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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 1)
UNIVAR CORPORATION
(Name of Issuer)
COMMON STOCK, par value $.33 1/3 per share
(Title of Class of Securities)
913353 10 8
(CUSIP Number)
John G. Scriven
Vice President and General Counsel
The Dow Chemical Company
2030 Dow Center
Midland, Michigan 48674
(517) 636-5914
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 13, 1994
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
Schedule because of Rule 13d-1(b)(3) or (4), check the following box[ ].
Check the following box if a fee is being paid with this statement [ ].
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CUSIP NO. 913353 10 8
<TABLE>
<S> <C>
1) Name of Reporting Person The Dow Chemical Company
and its IRS Identification IRS Identification No. 38-1285128
Number
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
3) SEC Use Only
4) Source of Funds WC
5) Check Box if Disclosure of Legal
Proceedings is Required Pursuant
to Items 2(d) or 2(e) [ ]
6) Citizenship or Place of Organization Delaware
Number of 7) Sole Voting Power 4,409,370; 19.9%(1)
Shares
Beneficially 8) Shared Voting Power 0
Owned by
Each 9) Sole Dispositive Power 4,409,370; 19.9%(1)
Reporting
Person With 10) Shared Dispositive Power 0
11) Aggregate Amount Beneficially Owned 4,409,370; 19.9%(1)
by Each Reporting Person
12) Check Box if the Aggregate Amount
in Row (11) Excludes Certain Shares [ ]
13) Percent of Class Represented by
Amount in Row (11) 19.9%(1)
14) Type of Reporting Person CO
</TABLE>
(1) Dow owns 3,900,000 shares, constituting 18.0%, of the Issuer's
Common Stock, and Dow has granted the Issuer a put, and the
Issuer has granted Dow a call, for up to 101,874 shares of
nonvoting Series A Junior Participating Convertible Preferred
Stock of the Issuer which is convertible by Dow into 509,370
shares of Common Stock of the Issuer.
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This Schedule 13D/A relates to the acquisition of 2,000,000 additional shares
of Common Stock, $.33 1/3 par value per share (the "Common Stock"), of Univar
Corporation, a Delaware corporation (the "Issuer"), and the option to acquire
101,874 shares of Series A Junior Participating Convertible Preferred Stock of
the Issuer, convertible into Common Stock, by The Dow Chemical Company, a
Delaware corporation ("Dow"). Dow previously acquired 1,900,000 shares of
Common Stock of the Issuer on June 24, 1991, as further discussed in Item 3
below.
Item 1. Security and Issuer
The title of the class of equity securities to which this statement
relates is Common Stock, $.33 1/3 par value per share, of the Issuer.
The Issuer and the address of its principal executive offices are:
Univar Corporation
6100 Carillon Point
Kirkland, Washington 98033
Item 2. Identity and Background
(a)-(c)
and (f) Dow is a corporation organized and existing under the laws of
the State of Delaware. The principal business address of Dow
is 2030 Dow Center, Midland, Michigan 48674. Dow is
engaged in the manufacture and sale of chemicals, plastic
materials, pharmaceuticals, agricultural and consumer
products, and other specialized products.
Set forth below is information concerning the name, business
address, and present principal occupation or employment of all
of the present executive officers and directors of Dow. Each
such person is a United States citizen with the exception of
Andrew J. Butler, who is a citizen of the United Kingdom.
Present Principal Occupation
Name and Business Address or Employment
Jacqueline K. Barton Director of Dow
California Institute of Technology Professor of Chemistry
Division of Chemistry and Chemical California Institute of Technology
Engineers
MAIL CODE 127-72
Pasadena, CA 91125
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Andrew J. Butler Director and Senior Vice President of Dow
Dow Europe S.A.
Bachtobelstrasse 3
CH 8810 Horgen, Switzerland
David T. Buzzelli Director and Vice President of Dow
The Dow Chemical Company
2030 Dow Center
Midland, MI 48674
Fred P. Corson Director and Vice President of Dow
The Dow Chemical Company
2030 Dow Center
Midland, MI 48674
Willie D. Davis Director of Dow
President and CEO President and Chief Executive Officer
All Pro Broadcasting, Inc. of All Pro Broadcasting, Inc.
161 North LaBrea Avenue (Los Angeles broadcasting company)
Inglewood, CA 90301
Michael L. Dow Director of Dow
Michael L. Dow, Associates Chairman and Chief Executive Officer
General Aviation Building of General Aviation, Inc.
Capital City Airport
Lansing, MI 48906
Joseph L. Downey Director and Senior Vice President of Dow
The Dow Chemical Company Chairman, DowBrands, Inc.
2030 Dow Center Chairman, DowElanco
Midland, MI 48674
Enrique C. Falla Director and Executive Vice
The Dow Chemical Company President and Chief Financial
2030 Dow Center Officer of Dow
Midland, MI 48674
Barbara H. Franklin Director of Dow
Franklin Associates President and Chief Executive Officer
2600 Virginia Ave., N.W. of Franklin Associates (management
Suite 506 consulting firm)
Washington, DC 20037
Fred W. Lyons, Jr. Director of Dow
Marion Merrell Dow Inc. Chairman and Chief Executive Officer
9300 Ward Parkway of Marion Merrell Dow Inc.
Kansas City, MO 64114 (pharmaceutical manufacturing)
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William J. Neeley Director and Senior Consultant
The Dow Chemical Company of Dow
2030 Dow Center
Midland, MI 48674
Frank P. Popoff Director, Chairman of the Board and Chief
The Dow Chemical Company Executive Officer of Dow
2030 Dow Center
Midland, MI 48674
Harold T. Shapiro Director of Dow
President President of Princeton University
Princeton University
1 Nassau Hall
Princeton, NJ 08544
Enrique J. Sosa Director and Senior Vice President
The Dow Chemical Company of Dow
2030 Dow Center
Midland, MI 48674
William S. Stavropoulos Director and Chief Operating Officer
The Dow Chemical Company of Dow
2030 Dow Center
Midland, MI 48674
Paul G. Stern Director of Dow
2010 Corporate Ridge Special Partner of Forstmann Little & Co.
Suite 700
McLean, VA 22102-7838
Joseph G. Temple, Jr. Director of Dow
Marion Merrell Dow Inc. Vice Chairman of the Board of
9300 Ward Parkway Marion Merrell Dow Inc. (pharmaceutical
Kansas City, MO 64114 manufacturing)
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(d)-(e) During the last five years, neither Dow, nor any of the
persons listed above has been convicted in a criminal
proceeding or been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction
and as a result of such proceeding been subject to a
judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to,
federal or state securities laws or findings any violation
with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
On June 24, 1991, Dow purchased 1,900,000 shares of the Common Stock
at $15.84 per share for a total purchase price of $30,096,000. In
addition, Dow granted the Issuer an option to put up to 2,900,000
additional shares of Common Stock to Dow (the "Put Option"). No put
could cause Dow's ownership of the Issuer's Common Stock to exceed 21%.
On May 13, 1994, Dow and the Issuer agreed to amend the Put Option.
Dow purchased 2,000,000 additional shares of the Common Stock at
$18.74 per share, for a total purchase price of $37,480,000. Dow also
granted the Issuer an option to put, and the Issuer granted Dow an
option to call, for a period of three years up to 101,874 shares of
nonvoting Series A Junior Participating Convertible Preferred Stock
of the Issuer (the "Preferred Stock") at $93.70 per share. Each
share of Preferred Stock is convertible, at Dow's option, at any time
into 5 shares of Common Stock of the Issuer.
The source of funds for the acquisition of the Common Stock was working
capital.
Item 4. Purpose of Transaction
Dow is one of the Issuer's largest suppliers of chemicals.
Accordingly, Dow acquired the Issuer's stock for investment purposes
and to maintain a relationship of mutual cooperation between Dow and
the Issuer.
(a) Subject to certain conditions, between May 13, 1994 and May 13,
1997, the Issuer may put to Dow, and Dow may call from the
Issuer, the Preferred Stock. See the Purchase Agreement (as
defined in Item 6) and incorporated herein by this reference.
(b)-(c) Not applicable.
(d) Dow has nominated one representative for election to the
Issuer's Board of Directors and appropriate committees thereof.
Dow may nominate other representatives to the Issuer's Board of
Directors in proportion to Dow's stock holdings.
(e)-(j) Not applicable.
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Item 5. Interest in Securities of the Issuer
(a)-(b) Dow owns 3,900,000 shares of Common Stock
of the Issuer, and has the option to
acquire 101,874 shares of Preferred Stock
of the Issuer, convertible into 509,370
shares of Common Stock, which constitutes
19.9% of the issued and outstanding
common stock of the Issuer. To the
best knowledge of Dow, none of the
directors or executive officers of Dow
listed in Item 2 beneficially own any
Common Stock of the Issuer. Dow has sole
power to vote and dispose of all shares
owned by it.
(c)-(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer
Pursuant to the Amended and Restated Agreement of Purchase and Sale of
Stock of Univar Corporation, dated as of May 13, 1994 (the "Purchase
Agreement"), between the Issuer and Dow, a copy of which Purchase
Agreement is filed as an exhibit hereto and incorporated herein by
reference, the Issuer has granted Dow an option to call, and Dow has
granted the Issuer an option to put, for a period of three years up to
101,874 additional shares of the Issuer's Preferred Stock.
The Amended and Restated Standstill Agreement, dated as of May
13, 1994 (the "Standstill Agreement"), between the Issuer and Dow, a
copy of which Standstill Agreement is filed as an exhibit hereto and
incorporated herein by reference, regulates the further acquisition and
disposition of the Issuer's common stock by Dow.
With the exception of the agreements discussed above, as of the
date hereof, there are no contracts, arrangements, understandings or
relationships (legal or otherwise) among the Issuer, Dow, and any of
the persons listed in Item 2 above or between any such persons and any
person with respect to any securities of the Issuer, including without
limitation the transfer or voting of any of the securities, finder's
fees, joint ventures, loan or option arrangements, put or calls,
guarantees or profits, division of profits or loss, or the giving or
withholding of proxies. None of the Common Stock or Preferred Stock is
pledged or otherwise subject to a contingency the occurrence of which
would give another person voting power or investment power over such
securities.
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Sequential
Item 7. Material to be Filed as Exhibits Page Number
(1) Amended and Restated Agreement of Purchase and
Sale of Stock of Univar Corporation, dated as of
May 13, 1994, between the Issuer and Dow; and ___
(2) Amended and Restated Standstill Agreement, dated
as of May 13, 1994, between the Issuer and Dow;
and ___
(3) Agreement of Right of First Refusal, dated as
of June 24, 1991, between the Issuer and Dow,
incorporated by reference from the original
filed 13D, dated as of June 24, 1991, as
permitted pursuant to Rules 101(a)(2)(ii) and
102(a).
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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.
Dated: May 16, 1994
THE DOW CHEMICAL COMPANY
By: /s/ Enrique J. Sosa
Name: Enrique J. Sosa
Title: Senior Vice President
<PAGE> 1
AMENDED AND RESTATED
AGREEMENT OF PURCHASE AND SALE OF STOCK
THIS AMENDED AND RESTATED AGREEMENT OF PURCHASE AND SALE OF STOCK (the
"Agreement") is made and entered into as of May 13, 1994, by and between The
Dow Chemical Company, a Delaware corporation (the "Purchaser"), and Univar
Corporation, a Delaware corporation (the "Company").
R E C I T A L S:
A. The Company and Purchaser initially entered into this Agreement as of
June 24, 1991 in connection with the purchase of the outstanding shares of
capital stock of certain subsidiaries of Kongsbo Industrier AB ("Kongsbo"),
which comprised the Beijer Industrial Distribution Group ("Beijer"), an
industrial group that was a distributor of Purchaser's products in parts of
Europe.
