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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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UNIVAR CORPORATION
(NAME OF SUBJECT COMPANY)
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UNIVAR CORPORATION
(NAME OF PERSON FILING STATEMENT)
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COMMON SHARES, NO PAR VALUE PER SHARE
(TITLE OF CLASS OF SECURITIES)
913353 10 8
(CUSIP NUMBER OF CLASS OF SECURITIES)
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WILLIAM A. BUTLER
VICE PRESIDENT, GENERAL COUNSEL, AND CORPORATE SECRETARY
UNIVAR CORPORATION
6100 CARILLON POINT
KIRKLAND, WA 98033
(206) 889-3400
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICE AND COMMUNICATIONS ON BEHALF OF THE PERSON FILING STATEMENT)
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COPY TO:
RICHARD B. DODD
PRESTON GATES & ELLIS
5000 COLUMBIA CENTER
701 FIFTH AVENUE
SEATTLE, WA 98104
(206) 623-7580
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Univar Corporation, a Washington
corporation ("Company"), and the address of the principal executive offices of
Company is 6100 Carillon Point, Kirkland, WA 98033.
The title of the class of equity securities to which this statement relates
is Company's Common Shares, no par value (the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer (the "Offer"), described in the
Tender Offer Statement on Schedule 14D-1, dated June 7, 1996 (the "Schedule
14D-1"), by UC Acquisition Corp., a Washington corporation ("Buyer") and an
indirect, wholly owned subsidiary of Royal Pakhoed N.V. (a translation of
Koninklijke Pakhoed N.V.), a Netherlands limited liability company ("Parent"),
filed with the Securities and Exchange Commission (the "Commission"), relating
to an offer by Buyer to purchase all of the outstanding Shares at a purchase
price of $19.45 per Share (the "Per Share Amount"), net to the seller in cash,
upon the terms and subject to the conditions set forth in Buyer's Offer to
Purchase, dated June 7, 1996, and the related Letter of Transmittal (which
together constitute the "Offer Documents"). The Offer Documents indicate that
the address of the principal executive offices of Parent are located at 333
Blaak, 3011 GB Rotterdam, The Netherlands, and the principal executive offices
of Buyer are located at 2000 West Loop South, Suite 2200, Houston, Texas.
The Offer is being made pursuant to the Agreement and Plan of
Reorganization, dated as of May 31, 1996 (the "Reorganization Agreement"), among
Company, Parent, and Buyer. A copy of the Reorganization Agreement is filed as
Exhibit 1 to this Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") and is incorporated herein by reference in its entirety.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of Company, which is the person filing this
statement, are set forth in Item 1 above.
(b)(i) Arrangements with Buyer and Parent
DIRECTOR'S AND OFFICER'S AGREEMENTS
In connection with the Offer, Parent has entered into agreements with each
of the directors of Company that are not affiliated with Buyer and with certain
of Company's officers (the "Director's and Officer's Agreements"). The
Director's and Officer's Agreements provide that the signatory will, as
appropriate: (i) vote in favor of the Merger (as hereinafter defined) and all
related agreements and all actions contemplated thereby, (ii) vote to recommend
to Company's shareholders acceptance of the Offer and use his reasonable best
efforts to cause the shareholders of Company to tender their Shares pursuant to
such Offer; (iii) use his reasonable efforts to cause the shareholders of
Company to adopt and approve the Reorganization Agreement and the transactions
contemplated thereby; and (iv) vote to authorize Company to consent to and/or
encourage the execution of agreements by a sufficient number of Company
shareholders to assure satisfaction of the Minimum Condition (as defined in the
Reorganization Agreement) of Buyer's proposed Offer. The form of Director's and
Officer's Agreement is filed as Exhibit 2 to this Schedule 14D-9 and is
incorporated herein by reference in its entirety.
SHAREHOLDER AGREEMENT
Also in connection with the Offer, Parent has received a letter agreement
from The Dow Chemical Company ("Dow"), a shareholder of Company (the
"Shareholder Agreement"). The Shareholder Agreement provides that Dow will, as
appropriate: (i) tender all Shares held of record or beneficially by it as of
May 31, 1996, or thereafter, pursuant to Buyer's Offer; (ii) provide all
consents and approvals pursuant to a certain Distributor Agreement by and
between Dow and Van Waters & Rogers Inc. a wholly owned subsidiary
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of the Company, dated March 8, 1996, required to consummate the Merger and the
transactions contemplated by the Reorganization Agreement; and (iii) at Parent's
request (a) exercise its option to purchase all or such portion required of the
101,874 shares of Series A Junior Participating Convertible Preferred Shares
(the "Preferred Shares"), which Dow is entitled to purchase pursuant to the
Amended and Restated Agreement of Purchase and Sale of Stock (the "Stock
Purchase Agreement") entered into by and between Dow and Company, dated May 13,
1994, (b) convert all the Preferred Shares acquired pursuant to the Stock
Purchase Agreement into Shares, and (c) tender all Shares acquired pursuant to
such conversion of the Preferred Shares to Buyer pursuant to Buyer's Offer. If
such request is not made by Parent, and the option is not exercised, Parent, or
the Surviving Corporation (as defined below), has agreed to pay Dow on
consummation of the Merger, the difference between the aggregate exercise price
of the option to acquire the Preferred Shares and the aggregate price that would
have been paid in the Offer for the Shares which would have otherwise been
issued pursuant to the conversion of the Preferred Shares.
The Shareholder Agreement provides that Dow is relieved of its obligations
if either a competing offer to purchase Shares at a price greater than $19.45
per share is made by a third party prior to the consummation of the Merger, or
Buyer's price for the purchase of the Shares is adjusted to a price which is
less than $19.45 per share. The Shareholder Agreement is filed as Exhibit 3 to
this Schedule 14D-9 and is incorporated herein by reference in its entirety.
THE SHARES OWNED BY SIGNERS OF THE DIRECTOR'S AND OFFICER'S AGREEMENTS AND
THE SHAREHOLDER AGREEMENT TOGETHER WITH THE SHARES OWNED BY PARENT AND ITS
AFFILIATES ARE SUFFICIENT TO SATISFY THE MINIMUM CONDITION (AS HEREINAFTER
DEFINED) AND TO APPROVE THE MERGER. THE OBLIGATIONS UNDER THE DIRECTOR'S AND
OFFICER'S AGREEMENTS ARE SUBJECT TO THE SIGNERS' CONTINUING FIDUCIARY DUTIES,
AND THE OBLIGATIONS OF DOW UNDER THE SHAREHOLDER AGREEMENT IS SUBJECT TO THERE
NOT BEING A COMPETING OFFER TO PURCHASE AT A PURCHASE PRICE GREATER THAN $19.45,
OR BUYER'S PRICE BEING ADJUSTED TO A PRICE LESS THAN $19.45.
REORGANIZATION AGREEMENT
The following is a summary of the Reorganization Agreement, which summary
is qualified in its entirety by reference to the Reorganization Agreement.
THE OFFER
The Reorganization Agreement provides for the commencement of the Offer as
promptly as reasonably practicable, but in no event later than five (5) business
days after the public announcement of Buyer's intention to commence the Offer.
The obligation of Buyer to accept for payment and pay for Shares tendered
pursuant to the Offer is subject only to: (i) the condition (the "Minimum
Condition") that at least the number of Shares that, when combined with the
Shares already owned by Parent and its direct or indirect subsidiaries
(collectively "Affiliates"), constitute a majority of the then outstanding
Shares on a fully diluted basis (excluding unissued shares reserved for options
which are surrendered pursuant to the Tender Offer as described below) shall
have been validly tendered and not withdrawn prior to the expiration of the
Offer, and (ii) the satisfaction or waiver of the other conditions described
below under "Conditions of the Offer." Under the Reorganization Agreement, Buyer
expressly reserves the right, in its sole discretion, to waive any of the other
conditions to the Offer (other than the Minimum Condition), to increase the Per
Share Amount payable in the Offer, and to make any other changes in the terms
and conditions of the Offer; provided, however, that, without the prior written
consent of Company, no change may be made which: (i) decreases the Per Share
Amount; (ii) decreases the number of Shares sought pursuant to the Offer; (iii)
imposes additional conditions to the Offer; (iv) changes the expiration date of
the Offer so that the Offer ends less than 30 "business days" (as defined in
Rule 14d-1(c)(6) of the Securities Exchange Act of 1934 (the "Exchange Act"))
from the date on which the Offer is first publicly announced or extend the
expiration date beyond July 31, 1996, provided that the expiration date of the
Offer may be extended by Buyer to a date not later than August 31, 1996, if (a)
any Government Approvals (as defined in Section 4.1 of the Reorganization
Agreement) shall not have been obtained by July 31, 1996, or (b) by July 26,
1996, less than eighty percent (80%) of the outstanding Shares have been
tendered for purchase pursuant to the Offer, and Buyer reasonably
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believes that eighty percent (80%) or more of the Shares will be tendered, if
the expiration date of the Offer is extended; (v) waive or modify the Minimum
Condition; or (vi) change the conditions to the Offer in any material respect.
In the event the Offer is extended beyond July 31, 1996, the Per Share Amount
shall be increased by an amount equal to the product of the Price multiplied by
the prime interest rate as announced by Bank of America NW, N.A. (doing business
as Seafirst Bank) in Seattle, Washington as in effect on August 1, 1996,
multiplied by the quotient of: (x) the number of days the Offer is extended
after July 31, 1996, divided by (y) 365. The Reorganization Agreement provides
that, subject to the terms and conditions of the Reorganization Agreement and
the Offer (including, without limitation, the Minimum Condition), Buyer shall
accept for payment and pay, as promptly as practicable after expiration of the
Offer, for all Shares validly tendered and not withdrawn; provided, that Buyer
shall have the right, in its sole discretion, to extend the Offer from time to
time as described above.
STOCK PLANS
Under the Reorganization Agreement, holders of employee and nonemployee
director stock options granted and restricted stock awards issued under various
plans (the "Stock Plans") have been given the right to surrender their options
and restricted stock awards for cash payments equal to the difference between
the Per Share Amount to be paid pursuant to the Offer and the exercise price, if
any, of the option or restricted stock award times the number of Shares subject
to each stock option grant or restricted stock award. As of May 31, 1996, there
were outstanding options for 1,741,072 Shares at a weighted average price of
$11.1485 per Share and an additional 50,000 Shares were subject to restricted
stock awards. Each of the options and awards were issued pursuant to plans which
provided for the acceleration of all unvested options and awards upon the event
of a "Change of Control" which in each plan is defined to include consummation
of the Offer. The Reorganization Agreement also provides that the Surviving
Corporation will indemnify holders against excise and other related taxes in the
event that any portion of the amounts received are treated as "parachute
payments" for federal income tax purposes.
THE MERGER
The Reorganization Agreement provides that, upon the terms and subject to
the conditions thereof (including those described below under "Conditions of the
Merger"), and in accordance with applicable provisions under the Washington
Business Corporation Act ("WBCA"), Buyer shall be merged with and into Company
(the "Merger"). Articles of Merger and a Merger Agreement (the "Merger
Agreement") shall be filed with the Washington Secretary of State at such time
thereafter as is provided in the Merger Agreement, and the effective time of the
Merger (the "Effective Time") shall be the time of the filing on the date of
such filing or other date specified in the Merger Agreement (the "Effective
Date"). As a result of the Merger, the separate corporate existence of Buyer
will cease and Company will continue as the surviving corporation of the Merger
(the "Surviving Corporation"). At the Effective Time, all assets, rights,
goodwill, privileges, immunities, powers, franchises and interests of Company
and Buyer in and to every type of property (real, personal, and mixed), as they
exist as of the Effective Time, shall pass and be transferred to and vest in the
Surviving Corporation by virtue of the Merger at the Effective Time without any
deed, conveyance or other transfer. The separate existence of Buyer shall cease
and the corporate existence of Company as the Surviving Corporation shall
continue unaffected and unimpaired by the Merger; and the Surviving Corporation
shall be deemed to be the same entity as each of Company and Buyer and shall be
subject to all of their duties and liabilities of every kind and description. At
the sole election of Parent, the Merger may be structured so that Company shall
be merged with and into Buyer with the result that Buyer shall be the "Surviving
Corporation." The Standstill Agreement among Parent, a subsidiary of Parent, and
Company dated September 19, 1986 and amended June 3, 1992 (the "1986 Standstill
Agreement") and the Confidentiality and Standstill Agreement, dated April 12,
1996, by and among Company, Parent, and subsidiaries of Parent (the
"Confidentiality Agreement") shall be terminated at the Effective Time.
Pursuant to the Merger Agreement, at the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any Shares, each of
the issued and outstanding Shares or fractional interests thereof (other than
any Shares owned by Buyer and its Affiliates and Shares as to which dissenters'
rights
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have been perfected), shall be converted into the right to receive an amount in
cash which shall be equal to the highest price paid to holders of Shares who
tender their Shares in the Tender Offer (the "Purchase Price"). From and after
the Effective Time, all outstanding Shares (other than Shares held by Buyer or
its Affiliates) shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and the holders of certificates
formerly representing Shares shall cease to have any rights with respect thereto
other than to receive the Per Share Amount or any dissenters' rights they have
perfected pursuant to Section 23B.13.020 of the WBCA. Any options which remain
unexercised as of the Effective Time shall be entitled without any further
action solely to the right to receive cash payments provided for in Section
1.5(a) of the Reorganization Agreement.
The Merger Agreement provides that the directors of Buyer immediately prior
to the Effective Time will be the initial directors of the Surviving Corporation
and that the officers of Company immediately prior to the Effective Time will be
the initial officers of the Surviving Corporation. The Merger Agreement provides
that, at the Effective Time, the Articles of Incorporation of Company, as in
effect immediately prior to the Effective Time, shall be amended as of the
Effective Time by operation of the Merger Agreement and by virtue of the Merger
without any further action by the shareholders or directors of the Surviving
Corporation to read in their entirety as set forth on Annex A attached to the
Merger Agreement. The Merger Agreement also provides that the Bylaws of Buyer,
as in effect immediately prior to the Effective Time, will be the Bylaws of the
Surviving Corporation until thereafter amended as provided by law, the Articles
of Incorporation of the Surviving Corporation, and such Bylaws.
The form of Merger Agreement is filed as Exhibit 4 to this Schedule 14D-9
and is incorporated herein by reference in its entirety.
COVENANTS SET FORTH IN THE REORGANIZATION AGREEMENT
Covenants of Parent and Buyer
Government Approvals. Pursuant to the Reorganization Agreement, Parent and
Buyer have agreed to take or cause to be taken as promptly as practicable all
such steps as shall be necessary to obtain all authorizations, consents, orders
or approvals of, or declarations or filings with, or terminations or expirations
of waiting periods imposed by any government agencies, as are required by law or
otherwise necessary or required to consummate the Tender Offer and the Merger
and have agreed to do any and all acts deemed by Company to be reasonably
necessary or appropriate in order to cause the Merger to be consummated on the
terms provided in the Reorganization Agreement as promptly as practicable.
Notification of Breach of Representations, Warranties, and
Covenants. Pursuant to the Reorganization Agreement, Parent and Buyer have
agreed to promptly give written notice to Company upon becoming aware of the
occurrence or impending or threatened occurrence of any event which would cause
or constitute a breach of any of the representations, warranties, or covenants
of Parent or Buyer contained or referred to in the Reorganization Agreement.
Press Releases. Pursuant to the Reorganization Agreement, Parent and Buyer
have agreed not to issue any press release or written statement for general
circulation to the public relating to the Merger, the Reorganization Agreement,
or the Merger Agreement unless previously provided to Company for review and
approval. In addition, Parent has agreed to cooperate with Company in the
development and distribution of all news releases and other public information
disclosures with respect to the Reorganization Agreement, the Merger Agreement,
and the Merger. Notwithstanding the foregoing, Parent and Buyer may, without the
consent of Company, issue any press release or written statement for general
circulation with regard to the Reorganization Agreement, the Merger Agreement
and the Merger that either Parent or Buyer determines is required under any
applicable law or regulation, provided that, prior to such issuance, Parent and
Buyer shall inform Company of their intent to make such releases or statements,
shall provide a copy thereof to Company, and shall provide Company with an
opportunity to review and comment on the content of such releases or statements.
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Offer to Purchase Shares. Pursuant to the Reorganization Agreement, Parent
and Buyer have agreed to use their best efforts in good faith to take or cause
to be taken as promptly as practicable all such steps as shall be necessary or
appropriate in order to complete the Tender Offer on the terms provided in the
Tender Offer Documents prior to the Merger.
Litigation Developments. Pursuant to the Reorganization Agreement, Parent
and Buyer have agreed to promptly advise Company with respect to any and all
material legal actions or other proceedings or investigations that could impede
the transactions contemplated by the Reorganization Agreement and to promptly
advise Company with respect to any significant developments arising in
connection with said actions, proceedings or investigations. In the event that
any action, suit, proceeding or investigation relating to the Reorganization
Agreement or to the transactions contemplated by the Reorganization Agreement is
commenced, whether before or after the Effective Time, the parties to the
Reorganization Agreement agree to cooperate and use their best efforts to defend
vigorously against and respond thereto.
Indemnification and Insurance. Pursuant to the Reorganization Agreement,
and with respect to events which occur prior to the Effective Time, Parent has
agreed that all rights to indemnification existing in favor of the present or
former directors, officers, employees, fiduciaries, and agents of: (i) Company,
(ii) Company Subsidiaries, or (iii) any pension plans or employee welfare
benefit plans which are sponsored by Company or Company Subsidiaries, as
provided in Company's Articles of Incorporation or pursuant to any agreements
previously disclosed by Company to Parent in writing, or the articles of
incorporation, bylaws, Board resolutions, or similar documents of Company
Subsidiaries as in effect as of May 31, 1996 shall survive the Merger and shall
continue in full force and effect for a period of not less than the statutes of
limitations, if any, applicable to such matters. Without limiting the foregoing,
Company and, after the Effective Time, Parent have agreed to cause the Surviving
Corporation to periodically advance expenses as incurred with respect to the
foregoing to the fullest extent permitted under the provisions of Company's
Articles of Incorporation or the articles of incorporation of Company
Subsidiaries. Parent has agreed that either Company will convert and extend its
current policies or it will cause the Surviving Corporation to maintain in
effect coverage for six (6) years from the Effective Time policies continuing to
the greatest extent possible the coverage (and avoiding to the greatest extent
possible any lapse of coverage) under the current policies of the directors' and
officers' liability insurance and ERISA or employee plan fiduciary liability
insurance maintained by Company and Company Subsidiaries with respect to events
which occur prior to the Effective Date. This commitment is subject to a
limitation that the incremental cost of the extended coverage after applying
prepaid premiums under current policies will not exceed $200,000, and if it
does, then the maximum coverage available at that cost will be obtained.
Company Agreements and Plans. Pursuant to the Reorganization Agreement,
Parent, Buyer, and their affiliates have agreed to cause the Surviving
Corporation to honor and fully perform all agreements and plans for the benefits
of employees or non-employee directors which are not terminated by the
Reorganization Agreement and which are disclosed to Parent and Buyer.
Covenants of Company
Approval by Company Shareholders. The Reorganization Agreement provides
that as soon as practicable after the expiration date of the Offer, and:
(i) if Buyer and its affiliates own or have the right to acquire less
than ninety percent (90%) of Company Shares, but more than fifty percent
(50%), Company shall cause the Merger, the Reorganization Agreement, and
the Merger Agreement to be submitted promptly for the approval of its
shareholders at a special meeting to be called and held in accordance with
applicable laws and Company bylaws; or
(ii) if, as a result of the Offer, Buyer owns or has the right to
acquire ninety percent (90%) or more of Company Shares, then at Buyer's
sole election, Company shall comply with all applicable procedures, deliver
all required disclosure documents, and cooperate with Buyer to consummate a
merger between Buyer and Company pursuant to Section 23B.11.040 of the WBCA
(a "short form merger").
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If a special meeting of Company shareholders is necessary or required, Company
shall use its best efforts to cause such meeting of its shareholders to take
place as soon as practicable. In connection with the call of such meeting,
Company shall cause such proxy materials or information statements, with any
amendments thereto that may in the judgment of its counsel be necessary or
desirable, to be mailed to its shareholders. In connection with the procedures
to complete a short form merger, Company shall cause such information
statements, with any amendments thereto that may in the judgment of its counsel
be necessary or desirable, to be mailed to its shareholders. Subject to the
discharge of their fiduciary duty, the Board of Directors of Company shall at
all times prior to and during such meeting of Company shareholders recommend
that the transactions contemplated by the Reorganization Agreement be adopted
and approved and use its best efforts to cause such adoption and approval.
Acceptance of Tender Offer. The Reorganization Agreement provides that
subject to the discharge of their fiduciary duty (i.e., the general legal duty
of a Board of Directors to act in the best interest of the shareholders as
determined by the Board of Director's business judgment), the Board of Directors
of Company shall at all times prior to the delivery of the Offer Documents, and
prior to the expiration of the Offer, recommend that the holders of Shares
tender their Shares to Buyer pursuant to the terms of the Offer Documents and
consent to and use their best efforts to encourage the execution of agreements
by a sufficient number of Company shareholders to assure satisfaction of the
Minimum Condition.
Agreements of Directors and Certain Officers and Major
Shareholders. Pursuant to the Reorganization Agreement, Company has
acknowledged and consented to the execution and delivery of the Director's and
Officer's Agreements and the Shareholder Agreement to Buyer and Parent by
certain officers and members of its Board of Directors. Subject to the exercise
of its fiduciary duties, Company covenants and agrees not to take any action
which would interfere with or prevent the performance of the Director's and
Officer's Agreements and the Shareholder Agreement.
Government Approvals. Pursuant to the Reorganization Agreement, Company
has agreed to cooperate in all reasonable respects with Parent and Buyer to
obtain any necessary government approvals. Prior to the Effective Date, Company,
with the cooperation of Parent and Buyer, has agreed to take or cause to be
taken as promptly as practicable all such steps as shall be necessary to obtain
all government approvals and shall do any and all acts deemed by Parent and
Buyer to be reasonably necessary or appropriate in order to cause the Merger to
be consummated on the terms provided in the Reorganization Agreement.
Notification of Breach of Representations, Warranties, and
Covenants. Pursuant to the Reorganization Agreement, Company has agreed to
promptly give written notice to Parent and Buyer upon becoming aware of the
occurrence or impending or threatened occurrence of any event which would cause
or constitute a breach of any of the representations, warranties, or covenants
of Company contained in the Reorganization Agreement and shall use its best
efforts to prevent the same or remedy the same promptly.
Compensation. The Reorganization Agreement provides that except in
accordance with budgets and plans previously approved by Company's Compensation
Committee, and in connection with the acceleration of stock options as provided
for in Section 1.5 of the Reorganization Agreement, and the cash-out of change
of control agreements, as amended, neither Company nor any of the Company
Subsidiaries shall make or approve any increase in the compensation payable or
to become payable to any of their directors, officers, employees, or agents with
annual salaries in excess of $75,000 at May 31, 1996 (including but not limited
to compensation through any profit sharing, pension, retirement, severance,
incentive or other employee benefit program or arrangement), nor shall any bonus
payment or any agreement or commitment to make a bonus payment be made nor shall
any stock option, warrant or other right to acquire capital shares be granted,
or employment agreement (other than any such employment agreement that may arise
by operation of law upon the hiring of any new employee) or consulting agreement
be entered into by Company with any such directors, officers, employees or
agents unless Parent and Buyer have given their prior written consent.
Conduct of Business in the Ordinary Course. The Reorganization Agreement
provides that prior to the Effective Time, Company and the Company Subsidiaries
shall use reasonable efforts to conduct their businesses and to maintain
satisfactory relationships with licensers, suppliers, distributors, and
customers, all in accordance with their ordinary and usual course of business.
Prior to the Effective Time, neither Company
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nor any of the Company Subsidiaries shall without the prior written consent of
Parent or except as specifically contemplated by the Reorganization Agreement:
(i) amend its Articles of Incorporation or Bylaws;
(ii) authorize for issuance, issue, deliver or sell any additional
capital shares, or securities convertible into such shares, or issue or
grant any rights, options or other commitments for the issuance of such
shares or convertible securities (other than the issuance of Shares
pursuant to the exercise of outstanding stock options, issuance of capital
shares or payment in lieu thereof pursuant to that certain Stock Purchase
Agreement between Company and Dow dated as of June 4, 1991 and amended as
of May 13, 1994 (the "Dow Put/Call") and the grant of any new options in
accordance with budgets and plans previously approved by Company's
Compensation Committee);
(iii) split, combine or reclassify any of its capital shares or
declare, set aside or pay any dividend (whether in cash, stock or property)
in respect to its Shares or redeem or otherwise acquire any of its Shares
other than the repurchase, at cost, of Shares issued to employees pursuant
to the terms of employee restricted stock or share purchase agreements;
(iv) dispose of or acquire any material properties or assets except in
the ordinary course of business;
(v) engage in any activities or transactions that are outside the
ordinary course of Company's business;
(vi) enter into or materially amend any provision of Company's Stock
Plans;
(vii) incur any indebtedness for borrowed money, other than amounts
borrowed pursuant to and in accordance with the terms and conditions of its
existing lines of credit.
Notwithstanding the foregoing, Parent and Buyer have agreed that Company or
its Subsidiaries may take certain actions with respect to the Pension Plans (as
defined in the Reorganization Agreement), prior to the Effective Time without
prior consent of Parent or Buyer.
Press Releases. The Reorganization Agreement prohibits Company from
issuing any press release or written statement for general circulation relating
to the Reorganization Agreement, the Merger Agreement, or the Merger unless
previously provided to Parent and Buyer for review and approval. Notwithstanding
the foregoing, Company may, without the consent of Parent and Buyer, issue any
press release or written statement for general circulation with regard to the
Reorganization Agreement, the Merger Agreement and the Merger that Company
determines is required under any applicable law or regulation, provided that,
prior to such issuance, Company shall inform Parent and Buyer of its intent to
make such releases or statements, shall provide a copy thereof to Parent and
Buyer, and shall provide Parent and Buyer with an opportunity to review and
comment on the content of such releases or statements.
No Merger or Solicitation. The Reorganization Agreement provides that,
subject to the continuing fiduciary duties of the Board of Directors of Company,
prior to the Effective Time, Company and the Company Subsidiaries shall not
effect or agree to effect any Business Combination (as defined in the
Reorganization Agreement), except for (x) any Business Combination unanimously
approved by the Board of Directors of Company, (y) any Business Combination
which does not require approval by the Board of Directors of Company, or (z) any
Business Combination approved by a majority of the disinterested directors of
Company (i.e., unaffiliated with Parent) in accordance with the Reorganization
Agreement. In addition, the Reorganization Agreement provides that prior to the
Effective Date, neither Company nor any officer, director, or affiliate of
Company, nor any investment banker, attorney, accountant or other agent, advisor
or representative retained by Company shall solicit or encourage, directly or
indirectly, any inquiries, discussions or proposals for, nor propose any
discussions or negotiations looking toward, or enter into any agreement or
understanding providing for, any Business Combination.
Unsolicited Offer for a Business Combination. The Reorganization Agreement
provides that in the event that the Board of Directors of Company receives a
bona fide unsolicited offer for a Business Combination or a bona fide
unsolicited indication of interest from any person, corporation, firm,
association,
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entity, or group to engage in a Business Combination, and reasonably determines,
upon advice of counsel, that any duty to act or to refrain from doing any act
pursuant to the Reorganization Agreement is inconsistent with the continuing
fiduciary duties of Company's Board of Directors to the shareholders of Company,
Company shall within two (2) business days of receipt of such indication or
offer inform Parent of such interest or the terms of such offer and may: (a)
disclose the same nonpublic information as provided to Parent to such
corporation, firm, association, person, or other entity or group concerning the
business and properties of Company and/or afford any such party the same access
as provided to Parent to the properties, books or records of Company and the
Company Subsidiaries or otherwise assist or encourage any such party in
connection with the foregoing, all on no more favorable terms and conditions as
set forth in the Confidentiality Agreement, provided that if requested,
Company's Board of Directors may provide nonpublic information not provided to
Parent and/or agree to more favorable terms and conditions so long as it
promptly provides the same information to Parent and/or modifies the
Confidentiality Agreement so as to make available the same terms and conditions
for Parent or (b) if Company's Board of Directors determines that their
continuing fiduciary duties would require their approval of any such unsolicited
bona fide offer for a Business Combination with another entity because the terms
of such offer are more favorable to Company's shareholders than the terms set
forth in the Reorganization Agreement, then Company may accept such offer,
provided that prior to taking any such actions Company shall provide Parent with
not less than two (2) business days to modify the terms of its Offer and Offer
Documents and to propose to Company any corresponding modifications to the
Reorganization Agreement.
Dividends. The Reorganization Agreement provides that Company shall not
declare, set aside or pay any dividend or other distribution in respect of the
Shares (including, without limitation, any stock dividend or distribution),
except in the ordinary course of business and not in amounts which materially
exceed the amounts previously paid by Company.
Accounting Methods. The Reorganization Agreement provides that Company
shall not change its methods of accounting in effect at February 29, 1996,
except as required by changes in GAAP as concurred in by its independent
auditors.
Additional Agreements. The Reorganization Agreement provides that in case
at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of the Reorganization Agreement or to vest
the Surviving Corporation with full title to all properties, assets, rights,
approvals, immunities, and franchises of Company, the proper officers and
directors of each party to the Reorganization Agreement shall take all such
necessary or appropriate action.
Litigation Developments. Pursuant to the Reorganization Agreement, Company
has agreed to promptly advise Parent and Buyer with respect to any and all legal
actions or other proceedings or investigations that either seek to enjoin the
transactions contemplated by the Reorganization Agreement or collect damages or
impose a monetary payment related to such transactions which could reasonably be
expected to exceed $5,000,000, and to promptly advise Parent and Buyer with
respect to any significant developments arising in connection with said actions,
proceedings, or investigations.
Employment Agreements. Pursuant to the Reorganization Agreement, Company
has agreed to permit and shall give Parent and Buyer the opportunity to
negotiate employment agreements with Company executives, provided that any such
agreement shall be subject to the consummation of the Tender Offer. Parent has
indicated that it intends to offer employment agreements to certain executives
of Company, but no terms or conditions have been determined.
Access to Properties, Books and Records; Confidentiality. The
Reorganization Agreement provides that following the consummation of the Offer,
Company shall give Parent and Buyer and their counsel and accountants reasonable
access, during normal business hours and upon reasonable request, to all of its
properties, books, contracts, commitments, and records including, but not
limited to, the corporate, financial, and operational records, papers, reports,
instructions, procedures, tax returns and filings, tax settlement letters,
material contracts or commitments, regulatory examinations, and correspondence
and shall allow Parent and Buyer to make copies of such materials (to the extent
not legally prohibited) and shall furnish Parent and Buyer with all such
information concerning its affairs as Parent and Buyer may reasonably request.
Company
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shall also use its best efforts to cause Company's accountants to make available
to Parent and Buyer, their accountants, counsel, and other agents, to the extent
reasonably requested in connection with such review, Company's accountants' work
papers and documentation relating to its work papers and its audits of the books
and records of Company. Any information requested by Parent and Buyer shall be
subject to the provisions of the Confidentiality Agreement.
Resignation and Appointment of Directors. Upon the execution of the
Reorganization Agreement, Company delivered to Parent and Buyer contingent
resignations of all directors of Company who were not nominated by Parent. Such
resignations are contingent on the consummation of the Tender Offer. Upon the
consummation of the Tender Offer, Company shall accept the resignations of a
sufficient number of such directors as determined by Parent and Buyer to result
in Parent having representation on the Board of Directors of Company
proportionate to the percentage shareholding of Parent and its affiliated
companies, provided that the Board of Directors (excluding directors nominated
by Parent) shall have the right but not the obligation to designate up to four
current members of the Special Committee (as defined below in Item 4) of the
Board who may remain directors after the consummation of the Offer until the
Effective Date. On the Effective Date, Company shall accept the resignations of
any such directors determined by Parent and Buyer who have not previously
resigned.
Covenants of the Parties
The Reorganization Agreement provides for Parent and Buyer to acknowledge
the provisions of the Confidentiality Agreement and confirm that the provisions
thereof continue to apply. Company has agreed to treat as confidential all
information provided by Parent and Buyer, which is designated as, or from the
content clearly intended as, confidential information in the same manner as
Company treats similar confidential information of its own, and if the
Reorganization Agreement is terminated, Company shall continue to treat all such
information as confidential and to cause its employees to keep all such
information confidential and shall return such documents theretofore delivered
by Parent and Buyer as either of them shall request, and shall use such
information, or cause it to be used, solely for the purposes of evaluating and
completing the transactions contemplated by the Reorganization Agreement.
REPRESENTATIONS AND WARRANTIES
The Reorganization Agreement contains various customary representations and
warranties of the parties thereto including representations and warranties
regarding corporate status, power, authorization, and capitalization of Company,
Parent, and Buyer. In addition, Company has made representations and warranties
relating to the material litigation, employee benefit plans, and brokers, and
Parent and Buyer have delivered representations and warranties relating to their
ability to finance the Offer and the fees and expenses related thereto.
CONDITIONS TO THE MERGER
Under the Reorganization Agreement, the respective obligations of Company,
Parent, and Buyer to consummate the Merger are subject to the satisfaction of
the following conditions, and only the following conditions: (i) no provision of
any applicable law or regulation and no judgment, injunction, order, or decree
shall prohibit or restrain the consummation of the Merger, (ii) all Governmental
Approvals, as defined in the Reorganization Agreement, shall have been obtained,
with such exceptions as would not, individually or in the aggregate, have a
material adverse effect on Company's business, and (iii) Buyer shall have
purchased the number of Shares pursuant to the Offer which satisfies the Minimum
Condition.
EXPENSES
The Reorganization Agreement provides that all costs and expenses incurred
in connection with the Reorganization Agreement shall be paid by the party
incurring such expenses, whether or not any of the transactions contemplated by
the Reorganization Agreement are consummated.
AMENDMENT; TERMINATION
The Reorganization Agreement may be amended by Parent, Buyer, and Company
at any time prior to the purchase of Shares pursuant to the Offer. In addition,
the Reorganization Agreement and the Merger Agreement may be terminated as
follows:
(a) By mutual written consent of each of Parent, Buyer, and Company at
any time prior to the purchase of Shares pursuant to the Offer.
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(b) By either Company or Parent, if: (i) as a result of the occurrence
of any of the conditions set forth in Annex I to the Reorganization
Agreement, (a) Buyer shall have failed to commence the Offer within ten
(10) days following May 31, 1996 or (b) the Offer shall have terminated or
expired in accordance with its terms without Buyer having purchased Shares
satisfying the Minimum Condition; or (ii) the Offer has not been
consummated by August 31, 1996, or such other mutually agreed to date.
(c) By Parent, if any person, entity or "group" (as defined in Section
13(d)(3) of the Securities and Exchange Act of 1934) other than Parent and
Buyer or Dow acquires beneficial ownership of ten percent (10%) (except in
bona fide arbitrage transactions) or more of the outstanding Shares.
(d) By Parent, Buyer, or Company, if prior to the Effective Time,
except for the transactions contemplated by the Reorganization Agreement,
Company and the Company Subsidiaries shall have, pursuant to Section
4.2(iii) of the Reorganization Agreement, effected or agreed to effect any
Business Combination, and the two (2) business days provided for in Section
4.2(iii)(b) of the Reorganization Agreement shall have expired without a
modification to the Reorganization Agreement which is approved by Company
Board of Directors, or commenced any proceedings for winding up and
dissolution affecting either of them.
(e) By Parent, if prior to the Effective Time, the Board of Directors
of Company shall have withdrawn or materially modified its approval or
recommendation of the Offer, the Reorganization Agreement or the Merger.
If the Reorganization Agreement is terminated for any of the above
described reasons, then the Reorganization Agreement shall be void and of no
effect with no liability on the part of any party thereto (unless such
termination is the result of a breach of the Reorganization Agreement by such
party). The termination of the Reorganization Agreement shall have no effect on
the 1986 Standstill Agreement or the Confidentiality Agreement (including
without limitation the Tender Offer Protocol attached as Exhibit B thereto).
1986 STANDSTILL AGREEMENT
Capitalized terms used in this section are defined in the 1986 Standstill
Agreement. A copy of the 1986 Standstill Agreement is attached as Exhibit 5 to
this Schedule 14D-9 and is incorporated herein by reference in its entirety.
In 1986, Company entered into the 1986 Standstill Agreement with Parent,
and in conjunction with the execution of that Agreement became a major
shareholder of Company. The 1986 Standstill Agreement provides that Parent will
not acquire beneficial ownership of any Voting Securities of Company if such
acquisition would result in Parent owning more than 35% of the Common Stock
Equivalents of Company. Parent may acquire additional Voting Securities above
the 35% limit by making a tender offer for shares of Voting Securities in
response to a third-party tender offer for such securities, in which event the
percentage limitation will increase to 45% and Parent may retain shares over 45%
to the extent Company elects not to repurchase such shares pursuant to its right
to do so under the 1986 Standstill Agreement. Parent may also acquire shares in
excess of the percentage limitation either by receiving approval of five-eighths
of the directors of Company who are not affiliated with Parent (the
"Unaffiliated Directors"), or by a tender offer (without approval by the
Unaffiliated Directors) which is: (i) made to all shareholders of Company, (ii)
payable in cash, and (iii) accepted by shareholders of Company owning two-thirds
of the outstanding common stock excluding shares held by Parent and shares not
tendered by certain core shareholders of Company. The Reorganization Agreement
was approved pursuant to the above described 5/8ths provision, as permitted by
the 1986 Standstill Agreement.
Subject to the foregoing restrictions, Parent may acquire shares by open
market purchase, partial tender offer, or private transaction. In response to an
increase in the number of outstanding shares of Company's common stock, Parent
may purchase unissued shares of common stock under certain circumstances.
The 1986 Standstill Agreement also provides that Parent will not (without
prior written approval of the Board, including the concurrence of a majority of
the Unaffiliated Directors): (i) deposit any Voting Securities into a voting
trust or subject them to a voting agreement except a trust or agreement between
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Parent and its affiliates or as required by Netherlands law, (ii) join any group
for the purpose of acquiring, holding, or disposing of Voting Securities within
the meaning of Section 13(d) of the Exchange Act, (iii) induce any other person
to initiate a tender offer for any securities of Company, or to effect any
change of control of Company, or take any action for the purpose of convening a
shareholders' meeting, or (iv) acquire more than 1% of any class of securities
of any entity that is publicly disclosed to be the beneficial owner of 5% or
more of the Voting Securities of Company.
The 1986 Standstill Agreement requires Company to provide Parent with
representation on the Board of Directors proportionate to its stock ownership.
Accordingly, during Company's last fiscal year, Messrs. Nicolaas J. Westdijk and
Roy E. Wansik and Dr. Sjoerd E. Eikelboom held three of twelve seats on the
Board. Directors designated by Parent are entitled to representation on any
committee of the Board at Parent's request. Parent is required to vote its
shares so as to afford Company's other shareholders with proportionate
representation.
Finally, pursuant to the Reorganization Agreement, the 1986 Standstill
Agreement will terminate upon completion of the Merger.
