10-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-K

ý    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004

OR

o    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From                     to                    

Commission file number 1-6450

GREAT LAKES CHEMICAL CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE
(State or other jurisdiction of
incorporation or organization) 95-1765035
(IRS Employer
Identification No.)

9025 NORTH RIVER ROAD, SUITE 400
INDIANAPOLIS, INDIANA 46240
(Address of principal executive offices)    (Zip Code)

Registrant's telephone number, including area code 317-715-3000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common stock, $1.00 par value Name of each exchange on which registered
New York Stock Exchange
Pacific Stock Exchange

Securities registered pursuant to Section 12 (g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to the filing requirements for the past 90 days.    Yes    ý    No    o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes    ý    No    o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    o

As of June 30, 2004, the aggregate market value of the voting stock held by non-affiliates of the registrant was $1,323,833,401 based on the last reported sales price on the New York Stock Exchange.

As of February 23, 2005, 51,436,147 shares of the registrant's stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Registrant's Annual Meeting of Shareholders to be held on May 5, 2005 are incorporated by reference into Part III.

TABLE OF CONTENTS

PART I
Item 1.	Business	3
Item 2.	Properties	7
Item 3.	Legal Proceedings	8
Item 4.	Submission of Matters to a Vote of Security Holders	10
PART II
Item 5.	Market for Registrant's Common Equity and Related Stockholder Matters	11
Item 6.	Selected Financial Data	12
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	13
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 8.	Financial Statements and Supplementary Data	34
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	75
Item 9A.	Controls and Procedures	75
PART III
Item 10.	Directors and Executive Officers of the Registrant	77
Item 11.	Executive Compensation	80
Item 12.	Security Ownership of Certain Beneficial Owners and Management	80
Item 13.	Certain Relationships and Related Transactions	80
Item 14.	Principal Accounting Fees and Services	80
PART IV
Item 15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K	81
	Signatures	86

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PART I

ITEM 1.    Business

GENERAL

Great Lakes Chemical Corporation is a Delaware corporation incorporated in 1933 with principal executive offices at 9025 North River Road, Suite 400, Indianapolis, Indiana 46240. As used in this report, except where otherwise stated or indicated by the context, "Great Lakes" or "the Company" means Great Lakes Chemical Corporation and its consolidated subsidiaries.

Great Lakes (NYSE: GLK) is a global company dedicated to delivering innovative, market-focused specialty chemical solutions and consumer products. The Company's products and services help treat and purify water, keep surfaces in and around the home shining, protect against and extinguish fire, and enhance the stability and performance of a wide range of consumer products, such as computers, electronics, automobiles, packaging, building materials and furniture. The Company serves customers and markets through an integrated network of research, production, sales, distribution and technical services facilities. The Company is organized into two global business units that serve diverse markets around the world: Industrial Performance Products and Consumer Products.

Industrial Performance Products - The Industrial Performance Products business unit offers one of the world's most comprehensive portfolios of polymer additive solutions and performance products formulated specially to meet the needs of its customers in a wide range of markets, from furniture and textiles to automotive to consumer electronics to building and construction. The Company's additive products directed to the polymer industry include flame retardants and polymer stabilizers. These additives are used in various phases during polymer production. Great Lakes is a leading producer of bromine-, phosphorus- and antimony-based flame retardants and synergists, as well as physical form compounds and blends, which reduce or eliminate the flammability of a wide variety of combustible materials. The Company's specialty additives are used in industrial water treatment and desalination processes and include antiscalents, corrosion inhibitors, dispersants, antifoams and superior bromine-based non-oxidizing and oxidizing microbiological control products. The Company's broad range of stabilizing products - from UV stabilizers to antioxidants to patented non-dusting blends - enhances critical polymer performance characteristics such as heat and light resistance and color consistency. The Company's performance products holdings include performance additives and fluids, fire suppressants, fluorine specialties, brominated performance products and optical monomers. The Company's line of performance additives and fluids is essential to the performance of natural, semi-synthetic and synthetic lubricants under extreme pressure, as well as fire-resistant fluids and lubricants used in industrial applications. The Company offers waterless fire suppression for mission-critical and high-value assets, which prevents extensive fire damage and eliminates collateral damage and downtime. The Company's fluorine specialties are essential to the performance of silicone-based materials under demanding conditions where aggressive solvents or high temperatures may be present. Other fluorine specialty products are used as propellants in medical inhalers and as refrigerants. The brominated performance products business offers fumigants that improve crop yields and protect grain and other stored food sources from infestation, including food imports and exports; chemical intermediates that serve as building blocks for other compounds; and clear brine fluids used in oil and gas exploration. The Company also produces optical monomers used in eyewear and for such applications as protection sheets for welding masks and screens, safety shields, photographic filters and lab equipment.

Consumer Products - The Consumer Products business unit is a leading supplier of products for use in swimming pools, hot tubs and home cleaning applications. The recreational water treatment division is a leading provider of pool and spa care products, including water treatment sanitizers, algaecides, biocides, oxidizers, pH and mineral balancers and other specialty chemicals. This

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business unit also offers specialty and multipurpose cleaners and degreasers that disinfect and clean indoor and outdoor surfaces in such areas as kitchens, bathrooms, laundry rooms, patios, garages and automobiles.

Segment data for the Company's operations for each of the three years in the period ended December 31, 2004 are presented in Note 17 to the Consolidated Financial Statements.

PRODUCTS AND SERVICES

The following is a list of the principal products and services, markets and production facilities of the Company:

INDUSTRIAL PERFORMANCE PRODUCTS

Products	Principal Markets	Production Facilities
Flame Retardants
Flame Retardants:
Bromine-, phosphorus- and antimony-based flame retardants and synergists marketed under the trade names Firemaster®, Kronitex®, Reofos®, Reogard®, Ongard®, Oncor™, Pyrobloc®, Smokebloc® and Timonox®, as well as flame retardant physical for compounds and blends sold under the trade name Fyrebloc®	Building and construction materials; electrical components; wire and cable; information technology and consumer equipment; printed wiring boards; furniture and furnishings; and automotive	El Dorado, AR; Reynosa, Mexico; Trafford Park (Manchester), U.K.
Performance Additives and Fluids:
Additives for natural, semi-synthetic and synthetic lubricants and fluids sold under the trade name Durad®, fire-resistant lubricants and additives marketed under the trade name Reolube® and specialty additives sold under the trade name Reomol®	Aviation, mining, electricity generation and gas pumping, as well as for products such as waxes, solvents and industrial cleaners	Trafford Park (Manchester), U.K.
Brominated Performance Products
Agricultural:
Methyl bromide including products marketed under the trade names Agribrom®, Brom-O-Gas®, Chlor-O-Pic®, Meth-O-Gas® and Terr-O-Gas®	Pest control in soil preparation, commodity storage and post-harvest food processing	El Dorado, AR
Bromine and Intermediates:
Bromine, bromine derivatives and bromine-based specialty chemicals	Electronics, plastics, rubber compounds, detergents and pharmaceuticals	El Dorado, AR
Clear Brine Fluids:
Brominated heavy brine fluids	Oil well drilling, completion and workovers	El Dorado, AR
Polymer Stabilizers
Polymer Stabilizers:
Antioxidants, UV absorbers and light stabilizers marketed under the trade names Alkanox®, Anox®, Lowilite® and Lowinox®; nucleating agents and clarifiers; non-dusting blends sold under the trade name Anox® NDB®	Fibers, cables, household appliances, communications equipment, computer and business machines, automotive, packaging, textiles, building and construction, cosmetics and optical lenses	Catenoy, France; Waldkraiburg, Germany; Pedrengo, Italy; Ravenna, Italy; Pyongtaek, Korea
Optical Monomers:
ADC monomers sold under the trade names Nouryset® and RAV-7®	Used in the manufacture of resins for ophthalmic, corrective and solar lenses	Pasadena, TX

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Products	Principal Markets	Production Facilities
Fire Suppression
FM-200® fire suppression agent	Information technology, telecommunications, transportation, medical and laboratory equipment, hazardous and flammable liquid storage facilities, document vaults and archives, and art galleries and museums.	El Dorado, AR
Fluorine Specialties
Organo-fluorine compounds and fluorinated intermediates	Refrigerants, pharmaceuticals and automotive components	El Dorado, AR
Industrial Water Additives
Antiscalants, biocides, corrosion inhibitors, dispersants, antifoams, hydantoin derivatives, formulated oxidizers and biocide dispensing equipment	Industrial cooling water treatment, industrial and municipal wastewater treatment, municipal desalination, pulp and paper processing, food processing and preservative intermediates	Adrian, MI; El Dorado, AR; Conyers, GA; Trafford Park (Manchester), U.K.

CONSUMER PRODUCTS

Products	Principal Markets	Production Facilities
Recreational Water Treatment
Water treatment sanitizers AquaChem®, Bayrol®, BioGuard®, Guardex®, Hydrotech™, Miami®, OMNI™, Pool Time®, Spa Guard®, Sun® and Vantage®; algicides, biocides oxidizers, pH balancers, mineral balancers and specialty chemicals and accessories	Pool and spa dealers and distributors, mass market retailers, wholesale distributors, specialty store owners, commercial pool and water park operators, residential and commercial builders, and retail customers	Conyers, GA; Lake Charles, LA; Adrian, MI; Kyalami, South Africa; Andoversford, U.K.
Household Products
The Works® brand of cleaners for glass, surface, tub, shower and toilet bowl, as well as drain openers and rust and calcium removers; Greased Lightning™, Orange Blast™ and Grapefruit Blast™ brands of multipurpose cleaners for tough cleaning tasks and everyday cleanup for bath, kitchen, flooring, laundry, patio and automotive	Grocery stores, mass merchandisers, dollar stores, hardware stores, farm and fleet operators, discount clubs and automotive stores	Ashley, IN; Conyers, GA

RAW MATERIALS

The primary source of an essential raw material, bromine, is brine. The brine is extracted from geological formations in the state of Arkansas using Company-owned wells. The Arkansas properties are located atop the Smackover lime deposits, which constitute a vast underground sea of bromine-rich brine. The 35-mile area between El Dorado and Magnolia, Arkansas, provides the best-known geological location for bromine production in the United States. In addition, during 2003, the Company entered into a long-term strategic agreement to source elemental bromine and certain derivatives from Dead Sea Bromine Ltd. Based on projected production rates and the above-mentioned sourcing agreement, the Company's bromine and brine supplies are estimated to be adequate.

Other raw materials used in the business are obtained from outside suppliers through purchase agreements. The cost of raw materials is generally based on market prices, although risk management tools may be utilized, as appropriate, to mitigate short-term market price fluctuations.

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Significant raw materials purchased by the Industrial Performance Products segment include chlorine, caustic, hexafluoropropene, phenol, bisphenol A and antimony oxide. Raw materials purchased by the Consumer Products segment include Tri-Chlor, chlorine, dichlor and cyanuric acid. The Consumer Products segment also purchases packaging containers made of high-density polyethylene, HDPE.

The Company has multiple suppliers for most key raw materials and employs various raw material management practices, such as the establishment of long-term relationships with suppliers and ongoing performance assessments and benchmarking, as part of the total supplier selection process. In addition, the Company purchases electricity and natural gas to meet its energy needs.

INTERNATIONAL OPERATIONS

Great Lakes has a significant presence in foreign markets, principally Western Europe and Asia. Approximately 40% of the Company's assets reside outside the United States, and approximately 40% of the Company's sales are invoiced from foreign locations. The geographic segment data is set forth in Note 17, "Segment Information," of the Notes to Consolidated Financial Statements.

CUSTOMERS AND DISTRIBUTION

During the last three years, no single customer has accounted for more than 10% of Great Lakes total consolidated net sales. The Company has no material contracts or subcontracts with government agencies. A major portion of the Company's sales is to industrial or commercial businesses for use in the production of other products. Certain products, such as recreational water treatment and household chemicals and supplies, are sold to a large number of retailers, mass merchandisers and distributors. Some export sales are marketed through distributors and brokers.

The Company's businesses do not normally reflect any significant backlog of orders.

COMPETITION

Great Lakes is in competition with businesses producing the same or similar products, as well as businesses producing products intended for similar use. There is one other major bromine producer in the United States, who competes with the Company in varying degrees across a variety of product lines. The Company also competes with a major overseas manufacturer of bromine and brominated products. These two manufacturers compete with the Company on a global basis. Several small producers in the United States and overseas are competitors for various individual products. Furthermore, there are numerous manufacturers that compete with the Company by offering alternatives to Great Lakes products. In Polymer Stabilizers, the Company competes with a significantly larger supplier across its entire product line and with a number of smaller companies in individual product areas. The Fire Suppression and Fluorine Specialties businesses compete with a global manufacturer that produces similar products, as well as manufacturers with products intended for similar use. The Company's Consumer Products business competes with several manufacturers and distributors of swimming pool and spa chemicals, as well as household cleaners.

Principal methods of competition are innovation, value, product quality and purity, technical services and service delivery. The Company is able to move quickly in providing new products to meet identified market demands. Management believes these factors, combined with highly qualified technical personnel, allow the Company to compete effectively.

SEASONALITY AND WORKING CAPITAL

The Company's products sold to the swimming pool industry exhibit some seasonality. The Company experiences higher sales and profits in the second and third quarters for pool products. Seasonality

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also requires that the Company build inventories for rapid delivery at certain times of the year. In particular, sales related to the pool product season require a build-up of inventory in the fourth and first quarters of the year. Certain arrangements with mass market customers permit returns of unsold material at the end of a season. The effect of these items on working capital and liquidity requirements quarter to quarter may be material.

RESEARCH AND DEVELOPMENT, PATENTS AND TRADEMARKS

The Company holds various patents and trademarks covering a number of its products and processes. While the Company believes these patents and trademarks offer significant commercial benefits, the Company's management does not believe any individual patent or trademark is of material importance to the Company's business as a whole.

Research and development expenditures are described in Note 1, "Summary of Significant Accounting Policies," of the Notes to Consolidated Financial Statements.

ENVIRONMENTAL

The Company's operations are subject to various laws and regulations relating to maintaining or protecting the quality of the environment. Information regarding environmental compliance and contingencies is set forth under the "Environmental and Regulatory Issues" caption in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in Note 3, "Repositioning Plans," and Note 20, "Commitments and Contingencies," of the Notes to Consolidated Financial Statements.

EMPLOYEES

The Company currently employs approximately 3,700 people, 38% of whom are employed outside the United States. Approximately 180 U.S. employees are represented by collective bargaining agreements. The Company maintains good employee relations, and while the Company has successfully completed its past labor negotiations without a work stoppage, it cannot predict the outcome of any future contract negotiations.

AVAILABLE INFORMATION

The Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and amendments to those reports, as well as the Company's Code of Business Conduct and charters, are available free of charge on the Company's Internet website at http://www.greatlakes.com as soon as reasonably practicable after such reports are filed with the Securities and Exchange Commission.

ITEM 2.    Properties

The Company leases its principal executive offices in Indianapolis, Indiana. The Company operates 15 production facilities in 8 countries. The Company has distribution facilities at all of its manufacturing sites. Listed under "Item I. Business" above in the table captioned "Products and Services" are the production facilities by business unit. The Company's principal research facilities are in West Lafayette, Indiana, Lawrenceville, Georgia, and Herentals, Belgium. Most principal locations are owned.

In addition, the Company owns or leases warehouses, distribution centers and office space for administrative and sales activities throughout the world. All of the Company's facilities are in good repair, suitable for the operation of the Company's businesses.

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ITEM 3.    Legal Proceedings

The Company and certain of its officers and employees have been named as defendants in five class action lawsuits filed in three counties in Georgia pertaining to the fire at the Company's Conyers warehouse on May 25, 2004 including the Davis case in Rockdale County, the Burtts and Hill cases in Fulton County and the Chapman and Brown cases in Gwinnett County. These suits seek recovery for economic and non-economic damages allegedly suffered as a result of the fire. The Company intends to vigorously defend against these lawsuits. The Company established a claims settlement process within one day of the fire to resolve all legitimate economic and personal injury claims raised by residents and businesses in Rockdale County, Georgia. While attorneys for certain plaintiffs attempted to stop this process, the Rockdale Superior Court ordered that the claims process continue in the interests of the citizens of that county. At the time of the fire, the Company maintained, and continues to maintain, property and general liability insurance. While the overall amount of damages caused by the fire to all third parties cannot be ascertained at this time, the Company recorded approximately $5 million of claims which are included in the consolidated statement of operations in other income (expense) - net in 2004. The Company also incurred approximately $4 million of legal and claims processing fees in 2004 that were not reimbursable under the general liability policy. The Company believes that its general liability policies will adequately cover any third party claims and legal and processing fees beyond the amounts recorded through December 31, 2004.

The plaintiffs have attempted to consolidate various cases into the Hill case in Fulton County, and to that end, have attempted to voluntarily dismiss the Davis and Burtts cases. The Company successfully opposed the dismissal of the Davis case and the plaintiffs continue to appeal that outcome. The Burtts case has been stayed and that case, as well as the Chapman and Brown cases, remains inactive pending the outcome of the Davis appeal.

In May 2002, Albemarle Corporation filed two complaints against the Company in the United States District Court for the Middle District of Louisiana, one alleging that the Company had infringed on three process patents held by Albemarle Corporation relating to bromine vacuum tower technology, and the other alleging that the Company had infringed or contributed or induced the infringement of a patent relating to the use of decabromodiphenyl ethane as a flame retardant in thermoplastics. On a motion by the Company and over Albemarle's objection, the cases were consolidated. In addition, the Company has filed a counterclaim with the District Court in the flame retardant cases, alleging, among other things, that the Albemarle patent is invalid or was obtained as a result of inequitable conduct in the United States Patent and Trademark Office. In March 2004, Albemarle amended its complaints to add additional counts of patent infringement and trade secret violations. With respect to the Albemarle case, the Company believes that the allegations of the original complaints, as well as the allegations in the additional counts are without basis factually or legally, and intends to defend the cases vigorously.

OSCA, the interest in which the Company divested to BJ Services Company in May 2002, is a party to certain pending litigation regarding a blowout of a well in the Gulf of Mexico operated by Newfield Exploration Company. In the lawsuit, the plaintiffs claimed that OSCA and the other defendants breached their contracts to perform work-over operations on the well and were negligent in performing those operations. In April 2002, a jury found OSCA and the other defendants responsible for those claims and determined OSCA's share of the damages. In connection with the lawsuit, the Company asserted claims against its insurers and insurance brokers in support of insurance coverage for this incident. A related trial on these insurance coverage claims was conducted by the submission of legal briefs. Thereafter, the court issued its final judgments on the underlying liability claims and the insurance coverage claims, entering judgment against OSCA for a net amount of approximately $13.3 million plus interest, and finding that amount only partially covered by insurance. Pursuant to an indemnification agreement between the Company and BJ Services entered into at

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the time of the sale of OSCA (see Note 4 to the Consolidated Financial Statements), Great Lakes has agreed to pay BJ Services a certain percentage of any uninsured cash damages in excess of an amount paid by OSCA upon settlement or final determination of this pending litigation. As of December 31, 2004, the Company has a $9.5 million reserve recorded in discontinued operations for this indemnification liability. Great Lakes and BJ Services expect to appeal some or all of the liability and insurance coverage decisions.

In May 1998, the Company self-reported to the United States Department of Justice (DOJ) and the European Commission certain business practices that raised questions under antitrust laws. As a result of the Company's cooperation, the Company and its directors and employees were accepted into the DOJ's amnesty program. Concurrently, the Company sought favorable treatment under a program in the European Union that also rewards self-reporting and cooperation. In May 2003, the Company received a letter from the EC Competition Directorate General officially notifying the Company of the Commission's decision not to pursue any proceedings.

The Company believes it has fully complied with all applicable conditions to date and has continued to cooperate with the DOJ in connection with certain follow-up matters arising out of the investigation, all of which are covered by the Company's acceptance into the amnesty program. Although, to the Company's knowledge, there have been no additional matters that have arisen in connection with the investigations, the Company intends to continue to be in full compliance with the DOJ and European Union programs.

Ten federal class action lawsuits and five California class action lawsuits naming the Company arose out of an alleged conspiracy concerning the pricing of bromine and brominated products, each of which claimed treble damages. The federal lawsuits were consolidated in the District Court for the Southern District of Indiana and certified as a class of direct purchasers of certain brominated products.

In September 2002, the Company agreed to settle all of the federal class action lawsuits. The settlement agreement affected direct purchasers from the Company of brominated diphenyl oxides (decabromodiphenyl oxide, octabromodiphenyl oxide and pentabromodiphenyl oxide) and their blends, tetrabromobisphenol-A and its derivatives and all methyl bromide products and their derivatives in the United States between January 1, 1995 and April 30, 1998. The Company agreed to a $4.1 million cash payment and $2.6 million in vouchers for the future purchase of decabromodiphenyl oxide and/or tetrabromobisphenol-A, to be distributed to class members.

Pursuant to the settlement agreement, the Company remitted the cash portion to an escrow account in November 2002, subject to final approval of the settlement agreement by the federal court, which was given in January 2003. In addition, as of December 31, 2004, the vouchers have been issued and substantially redeemed.

The California cases pending in the Superior Court for San Francisco County claim alleged violations of California competition laws and were stayed pending resolution of the federal cases. On December 17, 2004, the plaintiffs proposed terms of a settlement that the Company deemed acceptable and so communicated to the plaintiffs. Formal agreements and court approval have net yet been completed.

In the fourth quarter of 2004, the Company entered into a Consent Administrative Order (CAO) with the Arkansas Department of Environmental Quality related to the Company's El Dorado, Arkansas, operations. Pursuant to the CAO, the Company will pay a civil penalty of $10,000; perform two supplemental environmental projects valued at approximately $200,000; install additional equipment and back-up power to enhance the effectiveness of certain equipment; and perform air permitting compliance audits of its El Dorado operations. The CAO resolves the Company's liability for certain

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alleged and potential Clean Air Act and state permit violations as well as any noncompliance that may be discovered during the course of the air permitting compliance audits.

There are also various other lawsuits and claims, other than those mentioned above, pending against the Company and certain of its consolidated subsidiaries. While it is not possible to predict or determine the outcome of legal actions brought against the Company or the ultimate cost of these actions, the Company believes the costs associated with all such actions in the aggregate will not have a material adverse effect on its consolidated financial position, liquidity or results of operations. Furthermore, no director, officer or affiliate of the Company, or any associate of any director or officer, is involved, or has a material interest in, any proceeding that would have a material adverse effect on the Company.

ITEM 4.    Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders during the quarter ended December 31, 2004.

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PART II

ITEM 5.    Market for Registrant's Common Equity and Related Stockholder Matters

The common stock of Great Lakes Chemical Corporation is traded on the New York Stock Exchange (the "NYSE") under the trading symbol GLK. The following table sets forth the quarterly dividends paid per share and the quarterly ranges of high and low market prices per share on the NYSE for the last two fiscal years, based upon information supplied by the NYSE.

2004		March 31		June 30		September 30		December 31
Cash dividends declared per share		$	0.095	$	0.095	$	0.095	$	0.10
Stock Price Data
	High	$	28.00	$	27.17	$	27.33	$	29.83
	Low		22.26		22.19		22.88		23.82
Year-end close									28.49

2003		March 31		June 30		September 30		December 31
Cash dividends declared per share		$	0.09	$	0.09	$	0.09	$	0.095
Stock Price Data
	High	$	25.53	$	24.84	$	22.10	$	27.60
	Low		20.10		20.11		19.55		19.51
Year-end close									27.19

As of February 23, 2005, there were approximately 1,902 stockholders of record of the Company's common stock.

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ITEM 6.    Selected Financial Data

(millions, except per share data) Year Ended December 31,			2004			2003			2002			2001			2000
Statement of Operations Data
	Net sales		$	1,603.7		$	1,425.9		$	1,365.4		$	1,318.4		$	1,424.2
	Operating income (loss)			52.8			(62.2	)		100.7			(151.4	)		140.0
	Income (loss) from continuing operations before income taxes			3.5			(98.8	)		58.2			(231.2	)		111.1
	Income taxes (credit)			(16.4	)		(58.7	)		17.5			(44.0	)		34.0
	Income (loss) from continuing operations			19.9			(40.1	)		40.7			(187.2	)		77.1
	Income (loss) from discontinued operations			43.0			(8.0	)		84.3			(102.3	)		49.9
	Income (loss) before cumulative effect of accounting change			62.9			(48.1	)		125.0			(289.5	)		127.0
	Cumulative effect of accounting change			—			(3.3	)		—			—			—
	Net income (loss)		$	62.9		$	(51.4	)	$	125.0		$	(289.5	)	$	127.0
Balance Sheet Data - Year-End(1)
	Working capital (excluding cash and cash equivalents)		$	336.0		$	176.5		$	156.9		$	123.6		$	298.9
	Current ratio			2.6			1.9			2.1			1.5			2.5
	Capital expenditures		$	84.0		$	62.0		$	63.3		$	129.8		$	127.0
	Total assets			1,791.4			1,635.9			1,636.3			1,447.5			1,756.8
	Non-current liabilities			70.7			106.4			103.1			67.9			28.4
	Debt (net of cash and cash equivalents)			217.1			264.0			181.9			456.8			444.4
	Debt			439.3			434.7			440.6			511.7			663.0
	Percent of total capitalization			33.4	%		36.9	%		37.1	%		45.5	%		41.1	%
	Stockholders' equity		$	875.5		$	743.5		$	745.7		$	613.5		$	949.7
Share Data
	Basic and diluted earnings (loss) per share
		Continuing operations	$	0.39		$	(0.80	)	$	0.81		$	(3.73	)	$	1.47
		Discontinued operations		0.84			(0.15	)		1.67			(2.03	)		0.95
		Cumulative effect of accounting change		—			(0.07	)		—			—			—
		Net income (loss)	$	1.23		$	(1.02	)	$	2.48		$	(5.76	)	$	2.42
	Cash dividends per share
		Declared during year	$	0.385		$	0.365		$	0.33		$	0.32		$	0.32
		Paid during year		0.38			0.36			0.32			0.32			0.32
		Payout as a percent of net income (loss)		30.9	%		(35.3	)%		12.9	%		(5.6	)%		13.2	%
	Shares outstanding (basic)
		Average during year		50.9			50.4			50.2			50.3			52.4
		At year-end		51.4			50.6			50.2			50.2			50.3
	Stock price
		At year-end	$	28.49		$	27.19		$	23.88		$	24.28		$	37.19

⁽¹⁾

Amounts reflect balances for continuing operations.

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ITEM 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

The following provides a review of the consolidated financial position of Great Lakes Chemical Corporation ("the Company"), at December 31, 2004 and 2003, the consolidated results of operations for each of the three years in the period ended December 31, 2004, and where appropriate, factors that may affect future financial performance. Please read this discussion in conjunction with the accompanying consolidated financial statements, notes and selected consolidated financial data. As described in Note 4 to the Consolidated Financial Statements, the results of WIL Research Laboratories, the Fine Chemicals business and the results of OSCA, are reported in Discontinued Operations for all periods presented.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

The Company is including the following cautionary statement to make applicable and take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 with respect to any forward-looking statement made by, or on behalf of, the Company. Forward-looking statements generally may be identified by words such as "believes," "expects," "intends," "may," "will likely result," "estimates," "anticipates," "should" and other similar expressions, or the negative of such words or expressions. The factors identified in this cautionary statement are important factors (but do not necessarily constitute all important factors) that could cause actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, the Company.

Where any such forward-looking statement includes a statement of the assumptions or bases underlying such forward-looking statement, the Company cautions that, while it believes such assumptions or bases to be reasonable and makes them in good faith, assumed facts or bases almost always vary from actual results, and the differences between assumed facts or bases and actual results can be material, depending upon the circumstances. Where, in any forward-looking statement, the Company, or its management, expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished.

Taking into account the foregoing, certain factors, including, but not limited to, those listed below, may cause actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, the Company.

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Economic factors over which the Company has no control, including changes in global growth rates, inflation, U.S. Treasury or London Interbank Offering Rates (LIBOR), and foreign currency exchange rates.



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Competitive factors such as pricing dynamics on key products and the cost and availability of key raw materials.



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Governmental factors including laws and regulations and judicial decisions related to the production, distribution or use of key products such as bromine and bromine derivatives.



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The uncertainties inherent in new product development, including product safety concerns, regulatory approval processes, excessive costs to manufacture, or potential infringements of the patents or intellectual property rights of others.



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Legal factors, including unanticipated litigation of product liability claims, antitrust litigation, environmental matters or patent disputes with competitors, which could preclude commercialization of products or negatively affect the profitability of existing products.

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Inability to obtain existing levels of product liability or property damage insurance or denial of insurance coverage following a major product or general liability claim.



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Changes in tax laws or regulations, including those tax laws and regulations related to the remittance of foreign earnings or investments in foreign countries with favorable tax rates.



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Accounting standards and other authoritative guidance issued by the Financial Accounting Standards Board; the Securities and Exchange Commission; the Public Company Accounting Oversight Board; or the American Institute of Certified Public Accountants.



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Internal factors such as changes in business strategies, personnel changes and the impact of cost control efforts and business combinations.



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Unexpected disruption to the supply of bromine due to geological or geopolitical factors beyond the Company's control.

RESULTS OF OPERATIONS

The following table sets forth the percentage relationship to net sales of certain income statement items for the Company's continuing operations:

Year Ended December 31	2004		2003		2002
Net sales	100.0	%	100.0	%	100.0	%
Cost of products sold	79.7		81.8		76.6
Gross profit margin	20.3		18.2		23.4
Selling, general and administrative expenses	16.8		17.8		15.5
Asset impairments	0.2		4.8		0.4
Operating income (loss)	3.3		(4.4	)	7.5
Interest income (expense) - net	(1.6	)	(1.8	)	(2.0	)
Other income (expense) - net	(1.5	)	(0.8	)	(1.2	)
Income (loss) before income taxes and cumulative effect of accounting change	0.2		(7.0	)	4.3
Income taxes (credit)	(1.0	)	(4.2	)	1.3
Income (loss) from continuing operations before cumulative effect of accounting change	1.2	%	(2.8	)%	3.0	%

The following table provides details of amounts for asset impairments, restructuring charges and certain other significant items reflected in the Company's operating results in 2004, 2003 and 2002. This information should be referenced when reading the discussions of results below.

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Certain Other Significant Items Included in Operating Income:

(in millions) Year Ended December 31		2004			2003			2002
	Asset impairments (all segments)(1)	$	3.0		$	69.1		$	6.0
	Restructuring charges (all segments)(1)		13.3			28.6			(0.9	)
	Change in useful life of enterprise software (Corporate)		15.7			10.0			—
	CEO contractual termination benefits (Corporate)		6.8			—			—
	Long-term incentive compensation plan (Corporate)		(4.5	)		—			—
	Business interruption costs - facility fires (Consumer Products)		3.0			—			—
	Severance and lease costs (Consumer Products)		—			0.8			—
	Headquarter relocation costs and other costs (Consumer Products and Corporate)		—			0.5			—
	Litigation settlement (Industrial Performance Products)		—			(3.1	)		—
	Joint venture contract settlement costs (Industrial Performance Products)		—			2.6			—
	Pricing settlement - purchase contract (Industrial Performance Products)		—			1.4			—
	External consulting fees - restructuring related (Corporate)		1.0			0.8			—
	Contract cancellation costs		—			—			(1.0	)
	Other		1.3			1.0			—
	Total	$	39.6		$	111.7		$	4.1
Included in the Consolidated Statements of Operations as follows:
	Cost of products sold	$	15.9		$	28.6		$	(1.5	)
	Selling, general and administrative expenses		20.7			14.0			(0.4	)
	Asset impairments		3.0			69.1			6.0
	Total	$	39.6		$	111.7		$	4.1

⁽¹⁾

See Note 3 to the Consolidated Financial Statements

OVERVIEW

Great Lakes is a global specialty chemical company serving both industrial and consumer customers. The Company's organizational structure is designed to provide effective and innovative products to these customers and is reflected in the Company's two reportable segments: Industrial Performance Products and Consumer Products. The Industrial Performance Products segment offers one of the world's most comprehensive portfolios of polymer additive solutions and performance products formulated specially to meet the needs of its customers in a wide range of markets, from furniture and textiles to automotive and consumer electronics to building and construction. This segment consists of the following businesses: Flame Retardants, Polymer Stabilizers, Brominated Performance Products, Fire Suppression and Fluorine Specialties (collectively referred to as Fluorine), and Industrial Water Additives. The Consumer Products segment, which includes Recreational Water and Household Products businesses, is a leading supplier of products for use in swimming pools, hot tubs and home cleaning applications.

Important to both of these segments and, therefore, the overall success of the Company, is the ability to achieve and maintain adequate selling prices and sales volumes, effectively manage material and manufacturing costs and develop effective and innovative new products. The following is a brief discussion of each of these factors in 2004.

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Pricing Levels - While the Flame Retardants, Brominated Performance Products and Polymer Stabilizers businesses were able to benefit from price increases introduced in 2004, the recreational water business experienced lower sales prices for much of 2004 as a result of the Company's response to commercial actions of its competitors' attempts to gain market share on Tri-Chlor based products at the beginning of the 2004 pool season. Price increases were announced in the fourth quarter of 2004 by the recreational water business in response to expected increases in costs for Tri-Chlor based products in 2005.



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Sales Volume Increases - Overall sales volumes for the Company increased 7% from 2003 levels led by 9% volume growth in Industrial Performance Products. The increased volumes in Industrial Performance Products reflected increased demand in key end markets such as electronics and building and construction.



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Manufacturing and Material Costs - The Company enters into raw material contracts and certain financial instruments to control material and energy costs. Entering into 2004, management believed that raw material and energy costs would be comparable with 2003 levels. Actual material and energy costs, however, were higher than anticipated resulting in a negative impact year over year on net income from these costs of approximately $8 million or $(0.16) per share. This negative impact was more than offset by a net income impact of $21 million from productivity gains achieved in the Industrial Performance Products segment as a result of plant consolidations and other strategic initiatives undertaken in 2003 (see below). The Consumer Products segment incurred higher manufacturing costs as a result of a fire at its Conyers facility and the decision to reconfigure manufacturing operations. Selling, general and administrative expenses for Consumer Products also increased due to the integration of household products.

During 2003, the Company began a comprehensive repositioning plan. This plan included site closures and consolidations, headcount reductions and other cost reducing actions. While the majority of these charges were incurred in 2003, an additional $30 million of charges were recorded in 2004. The actions undertaken under the plan have translated into productivity gains and additional savings of approximately $20-25 million in 2004 and are expected to continue in the years ahead.

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Product Innovation - Industrial Performance Products has gone from virtually no revenue from new products five years ago to $121 million in 2004. Consumer Products new product revenue in 2004 reached $156 million. For the Company as a whole, new product revenue was $277 million in 2004.

        Other factors that significantly impacted 2004 financial results and are discussed further in MD&A include:

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Conyers Facility Fire - On May 25, 2004, Consumer Products incurred a fire in a finished goods warehouse located at its main manufacturing site in Conyers, Georgia. Through December 31, 2004, the Company has recorded losses representing the inventory and assets destroyed by the fire, third party claims and other fire-related expenses of $37.6 million. These losses were partially offset by insurance recoveries received to date, net of deductibles, of $20.5 million. The majority of these expenses, $13.9 million, were recorded in other income-expense-net. Additional insurance recoveries of approximately $10 million are expected in the first quarter of 2005. In addition, the recreational water business believes up to $12 million of sales that would have otherwise occurred in 2004 were not recovered.



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Sale of Toxicological Services Business - On September 30, 2004, the Company sold its toxicological services business, WIL Research Laboratories (WIL) for a gain of $84.1 million or $53.7 million, net of income tax expense of $30.4 million. As a result of the sale of WIL, this

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business has been reported as a component of discontinued operations for all years presented.

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CEO Resignation - On November 5, 2004, Mark Bulriss resigned his position of Chief Executive Officer and member of the Company's Board of Directors. As a result of the Resignation Agreement entered into on that date and based on Mr. Bulriss' original employment contract dated April 1998, the Company incurred $6.8 million of salary, bonus and pension-related costs. John J. Gallagher, III, formerly the Company's Chief Financial Officer, was appointed as the acting Chief Executive Officer at that time. In addition, Nigel D.T. Andrews was named non-executive chairman of the Board of Directors.

2004 COMPARED WITH 2003

Continuing Operations

Net sales increased $177.8 million or 12% to $1,603.7 million in 2004 from $1,425.9 million in 2003. Sales volume increases in both segments led to an overall sales volume increase of 7%. Overall selling prices were relatively flat reflecting a 2% increase in selling prices in Industrial Performance Products offset by a decrease in prices of 2% in Consumer Products. The effects of acquisitions and foreign exchange each positively impacted sales by 3%.

Gross profit increased $66.2 million year over year to $326.3 million in 2004 from $260.1 million in 2003. Gross profit margins (gross margin as a percentage of net sales) increased to 20.3% from 18.2% in the prior year. Cost of products sold in 2004 and 2003 included $15.9 million and $28.6 million, respectively, of amounts reflected in the Certain Other Significant Items Included in Operating Income table on page 15. Excluding these amounts, gross margin increased to 21.3% from 20.2% year-over-year. The increase reflects the impact of higher sales volumes during the year as well as significant gains in productivity in Industrial Performance Products. The higher sales volumes and productivity gains more than offset a $12 million increase in raw material and energy costs.

Selling, general and administrative expenses decreased, as a percent of sales, to 16.8% in 2004 from 17.8% in 2003. Included in selling, general and administrative expenses in 2004 and 2003 are $20.7 and $14.0 million, respectively of amounts reflected in the Certain Other Significant Items Included in Operating Income table on page 15. Excluding these amounts, selling, general and administrative expenses as a percent of sales decreased to 15.6% in 2004 from 16.8% in 2003. Additional selling, general and administrative costs generated through the acquisition of the Household Products groups were more than offset by lower spending in the business segments reflecting the Company's continued focus on reducing operating costs and overhead.

Operating income (loss) increased $115.0 million to $52.8 million in 2004 from an operating loss of $(62.2) million. Included in operating income (loss) in 2004 and 2003 were $39.6 million and $111.7 million of restructuring charges, asset impairments and other significant items detailed above. Excluding these amounts, operating income (loss) increased $42.9 million year over year. The productivity gains in manufacturing and improved sales volumes more than offset higher raw material and energy costs and fire-related challenges faced by Consumer Products during the current year.

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The components of other income (expense) - net in both 2004 and 2003 were as follows:

Year Ended December 31		2004			2003
Earnings of affiliates		$	(0.5	)	$	(3.5	)
Amortization of intangibles			(6.7	)		(5.8	)
Foreign exchange gain (loss)			(1.4	)		0.6
Asset write-offs and other costs related to facility fires, net of insurance recoveries
	Conyers, Georgia		(13.9	)		—
	La Chambre, France		(1.2	)		—
Gain on sale of non-operating site			3.2			—
Litigation/arbitration settlements			0.6			1.1
Adjustments to environmental reserves for non-operating sites			—			1.1
Other			(4.2	)		(4.3	)
Other income (expense) - net		$	(24.1	)	$	(10.8	)

In the second quarter of 2004, the Company reached a settlement with the Internal Revenue Service (IRS) on open audit issues related to the Company's treatment of certain international cash repatriation transactions in its 1995-2000 federal income tax filings. As a result of this settlement and through evaluation of its remaining income tax reserves, the Company released a net $17.5 million of tax benefit to earnings. In the third quarter of 2003, the Company received a favorable ruling from the IRS on certain other income tax issues related to the Company's federal income tax filings that resulted in the Company releasing $27.5 million of reserves to earnings. Excluding these releases to earnings in 2004 and 2003, the Company's effective tax rate would have been approximately 31.0% in both 2004 and 2003.

Income (loss) from continuing operations before cumulative effect of accounting change was $19.9 million or $0.39 per share in 2004 versus $(40.1) million or $(0.80) per share in 2003.

