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OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING COMMON SHARES
OF
UNIVAR CORPORATION
AT
$19.45 NET PER SHARE
BY
UC ACQUISITION CORP.
AN INDIRECT SUBSIDIARY OF
ROYAL PAKHOED N.V.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 8:00 P.M.,
NEW YORK CITY TIME, ON MONDAY, JULY 15, 1996,
UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES
THAT WOULD, WHEN AGGREGATED WITH THE SHARES ALREADY OWNED BY BUYER AND ITS
AFFILIATES, REPRESENT A MAJORITY OF ALL OUTSTANDING SHARES ON THE DATE OF
PURCHASE, AND (ii) ALL GOVERNMENTAL APPROVALS (AS DEFINED HEREIN) FOR THE OFFER
HAVING BEEN OBTAINED OR WAIVED BY PARENT AND BUYER AND APPLICABLE LAWS COMPLIED
WITH. SEE THE INTRODUCTION AND SECTIONS 1 AND 12.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC" OR THE "COMMISSION") NOR HAS THE COMMISSION
PASSED UPON THE FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR
ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
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IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
common shares (the "Shares") of Univar Corporation, a Washington corporation
("Company") should either (i) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal, have such shareholder's signature thereon guaranteed if required by
Instruction 1 to the Letter of Transmittal, mail or deliver the Letter of
Transmittal (or such facsimile), or, in the case of a book-entry transfer
effected pursuant to the procedure set forth in Section 2 of this Offer to
Purchase, an Agent's Message (as defined herein), and any other required
documents to the Depositary (as defined herein) and either deliver the
certificates for such Shares to the Depositary along with the Letter of
Transmittal (or facsimile) or deliver such Shares pursuant to the procedure for
book-entry transfer set forth in Section 2 of this Offer to Purchase, or (ii)
request such shareholder's broker, dealer, bank, trust company or other nominee
to effect the transaction for such shareholder. A shareholder having Shares
registered in the name of a broker, dealer, bank, trust company or other nominee
must contact such broker, dealer, bank, trust company or other nominee if such
shareholder desires to tender such Shares.
If a shareholder desires to tender Shares and such shareholder's
certificates for Shares are not immediately available or the procedure for
book-entry transfer cannot be completed on a timely basis, or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date, such shareholder's tender may be effected by following the procedure for
guaranteed delivery set forth in Section 2.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent at its address and telephone
number set forth on the back cover of this Offer to Purchase.
June 7, 1996
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TABLE OF CONTENTS
INTRODUCTION....................................................................... 3
SPECIAL FACTORS.................................................................... 4
THE TENDER OFFER................................................................... 15
1. TERMS OF THE OFFER......................................................... 15
2. PROCEDURE FOR TENDERING SHARES............................................. 17
3. WITHDRAWAL RIGHTS.......................................................... 19
4. ACCEPTANCE FOR PAYMENT AND PAYMENT......................................... 20
5. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES......................... 21
6. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES........................... 21
7. CERTAIN INFORMATION CONCERNING COMPANY..................................... 22
8. CERTAIN INFORMATION CONCERNING BUYER AND PARENT............................ 25
9. SOURCE AND AMOUNT OF FUNDS................................................. 27
10. CONTACTS AND TRANSACTIONS AMONG PARENT, BUYER AND COMPANY.................. 27
11. DIVIDENDS AND DISTRIBUTIONS................................................ 37
12. CERTAIN CONDITIONS OF THE OFFER............................................ 38
13. CERTAIN LEGAL MATTERS...................................................... 39
14. CERTAIN FEES AND EXPENSES.................................................. 43
15. MISCELLANEOUS.............................................................. 44
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TO THE HOLDERS OF COMMON SHARES OF
UNIVAR CORPORATION:
INTRODUCTION
UC Acquisition Corp., a Washington corporation ("Buyer"), which is an
indirect subsidiary of Royal Pakhoed N.V. (a translation of Koninklijke Pakhoed
N.V.), a publicly held limited liability company formed and existing under the
laws of The Netherlands ("Parent"), hereby offers to purchase all outstanding
Shares of Univar Corporation, a Washington corporation ("Company"), for a
purchase price of $19.45 per Share net to the seller in cash (the "Offer
Price"), upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which, together with any
amendments or supplements hereto or thereto, collectively constitute the "Offer"
or "Tender Offer"). Certificates for Shares may show the Shares as being issued
by "Univar Corporation," a Delaware corporation, or "VWR United Corporation,"
and indicate various par values. Those certificates continue to represent valid
Shares of Company and may be tendered for purchase by Buyer in accordance with
the terms of this Offer.
Buyer and its affiliates are the record owners of 6,106,000 Shares
representing approximately 28.09% of the outstanding Shares as of May 31, 1996.
Parent has entered into a Shareholder Agreement (the "Shareholder Agreement")
with The Dow Chemical Company ("Dow") and Officers and Directors Agreements (the
"Officers and Directors Agreements") with each of Company's directors who are
not affiliated with Parent, and certain officers of Company (the "Selling
Officers and Directors"), in which Dow has agreed, and the Selling Officers and
Directors, subject to the discharging of their fiduciary duties, have agreed to
tender an additional 5,056,396 Shares representing in the aggregate
approximately 23.26% of the outstanding Shares. If these Shares are all
purchased, Buyer and its affiliates will become the holders of approximately
51.36% and a majority of the outstanding Shares.
THE BOARD OF DIRECTORS OF COMPANY HAS DETERMINED THAT THE TENDER OFFER IS
FAIR TO AND IN THE BEST INTERESTS OF COMPANY AND ITS SHAREHOLDERS AND
UNANIMOUSLY RECOMMENDS THAT ITS SHAREHOLDERS ACCEPT THE OFFER BY BUYER TO
PURCHASE SHARES.
The purpose of the Offer is to enable Parent to acquire all the outstanding
Shares and control of Company. The Offer is the first step in the acquisition of
all Shares of Company. Buyer, Parent, and Company have entered into an Agreement
and Plan of Reorganization (the "Reorganization Agreement"), dated as of May 31,
1996, which provides, among other things, that following the consummation of the
Offer, subject to the terms and conditions contained in the Reorganization
Agreement and in accordance with the relevant provisions of the Washington
Business Corporation Act (the "WBCA"), Buyer will be merged into Company (the
"Proposed Merger") and Company will be the surviving corporation (the "Surviving
Corporation"). The Reorganization Agreement also provides that at Parent's
option, Company may be merged into Buyer with Buyer as the Surviving
Corporation. If Buyer acquires at least 90% of the outstanding Shares, Buyer
would have the ability to consummate the Proposed Merger without a meeting or
vote of the other shareholders of Company pursuant to the "short form" merger
provisions of the WBCA. Under the WBCA, a "short form" merger would have to be
effected by a merger of Company into Buyer, with Buyer as the Surviving
Corporation. On the effective date of the Proposed Merger (the "Effective
Date"), each outstanding Share (other than Shares owned by Buyer and its
affiliates, Shares held in the treasury of Company and Shares held by
shareholders who perfect their dissenters' rights under the WBCA) will be
converted into the right to receive an amount in cash equal to the highest price
per Share paid pursuant to the Offer (the "Merger Consideration").
In the event the Tender Offer is extended beyond July 31, 1996, the Offer
Price shall be increased by an amount equal to the product of the Offer Price
multiplied by the prime interest rate as announced by Bank of America NW, N.A.
(doing business as Seafirst Bank) in Seattle, Washington as in effect on August
1, 1996, multiplied by the quotient of the number of days that the Tender Offer
is extended after July 31, 1996, divided by 365.
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
Buyer will pay all fees and expenses of Chemical Mellon Shareholder Services
LLC, which is acting as the
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Depositary (the "Depositary"), and D.F. King & Co., Inc., which is acting as
Information Agent (the "Information Agent"), incurred in connection with the
Offer. See Section 14 "Certain Fees and Expenses." Certain federal income tax
consequences of the sale of Shares pursuant to the Offer are described in the
section captioned "Special Factors -- Certain Federal Income Tax Consequences"
below.
The Offer is subject to the fulfillment of a number of conditions
including, without limitation, the following:
MINIMUM TENDER CONDITION. THE OFFER IS CONDITIONED UPON THERE BEING
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN
SECTION 1 "TERMS OF THE OFFER") THAT NUMBER OF SHARES THAT WOULD, WHEN
AGGREGATED WITH THE SHARES ALREADY OWNED BY BUYER AND ITS AFFILIATES, REPRESENT
A MAJORITY OF ALL OUTSTANDING SHARES ON A FULLY DILUTED BASIS ON THE DATE OF
PURCHASE (THE "MINIMUM TENDER CONDITION"). BUYER AND ITS AFFILIATES OWN
6,106,000 SHARES. IF DOW FULFILLS THE TERMS OF THE SHAREHOLDER AGREEMENT AND THE
SELLING DIRECTORS AND OFFICERS FULFILL THE TERMS OF THE OFFICERS AND DIRECTORS
AGREEMENTS, BUYER AND ITS AFFILIATES WILL OWN, OR HAVE TENDERED TO BUYER, FOR
PURCHASE APPROXIMATELY 51.36% OF THE OUTSTANDING SHARES AND THE MINIMUM TENDER
CONDITION WILL BE SATISFIED. SEE "SPECIAL FACTORS -- CERTAIN SHARES EXPECTED TO
BE TENDERED."
GOVERNMENTAL APPROVALS CONDITION. THE OFFER IS CONDITIONED UPON OBTAINING
ALL AUTHORIZATIONS, CONSENTS, ORDERS OR APPROVALS OF, OR DECLARATIONS OR FILINGS
WITH, OR TERMINATIONS OR EXPIRATIONS OF WAITING PERIODS IMPOSED BY ANY
GOVERNMENT AGENCIES, AS ARE REQUIRED BY LAW OR OTHERWISE, NECESSARY OR REQUIRED
TO CONSUMMATE THE OFFER, INCLUDING, BUT NOT LIMITED TO, THE INVESTMENT CANADA
ACT, AND THE EXPIRATION OR TERMINATION OF ALL WAITING PERIODS IMPOSED BY THE
HART-SCOTT RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE
REGULATIONS THEREUNDER (THE "HSR ACT"), THE EXON-FLORIO AMENDMENT TO THE DEFENSE
PRODUCTION ACT OF 1950 AND THE REGULATIONS THEREUNDER ("EXON-FLORIO"), THE
COMPETITION ACT (CANADA) AND EUROPEAN ECONOMIC AREA AND NATIONAL MERGER
REGULATION (COLLECTIVELY, THE "GOVERNMENTAL APPROVALS").
Certain other conditions to the Offer are described in Sections 1, 2, 12
and 13. Buyer reserves the right (but shall not be obligated) to waive any or
all such conditions.
The percentages of Shares used herein are based on information provided by
Company, including a representation by Company that there were 21,735,415 Shares
outstanding as of May 31, 1996. The Reorganization Agreement provides that
immediately prior to the consummation of the Offer, holders of each of the then
outstanding stock options granted under any employee or non-employee director
stock option, stock purchase or similar plan or arrangement of Company
(collectively, the "Stock Plans") will receive cash payments from Company in
settlement of each such option and that the Stock Plans shall be terminated as
of the Effective Time (as defined herein). Accordingly, such Share percentages
assume that there are no stock options outstanding and that no Shares will be
issued pursuant to outstanding options. Such percentages also assume that Dow
will not exercise an option to purchase Series A Junior Participating
Convertible Preferred Shares of the Company (the "Preferred Shares") which are
convertible into Shares pursuant to Dow's rights under an agreement between Dow
and Company dated May 13, 1994 (the "Stock Purchase Agreement"). Under the
Shareholder Agreement, as discussed below, Dow has agreed that it will exercise
its option if Parent so requests. See "Special Factors -- Certain Shares
Expected to be Tendered."
SPECIAL FACTORS
PURPOSE OF THE OFFER
The purpose of the Offer and the Proposed Merger is to enable Parent to
acquire control of, and the entire equity interest in, Company. The Offer, as
the first step in the acquisition of Company, is intended to facilitate the
acquisition of at least a majority of the Shares. Parent currently intends, as
soon as practicable following
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consummation of the Offer, to consummate the Proposed Merger. The purpose of the
Proposed Merger is to acquire all Shares not tendered and purchased pursuant to
the Offer or otherwise held by non-affiliates of Parent. Pursuant to the
Proposed Merger, each then-outstanding Share (other than Shares owned by Buyer
and its affiliates, Shares held in the treasury of Company and Shares held by
shareholders who perfect any available dissenters' rights under the WBCA) will
be converted into the right to receive an amount in cash equal to the Merger
Consideration.
To ensure equal treatment of Company shareholders, the acquisition
transaction has been structured to be consummated in two steps, the Offer, a
cash tender offer, followed by the Proposed Merger, in which the remaining
equity interest in Company not acquired by Buyer pursuant to the Offer will be
subsequently converted into the right to receive the Merger Consideration. As a
result of the Proposed Merger, Company will become an indirect wholly-owned
subsidiary of Parent.
Except in the case of a "short-form" merger, under the WBCA and Company's
Articles of Incorporation, the approval of Company's Board of Directors and the
affirmative vote of holders of a majority of the outstanding Shares is required
to approve the Proposed Merger. If the Minimum Tender Condition is satisfied and
Buyer accepts for payment Shares tendered pursuant to the Offer, Buyer and its
affiliates would have sufficient voting power to approve the Proposed Merger
without the approval of any other shareholder of Company. See "Special
Factors -- Certain Shares Expected to be Tendered."
CERTAIN SHARES EXPECTED TO BE TENDERED
Buyer and its affiliates, Parent, Pakhoed USA Inc., a Delaware corporation,
and Pakhoed Investeringen, B.V., a limited liability company formed and existing
under the laws of The Netherlands, collectively own 6,106,000 Shares which
represents approximately 28.09% of the outstanding Shares. Pursuant to the
Shareholder Agreement between Dow and Parent, Dow has agreed to tender to Buyer
all Shares held of record or beneficially by it (representing all Shares as to
which Dow has sole or shared voting power) or later acquired (the "Dow Shares")
pursuant to the Offer. Buyer believes that Dow owns of record 3,900,000 Shares
which represents approximately 17.94% of the outstanding Shares. If Dow
exercises its option to purchase 101,874 Preferred Shares and converts such
Preferred Shares into Shares as described below, it will own approximately
19.87% of the then outstanding Shares. Dow and Parent have agreed, pursuant to
the Shareholder Agreement, that, if requested by Parent, Dow shall, (i) exercise
its option to purchase all or such portion of the Preferred Shares, which Dow is
entitled to purchase pursuant to the Stock Purchase Agreement, (ii) convert all
the Preferred Shares Dow acquires pursuant to the Stock Purchase Agreement into
509,370 Shares, and (iii) tender all Shares acquired pursuant to such conversion
of the Preferred Shares to Buyer pursuant to the Offer. If such request is not
made and the option is not exercised, Parent has agreed to pay to Dow or cause
the Surviving Corporation to pay Dow on consummation of the Proposed Merger, the
difference between the aggregate exercise price of the option to acquire the
Preferred Shares and the aggregate price that would have been paid pursuant to
the Offer for the Shares which would have been issued pursuant to the conversion
of the Preferred Shares. The Shareholder Agreement is subject to the absence of
a competing offer to purchase Shares at a purchase price greater than $19.45 per
Share or the Offer Price being adjusted to a price less than $19.45 per Share.
In addition, under the Officers and Directors Agreements, the Selling
Directors and Officers have each individually agreed that, subject to the
discharge of their fiduciary responsibilities in their capacities as members of
the Board of Directors or officers of Company, they will, as applicable: (a)
vote in favor of the Proposed Merger and the execution and delivery of the
Reorganization Agreement and all related agreements and all actions contemplated
thereby; (b) recommend to Company shareholders acceptance of the Offer and use
their reasonable efforts to cause the shareholders of Company to tender Shares
pursuant to the Offer; (c) use their reasonable efforts to cause the
shareholders of Company to adopt and approve the Reorganization Agreement and
the transactions contemplated thereby; and (d) consent to and/or encourage the
execution of agreements by a sufficient number of Company shareholders to assure
satisfaction of the Minimum Tender Condition. The Selling Directors and Officers
have also agreed to sell to Buyer a total of 1,156,396 Shares, representing
approximately 5.32% of the outstanding Shares.
Since Buyer and its affiliates, Parent, Pakhoed USA Inc., and Pakhoed
Investeringen B.V., collectively own 6,106,000 Shares, representing
approximately 28.09% of the outstanding Shares, and Dow and the Selling
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Directors and Officers, in connection with the Shareholder Agreement and the
Officers and Directors Agreements described above, have agreed to sell to Buyer
an additional 5,056,396 Shares representing approximately 23.26% of the
outstanding Shares, if Dow and the Selling Directors and Officers fulfill the
terms of the Shareholder Agreement and the Officers and Directors Agreements,
respectively, then Buyer and its affiliates will own 11,162,252 Shares,
representing approximately 51.36% of the outstanding Shares and the Minimum
Tender Condition will be met.
If the Minimum Tender Condition is met, Buyer will have sufficient voting
power to approve the Proposed Merger without the affirmative vote of any other
shareholder of Company. If as a result of the consummation of the Offer, Buyer
owns Shares representing 90% or more of the outstanding Shares it will be able
to effect the Proposed Merger as a "short form" merger without obtaining the
approval of any shareholder of Company.
CERTAIN EFFECTS OF THE TRANSACTION
The Proposed Merger will have the effect of eliminating the Shares of
Company shareholders, other than Shares held by Buyer and its affiliates, by
converting such Shares into the right to receive cash equal to the Merger
Consideration. Under Washington law, however, shareholders who have filed timely
notices of intent to dissent and who exercise dissenters' rights pursuant to
Sections 23B.11.020 through 23B.13.280 of the WBCA, will have certain rights
under the WBCA to dissent to the Proposed Merger and receive payment of "fair
value" of their Shares. Such rights to dissent, if statutory procedures are
complied with, could result in judicial determination of the fair value of the
Shares required to be paid to dissenting shareholders. Such dissenters' rights
are only available with respect to the Proposed Merger and are not available in
connection with the Offer. A copy of the provisions of 23B.11.020 through
23B.13.280 of the WBCA is attached as Schedule II to this Offer to Purchase. See
also "Special Factors -- Statutory Requirements."
According to Company's Annual Report on Form 10-K for the fiscal year ended
February 29, 1996 ("Company's 1996 10-K") Company's Shareholders' Equity was
$179,606,000 as of February 29, 1996, and Company had net income of $5,900,000
for the twelve months ended February 29, 1996. See Section 7 "Certain
Information Concerning Company." As a result of the consummation of the Offer
and the Proposed Merger, Company shareholders other than Parent and its
affiliates, will not have the opportunity to participate in the future earnings,
profits and growth of Company and will not have a right to vote on corporate
matters. Parent and its affiliates, as the Company shareholders after the
Proposed Merger, will own a 100% interest in the book value and earnings of
Company and will benefit from any increase in the value of Company following the
Offer and the Proposed Merger and will bear the risk of any decrease in the
value of Company after the Proposed Merger.
After the Proposed Merger, the Shares will cease to be registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), transactions
in Shares will not be reported on the New York Stock Exchange ("NYSE") or any
other national stock exchange, and the Shares will not be available for use as
collateral for loans made by brokers and others. See Section 6 "Effect of the
Offer on the Market for Shares" for a discussion on the possible effects of the
Offer.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash pursuant to the Offer or the Proposed Merger will be a
taxable transaction for federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be a taxable transaction
under applicable state, local or foreign income or other tax laws. Generally,
for federal income tax purposes, a tendering shareholder will recognize gain or
loss equal to the difference between the amount of cash received by the
shareholder pursuant to the Offer or the Proposed Merger and the aggregate tax
basis in the Shares tendered by the shareholder and purchased pursuant to the
Offer or converted in the Proposed Merger, as the case may be. Gain or loss will
be calculated separately for each block of Shares tendered and purchased
pursuant to the Offer or converted in the Proposed Merger, as the case may be.
If Shares are held by a shareholder as capital assets, gain or loss
recognized by the shareholder will be capital gain or loss, which will be
long-term capital gain or loss if the shareholder's holding period for the
Shares exceeds one (1) year. Under present law, long-term capital gains
recognized by an individual shareholder will generally be taxed at a maximum
federal marginal tax rate of 28%, and long-term capital gains recognized by a
corporate shareholder will be taxed at a maximum federal marginal tax rate of
35%.
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A shareholder (other than certain exempt shareholders including, among
others, all corporations and certain foreign individuals and entities) that
tenders Shares may be subject to 31% backup withholding unless the shareholder
provides its tax identification number ("TIN") and certifies that such number is
correct or properly certifies that it is awaiting a TIN, or unless an exemption
applies. A shareholder that does not furnish its TIN may be subject to a penalty
imposed by the Internal Revenue Service ("IRS"). See Section 2 "Procedure For
Tendering Shares -- Backup Withholding."
