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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GENERAL CHEMICAL
INDUSTRIAL PRODUCTS INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 2812 22-3649282
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
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LIBERTY LANE
HAMPTON, NEW HAMPSHIRE 03841
(603) 929-2606
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
STEWART FISHER
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
LIBERTY LANE
HAMPTON, NEW HAMPSHIRE 03841
(603) 929-2606
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPY TO:
GEORGE E.B. MAGUIRE
DEBEVOISE & PLIMPTON
875 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 909-6000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities of an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(b)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED
MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED PER SECURITY(1) OFFERING PRICE(1) REGISTRATION FEE
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10 5/8% Senior Subordinated Notes due 2009... $100,000,000 100% $ 100,000,000 $ 27,800
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f) under the Securities Act of 1933, as amended.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1993 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE 24, 1999
PROSPECTUS
[LOGO] GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
OFFER TO EXCHANGE FOR ALL OUTSTANDING
10 5/8% SENIOR SUBORDINATED NOTES DUE 2009
We are offering to exchange (the 'Exchange Offer') all of our outstanding
10 5/8% Senior Subordinated Notes Due 2009 (the 'Old Notes') for our registered
10 5/8% Senior Subordinated Notes Due 2009 (the 'New Notes'). The Old Notes and
New Notes are collectively referred to as the 'Notes'.
THE NEW NOTES:
The Old Notes were issued on April 30, 1999. The terms of the New Notes are
identical to the terms of the Old Notes except that the New Notes:
are registered under the Securities Act of 1933, as amended, and therefore
will not contain restrictions on transfer; and
will not contain certain provisions relating to additional interest.
YOU SHOULD CAREFULLY REVIEW THE RISK FACTORS BEGINNING ON PAGE 11 OF THIS
PROSPECTUS.
THE EXCHANGE OFFER:
Our offer to exchange Old Notes for New Notes will be open until 5:00 p.m.,
New York City time, on , 1999, unless we extend the offer.
You should also carefully review the procedures for tendering the Old Notes
beginning on page 91 of this Prospectus.
If you fail to tender your Old Notes, you will continue to hold unregistered
securities and your ability to transfer them could be adversely affected.
The Exchange Offer is subject to customary conditions. We may waive these
conditions.
No public market currently exists for the Notes.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE NOTES OR DETERMINED THAT THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is , 1999.
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TABLE OF CONTENTS
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Prospectus Summary.................................... 1
Risk Factors.......................................... 11
Use of Proceeds....................................... 18
Capitalization........................................ 18
Selected Financial Data............................... 19
Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 20
Industries............................................ 25
Business.............................................. 29
Our Arrangements with GenTek Relating to the
Spinoff............................................. 35
Management............................................ 40
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Beneficial Ownership of Capital Stock................. 46
Certain Relationships and Affiliate Transactions...... 49
Description of Credit Facility........................ 50
Description of Notes.................................. 51
Certain United States Federal Income Tax
Considerations...................................... 85
Plan of Distribution.................................. 88
The Exchange Offer.................................... 89
Legal Matters......................................... 96
Experts............................................... 96
Index to Financial Statements......................... F-1
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IMPORTANT INFORMATION ABOUT THIS PROSPECTUS
The information in this Prospectus is current only as of the date on its
cover, and may change after that date. For any time after the cover date of this
Prospectus, we do not represent that our affairs are the same as described or
that the information in this Prospectus is correct -- nor do we imply those
things by delivering this Prospectus, or offering to exchange securities.
We have used information that we believe comes from reliable sources,
but we do not assure you that the information in this Prospectus is accurate or
complete. This Prospectus contains summaries, believed to be accurate, of
certain terms of certain documents. All such summaries are qualified in their
entirety by reference to the actual documents. Copies of the actual documents
will be made available upon request to the Company. In making an investment
decision, you must rely upon your own examination of this Prospectus and the
terms of the offering and the Notes, including the merits and risks involved.
You should rely only on the information contained in this Prospectus. We
have not authorized any other person to provide you with different information.
If anyone provides you with different or inconsistent information, you should
not rely on it.
You might not be legally able to participate in this exchange
offering -- we are not giving you legal, business, financial or tax advice about
any matter. You should consult with your own attorney, accountant and other
advisors about those matters.
WE ARE NOT MAKING THE EXCHANGE OFFER, NOR WILL WE ACCEPT SURRENDERS FOR
EXCHANGE FROM ANY HOLDER OF OLD NOTES, IN ANY JURISDICTION IN WHICH THE EXCHANGE
OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES
OR 'BLUE SKY' LAWS OF SUCH JURISDICTION.
Each broker-dealer that receives New Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an 'underwriter' within the meaning of the
Securities Act of 1933, as amended (the 'Securities Act'). This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Old Notes where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See 'Plan of Distribution'.
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WHERE YOU CAN FIND MORE INFORMATION
We have filed a Registration Statement on Form S-4 to register with the
Securities and Exchange Commission (the 'Commission') the New Notes to be issued
in exchange for the Old Notes. This Prospectus is part of that Registration
Statement. As allowed by the Commission's rules, this Prospectus does not
contain all of the information you can find in the Registration Statement or the
exhibits to the Registration Statement.
Upon effectiveness of the Registration Statement of which this
Prospectus is a part, we will file annual, quarterly and other information with
the Commission. You may read and copy any reports, statements and other
information we file at the Commission's public reference rooms in Washington,
D.C., New York, New York, and Chicago, Illinois. Please call 1-800-SEC-0330 for
further information on the public reference rooms. Our filings will also be
available to the public from commercial document retrieval services and at the
web site maintained by the Commission at http://www.sec.gov.
The Indenture pursuant to which the Notes are issued requires us to
distribute to the holders of the Notes annual reports containing our financial
statements audited by our independent auditors and quarterly reports containing
unaudited condensed consolidated financial statements for the first three
quarters of each fiscal year.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus includes forward-looking statements. All statements
other than statements of historical facts included in this Prospectus, including
certain statements under 'Prospectus Summary,' 'Management's Discussion and
Analysis of Financial Condition and Results of Operations,' 'Industries' and
'Business,' may constitute forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. Although we believe that our assumptions made in connection with
the forward-looking statements are reasonable, we cannot assure you that our
assumptions and expectations will prove to have been correct. Important factors
that could cause our actual results to differ from our expectations are
disclosed in this Prospectus, including factors disclosed under 'Risk Factors.'
These forward-looking statements are subject to various risks, uncertainties and
assumptions about us, including, among other things:
fluctuation of world soda ash prices due to changes in supply and
demand;
international economic conditions and U.S. dollar exchange rates;
reduced soda ash demand from increased use of recycled glass or glass
substitutes;
our lack of complete control over the GCSAP partnership (as defined),
in which we hold a 51% interest;
increases in the cost of energy, transportation or labor;
environmental contamination at our facilities;
future modifications to existing environmental, safety and human health
regulations;
Year 2000 concerns;
our ability to operate as an independent business as a result of the
Spinoff described under 'Prospectus Summary -- The Spinoff'; and
certain potential adverse tax consequences of a change of control as a
result of the Spinoff.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this Prospectus might not occur.
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PROSPECTUS SUMMARY
This summary highlights selected information from this Prospectus, but
does not contain all the details of the Notes and information about us,
including information that may be important to you. Therefore, we urge you to
read this entire document carefully. Unless the context otherwise requires,
references in this document to 'us', 'we', 'our', 'ours' or the 'Company' mean
General Chemical Industrial Products Inc. and its subsidiaries at the time of
and after the Spinoff (as defined below). Unless the context otherwise requires,
references in this document to General Chemical Group mean The General Chemical
Group Inc., our parent company. When used in this document, data in tons are
measured in short tons (2,000 pounds).
COMPANY
We are the second largest soda ash producer in North America and one of
the top five producers globally, accounting for 23% of sales by North American
producers and 8% of global sales in 1998. We have total soda ash production
capacity of 3.3 million tons, consisting of 2.8 million tons of natural
production and 500,000 tons of synthetic production. We are also the second
largest North American producer of calcium chloride, a co-product of the
synthetic soda ash process, accounting for 27% of sales by North American
producers in 1998. Our soda ash is used in many familiar consumer products found
in virtually every home, including glass, soap, powdered detergent, paper,
textiles and food. Calcium chloride is mainly used for dust control and roadbed
stabilization during the summer, for de-icing roads during the winter, in
completion fluids for oil recovery and in various other industrial applications.
For the fiscal year ended December 31, 1998, we had net revenues of $261.5
million.
We produce natural soda ash from trona ore at our Green River, Wyoming
facility, where we have access to the largest and most economically recoverable
trona deposits in the world. Industry sources estimate that U.S. natural soda
ash cash production costs are typically less than half those of synthetic
producers. We believe that our lower costs give us a significant advantage, even
after shipping costs, over synthetic producers in most regions of the world. We
operate our Green River facility through General Chemical (Soda Ash) Partners
('GCSAP'), a partnership in which we own a 51% equity interest and are the
managing partner. The other partners of GCSAP are subsidiaries of
Owens-Illinois, Inc. ('Owens-Illinois') and TOSOH Corporation ('TOSOH').
Owens-Illinois is one of the world's largest consumers of soda ash. TOSOH is a
major chemical company and a distributor of soda ash in the Japanese market.
We produce synthetic soda ash and calcium chloride, as a co-product, at
our Amherstburg, Ontario facility. The synthetic process is used outside the
U.S. due to the scarcity of economically available trona deposits in the rest of
the world. Proximity to our major Canadian and eastern U.S. markets, control of
raw materials and successful marketing of the calcium chloride co-product make
our Amherstburg facility among the most efficient synthetic soda ash plants in
the world.
INDUSTRY
Soda Ash. World demand for soda ash in 1998 was approximately 36 million
tons. U.S. production of natural soda ash in 1998 was an estimated 11.2 million
tons with the remaining global demand being met predominantly by synthetic soda
ash producers. Growth in demand for soda ash is primarily driven by growth in
gross domestic product in global markets, with developing regions historically
growing at a faster rate than developed regions. Natural soda ash production
requires significantly less energy, labor and raw materials than synthetic soda
ash production. This cost differential allows U.S. producers, even after
shipping costs, to competitively export significant volumes of soda ash around
the world. In 1998, U.S. producers exported 36% of their production, primarily
to Latin America and Asia.
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During 1998, world demand and pricing for soda ash were negatively
impacted by economic turmoil in Asia and Latin America. In addition, recent
capacity additions by U.S. producers increased available supply. We believe that
market conditions will improve due to a combination of: (1) growth in demand as
per capita soda ash consumption increases in developing economies and growth in
demand continues in developed economies and (2) reduction in supply resulting
from continued closures of certain higher-cost international synthetic soda ash
facilities, announced postponements of previously planned capacity expansions in
the United States and industry consolidation.
Calcium Chloride. We estimate that North American demand for calcium
chloride was 1.2 million tons in 1998. The major end use markets for calcium
chloride are seasonal and weather dependent. During the summer, liquid calcium
chloride is used on unpaved roads for dust control and roadbed stabilization.
During the winter, calcium chloride is used in flake and liquid form on roads
for melting ice. Other applications include retail ice control, concrete
additive, water treatment and oil field uses.
COMPETITIVE STRENGTHS
We believe our principal competitive strengths are:
LOW-COST, HIGH-QUALITY PRODUCTION BASE
We have one of the lowest production costs in the global soda ash
industry primarily due to our location in the Green River Basin in
Wyoming and our consistent improvement in production efficiency. Since
taking control of the Green River facility in 1986, we have
approximately doubled annual productivity per employee. In the past two
years, through process improvements, we have increased our Green River
soda ash production capabilities from 2.4 million to 2.8 million tons
annually. In addition, the quality and consistency of soda ash produced
in Green River make it preferred for certain applications throughout the
world. As a result of our market focus, product quality and prudent
incremental increases in capacity, our plants have operated at over 90%
of effective capacity in each of the past 5 years.
STRATEGIC, ECONOMIC PARTNERS
We are partners with major soda ash purchasers who realize economic
benefits from purchasing from us instead of from our competitors.
Owens-Illinois, a 25% partner in GCSAP, is one of the largest consumers
of soda ash in the world. TOSOH, a 24% partner in GCSAP, is a
distributor of soda ash in the Japanese market. We also sell soda ash to
Church & Dwight Co., Inc. ('Church & Dwight') for use in baking soda,
detergents and personal care products. Church & Dwight is a leading
producer of sodium bicarbonate, commonly known as baking soda, sold
under its Arm & Hammer'r' brand. GCSAP and Church & Dwight jointly own
trona mineral leases under which GCSAP mines trona for the production of
soda ash sold to Church & Dwight. In 1998, we sold approximately 500,000
tons of soda ash directly to Owens-Illinois and Church & Dwight, plus
additional amounts to Owens-Illinois and TOSOH through ANSAC, as
described below.
ANSAC EXPORT COOPERATIVE
We are a member of the American Natural Soda Ash Company ('ANSAC'),
the export cooperative of U.S. soda ash producers. Membership in ANSAC
further enhances the U.S. producers' low-cost position by leveraging
ANSAC's global sales and marketing operations and creating distribution
economies of scale. Since the creation of ANSAC in 1984, U.S. exports of
soda ash grew at an approximate 8% annual rate from 1.6 million tons to
a peak of 4.6 million tons in 1997.
EXPERIENCED MANAGEMENT TEAM
We are led by an experienced and incentivized executive and operating
management team
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with an average of over 15 years of industry experience. Our management
team has strengthened relationships with major customers, improved the
efficiency of our operations, accessed new markets and developed new
products.
BUSINESS STRATEGY
We strive to enhance our market position and improve our profitability
by continued efforts to:
CAPITALIZE ON LOW-COST, HIGH-QUALITY POSITION
We intend to capitalize on our position as one of the world's
low-cost, high-quality producers of soda ash to increase our market
share across global markets. We believe that our low-cost global
position, product quality and consistency, improved production
capabilities from our recent investment program, and the marketing and
distribution efficiencies associated with our membership in ANSAC will
enable us to increase our sales volumes into export markets. We also
believe that we are well positioned to increase our sales volumes and
profitability as soda ash demand grows in developing market economies.
BUILD ON RELATIONSHIPS WITH STRATEGIC, ECONOMIC PARTNERS
In the second quarter of 1998, Owens-Illinois, one of the largest
consumers of soda ash in the world, acquired ACI International Limited,
a 25% partner in GCSAP. We estimate that, in 1998, Owens-Illinois
(including ACI International Limited) had global soda ash requirements
of 2 million tons, of which only approximately 10% was purchased from
GCSAP. We expect that, in light of the economic benefits of being a
GCSAP partner, Owens-Illinois will consider increased purchases from
GCSAP in the future. We have already experienced increased sales volume
to Owens-Illinois in the first quarter of 1999.
CONTINUE TO EXPAND PRODUCT APPLICATIONS AND SALES REGIONS
In the past two years, we have modified our Green River facility to
produce food grade soda ash and customized products for certain
customers who need low chloride, low calcium or specific particle size
soda ash. In addition, we have developed patented technology (our
Hydrator'r' technology) to liquify bulk soda ash at customer locations
directly from the railcar or truck, providing significant efficiencies
for our customers.
We have also successfully introduced Cal-Dry'TM', a calcium
chloride-based product, to petroleum refineries for distillate-drying
applications and Corguard'TM', a corrosion inhibiting de-icing product
with a broad range of applications. In addition, we have recently
successfully sold calcium chloride products in Latin America and the
Middle East, markets that we believe will offer us substantial growth
opportunities in the future. We expect to build off of these recent
successes and further expand our calcium chloride product applications
and sales regions.
PURSUE SELECTIVE ACQUISITIONS, ALLIANCES AND CONSOLIDATION
OPPORTUNITIES
We believe that selective acquisitions, alliances and consolidation
opportunities are available to strengthen and complement our soda ash
and calcium chloride businesses. We believe that these opportunities can
increase our profitability and enhance our leadership position by adding
economies of scale and cost synergies, broadening our revenue base, and
leveraging our management expertise, production base and sales and
marketing organizations.
THE SPINOFF
On April 30, 1999, General Chemical Group, our parent company, separated
its manufacturing and performance products businesses (the 'GenTek Business')
from its soda ash and calcium chloride business (the 'Industrial Chemicals
Business') through a spinoff (the 'Spinoff'). General Chemical Group
accomplished the Spinoff by transferring the GenTek Business to its subsidiary
GenTek Inc. ('GenTek'),
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and distributing the common stock of GenTek to General Chemical Group
shareholders. We believe that the Spinoff will enable us to focus our attention
and resources on our core industrial chemicals business and enhance our access
to the capital markets.
As a result of the Spinoff, General Chemical Group and GenTek are two
separate, stand-alone companies: GenTek operates the GenTek Business and General
Chemical Group, through our company, operates the Industrial Chemicals Business.
General Chemical Group's common stock continues to be listed on the New York
Stock Exchange (under the symbol 'GCG'). GenTek's common stock is also listed on
the New York Stock Exchange (under the symbol 'GK').
In connection with the Spinoff, we and GenTek entered into new financing
facilities as of April 30, 1999 (the 'Financings'), which consist of (1) the
offering of the Old Notes, (2) our new $85 million revolving credit facility
(the 'Credit Facility') and (3) GenTek's new credit facility. In this document,
the term 'Refinancing Transactions' refers collectively to (a) the initial
borrowing by our Canadian subsidiary of approximately $50 million under the
Credit Facility to repay existing indebtedness allocable to our business and
(b) the offering of the Old Notes and the distribution of approximately $82
million of the proceeds therefrom to our parent to repay existing third party
indebtedness allocable to our business and to pay our share of the one-time
charges directly attributable to the Spinoff.
In connection with the Spinoff, we entered into agreements with GenTek
to govern our relationship after the Spinoff. These agreements provide for each
party to make certain services, records and personnel available to the other and
for separation between us and GenTek of certain assets, liabilities and
responsibilities. For more information, see 'Our Arrangements with GenTek
relating to the Spinoff.'
THE ISSUER
We are incorporated in Delaware with principal executive offices at
Liberty Lane, Hampton, New Hampshire, 03842, telephone 603-929-2606.
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SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
We completed on April 30, 1999 the private offering (the 'Original
Offering') of $100,000,000 aggregate principal amount of 10 5/8% Senior
Subordinated Notes due 2009 (the 'Old Notes').
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The Exchange Offer........................ In this exchange offer (the 'Exchange Offer') you are entitled to exchange Old
Notes for our registered 10 5/8% Senior Subordinated Notes due 2009 (the 'New
Notes'). The Old Notes and the New Notes are collectively referred to as the
'Notes'.
Resale of New Notes....................... We believe that the New Notes that will be issued in this Exchange Offer may
be resold by most investors without compliance with the registration and
prospectus delivery provisions of the Securities Act, subject to certain
conditions. You should read the discussion under the heading 'The Exchange
Offer' for further information regarding the Exchange Offer and resale of the
New Notes.
Registration Rights Agreement............. In connection with the sale of the Old Notes to the initial purchasers, we
entered into an Exchange and Registration Rights Agreement with the initial
purchasers (the 'Registration Rights Agreement') requiring us to use our best
efforts to make the Exchange Offer.
Consequence of Failure to Exchange Old
Notes................................... You will continue to hold Old Notes which will remain subject to their
existing transfer restrictions if:
you do not tender your Old Notes; or
you tender your Old Notes and they are not accepted for exchange.
Subject to certain limited exceptions, we will have no obligation to register
the Old Notes after we consummate the Exchange Offer. See 'The Exchange
Offer -- Terms of the Exchange Offer' and ' -- Consequences of Failure to
Exchange.'
Expiration Date........................... The Exchange Offer will expire at 5:00 p.m., New York City time, on
, 1999, unless we extend it, in which case 'Expiration Date'
means the latest date and time to which the Exchange Offer is extended.
Interest on the New Notes................. The New Notes will accrue interest at a rate of 10 5/8% per annum from the
most recent date to which interest has been paid or provided for on the Old
Notes or, if no interest has been paid on the Old Notes, from April 30, 1999,
the issue date of the Old Notes (the 'Issue Date'). No additional interest
will be paid on Old Notes tendered and accepted for exchange.
Conditions to the Exchange Offer.......... The Exchange Offer is subject to certain customary conditions, which may be
waived by us. See 'The Exchange Offer -- Conditions.'
Procedures for Tendering Old
Notes................................... If you wish to accept the Exchange Offer, you must submit a Letter of
Transmittal, and any other required documentation and effect a tender of Old
Notes pursuant to the procedures for book-entry transfer (or other applicable
procedures), all in accordance with the instructions described in this
prospectus and in the Letter of Transmittal. See 'The Exchange
Offer -- Procedures for
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Tendering,' ' -- Book-Entry Transfer,' and ' -- Guaranteed Delivery
Procedures.' Certain other procedures may apply with respect to certain
book-entry transfers. See 'The Exchange Offer -- Exchanging Book-Entry Notes.'
Guaranteed Delivery Procedures............ If you wish to tender your Old Notes, but cannot properly do so prior to the
Expiration Date, you may tender your Old Notes according to the guaranteed
delivery procedures set forth in 'The Exchange Offer -- Guaranteed Delivery
Procedures.'
Withdrawal Rights......................... Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York
City time, on the Expiration Date. To withdraw a tender of Old Notes, a
written or facsimile transmission notice of withdrawal must be received by the
Exchange Agent at its address set forth herein under 'The Exchange
Offer -- Exchange Agent' prior to 5:00 p.m. New York City time, on the
Expiration Date.
Acceptance of Old Notes and Delivery of
New Notes............................... Subject to certain conditions, any and all Old Notes that are validly tendered
in the Exchange Offer prior to 5:00 p.m., New York City time, on the
Expiration Date will be accepted for exchange. The New Notes issued pursuant
to the Exchange Offer will be delivered as soon as practicable following the
Expiration Date. See 'The Exchange Offer -- Terms of the Exchange Offer.'
Certain U.S. Tax Consequences............. We believe that the exchange of Old Notes for New Notes will not constitute a
taxable exchange for U.S. federal income tax purposes. See 'Certain United
States Federal Income Tax Considerations.'
Exchange Agent............................ U.S. Bank Trust National Association is serving as the Exchange Agent.
Use of Proceeds........................... We will not receive any proceeds from the Exchange Offer. See 'Use of
Proceeds' for a description of the use of proceeds from the issuance of the
Old Notes.
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THE EXCHANGE NOTES
The terms of the New Notes are identical in all material respects to the
terms of the Old Notes except that the New Notes:
are registered under the Securities Act, and therefore will not contain
restrictions on transfer; and
will not contain certain provisions relating to additional interest.
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Issuer.................................... General Chemical Industrial Products Inc.
Securities Offered........................ $100,000,000 aggregate principal amount of 10 5/8% Senior Subordinated Notes
due 2009.
Maturity.................................. May 1, 2009.
Interest Payment Dates.................... May 1 and November 1 of each year, commencing November 1, 1999.
Sinking Fund.............................. None.
Optional Redemption....................... We may redeem the Notes, in whole or in part, on or after May 1, 2004, at the
redemption prices set forth in this Prospectus, plus accrued and unpaid
interest, if any, to the date of redemption. In addition, any time prior to
May 1, 2002, we may redeem up to 35% of the Notes at 110.625% of the principal
amount, plus accrued and unpaid interest, with the net proceeds of certain
equity issuances; provided at least 65% of the original aggregate principal
amount of the Notes remains outstanding immediately after such redemption.
Change of Control......................... Upon the occurrence of a 'Change of Control,' we will be required to make an
offer to repurchase each holder's Notes at a price equal to 101% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the
date of repurchase. See 'Description of the Notes -- Change of Control.'
Ranking................................... The Notes are unsecured senior subordinated obligations and rank:
subordinate to all of our senior indebtedness;
equally with all of our senior subordinated indebtedness;
senior to all of our subordinated indebtedness; and
effectively junior to all liabilities of our subsidiaries.
In addition, our claims as a partner against the assets of GCSAP will be
limited to our 51% partnership interest.
As of March 31, 1999, after giving effect to the Refinancing Transactions, we
would have had outstanding approximately $150 million of indebtedness, of
which $50 million was senior indebtedness both structurally and contractually
senior to the Notes. See 'Description of the Notes -- Ranking' and
'Description of Credit Facility.'
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Restrictive Covenants..................... The Indenture relating to the Notes contains certain covenants, including, but
not limited to, covenants with respect to the following matters:
limitation on additional indebtedness;
limitation on indebtedness and preferred stock by our subsidiaries;
limitation on restricted payments;
limitation on transactions with affiliates;
limitation on liens;
limitation on dividends and other payment restrictions affecting
subsidiaries; and
restrictions on consolidations, mergers and the sale of assets.
These covenants are subject to a number of important exceptions. See
'Description of the Notes -- Certain Covenants.'
</TABLE>
8
<PAGE>
SUMMARY FINANCIAL DATA
The summary financial data set forth below for each of the three years
ended December 31, 1998 are derived from, and should be read in conjunction
with, our audited Consolidated Financial Statements and notes included in this
Prospectus. The summary financial data for the three months ended March 31, 1998
and March 31, 1999 are derived from our unaudited Consolidated Financial
Statements and notes included in this Prospectus. The statement of operations
data for the years ended December 31, 1994 and 1995 are derived from our
unaudited financial statements not included in this Prospectus, which have been
prepared on a consistent basis with our audited financial statements and, in the
opinion of management, include all adjustments necessary for a fair presentation
of our financial position and results of operations for the periods covered
thereby.
Because we did not actually operate as a separate stand-alone business
during the periods depicted, we may have recorded different results had we been
operated independently of the GenTek Business. Therefore, the financial
information presented below is not necessarily indicative of the results of
operations or financial position that would have resulted if we had been a
separate, stand-alone business during the periods shown or of our future
performance as a separate, stand-alone business. See 'Management's Discussion
and Analysis of Financial Condition and Results of Operations.'
For a description of the basis of presentation of the historical
financial data, see Note 1 to the Consolidated Financial Statements.
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------------------- -----------------
1994 1995 1996 1997 1998 1998 1999
-------- -------- -------- -------- -------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues................................ $254,139 $265,333 $298,945 $289,700 $261,469 $62,343 $61,472
Gross profit................................ 75,159 78,794 100,143 84,931 59,131 13,209 10,204
Operating profit............................ 60,960 62,296 77,924(1) 68,281 41,049(2) 9,281 6,157
Minority interest........................... 16,957 19,458 31,635 24,253 16,666 4,437 2,587
Income before interest expense and income
taxes..................................... 43,442 44,224 46,963 44,587 24,342 5,137 3,978
Interest expense (3)........................ 12,193 13,777 13,001 12,747 11,747 2,916 2,669
Income before income taxes.................. 31,249 30,447 33,962 31,840 12,595 2,221 1,309
Income tax provision........................ 11,480 9,490 9,682 9,576 3,171 323 330
Net income.................................. $ 19,769 $ 20,957 $ 24,280 $ 22,264 $ 9,424 $ 1,898 $ 979
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
-------------------------
ACTUAL PRO FORMA (4)
-------- -------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments........................................... $ 1,249 $ 15,000
Adjusted working capital (5)................................................................ 36,603 36,603
Total assets................................................................................ 250,544 269,295
Long-term debt (including current portion).................................................. -- 150,000
Equity (deficit)............................................................................ 67,520 (63,729)
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
----------------------------------------------- ---------------
1994 1995 1996 1997 1998 1998 1999
------- ------- ------- ------- ------- ------ ------
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER FINANCIAL DATA:
Capital expenditures..................................... $ 6,965 $ 9,251 $34,934 $30,468 $18,498 $2,545 $3,254
Depreciation and amortization............................ 13,865 14,157 15,646 16,798 16,999 4,460 4,243
ADJUSTED FINANCIAL DATA:
Adjusted capital expenditures (6)........................ $ 5,154 $ 6,509 $21,393 $21,790 $14,214 $1,601 $2,312
Adjusted depreciation and amortization (6)............... 9,681 9,572 10,809 11,187 11,095 2,918 2,746
PRO FORMA FINANCIAL DATA (4):
Cash interest expense (7)........................................................................ $14,673 $3,669 $3,669
</TABLE>
- ------------
(1) Includes a one-time charge of $5.7 million ($3.5 million after tax) due
primarily to awards made under the Restricted Unit Plan, reflecting the
portion earned under prior equity programs. General Chemical Group recorded
a one-time charge of $12.5 million ($7.6 million after tax), and the amount
mentioned in the previous sentence related to our Company.
(2) Includes incremental accruals of $2.3 million ($1.4 million after tax)
principally related to litigation and environmental spending.
(3) Includes allocated interest expense from the General Chemical Group
attributable to our Company.
(4) Pro forma after giving effect, as of January 1, 1998, in the case of
operations data, and as of March 31, 1999, in the case of balance sheet
data, to the Refinancing Transactions. These pro forma calculations are
based upon our estimates and are therefore subject to uncertainty. See
'Disclosure Regarding Forward-Looking Statements.'
(5) Adjusted working capital consists of total current assets (excluding cash
and short-term investments) less total current liabilities (excluding the
current portion of long-term debt).
(6) Capital expenditures and depreciation and amortization have been adjusted
to exclude the 49% of GCSAP's capital expenditures and depreciation and
amortization, respectively, attributable to GCSAP's minority partners.
(7) Pro forma cash interest expense has been calculated using a weighted
average interest rate of 9.78%. A fluctuation in the assumed borrowing rate
of 0.125% would change cash interest expense by $62,500.
10
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be carefully considered in evaluating us and making an investment
decision.
IF YOU DO NOT PROPERLY TENDER YOUR OLD NOTES, YOU WILL CONTINUE TO HOLD
UNREGISTERED OLD NOTES, AND YOUR ABILITY TO TRANSFER OLD NOTES WILL BE ADVERSELY
AFFECTED.
We will only issue New Notes in exchange for Old Notes that are timely
and properly tendered. Therefore, you should allow sufficient time to ensure
timely delivery of the Old Notes and you should carefully follow the
instructions on how to tender your Old Notes. Neither we nor the Exchange Agent
are required to tell you of any defects or irregularities with respect to your
tender of the Old Notes. If you do not exchange your Old Notes for New Notes
pursuant to the Exchange Offer, the Old Notes you hold will continue to be
subject to the existing transfer restrictions. In general, the Old Notes may not
be offered or sold, unless registered under the Securities Act, or exempt from
registration under the Securities Act and applicable state securities laws. We
do not anticipate that we will register Old Notes under the Securities Act.
To the extent that Old Notes are tendered and accepted in the Exchange
Offer, the trading market for the remaining untendered or tendered but not
accepted Old Notes could be adversely affected. Because we anticipate that most
holders of the Old Notes will elect to exchange the Old Notes for New Notes due
to the absence of restrictions on the resale of New Notes under the Securities
Act, we anticipate that the liquidity of the market for any Old Notes remaining
after the consummation of the Exchange Offer may be substantially limited.
WE ARE AFFECTED BY FLUCTUATIONS IN SODA ASH PRICES
Our principal product is soda ash, and the profitability of our
operations is affected by the market price of soda ash more than any other
factor. Soda ash prices fluctuate and are affected by numerous factors which we
can not predict or control, including changes in global industry supply and
market demand for soda ash and prices and/or availability of substitutes for
end-products using soda ash. To the extent these factors adversely affect soda
ash prices, they could have a material adverse effect on our results of
operations and financial condition.
If the market price for soda ash falls significantly, we will experience
a decrease in profits or, potentially, a loss. In 1997 and 1998, due in part to
unfavorable soda ash prices, we experienced decreases in profits compared to the
prior year levels. We estimate that 1999 soda ash prices for U.S. producers will
be approximately $69 per ton, or approximately $6 per ton below the 1998 level.
There can be no assurance that soda ash prices will increase or that they will
not decrease further in the future. See 'Management's Discussion and Analysis of
Financial Condition and Results of Operations' and 'Industries -- Soda Ash
Pricing and Capacity Utilization.'
OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION AND
PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER THE NOTES
We will continue to have substantial indebtedness after completion of
the Exchange Offer. After giving effect to the Refinancing Transactions,
as of December 31, 1998, we would have had total long-term debt of $150
million, representing 161% of our total capitalization;
for fiscal year 1998, our pro forma ratio of earnings to fixed charges
would have been 2.3 to 1.0; and
we would have had the ability to borrow an additional $35 million under
our Credit Facility.
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<PAGE>
Our level of indebtedness could have important consequences to holders
of the Notes, including the following:
a substantial portion of our cash flow from operations must be
dedicated to the payment of interest on our indebtedness;
our leverage may make us more vulnerable to economic downturns, and may
limit our ability to withstand competitive pressures;
our ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions or general corporate
purposes may be impaired; and
borrowings under the Credit Facility will bear interest at fluctuating
rates, making us more susceptible to the above risks.
If we are unable to generate sufficient cash flow from operations in the
future, we may be unable to repay or refinance all or a portion of our then
existing debt or to obtain additional financing. There can be no assurance that
any such refinancing would be possible or that any additional financing could be
obtained on terms that are acceptable to us.
OUR INDENTURE FOR THE NOTES AND OUR CREDIT FACILITY IMPOSE SIGNIFICANT OPERATING
AND FINANCIAL RESTRICTIONS
The Indenture for the Notes and the Credit Facility impose significant
operating and financial restrictions on us. These restrictions affect, and in
certain cases limit, among other things, our ability to:
incur additional indebtedness and liens;
make capital expenditures;
make investments and sell assets;
enter into transactions with affiliates; or
consolidate, merge or sell all or substantially all of our assets.
There can be no assurance that these covenants will not adversely affect
our ability to finance our future operations or capital needs or to engage in
other business activities that may be in the interest of Noteholders. See
'Description of Notes' and 'Description of Credit Facility.'
WE ARE AFFECTED BY THE INCREASED USE OF GLASS SUBSTITUTES AND RECYCLED GLASS
Container glass production is one of the principal end markets for soda
ash. Competition from increased use of glass substitutes, such as plastic, and
recycled glass in the container industry has had a negative effect on demand for
soda ash. Management believes that the use of plastic containers will continue
to negatively impact the growth in domestic demand for soda ash. There can be no
assurance that the effects of competition from increased use of glass
substitutes or recycled glass in the container industry will not have a material
adverse effect on our results of operations and financial condition.
THE WORLD SODA ASH INDUSTRY IS HIGHLY COMPETITIVE
We face competition from a number of international and North American
producers, some of which have greater market share and greater financial,
production and other resources than we do. There can be no assurance that we
will have sufficient resources or otherwise be able to maintain our current
competitive position or that competitors will not seek to reduce prices to
compete, the occurrence of any of which could have a materially adversely effect
on our results of operations and financial condition. See
'Business -- Competition.'
12
<PAGE>
THE NOTES ARE CONTRACTUALLY SUBORDINATED IN RIGHT OF PAYMENT TO OUR SENIOR DEBT
The Notes are subordinated in right of payment to all our senior debt,
including the principal of and interest on the Credit Facility. In the event of
our insolvency, liquidation, reorganization, dissolution or other winding-up or
upon a default in payment with respect to, or the acceleration of, any senior
debt, the holders of such senior debt must be paid in full before the holders of
the Notes may be paid. If we incur any additional senior subordinated debt, the
holders of such debt would be entitled to share ratably with the holders of the
Notes in any proceeds distributed in connection with any insolvency,
liquidation, reorganization, dissolution or other winding-up. This right may
have the effect of reducing the amount of proceeds paid to holders of the Notes.
In addition, no payments may be made with respect to the principal of or
premium, if any, or interest on the Notes if a payment default exists with
respect to our senior debt and, under certain circumstances, no payments may be
made with respect to the principal of, or interest on the Notes for a certain
period if a non-payment default exists with respect to senior debt. In addition,
the Indenture permits us to incur additional debt, including senior debt, if
certain conditions are met. See 'Description of Notes -- Subordination.'
THE NOTES ARE EFFECTIVELY SUBORDINATED IN RIGHT OF PAYMENT TO OUR SECURED DEBT
The Notes are not secured by any of our assets and therefore are
effectively subordinated to all of our existing and future secured debt. The
Credit Facility is secured by the capital stock of certain of our subsidiaries,
including our 51% ownership interest in GCSAP, and certain of our assets (other
than those held by GCSAP). In addition, the Indenture and the Credit Agreement
permit us to incur additional secured debt, if certain conditions are met. In
the event of a default on secured indebtedness (whether as a result of the
failure to comply with a payment or other covenant, a cross-default, or
otherwise), the lenders under the Credit Facility will have a prior secured
claim on such assets. If any secured lenders should attempt to foreclose on
their collateral, the value of the Notes could be materially adversely affected.
See 'Description of Credit Facility.'
THE NOTES ARE EFFECTIVELY SUBORDINATED TO THE LIABILITIES OF OUR SUBSIDIARIES
We conduct substantially all of our operations through various direct
and indirect subsidiaries, including GCSAP and General Chemical Canada Ltd. We
are dependent on our ability to receive cash from our subsidiaries to meet our
debt service and other obligations, including obligations under the Notes and
the Credit Facility. Our subsidiaries are separate and distinct legal entities
and have no obligation, contingent or otherwise, to pay any amounts due pursuant
to the Notes. In addition, our claims against GCSAP are limited to our 51%
equity interest in GCSAP. Our rights, and the rights of our creditors, including
holders of the Notes, to participate in the distribution of the assets of any
subsidiary upon that subsidiary's liquidation or reorganization will be subject
to the prior claims of that subsidiary's creditors, including trade creditors.
Accordingly, the Notes are effectively subordinated to the liabilities of these
subsidiaries, which include up to $60 million available in U.S. dollars or the
Canadian dollar equivalent for borrowing by General Chemical Canada Ltd. under
the Credit Facility.
FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO VOID
OR SUBORDINATE INDEBTEDNESS
Various fraudulent transfer laws have been enacted for the protection of
creditors and may be utilized by a court to void or subordinate our indebtedness
in favor of other existing or future creditors of our business. If a court, in a
lawsuit on behalf of any of our creditors or a representative of our creditors,
were to find that, at the time we issued the Notes, we (x) intended to hinder,
delay or defraud any existing or future creditor or contemplated insolvency with
a design to prefer one or more creditors to the exclusion in whole or in part of
others or (y) did not receive fair consideration or reasonably equivalent value
for issuing such Notes and we (1) were insolvent, (2) were rendered insolvent by
reason of such issuance, (3) were engaged or about to engage in a business or
transaction for which its remaining assets constituted unreasonably small
capital to carry on its business or (4) intended to incur, or believed
13
<PAGE>
that we would incur, debts beyond our ability to pay such debts as they matured,
such court could void our obligations under the Notes and void such
transactions. Alternatively, in such event, claims of the holders of such Notes
could be subordinated to claims of our other creditors.
WE ARE ENGAGED IN A JOINT VENTURE
A substantial portion of our revenue is generated from GCSAP, in which
we own a 51% equity interest. We have been the managing partner of GCSAP since
its formation in 1986. As managing partner, we have had and will continue to
have overall responsibility for management of GCSAP, including all operational,
marketing and financial matters. However, certain significant actions of GCSAP
must be approved by a majority or, in certain instances, all of the partners.
Therefore, because we do not own 100% of GCSAP, there can be no assurance that
GCSAP will be managed to achieve any particular business or financial objective
or interest, such as to maximize cash flow. In addition, while there has never
been a disagreement among the partners which materially adversely affected
GCSAP's operations or financial results, there can be no assurance that such
disagreements will not occur in the future.
The GCSAP partnership agreement in certain cases prohibits the partners
from transferring their respective equity interests or withdrawing from the
partnership without the consent of the other partners. In addition, if the
parent company of any GCSAP partner proposes to transfer ownership of its GCSAP
partner subsidiary, the non-transferring parent companies may either (a) acquire
the transferred GCSAP partner, or its partnership interest, pursuant to a right
of first refusal or (b) require the transferring parent company, or the proposed
purchaser, to acquire the partnership interest held by their own GCSAP partner
subsidiaries. If one or both of Owens-Illinois or TOSOH were to seek to transfer
its GCSAP partner subsidiary and we did not or could not exercise our right of
first refusal, a new partner or partners could be admitted to the partnership.
Any such new partner may have business or financial objectives for GCSAP that
are different from ours. See 'Business -- General Chemical (Soda Ash) Partners.'
A PORTION OF OUR REVENUES IS DERIVED FROM INTERNATIONAL SOURCES
A large portion of our revenues is derived from sales outside of the
United States. GCSAP, along with the five other U.S. producers of natural soda
ash, is a member of ANSAC, a soda ash export cooperative. Through ANSAC, the six
U.S. producers export soda ash to all parts of the world except Canada and
European Union ('E.U.') member countries, where each of the members exports soda
ash directly. Sales outside of the United States, particularly sales to emerging
markets, are subject to other various risks which are not present in sales
within U.S. markets, including currency fluctuations, political and economic
instability, and uncertainty and governmental embargoes or foreign trade
restrictions such as antidumping duties. For example, certain countries have
from time to time considered limiting or prohibiting sales of products through
export cooperatives such as ANSAC. The occurrence of or increase in any adverse
international economic conditions could have a material adverse effect on our
results of operations or financial condition. See 'Industries -- Soda Ash.'
WE ARE SUBJECT TO ENVIRONMENTAL LAWS AND REGULATIONS
Our mining and production operations, which have been conducted at our
Green River, Wyoming and Amherstburg, Ontario facilities for many years, are
subject to numerous laws and regulations relating to the protection of human
health and the environment in the U.S. and Canada. Additionally, the
Comprehensive Environmental Response Compensation and Liability Act of 1980
('CERCLA') and similar state statutes have been construed as imposing joint and
several liability, under certain circumstances, on present and former owners and
operators of contaminated sites and transporters and generators of hazardous
substances for remediation of contaminated properties regardless of fault. We
believe that we are in substantial compliance with such laws and regulations.
However, due to the nature of our operations, we are involved from time to time
in administrative and judicial proceedings and inquiries relating to
environmental matters, which we do not believe will have a material adverse
effect on our financial condition or results of operations. Moreover,
modifications or
14
<PAGE>
changes in enforcement of existing laws and regulations or the adoption of new
laws and regulations in the future, particularly with respect to environmental
and safety standards, or the discovery of additional or unknown environmental
contamination, could require expenditures which might be material to our results
of operations or financial condition.
WE WILL PURSUE SELECTIVE ACQUISITIONS AND ALLIANCES
As part of our strategy, we will selectively pursue acquisitions and
alliances. Our ability to complete acquisitions or alliances is dependent upon,
and may be limited by, the availability of suitable candidates and capital, and
the restrictions contained in our debt instruments. In addition, acquisitions
and alliances involve risks that could adversely affect our operating results,
including the management time that may be diverted from operations in order to
pursue and complete such transactions and difficulties in integrating and
managing the additional operations and personnel of acquired companies. There
can be no assurance that we will be able to obtain the capital necessary to
consummate acquisitions or alliances on satisfactory terms, if at all. Future
acquisitions or alliances could result in the incurrence of additional debt,
costs and contingent liabilities, all of which could materially adversely affect
our results of operations or financial condition.
WE RELY HEAVILY ON THIRD PARTY TRANSPORTATION
We rely heavily on railroads and trucking companies to ship finished
product to our customers as well as to transport raw materials to our
manufacturing facilities. Rail and trucking operations are subject to various
hazards, including extreme weather conditions, work stoppages, operating hazards
and the Year 2000 issue. If we are unable to ship finished product or transport
raw materials as a result of such railroads' or trucking companies' failure to
operate, or if there were material changes in the cost of railroads or trucking
services, we may not be able to arrange alternative and timely means to ship our
goods, which could lead to interruptions or slowdowns in our business and result
in a material adverse effect on our financial condition and results of
operations.
WE RELY ON UNIONIZED EMPLOYEES AND WILL NEED TO RENEGOTIATE LABOR CONTRACTS IN
1999
As of April 30, 1999, 736 of our 1,026 employees were represented by
three different unions. Since 1986, we have been involved in 12 labor
negotiations, only one of which, in 1993, has resulted in a work disruption.
During that disruption, management operated the plant and supplied customers
without interruption until the labor disruption was settled and a new contract
was agreed upon. The three union contracts will be up for renewal during 1999.
There can be no assurance that we will be able to negotiate new labor agreements
on satisfactory terms or that the negotiation process will not involve material
disruptions to our business. See 'Business -- Employees; Labor Relations.'
PRIOR TO THE SPINOFF WE NEVER OPERATED AS A SEPARATE, STAND-ALONE COMPANY
Prior to the Spinoff we never operated as a separate, stand-alone entity
and have historically shared with the GenTek Business various financial,
administrative and managerial expertise. As a result of the Spinoff, for a
transitional period, GenTek is providing us with certain services, records and
personnel, as described in 'Our Arrangements With GenTek Relating to the
Spinoff.' As a result of the Spinoff, we maintain our own lines of credit and
banking relationships and are responsible for our own financial reporting and
control functions. There can be no assurance that, as a separate, stand-alone
company, our operating results will be comparable to those before the Spinoff.
WE ARE CONTROLLED BY OUR PRINCIPAL STOCKHOLDER
We are a wholly owned subsidiary of General Chemical Group. Paul M.
Montrone, Chairman of the Board of Directors of General Chemical Group,
beneficially owns or controls 80.6% of the voting power of the outstanding
shares of General Chemical Group. Therefore, Mr. Montrone alone has sufficient
voting power (without the consent of any other stockholder) to elect the entire
Board of Directors of General Chemical Group and, in general, to determine the
outcome of any corporate transactions or other
15
<PAGE>
matters submitted to the stockholders for approval, including mergers and sales
of assets, and to prevent, or cause, a change of control of General Chemical
Group or of our company.
WE MAY NOT BE ABLE TO FINANCE THE CHANGE OF CONTROL OFFER REQUIRED BY THE
INDENTURE
Upon the occurrence of a Change of Control, we will be required to make
an offer to purchase the Notes at a price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the date of repurchase. Certain events involving a Change of Control may result
in an event of default under the Credit Facility and our other indebtedness that
may be incurred in the future. An event of default under the Credit Facility or
other future indebtedness could result in an acceleration of such indebtedness,
in which case the subordination provisions of the Notes would require payment in
full (or provision therefor) of all senior debt before we can repurchase or make
other payments in respect of the Notes. See 'Description of Notes -- Offer to
Purchase upon Change of Control,' 'Description of Notes -- Subordination' and
'Description of Credit Facility.' There can be no assurance that we would have
sufficient resources to repurchase the Notes or pay our obligations if the
indebtedness under the Credit Facility or other future senior debt were
accelerated upon the occurrence of a Change of Control. There can be no
assurance that we will be able to obtain the consent of the lenders under the
Credit Facility to enable us to repurchase the Notes.
IF THE IRS DETERMINES THAT THE SPINOFF WILL RESULT IN A GAIN UNDER THE CODE, THE
IMPACT OF SUCH ADVERSE TAX CONSEQUENCE MAY HAVE A MATERIALLY ADVERSE AFFECT ON
OUR BUSINESS
If the Internal Revenue Service (the 'IRS') were to determine that the
Spinoff is part of a plan or a series of related transactions pursuant to which
one or more persons acquire, directly or indirectly, a 50% or greater interest,
by vote or value, in either General Chemical Group or GenTek, General Chemical
Group and, possibly, GenTek would recognize gain under section 355(e) of the
Internal Revenue Code of 1986 (the 'Code'). The amount of such gain would be
substantial and could result in significant liabilities to General Chemical
Group, even if there were no change of control of General Chemical Group, which
could have a material adverse effect on our business. Pursuant to the Tax
Sharing Agreement, General Chemical Group and GenTek will each be responsible,
and will indemnify one another, for 50% of any taxes resulting from the
application of section 355(e) of the Code, except that, if such taxes are
attributable to an act of General Chemical Group or GenTek (or any of their
respective subsidiaries), such party will be responsible, and will indemnify the
other, for 100% of such taxes. See 'Our Arrangements with GenTek Relating to the
Spinoff -- Tax Sharing Agreement.' As a result of the possible adverse tax
consequences described above, General Chemical Group may be restricted in its
ability to effect certain acquisitions, stock issuances and other transactions
that would result in a change of control of General Chemical Group.
WE MAY BE AFFECTED BY YEAR 2000 ISSUES
As a result of the Spinoff, GenTek provides us with management
information systems ('MIS') and MIS-supported functions, including personnel,
hardware and software, through December 31, 2001 on a service contract basis.
During this period, as provided in the Transition Support Agreement, GenTek will
provide us services related to the remediation of the Year 2000 problem for our
business. GenTek intends to continue General Chemical Group's program to assess,
mitigate and remediate the potential impact of the 'Year 2000' problem on our
business. An assessment of our business' Year 2000 compliance status was
completed in early 1998 and work began on a remediation program immediately
thereafter. The remediation program has been structured to address information
and noninformation technology hardware, software, facilities and equipment
(collectively, 'Systems'). However, the Transition Support Agreement provides
that generally GenTek will not be liable to us for any costs, losses, damages or
claims related to any Year 2000 services provided by it under the Transition
Support Agreement, other than for gross negligence or wilful misconduct. See
'Our Arrangements with GenTek relating to the Spinoff -- Transition Support
Agreement.' In the event that our material Systems are not Year 2000 compliant,
we may experience reductions or interruptions in operations which could have a
material adverse effect on our results of operations. See 'Management's
Discussion and Analysis of Financial Condition and Results of Operations -- Year
2000.'
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<PAGE>
In addition, we are working with GenTek to determine the Year 2000
compliance status of our material vendors, suppliers and service providers,
including the railroad and trucking companies we use to ship our products. Based
on currently available information, we do not anticipate any material impact to
us based on the failure of such third parties to be Year 2000 compliant.
However, the process of evaluating the Year 2000 compliance status of material
third parties is continually ongoing and, therefore, no guaranty or warranty can
be made as to such third parties' future compliance status and its potential
effect on our business. We believe there exists a sufficient number of suppliers
of raw material for our business so that alternate sources will be available if
any supplier is unable to deliver raw materials due to Year 2000 problems. There
can be no assurances, however, that such alternate sources will be able to
supply all our requirements in a timely manner or on terms comparable with those
of our current suppliers. If the railroads or trucking companies that ship our
products fail to be Year 2000 compliant, we may not be able to arrange
alternative and timely means to ship our goods, which could lead to
interruptions or slowdowns in our business. We are preparing for the possible
use of alternative suppliers and means of transportation, possible adjustment of
raw material and product inventory levels and contingencies with respect to
potential energy source interruptions, all in an effort to minimize the effects,
if any, of Year 2000 related interruptions or slowdowns caused by suppliers and
transporters.
THERE WILL BE NO PUBLIC TRADING MARKET FOR THE NEW NOTES
The New Notes are a new issue of securities for which there is currently
no active trading market. If the New Notes are traded after their initial
issuance, they may trade at a discount from their initial offering price,
depending upon prevailing interest rates, the market for similar securities, our
financial condition and other factors beyond our control, including general
economic conditions. We do not intend to apply for a listing or quotation of the
New Notes. No assurance can be given as to the development or liquidity of any
trading market for the New Notes. Likewise, no assurance can be given regarding
the ability of holders of the New Notes to sell their New Notes or the prices at
which such holders may be able to sell their New Notes.
Historically, the market for noninvestment grade debt has been subject
to disruptions that have caused substantial volatility in the prices of such
securities. There can be no assurance that the market for the New Notes will not
be subject to similar disruptions. Any such disruptions may have an adverse
effect on holders of the New Notes.
17
<PAGE>
USE OF PROCEEDS
THERE WILL BE NO PROCEEDS TO US FROM THE ISSUANCE OF NEW NOTES PURSUANT TO THE
EXCHANGE OFFER.
The net proceeds from the Original Offering were approximately $96
million. We used approximately $82 million of the net proceeds to fund a
distribution to our parent, General Chemical Group, prior to the Spinoff and the
balance for general corporate purposes. General Chemical Group used the
distribution to repay a portion of its existing third-party indebtedness
allocable to our business and to pay our share of the one-time expenses directly
attributable to the Spinoff. None of the proceeds of the original offering was
distributed to our parent's shareholders.
As a result of the Refinancing Transactions (including the transactions
described above), our outstanding indebtedness consists of the Notes and $50
million outstanding under our $85 million Credit Facility.
CAPITALIZATION
The following table sets forth, as of March 31, 1999, our actual
capitalization and our capitalization pro forma to reflect the Refinancing
Transactions as if such events had occurred on March 31, 1999. This table should
be read in conjunction with 'Use of Proceeds' and the Consolidated Financial
Statements and the notes included in this Prospectus. Because we did not
actually operate as a separate, stand-alone business as of March 31, 1999, the
information set forth below does not reflect what our capitalization would have
been if we had been a separate, stand-alone business prior to March 31, 1999 or
what our capitalization will be in the future.
<TABLE>
<CAPTION>
ACTUAL AT PRO FORMA AT
MARCH 31, 1999 MARCH 31, 1999
-------------- --------------
(IN THOUSANDS)
<S> <C> <C>
Cash, cash equivalents and short-term investments............................. $ 1,249 $ 15,000
-------------- --------------
-------------- --------------
Credit Facility(1)............................................................ $ 0 $ 50,000
Notes offered hereby.......................................................... 0 100,000
-------------- --------------
Total debt.................................................................... 0 150,000
Equity (deficit).............................................................. 67,250 (63,729)
-------------- --------------
Total capitalization.......................................................... $ 67,250 $ 86,271
-------------- --------------
-------------- --------------
</TABLE>
- ------------
(1) The Credit Facility provides for up to $85 million of borrowings, of which
up to $60 million in U.S. dollars or the Canadian dollar equivalent may be
borrowed by our Canadian subsidiary. As of March 31, 1999, the Credit
Facility would have had $35 million of unused borrowing availability.
18
<PAGE>
SELECTED FINANCIAL DATA
The selected financial data set forth below for each of the three years
ended December 31, 1998 are derived from, and should be read in conjunction
with, the audited Consolidated Financial Statements and notes for our Company
included in this Prospectus. The selected financial data for the three months
ended March 31, 1998 and 1999 are derived from the unaudited consolidated
financial statements of our Company included in this Prospectus. The selected
financial data for the years ended December 31, 1994 and 1995 are derived from
unaudited consolidated financial statements of our Company not included in this
Prospectus, which have been prepared on a consistent basis with the audited
financial statements of the business and, in the opinion of management, include
all adjustments necessary for a fair presentation of the financial position and
results of operations of the business for the periods covered thereby. Our
Consolidated Financial Statements for the three years ended December 31, 1998
have been audited by Deloitte & Touche LLP, independent auditors.
Because we did not actually operate as a separate stand-alone business
during the periods depicted, we may have recorded different results had we been
operated independently of the GenTek Business. Therefore, the financial
information presented below is not necessarily indicative of the results of
operations or financial position that would have resulted if we had been a
separate, stand-alone business during the periods shown, or of our future
performance as a separate, stand-alone business. Per share data for net income
have not been presented because we were operated through General Chemical Group
for the periods presented.
For a description of the basis of presentation of the historical
financial data of our Company, see Note 1 to the Consolidated Financial
Statements.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------- --------------------
1994 1995 1996 1997 1998 1998 1999
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues................................. $254,139 $265,333 $298,945 $289,700 $261,469 $ 62,343 $ 61,472
Gross profit................................. 75,159 78,794 100,143 84,931 59,131 13,209 10,204
Operating profit............................. 60,960 62,296 77,924(1) 68,281 41,049(2) 9,281 6,157
Minority interest............................ 16,957 19,458 31,635 24,253 16,666 4,437 2,587
Income before interest and income taxes...... 43,442 44,224 46,963 44,587 24,342 5,137 3,978
Interest expense(3).......................... 12,193 13,777 13,001 12,747 11,747 2,916 2,669
Income before income taxes................... 31,249 30,447 33,962 31,840 12,595 2,221 1,309
Income tax provision......................... 11,480 9,490 9,682 9,576 3,171 323 330
Net income................................... $ 19,769 $ 20,957 $ 24,280 $ 22,264 $ 9,424 $ 1,898 $ 979
OTHER DATA:
Ratio of earnings to fixed charges(4)........ 4.1x 3.9x 4.9x 4.3x 2.8x 2.7x 2.1x
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF
-------------------------------------------------------- MARCH 31,
1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments...... $ 558 $ 928 $ 1,609 $ 1,352 $ 1,127 $ 1,249
Adjusted working capital(5)............................ 23,791 27,970 27,628 44,519 38,728 36,603
Total assets........................................... 207,647 212,493 241,086 262,175 248,714 250,544
Equity................................................. 53,768 53,354 62,795 85,505 75,292 67,520
</TABLE>
- ------------
(1) Includes a one-time charge of $5.7 million ($3.5 million after tax) due
primarily to awards made under the Restricted Unit Plan, reflecting the
portion earned under prior equity programs. General Chemical Group recorded
a one-time charge of $12.5 million ($7.6 million after tax), and the amount
mentioned in the previous sentence related to our Company.
(2) Includes incremental accruals of $2.3 million ($1.4 million after-tax)
principally related to litigation and environmental spending.
(3) Includes allocated interest expense from the General Chemical Group.
(4) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income before minority interest and income taxes and
extraordinary items plus fixed charges. Fixed charges consist of interest
expense, including the amortization of deferred financing costs, and that
portion of rental expense that management believes to be representative of
interest. Pro forma for the Refinancing Transactions, the ratio of earnings
to fixed charges for 1998 and the three months ended March 31, 1999 would be
2.3x and 1.8x, respectively.
(5) Adjusted working capital consists of total current assets (excluding cash
and short-term investments) less total current liabilities (excluding the
current portion of long-term debt).
19
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
We are a leading global producer of soda ash and North American producer
of calcium chloride. We produce natural soda ash at our facility in Green River,
Wyoming, and synthetic soda ash and calcium chloride at our facility in
Amherstburg, Ontario.
Our principal product is soda ash, and the profitability of our
operations is affected by the market price of soda ash more than any other
factor. The price of soda ash has fluctuated in recent years due to numerous
factors, such as changes in industry capacity and global demand for soda ash,
and the change in price and/or availability of substitutes for end-products
using soda ash. In 1997 and 1998, due in part to unfavorable soda ash prices, we
experienced decreases in profits compared to prior year levels. We estimate that
1999 soda ash prices for U.S. producers will be approximately $69 per ton, or
approximately $6 per ton below the 1998 level. For a discussion of factors
affecting the prices of and demand for soda ash, see 'Industries -- Soda
Ash -- Pricing and Capacity Utilization.'
We produce natural soda ash by refining mined trona deposits at our
plant in Green River, Wyoming. The Green River basin contains the largest known,
economically recoverable trona deposits in the world. Our Green River facility,
including the plants and leases for mining trona ore, is owned and operated
through GCSAP, a partnership in which we own a 51% partnership interest and of
which we are the managing partner. See 'Business -- General Chemical (Soda Ash)
Partners.'
The discussion and analysis of our financial condition and results of
operations in this section relate to periods during which General Chemical Group
operated both the Industrial Chemicals and GenTek Businesses. We have not been
operated as a separate, stand-alone business and have historically shared with
the GenTek Business various financial, administrative and managerial expertise
relevant to operating as an independent public company. After the Spinoff, as a
separate, stand-alone business, our results and profits may not be comparable to
those before the Spinoff.
The Consolidated Financial Statements include an allocation of certain
assets, liabilities and expenses from General Chemical Group. In the opinion of
management, expenses have been allocated to our Company on a reasonable and
consistent basis using management's estimate of services provided to us by
General Chemical Group. However, such allocations are not necessarily indicative
of the level of expenses which might have been incurred had we been operated as
a separate, stand-alone entity during the periods presented or expected to be
incurred after the Spinoff. For further information on the basis of presentation
of the historical financial data of our Company, see Note 1 to such Consolidated
Financial Statements.
20
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth our unaudited statement of operations
data for the three years ended December 31, 1996, 1997 and 1998, the three
months ended March 31, 1998 and 1999 and the corresponding percentage of our net
revenues for the relevant period presented.