B. To finance a portion of the acquisition of Beijer, the Company agreed
to sell and Purchaser agreed to acquire 1,900,000 shares of the Company's
common stock, $.33-1/3 par value per share (the "Original Shares"), and the
Company agreed to sell under certain circumstances additional shares of the
Company's common stock, $.33-1/3 par value per share (the "Original Additional
Shares").
C. This Agreement was amended on September 24, 1993, November 30, 1993,
December 21, 1993, and February 21, 1994 and the parties have agreed to further
amend and fully restate their agreement including provisions for an initial
sale of 2,000,000 shares of the Company's common stock, $.33-1/3 par value per
share (the "Additional Common Shares") and, at the Company's or Purchaser's
option, a subsequent sale of 101,874 shares of Series A Preferred Stock (the
"Additional Preferred Shares") in lieu of the parties' existing agreement to
purchase and sell the Original Additional Shares. Provisions of the existing
agreement with no current or future effect have been deleted.
NOW, THEREFORE, for and in consideration of the respective covenants,
agreements, representations, and warranties contained herein, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
ACT. "Act" shall have the same meaning as in the Dow Standstill Agreement.
ADDITIONAL CLOSINGS. "Additional Closings" means the consummation of the
Company's transfer(s) to Purchaser of the Additional Preferred Shares in
exchange for certain consideration which shall occur at the time(s) determined
in accordance with Section 2.6 at the place(s) specified in Section 8.1.
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ADDITIONAL CLOSING DATES. "Additional Closing Dates" means the date(s)
determined in accordance with Section 2.6 relating to the consummation of the
purchase and sale of the Additional Preferred Shares.
ADDITIONAL COMMON SHARES. "Additional Common Shares" means the 2,000,000
shares of the Company's common stock, $.33-1/3 par value per share, that
Purchaser agrees to purchase from the Company pursuant to this Amended and
Restated Agreement of Purchase and Sale of Stock.
ADDITIONAL PREFERRED SHARES. "Additional Preferred Shares" means the
101,874 shares of the Company's Series A Preferred Stock that Purchaser agrees
to purchase from the Company pursuant to this Amended and Restated Agreement of
Purchase and Sale of Stock.
BENEFICIAL OWNER. "Beneficial Owner" and "Beneficial Ownership" and other
derivations thereof shall have the same meaning as in the Dow Standstill
Agreement and shall be interpreted in a manner consistent with any judicial
interpretation of such term under the Pakhoed Standstill Agreement.
CLOSING. "Closing" means the consummation of the Company's transfer to
Purchaser of the Additional Common Shares in exchange for certain consideration
which shall occur at the time and place specified in Section 8.1.
CLOSING DATE. "Closing Date" means the date provided for in Section 8.1
of this Agreement.
COMMISSION. "Commission" means the United States Securities and Exchange
Commission.
COMMON STOCK. "Common Stock" means shares of the Company's common stock,
$.33-1/3 par value per share or such other par value as may be established from
time to time.
COMMON STOCK EQUIVALENTS. "Common Stock Equivalents" shall have the same
meaning as in the Dow Standstill Agreement and shall be interpreted in a manner
consistent with any judicial interpretation of such term under the Pakhoed
Standstill Agreement, if such Pakhoed Standstill Agreement is in effect as of
the time such interpretation is made.
DOW STANDSTILL AGREEMENT. "Dow Standstill Agreement" means the agreement
between Purchaser and the Company, as amended and incorporated as Exhibit A.
ENVIRONMENTAL CLAIM. "Environmental Claim" means any notice of violation,
claim, demand, abatement order, designation as a "Potentially Responsible
Party," "Potentially Liable Property" or other notice or order by any
governmental authority or any Person for any damage, including, without
limitation, personal injury (including sickness, disease or death), tangible or
intangible property damage, contribution, indemnity, indirect or consequential
damages, damage to the environment or natural resources, nuisance, pollution,
contamination or other adverse effects on the environment, or for fines,
penalties, costs or restrictions, resulting from or based upon (i) the
existence of a Release (whether sudden or non-sudden or accidental or
non-accidental) of, or exposure to, any Hazardous Material in, into or onto the
environment at, in, by, from or in the vicinity of or related to any property
owned or leased by the Company or any of the Subsidiaries, (ii) the use,
generation, handling, transportation, storage, treatment or disposal of
Hazardous Materials in connection with the operation of any
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property owned or leased by the Company or any of the Subsidiaries, or (iii)
the violation, or alleged violation, of any statutes, ordinances, orders,
rules, regulations, permits, licenses or authorizations (including, without
limitation, all Environmental Laws) of or from any governmental authority
relating to environmental matters connected with any property owned or leased
by the Company or any of the Subsidiaries.
ENVIRONMENTAL LAWS. "Environmental Laws" means all applicable laws,
statutes, ordinances, orders, rules and regulations relating to environmental
matters, including, without limitation, those relating to the Release or
threatened Release of Hazardous Materials and to the generation, use, storage,
transportation, or disposal of Hazardous Materials, in any manner applicable to
Company or any of its Subsidiaries or any of their respective properties,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C. Section 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), the Occupational Safety and Health Act
(29 U.S.C. Section 651 et seq.) and the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. Section 11001 et seq.) and environmental
protection, including, without limitation, the National Environmental Policy
Act (42 U.S.C. Section 4321 et seq.) and applicable state or provincial laws,
each as amended or supplemented, and any similar or analogous local, state or
provincial and federal statutes and regulations promulgated pursuant thereto,
each as in effect as of the date of this Agreement.
HAZARDOUS MATERIALS. "Hazardous Materials" means (i) any chemical,
material or substance defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
waste," "restricted hazardous waste," or "toxic substances" or words of similar
import under applicable Environmental Laws; (ii) (A) oil, natural gas,
petroleum or petroleum derived substance, any drilling fluids, produced waters
and other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal fluid, any flammable substances or
explosives, any radioactive materials, any hazardous wastes or substances, any
toxic wastes or substances or (B) any other materials or pollutants that (1)
pose a hazard to any property of Company or any of its Subsidiaries or to
Persons on or about such property or to any other property that may be affected
by the Release of such materials or pollutants from property of Company or its
Subsidiaries or to Persons on or about such property or (2) cause such property
or such other property to be in violation of any Environmental Law; (iii)
asbestos, urea formaldehyde foam insulation, toluene, polychlorinated biphenyls
in excess of fifty parts per million; and (iv) any other chemical, material or
substance, exposure to which is prohibited, limited or regulated by any
applicable governmental authority.
KNOWLEDGE. "Knowledge" "known" and "to the best of Company's knowledge"
and derivations thereof, shall mean the actual knowledge of the Company's
officers after reasonable inquiry.
MARKET PRICE. "Market Price" means the average of the high and low prices
of the Common Stock quoted on any day on the New York Stock Exchange, or if not
listed thereon, any exchange on which the Common Stock may at the time be
listed, or, if there shall have been no sales on such exchange on such day, the
average of the mean between the bid and asked prices at the end of such day, or
if the Common Stock shall not be so listed, the average of the high and low
prices of the Common Stock on such day quoted on the National Association of
Securities Dealers, Inc. Automated Quotation System, or
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if the Common Stock is not so quoted, the average of the mean between the bid
and asked prices per share on such day in the over-the-counter market as
reported by a generally accepted reporting service.
OPTION. Subject to the terms set forth in this Agreement, "Option" means
the reciprocal rights of (i) the Company to put to Purchaser and (ii) the
Purchaser to call from the Company, 101,874 shares of the Series A Preferred
Stock.
ORIGINAL ADDITIONAL SHARES. "Original Additional Shares" means the shares
of the Company's common stock, $.33-1/3 par value per share with respect to
which Purchaser and the Company had previously agreed to purchase and sell,
which has been superseded by the terms of this amended and restated Agreement.
PAKHOED. "Pakhoed" shall have the same meaning as in the Dow Standstill
Agreement.
PAKHOED STANDSTILL AGREEMENT. "Pakhoed Standstill Agreement" shall have
the same meaning as in the Dow Standstill Agreement.
PERSON. "Person" means any individual, partnership, corporation, joint
venture, or other entity.
PREFERRED STOCK. "Preferred Stock" means shares of the Company's
preferred stock, no par value, as may be designated from time to time,
including Series A Preferred Stock.
RELEASE. "Release" means any uncontrolled or unpermitted release, spill,
emission, leaking, pumping, pouring, injection, escaping, deposit, disposal,
discharge, dispersal, leaching or migration into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), or into or out of any property, including the movement of any
Hazardous Material through the air, soil, surface water, groundwater or
property in violation of any applicable Environmental Law.
SEC DOCUMENTS. "SEC Documents" means the Company's Annual Report on Form
10-K for the years ended February 28, 1991, February 29, 1992, and February 28,
1993; its Quarterly Reports on Form 10-Q for each of the quarters ended May 31,
1993, August 31, 1993, and November 30, 1993; its Form 8-K dated June 24, 1991;
its Proxy Statement dated July 2, 1993 relating to the Company's 1993 Annual
Meeting of Shareholders; and all documents attached as Exhibits to or
incorporated by reference into the foregoing.
SERIES A PREFERRED STOCK. "Series A Preferred Stock" means the Series A
Junior Participating Convertible Preferred Stock as authorized by resolution of
the Company's Board of Directors on April 13, 1994 and the Certificate of
Designation for which is attached hereto as Exhibit B.
SHARES. "Shares" means the Company's Common Stock and its Series A
Preferred Stock as may be outstanding from time to time.
SUBSIDIARIES. "Subsidiaries" means Van Waters & Rogers Inc., a Washington
corporation, and Van Waters & Rogers Ltd./Van Waters & Rogers Ltee, a Canadian
corporation.
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ARTICLE II
PURCHASE AND SALE OF SHARES
2.1 PURCHASE AND SALE OF ADDITIONAL COMMON SHARES. Subject to the terms
and conditions set forth herein, at the Closing, the Company shall sell,
transfer, convey, assign, and deliver the Additional Common Shares to
Purchaser, and Purchaser shall acquire, purchase, and accept the Additional
Common Shares from the Company.
2.2 PURCHASE PRICE OF ADDITIONAL COMMON SHARES. The price for the
Additional Common Shares shall be $18.74 per share, for a total purchase price
of $37,480,000 for the Additional Common Shares, subject to Purchaser's right
of set-off as provided in Section 8.5 of this Agreement.
2.3 PAYMENT OF ADDITIONAL COMMON SHARES PURCHASE PRICE. The total
purchase price for the Additional Common Shares shall be delivered and paid by
Purchaser to the Company at the Closing in cash or by wire transfer to: UNIVAR
CORPORATION, Account #1461219, Seattle First National Bank, ABA # 125000024,
Attn. Dora Brown, NW Natl. Div., 358-3004.
2.4 PURCHASE OF ADDITIONAL PREFERRED SHARES. On and after the date
hereof and through and including the third anniversary of the date hereof (the
"Option Expiration"), the Company shall have the Option to sell, and the
Purchaser shall have the Option to purchase, up to 101,874 of the Additional
Preferred Shares, and, upon exercise of such Option by the Company or the
Purchaser, the Purchaser shall purchase and the Company shall sell such
Additional Preferred Shares, provided the terms and conditions set forth in
this Agreement have been fulfilled in all material respects.
2.5 PURCHASE PRICE OF ADDITIONAL PREFERRED SHARES. The price for the
Additional Preferred Shares shall be $93.70 per share (the "Purchase Price").