If backup withholding applies to a shareholder, the Depositary is required
to withhold 31% from payments to such shareholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the shareholder upon filing an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX
TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES,
TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A
HOLDER OF SHARES IN LIGHT OF INDIVIDUAL CIRCUMSTANCES. THE FEDERAL INCOME TAX
DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND IS BASED
ON EXISTING TAX LAW AS OF THE DATE OF THIS OFFER TO PURCHASE. DUE TO THE
INDIVIDUAL NATURE OF TAX CONSEQUENCES, SHAREHOLDERS ARE URGED TO CONSULT THEIR
OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING
THE APPLICATION AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX
LAWS) OF THE OFFER AND THE PROPOSED MERGER.
FAIRNESS OF THE TRANSACTION
BUYER. Buyer believes that the Offer and Proposed Merger is fair to the
public holders of Shares. In making this determination, Buyer considered the
following factors: (a) the premium represented by the difference between the
Offer Price and recent and historical trading prices of the Shares; (b) the
premium represented by the difference between the Offer Price and the book value
per Share of $8.28 as of February 29, 1996; (c) the Offer will provide holders
the opportunity to sell Shares for cash without the usual transaction costs
associated with open-market sales or the potential resulting depressing effect
on the market price of Shares due to the limited trading volume for Shares; and
(d) the business, results of operations and prospects of Company and the nature
of the industry in which it operates, and the risks associated therewith. Buyer
did not find it practicable to, and therefore did not, quantify or otherwise
assign relative weights to these factors.
Commencing August 26, 1995, Buyer retained the financial consulting
services of Mr. Thomas M. Foster, who provided financial and related advice to
Buyer in connection with the transactions contemplated by the Reorganization
Agreement. However, Buyer has not received any report, opinion or appraisal from
any outside financial advisor or appraiser with respect to the Offer and
Proposed Merger, including but not limited to, any report, opinion or appraisal
relating to the consideration or the fairness of the consideration to be offered
to the holders of the Shares or the fairness of the Offer and the Proposed
Merger to Company or to any security holder of Company. Buyer has not retained
any financial advisor to negotiate the terms of the Offer and the Proposed
Merger or to prepare a report concerning the fairness of the Offer and the
Proposed Merger.
COMPANY. The Board of Directors of Company has determined that the Tender
Offer is fair to and in the best interests of Company and its shareholders and
unanimously recommends that its shareholders accept the Offer by Buyer to
purchase Shares. In unanimously approving the Offer, the Proposed Merger and the
Reorganization Agreement and recommending that all shareholders tender their
Shares pursuant to the Offer, the Board considered a number of factors
including:
(a) the financial and other terms and conditions of the Offer and
Reorganization Agreement;
(b) the presentation of Schroder Wertheim Co., Incorporated ("Schroder
Wertheim") at the May 31, 1996 Board meeting and the written opinion of
Schroder Wertheim to the effect that, as of the date of such opinion, and
based upon the considerations and limitations set forth therein, the
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consideration to be received by the holders of Shares in the Offer and the
Proposed Merger was fair to such holders, other than Parent, Buyer and its
affiliates, from a financial point of view.
(c) the possible alternatives to the Offer and the Proposed Merger,
including, without limitation, continuing to operate Company as an
independent entity, and the risks and opportunities associated therewith;
(d) the business, results of operations, and prospects of Company and
the nature of the industry in which it operates, and the risks associated
therewith;
(e) the fact that the terms of the Reorganization Agreement should not
unduly discourage other third parties from making bona fide proposals to
acquire Company subsequent to the execution of the Reorganization Agreement
and, that if any such proposals were made, the Board, in the exercise of
its fiduciary duties, could determine to provide information to and engage
in negotiations with any such third party subject to the terms and
conditions of the Reorganization Agreement;
(f) the Governmental Approvals required to consummate the Proposed
Merger, including, among others, antitrust approvals, and the prospects for
receiving such approvals;
(g) the general relatively high level of stock prices on the NYSE and
other principal trading markets in the United States and the risk that a
major drop in such markets would also have a significant and potentially
long term adverse effect on the Shares; and
(h) the possibility that, after the expiration of the standstill
provisions contained in the Confidentiality Agreement (as defined below in
Section 10 "Contracts and Transactions among Parent, Buyer and Company"),
that Parent might proceed with a tender offer on a unilateral basis at a
significantly lower price.
The Board did not assign relative weights to the factors or determine that
any factor was of particular importance. Rather, the Board viewed its position
and recommendation as being on the totality of the information presented to and
considered by it. In negotiating the terms of the Offer, the Board appointed a
Special Committee, none of whom are members of management or affiliated with
Parent or Dow, to represent the interest of all unaffiliated shareholders in
negotiating the terms of the Offer and the Proposed Merger.
Buyer and its affiliates are not aware of any firm offer made by any
unaffiliated person during the preceding 18 months for (a) the merger or
consolidation of Company into or with such person or of such person into or with
Company, (b) the sale or other transfer of all or any substantial part of the
assets of Company or (c) securities of Company which would enable the holder
thereof to exercise control of Company.
REPORTS, OPINIONS AND APPRAISALS
As noted above, as part of its role as financial advisor to Company,
Schroder Wertheim was engaged to deliver to Company's Board of Directors its
opinion, as investment bankers, that as of May 31, 1996, the consideration to be
offered to the shareholders of Company other than Parent, Buyer and their
affiliates in the Offer and the Proposed Merger is fair to such shareholders
from a financial point of view. A copy of Schroder Wertheim's opinion is
contained in Company's Solicitation/Recommendation Statement on Schedule 14D-9
(the "Schedule 14D-9") filed by Company with the Commission in connection with
the Offer and is being mailed to shareholders by Company with this Offer to
Purchase. Such opinion is subject to certain limitations and is based on certain
assumptions stated therein, and the summary of such opinion set forth below is
qualified in its entirety by reference to the full text of such opinion. Holders
of Shares are urged to read Schroder Wertheim's opinion in its entirety.
No limitations were imposed by Company or the Board on the scope of
Schroder Wertheim's investigation or the procedures to be followed by Schroder
Wertheim in rendering its opinion, except that Schroder Wertheim was not
authorized to solicit, and did not solicit, any indications of interest from any
third party with respect to a purchase of all or a part of Company's business.
Schroder Wertheim was not requested to and did not make any recommendation to
the Board as to the form or amount of consideration to be offered to
shareholders in the Offer and the Proposed Merger, which was determined through
negotiations between Company and Parent. In arriving at its opinion, Schroder
Wertheim did not ascribe a specific range of value to Company, but made its
determination as to the fairness, from a financial point of view of the
consideration to be offered to the shareholders of Company other than Parent,
Buyer and their affiliates on the basis of the
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financial and comparative analyses described below. Schroder Wertheim's opinion
is for the information of the Board solely for its use in evaluating the
fairness from a financial point of view of the consideration to be offered to
the shareholders of Company other than Parent, Buyer and their affiliates in the
Offer and the Proposed Merger and is not intended to be, and does not
constitute, a recommendation to any shareholder as to whether to accept the
consideration to be offered to such shareholder in the Offer or the Proposed
Merger. In rendering its opinion, Schroder Wertheim was not engaged as an agent
or fiduciary of Company's shareholders or any other third party. Schroder
Wertheim's opinion is not an opinion as to the structure, terms or effect of any
aspect of the Offer or the Proposed Merger and does not in any manner address
the Company's underlying business decision to enter into the Reorganization
Agreement.
In connection with its opinion, Schroder Wertheim, among other things (i)
reviewed a draft, dated May 30, 1996, of the Reorganization Agreement; (ii)
reviewed a draft, dated May 30, 1996, of the Schedule 14D-1 filed by Buyer with
the Commission in connection with the Offer, including a draft of this Offer to
Purchase incorporated therein by reference; (iii) reviewed a draft, dated May
30, 1996, of the Schedule 14D-9 filed by Company with the Commission in
connection with the Offer; (iv) reviewed Company's Annual Reports on Form 10-K
filed with the Commission for the fiscal years ended February 1992, 1993, 1994,
1995 and 1996, including the audited consolidated financial statements of
Company included therein; (v) reviewed historical financial results of Company
by operating division prepared by management; (vi) reviewed forecasts and
projections for Company prepared or supplied by Company management for the
fiscal years ending February 1997 through 2002; (vii) held discussions with
Company management regarding the business, operations and prospects of Company;
(viii) compared the results of operations and certain market valuation
statistics of Company with those of certain publicly traded companies which
Schroder Wertheim deemed to be reasonably comparable to Company; (ix) reviewed
the financial terms, to the extent publicly available, of certain comparable
transactions; (x) reviewed the historical trading prices and volumes of Shares;
and (xi) performed such other financial studies, analyses, inquiries and
investigations as it deemed appropriate.
In rendering its opinion, Schroder Wertheim assumed and relied upon,
without independent verification, the accuracy and completeness of all
information supplied or otherwise made available to it by Company or obtained by
it from other sources, and upon the assurances of Company's management that they
were unaware of any information or facts that would make the information
provided to Schroder Wertheim incomplete or misleading. Schroder Wertheim did
not conduct a physical inspection of the properties and facilities of Company
and did not undertake an independent appraisal of assets or liabilities
(contingent or otherwise) of Company and was not furnished with any such
appraisals. Schroder Wertheim also assumed that the financial forecasts
furnished by Company were reasonably prepared and reflected the best current
available estimates and judgment of the senior management of Company as to the
expected future financial performance of Company. Schroder Wertheim's opinion
was necessarily based upon economic, market and other conditions as they existed
on, and the information made available to it as of, the date of its opinion, and
Schroder Wertheim has disclaimed any undertaking or obligation to advise any
person of any change in any fact or matter affecting its opinion.
The following paragraphs summarize the financial and comparative analyses
performed by Schroder Wertheim and presented to the Board in connection with its
opinion. The summary does not represent a complete description of the analyses
performed by Schroder Wertheim.
Analysis of Comparable Publicly Traded Companies. Using publicly available
information, Schroder Wertheim compared selected historical and projected
financial and operating data, and selected stock market data, of Company to the
corresponding data of the following publicly traded chemical and industrial
distribution companies which Schroder Wertheim considered reasonably comparable
to Company (collectively, the "Comparable Companies"): Aceto Corporation;
Bearings, Inc.; Ellis & Everard plc; Hawkins Chemical, Inc.; McKesson
Corporation; National Sanitary Supply Co.; and W.W. Grainger, Inc.
Schroder Wertheim performed a market analysis of Company and the Comparable
Companies using closing market prices as of May 30, 1996. In connection with
such analysis, Schroder Wertheim noted, among other things, that (i) the
multiple of Company's market price to its earnings per Share for the last twelve
months ("LTM") ended April 30, 1996 was 32.4x compared to an average market
price to earnings per share multiple of 14.5x for the Comparable Companies
(using the most recent reported LTM period for each of the Comparable Companies
(collectively, the "Comparable LTM Periods")); (ii) Company's market price to
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analyst projected 1997 earnings per Share (based on consensus analysts
estimates) multiple was 15.1x compared to an average analyst projected 1996
earnings per share multiple of 13.4x for the Comparable Companies; (iii)
Company's market value plus total debt minus total cash ("Enterprise Value") to
adjusted earnings before interest and taxes ("EBIT") multiple was 15.8x compared
to an average Enterprise Value to adjusted EBIT multiple of 9.0x for the
Comparable Companies; and (iv) Company's Enterprise Value to adjusted earnings
before interest, taxes, depreciation and amortization ("EBITDA") multiple was
8.0x compared to an average Enterprise Value to adjusted EBITDA multiple of 7.3x
for the Comparable Companies. Based on this analysis, Schroder Wertheim
calculated the implied equity value of Company's Shares on a fully diluted basis
to be between $7.45 and $13.13 per share. The offer price of $19.45 implies a
premium of 48.1% to 161.2% based on these implied values.
In addition, Schroder Wertheim compared Company's recent operating
performance to the recent operating performance of the Comparable Companies.
This analysis illustrated, among other things, that: (i) Company's growth rate
in revenues for the three years ended February 29, 1996 was 6.3% compared with
an average growth rate in revenues for the last three fiscal years of 10.2% for
the Comparable Companies; (ii) Company's LTM EBITDA as a percentage of revenues
("EBITDA Margin") was 2.8% compared with an average EBITDA Margin of 7.0% for
the Comparable Companies over the Comparable LTM Periods; (iii) Company's LTM
EBIT as a percentage of revenues ("EBIT Margin") was 1.4% compared with an
average EBIT Margin of 5.8% for the Comparable Companies over the Comparable LTM
Periods; (iv) Company's LTM net income as a percentage of revenues ("Net Income
Margin") was 0.4% compared to an average Net Income Margin of 3.5% for the
Comparable Companies over the Comparable LTM Periods; and (v) Company's LTM
return on equity was 8.6% compared to an average return on equity of 22.9% for
the Comparable Companies over the Comparable LTM Periods.
Discounted Cash Flow Analysis. Schroder Wertheim performed a discounted
cash flow analysis of Company based on the financial forecast of Company as a
whole and each of its major subsidiaries for the fiscal years ending 1997 to
2002 prepared and provided by the management of Company (the "Company Financial
Forecast"). A discounted cash flow analysis is a traditional valuation
methodology used to derive a valuation of a corporate entity by calculating the
estimated future free cash flows of such corporate entity and discounting such
cash flow results back to the present.
Schroder Wertheim analyzed the Company Financial Forecast and discounted
the stream of free cash flows provided in such forecast back to May 31, 1996. To
estimate the terminal value of Company at the end of the Company Financial
Forecast period, Schroder Wertheim applied terminal multiples ranging from 5.0x
to 7.0x to Company's projected fiscal 2002 adjusted EBITDA and discounted such
value estimates back to May 31, 1996. Schroder Wertheim then summed the present
values of the free cash flows and the present values of the terminal values to
derive a range of implied equity values for Company of $375.5 million to $651.3
million (after adjustments for total debt, cash and equivalents and cash
proceeds from the exercise of stock options). These values represent $16.82 to
$28.57 per Share on a fully-diluted basis.
Selected Merger and Acquisition Transaction Analysis. Schroder Wertheim
analyzed certain publicly available information relating to numerous selected
merger and acquisition transactions in the chemical and industrial distribution
industries since 1994. Although these transactions were reviewed for comparison
purposes, none of such transactions is directly comparable to the Offer or the
Proposed Merger. Among the transactions analyzed by Schroder Wertheim were
(target/acquiror): Parts, Inc. (GKN plc)/APS Holding Corp.; Erith plc/Graham
Group; Industrial and Life Sciences Unit (Baxter)/VWR Scientific Products
Corporation; ADESA Corporation/Minnesota Power & Lighting Company; Lambert
Riviere S.A./Royal Pakhoed N.V.; Anthem Electronics, Inc./Arrow Electronics,
Inc.; Orchidis/Brenntag AG; Gates-FA Distributing Inc./Arrow Electronics, Inc.;
Bunzl Building Supply Inc./Rugby Group plc; and several acquisitions completed
by Airgas, Inc. of various regional distributors.
Schroder Wertheim computed the equity cost (offer per share multiplied by
total common shares outstanding (the "Equity Cost")) in each of the selected
transactions analyzed and divided such amount by the acquired company's LTM net
income immediately prior to the acquisition which resulted in a range of
purchase price multiples. Schroder Wertheim also computed the adjusted price
(the Equity Cost plus latest reported total debt, capitalized leases, preferred
stock and minority interest minus total cash and cash
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equivalents, adjusted for outstanding options (the "Adjusted Purchase Price"))
paid in each of the selected transactions analyzed and divided such amount by
the acquired company's LTM adjusted EBITDA and EBIT immediately prior to the
acquisition which resulted in other ranges of purchase price multiples. Using
such information and Company's LTM operating results, Schroder Wertheim compared
the implied purchase price multiples of the Offer and the Proposed Merger to the
purchase price multiple ranges calculated as aforesaid. Such analysis
illustrated: (i) the implied Adjusted Purchase Price to LTM adjusted EBITDA
multiple of the Offer and the Proposed Merger is 11.0x compared with a multiple
range of 5.4x to 15.6x for the selected transactions analyzed; (ii) the implied
Adjusted Purchase Price to LTM adjusted EBIT multiple of the Offer and the
Proposed Merger is 21.6x compared with a multiple range of 8.7x to 21.1x for the
selected transactions analyzed; and (iii) the implied Equity Cost to LTM net
income multiple of the Offer and the Proposed Merger is 50.9x compared with a
multiple range of 11.6x to 38.6x for the selected transactions analyzed. Based
on this analysis, Schroder Wertheim calculated the implied equity value of
Company's Shares on a fully diluted basis to be between $4.17 and $21.41 per
share.
Other Analyses. Schroder Wertheim analyzed the feasibility of a leveraged
buyout of Company. This analysis implied that a leveraged buyout of Company was
marginally feasible at a price of $15.00 per Share based on current market
conditions.
Schroder Wertheim also analyzed the premium paid over the stock price of
the acquired company one day, one week and four weeks prior to the announcement
of the transaction in selected merger transactions since 1994. This analysis
demonstrated that, on average, the acquired company received a 34.6%, 39.1% and
45.0% premium over its stock price one day, one week and four weeks,
respectively, prior to announcement of a transaction. Schroder Wertheim then
compared these results with the premiums over Company's stock price implied by
the Offer and the Proposed Merger. The Offer and the Proposed Merger imply
premiums of 57.2%, 55.2% and 58.0% over Company's Share price one day, one week
and four weeks, respectively, prior to May 31, 1996.
The foregoing summary does not purport to be a complete description of
Schroder Wertheim's analyses or of the presentation by Schroder Wertheim to
Company's Board. Schroder Wertheim did not attribute any particular weight to
any analysis or factor considered by it, but rather made qualitative judgments
as to the significance and relevance of each analysis or factor. Accordingly,
Schroder Wertheim believes that its analyses must be considered as a whole and
that selecting portions of its analyses or of the factors considered, without
considering all analyses and factors, could create an incomplete or misleading
view of the processes underlying the preparation of its opinion. The preparation
of a fairness opinion is a complex process and is not necessarily susceptible to
partial analysis or summary description. In performing its analyses, Schroder
Wertheim made numerous assumptions with respect to general business and economic
conditions and other matters, many of which are beyond the control of Company.
The analyses performed by Schroder Wertheim are not necessarily indicative of
actual values or actual future results, which may be significantly more or less
favorable than suggested by such analyses. Additionally, analyses relating to
the values of businesses do not purport to be appraisals or to reflect the
prices at which a business may actually be sold or at which a company's
securities may trade at any time.
Schroder Wertheim is a nationally recognized investment banking firm
engaged, among other things, in the valuation of businesses and their securities
in connection with mergers, and acquisitions, negotiated underwritings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes.
A copy of the report submitted by Schroder Wertheim to Company's Board of
Directors has been filed as an exhibit to the Statement on Schedule 13E-3 filed
by Parent and Buyer. Copies of said report are available for inspection and
copying at the principal executive offices of Company during regular business
hours by any shareholder of Company, or a shareholder's representative who has
been so designated in writing.
In April 1995, Company engaged Schroder Wertheim as its exclusive financial
advisor in connection with the review of various options to maximize the value
of Company to its shareholders. Pursuant to this engagement, Company paid to
Schroder Wertheim a fee of $125,000 and agreed to pay customary and reasonable
advisory and financing fees to be negotiated in good faith if Company were to
proceed with a transaction or financing. In addition, Company agreed to
reimburse Schroder Wertheim for its reasonable out-
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of-pocket expenses in connection with such engagement and to indemnify Schroder
Wertheim against certain liabilities, including liabilities under the federal
securities laws.
Pursuant to an engagement letter, dated May 10, 1996, Company engaged
Schroder Wertheim, among other things, to render an opinion, as investment
bankers, as to the fairness, from a financial point of view, of the Offer and
the Proposed Merger to the shareholders of Company other than Parent, Buyer and
their affiliates. Pursuant to said engagement letter, Company (i) paid to
Schroder Wertheim an initial cash fee of $300,000 upon execution of said
engagement letter, (ii) paid to Schroder Wertheim an additional cash fee of
$300,000 at the time Schroder Wertheim informed the Board of Directors that it
was ready to deliver its opinion, and (iii) has agreed to pay to Schroder
Wertheim a cash fee of $900,000 upon consummation of the Offer. Company has also
agreed to reimburse Schroder Wertheim for its reasonable-out-of-pocket expenses
and to indemnify Schroder Wertheim, its officers, directors, controlling
persons, employees and agents, against certain liabilities, including
liabilities under the federal securities laws, relating to, arising out of, or
in connection with, the matters contemplated by the engagement letter.
Schroder Wertheim, in the normal course of business, trades in the
securities of Company for its own account and for the account of its customers,
and, accordingly, may from time to time hold a long or short position in
Company's securities.
