<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
UNIVAR CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
UNIVAR CORPORATION
- --------------------------------------------------------------------------------
(Name of Person Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transaction applies:
N/A
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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(5) Total fee paid:
N/A
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1 Set forth the amount on which the filing fee is calculated and state how
it was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing:
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[LOGO]
6100 CARILLON POINT
KIRKLAND WA 98033
July 7, 1995
DEAR SHAREHOLDERS:
You are cordially invited to attend the Annual Meeting of Shareholders of
Univar Corporation to be held at the Meydenbauer Center, 11100 N.E. 6th Street,
Bellevue, Washington on August 24, 1995 at 10:00 a.m. A map showing the location
of the Meydenbauer Center is set forth on the back page of this proxy statement.
At the Annual Meeting, we will report on the operations of the Corporation
and respond to any questions you may have. During the business portion of the
meeting, we will ask you to vote on the matters listed below, each of which is
described more fully in the formal Notice of Annual Meeting and Proxy Statement
which appear on the following pages. In particular,
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE:
(1) FOR the election of four directors;
(2) FOR the approval of a proposal to change Univar's state of
incorporation from Delaware to Washington by a merger with and into a
newly formed, wholly owned Washington subsidiary;
(3) FOR the approval of an increase in the authorized common shares from
40,000,000 to 100,000,000, and an increase in the authorized preferred
shares from 750,000 to 5,000,000; and
(4) FOR the approval of the 1995 Incentive Stock Plan.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the meeting,
it is important that your shares be represented. Therefore, we urge you to sign,
date, and promptly return the enclosed proxy card in the enclosed postage-paid
envelope. If you attend the meeting, you will, of course, have the privilege of
voting in person.
We look forward to greeting you personally, and on behalf of the Board of
Directors and management of the Corporation, we would like to express our
appreciation for your interest in Univar Corporation.
Sincerely,
<TABLE>
<S> <C>
[SIG] [SIG]
James W. Bernard James H. Wiborg
President and Chairman
Chief Executive Officer
</TABLE>
<PAGE> 3
[LOGO]
6100 CARILLON POINT
KIRKLAND WA 98033
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Univar Corporation will be held at
the Meydenbauer Center, 11100 N.E. 6th Street, Bellevue, Washington on August
24, 1995 at 10:00 a.m. for the following purposes:
1. To elect four directors;
2. To approve a proposal to change Univar's state of incorporation from
Delaware to Washington by a merger with and into a newly formed, wholly
owned Washington subsidiary;
3. To approve an increase in the authorized common shares from 40,000,000
to 100,000,000, and an increase in the authorized preferred shares from
750,000 to 5,000,000;
4. To approve the 1995 Incentive Stock Plan; and
5. To transact such other business as may properly come before the meeting.
Holders of common stock at the close of business on June 27, 1995 are
entitled to notice of, and to vote at, this meeting.
By Order of the Board of Directors
[SIG]
William A. Butler
Corporate Secretary
Each shareholder is urged to sign and return promptly the accompanying
proxy card in the enclosed envelope to which no postage need be affixed if
mailed in the United States.
Kirkland, Washington
July 7, 1995
<PAGE> 4
[LOGO]
6100 CARILLON POINT
KIRKLAND WA 98033
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 24, 1995
This proxy statement, which was first mailed to shareholders on July 7,
1995, is furnished in connection with the solicitation of proxies on behalf of
the Board of Directors of Univar Corporation (the "Corporation") to be voted at
the Annual Meeting of Shareholders of the Corporation to be held at 10:00 a.m.
on August 24, 1995 at the Meydenbauer Center, 11100 N.E. 6th Street, Bellevue,
Washington, for the purposes set forth in the accompanying Notice of Annual
Meeting of Shareholders. Shareholders who execute proxies retain the right to
revoke them at any time before they are voted. A proxy may be revoked by written
notice to the Corporate Secretary of the Corporation at 6100 Carillon Point,
Kirkland, Washington 98033, by submission of a proxy with a later date or by a
request in person to return the executed proxy. Proxies may be solicited by
officers, directors, and regular supervisory and executive employees of the
Corporation, none of whom will receive any additional compensation for their
services. Also, W.F. Doring & Co. may solicit proxies at an approximate cost of
$2,500 plus reasonable expenses. Such solicitations may be made personally, or
by mail, facsimile, telephone, telegraph, or messenger. The Company will pay
persons holding shares of common stock in their names or in the names of
nominees, but not owning such shares beneficially, such as brokerage houses,
banks, and other fiduciaries, for the expense of forwarding solicitation
materials to their principals. All costs of solicitation of proxies will be
borne by the Corporation.
Shareholders of record at the close of business on June 27, 1995 will be
entitled to vote at the meeting on the basis of one vote for each share of
common stock held. On June 27, 1995, there were shares of common stock
outstanding.
The holders of a majority of shares entitled to vote represented in person
or by proxy at the meeting shall constitute a quorum.
With respect to the election of each director, votes may be cast in favor
or withheld; votes that are withheld will be excluded entirely from the vote and
will have no effect. Under the rules of the New York Stock Exchange, Inc.,
brokers who hold shares in street name for customers have the authority to vote
on the election of directors, even when the brokers have not received
instructions from the beneficial owners.
With respect to the approval of the proposal to change the Corporation's
state of incorporation from Delaware to Washington and to increase the number of
authorized shares of the Corporation, and the approval of the 1995 Incentive
Stock Plan, the affirmative vote by the holders of a majority of shares entitled
to vote represented in person or by proxy at the meeting will be required. Votes
against, votes withheld, and broker non-votes shall have the effect of votes
against the approval of those matters.
PROPOSAL 1. ELECTION OF DIRECTORS
Your Corporation has a classified board of twelve directors. Four directors
are elected each year for a term of three years. Your Board of Directors has
proposed that the four nominees listed below be elected this year for a term to
expire in 1998. The Board of Directors recommends a vote FOR their election and,
unless you indicate otherwise, your signed proxy will be voted for the election
of these nominees.
<PAGE> 5
The Board of Directors expects that each of the nominees will be available
for election, but if any of them is not a candidate at the time the election
occurs, it is intended that such proxy will be voted for the election of another
nominee to be designated by the Nominating Committee of the Board of Directors
of the Corporation.
DIRECTORS TO BE ELECTED
ROGER L. KESSELER, 58, has been a director of the Corporation since 1991.
Since 1984, Mr. Kesseler has been the Vice President and Controller of The Dow
Chemical Company, which is engaged in the manufacture and sale of chemicals and
other products.
CURTIS P. LINDLEY, 70, has been a director of the Corporation since 1984.
Mr. Lindley is the Chair of the Ostrom Company, growers and distributors of
mushrooms. He also serves as a director of VWR Corporation, and was Chair of
PENWEST, LTD. from 1984 through 1990.
ANDREW V. SMITH, 70, has been a director of the Corporation since 1982. Mr.
Smith is a director of Airborne Express Corporation, Cascade Natural Gas
Corporation, PrimeSource Corporation, and also serves on the University of
Washington Board of Regents.
NICOLAAS J. WESTDIJK, 54, has been a director of the Corporation since
1992. Mr. Westdijk has been Chair of the Board of Management of Royal Pakhoed
N.V., a company providing chemical storage, transportation, and distribution
services, since May 1992. Mr. Westdijk served as a member of the Board of
Management of Royal Pakhoed N.V. during 1991 and as Chair of the Board of
Management of Furness N.V. from 1986 through 1990. He also serves as a director
on the boards of N.V. Nationale Investerings Bank and Wolters Kluwer N.V.
CONTINUING DIRECTORS -- TERM WILL EXPIRE IN 1996
RICHARD E. ENGEBRECHT, 68, has been a director of the Corporation since
1984. Mr. Engebrecht has served as Chair of the Board of Directors of
PrimeSource Corporation, a distributor of graphic arts and photographic
supplies, since September 1994. He was Chair of Momentum Corporation, a
predecessor corporation to PrimeSource Corporation, from December 1992 to
September 1994, and was President and Chief Executive Officer of Momentum
Corporation from March 1990 through December 1992. Mr. Engebrecht served as
President and Chief Executive Officer of VWR Corporation from 1986 through 1990.
In addition, Mr. Engebrecht serves as a director of PENWEST, LTD. and VWR
Corporation.
SJOERD D. EIKELBOOM, 59, has served as a director of the Corporation since
1993. Since 1976, Mr. Eikelboom has been Senior Vice President -- Corporate
Strategy and Economic Affairs of Royal Pakhoed N.V.
N. STEWART ROGERS, 65, has served the Corporation as a director since 1990.
Mr. Rogers was Senior Vice President of the Corporation from 1989 until 1991. He
serves as Chair of PENWEST, LTD., a company involved in the development,
manufacture and marketing of carbohydrate-based chemicals for the paper, food,
and textile industries, and as a director of Fluke Corporation, U.S. Bancorp,
and VWR Corporation. Mr. Rogers is the brother of Robert S. Rogers, director,
and the brother-in-law of James H. Wiborg, Chairman of the Board.
ROBERT S. ROGERS, 71, has served as a director of the Corporation since
1970. He has also served as President of Lands-West, Inc., a company involved in
land development and sales, since 1978, and is a director of VWR Corporation.
Mr. Rogers is the brother of N. Stewart Rogers, director, and the brother-in-law
of James H. Wiborg, Chairman of the Board.
CONTINUING DIRECTORS -- TERM WILL EXPIRE IN 1997
JAMES W. BERNARD, 58, has served as a director and as President and Chief
Executive Officer of the Corporation since 1986. From 1988 to 1992, Mr. Bernard
was President of Van Waters & Rogers Inc., the
2
<PAGE> 6
U.S. operating company of the Corporation. In addition, Mr. Bernard is a
director of VWR Corporation and U.S. Bank of Washington.
JOHN G. SCRIVEN, 52, has been a director of the Corporation since 1994.
From January 1995 to present, Mr. Scriven has served as Vice President & General
Counsel of The Dow Chemical Company. Prior to that, he was Associate General
Counsel of The Dow Chemical Company from 1993 to 1994 and Vice President of Dow
Europe S.A., Switzerland, from 1986 to 1993.
ROY E. WANSIK, 51, has been a director of the Corporation since 1991. Since
1984, Mr. Wansik has been President of Pakhoed Corporation, a chemical storage,
distribution, and services company. In addition, Mr. Wansik has served as
President of Paktank Corporation, a bulk liquid chemical storage and
distribution company, since 1982. Since 1984, Mr. Wansik has also acted as
President of EMPAK, Inc., a company engaged in environmental services and
chemical cleaning and disposal, and as President of Pakhoed Dry Bulk Terminals,
Inc., a chemical dry bulk storage and distribution company.
JAMES H. WIBORG, 70, has served as Chairman of the Corporation's Board
since 1986 and as a director since 1966. In addition, he has acted as Chair and
Chief Strategist for VWR Corporation, a distributor of scientific equipment and
supplies, since 1986. Mr. Wiborg was Chairman and Chief Strategist of the
Corporation from 1986 through 1990. Mr. Wiborg serves as a director of
PrimeSource Corporation, PACCAR, Inc., and PENWEST, LTD. Mr. Wiborg is the
brother-in-law of N. Stewart Rogers and Robert S. Rogers, directors.
3
<PAGE> 7
SECURITIES OWNERSHIP OF OFFICERS AND DIRECTORS
The following table sets forth information as of June 21, 1995 regarding
the beneficial ownership of the Corporation's common stock by the Corporation's
directors including the Corporation's Chief Executive Officer, by the four other
highest paid executive officers, and by the directors and executive officers as
a group. As of June 21, 1995, there were shares of common stock issued
and outstanding. Except to the extent each listed individual's shares are
subject to community property laws or as otherwise indicated, beneficial
ownership represents sole voting and sole investment power with respect to
$.33 1/3 par value common stock, the Corporation's only outstanding class of
stock.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENTAGE
OWNED OF CLASS
------------ ----------
<S> <C> <C>
DIRECTORS
NOMINEES FOR ELECTION:
Roger L. Kesseler................................................... 500 *
Curtis P. Lindley(1)................................................ 214,804 *
Andrew V. Smith(2).................................................. 20,320 *
Nicolaas J. Westdijk(3)............................................. 6,106,000 %
CONTINUING DIRECTORS -- Term Expires at the Annual Meeting of Shareholders in 1996:
Richard E. Engebrecht(4)............................................ 73,528 *
Sjoerd D. Eikelboom................................................. 0 N/A
N. Stewart Rogers(5)................................................ 302,219 %
Robert S. Rogers(6)................................................. 240,663 %
CONTINUING DIRECTORS -- Term Expires at the Annual Meeting of Shareholders in 1997:
James W. Bernard(7)................................................. 180,139 *
John G. Scriven..................................................... 0 N/A
Roy E. Wansik....................................................... 0 N/A
James H. Wiborg(8).................................................. 452,914 %
EXECUTIVE OFFICERS NAMED IN THE SUMMARY COMPENSATION TABLE
James P. Alampi(9).................................................. 7,515 *
Jeffrey Ellwood..................................................... 0 *
Paul H. Hough(10)................................................... 6,214 *
James L. Fletcher(11)............................................... 18,310 *
All Directors and Executive Officers as a Group (20
persons)(12)(13)................................................. 7,650,206 %
</TABLE>
- ---------------
* less than 1.00%
(1) Mr. Lindley disclaims beneficial ownership of 4,336 shares owned by his
spouse, but such shares are included in his total above as required by SEC
regulations.
(2) Mr. Smith' s total includes stock options to purchase 3,320 shares which
are exercisable within sixty days and were granted under the 1993
Non-Employee Director Stock Option Plan.
(3) Mr. Westdijk' s total includes 3,333,333 shares held by Pakhoed USA, Inc.
and 2,772,667 shares held by Pakhoed Investeringen B.V., wholly owned
subsidiaries of Royal Pakhoed N.V., as to which Mr. Westdijk shares voting
and investment power as Chair of the Board of Management of Royal Pakhoed
N.V. These shares are deemed to be beneficially owned by Mr. Westdijk in
accordance with SEC regulations, but he disclaims such beneficial
ownership.
(4) Mr. Engebrecht's total includes stock options to purchase 3,370 shares
which are exercisable within sixty days and were granted under the 1993
Non-Employee Director Stock Option Plan.
4
<PAGE> 8
(5) Mr. N. Stewart Rogers has voting and investment power as a trustee with
respect to 18,816 shares beneficially owned by his grandchildren and his
mother. Mr. N. Stewart Rogers disclaims beneficial ownership of these
18,816 shares, but such shares are included in his total above as required
by SEC regulations.
(6) Mr. Robert S. Rogers' total includes stock options to purchase 3,429 shares
which are exercisable within sixty days and were granted under the 1993
Non-Employee Director Stock Option Plan. Mr. Robert S. Rogers disclaims
beneficial ownership of 30,758 shares owned by his spouse, but such shares
are included in his total above as required by SEC regulations.
(7) Mr. Bernard's total includes stock options to purchase 7,924 shares which
are exercisable within sixty days and were granted under the 1986 Long-Term
Incentive Stock Plan. Mr. Bernard disclaims beneficial ownership of 81,200
shares owned by his spouse, but such shares are included in his total above
as required by SEC regulations.
(8) Mr. Wiborg shares voting and investment power as a co-trustee for 70,912 of
these shares. He disclaims beneficial ownership of these 70,912 shares and
of 142,000 shares owned by his spouse, but such shares are included in his
total above as required by SEC regulations.
(9) Mr. Alampi's total includes stock options to purchase 2,008 shares which
are exercisable within sixty days and were granted under the 1986 Long-Term
Incentive Stock Plan.
(10) Mr. Hough's total includes stock options to purchase 1,228 shares which are
exercisable within sixty days and were granted under the 1986 Long-Term
Incentive Stock Plan.
(11) Mr. Fletcher's total includes stock options to purchase 1,595 shares which
are exercisable within sixty days and were granted under the 1986 Long-Term
Incentive Stock Plan.
(12) Includes 3,333,333 shares held by Pakhoed USA, Inc. and 2,772,667 shares
held by Pakhoed Investeringen B.V., over which Mr. Westdijk shares voting
and investment control.
(13) Includes 29,439 shares for which certain directors and executive officers
have stock options exercisable within sixty days.
COMMITTEES OF THE BOARD OF DIRECTORS
The Corporation's Board of Directors has standing Audit, Compensation,
Executive, Finance, Nominating, Public Policy, and Retirement Plan Board
Committees. The members of and functions performed by each Committee are as
follows:
Audit Committee -- This Committee is comprised of Messrs. Engebrecht,
who is its Chair, Eikelboom, Kesseler, and Smith. This Committee selects or
terminates the Corporation's independent public accountants; reviews the
scope of the audit to be performed by the independent public accountants;
reviews the audit fee of the independent public accountants; approves
accounting policies; reviews reports of independent public accountants and
internal auditors as to the adequacy of the Corporation's accounting
system, controls, and other matters; reviews the scope and specifications
of the internal audit program; and reviews areas of possible conflicts of
interest and sensitive payments.
Compensation Committee -- This Committee is comprised of Messrs.
Smith, who is its Chair, Engebrecht, Kesseler, Robert S. Rogers, and
Westdijk. This Committee establishes compensation of corporate officers;
establishes incentive programs and criteria; administers the Corporation's
various compensation and benefit plans; reviews annually the operation of
all compensation practices and salary administration procedures; consults
with the Retirement Plan Board Committee regarding the effects of trends in
compensation on pension costs; recommends benefit levels in the
Corporation's retirement program; and recommends amounts for directors'
fees and retainers.
Executive Committee -- This Committee is comprised of Messrs. Wiborg,
who is its Chair, Bernard, Engebrecht, N. Stewart Rogers, and Westdijk.
This Committee exercises all the power of the Board of Directors between
meetings of the Board of Directors except that, absent specific
authorization, the Executive Committee does not have power to: amend or
repeal any section of the Bylaws or the Restated
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<PAGE> 9
Certificate of Incorporation; elect or remove any officer of the
Corporation; make recommendations as to the selection of the Chair of the
Board, a Vice Chair of the Board, or the President; rescind or modify
beyond $1,000,000 any resolution adopted by the Board of Directors;
authorize original issue of capital stock; authorize capital investments,
acquisitions or dispositions of property in excess of $1,000,000; approve
annual capital or operating budgets; declare any dividends; or fix
compensation of officers, directors, or employees. The Board of Directors
may specifically authorize the Executive Committee to act with respect to
any of the foregoing matters.
Finance Committee -- This Committee is comprised of Messrs. N. Stewart
Rogers, who is its Chair, Bernard, Kesseler, Scriven, Westdijk, and Wiborg.
The Finance Committee reviews and approves all proposals concerning major
financial policies of the Corporation, and makes recommendations with
respect to a change in the dividend policy of the Corporation. The
Committee also makes recommendations to the Board concerning the
advisability of and, in certain instances, approves major corporate
transactions, including acquisitions, after reviewing the effect of such a
transaction on any financial covenants imposed by the Corporation's
lenders. The Committee reviews and approves the banking relationships of
the Corporation; terms and conditions of proposed financings and other
sources of funds, be they debt or equity; adjustments to the Corporation's
capital structure; financial interrelationships between the Corporation and
its subsidiaries; debt liquidation policies; international monetary issues,
including hedging policies; financial impacts of alternative insurance
coverages; and other transactions and financial issues which management
desires to have reviewed by the Committee. In addition, the Committee
provides input to the Audit Committee with respect to the financial impacts
of various accounting policies and treatments.
Nominating Committee -- This Committee is comprised of Messrs.
Engebrecht, who is its Chair, Bernard, and Smith. This Committee receives,
reviews and maintains files of individuals qualified to be recommended as
nominees for election as directors; reviews as appropriate the capability
of each incumbent director to continue to serve as director, recommends a
list of individuals to the Board of Directors for nomination for election
to the Board of Directors at the annual meeting of shareholders; recommends
individuals for election to the Board of Directors as replacement directors
may be required; and recommends a director to serve as Chairman of the
Board. For information concerning shareholder nominations of directors, see
"Future Shareholder Proposals and Nominations -- 1996" below.
Public Policy Committee -- This Committee is comprised of Messrs.
Bernard, who is its Chair, Lindley, Scriven, Wansik, and Wiborg. This
Committee approves policies of the operating units and recommends further
development or modification of said policies with respect to corporate
health, safety, and environmentally related real estate affairs. The
Committee audits, or causes to be audited, the activities of the
Corporation in these areas to ensure they are carried out in a manner
upholding its responsibility to act as a good corporate citizen in
controlling risks to the health and safety of its employees, customers, the
public, and to the environment.
Retirement Plan Board Committee -- This Committee is comprised of
Messrs. Robert S. Rogers, who is its Chair, Lindley and N. Stewart Rogers.
This Committee directs the investment of the funds of the Univar
Corporation Retirement Plan; reviews and reports to the Board of Directors
with respect to the performance of any third parties responsible for the
administration and for the investment of the funds of plans maintained for
the benefit of employees of the Corporation and its U.S. subsidiary;
reviews and makes recommendations to the Board of Directors with respect to
any amendments proposed for such plans; reviews the annual reports made for
such plans; and establishes and administers any additional system for
periodic reporting as the Committee may deem advisable.
During the last fiscal year, commencing March 1, 1994 and ending February
28, 1995, the Board of Directors met five times. During that same period, the
Audit Committee met twice, the Compensation Committee met four times, the
Executive Committee took action twice by written consent, the Finance Committee
met four times, the Nominating Committee met once, the Public Policy Committee
met four times, and the Retirement Plan Board Committee met four times. All
directors, except Mr. Eikelboom and
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<PAGE> 10
Mr. Westdijk, attended 75% or more of the aggregate number of Board meetings and
meetings of Committees on which they served.
COMPENSATION OF DIRECTORS
No director who is an employee of the Corporation is compensated for
service as a member of the Board. The Chair of the Board receives an annual
retainer of $30,000. Each other non-employee director receives an annual
retainer of $10,000. Non-employee directors receive an additional $2,000 per
year for serving on the Executive Committee or as chair of another Board
committee.
Non-employee directors are compensated for each Board meeting attended as
follows: $1,500 for each meeting within the Director's state or province of
residence; $3,000 for each meeting outside the Director's state or province of
residence, but within the continent in which the Director resides; $4,500 for
each meeting outside the continent in which the Director resides.
Each non-employee director is paid $1,000 for each committee meeting
attended as a chair and $750 for each committee meeting attended as a committee
member. Reasonable travel expenses are reimbursed by the Corporation.
Non-employee directors are entitled to receive their retainers and/or
attendance fees in the form of discounted stock options in lieu of cash pursuant
to the 1993 Non-Employee Director Stock Option Plan.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Listed in the following table are the only known beneficial owners as of
June 21, 1995 of more than five percent (5%) of the Corporation's outstanding
stock based on shares outstanding on June 21, 1995. The Corporation
knows of no other person or "group," as that term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934, that is the beneficial owner of more than
five percent of the Corporation's common stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF TITLE OF BENEFICIAL PERCENT
BENEFICIAL OWNER CLASS OWNERSHIP OF CLASS
- ---------------------------- ------------ ----------- --------
<S> <C> <C> <C>
The Dow Chemical
Company(1)................ Common Stock 3,900,000 %
Willard H. Dow Ctr.
Midland, MI 48674
Pakhoed USA, Inc.(2)........ Common Stock 3,333,333 %
2000 W. Loop S.
Suite 2200
Houston, TX 77027
Pakhoed Investeringen
B.V.(2)................... Common Stock 2,772,667 %
c/o Royal Pakhoed N.V.
333 Blaak
3011 GB Rotterdam
The Netherlands
</TABLE>
- ---------------
(1) The shares are subject to a Standstill Agreement. See "Agreements with The
Dow Chemical Company" below.
(2) Pakhoed USA, Inc. and Pakhoed Investeringen B.V. are each a wholly owned
subsidiary of Royal Pakhoed N.V. The shares held by each corporation are
subject to a Standstill Agreement. See "Agreements with Royal Pakhoed N.V."
below.
AGREEMENTS WITH THE DOW CHEMICAL COMPANY
The Corporation has sold to The Dow Chemical Company ("Dow") 3,900,000
shares of the Corporation's common stock. Pursuant to the Amended and Restated
Agreement of Purchase and Sale of Stock with
7
<PAGE> 11
Dow (the "Purchase Agreement"), the Corporation may also sell to Dow, and Dow
may purchase from the Corporation, up to an additional 101,874 shares of Series
A Preferred Stock (which are convertible on a five for one basis into 509,370
shares of common stock) pursuant to a put option. Terms beginning with an
initial capital letter are defined in either the Purchase Agreement or the Dow
Standstill Agreement described below, both of which have been filed with the
Securities and Exchange Commission.
The following is a summary of certain provisions of the Purchase Agreement.
This summary is not intended to be complete and is qualified in its entirety by
the Purchase Agreement.
SALE OF ORIGINAL SHARES AND PUT OPTION FOR ADDITIONAL SHARES
In 1991, Dow purchased 1,900,000 shares of the Corporation's common stock.
In 1994, Dow purchased an additional 2,000,000 shares of the Corporation's
common stock.
Dow and the Corporation have agreed that, at any time within the three-year
period ending May 12, 1997, the Corporation can put to Dow, or Dow can call, up
to 101,874 shares of Series A Preferred Stock. The price per share will be
$93.70.