2.6 EXERCISE OF OPTION. The Company shall provide written notice to the
Purchaser, or the Purchaser shall provide written notice to the Company, of its
election to exercise the Option (the "Option Notice"). The Option Notice shall
specify the number of Additional Preferred Shares to be purchased and sold, the
purchase price calculated in accordance with Section 2.5, and, if the Option is
exercised by the Company, the proposed use of proceeds of the sale of the
Additional Preferred Shares. The Additional Preferred Shares shall be sold by
the Company and purchased by the Purchaser at one or two Additional Closings,
provided that, at the first Additional Closing, the Option shall be exercised
with respect to all or fifty percent (50%) of the Additional Preferred Shares,
and there shall be no more than two (2) Additional Closings arising from the
exercise of the Option. Purchaser shall select each Additional Closing Date,
but each Additional Closing Date shall be no later than 90 days after the date
of the applicable Option Notice.
2.7 CONDITIONS TO ADDITIONAL CLOSINGS. In addition to the conditions in
Article VII that are applicable to Additional Closings, the following shall be
conditions precedent to the Purchaser's obligation to purchase any Additional
Preferred Shares following an exercise of the Option by the Company:
(a) The Company will use the proceeds from the sale of Additional
Preferred Shares for purposes approved by a majority of the Board of the
Company which represent and enhance long term value to the shareholders of the
Company and which the Purchaser reasonably agrees, which agreement shall not be
unreasonably withheld, meet one or more
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of the following criteria: the use of proceeds (1) is an investment within the
industry of which the Company and the Purchaser are a part, (2) promotes the
globalization of the Company's business and/or the development of its
distribution business in North America, (3) enables the Company to
appropriately and effectively respond to environmental concerns and
requirements, or (4) enables the Company to expand, develop, and/or enhance its
ChemCare(R) business; prior to each Option Notice given by the Company, the
Company shall consult with the Purchaser regarding the proposed use of the
proceeds from such Option and shall give the Purchaser the opportunity to
present its views on the use of proceeds at a meeting of the Company's Board of
Directors;
(b) There shall have been no more than one (1) prior Additional Closing; and
(c) The Closing of the sale of the Additional Common Shares shall
have occurred.
2.8 DEFERRAL FEE. On or before April 30, 1995, April 30, 1996, and April
30, 1997, provided that an Additional Closing for the purchase of Additional
Preferred Shares has not occurred, Purchaser shall pay to the Company an annual
fee of $350,000 to compensate the Company at an assumed rate for additional
interest expense incurred as a result of deferring the exercise of the Option
as to the Additional Preferred Shares. In the event of one or more Additional
Closing(s) on or before April 30, 1997, the annual fee shall be proportionately
decreased at a rate of $3.44 per share of Series A Preferred Stock to take into
account the number of shares of Additional Preferred Shares purchased and
prorated based on the number of months during such year that the Additional
Preferred Shares were not outstanding. For example, if half of the Additional
Preferred Shares are purchased pursuant to the Option in the seventh month of
the second year and the remaining Additional Preferred Shares are purchased at
the end of the second year, then the fee due the Company for the second year
would be $175,000 and there would be no fee for the third year.
2.9 PAYMENT OF ADDITIONAL PREFERRED SHARES PURCHASE PRICE. The total
purchase price for the Additional Preferred Shares shall be paid at the
Additional Closings, subject to Purchaser's right of set-off as provided in
Section 8.5 of this Agreement, in accordance with wire or other reasonable
payment instructions given by the Company prior to such Additional Closings.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents, warrants, and agrees as follows:
3.1 ORGANIZATION AND EXISTENCE. Each of the Company and the Subsidiaries
is a corporation duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation with all requisite corporate
power to carry on its business as now conducted and to own and operate the
assets and properties now owned and operated by it. Each of the Company and
the Subsidiaries is duly qualified as a foreign corporation in each
jurisdiction in which the character and location of its assets and the nature
of its business requires such qualification except where the failure to be so
qualified will not have a material adverse effect on the business of the
Company and the Subsidiaries taken as a whole. The Company has delivered to
Purchaser complete and correct copies of the Certificates of Incorporation and
Bylaws
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<PAGE> 7
of the Company and the Subsidiaries as in effect on the date hereof. The
Subsidiaries are the only operating subsidiaries of the Company, and neither
the Company nor the Subsidiaries have any other operating subsidiaries.
3.2 AUTHORITY OF THE COMPANY. The Company has full corporate power and
authority to sell the Shares to Purchaser and the sale and transfer of the
Shares by the Company to Purchaser hereunder will vest title to the Shares in
Purchaser free and clear of any lien, pledge, charge, security interest,
adverse claim, or other encumbrance of any nature whatsoever. The execution,
delivery, and performance of this Agreement by the Company have been duly
authorized by all requisite corporate action and no further action is necessary
on the part of the Company to make this Agreement valid and binding upon the
Company in accordance with its terms. Purchaser has received copies of all
resolutions pertaining to such authorization and all such resolutions are in
full force and effect as of the date hereof.
3.3 CAPITALIZATION. The authorized capital stock of the Company consists
of 40,000,000 shares of Common Stock, of which 19,648,273 shares were issued
and outstanding and 2,370,229 shares were held in the Company's treasury, as of
April 1, 1994, and 750,000 shares of no par Preferred Stock, of which none is
outstanding. Series A Preferred Stock is the only series of preferred stock
which has been designated. As of April 1,1994, 1,045,774 shares were reserved
for issuance pursuant to stock options granted to the Company's employees (the
"Stock Options"). The Company has no other outstanding securities except for
indebtedness reflected in the SEC Documents. All of the issued and outstanding
shares (including the Shares) are or will be at the time of the Closing or the
Additional Closings, as the case may be, validly issued, fully paid, and
non-assessable, and have not and will not have been issued in violation of (1)
the preemptive rights of any stockholder of the Company or any other party or
(2) applicable federal, state, or foreign securities laws. The Shares are free
and clear of all liens, pledges, charges, security interests, adverse claims,
or other encumbrances of any nature whatsoever. Except for this Agreement, the
Pakhoed Standstill Agreement, the Shareholder Agreement between the Company and
Pakhoed Investeringen B.V. concerning Univar Europe N.V., and the Stock
Options, there are no outstanding subscriptions, options, rights, warrants,
convertible securities, or other agreements or commitments (contingent or
otherwise) obligating the Company to sell or transfer any of the Shares or
obligating the Company to issue or to transfer from treasury any additional
shares of, or any securities convertible into, the capital stock of the
Company. Except as set forth in the Dow Standstill Agreement and applicable
federal and state securities laws: (i) there are no restrictions or
qualifications of any kind on the sale or transfer of the Shares and (ii) no
proxy, voting trust, or other instrument, agreement, or document exists which
restricts or could restrict the right, power, or authority of the Purchaser to
vote the Shares as Purchaser deems desirable in its sole discretion.
3.4 NO BREACH. The execution and delivery by the Company of this
Agreement and of any other instrument contemplated hereby to which the Company
will be a party, and the consummation and performance of the transactions
contemplated hereby and thereby, have not resulted in, will not result in, and
do not constitute a conflict with, a breach or violation of, or a default or an
event that, with notice or lapse of time or both, would be a default, breach,
or violation of, or an event that would permit any party to terminate or to
accelerate the maturity of or any payment pursuant to:
(a) the Certificates of Incorporation or Bylaws of the Company or
any of the Subsidiaries;
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<PAGE> 8
(b) any term or provision of any lease, bond, promissory note,
conditional sales contract, commitment, indenture, mortgage, deed of trust, or
other agreement, instrument, indebtedness, or obligation to which the Company
or any of the Subsidiaries, is a party or by which any of them or any of their
respective assets or properties is bound;
(c) any license, franchise, permit, or other authorization,
governmental or otherwise, held by the Company or any of the Subsidiaries or
otherwise used in connection with the ownership and present conduct of the
business of the Company or any of the Subsidiaries; or
(d) to the best of the Company's knowledge, any law, judgment,
order, writ, injunction, decree, award, rule, or regulation of any court,
arbitrator, or other agency or body, governmental or otherwise.
Except compliance with the Securities Exchange Act of 1934, the execution and
delivery of this Agreement and the consummation and performance of the
transactions contemplated hereby do not require the approval, consent, or
authorization of, or any filing with or notice to, any federal, state, local,
or other agency or body, governmental or otherwise, or any other third party.
3.5 SEC DOCUMENTS. The Company has delivered to Purchaser a true and
complete copy of the SEC Documents. The Company has filed all documents
required to be filed with the SEC since May 1, 1986. Each of the SEC Documents
has been duly filed, and when filed was in substantial compliance with the
requirements of the applicable SEC form. Each of the SEC Documents was
complete and correct in all material respects as of its date and, as of its
date, did not contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances in which made, not misleading.
Except to the extent information contained in any SEC Document has been revised
or superseded by a later-filed SEC Document, none of the SEC Documents
currently contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made and taking
into account the date on which the SEC documents were filed, not misleading.
Except as may be disclosed in writing to the Purchaser in connection with the
purchase of the Additional Common Shares or pursuant to the SEC Documents,
since November 30, 1993, there has not been any material adverse change in the
condition (financial or otherwise) or results of operations of the Company.
The audited financial statements of the Company included in the SEC Documents
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated financial
position of the Company and its consolidated subsidiaries as at the dates
thereof and the consolidated results of their operations and changes in
financial position for the periods then ended. The unaudited financial
statements included in any SEC Documents comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto; and such unaudited financial
statements are fairly presented in conformity with generally accepted
accounting principles (except as otherwise permitted by Form 10-Q of the SEC)
applied on a basis substantially consistent with that of the audited financial
statements included in the SEC Documents subject to normal year-end audit
adjustments.
3.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the SEC
Documents or otherwise disclosed in writing to the Purchaser in connection with
the purchase of
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<PAGE> 9
the Additional Common Shares, the Company has not incurred, and none of its
assets or properties are subject to, any liabilities or obligations whether
accrued, absolute, contingent, invoiced or otherwise, whether due or to become
due and whether or not such liabilities are normally shown or reflected on a
balance sheet prepared in a manner consistent with generally accepted
accounting principles, other than:
(a) Estimated federal and state income and other taxes accrued in
the ordinary course of business of the Company since November 30, 1993; and
(b) Liabilities that, to the best of the Company's knowledge,
individually and in the aggregate do not have a material adverse effect on the
financial condition or business of the Company and the Subsidiaries taken as a
whole.
The Company is not in default in respect of any term or condition of any
material indebtedness or liability. There are no facts in existence on the
date hereof known to the Company that might reasonably serve as the basis for
any material liabilities or obligations of the Company not disclosed in this
Agreement, the SEC Documents, or the Schedules or Exhibits attached to this
Agreement.
3.7 TAX MATTERS. All material federal, state, county, local, foreign and
other taxes, including without limitation, income taxes, corporate franchise
taxes, sales and ad valorem taxes, assessments, penalties, and interest due and
payable by the Company on or before the date of this Agreement have been paid,
are adequately provided for in the Company's financial statements, or are being
contested in good faith, and the Company has filed (or obtained extensions for)
all tax returns and reports required to be filed by it with all applicable
taxing authorities, within the time and in the manner prescribed by law.
Except as otherwise disclosed in writing to the Purchaser in connection with
the purchase of the Additional Common Shares or in the SEC Documents, there are
no unpaid taxes which are or could become liens upon any of the property or
assets of the Company other than property taxes not yet due and payable.