PLANS FOR COMPANY
It is expected that following the Offer and the Proposed Merger, the
business and operations of Company will be continued substantially as they are
currently being conducted. Parent's current intention is to keep Company's
headquarters in Kirkland, Washington.
Furthermore, except as described in this Offer to Purchase Shares, based on
their current knowledge of Company, Parent and Buyer have no present plans or
proposals that would result in: (a) an extraordinary corporate transaction, such
as a merger, consolidation, reorganization or liquidation involving Company or
any of any corporation, partnership, limited liability company, or other entity
in which Company owns, directly or indirectly, any equity interest and whose
financial statements are consolidated for accounting purposes under generally
accepted accounting principles ("GAAP") ("Company Subsidiaries"), (b) a sale or
transfer of a material amount of assets involving Company or any of Company
Subsidiaries, (c) any material changes in Company's present capitalization or
dividend policy of Company, or (d) any other material change in Company's
corporate structure or business. However, Buyer and its affiliates are
continuing their review of Company and its assets, corporate structure,
capitalization, operations, properties, policies, management and personnel.
After the completion of such review, Parent may propose or develop alternative
plans or proposals, including mergers, transfers of a material amount of assets
or other transactions or changes of the nature described above. Parent and Buyer
also reserve the right to effect any change in Company's operations, properties,
policies, management and personnel as may be deemed necessary as a result of
such continuing review thereof.
Pursuant to the Reorganization Agreement, Parent has received contingent
resignations from all directors who were not nominated by Parent, which are
contingent upon consummation of the Offer. Upon the consummation of the Offer,
Company shall accept resignations of a sufficient number of directors as
determined by Parent to result in Parent having representation on the Board of
Directors of Company proportionate to the percentage holding of Buyer and its
affiliates, provided that the Board (excluding directors nominated by Parent)
shall have the right but not the obligation to designate up to four current
members of the Special Committee (as defined below) who may remain directors
after the consummation of the Offer and until the Effective Date of the Proposed
Merger. Parent expects that upon effectiveness of the Proposed Merger or shortly
thereafter, representatives of Parent will replace existing directors of Company
and the Board of Directors of Company will be composed exclusively of
representatives of Parent.
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CERTAIN STATUTORY REQUIREMENTS
Vote Required to Approve Proposed Merger
The WBCA requires that the adoption of any plan of merger or consolidation
of Company must be approved by Company's Board of Directors and by the vote of
the holders of two-thirds ( 2/3) of the outstanding Shares entitled to vote
thereon, unless otherwise provided by Company's Articles of Incorporation.
Article IX of Company's Articles of Incorporation provides that only a majority
of the outstanding Shares entitled to vote thereon is required for the approval
of the Proposed Merger. Company's Board of Directors has unanimously approved
the Offer and the Proposed Merger and the only further action of Company
required to approve the Proposed Merger will be the approval by a majority vote
of shareholders.
Article VII of Company's Articles of Incorporation requires that certain
Major Transactions, as defined therein, must be approved by 80% of the
outstanding Shares entitled to vote, which shall include the affirmative vote of
at least 50% of the outstanding Shares entitled to vote, other than shares held
by the Twenty Percent Shareholder, as defined therein, involved in such Major
Transaction. Buyer and Parent fall under the Articles of Incorporation's
definition of "Twenty Percent Shareholder" and the transactions contemplated by
the Reorganization Agreement constitute a "Major Transaction."
Company's Articles of Incorporation, however, also state that the
provisions of Article VII shall not apply to a Major Transaction if: (a) such
Major Transaction was approved by Company's Board of Directors after the Twenty
Percent Shareholder became a Twenty Percent Shareholder, and (b) the Twenty
Percent Shareholder sought and obtained the unanimous approval by Company's
Board of Directors of its acquisition of 20% or more of the outstanding Shares
entitled to vote prior to such acquisition being consummated. Parent and Pakhoed
Investeringen B.V. obtained their collective more than 20% interest in Company's
outstanding Shares prior to approval of Company's Board of Directors of the
transactions contemplated by the Reorganization Agreement and such transactions
were approved by the unanimous vote of the Board of Directors. Therefore, the
requirements for an approval by 80% of the outstanding Shares of a Major
Transaction, as described above, do not apply to the Proposed Merger.
The unanimous approval of the Reorganization Agreement by Company's Board
of Directors has rendered inapplicable the Washington Fair Price Statute,
Section 23B.17.020 of the WBCA, which would otherwise have required the vote of
the holders of two-thirds ( 2/3) of the outstanding Shares entitled to vote and
would have prevented the Shares held by Pakhoed USA Inc., Pakhoed Investeringen
B.V. and Buyer (as interested shareholders) from being counted towards the
required vote.
Furthermore, Parent, Pakhoed Investeringen B.V. and Pakhoed USA Inc.
acquired more than ten percent (10%) of Company's voting stock prior to March
23, 1988, which exempts the transactions contemplated by the Reorganization
Agreement from the Washington Moratorium Statute, Section 23B.19.040 of the WBCA
(the "Washington Moratorium Statute"). The Washington Moratorium Statute
prohibits certain "significant business transactions," such as the Proposed
Merger of a target corporation, with a greater-than-ten-percent shareholder for
a period of five (5) years, subject to certain exceptions.
If as a result of the consummation of the Offer, Buyer and its affiliates
own at least 90% of the outstanding Shares pursuant to the Offer, Buyer will
have the ability to consummate the Proposed Merger without a meeting or vote of
the other shareholders of Company pursuant to the "short form" merger provisions
of the WBCA. Under the WBCA as currently in effect, a "short form" merger would
have to be effected in the form of a merger of Company into Buyer. The Proposed
Merger and any such "short form" merger may require the consent of third parties
under certain of the agreements to which Company is subject.
Buyer and its affiliates will vote all outstanding Shares beneficially
owned by them in favor of adoption of the Proposed Merger. Collectively, Buyer
and its affiliates own approximately 28.09% of the outstanding Shares. If Dow
fulfills the terms of the Shareholder Agreement and the Selling Directors and
Officers fulfill the terms of the Officers and Directors Agreements, then Buyer
shall own approximately 51.36% of the outstanding Shares, the Minimum Tender
Condition will be met, and Buyer will have sufficient Shares to approve the
Proposed Merger without the affirmative vote of any other shareholders of
Company.
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Although Buyer, Parent, and Company have agreed to consummate the Proposed
Merger, there can be no assurance that certain conditions to the Proposed
Merger, some of which are beyond the control of Buyer, Parent, and Company will
be satisfied. See Section 10, "The Reorganization Agreement -- Conditions to the
Proposed Merger." The Offer and Proposed Merger are subject to other statutory
requirements described in "Special Factors" and Section 13 "Certain Legal
Matters."
Dissenters' Rights
Holders of Shares do not have dissenters' rights as a result of the Offer.
However, if the Proposed Merger is ultimately consummated, shareholders who have
filed timely notices of intent to dissent will have certain rights under the
WBCA to dissent to the Proposed Merger and receive payment of the fair value of
their Shares. At least 20 days prior to the date that shareholders vote on the
Proposed Merger (if a vote is required), Company will be required to deliver a
notice of dissenters' rights to all Company's shareholders, stating that the
shareholders have the right to dissent from the approval of the Proposed Merger
and explaining such dissenters' rights. Dissenters' rights also apply to
minority shareholders in connection with short form mergers. Such rights to
dissent, if the statutory procedures are complied with, could result in a
judicial determination of the "fair value" of the Shares required to be paid to
dissenting shareholders. The fair value of the Shares awarded to dissenting
shareholders would be the fair value as of the time immediately preceding the
consummation of the Proposed Merger, and would exclude any appreciation or
depreciation that occurred in anticipation of the Proposed Merger. The court
would also allow interest, at a rate that it determines to be fair and
equitable, from the date on which the Proposed Merger is consummated.
Parent and Buyer cannot make any representations as to the outcome of any
determination of fair value by a court, and holders of Shares should recognize
that such a determination of fair value could result in a price higher than,
lower than, or equal to the price available to shareholders pursuant to the
Proposed Merger. Moreover, Parent may argue in such a court proceeding that, for
purposes of such proceeding, the fair value of the Shares is less than the price
available pursuant to the Proposed Merger. Under Washington law, the court may
consider a variety of factors in determining fair value. These include the
market price at which the Shares are trading, the net value of Company's assets,
the anticipated future business prospects of Company, estimates of the
capitalized value of future earnings and other factors. Washington law requires
that the court consider all relevant facts and circumstances in determining the
fair value and that it not give undue emphasis to any one factor.
The Proposed Merger may be subject to additional "fairness" requirements.
Several recent cases in jurisdictions other than Washington, which may or may
not apply to the Proposed Merger have held that a controlling shareholder of a
company involved in a merger or other business combination has a fiduciary duty
to the other shareholders. In determining whether the controlling shareholder
has fulfilled such duty to the shareholders, certain courts have considered,
among other things, the type and amount of the consideration to be received by
such other shareholders and whether the other shareholders are accorded
appraisal rights.
The foregoing summary of the rights of objecting shareholders does not
purport to be a complete statement of the procedures to be followed by
shareholders desiring to exercise their dissenters' rights. The preservation and
exercise of dissenters' rights are conditioned on strict adherence to the
applicable provisions of the WBCA. A copy of the provisions of 23B.11.020
through 23B.13.280 of the WBCA is attached on Schedule II.
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"Going Private" Transactions
The Commission has adopted Rule 13e-3 under the Exchange Act which is
applicable to certain "going private" transactions and which may be applicable
to the Offer and Proposed Merger. The information and disclosures Buyer is
required to make under Rule 13e-3 are contained in this Offer to Purchase and
Buyer has filed a Schedule 13E-3 with the Commission in accordance with Rule
13e-3. However, the disclosures provided and the filing made are not to be
construed to deem any of Buyer or any of its affiliates as "affiliates" or
"control persons" of Company. Because of the restrictive provisions of the
Standstill Agreement which, among other things, limit the ability of Buyer and
its affiliates to elect representatives to Company's Board of Directors, to call
shareholder meetings, to form a "group", to induce any other person to initiate
a tender offer, or to otherwise exercise control over Company, Buyer does not
believe that it or any of its affiliates or "control persons" are "affiliates"
of Company for purposes of Rule 13e-3 or otherwise. See Section 10 "Contracts
and Transactions among Parent, Buyer and Company." Furthermore, under the
Standstill Agreement, Parent and its affiliates are required to vote their
shares for the election of persons designated by the other unaffiliated
directors to fill Board seats other than Parent's proportionate number to which
it is entitled under the Standstill Agreement.
INTEREST IN SECURITIES OF SUBJECT COMPANY
Except as described in this Offer to Purchase, none of Buyer, Parent,
Pakhoed USA Inc., or Pakhoed Investeringen B.V. or, to the best knowledge of
Buyer, any of the persons listed in Schedule I hereto, or any associate or
majority owned subsidiary of Buyer, Parent, Pakhoed USA Inc., or Pakhoed
Investeringen B.V. or any of the persons so listed, beneficially owns any equity
security of Company, and none of Buyer, Parent, Pakhoed USA Inc., or Pakhoed
Investeringen B.V. or, to the best knowledge of Buyer, any of the other persons
referred to above, or any of the respective directors, executive officers or
subsidiaries of any of the foregoing, has effected any transaction in any equity
security of Company during the past 60 days.
Except as described in this Offer to Purchase, including, but not limited
to, the information disclosed in Section 10 "Contracts and Transactions among
Parent, Buyer and Company" as of the date hereof, (a) there have not been any
contacts, transactions or negotiations between Buyer or Parent, any of their
respective subsidiaries or, to the best knowledge of Buyer, any of the persons
listed in Schedule I hereto, on the one hand, and Company or any of its
directors, officers or affiliates, on the other hand, that are required to be
disclosed pursuant to the rules and regulations of the Commission, and (b) none
of Buyer, Parent or, to the best knowledge of Buyer, any of the persons listed
in Schedule I hereto has any contract, arrangement, understanding or
relationship with any person with respect to any securities of Company. Prior to
the Effective Date, Buyer and Parent intend to have ongoing contacts and
negotiations with Company and its directors, officers and shareholders.
THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, Buyer will
accept for payment and pay the Offer Price for all Shares validly tendered prior
to the Expiration Date and not theretofore withdrawn in accordance with Section
3. The term "Expiration Date" means 8:00 p.m., New York City time, on Monday,
July 15, 1996, unless and until Buyer shall have extended the period of time
during which the Offer is open pursuant to this Section, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by Buyer, will expire.
If by 8:00 p.m., New York City time, on Monday, July 15, 1996 (or any date
or time then set as the Expiration Date), any or all of the conditions to the
Offer have not been satisfied or waived, Buyer reserves the right (but shall not
be obligated), subject to the applicable rules and regulations of the
Commission, to terminate the Offer and not accept for payment or pay for any
Shares and return all tendered Shares to tendering shareholders. In addition,
Buyer may: (a) extend the Offer to a date not later than August 31, 1996 if any
Governmental Approvals shall not have been obtained by July 31, 1996 or, if by
July 26, 1996, less than
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80% of the outstanding Shares have been tendered for purchase and Buyer
reasonably believes that 80% or more of the Shares will be tendered if the
Expiration Date is extended to not later than August 31, 1996; and (b) subject
to the right of Company shareholders to withdraw Shares until the Expiration
Date, retain the Shares that have been tendered during the period or periods for
which the Offer is extended. In the event the Tender Offer is extended beyond
July 31, 1996, the Offer Price shall be increased by an amount equal to the
product of the Offer Price multiplied by the prime interest rate as announced by
Bank of America NW, N.A. (doing business as Seafirst Bank) in Seattle,
Washington as in effect on August 1, 1996, multiplied by the quotient of the
number of days that the Tender Offer is extended after July 31, 1996, divided by
365.
There can be no assurance that Buyer will exercise its right to extend the
Offer. Any extension, amendment or termination to the Offer will be followed as
promptly as practicable by public announcement. In the case of an extension,
Rule 14e-l(d) under the Exchange Act requires that the announcement be issued no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
shareholders in connection with the Offer be promptly disseminated to
shareholders in a manner reasonably designed to inform shareholders of such
change), and without limiting the manner in which Buyer may choose to make any
public announcement, Buyer will not have any obligation to publish, advertise or
otherwise communicate any such public announcement other than by making a
release to the Dow Jones News Service. As used in this Offer to Purchase,
"business day" has the meaning set forth in Rule 14d-1 under the Exchange Act.
The minimum period during which an Offer must remain open following material
changes in the terms of the Offer or information concerning the Offer, other
than a change in price or a change in the percentage of securities sought, will
depend upon the facts and circumstances then existing, including the relative
materiality of the changed terms or information. In the case of a change in the
Offer Price or a change in the percentage of Shares sought, the Offer must
remain open for at least ten (10) business days from the date the notice of such
change is published, sent or given to shareholders.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS: (A) THE MINIMUM TENDER
CONDITION; (B) THERE BEING OBTAINED OR WAIVED ALL GOVERNMENTAL APPROVALS FOR THE
OFFER AND THAT ALL APPLICABLE LAWS ARE COMPLIED WITH; AND (C) THE SATISFACTION
OR WAIVER OF THE OTHER CONDITIONS SET FORTH IN SECTION 12. SEE THE INTRODUCTION
AND SECTION 12.
Buyer, pursuant to the Reorganization Agreement, may not, without the prior
written consent of Company: (a) decrease the Offer Price; (b) decrease the
Minimum Tender Condition; (c) impose additional conditions to the Offer; (d)
change the Expiration Date so that the Offer ends less than 30 business days
from the date on which the Offer is first publicly announced or extend the
Expiration Date beyond July 31, 1996, provided that the Expiration Date may be
extended by Buyer to a date not later than August 31, 1996 under the conditions
described above; (e) waive or modify the Minimum Tender Condition; or (f) change
the conditions to the Offer in any material respect, except that Buyer may waive
any of the other conditions to the Offer. The foregoing limitations shall not be
applicable in the event the Reorganization Agreement is terminated in accordance
with the termination provisions of the Reorganization Agreement, in which event
Buyer may modify its Offer subject to certain conditions set forth in the
Standstill Agreement between Parent, Parent Investeringen B.V., and Company,
dated September 19, 1986, as amended (the "Standstill Agreement").
Company has provided Buyer, the Depositary and the Information Agent with
Company's shareholder list and security listings for the purpose of
disseminating the Offer to holders of Shares. This Offer to Purchase, the
related Letter of Transmittal and other relevant materials will be mailed to
record holders of Shares, and will be furnished to brokers, dealers, banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder lists, or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares, by Buyer following receipt of such
lists or listings from Company, or by Company if it so elects.
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2. PROCEDURE FOR TENDERING SHARES
VALID TENDER. For a shareholder to validly tender Shares pursuant to the
Offer, either: (a) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees, or, in
the case of a book-entry transfer, an Agent's Message (as defined below), and
any other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either certificates for tendered Shares must be received by
the Depositary at one of such addresses or such Shares must be delivered
pursuant to the procedures for book-entry transfer set forth below (and a
Book-Entry Confirmation (as defined below) received by the Depositary), in each
case prior to the Expiration Date; or (b) the tendering shareholder must comply
with the guaranteed delivery procedures set forth below.
The Depositary will establish accounts with respect to the Shares at the
Depositary Trust Company and the Philadelphia Depository Trust Company (the
"Book-Entry Transfer Facilities") for purposes of the Offer within two (2)
business days after the date of this Offer to Purchase. Any financial
institution that is a participant in any of the Book-Entry Transfer Facilities'
systems may make book-entry delivery of Shares by causing a Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account in accordance
with such Book-Entry Transfer Facility's procedures for such transfer. However,
although delivery of Shares may be effected through book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message, and any other required
documents, must, in any case, be transmitted to, and received by, the Depositary
at one of its addresses set forth on the back cover of this Offer to Purchase
prior to the Expiration Date, or the tendering shareholder must comply with the
guaranteed delivery procedures described below. The confirmation of a book-entry
transfer of Shares into the Depositary's account at a Book-Entry Transfer
Facility as described above is referred to herein as a "Book-Entry
Confirmation." DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgement from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Buyer may
enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal if: (a) the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
any of the Book-Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Shares) of Shares tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal; or (b) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(an "Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instructions 1
and 5 to the Letter of Transmittal. If the certificates for Shares are
registered in the name of a
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person other than the signer of the Letter of Transmittal, or if payment is to
be made or certificates for Shares not tendered or not accepted for payment are
to be returned to a person other than the registered holder of the certificates
surrendered, the tendered certificates must be endorsed or accompanied by duly
executed stock powers, in either case signed exactly as the name or names of the
registered holders or owners appear on the certificates, with the signatures on
the certificates or stock powers guaranteed as aforesaid. See Instructions 1, 5
and 7 to the Letter of Transmittal.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates for Shares are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such shareholder's tender may be
effected if all the following conditions are met:
(a) such tender is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Buyer, is received by the
Depositary, as provided below, prior to the Expiration Date; and
(c) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message, and any other required
documents are received by the Depositary within three (3) trading days
after the date of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by facsimile transmission or mail to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of: (a) certificates for (or a Book-Entry Confirmation
with respect to) such Shares; (b) a Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message; and
(c) any other documents required by the Letter of Transmittal. Accordingly,
tendering shareholders may be paid at different times depending upon when
certificates for Shares or Book-Entry Confirmations with respect to Shares and
other required documents are actually received by the Depositary. In the event
the Tender Offer is extended beyond July 31, 1996 the Offer Price shall be
increased by an amount equal to the product of the Offer Price multiplied by the
prime interest rate as announced by Bank of America NW, N.A. (doing business as
Seafirst Bank) in Seattle, Washington as in effect on August 1, 1996, multiplied
by the quotient of the number of days that the Tender Offer is extended after
July 31, 1996, divided by 365. EXCEPT IN THE CASE OF AN EXTENSION OF THE OFFER
BEYOND JULY 31, 1996, UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE OF THE SHARES TO BE PAID BY BUYER FOR SHARES TENDERED.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering shareholder and
Buyer upon the terms and subject to the conditions of the Offer.
APPOINTMENT. By executing a Letter of Transmittal as set forth above, the
tendering shareholder will irrevocably appoint designees of Buyer as such
shareholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such shareholder's rights with respect to the Shares tendered by such
shareholder and accepted for payment by Buyer and with respect to any and all
other Shares or other securities or rights issued or issuable in respect of such
Shares on or after May 31, 1996. All such proxies will be considered coupled
with an interest in the tendered Shares. Such appointment will be effective
when, and only to the extent that, Buyer accepts for payment Shares tendered by
such shareholder as provided herein. Upon such appointment, all prior powers of
attorney, proxies and consents given by such shareholder with respect to such
Shares or other securities or rights will, without further action, be revoked
and no subsequent powers of attorney, proxies, consents or revocations may be
given
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(and, if given, will not be deemed effective). The designees of Buyer will
thereby be empowered to exercise all voting and other rights with respect to
such Shares and other securities or rights in respect of any annual, special or
adjourned meeting of Company's shareholders, actions by written consent in lieu
of any such meeting or otherwise, as they in their sole discretion deem proper.