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------------- -----------------------------
1996 1997 1998 1998 1999
------------- ------------- ------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues................... $298.9 100% $289.7 100% $261.5 100% $62.3 100% $61.5 100%
Gross profit................... 100.1 33 84.9 29 59.1 23 13.2 21 10.2 17
Selling, general and
administrative expense....... 22.2(1) 7 16.7 6 18.1 7 3.9 6 4.0 7
Operating profit............... 77.9 26 68.3 23 41.0(2) 16 9.3 15 6.2 10
Minority interest.............. 31.6 11 24.3 8 16.7 6 4.4 7 2.6 4
Interest expense............... 13.0 4 12.7 4 11.7 4 2.9 5 2.7 4
Net income..................... 24.3 8 22.3 8 9.4 4 1.9 3 1.0 2
Depreciation and
amortization................. 15.6 5 16.8 6 17.0 7 4.5 7 4.2 7
</TABLE>
- ------------
Note: Amounts may not total due to rounding
(1) Includes a one-time charge of $5.7 million ($3.5 million after-tax) due
primarily to awards made under a restricted unit plan, which replaced
certain prior equity programs. General Chemical Group recorded a one-time
charge of $12.5 million ($7.6 million after tax), and the amount mentioned
in the previous sentence related to our Company.
(2) Includes incremental accruals of $2.3 million ($1.4 million after tax)
principally related to litigation and environmental spending.
THREE MONTHS ENDED MARCH 31, 1999 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1998
Net revenues for the three month period ended March 31, 1999 were $61.5
million, versus $62.3 million for the comparable period in 1998. This decrease
is due to lower soda ash prices partially offset by higher calcium chloride
volumes.
Gross profit for the three month period ended March 31, 1999 decreased
$3.0 million to $10.2 million from $13.2 million for the comparable prior year
period. Gross profit as a percentage of sales was 17% for the three months ended
March 31, 1999 versus 21% for the three month period ended March 31, 1998
primarily due to the above-mentioned lower soda ash prices.
Selling, general and administrative expense as a percentage of net
revenues was 6% and 7% for the three months ended March 31, 1998 and 1999,
respectively.
Minority interest for the three month period ended March 31, 1999 was
$2.6 million compared with $4.4 million for the three month period ended March
31, 1998, reflecting lower earnings due to weaker soda ash pricing of General
Chemical (Soda Ash) Partners.
Interest expense for the three month period ended March 31, 1999 was
$2.7 million, which was $.2 million lower than the comparable prior year level.
Interest income for the three month period ended March 31, 1999 was $.4 million,
which was $.3 million higher than the comparable prior year level.
1998 COMPARED WITH 1997
Net revenues for 1998 were $261.5 million, which was $28.2 million, or
10%, below the prior year level. This decrease reflects lower volumes for soda
ash, particularly exports to Asia, as well as lower pricing for soda ash and
calcium chloride.
Gross profit for 1998 was $59.1 million, compared with $84.9 million in
the same period in 1997. Gross profit as a percentage of sales for 1998
decreased to 23% from 29% in 1997. These decreases were primarily due to the
above-mentioned lower soda ash volumes and unfavorable pricing.
21
<PAGE>
Selling, general and administrative expense as a percentage of net
revenues increased to 7% in 1998 from 6% in 1997 primarily due to the lower
sales volume.
Minority interest for 1998 was $16.7 million compared with $24.3 million
for 1997, reflecting lower earnings due to lower export volumes and weaker soda
ash pricing.
Interest expense for 1998 of $11.7 million was $1.0 million lower than
the comparable prior year level due to lower borrowing rates.
1997 COMPARED WITH 1996
Net revenues for 1997 were $289.7 million, which was $9.2 million, or
3%, below the prior year level. This decrease was due to lower pricing for soda
ash and calcium chloride, partially offset by higher soda ash volume.
Gross profit decreased 15% to $84.9 million for 1997 compared with
$100.1 million for 1996. Gross profit as a percentage of sales decreased to 29%
from 33% in 1996. These decreases were primarily due to the above-mentioned
lower pricing for soda ash and calcium chloride, partially offset by higher soda
ash volume.
Selling, general and administrative expense as a percentage of net
revenues decreased to 6% in 1997 from 7% in 1996. This decrease was due to the
recording in 1996 of a one-time charge of $5.7 million related primarily to a
new restricted unit plan created by General Chemical Group which replaced
certain prior equity programs. General Chemical Group recorded a one-time charge
of $12.5 million ($7.6 million after tax), and the amount mentioned in the
previous sentence related to our Company.
Minority interest for 1997 was $24.3 million compared with $31.6 million
for 1996, reflecting lower earnings due to lower soda ash pricing.
Interest expense of $12.7 million for 1997 was essentially at the 1996
year level.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $1.2 million at March 31, 1999 compared
with $1.1 million at December 31, 1998. During the first three months of 1999,
we generated cash flow from operating activities of $12.1 million, used cash of
$3.3 million for capital expenditures and transferred $8.4 million to General
Chemical Group. Cash and cash equivalents were $1.1 million at December 31, 1998
compared with $1.4 million at December 31, 1997. During 1998, we generated cash
flow from operating activities of $37.8 million, of which $18.5 million was used
to make capital expenditures and $19.6 million was transferred to General
Chemical Group.
We had working capital of $37.9 million at March 31, 1999 as compared
with $39.9 million at December 31, 1998. This decrease in working capital
principally reflects lower inventories. We had working capital of $39.9 million
at December 31, 1998 as compared with $45.9 million at December 31, 1997,
principally due to lower accounts receivable, partially offset by higher
inventories and lower accounts payable.
Prior to the Spinoff, our primary sources of liquidity were cash
generated from operations and borrowings under General Chemical Group's credit
facility. Following the Spinoff, our liquidity needs arise primarily from our
working capital requirements, capital expenditures and interest and principal
payment obligations. We believe that our existing capital resources, cash flow
generated from future operations and drawings under the Credit Facility will
enable us to maintain our planned operating, capital expenditure and debt
service requirements for the foreseeable future.
Our ability to satisfy our capital requirements will be dependent upon
our future financial performance, which in turn will be subject to general
economic conditions and to financial, business and other factors, including
factors beyond our control.
22
<PAGE>
In addition, concurrently with the Original Offering and the Spinoff, we
entered into an $85 million Credit Facility, of which up to $60 million will be
available in U.S. dollars or the Canadian dollar equivalent for borrowing by our
Canadian subsidiary. The net proceeds of the Original Offering and our initial
borrowings under the Credit Facility were used to repay existing third-party
indebtedness. Upon completion of the Refinancing Transactions, we had
approximately $35 million available for future borrowings under the Credit
Facility and $15 million of cash on hand.
We have significant leverage. Our outstanding indebtedness consists of
the Notes and $50 million outstanding under our Credit Facility. Our leverage
and debt service requirements make us more vulnerable to economic downturns, may
adversely affect our ability to obtain additional financing in the future and
may place us at a competitive disadvantage because we may be more highly
leveraged than certain of our competitors. As previously noted, the Indenture
and the Credit Facility impose operating and financial restrictions on us. These
covenants could adversely affect our ability to finance our future operations,
potential acquisitions or capital needs or to engage in business activities that
may be in the interest of Noteholders. See 'Risk Factors -- Our Substantial
Indebtedness Could Adversely Affect Our Financial Condition and Prevent Us From
Fulfilling Our Obligations Under the Notes.'
YEAR 2000
Following the Spinoff, GenTek provides us with MIS and MIS-supported
functions, including personnel, hardware and software, through December 31, 2001
on a service contract basis. During this period, as provided in the Transition
Support Agreement, GenTek will provide us services related to the remediation of
the Year 2000 problem for our business. A Year 2000 problem can occur where
date-sensitive software uses two digit year date fields, sorting the Year 2000
('00') before the Year 1999 ('99'). The Year 2000 problem can arise in hardware,
software, or any other equipment or process that uses embedded software or other
technology. The failure of such systems to properly recognize dates after
December 31, 1999 could result in data corruption and processing errors.
An assessment of our business' Year 2000 compliance status was completed
in early 1998 and work began on a remediation program immediately thereafter.
GenTek, which is principally responsible for overseeing the MIS functions of our
business through 2000, intends to continue General Chemical Group's Year 2000
remediation program for our business and is expected to effect all conversion
efforts needed to prevent the potential impact of Year 2000 problems. The
Transition Support Agreement provides that generally GenTek will not be liable
to us for any costs, losses, damages or claims related to any Year 2000 services
provided by it under the Transition Support Agreement, other than for gross
negligence or wilful misconduct. See 'Our Arrangements with GenTek relating to
the Spinoff -- Transition Support Agreement.' We intend to work with GenTek on
the separation of MIS functions of GenTek and our Company after resolution of
Year 2000 problems. We anticipate that we will recruit our own MIS staff during
2001 and that by approximately December 2001 a separation of our and GenTek's
MIS functions will be completed.
The remediation program has been structured to address Systems of our
Company and those of GenTek. Based on current estimates, it is expected that
approximately $1.0 million will be spent to replace or reprogram existing
Systems and complete the Year 2000 compliance program for the MIS serving both
GenTek and our Company. As of December 31, 1998, approximately $0.8 million of
such amount had been spent. GenTek believes that, as of March 31, 1999, all
material Systems are Year 2000 compliant and substantially all Systems will be
Year 2000 compliant by December 31, 1999. In the event that material Systems are
not Year 2000 compliant, we may experience reductions or interruptions in
operations which could have a material adverse effect on our results of
operations.
In addition, we are working with GenTek to determine the Year 2000
compliance status of our material vendors, suppliers and service providers,
including the railroad and trucking companies we use to ship our products. Based
on currently available information, we do not anticipate any material impact to
us based on the failure of such third parties to be Year 2000 compliant.
However, the process of evaluating the Year 2000 compliance status of material
third parties is continually ongoing and, therefore, no guaranty or warranty can
be made as to such third parties' future compliance status or its potential
23
<PAGE>
effect on us. We believe there exists a sufficient number of suppliers of raw
material for our business so that alternate sources will be available if any
supplier is unable to deliver raw materials due to Year 2000 problems. There can
be no assurances, however, that such alternate sources will be able to supply
all our requirements in a timely manner or on terms comparable with those of our
current suppliers. If the railroads or trucking companies that ship our products
fail to be Year 2000 compliant, we may not be able to arrange alternative and
timely means to ship our goods, which could lead to interruptions or slowdowns
in our business. We are preparing for the possible use of alternative suppliers
and means of transportation, possible adjustment of raw material and product
inventory levels and contingencies with respect to potential energy source
interruptions, all in an effort to minimize the effects, if any, of Year 2000
related interruptions or slowdowns caused by suppliers and transporters.
QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
We do not expect to enter into financial instruments for trading
purposes. We anticipate periodically entering into interest rate swap agreements
to effectively convert all or a portion of our floating-rate debt to fixed-rate
debt in order to reduce our exposure to movements in interest rates. Such
agreements would involve the exchange of fixed and floating interest rate
payments over the life of the agreement without the exchange of the underlying
principal amounts. We also anticipate periodically entering into currency
agreements to partially reduce our exposure to movements in currency exchange
rates. Swap and currency agreements will only be entered into with strong
creditworthy parties.
ENVIRONMENTAL MATTERS
Our mining and production operations, which have been conducted at the
Green River and Amherstburg sites for many years, are subject to numerous laws
and regulations relating to the protection of human health and the environment
in the U.S. and Canada. We believe that we are in substantial compliance with
such laws and regulations. However, as a result of our operations, we are
involved from time to time in administrative and judicial proceedings and
inquiries relating to environmental matters. In addition, modifications or
changes in enforcement of existing laws and regulations or the adoption of new
laws and regulations in the future, particularly with respect to environmental
and safety standards, or the discovery of additional or unknown environmental
contamination could require expenditures which might be material to our results
of operations or financial condition. See 'Business -- Environmental Matters.'
We have an established program to ensure that our facilities comply with
environmental laws and regulations. Expenditures made pursuant to this program
for 1998 approximated $1.7 million (of which approximately $0.6 million
represented capital expenditures and approximately $1.1 million related to
ongoing operations and the management and remediation of potential environmental
contamination from prior operations). Expenditures for 1997 amounted to $4.0
million (of which approximately $2.8 million represented capital expenditures
and approximately $1.2 million related to ongoing operations and the management
and remediation of potential environmental contamination from prior operations).
Should environmental laws and regulations affecting our operations become more
stringent, our costs for environmental compliance may increase above such range.
OTHER MATTERS
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, 'Accounting for Derivative
Instruments and Hedging Activities' ('FAS 133'). FAS 133 requires that all
derivative instruments be measured at fair value and recognized in the balance
sheet as either assets or liabilities. We are required to adopt FAS 133 for
fiscal years beginning after June 15, 1999. Management does not expect that the
adoption of FAS 133 will have a material effect on our results of operations or
financial condition.
24
<PAGE>
INDUSTRIES
Set forth below is information about the soda ash and calcium chloride
industries in which we operate:
SODA ASH INDUSTRY
Global consumption of soda ash during 1998 was approximately 36 million
tons with U.S. producers estimated to have produced approximately 11.2 million
tons and exported about 4.0 million tons, or about 36% of total U.S. production.
From 1984 to 1997, U.S. exports of soda ash grew at an approximate 8% annual
rate from 1.6 million tons to 4.6 million tons, before declining in 1998 to
approximately 4.0 million tons primarily as a result of the economic turmoil in
Asia and Latin America.
While growth in soda ash consumption is primarily driven by global
economic activity, U.S. producers of soda ash have gained global market share as
a result of the lower production costs and higher quality of U.S. natural soda
ash. Almost all of the soda ash produced outside the United States is synthetic
soda ash, which involves significantly higher production costs than the natural
process used in the United States. Industry sources estimate that U.S. natural
soda ash cash production costs are typically less than half those of synthetic
soda ash producers. This production cost differential is generally sufficient to
offset the increased freight costs for transporting U.S.-produced soda ash into
export markets. As a result, the U.S. producers of natural soda ash successfully
compete in most regions with local sources of synthetically produced soda ash.
GCSAP, along with the other five U.S. producers of natural soda ash, is
a member of ANSAC, a soda ash export cooperative organized in 1984 pursuant to
an exemption from U.S. antitrust laws provided under the Webb-Pommerene Act.
Through ANSAC, all six U.S. producers export soda ash to all parts of the world
except Canada and E.U. member countries. The primary export markets served by
ANSAC are Asia and Latin America, and to a lesser extent the Middle East, Africa
and Eastern Europe. Each individual member's allocation of ANSAC volume is based
on the member's total nameplate capacity, with any member's expansion phased-in
over a multi-year period for allocation purposes. ANSAC is the exclusive
distributor of the soda ash of its members; however, members can distribute soda
ash directly to their international affiliates for their own consumption,
subject to certain limitations. Certain countries, however, have from time to
time considered limiting or prohibiting sales of products through export
cooperatives such as ANSAC on grounds that they are anti-competitive, though we
are not aware of any pending or threatened activity in this regard that would be
material to our business.
While total Western European demand for soda ash is estimated at 7.3
million tons annually, U.S. producers' shipments into Western Europe during 1998
totaled only an estimated 0.3 million tons. The lower exports to Western Europe
are attributable to the stronger U.S. dollar, more aggressive pricing by local
producers and the leveling of provisional antidumping duties in 1995 by the
European Commission against five of the six U.S. soda ash producers, including
General Chemical Group. The removal of provisional antidumping duties in
November 1997 permits U.S. producers, subject to currency fluctuations and
economic conditions generally, to be more competitive in shipping soda ash into
E.U. member countries.
Management expects that in the future, U.S. producers will continue to
capitalize on both the growth in world markets and the closure of older,
higher-cost synthetic soda ash plants outside of North America. Since 1993, nine
producers have closed fourteen plants outside of North America with an estimated
aggregate capacity of 2.9 million tons of soda ash.
25
<PAGE>
SODA ASH -- CONSUMPTION
Soda ash is consumed primarily in the production of glass, sodium-based
chemicals, powdered detergents and in the treatment of water. The following
table sets forth estimated 1998 global consumption by end-use(1):
<TABLE>
<S> <C>
Glass:
Flat............................................................................................... 21%
Beverage container................................................................................. 19
Food and other container........................................................................... 7
Other.............................................................................................. 7
---
Sub-total glass............................................................................... 54
Chemicals............................................................................................... 24
Water treatment and other............................................................................... 15
Powdered detergents..................................................................................... 7
---
100%
---
---
</TABLE>
- ------------
(1) Derived from industry sources; based on volume.
Glass. Approximately one-half of global soda ash industry demand is
attributable to the production of glass, including: (1) flat glass (commercial,
residential and automobile windows) and mirrors; (2) beverage container; (3)
food and other container; and (4) other glass (fiberglass; television tubes;
lighting; tableware; glassware and laboratory ware).
Historically, domestic consumption of soda ash in the glass container
industry has been adversely affected by competition from alternative materials
and the growing trend toward the use of cullet (broken, recycled glass).
Management believes that the use of plastic containers will continue to
negatively impact the growth in domestic demand for soda ash, although the
continued growth of specialty uses for glass containers may provide additional
opportunities. According to the U.S. Geological Survey, there was no increase in
the domestic rate of glass recycling from 1996 to 1997, the most recent year for
which data is available. In developing economies, demand for glass is expected
to continue to grow as infrastructure requirements expand and standards of
living improve.
Chemicals. Sales of soda ash into the sodium-based chemicals market
represent approximately one-fourth of global consumption. The chemical industry
uses soda ash in a variety of industrial applications. For example, soda ash is
used in the production of sodium bicarbonate, sodium phosphates, sodium
silicates and chrome chemicals. Many of these products ultimately find use in
higher-growth, specialty applications in the beverage, coatings, food and
personal care sectors.
Water Treatment and Other. Additional markets for soda ash include water
treatment, pulp and paper, metallurgical applications and other industrial end
uses, which together represent approximately one-seventh of global soda ash
consumption. In the water treatment market, soda ash can be used to control pH
levels and also provides the sodium ion needed for water softening. In this
market, soda ash competes with caustic soda, which is manufactured as a
co-product with chlorine. Due to strong demand for chlorine in recent years,
caustic soda has been oversupplied and its prices have fallen. In the past year,
chlorine demand has weakened. Although caustic soda prices have not recently
increased, in the past lower chlorine production has resulted in higher caustic
soda prices. Increased prices for caustic soda would lead to increased use of
soda ash as a substitute.
Powdered Detergents. Soda ash is used as a component of powdered
detergents, and this market represents approximately one-tenth of global soda
ash consumption. Soda ash is often the prime alkali used to make phosphates and
silicates for dry detergent applications. 'Light' soda ash is preferred by
certain manufacturers for its lower bulk density, higher absorptivity rates and
faster rates of reaction. There has been a recent trend toward increased use of
liquid detergent in the United States, a trend offset by the growing use of dry
detergent outside of the United States.
26
<PAGE>
SODA ASH -- PRICING AND CAPACITY UTILIZATION
The price of soda ash has fluctuated in recent years and is affected by
numerous factors beyond our control, such as changes in global industry
capacity, global demand for soda ash and the price and/or availability of
substitutes for end-products using soda ash. Global demand for soda ash has been
subject to fluctuations based on, among other factors, worldwide economic
conditions, the rate of economic growth in developing regions such as Asia and
Latin America and currency fluctuations.
Management believes that consumption of soda ash will continue to grow,
primarily as a result of: (1) growth in the end-use markets for soda ash; (2)
export growth; and (3) new end-use applications for soda ash.
From 1988 to 1991, U.S. soda ash prices increased from $67 to $84 per
ton, mainly due to the surge in demand from certain export markets, including
Asia and Latin America. From 1991, U.S. soda ash prices declined to a low of $70
per ton in 1994 because of a number of capacity expansions before returning to
$83 per ton in 1996 as a result of the continued export growth. Since 1996, U.S.
soda ash prices have fallen to an estimated $75 per ton in 1998, primarily due
to capacity expansions totaling 1.2 million tons brought onstream in late 1996
(including a 700,000 ton expansion by FMC Corporation and a 300,000 ton
expansion by Solvay Minerals) and reduced export demand in Asia. We expect the
average soda ash price per ton for U.S. producers to be approximately $69 in
1999.
The following chart presents the average U.S. price per ton of soda ash
and global capacity utilized during the period from 1988 to 1998:
<TABLE>
<CAPTION>
GLOBAL
AVERAGE U.S. PRICE CAPACITY
YEAR PER TON(1) UTILIZATION(2)
- --------------------------------------------------- ------------------ --------------
<S> <C> <C>
1988............................................... $ 67 96%
1989............................................... 77 97
1990............................................... 83 97
1991............................................... 84 91
1992............................................... 81 90
1993............................................... 74 88
1994............................................... 70 91
1995............................................... 74 90
1996............................................... 83 89
1997............................................... 77 91
1998............................................... 75 87
</TABLE>
- ------------
(1) Based on data from the U.S. Geological Survey (not adjusted for inflation),
net of all shipping costs.
(2) Based on 95% of name-plate capacity as reported by industry sources.
SODA ASH -- CAPACITY EXPANSIONS
Since 1982, no new natural soda ash plants have been built in North
America. During this period, capacity expansion in the United States has been
achieved by expansion of existing facilities and improved operating
efficiencies. Expansions in the U.S. have generally been offset by the closure
of older, higher-cost synthetic soda ash plants outside the United States.
Recently, however, American Soda, LLP, a joint venture between American Alkali
and The Williams Companies, has announced its intention to solution mine
nahcolite reserves in White River, Colorado, for processing into soda ash and
sodium bicarbonate. The reported capacity of soda ash production at this
facility will be up to 1.0 million tons per year. The construction of this
facility, which has not yet begun, is contingent upon obtaining all of the
necessary regulatory approvals, permits and mineral leases, as well as the
commercial demonstration of the project as a viable production process.
Regarding existing soda ash producers, at the end of 1998, Oriental
Chemical Co. completed an 800,000 ton expansion of its Green River facility.
Upon completion of the expansion, due to current
27
<PAGE>
soda ash market conditions, Oriental Chemical Co. 'mothballed' 900,000 tons of
other capacity at the facility. In addition, Solvay Minerals Inc. announced the
delay of its previously planned 400,000 ton U.S. expansion, originally scheduled
for completion in late 1998, until the fourth quarter of 2000.
CALCIUM CHLORIDE INDUSTRY
North American demand for calcium chloride was estimated at 1.2 million
tons in 1998. Demand for calcium chloride is seasonal and dependent on weather
conditions in the Northeast and Midwest United States and eastern Canada. During
the summer, liquid calcium chloride is used on unpaved roads for dust control
and roadbed stabilization. In winter, calcium chloride is used in flake and
liquid form for de-icing roads. Other applications include retail ice control,
concrete additive, water treatment and oil field uses. Certain of these other
uses are new and represent international growth opportunities outside of
traditional de-icing and dust control markets.
28
<PAGE>
BUSINESS
OVERVIEW
We are the second largest soda ash producer in North America and one of
the top five producers globally, accounting for 23% of sales by North American
producers and 8% of global sales in 1998. We have total soda ash production
capacity of 3.3 million tons, consisting of 2.8 million tons of natural
production and 500,000 tons of synthetic production. We are also the second
largest North American producer of calcium chloride, a co-product of the
synthetic soda ash process, accounting for 27% of sales by North American
producers in 1998. Our soda ash is used in many familiar consumer products found
in virtually every home, including glass, soap, powdered detergent, paper,
textiles and food. Calcium chloride is mainly used for dust control and roadbed
stabilization during the summer, for de-icing roads during the winter, in
completion fluids for oil recovery and in various other industrial applications.
SALES AND MARKETING
Soda Ash. Our specially trained soda ash sales and marketing force
consists of six professionals with an average of over 20 years of industry
experience. Key accounts are covered by senior sales force managers and in many
cases, executive management, all of whom work closely with clients to satisfy
their product needs and develop long-term relationships. Additionally, sales and
marketing efforts are pursued at all levels of our company from the top level
management to the plant level.
Our technical staff works with customers to ensure product quality and
to troubleshoot customer manufacturing issues. In addition, our distribution
group works with the sales force and customers to efficiently distribute product
and, in some cases, actively manage customers' inventories for them. Products
are typically distributed directly to the customer by either rail or truck. We
operate a rail fleet of approximately 2,500 rail cars to service our customers.
Virtually all of these rail cars are leased.
In the soda ash market, we maintain a diverse client base that includes
numerous Fortune 500 companies. We sell to a range of companies in the glass
manufacturing, chemicals and detergents markets, including Albright & Wilson
Americas Ltd., Ball-Foster Glass Container Co., L.L.C., Church & Dwight,
Consumers Packaging, Inc., Ford Motor Company, Guardian Industries Corp.,
Occidental Chemical Corporation, Owens-Illinois and Procter & Gamble Co. As of
December 31, 1998, our top 10 soda ash customers accounted for approximately 36%
of revenues and had purchased from us for an average of 30 years.
Traditionally, large soda ash customers have made their soda ash
purchases pursuant to annual agreements rather than on a spot basis. In
accordance with industry practice, price and other terms are typically
negotiated in the fourth quarter of each year to cover purchases for the
following full year period based on soda ash supply and demand. Certain of our
customers have a contractual right to reopen their agreed pricing during the
contract year if they receive a more favorable bona fide offer from another
supplier. In the past, exercises of such rights have been infrequent and have
not had a material impact on our results of operations and financial condition,
although there can be no assurance that no such impact will occur in the future.
Calcium Chloride. We sell calcium chloride to a broad range of
industrial and municipal customers, principally through our strategic
distribution network. This network includes repackers and applicators who use
calcium chloride in roadbed stabilization, dust control and de-icing. In
addition, a dedicated calcium chloride sales force, consisting of nine
professionals in the United States and Canada with an average of 14 years of
industry experience, sells directly to several industrial accounts. Management
believes our long standing reputation for service, our strategic location, the
size and extent of our storage and distribution facilities, our dedicated sales
force and our network of specialty distributors will allow us to enhance our
position in the highway and road maintenance market.
29
<PAGE>
PROPERTIES
Our headquarters are located in Hampton, New Hampshire. The locations
and uses of our major properties are as follows:
<TABLE>
<CAPTION>
LOCATION USE
----------------------------------------------- -----------------------------------------------
<S> <C> <C>
United States........... Hampton, New Hampshire(1) Headquarters
Parsippany, New Jersey(1) Offices
Green River, Wyoming Trona Mine and Manufacturing Facility
Canada.................. Amherstburg, Ontario Manufacturing Facility
Brooks, Ontario Calcium Chloride Brine Fields
Mississauga, Ontario(1) Offices
</TABLE>
- ------------
(1) Leased.
MANUFACTURING AND DISTRIBUTION
We produce soda ash at two facilities: GCSAP's plant in Green River,
Wyoming, which produces natural soda ash; and our plant in Amherstburg, Ontario,
which produces synthetic soda ash and calcium chloride as a co-product. Since
1986, management has instituted operating improvements at both facilities, which
have lowered production costs. For example, at the Green River facility we have
eliminated labor-intensive conventional mining techniques through the
implementation of bore mining technology. These and other initiatives have
resulted in productivity per employee approximately doubling at the Green River
facility since 1986.
In addition to management's focus on costs, product quality has
continually improved. Management's commitment to quality was recognized in 1993
when the Green River facility became the first U.S. soda ash facility to be
awarded ISO 9002 certification by the International Standards Organization. The
Amherstburg facility achieved this certification in 1994. In 1997, Green River
became the first soda ash facility to receive QS-9000 certification (a more
rigorous quality program than ISO 9002).
Currently, our soda ash production capacity is 3.3 million tons, with
500,000 tons of capacity at our Amherstburg facility. In 1999, we received an
operating permit for nameplate capacity of 2.8 million tons at the Green River
facility. We mine trona, the raw material precursor of natural soda ash, at
Green River under leases with the U.S. Government, the State of Wyoming and
Union Pacific Resources Corporation. Management estimates that the extractable
trona reserves under these leases have a remaining life of approximately 100
years. For production at the Amherstburg facility, we solution mine our own salt
and purchase limestone from a major limestone producer.
At the Green River facility, we produce dense natural soda ash by
converting trona to soda ash (sodium carbonate). In the production process,
trona is calcined (heated), yielding soda ash plus water and carbon dioxide. The
impure soda ash is dissolved in water and the insoluble impurities are removed.
Upon concentration of the solution, soda ash monohydrate is precipitated,
leaving soluble impurities in solution. The monohydrate is subsequently passed
through a centrifuge and dryer, yielding dense soda ash. Due to the physical
properties of dense soda ash, it is the preferred material for glass
manufacture.
The synthetic soda ash production process utilized at the Amherstburg
facility is more energy and labor intensive than natural soda ash production
and, hence, more costly. In the synthetic manufacture of soda ash, limestone and
salt are combined to produce sodium bicarbonate and co-product calcium chloride
or ammonium chloride. The sodium bicarbonate intermediate is then filtered and
calcined (heated) to result in soda ash. The soda ash is cooled, dried and then
taken to storage. Using this process, we are able to produce both dense and
light soda ash. Light soda ash is preferred in certain detergent and chemicals
processes for its lower bulk density, higher absorptivity rates and faster rates
of reaction. Management believes that the Amherstburg facility is one of the
world's most efficient synthetic soda ash plants. It is profitable due to our
operating efficiency, the successful marketing of the co-product calcium
chloride and our proximity to major Canadian and eastern U.S. soda ash markets.
30
<PAGE>
Our calcium chloride operations have twelve terminals in the United
States and Canada. Our repacker and applicator distribution network consists of
31 locations where product is stored. In general, product is immediately shipped
after production from the Green River and Amherstburg facilities.
RESERVES AND CONTROL OF RESOURCES
We mine trona ore under leases with the U.S. government, the State of
Wyoming and the Union Pacific Resources Corporation. The trona reserves and mine
are located in the Green River, Wyoming area. In the Green River basin, the
Green River formation was deposited in a lake that began in the early Eocene
geologic period (approximately 35 million years ago) as a large body of fresh
water, shrank in size and became saline, expanded and then became fresh water
again. In general, the sediments deposited during the saline phase of this lake,
which included the trona deposits, are called the Wilkins Peak Member, and the
overlying and underlying fresh water deposits are called the Laney Shale Member
and Tipton Shale Member, respectively.
The Wilkins Peak Member contains at least 42 beds of trona in an area of
about 1,300 square miles, at depths ranging from about 400 feet to 3,500 feet.
The major beds, those that are known to exceed 4 feet in thickness and to
underlie at least 100 square miles, are numbered 1 through 25, beginning with
the bottommost beds. One bed, No. 17, is currently being mined at the Green
River facility at a depth of about 1,600 feet. The underground mine is
accessible by one service and personnel shaft, one production shaft and three
ventilation shafts. The trona deposits are mined through continuous mining and
bore mining techniques which use machines to rip the ore from the seam. Both
methods use the room and pillar technique mine plan.
Surface operations include facilities for crushing, calcining,
dissolving, classifying, clarifying, crystallizing, drying (conversion of
monohydrate to anhydrous), storing and loading.
Our estimated proven reserves within bed No. 17, which we are currently
mining, consist of approximately 85 million tons of extractable ore. At the 1998
operating rate of 2.3 million tons of soda ash per year (4.2 million tons of
trona ore), there is approximately a 21-year supply within bed No. 17. For the
three years ended December 31, 1998, annual production of trona ore averaged
approximately 4.1 million tons. In addition, estimated recoverable reserves
contain three other major minable trona beds containing approximately 324
million tons of extractable ore. These beds, which may require significant
capital to access, will provide more than 79 years of added reserves based on
current operating rates.
At the synthetic soda ash plant in Amherstburg, Ontario, Canada, we use
salt and limestone as our primary raw materials. Based on current production
levels, we have approximately 28 years of salt reserves. Owned limestone
reserves total approximately 15 years, with an option on an additional six years
of reserves. However, we are not currently utilizing our limestone reserves and
are instead purchasing all of our limestone requirements from a third party
under a long-term contract.
GENERAL CHEMICAL (SODA ASH) PARTNERS
Since 1986, the Green River plant has been owned by GCSAP, a partnership
of which General Chemical Group, through a subsidiary, was the managing partner
and owned a 51% equity interest until the Spinoff. In connection with the
Spinoff, General Chemical Group substituted us as the managing partner of GCSAP
and the holder of its 51% interest in the partnership. ACI International Limited
and TOSOH, through wholly owned subsidiaries, respectively own 25% and 24% of
GCSAP's equity interests. ACI International Limited, a major world producer of
container glass and a customer of GCSAP, was acquired in April 1998 by
Owens-Illinois, a worldwide producer of packaging materials. Management believes
that Owens-Illinois and ACI International Limited as a combined entity will be
one of the largest single purchasers of soda ash with annual domestic and
international requirements of approximately 2 million tons. TOSOH is a leading
chemical company and a distributor of soda ash in the Japanese market whose
operations previously included a 300,000 ton synthetic soda ash facility in
Nanyo, Japan. In 1997, TOSOH closed its synthetic soda ash facility and began
purchasing soda ash through ANSAC.
31
<PAGE>
We have been the managing partner of GCSAP since 1986 when it was
formed. As managing partner, we have had and will continue to have overall
responsibility for management of GCSAP, including with respect to all
operational, sales, marketing and financial matters. However, certain
significant actions of GCSAP must be approved by a majority or, in certain
instances, all of the partners. Historically, the recommendations of the
managing partner with respect to such matters have been accepted. The
partnership shall terminate on December 31, 2011, unless extended for an
additional five years or unless the partners decide to terminate it at any time.
The partnership agreement requires GCSAP to make quarterly cash
distributions to each of the three partners. The partnership agreement also
prohibits the partners from transferring their equity interests or withdrawing
from the partnership without the consent of the other partners. The obligations
of each GCSAP partner are guaranteed by its parent. Pursuant to a guaranty
agreement, each parent company has agreed to certain restrictions on its ability
to sell the stock of its partner subsidiary. If the parent company of any GCSAP
partner proposes to transfer ownership of its GCSAP partner subsidiary, the
non-transferring parent companies may either (a) acquire the transferred GCSAP
partner, or its partnership interest, pursuant to a right of first refusal or
(b) require the transferring parent company, or the proposed purchaser, to
acquire the partnership interest held by their own GCSAP partner subsidiaries.
ALCAD PARTNERSHIP
GCSAP and Church & Dwight are partners in ALCAD, a partnership that owns
certain trona reserves which were contributed to ALCAD at its formation. Church
& Dwight is a leading producer of sodium bicarbonate, commonly known as baking
soda, sold under the Arm & Hammer'r' brand. The trona is mined and processed by
GCSAP under a tolling agreement with ALCAD and all of the soda ash produced is
purchased by Church & Dwight under a sales contract. We have entered into
similar partnerships with other customers in the past and may do so in the
future.
COMPETITION
Soda Ash. The worldwide soda ash industry is comprised of a number of
domestic and international producers, some of which produce large volumes of
soda ash in multiple geographic regions. Solvay S.A., with natural soda ash
operations in the U.S. and multiple synthetic facilities in Eastern and Western
Europe, is the world's single largest producer of soda ash, with total estimated
capacity of approximately 8.6 million tons. If completed, FMC Corporation's
pending acquisition of Tg Soda Ash, Inc. will increase FMC's combined total
capacity to more than 4.8 million tons.
Given the global nature of the soda ash industry and major soda ash
consumers, we compete with both international and North American soda ash
producers. The international soda ash producers include Brunner Mond plc,
Penrice Soda Products Pty Ltd. (currently owned by IMC Global), Solvay S.A. and
various Eastern European and Asian producers.
Soda ash capacity outside of North America is distributed regionally as
follows:
<TABLE>
<CAPTION>
CAPACITY IN
REGION THOUSANDS OF TONS(1)
- ------------------------------------------------------------------- -------------------------------
<S> <C>
Eastern Europe..................................................... 6,900
Western Europe..................................................... 7,600
China.............................................................. 8,500
Other Asian Countries.............................................. 4,600
Rest of World...................................................... 2,000
--------
Total capacity outside North America.......................... 29,600
--------
--------
</TABLE>
- ------------
(1) Estimated 1998 annual nameplate capacity; derived from industry sources.
32
<PAGE>
The North American soda ash producers are listed below:
<TABLE>
<CAPTION>
CAPACITY IN
THOUSANDS OF
OWNER/MANAGING PARTNER LOCATION TONS(1) PARTNER(S)
- -------------------------------- ------------------ -------------- ----------------------------------------------------
<S> <C> <C> <C>
General Chemical
Industrial Products Inc. ...... Green River, WY 2,800 Owens-Illinois (25%)(2), TOSOH (24%)
Amherstburg, Ont. 500
------
3,300
FMC Corporation................. Green River, WY 3,550 Sumitomo (10%), Nippon Sheet Glass (10%)
Oriental Chemical Co.(3)........ Green River, WY 2,200 Union Pacific Resources Corp. (49%)
Solvay Minerals, Inc............ Green River, WY 2,300 Asahi Glass (20%)
IMC Global Inc.(4).............. Searles Lake, CA 1,500
Tg Soda Ash, Inc.(5)............ Green River, WY 1,300
------
Total North American Capacity................. 14,150
======
</TABLE>
- ------------
(1) Estimated 1998 annual nameplate capacity; derived from industry sources.
(2) Since April 1998, held by Owens-Illinois through its wholly-owned subsidiary
ACI International Limited.
(3) Excludes 900,000 tons of mothballed capacity, but includes 800,000 tons of
new capacity. See 'Industries -- Capacity Expansions' above.
(4) Currently held by IMC Global Inc. through its wholly-owned subsidiary, North
American Chemical Company. In April 1999, IMC Global Inc. announced that it
was abandoning the proposed sale of North American Chemical Company, which
operates a soda ash plant in California, and certain international synthetic
soda ash businesses, to Mincorp LLC, a holding company owned by Citigroup
Venture Capital, but that it was still pursuing alternative disposition
strategies.
(5) Currently 100% owned by Elf Aquitaine S.A. In January 1999, FMC Corporation
announced that it had signed a letter of intent to acquire Tg Soda Ash, Inc.
Due to the low-cost position of natural soda ash production in North
America and increasing worldwide demand for soda ash, both international
customers and producers have made substantial investments in the Green River
Basin. Most recently, in January 1999, FMC Corporation, the largest Wyoming
producer of soda ash, announced that it had signed a letter of intent to
purchase another Wyoming producer, Tg Soda Ash, Inc. In April 1999, IMC Global
Inc. announced that it was abandoning the proposed sale of North American
Chemical Company, which operates a soda ash plant in California, and certain
international synthetic soda ash businesses, to Mincorp LLC, a holding company
owned by Citigroup Venture Capital, but that it was still pursuing alternative
disposition strategies. Citigroup Venture Capital also controls Brunner Mond
plc, a United Kingdom-based manufacturer of soda ash with two synthetic
facilities in the United Kingdom, one in the Netherlands and one natural soda
ash facility in Magadi, Kenya.
Calcium Chloride. We are the largest producer of calcium chloride in
Canada and the second largest producer of calcium chloride in North America with
450,000 tons of capacity. Major competitors are The Dow Chemical Company ('Dow
Chemical'), TETRA Technologies, Inc. ('TETRA'), Ambar, Inc. and various local
producers in Canada. In the United States, we are the third largest distributor
of calcium chloride behind Dow Chemical and TETRA. It is estimated that Dow
Chemical has 700,000 tons of capacity. The next largest U.S. producer is TETRA,
which operates four plants with estimated total capacity of 350,000 tons. In
addition, Ambar Inc., an oil services company, purchased an existing salt
evaporation facility in Michigan for conversion to calcium chloride production.
During 1997, the facility came onstream with announced capacity of 300,000 tons,
although some portion of this production will likely be used by Ambar for
internal consumption in its oil service business in the Gulf Coast region.
SEASONALITY AND BACKLOGS
Sales of soda ash are generally not seasonal, except for sales to the
glass container industry, which increase significantly in the summer due to
stronger beverage demand. Sales of calcium chloride are concentrated in late
spring and summer for dust control and late fall and winter for de-icing. As a
result, sales are generally lowest in the first quarter and highest in the
second quarter.
Due to the nature of our business, there are no significant backlogs.
33
<PAGE>
ENVIRONMENTAL MATTERS
Our mining and production operations, which have been conducted at the
Green River and Amherstburg facilities for many years, are subject to numerous
laws and regulations relating to the protection of human health and the
environment in the U.S. and Canada. Additionally, CERCLA and similar state
statutes have been construed as imposing joint and several liability, under
certain circumstances, on present and former owners and operators of
contaminated sites and transporters and generators of hazardous substances for
remediation of contaminated properties regardless of fault. Management believes
that we are in substantial compliance with such laws and regulations. However,
as a result of our operations, we are involved from time to time in
administrative and judicial proceedings and inquiries relating to environmental
matters. To date, none of such proceedings or inquiries has had a material
adverse effect on our results of operations or financial condition. In addition,
based on information available at this time, management believes that no pending
proceeding or inquiry would have a material adverse effect on our financial
position or results of operations. However, modifications or changes in
enforcement of existing laws and regulations or the adoption of new laws and
regulations in the future, particularly with respect to environmental and safety
standards, or discovery of any additional or unknown environmental
contamination, if any, could require capital expenditures which may be material
or otherwise adversely impact our results of operations or financial condition.
We have established a program to ensure that our facilities comply with
environmental laws and regulations. See 'Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Environmental Matters'.
After the Spinoff, General Chemical Group, as the former parent of
GenTek and the GenTek Business, may under certain circumstances be found liable
for obligations of GenTek related to the use or transport of hazardous
substances or environmental contamination at facilities of the GenTek Business
for periods prior to the Spinoff. Although GenTek has agreed to indemnify and
hold harmless General Chemical Group with respect to all such liabilities and to
bear all of General Chemical Group's expenses for defending any claims relating
to these matters, our results of operations or financial condition could be
materially adversely affected in the event GenTek is unable or unwilling to
perform its indemnification obligations. See 'Our Arrangements With GenTek
Relating to the Spinoff.'
EMPLOYEES/LABOR RELATIONS
As of April 30, 1999, we had 1,026 employees, 289 of whom were full-time
salaried employees, 724 were full-time hourly employees and 13 were hourly
employees working in nonunion facilities.
Three union contracts, covering 736 employees at the Green River,
Wyoming and Amherstburg, Ontario facilities, have durations of three years and
will be up for renewal during 1999. Since 1986, we have been involved in 12
labor negotiations, only one of which, in 1993, has resulted in a work
disruption. During that disruption, management operated the plants and supplied
customers without interruption until the labor disruption was settled and a new
contract was agreed upon. Management believes that we will be able to negotiate
new labor agreements on satisfactory terms, although there can be no assurance
that we will be able to do so or that the negotiation process will not involve
material disruptions to our business.
LEGAL PROCEEDINGS
We are involved in claims, litigation, administrative proceedings and
investigations of various types in several jurisdictions. Although the amount of
any liability which could arise with respect to these actions cannot be
accurately predicted, in the opinion of management and based upon currently
available information any such liability not covered by insurance would have no
material adverse effect on our results of operation or financial condition.
34
<PAGE>
OUR ARRANGEMENTS WITH GENTEK
RELATING TO THE SPINOFF
To govern our relationship with GenTek after the Spinoff, we and our
parent company, General Chemical Group, entered into agreements with GenTek and
General Chemical Corporation ('GCC'), which, as a result of the Spinoff, is a
subsidiary of GenTek. The general terms and conditions of the Spinoff are set
forth in a Separation Agreement among us, General Chemical Group, GenTek and GCC
(the 'Separation Agreement'). In addition, General Chemical Group and GenTek or,
in certain cases, their respective subsidiaries, entered into the agreements
described in this section to facilitate the separation of the GenTek Business
from the Industrial Chemicals Businesses and an orderly transition in
establishing our parent, General Chemical Group, and GenTek each as separate,
stand-alone companies. The following summarizes the material terms of such
agreements. When used in this section 'General Chemical Group' means, unless
otherwise specified, The General Chemical Group Inc. and its subsidiaries
(including our company) after the Spinoff.
SEPARATION AGREEMENT
The Separation Agreement provides for, among other things, the principal
corporate transactions required to effect the Spinoff, the conditions that must
be satisfied prior to the date of the Spinoff (the 'Spinoff Date') and the
allocation between GenTek and us of certain assets and liabilities.
Reorganization. The Separation Agreement sets forth the corporate
transactions accomplished at or before the Spinoff to separate the GenTek
Business from the Industrial Chemicals Business. As a result of these
pre-Spinoff intra-group transactions, the GenTek Business is held by GenTek
through GCC and the Industrial Chemicals Business is held by us. We in turn are
owned by General Chemical Group through an intermediate holding company, New
Hampshire Oak Inc. ('New Hampshire Oak').
Distribution. On the Spinoff Date, General Chemical Group delivered to
the Distribution Agent a certificate or certificates representing all of the
shares of GenTek Common Stock, and instructed the Distribution Agent to
distribute to each holder of record of Common Stock of General Chemical Group on
the date announced by the Board of Directors of General Chemical Group (the
'Record Date') a certificate or certificates representing one share of GenTek
Common Stock for each share of Common Stock of General Chemical Group so held.
In addition, shares of Class B Common Stock of GenTek were distributed, at a
ratio of one-for-one, to the holders of record of Class B Common Stock of
General Chemical Group on the Record Date.
Separation of Assets and Liabilities. Pursuant to the Separation
Agreement, General Chemical Group owns through New Hampshire Oak 100% of our
capital stock, and, we, in turn, own the following assets: (1) all of General
Chemical Corporation's 51% interest in GCSAP, and all rights of the managing
partner of such partnership; (2) the capital stock of General Chemical Canada
Ltd. and certain other subsidiaries of General Chemical Group that are currently
engaged in the Industrial Chemicals Business (the 'Industrial Subsidiaries');
and (3) all other assets of the General Chemical Group and its subsidiaries used
principally in the Industrial Chemicals Business (collectively, the 'Industrial
Assets'). The Separation Agreement provided that the following would become
exclusively the assets of GenTek at or prior to the Spinoff: (1) the capital
stock of GCC; (2) the capital stock of certain subsidiaries of the General
Chemical Group that are currently engaged in the GenTek Business (the 'GenTek
Subsidiaries'), including Defiance, Inc. ('Defiance') and Noma Industries
Limited ('Noma'), both recently acquired by the General Chemical Group; and (3)
any other assets of the General Chemical Group and its subsidiaries that are not
used principally in the Industrial Chemicals Business (collectively, the 'GenTek
Assets').
All liabilities of General Chemical Group and its subsidiaries prior to
the Spinoff, other than the GenTek Liabilities (as defined below) (collectively,
the 'Industrial Liabilities'), remain exclusively the liabilities of General
Chemical Group and its subsidiaries after the Spinoff, including all
liabilities: (1) incurred in the conduct or operation of the Industrial
Chemicals Business or the ownership or use of Industrial Assets; (2) set forth
on the balance sheet of the Industrial Chemicals Business; (3) of General
Chemical Group arising under the Separation Agreement or any other agreements
with GenTek relating to the Spinoff; (4) arising under or in connection with the
Form 10, except for liabilities relating to information or statements in, or
omissions from, the Form 10 regarding GenTek or the GenTek Business;
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and (5) of General Chemical Group, NHO, the Industrial Subsidiaries and GCC that
do not relate either to the Industrial Chemicals Business or the GenTek Business
(such liabilities described in this clause (5), the 'Other Liabilities'),
including liabilities relating to, or arising out of the sale of, any business
formerly owned or operated by any of them (other than any such business that had
been engaged in the GenTek Business). While we are not aware of any material
Other Liabilities, there can be no assurance that claims arising from previously
unknown Other Liabilities may hereafter be asserted or that, if asserted, such
claims will not have a material adverse effect on our results of operations and
financial condition.
The Separation Agreement further provides that, as of the Spinoff, all
liabilities of the GenTek Business are exclusively the liabilities of GenTek and
its subsidiaries (collectively, the 'GenTek Liabilities'), including all
liabilities: (1) incurred in the conduct or operation of the GenTek Business or
the ownership or use of GenTek Assets, whether arising before, at or after the
Spinoff; (2) of the GenTek Subsidiaries, whether or not incurred in the conduct
or operation of the GenTek Business or the ownership of the GenTek Assets; (3)
of GenTek arising under the Separation Agreement or any other agreements with
General Chemical Group relating to the Spinoff; (4) undertaken by General
Chemical Group in connection with certain acquisitions relating to the GenTek
Business, including the recent acquisitions of Noma and Defiance; and (5)
arising under or in connection with the Form 10, but only to the extent such
liabilities relate to statements in, or omissions from, the Form 10 regarding
GenTek or the GenTek Business.
Payments Received. From and after the Spinoff Date, both GenTek and
General Chemical Group will promptly transfer to the other, from time to time,
any property received that is an asset of the other. Funds received by one upon
the payment of accounts receivable that belong to the other will be paid
promptly to the other party.
Amendments; Further Assurances. The Separation Agreement may only be
amended or rights thereunder waived by an instrument signed by the party to be
charged with the amendment or waiver. GenTek and General Chemical Group will use
their reasonable efforts to: (1) execute and deliver such further instruments
and documents and take such actions as the other party may reasonably request in
order to effectuate the purposes of the Separation Agreement and their other
agreements relating to the Spinoff, and (2) take all actions and do all things
reasonably necessary under applicable laws and agreements or otherwise to
consummate and make effective the transactions contemplated by the Separation
Agreement and their other agreements relating to the Spinoff.
No Representations or Warranties. Except as stated in the Separation
Agreement or other agreements entered into for the Spinoff, no party to such
agreements or any other agreement or document contemplated by the Separation
Agreement or any other agreements entered into for the Spinoff has or shall be
deemed to have made any representation or warranty as to: (1) the assets,
businesses or liabilities retained, transferred or assumed as contemplated
thereby, (2) any consents or approvals required in connection with the transfer
or assumption by such party of any asset or liability contemplated by the
Separation Agreement, (3) the value of or freedom from any lien, claim, equity
or other encumbrance of, or any other matter concerning, any assets of such
party, or (4) the absence of any defenses or right of setoff or freedom from
counterclaim with respect to any claim or other asset of any party. Except as
may expressly be set forth in the Separation Agreement or other agreements
entered into for the Spinoff, all such assets were, or are being, transferred,
or are being retained, on an 'as is,' 'where is' basis and the respective
transferees will bear the economic and legal risks that any conveyance will
prove to be insufficient to vest in the transferee a title that is free and
clear of any lien, claim or other encumbrance.
Guaranteed Liabilities. GenTek will use all reasonable efforts
(excluding payment of money) to obtain as promptly as practicable after the
Spinoff Date the release of General Chemical Group from its obligations
regarding the GenTek Liabilities on which General Chemical Group is an obligor
by reason of any guarantee of obligations for borrowed money (the 'Guaranteed
GenTek Liabilities'). General Chemical Group will use all reasonable efforts
(excluding the payment of money) to obtain as promptly as practicable after the
Spinoff Date the release of GenTek from its obligations with respect to the
Industrial Liabilities on which GenTek is an obligor by reason of any guarantee
of obligations for borrowed money (the 'Guaranteed Industrial Liabilities').
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Cross Indemnification. At and after the Spinoff, we and General Chemical
Group will indemnify, defend and hold harmless GenTek and its directors,
officers, employees and agents (the 'GenTek Indemnitees') from and against any
and all damage, loss, liability and expense (including, without limitation,
reasonable expenses of investigation and reasonable attorneys' fees and expenses
in connection with any and all actions or threatened actions) (collectively, the
'Indemnifiable Losses') incurred or suffered by any of the GenTek Indemnitees
and arising out of, or due to the failure of General Chemical Group to pay,
perform or otherwise discharge, any of the Industrial Liabilities, including, if
any, Other Liabilities. At and after the Spinoff, GenTek will indemnify, defend
and hold harmless General Chemical Group and its directors, officers, employees
and agents (the 'Industrial Indemnitees') from and against any and all
Indemnifiable Losses incurred or suffered by any of the Industrial Indemnitees
and arising out of, or due to the failure of GenTek to pay, perform or otherwise
discharge, any of the GenTek Liabilities. In circumstances in which the
indemnity is unavailable or insufficient, for any reason, to hold harmless an
indemnified party in respect of any Indemnifiable Losses, each indemnifying
party, in order to provide for just and equitable contribution, will contribute
to the amount paid or payable by such indemnified party as a result of such
Indemnifiable Losses, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions or
alleged statements or omissions that resulted in such Indemnifiable Losses, as
well as any other relevant equitable considerations. In addition, General
Chemical Group will agree to use its efforts to maintain directors' and
officers' liability insurance coverage at least equal to General Chemical
Group's current directors' and officers' liability insurance coverage for a
period of six years for directors and officers of General Chemical Group who
will become directors and officers of GenTek as of the Spinoff Date for their
acts as directors and officers of General Chemical Group for periods prior to
the Spinoff Date.
Non-Competition and Non-Solicitation. Each of General Chemical Group and
GenTek have covenanted that, subject to certain exceptions, neither will compete
with the other prior to the fifth anniversary of the Spinoff Date. General
Chemical Group and GenTek have also agreed not to hire, or solicit for
employment, any director, officer or supervisory-level employee of the other
until the third anniversary of the Spinoff.
EMPLOYEE BENEFITS AGREEMENT
In connection with the Spinoff, General Chemical Group and GenTek
entered into an employee benefits agreement (the 'Employee Benefits Agreement')
that separated the assets and liabilities under General Chemical Group's
employee benefit plans and other employment-related liabilities between General
Chemical Group and GenTek. As a general matter, General Chemical Group and
GenTek each (1) continue to employ their respective employees and (2) assume the
liabilities existing at the time of the Spinoff for their respective employees
and former employees. The Employee Benefits Agreement also provides for the
treatment of certain retirement plans, investment and savings programs, medical
and life insurance benefits, retiree medical and life insurance benefits and
stock awards.
GenTek and General Chemical Group will establish or maintain pension
plans, health and welfare plans, a savings (401(k)) plan, and executive
compensation plans to mirror the plans that General Chemical Group or its
subsidiaries currently sponsor for their employees. The Employee Benefits
Agreement provides for the separation of the amounts necessary to fund the
projected benefit obligations under the General Chemical Group pension plans of
GenTek's current and former employees, on the one hand, and General Chemical
Group's current and former employees, on the other hand, determined on an
equitable basis in accordance with the actuarial assumptions used by the
applicable General Chemical Group pension plan with respect to its last
completed actuarial report. Similar principles will apply with respect to any
employee benefit plan maintained outside of the United States.
GenTek has established a long-term incentive plan pursuant to which
stock options, stock appreciation rights, and other equity-related incentive
awards, as well as cash performance awards, may be granted. Outstanding General
Chemical Group equity-related awards held by current or former employees of
GenTek will receive similar awards with respect to GenTek stock, based on
formulas that preserve the inherent value of such awards at the time of the
Spinoff (except that restricted units will be
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split between GenTek and General Chemical Group). Replacement awards generally
will have the same other terms and conditions as the original awards.
TRANSITION SUPPORT AGREEMENT
Pursuant to a transition support agreement (the 'Transition Support
Agreement'), for a period of up to twelve months following the Spinoff, GenTek
agreed to provide General Chemical Group with tax, legal, accounting, treasury,
purchasing services, human resources, insurance management and claims
administration, and certain other administrative services, and General Chemical
Group agreed to provide GenTek with certain services as they may agree upon. In
addition, following the Spinoff, GenTek agreed to provide us with MIS and
MIS-supported functions, including personnel, hardware and software, on a
service contract basis. This arrangement will remain in effect through
approximately December 31, 2001. GenTek provides us with the general
administrative and MIS services and functions for a fee that will reflect a pro
rata allocation, based on the extent of services and functions provided, of
GenTek's overall costs and expenses for such services and functions, plus an
appropriate margin. See also 'Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Year 2000' and 'Risk Factors.'
Upon not less than 60 days prior written notice, either GenTek or
General Chemical Group may direct the other to discontinue any services provided
under the Transition Support Agreement, except with respect to MIS and related
functions. The Transition Support Agreement may be terminated by either party
for a material uncured breach by the other party, the insolvency of the other
party, or the change of control of the other party. The agreement also provides
that generally neither party will be liable to the other party for any costs,
losses, damages or claims related to services provided by it under the
Transition Support Agreement, other than for gross negligence or wilful
misconduct.
SUBLEASE AGREEMENT
As of the Spinoff, we use a portion of the office space located in
Parsippany, New Jersey pursuant to an agreement (the 'Sublease Agreement')
between General Chemical Corporation (a subsidiary of GenTek after the Spinoff)
and us. The sublease payments reflect a pro rata allocation, based upon the
square footage of the subleased premises, of General Chemical Corporation's
overall rental and other occupancy costs. The Sublease Agreement also provides
for customary maintenance and ancillary services.
TAX SHARING AGREEMENT
Prior to the Spinoff, General Chemical Group and GenTek entered into a
tax sharing agreement (the 'Tax Sharing Agreement') which provides, among other
things, that: (1) except for taxes described in clauses (2) and (3) below,
GenTek will be responsible for, and will indemnify and hold General Chemical
Group and its subsidiaries harmless from and against, all taxes of the
affiliated group filing consolidated Federal income tax returns of which General
Chemical Group is the common parent, and of any consolidated, combined or
unitary state, local or foreign tax group that includes GenTek or any of its
subsidiaries, to the extent that such taxes are attributable to periods ending
on or before the Spinoff Date; (2) General Chemical Group and GenTek generally
will each be responsible for, and will hold one another harmless from and
against, 50% of any taxes attributable to the Spinoff or the Reorganization,
including any taxes resulting from the application of section 355(e) of the Code
to the Spinoff or the Reorganization, except that each of GenTek and General
Chemical Group will be responsible for, and will indemnify and hold the other
harmless from and against, 100% of such taxes if such taxes are attributable to
an act of such company or any of its subsidiaries; (3) GenTek will make a
payment to General Chemical Group equal to its share of current taxes (including
estimated taxes) of the affiliated group filing consolidated Federal income tax
returns of which General Chemical Group is the common parent, and of any
consolidated, combined or unitary state, local or foreign tax group that
includes GenTek or any of its subsidiaries, for all periods ending on or before
the Spinoff Date, to the extent not already paid under the existing General
Chemical Group tax sharing agreement; and (4) all separate company taxes will be
borne by the company that is responsible for such taxes under local law. The Tax
Sharing Agreement also establishes, as between GenTek and General Chemical
Group, procedures for the conduct and settlement of certain tax audits and
related proceedings and the determination of the amount of the tax sharing
payments described above. The Tax Sharing Agreement is
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not binding on the IRS or any other taxing authority and will not affect the
several liability of GenTek and General Chemical Group and their respective
subsidiaries to the IRS for federal income taxes of the General Chemical Group
consolidated group relating to periods beginning prior to the Spinoff Date.
The Tax Sharing Agreement also restricts the ability of GenTek and
General Chemical Group to take certain actions which could adversely affect the
tax-free nature of the Spinoff and the Reorganization, including as a result of
the recognition of gain under section 355(e) of the Code. In particular, the Tax
Sharing Agreement provides that in the event Paul Montrone and the Montrone
Trusts no longer hold or control 50% or more of the voting power of stock of
GenTek or General Chemical Group, both GenTek and General Chemical Group
generally will be prohibited from entering into any transaction or series of
transactions, on or prior to the second anniversary of the date of the Spinoff,
pursuant to which one or more persons would acquire, directly or indirectly, a
50% or greater interest, by vote or value, in GenTek or General Chemical Group,
respectively. The Tax Sharing Agreement provides that each of GenTek and General
Chemical Group may enjoin the other company from engaging in any such restricted
action.
INTELLECTUAL PROPERTY AGREEMENT
Pursuant to an Intellectual Property Agreement entered into by GenTek
and General Chemical Group (the 'Intellectual Property Agreement'), after the
Spinoff, General Chemical Group has the rights to and interest in the
copyrights, trademarks, trade secrets and other intellectual property (the
'Intellectual Property') of General Chemical Group used prior to the Spinoff
primarily in the Industrial Chemicals Business, and GenTek has the rights to and
interest in all other Intellectual Property of General Chemical Group. As of the
Spinoff, each of GenTek and General Chemical Group licensed to the other party,
on a non-exclusive basis, those items of Intellectual Property that it owns and
the other party needs to use for the continued operations of its business,
subject to certain limitations set forth in the Separation Agreement and the
Transition Support Agreement.
