fL-Gvd OCT 2 01009
Unilever United States, Inc 800 Sylvan Avenue Andrew Shakalis, Esq. Englewood Qiffs, NJ 07632 Associate General Counsel - USA Environmental & Safety Tel: 201894 2763 Fax: 201 894 2727 Andrew.Shakalis@unilever.com
VIA FEDERAL EXPRESS Brian Carr, Esq. Assistant Regional Counsel New York/Caribbean Superfund Branch Office of Regional Counsel U.S. Environmental Protection Agency, Region II 290 Broadway, 17th Floor New York, NY 10007-1866
Re: Unilever United States, Inc. ("Unilever"): Response to USEPA's Gowanus Canal Superfund Site Section 104(e) Information Request
Dear Brian:
As a follow-up to our various conversations and, consistent with the granted extension of time within which to respond, attached please find Unilever's response to the USEPA's July 10, 2009 Information Request.
As we have discussed, due to the fact that Chesebrough-Pond's Inc. sold the shares of the Stauffer Chemical Company to Imperial Chemicals Industries PLC in 1987, I have not been able to ascertain or locate any responsive information or documentation other than the attached Purchase Agreement. To the extent any additional information is discovered, I will forward it to your attention.
If you have any questions, please give me a call.
Andrew Shakalis
encl.
106386.01 10119/09 REQUEST FOR INFORMATION
1. Please provide the following information on your Company: ·
a. Identify the state and date of incorporation of the Company and the Company's agents for service of process in the state of incorporation and in New York State.
b. Please identify the Chief Executive Officer or other presiding officer of the Company. Please also confirm the mailing address of that officer.
c. What is the nature of the business conducted by your Company?
d. If your Company is a subsidiary, division, branch or affiliate of another corporation or other entity, identify each of those other entities and those entities' Chief Executive Officers or other presiding officers. IdentifY the state of incorporation and agents for seivice of process in the state of incorporation and in New York State for each entity identified in your response to this question.
2. Is your Company a successor-in-interest to an entity, including those identified for your Company parenthetically in Definition 6, above? If your answer is no, please identify the current successor-in-interest to those companies and state the factual basis for your answer to this question.
3. Please describe in detail the manufacturing processes and any other operations conducted at the Facility by your Company, and identify the years in which it conducted such operations there. Ifthose operations were not constant, describe the nature of all changes in operations and state the year of each change.
a. During what years did your Company operate at the Facility?
b. During what years did your Company own all or any portion of the Facility?
c. Please provide a copy of documents which e~ectuated yom Company's acquisition and, if no longer owned, sale of the Facility property.
4. With respect to hazardous substances, hazardous wastes and industrial wastes at the Facility:
a. List all hazardous substances, hazardous wastes and industrial wastes that were used, stored, generated, handled or received by your Company at the Facility. Be as specific as possible in identifying each chemical, and provide, among other things, the chemical name, brand name, and chemical content
. 1 b. State when each hazardous substance, hazardous waste and industrial waste identified in your response to question 4.a., above, wa8 used, stored, generated, handled or received and state the volume of each hazardous substance, hazardous waste and industrial waste used, stored, generated or handled on an annual basis.
c. Describe the activity or activities in which each hazardous substance and waste identified in your response to question 4.a., above, was used, stored, handled or received.
d. Describe the activity or activities in which each hazardous waste and industrial . waste identified in your response to question 4.a._, above, was generated.
e. Show the location of the hazardous substances, hnzardous wastes and industrial w11.stes identified in your response to question 4.a., above through a map or diagram of the Facility ("Facility Plan'').
f. In addition to the Facility Plan, provide a floor plan of the Facility, both current and at !he time the Facility was in operation, that includes drainage sumps and all above-ground and below-ground discharge piping.
5. a. What did your Company do with the hazardous wastes, hazardous substances, and industrial wastes that it used, stored, generated or otherwise handled aftCr it was finished with them? Describe in detail how and where the hazardous substances, hazardous wastes and industrial wastes identified in response to question 4 above were disposed. For each disposal location and method, state the nature and quantity of the material disposed of on an annual basis.
b. If any hazardous substances, hazardous wastes and industrial wastes ever were removed from the Facility for disposal or treatment, state the names and addresses of the transporters and disposal facilities used and the period during which each such transporter and disposal site was used. If you are unaware of the ultimate disposal location of any of the hazardous substances, hazardous wastes and industrial wastes that were removed from the Facility, state the nature and . quantity of the particular materials in question and the names and addresses of the companies or individuals who removed the materials from the Facility.
c. Were any hazardous substances, hazardous wastes and industrial wastes ever disposed of at ·the Facility by your Company or any of its officers, employees, agents or representatives, or anyone else, either intentionally or unintentionally (in a manner other than those already identified in your responses to 5.a-b., above)? -· Your answer to this question should address, but not be limited to, instances in which hazardous substances, hazardous wastes, and industrial wastes were spilled or otherwise disposed onto or into the ground from drums, tanks, or any other
2 containers, as well as instances in which drums or other containers containing any volume whatsoever of hazardous substances, hazardous wastes and industrial wastes caught fue. For each disposal identifie~ in your response to this question:
i. Identify the locations at the Facility where such disposal occurred;
ii. State the periods during which such disposal occurred at each area identified in your response to question S.c.i., above;
iii. Identify each of the materials disposed of at the Facility, including the chemical content, characteristics, and form (solid, liquid, sludge or gas) of the material; · ·
iv. Describe the method of disposal used;
v. Describe how·the material was containerized (if at all) at the time of the disposal; and
vi. State the quantity of each such material that was disposed of at the Facility.
6. Identify all leaks, spills or releases or threats of releases of any kind of any hazardous substances, hazardous wastes and industrial wastes into the environment that have occurred or may have occurred at or from the Facility, including to the Gowanus Canal, including any leaks or releases from discharge pipes as well as from storage tanks, drums and other containers. Your answer should include:
a. when each release occurred;
b. how each release occurred;
c. what individuals and companies caused or contributed to the release;
d. what hazardous substances were released, and in what fonn (e.g., gas, liquid, solid or sludge);
e. the amount of each hazardous substance released;
f. where each release occurred (indicate on the Facility Plan);
g. the surface on or into which the material was released;
h. whether the release was fully contained and, if not, where the uncontained portion of the release is believed to have gone; . 3 i. any and all activities undertaken in respOnse to each release or threatened release;
j. any and all investigations of the circumstances, nature, extent or location of each release or threatened release including the results of any soil, water (ground or surface), or air testing that was undertaken; and
k. all persons with infomiation relating to subparts a. throughj. of this Question.
7. In addition to any documents requested above, please provide copies of the following:
a. All records relating to releases of hazardous substances, hazardous wastes, and industrial wastes at the Facility or to the Gowanus Canal; and
·b. All waste .manifests, invoices or other documents relating to the disposal of the hazardous substances, hazardous wastes, and industrial wastes dispOsed of at the Facility or otherwise handled at the Facility.
c. All investigation documents relating to conditions at the Facility~ including safety and environmental audits, sampling results, cleanup orders or any submissions to the environmental agencies, including but not limited to, the New York State Department of Environmental Conservation, the New York City Department of Environmental Protection and EPA.
8. Did the Facility utilize barges in its operations? If so, provide the following information:
a. the period ofbarge operations;
b. the location of barge transfers;
c. the nature of materials transferred to or from barges;
d. the nature of barge cleaning operations, if any, including what cleaning methods were used and how cleaning waste was handled; ·
e. what spill prevention controls were utilized;
f. a detailed description of any barge-related releases.
I 9. Did the Facility utilize an on-site fleet of vehicles or otherwise generate or accept used oil? If so, describe in detail the Facility's used oil management practices during the period of the Facility's operations, including the number of vehicles serviced on-site, the volume of waste oil generated, how the waste oil was store~ pending dispOsal, and the
4 method and location of waste oil disposal.
10. Did the Facility's operations include tank cleaning? If so, describe in detail the Facility's tank cleaning practices during the period of operations, including the number of tanks on site, the frequency and method of tank cleaning, the volume of tank cleaning waste generated, and the method and location of tank cleaning waste disposal.
11. Identify each of your Company's Facility discharge locations, including but not limited to, pipes, drains, sumps and sewer connections, describe the discharge location's purpose and use, show the location of each discharge point on the Facility Plan, and indicate whether it discharged to the Gowanus Canal, to the ground, the sewer or other location{s).
12. Please describe the closure of the Facility, if applicable. Your answer should include, but not be limited to, when the closure of the Facility occurred; how waste material was disposed of, and whether any waste material was left onsite. In addition, describe any further closure work that was undertaken at the time any portion of any of the Facility was transferred.
13. Does your Company have any additional information or documents which may help EPA identify other companies which conducted operations at or owned the Facility, or contributed contamination to the Gowanus Canal? If so, please provide that information and those documents; state the time period when each such company operated at or owned the Facility, or contributed contamination to the Gowanus Canal, and identify the source(s) of your information.
14. Identify the persons having knowledge of facts relating to the questions which are the subject of this inquiry. For each such person that you identify, provide the name, address, and telephone number of that person, and the basis of your belief that he or she has such knowledge. For past and present employees of the Company, include their job title and a description of their responsibilities.
15. Please state the name, title and address of each individual who assisted or was consulted in the preparation of your response to this Request for Information. In addition, state whether this person has personal knowledge of the answers provided.
16. Supply any additional information or documents in your possession or available to you that may be relevant to the questions which are the S"ijbject of this inquiry or that ptay assist EPA in identifying potentially responsible parties under CERCLA with respect to the Site.
5 Unilever United States, Inc. Response to the U.S. Environmental Protection Agency Information Request pursuant to 42 U.S.C. Sees. 9601-9675
1. (a) Unilever United States, Inc. was incorporated in the State of Delaware on August 3, 1977. The agent for service of process in Delaware for Unilever United States, Inc. is The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801. There is no agent for service of process in New York State for Unilever United States, Inc. (b) Michael B. Polk is the Chairman of Unilever United States, Inc. and the mailing address is 700 Sylvan Avenue, Englewood Cliffs, New Jersey 07632. (c) Unilever United States, Inc. is a holding company for all of Unilever's principal operations in the United States. (d) Unilever United States is an indirect subsidiary approximately 73% owned by Unilever N.V., a Dutch corporation, and approximately 27% by Unilever PLC, an English and Dutch corporation. Neither Unilever N.V. nor Unilever PLC does business in the United States, and neither entity has an agent for service of process in New York State. 2. Unilever United States, Inc. is a successor-in-interest to Chesebrough-Pond's Inc. The corporation formerly known as Chesebrough-Pond's Inc. was incorporated in the State of New York on May 11, 1880 under the name The Chesebrough Manufacturing Company Consolidated. A copy of the Certificate of Incorporation of The Chesebrough Manufacturing Company Consolidated filed with the Secretary of State of the State of New York is attached hereto as Exhibit A. On June 30, 1955, Pond's Extract Company was merged with and into The Chesebrough Manufacturing Company Consolidated, which simultaneously with the merger changed its name to Chesebrough-Pond's Inc. After a cash tender offer which was completed on December 10, 1986, effective February 10, 1987, Chesebrough-Pond's Inc. merged into a subsidiary of Unilever United States, Inc., a Delaware corporation. A copy of the Press Release dated February 10, 1987 issued on behalf of Unilever United States, Inc. relating to the completion of these transactions is attached hereto as Exhibit B. Effective December 31, 1989, Chesebrough-Pond's Inc., the New York corporation, was merged with Conopco, Inc., a Maine corporation formerly known as Lever Brothers Company, and simultaneously with this merger changed its name to Chesebrough Pond's, Inc. A copy of the Certificate of Merger filed with the Secretary of State of the State ofNew York evidencing this transaction is attached hereto as Exhibit C. Unilever United States, Inc. is not a successor-in-interest to Stauffer Chemical Company. As noted in the second preceding paragraph above, Unilever's acquisition of Chesebrough-Pond's Inc. was completed on February 10, 1987 (see Exhibit B attached hereto), at which time Stauffer Chemical Company was a wholly-owned subsidiary of Chesebrough-Pond's Inc. Pursuant to that certain Purchase Agreement dated June 5, 1987 between Chesebrough-Pond's Inc. as Seller and Atkemix One Inc. a Delaware
106375.01 10/19/09 corporation, Atkemix Five Inc., a Delaware corporation, Atkemix Fourteen Inc., a Delaware corporation, collectively, the Buyers and Imperial Chemical Industries PLC, an English public company as Guarantor, Chesebrough-Pond's Inc. agreed to sell to the Buyers all of its right, title and interest in and to all the shares of entities comprising the Stauffer Chemical Group, including Stauffer Chemical Company, a Delaware corporation. A copy of the Purchase Agreement is attached hereto as Exhibit D. Attention is directed to Section 5.02 of the Purchase Agreement entitled "Special Indemnity." A copy of the Press Release issued on behalf of Imperial Chemical Industries relating to the completion of this transaction is attached hereto as Exhibit E. As a result of the share transfer and, in particular, the Special Indemnity provision of the Purchase Agreement, Unilever United States, Inc. is not a successor-in-interest to Stauffer Chemical Company and has no responsibility for the Facility located at Ninth Street at the Gowanus Canal, Brooklyn, New York. At this time, it is our understanding that the successor-in-interest to Stauffer Chemical Company is ICI Americas, Inc., 10 Findeme Avenue, Bridgewater, New Jersey 08807. 3. No information available responsive to this request. 4. No information available responsive to this request. 5. No information available responsive to this request. 6. No information available responsive to this request. 7. No information available responsive to this request. 8. No information available responsive to this request. 9. No information available responsive to this request. 10. No information available responsive to this request. 11. No information available responsive to this request. 12. No information available responsive to this request. 13. See Response to Request for Information No. 2, above. 14. David J. Strickland, III, Esq., Assistant General Counsel, Corporate, Unilever United States, Inc. (201) 894-2764. 15. See, response #14. In addition, Mary Pfeil, Senior Records Administrator, (201) 894-2511; and Andrew Shakalis, Associate General Counsel- Environmental & Safety, Unilever, (201) 894-2763. 16. At this time, Unilever does not have any additional responsive information or documentation. Unilever recognizes its obligation to supplement this response, to the extent additional information becomes available.
2 106375.01 10/19/09 CERTIFICATION OF ANSWERS TO REQUEST FOR INFORMATION GOWANUSCANALSUPERFUNDSUE
State of /)40 Jc.rs.; Countyof B.~en
I certify under penalty of law that I have personally examined and am familiar with the information submitted in this document (response to EPA Request for Information ) and all documents submitted herewith, and that based on my inquiry of those individuals immediately responsible for obtaining the information, I believe that the submitted information is true, accurate, and complete, and that all documents submitted herewith are complete and authentic unless otherwise indicated. I am aware that there are significant penalties for submitting false information, including the pcissibility of fine and imprisonment. I am also aware that my Company is under a continuing obligation to supplement its response to EPA's Request for . Information if any additional information relevant to the matters addressed in EPA's Request for Information or my Company's response thereto should become known or available to the Company.
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Released on behalf of· Unilever by Humphrey Sullivan Unilever United States, Inc. 10 East 53rd Street ·.New. York,. New. York 10022 Day (212) 906-4694 FOR IMMEDIATE RELEASE. Night (2l2) 249~4723 TUESDAY, FEBRUARY 10, 1987
UNILEVER COMPLETESACQUISITION.OF. CHESEBROUGH-POND'S INC.
February 10, 1987--:Unilever United States, Inc. . ' ·~ ; announced today completion of the merger of a subsidiary of ~. . . . Unilever United States, Inc. into Chesebrough-Pond's Inc. /' The merger was approved today at a Special Meeting of
~·. Chesebrough shareholders. Unilever had acquired approxi
mately 95% of the outstanding Chesebrough shares in a cash offer completed December 30, 1986.
Remaining Chesebrough shareholders will be sent a letter of transmittal which they should complete and return along with their share certificates to the paying agent indicated on letter of transmittal. Shareholders will receive $72.50 share in cash upon surrender of their shares.
f f f m X :J'" 0: ;:::;: () 7--- ..
