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April 12, 1996
Royal Pakhoed N.V.
333 Blaak
3011 GB Rotterdam
The Netherlands
Re: Confidentiality and Standstill Agreement
Gentlemen:
In connection with your consideration of a possible transaction
involving you, which shall include Royal Pakhoed N. V. and all your "affiliates"
and "associates" (as such terms are defined in Rule 12b-2 of the Securities
Exchange Act of 1934 (the "Act")), (also collectively referred to as "Pakhoed")
and Univar Corporation ("Univar"), certain financial, operational and other
information concerning Univar is being and will be furnished to you and to your
directors, officers, employees, agents, and professional advisors.
As a condition to furnishing such information, you agree, as set forth
below, to (1) keep confidential such information and any other information
Univar or its representatives furnish to you, whether furnished before, on, or
after the date of this Confidentiality and Standstill Agreement ("Agreement"),
together with analyses, compilations, studies or other documents or records
prepared by you or others, which contain or reflect or are generated from
information supplied by Univar or its representatives (collectively referred to
as "Evaluation Material") and (2) the other matters contained in this Agreement.
You agree that the Evaluation Material will be used solely for the
purpose described above and that such Evaluation Material will be kept
confidential by you; provided, however, that any of such information may be
disclosed to your directors, officers, employees, agents, and professional
(collectively referred to as "your representatives"). It being understood that
prior to any disclosure of Evaluation Material, each of your representatives
shall be informed by you of the terms of this Agreement and of the confidential
nature of the Evaluation Material. Each of your representatives shall execute a
written agreement acceptable to Univar agreeing (i) to keep the Evaluation
Material confidential and to use it only in connection with the purpose
described above and (ii) to the other terms of this Agreement. You shall be
responsible for any breach of this Agreement by you or any of your
representatives.
Without the prior written consent of Univar, you will not disclose and
will direct your
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April 12, 1996
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representatives not to disclose, to any person other than Pakhoed and your
representatives, the fact that the Evaluation Material has been made available
to you, the fact that Univar and Pakhoed are considering a transaction, or any
information with respect to the discussions including the status thereof. The
term "person" as used in this Agreement shall be broadly interpreted to include,
without limitation, any corporation, company, partnership, or individual.
If you or any of your representatives are legally compelled to disclose
Evaluation Material which is subject to this Agreement, you will provide Univar
with prompt notice so that Univar may seek a protective order or other
appropriate remedy and/or waive compliance with this Agreement. In the event
that such protective order or other remedy is not obtained, or if Univar waives
compliance with the provisions of this Agreement, you will furnish only such
information as you are advised is legally required and will exercise your best
efforts to obtain assurance that confidential treatment will be accorded any
Evaluation Material which is compelled to be disclosed.
In the event Univar and Pakhoed do not complete the transaction
indicated above, you and your representatives will, upon the request of Univar,
either (1) promptly deliver to Univar all Evaluation Material, without retaining
any copy, extract, or reproduction thereof, or (2) promptly destroy all
Evaluation Material in your or your representatives' possession, and such
destruction shall be certified in writing to Univar by the person supervising
such destruction.
You understand that Univar does not make any representation or warranty
as to the accuracy or completeness of the Evaluation Material. You agree that
Univar and its officers, directors, employees, agents, or representatives shall
not have any liability hereunder to Pakhoed or any of your representatives
resulting from the use of the Evaluation Material by Pakhoed or your
representatives.
You agree to indemnify, defend, and hold Univar, its subsidiaries, and
their respective directors, officers, employees, agents and representatives
harmless from and against any losses, claims, damages or liabilities arising out
of breach of this Agreement by you or your representatives and will reimburse
Univar, its subsidiaries, and their respective directors, officers, employees,
agents, and representatives for all expenses (including counsel fees) incurred
in connection therewith. The obligations set forth in this paragraph shall
survive the termination of this Agreement.
You further acknowledge that subject to the satisfaction of Section 1.3
of the Tender Offer Protocol attached as Exhibit B (the "Protocol"), the
Evaluation Material is being furnished to you in consideration of your agreement
that for an initial period ending October 30, 1996 you will not, without the
prior written consent of the Company, (i) acquire any stock or other securities
of the Company, other than as permitted by that certain Standstill Agreement
dated September 19, 1986 (as amended June 3, 1992 and referred to herein as the
"Standstill Agreement") but specifically excluding the right to make a tender
offer pursuant to Section 2.10 of such Standstill Agreement (ii), submit to the
Company or any other person any proposal for a
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April 12, 1996
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transaction between you and the Company or involving any of its security holders
other than in accordance with the Protocol, (iii) solicit proxies or shareholder
consents with respect to securities of the Company or become a "participant" in
any "solicitation" or a member of a "group" (as such terms are used in
Regulation 14A and Section 13(d)(3) of the Act)in opposition to the
recommendation of the majority of the Unaffiliated Directors (as defined in the
Standstill Agreement), or (iv) otherwise assist, advise, encourage or act alone
or in concert with any other person in acquiring or attempting to acquire,
directly or indirectly, control of the Company or its assets. If the conditions
of Sections 2.1 and 2.2 of the Protocol are satisfied, the term of the
standstill provisions of this Agreement shall automatically extend to April 30,
1998. The parties further agree that if a tender offer is not consummated at any
time in accordance with the protocol, that Pakhoed will not ask to make a new
proposal, renew the current proposal or seek to modify or amend this agreement
until after February 28, 1997.