Buyer reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon Buyer's acceptance for payment of such
Shares, Buyer or its designee must be able to exercise full voting, consent and
other rights with respect to such Shares and other securities or rights,
including voting at any meeting of shareholders.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by Buyer in its sole discretion, which determination will be
final and binding. Buyer reserves the absolute right to reject any or all
tenders determined by it not to be in proper form or the acceptance for payment
of or payment for which may, in the opinion of Buyer's counsel, be unlawful.
Buyer also reserves the absolute right to waive any defect or irregularity in
the tender of any Shares of any particular shareholder whether or not similar
defects or irregularities are waived in the case of other shareholders. No
tender of Shares will be deemed to have been validly made until all defects or
irregularities relating thereto have been cured or waived. None of Buyer,
Parent, the Depositary, the Information Agent, or any other person will be under
any duty to give notification of any defects or irregularities in tenders or
incur any liability for failure to give any such notification. Buyer's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the instructions thereto) will be final and binding.
BACKUP WITHHOLDING. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a shareholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such shareholder's correct TIN on a Substitute Form W-9 and certify under
penalties of perjury that such TIN is correct and that such shareholder is not
subject to backup withholding. If a shareholder does not provide such
shareholder's correct TIN or fails to provide the certifications described
above, the IRS may impose a penalty on such shareholder and payment of cash to
such shareholder pursuant to the Offer may be subject to backup withholding of
31%. All shareholders surrendering Shares pursuant to the Offer should complete
and sign the main signature form and the Substitute Form W-9 included as part of
the Letter of Transmittal to provide the information and certification necessary
to avoid backup withholding (unless an applicable exemption exists and is proved
in a manner satisfactory to Buyer and the Depositary). Certain shareholders
(including, among others, all corporations and certain foreign individuals and
entities) are not subject to backup withholding. Noncorporate foreign
shareholders should complete and sign the main signature form and a Form W-8,
Certificate of Foreign Status, in order to avoid backup withholding. See
Instruction 10 to the Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by Buyer pursuant to the
Offer, may also be withdrawn at any time after August 6, 1996, or such later
date if the Offer is extended in accordance with its terms.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates for Shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedure
for book-entry transfer as set forth in Section 2, any notice of withdrawal must
also specify the name and number of the account at the appropriate Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with such Book-Entry
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Transfer Facility's procedures. Withdrawals of tenders of Shares may not be
rescinded, and any Shares properly withdrawn will thereafter be deemed not
validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered by again following one of the procedures described in Section 2 at
any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Buyer in its sole discretion, which
determination will be final and binding. None of Buyer, Parent, the Depositary,
the Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is amended, the terms and conditions of any such amendment), Buyer (i)
may accept for payment and pay for all Shares validly tendered and not properly
withdrawn in accordance with Section 3 upon satisfaction of the conditions to
the Offer set forth herein and (ii) will accept for payment such Shares promptly
after the Expiration Date. All questions as to the satisfaction of such terms
and conditions will be determined by Buyer in its sole discretion, which
determination will be final and binding. See Sections 1, 2, and 14. Buyer
expressly reserves the right, in its sole discretion, to delay acceptance for
payment of or payment for Shares in order to comply in whole or in part with any
applicable law, including, without limitation, the HSR Act, Exon-Florio, the
Investment Canada Act, the Competition Act (Canada), and European Economic Area
("EEA") and National Merger regulation. See Section 13. Any such delays will be
effected in compliance with Rule 14e-l(c) under the Exchange Act (relating to a
bidder's obligation to pay for or return tendered securities promptly after the
termination or withdrawal of such bidder's offer).
Parent filed a Notification and Report Form with respect to the Offer under
the HSR Act on June 7, 1996. Company is also subject to a filing requirement
under the HSR Act, with respect to which Parent provided notice to Company on
June 3, 1996, pursuant to the HSR Act. The waiting period under the HSR Act with
respect to the Offer will expire at 11:59 p.m., New York City time, on June 24,
1996, unless early termination of the waiting period is granted. However, the
Antitrust Division of the Department of Justice (the "Antitrust Division") or
the Federal Trade Commission (the "FTC") may extend the waiting period by
requesting additional information or documentary material from Parent and
Company. If such a request is made, such waiting period will expire at 11:59
p.m., New York City time, on the tenth (10th) day after substantial compliance
by Parent and Company with such request or as may be otherwise stipulated by
agreement with the Antitrust Division and the FTC. Buyer and Company expect to
make a joint voluntary Exon-Florio notice filing with respect to the Offer on
June 10, 1996, and shall be notified within 30 days after the Exon-Florio filing
was submitted if the Committee on Foreign Investment in the United States
("CFIUS") wishes to investigate the circumstances of the Offer. Parent and Buyer
will also make relevant pre-merger notification filings with Canadian regulatory
authorities, pursuant to the Competition Act (Canada) and relevant filings
pursuant to the Investment Canada Act. See Section 13 "Certain Legal Matters."
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of: (a) certificates
for (or a timely Book-Entry Confirmation with respect to) such Shares; (b) a
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message; and (c) any other documents required by
the Letter of Transmittal. The Offer Price paid to any shareholder pursuant to
the Offer will be the highest Offer Price paid to any other shareholder pursuant
to the Offer.
For purposes of the Offer, Buyer will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Buyer and not
withdrawn as, if and when Buyer gives oral or written notice to the Depositary
of Buyer's acceptance for payment of such Shares. Payment for Shares accepted
for payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering shareholders
for the purpose of receiving payment from Buyer and transmitting payment to
tendering shareholders.
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If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares will be returned, without expense to
the tendering shareholder (or, in the case of Shares delivered by book-entry
transfer of such Shares into the Depositary's account at a Book-Entry Transfer
Facility pursuant to the procedure set forth in Section 2, such Shares will be
credited to an account maintained at the appropriate Book-Entry Transfer
Facility), as promptly as practicable after the expiration or termination of the
Offer.
Buyer reserves the right to transfer or assign, in whole or from time to
time in part, to Parent, or to one or more direct or indirect wholly-owned
subsidiaries of Parent, the right to purchase Shares tendered pursuant to the
Offer, but any such transfer or assignment will not relieve Buyer of its
obligations under the Offer and will in no way prejudice the rights of tendering
shareholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
5. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are traded on the NYSE and prices are quoted under the symbol
UVX. The following table sets forth, for each of the periods indicated, the high
and low sales prices per Share as reported on the NYSE.
UNIVAR CORPORATION
SALES QUOTATION
-----------------
FISCAL YEAR ENDED FEBRUARY 28(29), HIGH LOW
----------------------------------------------------------- ------ ------
1994 First Quarter.................................... $11.38 $ 9.50
Second Quarter................................... 13.38 10.88
Third Quarter.................................... 14.25 10.00
Fourth Quarter................................... 12.88 10.88
1995 First Quarter.................................... 11.50 9.75
Second Quarter................................... 12.00 9.75
Third Quarter.................................... 14.50 11.75
Fourth Quarter................................... 13.75 11.63
1996 First Quarter.................................... 12.75 10.38
Second Quarter................................... 15.88 11.75
Third Quarter.................................... 16.25 12.25
Fourth Quarter................................... 13.75 9.88
1997 First Quarter.................................... 12.75 10.13
On May 31, 1996, the last full trading day before the first public
announcement of the intention to commence the Offer, the last reported sale
quotation of the Shares on the NYSE was $12 3/8 per Share. On June 3, 1996,
prior to the commencement of trading, Buyer announced the intention to commence
the Offer. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
SHARES.
According to Company's 1996 10-K, cash dividends of $0.075 per Share have
been declared during each of the last eight (8) quarters.
6. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES
MARKET FOR THE SHARES. The tender and purchase of Shares pursuant to the
Offer will reduce the number of holders of Shares and the number of Shares that
might otherwise trade publicly and could adversely affect the liquidity and
market value of the remaining Shares. The extent of the continuing public market
for the Shares and the availability of quotations will depend upon the number of
holders of Shares remaining at such time, the interests in maintaining a market
in Shares on the part of securities firms and other factors. As explained below,
following consummation of the Offer (if requisite conditions are met) or
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following consummation of the Proposed Merger (if such conditions are not met),
Buyer plans to cause Company to deregister the Shares under the Exchange Act and
to delist the Shares from all stock exchanges. Accordingly, following the
consummation of the Proposed Merger and possibly following the Offer, there will
be no continuing public market for the Shares.
NYSE. Depending upon the number of Shares purchased pursuant to the Offer,
the Shares may no longer meet the requirements of the NYSE for continued
inclusion on the NYSE, which require that an issuer have at least 1,100,000
publicly held shares, held by at least 2,000 shareholders of 100 shares or more,
with a market value of at least $40,000,000, and have demonstrated earning power
before federal income taxes and under competitive conditions of $2,500,000
during the latest fiscal year and of $2,000,000 during each of the preceding two
(2) years. The number of beneficial holders of stock held in the name of NYSE
member organizations will be considered in addition to the holders of record.
According to Company's 1996 10-K, as of February 29, 1996, there were
approximately 6,800 beneficial holders of record of Shares and as of May 31,
1996 there were 21,735,415 Shares outstanding. If, as a result of the purchase
of Shares pursuant to the Offer or otherwise, the Shares no longer meet the
requirements of the NYSE for continued inclusion in the NYSE, the Shares could
be adversely affected.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act
would substantially reduce the information required to be furnished by Company
to its shareholders and to the Commission and would make certain provisions of
the Exchange Act no longer applicable to Company, such as the short-swing profit
recovery provisions of Section 16(b) of the Exchange Act, the requirement of
furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in
connection with shareholders' meetings and the related requirement of furnishing
an annual report to shareholders, and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions. Furthermore, the
ability of "affiliates" of Company and persons holding "restricted securities"
of Company to dispose of such securities pursuant to Rule 144 or 144A
promulgated under the Securities Act of 1933, as amended, may be impaired or
eliminated.
Parent and Buyer intend to seek to cause Company to apply for termination
of registration of the Shares under the Exchange Act as soon as possible after
the completion of the Offer and to delist the Shares from all stock exchanges
subsequent to the consummation of the Offer if the requirements for such
termination are met. If termination of the registration of Company's Shares
becomes effective subsequent to the consummation of the Offer and prior to the
Proposed Merger, then Company may not be required to and will not distribute any
proxy statement or information statement, pursuant to Section 14 of the Exchange
Act, in connection with approval of the Proposed Merger. If registration of the
Shares is not terminated prior to the Proposed Merger, then the Shares will be
delisted from all stock exchanges and the registration of the Shares under the
Exchange Act will be terminated following the consummation of the Proposed
Merger.
MARGIN REGULATIONS. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans made
by brokers and others.
7. CERTAIN INFORMATION CONCERNING COMPANY
Company is a Washington corporation with its principal offices at Kirkland,
Washington. According to Company's 1996 10-K, Company's principal line of
business is the distribution of industrial, agricultural and pest control
chemicals and related products and services. As a distributor of industrial,
agricultural and pest control chemicals and related products, Company's role is
to purchase chemicals from manufacturers in truck, railcar, or tankcar qualities
and sell them in smaller quantities to various customers. Company adds value to
its
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products through superior service, selection, blending and packaging and
delivery reliability and Company provides customers assistance with
environmental and regulatory compliance. Company also provides a hazardous waste
management service in the United States called ChemCare(R). Through ChemCare(R),
Company provides its customers with logistics management, temporary waste
storage, and access to various treatment and disposal technologies. Company is
currently developing two ancillary services in the U.S.: contract chemical
management services, and third party logistics.
Set forth below is certain selected consolidated financial information with
respect to Company and the Company Subsidiaries (defined as any corporation,
partnership, limited liability company, or other entity in which Company owns,
directly or indirectly, any equity interest and whose financial statements are
consolidated with those of Company for accounting purposes under GAAP) excerpted
from the information contained in Company's 1996 10-K. More comprehensive
financial information is included in Company's 1996 10-K and other documents
filed by Company with the Commission. The following summary is qualified in its
entirety by reference to Company's 1996 10-K and such other documents and all
the financial information (including any related notes) contained therein.
Company's 1996 10-K and such other documents should be available for inspection
and copies thereof should be obtainable in the manner set forth below under
"Available Information."
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UNIVAR CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
YEAR ENDED FEBRUARY 28(29)
(THOUSANDS OF DOLLARS EXCEPT FOR SHARE DATA)
1996 1995 1994
---------- ---------- ----------
Sales.................................................... $2,037,674 $1,912,728 $1,802,464
Cost of sales............................................ 1,756,840 1,639,055 1,532,931
---------- ---------- ----------
Gross margin............................................. 280,834 273,673 269,533
Operating expenses....................................... 254,138 248,767 242,388
Reengineering and restructuring charges.................. 160 37,361 4,507
---------- ---------- ----------
Income (loss) from operations............................ 26,536 (12,455) 22,638
Interest expense......................................... (15,226) (11,973) (12,921)
Other -- net............................................. 896 709 525
---------- ---------- ----------
Income (loss) before provision for (benefit of) taxes on 12,206 (23,719) 10,242
income and minority interest...........................
Provision for (benefit of) taxes on income (loss)........ 6,306 (8,066) 4,403
---------- ---------- ----------
Income (loss) before minority interest................... 5,900 (15,653) 5,839
Minority interest's share in income (loss)............... -- 604 379
---------- ---------- ----------
Net income (loss)........................................ $ 5,900 $ (16,257) $ 5,460
========= ========= =========
Weighted average common shares outstanding............... 21,701 21,346 19,703
Net income (loss) per share.............................. $ 0.27 $ (0.76) $ 0.28
Cash dividends declared per share........................ $ 0.30 $ 0.30 $ 0.30
Total assets............................................. 740,605 673,203 652,694
Total interest bearing debt.............................. 188,703 162,348 177,685
Long-term debt........................................... 132,812 122,086 147,058
Working capital.......................................... 75,443 76,608 83,545
Shareholders' equity..................................... 179,606 176,163 157,406
Book value per share..................................... $ 8.28 $ 8.08 $ 8.01
Return on beginning equity............................... 3.3% (10.3)% 3.3%
AVAILABLE INFORMATION. Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports relating to its business, financial condition and other matters.
Information as of particular dates concerning Company's directors and officers,
their remuneration, stock options and other matters, the principal holders of
Company's securities and any material interest of such persons in transactions
with Company is required to be disclosed in proxy statements distributed to
Company's shareholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, DC 20549, and at the regional offices of the Commission located at
Seven World Trade Center, 13th Floor, New York, NY 10048 and Citicorp Center,
500 West Madison Street (Suite 1400), Chicago, IL 60661. Copies of such
information should be obtainable, by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450 Fifth
Street, N.W., Washington, DC 20549.
The information concerning Company contained herein has been taken from or
based upon publicly available documents on file with the Commission and other
publicly available information. Although Buyer and Parent do not have any
knowledge that any such information is untrue, neither Buyer nor Parent takes
any
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responsibility for the accuracy or completeness of such information or for any
failure by Company to disclose events that may have occurred and may affect the
significance or accuracy of any such information.
8. CERTAIN INFORMATION CONCERNING BUYER AND PARENT
Buyer, a Washington corporation that is a wholly owned subsidiary of
Pakhoed USA Inc. and an indirect subsidiary of Parent, was organized on May 24,
1996 to acquire Company and has not conducted any unrelated activities since its
organization. The principal office of Buyer is located at the principal office
of Pakhoed USA Inc., which is located at 2000 West Loop South, Suite 2200,
Houston, TX 77027. All outstanding shares of capital stock of Buyer are owned by
Pakhoed USA Inc.
Parent is a publicly held limited liability company formed under the laws
of the Netherlands with a business address of 333 Blaak, 3011 GB Rotterdam, The
Netherlands. Parent is engaged in providing storage, logistics and distribution
services for companies in the oil and chemical industry on a worldwide basis.
Parent's business specializes in two primary areas, operation of tank storage
facilities in Europe, the United States and in Southeast Asia, and shipping and
distribution of chemicals, mineral oils and bitumen. Parent's tank storage
facilities provide storage for chemicals and oils, including heavy fuels,
gasolines, chemicals, lubricating oils and edible oils. Parent's shipping and
distribution operations are located primarily in Europe.
Parent and its affiliates employ over 5,000 people in North America, Europe
and Southeast Asia. The name, business address, citizenship, present principal
occupation, and five-year employment history of each of the directors and
executive officers of Buyer and Parent are set forth in Schedule I to this Offer
to Purchase. Parent operates and owns subsidiaries worldwide, including, but not
limited to, Pakhoed Investeringen B.V. and Pakhoed USA Inc.
Set forth below is certain selected consolidated financial information with
respect to Parent and its subsidiaries excerpted from Parent's Report and
Accounts 1995 (the "Parent 1995 Annual Report"). The financial information has
been prepared using accounting principles generally accepted in the Netherlands
("Dutch accounting principles"). Dutch accounting principles differ in several
respects from GAAP. These differences result in both a monetary impact on both
shareholders' equity and net income, and alternative classification of certain
amounts and transactions. The most significant of these differences results from
the Dutch practice of charging all goodwill arising from purchases of businesses
directly against shareholders' equity rather than capitalizing and amortizing
such amounts over future periods as required by GAAP. Had such items been
recorded in accordance with GAAP, shareholders' equity at December 31, 1995,
would have been approximately 203 million Dutch Guilders greater, and net income
for the year then ended would have been approximately 14 million Dutch Guilders
less. Parent believes that other differences between Dutch accounting principles
and GAAP are immaterial for purposes of this Offer to Purchase.
The accompanying consolidated financial statements are stated in Dutch
Guilders. On June 5, 1996, the Wall Street Journal reported that, as of June 4,
1996, one U.S. dollar equaled 1.713 Dutch Guilders.
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ROYAL PAKHOED N.V.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN MILLIONS OF DUTCH GUILDERS EXCEPT PER SHARE DATA)*
DECEMBER 31,
------------------------------
1995 1994 1993
-------- -------- --------
CONSOLIDATED PROFIT AND LOSS ACCOUNTS 1993 THROUGH 1995
Net Operating Revenues......................................... 2,069.6 1,365.2 1,448.7
Expenses....................................................... -1,789.8 -1,102.7 -1,200.8
Depreciation................................................... -117.6.. -111.2 -105.0
-------- -------- --------
Operating Results.............................................. 162.2 151.3 142.9
Income from Participations..................................... 48.2 22.3 14.6
-------- -------- --------
Group Results.................................................. 210.4 173.6 157.5
Net Interest Expense........................................... -42.8 -28.4 -42.7
Income from ordinary Operations before Taxes................... 167.6 145.2 114.8
Taxes.......................................................... -44.0 -49.9 -39.1
-------- -------- --------
Income from ordinary Operations after Taxes.................... 123.6 95.3 75.7
Extraordinary Results after Taxes.............................. -2.1 -2.6 -15.4
-------- -------- --------
Net Profit..................................................... 121.5 92.7 60.3
Net Profit (per share)...................................... 4.00 3.20 2.32
CONSOLIDATED BALANCE SHEETS AT YEAR-END 1993 THROUGH 1995
Land and Buildings............................................. 366.6 360.2 352.7
Tank Terminals and Ancillary Equipment......................... 1,413.1 1,356.3 1,334.7
Ships.......................................................... 385.3 391.7 393.6
Machinery and Equipment........................................ 284.8 253.2 279.4
Under Construction............................................. 99.3 42.9 50.7
-------- -------- --------
Tangible Fixed Assets.......................................... 2,549.1 2,404.3 2,411.1
Depreciation................................................... 1,247.0 1,170.3 1,123.4
-------- -------- --------
Book Value Tangible Fixed Assets............................... 1,302.1 1,234.0 1,287.7
Financial Fixed Assets......................................... 404.5 363.5 337.4
-------- -------- --------
Fixed Assets................................................... 1,706.6 1,597.5 1,625.1
Working Capital................................................ 136.4 191.8 152.2
-------- -------- --------
Total Assets less Current Liabilities.......................... 1,843.0 1,789.3 1,777.3
Long-Term Liabilities
Long Term Debts............................................. 588.7 523.4 679.7
Provisions.................................................. 243.9 250.6 254.2
-------- -------- --------
832.6 774.0 933.9
Shareholders' Equity
Capital Paid-Up and Called.................................. 152.2 147.2 130.1
Reserves.................................................... 858.2 868.1 713.3
-------- -------- --------
1,010.4 1,015.3 843.4
-------- -------- --------
Shareholders' Equity and Long-Term Liabilities................. 1,843.0 1,789.3 1,777.3
- ---------------
* NOTE: These figures were obtained from the Parent 1995 Annual Report.