Dow has agreed that it will pay to the Corporation $350,000 per year, in
arrears, for each of the three years ending May 12, 1995, 1996, and 1997, in the
event the Corporation does not elect to put the Series A Preferred Stock to Dow,
or in the event Dow does not call said Series A Preferred Stock. If there is a
put or call of the Series A Preferred Stock during said three year period, the
annual fee shall be prorated accordingly.
The shares of Series A Preferred Stock (i) do not have any right to vote,
(ii) receive dividends in an amount equal to five times the dividend paid on
each share of common stock (if, as, and when paid on the common stock), and
(iii) are convertible at any time by the holder into five shares of common
stock. Further, the Series A Preferred Stock can be so converted by the
Corporation at any time after three years after issuance and can be redeemed in
whole or in part by the Corporation at any time. The Corporation has agreed that
it will not convert the Series A Preferred Stock into common stock if, following
said conversion, Dow would own in excess of 19.9% of the issued and outstanding
common stock of the Corporation.
The purchase price and number of shares of Series A Preferred Stock are
subject to adjustment in the event the Corporation declares a stock split or any
extraordinary dividend payable in stock, or approves any capital reorganization
or reclassification, consolidation or merger, or sale of all or substantially
all of its assets.
DOW STANDSTILL AGREEMENT
Dow and the Corporation have also entered into a Standstill Agreement (the
"Dow Standstill Agreement") which provides that Dow will not acquire beneficial
ownership of any Voting Securities of the Corporation without the approval of a
majority of the directors who are not affiliated with either Royal Pakhoed N.V.
("Pakhoed") or Dow (the "Unaffiliated Directors") if such acquisition would
result in Dow owning more than 21% of the Common Stock Equivalents of the
Corporation. Dow may acquire additional Voting Securities above the 21% limit by
making a tender offer for shares of Voting Securities which is made to all
shareholders, is payable in cash, and is accepted by shareholders owning
two-thirds of the outstanding common stock excluding shares held by Dow or
Pakhoed and any shares not tendered by the Core Shareholders (as defined in
"Agreements with Royal Pakhoed N.V." below). Dow is also permitted to make a
tender offer in response to a tender offer by a third party for an equivalent
number of shares. In the event of a third party tender offer, Dow's percentage
limitation would be increased to 27% and the Corporation would have the right to
buy back shares acquired by Dow in excess of 27%.
The Dow Standstill Agreement also provides that Dow will not (without
approval of the Unaffiliated Directors) (i) deposit any Voting Securities in a
voting trust or subject them to a voting agreement except a trust or agreement
between Dow and its affiliates, (ii) join any group for the purpose of
acquiring, holding, or disposing of Voting Securities within the meaning of
Section 13(d) of the Securities Exchange Act of 1934, (iii) induce any other
person to initiate a tender offer for any securities of the Corporation, or to
effect any change of control of the Corporation or take any action for the
purpose of convening a shareholders' meeting,
8
<PAGE> 12
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.
Under the Dow Standstill Agreement, Dow has the right to have the
composition of the Board of Directors reflect the proportional ownership
interest of Dow. Accordingly, Mr. Roger L. Kesseler and Mr. John G. Scriven have
served on the Board of the Corporation since 1991 and 1994, respectively.
Pursuant to the Dow Standstill Agreement, Dow has the right to maintain its
ownership at its percentage which may vary from time to time, but, as described
above, is generally capped at 21%. Dow has the preemptive right to purchase
shares from the Corporation whenever the Corporation proposes to sell shares in
a public offering or a private placement. The Corporation has established a
reserve of 21% of the Corporation's unissued shares to accommodate the
possibility that future sales of shares might be made by the Corporation giving
rise to Dow's preemptive right. At this time, the Corporation has no plan to
sell shares to a third party or in the public market (other than pursuant to
employee benefit plans such as those described elsewhere in this Proxy
Statement). Further, Dow has the right to participate in certain repurchases of
shares by the Corporation and in certain public offers or private placements by
the Corporation.
AGREEMENTS WITH ROYAL PAKHOED N.V.
The Corporation has entered into various agreements with Royal Pakhoed N.V.
and its wholly owned subsidiaries, Pakhoed USA, Inc. and Pakhoed Investeringen
B.V., (collectively, "Pakhoed") including a Standstill Agreement which is
substantially the same as the Dow Standstill Agreement. Pakhoed also has entered
into Shareholder Agreements (the "Core Shareholder Agreements") with Directors
Bernard, Engebrecht, Lindley, N. Stewart Rogers, Robert S. Rogers, and Wiborg
(and their respective wives), with M.M. Harris (now Director Emeritus) and his
wife, and with Nat S. Rogers (now deceased) and his wife (parents of Robert S.
and N. Stewart Rogers and the parents-in-law of James H. Wiborg). These
shareholders and their spouses as noted are referred to as the "Core
Shareholders."
Certain terms used in this Proxy Statement with initial capital letters are
defined in the agreements mentioned above. Each of those agreements has been
filed with the Securities and Exchange Commission.
PAKHOED STANDSTILL AND CORE SHAREHOLDER AGREEMENTS
The Standstill Agreement provides that Pakhoed will not acquire beneficial
ownership of any Voting Securities of the Corporation if such acquisition would
result in Pakhoed owning more than 35% of the Common Stock Equivalents of the
Corporation. Pakhoed 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 Pakhoed may retain shares over 45% to the
extent the Corporation elects not to repurchase such shares pursuant to its
right to do so under the Standstill Agreement. Pakhoed may also acquire shares
in excess of the percentage limitation either by receiving approval of
five-eighths of the directors of the Corporation who are not affiliated with
Pakhoed (the "Unaffiliated Directors"), or by a tender offer (without approval
by the Unaffiliated Directors) which is (i) made to all shareholders, (ii)
payable in cash, and (iii) accepted by shareholders owning two-thirds of the
outstanding common stock excluding shares held by Pakhoed and shares not
tendered by the Core Shareholders.
Subject to the foregoing restrictions, Pakhoed may acquire shares by open
market purchase, partial tender offer, or private transaction. In response to an
increase in the number of outstanding shares of the Corporation's common stock,
Pakhoed may purchase unissued or treasury shares of common stock under certain
circumstances.
The Standstill Agreement also provides that Pakhoed 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 Pakhoed
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 Securities Exchange Act of 1934,
9
<PAGE> 13
(iii) induce any other person to initiate a tender offer for any securities of
the Corporation, or to effect any change of control of the Corporation, or take
any action for the purpose of convening a shareholders' meeting, or (iv) acquire
more than 1% of any class of securities of any entity that is publicly disclosed
to be the beneficial owner of 5% or more of the Voting Securities of the
Corporation.
The Standstill Agreement requires the Corporation to provide Pakhoed with
representation on the Board proportionate to its stock ownership. Accordingly,
during the Corporation's last fiscal year, Messrs. Eikelboom, Wansik, and
Westdijk held three of twelve seats on the Board. Directors designated by
Pakhoed are entitled to representation on any committee of the Board at
Pakhoed's request. Pakhoed is required to vote its shares so as to afford the
Corporation's other shareholders with proportionate representation.
The Core Shareholder Agreements provide that the Core Shareholders will
vote their shares in favor of Pakhoed's representatives, as described in the
preceding paragraph, in consideration for the right of the Core Shareholders to
sell their shares to Pakhoed after a tender offer by Pakhoed made in accordance
with and satisfying the requirements of the Standstill Agreement.
UNIVAR EUROPE SHAREHOLDER AGREEMENT
In connection with the organization of Univar Europe, the Corporation and
Pakhoed entered into a Shareholder Agreement (the "Shareholder Agreement") which
established certain rules and procedures concerning governance of Univar Europe
and the sale to the Corporation of shares in Univar Europe owned by Pakhoed. At
the time Univar Europe was organized, the Corporation owned 51% of the shares of
Univar Europe and Pakhoed owned the remaining 49%.
Under the Shareholder Agreement, Pakhoed had a unilateral right to require
Univar to acquire Pakhoed's 49% interest in Univar Europe. In September, 1994,
Univar purchased Pakhoed's interest for $25,800,000.
EXECUTIVE COMPENSATION DISCLOSURES
Notwithstanding anything to the contrary set forth in any of the
Corporation's previous filings under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, that may incorporate future
filings (including this proxy statement, in whole or in part), the following
Report of the Compensation Committee on Executive Compensation and the
Performance Graph below shall not be incorporated by reference in any such
filings.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
COMPENSATION POLICY
The Compensation Committee of the Board of Directors (the "Committee") is
comprised of five outside directors who are not employees of the Corporation. As
part of its duties, the Committee administers the Corporation's executive
compensation programs and approves all salary and incentive compensation of the
corporate officers. The Committee also administers employee benefits such as
stock option plans, employee stock purchase plans, and employee savings (401(k))
plans. The Committee annually evaluates the compensation paid to its executive
officers in light of the Corporation's performance, including base salary,
payments made under the Management Annual Incentive Plan, and options granted
under the 1992 Long-Term Incentive Plan.
In accordance with the Compensation Policy adopted by the Committee, the
goals of the Corporation's compensation programs, applicable to all employees,
are to:
1. Attract and retain highly competent employees; and pay them market value
for their positions.
2. Motivate each employee to achieve and maintain a maximum performance
level and to reward the employee accordingly. Ensure that our employees
in similar positions of scope and responsibility receive similar base
pay given comparable levels of experience, responsibility and
performance.
10
<PAGE> 14
3. Ensure that salary decisions are based on performance. Allow for special
increases for employees whose learning curve and contribution enhances
their market value faster than their peers for their performance,
placing them outside of expected norms (merit).
The Committee believes that base salary and the Management Annual Incentive
Plan are important elements of the Corporation's cash compensation program. The
Committee further believes that the focus of the Corporation's compensation
strategy must be on producing long-term results which, in turn, will create a
competitive advantage for the Corporation. The long-term compensation strategy,
which includes the 1992 Long-Term Incentive Plan described below, serves to
promote value growth and to align the interests of the Chief Executive Officer
("CEO") and the other executive officers with those of the shareholders.
The Corporation's overall compensation philosophy helps to ensure the
proper balance of short-term and long-term results. As performance goals are met
or exceeded, total shareholder value is increased and the Corporation's
executives are rewarded accordingly.
The 1993 Omnibus Budget Reconciliation Act provides for a denial of a tax
deduction to the Corporation for compensation paid to any officer listed in the
Summary Compensation Table in excess of $1 million in any one year. There are
exceptions to this provision for certain types of performance-based plans. The
Committee expects to be able to structure and administer the Corporation's
compensation plans so as to avoid the loss of deductions.
BASE SALARY
Executive base salaries are structured to compensate executives in
proportion to the value of their services and, within the means of the
Corporation, to compare favorably with competitive employers. Base salaries are
reviewed annually by the Committee based on each individual's performance and
the external market. The Committee uses outside consultants and published
compensation survey data to review competitive rates of pay, to establish salary
ranges, and to set target base salary and management incentive levels. The
amount of the base salary is determined by the grade level assigned to the
executive and then adjusted up or down by various factors including job
responsibilities and the individual's experience and managerial performance.
THE MANAGEMENT ANNUAL INCENTIVE PLAN
The Management Annual Incentive Plan (the "Incentive Plan") provides an
opportunity for key management personnel to earn an annual cash incentive for
their efforts to increase the long-term value growth of the Corporation.
Currently, there are approximately 195 participants in the Incentive Plan.
In lieu of annual cash incentives under the Incentive Plan for the fiscal
year ended February 28, 1995, the named executive officers, along with 15 other
officers of the Corporation and its subsidiaries, were granted restricted stock
awards, the vesting of which was principally tied to the operating performance
of the Corporation's U.S. subsidiary during a period after the end of the fiscal
year. The restricted stock awards replaced 100% of the cash incentives for the
U.S. employees who received them, and they replaced 25% of the cash incentives
for Messrs. Ellwood and Hough. For the last fiscal year, no annual incentive was
paid to those individuals located in the U.S. and annual cash incentives paid to
Messrs. Ellwood and Hough were based on the performance of their respective
local operating companies. For further information on these restricted stock
awards, see footnote (2) to the Summary Compensation Table below.
Aside from the last fiscal year, the Incentive Plan has historically
provided that an annual incentive will be based on a ratio of Profit attained to
Capital employed ("P/C"). In accordance with the terms of the Incentive Plan,
target P/C ratios are set for each subsidiary and for the executive office. The
mix of base salary to annual incentive is related to the executive's grade
level. Executives at higher grade levels have a greater percentage of their
total cash compensation dependent upon the accomplishment of the Corporation's
overall business objectives, i.e., the higher the executive grade level, the
greater the proportion of annual compensation that is at risk. At the end of
each fiscal year, the President/CEO and the subsidiary presidents evaluate the
performance of participants against the approved Incentive Plan targets. A
multiplier, or
11
<PAGE> 15
"performance factor," is determined for each participant based on individual
performance. The multiplier may increase or decrease the normal, or "target,"
incentive award for participants; however, the maximum multiplier is one and a
half times (1.5x) the target incentive award. The target award is established by
applying a fixed percentage to the midpoint of the participant's salary range.
During the last fiscal year and pursuant to the recommendations of the survey
described above, this percentage was reduced by amounts varying from 5% to 15%
for the named executive officers and half of that reduction was applied to their
base salaries on March 1, 1994.
The Committee sets the performance factor for the CEO, and reviews and
approves the CEO's recommendations for the performance factors of the other
corporate and subsidiary officers.
1992 LONG-TERM INCENTIVE PLAN
The purpose of the 1992 Long-Term Incentive Plan (the "1992 Plan") is to
reward key employees of the Corporation for the sustained creation of value for
the Corporation's shareholders. The 1992 Plan provides a means whereby
participants are given an opportunity to share financially in this value through
options. For executive officers and certain other participants, a deferred cash
incentive may also be granted.
Participation in the 1992 Plan is limited to key employees of the
Corporation who, in the opinion of the Committee, have the opportunity to
materially influence the Corporation's long-range performance. To date,
approximately 45 employees have been selected to participate. Options under this
Plan have been granted on the first day of the Corporation's fiscal year in each
of 1992, 1993, 1994 and 1995; an average of 242,214 options have been granted
each year. Employees are recommended for participation by the President/CEO of
the Corporation and designated as participants by the Committee. In determining
who will participate in the 1992 Plan, the Committee takes into consideration an
employee's salary grade, scope of responsibilities, and potential contributions
to the success of the Corporation. A participant in the 1992 Plan during a
particular year is not eligible in that year to receive stock option grants
under the Corporation's other incentive stock option plans.
The 1992 Plan provides the opportunity for each participant to receive an
annual grant of options, and to have the vesting of granted options accelerated
based on the total shareholder return (stock price appreciation including
reinvested dividends) of the Corporation over a rolling three-year performance
cycle relative to the total shareholder return of each member of a group of peer
companies over the same period. The peer companies are selected by the
Committee. In the absence of accelerated vesting, each option vests on the tenth
anniversary of the date of grant. Acceleration of a participant's right to
exercise options granted under the 1992 Plan is dependent on the Corporation's
percentile ranking as compared with each member of the peer group. Based on the
Corporation's percentile ranking, all or part of each option grant may become
available for exercise prior to its expiration date. The percentage of a grant
which vests ranges from zero (if relative performance is below the 40th
percentile) up to 100% (if relative performance is at the 80th percentile or
above). The Committee believes that stock option grants under the 1992 Plan are
an effective way for the Corporation to align the interests of the Corporation's
executive officers and other key employees with its shareholders.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
During this past year, the Committee implemented step two of a two step
recommendation to move the CEO's base salary towards a more competitive
position. This two step program was initiated in 1993. The Committee approved a
5.1% increase in the CEO's base salary, effective February 1994. The CEO's
annual incentive target percentage was reduced by 7.5%, which amounted to a
decrease of $33,610 in the target amount. That amount was moved into his base
salary effective March 1, 1994. Other than that adjustment, no salary increase
was paid to the CEO during the last fiscal year. These actions were based on an
analysis and recommendation provided by an independent compensation consulting
firm following the firm's review of competitive cash compensation (base salary,
cash incentive, and long-term incentive) for the top paid executives in
companies comprising the peer group used for comparison purposes under the 1992
Plan. It is
12
<PAGE> 16
the Committee's intent to establish the CEO's compensation at or near the median
level of the compensation of those chief executive officers in the peer group.
As noted above, no annual incentive was paid to the CEO for the past fiscal
year.
As an incentive for future performance and consistent with the long-term
incentives awarded by peer companies, the Committee granted the CEO
non-qualified stock options (with a related deferred cash incentive) to purchase
21,636 shares under the 1992 Plan. These grants provide an incentive for the CEO
to continue to build shareholder value.
The Compensation Committee
Andrew V. Smith, Chair
Richard E. Engebrecht
Roger L. Kesseler
Robert S. Rogers
Nicolaas J. Westdijk
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Robert S. Rogers, a past officer of the Corporation for a term ending
in 1969, was a member of the Corporation's Compensation Committee for the fiscal
year ended February 28, 1995. Mr. Engebrecht, who served on the Compensation
Committee during the last fiscal year, was an officer of the Corporation from
1969 to 1985.
SUMMARY COMPENSATION TABLE
The following table summarizes, for the three fiscal years ending February
28, 1995, the annual and long-term compensation paid to the Chief Executive
Officer and to the other four highest paid executive officers at the end of the
last fiscal year.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION AWARDS
--------------------------------------------
ALL
ANNUAL COMPENSATION RESTRICTED SECURITIES OTHER
NAME AND ---------------------------------- STOCK UNDERLYING COMPEN-
POSITION YEAR SALARY($) BONUS($)(1) AWARDS($)(2) OPTIONS(#) SATION($)(3)
- ----------------------- ---- --------- ----------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
James W. Bernard 1995 $ 482,308 -0- $419,087 21,636 $ 12,174
President and CEO 1994 421,769 249,852 -0- 19,302 11,187
1993 375,000 282,487 -0- 15,790 7,180
James P. Alampi 1995 279,734 -0- 247,993 14,225 5,868
Vice President 1994 244,541 132,605 -0- 11,899 5,422
1993 198,174 133,285 -0- 7,900 2,665
Jeffrey Ellwood(4) 1995 200,141 61,299 29,492 -0- -0-
Vice President 1994 140,634 41,319 -0- -0- -0-
1993 159,098 13,234 -0- -0- -0-
Paul H. Hough 1995 134,962 94,768 22,384 6,607 543
Vice President 1994 117,749 100,514 -0- 6,778 634
1993 118,451 107,060 -0- 5,547 460
James L. Fletcher 1995 196,810 -0- 126,010 6,607 8,430
Vice President 1994 180,200 72,849 -0- 16,778 8,048
1993 161,308 87,657 -0- 5,547 5,642
</TABLE>
- ---------------
(1) Amounts included are paid under the Management Annual Incentive Plan (the
"Incentive Plan") administered by the Compensation Committee. The Incentive
Plan provides that the Compensation Committee may authorize annual cash or
deferred awards to full-time, salaried management employees of the
Corporation or its subsidiaries. Participation in the Incentive Plan is
subject to approval by the
13
<PAGE> 17
President of the Corporation and the Compensation Committee. The key
provisions of the Incentive Plan are described above in the Report of the
Compensation Committee on Executive Compensation.
(2) At fiscal year end, the Chief Executive Officer and the other named
executive officers held the following restricted shares. On grants of
restricted shares made prior to the last fiscal year, regular quarterly
dividends are paid.
Regular quarterly dividends on the restricted shares awarded during the
past fiscal year have been retained by the Corporation. Vesting of the
restricted stock awards made in the last fiscal year and payment of the
related dividends were subject to performance criteria that were measured
and confirmed after fiscal year end. These criteria were not met and
therefore the shares represented by these awards and the related dividends
have been returned to the Corporation. Because these shares have been
forfeited, they are not included in the table "Securities Ownership of
Officers and Directors," above.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
RESTRICTED SHARES RESTRICTED SHARES
GRANTED DURING VALUE AT GRANTED PRIOR TO VALUE AT
NAME FYE FEB. 28, 1995 FEB. 28, 1995 FYE FEB. 28, 1995 FEB. 28, 1995
-------------------------------- ----------------- ------------- ----------------- -------------
<S> <C> <C> <C> <C>
James W. Bernard................ 33,195 $419,087 -0- -0-
James P. Alampi................. 19,643 247,993 3,348 $42,269
Jeffrey Ellwood................. 2,336 29,492 -0- -0-
Paul H. Hough................... 1,773 22,384 872 11,009
James L. Fletcher............... 9,981 126,010 5,994 75,674
</TABLE>
(3) The amounts disclosed above are comprised of the following payments and
contributions by the Corporation:
<TABLE>
<CAPTION>
UNIVAR
CORPORATION
UNI$AVER STOCK GROUP TERM
NAME 401(K) PURCHASE PLAN LIFE INSURANCE
------------------------------------- ---------- ------------- --------------
<S> <C> <C> <C>
James W. Bernard
1995............................... $4,875 -0- $7,299
1994............................... 4,743 -0- 6,444
1993............................... 3,780 -0- 3,400
James P. Alampi
1995............................... 4,711 $ 440 717
1994............................... 4,657 240 526
1993............................... 2,026 360 279
Jeffrey Ellwood
1995............................... -0- -0- 1,524
1994............................... -0- -0- 1,612
1993............................... -0- -0- 1,807
Paul H. Hough
1995............................... -0- 348 195
1994............................... -0- 369 265
1993............................... -0- 196 264
James L. Fletcher
1995............................... 2,925 2,400 3,105
1994............................... 2,042 2,400 3,606
1993............................... 1,783 2,400 1,459
</TABLE>
(4) Mr. Ellwood serves on the Managing Board of Univar Europe N.V., a subsidiary
of the Corporation. Because Univar Europe's fiscal year ran from January 1,
1994 through December 31, 1994, Mr. Ellwood's compensation reflects payments
during calendar year 1994 and not the Corporation's fiscal year.
14
<PAGE> 18
OPTION GRANTS IN LAST FISCAL YEAR
Set forth below is a summary of the individual grants of stock options
awarded to the named executive officers during the fiscal year ended February
28, 1995. In addition, in accordance with SEC rules, shown below are the
hypothetical gains or "option spread" that would exist for the respective
options. These gains are based on assumed rates of annual compound stock price
appreciation of 5% and 10% from the date the options were granted over the full
option term.
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF ANNUAL RATES OF
SECURITIES TOTAL STOCK PRICE
UNDERLYING OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO OPTION TERM(2)
GRANTED EMPLOYEES EXERCISE PRICE --------------------
NAME (#)(1) IN FISCAL YEAR ($/SHARE) EXPIRATION DATE 5% 10%
- ------------------------- ---------- -------------- -------------- --------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
James W. Bernard......... 21,636 6.31% $ 11.25 June 1, 2004 $157,942 $403,149
James P. Alampi.......... 14,225 4.52 11.25 June 1, 2004 103,842 265,058
Jeffrey Ellwood.......... -0- N/A N/A N/A N/A N/A
Paul H. Hough............ 6,607 2.58 11.25 June 1, 2004 48,231 123,110
James L. Fletcher........ 6,607 2.58 11.25 June 1, 2004 48,231 123,110
</TABLE>
- ---------------
(1) Each of the options reflected in this table was granted to the named
executive officers pursuant to the 1992 Long-Term Incentive Plan (the "1992
Plan") of the Corporation which was approved by the shareholders in August
1992. Each grant was made at the fair market value of the Corporation's
common stock on the date of grant. The number of shares granted is dependent
on the recipient's salary grade and is determined in accordance with a
formula approved by the Compensation Committee. Each option has a term of
ten years and three months. Each option will vest and become exercisable not
later than the tenth anniversary of the date of grant. The option may vest
earlier than the tenth anniversary (but not before the third anniversary of
the date of grant) depending on how the "total shareholder return" achieved
by the Corporation ranks in comparison to the "total shareholder return" of
ten peer group companies selected by the Committee. Upon the vesting of the
options before the tenth anniversary, a deferred cash incentive is paid to
the named executive officer in an amount sufficient to exercise the option,
plus an increment to partially cover the amount of federal and state taxes
the executive officer would be obliged to pay with respect to the receipt of
the deferred cash. This Plan provides that the recipient may elect, upon
vesting, to have shares withheld to satisfy any federal, state, or local
taxes.
(2) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises and common stock holdings are
dependent on the future performance of the Corporation's common stock and
overall stock market conditions. There can be no assurance that the amounts
reflected in this table will be achieved.
15
<PAGE> 19
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
Set forth below is a summary of individual exercises of stock options by
the named executive officers during the last fiscal year, including the
aggregate value realized upon the date of exercise. This table includes the
number of shares covered by both exercisable and non-exercisable stock options
as of February 28, 1995. Also reported are the values for "in-the-money" options
which represent the positive spread between the exercise price of any such
existing stock options and the fiscal year end stock price.