General Chemical Corporation, a wholly-owned subsidiary of GenTek after
the Spinoff, entered into a license with General Chemical Group regarding the
General Chemical name and logo (the 'Licensed Mark'). General Chemical
Corporation, which owns the Licensed Mark, granted to General Chemical Group,
for a one-time up-front fee, a perpetual license to use the Licensed Mark in
connection with the soda ash and calcium chloride activities and operations of
the Industrial Chemicals Business, including as the trading name of General
Chemical Group and with respect to our role as the managing partner of GCSAP.
PURCHASES OF SODA ASH AND CALCIUM CHLORIDE
GenTek is an end user of soda ash. After the Spinoff, GenTek expects to
continue to purchase soda ash from us to meet its own supply needs and for
resale to distributors and customers who purchase multiple GenTek products.
These purchases will be on terms similar to those for its purchase of soda ash
from us prior to the Spinoff. Calcium chloride will also be purchased for resale
to GenTek distributors and customers who purchase multiple GenTek products.
Prior to the Spinoff, General Chemical Corporation, which is a
subsidiary of GenTek after the Spinoff, was party to contracts with end users
and distributors of soda ash and calcium chloride. In connection with the
pre-Spinoff reorganization, General Chemical Corporation was obliged to use
reasonable efforts to assign all of its soda ash and calcium chloride sales
contracts to us, except for contracts with distributors that covered products of
the GenTek Business. Any contracts that were not assigned to us prior to the
Spinoff remained with GCC. We will provide soda ash and calcium chloride to
GenTek to enable it to satisfy any such unassigned contracts, on terms
substantially similar to those provided in the unassigned contracts. Once these
contracts with end users and distributors expire, it is anticipated that, if
acceptable to these customers, we will enter into new contracts with them
directly.
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MANAGEMENT
MANAGEMENT
The following sets forth information about the directors and executive
officers of General Chemical Group and the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH GENERAL CHEMICAL GROUP
- -------------------------------------- --- -----------------------------------------------------------------------------
<S> <C> <C>
Paul M. Montrone...................... 58 Director; Chairman of the Board
Paul M. Meister....................... 46 Director; Vice Chairman of the Board
John M. Kehoe, Jr..................... 65 Director; President and Chief Executive Officer
DeLyle W. Bloomquist.................. 40 Vice President and Chief Operating Officer
Stewart A. Fisher..................... 38 Vice President and Chief Financial Officer
Douglas P. Strobel.................... 36 Controller
Philip E. Beekman..................... 67 Director
Gerald J. Lewis....................... 65 Director
Joseph Volpe.......................... 58 Director
</TABLE>
Paul Montrone has served as the Chairman of the Board of General
Chemical Group since 1995, and a Director of General Chemical Group since 1988.
He was President of General Chemical Group from 1987 to 1994. Mr. Montrone is
also Chairman of the Board of GenTek. Mr. Montrone is the Chairman of the Board
and Chief Executive Officer of Fisher Scientific International Inc. ('Fisher').
Paul Meister has served as the Vice Chairman of the Board of General
Chemical Group since 1998, and a Director of General Chemical Group since 1996.
Mr. Meister is Vice Chairman of the Board of GenTek. Mr. Meister is Vice
Chairman of the Board and Executive Vice President and Chief Financial Officer
of Fisher. Mr. Meister is also a Director of Minerals Technologies Inc. and M&F
Worldwide Corp.
John Kehoe is the President and Chief Executive Officer and a Director
of General Chemical Group. Mr. Kehoe is the Chairman of Wheelabrator
Technologies Inc. ('WTI'), a position he has held since June 1999. Mr. Kehoe was
the President and Chief Executive Officer of WTI from January 1993 to June 1999.
Mr. Kehoe was Vice President of WTI from December 1991 until December 1992 and
was Managing Director of WTI from June 1988 to November 1990.
DeLyle Bloomquist is Vice President and Chief Operating Officer of
General Chemical Group and a Director and the President and Chief Executive
Officer of the Company. Mr. Bloomquist was from 1996 until the Spinoff the
Vice President and General Manager, Industrial Chemicals of General Chemical
Corporation. Mr. Bloomquist was the Director of General Chemical Corporation's
Corporate Distribution Department between 1995 and 1996. Between 1993 and 1995,
he served as Controller, Industrial Chemicals of General Chemical Corporation.
Stewart Fisher is Vice President and Chief Financial Officer of General
Chemical Group and a Director and Vice President and Chief Financial Officer of
the Company. Mr. Fisher served from 1998 until the Spinoff as the Treasurer of
General Chemical Group and since 1994 as Treasurer of General Chemical
Corporation, a subsidiary of General Chemical Group. He served as Assistant
Treasurer of General Chemical Group from 1996 to 1998.
Douglas Strobel is the Controller of General Chemical Group and the
Company. He was Group Controller, Industrial Chemicals for General Chemical
Group from 1996 until the Spinoff. Mr. Strobel served as Business Controller,
Sulfur Products for General Chemical Corporation from prior to 1994 until 1996.
Philip Beekman has served as a Director of General Chemical Group since
1996. Mr. Beekman has been President of Owl Hollow Enterprises since prior to
1994, and was Chairman of the Board and Chief Executive Officer of Hook-SupeRx,
Inc. from prior to 1994 to 1994. Mr. Beekman is also a Director of Linens 'n
Things Inc. and Kendle International Inc.
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Gerald Lewis has served as a Director of General Chemical Group since
1996. Judge Lewis has been Chairman of Lawsuit Resolution Services since 1997.
He was of counsel to the law firm of Latham & Watkins from prior to 1994 to
1997.
Joseph Volpe has been a Director of General Chemical Group since the
Spinoff. He is a member of the Audit Committee, the Compensation Committee and
the Nominating Committee of the Board of General Chemical Group. He has been the
General Manager of the New York Metropolitan Opera since 1990.
COMMITTEES OF THE BOARD OF GENERAL CHEMICAL GROUP
The Board of Directors of General Chemical Group has three standing
committees: an Audit Committee; a Compensation Committee; and a Nominating
Committee.
The Audit Committee consists of Messrs. Beekman, Lewis, and Volpe, with
Judge Lewis serving as Chairman. It is responsible for, among other things,
recommending the firm to be appointed as independent accountants to audit
General Chemical Group's financial statements and to perform services related to
the audit; reviewing the scope and results of the audit with the independent
accountants; approving in advance the general nature of each professional
service performed by the independent public accountants; reviewing with the
management and the independent accountants General Chemical Group's year-end
operating results; considering the adequacy of the internal accounting and
control procedures of General Chemical Group; reviewing the non-audit services
to be performed by the independent accountants, if any; considering the effect
of such performance on the accountants' independence; directing and supervising,
when appropriate, special investigations into matters within the scope of the
independent public accountants' duties; and performing such other tasks related
to and in furtherance of the foregoing as it may consider necessary or
appropriate or as may be assigned to it by the Board from time to time.
The Compensation Committee consists of Messrs. Beekman, Meister and
Volpe, with Mr. Beekman serving as Chairman. It is responsible for reviewing and
recommending compensation arrangements for Directors and officers; approving
such arrangements for other senior level employees; administering certain
benefit and compensation plans of General Chemical Group and its subsidiaries
(including our company); monitoring the activities of an internal committee of
members of management established to carry out policies and guidelines with
respect to such plans; and performing such other tasks related to and in
furtherance of the foregoing as it may consider necessary or appropriate or as
may be assigned to it by the Board from time to time. A subcommittee of the
Compensation Committee, comprised solely of 'outside directors' (as such term is
used in Section 162(m) of the Code) who are also 'Non-Employee Directors' (as
such term is defined in Rule 16b-3 of the Exchange Act) has exclusive authority
to approve any awards of stock or options to directors of General Chemical Group
(other than Non-Employee Directors) or other individuals who are 'officers' of
the Company for purposes of Section 16 of the Exchange Act under The General
Chemical Group Inc. Long-Term Incentive Plan and to administer elements of The
General Chemical Group Inc. 1998 Annual Performance Incentive Plan covered by
Section 162(m) of the Code.
The Nominating Committee consists of all members of the Board, with Mr.
Montrone serving as Chairman. The Nominating Committee is responsible for
nominating persons for election to the Board. The Nominating Committee will
consider nominees properly recommended by stockholders.
COMPENSATION OF DIRECTORS
The directors of the Company do not receive any compensation for
services performed as a director or for meeting attendance. The non-employee
directors of General Chemical Group are entitled to receive cash compensation
and compensation pursuant to the plans described below.
Cash Compensation. Non-employee directors of General Chemical Group
receive compensation of $40,000 per year, with no additional fees for attendance
at the General Chemical Group's Board of Directors or committee meetings. Under
the Deferred Compensation Plan for Non-Employee Directors, a
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non-employee director of General Chemical Group may elect to have all or any
portion of the director's compensation deferred to a later date.
Retirement Plan for Non-Employee Directors. Under the Retirement Plan
for Non-Employee Directors, any director who retires from General Chemical
Group's Board of Directors with at least five years of service as a non-employee
director will be eligible for an annual retirement benefit for the remainder of
the director's lifetime. The annual retirement benefit is equal to 50 percent of
the director fee in effect at the date of the director's retirement for a
director who retires with five years of eligible service and is increased by 10
percent of the director fee in effect at the date of the director's retirement
for each additional year of service, up to 100 percent of such fee for 10 or
more years of service as a non-employee director or for directors who retire
after age 70. Retirement benefits may be suspended or terminated in certain
circumstances.
Restricted Unit Plan for Non-Employee Directors. Under the Restricted
Unit Plan for Non-Employee Directors, each non-employee director of General
Chemical Group who becomes a director will, upon becoming a director, receive a
one-time grant of 5,000 restricted units ('Restricted Units') evidencing a right
to receive shares of Common Stock, subject to certain restrictions. Twenty-five
percent of the Restricted Units and the related Dividend Equivalents will vest
for each year of service as a non-employee director of General Chemical Group.
There is accelerated 100% vesting upon the death or disability of a sitting
director. Vested Restricted Units and the related Dividend Equivalents will not
be payable until the director ceases to be a member of General Chemical Group's
Board of Directors. At that time the director will receive one share of Common
Stock for each vested Restricted Unit.
EXECUTIVE COMPENSATION
In general, compensation for executive officers and other key employees
General Chemical Group consists of base salary, annual bonus awards (a portion
of which may be payable in restricted stock) and long-term incentive awards of
options or restricted stock that may be made from time to time under the 1996
Stock Option and Incentive Plan (as described below).
PERFORMANCE PLAN
General Chemical Group has adopted the General Chemical Group Inc.
Performance Plan (the 'Performance Plan') for the purpose of providing
incentives to certain key employees of General Chemical Group and its
subsidiaries, including the Company, to earn annual cash bonuses and other
periodic cash awards. Eligible employees are selected by the Compensation
Committee, and awards are based solely on the attainment of preestablished
goals.
Awards. The general parameters of the Performance Plan allow for a
maximum annual bonus payment that can be earned per individual of no more than
the lesser of $2,000,000 and 200 percent of the individual's base salary. These
parameters represent the upper limits of the performance based incentive program
and do not necessarily indicate the actual award that will be made since awards
will be based solely on attainment of the stated performance objectives.
Performance Criteria. For awards ('Awards') other than annual bonuses,
the Compensation Committee will allocate a portion of each award (the 'Allocated
Portion') to each year in a performance period it shall establish (the
'Performance Period'). The performance objectives for an annual bonus or
Performance Period may be based upon either company-wide or operating unit
performance in any of the following areas: earnings per share, revenues,
operating cash flow, operating earnings, working capital to sales ratio or
return on capital (the 'Performance Objectives'). The earned Award related to an
Allocated Portion for a year in a Performance Period shall be subject to a three
year vesting schedule except that vesting shall also occur upon an individual's
death, disability (as defined in the plan) or termination with the consent of
the Compensation Committee or upon a change of control of the Company or
termination of the Performance Plan.
Administration. The Compensation Committee cannot increase the amounts
payable under the Performance Plan, but retains discretionary authority to
reduce the amount of compensation that would
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otherwise be payable to the Named Executives (as hereafter defined) even if the
target level of performance is attained. The Performance Plan may be amended or
terminated at any time at the sole discretion of the Compensation Committee.
1996 STOCK OPTION AND INCENTIVE PLAN
General Chemical Group adopted the 1996 Stock Option and Incentive Plan
(the '1996 Stock Plan') to provide for the grant of awards covering a maximum of
2,200,000 shares of Common Stock. The 1996 Stock Plan authorizes (i) the grant
of incentive and non-qualified stock options; (ii) the grant of shares of Common
Stock with or without conditions and restrictions; (iii) the grant of
performance share awards entitling the recipient to receive shares of Common
Stock upon the achievement of performance goals; and (iv) stock appreciation
rights accompanying options or granted separately. An award under the 1996 Stock
Plan, other than an award of restricted shares of Common Stock, may provide for
the crediting to the account of, or the current payment to, the holder thereof
of Dividend Equivalents. For a description of the options granted by General
Chemical Group to its directors and the Named Executives, see 'Summary
Compensation Table' and 'Beneficial Ownership.' All such options will vest 30
percent, 30 percent and 40 percent on the first, second and third anniversaries,
respectively, of the grant date.
Plan Administration; Eligibility. The 1996 Stock Plan is administered by
the Compensation Committee of General Chemical Group. All members of the
Compensation Committee must be 'disinterested persons' as that term is defined
under the rules promulgated by the Securities and Exchange Commission.
The Compensation Committee has full power to select, from among the
employees eligible for awards, the individuals to whom awards will be granted,
to make any combination of awards to participants, and to determine the specific
terms of each award, subject to the provisions of the 1996 Stock Plan. Persons
eligible to participate in the 1996 Stock Plan will be those officers, directors
and employees of the Company and its subsidiaries and other key persons who are
responsible for or contribute to the management, growth or profitability of the
Company and its subsidiaries, as selected from time to time by the Compensation
Committee.
Change of Control Provisions. Under the 1996 Stock Plan, upon the
occurrence of a Change of Control Event, outstanding options and stock
appreciation rights become immediately exercisable in full, and outstanding
restricted share and performance share awards vest in full. A Change of Control
Event is defined in the 1996 Stock Plan and includes (i) any person or group,
with certain exceptions, acquiring the beneficial ownership of securities
representing more than 35 percent of the voting power of the General Chemical
Group's then outstanding voting securities having the right to elect directors,
(ii) a change in the composition of a majority of the Board of Directors of the
General Chemical Group unless the selection or nomination of each of the new
members was approved by a majority of incumbent members of the Board of
Directors of the General Chemical Group or (iii) approval by the General
Chemical Group's stockholders of a consolidation, a merger in which the General
Chemical Group does not survive, or the sale of all or substantially all of the
General Chemical Group's assets. Such provisions of the 1996 Stock Plan may have
an anti-takeover effect.
RESTRICTED UNIT PLAN
General Chemical Group has a Restricted Unit Plan authorizing the
issuance of 850,000 units (subject to adjustment for stock splits, stock
dividends or other similar events) to participants thereunder. Each unit
represents one share of Common Stock, which will be issued to the participant
upon vesting unless the participant elects to defer receipt thereof. The
Restricted Unit Plan was established generally to facilitate the issuance of
units to approximately 70 key employees in satisfaction and replacement of the
rights earned beginning in 1989 under the Prior Equity Programs.
All units issued pursuant to the Restricted Unit Plan will be issued at
no cost to the recipient. All awards are subject to a five-year vesting schedule
such that 10 percent of the award vests six months after the date of grant and
an additional 10 percent vests on each of the first and second anniversaries
thereof, 20 percent on the third anniversary, and 25 percent on each of the
fourth and fifth anniversaries.
43
<PAGE>
The Compensation Committee may at any time waive such restrictions or accelerate
the date or dates on which such restrictions lapse. The Restricted Unit Plan
provides that in the event of a 'Change of Control' (as defined in the
Restricted Unit Plan) of General Chemical Group, all units will automatically
vest.
PENSION PLANS
In connection with the Spinoff, General Chemical Group or the Company
will establish a pension plan (the 'Pension Plan') to mirror the General
Chemical Corporation Salaried Employees' Pension Plan (the 'GCC Pension Plan')
and General Chemical Corporation will transfer to the Pension Plan the assets of
the GCC Pension Plan associated with employees who are employees of the Company
and its U.S. subsidiaries after the Spinoff. The GCC Pension Plan is a defined
benefit plan that generally benefits eligible, salaried employees. A
participating employee's annual retirement benefit is determined by the
employee's credited service under the GCC Pension Plan and average annual
earnings during the five consecutive years of the final ten years of service
credited under the GCC Pension Plan for which such employee's earnings were
highest. Annual earnings include principally salary, overtime and short-term
incentive compensation. The GCC Pension Plan provides that a participating
employee's right to receive benefits under the GCC Pension Plan becomes fully
vested after five years of service. Under the GCC Pension Plan, benefits are
adjusted by a portion of the social security benefits received by participants.
In addition to the GCC Pension Plan, the Named Executives participate in
an unfunded nonqualified excess benefit plan which pays benefits which would
otherwise accrue in accordance with the provisions of the GCC Pension Plan, but
which are not payable under the GCC Pension Plan by reason of certain benefit
limitations imposed by the Code.
The table below indicates the estimated maximum annual retirement
benefit a hypothetical participant would be entitled to receive under the GCC
Pension Plan and the excess benefit plan (without regard to benefit limitations
imposed by the Code) before any deduction for social security benefits if the
retirement occurred December 31, 1995, at the age of 65, after the indicated
number of years of credited service and if average annual earnings equaled the
amounts indicated.
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE(2)
AVERAGE ANNUAL --------------------------------------------------------
EARNINGS(1) 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- -------------------------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 200,000.............................................. $ 60,000 $ 80,000 $100,000 $100,000 $105,000
250,000.............................................. 75,000 100,000 125,000 125,000 131,250
300,000.............................................. 90,000 120,000 150,000 150,000 157,500
400,000.............................................. 120,000 160,000 200,000 200,000 210,000
500,000.............................................. 150,000 200,000 250,000 250,000 262,500
600,000.............................................. 180,000 240,000 300,000 300,000 315,000
700,000.............................................. 210,000 280,000 350,000 350,000 367,500
800,000.............................................. 240,000 320,000 400,000 400,000 420,000
900,000.............................................. 270,000 360,000 450,000 450,000 472,500
1,000,000.............................................. 300,000 400,000 500,000 500,000 525,000
</TABLE>
- ------------
(1) Compensation qualifying as annual earnings under the GCC Pension Plan
approximates the amounts set forth as Salary and Bonus in the Summary
Compensation table for the individuals listed on such table.
(2) The number of years of credited service under the GCC Pension Plan for
Messrs. Russell, Passino, Tanis, Bloomquist and Klink is approximately 22,
19, 11, 10 and 24, respectively.
OTHER PROGRAMS
The Company maintains a program pursuant to which certain key officers
of the Company will be entitled to reimbursement of certain medical expenses
that are excluded or subject to limitations in coverage under the Company's and
its subsidiaries' basic employee group medical plans. The maximum amount which
may be reimbursed under such program is $5,000 per year for each covered
officer.
44
<PAGE>
The Company and its subsidiaries maintain a deferred compensation
programs to which participants may defer all or any portion of their annual
salary and/or incentive compensation and elect to receive payment of such
deferred amounts in future years based on certain deferral options. Amounts
deferred will be credited on the books of the Company or such subsidiary and
interest will accrue on such amounts based on the average quoted rate for
ten-year U.S. Treasury Notes.
The Company also maintains qualified defined contribution retirement
plan under which eligible participants may, subject to certain statutory limits,
elect to contribute up to 18 percent of their compensation. The Company makes an
additional contribution under one plan equal to 50 percent of each participant's
own contributions up to a maximum Company contribution of 4 percent of the
participant's compensation. The Named Executives also participate in an
unfunded, nonqualified excess defined contribution retirement plan which pays
benefits which would otherwise accrue in accordance with the provisions of the
defined contribution retirement plans but which are not payable by reason of
certain benefit limitations imposed by the Code. Participants generally become
vested in these additional contributions over five years.
SUMMARY COMPENSATION TABLE
We are a wholly owned subsidiary of the General Chemical Group and
constitute substantially all of the assets of General Chemical Group. We were
incorporated on February 12, 1999. The following table summarizes compensation
awarded or paid by General Chemical Group and its subsidiaries during the
periods indicated below to the Chief Executive Officer and the four most highly
compensated other executive officers of General Chemical Group at year-end 1998
(collectively, the 'Named Executives'). In connection with the Spinoff, the
Named Executives other than Mr. Bloomquist became employees of GenTek or its
subsidiaries and are no longer employed by General Chemical Group or its
subsidiaries. For a description of the current executive officers of General
Chemical Group and the Company see 'Management.'
All stock compensation in prior years has been in the form of Common
Stock, or options to purchase Common Stock, of General Chemical Group.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION ----------------------
-------------------------- ALL OTHER
NAME AND FISCAL SALARY BONUS OPTIONS COMPENSATION
PRINCIPAL POSITION(1) YEAR ($) ($) (#) ($)
- ------------------------------------------------------------------- ------ ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C>
Richard R. Russell ................................................ 1998 400,000 75,000 -- 26,000
President and Chief Executive Officer 1997 400,000 375,000 -- 46,000
1996 400,000 425,000 400,000 49,000
Ralph M. Passino .................................................. 1998 250,000 50,000 -- 16,000
Vice President and General Manager, Manufacturing Group 1997 250,000 225,000 -- 28,000
1996 250,000 265,000 65,000 30,000
James N. Tanis .................................................... 1998 250,000 50,000 -- 16,000
Vice President and General Manager, Performance Products 1997 250,000 225,000 -- 28,000
1996 250,000 225,000 65,000 28,000
DeLyle W. Bloomquist .............................................. 1998 200,000 50,000 -- 13,000
Vice President and General Manager, Industrial Chemicals 1997 180,000 150,000 10,000 20,000
1996 140,000 125,000 30,000 10,000
Bodo B. Klink ..................................................... 1998 205,000 35,000 -- 13,000
Vice President, Business Development and Services 1997 205,000 120,000 5,000 20,000
1996 195,000 150,000 20,000 20,000
</TABLE>
- ------------
(1) The positions indicated in the table are such persons' positions with
General Chemical Group prior to the Spinoff. None of the Named Executives
other than Mr. Bloomquist is currently employed by General Chemical Group,
the Company or their subsidiaries.
45
<PAGE>
OPTION GRANTS
The following table sets forth information concerning individual grants
of stock options by General Chemical Group to Named Executives through year-end
1998 for the purchase of General Chemical Group Common Stock. For a discussion
of the treatment of General Chemical Group stock option plans in connection with
the Spinoff with respect to the executive officers of GenTek, see 'General
Chemical Group Stock Option and Restricted Unit Conversion' below.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------------------------
VALUE OF UNEXERCISED
IN-THE-MONEY
OPTIONS AT
SHARES DECEMBER 31, 1998($)
ACQUIRED ON VALUE ---------------------------
NAME EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard R. Russell..................... -- -- -- 400,000 0 0
Ralph M. Passino....................... -- -- 24,000 41,000 0 0
James N. Tanis......................... -- -- 24,000 41,000 0 0
DeLyle Bloomquist...................... -- -- 9,000 31,000 0 0
Bodo B. Klink.......................... -- -- 12,000 13,000 0 0
</TABLE>
GENERAL CHEMICAL GROUP STOCK OPTION AND RESTRICTED UNIT CONVERSION
Pursuant to the Employee Benefits Agreement effective on the Spinoff
Date, holders of outstanding options to purchase General Chemical Group Common
Stock and holders of restricted stock units will have their interests adjusted
as described below.
Stock Options. Employees of GenTek who hold General Chemical Group stock
options received options to purchase under the equivalent GenTek plan the same
number of shares of GenTek as entitled by their General Chemical Group options.
The exercise price of their existing General Chemical Group stock options will
be adjusted, and the exercise price of their GenTek stock options will be
established, in a manner that preserves (1) the difference between the exercise
price and value of the shares covered by the General Chemical Group stock option
and (2) the ratio of the exercise price per share to the fair market value of
the share covered by the option. All other terms of such adjusted options will
remain unchanged. Individuals who continue to provide employment, consulting and
similar services to both GenTek and General Chemical Group will similarly retain
their options to acquire shares of Common Stock of General Chemical Group and
will receive additional options to acquire shares of Common Stock of GenTek, in
each case as adjusted in the manner described above.
Restricted Units. Each restricted unit, whether held by employees of
GenTek or General Chemical Group, following the Spinoff Date, represents a
similar award with respect to a share of each of GenTek and General Chemical
Group.
BENEFICIAL OWNERSHIP OF CAPITAL STOCK
Our common stock is 100% held by New Hampshire Oak whose common stock in
turn is 100% held by General Chemical Group. The table below sets forth, based
on public filings as of the Spinoff Date and information provided to us by
shareholders of General Chemical Group, the beneficial ownership of shares of
Common Stock of General Chemical Group by (a) each person who beneficially owns
more than 5% of such shares, (b) each of the directors of the Company and
General Chemical Group, (c) each of the Named Executives and (d) all of the
persons listed under 'Management' as a group.
46
<PAGE>
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF
GENERAL CHEMICAL GROUP
--------------------------
COMMON PERCENT OF
NAME OF BENEFICIAL OWNER STOCK(1) CLASS(2)
- ------------------------------------------------------------------------ ---------- ----------
<S> <C> <C>
Directors and Officers
Paul M. Montrone(3)(4)(5)(6)............................................ 9,811,421 47.3%
Paul M. Meister(7)...................................................... 2,061,251 9.9%
John M. Kehoe, Jr....................................................... -- --
DeLyle W. Bloomquist(8)................................................. 37,268 *
Stewart A. Fisher(9).................................................... 15,001 *
Philip B. Beekman(10)................................................... 30,000 *
Gerald J. Lewis(11)..................................................... 25,000 *
Joseph Volpe............................................................ -- --
Richard R. Russell(12).................................................. 76,972 *
Ralph M. Passino(13).................................................... 76,986 *
James N. Tanis(14)...................................................... 69,986 *
James A. Wilkinson(15).................................................. 46,693 *
Bodo W. Klink(16)....................................................... 39,157 *
All directors and executive officers as a group (9 persons)(17)......... 11,985,467 48.8%
5% Shareholders
Paul M. Montrone(3)(4)(5)(6)............................................ 9,811,421 47.3%
1996 and February 1998 GRATs(4)(6)...................................... 3,552,502 17.1
Thomson Horstmann & Bryant, Inc.(18).................................... 889,250 4.3(19)
</TABLE>
- ------------
* Less than 1%.
(1) Our issued and outstanding capital stock consists of shares of Common
Stock, entitling its holder to one vote for each share, and Class B Common
Stock, entitling its holder to ten votes for each share. Holders of Class B
Common Stock may convert each such share of Class B Stock at any time and
from time to time into one share of Common Stock. The shares of Common
Stock are registered under the Exchange Act and are listed on the New York
Stock Exchange. There are significant restrictions on transfers of Class B
Common Stock. Except for the disparity in voting power, the conversion
provisions and the transfer restrictions, shares of Common Stock and Class
B Common Stock are substantially identical, including their participation
in dividends and in liquidation distributions.
(2) On the Spinoff Date a total of 20,731,613 shares were issued and
outstanding, consisting of 16,773,192 shares of Common Stock and 3,958,421
shares of Class B Common Stock.
The ownership percentages of our Common Stock shown above have been
calculated assuming the conversion of all outstanding shares of Class B
Common Stock into Common Stock. For the purpose of identifying persons who
beneficially own more than 5% of the shares of Common Stock, we have
assumed that no outstanding shares of Class B Common Stock have been
converted.
(3) Includes 894,812 shares of Class B Common Stock and 1,331,107 shares of
Common Stock held directly by Mr. Montrone. Also includes the shares of
Class B Common Stock owned by the 1996 GRAT, the February 1998 GRAT and the
December 1998 GRAT and the 1999 GRAT (see notes 3, 4 and 5 below). By
virtue of his position as co-trustee of the December 1998 GRAT and the 1999
GRAT and his relationship with the trustee of the 1996 GRAT and the
February 1998 GRAT, as well as his status as the settlor and annuity
beneficiary of such GRATs, Mr. Montrone may be deemed beneficial owner of
all the shares held by such GRATs. The address for Mr. Montrone is c/o The
General Chemical Group Inc., Liberty Lane, Hampton, New Hampshire 03842.
See also 'Certain Relationships and Affiliate Transactions--Stockholder
Agreements.'
(4) A grantor retained annuity trust formed in 1996 (the '1996 GRAT') owns
829,140 shares of Class B Common Stock and 1,214,881 shares of Common
Stock. A grantor retained annuity trust formed in February 1998 (the
'February 1998 GRAT') owns 611,903 shares of Class B Common Stock and
896,578 shares of Common Stock. Mr. Paul Montrone was the settlor, and is
the annuity beneficiary, of both the 1996 GRAT and the February 1998 GRAT.
Sandra G. Montrone, the wife of Mr. Montrone, and Paul M. Meister, are the
co-trustees of the 1996 GRAT and Mrs. Montrone is the sole trustee with
investment and voting discretion of the February 1998 GRAT. By virtue of
her position as co-trustee, Ms. Montrone may be deemed the beneficial owner
of all shares held by the 1996 GRAT and the February 1998 GRAT. Wilmington
Trust Company is the administrative trustee of the February 1998 GRAT. The
address for the 1996 GRAT and the February 1998 GRAT is c/o Sandra G.
Montrone, as trustee, Liberty Lane, Hampton, New Hampshire 03842.
(5) Two grantor retained annuity trusts, one formed in December 1998 (the
'December 1998 GRAT') and another formed in March 1999 (the '1999 GRAT'
and, together with the 1996 GRAT, February 1998 GRAT and December 1998
GRAT, the 'Montrone Trusts'), of which Mr. and Ms. Montrone are
co-trustees, each own 811,283 shares of Class B Common Stock and 1,188,717
Shares of Common Stock. Wilmington Trust Company is the administrative
trustee of the December 1998 GRAT and the 1999 GRAT. By virtue of their
position as co-trustees, each of Mr. and Ms. Montrone may be deemed the
beneficial owner of all shares held by the December 1998 GRAT and the 1999
GRAT.
(footnotes continued on next page)
47
<PAGE>
(footnotes continued from previous page)
(6) Does not include 100,000 shares of Common Stock held by a charitable
foundation, of which Mr. Montrone is a Director and Ms. Montrone is a
Director and officer. By virtue of their positions with the charitable
foundation, Mr. and Ms. Montrone may be deemed to be beneficial owners of
the shares of Common Stock held by the charitable foundation. Mr. and Ms.
Montrone disclaim any beneficial ownership of the 100,000 shares of Common
Stock held by the charitable foundation.
(7) Includes 10,000 shares of Common Stock held directly by Mr. Meister; and
7,500 restricted units granted pursuant to General Chemical Group's
Restricted Unit Plan. Also includes 829,140 shares of Class B Common Stock
and 1,214,881 shares of Common Stock held by the 1996 GRAT, of which Mr.
Meister is a co-trustee.
(8) Includes 500 shares of Common Stock held directly by Mr. Bloomquist; 21,768
restricted units granted pursuant to General Chemical Group's Restricted
Unit Plan; and options to purchase 15,000 shares of Common Stock.
(9) Includes 4,870 shares of Common Stock held directly by Mr. Fisher; 4,131
restricted units granted pursuant to General Chemical Group's Restricted
Unit Plan and vested on May 15, 1999; and options to purchase 6,000
shares of Common Stock.
(10) Includes 5,000 shares of Common Stock held directly by Mr. Beekman; 5,000
restricted units granted pursuant to the General Chemical Group's
Restricted Unit Plan for Non-Employee Directors; and options to purchase
20,000 shares of Common Stock.
(11) Includes 5,000 restricted units granted pursuant to the General Chemical
Group's Restricted Unit Plan for Non-Employee Directors; and options to
purchase 20,000 shares of Common Stock.
(12) Includes 20,000 shares of Common Stock held by Mr. Russell directly, 1,000
shares of Common Stock held by Mr. Russell's daughter, an aggregate of
55,972 restricted units granted pursuant to the General Chemical Group's
Restricted Unit Plan, of which 11,194 restricted units vested on each of
November 15, 1996, May 15, 1997 and May 15, 1998 and 22,390 restricted
units vested on May 15, 1999. Mr. Russell disclaims any beneficial
ownership of the 1,000 shares of Common Stock held by his daughter. In
connection with the Spinoff, Mr. Russell became an employee of GenTek
or its subsidiaries and is no longer employed by General Chemical Group
or its subsidiaries.
(13) Consists of 9,000 shares of Common Stock held by Mr. Passino's wife and
children, an aggregate of 27,986 restricted units granted pursuant to the
General Chemical Group's Restricted Unit Plan, of which 5,597 restricted
units vested on each of November 15, 1996, May 15, 1997 and May 15, 1998
and 11,195 restricted units vested on May 15, 1999, options to purchase
40,000 shares of Common Stock, which options vested 12,000 shares on each
of May 15, 1997 and May 15, 1998 and 16,000 shares on May 15, 1999. Mr.
Passino disclaims any beneficial ownership of the 9,000 shares of Common
Stock held by his wife and children. In connection with the Spinoff, Mr.
Passino became an employee of GenTek or its subsidiaries and is no longer
employed by General Chemical Group or its subsidiaries.
(14) Includes 2,000 shares of Common Stock held by Mr. Tanis directly, an
aggregate of 27,986 restricted units granted pursuant to the General
Chemical Group's Restricted Unit Plan, of which 5,597 restricted units
vested on each of November 15, 1996, May 15, 1997 and May 15, 1998 and
11,195 restricted units vested on May 15, 1999. Also includes options to
purchase 40,000 shares of Common Stock, which options vested 12,000 shares
on each of May 15, 1997 and May 15, 1998 and 16,000 shares on May 15, 1999.
In connection with the Spinoff, Mr. Tanis became an employee of GenTek
or its subsidiaries and is no longer employed by General Chemical Group
or its subsidiaries.
(15) Includes 13,633 shares of Common Stock held by Mr. Wilkinson directly,
4,353 shares held by Mr. Wilkinson's spouse, 8,707 restricted units vesting
on May 15, 1999 and options to purchase 20,000 shares of Common Stock,
which options vested 6,000 shares on each of May 15, 1997 and May 15, 1998
and 8,000 shares on May 15, 1999. In connection with the Spinoff, Mr.
Wilkinson became an employee of GenTek or its subsidiaries and is no longer
employed by General Chemical Group or its subsidiaries.
(16) Includes 500 shares of Common Stock held by Mr. Klink directly, an
aggregate of 18,657 restricted units granted pursuant to the General
Chemical Group's Restricted Unit Plan, of which 3,732 restricted units
vested on each of November 15, 1996, May 15, 1997 and May 15, 1998 and
7,461 restricted units vested on May 15, 1999. Also includes options to
purchase 20,000 shares of Common Stock, which options vested 6,000 shares
on each of May 15, 1997 and May 15, 1998, and 8,000 shares on May 15, 1999.
In connection with the Spinoff, Mr. Klink became an employee of GenTek
or its subsidiaries and is no longer employed by General Chemical Group or
its subsidiaries.
(17) Of such shares, 9,811,421 are beneficially owned by Mr. Montrone (see notes
(3), (4), (5) and (6)).
(18) The information presented herein is based solely upon a Schedule 13G filing
made with the SEC by Thomson Horstmann Bryant, Inc. ('Horstmann') on
January 28, 1999. According to such filing, Horstmann has sole voting power
over 572,600 of the above shares, shared voting power over 15,600 of the
above shares and sole dispositive power over 889,250 of the above shares.
The address of Horstmann is Park 80 West, Plaza Two, Saddle Brook, New
Jersey 07663.
(19) The percentage ownership of Common Stock has been calculated assuming the
conversion of all outstanding shares of Class B Common Stock into Common
Stock. Prior to such conversion, the percentage ownership of Common Stock
for Horstmann would be 5.3%.
48
<PAGE>
CERTAIN RELATIONSHIPS AND AFFILIATE TRANSACTIONS
AGREEMENTS WITH LATONA
Latona Associates Inc. ('Latona') is a management company that, since
1995, has provided General Chemical Group with strategic management, business
and financial advisory services, including strategic guidance and advice related
to financings, security offerings, recapitalizations, restructurings and
acquisitions and tax and employee benefit matters. In 1998, General Chemical
Group paid Latona $5.8 million of fees for such services, of which approximately
$1.1 million was attributable to our business. Latona has also provided General
Chemical Group, for an additional fee, advisory services with respect to
acquisitions, business combinations and other strategic transactions. Paul M.
Montrone, the controlling stockholder and Chairman of the Board of General
Chemical Group, also controls Latona. In addition, Paul M. Meister, a director
of General Chemical Group, is a Managing Director of Latona.
In connection with the Spinoff, Latona agreed to continue to provide its
services separately to us and to GenTek and to split its current fee between us
and GenTek. As a result, General Chemical Group will pay Latona an annual fee of
$1.5 million, payable quarterly in advance, adjusted annually after 1999 for
increases in the U.S. Department of Labor, Bureau of Labor Statistics, Consumer
Price Index. In addition, if General Chemical Group requests Latona to provide
advisory services in connection with any acquisition, business combination or
other strategic transaction, General Chemical Group will pay Latona additional
fees, comparable to those received by investment banking firms for such services
(subject to the approval of a majority of General Chemical Group's independent
directors).
General Chemical Group's new agreement with Latona relating to our
business is substantially similar to General Chemical Group's prior agreement
with Latona and extends through 2004. The agreement may be terminated by General
Chemical Group or Latona if the other party ceases, or threatens to cease, to
carry on its business, or commits a material breach of the agreement which is
not remedied within 30 days notice of such breach. General Chemical Group may
terminate the agreement if Mr. Montrone ceases to hold, directly or indirectly,
shares representing at least 20% of the aggregate voting power of General
Chemical Group's capital stock. Proposals regarding amendments to, waivers of,
extensions of or other changes in the terms of the agreement with Latona, as
well as any transactions perceived to involve potential conflicts of interest,
will be dealt with on a case-by-case basis, taking into account relevant factors
including the requirements of the NYSE and prevailing corporate practices.
STOCKHOLDER AGREEMENTS
Mr. Montrone, who holds or controls (including through the Montrone
Trusts) all of the Class B Common Stock and approximately 47.3% of the
outstanding shares of stock of General Chemical Group (assuming conversion of
all outstanding Class B Common Stock into Common Stock), may from time to time
acquire shares of Common Stock or warrants, options or rights to acquire shares
of Common Stock in the open market or in private transactions. General Chemical
Group has agreed not to interfere with any such acquisitions. See 'Beneficial
Ownership of Capital Stock.'
In order to facilitate obtaining the private letter ruling of the IRS
concerning the tax-free nature of the Spinoff, Mr. Montrone and the Montrone
Trusts converted some of their shares of Class B Common Stock into Common Stock
of General Chemical Group. As a result of such conversion, the voting power of
the shares held or controlled by Mr. Montrone and the Montrone Trusts decreased
from 89.9% to 80.6%. We believe that, without such conversion, the Spinoff could
have adverse tax consequences to General Chemical Group.
Pursuant to a registration rights agreement with General Chemical Group,
Mr. Montrone and the Montrone Trusts may request, at any time until April 1,
2004, the registration of their shares of Common Stock of General Chemical Group
for sale under the Securities Act. General Chemical Group will be required to
accept up to three requests for registration and, in addition, to include the
shares of Mr. Montrone and the Montrone Trusts in a proposed registration of
shares of General Chemical Group Common Stock under the Securities Act in
connection with the sale of shares of Common Stock of General Chemical Group or
any other stockholder of General Chemical Group. General Chemical Group will be
responsible to pay the expenses of the registration of shares of Mr. Montrone
and the Montrone Trusts, other than brokerage and underwriting commissions and
taxes relating to the sale of the shares. See 'Summary--The Spinoff' and
'Beneficial Ownership of Capital Stock.'
49
<PAGE>
DESCRIPTION OF CREDIT FACILITY
General. Concurrently with the Original Offering and the Spinoff, the
Company entered into the Credit Facility with a group of lenders (the 'Lenders')
and The Chase Manhattan Bank, as Administrative Agent, to refinance third party
indebtedness and for working capital and other general corporate purposes. The
commitments under the Credit Facility are $85 million of which up to $60 million
of the Credit Facility is available in United States dollars or in the Canadian
dollar equivalent to General Chemical Canada Ltd., a subsidiary of the Company
(the 'Canadian Borrower'). Upon consummation of the Refinancing Transactions,
$50 million is outstanding under the Credit Facility and $35 million is
available for future borrowings. Amounts borrowed under the Credit Facility may
be used for general corporate purposes including working capital, capital
expenditures, acquisitions and other payments. In addition, a portion of the
Credit Facility is available for the issuance of letters of credit. All
indebtedness under the Credit Facility of the Company is guaranteed, on a joint
and several basis, by all of the direct and indirect domestic subsidiaries of
the Company other than GCSAP (the 'Guarantors'). All indebtedness under the
Credit Facility of the Canadian Borrower is guaranteed by the Company and the
Guarantors.
Security. The Credit Facility is secured by 100% of the owned capital
stock of the direct and indirect domestic subsidiaries of the Company, 65% of
certain owned foreign subsidiaries of the Company and substantially all of the
other assets of the Company and the Guarantors. In addition, the portion of the
Credit Facility available to the Canadian Borrower is secured by 100% of the
owned capital stock of all subsidiaries of the Canadian Borrower and
substantially all of the assets of the Canadian Borrower and its subsidiaries.
Maturity; Prepayment. The Credit Facility matures five years after the
closing date of the Credit Facility. The Credit Facility is subject to mandatory
prepayments out of proceeds received from the sale or disposition of certain
assets, sale or issuance of certain equity and indebtedness and certain
insurance recoveries of the Company and its subsidiaries.
Interest Rates. The interest rate applicable to borrowings under the
Credit Facility is based, at the option of the Company, on ABR or Eurodollar
Rate for the Company or U.S. Base Rate, Canadian Dollar Prime Rate, Banker's
Acceptance or Eurodollar Rate for the Canadian Borrower as defined in the Credit
Facility, in each case plus a specified margin or stamping fee, in the case of a
Banker's Acceptance, based on the Company's ratio of funded debt to pro forma
EBITDA calculated on a rolling four quarter basis. Such margin or stamping fee
will range between 1.00% and 2.00% in the case of ABR, U.S. Base Rate and
Canadian Prime Rate loans and 2.25% and 3.25% in the case of Eurodollar loans or
Banker's Acceptances.
Representations and Warranties. The Credit Facility contains
representations and warranties customarily found in loan agreements for similar
financings.
Covenants; Events of Default. The Credit Facility contains numerous
restrictive financial and other covenants, including without limitation: (1)
restrictions on indebtedness, liens and guarantees; (2) restrictions on certain
mergers, consolidations, liquidations and dissolutions, sales of assets,
investments, modifications of subordinated and other debt instruments,
amendments to the documents executed in connection with the Spinoff,
transactions with affiliates, negative pledge clauses and clauses restricting
subsidiary distributions, leases, changes in passive holding company status of
the parent companies of the Company and lines of business; (3) restrictions on
certain payments (capital expenditures, prepayment on the Notes and other junior
indebtedness, dividend payments, and redemptions or other payments on the
capital stock); and (4) certain financial tests, including a maximum senior
leverage ratio, a maximum leverage ratio and a minimum interest coverage ratio.
The Credit Facility provides for certain customary events of defaults, including
an event of default upon the occurrence of a change of control of the Company.
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DESCRIPTION OF NOTES
The Company issued the Old Notes under an Indenture, dated as of April
30, 1999 (the 'Indenture'), between the Company and U.S. Bank Trust National
Association, as trustee (the 'Trustee'). The New Notes will also be issued under
the Indenture. The terms of the New Notes are identical in all material respects
to the terms of the Old Notes except that the New Notes are registered under the
Securities Act (and therefore will not contain restrictions on transfer), will
not contain certain provisions relating to additional interest, and will contain
terms of an administrative nature that differ from those of the Old Notes. The
following summary of certain provisions of the Indenture does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the Trust Indenture Act of 1939, as amended (the 'Trust Indenture Act'), and to
all of the provisions of the Indenture, including the definitions of certain
terms therein and those terms made a part of the Indenture by reference to the
Trust Indenture Act, as in effect on the date of the Indenture. The Indenture
has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part. The definitions of certain capitalized terms used in the
following summary are set forth below under 'Certain Definitions.' References in
this 'Description of the Notes' section to 'the Company' mean only General
Chemical Industrial Products Inc. and not any of its Subsidiaries.
GENERAL
The Notes may be issued only in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. The Company has
appointed the Trustee to serve as registrar and paying agent under the
Indenture. No service charge will be made for any registration of transfer or
exchange of the Notes, except for any tax or other governmental charge that may
be imposed in connection therewith.
RANKING
The Notes rank junior to, and are subordinated in right of payment to,
all existing and future Senior Indebtedness of the Company, pari passu in right
of payment with all senior subordinated Indebtedness of the Company and senior
in right of payment to all Subordinated Indebtedness of the Company. At December
31, 1998, on a pro forma basis after giving effect to the Refinancing
Transactions, the Company would have had $50 million of Senior Indebtedness
outstanding and the ability to borrow an additional $35 million of Senior
Indebtedness under the Credit Facility. All debt incurred under the $85 million
Credit Facility will be Senior Indebtedness of the Company and a portion of such
debt (up to the Canadian dollar equivalent of $60 million) may be incurred by
General Chemical Canada Ltd., a wholly owned subsidiary of the Company. See
' -- Subordination' below and the risk factors relating to contractual and
structural subordination and the Company's dependence upon subsidiaries
(including joint ventures) under 'Risk Factors' herein.
MATURITY, INTEREST AND PRINCIPAL OF THE NOTES
The Notes will be limited to $100.0 million aggregate principal amount
and will mature on May 1, 2009. Interest on the Notes will accrue at a rate of
10 5/8% per annum and will be payable semi-annually in arrears on each May 1 and
November 1, commencing November 1, 1999, to the holders of record of Notes at
the close of business on April 15 and October 15, respectively, immediately
preceding such interest payment date. Cash interest will accrue from the most
recent interest payment date to which interest has been paid or, if no interest
has been paid, from April 30, 1999. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
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OPTIONAL REDEMPTION
The Notes will be redeemable at the option of the Company, in whole or
in part, at any time on or after May 1, 2004, at the redemption prices
(expressed as a percentage of principal amount) set forth below, plus accrued
and unpaid interest thereon, if any, to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date), if redeemed during the twelve-month
period beginning on May 1 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ------------------------------------------------------------------------- ----------
<S> <C>
2004..................................................................... 105.313%
2005..................................................................... 103.542%
2006..................................................................... 101.771%
2007 and thereafter...................................................... 100.000%
</TABLE>
In addition, at any time and from time to time on or prior to May 1,
2002, the Company may redeem up to 35% of the originally issued aggregate
principal amount of the Notes with the net cash proceeds of one or more Equity
Issuances, at a redemption price in cash equal to 110.625% of the principal
amount thereof, plus accrued and unpaid interest thereon, if any, to the date of
redemption (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date); provided,
however, that at least 65% of the originally issued aggregate principal amount
of the Notes must remain outstanding immediately after giving effect to each
such redemption (excluding any Notes held by the Company or any of its
Affiliates). Notice of any such redemption must be given within 90 days after
the date of the closing of the relevant Equity Issuance.
SELECTION AND NOTICE OF REDEMPTION
In the event that less than all of the Notes are to be redeemed at any
time pursuant to an optional redemption, selection of such Notes for redemption
will be made by the Trustee in compliance with the requirements of the principal
national securities exchange, if any, on which the Notes are listed or, if the
Notes are not then listed on a national securities exchange, on a pro rata
basis, by lot or by such method as the Trustee shall deem fair and appropriate;
provided, however, that no Notes of a principal amount of $1,000 or less shall
be redeemed in part; provided, further, that if a partial redemption is made
with the net cash proceeds of an Equity Issuance, selection of the Notes or
portions thereof for redemption shall be made by the Trustee only on a pro rata
basis or on as nearly a pro rata basis as is practicable (subject to the
procedures of The Depository Trust Company), unless such method is otherwise
prohibited. Notice of redemption shall be mailed by first-class mail at least 30
but not more than 60 days before the redemption date to each Holder of Notes to
be redeemed at its registered address. If any Note is to be redeemed in part
only, the notice of redemption that relates to such Note shall state the portion
of the principal amount thereof to be redeemed. A new Note in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Note. On and after the redemption
date, interest will cease to accrue on Notes or portions thereof called for
redemption as long as the Company has deposited with the paying agent for the
Notes funds in satisfaction of the applicable redemption price pursuant to the
Indenture.
SUBORDINATION
The payment of the principal of, premium, if any, and interest on and
other Obligations relating to the Notes is subordinated in right of payment, to
the extent and in the manner provided in the Indenture, to the prior payment in
full in cash of all Senior Indebtedness.
Upon any payment or distribution of assets or securities of the Company
of any kind or character, whether in cash, property or securities (excluding any
payment in, or distribution of, Permitted Junior Securities and excluding any
payment from the trust described under 'Satisfaction and Discharge of Indenture;
Defeasance' (a 'Defeasance Trust Payment')), upon any dissolution or winding-up
or total
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liquidation or reorganization of the Company, whether voluntary or involuntary,
or in bankruptcy, insolvency, receivership or other proceedings, all Senior
Indebtedness shall first be paid in full in cash before the Holders or the
Trustee on behalf of the Holders shall be entitled to receive any payment by or
on behalf of the Company of the principal of, premium, if any, or interest on,
or other Obligations with respect to, the Notes, or any payment by or on behalf
of the Company to acquire any of the Notes or related Obligations for cash,
property or securities, or any distribution by or on behalf of the Company with
respect to the Notes of any cash, property or securities (excluding any payment
in, or distribution of, Permitted Junior Securities and excluding any Defeasance
Trust Payment). Before any payment may be made by, or on behalf of, the Company
of the principal of, premium, if any, or interest on, or other Obligations with
respect to, the Notes upon any such dissolution or winding-up or total
liquidation or reorganization or in bankruptcy, insolvency, receivership or
other proceedings, any payment in, or distribution of, assets or securities of
the Company of any kind or character, whether in cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities and
excluding any Defeasance Trust Payment), to which the Holders or the Trustee on
their behalf would be entitled, but for the subordination provisions of the
Indenture, shall be made by the Company or by any receiver, trustee in
bankruptcy, liquidation trustee, agent or other Person making such payment or
distribution, directly to the holders of the Senior Indebtedness (pro rata to
such holders on the basis of the respective amounts of Senior Indebtedness held
by such holders) or their representatives or to the trustee or trustees or agent
or agents under any agreement or indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear, to
the extent necessary to pay all such Senior Indebtedness in full in cash after
giving effect to any prior or concurrent payment, distribution or provision
therefor to or for the holders of such Senior Indebtedness.
No direct or indirect payment (excluding any payment in, or distribution
of, Permitted Junior Securities and excluding any Defeasance Trust Payment) by
or on behalf of the Company of principal of, premium, if any, or interest on, or
other Obligations with respect to, the Notes, whether pursuant to the terms of
the Notes, upon acceleration, pursuant to an Offer to Purchase, redemption,
defeasance, other purchase or otherwise, will be made if, at the time of such
payment, there exists a default in the payment of all or any portion of the
Obligations on any Designated Senior Indebtedness, whether at maturity, on
account of mandatory prepayment, acceleration or otherwise, and such default
shall not have been cured or waived or the benefits of this sentence waived by
or on behalf of the holders of such Designated Senior Indebtedness. In addition,
during the continuance of any event of default (other than a payment default
described in the preceding sentence) with respect to any Designated Senior
Indebtedness pursuant to which the maturity thereof may be immediately
accelerated, and upon receipt by the Trustee of written notice (a 'Payment
Blockage Notice') from the holder or holders of such Designated Senior
Indebtedness or the trustee or agent acting on behalf of the holders of such
Designated Senior Indebtedness, then, unless and until such event of default has
been cured or waived or has ceased to exist or such Designated Senior
Indebtedness has been discharged or repaid in full in cash or the benefits of
these provisions have been waived by the holders of such Designated Senior
Indebtedness, no direct or indirect payment (excluding any payment in, or
distribution of, Permitted Junior Securities and excluding any Defeasance Trust
Payment) will be made by or on behalf of the Company of principal of, premium,
if any, or interest on, or other Obligations with respect to, the Notes, to such
Holders, during a period (a 'Payment Blockage Period') commencing on the date of
receipt of such notice by the Trustee and ending 179 days thereafter.
Notwithstanding anything in the subordination provisions of the Indenture or the
Notes to the contrary, (x) in no event will a Payment Blockage Period extend
beyond 179 days from the date the Payment Blockage Notice in respect thereof was
given, (y) there shall be a period of at least 181 consecutive days in each
360-day period when no Payment Blockage Period is in effect and (z) not more
than one Payment Blockage Period may be commenced with respect to the Notes
during any period of 365 consecutive days. No event of default that existed or
was continuing on the date of commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period (to the extent the holder of Designated Senior Indebtedness, or trustee
or agent, giving notice commencing such Payment Blockage Period had knowledge of
such existing or continuing event of default) may be, or be made, the basis for
the commencement of any other Payment Blockage Period by the holder or holders
of such Designated Senior Indebtedness or the trustee or agent acting on behalf
of such Designated Senior Indebtedness, whether or not within a period
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of 365 consecutive days, unless such event of default has been cured or waived
for a period of not less than 90 consecutive days. If, notwithstanding the
foregoing, the Company (or any other Person on behalf of the Company) makes any
payment or distribution to the Trustee or to Holders prohibited by the
subordination provisions of the Indenture, then such payment or distribution
will be required to be paid over to or for the benefit of holders of Designated
Senior Indebtedness.
The failure to make any payment or distribution for or on account of the
Notes by reason of the provisions of the Indenture described under this
'Subordination' heading will not be construed as preventing the occurrence of
any Event of Default in respect of the Notes. See 'Events of Default' below.
By reason of the subordination provisions described above, in the event
of insolvency of the Company, funds which would otherwise be payable to Holders
will be paid to the holders of Senior Indebtedness to the extent necessary to
pay the Senior Indebtedness in full in cash, and the Company may be unable to
meet fully its obligations with respect to the Notes.
At the time of the issuance of the Old Notes, $50 million of borrowings
under the Credit Facility were the only outstanding Senior Indebtedness. Subject
to the restrictions set forth in the Indenture, in the future the Company may
issue additional Senior Indebtedness to refinance existing Indebtedness or for
other corporate purposes.
OFFER TO PURCHASE UPON CHANGE OF CONTROL
Following the occurrence of a Change of Control (the date of such
occurrence being the 'Change of Control Date'), the Company shall notify the
Holders of such occurrence in the manner prescribed by the Indenture and shall,
within 30 days after the Change of Control Date, make an Offer to Purchase all
Notes then outstanding, and shall purchase all Notes validly tendered, at a
purchase price in cash equal to 101% of the aggregate principal amount thereof,
plus accrued and unpaid interest thereon, if any, to the Purchase Date (subject
to the right of Holders of record on the relevant record date to receive
interest due on the relevant interest payment date). The Company's obligations
to make and consummate an Offer to Purchase following the occurrence of a Change
of Control may be satisfied if another Person makes and consummates such Offer
to Purchase in the manner and at the times prescribed herein.
If a Change of Control occurs which also constitutes an event of default
under the Credit Facility or any other Indebtedness, the lenders under the
Credit Facility or such other Indebtedness would be entitled to exercise the
remedies available to them as lenders under applicable law and pursuant to the
terms of the Credit Facility or such Indebtedness. Any claims of such lenders
holding secured indebtedness of the Company or Senior Indebtedness will be prior
to any claim of the Holders, as more fully discussed elsewhere in this Offering
Memorandum.
If an Offer to Purchase is made, there can be no assurance that the
Company will have available funds sufficient to pay for all of the Notes that
might be tendered by Holders seeking to accept the Offer to Purchase. If the
Company fails to repurchase all of the Notes tendered for purchase, such failure
will constitute an Event of Default under the Indenture. See 'Events of Default'
below.
If the Company makes an Offer to Purchase, the Company will comply with
all applicable tender offer laws and regulations, including, to the extent
applicable, Section 14(e) and Rule 14e-1 under the Exchange Act, and any other
applicable Federal or state securities laws and regulations and any applicable
requirements of any securities exchange on which the Notes are listed, and any
violation of the provisions of the Indenture relating to such Offer to Purchase
occurring as a result of such compliance shall not be deemed an Event of Default
or an event that, with the passing of time or giving of notice, or both, would
constitute an Event of Default.
Except as described above with respect to a Change of Control, the
Indenture does not contain provisions that permit the Holders to require that
the Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
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<PAGE>
CERTAIN COVENANTS
The Indenture contains the following covenants:
Limitation on Incurrence of Indebtedness and Preferred Equity Interests.
The Indenture provides that (i) the Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, Incur any Indebtedness and
(ii) the Company will not permit any Restricted Subsidiary to issue any
Preferred Equity Interests; provided, however, that the Company and/or any
Restricted Subsidiary (other than GCSAP and its Subsidiaries) may Incur
Indebtedness (other than Preferred Equity Interests of a Restricted Subsidiary)
if, at the time of and immediately after giving pro forma effect to such
Incurrence of Indebtedness and the application of the proceeds therefrom, the
Company's Consolidated Coverage Ratio would be greater than or equal to 2.0 to
1.0.
The provisions of the first paragraph of this covenant will not apply to
the Incurrence of any of the following items of Indebtedness (collectively,
'Permitted Indebtedness'):
(i) the Incurrence by the Company or any Restricted
Subsidiary (other than GCSAP and its Subsidiaries) of Indebtedness under
the Credit Facility; provided that the aggregate principal amount of
Indebtedness (with letters of credit being deemed to have a principal
amount at any time equal to the aggregate then undrawn and unexpired
amount thereof plus the aggregate amount of drawings thereunder that
have not then been reimbursed) outstanding under the Credit Facility
after giving effect to such Incurrence does not exceed an amount equal
to (x) $85.0 million, plus (y) in the case of a Credit Facility
constituting a refinancing (or a successive refinancing) of the initial
Credit Facility of an amount equal to the amount of reasonable fees,
underwriting discounts, premiums and other costs and expenses incurred
in connection with such refinancing, less (z) the aggregate principal
amount of such Indebtedness repaid from the net cash proceeds of any
Asset Sale to the extent reducing the commitments of the lenders
thereunder;
(ii) the Incurrence by the Company or any Restricted
Subsidiary of Indebtedness under the Indenture;
(iii) the Incurrence by the Company or any Restricted
Subsidiary of Purchase Money Indebtedness or Capital Lease Obligations;
provided that, after giving effect to any such Incurrence, the aggregate
principal amount (or accreted value, as applicable) of all outstanding
Indebtedness Incurred under this clause (iii), when aggregated with all
outstanding Permitted Refinancing Indebtedness (including any successive
refinancings) Incurred under clause (iv) below to refinance Indebtedness
Incurred under this clause (iii), does not exceed at any time
outstanding the greater of (x) $15.0 million and (y) 5% of Consolidated
Tangible Assets;
(iv) the Incurrence by the Company or any Restricted
Subsidiary of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace,
Indebtedness that was Incurred under the first paragraph hereof or
clause (ii) or (iii) of this paragraph;
(v) the Incurrence or issuance by the Company or any
Restricted Subsidiary of intercompany Indebtedness or Preferred Equity
Interests between or among the Company and any of the Restricted
Subsidiaries; provided that (a) if the Company is the obligor on any
such Indebtedness, such Indebtedness is expressly subordinated to the
prior payment in full in cash of all Obligations with respect to the
Notes and (b)(x) any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness or Preferred Equity Interests
being held by a Person other than the Company or a Restricted Subsidiary
thereof and (y) any sale or other transfer of any such Indebtedness or
Preferred Equity Interests to a Person that is neither the Company nor a
Restricted Subsidiary thereof shall be deemed, in each case, to
constitute an Incurrence of such Indebtedness or issuance of Preferred
Equity Interests by the Company or such Restricted Subsidiary, as the
case may be, that was not permitted by this clause (v);
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(vi) the Incurrence by the Company or any Restricted
Subsidiary of Permitted Hedging Obligations;
(vii) the Incurrence by the Company or any Restricted
Subsidiary of Indebtedness represented by trade letters of credit,
performance or surety bonds, completion guarantees or similar
arrangements, in each case, in the ordinary course of business; and
(viii) the Incurrence by the Company or any Restricted
Subsidiary (other than GCSAP and its Subsidiaries) of additional
Indebtedness and the issuance by any Restricted Subsidiary of Preferred
Equity Interests in an aggregate principal amount or liquidation
preference or other priority claim (or accreted value, as applicable) at
any time outstanding not to exceed $15.0 million at any one time
outstanding.