Appropriate accruals have been made for all taxes attributable to all periods
prior to and including the Closing, but not yet due. There are no applicable
taxes, fees, or other governmental charges payable in connection with the
execution and delivery of this Agreement.
3.8 CERTAIN REAL PROPERTY MATTERS.
(a) REAL PROPERTY. The Company has previously provided the
Purchaser with a complete and accurate list (as of the date of such list) (the
"Facilities List") of real properties owned by the Company or any of the
Subsidiaries or covered by leases for more than 3,000 square feet to which the
Company or any of the Subsidiaries is a party (the "Property").
(b) GOVERNMENTAL RESTRICTIONS. The Company has not received, nor is
it aware of, any notifications, restrictions, or stipulations from the United
States of America, any state or any other governmental authority requiring any
work to be done on the Property or threatening the use of the Property, except
environmental matters disclosed in writing to the Purchaser in connection with
the purchase of the Additional Common Shares or which in the aggregate would
not have a material adverse effect on the Company and the Subsidiaries taken as
a whole. There are no pending or threatened condemnation proceedings affecting
any portion of the Property which is material to the operations of the Company
and the Subsidiaries taken as a whole.
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<PAGE> 10
(c) TITLE. Fee simple title to the Property listed on the
Facilities List as owned is currently vested in the Company or the applicable
Subsidiary, as the case may be, subject to no known mortgages, liens,
encumbrances, or other matters affecting title, except as disclosed in the SEC
Documents or on the Facilities List or as arise in the ordinary course of
business (including liens arising as a matter of law) and do not materially
impair the Company's or the applicable Subsidiary's ownership or use of such
Property taken as a whole.
(d) LEASES AND RENTS. All of the leases listed on the Facilities
List are valid and in full force, and there does not exist any material default
or event which, with notice or lapse of time or both, would constitute a
default under any of these leases and which would have a materially adverse
effect on the Company or the applicable Subsidiary.
(e) ZONING. To the best of the Company's knowledge, the Company or
the applicable Subsidiary has the right to use each Property in the use to
which it is now put, and neither the Company nor the applicable Subsidiary has
received notice of any zoning violation or change with regard to any such
Property that would prevent continuation of such use.
(f) ENVIRONMENTAL PROTECTION. To the best of the Company's
knowledge and except as disclosed in writing to the Purchaser in connection
with the purchase of the Additional Common Shares:
(i) the operations of the Company and its Subsidiaries, comply
in all material respects with all Environmental Laws, noncompliance with which
would have a material adverse effect on the operations, assets, or condition of
the Company and its Subsidiaries taken as a whole;
(ii) the Company and each of its Subsidiaries have obtained all
material permits under Environmental Laws necessary to their respective
operations, and all such permits are in good standing, and the Company and each
of its Subsidiaries are in compliance with all material terms and conditions of
such permits, the absence of, or noncompliance with, which would have a
material adverse effect on the operations, assets, or condition of the Company
and its Subsidiaries taken as a whole; and
(iii) neither the Company nor any of its Subsidiaries has any
liability in connection with any Release of any Hazardous Materials by the
Company or any of its Subsidiaries or the existence of any Hazardous Material
on under or about any property that would give rise to an Environmental Claim
that would have a material adverse effect on the operations, assets, or
condition of the Company and its Subsidiaries taken as a whole.
3.9 MATERIAL CONTRACTS. The Company has provided a list of all contracts
and agreements, written or oral, absolute or contingent, which involve an
annual commitment of $1 million or more and to which the Company or any
Subsidiary is a party, other than (a) those involving the purchase or sale of
inventory in the ordinary course of the Company's business, and (b) those
specifically listed in any other disclosure made pursuant to this Agreement or
in the SEC Documents. The Company has provided Purchaser access to each such
contract and agreement together with all amendments and modifications thereof.
The Company shall provide a copy of such contracts and agreements upon
Purchaser's request.
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<PAGE> 11
3.10 NO DEFAULT. There has been no default or event that with notice or
lapse of time, or both would constitute a default, in any material respect, of
any obligation to be performed by the Company, any Subsidiary, or any other
party under any contract or agreement described in Section 3.9 or in the SEC
Documents, nor has the Company waived any material right under any such
contract or agreement. The Company has never had a material uncured default on
the payment of any principal, premium, or interest on any indebtedness.
Neither the Company nor any Subsidiary has received notice that any party
intends to modify, cancel, or terminate any such contract or agreement.
3.11 PATENTS AND TRADEMARKS. The Company has provided the Purchaser with
a complete written list of all trademarks, trademark registrations or
applications, service marks, patents, trade names, copyrights, or copyright
registrations or applications owned or used by the Company and each Subsidiary,
together with a brief description of each. Except as disclosed to Purchaser in
writing in connection with the purchase of the Additional Common Shares, the
Company and each Subsidiary owns or possesses all trademarks, trademark
registrations or applications, service marks, patents, trade names, copyrights,
or copyright registrations or applications, the use of which is necessary in
connection with the proper and efficient operation of the business of the
Company and each Subsidiary as now conducted or as proposed to be conducted, or
in connection with the performance of any contract to which the Company or any
Subsidiary is a party, without any known conflict with the rights of others.
Neither Company nor any Subsidiary has, to the best of its knowledge, infringed
nor is now infringing upon any trademark, trade name, service mark, or
copyright belonging to any other Person whatsoever.
3.12 LICENSES AND PERMITS. Except as to matters covered by Section 3.8,
the Company has all known licenses, franchises, permits, easements,
certificates, consents, rights, and privileges that it reasonably believes are
necessary or appropriate to the proper and efficient conduct of the business of
the Company and each Subsidiary as now conducted or as proposed to be
conducted, without any known conflict with the rights of others. All such
items are in full force and effect and the Company and each Subsidiary are not
in default under any such items where such default would have a material
adverse effect on the Company and its Subsidiaries taken as a whole.
3.13 INSURANCE. The Company has previously provided a written
description (including coverage amounts) of primary and first level excess
insurance policies (i) currently carried by the Company in connection with the
ordinary conduct of the Company's business and in connection with assets and
properties owned or leased by the Company (except employee benefit coverages)
or (ii) issued since 1950 under which the Company or any of its subsidiaries
engaged in the present or past chemical business may be entitled to recovery
for losses sustained as a result of any claim or proceeding involving Hazardous
Materials.
3.14 LITIGATION, LABOR DISPUTES, PRODUCT WARRANTIES AND PRODUCT LIABILITY.
(a) LITIGATION. Except as set forth in the SEC Documents, or as
otherwise disclosed in writing to Purchaser in connection with the purchase of
the Additional Common Shares, no known claim, action, suit, investigation or
other proceeding, reasonably believed to involve $1,000,000 or more, against
the Company or any Subsidiary or against any asset of the Company or any
Subsidiary is pending or, to the Company's knowledge, threatened. As of
February 28, 1994, reserves for claims reported were $3,400,000 and reserves
for incurred but not reported claims were $2,700,000. It is the Company's
present best judgment that no such claim, action, suit, investigation or other
proceeding would (a) result in any judgment, order, decree or other
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<PAGE> 12
determination that would have a material adverse effect on the Company; or (b)
prevent or impede the performance of this Agreement or of any of the agreements
related to this Agreement.
(b) LABOR. There is not pending, nor, to the Company's knowledge,
threatened, any labor or collective bargaining dispute, petition, strike or
work stoppage, organizing campaign, picketing (whether organized or not) or
advocated boycotting, or slowdown that would affect a material portion of the
business of the Company. There is not pending, nor to the Company's knowledge
is there threatened, any charge or complaint against the Company by the
National Labor Relations Board (or any equivalent agency outside the United
States) or any representative thereof; nor to the Company's knowledge is there
any valid basis for finding that the Company has committed any unfair labor
practice as defined in the National Labor Relations Act of 1947, as amended, or
any similar law of any jurisdiction outside the United States. The Company has
provided Purchaser with true and complete summary of all union contracts,
collective bargaining agreements, consent decrees or affirmative action plans.
(c) PRODUCT WARRANTIES AND PRODUCTS LIABILITIES. Except as
disclosed to the Purchaser in writing, there is not pending, nor to the
Company's knowledge threatened, any claim, action, suit or other proceeding
against the Company with respect to products sold by the Company which would
have a material adverse effect on the Company and Subsidiaries taken as a
whole.
3.15 COMPLIANCE WITH LAWS. Except with respect to environmental matters,
which are addressed in Section 3.8, the Company and the Subsidiaries have, to
the best of their knowledge, complied, and are in compliance, in all material
respects, with all laws, ordinances, rules, regulations, requirements, and
orders of federal, state, or local governments and/or their agencies to which
they are subject, (including, without limitation, those relating to zoning,
building, immigration, and equal employment opportunities), the violation of
which does or could materially adversely affect the prospects, earnings,
properties, or condition, financial or otherwise, of the Company and the
Subsidiaries. The Company and the Subsidiaries have obtained all material
licenses, consents, permits, and other governmental authorizations presently
required for the conduct of their businesses and operations as currently
conducted and for the ownership and operation of the assets and properties now
owned and operated by them. All such licenses, consents, permits and
authorizations are in full force and effect, and the Company and the
Subsidiaries are in compliance therewith.
3.16 EMPLOYEE BENEFIT PLANS. Except for the employee benefit plans
described in the last sentence of this Section 3.16 or as disclosed in writing
to the Purchaser in connection with the purchase of the Additional Common
Shares, there are no pension, bonus, profit sharing, stock option, stock
incentive, savings, or other employee benefit plans of any kind maintained by
the Company or to which the Company contributes or is required to contribute.
Except as so disclosed, all such plans and their related trusts, if any, comply
with the provisions of and have been administered in compliance with the
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and all other applicable laws, rules, and regulations, and any
necessary governmental approval of the plans has been obtained. True and
complete copies of (or descriptions of) the employee benefit plans have been
furnished to Purchaser.
3.17 BOOKS AND RECORDS. The books and records of account of the Company
and each Subsidiary are complete and correct and have been maintained in
accordance with generally accepted accounting principles; the minute books and
other records of the
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<PAGE> 13
Company and each Subsidiary fairly reflect actions taken at the meetings of the
Company and each Subsidiary and their respective Boards of Directors and
shareholders.
3.18 FULL DISCLOSURE. No representation, warranty, or other statement
contained in this Agreement or in any other document, certificate, or written
statement or disclosure furnished to Purchaser in connection with the
transactions contemplated by this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading. There is no fact
(specifically relating to the Company or any Subsidiary as distinguished from
general industry and general economic facts) known to the Company or any
Subsidiary that materially adversely affects the prospects, earnings,
properties, or condition, financial or otherwise, of the Company or any
Subsidiary that has not been disclosed herein or in such other documents,
certificates, and statements furnished to Purchaser for use in connection with
the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents, warrants, and agrees as follows:
4.1 ORGANIZATION AND EXISTENCE. Purchaser is a corporation duly
organized, validly existing, and in good standing under the laws of the state
of Delaware, and has all requisite corporate power to enter into and perform
this Agreement and the transactions contemplated hereby in the manner provided
herein.
4.2 AUTHORITY OF PURCHASER. As of the Closing, the execution, delivery,
and performance by Purchaser of this Agreement shall have been duly authorized
by the Board of Directors of Purchaser, and no further corporate action shall
be necessary on the part of Purchaser to make this Agreement the legal, valid,
and binding obligation of Purchaser enforceable against it in accordance with
its terms.
4.3 PURCHASE FOR INVESTMENT. Purchaser is acquiring the Shares for its
own account for investment purposes and not with a view toward resale or
redistribution. Purchaser may only dispose of the Shares in accordance with
the Dow Standstill Agreement and will not offer to sell or otherwise dispose of
any Shares in violation of applicable federal and state securities laws.
