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[UNIVAR CORPORATION LETTERHEAD]
APRIL 22, 1996
VIA FAX NO. 31-10-213-0512
Dr. Sjoerd D. Eikelboom
Royal Pakhoed N.V.
333 Blaak
3011 GB Rotterdam
The Netherlands
Re: Univar Corporation
Royal Pakhoed N.V.
Environmental Due Diligence Agreement
("DUE DILIGENCE AGREEMENT")
Dear Sjoerd:
Reference is made to the Confidentiality and Standstill Agreement in
connection with a possible transaction involving Royal Pakhoed N.V. ("PAKHOED")
and Univar Corporation ("UNIVAR") dated April 12, 1996 and the "TENDER OFFER
PROTOCOL" attached thereto as Exhibit B. The Confidentiality and Standstill
Agreement contemplates performance of environmental due diligence of Univar to
be conducted on behalf of Pakhoed by Pakhoed's legal counsel, Graham & James
("G&J"), and Pakhoed's environmental consultant, Harding Lawson Associates
("HLA"). Both G&J and HLA have provided professional services for Univar in the
past and HLA continues to provide professional services for Univar. Univar and
Pakhoed hereby consent to G&J's and HLA's representation of Pakhoed in this
proposed transaction. Any defined terms beginning with an initial capital used
herein which are not defined in this Due Diligence Agreement shall have the same
meaning as in the Confidentiality and Standstill Agreement. In consideration of
the continued good faith negotiations between Pakhoed and Univar and the mutual
benefits accruing to Pakhoed and Univar by virtue of their cooperation in this
due diligence effort, Pakhoed and Univar agree as follows:
1. Pakhoed and Univar agree to cooperate each with the other and the
other's legal counsel as well as with HLA as provided in this Due
Diligence Agreement. Any approval required of or from Pakhoed or Univar
pursuant to this Due Diligence Agreement shall not be unreasonably
withheld, conditioned or delayed. To the extent necessary or
appropriate, Pakhoed and Univar and/or their legal counsel shall meet
each with the other and with HLA, in person or via conference call, to
implement this Due Diligence Agreement. The
Value Growth
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Dr. Sjoerd D. Eikelboom
Due Diligence Agreement
April 22, 1996
Page 2
scope of, approach for and other terms concerning as well as the work
to be performed by HLA and G&J, and the time frame in which such work
shall be accomplished, are stated in the attached Exhibit A, "Due
Diligence Approach" ("SCOPE"), which is incorporated fully by this
reference.
2. Pakhoed shall pay all fees and costs of HLA's and G&J's performance of
the Scope. Univar shall pay the costs of its legal counsel and the
cost of providing a location in the Seattle area for file review as
contemplated in the Scope. Pakhoed shall pay all other costs of its
due diligence and the cost of providing any document review facility
outside of the Seattle area.
3. On the terms and for the limited purposes provided in the Scope, Univar
grants Pakhoed, G&J and HLA access to its files and personnel (as
identified in the Scope) to perform the Scope.
4. All preliminary and final results of due diligence shall be the sole
property of Pakhoed and Pakhoed shall not provide Univar any information
concerning its due diligence.
5. All results, reports, and any information obtained or developed by
Pakhoed, HLA or G&J pursuant to this Due Diligence Agreement and all
results, reports, and any other information obtained or developed
using information obtained in this due diligence shall constitute
"EVALUATION MATERIAL" under the Confidentiality and Standstill
Agreement, shall be subject to the terms and conditions therein and
shall be referred to herein as the "ENVIRONMENTAL EVALUATION
MATERIAL." All Environmental Evaluation Material shall be G&J attorney
work product and shall be protected from disclosure by G&J's attorney-
client privilege with Pakhoed and the attorney work product privilege,
as well as other applicable privileges, and may not be provided to
or used by any person other than those employed by Pakhoed and its
Representatives who have an actual need to know such information, and
who shall be advised of and agree to be bound by the Confidentiality
and Standstill Agreement before Evaluation Material is provided to them.
