Exhibit 10.1

STEPAN COMPANY

 

 

NOTE PURCHASE AGREEMENT

 

 

DATED AS OF JULY 10, 2015

Issuance of

$100,000,000 3.95% Senior Notes,

due July 10, 2027

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TABLE OF CONTENTS

 

SECTION      HEADING    PAGE   SECTION 1. AUTHORIZATION OF NOTES      1   
SECTION 2. SALE AND PURCHASE OF NOTES      1   

Section 2.1.

    

Notes

     1   

Section 2.2.

    

Subsidiary Guaranty

     1    SECTION 3. CLOSING DATE AND FUNDING DATE      2    SECTION 4.
CONDITIONS TO CLOSING AND FUNDING      2   

Section 4.1.

    

Representations and Warranties

     2   

Section 4.2.

    

Performance; No Default

     2   

Section 4.3.

    

Compliance Certificates

     3   

Section 4.4.

    

Opinions of Counsel

     3   

Section 4.5.

    

Purchase Permitted By Applicable Law, Etc

     3   

Section 4.6.

    

Sale of Other Notes

     4   

Section 4.7.

    

Payment of Special Counsel Fees

     4   

Section 4.8.

    

Private Placement Number

     4   

Section 4.9.

    

Changes in Corporate Structure

     4   

Section 4.10.

    

Funding Instructions

     4   

Section 4.11.

    

Proceedings and Documents

     4   

Section 4.12.

    

Subsidiary Guaranty

     4    SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY      5   

Section 5.1.

    

Organization; Power and Authority

     5   

Section 5.2.

    

Authorization, Etc

     5   

Section 5.3.

    

Disclosure

     5   

Section 5.4.

    

Organization and Ownership of Shares of Subsidiaries; Affiliates

     6   

Section 5.5.

    

Financial Statements; Material Liabilities

     6   

Section 5.6.

    

Compliance with Laws, Other Instruments, Etc

     6   

Section 5.7.

    

Governmental Authorizations, Etc

     7   

Section 5.8.

    

Litigation; Observance of Agreements, Statutes and Orders

     7   

Section 5.9.

    

Taxes

     7   

Section 5.10.

    

Title to Property; Leases

     7   

Section 5.11.

    

Licenses, Permits, Etc

     8   

Section 5.12.

    

Compliance with ERISA

     8   

Section 5.13.

    

Private Offering by the Company

     9   

Section 5.14.

    

Use of Proceeds; Margin Regulations

     9   

Section 5.15.

    

Existing Debt; Future Liens

     9   

Section 5.16.

    

Foreign Assets Control Regulations, Etc

     10   

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Section 5.17.

Status under Certain Statutes

  12   

Section 5.18.

Environmental Matters

  12   

Section 5.19.

Notes Rank Pari Passu

  12    SECTION 6. REPRESENTATIONS OF THE PURCHASER   12   

Section 6.1.

Purchase for Investment

  12   

Section 6.2.

Accredited Investor

  13   

Section 6.3.

Source of Funds

  13    SECTION 7. INFORMATION AS TO COMPANY   15   

Section 7.1.

Financial and Business Information

  15   

Section 7.2.

Officer’s Certificate

  17   

Section 7.3.

Visitation

  18   

Section 7.4.

Electronic Delivery

  18    SECTION 8. PAYMENT OF THE NOTES   19   

Section 8.1.

Required Prepayments

  19   

Section 8.2.

Optional Prepayments with Make-Whole Amount

  19   

Section 8.3.

Allocation of Partial Prepayments

  20   

Section 8.4.

Maturity; Surrender, Etc.

  20   

Section 8.5.

Purchase of Notes

  20   

Section 8.6.

Make-Whole Amount

  20   

Section 8.7.

Change in Control

  22    SECTION 9. AFFIRMATIVE COVENANTS   24   

Section 9.1.

Compliance with Law

  24   

Section 9.2.

Insurance

  25   

Section 9.3.

Maintenance of Properties

  25   

Section 9.4.

Payment of Taxes and Claims

  25   

Section 9.5.

Corporate Existence, Etc

  25   

Section 9.6.

Designation of Subsidiaries

  26   

Section 9.7.

Notes to Rank Pari Passu

  26   

Section 9.8.

Additional Subsidiary Guarantors

  26   

Section 9.6.

Books and Records

  27    SECTION 10. NEGATIVE COVENANTS   27   

Section 10.1.

Consolidated Net Worth

  27   

Section 10.2.

Consolidated Debt to Consolidated Total Capitalization

  27   

Section 10.3.

Interest Coverage Ratio

  27   

Section 10.4.

Priority Debt

  27   

Section 10.5.

Limitation on Liens

  27   

Section 10.6.

Sales of Asset

  30   

Section 10.7.

Merger and Consolidation

  30   

Section 10.8.

Restrictions on Investments

  31   

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Section 10.9.

Transactions with Affiliates

  31   

Section 10.10.

Terrorism Sanctions Regulations

  32   

Section 10.11.

Lien Restrictions

  32    SECTION 11. EVENTS OF DEFAULT   32    SECTION 12. REMEDIES ON DEFAULT,
ETC   35   

Section 12.1.

Acceleration

  35   

Section 12.2.

Other Remedies

  35   

Section 12.3.

Rescission

  35   

Section 12.4.

No Waivers or Election of Remedies, Expenses, Etc

  36    SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES   36   

Section 13.1.

Registration of Notes

  36   

Section 13.2.

Transfer and Exchange of Notes

  36   

Section 13.3.

Replacement of Notes

  37   

Section 13.4.

Prohibition on Transfer to a Competitor

  37    SECTION 14. PAYMENTS ON NOTES   38   

Section 14.1.

Place of Payment

  38   

Section 14.2.

Home Office Payment

  38    SECTION 15. EXPENSES, ETC   38   

Section 15.1.

Transaction Expenses

  38   

Section 15.2.

Survival

  39    SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT
  39    SECTION 17. AMENDMENT AND WAIVER   39   

Section 17.1.

Requirements

  39   

Section 17.2.

Solicitation of Holders of Notes

  40   

Section 17.3.

Binding Effect, etc

  40   

Section 17.4.

Notes Held by Company, etc

  41    SECTION 18. NOTICES   41    SECTION 19. REPRODUCTION OF DOCUMENTS   41
   SECTION 20. CONFIDENTIAL INFORMATION   42    SECTION 21. SUBSTITUTION OF
PURCHASER   43    SECTION 22. MISCELLANEOUS   43   

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Section 22.1.

Successors and Assigns

  43   

Section 22.2.

Payments Due on Non-Business Days

  43   

Section 22.3.

Accounting Terms

  43   

Section 22.4.

Severability

  44   

Section 22.5.

Construction

  44   

Section 22.6.

Counterparts

  44   

Section 22.7.

Governing Law

  44   

Section 22.8.

Jurisdiction and Process; Waiver of Jury Trial

  44   

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

SCHEDULE A — INFORMATION RELATING TO PURCHASERS SCHEDULE B — DEFINED TERMS
SCHEDULE 5.4 — Subsidiaries of the Company, Ownership of Subsidiary Stock,
Affiliates SCHEDULE 5.5 — Financial Statements SCHEDULE 5.11 — Licenses,
Permits, Etc. SCHEDULE 5.15 — Existing Debt SCHEDULE 10.5 — Existing Liens
EXHIBIT 1 — Form of 3.95% Senior Notes due July 10, 2027 EXHIBIT 2.2 — Form of
Subsidiary Guaranty EXHIBIT 4.4(a) — Form of Opinion of Deputy General Counsel
to the Company EXHIBIT 4.4(b) — Form of Opinion of Special Counsel to the
Company EXHIBIT 4.4(c) — Form of Opinion of Special Counsel to the Purchasers

 

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STEPAN COMPANY

EDENS AND WINNETKA ROAD

NORTHFIELD, ILLINOIS 60093

$100,000,000 3.95% SENIOR NOTES,

DUE JULY 10, 2027

Dated as of

July 10, 2015

TO THE PURCHASERS LISTED IN

THE ATTACHED SCHEDULE A:

Ladies and Gentlemen:

STEPAN COMPANY, a Delaware corporation (together with any successor thereto that
becomes a party hereto pursuant to Section 10.7, the “Company”), agrees with the
Purchasers listed in the attached Schedule A (the “Purchasers”) to this Note
Purchase Agreement (this “Agreement”) as follows:

SECTION 1. AUTHORIZATION OF NOTES.

The Company will authorize the issue and sale of $100,000,000 aggregate
principal amount of its 3.95% Senior Notes due July 10, 2027 (as amended,
restated or otherwise modified from time to time pursuant to Section 17 and
including any such notes issued in substitution therefor pursuant to Section 13,
the “Notes”). The Notes shall be substantially in the form set out in Exhibit 1.
Certain capitalized and other terms used in this Agreement are defined in
Schedule B. References to a “Schedule” are references to a Schedule attached to
this Agreement unless otherwise specified. References to a “Section” are
references to a Section of this Agreement unless otherwise specified.

SECTION 2. SALE AND PURCHASE OF NOTES.

Section 2.1. Notes. Subject to the terms and conditions of this Agreement, the
Company will issue and sell to each Purchaser and each Purchaser will purchase
from the Company, at the Closing provided for in Section 3, Notes in the
principal amount specified opposite such Purchaser’s name in Schedule A at the
purchase price of 100% of the principal amount thereof. The Purchasers’
obligations hereunder are several and not joint obligations and no Purchaser
shall have any liability to any Person for the performance or non-performance of
any obligation by any other Purchaser hereunder.

Section 2.2. Subsidiary Guaranty. The payment by the Company of all amounts due
with respect to the Notes and the performance by the Company of its obligations
under this Agreement will be absolutely and unconditionally guaranteed by the
Subsidiary Guarantor(s) pursuant to the Subsidiary Guaranty Agreement dated as
of even date herewith, which shall be substantially in the form of Exhibit 2.2
attached hereto, and otherwise in accordance with the provisions of Section 9.8
hereof (the “Subsidiary Guaranty”).

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

SECTION 3. CLOSING.

The sale and purchase of the Notes to be purchased by each Purchaser shall occur
at the offices of Chapman and Cutler LLP, 111 West Monroe Street, Chicago,
Illinois 60603 on July 10, 2015 at a closing (the “Closing”) or on such other
Business Day thereafter as may be agreed upon by the Company and the Purchasers.
On the Closing Date, the Company will deliver to each Purchaser the Notes to be
purchased by such Purchaser in the form of a single Note (or such greater number
of Notes in denominations of at least $100,000 as such Purchaser may request)
dated the Closing Date and registered in such Purchaser’s name (or in the name
of such Purchaser’s nominee), against delivery by such Purchaser to the Company
or its order of immediately available funds in the amount of the purchase price
therefor by wire transfer of immediately available funds for the account of the
Company to Account Number 5156998, at JPMorgan Chase Bank, N.A., Chicago,
Illinois, ABA Number 071-000-013, in the Account Name of “Stepan Company.” If at
the Closing the Company shall fail to tender such Notes to any Purchaser as
provided above in this Section 3, or any of the conditions specified in
Section 4 shall not have been fulfilled to such Purchaser’s satisfaction, such
Purchaser shall, at its election, be relieved of all further obligations under
this Agreement, without thereby waiving any rights such Purchaser may have by
reason of any of the conditions specified in Section 4 not having been fulfilled
to such Purchaser’s satisfaction or such failure by the Company to tender such
Notes.

SECTION 4. CONDITIONS TO CLOSING.

Each Purchaser’s obligation to purchase and pay for the Notes to be sold to such
Purchaser on the Closing Date is subject to the fulfillment to such Purchaser’s
satisfaction, prior to or at the Closing Date, of the following conditions:

Section 4.1. Representations and Warranties.

(a) Representations and Warranties of the Company. The representations and
warranties of the Company in this Agreement shall be correct when made and at
the time of the Closing.

(b) Representations and Warranties of the Subsidiary Guarantor. The
representations and warranties of the Subsidiary Guarantor in the Subsidiary
Guaranty shall be correct when made and at the time of the Closing.

Section 4.2. Performance; No Default. The Company and each Subsidiary Guarantor
shall have performed and complied with all agreements and conditions contained
in this Agreement and the Subsidiary Guaranty required to be performed or
complied with by the Company and each such Subsidiary Guarantor prior to or at
the Closing, and after giving effect to the issue and sale of the Notes (and the
application of the proceeds thereof as contemplated by

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Section 5.14), no Default or Event of Default shall have occurred and be
continuing. Neither the Company nor any Subsidiary shall have entered into any
transaction since the date of the Memorandum that would have been prohibited by
Section 10 hereof had such Sections applied since such date.

Section 4.3. Compliance Certificates.

(a) Officer’s Certificate of the Company. The Company shall have delivered to
such Purchaser an Officer’s Certificate, dated the Closing Date, certifying that
the conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.

(b) Secretary’s Certificate of the Company. The Company shall have delivered to
such Purchaser a certificate, dated the Closing Date, certifying as to the
resolutions attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of the Notes and this Agreement.

(c) Officer’s Certificate of the Subsidiary Guarantor. The Subsidiary Guarantor
shall have delivered to such Purchaser an Officer’s Certificate, dated the
Closing Date, certifying that the conditions specified in Sections 4.1(b), 4.2
and 4.9 have been fulfilled.

(d) Secretary’s Certificate of the Subsidiary Guarantor. The Subsidiary
Guarantor shall have delivered to such Purchaser a certificate, dated the
Closing Date, certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Subsidiary Guaranty.

Section 4.4. Opinions of Counsel. Such Purchaser shall have received opinions in
form and substance satisfactory to such Purchaser, dated the Closing Date
(a) from Kathleen O. Sherlock, Deputy General Counsel and Assistant Secretary of
the Company, covering the matters set forth in Exhibit 4.4(a) and covering such
other matters incident to the transactions contemplated hereby as such Purchaser
or its counsel may reasonably request (and the Company hereby instructs its
counsel to deliver such opinion to the Purchasers), (b) from Jones Day, special
counsel for the Company, covering the matters set forth in Exhibit 4.4(b) and
covering such other matters incident to the transactions contemplated hereby as
such Purchaser or its counsel may reasonably request (and the Company hereby
instructs its counsel to deliver such opinion to the Purchasers), and (c) from
Chapman and Cutler LLP, the Purchasers’ special counsel in connection with such
transactions, substantially in the form set forth in Exhibit 4.4(c) and covering
such other matters incident to such transactions as such Purchaser may
reasonably request.

Section 4.5. Purchase Permitted By Applicable Law, Etc. On the Closing Date,
such Purchaser’s purchase of Notes shall (a) be permitted by the laws and
regulations of each jurisdiction to which such Purchaser is subject, without
recourse to provisions (such as section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (b) not violate any applicable
law or regulation (including, without limitation, Regulation T, U or X of the
Board of Governors of the Federal Reserve System) and (c) not subject such
Purchaser to any tax, penalty

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

or liability under or pursuant to any applicable law or regulation, which law or
regulation was not in effect on the date hereof. If requested by such Purchaser,
such Purchaser shall have received an Officer’s Certificate certifying as to
such matters of fact as such Purchaser may reasonably specify to enable such
Purchaser to determine whether such purchase is so permitted.

Section 4.6. Sale of Other Notes. Contemporaneously on the Closing Date the
Company shall sell to each other Purchaser and each other Purchaser shall
purchase the Notes to be purchased by it at the Closing Date as specified in
Schedule A.

Section 4.7. Payment of Special Counsel Fees. Without limiting the provisions of
Section 15.1, the Company shall have paid on or before the Closing Date, the
reasonable fees, reasonable charges and reasonable disbursements of the
Purchasers’ special counsel referred to in Section 4.4 to the extent reflected
in a statement of such counsel rendered to the Company at least one Business Day
prior to the Closing Date.

Section 4.8. Private Placement Number. A Private Placement Number issued by
Standard & Poor’s CUSIP Service Bureau (in cooperation with the SVO) shall have
been obtained for the Notes.

Section 4.9. Changes in Corporate Structure. The Company shall not have changed
its jurisdiction of incorporation or organization, as applicable, or been a
party to any merger or consolidation or succeeded to all or any substantial part
of the liabilities of any other entity, at any time following the date of the
most recent financial statements referred to in Schedule 5.5.

Section 4.10. Closing Instructions. At least three Business Days prior to the
Closing Date, each Purchaser shall have received written instructions signed by
a Responsible Officer on letterhead of the Company confirming the information
specified in Section 3 including (i) the name and address of the transferee
bank, (ii) such transferee bank’s ABA number and (iii) the account name and
number into which the purchase price for the Notes is to be deposited.

Section 4.11. Proceedings and Documents. All corporate and other organizational
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory to such Purchaser and its special counsel, and such Purchaser and
its special counsel shall have received all such counterpart originals or
certified or other copies of such documents as such Purchaser or such special
counsel may reasonably request.

Section 4.12. Subsidiary Guaranty. The Subsidiary Guaranty shall have been duly
authorized, executed and delivered by Stepan Specialty Products, LLC, shall
constitute the legal, valid and binding contract and agreement of such
Subsidiary Guarantor and such Purchaser shall have received a true, correct and
complete copy thereof.

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to each Purchaser that:

Section 5.1. Organization; Power and Authority. The Company is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and is duly qualified as a foreign corporation
and is in good standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the failure to be so
qualified or in good standing would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Company has the
corporate power and authority to own or hold under lease the properties it
purports to own or hold under lease, to transact the business it transacts and
proposes to transact, to execute and deliver this Agreement and the Notes and to
perform the provisions hereof and thereof.

Section 5.2. Authorization, Etc. This Agreement and the Notes have been duly
authorized by all necessary corporate action on the part of the Company, and
this Agreement constitutes, and upon execution and delivery thereof each such
Note will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

Section 5.3. Disclosure. The Company, through its agent, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, has delivered to you and each other Purchaser a
copy of a Private Placement Memorandum, dated April, 2015 (the “Memorandum”),
relating to the transactions contemplated hereby. The Memorandum fairly
describes, in all material respects, the general nature of the business and
principal properties of the Company and its Restricted Subsidiaries. This
Agreement, the Memorandum, the documents, certificates or other writings
delivered to the Purchasers by or on behalf of the Company in connection with
the transactions contemplated hereby, the financial statements listed in
Schedule 5.5 and the Company’s Forms 10-K and 10-Q heretofore filed with the
Securities and Exchange Commission, in each case, delivered to the Purchasers
(or deemed to be delivered to the Purchasers in the case of the Company’s
Forms 10-K and 10-Q) prior to May 8, 2015 (this Agreement, the Memorandum and
such documents, certificates or other writings and such financial statements
being referred to, collectively, as the “Disclosure Documents”), taken as a
whole, do not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading in
light of the circumstances under which they were made. Except as disclosed in
the Disclosure Documents, since December 31, 2014, there has been no change in
the financial condition, operations, business or properties of the Company or
any of its Restricted Subsidiaries except changes that individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect.
There is no fact known to the Company that would reasonably be expected to have
a Material Adverse Effect that has not been set forth herein or in the
Disclosure Documents.

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Section 5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates.
(a) Schedule 5.4 contains (except as noted therein) complete and correct lists
(i) of the Company’s Restricted and Unrestricted Subsidiaries, showing, as to
each Subsidiary, the correct name thereof, the jurisdiction of its organization,
and the percentage of shares of each class of its capital stock or similar
equity interests outstanding owned by the Company and each other Subsidiary,
(ii) of the Company’s Affiliates, other than Subsidiaries, and (iii) of the
Company’s directors and senior officers.

(b) All of the outstanding shares of capital stock or similar equity interests
of each Subsidiary shown in Schedule 5.4 as being owned by the Company and its
Subsidiaries have been validly issued, are fully paid and nonassessable and are
owned by the Company or another Subsidiary free and clear of any Lien (except as
otherwise disclosed in Schedule 5.4).

(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other legal
entity duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization, and is duly qualified as a foreign corporation
or other legal entity and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Each such
Subsidiary has the corporate or other power and authority to own or hold under
lease the properties it purports to own or hold under lease and to transact the
business it transacts and proposes to transact.

(d) No Subsidiary is a party to, or otherwise subject to, any legal, regulatory
or contractual restriction (other than this Agreement, the agreements listed on
Schedule 5.4 and customary limitations imposed by corporate law or similar
statutes) restricting the ability of such Subsidiary to pay dividends out of
profits or make any other similar distributions of profits to the Company or any
of its Subsidiaries that owns outstanding shares of capital stock or similar
equity interests of such Subsidiary.

Section 5.5. Financial Statements; Material Liabilities. The Company has
delivered to each Purchaser copies of the financial statements of the Company
and its Subsidiaries listed on Schedule 5.5. All of said financial statements
(including in each case the related schedules and notes) fairly present in all
material respects the consolidated financial position of the Company and its
Subsidiaries as of the respective dates specified in such Schedule and the
consolidated results of their operations and cash flows for the respective
periods so specified and have been prepared in accordance with GAAP consistently
applied throughout the periods involved except (a) as set forth in the notes
thereto (subject, in the case of any interim financial statements, to normal
year-end adjustments), and (b) as specifically disclosed in writing by the
Company in its public filings with the Securities and Exchange Commission. The
Company and its Subsidiaries do not have any Material liabilities that are not
disclosed on such financial statements or otherwise disclosed in the Disclosure
Documents.

Section 5.6. Compliance with Laws, Other Instruments, Etc. The execution,
delivery and performance by the Company of this Agreement and the Notes will not
(a) contravene, result in any breach of, or constitute a default under, or
result in the creation of any Lien in respect of any property of the Company or
any Subsidiary under, any indenture, mortgage, deed of trust,

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

loan, purchase or credit agreement, lease, corporate charter or by-laws,
shareholders agreement (if any) or any other agreement or instrument to which
the Company or any Subsidiary is bound or by which the Company or any Subsidiary
or any of their respective properties may be bound or affected, (b) conflict
with or result in a breach of any of the terms, conditions or provisions of any
order, judgment, decree, or ruling of any court, arbitrator or Governmental
Authority applicable to the Company or any Subsidiary, or (c) violate any
provision of any statute or other rule or regulation of any Governmental
Authority applicable to the Company or any Subsidiary.

Section 5.7. Governmental Authorizations, Etc. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by the Company of this Agreement or the Notes.

Section 5.8. Litigation; Observance of Agreements, Statutes and Orders.
(a) There are no actions, suits, investigations or proceedings pending or, to
the knowledge of the Company, threatened against or affecting the Company or any
Restricted Subsidiary or any property of the Company or any Restricted
Subsidiary in any court or before any arbitrator of any kind or before or by any
Governmental Authority that, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.

(b) Neither the Company nor any Restricted Subsidiary is (i) in default under
any agreement or instrument to which it is a party or by which it is bound,
(ii) in violation of any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority or (iii) in violation of any applicable
law, ordinance, rule or regulation of any Governmental Authority (including,
without limitation, Environmental Laws, the USA PATRIOT Act or any of the other
laws and regulations that are referred to in Section 5.16), which default or
violation could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.

Section 5.9. Taxes. The Company and its Subsidiaries have filed all tax returns
that are required to have been filed in any jurisdiction, and have paid all
taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (a) the amount
of which is not individually or in the aggregate Material or (b) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company or a Subsidiary,
as the case may be, has established adequate reserves in accordance with GAAP.
The Company knows of no basis for any other tax or assessment that would
reasonably be expected to have a Material Adverse Effect. The charges, accruals
and reserves on the books of the Company and its Subsidiaries in respect of
federal, state or other taxes for all fiscal periods are adequate. The federal
income tax liabilities of the Company and its Subsidiaries have been finally
determined (whether by reason of completed audits or the statute of limitations
having run) for all fiscal years up to and including the fiscal year ended
December 31, 2010.

Section 5.10. Title to Property; Leases. The Company and its Restricted
Subsidiaries have good and sufficient title, leasehold or other interest to
their respective properties which the

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Company and its Restricted Subsidiaries own or purport to own that individually
or in the aggregate are Material, including all such properties reflected in the
most recent audited balance sheet referred to in Section 5.5 or purported to
have been acquired by the Company or any Restricted Subsidiary after said date
(except as sold or otherwise disposed of in the ordinary course of business), in
each case free and clear of Liens prohibited by this Agreement. All leases that
individually or in the aggregate are Material are valid and subsisting and are
in full force and effect in all material respects.

Section 5.11. Licenses, Permits, Etc. Except as disclosed in Schedule 5.11,

(a) the Company and its Restricted Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, proprietary software,
service marks, trademarks and trade names, or rights thereto, that individually
or in the aggregate are Material, without known conflict with the rights of
others;

(b) to the best knowledge of the Company, no product of the Company or any of
its Restricted Subsidiaries infringes in any Material respect any license,
permit, franchise, authorization, patent, copyright, proprietary software,
service mark, trademark, trade name or other right owned by any other Person,
except for any such infringement which would not reasonably be expected to have
a Material Adverse Effect; and

(c) to the best knowledge of the Company, there is no Material violation by any
Person of any right of the Company or any of its Restricted Subsidiaries with
respect to any patent, copyright, proprietary software, service mark, trademark,
trade name or other right owned or used by the Company or any of its Restricted
Subsidiaries, except violations which would not reasonably be expected to have a
Material Adverse Effect.

Section 5.12. Compliance with ERISA. (a) The Company and each ERISA Affiliate
have operated and administered each Plan in compliance with all applicable laws
except for such instances of noncompliance as have not resulted in and would not
reasonably be expected to result in a Material Adverse Effect. Neither the
Company nor any ERISA Affiliate has incurred any liability pursuant to Title I
or IV of ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans (as defined in section 3 of ERISA), and no event,
transaction or condition has occurred or exists that would reasonably be
expected to result in the incurrence of any such liability by the Company or any
ERISA Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or to section 430(k) of the Code or to any
such penalty or excise tax provisions under the Code or federal law or
section 4068 of ERISA or by the granting of a security interest in connection
with the amendment of a Plan, other than such liabilities or Liens as would not
be individually or in the aggregate reasonably likely to have a Material Adverse
Effect.

(b) The Unfunded Liabilities under each of the Plans (other than Multiemployer
Plans), determined as of the end of such Plan’s most recently ended plan year on
the basis of the actuarial assumptions specified for funding purposes in such
Plan’s most recent actuarial valuation report, did not exceed $10,000,000 in the
aggregate for all Plans.

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

(c) The Company and its ERISA Affiliates have not incurred any Unfunded
Liabilities in respect of Multiemployer Plans that individually or in the
aggregate are Material.

(d) The expected postretirement benefit obligation (determined as of the last
day of the Company’s most recently ended fiscal year in accordance with
Financial Accounting Standards Board Accounting Standards Codification Topic
715-60, without regard to liabilities attributable to continuation coverage
mandated by section 4980B of the Code) of the Company and its Subsidiaries is
not Material.