SEGMENT INFORMATION

The Company changed its reportable business segments as of the fourth quarter of 2004 in order to align the external presentation of results with the Company's current management and operating structure. In addition, the Company renamed its segments to more clearly reflect the key end markets and customers it serves. Previously, the Company segmented its financial operations into "Polymer Additives" and "Specialty Products." The renamed reporting structure continues to include two segments: "Industrial Performance Products" and "Consumer Products". The industrial water additives business, previously reported as a component of Specialty Products, was reclassified to the Industrial Performance Products segment. As a result of the 2004 change, segment results from the prior year have been reclassified to conform to the current year presentation.

Below is a discussion of the operations of the Company's business segments. The Company evaluates business unit performance and allocates resources based on operating income, which represents net sales less cost of products sold and selling, general and administrative expenses, as well as cash flows and return on investment. Both Industrial Performance Products and Consumer Products use bromine as a raw material in their production processes. In addition, assets used in the production of bromine are allocated from Industrial Performance Products to Consumer Products based on the percentage of production consumed.

Industrial Performance Products

The Industrial Performance Products business unit is a leading provider of flame retardants, polymer stabilizers and optical monomers, brominated performance products, fire suppression, fluorine

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specialty products and industrial water additives. Industrial Performance Products provides its customers an array of integrated polymer additive solutions and performance products formulated to meet specific, well-defined customer needs in a variety of products including consumer electronics, computers and business equipment, automotive, furniture, fibers, wire and cable, household appliances, communications equipment, building and construction materials, packaging, textiles, polymers, cosmetics, soil fumigants, water purifying, fire suppression and optical monomers.

	2004		2003
Net sales	$	1,029.3	$	887.6
Operating income (loss)		58.9		(72.7	)

Net sales increased $141.7 million or 16% in 2004. Full year sales volumes in Industrial Performance Products increased overall 9%, led by volume gains in Brominated Performance Products (BPP), Polymer Stabilizers and Flame Retardants of 12%, 9% and 9%, respectively. Industrial Water Additives and Fluorine also reported volume gains year over year but to a lesser extent. Selling prices added 2% to the overall net sales increase year over year led by a 6% increase in selling prices in Flame Retardants. The pricing increase in Flame Retardants combined with 1% price increases in both Polymer Stabilizers and BPP more than offset a 13% decrease in selling prices in Fluorine. Incremental sales related to the antimony joint venture formed in April 2004 also added 2% to the increase in net sales. Sales in Industrial Performance Products were favorably impacted 3% for the year from the effects of foreign exchange. Net sales in Industrial Performance Products benefited from new product sales, defined by management as products introduced in the last five years, and increased to $121 million in 2004 from $81 million in 2003.

Operating income (loss) increased $131.6 million to $58.9 million for the year. Included in operating income (loss) in 2004 and 2003 were $14.8 million and $95.9 million, respectively, of asset impairments, restructuring charges and other significant items. Excluding these items, operating income (loss) increased $50.5 million. The year-over-year improvement in operating income (loss) reflects $32 million of productivity gains as Industrial Performance Products benefited from increased throughput as a result of higher sales volumes. The segment also benefited from higher plant utilization as a result of facility consolidations and cost reduction initiatives. These productivity gains in combination with overall volume and pricing increases were more than able to offset the negative impact of higher raw material and energy costs.

Consumer Products

The Consumer Products business unit is a leading provider of recreational water care products. Through its acquisitions of Lime-O-Sol and A&M Cleaning Products in 2003, the Consumer Products business entered the specialty household cleaning products business with The Works® brand of non-abrasive bathroom cleaners, glass and surface cleaners, toilet bowl cleaners, drain openers and rust and calcium removers, as well as the Greased Lightning™ family of multipurpose cleaners.

	2004		2003
Net sales	$	574.4	$	538.3
Operating income		48.3		59.8

Consumer Products net sales increased $36.1 million or 7% to $574.4 million in the current year. A 3% increase in sales volumes in Consumer Products was offset by a 2% decrease in selling prices. Acquisitions that were made in 2003 contributed 4% of the year-over-year increase while the effects of foreign exchange added 2%. The volume increases reflect the market penetration efforts undertaken by the Household Products business to expand The Works® and Greased Lightning™ brand products. The price erosion experienced year over year of approximately $13 million was

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primarily driven by competitive pricing actions on Tri-Chlor based products that took effect in the first quarter of 2004 in the Recreational Water business. In addition, a warehouse fire at the Recreational Water business' main production facility in Conyers, Georgia (see below), disrupted production and sales in the second and third quarters of 2004. The Recreational Water business estimates that it was unable to recover approximately $12 million of revenue that otherwise would have been recognized in the disruption period.

Operating income for Consumer Products decreased $11.5 million to $48.3 million for the year 2004. Other significant items included in 2004 and 2003 were $4.8 million and $4.0 million, respectively. Business interruption costs of $3.0 million related to the fire experienced by the Recreational Water business at its Conyers facility as well as a fire incurred at its La Chambre, France, facility are included in the $4.8 million of items above. The decrease in operating income reflects lower selling prices in Recreational Water as well as manufacturing inefficiencies and additional costs associated with a reconfiguration of plant operations at the Conyers manufacturing facility in preparation for the 2005 pool season and the disruptive effects of the facility fires. Unfavorable weather patterns in the United States during the third quarter, including the hurricanes experienced in the Southeast, also negatively impacted operating income in this segment.

As previously mentioned, in May 2004, the Company's BioLab Inc. subsidiary experienced a fire in a finished goods warehouse located at its main manufacturing site in Conyers, Georgia. Products stored in this warehouse served primarily the distributor and private label customers of the Consumer Products Recreational Water business. Production and shipping operations were temporarily suspended for three days while the fire was being controlled. While there was no damage to the production facilities, the business did encounter disruptions to its material handling and order fulfillment processes during the second quarter and the first two months of the third quarter. The Company has insurance coverage for this type of event, in excess of deductibles, and has been actively working with its insurance carriers to resolve all property, business interruption and third-party claims related to this incident.

For the year ended December 31, 2004, the Company recorded losses representing the carrying value of inventory and assets destroyed in the fire of approximately $13.1 million and $3.5 million, respectively. The Company also recorded third-party claims (see Note 20) and other fire-related expenses of $21.0 million. These losses were partially offset by insurance recoveries received to date, net of deductibles, of $20.5 million. These amounts have been included in cost of products sold and other income (expense) - net for the year ended December 31, 2004. The effects of the fire on the financial results of the Company on a quarter-to-quarter basis are impacted by the timing and amount of insurance recoveries. As a result of discussions with insurance carriers, the Company believes that it will receive approximately $10 million of additional insurance recoveries in the first quarter of 2005.

In the first quarter of 2004, the Consumer Products segment experienced a fire at its La Chambre, France, facility. For the year ended December 31, 2004, the Company recorded $2.3 million of business interruption costs, asset write-offs and other fire-related expenses in costs of products sold and other income (expense) - net. These expenses were offset by $1.3 million of insurance recoveries received in the fourth quarter of 2004. Subsequent to the fire, management decided to close the production facility and therefore, severance costs of $0.7 million were also recorded for the employees at the site during the first quarter of 2004.

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2003 COMPARED WITH 2002

Continuing Operations

Net sales increased 4% to $1,425.9 million from $1,365.4 million in the prior year. Included in net sales in 2003 were $43.9 million of sales related to the Household Products acquisitions of Lime-O-Sol and A&M Cleaning Products. Excluding the sales from these acquisitions, net sales increased 1%. Sales for the year were positively impacted by 4% from the effects of foreign exchange, offset by lower sales volumes of 2% and a 1% impact of lower sales prices.

Gross profit decreased $58.8 million. Gross profit margins (gross margin as a percentage of net sales) decreased to 18.2% from 23.4% in the prior year. Included in cost of products sold in 2003 and 2002 were $28.6 million and $(1.5) million, respectively, of certain significant items. Excluding these amounts, gross margin decreased to 20.2% from 23.2% from 2002 to 2003. The decrease reflects the impact of lower sales volumes during 2003. Higher raw material and energy costs totaling $24 million, lower selling prices and unabsorbed manufacturing costs also contributed to the decline in gross profit margin.

Selling, general and administrative expenses decreased $41.0 million to $253.2 million. As a percent of sales, selling, general and administrative expenses increased to 17.8% from 15.5%. Included in the increase are net expenses for restructuring and other significant items of $14.0 million and $(0.4) million for 2003 and 2002, respectively. Also contributing to the increase in selling, general and administrative expenses was the inclusion of $10 million of expenses incurred by the Household Product acquisitions in 2003, the negative impacts of foreign currency of $9 million and higher pension and insurance costs of $6 million.

Asset impairment charges in 2003 of $69.1 million reflected the closure of three Industrial Performance Products manufacturing sites and a research and development facility which totaled $41.8 million, approximately $21.5 million for the impairment of goodwill and other long-lived assets of the Industrial Performance Products antimony products business, $4.4 million of assets related to the Fluorine business and $1.4 million of asset impairments due to Consumer Products site consolidations. These asset impairments were part of the repositioning plan that was implemented by Company management starting in the second quarter of 2003. Asset impairments in 2002 of $6.0 million reflected additional impairments needed to complete actions undertaken in connection with the 2001 repositioning plan.

Operating income (loss) was $(62.2) million compared to $100.7 million in the prior year. Included in operating income (loss) were net charges of $111.7 million and $4.1 million in 2003 and 2002, respectively. Excluding these charges, operating income decreased $55.3 million. The decrease reflects the lower sales prices and volumes, higher raw material and energy costs and increased selling, general and administrative expenses described above. In total, foreign exchange lowered operating income by $3 million.

The components of other income (expense) - net in both 2003 and 2002 were as follows:

Year Ended December 31	2003			2002
Earnings of affiliates	$	(3.5	)	$	(2.1	)
Amortization of intangibles		(5.8	)		(3.4	)
Foreign exchange gain (loss)		0.6			(1.7	)
Asset write-offs		—			(4.6	)
Litigation/arbitration settlements		1.1			2.7
Adjustments to environmental reserves for non-operating sites		1.1			—
Other		(4.3	)		(5.8	)
Other income (expense) - net	$	(10.8	)	$	(14.9	)

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Included in the fixed asset write-downs of $4.6 million is a $1.6 million impairment of the Consumer Products business unit's BioLab corporate facility as a part of a management plan to move to a leased facility in 2003. The existing facility was sold in January 2003. The increase in amortization expense from 2002 to 2003 reflects the amortization of intangible assets acquired through the Household Products acquisitions.

Income tax expense (credit) for the year ended December 31, 2003 amounted to a credit of $(58.7) million or an effective tax rate of (59.4)% compared to an expense of $17.5 million or an effective tax rate of 30.1% in the prior year. The 2003 effective rate benefited from a favorable ruling from the Internal Revenue Service (IRS) regarding certain income tax issues related to the Company's federal income tax filings. As a result of this decision and through evaluation of its remaining reserves, the Company released $27.5 million to earnings through income taxes (credits) in the third quarter of 2003. Excluding this release in earnings in 2003, the Company's effective tax rate would have been approximately 31.0%.

Income (loss) from continuing operations was $(40.1) million or $(0.80) per share in 2003, as compared to $40.7 million or $0.81 per share in 2002.

SEGMENT INFORMATION

Industrial Performance Products	2003			2002
Net sales	$	887.6		$	897.9
Operating income (loss)		(72.7	)		70.6

Net sales decreased $10.3 million or 1% in 2003. The increase in sales in Polymer Stabilizers was more than offset by a decline in sales in all other components of Industrial Performance Products. Overall selling prices for Industrial Performance Products were comparable year over year. Price increases in Flame Retardants were offset by pricing pressure in Polymer Stabilizers, which leveled off in the second half of 2003, and in Fluorine. Sales volumes in Industrial Performance Products decreased sales by 5%. Volume increases of 6% in Polymer Stabilizers were more than offset by volume declines in all other businesses. The level of new product sales, defined by management as products introduced in the last five years, increased to $81 million in 2003 from $59 million in 2002. Sales in Industrial Performance Products were favorably impacted 5% year-to-date in 2003 from the effects of foreign exchange.

Operating income (loss) decreased $143.3 million to $(72.7) million for the year. Included in operating income in 2003 are $95.9 million of charges for asset impairments, restructuring and other significant items. Included in operating income in 2002 are $5.4 million of charges for adjustments to reserves for previously recorded charges. In addition, the decrease reflects the impact of higher raw material costs, lower sales volumes, the reduction of inventory levels and unfavorable manufacturing variances in 2003 in the Bromine business. Operating results of Industrial Performance Products were also affected by a decline in sales of Methyl Bromide, an agricultural product, when compared to 2002. This decline reflected variations in customer order patterns and the phase-down of sales of Methyl Bromide in accordance with the Montreal Protocol (see Environmental and Regulatory Issues).

Consumer Products	2003		2002
Net sales	$	538.3	$	469.4
Operating income		59.8		65.6

Consumer Products net sales increased $68.9 million or 15% to $538.3 million in the current year. Net sales attributable to the Company's 2003 Household Products acquisitions (see Note 4 to the

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Consolidated Financial Statements) were $43.9 million or 9%. Also contributing to the increase in sales were higher sales volumes of new products of 4% and the favorable effects of foreign currency of 3%, partially offset by a 1% decline in prices.

Operating income for Consumer Products decreased $5.8 million to $59.8 million for the year 2003. Included in 2003 are $4.0 million of asset impairment charges, severance costs and headquarter relocation costs. Included in 2002 are reversals of $1.0 million of previously recorded reserves for contract cancellation and other costs. An unfavorable sales mix triggered by an unseasonably cool and rainy pool season in the northeast and mid-central United States contributed to the lower operating results in 2003. In addition, the positive effects of acquisitions and foreign exchange were more than offset by the effects of a decrease in productivity, higher raw material costs and increased selling, general and administrative expenses to fund growth initiatives, in particular, for the Household Products business.

Discontinued Operations

On September 30, 2004, the Company sold its toxicological services business, WIL Research Laboratories (WIL) for a gain of $84.1 million or $53.7 million, net of tax expense of $30.4 million. The cash tax liability incurred in conjunction with the sale transaction has been substantially offset through the use of previously recorded deferred tax assets. As a result of the sale of WIL, the Company has reported this business as a discontinued operation in accordance with Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," for all periods presented.

In 2002, management, with approval of the Board of Directors, committed to a plan to divest the Company's Fine Chemicals business, previously part of the Performance Chemicals segment. The Halebank, U.K., site of the Fine Chemicals business was sold in the fourth quarter of 2003. The assets of the Holywell, U.K., site were sold in the second quarter of 2004 for a loss of $1.5 million, net of tax. In addition, the sale of the Holywell facility required the Company, under SFAS No. 52, "Foreign Currency Translation," to recognize a non-cash $12.8 million loss reflecting the reclassification to earnings of currency translation related to the Fine Chemicals business previously recorded as a component of stockholders' equity of the U.K. subsidiary that owned both Halebank and Holywell. The Company has reported Fine Chemicals as discontinued operations for all periods presented.

In May 2002, the Company completed the sale of its Energy Services and Products business unit, OSCA, to BJ Services Company. Under the terms of the sale, BJ Services acquired all outstanding shares of OSCA, including the Company's 53.2% holding, for $28.00 per share in cash, or $221 million, resulting in a gain of $175.4 million. This transaction provided the Company with net proceeds of approximately $200 million, which was used to reduce the Company's debt position. As a result of this transaction, the Company has reflected OSCA as discontinued operations in 2002.

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Net sales and operating income (loss) relating to discontinued operations for 2004, 2003 and 2002 are as follows:

Year ended December 31		2004			2003			2002
Net sales
	WIL Research Laboratories	$	32.7		$	38.7		$	36.1
	Fine Chemicals		3.8			45.9			55.2
	OSCA		—			—			58.1
Operating income (loss)
	WIL Research Laboratories	$	7.1		$	9.9		$	10.5
	Fine Chemicals		(1.1	)		(16.4	)		(33.7	)
	OSCA		—			—			(16.3	)

Included in operating income (loss) in 2003 were restructuring charges for Fine Chemicals consisting of asset impairments of $15.8 million and $1.9 million of charges for severance. Included in operating income (loss) for the Fine Chemicals business in 2002 were $22.9 million of asset impairment charges and $3.8 million of severance costs recorded in conjunction with the intended sale of the Fine Chemicals business. Charges were also recorded in 2001 as a part of a detailed repositioning plan.

As of December 31, 2004, $9.5 million of restructuring charges recorded in 2001 remained to be spent. There were no amounts outstanding related to the charges taken in 2003 or 2002. The major components of the remaining reserves related to employee benefit costs of $2.0 million and $7.5 million of plant closure and environmental costs. Plant closure and environmental costs have been allocated between accrued expenses and non-current liabilities based on the anticipated timing of these expenditures.

Outlook

New Product Growth

The Company has gone from virtually no revenue from new products five years ago in the Industrial Performance Products segment to approximately $121 million in 2004. New product revenue in this segment is targeted to reach $150 million in 2005. Consumer Products new product revenues were $150 million in 2004. For the Company as a whole, new product revenues are expected to be approximately 17% of total revenues in 2005.

Raw Material and Energy Costs

The Company's operating units are greatly impacted by price changes for raw material and energy costs. Increases in raw material and energy costs, primarily natural gas, reduced operating income by $12 million in 2004 and $24 million in 2003. The Company enters into raw material contracts and certain financial instruments to minimize the impact of raw material and energy costs. Both raw material and natural gas costs for 2005 are anticipated to be higher than 2004 levels.

Foreign Exchange

Great Lakes, as a multinational company, is exposed to fluctuations in foreign exchange rates, primarily the euro, the British pound and the Japanese yen in relation to the U.S. dollar. Approximately 40% of the Company's external sales are invoiced from foreign locations, and approximately 40% of the Company's long-lived assets reside in foreign locations. In 2004, foreign exchange rates increased sales $40 million or 3% but increased operating income by only $1 million. In 2003, foreign exchange rate fluctuations increased sales $60 million or 4% but had a negative

24

impact on operating income of $3 million. While the Company currently hedges certain portions of its foreign currency exposure, significant changes in foreign currency exchange rates in 2005 would impact both sales and operating income levels.

Industrial Performance Products

During 2004, the Industrial Performance Products business was able to enact price increases on several of its products, which led to an overall increase in sales due to pricing of 2% versus 2003. Flame retardants benefited the most from these increases with a 6% increase in sales from pricing initiatives. These price increases were successful in 2004 in offsetting increased raw material and energy costs. Lower selling prices were realized in the Fluorine business for products sold in non-patent protected markets. Additional price increases have been announced for 2005 in an effort to continue to grow margins while facing higher raw material and energy costs.

Volume growth in Industrial Performance Products in 2004 reflected improved demand in certain key end-markets. Based on a strong order rate at the end of 2004, the outlook for the first quarter of 2005 is for positive volume growth.

Industrial Performance Products also continues to focus on driving continuous productivity gains, completing restructuring plans initiated in 2003, and expanding new product applications to help offset continued higher raw material and energy costs. In 2004, the Company entered into a 50/50 joint venture to produce and market antimony-based products (see Note 5 to the Consolidated Financial Statements). The joint venture's manufacturing facilities are still to be consolidated as of December 31; however, the formation of the joint venture has already resulted in lower conversion costs in antimony production for 2004. The Company is also benefiting from a long-term strategic sourcing agreement for elemental bromine and certain derivatives from Dead Sea Bromine Ltd. The Fluorine business is working to offset lower selling prices with new product development as evidenced by two new products introduced during the second half of 2004.

Consumer Products

Consumer Products experienced lower selling prices for 2004 compared to 2003 reflecting the Company's response to commercial actions of its competitors to gain market share on Tri-Chlor based products at the beginning of the 2004 pool season. The Recreational Water business is anticipating higher raw material and transportation costs heading into 2005 and, therefore, has taken steps to reverse the price declines. Effective October 1, 2004, or as contracts permitted, the Recreational Water business enacted a $0.10 per pound price increase on all products containing Chlorinated Isocyarnurates and a 7% price increase on all other pool and spa chemicals. In addition, the Company announced in late December 2004 that effective February 1, 2005, or as contracts permit, prices for products containing Chlorinated Isocyarnurates increased by up to 35% and prices on all other pool and spa products increased up to 10%.

Demand for recreational water care products is influenced by a variety of factors including seasonal weather patterns. Unfavorable weather patterns in the United States in the third quarter of 2003, including hurricanes experienced in the Southeast, negatively impacted sales volumes in 2004. Sales volumes in 2003 were hampered by an unseasonably cool and wet spring in the Northeast and mid-Central regions of the United States. Volumes in 2005 may also be impacted by weather trends during the pool season.

In 2003, the Consumer Products segment acquired Lime-O-Sol and The Works® brand specialty household cleaning products and A&M Cleaning Products and its Greased Lightning™ family of multipurpose cleaners. Consumer Products is working to further penetrate the market with these established products as well as new products such as Greased Lightning™ with Colorsafe Bleach, The Works® Automatic Toilet Bowl Cleaner and Grapefruit Blast® through multiple distribution

25

channels. The Household Products business delivered organic growth of 14% in the fourth quarter of 2004 versus the fourth quarter of 2003.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents - continuing operations at December 31, 2004 were $222.2 million, which represents an increase of $51.5 million from $170.7 million at year-end 2003.

Cash provided by operating activities - continuing operations was $20.9 million in the current year compared to $76.8 million in the prior year. The current year decrease reflects the use of cash as a result of a higher working capital levels at the end of 2004 compared to 2003. Included in operating activities - continuing operations in both 2004 and 2003 was a $10 million cash contribution to the Company's pension plan. The Company also spent approximately $33 million in 2004 for costs associated with its 2003, 2001 and 2000 repositioning plans. Spending in 2003 for these plans totaled $11 million. Expenditures related to the Consumer Products facility fire, net of insurance reimbursements, also decreased cash by approximately $17 million in 2004. Additional insurance proceeds of approximately $10 million are expected in the first quarter of 2005.

Cash used for investing activities - continuing operations amounted to $77.9 million in 2004 compared to $164.3 million in the prior year. Prior year investing activities reflect the Company's acquisitions of Lime-O-Sol and A&M Cleaning Products for $105.7 million. Capital expenditures for 2004 were $84.0 million compared to $62.0 million in 2003. Included in capital expenditures in 2004 were costs related to the replacement of the Company's enterprise software during the year as well as the initial licensing costs to extend the use of this software to additional facilities in 2005 and 2006. Other significant capital expenditures in 2004 included costs related to brine supply wells, a high-end antioxidant stabilizer expansion project and production equipment for two new Fluorine products. Capital spending in 2005 is expected to be consistent with depreciation levels, with expenditures estimated to be approximately $85 million.

Cash (used for) provided by investing activities - discontinued operations in 2004 included $105 million of net cash proceeds received by the Company from the sale of WIL Research Laboratories (see Note 4 to the Consolidated Financial Statements).

Cash used for financing activities - continuing operations used $6.2 million of cash in 2004 compared to a use of $24.1 million in 2003. Net repayments of debt were $0.2 million in the current year and $4.2 million in 2003. The Company paid dividends of $19.3 million in 2004 versus $18.1 million in 2003, reflecting the Board of Director's decision to increase the per share dividend rate. Employee stock option activity contributed $11.1 million of cash during the year, primarily in the fourth quarter.

Foreign exchange rate fluctuations also had a significant impact on cash and cash equivalents during the year as both the euro and British pound experienced fluctuations of 8% from the end of 2003 to the end of 2004.

The Company anticipates that cash provided by operating activities in the future will be sufficient to fund its operating costs and expenses, debt service obligations, dividend payments to common shareholders and capital expenditures.

Long-term debt, less current portion increased $1.3 million to $428.9 million from $427.6 million at the end of 2003. The Company's total long-term debt, including the current portion, as a percentage of total capitalization at December 31, 2004 was 33.4%. This compares to 36.9% at December 31, 2003. The Company's net debt, defined as total long-term debt less cash and cash equivalents, was $217.1 million or 19.9% of capitalization at December 31, 2004. This compares to $264.0 million or 26.2% at December 31, 2003.

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On September 30, 2004, the Company consolidated its 364-day unsecured revolving credit facility and its five-year facility into a new facility with a five-year term. Under the facility, the Company may borrow up to $375 million. The facility is used to support the Company's commercial paper program and for general corporate purposes. The new facility contains certain covenants, as defined in the agreement, that include, among others, requirements for a maximum ratio of debt to EBITDA, as defined in the agreement. Interest on borrowings outstanding under the agreement is based upon a variable rate tied to LIBOR. There were no outstanding borrowings on the facility as of December 31, 2004.

The Company has outstanding $400 million of 7% notes due July 15, 2009. The notes were sold under a shelf registration process. The Company may sell various debt securities, common stock or rights or warrants to purchase common stock individually or in combination up to $750 million. The unissued securities remaining on the registration statement are $350 million at December 31, 2004. The registration provides the Company with increased flexibility to finance its growth. The amount and timing of any borrowings will depend on the Company's specific cash requirements.

The Company's senior debt rating with Standard & Poor's and Moody's is BBB+ and A3, respectively, and its commercial paper rating is A2 and P2, respectively.

As of December 31, 2004, the Company had the following contractual obligations for continuing operations:

	Payments Due by Period
Contractual Obligations:	Total		2005		2006 and 2007		2008 and 2009		2010 and beyond
Debt	$	439.3	$	10.4	$	6.3	$	409.7	$	12.9
Operating leases		71.5		14.0		23.9		16.7		16.9
Purchase obligations(1)		30.3		19.5		5.4		5.4		—
Other non-current liabilities(2)		56.7		3.6		7.6		4.0		41.5
Total contractual cash obligations	$	597.8	$	47.5	$	43.2	$	435.8	$	71.3

⁽¹⁾

As of December 31, 2004, the Company had three long-term arrangements that require the purchase of raw materials to be used in operations. The arrangements require the purchase of a supplier's output up to a maximum quantity of material at prices negotiated during the term of the contract. It is expected that all purchases under these arrangements will be utilized in production.

⁽²⁾

Other non-current liabilities relate primarily to environmental liabilities and long-term employee benefit obligations.

No common stock share repurchases were made in 2004 or 2003. At December 31, 2004, a total of 2.8 million shares remain available for repurchase under existing Board authorizations. Management continues to analyze share repurchases as cash flow, market conditions and investment opportunities warrant.

At December 31, 2004, the Company had guaranteed $20.8 million of debt of an unconsolidated affiliate.

CRITICAL ACCOUNTING ESTIMATES

The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. The most significant estimates and assumptions relate to restructuring charges, impairment of

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goodwill, intangibles and other long-lived assets, income taxes, pensions, asset retirement obligations and contingencies related to litigation and environmental matters. Actual amounts could differ significantly from these estimates.

Restructuring Activities

The Company recorded restructuring charges, net of adjustments, of $13.3 million, $28.6 million and $(0.9) million in 2004, 2003 and 2002, respectively. These charges and adjustments were made in connection with detailed repositioning and restructuring plans approved by the Board, which provided for a series of cost reduction initiatives to further streamline operations, strengthen the Company's competitive position and provide a platform for future growth. The charges associated with these plans included estimates for employee severance costs, plant closure and related environmental costs and the settlements of various contractual obligations resulting from these repositioning and restructuring actions. When it is determinable that the actual costs differ from the original estimates, adjustments, either additional charges or reversals, are made to the remaining restructuring reserves at that time.

Impairment of Long-Lived and Intangible Assets

The Company evaluates long-lived assets, including goodwill and other intangible assets, annually or when events occur or circumstances change that may result in a potential impairment. Judgments regarding the existence of impairment indicators are based on legal factors, market conditions and operational performance of acquired businesses. If impairment indicators are present, the Company is required to assess the recoverability of these assets. In assessing the recoverability of the Company's goodwill and other intangible assets, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. If these estimates or their related assumptions change in the future, the Company may be required to adjust the impairment charges for these assets. The Company recorded asset impairments of $3.0 million, $69.1 million and $6.0 million in 2004, 2003 and 2002, respectively.

Income Taxes

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," which requires that deferred tax assets and liabilities are recognized using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities. The statement also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

The Company had deferred tax liabilities in excess of deferred tax assets, net of valuation allowances resulting in a net deferred tax liability position of $7.1 million at December 31, 2004. At December 31, 2003, the Company had deferred tax assets, net of valuation allowances, in excess of deferred tax liabilities of $50.5 million. At December 31, 2004 and 2003, management determined that it is more likely than not that $101.7 million and $56.4 million, respectively, of certain deferred tax assets, primarily foreign jurisdiction net operating loss carryforwards, will not be realized, requiring the Company to establish a valuation allowance for those amounts.

The Company evaluates on a quarterly basis its ability to realize its deferred tax assets by assessing its valuation allowance and by adjusting the amount of such allowance, if necessary. The factors used to assess the likelihood of realization are the Company's forecast of future taxable income and available tax planning strategies that could be implemented to support realization of certain deferred tax assets.

Failure to achieve forecasted taxable income might affect the ultimate realization of certain deferred tax assets. Factors that may affect the Company's ability to achieve sufficient forecasted taxable

28

income include, but are not limited to, increased competition, general economic conditions, a decline in sales or earnings, loss of market share or delays in product availability.

In addition, the Company operates within multiple taxing jurisdictions and is subject to audits in these jurisdictions. These audits can involve complex issues, which may require an extended period of time to resolve. In management's opinion, adequate provisions for income taxes have been made.

Defined Benefit Pension Plans

The Company sponsors various non-contributory and contributory defined benefit pension plans that have significant pension benefit costs developed from actuarial valuations. Inherent in these valuations are key assumptions including discount rates, expected return on plan assets and rates of increases in compensation levels. The Company is required to consider current market conditions, including changes in interest rates and plan asset investment returns, in determining these assumptions. At October 1, 2004 (the plans' annual measurement date), appropriate changes were made in the key assumptions for the plans. See Note 16, "Retirement Plans" to the Company's Consolidated Financial Statements for detail of these assumptions. The Company currently expects pension costs to decrease by approximately $2 million to $10 million in 2005 compared to 2004. The Company has no funding requirements for 2005 as actuarially determined for the U.S. plans. Although there were no funding requirements for either 2004 or 2003, the Company made voluntary contributions of 225,000 and 300,000 shares of Company treasury stock, or $5.4 million and $6.3 million, to the U.S. qualified plan during 2004 and 2003, respectively. The Company made additional discretionary cash contributions to the U.S. qualified plan of $10 million in each year. In 2005, the Company expects to contribute approximately $4 million to the U.S. qualified plan and approximately $4 million to its non-U.S. plan.

An increase in either the discount rate or expected return on plan assets of one-fourth of 1 percentage point, holding all other assumptions constant, would decrease the Company's 2004 pension expense by $2.4 million and $0.6 million, respectively. Correspondingly, a decrease in these assumptions of one-fourth of 1 percentage point, holding all other assumptions constant, would increase the Company's pension expense by $2.4 million and $0.6 million, respectively.

Asset Retirement Obligations

The Company currently has legal obligations to close bromine supply and disposal wells at the end of the assets' useful lives. The Company carries these obligations at their fair value as determined under Statement of Financial Accounting Standards (SFAS) 143, "Accounting for Asset Retirement Obligations," which was adopted as of January 1, 2003. The statement requires that upon recognition of a liability, the cost is capitalized as part of the related long-lived asset and allocated to expense over the useful life of the asset. The calculation of fair value requires the Company to make certain estimates, including the amount and timing of future cash outflows and appropriate discount rates. Actual closure costs may differ significantly from these estimated obligations. Adjustments may be required in the future if the estimated costs and timing of closure activities change. The amount of these discounted obligations at December 31, 2004 was $5.5 million.

Contingencies

The Company is subject to legal proceedings, lawsuits and other claims related to environmental, labor, product and other matters. The Company is required to assess the likelihood of any adverse judgments or outcomes related to these matters, as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The Company records a reserve when management considers the likelihood of an unfavorable outcome probable and when a reasonable estimate of the liability can be made. At December 31, 2004, the Company had accrued $3.6 million and $40.6 million related to litigation and environmental liabilities, respectively, for continuing operations.

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These accruals are estimates and may change in the future as new developments arise as changes are made in settlement strategy.

OTHER MATTERS

Repositioning Activities
2003 Repositioning Plan

In 2003, management initiated a comprehensive cost reduction plan, which included site closures and consolidations, headcount reductions and other actions. Pretax charges related to this plan incurred in 2003 and 2004 were approximately $142 million. This plan has been substantially completed as of December 31, 2004.

In 2003, the Company recorded pretax restructuring charges in continuing operations of $97.8 million related to the repositioning plan. The restructuring charges incurred during the year included costs associated with the planned closure of three plants in the Industrial Performance Products business segment, a strategic realignment of a Consumer Products facility and other organizational changes, with the elimination of approximately 400 positions. The charges also included the impairment of $18.1 million of goodwill as a result of evaluating strategic alternatives for the Antimony Products business. Severance and other charges of $28.7 million were recorded in the Statement of Operations of which $24.2 million was recorded in cost of products sold and $4.5 million in selling, general and administrative expenses. Other charges included costs for decommissioning, environmental remediation, contract cancellations, inventoried spares impairment and other items. Full year 2003 charges also included charges of $69.1 million for asset impairments. The Company recorded $2.1 million of severance costs, $10.5 million of decommissioning, environmental and other costs, and $3.0 million of asset impairments in 2004.

Certain other costs were recorded during 2003 and 2004 that did not meet the definition of restructuring costs under SFAS 146 but were included in the 2003 repositioning plan. These costs included a change in the useful life of the Company's enterprise software based on intended replacement in 2004, which added an additional $15.7 million of depreciation expense to 2004 and $10.0 million to 2003. Also included in 2004 and 2003 were $1.3 million and $2.1 million, respectively, of costs to relocate the Corporate and BioLab, Inc. headquarters, severance, lease cancellation and other costs.

Repositioning Plans Prior to 2003

The Company's Board of Directors approved detailed repositioning plans in both 2000 and 2001 that provided for a series of cost reduction initiatives that were intended to streamline operations, to strengthen the Company's competitive position and to continue to provide a strong platform for future growth. The major components of these repositioning plans included the consolidation of operations; plant closures; the elimination of manufacturing, research and development, sales and other management positions; and the impairment of certain underperforming and non-strategic long-lived assets, including goodwill. The activities related to these repositioning plans have been substantially completed. As of December 31, 2004, $9.7 million of reserves related to the 2001 repositioning plan and $1.9 million related to the 2000 repositioning plan remain. The major components of these remaining reserves relate to retirement benefits and environmental remediation costs yet to be spent for two closed facilities and are long-term in nature. Operating cash flows are expected to be sufficient to fund the remaining repositioning spending.

Acquisitions and Joint Ventures

In May 2004, the Company formed a 50/50 joint venture with Laurel Industries, Inc., a subsidiary of Occidental Petroleum Corporation, to develop, produce and market antimony-based flame retardants,

30

synergists and catalysts. The joint venture is operating under the name GLCC Laurel, LLC, with Great Lakes acting as general partner with responsibility for sales, customer service, technical support, credit and logistics. Great Lakes controls the joint venture and, therefore, the results of operations are consolidated in the Company's Consolidated Financial Statements as of May 1, 2004.

In February 2003, BioLab Inc., a part of the Company's Consumer Products business unit, acquired all of the outstanding shares of Lime-O-Sol Company. The acquisition included the Lime-O-Sol brand of specialty household cleaning products marketed under the trade name The Works®. Lime-O-Sol's operating results have been included in the Company's consolidated financial statements from the date of acquisition.

Additionally, in July 2003, BioLab Inc. acquired all of the outstanding shares of A&M Cleaning Products, Inc. (A&M). The acquisition included A&M's line of multipurpose cleaners sold under the trade names Greased Lightning™ and Orange Blast™. The operating results of A&M have been included in the Company's consolidated financial statements from the date of acquisition.

Environmental and Regulatory Issues

The Company is subject to various U.S. and international federal, state and local environmental, health and safety laws and regulations. The Company is also subject to liabilities arising under the Comprehensive Environmental Response Compensation and Liability Act ("CERCLA"), the Resource Conservation and Recovery Act ("RCRA") and similar state and international laws that impose responsibility for remediation of hazardous substances and hazardous waste constituents released into the environment.

The Company provides reserves for environmental liabilities that management considers probable and for which a reasonable estimate of the liability can be made. Accordingly, the Company's reserves for environmental liabilities related to continuing operations, including reserves associated with restructuring charges, were $40.6 million and $43.8 million at December 31, 2004 and 2003, respectively, and are recorded in accrued expenses and other non-current liabilities. While it is difficult to predict or determine the outcome of actions brought against the Company or the ultimate cost of environmental matters, management believes that the ultimate cost, if any, in excess of the amounts already provided is not likely to have a material adverse effect on its consolidated financial position, consolidated results of operations or liquidity.

The Company's operating costs relating to ongoing environmental compliance and safety charged directly to expense were approximately $19 million, $27 million and $30 million in 2004, 2003 and 2002, respectively. Capital expenditures related to environmental compliance and safety totaled $13 million in 2004 and are expected to be approximately $24 million in 2005.

Methyl bromide, a pesticide produced by the Industrial Performance Products segment, is subject to the provisions of the 1987 Montreal Protocol, which originally called for the phase out of production of this pesticide by developed nations by January 1, 2005. In March 2004, the Parties to the Montreal Protocol (the "Parties") granted Critical Use Exemptions to the United States and several other nations for 2005, as end users of the pesticide argued that technically and economically viable alternatives do not currently exist for many methyl bromide applications. The March decision did not address Critical Use Exemptions beyond 2005. The Company's production levels of methyl bromide in 2005 are expected to be in line with 2004 levels. Production levels beyond 2005 are undeterminable at this time and will be affected by decisions made by the Parties.

Inflation

Inflation has not been a significant factor for the Company over the last several years. Management believes that the effect of inflation on Company operations will continue to be moderate for the foreseeable future.

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Recently Issued Accounting Guidance

Refer to Note 1 to the Consolidated Financial Statements for a discussion of recently issued accounting guidance.

ITEM 7A.    Quantitative and Qualitative Disclosures About Market Risk

The Company's operations are exposed to market risk from changes in foreign currency exchange rates, interest rates and natural gas prices that could impact its results of operations and financial condition. The Company manages its exposure to these market risks through its regular operations and financing activities and, when deemed appropriate, by using derivative financial instruments in accordance with established policies and procedures. The derivative financial instruments generally used include swaps, forward contracts and options. The derivative financial instruments utilized by the Company in its hedging activities are considered risk management tools and are not used for trading purposes. In addition, derivative financial instruments are entered into with a diversified group of major financial institutions in order to limit the exposure of nonperformance on such instruments.

International operations, including U.S. export sales, constitute a significant portion of the Company's revenues and identifiable assets. These operations result in a large volume of foreign currency commitment and transaction exposures and foreign currency net asset exposures. At December 31, 2004 and 2003, the Company's primary net foreign currency market exposures were dispersed through various countries and primarily included the euro, the British pound and the Japanese yen. Exposure to variability in currency exchange rates is mitigated, when possible, through the use of natural hedges, whereby purchases and sales in the same foreign currency and with similar maturity dates offset one another. The amount of hedging activity and management of commitment and transaction exposures is coordinated at the corporate level. Hedges are set to mature concurrently with the estimated timing of settlement of the underlying transactions.

Considering the Company's operating profile, at December 31, 2004, the result of a uniform 10% change in the value of the dollar relative to the currencies in which the Company's sales are denominated would result in a change in operating income of approximately $0.1 million. A similar change in 2003 would have had approximately a $0.7 million effect on operating income. This calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar, and does not factor in any potential changes in sales levels or local currency prices that may result from changes in exchange rates.

The Company uses commercial paper as a source of financing, which exposes the Company to changes in short-term interest rates. The Company manages its ratio of fixed to floating rate debt with the objective of achieving a mix that management believes is appropriate. To manage this mix in a cost effective manner, the Company, from time to time, enters into interest rate swap agreements in which it agrees to exchange various combinations of fixed and/or variable interest rates based on agreed-upon notional amounts that are supported by the Company's current debt position. In 2002, the Company entered into fixed-to-variable interest rate swaps to manage interest expense on $75 million of fixed rate debt. In 2003, the Company entered into an additional fixed-to-variable interest rate swap on $50 million of fixed rate debt. In 2004, the Company entered into an additional fixed-to-variable interest rate swap of $50 million and $25 million in the second and third quarters, respectively, bringing the total debt covered by swaps to $200 million. Based on the Company's debt position at December 31, 2004, a hypothetical change in interest rates of 1 percentage point for a one-year period would change income (loss) from continuing operations before income taxes by approximately $2 million. This analysis does not consider any effect that a change in interest rates would have on overall economic activity or management actions to mitigate interest rate changes.