(ii) Arrangements with Executive Officers, Directors and Affiliates
Change of Control Agreements
The Board of Directors previously approved on a unanimous basis change of
control agreements (the "Change of Control Agreements") between Company and
certain of the officers of Company. At February 29, 1996, Company had Change of
Control Agreements in place with each of seven officers (the "Executives"). Each
Change of Control Agreement provides that the Executive will receive
compensation for 30 months if his employment is terminated (voluntarily or
involuntarily) for any reason other than gross misconduct, death, permanent and
total disability, or reaching age 65, provided such termination occurs within 24
months after certain defined events which might lead to a change of control of
Company. The compensation will be paid at a rate equal to the Executive's then
current salary and target incentive. The compensation is subject to a minimum
annual rate of not less than the Executive's average compensation for the
preceding three calendar years, and is subject to reduction if the aggregate
present value of all payments would exceed three times the Executive's
"annualized includible compensation," as defined in Section 280G of the Internal
Revenue Code, of 1986, as amended for the Executive's most recent five taxable
years. The Executive will also continue to have "employee" status for the
30-month period and will be entitled to retain most employee benefits and rights
during this period.
Company may cease payments in the event the Executive breaches certain
non-competition or confidentiality covenants. Company also has the right to
terminate the Change of Control Agreements upon a one-year notice, except as to
rights already accrued as a result of an event which has triggered the change of
control provisions of the Change of Control Agreements. The Board of Directors
approved the Change of Control Agreements based on the belief that the terms and
conditions of the Change of Control Agreements are in the best interest of
Company because the Change of Control Agreements will enable the Executives to
continue to focus on activities providing for the maximum long-term value to
Company's shareholders, even when faced with the possible change of control of
Company. The Change of Control Agreements are described further in Company's
1995 Proxy Statement at pages 18 to 19 which are filed as Exhibit 6 to this
Schedule 14D-9 and incorporated herein by reference in its entirety.
On May 31, 1996, Company executed letter amendments to the Change of
Control Agreements to clarify and make provisions for certain payments to be
made in the event the Offer is consummated (the "Letter Amendments"). The Letter
Amendments, among other provisions: (i) clarify that the consummation of the
Offer is a "change in control," (ii) provide for payment of the 30 months of
base compensation, target incentives and benefits in a lump sum upon
consummation of the Offer rather than upon termination of the Executive, and
(iii) provide for a "Gross-Up Payment" to each Executive to cover the effect of
excise and other taxes on the payments made pursuant to the Change of Control
Agreements, as amended, the conversion of outstanding stock options and other
payments likely to be treated as "parachute payments" for federal income tax
purposes, recognizing that payments in excess of the "three times annualized
includible
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compensation" may be paid to these individuals. Absent a specific agreement to
the contrary, the Letter Amendments provide that payments pursuant to the
revised agreements shall be in lieu of any other severance benefit which they
presently are entitled to in the event of a termination within 30 months after
the consummation of the Offer and by execution of the Letter Agreements will
also grant a release to the Surviving Corporation of any other claim, right, or
cause of action relating to his employment with Company prior to June 1, 1996. A
copy of the form of Letter Amendments to be executed with each Executive, along
with a list of the Executives and the estimated amounts to be paid to the
Executives, is filed as Exhibit 7 to this Schedule 14D-9 and is incorporated
herein by reference in its entirety.
The estimated aggregate amount payable to the seven Executives in the event
the Offer is consummated is approximately $5,600,000 in base compensation,
target bonuses, and other benefits pursuant to the amended Change of Control
Agreements. In addition, these seven officers will also receive an aggregate
amount of approximately $6,600,000 as cash payments for surrendering outstanding
stock options, deferred cash incentives, and restricted stock awards the vesting
of which is to be accelerated pursuant to Company Stock Plans under provisions
applicable to all other officers and employees of Company. The foregoing amounts
do not include the Gross-Up Payments which when determined will equal the
related excise and other taxes attributable to amounts deemed to be parachute
payments.
Members of the Special Committee have received $5,000 as recognition for
service on the Special Committee (as defined below in Item 4), both in
connection with the current Tender offer negotiations with Parent and Buyer and
for service over the last three years relating to conflict issues with Parent
including those relating to Univar Europe N.V. discussed below in item 4. During
this period, the Special Committee met by phone or in person fourteen (14)
times. Mr. Wiborg will receive an additional $30,000 having served as the chair
of the Special Committee, but only if the Offer is consummated.
In addition, certain directors who previously elected to receive retainers
and/or attendance fees in the form of discounted stock options in lieu of cash
payments pursuant to the 1993 Non-employee Director Stock Option Plan will
receive an aggregate of approximately $420,000 as cash payments for surrendering
their stock options.
The Letter Amendments were approved by the Special Committee which consists
solely of "outside" non-management directors and were ratified by the Board of
Directors after deliberating without the presence of any of the Executives or
the members of the Board nominated by Parent. These "unaffiliated directors"
concluded that the payments were consistent with the purposes of the Change of
Control Agreements and were fair and in the best interest of the shareholders of
Company.
Other Compensation Information.
Compensation arrangements and benefits payable to officers and directors
were also described in Company's proxy statement dated for its 1995 annual
meeting which was mailed to Company shareholders on or about July 7, 1995 (the
"1995 Proxy Statement"). Pages 10 to 13 are filed as Exhibit 8 to this Schedule
14D-9 and are incorporated herein by reference in their entirety. Also filed as
Exhibit 9 to this Schedule 14D-9 and incorporated herein by reference are the
corresponding information for the fiscal year ended February 29, 1996 which
Company intends to file as an amendment to its 1996 Form 10-K. As indicated
above in the discussion of the Reorganization Agreement under "Employment
Agreements," Parent has indicated that it intends to offer employment agreements
to certain executives of Company, but no terms or conditions have been
determined.
Indemnification, Insurance, and Limitation of Director Liability.
As discussed above in the discussion of the Reorganization Agreement under
"Indemnification and Insurance," officers and directors of Company will continue
to be entitled to indemnification pursuant to Company's Article of Incorporation
and various charter documents of the Company Subsidiaries. Company expects to
convert its present directors and officers insurance to a six (6) year policy
covering acts or omissions occurring prior to the Effective Date.
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Company's Articles of Incorporation also provide that Company Directors are
not liable to Company or its shareholders for monetary damages for conduct as a
director except for certain specified statutory exceptions.
Company's indemnification and limitations of director liability provisions
are described in the 1995 Proxy Statement at page(s) 20 through 25, filed as
Exhibit 10 to this Schedule 14D-9 and are incorporated herein by reference in
their entirety.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation of Company's Board of Directors.
The Board including all of the Unaffiliated Directors has unanimously
determined that the Offer and the Merger are fair to and in the best interests
of the shareholders of Company and unanimously recommends that all shareholders
of Company accept the Offer and tender all of their Shares pursuant to the
Offer. See "Reasons for the Offer; Factors Considered by the Board" for a
discussion of the factors considered by the Board in making its recommendation.
A copy of the press release issued by Company announcing the Offer and the
Merger is filed as Exhibit 11 to this Schedule 14D-9 and is incorporated herein
by reference in its entirety.
As set forth in the Offer Documents, upon the terms and subject to the
conditions of the Offer (including the satisfaction of the Minimum Condition),
Buyer will accept for payment and pay for all Shares validly tendered on or
prior to the Expiration Date and not properly withdrawn. The term "Expiration
Date" means 8:00 p.m., New York City time, on Monday, July 15, 1996, unless and
until Buyer, in its sole discretion (but, subject to the terms and conditions of
the Reorganization Agreement), shall have extended the period during which the
Offer is open, in which event the term "Expiration Date" shall mean the latest
time and date at which the Offer, as so extended by Buyer, shall expire.
Shareholders considering not tendering their Shares in order to wait for the
Merger should note that Buyer is not obligated to purchase any Shares, and can
terminate the Offer and the Reorganization Agreement and not proceed with the
Merger, if the Minimum Condition is not satisfied or any of the other conditions
to the Offer are not satisfied. Under the WBCA and Company's Articles of
Incorporation, the approval of the Board and the affirmative vote of the holders
of a majority of the outstanding Shares are all that would be required to
approve and adopt the Merger.
(b) Background of the Offer; Reasons for the Recommendation.
BACKGROUND.
Initial Investment by Pakhoed
On September 18, 1986, Pakhoed Investeringen B.V., a wholly owned
subsidiary of Parent entered into an Agreement for Exchange of Capital Stock
(the "Exchange Agreement") with Company pursuant to which, among other things,
Parent transferred to Company all of the issued and outstanding shares of
capital stock of DSW, Inc., a Washington corporation which had just acquired the
chemical distribution business of the McKesson Chemical Company, and Company
issued to Pakhoed Investeringen B.V. 6,106,000 Shares (giving effect to a
subsequent 2 for 1 stock split), representing approximately 35% of the total
outstanding Shares as of that date. In connection with the transactions effected
pursuant to the Exchange Agreement, the Company, Parent and Pakhoed
Investeringen entered into a standstill agreement of even date (the "1986
Standstill Agreement" which is described in Item 3).
Univar Europe N.V.
Parent and Company jointly organized Univar Europe N.V. ("Univar Europe")
in 1991. At the time Univar Europe was organized, Company owned 51% of the
shares of Univar Europe and Parent owned forty-nine percent (49%). In connection
with the organization of Univar Europe, Parent and Company entered into a
Shareholder Agreement whereby Company agreed that Parent would have unilateral
right to require Company to acquire Parent's 49% interest in Univar Europe. In
September, 1994, Company purchased
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Parent's interest in Univar Europe for $25.8 million. Funding for this aggregate
purchase price was provided through the sale of two million shares of Company's
Shares to Dow.
Recent Discussions Between Company and Parent Regarding a Potential Tender
Offer
During the last three years, there have been informal discussions between
James W. Bernard, a director of Company and Company's President and Chief
Executive officer until October, 1996, and Nicolaas J. Westdijk, a director of
Company and Chair of the Board of Management of Parent. Gary E. Pruitt,
Company's Chief Financial Officer, and Sjoerd D. Eikelboom, a Director of
Company and a Senior Vice President of Parent, participated in some of such
discussions. In particular, meetings were held on July 7 and August 9 and 10,
1995, to discuss means for cooperation between Company and Parent. Although
these meetings addressed possible business combinations and other possible
arrangements between the two companies, no proposals were made by Parent as a
result of these informal discussions.
During the week of October 9, 1995, Mr. Pruitt met with Dr. Eikelboom,
other management of Parent, and Mr. Thomas M. Foster, a financial advisor to
Parent, to discuss in greater detail the potential for cooperation between
Company and Parent and related matters. On October 30, 1995, Parent made a
request for certain financial, operational and other information concerning the
Company in connection with the consideration by Parent of a possible transaction
involving Parent and/or one or more of its affiliates and Company.
The December 1995 Contact
On December 11, 1995, Mr. Westdijk contacted James H. Wiborg, the Chairman
of the Board of Company, indicating interest in initiating discussions
concerning an acquisition of Company. In connection with such discussions,
Parent requested a meeting to discuss an outline of possible environmental due
diligence and the price which Parent would pay for the Shares.
By letter dated January 11, 1996, from Mr. Pruitt to Dr. Eikelboom, Company
outlined its proposal concerning a procedure to move discussions of a possible
negotiated transaction forward. That letter addressed a proposed amendment to
the Standstill Agreement, requested that Parent indicate a conditional per share
range of values, and suggested a due diligence approach. By letter dated January
23, 1996, Parent provided its response to the outline contained in the January
11 letter, indicating an approach to valuation but without providing any
specific value. By letter dated February 2, 1996, from Mr. Pruitt to Dr.
Eikelboom, Company indicated that it was not prepared to initiate discussions
with Parent concerning a possible transaction at that time.
The Tender Offer Protocol
In late February, 1996, Mr. Westdijk met with Mr. Wiborg and Paul H. Hough,
a director and the Chief Executive Officer of Company, requesting that
reconsideration to be given to initiating discussions. Mr. Westdijk, on behalf
of Parent, suggested to Mr. Wiborg and Mr. Hough that a price range could be
discussed based on expected earnings as well as on a current and historical
perspective.
By unanimous consent of the Board of Directors dated April 1, 1996, a
special committee relating to the transaction was created (the "Special
Committee") comprised of Messrs. James H. Wiborg, Andrew V. Smith, Richard E.
Engebrecht and N. Stewart Rogers, none of whom serve as executive officers of
Company, for the express purpose of negotiating a definitive acquisition
agreement with Parent. After a careful evaluation of Parent's request, a
protocol was created by Company for use in the negotiations (the "Protocol").
Under the Protocol, terms for price negotiation were described, and standstill
provisions were included in the related confidentiality agreement.
On March 15, 1996, Mr. Wiborg contacted Mr. Westdijk and a meeting was set
for April 10, 1996 in Seattle, Washington at which the Protocol would be
presented to Parent. Meetings were held from April 10 - 13, 1996, and Parent was
represented at all of the April meetings by Mr. Westdijk and Dr. Eikelboom. All
of the members of Company's Special Committee, along with Mr. Hough and Mr.
Pruitt,
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were present at the April 10 meeting. Thereafter Messrs. Wiborg and Pruitt
represented Company while conferring regularly by phone with the other members
of the Special Committee and Mr. Hough.
At the April 10 meeting, Parent received the Protocol and was informed that
the Protocol was the exclusive basis on which the parties could continue
discussions of a possible acquisition.
After a review of the terms and conditions of the Protocol, and
negotiations on April 11 and 12, 1996 relating to certain provisions within the
Protocol, the parties agreed to a revised Protocol, and the Protocol was
executed in connection with the Confidentiality Agreement on April 12, 1996. A
copy of the Confidentiality Agreement, as executed, which contains the Protocol
as Exhibit B, is filed as Exhibit 12 to this Schedule 14D-9 and is incorporated
herein by reference in its entirety.
The Confidentiality Agreement provides that Parent may not, without the
prior written consent of Company, disclose to any person other than Parent and
its representatives, the fact that Company and Parent were considering a
transaction. The Confidentiality Agreement further provides that Parent is to
keep confidential, subject to being legally compelled to disclose, certain
documents provided to Parent by Company in connection with the proposed
transaction (the "Evaluation Documents"). In the event that Parent is legally
compelled to disclose any of the Evaluation Documents, it is required to notify
Company so that Company can take such measures to protect the confidentiality of
the Evaluation Documents.
In connection with the Protocol, the Confidentiality Agreement also
provides that Parent, until October 30, 1996 (which was extended to April 30,
1998, as discussed below), except with the written approval of Company, agrees
not to: (i) acquire any of the stock or other securities of Company other than
as permitted by the 1986 Standstill Agreement, but specifically excluding the
right to make a tender offer pursuant to Section 2.10 of the 1986 Standstill
Agreement, (ii) submit to Company or any other person any proposal for a
transaction between Parent and Company or involving any of its securities
holders other than in accordance with the Protocol, (iii) solicit proxies or
shareholder consents with respect to the securities of Company or become a
"participant" in any "solicitation" or a member of a "group" (as such terms are
used in Regulation 14A and Section 13(d)(3) of the Exchange Act) in opposition
to the recommendation of the majority of the Unaffiliated Directors, or (iv)
otherwise assist, advise, encourage, or act alone or in concert with any other
person in acquiring or attempting to acquire, directly or indirectly, control of
Company or its assets.
Finally, the Confidentiality Agreement provides that if certain conditions
set forth in Section 2.1 and 2.2 of the Protocol are satisfied, the standstill
provisions of the Confidentiality Agreement automatically extends to April 30,
1998. These conditions were subsequently satisfied on April 26, 1996.
On April 13, Parent initially indicated a willingness to offer $17.00 per
share for all of the Shares. This offer was based on Parent's evaluation of the
value of Company based on Parent's analyses of, among other factors, performance
projections and discounted cash flows of Company. Company responded with a
counter-offer of $23.00 per Share. Company's price was based on recovery timing,
projected earnings, earning multiples, and market reactions to earnings
improvements.
The negotiations continued and each party made several proposals and
counter-proposals. Parent increased the price it was willing to offer to a price
of $19.50 per share and Company countered with $20.50. This was determined to be
the agreed price range. The parties determined to proceed on the basis that, if
they could reach agreement on the other terms and provisions of a definitive
acquisition agreement, the final price, subject to the approval of Company's
Board of Directors, would be between $19.50 and $20.50 per share with a
deduction equal to fifty percent of the after tax cost to Company of the
exercises of all previously granted stock options and restricted stock awards
and full payment of any amounts to be paid under previously authorized change of
control agreements. (See Item 3 -- Change of Control Agreements).
On April 20 and 21, 1996, counsel for Company met with counsel for Parent
to negotiate the terms of a definitive acquisition agreement, after previously
exchanging drafts of an agreement.
During the period from April 15 - 26, 1996, representatives of the Company
and Parent analyzed the estimated after tax cost to Company of the option
exercises and change of control payments described above.
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On April 26, 1996, Mr. Westdijk met with Company's Special Committee and agreed
upon a conditional tender offer price of $19.45 per share, based on the $20 per
share price, less $0.55 representing the price adjustment of fifty percent of
the after tax cost of the option exercises and change of control payments.
Beginning April 29, 1996, and ending May 24, 1996, subject to the terms of
the Confidentiality Agreement and of an Environmental Due Diligence Agreement
dated April 22, 1996, Parent conducted a due diligence review focusing primarily
on environmental liabilities and litigation related to the business, properties
and assets of Company. Parent representatives met with Company representatives
on April 29-30 and May 6-8 and 14, 1996, as part of the environmental due
diligence procedure. Over this period and continuing through May 31, 1996,
representatives of and counsel for Company and Parent continued to negotiate
terms of a definitive acquisition agreement. A copy of the Due Diligence
Agreement, as executed, is filed as Exhibit 13 to this Schedule 14D-9 and is
incorporated herein by reference in its entirety.
In April, 1995, Company retained Schroder Wertheim & Co. Incorporated
("Schroder Wertheim") as its exclusive financial advisor in connection with a
review of various options to maximize the value of the Company to its
shareholders. In April, 1996, Company advised Schroder Wertheim about the
on-going discussions with Parent concerning a possible acquisition of Company by
Parent. Company provided Schroder Wertheim with certain information concerning
Company and the proposed transaction so that Schroder Wertheim could perform a
preliminary analysis of the proposed transaction. Schroder Wertheim was not
authorized to and did not solicit any indications of interest from any other
third party with respect to all or a part of Company's business, and was not
requested to and did not make any recommendation as to the form or amount of
consideration to be offered to shareholders of Company in the proposed
transaction.
On May 2, 1996, an afternoon continuation of a Regular Meeting of the Board
of Directors of Company was held without the participation by the directors
nominated by Parent to discuss the proposed transaction. Representatives of
Schroder Wertheim were present at the meeting and offered their preliminary
analysis of the proposed transaction. Legal counsel reviewed issues relating to
the Protocol and the proposed Offer and Merger.
On May 10, 1996, Company and Schroder Wertheim executed into an engagement
letter pursuant to which the Company retained Schroder Wertheim as its financial
advisor in connection with the possible sale of the Company and to render an
opinion to the Board of Directors, as investment bankers, as to the fairness,
from a financial point of view, of the proposed transaction with Parent.
On May 30, 1996, Parent notified Company that it was willing to execute the
Reorganization Agreement and proceed with the Offer.
On May 31, 1996, the Board of Directors of Company held a special meeting
to consider the acquisition proposal submitted to Company. All of Company's
directors participated in the meeting. After initial discussion, the directors
nominated by Parent indicated that they would vote in favor of the Offer and
Merger and then excused themselves from further participation. During a
continuation of the meeting, the Board reviewed with certain of its executive
officers, legal counsel, and financial advisors in detail the acquisition
proposal submitted to Company. The presentations included a review of the
financial analysis and fairness opinion of Schroder Wertheim. Based on such
discussions and presentations, the Board unanimously approved the Reorganization
Agreement and the transactions contemplated thereby, including the Offer and the
Proposed Merger.
16
<PAGE> 18
On May 31, 1996, Parent, Buyer, and Company signed the Reorganization
Agreement, certain Directors and Officers of Company signed the Director's and
Officer's Agreements, and Dow signed the Shareholder Agreement.
REASONS FOR THE OFFER; FACTORS CONSIDERED BY THE BOARD.
In approving the Offer and the Reorganization Agreement and recommending
that all shareholders tender their Shares pursuant to the Offer, the Board
considered a number of factors including:
(a) the financial and other terms and conditions of the Offer and the
Reorganization Agreement;
(b) the presentation of Schroder Wertheim at the May 31, 1996 Board
meeting and the written opinion of Schroder Wertheim to the effect that, as
of the date of such opinion, and based upon the considerations set forth
therein, the consideration to be received by the holders of Shares other
than Parent and its Affiliates, in the Offer and the Merger is fair to such
holders, from a financial point of view. The full text of the written
opinion of Schroder Wertheim, which sets forth assumptions made, matters
considered and limitations on the review undertaken in connection with the
opinion, is attached as Annex A and filed as Exhibit 14 to this Schedule
14D-9, is incorporated herein by reference and should be read in its
entirety.
(c) the possible alternatives to the Offer and the Merger, including,
without limitation, continuing to operate Company as an independent entity,
and the risks and opportunities associated therewith;
(d) the familiarity of the Board with the business, results of
operations, and prospects of Company and the nature of the industry in
which it operates, and the risks associated therewith;
(e) the fact that the terms of the Protocol and the Reorganization
Agreement should not unduly discourage other third parties from making bona
fide proposals to acquire Company subsequent to the execution of the
Reorganization Agreement and, if any such proposals were made, the Board,
in the exercise of its fiduciary duties, could determine to provide
information to and engage in negotiations with any such third party subject
to the terms and conditions of the Reorganization Agreement;
(f) the Government Approvals required to consummate the Merger,
including, among others, antitrust approvals, and the prospects for
receiving such approvals;
(g) the general relatively high level of stock prices on the New York
Stock Exchange and other principal trading markets in the United States and
the risk that a major drop in such markets would also have a significant
and potentially long term adverse effect on the Shares; and
(h) the possibility that, after the expiration of the standstill
provisions described above, Parent might proceed with a tender offer on a
unilateral basis at a significantly lower price.
The Board did not assign relative weights to the factors or determine that
any factor was of particular importance. Rather, the Board viewed its position
and recommendation as being on the totality of the information presented to and
considered by it.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
In April 1995, Company engaged Schroder Wertheim as its exclusive financial
advisor in connection with the review of various options to maximize the value
of Company to its shareholders. Pursuant to this engagement, Company paid to
Schroder Wertheim a fee of $125,000 and agreed to pay customary and reasonable
advisory and financing fees to be negotiated in good faith if Company were to
proceed with a transaction or financing. In addition, Company agreed to
reimburse Schroder Wertheim for its reasonable out-of-pocket expenses in
connection with such engagement and to indemnify Schroder Wertheim against
certain liabilities, including liabilities under the federal securities laws.
Pursuant to a letter agreement dated May 10, 1996 (the "Engagement
Letter"), Company engaged Schroder Wertheim as its financial advisor in
connection with the possible sale of the Company and to render an opinion to the
Board of Directors, as investment bankers, as to the fairness, from a financial
point of view,
17
<PAGE> 19
of any transaction involving Parent. Pursuant to the terms of the Engagement
Letter, Company agreed to pay Schroder Wertheim: (i) an initial fee of $300,000
upon execution of the Engagement Letter, (ii) an additional fee of $300,000 at
the time Schroder Wertheim advised Company that it is ready to deliver its
fairness opinion, and (iii) an additional $900,000 upon closing of a sale
transaction involving Parent. Company has agreed to reimburse Schroder Wertheim
for its reasonable out-of-pocket expenses, including attorney's fees, and to
indemnify Schroder Wertheim against certain liabilities, including certain
liabilities under the federal securities laws.
Neither Company nor any person acting on its behalf has or currently
intends to employ, retain or compensate any person to make solicitations or
recommendations to the shareholders of Company on its behalf with respect to the
Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the best of Company's knowledge, no transactions in the Shares have
been effected during the past 60 days by Company or by any executive officer,
director, affiliate or subsidiary of Company except
for an exercise by Mr. Pruitt of a stock option for 2,112 Shares granted to him
in 1986. See also "Item 3. Identity and Background -- Director's and Officer's
Agreements."
(b) Unless Company's Board of Directors, in the exercise of its fiduciary
duties, approves another "Business Combination" (as defined in and permitted by
the Reorganization Agreement), all of Company's directors who are not affiliated
with Parent and Messrs. Pruitt, Hough, and Butler have agreed to tender all of
their Shares pursuant to the Offer. See "Item 3. Identity and
Background -- Director's and Officer's Agreements."
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth herein, no negotiation is being undertaken or is
underway by Company in response to the Offer which relates to or would result
in: (i) an extraordinary transaction such as a merger or reorganization,
involving Company or any subsidiary of Company; (ii) a purchase, sale or
transfer of a material amount of assets by Company or any subsidiary of Company;
(iii) a tender offer for or other acquisition of securities by or of Company; or
(iv) any material change in the present capitalization or dividend policy of
Company.
(b) Except as set forth herein, there is no transaction, Board resolution,
agreement in principle, or signed contract in response to the Offer that relates
to or would result in one or more of the events referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
None.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following items have been filed as exhibits to this Schedule 14D-9
filed by Company with the Commission, and are available for inspection at the
public reference facilities at the principal office of the Commission at 450
Fifth Street, Washington, D.C. 20549, and for copying upon payment of the
Commission's customary charges.
EXHIBIT INDEX
1. Agreement and Plan of Reorganization, dated May 31, 1996
2. Form of Director's and Officer's Agreement
3. Agreement with The Dow Chemical Company, dated May 31, 1996
4. Form of Merger Agreement
18
<PAGE> 20
5. 1986 Standstill Agreement
6. Excerpt from Company's 1995 Proxy Statement relating to Change of
Control Agreements
7. Form of letter to Company Officers clarifying and amending certain
change of control agreements, list of executive officers, and schedule
of payments
8. Excerpt from Company's 1995 Proxy Statement relating to Executive
Officer Compensation
9. Certain information relating to compensation arrangements and benefits
payable to officers and directors for the fiscal year ended February
29, 1996 which Company intends to file as an amendment to its 1996 Form
10-K
10. Excerpt from Company's 1995 Proxy Statement relating to indemnification
of directors and officers
11. Press Release of Company, issued June 3, 1996
12. Confidentiality Agreement dated April 12, 1996
13. Due Diligence Agreement dated April 22, 1996
14. Opinion of Schroder Wertheim & Co. Incorporated, dated May 31, 1996*
15. Letter, dated June 7, 1996, from the Chairman of the Board and Chief
Executive Officer to the Shareholders of Company*
- ---------------
* Included in materials being distributed to shareholders of Company.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
June 7, 1996 UNIVAR CORPORATION
/s/ WILLIAM A. BUTLER
Name: William A. Butler
Title: Vice President, General
Counsel,
and Corporate Secretary
19
<PAGE> 21
ANNEX A
LOGO
PERSONAL AND CONFIDENTIAL
May 31, 1996
Board of Directors
Univar Corporation
6100 Carillon Point
Kirkland, WA 98033
Members of the Board of Directors:
We understand that Royal Pakhoed N.V. ("Pakhoed") is contemplating the
acquisition of all of the outstanding shares of Common Stock of Univar
Corporation ("Univar" or the "Company") (the "Transaction"). The Transaction
will be effected in two steps, the first of which would be a tender offer (the
"Tender Offer") by UC Acquisition Corp. ("UC"), an indirect wholly-owned
subsidiary of Pakhoed, for all of the outstanding shares of Common Stock of the
Company (the "Shares") not currently owned by Pakhoed, UC or their affiliates,
pursuant to which shareholders of the Company other than Pakhoed, UC and their
affiliates would receive $19.45 net in cash in exchange for each Share tendered.
The Tender Offer must remain open for a period of at least 30 business days from
the date upon which the Tender Offer is first publicly announced. UC may extend
the expiration date of the Tender Offer to a date not later than July 31, 1996,
provided that UC may extend the expiration date of the Tender Offer to a date
not later than August 31, 1996 if (i) necessary Government Approvals (as defined
in the proposed Agreement and Plan of Reorganization among Pakhoed, UC and the
Company (the "Reorganization Agreement")) have not been obtained by July 31,
1996, or (ii) by July 26, 1996, less than 80% of the outstanding Shares have
been tendered pursuant to the Tender Offer. In the event the Tender Offer is
extended beyond July 31, 1996, the price per Share to be paid to shareholders of
the Company in the Tender Offer and the Merger (as defined below) shall be
increased by an amount equal to the product of (i) $19.45; (ii) the prime
interest rate as announced by Bank of America NW, N.A. (doing business as
Seafirst Bank) in Seattle, Washington as in effect on August 1, 1996; and (iii)
the quotient obtained by dividing (x) the number of days the Tender Offer is
extended through July 31, 1996 by (y) 365. The terms and conditions of the
Tender Offer are more fully described in the Reorganization Agreement.
Concurrent with the closing of the Tender Offer, the holder of each
outstanding option to purchase Shares which was not previously exercised would
receive in cash the positive difference, if any, between the highest price paid
to shareholders of the Company who tendered their Shares in the Tender Offer and
the exercise price per share of such option. Subsequent to the Tender Offer,
among other things, (i) the Company and UC would be merged and the surviving
corporation would be an indirectly wholly-owned subsidiary of Pakhoed (the
"Merger") and (ii) each remaining Share not owned by Pakhoed, UC or their
affiliates would be converted into the right to receive an amount in cash equal
to the highest price paid to shareholders of the Company who tendered their
Shares in the Tender Offer. The terms and conditions of the Merger are more
fully described in the Reorganization Agreement.
You have requested that Schroder, Wertheim & Co. Incorporated ("Schroder
Wertheim") render an opinion (the "Opinion"), as investment bankers, as to the
fairness, from a financial point of view, of the consideration to be received by
the shareholders of the Company other than Pakhoed, UC and their affiliates in
the Transaction (the "Transaction Consideration").
Schroder Wertheim, as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. Schroder Wertheim has acted
as financial advisor to Univar with respect to the Transaction for which we have
received fees and will receive additional fees, a portion of which is contingent
upon consummation of the Transaction.
In connection with the Opinion set forth herein, we have, among other
things:
i. reviewed a draft, dated May 30, 1996, of the Reorganization
Agreement;
- --------------------------------------------------------------------------------
Telephone 212-492-6000 Equitable Center, 787 Seventh Avenue
New York, NY 10019-6016
<PAGE> 22
ii. reviewed a draft, dated May 30, 1996, of the Schedule 14D-1 to be
filed by UC with the Securities and Exchange Commission in connection with
the Tender Offer, including a draft of the Offer to Purchase incorporated
therein by reference (the "Offer to Purchase");
iii. reviewed a draft, dated May 30, 1996, of the Schedule 14D-9 to be
filed by the Company with the Securities and Exchange Commission in
connection with the Tender Offer;
iv. reviewed the Company's Annual Reports on Form 10-K filed with the
Securities and Exchange Commission for the fiscal years ended February
1992, 1993, 1994, 1995 and 1996, including the audited consolidated
financial statements of Univar included therein;
v. reviewed historical financial results of Univar by operating
division prepared by management;
vi. reviewed forecasts and projections for Univar prepared or supplied
by Univar management for the fiscal years ending February 1997 through
2002;
vii. held discussions with Univar management regarding the business,
operations and prospects of the Company;
viii. performed various valuation analyses, as we deemed appropriate,
of Univar using generally accepted analytical methodologies, including: (i)
the application to the financial results of Univar of the public trading
multiples of companies which we deemed comparable; (ii) the application to
the financial results of Univar of the multiples reflected in recent
mergers and acquisitions for businesses which we deemed comparable; and
(iii) discounted cash flow and leveraged buyout analyses of Univar's
operations;
ix. reviewed the historical trading prices and volumes of Univar
Common Stock; and
x. performed such other financial studies, analyses, inquiries and
investigations as we deemed appropriate.
In rendering the Opinion, we have assumed and relied upon the accuracy and
completeness of all information supplied or otherwise made available to us by
Univar or obtained by us from other sources, and upon the assurance of Univar's
management that they are not aware of any information or facts that would make
the information provided to us incomplete or misleading. We have not
independently verified such information, undertaken an independent appraisal of
the assets or liabilities (contingent or otherwise) of Univar, or been furnished
with any such appraisals. With respect to financial forecasts for Univar, we
have been advised by Univar, and we have assumed, without independent
investigation, that they have been reasonably prepared and reflect the best
currently available estimates and judgment as to the expected future financial
performance of Univar.
The Opinion is necessarily based upon financial, economic, market and other
conditions as they exist, and the information made available to us, as of the
date hereof. We disclaim any undertaking or obligation to advise any person of
any change in any fact or matter affecting the Opinion which may come or be
brought to our attention after the date of the Opinion unless specifically
requested to do so.
The Opinion does not constitute a recommendation as to any action the Board
of Directors of the Company or any shareholder of the Company should take in
connection with the Transaction or any aspect thereof. In rendering the Opinion,
we have not been engaged as an agent or fiduciary of the Company's shareholders
or of any other third party. The Opinion relates solely to the fairness from a
financial point of view of the Transaction Consideration to the shareholders of
Univar other than Pakhoed, UC and their affiliates. We express no opinion herein
as to the structure, terms or effect of any other aspect of the Transaction.
This letter is for the information of the Board of Directors of the Company
solely for its use in evaluating the fairness from a financial point of view of
the Transaction Consideration to the shareholders of the Company other than
Pakhoed, UC and their affiliates and may not be used for any other purpose or
referred to without our prior written consent.
Based upon and subject to all the foregoing, we are of the opinion, as
investment bankers, that as of the date hereof, the Transaction Consideration is
fair, from a financial point of view, to the shareholders of Univar other than
Pakhoed, UC and their affiliates.
Very truly yours
SCHRODER WERTHEIM & CO.
INCORPORATED
A-2
<PAGE> 23
Exhibit Index
99.1. Agreement and Plan of Reorganization, dated May 31, 1996
99.2. Form of Director's and Officer's Agreement
99.3. Agreement with The Dow Chemical Company, dated May 31, 1996
99.4. Form of Merger Agreement
99.5. 1986 Standstill Agreement
99.6. Excerpt from Company's 1995 Proxy Statement relating to
Change of Control Agreements
99.7. Form of letter to Company Officers clarifying and amending
certain change of control agreements, list of executive
officers, and schedule of payments.
99.8. Excerpt from Company's 1995 Proxy Statement relating to
Executive Officer Compensation
99.9. Certain information relating to compensation arrangements
and benefits payable to officers and directors for the
fiscal year ended February 29, 1996 which Company intends
to file as an amendment to its 1996 Form 10-K.
99.10. Excerpt from Company's 1995 Proxy Statement relating to
indemnification of directors and officers
99.11. Press Release of Company, issued June 3, 1996
99.12. Confidentiality Agreement dated April 12, 1996
99.13. Due Diligence Agreement dated April 22, 1996.
99.14. Opinion of Schroder Wertheim & Co. Incorporated, dated
May 31, 1996*
99.15. Letter, dated June 7, 1996, from the Chairman of the
Board and Chief Executive Officer to the Shareholders of
Company*
* Included in materials being distributed to shareholders of Company.
-32-
<PAGE> 1
================================================================================
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
KONINKLIJKE PAKHOED N.V.
(ALSO KNOWN AS ROYAL PAKHOED N.V.),
UC ACQUISITION CORP.
AND
UNIVAR CORPORATION
DATED: MAY 31, 1996
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. THE TENDER OFFER....................................................................................... 1
1.1 The Tender Offer.............................................................................. 1
1.2 Buyer's Filings............................................................................... 2
1.3 Company Action................................................................................ 3
1.4 Company Filings............................................................................... 3
1.5 Stock Plans................................................................................... 4
2. THE MERGER............................................................................................. 5
2.1 Effective Time................................................................................ 5
2.2 Closing....................................................................................... 5
2.3 Effect of the Merger.......................................................................... 6
3. CONVERSION AND CANCELLATION OF SHARES.................................................................. 6
3.1 Conversion of Shares.......................................................................... 6
3.2 Surrender of Shares........................................................................... 6
3.3 No Further Transfers of Shares................................................................ 7
4. COVENANTS OF THE PARTIES............................................................................... 7
4.1 Covenants of Parent and Buyer................................................................. 7
(a) Government Approvals................................................................. 7
(b) Notification of Breach of Representations, Warranties and Covenants.................. 7
(c) Press Releases....................................................................... 7
(d) Offer to Purchase Shares............................................................. 8
(e) Litigation Developments.............................................................. 8
(f) Indemnification and Insurance........................................................ 8
(g) Company Agreements and Plans......................................................... 9
4.2 Covenants of Company.......................................................................... 9
(a) Approval by Company Shareholders. ................................................... 9
(b) Acceptance of Tender Offer........................................................... 10
(c) Agreements of Officers and Directors, and Major Shareholder.......................... 10
(d) Government Approvals................................................................. 10
(e) Notification of Breach of Representations, Warranties and Covenants.................. 10
(f) Compensation......................................................................... 11
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
(g) Conduct of Business in the Ordinary Course........................................... 11
(h) Press Releases....................................................................... 13
(i) No Merger or Solicitation............................................................ 14
(j) Dividends............................................................................ 15
(k) Accounting Methods................................................................... 15
(l) Additional Agreements................................................................ 15
(m) Litigation Developments.............................................................. 15
(n) Employment Agreements................................................................ 15
(o) Access to Properties, Books and Records; Confidentiality............................. 15
(p) Resignation and Appointment of Directors............................................. 16
(q) Approval of Merger................................................................... 16
(r) Deregistration....................................................................... 16
4.3 Covenants of the Parties...................................................................... 16
5. REPRESENTATIONS AND WARRANTIES OF COMPANY.............................................................. 17
5.1 Corporate Status and Power to Enter into Agreements........................................... 17
5.2 Execution and Delivery of the Agreement....................................................... 17
5.3 Capitalization................................................................................ 19
5.4 Employment Contracts and Benefits............................................................. 19
5.5 Legal Actions and Proceedings................................................................. 21
5.6 Retention of Broker or Consultant............................................................. 21
5.7 Accuracy of Representations and Warranties.................................................... 21
6. REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER ......................................................... 21
6.1 Corporate Status and Power to Enter into Agreements........................................... 21
6.2 Execution and Delivery of the Agreement....................................................... 22
6.3 Retention of Broker or Consultant............................................................. 22
6.4 Financing..................................................................................... 22
6.5 Accuracy of Representations and Warranties.................................................... 23
7. CONDITIONS TO THE MERGER............................................................................... 23
7.1 Conditions to the Obligations of Each Party................................................... 23
8. EXPENSES............................................................................................... 23
9. AMENDMENT; TERMINATION................................................................................. 24
9.1 Amendment..................................................................................... 24
9.2 Termination................................................................................... 24
9.3 Notice........................................................................................ 25
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
9.4 Breach of Obligations......................................................................... 25
9.5 Termination and Expenses...................................................................... 25
10. MISCELLANEOUS.......................................................................................... 25
10.1 Notices....................................................................................... 25
10.2 Binding Agreement............................................................................. 26
10.3 Governing Law................................................................................. 27
10.4 Attorneys' Fees............................................................................... 27
10.5 Entire Agreement; Severability................................................................ 27
10.6 Counterparts.................................................................................. 27
10.7 Waivers....................................................................................... 27
10.8 Survival of Representations and Warranties.................................................... 28
</TABLE>
Exhibits Initial Section Reference
A. Merger Agreement 1.1
B. Director Agreements 4.2(c)
C. Shareholder Agreement 4.2(c)
iii
<PAGE> 5
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, dated as of May 31, 1996
("Agreement"), is among KONINKLIJKE PAKHOED N.V. (also known as Royal Pakhoed
N.V.), a limited liability company formed and existing under the laws of The
Netherlands ("Parent"), UC ACQUISITION CORP., a Washington corporation and an
indirect wholly owned subsidiary of Parent ("Buyer"), and UNIVAR CORPORATION, a
Washington corporation ("Company").