(e) The execution and delivery of this Agreement and the issuance and sale of
the Notes hereunder will not involve any transaction that is subject to the
prohibitions of section 406 of ERISA or in connection with which a tax would be
imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation by
the Company to each Purchaser in the first sentence of this Section 5.12(e) is
made in reliance upon and subject to the accuracy of such Purchaser’s
representation in Section 6.3 as to the sources of the funds to be used to pay
the purchase price of the Notes to be purchased by such Purchaser.

Section 5.13. Private Offering by the Company. Neither the Company nor anyone
acting on its behalf has offered the Notes or any similar Securities for sale
to, or solicited any offer to buy the Notes or any similar Securities from, or
otherwise approached or negotiated in respect thereof with, any Person other
than the Purchasers and not more than 35 other Institutional Investors, each of
which has been offered the Notes at a private sale for investment. Neither the
Company nor anyone acting on its behalf has taken, or will take, any action that
would subject the issuance or sale of the Notes to the registration requirements
of section 5 of the Securities Act or to the registration requirements of any
Securities or blue sky laws of any applicable jurisdiction.

Section 5.14. Use of Proceeds; Margin Regulations. The Company will apply the
proceeds of the sale of the Notes to refinance existing Debt and for general
corporate purposes of the Company. No part of the proceeds from the sale of the
Notes hereunder will be used, directly or indirectly, for the purpose of buying
or carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 221), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of said Board
(12 CFR 220). Margin stock does not constitute more than 5% of the value of the
consolidated assets of the Company and its Subsidiaries and the Company does not
have any present intention that margin stock will constitute more than 5% of the
value of such assets. As used in this Section, the terms “margin stock” and
“purpose of buying or carrying” shall have the meanings assigned to them in said
Regulation U.

Section 5.15. Existing Debt; Future Liens. (a) Except as described therein,
Schedule 5.15 sets forth a complete and correct list of all outstanding Debt of
the Company and its Restricted Subsidiaries as of May 31, 2015 (including
descriptions of the obligors and obligees, principal amounts outstanding, any
collateral therefor and any Guaranties thereof), since which date there has been
no Material change in the amounts, interest rates, sinking funds, installment
payments

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

or maturities of the Debt of the Company or its Restricted Subsidiaries. Neither
the Company nor any Restricted Subsidiary is in default and no waiver of default
is currently in effect, in the payment of any principal or interest on any Debt
of the Company or such Restricted Subsidiary, and no event or condition exists
with respect to any Debt of the Company or any Restricted Subsidiary, that would
permit (or that with notice or the lapse of time, or both, would permit) one or
more Persons to cause such Debt to become due and payable before its stated
maturity or before its regularly scheduled dates of payment.

(b) Except as disclosed in Schedule 5.15, neither the Company nor any Restricted
Subsidiary has agreed or consented to cause or permit any of its property,
whether now owned or hereafter acquired, to be subject to a Lien that secures
Debt or to cause or permit in the future (upon the happening of a contingency or
otherwise) any of its property, whether now owned or hereafter acquired, to be
subject to a Lien that secures Debt.

(c) Neither the Company nor any Subsidiary is a party to, or otherwise subject
to any provision contained in, any instrument evidencing Debt of the Company or
such Subsidiary, any agreement relating thereto or any other agreement
(including, but not limited to, its charter or other organizational document)
which limits the amount of, or otherwise imposes restrictions on the incurring
of, Debt of the Company, except the agreements specifically identified in
Schedule 5.15.

Section 5.16. Foreign Assets Control Regulations, Etc. (a) Neither the Company
nor any Controlled Entity is (i) a Person whose name appears on the list of
Specially Designated Nationals and Blocked Persons published by the Office of
Foreign Assets Control, United States Department of the Treasury (“OFAC”) (an
“OFAC Listed Person”) (ii) an agent, department, or instrumentality of, or is
otherwise beneficially owned by, controlled by or acting on behalf of, directly
or indirectly, (x) any OFAC Listed Person or (y) any Person, entity,
organization, foreign country or regime that is subject to any OFAC Sanctions
Program, or (iii) otherwise blocked, subject to sanctions under or engaged in
any activity in violation of other United States economic sanctions, including
but not limited to, the Trading with the Enemy Act, the International Emergency
Economic Powers Act, the Comprehensive Iran Sanctions, Accountability and
Divestment Act (“CISADA”) or any similar law or regulation with respect to Iran
or any other country, the Sudan Accountability and Divestment Act, any OFAC
Sanctions Program, or any economic sanctions regulations administered and
enforced by the United States or any enabling legislation or executive order
relating to any of the foregoing (collectively, “U.S. Economic Sanctions”) (each
OFAC Listed Person and each other Person, entity, organization and government of
a country described in clause (i), clause (ii) or clause (iii), a “Blocked
Person”). Neither the Company nor any Controlled Entity has been notified that
its name appears or may in the future appear on a state list of Persons that
engage in investment or other commercial activities in Iran or any other country
that is subject to U.S. Economic Sanctions.

(b) No part of the proceeds from the sale of the Notes hereunder constitutes or
will constitute funds obtained on behalf of any Blocked Person or will otherwise
be used by the Company or any Controlled Entity, directly or indirectly, (i) in
connection with any investment in, or any transactions or dealings with, any
Blocked Person, or (ii) otherwise in violation of U.S. Economic Sanctions.

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

(c) Neither the Company nor any Controlled Entity (i) has been found in
violation of, charged with, or convicted of, money laundering, drug trafficking,
terrorist-related activities or other money laundering predicate crimes under
the Currency and Foreign Transactions Reporting Act of 1970 (otherwise known as
the Bank Secrecy Act), the USA PATRIOT Act or any other United States law or
regulation governing such activities (collectively, “Anti-Money Laundering
Laws”) or any U.S. Economic Sanctions violations, (ii) to the Company’s actual
knowledge after making due inquiry, is under investigation by any Governmental
Authority for possible violation of Anti-Money Laundering Laws or any
U.S. Economic Sanctions violations, (iii) has been assessed civil penalties
under any Anti-Money Laundering Laws or any U.S. Economic Sanctions, or (iv) has
had any of its funds seized or forfeited in an action under any Anti-Money
Laundering Laws. The Company has established procedures and controls which it
reasonably believes are adequate (and otherwise comply with applicable law) to
ensure that the Company and each Controlled Entity is and will continue to be in
compliance with all applicable current and future Anti-Money Laundering Laws and
U.S. Economic Sanctions.

(d) (1) Neither the Company nor any Controlled Entity (i) has been charged with,
or convicted of bribery or any other anti-corruption related activity under any
applicable law or regulation in a U.S. or any non-U.S. country or jurisdiction,
including but not limited to, the U.S. Foreign Corrupt Practices Act and the
U.K. Bribery Act 2010 (collectively, “Anti-Corruption Laws”), (ii) to the
Company’s actual knowledge after making due inquiry, is under investigation by
any U.S. or non-U.S. Governmental Authority for possible violation of
Anti-Corruption Laws, (iii) has been assessed civil or criminal penalties under
any Anti-Corruption Laws or (iv) has been or is the target of sanctions imposed
by the United Nations or the European Union;

(2) To the Company’s actual knowledge after making due inquiry, neither the
Company nor any Controlled Entity has, within the last five years, directly or
indirectly offered, promised, given, paid or authorized the offer, promise,
giving or payment of anything of value to a Governmental Official or a
commercial counterparty for the purposes of: (i) influencing any act, decision
or failure to act by such Government Official in his or her official capacity or
such commercial counterparty, (ii) inducing a Governmental Official to do or
omit to do any act in violation of the Governmental Official’s lawful duty, or
(iii) inducing a Governmental Official or a commercial counterparty to use his
or her influence with a government or instrumentality to affect any act or
decision of such government or entity; in each case in order to obtain, retain
or direct business or to otherwise secure an improper advantage in violation of
any applicable law or regulation or which would cause any holder to be in
violation of any law or regulation applicable to such holder; and

(3) No part of the proceeds from the sale of the Notes hereunder will be used,
directly or indirectly, for any improper payments, including bribes, to any
Governmental Official or commercial counterparty in order to obtain, retain or
direct business or obtain any improper advantage. The Company has established
procedures and controls which it reasonably believes are adequate (and otherwise
comply with applicable law) to ensure that the Company and each Controlled
Entity is and will continue to be in compliance with all applicable current and
future Anti-Corruption Laws.

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Section 5.17. Status under Certain Statutes. Neither the Company nor any
Restricted Subsidiary is subject to regulation under the Investment Company Act
of 1940, as amended, the Public Utility Holding Company Act of 2005, as amended,
the ICC Termination Act of 1995, as amended, or the Federal Power Act, as
amended.

Section 5.18. Environmental Matters. (a) Neither the Company nor any Restricted
Subsidiary has knowledge of any liability or has received any notice of any
liability, and no proceeding has been instituted raising any liability against
the Company or any of its Restricted Subsidiaries or any of their respective
real properties now or formerly owned, leased or operated by any of them, or
other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as would not reasonably be
expected to result in a Material Adverse Effect.

(b) Neither the Company nor any Restricted Subsidiary has knowledge of any facts
which would give rise to any liability, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring on or
in any way related to real properties now or formerly owned, leased or operated
by any of them or to other assets or their use, except, in each case, such as
would not reasonably be expected to result in a Material Adverse Effect.

(c) Neither the Company nor any Restricted Subsidiary has stored any Hazardous
Materials on real properties now or formerly owned, leased or operated by any of
them in a manner which is contrary to any Environmental Law that could,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.

(d) Neither the Company nor any Restricted Subsidiary has disposed of any
Hazardous Materials in a manner which is contrary to any Environmental Law that
could, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.

(e) All buildings on all real properties now owned, leased or operated by the
Company or any Restricted Subsidiary are in compliance with applicable
Environmental Laws, except where failure to comply could not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.

Section 5.19. Notes Rank Pari Passu. The obligations of the Company under this
Agreement and the Notes rank pari passu in right of payment with all other
senior unsecured Debt (actual or contingent) of the Company, including, without
limitation, all senior unsecured Debt of the Company described in Schedule 5.15
hereto.

SECTION 6. REPRESENTATIONS OF THE PURCHASER.

Section 6.1. Purchase for Investment. Each Purchaser severally represents that
it is purchasing the Notes for its own account or for one or more separate
accounts maintained by it or for the account of one or more pension or trust
funds and not with a view to the distribution

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

thereof, provided that the disposition of such Purchaser’s or such pension or
trust funds’ property shall at all times be within such Purchaser’s or such
pension or trust funds’ control. Each Purchaser understands that the Notes have
not been registered under the Securities Act and may be resold only if
registered pursuant to the provisions of the Securities Act or if an exemption
from registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.

Section 6.2. Accredited Investor. Each Purchaser represents that it is an
“accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act acting for its own account (and not for
the account of others) or as a fiduciary or agent for others (which others are
also “accredited investors”). Each Purchaser further represents that such
Purchaser has had the opportunity to ask questions of the Company and received
answers concerning the terms and conditions of the sale of the Notes.

Section 6.3. Source of Funds. Each Purchaser severally represents that at least
one of the following statements is an accurate representation as to each source
of funds (a “Source”) to be used by such Purchaser to pay the purchase price of
the Notes to be purchased by such Purchaser hereunder:

(a) the Source is an “insurance company general account” (as the term is defined
in the United States Department of Labor’s Prohibited Transaction Exemption
(“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by
the annual statement for life insurance companies approved by the NAIC (the
“NAIC Annual Statement”)) for the general account contract(s) held by or on
behalf of any employee benefit plan together with the amount of the reserves and
liabilities for the general account contract(s) held by or on behalf of any
other employee benefit plans maintained by the same employer (or affiliate
thereof as defined in PTE 95-60) or by the same employee organization in the
general account do not exceed 10% of the total reserves and liabilities of the
general account (exclusive of separate account liabilities) plus surplus as set
forth in the NAIC Annual Statement filed with such Purchaser’s state of
domicile; or

(b) the Source is a separate account that is maintained solely in connection
with such Purchaser’s fixed contractual obligations under which the amounts
payable, or credited, to any employee benefit plan (or its related trust) that
has any interest in such separate account (or to any participant or beneficiary
of such plan (including any annuitant)) are not affected in any manner by the
investment performance of the separate account; or

(c) the Source is either (i) an insurance company pooled separate account,
within the meaning of PTE 90-1 or (ii) a bank collective investment fund, within
the meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the
Company in writing pursuant to this clause (c), no employee benefit plan or
group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled separate
account or collective investment fund; or

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

(d) the Source constitutes assets of an “investment fund” (within the meaning of
Part VI of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified
professional asset manager” or “QPAM” (within the meaning of Part VI of the QPAM
Exemption), no employee benefit plan’s assets that are managed by the QPAM in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an affiliate
(within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or
by the same employee organization and managed by such QPAM, represent more than
20% of the total client assets managed by such QPAM, the conditions of Part I(c)
and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person
controlling or controlled by the QPAM maintains an ownership interest in the
Company that would cause the QPAM and the Company to be “related” within the
meaning of Part VI(h) of the QPAM Exemption and (i) the identity of such QPAM
and (ii) the names of any employee benefit plans whose assets in the investment
fund, when combined with the assets of all other employee benefit plans
established or maintained by the same employer or by an affiliate (within the
meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization, represent 10% or more of the assets of such investment
fund, have been disclosed to the Company in writing pursuant to this clause (d);
or

(e) the Source constitutes assets of a “plan(s)” (within the meaning of
Part IV(h) of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset
manager” or “INHAM” (within the meaning of Part IV(a) of the INHAM Exemption),
the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied,
neither the INHAM nor a person controlling or controlled by the INHAM (applying
the definition of “control” in Part IV(d)(3) of the INHAM Exemption) owns a 10%
or more interest in the Company and (i) the identity of such INHAM and (ii) the
name(s) of the employee benefit plan(s) whose assets constitute the Source have
been disclosed to the Company in writing pursuant to this clause (e); or

(f) the Source is a governmental plan; or

(g) the Source is one or more employee benefit plans, or a separate account or
trust fund comprised of one or more employee benefit plans, each of which has
been identified to the Company in writing pursuant to this clause (g); or

(h) the Source does not include assets of any employee benefit plan, other than
a plan exempt from the coverage of ERISA.

As used in this Section 6.3, the terms “employee benefit plan,” “governmental
plan,” and “separate account” shall have the respective meanings assigned to
such terms in section 3 of ERISA.

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

SECTION 7. INFORMATION AS TO COMPANY.

Section 7.1. Financial and Business Information. The Company shall deliver to
each holder of Notes that is an Institutional Investor:

(a) Quarterly Statements — within 60 days (or such shorter period as is 15 days
greater than the period applicable to the filing of the Company’s Quarterly
Report on Form 10-Q (the “Form 10-Q”) with the SEC regardless of whether the
Company is subject to the filing requirements thereof) after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the last
quarterly fiscal period of each such fiscal year), duplicate copies of,

(i) a consolidated balance sheet of the Company and its Subsidiaries as at the
end of such quarter, and

(ii) consolidated statements of income, changes in shareholders’ equity and cash
flows of the Company and its Subsidiaries, for such quarter and (in the case of
the second and third quarters) for the portion of the fiscal year ending with
such quarter,

setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments;

(b) Annual Statements — within 105 days (or such shorter period as is 15 days
greater than the period applicable to the filing of the Company’s Annual Report
on Form 10-K (the “Form 10-K”) with the SEC regardless of whether the Company is
subject to the filing requirements thereof) after the end of each fiscal year of
the Company, duplicate copies of

(i) a consolidated balance sheet of the Company and its Subsidiaries as at the
end of such year, and

(ii) consolidated statements of income, changes in shareholders’ equity and cash
flows of the Company and its Subsidiaries for such year,

setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by an opinion thereon of independent public accountants of
recognized national standing, which opinion shall state that such financial
statements present fairly, in all material respects, the financial position of
the companies being reported upon and their results of operations and cash flows
and have been prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the circumstances;

 

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(c) SEC and Other Reports — promptly upon their becoming available, one copy of
(i) each financial statement, report, notice or proxy statement sent by the
Company or any Subsidiary to its principal lending banks as a whole (excluding
information sent to such banks in the ordinary course of administration of a
bank facility, such as information relating to pricing and borrowing
availability) or to its public Securities holders generally, and (ii) each
regular or periodic report, each registration statement (without exhibits except
as expressly requested by such Purchaser or holder), and each prospectus and all
amendments thereto filed by the Company or any Subsidiary with the SEC and of
all press releases and other statements made available generally by the Company
or any Subsidiary to the public concerning developments that are Material;

(d) Notice of Default or Event of Default — promptly, and in any event within
five Business Days (i) after a Responsible Officer becomes aware of the
existence of any Default or Event of Default or that any Person has given any
notice or taken any action with respect to a claimed default hereunder or that
any Person has given any notice or taken any action with respect to a claimed
default of the type referred to in Section 11(f), a written notice specifying
the nature and period of existence thereof and what action the Company is taking
or proposes to take with respect thereto and (ii) of their becoming available,
one copy of any letter, certificate or other writing supplied by the Company’s
independent public accountants to any other Person pertaining to whether such
accountants have cause to believe that there has been any default by the Company
under any other agreement or evidence of Debt;

(e) ERISA Matters — promptly, and in any event within five Business Days after a
Responsible Officer becomes aware of any of the following, a written notice
setting forth the nature thereof and the action, if any, that the Company or an
ERISA Affiliate proposes to take with respect thereto:

(i) with respect to any Plan, any reportable event, as defined in
Section 4043(c) of ERISA and the regulations thereunder, for which notice
thereof has not been waived pursuant to such regulations as in effect on the
date thereof; or

(ii) the taking by the PBGC of steps to institute, or the threatening by the
PBGC of the institution of, proceedings under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by the PBGC with respect to such
Multiemployer Plan; or

(iii) any event, transaction or condition that would result in the incurrence of
any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of
ERISA or the imposition of a penalty or excise tax under the

 

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provisions of the Code relating to employee benefit plans, or the imposition of
any Lien on any of the rights, properties or assets of the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together with any other such
liabilities or Liens then existing, would reasonably be expected to have a
Material Adverse Effect;

(f) Notices from Governmental Authority — promptly, and in any event within 30
days of receipt thereof, copies of any notice to the Company or any Subsidiary
from any federal or state Governmental Authority relating to any order, ruling,
statute or other law or regulation that would reasonably be expected to have a
Material Adverse Effect; and

(g) Requested Information — with reasonable promptness, such other data and
information relating to the business, operations, affairs, financial condition,
assets or properties of the Company or any of its Subsidiaries (including, but
without limitation, actual copies of the Company’s Form 10-Q and Form 10-K) or
relating to the ability of the Company to perform its obligations hereunder and
under the Notes as from time to time may be reasonably requested by any such
holder of a Note.

Notwithstanding the foregoing, in the event that the Company shall have one or
more Unrestricted Subsidiaries, then, within the respective periods provided in
Section 7.1(a) and (b) above, the Company shall deliver to each holder of Notes
that is an Institutional Investor, unaudited financial statements of the
character and for the dates and periods as in said Sections 7.1(a) and
(b) covering the group of the Company and its Restricted Subsidiaries (on a
consolidated basis), together with a consolidating statement reflecting
eliminations or adjustments required to reconcile the financial statements of
such group of the Company and its Restricted Subsidiaries to the financial
statements delivered pursuant to Sections 7.1(a) and (b).

Section 7.2. Officer’s Certificate. Each set of financial statements delivered
to a holder of a Note pursuant to Section 7.1(a) or Section 7.1(b) shall be
accompanied by a certificate of a Senior Financial Officer:

(a) Covenant Compliance — setting forth the information from such financial
statements that is required in order to establish whether the Company was in
compliance with the requirements of Sections 10.1 through 10.8 during the
quarterly or annual period covered by the statements then being furnished,
(including with respect to each such provision that involves mathematical
calculations, the information from such financial statements that is required to
perform such calculations) and detailed calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the terms of
such Section, and the calculation of the amount, ratio or percentage then in
existence; and

(b) Event of Default — certifying that such Senior Financial Officer has
reviewed the relevant terms hereof and has made, or caused to be made, under his
or her supervision, a review of the transactions and conditions of the Company
and its

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Subsidiaries from the beginning of the quarterly or annual period covered by the
statements then being furnished to the date of the certificate and that such
review shall not have disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of Default or, if any
such condition or event existed or exists (including, without limitation, any
such event or condition resulting from the failure of the Company or any
Subsidiary to comply with any Environmental Law), specifying the nature and
period of existence thereof and what action the Company shall have taken or
proposes to take with respect thereto.

Section 7.3. Visitation. The Company shall permit the representatives of each
holder of Notes that is an Institutional Investor:

(a) No Default — if no Default or Event of Default then exists, at the expense
of such holder and upon reasonable prior notice to the Company, to visit the
principal executive office of the Company, to discuss the affairs, finances and
accounts of the Company and its Subsidiaries with the Company’s officers, and
(with the consent of the Company, which consent will not be unreasonably
withheld) its independent public accountants, and (with the consent of the
Company, which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Restricted Subsidiary, all at
such reasonable times and as often as may be reasonably requested in writing;
and

(b) Default — if a Default or Event of Default then exists, at the expense of
the Company, to visit and inspect any of the offices or properties of the
Company or any Restricted Subsidiary, to examine all their respective books of
account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective officers and independent public accountants (and by this
provision the Company authorizes said accountants to discuss the affairs,
finances and accounts of the Company and its Subsidiaries), all at such times
and as often as may be requested.

Section 7.4. Electronic Delivery. Financial statements, opinions of independent
certified public accountants, other information and Officers’ Certificates that
are required to be delivered by the Company pursuant to Sections 7.1(a), (b) or
(c) and Section 7.2 shall be deemed to have been delivered if the Company
satisfies any of the following requirements:

(i) such financial statements satisfying the requirements of Section 7.1(a) or
(b) and related Officer’s Certificate satisfying the requirements of Section 7.2
are delivered to each holder of a Note by e-mail;

(ii) the Company shall have timely filed such Form 10–Q or Form 10–K, satisfying
the requirements of Section 7.1(a) or Section 7.1(b), as the case may be, with
the SEC and shall have made such form and the related Officer’s Certificate
satisfying the requirements of Section 7.2 available on its home page on the
internet, which is located at http://www.stepan.com as of the date of this
Agreement;

 

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(iii) such financial statements satisfying the requirements of Section 7.1(a) or
Section 7.1(b) and related Officer’s Certificate(s) satisfying the requirements
of Section 7.2 are timely posted by or on behalf of the Company on IntraLinks or
on any other similar website to which each holder of Notes has free access; or

(iv) the Company shall have filed any of the items referred to in Section 7.1(c)
with the SEC and shall have made such items available on its home page on the
internet or on IntraLinks or on any other similar website to which each holder
of Notes has free access;

provided however, that in the case of any of clauses (ii), (iii) or (iv), the
Company shall have given each holder of a Note prior written notice, which may
be by e-mail or in accordance with Section 18, of such posting or filing in
connection with each delivery, provided further, that upon request of any holder
to receive paper copies of such forms, financial statements and Officer’s
Certificates or to receive them by e-mail, the Company will promptly e-mail them
or deliver such paper copies, as the case may be, to such holder.

SECTION 8. PAYMENT OF THE NOTES.

Section 8.1. Required Prepayments. (a) On July 10, 2021 and on each July 10
thereafter to and including July 10, 2026, the Company will prepay
$14,285,714.29 principal amount (or such lesser principal amount as shall then
be outstanding) of the Notes at par and without payment of the Make-Whole Amount
or any premium. The entire unpaid principal amount of the Notes shall become due
and payable on July 10, 2027.

(b) Upon any partial prepayment of the Notes pursuant to Section 8.2 or 8.7 or
the purchase of any Notes pursuant to Section 8.5, the principal amount of each
required prepayment of the Notes becoming due under this Section 8.1 on and
after the date of such prepayment or purchase shall be reduced in the same
proportion as the aggregate unpaid principal amount of the Notes is reduced as a
result of such prepayment or purchase.

Section 8.2. Optional Prepayments with Make-Whole Amount. The Company may, at
its option, upon notice as provided below, prepay at any time all, or from time
to time any part of, the Notes, in an amount not less than 10% of the aggregate
principal amount then outstanding of the Notes to be prepaid in the case of a
partial prepayment (or such lesser amount as shall be required to effect a
partial prepayment resulting from an offer of prepayment pursuant to
Section 10.6), at 100% of the principal amount so prepaid, together with
interest accrued thereon to the date of such prepayment, plus the Make-Whole
Amount determined for the prepayment date with respect to such principal amount
of each Note then outstanding. The Company will give each holder of Notes
written notice of each optional prepayment under this Section 8.2 not less than
15 days and not more than 60 days prior to the date fixed for such prepayment
unless the Company and the Required Holders agree to another time period
pursuant to Section 17. Each such notice shall specify such date (which shall be
a Business Day), the aggregate principal amount of the Notes to be prepaid on
such date, the principal amount of each Note held by such holder to be prepaid
(determined in accordance with Section 8.3), and the interest to be paid on the
prepayment date with respect to such principal amount being prepaid, and shall
be

 

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accompanied by a certificate of a Senior Financial Officer as to the estimated
Make-Whole Amount due in connection with such prepayment (calculated as if the
date of such notice were the date of the prepayment), setting forth the details
of such computation. Two Business Days prior to such prepayment, the Company
shall deliver to each holder of Notes a certificate of a Senior Financial
Officer specifying the calculation of each such Make-Whole Amount as of the
specified prepayment date.

Section 8.3. Allocation of Partial Prepayments. In the case of each partial
prepayment of the Notes pursuant to Section 8.1 Section 8.2, the principal
amount of the Notes to be prepaid shall be allocated among all of the Notes at
the time outstanding in proportion, as nearly as practicable, to the respective
unpaid principal amounts thereof not theretofore called for prepayment.

Section 8.4. Maturity; Surrender, Etc. In the case of each prepayment of Notes
pursuant to this Section 8, the principal amount of each Note to be prepaid
shall mature and become due and payable on the date fixed for such prepayment,
together with interest on such principal amount accrued to such date and the
applicable Make-Whole Amount. From and after such date, unless the Company shall
fail to pay such principal amount when so due and payable, together with the
interest and Make-Whole Amount as aforesaid, interest on such principal amount
shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to
the Company and cancelled and shall not be reissued, and no Note shall be issued
in lieu of any prepaid principal amount of any Note.