<TABLE>
<CAPTION>
SHARES NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED VALUE OPTIONS HELD AT IN-THE-MONEY OPTIONS
ON EXERCISE REALIZED FISCAL YEAR END(#) HELD AT FISCAL YEAR END($)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---------------------------- ----------- -------- -------------------------- --------------------------
<S> <C> <C> <C> <C>
James W. Bernard............ -0- N/A 7,122/58,332 $21,845/$70,639
James P. Alampi............. -0- N/A 1,338/36,034 0/ 43,357
Jeffrey Ellwood............. -0- N/A 0/0 N/A/N/A
Paul H. Hough............... 1,086 $8,790 1,053/19,456 2,817/ 23,387
James L. Fletcher........... -0- N/A 1,196/19,730 1,704/ 23,778
</TABLE>
UNIVAR CORPORATION RETIREMENT PLAN AND SUPPLEMENTAL BENEFITS PLAN
The table below shows the estimated annual benefits payable on retirement
under the Univar Corporation Retirement Plan ("Retirement Plan") to persons in
specified remuneration and years-of-service classifications. The retirement
benefits shown do not include deductions for FICA, federal income tax, state or
city taxes and are not offset by Social Security payments. These benefits are
based upon retirement at age 65 during 1994 and the payment of a single-life
annuity to the employee. All regular, full-time and part-time U.S. employees not
members of a collective bargaining unit (except for bargaining units
participating in all of Univar's benefits) are eligible to participate in the
Retirement Plan. As of February 28, 1995, approximately 1,851 employees were
eligible to participate in the Retirement Plan.
<TABLE>
<CAPTION>
HIGHEST AVERAGE
ANNUAL EARNINGS
DURING ANY
CONSECUTIVE YEARS OF SERVICE
SIXTY MONTHS ------------------------------------------------------------
OF EMPLOYMENT 15 20 25 30 35
- ------------------------------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000............................ $ 23,970 $ 31,960 $ 39,950 $ 43,700 $ 47,450
200,000............................ 49,470 65,960 82,450 89,950 97,450
300,000............................ 74,970 99,960 124,950 136,200 147,450
400,000............................ 100,470 133,960 167,450 182,450 197,450
500,000............................ 125,970 167,960 209,950 228,700 247,450
600,000............................ 151,470 201,960 252,450 274,950 297,450
700,000............................ 176,970 235,960 294,950 321,200 347,450
</TABLE>
With certain exceptions, Section 415 of the Internal Revenue Code currently
limits pensions which may be paid under plans qualified under the Internal
Revenue Code to an annual benefit of $120,000 (indexed annually). Section
401(a)(17) of the Internal Revenue Code limits the amount of annual compensation
which may be considered in determining qualified plan pensions to $150,000. The
Board of Directors, upon the recommendation of the Compensation Committee, has
established a Supplemental Benefits Plan for certain designated highly
compensated employees to whom these limits apply, or will apply in the future,
so that these employees will obtain the benefit that would have applied in the
absence of these limits. Only ten retired employees of the Corporation have
received payments under the Supplemental Benefits Plan during the past five
fiscal years. Such payments have aggregated $341,366 for one participant (the
only executive officer within the group) and $305,390 for the other nine
retirees for the five-year period ended February 28, 1995.
The Compensation and Retirement Plan Board Committees have approved the
adoption of a Trigger Rabbi Trust for the benefit of employees of Univar
Corporation and Van Waters & Rogers Inc. who have been designated as
participants in the Supplemental Benefits Plan. In the event of a change of
control of the
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<PAGE> 20
Corporation, the Trigger Rabbi Trust would require immediate and full funding by
Univar Corporation of the benefits to be paid under the Supplemental Benefits
Plan. Similarly, the Corporation has guaranteed the payments that would be
payable to participants in the Supplemental Benefits Plan of Van Waters & Rogers
Ltd. in the event of a change of control.
Compensation of executive officers covered by the Retirement Plan would
include salaries and incentives as reported in the Summary Compensation Table.
Of the persons named in the Summary Compensation Table, Mr. Bernard has 34 years
of service with the Corporation. With respect to the others named in that table,
Mr. Alampi, who is 48 years old, has 16 years of service and Mr. Fletcher, who
is 51, has 6 years of service.
As an employee of the Univar Europe N.V. group, the Corporation's European
subsidiary, Mr. Ellwood, who is named in the Summary Compensation Table, would
receive retirement benefits under an employer provided pension plan. Mr. Ellwood
is 49 years old and has 20 years of service. Under this pension plan, normal
retirement is reached at age 60, and the pension for Mr. Ellwood equals
two-thirds of his final salary, exclusive of any bonus payments.
Mr. Hough, also named in the table, is 56 years old and has 33 years of
service. As an employee of Van Waters & Rogers Ltd., the Corporation's Canadian
subsidiary, Mr. Hough participates in Van Waters & Rogers Ltd.'s Retirement
Plan. Upon retirement under that plan, Mr. Hough would receive similar
retirement benefits as those shown above under the U.S. Retirement Plan.
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PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Corporation's common stock
against the total shareholder return of the Standard & Poor's 500 Stock Index
and against the Standard & Poor's Chemicals Index. The graph sets forth data for
the five-year period commencing February 28, 1990 and ending February 28, 1995.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG UNIVAR CORPORATION, S&P 500 INDEX, & S&P CHEMICALS INDEX
[GRAPH]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD UNIVAR COR- S&P CHEMI-
(FISCAL YEAR COVERED) PORATION S&P 500 CALS
<S> <C> <C> <C>
1990 100 100 100
1991 117 115 100
1992 101 133 122
1993 93 147 127
1994 101 159 156
1995 117 171 173
</TABLE>
This comparison assumes that $100 was invested on February 28, 1990 in each
of Univar Corporation, the S&P 500 Index, and the S&P Chemicals Index.
The Corporation is engaged in chemical distribution services and is the
only U.S. publicly held chemical distributor of its size. The Corporation
believes that there is no truly comparable index against which performance of
its stock can be accurately compared.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CHANGE OF CONTROL AGREEMENTS
The Board of Directors has unanimously approved change of control
agreements (the "Agreements") between the Corporation and certain of the named
executive officers of the Corporation. At February 28, 1995, the Corporation had
Agreements in place with each of the named executive officers (the
"Executives"). Each Agreement provides that the Executive will receive
compensation for 30 months if his employment is terminated (voluntarily or
involuntarily) for any reason other than gross misconduct, death, permanent and
total disability, or reaching age 65 (or age 60 in Mr. Ellwood's case), provided
such termination occurs within 24 months after certain defined events which
might lead to a change of control of the Corporation. The compensation will be
paid at a rate equal to the Executive's then current salary and target
incentive. The
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<PAGE> 22
compensation is subject to a minimum annual rate of not less than the
Executive's average compensation for the preceding three calendar years, and is
subject to reduction if the aggregate present value of all payments would exceed
three times the Executive's "annualized includible compensation," as defined in
Section 280G of the Internal Revenue Code, for the Executive's most recent five
taxable years. The Executive will also continue to have "employee" status for
the 30-month period and will be entitled to retain most employee benefits and
rights during this period.
The estimated aggregate amounts presently payable to the following
executive officers in the event of a change of control would be (assuming each
executive officer receives payments for the maximum 30-month period): Mr.
Bernard $1,765,933; Mr. Alampi $1,067,623; Mr. Ellwood $473,534; Mr. Hough
$460,003; and Mr. Fletcher $660,440. The foregoing does not include the value of
any employee benefits which might be payable to the officer during the 30-month
period. These benefits would include participation in the Corporation's health
and welfare plans, disability insurance policies, continued vesting of stock
options and any outstanding restricted stock awards, and continuation of years
of service for pension and other retirement plan benefit compensation purposes.
The value of these benefits cannot be computed.
The Corporation may cease payments in the event the Executive breaches
certain non-competition or confidentiality covenants. The Corporation also has
the right to terminate the Agreements upon a one-year notice, except as to
rights already accrued as a result of an event which has triggered the change of
control provisions of the Agreements. The Board of Directors believes that the
terms and conditions of the Agreements are in the best interest of the
Corporation because the Agreements will enable the Executives to continue to
focus on activities providing for the maximum long-term value to the
Corporation's shareholders, even when faced with the possible change of control
of the Corporation.
PROPOSALS 2 AND 3.
REINCORPORATION IN WASHINGTON AND INCREASE IN CAPITAL SHARES
For the reasons set forth below, the Board of Directors believes that the
best interests of the Corporation and its shareholders will be served by
changing the Corporation's state of incorporation from Delaware to Washington
(the "Reincorporation"). The Board of Directors has approved the
Reincorporation, which would be accomplished by merging the Corporation with and
into its newly formed Washington subsidiary, New Univar Corporation ("New
Univar"). Upon effectiveness of the merger, New Univar's name will be changed to
Univar Corporation, the name under which the Corporation has operated since
1974. At the Annual Meeting, the shareholders will be asked to approve the
Reincorporation and increases in the number of authorized shares of the
Corporation.
PRINCIPAL REASONS FOR THE PROPOSED REINCORPORATION
The Corporation was originally incorporated as a Delaware corporation in
1966. Delaware was selected because it provided a comprehensive body of both
statutory and case law appropriate for a public corporation. Among the
significant provisions are the state's corporate laws relating to limitations on
director liabilities and indemnification of directors and officers. These issues
have consistently been viewed by the Board of Directors and management as
extremely important to recruiting and retaining directors and officers of the
highest caliber who are essential to the continuing successful operation of the
Corporation. Although the Corporation has not incurred any recent problem in
recruiting or retaining directors and officers, the cost and availability of
adequate director and officer insurance and the uncertainties relating to
indemnification have been reviewed on a regular basis.
As corporations in Washington and other states made similar decisions to
incorporate in Delaware, the legislatures of other states, including Washington,
updated their corporation laws. Specifically, the Washington Legislature amended
its corporate law in 1987 to provide limitations on director liability and to
revise statutes relating to indemnification of directors and officers.
Furthermore, in 1989, the Washington Legislature adopted a comprehensive
revision of the Washington Business Corporation Act ("WBCA") which became
effective in 1990. In the Corporation's opinion, Washington law is now clearer
and better addresses the
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<PAGE> 23
Corporation's concerns in these areas than does Delaware law. Also annual
franchise fees in Washington will be only $59 compared to approximately $120,000
a year in Delaware.
Under Delaware law, the ability of a corporation to indemnify directors and
officers in certain actions brought on behalf of the corporation remains
unclear, even though director and officer insurance purchased with corporate
funds may be used for such indemnification. By contrast, Washington law permits
such indemnification subject to specific limitations. See "Certain Differences
in Corporate Laws -- Indemnification of Directors and Officers" below.
Furthermore, during the last five years, the cost of insurance for directors and
officers has increased and exclusions have broadened. Although the Corporation
currently maintains director and officer liability insurance, in the future such
insurance may be impossible to obtain on a cost-effective basis.
PLAN OF MERGER
The Corporation will be merged with and into New Univar pursuant to the
terms of the proposed Plan and Agreement of Merger (the "Merger Agreement," a
copy of which is attached as Appendix A to this Proxy Statement). Upon the
completion of the merger, the owner of each outstanding common share of the
Corporation will automatically own one New Univar common share. Each outstanding
certificate representing a Corporation common share or shares will continue to
represent the same number of shares in New Univar (i.e., a certificate
representing one Corporation common share will then represent one New Univar
common share). THUS, IT WILL NOT BE NECESSARY FOR SHAREHOLDERS OF THE
CORPORATION TO EXCHANGE THEIR EXISTING SHARES CERTIFICATES. The common shares of
the Corporation will continue to be traded on the New York Stock Exchange under
the same symbol subsequent to the merger.
New Univar's Articles of Incorporation and Bylaws will be the Articles of
Incorporation and Bylaws of the surviving corporation, except that, upon the
effectiveness of the merger, New Univar's name will be changed to Univar
Corporation. The Articles of Incorporation of New Univar Corporation are
attached hereto as Appendix B. The discussion contained in this Proxy Statement
is qualified in its entirety by reference to Appendixes A and B.
EFFECT OF REINCORPORATION AND MERGER
The Reincorporation and the merger will effect a change in the legal
domicile of the Corporation and other changes of a legal nature, the most
significant of which are described in this Proxy Statement. However, the
Reincorporation and merger will not result in any change in the name, business,
management, location of the Corporation's principal executive offices, assets,
liabilities, or net worth or accounting practices. Moreover, as noted above, the
Corporation's common shares will continue to be traded on the New York Stock
Exchange under the symbol "UVX." The merger will not give rise to any appraisal
or dissenters' rights.
PRINCIPAL DIFFERENCES IN CORPORATE CHARTERS
The Corporation's current Certificate of Incorporation differs from New
Univar's Articles of Incorporation primarily as to indemnification of officers
and directors and limitations on director liability and as to the number of
authorized common and preferred shares. Other differences primarily concern
technical differences between the WBCA and the Delaware General Corporation Law
("DGCL").
Limitation on Director Liability. Both the WBCA and the DGCL allow charter
documents to eliminate or limit the personal liability of directors; however,
the two statutes prescribe different limitations. In Washington, the Articles of
Incorporation may not eliminate or limit the liability of a director for: (i)
acts or omissions involving intentional misconduct or a knowing violation of
law; (ii) approval of certain distributions or loans contrary to law; or (iii)
any transaction from which the director personally receives a benefit in money,
property, or services to which the director is not legally entitled. The
Delaware statute further excludes the limitation of director liability: (i) if a
director has breached the duty of loyalty to the corporation or its
shareholders; or (ii) for acts or omissions not in good faith. In both New
Univar's Articles of Incorporation and the Corporation's Certificate of
Incorporation, these limits on director liability are deemed to be contract
rights, which may not be adversely affected by a repeal or modification of the
applicable law and which are to
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<PAGE> 24
be automatically amended as authorized by changes in applicable law so that the
liability of a director shall be eliminated or limited to the fullest extent not
prohibited by applicable law. Neither the DGCL nor the WBCA limit a director's
liability for violation of certain federal laws including the federal securities
laws.
Indemnification of Directors and Officers. Under the Corporation's current
Certificate of Incorporation and Bylaws and under Delaware law, the ability of
the Corporation to indemnify its directors and officers for payments made in
settlement of derivative actions may be open to certain questions. See
"Principal Reasons for the Proposed Reincorporation" above. New Univar's
Articles of Incorporation provide that New Univar shall indemnify its directors
and officers for expenses and liabilities incurred by them as a result of their
service as directors and officers, provided that no such indemnification shall
be provided on account of: (i) acts or omissions of the director or officer
finally adjudged to be intentional misconduct or a knowing violation of the law;
(ii) approval of certain distributions or loans contrary to law; or (iii) any
transaction with respect to which the director or officer is finally adjudged to
have received a benefit to which he or she was not legally entitled. This
comprehensive language is intended to provide the broadest indemnification of
directors and officers not prohibited by Washington law, and to authorize
indemnification of directors and officers of amounts paid in settlement of
actions brought on behalf of the Corporation, commonly known as derivative
actions. See "Certain Differences in Corporate Law -- Indemnification of
Directors and Officers" below.
The Board of Directors believes that the potential personal liability that
can result from derivative actions arising out of an individual's service as a
director or officer of a corporation is a major concern for individuals who are
asked to serve in such positions. The Board of Directors has concluded that by
providing indemnification to the Corporation's directors and officers for
amounts paid in settlement of derivative actions, subject to the restrictions
set forth in the WBCA, the Corporation will be able to effectively maintain its
ability to recruit and retain individuals who possess the qualities and
experience necessary to serve as directors and officers of the Corporation.
Increase in Authorized Common and Preferred Shares. The total number of
common shares which the Corporation is authorized to issue under the
Corporation's Certificate of Incorporation is 40,000,000, and the number of
authorized preferred shares is 750,000. Under New Univar's Articles of
Incorporation, the number of authorized common shares is increased to
100,000,000 and the number of authorized preferred shares is increased to
5,000,000. Under Delaware law, the franchise fees payable by a corporation
incorporated in Delaware increases with the number of authorized shares, whereas
franchise fees payable under Washington law are not tied to the number of
authorized shares. As a result, the Board of Directors has concluded that the
Corporation will benefit from the greater flexibility in the structuring of
corporate transactions achieved by increasing the number of its authorized
common and preferred shares, at no additional cost to the Corporation. The
increased number of shares could more easily facilitate transactions such as
stock splits, stock dividends, mergers and acquisitions and various forms of
financings. However, the Corporation is not currently contemplating any
transaction which would result in any increase in the number of outstanding
common or preferred shares. Because the proposed increases represent a
significant change in the number of authorized common and preferred shares, the
shareholders are being asked to separately approve these increases. If the
shareholders do not approve these increases, the authorized capital of New
Univar will be the same as the present authorized capital of the Corporation.
Other Differences in the Charter Documents and Bylaws. New Univar's
Articles of Incorporation differ in other aspects. The differences relate to
differences between Delaware and Washington law. Specific provisions in certain
Articles have been included so as to minimize differences in corporate
governance before and after the Reincorporation. For example, New Univar's
Articles of Incorporation provide for a majority vote requirement in the case of
mergers (which is the same as the DGCL requirement for mergers) instead of a
two-thirds vote requirement which is the general provision applicable under the
WBCA. Similarly, preemptive rights, cumulative voting (with certain limited
exceptions found in the Corporation's Certificate of Incorporation), and
shareholder-called meetings are precluded in the New Univar Articles of
Incorporation since such rights do not presently apply to Univar under the DGCL.
Other differences under New Univar's Articles of Incorporation include the
following: (i) the authority of the Board of Directors regarding the issuance of
preferred shares and the determination of the rights and preferences with
respect to such shares are more specifically and broadly described; (ii) the
minimum number of directors is increased from seven to nine
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<PAGE> 25
to satisfy Washington law requirements applicable to classified boards and
cumulative voting (the actual size of the Board of Directors will remain at
twelve); and (iii) the elimination of "par value" for common and preferred
shares as permitted by Washington law.
Various differences also exist between New Univar's Bylaws and the
Corporation's Bylaws which are generally reflective of technical differences
between Delaware and Washington law and a policy decision not to include
provisions which are adequately covered by statute or not required to be
included in the Bylaws. However, none of these provisions is expected to have a
material effect on the governance of the Corporation. A copy of the New Univar
Bylaws may be obtained by writing to the Corporate Secretary at the
Corporation's Executive Offices.
CERTAIN DIFFERENCES IN CORPORATE LAW
The DGCL currently governs the rights of the Corporation's shareholders.
After the merger, the rights of shareholders shall be governed by the WBCA. The
following discussion summarizes certain significant differences between the
provisions of the DGCL and the WBCA, as applicable to a public company.
Amendment of Articles/Restated Certificate of Incorporation. The WBCA
authorizes a corporation's board of directors to make various changes to its
articles of incorporation without shareholder approval including changes: of
corporate name, of the number of outstanding shares in order to effectuate a
stock split or stock dividend in the corporation's own shares, and to change or
eliminate provisions with respect to par value of its shares. Other amendments
to a corporation's articles of incorporation must be recommended to the
shareholders by the board of directors, unless the board determines that because
of a conflict of interest or other special circumstances, it should make no
recommendations, and must be approved by a majority of all votes entitled to be
cast by each voting group which has a right to vote on the amendment.
Under the DGCL, amendments to a corporation's certificate of incorporation
require the approval of shareholders holding a majority of the voting power of
the corporation unless a different proportion is specified in the certificate of
incorporation.
Provisions Affecting Acquisitions and Business Combinations. The WBCA
imposes restrictions on certain transactions between a corporation and certain
significant shareholders.
Subject to certain exceptions, a merger, share exchange, sale of assets
other than in the regular course of business, or dissolution of a corporation
involving an "Interested Shareholder" owning beneficially 20% or more of the
corporation's voting securities must be approved by the holders of two-thirds of
the corporation's outstanding voting securities, other than those of the
Interested Shareholder. This restriction does not apply if the consideration
received as a result of the transaction by noninterested shareholders is not
less than the highest consideration paid by the Interested Shareholder for the
corporation's shares during the preceding two years or if the transaction is
approved by a majority of directors who are not affiliated with the Interested
Shareholder. A Washington corporation may, in its original articles of
incorporation, elect not to be covered by this provision; however, New Univar
has not done so.
In addition, Washington law prohibits a "target corporation," with certain
exceptions, from engaging in certain "significant business transactions" (such
as a merger or sale of assets) with an "acquiring person" who acquires more than
10% of the voting securities of a target corporation for a period of five years
after such acquisition, unless the transaction is approved by a majority of the
members of the target corporation's board of directors prior to the date of the
acquisition. To be covered by this statute, both domestic and foreign
corporations with their principal executive offices in Washington must have,
together with all of their subsidiaries, either a majority or over 1,000 of
their employees resident in Washington. Because the Corporation does not meet
this test, the statute does not apply to the Corporation and will not apply to
New Univar.
Delaware has enacted a business combination statute that is contained in
Section 203 of the DGCL providing that any person who acquires 15% or more of a
corporation's voting stock (thereby becoming an "interested shareholder") may
not engage in certain "business combinations" with the target corporation for a
period of three years following the date the person became an interested
shareholder, unless (i) the board of
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<PAGE> 26
directors of the corporation has approved, prior to that acquisition date,
either the business combination or the transaction that resulted in the person
becoming an interested shareholder, (ii) upon consummation of the transaction
that resulted in the person becoming an interested shareholder, that person owns
at least 85% of the corporation's voting stock outstanding at the time the
transaction is commenced (excluding shares owned by persons who are both
directors and officers and shares owned by employee stock plans in which
participants do not have the right to determine confidentially whether shares
will be tendered in a tender or exchange offer), or (iii) the business
combination is approved by the board of directors and authorized by the
affirmative vote (at an annual or special meeting and not by written consent) of
at least 66 2/3% of the outstanding voting stock not owned by the interested
shareholder.
For purposes of determining whether a person is the "owner" of 15% or more
of a corporation's voting stock for purposes of Section 203, ownership is
defined broadly to include the right, directly or indirectly, to acquire the
stock or to control the voting or disposition of the stock. A "business
combination" is also defined broadly to include (i) mergers and sales or other
dispositions of 10% or more of the assets of a corporation with or to an
interested shareholder, (ii) certain transactions resulting in the issuance or
transfer to the interested shareholder of any stock of the corporation or its
subsidiaries, (iii) certain transactions which would result in increasing the
proportionate share of the stock of a corporation or its subsidiaries owned by
the interested shareholder, and (iv) receipt by the interested shareholder of
the benefit (except proportionately as a shareholder) of any loans, advances,
guarantees, pledges, or other financial benefits.
These restrictions placed on interested shareholders by Section 203 do not
apply under certain circumstances, including, but not limited to, the following:
(i) if the corporation's original certificate of incorporation contains a
provision expressly electing not to be governed by Section 203 or (ii) if the
corporation, by action of its shareholders, adopts an amendment to its bylaws or
certificate of incorporation expressly electing not to be governed by Section
203, provided that such an amendment is approved by the affirmative vote of not
less than a majority of the outstanding shares entitled to vote and that such an
amendment will not be effective until 12 months after its adoption and will not
apply to any business combination with a person who became an interested
shareholder at or prior to such adoption. The Corporation has not elected to
take itself outside of the coverage of Section 203.
Prior to the adoption of Section 203, in 1983 and 1985 the Corporation's
shareholders approved amendments to its Certificate of Incorporation to include
various shareholder protective provisions by a considerable majority of
affirmative votes. Substantially similar provisions have been restated in the
Articles of Incorporation of New Univar. These provisions are intended to
discourage transactions such as two-tier tender offers, greenmail and similar
abusive transactions. Accordingly, the fact that New Univar will no longer be
subject to the restrictions of Section 203 and will not have all of the
protective provisions of Washington law is not expected to have a material
adverse effect on the shareholders of New Univar.
Mergers, Acquisitions and Other Transactions. Under the WBCA, a merger,
consolidation, sale of substantially all of a corporation's assets other than in
the regular course of business, or dissolution of a public corporation must be
approved by the affirmative vote of a majority of directors when a quorum is
present, and by two-thirds of all votes entitled to be cast by each voting group
entitled to vote as a separate group, unless another proportion is specified in
the articles of incorporation. As previously set forth in "Other Differences in
the Charter Documents," New Univar's Articles of Incorporation provide that the
corporate transactions specified above may be approved by a majority of the
outstanding shares entitled to vote. Under the DGCL, a merger, consolidation,
sale of all or substantially all of a corporation's assets other than in the
regular course of business or dissolution of a corporation must be approved by a
majority of the outstanding shares entitled to vote.
Action Without a Meeting. Under the WBCA, shareholder action may be taken
without a meeting if written consents setting forth such action are signed by
all holders of outstanding shares entitled to vote thereon.
The DGCL authorizes shareholder action without a meeting if consents are
received from holders of a majority of the outstanding shares. The Corporation's
Certificate of Incorporation does not permit such action.
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Class Voting. Under the WBCA, the articles of incorporation of a
corporation may authorize one or more classes of shares that have special,
conditional or limited voting rights, including the right to vote on certain
matters as a group. The articles of incorporation may not limit the rights of
holders of a class to vote as a group with respect to certain amendments to the
articles of incorporation and certain mergers that adversely affect the rights
of holders of that class.
The DGCL requires voting by separate classes only with respect to
amendments to the certificate of incorporation that adversely affect the holders
of those classes or that increase or decrease the aggregate number of authorized
shares or the par value of the shares of any of those classes.