WITNESSETH:
The Boards of Directors of Buyer and Company and the Supervisory and
Management Boards of Parent deem it advisable and in the best interests of
Parent, Buyer and Company and their respective shareholders to consummate the
business combination provided for herein whereby Parent would acquire Company
and the goodwill associated therewith through a two step transaction. First,
Buyer will commence a tender offer for Company's Common Stock, no par value
("Share" or "Shares"), in conformity with the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the applicable regulations thereunder (the
"Tender Offer"), and, second, following the consummation of the Tender Offer,
Buyer will be merged into Company (the "Merger"), with Company as the surviving
corporation. Alternatively, at Parent's option, Company may be merged into Buyer
pursuant to Section 2.3 hereof. Pursuant to the Merger and subject to the terms
and conditions herein, each holder of Shares will receive, in exchange for each
Share, an amount in cash, as specified in Section 3.1 of this Agreement and each
holder of options to purchase Shares will receive, in cancellation of such
options, an amount in cash as specified in Section 1.5 of this Agreement.
This Agreement and the Merger Agreement, as defined herein, have been
approved by the Supervisory and Management Boards of Parent and the Boards of
Directors of Buyer and Company and will be submitted for approval by the
shareholders of Company at a special meeting of its shareholders, if required
pursuant to applicable law or the terms hereof.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements provided for or contained
herein, the parties hereto agree as follows:
1. THE TENDER OFFER.
1.1 The Tender Offer. Provided that nothing shall have occurred that
would result in a failure to satisfy any of the conditions set forth in Annex I
hereto, Buyer shall, as promptly as practicable after the date hereof, but in no
event later than five (5) business days following the public announcement of the
terms of this Agreement, commence the Tender Offer to purchase all
1
<PAGE> 6
of the outstanding Shares pursuant to the terms thereof, at a price of Nineteen
Dollars and Forty-Five Cents ($19.45) per Share, in cash, as it may be adjusted
pursuant to the terms hereof (the "Price"). The Tender Offer shall be subject to
the condition that there shall be validly tendered in accordance with the terms
of the Tender Offer and not withdrawn prior to the expiration date of the Tender
Offer a number of Shares which, together with all Shares beneficially owned by
Parent and its "affiliates" and "associates" (as such terms are defined in Rule
12b-2 of the Exchange Act) (collectively, "Affiliates") represents at least a
majority of the Shares outstanding on a fully diluted basis (the "Minimum
Condition") and to the other conditions set forth in Annex I hereto. Unissued
Shares reserved for options which are cancelled pursuant to Section 1.5 shall
not be considered as outstanding Shares. Buyer will not, without the prior
written consent of Company, (a) decrease the Price; (b) decrease the number of
Shares sought pursuant to the Tender Offer; (c) impose additional conditions to
the Tender Offer; (d) change the expiration date of the Tender Offer so that the
Tender Offer ends less than thirty (30) "business days" (as defined in Rule
14d-1(c)(6) of the Exchange Act) from the date on which the Tender Offer is
first publicly announced or extend the expiration date beyond July 31, 1996,
provided that the expiration date of the Tender Offer may be extended by Buyer
to a date not later than August 31, 1996 if (i) any Government Approvals (as
defined in Section 4.1 hereof) shall not have been obtained by July 31, 1996, or
(ii) by July 26, 1996, less than eighty percent (80%) of the outstanding Shares
have been tendered for purchase pursuant to the Tender Offer, and Buyer
reasonably believes that eighty percent (80%) or more of the Shares will be
tendered, if the expiration date of the Tender Offer is extended; (e) waive or
modify the Minimum Condition; or (f) change the conditions to the Tender Offer
in any material respect, except that Buyer in its sole discretion may waive any
of the other conditions to the Tender Offer. In the event the Tender Offer is
extended beyond July 31, 1996 the Price shall be increased by an amount equal to
the product of the Price multiplied by the prime interest rate as announced by
Bank of America NW, N.A. (doing business as Seafirst Bank) in Seattle,
Washington as in effect on August 1, 1996, multiplied by the quotient of the
number of days that the Tender Offer is extended after July 31, 1996, divided by
three hundred and sixty-five (365). The foregoing limitations shall not be
applicable in the event this Agreement is terminated pursuant to Section 9.2(d),
in which event Buyer may modify its Tender Offer subject only to the limitations
of that certain Standstill Agreement among Parent, Pakhoed Investeringen, B.V.,
Pakhoed USA, Inc. and Company dated September 19, 1986 and amended June 3, 1992
(the "1986 Standstill Agreement").
1.2 Buyer's Filings. On or prior to the date the Tender Offer is
commenced, Buyer shall file with the Securities and Exchange Commission ("SEC")
a Tender Offer Statement on Schedule 14D-1 ("Schedule 14D-1") with respect to
the Tender Offer which will contain the offer to purchase and form of the
related letter of transmittal (which, together with any supplements or
amendments thereto, are collectively referred to herein as the "Tender Offer
Documents"), all in accordance with the requirements of the Exchange Act and
will disseminate the Tender Offer
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Documents to the holder of Shares. Buyer, Parent, and Company each agrees
promptly to correct any information provided by it for use in the Tender Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect. Buyer and Parent agree to take all steps
necessary to cause the Tender Offer Documents as so corrected to be filed with
the SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Company and its counsel
shall be given an opportunity to review and comment on the Schedule 14D-1 and
any amendments thereto prior to their being filed with the SEC. Buyer and Parent
each agrees to provide Company and its counsel in writing with any comments
Buyer, Parent or their counsel may receive from the SEC or its staff with
respect to the Tender Offer Documents promptly after the receipt thereof.
1.3 Company Action. In accordance with Section 2.8 of the 1986
Standstill Agreement, Company hereby consents to the Tender Offer and represents
and warrants that its Board of Directors, at a meeting duly called and held, has
(a) unanimously determined that this Agreement and the transactions contemplated
hereby, including the Tender Offer and the Merger, are fair to and in the best
interest of Company and its shareholders, and (b) unanimously approved this
Agreement and the transactions contemplated hereby, including the Tender Offer
and the Merger. Company further represents that Schroder Wertheim & Co.
Incorporated ("Schroder") has rendered to Company's Board of Directors its
opinion to be included in the Schedule 14D-9 (as defined in Section 1.4 hereof),
to the effect that the consideration to be received by the holders of the Shares
other than Parent and its affiliates pursuant to each of the Tender Offer and
the Merger is fair to such holders of Shares from a financial point of view.
Company will promptly furnish Parent with a list of its shareholders, mailing
labels and all available listings and computer files containing the names and
addresses of all record holders of Shares and lists of securities positions of
Shares held in stock depositories, in each case true and correct as of the most
recent practicable date (which shall not be more than ten (10) business days of
the date of this Agreement), and will promptly provide to Parent such additional
information (including, without limitation, updated lists of shareholders,
indicating the name and address of each record holder not previously furnished,
mailing labels and lists of securities positions) and such other assistance as
Parent may reasonably request in connection with the Tender Offer.
1.4 Company Filings. On or prior to the date that the Tender Offer is
commenced, Company will, in accordance with the requirements of the Exchange
Act, file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9
(the "Schedule 14D-9") which shall reflect the recommendations of Company's
Board of Directors referred to in Section 1.3 above. Company, Buyer and Parent
each agree promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that such information shall have become
false or misleading in any material respect. Company agrees to take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC
and to be disseminated to holders of
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Shares, in each case as and to the extent required by applicable federal
securities laws. Parent, Buyer and their counsel shall be given an opportunity
to review and comment on the Schedule 14D-9 and any amendments thereto prior to
their being filed with the SEC. Company agrees to provide Parent, Buyer and
their counsel in writing with any comments Company or its counsel may receive
from the SEC or its staff with respect to the Schedule 14D-9 and any amendments
thereto promptly after the receipt of such comments.
1.5 Stock Plans.
(a) Each outstanding employee or non-employee director stock
option to purchase Shares or restricted stock award granted under the Stock
Plans described in Section 4.2(g)(vi) may be surrendered by the holder thereof
to Company after the commencement of the Tender Offer and prior to the Effective
Time for the right to receive in exchange therefor an amount determined by
multiplying (i) the excess of the Price per Share paid pursuant to the Tender
Offer over the applicable exercise price, if any, of such option or award by
(ii) the sum of (x) the number of Shares the holder of such option(s) may
purchase (taking into account Shares the holder may conditionally purchase under
the Stock Plans in the event of a "Change of Control" as defined in such Stock
Plans) had such holder exercised such option in full immediately prior to the
Effective Time plus (y) the number of Shares owned by the holder under
restricted stock awards. Any "Deferred Cash Incentive" or other award of cash or
other property which becomes available to the holder from Company upon the
exercise of an option, pursuant to the terms of the Stock Plans, shall also
become payable. All such amounts shall be payable by Company at the time the
Shares are accepted for payment by Buyer if the Minimum Condition has been
satisfied (or at such later time as the option or award is surrendered to
Company, but not later than the Effective Time).
(b) Prior to the Effective Time, Company shall either (i)
obtain any consents from holders of options to purchase Shares granted under the
Stock Plans, or (ii) make any amendments to the terms of such Stock Plans that
are necessary to give effect to the transactions contemplated by Section 1.5(a).
Notwithstanding any other provision of this Section, payment may be withheld in
respect of any employee or non-employee director stock option or award until all
necessary consents in respect of such stock options or awards are obtained.
(c) The Stock Plans shall terminate as of the Effective Time,
and the provisions in any other plan or arrangement of Company or the Company
Subsidiaries (as defined in Section 4.1(f)) providing for the offering,
issuance, purchase, transfer or grant of any capital shares of Company or any
interest in respect of any capital shares of Company shall be terminated as of
the Effective Time, and Company shall ensure that following the Effective Time
no holder of an employee or non-employee director stock option or any
participant in any Stock Plan or other
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plan or arrangement of Company or the Company Subsidiaries shall have any right
thereunder to acquire any capital shares or any other interest in capital shares
of Company or the Surviving Corporation (as defined in Section 2.3). Any option
which remains unexercised as of the Effective Time shall be terminated,
cancelled and converted into the right to receive the cash payments provided for
in Section 1.5(a).
(d) Company and the Surviving Corporation shall have the right
to withhold from amounts payable pursuant to this Section any foreign, federal,
state or local income or other payroll related taxes required to be withheld
under applicable laws. The Surviving Corporation and Parent shall indemnify
holders of options and awards against any "Excise Tax" and shall also make a
"Gross-Up Payment" as those terms are defined in the Change of Control
Agreements, as amended, referenced in Section 5.4(a). The obligation to
indemnify against Excise Taxes and make a Gross-Up Payment shall apply to all
holders of options or awards who are subject to an Excise Tax or against whom an
Excise Tax is subsequently asserted regardless of whether an individual Change
of Control Agreement is executed in favor of the option or award holder provided
that such holder enters into an agreement with Company or the Surviving
Corporation regarding the terms of such indemnity substantially identical to the
form of the amendments to the Change of Control Agreements with certain
executive officers as of May 31, 1996. The Surviving Corporation shall properly
record, pay, and report all withheld taxes to the proper tax authorities and
furnish the employee with all required information reports. The Surviving
Corporation or Company shall have the right to condition any payments made to
holders of options and awards on the execution and delivery by such holders of a
mutually acceptable release of claims.
2. THE MERGER.
2.1 Effective Time. Subject to the terms and conditions of this
Agreement, upon the filing with the Washington Secretary of State of duly
executed Articles of Merger (including a Plan of Merger) as prescribed by the
Washington Business Corporation Act ("WBCA") substantially in the form attached
hereto as Exhibit A (the "Merger Agreement"), or at such time thereafter as is
provided in the Merger Agreement (the "Effective Time") on the date of such
filing or other date specified in the Merger Agreement (the "Effective Date")
the Merger shall become effective.
2.2 Closing. The closing of the Merger (the "Closing") will take place
as soon as practicable on the first (1st) business day after satisfaction of the
conditions set forth in Section 7 of this Agreement (the "Closing Date"), at the
offices of Graham & James LLP, 1001 Fourth Avenue Plaza, Suite 4500, Seattle,
Washington 98154-1065, unless another date or place is agreed to in writing by
the parties hereto.
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2.3 Effect of the Merger. Subject to the terms and conditions of this
Agreement and the Merger Agreement, at the Effective Time on the Effective Date,
Buyer shall be merged into Company, and Company shall be the surviving
corporation (the "Surviving Corporation") in the Merger. All assets, rights,
goodwill, privileges, immunities, powers, franchises and interests of Company
and Buyer in and to every type of property (real, personal and mixed) and choses
in action, as they exist as of the Effective Date, shall pass and be transferred
to and vest in the Surviving Corporation by virtue of the Merger at the
Effective Time without any deed, conveyance or other transfer. The separate
existence of Buyer shall cease and the corporate existence of Company as the
Surviving Corporation shall continue unaffected and unimpaired by the Merger;
and the Surviving Corporation shall be deemed to be the same entity as each of
Company and Buyer and shall be subject to all of their duties and liabilities of
every kind and description. At the sole election of Parent, the Merger may be
structured so that Company shall be merged with and into Buyer with the result
that Buyer shall be the "Surviving Corporation." The 1986 Standstill Agreement
and the Confidentiality and Standstill Agreement, dated April 12, 1996, by and
among Company, Parent and subsidiaries of Parent (the "Confidentiality
Agreement") shall be terminated at the Effective Time on the Effective Date.
3. CONVERSION AND CANCELLATION OF SHARES.
3.1 Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any Shares, each of
the issued and outstanding Shares or fractional interests thereof (other than
any Shares owned by Buyer and its Affiliates and Shares as to which dissenters'
rights have been perfected) shall be converted into the right to receive an
amount in cash which shall be equal to the highest Price paid to holders of
Shares who tender their Shares in the Tender Offer. From and after the Effective
Time, all outstanding Shares shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and the holders
of certificates formerly representing Shares (other than Shares held by Buyer
and its Affiliates) shall cease to have any rights with respect thereto other
than to receive the Price or any dissenters' rights they have perfected pursuant
to Section 23B.13.020 of the WBCA.
3.2 Surrender of Shares. Prior to the Effective Date, Buyer shall
appoint First Interstate Bank of Washington N.A. or Company's successor transfer
agent, or any other bank or trust company mutually acceptable to Buyer, Parent,
and Company, as exchange agent (the "Exchange Agent") for the purpose of
exchanging each certificate representing the Shares for the Price. As soon as
practicable after the Effective Date, each holder of Shares, upon surrender to
the Exchange Agent of one or more certificates for such Shares for cancellation,
will be entitled to receive a payment in cash of the Price for each Share or
fraction thereof.
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3.3 No Further Transfers of Shares. At the Effective Date, the stock
transfer books of Company shall be closed and no transfer of Shares theretofore
outstanding shall thereafter be made.
4. COVENANTS OF THE PARTIES.
4.1 Covenants of Parent and Buyer.
(a) Government Approvals. Prior to the Effective Date, Parent
and Buyer, with the cooperation of Company, shall take or cause to be taken as
promptly as practicable all such steps as shall be necessary to obtain all
authorizations, consents, orders or approvals of, or declarations or filings
with, or terminations or expirations of waiting periods imposed by any
government agencies, as are required by law or otherwise, necessary or required
to consummate the Tender Offer and the Merger (collectively, the "Government
Approvals"), including but not limited to the filing of the notification and
report form required under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended ("HSR Act"), the Exon-Florio Amendment to the Defense
Production Act of 1950 ("Exon-Florio"), the Competition Act (Canada) and the
Investment Canada Act and shall do any and all acts deemed by Company to be
reasonably necessary or appropriate in order to cause the Merger to be
consummated on the terms provided in this Agreement as promptly as practicable.
(b) Notification of Breach of Representations, Warranties and
Covenants. Parent and Buyer shall promptly give written notice to Company upon
becoming aware of the occurrence or impending or threatened occurrence of any
event which would cause or constitute a breach of any of the representations,
warranties, or covenants of Parent or Buyer contained or referred to in the
Merger Agreement or this Agreement and shall use its best efforts to prevent the
same or remedy the same promptly.
(c) Press Releases. Parent and Buyer shall not issue any press
release or written statement for general circulation to the public relating to
the Merger, this Agreement, or the Merger Agreement unless previously provided
to Company for review and approval (which approval will not be unreasonably
withheld or delayed) and shall cooperate with Company in the development and
distribution of all news releases and other public information disclosures with
respect to this Agreement, the Merger Agreement, and the Merger. Notwithstanding
the foregoing, Parent and Buyer may, without the consent of Company, issue any
press release or written statement for general circulation with regard to this
Agreement, the Merger Agreement, and the Merger that either Parent or Buyer
determines is required under any applicable law or regulation, provided that,
prior to such issuance, Parent and Buyer shall inform Company of their intent to
make such releases or statements, shall provide a copy thereof to Company and
shall
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provide Company with an opportunity to review and comment on the content of such
releases or statements.
(d) Offer to Purchase Shares. Parent and Buyer shall use their
best efforts in good faith to take or cause to be taken as promptly as
practicable all such steps as shall be necessary or appropriate in order to
complete the Tender Offer on the terms provided in the Tender Offer Documents
prior to the expiration thereof.
(e) Litigation Developments. Parent and Buyer agree to
promptly advise Company with respect to any and all material legal actions or
other proceedings or investigations that could impede the transactions
contemplated hereby and to promptly advise Company with respect to any
significant developments arising in connection with said actions, proceedings,
or investigations. In the event that any action, suit, proceeding or
investigation relating hereto or to the transactions contemplated hereby is
commenced, whether before or after the Effective Time, the parties hereto agree
to cooperate and use their best efforts to defend vigorously against and respond
thereto.
(f) Indemnification and Insurance. With respect to events
which occur prior to the Effective Time, Parent agrees that all rights to
indemnification existing in favor of the present or former directors, officers,
employees, fiduciaries and agents of (i) Company, (ii) any corporation,
partnership, limited liability company, or other entity in which Company owns,
directly or indirectly, any equity interest and whose financial statements are
consolidated for accounting purposes under generally accepted accounting
principles ("GAAP") (the "Company Subsidiaries") or (iii) any "Pension Plans"
(as defined in ERISA Section 3(2)) or "Employee Welfare Benefit Plans" (as
defined in ERISA Section 3(1)) which are sponsored by Company or the Company
Subsidiaries, as provided in Company's Articles of Incorporation or pursuant to
any agreements previously disclosed by Company to Parent in writing with
specific reference to this Section, or the articles of incorporation, bylaws,
Board resolutions or similar documents of the Company Subsidiaries as in effect
as of the date hereof shall survive the Merger and shall continue in full force
and effect for a period of not less than the statutes of limitations, if any,
applicable to such matters. Without limiting the foregoing, Company and, after
the Effective Time, Parent shall cause the Surviving Corporation to periodically
advance expenses as incurred with respect to the foregoing to the fullest extent
permitted under the provisions of Company's Articles of Incorporation or the
articles of incorporation of the Company Subsidiaries. As of the Effective Time,
Company shall, or in the event Company is unable to do so, Parent shall cause
the Surviving Corporation to convert the current policies for directors' and
officers' liability insurance and ERISA or employee plan fiduciary liability
insurance maintained by Company and the Company Subsidiaries to a policy or
policies for a term of six (6) years after the Effective Date which shall cover
events which occur prior to the Effective Date, provided that the incremental
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cost of such policy or policies, after applying all related prepaid insurance
premiums, shall not exceed two hundred thousand dollars ($200,000). To the
extent that the premium for such policy or policies exceeds two hundred thousand
dollars ($200,000), Company or the Surviving Corporation shall obtain reasonably
available policies for not less than such amount. Buyer and the Surviving
Corporation shall pay all expenses, including attorneys' fees, that may be
incurred by any present or former officer, director, employee, fiduciary or
agent of Company or the Company Subsidiaries in enforcing the indemnity and
other obligations provided for in this Section 4.1(f).
(g) Company Agreements and Plans. Parent, Buyer, and their
affiliates, shall cause the Surviving Corporation to honor and fully perform all
agreements and plans for the benefit of employees or non-employee directors
which are not terminated by the terms thereof or the terms hereof and continue
after the Effective Date, and which are disclosed to Parent and Buyer pursuant
to Section 5.4(a).
4.2 Covenants of Company.
(a) Approval by Company Shareholders. As soon as practicable
after the expiration date of the Tender Offer, (i) if Buyer and its affiliates
own or have the right to acquire less than ninety percent (90%) of Company
Shares, but more than fifty percent (50%), Company shall cause the Merger, this
Agreement, and the Merger Agreement to be submitted promptly for the approval of
its shareholders at a special meeting to be called and held in accordance with
applicable laws and Company bylaws; or (ii) if, as a result of the Tender Offer,
Buyer owns or has the right to acquire ninety percent (90%) or more of Company
Shares, then at Buyer's sole election, Company shall comply with all applicable
procedures, deliver all required disclosure documents, and cooperate with Buyer
to consummate a merger between Buyer and Company pursuant to Section 23B.11.040
of the WBCA (a "short form merger"). The Board of Directors of Company, in
authorizing the execution and delivery of this Agreement by Company, shall at
all times prior to the Effective Date, subject to the discharge of their
fiduciary duty, recommend to Company shareholders that this Agreement, the
Merger Agreement, and the Merger be approved. If a special meeting of Company
shareholders is necessary or required, Company shall use its best efforts to
cause such meeting of its shareholders to take place as soon as practicable. In
connection with the call of such meeting, Company shall cause such proxy
materials or information statements, with any amendments thereto that may in the
judgment of its counsel be necessary or desirable, to be mailed to its
shareholders (the proxy materials or information statements, together with any
amendments or supplements thereto, being herein referred to as the "Proxy
Statement"). In connection with the procedures to complete a short form merger,
Company shall cause such information statements, with any amendments thereto
that may in the judgment of its counsel be necessary or desirable, to be mailed
to its shareholders (the information statement, together with any supplements
thereto, being herein referred to as the "Information
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Statement"). Prior to mailing to its shareholders, Company shall give Parent and
Buyer and their counsel reasonable opportunity to review and comment on the
Proxy Statement and the Information Statement. Subject to the discharge of their
fiduciary duty, the Board of Directors of Company shall at all times prior to
and during such meeting of Company shareholders recommend that the transactions
contemplated hereby be adopted and approved and use its best efforts to cause
such adoption and approval.
(b) Acceptance of Tender Offer. Subject to the discharge of
their fiduciary duty, the Board of Directors of Company shall at all times prior
to the delivery of the Tender Offer Documents, and prior to the expiration of
the Tender Offer, recommend that the holders of Shares tender their Shares to
Buyer pursuant to the terms of the Tender Offer Documents and consent to and use
their best efforts to encourage the execution of agreements by a sufficient
number of Company shareholders to assure satisfaction of the Minimum Condition.
(c) Agreements of Officers and Directors, and Major
Shareholder. Company acknowledges and consents to the execution and delivery to
Buyer and Parent by (i) certain officers and members of its Board of Directors
of agreements in the form attached hereto as Exhibit B (the "Officer and
Director Agreements"), and (ii) The Dow Chemical Company ("Dow") of an agreement
in the form attached hereto as Exhibit C (the "Shareholder Agreement"). Subject
to the exercise of its fiduciary duties, Company covenants and agrees not to
take any action which would interfere with or prevent the performance of the
Officer and Director Agreements and the Shareholder Agreement.
(d) Government Approvals. Company shall cooperate in all
reasonable respects with Parent and Buyer in the performance of their
undertaking pursuant to Section 4.1(a) to obtain the Government Approvals. Prior
to the Effective Date, Company, with the cooperation of Parent and Buyer, shall
take or cause to be taken as promptly as practicable all such steps as shall be
necessary to obtain all Government Approvals and shall do any and all acts
deemed by Parent and Buyer to be reasonably necessary or appropriate in order to
cause the Merger to be consummated on the terms provided in this Agreement as
promptly as practicable.
(e) Notification of Breach of Representations, Warranties and
Covenants. Company shall promptly give written notice to Parent and Buyer upon
becoming aware of the occurrence or impending or threatened occurrence of any
event which would cause or constitute a breach of any of the representations,
warranties or covenants of Company contained or referred to in this Agreement
and shall use its best efforts to prevent the same or remedy the same promptly.
(f) Compensation. Except in accordance with budgets and plans
previously approved by Company's Compensation Committee, which have been
disclosed to Parent and
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Buyer, and in connection with the acceleration of stock options as provided for
in Section 1.5, and payments made under the Change of Control Agreements (as
amended) referred to in Section 5.4(a), neither Company nor any of the Company
Subsidiaries shall, prior to the Effective Date, make or approve any increase in
the compensation payable or to become payable to any of their directors,
officers, employees or agents with annual salaries in excess of $75,000 (or the
foreign equivalent) at the date hereof (including but not limited to
compensation through any profit sharing, pension, retirement, severance,
incentive or other employee benefit program or arrangement), nor shall any bonus
payment or any agreement or commitment to make a bonus payment be made nor shall
any stock option, warrant or other right to acquire capital shares be granted,
nor employment agreement (other than any such employment agreement that may
arise by operation of law upon the hiring of any new employee) nor consulting
agreement be entered into by Company with any such directors, officers,
employees or agents unless Parent or Buyer have given its prior written consent.
(g) Conduct of Business in the Ordinary Course. Prior to the
Effective Time, Company and the Company Subsidiaries shall use reasonable
efforts to conduct their businesses and to maintain satisfactory relationships
with licensers, suppliers, distributors, and customers, all in accordance with
their ordinary and usual course of business. Prior to the Effective Time,
neither Company nor any of the Company Subsidiaries shall without the prior
written consent of Parent or Buyer or except as specifically contemplated by
this Agreement:
(i) amend its Articles of Incorporation or Bylaws;
(ii) authorize for issuance, issue, deliver, grant or
sell any additional capital shares, or securities convertible into such shares,
or issue or grant any rights, options or other commitments for the issuance of
such shares or convertible securities (other than the issuance of capital shares
and the conversion thereof or payment in lieu thereof pursuant to that certain
Agreement of Purchase and Sale of Stock between Company and Dow dated as of June
4, 1991 and amended as of May 13, 1994 (the "Dow Put/Call"), or of Shares
pursuant to the exercise of outstanding options, and the grant of any new
options in accordance with budgets and plans previously approved by Company's
Compensation Committee); and
(iii) split, combine, or reclassify any of its
capital shares or declare, set aside or pay any dividend (whether in cash,
stock, or property) in respect to its Shares or redeem or otherwise acquire any
of its Shares other than the repurchase, at cost, of Shares issued to employees
pursuant to the terms of employee restricted stock or share purchase agreements;
(iv) dispose of or acquire any material properties or
assets except in the ordinary course of business;
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(v) engage in any activities or transactions that are
outside the ordinary course of Company's business, other than funding with cash
or letters of credit the supplemental pension benefits plans as required under
the terms of such plans and the trusts for such plans;
(vi) materially amend any provision of Company's 1986
Long Term Incentive Stock Plan, as amended and restated, 1992 Long Term
Incentive Plan, amended and restated as of April 23, 1996, 1993 Non-Employee
Director Stock Option Plan, and 1995 Incentive Stock Plan (collectively, the
"Stock Plans"), Pension Plans, or Employee Welfare Benefit Plans; or
(vii) incur any indebtedness for borrowed money,
other than: (1) amounts borrowed pursuant to and in accordance with the terms
and conditions of its existing lines of credit, or (2) amounts pledged or
potentially owed in connection with letters of credit which may be obtained
naming as beneficiaries the trustees of the trusts for supplemental pension
benefits plans as required under the terms of such trusts and plans.
Notwithstanding anything in this Agreement to the contrary, Company and the
Company Subsidiaries may take any or all of the following actions with respect
to their Pension Plans prior to the Effective Time without prior consent of
Parent or Buyer:
(1) amend the Pension Plans or the trusts funding such plans to the
extent necessary or desirable to (a) obtain favorable determination letters from
the Internal Revenue Service as to the Pension Plans' tax-qualified status, (b)
maintain the Pension Plans' tax-qualified status, (c) make administrative
changes to the operations of the Pension Plans provided such changes do not
significantly increase the cost of such plans, (d) clarify the procedures for
the funding of supplemental pension benefits through contributions to trusts of
cash or letters of credit, or (e) permit Company, pursuant to a prohibitive
transaction exemption obtained from the U.S. Department of Labor, to guaranty
and provide loans to Company's Univar Corporation Uni$aver Tax Savings
Investment Plan ("Uni$aver Plan") with respect to a guaranteed investment
contract which was issued by Confederation Life Insurance Company and is held by
that plan ("GIC");
(2) obtain letters of credit which name as beneficiary the trustees of
trusts which fund supplemental pension benefits as required or permitted by the
terms of the supplemental benefits plans and trusts, and secure such letters of
credit with assets of Company or the Company Subsidiaries as required by the
bank(s) issuing the letters of credit;
(3) take whatever steps are necessary to obtain the approval of the
U.S. Department of Labor and the Internal Revenue Service for Company's
guarantee of the book value of the GIC
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and Company's promise to make loans to the Uni$aver Plan with respect to the GIC
to the extent such action does not have a material adverse effect on Company and
the Company Subsidiaries taken as a whole;
(4) make guarantee payments and loans to the Uni$aver Plan with respect
to the GIC; and
(5) establish a new supplemental benefits plan for Van Waters & Rogers
Ltd. which is similar to the existing supplemental benefits plan for Van Waters
& Rogers Ltd., except that it would be for those employees of Van Waters &
Rogers Ltd. who would participate in the Van Waters & Rogers Ltd. Supplemental
Benefits Plan but for the fact that they are U.S. citizens or residents,
establish a rabbi trust for such mirror plan which is similar to the rabbi trust
for Company, and take the actions described in (1) and (2) above with respect to
such mirror plan and rabbi trust.
(h) Press Releases. Company shall not issue any press release
or written statement for general circulation relating to this Agreement, the
Merger Agreement, or the Merger unless previously provided to Parent and Buyer
for review and approval (which approval will not be unreasonably withheld or
delayed) and shall cooperate with Parent and Buyer in the development and
distribution of all news releases and other public information disclosures with
respect to this Agreement, the Merger Agreement and the Merger. Notwithstanding
the foregoing, Company may, without the consent of Parent and Buyer, issue any
press release or written statement for general circulation with regard to this
Agreement, the Merger Agreement and the Merger that Company determines is
required under any applicable law or regulation, provided that, prior to such
issuance, Company shall inform Parent and Buyer of its intent to make such
releases or statements, shall provide a copy thereof to Parent and Buyer, and
shall provide Parent and Buyer with an opportunity to review and comment on the
content of such releases or statements.
(i) No Merger or Solicitation.
(i) Except as contemplated by this Agreement and
subject to the continuing fiduciary duties of the Board of Directors of Company,
prior to the Effective Time, Company and the Company Subsidiaries shall not
effect or agree to effect any Business Combination; except for (x) any Business
Combination unanimously approved by Company's Board of Directors, (y) any
Business Combination which does not require approval by Company's Board of
Directors, or (z) any Business Combination approved by a majority of the
disinterested directors of Company (i.e., unaffiliated with Parent) in
accordance with Section 4.2(i)(iii) below. As used in this Agreement, "Business
Combination" shall mean (except as explicitly contemplated
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in this Agreement) any tender or exchange offer, proposal for a merger,
consolidation, acquisition of assets or other takeover proposal or any offer or
proposal to acquire in any manner a ten percent (10%) or greater interest in, or
a substantial portion of outstanding capital shares of any party or any
proceedings for winding up and dissolution of Company or of any of the Company
Subsidiaries.
(ii) Prior to the Effective Date, neither Company nor
any officer, director or affiliate of Company, nor any investment banker,
attorney, accountant or other agent, advisor or representative retained by
Company shall solicit or encourage, directly or indirectly, any inquiries,
discussions or proposals for, nor propose any discussions or negotiations
looking toward, or enter into any agreement or understanding providing for, any
Business Combination.
(iii) In the event that the Board of Directors of
Company receives a bona fide unsolicited offer for a Business Combination or a
bona fide unsolicited indication of interest from any person, corporation, firm,
association, entity or group to engage in a Business Combination, and reasonably
determines, upon advice of counsel, that any duty to act or to refrain from
doing any act pursuant to this Agreement is inconsistent with the continuing
fiduciary duties of Company Board of Directors to the shareholders of Company,
Company shall within two (2) business days of receipt of such indication or
offer inform Parent of such interest or the terms of such offer and may: (a)
disclose the same nonpublic information as provided to Parent to such
corporation, firm, association, person or other entity or group concerning the
business and properties of Company and/or afford any such party the same access
as provided to Parent to the properties, books or records of Company and the
Company Subsidiaries or otherwise assist or encourage any such party in
connection with the foregoing, all on no more favorable terms and conditions as
set forth in the Confidentiality Agreement, provided that if requested, Company
Board of Directors may provide nonpublic information not provided to Parent
and/or agree to more favorable terms and conditions so long as it promptly
provides the same information to Parent and/or modifies the Confidentiality
Agreement so as to make available the same terms and conditions for Parent, or
(b) if Company Board of Directors determines that their continuing fiduciary
duties would require their approval of any such unsolicited bona fide offer for
a Business Combination with another entity because the terms of such offer are
more favorable to Company's shareholders than the terms set forth in this
Agreement, then Company may accept such offer, provided that prior to taking any
such actions Company shall provide Parent with not less than two (2) business
days to modify the terms of its Tender Offer and Tender Offer Documents and to
propose to Company any corresponding modifications to this Agreement.
(j) Dividends. Company shall not declare, set aside or pay any
dividend or other distribution in respect of the Shares (including, without
limitation, any stock dividend or
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distribution), except in the ordinary course of business and not in amounts
which materially exceed the amounts previously paid by Company.
(k) Accounting Methods. Company shall not change its methods
of accounting in effect at February 29, 1996, except as required by changes in
GAAP as concurred in by its independent auditors.
(l) Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of
Company, the proper officers and directors of each party to this Agreement shall
take all such necessary or appropriate action.
(m) Litigation Developments. Company agrees to promptly advise
Parent and Buyer with respect to any and all legal actions or other proceedings
or investigations that either seeks to enjoin the transactions contemplated
hereby or collect damages or impose a monetary payment which could reasonably be
expected to exceed $5,000,000, and to promptly advise Parent and Buyer with
respect to any significant developments arising in connection with said actions,
proceedings or investigations.
(n) Employment Agreements. Company agrees to permit and shall
give Parent and Buyer the opportunity to negotiate employment agreements with
Company executives, provided that any such agreement shall be subject to the
consummation of the Tender Offer.
(o) Access to Properties, Books and Records; Confidentiality.
Following the consummation of the Tender Offer, Company shall give Parent and
Buyer and their counsel and accountants reasonable access, during normal
business hours and upon reasonable request, to all of its properties, books,
contracts, commitments and records including, but not limited to, the corporate,
financial and operational records, papers, reports, instructions, procedures,
tax returns and filings, tax settlement letters, material contracts or
commitments, regulatory examinations and correspondence and shall allow Parent
and Buyer to make copies of such materials (to the extent not legally
prohibited) and shall furnish Parent and Buyer with all such information
concerning its affairs as Parent and Buyer may reasonably request. Company shall
also use its best efforts to cause Company's accountants to make available to
Parent and Buyer, their accountants, counsel and other agents, to the extent
reasonably requested in connection with such review, Company's accountants' work
papers and documentation relating to its work papers and its audits of the books
and records of Company. Any information requested by Parent and Buyer shall be
subject to the provisions of the Confidentiality Agreement.
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(p) Resignation and Appointment of Directors. Upon the
execution of this Agreement, Company shall deliver to Parent and Buyer
contingent resignations of all directors of Company who were not nominated by
Parent. Such resignations shall be contingent on the consummation of the Tender
Offer. Upon the consummation of the Tender Offer, Company shall accept the
resignations of a sufficient number of such directors as determined by Parent
and Buyer to result in Parent having representation on the Board of Directors of
Company proportionate to the percentage shareholding of Parent and its
affiliated companies, provided that the Board of Directors (excluding directors
nominated by Parent) shall have the right but not the obligation to designate up
to four current members of the Special Committee of the Board of Directors who
shall remain directors after the consummation of the Tender Offer until the
Effective Date. On the Effective Date, Company shall accept the resignations of
any such directors determined by Parent and Buyer who have not previously
resigned.
(q) Approval of Merger. Subject to the discharge of their
fiduciary duty, the Board of Directors of Company shall at all times prior to
the Effective Date, recommend that the holders of Shares approve and consent to
this Agreement, the Merger and the Merger Agreement.
(r) Deregistration. Following the consummation of the Tender
Offer and if permitted by applicable rules and regulations, including the
Exchange Act, at the request of Parent or Buyer, Company shall take or cause to
be taken as promptly as practical any and all such steps as shall be necessary
to terminate the registration of the Shares under the Exchange Act and the
listing of the Shares on any stock exchange, including the New York Stock
Exchange.
4.3 Covenants of the Parties. Parent and Buyer acknowledge the
provisions of the Confidentiality Agreement and confirm that the provisions
thereof continue to apply. Company agrees to treat as confidential all
information provided by Parent and Buyer, which is designated as, or from the
content clearly intended as, confidential information in the same manner as
Company treats similar confidential information of its own, and if this
Agreement is terminated, Company shall continue to treat all such information as
confidential and to cause its employees to keep all such information
confidential and shall return such documents theretofore delivered by Parent and
Buyer as either of them shall request, and shall use such information, or cause
it to be used, solely for the purposes of evaluating and completing the
transactions contemplated hereby.
5. REPRESENTATIONS AND WARRANTIES OF COMPANY.
Company represents and warrants to Parent and Buyer that except as
disclosed to Parent and Buyer in writing on a separate disclosure statement
previously provided by Company (the "Company Disclosure Statement"):
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5.1 Corporate Status and Power to Enter into Agreements. Company (i) is
a corporation duly organized, validly existing and in good standing under the
laws of the state of Washington, and (ii) subject to the approval of this
Agreement and the Merger Agreement and the transaction contemplated hereby and
thereby by the shareholders of Company, it has all necessary corporate power to
enter into this Agreement and the Merger Agreement and to carry out all of the
terms and provisions hereof and thereof to be carried out by it. Company is duly
qualified to do business as a foreign corporation under the laws of each
jurisdiction in which the conduct of its business requires such qualification,
except for jurisdictions where failure to so qualify would not have a material
adverse effect on Company's business.
The Company Subsidiaries are each a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. Each of the Company Subsidiaries is duly qualified to do business
as a foreign corporation under the laws of such jurisdiction in which the
conduct of its business requires such qualification, except for jurisdictions
where failure to so qualify would not have a material adverse effect on its
business.
5.2 Execution and Delivery of the Agreement.
(a) The execution and delivery of this Agreement has been duly
authorized by the Board of Directors of Company and, when this Agreement, the
Merger Agreement, and the Merger have been duly approved by the affirmative vote
of the holders of a majority of the outstanding Shares, this Agreement, the
Merger Agreement and the Merger will be duly and validly authorized by all
necessary corporate action on the part of Company.
(b) This Agreement has been duly executed and delivered by
Company and (assuming due execution and delivery by and enforceability against
Parent and Buyer) constitutes the legal and binding obligations of Company,
except as enforcement may be limited by applicable bankruptcy laws or other
similar laws affecting creditors' rights generally, and except that the
availability of equitable remedies may be limited.