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9. SOURCE AND AMOUNT OF FUNDS
Buyer estimates that the total amount of funds required to purchase all
outstanding Shares (other than Shares currently held by Buyer and its
affiliates) pursuant to the Offer and to pay related fees and expenses is
approximately $306 million. Buyer plans to obtain such funds either directly or
indirectly from Parent through a capital contribution or loan (or a combination
thereof) which will be made at or prior to the time Shares tendered pursuant to
the Offer are accepted for payment. Parent plans to obtain funds for such
capital contribution or loan from (i) Parent's and its affiliate's available
general corporate funds, and (ii) borrowings by Parent under several existing
unsecured lines of credit.
Parent has nine established committed credit facilities with six different
banks, with an aggregate maximum credit amount available of approximately $433
million (the "Lines of Credit"). The stated terms of the Lines of Credit range
from three (3) to ten (10) years. As of June 5, 1996, Parent and its affiliates
had approximately $47 million in cash available to contribute or loan to Buyer
and approximately $20 million was outstanding under the Lines of Credit, with a
weighted average interest rate of 3%. Available cash plus amounts available for
draw under the Lines of Credit aggregate approximately $460 million.
Borrowings can be made at any time or from time to time under each of the
Lines of Credit for general corporate purposes, including acquisitions, and are
unsecured. The precise terms for each borrowing, including interest rate, are
determined at the time of the borrowings. Generally, the interest rates provided
by these Lines of Credits range from the applicable LIBOR or BIBOR plus 0.20% to
0.325%. The agreements documenting the Lines of Credit also require Parent to
pay commitment fees, ranging from 0.10% to 0.175% per annum of the daily undrawn
portion of the Lines of Credit.
The Lines of Credit contain customary conditions to borrowing,
representations and warranties, covenants and events of defaults. These include,
among other things, covenants restricting the creation of any mortgage on
Parent's real estate or other immovable property rights in The Netherlands
without the bank's consent, and requirements that the Parent maintain specified
consolidated financial ratios. As of June 4, 1996, Parent was in compliance with
the covenants contained in the Lines of Credit. Parent has also agreed, in some
instances, to pay the reasonable out-of-pocket expenses of the bank and to
indemnify the bank for reasonable costs incurred in preserving or enforcing its
rights under the Lines of Credit.
It is anticipated that borrowings incurred by Parent to make capital
contributions or loans (or a combination thereof) to Buyer will be replaced
partly by other long-term financing, sales of equity, or by other financing
options. Parent has not made any definitive arrangements for such refinancing.
Lines of Credit with an aggregate maximum credit amount available of $173
million require repayment of borrowings thereunder from proceeds of any
refinancing resulting from sales of equity in Parent or other long-term
financing.
The foregoing description is qualified by reference to the Lines of Credit,
copies of which (or the English translation of which) have been filed with the
Commission as exhibits to the Schedule 14D-1 and are incorporated herein by
reference. All U.S. dollar amounts provided above assume an exchange ratio of
one U.S. Dollar to 1.73 Dutch Guilders.
10. CONTACTS AND TRANSACTIONS AMONG PARENT, BUYER AND COMPANY
PARENT'S 1986 INVESTMENT IN COMPANY AND THE STANDSTILL AGREEMENT
On September 19, 1986, Pakhoed Investeringen B.V., a wholly owned
subsidiary of Parent entered into an Agreement for Exchange of Capital Stock
(the "Exchange Agreement") with Company pursuant to which, among other things,
Parent transferred to Company all of the issued and outstanding shares of
capital stock of DSW, Inc., a Washington corporation which had just acquired the
chemical distribution business of McKesson Chemical Company, and Company issued
to Pakhoed Investeringen B.V. 6,106,000 Shares (giving effect to a subsequent 2
for 1 stock split), representing approximately 35% of the total outstanding
Shares as of that date. In connection with the transactions effected pursuant to
the Exchange Agreement, the Company, Parent and Pakhoed Investeringen B.V.
entered into a standstill agreement of even date (the "Standstill Agreement").
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The Standstill Agreement provides that Parent will not acquire beneficial
ownership of any "Voting Securities" of Company (as defined in the Standstill
Agreement) if such acquisition would result in Parent owning more than 35% of
the Common Stock Equivalents of Company (as defined in the Standstill
Agreement). Parent may acquire additional Voting Securities above the 35% limit
by making a tender offer for shares of Voting Securities in response to a
third-party tender offer for such securities, in which event the percentage
limitation will increase to 45%, and Parent may retain shares over 45% to the
extent Company elects not to repurchase such shares pursuant to its right to do
so under the Standstill Agreement. Parent may also acquire shares in excess of
the percentage limitation either by receiving approval of five-eighths ( 5/8) of
the directors of Company who are not affiliated with Parent (the "Unaffiliated
Directors"), or by a tender offer (without approval by the Unaffiliated
Directors) which is: (i) made to all shareholders of Company, (ii) payable in
cash, and (iii) accepted by shareholders of Company owning two-thirds ( 2/3) of
the outstanding Shares excluding Shares held by Parent and Shares not tendered
by certain core shareholders of Company. The Reorganization Agreement and the
transactions contemplated thereby were approved by the above described
five-eighths ( 5/8) of the Unaffiliated Directors, as permitted by the
Standstill Agreement.
Subject to the foregoing restrictions, Parent may acquire Shares by open
market purchase, partial tender offer, or private transaction. In response to an
increase in the number of outstanding Shares, Parent may purchase unissued or
treasury Shares under certain circumstances.
The Standstill Agreement also provides that Parent will not (without prior
written approval of the Board, including the concurrence of a majority of the
Unaffiliated Directors): (i) deposit any Voting Securities into a voting trust
or subject them to a voting agreement except a trust or agreement between Parent
and its affiliates or as required by Netherlands law, (ii) join any group for
the purpose of acquiring, holding, or disposing of Voting Securities within the
meaning of Section 13(d) of the Exchange Act, (iii) induce any other person to
initiate a tender offer for any securities of Company, or to effect any change
of control of Company, or take any action for the purposes of convening a
shareholders' meeting, or (iv) acquire more than 1% of any class of securities
of any entity that is publicly disclosed to be the beneficial owner of 5% or
more of the Voting Securities of Company.
The Standstill Agreement requires Company to provide Parent with
representation on the Board of Directors proportionate to its stock ownership.
Accordingly, during Company's last fiscal year, Messrs. Nicolaas J. Westdijk,
Roy E. Wansik and Dr. Sjoerd D. Eikelboom held three of twelve seats on the
Company Board. Directors designated by Parent are entitled to representation on
any committee of the Company Board at Parent's request. Parent is required to
vote its Shares so as to afford Company's other shareholders with proportionate
representation.
The Standstill Agreement will terminate on the Effective Date of the
Merger.
UNIVAR EUROPE
Parent and Company jointly organized Univar Europe N.V. ("Univar Europe")
in 1991. At the time Univar Europe was organized, Company owned 51% of the
shares of Univar Europe and Parent owned forty-nine percent (49%). In connection
with the organization of Univar Europe, Parent and Company entered into a
Shareholder Agreement whereby Company agreed that Parent would have the
unilateral right to require Company to acquire Parent's 49% interest in Univar
Europe. In September, 1994, Company purchased Parent's interest in Univar Europe
for $25.8 million. Funding for this aggregate purchase price was provided
through the sale of 2,000,000 Shares to Dow.
BACKGROUND OF THE OFFER
From the time of its initial investment in Company, Parent has considered
ways consistent with the Standstill Agreement to maximize its investment in
Company. Such considerations included the possibility of acquiring additional
Shares or, in the alternative, disposing of all or a significant portion of its
Shares.
During the last three years, there have been informal discussions between
James W. Bernard, a director of Company and Company's President and Chief
Executive officer until October, 1995, and Nicolaas J.
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Westdijk, a director of Company and Chairman of the Board of Management of
Parent. Gary E. Pruitt, Company's Chief Financial Officer, and Sjoerd J.
Eikelboom, a Director of Company and a Senior Vice President of Parent,
participated in some such discussions. In particular, meetings were held on July
7 and August 9 and 10, 1995, to discuss means for cooperation between Company
and Parent. Although these meetings discussed possible business combinations and
other possible arrangements between the two companies, no proposals were made by
Parent as a result of these informal discussions.
During the week of October 9, 1995, Mr. Pruitt met with Dr. Eikelboom,
other management of Parent, and Mr. Thomas M. Foster, a financial advisor to
Parent, to discuss in greater detail the potential for cooperation between
Company and Parent and related matters. On October 30, 1995, Parent made a
request for certain financial, operational and other information concerning
Company in connection with the consideration by Parent of a possible transaction
involving Parent and/or one or more of its affiliates and Company. On December
11, 1995, Mr. Westdijk contacted James H. Wiborg, the Chairman of the Board of
Company, indicating interest in initiating discussions concerning an acquisition
of Company. In connection with such discussions, Parent requested a meeting to
discuss an outline of possible environmental due diligence and the price which
Parent would pay for the Shares.
By letter dated January 11, 1996, from Mr. Pruitt to Dr. Eikelboom, Company
outlined its proposal concerning a procedure to move discussions of a possible
negotiated transaction forward. That letter addressed a proposed amendment to
the Standstill Agreement, requested that Parent indicate a conditional per share
range of values, and suggested a due diligence approach. By letter dated January
23, 1996, Parent provided its response to the outline contained in the January
11 letter, indicating an approach to valuation but without providing any
specific value. By letter dated February 2, 1996, from Mr. Pruitt to Mr.
Eikelboom, Company indicated that it was not prepared to initiate discussions
with Parent concerning a possible transaction at that time.
In late February, 1996, Mr. Westdijk met with Mr. Wiborg and Paul H. Hough,
a director and the Chief Executive Officer of Company, requesting that
reconsideration be given to initiating discussions. Mr. Westdijk, on behalf of
Parent, suggested to Mr. Wiborg and Mr. Hough that a price range could be
discussed based on expected earnings as well as on a current and historical
perspective.
By unanimous consent of the Board of Directors dated April 1, 1996, a
special committee relating to the transaction was created (the "Special
Committee") comprised of Messrs. James H. Wiborg, Andrew V. Smith, Richard E.
Engebrecht and N. Stewart Rogers, none of whom are executive officers of
Company, for the express purpose of negotiating a definitive acquisition
agreement with Parent. Company also prepared a protocol for use in the
negotiations (the "Protocol"). Under the Protocol, terms for price negotiation
were described, and standstill provisions were included in the related
confidentiality agreement.
On March 15, 1996, Mr. Wiborg contacted Mr. Westdijk and a meeting was set
for April 10, 1996, in Seattle, Washington at which the Protocol would be
presented to Parent. Meetings were held from April 10-13, 1996, and Parent was
represented at all of the April meetings by Mr. Westdijk and Dr. Eikelboom. All
of the members of Company's Special Committee, Mr. Hough and Mr. Pruitt were
present at the initial April 10 meeting. Thereafter, Messrs. Wiborg and Pruitt
represented Company.
At the April 10 meeting, Parent received the Protocol and was informed that
the Protocol was the exclusive basis on which Company would continue discussions
of a possible acquisition. After a review of the terms and conditions of the
Protocol, and negotiations on April 11 and 12, 1996, relating to certain
provisions within the Protocol, the parties agreed to a revised Protocol, and on
April 12, 1996, the Protocol was executed in connection with a confidentiality
agreement (the "Confidentiality Agreement"). A copy of the Confidentiality
Agreement, as executed, which contains the Protocol as Exhibit B, is attached as
an exhibit to the Schedule 14D-1, and is incorporated herein by reference in its
entirety.
The Confidentiality Agreement provides that Parent may not, without the
prior written consent of Company, disclose to any person other than Parent and
its representatives, the fact that Company and Parent were considering a
transaction. The Confidentiality Agreement further provides that Parent is to
keep confidential, subject to being legally compelled to disclose, certain
documents provided to Parent by Company in connection with the proposed
transaction (the "Evaluation Documents"). In the event that Parent is legally
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compelled to disclose any of the Evaluation Documents, it is required to notify
Company so that Company can take such measures to protect the confidentiality of
the Evaluation Documents.
In connection with the Protocol, the Confidentiality Agreement provides
that Parent, until October 30, 1996 (which was extended to April 30, 1998, as
discussed below), except with the written approval of Company, agrees not to:
(i) acquire any of the stock or other securities of Company other than as
permitted by the Standstill Agreement, but specifically excluding the right to
make a tender offer pursuant to Section 2.10 of the Standstill Agreement, (ii)
submit to Company or any other person any proposal for a transaction between
Parent and Company or involving any of its securities holders other than in
accordance with the Protocol, (iii) solicit proxies or shareholder consents with
respect to the securities of Company or become a "participant" in any
"solicitation" or a member of a "group" (as such terms are used in Regulation
14A and Section 13(d)(3) of the Exchange Act) in opposition to the
recommendation of the majority of the Unaffiliated Directors, or (iv) otherwise
assist, advise, encourage, or act alone or in concert with any other person in
acquiring or attempting to acquire, directly or indirectly, control of Company
or its assets. Finally, the Confidentiality Agreement provides that if certain
conditions set forth in the Protocol are satisfied, the standstill provisions of
the Confidentiality Agreement automatically extend to April 30, 1998. These
conditions were satisfied on April 26, 1996.
On April 13, Parent initially indicated a willingness to offer $17.00 per
Share for all of the Shares. This offer was based on Parent's evaluation of the
value of Company based on Parent's analysis of, among other factors, performance
projections and discounted cash flows of Company. Company responded with a
counter-offer of $23.00 per Share. Company's price was based on recovery timing,
projected earnings, earnings multiples, and market reactions to earnings
improvements.
The negotiations continued and each party made several proposals and
counter-proposals. Parent had increased the price it was willing to offer to
$19.50 per Share and Company had countered with $20.50. This was determined to
be the agreed price range. The parties determined to proceed on the basis that,
if they could reach agreement on the other terms and provisions of a definitive
acquisition agreement, the final price, subject to the approval of the Company's
Board of Directors, would be between $19.50 and $20.50 per Share with a
deduction equal to fifty percent of the after tax cost to Company of the
exercises of all previously granted employee stock options and full payment of
any amounts to be paid under previously authorized change of control agreements.
See Section 10 -- "The Change of Control Agreements" below.
On April 20 and 21, 1996, counsel for Company met with counsel for Parent
to negotiate the terms of a definitive acquisition agreement, after previously
exchanging drafts of an agreement.
During the period from April 15 -- 26, 1996, representatives of Company and
Parent analyzed the estimated after tax cost to Company of the option exercises
and change of control payments described above. On April 24, 1996, the
Supervisory Board of Parent authorized Parent's management to continue to pursue
the possible transaction, subject to agreement on price, due diligence and final
review and approval by the Supervisory Board. On April 26, 1996, Mr. Westdijk
met with Company's Special Committee and agreed upon a conditional tender offer
price of $19.45 per Share, based on a $20 per Share price, less $0.55
representing the price adjustment of fifty percent of the after tax cost of the
option exercises and change of control payments.
Beginning April 29, 1996, and ending May 24, 1996, subject to the terms of
the Confidentiality Agreement, and of an Environmental Due Diligence Agreement
dated April 22, 1996, Parent conducted a due diligence review focusing primarily
on environmental liabilities and litigation related to the business, properties
and assets of Company. A copy of the Environmental Due Diligence Agreement, as
executed, is attached as an Exhibit to the Schedule 14D-1 and is incorporated
herein by reference. Parent representatives met with Company representatives on
April 29-30 and May 6-8 and 14, 1996, as part of the environmental due diligence
procedure. Over this period and continuing through May 31, 1996, representatives
of and counsel for Company and Parent continued to negotiate terms of a
definitive acquisition agreement.
In April, 1995, Company retained Schroder Wertheim as its exclusive
financial advisor in connection with a review of various options to maximize the
value of Company to its shareholders. In April, 1996,
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Company advised Schroder Wertheim about the on-going discussions with Parent
concerning a possible acquisition of Company by Parent. Company provided
Schroder Wertheim with certain information concerning Company and the proposed
transaction so that Schroder Wertheim could perform a preliminary analysis of
the proposed transaction. Schroder Wertheim was not authorized to and did not
solicit any indications of interest from any other third party with respect to
all or a part of Company's business, and was not requested to and did not make
any recommendation as to the form or amount of consideration to be offered to
shareholders of Company in the proposed transaction.
On May 2, 1996, an afternoon continuation of a Regular Meeting of the Board
of Directors of Company was held without the participation by the directors
nominated by Parent to discuss the proposed transaction. Representatives of
Schroder Wertheim were present at the meeting and offered their preliminary
analysis of the proposed transaction. Legal counsel reviewed issues relating to
the Protocol and the proposed Tender Offer and Proposed Merger.
On May 10, 1996, Company and Schroder Wertheim entered into an engagement
letter pursuant to which the Company retained Schroder Wertheim as its financial
advisor in connection with the possible sale of the Company and to render an
opinion to the Board of Directors, as investment bankers, as to the fairness,
from a financial point of view, of the proposed transaction with Parent.
On May 30, 1996, Parent's Supervisory Board and Board of Management
approved the Reorganization Agreement and Parent notified Company that it was
willing to execute the Reorganization Agreement and proceed with the Offer.
On May 31, 1996, the Board of Directors of Company held a special meeting
to consider the acquisition proposal submitted to Company. All of Company's
directors participated in the meeting. After initial discussion the directors
nominated by Parent indicated that they would vote in favor of the Tender Offer,
Proposed Merger and proposed Reorganization Agreement and then excused
themselves from further participation. During a continuation of the meeting, the
Board reviewed with certain of its executive officers, legal counsel, and
financial advisors the acquisition proposal submitted to Company. The
presentations included a review of the financial analysis and proposed fairness
opinion of Schroder Wertheim. Based on such discussions and presentations, the
Board unanimously approved the Reorganization Agreement and the transactions
contemplated thereby, including the Offer and the Proposed Merger.
On May 31, 1996, Parent, Buyer, and Company signed the Reorganization
Agreement, certain Directors and Officers of Company signed the Officers and
Directors Agreements, and Dow signed the Shareholder Agreement.
THE REORGANIZATION AGREEMENT
The following is a summary of the Reorganization Agreement, a copy of which
is filed as an Exhibit to the Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") filed by Buyer and Parent with the Commission in connection
with the Offer. Such summary is qualified in its entirety by reference to the
Reorganization Agreement.
The Offer
The obligation of Buyer to accept for payment and pay for Shares tendered
pursuant to the Offer is subject only to satisfaction of the conditions
described in this Offer to Purchase and Annex I of the Reorganization Agreement.
Provided that nothing shall have occurred that would result in a failure to
satisfy any of the conditions set forth in this Offer to Purchase, Buyer,
pursuant to the Reorganization Agreement, may not, without the prior written
consent of Company: (a) decrease the Offer Price; (b) decrease the Minimum
Tender Condition; (c) impose additional conditions to the Offer; (d) change the
Expiration Date so that the Offer ends less than 30 "business days" from the
date on which the Offer is first publicly announced or extend the expiration
date beyond July 31, 1996, except that Buyer may extend the Offer to a date not
later than August 31, 1996 if any Governmental Approvals shall not have been
obtained by July 31, 1996 or by July 26, 1996 less than 80% of the outstanding
Shares have been tendered for purchase and Buyer
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reasonably believes that 80% or more of the Shares will be tendered if the
Expiration Date is extended to not later than August 31, 1996; (e) waive or
modify the Minimum Tender Condition; or (f) change the conditions to the Offer
in any material respect, except that Buyer may waive any of the other conditions
to the Offer. In the event the Tender Offer is extended beyond July 31, 1996 the
Offer Price shall be increased by an amount equal to the product of the Offer
Price multiplied by the prime interest rate as announced by Bank of America NW,
N.A. (doing business as Seafirst Bank) in Seattle, Washington as in effect on
August 1, 1996, multiplied by the quotient of the number of days that the Tender
Offer is extended after July 31, 1996, divided by 365. The foregoing limitations
shall not be applicable in the event the Reorganization Agreement is terminated
in accordance with the termination provisions of the Reorganization Agreement,
in which event Buyer may modify its Offer subject only to the limitations of the
Standstill Agreement.