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OF - ---·· ...... - ___ OONOPCO, INC. 'into ~--- ~ -..:- ...·-~ .. ~~~~ .. "' -... UNDER Sf.;CTION 904' OF THE BUSINESS CORPoRATION LAW .,
Wo, tJ;le '1Jndersigned,, M-H. Kurtz and K.c. Leonard, :. being respectively a Vice President and·an Assistant ~ .· Secretary .of CONOPCO, Inc., a Maine coxporation · (hereinllfte'r" · • ·, cal~:e.d "CONOPCO~'), an~ _R.M. Phillipa.... _and M.H.• K'Lf{tz, beirtg : · •.. respoctiVcly J,;.he Pnuuaent and the Secre.tary of . · ~esebrough-Pond's Inc., a New York corporation· (hereinafter' called "Chesebrough"), her.eby._certify: · :·.. : .. • ., ,, ~;,;;.----- FIRST: The constituent COIJ>Oratfons are CONO~CO :._;~ :·1 and chesebrough. o .,. .- :~· ~.-.·.•\·:· .'.;:· .;,/ (':') ... SECOND: '!'he surviving corporation Ches-ebrough-Pond's Inc.· .. 0 p ...... and the Certificate of Inc~rporation !or the survtving corpor·t~pn.shal~~ be amended to change the name o! the corpo-ration. To acfomPl.iii!b~.thi's. ~: amendment, Article 1 of the Certificate o! ln~otporation !ar tfta.survivirig corporation sl)ail read in its entirety as follovs: • -· ···::·. * .~. ~. ~he name of the< c,qr~ratlon ·1~ co~opc6; -~N~-~ . _ ~--.· · ·::·:~ •· :.. . ;·: 1'.. ,.. THlRD: t.be desigmtt,ion of the .only. cl~ss. ot ouul:aiidir;&-ahares of -Chesebrough is Common Sta~k, pnr· value. $1..0.9 per sfu~'i!.c ("CKe.sebrough ...... Ct>mmon Stock") • ..Ihe total number of such shl\r~a-out:st4nding on the cfato. of__ this certijicllte is 3.100.-- Prior .to ·the cffec::iv.e thte of ·.~ho!merger to--. ,..h!ch this cc
• · ( i) ·Common Stock, par val uc $"1C)o. 00 per share. The tot~l number of such'Gharqs outstanding is 650,000. Each sha rc is cnt it 1 cr.l to one vote .. a (ii) ~~~sa ~Stock, par value SS.OO .per ~hnrr. The t:ntill number nf ~hares outstanding is 3,94Q. ~uch 5harcn ~rc not entltlcd to votci. · •.
Fl FTII: 'l'hc Ccrt:Hicatc o! Incorporation of '\ Chc~chrouqh waG filed by the Department of State of tho. State of New York nn May 11, l9RO under the nama o! ~ __Chcscbr._ough Manu!aoturinq Company. The Ccrtificntc of Incorporation of CONOPCO.was filed in the ~ffic6 o( the Secretary of Stote of Maine on october 13, J,fHI9 under the name Lever Brothers; Limited, Boston Works. The application~ for authority to· do businecs 1 in New York was filed by . ______t;Ol'JOP.CO _wi.th.,the. Dcpartmant of State <5r the--State o-f-Net
!;IXT!l: 'l"ne effective
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u:"IN \HTUI:SS HJH:RF.OF, this certificate p! -l-lurger·has been signad on· this·~ ·~ day ~f December, 1989~ and the statemGntsC:ontaincd~rein are affirmed as true under ·pen~lty of perjury.
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_..- - •. .•J/ /': ;:./- - / By /_1.- ( "''-g...... '"- ,, "-4- K:·c. Leonard 'l""· ...... r(.-;.·;-1. Secretary
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[CONFORMED COPY]
PORCHASE AGREEMENT
between
CHESEBROUGH-POND'S INC.
and
ATKEMIX ONE INC. ATKEM!X FIVE INC. ATKEMIX FOORTEEN INC. and IMPERIAL CHEMICAL INDUSTRIES PLC
June 5, 1987
Stauffer Chemical Group JUL 22 '87 16=06 ICI AMER P.3
-2-
ICI used cash and short and medium term borrowing facilities to finance the purchase of Stauffer. Further information on the Stauffer Chemical Company acquisition will be given in a circular to be sent to ICI Stockholders in the near future.
I 11 /87 ARTICLE I SALE AND PURCHASE
SECTION l.Ol. Sale of Shares ••••• ~ •••••••••••••• 2 SECTION 1.02. Payment ••••••••••••••••••••••••••• 3 SECTION 1.03. Closing Date •••••••••••••••••••••• 3 ARTICLE II CONDITIONS SEcrioN 2.01. General conditions •••••••••••••••• 3 (a) Performance ••••••••••••••••••• 4 (b) Representations ••••••••••••••• 4 (C) L~g~lit¥ •••••••••••••••••••••• 4 (d) L1t1gat1on •••••••••••••••••••• 4 (e) Consents ••••.•••• ~ • • • • • . • • • • • • 4 (f) Bart-Scott •••••••••••••••••••• 4 (g) Other Evidence...... 4 SECTION 2.02. Buyer Group's Conditions...... 4 (a) Material Adverse Change...... 4 (b) Comfort.Letter...... 4 (c) Opinion ...... • ...... 5
SECTION 2.03. Seller's Condition •••••••••••••••• 5 ARTICLE III REPRESENTATIONS SECTION 3.01. Seller's Representations .•.••••••. 5 (a) Organization •••••••••••••••••• 5 (b) Authorization ••••••••••••••••• 5 (c) No Conflict •••••••••••••••.••• 5 (d) Enforceability •••••••••••••••• 6 (e) Subsidiaries and Associates ••• 6 (f) Capital Stock ••••••••••••••••• 6 (g) Shares •••••••••••••••••••••••• 6 (h) Financial Statements ••••••••.• 7 (i) Other Assets •••••••••••••••••. 7 ( j ) Taxes • . • • • • • • • • • • • • • • • • • • • • • • • 8
-i- ( k) ERISA • • • • • • • • • • • • • • • • • • • • • • • • • 9 (l) Information Provided...... 10 (m) Special Indemnity...... 10 (n) Material Adverse Change...... 10 SECTION 3.02. Limitations on Seller's Representations ••••••••••••••••• 10 SECTION 3.03. Guarantor's and Buyers' Representations ••••••••••••••••• lO (a) Organization •••••••••••••••••• ll (b) Authorization ••••••••••••••••• ll (c) No Conflict ••••••••••••••••••• ll (d) Enforceability •••••••••••••••• ll (e) SEC Reports • • •• ••• • •• • • • • • • • • • ll (f) Public Offering • • •• • • • • • • • • • • • 12 ARTICLE IV COVENANTS SECTION 4. Ol. Conduct of Business ••••••••••••.•• 12 SECTION 4.02. Inspection •.....•••..••.••....•••• 14 SECTION 4.03. Confidentiality ••••••••••••••••••• 14 SECTION 4.04. Hart-Scott ...... 15 SECTION 4.05. Books and Records ••••••••••••••••• 16 SECTION 4.06. Employee Plans •••••••••••••..•..•. 16 SECTION 4.07. Tax Matters •.••••••••••••• ~ •••••••. 20 SECTION 4.08. Stauffer Headquarters ••••••••••••• 24 SECTION 4.09. South African Operations •••••••••• 24 SECTION 4.10. Use of Stauffer Name •••••••••••••• 25 SECTION 4.lj.. Use of Seller and Unilever Names •. 25 SECTION 4.12. Intercompany Accounts ••••••••••••. 25 SECTION 4.13. Dividend ...... 27 SECTION 4.14. Services ...... 27 SECTION 4 .1.5. Reorganization·····~·············· 28 SECTION 4.16. State Taxes ••••••••••••••••••••••• 28 ARTICLE V INDEMNITIES SECTION 5. Ol. General Indemnity ••••••••••••••••• 28 SECTION 5.02. Special Indemnity ••••••••••••••••• 30 SECTION 5.03. Defense •.•••••.•••••••••••••.•• · • • 31 SECTION 5.04. Guarantee Reimbursement ••••••••••• 31 SECTION 5.05. Taxes •••....••.•.••••••••••••••••. 32
-ii- SECTION 5.06. Interest •••••••••••••••••••••••••• 34 SECTION 5.07. After-tax Calculation...... 34 ARTICLE VI MISCELLANEOOS SECTION 6.01. Termination •..•••••••.•••••••••••• 35 SECTION 6.02. Publicity ...... 36 SECTION 6.03. Expenses •••••••••••••••••••••••••• 36 SECTION 6.04. Brokers ••••••••••••••••••••••••••• 36 SECTION 6.05. Notices ...... 36 SECTION 6.06. Severability •••••••••••••••••••••• 37 SECTION 6.07. ,Am.endmen t ..•....•.•••.•..••••••••• 37 SECTION 6.08. Headings .••••••••••••••••••••••••• 37 SECTION 6.09. Benefit ••••••••••••••••••••••••••• 38 SECTION 6.10. Payments •••••.••••••••••••••••.••• 38 SECTION 6.11. Counterparts •••••••••••••••••••••• 38 SECTION 6.12. Governing Law ••••••••••••••••••••• 38 SECTION 6.13. Guarantee ••••••••.•••••••••.••.•••. 38 ANNEX A Comfort Letter ANNEX B Opinion of Seller's Counsel ANNEX C Opinion of Buyer's Counsel ' SCHEDULE 1 Governmental Actions SCHEDULE 2 Subsidiaries and Associated Companies SCHEDULE 3 Extraordinary Transactions SCHEDULE 4 Certain Continuing Obligations SCHEDULE 5 Seller Guarantees SCHEDULE 6 Severance Policy SCHEDULE 7 Plan Assumptions
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-iii- PURCHASE AGREEMENT dated June 5, 1987, between CHESEBROUGH-POND'S INC., a New York corporation ("Seller"}, on the one hand, and Atkemix One Inc., a Delaware corporation ("Basic Buyer"), Atkemi?C Five Inc., a Delaware corporation ("Specialty Buyer"}, Atkemix Fourteen Inc., a Delaware cor poration ("Agricultural Buyer" and, together with the Basic Buyer and the Specialty Buyer, the "Buyers") and IMPERIAL CHEMICAL INDUSTRIES.PLC, an English public limited company ("Guarantor"), on the other hand.
Seller owns 1,000 shares (the "Stauffer Shares"} of common stock, $1.25 par value, of Stauffer Chemical Company, a Delaware corporation ("Stauffer"): 1,000. shares (the "Specialty Shares") of common stock, $1 par value, of Stauf fer Specialty & Food Products Company, Inc., a Delaware corporation ("Specialty"); and 1,000 shares (the "Agricul tural Shares"} of common stock, $1 par value, of Stauffer Agricultural Chemicals Company, Inc., a Delaware corporation ("Agricultural"). The Stauffer Shares, the Specialty Shares and the Agricultural Shares are the "Parent Shares". Stauf fer, Specialty and Agricultural are collectively the "Com panies" and each is a "Company". · The entities listed on Schedule 2, excluding the Companies, are referred to as the "Entities". The Entities more than 50% of the capital stock of which is owned by one or more Companies or Entities are referred to as "Sub sidiaries" and other Entities are referred to as "Associates". The Companies and Subsidiaries are referred to collectively as the "Stauffer Group". The shares of capital stock of the Entities owned by the Stauffer Group are referred to as the "Entity Shares" and, together with the Parent Shares, are referred to as the "Shares". References to a "party" herein mean Seller, on the one hand, and Guaran tor and Buyers, on the other hand. The Seller wishes to sell the Parent Shares to the respective Buyers thereof, and to cause the Stauffer Group to sell the Entity Snares of such Enti tie.s as may be designated by the Guarantor pursuant to Section l.Ol(a) (the "Designated Entities"} to such entities as may be designated by the Guarantor pursuant to Section l.Ol(a} (the "Designated Pur chasers"). The Guarantor, the Buyers and the Designated Purchasers are referred to.as the "Buyer Group". The parties agree as follows: ARTICLE I SALE AND PURCHASE SECTION 1.01.· Sale of Shares. (a) Not later than ten days prior to the Closing Date, the Guarantor shall designate, by notice to the Seller, the names of the Desig nated Entities and Designated Purchasers, the Entity Shares to be purchased at the Closing by each Designated Purchaser, and the respective purchase prices to be paia for·the Entity Shares of the Designated Entities. Each Designated Purchaser shall be a direct or indirect subsidiary of ICI or shall be reasonably acceptable to the Seller. Each Designated Entity shall be an entity organized, or which principally conducts its business, in jurisdiction(s) other than the United States of America or any .state(s) thereof. Any designation pursuant to this Section l.Ol(a) shall be ineffective to the extent such designation would (i) Clelay the Closing by more than three business days after the date on which the Closing would otherwise occur, (ii) together with all other designations pursuant to this Section l.Ol(a), result in costs, losses, liabilities, taxes or expenses (or risks thereof) to Seller which exceed the aggregate amount thereof Seller would have incurred, in the absence of such designation unless Guarantor shall, prior to the Closing, agree to indemnify Seller on an after-tax basis against such excess, (iii) prevent, delay or . reduce by withholding the remission to Seller of the proceeds of the sale of th~ Entity Shaies of the relevant Designated Entity unless Guarantor shall, prior to the Closing, agree to such arrangements as the Seller may reasonably consider to be necessary to avoid, or fully compensate the Seller for, such prevention, delay or reduction. No such designation shall be effective to the extent that the contemplated purchase and sale pursuant thereto·would be illegal or impossible (although the parties agree to cooperate to seek to avoid any such illegality or impossibility) or constitute a breach of contract or other instrument binding on Seller or any sub sidiary. (b) On the Closing Date, Seller shall (i) cause the Stauffer Group to sell the Entity Shares of the Desig nated Entities to the Designated Purchasers thereof and, immediately thereafter, shall (ii) sell (X) the Stauffer Shares to the Basic Buyer, (y) the Specialty Shares to the Specialty Buyer and (z) the Agricultural Shares to the Agricultural Buyer. The purchase price of the Stauffer Shares shall be $824,000,000 (less the aggregate purchase price designated pursuant to Section l.Ol(a) above to be paid for all Entity Shares of Designated Entities owned by Stauf-
-2- fer or any Subsidiary thereof); the purchase price of the Specialty Shares shall be $440,400,000 (less the aggregate purchase price designated pursuant to Section l.Ol(a) above to be paid for all Entity Shares of Designated Entities owned by Specialty or any Subsidiary thereof); and the purchase price of the Agricultural Shares shall be $428,000,000 (less the aggregate purchase price designated pursuant to Section ·l.Ol(a) above to be paid for all Entity Shares of Designated Entities owned by Agricultural or any Subsidiary thereof). (c) At the Closing, Seller shall and shall cause the Stauffer Group to deliver certificates for the Shares, together with blank stock powers duly executed by the registered holder thereof, to the Buyers and Designated Purchasers thereof. Such certificates and stock powers shall be delivered at the offices of Cravath, Swaine & Moore, One Chase Manhattan Plaza, New ~ork, N.Y. 10005. SECTION 1.02. Payment. At the Closing, the Buyers shall, and the Guarantor shall cause the Buyers and the Designated Purchasers to, deliver the respective purchase prices_of the Shares to the respective sellers thereof, by wire transfer of immediately available funds, to accounts of such sellers with a bank in New York City designated by Seller, by notice to the Guarantor, not later than three business days prior to the Closing Date.
SECTION ~.03. Closing Date. The Closing (the "Closing") of the purchase and sale of the Shares shall be held at 10:00 a.m., New York City time, on the Closing Date. "Closing Date" means the later of June 30, 1987 and the third business day after the expiration of the waiting period for the sale of the Shares under the Bart-Scott-Rodino Antitrust Improvements Act of 1976 ("Bart-Scott"), or as soon there after as the conditions set forth in Article II shall have been satisfied, or such other date as the parties may agree. A "business day" is a day that is neither a Saturday nor a I Sunday nor a day that banks are authorized to be closed in ~~ New York City.
ARTICLE II CONDITIONS SECTION 2.01. General Conditions. Each party's obligations under Article I shall be subject to the satisfac tion (or waiver by such party) on the Closing Date of the following conditions: ,_
-3- (a) Performance. The other party shall have performed in all material respects all obligations that this Agreement requires it to perform on or before the ·Closing Date. (b) .Representations. Each representation and warranty made by the other party in Article III (other than Section 3.01(1) and (n)) or Section ~.01 shall be true and correct in all material respects on the Closing Date as if made on and as of such date. (c) Legality. No change shall have occurred in any law, rule or regulation that would prohibit the performance of such party's obligations under Article I. (d) Litigation. No court, agency or other authority shall have issued any order, decree or judg ment to set aside, restrain, enjoin or prevent the performance of such party's obligations under this Agreement. (e) Consents. Except as set forth on Schedule 1, all the consents, approvals and filings described on Schedule l shall have been obtained or made.