Purchaser has had sufficient opportunities to discuss and review the Company's
business, management and financial affairs.
ARTICLE V
CONDITIONS PRECEDENT TO PURCHASER'S PERFORMANCE
5.1 CONDITIONS. The obligations of Purchaser to purchase the Additional
Common Shares and any Additional Preferred Shares under this Agreement are
subject to the satisfaction, at or before the Closing Date, with respect to the
Additional Common Shares, and the Additional Closings, with respect to the
Additional Preferred Shares, of all the conditions set out below in this
Article 5. Purchaser may waive any or all of these conditions in whole or in
part without prior notice; provided, however, that no such waiver of a
condition shall constitute a waiver by Purchaser of any of its other rights or
remedies, at law or in equity, if the Company shall be in material
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<PAGE> 14
default of any of its representations, warranties, or covenants under this
Agreement and such default is not actually known to Purchaser on the Closing
Date or the Additional Closing Date, as the case may be.
5.2 ACCURACY OF REPRESENTATIONS. Except as otherwise permitted by this
Agreement, all representations and warranties by the Company in this Agreement,
the Schedules hereto, or in any written statement delivered to or to be
delivered to Purchaser under this Agreement shall be true on and as of the
Closing Date as made at that time. Prior to each Additional Closing Date, the
Company shall update in writing the representations and warranties including
any changes to the exceptions previously disclosed. The representations and
warranties set forth in Sections 3.1, 3.2, 3.4, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11,
3.12, 3.13, 3.14, 3.15, 3.16, and 3.18 shall each be substantially the same
provided that disclosed exceptions may differ so long as the representations
and warranties, as modified, do not reflect a material adverse change to the
Company and its Subsidiaries taken as a whole.
5.3 PERFORMANCE OF THE COMPANY. The Company shall have performed,
satisfied, and complied in all material respects with all covenants,
agreements, and conditions required by this Agreement to be performed or
complied with by it on or before the Closing Date and the Additional Closing
Dates, as the case may be.
5.4 ABSENCE OF LITIGATION. No action, suit, or proceeding before any
court or any governmental body or authority, pertaining to the transactions
contemplated by this Agreement or to their consummation, shall have been
instituted or threatened on or before the Closing Date and the Additional
Closing Dates, as the case may be.
5.5 CONSENTS. The Board of Directors of the Purchaser (or Executive
Committee thereof) shall have approved the transactions contemplated by this
Agreement. All necessary agreements and consents of any parties to the
consummation of the transactions contemplated by this Agreement, or otherwise
pertaining to the matters covered by it, shall have been obtained by the
Company and delivered to Purchaser.
5.6 APPROVAL OF DOCUMENTS. The form and substance of all certificates,
instruments, opinions, and other documents delivered to Purchaser under this
Agreement shall be satisfactory in all reasonable respects to Purchaser and its
counsel.
ARTICLE VI
CONDITIONS PRECEDENT TO THE COMPANY'S PERFORMANCE
6.1 CONDITIONS. The obligations of the Company to sell and transfer the
Shares under this Agreement are subject to the satisfaction, at or before the
Closing Date and the Additional Closing Dates, as the case may be, of all the
following conditions of this Article 6. The Company may waive any or all of
these conditions in whole or in part without prior notice; provided, however,
that no such waiver of a condition shall constitute a waiver by the Company of
any of their other rights or remedies, at law or in equity, if Purchaser shall
be in material default in any of its representations, warranties, or covenants
under this Agreement and such default Is not actually known to the Company on
the Closing Date or the Additional Closing Dates, as the case may be.
6.2 PURCHASER'S WARRANTIES. All representations and warranties by
Purchaser contained in this Agreement or in any written statement delivered by
Purchaser under
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<PAGE> 15
this Agreement shall be true on and as of the Closing Date and the Additional
Closing Dates, as the case may be, as though made as of that date.
6.3 PERFORMANCE OF PURCHASER. Purchaser shall have performed, satisfied,
and complied with all covenants, agreements, and conditions required by this
Agreement to be performed, satisfied or complied with by it on or before the
Closing Date and the Additional Closing Dates, as the case may be.
6.4 ABSENCE OF LITIGATION. No action, suit or proceeding before any
court or any governmental body or authority, pertaining to the transactions
contemplated by this Agreement or to their consummation, shall have been
instituted threatened on or before the Closing Date and the Additional Closing
Dates, as the case may be.
6.5 APPROVAL OF DOCUMENTS. The form and substance of all certificates,
instruments, opinions, and other documents delivered to the Company under this
Agreement shall be satisfactory in all reasonable respects to the Company and
its counsel.
ARTICLE VII
THE CLOSING
7.1 CLOSING. The Closing with respect to the transactions contemplated
by this Agreement with respect to the sale of the Additional Common Shares
shall be held on May 13, 1994, 9:00 a.m. local time at Midland, Michigan or at
such other time, place, and date as may be mutually agreed to by the parties
(the "Closing Date").
7.2 THE COMPANY'S OBLIGATIONS. At the Closing, the Company shall deliver
to Purchaser the following:
(a) A certificate representing the Additional Common Shares in the
name of the Purchaser;
(b) An executed counterpart of the Dow Standstill Agreement; and
(c) The updates to all Schedules or other written disclosures.
7.3 PURCHASER'S OBLIGATIONS. At the Closing, Purchaser shall deliver to
the Company the following:
(a) $37,480,000 in cash or by wire transfer, as provided in Section
2.3 hereof; and
(b) An executed counterpart of the Dow Standstill Agreement.
ARTICLE VII
POST CLOSING
8.1 NATURE OF STATEMENTS. All statements contained herein, in any
Schedule or Exhibit hereto, or in any certificate or other written instrument
delivered by or on behalf of the Company or Purchaser pursuant to this
Agreement, or in connection with
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the transactions contemplated hereby, shall be deemed representations and
warranties by the Company or Purchaser, as the case may be.
8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Regardless of any
investigation at any time made by or on behalf of any party hereto, or of any
information any party may have in respect thereof, all covenants, agreements,
representations, and warranties made hereunder or pursuant hereto or in
connection with the transactions contemplated hereby shall survive the Closing
and each Additional Closing until the later of February 28, 1997 or one year
after the applicable Additional Closing Date.
8.3 EXPENSES. The Company and Purchaser each (i) represent and warrant
that they have not taken and will not take any action that would cause the
other party to have any obligation or liability to any person for a finder's or
broker's fee, and (ii) agree to indemnify the other party for breach of the
foregoing representation and warranty, whether or not the Closing occurs. Each
of the parties hereto shall pay all costs and expenses incurred by it or on its
behalf in connection with this Agreement and the transactions contemplated
hereby, including, without limiting the generality of the foregoing, fees and
expenses of its own financial consultants, accountants, and counsel.
8.4 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify,
defend, and hold harmless Purchaser and its permitted successors and assigns
from and against any assessment, claim, demand, obligation, liability, loss,
cost, damage, or expense, including, without limitation, interest, penalties,
and reasonable attorneys' fees resulting from, arising out of, or relating to,
any:
(a) Breach or default in the performance by the Company of any
covenant or agreement of the Company contained in this Agreement;
(b) Breach of warranty or inaccurate or erroneous representation
made by the Company herein or in any Schedule or Exhibit hereto or in any
certificate or other instrument delivered by or on behalf of the Company
pursuant hereto; or
(c) Liability arising out of any and all actions, suits,
proceedings, claims, demands, judgments, costs, and expenses incident to any of
the foregoing.
Purchaser and its successors and permitted assigns shall promptly notify the
Company of any such liability, breach of warranty, inaccuracy,
misrepresentation, or any other claim arising under the foregoing
indemnification provision. The Company may contest and defend in good faith
any claim of third parties covered by this Section 8.4, provided such contest
is made without cost or prejudice to Purchaser, and provided the Company
notifies Purchaser within thirty (30) days of its receipt of notice thereof of
the Company's desire to contest the claim, but no later than 2 business days
prior to the deadline for responsive pleadings. If the Company does not notify
Purchaser of its desire to contest the claim, the Company shall reimburse
Purchaser on demand for any payment actually made by Purchaser at any time
after the Closing Date with respect to any liabilities, obligations,
expenditures, or claims to which the foregoing indemnity relates.
8.5 PURCHASER'S SET-OFF. In the event Purchaser incurs any liabilities,
losses, damages, costs, or expenses resulting from, or related to any breach
of, or failure by the Company to perform, any of their representations,
warranties, covenants, or agreements in this Agreement, or in any Schedule,
Exhibit, certificate, or other instrument furnished or to be furnished by the
Company thereunder, and/or in the event
Page 16 of 20
<PAGE> 17
the Company becomes obligated to indemnify Purchaser pursuant to the terms
hereof, Purchaser may, at its option and without prejudice to any right of
Purchaser to proceed directly against the Company, be entitled to set-off all
or any portion of the amount of any such liability, loss, damage, or expense or
indemnity to which Purchaser shall be entitled hereunder against the unpaid
amounts due under this Agreement. The exercise of such right of set-off by
Purchaser hereunder shall be evidenced by means of a notice to such effect
given by Purchaser to the Company. Upon the exercise by Purchaser of its right
to set-off hereunder, the amount to which Purchaser is entitled to set-off
shall be, and is deemed to be, applied in reduction of, and shall constitute a
payment of, the amounts due under this Agreement to the extent specified in the
notice of set-off.
8.6 INDEMNIFICATION BY PURCHASER. Purchaser shall indemnify, defend, and
hold harmless the Company and its permitted successors and assigns from and
against any assessment, claim, demand, obligation, liability, loss, cost,
damage, or expense, including, without limitation, interest, penalties, and
reasonable attorneys' fees resulting from, arising out of, or relating to, any:
(a) Breach or default in the performance by Purchaser of any
covenant or agreement of Purchaser contained in this Agreement;
(b) Breach of warranty or inaccurate or erroneous representation
made by Purchaser herein or in any Schedule or Exhibit hereto or in any
certificate or other instrument delivered by or on behalf of Purchaser pursuant
hereto; or
(c) Liability arising out of any and all actions, suits,
proceedings, claims, demands, judgments, costs, and expenses incident to any of
the foregoing.
The Company and its successors and assigns shall promptly notify Purchaser of
any such liability, breach of warranty, inaccuracy, misrepresentation, or any
other claim arising under the foregoing indemnification provision. Purchaser
may contest and defend in good faith any claim of third parties covered by this
Section 8.6, provided such contest is made without cost or prejudice to the
Company, and provided Purchaser notifies the Company within thirty (30) days of
Purchaser's receipt of notice thereof that Purchaser intends to contest the
claim, but no later than 2 business days prior to the deadline for responsive
pleadings. If Purchaser does not notify the Company of its intention to
contest the claim, Purchaser shall reimburse the Company on demand for any
payment actually made by the Company at any time after the Closing Date with
respect to any liabilities, obligations, expenditures, or claims to which the
foregoing indemnity relates.
