Case Documents

PUBLIC COMPETITION TRIBUNAL IN THE MATTER of the Competition Act, R.S.C. 1985, c. C-34, and the Competition Tribunal Rules, SOR/94-290;

AND IN THE MATTER of filing and registration of a consent agreement pursuant to section 105 of the Competition Act.

BETWEEN:

The Commissioner of Competition Applicant -and-Akzo Nobel N. V. Respondent CONSENT AGREEMENT IN RELATION TO THE ACQUISITION BY AKZO NOBEL N.V. OF IMPERIAL CHEMICAL INDUSTRIES PLC

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PUBLIC WHEREAS Akzo Nobel N.V. (“Akzo Nobel”) has entered into an agreement to acquire all of the issued and outstanding shares of Imperial Chemical Industries PLC (“ICI”), pursuant to the Implementation Agreement, dated August 13, 2007, between Akzo Nobel and ICI (hereinafter referred to as the “Transaction”);

AND WHEREAS the Commissioner of Competition (the “Commissioner”) has concluded that the Transaction is likely to result in a substantial lessening and/or prevention of competition in the wholesale (upstream) supply of Decorative Coatings, as hereinafter defined, in Quebec;

AND WHEREAS Akzo Nobel accepts for the purpose of this Consent Agreement (the “Agreement”) and any related applications to the Competition Tribunal or the courts in respect of the Transaction, that the Transaction is likely to result in a substantial lessening and/or prevention of competition in the wholesale (upstream) supply of Decorative Coatings in Quebec;

AND WHEREAS the Commissioner is satisfied that the implementation of this Agreement will be sufficient to ensure that any likely substantial lessening and/or prevention of competition would not result from the completion of the Transaction and therefore grounds do not exist to apply to the Competition Tribunal (the “Tribunal”) under section 92 of the Competition Act in respect of the Transaction;

AND WHEREAS Akzo Nobel consensually attorns to the jurisdiction of the Tribunal for purposes of this Agreement and any proceeding initiated by the Commissioner relating to this Agreement;

AND WHEREAS the Commissioner and Akzo Nobel agree to the filing of this Agreement with the Tribunal by the Commissioner for registration;

AND WHEREAS nothing in this Agreement is intended to prevent or delay Akzo Nobel from, following the Closing Date (as herein defined), selling to Henkel KGAa (or other purchaser) all assets and liabilities comprising the Adhesives division and Electronics Materials division of ICI, both of which form part of ICI’s National Starch business, including such business carried out in Canada by Nacan Products Limited/Produits Nacan Ltée, as well as any subsequent sale of any remaining assets and liabilities of the National Starch Business;

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PUBLIC NOW THEREFORE Akzo Nobel and the Commissioner have agreed to the terms of this Agreement as follows:

I. DEFINITIONS [1] For the purposes of this Agreement, the following capitalized terms have the following meanings:

(a) “Act” means the Competition Act, R.S.C., 1985, c. C-34, as amended; (b) “Affiliate” has the meaning given to it in subsection 2(2) of the Act; (c) “Agreement” means this Consent Agreement entered into between Akzo Nobel and the Commissioner pursuant to section 105 of the Act;

(d) “Akzo Nobel” means Akzo Nobel N.V. and its Affiliates; (e) “Closing Date” means the date on which the Transaction is completed; (f) “Commissioner” means the Commissioner of Competition appointed pursuant to section 7 of the Act;

(g) “Confidential Information” means competitively sensitive or proprietary information of the Para Business and the Crown Diamond Brand not publicly known, including, without limiting the generality of the foregoing, any customer and supplier lists, price lists, confidential Para Intellectual Property, confidential Crown Diamond Intellectual Property, marketing methods or other trade secrets that relate to the Para Business and the Crown Diamond Brand;

(h) “Crown Diamond Assets” means Akzo Nobel’s right, title and interests in and to the following related to the Crown Diamond Brand:

(i) all Crown Diamond Intellectual Property; (ii) Crown Diamond Brand domain names http://www.peinturecrowndiamond.com and 12172904.1 3

PUBLIC http://www.crowndiamondpaints.com and any content posted on these domain names as at the date of this Agreement other than links not related to the Crown Diamond Brand;