(f) Hart-Scott. Al~ waiting periods under Hart Scott shall have expired or been terminated. (g) Other Evidence. Such party shall have received any evidence that it shall have reasonably requested to demonstrate the satisfaction of any unwaived condition to its obligatio~s.
SECTION 2.0~. Buver Group's Conditions. The Buyer Group's obligations under Article I shall be subject to the satisfaction .(or waiver by Guarantor) on the Closing Date of the following conditions: (a) Material Adverse Change. Except as set forth on Schedule 3, since December 31, 1986, there shall have been no material adverse change in the business, finan cial condition or results of operations of the Companies and their Subsidiaries taken as a whole. (b) Comfort Letter. The Buyer Group shall have received a letter from Arthur Young & Co. substantially in the form of Annex·A.
-4- (c) Opinion. The Buyer Group shall have received an opinion of counsel for Seller, substantially in the form of Annex E. SECTION 2.03. Seller's Condition. Seller's obligations under Article I shall be subject to the condition that on the Closing Date Seller shall have received (or waived receipt of) opinions of counsel for Guarantor and Buyers substantially in the form of Annex c.
ARTICLE III REPRESENTATIONS
S~CTION 3.01. Seller's Representations. Seller represents and warrants to the Buyer Group that the following statements are true_and correct: (a) Organization. Seller is a corporation duly organized, validly existing and in good standing. Selle! has the corporate power and authority to enter into and perform this Agreement. (b) Authorization. Seller has duly authorized, executed and del~vered this Agreement. (c) No Conflict. Seller's execution, delivery and performance of thls Agreement do not and will not (i) contravene the certificate of incorporation or by-laws of Seller or any of the Companies or any law, rule, regulation, order, judgment or decree that applies to or binds Seller or any Company or, to the knowledge of Seller, any entity listed on Schedule 2 or any of their properties, (ii) except as affected by any designation pursuant to Section l.Ol(a), constitute a material breach of, result in or permit the acceleration or termination of or constitute a default under (whether with notice or lapse of time or beth) or require any consent under any material agreement or instrument to which Seller or any Company or, to the knowledge of Seller, any entity listed on Schedule 2 is a party or that binds or affects any of them or their property (the Buyer Group having agreed that the agreement between Stauffer, HIMONT Incorporated and Mitsui Petrochemical Industries, Ltd., is net material), or (iii) except as affected by any designation pursuant to Section l.Dl(a), require any consent, permit, approval, action, filing or recording, except those listed on Schedule 1. However,
-s- Seller makes no representation or warranty as to com pliance with or contravention of any antitrust or com petition laws. (d) Enforceability. This Agreement is a legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms. (e) Subsidiaries· and Associates. Schedule 2 lists all entities 1n whlch one or more entities listed on Schedule 2 owns more than 20% of the outstanding voting capital stock. The entities listed on Schedule 2 own the percentages set forth on Schedule 2 of voting capi tal stock of each such entity, free of any security interest, lien, claim or encumSrance (other than this Agreement). Each entity listed on Schedule 2 is duly organized, validly existing and in good standing under the laws of the jurisdiction indicated opposite its name on Schedule 2 and has the power and authority under its organizational documents to carry on its current business and to own or lease its current properties. There are no outstanding options, warrants or other rights to purchase (other than rights of first refusal, previously disclosed in writing to the Buyer Group, with respect to securities of Entities not wholly owned) or securities convertible into capital stock of any entity listed on Schedule 2. ~he Entity Shares have been validly issued and are fully paid and nonassessable. When the Designated Purchase.rs purchase and pay for the Entity Shares in accordance with this Agreement, the Designated Purchasers thereof will own the Entity Shares free of any security interest, lien, claim, right of first refusal, option or encumbrance (other than those any Designated Purchaser may create). (f) Capital Stock. Each Company's authorized capital stock consists of 1,000 shares of common stock. The Parent Shares are the only outstanding capital stock of the Companies. The Parent Shares have been validly issued and are fully paid and nonassessable. (g) Shares. Seller owns the Parent Shares benefi cially and of record,. free of any security interest, lien, claim, right of first refusal, option or encum brance (other than this Agreement). When each of Basic Buyer, Specialty Buyer and Agricultural Buyer purchases and pays for the Stauffer Shares, Specialty Shares and Agricultural Shares, respectively, in accordance with this Agreement, the Buyers thereof will own such Parent
-~ Shares free of any security interest, lien, claim, right of first refusal, option or encumbrance (other than those any Buyer may create). (h) Financial Statements. Seller has furnished Guarantor and Buyers an audited consolidated (combined) balance sheet of the Companies at December 31, 1986, and unaudited statements of consolidated (combined) income and consolidated (combined) changes in financial . position of the Companies for the year ended December 31, 1986. Such financial statements conform to the books and records of the Stauffer Group, were prepared in accordance with generally accepted accounting prin ciples and present fairly the Companies' consolidated (combined) financial position at December 31, 1986, and their consolidated (-combined) results of operations for the year then ended. Seller has also furnished an unaudited consolidated (combined) balance sheet, state ment of consolidated (combined) income and statement of consolidated (combined) changes in financial position of the Companies at and for the quarter ended March 31, 1987. Such financial statements at and for the quarter .ended March 31, 1987, conform to the books and records of the Stauffer Group, were prepared in accordance with generally accepted accounting principles on a basis consistent with the consolidated (combined) financial statements at and for the year ended December 31, 1986, and present fairly the consolidated (combined) financial position of the Companies at March 31~ 1987, and the consolidated (combined) results of operations and chan ges in financial position of the Companies for the three months then ended. Notwithstanding the foregoing, the unaudited financial statements for the quarter ended March 31, 1987, do not include any required footnote i disclosure. 'I .~ (i) Other Assets. Except as reflected ip the financial s~atements described in Section 3.0l(h) and the notes thereto, except for the assets described in the last sen~ence of Section 4.09, and except for assets the benefits of which are to be provided to the Com panies pursuant to Section 4.14, neither Seller nor any of its affiliates (other than the entities listed on Schedule 2) owns any asset that is or at December 31, 1986 or thereafter was used to any substantial extent in the business of any of the Companies or the entities listed on Schedule 2.
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j
l,£1"I ;.:.:'1 I (j) Taxes. (i) For purposes of this Section and Sections 4.07 and 5.06, (x) "Taxes" shall mean all u.s. Federal income taxes and all taxes imposed py states, territories and possessions of the United States and political subdivisions thereof ("State and Local Taxes") which are based on or measured by net income or net profits including alternative minimum taxes, taxes under Section 59A of the Code and franchise taxes which include net income as an alternative basis together with all interest, penalties and additions imposed with respect to such taxes; (y) "Pre-Closing Tax Periods" shall mean all u.s. Federal taxable periods ending at or before the close of business on the Closing Date and all taxable periods other than u.s. Federal taxable periods ending on or before December 31, 1986; and (z) "Code" · shall mean the Internal Revenue Code of 1986. (ii) The Companies and any affiliated group, within the meaning of Section 1504 of the Code, of which any Company is or has been a member, have filed or caused to be filed in a timely manner (within any applicable·extension periods and to the extent required to be filed) all returns, reports and estimates required to be filed with respect to Taxes, all Taxes shown to be due on such returns, reports and estimates have been or will be timely paid in full. (iii) Any and all tax sharing agreements to which any of the Gompanies and the Seller (or any affiliate of the Seller) are parties shall be terminated effective on.the date hereof, and from and after such date, neither the Companies, nor the Seller (nor any affiliate of the Seller) shall have any further rights, obligations or liabilities thereunder. (iv) The Seller represents that neither it nor any affiliate has, during the period between December 31, 1986 through and including the date hereof (x) made any election pursuant to the Code that is inconsistent with any election of the Seller or such affiliate for any prior year or filed any amended tax return of any of the Companies (or group which includes the Companies), (y) paid any Tax for any period for which a return had been filed on or before December 31, 1986, or incurred any liability with respect to such a Tax, or entered into any closing agreement or other settlement agreement with respect to any tax period ending on or before such date or (z) conceded any amount of disputed Tax for any such period in any administrative or judicial proceeding
-8- if any such action under (x), (y) or (z) has a material adverse effect upon the relevant Buyer or Designated Purchaser or any of its affiliates (including the Com panies) and has not been disclosed to either the relevant Buyer or Designated Purchaser or the Guarantor. (k) ERISA. With respect to any employee benefit plans, with~n the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), covering employees of members of the Stauffer Group ("Plans")~ (i) any such Plans that are "employee pension benefit plans" within the meaning of Section 3(2) of ERISA are "qualified" within the meani~g of Section 40l(a) of the Code, and favorable deter mination letters have been obtained from the Inter nal Revenue Service for such Plans evidencing their compliance with applicable provisions of the Code: (ii) no "reportable event" within the meaning of Section 4043 of ERISA, has occurred with respect to any such Plan that is subject to Title IV of ERISA (a "Title IV Plan"): (iii) other than as reflected in the financial statements described in Section 3.0l(h) and the notes thereto, no Title IV Plan has an "accumulated funding deficiency", within the meaning of Section 4l2(a) of the Code, as of the most recent plan year: (iv) there has been no "prohibited transac tion", within the meaning of Section 497S(c) of the Code, involving the assets of such Plans:
(v) Seller has delivered to Gu~rantor or Buyers as to each such Plan, a true and correct copy of (a) the most recent annual report (Form 5500) filed with the Internal Revenue Service, (b) such Plan, (c) each trust agreement and group annuity contract, if any, relating to such Plan, and (d) the most recent actuarial report or valuation relating to a Title IV Plan that was delivered to Seller by the actuary for such Plan: and (vi) as of the most recent valuation date for each Title IV Plan the vested accrued benefits (as
-9- computed by the actuaries for such Plan using the actuarial assumptions in effect for such purpose as of such valuation d~te) of all participants and former participants in such Plans did not exceed the fair market value of the assets of such Plan. (1) Information Provided. To the knowledge of Seller as of the date hereof, the Confidential Memoran dum of Goldman, Sachs & Co., dated March 1987, entitled •stauffer Chemicals", as supplemented by the additional information referred to in a letter from Goldman, Sachs & Co., dated March 27, 1987 and the Confidential Memorandum of Stauffer, dated April 1987, in each case excluding forward-looking information, correctly reflected (at the time such written material was provided), in all material respects, the information such written material purported to reflect. (m) Special Indemnity. To the knowledge of Seller, there is no basis (other than relationships which are not extraordinary as between a parent and its wholly-owned subsidiary) as of tne date hereof for the assertion by Seller or any of its affiliates of any claim pursuant to Section 5.02, except as disclosed to Guarantor and Buyers prior to the date hereof and except for any environmental matters, employee benefit and compensation matters and guarantees and assurances covered by Section 5.04(a). (n) Material Adverse Change. Except as disclosed to Guarantor and Buyers prior to the date hereof, since December 31, 1986, there has been no material adverse change in the business, financial co~dition or results of operations of any of Stauffer, Specialty or Agricul tural and their .respective Subsidiaries. SECTION 3.02. Limitation on Seller's Representa tions. Guarantor and Buyers have made their own inves tigation of the business of the Stauffer Group and understand and have agreed that Seller is making no representations or warranties except as expressly set forth in Sections 3.01, 4.01 and 6.04. SECTION 3.03. Guarantor's and Buyers' Represen tations. Each of Guarantor and each Buyer represents and warrants to Seller that the statements in Sections 3.03(a), (b), (c) and (d) are true and correct: Guarantor represents and warrants to Seller that the statement in Section 3.03(e) is true and correct: and each of Guarantor and each Buyer .
-10- represents and warrants to Seller that the statement in Section 3.03(f) is true and correct. (a) Organization. It is a·corporation duly organized, validly existing and in good standing. It has the corporate power and authority to enter into and perform this Agreement. (b) Authorization. It has duly authorized, executed and delivered this Agreement.
(C) No Conflict. Its execution, delivery and performance of this Agreement do not and will not (i) contravene its certificate of incorpor~tion or by-laws or any law, rule, regulation, order, judgment or decree that applies to or binds it or any of its properties, (ii) constitute a material breach of, result in or permit the acceleration or termination of or constitute a default under (whether with notice or lapse of time or both) any material agreement or instrument to which it is a party or that binds or affects it or any of its properties or (iii) require any consent, permit, approval, action, filing or recording~ except as set forth on Schedule l. However, it makes no repre sentation or warranty as to compliance with or con travention of any antitrust or competition laws. (d) Enforceability. This Agreement is a legal, valid and binding obligation of it, enforceable against it in accordance with its terms. (e) SEC Reports. Guarantor has furniShed Seller its Annual Report on Form 20-F for the year ended Decem ber 31, 1986, and its reports on Form 6-K filed since December 31, 1986 through the date hereof and will provide to Seller any such report to be filed by Guaran ' .. .i tor from the date hereof through the Closing Date. Such reports do not and will not c~ntain any untrue statement of a material fact or omit to state a material fact 1 necessary to make the statements made, in light of the . l circumstances under which they are made, not misleading • The audited financial statements of Guarantor at and for the year ended December 31, 1986, and unaudited finan cial statements of Guarantor at and for the quarter ended March 31, 1987 contained in such reports conform to the books and records of Guarantor, were prepared in accordance with generally accepted accounting principles in the United Kingdom consistently applied and present fairly Guarantor's consolidated financial condition at '~ 'I
-11- TJ I I
the indicated dates and results of operations for the indicated periods. Notwithstanding the foregoing, the unaudited financial statements may not include all required footnote disclosure. (f) Public OfferinQ. Each member of the Buyer Group is purchasing Shares for its own account and not with a view to, or for sale in connection with, any distribution thereof.