The Proposed Merger
At the Effective Time (defined in the Reorganization Agreement as upon the
filing with the Washington Secretary of State of a duly executed Articles of
Merger and accompanying Plan of Merger (collectively, the "Merger Agreement") as
prescribed by the WBCA (or at such time thereafter as is provided in the Merger
Agreement), Buyer will be merged into Company in accordance with the applicable
provisions of the WBCA. At the Effective Time, (a) each Share then held in the
treasury of Company will be canceled; (b) each then-remaining outstanding Share
(other than Dissenting Shares, as hereinafter defined, and Shares held by Buyer
and its affiliates) will be converted into the right to receive the Merger
Consideration in cash, without interest; (c) all then-outstanding Common Shares
of Buyer will be converted into one fully paid and nonassessable Common Share of
the Surviving Corporation; and (d) all outstanding Shares held by shareholders
who shall have properly exercised dissenters' rights, if any, with respect
thereto under the applicable provisions of the WBCA ("Dissenting Shares") will
not be converted into the right to receive the Merger Consideration pursuant to
the Proposed Merger, but will be entitled to receive payment of the fair value
of such Shares in accordance with the provisions of the WBCA. From and after the
Effective Time, all outstanding Shares (other than Shares held by Parent, Buyer
or their affiliates) shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and the holders of certificates
formerly representing Shares shall cease to have any rights with respect thereto
other than to receive the Merger Consideration or dissenter's rights they have
perfected under the WBCA. Any options which remain unexercised as of the
Effective Time shall be entitled without any further action solely to the right
to receive cash payments provided for in the Reorganization Agreement.
Conditions of the Proposed Merger
The Reorganization Agreement provides that, the obligations of Company,
Parent and Buyer to consummate the Proposed Merger are, among other things,
subject to the satisfaction of the following conditions: (a) no provision of any
applicable law or regulation and no judgment, injunction, order or decree shall
prohibit or restrain the consummation of the Proposed Merger; (b) all
Governmental Approvals shall have been obtained, with such exceptions as would
not, individually or in the aggregate, have a material adverse effect on
Parent's or Company's business; and (c) Buyer shall have purchased Shares
pursuant to the Offer, sufficient to satisfy the Minimum Tender Condition.
No Solicitations
The Reorganization Agreement provides that, except as contemplated by the
Reorganization Agreement and subject to the continuing fiduciary duties of the
Board of Directors of Company, prior to the Effective Time, Company and Company
Subsidiaries: (a) shall not effect or agree to effect any Business Combination
(which is defined as any tender or exchange offer, proposal for a merger,
consolidation, acquisition of assets or other takeover proposal involving any
party to the Reorganization Agreement (except as explicitly contemplated in the
Reorganization Agreement) or any offer or proposal to acquire in any manner a
ten percent (10%) or greater interest in, or a substantial portion of
outstanding capital shares of any party to the Reorganization Agreement other
than transactions contemplated thereunder), or commence any proceedings for
winding up and dissolution affecting either of Company or Company Subsidiaries;
(b) shall not, nor shall
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any officer, director or affiliate of Company, nor any investment banker,
attorney, accountant or other agent, advisor or representative retained by
Company solicit or encourage, directly or indirectly, any inquiries, discussions
or proposals for, nor propose any discussions or negotiations looking toward, or
enter into any agreement or understanding providing for, any Business
Combination, provided that in response to a bona fide unsolicited offer for a
Business Combination or indication of interest from any person, corporation,
firm, association, entity or group to engage in a Business Combination, which
Company's Board of Directors reasonably determines, upon advice of counsel, that
it must respond to in light of its fiduciary duties to the shareholders of
Company, Company shall within two (2) business days of receipt of such
indication or offer inform Parent of such interest or the terms of such offer
and may: (i) disclose the same nonpublic information as provided to Parent to
such corporation, firm, association, person or other entity or group concerning
the business and properties of Company and/or afford any such party the same
access as provided to Parent to the properties, books or records of Company and
Company Subsidiaries or otherwise assist or encourage any such party in
connection with the foregoing, all on no more favorable terms and conditions as
set forth in the Confidentiality Agreement, provided that if requested, Company
Board of Directors may provide nonpublic information not provided to Parent
and/or agree to more favorable terms and conditions so long as it promptly
provides the same information to Parent and/or modifies the Confidentiality
Agreement so as to make available the same terms and conditions for Parent; or
(ii) if Company's Board of Directors determines that their continuing fiduciary
duties would require their approval of any such unsolicited bona fide offer for
a Business Combination with another entity because the terms of such offer are
more favorable to Company's shareholders than the terms set forth in the
Reorganization Agreement, then Company may accept such offer, provided that
prior to taking any such actions Company shall provide Parent with not less than
two (2) business days to modify the terms of this Offer and all requisite tender
offer documents and to propose to Company any corresponding modifications to the
Reorganization Agreement.
Termination of the Reorganization Agreement and Expenses
The Reorganization Agreement may be terminated:
(a) By the mutual consent of Parent, Buyer and Company at any time prior to
the purchase of Shares pursuant to the Offer;
(b) By either Company or Parent, if: (i) as a result of the occurrence of
any of the conditions set forth in Annex I of the Reorganization Agreement (a)
Buyer failed to commence the Tender Offer within ten (10) days following the
date the Reorganization Agreement is signed; or (b) the Tender Offer terminated
or expired in accordance with its terms without Buyer having purchased Shares
satisfying the Minimum Tender Condition pursuant to the Offer; or (ii) the
Tender Offer has not been consummated by August 31, 1996, or such other mutually
agreed to date;
(c) By Parent, if any person, entity or "group" (as defined in Section
13(d)(3) of the Exchange Act) other than Parent and Buyer or Dow acquires
beneficial ownership of ten percent (10%) (except in bona fide arbitrage
transactions) or more of the outstanding Shares;
(d) By Parent, Buyer or Company, if prior to the Effective Time, except for
transactions contemplated by the Reorganization Agreement, Company and Company
Subsidiaries have effected or agreed to effect any Business Combination, and the
two (2) business days provided for in the Reorganization Agreement has expired
without a modification to the Reorganization Agreement which is approved by
Company's Board of Directors; or
(e) By Parent, if prior to the Effective Time, the Board of Directors of
Company shall have withdrawn or materially modified its approval or
recommendation of the Tender Offer, the Reorganization Agreement or the Proposed
Merger.
If the Reorganization Agreement is terminated because (i) Company and
Company Subsidiaries have effected or agreed to effect any Business Combination,
and the two (2) business days provided for in the Reorganization Agreement have
expired without a modification to the Reorganization Agreement which is approved
by Company's Board of Directors, or (ii) if the foregoing events occur within 12
months following
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termination of the Reorganization Agreement, Company shall pay to Parent and
Buyer, on demand, the aggregate sum of $4,000,000.
Operation of Company's Business Until the Effective Time
The Reorganization Agreement provides that, from the date thereof until the
Effective Time, each of Company and Company Subsidiaries shall use reasonable
efforts to conduct its business and to maintain satisfactory relationships with
licensors, suppliers, distributors and customers, all in accordance with its
ordinary and usual course of business. Prior to the Effective Time, neither
Company nor Company Subsidiaries shall without the prior written consent of
Parent and Buyer or except as specifically contemplated by the Reorganization
Agreement: (a) amend its Articles of Incorporation or Bylaws; (b) authorize for
issuance, issue, deliver or sell any additional Shares, or securities
convertible into Shares, or issue or grant any rights, options or other
commitments for the issuance of Shares or such convertible securities (other
than the issuance of Preferred Shares and the conversion thereof or payment in
lieu thereof pursuant to the Stock Purchase Agreement, or of Shares pursuant to
the exercise of outstanding options, and the grant of any new options in
accordance with budgets and plans previously approved by Company's Compensation
Committee); (c) split, combine or reclassify any of its capital shares or
declare, set aside or pay any dividend (whether in cash, stock or property) in
respect to its Shares or redeem or otherwise acquire any of its Shares other
than the repurchase, at cost, of Shares issued to employees pursuant to the
terms of employee restricted stock or share purchase agreements; (d) dispose of
or acquire any material properties or assets except in the ordinary course of
business; (e) engage in any activities or transactions that are outside the
ordinary course of Company's business other than certain permitted activities
under the Reorganization Agreement; (f) materially amend any provision of the
Stock Plans, Pension Plans (as defined in the Reorganization Agreement) or
Employee Welfare Benefit Plans (as defined in the Reorganization Agreement); (g)
incur any indebtedness for borrowed money, other than amounts borrowed pursuant
to and in accordance with the terms and conditions of its existing lines of
credit or amounts pledged or potentially owed in connection with letters of
credit which may be obtained naming as beneficiary the trustees of the trusts
for supplemental pension benefits plans as required under the terms of such
trusts and plans; (h) except in accordance with budgets previously approved by
Company's Compensation Committee and in connection with the acceleration of
stock options and payments under the Change of Control Agreements (described
below), make or approve any increase in the compensation payable or to become
payable to any of their directors, officers, employees or agents with annual
salaries in excess of $75,000 or the foreign equivalent at the date hereof
(including, but not limited to, compensation through any profit sharing,
pension, retirement, severance, incentive or other employee benefit program or
arrangement), (i) make any bonus payment or any agreement or commitment to make
a bonus payment; or (j) grant or issue any stock option, warrant or other right
to acquire capital shares or enter into any employment agreement (other than any
such employment agreement that may arise by operation of law upon the hiring of
any new employee) or consulting agreement with any such directors, officers,
employees, or agents.
In addition, Company has agreed that it shall not: (a) declare, set aside
or pay any dividend or other distribution in respect of the Shares (including,
without limitation, any stock dividend or distribution), except in the ordinary
course of business and not in amounts which materially exceed the amounts
previously paid by Company; and (b) change its methods of accounting in effect
at February 29, 1996, except as required by changes in GAAP as concurred in by
its independent auditors.
Employment Agreements
Company has agreed to permit and shall give Parent and Buyer the
opportunity to negotiate employment agreements with key Company executives,
provided that any such agreement shall be subject to the consummation of the
Offer. Parent has indicated that it intends to offer employment agreements to
certain executives of Company, but no terms or conditions have been determined.
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Company Board Representation
Contemporaneously with the execution of the Reorganization Agreement,
Company delivered to Parent and Buyer resignations of all directors of Company
who were not nominated by Parent contingent on the consummation of the Offer.
Pursuant to the terms of the Reorganization Agreement, (a) upon the consummation
of the Offer, Company shall accept the resignations of a sufficient number of
such directors as determined by Parent and Buyer to result in Parent having
representation on the Board of Directors of Company proportionate to the
percentage shareholding of Parent and its affiliated companies, provided that
the Board of Directors (excluding directors nominated by Parent) shall have the
right but not the obligation to designate up to four (4) current members of the
Special Committee of the Board who shall remain after the consummation of the
Tender Offer until the Effective Date, and (b) on the Effective Date, Company
shall accept the resignations of any such directors determined by Parent and
Buyer who have not previously resigned.
Stock Options
Under the Reorganization Agreement holders of employee and nonemployee
director stock options granted and restricted stock awards issued under the
Stock Plans have been given the right to surrender their options and restricted
stock awards for cash payments equal to the difference between the Offer Price
per Share and the exercise price, if any, of the option or restricted stock
award times the number of Shares subject to each stock option grant or
restricted stock award. As of May 31, 1996 there were outstanding options for
1,741,072 Shares at a weighted average price of $11.1485 per Share and an
additional 50,000 Shares were subject to restricted stock awards. Each of the
options and awards were issued pursuant to plans which provided for the
acceleration of all unvested options and awards upon the event of a "Change of
Control" which in each plan is defined to include consummation of the Tender
Offer. The Reorganization Agreement also provides that the Surviving Corporation
will indemnify holders against excise and other related taxes in the event that
any portion of the amounts received are treated as "parachute payments" for
federal income tax purposes pursuant to mutually acceptable agreements
containing the terms of such indemnification.
Indemnification and Insurance
In the Reorganization Agreement, Parent has agreed that, with respect to
events occurring prior to the Effective Date, all rights to indemnification
existing in favor of the present or former directors, officers, employees,
fiduciaries and agents of Company, any of Company Subsidiaries, any Pension
Plans and Employee Welfare Benefit Plans (as defined in the Reorganization
Agreement) sponsored by Company or Company Subsidiaries, as provided in their
respective articles of incorporation, bylaws or pursuant to any agreements
previously disclosed by Company to Parent in writing with specific reference to
the Reorganization Agreement, as in effect as of the date of the Reorganization
Agreement, shall survive the Proposed Merger and shall continue in full force
and effect for a period of not less than the statutes of limitations, if any,
applicable to such matters.
Parent has further agreed that it will cause the Surviving Corporation to
periodically advance expenses as incurred with respect to the indemnification
obligations to the fullest extent permitted under the provisions of Company's
Articles of Incorporation or the articles of incorporation of Company
Subsidiaries. Parent shall cause the Surviving Corporation to periodically
advance expenses as incurred with respect to the foregoing to the fullest extent
permitted under the provisions of the Company's Articles of Incorporation or the
articles of incorporation of Company Subsidiaries. As of the Effective Time,
Company shall, or in the event Company is unable to do so, Parent shall cause
the Surviving Corporation to convert the current policies for directors' and
officers' liability insurance and ERISA or employee plan fiduciary liability
insurance maintained by Company and Company Subsidiaries to a policy or policies
for a term of six (6) years after the Effective Date which shall cover events
which occur prior to the Effective Date, provided that the incremental cost of
such policy or policies, after applying all related prepaid insurance premiums,
shall not exceed $200,000. To the extent that the premium for such policy or
policies exceeds $200,000, Company or the Surviving Corporation shall obtain
reasonably available policies for not less than such amount. Buyer and the
Surviving Corporation shall pay all
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expenses, including attorneys' fees, that may be incurred by any present or
former officer, director, employee, fiduciary or agent of Company or Company
Subsidiaries in enforcing the indemnity and other obligations provided for in
the Reorganization Agreement regarding indemnification and insurance.
Representations and Warranties
The Reorganization Agreement contains various representations and
warranties of Parent, Buyer and Company. Among other things, Company has made
representation and warranties: (a) that it and Company Subsidiaries are each
duly organized and validly existing corporations in good standing under the laws
of the state of their respective incorporation; (b) that subject to approval of
the Reorganization Agreement, it has the requisite corporate power to enter into
and carry out the terms of the Reorganization Agreement; (c) that it and Company
Subsidiaries are each qualified to do business as a foreign corporation in the
jurisdictions where failure to do so would have a material adverse affect on the
business; (d) that the execution and delivery of the Reorganization Agreement
has been duly authorized by Company; (e) that the Reorganization Agreement
constitutes the legal and binding obligation of Company; (f) that the execution
and delivery by Company of the Reorganization Agreement does not violate any
provision of Company's Articles of Incorporation or Bylaws, or any Governmental
Approvals obtained by Company, require the consent of any third party, or
violate any material contract, agreement or judgment to which either Company or
any of Company Subsidiaries is bound, including, but not limited to, the
Standstill Agreement; (g) regarding its capitalization; (h) regarding the scope
of its employment contracts and benefits and the compliance of such contracts
and benefits with applicable laws; (i) that neither Company nor any of Company
Subsidiaries is a party to, nor threatened with, any legal action or other
proceeding or investigation before any court, any arbitrator of any kind or any
government agency, and to the best of Company's knowledge, neither Company nor
any of Company Subsidiaries is subject to any potential action, proceeding,
investigation or claim, which could impede the transactions contemplated by the
Reorganization Agreement or exceed $5,000,000; (j) that there is no labor
dispute, strike, slow-down or stoppage pending or, to the best of the knowledge
of Company, threatened against Company or any of Company Subsidiaries; (k) that
Company has complied with relevant rules and regulations promulgated pursuant to
ERISA; and (l) that Company has not retained any brokers or consultants entitled
to be paid commissions except for Schroder Wertheim.
Parent and Buyer have delivered in the Reorganization Agreement various
customary representations and warranties including representations and
warranties regarding corporate status, power, authorization, and brokers. In
addition, Parent has represented and warranted that it has, or will have,
sufficient funds available to enable Buyer to purchase all of the Shares
outstanding and to pay all related contractual obligations, fees and expenses
pursuant to, or becoming payable by the Surviving Corporation as a result of,
the Reorganization Agreement, the Tender Offer, and the Merger Agreement and
shall make such funds available to Buyer or the Surviving Corporation.
THE STANDSTILL AGREEMENT. Pursuant to the Reorganization Agreement,
Company has represented and warranted to Parent and Buyer that: (a) all of the
actions necessary or required pursuant to the terms of the Standstill Agreement
to permit the transactions contemplated by the Reorganization Agreement and the
Offer have been taken, including, but not limited to, advance approval of the
Reorganization Agreement, the Offer, the Directors and Officers Agreements, and
the Shareholder Agreement from five-eighths of the Unaffiliated Directors (as
defined in the Standstill Agreement) as required by Section 2.8 of the
Standstill Agreement, and (b) that the execution and delivery of the
Reorganization Agreement and the consummation of the transactions contemplated
thereby, including the Offer, do not violate or breach any of the terms of the
Standstill Agreement. Furthermore, the Confidentiality Agreement and the
Protocol modify the Standstill Agreement such that, provided Parent has entered
into the Reorganization Agreement, then the minimum number of Shares tendered
and accepted in this Offer need only exceed a simple majority of the Shares as
of the closing of the Offer.
THE CHANGE OF CONTROL AGREEMENTS
The Board of Directors has unanimously approved change of control
agreements (the "Change of Control Agreements") between Company and certain of
the named executive officers of Company. At
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February 29, 1996, Company had Change of Control Agreements in place with each
of seven (7) executive officers (the "Executives"). Each Change of Control
Agreement provides that the Executive will receive compensation for 30 months if
his employment is terminated (voluntarily or involuntarily) for any reason other
than gross misconduct, death, permanent and total disability, or reaching age
65, provided such termination occurs within 24 months after certain defined
events which might lead to a change of control of Company. The compensation will
be paid at a rate equal to the Executive's then current salary and target
incentive. The compensation is subject to a minimum annual rate of not less than
the Executive's average compensation for the preceding three (3) calendar years,
and is subject to reduction if the aggregate present value of all payments would
exceed three (3) times the Executive's "annualized includible compensation", as
defined in Section 280G of the Code, for the Executive's most recent five (5)
taxable years. The Executive will also continue to have "employee" status for
the 30-month period and will be entitled to retain most employee benefits and
rights during this period.
Company may cease payments in the event the Executive breaches certain
non-competition or confidentiality covenants. Company also has the right to
terminate the Change of Control Agreements upon a one-year notice, except as to
rights already accrued as a result of an event which has triggered the change of
control provisions of the Change of Control Agreements. The Board of Directors
believes that the terms and conditions of the Change of Control Agreements are
in the best interest of Company because the Change of Control Agreements will
enable the Executives to continue to focus on activities providing for the
maximum long-term value to Company's shareholders, even when faced with the
possible change of control of Company.
On May 31, 1996, Parent agreed with the Executives to permit the Company to
enter into letter amendments to the Change of Control Agreements to clarify and
make provisions for payments to be made in the event the Tender Offer is
consummated (the "Letter Amendments"). The Letter Amendments: (i) clarify that
the consummation of the Tender Offer is a "change in control," (ii) provide for
payment of the 30 months of base compensation plus target bonuses upon
consummation of the Tender Offer rather than upon termination of the Executive,
such payment to be made in one lump sum in readily available funds within ten
(10) business days after Parent purchases shares satisfying the Minimum Tender
Condition, (iii) provide that if Executive continues as an employee of Company
after the Tender Offer, he shall be entitled to receive benefits comparable to
those provided other management personnel and (iv) provide for a "Gross-Up
Payment" to cover the effect of excise and other taxes on the payments made
pursuant to these agreements, the conversion of outstanding stock options and
other payments likely to be treated as "parachute payments" for federal income
tax purposes recognizing that payments in excess of the "three times annualized
compensation" may be paid to these individuals. The Executives have agreed that
payments pursuant to these revised agreements shall be in lieu of any other
severance or termination benefit or plan which they presently are entitled to in
the event of a termination within 30 months after the consummation of the Tender
Offer and by execution of the Letter Amendments will also grant a release to the
Surviving Corporation of any other right or cause of action relating to his
employment with Company prior to June 1, 1996. A copy of the form of Letter
Amendments to be executed with each Executive, along with a list of the
Executives and estimated amount to be paid is attached as an exhibit to the
Schedule 14D-1 and is incorporated herein by reference in its entirety.
The estimated aggregate amounts payable to seven executive officers in the
event the Tender Offer is consummated is approximately $5,600,000 in base
compensation, target bonuses and other benefits payable pursuant to the amended
Change of Control Agreements. In addition, these seven officers will also
receive an aggregate amount of approximately $6,600,000 as cash payments for
surrendering outstanding stock options and deferred cash incentives, the vesting
of which is to be accelerated pursuant to Company Stock Plans under provisions
applicable to other officers and employees of Company. The foregoing amounts do
not include the Gross-Up Payments which when determined will equal the related
excise and other taxes attributable to amounts deemed to be parachute payments.