As of December 31, 2004, the Company had investments of $118.6 million representing investment securities with maturities of three months or less. A hypothetical change in interest rates of

32

1 percentage point earned on these deposits for a one-year period would change income before income taxes by $1.2 million.

As part of its risk management strategy, the Company enters into fixed price swap and option contracts, including caps and floors, to manage its exposure to changes in natural gas prices. These natural gas contracts obligate the Company to make or receive a payment equal to the net change in the value of the contracts at their maturity. Such contracts are designated as hedges of the Company's forecasted purchases through 2004 and are effective in hedging the Company's exposure to changes in natural gas prices during this period.

Natural gas contracts that qualify as cash flow hedges under SFAS No. 133 are marked to market with unrealized gains and losses deferred through other comprehensive income (loss) and recognized in earnings when realized as an adjustment to cost of products sold. The fair values of these contracts at December 31, 2003 were immaterial to the Company's consolidated financial position. There were no contracts outstanding at December 31, 2004.

Based on the Company's natural gas exposure at December 31, 2004, a hypothetical 10% change in natural gas prices for a one-year period would change income before income taxes by approximately $1.4 million.

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ITEM 8.    Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Consolidated Statements of Operations for the years ended December 31, 2004, 2003 and 2002	35
Consolidated Balance Sheets at December 31, 2004 and 2003	36
Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002	37
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2004, 2003 and 2002	39
Notes to Consolidated Financial Statements	40
Report of Independent Registered Public Accounting Firm	74

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CONSOLIDATED STATEMENTS OF OPERATIONS

(millions, except per share data) Year Ended December 31				2004			2003			2002
Net Sales				$	1,603.7		$	1,425.9		$	1,365.4
Operating Expenses
	Cost of products sold				1,277.4			1,165.8			1,046.5
	Selling, general and administrative expenses				270.5			253.2			212.2
	Asset impairments				3.0			69.1			6.0
					1,550.9			1,488.1			1,264.7
Operating Income (Loss)					52.8			(62.2	)		100.7
Interest Income (Expense) - net					(25.2	)		(25.8	)		(27.6	)
Other Income (Expense) - net					(24.1	)		(10.8	)		(14.9	)
Income (Loss) from Continuing Operations before Income Taxes and Cumulative Effect of Accounting Change					3.5			(98.8	)		58.2
Income Taxes (Credit)					(16.4	)		(58.7	)		17.5
Income (Loss) from Continuing Operations before Cumulative Effect of Accounting Change				$	19.9		$	(40.1	)	$	40.7
Discontinued Operations
Income (Loss) from Discontinued Operations before Income Taxes				$	74.8		$	(2.9	)	$	137.6
Income Taxes					31.8			5.1			53.3
Income (Loss) from Discontinued Operations				$	43.0		$	(8.0	)	$	84.3
Income (Loss) before Cumulative Effect of Accounting Change					62.9			(48.1	)		125.0
Cumulative Effect of Accounting Change, Net of Income Taxes					—			(3.3	)		—
Net Income (Loss)				$	62.9		$	(51.4	)	$	125.0
Earnings (Loss) per Share
	Basic and Diluted
		Income (Loss) before Cumulative Effect of Accounting Change
			Continuing Operations	$	0.39		$	(0.80	)	$	0.81
			Discontinued Operations		0.84			(0.15	)		1.67
				$	1.23		$	(0.95	)	$	2.48
		Cumulative Effect of Accounting Change			—			—			(0.07	)
Net Income (Loss)				$	1.23		$	(1.02	)	$	2.48
Cash Dividends Declared per Share				$	0.385		$	0.365		$	0.33

See Notes to Consolidated Financial Statements.

35

CONSOLIDATED BALANCE SHEETS

(millions, except per share data) December 31		2004			2003
Assets
Current Assets
	Cash and cash equivalents	$	222.2		$	170.7
	Accounts and notes receivable, less allowances of $2.2 and $3.9, respectively		320.7			261.5
	Inventories		324.2			260.2
	Prepaid expenses		26.0			26.2
	Deferred income taxes		17.3			4.1
	Current assets - discontinued operations		8.6			37.7
Total Current Assets			919.0			760.4
Plant and Equipment, Net			549.3			550.5
Goodwill			212.3			205.7
Intangible Assets			72.8			63.4
Investments in and Advances to Unconsolidated Affiliates			22.6			22.5
Other Assets			24.0			24.7
Deferred Income Taxes			—			46.4
Non-Current Assets - Discontinued Operations			1.5			19.6
Total Assets		$	1,801.5		$	1,693.2
Liabilities and Stockholders' Equity
Current Liabilities
	Accounts payable	$	204.4		$	169.8
	Accrued expenses		115.3			122.4
	Income taxes payable		17.0			71.4
	Dividends payable		5.1			4.8
	Notes payable and current portion of long-term debt		10.4			7.1
	Current liabilities - discontinued operations		12.1			27.4
Total Current Liabilities			364.3			402.9
Long-Term Debt, less Current Portion			428.9			427.6
Deferred Income Taxes			24.4			—
Other Non-Current Liabilities			70.7			106.4
Non-Current Liabilities - Discontinued Operations			5.7			6.0
Minority Interest			32.0			6.8
Stockholders' Equity
	Common Stock, $1 par value, 200.0 million authorized shares; 73.6 and 73.0 million issued shares in 2004 and 2003, respectively		73.6			73.0
	Additional paid-in capital		130.7			124.7
	Retained earnings		1,656.3			1,612.9
	Treasury stock, at cost; 22.1 and 22.4 million shares in 2004 and 2003, respectively		(1,022.1	)		(1,035.9	)
	Accumulated other comprehensive income (loss)		37.0			(31.2	)
Total Stockholders' Equity			875.5			743.5
Total Liabilities and Stockholders' Equity		$	1,801.5		$	1,693.2

See Notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(millions) Year Ended December 31					2004			2003			2002
Operating Activities
	Net income (loss)				$	62.9		$	(51.4	)	$	125.0
	Adjustments to reconcile net income (loss) to net cash provided by operating activities - continuing operations:
			(Income) loss from discontinued operations			(43.0	)		8.0			(84.3	)
			Cumulative effect of accounting change			—			3.3			—
			Depreciation and depletion			90.0			87.5			75.3
			Amortization of intangible assets			6.7			5.8			3.4
			Deferred income taxes			17.8			(41.3	)		(2.8	)
			Losses of unconsolidated affiliates			0.9			3.5			2.3
			Loss on disposition of assets			2.8			2.3			5.5
			Income tax reserve release			(17.5	)		(27.5	)		—
			Asset impairments			3.0			69.1			6.0
			Other			(7.2	)		(1.2	)		13.4
			Changes in operating assets and liabilities, net of effects from business combinations:
				Accounts receivable		(44.0	)		24.5			9.0
				Inventories		(46.7	)		9.4			(10.4	)
				Other current assets		(3.1	)		(0.5	)		(2.3	)
				Accounts payable and accrued expenses		21.0			(3.6	)		(11.9	)
				Income taxes and other current liabilities		(14.4	)		(7.9	)		11.9
				Other non-current liabilities		(8.3	)		(3.2	)		5.1
Net Cash Provided by Operating Activities - Continuing Operations						20.9			76.8			145.2
	Income (loss) from discontinued operations					43.0			(8.0	)		84.3
	Adjustments to reconcile income (loss) from discontinued operations to net cash provided by (used for) operating activities - discontinued operations
		Depreciation and depletion				1.1			1.4			3.8
		Asset impairments				—			15.8			22.9
		Gain on disposition of assets - WIL Research Laboratories				(84.1	)		—			—
		Loss on disposition of assets - Fine Chemicals				14.9			—			—
		Gain on sale of subsidiary stock - OSCA				—			—			(175.4	)
		Deferred income taxes				30.6			(2.3	)		66.5
		Changes in operating assets and liabilities				(3.0	)		10.3			(2.5	)
Net Cash Provided by (Used for) Operating Activities - Discontinued Operations						2.5			17.2			(0.4	)
Net Cash Provided by Operating Activities						23.4			94.0			144.8
Investing Activities
	Plant and equipment additions					(84.0	)		(62.0	)		(63.3	)
	Business combinations, net of cash acquired					—			(105.7	)		(11.1	)
	Proceeds from sale of assets					7.6			3.9			0.4
	Other					(1.5	)		(0.5	)		(1.8	)
Net Cash Used for Investing Activities - Continuing Operations						(77.9	)		(164.3	)		(75.8	)
	Plant and equipment additions - discontinued operations					(1.5	)		(3.1	)		(5.9	)
	Proceeds from sale of WIL Research Laboratories					105.0			—			—
	Proceeds from sale of subsidiary stock - OSCA					—			—			221.2
	Other net investing activities - discontinued operations					(2.1	)		0.4			(4.1	)
Net Cash Provided by (Used for) Investing Activities - Discontinued Operations						101.4			(2.7	)		211.2
Net Cash Provided by (Used for) Investing Activities						23.5			(167.0	)		135.4

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(millions) Year Ended December 31		2004			2003			2002
Financing Activities
	Net repayments of commercial paper and other long-term obligations		(0.2	)		(4.2	)		(80.5	)
	Net (repayments) borrowings on short-term credit lines		1.4			—			(1.1	)
	Proceeds from stock options exercised		11.1			—			—
	Cash dividends paid		(19.3	)		(18.1	)		(16.5	)
	Other		0.8			(1.8	)		(3.8	)
Net Cash Used for Financing Activities - Continuing Operations			(6.2	)		(24.1	)		(101.9	)
Net Cash Used for Financing Activities - Discontinued Operations			—			—			(0.3	)
Net Cash Used for Financing Activities			(6.2	)		(24.1	)		(102.2	)
Effect of Exchange Rate Changes on Cash and Cash Equivalents -
	Continuing Operations		10.0			9.2			9.3
	Discontinued Operations		—			—			0.4
Increase (Decrease) in Cash and Cash Equivalents			50.7			(87.9	)		187.7
Cash and Cash Equivalents at Beginning of Year			171.5			259.4			71.7
Cash and Cash Equivalents at End of Year			222.2			171.5			259.4
Less: Cash and Cash Equivalents - Discontinued Operations			—			0.8			0.7
Cash and Cash Equivalents - Continuing Operations		$	222.2		$	170.7		$	258.7

See Notes to Consolidated Financial Statements.

38

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(millions)			Shares		2004 Amount			Shares		2003 Amount			Shares		2002 Amount
Common Stock
	Balance at January 1		73.0		$	73.0		73.0		$	73.0		73.0		$	73.0
	Stock option activity		0.6			0.6		—			—		—			—
	Balance at December 31		73.6			73.6		73.0			73.0		73.0			73.0
Additional Paid-In Capital
	Balance at January 1					124.7					133.7					133.3
	Stock option activity [net of tax benefit of $(1.1) million]					12.6					—					—
	Restricted stock activity					1.6					1.0					0.9
	Termination of shareholders' rights plan					—					—					(0.5	)
	Voluntary U.S. pension plan contribution					(5.0	)				(8.2	)				—
	Employee stock plan activity					(1.7	)				(1.8	)				—
	Balance at December 31					130.7					124.7					133.7
Retained Earnings
	Balance at January 1					1,612.9					1,682.7					1,574.2
	Net income (loss)					62.9					(51.4	)				125.0
	Dividends					(19.5	)				(18.4	)				(16.5	)
	Balance at December 31					1,656.3					1,612.9					1,682.7
Treasury Stock
	Balance at January 1		(22.4	)		(1,035.9	)	(22.8	)		(1,054.5	)	(22.8	)		(1,054.5	)
	Voluntary U.S. pension plan contribution		0.2			10.4		0.3			14.5		—			—
	Employee stock plan activity		0.1			3.4		0.1			4.1		—			—
	Balance at December 31		(22.1	)		(1,022.1	)	(22.4	)		(1,035.9	)	(22.8	)		(1,054.5	)
Accumulated Other Comprehensive Income (Loss)
	Cumulative translation adjustment
		Balance at January 1				1.7					(55.3	)				(109.4	)
		Translation adjustment				37.9					61.0					57.2
		Amounts recognized in income due to sale of foreign subsidiary				12.8					—					—
		Derivative activity [net of taxes (credit) of $0.6, $(2.2) and $(1.7)]				1.2					(4.0	)				(3.1	)
		Balance at December 31				53.6					1.7					(55.3	)
	Minimum pension liability
		Balance at January 1				(34.4	)				(33.9	)				(1.8	)
		Minimum pension liability adjustment [net of taxes (credit) of $8.7, $(0.3) and $(15.0)]				18.0					(0.5	)				(32.1	)
		Balance at December 31				(16.4	)				(34.4	)				(33.9	)
	Unrealized gain (loss) on derivative instruments
		Balance at January 1				1.5					—					(1.3	)
		Derivative activity [net of taxes (credit) of $(0.8), $0.7 and $0.7]				(1.7	)				1.5					1.3
		Balance at December 31				(0.2	)				1.5					—
	Balance at December 31					37.0					(31.2	)				(89.2	)
Total Stockholders' Equity			51.4		$	875.5		50.6		$	743.5		50.2		$	745.7
Comprehensive Income
	Net income (loss)				$	62.9				$	(51.4	)			$	125.0
	Translation adjustment					39.1					57.0					54.1
	Minimum pension liability adjustment					18.0					(0.5	)				(32.1	)
	Unrealized gain (loss) on derivative instruments					(1.7	)				1.5					1.3
Total Comprehensive Income					$	118.3				$	6.6				$	148.3

See Notes to Consolidated Financial Statements.

39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except as indicated)

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Great Lakes Chemical Corporation (the Company) is a diversified specialty chemical company. Primary manufacturing operations are located in the United States, Europe and Asia. The Company manages its business and reports segment information based on the nature of its products and services. The Company's segments include Industrial Performance Products and Consumer Products. The Company's products are sold globally. The principal markets include: computer and business equipment, consumer electronics, data processing, construction materials, telecommunications, pharmaceuticals, pool and spa dealers and distributors, mass merchandisers and grocery stores.

Further information on the Company's segments and discontinued operations are included in Notes 17 and 4, respectively, to the Consolidated Financial Statements.

Principles of Consolidation

The consolidated financial statements include all significant majority-owned subsidiaries of the Company. All material intercompany accounts and transactions are eliminated.

Investments

Investments in less than majority-owned entities in which the Company has the ability to exercise significant influence over operating and financial policies of the investees are accounted for by the equity method, which is cost, plus equity in their undistributed earnings since acquisition. All other investments are carried at their fair values or at cost, as appropriate.

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition

Revenue from sales of products, including amounts billed to customers for shipping and handling costs, is recognized at the time (1) ownership and all risks of loss have been transferred to the buyer, which is generally upon shipment, (2) the price is fixed and determinable and (3) collectibility is reasonably assured. Provisions for discounts and rebates and returns and other adjustments are reflected as a reduction of revenue in the period the related sales are recorded. Revenue from services is recognized when the services are rendered.

Shipping and Handling Costs

Shipping and handling costs, including certain warehousing costs, are included in cost of products sold.

Cash Equivalents

Investment securities with maturities of three months or less when purchased are considered to be cash equivalents.

Inventories

The Company values its inventories at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method.

40

Plant and Equipment

Plant and equipment are stated at cost. Depreciation of buildings and equipment is provided over the estimated useful lives of the assets using the straight-line method. The estimated useful lives for purposes of computing depreciation are: buildings, 10-40 years; manufacturing equipment, 7-20 years; and office equipment, 3-5 years.

In the third quarter of 2003, the Company changed the remaining estimated useful life of its enterprise software from 60 months to 15 months. This change in estimate was based upon the replacement of a majority of its current enterprise software modules in 2004, thereby reducing the remaining useful life of these assets. The effect of this change was to decrease net income by approximately $(10.8) million or $(0.21) per diluted common share in 2004 and $(6.9) million or $(0.14) per diluted common share in 2003.

Goodwill and Indefinite-Lived Intangible Assets

Goodwill, the excess of investment over fair value of net assets acquired, and indefinite-lived intangible assets are tested annually, or when events occur or circumstances change that would reduce the fair value of a reporting unit below its carrying value or indicate impairment of an indefinite-lived intangible asset. The Company performs its annual impairment test as of October 1 of each year.

Impairment of Long-Lived Assets and Amortizable Intangible Assets

When events or circumstances indicate that the carrying amount of long-lived assets to be held and used or amortizable intangible assets might not be recoverable, the expected future undiscounted cash flows from the assets is estimated and compared with the carrying amount of the assets. If the sum of the estimated undiscounted cash flows is less than the carrying amount of the assets, an impairment loss is recorded. The impairment loss is measured by comparing the fair value of the assets with their carrying amounts. Fair value is determined based on discounted cash flow or appraised values, as appropriate. Amortizable intangible assets are stated on the basis of cost and are being amortized by the straight-line method over the estimated future periods to be benefited. Long-lived assets that are held for sale are reported at the lower of the assets' carrying amount or fair value less costs related to the assets' disposition.

Environmental Costs

The Company participates in environmental assessments and remediation efforts at operating facilities, previously owned or operated facilities or other waste sites. Costs related to these efforts are accrued when it is probable that a liability has been incurred and the amount of that liability can be reasonably estimated. Liabilities for estimated remediation costs are recorded at undiscounted amounts, are based on experience and are regularly evaluated as efforts proceed.

Income Taxes

Current income taxes are provided on income reported for financial statement purposes adjusted for transactions that do not enter into the computation of income taxes payable. Deferred income tax liabilities and assets are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Income taxes are provided on the portion of the income of foreign affiliates that is expected to be remitted to the parent company and be taxable.

Treasury Stock

Shares of common stock repurchased under the Company's stock repurchase plans are recorded at cost as treasury stock. When the treasury shares are reissued, the Company uses a

41

weighted-average method for determining cost. The difference between the cost of the shares and the reissuance price is included in additional paid-in capital.

Stock-Based Compensation

The Company accounts for stock-based compensation using the intrinsic value method prescribed in APB Opinion No. 25, as provided for under SFAS No. 123. Compensation cost for stock options, if any, is measured as the excess of the quoted market price of the Company's stock at the date of grant over the amount an employee must pay to acquire the stock. Compensation cost for restricted stock awards is recorded over the requisite vesting periods based on the market value on the date of grant. The compensation expense incurred in 2004, 2003 and 2002 related to restricted stock awards totaled $0.5 million, $0.6 million and $0.9 million, respectively.

In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share-Based Payment." This statement replaced SFAS No. 123, "Accounting for Stock-Based Compensation" and superceded Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees." This statement requires that the cost resulting from all share-based payment transactions be recognized through earnings at an amount based on the fair value of an award at the date of its grant. The statement is effective for all periods beginning after June 15, 2005. The Company will adopt the statement as of July 1, 2005.

The following is a reconciliation of reported net income (loss) and per share amounts to pro forma net income (loss) and per share amounts as if the Company used the fair value method of accounting for stock-based compensation:

		2004			2003			2002
Net income (loss)		$	62.9		$	(51.4	)	$	125.0
Stock-based employee compensation expense included in reported income, net of tax			0.9			0.4			0.6
Total stock-based employee compensation expense determined under fair value-based method, for all awards, net of tax			(3.3	)		(4.2	)		(4.6	)
Pro forma net income (loss)		$	60.5		$	(55.2	)	$	121.0
Earnings (loss) per share
As reported:
	Basic and diluted	$	1.23		$	(1.02	)	$	2.48
Pro forma:
	Basic and diluted	$	1.18		$	(1.10	)	$	2.41

Foreign Currency Translation

Assets and liabilities of most foreign subsidiaries are translated at exchange rates in effect at the balance sheet date, and the statements of operations are translated at the average monthly exchange rates for the period. Translation gains and losses are recorded as a component of accumulated other comprehensive income (loss) in stockholders' equity until the foreign entity is sold or liquidated. Foreign currency transaction gains and losses are included in net income (loss). Transaction gains (losses) of $(3.0) million, $(0.2) million and $(6.0) million were included in income from continuing operations in 2004, 2003 and 2002, respectively.

Derivative Financial Instruments

The Company uses various derivative instruments including swaps, forward contracts and options to manage certain foreign currency, interest rate and natural gas price exposures. These instruments are entered into under the Company's corporate financial risk management policy to manage market

42

risk exposures and are not used for trading purposes. Management routinely reviews the effectiveness of the use of derivative instruments.

Derivatives used for hedging purposes must be designated as, and effective as, a hedge of the identified risk exposure at the designation of the contract. Accordingly, changes in the market value of the derivative contract must be highly correlated with changes in the market value of the underlying hedged item at inception of the hedge and over the life of the hedge contract. Any derivative instrument terminated, designated but no longer effective as a hedge or initially not effective as a hedge would be recorded at market value and the related gains and losses would be recognized in earnings. Derivatives not designated as hedges are adjusted to fair value through the consolidated statement of operations.

The Company recognizes all derivative instruments as either assets or liabilities in the consolidated balance sheets at fair value. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, the Company designates the hedging instrument, based upon the exposure being hedged, as a fair value, cash flow or a hedge of a net investment in a foreign operation.

The Company classifies its derivative financial instruments as held or issued for purposes other than trading. Gains and losses on hedges of existing assets and liabilities are included in other income (expense) - net. Gains and losses from hedges of anticipated transactions are classified in the statement of operations consistent with the accounting treatment of the items being hedged.

Advertising Costs

Advertising costs are expensed as incurred. Advertising and promotional expenses were $17.9 million, $17.6 million and $14.4 million in 2004, 2003 and 2002, respectively.

Research and Development Expenses

The Company expensed research and development expenses as incurred. Research and development expenses were approximately $26.6 million, $27.5 million and $26.0 million in 2004, 2003 and 2002, respectively.

Reclassifications

Certain amounts in the prior year financial statements and related notes have been reclassified to conform to the current year presentation.

Recently Issued Accounting Guidance

In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No.123 (revised 2004), "Share-Based Payment." This statement replaced SFAS No. 123, "Accounting for Stock-Based Compensation" and superceded Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees." This statement requires that the cost resulting from all share-based payment transactions be recognized through the financial statements at an amount based on the fair value of an award at the date of its grant. The statement is effective for all periods beginning after June 15, 2005. The Company will adopt the statement as of July 1, 2005 and therefore, will incur compensation expenses in the third and fourth quarters of 2005 for any non-vested options granted prior to 2005. In addition, the Company intends to grant restricted stock units in lieu of stock options in 2005. As a result of this change and the adoption of SFAS No. 123 (revised 2004), the Company will incur incremental stock-based compensation costs of approximately $3 million in 2005.

43

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs." This statement amends Accounting Research Bulletin (ARB) No. 43, Chapter 4 and clarifies that abnormal amounts of idle facility expense, freight, handling costs and wasted materials should be recognized as period charges and requires that fixed production overhead be allocated to inventory based on the normal capacity of the production facility. SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of this statement will not have a material impact on the Company's inventory costing methods.

On October 22, 2004, the American Jobs Creation Act of 2004 (the Act) was signed into law. The Act provides for a special one-time tax deduction of 85% of certain foreign earnings that are repatriated (as defined in the Act) in either an enterprise's last tax year that began before the enactment date, or the first tax year that begins during the one-year period beginning on the date of enactment. The Act also includes a tax deduction of up to 9% (when fully phased-in) of the lesser of (a) "qualified production activities income," as defined in the Act or (b) taxable income (after the deduction for the utilization of any net operating loss carryforwards). As a result of the Act, the FASB issued FASB Staff Positions (FSP) 109-1, "Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004," and 109-2, "Accounting and Disclosure Guidance for the Foreign Repatriation Provision within the American Jobs Creation Act of 2004." These FSPs were issued and effective as of December 21, 2004. The Company is still assessing the financial statement impact of the Act and these FSPs.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 requires that a liability for costs associated with exit or disposal activities be recognized when the liability is incurred rather than when an entity commits to an exit plan. SFAS No. 146 also provides that the liability be initially measured at fair value. The statement was effective for the Company beginning January 1, 2003 and was applied to the Company's 2003 restructuring activities as further described in Note 2 to the Consolidated Financial Statements.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." The interpretation expands on the disclosure requirements to be made in interim and annual financial statements. The interpretation also requires that a liability measured at fair value be recognized for guarantees even if the probability of payment on the guarantee is remote. The recognition provisions apply on a prospective basis for guarantees issued or modified after December 31, 2002. The Company's adoption of the interpretation on January 1, 2003 did not have a material effect on the Company's accounting or reporting of its guarantees.

In January 2003, the FASB released Interpretation No. 46, "Consolidation of Variable Interest Entities." This interpretation clarifies the application of Accounting Research Bulletin No. 51, "Consolidated Financial Statements," to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The interpretation established standards under which a Variable Interest Entity should be consolidated by the primary beneficiary. The requirements were effective immediately for Variable Interest Entities created after January 31, 2003 and for Variable Interest Entities in which the Company obtains an interest after January 31, 2003. A company with a variable interest in a Variable Interest Entity created before February 1, 2003 was required to apply the provisions of the interpretation to that entity no later than the beginning of the first interim or annual period beginning after December 15, 2003. The Company is not the primary beneficiary of its variable interest entities and therefore consolidation of these entities is not required.

44

NOTE 2: PLANT DISRUPTIONS

On May 25, 2004, the Company's BioLab Inc. subsidiary experienced a fire in a finished goods warehouse located at its main manufacturing site in Conyers, Georgia. Products stored in this warehouse served primarily the distributor and private label customers of the Consumer Products Recreational Water business. Production and shipping operations were temporarily suspended for three days while the fire was being controlled. While there was no damage to the production facilities, the business did encounter disruptions to its material handling and order fulfillment processes during the second quarter and the first two months of the third quarter. The Company has insurance coverage for this type of event and has been actively working with its insurance carriers to resolve all property, business interruption and third party claims related to this incident.

For the year ended December 31, 2004, the Company recorded losses representing the carrying value of inventory and assets destroyed in the fire of approximately $13.1 million and $3.5 million, respectively. The Company also recorded third-party claims (see Note 20) and other fire-related expenses of $21.0 million. These losses were partially offset by insurance recoveries received to date, net of deductibles, of $20.5 million. These amounts have been included in cost of products sold and other income (expense) - net for the year ended December 31, 2004. The effects of the fire on the financial results of the Company on a quarter-to-quarter basis are impacted by the timing and amount of insurance recoveries.

In the first quarter of 2004, the Consumer Products segment experienced a fire at its La Chambre, France, facility. For the year ended December 31, 2004, the Company has recorded $2.3 million of business interruption costs, asset write-offs and other fire-related expenses in costs of products sold and other income (expense) - net. These expenses have been offset by $1.3 million of insurance recoveries received in the fourth quarter of 2004. Subsequent to the fire, management decided to close the production facility and therefore, severance costs of $0.7 million were also recorded for the employees at the site during the first quarter of 2004.

NOTE 3: REPOSITIONING PLANS

2003 Repositioning Plan

In 2003, management initiated a comprehensive cost reduction plan, which included site closures and consolidations, headcount reductions and other actions. Pretax charges related to this plan incurred in 2003 and 2004 were approximately $142 million. This plan has been substantially completed as of December 31, 2004.

RESTRUCTURING CHARGES

In 2003, the Company recorded pretax charges in continuing operations of $97.8 million related to the restructuring plan. The restructuring charges incurred during the year included costs associated with the planned closure of four sites in the Industrial Performance Products business segment, a strategic realignment of a Consumer Products facility and other organizational changes, with the net elimination of approximately 400 positions. The charges also included the impairment of $18.1 million of goodwill related to the antimony products business. Severance and other charges of $28.7 million were recorded in the statement of operations of which $24.2 million was recorded in cost of products sold and $4.5 million in selling, general and administrative expenses. Full year charges in 2003 also included $69.1 million for asset impairments. The Company recorded $2.1 million of severance costs, $10.5 million of decommissioning, environmental and other costs, and $3.0 million of asset impairments in 2004.

45

Details of the 2003 asset impairments and restructuring charges by business unit and a reconciliation of the reserve balance at December 31, 2004 are as follows:

Description		Total 2003 Charges		Reserve Balance at December 31, 2003		Total 2004 Charges			2004 Activity*			Reserve Balance at December 31, 2004
Asset Impairment (non-cash):
	Industrial Performance Products	$	67.7	$	—	$	2.7		$	(2.7	)	$	—
	Consumer Products		1.4		—		0.3			(0.3	)		—
			69.1		—		3.0			(3.0	)		—
Severance Costs:
	Industrial Performance Products		14.7		14.5		1.3			(13.1	)		2.7
	Consumer Products		0.9		0.6		0.1			(0.6	)		0.1
	Corporate		0.4		0.2		0.7			(0.8	)		0.1
			16.0		15.3		2.1			(14.5	)		2.9
Plant Closure and Environmental:
	Industrial Performance Products		4.8		3.6		10.6			(10.5	)		3.7
	Consumer Products		—		—		0.3			(0.3	)		—
			4.8		3.6		10.9			(10.8	)		3.7
Other (Industrial Performance Products)			7.9		3.6		(0.4	)		(2.6	)		0.6
		$	97.8	$	22.5	$	15.6		$	(30.9	)	$	7.2

*

Includes the effects of foreign currency

As of December 31, 2004, $7.2 million of reserves remain for charges recorded in continuing operations related to the 2003 repositioning plan. These reserves are recorded in accrued expenses and non-current environmental reserves.

ASSET IMPAIRMENTS

Under the 2003 repositioning plan, several sites were closed in 2003 and early 2004 in an attempt to improve the overall cost structure of the Company, primarily in the Industrial Performance Products business unit. As a result, $26.2 million of impairments were recorded related to the closure of two Industrial Performance Products manufacturing facilities and one research and development facility in the United Kingdom. An additional $15.6 million of impairments were recorded for the closure of an Industrial Performance Products manufacturing facility in the United States.

The Consumer Products business also completed the consolidation of manufacturing facilities in North America in order to more productively manage future growth initiatives. As a result of this consolidation, the Toronto, Canada, facility was converted to a distribution site, which resulted in the impairment of $1.4 million of manufacturing assets.

Also included in asset impairments in 2003 were $4.4 million of charges in Industrial Performance Products for the write-off of capitalized costs related to discontinued products and $21.5 million of charges in Industrial Performance Products for goodwill and asset impairments as a result of evaluating strategic alternatives for the antimony products business in the fourth quarter of 2003.

Asset impairments recorded in 2004 primarily relate to the sale of an Industrial Performance Products product line and an additional impairment charge for the antimony products business as a result of the Company's entry into an antimony joint venture during the second quarter of 2004. These charges were partially offset by the reversal of asset impairments recorded in 2003 as a result of the sale of the Amlwch facility in the third quarter of 2004 for $1.9 million.

46

These impairment losses adjusted the carrying value of these assets to fair value. Fair value was determined using discounted cash flows for goodwill and for fixed assets either discounted cash flows or appraised values as appropriate. Any impaired fixed assets held for disposal were written down to fair value less costs of disposal. The adjusted carrying value of the assets, classified as held for use, are being depreciated or amortized over the estimated remaining lives of the assets.

SEVERANCE COSTS

As a result of site closures and consolidations and the reorganization of several processes within the Company, severance costs were accrued for approximately 400 employees. Severance related to the closure of Industrial Performance Products production sites and to selling, administrative and research personnel totaled $16.0 million, of which $1.3 was recorded 2004. Consumer Products recorded severance costs of $1.0 million while Corporate severance costs were $1.1 million, of which $0.8 million was recorded in 2004.

PLANT CLOSURE AND ENVIRONMENTAL COSTS

During the fourth quarter of 2003, environmental remediation reserves of $1.8 million were recorded for the two U.K. manufacturing sites restructured during the year. In addition, $3.0 million of charges were recorded for plant decommissioning costs that were incurred during 2003 or are contractual liabilities as of December 31, 2003. Additional plant closure costs of $10.6 million, primarily for the two U.K. sites, were recorded in 2004 in Industrial Performance Products. Plant closure costs of $0.3 million related to a Consumer Products site in Australia were also recorded in 2004. Further plant closure costs may be required in 2005 and will be expensed as incurred in accordance with SFAS No. 146.

OTHER RESTRUCTURING COSTS

Other restructuring costs recorded in 2003 include $3.4 million of contract cancellation costs for a long-term land lease and raw material supply contracts as well as $0.5 million of U.K. employment grant repayment costs. In addition, $3.6 million of spare parts inventories and $0.2 million of product inventory were written off in 2003.

OTHER NON-RESTRUCTURING COSTS

Certain other costs were recorded during the year that did not meet the definition of restructuring costs under SFAS No. 146 but were included in the 2003 repositioning plan. These costs include a change in the useful life of the Company's enterprise software based on intended replacement in 2004, which added an additional $15.7 million of depreciation expense to 2004 and $10.0 million of depreciation expense to 2003 (see Note 1 to the Consolidated Financial Statements). Other non-restructuring costs included costs to relocate the Corporate and BioLab, Inc. office headquarters and severance, lease and other costs of $1.3 million in 2004 and $2.1 million in 2003.

Repositioning Plans Prior to 2003

The Company's Board of Directors approved detailed repositioning plans in both 2000 and 2001 that provided for a series of cost reduction initiatives that were intended to streamline operations, to strengthen the Company's competitive position and to continue to provide a strong platform for future growth. The major components of these repositioning plans included the consolidation of operations; plant closures; the elimination of manufacturing, research and development, sales and other management positions; and the impairment of certain underperforming and non-strategic long-lived assets, including goodwill. The activities related to these repositioning plans have been substantially completed. As of December 31, 2004, $9.7 million of reserves related to the 2001 repositioning plan and $1.9 million related to the 2000 repositioning plan remain. The major components of these remaining reserves relate to retirement benefits and environmental remediation costs yet to be spent

47

for two closed facilities and are long-term in nature. Operating cash flows are expected to be sufficient to fund the remaining repositioning spend.

NOTE 4: DISCONTINUED OPERATIONS

On September 30, 2004, the Company sold its toxicological services business, WIL Research Laboratories (WIL), for a gain of $84.1 million or $53.7 million, net of tax expense of $30.4 million. The cash tax liability incurred in conjunction with the sale transaction has been substantially offset through the use of previously recorded deferred tax assets. As a result of the sale of WIL, the Company has reported this business as a discontinued operation in accordance with Statement of Financial Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," for all periods presented.

In 2002, management, with approval of the Board of Directors, committed to a plan to divest the Company's Fine Chemicals business. The Halebank, U.K.., site of the Fine Chemicals business was sold in the fourth quarter of 2003. The assets of the Holywell, U.K., site were sold in the second quarter of 2004 for a loss of $1.5 million, net of tax. In addition, the sale of the Holywell facility required the Company, under SFAS No. 52, "Foreign Currency Translation," to recognize a non-cash $12.8 million loss reflecting the reclassification to earnings of currency translation related to the Fine Chemicals business previously recorded as a component of stockholders' equity of the U.K. subsidiary that owned both Halebank and Holywell. The Company has reported Fine Chemicals as discontinued operations for all periods presented.

In May 2002, the Company completed the sale of OSCA to BJ Services Company. Under the terms of the sale, BJ Services acquired all outstanding shares of OSCA, including the Company's 53.2% holding, for $28.00 per share in cash, or $221 million, resulting in a gain of $175.4 million. This transaction provided the Company with net proceeds of approximately $200 million, which was used to reduce the Company's debt position. As a result of this transaction, the Company has reflected OSCA as discontinued operations in 2002.

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The operating results from discontinued operations presented in the accompanying consolidated statements of operations are as follows:

Year Ended December 31		2004			2003			2002
Net sales
	WIL Research Laboratories	$	32.7		$	38.7		$	36.1
	Fine Chemicals		3.8			45.9			55.2
	OSCA		—			—			58.1
Restructuring charges and asset impairments*
	Fine Chemicals		—			17.7			26.7
Operating income (loss)
	WIL Research Laboratories		7.1			9.9			10.5
	Fine Chemicals		(1.1	)		(16.4	)		(33.7	)
	OSCA		—			—			(16.3	)
Gain on sale of WIL Research Laboratories			84.1			—			—
Gain on sale of subsidiary stock - OSCA			—			—			175.4
Interest income (expense) - net			0.5			—			(0.4	)
Other income (expense) - net			(15.8	)		3.6			2.1
Income (loss) before income taxes		$	74.8		$	(2.9	)	$	137.6
Income taxes (credit)			31.8			5.1			53.3
Income (loss) from discontinued operations		$	43.0		$	(8.0	)	$	84.3

*

Included in operating income

Included in operating income in 2003 were restructuring charges for Fine Chemicals consisting of asset impairments of $15.8 million and $1.9 million of charges for severance. Included in operating income for the Fine Chemicals business in 2002 are $22.9 million of asset impairment charges and $3.8 million of severance costs recorded in conjunction with the intended sale of the Fine Chemicals business. Charges were also recorded in 2001 as a part of a detailed repositioning plan.

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The assets and liabilities held for sale from discontinued operations related to WIL, Fine Chemicals and OSCA presented in the accompanying consolidated balance sheets are composed of:

December 31		2004		2003
Current Assets:
Cash and cash equivalents		$	—	$	0.8
Accounts and notes receivable			4.7		17.7
Inventories			—		2.5
Other current assets			3.9		16.7
	Total current assets	$	8.6	$	37.7
Non-Current Assets:
Plant and equipment, net		$	—	$	19.6
Goodwill and other assets			1.5		—
	Total non-current assets	$	1.5	$	19.6
Current Liabilities:
Accounts payable and other current liabilities		$	12.1	$	27.4
	Total current liabilities		12.1		27.4
Non-Current Liabilities:
Other non-current liabilities			5.7		6.0
	Total non-current liabilities	$	5.7	$	6.0

As of December 31, 2004, $9.5 million of restructuring charges recorded in 2001 remain to be spent. There are no amounts outstanding related to the charges taken in 2003 or 2002. The major components of the remaining reserves relate to employee benefit costs of $2.0 million and $7.5 million of plant closure and environmental costs. Plant closure and environmental costs have been allocated between accrued expenses and non-current liabilities based on the anticipated timing of these expenditures.

NOTE 5: JOINT VENTURES AND ACQUISITIONS

In May 2004, the Company formed a 50/50 joint venture with Laurel Industries, Inc., a subsidiary of Occidental Petroleum Corporation, to develop, produce and market antimony-based flame retardants, synergists and catalysts. The joint venture is operating under the name GLCC Laurel, LLC, with Great Lakes acting as general partner with responsibility for sales, customer service, technical support, credit and logistics. Great Lakes controls the joint venture and, therefore, the results of operations are consolidated in the Company's Consolidated Financial Statements beginning May 1, 2004.

Great Lakes' contribution to the joint venture consisted of its antimony production facility in Reynosa, Mexico, as well as antimony-related working capital. The Company's contribution in the joint venture, which equates to 50% of the equity of the combined entity as determined by the projected discounted cash flows of the combined entity, resulted in an additional impairment of the carrying value in these assets of $2.8 million in the second quarter of 2004. An impairment of $21.5 million, including $18.1 million of goodwill, was previously recorded in the fourth quarter of 2003.

The opening balance sheet of the newly formed joint venture included the contributed assets of Great Lakes as well as the antimony manufacturing assets and working capital of Laurel Industries, Inc. The combined entity also recorded $14 million of intangible assets consisting of intellectual property and customer lists that will be amortized over 5-10 years. During the formation of the joint venture, Great Lakes and Laurel management approved a plan to consolidate all manufacturing of the joint venture into the Reynosa facility and close the Laurel manufacturing facility

50

in LaPorte, Texas, by the end of 2004. As a result of this plan, a liability of $0.9 million was recorded on the opening balance sheet of the joint venture for severance and other costs under Emerging Issues Task Force (EITF) Issue 95-3, "Recognition of Liabilities in Connection with Purchase Business Combinations."