For purposes of determining compliance with this covenant, (x) in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Indebtedness described in clauses (i) through (viii)
above or is entitled to be Incurred pursuant to the first paragraph of this
covenant, the Company shall, in its sole discretion, classify such item of
Indebtedness in any manner that complies with this covenant at the time of
Incurrence or issuance or at the time of any subsequent Incurrence or issuance
and (y) to avoid duplication, with respect to any item of Indebtedness, any
other obligation of the obligor on such Indebtedness (or of any other Person
that could have Incurred such Indebtedness under this covenant) arising under
any guaranty, Lien or letter of credit, bankers' acceptance or other similar
instrument or obligation supporting such Indebtedness shall be disregarded to
the extent that such guaranty, Lien or letter of credit, bankers' acceptance or
other similar instrument or obligation secures the principal amount of such
Indebtedness and the Incurrence of such Indebtedness has otherwise been included
in determining compliance with this covenant.
Limitation on Restricted Payments. The Company will not, and will not
cause or permit any Restricted Subsidiary to, directly or indirectly,
(i) declare or pay any dividend or any other distribution in
respect of any Equity Interests of the Company or any Restricted
Subsidiary or make any payment or distribution to the direct or indirect
holders (in their capacities as such) of Equity Interests of the Company
or any Restricted Subsidiary (other than (x) any dividends,
distributions and payments made to the Company or any Restricted
Subsidiary, (y) dividends or distributions payable to any Person solely
in Qualified Equity Interests of the Company or in options, warrants or
other rights to purchase Qualified Equity Interests of the Company and
(z) the payment of any dividend or distribution on a pro rata basis to
all holders of Equity Interests in a Restricted Subsidiary);
(ii) purchase, redeem or otherwise acquire or retire for
value any Equity Interests (other than any Equity Interests owned by the
Company or any Restricted Subsidiary) of (x) the Company or (y) any
Restricted Subsidiary to the extent such Equity Interests of the
Restricted Subsidiary are owned by an Affiliate of the Company (other
than a Restricted Subsidiary);
(iii) purchase, redeem, defease or retire for value, or make
any principal payment on, prior to any scheduled maturity, scheduled
repayment or scheduled sinking fund payment, any Subordinated
Indebtedness (other than (x) any Subordinated Indebtedness held by the
Company or any Restricted Subsidiary and (y) any purchase, redemption,
defeasance or other acquisition or retirement for value in anticipation
of satisfying a sinking fund obligation, principal installment or final
maturity, in each case due within one year of the date of such
acquisition or retirement); or
(iv) make any Investment (other than a Permitted Investment)
in any Person
(any such payment or any other action described in (i), (ii), (iii) or (iv)
each, a 'Restricted Payment'), unless
(a) no Default shall have occurred and be continuing at the
time of or immediately after giving effect to such Restricted Payment;
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(b) immediately after giving effect to such Restricted
Payment, the Company would be able to Incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under the Consolidated
Coverage Ratio of the first paragraph of the 'Limitation on Incurrence
of Indebtedness and Preferred Equity Interests' covenant; and
(c) immediately after giving effect to such Restricted
Payment, the aggregate amount of all Restricted Payments declared or
made on or after the Issue Date does not exceed an amount equal to the
sum of (1) 50% of cumulative Consolidated Net Income determined for the
period (taken as one accounting period) from April 1, 1999 and ending on
the last day of the most recent fiscal quarter immediately preceding the
date of such Restricted Payment for which consolidated financial
statements of the Company are available (or, if such cumulative
Consolidated Net Income shall be a loss, minus 100% of such loss), plus
(2) the aggregate net cash proceeds received by the Company either (x)
as capital contributions to the Company after the Issue Date or (y) from
the issue and sale (other than to a Subsidiary of the Company) of
Qualified Equity Interests of the Company after the Issue Date
(excluding the net cash proceeds (x) from any issuance or sale of
Qualified Equity Interests or capital contribution if such net cash
proceeds are to be made the subject of an optional redemption prior to
May 1, 2002 or (y) from any issuance or sale of Equity Interests or
capital contribution financed, directly or indirectly, using funds
borrowed from the Company or any Subsidiary of the Company until and to
the extent such borrowing is repaid), plus (3) the principal amount (or
accreted amount (determined in accordance with GAAP), if less) of any
Indebtedness of the Company or any Restricted Subsidiary Incurred after
the Issue Date which has been converted into or exchanged for Qualified
Equity Interests of the Company, plus (4) in the case of the disposition
or repayment of any Investment constituting a Restricted Payment made
after the Issue Date, an amount (to the extent not included in the
computation of Consolidated Net Income) equal to the lesser of (x) the
return of capital with respect to such Investment and (y) the amount of
such Investment which was treated as a Restricted Payment, in either
case, less the cost of the disposition of such Investment and net of
taxes to the extent such costs and taxes exceed the amount, if any, by
which the proceeds of such disposition or repayment exceed the lesser of
the amounts referred to in the preceding such clauses (x) and (y) of
this clause (4), plus (5) so long as the Designation thereof was treated
as a Restricted Payment made after the Issue Date, with respect to any
Unrestricted Subsidiary as to which a Revocation has occurred in
accordance with the 'Designation of Unrestricted Subsidiaries' covenant
below, the lesser of (x) the Fair Market Value of the Investment of the
Company or any Restricted Subsidiary in such Subsidiary as of the date
of such Revocation or (y) the Designation Amount with respect to such
Designation, plus (6) to the extent not included in the computation of
Consolidated Net Income, the amount of cash dividends or cash
distributions (other than to permit the Company or a Restricted
Subsidiary to pay taxes) received from any Unrestricted Subsidiary since
the Issue Date, minus (7) the greater of (x) $0 and (y) the Designation
Amount (measured as of the date of Designation) with respect to any
Subsidiary of the Company which has been Designated as an Unrestricted
Subsidiary after the Issue Date in accordance with the 'Designation of
Unrestricted Subsidiaries' covenant below, plus (8) $5.0 million.
For purposes of the preceding clause (c), the value of the aggregate net
proceeds received by the Company upon the issuance of Capital Stock either upon
the conversion of convertible Indebtedness or in exchange for outstanding
Indebtedness or upon the exercise of options, warrants or rights will be the net
proceeds received upon the issuance of such Indebtedness, options warrants or
rights plus the incremental amount received by the Company upon the conversion,
exchange or exercise thereof. For purposes of this covenant, the amount of any
Restricted Payment, if other than cash, shall be the Fair Market Value of the
asset(s) proposed to be transferred by the Company or such Restricted
Subsidiary, as the case may be, pursuant to such Restricted Payment.
The foregoing provisions will not prevent (i) the payment of any
dividend or distribution on, or redemption of, Equity Interests within 60 days
after the date of declaration of such dividend or distribution or the giving of
formal notice of such redemption, if at the date of such declaration or giving
of such
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formal notice such payment or redemption would comply with the provisions of the
Indenture; (ii) the purchase, redemption, retirement or other acquisition of any
Equity Interests in exchange for, or out of the net cash proceeds of the
substantially concurrent issue and sale (other than to a Subsidiary of the
Company) of, Qualified Equity Interests of the Company or a substantially
concurrent capital contribution to the Company; provided, that any such net cash
proceeds and the value of any Qualified Equity Interests issued in exchange for
such retired Equity Interests are excluded from clause (c)(2) of the preceding
paragraph; (iii) the purchase, redemption, retirement, defeasance or other
acquisition of Subordinated Indebtedness, or any other payment thereon, made in
exchange for, or out of the net cash proceeds of (x) a substantially concurrent
issue and sale (other than to a Subsidiary of the Company) of, Qualified Equity
Interests of the Company or a substantially concurrent capital contribution to
the Company; provided, that any such net cash proceeds and the value of any
Qualified Equity Interests issued in exchange for Subordinated Indebtedness are
excluded from clauses (c)(2) and (c)(3) of the preceding paragraph or (y) a
substantially concurrent issue and sale of other Subordinated Indebtedness
having no stated maturity for the payment of principal thereof prior to the 91st
day following the final stated maturity of the Notes; (iv) the distribution to
be made to NHO for distribution to GCG out of the net proceeds from the issuance
of the Notes (as described under 'Use of Proceeds'); (v) Permitted Equity
Incentive Payments; (vi) payments in connection with Permitted Partnership
Transactions; (vii) distributions, loans or advances to NHO for distribution to
GCG to fund payments, or payments made on behalf of GCG, pursuant to the terms
of the Separation Agreements, as the same may be amended, modified or replaced
in accordance with the Indenture; (viii) for any tax period in which the Company
is included in any consolidated, combined, affiliated or unitary group of GCG or
NHO or, in the case of payments described in clause (y) of the definition of
Related Taxes, for any tax period to which the Tax Sharing Agreement applies,
payments to GCG or NHO in an amount equal to the amount of Related Taxes for
such period, less the aggregate amount of such Taxes paid or to be paid directly
by the Company or its Subsidiaries for such period and less any refunds of such
Taxes (in respect of such period or any prior period (or portion thereof)
beginning after the Issue Date) that were received by GCG or NHO and were not
repaid to the Company; (ix) the making of distributions, loans or advances to
NHO for distribution to GCG to permit GCG to (A) pay its costs (including all
professional fees and expenses) incurred to comply with its reporting
obligations under federal or state laws, including any reports filed with
respect to the Securities Act, Exchange Act or the respective rules and
regulations promulgated thereunder, (B) make payments in respect of its
directors and officers insurance coverage and as customary compensation to the
independent directors of GCG, (C) make payments in respect of indemnification
obligations under GCG's charter or by-laws or pursuant to written agreements
owing to (1) directors and officers of GCG or (2) to employees or other Persons
to the extent, in the case of this sub-clause (2), such payments relate to
services performed by any such Person for the Company and its Subsidiaries, (D)
pay all reasonable fees and expenses payable by it and relating to the
Industrial Chemicals Business in connection with the Spin-Off, (E) pay amounts
due pursuant to the Management Agreement in an amount not to exceed $1.5 million
per year (subject to increase as provided for therein on the Issue Date) and
other fees payable under the Management Agreement to the extent approved by
disinterested directors of GCG or the Company in accordance with the
'Transactions with Affiliates' covenant, (F) pay its other operational expenses
(other than Taxes) incurred in the ordinary course of business to the extent
such expenses relate to acting as a holding company for the Company and its
Subsidiaries or to the operation of the Company and its Subsidiaries; (x) any
Investment constituting a Restricted Payment in any Person that is made out of
the net cash proceeds received by the Company either as (x) a substantially
concurrent capital contribution or (y) a substantially concurrent issue and sale
(other than to a Subsidiary of the Company) of Qualified Equity Interests of the
Company, provided that such net cash proceeds are excluded from clause (c)(2) of
the preceding paragraph; and (xi) any purchase, redemption, repurchase,
defeasance or other acquisition or retirement of Subordinated Indebtedness to
the extent required by the agreement governing such Subordinated Indebtedness,
following the occurrence of a Change of Control (or other similar event
described therein as a 'change of control'), but only if the Company shall have
complied with the covenant described under ' -- Change of Control' and, if
required, purchased all Notes tendered pursuant to the offer to repurchase all
the Notes required thereby, prior to purchasing or repaying such Subordinated
Indebtedness; provided, however, that in the case of each of clauses (ii),
(iii), (v), (x) and (xi), no Default shall have occurred and be continuing or
would arise therefrom.
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In determining the amount of Restricted Payments permissible under this
covenant, amounts expended pursuant to clauses (i), (v), (ix) (other than
subclause (D) thereof) and (xi) of the immediately preceding paragraph shall be
included as Restricted Payments and amounts expended pursuant to any other
clauses shall be excluded; provided, however that amounts expended pursuant to
clause (ix) shall only be included as Restricted Payments to the extent of 50%
of such amounts, on an after tax basis, that have not been deducted in arriving
at Consolidated Net Income. The amount of any non-cash Restricted Payment shall
be deemed to be equal to the Fair Market Value thereof at the date of the making
of such Restricted Payment. For purposes of determining compliance with this
covenant, in the event that a Restricted Payment meets the criteria of more than
one of the exceptions described in clauses (i) through (xi) above or is entitled
to be made pursuant to the first paragraph of this covenant, the Company may, in
its sole discretion, classify such Restricted Payment in any manner that
complies with this covenant at the time of such Restricted Payment.
Limitation on Liens. The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, assume, incur, create or
suffer to exist any Liens of any kind against or upon any of their respective
properties or assets, whether owned on the Issue Date or thereafter acquired, or
any proceeds therefrom, to secure any Indebtedness (an 'Initial Lien') unless
contemporaneously therewith effective provision is made, in the case of the
Company, to secure the Notes and all other amounts due under the Indenture,
equally and ratably with such Indebtedness (or, in the event that such
Indebtedness is subordinated in right of payment to the Notes, prior to such
Indebtedness) with a Lien on the same properties and assets securing such
Indebtedness for so long as such Indebtedness is secured by such Lien, except
for (i) Liens securing any Senior Indebtedness or any guaranty of Senior
Indebtedness by any Restricted Subsidiary and (ii) Permitted Liens. Any Lien
created in favor of the Notes pursuant hereto will be automatically and
unconditionally released and discharged upon (i) the unconditional release and
discharge of the Initial Lien to which it relates or (ii) any sale, exchange or
transfer to any Person that is not an Affiliate of the Company or any Restricted
Subsidiary of the property or assets secured by such Initial Lien, or of all of
the Equity Interests held by the Company and the Restricted Subsidiaries in, or
all or substantially all of the assets of, the Restricted Subsidiary whose
property or assets were the subject of such Lien, provided that, in the case of
this clause (ii), the provisions of the covenant 'Disposition of Proceeds of
Asset Sales' are complied with in connection with such sale, exchange or
transfer.
Disposition of Proceeds of Asset Sales. The Company will not, and will
not cause or permit any Restricted Subsidiary to, directly or indirectly, make
any Asset Sale, unless (i) the Company or such Restricted Subsidiary, as the
case may be, receives consideration at the time of such Asset Sale at least
equal to the Fair Market Value of the assets sold or otherwise disposed of and
(ii) at least 75% of such consideration consists of cash or Cash Equivalents;
provided that the principal amount (or accreted value) of any (i) Indebtedness
(other than any Subordinated Indebtedness or Pari Passu Debt) of the Company or
any Restricted Subsidiary that is actually assumed by the transferee in such
Asset Sale and from which the Company and the Restricted Subsidiaries are fully
and unconditionally released shall be deemed to be cash for purposes of
determining the percentage of cash consideration received by the Company or the
Restricted Subsidiaries and (ii) notes or other similar obligations received by
the Company or the Restricted Subsidiaries from such transferee that are
immediately converted, sold or exchanged (or are converted, sold or exchanged
within 30 days of the related Asset Sale) by the Company or the Restricted
Subsidiaries into cash shall be deemed to be cash in an amount equal to the net
cash proceeds realized upon such conversion, sale or exchange for purposes of
determining the percentage of cash consideration received by the Company or the
Restricted Subsidiaries.
With respect to any Asset Sale, the Company or such Restricted
Subsidiary, as the case may be, may (i) apply the Net Cash Proceeds of such
Asset Sale within 365 days of receipt thereof to repay Senior Indebtedness, (ii)
apply the Net Cash Proceeds of such Asset Sale to acquire, construct or improve
properties and capital assets to be used in a Related Business or to acquire
Equity Interests in any Person which thereby becomes a Restricted Subsidiary
whose assets consist primarily of properties and capital assets used in a
Related Business or (iii) apply the Net Cash Proceeds of any Asset Sale within
365 days of receipt thereof to repay Pari Passu Debt not exceeding the Pari
Passu Debt Pro Rata Share. Notwithstanding the foregoing, in the event a
Restricted Subsidiary that is not a Wholly-Owned Restricted Subsidiary dividends
or distributes to all of its stockholders on a pro rata basis any Net Cash
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Proceeds to the Company or another Restricted Subsidiary, the Company or such
Restricted Subsidiary need only apply its share of such Net Cash Proceeds in
accordance with the preceding clause (i), (ii) or (iii).
To the extent all or part of the Net Cash Proceeds of any Asset Sale are
not applied within 365 days of such Asset Sale as described in clause (i), (ii)
or (iii) or the proviso of the first paragraph of this covenant (such Net Cash
Proceeds, the 'Unutilized Net Cash Proceeds'), the Company shall, within 20 days
after such 365th day, make an Offer to Purchase all outstanding Notes up to a
maximum principal amount (expressed as a multiple of $1,000) of Notes equal to
such Unutilized Net Cash Proceeds, at a purchase price in cash equal to 100% of
the principal amount thereof, plus accrued and unpaid interest thereon, if any,
to the Purchase Date; provided, however, that the Offer to Purchase may be
deferred until there are aggregate Unutilized Net Cash Proceeds equal to or in
excess of $10.0 million, at which time the entire amount of such Unutilized Net
Cash Proceeds, and not just the amount in excess of $10.0 million, shall be
applied as required pursuant to this paragraph.
With respect to any Offer to Purchase effected pursuant to this
covenant, among the Notes, to the extent the aggregate principal amount of Notes
tendered pursuant to such Offer to Purchase exceeds the Unutilized Net Cash
Proceeds to be applied to the repurchase thereof, such Notes shall be purchased
pro rata based on the aggregate principal amount of such Notes tendered by each
Holder. To the extent the Unutilized Net Cash Proceeds exceed the aggregate
amount of Notes tendered by the Holders pursuant to such Offer to Purchase, the
Company may retain and utilize any portion of the Unutilized Net Cash Proceeds
not applied to repurchase the Notes for any purpose consistent with the other
terms of the Indenture.
In the event that the Company makes an Offer to Purchase the Notes, the
Company shall comply with any applicable securities laws and regulations,
including any applicable requirements of Section 14(e) of, and Rule 14e-1 under,
the Exchange Act, and any violation of the provisions of the Indenture relating
to such Offer to Purchase occurring as a result of such compliance shall not be
deemed an Event of Default or an event that with the passing of time or giving
of notice, or both, would constitute an Event of Default.
Each Holder shall be entitled to tender all or any portion of the Notes
owned by such Holder pursuant to the Offer to Purchase, subject to the
requirement that any portion of a Note tendered must be tendered in an integral
multiple of $1,000 principal amount and subject to any proration among tendering
Holders as described above.
Transactions with Affiliates. The Company will not, and will not cause
or permit any Restricted Subsidiary to, directly or indirectly, conduct any
business or enter into any transaction (or series of related transactions) with
or for the benefit of any of the respective Affiliates of GCG or the Company
(each an 'Affiliate Transaction'), unless (i) such Affiliate Transaction is on
terms, taken as a whole, which are no less favorable to the Company or such
Restricted Subsidiary, as the case may be, than would be available at the time
in a comparable transaction with an unaffiliated third party, (ii) if such
Affiliate Transaction or series of related Affiliate Transactions (other than
any such Affiliate Transactions between the Company or a Restricted Subsidiary
in the ordinary course of business) involves aggregate payments or other
consideration having a Fair Market Value in excess of $5.0 million, such
Affiliate Transaction is in writing and a majority of the members of the Board
of Directors of the Company or GCG that are disinterested with respect to such
Affiliate Transaction shall have approved such Affiliate Transaction and
determined that such Affiliate Transaction complies with the foregoing
provisions and (iii) if such Affiliate Transaction or series of related
Affiliate Transactions involves aggregate payments or other consideration having
a Fair Market Value in excess of $10.0 million, the Company shall have obtained
a written opinion from an Independent Financial Advisor (which is delivered to
the Trustee) stating that the terms of such Affiliate Transaction are fair, from
a financial point of view, to the Company or the Restricted Subsidiary involved
in such Affiliate Transaction, as the case may be.
Notwithstanding the foregoing, the restrictions set forth in this
covenant shall not apply to (i) any employment or separation agreement,
collective bargaining agreement, benefit plan, program or arrangement, related
trust agreement or any other similar arrangement for or with any employee,
officer or
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director entered into by the Company or any Restricted Subsidiary in the
ordinary course of business, whether before or after the Issue Date; (ii) loans
or other advances in an aggregate principal amount not to exceed $1.0 million at
any one time outstanding; (iii) transactions between or among the Company and/or
the Restricted Subsidiaries; provided that no Person that is an Affiliate of GCG
or the Company other than a Restricted Subsidiary directly or indirectly has a
beneficial Equity Interest in such Restricted Subsidiary; (iv) the payment of
reasonable director compensation and expenses to Persons who are not otherwise
Affiliates of the Company; (v) sales of soda ash, calcium chloride and other
products to GenTek and its Subsidiaries pursuant to existing agreements or in
the ordinary course of business on terms in aggregate no less favorable than
would be available in a comparable transaction at the time with an unaffiliated
third party; (vi) payments made pursuant to the Refinancing Transactions or the
Separation Agreements or the Tax Sharing Agreement as such agreements are in
effect on the Issue Date; (vii) payments not to exceed $1.5 million per year
(subject to increase as provided for in the Management Agreement as in effect on
the Issue Date) pursuant to the Management Agreement as in effect on the Issue
Date and other payments of fees for services rendered from an Affiliate which
have been approved by a majority of the disinterested directors of GCG or the
Company; (viii) payments of indemnification or contribution made to any
directors, officers, employees or agents of the Company or any Restricted
Subsidiary as determined in good faith by the Board of Directors of the Company
or such Restricted Subsidiary; (ix) any dividend or distribution permitted
pursuant to the covenant described under ' -- Certain Covenants -- Limitation on
Restricted Payments'; (x) the payment of compensation, performance of
indemnification or contribution obligations, or any issuance, grant or award of
stock, options, other equity-related interests or other securities, to
employees, officers or directors in the ordinary course of business; (xi) any
transaction in the ordinary course of business between the Company and any
Restricted Subsidiary and any Affiliate that is a joint venture or similar
entity (including a Supply Partnership and Mineral Agreement) in which the
Company and/or a Restricted Subsidiary has an Investment and which is primarily
engaged in a Related Business, provided that no Person that is an Affiliate of
GCG or the Company (other than a Restricted Subsidiary) directly or indirectly
has a beneficial interest in any Equity Interests in such joint venture or
similar entity; and (xii) Permitted Partnership Transactions.
Limitation on Senior Subordinated Indebtedness. The Company will not,
directly or indirectly, Incur any Indebtedness that by its terms would expressly
rank senior in right of payment to the Notes and expressly rank subordinate in
right of payment to any other Indebtedness of the Company.
Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries. The Company will not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly, create or otherwise cause to
exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions to the Company or any other Restricted Subsidiary on its Equity
Interests or with respect to any other interest or participation in, or measured
by, its profits, or pay any Indebtedness owed to the Company or any other
Restricted Subsidiary, (b) make loans or advances to, or guaranty any
Indebtedness or other obligations of, the Company or any other Restricted
Subsidiary or (c) transfer any of its properties or assets to the Company or any
other Restricted Subsidiary, except for such encumbrances or restrictions
existing under or by reason of (i) the Credit Facility as in effect on the Issue
Date and any amendments, restatements, renewals, replacements or refinancings
thereof; provided, however, that any such amendment, restatement, renewal,
replacement or refinancing is not materially more restrictive in the aggregate
with respect to such encumbrances or restrictions than those contained in the
Credit Facility on the Issue Date, as determined by the Board of Directors of
the Company; (ii) applicable law; (iii) any instrument governing Indebtedness or
Equity Interests of an Acquired Person acquired by the Company or any Restricted
Subsidiary as in effect at the time of such acquisition (except to the extent
any such Indebtedness or Equity Interests were Incurred by such Acquired Person
in connection with, as a result of or in contemplation of such acquisition);
provided, however, that such encumbrances and restrictions are not applicable to
any Restricted Subsidiary, or the properties or assets of any Restricted
Subsidiary, other than the Acquired Person; (iv)(A) non-assignment provisions
that restrict in a customary manner the subletting, assignment or transfer of
any property or asset that is subject to a lease, license or similar contract,
or the assignment or transfer of any lease, license or other contract, (B)
customary provisions restricting dispositions of real property interests set
forth in any easement or similar agreements of the
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Company or any Restricted Subsidiary or (C) restrictions on cash or other
deposits or net worth imposed by customers under agreements entered into in the
ordinary course of business; (v) Purchase Money Indebtedness or Capital Lease
Obligations permitted under the covenants described under ' -- Limitation on
Incurrence of Indebtedness and Preferred Equity Interests' and ' -- Limitation
on Liens' that only imposes encumbrances and restrictions on the property so
acquired; (vi) any agreement for the sale or disposition of the Equity Interests
or assets of any Restricted Subsidiary; provided, however, that such
encumbrances and restrictions described in this clause (vi) are only applicable
to such Restricted Subsidiary or assets, as applicable, and any such sale or
disposition is made in compliance with the covenant 'Disposition of Proceeds of
Asset Sales' above to the extent applicable thereto; (vii) Permitted Refinancing
Indebtedness permitted under clause (iv) of the second paragraph of 'Limitation
on Incurrence of Indebtedness and Preferred Equity Interests' above; provided,
however, that such encumbrances and restrictions contained in the agreements
governing such Indebtedness are not materially more restrictive in the aggregate
than those contained in the agreements governing the Indebtedness being
refinanced immediately prior to such refinancing, as determined by the Board of
Directors of the Company; (viii) the Indenture or contained in any other
indenture governing debt securities that are not materially more restrictive
than those contained in the Indenture, as determined by the Board of Directors
of the Company or (ix) customary restrictions contained in Indebtedness of a
Restricted Subsidiary which is permitted to be Incurred under the Indenture.
Ownership of GCSAP. The Company will at all times maintain direct or
indirect record and beneficial ownership of not less than 51% of the Equity
Interests and will at all times remain as the Managing General Partner of GCSAP
with rights and duties under the GCSAP Partnership Agreement that are not
materially adverse in any respect from those in effect on the Issue Date from
the perspective of Holders. For so long as this covenant is complied with, GCSAP
will be deemed a Subsidiary of the Company for all purposes of the Indenture.
Limitation on Lines of Business. The Company will not, and will not
cause or permit any Restricted Subsidiary, directly or indirectly, to, engage in
any business other than a Related Business.
Designation of Unrestricted Subsidiaries. The Company may designate
after the Issue Date any Subsidiary of the Company (other than GCSAP and its
Subsidiaries or any Subsidiary which owns Equity Interests in GCSAP or any of
its Subsidiaries) as an 'Unrestricted Subsidiary' under the Indenture (a
'Designation') only if:
(i) no Default shall have occurred and be continuing at the
time of or after giving effect to such Designation;
(ii) at the time of and after giving effect to such
Designation, the Company could Incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) under the Consolidated Coverage
Ratio of the first paragraph of 'Limitation on Incurrence of
Indebtedness and Preferred Equity Interests' above; and
(iii) the Company would be permitted to make an Investment
(other than a Permitted Investment) at the time of Designation (assuming
the effectiveness of such Designation) pursuant to the first paragraph
of 'Limitation on Restricted Payments' above in an amount (the
'Designation Amount') equal to the Fair Market Value of the Investment
of the Company and the Restricted Subsidiaries in such Subsidiary on
such date.
Neither the Company nor any Restricted Subsidiary shall at any time (x)
provide credit support for, subject any of its property or assets (other than
the Equity Interests of any Unrestricted Subsidiary) to the satisfaction of, or
guaranty, any Indebtedness of any Unrestricted Subsidiary (including any
undertaking, agreement or instrument evidencing such Indebtedness), (y) be
directly or indirectly liable for any Indebtedness of any Unrestricted
Subsidiary or (z) be directly or indirectly liable for any Indebtedness which
provides that the holder thereof may (upon notice, lapse of time or both)
declare a default thereon or cause the payment thereof to be accelerated or
payable prior to its final scheduled maturity upon the occurrence of a default
with respect to any Indebtedness of any Unrestricted Subsidiary, except for any
nonrecourse guaranty given solely to support the pledge by the Company or any
Restricted Subsidiary of
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the capital stock of any Unrestricted Subsidiary. All Subsidiaries of
Unrestricted Subsidiaries shall be automatically deemed to be Unrestricted
Subsidiaries.
The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a 'Revocation') if:
(i) no Default shall have occurred and be continuing at the
time of and after giving effect to such Revocation;
(ii) all Liens and Indebtedness of such Unrestricted
Subsidiary outstanding immediately following such Revocation would, if
Incurred at such time, have been permitted to be Incurred for all
purposes of the Indenture; and
(iii) any transaction (or series of related transactions)
between such Subsidiary and any of its Affiliates that occurred while
such Subsidiary was an Unrestricted Subsidiary would be permitted by
'Transactions with Affiliates' below as if such transaction (or series
of related transactions) had occurred at the time of such Revocation.
All Designations and Revocations must be evidenced by resolutions of the
Board of Directors of the Company, delivered to the Trustee certifying
compliance with the foregoing provisions.
Provision of Financial Information. Whether or not the Company is
subject to Section 13(a) or 15(d) of the Exchange Act, or any successor
provision thereto, the Company shall file with the SEC if permitted by SEC
practice and applicable law and regulations, so long as any Notes remain
outstanding, the annual reports, quarterly reports and other documents which the
Company would have been required to file with the SEC pursuant to such Section
13(a) or 15(d) (each, an 'Exchange Act Report') or any successor provision
thereto if the Company were so subject, such documents to be filed with the SEC
on or prior to the respective dates (the 'Required Filing Dates') by which the
Company would have been required so to file such documents if the Company were
so subject. The Company shall also in any event (a) within 15 days of each
Required Filing Date (whether or not permitted or required to be filed with the
SEC) (i) transmit (or cause to be transmitted) by mail to all Holders, as their
names and addresses appear in the Note register, without cost to such Holders,
and (ii) file with the Trustee, copies of the annual reports, quarterly reports
and other documents (without exhibits) which the Company is required to file
with the SEC pursuant to the preceding sentence, or, if such filing is not so
permitted (or, prior to the consummation of the Exchange Offer, when the Company
is not subject to Section 13(d) or 15(d) of the Exchange Act), information and
data of a similar nature, and (b) if, notwithstanding the preceding sentence,
filing such documents by the Company with the SEC is not permitted by SEC
practice or applicable law or regulations, promptly upon written request supply
copies of such documents to any Holder. In addition, for so long as any Notes
remain outstanding, until the completion of the Exchange Offer or the
effectiveness of a Shelf Registration Statement, as the case may be, the Company
will furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act, and, to any beneficial holder of
Notes, if not obtainable from the SEC, information of the type that would be
filed with the SEC pursuant to the foregoing provisions, upon the request of any
such holder.
MERGER AND CONSOLIDATION
The Company shall not consolidate with or merge with or into (whether or
not the Company is the Surviving Person) any other Person and the Company shall
not and shall not cause or permit any Restricted Subsidiary to, sell, convey,
assign, transfer, lease or otherwise dispose of all or substantially all of the
Company's and the Restricted Subsidiaries' properties and assets (determined on
a consolidated basis for the Company and the Restricted Subsidiaries) to any
Person in a single transaction or series of related transactions, unless: (i)
either (x) the Company shall be the Surviving Person or (y) the Surviving Person
(if other than the Company) shall be a corporation organized and validly
existing under the laws of the United States of America or any State thereof or
the District of Columbia, and shall, in any such case, expressly assume by a
supplemental indenture, the due and punctual payment of the principal of,
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premium, if any, and interest on all the Notes and the performance and
observance of every covenant of the Indenture and the Registration Rights
Agreement to be performed or observed on the part of the Company; (ii)
immediately thereafter, no Default shall have occurred and be continuing; (iii)
immediately after giving effect to any such transaction including the Incurrence
by the Company or any Restricted Subsidiary, directly or indirectly, of
additional Indebtedness (and treating any Indebtedness not previously an
obligation of the Company or any Restricted Subsidiary in connection with or as
a result of such transaction as having been Incurred at the time of such
transaction), the Surviving Person could Incur, on a pro forma basis after
giving effect to such transaction as if it had occurred at the beginning of the
four quarter period immediately preceding such transaction for which
consolidated financial statements of the Company are available, at least $1.00
of additional Indebtedness (other than Permitted Indebtedness) under the
Consolidated Coverage Ratio of the first paragraph of the covenant described
under 'Limitation on Incurrence of Indebtedness and Preferred Equity Interests'
above; and (iv) the Company will have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental indenture (if any) comply with the
Indenture.
Notwithstanding the foregoing clause (iii) of the immediately preceding
paragraph, any Restricted Subsidiary may consolidate with, merge into or
transfer all or part of its properties and assets to the Company.
For purposes of the foregoing, the transfer (by lease, assignment, sale
or otherwise, in a single transaction or series of transactions) of all or
substantially all the properties and assets of one or more Restricted
Subsidiaries the Equity Interests of which constitute all or substantially all
the properties and assets of the Company shall be deemed to be the transfer of
all or substantially all the properties and assets of the Company.
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in the immediately preceding paragraphs in
which the Company is not the Surviving Person and the Surviving Person is to
assume all the Obligations of the Company under the Notes, the Indenture and the
Registration Rights Agreement pursuant to a supplemental indenture, such
Surviving Person shall succeed to, and be substituted for, and may exercise
every right and power of, the Company and the Company shall be discharged from
its Obligations under the Indenture and the Notes.
EVENTS OF DEFAULT
The occurrence of any of the following will be defined as an 'Event of
Default' under the Indenture: (a) failure to pay principal of (or premium, if
any, on) any Note when due (whether or not prohibited by the provisions of the
Indenture described under 'Subordination' above); (b) failure to pay any
interest on any Note when due, continued for 30 days or more (whether or not
prohibited by the provisions of the Indenture described under 'Subordination'
above); (c) default in the payment of principal of or interest on any Note
required to be purchased pursuant to any Offer to Purchase required by the
Indenture when due and payable or failure to pay on the Purchase Date the
Purchase Price for any Note validly tendered pursuant to any Offer to Purchase
(whether or not prohibited by the provisions of the Indenture described under
'Subordination' above); (d) failure to perform or comply with any of the
provisions described under ' -- Certain Covenants -- Ownership of GCSAP' and
'Merger and Consolidation' above; (e) failure to perform any other covenant or
agreement of the Company under the Indenture or in the Notes continued for 45
days or more after written notice to the Company by the Trustee or Holders of at
least 25% in aggregate principal amount of the outstanding Notes; (f) default or
defaults under the terms of one or more instruments evidencing or securing
Indebtedness of the Company or any of the Restricted Subsidiaries having an
outstanding principal amount of $5.0 million or more individually or in the
aggregate that have resulted in the acceleration of the payment of such
Indebtedness or failure by the Company or any of the Restricted Subsidiaries to
pay principal when due at the stated maturity of any such Indebtedness; (g) the
rendering of a final judgment or judgments (not subject to appeal) against the
Company or any of the Restricted Subsidiaries in an amount of $5.0 million or
more (net of any amounts covered by reputable and creditworthy insurance
companies) which remain undischarged or unstayed for a period of 60 days after
the date on which the right to appeal has expired; or (h) certain
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events of bankruptcy, insolvency or reorganization affecting the Company or any
of the Restricted Subsidiaries. Subject to the provisions of the Indenture
relating to the duties of the Trustee, in case an Event of Default shall occur
and be continuing, the Trustee will be under no obligation to exercise any of
its rights or powers under the Indenture at the request or direction of any of
the Holders, unless such Holders shall have offered to the Trustee reasonable
indemnity. Subject to such provisions for the indemnification of the Trustee,
the Holders of a majority in aggregate principal amount of the outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on such Trustee.
If an Event of Default with respect to the Notes (other than an Event of
Default with respect to the Company described in clause (h) of the preceding
paragraph) occurs and is continuing, the Trustee or the Holders of at least 25%
in aggregate principal amount of the outstanding Notes, by notice in writing to
the Company, may declare the unpaid principal of (and premium, if any) and
accrued interest to the date of acceleration on all the outstanding Notes to be
due and payable immediately and, upon any such declaration, such principal
amount (and premium, if any) and accrued interest, notwithstanding anything
contained in the Indenture or the Notes to the contrary will become immediately
due and payable; provided, however, that so long as the Credit Facility shall be
in full force and effect, if an Event of Default shall have occurred and be
continuing (other than an Event of Default with respect to the Company described
in clause (h) of the preceding paragraph), the Notes shall not become due and
payable until the earlier to occur of (x) five Business Days following delivery
of written notice of such acceleration of the Notes to the agent under the
Credit Facility and (y) the acceleration (ipso facto or otherwise) of any
Indebtedness under the Credit Facility. If an Event or Default specified in
clause (h) of the preceding paragraph with respect to the Company occurs under
the Indenture, the Notes will ipso facto become immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.
Notwithstanding the foregoing, in the event of a declaration of
acceleration in respect of the Notes because an Event of Default specified in
clause (f) above shall have occurred and be continuing, such declaration of
acceleration shall be automatically annulled if the Indebtedness that is the
subject of such Event of Default has been discharged or paid or such Event of
Default shall have been cured or waived by the holders of such Indebtedness and
written notice of such discharge, cure or waiver, as the case may be, shall have
been given to the Trustee by the Company or by the requisite holders of such
Indebtedness or a trustee, fiduciary or agent for such holders, within 60 days
after such declaration of acceleration in respect of the Notes and (a) no Person
shall have commenced judicial proceedings to foreclose upon assets of the
Company or any of the Restricted Subsidiaries or shall have exercised any right
under applicable law or applicable security documents to take ownership of any
of such assets in lieu of foreclosure and (b) no other Event of Default with
respect to the Notes shall have occurred which has not been cured or waived
during such 60-day period.
Any such declaration with respect to the Notes may be rescinded by the
Holders of a majority in aggregate principal amount of the outstanding Notes
upon the conditions provided in the Indenture. For information as to waiver of
defaults, see 'Modification and Waiver' below. The Indenture provides that the
Trustee shall, within 30 days after the occurrence of any Default with respect
to the Notes outstanding, give the Holders thereof notice of all uncured
Defaults thereunder known to it. Except in the case of a Default in the payment
of principal of, or premium (if any) or interest on, any Note, the Trustee may
withhold notice if and so long as a committee of its trust officers in good
faith determines that withholding notice is in the interests of the Holders.
No Holder will have any right to institute any proceeding with respect
to the Indenture or for any remedy thereunder, unless such Holder shall have
previously given to the Trustee written notice of a continuing Event of Default
thereunder and unless the Holders of at least 25% of the aggregate principal
amount of the outstanding Notes shall have made written request, and offered
reasonable indemnity, to the Trustee to institute such proceeding as the
Trustee, and the Trustee shall have not have received from the Holders of a
majority in aggregate principal amount of such outstanding Notes a direction
inconsistent with such request and shall have failed to institute such
proceeding within 60 days. However, such limitations do not apply to a suit
instituted by a Holder for enforcement of payment of the principal
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of and premium, if any, or interest on such Note on or after the respective due
dates expressed in such Note.
The Company will be required to furnish to the Trustee annually a
statement as to the performance by it of certain of its obligations under the
Indenture and as to any default in such performance.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, INCORPORATOR AND
STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the
Company or any of its Affiliates, as such, shall have any liability for any
obligations of the Company or any of its Affiliates under the Notes or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE
The Company may terminate its substantive obligations in respect of the
Notes (subject to the subordination provisions) by delivering all outstanding
Notes to the Trustee for cancellation and paying all sums payable by it on
account of principal of, premium, if any, and interest on all Notes or
otherwise. In addition to the foregoing, the Company may, provided that no
Default has occurred and is continuing or would arise therefrom (or, with
respect to a Default with respect to the Company specified in clause (h) of
'Events of Default' above, occurs at any time on or prior to the 91st calendar
day after the date of such deposit (it being understood that this condition
shall not be deemed satisfied until after such 91st day)) under the Indenture
and provided that no default under any Senior Indebtedness would result
therefrom, terminate its substantive obligations in respect of the Notes (except
for its obligations to pay the principal of (and premium, if any, on) and the
interest on the Notes) by (i) depositing with the Trustee, under the terms of an
irrevocable trust agreement, money or United States Government Obligations
sufficient (without reinvestment) to pay all remaining Indebtedness on such
Notes to redemption or maturity, as the case may be; (ii) delivering to the
Trustee either an Opinion of Counsel or a ruling directed to the Trustee from
the Internal Revenue Service to the effect that the Holders will not recognize
income, gain or loss for Federal income tax purposes as a result of such deposit
and termination of obligations; (iii) delivering to the Trustee an Opinion of
Counsel to the effect that the Company's exercise of its option under this
paragraph will not result in any of the Company, the Trustee or the trust
created by the Company's deposit of funds pursuant to this provision becoming or
being deemed to be an 'investment company' under the Investment Company Act of
1940, as amended (the 'Investment Act'); and (iv) complying with certain other
requirements set forth in the Indenture. In addition, the Company may, provided
that no Default has occurred and is continuing or would arise therefrom (or,
with respect to a Default with respect to the Company specified in clause (h) of
'Events of Default' above, occurs at any time on or prior to the 91st calendar
day after the date of such deposit (it being understood that this condition
shall not be deemed satisfied until after such 91st day)) under the Indenture
and provided that no default under any Senior Indebtedness would result
therefrom, terminate all of its substantive obligations in respect of the Notes
(including its obligations to pay the principal of (and premium, if any, on) and
interest on the Notes) by (i) depositing with the Trustee, under the terms of an
irrevocable trust agreement, money or United States Government Obligations
sufficient (without reinvestment) to pay all remaining Indebtedness on the Notes
to redemption or maturity, as the case may be; (ii) delivering to the Trustee
either a ruling directed to the Trustee from the Internal Revenue Service to the
effect that the Holders will not recognize income, gain or loss for Federal
income tax purposes as a result of such deposit and termination of obligations
or an Opinion of Counsel addressed to the Trustee based upon such a ruling or
based on a change in the applicable Federal tax law since the date of the
Indenture, to such effect; (iii) delivering to the Trustee an Opinion of Counsel
to the effect that the Company's exercise of its option under this paragraph
will not result in any of the Company, the Trustee or the trust created by the
Company's deposit of funds pursuant to this provision becoming or being deemed
to be an
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'investment company' under the Investment Act; and (iv) complying with certain
other requirements set forth in the Indenture.
The Company may make an irrevocable deposit pursuant to this provision
only if at such time it is not prohibited from doing so under the subordination
provisions of the Indenture or certain covenants in the Senior Indebtedness and
the Company has delivered to the Trustee and any Paying Agent an Officers'
Certificate to that effect.
GOVERNING LAW
The Indenture and the Notes will be governed by the laws of the State of
New York without regard to principles of conflicts of laws.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for the Notes); provided,
however, that no such modification or amendment to the Indenture may, without
the consent of the Holder of each Note affected thereby, (a) change the maturity
of the principal of or any installment of interest on any such Note or alter the
optional redemption or repurchase provisions of any such Note or the Indenture
in a manner adverse to the Holders of the Notes; (b) reduce the principal amount
of (or the premium) of any such Note; (c) reduce the rate of or extend the time
for payment of interest on any such Note; (d) change the place or currency of
payment of principal of (or premium) or interest on any such Note; (e) modify
any provisions of the Indenture relating to the waiver of past defaults (other
than to add sections of the Indenture or the Notes subject thereto) or the right
of the Holders of Notes to institute suit for the enforcement of any payment on
or with respect to any such Note or the modification and amendment provisions of
the Indenture and the Notes (other than to add sections of the Indenture or the
Notes which may not be amended, supplemented or waived without the consent of
each Holder therein affected); (f) reduce the percentage of the principal amount
of outstanding Notes necessary for amendment to or waiver of compliance with any
provision of the Indenture or the Notes or for waiver of any Default in respect
thereof; (g) waive a default in the payment of principal of, interest on, or
redemption payment with respect to, the Notes (except a rescission of
acceleration of the Notes by the Holders as provided in the Indenture and a
waiver of the payment default that resulted from such acceleration); (h) modify
the ranking or priority of any Note or modify the definition of Senior
Indebtedness or amend or modify the subordination provisions of the Indenture,
in any case in any manner adverse to the Holders; or (i) modify the provisions
of any covenant (or the related definitions) in the Indenture requiring the
Company to make an Offer to Purchase following an event or circumstance which
may give rise to the requirement to make an Offer to Purchase in a manner
materially adverse to the Holders affected thereby otherwise than in accordance
with the Indenture.
The Holders of a majority in aggregate principal amount of the
outstanding Notes, on behalf of all Holders, may waive compliance by the Company
with certain restrictive provisions of the Indenture. Subject to certain rights
of the Trustee, as provided in the Indenture, the Holders of a majority in
aggregate principal amount of the Notes, on behalf of all Holders, may waive any
past default under the Indenture (including any such waiver obtained in
connection with a tender offer or exchange offer for the Notes), except a
default in the payment of principal, premium or interest (other than a payment
default resulting from an acceleration of the Notes rescinded as provided in the
Indenture) or a default arising from failure to purchase any Notes tendered
pursuant to an Offer to Purchase, or a default in respect of a provision that
under the Indenture cannot be modified or amended without the consent of each
affected Holder.
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THE TRUSTEE
Except during the continuance of a Default, the Trustee will perform
only such duties as are specifically set forth in the Indenture. During the
existence of a Default, the Trustee will exercise such rights and powers vested
in it under the Indenture and use the same degree of care and skill in its
exercise as a prudent person would exercise under the circumstances in the
conduct of such person's own affairs.
The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee, should it
become a creditor of the Company or any other obligor upon the Notes, to obtain
payment of claims in certain cases or to realize on certain property received by
it in respect of any such claim as security or otherwise. The Trustee is
permitted to engage in other transactions with the Company or an Affiliate of
the Company; provided, however, that if the Trustee acquires any conflicting
interest (as defined in the Indenture or in the Trust Indenture Act), it must
eliminate such conflict or resign.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture.
Reference is made to the Indenture for a full definition of all such terms, as
well as any other capitalized terms used herein for which no definition is
provided.
'Acquired Indebtedness' means Indebtedness of a Person (a) assumed in
connection with an Acquisition from such Person or (b) existing at the time such
Person becomes a Restricted Subsidiary or is merged or consolidated with or into
the Company or any Restricted Subsidiary; provided that such Indebtedness was
not Incurred by such Person in connection with or in contemplation of such
Acquisition, merger or consolidation or such Person becoming a Restricted
Subsidiary.
'Acquired Person' means, with respect to any specified Person, any other
Person which merges with or into or becomes a Subsidiary of such specified
Person.
'Acquisition' means (i) any capital contribution (by means of transfers
of cash or other property to others or payments for property or services for the
account or use of others, or otherwise) by the Company or any Restricted
Subsidiary to any other Person, or any acquisition or purchase of Equity
Interests of any other Person by the Company or any Restricted Subsidiary, in
either case pursuant to which such Person shall become a Restricted Subsidiary
or shall be consolidated with or merged into the Company or any Restricted
Subsidiary or (ii) any acquisition by the Company or any Restricted Subsidiary
of the assets of any Person which constitute substantially all of an operating
unit or line of business of such Person or which is otherwise outside of the
ordinary course of business.
'Additional Interest' has the meaning provided in the Registration
Rights Agreement.
'Affiliate' of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, 'control'
(including, with correlative meanings, the terms 'controlling,' 'controlled by'
and 'under common control with'), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that (i) beneficial ownership of 10.0% or more of the then outstanding Equity
Interests of a Person shall be deemed to be control for purposes of compliance
with the covenant described under 'Certain Covenants -- Transactions with
Affiliates'; and (ii) no individual, other than a director of the Company or GCG
or an officer of the Company with a policy-making function, shall be deemed an
Affiliate of the Company or any of its Subsidiaries, solely by reason of such
individual's employment, position or responsibilities by or with respect to the
Company or any of its Subsidiaries; provided, further, no Person holding Equity
Interests in GCSAP or in any Person in which GCSAP holds any Equity Interest
will be considered to be an Affiliate of the Company solely by reason of
directly or indirectly owning such Equity Interests for so long as GCSAP shall
be a Restricted Subsidiary.
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'ALCAD Partnership' means the partnership between Church & Dwight Co.,
Inc. and GCSAP pursuant to the Partnership Agreement dated December 29, 1981, as
the same has been and may after the Issue Date be amended, restated or
supplemented from time to time.
'Asset Sale' means any direct or indirect sale, conveyance, transfer,
lease (that has the effect of a disposition) or other disposition (including,
without limitation, any merger, consolidation or sale-leaseback transaction) to
any Person other than the Company or a Restricted Subsidiary, in one transaction
or a series of related transactions, of (i) any Equity Interest of any
Restricted Subsidiary; (ii) any material license, franchise or other
authorization of the Company or any Restricted Subsidiary; (iii) any assets of
the Company or any Restricted Subsidiary which constitute substantially all of
an operating unit or line of business of the Company or any Restricted
Subsidiary; or (iv) any other property or asset of the Company or any Restricted
Subsidiary outside of the ordinary course of business (including the receipt of
proceeds paid on account of the loss of or damage to any property or asset and
awards of compensation for any asset taken by condemnation, eminent domain or
similar proceedings). For the purposes of this definition, the term 'Asset Sale'
shall not include (a) any transaction consummated in compliance with 'Merger and
Consolidation' above and the creation of any Lien not prohibited by the covenant
described under ' -- Certain Covenants -- Limitation on Liens' above; provided,
however, that any transaction consummated in compliance with 'Merger and
Consolidation' above involving a sale, conveyance, assignment, transfer, lease
or other disposal of less than all of the properties or assets of the Company
shall be deemed to be an Asset Sale with respect to the properties or assets of
the Company and the Restricted Subsidiaries that are not so sold, conveyed,
assigned, transferred, leased or otherwise disposed of in such transaction; (b)
sales of property or equipment that has become worn out, obsolete or damaged or
otherwise unsuitable for use in connection with the business of the Company or
any Restricted Subsidiary; (c) any transaction consummated in compliance with
the covenant described under ' -- Certain Covenants -- Limitation on Restricted
Payments' above; (d) any disposition or series of related dispositions for
aggregate consideration not to exceed $1,000,000; (e) sales of accounts
receivable for cash for financing purposes; (f) any sale, conveyance, transfer
or other disposition of leases, licenses or other interests in mineral rights in
exchange for other leases, licenses or interests in mineral rights to be used by
the Company and the Restricted Subsidiaries and having an equivalent Fair Market
Value (taking into account the value to the Company or any Restricted Subsidiary
of the location and quality of the new mineral rights relative to the existing
mineral rights); and (g) any sale, conveyance, transfer, lease or other
disposition constituting a Permitted Investment in a Supply Joint Venture.
'Board Resolution' means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
'Capital Lease Obligation' means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be so required to be capitalized on the balance sheet in
accordance with GAAP.
'Cash Equivalents' means: (a) U.S. dollars and any other currency that
is convertible into U.S. dollars without legal restrictions and which is
utilized by the Company or any of the Restricted Subsidiaries in the ordinary
course of its business; (b) securities issued or directly and fully guaranteed
or insured by the U.S. government or any agency or instrumentality thereof
having maturities of not more than 365 days from the date of acquisition; (c)
certificates of deposit and time deposits with maturities of 365 days or less
from the date of acquisition, bankers' acceptances with maturities not exceeding
365 days and overnight bank deposits, in each case with any commercial bank
having capital and surplus in excess of $500.0 million (or the foreign currency
equivalent thereof); (d) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clauses (b) and
(c) above entered into with any financial institution meeting the qualifications
specified in clause (c) above; and (e) commercial paper rated P-1, A-1 or the
equivalent thereof by Moody's Investors Service, Inc. or Standard & Poor's
Corporation, respectively, and in each case maturing within 365 days after the
date of acquisition.
'Change of Control' means the occurrence of any of the following: (a)
any 'person' (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act), other than one or more Permitted
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Holders in the aggregate, is or becomes the 'beneficial owner' (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of a
majority of the total voting power of the Voting Equity Interests of the Company
(including any successor thereto under the Indenture); (b) the sale, lease,
transfer, conveyance or other disposition (other than by way of merger or
consolidation involving the Company), in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Subsidiaries taken as a whole to any 'person' (as such term is used in Section
13(d)(3) of the Exchange Act) other than one or more Permitted Holders; (c)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of the Company (together with any
new directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Company was approved by a vote of 66 2/3% of
the directors of the Company then still in office who were either directors at
the beginning of such period or whose election or nomination for election was
previously so approved or approved by a vote of Permitted Holders who
beneficially own, directly or indirectly, a majority in the aggregate of the
total voting power of the Voting Equity Interests of the Company) cease for any
reason to constitute a majority of the Board of Directors of the Company then in
office; or (d) the adoption of a plan relating to the liquidation or dissolution
of the Company.
'Change of Control Date' has the meaning set forth under 'Offer to
Purchase upon Change of Control' above.
'Consolidated Coverage Ratio' as of any date of determination means the
ratio of (i) the aggregate amount of Consolidated EBITDA for the four quarter
period of the most recent four consecutive fiscal quarters ending prior to the
date of such determination for which consolidated financial statements of the
Company are available (the 'Four Quarter Period') to (ii) Consolidated Interest
Expense for such Four Quarter Period; provided, however, that (1) if the Company
or any Restricted Subsidiary has Incurred any Indebtedness since the beginning
of such Four Quarter Period that remains outstanding on such date of
determination or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Incurrence of Indebtedness, Consolidated
EBITDA and Consolidated Interest Expense for such Four Quarter Period shall be
calculated after giving effect on a pro forma basis to such Indebtedness as if
such Indebtedness had been Incurred on the first day of such Four Quarter Period
(except that in making such computation, the amount of Indebtedness under any
revolving credit facility outstanding on the date of such calculation shall be
computed based on (A) the average daily balance of such Indebtedness during such
Four Quarter Period or such shorter period for which such facility was
outstanding or (B) if such facility was created after the end of such Four
Quarter Period, the average daily balance of such Indebtedness during the period
from the date of creation of such facility to the date of such calculation) and
the discharge of any other Indebtedness repaid, repurchased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such Four Quarter Period, (2) if since the
beginning of such Four Quarter Period the Company or any Restricted Subsidiary
shall have made any Asset Sale, the Consolidated EBITDA for such Four Quarter
Period shall be reduced by an amount equal to the Consolidated EBITDA (if
positive) directly attributable to the assets that are the subject of such Asset
Sale for such Four Quarter Period or increased by an amount equal to the
Consolidated EBITDA (if negative) directly attributable thereto for such Four
Quarter Period and Consolidated Interest Expense for such Four Quarter Period
shall be reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of the Company or any Restricted
Subsidiary repaid, repurchased or otherwise discharged with respect to the
Company and its continuing Restricted Subsidiaries in connection with such Asset
Sale for such Four Quarter Period (or, if the Equity Interests of any Restricted
Subsidiary are sold, the Consolidated Interest Expense for such Four Quarter
Period directly attributable to the Indebtedness of such Restricted Subsidiary
to the extent the Company and its continuing Restricted Subsidiaries are no
longer liable for such Indebtedness after such sale), (3) if since the beginning
of such Four Quarter Period the Company or any Restricted Subsidiary (by merger
or otherwise) shall have made an Acquisition of assets, including any
Acquisition occurring in connection with a transaction causing a calculation to
be made hereunder, Consolidated EBITDA and Consolidated Interest Expense for
such Four Quarter Period shall be calculated after giving pro forma effect
thereto (including the Incurrence of any Indebtedness) as if such Acquisition
occurred on the first day of such Four Quarter Period and (4) if
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since the beginning of such Four Quarter Period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the Company or any
Restricted Subsidiary since the beginning of such Four Quarter Period) shall
have made any Asset Sale or any Acquisition that would have required an
adjustment pursuant to clause (2) or (3) above if made by the Company or a
Restricted Subsidiary during such Four Quarter Period, Consolidated EBITDA and
Consolidated Interest Expense for such Four Quarter Period shall be calculated
after giving pro forma effect thereto as if such Asset Sale or Acquisition
occurred on, with respect to any Acquisition, the first day of such Four Quarter
Period and, with respect to any Asset Sale, the day prior to the first day of
such Four Quarter Period. For purposes of this definition, whenever pro forma
effect is to be given to an Acquisition, the amount of income or earnings and
any cost savings relating thereto and the amount of Consolidated Interest
Expense associated with any Indebtedness Incurred in connection therewith, the
pro forma calculations shall be determined in accordance with Regulation S-X
under the Securities Act. If any Indebtedness bears a floating rate of interest
and is being given pro forma effect, the interest expense on such Indebtedness
shall be calculated as if the rate in effect on the date of determination had
been the applicable rate for the entire period (taking into account any
agreement under which Hedging Obligations relating to interest are outstanding
applicable to such Indebtedness. In giving effect to any Indebtedness to be
Incurred, if such Indebtedness bears, at the option of the Company or a
Restricted Subsidiary, a rate of interest based on a prime or similar rate, a
eurocurrency interbank offered rate or other fixed or floating rate, the
interest expense on such Indebtedness shall be calculated by applying such
optional rate as the Company may designate. Interest on a Capital Lease
Obligation shall be deemed to accrue at an interest rate determined in good
faith by a responsible financial or accounting officer of the Company to be the
rate of interest implicit in such Capital Lease Obligation in accordance with
GAAP.
'Consolidated EBITDA' means, for any period, the Consolidated Net Income
for such period, minus (A) any non-cash item increasing Consolidated Net Income
during such period (other than any non-cash item arising from the reversal of an
accrual or reserve previously established in respect of a non-cash item), plus
(B) the following to the extent deducted in calculating such Consolidated Net
Income: (i) Consolidated Income Tax Expense for such period; (ii) Consolidated
Interest Expense for such period; (iii) depreciation expense for such period;
(iv) amortization expense for such period (other than in respect of amortization
or writeoff of debt issuance costs to the extent not constituting Consolidated
Interest Expense); and (v) all other non-cash items reducing Consolidated Net
Income for such period (other than any non-cash item requiring an accrual or a
reserve for cash disbursements in any future period); provided that, in
determining Consolidated EBITDA, there shall only be included that portion of
the items referred to in clause (A) or (B) related to, or arising in connection
with, any Person all of whose Equity Interests are not beneficially owned
directly or indirectly by the Company (a 'Specified Person') that is
proportionate to the amount of the net income (loss) of the Specified Person
included in Consolidated Net Income for such period.
'Consolidated Income Tax Expense' means, with respect to the Company for
any period, the provision for federal, state, local and foreign income taxes
payable by the Company and the Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.
'Consolidated Interest Expense' means, with respect to the Company for
any period, without duplication, the sum of (i) the interest expense of the
Company and the Restricted Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP (excluding, except to the extent
provided in clause (b) or (d) below, amortization or writeoff of debt issuance
costs), including, without limitation, (a) any amortization of debt discount,
(b) the net cost under Hedging Obligations relating to interest (including any
amortization of discounts), (c) the interest portion of any deferred payment
obligation, (d) all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and (e) all
capitalized interest and all accrued interest, and (ii) to the extent Incurred
by the Company and the Restricted Subsidiaries in such period but not included
in such interest expense, without duplication, (x) the interest component of
Capital Lease Obligations paid, accrued and/or scheduled to be paid or accrued
by the Company and the Restricted Subsidiaries during such period as determined
on a consolidated basis in accordance with GAAP and (y) dividends and
distributions paid, accrued and/or scheduled to be paid or accrued in respect of
Disqualified Equity Interests of the Company or Preferred Equity Interests of
any Restricted Subsidiary (other than, in each
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case, (i) any such dividends or distributions in Qualified Equity Interests of
the Company or (ii) any such dividends or distributions paid or payable to the
Company or a Restricted Subsidiary) during such period as determined on a
consolidated basis in accordance with GAAP. In determining Consolidated Interest
Expense, there shall only be included that portion of the items referred to in
clause (i) or (ii) related to, or arising in connection with, any Specified
Person that is proportionate to the amount of the net income (loss) of the
Specified Person included in Consolidated Net Income for such period.