You acknowledge and agree that Univar would not have an adequate remedy
at law and would be irreparably harmed in the event that any of the provisions
of this Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that Univar shall be entitled to
injunctive relief to prevent breaches of this Agreement and to specifically
enforce the terms and provisions hereof, in addition to any other remedy to
which it may be entitled at law or in equity. It is further understood and
agreed that no failure to or delay in exercising any right, power, or privilege
hereunder shall operate as a waiver thereof, and no single or partial exercise
thereof shall preclude any other or further exercise thereof or the exercise of
any right, power, or privilege hereunder. You agree to pay all costs and
expenses, including counsel fees, incurred by Univar in case any such action is
brought by it.
You agree and consent to personal jurisdiction and venue in any action
brought in any court, federal and state, within the state of Washington having
subject matter jurisdiction, in connection with any matter arising under this
Agreement. This Agreement shall be governed by and construed in accordance with
the laws of the State of Washington applicable to agreements made and to be
performed within such state.
Except as otherwise indicated, your obligations under this Agreement
shall terminate as of April 30, 1998.
[the remainder of this page has been intentionally left blank]
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April 12, 1996
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Except as modified herein all other terms and conditions of the
Standstill Agreement shall remain in full force and effect through the term of
this Agreement and thereafter as provided for in the Standstill Agreement.
Univar agrees that the provisions of this Agreement are not intended to inhibit
the ability of any legal counsel which has been approved as one of your
representatives to represent Pakhoed as its legal advisors; provided, however,
that said counsel shall at all times comply with the provisions of this
Agreement.
Very truly yours,
UNIVAR CORPORATION
Paul H. Hough
President
AGREED AND ACCEPTED this ___ day of April, 1996:
Royal Pakhoed N.V.
By:______________________________
Its:_____________________________
Pakhoed USA, Inc.
By:______________________________
Its:_____________________________
Pakhoed Investeringen B.V.
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April 12, 1996
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By:______________________________
Its:_____________________________
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April 12, 1996
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EXHIBIT A
APPROVED REPRESENTATIVES OF PAKHOED
[INTENTIONALLY OMITTED]
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April 12, 1996
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EXHIBIT B
TENDER OFFER PROTOCOL
APRIL 12, 1996
STEP I:
1.1 Execution of a unanimous consent of the Univar Board of Directors
authorizing the Special Committee to negotiate with Pakhoed subject to approval
by the full Board of Directors.
1.2 No later than 11:00 A.M., Friday April 12, 1996, Pakhoed and Univar
shall execute the Confidentiality and Standstill Agreement to which this Exhibit
shall be attached which establishes an initial standstill through October 31,
1996 equivalent to the 1986 standstill between Univar and Pakhoed; provided that
this initial standstill provision will become effective only upon satisfaction
of Section 1.3.
1.3 An agreement on a mutually acceptable range of the per share tender
offer price shall be reached and confirmed in writing no later than 4:00 P.M.
Saturday, April 13, 1996. Upon such agreement the initial standstill provisions
shall become automatically effective. If no agreement is reached as to an
acceptable range of the per share tender offer, then the standstill provisions
of this Agreement shall not apply, but the confidentiality provisions shall
apply including without limitation an understanding and agreement that the
discussions relating to price ranges and other matters discussed during April 10
through April 13 are subject to such confidentiality provisions.
1.4 Agreement that due diligence will be conducted only in accordance
with a mutually acceptable written agreement. It is specifically agreed that
Mark Hooper shall not participate in due diligence, negotiations, strategic
advise, consulting or any other role in connection with the transactions
contemplated by this protocol.
STEP II:
2.1 An environmental due diligence agreement shall be executed no later
than April 25, 1996.
2.2 A minimum acceptable tender offer price per Univar Common Share
shall be approved by the Special Committee no later than April 30, 1996.
2.3 After satisfaction of Section 2.1 (execution of a due diligence
agreement) and Section 2.2 (agreement on minimum tender offer price), the
standstill provisions shall
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April 12, 1996
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automatically extend to April 30, 1998 and there will be no further price
negotiations. If either or both of Sections 2.1 and 2.2 are not satisfied by
April 30, 1996 the initial standstill provision shall remain in effect until
October 31, 1996..