(c) The execution and delivery by Company of this Agreement
and the consummation of the transactions contemplated hereby, including the
Tender Offer (i) do not violate any provision of the Articles of Incorporation
or Bylaws of Company, any provision of federal or state law, or any governmental
rule or regulation (assuming (x) receipt of the Government Approvals, (y)
receipt of the requisite Company shareholder approval referred to in this
Section 5.2, and (z) the accuracy of the representations of Parent and Buyer set
forth herein), and (ii) do not require any consent of any person under, conflict
with or result in a breach of, or accelerate the performance required by any of
the terms of any material debt instrument, lease, license, covenant, agreement,
or understanding to which Company or any of the Company
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Subsidiaries is a party or by which it is bound which are required to be
disclosed by Company in filings made by it pursuant to the Exchange Act or any
order, ruling, decree, judgment, arbitration award or stipulation to which
Company or any of the Company Subsidiaries is subject, or constitute a material
default thereunder or result in the creation of any lien, claim, security
interest, encumbrance, charge, restriction, or similar right of any third party
upon any of the properties or assets of Company or of any of the Company
Subsidiaries. Without limiting the generality of the foregoing, Company
represents and warrants that:
(i) All of the actions necessary or required pursuant to the terms
of the 1986 Standstill Agreement to permit the transactions contemplated hereby,
the Tender Offer Documents, and the Merger Agreement have been taken, including
but not limited to, advance approval of the Agreement, the Tender Offer, the
Officer and Director Agreements, and the Shareholder Agreement, from
five-eighths (5/8) of the Unaffiliated Directors (as defined in the 1986
Standstill Agreement) as required by Section 2.8 of the 1986 Standstill
Agreement;
(ii) the execution and delivery of this Agreement and the Merger
Agreement and the consummation of the transactions contemplated hereby and
thereby, including the Tender Offer, do not violate or breach any of the terms
of the 1986 Standstill Agreement; and
(iii) approval from only the majority of Company shareholders
entitled to vote is required in order to approve this Agreement, the Merger
Agreement and the Merger pursuant to Article IX of the Articles of Incorporation
of Company and to WBCA, and that the provisions of Article VII of such Articles
do not apply to this Agreement, the Merger Agreement and the Merger.
5.3 Capitalization. The authorized capital shares of Company consists of
105,000,000 shares, of which 100,000,000 are authorized as common stock, no par
value, 21,735,415 of which are validly issued, fully paid and nonassessable and
currently outstanding, and 5,000,000 preferred shares, 105,000 of which are
designated and authorized as Series A Junior Participating Convertible Preferred
Shares ("Series A Shares") and of which none are issued and currently
outstanding; provided that Dow has the right to require Company to sell and
Company has the right to require Dow to purchase up to 107,874 Series A Shares
pursuant to the Dow Put/Call. Said shares have been issued in compliance with
all applicable registration or qualification provisions of state and federal
securities laws. No other equity securities of Company have been authorized,
issued or are outstanding. There are currently outstanding options to purchase
1,741,072 Shares, at a weighted average exercise price of $ 11.1485 per Share,
issued pursuant to the Stock Plans. Said options were issued and, upon issuance
in accordance with the terms of the outstanding options, said Shares shall be
issued, in compliance with all applicable securities laws. Other than as set
forth in this Section 5.3, there are no outstanding options, agreements, calls
or
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commitments of any character which would obligate Company to issue, sell,
pledge, assign, or otherwise encumber or dispose of, or to purchase, redeem, or
otherwise acquire, any Shares or any other equity security of Company, or
warrants or options relating to, rights to acquire, or debt or equity securities
convertible into, Shares or any other equity security of Company. Company has
delivered to Parent a true and correct copy of its options outstanding report,
which summarizes options issued pursuant to the Stock Plans as of May 30, 1996.
5.4 Employment Contracts and Benefits.
(a) Company has delivered to Parent and Buyer an accurate list setting
forth all bonus, incentive compensation, profit-sharing, pension, retirement,
stock purchase, stock option, deferred compensation, severance, retiree medical
plan and other fringe benefit plans, trust agreements, arrangements and
commitments of Company and of each of the Company Subsidiaries which is
incorporated in one of the United States, and will deliver within fifteen (15)
business days of the date of this Agreement a list of such plans, agreements,
arrangements and commitments for those Company Subsidiaries which are not
incorporated in one of the United States, together with copies of all such
plans, agreements, arrangements and commitments requiring any payments or
acceleration of any rights to acquire any Shares or any other equity security of
Company upon a change of control (the "Change of Control Agreements").
(b) With respect to each employee benefit plan (as defined in Section
3(3) of ERISA) which is listed pursuant to Section 5.4(a) and which is subject
to the reporting, disclosure, and record retention requirements set forth in the
Internal Revenue Code of 1986, as amended (the "IRC"), and Part I of Subtitle B
of Title I of ERISA and the regulations thereunder, each of such requirements
has been fully met on a timely basis.
(c) With respect to each "Employee Benefit Plan" (as defined in Section
3(3) of ERISA) which is listed in Section 5.4(a) and which is subject to Part 4
of Subtitle B of Title I of ERISA, to the best of Company's knowledge, none of
the following now exists or has existed within the six-year period ending on the
date hereof:
(i) Any act or omission constituting a material violation of
Section 402 of ERISA;
(ii) Any act or omission constituting a violation of Section 403 of
ERISA;
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(iii) Any act or omission by Company or any of the Company
Subsidiaries, or by any director, officer or employee thereof, constituting a
violation of Sections 404 and 405 of ERISA;
(iv) Any act or omission by any other person constituting a
violation of Sections 404 or 405 of ERISA;
(v) Any act or omission which constitutes a material violation of
Sections 406 or 407 of ERISA and is not exempted by Section 408 of ERISA or
which constitutes a violation of Section 4975(c) of the IRC and is not exempted
by Sections 4975(c) or (d) of the IRC; or
(vi) Any act or omission constituting a violation of Sections 503,
510 or 511 of ERISA.
(d) All contributions, premiums or other payments due from Company and
the Company Subsidiaries to (or under) any plan listed in Section 5.4(a) have
been fully paid or adequately provided for on the audited financial statements
of Company for the year ended February 29, 1996. All accruals thereon
(including, where appropriate, proportional accruals for partial periods) have
been made in accordance with GAAP consistently applied on a reasonable basis.
(e) Each plan listed pursuant to Section 5.4(a) complies in all
material respects with all applicable requirements of (i) the Age Discrimination
in Employment Act of 1967, as amended, and the regulations thereunder, (ii)
Title VII of the Civil Rights Act of 1964, as amended, and the regulations
thereunder, (iii) Titles I and IV of ERISA, and (iv) Section 401(a) of the IRC.
(f) Each plan listed pursuant to Section 5.4(a) complies in all
material respects with all applicable requirements of the health care
continuation coverage provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, and the regulations thereunder.
5.5 Legal Actions and Proceedings. Neither Company nor any of the Company
Subsidiaries is a party to, nor threatened with, any legal action or other
proceeding or investigation before any court, any arbitrator of any kind, or any
government agency, which have not been disclosed to Parent and Buyer and, which
to the best of Company's knowledge, (i) could result in damages or impose a
monetary payment which could reasonably be expected to exceed $5,000,000, or
(ii) could impede the transactions contemplated hereby. There is no labor
dispute, strike, slow-down, or stoppage pending or, to the best of the knowledge
of Company, threatened
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against Company or any of the Company Subsidiaries which would have a material
adverse effect on Company and any of the Company Subsidiaries taken as a whole.
5.6 Retention of Broker or Consultant. No broker, agent, finder,
consultant, or other party (other than legal, auditing, tax and accounting
advisors) has been retained by Company or is entitled to be paid based upon any
agreements, arrangements, or understandings made by Company in connection with
any of the transactions contemplated by this Agreement, except that Company has
engaged Schroder to act as its financial advisor and to render an opinion
regarding the fairness of the Price and the Merger from a financial point of
view. Company has provided Parent and Buyer with a true and accurate copy of its
agreement with Schroder.
5.7 Accuracy of Representations and Warranties. No representation or
warranty by Company, and no statement by Company in the Company Disclosure
Statement or any certificate, agreement, schedule, the Tender Offer Documents,
the Proxy Statement, the Information Statement, or Schedule 14D-9 furnished in
connection with the transactions contemplated by this Agreement or the Merger
Agreement, contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary to make such
representation, warranty, or statement not misleading; provided, however, that
information as of a later date shall automatically modify information as of an
earlier date.
6. REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER.
Parent and Buyer jointly and severally represent and warrant to Company
that:
6.1 Corporate Status and Power to Enter into Agreements. Parent is a
limited liability company duly organized, validly existing and in good standing
under the laws of The Netherlands and has all necessary corporate power to enter
into this Agreement and the Merger Agreement and to carry out all of the terms
and provisions hereof and thereof to be carried out by it. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Washington and has all necessary corporate power to enter into
this Agreement and the Merger Agreement and to carry out all of the terms and
provisions hereof and thereof to be carried out by it.
6.2 Execution and Delivery of the Agreement.
(a) The execution and delivery of this Agreement and the Merger
Agreement has been duly and validly authorized by the Supervisory and Management
Boards of Parent and the Board of Directors of Buyer.
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(b) This Agreement has been duly executed and delivered by each of
Parent and Buyer and (assuming due execution and delivery by and enforceability
against Company) constitutes a legal and binding obligation of each of Parent
and Buyer except as enforcement may be limited by applicable bankruptcy laws or
other similar laws affecting creditors' rights generally, and except that the
availability of equitable remedies may be limited.
(c) The execution and delivery by each of Parent and Buyer of this
Agreement and the Merger Agreement and the consummation of transactions
contemplated hereby, including the Tender Offer (i) do not violate any provision
of the applicable articles, bylaws, or other charter documents of Parent or
Buyer, any provision of foreign, federal, or state law or any governmental rule
or regulation (assuming (x) receipt of the Government Approvals, and (y)
accuracy of the representations of Company set forth herein), and (ii) do not
require any consent of any person under, conflict with, or result in a breach
of, or accelerate the performance required by any of the terms of, any material
debt instrument, lease, license, covenant, agreement, or understanding to which
either Parent or Buyer is a party or by which it is bound or any order, ruling,
decree, judgment, arbitration, award, or stipulation to which Parent or Buyer is
subject, or constitute a material default thereunder or result in the creation
of any lien, claim, security interest, encumbrance, charge, restriction, or
similar right of any third party upon any of the properties or assets of Parent
or Buyer.
6.3 Retention of Broker or Consultant. No broker, agent, finder, consultant
or other party (other than legal, auditing, tax and accounting advisers and
consultants disclosed to Company) has been retained by Parent or Buyer or is
entitled to be paid based upon any agreements, arrangements or understandings
made by Parent or Buyer in connection with any of the transactions contemplated
by this Agreement.
6.4 Financing. Parent has, or will have, sufficient funds available to
enable Buyer to purchase all of the Shares outstanding and to pay all related
contractual obligations, fees and expenses pursuant to, or becoming payable by
the Surviving Corporation as a result of, this Agreement, the Tender Offer, and
the Merger and shall make such funds available to Buyer or the Surviving
Corporation to consummate the Tender Offer, the Merger, and related transactions
as promptly as practicable following Buyer's becoming obligated to purchase
Shares pursuant to the Tender Offer or Merger.
6.5 Accuracy of Representations and Warranties. No representation or
warranty by Parent or Buyer and no statement by Parent or Buyer in the Tender
Offer Documents or any certificate, agreement or schedule furnished in
connection with the transactions contemplated by this Agreement or the Merger
Agreement, contains or will contain any untrue statement of material fact or
omits or will omit to state any material fact necessary to make such
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representation, warranty, or statement not misleading to Company; provided,
however, that information as of a later date shall be deemed to modify
information as of an earlier date.
7. CONDITIONS TO THE MERGER.
7.1 Conditions to the Obligations of Each Party. The obligations of
Company, Parent and Buyer to consummate the Merger are subject to the
satisfaction of the following conditions:
(a) no provision of any applicable law or regulation and no judgment,
injunction, order, or decree shall prohibit or restrain the consummation of the
Merger;
(b) all Governmental Approvals shall have been obtained, with such
exceptions as would not, individually or in the aggregate, have a material
adverse effect on Parent's or Company's business; and
(c) Buyer shall have purchased Shares pursuant to the Tender Offer
which satisfies the Minimum Condition.
8. EXPENSES.
Parent, Buyer, and Company each agree to pay, without right of
reimbursement from the other party and whether or not the transactions
contemplated by this Agreement or the Merger Agreement shall be consummated, the
costs incurred by each such party incident to the performance of its obligations
under this Agreement and the Merger Agreement, including without limitation,
costs incident to the preparation of this Agreement, the Merger Agreement, the
Tender Offer Documents, the Schedule 14D-9, the Proxy or the Information
Statement (as the case may be) and incident to the consummation of the Merger
and of the other transactions contemplated herein and in the Merger Agreement,
including the fees and disbursements of counsel, accountants, consultants, and
financial advisers employed by such party in connection therewith. Without
limiting the foregoing, Company shall bear its own costs of preparing and
distributing (including postage) the Proxy Statement or the Information
Statement to its shareholders and other information relating to these
transactions.
9. AMENDMENT; TERMINATION.
9.1 Amendment. This Agreement and the Merger Agreement may be amended in
writing by Parent, Buyer and Company at any time prior to the purchase of Shares
pursuant to the Tender Offer.
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9.2 Termination. This Agreement and the Merger Agreement may be terminated
as follows:
(a) By the mutual consent of Parent, Buyer, and Company at any time
prior to the purchase of Shares pursuant to the Tender Offer.
(b) By either Company or Parent, if (i) as a result of the occurrence
of any of the conditions set forth in Annex I hereto, (a) Buyer shall have
failed to commence the Tender Offer within ten (10) days following the date
hereof or (b) the Tender Offer shall have terminated or expired in accordance
with its terms without Buyer having purchased Shares satisfying the Minimum
Condition, or (ii) the Tender Offer has not been consummated by August 31, 1996,
or such other mutually agreed to date.
(c) By Parent, if any person, entity, or "group" (as defined in Section
13(d)(3) of the Exchange Act) other than Parent and Buyer or Dow acquires
beneficial ownership of ten percent (10%) (except in bona fide arbitrage
transactions) or more of the outstanding Shares.
(d) By Parent, Buyer or Company, if prior to the Effective Time, except
for the transactions contemplated by this Agreement, Company and the Company
Subsidiaries shall have, pursuant to Section 4.2(i)(iii), effected or agreed to
effect any Business Combination, and the two (2) business days provided for in
Section 4.2(i)(iii)(b) shall have expired without a modification to this
Agreement which is approved by Company Board of Directors.
(e) By Parent, if prior to the Effective Time, the Board of Directors
of Company shall have withdrawn or materially modified its approval or
recommendation of the Tender Offer, this Agreement, or the Merger.
9.3 Notice. The power of termination hereunder may be exercised by Parent,
Buyer, or Company, as the case may be, only by giving written notice, signed on
behalf of Company by its Chairman of the Board or President, or on behalf of
Parent and Buyer signed by Parent's Chairman of either its Supervisory or
Management Boards.
9.4 Breach of Obligations. If there has been a material breach by either
party in the performance of any of the obligations herein which shall not have
been cured within ten (10) business days after written notice thereof has been
given to the defaulting party, the nondefaulting party shall have the right to
terminate this Agreement upon written notice to the other party. In any event,
the nondefaulting party shall have no obligation to consummate any transaction
or take any further steps toward such consummation contemplated hereunder until
such breach is cured.
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9.5 Termination and Expenses. If this Agreement is terminated pursuant to
Section 9.2, this Agreement shall become void and of no effect with no liability
on the part of any party hereto (unless such termination is the result of a
breach of this Agreement by such party). The termination of this Agreement shall
have no effect on the 1986 Standstill Agreement or the Confidentiality Agreement
(including without limitation the Tender Offer Protocol attached as Exhibit B
thereto). Termination of this Agreement shall not terminate or affect the
obligations of the parties to pay expenses as provided in Section 8, to maintain
the confidentiality of the other party's information pursuant to Section 4.3 or
the Confidentiality Agreement, or the provisions of this Section 9.5 or of
Sections 10.1, 10.3 or 10.4 or the second sentence of Section 10.2 below and
shall not affect any agreement after such termination. If this Agreement shall
be terminated by Parent pursuant to Section 9.2(d), or if any of the events
specified in Section 9.2(d) occurs within twelve (12) months following
termination of this Agreement pursuant to Section 9.2, Company shall pay to
Parent and Buyer, on demand, the aggregate sum of $4,000,000. Any payment
required pursuant to the preceding sentence shall be paid no more than two (2)
business days after demand by wire transfer of immediately available funds.
Company, Parent and Buyer agrees that any termination of this Agreement or any
payment made pursuant to this Section 9.5 shall not in any manner release or be
construed as so releasing the nonterminating party or parties from any liability
or damage to the other party or parties arising out of, in connection with or
otherwise relating to, directly or indirectly, such parties' failure in
performance of any of its covenants or agreements hereunder.
10. MISCELLANEOUS.
10.1 Notices. Any notice or other communication required or permitted under
this Agreement shall be effective only if it is in writing and delivered
personally, or by overnight express or by facsimile or sent by internationally
recognized courier, shipping charges prepaid, addressed as follows:
To Parent and Buyer:
Koninklijke Pakhoed, N.V.
333 Blaak
3011 GB Rotterdam
The Netherlands
Attn: N.J. Westdijk, Chairman, Board of Management
Facsimile No.: 011-31-10-213-0512
With a copy to:
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Nicholas C. Unkovic, Esq.
Graham & James LLP
One Maritime Plaza, Suite 300
San Francisco, California 94111-3492
Facsimile No.: (415) 391-2493
To Company:
Univar Corporation
6100 Carillon Point
Kirkland, Washington 98033
Attn: Paul H. Hough, President and Chief Executive Officer
Facsimile No.: (206) 889-4100
With a copy to:
Richard B. Dodd, Esq.
Preston Gates & Ellis
5000 Columbia Center
701 Fifth Avenue
Seattle, WA 98104-7078
Facsimile No.: (206) 623-7022
or to such other address as either party may designate by notice to the other,
and shall be deemed to have been given upon receipt.
10.2 Binding Agreement. This Agreement is binding upon and is for the
benefit of Parent, Buyer, Company, and the shareholders, officers, directors,
and employees of Company and their respective successors and permitted assigns.
This Agreement is not made for the benefit of any person, firm, corporation, or
association not a party hereto, and no other person, firm, corporation or
association shall acquire or have any right under or by virtue of this
Agreement. No party may assign this Agreement or any of its rights, privileges,
duties, or obligations hereunder without the prior written consent of the other
parties to this Agreement.
10.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of Washington, without giving
effect to such State's choice-of-law principles.
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10.4 Attorneys' Fees. In any action at law or suit in equity in relation to
this Agreement, the Merger Agreement, or the Merger, the prevailing party in
such action or suit shall be entitled to receive a reasonable sum for its
attorneys' fees and all other reasonable costs and expenses incurred in such
action or suit.
10.5 Entire Agreement; Severability. This Agreement, the Confidentiality
Agreement (other than the Tender Offer Protocol attached as Exhibit B thereto),
the 1986 Standstill Agreement and the documents, certificates, agreements,
letters, schedules, and exhibits attached or required to be delivered pursuant
hereto set forth the entire agreement and understanding of the parties in
respect of the transactions contemplated hereby, and supersede all other prior
agreements, arrangements, and understandings relating to the subject matter
hereof. Each provision of this Agreement shall be interpreted in a manner to be
effective and valid under applicable law, but if any provision hereof shall be
prohibited or ruled invalid under applicable law, the validity, legality, and
enforceability of the remaining provisions shall not, except as otherwise
required by law, be affected or impaired as a result of such prohibition or
ruling.
10.6 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
10.7 Waivers. Prior to or at the Effective Time, each of Parent, Buyer, and
Company shall have the right to waive any default in the performance of any term
of this Agreement by the other, to waive or extend the time for the compliance
or fulfillment by the other of any and all of the other's obligations under this
Agreement and to waive any or all of the conditions precedent to its obligations
under this Agreement, except any condition which, if not satisfied, would result
in the violation of any law or applicable governmental regulation. No failure to
exercise and no delay in exercising any right, remedy, or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, or power hereunder preclude any other or further exercise thereof
or the exercise of any other right, remedy, or power provided herein or by law
or in equity. The waiver by any party of the time for performance of any act or
condition hereunder does not constitute a waiver of the act or condition itself.
10.8 Survival of Representations and Warranties. The representations and
warranties contained herein and in any certificate or other writings delivered
pursuant hereto shall survive the purchase of Shares pursuant to the Tender
Offer but shall not survive the consummation of the Merger or the termination of
this Agreement. This Section 10.8 shall not limit any covenant or agreement of
the parties hereto which by its terms contemplates performance after the
Effective Time.
27
<PAGE> 32
[Remainder of page intentionally left blank]
28
<PAGE> 33
IN WITNESS WHEREOF, Parent, Buyer, and Company have each caused this
Agreement and Plan of Reorganization to be signed, effective as of the date
written above.
KONINKLIJKE PAKHOED N.V.
By:_______________________________________
N. J. Westdijk, Chairman, Board
of Management
UNIVAR CORPORATION
By:_______________________________________
Paul H. Hough, President and
Chief Executive Officer
UC ACQUISITION CORP.
By:_______________________________________
N. J. Westdijk, Chairman and
President
29
<PAGE> 34
[Signature Page for Agreement and Plan of Reorganization]
30
<PAGE> 35
ANNEX I
Notwithstanding any other provision of the Tender Offer, Buyer shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Buyer's obligation to pay for or return tendered Shares after the termination
or withdrawal of the Tender Offer), to pay for any Shares, and may terminate the
Tender Offer, if (i) the Minimum Condition has not been satisfied, (ii)
Governmental Approvals have not been obtained or (iii) at any time on or after
May 31, 1996 and prior to the acceptance for payment of Shares, any of the
following conditions shall occur and be continuing:
(a) there shall be instituted or pending any action or proceeding by any
government or governmental authority or agency, domestic or foreign (i)
challenging or seeking to make illegal, to delay materially or otherwise
directly or indirectly to restrain or prohibit the making of the Tender Offer,
the acceptance for payment of or payment for some of or all the Shares by Buyer
or the consummation by Buyer of the Merger, (ii) seeking to restrain or prohibit
Buyer's ownership or operation (or that of its respective subsidiaries or
affiliates) of all or any material portion of the business or assets of Company
and the Company Subsidiaries, taken as a whole, or of Parent and its
subsidiaries, taken as a whole, or to compel Buyer or any of its subsidiaries or
affiliates to dispose of or hold separate all or any material portion of the
business or assets of Company and the Company Subsidiaries, taken as a whole, or
of Parent and its subsidiaries, taken as a whole, (iii) seeking to impose or
confirm material limitations on the ability of Parent or any of its subsidiaries
or affiliates to effectively exercise full rights of ownership of the Shares,
including, without limitation, the right to vote any Shares acquired or owned by
Parent or any of its subsidiaries or affiliates on all matters properly
presented to Company's shareholders, (iv) seeking to require divestiture by
Parent or any of its subsidiaries or affiliates of any Shares, or (v) that
otherwise is likely to materially adversely affect Company and the Company
Subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as a
whole;
(b) there shall be any action taken, or any statute, rule, regulation,
injunction, order or decree proposed, enacted, enforced, promulgated, issued or
deemed applicable to Company or any of the Company Subsidiaries or the Tender
Offer or the Merger, by any court, government or governmental authority or
agency, domestic or foreign other than the application of the waiting period
provisions of the HSR Act or Exon-Florio to the Tender Offer or the Merger, that
is likely, directly or indirectly, to result in any of the consequences referred
to in clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange, which
suspension or limitation shall
1
<PAGE> 36
continue for at least three consecutive trading days, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, The Netherlands, Japan or France, which declaration or suspension
shall continue for at least three consecutive business days (iii) any limitation
(whether or not mandatory) by any government, domestic, foreign or
supranational, or Governmental Entity on, or other event that, in the reasonable
judgment of Parent, might affect, the extension of credit by banks or other
lending institutions, (iv) a commencement of a war or armed hostilities or other
national or international calamity directly or indirectly involving the United
States, The Netherlands, Japan or France, (v) in the case of any of the
foregoing existing at the time of the commencement of the Tender Offer, a
material acceleration or worsening thereof; or (vii) any significant change in
United States, The Netherlands, Japan or France currency exchange rates or any
suspension of, or limitation on, the markets therefor (whether or not
mandatory);
(d) subject to the provisions of Section 9.4 of the Agreement, Company
shall have breached or failed to perform in any material respect, any of its
covenants or agreements under this Agreement or the Merger Agreement, or any of
the representations and warranties of Company set forth in the Merger Agreement
shall not be true in any respect which is material to Company and the Company
Subsidiaries as a whole, in each case when made or at any time prior to
consummation of the Tender Offer as if made at and as of such time, provided,
however, that for purposes of this Annex I, Company shall not be deemed to have
breached its representation and warranty contained in Section 5.5 with respect
to any legal action or other proceeding or investigation which arises after May
31, 1996 which it is not required to disclose pursuant to filings made by it
pursuant to the Exchange Act without regard to any time periods covered by, or
due dates of, such filings;
(e) the Agreement shall have been terminated in accordance with its terms;
or
(f) the Board of Directors of Company shall have withdrawn or materially
modified its approval or recommendation of the Tender Offer, the Agreement or
the Merger;
which, in the reasonable judgment of Parent in any such case, and regardless of
the circumstances giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payment.
2
<PAGE> 37
ARTICLES OF MERGER
OF
UC ACQUISITION CORP.
AND
UNIVAR CORPORATION
To the Secretary of State
State of Washington
Pursuant to the provisions of the Washington Business Corporation Act
("WBCA"), the domestic business corporations herein named do hereby submit the
following Articles of Merger.
1. Annexed hereto and made a part hereof is the Plan of Merger for
merging UC Acquisition Corp. with and into Univar Corporation as adopted by
resolution at a meeting by the Board of Directors of UC Acquisition Corp. on
___________, 1996 and by resolution adopted at a meeting by the Board of
Directors of Univar Corporation on ____________, 1996.
2. The merger was duly approved by the shareholders of UC Acquisition
Corp. and of Univar Corporation pursuant to WBCA 23B.11.030.
3. The effective time and date of the merger herein provided for shall
be the date that the Articles of Merger are filed with the Washington Secretary
of State.
Executed on _________________, 1996.
UNIVAR CORPORATION
By:____________________________
Name:
Capacity:
3
<PAGE> 38
EXHIBIT 4
PLAN OF MERGER
PLAN OF MERGER adopted by UC Acquisition Corp., a business corporation
organized under the laws of the State of Washington, by resolution of its Board
of Directors on _________________, 1996, and adopted by Univar Corporation, a
business corporation organized under the laws of the State of Washington, by
resolution of its Board of Directors on _________________, 1996.
1. UC Acquisition Corp. and Univar Corporation shall, pursuant to the
provisions of the Washington Business Corporation Act, be merged with and into a
single corporation, to wit, Univar Corporation. Univar Corporation shall be
the surviving corporation at the effective time and date of the merger and is
sometimes hereinafter referred to as the "surviving corporation," and shall
continue to exist as said surviving corporation under its present name pursuant
to the provisions of the Washington Business Corporation Act. The separate
existence of UC Acquisition Corp., which is sometimes hereinafter referred to as
the "non-surviving corporation," shall cease at the effective time and date of
the merger in accordance with the provisions of the Washington Business
Corporation Act.
2. The articles of incorporation of the surviving corporation shall be
the Amended and Restated Articles of Incorporation of said surviving corporation
at the effective time and date of the merger, a copy of which is attached hereto
as Exhibit A.
3. The bylaws of the surviving corporation shall be the Amended and
Restated Bylaws of said surviving corporation at the effective time and date of
the merger and will continue in full force and effect until changed, altered, or
amended as therein provided and in the manner prescribed by the provisions of
the Washington Business Corporation Act.
4. The effective date of merger shall be the date upon which the
Articles of Merger are filed with the Secretary of State. Upon the effective
date of the merger: the separate corporate existence of UC Acquisition Corp.
shall cease; title to all real estate and other property owned by UC Acquisition
Corp. or Univar Corporation shall be vested in Univar Corporation without
reversion or impairment; and the surviving corporation shall have all
liabilities of UC Acquisition Corp. and Univar Corporation. Any proceeding
pending by or against UC Acquisition Corp. or Univar Corporation may be
continued as if such merger did not occur, or the surviving corporation may be
substituted in the proceeding for UC Acquisition Corp.
5. Each issued share of the non-surviving corporation shall, at the
effective time and date of the merger, be converted into one share of the
surviving corporation. The issued
4
<PAGE> 39
shares of the surviving corporation existing prior to the merger shall be
cancelled and retired and shall cease to exist, and holders of certificates
formerly representing shares of the surviving corporation, other than those
shares held by UC Acquisition Corp. and its affiliates, shall cease to have any
rights with respect thereto other than a right to receive [$____] per share or
any dissenters' rights they have perfected pursuant to Section 23B.13.210 of the
Washington Business Corporations Act. Any shares of Univar Corporation in the
treasury of Univar Corporation on the effective date of the merger shall be
surrendered to the surviving corporation for cancellation,and no shares of the
surviving corporation shall be issued in respect thereof.
6. Any shareholder of Univar Corporation who has the right to dissent
from this merger as provided in Section 23B.13.020 of the Washington Business
Corporation Act and who so dissents in accordance with the requirements of
Sections 23B.11.020 through 23B.13.280 of the Washington Business Corporation
Act, shall be entitled, upon surrender of the certificate or certificates
representing certificated shares or upon imposition of restrictions of transfer
of uncertificated shares, to receive payment of the fair value of such
shareholder's shares as provided pursuant to Section 23B.13.250 of the
Washington Business Corporation Act.
7. Unless the conditions of Section 23B.11.040 of the Washington
Business Corporation Act are satisfied, the Plan of Merger herein made and
approved shall be submitted to the shareholders of the non-surviving corporation
and the shareholders of the surviving corporation for their approval or
rejection in the manner prescribed by the provisions of the Washington Business
Corporation Act.
8. In the event that the Plan of Merger shall have been approved by the
shareholders entitled to vote of the non-surviving corporation and by the
shareholders entitled to vote of the surviving corporation in the manner
prescribed by the provisions of the Washington Business Corporation Act, the
non-surviving corporation and the surviving corporation hereby stipulate that
they will cause to be executed and filed and/or recorded any document or
documents prescribed by the laws of the State of Washington, and that they will
cause to be performed all necessary acts therein and elsewhere to effectuate the
merger.
9. The Board of Directors and the proper officers of the non-surviving
corporation and of the surviving corporation, respectively, are hereby
authorized, empowered, and directed to do any and all acts and things, and to
make, execute, deliver, file, and/or record any and all instruments, papers, and
documents which shall be or become necessary, proper, or convenient to carry out
or put into effect any of the provisions of this Plan of Merger or of the merger
herein provided for.
5
<PAGE> 40
10. The address of the registered office of the surviving corporation
shall be _______________________________________________________________.
6
<PAGE> 41
EXHIBIT B
OFFICER AND DIRECTOR AGREEMENT
May 31, 1996
Koninklijke Pakhoed, N.V.
333 Blaak
3011 GB Rotterdam
The Netherlands
Gentlemen:
In consideration for the proposed business combination in which Univar
Corporation ("Company") will be merged with an indirect wholly owned subsidiary
("Buyer") of Koninklijke Pakhoed, N.V. ("Parent") (the "Merger"), the
undersigned Company officer or member of the Board of Directors of Company
hereby agrees that subject to the discharge of his fiduciary responsibilities,
in his capacity as an Officer and/or a member of the Board of Directors, he
will, as applicable:
(a) vote in favor of the Merger, and the execution and delivery of the
Agreement and Plan of Reorganization among Parent, Company, and Buyer
(the "Merger Agreement") and all related agreements and all actions
contemplated thereby;
(b) vote to recommend to Company shareholders acceptance of the Tender
Offer to be made by Buyer for Company Common Shares pursuant to
Buyer's proposed Offer to Purchase Shares and use his reasonable
efforts to cause the shareholders of Company to tender Company Common
Shares pursuant to such Offer to Purchase Shares;
(c) use his reasonable efforts to cause the shareholders of Company to
adopt and approve the Merger Agreement and the transactions
contemplated thereby; and
(d) vote to authorize Company to consent to and/or encourage the execution
of agreements by a sufficient number of Company shareholders to assure
satisfaction of the Minimum Condition of Buyer's proposed Offer to
Purchase Shares.
1
<PAGE> 42
The undersigned acknowledges that Parent has entered into the Merger Agreement
in reliance on the agreements herein set forth and on that basis covenants and
agrees that he will tender all Company Common Shares held of record or
beneficially by him (representing all shares as to which the undersigned and/or
his spouse have sole voting power) as of the date hereof or hereinafter acquired
to Buyer pursuant to Buyer's proposed Offer to Purchase Shares; provided that
notwithstanding the foregoing this letter agreement shall terminate and have no
further effect if the Board of Directors of Company approves another "Business
Combination" as permitted by Section 4.2(i) of the Merger Agreement. All terms
not otherwise defined in this letter agreement shall have the same meaning as in
the Merger Agreement
Sincerely yours,
_________________________________
Print Name:
2
<PAGE> 43
EXHIBIT C
SHAREHOLDER AGREEMENT
MAY 31, 1996
Koninklijke Pakhoed, N.V.
333 Blaak
3011 G.B. Rotterdam
The Netherlands
Gentlemen:
In consideration for the proposed tender offer for shares of Common Shares of
Univar Corporation ("Company") to be made by a subsidiary of yours (the "Buyer")
and to be followed by the merger of Company with Buyer (the "Merger"), the
undersigned agrees that, in its capacity as a shareholder of Company, it will:
(a) tender all shares of Company Common Shares held of record or beneficially
by it (representing all shares as to which the undersigned has sole or
shared voting power) as of the date hereof or hereinafter acquired to Buyer
pursuant to Buyer's proposed Offer to Purchase Shares;
(b) provide all consents and approvals pursuant to the Distributor Agreement by
and between the undersigned and Van Waters & Rogers, Inc., dated March 8,
1996, required to consummate the Merger and the transactions contemplated
by the Agreement and Plan of Reorganization among you, Company and Buyer;
and
(c) only at your request, (i) exercise its option to purchase all or such
portion required of the 101,874 shares of Series A Junior Participating
Convertible Preferred Shares (the "Preferred Shares"), which the
undersigned is entitled to purchase pursuant to the Amended and Restated
Agreement of Purchase and Sale of Stock (the "Stock Purchase Agreement")
entered into by and between the undersigned and Company, dated May 13,
1994, (ii) convert all the Preferred Shares the undersigned acquires
pursuant to the Stock Purchase Agreement into Company Common Shares, and
(iii) tender all shares of Company Common Shares acquired pursuant to such
conversion of the Preferred Shares to Buyer pursuant to Buyer's proposed
Offer to Purchase Shares. If such request is not made and the option is not
exercised, you will pay to us or cause the surviving corporation to pay us
on consummation of the Merger, the difference between the aggregate
exercise price of the option to acquire the Preferred Shares and the
aggregate price that would
3
<PAGE> 44
have been paid in the tender offer for the shares of Common Shares which
would have been issued pursuant to the conversion of the Preferred Shares.
Notwithstanding any other provision of this letter, the undersigned will be
relieved of its obligations under paragraphs (a), (b) and (c) above if (i) a
competing offer to purchase Company and/or its shares of Common Shares at a
price greater than $19.45 per share is made by a third party prior to
consummation of the Merger, or (ii) Buyer's price for the purchase of the
undersigned's shares of Common Stock pursuant to the Offer to Purchase is
adjusted to a price which is less than $19.45 per share.
Sincerely yours,
THE DOW CHEMICAL COMPANY
By: ___________________________
Name: ________________________
Title: ________________________
4
<PAGE> 1
FORM OF
DIRECTOR AND OFFICER AGREEMENT
May 31, 1996
Royal Pakhoed N.V.
Blaak 333
3011 GB Rotterdam
The Netherlands
Gentlemen:
In consideration for the proposed business combination in which Univar
Corporation ("Company") will be merged with an indirect wholly owned subsidiary
("Buyer") of Royal Pakhoed N.V. ("Parent") (the "Merger"), the undersigned
Company officer or member of the Board of Directors of Company hereby agrees
that subject to the discharge of his fiduciary responsibilities, in his capacity
as an officer and/or a member of the Board of Directors, he will, as applicable:
(a) vote in favor of the Merger, and the execution and delivery of
the Agreement and Plan of Reorganization among Parent,
Company, and Buyer (the "Reorganization Agreement") and all
related agreements and all actions contemplated thereby;
(b) vote to recommend to Company shareholders acceptance of the
Tender Offer to be made by Buyer for Company Common Shares
pursuant to Buyer's proposed Offer to Purchase Shares and use
his reasonable efforts to cause the shareholders of Company to
tender Company Common Shares pursuant to such Offer to
Purchase Shares;
(c) use his reasonable efforts to cause the shareholders of
Company to adopt and approve the Merger Agreement and the
transactions contemplated thereby; and
(d) vote to authorize Company to consent to and/or encourage the
execution of agreements by a sufficient number of Company
shareholders to assure satisfaction of the Minimum Condition
of Buyer's proposed Offer to Purchase Shares.
The undersigned acknowledges that Parent has entered into the Merger Agreement
in reliance on the agreements herein set forth and on that basis covenants and
agrees that he will tender all Company Common Shares held of record or
beneficially by him
<PAGE> 2
(representing all shares as to which the undersigned and/or his spouse have sole
voting power) as of the date hereof or hereinafter acquired to Buyer pursuant to
Buyer's proposed Offer to Purchase Shares; provided that notwithstanding the
foregoing this letter agreement shall terminate and have no further effect if
the Board of Directors of Company approves another "Business Combination" as
permitted by Section 4.2(i) of the Reorganization Agreement. All terms not
otherwise defined in this letter agreement shall have the same meaning as in the
Reorganization Agreement.
Sincerely yours,
_____________________________________
Director/Officer
Print Name: _________________________
_____________________________________
Spouse
Print Name: _________________________
<PAGE> 1
SHAREHOLDER AGREEMENT
May 31, 1996
Koninklike Pakhoed, N.V.
333 Blaak
3011 G.B. Rotterdam
The Netherlands
Gentlemen:
In consideration for the proposed tender offer for shares of Common
Shares of Univar Corporation ("Company") to be made by a subsidiary of yours
(the "Buyer") and to be followed by the merger of Company with Buyer (the
"Merger"), the undersigned agrees that, in its capacity as a shareholder of
Company, it will:
(a) tender all shares of Company Common Shares held of record or
beneficially by it (representing all shares as to which the
undersigned has sole or shared voting power) as of the date
hereof or hereinafter acquired to Buyer pursuant to Buyer's
proposed Offer to Purchase Shares;
(b) provide all consents and approvals pursuant to the Distributor
Agreement by and between the undersigned and Van Waters &
Rogers, Inc., dated March 8, 1996, required to consummate the
Merger and the transactions contemplated by the Agreement and
Plan of Reorganization among you, Company and Buyer; and
(c) only at your request, (i) exercise its option to purchase all
or such portion required of the 101,874 shares of Series A
Junior Participating Convertible Preferred Shares (the
"Preferred Shares"), which the undersigned is entitled to
purchase pursuant to the Amended and Restated Agreement of
Purchase and Sale of Stock (the "Stock Purchase Agreement")
entered into by and between the undersigned and Company, dated
May 13, 1994, (ii) convert all the Preferred Shares the
undersigned acquired pursuant to the Stock Purchase Agreement
into Company Common Shares, and (iii) tender all shares of
Company Common Shares acquired pursuant to such conversion of
the Preferred Shares to Buyer pursuant to Buyer's proposed
Offer to Purchase Shares. If such request is not made and the
option is not exercised, you will pay to us or cause the
surviving corporation to pay us on consummation of the Merger,
the difference between the aggregate exercise price of the
option to acquire the Preferred Shares and the aggregate price
that would have been paid in the tender offer for the shares
of Common Shares which would have been issued pursuant to the
conversion of the Preferred Shares.