Section 8.5. Purchase of Notes. The Company will not and will not permit any of
its Subsidiaries to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except (a) upon the payment or
prepayment of the Notes in accordance with the terms of this Agreement and the
Notes or (b) pursuant to a written offer to purchase any outstanding Notes made
by the Company or a Subsidiary pro rata to the holders of the Notes upon the
same terms and conditions. Any such offer shall provide each holder with
sufficient information to enable it to make an informed decision with respect to
such offer, and shall remain open for at least 10 Business Days. If the holders
of more than 50% of the aggregate principal amount of the Notes then outstanding
accept such offer, the Company shall promptly notify the remaining holders of
Notes of such fact and the expiration date for the acceptance by holders of
Notes of such offer shall be extended by the number of days necessary to give
each such remaining holder at least 5 Business Days from its receipt of such
notice to accept such offer. The Company will promptly cancel all Notes acquired
by the Company or any of its Subsidiaries pursuant to any payment, prepayment or
purchase of Notes pursuant to any provision of this Agreement and no Notes may
be issued in substitution or exchange for any such Notes.

Section 8.6. Make-Whole Amount.

“Make-Whole Amount” means, with respect to any Note, an amount equal to the
excess, if any, of the Discounted Value of the Remaining Scheduled Payments with
respect to the Called Principal of such Note over the amount of such Called
Principal, provided that the Make-Whole Amount may in no event be less than
zero. For the purposes of determining the Make-Whole Amount, the following terms
have the following meanings:

“Called Principal” means, with respect to any Note, the principal of such Note
that is to be prepaid pursuant to Section 8.2 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context requires.

 

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“Discounted Value” means, with respect to the Called Principal of any Note, the
amount obtained by discounting all Remaining Scheduled Payments with respect to
such Called Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.

“Reinvestment Yield” means, with respect to the Called Principal of any Note,
0.50% over the yield to maturity implied by the yield(s) reported as of 10:00
a.m. (New York City time) on the second Business Day preceding the Settlement
Date with respect to such Called Principal, on the display designated as “Page
PX1” (or such other display as may replace Page PX1) on Bloomberg Financial
Markets for the most recently issued actively traded on-the-run U.S. Treasury
securities (“Reported”) having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date. If there are no such
U.S. Treasury securities Reported having a maturity equal to such Remaining
Average Life, then such implied yield to maturity will be determined by
(a) converting U.S. Treasury bill quotations to bond equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between the yields Reported for the applicable most recently issued actively
traded on-the-run U.S. Treasury securities with the maturities (1) closest to
and greater than such Remaining Average Life and (2) closest to and less than
such Remaining Average Life. The Reinvestment Yield shall be rounded to the
number of decimal places as appears in the interest rate of the applicable Note.

If such yields are not Reported or the yields Reported as of such time are not
ascertainable (including by way of interpolation), then “Reinvestment Yield”
means, with respect to the Called Principal of any Note, 0.50% over the yield to
maturity implied by the U.S. Treasury constant maturity yields reported, for the
latest day for which such yields have been so reported as of the second Business
Day preceding the Settlement Date with respect to such Called Principal, in
Federal Reserve Statistical Release H.15 (or any comparable successor
publication) for the U.S. Treasury constant maturity having a term equal to the
Remaining Average Life of such Called Principal as of such Settlement Date. If
there is no such U.S. Treasury constant maturity having a term equal to such
Remaining Average Life, such implied yield to maturity will be determined by
interpolating linearly between (1) the U.S. Treasury constant maturity so
reported with the term closest to and greater than such Remaining Average Life
and (2) the U.S. Treasury constant maturity so reported with the term closest to
and less than such Remaining Average Life. The Reinvestment Yield shall be
rounded to the number of decimal places as appears in the interest rate of the
applicable Note.

“Remaining Average Life” means, with respect to any Called Principal, the number
of years obtained by dividing (i) such Called Principal into (ii) the sum of the
products obtained by

 

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multiplying (a) the principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (b) the number of years, computed on the
basis of a 360-day year composed of twelve 30-day months and calculated to two
decimal places, that will elapse between the Settlement Date with respect to
such Called Principal and the scheduled due date of such Remaining Scheduled
Payment.

“Remaining Scheduled Payments” means, with respect to the Called Principal of
any Note, all payments of such Called Principal and interest thereon that would
be due after the Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its scheduled due date,
provided that if such Settlement Date is not a date on which interest payments
are due to be made under the Notes, then the amount of the next succeeding
scheduled interest payment will be reduced by the amount of interest accrued to
such Settlement Date and required to be paid on such Settlement Date pursuant to
Section 8.2 or Section 12.1.

“Settlement Date” means, with respect to the Called Principal of any Note, the
date on which such Called Principal is to be prepaid pursuant to Section 8.2 or
has become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.

Section 8.7. Change in Control. (a) Notice of Change in Control or Control
Event. The Company will, within 15 Business Days after any Responsible Officer
has knowledge of the occurrence of any Change in Control or Control Event, give
written notice of such Change in Control or Control Event to each holder of
Notes unless notice in respect of such Change in Control (or the Change in
Control contemplated by such Control Event) shall have been given pursuant to
subparagraph (b) of this Section 8.7. If a Change in Control has occurred, such
notice shall contain and constitute an offer to prepay all of the Notes as
described in subparagraph (c) of this Section 8.7 and shall be accompanied by
the certificate described in subparagraph (g) of this Section 8.7.

(b) Condition to Company Action. The Company will not take any action that
consummates or finalizes a Change in Control unless (i) at least 15 Business
Days prior to such action it shall have given to each holder of Notes written
notice containing and constituting an offer to prepay Notes as described in
subparagraph (c) of this Section 8.7, accompanied by the certificate described
in subparagraph (g) of this Section 8.7, and (ii) contemporaneously with such
action, it prepays all Notes required to be prepaid in accordance with this
Section 8.7.

(c) Offer to Prepay Notes. The offer to prepay Notes contemplated by
subparagraphs (a) and (b) of this Section 8.7 shall be an offer to prepay, in
accordance with and subject to this Section 8.7, all, but not less than all, the
Notes held by each holder (in this case only, “holder” in respect of any Note
registered in the name of a nominee for a disclosed beneficial owner shall mean
such beneficial owner) on a date specified in such offer (the “Proposed
Prepayment Date”). If such Proposed Prepayment Date is in connection with an
offer contemplated by subparagraph (a) of this Section 8.7, such date shall be
not less than 20 days and not more than 30 days after the date of such offer (if
the Proposed Prepayment Date shall not be specified in such offer, the Proposed
Prepayment Date shall be the 20th day after the date of such offer).

 

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(d) Acceptance; Rejection. A holder of Notes may accept or reject the offer to
prepay made pursuant to this Section 8.7 by causing a written notice of such
acceptance or rejection to be delivered to the Company at least 5 Business Days
prior to the Proposed Prepayment Date. A failure by a holder of Notes to respond
to an offer to prepay made pursuant to this Section 8.7 shall be deemed to
constitute a rejection of such offer by such holder.

(e) Prepayment. Prepayment of the Notes to be prepaid pursuant to this
Section 8.7 shall be at 100% of the unpaid principal amount of such Notes,
together with interest on such Notes accrued to the date of prepayment but
without any premium or Make Whole Amount (the “Repurchase Price”). The
prepayment shall be made on the Proposed Prepayment Date except as provided in
subparagraph (f) of this Section 8.7.

(f) Deferral Pending Change in Control. The obligation of the Company to prepay
Notes pursuant to the offers required by subparagraph (b) and accepted in
accordance with subparagraph (d) of this Section 8.7 is subject to the
occurrence of the Change in Control in respect of which such offers and
acceptances shall have been made. In the event that such Change in Control does
not occur on the Proposed Prepayment Date in respect thereof, the prepayment
shall be deferred until and shall be made on the date on which such Change in
Control occurs. The Company shall keep each holder of Notes reasonably and
timely informed of (i) any such deferral of the date of prepayment, (ii) the
date on which such Change in Control and the prepayment are expected to occur,
and (iii) any determination by the Company that efforts to effect such Change in
Control have ceased or been abandoned (in which case the offers and acceptances
made pursuant to this Section 8.7 in respect of such Change in Control shall be
deemed rescinded).

(g) Officer’s Certificate. Each offer to prepay the Notes pursuant to this
Section 8.7 shall be accompanied by a certificate, executed by a Senior
Financial Officer of the Company and dated the date of such offer, specifying:
(i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this
Section 8.7; (iii) the Repurchase Price; (iv) that the conditions of this
Section 8.7 have been fulfilled; and (v) in reasonable detail, the nature and
date or proposed date of the Change in Control.

(h) Effect on Required Payments. The amount of each payment of the principal of
the Notes made pursuant to this Section 8.7 shall be applied against and reduce
each of the then remaining principal payments due pursuant to Section 8.1 by a
percentage equal to the aggregate principal amount of the Notes so paid divided
by the aggregate principal amount of the Notes outstanding immediately prior to
such payment.

(i) “Change in Control” Defined. “Change in Control” means (a) the acquisition
of ownership, directly or indirectly, beneficially or of record, by any Person
or group (within the meaning of the Exchange Act and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), other than
the Stepan Family acting in concert, of Equity Interests representing more than
35% of the aggregate ordinary voting power represented by the issued and
outstanding Equity Interests of the Company; or (b) occupation of a majority of
the seats (other than vacant seats) on the board of directors of the Company by
Persons who were neither (i) nominated by the board of directors of the Company
nor (ii) appointed by directors so nominated.

 

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(j) “Control Event” Defined. “Control Event” means:

(i) the execution by the Company or any of its Subsidiaries or Affiliates of any
agreement or letter of intent with respect to any proposed transaction or event
or series of transactions or events which, individually or in the aggregate, may
reasonably be expected to result in a Change in Control,

(ii) the execution of any written agreement which, when fully performed by the
parties thereto, would result in a Change in Control, or

(iii) the making of any written offer by any person (as such term is used in
section 13(d) and section 14(d)(2) of the Exchange Act as in effect on the date
of the Closing) or related persons constituting a group (as such term is used in
Rule 13d-5 under the Exchange Act as in effect on the date of the Closing) to
the holders of the common stock of the Company, which offer, if accepted by the
requisite number of holders, would result in a Change in Control.

(k) “Equity Interest” Defined. “Equity Interests” means shares of capital stock,
partnership interests, membership interests in a limited liability company,
beneficial interests in a trust or other equity ownership interests in a Person,
and any warrants, options or other rights entitling the holder thereof to
purchase or acquire any such equity interest.

(l) “Stepan Family” Defined. “Stepan Family” means at any time, collectively,
F. Quinn Stepan and family, Paul H. Stepan and family, Charlotte Stepan Shea and
family, Mary Louise Wehman and family, Alfred C. Stepan III and family, John A.
Stepan and family, Stratford E. Stepan and family, all trusts for the benefit of
the foregoing or their heirs or any one or more of them, Stepan Venture I and
Stepan Venture II and any entity controlled by any of the foregoing.

SECTION 9. AFFIRMATIVE COVENANTS.

The Company covenants that so long as any of the Notes are outstanding:

Section 9.1. Compliance with Law. Without limiting Section 10.9, the Company
will, and will cause each of its Subsidiaries to, comply with all laws,
ordinances or governmental rules or regulations to which each of them is
subject, including, without limitation, ERISA, Environmental Laws, the USA
PATRIOT Act and the other laws and regulations that are referred to in
Section 5.16, and will obtain and maintain in effect all licenses, certificates,
permits, franchises and other governmental authorizations necessary to the
ownership of their respective properties or to the conduct of their respective
businesses, in each case to the extent necessary to ensure that non-compliance
with such laws, ordinances or governmental rules or regulations or failures to
obtain or maintain in effect such licenses, certificates, permits, franchises
and other governmental authorizations could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

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Section 9.2. Insurance. The Company will, and will cause each of its Restricted
Subsidiaries to, maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated except for any non-maintenance that would not reasonably
be expected to have a Material Adverse Effect.

Section 9.3. Maintenance of Properties. The Company will, and will cause each of
its Restricted Subsidiaries to, maintain and keep, or cause to be maintained and
kept, their respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried on in
connection therewith may be properly conducted at all times, provided that this
Section shall not prevent the Company or any Restricted Subsidiary from
discontinuing the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Company has
concluded that such discontinuance would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

Section 9.4. Payment of Taxes and Claims. The Company will, and will cause each
of its Subsidiaries to, file all tax returns required to be filed in any
jurisdiction and to pay and discharge all taxes shown to be due and payable on
such returns and all other taxes, assessments, governmental charges, or levies
imposed on them or any of their properties, assets, income or franchises, to the
extent such taxes and assessments have become due and payable and before they
have become delinquent and all claims for which sums have become due and payable
that have or might become a Lien on properties or assets of the Company or any
Subsidiary not permitted by Section 10.5, provided that neither the Company nor
any Subsidiary need pay any such tax, assessment, charge, levy or claim if
(i) the amount, applicability or validity thereof is contested by the Company or
such Subsidiary on a timely basis in good faith and in appropriate proceedings,
and the Company or a Subsidiary has established adequate reserves therefor in
accordance with GAAP on the books of the Company or such Subsidiary or (ii) the
non-filing or nonpayment, as the case may be, of all such taxes, assessments,
charges, levies and claims in the aggregate would not reasonably be expected to
have a Material Adverse Effect.

Section 9.5. Corporate Existence, Etc. Subject to Sections 10.6 and 10.7, the
Company will at all times preserve and keep in full force and effect its
corporate existence, and will at all times preserve and keep in full force and
effect the corporate existence of each of its Restricted Subsidiaries (unless
merged into the Company or a Restricted Subsidiary) and all rights and
franchises of the Company and its Restricted Subsidiaries unless, in the good
faith judgment of the Company, the termination of or failure to preserve and
keep in full force and effect such corporate existence, right or franchise would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

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Section 9.6. Designation of Subsidiaries. The Company may from time to time
cause any Subsidiary (other than a Subsidiary Guarantor) to be designated as an
Unrestricted Subsidiary or any Unrestricted Subsidiary to be designated a
Restricted Subsidiary; provided, however, that at the time of such designation
and immediately after giving effect thereto, (a) no Default or Event of Default
would exist under the terms of this Agreement, and (b) the Company and its
Restricted Subsidiaries would be in compliance with all of the covenants set
forth in this Section 9 and Section 10 if tested on the date of such action and
provided, further, that once a Subsidiary has been designated an Unrestricted
Subsidiary, it shall not thereafter be redesignated as a Restricted Subsidiary
on more than one occasion and once a Subsidiary has been designated a Restricted
Subsidiary, it shall not thereafter be redesignated as an Unrestricted
Subsidiary on more than one occasion. Within ten (10) days following any
designation described above, the Company will deliver to you a notice of such
designation accompanied by a certificate signed by a Senior Financial Officer of
the Company certifying compliance with all requirements of this Section 9.6 and
setting forth all information required in order to establish such compliance.

Section 9.7. Notes to Rank Pari Passu. The Notes and all other obligations under
this Agreement of the Company are and at all times shall remain direct and
unsecured obligations of the Company ranking pari passu as against the assets of
the Company with all other present and future unsecured Debt (actual or
contingent) of the Company which is not expressed to be subordinate or junior in
rank to any other unsecured Debt of the Company.

Section 9.8. Additional Subsidiary Guarantors. (a) The Company will cause any
Subsidiary which is required by the terms of the Bank Credit Agreement or any
Debt Agreement to become a party to, or otherwise guarantee, Debt in respect of
the Bank Credit Agreement or such Debt Agreement, to enter into the Subsidiary
Guaranty and deliver to each of the holders of the Notes (concurrently with the
incurrence of any such obligation pursuant to the Bank Credit Agreement) the
following items:

(i) a joinder agreement in respect of the Subsidiary Guaranty;

(ii) a certificate signed by an authorized Responsible Officer of the Company
making representations and warranties to the effect of those contained in
Sections 5.4, 5.6 and 5.7, with respect to such Subsidiary and the Subsidiary
Guaranty, as applicable; and

(iii) an opinion of counsel (who may be in-house counsel for the Company)
addressed to each of the holders of the Notes satisfactory to the Required
Holders, to the effect that the Subsidiary Guaranty by such Person has been duly
authorized, executed and delivered and that the Subsidiary Guaranty constitutes
the legal, valid and binding contract and agreement of such Person enforceable
in accordance with its terms, except as an enforcement of such terms may be
limited by bankruptcy, insolvency, fraudulent conveyance and similar laws
affecting the enforcement of creditors’ rights generally and by general
equitable principles.

(b) At any time in which a Subsidiary Guaranty shall be in existence, the
holders of the Notes agree to discharge and release any Subsidiary Guarantor
from such Subsidiary Guaranty upon receipt of written notice from the Company,
provided that (i) such Subsidiary

 

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Guarantor has been released and discharged (or will be released and discharged
concurrently with the release of such Subsidiary Guarantor under such Subsidiary
Guaranty) as an obligor and guarantor under and in respect of the Bank Credit
Agreement and each Debt Agreement of the Company and the Company so certifies to
the holders of the Notes in a certificate of a Responsible Officer, (ii) at the
time of such release and discharge, the Company shall deliver a certificate of a
Responsible Officer to the holders of the Notes stating that no Default or Event
of Default exists, and (iii) if any fee or other form of consideration is given
to any holder of Debt of the Company expressly for the purpose of such release,
holders of the Notes shall receive equivalent consideration.

Section 9.9. Books and Records. The Company will, and will cause each of its
Restricted Subsidiaries to, maintain proper books of record and account in
conformity with GAAP and all applicable requirements of any Governmental
Authority having legal or regulatory jurisdiction over the Company or such
Restricted Subsidiary, as the case may be. The Company will, and will cause each
of its Restricted Subsidiaries to, keep books, records and accounts which, in
reasonable detail, accurately reflect all transactions and dispositions of
assets. The Company and its Restricted Subsidiaries have devised a system of
internal accounting controls sufficient to provide reasonable assurances that
their respective books, records, and accounts accurately reflect all
transactions and dispositions of assets and the Company will, and will cause
each of its Restricted Subsidiaries to, continue to maintain such system.

SECTION 10. NEGATIVE COVENANTS.

The Company covenants that so long as any of the Notes are outstanding:

Section 10.1. Consolidated Net Worth. The Company will not permit Consolidated
Net Worth to be less than $325,000,000.

Section 10.2. Consolidated Debt to Consolidated Total Capitalization. The
Company will not at any time permit the ratio of Consolidated Debt to
Consolidated Total Capitalization to exceed 60%.

Section 10.3. Interest Coverage Ratio. The Company will not permit the ratio of
Consolidated EBIT to Consolidated Interest Expense for each period of four
consecutive fiscal quarters (calculated as at the end of each fiscal quarter for
the four consecutive fiscal quarters then ended) to be less than 1.75 to 1.00.

Section 10.4. Priority Debt. The Company will not at any time permit the
aggregate amount of all Priority Debt to exceed 25% of Consolidated Adjusted
Tangible Net Worth (Consolidated Adjusted Tangible Net Worth to be determined as
of the end of the then most recently ended fiscal quarter of the Company).

Section 10.5. Limitation on Liens. The Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly create, incur, assume
or permit to exist (upon the happening of a contingency or otherwise) any Lien
on or with respect to any property or asset (including, without limitation, any
document or instrument in respect of goods or accounts

 

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receivable) of the Company or any such Restricted Subsidiary, whether now owned
or held or hereafter acquired, or any income or profits therefrom, or assign or
otherwise convey any right to receive income or profits (unless it makes, or
causes to be made, effective provision whereby the Notes will be equally and
ratably secured with any and all other obligations thereby secured, such
security to be pursuant to an agreement reasonably satisfactory to the Required
Holders and, in any such case, the Notes shall have the benefit, to the fullest
extent that, and with such priority as, the holders of the Notes may be entitled
under applicable law, of an equitable Lien on such property), except:

(a) Liens for taxes, assessments or other governmental charges that are not yet
due and payable or the payment of which is not at the time required by
Section 9.4;

(b) any attachment or judgment Lien, unless the judgment it secures shall not,
within 60 days after the entry thereof, have been discharged or execution
thereof stayed pending appeal, or shall not have been discharged within 60 days
after the expiration of any such stay;

(c) Liens incidental to the conduct of business or the ownership of properties
and assets (including landlords’, carriers’, warehousemen’s, mechanics’,
materialmen’s and other similar Liens for sums not yet due and payable) and
Liens to secure the performance of bids, tenders, leases, or trade contracts, or
to secure statutory obligations (including obligations under workers
compensation, unemployment insurance and other social security legislation),
surety or appeal bonds or other Liens incurred in the ordinary course of
business and not in connection with the borrowing of money;

(d) leases or subleases granted to others, easements, rights-of-way,
restrictions and other similar charges or encumbrances, in each case incidental
to the ownership of property or assets or the ordinary conduct of the business
of the Company or any of its Restricted Subsidiaries, on Liens incidental to
minor survey exceptions and the like, provided that such Liens do not, in the
aggregate, materially detract from the value of such property;

(e) Liens securing Debt of a Restricted Subsidiary to the Company or to a
Restricted Subsidiary;

(f) Liens existing as of the Closing Date and reflected in Schedule 10.5;

(g) Liens incurred after the Closing Date given to secure the payment of the
purchase price incurred in connection with the acquisition, construction or
improvement of property (other than accounts receivable or inventory) useful and
intended to be used in carrying on the business of the Company or a Restricted
Subsidiary, including Liens existing on such property at the time of acquisition
or construction thereof or Liens incurred within 365 days of such acquisition or
completion of such construction or improvement, provided that (i) the Lien shall
attach solely to the property acquired, purchased, constructed or improved;
(ii) at the time of acquisition, construction or improvement of such property
(or, in the case of any Lien incurred within three hundred

 

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sixty-five (365) days of such acquisition or completion of such construction or
improvement, at the time of the incurrence of the Debt secured by such Lien),
the aggregate amount remaining unpaid on all Debt secured by Liens on such
property, whether or not assumed by the Company or a Restricted Subsidiary,
shall not exceed the lesser of (y) the cost of such acquisition, construction or
improvement or (z) the Fair Market Value of such property (as determined in good
faith by one or more officers of the Company to whom authority to enter into the
transaction has been delegated by the board of directors of the Company); and
(iii) at the time of such incurrence and after giving effect thereto, no Default
or Event of Default would exist;

(h) any Lien incurred after the Closing Date that exists on property of a Person
immediately prior to its being consolidated with or merged into the Company or a
Restricted Subsidiary or its becoming a Restricted Subsidiary, or any Lien
incurred after the Closing Date that exists on any property acquired by the
Company or any Restricted Subsidiary at the time such property is so acquired
(whether or not the Debt secured thereby shall have been assumed), provided that
(i) no such Lien shall have been created or assumed in contemplation of such
consolidation or merger or such Person’s becoming a Restricted Subsidiary or
such acquisition of property, (ii) each such Lien shall extend solely to the
item or items of property so acquired and, if required by the terms of the
instrument originally creating such Lien, other property which is an improvement
to or is acquired for specific use in connection with such acquired property,
and (iii) at the time of such incurrence and after giving effect thereto, no
Default or Event of Default would exist;

(i) any extensions, renewals or replacements of any Lien permitted by the
preceding subparagraphs (e), (f), (g) and (h) of this Section 10.5, provided
that (i) no additional property shall be encumbered by such Liens, (ii) the
unpaid principal amount of the Debt or other obligations secured thereby shall
not be increased on or after the date of any extension, renewal or replacement,
and (iii) at such time and immediately after giving effect thereto, no Default
or Event of Default shall have occurred and be continuing;

(j) Liens securing Priority Debt of the Company or any Restricted Subsidiary,
provided that the aggregate principal amount of any such Priority Debt shall be
permitted by Section 10.4.

 

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Section 10.6. Sales of Assets. The Company will not, and will not permit any
Restricted Subsidiary to, sell, lease or otherwise dispose of any substantial
part (as defined below) of the assets of the Company and its Restricted
Subsidiaries; provided, however, that the Company or any Restricted Subsidiary
may sell, lease or otherwise dispose of assets constituting a substantial part
of the assets of the Company and its Restricted Subsidiaries if such assets are
sold in an arms length transaction and, at such time and after giving effect
thereto, no Default or Event of Default shall have occurred and be continuing
and an amount equal to the net proceeds received from such sale, lease or other
disposition (but only with respect to that portion of such assets that exceeds
the definition of “substantial part” set forth below) shall be used within 365
days of such sale, lease or disposition, in any combination:

(1) to acquire productive assets used or useful in carrying on the business of
the Company and its Restricted Subsidiaries and having a value at least equal to
the value of such assets sold, leased or otherwise disposed of; and/or

(2) to prepay or retire Senior Debt of the Company and/or its Restricted
Subsidiaries, provided that (i) the Company shall offer to prepay each
outstanding Note ratably with all such Senior Debt prepaid or retired, and
(ii) any such prepayment of the Notes shall be made in accordance with the terms
of Section 8.2 (but without the payment of any Make-Whole Amount or any other
premium).

As used in this Section 10.6, a sale, lease or other disposition of assets shall
be deemed to be a “substantial part” of the assets of the Company and its
Restricted Subsidiaries if the book value of such assets, when added to the book
value of all other assets sold, leased or otherwise disposed of by the Company
and its Restricted Subsidiaries during the period of 12 consecutive months
ending on the date of such sale, lease or other disposition, exceeds 10% of the
book value of Consolidated Total Assets, determined as of the end of the fiscal
quarter immediately preceding such sale, lease or other disposition; provided
that there shall be excluded from any determination of a “substantial part” any
(i) sale or disposition of assets in the ordinary course of business of the
Company and its Restricted Subsidiaries, (ii) any transfer of assets from the
Company to any Restricted Subsidiary or from any Restricted Subsidiary to the
Company or a Restricted Subsidiary, and (iii) any sale or transfer of property
acquired by the Company or any Restricted Subsidiary after the date of this
Agreement to any Person within 365 days following the acquisition or
construction of such property by the Company or any Restricted Subsidiary if the
Company or a Restricted Subsidiary shall concurrently with such sale or
transfer, lease such property, as lessee and (iv) the sale by the Company or any
Restricted Subsidiary of accounts receivable owing to it by account debtors
which customarily pay on terms longer than general market practices pursuant to
a receivables purchase agreement or other customary documentation (any such
agreement a “Receivables Purchase Agreement”) with JPMorgan Chase Bank, National
Association or another institution (any such institution a “Receivables Facility
Counterpart Counterparty”) whereby the Company or such Restricted Subsidiary
promptly receive cash proceeds from such Receivables Facility Counterparty equal
to the face value of such receivables net of a commercially reasonable and
customary discount rate; provided further that (i) any such sale is a true sale
with recourse to the Company or such Restricted Subsidiary limited to breach of
representation, warranty or covenant by the Company or such Restricted
Subsidiary with respect to the sold receivables; (ii) such Receivables Purchase
Agreement is on customary terms for such arrangement; and (iii) no Default or
Event of Default exists or would result from the sale of such receivables.