8.7 NOTICES. All notices, requests, consents, and other communications
hereunder shall be in writing and shall be deemed to have been delivered on the
date first (a) personally delivered (b) received by facsimile or (c) recorded
as delivered by overnight courier, if addressed as follows:
(a) if to the Company, to: Univar Corporation
6100 Carillon Point
Kirkland, WA 98033
Attn: General Counsel
Facsimile: (206) 889-4136
With a copy to: Preston Gates & Ellis
5000 Columbia Center
Page 17 of 20
<PAGE> 18
701 Fifth Avenue
Seattle, WA 98104-7078
Attn: Richard B. Dodd
Facsimile: (206) 623-7022
(b) if to Purchaser, to: The Dow Chemical Company
2030 Willard H. Dow Center
Midland, MI 48674
Attn: Director
of Mergers and Acquisitions
Facsimile: (517) 636-1830
With a copy to: The Dow Chemical Company
2030 Willard H. Dow Center
Midland, MI 48674
Attn: General Counsel
Facsimile: (517) 636-0861
Any party may change its address for purposes of this Section 8.7 by giving the
other parties written notice of the new address in the manner set forth above.
8.8 ARBITRATION. Any controversy or claim arising out of, or related to,
this Agreement, or the making, performance, or interpretation thereof, shall be
settled by arbitration in Chicago, Illinois in accordance with the rules of the
American Arbitration Association then existing, or the rules of any other
comparable organization in the event the American Arbitration Association shall
not then be in existence, and judgment on the arbitration award may be entered
in any court having jurisdiction over the subject matter of the controversy.
8.9 SPECIFIC PERFORMANCE. Each party's obligations under this Agreement
are unique. If any party should default in its obligations under this
Agreement, the parties each acknowledge that it would be extremely
impracticable to measure the resulting damages; accordingly, the non-defaulting
party, in addition to any other available rights or remedies, may sue in equity
for specific performance, and the parties each expressly waive the defense that
a remedy in damages will be adequate. Notwithstanding any breach or default by
any of the parties of any of their respective representations, warranties,
covenants, or agreements under this Agreement, if the purchase and sale
contemplated by it shall be consummated at the Closing, each of the parties
waives any rights that it or he may have to rescind this Agreement or the
transaction consummated by it; provided, however, this waiver shall not affect
any other rights or remedies available to the parties under this Agreement or
under the law except for defaults or breaches actually known to such parties on
the Closing Date or Additional Closing Date, as the case may be.
8.10 COSTS. If any legal action or an arbitration or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged
dispute, breach, default, or misrepresentation in connection with any of the
provisions of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys' fees and other costs
incurred in that action or proceeding, in addition to any other relief to which
it or they may be entitled.
8.11 Assignment. This Agreement may not be assigned by any party hereto
without the prior written consent of the other parties hereto. Subject to the
foregoing, this Agreement is binding upon the successors and assigns of the
parties hereto.
Page 18 of 20
<PAGE> 19
ARTICLE IX
MISCELLANEOUS
9.1 CONFIDENTIALITY. The parties agree that, except as may be required
by law, no public release or other disclosure of information concerning this
Agreement, the proposed transaction, the Company or the business affairs of the
Company shall be made subsequent to the date hereof, including subsequent to
the Closing, unless and until mutual agreement is reached in writing on any
such publicity or other disclosure.
9.2 SECTION AND PARAGRAPH HEADINGS. The Article and Section headings in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
9.3 CHANGES, WAIVERS, ETC. Neither this Agreement nor any provision
hereof may be changed, waived, discharged, or terminated orally, but only by a
statement in writing signed by the party against which enforcement of the
change, waiver, discharge, or termination is sought.
9.4 ENTIRE AGREEMENT. This Agreement and the Exhibits, Schedules,
certificates, and documents referred to herein constitute the entire agreement
of the parties hereto, and supersede all prior understandings with respect to
the subject matter hereof. All Exhibits and Schedules attached to this
Agreement are deemed to be fully incorporated herein by this reference for all
purposes, as though fully set forth at length herein.
9.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same instrument.
9.6 SEVERABILITY. In the event that a court of competent jurisdiction
determines that any portion of this Agreement is in violation of any statute or
public policy, then only the portions of this Agreement that violate such
statute or public policy shall be stricken. All portions of this Agreement
that do not violate any statute or public policy shall continue in full force
and effect. Any court order striking any portion of this Agreement shall
modify the stricken terms as narrowly as possible to give as much effect as
possible to the intentions of the parties pursuant to this Agreement.
9.7 GOVERNING LAW. This Agreement shall be construed in accordance with,
and governed by, the laws of the State of Washington.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
UNIVAR CORPORATION
By: /S/ JAMES W. BERNARD
Its: President And Chief Executive Officer
Page 19 of 20
<PAGE> 20
THE DOW CHEMICAL COMPANY
By:
Its:
THE DOW CHEMICAL COMPANY
By: /S/ ENRIQUE SOSA
Its: Senior Vice President
Page 20 of 20
<PAGE> 1
AMENDED AND RESTATED
STANDSTILL AGREEMENT
THIS AMENDED AND RESTATED STANDSTILL AGREEMENT (the "Agreement") is made
this 13th day of May, 1994, by and between UNIVAR CORPORATION, a Delaware
corporation ("Company"), and THE DOW CHEMICAL COMPANY, a Delaware corporation
("Dow").
RECITALS
A. Company and Dow initially entered into this Agreement as of June 24,
1991 along with a Stock Purchase Agreement (as defined below). Pursuant to the
Stock Purchase Agreement, Dow shall acquire from Company 2,000,000 shares of
Common Stock and may, upon circumstances described in the Stock Purchase
Agreement, acquire up to 101,874 shares of Series A Preferred Stock of Company,
in accordance with the terms of the Stock Purchase Agreement.
B. The parties seek to regulate the acquisition and disposition by Dow of
Company's Voting Securities, provide for Dow representation on Company's Board,
and generally foster a constructive and mutually beneficial relationship.
C. Dow and Company acknowledge that Company has made, prior to the
initial date hereof, a careful evaluation of Dow's investment objectives with
regard to its ownership of Voting Securities, and the compatibility of Dow'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, Dow's
ownership of Voting Securities would present an unusual opportunity for it to
gain an unusual degree of influence over Company and Company might have reached
a different decision with regard to entering into this Agreement and the Stock
Purchase Agreement; that, therefore, the provisions of Articles II through IV
were and continue to be a material inducement to Company to enter into and
amend this Agreement and the Stock Purchase 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 Dow not come to rest in the hands of any single holder or group of
holders other than Dow, and Dow's ownership of Voting Securities not be
increased, other than as provided for in this Agreement, the Stock Purchase
Agreement, or with the consent of Company. Dow acknowledges that such purposes
are reasonable and that the provisions of Articles II through IV are reasonable
in view of such purposes.
D. The parties desire to amend and restate this agreement
contemporaneously with the amendment and restatement of the Stock Purchase
Agreement. Provisions of the existing agreement with no current or future
effect have been deleted.
NOW, THEREFORE, in consideration of the agreements and covenants set forth
herein and in the Stock Purchase Agreement, and for other good and valuable
consideration, the parties agree as follows:
ARTICLE I
DEFINITIONS
<PAGE> 2
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 BENEFICIAL OWNER. "Beneficial Owner" and "Beneficial Ownership" and
other derivations thereof shall have the same meaning as under Rule 13d-3 (as
now in effect) adopted pursuant to Section 13(d) of the Exchange Act.
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 DOW AFFILIATE. "Dow Affiliate" means any Affiliate of Dow.
1.11 DOW AFFILIATED DIRECTOR. "Dow Affiliated Director" means any member
of the Board who has been designated by Dow under Article VI for nomination or
appointment as a director of Company.
1.12 EFFECTIVE DATE. "Effective Date" means the 13th day of May, 1994.
1.13 EXCHANGE ACT. "Exchange Act" means the Securities Exchange Act of
1934, as amended.
<PAGE> 3
1.14 HOLDER. "Holder" means Dow and any Person to whom the registration
rights under Article VII have been transferred in compliance with Section 7.7.
1.15 INVESTMENT BANKING FIRM. "Investment Banking Firm" means a
nationally recognized investment banking firm.
1.16 MARKET DISPOSITION PROGRAM. See Section 3.9(a).
1.17 MARKETABLE SECURITIES. See Section 3.13(a).
1.18 NOTICE OF EXERCISE. See Section 3.9.(b)(iii).
1.19 NOTICE OF ISSUE. See Section 2.6.
1.20 NOTICE OF PROPOSED SALE. See Section 3.9(a).
1.21 NOTICE OF PROPOSED COMPANY PURCHASE. See Section 3.12.
1.22 PAKHOED. Pakhoed means, collectively, Pakhoed Investeringen B.V., a
Netherlands corporation ("Parent"), Pakhoed Holding, N.V., a Netherlands
corporation ("Holding"), Pakhoed USA, Inc., a Delaware corporation, and any
Affiliates of said corporations.
1.23 PAKHOED AFFILIATED DIRECTOR. "Pakhoed Affiliated Director" means
any member of the Board who has been designated by Pakhoed under the Pakhoed
Standstill Agreement.
1.24 PAKHOED STANDSTILL AGREEMENT. The "Pakhoed Standstill Agreement"
means that certain Standstill Agreement among the Company, and Pakhoed dated as
of September 19, 1986, including any and all amendments thereto.
1.25 PERCENTAGE LIMITATION. See Section 2.2.
1.26 PERMITTED PERCENTAGE. "Permitted Percentage" means the Percentage
Limitation or, if the percentage of Common Stock Equivalents owned by Dow
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 of
rights to vote for the election of directors as a result of ownership of any
Voting Securities other than Common Stock, (b) Dow's acquisitions of Voting
Securities with Board approval in accordance with Section 2.8, or in accordance
with the Stock Purchase Agreement, or (c) Dow'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 Dow 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, Dow either does not or is not permitted by this Agreement to
purchase its full Permitted Percentage of such issuance.
1.27 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.
<PAGE> 4
1.28 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.
1.29 PRIVATE SALE. See Section 3.9(a).
1.30 SERIES A PREFERRED STOCK. "Series A Preferred Stock" means the
Series A Junior Participating Convertible Preferred Stock of the Company, as
created by a Certificate of Designation adopted by resolution of the Board on
April 13, 1994.
1.31 STOCK PURCHASE AGREEMENT. "Stock Purchase Agreement" means the
Agreement of Purchase and Sale of Stock originally dated June 24, 1991 between
Dow and Company, including any and all amendments thereto.
1.32 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 "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.
1.33 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.
1.34 UNAFFILIATED DIRECTOR. "Unaffiliated Director" means a director on
the Board who is neither a Dow Affiliated Director nor a Pakhoed Affiliated
Director.
1.35 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.
ARTICLE II
RESTRICTIONS ON ACQUISITION OF ADDITIONAL SHARES BY DOW
2.1 NO PURCHASES BEYOND PERCENTAGE LIMITATION. Except as otherwise
permitted herein and except as may occur as a consequence of Dow's acquisition
of Series A Preferred Stock pursuant to the Stock Purchase Agreement, Dow shall
not, directly or indirectly, acquire any Voting Securities beyond its
"Percentage Limitation". The "Percentage Limitation" shall be 21% or such
greater percentage of Common Stock Equivalents as Dow may then own in
accordance with this Agreement, but in no event greater than 27%.
2.2 PERMITTED PURCHASES. If Dow's aggregate ownership of Common Stock
Equivalents falls below its then Percentage Limitation, Dow may acquire
additional shares of Common Stock, up to its Percentage Limitation, at any time
by open market purchases, partial tender offer, or private transaction. If the
Common Stock Equivalents increase at any time and, as a consequence thereof
Dow's aggregate
<PAGE> 5
ownership of Common Stock Equivalents falls below its then
Percentage Limitation, Dow may acquire additional shares of Common Stock, up to
its Percentage Limitation, as follows:
(a) at any time by open market purchases, partial tender offer, or
private transaction; and/or
(b) Dow may, in accordance with Section 2.3, purchase unissued or
treasury shares of Common Stock from Company.