<PAGE> 2
Notwithstanding any other provision of this letter, the undersigned
will be relieved of its obligations under paragraphs (a), (b) and (c) above if
(i) a competing offer to purchase the Company and/or its shares of Common Shares
at a price greater than $19.45 per share is made by a third party prior to
consummation of the Merger, or (ii) Buyer's price for the purchase of the
undersigned's shares of Common Stock pursuant to the Offer to Purchase is
adjusted to a price which is less than $19.45 per share.
Sincerely yours,
THE DOW CHEMICAL COMPANY
By: /s/ Michael D. Parker
----------------------
Name: Michael D. Parker
Title: Group Vice President
<PAGE> 1
EXHIBIT 4
PLAN OF MERGER
PLAN OF MERGER adopted by UC Acquisition Corp., a business corporation
organized under the laws of the State of Washington, by resolution of its Board
of Directors on _________________, 1996, and adopted by Univar Corporation, a
business corporation organized under the laws of the State of Washington, by
resolution of its Board of Directors on _________________, 1996.
1. UC Acquisition Corp. and Univar Corporation shall, pursuant to the
provisions of the Washington Business Corporation Act, be merged with and into a
single corporation, to wit, Univar Corporation. Univar Corporation shall be
the surviving corporation at the effective time and date of the merger and is
sometimes hereinafter referred to as the "surviving corporation," and shall
continue to exist as said surviving corporation under its present name pursuant
to the provisions of the Washington Business Corporation Act. The separate
existence of UC Acquisition Corp., which is sometimes hereinafter referred to as
the "non-surviving corporation," shall cease at the effective time and date of
the merger in accordance with the provisions of the Washington Business
Corporation Act.
2. The articles of incorporation of the surviving corporation shall be
the Amended and Restated Articles of Incorporation of said surviving corporation
at the effective time and date of the merger, a copy of which is attached hereto
as Exhibit A.
3. The bylaws of the surviving corporation shall be the Amended and
Restated Bylaws of said surviving corporation at the effective time and date of
the merger and will continue in full force and effect until changed, altered, or
amended as therein provided and in the manner prescribed by the provisions of
the Washington Business Corporation Act.
4. The effective date of merger shall be the date upon which the
Articles of Merger are filed with the Secretary of State. Upon the effective
date of the merger: the separate corporate existence of UC Acquisition Corp.
shall cease; title to all real estate and other property owned by UC Acquisition
Corp. or Univar Corporation shall be vested in Univar Corporation without
reversion or impairment; and the surviving corporation shall have all
liabilities of UC Acquisition Corp. and Univar Corporation. Any proceeding
pending by or against UC Acquisition Corp. or Univar Corporation may be
continued as if such merger did not occur, or the surviving corporation may be
substituted in the proceeding for UC Acquisition Corp.
5. Each issued share of the non-surviving corporation shall, at the
effective time and date of the merger, be converted into one share of the
surviving corporation. The issued
4
<PAGE> 2
shares of the surviving corporation existing prior to the merger shall be
cancelled and retired and shall cease to exist, and holders of certificates
formerly representing shares of the surviving corporation, other than those
shares held by UC Acquisition Corp. and its affiliates, shall cease to have any
rights with respect thereto other than a right to receive [$____] per share or
any dissenters' rights they have perfected pursuant to Section 23B.13.210 of the
Washington Business Corporations Act. Any shares of Univar Corporation in the
treasury of Univar Corporation on the effective date of the merger shall be
surrendered to the surviving corporation for cancellation,and no shares of the
surviving corporation shall be issued in respect thereof.
6. Any shareholder of Univar Corporation who has the right to dissent
from this merger as provided in Section 23B.13.020 of the Washington Business
Corporation Act and who so dissents in accordance with the requirements of
Sections 23B.11.020 through 23B.13.280 of the Washington Business Corporation
Act, shall be entitled, upon surrender of the certificate or certificates
representing certificated shares or upon imposition of restrictions of transfer
of uncertificated shares, to receive payment of the fair value of such
shareholder's shares as provided pursuant to Section 23B.13.250 of the
Washington Business Corporation Act.
7. Unless the conditions of Section 23B.11.040 of the Washington
Business Corporation Act are satisfied, the Plan of Merger herein made and
approved shall be submitted to the shareholders of the non-surviving corporation
and the shareholders of the surviving corporation for their approval or
rejection in the manner prescribed by the provisions of the Washington Business
Corporation Act.
8. In the event that the Plan of Merger shall have been approved by the
shareholders entitled to vote of the non-surviving corporation and by the
shareholders entitled to vote of the surviving corporation in the manner
prescribed by the provisions of the Washington Business Corporation Act, the
non-surviving corporation and the surviving corporation hereby stipulate that
they will cause to be executed and filed and/or recorded any document or
documents prescribed by the laws of the State of Washington, and that they will
cause to be performed all necessary acts therein and elsewhere to effectuate the
merger.
9. The Board of Directors and the proper officers of the non-surviving
corporation and of the surviving corporation, respectively, are hereby
authorized, empowered, and directed to do any and all acts and things, and to
make, execute, deliver, file, and/or record any and all instruments, papers, and
documents which shall be or become necessary, proper, or convenient to carry out
or put into effect any of the provisions of this Plan of Merger or of the merger
herein provided for.
5
<PAGE> 3
10. The address of the registered office of the surviving corporation
shall be _______________________________________________________________.
6
<PAGE> 1
Univar Corporation,
Pakhoed Holding N.V.,
and
Pakhoed Investeringen B.V.
- --------------------------------------------------------------------------------
STANDSTILL AGREEMENT
- --------------------------------------------------------------------------------
Dated: September 19, 1986
<PAGE> 2
STANDSTILL AGREEMENT
THIS STANDSTILL AGREEMENT (the "Agreement") is made this 19th day of
September, 1986, by and among Univar CORPORATION, a Delaware corporation
("Company"), and Pakhoed Holding N.V., a Netherlands corporation ("Holding"),
and Pakhoed Investeringen B.V., a Netherlands corporation ("Parent").
RECITALS
A. Company, Holding, Parent and Subsidiary have contemporaneously
herewith entered into an Agreement for Exchange of Capital Stock (as defined
below) pursuant to which, among other things, Parent shall transfer to Company
all of the issued and outstanding shares of capital stock of Subsidiary, and
Company shall issue to Parent shares of Common Stock of Company, the actual
number of which shall be determined in accordance with the terms of the Exchange
Agreement.
B. The parties seek to regulate the acquisition and disposition by
Purchaser (as defined below) of Company's Voting Securities, provide for
Purchaser representation on Company's Board, and generally foster a constructive
and mutually beneficial relationship.
C. Purchaser and Company acknowledge that Company has made, prior to
the date hereof, a careful evaluation of Purchaser's investment objectives with
regard to its ownership of Voting Securities, and the compatibility of
Purchaser's management and objectives with the management and objectives of
Company; that such factors were critical to Company in its decision to enter
into this Agreement; that, absent the provisions of Articles II through IV
hereof, Purchaser's ownership of Voting Securities would present an unusual
opportunity for it to gain effective control of Company and Company might have
reached a different decision with regard
<PAGE> 3
to entering into this Agreement and the Exchange Agreement; that, therefore, the
provisions of Articles II through IV were a material inducement to Company to
enter into this Agreement and the Exchange Agreement; and, that the primary
purposes of Articles II through IV are that, so long as such provisions remain
in effect and except as permitted by such provisions, the Voting Securities
owned by Purchaser not come to rest in the hands of any single holder or group
of holders other than Purchaser, and Purchaser's ownership of Voting Securities
not be increased, other than as provided for in this Agreement or with the
consent of Company. Purchaser acknowledges that such purposes are reasonable and
that the provisions of Articles II through IV are reasonable in view of such
purposes.
NOW, THEREFORE, in consideration of the agreements and covenants set
forth herein and in the Exchange Agreement, and for other good and valuable
consideration, the parties agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, in addition to other terms defined elsewhere
herein, the following terms have the respective meanings set forth below:
1.1 Act. "Act" means the Securities Act of 1933, as
amended.
1.2 Affiliate. "Affiliate" means any Person directly or
indirectly controlled by, controlling or under common control with another
Person, including but not limited to a Person who is employed by or is a
consultant or independent contractor to another Person. For purposes of this
definition, "control" means the power to direct the management or policies of
the Person in question.
1.3 Affiliated Director. "Affiliated Director" means any
member of the Board who has been designated by Purchaser under Article VI for
nomination or appointment as a director of Company.
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1.4 Board. "Board" means the Board of Directors of
Company as constituted from time to time.
1.5 Business Day. "Business Day" means any Monday through
Friday, inclusive, excluding any such day which is a Federal or State of
Washington holiday.
1.6 Commission. "Commission" means the Securities and
Exchange Commission of the United States.
1.7 Common Stock. "Common Stock" means the common stock
of Company, par value $.33-1/3 per share or such other par value as may be
established from time to time.
1.8 Common Stock Equivalents. "Common Stock Equivalents"
means the sum of the following, determined at any time during the term of this
Agreement" (a) the total number of shares of issued and outstanding Common
Stock, plus (b) the number of shares of Common Stock reserved for issuance
pursuant to stock options granted (but not yet exercised) under Company's stock
option plans, and plus (c) the number of votes which may be cast for the
election of directors (whether directly or by formula) as a result of ownership
of any Voting Securities other than Common Stock; provided, however, the shares
of Common Stock described in (b) above shall not be included in Common Stock
Equivalents until the earlier of (i) the date the options are exercisable, or
(ii) the end of the fiscal year of Company during which such options were
granted; provided, further, that the votes described in (c) above shall not be
included in Common Stock Equivalents until the Voting Securities other than
Common Stock are able to be voted for the election of directors.
1.9 Core Shareholders. "Core Shareholders" means the
individuals identified on the attached Exhibit A.
1.10 Effective Date. "Effective Date" means the date the
acquisition of Common Stock by Parent is consummated pursuant to the terms of
the Exchange Agreement.
1.11 Exchange Act. "Exchange Act" means the Securities
Exchange Act of 1934, as amended.
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1.12 Exchange Agreement. "Exchange Agreement" means the
Agreement for Exchange of Capital Stock of even date herewith among Parent,
Holding, Subsidiary, and Company.
1.13 Holder. "Holder" means Purchaser and any Person to
whom the registration rights under Article VII have been transferred in
compliance with Section 7.7.
1.14 Investment Banking Firm. "Investment Banking Firm"
means a nationally recognized investment banking firm.
1.15 Market Deposition Program. See Section 3.9(a).
1.16 Notice of Exercise. See Section 3.9.(b)(iii).
1.17 Notice of Issue. See Section 2.6.
1.18 Notice of Proposed Sale. See Section 3.9(a).
1.19 Percentage Limitation. See Section 2.2.
1.20 Permitted Percentage. "Permitted Percentage" means
the Percentage Limitation or, if the percentage of Common Stock Equivalents
owned by Purchaser increases as a consequence of (a) a reduction in the number
of outstanding Voting Securities other than as a result of (1) the expiration of
rights to acquire Common Stock under Company's stock option plans or (2) the
lapse or rights to vote for the election of directors as a result of ownership
of any Voting Securities other than Common Stock, (b) Purchaser's acquisitions
of Voting Securities with Board approval in accordance with Section 2.8, or (c)
Purchaser's acquisitions of Voting Securities in a tender offer permitted by
Section 2.7, following which Company fails to repurchase shares of Voting
Securities in accordance with Section 2.7(b), such greater percentage of Common
Stock Equivalents owned by Purchaser after such reduction, acquisition, or
failure, respectively. The Permitted Percentage shall be reduced from time to
time if, upon the issuance by Company of Common Stock Equivalents, Purchaser
either does not or is not permitted by this Agreement to purchase its full
Permitted Percentage of such issuance.
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1.21 Person. "Person" means any individual, partnership,
association, corporation, trust, or other entity, including without limitation
employee pension, profit sharing, and other benefit plans and trusts.
1.22 Principal Trading Market. "Principal Trading Market"
means the principal trading exchange or national automated stock quotation
system on which the Common Stock is traded or quoted.
1.23 Private Sale. See Section 3.9(a).
1.24 Purchaser. "Purchaser" means Holding, Parent, and
Purchaser Affiliates, jointly and severally.
1.25 Purchaser Affiliate. "Purchaser Affiliate" means any
Affiliate of either Holding or Parent.
1.26 Subsidiary. "Subsidiary" means DSW, Inc., a
Washington corporation.
1.27 Twenty Day Average. "Twenty Day Average" means the
average closing sale price of Common Stock on the Principal Trading Market for
the twenty (20) trading days preceding the earlier of the closing of, or public
announcement date concerning, the issuance of Voting Securities by Company.
1.28 Unaffiliated Director. "Unaffiliated Director" means
a director on the Board who is not an Affiliated Director.
1.29 Voting Securities. "Voting Securities" means Common
Stock and any other Company securities entitled to vote for the election of
directors, or any security (including any preferred stock of Company)
convertible into or exchangeable for or exercisable for the purchase of Common
Stock or other Company securities entitled to vote for the election of
directors.
1.30 13D Group. "13D Group" means any group of Persons
(other than the Core Shareholders) formed for the purpose of acquiring, holding,
voting.or disposing of Voting Securities required under Section 13(d) of the
Exchange Act and the rules and regulations thereunder (as now in effect) to file
a statement on Schedule 13D with the Commission as a
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"person" within the meaning of Section 13(d)(3) of the Exchange Act disclosing
beneficial ownership of Voting Securities representing more than 5% of any class
of Voting Securities.
ARTICLE II
RESTRICTIONS ON ACQUISITION OF ADDITIONAL
SHARES BY PURCHASER
2.1 No Purchases Before Effective Date. Except as
provided in Sections 2.7 and 2.9, Purchaser shall not, between the date of
execution of this Agreement and the Effective Date, acquire in any way or hold
record or beneficial ownership of any Voting Securities.
2.2 No Purchases Beyond Percentage Limitation. Except as
otherwise permitted herein, Purchaser shall not, directly or indirectly, acquire
any Voting Securities beyond its "Percentage Limitation". The "Percentage
Limitation" shall be 35% or such greater percentage of Common Stock Equivalents
as Purchaser may then own in accordance with this Agreement, but in no event
greater than 45%.
2.3 Permitted Purchase Due to Increases in Common Stock
Equivalents. If the Common Stock Equivalents increase at any time and, as a
consequence thereof Purchaser's aggregate ownership of Common Stock Equivalents
falls below its then Percentage Limitation, Purchaser may acquire additional
shares of Common Stock up to its Percentage Limitation, as follows:
(a) Purchaser may at any time do so by open
market purchases, partial tender offer, or private transaction; and/or
(b) Purchaser may, in accordance with Section
2.4, purchase unissued or treasury shares of Common Stock from Company.
2.4 Procedures Concerning Purchaser's Acquisition of
Shares from Company in response to Increases in Common Stock Equivalents.
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(a) Within thirty (30) days after any increase
in Common Stock Equivalents (other than an increase previously notified to
Purchaser under Section 2.6), Company shall give Purchaser written notice
setting forth the number of Common Stock Equivalents prior to the increase, the
number of Common Stock Equivalents after the increase, Purchaser's then
Percentage Limitation, the number of shares of Common Stock Purchaser may
purchase as a consequence of said increase, and the per share purchase price for
such shares.
(b) The purchase price per share of Common Stock
purchased under Section 2.3(b) shall be established as follows:
(i) if the Common Stock Equivalents
increased as a result of issuance by Company of one or more Voting Securities
(other than issuance of options under Company's stock option plans), the price
per share shall be the lesser of the Twenty Day Average or the aggregate fair
market value of all consideration received by Company for such Voting Securities
as determined by the Board (including attribution of the consideration received
with respect to each Voting Security other than Common Stock) within thirty (30)
days after the issuance, divided by the number of Common Stock Equivalents
issued by Company; or
(ii) if the Common Stock Equivalents
increased as a result of Company's issuance of stock options under Company's
stock option plans, the purchase price shall be the closing sale price of Common
Stock on the Principal Trading Market for the last day of Company's fiscal year
in which such options were issued.
(c) Purchaser shall have the right to purchase
from Company a number of shares of Common Stock equal to its then Percentage
Limitation multiplied times the increase in the Common Stock Equivalents.
Purchaser shall have fifteen (15) days from receipt of Company's notice pursuant
to Section 2.4.(a) above to notify Company in writing whether it elects to
purchase any of such shares of Common Stock and, if it so elects, the number of
shares it elects to purchase. At the time Purchaser delivers its notice to
Company, there shall be a binding agreement between Purchaser and Company for
the purchase and sale of the number of shares of
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Common Stock elected by Purchaser. Purchaser shall pay the purchase price to
Company in immediately available funds, and Company shall deliver certificates
representing the shares to Purchaser, on a date specified by Purchaser in its
notice, which date shall not be more than twenty (20) days after Purchaser
delivers its notice to Company.
2.5 Limitation on Purchaser's Right to Purchase Common
Stock Pursuant to Section 2.3 in the Event of a Business Acquisition by Company.
(a) Notwithstanding Section 2.3, Purchaser shall
have no right to purchase additional shares of Common Stock if (i) the Common
Stock Equivalents increased due to issuance by Company of Voting Securities in
connection with Company's acquisition of a business entity from a third party,
(ii) during the one year period following closing of such an acquisition,
Company repurchases a number of shares of Voting Securities equal to or greater
than the number of shares of Common Stock Equivalents issued to the third party,
and (iii) Company's plan to repurchase shares was approved by a majority of the
Board and notice thereof was given to Purchaser prior, to the closing of the
acquisition. If Company does not within the one year period repurchase a number
of shares of Voting Securities equal to the number of Common Stock Equivalents
issued to the third party, Purchaser shall have all rights under Section 2.3 to
purchase shares of Common Stock up to its Percentage Limitation. For purposes of
Section 2.4, Company shall give notice to Purchaser in accordance with Section
2.4(a) within thirty (30) days after the end of the one year period, and the
purchase price to be paid by Purchaser to purchase shares from Company shall be
established in accordance with Section 2.4(b)(i) as of the date of the closing
of the business acquisition. Except as modified by the preceding sentence, the
provisions of Section 2.4 shall govern any such purchase.
(b) The limitation contained in Section 2.5
shall only apply to increases of up to fifteen (15%) in the Common Stock
Equivalents. If in connection with an acquisition Company issues Voting
Securities which cause the Common Stock Equivalents to increase more than
fifteen
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(15%), Purchaser shall have all rights under Section 2.3 to purchase Common
Stock in connection with such increase over fifteen (15%).
2.6 Permitted Purchase If Company Proposes to Issue
Voting Securities for Cash. If Company proposes to issue Voting Securities
solely for cash pursuant to a registered offering or a private placement, and as
a consequence thereof Purchaser's aggregate ownership of Common Stock
Equivalents would fall below its then Percentage Limitation, Company shall give
Purchaser written notice of such fact (the "Notice of Issue") at least thirty
(30) days prior to the anticipated date of such issuance stating the number of
Common Stock Equivalents to be issued and the anticipated price per Common Stock
Equivalent. Purchaser shall have the right to purchase from Company a number of
shares of Common Stock equal to its then Percentage Limitation multiplied times
the number of Common Stock Equivalents to be issued. Purchaser shall have
fifteen (15) days from receipt of the Notice of Issue to notify Company in
writing whether it elects to purchase any of such shares of Common Stock and, if
it so elects, the number of shares it elects to purchase. At the time Purchaser
delivers its election to Company, there shall be a binding agreement between
Purchaser and Company for the purchase and sale of the number of shares of
Common Stock elected by Purchaser. The purchase price per share shall be the
price per Common Stock Equivalent at which the Voting Securities are actually
issued by Company; provided, however, that without Purchaser's consent the
purchase price shall not be more than one hundred twenty percent (120%) of the
anticipated price per Common Stock Equivalent set forth in the Notice of Issue.
Purchaser shall pay the purchase price to Company in immediately available
funds, and Company shall deliver certificates representing the shares of Common
Stock to Purchaser, on the date of Company's issuance of the Voting Securities.
2.7 Permitted Purchase in Response To Third Party Tender
Offer.
(a) If a tender or exchange offer is made by any
Person or 13D Group (other than Purchaser or any Person acting in concert with
Purchaser) to acquire Voting Securities, Purchaser may make a tender offer for
up to an equivalent number of shares of such Voting
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Securities as are sought to be purchased by the party making the other tender
offer. If Purchaser initiates a tender offer under this Section 2.7, the tender
offer may be on such terms as Purchaser shall elect and Company agrees that it
shall not in any way (whether by active opposition, Board announcement or
otherwise) contest said tender offer.
(b) If, following the tender offer, Purchaser
owns in the aggregate more than 45% of the Common Stock Equivalents, Company
shall have the right, exercisable at any time during the six month period
following completion of Purchaser's tender offer, to purchase from Purchaser a
number of shares of such Voting Securities as will cause Purchaser to own in the
aggregate 45% of the Common Stock Equivalents following such purchase. Company
shall, within said six (6) month period, notify Purchaser in writing whether it
elects to purchase any of such shares and, if it so elects, the number of shares
it elects to purchase. At the time Company delivers its notice to Purchaser,
there shall be a binding agreement between Purchaser and Company for the
purchase and sale of the number of shares of such Voting Securities elected by
Company.
(c) The purchase price per share shall be the
price paid by Purchaser in the tender offer to the tendering shareholders, plus
a pro-rata share of the costs and expenses incurred by Purchaser in conducting
said tender offer. The pro-rata share of costs and expenses shall be the
aggregate of all costs and expenses directly incurred by Purchaser, divided by
the number of shares of Voting Securities acquired in the tender offer. Company
shall pay the purchase price to Purchaser in immediately available funds, and
Purchaser shall deliver certificates representing the shares to Company, on a
date specified by Company in its notice, which date shall not be more than
twenty (20) days after Company delivers its notice to Purchaser.
(d) If Company's purchase is subject to or is
voluntarily submitted for shareholder approval, Purchaser shall vote all its
Voting Securities in favor of the purchase.
(e) If Company does not elect to purchase shares
from Purchaser, or elects to purchase only a portion of the shares under Section
2.7(b), Purchaser shall be entitled to retain the
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shares over 45%, but the Percentage Limitation shall remain at 45% (or such
lesser percentage as it shall become from time to time thereafter).
2.8 Permitted Purchase With Board Approval.
Notwithstanding any other provision of this Agreement, Purchaser may purchase
additional shares of Voting Securities at any time, if five-eighths (5/8) of the
Unaffiliated Directors approve such purchase in advance.
2.9 Permitted Purchase by 100% Tender Offer in response
to 10% Shareholder or Core Shareholder Increase. If at any time (a) any Person
(other than Purchaser) or a 13D Group becomes the beneficial owner of 10% or
more of the Common Stock Equivalents, or (b) the percentage of Common Stock
Equivalents beneficially owned in the aggregate by the Core Shareholders
increases by ten (10) percentage points or more over the percentage owned by the
Core Shareholders on the date of this Agreement, Purchaser shall have the right
to acquire additional shares of Common Stock by means of a tender offer under
Section 2.11 below. For purposes of this Section 2.9, the Core Shareholders'
beneficial ownership of Common Stock Equivalents shall be determined by the
reports filed (or required to be filed) by them on Form 4 under Section 16(a) of
the Exchange Act, or any successor form, or from equivalent information
furnished to Purchaser by each Core Shareholder pursuant to separate agreements
between Purchaser and the Core Shareholders.
2.10 Permitted Purchase by 100% Tender Offer After Five
Years. Commencing on the fifth anniversary of the Effective Date, Purchase shall
have the right to acquire additional shares of Common Stock by means of a tender
offer in accordance with Section 2.11 below.
2.11 Requirements for Tender Offers.
(a) Whenever Purchaser shall make a tender offer
for shares of Common Stock under Section 2.9 or 2.10, Purchaser may not close
the acquisition of the tendered shares unless all of the following requirements
have been satisfied:
(i) Purchaser's offer shall have been
made to all holders of Common Stock;
(ii) Purchaser shall offer to purchase
for cash all shares tendered; and
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(iii) Purchaser's offer shall have been
accepted by shareholders owning not less than two-thirds (2/3) of the
outstanding Common Stock.
(b) With respect to calculating whether
Purchaser's offer has been accepted by shareholders owning two-thirds (2/3) of
the outstanding Common Stock, the following shall apply:
(i) Common Shares beneficially owned by
Purchaser shall be excluded from the outstanding Common Stock;
(ii) in the case of a tender offer pursuant to
Section 2.9, Common Shares owned by the Person or 13D Group which gave rise to
Purchaser's right to make a tender offer shall be excluded from the outstanding
Common Stock; and (iii) if one or more Core Shareholders do not tender all of
their shares of Common Stock, the shares not tendered shall be excluded from the
outstanding Common Stock.
2.12 Mandatory Disposal of Excess Shares. If in violation
of any provision of Article II Purchaser shall at any time hold in the aggregate
in excess of its then Permitted Percentage, Purchaser shall be required to
dispose of such excess shares by promptly selling, subject to Company's right of
first refusal under Section 3.8, sufficient Voting Securities so that after such
sale Purchaser shall own in the aggregate not more than its then Permitted
Percentage. If Purchaser fails to dispose of shares of Voting Securities within
ninety (90) days after receipt of notice from Company advising Purchaser of its
obligation so to dispose of shares (it being understood that giving of notice by
Company is not a precondition to Purchaser's obligation to dispose of excess
shares), Company shall have the right to redeem at par value from Purchaser a
number of shares of Common Stock so that after such redemption the shares of
Voting Securities owned by Purchaser do not exceed Purchaser's then Permitted
Percentage.
2.13 Monthly Report of Ownership. During the term of this
Agreement, Purchaser will furnish to Company, within ten (10) days after the end
of each calendar month in which Purchaser acquires or disposes of any Voting
Securities, a statement showing the number of
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shares of Voting Securities acquired or disposed of during the just ended month
and the aggregate number of shares of Voting Securities held by Purchaser at the
end of such month. To the extent that any such acquisition or disposition must
be reported to the Commission, Purchaser may fulfill the statement requirement
in this Section 2.13 by providing to Company a copy of such report to the
Commission.
2.14 General Rule Regarding Acquisition of Voting
Securities. Purchaser agrees that any and all acquisitions of Voting Securities
shall be made in compliance with all applicable federal and state laws,
including securities laws, and in accordance with restrictions generally imposed
on members of the Board and their Affiliates with respect to trading on
non-public information. Purchaser agrees to indemnify, defend and hold harmless
Company, its officers, directors and employees from and against any and all
losses, claims, liabilities, assertions and expenses incurred or suffered by any
of them, including attorneys' fees and costs of litigation, as a consequence of
a claim by any party other than Company or any of its Affiliates that Purchaser
breached its obligations set forth in the preceding sentence.
ARTICLE III
SALES OF SHARES BY PURCHASER AND RELATED RIGHTS
AND OBLIGATIONS OF PURCHASER AND COMPANY
3.1 General Restrictions on Resale or Other Disposition.
During the term of this Agreement, Purchaser shall not sell, transfer any
beneficial interest in, pledge, hypothecate or otherwise dispose of any Voting
Securities except in compliance with Article III.
3.2 Allowed Sales Pursuant to Registration Rights.
Subject to Company's right of first refusal under Section 3.8, Purchaser may at
any time sell Common Stock by means of an offering made pursuant to the
registration rights set forth in Article VII below.
3.3 Allowed Sales Pursuant to Rule 144. Subject to
Company's right of first refusal under Section 3.8, Purchaser may at any time
sell Common Stock pursuant to Rule 144 of the
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General Rules and Regulations under the Act, provided that Purchaser shall
notify Company at least two Business Days prior to the date of entering any sale
or transfer order of Common Stock pursuant to Rule 144, and provided further
that, if Company shall thereupon notify Purchaser of the pendency of its public
offering of any Voting Securities, Purchaser shall not effect any sales under
Rule 144 within 10 days prior to the commencement of or during such offering.
3.4 Allowed Private Sales to Third Parties or Pursuant to
Tender Offer. Subject to Company's right of first refusal under Section 3.8,
Purchaser may at any time make private sales of Voting Securities to a third
person, including sales pursuant to a tender offer or exchange offer.
3.5 Allowed Pledges. Purchaser may at any time make a
bona fide pledge of or grant a security interest in Voting Securities to a
commercial or an institutional bank or lender for money borrowed, provided that
the bank or lender acknowledges in writing that (a) it has received a copy of
this Agreement and (b) its sale of Voting Securities following foreclosure shall
be subject to Company's right of first refusal under Section 3.8 (as if such
bank or lender were Purchaser).
3.6 Allowed Transfers to Purchaser Affiliates. Holding,
Parent and Purchaser Affiliates may at any time transfer Voting Securities among
themselves, provided that in the reasonable opinion of counsel acceptable to
Company and Purchaser such transfer would have no clear, adverse impact of a
financial character on Company, and would not adversely affect the liabilities
and/or responsibilities of Purchaser to Company, and provided further that the
transferee shall agree in advance in writing to be bound by the terms of this
Agreement.
3.7 Allowed Transfers Upon Approved Business Disposition.
Purchaser may dispose of Voting Securities in conjunction with a merger or
consolidation in which Company is acquired, or in conjunction with a sale of all
or substantially all of Company's assets, provided a majority of the Board
approved such merger, consolidation, or sale.
3.8 Right of First Refusal. If during the term of this
Agreement, Purchaser desires to sell any Voting Securities pursuant to Section
3.2, 3.3, or 3.4, Company shall have a right of
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first refusal to purchase said Voting Securities in accordance with the
procedures set forth in Section 3.9 below.
3.9 Procedures for right of First Refusal. (a) If
Purchaser desires to sell to a third party all or part of its Voting Securities
pursuant to Section 3.4 above ("Private Sale"), or if Purchaser desires to sell
all or part of its Common Stock in the open market pursuant to Section 3.2 or
3.3 above ("Market Disposition Program"), Purchaser shall transmit to Company
and to each Unaffiliated Director a written notice ("Notice of Proposed Sale")
setting forth:
(i) if a Private Sale, (A) as to each Person to
whom such sale is proposed to be made: (1) the name, address and principal
business activity of such Person; (2) the number of shares of Voting Securities
proposed to be sold to such Person; (3) the manner in.which the sale is proposed
to be made; and (4) the price at which or other consideration for which, and the
material terms upon which, such sale is proposed to be made, and (B)
representing that the Private Sale is, to the best knowledge of Purchaser, bona
fide; and
(ii) if sales pursuant to a Market Disposition
Program: (A) the approximate date the sales are scheduled to commence; and (B)
the amount of Common Stock sought to be disposed of.
(b) Upon receipt of the Notice of Proposed Sale Company
shall have an option to purchase, in the case of a Private Sale, all but not
less than all of the Voting Securities proposed to be sold, and in the case of a
Market Disposition Program, all, if the Market Disposition Program is a firm
commitment public offering, or, if it is not such an offering, any part, of the
Common Stock proposed to be disposed of, on the following terms and conditions:
(i) If the option arises in connection with a
Private Sale, the purchase price shall be the price specified in the Notice of
Proposed Sale.
(ii) If the option arises in connection with a
Market Disposition Program, the purchase price per share of Common Stock shall
be the Twenty Day Average determined as if
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the day Purchaser delivers the Notice of Proposed Sale to Company is the closing
date of an issuance of securities by Company in the absence of any public
announcement.
(iii) If a majority of the Unaffiliated Directors
determine that it is in the best interests of Company to exercise the option,
they shall direct Company to send a written notice (the "Notice of Exercise") to
Purchaser within thirty (30) days after the Notice of Proposed Sale is received
by Company specifying the number of shares Company is purchasing; provided,
however, that in the case of a tender offer, Purchaser must receive the Notice
of Exercise not less than forty-eight (48) hours prior to the earlier of (A) the
expiration of the tender offer or (B) any date after which shares tendered may
be treated less favorably than shares tendered prior thereto. If approval of
such purchase by Company's shareholders is required by law or Company's Restated
Certificate of Incorporation, and if the Private Sale is in response to a tender
offer, Company shall waive its right of first refusal granted under Section 3.8;
otherwise, Company's Notice of Exercise shall be subject to receipt of such
shareholder approval, which Company shall use its best efforts to obtain as soon
as possible, and in any event within one hundred twenty (120) days after, the
date of the Notice of Exercise. Company's failure to obtain shareholder approval
within the one hundred twenty (120) day period shall give Purchaser the right to
proceed with the proposed sale under Section 3.9(c). If such repurchase is
subject to shareholder approval, Purchaser shall vote all its Voting Securities
in favor of the purchase.
(4) Upon Purchaser's receipt of the
Notice of Exercise, there shall be a binding agreement between Purchaser and
Company for the purchase and sale of the number of shares contained in the
Notice of Exercise. The closing of the purchase and sale shall occur on the
thirtieth Business Day following Purchaser's receipt of the Notice of Exercise.
At the closing Purchaser will deliver to Company certificates for the Voting
Securities to be sold, duly endorsed for transfer or accompanied by a duly
executed stock power, and Company will deliver to Purchaser the purchase price
as follows: if Company's purchase is following Purchaser's proposed Private
Sale, Company shall pay Purchaser the price specified in the Notice of Proposed
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Sale in the same manner (and the sale shall be upon the same terms) specified
therein, and if Company's purchase is following Purchaser's proposed Market
Disposition Program, Company shall pay Purchaser at the closing for the shares
purchased in immediately available funds; provided, however, that if Company
receives a Notice of Proposed Sale on or before the third anniversary of the
Effective Date, Company shall have the option to pay Purchaser by delivery at
the closing of ten percent (10%) of the purchase price in immediately available
funds, and the balance by delivery of a promissory note providing terms
specified in the next succeeding sentence; provided, further, that
notwithstanding the preceding proviso, if the Notice of Proposed Sale received
by Company on or before the third anniversary describes a proposed Private Sale
in response to a tender offer, Company shall pay the purchase price in the same
manner (and the sale shall be upon the same terms) specified in the Notice of
Proposed Sale. The promissory note shall provide for: fixed interest at a rate
equal to one percent (1%) greater than the weekly average yield on United States
Treasury securities adjusted to a constant maturity of ten years as determined
for the week prior to the week during which Company received the Notice of
Proposed Sale; equal annual installments including interest payable on each
anniversary of the closing in immediately available funds, with each installment
in an amount sufficient to amortize the promissory note in ten annual payments;
and for the entire unpaid balance including accrued and unpaid interest to be
payable on the fifth anniversary of the closing.
(5) Company may assign its right to
purchase the Voting Securities and may designate in the Notice of Exercise one
or more Persons to take title to all or any part of the Voting Securities, but
this shall not relieve Company of its obligation to pay the purchase price.
(c) If following receipt of a Notice of Proposed Sale
Company fails to give Purchaser a Notice of Exercise within the prescribed time
period, Purchaser shall be free to effect such sale on the following terms and
conditions:
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(i) if a Private Sale was proposed,
Purchaser may effect such sale at any time during the period ending one hundred
twenty (120) days after the date Company's Notice of Exercise was required to be
given, to the Person or Persons specified in the Notice of Proposed Sale for the
consideration and on the terms specified in said notice; and (ii) if a Market
Disposition Program was proposed, Purchaser may effect such sales at any time
during the period ending one hundred eighty (180) days after the date Company's
Notice of Exercise required to be given.
(d) If Purchaser does not make the sales within the
time periods provided above, the Voting Securities so proposed to be sold will
once again become subject to this Agreement to the same extent as if such sales
had not been proposed.
3.10 Purchaser's Covenants With Respect_to Distribution of
Shares. In any transaction or transactions under Section 3.2 or 3.3, Purchaser
shall use its best efforts, and shall cause any underwriter involved to use its
best efforts, to sell the Common Stock in the United States and in a manner
which will effect the.broadest possible distribution, with no sales to any one
person or group (as defined in the Exchange Act) in excess of 10% of the Common
Stock sold in such sale.
3.11 Company's Undertaking to-,File Reports and Cooperate in
Rule 144 Transactions. During the term of this Agreement, Company shall use its
best efforts to file, on a timely basis, all annual, quarterly and other reports
it is required to file under Sections 13 and 15(d) of the Exchange Act, and the
Rules and Regulations of the Commission thereunder, as amended from time to
time. In the event of any proposed sales of Common Stock by Purchaser under
Section 3.3, Company shall cooperate with Purchaser to enable such sales to be
made in accordance with applicable laws, rules and regulations, the requirements
of Company's transfer agent, and the reasonable requirements of the broker
through which the sales are proposed to be executed, and shall, upon request,
furnish unlegended certificates representing Common Stock in
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such numbers and denominations as Purchaser shall reasonably require for
delivery in connection with such sales.
ARTICLE IV
LEGENDS AND STOP TRANSFER ORDERS
4.1 Placement of Legends and Entry of Transfer Orders.
Purchaser agrees:
(a) that, within ten (10) Business Days after its
acquisition of any certificates evidencing Voting Securities (or, in the case of
Voting Securities currently owned by Purchaser, within ten (10) Business Days
after the date hereof) to submit such certificates to Company for placement on
the face thereof the following legends:
"The shares represented by this certificate are subject to the
restrictions on disposition set forth in and to the other provisions of
a Standstill Agreement dated as of _______________, 1986, among
[Company], [Holding] and [Parent]. Copies of such Agreement are on file
at the respective offices of [Company], [Holding] and [Parent].";
and such additional legends designed to ensure compliance with Federal and State
laws as counsel for Company may reasonably request; and
(b) to the entry of stop transfer orders with the
transfer agents of any such Voting Securities, against the transfer of such
legended certificates except in compliance with this Agreement.
4.2 Removal of Legends and Stop Transfer Orders. Company
agrees that it will, upon receipt of an opinion from its counsel that it is
appropriate so to do and upon the presentation to its transfer agent of the
certificates containing the legends provided for in Section 4.1(a), remove such
legends and withdraw the stop transfer orders provided for in Section 4.1(b)
with respect to such certificates, upon the earlier of the following:
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(a) any sale of the shares represented by such
certificates made under Section 3.2, 3.3 or 3.4; or
(b) termination of this. Agreement.