Section 10.7. Merger and Consolidation. The Company will not, and will not
permit any of its Restricted Subsidiaries to, consolidate with or merge with any
other Person or convey, transfer or lease substantially all of its assets in a
single transaction or series of transactions to any Person; provided that:

(1) any Restricted Subsidiary of the Company may (x) consolidate with or merge
with, or convey, transfer or lease substantially all of its assets in a single
transaction or series of transactions to, (i) the Company or a Restricted
Subsidiary so long

 

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as in any merger or consolidation involving the Company, the Company shall be
the surviving or continuing corporation or (ii) any other Person so long as the
survivor is the Restricted Subsidiary, or (y) convey, transfer or lease all of
its assets in compliance with the provisions of Section 10.6; and

(2) the foregoing restriction does not apply to the consolidation or merger of
the Company with, or the conveyance, transfer or lease of substantially all of
the assets of the Company in a single transaction or series of transactions to,
any Person so long as:

(a) the successor formed by such consolidation or the survivor of such merger or
the Person that acquires by conveyance, transfer or lease substantially all of
the assets of the Company as an entirety, as the case may be (the “Successor
Corporation”), shall be a solvent entity organized and existing under the laws
of the United States of America, any State thereof or the District of Columbia;

(b) if the Company is not the Successor Corporation, such Successor Corporation
shall have executed and delivered to each holder of Notes its assumption of the
due and punctual performance and observance of each covenant and condition of
this Agreement and the Notes (pursuant to such agreements and instruments as
shall be reasonably satisfactory to the Required Holders), and the Successor
Corporation shall have caused to be delivered to each holder of Notes (A) an
opinion of nationally recognized independent counsel, to the effect that all
agreements or instruments effecting such assumption are enforceable in
accordance with their terms and (B) an acknowledgment from each Subsidiary
Guarantor that the Subsidiary Guaranty continues in full force and effect; and

(c) immediately after giving effect to such transaction no Default or Event of
Default would exist.

Section 10.8. Restrictions on Investments. The Company will not and will not
permit any Restricted Subsidiary to make any Investment, or commit to make any
Investment, in any Unrestricted Subsidiaries after March 15, 2015, if,
immediately after giving effect to any such proposed Investment, the aggregate
amount of such proposed Investment together with all prior Investments in
Unrestricted Subsidiaries made after March 15, 2015 pursuant to this
Section 10.8 (all such Investments to be taken at the cost thereof at the time
of making such Investment without allowance for any subsequent write-offs or
appreciation or depreciation thereof, but less any amount repaid or recovered on
account of capital or principal after March 15, 2015) shall exceed 30% of
Consolidated Tangible Net Worth as of the date of such proposed Investment.

Section 10.9. Transactions with Affiliates. The Company will not and will not
permit any Restricted Subsidiary to enter into directly or indirectly any
Material transaction or Material group of related transactions (including
without limitation the purchase, lease, sale or exchange of properties of any
kind or the rendering of any service) with any Affiliate (other than the Company
or another Restricted Subsidiary), except in the ordinary course and upon fair
and reasonable terms that are not materially less favorable to the Company or
such Restricted Subsidiary, taken as a whole, than would be obtainable in a
comparable arm’s-length transaction with a Person not an Affiliate.

 

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Section 10.10. Terrorism Sanctions Regulations. The Company will not and will
not permit any Controlled Entity (a) to become (including by virtue of being
owned or controlled by a Blocked Person), own or control a Blocked Person or any
Person that is the target of sanctions imposed by the United Nations or by the
European Union, or (b) directly or indirectly to have any investment in or
engage in any dealing or transaction (including, without limitation, any
investment, dealing or transaction involving the proceeds of the Notes) with any
Person if such investment, dealing or transaction (i) would cause any holder to
be in violation of any law or regulation applicable to such holder, or (ii) is
prohibited by or subject to sanctions under any U.S. Economic Sanctions, or
(c) to engage, nor shall any Affiliate of either engage, in any activity that
could subject such Person or any holder to sanctions under CISADA or any similar
law or regulation with respect to Iran or any other country that is subject to
U.S. Economic Sanctions.

Section 10.11. Lien Restrictions. Notwithstanding anything to the contrary
contained in Section 10.5, no Liens permitted pursuant to the terms of
Section 10.5 may secure any obligations under the Bank Credit Agreement or any
private placement document pursuant to which the Company has issued senior
notes, either existing as of the Closing Date or in the future unless the
Company makes, or causes to be made, effective a provision whereby the Notes
will be equally and ratably secured with any and all other obligations thereby
secured, such security to be pursuant to an agreement reasonably satisfactory to
the Required Holders.

SECTION 11. EVENTS OF DEFAULT.

An “Event of Default” shall exist if any of the following conditions or events
shall occur and be continuing:

(a) the Company defaults in the payment of any principal or Make-Whole Amount,
if any, on any Note when the same becomes due and payable, whether at maturity
or at a date fixed for prepayment or by declaration or otherwise; or

(b) the Company defaults in the payment of any interest on any Note for more
than five Business Days after the same becomes due and payable; or

(c) the Company defaults in the performance of or compliance with any term
contained in Section 10 or any Subsidiary Guarantor defaults in the performance
of or compliance with any term of the Subsidiary Guaranty beyond any period of
grace or cure period provided with respect thereto; or

(d) the Company defaults in the performance of or compliance with any term
contained herein (other than those referred to in paragraphs (a), (b) and (c) of
this Section 11) and such default is not remedied within 30 days after the
earlier of (i) a Responsible Officer obtaining actual knowledge of such default
or (ii) the Company receiving written notice of such default from any holder of
a Note (any such written notice to be identified as a “notice of default” and to
refer specifically to this paragraph (d) of Section 11); or

 

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(e) any Subsidiary Guaranty ceases to be a legally valid, binding and
enforceable obligation or contract of a Subsidiary Guarantor (other than upon a
release of any Subsidiary Guarantor from a Subsidiary Guaranty in accordance
with the terms of Section 9.8(b) hereof), or any Subsidiary Guarantor or any
party by, through or on account of any such Person, challenges the validity,
binding nature or enforceability of any such Subsidiary Guaranty; or

(f) any representation or warranty made in writing by or on behalf of the
Company or any Subsidiary Guarantor in this Agreement or any Subsidiary Guaranty
or by any officer of the Company or any Subsidiary Guarantor in any writing
furnished in connection with the transactions contemplated hereby or by any
Subsidiary Guaranty proves to have been false or incorrect in any material
respect on the date as of which made; or

(g) (i) the Company or any Restricted Subsidiary is in default (as principal or
as guarantor or other surety) in the payment of any principal of or premium or
make-whole amount or interest (in the payment amount of at least $100,000) on
any Debt other than the Notes that is outstanding in an aggregate principal
amount of at least $20,000,000 beyond any period of grace provided with respect
thereto, or (ii) the Company or any Restricted Subsidiary is in default in the
performance of or compliance with any term of any instrument, mortgage,
indenture or other agreement relating to any Debt other than the Notes in an
aggregate principal amount of at least $20,000,000 or any other condition
exists, and as a consequence of such default or condition such Debt has become,
or has been declared, due and payable or one or more Persons has the right to
declare such Debt to be due and payable before its stated maturity or before its
regularly scheduled dates of payment, or (iii) as a consequence of the
occurrence or continuation of any event or condition (other than the passage of
time or the right of the holder of Debt to convert such Debt into equity
interests), the Company or any Restricted Subsidiary has become obligated to
purchase or repay Debt other than the Notes before its regular maturity or
before its regularly scheduled dates of payment in an aggregate outstanding
principal amount of at least $20,000,000 or one or more Persons have the right
to require the Company or any Restricted Subsidiary to purchase or repay such
Debt; or

(h) the Company, any Material Subsidiary or any Subsidiary Guarantor (i) is
generally not paying, or admits in writing its inability to pay, its debts as
they become due, (ii) files, or consents by answer or otherwise to the filing
against it of, a petition for relief or reorganization or arrangement or any
other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of any
jurisdiction, (iii) makes an assignment for the benefit of its creditors,
(iv) consents to the appointment of a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any of the
foregoing; or

 

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(i) a court or governmental authority of competent jurisdiction enters an order
appointing, without consent by the Company, any of its Material Subsidiaries or
any Subsidiary Guarantor, a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for relief
or reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Company, any of its
Material Subsidiaries or any Subsidiary Guarantor, or any such petition shall be
filed against the Company, any of its Material Subsidiaries or any Subsidiary
Guarantor and such petition shall not be dismissed within 60 days; or

(j) a final judgment or judgments at any one time outstanding for the payment of
money aggregating in excess of $20,000,000 are rendered against one or more of
the Company, its Restricted Subsidiaries or any Subsidiary Guarantor and which
judgments are not, within 60 days after entry thereof, bonded, discharged or
stayed pending appeal, or are not discharged within 60 days after the expiration
of such stay; or

(j) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA
or the Code for any plan year or part thereof or a waiver of such standards or
extension of any amortization period is sought or granted under Section 412 of
the Code, (ii) a notice of intent to terminate any Plan shall have been or is
reasonably expected to be filed with the PBGC or the PBGC shall have instituted
proceedings under ERISA section 4042 to terminate or appoint a trustee to
administer any Plan or the PBGC shall have notified the Company or any ERISA
Affiliate that a Plan may become a subject of any such proceedings, (iii) the
aggregate “amount of unfunded benefit liabilities” (within the meaning of
section 4001(a)(18) of ERISA) under all Plans, determined in accordance with
Title IV of ERISA, shall exceed an amount that could reasonably be expected to
have a Material Adverse Effect, (iv) the Company or any ERISA Affiliate shall
have incurred or is reasonably expected to incur any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, (v) the Company or any ERISA Affiliate
withdraws from any Multiemployer Plan, or (vi) the Company or any Subsidiary
establishes or amends any employee welfare benefit plan that provides
post-employment welfare benefits in a manner that would increase the liability
of the Company or any Subsidiary thereunder; and any such event or events
described in clauses (i) through (vi) above, either individually or together
with any other such event or events, could reasonably be expected to have a
Material Adverse Effect. As used in this Section 11(j), the terms “employee
benefit plan” and “employee welfare benefit plan” shall have the respective
meanings assigned to such terms in section 3 of ERISA; or

As used in Section 11(j), the terms “employee benefit plan” and “employee
welfare benefit plan” shall have the respective meanings assigned to such terms
in Section 3 of ERISA.

 

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SECTION 12. REMEDIES ON DEFAULT, ETC.

Section 12.1. Acceleration. (a) If an Event of Default with respect to the
Company described in paragraph (h) or (i) of Section 11 (other than an Event of
Default described in clause (i) of paragraph (h) or described in clause (vi) of
paragraph (h) by virtue of the fact that such clause encompasses clause (i) of
paragraph (h)) has occurred, all the Notes then outstanding shall automatically
become immediately due and payable.

(b) If any other Event of Default has occurred and is continuing, any holder or
holders of more than 50% in aggregate principal amount of the Notes at the time
outstanding may at any time at its or their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately due and
payable.

(c) If any Event of Default described in paragraph (a) or (b) of Section 11 has
occurred and is continuing with respect to any Notes, any holder or holders of
Notes at the time outstanding affected by such Event of Default may at any time,
at its or their option, by notice or notices to the Company, declare all the
Notes held by such holder or holders to be immediately due and payable.

Upon any Note’s becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Note will forthwith mature and the entire
unpaid principal amount of such Note, plus (i) all accrued and unpaid interest
thereon (including, but not limited to, interest accrued thereon at the Default
Rate) and (ii) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.

Section 12.2. Other Remedies. If any Default or Event of Default has occurred
and is continuing, and irrespective of whether any Notes have become or have
been declared immediately due and payable under Section 12.1, the holder of any
Note at the time outstanding may proceed to protect and enforce the rights of
such holder by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in any
Note or Subsidiary Guaranty, or for an injunction against a violation of any of
the terms hereof or thereof, or in aid of the exercise of any power granted
hereby or thereby or by law or otherwise.

Section 12.3. Rescission. At any time after the Notes have been declared due and
payable pursuant to clause (b) or (c) of Section 12.1, the holders of more than
50% in aggregate principal amount of the Notes then outstanding, by written
notice to the Company, may rescind and annul any such declaration and its
consequences if (a) the Company has paid all overdue interest on the Notes, all
principal of and Make-Whole Amount on any Notes that are due and payable and are

 

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unpaid other than by reason of such declaration, and all interest on such
overdue principal and Make-Whole Amount and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (b) neither the Company nor any other Person shall have paid any amounts
which have become due solely by reason of such declaration, (c) all Events of
Default and Defaults, other than non-payment of amounts that have become due
solely by reason of such declaration, have been cured or have been waived
pursuant to Section 17, and (d) no judgment or decree has been entered for the
payment of any monies due pursuant hereto or to any Notes. No rescission and
annulment under this Section 12.3 will extend to or affect any subsequent Event
of Default or Default or impair any right consequent thereon.

Section 12.4. No Waivers or Election of Remedies, Expenses, Etc. No course of
dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such holder’s rights, powers or remedies. No right, power or remedy conferred by
this Agreement, any Subsidiary Guaranty or by any Note upon any holder thereof
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under Section 15, the
Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys’ fees, expenses and disbursements.

SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

Section 13.1. Registration of Notes. The Company shall keep at its principal
executive office a register for the registration and registration of transfers
of Notes. The name and address of each holder of one or more Notes, each
transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. If any holder of one or more Notes
is a nominee, then (a) the name and address of the beneficial owner of such Note
or Notes shall also be registered in such register as an owner and holder
thereof and (b) at any such beneficial owner’s option, either such beneficial
owner or its nominee may execute any amendment, waiver or consent pursuant to
this Agreement. Prior to due presentment for registration of transfer, the
Person in whose name any Note shall be registered shall be deemed and treated as
the owner and holder thereof for all purposes hereof, and the Company shall not
be affected by any notice or knowledge to the contrary. The Company shall give
to any holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.

Section 13.2. Transfer and Exchange of Notes. Upon surrender of any Note to the
Company at the address and to the attention of the designated officer (all as
specified in Section 18(iii)), for registration of transfer or exchange (and in
the case of a surrender for registration of transfer accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
such holder’s attorney duly authorized in writing and accompanied by the
relevant name, address and other information for notices of each transferee of
such Note or part thereof), within ten Business Days thereafter, the Company
shall execute and deliver, at the Company’s expense (except as provided below),
one or more new Notes (as requested by the holder thereof) in exchange therefor,
in an aggregate principal amount equal to

 

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the unpaid principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be substantially in
the form of the Note originally issued hereunder. Each such new Note shall be
dated and bear interest from the date to which interest shall have been paid on
the surrendered Note or dated the date of the surrendered Note if no interest
shall have been paid thereon. The Company may require payment of a sum
sufficient to cover any stamp tax or governmental charge imposed in respect of
any such transfer of Notes. Notes shall not be transferred in denominations of
less than $100,000, provided that if necessary to enable the registration of
transfer by a holder of its entire holding of Notes, one Note may be in a
denomination of less than $100,000. Any transferee, by its acceptance of a Note
registered in its name (or the name of its nominee), shall be deemed to have
made the representation set forth in Section 6.3, provided, that in lieu thereof
such holder may (in reliance upon information provided by the Company, which
shall not be unreasonably withheld) make a representation to the effect that the
purchase by any holder of any Note will not constitute a non-exempt prohibited
transaction under section 406(a) of ERISA.

The Notes have not been registered under the Securities Act or under the
securities laws of any state and may not be transferred or resold unless
registered under the Securities Act and all applicable state securities laws or
unless an exemption from the requirement for such registration is available.

Section 13.3. Replacement of Notes. Upon receipt by the Company at the address
and to the attention of the designated officer (all as specified in
Section 18(iii)) of evidence reasonably satisfactory to it of the ownership of
and the loss, theft, destruction or mutilation of any Note (which evidence shall
be, in the case of an Institutional Investor, notice from such Institutional
Investor of such ownership and such loss, theft, destruction or mutilation), and

(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original Purchaser or another holder of a Note with a minimum net worth
of at least $50,000,000 or a Qualified Institutional Buyer, such Person’s own
unsecured agreement of indemnity shall be deemed to be satisfactory), or

(b) in the case of mutilation, upon surrender and cancellation thereof,

the Company at its own expense shall execute and deliver not more than ten
Business Days following satisfaction of such conditions, in lieu thereof, a new
Note dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.

Section 13.4 Prohibition on Transfer to a Competitor. Each Purchaser agrees
that, prior to the existence of a Default or Event of Default, it will not sell,
assign or otherwise transfer any Note or portion thereof to a Competitor or
Competitor Affiliate. As used herein “Competitor” means any Person which is
primarily engaged in the lines of business of the Company and its Restricted
Subsidiaries as described in the Memorandum or as changed from time to time.
“Competitor Affiliate” means, with respect to any Competitor, (a) any Person at
the time directly

 

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or indirectly controlling, controlled by or under common control with such
Competitor, (b) any other Person of which such Competitor at the time owns 50%
or more on a consolidated basis of the equity interest of such Person, and
(c) any other Person which at the time owns 50% or more of any class of the
capital stock or other equity interest of such Competitor, provided that:
(i) the provision of investment advisory services by a Person to an employee
benefit plan which is owned or controlled by a Person which would otherwise be a
Competitor or Competitor Affiliate shall not of itself cause the Person
providing such services to be deemed a Competitor or Competitor Affiliate; and
(ii) in no event shall an Institutional Investor be deemed a Competitor or
Competitor Affiliate.

SECTION 14. PAYMENTS ON NOTES.

Section 14.1. Place of Payment. Subject to Section 14.2, payments of principal,
Make-Whole Amount and interest becoming due and payable on the Notes shall be
made in New York, New York at the principal office of Bank of America, N.A. in
such jurisdiction. The Company may at any time, by notice to each holder of a
Note, change the place of payment of the Notes so long as such place of payment
shall be either the principal office of the Company in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction.

Section 14.2. Home Office Payment. So long as any Purchaser or its nominee shall
be the holder of any Note, and notwithstanding anything contained in
Section 14.1 or in such Note to the contrary, the Company will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, interest and
all other amounts becoming due hereunder by the method and at the address
specified for such purpose below such Purchaser’s name in Schedule A, or by such
other method or at such other address as such Purchaser shall have from time to
time specified to the Company in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation thereon,
except that upon written request of the Company made concurrently with or
reasonably promptly after payment or prepayment in full of any Note, such
Purchaser shall surrender such Note for cancellation, reasonably promptly after
any such request, to the Company at its principal executive office or at the
place of payment most recently designated by the Company pursuant to
Section 14.1. Prior to any sale or other disposition of any Note held by a
Purchaser or its nominee, such Purchaser will, at its election, either endorse
thereon the amount of principal paid thereon and the last date to which interest
has been paid thereon or surrender such Note to the Company in exchange for a
new Note or Notes pursuant to Section 13.2. The Company will afford the benefits
of this Section 14.2 to any Institutional Investor that is the direct or
indirect transferee of any Note purchased by a Purchaser under this Agreement
and that has made the same agreement relating to such Note as the Purchasers
have made in this Section 14.2.

SECTION 15. EXPENSES, ETC.

Section 15.1. Transaction Expenses. Whether or not the transactions contemplated
hereby are consummated, the Company will pay all costs and expenses (including
reasonable attorneys’ fees of a special counsel and, if reasonably required by
the Required Holders, local or other counsel) incurred by the Purchasers and
each other holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in

 

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respect of this Agreement, any Subsidiary Guaranty or the Notes (whether or not
such amendment, waiver or consent becomes effective) within 15 Business Days
after the Company’s receipt of any invoice therefor, including, without
limitation: (a) the costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this
Agreement, any Subsidiary Guaranty or the Notes or in responding to any subpoena
or other legal process or informal investigative demand issued in connection
with this Agreement, any Subsidiary Guaranty or the Notes, or by reason of being
a holder of any Note, (b) the costs and expenses, including financial advisors’
fees, incurred in connection with the insolvency or bankruptcy of the Company or
any Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes and any Subsidiary Guaranty
and (c) the costs and expenses incurred in connection with the initial filing of
this Agreement and all related documents and financial information with the SVO
provided, that such costs and expenses under this clause (c) shall not exceed
$3,500. The Company will pay, and will save each Purchaser and each other holder
of a Note harmless from, all claims in respect of any fees, costs or expenses,
if any, of brokers and finders (other than those, if any, retained by a
Purchaser or other holder in connection with its purchase of the Notes).

Section 15.2. Survival. The obligations of the Company under this Section 15
will survive the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement, any Subsidiary Guaranty or the Notes,
and the termination of this Agreement.

SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

All representations and warranties contained herein shall survive the execution
and delivery of this Agreement and the Notes, the purchase or transfer by any
Purchaser of any Note or portion thereof or interest therein and the payment of
any Note, and may be relied upon by any subsequent holder of a Note, regardless
of any investigation made at any time by or on behalf of such Purchaser or any
other holder of a Note. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant to this Agreement
shall be deemed representations and warranties of the Company under this
Agreement. Subject to the preceding sentence, this Agreement, the Notes and any
Subsidiary Guaranties embody the entire agreement and understanding between each
Purchaser and the Company and supersede all prior agreements and understandings
relating to the subject matter hereof.

SECTION 17. AMENDMENT AND WAIVER.

Section 17.1. Requirements. This Agreement and the Notes may be amended, and the
observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), only with the written consent of the Company
and the Required Holders, except that (a) no amendment or waiver of any of
Sections 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it is used
therein), will be effective as to any Purchaser unless consented to by such
Purchaser in writing; and (b) no amendment or waiver may, without the written
consent of each Purchaser and the holder of each Note at the time outstanding,
(i) subject to Section 12 relating to acceleration or rescission, change the
amount or time of any prepayment or payment of

 

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principal of, or reduce the rate or change the time of payment or method of
computation of (x) interest on the Notes or (y) the Make-Whole Amount,
(ii) change the percentage of the principal amount of the Notes the holders of
which are required to consent to any amendment or waiver, or (iii) amend any of
Sections 8 (except as set forth in the second sentence of Section 8.2), 11(a),
11(b), 12, 17 or 20.

Section 17.2. Solicitation of Holders of Notes.

(a) Solicitation. The Company will provide each holder of a Note with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes or any Subsidiary Guaranty. The Company will deliver
executed or true and correct copies of each amendment, waiver or consent
effected pursuant to this Section 17 or any Subsidiary Guaranty to each holder
of a Note promptly following the date on which it is executed and delivered by,
or receives the consent or approval of, the requisite holders of Notes.

(b) Payment. The Company will not directly or indirectly pay or cause to be paid
any remuneration, whether by way of supplemental or additional interest, fee or
otherwise, or grant any security or provide other credit support, to any holder
of a Note as consideration for or as an inducement to the entering into by such
holder of any waiver or amendment of any of the terms and provisions hereof or
of any Subsidiary Guaranty or any Note unless such remuneration is concurrently
paid, or security is concurrently granted or other credit support concurrently
provided, on the same terms, ratably to each holder of a Note even if such
holder did not consent to such waiver or amendment.

(c) Consent in Contemplation of Transfer. Any consent given pursuant to this
Section 17 or any Subsidiary Guaranty by a holder of a Note that has transferred
or has agreed to transfer its Note to the Company, any Subsidiary or any
Affiliate of the Company in connection with such consent shall be void and of no
force or effect except solely as to such holder, and any amendments effected or
waivers granted or to be effected or granted that would not have been or would
not be so effected or granted but for such consent (and the consents of all
other holders of Notes that were acquired under the same or similar conditions)
shall be void and of no force or effect except solely as to such holder.

Section 17.3. Binding Effect, etc. Any amendment or waiver consented to as
provided in this Section 17 or any Subsidiary Guaranty applies equally to all
holders of Notes and is binding upon them and upon each future holder of any
Note and upon the Company without regard to whether such Note has been marked to
indicate such amendment or waiver. No such amendment or waiver will extend to or
affect any obligation, covenant, agreement, Default or Event of Default not
expressly amended or waived or impair any right consequent thereon. No course of
dealing between the Company and any holder of a Note and no delay in exercising
any rights hereunder or under any Note or Subsidiary Guaranty shall operate as a
waiver of any rights of any holder of such Note.

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Section 17.4. Notes Held by Company, etc. Solely for the purpose of determining
whether the holders of the requisite percentage of the aggregate principal
amount of Notes then outstanding approved or consented to any amendment, waiver
or consent to be given under this Agreement, any Subsidiary Guaranty or the
Notes, or have directed the taking of any action provided herein or in any
Subsidiary Guaranty or the Notes to be taken upon the direction of the holders
of a specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.

SECTION 18. NOTICES.

Except to the extent otherwise provided in Section 7.4, all notices and
communications provided for hereunder shall be in writing and sent (a) by
telecopy if the sender on the same day sends a confirming copy of such notice by
an internationally recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail with return receipt requested (postage
prepaid), or (c) by an internationally recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:

(i) if to any Purchaser or its nominee, to such Purchaser or nominee at the
address specified for such communications in Schedule A, or at such other
address as such Purchaser or nominee shall have specified to the Company in
writing,

(ii) if to any other holder of any Note, to such holder at such address as such
other holder shall have specified to the Company in writing, or

(iii) if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of Chief Financial Officer, with a copy to the
General Counsel, or at such other address as the Company shall have specified to
the holder of each Note in writing.

Notices under this Section 18 will be deemed given only when actually received.

SECTION 19. REPRODUCTION OF DOCUMENTS.

This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by any Purchaser at the Closing (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to any Purchaser, may be
reproduced by such Purchaser by any photographic, photostatic, electronic,
digital, or other similar process and such Purchaser may destroy any original
document so reproduced. The Company agrees and stipulates that, to the extent
permitted by applicable law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such Purchaser in the regular course of business) and
any enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 19 shall not prohibit the
Company or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing evidence
to demonstrate the inaccuracy of any such reproduction.

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

SECTION 20. CONFIDENTIAL INFORMATION.