11. DIVIDENDS AND DISTRIBUTIONS
Except as contemplated by the Reorganization Agreement (including, without
limitation, the making of the Offer) Company has agreed that neither it nor
Company Subsidiaries will, between the date of the execution and delivery of the
Reorganization Agreement and the Effective Time, directly or indirectly do, or
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propose or agree to do, any of the following without the prior written consent
of Buyer: split, combine or reclassify any Shares of its capital stock or
declare, redeem or otherwise acquire any of its capital stock. Further, Company
shall not declare, set aside or pay any dividend or other distribution in
respect of the Shares (including, without limitation, any stock dividend or
distribution), except in the ordinary course of business and not in amounts
which materially exceed the amounts previously paid by Company.
12. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Tender Offer, Buyer shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Buyer's obligation to pay for or return tendered Shares after the termination
or withdrawal of the Tender Offer), to pay for any Shares, and may terminate the
Tender Offer, if (a) the Minimum Tender Condition has not been satisfied, (b)
Governmental Approvals have not been obtained or (c) at any time on or after May
31, 1996 and prior to the acceptance for payment of Shares, any of the following
conditions shall occur and be continuing:
(a) There shall be instituted or pending any action or proceeding by
any government or governmental authority or agency, domestic or foreign:
(i) challenging or seeking to make illegal, to delay materially or
otherwise directly or indirectly to restrain or prohibit the making of the
Tender Offer, the acceptance for payment of or payment for some of or all
the Shares by Buyer or the consummation by Buyer of the Proposed Merger,
(ii) seeking to restrain or prohibit Buyer's ownership or operation (or
that of its respective subsidiaries or affiliates) of all or any material
portion of the business or assets of Company and Company Subsidiaries,
taken as a whole, or of Parent and its subsidiaries, taken as a whole, or
to compel Buyer or any of its subsidiaries or affiliates to dispose of or
hold separate all or any material portion of the business or assets of
Company and Company Subsidiaries, taken as a whole, or of Parent and its
subsidiaries, taken as a whole, (iii) seeking to impose or confirm material
limitations on the ability of Parent or any of its subsidiaries or
affiliates to effectively exercise full rights of ownership of the Shares,
including, without limitation, the right to vote any Shares acquired or
owned by Parent or any of its subsidiaries or affiliates on all matters
properly presented to Company's shareholders, or (iv) seeking to require
divestiture by Parent or any of its subsidiaries or affiliates of any
Shares, or (v) that otherwise is likely to materially adversely affect
Company and Company Subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole;
(b) There shall be any action taken, or any statute, rule, regulation,
injunction, order or decree proposed, enacted, enforced, promulgated,
issued or deemed applicable to Company or any of Company Subsidiaries or
the Tender Offer or the Proposed Merger, by any court, government or
governmental authority or agency, domestic or foreign other than the
application of the waiting period provisions of the HSR Act, Exon-Florio or
any foreign regulatory agency to the Tender Offer or the Proposed Merger,
that is likely, directly or indirectly, to result in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;
(c) There shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the NYSE; which suspension
or limitation shall continue for at least three (3) consecutive trading
days, (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, The Netherlands, Japan
or France, (iii) any limitation (whether or not mandatory) by any
government, domestic, foreign or supranational, or governmental entity on,
or other event that, in the sole judgment of Buyer, might affect, the
extension of credit by banks or other lending institutions, (iv) a
commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States,
The Netherlands, Japan or France, (v) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof; or (vi) any significant change in the
United States, The Netherlands, Japan or France currency, exchange rates or
any suspension of, limitations on, the markets therefor (whether or not
mandatory);
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(d) Subject to the right to cure provided by Section 9.4 of the
Reorganization Agreement, Company shall have breached or failed to perform
in any material respect, any of its covenants or agreements under the
Reorganization Agreement, or any of the representations and warranties of
Company set forth in the Reorganization Agreement shall not be true in any
respect which is material to Company and Company Subsidiaries as a whole,
in each case when made or at any time prior to consummation of the Tender
Offer as if made at and as of such time; provided, however, that the
Company shall not be deemed to have breached its representation and
warranty contained in the Reorganization Agreement with respect to any
legal action or other proceeding or investigation which arises after May
31, 1996 which it is not required to disclose pursuant to filings made by
it pursuant to the Exchange Act without regard to any time periods covered
by, or due dates of, such filings;
(e) The Reorganization Agreement shall have been terminated in
accordance with its terms; or
(f) The Board of Directors of Company shall have withdrawn or
materially modified its approval or recommendation of the Tender Offer or
the Proposed Merger, which, in the reasonable judgment of Parent or Buyer
in any such case, and regardless of the circumstances giving rise to any
such condition, makes it inadvisable to proceed with such acceptance for
payment or payment for the Shares.
The foregoing conditions are for the sole benefit of Buyer and Parent and
may be asserted by Buyer or Parent regardless of the circumstances giving rise
to any such condition or may be waived by Buyer or Parent in whole or in part at
any time and from time to time in its sole discretion. The failure by Buyer or
Parent at any time to exercise any of the foregoing rights will not be deemed a
waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances will not be deemed a waiver with respect to
any other facts and circumstances and each such right will be deemed an ongoing
right that may be asserted at any time and from time to time. Any determination
by Buyer concerning the events described in this Section 12 will be final and
binding upon all parties.
13. CERTAIN LEGAL MATTERS
Except as set forth in this Offer to Purchase, based on a review of
publicly available information regarding Company, the review of certain
information furnished by Company to Buyer and Parent and discussions among
representatives of Buyer and Parent and representatives of Company during
Buyer's and Parent's investigation of Company (see Section 10), Buyer and Parent
are not aware of any licenses or regulatory permits that would be material to
the business of Company, and Company Subsidiaries, taken as a whole, and that
might be adversely affected by Buyer's acquisition of Shares (and the indirect
acquisition of the stock of Company Subsidiaries) as contemplated herein, or any
filings, approvals or other actions by or with any domestic, foreign or
supranational governmental authority or administrative or regulatory agency that
would be required prior to the acquisition of Shares (or the indirect
acquisition of the stock of Company's Subsidiaries) by Buyer pursuant to the
Offer as contemplated herein. Should any such approval or other action be
required, there can be no assurance that any such additional approval or action,
if needed, would be obtained without substantial conditions or that adverse
consequences might not result to Company's business, or that certain parts of
Company's or Parent's business might not have to be disposed of or held separate
or other substantial conditions complied with in order to obtain such approval
or action or in the event that such approvals were not obtained or such actions
were not taken. Buyer's obligation to purchase and pay for Shares is subject to
certain conditions, including conditions with respect to legal matters discussed
in this Section 13.
STATE TAKEOVER LAWS. Company is incorporated under the laws of the State
of Washington. As a Washington corporation, Company is subject to the provisions
of the WBCA, including those described in "Special Factors -- Statutory
Requirements." A number of other states have adopted takeover laws and
regulations which purport, to varying degrees, to be applicable to attempts to
acquire securities of corporations which are incorporated in such states or
which have substantial assets, security holders, principal executive offices or
principal places of business therein. To the extent that certain provisions of
certain of these state takeover statutes purport to apply to the Offer, Buyer
believes that such laws conflict with federal law and constitute an
unconstitutional burden on interstate commerce. In 1982, the Supreme Court of
the United States, in Edgar v. Mite Corp., invalidated on constitutional grounds
the Illinois Business Takeovers Statute,
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which as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult, and the reasoning in such decision
is likely to apply to certain other state takeover statutes. In 1987, however,
in CTS Corp. v. Dynamics Corp. of America, the Supreme Court of the United
States held that the State of Indiana could, as a matter of corporate law and,
in particular, those aspects of corporate law concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs of a
target corporation without the prior approval of the remaining shareholders,
provided that such laws were applicable only under certain conditions.
Company, directly or through Company Subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. Buyer does not know whether any of these laws will, by their
terms, apply to the Offer or the Proposed Merger and has not complied with any
such laws. Should any person seek to apply any state takeover law, Buyer will
take such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
In the event it is asserted that one or more state takeover laws is applicable
to the Offer or the Proposed Merger, and an appropriate court does not determine
that it is inapplicable or invalid as applied to the Offer, Buyer might be
required to file certain information with, or receive approvals from, the
relevant state authorities. In addition, if enjoined, Buyer might be unable to
accept for payment any Shares tendered pursuant to the Offer, or be delayed in
continuing or consummating the Offer and the Proposed Merger. In such case,
Buyer may not be obligated to accept for purchase, or pay for, any Shares
tendered. See Section 12, "Certain Conditions of the Offer."
ANTITRUST. Under the provisions of the HSR Act applicable to the Offer,
the acquisition of Shares under the Offer may be consummated following the
expiration of a fifteen (15)-calendar-day waiting period following the filing by
Parent of a Notification and Report Form with respect to the Offer, unless
Parent receives a request for additional information or documentary material
from the Antitrust Division or the FTC or unless early termination of the
waiting period is granted. Parent made such filing on June 5, 1995. If, within
the initial fifteen (15)-day waiting period, either the Antitrust Division or
the FTC requests additional information or material from Parent concerning the
Offer, the waiting period will be extended and would expire at 11:59 p.m., New
York City time, on the tenth (10th) calendar day after the date of substantial
compliance by Parent with such request or as may be otherwise stipulated by
agreement with the Antitrust Division and the FTC. In practice, complying with a
request for additional information or material can take a significant amount of
time. In addition, if the Antitrust Division or the FTC raises substantive
issues in connection with a proposed transaction, the parties frequently engage
in negotiations with the relevant governmental agency concerning possible means
of addressing those issues and may agree to delay consummation of the
transaction while such negotiations continue.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as Buyer's proposed acquisition of
Company. At any time before or after Buyer's acquisition of Shares pursuant to
the Offer, the Antitrust Division or the FTC could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or the
consummation of the Proposed Merger or seeking the divestiture of Shares
acquired by Buyer or the divestiture of substantial assets of Company or Company
subsidiaries or Parent or its subsidiaries. Private parties may also bring legal
action under the antitrust laws under certain circumstances. There can be no
assurance that a challenge to the Offer on antitrust grounds will not be made
or, if such a challenge is made, of the result thereof.
The Offer is conditioned upon obtaining all Governmental Approvals
including those required under the HSR Act. The Reorganization Agreement also
provides that Buyer shall be permitted to extend the Offer to August 31, 1996 by
reason of the nonsatisfaction of the HSR Act by July 31, 1996 (provided that
such extension shall not prohibit Buyer from terminating the Offer or failing to
extend the Offer by reason of nonsatisfaction of any other condition of the
Offers).
EXON-FLORIO. Under Exon-Florio, the President of the United States is
authorized to prohibit or suspend acquisitions, mergers or takeovers by foreign
persons of persons engaged in interstate commerce in the United States if the
President determines, after investigation, that such foreign persons in
exercising control of
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such acquired persons might take action that threatens to impair the national
security of the United States and that other provisions of existing law do not
provide adequate authority to protect national security. Pursuant to
Exon-Florio, notice of an acquisition by a foreign person may be made to CFIUS
either voluntarily by the parties to such proposed acquisition, merger or
takeover or by any member of CFIUS. CFIUS is comprised of representatives of the
Departments of the Treasury, State, Commerce, Defense and Justice, the Office of
Management and Budget, the Office of Science and Technology Policy, the United
States Trade Representative's Office of Management and Budget, the Office of
Science and Technology Policy, the United States Trade Representative's Office
and the Council of Economic Advisors, as well as the Assistant to the President
for National Security Affairs and the Assistant to the President for Economic
Policy.
A determination that an investigation is called for must be made within 30
days after notification of a proposed acquisition, merger or takeover is first
filed with CFIUS. Any such investigation must be completed within 45 days of
such determination. Any decision by the President to take action must be
announced within 15 days of the completion of the investigation. Exon-Florio
does not require the filing of a notification, nor does it prohibit the
consummation of an acquisition, merger or takeover if a notification is not
made. If no notification is made, however, such an acquisition, merger or
takeover thereafter remains indefinitely subject to divestment should the
President subsequently determine that the national security of the United States
has been threatened or impaired. Buyer and Company expects to file with CFIUS,
on June 10, 1996, a joint voluntary notice of the transactions contemplated by
the Reorganization Agreement. Although Buyer believes that the transactions
contemplated by the Reorganization Agreement should not raise any national
security concerns, there can be no assurance that CFIUS will not determine to
conduct an investigation of the proposed transaction and, if an investigation is
commenced, there can be no assurance regarding the outcome of such
investigation.
The Offer is conditioned upon obtaining all Governmental Approvals
including those required under Exon-Florio. The Reorganization Agreement also
provides that Buyer shall be permitted to extend the Offer to August 31, 1996 by
reason of the nonsatisfaction of Exon-Florio by July 31, 1996 (provided that
such extension shall not prohibit Buyer from terminating the Offer or failing to
extend the Offer by reason of nonsatisfaction of any other condition of the
Offer).
INVESTMENT CANADA ACT. The Investment Canada Act (the "IC Act") governs
the acquisition, directly or indirectly, by non-Canadians of control of existing
Canadian businesses and the establishment by non-Canadians of new Canadian
businesses. Under the IC Act, subject to certain exceptions, a non-Canadian
proposing to acquire direct control of a Canadian business which has gross
assets equal to or in excess of Cdn. $5 million must first file an application
for review with Industry Canada, the federal government department responsible
for administering the IC Act, and receive approval for such investment from the
federal Minister (the "Minister") responsible for the IC Act. Approval is
granted where it is demonstrated, to the Minister's satisfaction, that the
proposed investment is or is likely to be of net benefit to Canada. Where the
non-Canadian has the status of a WTO investor (essentially, any national or
government of a country which is a member of the World Trade Organization or any
entity or other prescribed form of business organization which is controlled (as
defined) by any such national or government) for purposes of the IC Act or where
the Canadian business is already controlled by a WTO investor, the above
threshold is increased to Cdn. $168 million for acquisitions in 1996, subject to
certain exceptions. Where the gross assets of the Canadian business being
acquired are less than the applicable threshold, the non-Canadian must file a
notice with Industry Canada, either prior to or within 30 days following the
closing of the acquisition. Acquisitions subject to notice filing under the IC
Act are, subject to certain exceptions, not subject to the review and approval
process under the IC Act. Further, there is no longer any review of most
indirect acquisitions by WTO investors of control of Canadian businesses or
where the Canadian businesses are already controlled by WTO investors.
According to Company's 1996 10-K, Company conducts certain operations in
Canada. The acquisition of Shares by Buyer pursuant to the Offer will constitute
an indirect acquisition of control of the Canadian business of Company for
purposes of the IC Act. Parent and Buyer believe that Company is controlled by a
WTO investor for purposes of the IC Act. Parent intends to file the required
notice with Industry Canada. The acquisition will not be subject to the review
and approval process under the IC Act.
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PRE-MERGER NOTIFICATION REQUIREMENTS UNDER THE COMPETITION ACT
(CANADA). Certain provisions of the Competition Act (Canada) (the "Competition
Act") require prenotification to the Director of Investigation and Research
appointed under the Competition Act (the "Canadian Director") of significant
corporate transactions, such as the acquisition of a large percentage of the
stock of a public company that has Canadian operations, or a merger or
consolidation involving such an entity. Prenotification is generally required
with respect to transactions in which the parties to the transactions and their
affiliates have assets in Canada, or annual gross revenues from sales in, from
or into Canada, in excess of Cdn. $400,000,000 and which involve the direct or
indirect acquisition of an operating business, the aggregate value of the assets
of which, or the annual gross revenues from which, exceed Cdn. $35,000,000. For
transactions subject to the notification requirements, notice must be given
seven (7) or twenty-one (21) days prior to the completion of the transaction
depending on the information provided to the Canadian Director. The Canadian
Director may waive the waiting period. After the applicable waiting period
expires or is waived, the transaction may be completed.
If the Canadian Director believes that the proposed transaction prevents or
lessens, or is likely to prevent or lessen, competition substantially in a
market, the Canadian Director may apply to the Competition Tribunal, a special
purpose Canadian tribunal, which may order, among other things, the disposition
of the Canadian assets acquired in such transaction.
Parent intends to file any required notice and information with respect to
its proposed acquisition with the Canadian Director and, to the extent
necessary, observe the applicable waiting period and/or apply to the Canadian
Director for an advance ruling certificate to the effect that the Offer or
Proposed Merger would not prevent or lessen, or be likely to prevent or lessen,
competition substantially.
EEA AND NATIONAL MERGER REGULATION. According to Company's 1996 10-K,
Company conducts substantial operations in the European Economic Area ("EEA").
EEC Regulation 4064/89 (the "Merger Regulation") and Article 57 of the European
Economic Area Agreement require that concentrations with a "Community dimension"
be notified in prescribed form to the Commission of the European Communities
(the "European Commission") for review and approval prior to being put into
effect. In such cases, the European Commission will, with certain exceptions,
have exclusive jurisdiction to review the concentration as opposed to the
individual countries within the EEA.
The Offer will be deemed to have a "Community dimension" if the combined
aggregate worldwide annual revenues of both Parent and Company exceed ECU 5
billion and if the Community-wide annual revenues of each of Parent and Company
exceed ECU 250 million and if both Parent and Company do not receive more than
two-thirds ( 2/3) of their respective Community-wide revenues from one and the
same country. Concentrations that are found not to be subject to the Merger
Regulation may be subject to the various national merger control regimes of the
countries of the EEA, resulting in the possibility that it may be necessary or
desirable to obtain prior approvals from the various national authorities.
Based upon information contained in Company's 1996 10-K, Buyer currently
believes that the Offer should not be considered to have a "Community
dimension," as the combined aggregate worldwide annual revenues of both Parent
and Company for 1996 do not appear to exceed ECU 5 billion and the Community-
wide revenues of Company for 1996 appear not to exceed ECU 250 million.
Therefore, Buyer does not currently intend to file a notification with the
European Commission.
In general, EEA countries from which it may be necessary to obtain
approvals include: Austria, Belgium, Germany, Greece, Ireland, Italy, Portugal
and Sweden. In each of these jurisdiction's mandatory notification obligations
may apply. In certain other jurisdictions, although filing is not mandatory, it
may be considered desirable to obtain clearance from the relevant national
authority. The period within which the relevant national authority must or may
reach a preliminary decision on the notification, and the length of time
available to such national authority if it decides to commence a full
investigation of the transaction, varies from jurisdiction to jurisdiction. In
most cases a decision at the preliminary inquiry phase can be expected within
one to two (1-2) months of notification; where a full inquiry into a transaction
is undertaken, the detailed investigations may take several months. The relevant
national authorities are in many cases empowered to take a range of actions
designed to modify or prevent the implementation of transactions that do
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not fulfill the criteria for approval under the relevant national laws. Buyer
currently believes that no such mandatory or voluntary notifications or filings
are required as the activities of Company and the Company Subsidiaries and the
activities of Parent and its subsidiaries are in different countries and/or do
not meet the various national thresholds.
After commencement of the Offer, Buyer will seek further information
regarding the 1996 Community-wide revenues of Company. In the event that Buyer
concludes that the 1996 Community-wide revenues of Company in fact exceeded ECU
250 million and the Offer and the transactions contemplated thereby are,
therefore, deemed to have a "Community dimension," Buyer will file a
notification in the prescribed form with the European Commission in accordance
with the Merger Regulation. Transactions subject to the filing requirements of
the Merger Regulation are suspended automatically until three (3) weeks after
receipt of the notification. The European Commission may extend the suspension
period for such period as it finds necessary to make a final decision on the
legality of the transaction. However, in the case of a public bid, the bidder
may acquire shares of the target company during the suspension period (provided
that the transaction has been duly notified to the European Commission), but may
not vote such shares until after the end of the suspension period unless the
European Commission grants permission to do so in order to maintain the full
value of the bidder's investment.
If a filing under the Merger Regulation is made, the European Commission
must decide whether to initiate proceedings within one (1) month after the
receipt of the notification, subject to certain extensions for EEA holidays if
the information to be supplied with the notification is incomplete or if an
individual country has requested a referral of the transaction (or part of it).
If proceedings are initiated, the European Commission must reach a decision in
the proceedings within four (4) months of the commencement of the proceedings.
During this period the Buyer may modify the transactions contemplated to remove
any serious doubts of the Commission as to the compatibility of the transactions
with the common market. If the European Commission fails to reach a decision
within either of these time periods the transaction will be deemed to be
compatible with the common market. If the European Commission declares the Offer
to be incompatible with the common market, it may prevent the consummation of
the transaction, order a divestiture if the transaction has already been
consummated, or impose conditions or other obligations.
There can be no assurance that a challenge to the Offer will not be made
pursuant to the merger control regimes of one or more of the various countries
(or alternatively, if applicable, pursuant to the Merger Regulation) or by legal
action brought by private parties or, if such a challenge is made, what the
outcome will be. See Section 12, "Certain Conditions of the Offer".