BioLab Inc., a part of the Company's Consumer Products business unit, acquired all of the outstanding shares of Lime-O-Sol Company on February 28, 2003 for approximately $65 million in cash. The acquisition included the Lime-O-Sol brand of specialty household cleaning products marketed under the trade name The Works®. Goodwill and intangible assets of $43 million and $14 million, respectively, were recorded as a result of this acquisition. Lime-O-Sol's results have been included in the Company's consolidated financial statements from the date of acquisition.

Additionally, BioLab Inc. acquired all of the outstanding shares of A&M Cleaning Products, Inc. (A&M) on July 10, 2003 for $41 million in cash and assumed liabilities. The acquisition included A&M's line of multipurpose cleaners sold under the trade names Greased Lightning™ and Orange Blast™. Goodwill and intangible assets of $25 million and $19 million, respectively, were recorded as a result of this acquisition. The results of A&M have been included in the Company's consolidated financial statements from the date of acquisition.

NOTE 6: GOODWILL AND INTANGIBLE ASSETS

In June 2001, the FASB issued SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." Under these rules, goodwill is not amortized but is subject to annual impairment tests in accordance with the statement. Other intangible assets are amortized over their estimated useful lives. The Company adopted these standards January 1, 2002 and therefore ceased amortization of goodwill as of that date.

The Company completed the transitional impairment tests required by SFAS No. 142 during 2002 and determined that there was no impairment loss as a result of the adoption. The Company conducted its annual impairment testing as of October 1, 2004 and has determined that the fair values of its reporting units exceed the carrying values of those units.

The following table includes information regarding the carrying values and related accumulated amortization of intangible assets as of and for the years ended December 31, 2004 and 2003:

			2004 Gross Carrying Amount		2004 Accumulated Amortization			2003 Gross Carrying Amount		2003 Accumulated Amortization
Amortized Intangible Assets:
	Non-compete agreements		$	10.8	$	(8.3	)	$	10.5	$	(6.1	)
	Patents, trademarks and licenses			5.4		(4.1	)		5.2		(3.9	)
	Intellectual property			36.3		(8.4	)		30.7		(5.4	)
	Customer-related			29.2		(4.7	)		19.1		(3.0	)
	Other			8.1		(5.5	)		7.3		(5.0	)
		Total amortized intangible assets	$	89.8	$	(31.0	)	$	72.8	$	(23.4	)
Indefinite-Lived Intangible Assets:
	Trademarks		$	14.0	$	—		$	14.0	$	—
Total intangible assets			$	103.8	$	(31.0	)	$	86.8	$	(23.4	)

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Intangible asset amortization expense for the year ended December 31, 2004 was $6.7 million. Future amortization expense for the next five years is estimated to be approximately $6 million in 2005, 2006 and 2007 and $5 million in 2008 and 2009.

The opening balance sheet of the newly formed 50/50 joint venture with Laurel Industries, Inc. included the contributed assets of Great Lakes as well as the antimony manufacturing assets and working capital of Laurel Industries, Inc. The combined entity also recorded $13.9 million of intangible assets consisting of intellectual property and customer lists that will be amortized over 5-10 years. These intangible assets have been included in the above table as Intellectual property of $4.1 million and customer-based intangibles of $9.8 million.

Included in the Company's acquisition of the outstanding shares of Lime-O-Sol Company were $43.2 million of goodwill and $13.9 million of intangibles, which consisted of non-compete agreements of $0.7 million, trademarks of $7.5 million and customer-based intangibles of $5.7 million. The non-compete agreements are being amortized over a period of 1-2 years and the customer-based intangibles over a period of 15 years. The trademarks associated with this acquisition have been classified as indefinite lived intangible assets.

Included in the Company's acquisition of A&M Cleaning Products, Inc. were $25.2 million of goodwill and $19.2 million of intangibles, which consisted of non-compete agreements of $0.9 million, trademarks of $6.5 million, intellectual property of $10.4 million and customer-related intangibles of $1.4 million. The non-compete agreements are being amortized over a period of approximately 2 years, and the intellectual property and customer-related intangibles over a period of 10 years. The trademarks associated with this acquisition have been classified as indefinite-lived intangible assets.

The changes in the carrying amount of goodwill for the years ended December 31, 2003 and 2004 are as follows:

			Industrial Performance Products			Consumer Products		Total
Goodwill:
	Balance as of January 1, 2003		$	91.0		$	52.6	$	143.6
		Goodwill acquired		—			68.4		68.4
		Goodwill impaired		(18.1	)		—		(18.1	)
		Effects of foreign currency		11.4			0.4		11.8
	Balance as of December 31, 2003		$	84.3		$	121.4	$	205.7
		Goodwill acquired		—			—		—
		Goodwill impaired		—			—		—
		Effects of foreign currency		6.2			0.4		6.6
	Balance as of December 31, 2004		$	90.5		$	121.8	$	212.3

During the fourth quarter of 2003, $18.1 million of goodwill was impaired as a result of evaluating strategic alternatives for the antimony products business.

NOTE 7: ASSET RETIREMENT OBLIGATIONS

On January 1, 2003, the Company adopted SFAS No. 143, "Accounting for Asset Retirement Obligations." The statement requires legal obligations associated with retirement of long-lived assets to be recognized at their fair value at the time that the obligations are incurred. The liability is reported at a discounted fair value and is adjusted in subsequent periods as accretion expense is recorded. Corresponding retirement costs are capitalized as part of the carrying amount of the related long-lived asset and depreciated over the useful life of the asset. The Company currently has

52

legal obligations to close brine supply and disposal wells and waste disposal wells at the end of the assets' useful lives.

Upon adoption in the first quarter of 2003, the Company recorded transition amounts for liabilities related to these wells, and the associated capitalizable costs net of accumulated depreciation. A liability of $5.7 million was recorded to long-term liabilities and a net asset of $0.6 million was recorded to plant and equipment on January 1, 2003. This resulted in a cumulative effect of an accounting change of $(3.3) million (net of income taxes of $1.8 million). Accretion and depreciation expense subsequent to the adoption of the statement decreased net income $0.3 million in both 2003 and 2004.

The pro forma effects of the application of SFAS No. 143 as if the statement had been adopted on January 1, 2002 are presented below:

Year Ended December 31	2004		2003			2002
Reported net income (loss)	$	62.9	$	(51.4	)	$	125.0
Additional accretion and depreciation expense		—		—			(0.3	)
Cumulative effect of accounting change, net of income taxes		—		3.3			—
Pro forma net income (loss)	$	62.9	$	(48.1	)	$	124.7
Reported net income (loss) per share, basic and diluted	$	1.23	$	(1.02	)	$	2.48
Pro forma net income (loss) per share, basic and diluted	$	1.23	$	(0.95	)	$	2.48

The following table describes the changes in the Company's asset retirement obligations during 2004.

Asset retirement obligation at December 31, 2003	$	5.5
Accretion expense		0.4
Liabilities settled during the year		(0.2	)
Adjustment to obligation due to changes in estimate		(0.2	)
Asset retirement obligation at December 31, 2004	$	5.5

The pro forma asset retirement obligation liability balances as if SFAS No. 143 had been adopted January 1, 2002 are as follows:

December 31	2004		2003		2002
Pro forma amounts of liability for asset retirement obligation at beginning of year	$	5.5	$	5.7	$	5.3
Pro forma amounts of liability for asset retirement obligation at end of year		5.5		5.5		5.7

NOTE 8: CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of the following:

December 31	2004		2003
Cash	$	103.6	$	83.5
Cash equivalents		118.6		87.2
	$	222.2	$	170.7

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NOTE 9: INVENTORIES

The major components of inventories are as follows:

December 31	2004		2003
Finished products	$	241.9	$	191.5
Raw materials		51.0		37.3
Supplies		31.3		31.4
	$	324.2	$	260.2

NOTE 10: PLANT AND EQUIPMENT

Plant and equipment consist of the following:

December 31	2004			2003
Land	$	15.0		$	14.8
Buildings		111.1			118.0
Equipment		1,146.3			1,094.1
Construction in progress		60.8			36.3
		1,333.2			1,263.2
Less allowances for depreciation and depletion		(783.9	)		(712.7	)
	$	549.3		$	550.5

NOTE 11: DEBT

Long-term debt is summarized as follows:

December 31	2004			2003
Notes payable	$	400.0		$	400.0
Industrial development bonds		9.0			12.3
Interest rate swaps		5.0			7.2
Other		25.3			15.2
		439.3			434.7
Less current portion		(10.4	)		(7.1	)
	$	428.9		$	427.6

The Company has outstanding $400 million of 7% notes due July 15, 2009. The Company may sell various unsecured debt securities, common stock or rights or warrants to purchase common stock individually or in combination up to $750 million. The amount of securities remaining to be sold on the registration statement is $350 million.

On September 30, 2004, the Company consolidated its 364-day unsecured revolving credit facility and its five-year facility into a new facility with a five-year term. Under the facility, the Company may borrow up to $375 million. The facility is used to support the Company's commercial paper program and for general corporate purposes. The new facility contains certain covenants, as defined in the agreement, that include, among others, requirements for a maximum ratio of debt to EBITDA, as defined in the agreement. Interest on borrowings outstanding under the agreement is based upon a variable rate tied to LIBOR. There were no outstanding borrowings on the facility as of December 31, 2004.

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The interest rate on industrial development bonds was 2.01% at December 31, 2004, and the bonds have maturities through 2025.

Borrowings using commercial paper financing are classified as a component of long-term debt, since the Company has the ability and the intent to refinance these borrowings on a long-term basis either through continued commercial paper borrowings or utilization of available long-term credit facilities. There were no outstanding commercial paper borrowings as of December 31, 2004 and 2003.

Debt matures as follows: 2005, $10.4 million; 2006, $3.2 million; 2007, $3.1 million; 2008, $2.4 million; 2009, $407.3 million; and thereafter, $12.9 million.

During 2004, 2003 and 2002, interest costs were $27.0 million, $27.8 million and $32.1 million, respectively, which included capitalized interest of $0.1 million in 2004, $0.4 million in 2003 and $0.6 million in 2002. In these years, cash interest payments were $27.4 million, $28.6 million and $33.9 million, respectively.

NOTE 12: INCOME TAXES

The following is a summary of domestic and foreign income from continuing operations before income taxes, the components of the provisions for income taxes, a reconciliation of the United States federal income tax rate to the effective income tax rate and the components of deferred income tax assets and liabilities:

Income (Loss) Before Income Taxes:

Year Ended December 31	2004			2003			2002
Domestic	$	(58.7	)	$	(85.2	)	$	18.1
Foreign		62.2			(13.6	)		40.1
	$	3.5		$	(98.8	)	$	58.2

Provisions (Credits) for Income Taxes:

Year Ended December 31		2004			2003			2002
Current:
	Federal	$	(28.3	)	$	(21.5	)	$	(57.2	)
	State		4.2			(0.5	)		(1.1	)
	Foreign		(10.1	)		4.6			19.1
			(34.2	)		(17.4	)		(39.2	)
Deferred:
	Domestic		8.6			(30.6	)		69.2
	Foreign		9.2			(10.7	)		(12.5	)
			17.8			(41.3	)		56.7
		$	(16.4	)	$	(58.7	)	$	17.5

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A reconciliation of the statutory U.S. federal income tax expense (credit) to the recorded income tax expense (credit) from continuing operations is as follows:

Year Ended December 31		2004			2003			2002
Income tax expense (credit) at U.S. federal tax rate		$	1.2		$	(34.6	)	$	20.4
Change resulting from:
	State income tax		(0.7	)		(0.3	)		(0.7	)
	Depletion		(2.5	)		(2.0	)		(2.1	)
	Export sales incentive		(1.7	)		(1.4	)		(1.4	)
	Low income housing credit		(2.3	)		(2.8	)		(3.1	)
	International operations		4.5			1.1			1.1
	Income tax reserve release		(17.5	)		(27.5	)		—
	Nondeductible goodwill		—			—			—
	Change in valuation allowance		1.8			6.7			2.8
	Other		0.8			2.1			0.5
Income tax expense (credit)		$	(16.4	)	$	(58.7	)	$	17.5

During the second quarter of 2004, the Company received a favorable final notification and settlement from the Internal Revenue Service (IRS) Appeals Division confirming the tax filing positions taken by the Company relating to the treatment of certain international cash repatriation transactions in its 1995 through 2000 federal income tax filings. As a result of this settlement and through evaluation of its remaining reserves, the Company released a net $17.5 million of income tax benefit to earnings. Excluding the impact of this release, the Company's effective income tax rate for the year ended December 31, 2004 would have been approximately 31.0%.

The Company also repatriated foreign earnings during 2004. The repatriation increased the Company's effective tax related to international operations. A portion of this increase, however, was offset by a decrease in the Company's valuation allowance related to certain foreign and/or domestic tax carryforwards for which prior utilization had been uncertain.

During the third quarter of 2003, the Company received a final notification from the IRS of a favorable ruling on certain income tax issues related to the Company's 1994 to 2000 federal income tax filings for those years that confirmed that tax filing positions taken by the Company were consistent with tax laws and regulations. As a result of this decision and evaluation of its remaining income tax reserves at that time, the Company released $27.5 million of tax benefit to earnings. Excluding the impact of this release, the Company's effective income tax rate for the year ended December 31, 2003 would have been approximately 31.0%.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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Components of Deferred Tax Assets and Liabilities:

December 31		2004			2003
Deferred tax assets
	Accrued expenses	$	10.2		$	6.3
	Restructuring charges		1.3			2.4
	Tax credit carryforwards		39.7			33.4
	Net operating loss carryforwards		97.8			81.7
	Intangible amortization		11.9			26.6
	Other		33.9			20.0
Deferred tax assets			194.8			170.4
	Valuation allowance		101.7			56.4
Deferred tax assets, net of valuation allowance		$	93.1		$	114.0
Deferred tax liabilities
	Property and equipment	$	88.5		$	51.1
	Other		11.7			12.4
Deferred tax liabilities		$	100.2		$	63.5
Net deferred tax (liabilities) assets		$	(7.1	)	$	50.5

As of December 31, 2004, the Company had tax credit carryforwards of $39.7 million available. A valuation allowance of $24.5 million has been recorded against the portion of these credit carryforwards for which utilization is uncertain. Of the amount of tax credit carryforwards for which no valuation allowance has been recorded, $0.1 million will expire on or before 2008, $2.6 million expire in 2019; $0.2 million expire in 2020; $3.3 million expire in 2021; $1.3 million expire in 2022; $2.8 million expire in 2023; $2.3 million expire in 2024, and the remaining $2.6 million have no expiration dates. At December 31, 2004, the Company has net operating losses resulting in $97.8 million of deferred tax assets to offset future tax liabilities. A valuation allowance of $77.2 million has been recorded against the portion of these net operating loss carryforwards for which utilization is uncertain. The tax effect of the amount of net operating loss carryforwards for which no valuation allowance has been recorded have no expiration dates.

Cash payments for income taxes were $4.0 million, $14.4 million and $14.0 million in 2004, 2003 and 2002, respectively.

In October 2004, Congress enacted The American Jobs Creation Act of 2004 (the "Act'). The Act included a deduction from income for federal tax purposes of 85% of the amount of certain dividends paid to a United States company from its foreign subsidiaries. This provision expires at the end of 2005. The Company is considering the effects of this law on the potential payment of dividends from certain of its foreign subsidiaries. The Company is currently evaluating the applicability of the provision in light of business needs and is waiting for additional guidance from the IRS on certain technical aspects of the law. The Company expects to complete its evaluation before the end of the third quarter of 2005. The range of the amount of repatriation and related tax effects, if any, cannot be reasonably estimated at this time, however, up to $500 million of unremitted earnings are being considered for possible repatriation.

NOTE 13: STOCKHOLDERS' EQUITY

The Board of Directors has authorized the Company to purchase shares of the Company's common stock in the open market or in privately negotiated transactions. No share repurchases were made in 2004, 2003 or 2002. A total of 2.8 million shares remain available under existing Board authorizations.

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During 2004 and 2003, the Company made voluntary contributions of 225,000 shares and 300,000 shares, respectively, of Company treasury stock to its U.S. qualified defined benefit pension plan. The Company also contributed approximately 100,000 shares of treasury stock to the Great Lakes Savings Plan, a defined contribution, 401(k) employee savings plan, and the Great Lakes Chemical Corporation Supplemental Savings Plan as the Company's matching contributions to these plans. These contributions were non-cash transactions and therefore not reflected in the consolidated statements of cash flows in 2004 or 2003.

NOTE 14: EARNINGS PER SHARE

Basic earnings per share is based on the weighted-average number of common shares outstanding during the period, while diluted earnings per share includes the effect of options and restricted stock that were dilutive and outstanding during the period. The computation of basic and diluted earnings per share is determined using net income or loss as reported as the numerator, and the number of shares included in the denominator is calculated as follows:

Year Ended December 31	2004	2003	2002
Denominator for basic earnings per share (weighted-average shares)	50.9	50.4	50.2
Effect of dilutive securities	0.2	—	0.1
Denominator for diluted earnings per share	51.1	50.4	50.3

Options to purchase shares of common stock of 2.3 million in 2004, 4.7 million in 2003 and 3.0 million in 2002 were outstanding, but were excluded from the computation of diluted earnings per share, because they were antidilutive.

NOTE 15: STOCK AND INCENTIVE COMPENSATION PLANS

Stock Compensation Plans

The Company has four plans that provide for the granting of stock awards to officers and key employees. The 2002 and 1998 Stock Compensation Plans have stock awards available for grant. The 1993 and 1984 Stock Compensation Plan have no stock awards available for grant, but do have options exercisable as of December 31, 2004. The Company is authorized to grant options for up to 7.0 million shares under the 2002, 1998 and 1993 plans, of which 5.2 million have been granted. Options under the plans have been granted at the market value at the date of grant, become exercisable over periods of one to five years and expire 10 years from the date of grant.

In addition to the options awarded under the plans, the Company on April 6, 1998 granted its former chief executive officer an option to acquire 0.7 million shares of the Company's stock. The exercise price of these options is $41.95 and they all were fully vested as of December 31, 2002. The options expire 10 years from the grant date.

The Company intends to grant restricted stock units in lieu of stock options in 2005.

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The status of the Company's stock options is summarized below:

	Shares Under Option		Weighted- Average Exercise Price
Outstanding at January 1, 2002	3.3		$	39.53
Granted	0.9			22.12
Exercised	0.0			23.44
Terminated	(0.3	)		47.24
Outstanding at December 31, 2002	3.9			34.71
Granted	1.0			21.63
Exercised	0.0			22.00
Terminated	(0.2	)		36.08
Outstanding at December 31, 2003	4.7			31.65
Granted	0.9			25.05
Exercised	(0.5	)		22.15
Terminated	(0.5	)		33.91
Outstanding at December 31, 2004	4.6		$	30.84
Currently Exercisable	3.2		$	34.37

During 2004, 2003 and 2002, the Company awarded restricted stock units totaling approximately 47,000, 6,000 and 20,000 shares, respectively, to directors and other key employees. These awards become exercisable over a period of one to 10 years. The Company recognizes compensation expense consistent with the vesting of each award. The compensation expense incurred in 2004, 2003 and 2002 related to these awards totaled $0.5 million, $0.6 million and $0.9 million, respectively.

The following table summarizes information concerning outstanding and exercisable options at December 31, 2004:

Range of Exercise Prices		$20.64-$29.99		$30.00-$44.99		$45.00-$66.56
Options outstanding:
	Weighted-average remaining contractual life		8.3 yrs		4.4 yrs		2.6 yrs
	Weighted-average exercise price	$	23.46	$	36.86	$	53.21
	Options outstanding (millions)		2.3		2.1		0.2
Options exercisable:
	Weighted-average exercise price	$	23.40	$	36.86	$	53.21
	Options exercisable (millions)		0.9		2.1		0.2

For the year ended December 31, 2004 and all previous periods presented, the Company has accounted for stock compensation costs in accordance with the provisions of APB Opinion No. 25 and related interpretations. Accordingly, no compensation cost has been recognized for the normal vesting of options granted under its fixed stock option plans. In the fourth quarter, however, the Company recognized $0.9 million of compensation expense related to the contractually required acceleration of vesting provisions for options held by the Company's former chief executive officer at the time of his resignation.

The following table sets forth pro forma information as if compensation cost had been determined based on the fair value at the grant date for awards under the Company's stock plans consistent with the requirements of SFAS No. 123, "Accounting for Stock-Based Compensation." For the purposes of

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the pro forma disclosure, the estimated compensation costs are amortized to expense over the options' vesting period, principally three years.

While no compensation expense has been recognized for the normal vesting of options under the Company's stock option plans, outstanding options whose exercise prices were less than the average market price of common stock during the period are included, when appropriate, in the determination of share dilution for the purposes of calculating diluted earnings per share.

December 31		2004			2003			2002
Weighted-average fair value per share of options granted during the year(1)		$	7.80		$	6.36		$	7.24
Net income (loss):
	As reported		62.9			(51.4	)		125.0
	Pro forma		60.5			(55.2	)		121.0
Basic and diluted earnings per share:
	As reported		1.23			(1.02	)		2.48
	Pro forma		1.18			(1.10	)		2.41
Assumptions:
	Expected volatility		29.8	%		29.0	%		28.9	%
	Expected life in years		6.5			6.5			6.5
	Risk-free interest rate		3.6	%		3.5	%		4.7	%
	Dividend yield		1.5	%		1.7	%		1.5	%

⁽¹⁾

On date of grant using the Black-Scholes option pricing model, a pricing model acceptable under SFAS No. 123.

Incentive Compensation Plan

In 2003, the Company established a Long-Term Incentive Plan ("LTIP") under the Company's 2002 Stock Option and Incentive Plan to provide certain incentives to certain officers. The plan is administered by the Compensation and Incentive Committee of the Board of Directors (the "Committee"). The LTIP was designed to provide incentive awards payable in restricted stock with a cash pay-out option, based on the achievement, over a three-year period ending in 2005, of Company or business unit performance targets established by the Committee.

Compensation under this LTIP is accrued over the period of performance, which is three years. Compensation expense related to the LTIP amounted to $2.8 million for the year ended December 31, 2003. However, as of December 31, 2004, the Committee determined, based upon a comparison of the current and projected actual performance to the targets, achievement of the original incentive award amount was not likely and adjustments to reduce the accrued payout were made. As a result, compensation expense (income) related to the LTIP for 2004 was $(2.0) million. This reflects the impact of the adjustment made in the fourth quarter of 2004 to properly reflect accrued amounts through two of the three years covered by the plan.

NOTE 16: RETIREMENT PLANS

Defined Benefit Pension Plans

The Company sponsors various noncontributory and contributory defined benefit retirement plans covering certain of its U.S. and non-U.S. employees. Retirement benefits are based upon years of service and the employee's compensation levels during this service period. The Company also has unfunded supplemental nonqualified defined benefit plans, which provide pension benefits for certain employees in excess of the tax-qualified plans' limits. The net periodic benefit cost is assessed in accordance with the advice of professionally qualified actuaries.

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The Company's funding policy is to make contributions to the extent such contributions are tax deductible as actuarially determined and as permitted by regulatory authorities. The funded amounts reflect actuarial assumptions regarding compensation, interest and other projections. The Company uses an October 1 measurement date for its plans.

Obligations and Funded Status

		U.S. Plans						Non-U.S. Plan
December 31		2004			2003			2004			2003
Change in projected benefit obligation:
	Projected benefit obligation at beginning of year	$	174.0		$	140.6		$	159.8		$	145.1
	Service cost		6.0			5.2			2.2			4.9
	Interest cost		10.7			9.7			9.0			8.5
	Plan participants' contributions		—			—			1.0			1.7
	Curtailments		(1.8	)		—			(0.5	)		(7.0	)
	Actuarial (gain) loss		1.3			23.5			(8.4	)		(4.8	)
	Benefits paid		(5.7	)		(5.0	)		(5.4	)		(4.1	)
	Amendments		0.2			—			—			—
	Termination benefits		0.4			—			—			—
	Foreign currency exchange rate changes		—			—			13.7			15.5
	Projected benefit obligation at end of year	$	185.1		$	174.0		$	171.4		$	159.8
Change in plan assets:
	Fair value of plan assets at beginning of year	$	119.7		$	92.1		$	112.2		$	86.4
	Actual return on plan assets		13.7			15.5			14.5			14.6
	Employer contributions		16.2			17.1			5.0			3.7
	Plan participants' contributions		—			—			1.0			1.7
	Benefits paid		(5.7	)		(5.0	)		(5.4	)		(4.1	)
	Foreign currency exchange rate changes		—			—			10.3			9.9
	Fair value of plan assets at end of year	$	143.9		$	119.7		$	137.6		$	112.2
	Funded status	$	(41.2	)	$	(54.3	)	$	(33.8	)	$	(47.6	)
	Unrecognized net actuarial loss		47.3			53.8			46.3			56.5
	Unrecognized prior service cost		—			0.1			—			—
	Unrecognized transition obligation		—			0.2			—			—
	Net amount recognized	$	6.1		$	(0.2	)	$	12.5		$	8.9
Amounts recognized in the statement of financial position consist of:
	Prepaid benefit cost	$	—		$	—		$	12.5		$	—
	Accrued benefit cost		(19.1	)		(32.1	)		—			(10.7	)
	Intangible assets		—			0.1			—			—
	Accumulated other comprehensive loss		25.2			31.8			—			19.6
	Net amount recognized	$	6.1		$	(0.2	)	$	12.5		$	8.9

Amounts applicable to the Company's U.S. and non-U.S. pension plans with projected benefit obligations in excess of plan assets are summarized as follows:

December 31	2004		2003
Projected benefit obligation	$	356.5	$	333.8
Fair value of plan assets		281.5		231.9

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Amounts applicable to the Company's U.S. and non-U.S. pension plans with accumulated benefit obligations in excess of plan assets are summarized as follows:

December 31	2004		2003
Accumulated benefit obligation	$	293.3	$	274.7
Fair value of plan assets		281.5		231.9

Components of net periodic benefit cost

	U.S. Plans									Non-U.S. Plan
Year Ended December 31	2004			2003			2002			2004			2003			2002
Service cost	$	6.0		$	5.2		$	4.9		$	2.2		$	4.9		$	3.7
Interest cost		10.7			9.7			9.0			9.0			8.5			6.4
Expected return on plan assets		(10.5	)		(8.1	)		(9.5	)		(10.3	)		(8.7	)		(8.1	)
Amortization of prior service cost		0.1			0.2			0.1			—			—			—
Amortization of transition obligation		0.1			0.1			0.2			—			—			—
Amortization of net loss		3.0			2.1			0.1			1.4			1.7			—
Curtailment loss		0.1			—			—			—			—			—
Termination benefit cost		0.4			—			—			—			—			—
Net periodic benefit cost	$	9.9		$	9.2		$	4.8		$	2.3		$	6.4		$	2.0

Allocation of net periodic benefit cost

	U.S. Plans						Non-U.S. Plan
Year Ended December 31	2004		2003		2002		2004		2003		2002
Continuing operations	$	9.2	$	8.4	$	4.5	$	2.1	$	4.8	$	1.3
Discontinued operations		0.7		0.8		0.3		0.2		1.6		0.7
Net periodic benefit cost	$	9.9	$	9.2	$	4.8	$	2.3	$	6.4	$	2.0

Assumptions

	U.S. Plans				Non-U.S. Plan
	2004		2003		2004		2003
Weighted-average assumptions used to determine benefit obligations at December 31, 2004 and 2003
Discount rate	6.00	%	6.25	%	5.75	%	5.50	%
Rate of compensation increase	3.50	%	3.50	%	4.00	%	3.75	%

	U.S. Plans				Non-U.S. Plan
	2004		2003		2004		2003
Weighted-average assumptions used to determine net cost for years ended December 31, 2004 and 2003
Discount rate	6.25	%	7.00	%	5.50	%	5.50	%
Expected long-term rate of return on plan assets	8.50	%	9.00	%	7.50	%	7.00	%
Rate of compensation increase	3.50	%	4.00	%	3.75	%	3.75	%

To develop the expected long-term rate of return on assets assumption, the Company considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolios. This resulted in the selection of an 8.50% and 7.50% long-term rate of return on assets assumption for the U.S. plans and non-U.S. plan, respectively, for 2004.

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Plan Assets

The Company's pension plan weighted-average asset allocations at December 31, 2004 and 2003 by asset category are as follows:

	December 31, 2004				December 31, 2003
	U.S.		Non-U.S.		U.S.		Non-U.S.
Asset Category
Equity securities	74.3	%	70.8	%	71.1	%	70.6	%
Fixed income	24.6		29.2		25.7		29.4
Real estate	0.6		—		1.2		—
Other	0.5		—		2.0		—
Total	100.0	%	100.0	%	100.0	%	100.0	%

The Company's retirement plan assets are invested with the objective of providing the plans the ability to fund current and future benefit payment requirements while minimizing annual Company contributions. The plans' asset allocation strategy reflects the desire to meet these objectives.

The asset allocation data presented in the following table contains guideline percentages, at market value, for various asset classes for both the U.S. and non-U.S. plans. The "Strategic Target" is a guide, and will at times not reflect the actual asset allocation, as this will be dictated by current market conditions. The "Tactical Range" anticipates this fluctuation and provides flexibility to vary around the target without the need for immediate rebalancing. These asset allocations are monitored on an ongoing basis by an Investment Committee for the plans to maintain the asset allocations within the stated ranges. The non-U.S. plan 2002 strategic target for equity securities and fixed income was adjusted from 80% to 70% and 20% to 30%, respectively, in 2003.

Equity securities of the U.S. plan includes 525,000 shares of the Company's common stock in the amount $15.0 million (9.7% of total U.S. plan assets) at December 31, 2004. Of the 525,000 share, 300,000 shares were contributed in 2003 and 225,000 shares were contributed in 2004.

	U.S. Plan		Non-U.S. Plan
Security Class	Strategic Target	Tactical Range	Strategic Target	Tactical Range
U.S. Large Cap Equities - Core	20%	15%-25%
U.S. Large Cap Equities - Value	10%	7%-12%
U.S. Large Cap Equities - Growth	10%	7%-12%
Great Lakes Chemical Corporation Common Stock	7%	0%-10%
U.S. Small Cap Equities - Core	10%	7%-12%
International Equity	12%	5%-15%
Equity Securities	69%	64%-74%	70%	64%-76%
Fixed Income	28%	22%-32%	30%	24%-36%
Alternative Investments	2%	0%-10%
Cash	1%	0%-5%
Other	3%	0%-10%	0%	0%
Total	100%		100%

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Contributions

In 2005, the Company expects to contribute approximately $4 million to the U.S. qualified plan and approximately $4 million to its non-U.S. plan.

Benefit Payments

Future combined benefit payments for the U.S. and non-U.S. plans over the next five years and 2010 to 2014 in the aggregate are estimated to be as follows: $8.7 million - 2005, $9.2 million - 2006, $9.6 million - 2007, $10.2 million - 2008, $10.7 million - 2009, and $63.4 million -2010-2014.

The Company provides no significant postretirement benefits other than pensions.

Defined Contribution Retirement Plan

Certain Company employees participate in the Great Lakes Savings Plan, which is a defined contribution, 401(k) employee savings plan generally available to all U.S. full-time salaried, non-union hourly employees and certain union hourly employees. The plan is funded by contributions from participants with matching contributions provided by the Company. Contributions from the Company to the plan approximated $2.8 million, $2.7 million and $2.7 million in 2004, 2003 and 2002, respectively.

Contributions to the plan during 2003 and for the first half of 2004 were made through the use of the Company's treasury stock.

NOTE 17: SEGMENT INFORMATION

The Company changed its reportable business segments as of the fourth quarter of 2004 in order to align the external presentation of results with the Company's current management and operating structure. The Company operates in two business segments - Industrial Performance Products and Consumer Products.

The Industrial Performance Products segment provides a comprehensive portfolio of polymer additive solutions formulated specially to meet the needs of its customers in a wide range of markets, from furniture and textiles to automotive to consumer electronics to building and construction. The segment produces bromine-, phosphorus- and antimony-based flame retardants and synergists; lubricant additives; stabilizing products including antioxidants, UV absorbers, light stabilizers and non-dusting blends; optical monomers; brominated performance products used in agriculture, electronics, photographic papers, rubber compounds, detergents, pharmaceuticals, and oil and gas exploration; fire suppression and fluorine specialty products and industrial water additives.

The Consumer Products segment is a leading supplier of consumer products used in swimming pools and hot tubs. This segment also supplies a line of home cleaning products. The segment also sells pool and spa products to dealers, distributors and mass market retailers and household cleaning products to consumers through mass retailers in grocery, drug, home center, hardware, discount and automotive supply stores.

The Company evaluates business unit performance and allocates resources based on the operating income, which represents net sales less cost of products sold and selling, general and administrative expenses, cash flows and return on investment of each business unit. Industrial Performance Products and Consumer Products use bromine as a raw material in their production processes. Bromine is transferred at cost from Industrial Performance Products to Consumer Products based upon a bromine supply agreement. In addition, assets used in the production of bromine are allocated to Consumer Products from Industrial Performance Products based on the percentage of production consumed. The accounting policies of the reportable segments are the same as those described in the Summary of Significant Accounting Policies.

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Corporate includes the corporate offices and any other activities not associated with a specific segment. Segment assets include primarily accounts receivable, inventory, net plant and equipment and other miscellaneous assets. Assets included in Corporate principally are cash and cash equivalents; deferred income taxes; certain investments and other assets; and certain unallocated plant and equipment, including the Company's enterprise software systems. Geographic sales information is reported based on the location that invoices the external customer. Geographic long-lived assets are grouped by the location of the reporting country. Inter-segment sales are insignificant and are eliminated in consolidation.

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Year Ended December 31		2004			2003			2002
Net Sales by Segment to External Customers:
	Industrial Performance Products	$	1,029.3		$	887.6		$	897.9
	Consumer Products		574.4			538.3			469.4
	Total sales of reportable segments		1,603.7			1,425.9			1,367.3
	Corporate		—			—			(1.9	)
		$	1,603.7		$	1,425.9		$	1,365.4
Segment Profit (Loss):
	Industrial Performance Products	$	58.9		$	(72.7	)	$	70.6
	Consumer Products		48.3			59.8			65.6
	Total profits (losses) of reportable segments		107.2			(12.9	)		136.2
	Corporate		(54.4	)		(49.3	)		(35.5	)
	Operating income (loss)		52.8			(62.2	)		100.7
Interest income (expense) - net			(25.2	)		(25.8	)		(27.6	)
Other income (expense) - net			(24.1	)		(10.8	)		(14.9	)
Income (loss) before income taxes		$	3.5		$	(98.8	)	$	58.2
Depreciation and Depletion Expense:
	Industrial Performance Products	$	53.6		$	54.3		$	53.7
	Consumer Products		14.7			14.1			14.3
	Corporate		21.7			19.1			7.3
		$	90.0		$	87.5		$	75.3
Segment Assets:
	Industrial Performance Products	$	1,076.7		$	932.5		$	1,019.2
	Consumer Products		474.7			440.6			296.1
	Corporate		240.0			262.8			321.0
		$	1,791.4		$	1,635.9		$	1,636.3
Investment in Unconsolidated Subsidiaries:
	Industrial Performance Products	$	10.1		$	13.6		$	11.3
Expenditures for Long-lived Assets:
	Industrial Performance Products	$	56.9		$	43.7		$	41.5
	Consumer Products		22.1			16.3			19.9
	Corporate		5.0			2.0			1.9
		$	84.0		$	62.0		$	63.3
Geographic Information Net Sales to External Customers:
	United States	$	951.3		$	873.4		$	858.4
	United Kingdom		97.2			102.5			126.0
	Switzerland		224.9			189.7			158.3
	Other foreign		330.3			260.3			222.7
		$	1,603.7		$	1,425.9		$	1,365.4
Long-lived Assets:
	United States	$	520.0		$	546.4		$	515.1
	United Kingdom		70.1			65.4			87.7
	Other foreign		266.9			230.3			202.1
		$	857.0		$	842.1		$	804.9

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NOTE 18: INVESTMENT IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES

As of December 31, 2004, the Company's investment in unconsolidated affiliates consisted primarily of a 49% interest in Gulf Stabilizers Industries Limited, a Saudi Arabian manufacturer of antioxidants, and a 50% interest in Tetrabrom Technologies, Ltd., an Israeli manufacturer of tetrabromobisphenol-A. The Company is also a limited partner in certain low-income housing investments that generate benefits in the form of tax credits.

The Company's equity in losses of unconsolidated affiliates was $(0.5) million, $(3.5) million and $(2.1) million in 2004, 2003 and 2002, respectively.

NOTE 19: FINANCIAL INSTRUMENTS

Foreign Exchange Risk Management

In the normal course of business, operations of the Company are subject to risks associated with changing foreign exchange rates. These fluctuations can vary the costs of financing, investing and operating activities. Accordingly, the Company hedges certain portions of its exposure to foreign currency fluctuations through the use of options and forward exchange contracts to protect the value of its existing foreign currency asset and liability commitments and anticipated foreign currency revenues.

It is the Company's policy to enter into foreign currency hedging transactions only to the extent considered necessary to achieve the objectives stated above. The Company does not enter into foreign currency transactions for trading purposes. The Company enters into forward contracts and option contracts to hedge portions of its foreign currency-denominated, forecasted sales and subsequent cash flows. The critical terms of the hedges are the same as the underlying forecasted transactions, and the hedges are considered perfectly effective to offset the changes in fair value of cash flows from the hedged transactions. Gains and losses on these instruments are generally recorded in other comprehensive income (loss) until the underlying transaction is recognized in net income.

The Company enters into currency option and forward contracts to hedge anticipated foreign currency transactions during the next 12 months. The principal currencies hedged are the Japanese yen, euro and British pound.

The Company used currency swap contracts to hedge a long-term intercompany loan. These contracts hedge the euro against the British pound. The terms of the swap contracts match the loan principal repayment terms. Gains or losses on these contracts are reflected in earnings and are offset by losses or gains on the underlying intercompany loan.

In addition, the Company enters into certain foreign currency forward contracts that are not treated as hedges under SFAS No. 133 to hedge recognized foreign currency transactions. Gains and losses on these contracts are recorded in net earnings and are substantially offset by the earnings effect of the revaluation of the underlying foreign currency denominated transaction.

Gains and losses arising from the use of the above instruments are recorded in the statement of operations concurrently with gains and losses arising from the underlying hedged transactions. The impact on pretax income of the currency forwards and options used to mitigate gains and losses on foreign exchange was a net gain (loss) of approximately $4.8 million, $0.5 million and $4.4 million in 2004, 2003 and 2002, respectively.

The Company uses forward foreign exchange contracts to protect the value of its investments in its foreign subsidiaries in Europe. Realized and unrealized gains and losses from these hedges are not included in the statement of operations, but are shown in the cumulative translation adjustment account in other comprehensive income (loss), with the related amounts due to or from counterparties included in other liabilities or other assets.

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During the years ended December 31, 2004, 2003 and 2002 the Company recognized $0.5 million, $4.0 million and $3.1 million of net losses, respectively, included in the cumulative translation adjustment, related to the forward foreign currency exchange contracts.

Interest Rate Risk Management

The Company has employed certain hedging instruments to minimize its exposure to changes in interest rates, including an interest rate swap agreement. In 2000, the Company terminated a swap arrangement and as a result recognized a $2.9 million gain, which is being amortized over the remaining term of the underlying 7% fixed rate notes that are due July 15, 2009. In 2003 and 2004, the Company entered into $50 million and $75 million interest rate swaps, respectively, accounted for as a fair value hedge to manage its exposure to interest rate changes.

Gains and losses arising from the use of such interest rate hedging instruments are recorded in the income statement concurrently with gains and losses arising from the underlying transactions. The impact on pretax income of interest rate risk management activities was a net gain of approximately $5.3 million in 2004, $3.9 million in 2003 and $2.1 million in 2002.

Natural Gas Price Risk Management

The Company consumes natural gas during the normal course of production. The fluctuations of natural gas prices can vary the costs of production. As part of its risk management strategy, the Company enters into fixed price swap and option contracts, including caps and floors, to manage its exposure to changes in natural gas prices. These natural gas contracts obligate the Company to make or receive a payment equal to the net change in the value of the contracts at their maturity. Such contracts are designated as hedges of the Company's forecasted purchases up to December 2004 and are effective in hedging the Company's exposure to changes in natural gas prices during this period.