Transactions With Officers or Directors. The WBCA sets forth a safe harbor
for transactions between a corporation and one or more of its directors. A
conflicting interest transaction may not be enjoined, set aside or give rise to
damages if: (i) it is approved by a majority of qualified directors; (ii) it is
approved by the affirmative vote of all qualified shares; or (iii) at the time
of commitment, the transaction was fair to the corporation. For purposes of this
provision, "qualified director" is one who does not have: (a) a conflicting
interest respecting the transaction, or (b) a familial, financial, professional,
or employment relationship with a second director which relationship would
reasonably be expected to exert an influence on the first director's judgment
when voting on the transaction. "Qualified Shares" are defined generally as
shares other than those beneficially owned, or the voting of which is
controlled, by a director who has a conflicting interest respecting the
transaction.
The DGCL provides that contracts or transactions between a corporation and
one or more of its officers or directors or an entity in which they have an
interest is not void or voidable solely because of such interest or the
participation of the director or officer in a meeting of the board or a
committee which authorizes the contract or transaction if: (i) the material
facts as to the relationship or interest and as to the contract or transaction
are disclosed or are known to the board or the committee, and the board or
committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of disinterested directors; (ii) the material
facts as to the relationship or interest and as to the contract or transaction
are disclosed or are known to the shareholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
shareholders; or (iii) the contract or transaction is fair as to the corporation
as of the time it is authorized, approved or ratified, by the board of
directors, a committee thereof, or the shareholders.
Appraisal or Dissenter's Rights. Under the WBCA, a shareholder is entitled
to dissent from and, upon perfection of his or her appraisal right, to obtain
fair value of his or her shares in the event of certain corporate actions,
including certain mergers, consolidations, share exchanges, sales of
substantially all assets of the corporation, and amendments to the corporation's
articles of incorporation that materially and adversely affect shareholder
rights.
Under the DGCL, appraisal rights are available only in connection with
certain mergers or consolidations, unless otherwise provided in the
corporation's certificate of incorporation. Even in the event of those mergers
or consolidations, unless the certificate of incorporation otherwise provides,
the DGCL does not provide appraisal rights (1) if the shares of the corporation
are listed on a national securities exchange, designated as a "National Market
System" security, or held of record by more than 2,000 shareholders (as long as
in the merger the shareholders receive shares of the surviving corporation or
any other corporation the shares of which are listed on a national securities
exchange, designated as a National Market System security, or held of record by
more than 2,000 shareholders) or (2) if the corporation is the surviving
corporation and no vote of its shareholders is required for the merger. The
Corporation's common stock is listed on the New York Stock Exchange and
shareholders therefore would presently not have statutory appraisal rights under
the DGCL in such mergers but will have under the WBCA.
Indemnification of Directors and Officers. Under the WBCA, if authorized by
the articles of incorporation, a bylaw adopted or ratified by shareholders, or a
resolution adopted or ratified, before or after the event, by the shareholders,
a corporation has the power to indemnify a director or officer made a party to a
proceeding, or advance or reimburse expenses incurred in a proceeding, under any
circumstances, except that no such indemnification shall be allowed on account
of: (i) acts or omissions of the directors finally adjudged to be intentional
misconduct or a knowing violation of the law; (ii) conduct of the director
finally adjudged to
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be an unlawful distribution; or (iii) any transaction with respect to which it
was finally adjudged that such director personally received a benefit in money,
property or services to which the director was not legally entitled. Written
commentary by the drafters of the WBCA, which has the status of legislative
history, specifically indicates that a corporation may indemnify its directors
and officers for amounts paid in settlement of derivative actions, provided that
the director's or officer's conduct does not fall within one of the categories
set forth above. New Univar's Articles provide that New Univar shall indemnify
its directors and officers to the fullest extent not prohibited by law,
including indemnification for payments in settlement of actions brought against
the director or officer in the name of the corporation, commonly referred to as
a derivative action. See "Principal Differences in Corporate Charters and
Bylaws -- Indemnification of Directors and Officers" above.
Under the DGCL, indemnification of directors and officers is authorized to
cover judgments, amounts paid in settlement, and expenses arising out of
non-derivative actions where the director or officer acted in good faith and in,
or not opposed, to the best interests of the corporation. Additionally, under
the DGCL, a corporation may reimburse directors and officers for expenses
incurred in a derivative action. While the DGCL provides that these
indemnification provisions are not exclusive, which, in the Corporation's
opinion, indicates that a corporation may provide for broader indemnification in
its charter documents including circumstances not otherwise authorized under the
DGCL, there is some uncertainty as to the extent to which a corporation may
indemnify its directors and officers for judgments and amounts paid in
settlement of derivative actions. There are no definitive decisions and this
uncertainty exists because certain legal commentators have argued that such
indemnification would be circular and is against public policy. Also, a proposal
to permit such indemnification was specifically rejected by the General
Corporation Law Section of the Delaware Bar Association.
The Corporation has included undertakings in various registration
statements filed with the Securities and Exchange Commission that in the event a
claim for indemnification is asserted by a director or officer relating to
liabilities under the Securities Act of 1933 the Corporation will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether
indemnification would be against public policy and will be governed by any final
adjudication of such issue.
TAX CONSEQUENCES
In connection with the Reincorporation, the law firm of Preston Gates &
Ellis, counsel to the Corporation, will issue an opinion that the
Reincorporation will constitute a tax free reorganization under the Internal
Revenue Code. Accordingly, it is anticipated that no gain or loss will be
recognized for federal income tax purposes by the Corporation, New Univar, or
their shareholders as a result of the merger, and the tax basis and holding
period for the shares of New Univar deemed received by the shareholders of the
Corporation in exchange for the Corporation's shares will be the same as the tax
basis and holding period of the shares of the Corporation deemed to be exchanged
therefor. In addition, New Univar generally will succeed to the tax attributes
of the Corporation.
VOTE REQUIRED AND BOARD RECOMMENDATION
Delaware law requires the favorable vote of at least a majority of all of
the outstanding voting shares of the Corporation to approve the Reincorporation
and the increase in capital shares.
As discussed above, one of the reasons for proposing the Reincorporation is
that Washington law has clearer and broader provisions relating to the
limitation of director liability and indemnification of officers and directors.
Accordingly, the Board has a personal interest in the approval of the
Reincorporation.
The indemnification requirements might have a significant adverse effect on
the Corporation and its shareholders in the event of a substantial judgment or
settlement, not otherwise covered by insurance, with respect to a director or
officer entitled to indemnification.
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The Corporation is not aware of any pending or threatened litigation or
proceeding which may result in a claim for indemnification by a director or
officer or where the limitations on director liability under the DGCL or WBCA
would be applicable.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
THE REINCORPORATION FROM DELAWARE TO WASHINGTON BY MEANS OF A MERGER OF THE
CORPORATION INTO NEW UNIVAR CORPORATION, A NEWLY FORMED, WHOLLY OWNED WASHINGTON
CORPORATION.
THE BOARD OF DIRECTORS ALSO RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
APPROVAL OF THE INCREASE IN THE NUMBER OF AUTHORIZED COMMON SHARES FROM
40,000,000 TO 100,000,000 AND THE INCREASE IN THE NUMBER OF AUTHORIZED PREFERRED
SHARES FROM 750,000 TO 5,000,000.
PROPOSAL 4. APPROVAL OF THE 1995 INCENTIVE STOCK PLAN
At the meeting, the shareholders will be requested to consider and approve
the 1995 Incentive Stock Plan (the "1995 Plan"). The Board of Directors of the
Corporation recommends that the 1995 Plan be approved by the shareholders at the
meeting.
The 1993 Omnibus Budget Reconciliation Act ("OBRA") became law in August
1993. Under this law, publicly-held companies may be limited as to income tax
deductions to the extent total remuneration (including stock options) for
certain executive officers exceeds $1 million in any one year. However, OBRA
provides an exception for "performance-based" remuneration, including stock
options. The law requires that certain actions must be taken by a compensation
committee, or a subcommittee thereof, of two or more outside directors and that
the material terms under which remuneration is to be paid must be approved by a
majority vote of the shareholders in order for stock options to qualify as
"performance-based" remuneration. The 1995 Plan has been drafted, and will be
administered, with the intent that it comply with the provisions of OBRA.
DESCRIPTION OF THE 1995 PLAN
The following description of the 1995 Plan is qualified in its entirety by
reference to the 1995 Plan itself, which is included as Appendix C to this Proxy
Statement.
The 1995 Plan, which was approved by the Board in April 1995, was adopted
in order to enhance the long-term performance of the Corporation by rewarding
key employees of the Corporation for the sustained creation of incremental value
for the Corporation's shareholders. Option grants may only be made to employees
of the Corporation ("Participants"). Non-employee directors and nominees for
director are not eligible to participate. At this time, approximately 110
employees are eligible to participate.
The 1995 Plan, if approved by the shareholders, will reserve 2,000,000
shares of the Corporation's common stock for issuance pursuant to stock options
or restricted stock awards to be granted thereunder. Options granted under the
1995 Plan will be either incentive stock options ("ISOs"), as defined in Section
422 of the Internal Revenue Code of 1986, or non-qualified stock options.
The 1995 Plan will be administered by a Subcommittee of the Compensation
Committee of the Corporation (the "Subcommittee") and may be terminated at any
time by direction of the Subcommittee or in the event all shares reserved under
the 1995 Plan have been purchased. The 1995 Plan is not qualified under section
401(a) of the Internal Revenue Code, as amended (the "Code"), nor is it subject
to the provisions of the Employee Retirement Income Security Act of 1974.
Option grants to Participants, including executive officers, are made by
the Subcommittee. The Subcommittee consists of two members of the Compensation
Committee, each of whom must be (1) "disinterested" as that term is defined in
Rule 16b-3 of the Securities and Exchange Commission and (2) an "outside
director" as that term is defined in Section 162(m) of the Code and the related
regulations.
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<PAGE> 30
The Subcommittee in its discretion determines which officers and employees
may participate in the 1995 Plan and the amount of their options or awards.
Accordingly, it is not possible to state the names or positions of or the number
of options or awards that may be granted to the Corporation's officers and
employees. However, no grants of options or restricted stock awards may be made
to any Participant under the 1995 Plan in excess of 200,000 shares in any one
year. No grants or awards were made during the fiscal year ended February 28,
1995.
The Subcommittee will establish the time or times at which options may be
exercised and whether all of the options may be exercisable at one time or in
increments over time. The option price or procedure for setting the option price
shall be set by the Subcommittee at the time of the granting of an option. For
ISOs, the option price may not be less than the fair market value of the
Corporation's stock on the date of grant. For nonqualified stock options, the
option price may be less than, equal to, or greater than the fair market value
of the Corporation's stock on the date of grant. However, options granted at
less than fair market value may not qualify as performance-based compensation
under OBRA and any compensation realized for tax purposes in respect of such
options by individuals who are "Named Executive Officers" in the Corporation's
proxy statement for the taxable year of exercise might be partially or wholly
non-deductible by the Corporation. The Subcommittee also has the authority to
reset the price of any stock option after the original grant and before
exercise. In the event of stock dividends, splits, and similar capital changes,
the 1995 Plan provides for appropriate adjustments in the number of shares
available for options and the number and option prices of shares subject to
outstanding options.
In the case of ISOs, Internal Revenue Service ("IRS") rules provide that no
Participant may be granted ISOs in any one calendar year in excess of $100,000
plus any "unused limit carryover" to that year. Further, grants cannot be made
at less than the fair market value of the Corporation's common stock on the date
of grant.
The Subcommittee may authorize the grant of restricted stock awards
("RSAs"). The shares subject to such RSAs will not be transferable for such
period as the Subcommittee shall determine. The certificates for such shares
will be held by the Corporation, together with a stock power which shall be
executed in favor of the Corporation by the Participant. A Participant forfeits
his rights to the RSA if the Participant's employment with the Corporation or
any of its subsidiaries terminates for any reason, prior to the expiration or
satisfaction of the restrictions applicable to such shares. The Subcommittee may
accelerate the removal of any or all restrictions if in its judgment it
concludes that performance had warranted such action or such actions are in the
best interests of the Corporation.
The Subcommittee establishes the time or times at which the options or RSAs
may be exercised or become vested. The vesting schedule may vary from grant to
grant and from recipient to recipient.
Upon a Change of Control (as defined in the 1995 Plan) of the Corporation,
all unvested options previously granted under the Plan shall become immediately
vested and available for exercise. Such options may be exercised by the
Participant at any time prior to the expiration of the option. Similarly, all
unvested RSAs shall become immediately vested upon a Change of Control.
Any options, vested or unvested, may be exercised on a conditional basis in
the event of an announcement of a Change of Control transaction, provided no
provision is made in such Change of Control transaction for the exercise,
exchange, or surrender of options, or other procedure whereby the Participant
may realize in cash the difference between the exercise price and the fair
market value of the per share consideration to be received in the Change of
Control transaction for the exercise, exchange, or surrender of options, or
other procedure whereby the Participant may realize in cash the difference
between the exercise price and the fair market value of the per share
consideration to be received by holders of the Common Stock of the Corporation.
A conditional exercise shall be made by giving a written notice of exercise to
the Corporate Secretary of the Corporation. If the Change of Control transaction
is canceled or revoked, or otherwise does not occur, or does not actually result
in a Change of Control, the conditional exercise of unvested options shall be
rescinded.
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Under the 1995 Plan, the Subcommittee has the right to set the term of each
individual option. Typically, options expire at the earliest of (1) 10 years
after their grant, (2) 90 days after a Participant's termination of employment
for any reason other than "cause," (3) immediately upon termination for cause,
and (4) one year after a Participant's death or retirement due to disability. An
individual option may specify earlier dates of termination. All vested options
not exercised within the time limits set forth in the 1995 Plan (or an
individual option agreement) for the exercise of vested options shall be
forfeited.
Unvested options granted under the 1995 Plan are immediately forfeited upon
any termination of service.
The purchase price of option shares may be paid in cash or in shares of the
Corporation's common stock. Shares used to pay the exercise price will be valued
at their fair market value on the exercise date. Option holders must also pay
the Corporation, at the time of exercise, the amount of federal, state, and
local withholding taxes, if any, required to be withheld by the Corporation.
These withholding taxes may be paid by turning in shares of the Corporation's
common stock, valued at fair market value.
Under the 1995 Plan, the Subcommittee has the authority to grant
"Replacement Options." Such grants are at the discretion of the Subcommittee
unless the Subcommittee affirmatively determines that such grants will be
automatic for all Participants entitled to receive such a Replacement Option.
If a Participant is an employee of the Corporation at the time of the
exercise of an option (the "Original Option") and pays all or a portion of the
exercise price for the Original Option by surrendering currently owned shares of
Common Stock, then such Participant is entitled to receive a "Replacement
Option," either at the discretion of the Subcommittee or automatically as
determined in accordance with the preceding paragraph. The Replacement Option
will have the following terms:
(a) The Replacement Option will be for the same number of shares as
were surrendered by the Participant at the time the Original Option was
exercised, but will not apply to any shares that were surrendered to pay
applicable taxes;
(b) The Replacement Option will be priced at the fair market value on
the date of exercise of the Original Option;
(c) The Replacement Option will expire on the same date as the
Original Option would have expired;
(d) The Replacement Option will vest in its entirety 12 months after
the date it was granted;
(e) The shares acquired upon exercise of the Original Option must be
held for 12 months after the date of that exercise, or the Replacement
Option is canceled;
(f) The shares that were surrendered to exercise the Original Option
must have been held for at least six months at the time of surrender; and
(g) Each Replacement Option will be a Non-Qualified Stock Option, even
if the Original Option was an Incentive Stock Option.
The Board has the right to substitute or assume options in connection with
mergers, reorganizations, separations, or other transactions to which Section
424(a) of the Code applies; provided such substitutions and assumptions are
permitted by Section 424 of the Code and the regulations promulgated thereunder.
The number of shares reserved for the 1995 Plan may be increased by the
corresponding number of options assumed, and, in the case of a substitution, by
the net increase in the number of shares subject to options before and after the
substitution.
The 1995 Plan may be modified, amended, or terminated by the Board except
with respect to options granted prior to such action. The Board shall have the
authority to adopt such modifications, procedures, and subplans as may be
necessary or desirable to comply with provisions of the laws of foreign
countries in which the Corporation or its subsidiaries operate to assure the
viability of the benefits from options granted to employees employed in such
countries and to meet the objectives of the 1995 Plan. Notwithstanding the
foregoing, shareholder approval is required for any amendment which increases
the number of shares subject
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to the 1995 Plan (other than in connection with automatic adjustments due to
changes in capitalization or the assumption or substitution of options in
connection with mergers or acquisitions) or which is otherwise subject to
shareholder approval pursuant to Rule 16b-3 of the Securities and Exchange
Commission. Shareholder approval may also be required if there are "material
changes" to the Plan for purposes of Section 162(m) of the Code or to comply
with new legislation.
Except as otherwise approved by the Subcommittee, the options are
nonassignable except by will or by the laws of descent and distribution.
The closing price of the Corporation's common stock on the New York Stock
Exchange on June 21, 1995 was $ .
FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE 1995 PLAN
The federal income tax consequences of a Participant's participation in the
1995 Plan are complex and subject to change. The following discussion, which has
been prepared by the law firm of Preston Gates & Ellis, counsel to the
Corporation, is only a summary of the general rules applicable to
remuneration-related options and restricted stock awards. A taxpayer's
particular situation may be such that some variation of the general rules would
apply. Further, this summary addresses rules applicable in the United States. If
a Participant is subject to the laws of a different country, the summary below
may not apply.
Non-Qualified Option Grants. An optionee will not recognize any taxable
income at the time he or she is granted a nonqualified option. However, upon its
exercise, the optionee will recognize ordinary income for federal tax purposes
measured by the excess of the then fair market value of the shares over the
option price. The income realized by the optionee will be subject to income tax
withholding.
The optionee's basis for determination of gain or loss upon the subsequent
disposition of shares acquired upon the exercise of a nonqualified stock option
will be the amount paid for such shares plus any ordinary income recognized as a
result of the exercise of such option. Upon disposition of any shares acquired
pursuant to the exercise of a nonqualified stock option, the difference between
the sale price and the optionee's basis in the shares will be treated as a
capital gain or loss and will be characterized as long-term capital gain or loss
if the shares have been held for more than one year at the date of their
disposition.
In general, there will be no federal tax consequences to the Corporation
upon the grant or termination of a nonqualified stock option or a sale or
disposition of the shares acquired upon the exercise of a nonqualified stock
option. However, upon the exercise of a nonqualified stock option, the
Corporation will be entitled to a deduction for federal income tax purposes
equal to the amount of ordinary income that an optionee is required to recognize
as a result of the exercise, provided that the deduction is not disallowed
pursuant to Section 162(m) of the Code.
When a non-qualified stock option is exercised by the surrender of shares,
the transaction is separated into two parts for tax purposes. In the first part
of the transaction, the number of shares surrendered will be deemed exchanged,
tax free, for a like number of shares received, and the basis of the shares so
received will be the same as the basis of the shares surrendered. In the second
part of the transaction, the full fair market value of the remaining shares
constitutes both the basis for the shares and the taxable amount of
compensation. The holding period of these shares will begin on the date of
exercise.
Incentive Stock Options. If an option granted under the Plan is treated as
an ISO, the optionee will not recognize any income upon either the grant or the
exercise of the option and the Corporation will not be allowed a deduction for
federal tax purposes. Upon a sale of the shares, the tax treatment to the
optionee and the Corporation will depend primarily upon whether the optionee has
met certain holding period requirements at the time he or she sells the shares.
In addition, as discussed below, the exercise of an ISO may subject the optionee
to alternative minimum tax liability.
If an optionee exercises an ISO and does not dispose of the shares received
within two years after the date of the grant of such option or within one year
after transfer of the shares to him or her and is employed by the Corporation
from the date of grant to the date three months prior to the date of exercise,
any gain realized
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upon disposition will be characterized as long-term capital gain and, in such
case, the Corporation will not be entitled to a federal income tax deduction.
If the optionee disposes of the shares either within two years after the
date the option is granted or within one year after the transfer of the shares
to him or her, such disposition generally will be treated as a disqualifying
disposition and an amount equal to the lesser of (1) the fair market value of
the shares on the date of exercise minus the purchase price, or (2) the amount
realized on the disposition minus the purchase price, will be taxed as ordinary
income to the optionee in the taxable year in which the disposition occurs. The
excess, if any, of the amount realized upon disposition over the fair market
value at the time of the exercise of the option will be treated as long-term
capital gain if the shares have been held for more than one year following the
exercise of the option. In the event of a disqualifying disposition, the
Corporation may withhold income taxes from the optionee's compensation with
respect to the ordinary income realized by the optionee as a result of the
disqualifying disposition. Certain transfers to a Participant's estate and
certain transfers to a spouse or incident to a divorce are not treated as
disqualifying dispositions and do not therefore trigger income recognition to a
Participant.
The exercise of an ISO may subject an optionee to alternative minimum tax
liability because the excess of the fair market value of the shares at the time
an ISO is exercised over the purchase price of the shares is included in income
for purposes of the alternative minimum tax. Consequently, an optionee may be
obligated to pay alternative minimum tax in the year he or she exercises an ISO.
In general, there will be no federal tax consequences to the Corporation
upon the grant, exercise, or termination of an ISO. However, in the event an
optionee sells or disposes of stock received upon the exercise of an ISO in a
disqualifying disposition, the Corporation will be entitled to a deduction for
federal income tax purposes in an amount equal to the ordinary income, if any,
recognized by the optionee upon disposition of the shares, provided that the
deduction is not disallowed pursuant to Section 162(m) of the Code.
When an ISO is exercised in whole or in part by the surrender of shares,
gain or loss will generally not be recognized except under the following
circumstances: (1) if the shares surrendered by the Participant were obtained
upon the exercise of an ISO granted by the Corporation, and (2) the Participant
did not hold such shares for the time period required to avoid a disqualifying
disposition (i.e., such shares are surrendered within 2 years of the grant of
the option under such plans or within one year of the transfer of the shares to
the Participant).
Upon the exchange of shares received on the exercise of an ISO ("ISO
Shares") for other ISO Shares, the gain to be recognized if (1) and (2) above
apply will be ordinary income equal to the lesser of (a) the difference between
the option price of the shares surrendered and the fair market value of those
shares when the option was exercised, and (b) the difference between the option
price of the shares surrendered and the current fair market value of those
shares. The fact that income is recognized as to the shares surrendered will not
affect the favorable tax treatment for the shares being acquired.
To the extent of the number of "old" shares traded in, the new option
shares will retain the option holder's tax basis and capital gain holding
period. Any amounts recognized as income will increase the basis of new option
shares whose basis is determined with reference to the basis of the old option
shares. The remainder of the option shares take on a new tax basis equal to the
amount of cash paid (if any). The capital gain holding period of these shares
will begin on the date of exercise. The required holding period, for determining
whether these shares were held for one year from the date of transfer, begins on
the acquisition date of the shares, irrespective of the fact that the capital
gains holding period may begin earlier.
Restricted Stock Awards. A holder generally will not recognize taxable
income upon the grant of restricted shares and the recognition of any income
will be postponed until the time that the restrictions on the shares lapse, at
which time the holder will recognize ordinary income equal to the fair market
value of the restricted shares at the time that such restrictions lapse. The
1995 Plan provides that a holder may not elect to have the tax applied at the
time of the award.
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The Corporation generally will be entitled to a deduction equal to any
ordinary income recognized by the holder in the same taxable year in which the
holder recognizes ordinary income with respect to the restricted shares.
VOTE REQUIRED AND BOARD RECOMMENDATION
The approval of the 1995 Plan is subject to the affirmative vote of
shareholders holding a majority of the shares of the Corporation's common stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1995 PLAN.
INDEPENDENT PUBLIC ACCOUNTANTS
At the recommendation of the Audit Committee, the Board of Directors has
appointed the firm of Arthur Andersen & Co., independent public accountants, to
audit the accounts of the Corporation and its subsidiaries for the fiscal year
ending February 28, 1995. Arthur Andersen & Co. has audited the accounts of the
Corporation since its incorporation. A representative of Arthur Andersen & Co.
will be present at the 1995 Annual Meeting of Shareholders with the opportunity
to make a statement and will be available to respond to appropriate questions.
FUTURE SHAREHOLDER PROPOSALS AND NOMINATIONS -- 1996
The Bylaws of the Corporation require that shareholders who wish to present
director nominations at the 1996 Annual Meeting of Shareholders submit written
notice of such nominations to the Corporate Secretary by March 9, 1996. Other
proposals of shareholders to be presented at the 1996 Annual Meeting must be
received by the Corporation not later than April 1, 1996. The Bylaws set forth
additional conditions and procedures for such nominations and proposals. Any
shareholder may receive a copy of the Corporation's Bylaws by submitting a
written request to the Corporate Secretary. Any nomination or proposal not made
in compliance with the Bylaws may be rejected by the Board of Directors.
OTHER BUSINESS
The Board of Directors has no knowledge of any other business to be acted
upon at this meeting. If, however, any other business is presented at the
meeting, proxies will be voted in accordance with the judgment of the person or
persons voting such proxies unless the proxies are so marked as to preclude such
discretionary authority.