For the purposes of this Section 20, “Confidential Information” means
information delivered to any Purchaser by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by such
Purchaser as being confidential information of the Company or such Subsidiary,
provided that such term does not include information that (a) was publicly known
or otherwise known to such Purchaser prior to the time of such disclosure,
(b) subsequently becomes publicly known through no act or omission by such
Purchaser or any Person acting on such Purchaser’s behalf, (c) otherwise becomes
known to such Purchaser other than through disclosure by the Company or any
Subsidiary or (d) constitutes financial statements delivered to such Purchaser
under Section 7.1 that are otherwise publicly available. Each Purchaser will
maintain the confidentiality of such Confidential Information in accordance with
procedures adopted by such Purchaser in good faith to protect confidential
information of third parties delivered to such Purchaser, provided that such
Purchaser may deliver or disclose Confidential Information to (i) its directors,
officers, employees, agents, attorneys, trustees and affiliates (to the extent
such disclosure reasonably relates to the administration of the investment
represented by its Notes), (ii) its auditors, financial advisors and other
professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with this Section 20, (iii) any other
holder of any Note, (iv) any Institutional Investor to which it sells or offers
to sell such Note or any part thereof or any participation therein (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by this Section 20), (v) any Person from which it offers
to purchase any Security of the Company (if such Person has agreed in writing
prior to its receipt of such Confidential Information to be bound by this
Section 20), (vi) any federal or state regulatory authority having jurisdiction
over such Purchaser, (vii) the NAIC or the SVO or, in each case, any similar
organization, or any nationally recognized rating agency that requires access to
information about such Purchaser’s investment portfolio, or (viii) any other
Person to which such delivery or disclosure may be necessary or appropriate
(w) to effect compliance with any law, rule, regulation or order applicable to
such Purchaser, (x) in response to any subpoena or other legal process, (y) in
connection with any litigation to which such Purchaser is a party or (z) if an
Event of Default has occurred and is continuing, to the extent such Purchaser
may reasonably determine such delivery and disclosure to be necessary or
appropriate in the enforcement or for the protection of the rights and remedies
under such Purchaser’s Notes, this Agreement or any Subsidiary Guaranty. Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 20 as though it
were a party to this Agreement. On reasonable request by the Company in
connection with the delivery to any holder of a Note of information required to
be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying this Section 20.

 

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In the event that as a condition to receiving access to information relating to
the Company or its Subsidiaries in connection with the transactions contemplated
by or otherwise pursuant to this Agreement, any Purchaser or holder of a Note is
required to agree to a confidentiality undertaking (whether through IntraLinks,
another secure website, a secure virtual workspace or otherwise) which is
different from this Section 20, this Section 20 shall not be amended thereby
and, as between such Purchaser or such holder and the Company, this Section 20
shall supersede any such other confidentiality undertaking.

SECTION 21. SUBSTITUTION OF PURCHASER.

Each Purchaser shall have the right to substitute any one of its Affiliates or
another Purchaser or any one of such other Purchaser’s Affiliates (a “Substitute
Purchaser”) as the purchaser of the Notes that it has agreed to purchase
hereunder, by written notice to the Company, which notice shall be signed by
both such Purchaser and such Substitute Purchaser, shall contain such Substitute
Purchaser’s agreement to be bound by this Agreement and shall contain a
confirmation by such Substitute Purchaser of the accuracy with respect to it of
the representations set forth in Section 6. Upon receipt of such notice, any
reference to such Purchaser in this Agreement (other than in this Section 21),
shall be deemed to refer to such Substitute Purchaser in lieu of such original
Purchaser. In the event that such Substitute Purchaser is so substituted as a
Purchaser hereunder and such Substitute Purchaser thereafter transfers to such
original Purchaser all of the Notes then held by such Substitute Purchaser, upon
receipt by the Company of notice of such transfer, any reference to such
Substitute Purchaser as a “Purchaser” in this Agreement (other than in this
Section 21), shall no longer be deemed to refer to such Substitute Purchaser,
but shall refer to such original Purchaser, and such original Purchaser shall
again have all the rights of an original holder of the Notes under this
Agreement.

SECTION 22. MISCELLANEOUS.

Section 22.1. Successors and Assigns. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent holder of a Note) whether so expressed or
not.

Section 22.2. Payments Due on Non-Business Days. Anything in this Agreement or
the Notes to the contrary notwithstanding (but without limiting the requirement
in Section 8.2 that the notice of any optional prepayment specify a Business Day
as the date fixed for such prepayment), any payment of principal of or
Make-Whole Amount or interest on any Note that is due on a date other than a
Business Day shall be made on the next succeeding Business Day without including
the additional days elapsed in the computation of the interest payable on such
next succeeding Business Day; provided that if the maturity date of any Note is
a date other than a Business Day, the payment otherwise due on such maturity
date shall be made on the next succeeding Business Day and shall include the
additional days elapsed in the computation of interest payable on such next
succeeding Business Day.

Section 22.3. Accounting Terms. (a) All accounting terms used herein which are
not expressly defined in this Agreement have the meanings respectively given to
them in accordance

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

with GAAP. Except as otherwise specifically provided herein, (i) all
computations made pursuant to this Agreement shall be made in accordance with
GAAP, and (ii) all financial statements shall be prepared in accordance with
GAAP. For purposes of determining compliance with this Agreement (including,
without limitation, Section 9, Section 10 and the definition of “Debt”), any
election by the Company to measure any financial liability using fair value (as
permitted by Financial Accounting Standards Board Accounting Standards
Codification Topic No. 825-10-25 — Fair Value Option, International Accounting
Standard 39 — Financial Instruments: Recognition and Measurement or any similar
accounting standard) shall be disregarded and such determination shall be made
as if such election had not been made.

(b) Notwithstanding the foregoing provisions of Section 22.2(a), if at any time
any change in GAAP would require a lessee to capitalize its operating leases
under GAAP on the balance sheet of such lessee, the GAAP treatment of operating
leases on the date of the Closing shall continue to apply for purposes of this
Agreement and the calculation of the financial covenants under this Agreement.

Section 22.4. Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.

Section 22.5. Construction. Each covenant contained herein shall be construed
(absent express provision to the contrary) as being independent of each other
covenant contained herein, so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse compliance with
any other covenant. Where any provision herein refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person.

For the avoidance of doubt, all Schedules and Exhibits attached to this
Agreement shall be deemed to be a part hereof.

Section 22.6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.

Section 22.7. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
the State of New York excluding choice-of-law principles of the law of such
State that would permit the application of the laws of a jurisdiction other than
such State.

Section 22.8. Jurisdiction and Process; Waiver of Jury Trial. (a) The Company
irrevocably submits to the non-exclusive jurisdiction of any New York State or
federal court sitting in the Borough of Manhattan, The City of New York, over
any suit, action or proceeding arising out of or relating to this Agreement or
the Notes. To the fullest extent permitted by

 

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applicable law, the Company irrevocably waives and agrees not to assert, by way
of motion, as a defense or otherwise, any claim that it is not subject to the
jurisdiction of any such court, any objection that it may now or hereafter have
to the laying of the venue of any such suit, action or proceeding brought in any
such court and any claim that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum.

(b) The Company consents to process being served by or on behalf of any holder
of Notes in any suit, action or proceeding of the nature referred to in
Section 22.8(a) by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, return receipt
requested, to it at its address specified in Section 18 or at such other address
of which such holder shall then have been notified pursuant to said Section. The
Company agrees that such service upon receipt (i) shall be deemed in every
respect effective service of process upon it in any such suit, action or
proceeding and (ii) shall, to the fullest extent permitted by applicable law, be
taken and held to be valid personal service upon and personal delivery to it.
Notices hereunder shall be conclusively presumed received as evidenced by a
delivery receipt furnished by the United States Postal Service or any reputable
commercial delivery service.

(c) Nothing in this Section 22.8 shall affect the right of any holder of a Note
to serve process in any manner permitted by law, or limit any right that the
holders of any of the Notes may have to bring proceedings against the Company in
the courts of any appropriate jurisdiction or to enforce in any lawful manner a
judgment obtained in one jurisdiction in any other jurisdiction.

(d) THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR
WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN
CONNECTION HEREWITH OR THEREWITH.

*  *  *  *  *

 

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The execution hereof by the Purchasers shall constitute a contract among the
Company and the Purchasers for the uses and purposes hereinabove set forth. This
Agreement may be executed in any number of counterparts, each executed
counterpart constituting an original but all together only one agreement.

 

Very truly yours,

 

STEPAN COMPANY

By   Name: Scott D. Beamer Title: Vice President and Chief Financial Officer

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Accepted as of the date first written above.

 

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: Babson Capital Management LLC as
Investment Adviser By:   Name: Title:

 

CM LIFE INSURANCE COMPANY By: Babson Capital Management LLC as Investment
Adviser By:   Name: Title:

 

BANNER LIFE INSURANCE COMPANY By: Babson Capital Management LLC as Investment
Adviser By:   Name: Title:

 

MASSMUTUAL ASIA LIMITED By: Babson Capital Management LLC as Investment Adviser
By:   Name: Title:

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Accepted as of the date first written above.

 

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By:   Vice President

 

THE GIBRALTAR LIFE INSURANCE CO., LTD. By: Prudential Investment Management
Japan Co., Ltd. (as Investment Manager) By: Prudential Investment Management,
Inc. (as Sub-Adviser) By:   Vice President

 

FARMERS NEW WORLD LIFE INSURANCE COMPANY

PHYSICIANS MUTUAL INSURANCE COMPANY

FARMERS INSURANCE EXCHANGE

MID CENTURY INSURANCE COMPANY

By: Prudential Private Placement Investors, L.P. (as Investment Advisor) By:
Prudential Private Placement Investors, Inc. (as its General Partner) By:   Vice
President

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Accepted as of the date first written above.

 

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY By: Delaware Investment Advisers, a
series of Delaware Management Business Trust, Attorney in Fact By:   Name:
Title:

 

THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA By:   Name: Title:

 

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Accepted as of the date first written above.

 

CONNECTICUT GENERAL LIFE INSURANCE COMPANY By:

Cigna Investments, Inc.

(authorized agent)

By   Name: Title:

 

LIFE INSURANCE COMPANY OF NORTH AMERICA By:

Cigna Investments, Inc.

(authorized agent)

By   Name: Title:

 

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INFORMATION RELATING TO PURCHASERS

 

NAME OF AND ADDRESS

OF PURCHASER

PRINCIPAL AMOUNT OF

NOTES TO BE PURCHASED

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY

c/o Babson Capital Management LLC

1500 Main Street — Suite 2200

PO Box 15189

Springfield, MA 01115-5189

Attn: Securities Investment Division

$22,700,000

Payments

All payments on account of the Note shall be made by crediting in the form of
bank wire transfer of Federal or other immediately available funds, (identifying
each payment as “Stepan Company 3.95% Senior Notes, due July 10, 2027,
PPN 858586 J*2” interest and principal), to:

MassMutual

Citibank

New York, New York

ABA # 021000089

Acct # 30510685

RE: Description of security, cusip, principal and interest split

With advice of payment to the Treasury Operations Liquidity Management
Department at Massachusetts Mutual Life Insurance Company at
mmincometeam@massmutual.com or (413) 226-4295 (facsimile).

Notices

 

Send Communications and Notices to:

 

Massachusetts Mutual Life Insurance Company

c/o Babson Capital Management LLC

1500 Main Street, Suite 2200

PO Box 15189

Springfield, MA 01115-5189

Send Notices on Payments to:

 

Massachusetts Mutual Life Insurance Company

1295 State Street

Treasury Operations Liquidity Management

Springfield, MA 01111

Attn: Janelle Tarantino

 

With a copy to:

 

Massachusetts Mutual Life Insurance Company

c/o Babson Capital Management LLC

1500 Main Street — Suite 2200

PO Box 15189

Springfield, MA 01115

 

SCHEDULE A

(to Note Purchase Agreement)

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Electronic delivery of financials and other information to:

Massachusetts Mutual Life Insurance Company

c/o Babson Capital Management LLC

1500 Main Street — Suite 2200

Springfield, MA 01115

With email notification to:

1. privateplacements@babsoncapital.com

2. tpshea@babsoncapital.com

Physical Delivery of Notes

All securities should be registered to Massachusetts Mutual Life Insurance
Company and sent via overnight mail to:

Steven Katz, Counsel

Babson Capital Management LLC

1500 Main Street, Suite 2800

Springfield, MA 01115-5189

Telephone: 413-226-1059

Facsimile: 413-226-2059

E-mail: skatz@babsoncapital.com

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 04-1590850

 

A-2

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

NAME OF AND ADDRESS

OF PURCHASER

PRINCIPAL AMOUNT OF

NOTES TO BE PURCHASED

BANNER LIFE INSURANCE COMPANY

c/o Babson Capital Management LLC

1500 Main Street — Suite 2200

PO Box 15189

Springfield, MA 01115-5189

Attn: Securities Investment Division

$5,000,000

Payments

All payments on account of the Note shall be made by crediting in the form of
bank wire transfer of Federal or other immediately available funds, (identifying
each payment as “Stepan Company 3.95% Senior Notes, due July 10, 2027,
PPN 858586 J*2” interest and principal), to:

BANNER LIFE INSURANCE COMPANY

The Bank of New York/Mellon

New York, New York

ABA # 021000018

Acct Name: Banner Life Insurance Company

Acct # GLA 111566

Attention: P&I Department

RE: Description of security, cusip, principal and interest split

Notices

 

Send Communications and Notices, including notices on payments, to: Electronic
Delivery of Financials and other information to:

Banner Life Insurance Company

c/o Babson Capital Management LLC

1500 Main Street — Suite 2200

PO Box 15189

Springfield, MA 01115-5189

Banner Life Insurance Company

c/o Babson Capital Management LLC

1500 Main Street — Suite 2200

PO Box 15189

Springfield, MA 01115-5189

 

With notification to:

 

1. privateplacements@babsoncapital.com

 

2. tpshea@babsoncapital.com

 

A-3

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Physical Delivery of Notes

All securities should be registered to Hare & Co., LLC and sent via overnight
mail to:

Bank of New York

Depository ineligible and physical issues:

The Bank of New York

One Wall Street — 3rd Floor/Window A

New York, NY 10286

For account: U.S. Bank N.A. #117612

With a copy to:

Steven Katz, Counsel

Babson Capital Management LLC

1500 Main Street, Suite 2800

Springfield, MA 01115-5189

Telephone: 413-226-1059

Facsimile: 413-226-2059

E-mail: skatz@babsoncapital.com

Name of Nominee in which Notes are to be issued: Hare & Co., LLC

Taxpayer I.D. Number: 52-1236145

 

A-4

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

 

NAME OF AND ADDRESS

OF PURCHASER

PRINCIPAL AMOUNT OF

NOTES TO BE PURCHASED

C.M. LIFE INSURANCE COMPANY

c/o Babson Capital Management LLC

1500 Main Street — Suite 2200

PO Box 15189

Springfield, MA 01115-5189

Attn: Securities Investment Division

$1,300,000

Payments

All payments on account of the Note shall be made by crediting in the form of
bank wire transfer of Federal or other immediately available funds, (identifying
each payment as “Stepan Company 3.95% Senior Notes, due July 10, 2027,
PPN 858586 J*2” interest and principal), to:

JP Morgan Chase Bank

New York, NY

ABA # 021000021

Account Name: CM Life Insurance Company

Account Number: 771061371

RE: Description of security, cusip, principal and interest split

With advice of payment to the Treasury Operations Liquidity Management
Department at Massachusetts Mutual Life Insurance Company at
mmincometeam@massmutual.com or (413) 226-4295 (facsimile).

Notices

 

Send Communications and Notices to

 

C.M. Life Insurance Company

c/o Babson Capital Management LLC

1500 Main Street — Suite 2200

PO Box 15189

Springfield, MA 01115-5189

Send Notices on Payments to

 

C.M. Life Insurance Company

Treasury Operations Liquidity Management

1295 State Street

Springfield, MA 01111

Attn: Janelle Tarantino

Electronic Delivery of Financials and other information to: With a copy to:

C.M. Life Insurance Company

c/o Babson Capital Management LLC

1500 Main Street — Suite 2200

PO Box 15189

Springfield, MA 01115-5189

C.M. Life Insurance Company

c/o Babson Capital Management LLC

1500 Main Street — Suite 2200

PO Box 15189

Springfield, MA 01115

 

A-5

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

With email notification to:

1. privateplacements@babsoncapital.com

2. tpshea@babsoncapital.com

Physical Delivery of Notes

All securities should be registered to C.M. Life Insurance Company and sent via
overnight mail to:

Steven Katz, Counsel

Babson Capital Management LLC

1500 Main Street, Suite 2800

Springfield, MA 01115-5189

Telephone: 413-226-1059

Facsimile: 413-226-2059

E-mail: skatz@babsoncapital.com

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 06-1041383

 

A-6

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

 

NAME OF AND ADDRESS

OF PURCHASER

PRINCIPAL AMOUNT OF

NOTES TO BE PURCHASED

MASSMUTUAL ASIA LIMITED COMPANY

c/o Babson Capital Management LLC

1500 Main Street — Suite 2200

PO Box 15189

Springfield, MA 01115-5189

Attn: Securities Investment Division

$1,000,000

Payments

All payments on account of the Note shall be made by crediting in the form of
bank wire transfer of Federal or other immediately available funds, (identifying
each payment as “Stepan Company 3.95% Senior Notes, due July 10, 2027,
PPN 858586 J*2” interest and principal), to:

Gerlach & Co.

Citibank, N.A.

ABA Number 021000089

Concentration Account 36112805

FFC: MassMutual Asia 849195

Name of Security/CUSIP Number

With advice of payment to the Treasury Operations Liquidity Management
Department at Massachusetts Mutual Life Insurance Company at
mmincometeam@massmutual.com or (413) 226-4295 (facsimile).

Notices

 

Send Communications and Notices to

 

MassMutual Asia Limited

c/o Babson Capital Management LLC

1500 Main Street — Suite 2200

PO Box 15189

Springfield, MA 01115-5189

 

Electronic Delivery of Financials and other information to:

 

MassMutual Asia Limited

c/o Babson Capital Management LLC

1500 Main Street — Suite 2200

PO Box 15189

Springfield, MA 01115-5189

Send Notices on Payments to

 

MassMutual Asia Limited

Treasury Operations Liquidity Management

1295 State Street

Springfield, MA 01111

Attn: Janelle Tarantino

 

With a copy to:

 

MassMutual Asia Limited

c/o Babson Capital Management LLC

1500 Main Street — Suite 2200

PO Box 15189

Springfield, MA 01115

 

A-7

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

With email notification to:

1. privateplacements@babsoncapital.com

2. tpshea@babsoncapital.com

Send Corporate Action Notification to:

Citigroup Global Securities Services

Attn: Corporate Action Dept

3800 Citibank Center Tampa

Building B Floor 3

Tampa, FL 33610-9122

Physical Delivery of Notes

All securities should be registered in Citibank’s nominee name of Gerlach & Co.
and sent via overnight mail to:

Citibank NA

399 Park Avenue

Level B Vault

New York, NY 10022

Acct. #849195

With a copy to:

Steven Katz, Counsel

Babson Capital Management LLC

1500 Main Street, Suite 2800

Springfield, MA 01115-5189

Telephone: 413-226-1059

Facsimile: 413-226-2059

E-mail: skatz@babsoncapital.com

Name of Nominee in which Notes are to be issued: Gerlach & Co.

 

A-8

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

NAME OF AND ADDRESS

OF PURCHASER

PRINCIPAL AMOUNT OF

NOTES TO BE PURCHASED

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

c/o Prudential Capital Group

Two Prudential Plaza

180 N. Stetson Avenue, Suite 5600

Chicago, IL 60601

Attention: Managing Director, Corporate Finance

$10,000,000

Payments

All payments on account of Notes held by such purchaser shall be made by wire
transfer of immediately available funds for credit to:

JPMorgan Chase Bank

New York, NY

ABA No.: 021-000-021

Account Name: Motorola

Account No.: P30875 (please do not include spaces)

Each such wire transfer shall set forth the name of the Company, a reference to
“3.95% Senior Notes due 10 July 2027, Security No. INV10081, PPN 858586J*2” and
the due date and application (as among principal, interest and Make-Whole
Amount) of the payment being made.

Notices

All notices with respect to payments, and written confirmation of each such
payment, to be addressed to:

The Prudential Insurance Company of America

c/o Investment Operations Group

Gateway Center Two, 10th Floor

100 Mulberry Street

Newark, NJ 07102-4077

Attention: Manager, Billings and Collections

All other notices and communications to be addressed as first provided above.

 

A-9

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Physical Delivery of Notes

Send physical security by nationwide overnight delivery service to:

Prudential Capital Group

Two Prudential Plaza

180 N. Stetson Avenue

Suite 5600

Chicago, IL 60601

Attention: Kim L. Maranda

Telephone: (312) 540-4246

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 22-1211670

 

A-10

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

NAME OF AND ADDRESS

OF PURCHASER

PRINCIPAL AMOUNT OF

NOTES TO BE PURCHASED

FARMERS INSURANCE EXCHANGE

Prudential Private Placement Investors, L.P.

c/o Prudential Capital Group

Two Prudential Plaza

180 N. Stetson Avenue

Suite 5600

Chicago, IL 60601

Attention: Managing Director, Corporate Finance

$7,000,000

Payments

All payments on account of Notes held by such purchaser shall be made by wire
transfer of immediately available funds for credit to:

JPMorgan Chase Bank

ABA: 021000021

Beneficiary Account No: 9009000200

Beneficiary Account Name: JPMorgan Income

Ultimate Beneficiary: P13939 Farmers Insurance Exchange

Each such wire transfer shall set forth the name of the Company, a reference to
“3.95% Senior Notes due 10 July 2027, PPN 858586J*2” and the due date and
application (as among principal, interest and Make-Whole Amount) of the payment
being made.

Notices

All notices with respect to payments, and written confirmation of each such
payment, to be addressed to:

Farmers

4680 Wilshire Blvd.

Los Angeles, CA 90010

Attention: Treasury

Treasury:

Treasury Manager

323-932-3450

usw.treasury.farmers@farmersinsurance.com

All other notices and communications to be addressed as first provided above.

 

A-11

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Physical Delivery of Notes

 

(a) Send physical security by nationwide overnight delivery service to:

Mailing Address (for overnight mail)

JPMorgan Chase Bank, N.A.

Physical Receive Department

4 Chase Metrotech Center

3rd Floor

Brooklyn, NY 11245-0001

Attention: Brian Cavanaugh, Tel. 718-242-0264

Please include in the cover letter accompanying the Notes a reference to the
Purchaser’s account number (“P13939—Farmers Insurance Exchange”) and CUSIP
information.

 

(b) Send copy by nationwide overnight delivery service to:

Prudential Capital Group

Gateway Center 2, 10th Floor

100 Mulberry

Newark, NJ 07102

Attention: Trade Management, Manager

Telephone: (973) 367-3141

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 95-2575893

 

A-12

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

 

NAME OF AND ADDRESS

OF PURCHASER

PRINCIPAL AMOUNT OF

NOTES TO BE PURCHASED

THE GIBRALTAR LIFE INSURANCE CO., LTD.

Prudential Private Placement Investors, L.P.

c/o Prudential Capital Group

Two Prudential Plaza

180 N. Stetson Avenue

Suite 5600

Chicago, IL 60601

Attention: Managing Director, Corporate Finance

$5,000,000

Payments (principal, interest and Make-Whole)

All principal, interest and Make-Whole Amount payments on account of Notes held
by such purchaser shall be made by wire transfer of immediately available funds
for credit to:

JPMorgan Chase Bank

New York, NY

ABA No.: 021-000-021

Account Name: GIBPRVAFS2

Account No.: P30784 (please do not include spaces)

Each such wire transfer shall set forth the name of the Company, a reference to
“3.95% Senior Notes due 10 July 2027, Security No. INV10081, PPN 858586J*2” and
the due date and application (as among principal, interest and Make-Whole
Amount) of the payment being made.

Payments (other than principal, interest or Make-Whole)

All payments, other than principal, interest or Make-Whole Amount, on account of
Notes held by such purchaser shall be made by wire transfer of immediately
available funds for credit to:

JPMorgan Chase Bank

New York, NY

ABA No. 021-000-021

Account No. 304199036

Account Name: Prudential International Insurance Service Co.

Each such wire transfer shall set forth the name of the Company, a reference to
“3.95% Senior Notes due 10 July 2027, Security No. INV10081, PPN 858586J*2” and
the due date and application (e.g., type of fee) of the payment being made.

 

A-13

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Notices

All notices with respect to payments, and written confirmation of each such
payment, to be addressed to:

The Gibraltar Life Insurance Co., Ltd.

2-13-10, Nagata-cho

Chiyoda-ku, Tokyo 100-8953, Japan

Telephone: 81-3-5501-6680

Facsimile: 81-3-5501-6432

E-mail: mizuho.matsumoto@gib-life.co.jp

 

Attention: Mizuho Matsumoto, Team Leader of Investment Administration Team

and e-mail copy to:

Ito_Yuko@gib-life.co.jp

Maki.Ichihari@gib-life.co.jp

Kenji.Inoue@gib-life.co.jp

All other notices and communications to be addressed as first provided above.

Physical Delivery of Notes

Prudential Capital Group

Two Prudential Plaza

180 N. Stetson Avenue

Suite 5600

Chicago, IL 60601

Attention: Kim L. Maranda

Telephone: (312) 540-4246

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 98-0408643

 

A-14

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

NAME OF AND ADDRESS

OF PURCHASER

PRINCIPAL AMOUNT OF

NOTES TO BE PURCHASED

FARMERS NEW WORLD LIFE INSURANCE COMPANY

Prudential Private Placement Investors, L.P.

c/o Prudential Capital Group

Two Prudential Plaza

180 N. Stetson Avenue

Suite 5600

Chicago, IL 60601

Attention: Managing Director, Corporate Finance

$3,750,000

Payments

All payments on account of Notes held by such purchaser shall be made by wire
transfer of immediately available funds for credit to:

JPMorgan Chase Bank

New York, NY

ABA No.: 021000021

Account No.: 9009000200

Account Name: SSG Private Income Processing

For further credit to Account P58834 Farmers NWL

Each such wire transfer shall set forth the name of the Company, a reference to
“3.95% Senior Notes due 10 July 2027, PPN 858586J*2” and the due date and
application (as among principal, interest and Make-Whole Amount) of the payment
being made.

Notices

All notices with respect to payments, and written confirmation of each such
payment, to be addressed to:

investment.accounting@farmersinsurance.com

or

Farmers Insurance Company

Attention: Investment Accounting Team

4680 Wilshire Blvd., 4th Floor

Los Angeles, CA 90010

and

investments.operations@farmersinsurance.com

or

Farmers New World Life Insurance Company

Attention: Investment Operations Team

3003 77th Avenue Southeast, 5th Floor

Mercer Island, WA 98040-2837

All other notices and communications to be addressed as first provided above.

 

A-15

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Physical Delivery of Notes

 

(a) Send physical security to:

If sending by overnight delivery:

JPMorgan Chase Bank, N.A.

4 Chase Metrotech Center, 3rd Floor

Brooklyn, NY 11245-0001

Attention: Physical Receive Department

Brian Cavanaugh

Telephone: (718) 242-0264

Please include in the cover letter accompanying the Notes a reference to the
Purchaser’s account number (“P58834 — Farmers New World Life Private Placement”)
and CUSIP information.