The natural gas contracts that qualify as cash flow hedges under SFAS No. 133 are marked to market with unrealized gains and losses deferred and recognized in earnings when realized as an adjustment to cost of products sold. Unrealized changes in fair value of contracts no longer effective as hedges are recognized in cost of products sold from the date that the contracts become ineffective until their expiration. The impact on pretax income of natural gas risk management activities was a net gain (loss) of approximately $1.3 million in 2004, $0.4 million in 2003 and approximately $(1.1) million in 2002.

Fair Value of Financial Instruments

For certain of the Company's financial instruments, including cash and cash equivalents; accounts and notes receivable; accounts payable; and accrued expenses, the stated values approximate fair value due to their short-term nature. Consequently, such financial instruments are not included in the following table that provides information about the notional amounts, carrying amounts and estimated fair values of other financial instruments, both on and off the balance sheets:

	2004								2003
	Notional Amount		Carrying Amount			Fair Value			Notional Amount		Carrying Amount		Fair Value
Long-term debt including current portion	$	—	$	439.3		$	479.3		$	—	$	434.7	$	485.9
Interest rate swap agreements		200.0		5.0			5.0			125.0		7.2		7.2
Foreign currency options and forward contracts		148.2		(0.6	)		(0.6	)		236.8		1.7		1.7
Natural gas options and swap contracts		—		—			—			4.7		0.8		0.8

The estimated fair value of long-term debt is based primarily on quoted market prices for the same or similar issues. The fair values of option, forward exchange and swap contracts are based on quoted market prices of comparable instruments.

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Other Comprehensive Income (Loss)

The following table represents the movement of amounts in other comprehensive income (loss) of deferred cash flow hedges, net of tax, described above under foreign exchange risk and natural gas price management:

Balance at December 31, 2002	$	—
Net change in derivative fair value during 2003		1.3
Amounts reclassified to earnings during 2003		0.2
Balance at December 31, 2003	$	1.5
Net change in derivative fair value during 2004		(1.4	)
Amounts reclassified to earnings during 2004		(0.3	)
Balance at December 31, 2004	$	(0.2	)

Concentrations of Credit Risk

The Company sells a broad range of products to a diverse group of customers operating throughout the world. These industries generally are not significantly affected by changes in economic or other factors. Credit limits, ongoing credit evaluation and account-monitoring procedures are utilized to minimize the risk of loss. Collateral is generally not required. Counterparties to the currency contracts and interest rate swap contracts are major financial institutions. Credit losses from counterparty nonperformance are not anticipated.

NOTE 20: COMMITMENTS AND CONTINGENCIES

The Company has various purchase commitments for raw materials, supplies and plant and equipment incident to the ordinary conduct of business. All such commitments are at prices at or below current market. At December 31, 2004, the Company had committed approximately $25 million to complete capital projects.

At December 31, 2004, the Company had guaranteed $20.8 million of debt of an unconsolidated affiliate.

The Company has various operating leases primarily for the use of office space, computer equipment and services. Future minimum lease payments under these non-cancelable operating leases totaled approximately $72 million at December 31, 2004, due as follows: 2005 -$14 million; 2006 - $12 million; 2007 - $12 million; 2008 - $10 million; 2009 - $7 million; 2010 and thereafter, $17 million.

Rent expense for all operating leases amounted to $18 million, $20 million and $15 million for 2004, 2003 and 2002, respectively.

The Company is subject to various lawsuits and claims with respect to matters such as governmental regulations, income taxes and other actions arising out of the normal course of business. The Company is also subject to contingencies pursuant to environmental laws and regulations that in the future may require the Company to take action to correct the effects on the environment of prior manufacturing and waste disposal practices.

The Company and certain of its officers and employees have been named as defendants in five class action lawsuits filed in three counties in Georgia pertaining to the fire at the Company's Conyers warehouse on May 25, 2004 including the Davis case in Rockdale County, the Burtts and Hill cases in Fulton County and the Chapman and Brown cases in Gwinnett County. These suits seek recovery for economic and non-economic damages allegedly suffered as a result of the fire. The Company intends to vigorously defend against these lawsuits. The Company established a claims settlement process within one day of the fire to resolve all legitimate economic and personal injury claims raised by residents and businesses in Rockdale County, Georgia. While attorneys for

69

certain plaintiffs attempted to stop this process, the Rockdale Superior Court ordered that the claims process continue in the interests of the citizens of that county. At the time of the fire, the Company maintained, and continues to maintain, property and general liability insurance. While the overall amount of damages caused by the fire to all third parties cannot be ascertained at this time, the Company recorded approximately $5 million in other income (expense) - net in 2004 for claims. The Company also incurred approximately $4 million of legal and claims processing fees in 2004 that were not reimbursable under the general liability policy. The Company believes that its general liability policies will adequately cover any third party claims and legal and processing fees beyond the amounts recorded through December 31, 2004.

The plaintiffs have attempted to consolidate various cases into the Hill case in Fulton County, and to that end, have attempted to voluntarily dismiss the Davis and Burtts cases. The Company successfully opposed the dismissal of the Davis case and the plaintiffs continue to appeal that outcome. The Burtts case has been stayed and that case, as well as the Chapman and Brown cases, remains inactive pending the outcome of the Davis appeal.

In May 2002, Albemarle Corporation filed two complaints against the Company in the United States District Court for the Middle District of Louisiana, one alleging that the Company had infringed on three process patents held by Albemarle Corporation relating to bromine vacuum tower technology, and the other alleging that the Company had infringed or contributed or induced the infringement of a patent relating to the use of decabromodiphenyl ethane as a flame retardant in thermoplastics. On a motion by the Company and over Albemarle's objection, the cases were consolidated. In addition, the Company has filed a counterclaim with the District Court in the flame retardant cases, alleging, among other things, that the Albemarle patent is invalid or was obtained as a result of inequitable conduct in the United States Patent and Trademark Office. In March 2004, Albemarle amended its complaints to add additional counts of patent infringement and trade secret violations. With respect to the Albemarle case, the Company believes that the allegations of the original complaints, as well as the allegations in the additional counts are without basis factually or legally, and intends to defend the cases vigorously.

OSCA, the interest in which the Company divested to BJ Services Company in May 2002, is a party to certain pending litigation regarding a blowout of a well in the Gulf of Mexico operated by Newfield Exploration Company. In the lawsuit, the plaintiffs claimed that OSCA and the other defendants breached their contracts to perform work-over operations on the well and were negligent in performing those operations. In April 2002, a jury found OSCA and the other defendants responsible for those claims and determined OSCA's share of the damages. In connection with the lawsuit, the Company asserted claims against its insurers and insurance brokers in support of insurance coverage for this incident. A related trial on these insurance coverage claims was conducted by the submission of legal briefs. Thereafter, the court issued its final judgments on the underlying liability claims and the insurance coverage claims, entering judgment against OSCA for a net amount of approximately $13.3 million plus interest, and finding that amount only partially covered by insurance. Pursuant to an indemnification agreement between the Company and BJ Services entered into at the time of the sale of OSCA (see Note 4 to the Consolidated Financial Statements), Great Lakes has agreed to pay BJ Services a certain percentage of any uninsured cash damages in excess of an amount paid by OSCA upon settlement or final determination of this pending litigation. As of December 31, 2004, the Company has a $9.5 million reserve recorded in discontinued operations for this indemnification liability. Great Lakes and BJ Services expect to appeal some or all of the liability and insurance coverage decisions.

In May 1998, the Company self-reported to the United States Department of Justice (DOJ) and the European Commission certain business practices that raised questions under antitrust laws. As a result of the Company's cooperation, the Company and its directors and employees were accepted into the DOJ's amnesty program. Concurrently, the Company sought favorable treatment under a program in the European Union that also rewards self-reporting and cooperation. In May 2003, the

70

Company received a letter from the EC Competition Directorate General officially notifying the Company of the Commission's decision not to pursue any proceedings.

The Company believes it has fully complied with all applicable conditions to date and has continued to cooperate with the DOJ in connection with certain follow-up matters arising out of the investigation, all of which are covered by the Company's acceptance into the amnesty program. Although, to the Company's knowledge, there have been no additional matters that have arisen in connection with the investigations, the Company intends to continue to be in full compliance with the DOJ and European Union programs.

Ten federal class action lawsuits and five California class action lawsuits naming the Company arose out of an alleged conspiracy concerning the pricing of bromine and brominated products, each of which claimed treble damages. The federal lawsuits were consolidated in the District Court for the Southern District of Indiana and certified as a class of direct purchasers of certain brominated products.

In September 2002, the Company agreed to settle all of the federal class action lawsuits. The settlement agreement affected direct purchasers from the Company of brominated diphenyl oxides (decabromodiphenyl oxide, octabromodiphenyl oxide and pentabromodiphenyl oxide) and their blends, tetrabromobisphenol-A and its derivatives and all methyl bromide products and their derivatives in the United States between January 1, 1995 and April 30, 1998. The Company agreed to a $4.1 million cash payment and $2.6 million in vouchers for the future purchase of decabromodiphenyl oxide and/or tetrabromobisphenol-A, to be distributed to class members.

Pursuant to the settlement agreement, the Company remitted the cash portion to an escrow account in November 2002, subject to final approval of the settlement agreement by the federal court, which was given in January 2003. In addition, as of December 31, 2004, the vouchers have been issued and substantially redeemed.

The California cases pending in the Superior Court for San Francisco County claim alleged violations of California competition laws and were stayed pending resolution of the federal cases. On December 17, 2004, the plaintiffs proposed terms of a settlement that the Company deemed acceptable and so communicated to the plaintiffs. Formal agreements and court approval have not yet been completed.

Litigation accruals of approximately $3.6 million and $8.0 million have been reflected in the Company's consolidated balance sheet related to continuing operations as of December 31, 2004 and 2003, respectively.

The Company is subject to various U.S. and international federal, state and local environmental, health and safety laws and regulations. The Company is also subject to liabilities arising under the Comprehensive Environmental Response Compensation and Liability Act ("CERCLA"), the Resource Conservation and Recovery Act ("RCRA") and similar state and international laws that impose responsibility for remediation of hazardous substances and hazardous waste constituents released into the environment.

The Company provides reserves for environmental liabilities that management considers probable for which a reasonable estimate of the liability can be made. Accordingly, the Company's reserves for environmental liabilities, including reserves associated with restructuring charges, were approximately $40.6 million and $43.8 million at December 31, 2004 and 2003, respectively, with the current portion of these liabilities included in accrued expenses and the long-term portion included in non-current liabilities. While it is difficult to predict or determine the outcome of actions brought against the Company or the ultimate cost of environmental matters, management believes that the ultimate cost, if any, in excess of the amounts already provided is not likely to have a material adverse effect on its consolidated financial position, consolidated results of operations or liquidity.

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In the fourth quarter of 2004, the Company entered into a Consent Administrative Order (CAO) with the Arkansas Department of Environmental Quality related to the Company's El Dorado, Arkansas, operations. Pursuant to the CAO, the Company will pay a civil penalty of $10,000; perform two supplemental environmental projects valued at approximately $200,000; install additional equipment and back-up power to enhance the effectiveness of certain equipment; and perform air permitting compliance audits of its El Dorado operations. The CAO resolves the Company's liability for certain alleged and potential Clean Air Act and state permit violations as well as any noncompliance that may be discovered during the course of the air permitting compliance audits.

NOTE 21: QUARTERLY FINANCIAL DATA (UNAUDITED)

A summary of the quarterly results of operations for the years ended December 31, 2004 and 2003 is as follows:

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

(millions, except per share data) 2004 - Three Months Ended			March 31(1)			June 30(1)			September 30			December 31
Net Sales			$	358.1		$	443.2		$	391.9		$	410.5
Operating Expenses
	Cost of products sold			291.1			343.4			313.4			329.5
	Selling, general and administrative expenses			63.8			72.1			63.7			70.9
	Asset impairments			0.3			4.6			(1.9	)		—
Operating Income (Loss)				2.9			23.1			16.7			10.1
Interest Income (Expense) - net				(6.3	)		(6.2	)		(6.2	)		(6.5	)
Other Income (Expense) - net				(4.9	)		(4.4	)		(11.9	)		(2.9	)
Income (Loss) from Continuing Operations before Income Taxes and Cumulative Effect of Accounting Change				(8.3	)		12.5			(1.4	)		0.7
Income Taxes (Credit)				(2.7	)		(13.7	)		(0.2	)		0.2
Income (loss) before Cumulative Effect of Accounting Change
	- Continuing Operations		$	(5.6	)	$	26.2		$	(1.2	)	$	0.5
	- Discontinued Operations			0.6			(12.6	)		54.5			0.5
Cumulative Effect of Accounting Change, Net of Income Taxes				—			—			—			—
Net Income (Loss)			$	(5.0	)	$	13.6		$	53.3		$	1.0
Earnings (Loss) per Share:
	Basic and Diluted
		Continuing Operations	$	(0.11	)	$	0.52		$	(0.03	)	$	0.01
		Discontinued Operations	$	0.01		$	(0.25	)	$	1.08		$	0.00
		Cumulative Effect of Accounting Change	$	0.00		$	0.00		$	0.00		$	0.00
		Net Income (Loss)	$	(0.10	)	$	0.27		$	1.05		$	0.01

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2003 - Three Months Ended		March 31(1)			June 30(1)			September 30			December 31
Net Sales		$	324.7		$	406.8		$	365.7		$	328.7
Operating Expenses
	Cost of products sold		259.3			317.3			308.6			280.6
	Selling, general and administrative expenses		56.4			60.3			69.7			66.8
	Asset impairments		—			—			43.8			25.3
Operating Income (Loss)			9.0			29.2			(56.4	)		(44.0	)
Interest Income (Expense) - net			(6.6	)		(6.8	)		(6.4	)		(6.0	)
Other Income (Expense) - net			(3.3	)		(0.5	)		(2.7	)		(4.3	)
Income (Loss) from Continuing Operations before Income Taxes			(0.9	)		21.9			(65.5	)		(54.3	)
Income Taxes			(0.4	)		6.6			(47.9	)		(17.0	)
Income (Loss) before Cumulative Effect of Accounting Change
	- Continuing Operations	$	(0.5	)	$	15.3		$	(17.6	)	$	(37.3	)
	- Discontinued Operations		3.0			3.6			(9.4	)		(5.2	)
Cumulative Effect of Accounting Change, Net of Income Taxes			(3.3	)		—			—			—
Net Income (Loss)		$	(0.8	)	$	18.9		$	(27.0	)	$	(42.5	)
Earnings per Share:
Basic and Diluted
	Continuing Operations	$	(0.01	)	$	0.30		$	(0.35	)	$	(0.74	)
	Discontinued Operations	$	0.06		$	0.08		$	(0.19	)	$	(0.10	)
	Cumulative Effect of Accounting Change	$	(0.07	)	$	0.00		$	0.00		$	0.00
	Net Income (Loss)	$	(0.02	)	$	0.38		$	(0.54	)	$	(0.84	)

⁽¹⁾

Amounts reported for the first and second quarters of 2004 and 2003 have been restated from the March 31, 2004 and June 30, 2004 Form 10-Qs as filed, due to the sale of WIL Research Laboratories in the third quarter of 2004 and its subsequent reporting as discontinued operations.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Great Lakes Chemical Corporation

We have audited the accompanying consolidated balance sheets of Great Lakes Chemical Corporation as of December 31, 2004 and 2003, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2004. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule 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 the standards of the Public Company Accounting Oversight Board (United States). 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, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Great Lakes Chemical Corporation at December 31, 2004 and 2003, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Great Lakes Chemical Corporation's internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2005 expressed an unqualified opinion thereon.

/s/  ERNST & YOUNG LLP

Indianapolis, Indiana
February 25, 2005

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Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

As of December 31, 2004, management, under the supervision of the Company's Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon this evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that these disclosure controls and procedures are effective, in all material respects, in ensuring that the information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported on a timely basis.

There have been no significant changes in the Company's internal controls or in other factors subsequent to the date of the evaluation that could significantly affect these controls.

Management's Report on Internal Control over Financial Reporting

Management of the Company is responsible for the establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) of the Securities Exchange Act of 1934. The Company's internal control over financial reporting is designed to provide reasonable assurance to management and the Board of Directors as to the fair, reliable and timely preparation and presentation of consolidated financial statements filed with the Securities and Exchange Commission.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even processes determined to be effective can provide only reasonable assurance with respect to the financial statement preparation and presentation.

Management conducted an evaluation of the Company's internal controls over financial reporting based on a framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the effectiveness of controls and a conclusion on the evaluation. Based on this evaluation, management believes that as of December 31, 2004, the Company's internal control over financial reporting is effective.

The Company's independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report on management's assessment of internal control over financial reporting as of December 31, 2004 and that report is included herein.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Great Lakes Chemical Corporation

We have audited management's assessment, included in the accompanying Management's Report on Internal Control over Financial Reporting, that Great Lakes Chemical Corporation maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Great Lakes Chemical Corporation's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management's assessment that Great Lakes Chemical Corporation maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Great Lakes Chemical Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Great Lakes Chemical Corporation as of December 31, 2004 and 2003, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2004 of Great Lakes Chemical Corporation and our report dated February 25, 2005 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Indianapolis, Indiana
February 25, 2005

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PART III

Item 10.    Directors and Executive Officers of the Registrant

Information regarding directors of the Company is contained under the headings "Board and Committee Structure" and "Proposal One: Election of Directors" in the Proxy Statement for the Company's Annual Meeting of Stockholders to be held on May 5, 2005, which is to be filed with the Securities and Exchange Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934. This information is incorporated herein by reference. The executive officers of the Company are as follows:

John J. Gallagher, III
Chief Executive Officer
Officer since 2001

Mr. Gallagher, 41, joined Great Lakes in May 2001 as senior vice president and chief financial officer. In July 2003, he assumed additional responsibilities of global supply chain. He assumed his current position as president and chief executive officer in November 2004. Prior to joining Great Lakes, Mr. Gallagher was vice president and chief financial officer at UOP LLC, a $1.1 billion global joint venture of the Dow Chemical Company and Honeywell International, a position he held since 1999. Prior to UOP, Mr. Gallagher served in a number of positions of increasing responsibility at AlliedSignal (now Honeywell International) where he last held the position of vice president, finance and business development at Bendix Commercial Vehicle Systems. Prior to that, Mr. Gallagher had responsibilities for all of AlliedSignal as director, business analysis and planning, and previously director, finance and mergers and acquisitions. He also spent nine years at Price Waterhouse LLP (now PricewaterhouseCoopers LLP) as a management consultant on numerous M&A transactions, both in the United States and around the world. He is a member of the Board of Trustees for The Children's Museum of Indianapolis. Mr. Gallagher is a C.P.A. and holds a B.S. degree in Accounting from the University of Delaware.

Larry J. Bloom
Executive Vice President
and Chief Strategy Officer, Consumer Products
Officer since 2000

Mr. Bloom, 56, assumed the position of executive vice president of Great Lakes in 2000. He joined the Company in 1990 as a result of the acquisition by Great Lakes of Bio-Lab, Inc., where he served as president from 1987 until December 2004. In January 2005, Mr. Bloom became executive vice president and chief strategy officer, consumer products. From 1970 to 1987, he held various sales, marketing and technical positions with Bio-Lab, Inc. Mr. Bloom is a graduate of Georgia Institute of Technology, receiving a B.S. degree in Chemical Engineering.

Angelo C. Brisimitzakis
Executive Vice President, Flame Retardants
and Performance Products
Officer since 2000

Dr. Brisimitzakis, 46, joined Great Lakes in 1998 as vice president, global supply chain, following 14 years at General Electric Corporation, where he held leadership positions in sales, technology, business development, supply chain and business management functions. He was named an officer in 2000 and was named vice president for flame retardants in 2001. He assumed his current role in 2002. Dr. Brisimitzakis earned a Ph.D. in Chemistry from New York University and an M.B.A. in Marketing from New York University/Pace University.

77

Richard T. Higgons
Executive Vice President, Business Development
Officer since 2001

Mr. Higgons, 62, joined Great Lakes in 2001. Prior to joining Great Lakes, Mr. Higgons was staff vice president for corporate development with Mallinckrodt, Inc., a position he held for five years. From 1991 to 1995, Mr. Higgons was vice president for business development for Mallinckrodt's chemical business. From 1988 to 1991, Mr. Higgons held several senior management positions in finance, business development and strategic planning for Imcera Group, Inc. Mr. Higgons received a B.S. degree in Accounting from Indiana Northern University.

Maurizio Butti
Executive Vice President, Polymer Stabilizers
Officer since 2004

Mr. Butti, 47, joined Great Lakes in 1994 as business development manager - Polymer Stabilizers. He has held several positions within the Company, including director of corporate development - EMEA and Asia and vice president of business management and marketing - Polymer Stabilizers. He was named an officer and assumed his current position in May 2004. Prior to joining Great Lakes, Mr. Butti was new products development manager at SOL Industries and strategic planning manager with EniChem Synthesis SpA. Mr. Butti holds a degree in Chemical Engineering from Politecnico di Milano (Italy) and an M.B.A. from Bocconi University of Milano.

Kevin M. Dunn
Executive Vice President, Consumer Products
Officer since 2004

Mr. Dunn, 52, joined Great Lakes in December 2004 after serving as president of Playtex Products, Inc., Consumer Products Division. Prior to this, Mr. Dunn was president of the North America Household Products Division of Reckitt & Colman plc. He has also served in numerous marketing and general management positions with Eastman Kodak and Sterling Winthrop. Mr. Dunn holds a B.S. degree from New York University and an M.B.A. degree from St. John's University.

John B. Blatz
Senior Vice President,
Environmental, Health and Safety
Officer since 2001

Mr. Blatz, 53, joined Great Lakes in 2001. Prior to joining Great Lakes, Mr. Blatz was with Dexter Corporation for 10 years, where his last position was vice president, environmental & process management. Previous positions included managing director and general counsel of Goldman Financial Group, Inc. for two years; positions with Emhart Corporation, now a part of Black & Decker, from 1980 to 1988; associate counsel with Scott Paper Company from 1978 to 1980, and private practice with the law firm O'Connor & Hannan. Mr. Blatz earned a J.D. from the University of Minnesota Law School in 1976 and a B.A. from Dartmouth College in 1973.

Jeffrey Potrzebowski
Senior Vice President and Chief Financial Officer
Officer since 2004

Mr. Potrzebowski, 52, joined Great Lakes in 1993 as director of internal audit. He was named director of investor relations in 1996 and was promoted to vice president in 2002. He was named as an officer and assumed his current position in 2004. Prior to joining Great Lakes, he served as group controller from 1991 through 1993 for Stewart-Warner Corporation. He was previously a

78

controller for USG Corporation and a senior manager for the audit firm of Price Waterhouse LLP (now PricewaterhouseCoopers LLP). Mr. Potrzebowski is a C.P.A. and graduated from the University of Toledo with a B.S. in Business Administration.

Richard J. Kinsley
Senior Vice President,
Human Resources & Communications
Officer since 1999

Mr. Kinsley, 47, joined Great Lakes in April 1999. Prior to joining Great Lakes, Mr. Kinsley served as vice president, human resources for the electronic materials division at AlliedSignal (now Honeywell International) for four years. Prior to AlliedSignal, he spent 10 years with The Pfaudler Companies, where he held senior management positions in sales and marketing, business development and human resources. Mr. Kinsley holds dual degrees in Economics and Business Administration from LeMoyne College and an M.B.A. from the University of Rochester.

Jeffrey M. Lipshaw
Senior Vice President,
General Counsel
Officer since 1999

Mr. Lipshaw, 50, joined Great Lakes in October 1999 after serving as of counsel with the Detroit-based law firm Dykema Gossett PLLC from February 1998. He was previously an associate and partner in the firm from 1979 until 1992. From 1993 through 1997, Mr. Lipshaw was vice president and general counsel of AlliedSignal Automotive in Southfield, Michigan. He holds an A.B. degree from the University of Michigan and a J.D. degree from Stanford University.

Zoe F. Schumaker
Senior Vice President and Chief Information Officer
Officer since 2001

Ms. Schumaker, 44, joined Great Lakes in 2001, after serving as vice president, information technology at Ingersoll-Rand Company's IR security and safety sector. From 1991 to 1999, Ms. Schumaker worked at Blount International, Inc., a diversified international manufacturer of outdoor products, industrial and power equipment, and sporting equipment, where she last held the position of vice president, information systems. From 1991 to 1997, Ms. Schumaker held several positions at Blount's outdoor products group, including director of information systems, manager of information systems and manager of systems development. Prior to 1991, Ms. Schumaker held positions in consulting and systems development. She earned a B.A. degree in Psychology from the University of California at Berkeley and an M.B.A. from the University of Oregon in 1995.

William L. Sherwood
Vice President and Corporate Controller
Officer since 2002

Mr. Sherwood, 43, joined Great Lakes in 2000 as director, financial reporting. He was named as an officer and assumed his current position in 2002. Prior to joining Great Lakes, Mr. Sherwood was with Ernst & Young LLP in Indianapolis, Indiana, for 16 years, where he was an auditor and senior manager in the audit and assurance practice. Mr. Sherwood is a C.P.A. and holds a B.S. degree in Accounting from Butler University.

Information relating to compliance with Section 16(a) of the Exchange Act is set forth under the heading "Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's 2005 Proxy

79

Statement for the Company's Annual Meeting of Stockholders to be held on May 5, 2005 and is incorporated herein by reference.

Information relating to the Company's Code of Business Conduct is set forth under the heading "Governance" in the Company's 2005 Proxy Statement for the Company's Annual Meeting of Stockholders to be held on May 5, 2005, and is incorporated herein by reference.

Item 11.    Executive Compensation

This information is set forth under the heading "Executive Compensation and Other Information" in the Company's 2005 Proxy Statement for the Company's Annual Meeting of Stockholders to be held on May 5, 2005 and is incorporated herein by reference.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

This information is set forth under the heading "Security Ownership of Certain Beneficial Owners and Management" and "Equity Compensation Plan Information" in the Company's 2005 Proxy Statement for the Company's Annual Meeting of Stockholders to be held on May 5, 2005 and is incorporated herein by reference.

Item 13.    Certain Relationships and Related Transactions

None.

Item 14.    Principal Accounting Fees and Services

This information is set forth under the heading "Fees Paid to Independent Auditors" in the Company's 2005 Proxy Statement for the Company's Annual Meeting of Stockholders to be held on May 5, 2005 and is incorporated herein by reference.

80

PART IV

Item 15.    Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)(1)    Financial Statements

The following consolidated financial statements of Great Lakes Chemical Corporation and related notes thereto, together with the report thereon of Ernst & Young LLP dated February 25, 2005, appearing on pages 26 through 56 are included herein:

Consolidated Statements of Operations - Years ended December 31, 2004, 2003 and 2002
Consolidated Balance Sheets - December 31, 2004 and 2003
Consolidated Statements of Cash Flows - Years ended December 31, 2004, 2003 and 2002
Consolidated Statements of Stockholders' Equity - Years ended December 31, 2004, 2003 and 2002
Notes to Consolidated Financial Statements - December 31, 2004.

(a)(2)    Financial Statement Schedule

The following Consolidated Financial Statement Schedule of Great Lakes Chemical Corporation is filed as part of Item 15(d) of this report and should be read in conjunction with the Consolidated Financial Statements.

             Schedule II - Valuation and Qualifying Accounts

All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore, have been omitted.

81

(a)(3)    Exhibits:

Exhibit No.	Description
(3)(i)	Restated Certificate of Incorporation (incorporated by reference to Exhibit (3)(i) to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2003, SEC File Number 001-06450)
(3)(ii)	Amended and Restated By-Laws adopted by the Board of Directors on February 7, 2005.
(4)(i)	Indenture dated as of July 16, 1999, between the Company and The First National Bank of Chicago, as Trustee (incorporated by reference to the Company's Registration Statement on Form S-3, SEC File Number 333-78515)
(10)(i)	Supplemental Retirement Plan, as amended (incorporated by reference to Exhibit (10)(i) to the Company's Annual Report on Form 10-K for the year ended December 31, 1997, SEC File Number 001-06450)
(10)(ii)	Non-Qualified Deferred Compensation Plan, effective January 1, 2004 (incorporated by reference to Exhibit (10)(iv) to the Company's Annual Report on Form 10-K for the year ended December 31, 2003, SEC File Number 001-06450)
(10)(iii)	Standard Form of Severance Agreements (incorporated by reference to Exhibit (10)(iv) to the Company's Annual Report on Form 10-K for the year ended December 31, 1997, SEC File Number 001-06450)
(10)(iv)(a)	Non Employee Directors' Deferred and Long Term Compensation Plan (incorporated by reference to Exhibit (10)(vi) the Company's Annual Report on Form 10-K for the year ended December 31, 1997, SEC File Number 001-06450)
(10)(iv)(b)	Amendment No. 1 to Non Employee Directors' Deferred and Long Term Compensation Plan, effective May 6, 1998 (incorporated by reference to Exhibit (10)(v) to the Company's Annual Report on Form 10-K for the year ended December 31, 1999, SEC File Number 001-06450)
(10)(v)(a)	Death Benefit Only Plan, effective April 1, 2003 (incorporated by reference to Exhibit (10)(vii)(a) to the Company's Annual Report on Form 10-K for the year ended December 31, 2003, SEC File Number 001-06450)
(10)(v)(b)	Amendment No. 2003-1 to Death Benefit Only Plan, effective July 18, 2003 (incorporated by reference to Exhibit (10)(vii)(b) to the Company's Annual Report on Form 10-K for the year ended December 31, 2003, SEC File Number 001-06450)
(10)(vi)	Form of Amended Change in Control Agreement (portions omitted pursuant to request for confidential treatment)
(10)(vii)	Change in Control Agreement between John J. Gallagher, III and the Company effective December 2, 2004 (portions omitted pursuant to request for confidential treatment)
(10)(viii)	Directors Retirement Plan, effective January 1, 1993 (incorporated by reference to Exhibit (10)(ix) to the Company's Annual Report on Form 10-K for the year ended December 31, 1997, SEC File Number 001-06450)

82

(10)(ix)(a)	1998 Stock Compensation Plan (incorporated by reference to Exhibit 99.1 to the Company's Registration Statement on Form S-8 filed August 17, 1998, SEC File Number 333-61609)
(10)(ix)(b)	Amendment to 1998 Employee Stock Compensation Plan dated February 15, 1999 (incorporated by reference to Exhibit (10)(ix) to the Company's Annual Report on Form 10-K for the year ended December 31, 1999, SEC File Number 001-06450)
(10)(x)	1993 Employee Stock Compensation Plan as amended on November 21, 1997 (incorporated by reference to Exhibit (10)(x) to the Company's Annual Report on Form 10-K for the year ended December 31, 1997, SEC File Number 001-06450)
(10)(xi)	1984 Employee Stock Option Plan as amended February 10, 1997 (incorporated by reference to Exhibit (10)(xi) to the Company's Annual Report on Form 10-K for the year ended December 31, 1997, SEC File Number 001-06450)
(10)(xii)	Employment Agreement with Mark P. Bulriss effective April 1, 1998 (incorporated by reference to Exhibit (10)(b) to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1998, SEC File Number 001-06450)
(10)(xiii)	Stock Option and Restricted Stock Agreements with Mark P. Bulriss effective April 1, 1998 (incorporated by reference to Exhibit (10)(a) to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1998, SEC File Number 001-06450)
(10)(xiv)	Resignation Agreement and Limited Release between Mark P. Bulriss and the Company dated November 5, 2004.
(10)(xv)(a)	Supplemental Executive Long Term Disability Benefit Plan effective January 1, 1995 (incorporated by reference to Exhibit (10)(xiv)(a) to the Company's Annual Report on Form 10-K for the year ended December 31, 2001, SEC File Number 001-06450)
(10)(xv)(b)	Amendment to Supplemental Executive Long Term Disability Benefit Plan dated April 3, 1998 (incorporated by reference to Exhibit (10)(xiv)(b) to the Company's Annual Report on Form 10-K for the year ended December 31, 2001, SEC File Number 001-06450)
(10)(xvi)	2002 Stock Option and Incentive Plan (incorporated by reference to Exhibit (10)(xv) to the Company's Annual Report on Form 10-K for the year ended December 31, 2002, SEC File Number 001-06450)
(10)(xvii)	Long Term Incentive Plan for Senior Executives, effective for fiscal years 2003-2005 (portions omitted pursuant to request for confidential treatment) (incorporated by reference to Exhibit 10(iii) to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2003, SEC File Number 001-06450)
(10)(xviii)	Incentive Compensation Plan, effective for fiscal year 2005
(10)(xix)	Severance Plan for Employees Covered Under the Corporate Change in Control Agreements, effective as of May 3, 1996, as amended.

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(21)	Subsidiaries
(23)	Consent of Independent Auditors
(31)(i)(a)	Rule 13a-14(a)/15d-14(a) Certifications
(31)(i)(b)	Rule 13a-14(a)/15d-14(a) Certifications
(32)(i)(a)	Section 1350 Certification
(32)(i)(b)	Section 1350 Certification

(b)    Reports on Form 8-K

During the fourth quarter of 2004 and through March X, 2005, the Company furnished the following reports on Form 8-K to the Securities and Exchange Commission.

Information provided under Item 1.01 of Form 8-K:

•

Form 8-K filed October 1, 2004, reporting the press release announcing the sale of WIL Research Laboratories.



•

Form 8-K filed November 12, 2004, reporting the entry into a termination agreement with a principal officer.



•

Form 8-K filed December 8, 2004, reporting the entry into a compensation agreement with a principal officer.

Information provided under Item 2.02 of Form 8-K:

•

Form 8-K filed October 21, 2004, reporting the third quarter and year-to-date 2004 results



•

Form 8-K filed February 3, 2005, reporting the fourth quarter and full year 2004 results

Information provided under Item 2.03 of Form 8-K:

•

Form 8-K filed November 1, 2004, reporting the creation of a direct financial obligation.

Information provided under Item 7.01 of Form 8-K:

•

Form 8-K filed October 14, 2004, reporting the press release announcing a change in reporting segments effective September 30, 2004.



•

Form 8-K filed December 15, 2004, providing prior quarter income statements for 2004 and 2003 restated for segment changes effective September 30, 2004.



•

Form 8-K filed February 2, 2005, reporting the press release announcing a change in reporting segments effective December 31, 2004.

84

SCHEDULE II

GREAT LAKES CHEMICAL CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
DECEMBER 31, 2004

				Additions
		Balance at Beginning of Period										Balance at End of Period
Description				Charges to Costs and Expenses			Charged to Other Accounts		Deductions
2004:
Reserve deducted from asset:
	Allowance for doubtful accounts receivable	$	3,907,000	$	(85,000	)	$	—	$	1,603,000	(A)	$	2,219,000
2003:
Reserve deducted from asset:
	Allowance for doubtful accounts receivable	$	4,676,000	$	76,000		$	—	$	845,000	(A)	$	3,907,000
2002:
Reserve deducted from asset:
	Allowance for doubtful accounts receivable	$	5,773,000	$	1,809,000		$	—	$	2,906,000	(A)	$	4,676,000

^(A)

Uncollectible accounts receivable written off, net of recoveries and foreign currency translation.

85

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GREAT LAKES CHEMICAL CORPORATION (Registrant)

Date March 4, 2005 /s/ John J. Gallagher III John J. Gallagher III, Chief Executive Officer
(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Date	March 4, 2005	/s/ Jeffrey Potrzebowski Jeffrey Potrzebowski, Senior Vice President and Chief Financial Officer (Principal Financial Officer)
Date	March 4, 2005	/s/ William L. Sherwood William L. Sherwood, Vice President and Corporate Controller (Principal Accounting Officer)
Date	March 4, 2005	/s/ Nigel D. T. Andrews Nigel D. T. Andrews, Chairman
Date	March 4, 2005	/s/ James W. Crownover James W. Crownover, Director
Date	March 4, 2005	/s/ Thomas M. Fulton Thomas M. Fulton, Director
Date	March 4, 2005	/s/ Martin M. Hale Martin M. Hale, Director
Date	March 4, 2005	/s/ Louis E. Lataif Louis E. Lataif, Director
Date	March 4, 2005	/s/ John C. Lechleiter John C. Lechleiter, Director
Date	March 4, 2005	/s/ Mack G. Nichols Mack G. Nichols, Director
Date	March 4, 2005	/s/ Jay D. Proops Jay D. Proops, Director

86

QuickLinks

PART I

ITEM 1. Business
ITEM 2. Properties
ITEM 3. Legal Proceedings
ITEM 4. Submission of Matters to a Vote of Security Holders

PART II

ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters

ITEM 6. Selected Financial Data

ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

ITEM 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF CASH FLOWS

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in millions, except as indicated)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

PART III

Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions
Item 14. Principal Accounting Fees and Services

PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K

SCHEDULE II

SIGNATURES

EX-3.(II)

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Exhibit (3)(ii)

AMENDED AND RESTATED


BY-LAWS


OF


GREAT LAKES CHEMICAL CORPORATION

ARTICLE I
Stockholders

        Section 1. Annual Meeting.    The annual meeting of the stockholders of the Corporation shall be held at the registered office of the Corporation in the State of Delaware or at such other place within or without the State of Delaware, as may be determined by the Board of Directors and as may be stated in the notice of the meeting. The Board of Directors may also, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as authorized by the General Corporation Law of the State of Delaware ("DGCL") and as provided in Section 3 of this Article I.

        The annual meeting shall be held on such date and at such time as shall be designated from time to time by the Board of Directors. The business to be transacted at such meeting shall be the election of directors and such other business as shall properly be brought before the meeting.

        No business may be transacted at an annual meeting of stockholders, other than business that is (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (c) otherwise properly brought before the annual meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 1 and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 1.

        In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

        To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than one hundred twenty (120) days nor more than one hundred fifty (150) days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which notice of the date of the annual meeting was mailed or public announcement of the date of the annual meeting was made, whichever first occurs. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder's notice as described above.

        To be in proper written form, a stockholder's notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of such stockholder, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such

business by such stockholder and any material interest of such stockholder in such business and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

        No business shall be conducted at the annual meeting of stockholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 1; provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 1 shall be deemed to preclude discussion by any stockholder of any such business. If the Chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

        The term "public announcement" shall mean an announcement in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").

        Section 2. Special Meetings.    Special meetings of the stockholders may be called by the Board of Directors, by the Chairman, or by the President. At any time, upon the written request of any person or persons entitled to call a special meeting, it shall be the duty of the Secretary to send out notices of such meeting, to be held within or without the State of Delaware and at such time, but not less than fifteen days nor more than thirty days after receipt of the request, as may be fixed by the Board of Directors. If the Board of Directors shall fail to fix a time or place, the meeting shall be held at the registered office of the Corporation in the State of Delaware at such time as shall be fixed by the Secretary within the above limits. The Board of Directors may also, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as authorized by the DGCL and as provided in Section 3 of this Article I.

        Section 3. Stockholder Meetings by Remote Communication.    If authorized by the Board of Directors in its sole discretion, and subject to guidelines and procedures as the Board of Directors may adopt, stockholders and proxyholders not physically present at a meeting of stockholders, whether such meeting is to be held at a designated place or solely by means of remote communication, may, by means of remote communication, participate in such meeting of stockholders and be deemed present in person and vote at such meeting, provided that (a) the Corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder, (b) the Corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (c) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Corporation.

Section 4. Notice of Meetings and Adjourned Meetings.

        (a)   A notice of each meeting of stockholders shall be given which shall state the place, if any, date and hour of the meeting and the means of remote communication, if any, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meetings. Notice shall be deemed given if: (i) mailed, when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation; (ii) by facsimile transmission, when directed to a number at which the stockholder has consented to receive notice; (iii) by electronic mail, when directed to an electronic mail

2

address at which the stockholder has consented to receive notice; (iv) by posting on an electronic network together with a separate notice to the stockholder of such specific posting, upon the later of such posting and the giving of such separate notice; and (v) by any other form of electronic transmission consented to by the stockholder, when directed to the stockholder. No publication of the notice of meetings shall be required. An affidavit of the Secretary or an Assistant Secretary or of the Transfer Agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. Any previously scheduled meeting of the stockholders may be postponed, and (unless the Certificate of Incorporation provides otherwise) any special meeting of the stockholders may be canceled, by resolution of the Board of Directors upon public notice given prior to the date previously scheduled for such meeting of stockholders.