The Annual Report of the Corporation for the fiscal year ended February 28,
1995 has been mailed to the shareholders. If you have not received a copy of the
Annual Report, please contact the Corporate Secretary at (206) 889-3400.
July 7, 1995
By Order of the Board of Directors
[SIG]
William A. Butler
Corporate Secretary
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APPENDIX A
PLAN AND AGREEMENT OF MERGER
BETWEEN
NEW UNIVAR CORPORATION
AND
UNIVAR CORPORATION
This Plan and Agreement of Merger (this "Agreement") is entered into this
day of , 1996 by and between NEW UNIVAR CORPORATION, a
Washington corporation (the "Surviving Corporation"), and UNIVAR CORPORATION, a
Delaware corporation ("Univar Corporation"). The Surviving Corporation and
Univar Corporation are sometimes referred to jointly as the "Constituent
Corporations."
RECITALS
A. Each of the Constituent Corporations is a corporation organized and
existing under the laws of the respective states as indicated in the first
paragraph of this Agreement.
B. The shareholders and directors of each of the Constituent Corporations
have deemed it advisable for the mutual benefit of the Constituent Corporations
and their respective shareholders that Univar Corporation be merged into the
Surviving Corporation pursuant to the provisions of the Washington Business
Corporation Act, Title 23B of the Revised Code of Washington and the Delaware
General Corporation Law (the "Merger").
NOW, THEREFORE, in accordance with the laws of Washington and Delaware, the
Constituent Corporations agree that, subject to the following terms and
conditions, (i) Univar Corporation shall be merged into the Surviving
Corporation, (ii) the Surviving Corporation shall continue to be governed by the
laws of the state of Washington, and (iii) the terms of the Merger, and the mode
of carrying them into effect, shall be as follows:
ARTICLE I
ARTICLES OF SURVIVING CORPORATION
The Articles of Incorporation of the Surviving Corporation as in effect
immediately prior to the Effective Time of the Merger shall constitute the
"Articles" of the Surviving Corporation within the meaning of Section
23B.01.400(l) of the Washington Business Corporation Act and Section 104 of the
Delaware General Corporation Law, except that Article I of the Articles of
Incorporation of the Surviving Corporation is hereby amended in its entirety to
read as follows:
"ARTICLE I
NAME
The name of the corporation is Univar Corporation."
ARTICLE II
APPOINTMENT OF AGENT FOR SERVICE OF PROCESS
Pursuant to Section 252(d) of the Delaware General Corporation Law, the
Surviving Corporation irrevocably appoints the Secretary of the State of
Delaware to accept service of process in any proceeding to enforce against the
Surviving Corporation any obligation of any Constituent Corporation as well as
for enforcement of any obligation of the surviving Corporation arising from the
Merger. The Delaware Secretary
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of State shall mail a copy of the service of process to Univar Corporation,
Attn: Legal Department, 6100 Carillon Point, Kirkland, Washington 98033.
ARTICLE III
CONVERSION OF SHARES
3.1 Univar Corporation Shares. At the Effective Time of the Merger each
outstanding share of the common stock and preferred stock of Univar Corporation
shall automatically convert to one share of common stock and preferred stock, as
applicable, of the Surviving Corporation. It will not be necessary for
shareholders of Univar Corporation to exchange their existing stock certificates
for stock certificates of the Surviving Corporation.
3.2 Surviving Corporation Shares. At the Effective Time of the Merger each
outstanding share of the common stock and preferred stock of the Surviving
Corporation shall be automatically canceled and returned to the status of
authorized but unissued shares.
ARTICLE IV
BYLAWS
The Bylaws of the Surviving Corporation shall be the governing Bylaws.
ARTICLE V
DIRECTORS AND OFFICERS
The directors and officers of Univar Corporation shall be the directors and
officers of the Surviving Corporation.
ARTICLE VI
EFFECT OF THE MERGER
The effect of the Merger shall be as provided by the applicable provisions
of the laws of Washington and Delaware. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time of the Merger: the
separate existence of Univar Corporation shall cease; the Surviving Corporation
shall possess all assets and property and every interest therein wherever
located, and the rights, privileges, immunities, powers, franchises, and
authority, of a public as well as a private nature, of all of the Constituent
Corporations; all obligations belonging to or due any of the Constituent
Corporations shall be vested in and become the obligations of the Surviving
Corporation without further act or deed; title to any real estate or any
interest therein vested in any of the Constituent Corporations shall be vested
in and become the obligations of the Surviving Corporation without further act
or deed; title to any real estate or interest therein shall not revert or in any
way be impaired by reason of the Merger; all rights of creditors and all liens
upon any property of the Constituent Corporations shall be preserved unimpaired;
and the Surviving Corporation shall be liable for all of the obligations of the
Constituent Corporations and any claim existing, or action or proceeding
pending, by or against any of the Constituent Corporations may be prosecuted to
judgment with right of appeal, as if the Merger had not taken place.
If at any time after the Effective Time of the Merger the Surviving
Corporation shall consider it to be advisable that any further conveyances,
agreements, documents, instruments, and assurances of law or any other things
are necessary or desirable to vest, perfect, confirm or record in the Surviving
Corporation the title to any property, rights, privileges, powers and franchises
of the Constituent Corporations or otherwise to carry out the provisions of this
Agreement, the proper directors and officers of the Constituent Corporations
last in office shall execute and deliver, upon the Surviving Corporation's
request, any and all proper conveyances, agreements, documents, instruments, and
assurances of law, and do all things necessary or proper to vest,
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perfect or confirm title to such property, rights, privileges, powers and title
to such property, rights, privileges, powers and franchises in the Surviving
Corporation, and otherwise to carry out the provisions of this Agreement.
ARTICLE VII
EFFECTIVE TIME OF THE MERGER
As used in this Agreement, the "Effective Time of the Merger" shall mean
February 29, 1996, at 7:00 p.m. Pacific Time.
ARTICLE VIII
TERMINATION
This Agreement may be terminated and the Merger abandoned by mutual consent
of the directors of the Constituent Corporations at any time prior to the
Effective Time of the Merger.
ARTICLE IX
NO THIRD PARTY BENEFICIARIES
Except as otherwise specifically provided herein, nothing express or
implied in this Agreement is intended, or shall be construed, to confer upon or
give any person, firm or corporation, other than the Constituent Corporations
and their respective shareholders, any rights or remedies under or by reason of
this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Plan and Agreement
of Merger to be executed as of the date first above written.
NEW UNIVAR CORPORATION
a Washington corporation
By ________________________________
James W. Bernard
President and CEO
ATTEST:
__________________________________
William A. Butler
Corporate Secretary
UNIVAR CORPORATION
a Delaware corporation
By ________________________________
James W. Bernard
President and CEO
ATTEST:
__________________________________
William A. Butler
Corporate Secretary
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APPENDIX B
ARTICLES OF INCORPORATION
OF
NEW UNIVAR CORPORATION
ARTICLE I
NAME
The name of the corporation (the "Corporation") is New Univar Corporation.
ARTICLE II
REGISTERED OFFICE AND AGENT
The address of the registered office of the Corporation is 520 Pike Street,
Seattle, Washington 98101, and the name of the registered agent at such address
is CT Corporation System.
ARTICLE III
PURPOSE
The purpose of the Corporation is to create the maximum continuing rate of
growth in shareholder value through long-term profit on invested capital and the
growth of that capital.
To accomplish this purpose, the Board of Directors, management, and
employees of the Corporation are expected to exercise appropriate business
judgment in discharging their responsibilities to the shareholders of the
Corporation. Without limiting the purpose and without limiting the scope of such
business judgment or modifying the legal duties and liabilities of the Board of
Directors, management, and employees, it is expected that they will strive to:
- Evaluate business opportunities with due consideration to the risks to be
undertaken;
- Develop and maintain strategic direction for all business segments;
- Develop and maintain superior management and organizational structures;
- Encourage employee involvement in the business process;
- Maintain a working environment in which employees are provided with
training, the opportunity for advancement and growth, and recognition for
their achievements;
- Promote an understanding in the market place of the intrinsic values so
created;
- Maintain a dynamic dividend policy that balances the current needs of the
shareholders with the needs of the Corporation to preserve a sound
financial condition as a foundation for long-term growth;
- Give appropriate consideration to the effects of any action upon
shareholders, employees, customers, suppliers, creditors, the community,
and other appropriate constituencies; and
- Conduct its business legally and ethically within the free enterprise
system as a responsible corporate citizen.
In carrying out this purpose, the Corporation is authorized to engage in
any lawful act or activity for which corporations may be organized under the
Washington Business Corporation Act, Title 23B of the Revised Code of Washington
(the "WBCA").
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ARTICLE IV
CAPITAL SHARES
4.1 Authorized Shares. The total number of capital shares which the
Corporation shall have authority to issue is 105,000,000 shares, which shall
consist of 100,000,000 common shares ("Common Shares") and 5,000,000 preferred
shares ("Preferred Shares"). Except as otherwise provided in accordance with
these Articles of Incorporation, the Common Shares shall have the unlimited
voting rights, with each share being entitled to one vote, and the rights to
receive the net assets of the Corporation upon dissolution, with each share
participating on a pro rata basis.
4.2 Issuance of Preferred Shares. The Board of Directors is hereby
authorized from time to time, without shareholder action, to provide for the
issuance of Preferred Shares in one or more series not exceeding in the
aggregate the number of Preferred Shares authorized by these Articles of
Incorporation, as amended from time to time; and to determine with respect to
each such series the voting powers, if any (which voting powers, if granted, may
be full or limited but shall in no event be greater than one vote per share),
designations, preferences, and relative, participating, option, or other special
rights, and the qualifications, limitations, or restrictions relating thereto,
including without limiting the generality of the foregoing, the voting rights
relating to Preferred Shares of any series (which shall not be greater than one
vote per share, which may vary over time, and which may be applicable generally
or only upon the happening and continuance of stated events or conditions); the
rate of dividend to which holders of Preferred Shares of any series may be
entitled (which may be cumulative or noncumulative); the rights of holders of
Preferred Shares of any series in the event of liquidation, dissolution, or
winding up of the affairs of the Corporation; the rights, if any, of holders of
Preferred Shares of any series to convert or exchange such Preferred Shares of
such series for shares of any other class or series of capital stock or for any
other securities, property, or assets of the Corporation or any subsidiary
(including the determination of the price or prices or the rate or rates
applicable to such rights to convert or exchange and the adjustment thereof, the
time or times during which the right to convert or exchange shall be applicable,
and the time or times during which a particular price or rate shall be
applicable); and whether or not the shares of that series shall be redeemable,
and if so, the terms and conditions of such redemption, including the date or
dates upon or after which they shall be redeemable, and the amount per share
payable in case of redemption, which amount may vary under different conditions
and at different redemption dates, and whether any shares of that series shall
be redeemed pursuant to a retirement or sinking fund or otherwise and the terms
and conditions of such obligation. A series of Voting Shares (as defined in
Article VI) may be given the right to elect one or more Directors only if the
series is approved in a resolution adopted by a majority of the Disinterested
Directors (as defined in Article VI).
4.3 Filings and Effectiveness. Before the Corporation shall issue any
Preferred Shares of any series, Articles of Amendment or Restated Articles of
Incorporation, fixing the voting powers, designations, preferences, the
relative, participating, option, or other rights, if any, and the
qualifications, limitations, and restrictions, if any, relating to the Preferred
Shares of such series, and the number of Preferred Shares of such series
authorized by the Board of Directors to be issued shall be filed with the
secretary of state in accordance with the WBCA and shall become effective
without any shareholder action. The Board of Directors is further authorized to
increase or decrease (but not below the number of such shares of such series
then outstanding) the number of shares of any series subsequent to the issuance
of shares of that series.
4.4 No Preemptive Rights. Shareholders of the Corporation have no
preemptive rights to acquire additional capital shares or securities convertible
into capital shares issued by the Corporation.
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ARTICLE V
SERIES A JUNIOR PARTICIPATING CONVERTIBLE PREFERRED SHARES
A series of Preferred Shares has been designated with the following
preferences, limitations and relative rights:
5.1 Designation And Amount. The shares of such series shall be designated
as "Series A Junior Participating Convertible Preferred Shares" (the "Series A
Preferred Shares") and the number of shares constituting the Series A Preferred
Shares shall be 105,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of Series A Preferred Shares to a number less than the number of
shares then outstanding plus the number of shares reserved for issuance upon the
exercise of any outstanding options, rights, or warrants.
5.2 Dividends And Distributions.
5.2.1 Subject to the prior and superior rights of the holders of any
series of Preferred Shares or any similar shares ranking prior and superior to
the Series A Preferred Shares with respect to dividends, the holders of Series A
Preferred Shares, in preference to the holders of any shares ranking junior to
the Series A Preferred Shares but on a parity with the holders of Common Shares,
shall be entitled to receive, when, as and if paid by the Corporation out of
funds legally available for the purpose, dividends or other distributions equal
to five (5) times the aggregate per share amount of all dividends or other
distributions paid with respect to the Common Shares, other than a dividend
payable in Common Shares or a subdivision of the outstanding Common Shares (by
reclassification or otherwise). In the event the Corporation shall at any time
declare or pay any dividend on the Common Shares payable in Common Shares, or
effect a subdivision or combination or consolidation of the outstanding Common
Shares (by reclassification or otherwise) into a greater or lesser number of
Common Shares, then in each such case the amount of such dividend or
distribution to which holders of Series A Preferred Shares were entitled
immediately prior to such event under the preceding sentence shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the number
of Common Shares outstanding immediately after such event and the denominator of
which is the number of Common Shares that were outstanding immediately prior to
such event.
5.2.2 The Corporation shall declare a dividend or distribution on the
Series A Preferred Shares as provided in Subsection 5.2.1 of this Section at the
same time it declares a dividend or distribution on the Common Shares (other
than a dividend payable in Common Shares).
5.2.3 The Board of Directors may fix a record date for the
determination of holders of Series A Preferred Shares entitled to receive
payment of a dividend or distribution declared thereon, which record date shall
be not more than sixty (60) days prior to the date fixed for the payment
thereof.
5.3 Voting. The Series A Preferred Shares shall not have any voting
powers, either general or special, except that the consent of the holders of at
least a majority of all of the Series A Preferred Shares at the time
outstanding, given in person or by proxy, shall be necessary for authorizing,
effecting or validating the amendment, alteration or repeal of any of the
provisions of the Articles of Incorporation or of any certificate amendatory
thereof or supplemental thereto (including any Articles of Amendment or any
similar document relating to any series of Preferred Shares) so as to affect
adversely the powers, preferences, or rights, of Series A Preferred Shares. An
increase of the authorized amount of Common Shares or the Preferred Shares, or
the creation or authorization of any shares of any other class of shares of the
Corporation ranking prior to or on a parity with the Series A Preferred Shares
as to dividends or upon liquidation, dissolution, or winding up, or the
reclassification of any authorized stock of the Corporation into any such prior
or parity shares, or the creation or authorization of any obligation or security
convertible into or evidencing the right to purchase any such prior or parity
shares shall not be deemed to affect adversely the powers, preferences, or
rights of Series A Preferred Shares.
5.4 Certain Restrictions. Whenever dividends or distributions payable on
the Series A Preferred Shares as provided in Section 5.2.2 are in arrears,
thereafter and until all accrued and unpaid dividends and
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distributions, whether or not declared, on Series A Preferred Shares outstanding
shall have been paid in full, the Corporation shall not:
5.4.1 declare or pay any dividends, or make any other distributions, on
any shares ranking junior (either as to dividends or upon liquidation,
dissolution, or winding up) to the Series A Preferred Shares;
5.4.2 declare or pay dividends, or make any other distributions, on any
shares ranking on a parity (either as to dividends or upon liquidation,
dissolution, or winding up) with the Series A Preferred Shares except dividends
paid ratably on the Series A Preferred Shares and all such parity shares on
which dividends are payable or in arrears in proportion to the total amounts to
which the holders of all such shares are then entitled; or
5.4.3 redeem or purchase or otherwise acquire for consideration shares
ranking junior (either as to dividends or upon liquidation, dissolution, or
winding up) to the Series A Preferred Shares, provided that the Corporation may
at any time redeem, purchase or otherwise acquire any such junior shares in
exchange for any shares of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series A
Preferred Shares.
5.5 Conversion. Each of the Series A Preferred Shares may be converted at
any time, at the option of the holder thereof, into Common Shares, on the terms
and conditions set forth below in this Section 5.5. Further, each of the Series
A Preferred Shares may be converted at any time after the expiration of three
years from the date of issuance of the Series A Preferred Shares, at the option
of the Corporation, into Common Shares, on the terms and conditions set forth
below in this Section 5.5.
5.5.1 Subject to the provisions for adjustment hereinafter set forth,
each of the Series A Preferred Shares shall be convertible at the option of the
holder thereof, or, as set forth in the preceding paragraph, at the option of
the Corporation, in the manner hereinafter set forth, into five (5) fully paid
and non assessable Common Shares.
5.5.2 The number of Common Shares into which each of the Series A
Preferred Shares is convertible as set forth in Subsection 5.5.1 shall be
adjusted from time to time as follows:
5.5.2.1 In case the Corporation shall at any time or from time to
time declare or pay any dividend on its Common Shares payable in its Common
Shares or effect a subdivision of the outstanding Common Shares into a greater
number of Common Shares (by reclassification or otherwise than payment of a
dividend in its Common Shares), then, and in each such case, the number of
Common Shares into which each of the Series A Preferred Shares is convertible
shall be adjusted so that the holder of each share thereof shall be entitled to
receive, upon the conversion thereof, the number of Common Shares determined by
multiplying (a) the number of Common Shares into which such share was
convertible immediately prior to the occurrence of such event by (b) a fraction,
the numerator of which is the sum of (i) the number of Common Shares into which
such shares was convertible immediately prior to the occurrence of such event
plus (ii) the number of Common Shares which such holder would have been entitled
to receive in connection with the occurrence of such event had such share been
converted immediately prior thereto, and the denominator of which is the number
of Common Shares into which such shares were convertible immediately prior to
the occurrence of such event. An adjustment made pursuant to this Subsection
5.5.2.1 shall become effective (a) in the case of any such dividend, immediately
after the close of business on the record date for the determination of holders
of Common Shares entitled to receive such dividend, or (b) in the case of any
such subdivision, at the close of business on the day immediately prior to the
day upon which such corporate action becomes effective;
5.5.2.2 In case the Corporation at any time or from time to time
shall combine or consolidate the outstanding Common Shares into a lesser number
of Common Shares, by reclassification or otherwise, then, and in each such case,
the number of Common Shares into which each of the Series A Preferred Shares is
convertible shall be adjusted so that the holder of each share thereof shall be
entitled to receive, upon the conversion thereof, the number of Common Shares
determined by multiplying (a) the number of Common Shares into which such share
was convertible immediately prior to the occurrence of such event by (b) a
fraction, the numerator of which is the number of shares which the holder would
have owned after giving
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effect to such event had such share been converted immediately prior to the
occurrence of such event and the denominator of which is the number of Common
Shares into which such share was convertible immediately prior to the occurrence
of such event. An adjustment made pursuant to this Subsection 5.5.2.2 shall
become effective at the close of business on the day immediately prior to the
day upon which such corporate action becomes effective; and
5.5.2.3 In case the Corporation at any time or from time to time
shall issue rights or warrants to all holders of its Common Shares entitling
them (for a period expiring within forty-five (45) calendar days after the date
of issuance) to subscribe for or purchase its Common Shares (or securities
convertible into its Common Shares) at a price per share (or having a conversion
price per share) less than the Current Market Price (as defined in Subsection
5.5.3 below) per share of Common Shares on the record date fixed for the
determination of shareholders entitled to receive such right or warrant, then,
and in each such case (unless the holders of the Series A Preferred Shares shall
be permitted to subscribe for or purchase Common Shares on the same basis as
though such Series A Preferred Shares had been converted into Common Shares
immediately prior to the close of business on such record date), the number of
Common Shares into which each of the Series A Preferred Shares is convertible
shall be adjusted so that the holder of each share thereof shall be entitled to
receive, upon the conversion thereof, the number of Common Shares determined by
multiplying (a) the number of Common Shares into which such share was
convertible immediately prior to such event by (b) a fraction, the numerator of
which shall be the sum of (i) the number of Common Shares outstanding on such
record date plus (ii) the number of additional Common Shares offered for
subscription or purchase, and the denominator of which shall be the sum of (i)
the number of Common Shares outstanding on such record date plus (ii) the number
of Common Shares which the aggregate consideration receivable by the Corporation
for the total number of Common Shares so offered would purchase at such Current
Market Price on such record date. For purposes of this Subsection 5.5.2.3, the
aggregate consideration receivable by the Corporation in connection with the
issuance of rights or warrants to subscribe for or purchase securities
convertible into Common Shares shall be deemed to be equal to the sum of the
aggregate offering price of such securities plus the minimum aggregate amount,
if any, payable upon conversion of such securities into Common Shares. An
adjustment made pursuant to this Subsection 5.5.2.3 shall be made upon the
issuance of any such rights or warrants and shall be effective retroactively
immediately after the close of business as of the record date fixed for the
determination of shareholders entitled to receive such rights or warrants. For
purposes of this Subsection 5.5.2.3, the granting of the right to purchase
Common Shares pursuant to any plan providing for the reinvestment of dividends
or interest payable on securities of the Corporation, and the investment of
additional optional amounts, in Common Shares, in any such case at a price per
share of not less than ninety-five percent (95%) of the current market price
(determined as provided in such plans) per Common Share, shall not be deemed to
constitute an issue of rights or warrants by the Corporation within the meaning
of this Subsection.
5.5.3 For purposes of this Article V, the definitions in this
Subsection 5.5.3 shall apply. The term "Current Market Price" shall mean, as
applied to any class of shares on any date, the average of the daily "Closing
Prices" (as hereinafter defined) for the twenty (20) consecutive "Trading Days"
(as hereinafter defined) immediately prior to the date in question; provided,
however, that in the event that the Current Market Price per Common Share is
determined during a period following the announcement by the Corporation of a
dividend or distribution on its Common Shares payable in its Common Shares or
securities convertible into its Common Shares, and prior to the expiration of
thirty (30) consecutive Trading Days after the ex-dividend date for such
dividend or distribution, then, and in each such case, the Current Market Price
shall be appropriately adjusted to reflect the Current Market Price per Common
Share equivalent. The term "Closing Price" on any day shall mean the last per
share sales price, regular way, of such shares on such day, or, if no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Common Shares are not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the such shares are listed or admitted to
trading or, if the such shares are not listed or admitted to trading on any
national securities exchange, as reported by the NASDAQ Stock Market. The term
"Trading Day" shall mean a day on which
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the principal national securities exchange on which such shares are listed or
admitted to trading is open for the transaction of business or, if such shares
are not listed or admitted to trading on any national securities exchange, a
Monday, Tuesday, Wednesday, Thursday or Friday on which banking institutions in
the Borough of Manhattan, City and State of New York, are not authorized or
obligated by law or executive order to close.
5.5.4 The holder of any Series A Preferred Shares may exercise his
option to convert such shares into Common Shares by surrendering for such
purpose to the Corporation, at its principal office or at such other office or
agency maintained by the Corporation for that purpose, a certificate or
certificates representing the Series A Preferred Shares to be converted
accompanied by a written notice stating that such holder elects to convert all
or a specified whole number of such shares in accordance with the provisions of
this Section 5.5. Such notice shall be accompanied by payment of all transfer
taxes payable upon the issuance of Common Shares, provided that in no event
shall a certificate of Common Shares be issued in contravention of Section 5.6
or any agreement between the Corporation and the holder. As promptly as
practicable, and in any event within five (5) business days after the surrender
of such certificates and the receipt of such notice relating thereto and, if
applicable, payment of all transfer taxes, the Corporation shall deliver or
cause to be delivered (i) certificates representing the number of validly
issued, fully paid and non assessable Common Shares to which the holder of the
Series A Preferred Shares so converted shall be entitled and (ii) if less than
the full number of Series A Preferred Shares evidenced by the surrendered
certificate or certificates being converted, a new certificate or certificates,
of like tenor, for the number of shares evidenced by such surrendered
certificate or certificates less the number of shares converted. Such
conversions shall be deemed to have been made at the close of business on the
date of giving of such notice and of such surrender of the certificate or
certificates representing the Series A Preferred Shares to be converted so that
the rights of the holder thereof shall cease except for the right to receive
Common Shares in accordance herewith, and the converting holder shall be treated
for all purposes as having become the record holder of such Common Shares at
such time.
5.5.5 Upon conversion of any Series A Preferred Shares, the holder
thereof, after such conversion, shall not be entitled to receive any
accumulated, accrued or unpaid dividends in respect of the shares so converted,
provided that such holder shall be entitled to receive any dividends on such
Series A Preferred Shares declared prior to such conversion if such holder held
such shares on the record date fixed for the determination of holders of the
Series A Preferred Shares entitled to receive payment of such dividend.
5.5.6 In connection with the conversion of any Series A Preferred
Shares, no fractions of Common Shares shall be issued, but the Corporation shall
pay a cash adjustment in respect of such fractional interest in an amount equal
to the market value of such fractional interest. In such event, the market value
of a Common Share shall be the Closing Price of such shares on the last business
day on which such shares were traded immediately preceding the date upon which
such Series A Shares are deemed to have been converted.