'Consolidated Net Income' means, for any period, the consolidated net
income (loss) of the Company and the Restricted Subsidiaries determined on a
consolidated basis in accordance with GAAP; provided, however, that there shall
be excluded from such Consolidated Net Income: (i) any net income (loss) of any
Person that is not a Restricted Subsidiary, except that (A) subject to the
limitations contained in clause (iv) below, the Company's equity in the net
income of any such Person for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash actually distributed by such
Person during such period to the Company or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution to a Restricted Subsidiary, to the limitations contained in clause
(iii) below) and (B) the Company's equity in a net loss of any such Person
(other than an Unrestricted Subsidiary) for such period shall be included in
determining such Consolidated Net Income; (ii) for purposes of the covenant
described under ' -- Certain Covenants -- Limitation on Restricted Payments,'
any net income (loss) of any Person acquired by the Company or a Restricted
Subsidiary in a 'pooling of interests' transaction for any period prior to the
date of such acquisition; (iii) any net income (loss) of any Restricted
Subsidiary if such Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions or loans
or advances by such Restricted Subsidiary, directly or indirectly, to the
Company except that (A) subject to the limitations contained in (iv) below, the
Company's equity in the net income of any such Restricted Subsidiary for such
period shall be included in such Consolidated Net Income up to the aggregate
amount of cash that could have been distributed by such Restricted Subsidiary
during such period to the Company or a Restricted Subsidiary as a dividend
(subject, in the case of a dividend that could have been made to another
Restricted Subsidiary, to the limitation contained in this clause (i)) and (B)
the Company's equity in a net loss of any such Restricted Subsidiary for such
period shall be included in determining such Consolidated Net Income; (iv) any
gain or loss realized upon the sale or other disposition of any asset of the
Company or the Restricted Subsidiaries (including pursuant to any sale/leaseback
transaction) that is not sold or otherwise disposed of in the ordinary course of
business and any gain or loss realized upon the sale or other disposition of any
Equity Interests of any Person; (v) the cumulative effect of a change in
accounting principles; (vi) any item classified as an extraordinary, unusual or
nonrecurring gain, loss or charge, including, but not limited to, any such item
related to, or arising in connection with the Spin-Off or to any Asset Sale or
Acquisition by the Company or any Restricted Subsidiary after the Issue Date (in
each case on an after-tax basis), (vii) all deferred financing costs written off
and premiums paid in connection with any early extinguishment of Indebtedness
and (viii) any non-cash compensation charge arising from any grant of stock,
stock options or other equity-based awards.
'Consolidated Tangible Assets' means, as of any date of determination,
the total assets, less goodwill and other intangibles shown on the balance sheet
of the Company and the Restricted Subsidiaries as of the most recent date for
which such a balance sheet is available, determined on a consolidated basis in
accordance with GAAP.
'consolidation' means the consolidation of the accounts of each of the
Restricted Subsidiaries with those of the Company in accordance with GAAP
consistently applied; provided, however, that 'consolidation' will not include
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of the Company or any Restricted Subsidiary in an Unrestricted Subsidiary will
be accounted for as an investment. The term 'consolidated' has a correlative
meaning.
'Credit Facility' means the Credit Agreement, dated as of April 30, 1999
among the Company, General Chemical Canada Ltd., the lenders named therein and
The Chase Manhattan Bank, as Administrative Agent, including any deferrals,
renewals, extensions, replacements, refinancings or refundings thereof, or
amendments, modifications or supplements thereto and any agreement providing
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therefor (including any restatements thereof and any increases in the amount of
commitments thereunder), whether by or with the same or any other lender,
creditor, group of lenders or group of creditors, and including related notes,
guaranty and note agreements, collateral security documents and other
instruments and agreements executed in connection therewith.
'Default' means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
'Designated Senior Indebtedness' means (a) any Indebtedness outstanding
under the Credit Facility and (b) any other Senior Indebtedness which, at the
time of determination, has an aggregate principal amount outstanding, together
with any commitments to lend additional amounts, of at least $15.0 million, if
the instrument governing such Senior Indebtedness expressly states that such
Indebtedness is 'Designated Senior Indebtedness' for purposes of the Indenture
and an officers' certificate of the Company setting forth such designation by
the Company has been filed with the Trustee.
'Designation' has the meaning set forth under ' -- Certain
Covenants -- Designation of Unrestricted Subsidiaries' above.
'Designation Amount' has the meaning set forth under ' -- Certain
Covenants -- Designation of Unrestricted Subsidiaries' above.
'Disposition' means, with respect to any Person, any merger,
consolidation or other business combination involving such Person (whether or
not such Person is the Surviving Person) or the sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of such
Person's assets.
'Disqualified Equity Interest' means any Equity Interest to the extent
that, by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable at the option of the holder thereof), or upon
the happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable, at the option of the holder
thereof, in whole or in part, or exchangeable into Indebtedness on or prior to
the maturity date of the Notes; provided, however, any Equity Interests that
would not constitute Disqualified Equity Interests but for provisions thereof
giving holders thereof the right to require such Person to repurchase or redeem
such Capital Stock upon the occurrence of a 'change of control' occurring prior
to the final stated maturity of the Notes shall not constitute Disqualified
Equity Interests if the 'change of control' provisions applicable to such
Capital Stock are not more favorable to the holders of such Capital Stock than
the similar provisions of the covenants described under 'Change of Control.'
'Equity Interest' in any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, and
membership interests in such Person, including any Preferred Equity Interests.
'Equity Issuance' means any public or private issuance of Equity
Interests of GCG or the Company (including by the Company to NHO or GCG);
provided that, in the case of an Equity Issuance by GCG, the proceeds thereof in
an amount not less than the amount of funds to be used to optionally redeem
Notes must be contributed as common equity to the Company.
'ESOP' means an employee stock ownership plan for the benefit of the
employees of the Company or its Subsidiaries.
'Exchange Act' means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.
'Existing Indebtedness' means any Indebtedness of the Company and the
Restricted Subsidiaries in existence on the Issue Date until such amounts are
repaid.
'Expiration Date' has the meaning set forth in the definition of 'Offer
to Purchase' below.
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'Fair Market Value' means, with respect to any asset, the price (after
taking into account any liabilities relating to such assets) which could be
negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of which is under any
compulsion to complete the transaction; provided, however, that the Fair Market
Value of any such asset or assets shall be determined conclusively by the Board
of Directors of the Company acting in good faith, and shall be evidenced by
resolutions of the Board of Directors of the Company delivered to the Trustee.
'Four Quarter Period' has the meaning set forth in the definition of
'Consolidated Coverage Ratio' above.
'GAAP' means generally accepted accounting principles in the United
States of America as in effect on the Issue Date (for purposes of the
definitions of the terms 'Consolidated Coverage Ratio,' 'Consolidated EBITDA,'
'Consolidated Interest Expense,' 'Consolidated Tangible Assets' and
'Consolidated Net Income' and all defined terms in the Indenture to the extent
used in or relating to any of the foregoing definitions, and all ratios and
computations based on any of the foregoing definitions) and as in effect from
time to time (for all other purposes of the Indenture), including those set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
the Indenture shall be computed in conformity with GAAP as consistently applied.
In calculating any of 'Consolidated Net Income,' 'Consolidated Coverage Ratio,'
'Consolidated Interest Expense' and 'Consolidated Tangible Assets' and all
defined terms used in or relating to the foregoing for periods that include
periods prior to the Issue Date, information found in or derived from combined
financial statements of the Industrial Chemicals Business prepared on a basis
consistent with those included in this Offering Memorandum shall be utilized.
'GCG' means The General Chemical Group Inc. and any successor thereto
for so long as it directly or indirectly owns a majority of the Equity Interests
and Voting Equity Interests of the Company.
'GCSAP' means General Chemical (Soda Ash) Partners and any successor
thereto.
'guaranty' means, as applied to any obligation, (i) a guaranty (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit. A guaranty shall include,
without limitation, any agreement to maintain or preserve any other Person's
financial condition or to cause any other Person to achieve certain levels of
operating results.
'Hedging Obligations' means, with respect to any Person, the Obligations
of such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements, (ii) other agreements or
arrangements relating to fluctuations in interest rates and (iii) foreign
currency, commodity or energy hedge, exchange or similar agreements (agreements
referred to in this definition being referred to herein as 'Hedging
Agreements').
'Holder' means the registered holder of any Note.
'Incur' means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guaranty or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and 'Incurrence,' 'Incurred' and 'Incurring' shall have meanings
correlative to the foregoing); provided, however, that a change in generally
accepted accounting principles that results in an obligation of such Person that
exists at such time becoming Indebtedness shall not be deemed an Incurrence of
such Indebtedness and that neither the accrual of interest nor the accretion of
original issue discount shall be
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deemed an Incurrence of Indebtedness (although the amount of such accrual or
accretion at any date at which an outstanding amount of Indebtedness is to be
calculated shall be included in the calculation of such outstanding principal
amount). Indebtedness of any Acquired Person or any of its Subsidiaries existing
at the time such Acquired Person becomes a Restricted Subsidiary (or is merged
into or consolidated with the Company or any Restricted Subsidiary), whether or
not such Indebtedness was Incurred in connection with, as a result of, or in
contemplation of, such Acquired Person becoming a Restricted Subsidiary (or
being merged into or consolidated with the Company or any Restricted
Subsidiary), shall be deemed Incurred at the time any such Acquired Person
becomes a Restricted Subsidiary or merges into or consolidates with the Company
or any Restricted Subsidiary.
'Indebtedness' means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and whether
or not contingent, (a) every obligation of such Person for money borrowed; (b)
every obligation of such Person evidenced by bonds, debentures, notes or other
similar instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses; (c) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person; (d)
every obligation of such Person issued or assumed as the deferred purchase price
of property or services and every conditional sale obligation (but excluding (x)
trade accounts payable incurred in the ordinary course of business and payable
in accordance with industry practices or (y) other accrued liabilities arising
in the ordinary course of business which are not overdue or which are being
contested in good faith); (e) every Capital Lease Obligation of such Person; (f)
every net obligation under Hedging Obligations of such Person; and (g) every
obligation of the type referred to in clauses (a) through (f) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or is responsible or liable for, directly or indirectly,
as obligor, guarantor or otherwise. Indebtedness (a) shall never be calculated
taking into account any cash and Cash Equivalents held by such Person; (b) shall
not include obligations of any Person (w) arising from reclamation obligations,
or any bonding thereof, to the extent such reclamation obligations are due after
the final Stated Maturity of the Notes, (x) arising from the honoring by a bank
or other financial institution of a check, draft or similar instrument
inadvertently drawn against insufficient funds in the ordinary course of
business, provided that such obligations are extinguished within two Business
Days of their Incurrence, (y) resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business and consistent
with past business practices and (z) under stand-by letters of credit to the
extent collateralized by cash or Cash Equivalents; (c) which provides that an
amount less than the principal amount thereof shall be due upon any declaration
of acceleration thereof shall be deemed to be Incurred or outstanding in an
amount equal to the accreted value thereof at the date of determination; (d)
shall include the liquidation preference and any mandatory redemption payment
obligations in respect of any Disqualified Equity Interests of the Company or
any Restricted Subsidiary; and (e) shall not include obligations under
performance bonds, performance guaranties, surety bonds and appeal bonds,
letters of credit or similar obligations, incurred in the ordinary course of
business. For purposes of determining compliance with any U.S.
dollar-denominated restriction on the Incurrence of Indebtedness denominated in
a foreign currency, the U.S. dollar-equivalent principal amount of such
Indebtedness Incurred pursuant thereto shall be calculated based on the relevant
currency exchange rate in effect on the date that such Indebtedness was Incurred
if such Indebtedness is Incurred to refinance other Indebtedness denominated in
a foreign currency, and such refinancing would cause the applicable U.S.
dollar-denominated restriction to be exceeded if calculated at the relevant
currency exchange rate in effect on the date of such refinancing, such U.S.
dollar-denominated restriction shall be deemed not to have been exceeded so long
as the principal amount of such refinancing Indebtedness does not exceed the
principal amount of such Indebtedness being refinanced. The principal amount of
any Indebtedness Incurred to refinance other Indebtedness, if Incurred in a
different currency from the Indebtedness being refinanced, shall be calculated
based on the currency exchange rate applicable to the currencies in which such
respective Indebtedness is denominated that is in effect on the date of such
refinancing.
'Independent Financial Advisor' means a nationally recognized
accounting, appraisal, investment banking firm or consultant that is, in the
judgment of the Company's Board of Directors, qualified to perform the task for
which it has been engaged (i) which does not, and whose directors,
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officers and employees or Affiliates do not, have a direct or indirect financial
interest in the Company and (ii) which, in the judgment of the Board of
Directors of the Company, is otherwise independent and qualified to perform the
task for which it is to be engaged.
'interest' means, with respect to the Notes, the sum of any cash
interest and any Additional Interest on the Notes.
'Investment' means, with respect to any Person, any direct or indirect
loan, advance, guaranty or other extension of credit (other than trade
receivables created on customary terms in the ordinary course of business) or
capital contribution to (by means of transfers of cash or other property or
assets to others or payments for property or services for the account or use of
others, or otherwise), or purchase or acquisition of capital stock, bonds,
notes, debentures or other securities or evidences of Indebtedness issued by,
any other Person. Unless the context otherwise requires, the amount of any
Investment shall be the original cost of such Investment, plus the cost of all
additions thereto, and minus the amount of any portion of such Investment repaid
to such Person in cash as a repayment of principal or a return of capital, as
the case may be, but without any other adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such Investment.
In determining the amount of any Investment constituting a guaranty, the maximum
potential amount of such guaranty shall be considered the amount of the
Investment and, in determining the amount of any Investment involving a transfer
of any property or asset other than cash, such property shall be valued at its
Fair Market Value at the time of such transfer. A guaranty of performance by the
Company or any Restricted Subsidiary in the delivery of the product or material
requirements of a customer or third party in the ordinary course of business
shall not constitute an Investment.
'Issue Date' means the original issue date of the Notes.
'Lien' means any lien, mortgage, charge, security interest,
hypothecation, assignment for security or encumbrance of any kind (including any
conditional sale or capital lease or other title retention agreement, any lease
in the nature thereof, and any agreement to give any security interest).
'Management Agreement' means the management agreement as in effect on
the Issue Date between GCG and Latona Associates Inc. (and its permitted
successors and assigns thereunder), as it may be amended, modified or replaced
after the Issue Date with the approval of a majority of the disinterested
directors of GCG or the Company.
'Maturity Date' means May 1, 2009.
'Mineral Agreement' means an agreement between the Company or a
Restricted Subsidiary of the Company and a customer of the Company or such
Restricted Subsidiary (that is not an Affiliate of the Company) for the purpose
of mining minerals pursuant to which the Company or such Restricted Subsidiary
contributes minerals leases to such Person (that is not a Affiliate of the
Company), or agrees to mine minerals for such Person, in the ordinary course of
the Company or such Restricted Subsidiary's business.
'Net Cash Proceeds' means the aggregate proceeds in the form of cash or
Cash Equivalents received by the Company or any Restricted Subsidiary in respect
of any Asset Sale, including all cash or Cash Equivalents received upon any
sale, liquidation or other exchange of proceeds of Asset Sales received in a
form other than cash or Cash Equivalents, net of (a) the direct costs relating
to such Asset Sale (including, without limitation, legal, accounting and
investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof; (b) taxes paid or payable as a result thereof
(after taking into account any available tax credits or deductions and any tax
sharing arrangements); (c) amounts required to be applied to the repayment of
Indebtedness secured by a Lien on the asset or assets that were the subject of
such Asset Sale; (d) amounts deemed, in good faith, appropriate by the Board of
Directors of the Company to be provided as a reserve, in accordance with GAAP,
against any liabilities associated with such assets which are the subject of
such Asset Sale (provided that the amount of any such reserves shall be deemed
to constitute Net Cash Proceeds at the time such reserves shall have been
released or are not otherwise required to be retained as a reserve); and (e)
with respect to
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Asset Sales by Restricted Subsidiaries, the portion of such cash payments
attributable to Persons holding a minority interest in such Restricted
Subsidiary.
'NHO' means New Hampshire Oak, Inc., a Delaware corporation, or any
successor thereto for so long as it directly or indirectly beneficially owns a
majority of the Voting Equity Interests and Equity Interests in the Company.
'Obligations' means any principal, interest (including, with respect to
Designated Senior Indebtedness only, Post-Petition Interest), penalties, fees,
indemnifications, reimbursement obligations, damages and other liabilities
payable under the documentation governing any Indebtedness.
'Offer' has the meaning set forth in the definition of 'Offer to
Purchase' below.
'Offer to Purchase' means a written offer (the 'Offer') sent by or on
behalf of the Company by first-class mail, postage prepaid, to each holder at
his address appearing in the register for the Notes on the date of the Offer
offering to purchase up to the principal amount of Notes specified in such Offer
at the purchase price specified in such Offer (as determined pursuant to the
Indenture). Unless otherwise required by applicable law, the Offer shall specify
an expiration date (the 'Expiration Date') of the Offer to Purchase, which shall
be not less than 20 Business Days nor more than 60 days after the date of such
Offer, and a settlement date (the 'Purchase Date') for purchase of Notes to
occur no later than five Business Days after the Expiration Date. The Company
shall notify the Trustee at least 15 Business Days (or such shorter period as is
acceptable to the Trustee) prior to the mailing of the Offer of the Company's
obligation to make an Offer to Purchase, and the Offer shall be mailed by the
Company or, at the Company's request, by the Trustee in the name and at the
expense of the Company. The Offer shall contain all the information required by
applicable law to be included therein. The Offer shall also contain information
concerning the business of the Company and its Subsidiaries which the Company in
good faith believes will enable such Holders to make an informed decision with
respect to the Offer to Purchase (which at a minimum will include (i) the most
recent annual and quarterly financial statements and 'Management's Discussion
and Analysis of Financial Condition and Results of Operations' contained in the
documents required to be filed with the Trustee pursuant to the Indenture (which
requirements may be satisfied by delivery of such documents together with the
Offer), (ii) a description of material developments in the Company's business
subsequent to the date of the latest of such financial statements referred to in
clause (i) (including a description of the events requiring the Company to make
the Offer to Purchase), (iii) if applicable, appropriate pro forma financial
information concerning the Offer to Purchase and the events requiring the
Company to make the Offer to Purchase and (iv) any other information required by
applicable law to be included therein). The Offer shall contain all instructions
and materials necessary to enable such Holders to tender Notes pursuant to the
Offer to Purchase. The Offer shall also state: (1) the Section of the Indenture
pursuant to which the Offer to Purchase is being made; (2) the Expiration Date
and the Purchase Date; (3) the aggregate principal amount of the outstanding
Notes offered to be purchased by the Company pursuant to the Offer to Purchase
(including, if less than 100%, the manner by which such amount has been
determined pursuant to the Section of the Indenture requiring the Offer to
Purchase) (the 'Purchase Amount'); (4) the purchase price to be paid by the
Company for each $1,000 aggregate principal amount of Notes accepted for payment
(as specified pursuant to the Indenture) (the 'Purchase Price'); (5) that the
Holder may tender all or any portion of the Notes registered in the name of such
Holder and that any portion of a Note tendered must be tendered in an integral
multiple of $1,000 principal amount; (6) the place or places where Notes are to
be surrendered for tender pursuant to the Offer to Purchase; (7) that interest
on any Note not tendered or tendered but not purchased by the Company pursuant
to the Offer to Purchase will continue to accrue; (8) that on the Purchase Date
the Purchase Price will become due and payable upon each Note being accepted for
payment pursuant to the Offer to Purchase and that interest thereon shall cease
to accrue on and after the Purchase Date; (9) that each Holder electing to
tender all or any portion of a Note pursuant to the Offer to Purchase will be
required to surrender such Note at the place or places specified in the Offer
prior to the close of business on the Expiration Date (such Note being, if the
Company or the Trustee so requires, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing); (10) that Holders will be entitled to withdraw all or any portion of
Notes tendered if
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the Company (or its Paying Agent) receives, not later than the close of business
on the fifth Business Day next preceding the Expiration Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Note the Holder tendered, the certificate number of the
Note the Holder tendered and a statement that such Holder is withdrawing all or
a portion of his tender; (11) that (a) if Notes in an aggregate principal amount
less than or equal to the Purchase Amount are duly tendered and not withdrawn
pursuant to the Offer to Purchase, the Company shall purchase all such Notes and
(b) if Notes in an aggregate principal amount in excess of the Purchase Amount
are tendered and not withdrawn pursuant to the Offer to Purchase, the Company
shall purchase Notes having an aggregate principal amount equal to the Purchase
Amount on a pro rata basis (with such adjustments as may be deemed appropriate
so that only Notes in denominations of $1,000 principal amount or integral
multiples thereof shall be purchased); and (12) that in the case of any Holder
whose Note is purchased only in part, the Company shall execute and the Trustee
shall authenticate and deliver to the Holder of such Note without service
charge, a new Note or Notes, of any authorized denomination as requested by such
Holder, in an aggregate principal amount equal to and in exchange for the
unpurchased portion of the Note so tendered.
An Offer to Purchase shall be governed by and effected in accordance
with the provisions above pertaining to any Offer.
'Opinion of Counsel' means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
'Pari Passu Debt' means Indebtedness of the Company that neither
constitutes Senior Indebtedness nor Subordinated Indebtedness.
'Pari Passu Debt Pro Rata Share' means the amount of the applicable Net
Cash Proceeds obtained by multiplying the amount of such Net Cash Proceeds by a
fraction, (i) the numerator of which is the aggregate accreted value and/or
principal amount, as the case may be, of all Pari Passu Debt outstanding at the
time of the applicable Asset Sale with respect to which the Company is required
to use Net Cash Proceeds to repay or make an offer to purchase or repay and (ii)
the denominator of which is the sum of (a) the aggregate principal amount of all
Notes outstanding at the time of the applicable Asset Sale and (b) the aggregate
principal amount or the aggregate accreted value, as the case may be, of all
Pari Passu Debt outstanding at the time of the applicable Offer to Purchase with
respect to which the Company is required to use the applicable Net Cash Proceeds
to offer to repay or make an offer to purchase or repay.
'Permitted Designee' with respect to any Permitted Holder means (A) a
spouse or child (in the case of an individual) of such Permitted Holder, (B) any
trust principally for the benefit of such Permitted Holder or a spouse or child
of such Permitted Holder, (C) in the event of death or incompetence of a
Permitted Holder, such Permitted Holder's estate, heirs, executor,
administrator, committee or other court appointed representative, (D) any
foundation or not-for-profit organization established by a Permitted Holder, or
(E) any Person so long as one or more Permitted Holders in the aggregate owns a
majority of the voting power of the Voting Stock of such person.
'Permitted Equity Incentive Payments' means (i) distributions, loans or
advances made to NHO for distribution to GCG to the extent used to fund the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of GCG held by any member of the Company's or any of its
Subsidiaries' management pursuant to any management equity subscription
agreement or stock option agreement in effect as of the date of the Indenture
and as the same may be amended, modified or replaced in accordance with the
covenant described under ' -- Certain Covenants -- Transactions with
Affiliates'; (ii) payments of any amounts to an ESOP or other stock plan for
employees of the Company or any of its Subsidiaries; and (iii) payments to
members of management of the Company and its Subsidiaries pursuant to equity
incentive plans of GCG to the extent such payments are reflected as expenses in
the calculation of Consolidated Net Income; provided that the aggregate amount
of payments made under the preceding clauses (i), (ii) and (iii) shall not
exceed the sum of $3.0 million in any calendar year plus the Net Cash Proceeds
received by the Company since the Issue Date from, or as a capital contribution
from, the issuance or sale to employees of the Company and its Subsidiaries of
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Qualified Equity Interests, to the extent such Net Cash Proceeds are not and
have not been included in any calculation under clause (c)(2) of the first
paragraph (a) or under any clause (other than clause (v)) of the second
paragraph of the covenant described under ' -- Certain Covenants -- Limitation
on Restricted Payments.'
'Permitted Hedging Obligations' means any Hedging Obligations that are
Incurred (a) in the ordinary course of business and (b) for the purpose of
hedging (x) interest rate risk to the Company or any Restricted Subsidiary with
respect to any fixed or floating rate Indebtedness of the Company or any
Restricted Subsidiary (including all Hedging Obligations Incurred in connection
with the Credit Facility), (y) currency risk to the Company or any Restricted
Subsidiary with respect to Indebtedness of the Company or a Restricted
Subsidiary or the cost of goods and services used by the Company or a Restricted
Subsidiary in the ordinary course of business or (z) the risk to the Company and
the Restricted Subsidiaries of fluctuations in the cost of natural gas, other
energy inputs or commodities used in the ordinary course of business of the
Company and the Restricted Subsidiaries.
'Permitted Holder' means Paul M. Meister and Paul M. Montrone and their
respective Permitted Designees.
'Permitted Indebtedness' has the meaning set forth in the second
paragraph of 'Certain Covenants -- Limitation on Indebtedness' above.
'Permitted Investments' means (a) any Investment in the Company, any
Restricted Subsidiary or a Person that becomes a Restricted Subsidiary, or is
merged with or into or consolidated with the Company or a Restricted Subsidiary
(provided the Company or a Restricted Subsidiary is the survivor), as a result
of or in connection with such Investment; (b) Cash Equivalents; (c) Investments
in prepaid expenses, negotiable instruments held for collection and lease,
utility and workers' compensation, performance and other similar deposits; (d)
loans and advances to employees made in the ordinary course of business not to
exceed $1.0 million in the aggregate at any one time outstanding; (e) Permitted
Hedging Obligations; (f) bonds, notes, debentures or other securities received
as consideration from any Asset Sale that is subject to and made in compliance
with the covenant described under ' -- Certain Covenants -- Disposition of
Proceeds of Asset Sales', any sale or other disposition of assets not to exceed
$1.0 million outstanding at any time or the sale of property or equipment that
has become worn out, obsolete or damaged or otherwise unsuitable for use in
connection with the business of the Company or any Restricted Subsidiary; (g)
transactions with officers, directors and employees of the Company or any
Restricted Subsidiary entered into in the ordinary course of business (including
compensation or employee benefit arrangements with any such director or
employee); (h) any Investment to the extent that the consideration therefor
consists of Qualified Equity Interests of the Company or Equity Interests of GCG
or NHO; (i) Investments in Persons primarily engaged in a Related Business in an
aggregate amount at any time outstanding not to exceed the greater of (x) $10.0
million or (y) 5% of Consolidated Tangible Assets; (j) securities or other
Investments received in settlement of debts created in the ordinary course of
business and owing to the Company or any Restricted Subsidiary, or as a result
of foreclosure, perfection or enforcement of any Lien, or in satisfaction of
judgments, including in connection with any bankruptcy proceeding or other
reorganization of another Person; (k) any Investment in any Supply Partnership
in an aggregate amount at any time outstanding not to exceed 10% of Consolidated
Tangible Assets and (l) any Investment pursuant to a Mineral Agreement.
'Permitted Junior Securities' means any securities of the Company or any
other Person provided for by a plan of reorganization or readjustment succeeding
to the assets and liabilities for the Company that are (i) equity securities
without special covenants or (ii) subordinated in right of payment to all Senior
Indebtedness that may at the time be outstanding, to substantially the same
extent as, or to a greater extent than, the Notes are subordinated as provided
in the Indenture, in any event pursuant to a court order so providing and as to
which (a) the rate of interest on such securities shall not exceed the effective
rate of interest on the Notes on the date of the Indenture, (b) such securities
shall not be entitled to the benefits of covenants or defaults materially more
beneficial to the holders of such securities than those in effect with respect
to the Notes on the date of the Indenture and (c) such securities shall not
provide for amortization (including sinking fund and mandatory prepayment
provisions) commencing
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prior to the date one year following the final scheduled maturity date of the
Senior Indebtedness (as modified by the plan of reorganization or readjustment
pursuant to which such securities are issued) provided that, in each case with
respect to clauses (i) and (ii) above, (x) if a new corporation results from any
such reorganization or readjustment, such corporation assumes all Senior
Indebtedness that will be outstanding after giving effect thereto and (y) the
rights of the holders of the Senior Indebtedness are not, without the consent of
such holders, altered or impaired, including, without limitation, such rights
being impaired within the meaning of Section 1124 of Title 11 of the United
States Code, or any impairment of the right to receive interest accruing during
the pendency of a bankruptcy or insolvency proceeding, including proceedings
under Title 11 of the United States Code.
'Permitted Liens' means (a) Liens on property of a Person existing at
the time such Person is merged into or consolidated with the Company or any
Restricted Subsidiary; provided, however, that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not secure any
property or assets of the Company or any Restricted Subsidiary other than the
property or assets subject to the Liens prior to such merger or consolidation;
(b) Liens imposed by law such as carriers', warehousemen's and mechanics' Liens
and other similar Liens arising in the ordinary course of business which secure
payment of obligations not more than 60 days past due or which are being
contested in good faith and by appropriate proceedings; (c) Liens existing on
the Issue Date; (d) Liens securing only the Notes; (e) Liens in favor of the
Company or any Restricted Subsidiary; (f) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or the nonpayment of
which in the aggregate would not reasonably be expected to have a material
adverse effect on the Company and the Restricted Subsidiaries or that are being
contested in good faith by appropriate proceedings; provided, however, that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor; (g) easements, reservation of rights of way,
restrictions and other similar easements, licenses, restrictions on the use of
properties, or minor imperfections of title that in the aggregate do not in any
case materially detract from the properties subject thereto or interfere with
the ordinary conduct of the business of the Company and the Restricted
Subsidiaries; (h) pledges, deposits or Liens in connection with workers'
compensation, unemployment insurance and other social security and other similar
legislation or other insurance-related obligations (including, without
limitation, pledges or deposits securing liability to insurance carriers under
insurance or self-insurance arrangements); (i) pledges, deposits or Liens to
secure the performance of bids, tenders, trade, government or other contracts
(other than for borrowed money), obligations for utilities, leases, licenses,
statutory obligations, completion guarantees, surety, judgment, appeal or
performance bonds, other similar bonds, instruments or obligations, and other
obligations of a like nature incurred in the ordinary course of business; (j)(A)
mortgages, liens, security interests, restrictions, encumbrances or any other
matters of record that have been placed by any developer, landlord or other
third party on property over which the Company or any Restricted Subsidiary has
easement rights or on any leased property and subordination or similar
agreements relating thereto and (B) any condemnation or eminent domain
proceedings affecting any real property; (k) Liens arising out of judgments,
decrees, orders or awards not constituting any Event of Default in respect of
which the Company shall in good faith be prosecuting an appeal or proceedings
for review, which appeal or proceedings shall not have been finally terminated,
or if the period within which such appeal or proceedings may be initiated shall
not have expired; (l) Liens securing Hedging Obligations Incurred in compliance
with the covenant described under ' -- Certain Covenants -- Limitation on
Incurrence of Indebtedness'; (m) Liens securing Purchase Money Indebtedness;
provided, however, that (I) such Liens secure Indebtedness in an amount not in
excess of the original purchase price or the original cost of any such assets or
repair, addition or improvement thereto (plus an amount equal to the reasonable
fees and expenses in connection with the incurrence of such Indebtedness), (II)
such Liens do not extend to any other assets of the Company or the Restricted
Subsidiaries (and, in the case of repair, addition or improvements to any such
assets, such Lien extends only to the assets (and improvements thereto or
thereon) repaired, added to or improved), (III) the Incurrence of such
Indebtedness is permitted by ' -- Certain Covenants -- Limitation on Incurrence
of Indebtedness' above and (IV) such Liens attach within 180 days of such
purchase, construction, installation, repair, addition or improvement; (n) Liens
to secure any refinancings, renewals, extensions, modifications or replacements
(collectively, 'refinancing') (or successive refinancings), in whole or in part,
of any Indebtedness secured by Liens referred to in the clauses above so long as
such Lien does not extend to any other property (other than improvements
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thereto); (o) Liens securing letters of credit entered into in the ordinary
course of business and consistent with past business practice; and (p) Liens on
and pledges of the Equity Interests of any Unrestricted Subsidiary securing any
Indebtedness of such Unrestricted Subsidiary.
'Permitted Partnership Transaction' means (i) payments or other
transactions made pursuant to the General Chemical (Soda Ash) Partnership
Agreement, as in effect on the date of the Indenture or as amended from time to
time in accordance with its terms; provided that any such amendment does not
contain terms that are materially more adverse in the aggregate to the Holders
than those in effect on the date of the Indenture; and (ii) transactions between
the Company and GCSAP which are on terms as favorable in aggregate to the
Company than those that would be obtainable at the time for a comparable
transaction in arm's-length dealings with an unrelated third person so long as
no Affiliate (other than the Company or a Restricted Subsidiary) directly or
indirectly has a beneficial Equity Interest in GCSAP.
'Permitted Refinancing Indebtedness' means any Indebtedness of the
Company or any of the Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of the Restricted Subsidiaries
(other than intercompany Indebtedness); provided that: (i) the principal amount
(or accreted value, if applicable) of such Permitted Refinancing Indebtedness
does not exceed the principal amount of (or accreted value, if applicable), plus
accrued interest on, the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable fees, underwriting
discount, premiums and all other costs and expenses incurred in connection
therewith); (ii) except in the case of Senior Indebtedness or Indebtedness of a
Restricted Subsidiary, such Permitted Refinancing Indebtedness has a final
maturity date not earlier than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Notes, such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and is subordinated in right of payment
to, the Notes on terms at least as favorable to the Holders as those contained
in the documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; (iv) GCSAP and its Subsidiaries may
only Incur such Indebtedness to extend, refinance, renew, replace, defease or
refund its own Indebtedness; and (v) Preferred Equity Interest of a Restricted
Subsidiary may not be refinanced, replaced, defeased or refunded with
Indebtedness.
'Person' means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, limited liability
limited partnership, trust, unincorporated organization or government or any
agency or political subdivision thereof.
'Post-Petition Interest' means, with respect to any Indebtedness of any
Person, all interest accrued or accruing on such Indebtedness after the
commencement of any bankruptcy, insolvency or liquidation proceeding against
such Person in accordance with and at the contract rate (including, without
limitation, any rate applicable upon default) specified in the agreement or
instrument creating, evidencing or governing such Indebtedness, whether or not,
pursuant to applicable law or otherwise, the claim for such interest is allowed
as a claim in such bankruptcy, insolvency or liquidation proceeding.
'Preferred Equity Interest,' in any Person, means an Equity Interest of
any class or classes (however designated) which is preferred as to the payment
of dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over Equity
Interests of any other class in such Person. Preferred Equity Interests of any
Acquired Person or any of its Subsidiaries existing at the time such Acquired
Person becomes a Restricted Subsidiary (or is merged into or consolidated with
the Company or any Restricted Subsidiary), shall be deemed issued at such time.
'Purchase Amount' has the meaning set forth in the definition of 'Offer
to Purchase' above.
'Purchase Date' has the meaning set forth in the definition of 'Offer to
Purchase' above.
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'Purchase Money Indebtedness' means Indebtedness of the Company or any
Restricted Subsidiary Incurred for the purpose of financing all or any part of
the acquisition (whether directly or through the acquisition of the Equity
Interests of any Person), leasing, construction or improvement of any property,
plant or equipment used in the business of the Company or any Restricted
Subsidiary, provided that the aggregate principal amount of such Indebtedness
does not exceed such purchase price or cost.
'Purchase Price' has the meaning set forth in the definition of 'Offer
to Purchase' above.
'Qualified Equity Interest' in any Person means any Equity Interest in
such Person other than any Disqualified Equity Interest.
'Redemption Date' has the meaning set forth in the third paragraph of
' -- Optional Redemption' above.
'Related Business' means (a) those businesses in which the Company or
any of the Restricted Subsidiaries is engaged on the date of the Indenture, or
that are similar or reasonably related, complementary or incidental thereto or
extensions or developments thereof and (b) any business (the 'Other Business')
which forms a part of a business (the 'Acquired Business') which is acquired by
the Company or any of the Restricted Subsidiaries if (i) the primary intent of
the Company or such Restricted Subsidiary was to acquire that portion of the
Acquired Business which meets the requirements of clause (a) of this definition
and (ii) the Company believed that it would not have been able to acquire such
portion of the Acquired Business if the Other Business was not also acquired.
'Related Taxes' means (x) the Company's share (based on the ratio of the
book value of the Company and its subsidiaries to the book value of GCG and its
subsidiaries (including the Company and its subsidiaries)) of any state or local
taxes, other than taxes imposed on or measured by income or receipts, that are
imposed on GCG or NHO by virtue of GCG or NHO (as the case may be) (1) being
incorporated in such state or locality, (2) having capital stock outstanding or
(3) owning the stock of the Company (but excluding any taxes imposed on or
attributable to any dividends received from the Company), (y) any payments in
respect of Taxes required to be made by GCG under the Tax Sharing Agreement
(less any refunds of such taxes that are received by GCG or NHO and not repaid
to the Company) and (z) any Taxes of the Company or its Subsidiaries that are
measured by income and for which GCG or NHO is liable up to an amount not to
exceed with respect to such federal taxes, the amount of any such taxes that the
Company would have been required to pay on a consolidated basis if the Company
had filed a consolidated return on behalf of an affiliated group (as defined in
section 1504 of the Code) of which it was the common parent, or with respect to
such state, local and foreign taxes, the amount of taxes that the Company would
have been required to pay if the Company and its eligible Subsidiaries had filed
an affiliated, combined or unitary return with respect to such state, local or
foreign taxes.
'Restricted Subsidiary' means any Subsidiary of the Company that has not
been designated by the Board of Directors of the Company, by a resolution of the
Board of Directors of the Company delivered to the Trustee, as an Unrestricted
Subsidiary pursuant to the covenant ' -- Designation of Unrestricted
Subsidiaries' above. Any such designation may be revoked by a resolution of the
Board of Directors of the Company delivered to the Trustee, subject to the
provisions of such covenant.
'SEC' means the Securities and Exchange Commission.
'Senior Indebtedness' means, at any date, (a) all Obligations of the
Company under the Credit Facility; (b) all Hedging Obligations of the Company;
(c) all Obligations of the Company under stand-by letters of credit; and (d) all
Obligations under other Indebtedness of the Company including principal,
premium, if any, and interest on such Indebtedness, unless the instrument under
which such Indebtedness of the Company for money borrowed is Incurred expressly
provides that such Indebtedness for money borrowed is not senior or superior in
right of payment to the Notes, and all renewals, extensions, modifications,
amendments or refinancings thereof. Notwithstanding the foregoing, Senior
Indebtedness shall not include (a) to the extent that it may constitute
Indebtedness, any Obligation for federal, state, local, foreign or other taxes;
(b) any Indebtedness of the Company to any Subsidiary of the
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Company, unless and for so long as such Indebtedness has been pledged to secure
Obligations under the Credit Facility or other Senior Indebtedness; (c) any
Obligation in respect of any trade payable Incurred for the purchase of goods or
materials, or for services obtained, in the ordinary course of business; (d)
Indebtedness evidenced by the Notes; (e) Indebtedness of the Company that is
expressly subordinate or junior in right of payment to any other Indebtedness of
the Company; (f) to the extent that it may constitute Indebtedness, any
obligation owing under leases (other than Capital Lease Obligations), subleases
or licenses or Management Agreements; and (g) any obligation that by operation
of law is subordinate to any general unsecured obligations of the Company.
'Separation Agreements' means, collectively, the Separation Agreement
dated April 15, 1999 among GenTek, GCG, General Chemical Corporation and the
Company, the Employee Benefits Agreement dated April 28, 1999 between GenTek and
GCG, the Transition Support Agreement dated April 28, 1999 between GenTek and
GCG, the Sublease Agreement dated April 28, 1999 between General Chemical
Corporation and the Company and the Intellectual Property Agreement dated April
28, 1999 among GenTek, GCG, General Chemical Corporation and the Company and
does not include the Tax Sharing Agreement.
'Stated Maturity,' when used with respect to any Note or any installment
of interest thereon, means the date specified in such Note as the fixed date on
which the principal of such Note or such installment of interest is due and
payable.
'Subordinated Indebtedness' means, with respect to the Company, any
Indebtedness of the Company which is expressly subordinated in right of payment
to the Notes.
'Subsidiary' means, with respect to any Person, (a) any corporation of
which the outstanding Voting Equity Interests having at least a majority of the
votes entitled to be cast in the election of directors shall at the time be
owned, directly or indirectly, by such Person, or (b) any other Person of which
at least a majority of Voting Equity Interests are at the time, directly or
indirectly, owned by such first named Person. Notwithstanding the foregoing, for
so long as the Company is permitted to consolidate the ALCAD Partnership in its
consolidated financial statements and the ALCAD Partnership and related
agreements provide for the distribution of profits to the Company and the
Restricted Subsidiaries on terms that are not adverse in any material respect
from the perspective of Holders than those in effect on the Issue Date, the
Company will be permitted to treat the ALCAD Partnership as a Subsidiary for all
purposes of the Indenture.
'Supply Partnership' means any Person (a) in which the Company
beneficially owns less than a majority of the Voting Equity Interests, and (b)
which has been organized for the purpose of toll manufacturing, marketing or
selling industrial chemical products, mining minerals and/or supplying energy,
raw materials or transportation services for the benefit of (x) the Company and
the Restricted Subsidiaries in the ordinary course and (y) one or more of its
customers or raw material (including energy) suppliers that is not an Affiliate
of the Company and (z) if applicable, other persons similarly situated as the
Company and the Restricted Subsidiary with respect to such benefits.
'Surviving Person' means, with respect to any Person involved in or that
makes any Disposition, the Person formed by or surviving such Disposition or the
Person to which such Disposition is made.
'Tax Sharing Agreement' means the Tax Sharing Agreement dated April 28,
1999 between GenTek and GCG, as the same may be amended, modified or replaced in
accordance with the Indenture.
'Taxes' means any federal, state, local or foreign taxes.
'United States Government Obligations' means direct non-callable
obligations of the United States of America for the payment of which the full
faith and credit of the United States is pledged.
'Unrestricted Subsidiary' means any Subsidiary of the Company designated
as such pursuant to ' -- Certain Covenants -- Designation of Unrestricted
Subsidiaries' above. Any such designation may be
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revoked by a resolution of the Board of Directors of the Company delivered to
the Trustee, subject to the provisions of such covenant.
'Unutilized Net Cash Proceeds' has the meaning set forth in the third
paragraph under ' -- Certain Covenants -- Disposition of Proceeds of Asset
Sales' above.
'Voting Equity Interests' means Equity Interests in a corporation or
other Person either (x) with voting power under ordinary circumstances entitling
the holders thereof to vote for the election of the Board of Directors or other
governing body of such corporation or Person or (y) for purposes of the
definition of 'Change of Control' only, directly or indirectly accompanied with
other rights to direct the policies, management or affairs of such Person
pursuant to contract or otherwise.
'Weighted Average Life to Maturity' means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment of final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (b) the then outstanding
aggregate principal amount of such Indebtedness.
'Wholly Owned Restricted Subsidiary' means any Restricted Subsidiary all
of the outstanding Equity Interests (other than directors' qualifying shares) of
which are owned, directly or indirectly, by the Company.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States income tax
consequences of the exchange of the Old Notes for the New Notes and the
ownership and disposition of the New Notes. This summary applies only to a
beneficial owner of a New Note who acquires the New Notes in exchange for Old
Notes that such holder acquired for cash at the Original Offering from the
Initial Purchasers and for the Original Offering Price thereof.
This summary is based on provisions of the Internal Revenue Code of
1986, as amended (the 'Code'), existing and proposed Treasury regulations
promulgated thereunder (the 'Treasury Regulations') and administrative and
judicial interpretations thereof, all as of the date hereof and all of which are
subject to change, possibly on a retroactive basis.
This summary does not address the tax consequences to subsequent
purchasers of the Notes and is limited to acquirors who hold the Notes as
'capital assets' within the meaning of section 1221 of the Code. This summary is
for general information only, and does not address all of the tax consequences
that may be relevant to particular acquirors in light of their personal
circumstances, or to certain types of acquirors (such as banks and other
financial institutions, real estate investment trusts, regulated investment
companies, insurance companies, tax-exempt organizations, dealers in securities,
persons who have hedged the interest rate on the Notes, partnerships and other
pass-through entities or persons whose functional currency is not the U.S.
dollar). In addition, this summary does not include any description of the tax
laws of any state, local or non-U.S. government that may be applicable to a
particular acquiror.
As used herein, the term 'U.S. Holder' means a beneficial owner of a
Note that is, for U.S. federal income tax purposes, (a) a citizen or individual
resident of the United States, (b) a corporation created or organized in the
United States or under the laws of the United States or of any state of the
United States, (c) an estate whose income is includable in gross income for U.S.
federal income tax purposes regardless of its source or (d) a trust if (i) a
court within the United States is able to exercise primary supervision over the
administration of the trust and (ii) at least one U.S. person has authority to
control all substantial decisions of the trust.
PROSPECTIVE ACQUIRORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE PARTICULAR U.S. FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO
THEM OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE NOTES, AS WELL AS THE
TAX CONSEQUENCES UNDER STATE, LOCAL, NON-U.S. AND OTHER TAX LAWS AND THE
POSSIBLE EFFECTS OF CHANGES IN TAX LAWS.
THE EXCHANGE OFFER
The Exchange of an Old Note for a New Note of a U.S. Holder pursuant to
the Exchange Offer will not constitute a taxable exchange of the Old Notes, and
thus a U.S. Holder will not recognize taxable gain or loss upon receipt of a New
Note. As a result, each U.S. Holder will have the same adjusted tax basis and
holding period in the New Notes as it had in the Old Notes immediately before
the exchange.
INCOME TAXATION OF U.S. HOLDERS
Payment of Interest on the Notes. In general, interest paid on a Note
will be taxable to a U.S. Holder as ordinary interest income, as received or
accrued, in accordance with such holder's regular method of accounting for
federal income tax purposes.
Liquidated Damages. Since the Old Notes provide for the payment of
liquidated damages in certain circumstances ('Liquidated Damages'), the Notes
may be subject to special rules under the Treasury Regulations that are
applicable to debt instruments that provide for one or more contingent payments.
Under the Treasury Regulations, however, the special rules applicable to
contingent payment debt instruments will not apply if, as of the issue date, the
contingency is either 'remote' or 'incidental.' The Company intends to take the
position that, solely for these purposes, at the time of the Original
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Offering, the payment of Liquidated Damages was a remote or incidental
contingency. The Company's determination that such payments were a remote or
incidental contingency for these purposes is binding on a U.S. Holder, unless
such U.S. Holder discloses in the proper manner to the Internal Revenue Service
(the 'IRS') that it is taking a different position. Prospective investors should
consult their tax advisors as to the tax considerations relating to the payment
of Liquidated Damages, in particular in connection with the Treasury Regulations
relating to contingent payment interests.
Sale, Exchange or Retirement of the Notes. Upon the sale, exchange,
redemption, retirement at maturity or other disposition of a Note, a U.S. Holder
will generally recognize taxable gain or loss equal to the difference between
the sum of the cash and the fair market value of all other property received on
such disposition (except to the extent such cash or property is attributable to
accrued interest, which will be taxable as ordinary income) and such holder's
adjusted tax basis in the Note.
Gain or loss recognized on the disposition of a Note generally will be
capital gain or loss, and will be long-term capital gain or loss if, at the time
of such disposition, the holder's holding period for the Note is more than one
year.
Backup Withholding and Information Reporting. In general, a U.S. Holder
will be subject to backup withholding at the rate of 31% with respect to
payments of interest, principal and premium, if any, paid on, and the proceeds
of a disposition of, a Note, unless the holder (a) is an entity that is exempt
from withholding (including corporations, tax-exempt organizations and certain
qualified nominees) and, when required, demonstrates this fact, or (b) provides
the Company with its taxpayer identification number ('TIN') (which for an
individual would be the holder's social security number), certifies under
penalties of perjury that the TIN provided to the Company is correct and that
the holder has not been notified by the IRS that it is subject to backup
withholding due to underreporting of interest or dividends, and otherwise
complies with applicable requirements of the backup withholding rules. In
addition, such payments of principal, premium and interest to U.S. Holders that
are not exempt entities will generally be subject to information reporting
requirements. A U.S. Holder who does not provide the Company with its correct
TIN may be subject to penalties imposed by the IRS.
The Company will report to U.S. Holders and the IRS the amount of any
'reportable payments' (including any interest paid) and any amounts withheld
with respect to the Notes during the calendar year.
The amount of any backup withholding from a payment to a U.S. Holder
will be allowed as a credit against such holder's federal income tax liability
and may entitle such holder to a refund, provided that the required information
is furnished to the IRS. Treasury Regulations, generally effective for payments
made after December 31, 2000 (the 'New Withholding Regulations'), modify certain
of the certification requirements for backup withholding. It is possible that
the Company and other withholding agents may request a new withholding exemption
from holders in order to qualify for continued exemption from backup withholding
under the New Withholding Regulations.
TAXATION OF NON-U.S. HOLDERS
Payment of Interest on the Notes. In general, payments of interest
received by any holder of a Note that is not a U.S. Holder (a 'Non-U.S. Holder')
will not be subject to a U.S. federal income tax (or any withholding thereof,
except as described below under 'Backup Withholding and Information Reporting'),
provided that (a) under an exemption for certain portfolio interest, (i) the
Non-U.S. Holder does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the Company that is entitled to
vote, (ii) the holder is not a 'controlled foreign corporation' (generally, a
non-U.S. corporation controlled by U.S. shareholders) that is related to the
Company actually or constructively through stock ownership and (iii) either (x)
the beneficial owner of the Note, under penalties of perjury, provides the
Company or its agent with the beneficial owner's name and address and certifies
that it is not a U.S. person on IRS Form W-8 (or a suitable substitute or
successor form) or (y) a securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary course of
its trade or business holds the Note and certifies to the Company or its agent
under penalties of perjury that such a Form W-8 (or suitable substitute or
successor form) has been
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received by it from the beneficial owner or qualifying intermediary and
furnishes the payor a copy thereof, (b) the Non-U.S. Holder is subject to U.S.
federal income tax with respect to the Note on a net basis because payments
received with respect to the Note are effectively connected with the conduct of
a trade or business within the United States by the holder (in which case the
holder may also be subject to U.S. 'branch profits tax') and the holder provides
the Company with a properly executed IRS Form 4224 or a successor form, or (c)
the Non-U.S. Holder is entitled to the benefits of an income tax treaty under
which the interest is exempt from U.S. withholding tax and the holder or such
holder's agent provides a properly executed IRS Form 1001 or a successor form
claiming the exemption. Payments of interest not exempt from U.S. federal income
tax as described above will be subject to withholding at the rate of 30%
(subject to reduction under the applicable income tax treaty).
The New Withholding Regulations generally will be effective with respect
to payments made after December 31, 2000. The New Withholding Regulations
generally will not affect the certification rules described in the preceding
paragraph, but will provide alternative methods for satisfying such
requirements. The New Withholding Regulations may require that a Non-U.S. Holder
(including a non-U.S. partnership or a partner thereof) obtain a TIN and make
certain certifications if interest in respect of a Note is not portfolio
interest and the Non-U.S. Holder wishes to claim a reduced rate of withholding
under an income tax treaty. It is possible that the Company and other
withholding agents may request a new withholding exemption from Non-U.S. Holders
in order to qualify for continued exemption from withholding under the New
Withholding Regulations. Each Non-U.S. Holder should consult its own tax advisor
regarding the application of the New Withholding Regulations.
Sale, Exchange or Retirement of the Notes. A Non-U.S. Holder generally
will not be subject to U.S. federal income tax (or withholding thereof) in
respect of gain realized on the sale, exchange, redemption, retirement at
maturity or other disposition of Notes, unless (a) the gain is effectively
connected with the conduct of a trade or business within the United States by
the holder, or (b) the holder is an individual who is present in the United
States for a period or periods aggregating 183 or more days in the taxable year
of the disposition and certain other conditions are met.
With respect to a Non-U.S. Holder subject to U.S. federal income tax as
described in the preceding paragraph, an exchange of a Note for an Exchange Note
will not be treated as a taxable exchange of the Note. The Old Notes provide for
the payment of Liquidated Damages in certain circumstances. Non-U.S. Holders
should consult their tax advisors as to the tax considerations relating to debt
instruments that provide for one or more contingent payments, in particular as
to the availability of the exemption for portfolio interest, and the ability of
holders to claim the benefits of income tax treaty exemptions from U.S.
withholding tax on interest, in respect of such Liquidated Damages.
Backup Withholding and Information Reporting. Under current Treasury
Regulations, backup withholding and certain information reporting do not apply
to payments made by the Company or a paying agent to Non-U.S. Holders if the
certification described under 'Payment of Interest on the Notes' is received,
provided that the payor does not have actual knowledge that the holder is a U.S.
person. If any payments of principal and interest are made to the beneficial
owner of a Note by or through the non-U.S. office of a non-U.S. custodian,
non-U.S. nominee or other non-U.S. agent of such beneficial owner, or if the
non-U.S. office of a non-U.S. 'broker' (as defined in applicable Treasury
Regulations) pays the proceeds of the sale of a Note or a coupon to the seller
thereof, backup withholding and information reporting will not apply.
Information reporting requirements (but not backup withholding) will apply,
however, to a payment by a non-U.S. office of a broker that is a U.S. person,
that derives 50% or more of its gross income for certain periods from the
conduct of a trade or business in the United States, or that is a 'controlled
foreign corporation' (generally, a non-U.S. corporation controlled by U.S.
shareholders) with respect to the United States, unless the broker has
documentary evidence in its records that the holder is a non-U.S. person and
certain other conditions are met, or the holder otherwise establishes an
exemption. Payment by a U.S. office of a broker is subject to both backup
withholding at a rate of 31% and information reporting unless the holder
certifies under penalties of perjury that it is a non-U.S. person, or otherwise
establishes an exemption. A Non-U.S. Holder may obtain a refund or a credit
against such holder's U.S. federal income tax liability of any amounts withheld
under the backup withholding rules, provided the required information is
furnished to the IRS.
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In addition, in certain circumstances, interest on a Note owned by a
Non-U.S. Holder will be required to be reported annually on IRS Form 1042S, in
which case such form will be filed with the IRS and furnished to the holder.
The New Withholding Regulations revise (substantially in certain
respects) the procedures that withholding agents and payees must follow to
comply with, or to establish an exemption, from these information reporting and
backup withholding provisions for payments after December 31, 2000. It is
possible that the Company and other withholding agents may request a new
withholding exemption from Non-U.S. Holders in order to qualify for continued
exemption from backup withholding under the New Withholding Regulations. Each
Non-U.S. Holder should consult its own tax advisor regarding the application to
such holder of the New Withholding Regulations.
Estate Tax. Subject to applicable estate tax treaty provisions, Notes
held at the time of death (or theretofore transferred subject to certain
retained rights or powers) by an individual who at the time of death is a
Non-U.S. Holder will not be included in such holder's gross estate for U.S.
federal estate tax purposes, provided that (a) the individual does not actually
or constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote and (b) the income on the Notes
is not effectively connected with the conduct of a U.S. trade or business by the
individual.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Registered Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until , 199 , all
dealers effecting transactions in the Exchange Securities may be required to
deliver a prospectus.
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Registered Exchange Offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchasers of any such Exchange Securities. Any broker-dealer that resells
Exchange Securities that were received by it for its own account pursuant to the
Registered Exchange Offer and any broker or dealer that participates in a
distribution of such Exchange Securities may be deemed to be an 'underwriter'
within the meaning of the Securities Act and any profit on any such resale of
Exchange Securities and any commission or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that, by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an 'underwriter' within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the Holders of the Securities) other than commissions or concessions of any
broker-dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
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THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER
GENERAL; PURPOSE OF THE EXCHANGE OFFER
In connection with the issuance of the Old Notes pursuant to a Purchase
Agreement, dated as of April 22, 1999, among General Chemical Group and Chase
Securities Inc., BT Alex. Brown Incorporated and ING Baring Furman Selz LLC (the
'Initial Purchasers'), the Initial Purchasers and their respective assignees
became entitled to the benefits of the Registration Rights Agreement.
Under the Registration Rights Agreement, the Company has agreed (1) to
use its best efforts to cause to be filed with the Commission on or prior to 60
days after the date of the Original Offering the Registration Statement of which
this prospectus is a part with respect to a registered offer to exchange the Old
Notes for the New Notes, and (2) to use its reasonable best efforts to cause the
Exchange Offer Registration Statement to be declared effective under the
Securities Act within 180 days after the initial issuance of the Old Notes. The
Company will keep the Exchange Offer open for not less than 30 business days
after the date notice of the Exchange Offer is mailed to holders of the Old
Notes. The Exchange Offer being made hereby, if consummated within 210 days
after the initial issuance of the Old Notes, will satisfy those requirements
under the Registration Rights Agreement.
Upon the terms and subject to the conditions set forth in this
prospectus and in the Letters of Transmittal, all Old Notes validly tendered and
not withdrawn prior to 5:00 p.m., New York City time, on the Expiration Date
will be accepted for exchange. New Notes will be issued in exchange for an equal
principal amount of outstanding Old Notes accepted in the Exchange Offer. Old
Notes may be tendered only in integral multiples of $1,000. This Prospectus,
together with the Letters of Transmittal, is being sent to all registered
holders as of , 1999. The Exchange Offer is not conditioned upon any
minimum principal amount of Old Notes being tendered for exchange. However, the
obligation to accept Old Notes for exchange pursuant to the Exchange Offer is
subject to certain customary conditions as set forth herein under
' -- Conditions.'
Old Notes shall be deemed to have been accepted as validly tendered
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Old Notes for the purposes of receiving the New Notes and delivering New
Notes to such holders.
Based on interpretations by the Staff of the Commission as set forth in
no-action letters issued to third parties (including Exxon Capital Holdings
Corporation (available May 13, 1988), Morgan Stanley & Co. Incorporated
(available June 5, 1991), K-III Communications Corporation (available May 14,
1993) and Shearman & Sterling (available July 2, 1993)), the Company believes
that the New Notes issued pursuant to the Exchange Offer may be offered for
resale, resold and otherwise transferred by any holder thereof (other than any
such holder that is a broker-dealer or an 'affiliate' of the Company within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that:
such New Notes are acquired in the ordinary course of business;
at the time of the commencement of the Exchange Offer such holder has
no arrangement or understanding with any person to participate in a
distribution of such New Notes; and
such holder is not engaged in, and does not intend to engage in, a
distribution of such New Notes.
The Company has not sought, and does not intend to seek, a no-action letter from
the Commission with respect to the effects of the Exchange Offer, and there can
be no assurance that the Staff would make a similar determination with respect
to the New Notes as it has in such no-action letters.
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By tendering Old Notes in exchange for New Notes and executing the
Letter of Transmittal, each holder will represent to the Company that:
any New Notes to be received by it will be acquired in the ordinary
course of business;
it has no arrangements or understandings with any person to participate
in the distribution of the Old Notes or New Notes within the meaning of
the Securities Act; and
it is not an 'affiliate,' as defined in Rule 405 under the Securities
Act, of the Company.
Each broker-dealer that receives Exchange Securities for its own account
in exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Securities. See 'Plan of Distribution.' Each holder, whether or
not it is a broker-dealer, shall also represent that it is not acting on behalf
of any person that could not truthfully make any of the foregoing
representations contained in this paragraph. If a holder of Old Notes is unable
to make the foregoing representations, such holder may not rely on the
applicable interpretations of the staff of the Commission and must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction unless such sale is made
pursuant to an exemption from such requirements.