        (b)   Whether or not a quorum is present, any annual, regular or special meeting of the stockholders may be adjourned to another date by the Chairman of the meeting or by a majority vote by the shares represented at such meeting. When a meeting is adjourned to another time or place, if any, notice need not be given of the adjourned meeting if the time and place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting, are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

        (c)   Whenever a notice of a meeting is required to be given to stockholders, a written waiver thereof, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting, either in person or by proxy, shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of a meeting, to the transaction of any business because the meeting was not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice.

        Section 5. Quorum.    Except as otherwise provided by law, a quorum at all meetings of stockholders shall consist of the holders of record of a majority of the shares entitled to vote thereat.

        Section 6. Conduct of Meeting.    Meetings of the stockholders shall be presided over by the Chairman, or if he is not present, by the President, or if he is not present, by a Vice President or other person chosen at the meeting. The Secretary or an Assistant Secretary of the Corporation, or in his absence, a person chosen at the meeting, shall act as Secretary of the meeting.

        Section 7. Inspectors of Election.    The Corporation, in advance of any meeting of stockholders, shall appoint one or more inspectors of election to act at the meeting or any adjournment thereof. In case any person who may be appointed as an inspector fails to appear or is unable to act, the vacancy may be filled by the Corporation in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, before entering upon the discharge of duties of inspector, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of such inspector's ability. The inspector or inspectors so appointed or designated shall (i) ascertain the number of shares of capital stock of the Corporation outstanding and the voting power of each such share, (ii) determine the shares of capital stock of the Corporation represented at the meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and (v) certify their determination of the number of shares of capital stock of the

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Corporation represented at the meeting and such inspectors' count of all votes and ballots. Such certification shall specify such other information as may be required by law. In determining the validity and counting of proxies and ballots cast at any meeting of stockholders of the Corporation, the inspectors may consider such information as is permitted by applicable law. No person who is a candidate for an office at an election may serve as an inspector at such election.

        Section 8. Voting.    All elections of directors shall be by ballot which may be satisfied by a written ballot or by a ballot submitted by electronic transmission, provided that such electronic submission must either set forth or be submitted with information from which it can be determined that the electronic submission was authorized by the stockholder or proxyholder. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided in the Restated Certificate of Incorporation of the Corporation. Nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 8 and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 8.

        In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

        To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than one hundred and twenty (120) days nor more than one hundred fifty (150) days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which notice of the date of the annual meeting was mailed or public announcement (as defined in Section 1) of the date of the annual meeting was made, whichever first occurs. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder's notice as described above.

        To be in proper written form, a stockholder's notice to the Secretary must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the person and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to nominate the persons named in his notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to be named as a nominee and to serve as a director if elected.

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        No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 8. If the Chairman of the annual meeting determines that a nomination was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.

        At every meeting of the stockholders, each stockholder entitled to vote at such meeting shall have, as to each matter submitted to a vote, one vote for each share of stock having voting rights registered in his name on the stock books of the Corporation.

        At all meetings of stockholders, a stockholder may vote by proxy executed in writing by the stockholder or his duly authorized attorney in fact and delivered to the Secretary of the meeting or submitted by electronic transmission by the stockholder, provided that such electronic submission must either set forth or be submitted with information from which it can be determined that electronic submission was authorized by the stockholder or proxyholder. No proxy shall be voted or acted upon after three years from its date, unless the proxy provided for a longer period.

        A quorum being present, directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote.

        In all matters, other than the election of directors, the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter, a quorum being present, shall be the act of the stockholders.

        Section 9. List of Stockholders.    The Secretary or other officer of the Corporation having charge of the stock ledger shall prepare and make or cause to be prepared and made, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at said election, arranged in alphabetical order, and showing the address of each such stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting, for a period of at least ten days prior to the meeting, during ordinary business hours at the principal place of business of the Corporation or on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Upon the willful neglect or refusal of the directors then in office to produce or cause to be produced such a list at any meeting for the election of directors held at a place, or to open such a list to examination on a reasonably accessible electronic network during any meeting for the election of directors held solely by means of remote communication, they shall be ineligible to any office at such meeting. The original or duplicate stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by this section or the books of the Corporation, or to vote in person or by proxy at such meeting.

Section 10. Fixing Date for Determination of Stockholders of Record.

        (a)   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 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

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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 nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action.

        (b)   If no record date is fixed:

        (i)    The record date for determining stockholders entitled to notice of or to vote at a meeting of the stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.

        (ii)   The record date for determining stockholder for any other purpose shall be at the close of business on the date on which the Board of Directors adopts the resolution relating thereto.

        (c)   A determination of stockholders of 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.

ARTICLE II
Directors

        Section 1. Number, Qualifications, Classes, Terms and Quorum.    The business and affairs of the Corporation shall be managed under the direction of the Board of Directors which shall consist of up to nine (9) members, as determined by the Board from time to time. The number of directors may be increased or decreased by resolution of the Board of Directors; provided, that no decrease in the number of directors shall cause a director to be removed from office. Directors need not be stockholders.

        Any director may resign at any time upon written notice to the Corporation. A majority of the total number of directors shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. The Board of Directors may elect a Chairman of the Board of Directors who shall preside at all meetings of the stockholders and of the Board of Directors. The Chairman of the Board of Directors shall have such other powers and perform such other duties as are delegated to him by the Board of Directors or as are incidental to his office.

        Section 2. Vacancies.    Any vacancy in the Board of Directors or newly created directorship resulting from any increase in the number of directors may be filled by a majority of the directors then in office, excluding any directors who shall theretofore have resigned as of a future date, although less than a quorum, or by a sole remaining director.

        Section 3. Meetings.    The Board of Directors shall meet each year immediately after the annual meeting of the stockholders, at the place where the annual meeting of the stockholders is held, for the purpose of electing officers and for the conduct of any other business that may be brought before the meetings. Such meeting shall be held without notice. If such meeting is not held as herein provided, the election of officers may be had at any subsequent meeting of the Board of Directors. Regular meetings of the Board of Directors may be held at such time and place within or without the State of Delaware, as the Board of Directors may from time to time designate. Special meetings of the Board of Directors may be held upon the call of the Chairman of the Board, or two or more members of the Board of Directors, at any place, within or without the State of Delaware, upon not less than 48 hours notice, specifying the time, place and general purposes of the meeting, given to each director either personally, or by telephone, telegram, by mail or by electronic submission. At any meeting at which all of the directors are present, notice of the time, place and purposes thereof shall be deemed waived. Notice of any meeting may be waived in writing, either before, during, or after any meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors, or members of

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a committee of the directors, need be specified in any written waiver of notice. A majority of the directors present at any meeting, whether or not a quorum is present, may adjourn the meeting and no notice of such adjourned meeting need be given.

        Section 4. Committees.    The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at 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 such absent or disqualified member.

        Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise the authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution or amending the By-Laws of the Corporation; and, unless the resolution expressly so provides, no such committee shall have the power or authority to declare a dividend or authorize the issuance of stock.

        Section 5. Action by Consent Without a Meeting.    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 members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee.

        Section 6. Meetings by Conference Telephone.    Members of the Board of Directors or of any committee designated by the Board may participate in a meeting of such Board or committee by means of 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 shall constitute presence in person at such meeting.

ARTICLE III
Officers

        Section 1. Officers.    The officers shall consist of a Chief Executive Officer, a President, one or more Vice Presidents and/or Senior or Executive Vice Presidents, a Secretary, one or more Assistant Secretaries, a Treasurer, and one or more Assistant Treasurers. Such officers shall be elected by the Board of Directors and each officer shall hold office until his successor is elected and qualified or until his earlier resignation or removal. Any officer may resign at any time upon written notice to the Corporation. Any number of offices may be held by the same person, but no officer shall execute, act or verify any instrument in more than one capacity. The Corporation may have such other officers and agents as the Board of Directors may determine, who shall be elected or appointed by the Board of Directors and hold office for such terms as are prescribed by the Board of Directors. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise, shall be filled by the Board of Directors. The Board of Directors may remove any officer with or without cause.

        Section 2. Chief Executive Officer.    Subject to the authority of the Board of Directors, the Chief Executive Officer shall administer the affairs of the Corporation and shall have such other powers and

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perform such other duties as are delegated to him by the Board of Directors, or by an authorized committee thereof, or are incidental to his office. During the time when the office of the Chairman of the Board is vacant, the Chief Executive Officer shall perform the duties of that office.

        Section 3. President.    Subject to the authority of the Board of Directors, the President shall, during the absence or disability of the Chief Executive Officer, administer the affairs of the Corporation and shall have such other powers and perform such other duties as are incidental to his office or as are delegated to him by the Board of Directors, or an authorized committee thereof, or by the Chief Executive Officer.

        Section 4. Vice Presidents.    Subject to the authority of the Board of Directors, the Vice Presidents, in the order designated by the Board of Directors, shall exercise the functions of the Chief Executive Officer and the President during the absence or disability of the Chief Executive Officer and the President. Each Vice President shall have such other duties as are assigned to him from time to time by the Board of Directors or the Chief Executive Officer.

        Section 5. Other Officers.    The Secretary and the Treasurer shall perform such duties as are incidental to their offices, or as are properly required of them by the Board of Directors or the Chief Executive Officer. The Assistant Secretaries shall, in the absence of the Secretary, perform the duties and exercise the powers of the Secretary, and shall perform such other duties as may be assigned by the Board of Directors or the Chief Executive Officer. Other subordinate officers elected or appointed by the Board of Directors shall exercise such powers and perform such duties as may be delegated to them.

        Section 6. Delegation of Authority.    In the case of the absence or incapacity of any officer, or for any other reason that the Board of Directors may deem sufficient, the Board of Directors or, in the absence of any action by the Board of Directors, the Chief Executive Officer may delegate any or all of the duties or powers of such officer to any other officer or to any other director or to any other person.

ARTICLE IV
Certificates of Stock

        Section 1. Form.    Every holder of stock in the Corporation shall be entitled to have a certificate signed by the Chairman of the Board of Directors, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation certifying the number of shares owned by him in such Corporation. If such certificate is countersigned (1) by a Transfer Agent other than the Corporation or its employee, or, (2) by a Registrar other than the Corporation or its employee, any other signature on the certificate may be a facsimile. In case any officer, Transfer Agent or Registrar who has signed or whose facsimile signature has been placed upon a certificate who has 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 were such officer, Transfer Agent or Registrar at the date of issue.

        Section 2. Transfers.    Transfers of shares of stock of the Corporation shall be made only on the books of the Corporation by the registered owner thereof, or his duly authorized attorney, with a Transfer Clerk or Transfer Agent appointed as specified in these By-Laws, and on surrender of the certificate or certificates for such shares of stock properly endorsed and with all taxes thereon paid. The person in whose name the shares of stock stand on the books of the Corporation shall be deemed by the Corporation to be the holder thereof for all purposes.

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        Section 3. Transfer Agent and Registrar.    The Board of Directors may appoint one or more Transfer Agents or Transfer Clerks and one or more Registrars, and may require all certificates for shares of stock to bear the signature or signatures of any of them.

        Section 4. Loss or Destruction.    In case of loss or destruction of a certificate for shares, another certificate may be issued in lieu thereof in such manner and upon such terms as the Board of Directors shall authorize, either by general resolution or by special resolution in each particular case.

ARTICLE V
Fiscal Year

        Section 1. Fiscal Year.    The fiscal year of the Corporation shall begin on the first day of January of each year and shall end on the 31st day of December following.

ARTICLE VI
Seal

        Section 1. Corporation Seal.    The Board of Directors shall provide a suitable corporate seal for use by the Corporation.

ARTICLE VII
Indemnification

        Section 1. Indemnification.    Each person who was or is made a party or is threatened to be made a party to or is involved in or called as a witness in any action, suit or proceeding, whether civil, criminal, administrative or investigative, and any appeal therefrom (hereinafter, collectively a "Proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is, was or had agreed to become a director of the Corporation or is, was or had agreed to become an officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, shall be indemnified and held harmless by the Corporation to the fullest extent permitted under the General Corporation Law of the State of Delaware (the "DGCL"), as the same now exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than the DGCL permitted the Corporation to provide prior to such amendment), against all expenses, liabilities and losses (including attorneys' fees, judgments, fines, excise taxes or penalties pursuant to the Employee Retirement Income Security Act of 1974, as amended, and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith; provided, that except as explicitly provided herein, prior to a Change in Control of the Corporation, as defined herein, a person seeking indemnity in connection with a Proceeding (or part thereof) initiated by such person against the Corporation or any director, officer, employee or agent of the Corporation shall not be entitled thereto unless the Corporation has joined in or consented to such proceeding (or part thereof). For purposes of this Article, a "Change in Control of the Corporation" shall be deemed to have occurred if the conditions set forth in any one of the following clauses shall have been satisfied: (a) any "person" (as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934 (as in effect as of December 7, 1995 (the "Exchange Act")) other than (i) the Corporation, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of shares of the Corporation (any such person is hereinafter referred to as a "Person"), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing more than 50% of the combined voting power of the Corporation's then outstanding securities (not including in

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the securities beneficially owned by such Person any securities acquired directly from the Corporation); (b) there is consummated a merger or consolidation of the Corporation with or into any other corporation, other than a merger or consolidation which would result in the holders of the voting securities of the Corporation outstanding immediately prior thereto holding securities which represent, in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Corporation, immediately after such merger or consolidation, more than 70% of the combined voting power of the voting securities of either the Corporation or the other entity which survives such merger or consolidation or the parent of the entity which survives such merger or consolidation; (c) the stockholders of the Corporation approve any plan or proposal for the liquidation or dissolution of the Corporation or an agreement for the sale or disposition by the Corporation of all or substantially all the Corporation's assets; or (d) during any period of two consecutive years (not including any period prior to December 7, 1995), individuals who at the beginning of such period constitute the Board of Directors and any new director (other than a director designated by a Person who has entered into an agreement with the Corporation to effect a transaction described in clause (a), (b) or (c) of this paragraph) whose election by the Board or nomination for election by the Corporation's stockholders was approved by a vote of at least two-thirds (²/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof. For purposes of this Article VII, where a Change in Control of the Corporation results from a series of related transactions, the Change in Control of the Corporation shall be deemed to have occurred on the date of the consummation of the first such transaction. For purposes of clause (a) of this paragraph, the stockholders of another corporation (other than the Corporation or a corporation described in clause (iv)), in the aggregate, shall be deemed to constitute a Person.

        Prior to a Change in Control of the Corporation, any indemnification under Section 1 (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 director, officer, employee or agent is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the DGCL. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel (who may be the regular counsel of the Corporation) in a written opinion or (3) by the stockholders.

        Following a Change in Control of the Corporation, any indemnification under this Section 1 (unless ordered by a court) shall be paid by the Corporation unless within 60 days of such request for indemnification a determination is made, in a written opinion, by special independent counsel selected by the person requesting indemnification and approved by the Corporation (which approval shall not be unreasonably withheld), which counsel has not otherwise performed services (other than in connection with similar matters) within the five years preceding its engagement to render such opinion for such person or for the Corporation or any affiliates (as such term is defined in Rule 405 under the Securities Act of 1933, as amended) of the Corporation (whether or not they were affiliates when services were so performed) ("Independent Counsel"), that indemnification of such person is not proper under the circumstances because such person has not met the necessary standard of conduct under the DGCL. Unless such person has theretofore selected Independent Counsel pursuant to this Section 1 and such Independent Counsel has been approved by the Corporation, legal counsel approved by a resolution or resolutions of the Board of Directors prior to a Change in Control of the Corporation shall be deemed to have been approved by the Corporation as required. Such Independent Counsel shall determine as promptly as practicable whether and to what extent such person would be permitted to be indemnified under applicable law and shall render its written opinion to the Corporation and such person to such effect. The Corporation agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such Independent Counsel against any

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and all expenses, claims, liabilities and damages arising out of or relating to this Article or its engagement pursuant hereto. In making a determination under this Section 1, the Independent Counsel referred to above shall determine that indemnification is permissible unless clearly precluded by this Article VII or the applicable provisions of the DGCL.

        Section 2. Payment of Expenses in Advance.    Expenses, including attorneys' fees, incurred by a person referred to in Section 1 of this Article in defending a proceeding shall be paid by the Corporation in advance of the final disposition of such proceeding, including any appeal therefrom, upon receipt of an undertaking (the "Undertaking") by or on behalf of such person to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation.

        Section 3. Right of Claimant to Bring Suit.    If a claim under Section 1 hereof is not paid in full by the Corporation within 60 days after a written claim has been received by the Corporation or if expenses pursuant to Section 2 hereof have not been advanced within 10 days after a written request for such advancement, accompanied by the Undertaking, has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim or the advancement of expenses. (If the claimant is successful, in whole or in part, in such suit or any other suit to enforce a right for expenses or indemnification against the Corporation or any other party under any other agreement, such claimant shall also be entitled to be paid the reasonable expense of prosecuting such claim.) It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required Undertaking has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the DGCL for the Corporation to indemnify the claimant for the amount claimed. After a Change in Control of the Corporation, the burden of proving such defense shall be on the Corporation, and any determination by the Corporation (including its Board of Directors, independent legal counsel or its stockholders) that the claimant had not met the applicable standard of conduct required under the DGCL shall not be a defense to the action nor create a presumption that claimant had not met such applicable standard of conduct.

        Section 4. Indemnity Not Exclusive.    The indemnification and advancement of expenses provided by, or granted pursuant to, the other sections of this Article VII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any statute, 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. The Board of Directors shall have the authority, by resolution, to provide for such other indemnification of directors, officers, employees or agents as it shall deem appropriate.

        Section 5. Insurance Indemnification.    The Corporation shall have power to purchase and maintain insurance to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise, against any expenses, liabilities or losses, whether or not the Corporation would have the power to indemnify such person against such expenses, liabilities or losses under the provisions of this Article VII or the DGCL.

        Section 6. Continuation of Indemnification; Enforceability.    The provisions of this Article shall be applicable to all proceedings commenced after its adoption, whether such arise out of events, acts, omissions or circumstances which occurred or existed prior or subsequent to such adoption, and 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 person. This Article shall be deemed to grant each person who, at any time that this Article is in effect, serves or agrees to serve in any capacity which entitles him to indemnification hereunder rights against the Corporation to enforce the provisions of this Article, and any repeal or other modification of this Article or any repeal or modification of the DGCL or any other applicable

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law shall not limit any rights of indemnification then existing or arising out of events, acts, omissions or circumstances occurring or existing prior to such repeal or modification, including, without limitation, the right to indemnification for proceedings commenced after such repeal or modification to enforce this Article with regard to acts, omissions, events or circumstances occurring or existing prior to such repeal or modification.

        Section 7. 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 and officer of the Corporation as to costs, charges and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to any proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation, to the full extent permitted by any applicable portion of this Article that shall not have been invalidated and to the full extent permitted by applicable law.

ARTICLE VIII
Amendments

        Section 1. Amendments.    The Board of Directors shall have the power to make, alter or repeal the By-Laws of the Corporation at the annual or any regular meeting of the Board of Directors or by unanimous written consent without a meeting, or at any special meeting called for such purposes.

Amended and Restated By-Laws
Adopted by the Board of Directors on
February 7, 2005.

/s/  KAREN WITTE DUROS Karen Witte Duros, Secretary

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Exhibit (3)(ii)

AMENDED AND RESTATED BY-LAWS OF GREAT LAKES CHEMICAL CORPORATION
ARTICLE I Stockholders
ARTICLE II Directors
ARTICLE III Officers
ARTICLE IV Certificates of Stock
ARTICLE V Fiscal Year
ARTICLE VI Seal
ARTICLE VII Indemnification
ARTICLE VIII Amendments

EX-10.(VI)

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Exhibit (10)(vi)

***Portions marked with asterisks within brackets have been omitted pursuant to a request for confidential treatment, and have been filed separately in connection with such request.

CHANGE IN CONTROL AGREEMENT (3x/3x)

        This Change in Control Agreement ("Agreement") is entered into this    day of February, 2005, by and between                        ("Executive") and Great Lakes Chemical Corporation ("Company").

Background

        A.    The Company considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its stockholders. In this connection, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control exists and that such possibility, and the uncertainty and questions that it may raise among management, could result in the departure or distraction of key management personnel to the detriment of the Company and its stockholders. Accordingly, the Company's Board of Directors has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's management, including the Executive, to their assigned duties without distraction and disruption in the event of a threatened or actual change in control or other major corporate transaction.

        B.    This Agreement does not constitute an employment contract, nor does it alter the Executive's status as an at-will employee of the Company. This Agreement merely sets out the severance benefits that the Company will provide if, but only if, the Executive's employment with the Company terminates or is deemed to terminate after the occurrence of an actual or potential change in control or other major transaction under the circumstances described herein or as otherwise provided in Section 7 following a major transaction.

        In consideration of the premises and the Executive's employment by the Company, the Executive and the Company agree as follows:

Agreement

        1.    Defined Terms.    The following terms, when capitalized, shall have the meanings specified below for purposes of this Agreement:

        (a)   "Beneficial Owner" means a "beneficial owner, as defined in Rule 13d-3 under the Exchange Act.

        (b)   "Board" means the Company's Board of Directors.

        (c)   "Cause" means, with respect to the Executive, the Executive's (i) act of fraud, embezzlement, theft, or other intentional material violation of the law in connection with or in the course of his employment, (ii) willful gross misconduct that is likely to materially injure the reputation, business, or a business relationship of the Company; (iii) violation of the Confidentiality and Non-Competition Agreement, or (iv) willful and continued failure to perform his duties for the Company (other than a failure due to Disability), after a demand for substantial performance to the Executive by the Board that specifically identifies the manner in which the Board believes that the Executive has not performed his duties. For purposes of the preceding sentence, no act, or failure to act, on the part of the Executive shall be deemed "willful," unless it was done or omitted by the Executive not in good faith and without reasonable belief that his act or omission was in or not opposed to the best interests of the Company. Notwithstanding the foregoing, the Executive's employment shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for that purpose (after reasonable

notice to the Executive and an opportunity for the Executive, together with his counsel, to be heard by the Board), finding that in the Board's good faith opinion, the Executive was guilty of conduct described in the first sentence of this Subsection and describing the specific acts or omissions constituting such conduct.

        (d)   "Change in Control" means, except as provided in Section 3, that the conditions set out in any one of the following paragraphs have been satisfied:

          (i)  any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than (A) the Company, (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of shares of the Company (any such person is hereinafter referred to as a "Person"), is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing more than 20% of the combined voting power of the Company's then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company);

         (ii)  there is consummated a merger or consolidation of the Company with or into any other corporation, other than a merger or consolidation that would result in the holders of the voting securities of the Company outstanding immediately prior thereto holding securities that represent, in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, immediately after such merger or consolidation, more than 70% of the combined voting power of the voting securities of either the Company or the other entity that survives such merger or consolidation or the parent of the entity that survives such merger or consolidation;

        (iii)  the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets; or

        (iv)  during any period of two consecutive years (not including any period before the date of this Agreement), individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in paragraph (i), (ii) or (iii) of this Subsection) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (²/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof.

        For purposes of this Agreement, where a Change in Control results from a series of related transactions, the Change in Control shall be deemed to have occurred on the date of the consummation of the first such transaction. For purposes of paragraph (i), the stockholders of another corporation (other than the Company or a corporation described in clause (D) of paragraph (i)) shall be deemed to constitute a Person. Further, it is understood by the parties that the sale, transfer, or other disposition of a subsidiary of the Company shall not constitute a Change in Control.

        Termination of the Executive's Employment during or following a Potential Change in Control shall be considered to have occurred following a Change in Control to the extent provided in Section 2(c).

        (e)   "Code" means the Internal Revenue Code of 1986, as amended from time to time.

        (f)    "Company" means Great Lakes Chemical Corporation and any successor, to the extent provided in Section 13.

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        (g)   "Confidentiality and Non-Compete Agreement" means the confidentiality and non-compete agreement between the Company and the Executive.

        (h)   "Date of Termination" means, (i) if the Executive Terminates Employment for Good Reason, the date of termination specified in the Executive's resignation, and (ii) if the Executive's Employment is Terminated for any other reason, the date on which a notice of termination is given.

        (i)    "Exchange Act" means the Securities Exchange Act of 1934, as in effect on the date of this Agreement.

        (j)    "Good Reason" means any of the following:

          (i)  without the Executive's express written consent, a material reduction in the Executive's duties, responsibilities, or status with the Company as in effect immediately before the Change in Control or Major Transaction, or a change in the Executive's titles or offices (to a lesser title or office) as in effect immediately before a Change in Control or Major Transaction, or any removal of the Executive from or any failure to reelect or reappoint the Executive to any of his positions, except in connection with the Executive's Termination of Employment by the Company for Cause or by the Executive for other than Good Reason;

         (ii)  a reduction by the Company in the Executive's base salary or perquisites as in effect on the date hereof or as the same may be increased from time to time;

        (iii)  a material reduction by the Company of the benefits provided to the Executive under any thrift, incentive, or compensation plan, or any pension, life insurance, health and accident, or disability plan in which the Executive is participating at the time of a Change in Control or Major Transaction (or plans providing the Executive with substantially similar benefits), or the taking of any action by the Company that would adversely affect the Executive's participation in or materially reduce the Executive's benefits under any of such plans or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the Change in Control or Major Transaction, unless such reduction or action is generally applicable to all employees of the Company or relevant subsidiary; or

        (iv)  the Company requires the Executive (without his consent) to perform the duties of his employment beyond the 50 mile radius from the location of the Executive's employment immediately before the Change in Control or Major Transaction;

provided, however, that (i) any Termination of Employment by the Executive shall not be considered a termination for Good Reason for purposes of this Agreement if such termination occurs after the Executive has been absent from his work for a continuous period of at least six months as a result of his incapacity due to physical or mental illness ("Disability Period") and occurs while the Executive is receiving benefits under the Company's (or any subsidiary's) long-term disability plan(s) in effect immediately before the Change in Control or Major Transaction; and (ii) if the Executive returns to work following a Disability Period, clause (i) of this paragraph shall not apply in determining whether Good Reason exists following such return.

        To Terminate Employment for Good Reason, the Executive must provide his written resignation to the Company within 90 days from the event (or from the last in a series of events) relied upon the Executive as a basis for termination for Good Reason, and such notice must specify such event(s).

        (k)   "Major Transaction" means, on or before [* * * * * * * * * *], the sale or disposition to a third party or parties of all or substantially all of any two of the following groups of businesses (whether simultaneously or in series):

          (i)  [* * * * * * * * * *];

         (ii)  [* * * * * * * * * *]; or

        (iii)  [* * * * * * * * * *].

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        If a Major Transaction results from a series of transactions, the Major Transaction shall be deemed to have occurred on the date of the consummation of the last such transaction. For avoidance of doubt, "sale or disposition" means that, upon the completion of a transaction of any legal form (including but not limited to a sale of assets, sale of stock, merger or consolidation, or formation of joint venture), the Company no longer owns equity representing a controlling interest in the business. A sale or disposition described above shall not be considered a Major Transaction, if it is also a Change in Control and payments are made pursuant to Section 5.

        (l)    "Person" means a "person" within the meaning of Subsection (d)(i).

        (m)  "Potential Change in Control" means, except as provided in Section 3, the occurrence and continuation of any of the following conditions:

          (i)  any Person is or becomes the Beneficial Owner, directly or indirectly, of 10% or more of the outstanding common stock of the Company, unless such Person has reported or is required to report such ownership on Schedule 13G under the Exchange Act (or any comparable or successor report) or on Schedule 13D under the Exchange Act (or any comparable or successor report), which Schedule 13D does not state any intention to or reserve the right to control or influence the management or policies of the Company or engage in any of the actions specified in Item 4 of such Schedule (other than the disposition of the common stock) so long as such Person neither reports nor is required to report such ownership other than as described in this paragraph; or

         (ii)  the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control; or

        (iii)  any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute or result in a Change in Control; or

        (iv)  any Person commences a solicitation (as defined in Rule 14a-1 of the Exchange Act) of proxies or consents that has the purpose of effecting or would (if successful) result in a Change in Control; or

         (v)  a tender or exchange offer for at least 10% of the outstanding voting securities of the Company, made by a Person, is first published or sent or given (within the meaning of Rule 14d-2(a) of the Exchange Act).

        Termination of the Executive's Employment during or following a Potential Change in Control shall be considered to have occurred following a Change in Control to the extent provided in Section 2(c).

        (n)   "Term" means the term of this Agreement, as determined pursuant to Section 2.

        (o)   "Terminates Employment", "Terminate(s) the Executive's Employment", and "Termination of Employment" all refer to a complete termination of the employment relationship between the Company and all employers required to be aggregated with the Company pursuant to Code Section 414(b) or (c).

        2.    Term.

        (a)   This Agreement shall commence as of January 1, 2005, and shall continue in effect through December 31, 2006; provided, however, that beginning January 1, 2007, and each January 1 thereafter, the term of this Agreement shall automatically be extended for an additional year unless, not later than March 31 of the preceding year, the Company shall have given the Executive notice that it does not wish to extend this Agreement or a Change in Control shall have occurred before such January 1; provided, however, (i) if a Change in Control shall have occurred during the term of this Agreement, this Agreement shall continue for a period of not less than 36 months after the month in which the

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Change in Control occurs, and (ii) this Agreement shall continue in effect during the pendency of a Potential Change in Control and for nine months thereafter.

        (b)   This Agreement shall be immediately terminated, and the Executive shall have no right to payment of any compensation or benefits hereunder, if he incurs a Termination of Employment before the occurrence of a Change in Control or Major Transaction; provided, however, if the Company Terminates the Executive's Employment without Cause, or the Executive Terminates Employment for Good Reason, before a Major Transaction that occurs on or before [***], and the Executive is not entitled to any payment pursuant to Section 5 or 6, the Executive's Termination of Employment shall be disregarded in determining whether he is entitled to a payment pursuant to Section 7. Nothing in this Agreement shall confer on the Executive any right to continue in the employ of the Company or interfere with or restrict in any way the rights of the Company, which are expressly reserved, to discharge the Executive at any time before a Change in Control or Major Transaction for any reason.

        (c)   Notwithstanding Subsection (b), if the Executive incurs a Termination of Employment during a Potential Change in Control or within nine months following the conclusion of a Potential Change in Control, such termination shall be deemed to be a termination after a Change in Control entitling the Executive to the severance and other benefits set out herein as if the Executive had Terminated Employment after a Change in Control.

        3.    Exception for Certain Spin-Off Transactions.    Notwithstanding the definitions in Section 1, neither a "Change in Control" nor a "Potential Change in Control" shall be deemed to have occurred by virtue of the Company entering into any agreement with respect to, the public announcement of, the approval by the Company's stockholders or directors of, or the consummation of, any transaction or series of integrated transactions (including any merger or other business combination transaction) entered into in connection with, or expressly conditioned upon the occurrence of, a spin-off (such transaction or series of integrated transactions, the "Spin-Off Transaction") immediately following which the recordholders of the common stock of the Company immediately prior to the Spin-Off Transaction continue to have substantially the same proportionate ownership in the spun-off entity as they had in the Company immediately prior to the Spin-Off Transaction; provided that such Spin-Off Transaction (including any related merger or other business combination transaction) has been approved by a vote of a majority of the Company's Continuing Directors (as defined below) then in office. For purposes of this Agreement, a "Continuing Director" shall mean any member of the Board of Directors of the Company who is a member of the Board of Directors as of the date of this Agreement and any person who subsequently becomes a member of the Board of Directors, if such person's nomination for election or election to the Board of Directors is recommended or approved by a majority of the Continuing Directors.

        4.    Relationship of Sections 5, 6, and 7.    Except as provided in this Section, the payment of benefits pursuant to Section 5, 6, or 7 shall make the Executive ineligible for benefits under any other Section of this Agreement or under the same Section of this Agreement as a result of a later Change in Control or Major Transaction. If the Executive receives benefits pursuant to Section 7, and a Change in Control occurs at least 18 months thereafter, the prior payment of benefits under Section 7 shall not make the Executive ineligible for benefits under Section 5.

        5.    Benefits Upon Termination of Employment Following a Change in Control.

        (a)   The Executive shall be entitled to benefits under this Section, rather than under any other severance program of the Company, if he incurs a Termination of Employment under the circumstances described in this Section following a Change in Control.

        (b)   If the Company Terminates the Executive's Employment for Cause, the Company shall be obliged to pay the Executive his full base salary through his termination date at the rate in effect at the time the notice of termination is given, and the Company shall have no further obligations under this Agreement.

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        (c)   If the Company Terminates the Executive's Employment for other than Cause, or if the Executive Terminates Employment for Good Reason, then the Company shall pay to the Executive as severance pay (and without regard to the provisions of any benefit plan) in one or more payments within 30 days following the Executive's Date of Termination, the sum of the following amounts:

          (i)  any accrued and owing portion of the Executive's full base salary through the Date of Termination at a rate equal to the greater of the rate in effect immediately before the occurrence of the event(s) giving rise to the termination or the rate in effect immediately before the Change in Control; plus an amount equal to unpaid salary with respect to any vacation days accrued but not taken as of the Date of Termination;

         (ii)  a pro-rata bonus determined by multiplying the greater of (A) the Executive's target annual bonus (assuming 100% fulfillment of all elements of the formula under which such bonus would have been calculated) for the year in which the Date of Termination occurs, or (B) the average of the annual bonuses paid or payable to the Executive for the three calendar years immediately before the year in which the Date of Termination occurs, multiplied by a fraction, the numerator of which is the number of days in the year of termination up to and including the Date of Termination and the denominator of which is 365;

        (iii)  an amount equal to the product of (A) the sum of (1) the Executive's annual base salary at a rate equal to the greater of the rate in effect immediately before the occurrence of the event(s) giving rise to the notice of termination or the rate in effect immediately before the Change in Control, and (2) the greater of the Executive's target annual bonus (assuming 100% fulfillment of all elements of the formula under which such bonus would have been calculated) for the year in which the Date of Termination occurs or the average of the annual bonuses payable to the Executive for the three calendar years immediately before the year in which the Date of Termination occurs, multiplied by (B) three; and

        (iv)  in lieu of any further payments not otherwise addressed by this Agreement under any long term incentive or compensation plan of the Company or any subsidiary thereof or any successor plan, an amount equal to all awards thereunder earned or accrued, but not yet paid, for periods up to and including the Date of Termination.

        (d)   If the Company Terminates the Executive's Employment for other than Cause, or if the Executive Terminates Employment for Good Reason, then the Company shall, in addition to paying the amounts owed to the Executive pursuant to Subsection (c):

          (i)  maintain in full force and effect, for the three years following the Executive's Termination of Employment, for the continued benefit of the Executive (and his spouse and dependents, if applicable), all life insurance, health and accident, and disability plans and programs in which the Executive was entitled to participate immediately before the occurrence of the event(s) giving rise to the notice of termination, provided that the Executive's continued participation is possible under the general terms and provisions of such plans and programs. If the Executive's continued participation in any such plan or program is barred, the Company shall arrange to provide the Executive upon comparable terms with benefits substantially similar to the benefits to which the Executive would otherwise have been entitled under such plans and programs. At the end of the three year period of continued coverage, the Executive shall have the option to have assigned to him, at no cost and with no apportionment of pre-paid premiums, any assignable insurance policy owned by the Company or any subsidiary thereof and relating specifically to the Executive. The Executive's receipt, from a new employer, of any of the benefits described in this Subsection shall not eliminate the Company's obligations to provide the Executive with such benefits (or their equivalent), but shall act as an offset to the Company's obligations hereunder;

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         (ii)  in addition to the retirement benefits to which the Executive is entitled under each defined benefit pension plan of the Company ("Pension Plan") or any successor plan thereto, including, but not limited to the Retirement Plan and the Supplemental Retirement Plan, the Company shall pay to the Executive, in cash within 30 days following his Date of Termination, a lump sum amount equal to the excess of (A) the actuarial equivalent of the retirement pension payable as a level single life annuity beginning as of the first day of the month following the Executive's 65^th birthday or earlier date after the Executive's Termination of Employment (taking into account any early retirement subsidies associated therewith) that the Executive would have accrued under the terms of each such Pension Plan (without regard to any amendment to such Pension Plan made after a Change in Control that adversely affects in any manner the computation of retirement benefits thereunder), determined as if the Executive were fully vested thereunder and had accumulated service for three years following his Termination of Employment and had been credited under each such Pension Plan during such period with compensation equal to the higher of the Executive's annual base salary in effect immediately before the occurrence of the event(s) giving rise to the notice of termination or the Executive's annual base salary at the rate in effect immediately before the Change in Control, plus the greater of the Executive's target annual bonus (assuming 100% fulfillment of all elements of the formula under which such bonus would have been calculated) for the year in which the Date of Termination occurs or the average of the Executive's annual bonuses for the three years immediately preceding the year in which the Date of Termination occurs over (B) the actuarial equivalent of the retirement pension payable as a level single life annuity beginning as of the first day of the month following the Executive's 65^th birthday or earlier date after the Executive's Termination of Employment (taking into account any early retirement subsidies associated therewith) that the Executive had accrued pursuant to the provisions of each such Pension Plan as of the Date of Termination. For purposes of the preceding sentence, the annuity starting date providing the largest payment to the Executive shall be used. For purposes of this paragraph, "actuarial equivalent" shall be determined using the same methods and assumptions utilized under each of the Pension Plans, as applicable, immediately before occurrence of the event(s) giving rise to the notice of termination (without regard to any amendment of such methods and assumptions made after a Change in Control that results in a lower payment under this paragraph);

        (iii)  all awards to the Executive under any Company stock plan shall vest upon the Change in Control. This paragraph supersedes any inconsistent provisions in any stock plan or award issued thereunder, and constitutes an amendment to any such award that has been approved by the Committee as provided under any stock plan (provided, however, that notwithstanding any agreement elsewhere to the contrary, the period of time in which the Executive may exercise vested stock awards shall end on the earlier of the date on which the right to exercise such award would have expired if the Executive had remained an employee of the Company or two years from the Date of Termination);

        (iv)  the Company shall reimburse the Executive for individual outplacement services to be provided by a firm of the Executive's choice or, at the Executive's election, provide the Executive with the use of office space, office supplies, and secretarial assistance satisfactory to the Executive. The aggregate expenditures of the Company pursuant to this paragraph shall not exceed $20,000;

         (v)  the Company shall continue to pay the Executive any car allowance in effect as of the Date of Termination for the three year period thereafter,

        (vi)  the Company shall cause title to the laptop or notebook computer (and the associated docking station, if any) provided by the Company or any of its subsidiaries for the Executive's principal use to be transferred to the Executive, and shall permit the Executive's use of any "shrink wrap" or other standard software generally installed with a new computer (such as the operating system, office programs, etc.) under the Company's licenses for the three year period

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following the Date of Termination, provided that appropriate measures are taken by the Company's Information Services Department to insure that all proprietary information and software, as well as any software solely related to use of the Company's networks is removed; and

       (vii)  the Company shall pay all reasonable out-of-pocket expenses, including reasonable legal fees and legal expenses, incurred by the Executive in connection with any judicial or other proceeding, including any arbitration proceeding, to enforce this Agreement or to construe, determine, or defend the validity of this Agreement.

        (e)   This Agreement and all payments pursuant hereto are intended to comply with Code Section 409A and the guidance thereunder, and this Agreement shall be construed accordingly. To the extent that compliance with Section 409A(a)(2)(B)(i) would require any payment otherwise provided for by this Agreement to be delayed, such payment shall be made as soon as administratively feasible after the period of delay required by Code Section 409A(a)(2)(B)(i).

        6.    Benefits Upon Termination of Employment Following a Major Transaction.

        (a)   The Executive shall be entitled to benefits under this Section, rather than under any other severance program of the Company, if he incurs a Termination of Employment under the circumstances described in this Section following a Major Transaction.

        (b)   If the Company Terminates the Executive's Employment for Cause, the Company shall be obliged to pay the Executive his full base salary through his termination date at the rate in effect at the time the notice of termination is given, and the Company shall have no further obligations under this Agreement.