(iii) all applicable licenses, permits and authorizations; (iv) all applicable contracts, commitments and customer orders; (v) all inventories; and (vi) all books, records and files, including customer lists, and sales and pricing data that are specific to the Crown Diamond Brand (for greater certainty, to the extent that there are any books, records and files, including customer lists, and sales and pricing data that are common to the Crown Diamond Brand and to Akzo Nobel’s ongoing businesses, Akzo Nobel shall extract the relevant portions of the books, records and files, including customer lists, and sales and pricing data that are specific to the Crown Diamond Brand provided that, having regard to this context, the Divestiture Monitor shall have the authority to require that the Purchaser has sufficient information from the documentation above to allow it to carry on the Crown Diamond Brand business in the ordinary course);

for greater certainty, back office systems, and services, rights and assets used in connection with Akzo Nobel’s other businesses are not included as Crown Diamond Assets;

(i) “Crown Diamond Brand” means the business of marketing and selling Decorative Coatings under the Crown Diamond brand and all related sub-brands,

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PUBLIC Crown Diamond Perfection, Crown Diamond Privilège, Crown Diamond Sélection and Crown Diamond Stains, as well as the Personnel;

(j) “Crown Diamond Intellectual Property” means the following related to the Crown Diamond Brand, excluding any rights described in Confidential Schedule “A”:

(i) copyrights relating to trade dress, packaging and sales and marketing materials;

(ii) trademarks; and (iii) rights to sue and recover damages or obtain injunctive relief for infringement, dilution, misappropriation, violation or breach of any of the foregoing;

The Divestiture Monitor shall have the authority to require Akzo Nobel to provide all Crown Diamond intellectual property rights reasonably required for the sale of the Crown Diamond Brand to a Purchaser. For greater certainty, however, the Divestiture Monitor shall not require that Akzo Nobel include as Crown Diamond Brand any assets, tangible or intangible, or rights excluded pursuant to the definition of the Crown Diamond Assets.

(k) “Decorative Coatings” means decorative or architectural coatings, which include interior and exterior house paints, primers, sealers, varnishes and stains;

(l) “Direct Costs” means the cost of (i) raw materials and packaging (plus 5% to account for anticipated waste), (ii) direct labour, (iii) reasonably allocated factory overhead (fixed and variable) in manufacturing and supplying Decorative Coatings, and (iv) 10% of the total cost of items (i) through (iii) for technical support, management and administrative costs;

(m) “Divest” means to implement any Divestiture pursuant to this Agreement; 12172904.1 5

PUBLIC (n) “Divestiture” means the sale, transfer, assignment, or other disposal of the Divestiture Assets such that Akzo Nobel will have no further direct or indirect interest in the Divestiture Assets, except as permitted herein or upon the consent of the Commissioner;

(o) “Divestiture Agreement” means any agreement between Akzo Nobel and a Purchaser or, if necessary, between the Divestiture Trustee and a Purchaser, in each case to accomplish the Divestiture contemplated by this Agreement;

(p) “Divestiture Assets” means the Crown Diamond Assets and the Para Assets; (q) “Divestiture Monitor” means the Person appointed under paragraph 3 of this Agreement, and any employees, agents or other persons acting for or on behalf of the Divestiture Monitor;

(r) “Divestiture Trustee” means the Person appointed at paragraph 44 of this Agreement, if necessary, and any employees, agents or other persons acting for or on behalf of the Divestiture Trustee;

(s) “Divestiture Trustee Sale” means a Divestiture to be conducted by the Divestiture Trustee pursuant to Part VII of this Agreement;

(t) ICI” means Imperial Chemical Industries PLC and its Affiliates; (u) “Implementation Agreement” means the Implementation Agreement between Akzo Nobel and ICI dated August 13, 2007;

(v) “Initial Sale Period” means the period set out in Confidential Schedule “B” to this Agreement;

(w) “Para Assets” means Akzo Nobel’s right, title and interests in and to the following assets related to the Para Business:

(i) all Para Intellectual Property; 12172904.1 6

PUBLIC (ii) Para Business domain name http://www.para.com and any content posted on this domain name as at the date of this Agreement other than links not related to the Para Business;

(iii) all applicable licenses, permits and authorizations; (iv) all applicable contracts, commitments and customer orders; (v) all inventories; (vi) the Etobicoke production facility located in Toronto, Ontario (former City of Etobicoke, Ontario);