Upon consummation of the Exchange Offer, subject to certain limited
exceptions, holders of Old Notes who do not exchange their Old Notes for New
Notes in the Exchange Offer will no longer be entitled to registration rights
and will not be able to offer or sell their Old Notes, unless such Old Notes are
subsequently registered under the Securities Act, except pursuant to an
exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. Subject to limited exceptions, the Company
will have no obligation to effect a subsequent registration of the Old Notes.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The term 'Expiration Date' shall mean , 1999, unless the
Company, in its sole discretion, extends the Exchange Offer, in which case the
term 'Expiration Date' shall mean the latest date to which the Exchange Offer is
extended.
To extend the Expiration Date, the Company will notify the Exchange
Agent of any extension by oral or written notice and will notify the holders of
the Old Notes by means of a press release or other public announcement prior to
9:00 A.M., New York City time, on the next business day after the previously
scheduled Expiration Date. Such announcement may state that the Company is
extending the Exchange Offer for a specified period of time.
The Company reserves the right (1) to delay acceptance of any Old Notes,
to extend the Exchange Offer or to terminate the Exchange Offer and not permit
acceptance of Old Notes not previously accepted if any of the conditions set
forth herein under ' -- Conditions' shall have occurred and shall not have been
waived by the Company prior to the Expiration Date, by giving oral or written
notice of such delay, extension or termination to the Exchange Agent, or (2) to
amend the terms of the Exchange Offer in any manner deemed by it to be
advantageous to the holders of the Old Notes. Any such delay in acceptance,
extension, termination or amendment will be followed as promptly as practicable
by oral or written notice thereof to the Exchange Agent. If the Exchange Offer
is amended in a manner determined by the Company to constitute a material
change, the Company will promptly disclose such amendment in a manner reasonably
calculated to inform the holders of the Old Notes of such amendment.
Without limiting the manner in which the Company may choose to make
public announcement of any delay, extension, amendment or termination of the
Exchange Offer, the Company shall have no obligations to publish, advertise, or
otherwise communicate any such public announcement, other than by making a
timely release to an appropriate news agency.
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INTEREST ON THE NEW NOTES
The New Notes will accrue interest at the rate of 10 5/8% per annum from
the last interest payment date on which interest was paid on the Old Note
surrendered in exchange therefor, or, if no interest has been paid on such Old
Note, from the Issue Date, provided, that if an Old Note is surrendered for
exchange on or after a record date for an interest payment date that will occur
on or after the date of such exchange and as to which interest will be paid,
interest on the New Note received in exchange therefor will accrue from the date
of such interest payment date. Interest on the New Notes is payable on May 1 and
November 1 of each year, commencing November 1, 1999. No additional interest
will be paid on Old Notes tendered and accepted for exchange.
PROCEDURES FOR TENDERING
To tender in the Exchange Offer, a holder must complete, sign and date
the applicable Letter of Transmittal, or a facsimile thereof, have the
signatures thereon guaranteed if required by the Letter of Transmittal, and mail
or otherwise deliver such Letter of Transmittal or such facsimile, together with
any other required documents, to the Exchange Agent prior to 5:00 p.m., New York
City time, on the Expiration Date. In addition, either:
certificates of such Old Notes must be received by the Exchange Agent
along with the applicable Letter of Transmittal; or
a timely confirmation of a book-entry transfer (a 'Book-Entry
Confirmation') of such Old Notes, if such procedure is available, into
the Exchange Agent's account at The Depository Trust Company (the
'Book-Entry Transfer Facility') pursuant to the procedure for
book-entry transfer described below, must be received by the Exchange
Agent prior to the Expiration Date with the applicable Letter of
Transmittal; or
the holder must comply with the guaranteed delivery procedures
described below.
The method of delivery of Old Notes, Letter of Transmittal and all other
required documents is at the election and risk of the holders. If such delivery
is by mail, it is recommended that registered mail, properly insured, with
return receipt requested, be used. In all cases, sufficient time should be
allowed to assure timely delivery. No Old Notes, Letters of Transmittal or other
required documents should be sent to the Company. Delivery of all Old Notes (if
applicable), Letters of Transmittal and other documents must be made to the
Exchange Agent at its address set forth below. Holders may also request their
respective brokers, dealers, commercial banks, trust companies or nominees to
effect such tender for such holders.
The tender by a holder of Old Notes will constitute an agreement between
such holder and the Company in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal. Any beneficial
owner whose Old Notes are registered in the name of a broker, dealer, commercial
bank, trust company or other nominee and who wishes to tender should contact
such registered holder promptly and instruct such registered holder to tender on
his behalf.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by any member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an 'eligible guarantor' institution within the meaning of
Rule 17Ad-15 under the Exchange Act (each an 'Eligible Institution') unless the
Old Notes tendered pursuant thereto are tendered (i) by a registered holder of
Old Notes who has not completed the box entitled 'Special Issuance Instructions'
or 'Special Delivery Instructions' on the applicable Letter of Transmittal or
(ii) for the account of an Eligible Institution.
If the Letter of Transmittal is signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such person should so indicate
when signing, and unless waived by the Company, evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal.
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All questions as to the validity, form, eligibility, time of receipt and
withdrawal of the tendered Old Notes will be determined by the Company in its
sole discretion, which determination will be final and binding. The Company
reserves the absolute right to reject any and all Old Notes not properly
tendered or any Old Notes which, if accepted, would, in the opinion of counsel
for the Company, be unlawful. The Company also reserves the absolute right to
waive any irregularities or conditions of tender as to particular Old Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer,
including the instructions in the Letters of Transmittal, will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as the
Company shall determine. Neither the Company, the Exchange Agent nor any other
person shall be under any duty to give notification of defects or irregularities
with respect to tenders of Old Notes, nor shall any of them incur any liability
for failure to give such notification. Tenders of Old Notes will not be deemed
to have been made until such irregularities have been cured or waived. Any Old
Notes received by the Exchange Agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned without cost to such holder by the Exchange Agent, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
In addition, the Company reserves the right in its sole discretion,
subject to the provisions of the Indenture:
to purchase or make offers for any Old Notes that remain outstanding
subsequent to the Expiration Date or, as set forth under
' -- Conditions,' to terminate the Exchange Offer;
to redeem Old Notes as a whole or in part at any time and from time to
time, as set forth under 'Description of the Notes -- Optional
Redemption;' and
to the extent permitted under applicable law, to purchase Old Notes in
the open market, in privately negotiated transactions or otherwise.
The terms of any such purchases or offers could differ from the terms of the
Exchange Offer.
In addition, each broker-dealer that receives Exchange Securities for
its own account in exchange for Securities, where such Securities were acquired
by such broker-dealer as a result of market-making or other trading activities,
must acknowledge that it will deliver a prospectus in connection with any resale
of such Exchange Securities. See 'Plan of Distribution.'
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, all Old Notes properly tendered will be accepted promptly after the
Expiration Date, and the New Notes will be issued promptly after acceptance of
the Old Notes. See ' -- Conditions.' For purposes of the Exchange Offer, Old
Notes shall be deemed to have been accepted as validly tendered for exchange
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. For each Old Note accepted for exchange, the holder of such Old
Note will receive a New Note having a principal amount equal to that of the
surrendered Old Note. In all cases, issuance of New Notes for Old Notes that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of:
certificates for such Old Notes or a timely Book-Entry Confirmation of
such Old Notes into the Exchange Agent's account at the applicable
Book-Entry Transfer Facility;
a properly completed and duly executed Letter of Transmittal; and
all other required documents.
If any tendered Old Notes are not accepted for any reason set forth in the terms
and conditions of the Exchange Offer, such unaccepted or such nonexchanged Old
Notes will be returned without expense to the tendering holder thereof (if in
certificated form) or credited to an account maintained with such Book-Entry
Transfer Facility as promptly as practicable after the expiration or termination
of the Exchange Offer.
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BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with
respect to the Old Notes at the applicable Book-Entry Transfer Facility for
purposes of the Exchange Offer within two business days after the date of this
prospectus. Any financial institution that is a participant in such Book-Entry
Transfer Facility's systems may make book-entry delivery of Old Notes by causing
such Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
applicable Book-Entry Transfer Facility, the applicable Letter of Transmittal or
facsimile thereof with any required signature guarantees and any other required
documents must, in any case, be transmitted to and received by the Exchange
Agent at one of the addresses set forth below under ' -- Exchange Agent' on or
prior to the Expiration Date or the guaranteed delivery procedures described
below must be complied with.
EXCHANGING BOOK-ENTRY NOTES
The Exchange Agent and the Book-Entry Transfer Facility have confirmed
that any financial institution that is a participant in the Book-Entry Transfer
Facility may utilize the Book-Entry Transfer Facility Automated Tender Offer
Program ('ATOP') procedures to tender Old Notes.
Any participant in the applicable Book-Entry Transfer Facility may make
book-entry delivery of Old Notes by causing such Book-Entry Transfer Facility to
transfer such Old Notes into the Exchange Agent's account in accordance with
such Book-Entry Transfer Facility's ATOP procedures for transfer. However, the
exchange for the Old Notes so tendered will only be made after a Book-Entry
Confirmation of such book-entry transfer of Old Notes into the Exchange Agent's
account, and timely receipt by the Exchange Agent of an Agent's Message and any
other documents required by the Letter of Transmittal. The term 'Agent's
Message' means a message, transmitted by the Book-Entry Transfer Facility and
received by the Exchange Agent and forming part of a Book-Entry Confirmation,
which states that the Book-Entry Transfer Facility has received an express
acknowledgment from a participant tendering Old Notes that are the subject of
such Book-Entry Confirmation that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal, and that the Company may
enforce such agreement against such participant.
GUARANTEED DELIVERY PROCEDURES
If the procedures for book-entry transfer cannot be completed on a
timely basis, a tender may be effected if:
the tender is made through an Eligible Institution;
prior to the Expiration Date, the Exchange Agent receives by facsimile
transmission, mail or hand delivery from such Eligible Institution a
properly completed and duly executed Letter of Transmittal and Notice
of Guaranteed Delivery, substantially in the form provided by the
Company, which:
(1) sets forth the name and address of the holder of Old Notes
and the amount of Old Notes tendered;
(2) states that the tender is being made thereby; and
(3) guarantees that within three New York Stock Exchange
('NYSE') trading days after the date of execution of the
Notice of Guaranteed Delivery, the certificates for all
physically tendered Old Notes, in proper form for
transfer, or a Book-Entry Confirmation, as the case may
be, and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution
with the Exchange Agent; and
the certificates for all physically tendered Old Notes, in proper form
for transfer, or a Book-Entry Confirmation, as the case may be, and all
other documents required by the Letter of Transmittal are received by
the Exchange Agent within three NYSE trading days after the date of
execution of the Notice of Guaranteed Delivery.
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WITHDRAWAL OF TENDERS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent prior to 5:00 p.m., New York City time on the
Expiration Date at one of the addresses set forth below under ' -- Exchange
Agent.' Any such notice of withdrawal must:
specify the name of the person having tendered the Old Notes to be
withdrawn;
identify the Old Notes to be withdrawn, including the principal amount
of such Old Notes;
in the case of Old Notes tendered by book-entry transfer, specify the
number of the account at the Book-Entry Transfer Facility from which
the Old Notes were tendered and specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the
withdrawn Old Notes and otherwise comply with the procedures of such
facility;
contain a statement that such holder is withdrawing its election to
have such Old Notes exchanged;
be signed by the holder in the same manner as the original signature on
the Letter of Transmittal by which such Old Notes were tendered,
including any required signature guarantees, or be accompanied by
documents of transfer to have the trustee with respect to the Old Notes
register the transfer of such Old Notes in the name of the person
withdrawing the tender; and
specify the name in which such Old Notes are registered, if different
from the person who tendered such Old Notes.
All questions as to the validity, form, eligibility and time of receipt of such
notice will be determined by the Company, whose determination shall be final and
binding on all parties. Any Old Notes so withdrawn will be deemed not to have
been validly tendered for exchange for purposes of the Exchange Offer. Any Old
Notes which have been tendered for exchange but which are not exchanged for any
reason will be returned to the tendering holder thereof without cost to such
holder, in the case of physically tendered Old Notes, or credited to an account
maintained with the applicable Book-Entry Transfer Facility for the Old Notes as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Notes may be retendered by following one
of the procedures described under ' -- Procedures for Tendering' and
' -- Book-Entry Transfer' above at any time on or prior to 5:00 p.m., New York
City time, on the Expiration Date.
CONDITIONS
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer if at any time
prior to 5:00 p.m., New York City time, on the Expiration Date, the Company
determines that the Exchange Offer violates applicable law, any applicable
interpretation of the staff of the Commission or any order of any governmental
agency or court of competent jurisdiction.
The foregoing conditions are for the sole benefit of the Company and may
be asserted by the Company regardless of the circumstances giving rise to any
such condition or may be waived by the Company in whole or in part at any time
and from time to time in its sole discretion. The failure by the Company at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this prospectus constitutes a
94
<PAGE>
part or the qualification of the Indenture under the Trust Indenture Act of
1939, as amended. The Company is required to use every reasonable effort to
obtain the withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible moment.
EXCHANGE AGENT
U.S. Bank Trust National Association, Exchange Agent has been appointed
as Exchange Agent for the Exchange Offer. Questions and requests for assistance
and requests for additional copies of this prospectus or of the Letters of
Transmittal should be directed to the Exchange Agent addressed as follows:
<TABLE>
<S> <C>
By Mail, Hand Delivery or For Information Call:
Overnight Courier: (800) 934-6802
U.S. Bank Trust National Association
180 East 5th Street Facsimile Transmission Number:
St. Paul, Minnesota 55101 (612) 244-1537
Attention: Specialized Finance
</TABLE>
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will
be borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail; however, additional solicitations may be
made by telegraph, telephone, telecopy or in person by officers and regular
employees of the Company.
The Company will not make any payments to brokers, dealers or other
persons soliciting acceptances of the Exchange Offer. The Company, however, will
pay the Exchange Agent reasonable and customary fees for its services and will
reimburse the Exchange Agent for its reasonable out-of-pocket expenses in
connection therewith. The Company may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of the prospectus and related documents to
the beneficial owners of the Old Notes, and in handling or forwarding tenders
for exchange.
The expenses to be incurred by the Company in connection with the
Exchange Offer will be paid by the Company, including fees and expenses of the
Exchange Agent and Trustee and accounting, legal, printing and related fees and
expenses.
The Company will pay all transfer taxes, if any, applicable to the
exchange of Old Notes pursuant to the Exchange Offer. If, however, New Notes or
Old Notes for principal amounts not tendered or accepted for exchange are to be
registered or issued in the name of any person other than the registered holder
of the Old Notes tendered, or if tendered Old Notes are registered in the name
of any person other than the person signing the Letter of Transmittal, or if a
transfer tax is imposed for any reason other than the exchange of Old Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
imposed on the registered holder or any other persons will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act
95
<PAGE>
and applicable state securities laws. The Company does not currently anticipate
that it will register the Old Notes under the Securities Act. To the extent that
Old Notes are tendered and accepted in the Exchange Offer, the trading market
for untendered and tendered but unaccepted Old Notes could be adversely
affected.
LEGAL MATTERS
Certain matters with respect to the New Notes will be passed on for the
Company by Debevoise & Plimpton, New York, New York.
EXPERTS
The consolidated financial statements as of December 31, 1997 and 1998
and for each of the three years in the period ended December 31, 1998 included
in this prospectus and the related financial statement schedule included
elsewhere in the registration statement have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their reports appearing herein and
elsewhere in the registration statement, and have been so included in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
96
<PAGE>
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
OF GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of Operations for the Three Months Ended March 31, 1998 and 1999........................... F-2
Consolidated Balance Sheets at December 31, 1998 and March 31, 1999................................................ F-3
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1998 and 1999........................... F-4
Notes to the Consolidated Financial Statements..................................................................... F-5
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditors' Report....................................................................................... F-7
Consolidated Statements of Operations for the three years ended December 31, 1998.................................. F-8
Consolidated Balance Sheets at December 31, 1997 and 1998.......................................................... F-9
Consolidated Statements of Cash Flows for the three years ended December 31, 1998.................................. F-10
Consolidated Statements of Changes in Equity for the three years ended December 31, 1998........................... F-11
Notes to Consolidated Financial Statements......................................................................... F-12
</TABLE>
F-1
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
1998 1999
------- -------
(IN THOUSANDS)
<S> <C> <C>
Net revenues....................................................................................... $62,343 $61,472
Cost of sales...................................................................................... 49,134 51,268
Selling, general and administrative expense........................................................ 3,928 4,047
------- -------
Operating profit.............................................................................. 9,281 6,157
Interest expense................................................................................... 2,916 2,669
Interest income.................................................................................... 157 423
Foreign currency transaction (gains) losses........................................................ (172) (15)
Other expense, net................................................................................. 36 30
------- -------
Income before income taxes and minority interest.............................................. 6,658 3,896
Minority interest.................................................................................. 4,437 2,587
------- -------
Income before income taxes.................................................................... 2,221 1,309
Income tax provision............................................................................... 323 330
------- -------
Net income.................................................................................... $ 1,898 $ 979
------- -------
------- -------
</TABLE>
See the accompanying notes to the consolidated financial statements.
F-2
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1999
------------ -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................................... $ 1,127 $ 1,249
Receivables, net........................................................................ 58,601 58,766
Inventories............................................................................. 25,508 22,571
Deferred income taxes................................................................... 4,392 4,383
Other current assets.................................................................... 1,659 4,988
------------ -----------
Total current assets............................................................... 91,287 91,957
Property, plant and equipment, net........................................................... 141,808 141,900
Other assets................................................................................. 15,619 16,687
------------ -----------
Total assets....................................................................... $248,714 $ 250,544
------------ -----------
------------ -----------
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable........................................................................ $ 24,298 $ 26,182
Accrued liabilities..................................................................... 25,146 27,923
Income taxes payable.................................................................... 1,988 --
------------ -----------
Total current liabilities.......................................................... 51,432 54,105
Other liabilities............................................................................ 78,561 83,829
------------ -----------
Total liabilities.................................................................. 129,993 137,934
Minority interest............................................................................ 43,429 45,090
Net investment by The General Chemical
Group Inc.................................................................................. 75,292 67,520
------------ -----------
Total liabilities and equity....................................................... $248,714 $ 250,544
------------ -----------
------------ -----------
</TABLE>
See the accompanying notes to the consolidated financial statements.
F-3
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
1998 1999
-------- -------
(IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net income.................................................................................... $ 1,898 $ 979
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization............................................................ 4,460 4,243
Decrease in receivables.................................................................. 13,126 271
Decrease in inventories.................................................................. 809 3,259
Increase (decrease) in accounts payable.................................................. (4,425) 1,558
Increase in accrued liabilities.......................................................... 3,646 619
(Decrease) in income taxes payable....................................................... (1,217) (2,702)
Increase (decrease) in other liabilities and assets, net................................. (7,125) 2,212
Increase in minority interest............................................................ 4,396 1,661
-------- -------
Net cash provided by operating activities................................................ 15,568 12,100
-------- -------
Cash flows from investing activities:
Capital expenditures.......................................................................... (2,545) (3,254)
Other financing activities.................................................................... (75) (373)
-------- -------
Net cash (used for) investing activities................................................. (2,620) (3,627)
-------- -------
Cash flows from financing activities:
Net transactions with The General Chemical Group Inc.......................................... (13,164) (8,351)
-------- -------
Net cash (used for) financing activities................................................. (13,164) (8,351)
-------- -------
Increase (decrease) in cash and cash equivalents................................................... (216) 122
Cash and cash equivalents at beginning of period................................................... 1,352 1,127
-------- -------
Cash and cash equivalents at end of period......................................................... $ 1,136 $ 1,249
-------- -------
-------- -------
</TABLE>
See the accompanying notes to the consolidated financial statements.
F-4
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED MARCH 31, 1999
(DOLLARS IN THOUSANDS)
(UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
General Chemical Industrial Products Inc. (the 'Company') is a
wholly-owned subsidiary of The General Chemical Group Inc. ('GCG'). The company
was formed on April 30, 1999 as part of the separation by GCG of its
Manufacturing and Performance Products Segments from its Industrial Chemicals
Segment through a distribution of stock of GenTek Inc. ('GenTek') to
stockholders of GCG (the 'Spinoff'). In connection with the Spinoff, GCG
transferred its Industrial Chemical Segment to a wholly-owned subsidiary,
General Chemical Industrial Products Inc. and transferred its Manufacturing
and Performance Products Segments to a wholly-owned subsidiary, GenTek, and
distributed the stock of GenTek to shareholders of GCG. On April 30, 1999, GCG
and GenTek became separate, publicly-traded companies on the New York Stock
Exchange. GCG continues to trade using the GCG symbol. GCG owns and operates
the Company, and GenTek owns and operates the businesses comprising the
Manufacturing and Performance Products Segments.
These unaudited financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. The financial
statements do not include certain information and footnotes required by
generally accepted accounting principles. In the opinion of management, all
adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation have been included. Operating results for the
three months ended March 31, 1999 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1999. The Company's
financial statements should be read in conjunction with the financial statements
and the notes thereto for the year ended December 31, 1998 included elsewhere in
this Prospectus.
Certain prior-period amounts have been reclassified to conform with the
current presentation.
NOTE 2 -- COMPREHENSIVE INCOME
Total comprehensive income is comprised of net income and foreign
currency translation gains and losses. Total comprehensive income for the three
months ended March 31, 1998 and 1999 was $1,901 and $963, respectively.
NOTE 3 -- ADDITIONAL FINANCIAL INFORMATION
The components of inventories were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1999
------------ -----------
<S> <C> <C>
Raw materials...................................................................... $ 3,480 $ 2,526
Work in process.................................................................... 1,839 2,199
Finished products.................................................................. 13,297 9,450
Supplies and containers............................................................ 6,892 8,396
------------ -----------
$ 25,508 $22,571
------------ -----------
------------ -----------
</TABLE>
NOTE 4 -- RELATED PARTY TRANSACTIONS
MANAGEMENT AGREEMENT
GCG is party to a management agreement with Latona Associates (which is
controlled by a stockholder of GCG) under which GCG receives corporate
supervisory and administrative services and strategic guidance for a quarterly
fee. In connection with the Spinoff, Latona agreed to provide its services
separately to GCG and GenTek. The Company's share of this management fee is $285
and $146 for the three months ended March 31, 1998 and 1999, respectively.
F-5
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
FOR THE QUARTER ENDED MARCH 31, 1999
(DOLLARS IN THOUSANDS)
(UNAUDITED)
OTHER TRANSACTIONS
The Company supplies soda ash to General Chemical Corporation ('GCC'),
an affiliate of the Company. For the three months ended March 31, 1998 and 1999,
sales to GCC amounted to $1,298 and $931, respectively.
NOTE 5 -- GEOGRAPHIC INFORMATION
<TABLE>
<CAPTION>
TOTAL REVENUES OPERATING PROFIT
MARCH 31, MARCH 31,
------------------ ----------------
1998 1999 1998 1999
------- ------- ------ ------
<S> <C> <C> <C> <C>
United States....................................................... $48,450 $47,337 $7,960 $5,664
Foreign............................................................. 19,754 21,933 1,321 493
Elimination......................................................... (5,861) (7,798) -- --
------- ------- ------ ------
$62,343 $61,472 $9,281 $6,157
------- ------- ------ ------
------- ------- ------ ------
</TABLE>
NOTE 6 -- SUBSEQUENT EVENT
As of April 30, 1999, and in connection with the Spinoff, the Company
issued and sold $100,000 aggregate principal amount of 10 5/8% Senior
Subordinated Notes due 2009 and entered into an $85,000 revolving credit
facility with certain lenders party thereto, The Chase Manhattan Bank, as
Administrative Agent, The Chase Manhattan Bank of Canada, as Canadian
Administrative Agent, The Bank of Nova Scotia, as Syndication Agent, and The
First National Bank of Chicago as Documentation Agent.
F-6
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE STOCKHOLDER OF
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
We have audited the accompanying consolidated balance sheets of General
Chemical Industrial Products Inc. as of December 31, 1997 and 1998, and the
related consolidated statements of operations, changes in equity and cash flows
for each of the three years in the period ended December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of General Chemical Industrial
Products Inc. at December 31, 1997 and 1998, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1998 in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Parsippany, New Jersey
February 11, 1999
(April 30, 1999 as to Note 1)
F-7
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1996 1997 1998
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Net revenues....................................................................... $298,945 $289,700 $261,469
Cost of sales...................................................................... 198,802 204,769 202,338
Selling, general and administrative expense........................................ 22,219 16,650 18,082
-------- -------- --------
Operating profit................................................................. 77,924 68,281 41,049
Interest expense................................................................... 13,001 12,747 11,747
Interest income.................................................................... 1,029 1,029 930
Foreign currency transaction (gains) losses........................................ (86) 185 447
Other expense, net................................................................. 441 285 524
-------- -------- --------
Income before minority interest and income taxes................................. 65,597 56,093 29,261
Minority interest.................................................................. 31,635 24,253 16,666
-------- -------- --------
Income before income taxes....................................................... 33,962 31,840 12,595
Income tax provision............................................................... 9,682 9,576 3,171
-------- -------- --------
Net income....................................................................... $ 24,280 $ 22,264 $ 9,424
-------- -------- --------
-------- -------- --------
</TABLE>
See the accompanying notes to the consolidated financial statements.
F-8
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents...................................................................... $ 1,352 $ 1,127
Receivables, net............................................................................... 72,917 58,601
Inventories.................................................................................... 20,630 25,508
Deferred income taxes.......................................................................... 4,295 4,392
Other current assets........................................................................... 2,217 1,659
-------- --------
Total current assets........................................................................ 101,411 91,287
Property, plant and equipment, net............................................................... 144,035 141,808
Other assets..................................................................................... 16,729 15,619
-------- --------
Total assets........................................................................... $262,175 $248,714
-------- --------
-------- --------
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable............................................................................... $ 29,216 $ 24,298
Accrued liabilities............................................................................ 24,412 25,146
Income taxes payable........................................................................... 1,914 1,988
-------- --------
Total current liabilities................................................................... 55,542 51,432
Other liabilities................................................................................ 77,827 78,561
-------- --------
Total liabilities........................................................................... 133,369 129,993
Minority interest................................................................................ 43,301 43,429
Net investment by The General Chemical Group Inc................................................. 85,505 75,292
-------- --------
Total liabilities and equity........................................................... $262,175 $248,714
-------- --------
-------- --------
</TABLE>
See the accompanying notes to the consolidated financial statements.
F-9
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1996 1997 1998
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income......................................................................... $ 24,280 $ 22,264 $ 9,424
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization................................................. 15,646 16,798 16,999
Net loss on disposition of long-term assets................................... 497 696 460
(Increase) decrease in receivables............................................ (9,714) (12,085) 12,189
(Increase) decrease in inventories............................................ 2,966 (940) (5,754)
Increase (decrease) in accounts payable....................................... 3,030 3,631 (3,460)
Increase (decrease) in accrued liabilities.................................... 4,342 (5,234) 909
Increase (decrease) in income taxes payable................................... 820 (2,394) (32)
Increase in minority interest................................................. 10,294 4,729 128
Increase (decrease) in other liabilities and assets, net...................... (1,737) 2,293 6,946
-------- -------- --------
Net cash provided by operating activities.................................. 50,424 29,758 37,809
-------- -------- --------
Cash flows from investing activities:
Capital expenditures............................................................... (34,934) (30,468) (18,498)
Proceeds from sales or disposals of long-term assets............................... 30 7 101
-------- -------- --------
Net cash used for investing activities..................................... (34,904) (30,461) (18,397)
-------- -------- --------
Cash flows from financing activities:
Net transactions with The General Chemical Group Inc............................... (14,839) 446 (19,637)
-------- -------- --------
Net cash provided by (used for) financing activities....................... (14,839) 446 (19,637)
-------- -------- --------
Increase (decrease) in cash and cash equivalents..................................... 681 (257) (225)
Cash and cash equivalents at beginning of period..................................... 928 1,609 1,352
-------- -------- --------
Cash and cash equivalents at end of period........................................... $ 1,609 $ 1,352 $ 1,127
-------- -------- --------
-------- -------- --------
</TABLE>
See the accompanying notes to the consolidated financial statements.
F-10
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE THREE YEARS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
1996 1997 1998
-------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Net investment by The General Chemical Group Inc. at beginning of year.................$ 53,354 $62,795 $ 85,505
Net income............................................................................ 24,280 22,264 9,424
Transfers (to) from The General Chemical Group Inc................................... (14,839) 446 (19,637)
-------- ------- --------
Net investment by The General Chemical Group Inc. at end of year..................... $ 62,795 $85,505 $ 75,292
-------- ------- --------
-------- ------- --------
</TABLE>
See the accompanying notes to the consolidated financial statements.
F-11
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 1 -- BASIS OF PRESENTATION
General Chemical Industrial Products Inc. (the 'Company') is a leading
North American supplier of soda ash and calcium chloride to a broad range of
industrial and municipal customers. The primary end markets for soda ash include
glass production, sodium-based chemicals, powdered detergents, water treatment
and other industrial end uses. Calcium chloride is mainly used for dust control
and roadbed stabilization during the summer and melting ice during the winter.
The Company is a wholly-owned subsidiary of The General Chemical Group Inc.
('GCG'). The Company was formed on April 30, 1999 as part of the separation by
GCG of its Manufacturing and Performance Products Segments from its Industrial
Chemicals Segment through a distribution of stock of GenTek Inc. ('GenTek') to
stockholders of GCG (the 'Spinoff'). In connection with the Spinoff, GCG
transferred its Industrial Chemical Segment to a wholly-owned subsidiary,
General Chemical Industrial Products Inc. and transferred its Manufacturing
and Performance Products Segment to a wholly-owned subsidiary, GenTek and
distributed the stock of GenTek to shareholders of GCG. On April 30, 1999, GCG
and GenTek became separate, publicly-traded companies on the New York Stock
Exchange. GCG continues to trade using the GCG symbol. GCG owns and operates
the Company, and GenTek owns and operates the businesses comprising the
Manufacturing and Performance Products Segments.
The transfer of GCG's Industrial Chemical Segment to the Company has been
reflected at the historical book value of the assets and liabilities received
and accounted for in a manner similar to a pooling of interests. Accordingly,
all prior periods presented have been restated to reflect the transfer.
The financial information included herein does not necessarily reflect the
consolidated results of operations, financial position, changes in equity and
cash flows of the Company had the Company been a separate stand-alone entity for
the periods presented. The consolidated financial statements include an
allocation of certain assets, liabilities and expenses from GCG, including
allocations of general corporate overhead expenses of $2,569, $1,285 and $1,448
for the years 1996, 1997 and 1998, respectively. In the opinion of management,
expenses have been allocated to the Company in a reasonable and consistent basis
using management's estimate of services provided to the Company by GCG. However,
such allocations are not necessarily indicative of the level of expenses which
might have been incurred had the Company been operating as a stand-alone entity
during the periods presented or expected to be incurred after the Spinoff.
The Company participates in GCG's centralized cash management and financing
program, and the accompanying financial statements include an allocation of net
interest expense from GCG. To the extent the Company has experienced temporary
cash needs for working capital purposes or capital expenditures, such funds have
historically been provided by GCG. The net effect of cash transfers to or from
GCG are reflected in net investment by The General Chemical Group Inc. Net
interest expense has been allocated assuming that the Company's allocated share
of GCG's debt would be $150,000. The allocations were made consistently in each
year, and management believes the allocations are reasonable. However, these
interest costs would not necessarily be indicative of what the actual costs
would have been had the Company operated as a separate, stand-alone public
entity. Subsequent to the Spinoff, the Company will be responsible for these
cash management functions using its own resources or purchased services and
will be responsible for the costs associated with operating a public company.
The Company's financial results include the costs incurred by GCG pension
and postretirement benefit plans for employees and retirees of the Company.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
F-12
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
The accompanying consolidated financial statements reflect the results of
operations, financial position, changes in net equity and cash flows of the
Company, including General Chemical (Soda Ash) Partners ('GCSAP') of which the
Company owns 51 percent. The consolidated financial statements reflect the
assets and liabilities and the historical results of operations of the
Industrial Chemical Business. All intercompany balances and transactions have
been eliminated.
Taxes on income are computed as if the Company were a stand-alone company.
The provision for income taxes has been determined as if the Company had filed
separate tax returns under its existing structure for the periods presented.
Inventories are valued at the lower of cost or market, using the last-in,
first-out ('LIFO') method for most domestic production inventories and the
first-in, first-out ('FIFO') or average-cost method for all other inventories.
Production inventory costs include material, labor and factory overhead.
Property, plant and equipment are carried at cost and are depreciated
principally using the straight line method, using estimated lives which range
from 2 to 30 years. Mines and machinery and equipment of GCSAP are depreciated
using the units-of-production method. Approximately 54 percent of machinery and
equipment and 80 percent of mines and quarries are depreciated using the units
of production method.
The Company evaluates the recovery of long-lived assets not held for sale
by measuring the carrying value of these assets against the estimated
undiscounted future cash flows associated with them. At the time such
evaluations indicate that the future cash flows are not sufficient to recover
the carrying value of such assets, the assets are adjusted to their fair values,
which have been determined on a discounted cash flow basis.
The Company provides for the expected costs to be incurred for the eventual
reclamation of mining properties pursuant to local law. Land reclamation costs
are being accrued over the estimated remaining life of the reserves currently
under lease. At December 31, 1997 and 1998, the Company had accruals of $24,746
and $25,684, respectively, for land reclamation. These amounts are included in
other liabilities on the balance sheet.
The Company recognizes deferred tax assets and liabilities based on
differences between financial statement and tax bases of assets and liabilities
using presently enacted tax rates.
The Company does not hold or issue derivative financial instruments for
trading purposes or any other purposes.
All highly liquid instruments purchased with a maturity of three months or
less are considered to be cash equivalents.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, 'Accounting for Derivative Instruments
and Hedging Activities' ('FAS 133'). FAS 133 requires that all derivative
instruments be measured at fair value and recognized in the balance sheet as
either assets or liabilities. The Company is required to adopt FAS 133 for
fiscal years beginning after June 15, 1999. The Company does not expect the
adoption of FAS 133 will have a material effect on the Company's results of
operations or financial condition.
F-13
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE 3 -- INCOME TAXES
Income before income taxes is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
United States................................................................ $18,280 $18,746 $ 8,141
Foreign...................................................................... 15,682 13,094 4,454
------- ------- -------
Total................................................................... $33,962 $31,840 $12,595
------- ------- -------
------- ------- -------
</TABLE>
The components of the income tax provision are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1996 1997 1998
------- ------ -------
<S> <C> <C> <C>
United States:
Current.................................................................... $ 5,145 $1,018 $ 3,850
Deferred................................................................... (2,224) 2,884 (2,691)
Foreign:
Current.................................................................... 6,179 5,073 1,503
Deferred................................................................... (726) (739) (94)
State:
Current.................................................................... 1,939 706 1,552
Deferred................................................................... (631) 634 (949)
------- ------ -------
Total................................................................. $ 9,682 $9,576 $ 3,171
------- ------ -------
------- ------ -------
</TABLE>
A summary of the components of deferred tax assets and liabilities is as
follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------
1997 1998
---------- ----------
<S> <C> <C>
Postretirement benefits............................................................ $ 12,575 $ 12,597
Nondeductible accruals............................................................. 12,808 13,363
Foreign operations................................................................. 4,302 4,291
Other.............................................................................. 105 105
---------- ----------
Deferred tax assets........................................................... 29,790 30,356
---------- ----------
Property, plant and equipment...................................................... 15,029 15,739
Pensions........................................................................... 5,377 4,733
Inventory.......................................................................... (631) (681)
Other.............................................................................. 40 40
---------- ----------
Deferred tax liabilities...................................................... 19,815 19,831
---------- ----------
Valuation allowance................................................................ 11,434 11,423
---------- ----------
Net deferred tax liabilities....................................................... $ 1,459 $ 898
---------- ----------
---------- ----------
</TABLE>
The Company has deferred tax assets related to foreign tax credits of
$11,434 and $11,423 at December 31, 1997 and 1998, respectively, against which a
full valuation allowance has been recorded. The Company reversed $1,426, $4,656
and $11 of previously recorded valuation allowances during 1996, 1997 and 1998,
respectively, primarily related to foreign tax credits that had expired.
F-14
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
The difference between the effective income tax rate and the United States
statutory rate is reconciled below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1996 1997 1998
----- ----- ------
<S> <C> <C> <C>
U.S. federal statutory rate....................................................... 35.0% 35.0% 35.0%
State income taxes, net of federal benefit........................................ 2.5 2.7 3.1
Tax effect of foreign operations.................................................. 2.5 1.1 2.4
Depletion......................................................................... (11.9) (9.1) (16.6)
Other............................................................................. 0.4 0.4 1.3
----- ----- ------
Total........................................................................ 28.5% 30.1% 25.2%
----- ----- ------
----- ----- ------
</TABLE>
In connection with the Spinoff, GCG entered into a tax sharing agreement
with GenTek. The agreement will require GenTek to indemnify and hold harmless
GCG for consolidated income tax liabilities attributable to periods before the
Spinoff.
NOTE 4 -- PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
The Company participates in GCG's domestic and foreign pension plans. At
the Spinoff, the Company will assume the responsibility for pension benefits for
retirees whose last work assignment was with the Company and for employees of
the Company. Following the Spinoff, the Company will establish separate defined
benefit plans for the employees and retirees of the Company. Assets included in
trusts under qualified pension plans will be divided after the Spinoff between
the trusts for GenTek's qualified pension plans and the Company's qualified
pension plans. Each such domestic plan will receive the legally required funding
under the Employee Retirement Income Security Act of 1974 and foreign plans will
receive funding as specified under the applicable statutory requirement. The
Company also participates in GCG's sponsored postretirement benefit plan
substantially covering all hourly and certain salaried employees of GCG. GCG
funds these benefits on a pay-as-you-go basis. At the Spinoff, the Company will
assume the responsibility for postretirement benefits for retirees whose last
work assignment was with the Company and for the employees of the Company. The
disclosures for GCG's Pension Plans and Other Postretirement Benefits are as
follows:
<TABLE>
<CAPTION>
OTHER
PENSION BENEFITS POSTRETIREMENT BENEFITS
DECEMBER 31, DECEMBER 31,
-------------------------------- -----------------------------
1996 1997 1998 1996 1997 1998
-------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
UNITED STATES:
Components of Net Periodic Benefit Cost
Service Cost................................. $ 4,748 $ 5,217 $ 5,645 $ 1,455 $ 1,575 $ 1,568
Interest Cost................................ 13,125 13,873 14,935 3,587 3,896 4,046
Expected Return on Plan Assets............... (12,241) (13,466) (15,156) -- -- --
Amortization of Net Prior Service
Cost.................................. 841 843 910 (1,604) (1,604) (1,604)
(Gain)/Loss............................. 80 46 10 (757) (587) (628)
-------- -------- -------- ------- ------- -------
Net Periodic Benefit Cost.................... $ 6,553 $ 6,513 $ 6,344 $ 2,681 $ 3,280 $ 3,382
-------- -------- -------- ------- ------- -------
-------- -------- -------- ------- ------- -------
</TABLE>
F-15
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
OTHER
POSTRETIREMENT
PENSION BENEFITS BENEFITS
DECEMBER 31, DECEMBER 31,
-------------------- --------------------
1997 1998 1997 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Change in Benefit Obligation
Benefit Obligation at Prior Measurement Date...................... $187,760 $203,495 $ 55,578 $ 57,522
Service Cost...................................................... 5,217 5,533 1,575 1,568
Interest Cost..................................................... 13,873 14,856 3,896 4,046
Actuarial (Gain)/Loss............................................. 960 22,332 (1,800) (948)
Benefits Paid..................................................... (9,077) (10,648) (2,318) (2,989)
Plan Amendments................................................... 699 -- -- --
Business Combinations............................................. 4,063 1,333 591 --
-------- -------- -------- --------
Benefit Obligation at Measurement Date............................ $203,495 $236,901 $ 57,522 $ 59,199
-------- -------- -------- --------
-------- -------- -------- --------
Change in Plan Assets
Fair Value of Assets at Prior Measurement Date.................... $166,661 $193,301 $ -- $ --
Actual Return on Plan Assets...................................... 29,122 17,124 -- --
Employer Contributions............................................ 2,470 3,065 2,318 2,989
Benefits Paid..................................................... (9,077) (10,649) (2,318) (2,989)
Business Combinations............................................. 4,125 1,147 -- --
-------- -------- -------- --------
Fair Value of Assets at Measurement Date.......................... $193,301 $203,988 -- --
-------- -------- -------- --------
-------- -------- -------- --------
Reconciliation of Funded Status
Funded Status..................................................... $(10,194) $(32,913) $(57,522) $(59,199)
Unrecognized Net
Transition (Asset)/Obligation................................ -- 13 -- --
Prior Service Cost........................................... 7,091 6,178 (11,104) (9,500)
(Gain)/Loss.................................................. (23,796) (3,540) (8,309) (8,629)
-------- -------- -------- --------
Net Amount Recognized............................................. $(26,899) $(30,262) $(76,935) $(77,328)
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
The assumptions used in accounting for the plans in 1996, 1997 and 1998
were
<TABLE>
<CAPTION>
PENSION PLANS
-----------------------------------------
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Discount rate.......................................................................... 7 1/2% 7 1/2% 6 3/4%
Long-term rate of return on assets..................................................... 9% 9% 9%
Average rate of increase in employee compensation...................................... 5% 5% 5%
</TABLE>
The assumption used in accounting for the medical plans in 1998 was an 8
percent health care cost trend rate (decreasing to 6 3/4 percent in the year
2001 and beyond). A one percent increase in the health care trend rate would
increase the accumulated postretirement benefit obligation by $3,881 at year end
1998 and the net periodic cost by $330 for the year. A one percent decrease in
the health care trend rate would decrease the accumulated postretirement benefit
obligation by $4,206 at year end 1998 and the net periodic cost by $357 for the
year.
The assumption used in accounting for the plans in 1997 was a 10 percent
health care cost trend rate (decreasing to 7 1/2 percent in the year 2000 and
beyond).
The dates used to measure plan assets and liabilities were October 31, 1997
and 1998 for all plans. Pension plan assets are invested primarily in stocks,
bonds, short-term securities and cash equivalents.
F-16
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
OTHER
PENSION BENEFITS POSTRETIREMENT BENEFITS
DECEMBER 31, DECEMBER 31,
----------------------------- --------------------------
1996 1997 1998 1996 1997 1998
------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
CANADA
Components of Net Periodic Benefit Cost
Service Cost........................................ $ 1,494 $ 1,352 $ 1,463 $ 310 $ 302 $ 332
Interest Cost....................................... 3,727 3,868 3,789 864 1,032 1,014
Expected Return on Plan Assets...................... (4,662) (4,877) (4,881) -- -- --
Amortization of Net Prior Service Cost.............. 92 90 84 -- -- --
(Gain)/Loss......................................... 467 432 458 -- -- --
------- ------- ------- ------ ------ ------
Net Periodic Benefit Cost...................... $ 1,118 $ 865 $ 913 $1,174 $1,334 $1,346
------- ------- ------- ------ ------ ------
------- ------- ------- ------ ------ ------
</TABLE>
<TABLE>
<CAPTION>
OTHER
POSTRETIREMENT
PENSION BENEFITS BENEFITS
DECEMBER 31, DECEMBER 31,
---------------------- ----------------------
1997 1998 1997 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Change in Benefit Obligation
Benefit Obligation at Prior Measurement Date.............. $ 50,714 $ 55,493 $ 13,297 $ 14,631
Service Cost.............................................. 1,349 1,457 302 330
Interest Cost............................................. 3,857 3,773 1,029 1,010
Actuarial (Gain)/Loss..................................... 3,977 5,823 592 (934)
Foreign Currency Translation.............................. (899) (3,701) (235) (977)
Benefits Paid............................................. (3,505) (3,240) (354) (370)
-------- -------- -------- --------
Benefit Obligation at Measurement Date............... $ 55,493 $ 59,605 $ 14,631 $ 13,690
-------- -------- -------- --------
-------- -------- -------- --------
Change in Plan Assets
Fair Value of Assets at Prior Measurement Date............ $ 59,940 $ 66,181 $ -- $ --
Actual Return on Plan Assets.............................. 10,611 2,633 -- --
Employer Contributions.................................... 1,085 1,643 354 370
Foreign Currency Translation.............................. (1,950) (4,412) -- --
Benefits Paid............................................. (3,505) (3,240) (354) (370)
-------- -------- -------- --------
Fair Value of Assets at Measurement Date............. $ 66,181 $ 62,805 $ -- $ --
-------- -------- -------- --------
-------- -------- -------- --------
Reconciliation of Funded Status
Funded Status............................................. $ 11,576 $ 3,201 $(14,631) $(13,691)
Unrecognized Net Prior Service Cost....................... 834 695 -- --
(Gain)/Loss............................................... 6,392 13,560 1,340 316
-------- -------- -------- --------
Net Amount Recognized................................ $ 18,802 $ 17,456 $(13,291) $(13,375)
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
The Canadian prepaid pension cost is included in other assets on the
balance sheet.
The assumptions used in accounting for the plans in 1996, 1997 and 1998
were
<TABLE>
<CAPTION>
PENSION PLANS
-----------------------------------------
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Estimated discount rate................................................................ 8% 7 1/2% 6 3/4%
Estimated long-term rate of return on assets........................................... 9% 9% 9%
Average rate of increase in employee compensation...................................... 5 1/4% 5 1/4% 5 1/4%
</TABLE>
The assumption used in accounting for the medical plans in 1998 was an 8.4
percent health care cost trend rate (decreasing to 6 percent in the year 2003
and beyond). A one percent increase in the health care trend rate would increase
the accumulated postretirement benefit obligation by $2,803 at year
F-17
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
end 1998 and the net periodic cost by $289 for the year. A one percent decrease
in the health care trend rate would decrease the accumulated postretirement
benefit obligation by $2,209 at year end 1998 and the net periodic cost by $223
for the year.
The assumption used in accounting for the plans in 1997 was a 10 percent
health care cost trend rate (decreasing to 7 1/2 percent in the year 2003 and
beyond).
The dates used to measure plan assets and liabilities were October 31, 1997
and 1998 for all plans. Pension plan assets are invested primarily in stocks,
bonds, short-term securities and cash equivalents.
The Company's share of GCG's consolidated net periodic benefit cost related
to pension benefits, which has been recorded in the accompanying statement of
operations in 1998, 1997 and 1996 was $3,282, $3,277 and $3,269, respectively.
The Company's share of GCG's consolidated net periodic benefit cost related to
postretirement benefits, which has been recorded in the accompanying statement
of operations in 1998, 1997 and 1996 was $2,118, $2,103 and $1,349,
respectively. The Company's share of the accrued pension obligation, which has
been recorded in the accompanying balance sheet at December 31, 1998 and
December 31, 1997 was $8,873 and $8,424, respectively. The actual amount
transferred will be measured at the Spinoff date and may be different from these
amounts.
The Company's share of the long-term portion of the accrued postretirement
benefit obligation as of December 31, 1998 and 1997 was $38,766 and $38,526,
respectively, and is included in other liabilities on the balance sheet. The
actual amount transferred will be measured at the Spinoff date and may be
different from these amounts.
The Company's share of GCG's pension assets as of December 31, 1997 and
1998 was $16,422 and $15,312, respectively, is included in other assets on the
balance sheet. The actual amount transferred will be measured at the Spinoff
date and may be different from these amounts.
NOTE 5 -- COMMITMENTS AND CONTINGENCIES
Future minimum rental payments for operating leases (primarily for
transportation equipment, offices and warehouses) having initial or remaining
noncancellable lease terms in excess of one year as of December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31,
- ---------------------------------------------------------------------------------
<S> <C>
1999.......................................................................... $ 9,570
2000.......................................................................... 3,366
2001.......................................................................... 350
2002.......................................................................... 299
2003 and thereafter........................................................... 213
-------
$13,798
-------
-------
</TABLE>
Rental expense for the years ended December 31, 1996, 1997 and 1998 was
$11,175, $12,772 and $13,913, respectively.
Parent Guaranty and Transfer Agreement. A restated parent guaranty and
transfer agreement between New Hampshire Oak, a wholly owned subsidiary of GCG
and the parent of the Company, ACI International Limited and TOSOH America, Inc.
provides that in the event that either New Hampshire Oak, ACI International
Limited or TOSOH America, Inc. (such entities being referred to as a
'transferring parent' or 'nontransferring parent' as the context requires)
proposes to sell or otherwise transfer or cause to be sold or transferred the
voting securities of the Company, the Andover Group, Inc. or TOSOH Wyoming, Inc.
(the respective subsidiaries constituting the partners of GCSAP) as the case may
be, the nontransferring parents will have the following options: (1) to purchase
the transferring parent's subsidiary's interest in GCSAP at fair market value;
(2) to require the transferring parent to purchase the nontransferring parents'
subsidiaries' interest in GCSAP at fair market value; (3) to buy the voting
F-18
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
securities to be sold by the transferring parent on the same terms and
conditions and at the same price as the transferring parent proposes to sell or
otherwise transfer or cause to be sold or transferred such voting securities; or
(4) to cause the proposed transferee to purchase the nontransferring parents'
subsidiaries' interest in GCSAP for a price reflecting the price to be paid by
the proposed transferee for such voting securities. In the event that New
Hampshire Oak ceases to own at least 51 percent of the Company while the Company
is a partner, the Company shall pay to The Andover Group, Inc. $2,833.
The Company is involved in claims, litigation, administrative proceedings
and investigations and remediation relative to environmental matters. Although
the amount of any ultimate liability which could arise with respect to these
matters cannot be accurately predicted, it is the opinion of management, based
upon currently available information and the accruals established, that any
such liability will have no material adverse effect on the Company's financial
condition, results of operations or cash flows.
NOTE 6 -- RELATED PARTY TRANSACTIONS
MANAGEMENT AGREEMENT
The General Chemical Group Inc. is party to a management agreement with
Latona Associates (which is controlled by a stockholder of GCG) under which GCG
receives corporate supervisory and administrative services and strategic
guidance for a quarterly fee. The Company's share of this management fee is
$388, $361 and $285 per quarter for the years 1996, 1997 and 1998, respectively.
OTHER TRANSACTIONS
The Company supplies soda ash to General Chemical Corporation ('GCC'), an
affiliate of the Company. For the years ended December 31, 1996, 1997 and 1998,
sales to GCC amounted to $5,665, $5,240 and $5,325, respectively.
NOTE 7 -- ADDITIONAL FINANCIAL INFORMATION
The following are summaries of selected balance sheet items:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
RECEIVABLES 1997 1998
- ---------------------------------------------------------------------------- ------- -------
<S> <C> <C>
Trade....................................................................... $68,655 $54,857
Other....................................................................... 6,951 6,402
Allowance for doubtful accounts............................................. (2,689) (2,658)
------- -------
$72,917 $58,601
------- -------
------- -------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
INVENTORIES 1997 1998
- ---------------------------------------------------------------------------- ------- -------
<S> <C> <C>
Raw materials............................................................... $ 2,782 $ 3,480
Work in process............................................................. 205 1,839
Finished products........................................................... 11,210 13,297
Supplies and containers..................................................... 6,433 6,892
------- -------
$20,630 $25,508
------- -------
------- -------
</TABLE>
Inventories valued at LIFO amounted to $2,475 and $5,632 at December 31,
1997 and 1998, respectively, which were below estimated replacement cost by
$3,136 and $2,011, respectively. The impact of LIFO liquidations in 1996, 1997
and 1998 was not significant.
F-19
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
PROPERTY, PLANT AND EQUIPMENT 1997 1998
- ------------------------------------------------------------------------- --------- --------
<S> <C> <C>
Land and improvements.................................................... $ 19,924 $ 19,915
Machinery and equipment.................................................. 192,411 178,049
Buildings and leasehold improvements..................................... 16,607 12,492
Construction in progress................................................. 7,413 5,200
Mines and quarries....................................................... 13,658 14,395
--------- --------
250,013 230,051
Less accumulated depreciation and amortization........................... (105,978) (88,243)
--------- --------
$ 144,035 $141,808
--------- --------
--------- --------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
ACCRUED LIABILITIES 1997 1998
- ---------------------------------------------------------------------------- ------- -------
<S> <C> <C>
Wages, salaries and benefits................................................ $ 6,497 $11,064
Taxes, other than income taxes.............................................. 8,004 7,638
Other....................................................................... 9,911 6,444
------- -------
$24,412 $25,146
------- -------
------- -------
</TABLE>
NOTE 8 -- FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values of cash and cash equivalents, receivables and payables
approximate their carrying values due to the short-term nature of the
instruments.
NOTE 9 -- GEOGRAPHIC INFORMATION
<TABLE>
<CAPTION>
TOTAL REVENUES OPERATING PROFIT IDENTIFIABLE ASSETS
-------------------------------- ----------------------------- --------------------
1996 1997 1998 1996 1997 1998 1997 1998
-------- -------- -------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
United States(1).... $230,489 $220,525 $191,884 $57,927 $50,847 $32,403 $167,192 $156,784
Foreign(2).......... 111,117 106,052 93,296 19,997 17,434 8,646 94,983 91,930
Elimination(3)...... (42,661) (36,877) (23,711) -- -- -- -- --
-------- -------- -------- ------- ------- ------- -------- --------
$298,945 $289,700 $261,469 $77,924 $68,281 $41,049 $262,175 $248,714
-------- -------- -------- ------- ------- ------- -------- --------
-------- -------- -------- ------- ------- ------- -------- --------
</TABLE>
- ------------
(1) Total revenues include export sales of $66,467, $74,032 and $60,710 for the
years ended December 31, 1996, 1997 and 1998, respectively.
(2) Principally Canada.
(3) Sales between geographic areas are recorded at prices comparable to market
prices charged to third-party customers and are eliminated in consolidation.
F-20
<PAGE>
[Logo] GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
OFFER TO EXCHANGE FOR ALL OUTSTANDING
10 5/8% SENIOR SUBORDINATED NOTES DUE 2009
-----------------------------
PROSPECTUS
-----------------------------
, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is incorporated under the laws of the State of Delaware.
Section 145 of the Delaware Corporation Law, as amended, and paragraph (5)
of Article Fifth of the Company's Amended and Restated Certificate of
Incorporation provide for the indemnification, except in certain circumstances
set forth below, of officers, directors, employees and agents of the Company
for certain expenses incurred in connection with any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal, administrative
or investigative, and for the purchase and maintenance of insurance by the
Company on behalf of officers, directors, employees and agents of The Company
against any liability asserted against, and incurred by, any such officer,
director, employee or agent in such capacity. Set forth below is the text of
Section 145 and the text of paragraph (5) of Article Fifth of the Company's
Amended and Restated Certificate of Incorporation.
Section 145 of the Delaware Corporation Law, as amended, provides as
follows:
'145 INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE. -- (a) A corporation shall have power to indemnify any person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that the person is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by the
person in connection with such action, suit or proceeding if this person
acted in good faith and in a manner the person reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
the person's conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which
this person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that the person's conduct was
unlawful.
(b) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that the person is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by the person in connection with the defense or
settlement of such action or suit if the person acted in good faith and in
a manner the person reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection therewith.
II-1
<PAGE>
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the present or former director, officer, employee or agent is proper in
the circumstances because the person has met the applicable standard of
conduct set forth in subsections (a) and (b) of this section. Such
determination shall be made, with respect to a person who is a director or
officer at the time of such determination, (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even
though less than a quorum, or (2) by a committee of such directors
designated by majority vote of such directors, even though less than a
quorum, or (3) if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion, or (4) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such person is not
entitled to be indemnified by the corporation as authorized in this
section. Such expenses (including attorneys' fees) incurred by former
directors and officers or other employees and agents may be so paid upon
such terms and conditions, if any, as the corporation deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in such person's official capacity and as to action in another capacity
while holding such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against such person and incurred by such person in
any such capacity, or arising out of such person's status as such, whether
or not the corporation would have the power to indemnify such person
against such liability under this section.
(h) For purposes of this section, references to 'the corporation'
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to 'other enterprises'
shall include employee benefit plans; references to 'fines' shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to 'serving at the request of the corporation' shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner such person reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner 'not opposed to the best interests of the
corporation' as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.'
II-2
<PAGE>
(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or
indemnification brought under this section or under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise. The Court of
Chancery may summarily determine a corporation's obligation to advance
expenses (including attorney's fees).'
Paragraph (5) of Article Fifth of the Amended and Restated Certificate of
Incorporation of the Company provides as follows:
'(5) No director of the Corporation shall be liable to the Corporation
or its stockholders for monetary damages for breach of his or her fiduciary
duty as a director, provided that nothing contained in this Article shall
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of the law, (iii) under Section 174 of the DGCL or
(iv) for any transaction from which the director derived an improper
personal benefit.'
As permitted by Section 145 of the General Corporation Law of the State of
Delaware, as amended, the Company has purchased and maintains insurance
providing for reimbursement to elected directors and officers, subject to
certain exceptions, of amounts they may be legally obligated to pay, including
but not limited to damages, judgments, settlements, costs and attorneys' fees
(but not including fines, penalties or matters not insurable under the law), as
a result of claims and legal actions instituted against them to recover for
their acts while serving as directors or officers.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------ ----------------------------------------------------------------------------------------------------------
<S> <C>
2.1 -- Amendment No. 2 to Form 10 of GenTek Inc. for registration of Securities of GenTek Inc. Incorporated by
reference to GenTek Inc.'s Registration Statement Amendment No. 2 on Form 10 (File No. 001-14789) filed
with the Securities and Exchange Commission on April 8, 1999 (the '1999 GenTek Form 10')
2.2 -- Separation Agreement among the Company, GenTek Inc., The General Chemical Group Inc. and General
Chemical Corporation. Incorporated by reference to the relevant exhibit to the 1999 GenTek Form 10
3.1 -- Amended and Restated Certificate of Incorporation of the Company
3.2 -- Amended and Restated By-Laws of the Company
4.1 -- Indenture, dated as of April 30, 1999, between the Company and U.S. Bank Trust National Association, as
Trustee. Incorporated by reference to the relevant exhibit to General Chemical Group Inc.'s 10-Q for the
three months ended March 31, 1999 filed with the Securities and Exchange Commission on April 17, 1999
(the 'GCG First Quarter 1999 10-Q')
4.2 -- Exchange and Registration Rights Agreement, dated as of April 30, 1999, among the Company, Chase
Securities Inc., BT Alex. Brown Incorporated and ING Baring Fulman Selz LLC
5.1 -- Opinion of Debevoise & Plimpton
10.1 -- Second Amended and Restated Partnership Agreement of GCSAP dated June 30, 1992, among the Company (as
assignee of General Chemical Corporation), The Andover Group, Inc., and TOSOH Wyoming, Inc. Incorporated
by reference to the relevant exhibit to General Chemical Corporation's Registration Statement filed with
the SEC on August 11, 1993, File No. 33-64824 (the '1993 GCC Registration Statement')
10.2 -- Amended and Restated Parent Guaranty and Transfer Agreement dated June 30, 1992, among New Hampshire
Oak, Inc., ACI International Limited and TOSOH America, Inc. Incorporated by reference to the relevant
exhibit to the 1993 GCC Registration Statement
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C>
10.3 -- Amended and Restated Services Agreement, dated June 30, 1992, between the Company (as assignee of
General Chemical Corporation) and GCSAP. Incorporated by reference to the relevant exhibit to the 1993
GCC Registration Statement
10.4 -- Employee Transfer Agreement, dated June 30, 1992, between the Company (as assignee of General Chemical
Corporation) and GCSAP. Incorporated by reference to the relevant exhibit to the 1993 GCC Registration
Statement
10.5 -- Guaranty dated as of June 30, 1992, from New Hampshire Oak, Inc., for the benefit of GCSAP.