        (c)   If the Company Terminates the Executive's Employment for other than Cause, or if the Executive Terminates Employment for Good Reason, then the Company shall pay to the Executive as severance pay (and without regard to the provisions of any benefit plan) in one or more payments within 30 days following the Executive's Date of Termination, the sum of the following amounts:

          (i)  any accrued and owing portion of the Executive's full base salary through the Date of Termination at a rate equal to the greater of the rate in effect immediately before the occurrence of the event(s) giving rise to the notice of termination or the rate in effect immediately before the Major Transaction; plus an amount equal to unpaid salary with respect to any vacation days accrued but not taken as of the Date of Termination;

         (ii)  a pro-rata bonus determined by multiplying the greater of (A) the Executive's target annual bonus (assuming 100% fulfillment of all elements of the formula under which such bonus would have been calculated) for the year in which the Date of Termination occurs, or (B) the average of the annual bonuses paid or payable to the Executive for the three calendar years immediately before the year in which the Date of Termination occurs, multiplied by a fraction, the numerator of which is the number of days in the year of termination up to and including the Date of Termination and the denominator of which is 365;

        (iii)  an amount equal to the product of (A) the sum of (1) the Executive's annual base salary at a rate equal to the greater of the rate in effect immediately before the occurrence of the event(s) giving rise to the notice of termination or the rate in effect immediately before the Major Transaction, and (2) the greater of the Executive's target annual bonus (assuming 100% fulfillment of all elements of the formula under which such bonus would have been calculated) for the year in which the Date of Termination occurs or the average of the annual bonuses payable to the Executive for the three calendar years immediately before the year in which the Date of Termination occurs, multiplied by (B) three; and

        (iv)  in lieu of any further payments not otherwise addressed by this Agreement under any long term incentive or compensation plan of the Company or any subsidiary thereof or any

8

successor plan, an amount equal to all awards thereunder earned or accrued, but not yet paid, for periods up to and including the Date of Termination.

        (d)   If the Company Terminates the Executive's Employment for other than Cause, or if the Executive Terminates Employment for Good Reason, then the Company shall, in addition to paying the amounts owed to the Executive pursuant to Subsection (c):

          (i)  maintain in full force and effect, for the three years following the Executive's Termination of Employment, for the continued benefit of the Executive (and his spouse and dependents, if applicable), all life insurance, health and accident, and disability plans and programs in which the Executive was entitled to participate immediately before the occurrence of the event(s) giving rise to the notice of termination, provided that the Executive's continued participation is possible under the general terms and provisions of such plans and programs. If the Executive's continued participation in any such plan or program is barred, the Company shall arrange to provide the Executive upon comparable terms with benefits substantially similar to the benefits to which the Executive would otherwise have been entitled under such plans and programs. At the end of the three year period of continued coverage, the Executive shall have the option to have assigned to him, at no cost and with no apportionment of pre-paid premiums, any assignable insurance policy owned by the Company or any subsidiary thereof and relating specifically to the Executive. The Executive's receipt, from a new employer, of any of the benefits described in this Subsection shall not eliminate the Company's obligations to provide the Executive with such benefits (or their equivalent), but shall act as an offset to the Company's obligations hereunder;

         (ii)  in addition to the retirement benefits to which the Executive is entitled under each defined benefit pension plan of the Company ("Pension Plan") or any successor plan thereto, including, but not limited to the Retirement Plan and the Supplemental Retirement Plan, the Company shall pay to the Executive, in cash within 30 days following his Date of Termination, a lump sum amount equal to the excess of (A) the actuarial equivalent of the retirement pension payable as a level single life annuity beginning as of the first day of the month following the Executive's 65^th birthday or earlier date after the Executive's Termination of Employment (taking into account any early retirement subsidies associated therewith) that the Executive would have accrued under the terms of each such Pension Plan (without regard to any amendment to such Pension Plan made after a Major Transaction that adversely affects in any manner the computation of retirement benefits thereunder), determined as if the Executive were fully vested thereunder and had accumulated service for three years following his Date of Termination and had been credited under each such Pension Plan during such period with compensation equal to the higher of the Executive's annual base salary in effect immediately before the occurrence of the event(s) giving rise to the Executive's notice of termination or the Executive's annual base salary at the rate in effect immediately before the Major Transaction, plus the greater of the Executive's target annual bonus (assuming 100% fulfillment of all elements of the formula under which such bonus would have been calculated) for the year in which the Date of Termination occurs or the average of the Executive's annual bonuses for the three years immediately preceding the year in which the Date of Termination occurs over (B) the actuarial equivalent of the retirement pension payable as a level single life annuity beginning as of the first day of the month following the Executive's 65^th birthday or earlier date after the Executive's Termination of Employment (taking into account any early retirement subsidies associated therewith) that the Executive had accrued pursuant to the provisions of each such Pension Plan as of the Date of Termination. For purposes of the preceding sentence, the annuity starting date providing the largest payment to the Executive shall be used. For purposes of this paragraph, "actuarial equivalent" shall be determined using the same methods and assumptions utilized under each of the Pension Plans, as applicable, immediately before occurrence of the event(s) giving rise to the notice of termination (without regard to any

9

amendment of such methods and assumptions made after a Major Transaction that results in a lower payment under this paragraph);

        (iii)  all awards to the Executive under any Company stock plan shall vest upon the Major Transaction. This paragraph supersedes any inconsistent provisions in any stock plan or award issued thereunder, and constitutes an amendment to any such award that has been approved by the Committee as provided under any stock plan (provided, however, that notwithstanding any agreement elsewhere to the contrary, the period of time in which the Executive may exercise vested stock awards shall end on the earlier of the date on which the right to exercise such award would have expired if the Executive had remained an employee of the Company or two years from the Date of Termination);

        (iv)  the Company shall reimburse the Executive for individual outplacement services to be provided by a firm of the Executive's choice or, at the Executive's election, provide the Executive with the use of office space, office supplies, and secretarial assistance satisfactory to the Executive. The aggregate expenditures of the Company pursuant to this paragraph shall not exceed $20,000;

         (v)  the Company shall continue to pay the Executive any car allowance in effect as of the Date of Termination for the three year period thereafter,

        (vi)  the Company shall cause title to the laptop or notebook computer (and the associated docking station, if any) provided by the Company or any of its subsidiaries for the Executive's principal use to be transferred to the Executive, and shall permit the Executive's use of any "shrink wrap" or other standard software generally installed with a new computer (such as the operating system, office programs, etc.) under the Company's licenses for the three year period following the Executive's Date of Termination, provided that appropriate measures are taken by the Company's Information Services Department to insure that all proprietary information and software, as well as any software solely related to use of the Company's networks is removed; and

       (vii)  the Company shall pay all reasonable out-of-pocket expenses, including reasonable legal fees and legal expenses, incurred by the Executive in connection with any judicial or other proceeding, including any arbitration proceeding, to enforce this Agreement or to construe, determine, or defend the validity of this Agreement.

        (e)   This Agreement and all payments pursuant hereto are intended to comply with Code Section 409A and the guidance thereunder, and this Agreement shall be construed accordingly. To the extent that compliance with Section 409A(a)(2)(B)(i) would require any payment otherwise provided for by this Agreement to be delayed, such payment shall be made as soon as administratively feasible after the period of delay required by Code Section 409A(a)(2)(B)(i).

        7.    Benefits Payable Following Major Transaction.    If the Executive has not incurred a Termination of Employment on or before the 366^th day following a Major Transaction ("Pay Out Date"), the Company shall pay to the Executive as a bonus (and without regard to the provisions of any benefit plan) in a lump sum payment, an amount equal to the product of (i) the sum of (A) the Executive's annual base salary at the rate in effect immediately before the Major Transaction, plus (B) the greater of (I) the Executive's target annual bonus (assuming 100% fulfillment of all elements of the formula under which such bonus would have been calculated) in the year in which the Pay-Out Date occurs, and (II) the average of the annual bonuses paid or payable to the Executive for the three calendar years immediately before the year in which the Pay-Out Date occurs, multiplied by (ii) three. Upon such payment, all of the Company's obligations with respect to the Major Transaction shall have been fulfilled. Under no circumstances shall the Executive be entitled to a payment pursuant to this Section and Section 6 as a result of a Major Transaction.

        8.    No Obligation to Mitigate.    The Executive shall not be required to mitigate the amount of any payment or benefits provided for in Section 5 or 6 by seeking other employment or otherwise, nor

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(except as provided in paragraph 5(d)(i) or 6(d)(i)) shall the amount of any payment or benefits provided for in Section 5 or 6 be reduced by any payments or benefits received by the Executive as the result of employment by another employer after the Date of Termination, or otherwise; provided, however, that the amount payable under Section 5 or 6 shall be reduced by the amount of any severance, termination, or notice pay (or any other similar amounts) required by law to be paid to the Executive by the Company or its subsidiaries and by any salary or other amounts paid to the Executive during any notice period that the Company or its subsidiaries is required by law to provide.

        9.    Gross-Up for Excise Taxes.    If any payment or benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive's employment (whether pursuant to the terms of this Agreement or any other plan, arrangement, or agreement with the Company) (all such payments and benefits being hereinafter called "Total Payments") would be subject (in whole or part) to the excise tax imposed under Code Section 4999 ("Excise Tax"), the Company shall pay the Executive an additional amount ("Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state, and local income tax and Excise Tax upon the payment provided for by this Subsection, shall be equal to the Total Payments. For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) the Executive's Total Payments shall be treated as "parachute payments" within the meaning of Code Section 280G(b)(2); and all "excess parachute payments" within the meaning of Code Section 280G(b)(1) shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected by the accounting firm that was, immediately before the actual or deemed Change in Control, the Company's independent auditor ("Auditor") and reasonably acceptable to the Executive, such other payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of Code Section 280G(b)(4)(A), or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of Code Section 280G(b)(4)(B), in excess of the base amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, (ii) the amount of the Total Payments that shall be treated as subject to the Excise Tax shall be equal to the lesser of (1) the total amount of the Total Payments or (2) the amount of excess parachute payments within the meaning of Code Section 280G(b)(1) (after applying clause (i) above) and (iii) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence (or, if higher, in the state and locality of the Executive's principal place of business) on the Date of Termination, net of the maximum reduction in federal income taxes that could be obtained from deduction of such state and local taxes. In the event that the Excise Tax is later determined to be less than the amount taken into account hereunder at the time of Termination of Employment, the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state, and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state, or local income tax deduction) plus interest on the amount of such repayment at 120% of the rate provided in Code Section 1274(b)(2)(B). If the Excise Tax is determined to exceed the amount taken into account hereunder at the time of Termination of Employment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment to the Executive with respect to such excess (plus any interest, penalties, or additions payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each

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reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Severance Payments. Except as otherwise expressly provided, the Company shall pay the amounts required by this Section within 30 days of the Date of Termination. For purposes of this Section, a Major Transaction shall be deemed a Change in Control.

        10.    Default in Payment.    Any payment not made within ten days after it is due in accordance with this Agreement shall thereafter bear interest, compounded quarterly, at the prime rate from time to time in effect at the Chase Manhattan Bank of New York.

        11.    Rights and Waivers.    All rights and remedies of the parties hereto are separate and cumulative, and no one of them, whether exercised or not, shall be deemed to exclude, limit, or prejudice any other right or remedy that either of the parties hereto may have. No party to this Agreement shall be deemed to waive any right or remedy under this Agreement, unless such waiver is in writing and signed by such party. No delay or omission on the part of either party in exercising any right or remedy shall operate as a waiver of such right or remedy or any other right or remedy. A waiver on any one occasion shall not be construed as a bar to or a waiver of any right or remedy on any future occasion.

        12.    Effect on Other Plans, Agreements, and Benefits.    Except to the extent expressly set forth herein, any benefit or compensation to which the Executive is entitled under any agreement between the Executive and the Company or any of its subsidiaries or under any plan maintained by the Company or any of its subsidiaries in which the Executive participates or participated shall not be modified or lessened in any way, but shall be payable according to the terms of the applicable plan or agreement. The terms of this Agreement shall supersede and terminate any prior change in control severance agreement, or the provisions of any other agreement providing benefits following a change in control, entered into between the Executive and the Company or any subsidiary thereof. Notwithstanding the above, any benefits received by the Executive pursuant to this Agreement shall be in lieu of any severance benefits to which the Executive would otherwise be entitled under any general severance policy maintained by the Company or the relevant subsidiary for its management personnel or under any employment contract between the Executive and the Company or any subsidiary thereof.

        13.    Unsecured Obligation.    All rights of the Executive or any beneficiary of the Executive who succeeds to the Executive's rights to payments or benefits under this Agreement shall at all times be entirely unfunded and no provision shall at any time be made with respect to segregating any assets of the Company or payment of any amounts due hereunder. Neither the Executive nor any such beneficiary shall have any interest in or rights against any specific assets of the Company or any of its subsidiaries, and the Executive and any such beneficiary shall have only the rights of a general unsecured creditor of the Company.

        14.    Successors.

        (a)   The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement before the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled hereunder if he Terminated Employment for Good Reason after a Change in Control, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined, and any successor to its business and/or

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assets as aforesaid that executes and delivers the agreement provided for in this Subsection or otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

        (b)   The Company shall require any successor to a business acquired in a Major Transaction, by agreement in form and substance satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place, if the Executive's employment with the Company is to be terminated as a result of the transaction but the Executive is offered employment with such successor on terms that do not constitute Good Reason. Failure of the Company to obtain such agreement before the effectiveness of any such Major Transaction shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled hereunder if he Terminated Employment for Good Reason after a Major Transaction, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined, and party to a Major Transaction that executes and delivers the agreement provided for in this Subsection or otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

        (c)   This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If the Executive should die while any amounts would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's devisee, legatee, or other designee or, if there be no such designee, to the Executive's estate.

        15.    Burden of Proof.    In any judicial or other proceedings in which the Executive's right to, or the amount of, benefits hereunder is disputed, the ultimate burden of proof shall be on the Company.

        16.    Arbitration.    Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Indianapolis, Indiana by three arbitrators, one of whom shall be appointed by the Company, one of whom shall be appointed by the Executive, and the third of whom shall be appointed by the first two arbitrators. If either the Company or the Executive fails to appoint an arbitrator within 20 days of a request in writing by the other to do so, or if the first two arbitrators cannot agree on the appointment of a third arbitrator within 20 days after the second arbitrator is designated, then such arbitrator shall be appointed by the Chief Judge of the United States District Court located in the city of Indianapolis, or upon his failure to act, by the American Arbitration Association so as to enable the arbitrators to render an award within 90 days after the three arbitrators have been appointed. Following the selection of arbitrators as set forth above, the arbitration shall be conducted promptly and expeditiously and in accordance with the rules of the American Arbitration Association. Pending the resolution of such dispute or controversy, the Company will continue to pay the Executive without interruption his full base salary at the rate in effect immediately before the notice giving rise to the dispute was given and continue the Executive as a participant in all thrift, incentive, compensation, pension, life insurance, health and accident or disability plans in which the Executive was participating when the notice giving rise to the dispute was given at the level in effect immediately before such notice. Judgment may be entered on the arbitrator's award in any court having jurisdiction; provided, however, that the Executive shall be entitled to seek specific performance of his right to be paid during the pendency of any dispute or controversy arising under or in connection with this Agreement. The Company shall bear all of the expenses relating to any arbitration under this Agreement.

        17.    Amendment.    No provision of this Agreement may be amended or waived, except by written agreement signed by both the Company and the Executive.

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        18.    Entire Agreement.    This Agreement contains the entire agreement and understanding of the parties regarding the transaction contemplated herein and supersedes all prior agreements, arrangements, or understandings, whether written or oral, relating to the subject matter hereof, including, without limitation, any letters, agreements, or understandings between the Executive and the Company or any subsidiary thereof before the date hereof. Execution of this Agreement shall supersede and terminate any prior change in control severance agreement, or the provisions of any other agreement providing benefits following a change in control, entered into between the Executive and the Company or any subsidiary thereof.

        19.    Severability.    If any provision of the Agreement is held to be invalid, illegal, or unenforceable, the remainder of this Agreement shall not be affected thereby. If any provision of this Agreement is held by a court of competent jurisdiction to conflict with any federal, state, or local law, such provision is hereby declared to be of such force and effect as is permissible in such jurisdiction.

        20.    Governing Law.    The provisions of this Agreement shall be construed in accordance with, and governed by, the laws of the State of Indiana without regard to principles of conflict of laws.

        21.    Counterparts.    This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same instrument.

	GREAT LAKES CHEMICAL CORPORATION
	By:
Date:	Date:

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Exhibit (10)(vi)

EX-10.(VII)

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Exhibit (10)(vii)

***Portions marked with asterisks within brackets have been omitted pursuant to a request for confidential treatment, and have been filed separately in connection with such request.

CHANGE IN CONTROL AGREEMENT

        This Change in Control Agreement ("Agreement") is entered into, effective as of December 2, 2004, by and between John J. Gallagher III ("Executive") and Great Lakes Chemical Corporation ("Company").

Background

        A.    The Company considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its stockholders. In this connection, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control exists and that such possibility, and the uncertainty and questions that it may raise among management, could result in the departure or distraction of key management personnel to the detriment of the Company and its stockholders. Accordingly, the Company's Board of Directors has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's management, including the Executive, to their assigned duties without distraction and disruption in the event of a threatened or actual change in control or other major corporate transaction.

        B.    This Agreement does not constitute an employment contract, nor does it alter the Executive's status as an at-will employee of the Company. This Agreement merely sets out the severance benefits that the Company will provide if, but only if, the Executive's employment with the Company terminates or is deemed to terminate after the occurrence of an actual or potential change in control or other major transaction under the circumstances described herein or as otherwise provided in Section 7 following a major transaction.

        In consideration of the premises and the Executive's employment by the Company, the Executive and the Company agree as follows:

Agreement

        1.    Defined Terms.    The following terms, when capitalized, shall have the meanings specified below for purposes of this Agreement:

        (a)   "Beneficial Owner" means a "beneficial owner, as defined in Rule 13d-3 under the Exchange Act.

        (b)   "Board" means the Company's Board of Directors.

        (c)   "Cause" means, with respect to the Executive, the Executive's (i) act of fraud, embezzlement, theft, or other intentional material violation of the law in connection with or in the course of his employment, (ii) willful gross misconduct that is likely to materially injure the reputation, business, or a business relationship of the Company; (iii) violation of the Confidentiality and Non-Competition Agreement, or (iv) willful and continued failure to perform his duties for the Company (other than a failure due to Disability), after a demand for substantial performance to the Executive by the Board that specifically identifies the manner in which the Board believes that the Executive has not performed his duties. For purposes of the preceding sentence, no act, or failure to act, on the part of the Executive shall be deemed "willful," unless it was done or omitted by the Executive not in good faith and without reasonable belief that his act or omission was in or not opposed to the best interests of the Company. Notwithstanding the foregoing, the Executive's employment shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire

membership of the Board at a meeting of the Board called and held for that purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with his counsel, to be heard by the Board), finding that in the Board's good faith opinion, the Executive was guilty of conduct described in the first sentence of this Subsection and describing the specific acts or omissions constituting such conduct.

        (d)   "Change in Control" means, except as provided in Section 3, that the conditions set out in any one of the following paragraphs have been satisfied:

        (i)    any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than (A) the Company, (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of shares of the Company (any such person is hereinafter referred to as a "Person"), is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing more than 20% of the combined voting power of the Company's then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company);

        (ii)   there is consummated a merger or consolidation of the Company with or into any other corporation, other than a merger or consolidation that would result in the holders of the voting securities of the Company outstanding immediately prior thereto holding securities that represent, in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, immediately after such merger or consolidation, more than 70% of the combined voting power of the voting securities of either the Company or the other entity that survives such merger or consolidation or the parent of the entity that survives such merger or consolidation;

        (iii)  the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets; or

        (iv)  during any period of two consecutive years (not including any period before the date of this Agreement), individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in paragraph (i), (ii) or (iii) of this Subsection) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (²/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof.

For purposes of this Agreement, where a Change in Control results from a series of related transactions, the Change in Control shall be deemed to have occurred on the date of the consummation of the first such transaction. For purposes of paragraph (i), the stockholders of another corporation (other than the Company or a corporation described in clause (D) of paragraph (i)) shall be deemed to constitute a Person. Further, it is understood by the parties that the sale, transfer, or other disposition of a subsidiary of the Company shall not constitute a Change in Control.

Termination of the Executive's Employment during or following a Potential Change in Control shall be considered to have occurred following a Change in Control to the extent provided in Section 2(c).

        (e)   "Code" means the Internal Revenue Code of 1986, as amended from time to time.

        (f)    "Company" means Great Lakes Chemical Corporation and any successor, to the extent provided in Section 13.

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        (g)   "Confidentiality and Non-Compete Agreement" means the confidentiality and non-compete agreement between the Company and the Executive.

        (h)   "Date of Termination" means, (i) if the Executive Terminates Employment for Good Reason, the date of termination specified in the Executive's resignation, and (ii) if the Executive's Employment is Terminated for any other reason, the date on which a notice of termination is given.

        (i)    "Exchange Act" means the Securities Exchange Act of 1934, as in effect on the date of this Agreement.

        (j)    "Good Reason" means any of the following:

        (i)    without the Executive's express written consent, a material reduction in the Executive's duties, responsibilities, or status with the Company as in effect immediately before the Change in Control or Major Transaction, or a change in the Executive's titles or offices (to a lesser title or office) as in effect immediately before a Change in Control or Major Transaction, or any removal of the Executive from or any failure to reelect or reappoint the Executive to any of his positions, except in connection with the Executive's Termination of Employment by the Company for Cause or by the Executive for other than Good Reason;

        (ii)   a reduction by the Company in the Executive's base salary or perquisites as in effect on the date hereof or as the same may be increased from time to time;

        (iii)  a material reduction by the Company of the benefits provided to the Executive under any thrift, incentive, or compensation plan, or any pension, life insurance, health and accident, or disability plan in which the Executive is participating at the time of a Change in Control or Major Transaction (or plans providing the Executive with substantially similar benefits), or the taking of any action by the Company that would adversely affect the Executive's participation in or materially reduce the Executive's benefits under any of such plans or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the Change in Control or Major Transaction, unless such reduction or action is generally applicable to all employees of the Company or relevant subsidiary; or

        (iv)  the Company requires the Executive (without his consent) to perform the duties of his employment beyond the 50 mile radius from the location of the Executive's employment immediately before the Change in Control or Major Transaction;

provided, however, that (i) any Termination of Employment by the Executive shall not be considered a termination for Good Reason for purposes of this Agreement if such termination occurs after the Executive has been absent from his work for a continuous period of at least six months as a result of his incapacity due to physical or mental illness ("Disability Period") and occurs while the Executive is receiving benefits under the Company's (or any subsidiary's) long-term disability plan(s) in effect immediately before the Change in Control or Major Transaction; and (ii) if the Executive returns to work following a Disability Period, clause (i) of this paragraph shall not apply in determining whether Good Reason exists following such return.

To Terminate Employment for Good Reason, the Executive must provide his written resignation to the Company within 90 days from the event (or from the last in a series of events) relied upon the Executive as a basis for termination for Good Reason, and such notice must specify such event(s).

        (k)   "Major Transaction" means, on or before [* * * * * * * * * *], the sale or disposition to a third party or parties of all or substantially all of any two of the following groups of businesses (whether simultaneously or in series):

        (i)    [* * * * * * * * * *];

        (ii)   [* * * * * * * * * *]; or

        (iii)  [* * * * * * * * * *].

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If a Major Transaction results from a series of transactions, the Major Transaction shall be deemed to have occurred on the date of the consummation of the last such transaction. For avoidance of doubt, "sale or disposition" means that, upon the completion of a transaction of any legal form (including but not limited to a sale of assets, sale of stock, merger or consolidation, or formation of joint venture), the Company no longer owns equity representing a controlling interest in the business. A sale or disposition described above shall not be considered a Major Transaction, if it is also a Change in Control and payments are made pursuant to Section 5.

        (l)    "Person" means a "person" within the meaning of Subsection (d)(i).

        (m)  "Potential Change in Control" means, except as provided in Section 3, the occurrence and continuation of any of the following conditions:

        (i)    any Person is or becomes the Beneficial Owner, directly or indirectly, of 10% or more of the outstanding common stock of the Company, unless such Person has reported or is required to report such ownership on Schedule 13G under the Exchange Act (or any comparable or successor report) or on Schedule 13D under the Exchange Act (or any comparable or successor report), which Schedule 13D does not state any intention to or reserve the right to control or influence the management or policies of the Company or engage in any of the actions specified in Item 4 of such Schedule (other than the disposition of the common stock) so long as such Person neither reports nor is required to report such ownership other than as described in this paragraph; or

        (ii)   the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control; or

        (iii)  any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute or result in a Change in Control; or

        (iv)  any Person commences a solicitation (as defined in Rule 14a-1 of the Exchange Act) of proxies or consents that has the purpose of effecting or would (if successful) result in a Change in Control; or

        (v)   a tender or exchange offer for at least 10% of the outstanding voting securities of the Company, made by a Person, is first published or sent or given (within the meaning of Rule 14d-2(a) of the Exchange Act).

Termination of the Executive's Employment during or following a Potential Change in Control shall be considered to have occurred following a Change in Control to the extent provided in Section 2(c).

        (n)   "Term" means the term of this Agreement, as determined pursuant to Section 2.

        (o)   "Terminates Employment", "Terminate(s) the Executive's Employment", and "Termination of Employment" all refer to a complete termination of the employment relationship between the Company and all employers required to be aggregated with the Company pursuant to Code Section 414(b) or (c).

        2.    Term.

        (a)   This Agreement shall commence as of December 2, 2004, and shall continue in effect through December 31, 2006; provided, however, that beginning January 1, 2007, and each January 1 thereafter, the term of this Agreement shall automatically be extended for an additional year unless, not later than March 31 of the preceding year, the Company shall have given the Executive notice that it does not wish to extend this Agreement or a Change in Control shall have occurred before such January 1; provided, however, (i) if a Change in Control shall have occurred during the term of this Agreement, this Agreement shall continue for a period of not less than 36 months after the month in which the Change in Control occurs, and (ii) this Agreement shall continue in effect during the pendency of a Potential Change in Control and for nine months thereafter.

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        (b)   This Agreement shall be immediately terminated, and the Executive shall have no right to payment of any compensation or benefits hereunder, if he incurs a Termination of Employment before the occurrence of a Change in Control or Major Transaction; provided, however, if the Company Terminates the Executive's Employment without Cause, or the Executive Terminates Employment for Good Reason, before a Major Transaction that occurs on or before [***], and the Executive is not entitled to any payment pursuant to Section 5 or 6, the Executive's Termination of Employment shall be disregarded in determining whether he is entitled to a payment pursuant to Section 7. Nothing in this Agreement shall confer on the Executive any right to continue in the employ of the Company or interfere with or restrict in any way the rights of the Company, which are expressly reserved, to discharge the Executive at any time before a Change in Control or Major Transaction for any reason.

        (c)   Notwithstanding Subsection (b), if the Executive incurs a Termination of Employment during a Potential Change in Control or within nine months following the conclusion of a Potential Change in Control, such termination shall be deemed to be a termination after a Change in Control entitling the Executive to the severance and other benefits set out herein as if the Executive had Terminated Employment after a Change in Control.

        3.    Exception for Certain Spin-Off Transactions.    Notwithstanding the definitions in Section 1, neither a "Change in Control" nor a "Potential Change in Control" shall be deemed to have occurred by virtue of the Company entering into any agreement with respect to, the public announcement of, the approval by the Company's stockholders or directors of, or the consummation of, any transaction or series of integrated transactions (including any merger or other business combination transaction) entered into in connection with, or expressly conditioned upon the occurrence of, a spin-off (such transaction or series of integrated transactions, the "Spin-Off Transaction") immediately following which the recordholders of the common stock of the Company immediately prior to the Spin-Off Transaction continue to have substantially the same proportionate ownership in the spun-off entity as they had in the Company immediately prior to the Spin-Off Transaction; provided that such Spin-Off Transaction (including any related merger of other business combination transaction) has been approved by a vote of a majority of the Company's Continuing Directors (as defined below) then in office. For purposes of this Agreement, a "Continuing Director" shall mean any member of the Board of Directors of the Company who is a member of the Board of Directors as of the date of this Agreement and any person who subsequently becomes a member of the Board of Directors, if such person's nomination for election or election to the Board of Directors is recommended or approved by a majority of the Continuing Directors.

        4.    Relationship of Sections 5, 6, and 7.    Except as provided in this Section, the payment of benefits pursuant to Section 5, 6, or 7 shall make the Executive ineligible for benefits under any other Section of this Agreement or under the same Section of this Agreement as a result of a later Change in Control or Major Transaction. If the Executive receives benefits pursuant to Section 7, and a Change in Control occurs at least 18 months thereafter, the prior payment of benefits under Section 7 shall not make the Executive ineligible for benefits under Section 5.

        5.    Benefits Upon Termination of Employment Following a Change in Control.

        (a)   The Executive shall be entitled to benefits under this Section, rather than under any other severance program of the Company, if he incurs a Termination of Employment under the circumstances described in this Section following a Change in Control.

        (b)   If the Company Terminates the Executive's Employment for Cause, the Company shall be obliged to pay the Executive his full base salary through his termination date at the rate in effect at the time the notice of termination is given, and the Company shall have no further obligations under this Agreement.

        (c)   If the Company Terminates the Executive's Employment for other than Cause, or if the Executive Terminates Employment for Good Reason, then the Company shall pay to the Executive as

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severance pay (and without regard to the provisions of any benefit plan) in one or more payments within 30 days following the Executive's Date of Termination, the sum of the following amounts:

        (i)    any accrued and owing portion of the Executive's full base salary through the Date of Termination at a rate equal to the greater of the rate in effect immediately before the occurrence of the event(s) giving rise to the termination or the rate in effect immediately before the Change in Control; plus an amount equal to unpaid salary with respect to any vacation days accrued but not taken as of the Date of Termination;

        (ii)   a pro-rata bonus determined by multiplying the greater of (A) the Executive's target annual bonus (assuming 100% fulfillment of all elements of the formula under which such bonus would have been calculated) for the year in which the Date of Termination occurs, or (B) the average of the annual bonuses paid or payable to the Executive for the three calendar years immediately before the year in which the Date of Termination occurs, multiplied by a fraction, the numerator of which is the number of days in the year of termination up to and including the Date of Termination and the denominator of which is 365;

        (iii)  an amount equal to the greater of (I) the product of (A) the sum of his salary for the twelve months immediately prior to the occurrence of the event(s) giving rise to the notice of termination, plus the greater of (i) his target bonus of 85% of the salary set forth in the preceding clause (assuming, for purposes of this agreement there were 100% fulfillment of all elements of the formula under which such bonus would have been calculated), or (ii) the average of the annual bonuses paid or payable to him for the three (3) calendar years immediately preceding the year in which the Date of Termination occurs, multiplied by (B) three; or (II) $3 million; and

        (iv)  in lieu of any further payments not otherwise addressed by this Agreement under any long term incentive or compensation plan of the Company or any subsidiary thereof or any successor plan, an amount equal to all awards thereunder earned or accrued, but not yet paid, for periods up to and including the Date of Termination.

        (d)   If the Company Terminates the Executive's Employment for other than Cause, or if the Executive Terminates Employment for Good Reason, then the Company shall, in addition to paying the amounts owed to the Executive pursuant to Subsection (c):

        (i)    maintain in full force and effect, for the three years following the Executive's Termination of Employment, for the continued benefit of the Executive (and his spouse and dependents, if applicable), all life insurance, health and accident, and disability plans and programs in which the Executive was entitled to participate immediately before the occurrence of the event(s) giving rise to the notice of termination, provided that the Executive's continued participation is possible under the general terms and provisions of such plans and programs. If the Executive's continued participation in any such plan or program is barred, the Company shall arrange to provide the Executive upon comparable terms with benefits substantially similar to the benefits to which the Executive would otherwise have been entitled under such plans and programs. At the end of the three year period of continued coverage, the Executive shall have the option to have assigned to him, at no cost and with no apportionment of pre-paid premiums, any assignable insurance policy owned by the Company or any subsidiary thereof and relating specifically to the Executive. The Executive's receipt, from a new employer, of any of the benefits described in this Subsection shall not eliminate the Company's obligations to provide the Executive with such benefits (or their equivalent), but shall act as an offset to the Company's obligations hereunder;

        (ii)   in addition to the retirement benefits to which the Executive is entitled under each defined benefit pension plan of the Company ("Pension Plan") or any successor plan thereto, including, but not limited to the Retirement Plan and the Supplemental Retirement Plan, the Company shall pay to the Executive, in cash within 30 days following his Date of Termination, a

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lump sum amount equal to the excess of (A) the actuarial equivalent of the retirement pension payable as a level single life annuity beginning as of the first day of the month following the Executive's 65^th birthday or earlier date after the Executive's Termination of Employment (taking into account any early retirement subsidies associated therewith) that the Executive would have accrued under the terms of each such Pension Plan (without regard to any amendment to such Pension Plan made after a Change in Control that adversely affects in any manner the computation of retirement benefits thereunder), determined as if the Executive were fully vested thereunder and had accumulated service for three years following his Termination of Employment and had been credited under each such Pension Plan during such period with compensation equal to the higher of the Executive's annual base salary in effect immediately before the occurrence of the event(s) giving rise to the notice of termination or the Executive's annual base salary at the rate in effect immediately before the Change in Control, plus the greater of the Executive's target annual bonus (assuming 100% fulfillment of all elements of the formula under which such bonus would have been calculated) for the year in which the Date of Termination occurs or the average of the Executive's annual bonuses for the three years immediately preceding the year in which the Date of Termination occurs over (B) the actuarial equivalent of the retirement pension payable as a level single life annuity beginning as of the first day of the month following the Executive's 65^th birthday or earlier date after the Executive's Termination of Employment (taking into account any early retirement subsidies associated therewith) that the Executive had accrued pursuant to the provisions of each such Pension Plan as of the Date of Termination. For purposes of the preceding sentence, the annuity starting date providing the largest payment to the Executive shall be used. For purposes of this paragraph, "actuarial equivalent" shall be determined using the same methods and assumptions utilized under each of the Pension Plans, as applicable, immediately before occurrence of the event(s) giving rise to the notice of termination (without regard to any amendment of such methods and assumptions made after a Change in Control that results in a lower payment under this paragraph);

        (iii)  all awards to the Executive under any Company stock plan shall vest upon the Change in Control. This paragraph supersedes any inconsistent provisions in any stock plan or award issued thereunder, and constitutes an amendment to any such award that has been approved by the Committee as provided under any stock plan (provided, however, that notwithstanding any agreement elsewhere to the contrary, the period of time in which the Executive may exercise vested stock awards shall end on the earlier of the date on which the right to exercise such award would have expired if the Executive had remained an employee of the Company or two years from the Date of Termination);

        (iv)  the Company shall reimburse the Executive for individual outplacement services to be provided by a firm of the Executive's choice or, at the Executive's election, provide the Executive with the use of office space, office supplies, and secretarial assistance satisfactory to the Executive. The aggregate expenditures of the Company pursuant to this paragraph shall not exceed $20,000;

        (v)   the Company shall continue to pay the Executive any car allowance in effect as of the Date of Termination for the three year period thereafter,

        (vi)  the Company shall cause title to the laptop or notebook computer (and the associated docking station, if any) provided by the Company or any of its subsidiaries for the Executive's principal use to be transferred to the Executive, and shall permit the Executive's use of any "shrink wrap" or other standard software generally installed with a new computer (such as the operating system, office programs, etc.) under the Company's licenses for the three year period following the Date of Termination, provided that appropriate measures are taken by the Company's Information Services Department to insure that all proprietary information and software, as well as any software solely related to use of the Company's networks is removed; and

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        (vii) the Company shall pay all reasonable out-of-pocket expenses, including reasonable legal fees and legal expenses, incurred by the Executive in connection with any judicial or other proceeding, including any arbitration proceeding, to enforce this Agreement or to construe, determine, or defend the validity of this Agreement.

        (e)   This Agreement and all payments pursuant hereto are intended to comply with Code Section 409A and the guidance thereunder, and this Agreement shall be construed accordingly. To the extent that compliance with Section 409A(a)(2)(B)(i) would require any payment otherwise provided for by this Agreement to be delayed, such payment shall be made as soon as administratively feasible after the period of delay required by Code Section 409A(a)(2)(B)(i).

        6.    Benefits Upon Termination of Employment Following a Major Transaction.

        (a)   The Executive shall be entitled to benefits under this Section, rather than under any other severance program of the Company, if he incurs a Termination of Employment under the circumstances described in this Section following a Major Transaction.

        (b)   If the Company Terminates the Executive's Employment for Cause, the Company shall be obliged to pay the Executive his full base salary through his termination date at the rate in effect at the time the notice of termination is given, and the Company shall have no further obligations under this Agreement.

        (c)   If the Company Terminates the Executive's Employment for other than Cause, or if the Executive Terminates Employment for Good Reason, then the Company shall pay to the Executive as severance pay (and without regard to the provisions of any benefit plan) in one or more payments within 30 days following the Executive's Date of Termination, the sum of the following amounts:

        (i)    any accrued and owing portion of the Executive's full base salary through the Date of Termination at a rate equal to the greater of the rate in effect immediately before the occurrence of the event(s) giving rise to the notice of termination or the rate in effect immediately before the Major Transaction; plus an amount equal to unpaid salary with respect to any vacation days accrued but not taken as of the Date of Termination;

        (ii)   a pro-rata bonus determined by multiplying the greater of (A) the Executive's target annual bonus (assuming 100% fulfillment of all elements of the formula under which such bonus would have been calculated) for the year in which the Date of Termination occurs, or (B) the average of the annual bonuses paid or payable to the Executive for the three calendar years immediately before the year in which the Date of Termination occurs, multiplied by a fraction, the numerator of which is the number of days in the year of termination up to and including the Date of Termination and the denominator of which is 365;

        (iii)  an amount equal to the greater of (I) the product of (A) the sum of his salary for the twelve months immediately prior to the occurrence of the event(s) giving rise to the notice of termination, plus the greater of (i) his target bonus of 85% of the salary set forth in the preceding clause (assuming, for purposes of this agreement there were 100% fulfillment of all elements of the formula under which such bonus would have been calculated), or (ii) the average of the annual bonuses paid or payable to him for the three (3) calendar years immediately preceding the year in which the Date of Termination occurs, multiplied by (B) three; or (II) $3 million; and

        (iv)  in lieu of any further payments not otherwise addressed by this Agreement under any long term incentive or compensation plan of the Company or any subsidiary thereof or any successor plan, an amount equal to all awards thereunder earned or accrued, but not yet paid, for periods up to and including the Date of Termination.