5.5.7 The Corporation shall at all times reserve and keep available out
of its authorized Common Shares the full number of Common Shares issuable upon
the conversion of all outstanding Series A Preferred Shares.
5.6 Restrictions on Transfer. NO SERIES A PREFERRED SHARES SHALL BE SOLD,
ASSIGNED, ALIENATED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF
WITHOUT THE EXPRESS WRITTEN CONSENT OF THE CORPORATION. THE HOLDER, IN ACCEPTING
SERIES A PREFERRED SHARES, ACKNOWLEDGES THAT CONVERSION PURSUANT TO SECTION 5.5
IS A PREREQUISITE TO ANY TRANSFER OF ANY BENEFICIAL INTEREST IN SUCH SHARES.
EACH CERTIFICATE OF SERIES A PREFERRED SHARES SHALL BEAR A LEGEND SETTING FORTH
THIS RESTRICTION.
5.7 Reacquired Shares. Any Series A Preferred Shares purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired
and canceled promptly after the acquisition thereof. The Corporation shall cause
all such shares upon their cancellation to become authorized but unissued
Preferred Shares which may be reissued as part of a new series of Preferred
Shares subject to the conditions and restrictions on issuance set forth herein,
in any resolution or Articles of Amendment establishing a series of Preferred
Shares or any similar shares, or as otherwise required by law.
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5.8 Liquidation, Dissolution, or Winding Up. Upon any liquidation,
dissolution, or winding up of the Corporation, the Series A Preferred Shares
shall not be entitled to any preference over the Corporation's Common Shares
with respect to distributions of the assets of the Corporation.
5.9 Consolidation, Merger, Etc. In case the Corporation shall enter into
any consolidation, merger, combination, or other transaction in which the Common
Shares are exchanged for or changed into other stock or securities, cash and/or
any other property payable in kind, then in any such case, each Series A
Preferred Share shall at the same time be similarly exchanged or changed into an
amount per share, subject to the provision for adjustment hereinafter set forth,
equal to five (5) times the aggregate amount of shares, securities, cash, and/or
any other property (payable in kind), as the case may be, into which or for
which each Common Share is changed or exchanged. In the event the Corporation
shall at any time declare or pay any dividend on the Common Shares payable in
Common Shares, or effect a subdivision or combination or consolidation of the
outstanding Common Shares (by reclassification or otherwise than by payment of a
dividend in Common Shares) into a greater or lesser number of Common Shares,
then in each such case the amount set forth in the preceding sentence with
respect to the exchange or change of Series A Preferred Shares shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the number
of Common Shares outstanding immediately after such event and the denominator of
which is the number of Common Shares that were outstanding immediately prior to
such event.
5.10 Redemption. The Series A Preferred Shares may be redeemed in whole or
in part by the Corporation at any time after issuance for an amount equal to the
issue price, plus any accrued and unpaid dividends.
5.11 Rank. The Series A Preferred Shares shall rank junior with respect to
the payment of dividends and the distribution of assets to all series of the
Corporation's Preferred Shares or any similar shares that specifically provide
that they shall rank prior to the Series A Preferred Shares. Nothing herein
shall preclude the Board from creating any series of Preferred Shares or any
similar shares ranking on a parity with or prior to the Series A Preferred
Shares as to the payment of dividends or the distribution of assets upon
liquidation, dissolution, or winding up.
ARTICLE VI
CERTAIN DEFINITIONS; INTERPRETATION
6.1 Definitions. For purposes of Articles VI through XIII, the following
defined terms shall have the meanings set forth below. All references in these
Articles to statutes, rules or regulations shall include a reference to said
statutes, rules or regulations as currently in effect or hereafter amended.
6.1.1 "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the Securities Exchange Act of 1934.
6.1.2 "Beneficial Owner" and correlative terms shall have the meanings
ascribed to them in Rule 13d-3 and related interpretive releases promulgated and
issued under the Securities Exchange Act of 1934. Without limitation, any Voting
Shares which any Twenty Percent Shareholder has the right to vote or to acquire
pursuant to any agreement, or upon exercise of conversion rights, warrants or
options, or otherwise, shall be deemed "Beneficially Owned" by such Twenty
Percent Shareholder.
A person shall be a "Beneficial Owner" of any Voting Shares:
(1) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; or
(2) which such person or any of its Affiliates or Associates has (a)
the right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (b) the right to vote pursuant to any
agreement, arrangement, or understanding; or
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(3) which are beneficially owned, directly or indirectly, by any other
person with which such person or any of its Affiliates or Associates has
any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any Voting Shares.
6.1.3 "Board of Directors" or the "Board" means the group of
individuals elected by the shareholders as Directors of the Corporation or
appointed by the Directors to fill a vacancy on the Board.
6.1.4 "Continuing Director" shall mean, with respect to any proposed
Major Transaction, a Director who was a member of the Board of Directors
immediately prior to the time that any Twenty Percent Shareholder involved in
the proposed Major Transaction acquired twenty percent (20%) or more of the
outstanding Voting Shares.
6.1.5 "Disinterested Director" means any member of the Board of
Directors who is unaffiliated with any Five Percent Shareholder and/or Forty
Percent Shareholder and was a member of the Board prior to the time that any
Five Percent Shareholder or Forty Percent Shareholder became a Five Percent
Shareholder or Forty Percent Shareholder, and any successor of a Disinterested
Director who is unaffiliated with any Five Percent Shareholder or Forty Percent
Shareholder and is recommended to succeed a Disinterested Director by a majority
of Disinterested Directors then on the Board.
6.1.6 "Fair Market Value" means (i) in the case of shares, the Market
Price, and (ii) in the case of property other than cash or shares, the fair
market value of such property on the date in question as determined by the Board
in good faith.
6.1.7 "Five Percent Shareholder" shall mean any person (other than the
Corporation or any Subsidiary) who or which:
6.1.7.1 is the Beneficial Owner, directly or indirectly, of five
percent (5%) or more of the voting power of the outstanding Voting Shares; or
6.1.7.2 is an Affiliate of the Corporation and at any time within
the two-year period immediately prior to the date in question was the Beneficial
Owner, directly or indirectly, of five percent (5%) or more of the voting power
of the then outstanding Voting Shares; or
6.1.7.3 is an assignee of or has otherwise succeeded to any Voting
shares which were, at any time within the two-year period immediately prior to
the date in question, beneficially owned by any Five Percent Shareholder, if
such assignment or succession shall have occurred in the course of a transaction
or series of transactions not involving a public offering within the meaning of
the Securities Act of 1933.
6.1.8 "Forty Percent Shareholder" shall mean any person (other than the
Corporation or any Subsidiary) who or which:
6.1.8.1 is the Beneficial Owner, directly or indirectly, of forty
percent (40%) or more of the voting power of the outstanding Voting Shares; or
6.1.8.2 is an Affiliate of the Corporation and at anytime within the
two-year period immediately prior to the date in question was the Beneficial
Owner, directly or indirectly, of forty percent (40%) or more of the voting
power of the then outstanding Voting Shares; or
6.1.8.3 is an assignee of or has otherwise succeeded to any Voting
Shares which were at any time within the two-year period immediately prior to
the date in question beneficially owned by any Forty Percent Shareholder, if
such assignment or succession shall have occurred in the course of a transaction
or series of transactions not involving a public offering within the meaning of
the Securities Act of 1933.
6.1.9 "Major Transaction" shall mean (1) any merger or consolidation of
the Corporation or a Subsidiary with or into a Twenty Percent Shareholder, (2)
any sale, lease, exchange, transfer or other disposition, including without
limitation a mortgage or other security device, of all or any Substantial Part
of the assets of the Corporation (including without limitation any securities of
a Subsidiary) or of a Subsidiary, to a Twenty Percent Shareholder, (3) any
merger or consolidation of a Twenty Percent Shareholder with or into the
Corporation or a Subsidiary, (4) any sale, lease, exchange, transfer, or other
disposition of all or any
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Substantial Part of the assets of a Twenty Percent Shareholder to the
Corporation or a Subsidiary, (5) the issuance of any securities of the
Corporation or a Subsidiary to a Twenty Percent Shareholder, (6) the acquisition
by the Corporation or a Subsidiary of any securities of a Twenty Percent
Shareholder, (7) any reclassification of Voting Shares, or any recapitalization
involving Voting Shares, proposed by a Twenty Percent Shareholder within five
years after such Twenty Percent Shareholder became a Twenty Percent Shareholder,
(8) any loan or other extension of credit by the Corporation or a Subsidiary to
a Twenty Percent Shareholder or any guarantees by the Corporation or a
Subsidiary of any loan or other extension of credit by any person to a Twenty
Percent Shareholder, and (9) any agreement, contract or other arrangement
providing for any of the transactions described in this definition of Major
Transaction.
6.1.10 "Market Price" means: the last closing sale price immediately
preceding the time in question of a share of the stock in question on the
Composite Tape for New York Stock Exchange-listed stocks, or, if such stock is
not quoted on the Composite Tape, on the New York Stock Exchange, or, if such
stock is not listed on such Exchange, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934 on which such
stock is listed, or, if such stock is not listed on any such exchange, the last
closing bid quotation with respect to a share of such stock immediately
preceding the time in question on the NASDAQ Stock Market or any system then in
use (or any other system of reporting or ascertaining quotations then
available), or if such stock is not so quoted, the fair market value at the time
in question of a share of such stock as determined by the Board in good faith.
6.1.11 "Other consideration to be received" shall, for the purposes of
Section 7.1.4.1, include without limitation Voting Shares retained by its
existing public shareholders in the event of a Major Transaction which is a
merger or consolidation in which the Corporation is the surviving corporation.
6.1.12 "Outside Director" shall mean, with respect to any proposed
Major Transaction, a Director who is not (1) an officer or employee of the
Corporation or of any Subsidiary or any relative of an officer or employee, (2)
a Twenty Percent Shareholder or an officer, Director or employee, Associate or
Affiliate of a Twenty Percent Shareholder, or a relative of any of the
foregoing, or (3) a person having a direct or indirect material business
relationship with the Corporation or any Subsidiary.
6.1.13 "Subsidiary" means any corporation or other entity of which a
majority of any class of equity security is beneficially owned, directly or
indirectly, by the Corporation; provided, however, that for the purposes of the
definitions of Five Percent Shareholder and Forty Percent Shareholder set forth
in Subsections 6.1.7 and 6.1.8, the term "Subsidiary" shall mean only a
corporation of which a majority of the voting power of the capital shares
entitled to vote generally in the election of Directors is owned, directly or
indirectly, by the Corporation.
6.1.14 "Substantial Part" shall mean more than ten percent (10%) of the
total assets of the person or entity in question, as of the end of its most
recent fiscal year ending prior to the time the determination is being made.
6.1.15 "Twenty Percent Shareholder" shall mean any individual,
corporation, partnership, or other person or entity and each member of any
"person" as such term is defined in Section 13(d)(3) of the Securities Exchange
Act of 1934 which, together with its Affiliates and Associates, or other members
of such "person" and any other person or entity with which it or its Affiliates
or Associates has any agreement, arrangement, or understanding, directly or
indirectly, for the purpose of acquiring, holding, voting or disposing of Voting
Shares, is the Beneficial Owner of twenty percent (20%) or more in the aggregate
of the outstanding Voting Shares, and any Affiliate, Associate or member of such
"person," or any such other persons or entities.
6.1.16 "Voting Shares" shall mean all Common Shares and any other
shares entitled to vote for the election of Directors as of the date on which a
determination of Voting Shares is being made under these Articles of
Incorporation.
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6.2 Interpretation. In making interpretations under the provisions of
Articles VI through XIII of these Articles, the following paragraphs shall
apply:
6.2.1 For the purposes of determining whether a person is a Five
Percent Shareholder, a Forty Percent Shareholder, or a Twenty Percent
Shareholder, pursuant to Subsections 6.1.7, 6.1.8, and 6.1.15, respectively, the
number of Voting Shares deemed to be outstanding shall include shares deemed
owned through application of Subsection 6.1.2, but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or options, or
otherwise.
6.2.2 The Board of Directors shall have the power and duty to determine
for the purposes of this Article VI, on the basis of information known to the
Corporation, whether (a) any corporation, person or other entity "Beneficially
Owns," directly or indirectly, more than twenty percent (20%) of the Voting
Shares, (b) any corporation, person or other entity is an Affiliate or Associate
of another and (c) any proposed sale, lease, exchange or other disposition of
part of the assets of the Corporation or any of its Affiliates involves a
Substantial Part of the assets of the Corporation or such Affiliate, provided
that assets involved in any single transaction or series of related transactions
having an aggregate Fair Market Value of more than fifteen percent (15%) of the
total consolidated assets of the Corporation and its Affiliates shall always be
deemed to constitute a "Substantial Part" for purposes of this Article VI. Any
such determination made in good faith shall be conclusive and binding for all
purposes of this Article VI.
ARTICLE VII
HIGHER THAN MAJORITY VOTE OF SHAREHOLDERS
REQUIRED IN THE EVENT OF CERTAIN TRANSACTIONS
7.1 Restrictions on Major Transactions. Subject to the provisions of any
series of Preferred Shares which may at the time be outstanding, any Major
Transaction shall require the affirmative vote of the holders of not less than
eighty percent (80%) of the outstanding Voting Shares, which shall include the
affirmative vote of at least fifty percent (50%) of the outstanding Voting
Shares held by shareholders other than the Twenty Percent Shareholder involved
in such Major Transaction; provided, however, that such voting requirement shall
not be applicable if:
7.1.1 The Major Transaction was approved by the Board either (i) prior
to the Twenty Percent Shareholder involved in the Major Transaction having
become a Twenty Percent Shareholder, or (ii) after such Twenty Percent
Shareholder became such but only if the Twenty Percent Shareholder has sought
and obtained the unanimous approval by the Board of such Twenty Percent
Shareholder's acquisition of twenty percent (20%) or more of the outstanding
Voting Shares prior to such acquisition being consummated; or
7.1.2 The Major Transaction involves solely the Corporation and a
Subsidiary none of whose stock is Beneficially Owned by a Twenty Percent
Shareholder (other than Beneficial Ownership arising solely because of control
of the Corporation); provided that each shareholder of the Corporation receives
the same type of consideration in such transaction in proportion to his share
holdings; or
7.1.3 Prior to becoming a Twenty Percent Shareholder, such Twenty
Percent Shareholder made a tender offer for Voting Shares which (i) conformed in
all respects to federal laws and regulations governing such a transaction
whether or not the Corporation or such shares were then regulated by or
registered under said laws, (ii) committed such Twenty Percent Shareholder to
take all shares tendered if it took any shares, and (iii) resulted in such
Twenty Percent Shareholder acquiring at least seventy-five percent (75%) of the
shares of each class of Voting Shares held by persons other than such Twenty
Percent Shareholder; or
7.1.4 All the following conditions are satisfied:
7.1.4.1 The cash or Fair Market Value of the property, securities or
"other consideration" to be received per share (as adjusted for stock splits,
stock dividends, reclassification of shares into a lesser number, and similar
events) by holders of Common Shares in the Major Transaction is not less than
the higher of (i) the highest per share price (including brokerage commissions,
soliciting dealer's fees, dealer-
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management compensation, and other expenses, including, but not limited to,
costs of newspaper advertisements, printing expenses and attorneys' fees, paid
by such Twenty Percent Shareholder in acquiring any of its holdings of the
Common Shares or (ii) an amount which bears the same or a greater percentage
relationship to the Market Price of the Common Shares immediately prior to the
announcement of such Major Transaction as the highest per share price determined
in (i) above bears to the Market Price of the Common Shares immediately prior to
the commencement of acquisition of the Common Shares by such Twenty Percent
Shareholder; and
7.1.4.2 After becoming a Twenty Percent Shareholder and prior to the
consummation of such Major Transaction, (i) such Twenty Percent Shareholder
shall not have acquired any shares directly or indirectly, from the Corporation
or a Subsidiary (except upon conversion of convertible securities acquired by it
prior to becoming a Twenty Percent Shareholder or upon compliance with the
provisions of this Article VII or as a result of a pro rata stock dividend or
stock split) and (ii) such Twenty Percent Shareholder shall not have received
the benefit, directly or indirectly (except proportionately as a shareholder),
of any loans, advances, guarantees, pledges or other financial assistance or tax
credits provided by the Corporation or a Subsidiary, or made any major changes
in the Corporation's business or equity capital structure without the unanimous
vote of the members of the Board then in office; and
7.1.4.3 A proxy statement responsive to the requirements of the
Securities Exchange Act of 1934, whether or not the Corporation is then subject
to such requirements, shall be mailed to all shareholders of the Corporation for
the purpose of soliciting shareholder approval of such Major Transaction and
shall contain at the front thereof, in a prominent place any recommendations as
to the advisability (or inadvisability) of the Major Transaction which the
Continuing Directors, or any Outside Directors, may choose to state.
7.2 Clarification. Nothing contained in this Article VII shall be
construed to relieve any Twenty Percent Shareholder from any fiduciary
obligation imposed by law.
ARTICLE VIII
RESTRICTIONS ON SHARE REPURCHASES AND
OTHER TRANSACTIONS
8.1 Restrictions on Share Repurchase. Any purchase by the Corporation of
Voting Shares from a Five Percent Shareholder, other than pursuant to an offer
to the holders of all of the outstanding shares of the same class of Voting
Shares as those so purchased, at a per share price in excess of the Market
Price, at the time of such purchase of the shares so purchased, shall require
the affirmative vote of the holders of that amount of the voting power of the
Voting Shares equal to the sum of (i) the voting power of the Voting Shares of
which the Five Percent Shareholder is the Beneficial Owner and (ii) a majority
of the voting power of the remaining outstanding Voting Shares, voting together
as a single class.
8.2 Other Transactions. In addition to any affirmative vote required by
law or these Articles of Incorporation:
8.2.1 any merger or consolidation of the Corporation or any Subsidiary
with (1) any Five Percent Shareholder or (2) any other corporation (whether or
not itself a Five Percent Shareholder) which is, or after such merger or
consolidation would be, an Affiliate of a Five Percent Shareholder; or
8.2.2 any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with any Five
Percent Shareholder or any Affiliate of any Five Percent Shareholder of any
assets of the Corporation or any Subsidiary having an aggregate Fair Market
Value of $2,000,000 or more; or
8.2.3 the issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of transactions) of any securities of the
Corporation or any Subsidiary having an aggregate Fair Market Value of
$2,000,000 or more to any Five Percent Shareholder or any Affiliate of any Five
Percent Shareholder in exchange for cash, securities or other property (or a
combination thereof); or
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8.2.4 the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of a Five Percent
Shareholder or any Affiliate of any Five Percent Shareholder; or
8.2.5 any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or consolidation
of the Corporation with any Subsidiary or any other transaction (whether or not
with or into or otherwise involving a Five Percent Shareholder) which has the
effect, directly or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly owned by any Five
Percent Shareholder or any Affiliate of any Five Percent Shareholder;
shall require either (a) the approval of a majority of the Disinterested
Directors or (b) the affirmative vote of the holders of that amount of voting
power of the Voting Shares equal to the sum of (1) the voting power of the
Voting Shares of which the Five Percent Shareholder is the beneficial owner and
(2) a majority of the voting power of the remaining outstanding Voting Shares,
voting together as a single class; provided, however, that no such vote shall be
required for (i) the purchase by the Corporation of Voting Shares from a Five
Percent Shareholder unless such vote is required by Section 8.1 of this Article
VIII, (ii) any transaction with a Five Percent Shareholder who is also a Twenty
Percent Shareholder as defined in Article VI and to which the provisions of
Article VII apply and are complied with, or (iii) any transaction with a Five
Percent Shareholder who has Beneficially Owned all his Voting Shares for two
years or more.
8.3 Forty Percent Shareholder and Cumulative Voting. At any election of
Directors of the Corporation on or after the date on which any Forty Percent
Shareholder becomes a Forty Percent Shareholder, and until such time as there is
no longer any Forty Percent Shareholder, there shall be cumulative voting for
election of Directors so that any holder of Voting Shares entitled to vote in
such election shall be entitled to as many votes as shall equal the number of
Directors to be elected multiplied by the number of votes to which such
shareholder's shares would be entitled except for the provisions of this Section
8.3, and such shareholder may cast all of such votes for a single Director, or
distribute such votes among as many candidates as such shareholder sees fit. In
any such election of Directors, one or more candidates for the Board may be
nominated by a majority of the Disinterested Directors and by any person who is
the Beneficial Owner of one percent (1%) or more of the outstanding Voting
Shares. With respect to any candidates nominated by a majority of the
Disinterested Directors or by any person who is the Beneficial Owner of one
percent (1%) or more of the outstanding Voting Shares, there shall be included
in any proxy statement or other communication with respect to such election to
be sent to holders of Voting Shares by the Corporation during the period in
which there is a Forty Percent Shareholder, at the expense of the Corporation,
descriptions and other statements of or with respect to such candidates
submitted by them or on their behalf, which shall receive equal space, coverage
and treatment as is received by candidates nominated by the Board or management
of the Corporation provided that such information is received on a timely basis
and complies with applicable federal and state securities laws.
8.4 Duties of Five Percent Shareholder. It shall be the duty of any Five
Percent Shareholder:
8.4.1 to give or cause to be given written notice to the Corporation,
immediately upon becoming a Five Percent Shareholder, of such person's status as
a Five Percent Shareholder and of such other information as the Corporation may
reasonably require with respect to identifying all owners and amount of
ownership of the outstanding Voting Shares of which such Five Percent
Shareholder is a Beneficial Owner, and
8.4.2 to notify the Corporation promptly in writing of any change in
the information provided in Subsection 8.4.1; provided, however, that the
failure of a Five Percent Shareholder to comply with the provisions of this
Section 8.4 shall not in any way be construed to prevent the Corporation from
enforcing the provisions of Sections 8.1 through 8.3 of this Article VIII.
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ARTICLE IX
MERGERS, SHARE EXCHANGES, AND OTHER TRANSACTIONS
Except as otherwise expressly provided in these Articles of Incorporation,
a merger, share exchange, sale of substantially all of the Corporation's assets,
or dissolution must be approved by the affirmative vote of a majority of the
Corporation's outstanding shares entitled to vote, or if separate voting by
voting groups is required, then by not less than a majority of all the votes
entitled to be cast by that voting group.
ARTICLE X
DIRECTORS
10.1 Number. The number of Directors of the Corporation shall be fixed in
the manner specified by the Bylaws of the Corporation, provided that the number
of Directors shall not be less than nine (9).
10.2 Classes. The Board of Directors shall be divided into three classes,
with each class to be as equal in number as may be possible. A Director's basic
term shall be three years, but initially the term of the Directors in the first
class shall expire at the first annual shareholders' meeting after the filing of
these Articles, the term of Directors in the second class shall expire at the
second annual shareholders' meeting after the filing of these Articles, and the
term of Directors in the third class shall expire at the third annual
shareholders' meeting after the filing of these Articles.
10.3 Vacancies. Vacancies and newly created directorships resulting from
any increase in the authorized number of Directors shall be filled only by a
majority of the Directors then in office, although less than a quorum, or by a
sole remaining Director, unless for any reason there are no Directors in office
in which case they shall be filled by a special election by shareholders. The
term of a Director elected to fill a vacancy expires at the next shareholders'
meeting at which Directors are elected.
10.4 Cumulative Voting. Except as otherwise provided in these Articles,
shareholders of the Corporation shall not have the right to cumulate votes in
the election of Directors.
10.5 Removal of Directors. At a meeting of shareholders called expressly
for that purpose, any Director, any class of Directors, or the entire Board of
Directors may be removed from office as a Director at any time (a) for cause by
the affirmative vote at a duly called meeting of shareholders of at least eighty
percent (80%) of the votes which all shareholders would be entitled to cast at
an annual election of the director or directors, provided that if cumulative
voting is then in effect, then a Director may not be removed if the number of
votes sufficient to elect such Director is voted against the Director's removal,
or (b) without cause by the affirmative vote which satisfies the requirements of
Article XIII applicable to an amendment, modification, or repeal of certain of
these Articles.
ARTICLE XI
AMENDMENT OF BYLAWS
In furtherance and not in limitation of the powers conferred by the WBCA,
the Board of Directors is expressly authorized to make, adopt, repeal, alter,
amend, and rescind the Bylaws of the Corporation by a resolution adopted by a
majority of the Directors. The shareholders shall also have the power to adopt,
amend or repeal the Bylaws of the Corporation by the affirmative vote which
satisfies the requirements of Article XIII applicable to an amendment,
modification, or repeal of certain of these Articles.
ARTICLE XII
SPECIAL SHAREHOLDER MEETINGS
Special meetings of the shareholders of the Corporation for any purpose or
purposes may be called at any time by the Board of Directors or an authorized
committee of the Board of Directors, but such special meetings may not be called
by any other person or persons.
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ARTICLE XIII
RESTRICTIONS ON CERTAIN AMENDMENTS
The provisions set forth in this Article XIII and in Articles III, VI,
VII,VIII, X and XII herein may not be repealed or amended in any respect, unless
such action is approved by the affirmative vote of the holders of not less than
eighty percent (80%) of the outstanding Voting Shares, subject to the provisions
of any series of Preferred Shares which may at the time be outstanding,
provided, however, that if there is a shareholder of the Corporation which is a
Twenty Percent Shareholder, such eighty percent (80%) vote must include the
affirmative vote of at least fifty percent (50%) of the outstanding Voting
Shares held by shareholders other than the Twenty Percent Shareholder.