2.4 Any proposal shall be strictly in accordance with all the terms and
conditions of the Standstill Agreement, including without limitation the
"Requirement for Tender Offers" as set forth in Section 2.11 of the Standstill
Agreement; provided that (a) the Univar Board has not exercised its fiduciary
duty to accept or recommend a better offer pursuant to Section 4.5 and
(b)Pakhoed has entered into a Merger Agreement to acquire the non-tendered
shares pursuant to Section 4.3 then the minimum number of Univar shares tendered
and accepted in the Tender Offer, together with the Univar shares owned by
Pakhoed, need only exceed a simple majority of the outstanding Univar shares as
of the closing of the Tender Offer. All other material terms and conditions of
any such tender offer and the form of the proposed Merger Agreement shall have
been disclosed and shall be acceptable to Univar's counsel no later than April
30, 1996.
2.5 Subject to the satisfaction of the fiduciary duties of the Univar
Board of Directors, Univar will consent to and/or encourage the execution of
agreements by a sufficient number of large Univar shareholders to assure
satisfaction of the minimum tender offer acceptances required by Section 2.4. It
is secifically understood that such agreements will permit the signing
shareholder to accept a higher offer pursuant to Section 4.5.
STEP III:
3.1 If an initial tender offer is approved by the Special Committee,
environmental due diligence shall be conducted by Pakhoed and your
representatives only as permitted by the Due Diligence Agreement referred to in
Section 1.4.
3.2 Both Pakhoed and Univar shall recognize as a moral and legal
obligation all existing rights of Univar officers and other employees including
the rights to receive the benefits of all outstanding stock options and payments
and benefits provided for in the Change of Control Agreements regardless of
provisions in the Change of Control Agreements which might be interpreted as
limiting those rights. No later than April 30, 1996 Pakhoed and Univar shall
mutually agree upon the estimated net after-tax cost (i.e., federal income tax
benefits to the surviving entity and federal excise tax costs, if any, to the
employees) of making the stock options and other change of control benefits
available to the Univar employees with indemnification against any excise tax.
In recognition of the fairness and mutual benefits of sharing these costs, the
tender offer price shall be reduced by fifty percent (50%) of such after-tax
cost determined on a fully diluted per share basis. Any adjustment required by
this Section shall be reflected in the per share tender offer referred to in
Section 2.2.
3.3 The full Univar Board shall review the proposal and related matters
in a continuation of the regular May 2 Board meeting. The continuation meeting
will be held on the afternoon of May 2 at a location outside of Kirkland.
Pakhoed directors may attend but will be
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April 12, 1996
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expected to excuse themselves after an initial presentation.
3.4 All environmental due diligence shall be completed no later than
May 24, 1996. Pakhoed shall advise the Special Committee of its decision to
proceed or not to proceed with a tender offer no later than May 30, 1996. If the
answer is no the Standstill stays in effect until April 30, 1998 and the ban on
proposals and new negotiation stays in effect until after February 28, 1997.
STEP IV:
4.1. If the answer is yes, a special board meeting will be held on May
31, 1996 and a Merger Agreement setting forth the definitive terms and
conditions shall be executed no later than June 3, 1996. A press release shall
be issued only after execution of the Merger Agreement.
4.2 The tender offer will commence within five (5) business days after
the initial announcement and will stay open for a minimum of thirty (30)
business days after the initial announcement (July 15 assuming a June 3
announcement). The tender offer will be completed no later than July 31, 1996.
Payment for the shares is required to be made promptly after completion.
4.3 Pakhoed will be contractually obligated pursuant to the Merger
Agreement to promptly follow any Tender Offer which is accepted by the minimum
number of shares as required by Section 2.4 which shall also represent a simple
majority of the outstanding shares as of the close of the Tender Offer with a
cash merger for the remaining untendered shares at the final per share tender
offer price.
4.4 Pakhoed will have an opportunity to negotiate employment agreements
with a mutually acceptable number of key executives prior to the execution of
the Merger Agreement and commencement of the Tender Offer, however the execution
of such agreements shall not be a condition to the Tender Offer and the failure
to secure such agreements shall not effect the April 30 1998 standstill
agreement.
4.5 The Univar Board will agree not to solicit other bids but will not
be restricted from considering (including providing information comparable to
that provided to Pakhoed) or accepting another unsolicited higher cash offer for
all of the outstanding Univar Common Shares. If another acquisition proposal is
approved by the Univar Board Pakhoed shall have the right to modify its tender
offer as permitted by Section 2.7 of the Standstill Agreement.
4.6 Any modification of the foregoing protocol or related dates must be
approved in writing by the Chairman of the Special Committee and a designated
representative of Pakhoed.
4.7 If either the October 31, 1996 or April 30 1998 standstill
provisions become effective in accordance with this letter agreement such
provisions will stay in effect if the tender
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April 12, 1996
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offer is not completed in accordance with the foregoing protocol and time
schedule and Pakhoed further agrees that it will not ask to make a new proposal,
renew the current proposal or seek to modify or amend this agreement until after
February 28, 1997; provided that, if the Univar Board fails to approve a tender
offer which has been approved by the Special Committee and is otherwise made in
accordance with this protocol and all previously disclosed and mutually agreed
terms and conditions, the standstill provisions of this Agreement will be
terminated as of October 31, 1996, but thereafter the present Standstill
Agreement shall remain in effect.