 

(b) Send copy by nationwide overnight delivery service to:

Prudential Capital Group

Gateway Center 2, 10th Floor

100 Mulberry

Newark, NJ 07102

Attention: Trade Management, Manager

Telephone: (973) 367-3141

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 91-0335750

 

A-16

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

 

NAME OF AND ADDRESS

OF PURCHASER

PRINCIPAL AMOUNT OF

NOTES TO BE PURCHASED

MID CENTURY INSURANCE COMPANY

Prudential Private Placement Investors, L.P.

c/o Prudential Capital Group

Two Prudential Plaza

180 N. Stetson Avenue

Suite 5600

Chicago, IL 60601

Attention: Managing Director, Corporate Finance

$3,000,000

Payments

All payments on account of Notes held by such purchaser shall be made by wire
transfer of immediately available funds for credit to:

JPMorgan Chase Bank

ABA: 021000021

Beneficiary Account No: 9009000200

Beneficiary Account Name: JPMorgan Income

Ultimate Beneficiary: G23628 Mid Century Insurance Company

Each such wire transfer shall set forth the name of the Company, a reference to
“3.95% Senior Notes due 10 July 2027, PPN 858586J*2” and the due date and
application (as among principal, interest and Make-Whole Amount) of the payment
being made.

Notices

All notices with respect to payments, and written confirmation of each such
payment, to be addressed to:

Farmers

4680 Wilshire Blvd.

Los Angeles, CA 90010

Attention: Treasury

Treasury:

Treasury Manager

323-932-3450

usw.treasury.farmers@farmersinsurance.com

All other notices and communications to be addressed as first provided above.

 

A-17

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Physical Delivery of Notes

 

(a) Send physical security by nationwide overnight delivery

service to:

Mailing Address (for overnight mail)

JPMorgan Chase Bank, N.A.

Physical Receive Department

4 Chase Metrotech Center

3rd Floor

Brooklyn, NY 11245-0001

Attention: Brian Cavanaugh, Tel. 718-242-0264

Please include in the cover letter accompanying the Notes a reference to the
Purchaser’s account number (“G23628 — Mid Century Insurance Company”) and CUSIP
information.

 

(b) Send copy by nationwide overnight delivery service to:

Prudential Capital Group

Gateway Center 2, 10th Floor

100 Mulberry

Newark, NJ 07102

Attention: Trade Management, Manager

Telephone: (973) 367-3141

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 95-6016640

 

A-18

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

NAME OF AND ADDRESS

OF PURCHASER

PRINCIPAL AMOUNT OF

NOTES TO BE PURCHASED

PHYSICIANS MUTUAL INSURANCE COMPANY

Prudential Private Placement Investors, L.P.

c/o Prudential Capital Group

Two Prudential Plaza

180 N. Stetson Avenue

Suite 5600

Chicago, IL 60601

Attention: Managing Director, Corporate Finance

$1,250,000

Payments

All payments on account of Notes held by such purchaser shall be made by wire
transfer of immediately available funds for credit to:

The Northern Trust Company

Chicago, IL

ABA No.: 071000152

Account Name: Physicians Mutual Insurance Company

Account No.: 26-27099

Each such wire transfer shall set forth the name of the Company, a reference to
“3.95% Senior Notes due 10 July 2027, PPN 858586J*2” and the due date and
application (as among principal, interest and Make-Whole Amount) of the payment
being made.

Notices

All notices with respect to payments, and written confirmation of each such
payment, to be addressed to:

Physicians Mutual Insurance Company

2600 Dodge Street

Omaha, NE 68131

Attention: Steve Scanlan

Facsimile: (402) 633-1096

All other notices and communications to be addressed as first provided above.

 

A-19

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

Physical Delivery of Notes

 

(a) Send physical security by nationwide overnight delivery service to:

The Northern Trust Company of New York

Harborside Financial Center 10, Suite 1401

3 Second Street

Jersey City, NJ 07311

Attention: Jose Mero & Ruby Vega

Please include in the cover letter accompanying the Notes a reference to the
Purchaser’s account number (Physicians Mutual Insurance Company-Prudential;
26-27099).

 

(b) Send copy by nationwide overnight delivery service to:

Prudential Capital Group

Gateway Center 2, 10th Floor

100 Mulberry

Newark, NJ 07102

Attention: Trade Management, Manager

Telephone: (973) 367-3141

Name of Nominee in which Notes are to be issued: How & Co.

Taxpayer I.D. Number: 47-0270450

 

A-20

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

NAME OF AND ADDRESS

OF PURCHASER

PRINCIPAL AMOUNT OF

NOTES TO BE PURCHASED

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

c/o Delaware Investment Advisers

2005 Market Street, Mail Stop 41-104

Philadelphia, Pennsylvania 19103

Attention: Fixed Income Private Placements

Private Placement Fax: (215) 255-1654

$10,000,000

$4,000,000

$3,000,000

$3,000,000

Payments

All principal and interest payments on or in respect of the Notes shall be made
in immediately available funds via Fed Wire to:

The Bank of New York Mellon

New York, NY

ABA #: 021000018

BENEFICIARY/Account #: GLA 111566

Attn: The Bank of New York Mellon Private Placement P & I Dept.

Bank to Bank Information Ref: insert Custody Account# listed above;

PPN 858586 J*2/Sec Desc/ P&I Details

Reference Registered Holder: The Lincoln National Life Insurance Company

For Further Credit Account Numbers Listed Below:

 

NOTE
AMOUNT

 

LINCOLN ACCOUNT NAME

CUSTODY
NUMBER   $10,000,000    The Lincoln National Life Insurance Company — Seg 66
215733   $4,000,000    The Lincoln National Life Insurance Company — Seg 62
215730   $3,000,000    The Lincoln National Life Insurance Company — Seg 46
215726   $3,000,000    The Lincoln National Life Insurance Company — Seg 76
215736

Notices

All notices of payments on or in respect of the Notes and written confirmation
of each such payment to be addressed to:

Delaware Investment Advisers

2005 Market Street, Mail Stop 41-104

Philadelphia, Pennsylvania 19103

Attention: Fixed Income Private Placements

Private Placement Fax: 215-255-1654

 

A-21

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

With notices of PAYMENT ONLY:

Lincoln Financial Group

1300 South Clinton Street

Fort Wayne, Indiana 46802

Attention: K. Estep — Investment Accounting

Investment Accounting Fax: 260-455-1441

and

The Bank of New York Mellon

P. O. Box 392003

Pittsburgh, PA 15251-9003

Attention: Private Placement P&I Department

Registered Holder/Sec Desc/PPN 858586 J*2

Email: ppservicing@bnymellon.com

All other notices and communications to be addressed as first provided above.

Physical Delivery

The Depository Trust Company

570 Washington Blvd — 5th Floor

Jersey City, New Jersey 07310

Attention: BNY Mellon/Branch Deposit Department

(in cover letter reference note amt, acct name, and bank custody account #)

Please fax copy of cover letter to:

Karen Costa — The Bank of New York Mellon — Fax #: 844-601-7769

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 35-0472300

 

A-22

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

NAME OF AND ADDRESS

OF PURCHASER

PRINCIPAL AMOUNT OF

NOTES TO BE PURCHASED

THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA

7 Hanover Square

New York, NY 10004-2616

Attn: Timothy Powell

Investment Department 9-A

FAX # (212) 919-2658

Email address: timothy_powell@glic.com

$14,000,000

Payments

All payments on or in respect of the Notes shall be made by wire transfer to:

JP Morgan Chase

FED ABA #021000021

Chase/NYC/CTR/BNF

A/C 900-9-000200

Reference A/C #G05978, Guardian Life, PPN 858586 J*2, Stepan Company

Notices

All notices and communications with respect to payments and written confirmation
of each such payment, to be addressed as first provided above.

Physical Delivery of Notes

JP Morgan Chase Bank, N.A.

4 Chase Metrotech Center — 3rd Floor

Brooklyn, NY 11245-0001

Reference A/C #G05978, Guardian Life

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 13-5123390

 

A-23

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

NAME OF AND ADDRESS

OF PURCHASER

PRINCIPAL AMOUNT OF

NOTES TO BE PURCHASED

LIFE INSURANCE COMPANY OF NORTH AMERICA

CIG & Co. c/o Cigna Investments, Inc.

Attention: Fixed Income Securities

Wilde Building, A5PRI

900 Cottage Grove Rd.

Bloomfield, Connecticut 06002

E-Mail: CIMFixedIncomeSecurities@Cigna.com

$5,000,000

Payments

All payments on or in respect of the Notes to be by Federal Funds Wire Transfer
to:

J. P. Morgan Chase Bank

BNF=Cigna Private Placements/AC=9009001802

ABA #021000021

OBI = Stepan Company 3.95% Senior Notes, due July 10, 2027, PPN 858586 J*2

Notices

Address for Notices Related to Payments:

CIG & Co.

c/o Cigna Investments, Inc.

Attention: Fixed Income Securities

Wilde Building, A5PRI

900 Cottage Grove Rd.

Bloomfield, Connecticut 06002

E-Mail: CIMFixedIncomeSecurities@Cigna.com

Address for All Other Notices to be addressed as first provided above.

Physical Delivery of Notes

J.P. Morgan Chase Bank, N.A.

4 Chase Metrotech Center

3rd Floor

Brooklyn, New York 11245-0001

Attention: Physical Receive Department

(718) 242-0264

Name of Nominee in which Notes are issued: CIG & Co.

Taxpayer I.D. Number for CIG & Co.: 13-3574027

 

A-24

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

NAME OF AND ADDRESS

OF PURCHASER

PRINCIPAL AMOUNT OF

NOTES TO BE PURCHASED

CONNECTICUT GENERAL LIFE INSURANCE COMPANY

CIG & Co. c/o Cigna Investments, Inc.

Attention: Fixed Income Securities

Wilde Building, A5PRI

900 Cottage Grove Rd.

Bloomfield, Connecticut 06002

E-Mail: CIMFixedIncomeSecurities@Cigna.com

$500,000

$500,000

Payments

All payments on or in respect of the Notes to be by Federal Funds Wire Transfer
to:

J. P. Morgan Chase Bank

BNF=Cigna Private Placements/AC=9009001802

ABA #021000021

OBI = Stepan Company 3.95% Senior Notes, due July 10, 2027, PPN 858586 J*2

Notices

Address for Notices Related to Payments:

CIG & Co.

c/o Cigna Investments, Inc.

Attention: Fixed Income Securities

Wilde Building, A5PRI

900 Cottage Grove Rd.

Bloomfield, Connecticut 06002

E-Mail: CIMFixedIncomeSecurities@Cigna.com

Address for All Other Notices to be addressed as first provided above.

Physical Delivery of Notes

J.P. Morgan Chase Bank, N.A.

4 Chase Metrotech Center

3rd Floor

Brooklyn, New York 11245-0001

Attention: Physical Receive Department

(718) 242-0264

Name of Nominee in which Notes are issued: CIG & Co.

Taxpayer I.D. Number for CIG & Co.: 13-3574027

 

A-25

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DEFINED TERMS

As used herein, the following terms have the respective meanings set forth below
or set forth in the Section hereof following such term:

“Affiliate” means, at any time, and with respect to any Person, (a) any other
Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any Person of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, “Control” means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an “Affiliate”
is a reference to an Affiliate of the Company.

“Agreement” means this Agreement, including all Schedules attached to this
Agreement, as it may be amended, restated, supplemented or otherwise modified
from time to time.

“Anti-Corruption Laws” is defined in Section 5.16(d)(1).

“Anti-Money Laundering Laws” is defined in Section 5.16(c).

“Blocked Person” is defined in Section 5.16(a).

“Bank Credit Agreement” means the Amended and Restated Credit Agreement dated as
of July 10, 2014 by and among the Company, JPMorgan Chase Bank, N.A., as
administrative agent, and the other financial institutions party thereto, as
amended, restated, joined, supplemented or otherwise modified from time to time,
and any renewals, extensions or, refinancings replacements thereof, which
constitute the primary bank credit facility of the Company.

“Business Day” means any day other than a Saturday, a Sunday or a day on which
commercial banks in New York, New York are required or authorized to be closed.

“Capital Lease” means, at any time, a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

“Capital Lease Obligation” means, with respect to any Person and a Capital
Lease, the amount of the obligation of such Person as the lessee under such
Capital Lease which would, in accordance with GAAP, appear as a liability on a
balance sheet of such Person.

 

SCHEDULE B

(to Note Purchase Agreement)

--------------------------------------------------------------------------------

STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

“CISADA” means the Comprehensive Iran Sanctions, Accountability and Divestment
Act.

“Closing” is defined in Section 3 hereof.

“Closing Date” is the date of the Closing.

“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time.

“Company” means Stepan Company, a Delaware corporation.

“Confidential Information” is defined in Section 20.

“Consolidated Adjusted Tangible Net Worth” shall mean the sum of the amounts set
forth on the consolidated balance sheet of the Company and its Subsidiaries
prepared in accordance with GAAP and as of any date selected by the Company not
more than 45 days prior to the taking of any action for the purpose of which the
determination is being made, which appears as (a) the par or stated value of all
outstanding stock, (b) capital, paid-in and earned surplus and (c) long term
deferred tax liabilities, less the sum of (i) any surplus resulting from any
write-up of assets, (ii) good will, including any amounts (however designated on
such balance sheet) representing the cost of acquisitions of Subsidiaries in
excess of underlying tangible assets, unless an appraisal of such assets made by
a reputable firm of appraisers at the time of acquisition shall indicate
sufficient value to cover such excess, (iii) any amounts by which Investments in
Persons appearing on the asset side of the balance sheet exceed the lesser of
cost or the proportionate share of such corporation in the book value of the
assets of such Persons, provided that such book value shall be reduced by any
amounts representing restrictions on the payment of dividends by such Persons
pursuant to any law, charter provisions, mortgage or indenture or, in lieu of
the foregoing, any Investment may be carried at its market value if the
securities representing such Investment are publicly traded, (iv) patents,
trademarks, copyrights, leasehold improvements not recoverable at the expiration
of a lease and deferred charges (including, but not limited to, unamortized debt
discount and expense, organization expenses, experimental and development
expenses, but excluding prepaid expenses), (v) any amounts at which shares of
capital stock of the Company appear on the asset side of such balance sheet,
(vi) any amount of Debt not included on the liability side of such balance sheet
and (vii) other comprehensive income or expense (as defined by GAAP), to the
extent included in subclause (a), (b) or (c) above.

“Consolidated Debt” means as of any date of determination the total amount of
all Debt of the Company and its Restricted Subsidiaries determined on a
consolidated basis in accordance with GAAP.

“Consolidated EBIT” shall mean, for any period, Consolidated Net Income for such
period, plus, to the extent deducted in computing such Consolidated Net Income
and without duplication, (a) Consolidated Interest Expense for such period,
(b) income tax expense for such period, and (c) other non cash charges
(including, without limitation, deferred compensation expense, stock option
expense and share-based compensation expense) for such period, all determined on
a consolidated basis in accordance with GAAP.

 

B-2

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

“Consolidated Interest Expense” shall mean, for any period, the gross interest
expense of the Company and its Restricted Subsidiaries deducted in the
calculation of Consolidated Net Income for such period, determined on a
consolidated basis in accordance with GAAP.

“Consolidated Net Income” shall mean, for any period, the consolidated net
income (or loss) of the Company and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.

“Consolidated Net Worth” shall mean the consolidated stockholder’s equity of the
Company and its Restricted Subsidiaries, as defined according to GAAP.

“Consolidated Tangible Net Worth” shall mean the sum of the amounts set forth on
the consolidated balance sheet of the Company and its Restricted Subsidiaries,
prepared in accordance with GAAP and as of any date selected by the Company not
more than 45 days prior to the taking of any action for the purpose of which the
determination is being made, which appears as (a) the par or stated value of all
outstanding stock, (b) capital, paid-in and earned surplus and (c) long term
deferred tax liabilities, less the sum of (i) any surplus resulting from any
write-up of assets, (ii) good will, including any amounts (however designated on
such balance sheet) representing the cost of acquisitions of Restricted
Subsidiaries in excess of underlying tangible assets, unless an appraisal of
such assets made by a reputable firm of appraisers at the time of acquisition
shall indicate sufficient value to cover such excess, (iii) any amounts by which
Investments in persons appearing on the asset side of such balance sheet exceed
the lesser of cost or the proportionate share of such corporation in the book
value of the assets of such persons, provided that such book value shall be
reduced by any amounts representing restrictions on the payment of dividends by
such persons pursuant to any law, charter provision, mortgage or indenture or,
in lieu of the foregoing, any Investment may be carried at its market value if
the securities representing such Investment are publicly traded, (iv) patents,
trademarks, copyrights, leasehold improvements not recoverable at the expiration
of a lease and deferred charges (including, but not limited to, unamortized debt
discount and expense, organization expenses, experimental and development
expenses, but excluding prepaid expenses), (v) any amounts at which shares of
capital stock of the Company appear on the asset side of such balance sheet,
(vi) any amount of Debt not included on the liability side of such balance sheet
and (vii) other comprehensive income or expense (as defined by GAAP), to the
extent included in subclause (a), (b) or (c) above.

“Consolidated Total Assets” means, as of any date of determination, the total
amount of all assets of the Company and its Restricted Subsidiaries, determined
on a consolidated basis in accordance with GAAP.

“Consolidated Total Capitalization” means, at any time, the sum of
(i) Consolidated Net Worth and (ii) Consolidated Debt.

 

B-3

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

“Controlled Entity” means (i) any of the Subsidiaries of the Company and any of
their or the Company’s respective Controlled Affiliates and (ii) if the Company
has a parent company, such parent company and its Controlled Affiliates. As used
in this definition, “Control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.

“Debt” means, with respect to any Person, without duplication,

(a) its liabilities for borrowed money;

(b) its liabilities for the deferred purchase price of property acquired by such
Person (excluding accounts payable and other accrued liabilities arising in the
ordinary course of business but including, without limitation, all liabilities
created or arising under any conditional sale or other title retention agreement
with respect to any such property);

(c) its Capital Lease Obligations;

(d) its liabilities for borrowed money secured by any Lien with respect to any
property owned by such Person (whether or not it has assumed or otherwise become
liable for such liabilities); and

(e) Guarantees by such Person with respect to liabilities of a type described in
any of clauses (a) through (d) hereof.

Debt of any Person shall include all obligations of such Person of the character
described in clauses (a) through (e) to the extent such Person remains legally
liable in respect thereof notwithstanding that any such obligation is deemed to
be extinguished under GAAP.

“Debt Agreement” with respect to any Person means any note, note agreement, loan
agreement or other similar agreement or instrument that evidences Debt of such
Person.

“Default” means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.

“Default Rate” means that rate of interest that is 2% per annum above the rate
of interest stated in clause (a) of the first paragraph of the Notes.

“Disclosure Documents” is defined in Section 5.3.

“Electronic Delivery” is defined in Section 7.1(a).

“Environmental Laws” means any and all federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.

 

B-4

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time in effect.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that
is treated as a single employer together with the Company under section 414 of
the Code.

“Event of Default” is defined in Section 11.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fair Market Value” means, at any time and with respect to any property, the
sale value of such property that would be realized in an arm’s-length sale at
such time between an informed and willing buyer and an informed and willing
seller (neither being under a compulsion to buy or sell), as reasonably
determined in the good faith opinion of the Company’s board of directors.

“Form 10-K” is defined in Section 7.1(b).

“Form 10-Q” is defined in Section 7.1(a).

“GAAP” means those generally accepted accounting principles as in effect from
time to time in the United States of America.

“Governmental Authority” means

(a) the government of

(i) the United States of America or any state or other political subdivision
thereof, or

(ii) any jurisdiction in which the Company or any Restricted Subsidiary conducts
all or any part of its business, or which has jurisdiction over any properties
of the Company or any Restricted Subsidiary, or

(b) any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.

“Governmental Official” means any governmental official or employee, employee of
any government-owned or government-controlled entity, political party, any
official of a political party, candidate for political office, official of any
public international organization or anyone else acting in an official capacity.

 

B-5

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

“Guaranty” means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Debt, dividend or other obligation of any other Person in any manner, whether
directly or indirectly, including (without limitation) obligations incurred
through an agreement, contingent or otherwise, by such Person:

(a) to purchase such Debt or obligation or any property constituting security
therefor primarily for the purpose of assuring the owner of such Debt or
obligation of the ability of any other Person to make payment of the Debt or
obligation;

(b) to advance or supply funds (i) for the purchase or payment of such Debt or
obligation, or (ii) to maintain any working capital or other balance sheet
condition or any income statement condition of any other Person or otherwise to
advance or make available funds for the purchase or payment of such Debt or
obligation;

(c) to lease properties or to purchase properties or services primarily for the
purpose of assuring the owner of such Debt or obligation of the ability of any
other Person to make payment of the Debt or obligation; or

(d) otherwise to assure the owner of such Debt or obligation against loss in
respect thereof.

In any computation of the Debt or other liabilities of the obligor under any
Guaranty, the Debt or other obligations that are the subject of such Guaranty
shall be assumed to be direct obligations of such obligor, provided that the
amount of such Debt outstanding for purposes of this Agreement shall not exceed
the maximum amount of Debt that is the subject of such Guaranty.

“Hazardous Material” means any and all pollutants, toxic or hazardous wastes or
other substances that might pose a hazard to health and safety, the removal of
which may be required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage or filtration of which is or
shall be restricted, prohibited or penalized by any applicable law including,
but not limited to, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum, petroleum products, lead based paint, radon gas or similar
restricted, prohibited or penalized substances.

“holder” means, with respect to any Note, the Person in whose name such Note is
registered in the register maintained by the Company pursuant to Section 13.1,
provided, however, that if such Person is a nominee, then for the purposes of
Sections 7, 12, 17.2 and 18 and any related definitions in this Schedule B,
“holder” shall mean the beneficial owner of such Note whose name and address
appears in such register.

“INHAM Exemption” is defined in Section 6.2(e).

 

B-6

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

“Institutional Investor” means (a) any Purchaser of a Note, (b) any holder of a
Note holding (together with one or more of its affiliates) at least $2,000,000
of the aggregate principal amount of the Notes then outstanding, (c) any bank,
trust company, savings and loan association or other financial institution, any
pension plan, any investment company, any insurance company, any broker or
dealer, or any other similar financial institution or entity, regardless of
legal form, and (d) any Related Fund of any holder of any Note.

“Investments” shall mean all investments, in cash or by delivery of property
made, directly or indirectly in any Person, whether by acquisition of shares of
capital stock, Debt or other obligations or securities or by loan, advance,
capital contribution or otherwise.

“Lease Rentals” shall mean, for any period, the aggregate amount of fixed rental
or operating lease expense payable by the Company and its Restricted
Subsidiaries with respect to leases of real and personal property (excluding
Capital Lease Obligations) determined in accordance with GAAP.

“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge,
security interest or other encumbrance, or any interest or title of any vendor,
lessor, lender or other secured party to or of such Person under any conditional
sale or other title retention agreement (other than an operating lease) or
Capital Lease, upon or with respect to any property or asset of such Person
(including, in the case of stock, shareholder agreements, voting trust
agreements and all similar arrangements).

“Make-Whole Amount” shall have the meaning set forth in Section 8.6 with respect
to any Note.

“Material” means material in relation to the business, operations, affairs,
financial condition, assets or properties of the Company and its Restricted
Subsidiaries taken as a whole.

“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, affairs, financial condition, assets or properties of the Company
and its Restricted Subsidiaries taken as a whole, or (b) the ability of the
Company to perform its obligations under this Agreement and the Notes, (c) the
ability of any Subsidiary Guarantor to perform its obligations under the
Subsidiary Guaranty or (d) the validity or enforceability of this Agreement, the
Notes or the Subsidiary Guaranty.

“Material Subsidiary” means, at any time, any Restricted Subsidiary of the
Company which, together with all other Restricted Subsidiaries of such
Restricted Subsidiary, accounts for more than (i) 5% of the consolidated assets
of the Company and its Restricted Subsidiaries or (ii) 5% of consolidated
revenue of the Company and its Restricted Subsidiaries.

“Memorandum” is defined in Section 5.3.

“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term
is defined in Section 4001(a)(3) of ERISA).

 

B-7

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

“NAIC” means the National Association of Insurance Commissioners or any
successor thereto.

“Notes” is defined in Section 1.

“OFAC” is defined in Section 5.16(a).

“OFAC Listed Person” is defined in Section 5.16(a).

“OFAC Sanctions Program” means any economic or trade sanction that OFAC is
responsible for administering and enforcing. A list of OFAC Sanctions Programs
may be found at
http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx.

“Officer’s Certificate” means a certificate of a Senior Financial Officer or of
any other officer of the Company whose responsibilities extend to the subject
matter of such certificate.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA or any successor thereto.

“Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, business entity or a
Governmental Authority.

“Plan” means an “employee benefit plan” (as defined in Section 3(3) of ERISA)
that is or, within the preceding five years, has been established or maintained,
or to which contributions are or, within the preceding five years, have been
made or required to be made, by the Company or any ERISA Affiliate or with
respect to which the Company or any ERISA Affiliate may have any liability.

“Priority Debt” means (without duplication), as of the date of any determination
thereof, the sum of (i) all unsecured Debt of Subsidiaries (including all
Guaranties of Debt but excluding (x) Debt owing to the Company or any other
Subsidiary, (y) Debt outstanding at the time such Person became a Subsidiary,
provided that such Debt shall have not been incurred in contemplation of such
Person becoming a Subsidiary, and (z) all Debt of Subsidiary Guarantors, and
(ii) all Debt of the Company and its Subsidiaries secured by Liens other than
Debt secured by Liens permitted by subparagraphs (a) through (i), inclusive, of
Section 10.5 (including for purposes of such subparagraphs, Debt secured by
Liens on assets of Unrestricted Subsidiaries in the same manner as Liens are
permitted on the assets of Restricted Subsidiaries in such subparagraphs, except
that, solely for purposes of this definition of Priority Debt, subparagraph
(f) of Section 10.5 shall be read as permitting only Liens existing as of the
Closing Date and reflected in Schedule 10.5 with respect to Unrestricted
Subsidiaries).

“property” or “properties” means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, choate or inchoate.

“PTE” is defined in Section 6.2(a).

 

B-8

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

“Purchaser” or “Purchasers” means each of the purchasers that has executed and
delivered this Agreement to the Company and such Purchaser’s successors and
assigns (so long as any such assignment complies with Section 13.2), provided,
however, that any Purchaser of a Note that ceases to be the registered holder or
a beneficial owner (through a nominee) of such Note as the result of a transfer
thereof pursuant to Section 13.2 shall cease to be included within the meaning
of “Purchaser” of such Note for the purposes of this Agreement upon such
transfer.

“Qualified Institutional Buyer” means any Person who is a “qualified
institutional buyer” within the meaning of such term as set forth in Rule
144A(a)(1) under the Securities Act.

“QPAM Exemption” is defined in Section 6.2(e).

“Receivables Facility Counterpart Counterparty” is defined in Section 10.6.