Incorporated by reference to the relevant exhibit to the 1993 GCC Registration Statement
10.6 -- Employee Benefits Agreement among The General Chemical Group Inc., the Company and General Chemical
Corporation. Incorporated by reference to the relevant exhibit to the 1999 GenTek Form 10
10.7 -- Intellectual Property Agreement among the Company, General Chemical Corporation, GenTek Inc. and The
General Chemical Group Inc. Incorporated by reference to the relevant exhibit to the 1999 GenTek Form 10
10.8 -- Credit Agreement, dated as of April 30, 1999, among the Company and General Chemical Canada Ltd. as
Borrowers, the several Lenders from time to time parties thereto, The Chase Manhattan Bank, as
Administrative Agent, The Chase Manhattan Bank of Canada, as Canadian Administrative Agent, The Bank of
Nova Scotia, as Syndication Agent, and The First National Bank of Chicago as Documentation Agent.
Incorporated by reference to the relevant exhibit to the GCG First Quarter 1999 10-Q
10.9 -- Guarantee and Collateral Agreement, dated as of April 30, 1999, made by the Company and certain of its
subsidiaries in favor of the Chase Manhattan Bank, as Collateral Agent. Incorporated by reference to the
relevant exhibit to the GCG First Quarter 1999 10-Q
12.1 -- Computations of Ratio of Earnings to Fixed Charges
21.1 -- Subsidiaries of the Company
23.1 -- Consent of Deloitte & Touche LLP
23.2 -- Consent of Debevoise & Plimpton (included in item 5.1)
24.1 -- Powers of Attorney
*25.1 -- Statement of Eligibility and Qualification Under the Trust Indenture Act (Form F-1) of Exchange Agent
27.1 -- Financial Data Schedule
99.1 -- Form of Letter of Transmittal used in connection with the Exchange Offer
99.2 -- Form of Notice of Guaranteed Delivery used in connection with the Exchange Offer
</TABLE>
--------------
* To be filed by amendment.
II-4
<PAGE>
(B) FINANCIAL STATEMENT SCHEDULES.
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE THREE YEARS ENDED DECEMBER 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT ADDITIONS DEDUCTIONS TRANSLATION BALANCE AT
BEGINNING CHARGED TO FROM ADJUSTMENT END OF
OF PERIOD INCOME RESERVES DURING PERIOD PERIOD
---------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1996
Allowance for doubtful accounts.............. $2,020 $126 $ (201) $ 3 $1,948
Year ended December 31, 1997
Allowance for doubtful accounts.............. $1,948 $768 $ (5) $ (22) $2,689
Year ended December 31, 1998
Allowance for doubtful accounts.............. $2,689 $ 5 $ (5) $ (31) $2,658
</TABLE>
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(c) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
(d) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, General
Chemical Industrial Products Inc. has caused this Registration Statement on Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, on
the 24th day of June, 1999.
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
By /s/ STEWART FISHER
........................................
STEWART FISHER
VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
Pursuant to the requirements of this Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------------- --------------------------------------------------- ------------------------
<C> <S> <C>
PRINCIPAL EXECUTIVE OFFICER:
* President and Chief Executive Officer June 24, 1999
........................................
(DELYLE BLOOMQUIST)
PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER:
/s/ STEWART FISHER Vice President and Chief Financial Officer June 24, 1999
........................................
(STEWART FISHER)
DIRECTORS:
* Director and Chairman of the Board June 24, 1999
........................................
(DELYLE BLOOMQUIST)
/s/ STEWART FISHER Director June 24, 1999
........................................
(STEWART FISHER)
/s/ STEWART FISHER June 24, 1999
*By: ...................................
(STEWART FISHER)
Attorney-in-Fact
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------ ----------------------------------------------------------------------------------------------------------
<S> <C>
2.1 -- Amendment No. 2 to Form 10 of GenTek Inc. for registration of Securities of GenTek Inc. Incorporated by
reference to GenTek Inc.'s Registration Statement Amendment No. 2 on Form 10 (File No. 001-14789) filed
with the Securities and Exchange Commission on April 8, 1999 (the '1999 GenTek Form 10')
2.2 -- Separation Agreement among the Company, GenTek Inc., The General Chemical Group Inc. and General
Chemical Corporation. Incorporated by reference to the relevant exhibit to the 1999 GenTek Form 10
3.1 -- Amended and Restated Certificate of Incorporation of the Company
3.2 -- Amended and Restated By-Laws of the Company
4.1 -- Indenture, dated as of April 30, 1999, between the Company and U.S. Bank Trust National Association, as
Trustee. Incorporated by reference to the relevant exhibit to General Chemical Group Inc.'s 10-Q for the
three months ended March 31, 1999 filed with the Securities and Exchange Commission on April 17, 1999
(the 'GCG First Quarter 1999 10-Q')
4.2 -- Exchange and Registration Rights Agreement, dated as of April 30, 1999, among the Company, Chase
Securities Inc., BT Alex. Brown Incorporated and ING Baring Fulman Selz LLC
5.1 -- Opinion of Debevoise & Plimpton
10.1 -- Second Amended and Restated Partnership Agreement of GCSAP dated June 30, 1992, among the Company (as
assignee of General Chemical Corporation), The Andover Group, Inc., and TOSOH Wyoming, Inc. Incorporated
by reference to the relevant exhibit to General Chemical Corporation's Registration Statement filed with
the SEC on August 11, 1993, File No. 33-64824 (the '1993 GCC Registration Statement')
10.2 -- Amended and Restated Parent Guaranty and Transfer Agreement dated June 30, 1992, among New Hampshire
Oak, Inc., ACI International Limited and TOSOH America, Inc. Incorporated by reference to the relevant
exhibit to the 1993 GCC Registration Statement
10.3 -- Amended and Restated Services Agreement, dated June 30, 1992, between the Company (as assignee of
General Chemical Corporation) and GCSAP. Incorporated by reference to the relevant exhibit to the 1993
GCC Registration Statement
10.4 -- Employee Transfer Agreement, dated June 30, 1992, between the Company (as assignee of General Chemical
Corporation) and GCSAP. Incorporated by reference to the relevant exhibit to the 1993 GCC Registration
Statement
10.5 -- Guaranty dated as of June 30, 1992, from New Hampshire Oak, Inc., for the benefit of GCSAP.
Incorporated by reference to the relevant exhibit to the 1993 GCC Registration Statement
10.6 -- Employee Benefits Agreement among The General Chemical Group Inc., the Company and General Chemical
Corporation. Incorporated by reference to the relevant exhibit to the 1999 GenTek Form 10
10.7 -- Intellectual Property Agreement among the Company, General Chemical Corporation, GenTek Inc. and The
General Chemical Group Inc. Incorporated by reference to the relevant exhibit to the 1999 GenTek Form 10
10.8 -- Credit Agreement, dated as of April 30, 1999, among the Company and General Chemical Canada Ltd. as
Borrowers, the several Lenders from time to time parties thereto, The Chase Manhattan Bank, as
Administrative Agent, The Chase Manhattan Bank of Canada, as Canadian Administrative Agent, The Bank of
Nova Scotia, as Syndication Agent, and The First National Bank of Chicago as Documentation Agent.
Incorporated by reference to the relevant exhibit to the GCG First Quarter 1999 10-Q
10.9 -- Guarantee and Collateral Agreement, dated as of April 30, 1999, made by the Company and certain of its
subsidiaries in favor of the Chase Manhattan Bank, as Collateral Agent. Incorporated by reference to the
relevant exhibit to the GCG First Quarter 1999 10-Q
</TABLE>
II-7
<PAGE>
<TABLE>
<S> <C>
12.1 -- Computations of Ratio of Earnings to Fixed Charges
21.1 -- Subsidiaries of the Company
23.1 -- Consent of Deloitte & Touche LLP
23.2 -- Consent of Debevoise & Plimpton (included in Exhibit 5.1)
24.1 -- Powers of Attorney
*25.1 -- Statement of Eligibility and Qualification Under the Trust Indenture Act (Form F-1) of Exchange Agent
27.1 -- Financial Data Schedule
99.1 -- Form of Letter of Transmittal used in connection with the Exchange Offer
99.2 -- Form of Notice of Guaranteed Delivery used in connection with the Exchange Offer
</TABLE>
- ------------
* To be filed by amendment.
II-8
STATEMENT OF DIFFERENCES
The trademark symbol shall be expressed as ................ 'TM'
The registered trademark symbol shall be expressed as...... 'r'
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
The name of the corporation is General Chemical Industrial Products
Inc. (the "Corporation"). The Corporation was incorporated by the filing of its
original Certificate of Incorporation with the Secretary of State of the State
of Delaware on February 12, 1999. This Amended and Restated Certificate of
Incorporation, which both amends and restates the provisions of the
Corporation's Certificate of Incorporation, was duly adopted in accordance with
the provisions of Sections 242 and 245 of the General Corporation Law of the
State of Delaware and by the written consent of the Corporation's sole
stockholder in accordance with Section 228 of the General Corporation Law of the
State of Delaware. The Certificate of Incorporation of the Corporation is hereby
amended and restated to read in its entirety as follows:
FIRST: The name of the Corporation is General Chemical Industrial
Products Inc. (the "Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is at Corporation Trust Center, 1209 Orange Street in the City
of Wilmington, County of New Castle. The name of its registered agent at that
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the
"DGCL").
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is One Thousand (1000) shares of Common Stock, each
having a par value of one penny ($.01).
FIFTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
<PAGE>
(1) The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors.
(2) The directors shall have power, without the assent or vote of the
stockholders, to make, alter, amend, change, add to or repeal the By-Laws of the
Corporation, except to the extent that this Certificate of Incorporation or the
By-Laws of the Corporation otherwise provide .
(3) The number of directors of the Corporation shall be fixed, and may
be altered from time to time, in the manner provided in the By-Laws of the
Corporation. Vacancies in the Board of Directors and newly-created directorships
resulting from any increase in the authorized number of directors may be filled,
and directors may be removed, as provided in the By-Laws of the Corporation.
Election of directors may be conducted in any manner approved by the
stockholders at the time when the election is held and, unless the By-Laws of
the Corporation so provide, need not be by written ballot.
(4) In addition to the powers and authority hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation, subject, nevertheless, to the provisions of the DGCL, this
Certificate of Incorporation, and the By-Laws of the Corporation.
(5) No director of the Corporation shall be liable to the Corporation
or its stockholders for monetary damages for breach of his or her fiduciary duty
as a director, provided that nothing contained in this Article shall eliminate
or limit the liability of a director (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of the law, (iii) under Section 174 of the DGCL or (iv) for any transaction from
which the director derived an improper personal benefit.
SIXTH: Meetings of stockholders may be held within or without the State
of Delaware, an the By-Laws may provide. The books of the Corporation may be
kept (subject to the requirements of the DGCL) outside the State of Delaware at
such place or places as may be designated from time to time by the Board of
Directors or in the By-Laws of the Corporation.
SEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed
2
<PAGE>
for this Corporation under the provisions of Section 291 of the DGCL or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of the DGCL, order a
meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of this Corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
EIGHTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
3
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Amended and
Restated Certificate of Incorporation this 28th day of April, 1999.
By /s/ Stewart A. Fisher
-----------------------------
Name: Stewart A. Fisher
Office: Vice President
4
<PAGE>
================================================================================
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
AMENDED AND RESTATED
BY-LAWS
As Adopted on April 28, 1999
================================================================================
<PAGE>
Table of Contents
<TABLE>
<S> <C>
ARTICLE I
OFFICES...............................................................1
Section 1. Registered Office.........................................1
Section 2. Other Offices.............................................1
ARTICLE II
MEETINGS OF STOCKHOLDERS..............................................1
Section 1. Place of Meetings.........................................1
Section 2. Annual Meetings...........................................1
Section 3. Special Meetings..........................................2
Section 4. Notice of Meetings; Waiver................................2
Section 5. Quorum....................................................2
Section 6. Voting. ..................................................3
Section 7. Consent of Stockholders in Lieu of Meeting................3
Section 8. Organization; Procedure...................................4
ARTICLE III
DIRECTORS.............................................................4
Section 1. Number and Election of Directors..........................4
Section 2. Removal; Resignation......................................4
Section 3. Vacancies.................................................5
Section 4. Duties and Powers.........................................5
Section 5. Chairman of the Board of Directors........................5
Section 6. Meetings..................................................5
Section 7. Quorum....................................................6
Section 8. Actions of Board..........................................6
Section 9. Manner of Participation...................................6
Section 10. Committees...............................................6
Section 11. Compensation.............................................7
Section 12. Interested Directors.....................................7
Section 13. Reliance on Accounts and Reports, etc....................7
ARTICLE IV
OFFICERS..............................................................8
Section 1. General...................................................8
Section 2. Appointment and Tenure....................................8
Section 3. Authority and Duties of Officers..........................8
Section 4. President.................................................8
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 5. Vice-Presidents...........................................9
Section 6. Secretary.................................................9
Section 7. Treasurer.................................................9
Section 8. Assistant Secretaries....................................10
Section 9. Assistant Treasurers.....................................10
Section 10. Additional Officers.....................................10
ARTICLE V
STOCK................................................................11
Section 1. Form of Certificate......................................11
Section 2. Signatures...............................................11
Section 3. Lost Certificate.........................................11
Section 4. Transfers................................................12
Section 5. Record Date..............................................12
Section 6. Registered Stockholder...................................12
Section 7. Transfer Agent and Registrar.............................12
ARTICLE VI
INDEMNIFICATION......................................................13
Section 1. Nature of Indemnity......................................13
Section 2. Successful Defense.......................................14
Section 3. Determination That Indemnification Is Proper.............14
Section 4. Advance Payment of Expenses..............................14
Section 5. Procedure for Indemnification of Directors and Officers..14
Section 6. Survival; Preservation of Other Rights...................15
Section 7. Insurance................................................16
Section 8. Severability.............................................16
ARTICLE VII
GENERAL PROVISIONS...................................................16
Section 1. Dividends................................................16
Section 2. Reserves.................................................16
Section 3. Execution of Instruments.................................17
Section 4. Corporate Indebtedness...................................17
Section 5. Deposits.................................................17
Section 6. Checks...................................................17
Section 7. Fiscal Year..............................................17
Section 8. Seal.....................................................18
Section 9. Books and Records; Inspection............................18
Section 10. Sale, Transfer, etc. of Securities......................18
Section 11. Voting as Stockholder...................................18
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE VIII
AMENDMENTS...........................................................18
Section 1. Amendments...............................................18
ARTICLE IX
CONSTRUCTION.........................................................19
Section 1. Construction.............................................19
</TABLE>
iii
<PAGE>
AMENDED AND RESTATED
BY-LAWS
OF
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
(hereinafter called the "Corporation")
As Adopted on April 28, 1999
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Corporation
shall be located at Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle, State of Delaware.
Section 2. Other Offices. The Corporation may also have offices or
other places of business at such other places both within and without the State
of Delaware as the Board of Directors may from time to time determine or as the
business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. Subject to Section 7 of this Article, the
annual meetings of stockholders shall be held on such date and at such time as
shall be designated from time to time by the resolution of Board of Directors
and stated in the notice of the meeting, at which meetings the stockholders
shall elect by a plurality vote a Board of Directors, and transact such other
business as may properly be brought before the meeting.
<PAGE>
Section 3. Special Meetings. Unless otherwise prescribed by law or by
the Amended and Restated Certificate of the Corporation (as the same may
hereafter be amended and/or restated, the "Certificate"), special meetings of
stockholders, for any purpose or purposes, may be called by either (i) the
Chairman, if there be one, or (ii) the President (or, in the event of his or her
absence, any Vice President, if there be one) or (iii) the Secretary, and shall
be called by any such officer at the request in writing of a majority of the
Board of Directors or at the request in writing of stockholders owning a
majority of the capital stock of the Corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 4. Notice of Meetings; Waiver. The Secretary or any Assistant
Secretary shall cause written notice of the place, date and hour of each meeting
of the stockholders, and, in the case of a special meeting, the purpose or
purposes for which such meeting is called, to be given personally or by mail,
not less than ten nor more than 60 days prior to the meeting, to each
stockholder of record entitled to vote at such meeting. If such notice is
mailed, it shall be deemed to have been given to a stockholder when deposited in
the United States mail, postage prepaid, directed to the stockholder at his or
her address as it appears on the record of stockholders of the Corporation, or,
if he or she shall have filed with the Secretary of the Corporation a written
request that notices to him or her be mailed to some other address, then
directed to him or her at such other address. Such further notice shall be given
as may be required by law.
No notice of any meeting of stockholders need be given to any
stockholder who submits a signed waiver of notice, whether before or after the
meeting. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in a written
waiver of notice. The attendance of any stockholder at a meeting of stockholders
shall constitute a waiver of notice of such meeting, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business on the ground that the meeting is
not lawfully called or convened.
Section 5. Quorum. Except as otherwise provided by law or by the
Certificate, the holders of a majority of the capital stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to the
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. If the adjournment is for
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more than 30 days, or if after the adjournment a new record dated is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder entitled to vote at the meeting.
Section 6. Voting. Unless otherwise required by law, the Certificate or
these By-Laws, any question brought before any meeting of stockholders shall be
decided by the vote of the holders of a majority of the stock represented at a
meeting of stockholders shall be entitled to cast one vote for each share of the
capital stock entitled to vote thereat held by such stockholder. Such votes may
be cast in person or by proxy but no proxy shall be voted on or after three
years from its date, unless such proxy provides for a longer period. A
stockholder may authorize a valid proxy by executing a written instrument signed
by such stockholder, or by causing his or her signature to be affixed to such
writing by any reasonable means including, but not limited to, by facsimile
signature, or by transmitting or authorizing the transmission of a telegram,
cablegram or other means of electronic transmission to the person designated as
the holder of the proxy, a proxy solicitation firm or a like authorized agent. A
stockholder may revoke any proxy which is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or by filing another duly executed proxy bearing a later date with the
Secretary. Proxies by telegram, cablegram or other electronic transmission must
either set forth or be submitted with information from which it can be
determined that the telegram, cablegram or other electronic transmission was
authorized by the stockholder. Any copy, facsimile telecommunication or other
reliable reproduction of a writing or transmission created pursuant to this
Section 6 may be substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original writing or
transmission could be used, provided that such copy, facsimile telecommunication
or other reproduction shall be a complete reproduction of the entire original
writing or transmission. The Board of Directors, in its discretion, or the
officer of the Corporation presiding at a meeting of stockholders, in his
discretion, may require that any votes cast at such meeting shall be cast by
written ballot.
Section 7. Consent of Stockholders in Lieu of Meeting. To the fullest
extent provided by law, any action required or permitted to be taken at any
annual or special meeting of stockholders of the Corporation, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders in
person or by proxy if outstanding stock having not less than the minimum number
of votes that would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote thereon were present and voted. Prompt
notice of the taking of the corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing and who, if the action had been taken at a meeting, would
have been entitled to notice of the meeting if the record date for such meeting
had been the date that written
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consents signed by a sufficient number of stockholders to take the action were
delivered to the Corporation as provided in this Section. Every written consent
shall bear the date of signature of each stockholder who signs the consent and
no written consent shall be effective to take the corporate action referred to
therein unless, within 60 days of the earliest dated consent delivered in the
manner required by law to the Corporation, written consents signed by a
sufficient number of stockholders to take action are delivered to the
Corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested.
Section 8. Organization; Procedure. At every meeting of stockholders
the presiding officer shall be the Chairman of the Board if one is elected, or
if not elected or in his or her absence or disability the President or, in the
absence or disability of the Chairman, if one is elected, and the President, a
presiding officer chosen by a majority of the stockholders present in person or
by proxy. The Secretary, or in the event of his or her absence or disability,
the Assistant Secretary, if any, or if there be no Assistant Secretary, in the
absence of the Secretary, an appointee of the presiding officer, shall act as
Secretary of the meeting. The order of business and all other matters of
procedure at every meeting of stockholders may be determined by such presiding
officer.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors. The Board of Directors
shall consist of not less than one nor more than fifteen members, the exact
number of which shall be fixed by the Board of Directors. Except as provided in
Section 3 of this Article, directors shall be elected by a plurality of the
votes cast at annual meetings of stockholders, and each director so elected
shall hold office until his successor is duly elected and qualified, or until
his earlier resignation or removal. Directors need not be stockholders.
Section 2. Removal; Resignation. (a) Any director may be removed at any
time, either for or without cause, upon the affirmative vote of the holders of a
majority of the outstanding shares of stock of the Corporation entitled to vote
for the election of such director. Any vacancy in the Board of Directors caused
by any such removal may be filled at such meeting by the stockholders entitled
to vote for the election of the director so removed. If such stockholders do not
fill such vacancy at such meeting (or in the written instrument effecting such
removal, if such removal was effected by consent without a meeting), such
vacancy may be filled in the manner provided in Section 3 of this Article.
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(b) Any director may resign by delivering his or her written
resignation to the Chairman of the Board, if one is elected, the President or
the Secretary. Such resignation shall be effective upon delivery unless it is
specified to be effective at some other time or upon the happening of some other
event.
Section 3. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and
qualified, or until their earlier resignation or removal.
Section 4. Duties and Powers. The property, affairs and business of the
Corporation shall be managed by or under the direction of the Board of Directors
and the Board of Directors may exercise all powers of the Corporation.
Section 5. Chairman of the Board of Directors. The Chairman of the
Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. He shall be the Chief Executive
Officer of the Corporation, and except where by law the signature of the
President is required, the Chairman of the Board of Directors shall possess the
same power as the President to sign all contracts, certificates and other
instruments of the Corporation which may be authorized by the Board of
Directors. During the absence or disability of the President, the Chairman of
the Board shall exercise all the powers and discharge all the duties of the
President. The Chairman of the Board of Directors shall also perform such other
duties and may exercise such other powers as from time to time may be assigned
to him by these By-Laws or by the Board of Directors.
Section 6. Meetings. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without notice
at such time and at such place as may from time to time be determined by the
Board of Directors. Special meetings of the Board of Directors may be called by
the Chairman, if there be one, the President, or a majority of the directors,
and shall be held at the date and hour as may be specified in the respective
notices or waivers of notice of such meetings. Special meetings of the Board of
Directors may be called on twenty-four hours' notice, if notice is given to each
director personally or by telephone or telegram, or on five days' notice, if
notice is mailed to each director, addressed to him or her at his or her usual
place of business. Notice of any special meeting need not be given to any
director who attends such meeting without protesting the lack of notice to him
or her, prior to or at the commencement of such meeting, or to any director who
submits a signed waiver of notice, whether before or after such meeting, and any
business may be transacted thereat.
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Section 7. Quorum. Except as may be otherwise specifically provided
by law, the Certificate or these By-Laws, at all meetings of the Board of
Directors, a majority of the entire Board of Directors shall constitute a quorum
for the transaction of business and the act of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the Board
of Directors. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 8. Actions of Board. Unless otherwise provided by the
Certificate or these By-Laws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all the members of the Board of Directors or committee, as
the case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board of Directors or committee.
Section 9. Manner of Participation. (a) To the extent consistent with
applicable law, the Certificate and these By-Laws, the Board of Directors may
adopt such rules and regulations for the conduct of meetings of the Board of
Directors as it may deem appropriate.
(b) Members of the Board of Directors of the Corporation, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors or such committee by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to this
Section 9 shall constitute presence in person at such meeting.
Section 10. Committees. The Board of Directors may designate one or
more committees, each committee to consist of such number of directors of the
Corporation as a it may fix from time to time. Except as the Board of Directors
may otherwise determine, any such committee may make rules for the conduct of
its business, but unless otherwise provided by the Board of Directors or in such
rules, its business shall be conducted so far as possible in the same manner as
is provided by these By-Laws for the Board of Directors. All members of such
committees shall hold such offices at the pleasure of the Board of Directors.
Thereafter, members of each such committee may be designated at the regular
meeting of the Board of Directors. Each member of any such committee shall hold
office until his or her successor shall have been appointed or until he or she
shall cease to be a Director, or until his or her earlier death, resignation or
removal (whether as a Director or as a member of such Committee by the Board of
Directors). In the absence or disqualification of a member of a committee, the
member or members thereof present at
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any meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any absent or disqualified
member. Any committee, to the extent allowed by law and provided in the
resolution establishing such committee, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation. Each committee shall keep regular minutes and
report to the Board of Directors at the meeting of the Board of Directors next
following any such proceedings. The Board of Directors shall have power to
rescind any action of any committee, to the extent permitted by law, but no such
rescission shall have retroactive effect. Any such Committee may be abolished or
re-designated from time to time by the Board of Directors.
Section 11. Compensation. The amount, if any, which each director shall
be entitled to receive as compensation for his or her services as such shall be
fixed from time to time by resolution of the Board of Directors.
Section 12. Interested Directors. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose if (i) the material facts as to his or their
relationship or interest and as to the contract of Directors or the committee,
and the Board of Directors or committee in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum, or
(ii) the material facts as to his or their relationship or interest and as to
the contract or transaction are disclosed or are known to the shareholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the shareholders, or (iii) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified, by the Board of Directors, a committee thereof or the
shareholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
Section 13. Reliance on Accounts and Reports, etc. A director, or a
member of any committee designated by the Board of Directors shall, in the
performance of his or her duties, be fully protected in relying in good faith
upon the records of the Corporation and upon information, opinions, reports or
statements presented to the Corporation by any of the Corporation's officers or
employees, or committees designated by the Board of
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Directors, or by any other person as to the matters the member reasonably
believes are within such other person's professional or expert competence and
who has been selected with reasonable care by or on behalf of the Corporation.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be chosen by
the Board of Directors and shall be a President, a Secretary and a Treasurer.
The Board of Directors, in its discretion, may also choose a Chairman of the
Board of Directors (who must be a director) and one or more Vice-Presidents,
Assistant Secretaries, Assistant Treasurers and other officers. Any number of
offices may be held by the same person, unless otherwise prohibited by law, the
Certificate or these By-Laws. The officers of the Corporation need not be
stockholders of the Corporation nor, except in the case of the Chairman of the
Board of Directors, need such officers be directors of the Corporation.
Section 2. Appointment and Tenure. Unless otherwise determined by the
Board of Directors, the Board of Directors at its regular meeting shall appoint
the officers of the Corporation who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the Board of Directors; and all officers of the Corporation
shall hold office until their successors are appointed and qualified, or until
their earlier resignation or removal. Any officer appointed by the Board of
Directors may be removed for or without cause at any time by the affirmative
vote of a majority of the Board of Directors. Any vacancy occurring in any
office of the Corporation shall be filled by the Board of Directors. The
salaries of all officers of the Corporation shall be fixed by the Board of
Directors.
Section 3. Authority and Duties of Officers. The officers of the
Corporation shall have such authority and shall exercise such powers and perform
such duties as may be specified in these By-Laws, except that in any event each
officer shall exercise such powers and perform such duties as may be required by
law.
Section 4. President. The President shall, subject to the control of
the Board of Directors and, if there be one, the Chairman of the Board of
Directors, have general supervision of the business of the Corporation and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. He shall execute all bonds, mortgages, contracts and other instruments
of the Corporation requiring a seal, under the seal of the Corporation, except
where required or permitted by law to be otherwise signed and executed and
except that the other officers of the Corporation may sign and execute documents
when so authorized by these By-Laws, the Board of Directors or the President. In
the absence or disability of the Chairman of the Board of Directors, or if there
be none,
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the President shall preside at all meetings of the stockholders and the Board of
Directors. If there be no Chairman of the Board of Directors, the President
shall be the Chief Executive Officer of the Corporation. The President shall
also perform such other duties and may exercise such other powers as from time
to time may be assigned to him by these By-Laws or by the Board of Directors.
Section 5. Vice-Presidents. At the request of the President or in his
absence or in the event of his inability or refusal to act (and if there be no
Chairman of the Board of Directors), the Vice-President or the Vice-Presidents
of there is more than one (in the order designated by the Board of Directors)
shall perform the duties of the President, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the President. Each
Vice-President shall perform such other duties and have such other powers as the
Board of Directors from time to time may prescribe. If there by no Chairman of
the Board of Directors and no Vice-President, the Board of Directors shall
designate the officer of the Corporation who, in the absence of the President or
in the event of the inability or refusal of the President to act, shall perform
the duties of the President, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the President.
Section 6. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all meetings
of the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or
President, under whose supervision he shall be. If the Secretary shall be unable
or shall refuse to cause to be given notice of all meetings of the stockholders
and special meetings of the Board of Directors, and if there by no Assistant
Secretary, then either the Board of Directors or the President may choose
another officer to cause such notice to be given. The Secretary shall have
custody of the seal of the Corporation and the Secretary or any Assistant
Secretary, if there be one, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by the signature
of the Secretary or by the signature of any such Assistant Secretary. The Board
of Directors may give general authority to any other officer to affix the seal
of the Corporation and to attest the affixing by his signature. The Secretary
shall see that all books, reports, statements, certificates and other documents
and records required by law to be kept or filed are properly kept or filed, as
the case may be.
Section 7. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements on books belonging to the Corporation and shall
deposit all moneys and
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other valuables effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors and shall perform
such other duties as may be prescribed by the Board of Directors or President,
under whose supervision he shall be. The Treasurer shall disburse the funds of
the Corporation as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the President and the Board
of Directors, at its regular meetings, or when the Board of Directors so
required, an account of all his transactions as Treasurer and of the financial
condition of the Corporation. If required by the Board of Directors, the
Treasurer shall give the Corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors for the faithful
performance of the duties of his office and for the restriction to the
Corporation, in the case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
Section 8. Assistant Secretaries. Except as may be otherwise provided
in these By-Laws, Assistant Secretaries, of there be any, shall perform such
duties and have such powers as from time to time may be assigned to them by the
Board of Directors, the President, any Vice-President, if there be any, or the
Secretary, and in the absence of the Secretary or in the event of his disability
or refusal to act, shall perform the duties of the Secretary, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the Secretary.
Section 9. Assistant Treasurers. Assistant Treasurers, if there be any,
shall perform such duties and have such powers as from time to time maybe
assigned to them by the Board of Directors, the President, any Vice-President,
if there be any, or the Treasurer, and in the absence of the Treasurer or in the
event of his disability or refusal to act, shall perform the duties of the
Treasurer, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Treasurer. If required by the Board of Directors,
an Assistant Treasurer shall give the Corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
Section 10. Additional Officers. Such other officers as the Board of
Directors may choose shall performs such duties and have such powers as from
time to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
The Board of Directors from time to time may
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delegate to any officer or agent the power to appoint subordinate officers or
agents and to prescribe their respective rights, terms of office, authorities
and duties. Any such officer or agent may remove any such subordinate officer or
agent appointed by him or her, for or without cause.
ARTICLE V
STOCK
Section 1. Form of Certificate. The shares of the Corporation shall be
represented by certificates, provided that the Board of Directors may provide by
resolution or resolutions that some or all of any or all classes or series of
the stock of the Corporation shall be uncertificated shares. Any such resolution
shall not apply to shares represented by a certificate until each certificate is
surrendered to the Corporation. Notwithstanding the adoption of such a
resolution by the Board of Directors, every holder of stock in the Corporation
represented by certificates and upon request every holder of uncertificated
shares shall be entitled to have a certificate signed by, or in the name of the
Corporation, by the Chairman, if there be one, the President or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary, representing the number of shares registered in
certificate form. Such certificate shall be in such form as the Board of
Directors may determine, to the extent consistent with applicable law, the
Certificate of Incorporation and these By-Laws.
Section 2. Signatures. All of such signatures on the certificate
referred to in Section 1 of this Article of these By-Laws may be a facsimile,
engraved or printed, to the extent permitted by law. In case any officer,
transfer agent or registrar who has signed, or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he or she were such officer, transfer
agent or registrar at the date of issue.
Section 3. Lost Certificate. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise the same in such manner
as the Board of Directors shall require and/or to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
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Section 4. Transfers. Stock of the Corporation shall be transferable in
the manner prescribed by law and in these By-Laws. Transfers of stock shall be
made on the books of the Corporation only by the person named in the certificate
or by his attorney lawfully constituted in writing and upon the surrender of the
certificate therefor, which shall be cancelled before a new certificate shall be
issued. Subject to the provisions of the Certificate and these By-Laws, the
Board of Directors may prescribe such additional rules and regulations as it may
deem appropriate relating to the issue, transfer and registration of shares of
the Corporation.
Section 5. Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty days nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action and, if such record date is fixed in order that the Corporation may
determine the stockholders entitled to express consent to corporate action in
writing without a meeting, shall not be more than ten days after the date upon
which the resolution fixing such record date is adopted by the Board of
Directors. A determination of stockholders or record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 6. Registered Stockholder. Prior to due surrender of a
certificate for registration of transfer, the Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to received dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law. Whenever any transfer of shares shall be made for collateral security, and
not absolutely, it shall be so expressed in the entry of the transfer if, when
the certificates are presented to the Corporation for transfer or uncertificated
shares are requested to be transferred, both the transferor and transferee
request the Corporation to do so.
Section 7. Transfer Agent and Registrar. The Board of Directors may
appoint one or more transfer agents and one or more registrars, and may require
all certificates representing shares to bear the signature of any such transfer
agents or registrars.
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ARTICLE VI
INDEMNIFICATION
Section 1. Nature of Indemnity. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or she
is or was or has agreed to become a director or officer of the Corporation, or
is or was serving or has agreed to serve at the request of the Corporation as a
director or officer, of another corporation, partnership, joint venture, trust
or other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, and may indemnify any person who was or is a party or
is threatened to be made a party to such an action, suit or proceeding by reason
of the fact that he or she is or was or has agreed to become an employee or
agent of the Corporation, or is or was serving or has agreed to serve at the
request of the Corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her or on his or her behalf in
connection with such action, suit or proceeding and any appeal therefrom, if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding had no reasonable cause to believe his or her
conduct was unlawful; except that in the case of an action or suit by or in the
right of the Corporation to procure a judgment in its favor (i) such
indemnification shall be limited to expenses (including attorneys' fees)
actually and reasonably incurred by such person in the defense or settlement of
such action or suit, and (ii) no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Delaware Court
of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Delaware Court of Chancery or
such other court shall deem proper.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
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Section 2. Successful Defense. To the extent that a present or former
director, officer, employee or agent of the Corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Section 1 of this Article or in defense of any claim, issue or matter
therein, he or she shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection therewith.
Section 3. Determination That Indemnification Is Proper. Any
indemnification of a present or former director or officer of the Corporation
under Section 1 of this Article (unless ordered by a court) shall be made by the
Corporation only upon a determination that indemnification of such person is
proper in the circumstances because such person has met the applicable standard
of conduct set forth in Section 1 of this Article. Any indemnification of a
present or former employee or agent of the Corporation under Section 1 of this
Article (unless ordered by a court) may be made by the Corporation upon a
determination that indemnification of the employee or agent is proper in the
circumstances because he or she has met the applicable standard of conduct set
forth in Section 1 of this Article. Any such determination shall be made, with
respect to a person who is a director or officer at the time of such
determination (i) by a majority vote of the Directors who are not parties to
such action, suit or proceeding, even though less than a quorum, or (ii) by a
committee of such directors designated by majority vote of such directors, even
though less than a quorum, or (iii) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or (iv)
by the stockholders.
Section 4. Advance Payment of Expenses. Expenses (including attorneys'
fees) incurred by a present director or officer in defending any civil,
criminal, administrative or investigative action, suit or proceeding shall be
paid by the Corporation in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount if it shall ultimately be determined that he or she
is not entitled to be indemnified by the Corporation as authorized in this
Article. Such expenses (including attorneys' fees) incurred by former directors
and officers or other employees and agents may be so paid upon such terms and
conditions, if any, as the Corporation deems appropriate. The Corporation, or in
respect of a present director or officer the Board of Directors, may authorize
the Corporation's counsel to represent such present or former director, officer,
employee or agent in any action, suit or proceeding, whether or not the
Corporation is a party to such action, suit or proceeding.
Section 5. Procedure for Indemnification of Directors and Officers. Any
indemnification of a director, officer, employee or agent of the Corporation
under Sections 1 and 2 of this Article, or advance of costs, charges and
expenses to such person under Section 4 of this Article, shall be made promptly,
and in any event within 30 days, upon the written request of such person. If a
determination by the Corporation that such person
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is entitled to indemnification pursuant to this Article is required, and the
Corporation fails to respond within 60 days to a written request for indemnity,
the Corporation shall be deemed to have approved such request. If the
Corporation denies a written request for indemnity or advancement of expenses,
in whole or in part, or if payment in full pursuant to such request is not made
within 30 days, the right to indemnification or advances as granted by this
Article shall be enforceable by such person in any court of competent
jurisdiction. Such person's costs and expenses incurred in connection with
successfully establishing his or her right to indemnification, in whole or in
part, in any such action shall also be indemnified by the Corporation. It shall
be a defense to any such action (other than an action brought to enforce a claim
for the advance of costs, charges and expenses under Section 4 of this Article
where the required undertaking, if any, has been received by or tendered to the
Corporation) that the claimant has not met the standard of conduct set forth in
Section 1 of this Article, but the burden of proving such defense shall be on
the Corporation. Neither the failure of the Corporation (including its Board of
Directors or any committee thereof, its independent legal counsel, and its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in
Section 1 of this Article, nor the fact that there has been an actual
determination by the Corporation (including its Board of Directors or any
committee thereof, its independent legal counsel, and its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct.
Section 6. Survival; Preservation of Other Rights. The foregoing
indemnification provisions shall be deemed to be a contract between the
Corporation and each director, officer, employee and agent who serves in any
such capacity at any time while these provisions as well as the relevant
provisions of the Delaware Corporation Law are in effect and any repeal or
modification thereof shall not affect any right or obligation then existing with
respect to any state of facts then or previously existing or any action, suit or
proceeding previously or thereafter brought or threatened based in whole or in
part upon any such state of facts. Such a "contract right" may not be modified
retroactively without the consent of such director, officer, employee or agent.
The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
15
<PAGE>
Section 7. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was or has agreed to become a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him or her and incurred by him or her or on his or her behalf in any such
capacity, or arising out of his or her status as such, whether or not the
Corporation would have the power to indemnify him or her against such liability
under the provisions of this Article, provided that such insurance is available
on acceptable terms, which determination shall be made by a vote of a majority
of the entire Board of Directors.
Section 8. Severability. If this Article or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director or officer and may
indemnify each employee or agent of the Corporation as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Corporation, to the fullest extent permitted by any applicable
portion of this Article that shall not have been invalidated and to the fullest
extent permitted by applicable law.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of law and the Certificate, if any, may
be declared by the Board of Directors at any regular or special meeting, and may
be paid in cash, in property, or in shares of the capital stock. A member of the
Board of Directors, or a member of any committee designated by the Board of
Directors shall be fully protected in relying in good faith upon the records of
the Corporation and upon such information, opinions, reports or statements
presented to the Corporation by any of its officers or employees, or committees
of the Board of Directors, or by any other person as to matters the director
reasonably believes are within such other person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Corporation, as to the value and amount of the assets, liabilities and/or net
profits of the Corporation, or any other facts pertinent to the existence and
amount of surplus or other funds from which dividends might properly be declared
and paid.
Section 2. Reserves. There may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in its absolute discretion, thinks proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation or
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for such other purpose as the Board of Directors shall think conducive to the
interest of the Corporation, and the Board of Directors may similarly modify or
abolish any such reserve.
Section 3. Execution of Instruments. The Chairman, if there be one, the
President, any Vice President, if there be any, the Secretary or the Treasurer
may enter into any contract or execute and deliver any instrument in the name
and on behalf of the Corporation. The Board of Directors, the Chairman, if there
be one, or the President may authorize any other officer or agent to enter into
any contract or execute and deliver any instrument in the name and on behalf of
the Corporation. Any such authorization may be general or limited to specific
contracts or instruments.
Section 4. Corporate Indebtedness. No loan shall be contracted on
behalf of the Corporation, and no evidence of indebtedness shall be issued in
its name, unless authorized by the Board of Directors, the Chairman, if there be
one, or the President. Such authorization may be general or confined to specific
instances. Loans so authorized may be effected at any time for the Corporation
from any bank, trust company or other institution, or from any firm, corporation
or individual. All bonds, debentures, notes and other obligations or evidences
of indebtedness of the Corporation issued for such loans shall be made, executed
and delivered as the Board of Directors, the Chairman, if there be one, or the
President shall authorize. When so authorized by the Board of Directors, the
Chairman, if there be one, or the President, any part of or all the properties,
including contract rights, assets, business or good will of the Corporation,
whether then owned or thereafter acquired, may be mortgaged, pledged,
hypothecated or conveyed or assigned in trust as security for the payment of
such bonds, debentures, notes and other obligations or evidences of indebtedness
of the Corporation, and of the interest thereon, by instruments executed and
delivered in the name of the Corporation.
Section 5. Deposits. Any funds of the Corporation may be deposited from
time to time in such banks, trust companies or other depositaries as may be
determined by the Board of Directors, the Chairman, if there be one, or the
President, or by such officers or agents as may be authorized by the Board of
Directors, the Chairman, if there be one, or the President to make such
determination.
Section 6. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such agent or agents
of the Corporation, and in such manner, as the Board of Directors, the Chairman,
if there be one, or the President from time to time may determine.
Section 7. Fiscal Year. The fiscal year of the Corporation shall
commence on the first day of January of each year (except for the Corporation's
first fiscal year which
17
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shall commence on the date of incorporation) and shall terminate in each case on
December 31.
Section 8. Seal. The seal of the Corporation shall be circular in form
and shall contain the name of the Corporation, the year of its incorporation and
the words "Corporate Seal" and "Delaware". The form of such seal shall be
subject to alteration by the Board of Directors. The seal may be used by causing
it or a facsimile thereof to be impressed, affixed or reproduced, or may be used
in any other lawful manner.
Section 9. Books and Records; Inspection. Except to the extent
otherwise required by law, the books and records of the Corporation shall be
kept at such place or places within or without the State of Delaware as may be
determined from time to time by the Board of Directors.
Section 10. Sale, Transfer, etc. of Securities. To the extent
authorized by the Board of Directors, the Chairman, if there be one, or by the
President, any Vice President, if there be any, the Secretary or the Treasurer
or any other officers designated by the Board of Directors, the Chairman, if
there be one, or the President may sell, transfer, endorse, and assign any
shares of stock, bonds or other securities owned by or held in the name of the
Corporation, and may make, execute and deliver in the name of the Corporation,
under its corporate seal, any instruments that may be appropriate to effect any
such sale, transfer, endorsement or assignment.
Section 11. Voting as Stockholder. Unless otherwise determined by
resolution of the Board of Directors, the Chairman, if there be one, the
President or any Vice President, if there be any, shall have full power and
authority on behalf of the Corporation to attend any meeting of stockholders of
any corporation in which the Corporation may hold stock, and to act, vote (or
execute proxies to vote) and exercise in person or by proxy all other rights,
powers and privileges incident to the ownership of such stock. Such officers
acting on behalf of the Corporation shall have full power and authority to
execute any instrument expressing consent to or dissent from any action of any
such corporation without a meeting. The Board of Directors may by resolution
from time to time confer such power and authority upon any other person or
persons.
ARTICLE VIII
AMENDMENTS
Section 1. Amendments. These By-Laws may be altered, amended or
repealed, in whole or in part, or new By-Laws may be adopted by the stockholders
or by the majority vote or consent of the Board of Directors, provided, however,
that notice of such
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<PAGE>
alteration, amendment, repeal or adoption of new By-Laws be contained in the
notice of such meeting of stockholders or Board of Directors as the case may be.
All such amendments must be approved by either the holders of a majority of the
outstanding capital stock entitled to vote thereon or by a majority of the
entire Board of Directors then in office.
ARTICLE IX
CONSTRUCTION
Section 1. Construction. In the event of any conflict between the
provisions of these By-Laws as in effect from time to time and the provisions of
the Certificate as in effect from time to time, the provisions of the
Certificate shall be controlling.
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GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
$100,000,000
10 5/8% Senior Subordinated Notes due 2009
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
April 30, 1999
CHASE SECURITIES INC.
BT ALEX. BROWN INCORPORATED
ING BARING FURMAN SELZ LLC
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
General Chemical Industrial Products Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to Chase Securities Inc. ("CSI"), BT
Alex. Brown Incorporated and ING Baring Furman Selz LLC (together with CSI, the
"Initial Purchasers"), upon the terms and subject to the conditions set forth in
a purchase agreement dated April 22, 1999 (the "Purchase Agreement"),
$100,000,000 aggregate principal amount of its 10 5/8% Senior Subordinated Notes
due 2009 (the "Securities"). Capitalized terms used but not defined herein shall
have the meanings given to such terms in the Purchase Agreement.
As an inducement to the Initial Purchasers to enter into the Purchase
Agreement and in satisfaction of a condition to the obligations of the Initial
Purchasers thereunder, the Company agrees with the Initial Purchasers, for the
benefit of the holders (including the Initial Purchasers) of the Securities, the
Exchange Securities (as defined herein) and the Private Exchange Securities (as
defined herein) (collectively, the "Holders"), as follows:
1. Registered Exchange Offer. The Company shall (i) prepare and, not
later than 60 days (or if the 60th day is not a business day, the first business
day thereafter) following the date of original issuance of the Securities (the
"Issue Date"), file with the Commission a registration statement (the "Exchange
Offer Registration Statement") on an appropriate form under the Securities Act
with respect to a proposed offer (the "Registered Exchange Offer") to the
Holders of the Securities that are Transfer Restricted Securities (as defined in
Section 3 hereof) who are not prohibited by any law or policy or interpretation
of the Commission or its staff from participating in the Registered Exchange
Offer to issue and deliver to such Holders, in exchange for the Securities, a
like aggregate principal amount of debt securities of the Company (the "Exchange
Securities") that are identical in all material respects to the Se-
<PAGE>
curities, except that the Exchange Securities will not contain terms with
respect to the liquidated damage payments described in Section 3 below or
transfer restrictions, (ii) use its reasonable best efforts to cause the
Exchange Offer Registration Statement to become effective under the Securities
Act within 180 days (or if the 180th day is not a business day, the first
business day thereafter) after the Issue Date and the Registered Exchange Offer
to be consummated no later than 210 days (or if the 210th day is not a business
day, the first business day thereafter) after the Issue Date and (iii) keep the
Exchange Offer Registration Statement effective for not less than 30 days (or
longer, if required by applicable law) after the date on which notice of the
Registered Exchange Offer is mailed to the Holders (such period being called the
"Exchange Offer Registration Period"). The Exchange Securities will be issued
under the Indenture or an indenture (the "Exchange Securities Indenture")
between the Company and the Trustee or such other bank or trust company that is
reasonably satisfactory to the Initial Purchasers, as trustee (the "Exchange
Securities Trustee"), such indenture to be identical in all material respects to
the Indenture, except for the transfer restrictions relating to the Securities
(as described above).
Upon the effectiveness of the Exchange Offer Registration Statement,
the Company shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer, subject to the terms and conditions
hereof, to enable each Holder of Securities that are Transfer Restricted
Securities electing to exchange Securities for Exchange Securities (assuming
that such Holder (a) is not an affiliate of the Company within the meaning of
the Securities Act or an Exchanging Dealer (as defined herein) not complying
with the requirements of the next sentence, (b) is not an Initial Purchaser
holding Securities that have, or that are reasonably likely to have, the status
of an unsold allotment in an initial distribution, (c) acquires the Exchange
Securities in the ordinary course of such Holder's business and (d) has no
arrangements or understandings with any person to participate in the
distribution of the Exchange Securities) to trade such Exchange Securities from
and after their receipt without any limitations or restrictions under the
Securities Act. The Company, the Initial Purchasers and each Exchanging Dealer
acknowledge that, pursuant to current interpretations by the Commission's staff
of Section 5 of the Securities Act, each Holder that is a broker-dealer electing
to exchange Securities, acquired for its own account as a result of
market-making activities or other trading activities, for Exchange Securities
(an "Exchanging Dealer"), is required to deliver a prospectus containing
substantially the information set forth in Annex A hereto on the cover, in Annex
B hereto in the "Exchange Offer Procedures" section and the "Purpose of the
Exchange Offer" section and in Annex C hereto in the "Plan of Distribution"
section of such prospectus in connection with a sale of any such Exchange
Securities received by such Exchanging Dealer pursuant to the Registered
Exchange Offer.
If, prior to the consummation of the Registered Exchange Offer, any
Holder holds any Securities acquired by it that have, or that are reasonably
likely to be determined to have, the status of an unsold allotment in an initial
distribution, or any Holder is not entitled to participate in the Registered
Exchange Offer, the Company shall, upon the request of any such Holder,
simultaneously with the delivery of the Exchange Securities in the Registered
Exchange Offer, issue and deliver to any such Holder, in exchange for the
Securities held by
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<PAGE>
such Holder (the "Private Exchange"), a like aggregate principal amount of debt
securities of the Company (the "Private Exchange Securities") that are identical
in all material respects to the Exchange Securities, except for the transfer
restrictions relating to such Private Exchange Securities. The Private Exchange
Securities will be issued under the same indenture as the Exchange Securities,
and the Company shall use its reasonable efforts to cause the Private Exchange
Securities to bear the same CUSIP number as the Exchange Securities.
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 30 days
(or longer, if required by applicable law) after the date on which notice
of the Registered Exchange Offer is mailed to the Holders;
(c) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Securities at any time prior to
the close of business, New York City time, on the last business day on
which the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all securities laws that are
applicable to the Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange Offer
and any Private Exchange, as the case may be, the Company shall:
(a) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer and the Private
Exchange;
(b) deliver to the Trustee for cancellation all Securities so accepted
for exchange; and
(c) cause the Trustee or the Exchange Securities Trustee, as the case
may be, promptly to authenticate and deliver to each Holder, Exchange
Securities or Private Exchange Securities, as the case may be, equal in
principal amount to the Securities of such Holder so accepted for exchange.
The Company shall use its reasonable best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
prospectus contained therein in order to permit such prospectus to be used by
dealers subject to the prospectus delivery requirements of Section 4(3) of the
Securities Act and Rule 174 thereunder for such pe-
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<PAGE>
riod of time as such persons must comply with such requirements in order to
resell the Exchange Securities; provided that (i) in the case where such
prospectus and any amendment or supplement thereto must be delivered by an
Exchanging Dealer, such period shall be the lesser of 180 days and the date on
which all Exchanging Dealers have sold all Exchange Securities held by them and
(ii) the Company shall make such prospectus and any amendment or supplement
thereto available to any broker-dealer for use in connection with any resale of
any Exchange Securities for a period of not less than 90 days after the
consummation of the Registered Exchange Offer.
The Indenture or the Exchange Securities Indenture, as the case may be,
shall provide that the Securities, the Exchange Securities and the Private
Exchange Securities shall vote and consent together on all matters as one class
and that none of the Securities, the Exchange Securities or the Private Exchange
Securities will have the right to vote or consent as a separate class on any
matter.
Interest on each Exchange Security and Private Exchange Security issued
pursuant to the Registered Exchange Offer and in the Private Exchange will
accrue from the last interest payment date on which interest was paid on the
Securities surrendered in exchange therefor or, if no interest has been paid on
the Securities, from the Issue Date.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act, (iii) such Holder is not an affiliate of the Company (as
defined in Rule 401 under the Securities Act) or, if it is such an affiliate,
such Holder will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable, (iv) if such Holder
is a broker-dealer, that it will receive Exchange Securities for its own account
in exchange for Initial Securities that were acquired as a result of
market-making activities or other trading activities and that it will deliver a
prospectus in connection with any resale of such Exchange Securities, and (v)
that it is not acting on behalf of any person who could not truthfully make the
foregoing representations to its knowledge.
Notwithstanding any other provisions hereof, the Company will ensure
that (i) any Exchange Offer Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations of the
Commission thereunder, (ii) any Exchange Offer Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of any Exchange Offer Registration Statement,
and any supplement to such prospectus, does not, as of the consummation of the
Registered Exchange Offer, include an untrue statement of a material fact or
omit to state a material fact necessary in order to
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<PAGE>
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
2. Shelf Registration. If (i) because of any change in law or
applicable interpretations thereof by the Commission's staff the Company is not
permitted to effect the Registered Exchange Offer as contemplated by Section 1
hereof, or (ii) any Securities validly tendered pursuant to the Registered
Exchange Offer are not exchanged for Exchange Securities within 210 days after
the Issue Date, or (iii) any Initial Purchaser so requests with respect to
Securities or Private Exchange Securities not eligible to be exchanged for
Exchange Securities in the Registered Exchange Offer and held by it following
the consummation of the Registered Exchange Offer (other than due to such
Initial Purchaser's inability to make the representations referred to in clauses
(i), (ii), (iii) and (v) of the second to last paragraph of Section 1), or (iv)
any applicable securities law or interpretations by the Commission's staff do
not permit any Holder to participate in the Registered Exchange Offer (other
than due to such Holder's inability to make the representations referred to in
clauses (i), (ii), (iii) and (v) of the second to last paragraph of Section 1),
or (v) any Holder that participates in the Registered Exchange Offer does not
receive freely transferable Exchange Securities in exchange for validly tendered
Securities, or (vi) the Company so elects, then the following provisions shall
apply:
(a) The Company shall use its reasonable best efforts to file as
promptly as reasonably practicable with the Commission, and thereafter
shall use its reasonable best efforts to cause to be declared effective, a
shelf registration statement on an appropriate form under the Securities
Act relating to the offer and sale of the Transfer Restricted Securities
(as defined below) by the Holders thereof from time to time in accordance
with the methods of distribution set forth in such registration statement
and Rule 415 under the Securities Act (hereafter, a "Shelf Registration
Statement" and, together with any Exchange Offer Registration Statement, a
"Registration Statement") provided, however, that no Holder (other than an
Initial Purchaser) shall be entitled to have to Securities held by it
covered by such Shelf Registration Statement unless such Holder agrees in
writing to be bound by all provisions of Section 6 of this Agreement
applicable to such Holder.
(b) The Company shall use its reasonable best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be lawfully delivered by Holders of
Transfer Restricted Securities for a period ending on the earlier of (i)
two years from the Issue Date or such shorter period that will terminate
when all the Transfer Restricted Securities covered by the Shelf
Registration Statement have been sold pursuant thereto and (ii) the date on
which the Securities become eligible for resale without volume restrictions
pursuant to Rule 144 under the Securities Act (in any such case, such
period being called the "Shelf Registration Period"). The Company shall be
deemed not to have used its reasonable best efforts to keep the Shelf
Registration Statement effective during the requisite period if it
voluntarily takes any action that would result in Holders of Transfer
Restricted Se-
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<PAGE>
curities covered thereby not being able to offer and sell such Transfer
Restricted Securities during that period, unless (i) such action is
required by applicable law , (ii) such action is taken by the Company in
good faith and for valid business reasons, including the acquisition or
divestiture of assets, so long as (a) any single period is no longer than
30 successive days, (b) all total periods in any calendar year are no
longer than 60 days and (c) the Company promptly complies with the
requirements of Section 4(o) at the outset of any such period and, at the
expiration of any such 30 day period, Section 4(j) hereof, if applicable.
(c) Notwithstanding any other provisions hereof, but subject to
Sections 4(j) and 4(o), the Company will ensure that (i) any Shelf
Registration Statement and any amendment thereto and any prospectus forming
part thereof and any supplement thereto complies in all material respects
with the Securities Act and the rules and regulations of the Commission
thereunder, (ii) any Shelf Registration Statement and any amendment thereto
(in either case, other than with respect to information included therein in
reliance upon or in conformity with written information furnished to the
Company by or on behalf of any Holder specifically for use therein (the
"Holders' Information")) does not, when it becomes effective, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading and (iii) any prospectus forming part of any Shelf
Registration Statement, and any supplement to such prospectus (in either
case, other than with respect to Holders' Information), when it becomes
effective, does not include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
3. Liquidated Damages. (a) The parties hereto agree that the Holders of
Transfer Restricted Securities will suffer damages if the Company fails to
fulfill its obligations under Section 1 or Section 2, as applicable, and that it
would not be feasible to ascertain the extent of such damages. Accordingly, if
(i) the applicable Registration Statement is not filed with the Commission on or
prior to 60 days (or if such 60th day is not a business day, the next business
day) after the Issue Date, (ii) the Exchange Offer Registration Statement or the
Shelf Registration Statement, as the case may be, is not declared effective
within 180 days (or if such 180th day is not a business day, the next business
day) after the Issue Date (or in the case of a Shelf Registration Statement
required to be filed in response to a change in law or the applicable
interpretations of Commission's staff, if later, within 45 days after
publication of the change in law or interpretation), (iii) the Registered
Exchange Offer is not consummated on or prior to 210 days (or if such 210th day
is not a business day, the next business day) after the Issue Date, or (iv) the
Shelf Registration Statement is filed and declared effective within 180 days (or
if such 180th day is not a business day, the next business day) after the Issue
Date (or in the case of a Shelf Registration Statement required to be filed in
response to a change in law or the applicable interpretations of Commission's
staff, if later, within 45 days after publication of the change in law or
interpretation) but shall thereafter cease to be effective (at any time that the
Company is obligated to maintain the effectiveness thereof)
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<PAGE>
without being succeeded within 30 days or, in the case of the actions described
in Section 2(b)(ii), 60 days, by an additional Registration Statement filed and
declared effective (each such event referred to in clauses (i) through (iv), a
"Registration Default"), the Company will be obligated to pay liquidated damages
to each Holder of Transfer Restricted Securities, during the period of one or
more such Registration Defaults, in an amount equal to $ 0.192 per week per
$1,000 principal amount of Transfer Restricted Securities held by such Holder
until (i) the applicable Registration Statement is filed, (ii) the Exchange
Offer Registration Statement is declared effective, (iii) the Registered
Exchange Offer is consummated, (iv) the Shelf Registration Statement is declared
effective or (v) the Shelf Registration Statement again becomes effective, as
the case may be. Following the cure of all Registration Defaults, the accrual of
liquidated damages will cease. Only Holders entitled to a Shelf Registration
Statement pursuant to Section 2 hereof will be entitled to liquidated damages in
respect of a Registration Default with respect to a Shelf Registration
Statement. As used herein, the term "Transfer Restricted Securities" means (i)
each Security until the date on which such Security has been exchanged for a
freely transferable Exchange Security in the Registered Exchange Offer, (ii)
each Security or Private Exchange Security until the date on which it has been
effectively registered under the Securities Act and disposed of in accordance
with the Shelf Registration Statement or (iii) each Security or Private Exchange
Security until the date on which it is distributed to the public pursuant to
Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under
the Securities Act. Notwithstanding anything to the contrary in this Section
3(a), the Company shall not be required to pay liquidated damages to a Holder of
Transfer Restricted Securities if such Holder failed to comply with its
obligations to make the representations set forth in the second to last
paragraph of Section 1 or failed to provide the information required to be
provided by it, if any, pursuant to Section 4(n).
(b) The Company shall notify the Trustee and the Paying Agent under the
Indenture immediately upon the happening of each and every Registration Default.
The Company shall pay the liquidated damages due on the Transfer Restricted
Securities by depositing with the Paying Agent (which may not be the Company for
these purposes), in trust, for the benefit of the Holders thereof, prior to
10:00 a.m., New York City time, on the next interest payment date specified by
the Indenture and the Securities, sums sufficient to pay the liquidated damages
then due. The liquidated damages due shall be payable on each interest payment
date specified by the Indenture and the Securities to the record holder entitled
to receive the interest payment to be made on such date. Each obligation to pay
liquidated damages shall be deemed to accrue from and including the date of the
applicable Registration Default.
(c) The parties hereto agree that the liquidated damages
provided for in this Section 3 constitute a reasonable estimate of and are
intended to constitute the sole damages that will be suffered by Holders of
Transfer Restricted Securities by reason of the failure of (i) the Shelf
Registration Statement or the Exchange Offer Registration Statement to be filed,
(ii) the Shelf Registration Statement to remain effective or (iii) the Exchange
Offer Registration Statement to be declared effective and the Registered
Exchange Offer to be consummated, in each case to the extent required by this
Agreement.