ARTICLE V
CERTAIN AGREEMENTS OF PURCHASER AND COMPANY
5.1 Future Actions. Purchaser shall not, unless the prior
written consent of the Board (in which a majority of the Unaffiliated Directors
shall concur) has been obtained, and then only to the extent express written
consent has been obtained:
(a) at any time before the expiration of five
(5) years after the Effective Date, solicit proxies or become a "participant" in
a "solicitation" (as such terms are defined in Regulation 14A under the Exchange
Act) in opposition to the recommendation of the majority of the directors on the
Board with respect to any matter; or
(b) deposit any Voting Securities in a voting
trust or subject them to a voting agreement or other arrangement of similar
effect; provided, however, that nothing in this Section 5.2 shall preclude
Purchaser from so depositing any Voting Securities to the extent required by
Netherlands laws or regulations, or if such trust, agreement or arrangement is,
and continues to be during the term of this Agreement, solely by and among
Holding, Parent and Purchaser Affiliates; or
(c) join a partnership, limited partnership,
syndicate or other group for the purpose of acquiring, holding or disposing of
Voting Securities within the meaning of Section 13(d) of the Exchange Act; or
(d) induce or attempt to induce any other Person
to initiate a tender offer for any securities of Company, or to effect any
change of control of Company, or take any action for the purpose of convening a
stockholders' meeting of Company; or
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(e) acquire, by purchase or otherwise, more than
1% of any class of equity securities of any entity which, prior to the time
Purchaser acquires more than 1% of such class, is publicly disclosed (by filing
with the Commission or otherwise) to be the beneficial owner of more than 5% of
any class of the Voting Securities; provided, that if Purchaser owns in the
aggregate in excess of 1% of any such entity, it shall divest such excess within
seven (7) days of acquiring such excess, and, provided further, that upon being
notified by Company in writing that an entity owns in excess of 5% of any class
of the Voting Securities, Purchaser shall affirm in writing to Company that
Purchaser does not own, in the aggregate, more than 1% of any class of equity
securities of such Person.
5.2 Acquisitions and Transfers in Contravention of
Agreement. Notwithstanding Company's rights to seek injunctions or other relief,
any Voting Securities acquired or transferred by Purchaser or contravention of
this Agreement may not be voted on any matter on which shareholders of Company
are entitled to vote.
5.3 Company's Issuance of Securities. During the term of
this Agreement, Company shall not issue any security (including without
limitation any Voting Security) which provide the holder(s) thereof with any
extraordinary or special voting rights or any right to veto any action of
Company, unless such issuance is approved in advance by a not less than eighty
percent (80%) vote of the Board. Further, Company shall not consider or approve
any such issuance prior to the Effective Date.
ARTICLE VI
BOARD OF DIRECTORS
6.1 Size of Board. On or before the Effective Date,
Company shall take all requisite action to increase the size of the Board by
four to thirteen and to appoint, effective as of the Effective Date, individuals
designated by Purchaser to fill the four new seats. The parties
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agree the size of the Board shall be reduced to and remain at twelve following
the first resignation therefrom following the Effective Date.
6.2 Terms. Purchaser shall advise Company on or before
the Effective Date which of the Affiliated Directors shall have terms expiring
at the annual meeting of shareholders of Company next following the Effective
Date, which shall have terms expiring at the second such annual meeting, and
which shall have terms expiring at the third such annual meeting. After the term
of any Affiliated Director expires, his or her successor shall serve a term of
three (3) years as provided in the Restated Certificate of Incorporation of
Company.
6.3 Proportional Representation.
(a) Company shall cause representatives
designated by Purchaser to be nominated for election to the Board so as to
provide Purchaser with representation on the Board proportionate to its share
ownership of Common Stock rounded down to the nearest whole number. With respect
to committees of the Board, Purchaser shall be entitled to be represented on any
committee with respect to which Purchaser requests representation.
(b) Purchaser shall vote its shares of Common
Stock so as to provide other Company shareholders with corresponding
proportionate representation. If, pursuant to the Restated Certificate of
Incorporation of Company, cumulative voting for the election of Company
directors is required, Purchaser may initially vote its shares to ensure that
its then proportionate number of Affiliated Directors are elected. Purchaser
agrees that, once its proportionate number of Affiliated Directors are elected,
Purchaser shall vote its shares of Common Stock so as to elect persons to the
Board who have been designated by the Unaffiliated Directors.
(c) Company shall use its best efforts to cause
a change in Board representation to be effected as soon as reasonably possible
following a change in Purchaser's share ownership. At Purchaser's request
Company shall cause such change to occur at the first Board meeting to be held
following a change in Purchaser's share ownership, which meeting shall
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be held not more than ninety (90) days following the change in Purchaser's share
ownership. Company may effect changes in Board representation by increase in the
size of the Board or by resignations or retirements of Board members.
Notwithstanding the foregoing, Purchaser's right to proportional Board
representation shall not cause the number of Affiliated Directors to (i)
decrease during the one year period during which Company has the right to
purchase Voting Securities under Section 2.5(a), or (ii) increase beyond 45%
during the six month period during which Company has the right to purchase
Voting Securities under Section 2.7(b)
6.4 Environmental Committee.
(a) Company shall cause a Public Policy
Committee of the Board to be established promptly after the Effective Date, and
to be continued thereafter during the term of this Agreement. The Public Policy
Committee shall be responsible to audit and recommend to the Board policies with
respect to Company health and safety,.environmental, insurance and real estate
affairs. The Committee's activities will include preparation of the job
description and interviewing the candidates for the position of Vice President
Environmental Affairs (discussed in (b) below), performing audits of and making
recommendations concerning existing and proposed Company real property sites and
insurance coverage,, consultation concerning budgets within the areas of the
Committee's responsibility, and review of approved lists of legal and other
consultants to provide services to Company in the areas of the Committee's
responsibility. Meetings of the Public Policy Committee shall be called on
notice by any member of the Committee, by the Chairman of the Board, and/or by
the Vice President-Environmental Affairs. The Chief Executive Officer shall be a
member of the Committee.
(b) Effective on the Effective Date, Company
shall create, and shall promptly thereafter fill and continue during the term of
this Agreement, a new job position to be known as Vice President-Environmental
Affairs. The Vice President shall be responsible for the health, safety and
environmental affairs of Company, both in the U.S. and Canada. The Vice
President shall report to Company's Chief Executive Officer.
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ARTICLE VII
REGISTRATION RIGHTS
7.1 Duration of Registration Rights. Purchaser's rights
to have Company register shares of Common Stock provided in this Article VII
shall terminate upon termination of this Agreement. Rights of a Holder other
than Purchaser to have Company register shares of Common Stock provided in this
Article VII shall terminate two (2) years after Holder acquired its Common Stock
and shall survive termination of this Agreement during such two year period.
7.2 Demand Registration Covenant.
(a) If a Holder requests in writing that Company
register under the Act any Common Stock then owned by Holder, Company will use
its best efforts to cause the offering and sale to be registered as soon as
reasonably practicable. In connection therewith Company shall prepare and file a
registration statement under the Act on such form as Company shall determine to
be appropriate; provided, however, that Company shall not be obligated to file
more than one registration statement pursuant to this Section 7.2 during any
12-month period. The request shall specify the amount of Common Stock intended
to be offered and sold, shall express Holder's present intent to offer such
Common Stock for distribution, shall describe the nature or method of the
proposed offer and sale, and shall contain the undertaking of Holder to comply
with all applicable requirements of this Article VII.
(b) Upon receipt of a request for registration
under Section 7.2, Company will promptly give notice to all Holders other than
those initiating the request and provide a reasonable opportunity for such
Holders to participate in such registration. Any such other Holder must notify
Company in writing of its desire to participate, within thirty (30) days of
receipt of company's notice.
(c) Any request for registration under Section
7.2 must be for a firm commitment public offering to be managed by one or more
underwriters selected jointly by
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Company and Holder(s) requesting registration. If, in the written opinion of the
underwriters, marketing factors require a limitation of the number of shares to
be underwritten, and if the total amount of securities that all Holders
(initiating and non-initiating) request pursuant to Section 7.2 to be included
in such offering exceeds the amount of securities that the underwriters
reasonably believe compatible with the success of the offering, Company shall
only be required to include in the offering the amount of Common Stock that the
underwriters believe will not jeopardize the success of the offering, and such
amount shall be allocated among such Holders in proportion to the respective
amounts of Common Stock proposed to be sold by each of the Holders. Any shares
of Common Stock that are so excluded from the underwriting shall be excluded
from the registration.
(d) If within ninety (9.0) days after receipt of
a request under Section 7.2(a) and any requests under Section 7.2(b) Company
shall have obtained (i) from Commission a "noaction" letter in which the
Commission has indicated that it will take no action if, without registration
under the Act, Holders dispose of the Common Stock covered by the request(s) in
the manner proposed or (ii) an opinion of its counsel (concurred in by counsel
for the requesting Holder(s)) that no registration under the Act is required,
Company need not comply with such request or request(s); provided, however, that
receipt of such "no-action" letter or opinion shall not constitute a
registration for the purpose of determining Company's obligations to Holders
under Section 7.2; and provided, further, that in such event counsel for Company
shall opine whether, by reason of the "no-action" letter or otherwise, the
removal of any legend from certificates representing all shares to which such
"no-action" letter or opinion refers is permissible, and, if so, Company shall
remove from such certificates all legends no longer required and shall rescind
any stop-transfer instructions previously communicated to its transfer agent
relating to such certificates.
7.3 Participation Registration Covenant. if Company shall
propose registration under the Act of an offering of Common Stock, Company shall
give prompt written notice of such
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fact to each Holder and will use all reasonable efforts to cause the
registration of such number of shares of Common Stock then owned by Holders as
Holders shall request, within fifteen (15) days after receipt of such notice, to
be included, upon the same terms (including the method of distribution) of any
such offering; provided, however, that (a) Company shall not be required to give
notice or include such Common Stock in any such registration if the proposed
registration (i) is not a primary registration of securities by Company for its
own account, or (ii) is primarily (A) a registration of a stock option or
compensation plan or of securities issued or issuable pursuant to any such plan,
or (B) a registration of securities proposed to be issued in exchange for
securities or assets of, or in connection with a merger or consolidation with,
another corporation; (b) the offering of Common Stock by Holders shall comply
with Section 3.10 above; and (c) Company may, in its sole discretion and without
the consent of the Holders, withdraw such registration statement and abandon the
proposed offering.
7.4 Company's Obligations in Connection with
Registrations. In connection with any registration of Common Stock undertaken by
Company under Article VII, Company shall:
(a) furnish to Holders or their underwriter such
copies of any prospectus (including any preliminary prospectus) Holders may
reasonably request to effect the offering and sale, but only while Company is
required under the provisions hereof to cause the registration statement to
remain current;
(b) use its best efforts to qualify the offering
under applicable Blue Sky or other state securities laws to enable Holders to
offer and sell the Common Stock; provided, however, that Company shall not be
obligated to qualify as a foreign corporation to do business under the laws of
any jurisdiction in which it is not then qualified or to file any general
consent to service of process;
(c) furnish Holders, at the expense of Company,
with unlegended certificates representing ownership of the Common Stock being
sold in such numbers and denominations as Holders shall reasonably request,
meeting the requirements of the Principal Trading Market;
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(d) use its best efforts to cause the
registration statement to remain current for thirty (30) days following its
effective date or such lesser period as the underwriters may agree; and
(e) instruct the transfer agent(s) and the
registrar(s) of Company's securities to release the stop transfer orders with
respect to the Common Stock being sold.
7.5 Conditions to Obligations Registration Covenants.
Company's obligations to register the Common Stock owned by Holders under
Article VII are subject to the following conditions.
(a) Company (upon the decision of a majority of
the Unaffiliated Directors) shall be entitled to postpone for up to ninety (90)
days the filing of any registration statement under Section 7.2, if at the time
it receives the request for registration such Unaffiliated Directors determine,
in their reasonable judgment, that such registration and offering would
materially interfere with any financing, acquisition, corporate reorganization
or other material transaction involving Company or any of its Affiliates.
Company shall promptly give Holders written notice of such determination.
(b) Company may require that the number of
shares of Common Stock offered for sale by Holders pursuant to a request for
registration under Section 7.3 be decreased or excluded entirely if, in the
opinion of Company's Investment Banking Firm, such reduction is desirable to
permit the orderly distribution and sale of the securities being offered. If
Company shall require such a reduction, Holders shall have the right to withdraw
from the offering.
(c) If Holders request registration pursuant to
Section 7.2, (i) the managing underwriter shall be an Investment Banking Firm
approved by Company (which approval will not be unreasonably withheld) and (ii)
Company will enter into an underwriting agreement containing representations,
warranties and agreements not materially different from those customarily
included in underwriting agreements with an issuer for a secondary distribution;
provided,
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however, that Company will not be obligated to indemnify the underwriters on
terms materially different from those set forth in Section 7.8(a).
(d) Company may require, as a condition to
fulfilling its obligations under the registration covenants in Section 7.2 and
7.3, the indemnification agreements provided in Section 7.8(b) from Holders and
the underwriters.
(e) It shall be a condition precedent to the
obligations of Company to take action pursuant to this Article VII that each
Holder whose Common Stock is being registered, and each underwriter designated
by such Holder, will furnish to Company such information and materials as
Company may reasonably request and as shall be required in connection with the
action to be taken by Company. To the extent possible Holders shall provide
Company with any information and materials required to obtain acceleration of
the effective date of the registration statement.
(f) If, in the reasonable opinion of counsel to
Company it is necessary or appropriate for Company to comply with any applicable
rule, regulation, or release promulgated by the Commission, each Holder whose
Common Stock is being registered and any underwriter participating in such
public offering shall execute and deliver to Company an appropriate agreement,
in form satisfactory to counsel for Company, that such Holder or underwriter
will comply with all prospectus delivery requirements of the Act and with all
anti-stabilization, manipulation, and similar provisions of Section 10 of the
Exchange Act and any rules issued thereunder by the Commission, and will furnish
to Company information about sales made in such public offering.
(g) Holders of Common Stock included in the
registration statement shall not (until further notice) effect sales thereof
after receipt of written notice (which may include notice by telegraph) from
Company to suspend sales, to permit Company to correct or update a registration
statement or prospectus; provided, however, that the obligations of Company with
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respect to maintaining any registration statement current and effective shall be
extended by a period of days equal to the period such suspension is in effect.
(h) At the end of the period during which
Company is obligated to keep any registration statement current and effective
(and any extensions thereof required by the preceding paragraph), and upon
receipt of notice from Company of its intention to remove from registration the
securities covered by such registration statement that remain unsold, Holders of
Common Stock included in the registration statement shall discontinue sales of
such Common Stock pursuant to such registration statement, and each such Holder
shall notify Company of the number of shares registered belonging to such Holder
that remain unsold promptly following receipt of such notice from Company.
(i) No Holder shall have any right to take any
action to restrain, enjoin, or otherwise delay any registration as the result of
any controversy that might arise with respect to the interpretation or
implementation of this Article VII.
7.6 Expenses.
(a) To the extent the expenses of registration
incurred in connection with a demand registration statement pursuant to Section
7.2 exceed the amount which Company would otherwise have incurred in its normal
Commission compliance work (which amount Company shall pay), all Holders
participating in such registration shall pay all such expenses including,
without limitation, all Commission and Blue Sky registration and filing fees,
printing expenses, fees and disbursements of legal counsel for Company and Blue
Sky counsel, transfer agents' and registrars' fees, fees and disbursements of
experts used by Company in connection with such registration, and expenses
incidental to any post-effective amendment to any such registration statement.
Further, such participating Holders shall pay all underwriting discounts,
commissions and expenses, fees and disbursements of their counsel and
accountants, and expenses of any special audits of Company incidental to or
required in connection with such registration.
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(b) In connection with any registration pursuant
to Section 7.3, Company shall pay all Commission and Blue Sky registration and
filing fees, underwriting discounts, commissions and expenses, printing
expenses, fees and disbursements of legal counsel for Company and Blue Sky
counsel, transfer agents' and registrars' fees, fees and disbursements of
experts used by Company in connection with such registration, expenses of any
special audits of Company incidental to or required by such registration, and
expenses incidental to any post-effective amendment to any such registration
statement, except to the extent the aggregate of such costs exceeds the amount
which Company would have expended in conducting an offering of only the shares
sold by it, and the participating Holders pro rata shall pay such excess based
on the number of shares of Common Stock offered by each pursuant to such
registration statement. Such Holders shall pay all expenses directly
attributable to the inclusion in the offering of Common Stock being sold by the
Holders, including without limitation fees and disbursements of their own
counsel and accountants.
7.7 Assignability of Registration Rights. The
registration rights afforded Purchaser in this Article VII shall be assignable
to a transferee of.Common Stock from Purchaser so long as (i) such transferee
has acquired not less than 750,000 shares of Common Stock (as adjusted from time
to time to reflect stock splits, stock dividends and similar changes in the
capitalization of Company) from Purchaser, (ii) such transferee has agreed with
Company in writing to comply with all applicable provisions of this Article VII,
and (iii) Purchaser has otherwise complied with all provisions of this Agreement
which affect its right to sell, transfer or otherwise dispose of shares of
Common Stock. For a transfer of registration rights to be effective, Purchaser
shall give Company written notice at the time of such transfer stating the name
and address of the transferee and identifying the shares with respect to which
the rights under this Article VII are being assigned.
7.8 Indemnification.
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(a) In the case of each registration effected by Company
pursuant to Section 7.2 or 7.3, to the extent permitted by law Company
("indemnifying party") agrees to indemnify and hold harmless each Holder, its
officers and directors, and each underwriter within the meaning of Section 15 of
the Act, against any and all losses, claims, damages, liabilities or actions to
which they or any of them may become subject under the Act or any other statute
or common law, including any amount paid in settlement of any litigation,
commenced or threatened, if such settlement is effected with the written consent
of Company, and to reimburse them for any legal or other expenses incurred by
them in connection with investigating any claims and defending any actions,
insofar as any such losses, claims, damages, liabilities or actions arise out of
or are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the registration statement relating to the sale of
such shares, or any post-effective amendment thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, if used prior to the effective date of such registration
statement, or contained in the final prospectus (as amended or supplemented if
Company shall have filed with the Commission any amendment thereof or supplement
thereto) if used within the period during which Company is required to keep the
registration statement to which such prospectus relates current under Section
7.4(d) (including any extensions of such period as provided in Section 7.5.(g)),
or the omission or alleged omission to state therein (if so used) a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that the
indemnification agreement contained in this Section 7.8(a) shall not (x) apply
to such losses, claims, damages, liabilities or actions arising out of, or based
upon, any such untrue statement or alleged untrue statement, or any such
omission or alleged omission, if such statement or omission was made in reliance
upon and in conformity with information furnished to Company by such Holder or
underwriter for use in connection with preparation of the registration
statement, any preliminary prospectus or final prospectus contained in the
registration
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statement, or any amendment or supplement thereto, or (y) inure to the benefit
of any underwriter or any Person controlling such underwriter, if such
underwriter failed to send or give a copy of the final prospectus to the Person
asserting the claim at or prior to the written confirmation of the sale of such
securities to such Person and if the untrue statement or omission concerned had
been corrected in such final prospectus.
(b) In the case of each registration effected by Company
pursuant to Section 7.2 or 7.3 above, each Holder and each underwriter of the
shares to be registered (each such party and such underwriters being referred to
severally as an "indemnifying party") shall agree in the same manner and to the
same extent as set forth in Section 7.8(a) to indemnify and hold harmless
Company, each Person (if any) who controls., Company within the meaning of
Section 15 of the Act, the directors of Company and those officers of Company
who shall have signed any such registration statement, with respect to any
untrue statement or alleged untrue statement in, or omission or alleged omission
from, such registration statement or any post-effective amendment thereto or any
preliminary prospectus or final prospectus (as amended or supplemented, if
amended or supplemented) contained in such registration statement, if such
statement or omission was made in reliance upon and in conformity with
information furnished to Company by such indemnifying party for use in
connection with the preparation of such registration statement or any
preliminary prospectus or final prospectus contained in such registration
statement or any such amendment or supplement thereto.
(c) Each indemnified party will, promptly after receipt
of written notice of the commencement of an action against such indemnified
party in respect of which indemnity may be sought under this Section 7.8, notify
the indemnifying party in writing of the commencement thereof. In case any such
action shall be brought against any indemnified party and it shall so notify an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and to the extent it may wish, jointly with any
other indemnifying party
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similarly notified, to assume the defense thereof with counsel satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 7.8 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. The indemnity agreements in this Section 7.8 shall be in
addition to any liabilities which the indemnifying parties may have pursuant to
law.
ARTICLE VIII
TERMINATION
8.1 Termination. This Agreement shall terminate upon the
earliest to occur of the following:
(a) Purchaser's completion of a tender offer in
accordance with Section 2.11; or
(b) the date Purchaser owns in the aggregate
less than ten percent (10%) of the then Common Stock Equivalents; or
(c) if elected by Purchaser, exercisable upon
delivery of written notice thereof to Company, upon the failure of Company to
comply with its obligations under (i) this Agreement and cure of such failure
does not occur within thirty (30) days after Purchaser gives written notice of
such failure to Company or (ii) Section 2 or 3(a) of the Indemnity Agreement
dated the date of this Agreement between Company, Purchaser, and Subsidiary, and
cure of such failure does not occur within fifteen (15) days after Purchaser
gives written notice of such failure; or
(d) if elected by Company, exercisable upon
delivery of written notice thereof to the Purchaser, upon the failure of
Purchaser to comply with its obligations under this Agreement and cure of such
failure does not occur within thirty (30) days after Company gives written
notice of such failure to Purchaser.
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8.2 Extended Cure Period. Notwithstanding Sections
8.1(c)(i) and 8.1(d) (but not Section 8.1(c)(ii)), the parties agree that if the
nature of the failure requires that more than thirty (30) days are necessary to
cure, this Agreement shall not terminate if the failing party commences a cure
within the thirty (30) day period and thereafter continuously and diligently
pursues all steps necessary to cure the failure up to and including completion
of the cure; provided, however, that this Section 8.2 shall not apply to
Company's failure to sell at the time provided shares of Common Stock to
Purchaser under Section 2.4 or 2.6.
8.3 Termination of One Party's Obligations. In lieu of
terminating this Agreement upon a breach by the other party under Section 8.1(c)
or 8.1(d), the party not in breach may notify the other that, upon expiration of
said notice period (subject to Section 8.2), all rights of the defaulting party
hereunder shall cease but all of the defaulting party's obligations hereunder
shall continue in full force and effect.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
9.1 Of Company. Company hereby represents and warrants to
each of Holding and Parent as follows:
(a) Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with corporate power to own its properties and to conduct its business as now
conducted.
(b) The authorized capital stock of Company
consists of (i) 14,000,000 shares of Common Stock, of which at the date of this
Agreement, 5,675,989 shares were validly issued and outstanding, fully paid and
nonassessable and 1,292,090 shares were held in the Company's treasury, and (ii)
750,000 series preferred shares, no par value, of which, at the date of this
Agreement, no shares were issued and outstanding. In addition, at the date of
this Agreement, an aggregate of 172,967 shares of Common Stock (including
authorized but unissued
-34-
<PAGE> 36
shares and treasury shares) were reserved for issuance pursuant to presently
existing options and future options under currently existing stock option plans.
There are outstanding no other options, warrants, rights or convertible
securities providing for the issuance of Company capital stock.
(c) Company has full legal right, power and
authority to enter into and perform this Agreement, and the execution and
delivery of this Agreement by Company and the consummation of the transactions
contemplated hereby have been duly authorized by the Board and require no other
Board or stockholder action. This Agreement constitutes a valid and binding
agreement of Company. Neither this Agreement nor the performance of this
Agreement by Company, Holding or Parent violate Company's Restated Certificate
of Incorporation.
9.2 Of Holding and Parent. Each of Holding and Parent
hereby represents and warrants to Company as follows: (a) Holding and Parent are
corporations duly organized, validly existing and in good standing under the
laws of the Netherlands, with corporate power to own its properties and to
conduct its business as now conducted. (b) Each has full legal right, power and
authority to enter into and perform this Agreement, and the execution and
delivery of this Agreement by each and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of Directors of each
and require no other Board of Directors or stockholder action of either. This
Agreement constitutes a valid and binding agreement of each of Holding and
Parent.
ARTICLE X
MISCELLANEOUS
10.1 Specific Enforcement. The parties hereto acknowledge
and agree that each would be irreparably damaged if any of the provisions of
this Agreement are not performed by the other in accordance with their specific
terms or are otherwise breached. It is accordingly agreed that each party shall
be entitled to an injunction or injunctions to prevent breaches of this
-35-
<PAGE> 37
Agreement by the other and to enforce this Agreement and the terms and
provisions hereof specifically against the other in any action instituted in the
United States District Court for the Western District of Washington, in addition
to any other remedy to which such aggrieved party may be entitled at law or in
equity. Company and Purchaser each consents to personal jurisdiction in any such
action brought in the United States District Court for the Western District of
Washington.
10.2 Severability. If any term or provision of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void, unenforceable or against its regulatory policy, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
10.3 Expenses. Except as otherwise provided herein, each
party hereto shall pay its own expenses in connection with this Agreement.
10.4 Assignment; Successors. This Agreement shall be
binding upon and shall inure to the benefit of and be enforceable by the
successors of the parties hereto. Except as otherwise provided herein, this
Agreement shall not be assignable.
10.5 Amendments. This Agreement may not be modified,
amended, altered or supplemented except by a written agreement signed by
Company, Holding, and Parent which shall be authorized by all necessary
corporate action of each party. Any party may waive any condition to the
obligations of any other party hereunder.
10.6 Notices. Every notice or other communication required
or contemplated by this Agreement to be given by a party shall be delivered
either by (a) personal delivery, (b) courier mail, (c) facsimile mail, or (d)
"tested" telex (a telex for which the proper answer back has been received)
addressed to the party for whom intended at the following address:
To Company: Univar Corporation
1600 Norton Bldg.
Seattle, WA 98104
-36-
<PAGE> 38
Attention: N. Stewart Rodgers
Telex No.: 32-8736
Answer Back: ARTHURANDER SEA
With a copy to: Preston Thorgrimson Shidler Gates & Ellis
5000 Columbia Seafirst Center
701 Fifth Avenue
Seattle, WA 98101
To Holding and
Parent: Pakhoed Holding N.V.
P.O. Box 863
3000 AW Rotterdam, The Netherlands
Attention: H. Goemans
Telex No.: 22112
Answer Back: PAKR NL
With a copy to: Graham & James
One Maritime Plaza, Suite 300
San Francisco, CA 94111
Attention: Nicholas C. Unkovic, Esq.
Telex No.: 67565
Answer Back: GJ SFO
or at such other address as the intended recipient previously shall have
designated by written notice to the other parties. Notice by courier mail shall
be effective on the date it is officially recorded as delivered to the intended
recipient by return receipt or equivalent. All notices and other communications
required or contemplated by this Agreement delivered in person or sent by
facsimile mail or "tested" telex shall be deemed to have been delivered to and
received by the addressee and shall be effective on the date of personal
delivery or on the date sent, respectively. Notice not given in writing shall be
effective only if acknowledged in writing by a duly authorized representative of
the party to whom it was given.
10.7 Attorneys' Fees. If any action or proceeding shall be
commenced to enforce this Agreement or any right arising in connection with this
Agreement, the prevailing party in such action or proceeding shall be entitled
to recover from the other party the reasonable attorneys'
-37-
<PAGE> 39
fees, costs and expenses incurred by such prevailing party in connection with
such action or proceeding.
10.8 Integration. This Agreement contains the entire
understanding of the parties with respect to its subject matter. There are no
restrictions, agreements, promises, warranties, covenants or undertakings other
than those expressly set forth herein with respect to any matter.
10.9 Waivers. No failure or delay on the part of either
party in the exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privilege. All rights and remedies existing under this Agreement
are cumulative to, and not exclusive of, any rights or remedies otherwise
available.
10.10 Governing Law. This Agreement shall be governed by
and construed in accordance with the substantive law of the State of Washington
without giving effect to the principles of conflict of laws.
10.11 Counterparts. This Agreement may be executed-, in
one or more counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument.
10.12 Cooperation. The parties hereto shall each perform
such acts, execute and deliver such instruments and documents, and do all such
other things as may be reasonably necessary to accomplish the transactions
contemplated in this Agreement.
IN WITNESS WHEREOF, Company, Holding, and Parent have caused
this Agreement to be executed as of the date first above written.
UNIVAR CORPORATION
BY: _______________________________
ITS: ______________________________
PAKHOED HOLDING N.V.
-38-
<PAGE> 40
BY:________________________________
ITS: ______________________________
PAKHOED INVESTERINGEN B.V.
BY:________________________________
ITS: ______________________________
-39-
<PAGE> 41
EXHIBIT A
LIST OF CORE SHAREHOLDERS
<TABLE>
<CAPTION>
Names Number of Shares Owned
----- ----------------------
<S> <C>
James W. & Maureen Bernard 81,500
Richard E. & Gail J. Engebrecht 50,000
Milton M. & Lorraine D. Harris 98,767
Curtis P. & Mary B. Lindley 104,734
Nat S. & Marian W. Rogers 82,800
N. Stewart & Jane S. Rogers 155,584
Robert S. & Gloria D. Rogers 128,664
James H. & Ann R. Wiborg 207,961
</TABLE>
-40-
<PAGE> 1
EXHIBIT 6
The following is excerpted from pages 18-19 of Company's Definitive Proxy
Statement for fiscal year 1995, which was mailed to shareholders of Company on
or about July 7, 1995.
CHANGE OF CONTROL AGREEMENTS
The Board of Directors has unanimously approved change of control
agreements (the "Agreements") between the Corporation and certain of the named
executive officers of the Corporation. At February 28, 1995, the Corporation had
Agreements in place with each of the named executive officers (the
"Executives"). Each Agreement provides that the Executive will receive
compensation for 30 months if his employment is terminated (voluntarily or
involuntarily) for any reason other than gross misconduct, death, permanent and
total disability, or reaching age 65 (or age 60 in Mr. Ellwood's case), provided
such termination occurs within 24 months after certain defined events which
might lead to a change of control of the Corporation. The compensation will be
paid at a rate equal to the Executive's then current salary and target
incentive. The compensation is subject to a minimum annual rate of not less than
the Executive's average compensation for the preceding three calendar years, and
is subject to reduction if the aggregate present value of all payments would
exceed three times the Executive's "annualized includible compensation," as
defined in Section 280G of the Internal Revenue Code, for the Executive's most
recent five taxable years. The Executive will also continue to have "employee"
status for the 30-month period and will be entitled to retain most employee
benefits and rights during this period.
The estimated aggregate amounts presently payable to the following
executive officers in the event of a change of control would be (assuming each
executive officer receives payments for the maximum 30-month period): Mr.
Bernard $1,765,933; Mr. Alampi $1,067,623; Mr. Ellwood $473,534; Mr. Hough
$460,003; and Mr. Fletcher $660,440. The foregoing does not include the value of
any employee benefits which might be payable to the officer during the 30-month
period. These benefits would include participation in the Corporation's health
and welfare plans, disability insurance policies, continued vesting of stock
options and any outstanding restricted stock awards, and continuation of years
of service for pension and other retirement plan benefit compensation purposes.
The value of these benefits cannot be computed.
The Corporation may cease payments in the event the Executive breaches
certain non-competition or confidentiality covenants. The Corporation also has
the right to terminate the Agreements upon a one-year notice, except as to
rights already accrued as a result of an event which has triggered the change of
control provisions of the Agreements. The Board of Directors believes that the
terms and conditions of the Agreements are in the best interest of the
Corporation because the Agreements will enable the Executives to continue to
focus on activities providing for the maximum long-term value to the
Corporation's shareholders, even when faced with the possible change of control
of the Corporation.
<PAGE> 1
May 31, 1996
Paul H. Hough
William A. Butler
Jeffrey Ellwood
James L. Fletcher
H. Drew MacAfee
Gary E. Pruitt
Larry Bullock
RE: CHANGE OF CONTROL AGREEMENT
Gentlemen:
Royal Pakhoed N.V. and UC Acquisition Corporation agree to and approve
the attached proposed letter agreement which amends the Change of Control
Agreements between Univar Corporation (or Van Waters & Rogers Ltd.) and each of
you. We further agree to execute final letter agreements with each of you
substantially in accordance with the attached form after execution by you and
Univar. We understand that the letter agreement with Larry Bullock may need to
be modified from the attached form due to differences in the form of his
agreement with Van Waters & Rogers Ltd.
Royal Pakhoed N.V
UC Acquisition Corporation
By /s/ N.J. Westdijk
-----------------
N. J. Westdijk
Chairman
<PAGE> 2
May 31, 1996
Re: Change of Control Agreement
Dear ______________:
This letter sets forth certain interpretations and amendments to that
certain agreement dated ____________ between you (the "Executive") and Univar
Corporation (the "Corporation") (the "Change of Control Agreement") as it
relates to the tender offer to be made by UC Acquisition Corp. ("Buyer") in
accordance with that certain Agreement and Plan of
<PAGE> 3
May 31, 1996
Page 2
Reorganization dated as of May 31, 1996 among Royal Pakhoed N.V. ("Parent"),
Buyer, and the Corporation (the "Reorganization Agreement"). Terms not otherwise
defined in this agreement shall have the same meaning as set forth in the
Reorganization Agreement and the Change of Control Agreement, respectively.
References to the following sections and headings are to the corresponding
sections in the Change of Control Agreement which are clarified and amended as
follows.
1. Term of Agreement. The following sentence shall be added to
Section 1 of the Change of Control Agreement.
"Notwithstanding any of the other provisions of this Section
1, except as to the benefits set forth in this amendment which accrue
as a result of the Tender Offer, this Change of Control Agreement shall
be canceled as of the close of business on the date of the closing of
the Tender Offer in accordance with the Reorganization Agreement, in
which case such date shall be the 'Cancellation Date.'"
2. Change in Control. The closing of the Tender Offer in
accordance with the Reorganization Agreement shall be a "change in control" as
defined in the Change of Control Agreement.
3. Termination of Employment. Upon closing the Tender Offer in
accordance with the Reorganization Agreement, the Executive shall have the right
to receive the compensation and benefits described in Sections 4 and 5 of the
Change of Control Agreement without any requirement of a "termination of
Executive's employment" as defined in Section 3 of the Change of Control
Agreement.
4 and 5. Compensation and Benefits. The amounts payable pursuant to
Section 4 and 5, without regards to any limitation in the prior version of
Section 6, shall be paid in a lump sum in the amount set forth on Exhibit A
which shall be paid in readily available funds within ten (10) business days
after Pakhoed purchases Shares satisfying the Minimum Condition pursuant to the
Reorganization Agreement.
5. Benefits. If Executive continues as an employee of the
Corporation after the Tender Offer he shall be entitled to receive benefits
comparable to those provided other management personnel.
6. Gross-Up Provision. In lieu of the existing provision in
Section 6 of the Change of Control Agreement the following provisions shall
apply:
(a) Notwithstanding anything to the contrary contained herein, in
the event it shall be determined that any payment or distribution by the
Corporation to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of (i) this
<PAGE> 4
May 31, 1996
Page 3
Change of Control Agreement, as amended, (ii) the Stock Option Plans (as defined
in the Reorganization Agreement and specifically including without limitation
the cash payments provided for in Section 1.5 of the Reorganization Agreement),
(iii) other payments deemed to be "parachute payments" pursuant to Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code") and (iv) any
payment to the Internal Revenue Service ("IRS"), pursuant to Section 6(b) below,
(clauses (i) through (iv) are referred to herein collectively as the "Payment"),
would be subject to the excise tax imposed by Section 4999 of the Code, or any
comparable federal, state or local excise tax (such excise tax, together with
any interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in such an amount that after the payment of all
taxes (including, without limitation, any interest and penalties imposed on such
taxes and the Excise Tax) imposed on the Gross-Up Payment, the Executive shall
retain an amount of the Gross-Up Payment equal to the Excise Tax imposed on the
Payment. The intent of the parties is that the Corporation shall be solely
responsible for, and shall pay, any Excise Tax on any Payment and Gross-Up
Payment and any income and employment taxes (including, without limitation,
penalties and interest) imposed on any Gross-Up Payment, as well as any loss of
tax deduction caused by the Gross-Up Payment and indemnify, defend and hold
Executive harmless against all such liabilities and related expenses. For
purposes of determining the amount of the Gross-Up Payment, the Executive shall
be deemed to pay federal income taxes at the highest marginal rates of federal
income taxation applicable to individuals in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rates of taxation applicable to individuals as are in effect in the
state and locality of the Executive's residence in the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in federal
income taxes that could be obtained from deduction of such state and local
taxes.
(b) All determinations required to be made under this Section,
including without limitation, whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment, shall be made by Price Waterhouse or in
the event they are unable or unwilling another nationally recognized accounting
firm, which firm must be reasonably acceptable to the Executive (the "Accounting
Firm"). The Corporation shall cause the Accounting Firm to provide detailed
supporting calculations to the Corporation and the Executive within fifteen (15)
business days after notice is given by the Corporation to the Accounting Firm,
or such earlier time as is requested by the Corporation. If the Corporation
fails to timely direct the Accounting Firm and provide it with necessary
information, Executive may do so two (2) business days after written notice to
the Corporation and the Accounting Firm shall make its determination based on
the information previously provided to the Accounting Firm and any information
or estimates provided by Executive. All fees and expenses of the Accounting firm
shall be borne solely by the Corporation. Any Gross-Up Payment as determined
pursuant to this Section 6, shall be paid by the Corporation within five (5)
days after receipt of the Accounting Firm's determination. The Accounting Firm
shall make its determinations using the substantial authority standard within
the meaning of Section 6662 of the Code. Any determination by the Accounting
Firm shall be binding upon the Corporation and the Executive in the absence of
material mathematical or legal
<PAGE> 5
May 31, 1996
Page 4
error. As a result of the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination by the Accounting Firm hereunder,
it is possible that Gross-Up Payment will not have been made by the Corporation
that should have been made ("Underpayment") or that Gross-Up Payment will have
been made that should not have been made ("Overpayment"), in each case,
consistent with the calculations required to be made hereunder. In the event
that the Executive hereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Corporation to the
Internal Revenue Service or other appropriate taxing authority on the
Executive's behalf or, if such Underpayment has been previously paid by the
Executive, to the Executive. In the event that the Accounting Firm determines
that an Overpayment has been made, any such Overpayment shall be treated for all
purposes as a loan to the Executive with interest at applicable federal rate
provided for in Section 7872(f)(2) of the Code, due and payable within ninety
(90) days after written demand to the Executive by the Corporation; provided,
however that Executive shall have no duty or obligation whatsoever to repay said
loan to the extent that the Executive's receipt of the Overpayment, or any
portion thereof, is includable in Executive's income and the Executive's
repayment of that amount is not fully deductible by the Executive for federal
and state income tax purposes. It is the intent of the preceding sentence that
tax consequences of any Overpayment shall be neutral to the Executive.
(c) The Corporation and the Executive agree to prepare and file
their respective tax returns (including any amendments thereto) and report their
respective deductions and income on a basis that is consistent with the analysis
that has been prepared by the Accounting Firm and any subsequent determination
by the Accounting Firm.
(d) In the event the Internal Revenue Service or any state taxing
authority proposes an adjustment to the taxes of the Executive which would give
rise to an Underpayment requiring indemnification by the Corporation hereunder,
then the Executive shall notify the Corporation in writing within fifteen (15)
days of the Executive's receipt of the proposed adjustment, provided that the
failure to provide such notice shall not relieve the Corporation of its
obligations under this Agreement with respect to any adjustment unless its
ability to contest such proposed adjustment is materially compromised. The
Executive agrees that thereafter the Corporation, at its own expense, shall have
the right to control the tax proceeding concerning such proposed adjustment,
including, among other things, agreeing to, contesting or compromising the
proposed adjustment. In the event the Corporation believes that there is
substantial authority that the Executive has made an Overpayment and is entitled
to a refund of federal or state taxes, then the Executive agrees to file a claim
for refund asserting such Overpayment and the Corporation shall have the right
to prosecute the claim for refund. The filing of any claim and any related
prosecution of such claim shall be at the sole expense of the Corporation.
7. Effect of Death. Death of the Executive shall have no effect
on the Surviving Corporation's obligation to make the payments provided pursuant
to Section 4 and 5 as modified
<PAGE> 6
May 31, 1996
Page 5
above. The last two sentences of Section 7 shall continue to apply as to
benefits to be paid pursuant to Section 5 and as to payments due in respect of
the Executive's death.