(vii) leased distribution centre located in Brampton, Ontario, and equipment therein, including the sales office located onsite;

(viii) leased Railside Avenue service centre in Toronto, Ontario, and equipment therein; and

(ix) all books, records and files, including customer lists, and sales and pricing data that are specific to the Para Business (for greater certainty, to the extent that there are any books, records and files, including customer lists, and sales and pricing data that are common to the Para Business and to Akzo Nobel’s ongoing businesses, Akzo Nobel shall extract the relevant portions of the books, records and files, including customer lists, and sales and pricing data that are specific to the Para Business provided that, having regard to this context, the Divestiture Monitor shall have the authority to require that the Purchaser has sufficient information from the documentation above to allow it to carry on the Para Business in the ordinary course);

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PUBLIC In the event that the Divestiture Monitor is of the opinion that Akzo Nobel has not included assets related to the Para Business that are required for the viable operation of the Para Business by a Purchaser, the Divestiture Monitor may require Akzo Nobel to include such assets as part of the Para Assets. Notwithstanding the foregoing, nothing in this Agreement shall require Akzo Nobel to include within the Para Assets: (a) the back office systems, services and assets used in connection with Akzo Nobel’s other businesses, (b) any equipment, inventory, intellectual property, contracts, commitments and customer orders, and applicable licenses, permits and authorizations related to Akzo Nobel’s colourants business or related to the manufacture of the Synteko line of coatings that are currently manufactured in the Etobicoke facility noted in sub-paragraph (vi) above, and (c) any production facility, distribution centre or service centre not identified in sub-paragraphs (vi), (vii) or (viii) above;

(x) “Para Business” means the business of manufacturing, marketing and selling Decorative Coatings under the Para brand and all related sub-brands, Para Design Elements, Para Elite, Para Premium, Paratech, PrimeTech, Para Professional, Para Professional Precision, Para Timbercare, Para Ultra and Para Woodcare, as well as the Personnel;

(y) “Para Intellectual Property” means all of the following related to the Para Business:

(i) copyrights relating to trade dress, packaging and sales and marketing materials;

(ii) trademarks; (iii) trade secrets, know-how, techniques, data, formulations and recipes used by the Para Business, and all rights in any jurisdiction to limit the use or disclosure thereof; and

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PUBLIC (iv) rights to sue and recover damages or obtain injunctive relief for infringement, dilution, misappropriation, violation or breach of any of the foregoing.

The Divestiture Monitor shall have the authority to require Akzo Nobel to provide all Para intellectual property rights reasonably required for the viable operation of the Para Business by a Purchaser. For greater certainty, however, the Divestiture Monitor shall not require that Akzo Nobel include as Para Intellectual Property any assets, tangible or intangible, or rights excluded pursuant to the definition of the Para Assets;

(z) “Permitted Person” means any Person employed by KPMG, the external auditors of Akzo Nobel, and any accountant, legal counsel, business valuator or investment banker employed or retained by Akzo Nobel;

(aa) “Person” means any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity, whether acting alone or in concert with another Person;

(bb) “Personnel” means any individual identified pursuant to paragraph 17; (cc) “Purchaser” means the Person that acquires the Divestiture Assets pursuant to this Agreement;

(dd) “Sico” means Sico Inc., an indirect, wholly-owned subsidiary of Akzo Nobel; (ee) “Transaction” means the proposed acquisition by Akzo Nobel of all of the issued and outstanding shares of ICI, pursuant to the terms of the Implementation Agreement;

(ff) “Tribunal” means the Competition Tribunal established by the Competition Tribunal Act, R.S.C. 1985, c.19 (2 nd Supp.), as amended; and 12172904.1 9

PUBLIC (gg) “Trustee Sale Period” means the period following the expiration of the Initial Sale Period and ending 120 days after the Divestiture Trustee is empowered to sell the Divestiture Assets or such longer period as directed by the Commissioner;

All other terms defined in this Agreement have the meanings established elsewhere in this Agreement.