ARTICLE XIV
LIMITATION OF DIRECTOR LIABILITY
A Director of the Corporation shall not be personally liable to the
Corporation or its shareholders for monetary damages for conduct as a Director,
except for:
(a) Acts or omissions involving intentional misconduct by the Director or a
knowing violation of law by the Director;
(b) Conduct violating Section 23B.08.310 of the WBCA (which involves
distributions by the Corporation); or
(c) Any transaction from which the Director will personally receive a
benefit in money, property, or services to which the Director is not
legally entitled.
If the WBCA is amended to authorize corporate action further eliminating or
limiting the personal liability of Directors, then the liability of a Director
of the Corporation shall be eliminated or limited to the fullest extent not
prohibited by the WBCA, as so amended. The provisions of this Article shall be
deemed to be a contract with each Director of the Corporation who serves as such
at any time while such provisions are in effect, and each such Director shall be
deemed to be serving as such in reliance on the provisions of this Article. Any
repeal or modification of this paragraph by the shareholders of the Corporation
shall not adversely affect any right or protection of a Director of the
Corporation with respect to any acts or omissions of such Director occurring
prior to such repeal or modification.
ARTICLE XV
INDEMNIFICATION
15.1 Definitions. As used in this Article:
15.1.1 "Agent" means an individual who is or was an agent of the
Corporation or an individual who, while an agent of the Corporation, is or was
serving at the Corporation's request as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, employee benefit plan, or other enterprise. "Agent"
includes, unless the context requires otherwise, the spouse, heirs, estate and
personal representative of an agent.
15.1.2 "Corporation" means the Corporation, its Subsidiaries, and any
domestic or foreign predecessor entity which, in a merger or other transaction,
ceased to exist.
15.1.3 "Director" means an individual who is or was a Director of the
Corporation or an individual who, while a Director of the Corporation, is or was
serving at the Corporation's request as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise. "Director"
includes, unless the context requires otherwise, the spouse, heirs, estate, and
personal representative of a Director.
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15.1.4 "Employee" means an individual who is or was an employee of the
Corporation or an individual, while an employee of the Corporation, is or was
serving at the Corporation's request as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, employee benefit plan, or other enterprise. "Employee"
includes, unless the context requires otherwise, the spouse, heirs, estate, and
personal representative of an employee.
15.1.5 "Expenses" include counsel fees.
15.1.6 "Indemnitee" means an individual made a party to a Proceeding
because the individual is or was a Director, Officer, Employee, or Agent of the
Corporation, and who possesses indemnification rights pursuant to these Articles
or other corporate action. "Indemnitee" includes, unless the context requires
otherwise, the spouse, heirs, estate, and personal representative of such
individuals.
15.1.7 "Liability" means the obligation to pay a judgment, settlement,
penalty, fine, including an excise tax with respect to an employee benefit plan,
or reasonable Expenses incurred with respect to a Proceeding.
15.1.8 "Officer" means an individual who is or was an officer of the
Corporation (regardless of whether or not such individual was also a Director)
or an individual who, while an officer of the Corporation, is or was serving at
the Corporation's request as a director, officer, partner, trustee, employee, or
agent of another foreign or domestic corporation, partnership, joint venture,
trust, employee benefit plan, or other enterprise. "Officer" includes, unless
the context requires otherwise, the spouse, heirs, estate, and personal
representative of an officer.
15.1.9 "Party" includes an individual who was, is, or is threatened to
be named a defendant, respondent, or witness in a Proceeding.
15.1.10 "Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, derivative, criminal,
administrative, or investigative, and whether formal or informal.
15.1.11 "Subsidiary" means any corporation or other entity that is
wholly owned by the Corporation, directly or indirectly, and any other entities
that are specifically designated as "Subsidiaries" for purposes of this Article
by the Board of Directors.
15.2 Indemnification Rights of Directors and Officers. The Corporation
shall indemnify its Directors and Officers to the full extent not prohibited by
applicable law now or hereafter in force against liability arising out of a
Proceeding to which such individual was made a Party because the individual is
or was a Director or an Officer. However, such indemnity shall not apply on
account of:
(a) Acts or omissions of a Director or Officer finally adjudged to be
intentional misconduct or a knowing violation of law;
(b) Conduct of a Director or Officer finally adjudged to be in
violation of Section 23B.08.310 of the WBCA relating to distributions by
the Corporation; or
(c) Any transaction with respect to which it was finally adjudged
that such Director or Officer personally received a benefit in money,
property, or services to which the Director or Officer was not legally
entitled.
Subject to the foregoing, it is specifically intended that Proceedings
covered by indemnification shall include Proceedings brought by the Corporation
(including derivative actions), Proceedings by government entities and
governmental officials, or other third party actions.
15.3 Indemnification of Employees and Agents of the Corporation. The
Corporation may, by action of its Board of Directors from time to time, provide
indemnification and pay Expenses in advance of the final disposition of a
Proceeding to Employees and Agents of the Corporation who are not also
Directors, in each case to the same extent as to a Director with respect to the
indemnification and advancement of Expenses pursuant to rights granted under, or
provided by, the WBCA or otherwise.
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15.4 Partial Indemnification. If an Indemnitee is entitled to
indemnification by the Corporation for some or a portion of Expenses,
liabilities, or losses actually and reasonably incurred by Indemnitee in an
investigation, defense, appeal or settlement but not, however, for the total
amount thereof, the Corporation shall nevertheless indemnify Indemnitee for the
portion of such Expenses, liabilities or losses to which Indemnitee is entitled.
15.5 Procedure for Seeking Indemnification and/or Advancement of
Expenses. The following procedures shall apply in the absence of (or at the
option of the Indemnitee, in lieu thereof) specific procedures otherwise
applicable to an Indemnitee pursuant to a contract, trust agreement, or general
or specific action of the Board of Directors:
15.5.1 Notification and Defense of Claim. Indemnitee shall promptly
notify the Corporation in writing of any Proceeding for which indemnification
could be sought under this Article. In addition, Indemnitee shall give the
Corporation such information and cooperation as it may reasonably require and as
shall be within Indemnitee's power.
With respect to any such Proceeding as to which Indemnitee has notified the
Corporation:
(a) The Corporation will be entitled to participate therein at its own
expense; and
(b) Except as otherwise provided below, to the extent that it may wish,
the Corporation, jointly with any other indemnifying party similarly notified,
will be entitled to assume the defense thereof, with counsel satisfactory to
Indemnitee. Indemnitee's consent to such counsel may not be unreasonably
withheld.
After notice from the Corporation to Indemnitee of its election to
assume the defense, the Corporation will not be liable to Indemnitee under this
Article for any legal or other Expenses subsequently incurred by Indemnitee in
connection with such defense. However, Indemnitee shall continue to have the
right to employ its counsel in such Proceeding, at Indemnitee's expense; and if:
(i) The employment of counsel by Indemnitee has been authorized by
the Corporation;
(ii) Indemnitee shall have reasonably concluded that there may be
a conflict of interest between the Corporation and Indemnitee in the
conduct of such defense; or
(iii) The Corporation shall not in fact have employed counsel to
assume the defense of such Proceeding,
the fees and Expenses of Indemnitee's counsel shall be at the expense of the
Corporation.
The Corporation shall not be entitled to assume the defense of any
Proceeding brought by or on behalf of the Corporation or as to which Indemnitee
shall reasonably have made the conclusion that a conflict of interest may exist
between the Corporation and the Indemnitee in the conduct of the defense.
15.5.2 Information to be Submitted and Method of Determination and
Authorization of Indemnification. For the purpose of pursuing rights to
indemnification under this Article, the Indemnitee shall submit to the Board a
sworn statement requesting indemnification and reasonable evidence of all
amounts for which such indemnification is requested. Together, the sworn
statement and the evidence constitute an "Indemnification Statement."
Submission of an Indemnification Statement to the Board shall create a
presumption that the Indemnitee is entitled to indemnification hereunder, and
the Corporation shall, within sixty (60) calendar days thereafter, make the
payments requested in the Indemnification Statement to or for the benefit of the
Indemnitee, unless: (1) within such sixty (60) calendar day period it shall be
determined by the Corporation that the Indemnitee is not entitled to
indemnification under this Article; (2) such determination shall be based upon
clear and convincing evidence (sufficient to rebut the foregoing presumption);
and (3) the Indemnitee shall receive notice in writing of such determination,
which notice shall disclose with particularity the evidence upon which the
determination is based.
The foregoing determination may be made: (1) by the Board of Directors by
majority vote of a quorum of Directors who are not at the time Parties to the
Proceedings; (2) if a quorum cannot be obtained, by majority
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vote of a committee duly designated by the Board of Directors (in which
designation, Directors who are Parties may participate) consisting solely of two
(2) or more Directors not at the time Parties to the Proceeding; (3) by special
legal counsel; or (4) by the shareholders as provided by Section 23B.08.550 of
the WBCA.
Any determination that the Indemnitee is not entitled to indemnification,
and any failure to make the payments requested in the Indemnification Statement,
shall be subject to judicial review by any court of competent jurisdiction.
15.5.3 Special Procedure Regarding Advances for Expenses. An Indemnitee
seeking payment of Expenses in advance of a final disposition of the Proceeding
must furnish the Corporation, as part of the Indemnification Statement:
15.5.3.1 A written affirmation of the Indemnitee's good faith belief
that the Indemnitee has met the standard of conduct required to be eligible for
indemnification; and
15.5.3.2 A written undertaking, constituting an unlimited general
obligation of the Indemnitee, to repay the advance if it is ultimately
determined that the Indemnitee did not meet the required standard of conduct.
Upon satisfaction of the foregoing, the Indemnitee shall have a
contractual right to the payment of such Expenses.
15.5.4 Settlement. The Corporation is not liable to indemnify
Indemnitee for any amounts paid in settlement of any Proceeding without the
Corporation's written consent. The Corporation shall not settle any Proceeding
in any manner which would impose any penalty or limitation on Indemnitee without
Indemnitee's written consent. Neither the Corporation nor Indemnitee may
unreasonably withhold its consent to a proposed settlement.
15.6. Contract and Related Rights.
15.6.1 Contract Rights. The right of an Indemnitee to indemnification
and advancement of Expenses is a contract right upon which the Indemnitee shall
be presumed to have relied in determining to serve or to continue to serve in
his or her capacity with the Corporation. Such right shall continue as long as
the Indemnitee shall be subject to any possible Proceeding. Any amendment to or
repeal of this Article shall not adversely affect any right or protection of an
Indemnitee with respect to any acts or omissions of such Indemnitee occurring
prior to such amendment or repeal.
15.6.2 Optional Insurance, Contracts, and Funding. The Corporation may:
15.6.2.1 Maintain insurance, at its expense, to protect itself and
any Indemnitee against any liability, whether or not the Corporation would have
power to indemnify the individual against the same liability under Section
23B.08.510 or .520 of the WBCA;
15.6.2.2 Enter into contracts with any Indemnitee in furtherance of
this Article and consistent with the WBCA; and
15.6.2.3 Create a trust fund, grant a security interest, or use
other means (including without limitation a letter of credit) to ensure the
payment of such amounts as may be necessary to effect indemnification as
provided in this Article.
15.6.3 Severability. If any provision or application of this Article
shall be invalid or unenforceable, the remainder of this Article and its
remaining applications shall not be affected thereby, and shall continue in full
force and effect.
15.6.4 Right of Indemnitee to Bring Suit. If (1) a claim under this
Article for indemnification is not paid in full by the Corporation within sixty
(60) calendar days after an Indemnification Statement has been received by the
Corporation; or (2) a claim under this Article for advancement of Expenses is
not paid in full by the Corporation within twenty (20) calendar days after a
written claim has been received by the Corporation, then the Indemnitee may, but
need not, at any time thereafter bring suit against the Corporation
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to recover the unpaid amount of the claim. To the extent successful in whole or
in part, the Indemnitee shall be entitled to also be paid the expense (to be
proportionately prorated if the Indemnitee is only partially successful) of
prosecuting such claim. Neither (1) the failure of the Corporation (including
its Board of Directors, its shareholders, or independent legal counsel) to have
made a determination prior to the commencement of such Proceeding that
indemnification or reimbursement or advancement of Expenses to the Indemnitee is
proper in the circumstances; nor (2) an actual determination by the Corporation
(including its Board of Directors, its shareholders, or independent legal
counsel) that the Indemnitee is not entitled to indemnification or to the
reimbursement or advancement of Expenses, shall be a defense to the Proceeding
or create a presumption that the Indemnitee is not so entitled.
15.6.5 Nonexclusivity of Rights. The right to indemnification and the
payment of Expenses incurred in defending a Proceeding in advance of its final
disposition granted in this Article shall not be exclusive of any other right
which any Indemnitee may have or hereafter acquire under any statute, provision
of this Article or the Bylaws, agreement, vote of shareholders or disinterested
directors, or otherwise. The Corporation shall have the express right to grant
additional indemnity without seeking further approval or satisfaction by the
shareholders. All applicable indemnity provisions and any applicable law shall
be interpreted and applied so as to provide an Indemnitee with the broadest but
nonduplicative indemnity to which he or she is entitled.
15.7 Contribution. If the indemnification provided in Section 15.2 of this
Article is not available to be paid to Indemnitee for any reason other than
those set forth in subparagraphs 15.2(a), 15.2(b), and 15.2(c) of Section 15.2
of this Article (for example, because indemnification is held to be against
public policy even though otherwise permitted under Section 15.2) then in
respect of any Proceeding in which the Corporation is jointly liable with
Indemnitee (or would be if joined in such Proceeding), the Corporation shall
contribute to the amount of loss paid or payable by Indemnitee in such
proportion as is appropriate to reflect:
(a) The relative benefits received by the Corporation on the one hand
and the Indemnitee on the other hand from the transaction from which such
Proceeding arose, and
(b) The relative fault of the Corporation on the one hand and the
Indemnitee on the other hand in connection with the events which resulted
in such loss, as well as any other relevant equitable consideration.
The relative benefits received by and fault of the Corporation on the one
hand and the Indemnitee on the other shall be determined by a court of competent
jurisdiction (which may be the same court in which the Proceeding took place)
with reference to, among other things, the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent the circumstances
resulting in such loss. The Corporation agrees that it would not be just and
equitable if a contribution pursuant to this Article was determined by pro rata
allocation or any other method of allocation which does not take account of the
foregoing equitable considerations.
15.8 Exceptions. Any other provision herein to the contrary
notwithstanding, the Corporation shall not be obligated pursuant to the terms of
these Articles to indemnify or advance Expenses to Indemnitee with respect to
any Proceeding:
15.8.1 Claims Initiated by Indemnitee. Initiated or brought voluntarily
by Indemnitee and not by way of defense, but such indemnification or advancement
of Expenses may be provided by the Corporation in specific cases if the Board of
Directors finds it to be appropriate. Notwithstanding the foregoing, the
Corporation shall provide indemnification including the advancement of Expenses
with respect to Proceedings brought to establish or enforce a right to
indemnification under these Articles or any other statute or law or as otherwise
required under the statute.
15.8.2 Lack of Good Faith. Instituted by Indemnitee to enforce or
interpret this Article, if a court of competent jurisdiction determines that
each of the material assertions made by Indemnitee in such Proceeding was not
made in good faith or was frivolous.
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15.8.3 Insured Claims. For which any of the Expenses or liabilities for
indemnification is being sought have been paid directly to Indemnitee by an
insurance carrier under a policy of officers' and directors' liability insurance
maintained by the Corporation.
15.8.4 Prohibited by Law. If the Corporation is prohibited by the WBCA
or other applicable law as then in effect from paying such indemnification
and/or advancement of Expenses. For example, the Corporation and Indemnitee
acknowledge that the Securities and Exchange Commission ("SEC") has taken the
position that indemnification is not possible for liabilities arising under
certain federal securities laws. Indemnitee understands and acknowledges that
the Corporation has undertaken or may be required in the future to undertake
with the SEC to submit the question of indemnification to a court in certain
circumstances for a determination of the Corporation's right to indemnify
Indemnitee.
15.9 Successors and Assigns. All obligations of the Corporation to
indemnify any Director or Officer shall be binding upon all successors and
assigns of the Corporation (including any transferee of all or substantially all
of its assets and any successor by merger or otherwise by operation of law). The
Corporation shall not effect any sale of substantially all of its assets,
merger, consolidation, or other reorganization, in which it is not the surviving
entity, unless the surviving entity agrees in writing to assume all such
obligations of the Corporation.
ARTICLE XVI
INCORPORATOR
The name and address of the incorporator are:
Richard B. Dodd
5000 Columbia Center
701 Fifth Avenue
Seattle, WA 98104
The undersigned Incorporator has signed these Articles of Incorporation as
of , 1996.
-----------------------------------
Richard B. Dodd
Incorporator
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APPENDIX C
UNIVAR CORPORATION
1995 INCENTIVE STOCK PLAN
ADOPTED APRIL 26, 1995
1. Introduction; Purpose of the Plan. This Plan establishes the right of
and procedures for Univar Corporation (the "Company") to grant to its key
employees (1) Non-Qualified Stock Options, (2) Incentive Stock Options, and (3)
Restricted Stock Awards. The purpose of this Plan is to enhance the long-term
performance of Univar Corporation by rewarding key employees of the Company and
its Subsidiaries for the sustained creation of incremental value for the
Company's shareholders. The Plan provides a means whereby Participants are given
an opportunity to share financially in this incremental value through Options
and other Awards.
2. Definitions. As used herein, the following definitions shall apply:
2.1 "Award" shall mean a Restricted Stock Award awarded to a
Participant pursuant to the Plan and evidenced by a written agreement which
generally incorporates the terms and provisions of the Plan.
2.2 "Board" shall mean the Board of Directors of the Company.
2.3 "Cause" shall mean (1) continued failure by a Participant to
perform his or her duties (except as a direct result of the Participant's
incapacity due to physical or mental illness) for a period of at least six (6)
months after receiving written notification by the Chief Executive Officer or an
individual designated by the Chief Executive Officer (or the Board in the case
of the Chief Executive Officer) identifying the manner in which the Participant
has failed to perform his or her duties; (2) engaging in conduct, which, in the
opinion of a majority of the Subcommittee, is materially injurious to the
Company; or (3) conviction of the Participant of a misdemeanor involving moral
turpitude or any felony.
2.4 "Change of Control" shall mean the occurrence of any of the
following events: (1) an acquisition (other than directly from the Company) of
any voting securities of the Company (the "Voting Securities") by any "Person"
or "Group" (as such terms are used for purposes of Section 13(d) or 14(d) of the
Exchange Act) immediately after which such Person has "Beneficial Ownership"
(within the meaning of Rule 13d-3 of the Exchange Act) of more than fifty
percent (50%) of the combined voting power of the Company's then outstanding
Voting Securities; (2) the Board ceases for any reason to have at least a
majority of "Unaffiliated Directors" (defined as all members of the Board except
those who are or were proposed for nomination as a member of the Board by, or
are otherwise "affiliated" or "associated" (as those terms are used for purposes
of Rule 12b-2 of the Exchange Act) with, a person who has Beneficial Ownership
of ten percent (10%) or more of the combined voting power of the Company); or
(3) approval by the shareholders of the Company of (i) a merger, consolidation,
or reorganization involving the Company, unless either (a) the shareholders of
the Company immediately before such merger, consolidation, or reorganization
own, directly or indirectly immediately following such merger, consolidation, or
reorganization, at least seventy-five percent (75%) of the combined voting power
of the Company resulting from such merger, consolidation, or reorganization (the
"Surviving Corporation") in substantially the same proportion as their ownership
immediately before such merger, consolidation, or reorganization, or (b) at
least a majority of the members of the Board of Directors of the Surviving
Corporation are Unaffiliated Directors who were directors of the Company
immediately prior to the execution of the agreement providing for such merger,
consolidation or reorganization, or (ii) a complete liquidation or dissolution
of the Company.
2.5 "Change of Control Transaction" shall mean a tender offer, exchange
offer, merger, consolidation, reorganization, or other transaction which may
lead to a Change of Control.
2.6 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.7 "Committee" shall mean the Compensation Committee appointed by the
Board.
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2.8 "Common Stock" shall mean the Common Stock of Univar Corporation.
2.9 "Company" shall mean Univar Corporation, a Delaware corporation,
and its successors by way of merger.
2.10 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
2.11 "Fair Market Value" shall mean the closing price of the Common
Stock on a given day on the principal trading exchange or national automated
stock quotation system on which the Common Stock is traded or quoted, or such
other price as may be determined by the Subcommittee.
2.12 "Incentive Stock Option" shall mean any Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
2.13 "Non-Qualified Stock Option" shall mean an Option not intended to
qualify as an Incentive Stock Option.
2.14 "Option" shall mean a stock option granted pursuant to the Plan
and evidenced by a written agreement which generally incorporates the terms and
provisions of the Plan.
2.15 "Participant" shall mean any employee of the Company, or of any
Subsidiary of the Company and designated by the Subcommittee to participate in
the Plan.
2.16 "Plan" shall mean this 1995 Incentive Stock Plan.
2.17 "Replacement Option" shall mean an Option granted pursuant to the
provisions of Section 4.7 of this Plan.
2.18 "Securities Act" shall mean the Securities Act of 1933, as
amended.
2.19 "Share" shall mean one share of Common Stock, as adjusted in
accordance with Section 3.7 of the Plan.
2.20 "Subcommittee" shall mean a subcommittee of the Committee that is
appointed by the Committee that is comprised solely of "outside directors" as
that term is defined in Section 162(m) of the Code, and the regulations
thereunder, or the Committee itself if it is comprised solely of outside
directors.
2.21 "Subsidiary" shall mean a "subsidiary corporation" of the Company,
whether now or hereafter existing, as defined in Section 424(f) of the Code.
3. Provisions Of General Application. The provisions of this Section 3
apply to Non-Qualified Stock Options, Incentive Stock Options, and Awards
granted by the Company.
3.1 Stock Reserved for this Plan. Subject to the provisions of Section
3.7 and 4.8 of the Plan, the maximum aggregate number of shares which may be
issued upon the exercise of Options or granted as Awards under the Plan is
2,000,000 shares of Common Stock. Said number of Shares may be increased from
time to time in accordance with Section 3.10.1 below. The Shares may be
authorized but unissued Common Stock, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason without
having been exercised in full or if an Award is forfeited, in whole or in part,
before it vests, the unpurchased or forfeited Shares shall, unless the Plan
shall have been terminated, become available for future grant under the Plan.
3.2 Administration of the Plan.
3.2.1 Composition of Subcommittee. The Plan shall be administered by
the Subcommittee. The Subcommittee shall at all times be comprised of not less
than two (2) directors. Each member of the Subcommittee shall be a
"disinterested person" (as that term is defined in Rule 16b-3(c)(2) promulgated
by the Securities and Exchange Commission pursuant to its authority under the
Exchange Act). The Board may increase the size of the Subcommittee and appoint
additional members thereof, remove members with or without cause and appoint new
members in substitution therefor, fill vacancies however caused, or remove all
members of the Subcommittee and thereafter appoint new members of the
Subcommittee.
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3.2.2 Powers of the Subcommittee. Subject to the provisions of the
Plan, the Subcommittee shall have the authority, in its discretion: (i) to
determine the Fair Market Value of the Common Stock of the Company and the
exercise price per share of Options to be granted; (ii) to determine the
Participants to whom, and the time or times at which, Options or Awards shall be
granted and the number of Shares to be represented by each Option or Award;
(iii) to interpret the Plan; (iv) to prescribe, amend, and rescind rules and
regulations relating to the Plan; (v) to determine the terms and provisions of
each Option or Award granted (which need not be identical) and, with the consent
of the holder thereof, modify or amend each Option or Award; (vi) to establish
the time or times at which the Option or Award Shares may be purchased or become
vested; (vii) to establish criteria for accelerating the vesting of Options or
Awards; (viii) to establish performance requirements and performance measures
that determine acceleration of Option or Award vesting; (ix) to verify such
performance; (x) to accelerate or defer (with the consent of the Participant)
the exercise or vesting date of any Option or Award; (xi) to authorize any
person to execute on behalf of the Company any instrument required to effectuate
the grant of an Option or Award previously granted under the Plan; (xii) to make
exceptions to the provisions of the Plan in good faith and for the benefit of
the Company; and (xiii) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
3.2.3 Effects of Decisions of the Subcommittee, Committee, and
Board. All decisions, determinations, and interpretations of the Subcommittee,
the Committee, or the Board shall be final and binding on all Participants and
any other holders of any Options or Awards granted under the Plan.
3.3 Participation.
3.3.1 Participants. Participation in the Plan is limited to key
employees of the Company and of its Subsidiaries who, in the opinion of the
Subcommittee, have the opportunity to materially influence the Company's
long-range performance and who are designated as Participants by the
Subcommittee. In determining who shall participate in the Plan, the Subcommittee
shall take into consideration an employee's salary grade, duties, past and
potential contributions to the success of the Company, and other factors deemed
relevant by the Subcommittee in connection with accomplishing the purpose of
this Plan. A Participant who has been granted an Option or an Award, whether
under this Plan or otherwise, may, if the Subcommittee shall so determine, be
granted additional Options or Awards. New Participants may be added to the Plan
at any time at the discretion of the Subcommittee.