ARTICLE IV COVENAN'I'S SECTION 4.01 Conduct of Business. Seller repre sents and warrants to each member of the Buyer Group that since December 31, 1986, no Company or Subsidiary of any Company has done or agreed to do any of the following, and agrees that no Company or Subsidiary of any Company shall do or agree to do any of the following before the Closing Date, in each case except as set forth in Schedule 3: (a) issue any capital stock or any securities convertible into capital stock: (b) split, subdivide or reclassify its capi tal stock: (c) amend its certificate of incorporation or by-laws (or equivalent organizational documents), merge, consolidate, liquidate or dissolve; (d) borrow money or issue debt securities, other than to incur current liabilities and enter into contracts in the ordinary course of business; (e) prepay or discharge any. long term debt, other than the current portion of long term debt shown on the Companies' December 31, 1986, balance sheet; (f) declare or pay any dividend or other distribution on its capital stock; (g) purchase or redeem any capital stock;
-12- (h) create any security interest, lien, mortgage, claim or other encumbrance on any of its property, other than in the ordinary course of its business; (i) cancel any debt owed to it, other than in the ordinary course of its business: (j) incur or assume any guaranty or other liability to discharge an obligation of another, other than guaranties of or li~bilities to dis charge obligations of wholly owned subsidiaries and endorsements for deposits in the ordinary course of business; (k) acquire, add to or dispose of any capital assets having a value material to the Companies and their subsidiaries as a whole, other than capital expenditures not exceeding $10,000,000 in the · aggregate and repairs, replacements, acquisitions, additions and dispositions in the ordinary course of business or in accordance with programs approved before December 31, 1986, by a Company or another entity listed on Schedule 2; (l) enter into or terminate (other than in accordance with its terms) any contract material to the Companies and their Subsidiaries taken as a ·whole, other than in the ordinary course of their business; (m) materially change its accounting methods; (n) materially increase the aggregate compen sation of management or the rates of compensation of other employees, other than through normal merit and cost of living raises and reasonable adjust ments in connection with terminations of rights under bonus, stock, pension, profit-sharing and other employee benefit plans in connection with the sale of the Shares except for the matters referred to in paragraph 7 of the letter dated May 22, 1987 from Goldman, Sachs & Co. to Mr. Ray King of Guaran~or. (o) grant or agree to grant any preferential right to purchase any asset, except in the ordinary course of business, or otherwise conduct its business other than in the ordinary course; or
-13- (p) take any action or fail to take any action, which action or failure would reasonably be expected to cause any representation of Seller herein to be inaccurate in any material respect at or prior to the Closing or cause noncompliance in any material respect with any agreement herein of Seller at or prior to the Closing. It is understood that approximately 40 employees who have been spending a majority of their time working for the Com panies and whose payroll costs are reflected in the unaudited financial statements referred to in Section 3.0l(h) will be transferred to the Companies and that approximately 20 employees of the Companies who have been spending a majority of time working fo.r Seller will be transferred to Seller. SECTION 4.02. Inspection. Any member of the Buyer Group, through its officers, employees, counsel, accountants and other authorized representatives, may inspect the Com panies' properties and records and may discuss the Companies' affairs and accounts with the Companies' officers, employees, independent accountants, actuaries and other agents. Each member of the Buyer Group shall conduct any inspection or discussion during the Companies' normal business hours and in a manner that does not interfere with normal business or contravene any agreement. Each member of the Buyer Group shall schedule all inspections· and discussions to be held at times and places approv_ed in advance by Seller and the Com- panies. · SECTION 4.03. Confidentiality. (a) At all times prior to the Closing, no member of the Buyer Group shall disclose, use or permit its officers, employees, counsel, accountants or other representatives to disclose or use, directly or indirectly, any information provided to any member of the Buyer Group by or on behalf of Seller or any of its affiliates about Seller, the Companies, any entity listed ~:I on Schedule 2 or any of their businesses, properties or processes, other than (i) information in the public: domain, (ii) information Guarantor or any affilia~e knew (and was not restricted from disclosing or using) before Guarantor was first contacted by Seller or its representatives in connec tion with the sale of the Shares, (iii) information obtained from a source other than Seller or any of its affiliates, provided that to Guarantor's knowledge, such source was not at the time it furnished such information, bound by a con fidentiality agreement for the benefit of Seller or any of its affiliates in respect thereof and (iv) as required in
-14- connection with (x) compliance with Hart-Scott or any other ~. applicable law, regulation or rule of any stock exchange, (y) any actual or potential borrowing or other financing transac I ·tion by Guarantor or any Buyer or any of their affiliates or (z) any potential sale by any Buyer or Designated Purchaser or any of their affiliates of any of the Shares or any assets of the Stauffer Group; provided that, in the cases of (iv)(y) and (iv)(z) of this Section 4.03(a), the recipient of any such information agrees to be bound by this Section 4.03(a). Promptly after any termination of this Agreement pursuant to Section 6.01, Guarantor and Buyers shall return to Seller all written informat"ion and documents received in connection with ~ the proposed sal·e of the Shares (other than drafts of this I Agreement) and shall destroy and cause their officers, employees, counsel, accountants and other representatives to destroy any copies of such information and documents and any notes or abstracts of information in their possession about Seller, the Companies and each entity listed on Schedule 2. (b) Unless and until this Agreement has been terminated pursuant to Section 6.01, Seller and its affiliates will not dispose of or agree to dispose of any Shares except pursuant to this Agreement and will not, and will not permit any entity listed on Schedule 2 to, (i) disclose (other than to Guarantor and the Buyers and their agents) any information with respect to the businesses of the -- Stauffer Group not customarily dis.closed in the ordinary course of business of the Stauffer Group or legally required to be disclosed concerning the business or properties of the Stauffer Group or (ii) terminate or waive any provision of any confidentiality agreement entered into after December 31, 1986 with any other prospective purchaser of any Company or any entity listed in Schedule 2 or any portions of any thereof. Seller hereby assigns, effective at the Closing, to Guarantor and the Buyers all rights of Seller and its affiliates under all such agreements to the extent such ·.~ agreements relate to any entity listed on Schedule 2. Seller agrees to take such action as Guarantor or a Buyer ~y request at the expense of the person making such request to enforce such agreements or to implement such assignment or Guarantor's or any Buyer's exercise of any right so assigned. SECTION 4.04. Hart-Scott. Each of Seller and Guarantor has filed or shall promptly file a notification and report in accordance with Hart-Scott for th.e Buyers' and i Designated Purchasers' purchase of the Shares. Each of ' Seller and Guarantor s~all promptly furnish any additional / information requested of it under Har~-Scott. (
-15- SECTION 4.05. Books and Records. On reasonable notice at any time after the Closing Date, Buyers and Desig nated Purchasers shall permit representatives of Seller during normal business hours to inspect and copy the books and records of the Companies and the entities listed on Schedule 2 for periods before the Closing Date. Buyers and Designated Purchasers shall preserve such books and records for at least three years after the Closing Date. Neither any Buyer nor any Designated Purchaser shall thereafter dispose of such books and records unless it shall have notified Seller at least six months before such disposition and given Sel~er the opportunity (at Seller's expense) to remove and retain the books and records. SECTION 4.06. Employee Plans. (a) General. • Guarantor and Buyers will cause the members of the Stauffer Group to maintain employee compensation programs (including Plans as defined in Section 3.0l(k) anQ Seller's transitional cash award program described in the footnotes to ~he finan cial statements described in Section 3.0l(h)) in effect at the Closing Date or provide alternative compensation programs including benefits to current and form,r employees which, in the aggregate, are no less favorable than and gualitatively comparable to the benefits provided to such current and former employees, respectively, immediately prior to the Closing Date. Guarantor shall, and shall cause each Buyer and Designated Purchaser to, give such employees full credit for purposes of eligibility, vesting and benefit levels under Buyer's Plans for such employees' service recognized by Seller under its Plans. On the first day of the second month after the Closing occurs, Guarantor shall cause the members of the Stauffer Group to pay to each person employed by the Companies on the Closing Date the amounts accrued to such persons under Seller's transitional cash award program for the year ended August. 1, 1987, notwithstanding that any such members may have terminated the employment of such person between the Closing Date and the date of such payment. (b) Severance. Guarantor and Buyers will cause the members of the Stauffer Group to maintain and comply with the severance pay policy described in Schedule 6 at least until December 31, 1988. (c) Retirement Plans. (l) On or before the Closing Date, Guarantor or Buyers shall establish or desig nate one or·more defined benefit plans ("Buyer's Pension Plans") and trusts thereunder to provide benefits substan tially equal to the benefits provided under the Chesebrougn Pond's Inc. Retirement Plan ("Seller's Salaried Pension
-16- Plan") for the benefit of current and former employees of the Companies and the Entities and their beneficiaries who are covered by Seller's Salaried Pension Plan. The benefits accrued through the Closing Date under Seller's Salaried Pension Plan for current and former employees of the Com panies and the Entities and their beneficiaries will be fully vested and nonforfeitable under the respective Buyer's Pen sion Plan. . (2) As soon as practicable after the later of the Closing Date and Seller's receipt of evidence satisfactory to Seller's counsel that any Buyer's Pension Plan is a qualified plan under Section 40l(a) of the Code and that any trust thereunder is exempt from tax under Section.SOl(a) of the Code, Seller shall cause Seller's Salaried Pension Plan to transfer, in accordance with Section 414(1) of the Code, to such Buyer's Pension Plan an amount in cash or other assets acceptable to Guarantor equal to the present value as of the Closing Date of the accrued benefits (calculated using the assumptions in Schedule ·7) earned from August 1, 1985 to the Closing Date under Seller's Salaried Pension Plan by current and former employees of the Companies·and the Entities who are participating in such Buyer's Pension Plan (except employees who remain employees of Seller or affiliates of Seller on the day after the Closing Date (•Excluded Employees")), reduced by any benefits from the Seller's Salaried Pension Plan (other than benefits secured by the annuity contract referred to in Section 4.06(c)(4) below) with respect to current and former employees of the Companies and the Entities (except Excluded Employees) ~nd their beneficiaries from the Closing Date to the date of asset transfer, and increased by interest, compounded quarterly, on the daily balance of such amount from the Closing Date to the date of asset transfer at the rate of l% plus the PBGC immediate annuity rate. The calculation of the amount to be transferred shall be made by the enrolled actuary for Seller's Salaried Pension Plan, and Seller shall supply sufficient information to an actuary designated by Guarantor to enable such actuary to verify the calculation. If the two actuaries cannot agree, they shall jointly designate a third actuary, who shall be an enrolled actuary, and the third actuary shall determine the correct amount to be transferred. Seller and Guarantor shall each pay an equal share of the cost of the third actuary's services. Excluded Employees shall include, without limitation, all employees who are engaged in the manufacture and sale of metasilicates and 1 Sta-Film adhesives who accept employment with Seller or its l affiliates, and the Seller undertakes to offer employment to -L:I
-17- all such employees (on a basis no less favorable than such employee's current employment) before the Closing Date. ) 1 (3) Upon such transfer of assets, such Buyer's j Pension Plan shall assume (by instruments satisfactory to ' counsel for Guarantor and Seller) liability for all accrued benefits under the Seller's Salaried Pension Plan in respect of such current and former employees of the Companies and the Entities (except Excluded Employees) and their beneficiaries. (4) on the Closing Date, Seller shall assign to the Buyer the annuity contract from The Prudential Insurance Company of America ("Prudential") for the benefit of current and former employees of the Companies and the Entities and all other persons who are intended beneficiaries of such annuity contract. On the Closing Date, Guarantor, Buyer·s and the respective Designated Purchasers shall assume all obligations and responsibilities (including administrative responsibilities) of Seller and the Companies or Entities under such annuity contract, provided, however, that Guaran tor and the Buyers shall be relieved of their obligations with respect to the employees of Stauffer-Wacker Silicones Corporation and all. employ~es of the Companies and Entities who are retained by Seller and remain employed by Seller or any of Seller's affiliates on December 31, 1987, upon the execution and delivery of an appropriate agreeme.nt to that effect with Prudential. (d) Retained Hourly Employees Retirement Plan. (1) On or before the Closing Date, Seller shall adopt a new defined benefit plan (or make provision for the use of an existing plan of Seller) ("Retained Hourly Employees Retire ment Plan") and establish or cause to be established a trust thereunder (or make provision for the use of an existing trust) to provide benefits substantially equal to the benefits provided to hourly employees of any Company or Entity employed at ~he Joliet, Illinois, and Pittsburg, California, metasilicates facilities ("Retained Hourly Employees") under the Amended Retirement Plan for Employees of Stauffer Chemical Company ("Stauffer's Hourly Retirement Plan"). The benefits accrued through the.Closing Date under Stauffer's Hourly Retirement Plan for Retained Hourly Employees and· their beneficiaries will be fully vested and nonforfeitable under the Retained Hourly Employees Retirement Plan. (2) As soon as practicable after the later of the Closing Date and Guarantor's and Buyers' receipt of evidence satisfactory to their counsel that the Retained Hourly
-18- Employees Retirement Plan is a qualified plan under Section 40l(a) of the Code and that the Retained Hourly Employees Retirement Plan is exempt from tax under Section SOl(a) of the Code, Guarantor or a Buyer shall cause Stauffer's Hourly Retirement Plan to transfer, in accordance with Section 414(1) of the Code, to the Retained Hourly Employees Retire ment Plan an amount in cash or other assets acceptable to Seller equal to the present value as of the Closing Date of the accrued benefits (calculated using the assumptions in Schedule 7) earned by Retained Hourly Employees from August l, 1985, to the Closing Date under Stauffer's Hourly Retire ment Plan, reduced by any benefits paid from Stauffer·~ Hourly Retirement Plan with respect to Retained Hourly Employees and their beneficiaries from the Closing Date to the date of asset transfer, and increased by interest, com pounded quarterly, on the daily balance of such amount from the Closing Date to the date of asset transfer at the rate of 1\ plus the PBGC immediate annuity rate. The calculation of the amount to be transferred shall be made by the enrolled actuary for Stauffer's Hourly Retirement Plan, and Guarantor or Buyers shall supply sufficient information to an actuary designated by Seller to enable such actuary to verify the calculation. If the two actuaries cannot agree, they shall jointly designate a third actuary, who shall be an enrolled actuary, and the third actuary shall determine the correct amount to be transferred. Seller and Guarantor shall each pay an equal share of the cost of the third actuary's ser vices. (3) Upon such transfer of assets, the Retained Hourly Employees Retirement.Plan shall assume (by instruments satisfactory to counsel for Guarantor and Seller) liability for all accrued benefits under Stauffer's Hourly Retirement Plan in respect of the Retained Hourly Employees. (e) Savings Plan. Promptly after the Closing Date the Guarantor or Buyers shall establish or designate one or more plans ("Buyer's Savings Plans") for the benefit of persons who shall remain employees of a Company or Entity immediately after the Closing ("Transferred Employees"). Seller shall fully vest such Transferred Employees with all contributions made on behalf of such Transferred Employees to the defined contribution plans of Seller, the Companies, the Entities or any subsidiary thereof (Seller's Defined Con tribution Plans") through the Closing Date. As soon as practicable after the later of the Closing Date and Seller's receipt of evidence satisfactory to Seller's counsel that any ·Buyer's Savings Plan meets the requirements of Section 40l(a) of the Code, Seller shall cause the respective Seller's
-19- Defined Contribution Plans to transfer to such Buyer's Savings Plan, for the account of ;he Transferred Employees ·participating in such Buyer's Savings Plan, all assets, or in lieu thereof, cash of equal market value, standing to the credit of each such Transferred Employee in such Seller's Defined Contribution Plans. (f) Retained Bourly Employees Savings Plan. Promptly after the Closing Date. Seller shall adopt a savings plan (or make provision for the use of an existing plan of Seller) ("Retained Bourly Employees Savings Plan") for the benefit of Retained Hourly Employees that is substantially identical to the Savings Plan for Employees of Stauffer Chemical Company ("Stauffer Hourly Savings Plan"). Seller shall fully vest· or cause Stauffer to vest fully such ·Retained Hourly Employee.s with all contributions made on behalf of the Retained Hourly Employees to the Stauffer Hourly Savings Plan until the Closing Date. As soon as practicable after the later of the Closing Date and Guaran tor's or Buyers' receipt of evidence satisfactory to their counsel that the Retained Bourly Employees Savings Plan meets .the requirements of Section 40l(a) of the Code, Guarantor or a Buyer·shall cause Stauffer's Hourly Savings Plan to trans fer to the Retained Hourly Employees Savings Plan, for the account of the Retained Bourly Employees, all assets, or in lieu thereof, cash of equal market value, standing to ~he credit of each such Retained Bourly·Employee in Stauffer's Hourly Savin~s Plan. (g) Seller fndemnifies and agrees to hold harmless each member of the Buyer Group and, effective at the Closing, each entity listed on Schedule 2, against any liability for benefits under Seller's employee benefit plans accruing to Excluded Employees, except benefits under the Prudential annuity contract referred to in Section 4.06(c). .·-""' SECTION 4.07. Tax Matters. (a) The relevant Buyer (or Designated Purchaser) shall cause any Company or Subsidiary it owns to elect, where permitted by law, to carry forward any net operating loss or other item that would, absent such election, be carried back to a taxable period of any Compan.y ending on or before the Closing Date in which such Company filed a consolidated Tax return with Seller or any affiliate of Seller. (b) Each Buyer agrees to pay to Seller the benefit received by a Company, such Buyer or any affiliate of such Buyer from the use in any taxable period (other than in a Pre-Closing Tax Period) of a carryforward of a net operating