II. APPLICATION [2] The provisions of this Agreement apply to: (a) Akzo Nobel; (b) each officer, director, employee, agent or other Person acting for or on behalf of Akzo Nobel and any successors or assigns of Akzo Nobel;

(c) all other Persons acting in concert or participating with one or more of those listed in (a) or (b);

(d) the Commissioner; (e) the Divestiture Monitor; (f) the Divestiture Trustee; and (g) the Purchaser and the Purchaser’s successors and assigns. III. DIVESTITURE MONITOR [3] The Commissioner shall appoint a Divestiture Monitor who shall be responsible for monitoring the compliance of Akzo Nobel with this Agreement. Akzo Nobel shall be responsible for all reasonable fees and expenses charged or incurred by the Divestiture Monitor or any replacement Divestiture Monitor appointed pursuant to this Agreement. If the Divestiture Monitor ceases to act or fails to act diligently and consistently with the purposes of this Agreement, the Commissioner may appoint a substitute Divestiture Monitor.

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PUBLIC [4] Akzo Nobel shall pay all invoices submitted by the Divestiture Monitor on a monthly basis. Any outstanding monies owed to the Divestiture Monitor by Akzo Nobel shall be paid out from any proceeds of the Divestiture.

[5] The Divestiture Monitor shall have full and complete access to all Personnel, records, documents and facilities of the Divestiture Assets or any other relevant information that the Divestiture Monitor requests; Akzo Nobel shall assist the Divestiture Monitor and shall not interfere with the Divestiture Monitor's execution of its obligations herein.

[6] The Divestiture Monitor shall serve without bond or other security, at the expense of Akzo Nobel, on such reasonable and customary terms and conditions as the Commissioner may determine. The Divestiture Monitor shall have the authority to engage, at the reasonable cost and expense of Akzo Nobel, such consultants, accountants, lawyers, and other representatives and assistants as are reasonably necessary to carry out the Divestiture Monitor's duties and responsibilities under this Agreement. The Divestiture Monitor shall account for all expenses incurred, including fees for his services.

[7] Akzo Nobel shall indemnify the Divestiture Monitor and hold him harmless against any losses, claims, damages, liabilities or expenses arising out of, or in connection with, the performance of the duties of the Divestiture Monitor, including all reasonable fees of counsel and other expenses incurred in connection with the preparation for, or defence of any claim, whether or not resulting in any liability, except to the extent that such liabilities, losses, damages, claims or expenses result from malfeasance, gross negligence or bad faith by the Divestiture Monitor.

[8] The Divestiture Monitor shall report on Akzo Nobel’s compliance with this Agreement, in writing, to the Commissioner (i) no later than thirty (30) days after being appointed and every thirty (30) days thereafter until the Divestiture is completed, (ii) no later than thirty (30) days after completion of the Divestiture and (iii) at any other time prior to the completion of the Divestiture as requested by the Commissioner or her staff . The Divestiture Monitor shall provide each such report forthwith. Akzo Nobel shall, during the pendency of the obligations set forth in Part IX of this Agreement, provide forthwith, as requested from time to time by the Commissioner or her staff in respect of a particular period, a statutory declaration of a senior

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PUBLIC officer of its Canadian business that Akzo Nobel has complied in all respects with the obligations set forth in Part IX of this Agreement.

[9] Akzo Nobel shall not attempt to influence, direct or control the Divestiture Monitor. [10] This Agreement does not provide the Divestiture Monitor with ownership of the Divestiture Assets.

[11] The Divestiture Monitor shall execute a confidentiality agreement in the form required by the Commissioner in which the Divestiture Monitor will undertake not to disclose any competitively sensitive or proprietary information, including any Confidential Information, acquired in the performance of the Divestiture Monitor's duties to any person except to the Commissioner.

[12] If the Divestiture Monitor considers that Akzo Nobel is in default of any of the terms of this Agreement, the Divestiture Monitor shall immediately notify the Commissioner of the breach, who shall forthwith give notice to Akzo Nobel setting out the particulars of the default and allowing Akzo Nobel an opportunity to provide an explanation and, where appropriate, take any appropriate corrective action.

IV. PRESERVATION OF THE DIVESTITURE ASSETS [13] Pending the Divestiture, Akzo Nobel shall: (a) continue to be responsible for the management and operation of the Para Business and the Crown Diamond Brand; and

(b) provide resources to the Para Business and the Crown Diamond Brand sufficient to maintain sales, marketing and business plans existing at the date of the Implementation Agreement relating to the Para Business and the Crown Diamond Brand, including as set forth in Confidential Schedule “C”, except as stated in Confidential Schedule A.