2.3 PROCEDURES CONCERNING DOW'S ACQUISITION OF COMMON STOCK FROM COMPANY
IN RESPONSE TO INCREASES IN COMMON STOCK EQUIVALENTS.
(a) Within thirty (30) days after any increase in Common Stock
Equivalents (other than an increase previously notified to Dow under Section
2.5), Company shall give Dow written notice setting forth the number of Common
Stock Equivalents prior to the increase, the number of Common Stock Equivalents
after the increase, Dow's then Percentage Limitation, the number of shares of
Common Stock Dow 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 2.2(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) Dow 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. Dow shall have fifteen (15) days
from receipt of Company's notice pursuant to Section 2.3(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 Dow delivers its notice to Company, there shall be a binding agreement
between Dow and Company for the purchase and sale of the number of shares of
Common Stock elected by Dow. Dow shall pay the purchase price to Company in
immediately available funds, and Company shall deliver certificates
representing the shares to Dow, on a date specified by Dow in its notice, which
date shall not be more than twenty (20) days after Dow delivers its notice to
Company.
2.4 LIMITATION ON DOW'S RIGHT TO PURCHASE COMMON STOCK PURSUANT TO
SECTION 2.2 IN THE EVENT OF A BUSINESS ACQUISITION BY COMPANY.
<PAGE> 6
(a) Notwithstanding Section 2.2, Dow 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
Unaffiliated Directors and notice thereof was given to Dow, 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, Dow shall have all rights
under Section 2.2 to purchase shares of Common Stock up to its Percentage
Limitation. For purposes of Section 2.3, Company shall give notice to Dow in
accordance with Section 2.3(a) within thirty (30) days after the end of the one
year period, and the purchase price to be paid by Dow to purchase shares from
Company shall be established in accordance with Section 2.3(b)(i) as of the
date of the closing of the business acquisition. Except as modified by the
preceding sentence, the provisions of Section 2.3 shall govern any such
purchase.
(b) The limitation contained in Section 2.4 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 (15%), Dow shall have
all rights under Section 2.2 to purchase Common Stock in connection with such
increase over fifteen (15%).
2.5 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
Dow's aggregate ownership of Common Stock Equivalents would fall below its then
Percentage Limitation, Company shall give Dow 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. [See also notice
requirements in section 3.13 below.] Dow shall have the right to purchase from
Company a number of shares of Common Stock equal to its then Percentage
Limitation multiplied times the gross number of Common Stock Equivalents to be
issued including any shares which Pakhoed or Dow may elect to purchase pursuant
to either this Agreement or the Pakhoed Standstill Agreement. Dow 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 Dow
delivers its election to Company, there shall be a binding agreement between
Dow and Company for the purchase and sale of the number of shares of Common
Stock elected by Dow. 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 Dow's consent the purchase price paid
by Dow 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.
Dow shall pay the purchase price to Company in immediately available funds, and
Company shall deliver certificates representing the shares of Common Stock to
Dow, on the date of Company's issuance of the Voting Securities.
2.6 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 Dow or any Person acting in concert with Dow) to acquire
Voting Securities, Dow may make a tender offer for up to an equivalent number of
shares of such Voting
<PAGE> 7
Securities as are sought to be purchased by the party making the other tender
offer. If Dow initiates a tender offer under this Section 2.6, the tender
offer may be on such terms as Dow 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, Dow owns in the aggregate more
than 27% of the Common Stock Equivalents, Company shall have the right,
exercisable at any time during the six month period following completion of
Dow's tender offer, to purchase from Dow a number of shares of such Voting
Securities as will cause Dow to own in the aggregate 27% of the Common Stock
Equivalents following such purchase. Company shall, within said six (6) month
period, notify Dow 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 Dow, there shall be a binding agreement between
Dow 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 Dow in
the tender offer to the tendering shareholders, plus a prorata share of the
costs and expenses incurred by Dow in conducting said tender offer. The
prorata share of costs and expenses shall be the aggregate of all costs and
expenses directly incurred by Dow, divided by the number of shares of Voting
Securities acquired in the tender offer. Company shall pay the purchase price
to Dow in immediately available funds, and Dow 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 Dow.
(d) If Company's purchase is subject to or is voluntarily submitted
for shareholder approval, Dow shall vote all its Voting Securities in favor of
the purchase.
(e) If Company does not elect to purchase shares from Dow, or elects
to purchase only a portion of the shares under Section 2.6(b), Dow shall be
entitled to retain the shares over 27%, but the Percentage Limitation shall
remain at 27% (or such lesser percentage as it shall become from time to time
thereafter).
2.7 PERMITTED PURCHASE WITH BOARD APPROVAL. Notwithstanding any other
provision of this Agreement, Dow may purchase additional shares of Voting
Securities at any time, if a majority of the Unaffiliated Directors approve
such purchase in advance.
2.8 PERMITTED PURCHASE BY AND REQUIREMENTS FOR 100% TENDER OFFERS. Dow
shall at any time have the right to acquire additional shares of Common Stock
by means of a tender offer in accordance with the following requirements and
procedures:
(a) Whenever Dow shall make a tender offer for shares of Common
Stock under this Section, Dow may not close the acquisition of the tendered
shares unless all of the following requirements have been satisfied:
(i) Dow's offer shall have been made to all holders of Common
Stock;
(ii) Dow shall offer to purchase for cash all shares tendered;
and
(iii) Dow's offer shall have been accepted by shareholders
owning not less than two-thirds (2/3) of the outstanding Common Stock.
<PAGE> 8
(b) With respect to calculating whether Dow'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 Dow and Pakhoed shall
be excluded from the outstanding Common Stock;
(ii) 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.
2.9 MANDATORY DISPOSAL OF EXCESS SHARES. If in violation of any
provision of Article II Dow shall at any time hold in the aggregate in excess
of its then Permitted Percentage, Dow 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 Dow
shall own in the aggregate not more than its then Permitted Percentage. If Dow
fails to dispose of shares of Voting Securities within ninety (90) days after
receipt of notice from Company advising Dow of its obligation so to dispose of
shares (it being understood that giving of notice by Company is not a
precondition to Dow's obligation to dispose of excess shares), Company shall
have the right to redeem at par value from Dow a number of shares of Common
Stock so that after such redemption the shares of Voting Securities owned by
Dow do not exceed Dow's then Permitted Percentage.
2.10 MONTHLY REPORT OF OWNERSHIP. During the term of this Agreement, Dow
will furnish to Company, within ten (10) days after the end of each calendar
month in which Dow acquires or disposes of any Voting Securities, a statement
showing the number of shares of Voting Securities acquired or disposed of
during the just ended month and the aggregate number of shares of Voting
Securities held by Dow at the end of such month. To the extent that any such
acquisition or disposition must be reported to the Commission, Dow may fulfill
the statement requirement in this Section 2.10 by providing to Company a copy
of such report to the Commission.
2.11 GENERAL RULE REGARDING ACQUISITION OF VOTING SECURITIES. Dow 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. Dow 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 Dow breached its obligations set forth in
the preceding sentence.
ARTICLE III
SALES OF SHARES BY DOW AND RELATED RIGHTS AND OBLIGATIONS OF DOW AND COMPANY
3.1 GENERAL RESTRICTIONS ON RESALE OR OTHER DISPOSITION. During the term
of this Agreement, Dow shall not sell, transfer any beneficial interest in,
pledge, hypothecate or otherwise dispose of any Voting Securities except in
compliance with Article III.
<PAGE> 9
3.2 ALLOWED SALES PURSUANT TO REGISTRATION RIGHTS. Subject to Company's
right of first refusal under Section 3.8, Dow 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, Dow may at any time sell Common Stock pursuant
to Rule 144 of the General Rules and Regulations under the Act, provided that
Dow 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 Dow of the pendency of
its public offering of any Voting Securities, Dow 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, Dow may at any
time make private sales of Voting Securities to a third person, including sales
pursuant to a tender offer or exchange offer, provided that without the express
written consent of Company Dow shall not sell, transfer any beneficial interest
in, pledge, hypothecate or otherwise dispose of any shares of Series A
Preferred Stock other than by conversion of Series A Preferred Stock to Common
Stock.
3.5 ALLOWED PLEDGES. Dow 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 Dow).
3.6 ALLOWED TRANSFERS TO DOW AFFILIATES. Dow and Dow Affiliates may at
any time transfer Voting Securities among themselves, provided that in the
reasonable opinion of counsel acceptable to Company and Dow 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 Dow 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. Dow 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, Dow
desires to sell any Voting Securities in accordance with Section 3.2, 3.3, or
3.4, Company shall have a right of 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 Dow desires to sell to a third party all or part of its Voting
Securities in accordance with Section 3.4 above ("Private Sale"), or if Dow
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"), Dow shall transmit to
Company and to each Unaffiliated Director a written notice ("Notice of Proposed
Sale") setting forth:
<PAGE> 10
(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 Dow, 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 the day Dow 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 Dow
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, Dow 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
Dow the right to proceed with the proposed sale under Section 3.9(c). If such
repurchase is subject to shareholder approval, Dow shall vote all its Voting
Securities in favor of the purchase.
(iv) Upon Dow's receipt of the Notice of Exercise, there shall
be a binding agreement between Dow 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 Dow's
receipt of the Notice of Exercise. At the closing Dow 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 Dow
the purchase price as follows: if Company's purchase is
<PAGE> 11
following Dow's proposed Private Sale, Company shall pay Dow the price
specified in the Notice of Proposed Sale in the same manner (and the sale shall
be upon the same terms) specified therein, and if Company's purchase is
following Dow's proposed Market Disposition Program, Company shall pay Dow at
the closing for the shares purchased in immediately available funds.
(v) 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 Dow a Notice of Exercise within the prescribed time period, Dow shall
be free to effect such sale on the following terms and conditions:
(i) if a Private Sale was proposed, Dow 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, Dow may
effect such sales at any time during the period ending one hundred eighty (180)
days after the date Company's Notice of Exercise was required to be given.
(d) If Dow 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 DOW'S COVENANTS WITH RESPECT TO DISTRIBUTION OF SHARES. In any
transaction or transactions under Section 3.2 or 3.3, Dow 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 Dow under Section
3.3, Company shall cooperate with Dow 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 such numbers and
denominations as Dow shall reasonably require for delivery in connection with
such sales.
3.12 ALLOWED SALES PURSUANT TO COMPANY REPURCHASE.
(a) In the event that Company agrees to repurchase, redeem or
otherwise acquire (collectively, "redeem") any shares of Common Stock from one,
some, or all of its shareholders, Company shall transmit to Dow a written
notice ("Notice of Proposed
<PAGE> 12
Company Purchase") setting forth (i) the number of shares of Common Stock
proposed to be redeemed; (ii) the manner in which the redemption is proposed
to be made; (iii) the price at which and the material terms upon which such
redemption is proposed to be made; and (iv) the approximate date the redemption
is scheduled to occur.
(b) Upon receipt of the Notice of Proposed Company Purchase Dow
shall have an option to have redeemed by the Company that number of shares of
Common Stock determined by multiplying the percentage that Dow's Common Stock
Equivalents represents of the Company's outstanding Common Stock Equivalents
times the number of shares of Common Stock that Company proposes to redeem from
its shareholders other than Dow. Dow's option as specified in the preceding
sentence shall be on the following terms and conditions: (i) the purchase
price for Dow's shares shall be the same price per share as the price paid to
shareholders other than Dow; (ii) all other terms and conditions of the
redemption shall be the same as the terms and conditions as the redemption with
the shareholders other than Dow; (iii) Dow shall deliver certificates for the
Common Stock to be redeemed, duly endorsed for transfer or accompanied by a
duly executed stock power; and (iv) the closing of the purchase and sale shall
occur on that day scheduled for the redemption of shares of shareholders other
than Dow; provided, however, that this Section 3.12 shall not apply with
respect to the redemption of up to 1,000,000 shares of Common Stock from
Pakhoed during the six (6) months following the Effective Date.