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I I loss, net capital loss, investment tax credit, foreign tax credit or charitable deduction or any other tax attribute which could potentially reduce United States fed~ral income taxes ("Federal Taxes") (including without limitation deduc tions and credits related to alternative minimum taxes) (a 11 Tax Asset") of the Seller's consolidated group which is apportioned under Treas. Reg. Section l.l502-79(c) to the Company. Such benefit shall be considered to equal the excess of (x) the amount of Federal Taxes that would have been payable by a Company, the relevant Buyer (or Designated Purchaser) or its affiliate in the absence of such carryfor ward over (y) the amount of Federal.Taxes actually payable by a Company, the relevant Buyer (or Designated Purchaser) or its affiliate. Payment of the amount of such benefit shall be made within 90 days of the filing by the relevant Buyer (or Designated Purchaser) or Buyer's affiliated group, as defined in Section 1504 of the Code, as the case may be, of the applicable income tax return for the relevant taxable year. If, subsequent to the payment by the relevant Buyer (or Designated Purchaser) to Seller of any amount pursuant to this paragraph (b) there shall be (A) a Final Determination of a deficiency of Federal Taxes of a Company, the relevant Buyer (or Designated Purchaser) or an affiliate of the relevant Buyer (or Designated Purchaser), on the grounds that the Tax Asset giving rise to such payment was not in fact available, (B) a Final Determination resulting from an audit of Seller or any affiliate of Seller which results in· a reduction of the Tax Asset apportioned to a Company as described above, (C) a recapture by a Company, the relevant Buyer (or Designated Purchaser) or any affiliate of the relevant" Buyer (or Designated Purchaser) of any Tax Asset so apportioned to a Company, or (D) a reduction in the amount of the benefit realized by a Company, the relevant Buyer (or Designated Purchaser) or an affiliate of the relevant Buyer (or Designated Purchaser) as a result of other Tax Assets which arise in a taxable period other than a Pre-Closing Tax Period, Seller agrees to repay to the relevant Buyer (or Designated Purchaser), within 90 days of such event, an amount which would not have been payable to Seller had the amou~t of the benefit been determined in light of the events described in (A), (B), (C) or (D), and to hold the relevant Buyer (or Designated Purchaser) harmless on an after-tax basis for any penalties or interest payable by the relevant Buyer (or Designated Purchaser), a Company or an affiliate of the relevant Buyer (or Designated Purchaser) as a result of the events described in (A), (B), (C) or (D). (c) Seller agrees to pay to the relevant Buyer (or I Designated Purchaser) the benefit received by a Company, t t ! -21- if I ! Seller or any affiliate of Seller from the use in a Pre Closing Tax Period of a carryback of a Tax Asset from a taxable period other than a Pre-Closing Tax Period. Such benefit shall be considered to equal the excess of (x) the amount of Federal Taxes that would have been paid by a Com pany, Seller or its affiliate in the absence of such car ryback over (y) the amount of Feoeral Taxes actually payable by such Company, Seller or affiliate. Payment of the amount of such benefit shall be made within 90 days of the filing by the Seller or Seller's affiliated group, as described Section 1504 of the Code, as the case may be, of the applicable tax return for the taxable period to which the Tax Asset is carried back. If, subsequent to the payment by Seller to the relevant Buyer (or Designated Purchaser) of any amount pursuant to this paragraph (c) there shall be (A) a Final. Determination under applicable law of a deficiency of Taxes of a Company, Seller or an affiliate of Seller, on the grounds that the Tax Asset giving rise to such payment was not in fact available, (B) a Final Determination resulting from an audit of a Company, the relevant Buyer (or Designated Purchaser) or an affiliate of the relevant Buyer (or Desig nated Purchaser) which results in a reduction.of the Tax Asset carried back, (C) a recapture by a Company, Seller or any affiliate of Seller of any Tax Asset so carried back, or (D) a reduction in the amount of the benefit realized by a Company, Seller or an affiliate of Seller as a result of other Tax Assets of a Company which arise in a Pre-Closing Tax Period or as a result of other Tax Assets of Seller or an affiliate of Seller, the relevant Buyer (or Designated Pur chaser) agrees to repay to Seller within 90 days of such event any amount which woul~ not have been payable to the relevant Buyer (or Designated Purchaser) had the amount of the benefit been determined in light of t.he events described in (A), (B), (C) or (D),. and to hold Seller harmless on an after-tax basis for any penalties and interest payable by Seller solely as a result of the events described in (A), (B), (C) or (D). (d} If any refund of Taxes is received by the relevant Buyer (or Designated Purchaser), any affiliate of the·relevant Buyer (or Designated Purchaser) or any of the Companies· which Taxes are attributable to Pre-Closing Tax Periods of a Company or of any corporation which immediately before the Closing Date is a member of an affiliated group (as defined in Section 1504(a) of the Code) of which a Com pany is 4 member, the relevant Buyer (or Designated Pur chaser) shall immediately remit to Seller an amount equal to the amount of such refund reduced by any Taxes payable on account of such refund. Notwithstanding the foregoing, any
-22- refund of Taxes resulting from the carryback of losses, credits or deductions attributable to operations during any period other than a Pre-Closing Tax Period.shall be retained by the relevant Buyer or Designated Purchaser, or any Com pany. (e) The relevant Buyer (or Designated Purchaser) shall cause the Companies to conduct their businesses in ··-their ordinary course on the Closing Date, and the ·relevant Buyer (or Designated Purchaser) will indemnify and hold harmless se:ler from any Tax resulting from transactions which the relevant Buyer (or Designated Purchaser) causes any Company to conduct on the Closing Date that are not in the ordinary course of such Company's business •. (f) Payment of sales, use, conveyance, stamp duty, transfer, reporting and similar fees and taxes applicable in .connecti9n with the transfer of the Shares shall be made by the party legally required in the first instance to pay t~e same. (g) From and after the date hereof through the Closing Date, neither the Seller nor any affiliate of the Seller (including the Companies) shall, without the consent of relevant Buyer or Designated Purchaser, (i) make any election pursuant to the Code that is inconsistent with any election of the Seller or any affiliate for any prior year or file any amended tax return of any of the Companies (or group which includes such companies), (ii) pay any Tax for any period for which a return has already been filed, incur any liability to Seller or any affiliate with respect to the payment of such a tax, or enter into any closing agreement or other settlement agreement with respect to any Pre-Closing Tax Period, or (iii) concede any amount of disputed tax for any Pre-Closing Tax Period in any administrative or judicial .~.... proceeding if any such actions (under (i), (ii), or {iii)) has a material adverse effect upon the relevant Buyer or Designated Purchaser or any of its affiliates, including the Companies. (h) Seller covenants to .the relevant Buyer (or Designated Purchaser) and the relevant Buyer (or Designated Purchaser) covenants to Seller that any payments made pur suant to this Agreement after the Closing Date will be treated for income tax reporting purposes as adjustments to the respective Purchase Prices set forth in Section l.Ol(b) of this Agreement.
-23- (i) "Final Determination" for purposes of this Agreement shall mean (i) for u.s. federal income tax pur poses, a "determination" as defined in Section 1313(a) of the Code, and (ii) for purposes of other taxes, any event with similar final effect under the applicable law. (j) Seller's Federal income tax return which includes the taxable period of the Companies ending on the Closing Date shall be filed so that (i) any elections and positions taken therein with respect to the Companies are consistent with such elections and positions taken for prior taxable years, and (ii) any elections and positions taken with respect to the Companies not governed by clause (i) are made on a basis so as to minimize the long term Federal income tax liabilities of the Companies. Buyer or the relevant Designated Purchaser will upon request provide appropriate information to Seller for purposes of filing such return. Any dispute concerning this paragraph shall be resolved by arbitration by a nationally recognized firm of certified public accountants (the Independent Accountants) selected by the relevant Buyer (or designated purchaser) and reasonably acceptable to Seller. SECTION 4.08. Stauffer Beadguarters. (a) Before the Closing Date, Stauffer shall assume all Seller's obligatio~_s under the lease commencing July l, 19:35, between Seller and Interim Funding Corporation and under related agreements. Basic Buyer and Guarantor shall use their best efforts before and after the Closing Date to obtain the release of Seller from such lease and related agreements. At Seller's request, effective at the time of Closing, Guarantor shall guarantee all Stauffer's obligations under such lease and related agreements after such assumption. At the time such guarantee shall become effective, Seller shall transfer to Stauffer or such other entity as the Basic Buyer shall designate all Seller's right, title and interest (including its title and leasehold interest) in and to the property leased or subleased pursuant to such lease and related agree ments. (b) On or before the Closing Date, Stauffer shall sublease to Seller the space in such property that Seller and its officers and employees currently occupy. Such sublease shall be substantially in the form heretofore agreed by the parties. SECTION 4.09. South African Operations. Guarantor and Buyers understand that an affiliate of Seller conducts certain operations under the name "Stauffer" in the Republic
-24- I ~
of South Africa. Seller shall cause such affiliate to sell to Agricultural Buyer or its designee, and Agricultural Buyer or its designee shall purchase, the assets of such affiliate currently used in ;he Stauffer operations for an amount in South African Rands equal to the book value (net of any reserves), at the time of transfer, of such affiliate's inventory and accounts receivable plus one such Rand. Guarantor shall also arrange for substitute employment or adequate termination or redundancy arrangements-for the 32 employees of such affiliate. Neither Seller nor any affiliate (other than the entities listed on Schedule 2) shall retain any right in or right to use any such asset so transferred. To the extent practicable, such sale shall take place contemporaneous with, and subject to the same con ditions as, the purchase and sale of the Shar~s. SECTION 4.10. Use of Stauffer Name. After the Closing Date, Seller shall not use and shall not permit any affiliate (other than an entity listed on Schedule 2) to use the name "Stauffer" (including, without limitation, any tradename, trademark, symbol or design containing the name "Stauffer") in any business. SECTION 4.11. Use of Seller and Unilever Names. After the Closing Date, Buyers and the Designatea Purchasers shall not use and shall not permit any entity listed on Schedule 2 to use any tradename, trademark, symbol or design that is used by or associated with Seller, its parent com panies or any of their affiliates, except as may be reasonably necessary or desirable for a period not to exceed. six months from the Closing Date to indicate the purchase of the business of the Stauffer Group from Seller. Not withstanding the foregoing, Buyers and the Designated Pur chasers may continue to use and distribute all Stauffer Group products and sales, advertising, promotional, packaging and .- other materials that contain any such tradename, trademark, symbol or design which shall have been manufactured or -~ printed prior to the Closing Date until supplies are exhausted. All claims, liabilities, costs and expenses arising out of such use and distribution shall be for the account of the Buyer Group except for any claims, liabilities, costs and expenses related to the use of the Seller's name, which shall be for the account of Seller. SECTION 4.12. IntercomDany Accounts. (a) Except as disclosed to Guarantor and Buyers prior to the date hereof, all transactions ("Intercompany Transactions") between Seller or its affiliates (other than the entities listed on Schedule 2) and the entities listed on Schedule 2
-25- ]
have been since December 31, 1986, and will at all times prior to the Closing be conducted on terms consistent with the terms on which such transactions were reflected in the unaudited statements of consolidated (combined) income for the year ·ended December 31, 1986. Seller shall account, and shall cause the entities listed on Schedule 2 to account, for all advances and payments in connection with Intercompany Transactions during the period beginning on January 1, 1987 and ending on the Closing Date. Within thirty days after the Closing Date, Seller shall deliver to Guarantor a statement of Intercompany Transactions for such period (an "Intercom pany Statement"). No amounts in respect of Federal Taxes shall be included in an Intercompany Statement. (b) The net amount (if any) of the Intercompany Transactions reflected in an Intercompany Statement is herein referred to as an "Interc~mpany Balance". If an Intercompany Balance is owed to Seller and its·affiliates (other than the entities listed on Schedule 2), Guarantor shall pay or cause to be paid such Intercompany Balance to Seller or its desig nee within twenty business days after delivery of the Inter company Statement. If an Intercompany Balance is owed to entities listed on Schedule 2, Seller shall pay or cause to be paid such Intercompany Balance to Guarantor (or its desig nees) within twenty business days after delivery of the . Intercompany Statement. Notwithstanding the foregoing, if Guarantor invokes the disagreement mechanism pursuant to Section 4.12(c) below, the payment obligations of Guarantor contained in this Section 4.12(b) shall be suspended, pending resolution of any disagreement as provided in Section 4.12(d) below. --1 (c) If Guarantor disagrees with the calculation of the Intercompany Balance it may, within fifteen business days after delivery of the Intercompany Statement, deliver a JlI I notice to Seller disagreeing with such calculation (a "Dis agreement Notice"); setting forth its calculation of the Intercompany Balance and specifying, in reasonable detail, ~j! those items or amounts as to which Guarantor disagrees and the reasons for such disagreement. Guarantor snall be deemed I to have agreed with all items and amounts contained in the Intercompany Statement other than those specified in such I ! Disagreement ~otice. (d) If a Disagreement Notice shall be delivered pursuant to Section 4.12(c) above, Seller and Guarantor shall, during ~he ten business days following such delivery, use their best efforts to reach agreement on the-disputed items or amounts in order to determine the definitive Inter-
-26- ·c 'i.·•.·. ~ I !
.company Balance. If during such period, Seller and such Buyer or Designated Purchaser are unable to reach such agree ment, they shall thereafter cause, Arthur Andersen & Co. or other independent accountants of nationally recognized stand ing reasonably satisfactory to Seller and Guarantor (who shall not have any material relationship with Seller or Guarantor), promptly to review this Agreement and the dis puted items and amounts for the purpose of calculating the definitive Intercompany Balance. In making such calculation, such independent accountants shall consider only those items or amounts in the Intercompany Statement as to which Guaran tor has disagreed. Such independent accountants shall deliver to·seller and Guarantor, as promptly as practicable, a report of the definitive Intercompany Balance, which shall not be more favorable to Seller than the Intercompany Balance shown in the disputed Intercompany Statement nor more favorable to Guarantor than the Intercompany Balance shown in the calculations delivered by Guarantor in the Disagreement Notice. Such report shall be final, conclusive and binding upon the parties hereto and their affiliates, and the person required to pay the Intercompany Balance pursuant to such ·eport shall pay or cause to be paid the amount specified herein to the other person or its designee not later than :ive business days after receipt of such report. The cost of such review and report shall be borne equally by Seller and Guarantor. SECTION 4.13. Dividend. Except for the dividends described in paragraphs 4 and S of Schedule 3 no dividends or distributions shall be other than in cash. On the payment date declared by the board of directors of a Company for any cash dividend or cash distribution described in Schedule 3 which has not been paid prior to the Closing Date, the Buyer of such Company shall cause the payment by such Company of such dividend or distribution. SECTION 4.14. Services. After the Closing Date, ~i Seller shall furnish the Companies services pursuant to l agreements entered into by Seller on May 29, 1987, for the periods set forth therein. Notwithstanding anything to the contrary in such agreements, (a) no Company shall have the right to terminate any such service agreement unless each of the other Companies terminates the other service agreements concurrently, provided that such services shall be continued to such other Companies if Seller is not adversely affected thereby, (b) in the event that there is a termination or reduction of any Service, as defined in any such agreement, the fees pursuant to such service agreement shall be reduced by the actual cost saving realized by Seller as a result of
-27- such reduction or termination, and (c) notwithstanding the assignment provisions thereof, any Company's rights there under shall _be assignable, on a basis not adverse to the Seller, to any purchaser of a substantial portion of such Company's business. SECTION 4.15. Reorganization. Seller agrees (i) to use its best efforts to consummate prior to the Closing Date the transactions contemplated by the Asset Contribution Agreements, dated December 30, 1986, between Stauffer and Agriculture and between Stauffer and Specialty, and by paragraph 4 of Schedule 3 substantially in accordance there with and (ii) to keep the Buyer Group informed of the progress of such reorganization. SECTION 4.16. State Taxes. Notwithstanding any thing to the contrary in thls Agreement, Seller covenants to each Buyer and Designated Purchaser and each Buyer and Desig nated Purchaser covenants to Seller that it shall in good faith discuss such matters and take such actions as may be · appropriate to minimize the aggregate State and Local Taxes arising with respect to the transactions contemplated under. this Agreement. However, Seller shall not be required to take any action toward such end if the result would be to increase to any extent its own aggregate Federal, state and local tax liabilities, un2ess the Guarantor provides Seller with an indemnity satisfactory to Seller protecting Seller on an after-tax basis against any such increase in tax liability. ARTICLE V INDEMNITIES ] SECTION 5.01. General Indemnity. (a) Each party ~·-· indemnifies and agrees to hold harmless the other (and in the case of Seller as indemnitor, each member of the Buyer Group and, effective at the Closing, each entity listed on ·schedule 2) (on an after-tax, after-insurance basis) against any liability, loss, fine, penalty, claim, cost or expense (including reasonable costs of investigation and settlement and legal and accounting fees and expenses) arising out of (i) any misrepresentation or breach of warranty (determined in each case without regard to any materiality, qualification or exception thereto) by the indemnifying party in Article III (other than Section 3.0l(j) or (n)) or Section 4.01, (ii) any covenant or agreement of the indemnifying party in Sec tion 4.01 or (iii) any of the transactions identified in Item ~- l of Schedule 3 (other than as set forth in Schedule 4).