6. All such results, reports and documentary information shall bear, as a
header on each page, the following legend:
PRIVILEGED AND CONFIDENTIAL
PREPARED AT THE DIRECTION OF PAKHOED LEGAL COUNSEL
DO NOT REPRODUCE OR DISTRIBUTE
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Dr. Sjoerd D. Eikelboom
Due Diligence Agreement
April 22, 1996
Page 3
7. UNLESS SPECIFIC ARRANGEMENTS ARE MADE, FAXES AND OTHER WRITTEN NOTICES
ARE TO BE SENT ONLY TO SCOTT VOKEY WHOSE ADDRESS AND PHONE NUMBER IS:
Scott R. Vokey
Preston Gates & Ellis
5000 Columbia Center
701 Fifth Avenue
Seattle, Washington 98104-7078
Tel: (206) 623-7580
Tel: (206) 467-7605 (direct)
Fax: (206) 623-7022
8. This Due Diligence Agreement shall be effective when signed by
authorized representatives of Pakhoed, Univar, G&J and HLA and shall
terminate upon the successful conclusion of the merger contemplated by
the Confidentiality and Standstill Agreement. Each of the individuals
signing below on behalf of Pakhoed, G&J, and HLA represents and
warrants to Univar that he or she is authorized to sign on behalf of
the entity he or she represents. This letter agreement may be executed
in two or more counterparts by facsimile signature, all of which taken
together shall constitute one instrument.
9. Pakhoed acknowledges that upon the execution of this Due Diligence
Agreement and agreement on the minimum acceptable tender offer price
per Section 2.3 of the Tender Offer Protocol, the two year standstill
provisions of the Confidentiality and Standstill Agreement are hereby
effective.
Sincerely,
Univar Corporation
/s/William A. Butler
William A. Butler
Vice President, General Counsel
and Corporate Secretary
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Dr. Sjoerd D. Eikelboom
Due Diligence Agreement
April 22, 1996
Page 4
AGREED TO AND ACCEPTED:
Royal Pakhoed N.V. Graham & James
By:_____________________________ By:________________________
Name:___________________________ Name:______________________
Title:__________________________ Title:_____________________
Date:___________________________ Date:______________________
Harding Lawson Associates
By: /s/ Victor R. Johnson, Jr.
-----------------------------
Name: /s/ Victor R. Johnson, Jr.
---------------------------
Title: Senior Vice President
--------------------------
Date: 4/24/96
---------------------------
cc: Wayne E. Grotheer, with Exhibit A
Joel S. Summer, with Exhibit A
Scott R. Vokey, with Exhibit A
Richard B. Dodd, with Exhibit A
Maureen Bennett, with Exhibit A
Nicholas Unkovic, with Exhibit A
Victor Johnson, with Exhibit A
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Dr. Sjoerd D. Eikelboom
Due Diligence Agreement
April 22, 1996
Page 4
AGREED TO AND ACCEPTED:
Royal Pakhoed N.V. Graham & James
By: /s/ S. Eikelboom By: /s/ Nicholas Unkovic
---------------------------- --------------------------
Name: /s/ S. Eikelboom Name: /s/ Nicholas Unkovic
-------------------------- -------------------------
Title: Director Title: Partner
------------------------- ------------------------
Date: 4/25/96 Date: 4/25/96
-------------------------- -------------------------
Harding Lawson Associates
By:____________________________
Name:__________________________
Title:_________________________
Date:__________________________
cc: Wayne E. Grotheer, with Exhibit A
Joel S. Summer, with Exhibit A
Scott R. Vokey, with Exhibit A
Richard B. Dodd, with Exhibit A
Maureen Bennett, with Exhibit A
Nicholas Unkovic, with Exhibit A
Victor Johnson, with Exhibit A
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Exhibit A
Due Diligence Approach
April 22, 1996
A. Guiding Principles
Univar and Pakhoed wish to permit Pakhoed to evaluate (solely for
purposes of the proposed transaction) environmental and product, toxic tort and
similar liabilities related to Univar on the schedule set forth in the Protocol,
while preserving the confidentiality of the proposed transaction and of the
information collected during due diligence.
Therefore, except as otherwise consented to by Univar, information
shall be gathered only from the sources and in accordance with the procedures
specified in this Due Diligence Approach and not from Univar facilities (other
than its Kirkland headquarters) or through contacts with regulatory agencies.
It is expected that some information will be needed from excluded sources, but
Univar will make that information available only as agreed by the parties, for
example by having Univar personnel or counsel obtain the information in a
manner designed to protect confidentiality.
Subject to the limitations in this Due Diligence Approach, the due
diligence shall cover all known active and inactive Univar sites, in the US and
elsewhere, including offsite locations where Univar may be a responsible/liable
party.
It has been estimated that this due diligence should take six weeks,
but the Protocol requires that the due diligence be completed by May 24, 1996,
which is expected to allow less than a month for due diligence. Therefore, both
parties will make appropriate personnel and resources available on a priority
basis to accomplish the due diligence by May 24, 1996.
The due diligence will be conducted in a cooperative fashion designed to
limit to the extent possible the need to obtain information from excluded
sources while providing as much information as possible, keeping in mind the
practical limitations imposed by the time available and the need for
confidentiality.