“Receivables Purchase Agreement” is defined in Section 10.6.

“Related Fund” means, with respect to any holder of any Note, any fund or entity
that (i) invests in Securities or bank loans, and (ii) is advised or managed by
such holder, the same investment advisor as such holder or by an affiliate of
such holder or such investment advisor.

“Required Holders” means, at any time, the holders of more than 50% in principal
amount of the Notes at the time outstanding (exclusive of Notes then owned by
the Company or any of its Affiliates and any Notes held by parties who are
contractually required to abstain from voting with respect to matters affecting
the holders of the Notes).

“Responsible Officer” means any Senior Financial Officer and any other officer
of the Company with responsibility for the administration of the relevant
portion of this Agreement.

“Restricted Subsidiary” means any Subsidiary in which: (i) at least a majority
of the voting securities are owned by the Company and/or one or more Restricted
Subsidiaries and (ii) the Company has not designated an Unrestricted Subsidiary
by notice in writing given to the holders of the Notes.

“SEC” means the Securities and Exchange Commission of the United States, or any
successor thereto.

“Securities” or “Security” shall have the meaning specified in section 2(a)(1)
of the Securities Act.

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.

“Senior Debt” means, as of the date of any determination thereof, all
Consolidated Debt, other than Subordinated Debt.

 

B-9

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STEPAN COMPANY NOTE PURCHASE AGREEMENT

 

“Senior Financial Officer” means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.

“Source” is defined in Section 6.2.

“Subordinated Debt” means all unsecured Debt of the Company which shall contain
or have applicable thereto subordination provisions providing for the
subordination thereof to other Debt of the Company (including, without
limitation, the obligations of the Company under this Agreement or the Notes).

“Subsidiary” means, as to any Person, any other Person in which such first
Person or one or more of its Subsidiaries or such first Person and one or more
of its Subsidiaries owns sufficient equity or voting interests to enable it or
them (as a group) ordinarily, in the absence of contingencies, to elect a
majority of the directors (or Persons performing similar functions) of such
second Person, and any partnership or joint venture if more than a 50% interest
in the profits or capital thereof is owned by such first Person or one or more
of its Subsidiaries or such first Person and one or more of its Subsidiaries
(unless such partnership or joint venture can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
“Subsidiary” is a reference to a Subsidiary of the Company.

“Subsidiary Guarantor” means each Subsidiary which is party to a Subsidiary
Guaranty.

“Subsidiary Guaranty” is defined in Section 2.2 of this Agreement.

“Substitute Purchaser” is defined in Section 21.

“SVO” means the Securities Valuation Office of the NAIC or any successor to such
Office.

“Unfunded Liabilities” means (i) in the case of Plans (other than Multiemployer
Plans) the amount (if any) by which the present value of all vested
nonforfeitable benefits under such Plan exceeds the fair market value of all
Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan, and (ii) in the case of Multiemployer
Plans, the withdrawal liability of the Company and Subsidiaries. The interest
rate for computing the present value of all vested nonforfeitable benefits shall
be the Valuation Liability Interest Rate, as indicated on Form 5500 Schedule B
for such Plan. For purposes of this defined term ‘Unfunded Liabilities’ only,
the term ‘Plan’ means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Internal Revenue Code as to which the Company or any Subsidiary may have any
liability.

“Unrestricted Subsidiary” means any Subsidiary so designated by the Company.

“USA PATRIOT Act” means United States Public Law 107-56, Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.

“U.S. Economic Sanctions” is defined in Section 5.16(a).

 

B-10

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SUBSIDIARIES OF THE COMPANY AND OWNERSHIP OF SUBSIDIARY STOCK

SUBSIDIARIES OF THE COMPANY

 

CORPORATE NAME

   JURISDICTION
OF INCORPORATION OR
FORMATION    PERCENTAGE
OF
SHARES
HELD OR
BENEFICIALLY
OWNED     RESTRICTED
SUBSIDIARY
(Y/N)  

Stepan Holdings, LLC

   United States      100 %      Y   

Stepan Canada Inc.

   Canada      100 %      Y   

Stepan Asia Pte. Ltd.

   Singapore      100 %      Y   

Stepan Specialty Products, LLC

   United States      100 %      Y   

Stepan Specialty Products B.V.

   Netherlands      100 %      Y   

Stepan Europe S.A.S.

   France      100 %      N   

Stepan Mexico, S.A. de C.V.

   Mexico      100 %      N   

Stepan Quimica Ltda.

   Brazil      100 %      Y   

Stepan Colombia S.A.S.

   Colombia      100 %      N   

Stepan UK Limited

   England and Wales      100 %      N   

Stepan Deutschland GmbH

   Germany      100 %      N   

Stepan Polska Sp. z o.o.

   Poland      100 %      N   

Stepan Philippines, Inc.

   Philippines      100 %      N   

Stepan Philippines Quaternaries, Inc.

   Philippines      100 %      N   

Stepan India (Private) Limited

   India      100 %      N   

Stepan Chemical (Nanjing) Co., Ltd.

   China      100 %      N   

Nanjing Stepan Jinling Chemical LLC. (Joint Venture)

   China      80 %      N   

Stepan Chemical (Shanghai) Co., Ltd.

   China      100 %      N   

Stepan (Nanjing) Chemical R&D Co., Ltd.

   China      100 %      N   

Stepan International Trading (Shanghai) Co., Ltd.

   China      100 %      N   

 

SCHEDULE 5.4

(to Note Purchase Agreement)

--------------------------------------------------------------------------------

AFFILIATES OF THE COMPANY

 

CORPORATE NAME

   JURISDICTION
OF
INCORPORATION
OR FORMATION    PERCENTAGE
OF
SHARES HELD
OR
BENEFICIALLY
OWNED  

Tiorco, LLC (Joint Venture)

   United States      50 % 

As of the Closing Date, the Company’s directors are Michael R. Boyce, Randall S.
Dearth, Joaquin Delgado, Gregory E. Lawton, F. Quinn Stepan, F. Quinn Stepan,
Jr., and Edward J. Wehmer.

As of the Closing Date, the Company’s senior officers are F. Quinn Stepan, F.
Quinn Stepan, Jr., Frank Pacholec, Greg Servatius, Scott C. Mason, Scott D.
Beamer, Arthur W. Mergner, Scott R. Behrens, and Kathleen O. Sherlock.

 

5.4-2

--------------------------------------------------------------------------------

FINANCIAL STATEMENTS

 

1. Financial statements for the quarterly period ended March 31, 2015

 

2. Financial statements for the fiscal years ended December 31,
2010, December 31, 2011, December 31, 2012, December 31, 2013 and December 31,
2014

 

SCHEDULE 5.5

(to Note Purchase Agreement)

--------------------------------------------------------------------------------

LICENSES, PERMITS, ETC.

None.

 

SCHEDULE 5.11

(to Note Purchase Agreement)

--------------------------------------------------------------------------------

EXISTING DEBT

Indebtedness of the Company and its Restricted Subsidiaries on May 31, 2015

 

OBLIGOR

  

CREDITOR

   DESCRIPTION OF
INDEBTEDNESS
(INCLUDING
INTEREST RATE)    COLLATERAL
(IF ANY)    MATURITY    OUTSTANDING
PRINCIPAL
AMOUNT
(000’S)  

Stepan Company

   JPMorgan Chase Bank, N.A. (as Agent)    Credit Agreement
(various rates)    None    2019    $ 20,000   

Stepan Company

   The Northwestern Mutual Life Insurance Company    6.86% Notes    None    2015
   $ 2,856   

Stepan Company

   The Northwestern Mutual Life Insurance Company for its Group Annuity    6.86%
Notes    None    2015    $ 143   

Stepan Company

   Thrivent Financial for Lutherans    6.86% Notes    None    2015    $ 428   

Stepan Company

   The Mutual Life Insurance Company of New York    6.86% Notes    None    2015
   $ 428   

Stepan Company

   Prudential Investment Management    6.86% Notes    None    2015    $ 428   

Stepan Company

   Alliance Capital    5.69% Notes    None    2018    $ 11,429   

Stepan Company

   CIGNA    5.69% Notes    None    2018    $ 11,429   

Stepan Company

   Prudential Investment Management    5.88% Notes    None    2022    $ 20,000
  

Stepan Company

   AXA/Alliance Capital    5.88% Notes    None    2022    $ 10,000   

Stepan Company

   CIGNA    5.88% Notes    None    2022    $ 10,000   

Stepan Company

   Prudential Investment Management    4.86% Notes    None    2023    $ 22,500
  

 

SCHEDULE 5.15

(to Note Purchase Agreement)

--------------------------------------------------------------------------------

OBLIGOR

  

CREDITOR

   DESCRIPTION OF
INDEBTEDNESS
(INCLUDING
INTEREST RATE)    COLLATERAL
(IF ANY)    MATURITY    OUTSTANDING
PRINCIPAL
AMOUNT
(000’S)  

Stepan Company

   Mutual of Omaha Insurance Company    4.86% Notes    None    2023    $ 15,000
  

Stepan Company

   New York Life Insurance and Annuity Corporation    4.86% Notes    None   
2023    $ 10,600   

Stepan Company

   New York Life Insurance Company    4.86% Notes    None    2023    $ 9,400   

Stepan Company

   RGA Reinsurance Company    4.86% Notes    None    2023    $ 7,500   

Stepan Company

   Babson Capital Management LLC    3.86% Notes    None    2025    $ 40,000   

Stepan Company

   Delaware Investment Advisors    3.86% Notes    None    2025    $ 25,000   

Stepan Company

   The Guardian Life Insurance Company of America    3.86% Notes    None    2025
   $ 18,000   

Stepan Company

   AXA Equitable Life Insurance Company/Alliance Bernstein    3.86% Notes   
None    2025    $ 10,000   

Stepan Company

   Great-West Life & Annuity Insurance Company    3.86% Notes    None    2025   
$ 7,000   

 

5.15-2

--------------------------------------------------------------------------------

EXISTING LIENS

Debt of Foreign Subsidiaries Secured by Liens as of May 31, 2015

 

OBLIGOR

   CREDITOR    DESCRIPTION
OF
INDEBTEDNESS    SECURITY    MATURITY    OUTSTANDING
PRINCIPAL
AMOUNT
(000’S)  

Stepan Europe S.A.S.

   LCL    Term Loan    General
Intangibles    2015    $ 275   

Stepan UK Limited

   HSBC    Short-Term
Credit Line    Accounts
Receivable    2015    $ 3,511   

Stepan Quimica Ltda.

   Banco Itau    Short-Term
Credit Line    Accounts
Receivable    2015    $ 0   

 

SCHEDULE 10.5

(to Note Purchase Agreement)

--------------------------------------------------------------------------------

[FORM OF NOTE]

STEPAN COMPANY

3.95% SENIOR NOTE DUE JULY 10, 2027

 

No. [            ] July 10, 2015 $[            ] PPN 858586 J*2

For Value Received, the undersigned, Stepan Company (herein called the
“Company”), a corporation organized and existing under the laws of the State of
Delaware, hereby promises to pay to [            ], or registered assigns, the
principal sum of [            ] Dollars (or so much thereof as shall not have
been prepaid) on July 10, 2027 (the “Maturity Date”), with interest (computed on
the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance
hereof at the rate of 3.95% per annum from the date hereof, payable
semiannually, on the 10th day of July and January in each year, commencing with
the July 10 or January 10 next succeeding the date hereof, and on the Maturity
Date, until the principal hereof shall have become due and payable, and (b) to
the extent permitted by law, (x) on any overdue payment of interest and
(y) during the continuance of an Event of Default, on such unpaid balance and on
any overdue payment of any Make-Whole Amount, at a rate per annum equal to
5.95%, payable semiannually as aforesaid (or, at the option of the registered
holder hereof, on demand).

Payments of principal of, interest on and any Make-Whole Amount with respect to
this Note are to be made in lawful money of the United States of America at Bank
of America, N.A. in New York, New York or at such other place as the Company
shall have designated by written notice to the holder of this Note as provided
in the Note Purchase Agreement referred to below.

This Note is one of a series of Senior Notes (herein called the “Notes”) issued
pursuant to the Note Purchase Agreement, dated as of July 10, 2015 (as from time
to time amended, the “Note Purchase Agreement”), between the Company and the
respective Purchasers named therein and is entitled to the benefits thereof.
Each holder of this Note will be deemed, by its acceptance hereof, to have
(i) agreed to the confidentiality provisions set forth in Section 20 of the Note
Purchase Agreement and (ii) made the representation set forth in Section 6.2 of
the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used
in this Note shall have the respective meanings ascribed to such terms in the
Note Purchase Agreement.

This Note is a registered Note and, as provided in the Note Purchase Agreement,
upon surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder’s attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company will not be affected by any notice to the contrary.

 

EXHIBIT 1

(to Note Purchase Agreement)

--------------------------------------------------------------------------------

The Company will make required prepayments of principal on the date and in the
amounts specified in the Note Agreement. This Note is subject to optional
prepayment, in whole or from time to time in part, at the times and on the terms
specified in the Note Purchase Agreement, but not otherwise.

If an Event of Default, as defined in the Note Purchase Agreement, occurs and is
continuing, the principal of this Note may be declared or otherwise become due
and payable in the manner, at the price (including any applicable Make-Whole
Amount) and with the effect provided in the Note Purchase Agreement.

This Note shall be construed and enforced in accordance with, and the rights of
the issuer and holder hereof shall be governed by, the law of the State of New
York excluding choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than such State.

 

STEPAN COMPANY By       Name:       Title:    

 

E-1-2

--------------------------------------------------------------------------------

FORM OF SUBSIDIARY GUARANTY

GUARANTY

THIS GUARANTY (as the same may be amended, restated, supplemented or otherwise
modified from time to time, this “Guaranty”) is made as of July 10, 2015, by
Stepan Specialty Products, LLC, a Delaware limited liability company (together
with any Subsidiaries which become parties to this Guaranty by executing a
Supplement hereto in the form attached hereto as Annex I, the “Guarantors”), for
the benefit of the holders from time to time of the Notes (as defined below)
(the “Holders”).

WITNESSETH:

WHEREAS, Stepan Company, a Delaware corporation (the “Borrower”), has entered
into that certain Note Purchase Agreement, dated as of July 10, 2015 (the “Note
Purchase Agreement”), by and among the Borrower and the purchasers named
therein.

WHEREAS, the Borrower has authorized the issuance of and, pursuant to the Note
Purchase Agreement, proposes to issue and sell on the date hereof its 3.95%
Senior Notes, due July 10, 2027 (the “Notes”) pursuant to the Note Purchase
Agreement.

WHEREAS, pursuant to Section 9.8 of the Note Purchase Agreement, the Borrower
has agreed that certain of its Subsidiaries (each a “Guarantor” and,
collectively, the “Guarantors”) will guarantee the Borrower’s obligations under
the Notes and the Note Purchase Agreement;

WHEREAS, the Guarantors hereby execute and deliver this Guaranty, whereby each
of the Guarantors, without limitation and with full recourse, shall guarantee
the payment when due of all of the “Guaranteed Obligations” (as defined below);
and

WHEREAS, the Guarantors each acknowledge that they have and will continue to
derive substantial benefits from the issuance of the Notes, and each of the
Guarantors is willing to guarantee the Guaranteed Obligations;

NOW, THEREFORE, in consideration of the foregoing premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

SECTION 1. Definitions. Terms defined in the Note Purchase Agreement and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein.

SECTION 2. Representations, Warranties and Covenants. Each of the Guarantors
represents and warrants to each Holder as of the date of this Agreement that:

(A) It (i) is a corporation, partnership or limited liability company, duly
incorporated or organized, as the case may be, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization,
(ii) is duly qualified to do business as a foreign entity and is in good
standing under the laws of each jurisdiction where the business by it makes such
qualification necessary,

 

EXHIBIT 2.2

(to Note Purchase Agreement)

--------------------------------------------------------------------------------

and (iii) has all requisite corporate, partnership or limited liability power
and authority, as the case may be, to own, operate and encumber its property and
to conduct its business in each jurisdiction in which its business is conducted
except to the extent that the failure to have such authority could not
reasonably be expected to have a material adverse effect (a) on the business,
financial condition, operations or properties of a Guarantor taken as a whole or
(b) on its ability to perform its obligations hereunder.

(B) It has the requisite corporate, limited liability company or partnership, as
applicable, power and authority and legal right to execute and deliver this
Guaranty and to perform its obligations hereunder. The execution and delivery by
it of this Guaranty and the performance of each of its obligations hereunder
have been duly authorized by proper proceedings, and this Guaranty constitutes a
legal, valid and binding obligation of each Guarantor, enforceable against such
Guarantor, in accordance with its terms, except as enforceability may be limited
by (i) bankruptcy, insolvency, fraudulent conveyances or transfers,
reorganization or similar laws relating to or affecting the enforcement of
creditors’ rights generally, (ii) general equitable principles (whether
considered in a proceeding in equity or at law), and (iii) requirements of
reasonableness, good faith and fair dealing.

(C) Neither the execution and delivery by it of this Guaranty, nor the
consummation by it of the transactions herein contemplated, nor compliance by it
with the terms and provisions hereof, will (i) conflict with the charter or
other organizational documents of such Guarantor, (ii) conflict with, result in
a breach of or constitute (with or without notice or lapse of time or both) a
default under any law, rule, regulation, order, writ, judgment, injunction,
decree or award (including, without limitation, any environmental property
transfer laws or regulations) applicable to such Guarantor or any provisions of
any indenture, instrument or agreement to which such Guarantor is party or is
subject or which it or its property is bound or affected, or require termination
of any such indenture, instrument or agreement, (iii) result in or require the
creation or imposition of any Lien whatsoever upon any of the property or assets
of such Guarantor, other than Liens permitted or created by the Note Purchase
Agreement, or (iv) require any approval of such Guarantor’s board of directors
or shareholders or unitholders except such as have been obtained. The execution,
delivery and performance by the Guarantors of this Guaranty do not and will not
require any registration with, consent or approval of, or notice to, or other
action to, with or by any governmental authority, including under any
environmental property transfer laws or regulations, except filings, consents or
notices which have been made.

In addition to the foregoing, each of the Guarantors covenants that, so long as
any amount is payable under the Note Purchase Agreement or the Notes or any
other Guaranteed Obligations shall remain unpaid, it will, and, if necessary,
will enable the Borrower to, fully comply with those covenants and agreements of
the Borrower applicable to such Guarantor set forth in the Note Purchase
Agreement.

SECTION 3. The Guaranty. Each of the Guarantors hereby unconditionally
guarantees, jointly with the other Guarantors and severally, as a primary
obligor and not merely as a surety, to each Holder and its successors, transfers
and assigns, the full and punctual payment and performance when due, whether at
stated maturity, upon acceleration or otherwise, of the principal of and
Make-Whole Amount and interest on (including, without limitation, interest
whether or not an allowable claim, accruing after the date of filing of any
petition in bankruptcy, or the commencement of any bankruptcy, insolvency or
similar proceeding relating to the Borrower) the Notes issued from time to time,
including Additional Notes issued after the date hereof, and all other amounts
under the Note Purchase Agreement and all other obligations, agreements and
covenants of the Borrower now or hereafter existing under the Note Purchase

 

S-2.2-2

--------------------------------------------------------------------------------

Agreement whether for principal, Make-Whole Amount, interest (including interest
accruing both prior to and subsequent to the commencement of any proceeding
against or with respect to the Borrower under any chapter of the Bankruptcy
Code), indemnification payments, expenses (including attorneys’ fee and
expenses) or otherwise, and all costs and expenses, if any, incurred by any
Holder in connection with enforcing any rights under this Guaranty (all of the
foregoing being referred to collectively as the “Guaranteed Obligations” and the
holders from time to time of the Guaranteed Obligations being referred to
collectively as the “Holders of Guaranteed Obligations”). Upon (x) the failure
by the Borrower to pay punctually any such amount or perform such obligation,
and (y) such failure continuing beyond any applicable grace or notice and cure
period, each of the Guarantors agrees that it shall forthwith on demand pay such
amount or perform such obligation at the place and in the manner specified in
the Note Purchase Agreement. Each of the Guarantors hereby agrees that this
Guaranty is an absolute, irrevocable, unconditional, present and continuing
guaranty of payment and is not a guaranty of collection, and is no way
conditioned upon any attempt to collect from the Borrower or any other action,
occurrence or circumstance whatsoever.

Notwithstanding any stay, injunction or other prohibition preventing such action
against the Borrower, if for any reason whatsoever the Borrower shall fail or be
unable duly, punctually and fully to perform and (in the case of the payment of
the Guaranteed Obligations) pay such amounts as and when the same shall become
due and (in the case of the payment of the Guaranteed Obligations) payable or to
perform or comply with any other Guaranteed Obligation, whether or not such
failure or inability shall constitute an “Event of Default” under the Note
Purchase Agreement or the Notes, each Guarantor will forthwith (in the case of
the payment of Guaranteed Obligations) pay or cause to be paid such amounts to
the Holders, in lawful money of the United States of America, at the place
specified in the Note Purchase Agreement, or perform or comply with such
Guaranteed Obligations or cause such Guaranteed Obligations to be performed or
complied with, (in the case of the payment of Guaranteed Obligations) together
with interest (in the amounts and to the extent required under such Notes) on
any amount due and owing.

SECTION 4. Guaranty Unconditional. The obligations of each of the Guarantors
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:

(A) any extension, renewal, settlement, indulgence, compromise, waiver or
release of or with respect to the Guaranteed Obligations or any part thereof or
any agreement relating thereto, or with respect to any obligation of any other
guarantor of any of the Guaranteed Obligations, whether (in any such case) by
operation of law or otherwise, or any failure or omission to enforce any right,
power or remedy with respect to the Guaranteed Obligations or any part thereof
or any agreement relating thereto, or with respect to any obligation of any
other guarantor of any of the Guaranteed Obligations;

(B) any modification or amendment of or supplement to the Note Purchase
Agreement, including, without limitation, any such amendment which may increase
the amount of, or the interest rates applicable to, any of the Guaranteed
Obligations guaranteed hereby;

(C) any release, surrender, compromise, settlement, waiver, subordination or
modification, with or without consideration, of any collateral securing the
Guaranteed

 

S-2.2-3

--------------------------------------------------------------------------------

Obligations or any part thereof, any other guaranties with respect to the
Guaranteed Obligations or any part thereof, or any other obligation of any
person or entity with respect to the Guaranteed Obligations or any part thereof,
or any nonperfection or invalidity of any direct or indirect security for the
Guaranteed Obligations;

(D) any change in the corporate, partnership or other existence, structure or
ownership of the Borrower or any other guarantor of any of the Guaranteed
Obligations, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Borrower or any other guarantor of the Guaranteed
Obligations, or any of their respective assets or any resulting release or
discharge of any obligation of the Borrower or any other guarantor of any of the
Guaranteed Obligations;

(E) the existence of any claim, setoff or other rights which the Guarantors may
have at any time against the Borrower, any other guarantor of any of the
Guaranteed Obligations, any Holder of Guaranteed Obligations or any other
Person, whether in connection herewith or in connection with any unrelated
transactions; provided that nothing herein shall prevent the assertion of any
such claim by separate suit or compulsory counterclaim;

(F) the enforceability or validity of the Guaranteed Obligations or any part
thereof or the genuineness, enforceability or validity of any agreement relating
thereto or with respect to any collateral securing the Guaranteed Obligations or
any part thereof, or any other invalidity or unenforceability relating to or
against the Borrower or any other guarantor of any of the Guaranteed
Obligations, for any reason related to the Note Purchase Agreement, the Notes or
any provision of applicable law, decree, order or regulation of any jurisdiction
purporting to prohibit the payment by the Borrower or any other guarantor of the
Guaranteed Obligations, of any of the Guaranteed Obligations or otherwise
affecting any term of any of the Guaranteed Obligations;

(G) the failure of the Holders to take any steps to perfect and maintain any
security interest in, or to preserve any rights to, any security or collateral
for the Guaranteed Obligations, if any;

(H) the election by, or on behalf of, any one or more of the Holders of
Guaranteed Obligations, in any proceeding instituted under Chapter 11 of Title
11 of the United States Code (11 U.S.C. 101 et seq.) (the “Bankruptcy Code”), of
the application of Section 1111(b)(2) of the Bankruptcy Code;

(I) any borrowing or grant of a security interest by the Borrower, as
debtor-in-possession, under Section 364 of the Bankruptcy Code;

(J) the disallowance, under Section 502 of the Bankruptcy Code, of all or any
portion of the claims of the Holders of Guaranteed Obligations for repayment of
all or any part of the Guaranteed Obligations;

(K) the failure of any other guarantor to sign or become party to this Guaranty
or any amendment, change, or reaffirmation hereof; or

 

S-2.2-4

--------------------------------------------------------------------------------

(L) any other act or omission to act or delay of any kind by the Borrower, any
other guarantor of the Guaranteed Obligations, any Holder of Guaranteed
Obligations or any other Person or any other circumstance whatsoever which
might, but for the provisions of this Section 4, constitute a legal or equitable
discharge of any Guarantor’s obligations hereunder except as provided in
Section 5.

SECTION 5. Discharge Only Upon Payment In Full: Reinstatement In Certain
Circumstances.

(A) Each of the Guarantors’ obligations hereunder shall remain in full force and
effect and shall not be discharged until such time as all of the principal of,
Make-Whole Amount and interest on the Notes, the other Guaranteed Obligations
and all other independent payment obligations of such Guarantor under the
Guaranty shall have been paid in full in cash and performed in full, and all of
the agreements of each of the other Guarantors hereunder shall be duly paid in
cash and performed in full. If at any time any payment of the principal of,
Make-Whole Amount, or interest on any Note or any other amount payable by the
Borrower or any other party under the Note Purchase Agreement or any Note is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of the Borrower or otherwise, each of the
Guarantors’ obligations hereunder with respect to such payment shall be
reinstated as though such payment had been due but not made at such time.

(B) A Guarantor shall automatically be released from its obligations hereunder
in the event that all of the capital stock of such Guarantor shall be sold,
transferred or otherwise disposed of, or the assets of such Guarantor shall be
sold, transferred or otherwise disposed of substantially in their entirety, in
each case to a Person that is not the Borrower in accordance with the terms of
the Note Purchase Agreement.

(C) In connection with any termination or release pursuant to paragraph (A) or
(B) of this Section 5 the Holders shall execute and deliver to any Guarantor, as
the case may be, at such Guarantor’s expense, all documents that such Guarantor
shall reasonably request to evidence such termination or release. Any execution
and delivery of documents pursuant to this Section 5 shall be without recourse
to or warranty by the Holders.

SECTION 6. General Waivers; Additional Waivers.