-28- Subject to Section 5.07, the calculation of the amount required to hold the indemnified party harmless on an after tax, after-insurance basis shall take into account any tax benefits reasonably obtainable and any insurance proc~eds obtainable under existing policies with solvent insurance companies covering the liability. (b) Seller shall have no liability under this Section 5.01 or otherwise to any member of the Buyer Group or the entities listed on Schedule 2 or any other person for any misrepresentation or breach of warranty or covenant relating to the existence or adequacy of reserves or other accounts in any financial statements for environmental mat ters or for any other claim, litigation· or contingency. (c) A party shall be liable for indemnification under this Section 5.01 only to the extent the aggregate of all liabilities indemnified is greater than $33,840,000 but less than $338,400,000' provided that the limits contained in this Section 5.0l(c) shall not apply with respect to (i) any misrepresentation or inaccuracy known to such party (X) at or prior to the date hereof or (y) after such date but prior to the Closing and not disclosed in writing by such party to the other party prior to the Closing or (ii) any willful breach or nonfulfillment by such party or its affiliates or (iii) in the case of Seller, (A} any representation in Section 3.0l(a), (b), (d), (e), (f) or (g) or (B) any of the transac tions identified in Item l of Schedule 3 (other than those set forth in Schedule 4) or (iv) in the case of each of Guarantor and each Buyer, any representation in Section 3.03(a), (b), (d) or (e). (d) The representations, warranties and covenants in Article III (other than Section 3.0l(j)) and Section 4.01 and the indemnity ~n this Section 5.01 shall survive the sale and purchase of the Shares, but shall expire on the earlier of (i) May 31, 1988 and (ii) 45 days after the completion of the audit of the financial statements of the Companies and their Subsidiaries at and for the fiscal year ended December 31, 1987 (which financial statements and audit Buyers shall use their best efforts to cause to be completed as soon thereafter as practicable). The right to indemnity under this Section 5.01 for any liability shall survive such expiration if the indemnified party shall have notified the indemnifying party of the facts giving rise to such right to indemnity before the expiration of the indemnity. The indem nity in this Section 5.01 shall be the exclusive remedy for any misrepresentation or breach of warranty in Article III
-29- (other than Section 3.0l(j)) or Section 4.01 or breach of any covenant or agreement in Section 4.01. SECTION 5.02. Special Indemnity. (a) Effective at the time of Closing, the Buyers shall cause the Companies jointly and severally to indemnify and agree to hold harmless Seller and its affiliates (on an after-tax, after-insurance basis) against any liability, loss, fine, penalty, claim, cost or expense (including reasonable costs of investigation and settlement and legal and accounting fees and expenses) arising out of the operations or business or properties of the Companies, their current ·or past subsidiaries or associated companies or any other entity listed on Schedule 2, or arising out of or r·esulting from Seller's ownership c;>f the Shares or control of or participation in the management of the Companies, their current or past subsidiaries or associated companies or any other entity listed on Schedule 2. The Companies' liability under this Section 5.02 extends to all acts, omissions, events or conditions, whether occurring before, at the time of or after the sale and pur chase of the Shares, except for any liability, loss, fine, penalty, claim, cost or expense primarily attributable to (i) acts or omissions of Seller or its affiliates (other than the entities listed in Schedule 2) occurring after the Closing, (ii) the willful misconduct or gross negligence of Seller or its affiliates (including the entities listed on Schedule 2 in respect of acts or omissions of such entities occu:ring on or after December 31, 1986 but prior to the Closing) or (iii) acts, omissions, events or conditions for which Seller indem nifies any member of the Buyer Group or any of the entities listed on Schedule 2 pursuant to this Agreement. (b) Subject to Section 5.07, the calculation of the amount required to hold Seller harmless on an after-tax, after-insurance basis shall take into account any tax benefits reasonably obtainable and any insurance proceeds obtainable under existing policies with solvent insurance companies covering the liability. Seller shall have no obligation to carry or maintain any insurance against any liability described in this Section 5.02. Except as set forth in Schedule 3, Seller shall not voluntarily terminate any insurance coverage of any entity listed on Schedule 2 for any per.iod before the. Closing Date.
(c) The Companies' indemnity under this Sect~on 5.02 shall survive the sale and. purchase of .the Shares, and shall thereafter survive until the expiration of the last statute of limitations covering any liability ind~mnified under this Section 5.02.
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SECTION 5.03. Defense. (a) If a person shall receive notice of-an action asserting a liability for which it is indemnified under Section 5.01 or 5.02, it shall promptly notify the indemnifying party. Guarantor or any Buyer shall have the right to assume the defense of any claim or action in respect of which indemnity may be sought under this Article v, and Seller shall make available to Guarantor or a Buyer, as the case may be, all records and other materials required by it for use in contesting any such action. The indemnifying party may participate in the defense of such action and may assume the defense with coun sel satisfactory to ~he indemnified party if the indemnifying party shall have confirmed in writing its obligation to indemnify for the liability asserted in such action, provided, however, that if the indemnifying party shall be Seller, Seller shall cease to have the right to assume the defense (and, if Guarantor shall so request, Seller shall permit the indemnified party to assume any defense previously assumed by Seller) of any and all claims in respect of which indemnification may be sought under Section 5.01 if it shall appear, in Guarantor's reasonable judgment after consultation with Seller, that actual or reasonably foreseeable claimS in respect of which such indemnification may be sought may exceed $200,000,000 in the aggregate. The indemnifying party shall not be liable for any settlement effected without its consent of any claim, suit or proceeding in respect of which indemnity may be sought hereunder, which consent shall not be unreasonably withheld. (b) The officers, directors, agents and employees of an indemnified party shall have the same right to indem nification as the indemnified party. SECTION 5.04. Guarantee Reimbursement. (a) Buyers shall cause the Companles to perform all their obligations (including the obligations to pay principal, premium, if any, and interest) the performance of which has been guaranteed or otherwise assured by Seller or its affiliates, inc·luding those li·sted in Schedule 5. On the day that Seller shall make any payment or any deposit for payment of any such obligation, pursuant to its guaranty of such obligations or otherwise, the relevant Buyer shall reimburse Seller for such payment. Seller's rights under this Section 5.04 are in addition to any right of subrogation, reimburse ment or indemnity it may have at law or in equity. Seller's rights under this Section 5.• 04 shall not be limited by any limitation of its rights to subrogation, reimbursement or indemnity against any Company.
-31- (b) Buyers' obligations under this Section 5.04 are absolute, unconditional, irrevocable and continuing and shall be performed without notice or demand and without counterclaim, setoff, deduction, deferment or defense. Such obligations shall not be discharged, released, terminated, reduced, diminished, abated, suspended, deferred or otherwise affected for any reason (other than performance). Buyers waive all defenses, releases and other rights to the same extent as Seller ha~ waived defenses, releases and other rights in.its guarantee of such indebtedness. Buyers' obligation under this Section 5.04 shall survive the sale and purchase of the Shares. i I I (c) Guarantor shall use its best efforts before and after the Closing Date to obtain the release of Seller from any guarantee or other assurance of any obligation of any Company or any other entity listed on Schedule 2. At Seller's request, Guarantor shall guarantee the obligations listed in Schedule 5. SECTION 5.05. Taxes. (a) Seller indemnifies each Buyer (or Designated Purchaser) and its affiliates (including the Companies), on an after-tax basis, against, and agrees to hold them harmless from, (i) all liability of the Companies and of any affiliated or unitary group of corporations (as defined in Section 1504 of the Code or a comparable tax statute in another jurisdiction in the Onited States) of which any such Company is or has been a member for Taxes attributable to Pre-Closing Tax Periods, (ii) all liability for Taxes of Seller and any corporation, other than the Companies, which is or has been affiliated with Seller, which Taxes are imposed as a result of Treasury Regulation Sec tion l.l502-6(a) or otherwise, and (iii) any liability for out-of-pocket fees, costs and expenses (including without limitation reasonable attorney's fees) arising out of or incident to any proceedings with respect to any Tax indem nified hereunder. Notwithstanding the foregoing, Seller shall not indemnify and hold harmless any Buyer (or Desig nated Purchaser) or its affiliates against any liability-for Taxes resulting from an election under Code Section 338 with respect to the Companies made by Buyer, any affiliate of Buyer or any transferee of Buyer or its affiliates. Buyer indemnifies Seller and its affiliates and agrees to hold them harmless from (i) any liability for State and Local Taxes of the Companies and of all corporations which, immediately after the Closing Date, are members of any affiliated or unitary group of corporations (as defined in Section 1504 of the Code or a comparable tax statute in another jurisdiction
-32- in the United States) of which the Companies are members other than State and Local Taxes for Pre-Closing Tax Periods and (ii) any liability for Taxes of the Companies and Entities resulting from an election under Code Section 338 with respect to ·the Companies or Entities made by any Buyer or its affiliates or any transferee of any Buyer or its affiliates. Any payment required under this ~ection, shall be due in all events within 30 days of a Final Determination as defined under applicable law: provided however, that payments under clause (iii) shall be due 30 days after the date on which the Seller receives notice from Buyer that such cost, fee or expense was incurred, and in the case of any payment of Tax in connection with the filing of any protest or conduct of any controversy or proceedings (including by way of suit for refund), payment shall be due when such Tax is required to be paid under the law governing the protest, controversy, or proceeding: any such payment not made when due shall bear interest at the greater of the rate specified in Section 5.06 or the rate applicable to the deficiencies in such class of Tax from the date such Tax was paid to the date indemnification for such Tax shall have been received by the indemnified party. If any claim or demand is asserted in writing against an indemnified party hereunder, such party shall notify the indemnifying party of such claim or demand within 10 days of receipt thereof. The indemnifying party shall have the right to control the defense, compromise or settlement thereof provided, however, that the indemnifying party shall not be permitted to take any action with respect to an issue that could adversely affect the tax liability of the indemnified party (with respect to liabilities not indem nified hereunder) unless the indemnified party consents to such action which consent shall not be unreasonably withheld. The indemnified party shall cooperate fully in such defense as and to the extent reasonably requested by the indemnifying party. Such cooperation shall include the retention and (upon the indemnifying party's request) the provision to the indemnifying party of records and information which are reasonably relevant to such claims or demand and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. An indemnifying party shall not be liable hereunder for a Tax resulting from a claim or demand the defense, compromise or settlement of which it was not offered the opportunity to control as provided hereunder to the extent such party's liability for such tax is adversely affected as a result thereof. Each party's rights under this Section 5.05 shall survive until the expiration of any applicable statute of limitations, as such statute of limitations may be extended by the indemnified party.
-33- (b) The Buyer Group and the Companies shall cooperate fully, as and to the extent reasonably requested by Seller, in connection with any audit, litigation or other proceeding with respect to Taxes for Pre-Closing Tax Periods. Such cooperation shall include the retention and (upon Seller's request) the provision to Seller of records and information which are reasonably relevant to such claim or demand and making employees available on a mutually con yenient basis to provide additional information and explanation of any material provided here~nder. Seller shall, to the extent possible under applicable law, have the right to control the defense, compromise or settlement of any audit, litigation or other proceeding with respect to Taxes for any Pr~-Closing Tax Periods. (c) Notwithstanding anything to the contrary in Section 5.05(a) the Seller shall indemnify tbe relevant Buyer (or Designated Purchaser) for any State and Local Taxes attributable to the transactions described in Schedule 3 (other than the transactions described in paragraph 4 of Schedule 3) to the extent such Taxes exceed ~4.5 million. It is understood by the parties that such Taxes will generally be deductible on Seller's consolidated Federal income tax return. Any indemnity pursuant to this Section S.OS(c) will be reduced by the benefit of any deduction of such Taxes allowable on a Federal income tax return for a taxable year not included in Seller's consolidated Federal income tax return. (d) Any contest with respect ·to any tax indem nified under Section 1.01 or 4.16 of this Agreement shall be governed by the provisions of paragraph (~) of this Section 5.05. SECTION 5.06. Interest. An indemnifying or reim bursing party under this Art1c1e shall pay interest to the party indemnified or entitled to reimbursement at a rate equal to the higher of the rate announced from time to time by Morgan Guaranty Trust Company of New York as its prime or base rate and the rate at which interest would accrue on the indemnified or reimbursed obligation if it remained unpaid. Such interest shall accrue from the date of the payment of the amount to be indemnified or reimbursed to the date on which the indemnity or reimbursement is paid. Such interest shall be paid upon request from time to time. SECTION 5.07. After-tax Calculation. (a) For purposes of this Article v, after-tax means that an indem-
-34- nifying party shall discharge its obligation to indemnify an indemnified party against such damage, loss, liability, expense, Taxes and other amounts ·(collectively referred to hereinafter as a "Loss") under this Article V, by paying to the indemnified party an amount that, on an after-tax basis reflecting the hypothetical tax consequences, if any, of the receipt of the indemnification payment hereunder (unless such payment is treated as a reduction of the Purchase Price), shall be equal to the hypothetical after-tax amount of such Loss taking into account the hypothetical tax consequences, if any, of the payment or incurrence of such Loss. Unless the indemnified party's counse~ is unable to advise the indemnifying party that a payment by the indemnifying party pursuant to this Section 5.07 would be treated as an adjust ment of the Purchase Price, such payment will be treated as an adjustment of the Purchase Price for purposes of this Agreement; provided, that if any such payment is ultimately determined not to be an adjustment to the Purchase Price, the indemnifying party will pay to the indemnified party (regardless of when such determination is made) such additional amounts as are necessary so that the indemnified party shall have received the full amount due in accordance with the preceding sentence. (b) For purposes of this Section 5.07, references to "hypothetical" tax consequences, "hypothetical" reduction in liability, "hypothetical" tax, "hypothetical" after-tax amount and calculated on a "hypothetical" basis refer to calculations of tax at the maximum statutory rate (or rates, in the case of an item of income or deduction taxable or deductible for purposes of more than one Tax) applicable to the relevant Buyer (or Designated Purchaser) or Designated Purchaser for the relevant year, after taking into account, for example, the effect of deductions available for other taxes such as state and local income taxes.