B. Personnel
Graham and James ("G&J") will retain Harding Lawson Associates ("HLA").
Pakhoed's due diligence will be conducted by representatives of Pakhoed, HLA
and G&J (the "Pakhoed team"). While Pakhoed retains the right to designate its
team, it is expected that those representatives will for most purposes include:
Rino Wong (Pakhoed); Vic Johnson ("VJ"), Larry Floyd ("LF") and Jim Briedlow
("JB") (HLA); and Maureen Bennett and either Andy Port or
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Rupert Hansen (G&J). Others who may be involved on a less frequent basis include
Sjoerd Eikelboom, Roy Wansik and Jean Warren (Pakhoed) and Nick Unkovic (G&J).
The Pakhoed team will have its primary contacts with Wayne Grotheer
("WG") and Joel Summer ("JS") (Univar) and Scott Vokey ("SRV") of Preston Gates
& Ellis ("PG&E"), but may also have contacts with Jim Wiborg, Paul Hough, Gary
Pruitt, Bill Butler and Rick Dodd (PG&E).
C. Information Sources
Univar will make available in an offsite data room at a site to be
designated by Pakhoed:
1) all relevant and reasonably accessible information
located in Univar's Kirkland headquarters or
headquarters storage or under PG&E's control,
2) Univar's FY 1997 capital budget,
3) to the extent reasonably available, existing lists of
known active and inactive Univar sites, including third
party sites where Univar may be a responsible/liable
party, and
4) on a priority basis, the assistance of the Univar
personnel and representatives described above.
The Pakhoed team will also have access to information:
1) contained in the files of Pakhoed, G&J and HLA (provided
that HLA personnel other than VJ, LF and JB who have
worked for Univar may not be informed of this project or
that such information is being used),
2) available from commercially available data bases such as
commercial electronic due diligence services (such as
EDR) and from commercial serial photograph services,
city directory services and historical mapping services
(such as Sanborn),
3) available from other sources with prior permission of
Univar, and
4) derived from discussions with the Univar personnel and
representatives described above.
Except as described above, the Pakhoed team will not, with respect to
Univar and without prior permission from Univar
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1) contact any present or former Univar officers,
directors, employees, attorneys, consultants, agents or
other advisors, including without limitation present or
former project managers,
2) contact any regulatory agency or its present or former
personnel, contractors, consultants, attorneys or
advisors, or review or request copies of any regulatory
agency file,
3) visit, or request from any third person information
concerning, (a) any present or former Univar leased or
owned site or (b) any third party site at which Univar
is or may be a potentially responsible/liable party, or
4) review (a) the files of project managers or (b) files
located at Univar facilities.
It is nevertheless expected that, with respect to a limited number of sites or
pending or threatened litigation, information will be required from one or more
of the above excluded sources. It is also expected that information that cannot
now reasonably be anticipated will be required. The Pakhoed team will limit
requests for such information to the extent possible, and Univar will cooperate
to obtain such information in a manner agreeable to both Univar and Pakhoed.
With respect to regulatory agency contacts, due to the difficulty in scheduling
appointments with such agencies, the parties will use their best efforts to
identify and pursue any such required contacts as early as possible in the
process.
D. Due Diligence Process and Schedule
The due diligence process will commence upon execution of this
agreement and agreement on the minimum acceptable tender offer price per
Section 2.3 of the Protocol, extending the Pakhoed standstill period to two
years. These conditions are expected to be fulfilled on April 26, 1996.
Univar will make the information it is to provide (described above)
available in the data room on April 29, 1996. The due diligence will commence
that day with interviews of WG, JS and SRV, and will be completed no later than
May 24, 1996. The parties will make available the personnel and resources
necessary to accomplish this schedule.
E. Uses of Due Diligence Information
Neither Pakhoed, G&J, nor HLA will use any information developed during
the due diligence for any purpose other than evaluation of the potential
transaction, including but not limited to any attempt to require Univar to set
environmental reserves, change any accounting policy, force Univar to make any
disclosure, or in connection with any Univar project.
Univar will not be required to develop any new cost estimates, and
Pakhoed, G&J and HLA will keep confidential and not disclose to Univar or to
any third parties any cost estimates or
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other information that Pakhoed, G&J or HLA may develop, in the course of the
due diligence investigation.
Pakhoed, HLA and G&J shall destroy all information developed pursuant
to this due diligence protocol, including without limitation notes, schedules,
and reports, if the potential transaction does not close in accordance with the
Confidentiality and Standstill Agreement dated April 12, 1996.
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