OTHER FOREIGN LAWS. Company's 1996 10-K indicates that Company and certain
of Company Subsidiaries conduct business in other foreign countries outside
Canada and the EEA where regulatory filings or approvals may be required or
desirable in connection with the consummation of the Offer. Certain of such
filings or approvals, if required or desirable, may not be made or obtained
prior to the expiration of the Offer. After commencement of the Offer, Buyer
will seek further information regarding the applicability of any such laws and
currently intends to take such action as may be required or desirable. If any
government or governmental authority or agency takes any action prior to the
completion of the Offer that, in the sole judgment of Buyer, might have certain
adverse effects, Buyer will not be obligated to accept for payment or pay for
any Shares tendered. See Section 12, "Certain Conditions of the Offer".
14. CERTAIN FEES AND EXPENSES
Buyer and Parent have retained D.F. King & Co., Inc. to act as the
Information Agent and Chemical Mellon Shareholders Services, LLC, to serve as
the Depositary in connection with the Offer. The Information Agent and the
Depositary each will receive reasonable and customary compensation for their
services, be reimbursed for certain reasonable out-of-pocket expenses and be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities and expenses under the federal securities laws.
Neither Buyer nor Parent will pay any fees or commissions to any broker or
dealer or other person (other than the Information Agent) in connection with the
solicitation of tenders of Shares pursuant to the Offer. Brokers, dealers, banks
and trust companies will be reimbursed by Buyer upon request for customary
mailing
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and handling expenses incurred by them in forwarding material to their
customers. It is estimated that the expenses incurred by Buyer and Parent in
connection with the offer will be approximately as set forth below:
Financial Advisor...................................................... $458,000
Legal and Expert Fees and Expenses..................................... $1,200,000
Printing, Mailing, Solicitation, Distribution and Depositary
Expenses............................................................. $260,000
Filing Fees and Related Expenses....................................... $106,000
Miscellaneous.......................................................... $100,000
TOTAL:............................................................ $2,124,000
15. MISCELLANEOUS
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. Neither Buyer nor Parent is aware of any jurisdiction in which the
making of the Offer or the acceptance thereof would not be in compliance with
the laws of such jurisdiction. To the extent Buyer or Parent becomes aware of
any state law that would limit the class of offerees in the Offer, Buyer will
amend the Offer and, depending on the timing of such amendment, if any, will
extend the Offer to provide adequate dissemination of such information to
holders of Shares prior to the expiration of the Offer.
No person has been authorized to give any information or to make any
representation on behalf of Buyer or Parent not contained herein or in the
Letter of Transmittal and, if given or made, such information or representation
must not be relied upon as having been authorized.
Buyer has filed with the Commission the Schedule 14D-1 pursuant to Rule
14d-3 under the Exchange Act, together with exhibits, furnishing certain
additional information with respect to the Offer, and may file amendments
thereto. Such Schedule 14D-1 and any amendments thereto, including exhibits,
should be available for inspection at the public reference facilities of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such
information should be obtainable, by mail, upon payment of the Commission's
customary charges, by writing to the Commission at such address.
UC ACQUISITION CORP.
June 7, 1996
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT, PAKHOED USA, INC. ("PAKHOED USA"), BUYER AND
PAKHOED INVESTERINGEN, B.V. ("INVESTERINGEN")
SECTION A. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The name, business address, present principal occupation or employment and
five (5)-year employment history of each of the directors and executive officers
of Parent are set forth below. All such directors and executive officers listed
below are citizens of The Netherlands, except Roy E. Wansik, who is a citizen of
the United States. Unless otherwise indicated, the principal business address of
each director or executive officer is 333 Blaak, 3011 GB Rotterdam, The
Netherlands.
POSITION WITH PARENT;
NAME, AGE AND PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS FIVE (5)-YEAR EMPLOYMENT HISTORY
- ------------------------------ --------------------------------------------------------------------
N. J. Westdijk (54)........... Managing Director of Parent from 1990 to 1992. Chairman of the Board
of Parent from 1992 to present. See Sections B, C and D for further
employment history.
Pierre A. Pellenaars (51)..... Senior Vice President, Finance and Administration, of Parent from
1989 to present. Director of Univar Europe N.V. from 1991 to 1994.
See Section D for further employment history.
J. W. Berghuis (61)........... Vice Chairman of the Board of Management of Parent from 1991 to
present. See Sections B, C and D for further employment history.
G. P. Krans (48).............. Member of the Board of Management of Parent from May 1996 to
present. Chief Executive Officer of Shell Saudi Arabia Oil and
Chemicals from 1994 to 1995. Chief Financial Officer of Shell
Indonesia Oil and Chemicals from 1989 to 1994.
A. H. Spoor (47).............. Member of the Board of Management of Parent from 1996 to present.
Director of Special Products Division, Natural Gas, Exxon Company
Int. from 1993 to February 1996.
Frederick van der Ploeg Professor of Political Economy at the University of Amsterdam from
(40)........................ 1991 to present. Member of the Lower House of the Dutch Parliament
for the Labour Party (PvdA) (Financial Spokesperson) from 1994 to
present. Member of the Supervisory Board of Parent from 1996 to
present.
H. de Ruiter (62)............. Member of the Supervisory Board of Parent from 1996 to present.
Currently serving as Deputy Chairman. Managing Director of
Royal/Dutch Shell until 1994.
J. F. M. Peters (64).......... Member of the Supervisory Board of Parent from 1983 to present.
Chairman and Chief Financial Officer, Executive Board of AEGON N.V.
from 1984 to 1993. Retired, various board memberships from 1993 to
present.
J. H. Choufoer (69)........... Chairman of the Supervisory Board of Parent from 1990 to present.
Chairman of the Supervisory Board of Koninklijke Ahold N.V. from
1990 to May 1996. Chairman of the Supervisory Board of ING Group
N.V. from 1990 to May 1996. Chairman of the Supervisory Board of
Koninklijke Hoogovens N.V. from 1990 to present. Member of the
Supervisory Board of N.V. Koninklijke Nederlandsche Petroleum
Maatschappij (Royal Dutch Petroleum Co.) from 1990 to present.
Member of the Board of Directors of The Shell Petroleum Co. Ltd.
from 1990 to present.
Hubert Crijns (65)............ Member of the Supervisory Board of Parent from 1993 to present.
Member of the Supervisory Board of Parent from 1993 to present.
Chief Executive Officer of Parent from 1976 to 1993.
Arie A. van der Louw (62)..... Member of the Supervisory Board of Parent, Heidemij N.V., Verenigde
Tankrederijen, Nelcon and Groot Themsen from 1991 to present.
Chairman of Supervisory Board of Feijenoord -- Stadium from 1991 to
present. Chairman of Dutch Broadcasting Corporation from 1992 to
present.
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POSITION WITH PARENT;
NAME, AGE AND PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS FIVE (5)-YEAR EMPLOYMENT HISTORY
- ------------------------------ --------------------------------------------------------------------
J. Groenendijk (68)........... Retired since 1988. Chairman of the Executive Board of Royal
Nedlloyd Group N.V. from 1985 to 1988. Several non-executive
directorships with Dutch companies, including Parent, from 1988 to
1996.
J. Bouwens (60)............... Division President of Gebr. Broere from prior to 1988 to present.
Member of the Strategic Committee of Parent and Group President of
the Shipping and Chemical Storage Group of Parent from 1994 to
present.
J. Brouwer (54)............... Division President of Paktank International from prior to 1990 to
present. Member of the Strategic Committee of Parent and Group
President of International Tank Storage and Development Group of
Parent from 1994 to present.
P.Y. Divet (50)............... Managing Director of Lambert Riviere S.A. from prior to 1991 to
present. President of Lambert Riviere S.A. from 1995 to present.
Member of the Strategic Committee of Parent from 1996 to present.
S.D. Eikelboom (60)........... Senior Vice President Strategy & Development of Parent from 1976 to
present.
P.P. Witte (42)............... Senior Vice President, Human Resources, of Parent from 1995 to
present. Senior Vice President, Human Resources (Netherlands) at
Asea Brown Boveri B.V. from 1991 to 1994. Personnel Manager
(Netherlands) of BASF Netherlands B.V. from 1986 to 1991.
Roy E. Wansik (52) Group President, North America, of Parent from 1993 to present.
2000 West Loop South, #2200 Member of the Strategic Committee of Parent from 1993 to present.
Houston, Texas 77027.......... See Section B for further employment history.
SECTION B. DIRECTORS AND EXECUTIVE OFFICERS OF PAKHOED USA
The name, business address, present principal occupation or employment and
five (5)-year employment history of each of the directors and executive officers
of Pakhoed USA are set forth below. Unless otherwise indicated, the business
address of each such director and executive officer is 2000 West Loop South,
#2200, Houston, Texas 77027. All such directors and executive officers listed
below are citizens of the United States, except N.J. Westdijk and J. Berghuis,
who are citizens of The Netherlands.
NAME, AGE AND POSITION WITH PAKHOED, USA; PRINCIPAL OCCUPATION
BUSINESS ADDRESS OR EMPLOYMENT; FIVE (5)-YEAR EMPLOYMENT HISTORY
- ------------------------------ ----------------------------------------------------------------------------
N.J. Westdijk (54)............ Director, Chairman and President of Pakhoed USA from 1992 to present. See
333 Blaak Sections A, C and D for further employment history.
3011 GB Rotterdam
The Netherlands
Roy E. Wansik (52)............ Vice President and Director of Pakhoed USA from 1991 to present. See Section
A for further employment history.
John H. Trow (61)............. Treasurer and Secretary of Pakhoed USA from 1991 to present. See Section C
for further employment history.
J.W. Berghuis (61)............ Director of Pakhoed USA from 1992 to present. See Sections A, C and D for
333 Blaak further employment history.
3011 GB Rotterdam
The Netherlands
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SECTION C. DIRECTORS AND EXECUTIVE OFFICERS OF BUYER
The name, business address, present principal occupation or employment and
five (5)-year employment history of each of the directors and executive officers
of Buyer are set forth below. Unless otherwise indicated, the business address
of each such director and executive officer is UC Acquisition Corp., in care of
Pakhoed USA, 2000 West Loop South, #2200, Houston, Texas 77027. All such
directors and executive officers listed below are citizens of the United States,
except Mr. N.J. Westdijk and Mr. J.W. Berghuis, who are citizens of The
Netherlands.
NAME, AGE AND POSITION WITH BUYER; PRINCIPAL OCCUPATION
BUSINESS ADDRESS OR EMPLOYMENT; FIVE (5)-YEAR EMPLOYMENT HISTORY
- ------------------------------ ----------------------------------------------------------------------------
N. J. Westdijk (54)........... Chairman, of the Board, President and Director of Buyer from May 1996 to
333 Blaak present. See Sections A, B and D for further employment history.
3011 GB Rotterdam
The Netherlands
Roy E. Wansik (52)............ Vice President and Director of Buyer from May 1996 to present. See Sections
A and B for further employment history.
John H. Trow (61)............. Treasurer and Secretary of Buyer from May 1996 to present. See Section B for
further employment history.
J. W. Berghuis (61)........... Director of Buyer from May 1996 to present. See Sections A, B and D for
333 Blaak further employment history.
3011 GB Rotterdam
The Netherlands
SECTION D. DIRECTORS AND EXECUTIVE OFFICERS OF INVESTERINGEN
The name, business address, present principal occupation or employment and
five (5)-year employment history of each of the directors and executive officers
of Investeringen are set forth below. The business address of each such director
and executive officer is Pakhoed Investeringen, in care of Parent, 333 Blaak,
3011 GB Rotterdam, The Netherlands. All such directors and executive officers
listed below are citizens of The Netherlands.
NAME, AGE AND POSITION WITH INVESTERINGEN; PRINCIPAL OCCUPATION
BUSINESS ADDRESS OR EMPLOYMENT; FIVE (5)-YEAR EMPLOYMENT HISTORY
- ------------------------------ ----------------------------------------------------------------------------
N.J. Westdijk (54)............ Managing Director of Investeringen from 1992 to present. See Sections A, B
and C for further employment history.
J. W. Berghuis (61)........... Director of Investeringen from 1992 to present. See Sections A, B and C for
further employment history.
Pierre A. Pellenaars (51)..... Director of Investeringen from 1989 to present. See Section A for further
employment history.
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SCHEDULE II
THE FOLLOWING IS REPRODUCED FROM THE WASHINGTON BUSINESS CORPORATION ACT.
DISSENTERS' RIGHTS
23B.13.010 DEFINITIONS. -- As used in this chapter:
(1) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring corporation by merger or
share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under RCW 23B.13.020 and who exercises that right when and in
the manner required by RCW 23B.13.200 through 23B.13.280.
(3) "Fair value" with respect to a dissenter's shares means the value of
the shares immediately before the effective date of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all the circumstances.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
23B.13.020 RIGHT TO DISSENT.
(1) A shareholder is entitled to dissent from, and obtain payment of the
fair value of the shareholder's shares in the event of any of the following
corporate actions:
(a) Consummation of a plan of merger to which the corporation is a
party (i) if shareholder approval is required for the merger by RCW
23B.11.030, 23B.11.080, or the articles of incorporation and the
shareholder is entitled to vote on the merger, or (ii) if the corporation
is a subsidiary that is merged with its parent under RCW 23B.11.040;
(b) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(c) Consummation of a sale or exchange of all, or substantially all,
of the property of the corporation other than in the usual and regular
course of business, if the shareholder is entitled to vote on the sale or
exchange, including a sale in dissolution, but not including a sale
pursuant to court order or a sale for cash pursuant to a plan by which all
or substantially all of the net proceeds of the sale will be distributed to
the shareholders within one year after the date of sale;
(d) An amendment of the articles of incorporation that materially
reduces the number of shares owned by the shareholder to a fraction of a
share if the fractional share so created is to be acquired for cash under
RCW 23B.06.040; or
(e) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board
of directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
(2) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this chapter may not challenge the corporate action
creating the shareholder's entitlement unless the action fails to comply
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with the procedural requirements imposed by this title, RCW 25.10.900 through
25.10.955, the articles of incorporation, or the bylaws, or is fraudulent with
respect to the shareholder or the corporation.
(3) The right of a dissenting shareholder to obtain payment of the fair
value of the shareholder's shares shall terminate upon the occurrence of any one
of the following events:
(a) The proposed corporate action is abandoned or rescinded;
(b) A court having jurisdiction permanently enjoins or sets aside the
corporate action; or
(c) The shareholder's demand for payment is withdrawn with the written
consent of the corporation. (Last amended by Ch. 269, L. '91, eff.
7-28-91.)
23B.13.030 DISSENT OF NOMINEES AND BENEFICIAL OWNERS.
(1) A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in the shareholder's name only if the shareholder dissents
with respect to all shares beneficially owned by any one person and notifies the
corporation in writing of the name and address of each person on whose behalf
the shareholder asserts dissenters' rights. The rights of a partial dissenter
under this subsection are determined as if the shares as to which the dissenter
dissents and the dissenter's other shares were registered in the names of
different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares
held on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder submits to the corporation the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(b) The beneficial shareholder does so with respect to all shares of
which such shareholder is the beneficial shareholder or over which such
shareholder has power to direct the vote.
23B.13.200 NOTICE OF DISSENTERS' RIGHTS.
(1) If proposed corporate action creating dissenters' rights under RCW
23B.13.020 is submitted to a vote at a shareholders' meeting, the meeting notice
must state that shareholders are or may be entitled to assert dissenters' rights
under this chapter and be accompanied by a copy of this chapter.
(2) If corporate action creating dissenters' rights under RCW 23B.13.020 is
taken without a vote of shareholders, the corporation, within ten days after the
effective date of such corporate action, shall notify in writing all
shareholders entitled to assert dissenters' rights that the action was taken and
send them the dissenters' notice described in RCW 23B.13.220.
23B.13.210 NOTICE OF INTENT TO DEMAND PAYMENT.
(1) If proposed corporate action creating dissenters' rights under RCW
23B.13.020 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights must (a) deliver to the corporation before
the vote is taken written notice of the shareholder's intent to demand payment
for the shareholder's shares if the proposed action is effected, and (b) not
vote such shares in favor of the proposed action.
(2) A shareholder who does not satisfy the requirements of subsection (1)
of this section is not entitled to payment for the shareholder's shares under
this chapter.
23B.13.220 DISSENTERS' NOTICE.
(1) If proposed corporate action creating dissenters' rights under RCW
23B.13.020 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of RCW 23B.13.210.
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(2) The dissenters' notice must be sent within ten days after the effective
date of the corporate action, and must:
(a) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(b) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(c) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not the person acquired beneficial
ownership of the shares before that date;
(d) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than thirty nor more than sixty days
after the date the notice in subsection (1) of this section is delivered;
and
(e) Be accompanied by a copy of this chapter.
23B.13.230 DUTY TO DEMAND PAYMENT.
(1) A shareholder sent a dissenters' notice described in RCW 23B.13.220
must demand payment, certify whether the shareholder acquired beneficial
ownership of the shares before the date required to be set forth in the
dissenters' notice pursuant to RCW 23B.13.220(2)(c), and deposit the
shareholder's certificates in accordance with the terms of the notice.
(2) The shareholder who demands payment and deposits the shareholder's
share certificates under subsection (1) of this section retains all other rights
of a shareholder until the proposed corporate action is effected.
(3) A shareholder who does not demand payment or deposit the shareholder's
share certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for the shareholder's shares under this
chapter.
23B.13.240 SHARE RESTRICTIONS.
(1) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is effected or the restriction is released under RCW 23B.13.260.
(2) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until the
effective date of the proposed corporate action.
23B.13.250 PAYMENT.
(1) Except as provided in RCW 23B.13.270, within thirty days of the later
of the effective date of the proposed corporate action, or the date the payment
demand is received, the corporation shall pay each dissenter who complied with
RCW 23B.13.230 the amount the corporation estimates to be the fair value of the
shareholder's shares, plus accrued interest.
(2) The payment must be accompanied by:
(a) The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for
that year, and the latest available interim financial statements, if any;
(b) An explanation of how the corporation estimated the fair value of
the shares;
(c) An explanation of how the interest was calculated;
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(d) A statement of the dissenter's right to demand payment under RCW
23B.13.280; and
(e) A copy of this chapter.
23B.13.260 FAILURE TO TAKE ACTION.
(1) If the corporation does not effect the proposed action within sixty
days after the date set for demanding payment and depositing share certificates,
the corporation shall return the deposited certificates and release any transfer
restrictions imposed on uncertificated shares.
(2) If after returning deposited certificates and releasing transfer
restrictions, the corporation wishes to undertake the proposed action, it must
send a new dissenters' notice under RCW 23B.13.220 and repeat the payment demand
procedure.
23B.13.270 AFTER-ACQUIRED SHARES.
(1) A corporation may elect to withhold payment required by RCW 23B.13.250
from a dissenter unless the dissenter was the beneficial owner of the shares
before the date set forth in the dissenters' notice as the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action.
(2) To the extent the corporation elects to withhold payment under
subsection (1) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of the dissenter's demand. The corporation shall send with its offer an
explanation of how it estimated the fair value of the shares, an explanation of
how the interest was calculated, and a statement of the dissenter's right to
demand payment under RCW 23B.13.280.
23B.13.280 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
(1) A dissenter may notify the corporation in writing of the dissenter's
own estimate of the fair value of the dissenter's shares and amount of interest
due, and demand payment of the dissenter's estimate, less any payment under RCW
23B.13.250, or reject the corporation's offer under RCW 23B.13.270 and demand
payment of the dissenter's estimate of the fair value of the dissenter's shares
and interest due, if:
(a) The dissenter believes that the amount paid under RCW 23B.13.250
or offered under RCW 23B.13.270 is less than the fair value of the
dissenter's shares or that the interest due is incorrectly calculated;
(b) The corporation fails to make payment under RCW 23B.13.250 within
sixty days after the date set for demanding payment; or
(c) The corporation does not effect the proposed action and does not
return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty days after the date set for
demanding payment.
(2) A dissenter waives the right to demand payment under this section
unless the dissenter notifies the corporation of the dissenter's demand in
writing under subsection (1) of this section within thirty days after the
corporation made or offered payment for the dissenter's shares.
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Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each shareholder of Company or
such shareholder's broker, dealer, bank, trust company or other nominee to the
Depositary at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
CHEMICAL MELLON SHAREHOLDER SERVICES, LLC
By Mail: By Overnight Delivery: By Hand:
Chemical Mellon Chemical Mellon First Interstate Bank of
Shareholder Services Shareholder Services Washington
P. O. Box 817 Attn: Reorg. Dept. 1st Floor 999 Third Avenue
Midtown Station 85 Challenger Road Stock Transfer, 14th Floor
New York, NY 10018 Ridgefield Park, NJ 07660 Seattle, Washington 98104
By Facsimile Transmission New York Drop:
For Guaranteed Deliveries Only:
(201) 296-4293 120 Broadway, 13th Floor
New York, NY 10271
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent at its telephone numbers and
location listed below. You may also contact your broker, dealer, bank, trust
company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Call Toll Free
1-800-735-3591
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