Sections 8 through 16 of the Change of Control Agreement shall continue
to apply without modification. In the event the Reorganization Agreement is
terminated, the Change of Control Agreement shall continue in full force and
effect without regard to the amendments and modifications made pursuant to this
letter. The following shall be added as a new Section 17.
[Remainder of page intentionally omitted]
<PAGE> 7
May 31, 1996
Page 6
17. Release. The Executive agrees that payments made pursuant to
the Change of Control Agreement, as amended, shall be in lieu of, and the
Executive hereby waives and releases any claim to, severance or other
termination payments under any other plan or arrangement of the Corporation, or
any other claim, right or cause of action relating to his employment with the
Corporation existing as of the date of this Agreement, provided that the
foregoing shall not apply to (i) any new agreement, regardless of when executed,
between the Executive and the Surviving Corporation, Parent or any affiliate of
Parent, or (ii) any plan applicable or other severance or termination otherwise
payable to Executive in connection with any termination which occurs more than
thirty (30) months after the closing of the Tender Offer.
Very truly yours,
UNIVAR CORPORATION
By______________________
Its___________________
Agreed and Accepted:
By ______________________
(the "Executive")
Royal Pakhoed N.V.
By_______________________
N.J. Westdijk
Chairman, Board of Management
UC Acquisition Corp.
By_______________________
N.J. Westdijk
Chairman and President
<TABLE>
<CAPTION>
Cash payments
for surrender of
Stock Options,
Base Restricted
Compensation, Stock Awards
Target Inventive and Deferred
and Benefits Cash Incentives
pursuant to pursuant to
Amended Change of Stock Option
Officers Control Agreement Plans
- --------- ------------------ ----------------
<S> <C> <C>
William A. Butler $ 672,531.30 $ 574,817.90
Larry Bullock 494,426.55 573,047.87
Jeffrey Ellwood 689,716.48 359,601.97
James L. Fletcher 731,519.00 847,208.97
Paul H. Hough 1,596,363.05 3,094,022.41
H. Drew MacAfee 637,321.80 499,339.02
Gary E. Pruitt 817,019.70 670,919.97
------------- -------------
Totals $5,638,897.87 $6,618,958.11
============= =============
</TABLE>
<PAGE> 1
EXHIBIT 8
The following is excerpted from pages 10-13 of Company's Definitive Proxy
Statement for fiscal year 1995, which was mailed to shareholders of Company on
or about July 7, 1995.
EXECUTIVE COMPENSATION DISCLOSURES
Notwithstanding anything to the contrary set forth in any of the
Corporation's previous filings under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, that may incorporate future
filings (including this proxy statement, in whole or in part), the following
Report of the Compensation Committee on Executive Compensation and the
Performance Graph below shall not be incorporated by reference in any such
filings.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
COMPENSATION POLICY
The Compensation Committee of the Board of Directors (the "Committee")
is comprised of five outside directors who are not employees of the Corporation.
As part of its duties, the Committee administers the Corporation's executive
compensation programs and approves all salary and incentive compensation of the
corporate officers. The Committee also administers employee benefits such as
stock option plans, employee stock purchase plans, and employee savings (401(k))
plans. The Committee annually evaluates the compensation paid to its executive
officers in light of the Corporation's performance, including base salary,
payments made under the Management Annual Incentive Plan, and options granted
under the 1992 Long-Term Incentive Plan.
In accordance with the Compensation Policy adopted by the Committee,
the goals of the Corporation's compensation programs, applicable to all
employees, are to:
1. Attract and retain highly competent employees; and pay them market
value for their positions.
2. Motivate each employee to achieve and maintain a maximum performance
level and to reward the employee accordingly. Ensure that our employees
in similar positions of scope and responsibility receive similar base
pay given comparable levels of experience, responsibility and
performance.
3. Ensure that salary decisions are based on performance. Allow for
special increases for employees whose learning curve and contribution
enhances their market value faster than their peers for their
performance, placing them outside of expected norms (merit).
The Committee believes that base salary and the Management Annual
Incentive Plan are important elements of the Corporation's cash compensation
program. The Committee further
<PAGE> 2
believes that the focus of the Corporation's compensation strategy must be on
producing long-term results which, in turn, will create a competitive advantage
for the Corporation. The long-term compensation strategy, which includes the
1992 Long-Term Incentive Plan described below, serves to promote value growth
and to align the interests of the Chief Executive Officer ("CEO") and the other
executive officers with those of the shareholders.
The Corporation's overall compensation philosophy helps to ensure the
proper balance of short-term and long-term results. As performance goals are met
or exceeded, total shareholder value is increased and the Corporation's
executives are rewarded accordingly.
The 1993 Omnibus Budget Reconciliation Act provides for a denial of a
tax deduction to the Corporation for compensation paid to any officer listed in
the Summary Compensation Table in excess of $1 million in any one year. There
are exceptions to this provision for certain types of performance-based plans.
The Committee expects to be able to structure and administer the Corporation's
compensation plans so as to avoid the loss of deductions.
BASE SALARY
Executive base salaries are structured to compensate executives in
proportion to the value of their services and, within the means of the
Corporation, to compare favorably with competitive employers. Base salaries are
reviewed annually by the Committee based on each individual's performance and
the external market. The Committee uses outside consultants and published
compensation survey data to review competitive rates of pay, to establish salary
ranges, and to set target base salary and management incentive levels. The
amount of the base salary is determined by the grade level assigned to the
executive and then adjusted up or down by various factors including job
responsibilities and the individual's experience and managerial performance.
THE MANAGEMENT ANNUAL INCENTIVE PLAN
The Management Annual Incentive Plan (the "Incentive Plan") provides an
opportunity for key management personnel to earn an annual cash incentive for
their efforts to increase the long-term value growth of the Corporation.
Currently, there are approximately 195 participants in the Incentive Plan.
In lieu of annual cash incentives under the Incentive Plan for the
fiscal year ended February 28, 1995, the named executive officers, along with 15
other officers of the Corporation and its subsidiaries, were granted restricted
stock awards, the vesting of which was principally tied to the operating
performance of the Corporation's U.S. subsidiary during a period after the end
of the fiscal year. The restricted stock awards replaced 100% of the cash
incentives for the U.S. employees who received them, and they replaced 25% of
the cash incentives for Messrs. Ellwood and Hough. For the last fiscal year, no
annual incentive was paid to those individuals located in the U.S. and annual
cash incentives paid to Messrs. Ellwood and Hough were based on the performance
of their respective local operating companies. For further information on these
restricted stock awards, see footnote (2) to the Summary Compensation Table
below.
<PAGE> 3
Aside from the last fiscal year, the Incentive Plan has historically
provided that an annual incentive will be based on a ratio of Profit attained to
Capital employed ("P/C"). In accordance with the terms of the Incentive Plan,
target P/C ratios are set for each subsidiary and for the executive office. The
mix of base salary to annual incentive is related to the executive's grade
level. Executives at higher grade levels have a greater percentage of their
total cash compensation dependent upon the accomplishment of the Corporation's
overall business objectives, i.e., the higher the executive grade level, the
greater the proportion of annual compensation that is at risk. At the end of
each fiscal year, the President/CEO and the subsidiary presidents evaluate the
performance of participants against the approved Incentive Plan targets. A
multiplier, or "performance factor," is determined for each participant based on
individual performance. The multiplier may increase or decrease the normal, or
"target," incentive award for participants; however, the maximum multiplier is
one and a half times (1.5x) the target incentive award. The target award is
established by applying a fixed percentage to the midpoint of the participant's
salary range. During the last fiscal year and pursuant to the recommendations of
the survey described above, this percentage was reduced by amounts varying from
5% to 15% for the named executive officers and half of that reduction was
applied to their base salaries on March 1, 1994.
The Committee sets the performance factor for the CEO, and reviews and
approves the CEO's recommendations for the performance factors of the other
corporate and subsidiary officers.
1992 LONG-TERM INCENTIVE PLAN
The purpose of the 1992 Long-Term Incentive Plan (the "1992 Plan") is
to reward key employees of the Corporation for the sustained creation of value
for the Corporation's shareholders. The 1992 Plan provides a means whereby
participants are given an opportunity to share financially in this value through
options. For executive officers and certain other participants, a deferred cash
incentive may also be granted.
Participation in the 1992 Plan is limited to key employees of the
Corporation who, in the opinion of the Committee, have the opportunity to
materially influence the Corporation's long-range performance. To date,
approximately 45 employees have been selected to participate. Options under this
Plan have been granted on the first day of the Corporation's fiscal year in each
of 1992, 1993, 1994 and 1995; an average of 242,214 options have been granted
each year. Employees are recommended for participation by the President/CEO of
the Corporation and designated as participants by the Committee. In determining
who will participate in the 1992 Plan, the Committee takes into consideration an
employee's salary grade, scope of responsibilities, and potential contributions
to the success of the Corporation. A participant in the 1992 Plan during a
particular year is not eligible in that year to receive stock option grants
under the Corporation's other incentive stock option plans.
The 1992 Plan provides the opportunity for each participant to receive
an annual grant of options, and to have the vesting of granted options
accelerated based on the total shareholder return (stock price appreciation
including reinvested dividends) of the Corporation over a rolling three-year
performance cycle relative to the total shareholder return of each member of a
group of
<PAGE> 4
peer companies over the same period. The peer companies are selected by the
Committee. In the absence of accelerated vesting, each option vests on the tenth
anniversary of the date of grant. Acceleration of a participant's right to
exercise options granted under the 1992 Plan is dependent on the Corporation's
percentile ranking as compared with each member of the peer group. Based on the
Corporation's percentile ranking, all or part of each option grant may become
available for exercise prior to its expiration date. The percentage of a grant
which vests ranges from zero (if relative performance is below the 40th
percentile) up to 100% (if relative performance is at the 80th percentile or
above). The Committee believes that stock option grants under the 1992 Plan are
an effective way for the Corporation to align the interests of the Corporation's
executive officers and other key employees with its shareholders.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
During this past year, the Committee implemented step two of a two step
recommendation to move the CEO's base salary towards a more competitive
position. This two step program was initiated in 1993. The Committee approved a
5.1% increase in the CEO's base salary, effective February 1994. The CEO's
annual incentive target percentage was reduced by 7.5%, which amounted to a
decrease of $33,610 in the target amount. That amount was moved into his base
salary effective March 1, 1994. Other than that adjustment, no salary increase
was paid to the CEO during the last fiscal year. These actions were based on an
analysis and recommendation provided by an independent compensation consulting
firm following the firm's review of competitive cash compensation (base salary,
cash incentive, and long-term incentive) for the top paid executives in
companies comprising the peer group used for comparison purposes under the 1992
Plan. It is the Committee's intent to establish the CEO's compensation at or
near the median level of the compensation of those chief executive officers in
the peer group.
As noted above, no annual incentive was paid to the CEO for the past
fiscal year.
As an incentive for future performance and consistent with the
long-term incentives awarded by peer companies, the Committee granted the CEO
non-qualified stock options (with a related deferred cash incentive) to purchase
21,636 shares under the 1992 Plan. These grants provide an incentive for the CEO
to continue to build shareholder value.
The Compensation Committee
Andrew V. Smith, Chair
Richard E. Engebrecht
Roger L. Kesseler
Robert S. Rogers
Nicolaas J. Westdijk
<PAGE> 1
EXHIBIT 9
Company plans to file the following information in an amendment to its Form 10-K
for fiscal year 1996:
EXECUTIVE COMPENSATION DISCLOSURES
Notwithstanding anything to the contrary set forth in any of the
Corporation's previous filings under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, that may incorporate future
filings (including this proxy statement, in whole or in part), the following
Report of the Compensation Committee on Executive Compensation and the
Performance Graph below shall not be incorporated by reference in any such
filings.
Report of the Compensation Committee on Executive Compensation
Compensation Policy
The Compensation Committee of the Board of Directors (the "Committee")
is comprised of five outside directors who are not employees of the Corporation.
As part of its duties, the Committee oversees the Corporation's executive
compensation programs and approves all salary and incentive compensation of the
corporate officers. The Committee also administers employee benefits such as
stock option plans, employee stock purchase plans, and employee savings (401(k))
plans. The Committee annually evaluates the compensation paid to its executive
officers in light of the Corporation's performance, including base salary,
payments made under the Management Annual Incentive Plan, and options granted
under the 1992 Long-Term Incentive Plan.
In accordance with the Compensation Policy adopted by the Committee,
the goals of the Corporation's compensation programs, applicable to all
employees, are to:
1. Attract and retain highly competent employees; and pay them market
value for their positions.
2. Motivate each employee to achieve and maintain a maximum performance
level and to reward the employee accordingly. Ensure that employees in similar
positions of scope and responsibility receive similar base pay given comparable
levels of experience, responsibility, and performance.
3. Ensure that salary decisions are based on performance. Allow for
special increases for employees whose learning curve and contribution enhances
their market value faster than their peers for their performance, placing them
outside of expected norms (merit).
The Committee believes that base salary and the Management Annual
Incentive Plan are important elements of the Corporation's cash compensation
program. The Committee further believes that the focus of the Corporation's
compensation strategy must be on producing long-
<PAGE> 2
term results which, in turn, will create a competitive advantage for the
Corporation. The long-term compensation strategy, which includes the 1992
Long-Term Incentive Plan described below, serves to promote value growth and to
align the interests of the Chief Executive Officer ("CEO") and the other
executive officers with those of the shareholders.
The Corporation's overall compensation philosophy helps to ensure the
proper balance of short-term and long-term results. As performance goals are met
or exceeded, total shareholder value is increased and the Corporation's
executives are rewarded accordingly.
The 1993 Omnibus Budget Reconciliation Act provides for a denial of a
tax deduction to the Corporation for compensation paid to any officer listed in
the Summary Compensation Table in excess of $1 million in any one year. There
are exceptions to this provision for certain types of performance-based plans.
The Committee expects to be able to structure and administer the Corporation's
compensation plans so as to avoid the loss of deductions.
Base Salary
Executive base salaries are structured to compensate executives in
proportion to the value of their services and, within the means of the
Corporation, compare favorably with competitive employers. Base salaries are
reviewed annually by the Committee based on each individual's performance and
the external market. The Committee uses outside consultants and published
compensation survey data to review competitive rates of pay, to establish salary
ranges, and to set target base salary and management incentive levels. The
amount of the base salary is determined by the grade level assigned to the
executive and then adjusted up or down by various factors including job
responsibilities and the individual's experience and managerial performance.
The Management Annual Incentive Plan
The Management Annual Incentive Plan (the "Incentive Plan") provides an
opportunity for key management personnel to earn an annual cash incentive based
on their ability to increase the long-term value growth of the Corporation.
Currently, there are approximately 307 eligible participants in the Incentive
Plan.
For the last fiscal year, no annual incentive was paid to those
individuals located in the U.S. Mr. Hough was paid an annual cash incentive
based on the performance of Van Waters & Rogers Ltd. Mr. Ellwood was paid an
annual cash incentive based on the performance of Univar Europe.
The Incentive Plan has historically provided that an annual incentive
will be based on a ratio of Profit attained to Capital employed ("P/C"). In
accordance with the terms of the Incentive Plan, target P/C ratios are set for
each subsidiary and for the executive office. The mix of base salary to annual
incentive is related to the executive's grade level. Executives at higher grade
levels have a greater percentage of their total cash compensation dependent upon
the accomplishment of the Corporation's overall business objectives, i.e., the
higher the executive grade level, the greater the proportion of annual
compensation that is at risk. At the end of each
<PAGE> 3
fiscal year, the President/CEO and the subsidiary presidents evaluate the
performance of participants against the approved Incentive Plan targets. A
multiplier, or "performance factor", is determined for each participant based on
individual performance. The multiplier may increase or decrease the normal, or
"target", incentive award for participants; however, the maximum multiplier is
one and a half times (1.5x) the target incentive award. The target award is
established by applying a fixed percentage to the midpoint of the participant's
salary range.
The Committee sets the performance factor for the CEO, and reviews and
approves the CEO's recommendations for the performance factors of the other
corporate and subsidiary officers.
1992 Long-Term Incentive Plan
The purpose of the 1992 Long-Term Incentive Plan (the "1992 Plan") is
to reward key employees of the Corporation for the sustained creation of value
for the Corporation's shareholders. The 1992 Plan provides a means whereby
participants are given an opportunity to share financially in this value through
options. For executive officers and certain other participants, a deferred cash
incentive may also be granted.
Participation in the 1992 Plan is limited to key employees of the
Corporation who, in the opinion of the Committee, have the opportunity to
materially influence the Corporation's long-range performance. To date,
approximately 45 employees have been selected to participate. Options under this
Plan have been granted on the first day of the Corporation's fiscal year in each
of 1992, 1993, 1994, 1995, and 1996; an average of 249,774 options have been
granted each year. Employees are recommended for participation by the
President/CEO of the Corporation and designated as participants by the
Committee. In determining who will participate in the 1992 Plan, the Committee
takes into consideration an employee's salary grade, scope of responsibilities,
and potential contributions to the success of the Corporation. A participant in
the 1992 Plan during a particular year is not eligible in that year to receive
stock option grants under the Corporation's other incentive stock option plans.
The 1992 Plan provides the opportunity for each participant to receive
an annual grant of options, and to have the vesting of granted options
accelerated based on the total shareholder return (stock price appreciation
including reinvested dividends) of the Corporation over a rolling three-year
performance cycle relative to the total shareholder return of each member of a
group of peer companies over the same period. The peer companies are selected by
the Committee. In the absence of accelerated vesting, each option vests on the
tenth anniversary of the date of grant. Acceleration of a participant's right to
exercise options granted under the 1992 Plan is dependent on the Corporation's
percentile ranking as compared with each member of the peer group. Based on the
Corporation's percentile ranking, all or part of each option grant may become
available for exercise prior to its expiration date. The percentage of a grant
which vests ranges from zero (if relative performance is below the 40th
percentile) up to 100% (if relative performance is at the 80th percentile or
above). The Committee believes that stock option grants under the 1992 Plan are
an effective way for the Corporation to align the interests of the Corporation's
executive officers and other key employees with its shareholders.
<PAGE> 4
Compensation of the Chief Executive Officer
Mr. Bernard served as the Corporation's President and Chief Executive
Officer until his October 1995 retirement. Mr. Bernard received no salary
increase during the fiscal year.
Effective November 1, 1995, Mr. Hough was promoted to President and
Chief Executive Officer of the Corporation and President of Van Waters & Rogers
Inc. Mr. Hough also retained his responsibility for the Corporation's Canadian
operations for the balance of the fiscal year. Mr. Hough's salary was increased
to $380,000 per year on this appointment. The Committee deems the increase to be
fair and appropriate and will continue to review the CEO's compensation. It is
the Committee's intent through the use of a regression model to establish the
CEO's compensation at or near the median level of those chief executives
comprising the peer group used for comparison purposes under the 1992 Plan.
As noted above, Mr. Bernard received no annual incentive for the past
fiscal year and Mr. Hough received an annual incentive pursuant to the Incentive
Plan relating to the performance of the Canadian operations.
As an incentive for future performance and consistent with the
long-term incentives awarded by peer companies, the Committee granted Mr. Hough
non-qualified stock options (with a related deferred cash incentive) to purchase
18,571 shares under the 1992 Plan and Mr. Bernard non-qualified stock options
(with a related deferred cash incentive) to purchase 20,057 shares under the
1992 Plan. These grants provide an incentive for the CEO to continue to build
shareholder value.
Compensation of Former Executive Officers Pursuant to Separation
Agreements
The Corporation granted Mr. Bernard a benefits package consistent with
his executive position and tenure with the Corporation when he retired as an
executive officer of the Corporation on October 26, 1995. In addition, the
Corporation granted Mr. Alampi a benefits package consistent with his executive
position when he resigned as an executive officer of the Corporation on October
26, 1995. The terms of the Corporation's agreements with Mr. Bernard and Mr.
Alampi are described under the heading "Certain Relationships and Related
Transactions--Employment Separation Agreements" below.
The Compensation Committee
Andrew V. Smith, Chair
Richard E. Engebrecht
Roger L. Kesseler
Curtis P. Lindley
Nicolaas J. Westdijk
<PAGE> 1
EXHIBIT 10
The following is excerpted from pages 20-25 of Company's Definitive
Proxy Statement for fiscal year 1995, which was mailed to shareholders of
Company on or about July 7, 1995.
Limitation on Director Liability. Both the WBCA and the DGCL allow
charter documents to eliminate or limit the personal liability of directors;
however, the two statutes prescribe different limitations. In Washington, the
Articles of Incorporation may not eliminate or limit the liability of a director
for: (i) acts or omissions involving intentional misconduct or a knowing
violation of law; (ii) approval of certain distributions or loans contrary to
law; or (iii) any transaction from which the director personally receives a
benefit in money, property, or services to which the director is not legally
entitled. The Delaware statute further excludes the limitation of director
liability: (i) if a director has breached the duty of loyalty to the corporation
or its shareholders; or (ii) for acts or omissions not in good faith. In both
New Univar's Articles of Incorporation and the Corporation's Certificate of
Incorporation, these limits on director liability are deemed to be contract
rights, which may not be adversely affected by a repeal or modification of the
applicable law and which are to be automatically amended as authorized by
changes in applicable law so that the liability of a director shall be
eliminated or limited to the fullest extent not prohibited by applicable law.
Neither the DGCL nor the WBCA limit a director's liability for violation of
certain federal laws including the federal securities laws.
Indemnification of Directors and Officers. Under the Corporation's
current Certificate of Incorporation and Bylaws and under Delaware law, the
ability of the Corporation to indemnify its directors and officers for payments
made in settlement of derivative actions may be open to certain questions. See
"Principal Reasons for the Proposed Reincorporation" above. New Univar's
Articles of Incorporation provide that New Univar shall indemnify its directors
and officers for expenses and liabilities incurred by them as a result of their
service as directors and officers, provided that no such indemnification shall
be provided on account of: (i) acts or omissions of the director or officer
finally adjudged to be intentional misconduct or a knowing violation of the law;
(ii) approval of certain distributions or loans contrary to law; or (iii) any
transaction with respect to which the director or officer is finally adjudged to
have received a benefit to which he or she was not legally entitled. This
comprehensive language is intended to provide the broadest indemnification of
directors and officers not prohibited by Washington law, and to authorize
indemnification of directors and officers of amounts paid in settlement of
actions brought on behalf of the Corporation, commonly known as derivative
actions. See "Certain Differences in Corporate Law -- Indemnification of
Directors and Officers" below.
The Board of Directors believes that the potential personal liability
that can result from derivative actions arising out of an individual's service
as a director or officer of a corporation is a major concern for individuals who
are asked to serve in such positions. The Board of Directors has concluded that
by providing indemnification to the Corporation's directors and officers for
amounts paid in settlement of derivative actions, subject to the restrictions
set forth in the WBCA, the Corporation will be able to effectively maintain its
ability to recruit and retain individuals who possess the qualities and
experience necessary to serve as directors and officers of the Corporation.
<PAGE> 2
Increase in Authorized Common and Preferred Shares. The total number of
common shares which the Corporation is authorized to issue under the
Corporation's Certificate of Incorporation is 40,000,000, and the number of
authorized preferred shares is 750,000. Under New Univar's Articles of
Incorporation, the number of authorized common shares is increased to
100,000,000 and the number of authorized preferred shares is increased to
5,000,000. Under Delaware law, the franchise fees payable by a corporation
incorporated in Delaware increases with the number of authorized shares, whereas
franchise fees payable under Washington law are not tied to the number of
authorized shares. As a result, the Board of Directors has concluded that the
Corporation will benefit from the greater flexibility in the structuring of
corporate transactions achieved by increasing the number of its authorized
common and preferred shares, at no additional cost to the Corporation. The
increased number of shares could more easily facilitate transactions such as
stock splits, stock dividends, mergers and acquisitions and various forms of
financings. However, the Corporation is not currently contemplating any
transaction which would result in any increase in the number of outstanding
common or preferred shares. Because the proposed increases represent a
significant change in the number of authorized common and preferred shares, the
shareholders are being asked to separately approve these increases. If the
shareholders do not approve these increases, the authorized capital of New
Univar will be the same as the present authorized capital of the Corporation.
Other Differences in the Charter Documents and Bylaws. New Univar's
Articles of Incorporation differ in other aspects. The differences relate to
differences between Delaware and Washington law. Specific provisions in certain
Articles have been included so as to minimize differences in corporate
governance before and after the Reincorporation. For example, New Univar's
Articles of Incorporation provide for a majority vote requirement in the case of
mergers (which is the same as the DGCL requirement for mergers) instead of a
two-thirds vote requirement which is the general provision applicable under the
WBCA. Similarly, preemptive rights, cumulative voting (with certain limited
exceptions found in the Corporation's Certificate of Incorporation), and
shareholder-called meetings are precluded in the New Univar Articles of
Incorporation since such rights do not presently apply to Univar under the DGCL.
Other differences under New Univar's Articles of Incorporation include the
following: (i) the authority of the Board of Directors regarding the issuance of
preferred shares and the determination of the rights and preferences with
respect to such shares are more specifically and broadly described; (ii) the
minimum number of directors is increased from seven to nine to satisfy
Washington law requirements applicable to classified boards and cumulative
voting (the actual size of the Board of Directors will remain at twelve); and
(iii) the elimination of "par value" for common and preferred shares as
permitted by Washington law.
Various differences also exist between New Univar's Bylaws and the
Corporation's Bylaws which are generally reflective of technical differences
between Delaware and Washington law and a policy decision not to include
provisions which are adequately covered by statute or not required to be
included in the Bylaws. However, none of these provisions is expected to have a
material effect on the governance of the Corporation. A copy of the New Univar
Bylaws may be obtained by writing to the Corporate Secretary at the
Corporation's Executive Offices.
<PAGE> 3
CERTAIN DIFFERENCES IN CORPORATE LAW
The DGCL currently governs the rights of the Corporation's
shareholders. After the merger, the rights of shareholders shall be governed by
the WBCA. The following discussion summarizes certain significant differences
between the provisions of the DGCL and the WBCA, as applicable to a public
company.
Amendment of Articles/Restated Certificate of Incorporation. The WBCA
authorizes a corporation's board of directors to make various changes to its
articles of incorporation without shareholder approval including changes: of
corporate name, of the number of outstanding shares in order to effectuate a
stock split or stock dividend in the corporation's own shares, and to change or
eliminate provisions with respect to par value of its shares. Other amendments
to a corporation's articles of incorporation must be recommended to the
shareholders by the board of directors, unless the board determines that because
of a conflict of interest or other special circumstances, it should make no
recommendations, and must be approved by a majority of all votes entitled to be
cast by each voting group which has a right to vote on the amendment.
Under the DGCL, amendments to a corporation's certificate of
incorporation require the approval of shareholders holding a majority of the
voting power of the corporation unless a different proportion is specified in
the certificate of incorporation.
Provisions Affecting Acquisitions and Business Combinations. The WBCA
imposes restrictions on certain transactions between a corporation and certain
significant shareholders.
Subject to certain exceptions, a merger, share exchange, sale of assets
other than in the regular course of business, or dissolution of a corporation
involving an "Interested Shareholder" owning beneficially 20% or more of the
corporation's voting securities must be approved by the holders of two-thirds of
the corporation's outstanding voting securities, other than those of the
Interested Shareholder. This restriction does not apply if the consideration
received as a result of the transaction by noninterested shareholders is not
less than the highest consideration paid by the Interested Shareholder for the
corporation's shares during the preceding two years or if the transaction is
approved by a majority of directors who are not affiliated with the Interested
Shareholder. A Washington corporation may, in its original articles of
incorporation, elect not to be covered by this provision; however, New Univar
has not done so.
In addition, Washington law prohibits a "target corporation," with
certain exceptions, from engaging in certain "significant business transactions"
(such as a merger or sale of assets) with an "acquiring person" who acquires
more than 10% of the voting securities of a target corporation for a period of
five years after such acquisition, unless the transaction is approved by a
majority of the members of the target corporation's board of directors prior to
the date of the acquisition. To be covered by this statute, both domestic and
foreign corporations with their principal executive offices in Washington must
have, together with all of their subsidiaries, either a majority or over 1,000
of their employees resident in Washington. Because the Corporation does not meet
this test, the statute does not apply to the Corporation and will not apply to
New Univar.
<PAGE> 4
Delaware has enacted a business combination statute that is contained
in Section 203 of the DGCL providing that any person who acquires 15% or more of
a corporation's voting stock (thereby becoming an "interested shareholder") may
not engage in certain "business combinations" with the target corporation for a
period of three years following the date the person became an interested
shareholder, unless (i) the board of directors of the corporation has approved,
prior to that acquisition date, either the business combination or the
transaction that resulted in the person becoming an interested shareholder, (ii)
upon consummation of the transaction that resulted in the person becoming an
interested shareholder, that person owns at least 85% of the corporation's
voting stock outstanding at the time the transaction is commenced (excluding
shares owned by persons who are both directors and officers and shares owned by
employee stock plans in which participants do not have the right to determine
confidentially whether shares will be tendered in a tender or exchange offer),
or (iii) the business combination is approved by the board of directors and
authorized by the affirmative vote (at an annual or special meeting and not by
written consent) of at least 66 2/3% of the outstanding voting stock not owned
by the interested shareholder.
For purposes of determining whether a person is the "owner" of 15% or
more of a corporation's voting stock for purposes of Section 203, ownership is
defined broadly to include the right, directly or indirectly, to acquire the
stock or to control the voting or disposition of the stock. A "business
combination" is also defined broadly to include (i) mergers and sales or other
dispositions of 10% or more of the assets of a corporation with or to an
interested shareholder, (ii) certain transactions resulting in the issuance or
transfer to the interested shareholder of any stock of the corporation or its
subsidiaries, (iii) certain transactions which would result in increasing the
proportionate share of the stock of a corporation or its subsidiaries owned by
the interested shareholder, and (iv) receipt by the interested shareholder of
the benefit (except proportionately as a shareholder) of any loans, advances,
guarantees, pledges, or other financial benefits.
These restrictions placed on interested shareholders by Section 203 do
not apply under certain circumstances, including, but not limited to, the
following: (i) if the corporation's original certificate of incorporation
contains a provision expressly electing not to be governed by Section 203 or
(ii) if the corporation, by action of its shareholders, adopts an amendment to
its bylaws or certificate of incorporation expressly electing not to be governed
by Section 203, provided that such an amendment is approved by the affirmative
vote of not less than a majority of the outstanding shares entitled to vote and
that such an amendment will not be effective until 12 months after its adoption
and will not apply to any business combination with a person who became an
interested shareholder at or prior to such adoption. The Corporation has not
elected to take itself outside of the coverage of Section 203.
Prior to the adoption of Section 203, in 1983 and 1985 the
Corporation's shareholders approved amendments to its Certificate of
Incorporation to include various shareholder protective provisions by a
considerable majority of affirmative votes. Substantially similar provisions
have been restated in the Articles of Incorporation of New Univar. These
provisions are intended to discourage transactions such as two-tier tender
offers, greenmail and similar abusive transactions.
<PAGE> 5
Accordingly, the fact that New Univar will no longer be subject to the
restrictions of Section 203 and will not have all of the protective provisions
of Washington law is not expected to have a material adverse effect on the
shareholders of New Univar.
Mergers, Acquisitions and Other Transactions. Under the WBCA, a merger,
consolidation, sale of substantially all of a corporation's assets other than in
the regular course of business, or dissolution of a public corporation must be
approved by the affirmative vote of a majority of directors when a quorum is
present, and by two-thirds of all votes entitled to be cast by each voting group
entitled to vote as a separate group, unless another proportion is specified in
the articles of incorporation. As previously set forth in "Other Differences in
the Charter Documents," New Univar's Articles of Incorporation provide that the
corporate transactions specified above may be approved by a majority of the
outstanding shares entitled to vote. Under the DGCL, a merger, consolidation,
sale of all or substantially all of a corporation's assets other than in the
regular course of business or dissolution of a corporation must be approved by a
majority of the outstanding shares entitled to vote.
Action Without a Meeting. Under the WBCA, shareholder action may be
taken without a meeting if written consents setting forth such action are signed
by all holders of outstanding shares entitled to vote thereon.
The DGCL authorizes shareholder action without a meeting if consents
are received from holders of a majority of the outstanding shares. The
Corporation's Certificate of Incorporation does not permit such action.
Class Voting. Under the WBCA, the articles of incorporation of a
corporation may authorize one or more classes of shares that have special,
conditional or limited voting rights, including the right to vote on certain
matters as a group. The articles of incorporation may not limit the rights of
holders of a class to vote as a group with respect to certain amendments to the
articles of incorporation and certain mergers that adversely affect the rights
of holders of that class.
The DGCL requires voting by separate classes only with respect to
amendments to the certificate of incorporation that adversely affect the holders
of those classes or that increase or decrease the aggregate number of authorized
shares or the par value of the shares of any of those classes.
Transactions With Officers or Directors. The WBCA sets forth a safe
harbor for transactions between a corporation and one or more of its directors.
A conflicting interest transaction may not be enjoined, set aside or give rise
to damages if: (i) it is approved by a majority of qualified directors; (ii) it
is approved by the affirmative vote of all qualified shares; or (iii) at the
time of commitment, the transaction was fair to the corporation. For purposes of
this provision, "qualified director" is one who does not have: (a) a conflicting
interest respecting the transaction, or (b) a familial, financial, professional,
or employment relationship with a second director which relationship would
reasonably be expected to exert an influence on the first director's judgment
when voting on the transaction. "Qualified Shares" are defined generally as
<PAGE> 6
shares other than those beneficially owned, or the voting of which is
controlled, by a director who has a conflicting interest respecting the
transaction.
The DGCL provides that contracts or transactions between a corporation
and one or more of its officers or directors or an entity in which they have an
interest is not void or voidable solely because of such interest or the
participation of the director or officer in a meeting of the board or acommittee
which authorizes the contract or transaction if: (i) the material facts as to
the relationship or interest and as to the contract or transaction are disclosed
or are known to the board or the committee, and the board or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of disinterested directors; (ii) the material facts as to the
relationship or interest and as to the contract or transaction are disclosed or
are known to the shareholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the shareholders;
or (iii) the contract or transaction is fair as to the corporation as of the
time it is authorized, approved or ratified, by the board of directors, a
committee thereof, or the shareholders.
Appraisal or Dissenter's Rights. Under the WBCA, a shareholder is
entitled to dissent from and, upon perfection of his or her appraisal right, to
obtain fair value of his or her shares in the event of certain corporate
actions, including certain mergers, consolidations, share exchanges, sales of
substantially all assets of the corporation, and amendments to the corporation's
articles of incorporation that materially and adversely affect shareholder
rights.
Under the DGCL, appraisal rights are available only in connection with
certain mergers or consolidations, unless otherwise provided in the
corporation's certificate of incorporation. Even in the event of those mergers
or consolidations, unless the certificate of incorporation otherwise provides,
the DGCL does not provide appraisal rights (1) if the shares of the corporation
are listed on a national securities exchange, designated as a "National Market
System" security, or held of record by more than 2,000 shareholders (as long as
in the merger the shareholders receive shares of the surviving corporation or
any other corporation the shares of which are listed on a national securities
exchange, designated as a National Market System security, or held of record by
more than 2,000 shareholders) or (2) if the corporation is the surviving
corporation and no vote of its shareholders is required for the merger. The
Corporation's common stock is listed on the New York Stock Exchange and
shareholders therefore would presently not have statutory appraisal rights under
the DGCL in such mergers but will have under the WBCA.
Indemnification of Directors and Officers. Under the WBCA, if
authorized by the articles of incorporation, a bylaw adopted or ratified by
shareholders, or a resolution adopted or ratified, before or after the event, by
the shareholders, a corporation has the power to indemnify a director or officer
made a party to a proceeding, or advance or reimburse expenses incurred in a
proceeding, under any circumstances, except that no such indemnification shall
be allowed on account of: (i) acts or omissions of the directors finally
adjudged to be intentional misconduct or a knowing violation of the law; (ii)
conduct of the director finally adjudged to be an unlawful distribution; or
(iii) any transaction with respect to which it was finally adjudged that such
director personally received a benefit in money, property or services to which
the director was not legally entitled. Written commentary by the drafters of the
WBCA, which has the status of legislative
<PAGE> 7
history, specifically indicates that a corporation may indemnify its directors
and officers for amounts paid in settlement of derivative actions, provided that
the director's or officer's conduct does not fall within one of the categories
set forth above. New Univar's Articles provide that New Univar shall indemnify
its directors and officers to the fullest extent not prohibited by law,
including indemnification for payments in settlement of actions brought against
the director or officer in the name of the corporation, commonly referred to as
a derivative action. See "Principal Differences in Corporate Charters and Bylaws
- -- Indemnification of Directors and Officers" above.
Under the DGCL, indemnification of directors and officers is authorized
to cover judgments, amounts paid in settlement, and expenses arising out of
non-derivative actions where the director or officer acted in good faith and in,
or not opposed, to the best interests of the corporation. Additionally, under
the DGCL, a corporation may reimburse directors and officers for expenses
incurred in a derivative action. While the DGCL provides that these
indemnification provisions are not exclusive, which, in the Corporation's
opinion, indicates that a corporation may provide for broader indemnification in
its charter documents including circumstances not otherwise authorized under the
DGCL, there is some uncertainty as to the extent to which a corporation may
indemnify its directors and officers for judgments and amounts paid in
settlement of derivative actions. There are no definitive decisions and this
uncertainty exists because certain legal commentators have argued that such
indemnification would be circular and is against public policy. Also, a proposal
to permit such indemnification was specifically rejected by the General
Corporation Law Section of the Delaware Bar Association.
The Corporation has included undertakings in various registration
statements filed with the Securities and Exchange Commission that in the event a
claim for indemnification is asserted by a director or officer relating to
liabilities under the Securities Act of 1933 the Corporation will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether
indemnification would be against public policy and will be governed by any final
adjudication of such issue.
<PAGE> 1
FOR RELEASE: IMMEDIATE
Univar Corporation
6100 Carillon Point
Kirkland, WA 98033
Contact: Gary E. Pruitt
206-889-3440
UNIVAR ANNOUNCES AGREEMENT TO MERGE WITH ROYAL PAKHOED N.V.
KIRKLAND, WASHINGTON, June 3, 1996 . . . Univar Corporation (NYSE:UVX)
announced today that it has entered into an agreement to merge with a subsidiary
of Royal Pakhoed N.V., a Netherlands limited liability company. Pakhoed and its
affiliates currently own approximately 28% of Univar's common stock. The merger
will be preceded by a cash tender offer for all the outstanding common shares of
Univar at a price of $19.45 per common share. The tender offer will be initiated
by UC Acquisition Corp., a subsidiary of Pakhoed which has been created for this
transaction.
Univar's Board of Directors has unanimously endorsed the offer and
recommends that its shareholders accept the offer. The Board also has
unanimously approved the merger agreement.
Univar has approximately 21,700,000 shares outstanding, giving the
transaction a total equity value of approximately $425 million. Pakhoed has
entered into agreements with The Dow Chemical Company and certain other
shareholders to tender approximately 5.1 million shares (or approximately 23% of
Univar's outstanding shares). These shares, together with shares currently held
by Pakhoed and its affiliates, represent in excess of 51% of Univar's
outstanding shares. Pakhoed intends to finance the offer and merger from
existing lines of credit and cash on hand.
"The offer represents an excellent value for our shareholders, and we
are also confident that Pakhoed will be a good owner and manager for both the
business and our employees," said James H. Wiborg, Chairman of the Univar Board.