3.13 RIGHTS OF COSALE.
(a) In the event that Company proposes to issue any shares of Common
Stock in one or more related transactions, other than a registered public
offering described in section 7.3, solely for cash or "Marketable Securities"
(which term shall mean any securities which are readily tradable on a
recognized exchange, national automated quotation system or regular
over-the-counter market and which the Company does not intend to hold for more
than one year), Company shall transmit to Dow a Notice of Issue (as defined in
section 2.5) setting forth (i) the number of shares of Common Stock proposed
to be sold; (ii) the manner in which the sale is proposed to be made; (iii) the
price at which and the material terms (including anticipated expenses) upon
which such sale is proposed to be made; and (iv) the approximate date the sale
is scheduled to occur.
(b) Upon receipt of the Notice of Issue, Dow shall have an option to
sell that number of shares of Common Stock determined by multiplying the
percentage that Dow's Common Stock Equivalents represent of the Company's
outstanding Common Stock Equivalents times the number of shares of Common Stock
that Company proposes to issue, on the following terms and conditions:
(i) The sale price per share will be, and Dow will receive,
the price (less expenses of the transaction allocable to Common Stock sold by
Dow) specified in the Notice of Issue in the same manner (and the sale shall be
upon the same terms) specified therein;
(ii) If Dow determines to exercise the option, it shall send a
written notice to Company within fifteen (15) days after the Notice of Issue is
received by Dow specifying the number of shares Dow proposes to sell;
(iii) Dow shall execute an agreement for the sale of such
shares in form reasonably acceptable to Dow, Company and the purchaser of the
Common Stock, and Dow shall deliver certificates for the Common Stock to be
sold, duly endorsed for
<PAGE> 13
transfer or accompanied by a duly executed stock power, together with such
other documents as may be reasonably requested by Company or the purchaser of
the Common Stock; and
(iv) The closing of the purchase and sale shall occur on that
day scheduled for the issuance of shares by the Company.
ARTICLE IV
LEGENDS AND STOP TRANSFER ORDERS
4.1 PLACEMENT OF LEGENDS AND ENTRY OF TRANSFER ORDERS. Dow agrees:
(a) that, within ten (10) Business Days after its acquisition of any
certificates evidencing Voting Securities 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 an Amended
and Restated Standstill Agreement dated as of
May 13, 1994, between [Company] and [Dow].
Copies of such Agreement are on file at the
respective offices of [Company] and [Dow].";
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:
(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 DOW AND COMPANY
5.1 FUTURE ACTIONS. Dow 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:
<PAGE> 14
(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, provided that this provision shall not apply if
Pakhoed is not at such time subject to substantially the same restriction; 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 5.1 shall preclude Dow from so depositing
any Voting Securities if such trust, agreement or arrangement is, and continues
to be during the term of this Agreement, solely by and among Dow and Dow
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
(e) acquire, by purchase or otherwise, more than 1% of any class of
equity securities of any entity which, prior to the time Dow 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 Dow 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, Dow shall affirm in writing to Company that Dow 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 Dow 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 provides 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.
5.4 RESTRICTIONS ON CONVERSION OF SERIES A PREFERRED STOCK. The Company
agrees that it will not, without Dow's written consent, require, as permitted
by a Certificate of Designation, the conversion to Common Stock of Series A
Preferred Stock owned by Dow if such conversion would cause Dow's ownership of
Common Stock Equivalents to exceed 19.9%.
ARTICLE VI
BOARD OF DIRECTORS
<PAGE> 15
6.1 SIZE OF BOARD. If Dow so elects, on or before the Effective Date,
Company shall make its best efforts to create, by requesting one or more
members of the Board to resign, a vacancy on the Board and appoint, effective
as of the Effective Date, or as soon thereafter as possible, an additional
individual designated by Dow to serve as a member of the Board. The parties
agree the size of the Board shall remain at twelve or such other number as may
be acceptable to Dow and Pakhoed.
6.2 TERMS. The Dow Affiliated Director appointed pursuant to Section 6.1
shall have an initial term equal to the unexpired term of the director who
resigned pursuant to Section 6.1. After the initial 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) If Dow so elects, Company shall cause representatives designated
by Dow to be nominated for election to the Board so as to provide Dow with
representation on the Board proportionate to its share ownership of Common
Stock Equivalents rounded down to the nearest whole number. With respect to
committees of the Board, Dow shall be entitled to be represented on any
committee with respect to which Dow requests representation.
(b) Dow 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, Dow may initially
vote its shares to ensure that its then proportionate number of Dow Affiliated
Directors are elected. Dow agrees that, once its proportionate number of Dow
Affiliated Directors are elected, Dow 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 Dow's share ownership. At Dow's request Company shall cause such change to
occur at the first Board meeting to be held following a change in Dow's share
ownership, which meeting shall be held not more than ninety (90) days following
the change in Dow'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, Dow's right to
proportional Board representation shall not cause the number of Dow 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 27% during the six month period during which Company has the right to
purchase Voting Securities under Section 2.7(b)
6.4 PUBLIC POLICY COMMITTEE.
(a) Company shall cause the Public Policy Committee of the Board to
be continued 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 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
<PAGE> 16
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 Senior Vice President with responsibility
for environmental policy issues. The Chief Executive Officer shall be a member
of the Committee.
(b) Company shall continue during the term of this Agreement to
assign responsibility for environmental policies to a Senior Vice Presidents or
other comparable senior position and title. The Senior Vice President shall be
responsible for the health, safety and environmental affairs of Company. The
Senior Vice President shall report to Company's Chief Executive Officer.
ARTICLE VII
REGISTRATION RIGHTS
7.1 DURATION OF REGISTRATION RIGHTS. Dow'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 Dow 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 two
registration statements 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 pursuant to Section 7.5(c). 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 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
<PAGE> 17
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 (90) 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 "no-action" 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 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
<PAGE> 18
as Holders shall reasonably request, meeting the requirements of the Principal
Trading Market;
(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) If, in the opinion of Company's Investment Banking Firm, a
reduction is desirable in the number of shares of Common Stock offered for sale
by the Company and Holders, pursuant to a request for registration under
Section 7.3, to permit the orderly distribution and sale of the securities
being offered, then 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, which shares will be allocated among the Company,
Dow and Holders as follows: First to be included shall be Common Stock owned
by Dow equal to the total number of shares to be included in the offering
multiplied by Dow's then current ownership percentage of Common Stock
Equivalents; Second to be included shall be the number of shares requested by
the Company to be included in the offering; and Third, with respect to any
shares remaining to be included in the offering (if any), there shall be
included that number of shares of each Holder (including Dow) multiplied by a
fraction, the numerator of which is each Holder's percentage of Common Stock
Equivalents and the denominator of which is the total of all Holders'
percentage of Common Stock Equivalents. 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 selected by the
Holders and 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, 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.
<PAGE> 19
(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
antistabilization, 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 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, provided that
Company shall pay such expenses if the registration statement is filed on Form
S-3 and coordinated with Company's other filings with the Commission so as to
avoid the necessity of any amendments to such filings or any special audit by
Company's independent auditors. Further, such participating Holders shall pay
all underwriting
<PAGE> 20
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.
(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 Dow in this Article VII shall be assignable to a transferee of Common
Stock from Dow so long as (i) such transferee has acquired not less than
500,000 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 Dow, (ii) such transferee has agreed with Company in writing to comply
with all applicable provisions of this Article VII, and (iii) Dow 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, Dow 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.
(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
<PAGE> 21
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 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 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
<PAGE> 22
8.1 TERMINATION. This Agreement shall terminate upon the earliest to
occur of the following:
(a) Dow's completion of a tender offer in accordance with Section
2.11; or
(b) the date Dow owns in the aggregate less than five percent (5%)
(provided that such percentage shall be ten percent (10%) if the Pakhoed
Standstill Agreement is terminated) of the then Common Stock Equivalents; or
(c) if elected by Dow, exercisable upon delivery of written notice
thereof to Company, upon the failure of Company to comply with its obligations
under this Agreement and cure of such failure does not occur within thirty (30)
days after Dow gives written notice of such failure to Company; or
(d) if elected by Company, exercisable upon delivery of written
notice thereof to the Dow, upon the failure of Dow 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 Dow.
8.2 EXTENDED CURE PERIOD. Notwithstanding Sections 8.1(c) and 8.1(d),
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 Dow 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 Dow 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)
40,000,000 shares of Common Stock, as of April 1, 1994, 19,648,273 shares were
validly issued and outstanding, fully paid and nonassessable and 2,370,229
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, and Series A Preferred Stock is the only series which
has been designated. In addition, as of April 1, 1994, approximately 1,045,774
shares of Common Stock (including authorized but unissued shares and treasury
shares) were reserved for issuance pursuant to presently existing options under
currently existing stock option plans. There are outstanding no
<PAGE> 23
other options, warrants, rights or convertible securities providing for the
issuance of Company capital stock, except for rights conferred upon Pakhoed
pursuant to the Pakhoed Standstill Agreement.
(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 or Dow violate
Company's Restated Certificate of Incorporation.
9.2 OF DOW. Dow hereby represents and warrants to Company as follows:
(a) Dow 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) it has full legal
right, power and authority to enter into and perform this Agreement, and the
execution and delivery of this Agreement by it and the consummation of the
transactions contemplated hereby have been duly authorized by its Board of
Directors and require no other Board of Directors or stockholder action. This
Agreement constitutes a valid and binding agreement of Dow.
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 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 Dow 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 and Dow which
shall be
<PAGE> 24
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, or (c) facsimile addressed to the
party for whom intended at the following address:
To Company: Univar Corporation
6100 Carillon Point
Kirkland, WA 98033
Attention: Corporate Secretary
Facsimile: (206) 889-4136
With a copy to: Preston Gates & Ellis
5000 Columbia Center
701 Fifth Avenue
Seattle, WA 98104-7078
Attention: Richard B. Dodd
Facsimile: (206) 623-7022
To Dow: The Dow Chemical Company
2030 Willard H. Dow Ctr.
Midland, MI 48674
Attn: Director of Mergers and
Acquisitions
Facsimile: (517) 636-1830
With a copy to: The Dow Chemical Company
2030 Willard H. Dow Ctr.
Midland, MI 48674
Attn: General Counsel
Facsimile: (517) 636-0861
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 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' 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.
<PAGE> 25
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 and Dow have caused this Agreement to be
executed as of the date first above written.
UNIVAR CORPORATION
BY: /S/ JAMES W. BERNARD
ITS: President And Chief Executive Officer
THE DOW CHEMICAL COMPANY
BY: /S/ ENRIQUE SOSA
ITS: Senior Vice President
<PAGE> 26
EXHIBIT A
LIST OF CORE SHAREHOLDERS
NAMES NUMBER OF SHARES OWNED
James W. & Maureen Bernard 186,386*
Richard E. and Gail J. Engebrecht 71,000
Milton M. and Lorraine D. Harris 197,534
Curtis P. & Mary B. Lindley 214,804
N. Stewart & Carol Rogers 303,019
Robert S. & Gloria D. Rogers 237,234
James H. & Ann R. Wiborg 475,011
* Includes stock options exercisable as of April 1, 1994 and
Uni$aver Plan (401(k)) shares as of December 31, 1993.