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<PAGE>
4. Registration Procedures. In connection with any Registration
Statement, the following provisions shall apply:
(a) The Company shall (i) furnish to each Initial Purchaser, prior to
the filing thereof with the Commission, a copy of the Registration
Statement and each amendment thereof and each supplement, if any, to the
prospectus included therein and shall use its reasonable best efforts to
reflect in each such document, when so filed with the Commission, such
comments as any Initial Purchaser may reasonably propose; (ii) if
applicable, include the information set forth in Annex A hereto on the
cover, in Annex B hereto in the "Exchange Offer Procedures" section and the
"Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan
of Distribution" section of the prospectus forming a part of the Exchange
Offer Registration Statement, and include the information set forth in
Annex D hereto in the Letter of Transmittal delivered pursuant to the
Registered Exchange Offer; and (iii) if requested by any Initial Purchaser,
include the information required by Items 507 or 508 of Regulation S-K, as
applicable, in the prospectus forming a part of the Exchange Offer
Registration Statement.
(b) The Company shall advise each Initial Purchaser (in the case of a
Shelf Registration Statement), the Holders who propose to sell Securities
pursuant to the Shelf Registration Statement as selling security holders
and (in the case of any Exchange Offer Registration Statement) any
Exchanging Dealer from whom the Company has received prior written notice
that it will be an Exchanging Dealer in the Registered Exchange Offer and,
if requested by any such person, confirm such advice in writing (which
advice pursuant to clauses (ii)-(v) hereof shall be accompanied by an
instruction to suspend the use of the prospectus until the requisite
changes have been made):
(i) when any Registration Statement and any amendment thereto has
been filed with the Commission and when such Registration Statement or
any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or
supplements to any Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities, the
Exchange Securities or the Private Exchange Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose; and
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<PAGE>
(v) of the happening of any event that requires the making of any
changes in any Registration Statement or the prospectus included
therein in order that the Registration Statement (as of its effective
date) or the prospectus do not contain an untrue statement of material
fact nor omit to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of the
prospectus, in light of the circumstances under which they were made)
not misleading.
(c) The Company will make every reasonable effort to obtain the
withdrawal at the earliest possible time of any order suspending the
effectiveness of any Registration Statement.
(d) The Company will furnish to each Holder of Transfer Restricted
Securities included within the coverage of any Shelf Registration
Statement, without charge, at least one conformed copy of such Shelf
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules and, if any such Holder so requests in
writing, all exhibits thereto (including those, if any, incorporated by
reference).
(e) The Company will, during the Shelf Registration Period, promptly
deliver to each Holder of Transfer Restricted Securities included within
the coverage of any Shelf Registration Statement, without charge, as many
copies of the prospectus (including each preliminary prospectus) included
in such Shelf Registration Statement and any amendment or supplement
thereto as such Holder may reasonably request; and the Company consents to
the use of such prospectus or any amendment or supplement thereto by each
of the selling Holders of Transfer Restricted Securities in connection with
the offer and sale of the Transfer Restricted Securities covered by such
prospectus or any amendment or supplement thereto.
(f) The Company will furnish to each Initial Purchaser and each
Exchanging Dealer, without charge, at least one conformed copy of the
Exchange Offer Registration Statement and any post-effective amendment
thereto, including financial statements and schedules and, if any Initial
Purchaser or Exchanging Dealer so requests in writing, all exhibits thereto
(including those, if any, incorporated by reference).
(g) The Company will, during the Exchange Offer Registration Period, as
applicable, promptly deliver to each Initial Purchaser or Exchanging
Dealer, as applicable, without charge, as many copies of the final
prospectus included in the Exchange Offer Registration Statement and any
amendment or supplement thereto as such Initial Purchaser or Exchanging
Dealer may reasonably request for delivery by (i) such Exchanging Dealer in
connection with a sale of Exchange Securities received by it pursuant to
the Registered Exchange Offer or (ii) such Initial Purchaser in connection
with a sale of Exchange Securities received by it in exchange for
Securities constituting any portion of an unsold allotment; and the Company
consents to the use of such prospec-
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<PAGE>
tus or any amendment or supplement thereto by any such Initial Purchaser or
Exchanging Dealer, as applicable, as aforesaid.
(h) Prior to the effective date of any Registration Statement, the
Company will use its reasonable best efforts to register or qualify, or
cooperate with the Holders of Securities, Exchange Securities or Private
Exchange Securities included therein and their respective counsel in
connection with the registration or qualification of, such Securities,
Exchange Securities or Private Exchange Securities for offer and sale under
the securities or "blue sky" laws of such states of the United States as
any such Holder reasonably requests in writing and do any and all other
acts or things necessary or advisable to enable the offer and sale in such
states of the United States of the Securities, Exchange Securities or
Private Exchange Securities covered by such Registration Statement;
provided that the Company will not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to take
any action which would subject it to general service of process or to
taxation in any such jurisdiction where it is not then so subject.
(i) The Company will cooperate with the Holders of Securities, Exchange
Securities or Private Exchange Securities to facilitate the timely
preparation and delivery of certificates representing Securities, Exchange
Securities or Private Exchange Securities to be sold pursuant to any
Registration Statement free of any restrictive legends and in such
denominations and registered in such names as the Holders thereof may
request in writing prior to sales of Securities, Exchange Securities or
Private Exchange Securities pursuant to such Registration Statement.
(j) If any event contemplated by Section 4(b)(ii) through (v) occurs
during the period for which the Company is required to maintain an
effective Registration Statement, the Company will promptly prepare and
file with the Commission a post-effective amendment to the Registration
Statement or a supplement to the related prospectus or file any other
required document so that, as thereafter delivered to purchasers of the
Securities, Exchange Securities or Private Exchange Securities from a
Holder, the prospectus will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(k) Not later than the effective date of the applicable Registration
Statement, the Company will provide a CUSIP number for the Securities, the
Exchange Securities and the Private Exchange Securities, as the case may
be, and provide the applicable trustee with printed certificates for the
Securities, the Exchange Securities or the Private Exchange Securities, as
the case may be, in a form eligible for deposit with The Depository Trust
Company.
(l) The Company will comply with all applicable rules and regulations
of the Commission and will make generally available to its security holders
as soon as prac-
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<PAGE>
ticable after the effective date of the applicable Registration Statement
an earning statement satisfying the provisions of Section 11(a) of the
Securities Act; provided that in no event shall such earning statement be
delivered later than 45 days after the end of a 12-month period (or 90
days, if such period is a fiscal year) beginning with the first month of
the Company's first fiscal quarter commencing after the effective date of
the applicable Registration Statement, which statement shall cover such
12-month period.
(m) The Company will use its reasonable best efforts to cause the
Indenture or the Exchange Securities Indenture, as the case may be, to be
qualified under the Trust Indenture Act as required by applicable law in a
timely manner.
(n) The Company may require each Holder of Transfer Restricted
Securities to be registered pursuant to any Shelf Registration Statement to
furnish to the Company such information concerning the Holder and the
distribution of such Transfer Restricted Securities as the Company may from
time to time reasonably require for inclusion in such Shelf Registration
Statement, and the Company may exclude from such registration the Transfer
Restricted Securities of any Holder that fails to furnish such information
within a reasonable time after receiving such request.
(o) Each known Exchanging Dealer, the Initial Purchasers and each
Holder of Transfer Restricted Securities to be registered pursuant to a
Shelf Registration statement agrees that, upon receipt of any notice from
the Company pursuant to Section 4(b)(ii) through (v), such person will
discontinue disposition of such Transfer Restricted Securities until such
person's receipt of copies of the supplemental or amended prospectus
contemplated by Section 4(j) or until advised in writing (the "Advice") by
the Company that the use of the applicable prospectus may be resumed. If
the Company shall give any notice under Section 4(b)(ii) through (v) during
the period that the Company is required to maintain an effective
Registration Statement (the "Effectiveness Period"), such Effectiveness
Period shall be extended by the number of days during such period from and
including the date of the giving of such notice to and including the date
when each seller of Transfer Restricted Securities covered by such
Registration Statement shall have received (x) the copies of the
supplemental or amended prospectus contemplated by Section 4(j) (if an
amended or supplemental prospectus is required) or (y) the Advice (if no
amended or supplemental prospectus is required).
(p) In the case of a Shelf Registration Statement, the Company shall
enter into such customary agreements (including, if requested, an
underwriting agreement in customary form) and use its reasonable best
efforts to take all such other action, if any, as Holders of a majority in
aggregate principal amount of the Securities, Exchange Securities and
Private Exchange Securities being sold or the managing underwriters (if
any) shall reasonably request in order to facilitate any disposition of
Securities, Exchange Securities or Private Exchange Securities pursuant to
such Shelf Registration Statement.
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<PAGE>
(q) In the case of a Shelf Registration Statement, the Company shall
(i) make reasonably available for inspection by a representative of, and
Special Counsel (as defined below) acting for, Holders of a majority in
aggregate principal amount of the Securities, Exchange Securities and
Private Exchange Securities being sold and any underwriter participating in
any disposition of Securities, Exchange Securities or Private Exchange
Securities pursuant to such Shelf Registration Statement, all relevant
financial and other records, pertinent corporate documents and properties
of the Company and its subsidiaries and (ii) use its reasonable best
efforts to have its officers, directors, employees, accountants and counsel
supply all relevant information reasonably requested by such
representative, Special Counsel or any such underwriter (an "Inspector") in
connection with such Shelf Registration Statement; provided, however, that
the foregoing inspection and information gathering shall be coordinated by
the Inspectors. Each Inspector will be required to agree in writing,
pursuant to a confidentiality agreement in form and substance reasonably
satisfactory to the Company and such Inspector, that information obtained
by such Inspector shall be deemed confidential and shall not be disclosed
by the Inspectors unless (i) in the opinion of counsel to the Inspectors
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in such Registration Statement, unless such
Registration Statement cannot be used pursuant to Section 4(o) or 4(j);
(ii) the release of such information is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction; provided that the
Company has the right to challenge the subpoena or order before providing
such information; or (iii) such information has been made generally
available to the public by the Company.
(r) In the case of a Shelf Registration Statement, the Company shall,
if requested by Holders of a majority in aggregate principal amount of the
Securities, Exchange Securities and Private Exchange Securities being sold,
their Special Counsel or the managing underwriters (if any) in connection
with such Shelf Registration Statement, use its reasonable best efforts to
cause (i) its counsel to deliver an opinion relating to the Shelf
Registration Statement and the Securities, Exchange Securities or Private
Exchange Securities, as applicable, in customary form, addressed to the
Holders selling thereby, (ii) its officers to execute and deliver all
customary documents and certificates requested by Holders of a majority in
aggregate principal amount of the Securities, Exchange Securities and
Private Exchange Securities being sold, their Special Counsel or the
managing underwriters (if any) and (iii) its independent public accountants
to provide a comfort letter or letters in customary form, addressed to the
Holders selling thereby, subject to receipt of appropriate documentation as
contemplated, and only if permitted, by Statement of Auditing Standards No.
72.
5. Registration Expenses. The Company will bear all expenses incurred
in connection with the performance of its obligations under Sections 1, 2, 3 and
4 and the Company will reimburse the Initial Purchasers and the Holders for the
reasonable fees and disbursements of one firm of attorneys (in addition to any
local counsel) chosen by the Holders of a majority in aggregate principal amount
of the Securities, the Exchange Securities and the
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<PAGE>
Private Exchange Securities to be sold pursuant to each Registration Statement
(the "Special Counsel") acting for the Initial Purchasers or Holders in
connection therewith.
6. Indemnification. (a) In the event of a Shelf Registration Statement
or in connection with any prospectus delivery pursuant to an Exchange Offer
Registration Statement by an Initial Purchaser or Exchanging Dealer, as
applicable, the Company shall indemnify and hold harmless each Holder
(including, without limitation, any such Initial Purchaser or Exchanging
Dealer), its affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls such Holder
within the meaning of the Securities Act or the Exchange Act (collectively
referred to for purposes of this Section 6 and Section 7 as a Holder) from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof (including, without limitation, any loss, claim, damage,
liability or action relating to purchases and sales of Securities, Exchange
Securities or Private Exchange Securities), to which that Holder or any such
controlling person may become subject, whether commenced or threatened, under
the Securities Act, the Exchange Act, any other federal or state statutory law
or regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in any such Registration
Statement or any prospectus forming part thereof or in any amendment or
supplement thereto or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and shall reimburse each Holder promptly upon demand for
any legal or other expenses reasonably incurred by that Holder or any such
controlling person in connection with investigating or defending or preparing to
defend against or appearing as a third party witness in connection with any such
loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of, or
is based upon, an untrue statement or alleged untrue statement in or omission or
alleged omission from any of such documents in reliance upon and in conformity
with any Holders' Information; and provided, further, that with respect to any
such untrue statement in or omission made in any prospectus, or any amendment or
supplement thereto, or any preliminary prospectus, the indemnity agreement
contained in this Section 6(a) shall not inure to the benefit of any Holder from
whom the person asserting any such loss, claim, damage, liability or action
received Securities, Exchange Securities or Private Exchange Securities to the
extent that such loss, claim, damage, liability or action of or with respect to
such Holder results from the fact that either (x) both (A) a copy of the final
prospectus was not sent or given to such person at or prior to the written
confirmation of the sale of such Securities, Exchange Securities or Private
Exchange Securities to such person and (B) the untrue statement in or omission
from the related preliminary prospectus was corrected in the final prospectus
unless such failure to deliver the final prospectus was a result of
non-compliance by the Company with Section 4(d), 4(e), 4(f) or 4(g) or (y) at
the time of such purchase such Holder had received advice from the Company that
the use of such prospectus, amendment, supplement or preliminary prospectus was
suspended as provided in Section 4(o).
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<PAGE>
(b) In the event of a Shelf Registration Statement or in connection
with any prospectus delivery pursuant to an Exchange Offer Registration
Statement by an Exchanging Dealer or Initial Purchaser, as applicable, each
Holder shall indemnify and hold harmless the Company, its affiliates, their
respective officers, directors, employees, representatives and agents, and each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act (collectively referred to for purposes of this Section
6(b) and Section 7 as the Company), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company or any such controlling person may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
any such Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, but in each case only to the extent that
(i) the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with any Holders'
Information furnished to the Company by such Holder or, that such loss, claim,
damage, liability or action results from the fact that either (x) both (A) a
copy of the final prospectus was not sent or given to such person at or prior to
the written confirmation of the sale of such Securities, Exchange Securities or
Private Exchange Securities to such person and (B) the untrue statement in or
omission from the related preliminary prospectus was corrected in the final
prospectus unless, in either case, such failure to deliver the final prospectus
was corrected in the final prospectus unless, in either case, such failure to
deliver the final prospectus was a result of non-compliance by the Company with
Section 4(d), 4(e), 4(f) or 4(g) or(y) at the time of the use of such
prospectus, amendment, supplement or preliminary prospectus by such Holder, such
prospectus, amendment, supplement or preliminary prospectus was suspended as
provided in Section 4(o), and shall reimburse the Company or any controlling
person for any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending or preparing to defend against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that no such Holder shall be liable for any indemnity claims hereunder in excess
of the amount of net proceeds received by such Holder from the sale of
Securities, Exchange Securities or Private Exchange Securities pursuant to such
Shelf Registration Statement.
(c) Promptly after receipt by an indemnified party under this Section 6
of notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party pursuant to Section 6(a) or 6(b), notify the indemnifying party in writing
of the claim or the commencement of that action; provided, however, that the
failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 6 except to the extent that it
has been materially prejudiced (through the forfeiture of substantive rights or
defenses) by such failure; and provided, further, that the failure to notify the
indemnifying party shall not relieve it from any
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<PAGE>
liability which it may have to an indemnified party otherwise than under this
Section 6. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of
its election to assume the defense of such claim or action, the indemnifying
party shall not be liable to the indemnified party under this Section 6 for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than the reasonable costs of
investigation; provided, however, that an indemnified party shall have the
right to employ its own counsel in any such action, but the fees, expenses and
other charges of such counsel for the indemnified party will be at the expense
of such indemnified party unless (1) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party,
(2) the indemnified party has reasonably concluded (based upon advice of
counsel to the indemnified party) that there may be legal defenses available to
it or other indemnified parties that are different from or in addition to those
available to the indemnifying party, (3) a conflict or potential conflict exists
(based upon advice of counsel to the indemnified party) between the indemnified
party and the indemnifying party (in which case the indemnifying party will not
have the right to direct the defense of such action on behalf of the indemnified
party) or (4) the indemnifying party has not in fact employed counsel reasonably
satisfactory to the indemnified party to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than one
separate firm of attorneys (in addition to any local counsel) at any one time
for all such indemnified party or parties. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 6(a) and 6(b),
shall use all reasonable efforts to cooperate with the indemnifying party in
the defense of any such action or claim. No indemnifying party shall be liable
for any settlement of any such action effected without its written consent
(which consent shall not be unreasonably withheld), but if settled with its
written consent or if there be a final judgment for the plaintiff in any such
action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party (which consent shall not be unreasonably
withheld), effect any settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such proceeding.
7. Contribution. If the indemnification provided for in Section 6 is
unavailable or insufficient to hold harmless an indemnified party under Section
6(a) or 6(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to
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<PAGE>
the amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability, or action in respect thereof, (i) in such proportion
as shall be appropriate to reflect the relative benefits received by the Company
from the offering and sale of the Securities, on the one hand, and a Holder with
respect to the sale by such Holder of Securities, Exchange Securities or Private
Exchange Securities, on the other, or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and such Holder
on the other with respect to the statements or omissions that resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and a Holder on the other with respect to such offering
and such sale shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Securities (before deducting expenses)
received by or on behalf of the Company as set forth in the table on the cover
of the Offering Memorandum, on the one hand, bear to the total proceeds received
by such Holder with respect to its sale of Securities, Exchange Securities or
Private Exchange Securities, on the other. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to the Company or information supplied by the Company on
the one hand or to any Holders' Information supplied by such Holder on the
other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 7 were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 7 shall be deemed
to include, for purposes of this Section 7, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending or preparing to defend any such action or claim. Notwithstanding
the provisions of this Section 7, an indemnifying party that is a Holder of
Securities, Exchange Securities or Private Exchange Securities shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Securities, Exchange Securities or Private Exchange
Securities sold by such indemnifying party to any purchaser exceeds the amount
of any damages which such indemnifying party has otherwise paid or become liable
to pay by reason of any untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
8. Rules 144 and 144A. So long as any Transfer Restricted Securities
remain outstanding, the Company shall use its reasonable best efforts to file
the reports required to be filed by it under the Securities Act and the Exchange
Act in a timely manner and, if at any time the Company is not required to file
such reports, it will, upon the written request of any Holder of Transfer
Restricted Securities, make publicly available other information so long as
necessary to permit sales of such Holder's securities pursuant to Rules 144 and
144A. The
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<PAGE>
Company covenants that it will use its reasonable best efforts to take such
further action as any Holder of Transfer Restricted Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Transfer Restricted Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rules 144 and 144A
(including, without limitation, the requirements of Rule 144A(d)(4)). Upon the
written request of any Holder of Transfer Restricted Securities, the Company
shall deliver to such Holder a written statement as to whether it has complied
with such requirements. Notwithstanding the foregoing, nothing in this Section 8
shall be deemed to require the Company to register any of its securities
pursuant to the Exchange Act.
9. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by any Shelf Registration Statement are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the Holders of
a majority in aggregate principal amount of such Transfer Restricted Securities
included in such offering, subject to the consent of the Company, and such
Holders shall be responsible for all underwriting commissions and discounts in
connection therewith.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
10. Miscellaneous. (a) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, unless the Company
has obtained the written consent of Holders of a majority in aggregate principal
amount of the Securities, the Exchange Securities and the Private Exchange
Securities, taken as a single class. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose Securities, Exchange
Securities or Private Exchange Securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of a majority in aggregate
principal amount of the Securities, the Exchange Securities and the Private
Exchange Securities being sold by such Holders pursuant to such Registration
Statement.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier or air courier guaranteeing next-day delivery:
(1) if to a Holder, at the most current address given by such Holder to
the Company in accordance with the provisions of this Section 10(b), which
address ini-
-17-
<PAGE>
tially is, with respect to each Holder, the address of such Holder
maintained by the Registrar under the Indenture, with a copy in like manner
to Chase Securities Inc., BT Alex. Brown Incorporated and ING Baring Furman
Selz LLC;
(2) if to an Initial Purchaser, initially at its address set forth in
the Purchase Agreement; and
(3) if to the Company, initially at the address of the Company set
forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; one business day after
being delivered to a next-day air courier; three business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine operator, if sent by telecopier.
(c) Successors and Assigns. This Agreement shall be binding upon the
Company, each other party hereto and each Holder and their respective successors
and assigns. Each Holder by its acceptance of a Security, for itself and its
successors and assigns, agrees to be bound hereby.
(d) Counterparts. This Agreement may be executed in any number of
counterparts (which may be delivered in original form or by telecopier) and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) Definition of Terms. For purposes of this Agreement, (a) the term
"business day" means any day on which the New York Stock Exchange, Inc. is open
for trading, (b) the term "subsidiary" has the meaning set forth in Rule 405
under the Securities Act and (c) except where otherwise expressly provided, the
term "affiliate" has the meaning set forth in Rule 405 under the Securities Act.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(h) Remedies. In the event of a breach by the Company or by any Holder
of any of their obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all rights granted by
law, including recovery of damages (other than the recovery of damages for a
breach by the Company of its obligations under Sections 1 or 2 hereof for which
liquidated damages have been paid pursuant to Section 3 hereof), will be
entitled to specific performance of its rights under this Agreement. The Company
and each Holder agree that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of any of the provisions of
this Agreement
-18-
<PAGE>
and hereby further agree that, in the event of any action for specific
performance in respect of such breach, it shall waive the defense that a remedy
at law would be adequate.
(i) No Inconsistent Agreements. The Company represents, warrants and
agrees that (i) it has not entered into, shall not, on or after the date of this
Agreement, enter into any agreement that is inconsistent with the rights granted
to the Holders in this Agreement or otherwise conflicts with the provisions
hereof and (ii) it has not previously entered into any agreement which remains
in effect granting any registration rights with respect to any of its debt
securities to any person.
(j) Severability. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
-19-
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the Initial Purchasers.
Very truly yours,
GENERAL CHEMICAL INDUSTRIAL
PRODUCTS INC.
By /s/ Stewart A. Fisher
-----------------------------
Name: Stewart A. Fisher
Title: Vice President
Accepted:
CHASE SECURITIES INC.
By /s/ Peter J. DiLullo
----------------------------------
Name: Peter J. DiLullo
Title: Vice President
BT ALEX. BROWN INCORPORATED
By /s/ Tom W. Cole
----------------------------------
Name: Tom W. Cole
Title: Managing Director
ING BARING FURMAN SELZ LLC
By /s/ James C. Larmett
----------------------------------
Name: James C. Larmett
Title: Managing Director
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution"
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution".
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Securities
received in exchange for Securities where such Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 180 days after the Expiration Date, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until _______________,
199_, all dealers effecting transactions in the Exchange Securities may be
required to deliver a prospectus.
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Registered Exchange Offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchasers of any such Exchange Securities. Any broker-dealer that resells
Exchange Securities that were received by it for its own account pursuant to the
Registered Exchange Offer and any broker or dealer that participates in a
distribution of such Exchange Securities may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
Exchange Securities and any commission or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that, by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the Holders of the Securities) other than commissions or concessions of any
broker-dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
<PAGE>
ANNEX D
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
Address:
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
<PAGE>
Exhibit 5.1
[Letterhead of Debevoise & Plimpton]
June 21, 1999
General Chemical Industrial Products Inc.
90 East Halsey Road
Parsippany, New Jersey 03841
Registration Statement on Form S-4
Ladies and Gentlemen:
We have acted as special counsel to General Chemical Industrial
Products Inc. (the "Company") in connection with the preparation and filing with
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Act"), of a Registration Statement on Form S-4 (as
amended, the "Registration Statement") relating to the proposed exchange by the
Company of $100,000,000 aggregate principal amount of its 10 5/8% Senior
Subordinated Notes due 2009 (the "New Notes") for $100,000,000 aggregate
principal amount of its currently outstanding 10 5/8% Senior Subordinated Notes
due 2009 (the "Old Notes").
In so acting, we have examined and relied upon the originals, or
copies certified or otherwise identified to our satisfaction, of such records,
documents, certificates and other instruments as in our judgment are necessary
or appropriate to enable us to render the opinion expressed below.
We are of the opinion that, when the Registration Statement has
become effective under the Securities Act and the New Notes have been duly
issued and exchanged for
<PAGE>
2
the Old Notes in the manner described in the Registration Statement, the New
Notes will be validly issued and will be valid and legally binding obligations
of the Company, enforceable against the Company in accordance with their terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or affecting creditors' rights generally or by
general principles of equity (regardless of whether such enforceability is
considered in an action at law or in equity).
We express no opinion as to the effect of any Federal or state
laws regarding fraudulent transfers or conveyances.
We express no opinion as to the laws of any jurisdiction other
than the Federal laws of the United States, the laws of the State of New York
and the General Corporation Law of the State of Delaware.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the headings "Legal
Matters" in the Prospectus. In giving such consent, we do not hereby concede
that we are within the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ Debevoise & Plimpton
<PAGE>
Exhibit 12.1
Ratio of Earnings to Fixed Charges
The ratio of earnings to fixed charges is computed by dividing earnings by fixed
charges. Earnings consist of income before minority interest and income taxes
and extraordinary items plus fixed charges. Fixed charges consist of interest
expense, including the amortization of deferred financing costs, and that
portion of rental expense deemed to be representative of interest.
<PAGE>
Exhibit 21.1
SUBSIDIARIES OF THE COMPANY
NHO Canada Holding Inc.
General Chemical Canada Holding Inc.
General Chemical Canada Ltd.
General Chemical International Inc.
General Chemical (Great Britain) Ltd.
Alchemco Philippines, Inc.
General Chemical (Soda Ash), Inc.
General Chemical Soda Ash Partners (51%)
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULE
TO THE SHAREHOLDER OF
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
We consent to the use in this Registration Statement relating to
$100,000,000 Senior Subordinated Notes due 2009 of General Chemical Industrial
Products Inc. on Form S-4 of our report dated February 11, 1999 (April 30, 1999
as to Note 1), appearing in the Prospectus, which is part of this Registration
Statement, and to the references to us under the headings 'Selected Financial
Data' and 'Experts' in such Prospectus.
Our audits of the consolidated financial statements referred to in
our aforementioned report also included the financial statement schedule of
General Chemical Industrial Products Inc., listed in Item 21(b). This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
/s/ Deloitte & Touche LLP
Parsippany, New Jersey
June 22, 1999
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY
The undersigned, Director, President and Chief Executive Officer
of General Chemical Industrial Products Inc. (the "Company"), does hereby
constitute and appoint Stewart A. Fisher as his true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him and in
his name, place and stead in any and all capacities, to execute and deliver in
his name and on his behalf:
(a) one or more Registration Statements on Form S-4 or any other
appropriate form (each, a "Registration Statement") of the Company to be
filed by the Company with the Securities and Exchange Commission ("SEC")
(including, without limitation, Registration Statements filed pursuant
to Rule 462(b) under the Securities Act of 1933, as amended (the
"Securities Act")) for the purpose of offering to exchange (the
"Exchange Offer") up to $100 million aggregate principal amount of the
Company's 10 5/8% Senior Subordinated Notes due 2009 (the "New Notes")
for a like principal amount of the Company's issued and outstanding
10 5/8% Senior Subordinated Notes due 2009 (the "Old Notes"); and
(b) any and all supplements and amendments (including, without
limitation, post-effective amendments) to such Registration Statements;
and any and all other documents and instruments in connection with the Exchange
Offers which such attorney-in-fact and agent deems necessary or advisable to
enable the Company to comply with (a) the Securities Act, the Securities
Exchange Act of 1934, as amended, and the other federal securities laws of the
United States of America and the rules, regulations and requirements of the SEC
in respect of any thereof, (b) the securities or Blue Sky laws of any state or
other governmental subdivision of the United States of America and (c) the
securities or similar applicable laws of Canada, England and any other foreign
jurisdiction; and the undersigned does hereby ratify and confirm as his own acts
and deeds all that such attorneys-in-fact and agents, and each of them, shall do
or cause to be done by virtue hereof. Such attorney-in-fact and agent shall
have, and may exercise, all of the powers hereby conferred.
<PAGE>
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this
power of attorney this 7th day of June, 1999.
/s/ DeLyle Bloomquist
-------------------------------------
DeLyle Bloomquist
Witness:
/s/ H. Scott Ellis
- ------------------------------
H. Scott Ellis
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial
information extracted from the Form S-4 for
the periods ended March 31, 1999 and
December 31, 1999 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 001088382
<NAME> GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
<MULTIPLIER> 1,000
<S> <C> <C>
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> MAR-31-1999 DEC-31-1998
<PERIOD-TYPE> 3-MOS 12-MOS
<CASH> 1,249 1,127
<SECURITIES> 0 0
<RECEIVABLES> 61,432 61,259
<ALLOWANCES> 2,666 2,658
<INVENTORY> 22,571 25,508
<CURRENT-ASSETS> 91,957 91,287
<PP&E> 286,036 230,051
<DEPRECIATION> 144,136 88,243
<TOTAL-ASSETS> 250,544 248,714
<CURRENT-LIABILITIES> 54,105 51,432
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 67,520 75,292
<TOTAL-LIABILITY-AND-EQUITY> 250,544 248,714
<SALES> 61,472 261,469
<TOTAL-REVENUES> 61,472 261,469
<CGS> 51,268 202,338
<TOTAL-COSTS> 51,268 202,338
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 2,669 11,747
<INCOME-PRETAX> 1,309 12,595
<INCOME-TAX> 330 3,171
<INCOME-CONTINUING> 979 9,424
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 979 9,424
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0
<PAGE>
Exhibit 99.1
LETTER OF TRANSMITTAL
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
Offer to Exchange all Outstanding
10 5/8% Senior Subordinated Notes Due 2009
for
10 5/8% Senior Subordinated Notes Due 2009
which Have Been Registered Under
the Securities Act of 1933
Pursuant to the Prospectus, dated , 1999
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
_______ __, 1999 UNLESS EXTENDED (THE "EXPIRATION DATE").
TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY
TIME, ON THE EXPIRATION DATE.
Delivery To: U.S. Bank Trust National Association, Exchange Agent
By Mail, Hand Delivery or For Information Call:
Overnight Carrier: (800) 934-6802
U.S. Bank Trust National Association Facsimile Transmission Number:
180 East 5th Street (612) 244-1537
St. Paul, Minnesota 55101
Attention: Specialized Finance
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET
FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX BELOW
<PAGE>
The undersigned acknowledges that he, she or it has received and reviewed
this Letter of Transmittal (the "Letter") and the Prospectus, dated ________ __,
1999 (the "Prospectus"), of General Chemical Industrial Products Inc., a
corporation organized under the laws of the State of Delaware (the "Company" or
the "Issuer"), relating to its offer to exchange up to $100,000,000 aggregate
principal amount of its 10 5/8% Senior Subordinated Notes Due 2009 (the "New
Notes"), which have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), for a like principal amount of its issued and
outstanding 10 5/8% Senior Notes Due 2009 (the "Old Notes") from the registered
holders thereof (the "Holders"). The Prospectus and this Letter of Transmittal
(this "Letter") together constitute the Company's offer to exchange (the
"Exchange Offer") its New Notes for a like principal amount of its Old Notes
from the Holders.
For each Old Note accepted for exchange, the Holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. The New Notes will bear interest from the most recent date to which
interest has been paid on the Old Notes or, if no interest has been paid on the
Old Notes, from April 30, 1999. Accordingly, registered holders of New Notes on
the relevant record date for the first interest payment date following the
consummation of the Exchange Offer will receive interest accruing from the most
recent date to which interest has been paid or, if no interest has been paid,
from April 30, 1999. Old Notes accepted for exchange will cease to accrue
interest from and after the date of consummation of the Exchange Offer. Holders
of Old Notes whose Old Notes are accepted for exchange will not receive any
payment in respect of accrued interest on such Old Notes.
This Letter is to be completed by a Holder of Old Notes either if
certificates are to be forwarded herewith or if a tender of certificates for Old
Notes, if available, is to be made by book-entry transfer to the account
maintained by the Exchange Agent at DTC (the "Book-Entry Transfer Facility")
pursuant to the procedures set forth in "The Exchange Offer--Book-Entry
Transfer" section of the Prospectus. Holders of Old Notes whose certificates are
not immediately available, or who are unable to deliver their certificates or
confirmation of the book-entry tender of their Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility (a "Book-Entry
Confirmation") and all other documents required by this Letter to the Exchange
Agent on or prior to the Expiration Date, must tender their Old Notes according
to the guaranteed delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures" section of the Prospectus. See
Instruction 1. Delivery of documents to the Book-Entry Transfer Facility does
not constitute delivery to the Exchange Agent.
Holders of Old Notes that are tendering by book-entry transfer to the
Exchange Agent's account at DTC can execute the tender through the DTC Automated
Tender Offer Program ("ATOP") for which the transaction will be eligible. DTC
participants should transmit their acceptance to DTC which will verify the
acceptance and execute a book-entry delivery to the Exchange Agent's account at
DTC. DTC will then send an Agent's Message (as defined in the Prospectus) to the
Exchange Agent for its acceptance. DTC participants may also accept the Exchange
Offer by submitting a notice of guaranteed delivery through ATOP.
2
<PAGE>
List below the Old Notes to which this Letter relates. If the space provided
below is inadequate, the certificate numbers and principal amount of Old Notes
should be listed on a separate signed schedule affixed hereto.
<TABLE>
<CAPTION>
DESCRIPTION OF OLD NOTES 1 2 3
Aggregate
Name(s) and Address(es) of Registered Principal Principal
Holder(s) Certificate Amount of Amount
(Please fill in, if blank) Number(s)* Old Note(s) Tendered**
<S> <C> <C> <C>
Total
</TABLE>
* Need not be completed if Old Notes are being tendered by book-entry transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have
tendered ALL of the Old Notes represented by the Old Notes indicated in
column 2. See Instruction 2. Old Notes tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple
thereof. See Instruction 1.
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution________________________________
Account Number______________________________________________Transaction Code
Number______________________________________________________________________
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s)_____________________________________________
Window Ticket Number (if any)_______________________________________________
Date of Execution of Notice of Guaranteed Delivery__________________________
Name of Institution Which Guaranteed Delivery_______________________________
If Delivered by Book-Entry Transfer, Complete the Following:
Account Number______________________________________________Transaction Code
Number______________________________________________________________________
3
<PAGE>
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER ENTITLED, PURSUANT TO THE TERMS OF THE
REGISTRATION RIGHTS AGREEMENT REFERRED TO IN THE PROSPECTUS, TO RECEIVE, AND
WISH TO RECEIVE, 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO WITHIN 90 DAYS AFTER THE EXPIRATION DATE.
Name:___________________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of New
Notes. If the undersigned is a broker-dealer that will receive New Notes for its
own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges and
represents that it will deliver a prospectus meeting the requirements of the
Securities Act, in connection with any resale of such New Notes; however, by so
acknowledging and representing and by delivering such a prospectus the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. If the undersigned is a broker-dealer that will
receive New Notes, it represents that the Old Notes to be exchanged for the New
Notes were acquired as a result of market-making activities or other trading
activities. In addition, such broker-dealer represents that it is not acting on
behalf of any person who could not truthfully make the foregoing
representations.
4
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of Old
Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of the Old Notes tendered hereby, the undersigned hereby sells, assigns
and transfers to, or upon the order of, the Company all right, title and
interest in and to such Old Notes as are being tendered hereby.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the undersigned's true and lawful agent and attorney-in-fact with
respect to such tendered Old Notes, with full power of substitution, among other
things, to cause the Old Notes to be assigned, transferred and exchanged. The
undersigned hereby represents and warrants that the undersigned has full power
and authority to tender, sell, assign and transfer the Old Notes, and to acquire
New Notes issuable upon the exchange of such tendered Old Notes, and that, when
such Old Notes are accepted for exchange, the Company will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim when the same are accepted
by the Company. The undersigned hereby further represents and warrants that any
New Notes acquired in exchange for Old Notes tendered hereby will have been
acquired in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the undersigned, that neither the Holder of
such Old Notes nor any such other person is participating in, intends to
participate in or has an arrangement or understanding with any person to
participate in the distribution (within the meaning of the Securities Act) of
Old Notes or New Notes, that neither the Holder of such Old Notes nor any such
other person is an "affiliate," as defined in Rule 405 under the Securities Act,
of the Company, and that neither the Holder of such Old Notes nor such other
person is acting on behalf of any person who could not truthfully make the
foregoing representations and warranties.
The undersigned acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the New Notes issued pursuant to the Exchange Offer in exchange
for the Old Notes may be offered for resale, resold and otherwise transferred by
Holders thereof (other than any such Holder that is a broker-dealer or an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such Holder's business, at the time of commencement of
the Exchange Offer such Holder has no arrangement or understanding with any
person to participate in a distribution of such New Notes, and such Holder is
not engaged in, and does not intend to engage in, a distribution of such New
Notes. However, the SEC has not considered the Exchange Offer in the context of
a no-action letter and there can be no assurance that the staff of the SEC would
make a similar determination with respect to the Exchange Offer as in other
circumstances. If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of New Notes and has no arrangement or understanding to participate
in a distribution of New Notes. If the undersigned is a broker-dealer that will
receive New Notes for its own account in exchange for Old Notes, it represents
that the Old Notes to be exchanged for the New Notes were acquired by it as a
result of market-making activities or other trading activities and acknowledges
that it will deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of such New Notes; however, by so acknowledging
and by delivering a prospectus meeting the requirements of the Securities Act,
the undersigned will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
5
<PAGE>
The SEC has taken the position that such broker-dealers may fulfill their
prospectus delivery requirements with respect to the New Notes (other than a
resale of New Notes received in exchange for an unsold allotment from the
original sale of the Old Notes) with the Prospectus. The Prospectus, as it may
be amended or supplemented from time to time, may be used by certain
broker-dealers (as specified in the Registration Rights Agreement referenced in
the Prospectus) ("Participating Broker-Dealers") for a period of time, starting
on the Expiration Date and ending on the close of business 90 days after the
Expiration Date in connection with the sale or transfer of such New Notes. The
Company has agreed that, for such period of time, it will make the Prospectus
(as it may be amended or supplemented) available to such a broker-dealer which
elects to exchange Old Notes, acquired for its own account as a result of market
making or other trading activities, for New Notes pursuant to the Exchange Offer
for use in connection with any resale of such New Notes. By accepting the
Exchange Offer, each broker-dealer that receives New Notes pursuant to the
Exchange Offer acknowledges and agrees to notify the Company prior to using the
Prospectus in connection with the sale or transfer of New Notes and that, upon
receipt of notice from the Company of the happening of any event which makes any
statement in the Prospectus untrue in any material respect or which requires the
making of any changes in the Prospectus in order to make the statements therein
(in light of the circumstances under which they were made) not misleading, such
broker-dealer will suspend use of the Prospectus until (i) the Company has
amended or supplemented the Prospectus to correct such misstatement or omission
and (ii) either the Company has furnished copies of the amended or supplemented
Prospectus to such broker-dealer or, if the Company has not otherwise agreed to
furnish such copies and declines to do so after such broker-dealer so requests,
such broker-dealer has obtained a copy of such amended or supplemented
Prospectus as filed with the SEC. Except as described above, the Prospectus may
not be used for or in connection with an offer to resell, a resale or any other
retransfer of New Notes. A broker-dealer that acquired Old Notes in a
transaction other than as part of its market-making activities or other trading
activities will not be able to participate in the Exchange Offer.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer--Withdrawal of Tenders"
section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained at the Book-Entry
Transfer Facility. Similarly, unless otherwise indicated under the box entitled
"Special Delivery Instructions" below, please send the New Notes (and, if
applicable, substitute certificates representing Old Notes for any Old Notes not
exchanged) to the undersigned at the address shown above in the box entitled
"Description of Old Notes."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AS
SET FORTH IN SUCH BOX ABOVE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX BELOW.
6
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
x____________________________________________________________ ___________
_____________________________________________________, 1999
x____________________________________________________________ ___________
_____________________________________________________, 1999
Signature(s) of Owner
Date
Area Code and Telephone Number__________________________________________________
If a Holder is tendering an Old Note, this Letter must be signed by the
registered Holder(s) as the name(s) appear(s) on the certificate(s) for the Old
Note or by any person(s) authorized to become registered Holder(s) by
endorsements and documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, officer or other person acting in a fiduciary
or representative capacity, please set forth full title. See Instruction 3.
Name(s)_________________________________________________________________________
________________________________________________________________________________
(Please Type or Print)
Capacity:_______________________________________________________________________
Address:________________________________________________________________________
SIGNATURE GUARANTEE
(If required by Instruction 3)
Signature(s) Guaranteed by
an Eligible Institution:________________________________________________________
(Authorized Signature)
________________________________________________________________________________
(Title)
________________________________________________________________________________
(Name and Firm)
________________________________________________________________________________
Dated:___________________________________________________________________, 1999
(Please Complete Accompanying Substitute Form W-9 Herein. See Instruction 5.)
7
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 3, 4 and 6)
To be completed ONLY if certificates for Old Notes not exchanged and/or New
Notes are to be issued in the name of and sent to someone other than the person
or persons whose signature(s) appear(s) on this Letter above, or if Old Notes
delivered by book-entry transfer which are not accepted for exchange are to be
turned by credit to an account maintained at the Book-Entry Transfer Facility
other than the account indicated above.
Issue: New Notes and/or Old Notes to:
Name(s)_________________________________________________________________________
(Please Type or Print)
________________________________________________________________________________
(Please Type or Print)
Address_________________________________________________________________________
________________________________________________________________________________
(Zip Code)
(Complete Substitute Form W-9)
[ ] Credit unexchanged Old Notes delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
________________________________________________________________________________
(Book-Entry Transfer Facility
Account Number, if applicable)
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3, 4 and 6)
To be completed ONLY if certificates for Old Notes not exchanged and/or New
Notes are to be sent to someone other than the person or persons whose
signature(s) appear(s) on this Letter above or to such person or persons at an
address other than shown in the box entitled "Description of Old Notes" on this
Letter above.
Mail: New Notes and/or Old Notes to:
Name(s)_________________________________________________________________________
(Please Type or Print)
________________________________________________________________________________
(Please Type or Print)
Address_________________________________________________________________________
________________________________________________________________________________
(Zip Code)
IMPORTANT: UNLESS GUARANTEED DELIVERY PROCEDURES ARE COMPLIED WITH, THIS LETTER
OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES FOR OLD NOTES OR A
BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY
THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION
DATE.
8
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer for the
105/8% Senior Subordinated Notes Due 2009
of General Chemical Industrial Products Inc. in Exchange for the
105/8% Senior Subordinated Notes Due 2009
of General chemical Industrial Products Inc., which Have Been Registered Under
the Securities Act of 1933, As Amended
1. Delivery of this Letter and Notes; Guaranteed Delivery Procedures.
This Letter is to be completed by Holders of Old Notes either if
certificates are to be forwarded herewith or if tenders are to be made pursuant
to the procedures for delivery by book-entry transfer set forth in "The Exchange
Offer--Book-Entry Transfer" section of the Prospectus. Certificates for all
physically tendered Old Notes, or Book-Entry Confirmation, as the case may be,
as well as a properly completed and duly executed Letter (or manually signed
facsimile hereof) and any other documents required by this Letter, must be
received by the Exchange Agent at the address set forth herein on or prior to
the Expiration Date, or the tendering Holder must comply with the guaranteed
delivery procedures set forth below. Old Notes tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple thereof.
Holders whose certificates for Old Notes are not immediately available or
who cannot deliver their certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date, or who cannot complete the
procedure for book entry transfer on a timely basis, may tender their Old Notes
pursuant to the guaranteed delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures" section of the Prospectus. Pursuant to
such procedures, (I) such tender must be made through an Eligible Institution,
(ii) prior to 5:00 P.M., New York City time, on the Expiration Date, the
Exchange Agent must receive from such Eligible Institution a properly completed
and duly executed Letter (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by facsimile
transmission, mail or hand delivery), setting forth the name and address of the
Holder of Old Notes and the amount of Old Notes tendered, stating that the
tender is being made thereby and guaranteeing that within three New York Stock
Exchange ("NYSE') trading days after the date of execution of the Notice of
Guaranteed Delivery, the certificates for all physically-tendered Old Notes, in
proper form for transfer, or a Book-Entry Confirmation, as the case may be, and
any other documents required by this Letter will be deposited by the Eligible
Institution with the Exchange Agent, and (iii) the certificates for all
physically- tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and all other documents required by this
Letter, are received by the Exchange Agent within three NYSE trading days after
the date of execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Old Notes and all other
required documents, including delivery through DTC and any acceptance of an
Agent's Message delivered through ATOP, is at the election and risk of the
tendering Holders, but the delivery will be deemed made only when actually
received or confirmed by the Exchange Agent. If Old Notes are sent by mail, it
is suggested that the mailing be registered mail, properly insured, with return
receipt requested, made sufficiently in advance of the Expiration Date to permit
delivery to the Exchange Agent prior to 5:00 P.M., New York City time, on the
Expiration Date.
See "The Exchange Offer" section of the Prospectus.
9
<PAGE>
2. Partial Tenders (not applicable to noteholders who tender by book-entry
transfer).
If less than all of the Old Notes evidenced by a submitted certificate are
to be tendered, the tendering Holder(s) should fill in the aggregate principal
amount of Old Notes to be tendered in the box above entitled "Description of Old
Notes--Principal Amount Tendered." A reissued certificate representing the
balance of nontendered Old Notes will be sent to such tendering Holder, unless
otherwise provided in the appropriate box on this Letter, promptly after the
Expiration Date. All of the Old Notes delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise indicated.
3. Signatures on this Letter; Bond Powers and Endorsements; Guarantee of
Signatures.
If this Letter is signed by the registered Holder of the Old Notes tendered
hereby, the signature must correspond exactly with the name as written on the
face of the certificates without any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint owners,
all of such owners must sign this Letter.
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter as there are different registrations of certificates.
When this Letter is signed by the registered Holder or Holders of the Old
Notes specified herein and tendered hereby, no endorsements of certificates or
separate bond powers are required. If, however, the New Notes are to be issued,
or any untendered Old Notes are to be reissued, to a person other than the
registered Holder, then endorsements of any certificates transmitted hereby or
separate bond powers are required. Signatures on such certificate(s) must be
guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered Holder or
Holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the registered Holder or Holders appear(s) on
the certificate(s) and signatures on such certificate(s) must be guaranteed by
an Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
Endorsements on certificates for Old Notes or signatures on bond powers
required by this Instruction 3 must be guaranteed by any member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended (each an "Eligible Institution").
Signatures on this Letter need not be guaranteed by an Eligible
Institution, provided the Old Notes are tendered: (i) by a registered holder of
Old Notes (which term, for purposes of the Exchange Offer, includes any
participant in the Book-Entry Transfer Facility system whose name appears on a
security position listing as the holder of such Old Notes) who has not completed
the box entitled "Special
10
<PAGE>
Issuance Instructions" or "Special Delivery Instructions" in this Letter, or
(ii) for the account of an Eligible Institution.
4. Special Issuance and Delivery Instructions.
Tendering Holders of Old Notes should indicate in the applicable box the
name and address to which New Notes issued pursuant to the Exchange Offer and or
substitute certificates evidencing Old Notes not exchanged are to be issued or
sent, if different from the name or address of the person signing this Letter.
In the case of issuance in a different name, the employer identification or
social security number of the person named must also be indicated. Holders
tendering Old Notes by book-entry transfer may request that Old Notes not
exchanged be credited to such account maintained at the Book-Entry Transfer
Facility as such Holder may designate hereon. If no such instructions are given,
such Old Notes not exchanged will be returned to the name and address of the
person signing this Letter.
5. Taxpayer Identification Number.
Federal income tax law generally requires that a tendering Holder whose Old
Notes are accepted for exchange must provide the Company (as payor), or the
Paying Agent designated by the Company to act on its behalf, with such Holder's
correct Taxpayer Identification Number ("TIN") on Substitute Form W-9 below,
which in the case of a tendering Holder who is an individual, is his or her
social security number. If the Company is not provided with the current TIN or
an adequate basis for an exemption from backup withholding, such tendering
Holder may be subject to a $50 penalty imposed by the Internal Revenue Service.
In addition, delivery to such tendering Holder of New Notes may result in backup
withholding in an amount equal to 31% of all reportable payments made after the
exchange. If withholding results in an overpayment of taxes, a refund may be
obtained.
Exempt Holders of Old Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering Holder of Old Notes must
provide its correct TIN by completing the Substitute Form W-9 set forth below,
certifying, under penalties of perjury, that the TIN provided is correct (or
that such Holder is awaiting a TIN) and that (i) the Holder is exempt from
backup withholding, or (ii) the Holder has not been notified by the Internal
Revenue Service that such Holder is subject to backup withholding as a result of
a failure to report all interest or dividends or (iii) the Internal Revenue
Service has notified the Holder that such Holder is no longer subject to backup
withholding. If the tendering Holder of Old Notes is a nonresident alien or
foreign entity not subject to backup withholding, such Holder must give the
Exchange Agent a completed Form W-8, Certificate of Foreign Status. This form
may be obtained from the Exchange Agent. If the Old Notes are in more than one
name or are not in the name of the actual owner, such Holder should consult the
W-9 Guidelines for information on which TIN to report. If such Holder does not
have a TIN, such Holder should consult the W-9 Guidelines for instructions on
applying for a TIN, check the box in Part 2 of the Substitute Form W-9 and write
"applied for" in lieu of its TIN. Note: Checking this box and writing "applied
for" on the form means that such Holder has already applied for a TIN or that
such Holder intends to apply for one in the near future. If such Holder does not
provide its TIN to the Issuer within 60 days, backup withholding will begin and
continue until such Holder furnishes its TIN to the Issuer.
11
<PAGE>
6. Transfer Taxes.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Old Notes to it or its order pursuant to the Exchange Offer. If, however, New
Notes and/or substitute Old Notes not exchanged are to be delivered to, or are
to be registered or issued in the name of, any person other than the registered
Holder of the Old Notes tendered hereby, or if tendered Old Notes are registered
in the name of any person other than the person signing this Letter, or if a
transfer tax is imposed for any reason other than the transfer of Old Notes to
the Company or its order pursuant to the Exchange Offer, the amount of any such
transfer taxes (whether imposed on the registered Holder or any other persons)
will be payable by the tendering Holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted herewith, the amount of such
transfer taxes will be billed directly to such tendering Holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes specified in this Letter.
7. Waiver of Conditions.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
8. No Conditional Tenders.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders of Old Notes, by execution of this Letter, shall
waive any right to receive notice of the acceptance of their Old Notes for
exchange.
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of Old
Notes nor shall any of them incur any liability for failure to give any such
notice.
9. Mutilated, Lost, Stolen or Destroyed Old Notes.
Any Holder whose Old Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above for further
instructions.
10. Withdrawal Rights.
Tenders of Old Notes of a series may be withdrawn at any time prior to 5:00
P.M., New York City time, on the Expiration Date with respect to such series.
For a withdrawal of a tender of Old Notes to be effective, a written notice
of withdrawal must be received by the Exchange Agent at the address set forth
above prior to 5:00 P.M., New York City time, on the Expiration Date with
respect to such series. Any such notice of withdrawal must (i) specify the name
of the person having tendered the Old Notes to be withdrawn (the "Depositor"),
(ii) identify the Old Notes to be withdrawn (including the principal amount of
such Old Notes), (iii) in the case of Old Notes tendered by book-entry transfer,
specify the number of the account at the Book-Entry Transfer Facility from which
the Old Notes were tendered and specify the name and number of the account at
the Book-Entry Transfer Facility to be
12
<PAGE>
credited with the withdrawn Old Notes and otherwise comply with the procedures
of such facility, (iv) contain a statement that such Holder is withdrawing its
election to have such Old Notes exchanged, (v) be signed by the Holder in the
same manner as the original signature on the Letter by which such Old Notes were
tendered (including any required signature guarantees) or be accompanied by
documents of transfer to have the Trustee with respect to the Old Notes register
the transfer of such Old Notes in the name of the person withdrawing the tender
and (vi) specify the name in which such Old Notes are registered, if different
from that of the Depositor. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Company, whose determination shall be final and binding on all parties. Any
Old Notes so withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the Exchange Offer and no New Notes will be issued with
respect thereto unless the Old Notes so withdrawn are validly retendered. Any
Old Notes that have been tendered for exchange but which are not exchanged for
any reason will be returned to the tendering Holder thereof without cost to such
Holder (or, in the case of Old Notes tendered by book-entry transfer into the
Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the
book-entry transfer procedures set forth in "The Exchange Offer--Book-Entry
Transfer" section of the Prospectus, such Old Notes will be credited to an
account maintained with the Book-Entry Transfer Facility for the Old Notes) as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Notes may be retendered by following the
procedures described above at any time on or prior to 5:00 P.M., New York City
time, on the Expiration Date with respect to such series of Old Notes.
11. Requests for Assistance or Additional Copies.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, and requests for Notices of
Guaranteed Delivery and other related documents may be directed to the Exchange
Agent, at the address and telephone number indicated above.
13
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(See Instruction 5)
PAYOR'S NAME: FIRST UNION NATIONAL BANK, as Paying Agent
<TABLE>
<S> <C> <C>
Part 1--PLEASE PROVIDE TIN:________________________________
YOUR TIN IN THE BOX AT Social Security Number or
RIGHT AND CERTIFY BY Employer Identification Number
SUBSTITUTE SIGNING AND DATING BELOW.
Form W-9 Part 2--TIN Applied for [ ]
Department of the Treasury CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
Internal Revenue Service
Payor's Request for (1) the number shown on this form is my correct Taxpayer Identification Number
Taxpayer (or I am waiting for a number to be issued to me).
Identification Number
("TIN") and (2) I am not subject to backup withholding either because: (a) I am exempt from
Certification backup withholding, or (b) I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (c) the IRS has notified me
that I am no longer subject to backup withholding, and
(3) any other information provided on this form is true and correct.
SIGNATURE_________________________________ DATE_________________________
</TABLE>
You must cross out item (2) of the above certification if you have been notified
by the IRS that you are subject to backup withholding because of underreporting
of interest or dividends on your tax return and you have not been notified by
the IRS that you are no longer subject to backup withholding.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of the exchange, 31 percent
of all reportable payments made to me thereafter will be withheld until I
provide a number.
____________________________________ ______________________________________
Signature Date
NOTE: FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF
ANY PAYMENTS MADE TO YOU PURSUANT TO THE TENDER OFFER AND/OR THE
SOLICITATION. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
14
<PAGE>
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
10 5/8% Senior Subordinated Notes Due 2009
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of General Chemical Industrial Products Inc., (the "Issuer" or
the "Company") made pursuant to the Prospectus, dated ______ __, 1999 (the
"Prospectus"), if certificates (as applicable) for outstanding 10 5/8% Senior
Subordinated Notes Due 2009 (the "Old Notes") of the Issuer are not immediately
available or if the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach U.S. Bank
Trust National Association, as exchange agent (the "Exchange Agent") prior to
5:00 P.M., New York City time, on the Expiration Date of the Exchange Offer.
Such form may be delivered or transmitted by facsimile transmission, mail or
hand delivery to the Exchange Agent as set forth below. In addition, in order to
utilize the guaranteed delivery procedure to tender Old Notes pursuant to the
Exchange Offer, a completed, signed and dated Letter of Transmittal (or
facsimile thereof) relating to the tender for exchange of Old Notes (the "Letter
of Transmittal") must also be received by the Exchange Agent prior to 5:00 P.M.,
New York City time, on the Expiration Date. Capitalized terms not defined herein
are defined in the Prospectus or the Letter of Transmittal.
<TABLE>
<CAPTION>
Delivery To: U.S. Bank Trust National Association, Exchange Agent
<S> <C>
By Mail, Hand Delivery or For Information Call:
Overnight Carrier: (800) 934-6802
U.S. Bank Trust National Association Facsimile Transmission Number:
180 East 5th Street (612) 244-1537
St. Paul, Minnesota 55101
Attention: Specialized Finance
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
<PAGE>
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Old Notes set forth below pursuant to the
guaranteed delivery procedure described in "The Exchange Offer--Guaranteed
Delivery Procedures" section of the Prospectus.
<TABLE>
- -------------------------------------------------------------------------------
<S> <C> <C>
Certificate Number(s) Aggregate Principal Aggregate Principal
(if known) of Existing Amount Represented Amount Tendered
Notes or Account (if less than all)*
Number at the Book-
Entry Transfer Facility
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
* Unless otherwise indicated, the Holder will be deemed to have tendered the
full aggregate principal amount represented by such Old Notes.
- -------------------------------------------------------------------------------
All authority herein conferred or agreed to be conferred shall survive the death
or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PLEASE SIGN HERE
<S> <C>
X ------------------------------------------------ --------------------------
Signature(s) of Owner(s) Date
or Authorized Signatory
</TABLE>
Area Code and Telephone Number:_____________________
Must be signed by the Holder(s) of Old Notes as their name(s) appear(s) on
certificates for Old Notes or on a security position listing, or by person(s)
authorized to become registered Holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below.
2
<PAGE>
Please print name(s) and address(es)
Name(s): -----------------------------------------------------------------
Capacity: -----------------------------------------------------------------
Address(es): -----------------------------------------------------------------
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc., a commercial bank or
trust company having an office or correspondent in the United States or an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, hereby guarantees that the
certificates representing the principal amount of Old Notes tendered hereby in
proper form for transfer, or timely confirmation of the book-entry transfer of
such Old Notes into the Exchange Agent's account at The Depository Trust Company
pursuant to the procedures set forth in "The Exchange Offer--Guaranteed Delivery
Procedures" section of the Prospectus, together with any required signature
guarantee and any other documents required by the Letter of Transmittal, will be
received by the Exchange Agent at the address set forth above, no later than
three New York Stock Exchange trading days after the date of execution of this
Notice of Guaranteed Delivery.
<TABLE>
<S> <C>
____________________________________ _______________________________________
Name of Firm Authorized Signature
____________________________________ _______________________________________
Address Title
____________________________________ Name: _________________________________
Zip Code (Please Type or Print)
Area Code and Tel. No.______________ Dated: ________________________________
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM.
CERTIFICATES FOR OLD NOTES SHOULD BE SENT ONLY WITH A COPY OF
YOUR PREVIOUSLY EXECUTED LETTER OF TRANSMITTAL.
3
<PAGE>
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly completed and
duly executed copy of this Notice of Guaranteed Delivery and any other documents
required by this Notice of Guaranteed Delivery must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. The method of delivery of this Notice of Guaranteed
Delivery and any other required documents to the Exchange Agent is at the
election and risk of the Holder and the delivery will be deemed made only when
actually received by the Exchange Agent. If delivery is by mail, registered or
certified mail properly insured, with return receipt requested, is recommended.
In all cases sufficient time should be allowed to assure timely delivery. For a
description of the guaranteed delivery procedure, see Instruction 1 of the
Letter of Transmittal.
2. Signatures of this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery is signed by the registered Holder(s) of the Old Notes
referred to herein, the signature must correspond with the name(s) written on
the face of the Old Notes without alteration, enlargement, or any change
whatsoever. If this Notice of Guaranteed Delivery is signed by a participant of
the Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of Old Notes, the signature must correspond with the name
shown on the security position listing as the owner of the Old Notes.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered Holder(s) of any Old Notes listed or a participant of the Book-Entry
Transfer Facility, this Notice of Guaranteed Delivery must be accompanied by
appropriate bond powers, signed as the name of the registered Holder(s) appears
on the Old Notes or signed as the name of the participant shown on the
Book-Entry Transfer Facility's security position listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing.
3. Requests for Assistance or Additional Copies. Questions and requests for
assistance and requests for additional copies of the Prospectus may be directed
to the Exchange Agent at the address specified in the Prospectus. Holders may
also contact their broker, dealer, commercial bank, trust company, or other
nominee for assistance concerning the Exchange Offer.
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