(A) General Waivers. Each of the Guarantors irrevocably waives acceptance
hereof, presentment, demand or action on delinquency, protest, the benefit of
any statutes of limitations and, to the fullest extent permitted by law, any
notice not provided for herein, as well as any requirement that at any time any
action be taken by any Person against the Borrower, any other guarantor of the
Guaranteed Obligations, or any other Person.

(B) Additional Waivers. Notwithstanding anything herein to the contrary, each of
the Guarantors hereby absolutely, unconditionally, knowingly, and expressly
waives:

(i) any right it may have to revoke this Guaranty as to future indebtedness or
notice of acceptance hereof;

 

S-2.2-5

--------------------------------------------------------------------------------

(ii) (a) notice of acceptance hereof; (b) notice of any financial accommodations
made or extended under the Note Purchase Agreement or the creation or existence
of any Guaranteed Obligations; (c) notice of the amount of the Guaranteed
Obligations, subject, however, to each Guarantor’s right to make inquiry of the
Holders of Guaranteed Obligations to ascertain the amount of the Guaranteed
Obligations at any reasonable time; (d) notice of any adverse change in the
financial condition of the Borrower or of any other fact that might increase
such Guarantor’s risk hereunder; (e) notice of presentment for payment, demand,
protest, and notice thereof as to any instruments under the Note Purchase
Agreement or the Notes; (f) notice of any Default or Event of Default; and
(g) all other notices (except if such notice is specifically required to be
given to such Guarantor hereunder or under the Note Purchase Agreement) and
demands to which each Guarantor might otherwise be entitled;

(iii) its right, if any, to require the Holders of Guaranteed Obligations to
institute suit against, or to exhaust any rights and remedies which the Holders
of Guaranteed Obligations have or may have against, the other Guarantors or any
third party, or against any collateral provided by the other Guarantors, or any
third party; and each Guarantor further waives any defense arising by reason of
any disability or other defense (other than the defense that the Guaranteed
Obligations shall have been fully and finally performed and indefeasibly paid)
of the other Guarantors or by reason of the cessation from any cause whatsoever
of the liability of the other Guarantors in respect thereof;

(iv) (a) any rights to assert against the Holders of Guaranteed Obligations any
defense (legal or equitable), set-off, counterclaim, or claim which such
Guarantor may now or at any time hereafter have against the other Guarantors or
any other party liable to the Holders of Guaranteed Obligations; (b) any
defense, set-off, counterclaim, or claim, of any kind or nature, arising
directly or indirectly from the present or future lack of perfection,
sufficiency, validity, or enforceability of the Guaranteed Obligations or any
security therefor; (c) any defense such Guarantor has to performance hereunder,
and any right such Guarantor has to be exonerated, arising by reason of: the
impairment or suspension of the Holders of Guaranteed Obligations’ rights or
remedies against the other Guarantors; the alteration by the Holders of
Guaranteed Obligations of the Guaranteed Obligations; any discharge of the other
Guarantors’ obligations to the Holders of Guaranteed Obligations by operation of
law as a result of the Holders of Guaranteed Obligations’ intervention or
omission; or the acceptance by the Holders of Guaranteed Obligations of anything
in partial satisfaction of the Guaranteed Obligations; and (d) the benefit of
any statute of limitations affecting such Guarantor’s liability hereunder or the
enforcement thereof, and any act which shall defer or delay the operation of any
statute of limitations applicable to the Guaranteed Obligations shall similarly
operate to defer or delay the operation of such statute of limitations
applicable to such Guarantor’s liability hereunder; and

(v) any defense arising by reason of or deriving from (a) any claim or defense
based upon an election of remedies by the Holders of Guaranteed Obligations; or
(b) any election by the Holders of Guaranteed Obligations under Section 1111(b)
of Title 11 of the United States Code entitled “Bankruptcy”, as now and
hereafter in effect (or any successor statute), to limit the amount of, or any
collateral securing, its claim against the Guarantors.

 

S-2.2-6

--------------------------------------------------------------------------------

SECTION 7. Subordination of Subrogation; Subordination of Intercompany
Indebtedness.

(A) Subordination of Subrogation. Until the Guaranteed Obligations have been
fully and finally performed and indefeasibly paid in full in cash (other than
contingent indemnity obligations), the Guarantors (i) shall have no right of
subrogation with respect to such Guaranteed Obligations and (ii) waive any right
to enforce any remedy which the Holders of Guaranteed Obligations now have or
may hereafter have against the Borrower, any endorser or any guarantor of all or
any part of the Guaranteed Obligations or any other Person, and the Guarantors
waive any benefit of, and any right to participate in, any security or
collateral given to the Holders of Guaranteed Obligations to secure the payment
or performance of all or any part of the Guaranteed Obligations or any other
liability of the Borrower to the Holders of Guaranteed Obligations. Should any
Guarantor have the right, notwithstanding the foregoing, to exercise its
subrogation rights, each Guarantor hereby expressly and irrevocably
(a) subordinates any and all rights at law or in equity to subrogation,
reimbursement, exoneration, contribution, indemnification or set off that such
Guarantor may have to the indefeasible payment in full in cash of the Guaranteed
Obligations (other than contingent indemnity obligations) and (b) waives any and
all defenses available to a surety, guarantor or accommodation co-obligor until
the Guaranteed Obligations are indefeasibly paid in full in cash and performed
in full. Each Guarantor acknowledges and agrees that this subordination is
intended to benefit the Holders of Guaranteed Obligations and shall not limit or
otherwise affect such Guarantor’s liability hereunder or the enforceability of
this Guaranty, and that the Holders of Guaranteed Obligations and their
successors and assigns are intended third party beneficiaries of the waivers and
agreements set forth in this Section 7(A).

(B) Subordination of Intercompany Indebtedness. Each Guarantor agrees that any
and all claims of such Guarantor against the Borrower or any other Guarantor
hereunder (each an “Obligor”) with respect to any “Intercompany Indebtedness”
(as hereinafter defined), any endorser, obligor or any other guarantor of all or
any part of the Guaranteed Obligations, or against any of its properties shall
be subordinate and subject in right of payment to the prior payment, in full and
in cash, of all Guaranteed Obligations; provided that, as long as no Event of
Default has occurred and is continuing, such Guarantor may receive payments of
principal and interest from any Obligor with respect to Intercompany
Indebtedness. Notwithstanding any right of any Guarantor to ask, demand, sue
for, take or receive any payment from any Obligor, all rights, liens and
security interests of such Guarantor, whether now or hereafter arising and
howsoever existing, in any assets of any other Obligor shall be and are
subordinated to the rights of the Holders of Guaranteed Obligations in those
assets. No Guarantor shall have any right to possession of any such asset or to
foreclose upon any such asset, whether by judicial action or otherwise, unless
and until all of the Guaranteed Obligations shall have been fully paid and
satisfied (in cash) and fully performed. If all or any part of the assets of any
Obligor, or the proceeds thereof, are subject to any distribution, division or
application to the creditors of such Obligor, whether partial or complete,
voluntary or involuntary, and whether by reason of liquidation, bankruptcy,
arrangement, receivership, assignment for the benefit of creditors or any other
action or proceeding, or if the business of any such Obligor is dissolved or if
substantially all of the assets of any such Obligor are sold, then, and in any
such event (such events being herein referred to as an “Insolvency Event”), any
payment or distribution of any kind or character, either in cash, securities or
other property, which shall be payable or deliverable upon or with respect to
any indebtedness of any Obligor to any Guarantor (“Intercompany

 

S-2.2-7

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Indebtedness”) shall be paid or delivered directly to the Holders for
application on any of the Guaranteed Obligations, due or to become due, until
such Guaranteed Obligations shall have first been fully paid and satisfied (in
cash). Should any payment, distribution, security or instrument or proceeds
thereof be received by the applicable Guarantor upon or with respect to the
Intercompany Indebtedness after any Insolvency Event and prior to the
satisfaction of all of the Guaranteed Obligations, such Guarantor shall receive
and hold the same in trust, as trustee, for the benefit of the Holders of
Guaranteed Obligations and shall forthwith deliver the same to the Holders of
Guaranteed Obligations, in precisely the form received (except for the
endorsement or assignment of the Guarantor where necessary), for application to
any of the Guaranteed Obligations, due or not due, and, until so delivered, the
same shall be held in trust by the Guarantor as the property of the Holders of
Guaranteed Obligations. If any such Guarantor fails to make any such endorsement
or assignment to the Holders of Guaranteed Obligations, the Holders of
Guaranteed Obligations or any of their officers or employees are irrevocably
authorized to make the same. Each Guarantor agrees that until the Guaranteed
Obligations (other than the contingent indemnity obligations) have been paid in
full (in cash) and satisfied and fully performed, no Guarantor will assign or
transfer to any Person any claim any such Guarantor has or may have against any
Obligor.

SECTION 8. Contribution with Respect to Guaranteed Obligations.

(A) To the extent that any Guarantor shall make a payment under this Guaranty (a
“Guarantor Payment”) which, taking into account all other Guarantor Payments
then previously or concurrently made by any other Guarantor, exceeds the amount
which otherwise would have been paid by or attributable to such Guarantor if
each Guarantor had paid the aggregate Guaranteed Obligations satisfied by such
Guarantor Payment in the same proportion as such Guarantor’s “Allocable Amount”
(as defined below) (as determined immediately prior to such Guarantor Payment)
bore to the aggregate Allocable Amounts of each of the Guarantors as determined
immediately prior to the making of such Guarantor Payment, then, following
indefeasible payment in full in cash of the Guaranteed Obligations and
termination of the Note Purchase Agreement, such Guarantor shall be entitled to
receive contribution and indemnification payments from, and be reimbursed by,
each other Guarantor for the amount of such excess, pro rata based upon their
respective Allocable Amounts in effect immediately prior to such Guarantor
Payment.

(B) As of any date of determination, the “Allocable Amount” of any Guarantor
shall be equal to the excess of the fair value of the property of such Guarantor
over the total liabilities of such Guarantor (including the maximum amount
reasonably expected to become due in respect of contingent liabilities,
calculated, without duplication, assuming each other Guarantor that is also
liable for such contingent liability pays its ratable share thereof), giving
effect to all payments made by other Guarantors as of such date in a manner to
maximize the amount of such contributions.

(C) This Section 8 is intended only to define the relative rights of the
Guarantors, and nothing set forth in this Section 8 is intended to or shall
impair the obligations of the Guarantors, jointly and severally, to pay any
amounts as and when the same shall become due and payable in accordance with the
terms of this Guaranty.

 

S-2.2-8

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(D) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Guarantor or Guarantors
to which such contribution and indemnification is owing.

(E) The rights of the indemnifying Guarantors against other Guarantors under
this Section 8 shall be exercisable upon the full and indefeasible payment of
the Guaranteed Obligations in cash, the performance in full of the Guaranteed
Obligations and the termination of the Note Purchase Agreement.

(F) In determining the solvency of any Guarantor, it is the intention of the
parties hereto that any rights of subrogation or contribution which such
Guarantor may have under this Guaranty, any other agreement or applicable law
shall be taken into account.

SECTION 9. Limitation of Obligations. Notwithstanding any other provision of
this Guaranty, each Guarantor’s obligation to pay the amount guaranteed by each
Guarantor hereunder shall be limited to the extent, if any, required so that its
obligations hereunder shall not be subject to avoidance under Section 548 of the
Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act,
Uniform Fraudulent Conveyance Act or similar statute or common law.

SECTION 10. Stay of Acceleration. If acceleration of the time for payment of any
amount payable by the Borrower under the Note Purchase Agreement or any Note is
stayed upon the insolvency, bankruptcy or reorganization of the Borrower, all
such amounts otherwise subject to acceleration under the terms of the Note
Purchase Agreement or any Note shall nonetheless be payable by each of the
Guarantors hereunder forthwith on demand by the Holders.

SECTION 11. Notices. All notices, requests and other communications to any party
hereunder shall be given in the manner prescribed in the Note Purchase Agreement
with respect to the Holders at their notice address therein and with respect to
any Guarantor, in care of the Borrower at the address of the Borrower set forth
in the Note Purchase Agreement or such other address or telecopy number as such
party may hereafter specify for such purpose by notice in accordance with the
provisions of the Note Purchase Agreement.

SECTION 12. No Waivers. No failure or delay by the Holder of Guaranteed
Obligations in exercising any right, power or privilege hereunder shall operate
as a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies provided in this Guaranty, the Note
Purchase Agreement, and the Notes shall be cumulative and not exclusive of any
rights or remedies provided by law.

SECTION 13. Successors and Assigns. This Guaranty is for the benefit of the
Holders and the Holders of Guaranteed Obligations and their respective
successors, transfers and permitted assigns; provided, that no Guarantor shall
have any right to assign its rights or obligations hereunder without the consent
of all of the Holders, and any such assignment in violation of this Section 13
shall be null and void; and in the event of an assignment of any amounts payable
under the Note Purchase Agreement or the Notes in accordance with the respective
terms thereof, the rights hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such indebtedness. This
Guaranty shall be binding upon each of the Guarantors and their respective
successors and assigns.

 

S-2.2-9

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SECTION 14. Changes in Writing. Other than in connection with the addition of
additional Subsidiaries, which become parties hereto by executing a supplement
hereto in the form attached as Annex I, neither this Guaranty nor any provision
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by each of the Guarantors and the Holders.

SECTION 15. GOVERNING LAW. THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

SECTION 16. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.

(A) CONSENT TO JURISDICTION. EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN THE
BOROUGH OF MANHATTAN, THE CITY OF NEW YORK, AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE NOTE
PURCHASE AGREEMENT OR ANY NOTE AND EACH GUARANTOR HEREBY IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER
HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A
COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT
THE RIGHT OF ANY HOLDER OF GUARANTEED OBLIGATIONS TO BRING PROCEEDINGS AGAINST
ANY GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING
BY ANY GUARANTOR AGAINST ANY HOLDER OF GUARANTEED OBLIGATIONS INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS GUARANTY OR ANY OTHER RELATED DOCUMENT SHALL BE BROUGHT ONLY
IN A COURT SITTING IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK.

(B) WAIVER OF JURY TRIAL. EACH GUARANTOR HEREBY WAIVES TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH THIS GUARANTY, THE NOTE PURCHASE AGREEMENT OR ANY NOTE OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.

SECTION 17. No Strict Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Guaranty. In the event an ambiguity or
question of intent or interpretation arises, this Guaranty shall be construed as
if drafted jointly by the parties hereto and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Guaranty.

 

S-2.2-10

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SECTION 18. Taxes, Expenses of Enforcement, etc.

(A) Taxes.

(i) All payments by any Guarantor to or for the account of any Holder of
Guaranteed Obligations hereunder or under any promissory note shall be made free
and clear of and without deduction for any and all taxes. If any Guarantor shall
be required by law to deduct any taxes from or in respect of any sum payable
hereunder to any Holder of Guaranteed Obligations, (a) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 18(A)) such
Holder or Holder of Guaranteed Obligations (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(b) such Guarantor shall make such deductions, (c) such Guarantor shall pay the
full amount deducted to the relevant authority in accordance with applicable law
and (d) such Guarantor shall furnish to the Holders the original copy of a
receipt evidencing payment thereof within ten (10) days after such payment is
made.

(ii) In addition, the Guarantors hereby agree to pay any present or future stamp
or documentary taxes and any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under any promissory note
or from the execution or delivery of, or otherwise with respect to, this
Guaranty or any promissory note (“Other Taxes”).

(iii) The Guarantors hereby agree to indemnify the Holder of Guaranteed
Obligations for the full amount of taxes or Other Taxes (including, without
limitation, any taxes or Other Taxes imposed on amounts payable under this
Section 18(A)) paid by any Holder or Holder of Guaranteed Obligations and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. Payments due under this indemnification shall be made within
thirty (30) days of the date the Holder of Guaranteed Obligations makes demand
therefor.

(B) Expenses of Enforcement, Etc. Subject to the terms of the Note Purchase
Agreement, after the occurrence of a Default under the Note Purchase Agreement,
the Holders shall have the right at any time to commence enforcement proceedings
with respect to the Guaranteed Obligations. The Guarantors agree to reimburse
the Holders and Holders of Guaranteed Obligations for any costs and
out-of-pocket expenses (including reasonable attorneys’ fees and time charges of
attorneys for the Holders), paid or incurred by any Holder or Holder of
Guaranteed Obligations in connection with the collection and enforcement of
amounts due under the Note Purchase Agreement, the Notes and this Guaranty.

SECTION 19. Setoff. At any time after all or any part of the Guaranteed
Obligations have become due and payable (by acceleration or otherwise), each
Holder of Guaranteed Obligations may, without notice to any Guarantor and
regardless of the acceptance of any security or collateral for the payment
hereof, appropriate and apply in accordance with the terms of the Note Purchase
Agreement and the Notes toward the payment of all or any part of the Guaranteed
Obligations (i) any indebtedness due or to become due from such Holder of
Guaranteed Obligations to any Guarantor, and (ii) any moneys, credits or other
property belonging to any Guarantor, at any time held by or coming into the
possession of such Holder of Guaranteed Obligations or any of their respective
affiliates.

 

S-2.2-11

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SECTION 20. Financial Information. Each Guarantor hereby assumes responsibility
for keeping itself informed of the financial condition of the Borrower and any
and all endorsers and/or other Guarantors of all or any part of the Guaranteed
Obligations, and of all other circumstances bearing upon the risk of nonpayment
of the Guaranteed Obligations, or any part thereof, that diligent inquiry would
reveal, and each Guarantor hereby agrees that none of the Holders of Guaranteed
Obligations shall have any duty to advise such Guarantor of information known to
any of them regarding such condition or any such circumstances. In the event any
Holder of Guaranteed Obligations in its sole discretion, undertakes at any time
or from time to time to provide any such information to a Guarantor, such Holder
of Guaranteed Obligations shall be under no obligation (i) to undertake any
investigation not a part of its regular business routine, (ii) to disclose any
information which such Holder of Guaranteed Obligations, pursuant to accepted or
reasonable commercial finance practices, wishes to maintain confidential or
(iii) to make any other or future disclosures of such information or any other
information to such Guarantor.

SECTION 21. Severability. Wherever possible, each provision of this Guaranty
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.

SECTION 22. Merger. This Guaranty represents the final agreement of each of the
Guarantors with respect to the matters contained herein and may not be
contradicted by evidence of prior or contemporaneous agreements, or subsequent
oral agreements, between the Guarantor and any Holder of Guaranteed Obligations.

SECTION 23. Headings. Section headings in this Guaranty are for convenience of
reference only and shall not govern the interpretation of any provision of this
Guaranty.

[SIGNATURE PAGES TO FOLLOW]

 

S-2.2-12

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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed
by its authorized officer as of the day and year first above written.

 

Stepan Specialty Products, LLC, as a Guarantor By:   Name: Robert J. Peacock
Title: President

 

S-2.2-13

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ANNEX I TO GUARANTY

Reference is hereby made to the Guaranty (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the “Guaranty”), dated as
of July 10, 2015, made by Stepan Specialty Products, LLC, a Delaware limited
liability company (together with any Subsidiaries which become parties to the
Guaranty by executing a Supplement thereto substantially similar in form and
substance hereto, the “Guarantors”), for the benefit of the Holders. Each
capitalized term used herein and not defined herein shall have the meaning given
to it in the Guaranty. By its execution below, the undersigned, [NAME OF NEW
GUARANTOR], a [corporation] [partnership] [limited liability company] (the “New
Guarantor”), agrees to become, and does hereby become, a Guarantor under the
Guaranty and agrees to be bound by such Guaranty as if originally a party
thereto. By its execution below, the undersigned represents and warrants as to
itself that all of the representations and warranties contained in Section 2 of
the Guaranty are true and correct in all respects as of the date hereof.

IN WITNESS WHEREOF, the New Guarantor has executed and delivered this Annex I
counterpart to the Guaranty as of this                      day of             ,
    .

 

[NAME OF NEW GUARANTOR] By:  

Title:  

 

S-2.2-14

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FORM OF OPINION OF GENERAL COUNSEL

TO THE COMPANY

The closing opinion of Kathleen O. Sherlock, Deputy General Counsel and
Assistant Secretary of the Company, which is called for by Section 4.4 of the
Note Purchase Agreement, shall be dated the Closing Date and addressed to the
Purchasers, shall be satisfactory in scope and form to each Purchaser and shall
be to the effect that:

1. The Company and Stepan Specialty Products, LLC (the “Guarantor”) each have
the corporate or limited liability company power, as applicable, and authority
to own, pledge and operate its properties, to lease any properties it operates
under lease, to conduct its business as presently conducted and to execute and
deliver the Note Purchase Agreement, the Notes and the Subsidiary Guaranty (the
“Transaction Documents”) to which it is a party and to perform its obligations
thereunder.

2. Assuming the proceeds of the Notes are used solely for the purposes set forth
in the Note Purchase Agreement, neither the execution and delivery by the
Company or the Guarantor of the Transaction Documents to which it is a party,
nor the performance by the Company or the Guarantor of its obligations
thereunder (including the issuance and sale of the Notes): (i) results in the
breach of, or constitutes a default under, any material indenture, mortgage,
deed of trust, lease or sublease agreement to which the Company or the Guarantor
is a party or by which it or any of its properties is bound; (ii) results in the
creation or imposition of any lien upon any of the property of the Company or
the Guarantor under any indenture, mortgage or other agreement described in
clause (i) above; or (iii) requires the consent or approval of, or withholding
of objection, or any filing of qualification or registration with, any
governmental body, agency or authority other than those which have been
obtained.

3. Except as disclosed in the Note Purchase Agreement or the Subsidiary
Guaranty, there are no actions, suits, or proceedings pending or overtly
threatened against the Company or the Guarantor or any of their assets and
properties that questions or may affect the validity of any action to be taken
by the Company or the Guarantor pursuant to the Transaction Documents, or that
seeks to restrain the Company or the Guarantor from carrying out the
transactions contemplated therein or the Company’s or the Guarantor’s
obligations thereunder.

 

EXHIBIT 4.4(a)

(to Note Purchase Agreement)

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FORM OF OPINION OF SPECIAL COUNSEL

TO THE COMPANY

The closing opinion of Jones Day, special counsel to the Company, which is
called for by Section 4.4 of the Note Purchase Agreement, shall be dated the
Closing Date and addressed to the Purchasers, shall be satisfactory in scope and
form to each Purchaser and shall be to the effect that:

(1) The Company is a corporation validly existing and in good standing under the
laws of the State of Delaware as of the date listed on the Company Good Standing
Certificate. The Guarantor is a limited liability company validly existing and
in good standing under the laws of the State of Delaware as at the date listed
on the Guarantor Good Standing Certificate. The Company is authorized or
qualified to do business and in good standing as a foreign corporation in the
State of Illinois as at the date listed on the Foreign Good Standing
Certificate.

(2) The issuance and sale of the Notes and the execution and delivery to the
Purchasers by the Company of the Notes and the Note Purchase Agreement (the
“Company Documents”) and the performance by the Company of its obligations
thereunder have been duly authorized by all necessary corporate action of the
Company. The execution and delivery to the Purchasers by, Stepan Specialty
Products, LLC (the “Guarantor”) of the Subsidiary Guaranty (the “Guaranty”) and
the performance by the Guarantor of its obligations thereunder have been duly
authorized by all necessary limited liability company action of the Guarantor.

(3) Each Company Document has been duly executed and delivered on behalf of the
Company and, when the Notes are delivered against payment therefor in accordance
with the terms of the Note Purchase Agreement, constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms. The Guaranty has been duly executed and delivered on behalf of the
Guarantor and, when the Notes are delivered against payment therefor in
accordance with the terms of the Note Purchase Agreement, constitutes a valid
and binding obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms.

(4) Assuming the proceeds of the Notes are used solely for the purposes set
forth in the Note Purchase Agreement, the execution and delivery to the
Purchasers by the Company of the Note Purchase Agreement and the performance by
the Company of its obligations thereunder, and the issuance and sale of the
Notes: (i) do not contravene any provision of the Company Certificate of
Incorporation or the Company By-Laws; and (ii) do not violate (A) any present
law, or present regulation of any governmental agency or authority, of the State
of New York or the United States of America applicable to the Company or its
property or (B) any court decree or order binding upon the Company or its
property that is listed on Annex I to the Company Officer’s Certificate (this
opinion being limited in that we express no opinion (1) with respect to any
violation not readily ascertainable from the face of any such decree or order,
or arising under or based upon any cross default provision insofar as it relates
to a default under an agreement not so identified to us, or arising under or
based upon any covenant of a financial or numerical nature or requiring
computation or (2) as to any law which might be violated by any
misrepresentation or omission or a fraudulent act).

 

EXHIBIT 4.4(b)

(to Note Purchase Agreement)

--------------------------------------------------------------------------------

(5) The execution and delivery to the Purchasers by the Guarantor of the
Guaranty and the performance by the Guarantor of its obligations thereunder:
(i) do not contravene any provision of the Guarantor Certificate of Formation or
the Guarantor LLC Agreement; and (ii) do not violate (A) any present law, or
present regulation of any governmental agency or authority, of the State of New
York or the United States of America applicable to the Guarantor or its property
or (B) any court decree or order binding upon the Guarantor or its property that
is listed on Annex I to the Guarantor Officer’s Certificate (this opinion being
limited in that we express no opinion (1) with respect to any violation not
readily ascertainable from the face of any such decree or order, or arising
under or based upon any cross default provision insofar as it relates to a
default under an agreement not so identified to us, or arising under or based
upon any covenant of a financial or numerical nature or requiring computation or
(2) as to any law which might be violated by any misrepresentation or omission
or a fraudulent act).

(6) Neither the Company nor the Guarantor is required to register as an
“investment company” (under, and as defined in, the Investment Company Act of
1940, as amended (the “1940 Act”)) or, to our knowledge, is a company controlled
by a company required to register as such under the 1940 Act.

(7) Assuming the offer, issuance, sale and delivery of the Notes occurs solely
in the manner and under the circumstances contemplated by the Note Purchase
Agreement, it is not necessary in connection with the offer and sale of the
Notes to the Purchasers under the Note Purchase Agreement to register the Notes
under the Securities Act of 1933, as amended.

(8) The issuance by the Company of the Notes and the application of the proceeds
thereof as provided in the Note Purchase Agreement will not violate Regulation
T, U or X of the Board of Governors of the Federal Reserve System (the “Margin
Regulations”).

The opinion of Jones Day, shall cover such other matters relating to the sale of
the Notes as each Purchaser may reasonably request and successors and assigns of
the Purchasers shall be entitled to rely on such opinion. With respect to
matters of fact on which such opinion is based, such counsel shall be entitled
to rely on appropriate certificates of public officials and other officers of
the Company.

 

E-4.4(b)-2

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FORM OF OPINION OF SPECIAL COUNSEL

TO THE PURCHASERS

[To be provided to the Purchasers only]

 

EXHBIT 4.4(c)

(to Note Purchase Agreement)