ARTICLE VI MISCELLANEOUS SECTION 6.01. Termination. This Agreement may be terminated by either party by notlce to the other party if (i) the Closing Date shall not have occurred before September 30, 1987, or (ii) such other party shall materially breach this Agreement before the Closing Date and shall not have ,:.! cured such breach within three days of notice of such breach. All rights and obligations of the parties (other than rights
-35- ]
and obligations ar1s1ng from the breach of this Agreement before termination) shall terminate upon such termination, except Sections 4.03, 6.02, 6.03 and 6.04. SECTION 6.02. Publicit¥. The parties shall use their utmost efforts to consult w1th each other before issu ing any press release or public announcement about the tran sactions contemplated by this Agreement. SECTION 6.03. Expenses. Guarantor, each Buyer, Seller, each Designa~ed Purchaser and-each entity listed on --- Schedule 2 shall each bear its own expenses in cQnnection with this Agreement and the sale and purchase of the Shares; provided that Seller shall bear all fees and expenses of third parties (including, without limitation, counsel fees and accountants• fees) incurred by the entities listed on Schedule 2 in connection therewith. SECTION 6.04. Brokers. Seller has retained and shall pay the fees of Goldman, Sachs & Co. Seller (i) repre sents to the Guarantor, Buyers and the Designated Purchasers that neither it nor any affiliate has retained any other broker, investment banker or other agent in connection with the sale of the Shares and (ii) indemnifies the Guarantor, Buyers and the Designated Purchasers against any commission, finder's fee or financial advisory.fee in connection with the sale and purchase of the Shares resulting from any action taken by Seller or any affiliate (including the entities listed on Schedule 2). Guarantor shall pay the fees of any investment bank retained by it or by any Buyer or any Desig nated Purchaser. Guarantor indemnifies Seller against any commission, finder's fee or financial advisory fee in connec tion with the sale and purchase of the Shares resulting from any action taken by Guarantor, any Buyer or any Designated Purc~aser. SECTION 6.05. Notices. All notices, consents, directions, approvals, instructions, requests and other communications given hereunder shall be in writing and shall be effective when received. Notices to Seller shall be addressed to it at: Chesebrough-Pond's Inc. 2 Nyala Farm Road Westport, CT 06881 Attention of Vice President and General Counsel
-36- with a copy to: Unilever United States, Inc. 10 East 53d Street New York, NY 10022 Attention of Vice President and General Counsel Notices to Guarantor or any Buyer shall be addressed to it at: Imperial Chemical Industries PLC Imperial Chemical Bouse Mill bank London SWlP 3JF England Attention of The Secretary Telex: 21324 Answerback: IMO IMPERICAL CHEMICAL with a copy to: ICI Americas Inc •. Wilmington, Delaware 19897
Attention of J-. Kent Rie~el, Esq. r-ck'~ ft' J Telex: 4945649 14\\ I,,~;,- ..:;;- \:',u~::•.:.,":::,,_sf\ Either party may change its address for notices by notice to the other party. SECTION 6.06. Severability. If any provision of this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the remaining provisions shall continue to be valid and enforceable and such provision shall continue to be valid and enforceable in any other jurisdiction. SECTION 6.07. Amendment. Neither party shall be bound by any term~nation, amendment, supplement, waiver or modification of this Agreement unless such party (or, in the case of tne Buyer Group, the Guarantor) shall have consented to it in writing. This Agreement, including the ~nnexes and schedules hereto, embodies the entire agreement of the par ties with respect to the subject matter hereof and supersedes all prior agreements with respect thereto. SECTION 6.08. Headings. The headings of the Sections and subsections are for convenience and shall not
-37- affect the meaning of this Agreement. As used herein, the I phrase "knowledge of Seller", and similar phrases, means the current chief executive officer, chief operating officer and chief financial officer of Seller and the personnel of · Onilever Onited States, Inc. and Onilever involved in the transactions contemplated hereby. SECTION 6.09. Benefit. A party may assign any of its rights hereunder, provided that (i) no such assignment shall (x) relieve such party of any of its obligations hereunder (y) affect the time of Closing or (z) impose any additional cbligation on or increase any obligation of the other party hereunder and (ii) prior to the Closing, any such assignment shall require the written consent of the other party, which consent shall not be unreasonably withheld. This Agreement shall be binding upon and inure to the benefit of the parties hereto, the Designated Purchasers, the Seller Guarantors, ~he entities listed on Schedule 2 and each of their permitted successors and assigns which, together with their officers, directors, agents and employees shall be the only· persons entitled to the benefits of this Agreement (as amended by the parties from time to time). SECTION 6.10. Payments. All payments under this Agreement shall be made by certified check payable in immediately available funds or, if a party shall designate an account to which such payment shall be made before the time of such payment, by wire transfer of immediately available funds to the designate~ account. SECTION 6.11. Counterparts. The parties and the Seller Guarantors may sign this Agreement in any number of counterparts and on separate counterparts. SECTION 6.12. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. SECTION 6.13. Guarantee. (a) Guarantor uncon ditionally guarantees to Seller the prompt ar.d full discharge by Buyers and the Designated Purchasers and, after the Clos ing, the Companies, of all of their respective obligations and liabi~ities under this Agreement in accordance with the terms hereof. Guarantor agrees that.if any Buyer, Designated Purchaser or Company shall fail to perform and discharge promptly all such obligations and liabiiities in accordance with the terms and provisions of this Agreement, Guarantor shall forthwith, upon demand, perform or discharge, or cause to be performed or discharged, the same. The unconditional
-38- obligation of the Guarantor hereunder will not be affected, impaired or released by any extension, waiver, amendment or thing whatsoever which would release a guarantor (other than performance). (b) Guarantor hereby constitutes ICI Americas Inc., 645 Fifth Avenue, New York, New York 10022, its attor ney upon which process may be served in any legal action or proceeding brought in the u.s. District Court for the -1·L.. ···· Southern District of New York or, if such court lacks juris diction, in the state courts located in the Cotinty of New York, arising out of this Agreement. Service of process upon ICI Americas Inc. as attorney for Guarantor shall, to the extent permitted by law, be deemed in every respect effective service of process upon Guarantor in any such legal action or proceeding. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed.
CHESEBROUGH-POND'S INC.,
by /S/ Morris Tabaksblat Title: Chairman and Chief Executive Officer
ATI by /S/ P. H. Jessup Title: Attorney-in-Fact ATKEMIX FIVE INC. by /S/ P. H. Jessup Title: Attorney-in-Fact -39- ] 1:. ATKEMIX FOURTEEN INC. by /s/ J. Dewhurst Title: Attorney-in-Fact IMPERIAL CHEMICAL INDOS'l'RIES PLC by /S/ R. C. Hampel Title: Director Unilever N.V., a corporation orqanized under the laws of The Netherlands ("Unilever N.V~"), and Unilever Uniteq States, Inc. ("Unilever U.S."), a Delaware corporation (each a "Seller Guarantor"), hereby jointly and severally unconditionally quarantee to Guarantor, Buyers and the Desiq nated Purchasers and, effective at the Closinq, to the entities listed on Schedule 2, the prompt and full discharqe by Seller of all Seller's obliqations and liabilities under this Purchase Aqreement in accordance with the terms hereof. Each Seller Guarantor hereby aqrees that, if Seller shall fail to perform and discharqe promptly all such obliqations and liabilities in accordance with the terms and provisions of this Purchase Aqreement, such Seller Guarantor shall forthwith, upon demand, perform or discharqe the same. The unconditional obligation of each Seller Guarantor hereunder will not be affected, impaired or released by any extension, waiver, amendment or thinq whatsoever wnich would release a quarantor (other than performance). Corporate action has been duly taken by each Seller Guarantor to authorize this Guarantee and to authorize Unilever u.s. to execute and deliver this Guarantee on behalf of such Seller Guarantor. Seller Guarantors have furnished to Guarantor and Buyers the Annual Report on Form 20-F of Onilever N.V. for the year ended December 31, 1986 and its reports on Form 6-K filed since December 31, 1986 through the date hereof and will provide to Guarantor and Buyers any such report to be filed by Seller Guarantors from the date hereof throuqh the Closinq Date. Such reports do not and will not contain any untrue statement of a material fact or omit to ,;···.······,'~ ;J state any material fact necessary to make the statements ·j·')•A ,. -40- made, in the light of the circumstances under which they are made, not misleading. The audited financial statements of Unilever N.V. at and for the year ended December 31, 1986 · contained in such report conforms to the books and records of Unilever N.V., were prepared in accordance with generally accepted accounting principles in the Netherlands consis tently applied and present fairly the consolidated financial condition of Unilever N.V. at the indicated date and results of operations for the indicated.period. Notwithstanding the foregoing, the unaudited financial statements may not include all required footnote disclosure. This Guarantee shall be governed by and construed in accordance with the laws of the State of New York. Unilever N.V. hereby constitutes Unilever u.s., 10 East 53d Street, New York, N.Y. 10022 its·attorney upon which process may be served in any legal action or proceeding brought in the u.s. District Court for the Southern District of New York or, if such court lacks jurisdiction, in the state courts located in the County of New York, arising out ~ of this Guarantee. Service of process upon Unilever u.s. as attorney for Unilever N.V. shall, to the extent permitted by law, be deemed in every respect effective service of process upon Unilever N.V. in any such legal action or proceeding. Ij ] IN WITNESS WHEREOF, the Seller Guarantors-have caused this Guarantee to be duly executed as of the date first above written •. UNILEVER UNITED STATES, INC., for itself and Unilever N.V., by /s/ Gordon K. G. Stevens Title: Chairman and Chief Executive Officer -41- ANNEX A '1'0 PURCHASE AGREEMENT ; [Letterhead of] ARTHUR YOONG & CO. "[Name of Buyer} [address] We have examined the consolidated (combined) balance sheet of Stauffer Chemical Company, Stauffer Specialty & Food Products Inc., Stauffer Agricultural Chemi cals Company, Inc. and their consolidated subsidiaries (the "Companies") as of December 31, 1986, and issued our report thereon dated February 23, 1987. We have not examined any other statements of the Companies at or for the period ended December 31, 1986. This letter is provided as set forth in Section 2.02 of the Purchase Agreement between Chesebrough- Pond's Inc., Seller, and , Buyer, dated • In connection with your proposed acquisition of the shares of common stock of the Companies: 1. We are independent certified public accountants with respect to the Companies pursuant to the rules and regulations of the American Institute of Certified Public Accountants. 2. We have not examined any financial statements of the Companies as of any date or for any period subsequent to December 31, 1986~ although we have made an examination for the year ended December 31, 1986, the purpose (and there fore the scope)· of the examination was to enable us to express our opinion on the consolidated (combined) balance sheet as of December 31, 1986, but not on the financial statements for the year then ended or for any interim period within that year. Therefore, we are unable to and do not express any opinion on the unaudited consolidated (combined) statements of income and changes in financial portion for the quarter ended December 31, 1986, or on the unaudited con solidated (combined) condensed balance sheet as of March 31, 1987, and interim unaudited consolidated (combined) condensed statements of income and changes in financial position for the year ended December 31, 1986, or the quarter ended March 31, 1987, or on the financial position, results of J operations, or changes in financial position as of any date or for any period subsequent to December 31, 1986. 3. For purposes of this letter we have read the 1986 minutes of meetings of the stockholders and the board of directors of the Companies as set forth in the minute books at , 1987, officials of the Companies having advised . us that the minutes of all such meetings ·through , ' 1987, were set forth therein, and have carried out other . procedures to [five business days before the date of this ~ letter] (the "Cut-Off Date"), (our work did not extend to the period from the Cut-Off Date to the date of this letter) as follows: (a) With respect to the year ended December 31, 1986, we have: (i) read the unaudited consolidated (combined) condensed statements of income and changes in financial position for the year ended December 31, 1986; and (ii) made inquiries of certain officials of the Companies who have responsibility for financial and accounting matters regarding whether the unaudited consolidated (combined) condensed financial statements referred to under 3(a)(i) above are fairly presented in conformity with generally accepted accounting principles (except that such statements may not include all required footnote disclosu~e). (b) With respect to the three months ended March 31, 1987, we have: (i) read the unaudited consolidated (combined) condensed balance sheet as of March 31, 1987, and unaudited consolidated (com bined) condensed statements of income for the three months then ended, and changes in finan cial position for three months then ended; and (ii) made inquiries of certain officials of the Companies who have responsibility for financial and accounting matters regarding whether the unaudited consolidated (combined) condensed financial statements referred to under 3(b)(i) above are fairly presented in conformity with generally accepted accounting -2- principles (except that such statements may not include all required footnote disclosure) applied on a basis substantially consistent with that of the audited consolidated (com bined) balance sheet at December 31, 1986, and the unaudited consolidated (combined) state ments of income and changes in financial position for the year ended December 31, 1986. (c) With respect to the period from March 31, !987, to [date of last ·internal interim statements] (the "Internal Statement Date"), we have: (i) read the unaudited consolidated · (combined). balance sheet as of the Internal Statement Date and the unaudited consolidated (combined) statements of income and changes in financial position for the months ended on the Internal Statement Date, furnished us by the Companies and attached hereto, officials of the Companies having advised us that no such financial statements as of any date or for any period subsequent to the Internal Statement Date were available; and (ii) made inquiries of certain officials of the Companies who have responsibility for financial and accounting matters regarding whether the unaudited consolidated (combined) financial statements referred to under 3(c)(i) are stated on a basis substantially consistent with that of the audited consolidated (com bined) balance sheet at December 31, 1986, and the unaudited consolidated (combined) state ments of income and changes in financial position for the year then ended. The foregoing procedures do not constitute an examination made in accordance with generally accepted auditing stand ards. Also, they would not necessarily reveal matters of significance with respect to the comments in the following paragraph. Accordingly, we make no representation regarding the sufficiency of the foregoing procedures for your pur poses. 4. Nothing came to our attention as a result of the foregoing procedures, however, that caused us to believe that: -3- (a) the unaudited consolidated (combined) condensed financial statements described in 3(a)(i) are not fairly presented in conformity with generally accepted accounting principles; (b) the unaudited consolidated (combi"ned) condensed financial statements described in 3(b)(i) and 3(c)(i) are not fairly presented in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the audited consolidated (combined) balance sheet at December 31, 1986, and the unaudited consolidated (·combined) statements of income and changes in financial position for the year then ended; or (c) (i) at the Internal Statement Date, there was any change in the capital stock of the Companies or long-term debt of the Companies, as compared with the amounts shown on the March 31, 1987, balance sheet, or (ii) for the period from April 1,·1987, to the Internal Statement Date, net sales were less than an amount which is equal to $85 million multiplied by the number (not more than 3} of full calendar months between March 31, 1987, and the Internal Statement Date or net income, excluding the results of all transactions referred to in Schedule 3 of the Purchase Agreement and any nonrecurring, extraordinary or otherwise unusual items identified by the Companies on the unaudited consolidated (combined} statement of income for the number of months ended on the Internal Statement Date, was less than an amount which is equa·l to $5.6 million multiplied by the number (not more than 3) of full calendar months between March 31, 1987 and the Internal Statement Date. 5. As mentioned under 3(c), the Companies' offi cials have advised us that no consolidated (combined} state ments as of any date or for any period subsequent to the Internal Statement Date are available; accordingly, the procedures carried out by us with respect to changes in the financial statement items after the Internal Statement Date have, of necessity, been even more limited than those with. respect to the periods referred to in 3. We have made inquiries of certain officials of the Companies who have responsibility for financial and accounting matters regarding (a) whether there was any change at the Cut-Off Date in the capital stock or long-term debt of the Companies as compared -4- with amounts shown on the March 31, 1987, unaudited con solidated (combined) balance sheet or (b) for the period from April 1, 1987, to the Cut-Off Date net sales and net income, excluding the results of all transactions refer~ed to in Schedule 3 of the Purchase Agreement and any nonrecurring, extraordinary or otherwise unusual items identified by the Companies in a letter provided to us, were at rates less than, respectively, the rates of net sales and net income referred to in 4(c) and calculated as in 4(c), such rates to be prorated daily on the basis of a 30-day month for any -period of less than a full calendar mo.nth. · -On the basis of these inquiries and our reading of the minutes as described previously herein, nothing came to our attention that caused us to believe that there were any· such changes or decreases. 