[14] Akzo Nobel shall take all necessary steps to maintain the competitive viability of the Para Business and the Crown Diamond Brand, including:

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PUBLIC (a) operating the Para Business and the Crown Diamond Brand in compliance with all applicable laws;

(b) maintaining all material licences, registrations, permits and approvals necessary for the operation of the Para Business and the Crown Diamond Brand;

(c) using commercially reasonable competitiveness and the customer base of the Para Business and the Crown Diamond Brand, and, in particular, to continue to solicit business;

(d) maintaining and holding the assets that comprise the Para Business and the Crown Diamond Brand in good condition and repair, normal wear and tear excepted, and to standards at least equal to those maintained prior to the date of the Implementation Agreement;

(e) taking all commercially reasonable steps to honour all customer contracts and to maintain quality and service standards for customers of the Para Business and the Crown Diamond Brand;

(f) maintaining all material contracts of the Para Business and the Crown Diamond Brand except with the consent of the Divestiture Monitor;

(g) not communicating any Confidential Information outside of Akzo Nobel, other than to Permitted Persons, the Divestiture Monitor, the Commissioner or to a potential Purchaser to the extent that such is necessary for due diligence;

(h) not knowingly taking or allowing to be taken any action that adversely affects the competitiveness, operations or financial status of the Para Business or the Crown Diamond Brand;

(i) not curtailing marketing, sales, promotional or other activities of the Para Business and the Crown Diamond Brand in connection with the solicitation of existing or prospective customers;

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efforts to maintain and enhance the

PUBLIC (j) not altering, or causing to be altered, the direct management of the Para Business or the Crown Diamond Brand as they existed prior to the date of the Implementation Agreement, except as may be necessary to comply with the terms of this Agreement or to replace employees that may resign, all subject to the consent of the Commissioner; and

(k) not terminating or altering any current employment, salary or benefit agreements for any Personnel. In determining whether Akzo Nobel has fulfilled its obligations under this paragraph 14, the Divestiture Monitor shall take into account (i) any changed business circumstances resulting from Akzo Nobel’s obligations under Part IX of this Agreement, and (ii) any declines in volumes, revenues or profitability in the Para Business or the Crown Diamond Brand that are consistent with general declines in industry volumes, revenues or profitability.

[15] In addition to the foregoing, Akzo Nobel shall provide sufficient financial resources to: (a) operate the Para Business and the Crown Diamond Brand at least at current rates of operation and to carry on, at least at their scheduled pace, all capital projects, business plans and promotional activities contemplated by Sico’s most recent budget prior to the date of this Agreement in respect of the Para Business and the Crown Diamond Brand, except as stated in Confidential Schedule A;

(b) subject to sub-paragraph (a) above, continue, at least at their scheduled pace, any additional expenditures for the Para Business and the Crown Diamond Brand authorized prior to the date of the Implementation Agreement;

(c) maintain the viability and marketability of the Para Business and the Crown Diamond Brand at the level they were at prior to the date of the Implementation Agreement; and

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PUBLIC (d) perform all maintenance to the assets referred to in sub-paragraphs (vi), (vii) and (viii) of paragraph 1(w) to a level at least as great as of the date of the Implementation Agreement.

[16] For greater certainty, nothing in this Agreement shall prevent Akzo Nobel from undertaking the activity identified in Confidential Schedule “A”.

[17] Akzo Nobel shall staff the Para Business and the Crown Diamond Brand with sufficient employees to maintain their viability, competitiveness and marketability. Employees of Akzo Nobel who spend more than fifty (50) percent of their time in respect of the Para Business and the Crown Diamond Brand shall constitute “Personnel” for the purposes of this Agreement. A list of Personnel by location and job description is provided at Confidential Schedule “D”. To the extent that any Personnel leaves or has left employment with respect to the Para Business and the Crown Diamond Brand prior to the end of the period covered by this Agreement, Akzo Nobel shall replace any such departing or departed Personnel with persons who have similar experience and expertise, or determine not to replace any such departing or departed Personnel with the prior approval of the Commissioner. The Commissioner shall not make public at any time the list of Personnel.