3.3.2 Grants Discretionary; No Right to Continuing Employment. The
granting of any Option or Award pursuant to this Plan shall be entirely in the
discretion of the Subcommittee and nothing herein contained shall be construed
to give any person any right to participate under this Plan or to receive any
Option or Award under it. Nothing in the Plan or any Option or Award granted
hereunder shall confer upon any Participant any right with respect to
continuation of employment with the Company, nor shall it interfere in any way
with the Participant's right or the Company's right to terminate the employment
relationship at any time, with or without cause.
3.4 Per-Participant Limit. No Participant shall be entitled to receive
grants of Options and Awards aggregating in excess of 200,000 Shares in any one
fiscal year of the Company.
3.5 Option and Award Agreements. Each Option and Award shall be
evidenced by a written agreement. Each Option and Award granted under this Plan
shall be subject to such amendment or modification from time to time as the
Subcommittee shall deem necessary or appropriate to comply with or take
advantage of applicable laws or regulations and shall contain such provisions
which are consistent with the Plan as the Subcommittee shall from time to time
approve.
3.6 Transferability of Options, Awards, and Rights under the
Plan. Except as otherwise approved by the Subcommittee on a case by case basis
or pursuant to a policy applying to all holders of Options or Awards, or to
specific classes of Options or Awards, the Options and Awards, and any other
rights under the Plan, may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Participant, only by the Participant and, after his or her death, by the
representative of the Participant's estate. No person
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shall have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage, or otherwise encumber, hypothecate, or convey in advance of actual
receipt, benefits, if any, payable under this Plan, or any part thereof, or any
interest therein which are, and all rights to which are, expressly declared to
be unassignable and non-transferable. No portion of the Plan's benefits shall,
prior to actual payment, be subject to seizure, attachment, lien or
sequestration for the payment of any debts, judgments, alimony, or separate
maintenance owed by a Participant or any other person, nor be transferable by
operation of law in the event of the Participant's or any other person's
bankruptcy or insolvency. Any such transfer or attempted transfer in violation
of the preceding provisions shall be considered null and void.
3.7 Adjustments Upon Changes in Capitalization. Subject to any required
action by the shareholders of the Company, the number of shares of Common Stock
covered by each outstanding Option or Award, and the number of shares of Common
Stock which have been authorized for issuance under the Plan but as to which no
Options or Awards have yet been granted or which have been returned to the Plan
upon cancellation, expiration, or forfeiture of an Option or Award, as well as
the price per share of Common Stock covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding, and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares of Common Stock subject to an Option or Award.
In the event of an extraordinary dividend or partial liquidation, the
Subcommittee shall make an appropriate adjustment to the Option exercise price
so that the difference between the exercise price and the Fair Market Value of
the Common Stock after such distribution is equivalent to the difference between
the exercise price and the Fair Market Value before such distribution. The
Subcommittee shall select a representative period before and after the
"ex-dividend date" for such distribution for the purpose of determining the
respective Fair Market Value of the Common Stock.
3.8 Acceleration of Vesting upon Change of Control. Upon a Change of
Control of the Company, all unvested Options previously granted under the Plan
shall become immediately vested and available for exercise. Such Options may be
exercised by the Participant at any time prior to the originally specified
expiration date of the Option, unless the Options would otherwise terminate in
accordance with the terms of this Plan or the individual Option. Similarly, all
unvested Awards shall become immediately vested upon a Change of Control.
Any Options, vested or unvested, may be exercised on a conditional basis
in the event of an announcement of a Change of Control Transaction, provided no
provision is made in such Change of Control Transaction for the exercise,
exchange, or surrender of Options, or other procedure whereby the Participant
may realize in cash the difference between the exercise price and the fair
market value of the per Share consideration to be received in the change of
Control Transaction for the exercise, exchange, or surrender of Options, or
other procedure whereby the Participant may realize in cash the difference
between the exercise price and the fair market value of the per Share
consideration to be received by holders of the Common Stock of the Company. A
conditional exercise shall be made by giving a written notice of exercise to the
Corporate Secretary of the Company. If the Change of Control Transaction is
canceled or revoked, or otherwise does not occur, or does not actually result in
a Change of Control, the conditional exercise of unvested Options shall be
rescinded.
3.9 Compliance with Securities Laws. The Subcommittee shall have the
right to:
3.9.1 Require the holder of an Option or Award to execute, as a
condition of the exercise of an Option or receipt of an Award, a letter
evidencing the holder's intent to acquire the Shares for investment and not with
a view to the distribution thereof;
3.9.2 Place appropriate legends upon the certificate or certificates
for the Shares; and
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3.9.3 Take such other acts as it deems necessary in order to cause
the issuance of Optioned or Awarded Shares to comply with applicable provisions
of State and Federal Securities Laws.
3.10. Amendment and Termination of the Plan.
3.10.1 Right to Amend and Terminate. The Subcommittee may amend or
terminate the Plan from time to time in such respects as the Subcommittee may
deem advisable; provided that the following revisions or amendments shall
require approval of or ratification by the shareholders of the Company:
3.10.1.1 Any increase in the number of Shares subject to the
Plan, other than in connection with an adjustment under Sections 3.7 or 4.8 of
the Plan; or
3.10.1.2 If the Company has a class of equity securities
registered under Section 12 of the Exchange Act at the time of such revision or
amendment, any change which would require shareholder approval pursuant to Rule
16b-3 promulgated by the Securities and Exchange Commission pursuant to its
authority under the Exchange Act.
3.10.2 Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options or Awards already granted and
such Options or Awards shall remain in full force and effect as if this Plan had
not been amended or terminated, unless mutually agreed otherwise between the
Participant and the Subcommittee, which agreement must be in writing and signed
by the Participant and the Company.
3.11 Termination Date of Plan. No grants of Options or Awards may be
made under this Plan after February 28, 2005. All Options and Awards then
outstanding shall continue in full force and effect thereafter, subject to their
terms and the terms of this Plan.
4. Provisions Applicable To Non-Qualified And Incentive Stock Options. The
provisions of this Section 4 apply to Non-Qualified Stock Options and Incentive
Stock Options.
4.1. Term of Options. The term of each Option shall be set by the
Subcommittee and may vary from grant to grant and from Participant to
Participant. Each Option may also specify the terms and conditions under which
the Option may terminate prior to said expiration date, in addition to the
events set forth in this Plan.
4.2. Extension of Exercise Dates. The Subcommittee shall have the
authority to extend the expiration date of any outstanding Option in
circumstances in which it deems such action to be appropriate (provided that,
for a Participant who is an "executive officer" of the Company within the
meaning of Section 16 of the Exchange Act, each extension shall be for a period
of not less than six (6) months and one (1) day and, if such an extension goes
beyond the specified expiration date of the Option, the expiration date of the
Option will also be extended to the minimum extent necessary to accommodate said
six (6) months and one (1) day period).
4.3 Vesting of Options. The Subcommittee shall have the authority to
establish the time or times at which the Optioned Shares may be purchased and
whether all of the Options may be exercised at one time or in increments. Such
time or times may vary from grant to grant and from Participant to Participant.
4.4 Accelerated Vesting. In addition to the provisions of Section 3.8
above, the Subcommittee shall have the authority to establish criteria for
accelerating the vesting of Options if certain events occur. No acceleration
shall allow the holder of an Option to purchase any Shares for which the Options
have expired.
4.5 Terms and Expiration of Options. Each Option granted under this
Plan shall be in writing, shall be subject to such amendment or modification
from time to time as the Subcommittee shall deem necessary or appropriate to
comply with or take advantage of applicable laws or regulations and shall be
subject to the following provisions, together with such other provisions as the
Subcommittee shall from time to time approve:
4.5.1 That, subject to the provisions of Section 4.5.2 below, the
Option, as to the whole or any part thereof, may be exercised only by the
Participant or the Participant's personal representative or permitted
transferee;
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4.5.2 That neither the whole nor any part of the Option shall be
transferable by the Participant or by operation of law otherwise than by the
will of, or by the laws of descent and distribution applicable to, a deceased
Participant and that the Option and any and all rights granted to the
Participant thereunder and not theretofore effectively and completely exercised
shall automatically terminate and expire upon any sale, transfer or
hypothecation or any attempted sale, transfer, or hypothecation of such rights
or upon the bankruptcy or insolvency of the Participant or his or her estate or
permitted transferee;
4.5.3 That subject to the foregoing provisions, an Option may be
exercised at different times for portions of the total number of Option Shares
for which the right to purchase shall have vested;
4.5.4 That all Options shall expire at the earliest of the
following:
(1) The date specified in the Option;
(2) Ninety (90) days after voluntary or involuntary
termination of Participant's employment, other than termination as
described in Paragraph (3) below, unless a different period is established
by the Subcommittee;
(3) Upon the discharge of Participant for misconduct,
willfully or wantonly harmful to the Company;
(4) Twelve (12) months after Participant's death or
disability;
(5) Such earlier date as the Subcommittee may specify in the
event of a Change of Control; or
(6) Such other date as the Subcommittee may specify in an
individual Option agreement.
4.5.5 That the terms of the Options shall not be affected by any
change in the Participant's duties or position so long as the Participant shall
continue to be employed by the Company or a Subsidiary.
4.6. Exercises; Payment Mechanics; Withholding.
4.6.1 Exercise Price. The per Share exercise price under each Option
shall be such price as is determined by the Subcommittee and, subject to the
provisions of Section 5.2, may be less than, equal to, or greater than the Fair
Market Value per Share on the date of grant.
4.6.2 Procedure for Exercise. The Option may not be exercised for a
fraction of a Share.
The Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with procedures
established by the Company and full payment for the Shares and all applicable
taxes with respect to which the Option is exercised has been received by or for
the account of the Company.
Payment of the purchase price provided in the Option shall be made in
cash, in Shares owned by the Participant, or in any combination of cash and
Shares. Shares used to pay the exercise price shall be valued at their Fair
Market Value on the exercise date. Payment may also be made by delivery
(including by fax) to the Company or its designated agent a properly executed
exercise notice together with irrevocable instructions to a broker to sell a
sufficient portion of the shares and promptly deliver to the Company the amount
of sale proceeds necessary to pay the exercise price and any taxes required to
be withheld.
4.6.3 Withholding. Prior to issuance of the Shares upon exercise of
an Option, the Participant shall pay any federal, state, and local withholding
obligations of the Company, if applicable.
A Participant may also elect to pay all or part of such withholding
tax obligations by having the Company withhold a whole number of Shares having a
value at least equal to the amount required to be withheld. The value of the
Shares to be withheld shall equal the Fair Market Value of the Shares on the day
the Option is exercised.
If a Participant is an "executive officer" of the Company within the
meaning of Section 16 of the Exchange Act, the following provisions shall apply
to an election to withhold Shares: (i) if a Participant
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has received multiple Options, a separate election must be made for each Option;
(ii) the election may be a "standing election", i.e., upon making an election, a
fixed date need not be set for the exercise of the Option to which the election
relates; (iii) the election will be subject to the approval or disapproval of
the Subcommittee, which approval or disapproval may be given at any time after
the election to which it relates; (iv) the election may not be made within six
months following the date of grant of the Option to which it relates; (v) the
election must be made at least six months prior to the day the Option is
exercised, or both the election and exercise must be made in the ten-day "window
period" beginning on the third day following the release of the Company's
quarterly or annual summary statement of sales and earnings; and (vi) an
election may be revoked, or may be reinstituted after a revocation, only upon
six months' prior notice.
4.6.4 Accounting Requirements. The Subcommittee may at any time
impose restrictions on the use of Shares for payment of the exercise price
pursuant to Section 4.6.2 or satisfaction of the withholding tax obligation
pursuant to Section 4.6.3 so as to avoid adverse accounting treatment to the
Company, including requiring that Shares used must be beneficially owned for a
minimum time period. The Subcommittee shall also have the right to require the
withholding tax obligation to be satisfied by the withholding of Shares.
4.6.5 Effect of Exercise. Exercise of an Option in any manner shall
result in a decrease in the number of Shares which thereafter may be available,
both for purposes of the Plan and for sale under the Options, by the number of
Shares as to which the Option is exercised.
4.7 Replacement Options.
4.7.1 Authority to Grant Replacement Options. The Subcommittee shall
have the authority to grant Replacement Options in accordance with this Plan.
Such grants will be at the discretion of the Subcommittee unless the
Subcommittee affirmatively determines that such grants will be automatic for all
Participants entitled to receive such a Replacement Option.
4.7.2 Terms of Replacement Options. If a Participant is an employee
of the Company, or a Subsidiary at the time of the exercise of an Option (the
"Original Option") and pays all or a portion of the exercise price for the
Original Option by surrendering currently owned shares of Common Stock in
accordance with the provisions of Section 4.6.2 above, then such Participant
shall be entitled to receive a "Replacement Option," either at the discretion of
the Subcommittee or automatically as determined in accordance with the preceding
subsection. The Replacement Option shall have the following terms and shall for
all purposes be deemed an Option subject to the provisions of this Plan:
(a) The Replacement Option shall be for the same number of Shares as
were surrendered by the Participant at the time the Original Option was
exercised, but shall not apply to any Shares that were surrendered to pay
applicable taxes;
(b) The Replacement Option shall have an exercise price equal to the
Fair Market Value of the Common Stock on the date the Original Option was
exercised;
(c) The Replacement Option shall expire on the same date as the
Original Option would have expired;
(d) The Replacement Option will vest in its entirety 12 months after
the date it was granted;
(e) The Shares acquired upon exercise of the Original Option must be
held for 12 months after the date of that exercise, or the Replacement
Option is canceled;
(f) The shares that were surrendered to exercise the Original Option
must have been held for at least six months at the time of surrender; and
(g) Each Replacement Option will be a Non-Qualified Stock Option, even
if the Original Option was an Incentive Stock Option.
4.8 Substitutions and Assumptions. The Subcommittee shall have the
right to substitute or assume Options in connection with mergers,
reorganizations, separations, or other "corporate transactions" as that term is
defined in, and said substitutions and assumptions are permitted by, Section 425
of the Code and
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<PAGE> 65
the regulations promulgated thereunder. The number of Shares reserved pursuant
to Section 3.1 may be increased by the corresponding number of Options assumed
and, in the case of a substitution, by the net increase in the number of Shares
subject to Options before and after the substitution.
4.9. Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the stock transfer books of the Company) of the stock
certificate or direct registration on the Company's books evidencing such
Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Shares, notwithstanding the
exercise of the Option, provided that in the event of a Change of Control or the
announcement of a Change of Control Transaction, a Participant shall have all
the rights set forth in Section 3.8 to conditionally exercise Options and the
Company may issue stock certificates or directly register the purchased Shares
on its books on a conditional basis to enable the Participant to exercise
Options, tender shares, or otherwise realize the benefit of vested Options or
Options which become vested pursuant to Section 3.8. The Company shall issue (or
cause to be issued) such stock certificate, or directly register the same on its
books, promptly upon exercise of the Option.
4.10 Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act,
the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
5. Provisions Applicable Solely To Incentive Stock Options. In addition to
the provisions of Sections 3 and 4 above, the following paragraphs shall apply
to any Options granted under this Plan that are Incentive Stock Options.
5.1 Conformance with Code. Options granted under this Plan that are
"Incentive Stock Options" shall conform to, be governed by, and interpreted in
accordance with Section 422 of the Code and any regulations promulgated
thereunder as well as any amendments to the Code and Regulations.
5.2 Option Price. The Option or purchase price of each Share Optioned
under the Incentive Stock Option provisions of this Plan shall be determined by
the Subcommittee at the time of the action for the granting of the Option but
shall not, in any event, be less than the Fair Market Value of the Common Stock
on the date of grant.
5.3 Limitation on Amount of Incentive Stock Options. The aggregate Fair
Market Value of the Option Shares (determined on the date of grant) for which
any employee may be granted Incentive Stock Options in any one calendar year
(under this Plan or any other Plan of the Company that authorizes Incentive
Stock Options) shall not exceed $100,000 plus any unused limit carryover to such
year. The amount of the "unused limit carryover" shall be determined pursuant to
section 422(c)(4) of the Code and any regulations promulgated thereunder, and
amendments to the Code and Regulations.
5.4 Limitation on Grants to Substantial Shareholders. An employee may
not, immediately prior to the grant of an Incentive Stock Option hereunder, own
stock in the Company representing more than ten percent (10%) of the voting
power of all classes of stock of the Company unless the per share Option price
specified by the Subcommittee for the Incentive Stock Options granted such an
employee is at least one hundred ten percent (110%) of the Fair Market Value of
the Company's Common Stock on the date of grant and such Option, by its terms,
is not exercisable after the expiration of five (5) years from the date such
Option is granted.
5.5 Compliance with Code. The foregoing requirements applicable to
Incentive Stock Options issued under the Plan are intended to cause such Options
to qualify under the provisions of the Code applicable to such Options. The
Subcommittee shall add such additional limitations or restrictions to any
Incentive Stock Option grants as it determines are appropriate to allow such
options to qualify under the relevant Code provisions.
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6. Restricted Stock Awards. In addition to the provisions of Section 3
above, the following paragraphs shall apply to Awards.
6.1 Consideration. The Subcommittee may grant Awards of Shares under
this Plan at such time or times as the Subcommittee shall determine, in its sole
discretion, that an eligible employee has rendered services of a value to the
Company, in excess of all other compensation paid, at least equal to the
aggregate par value of such Shares, if any. Alternatively, the Subcommittee may
sell Shares, as determined by the Subcommittee in its discretion, to eligible
employees at not less than the aggregate par value, if any, of the Shares
covered by the Award.
6.2 Terms and Conditions. Each Award shall be evidenced by an
instrument in such form as the Subcommittee shall prescribe from time to time in
accordance with this Plan and shall be subject to the following terms and
conditions and such other terms and conditions as the Subcommittee, in its
discretion, shall establish:
6.2.1 Shares issued in accordance with an Award may not be sold,
assigned, transferred, pledged, hypothecated, or otherwise disposed of, except
by will or the laws of descent and distribution, for such period as the
Subcommittee shall determine from the date on which the Award is made. The
Certificates for such Shares will be held by the Company, together with a stock
power which shall be executed in favor of the Company by the employee, until
such time as the restrictions shall lapse. The Certificate may include a legend
setting forth restrictions on transfer and any legend required by Section 3.9.2.
6.2.2 Restrictions on each Award shall be determined by the
Subcommittee when the Award is made. Unless the Subcommittee shall specify
otherwise, the Participant will forfeit his or her rights to the Award if the
Participant's employment with the Company or any of its subsidiaries shall
terminate for any reason prior to the expiration or satisfaction of the
restrictions applicable to such shares. Any attempt to dispose of such Shares in
contravention of the foregoing restrictions shall be null and void and without
effect.
6.2.3 Notwithstanding the foregoing subsection 6.2.2, the
Subcommittee at its sole discretion may, at any time or from time to time for
any part or all of the Award, accelerate the removal of any or all restrictions.
6.2.4 Each holder shall agree in writing at the time of any Award,
and as a condition thereof, that the holder shall not make an election under
Section 83(b)(2) of the Code, to include in the holder's gross income as
determined for federal income tax purposes any part of the value of Shares
issued or transferred to the holder under the Award. If a holder subsequently
makes such an election, all Shares covered by the Award shall be forfeited to
the Company.
6.3 Rights as Shareholders. Upon issuance of any Shares subject to an
Award, except as to the restrictions on transferability and subject to the
possibility of forfeiture for failure to satisfy the continuous employment
obligations, the holder shall have all the rights of a shareholder with respect
to such Shares, including the right to vote the Shares. Any dividends or other
distributions (except additional shares of Common Stock) paid to or received by
the holder with respect to Shares which may thereafter revert to the Company, as
provided hereunder, shall nevertheless remain the property of the holder and
shall not be subject to forfeiture.
6.4 Withholding Taxes. The Award shall contain an acknowledgment and
agreement by the holder, that the Company shall, to the extent required or
permitted by law, deduct from any payments of any kind otherwise due or to
become due to the holder, when due, any federal, state or local taxes of any
kind required by law to be withheld with respect of the Award. If no such
payments are due or will become due to the holder, the holder will pay to the
Company, or make arrangements satisfactory to the Subcommittee regarding payment
of, any federal, state or local taxes of any kind required by law to be
withheld, if any, with respect of the Award. No certificate for Shares shall be
issued to any holder until such provision for the withholding or payment of any
applicable taxes has been made to the satisfaction of the Subcommittee. In order
to pay the applicable taxes, a holder may elect to have the Company withhold a
whole number of the Shares upon their vesting, with such Shares valued at the
Fair Market Value of the Common Stock on the vesting date.
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7. Miscellaneous Provisions.
7.1 Participants in Foreign Countries. The Subcommittee shall have the
authority to adopt such modifications, procedures, and subplans as may be
necessary or desirable to comply with provisions of the laws of foreign
countries in which the Company or its Subsidiaries may operate to assure the
viability of the benefits from Options and Awards granted to Participants
employed in such countries and to meet the objectives of the Plan.
7.2 Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
7.3 Shareholder Approval. Continuance of the Plan is subject to
approval by the shareholders of the Company within twelve (12) months after the
date the Plan is adopted by the Board. Any Option granted prior to the receipt
of shareholder approval shall become null and void if such approval is not
received in accordance with the preceding sentence.
7.4 Unsecured Status of Claim. Participants and their beneficiaries,
heirs, successors, and assigns shall have no legal or equitable rights,
interests or claims in any specific property or assets of the Company. No assets
of the Company shall be held under any trust for the benefit of Participants,
their beneficiaries, heirs, successors, or assigns, or held in any way as
collateral security for the fulfillment of the Company's obligations under the
Plan. The Company's obligations under the Plan shall be merely that of an
unfunded and unsecured promise of the Company to pay benefits in the future.
7.5 Validity. In the event that any provision of the Plan or any
related Option or Award is held to be invalid, void or unenforceable, the same
shall not affect, in any respect whatsoever, the validity of any other provision
of the Plan or any related Option or Award.
7.6 Applicable Law. The Plan and any related Options or Awards shall be
governed in accordance with the laws of the state of Washington.
7.7 Inurement of Rights and Obligations. The rights and obligations
under the Plan and any related Options and Awards shall inure to the benefit of
and shall be binding on the Company, its successors and assigns, and the
Participants and their beneficiaries, heirs, successors, and assigns.
7.8 Interpretation. It is the intent of the Company that this Plan, and
each Option and Award granted hereunder, shall be administered and implemented
in such a manner so as to comply with, and take advantage of, the applicable
provisions of federal, state, and international securities and tax laws. In the
event of alternative interpretations of any of the provisions of this Plan, or
of an Option or Award, the interpretation that supports the intent set forth in
the preceding sentence shall prevail.
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DIRECTIONS TO MEYDENBAUER CENTER:
[MAP]
From I-405 take the N.E. 4th Street Exit, head west.
Turn right on 112th Avenue N.E. (heading north),
Turn left on N.E. 6th Street (heading west).
Parking garage entrance is on N.E. 6th Street.
<PAGE> 69
PROXY -- UNIVAR CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE 1995 ANNUAL
MEETING
The undersigned hereby appoints James H. Wiborg, James W. Bernard and James
L. Fletcher, and each of them, with full power of substitution, as proxies to
vote the shares which the undersigned is entitled to vote at the Annual Meeting
of the Corporation to be held on August 24, 1995 at 10:00 a.m. and at any
adjournments thereof.
Your Board of Directors recommends you vote FOR proposals 1, 2, 3, and 4.
1. Election of Directors
<TABLE>
<S> <C> <C>
Nominees: Roger L. Kesseler Andrew V. Smith
Curtis P. Lindley Nicolaas J. Westdijk
FOR all nominees / / WITHHOLD AUTHORITY / /
(except as marked to vote for all
to the contrary)* nominees
</TABLE>
* To withhold authority to vote for any individual nominee, write that nominee's
name on the line below.
- --------------------------------------------------------------------------------
2. Proposal to change Univar's state of incorporation from Delaware to
Washington by a merger with and into a newly formed, wholly owned Washington
subsidiary
FOR / / AGAINST / / ABSTAIN / /
Please Do Not Fold (continued on other side)
(continued from other side)
3. Proposal to approve an increase in the authorized common shares from
40,000,000 to 100,000,000, and an increase in the authorized preferred
shares from 750,000 to 5,000,000
FOR / / AGAINST / / ABSTAIN / /
4. Proposal to approve the 1995 Incentive Stock Plan
FOR / / AGAINST / / ABSTAIN / /
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This Proxy, when properly executed, will be voted and will be voted in the
manner directed herein by the undersigned shareholders. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3, AND 4.
When shares are held by
joint tenants, both
should sign. When signing
as attorney, executor,
administrator, trustee or
guardian, please give
your full title as such.
If a corporation, please
sign in full corporate
name by President or
other authorized officer.
If a partnership, please
sign in partnership name
by authorized person.
Date: , 1995
-------------
--------------------------
(Signature)
--------------------------
(Signature, if held
jointly)
IMPORTANT, PLEASE SIGN AND RETURN PROMPTLY.