6. This letter is solely for your information and to assist with the proposed acquisition of the Companies and is not to be used for any other purpose. -s- ANNEX B '1'0 PURCHASE AGREEMENT [Letterhead of] CRAVATB, SWAINE & MOORE [Closing Date] Purchase Agreement dated , 1987, between Chesebrough-Pond's Inc. and (Buyer] · Dear Sirs: We have acted as counsel to Chesebrough-Pond's Inc., a New York corporation ("Seller") in connection with the Purchase Agreement dated , 1987 (the "Pur- chase Agreement"), between Seller and [Buyer], a corporation ("Buyer"). Pursuant to the Purchase Agreement, Buyer is pur chasing from Seller shares (the "Shares") of common stock of Stauffer Chemical Company, Stauffer Specialty & Food Products, Inc .. and Stauffer Agricultural Chemicals Company, Inc., each a Delaware corporation (the "Companies"). Pur suant to a guarantee attached to the Purchase Agreement (the "Guarantee"), Onilever N.V. and Onilever United States, Inc. (each a "Guarantor") have guaranteed the obligations of Seller. We have examined originals or copies identified to our satisfaction of corporate records, documents and proceed ings of Seller that we have considered appropriate. Based upon the foregoing, we are of opinion as follows: 1. Each of Seller, the Guarantors and the Com panies is a corporation duly organized, validly existing and in good standing. Seller has the corporate power and authority to perform its obligations under the Purchase Agreement. Each Guarantor has the corporate power and authority to perform its obligations under the Guarantee. 2. Seller has duly authorized, executed and delivered the Purchase Agreement. Each Guarantor has duly authorized, executed and delivered the Guarantee. 3. Seller's execution, delivery and performance of the Purchase Agreement and the Guarantors' execution, delivery and performance of the Guarantee do not and will ~ot ( i) contravene- their or any Company • s certificate of incor poration or by-laws or, to the best of our knowledge, any law, rule, regulation, order, judgment or decree that applies to or binds Seller, any Guarantor or any Company or any of their properties, (ii) constitute a material breach or default or require any consent under any material agreement or instrument known to us to which S.eller, any Guarantor or any Company is a party or that binds or affects any of them or their property, [except as set forth on Schedule 1 to the Purchase Agreement,] or, (iii) to the best of our knowledge, require any consent, permit, approval, action, filing or recording, except those listed on Schedule l to-the Purchase Agreement. Bowever, we express no opinion about compliance with or contravention of any antitrust or competition laws or any environmental laws. 4. The Purchase Agreement is a legal, valid and binding obligation of Seller, enforceable in accordance with -its terms (subject to bankruptcy, reorgani~ation, insolvency, moratorium and other similar laws from time to time in effect affecting the enforceability of creditors' rights generally). The Guarantee is a legal, valid and binding obligation of each Guarantor, enforceable in accordance with its terms (subject as aforesaid). I·i 5. Each Company's authorized capital stock con l sists of 1,000 shares of common stock. The Shares are the only outstanding capital stock of the Companies. The Shares have been validly issued and are fully paid and nonassess able. 6. Seller owns the Shares free of any security interest, lien, claim, right of first refusal, option or encumbrance (other than Buyer's rights under the Purchase Agreement). When Buyer purchases and pays for the Shares in accordance with the Purchase Agreement, it will .own the Shares free of any security interest, lien, claim, right of first refusal, option or encumbrance (other than those Buyer may create). We are members of the Bar of the State of New York and express no opinion about any matters governed by any law -2- I j I ·other than the law of the State of New York, the corporate law of the State of Delaware and the Federal law of the United States of America. With your consent, we have relied as to certain mat.ters on the attached opinions of Robert B. Mann, Esq., General Counsel of Seller, and D.C. Buijs, Esq., Secretary of Onilever N.V. Very truly yours,· -3- ANNEX C '1'0 PURCHASE AGREEMENT (Letterhead of] DAVIS POLK & WARDWELL ]' [Closing Date] Purchase Agreement dated , 1987, between Chesebrough-Pond's Inc. and [Buyer] Dear Sirs: We are furnishing this opinion to you pursuant to the Purchase Agreement dated · , 1987 (the "Purchase Agreement"), between Chesebrough-Pond's Inc., a New York corporation ("Seller"), and (Buyer], a corporation ("Buyer"). We have acted as counsel to Buyer in connection with the Purchase Agreement. We have examined originals or copies identified to our satisfaction of such corporate records, documents and proceedings of Buyer that we have considered appropriate. Based upon the foregoing, we are of opinion as follows: 1. Buyer is a corporation duly organized, validly existing and in good standing. Buyer has the corporate power and authority to enter into and perform the Purchase Agree ment. 2. Buyer has duly authorized, executed and delivered the Purchase Agreement. 3. Buyer's execution, delivery and performance of the Purchase Agreement do not and will not (i) contravene its certificate of incorporation or by-laws or, to the best of our knowledge, any law, rule, regulation, order, judqment or decree that applies to or binds it or any of its properties, (ii) constitute a material breach or default under any agree- I ment or instrument to which it is a party or that binds or ·~ affects it or any of its properties or (iii) require any consent, permit, approval, action, filing or recording, except as set forth on Schedule l to the Purchase Agreement. However, we express no opinion about compliance with or •l contravention of any antitrust or competition laws. 4. The Purchase Agreement is a legal, valid and t binding obligation of Purchaser, enforceable in accordance with its terms (subject to bankruptcy, reorganization, insol vency, moratorium and other similar laws from time to time in effect affecting the enforceability of creditors' rights generally). We are members of the Bar of the State of New York and express no opinion about any matters governed by any law other than the law of the State of New York, the corporate lqw of the State of Delaware and the Federal law of the United States of America. With your consent, we have relied as to certain matters on the attached opinions of v.o. White, Esq. and J.K. Riegel, Esq. Very truly yours, -2- SCHEDULE l . '1'0 PURCHASE AGREEMENT Governmental Actions l. Seller and Buyer must each file a notification and report under Bart-Scott, and may not close the sale and purchase until the expiration of the waiting periods provided by Bart-Scott. SCHEDULE 2 '1'0 PORCHASE AGREEMENT Subsidiaries and Associated Companies Percent Voting and Equity Jurisdiction Interest Stauffer Chemical Company •••••••••••• Delaware Stauffer Chemical (U.K.) Ltd •••••• England 100 Stauffer Chemical Ltd ••••••••••••• England 100 Basic ~anagement, Inc •••••••••.•.• Nevada 32 Chauncey Construction Company, Inc. Delaware 100 Compania Panamena de Industrias Quimicas, S.A . •.•...•..•..•..... Panama 100 Industrias Quimicas de Mexico, ·s.A •••••••••••••••••• Mexico 79 Limanol, S .A...... Mexico 51 Promotadora I.Q.S.A. de c.v .. Mexico 69 Electroquimica Potosi, S.A •• Mexico 69 Stauffer Productos Quimicos, Ltda ••••••••••••••• Brazil 100 Alkyls do.Brazil •••••••••••.•• Brazil so Stauffer Comercial Exportadora, S.A ••••••••••• Brazil 100 Stauffer Rioplatense S.A.I.C •• Argentina 90 Cornwall Chemicals, Limited .•••• canada so Montrose Chemical Corporation of California •.••••••••••••••• Delaware so Quimica Lucava, S.A ••••••••••.• Mexico 40 Ouimica Stauffer Chile Ltda •.•• Chile 100 Sodium Bicarbonate Export Corporation ••••••••••••••••••• Delaware 35 Stauffer Australia Limited •••••• Australia 99 Pacific Chemical Industries Pty., Ltd ••••••• Australia so Stauffer Chemical Company (New Zealand), Limited •••••• New Zealand 100 Stauffer Chemical B.V •••••••••• Netherlands 100 Produits-Chimiques Auxiliaries et de Syn~hese S.A ••••••••• France 100 Societe Immobiliere Auxiliaire de Chimie S.A ••• France 100 Percent Voting and Equity Jurisdiction Interest Stauffer Chemical G.m.b.H •••• Austria 100 Stauffer Finance N.V .•••••••• Netherlands 100 Antilles S~auffer Chemical Company of canada I Ltd. • •••••••••••••••• Canada 100 Stauffer Chemical Company International S.A ••.••••••••• Switzerland 100 Kali-Chemie Stauffer G.m.b.H •• West Germany - sp Stauffer Chemical Company of Wyollling • •••••••••••••••••••••• Delaware 51 Stauffer Wyoming Pipeline Co •• california 100 Stauffer Chemical Development Corporation ••••••••••••••••••• Delaware 100 Stauffer Chemical (Europe) S.A •• Switzerland 100 Stauffer Chemical Italia S.p~A •• Italy 100 Stauffer Chemical S.A •••••••••• Switzerland 100 Stauffer Chemical S.A.R.L •••• France 100 Stauffer (Hong Kong) Limited •••• Hong Kong 100 Stauffer Iberica S.A ••••••••••• Spain 100 Stauffer Japan, Ltd •••••••••••• Japan 100 Kashima Industries Company •••• Japan 70 Stauffer Oil & Gas, Inc •••••••• Delaware 100 Stauffer Quimicos Y Agroquimicos S.A ••..••••••••• Argentina 100 Toyo-Stauffer Chemical Co., Ltd. Japan so u.s. Shippers Association ••••••• Delaware 33 Stauffer Specialty & Food Products Company, Inc...... Delaware Nyala Farm Products, Inc ••••••• Delaware 100 Texas Alkyls Belgium, S.A ...••••. Belgium 50 Texas Alkyls, Inc •••••••.•••••••• Delaware 50 ·Stauffer Agricultural Chemicals Company, Inc. • ••••••••.•.•••••• Delaware Calhio Chemicals, Inc •••••••••• Delaware 100 -2- SCHEDULE 3 TO PURCHASE AGREEMENT Extraordinary Transactions l. The Companies ha~e sold or intend to sell the following: (a) worldwide patents, patent applications and know-how or worldwide licenses for the use of patents, patent applications and know-how for Sta-Film technology and adhesives, for interlinear die-electric technology and transfer lamination technology; (b) the business and assets related to the manufacture, distribution and sale of metasilicates located at Pittsburg, California and Joliet, Illinois; (c) the Companies' interest in Stauffer-Wacker Silicones Corporation, pursuant to the Agreement of Purchase and Sale dated May 15, 1987, between Stauffer and Wacker Chemical Corporation; and (d) the assets described in the Sale Agreement dated March 6, 1987, among Stauffer, Stauffer Seeds, Inc. and Northrup King Co. 2. The entities listed on Schedule 2 shall declare and pay the following distributions (as dividends or in any other form) on their common stock: (a) distribution or dividend of an aggregate amount equal to the gross proceeds of the transactions described in paragraph l; (b) dividends in the aggregate equal to $70 mil lion (the amount estimated by the Seller in good faith to be the consolidated net income of the Stauffer Group for the periGd January 1 to June 30, 1987), plus $246,575 per diem for the period, if any, from and including July l, 1987, to and including the Closing Date; (c) other dividends of $128.6 million; (d) a dividend of $20 million (the amount estimated by Seller in good faith to be the liability the Companies would accrue for Taxes if they were not included.in a consolidated return for the period ending on June 30, 1987), plus, if the Closing Date shall occur after June 30, 1987, such additional amount as shall be estimated on a mutually agreed basis of the liability the Companies would accrue for Taxes if they were not included in a consolidated return for the period from June 30, 1987, to the Closing Date); and (e) dividends in an aggregate amount equal to the purchase prices for the Entity Shares designated pur suant to Section l.Ol(a). 3. The Companies shall redeem, purchase or other wise retire the remaining principal amount 4-l/2\ Sinking · Fund Debentures due 1989 (less than $5 million), the $4,660,000 Citronelle, Alabama Pollution Control Revenue Bonds due 2012 ( 1982·) and the obllgations under the Interest Exchange Agreement dated as of July 18, 1985, between the Chase Manhattan Bank, N.A., and Stauffer unless the Seller is able·to arrange for waiver or modification of covenants relating to the foregoing obligations which would be violated by the transactions contemplated by this Agreement. 4. On or before .the Closing Date, Stauffer shall distribute to Seller the Agriculture Shares and the Specialty Shares. 5. The Companies have paid to Seller a dividend of $267 million by means of the cancellation of intercompany accounts. 6. Stauffer has repurchased accounts receivable in the United States for $100 million. 7. Stauffer Chemical Company of Wyoming has paid ·$20 million dividend to its minority stockholder. 8. Sel~er shall contribute the capital stock of Stauffer Chemical (O.K.) Ltd. and Stauffer Chemical Ltd. to the capital of Stauffer. 9. The Companies shall engage in the transactions described in Sections 4.08 and 4.09 of the Purchase Agree ment. 10. All directors and officers liability insurance except for $5 million has been cancelled. Seller will endeavor to have on the Closing Date insurance that supplies coverage substantially the same as Stauffer has previously -2- enjoyed under Seller's policies, but this cannot be guaran teed. Seller will promptly notify Guarantor if it becomes apparent that any such coverage is not likely to continue in effect at all times prior to the end of the Closing Date. 11. Stauffer intends to make a consent dividend election wh~re such an election is practicable for each of its first tier foreign subsidiaries and other foreign affiliates. Such dividend shall aggregate approximately $30 million. For o.s. tax purposes, a consent dividend election has the effect of repatriating from the foreign subsidiary or other foreign affiliate earnings equal to the amount specified in the election although no cash will actually be remitted to Stauffer. For foreign tax purposes, a consent 8 dividend will have no effect on the statutory retained earn ings of the foreign subsidiary or other foreign affiliate. l -3- SCHEDULE 4 '1'0 PURCHASE AGREEMENT Certain Continuing Obligations The parties a9ree to ne9otiate the contents of this schedule promptly and in 900d faith after the execution of this A9ree- ment. - ·-· SCHEDULE 5 TO PURCHASE AGREEMENT Seller Guarantees l. 4-1/2% Sinking Fund Debentures due 1989 issued by Stauffer. 2. 8-l/2% Sinking Fund Debentures due 1996 issued by Stauffer. 3. 8.85% Sinking Fund Debentures due 2001 issued by Stauffer. 4. Anderson, South Carolina, Series 1977 Pol lution Control Revenue Bonds. 5. Anderson, South Carolina, Series 1977-A Pol lution Control Revenue Bonds. 6. Green River, New Y.ork, Series 1985 Pollution Control Revenue Bonds. 7. Martinez, California, Series 1982 Pollution Control Revenue Bonds. B. Loans from Citibank NA and Bank of Boston to Stauffer Quimicos Y Agroquimicos S_.A. or Stauffer Rioplatense S.A.I.C. 9. Loans from Canadian Imperial Bank of Commerce to Stauffer Chemical Company of Canada, Ltd. 10. Lease and related documents deseribed in Section 4.08. 11. Lease of corporate research facility in Far mington, Connecticut, and related documents. 12. Lease of corporate research and engineering facility in Dobbs Ferry, New York. 13. Lease of corporate research and manufacturing facility in Richmond, California. . 14. Bond for reclamation after completing mining operations of Stauffer Chemical Company of Wyoming. lS. New Jersey ECRA administrative consent orders to guaranty performance of administrative consent orders for Dayton and Edison, New Jersey,_ sites. -2- SCHEDULE 6 'l'O PORCBASE AGREEMENT Schedule A Severance Pay In the event it is necessary to terminate a salaried employee, the following schedule of severance payments shall apply •. Tpe employee's Salary Range Midpoint will determine the number of weeks of severance payment which the employee is entitled to receive. Salary Range Midpoints will be those in effect at the Closing or at the time of the employee's termination, whichever is more favorable to the employee. The amount of the severance payments will be based on the employee's salary at the time of termination, and bonus, if any, awarded for 1986. MANAGEMENT (EXEMPT) SALARY RANGE MIDPOINT (COO's) SEVERANCE PAYMENT $79.6 and above or Minimum of six months in participation in Chesebrough's lieu of notice. Accrue at Executive Incentive rate of six weeks per year. Compensation Plan prior to the Closing Date $50.9 - $79.5 Minimum of four months. in lieu of notice. Accrue at rate of four weeks per year. All other exempts Minimum of two months in $50.8 and below lieu of notice. Accrue at rate of three weeks per year. CLERICAL (NON-EXEMPT) GRADES Local (non-exempt) Minimum of four weeks in lieu salaried employees of notice. Accrue at rate of two weeks per year: except that employees on the payroll of Stauffer Chemical Company on June l, 1985 who at their time of termination are over age 45 will have their.severance calculated by the following alternative method: age 45 to 49, 2.5 weeks per year of service: SO years and ovet, 3 weeks per year of service. The maximum accrual in all ca~es will be one hundred and four (lO') weeks. Full terms and conditions a~d interpretations thereof are as set fer Seller's employee benefit manual. -2- SCHEDULE 7 TO PURCHASE AGREEMENT Assumption Basis for Determining Present Value of Accrued Pension Benefits 1. Interest rates Rates equal to the sum of (a) and (b), where: (a) Rate used by the Pension Benefit Guaranty Corporation ("PBGCR), in accordance with· Section 2619 of the PBGC Regulations, to value immediately annuities under a trusteed, single-employer plan terminating as of ~he Closing Date, and (b) 1\. 2. Mortality rates PBGC mortality rates for healthy lives, as set forth in Tables I and II of Appendix A of Section 2619 of the PBGC Regulations. 3. Withdrawal, retirement Rates used in the January l, and disability rates 1986, actuarial valuation of the plan, as set forth in Appendix D of .the actuary's report. 4. Percentage married and The same assumptions as used benefit commencement in the January 1, 1986, age for terminated actuarial valuation of the vested employees plan. The maximum accrual in all cases will be one hundred and four (104) weeks. Full terms and conditions and interpretations thereof are as set forth in Seller's employee benefit manual. m ::rX C'" ;::::;: m EXHIBIT.t: JUL 22 '87 16=05 ICI AMER P.2 CONTACT: Kathleen M, Tridente .. (302) 575-3638 !C!. Completes Stauffer·Purchaee WILMINGTON, Del., July 23--ICI has completed the purchase of the Stauffer Chemical Company from Unilever for $1.69 billion in cash. I Cit s agreement to acquire Stauffer was announced on June. S and the dea.l was eompleted on July zz.. l\.iJ. now uw.u.o t:..b.~ ~uunToh, .manufactur±ng and marketing interests of ·Stauffer in the US and worldwide. The purChase brings together two of ICI' s main strategiea of increasing sales in the US and of taking a stronger · ··position in world ~griehemicals. ·Stauffer is a major proclucer of: a.grichemicals, particularly of corn (maize) and rice herbicides1 specialty chemicalsa and basic chemicals. ICI announced on June 22 that agreement had been reached for the sale of the Stauffer specialty chemicals business to Akzo for $625 million. The sale of the specialty business is expected to. be eompleted during Augu1lt. In addition to the agriehemicals and specialty chemicals businesses, StauffeT has a good and robust business in basic chemicals. While some parts of this business could be of interest to ICI, strc:mg interest has been expressed by other parti•e. lCI is actively following up that interest. --MORE--