Schroder Wertheim & Co. Incorporated acted
<PAGE> 2
as financial advisor to Univar and has provided an opinion to the Univar Board
that the offer is fair, from a financial point of view, to the shareholders of
Univar other than Pakhoed.
"With its worldwide logistic operations on the one hand, and Univar's
strength in chemical distribution on the other, Pakhoed positions itself as
a truly unique business partner for the chemical industry," said Klaas Westdijk,
Chairman of Pakhoed's Board of Management. "Through our complementary resources,
we can deliver significant benefits to our customers and suppliers in a broad
range of areas" added Paul H. Hough, Univar's President and Chief Executive
Officer.
The terms and conditions of the tender offer will be set forth in
offering documents expected to be filed with the Securities and Exchange
Commission not later than June 7, 1996. This filing will include conditions
relating to the acquisition of a majority of the outstanding shares of Univar,
on a fully diluted basis, including shares which are already owned by Pakhoed.
The filing also will contain information relating to certain governmental
approvals to be obtained prior to the completion of the offer and merger. The
agreement to merge will be filed with these documents. The merger agreement also
permits the Board, in the exercise of its fiduciary duties, to consider other
offers or indications of interest to be acquired, to provide information to the
acquirer, and after notice and satisfaction of other requirements, enter into an
agreement to be acquired by a party other than Pakhoed.
Univar is a Washington corporation, engaged in the distribution of
industrial, agricultural and pest control chemicals and related products and
services. Its shares are traded on the New York Stock Exchange under the symbol
"UVX." It conducts its operation in the United States, Canada and Europe.
Pakhoed is a limited liability company formed under the laws of the
Netherlands and operates numerous tank storage facilities in Europe, the United
States and Asia for storage of chemicals and oil, and conducts worldwide
shipping and distribution operations, primarily in Europe. Pakhoed's shares are
traded on the Amsterdam and London Stock Exchanges.
<PAGE> 1
April 12, 1996
Royal Pakhoed N.V.
333 Blaak
3011 GB Rotterdam
The Netherlands
Re: Confidentiality and Standstill Agreement
Gentlemen:
In connection with your consideration of a possible transaction
involving you, which shall include Royal Pakhoed N. V. and all your "affiliates"
and "associates" (as such terms are defined in Rule 12b-2 of the Securities
Exchange Act of 1934 (the "Act")), (also collectively referred to as "Pakhoed")
and Univar Corporation ("Univar"), certain financial, operational and other
information concerning Univar is being and will be furnished to you and to your
directors, officers, employees, agents, and professional advisors.
As a condition to furnishing such information, you agree, as set forth
below, to (1) keep confidential such information and any other information
Univar or its representatives furnish to you, whether furnished before, on, or
after the date of this Confidentiality and Standstill Agreement ("Agreement"),
together with analyses, compilations, studies or other documents or records
prepared by you or others, which contain or reflect or are generated from
information supplied by Univar or its representatives (collectively referred to
as "Evaluation Material") and (2) the other matters contained in this Agreement.
You agree that the Evaluation Material will be used solely for the
purpose described above and that such Evaluation Material will be kept
confidential by you; provided, however, that any of such information may be
disclosed to your directors, officers, employees, agents, and professional
(collectively referred to as "your representatives"). It being understood that
prior to any disclosure of Evaluation Material, each of your representatives
shall be informed by you of the terms of this Agreement and of the confidential
nature of the Evaluation Material. Each of your representatives shall execute a
written agreement acceptable to Univar agreeing (i) to keep the Evaluation
Material confidential and to use it only in connection with the purpose
described above and (ii) to the other terms of this Agreement. You shall be
responsible for any breach of this Agreement by you or any of your
representatives.
Without the prior written consent of Univar, you will not disclose and
will direct your
<PAGE> 2
Confidentiality and Standstill Agreement
April 12, 1996
Page 2
representatives not to disclose, to any person other than Pakhoed and your
representatives, the fact that the Evaluation Material has been made available
to you, the fact that Univar and Pakhoed are considering a transaction, or any
information with respect to the discussions including the status thereof. The
term "person" as used in this Agreement shall be broadly interpreted to include,
without limitation, any corporation, company, partnership, or individual.
If you or any of your representatives are legally compelled to disclose
Evaluation Material which is subject to this Agreement, you will provide Univar
with prompt notice so that Univar may seek a protective order or other
appropriate remedy and/or waive compliance with this Agreement. In the event
that such protective order or other remedy is not obtained, or if Univar waives
compliance with the provisions of this Agreement, you will furnish only such
information as you are advised is legally required and will exercise your best
efforts to obtain assurance that confidential treatment will be accorded any
Evaluation Material which is compelled to be disclosed.
In the event Univar and Pakhoed do not complete the transaction
indicated above, you and your representatives will, upon the request of Univar,
either (1) promptly deliver to Univar all Evaluation Material, without retaining
any copy, extract, or reproduction thereof, or (2) promptly destroy all
Evaluation Material in your or your representatives' possession, and such
destruction shall be certified in writing to Univar by the person supervising
such destruction.
You understand that Univar does not make any representation or warranty
as to the accuracy or completeness of the Evaluation Material. You agree that
Univar and its officers, directors, employees, agents, or representatives shall
not have any liability hereunder to Pakhoed or any of your representatives
resulting from the use of the Evaluation Material by Pakhoed or your
representatives.
You agree to indemnify, defend, and hold Univar, its subsidiaries, and
their respective directors, officers, employees, agents and representatives
harmless from and against any losses, claims, damages or liabilities arising out
of breach of this Agreement by you or your representatives and will reimburse
Univar, its subsidiaries, and their respective directors, officers, employees,
agents, and representatives for all expenses (including counsel fees) incurred
in connection therewith. The obligations set forth in this paragraph shall
survive the termination of this Agreement.
You further acknowledge that subject to the satisfaction of Section 1.3
of the Tender Offer Protocol attached as Exhibit B (the "Protocol"), the
Evaluation Material is being furnished to you in consideration of your agreement
that for an initial period ending October 30, 1996 you will not, without the
prior written consent of the Company, (i) acquire any stock or other securities
of the Company, other than as permitted by that certain Standstill Agreement
dated September 19, 1986 (as amended June 3, 1992 and referred to herein as the
"Standstill Agreement") but specifically excluding the right to make a tender
offer pursuant to Section 2.10 of such Standstill Agreement (ii), submit to the
Company or any other person any proposal for a
<PAGE> 3
Confidentiality and Standstill Agreement
April 12, 1996
Page 3
transaction between you and the Company or involving any of its security holders
other than in accordance with the Protocol, (iii) solicit proxies or shareholder
consents with respect to securities of the Company or become a "participant" in
any "solicitation" or a member of a "group" (as such terms are used in
Regulation 14A and Section 13(d)(3) of the Act)in opposition to the
recommendation of the majority of the Unaffiliated Directors (as defined in the
Standstill Agreement), or (iv) otherwise assist, advise, encourage or act alone
or in concert with any other person in acquiring or attempting to acquire,
directly or indirectly, control of the Company or its assets. If the conditions
of Sections 2.1 and 2.2 of the Protocol are satisfied, the term of the
standstill provisions of this Agreement shall automatically extend to April 30,
1998. The parties further agree that if a tender offer is not consummated at any
time in accordance with the protocol, that Pakhoed will not ask to make a new
proposal, renew the current proposal or seek to modify or amend this agreement
until after February 28, 1997.
You acknowledge and agree that Univar would not have an adequate remedy
at law and would be irreparably harmed in the event that any of the provisions
of this Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that Univar shall be entitled to
injunctive relief to prevent breaches of this Agreement and to specifically
enforce the terms and provisions hereof, in addition to any other remedy to
which it may be entitled at law or in equity. It is further understood and
agreed that no failure to or delay in exercising any right, power, or privilege
hereunder shall operate as a waiver thereof, and no single or partial exercise
thereof shall preclude any other or further exercise thereof or the exercise of
any right, power, or privilege hereunder. You agree to pay all costs and
expenses, including counsel fees, incurred by Univar in case any such action is
brought by it.
You agree and consent to personal jurisdiction and venue in any action
brought in any court, federal and state, within the state of Washington having
subject matter jurisdiction, in connection with any matter arising under this
Agreement. This Agreement shall be governed by and construed in accordance with
the laws of the State of Washington applicable to agreements made and to be
performed within such state.
Except as otherwise indicated, your obligations under this Agreement
shall terminate as of April 30, 1998.
[the remainder of this page has been intentionally left blank]
<PAGE> 4
Confidentiality and Standstill Agreement
April 12, 1996
Page 4
Except as modified herein all other terms and conditions of the
Standstill Agreement shall remain in full force and effect through the term of
this Agreement and thereafter as provided for in the Standstill Agreement.
Univar agrees that the provisions of this Agreement are not intended to inhibit
the ability of any legal counsel which has been approved as one of your
representatives to represent Pakhoed as its legal advisors; provided, however,
that said counsel shall at all times comply with the provisions of this
Agreement.
Very truly yours,
UNIVAR CORPORATION
Paul H. Hough
President
AGREED AND ACCEPTED this ___ day of April, 1996:
Royal Pakhoed N.V.
By:______________________________
Its:_____________________________
Pakhoed USA, Inc.
By:______________________________
Its:_____________________________
Pakhoed Investeringen B.V.
<PAGE> 5
Confidentiality and Standstill Agreement
April 12, 1996
Page 5
By:______________________________
Its:_____________________________
<PAGE> 6
Confidentiality and Standstill Agreement
April 12, 1996
Page 6
EXHIBIT A
APPROVED REPRESENTATIVES OF PAKHOED
[INTENTIONALLY OMITTED]
<PAGE> 7
Confidentiality and Standstill Agreement
April 12, 1996
Page 7
EXHIBIT B
TENDER OFFER PROTOCOL
APRIL 12, 1996
STEP I:
1.1 Execution of a unanimous consent of the Univar Board of Directors
authorizing the Special Committee to negotiate with Pakhoed subject to approval
by the full Board of Directors.
1.2 No later than 11:00 A.M., Friday April 12, 1996, Pakhoed and Univar
shall execute the Confidentiality and Standstill Agreement to which this Exhibit
shall be attached which establishes an initial standstill through October 31,
1996 equivalent to the 1986 standstill between Univar and Pakhoed; provided that
this initial standstill provision will become effective only upon satisfaction
of Section 1.3.
1.3 An agreement on a mutually acceptable range of the per share tender
offer price shall be reached and confirmed in writing no later than 4:00 P.M.
Saturday, April 13, 1996. Upon such agreement the initial standstill provisions
shall become automatically effective. If no agreement is reached as to an
acceptable range of the per share tender offer, then the standstill provisions
of this Agreement shall not apply, but the confidentiality provisions shall
apply including without limitation an understanding and agreement that the
discussions relating to price ranges and other matters discussed during April 10
through April 13 are subject to such confidentiality provisions.
1.4 Agreement that due diligence will be conducted only in accordance
with a mutually acceptable written agreement. It is specifically agreed that
Mark Hooper shall not participate in due diligence, negotiations, strategic
advise, consulting or any other role in connection with the transactions
contemplated by this protocol.
STEP II:
2.1 An environmental due diligence agreement shall be executed no later
than April 25, 1996.
2.2 A minimum acceptable tender offer price per Univar Common Share
shall be approved by the Special Committee no later than April 30, 1996.
2.3 After satisfaction of Section 2.1 (execution of a due diligence
agreement) and Section 2.2 (agreement on minimum tender offer price), the
standstill provisions shall
<PAGE> 8
Confidentiality and Standstill Agreement
April 12, 1996
Page 8
automatically extend to April 30, 1998 and there will be no further price
negotiations. If either or both of Sections 2.1 and 2.2 are not satisfied by
April 30, 1996 the initial standstill provision shall remain in effect until
October 31, 1996..
2.4 Any proposal shall be strictly in accordance with all the terms and
conditions of the Standstill Agreement, including without limitation the
"Requirement for Tender Offers" as set forth in Section 2.11 of the Standstill
Agreement; provided that (a) the Univar Board has not exercised its fiduciary
duty to accept or recommend a better offer pursuant to Section 4.5 and
(b)Pakhoed has entered into a Merger Agreement to acquire the non-tendered
shares pursuant to Section 4.3 then the minimum number of Univar shares tendered
and accepted in the Tender Offer, together with the Univar shares owned by
Pakhoed, need only exceed a simple majority of the outstanding Univar shares as
of the closing of the Tender Offer. All other material terms and conditions of
any such tender offer and the form of the proposed Merger Agreement shall have
been disclosed and shall be acceptable to Univar's counsel no later than April
30, 1996.
2.5 Subject to the satisfaction of the fiduciary duties of the Univar
Board of Directors, Univar will consent to and/or encourage the execution of
agreements by a sufficient number of large Univar shareholders to assure
satisfaction of the minimum tender offer acceptances required by Section 2.4. It
is secifically understood that such agreements will permit the signing
shareholder to accept a higher offer pursuant to Section 4.5.
STEP III:
3.1 If an initial tender offer is approved by the Special Committee,
environmental due diligence shall be conducted by Pakhoed and your
representatives only as permitted by the Due Diligence Agreement referred to in
Section 1.4.
3.2 Both Pakhoed and Univar shall recognize as a moral and legal
obligation all existing rights of Univar officers and other employees including
the rights to receive the benefits of all outstanding stock options and payments
and benefits provided for in the Change of Control Agreements regardless of
provisions in the Change of Control Agreements which might be interpreted as
limiting those rights. No later than April 30, 1996 Pakhoed and Univar shall
mutually agree upon the estimated net after-tax cost (i.e., federal income tax
benefits to the surviving entity and federal excise tax costs, if any, to the
employees) of making the stock options and other change of control benefits
available to the Univar employees with indemnification against any excise tax.
In recognition of the fairness and mutual benefits of sharing these costs, the
tender offer price shall be reduced by fifty percent (50%) of such after-tax
cost determined on a fully diluted per share basis. Any adjustment required by
this Section shall be reflected in the per share tender offer referred to in
Section 2.2.
3.3 The full Univar Board shall review the proposal and related matters
in a continuation of the regular May 2 Board meeting. The continuation meeting
will be held on the afternoon of May 2 at a location outside of Kirkland.
Pakhoed directors may attend but will be
<PAGE> 9
Confidentiality and Standstill Agreement
April 12, 1996
Page 9
expected to excuse themselves after an initial presentation.
3.4 All environmental due diligence shall be completed no later than
May 24, 1996. Pakhoed shall advise the Special Committee of its decision to
proceed or not to proceed with a tender offer no later than May 30, 1996. If the
answer is no the Standstill stays in effect until April 30, 1998 and the ban on
proposals and new negotiation stays in effect until after February 28, 1997.
STEP IV:
4.1. If the answer is yes, a special board meeting will be held on May
31, 1996 and a Merger Agreement setting forth the definitive terms and
conditions shall be executed no later than June 3, 1996. A press release shall
be issued only after execution of the Merger Agreement.
4.2 The tender offer will commence within five (5) business days after
the initial announcement and will stay open for a minimum of thirty (30)
business days after the initial announcement (July 15 assuming a June 3
announcement). The tender offer will be completed no later than July 31, 1996.
Payment for the shares is required to be made promptly after completion.
4.3 Pakhoed will be contractually obligated pursuant to the Merger
Agreement to promptly follow any Tender Offer which is accepted by the minimum
number of shares as required by Section 2.4 which shall also represent a simple
majority of the outstanding shares as of the close of the Tender Offer with a
cash merger for the remaining untendered shares at the final per share tender
offer price.
4.4 Pakhoed will have an opportunity to negotiate employment agreements
with a mutually acceptable number of key executives prior to the execution of
the Merger Agreement and commencement of the Tender Offer, however the execution
of such agreements shall not be a condition to the Tender Offer and the failure
to secure such agreements shall not effect the April 30 1998 standstill
agreement.
4.5 The Univar Board will agree not to solicit other bids but will not
be restricted from considering (including providing information comparable to
that provided to Pakhoed) or accepting another unsolicited higher cash offer for
all of the outstanding Univar Common Shares. If another acquisition proposal is
approved by the Univar Board Pakhoed shall have the right to modify its tender
offer as permitted by Section 2.7 of the Standstill Agreement.
4.6 Any modification of the foregoing protocol or related dates must be
approved in writing by the Chairman of the Special Committee and a designated
representative of Pakhoed.
4.7 If either the October 31, 1996 or April 30 1998 standstill
provisions become effective in accordance with this letter agreement such
provisions will stay in effect if the tender
<PAGE> 10
Confidentiality and Standstill Agreement
April 12, 1996
Page 10
offer is not completed in accordance with the foregoing protocol and time
schedule and Pakhoed further agrees that it will not ask to make a new proposal,
renew the current proposal or seek to modify or amend this agreement until after
February 28, 1997; provided that, if the Univar Board fails to approve a tender
offer which has been approved by the Special Committee and is otherwise made in
accordance with this protocol and all previously disclosed and mutually agreed
terms and conditions, the standstill provisions of this Agreement will be
terminated as of October 31, 1996, but thereafter the present Standstill
Agreement shall remain in effect.
<PAGE> 1
EXHIBIT 13
{Letterhead of Univar Corporation}
April 22, 1996
VIA FAX NO. 31-10-213-0512
Dr. Sjoerd D. Eikelboom
Royal Pakhoed N.V.
333 Blaak
3011 GB Rotterdam
The Netherlands
Re: Univar Corporation
Royal Pakhoed N.V.
Environmental Due Diligence Agreement ("DUE DILIGENCE AGREEMENT")
Dear Sjoerd:
Reference is made to the Confidentiality and Standstill Agreement in
connection with a possible transaction involving Royal Pakhoed N.V. ("PAKHOED")
and Univar Corporation ("UNIVAR") dated April 12, 1996 and the "TENDER OFFER
PROTOCOL" attached thereto as Exhibit B. The Confidentiality and Standstill
Agreement contemplates performance of environmental due diligence of Univar to
be conducted on behalf of Pakhoed by Pakhoed's legal counsel, Graham & James
("G&J"), and Pakhoed's environmental consultant, Harding Lawson Associates
("HLA"). Both G&J and HLA have provided professional services for Univar in the
past and HLA continues to provide professional services for Univar. Univar and
Pakhoed hereby consent to G&J's and HLA's representation of Pakhoed in this
proposed transaction. Any defined terms beginning with an initial capital used
herein which are not defined in this Due Diligence Agreement shall have the same
meaning as in the Confidentiality and Standstill Agreement. In consideration of
the continued good faith negotiations between Pakhoed and Univar and the mutual
benefits accruing to Pakhoed and Univar by virtue of their cooperation in this
due diligence effort, Pakhoed and Univar agree as follows:
1. Pakhoed and Univar agree to cooperate each with the other and the
other's legal counsel as well as with HLA as provided in this Due
Diligence Agreement. Any approval required of or from Pakhoed or Univar
pursuant to this Due Diligence Agreement shall
<PAGE> 2
Dr. Sjoerd D. Eikelboom
Due Diligence Agreement
April 22, 1996
Page 2
not be unreasonably withheld, conditioned or delayed. To the extent
necessary or appropriate, Pakhoed and Univar and/or their legal counsel
shall meet each with the other and with HLA, in person or via
conference call, to implement this Due Diligence Agreement. The scope
of, approach for and other terms concerning as well as the work to be
performed by HLA and G&J, and the time frame in which such work shall
be accomplished, are stated in the attached Exhibit A, "Due Diligence
Approach" ("SCOPE"), which is incorporated fully by this reference.
2. Pakhoed shall pay all fees and costs of HLA's and G&J's performance of
the Scope. Univar shall pay the costs of its legal counsel and the cost
of providing a location in the Seattle area for file review as
contemplated in the Scope. Pakhoed shall pay all other costs of its due
diligence and the cost of providing any document review facility
outside of the Seattle area.
3. On the terms and for the limited purposes provided in the Scope, Univar
grants Pakhoed, G&J and HLA access to its files and personnel (as
identified in the Scope) to perform the Scope.
4. All preliminary and final results of due diligence shall be the sole
property of Pakhoed and Pakhoed shall not provide Univar any
information concerning its due diligence.
5. All results, reports, and any information obtained or developed by
Pakhoed, HLA or G&J pursuant to this Due Diligence Agreement and all
results, reports, and any other information obtained or developed using
information obtained in this due diligence shall constitute "EVALUATION
MATERIAL" under the Confidentiality and Standstill Agreement, shall be
subject to the terms and conditions therein and shall be referred to
herein as the "ENVIRONMENTAL EVALUATION MATERIAL." All Environmental
Evaluation Material shall be G&J attorney work product and shall be
protected from disclosure by G&J's attorney-client privilege with
Pakhoed and the attorney work product privilege, as well as other
applicable privileges, and may not be provided to or used by any person
other than those employed by Pakhoed and its Representatives who have
an actual need to know such information, and who shall be advised of
and agree to be bound by the Confidentiality and Standstill Agreement
before Evaluation Material is provided to them.
6. All such results, reports and documentary information shall bear, as a
header on each page, the following legend:
PRIVILEGED AND CONFIDENTIAL
PREPARED AT THE DIRECTION OF PAKHOED LEGAL COUNSEL
DO NOT REPRODUCE OR DISTRIBUTE
<PAGE> 3
Dr. Sjoerd D. Eikelboom
Due Diligence Agreement
April 22, 1996
Page 3
7. UNLESS SPECIFIC ARRANGEMENTS ARE MADE, FAXES AND OTHER WRITTEN NOTICES
ARE TO BE SENT ONLY TO SCOTT VOKEY WHOSE ADDRESS AND PHONE NUMBER IS:
Scott R. Vokey
Preston Gates & Ellis
5000 Columbia Center
701 Fifth Avenue
Seattle, Washington 98104-7078
Tel: (206) 623-7580
Tel: (206) 467-7605 (direct)
Fax: (206) 623-7022
8. This Due Diligence Agreement shall be effective when signed by
authorized representatives of Pakhoed, Univar, G&J and HLA and shall
terminate upon the successful conclusion of the merger contemplated by
the Confidentiality and Standstill Agreement. Each of the individuals
signing below on behalf of Pakhoed, G&J, and HLA represents and
warrants to Univar that he or she is authorized to sign on behalf of
the entity he or she represents. This letter agreement may be executed
in two or more counterparts by facsimile signature, all of which taken
together shall constitute one instrument.
9. Pakhoed acknowledges that upon the execution of this Due Diligence
Agreement and agreement on the minimum acceptable tender offer price
per Section 2.3 of the Tender Offer Protocol, the two year standstill
provisions of the Confidentiality and Standstill Agreement are hereby
effective.
Sincerely,
Univar Corporation
/s/ William A. Butler
William A. Butler
Vice President, General Counsel
and Corporate Secretary
<PAGE> 4
Dr. Sjoerd D. Eikelboom
Due Diligence Agreement
April 22, 1996
Page 4
AGREED TO AND ACCEPTED:
ROYAL PAKHOED N.V. GRAHAM & JAMES
By: /s/ Dr. Sjoerd D. Eikelboom By: /s/ Nicholas Unkovic
Name: Dr. Sjoerd D. Eikelboom Name: Nicholas Unkovic
Title: Senior Vice President Title: Partner
Date: April 25, 1996 Date: April 25, 1996
HARDING LAWSON ASSOCIATES
By: /s/ Victor Johnson
Name: Victor R. Johnson, Jr.
Title: Senior Vice President
Date: April 24, 1996
cc: Wayne E. Grotheer, with Exhibit A
Joel S. Summer, with Exhibit A
Scott R. Vokey, with Exhibit A
Richard B. Dodd, with Exhibit A
Maureen Bennett, with Exhibit A
Nicholas Unkovic, with Exhibit A
Victor Johnson, with Exhibit A.
<PAGE> 5
Exhibit A
Due Diligence Approach
April 22, 1996
A. Guiding Principles
Univar and Pakhoed wish to permit Pakhoed to evaluate (solely for
purposes of the proposed transaction) environmental and product, toxic tort and
similar liabilities related to Univar on the schedule set forth in the Protocol,
while preserving the confidentiality of the proposed transaction and of the
information collected during due diligence.
Therefore, except as otherwise consented to by Univar, information
shall be gathered only from the sources and in accordance with the procedures
specified in this Due Diligence Approach and not from Univar facilities (other
than its Kirkland headquarters) or through contacts with regulatory agencies. It
is expected that some information will be needed from excluded sources, but
Univar will make that information available only as agreed by the parties, for
example by having Univar personnel or counsel obtain the information in a manner
designed to protect confidentiality.
Subject to the limitations in this Due Diligence Approach, the due
diligence shall cover all known active and inactive Univar sites, in the US and
elsewhere, including offsite locations where Univar may be a responsible/liable
party.
It has been estimated that this due diligence should take six weeks,
but the Protocol requires that the due diligence be completed by May 24, 1996,
which is expected to allow less than a month for due diligence. Therefore, both
parties will make appropriate personnel and resources available on a priority
basis to accomplish the due diligence by May 24, 1996.
The due diligence will be conducted in a cooperative fashion designed
to limit to the extent possible the need to obtain information from excluded
sources while providing as much information as possible, keeping in mind the
practical limitations imposed by the time available and the need for
confidentiality.
B. Personnel
Graham and James ("G&J") will retain Harding Lawson Associates ("HLA").
Pakhoed's due diligence will be conducted by representatives of Pakhoed, HLA and
G&J (the "Pakhoed team"). While Pakhoed retains the right to designate its team,
it is expected that those representatives will for most purposes include: Rino
Wong (Pakhoed); Vic Johnson ("VJ"), Larry Floyd ("LF") and Jim Briedlow ("JB")
(HLA); and Maureen Bennett and either Andy Port
<PAGE> 6
or Rupert Hansen (G&J). Others who may be involved on a less frequent basis
include Sjoerd Eikelboom, Roy Wansik and Jean Warren (Pakhoed) and Nick Unkovic
(G&J).
The Pakhoed team will have its primary contacts with Wayne Grotheer
("WG") and Joel Summer ("JS") (Univar) and Scott Vokey ("SRV") of Preston Gates
& Ellis ("PG&E"), but may also have contacts with Jim Wiborg, Paul Hough, Gary
Pruitt, Bill Butler and Rick Dodd (PG&E).
C. Information Sources
Univar will make available in an offsite data room at a site to be
designated by Pakhoed:
1) all relevant and reasonably accessible information
located in Univar's Kirkland headquarters or
headquarters storage or under PG&E's control,
2) Univar's FY 1997 capital budget,
3) to the extent reasonably available, existing lists of
known active and inactive Univar sites, including
third party sites where Univar may be a
responsible/liable party, and
4) on a priority basis, the assistance of the Univar
personnel and representatives described above.
The Pakhoed team will also have access to information:
1) contained in the files of Pakhoed, G&J and HLA
(provided that HLA personnel other than VJ, LF and JB
who have worked for Univar may not be informed of
this project or that such information is being used),
2) available from commercially available data bases such
as commercial electronic due diligence services (such
as EDR) and from commercial serial photograph
services, city directory services and historical
mapping services (such as Sanborn),
3) available from other sources with prior permission of
Univar, and
4) derived from discussions with the Univar personnel
and representatives described above.
Except as described above, the Pakhoed team will not, with respect to
Univar and without prior permission from Univar
<PAGE> 7
1) contact any present or former Univar officers,
directors, employees, attorneys, consultants, agents
or other advisors, including without limitation
present or former project managers,
2) contact any regulatory agency or its present or
former personnel, contractors, consultants, attorneys
or advisors, or review or request copies of any
regulatory agency file,
3) visit, or request from any third person information
concerning, (a) any present or former Univar leased
or owned site or (b) any third party site at which
Univar is or may be a potentially responsible/liable
party, or
4) review (a) the files of project managers or (b) files
located at Univar facilities.
It is nevertheless expected that, with respect to a limited number of sites or
pending or threatened litigation, information will be required from one or more
of the above excluded sources. It is also expected that information that cannot
now reasonably be anticipated will be required. The Pakhoed team will limit
requests for such information to the extent possible, and Univar will cooperate
to obtain such information in a manner agreeable to both Univar and Pakhoed.
With respect to regulatory agency contacts, due to the difficulty in scheduling
appointments with such agencies, the parties will use their best efforts to
identify and pursue any such required contacts as early as possible in the
process.
D. Due Diligence Process and Schedule
The due diligence process will commence upon execution of this
agreement and agreement on the minimum acceptable tender offer price per Section
2.3 of the Protocol, extending the Pakhoed standstill period to two years. These
conditions are expected to be fulfilled on April 26, 1996.
Univar will make the information it is to provide (described above)
available in the data room on April 29, 1996. The due diligence will commence
that day with interviews of WG, JS and SRV, and will be completed no later than
May 24, 1996. The parties will make available the personnel and resources
necessary to accomplish this schedule.
E. Uses of Due Diligence Information
Neither Pakhoed, G&J, nor HLA will use any information developed during
the due diligence for any purpose other than evaluation of the potential
transaction, including but not limited to any attempt to require Univar to set
environmental reserves, change any accounting policy, force Univar to make any
disclosure, or in connection with any Univar project.
<PAGE> 8
Univar will not be required to develop any new cost estimates, and
Pakhoed, G&J and HLA will keep confidential and not disclose to Univar or to any
third parties any cost estimates or other information that Pakhoed, G&J or HLA
may develop, in the course of the due diligence investigation.
Pakhoed, HLA and G&J shall destroy all information developed pursuant
to this due diligence protocol, including without limitation notes, schedules,
and reports, if the potential transaction does not close in accordance with the
Confidentiality and Standstill Agreement dated April 12, 1996.
<PAGE> 1
EXHIBIT 14
{LETTERHEAD OF SCHRODER WERTHEIM & CO. INCORPORATED}
May 31, 1996
The Board of Directors
Univar Corporation
6100 Carillon Point
Kirkland, Washington 98033
Members of the Board of Directors:
We understand that Royal Pakhoed N.V. ("Pakhoed") is contemplating the
acquisition of all of the outstanding shares of Common Stock of Univar
Corporation ("Univar" or the "Company") (the "Transaction"). The Transaction
will be effected in two steps, the first of which would be a tender offer (the
"Tender Offer") by UC Acquisition Corporation ("UC"), an indirect wholly-owned
subsidiary of Pakhoed, for all of the outstanding shares of Common Stock of the
Company (the "Shares") not currently owned by Pakhoed, UC or their affiliates,
pursuant to which shareholders of the Company other than Pakhoed, UC and their
affiliates would receive $19.45 net in cash in exchange for each Share tendered.
The Tender Offer must remain open for a period of at least 30 business days from
the date upon which the Tender Offer is first publicly announced. UC may extend
the expiration date of the Tender Offer to a date not later than July 31, 1996,
provided that UC may extend the expiration date of the Tender Offer to a date
not later than August 15, 1996 if (i) necessary Government Approvals (as defined
in the proposed Agreement and Plan of Reorganization among Pakhoed, UC and the
Company (the "Reorganization Agreement")) have not been obtained by July 31,
1996, or (ii) by July 26, 1996, less than 80% of the outstanding Shares have
been tendered pursuant to the Tender Offer. In the event the Tender Offer is
extended beyond July 31, 1996, the price per Share to be paid to shareholders of
the Company in the Tender Offer and the Merger (as defined below) shall be
increased by an amount equal to the product of (i) $19.45; (ii) the prime
interest rate as announced by Bank of America NW, N.A. (doing business as
Seafirst Bank) in Seattle, Washington as in effect on August 1, 1996; and (iii)
the quotient obtained by dividing (x) the number of days the Tender Offer is
extended through July 31, 1996 by (y) 365. The terms and conditions of the
Tender Offer are more fully described in the Reorganization Agreement.
Concurrent with the closing of the Tender Offer, the holder of each
outstanding option to purchase Shares which was not previously exercised would
receive in cash the positive difference, if any, between the highest price paid
to shareholders of the Company who tendered their Shares in the Tender Offer and
the exercise price per share of such option. Subsequent to the Tender Offer,
among other things, (i) the Company and UC would be merged and the surviving
corporation would be an indirectly wholly-owned subsidiary of Pakhoed (the
"Merger") and
<PAGE> 2
(ii) each remaining Share not owned by Pakhoed, UC or their affiliates would be
converted into the right to receive an amount in cash equal to the highest price
paid to shareholders of the Company who tendered their Shares in the Tender
Offer. The terms and conditions of the Merger are more fully described in the
Reorganization Agreement.
You have requested that Schroder, Wertheim & Co. Incorporated
("Schroder Wertheim") render an opinion (the "Opinion"), as investment bankers,
as to the fairness, from a financial point of view, of the consideration to be
received by the shareholders of the Company other than Pakhoed, UC and their
affiliates in the Transaction (the "Transaction Consideration").
Schroder Wertheim, as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. Schroder Wertheim has acted
as financial advisor to Univar with respect to the Transaction for which we have
received fees and will receive additional fees, a portion of which is contingent
upon consummation of the Transaction.
In connection with the Opinion set forth herein, we have, among other
things:
i. reviewed a draft, dated May 30, 1996, of the Reorganization
Agreement;
ii. reviewed a draft, dated May 30, 1996, of the Schedule 14D-1 to be
filed by UC with the Securities and Exchange Commission in
connection with the Tender Offer, including a draft of the Offer
to Purchase incorporated therein by reference (the "Offer to
Purchase");
iii. reviewed a draft, dated May 30, 1996, of the Schedule 14D-9 to be
filed by the Company with the Securities and Exchange Commission
in connection with the Tender Offer;
iv. reviewed the Company's Annual Reports on Form 10-K filed with the
Securities and Exchange Commission for the fiscal years ended
February 1992, 1993, 1994, 1995 and 1996, including the audited
consolidated financial statements of Univar included therein;
v. reviewed historical financial results of Univar by operating
division prepared by management;
vi. reviewed forecasts and projections for Univar prepared or
supplied by Univar management for the fiscal years ending
February 1997 through 2002;
vii. held discussions with Univar management regarding the business,
operations and prospects of the Company;
<PAGE> 3
viii. performed various valuation analyses, as we deemed appropriate,
of Univar using generally accepted analytical methodologies,
including: (i) the application to the financial results of Univar
of the public trading multiples of companies which we deemed
comparable; (ii) the application to the financial results of
Univar of the multiples reflected in recent mergers and
acquisitions for businesses which we deemed comparable; and (iii)
discounted cash flow and leveraged buyout analyses of Univar's
operations;
ix. reviewed the historical trading prices and volumes of Univar
Common Stock; and
x. performed such other financial studies, analyses, inquiries and
investigations as we deemed appropriate.
In rendering the Opinion, we have assumed and relied upon the accuracy
and completeness of all information supplied or otherwise made available to us
by Univar or obtained by us from other sources, and upon the assurance of
Univar's management that they are not aware of any information or facts that
would make the information provided to us incomplete or misleading. We have not
independently verified such information, undertaken an independent appraisal of
the assets or liabilities (contingent or otherwise) of Univar, or been furnished
with any such appraisals. With respect to financial forecasts for Univar, we
have been advised by Univar, and we have assumed, without independent
investigation, that they have been reasonably prepared and reflect the best
currently available estimates and judgment as to the expected future financial
performance of Univar.
The Opinion is necessarily based upon financial, economic, market and
other conditions as they exist, and the information made available to us, as of
the date hereof. We disclaim any undertaking or obligation to advise any person
of any change in any fact or matter affecting the Opinion which may come or be
brought to our attention after the date of the Opinion unless specifically
requested to do so.
The Opinion does not constitute a recommendation as to any action the
Board of Directors of the Company or any shareholder of the Company should take
in connection with the Transaction or any aspect thereof. In rendering the
Opinion, we have not been engaged as an agency or fiduciary of the Company's
shareholders or of any other third party. The Opinion relates solely to the
fairness from a financial point of view of the Transaction Consideration to the
shareholders of Univar other than Pakhoed, UC and their affiliates. We express
no opinion herein as to the structure, terms or effect of any other aspect of
the Transaction.
This letter is for the information of the Board of Directors of the
Company solely for its use in evaluating the fairness from a financial point of
view of the Transaction Consideration to the shareholders of the Company other
than Pakhoed, UC and their affiliates and may not be used for any other purpose
or referred to without our prior written consent.
<PAGE> 4
Based upon and subject to all the foregoing, we are of the opinion, as
investment bankers, that as of the date hereof, the Transaction Consideration is
fair, from a financial point of view, to the shareholders of Univar other than
Pakhoed, UC and their affiliates.
Very truly yours
SCHRODER WERTHEIM & CO.
INCORPORATED
<PAGE> 1
EXHIBIT 15
{Letterhead of Univar Corporation}
UNIVAR CORPORATION
6100 CARILLON POINT
KIRKLAND, WA 98033
June 7, 1996
Dear Shareholder:
On behalf of the Board of Directors of Univar Corporation (the
"Company"), we are pleased to inform you that on May 31, 1996, the Company
entered into an Agreement and Plan of Reorganization (the "Reorganization
Agreement") with UC-Acquisition Corp., a Washington corporation ("Buyer") and an
indirect, wholly-owned subsidiary of Koninklijke Pakhoed , a Netherlands limited
liability company ("Parent"), pursuant to which Buyer has commenced today a
tender offer to purchase all of the Company's outstanding common shares of
Common Stock of the Company not currently owned by Parent, Buyer or their
affiliates (the "Shares") at $19.45 per share, net to the seller, in cash (the
"Offer"). Following the completion of the Offer, upon the terms and subject to
the conditions of the Reorganization Agreement, Buyer will be merged with and
into the Company (the "Merger") and each of the shares not owned by Parent,
Buyer, or their affiliates or by any dissenting shareholders will be converted
into the right to receive an amount equal to $19.45 per share in cash. In the
event the Offer is extended by Buyer or Parent beyond July 31, 1996, the amount
payable per Share shall be increased by an amount equal to the product of the
Price multiplied by the prime interest rate as announced by Bank of America NW,
N.A. (doing business as Seafirst Bank) in Seattle, Washington as in effect on
August 1, 1996, multiplied by the quotient of the number of days the Tender
offer is extended after July 31, 1996 and divided by 365.
YOUR BOARD OF DIRECTORS HAS DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO
AND IN THE BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS AND RECOMMENDS THAT THE
SHAREHOLDERS ACCEPT THE OFFER AND TENDER ALL OF THEIR SHARES TO BUYER.
In arriving at its decision, your Board of Directors gave careful
consideration to a number of factors described in the enclosed Schedule 14D-9
that is being filed with the Securities and Exchange Commission. The enclosed
Schedule 14D-9 describes the Board's decision and contains other important
information relating to that decision.
The Company engaged Schroder Wertheim & Co. Incorporated ("Schroder
Wertheim") to render an opinion to the Board of Directors as to the fairness,
from a financial point of view, of the consideration to be received by Company
shareholders in the Offer and Merger. A copy of Schroder Wertheim's written
opinion, which sets forth the matters considered and the limitation on the
review undertaken by Schroder Wertheim, is attached as an exhibit to the
accompanying Schedule 14D-9 and should be read in its entirety.
Accompanying this letter, in addition to the Schedule 14D-9 and the
opinion of Schroder Wertheim & Co., is the Offer to Purchase, together with
related materials including a letter of transmittal for use in tendering shares.
These documents set forth the terms and conditions of the Offer and provide
instructions as to how to tender your shares. We urge you to read the enclosed
materials carefully and consider all factors set forth therein before making
your decision with respect to the Offer.
We, individually, along with the entire Board of Directors, management
and employees of the Company thank you for your loyal support throughout the
years.
Sincerely,
-1-
<PAGE> 2
James H. Wiborg
Chairman of the Board of Directors
Paul H. Hough
Chief Executive Officer
-2-