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        (d)   If the Company Terminates the Executive's Employment for other than Cause, or if the Executive Terminates Employment for Good Reason, then the Company shall, in addition to paying the amounts owed to the Executive pursuant to Subsection (c):

        (i)    maintain in full force and effect, for the three years following the Executive's Termination of Employment, for the continued benefit of the Executive (and his spouse and dependents, if applicable), all life insurance, health and accident, and disability plans and programs in which the Executive was entitled to participate immediately before the occurrence of the event(s) giving rise to the notice of termination, provided that the Executive's continued participation is possible under the general terms and provisions of such plans and programs. If the Executive's continued participation in any such plan or program is barred, the Company shall arrange to provide the Executive upon comparable terms with benefits substantially similar to the benefits to which the Executive would otherwise have been entitled under such plans and programs. At the end of the three year period of continued coverage, the Executive shall have the option to have assigned to him, at no cost and with no apportionment of pre-paid premiums, any assignable insurance policy owned by the Company or any subsidiary thereof and relating specifically to the Executive. The Executive's receipt, from a new employer, of any of the benefits described in this Subsection shall not eliminate the Company's obligations to provide the Executive with such benefits (or their equivalent), but shall act as an offset to the Company's obligations hereunder;

        (ii)   in addition to the retirement benefits to which the Executive is entitled under each defined benefit pension plan of the Company ("Pension Plan") or any successor plan thereto, including, but not limited to the Retirement Plan and the Supplemental Retirement Plan, the Company shall pay to the Executive, in cash within 30 days following his Date of Termination, a lump sum amount equal to the excess of (A) the actuarial equivalent of the retirement pension payable as a level single life annuity beginning as of the first day of the month following the Executive's 65^th birthday or earlier date after the Executive's Termination of Employment (taking into account any early retirement subsidies associated therewith) that the Executive would have accrued under the terms of each such Pension Plan (without regard to any amendment to such Pension Plan made after a Major Transaction that adversely affects in any manner the computation of retirement benefits thereunder), determined as if the Executive were fully vested thereunder and had accumulated service for three years following his Date of Termination and had been credited under each such Pension Plan during such period with compensation equal to the higher of the Executive's annual base salary in effect immediately before the occurrence of the event(s) giving rise to the Executive's notice of termination or the Executive's annual base salary at the rate in effect immediately before the Major Transaction, plus the greater of the Executive's target annual bonus (assuming 100% fulfillment of all elements of the formula under which such bonus would have been calculated) for the year in which the Date of Termination occurs or the average of the Executive's annual bonuses for the three years immediately preceding the year in which the Date of Termination occurs over (B) the actuarial equivalent of the retirement pension payable as a level single life annuity beginning as of the first day of the month following the Executive's 65^th birthday or earlier date after the Executive's Termination of Employment (taking into account any early retirement subsidies associated therewith) that the Executive had accrued pursuant to the provisions of each such Pension Plan as of the Date of Termination. For purposes of the preceding sentence, the annuity starting date providing the largest payment to the Executive shall be used. For purposes of this paragraph, "actuarial equivalent" shall be determined using the same methods and assumptions utilized under each of the Pension Plans, as applicable, immediately before occurrence of the event(s) giving rise to the notice of termination (without regard to any amendment of such methods and assumptions made after a Major Transaction that results in a lower payment under this paragraph);

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        (iii)  all awards to the Executive under any Company stock plan shall vest upon the Major Transaction. This paragraph supersedes any inconsistent provisions in any stock plan or award issued thereunder, and constitutes an amendment to any such award that has been approved by the Committee as provided under any stock plan (provided, however, that notwithstanding any agreement elsewhere to the contrary, the period of time in which the Executive may exercise vested stock awards shall end on the earlier of the date on which the right to exercise such award would have expired if the Executive had remained an employee of the Company or two years from the Date of Termination);

        (iv)  the Company shall reimburse the Executive for individual outplacement services to be provided by a firm of the Executive's choice or, at the Executive's election, provide the Executive with the use of office space, office supplies, and secretarial assistance satisfactory to the Executive. The aggregate expenditures of the Company pursuant to this paragraph shall not exceed $20,000;

        (v)   the Company shall continue to pay the Executive any car allowance in effect as of the Date of Termination for the three year period thereafter,

        (vi)  the Company shall cause title to the laptop or notebook computer (and the associated docking station, if any) provided by the Company or any of its subsidiaries for the Executive's principal use to be transferred to the Executive, and shall permit the Executive's use of any "shrink wrap" or other standard software generally installed with a new computer (such as the operating system, office programs, etc.) under the Company's licenses for the three year period following the Executive's Date of Termination, provided that appropriate measures are taken by the Company's Information Services Department to insure that all proprietary information and software, as well as any software solely related to use of the Company's networks is removed; and

        (vii) the Company shall pay all reasonable out-of-pocket expenses, including reasonable legal fees and legal expenses, incurred by the Executive in connection with any judicial or other proceeding, including any arbitration proceeding, to enforce this Agreement or to construe, determine, or defend the validity of this Agreement.

        (e)   This Agreement and all payments pursuant hereto are intended to comply with Code Section 409A and the guidance thereunder, and this Agreement shall be construed accordingly. To the extent that compliance with Section 409A(a)(2)(B)(i) would require any payment otherwise provided for by this Agreement to be delayed, such payment shall be made as soon as administratively feasible after the period of delay required by Code Section 409A(a)(2)(B)(i).

        7.    Benefits Payable Following Major Transaction.    If the Executive has not incurred a Termination of Employment on or before the 366^th day following a Major Transaction ("Pay Out Date"), the Company shall pay to the Executive as a bonus (and without regard to the provisions of any benefit plan) in a lump sum payment, an amount equal to the product of (i) the sum of (A) the Executive's annual base salary at the rate in effect immediately before the Major Transaction, plus (B) the greater of (I) the Executive's target annual bonus (assuming 100% fulfillment of all elements of the formula under which such bonus would have been calculated) in the year in which the Pay-Out Date occurs, and (II) the average of the annual bonuses paid or payable to the Executive for the three calendar years immediately before the year in which the Pay-Out Date occurs, multiplied by (ii) three. Upon such payment, all of the Company's obligations with respect to the Major Transaction shall have been fulfilled. Under no circumstances shall the Executive be entitled to a payment pursuant to this Section and Section 6 as a result of a Major Transaction.

        8.    No Obligation to Mitigate.    The Executive shall not be required to mitigate the amount of any payment or benefits provided for in Section 5 or 6 by seeking other employment or otherwise, nor (except as provided in paragraph 5(d)(i) or 6(d)(i)) shall the amount of any payment or benefits provided for in Section 5 or 6 be reduced by any payments or benefits received by the Executive as the

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result of employment by another employer after the Date of Termination, or otherwise; provided, however, that the amount payable under Section 5 or 6 shall be reduced by the amount of any severance, termination, or notice pay (or any other similar amounts) required by law to be paid to the Executive by the Company or its subsidiaries and by any salary or other amounts paid to the Executive during any notice period that the Company or its subsidiaries is required by law to provide.

        9.    Gross-Up for Excise Taxes.    If any payment or benefit received or to be received by the Executive in connection with a Change in Control or or the termination of the Executive's employment (whether pursuant to the terms of this Agreement or any other plan, arrangement, or agreement with the Company) (all such payments and benefits being hereinafter called "Total Payments") would be subject (in whole or part) to the excise tax imposed under Code Section 4999 ("Excise Tax"), the Company shall pay the Executive an additional amount ("Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state, and local income tax and Excise Tax upon the payment provided for by this Subsection, shall be equal to the Total Payments. For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) the Executive's Total Payments shall be treated as "parachute payments" within the meaning of Code Section 280G(b)(2); and all "excess parachute payments" within the meaning of Code Section 280G(b)(1) shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected by the accounting firm that was, immediately before the actual or deemed Change in Control, the Company's independent auditor ("Auditor") and reasonably acceptable to the Executive, such other payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of Code Section 280G(b)(4)(A), or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of Code Section 280G(b)(4)(B), in excess of the base amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, (ii) the amount of the Total Payments that shall be treated as subject to the Excise Tax shall be equal to the lesser of (1) the total amount of the Total Payments or (2) the amount of excess parachute payments within the meaning of Code Section 280G(b)(1) (after applying clause (i) above) and (iii) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of Code Sections 280G(d)(3) and (4). For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence (or, if higher, in the state and locality of the Executive's principal place of business) on the Date of Termination, net of the maximum reduction in federal income taxes that could be obtained from deduction of such state and local taxes. In the event that the Excise Tax is later determined to be less than the amount taken into account hereunder at the time of Termination of Employment, the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state, and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state, or local income tax deduction) plus interest on the amount of such repayment at 120% of the rate provided in Code Section 1274(b)(2)(B). If the Excise Tax is determined to exceed the amount taken into account hereunder at the time of Termination of Employment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment to the Executive with respect to such excess (plus any interest, penalties, or additions payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Severance Payments.

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Except as otherwise expressly provided, the Company shall pay the amounts required by this Section within 30 days of the Date of Termination. For purposes of this Section, a Major Transaction shall be deemed a Change in Control.

        10.    Default in Payment.    Any payment not made within ten days after it is due in accordance with this Agreement shall thereafter bear interest, compounded quarterly, at the prime rate from time to time in effect at the Chase Manhattan Bank of New York.

        11.    Rights and Waivers.    All rights and remedies of the parties hereto are separate and cumulative, and no one of them, whether exercised or not, shall be deemed to exclude, limit, or prejudice any other right or remedy that either of the parties hereto may have. No party to this Agreement shall be deemed to waive any right or remedy under this Agreement, unless such waiver is in writing and signed by such party. No delay or omission on the part of either party in exercising any right or remedy shall operate as a waiver of such right or remedy or any other right or remedy. A waiver on any one occasion shall not be construed as a bar to or a waiver of any right or remedy on any future occasion.

        12.    Effect on Other Plans, Agreements, and Benefits.    Except to the extent expressly set forth herein, any benefit or compensation to which the Executive is entitled under any agreement between the Executive and the Company or any of its subsidiaries or under any plan maintained by the Company or any of its subsidiaries in which the Executive participates or participated shall not be modified or lessened in any way, but shall be payable according to the terms of the applicable plan or agreement. The terms of this Agreement shall supersede and terminate any prior change in control severance agreement, or the provisions of any other agreement providing benefits following a change in control, entered into between the Executive and the Company or any subsidiary thereof. Notwithstanding the above, any benefits received by the Executive pursuant to this Agreement shall be in lieu of any severance benefits to which the Executive would otherwise be entitled under any general severance policy maintained by the Company or the relevant subsidiary for its management personnel or under any employment contract between the Executive and the Company or any subsidiary thereof.

        13.    Unsecured Obligation.    All rights of the Executive or any beneficiary of the Executive who succeeds to the Executive's rights to payments or benefits under this Agreement shall at all times be entirely unfunded and no provision shall at any time be made with respect to segregating any assets of the Company or payment of any amounts due hereunder. Neither the Executive nor any such beneficiary shall have any interest in or rights against any specific assets of the Company or any of its subsidiaries, and the Executive and any such beneficiary shall have only the rights of a general unsecured creditor of the Company.

        14.    Successors.

        (a)   The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement before the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled hereunder if he Terminated Employment for Good Reason after a Change in Control, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined, and any successor to its business and/or assets as aforesaid that executes and delivers the agreement provided for in this Subsection or otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

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        (b)   The Company shall require any successor to a business acquired in a Major Transaction, by agreement in form and substance satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place, if the Executive's employment with the Company is to be terminated as a result of the transaction but the Executive is offered employment with such successor on substantially the same terms and conditions as existed immediately before the Major Transaction. Failure of the Company to obtain such agreement before the effectiveness of any such Major Transaction shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled hereunder if he Terminated Employment for Good Reason after a Major Transaction, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined, and party to a Major Transaction that executes and delivers the agreement provided for in this Subsection or otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

        (c)   This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If the Executive should die while any amounts would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's devisee, legatee, or other designee or, if there be no such designee, to the Executive's estate.

        15.    Burden of Proof.    In any judicial or other proceedings in which the Executive's right to, or the amount of, benefits hereunder is disputed, the ultimate burden of proof shall be on the Company.

        16.    Arbitration.    Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Indianapolis, Indiana by three arbitrators, one of whom shall be appointed by the Company, one of whom shall be appointed by the Executive, and the third of whom shall be appointed by the first two arbitrators. If either the Company or the Executive fails to appoint an arbitrator within 20 days of a request in writing by the other to do so, or if the first two arbitrators cannot agree on the appointment of a third arbitrator within 20 days after the second arbitrator is designated, then such arbitrator shall be appointed by the Chief Judge of the United States District Court located in the city of Indianapolis, or upon his failure to act, by the American Arbitration Association so as to enable the arbitrators to render an award within 90 days after the three arbitrators have been appointed. Following the selection of arbitrators as set forth above, the arbitration shall be conducted promptly and expeditiously and in accordance with the rules of the American Arbitration Association. Pending the resolution of such dispute or controversy, the Company will continue to pay the Executive without interruption his full base salary at the rate in effect immediately before the notice giving rise to the dispute was given and continue the Executive as a participant in all thrift, incentive, compensation, pension, life insurance, health and accident or disability plans in which the Executive was participating when the notice giving rise to the dispute was given at the level in effect immediately before such notice. Judgment may be entered on the arbitrator's award in any court having jurisdiction; provided, however, that the Executive shall be entitled to seek specific performance of his right to be paid during the pendency of any dispute or controversy arising under or in connection with this Agreement. The Company shall bear all of the expenses relating to any arbitration under this Agreement.

        17.    Amendment.    No provision of this Agreement may be amended or waived, except by written agreement signed by both the Company and the Executive.

        18.    Entire Agreement.    This Agreement contains the entire agreement and understanding of the parties regarding the transaction contemplated herein and supersedes all prior agreements,

13

arrangements, or understandings, whether written or oral, relating to the subject matter hereof, including, without limitation, any letters, agreements, or understandings between the Executive and the Company or any subsidiary thereof before the date hereof. Execution of this Agreement shall supersede and terminate any prior change in control severance agreement, or the provisions of any other agreement providing benefits following a change in control, entered into between the Executive and the Company or any subsidiary thereof.

        19.    Severability.    If any provision of the Agreement is held to be invalid, illegal, or unenforceable, the remainder of this Agreement shall not be affected thereby. If any provision of this Agreement is held by a court of competent jurisdiction to conflict with any federal, state, or local law, such provision is hereby declared to be of such force and effect as is permissible in such jurisdiction.

        20.    Governing Law.    The provisions of this Agreement shall be construed in accordance with, and governed by, the laws of the State of Indiana without regard to principles of conflict of laws.

        21.    Counterparts.    This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same instrument.

	GREAT LAKES CHEMICAL CORPORATION
/s/  JOHN J. GALLAGHER III John J. Gallagher III	By:	Nigel T. Andrews
Date: February 8, 2005	Date: February 8, 2005

14

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Exhibit (10)(vii)

EX-10.(XIV)

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Exhibit (10)(xiv)

RESIGNATION AGREEMENT AND LIMITED RELEASE

        This RESIGNATION AGREEMENT AND LIMITED RELEASE ("Agreement") is made and entered into this 5th day of November, 2004, by and between Mark Bulriss (hereinafter referred to as "the Executive") and Great Lakes Chemical Corporation (hereinafter referred to as "the Company").

        The Executive has expressed his desire to resign as a member of the Board of Directors of the Company and from employment with the Company as President and Chief Executive Officer effective on November 5, 2004 ("the Resignation Date"), and the Company has expressed its willingness to accept such resignation. Therefore, in consideration of the mutual promises contained herein, the parties agree to the following terms and conditions:

1.

The Executive represents and agrees that he is fully aware of his rights and that he has been advised to discuss any and all aspects of this Agreement with his attorney. The Executive has carefully read and fully understands all of the provisions of this Agreement, and he acknowledges that he executes it voluntarily.

2.

Executive does not release claims (a) that he may have arising out of the indemnification provisions of the Company's Certificate of Incorporation, Bylaws, or the provisions of the Delaware General Corporation Law, or (b) arising out of the Employment Agreement by and between the Company and the Executive dated as of April 1, 1998 (the "Employment Agreement") except to the extent he has expressly released them as set forth in Paragraph 3(b) below. Other than as set forth in the preceding sentence, the Executive hereby releases and forever discharges the Released Parties from all Claims. This release is a material inducement to the Company to enter into this Agreement.

3.

As a material inducement to the Executive to enter into this Agreement, the Company agrees to the following:

a)

Right to Resign.    The Executive hereby resigns his employment with the Company as its President and Chief Executive Officer, as a member of the Board of Directors of the Company and as an officer or director of any entity affiliated with the Company as of the Resignation Date. The Company agrees to accept the Executive's resignation, effective on the Resignation Date. The Executive also agrees to be available for consulting from November 5, 2004 through November 30, 2004 at the Company's reasonable request (although it is anticipated that such requests will be infrequent and related primarily to transition issues).

(b)

Severance Pay and Benefits.    The Company acknowledges and agrees that the Executive's resignation shall be deemed a resignation by the Executive for Good Reason under the terms of the Employment Agreement. As a result, the Company shall pay or provide to the Executive the items set forth in paragraph 6(c)(i) through (viii) of the Employment Agreement in accordance with the terms thereof.

The Executive expressly releases the Company from any claims or liability for any additional compensation, benefits, or other payments pursuant to, or based upon, the Employment Agreement, and the Executive expressly waives his right to any additional compensation, benefits, or other payments based upon, or pursuant to, the Employment Agreement.

4.

The Executive represents and warrants that he has no actual knowledge of any practice engaged in by the Company, its subsidiaries or related entities that is or was a violation in any material respect of any applicable state law or regulations or of any federal law or regulations including, but not by way of limitation, the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder.

5.

The Executive agrees that he will not disparage the Company, its business, its executive, officers or agents, or any of the Company's affiliates or related entities in any manner harmful to their

business or business reputation. Likewise, the Company agrees that its managing agents will not disparage the Executive in any manner harmful to his reputation.

6.

The executive represents and warrants that the Executive has not filed any complaint(s) or charge(s) against the Company with the EEOC or the state commission empowered to investigate claims of employment discrimination, the Office of Federal Contract Compliance Programs, or with any other local, state or federal agency or court. This Agreement will not affect the Executive's right to file hereafter a charge with or otherwise participate in an investigation or proceeding conducted by the EEOC regarding matters which arose after this date and which are not the subject of this Agreement.

7.

The Company represents that it has no knowledge of any pending claim against the Company or the Executive involving, or based upon, acts of the Executive. The Executive represents and acknowledges that, in executing this Agreement, he does not rely and has not relied upon any other representation or statement made by any of the Released Parties or by any of the Released Parties' agents, representatives or attorneys, except as set forth herein, with regard to the subject matter, basis or effect of this Agreement.

8.

This Agreement shall be binding upon the Company, the Executive and upon the Executive's heirs, administrators, representatives, executors, successors, and assigns, and shall inure to the benefit of the Released Parties and each of them, and to their heirs, administrators, representatives, executor, successors and assigns.

9.

This Agreement shall in all respects be interpreted, enforced and governed under the laws of the State of Indiana.

10.

Should any provision of this Agreement be declared or be determined by any court to be illegal or invalid, the validity of the remaining parts, terms, or provisions shall not be affected thereby and said illegal or invalid part, term or provision shall be deemed not to be a part of this Agreement.

11.

This Agreement shall not be construed as an admission by the Company or the Executive of any fact or conclusion of law, except as provided in Section 3(b).

12.

The term "Released Parties" means the Company, its related entities, and each of the Company's and its shareholders, successors, assigns, agents, directors, officers, representatives, and attorneys. The term "Claim" means any and all claims, liabilities, obligations, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorney's fees and costs actually incurred), of any nature whatsoever, known or unknown, which the Executive now has, owns, holds, or claims to have, own, or hold, or which the Executive at any time heretofore had, owned, or held, or claimed to have, own, or hold against each or any of the Released Parties.

13.

This Agreement sets forth the entire agreement between the parties hereto.

Great Lakes Chemical Corporation
By:	/s/  JAMES W. CROWNOVER

Title:	Presiding Independent Director
/s/  MARK P. BULRISS Mark Bulriss
Date: 11-5-04

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Exhibit (10)(xiv)

RESIGNATION AGREEMENT AND LIMITED RELEASE

EX-10.(XVIII)

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Exhibit (10)(xviii)

GREAT LAKES CHEMICAL CORPORATION

2005 INCENTIVE COMPENSATION PLAN

PERSONAL AND CONFIDENTIAL

GREAT LAKES CHEMICAL CORPORATION

INCENTIVE COMPENSATION PLAN

Purpose and Objectives

        The purpose of the Incentive Compensation Plan (Plan) is to contribute to the motivation of key employees in accomplishing the Company goals. The objectives of the Plan are as follows:

•

Clearly communicate and reinforce Operating Income and Free Cash Flow goals.



•

Provide a competitive incentive for achievement of Operating Income and Free Cash Flow goals.



•

Establish an objective basis for determining annual awards.

Plan Definitions

        Certain words or phases used in this plan document are defined as follows:

•

Award—An annual incentive compensation award.



•

Base Salary—Annual Salary as of December 31^st of the Plan year.



•

Business Unit—Any designated organizational entity, division or business unit within the Company.



•

Capital Employed—Average capital used to produce revenue and profits of the business.



•

Company—Great Lakes Chemical Corporation and its subsidiaries.



•

Free Cash Flow (FCF):

•

Business Unit Free Cash Flow:  Net Income plus depreciation and amortization, net of changes in working capital, less capital expenditures and cash repositioning charges.



•

Corporate Free Cash Flow:  Operating Cash Flow less capital expenditures.



•

Operating Income—Sales less COGS (cost of goods sold) and SAR (sales, administrative, and R&D) excluding special charges and other call-outs; adjusted for the minority interest income or loss from non-consolidated JV's (Saudi Arabia, TBT).



•

Plan Year—The period from January 1^st - December 31^st of each calendar year.



•

Target Award—An incentive compensation award earned by a participant based on achieving Operating Income and FCF target objectives and other performance objectives during the plan year that represents payment at 100%.



•

Vitality Index—Percent of revenues generated from new products commercialized within last five calendar years

Eligibility

        Participants include key positions that significantly influence the performance of the Company and/or Business Unit. Participants are identified by salary band and recommended by the head of each Business Unit or Corporate function, subject to the approval of the Incentive Compensation Review Committee.

Administration

        The Compensation and Incentive Committee (C&IC) of the Board has ultimate authority over the Plan, is responsible for approving the Plan and may alter any provision of the Plan or terminate the

2

Plan at any time. The Compensation and Incentive Committee of the Board will directly administer the Plan with respect to all participants. Specific responsibilities of this Committee include:

•

Approving Annual Incentive Compensation Plan.



•

Approving Corporate and Business Unit performance objectives.



•

Determining incentive compensation award percentages.



•

Approving incentive compensation awards.

        The Incentive Compensation Review Committee, consisting of the Chief Executive Officer and the Senior Vice President, Human Resources and Communications will make recommendations to the C&IC and resolve questions regarding the interpretation of the Plan.

Target Award Levels

        The target incentive awards for each eligible position (by category) are expressed as a percentage of base salary as follows:

ELIGIBLE POSITION	TARGET INCENTIVE AWARD
CEO	85 - 100%
President, Executive Vice President, Senior Vice President	45% - 75%
Vice Presidents, General Managers, Directors	25% - 40%
Key Employees	7.5% - 20%

Payout Ranges

        Payout ranges are based upon target incentive award and are expressed as a percentage of base salary as follows:

	MINIMUM		TARGET		MAXIMUM
Corp or BU Op Income & FCF	0	%	100	%	Unlimited
Individual MBO's	0	%	100	%	200	%

        As an incentive to increase shareholder value, Operating Income & FCF achievements, based upon actual results, are uncapped. That portion of participants' total earned incentive award in excess of 200% will be converted to Great Lakes Chemical Corporation Restricted Stock Units (RSU's) and presented to the ICP participant with a three year cliff vesting period.

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Determination of Awards

        Awards will be determined as follows:

PARTICIPANT GROUP	CORPORATE OP INC + FCF		BUSINESS UNIT OP INC + FCF		INDIVIDUAL MBO COMPONENT
Corporate	*50	%			**50	%
Business Unit			*50	%	**50	%

*

Compensation and Incentive Committee, based on the recommendation of the CEO, may choose to increase or decrease Operating Income and FCF based awards after evaluating business unit and company performance and results in comparison to the overall business conditions in 2004.

**

If the Great Lakes Chemical Corporation 2005 Earnings Per Share (EPS) exceeds $1.50, the individual MBO component pool can be increased by up to 150%; and if EPS exceeds $1.75, the individual MBO component pool can be increased by up to 200%. The CEO will make the final determination based on business unit results, degree of difficulty to obtain such results, and general business conditions.

Distribution of Incentive Compensation

        Awards under the Plan are to be paid to a participant in cash as soon as financial performance is determined and individual performance can be assessed. Awards will typically be paid by March 15^th following the close of a Plan year.

        A participant must be actively employed by the company on the date the bonus is paid to receive an incentive award. Participants hired or promoted to an eligible position during the Plan year may receive a pro-rated incentive award (based on salary earned in the Plan year while in the eligible position) if approved by the Incentive Compensation Review Committee.

        In the event a participant's employment is terminated prior to the end of the Plan year due to death, disability, or normal retirement, the participant or beneficiary may be entitled to receive the award that would have been earned if participant's employment had continued to the end of the Plan year, subject to the approval of the Incentive Compensation Review Committee.

        At the sole discretion of the Incentive Compensation Review Committee, a participant may not receive an incentive award due to poor individual performance or misconduct and may be declared ineligible under the ICP.

Distribution of Restricted Stock Units

        A participant must be actively employed by the company on the date the restricted stock unit award vest to receive such award. Non-vested awards will lapse upon termination of employment. In the event a participant's employment is terminated prior to the end of the vesting period due to death, disability, or normal retirement, the participant or beneficiary may be entitled to receive the award that would have vested if employment had continued to the end of the vesting period. These provisions are subject to the approval of the Incentive Compensation Review Committee.

General Provisions

Limitations on Vested Interest

It is understood that the awarding of incentive compensation hereunder is within the sole discretion of Great Lakes Chemical Corporation. No participant has any vested interest in an

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award under the Plan until such award has been approved by the Compensation and Incentive Committee.

        Participants may be deleted from or added to the Plan each year at the sole discretion of the Company.

Employment Rights

The Plan does not give any employee the right to be retained in the employ of the Company. Specifically, the Plan does not create an employment contract for the Plan year or any part thereof.

Non-Assignment

Incentive compensation payments may not be pledged, assigned or transferred for any reason.

Withholding

Any taxes required to be withheld by Federal, State or Local Regulations will be deducted from incentive compensation payments hereunder.

Discontinuance, Suspension or Amendment of the Plan

The Company, with the approval of the Compensation and Incentive Committee, may discontinue or suspend the Plan at any time, or amend the Plan in any respect. The Company may review the Plan and its administration at any time to determine whether the objectives of the Plan continue to be met. Where appropriate, the Incentive Compensation Review Committee of the Company may make changes in the Plan with the approval of the Compensation and Incentive Committee of the Board of Directors.

5

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Exhibit (10)(xviii)

GREAT LAKES CHEMICAL CORPORATION 2005 INCENTIVE COMPENSATION PLAN PERSONAL AND CONFIDENTIAL
GREAT LAKES CHEMICAL CORPORATION INCENTIVE COMPENSATION PLAN

EX-10.(XIX)

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Exhibit (10)(xix)

GREAT LAKES CHEMICAL CORPORATION
CORPORATE GUIDELINES AND PROCEDURES

Subject: Severance Plan for Employees Covered Under the Corporate Change in Control Agreements	Effective Date: May 3,1996
Approved By: /s/ RBM	Revision Date: June 1, 1997

1.    Purpose

        The purpose of the Great Lakes Chemical Corporation ("Company") Severance Plan for Employees Covered Under the Corporate Change in Control Agreements ("Plan") is to provide financial assistance to eligible involuntarily terminated employees following cessation of active employment under conditions set forth in the Plan. Such financial assistance is intended as income transition while the eligible employee is actively seeking employment elsewhere.

II.    Plan Document

        The ERISA plan document for this Plan is the controlling document for questions relating to the Plan. This document is maintained by the Corporate Director, Human Resources.

III.    Eligibility

A.

Eligible employees are those employees who have entered into a change in control agreement with the Company (and have not received the compensation specified in the change in control agreement) and who have at least one Year of Service (as defined herein). Subject to Sections VI and VII hereof, eligible employees under this Plan will not be eligible for any severance pay or benefits under any other severance or similar type plan sponsored by the Company.

B.

An employee will be eligible under the Plan unless his termination is for reasons such as: sale of the business unit or portion thereof where the employee is offered employment with the buyer (whether or not such offered employment is accepted or the responsibilities and compensation of the position offered are comparable to his position immediately prior to his termination), retirement, loss of employment with the Company followed by employment with an affiliate of the Company, disability, misconduct, cause, failure of an employee to return from the expiration of a leave of absence or layoff, resignation, death or induction or enlistment into the military service.

C.

Each eligible employee will be required to sign an Agreement and Release form provided by the Company in order to receive any severance payments and benefits under the Plan.

IV.    Severance Payment and Benefit Schedule

        The Plan provides for severance payments ("Severance Payments") and Comp2 standard medical and dental benefits ("Benefits") to eligible employees. Eligible employees will receive Severance Payments on a regular pay date, just as when employed. For example, if the eligible employee's pay date is bi-weekly on every other Friday, Severance Payments will follow the same schedule until the Severance Payments have been exhausted. The weekly salary equivalent is equal to the annual base pay in effect at the time employment terminates, divided by 52. Eligible employees will receive Benefits under the Plan commencing on the first day of the month following termination. *

1

        An involuntarily terminated employee who meets the Plan's eligibility standards and who signs an Agreement and Release form provided by the Company will be eligible for the Severance Payments and Benefits for the periods set forth below:

Eligible Employee	Base Level Severance Payment Period**	Base Level Benefit Period
Chief Executive Officer	18 months	18 months
Business Unit Leader or Chief Financial Officer	12 months	12 months
Corporate Vice President	9 months	9 months

*

Each eligible employee, and dependents if enrolled on the employee's date of termination, will, under the terms of the Comp2 medical and dental plan, be entitled to continue their then current level of benefits for the remainder of the month in which he or she is terminated. Thereafter, Benefits shall be provided as set forth in the Plan.

**

Base salary.

        Benefits under the Plan will terminate prior to the period set forth in the schedule in this Section IV on the date any alternative medical and/or dental coverage becomes available to the eligible employee. All benefits other than Comp2 standard medical and dental coverage shall cease on the date of termination, including but not limited to pension, life insurance and 401(k) eligibility. Severance Payments and Benefits provided under this Plan are not considered compensation for purposes of the Company's benefit plans and no benefit service credit will be granted following the date of termination.

        Benefits provided under the Plan will apply toward the maximum allowable COBRA period. For example, if an employee is eligible for 18 months of COBRA coverage and Benefits are provided for one year under the Plan, 6 additional months of COBRA eligibility would remain after the expiration of the Benefits provided under the Plan. COBRA participation after expiration of the Benefits requires payment of COBRA premiums by the separated employee. If the Benefit period available under the Plan exceeds the COBRA period, Benefits will be provided in a manner to be determined by the Company.

        In addition to the base level Severance Payments and base level Benefits, one additional week of Severance Payments and Benefits will also be provided for each Year of Service. A Year of Service will be accrued for every 12 consecutive month period of the eligible employee's service which will be computed based upon date of hire.

        Severance Payments will terminate in the event, and as of the effective date, employment with another employer is obtained. In the event of the death of an eligible employee prior to the completion of all Severance Payments and Benefits due under the terms of the Plan, all Severance Payments remaining to be paid pursuant to Section IV hereof will be paid to the eligible employee's estate and if applicable, Benefits will be payable to the employee's dependents. Severance Payments will be reduced by any unemployment compensation received by the eligible employee while such Severance Payments are being made under the Plan.

        Any Severance Payments and Benefits payable under this Plan will be reduced by any notification period or pay in lieu thereof under the Worker Adjustment and Retraining Notification Act (WARN), implementing regulations thereunder, and/or any state statute or regulation requiring layoff or termination notice or pay in lieu thereof.

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V.    Outplacement Services/Assistance

        Outplacement services, which include employee counseling and reemployment assistance, will be provided at the Company's expense for a period of time as determined by the Company. Such outplacement services will be provided by a consulting agency which specializes in such services and will be selected by the Company.

VI.    Change of Control

        In the event compensation becomes due under the eligible employee's change in control agreements following a change in control of the Company or potential change in control of the Company (as defined in the eligible employee's change in control agreements), no Severance Payments, Benefits or outplacement services will be provided under this Plan. Nothing in this Plan will be interpreted to modify, alter, or in any way change the benefits otherwise available under the change in control agreements.

VII.    Employment Agreement

        With respect to any eligible employee who has an employment or other similar agreement with the Company that is not a change in control agreement ("employment agreement") in effect as of his termination, to the extent such employment agreement provides for severance, termination or similar post-termination payments, no Severance Payments, Benefits or outplacement services will be payable under the Plan.

VIII.    Administration

        The Company reserves the exclusive right to determine the scope, application and interpretation of this Plan. The Company's decision on any question arising under this Plan will, subject to the claims procedure established in the Plan, be final. The Company reserves the right in its sole discretion to amend, modify, change or terminate the Plan whenever it will deem such action to be appropriate.

        Any questions concerning the contents of the Plan should be directed to the attention of the Corporate Director, Human Resources.

3

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Exhibit (10)(xix)

GREAT LAKES CHEMICAL CORPORATION CORPORATE GUIDELINES AND PROCEDURES

EX-21

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Exhibit 21

SUBSIDIARIES

Name of Corporation	Jurisdiction
1167201 Ontario Limited	Canada
A & M Cleaning Products, LLC	Delaware/U.S.
Antimony Products (Proprietary) Ltd.	South Africa
Aqua Clear Industries, L.L.C.	New York/U.S.
ASCK, Inc.	Delaware/U.S.
ASEPSIS, Inc.	Canada
ASEPSIS, Inc.	Georgia/U.S.
ASIA Stabilizers Co., Ltd.	Korea
BAYROL Deutschland GmbH	Germany
BAYROL FRANCE S.A.S.	France
BAYROL Iberica S.A.	Spain
Bio-Lab Canada, Inc.	Canada
Bio-Lab, Inc.	Delaware/U.S.
BioLab (Gulf) GmbH	Switzerland
BioLab Arabia Limited	Saudi Arabia
BioLab Australia Pty. Ltd.	Australia
Biolab Services, Inc.	Delaware/U.S.
BioLab Textile Additives, LLC	Delaware/U.S.
BioLab U.K. Limited	United Kingdom
BLSA Industries (Pty) Ltd	South Africa
Blue Systemes S.A.S.	France
Chemol France S.A.	France
Chemol Reszvenytarsasag International	Hungary
GL Development, Ltd.	British West Indies
GLC Holdings GmbH	Switzerland
GLCC Laurel, LLC	Delaware/U.S.
GLCC Laurel de Mexico, S.A. de C.V.	Mexico
GLCC Mexico Holdings, Inc.	Delaware/U.S.
GLK Holdings (Netherlands) C.V.	The Netherlands
GLK Services, Inc.	Delaware/U.S.
Great Lakes (UK) Limited	United Kingdom
Great Lakes Chemical (Europe) GmbH	Switzerland
Great Lakes Chemical (Far East) Limited	Hong Kong
Great Lakes Chemical (Gulf) GmbH	Switzerland
Great Lakes Chemical (Netherlands) B.V.	The Netherlands
Great Lakes Chemical (S) Pte Ltd.	Singapore
Great Lakes Chemical France SAS	France
Great Lakes Chemical Global, Inc.	Delaware/U.S.
Great Lakes Chemical Japan Limited	Japan
Great Lakes Chemical Konstanz GmbH	Germany
Great Lakes Europe Unlimited	United Kingdom
Great Lakes Holding (Europe) AG	Switzerland

Great Lakes Holding Deutschland GmbH	Germany
Great Lakes Holding SAS	France
Great Lakes Manufacturing (Germany) GmbH	Germany
Great Lakes Manufacturing (UK) Limited	United Kingdom
Great Lakes Manufacturing Italy S.r.l.	Italy
Great Lakes Sales (Europe) GmbH	Switzerland
Great Lakes Sales (Germany) GmbH	Germany
Great Lakes Sales (UK) Limited	United Kingdom
Great Lakes Sales France SAS	France
Great Lakes Sales Italy S.r.l.	Italy
Great Lakes Sales Mexico, S. de R.L. de C.V.	Mexico
Great Lakes SAS	France
Great Lakes Technology (Belgium) N.V.	Belgium
Great Lakes Trading Company, Inc.	Delaware/U.S.
Gulf Stabilizers Industries Sales FZCO	Dubai
Gulf Stabilizers Industries, Ltd.	Saudi Arabia
HomeCare Labs, Inc.	Delaware/U.S.
Hydrotech Chemical Corporation	Canada
Hydrotech Chemical Corporation Pty. Ltd	Australia
INTERBAYROL, A.G.	Switzerland
ISCI, Inc.	Indiana/U.S.
MPC S.A.R.L.	France
Niagara Insurance Company, Ltd	Bermuda
PABU Services, Inc.	Delaware/U.S.
PCBU Services, Inc.	Delaware/U.S.
Poolbrite (SA) (PTY) Ltd	South Africa
POOLTIME GmbH	Germany
QO Chemicals GmbH	Germany
QO Chemicals Inc.	Delaware/U.S.
Recreational Water Products, Inc.	Delaware/U.S.
Recreational Water Products Pty. Ltd.	Australia
Recreational Water Products Inc.	Canada
TETRABROM Technologies Ltd.	Israel
WRL of Indiana, Inc.	Indiana/U.S.

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Exhibit 21
SUBSIDIARIES

EX-23

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Exhibit 23

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in Post-Effective Amendment Number 1 to the Registration Statement Number 33-02074 on Form S-8, dated February 3, 1995, in Registration Statement Number 33-02075 on Form S-8, dated December 11, 1985, in Registration Statement Number 33-42477 on Form S-3, dated August 28, 1991, in Registration Statement Number 33-57589 on Form S-8, dated February 3, 1995, in Registration Statement Number 33-00543 on Form S-8, dated January 30, 1996, in Registration Statement Number 333-49127 on Form S-8 dated April 1, 1998, in Registration Statement Number 333-61609 on Form S-8, dated August 17, 1998, in Registration Statement Number 333-78515 on Form S-3, dated May 14, 1999, in Registration Statement Number 333-100787 on Form S-8, dated October 28, 2002, in Registration Statement Number 333-101719 on Form S-8 dated December 6, 2002, in Registration Statement Number 333-103715 on Form S-8, dated March 10, 2003, in Registration Statement Number 333-105132 on Form S-3, dated May 9, 2003, and in Registration Statement Number 333-111346, dated December 19, 2003 and of our report dated February 25, 2005, with respect to the consolidated financial statements and schedule of Great Lakes Chemical Corporation, Great Lakes Chemical Corporation management's assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Great Lakes Chemical Corporation, included in this Annual Report (Form 10-K) for the year ended December 31, 2004.

/s/ ERNST & YOUNG LLP

Indianapolis, Indiana
March 2, 2005

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Exhibit 23

CONSENT OF INDEPENDENT AUDITORS

EX-31.(I)(A)

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Exhibit (31)(i)(a)

I, John J. Gallagher III, certify that:

1.

I have reviewed this annual report on Form 10-K of Great Lakes Chemical Corporation;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 4, 2005 /s/  JOHN J. GALLAGHER III John J. Gallagher III, Chief Executive Officer

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Exhibit (31)(i)(a)

EX-31.(I)(B)

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Exhibit (31)(i)(b)

I, Jeffrey Potrzebowski, certify that:

1.

I have reviewed this annual report on Form 10-K of Great Lakes Chemical Corporation;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 4, 2005 /s/  JEFFREY POTRZEBOWSKI Jeffrey Potrzebowski, Chief Financial Officer

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Exhibit (31)(i)(b)

EX-32.(I)(A)

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Exhibit (32)(i)(a)

STATEMENT OF CHIEF EXECUTIVE OFFICE

        The undersigned chief executive officer of Great Lakes Chemical Corporation hereby certifies that this Annual Report on Form 10-K for the year ended December 31, 2004 ("Periodic Report") fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934 (15 U.S.C. 78m) and that information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of Great Lakes Chemical Corporation.

/s/  JOHN J. GALLAGHER III John J. Gallagher III, Chief Executive Officer
Dated: March 4, 2005

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Exhibit (32)(i)(a)

STATEMENT OF CHIEF EXECUTIVE OFFICE

EX-32.(I)(B)

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Exhibit (32)(i)(b)

STATEMENT OF CHIEF FINANCIAL OFFICER

        The undersigned chief financial officer of Great Lakes Chemical Corporation hereby certifies that this Annual Report on Form 10-K for the year ended December 31, 2004 ("Periodic Report") fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934 (15 U.S.C. 78m) and that information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of Great Lakes Chemical Corporation.

/s/  JEFFREY POTRZEBOWSKI Jeffrey Potrzebowski, Chief Financial Officer
Dated: March 4, 2005

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Exhibit (32)(i)(b)

STATEMENT OF CHIEF FINANCIAL OFFICER