1
May 31, 1996
Paul H. Hough
William A. Butler
Jeffrey Ellwood
James L. Fletcher
H. Drew MacAfee
Gary E. Pruitt
Larry Bullock
RE: CHANGE OF CONTROL AGREEMENT
Gentlemen:
Royal Pakhoed N.V. and UC Acquisition Corporation agree to and approve
the attached proposed letter agreement which amends the Change of Control
Agreements between Univar Corporation (or Van Waters & Rogers Ltd.) and each of
you. We further agree to execute final letter agreements with each of you
substantially in accordance with the attached form after execution by you and
Univar. We understand that the letter agreement with Larry Bullock may need to
be modified from the attached form due to differences in the form of his
agreement with Van Waters & Rogers Ltd.
Royal Pakhoed N.V
UC Acquisition Corporation
By /s/ N.J. Westdijk
-----------------
N. J. Westdijk
Chairman
2
May 31, 1996
Re: Change of Control Agreement
Dear ______________:
This letter sets forth certain interpretations and amendments to that
certain agreement dated ____________ between you (the "Executive") and Univar
Corporation (the "Corporation") (the "Change of Control Agreement") as it
relates to the tender offer to be made by UC Acquisition Corp. ("Buyer") in
accordance with that certain Agreement and Plan of
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May 31, 1996
Page 2
Reorganization dated as of May 31, 1996 among Royal Pakhoed N.V. ("Parent"),
Buyer, and the Corporation (the "Reorganization Agreement"). Terms not otherwise
defined in this agreement shall have the same meaning as set forth in the
Reorganization Agreement and the Change of Control Agreement, respectively.
References to the following sections and headings are to the corresponding
sections in the Change of Control Agreement which are clarified and amended as
follows.
1. Term of Agreement. The following sentence shall be added to
Section 1 of the Change of Control Agreement.
"Notwithstanding any of the other provisions of this Section
1, except as to the benefits set forth in this amendment which accrue
as a result of the Tender Offer, this Change of Control Agreement shall
be canceled as of the close of business on the date of the closing of
the Tender Offer in accordance with the Reorganization Agreement, in
which case such date shall be the 'Cancellation Date.'"
2. Change in Control. The closing of the Tender Offer in
accordance with the Reorganization Agreement shall be a "change in control" as
defined in the Change of Control Agreement.
3. Termination of Employment. Upon closing the Tender Offer in
accordance with the Reorganization Agreement, the Executive shall have the right
to receive the compensation and benefits described in Sections 4 and 5 of the
Change of Control Agreement without any requirement of a "termination of
Executive's employment" as defined in Section 3 of the Change of Control
Agreement.
4 and 5. Compensation and Benefits. The amounts payable pursuant to
Section 4 and 5, without regards to any limitation in the prior version of
Section 6, shall be paid in a lump sum in the amount set forth on Exhibit A
which shall be paid in readily available funds within ten (10) business days
after Pakhoed purchases Shares satisfying the Minimum Condition pursuant to the
Reorganization Agreement.
5. Benefits. If Executive continues as an employee of the
Corporation after the Tender Offer he shall be entitled to receive benefits
comparable to those provided other management personnel.
6. Gross-Up Provision. In lieu of the existing provision in
Section 6 of the Change of Control Agreement the following provisions shall
apply:
(a) Notwithstanding anything to the contrary contained herein, in
the event it shall be determined that any payment or distribution by the
Corporation to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of (i) this
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May 31, 1996
Page 3
Change of Control Agreement, as amended, (ii) the Stock Option Plans (as defined
in the Reorganization Agreement and specifically including without limitation
the cash payments provided for in Section 1.5 of the Reorganization Agreement),
(iii) other payments deemed to be "parachute payments" pursuant to Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code") and (iv) any
payment to the Internal Revenue Service ("IRS"), pursuant to Section 6(b) below,
(clauses (i) through (iv) are referred to herein collectively as the "Payment"),
would be subject to the excise tax imposed by Section 4999 of the Code, or any
comparable federal, state or local excise tax (such excise tax, together with
any interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in such an amount that after the payment of all
taxes (including, without limitation, any interest and penalties imposed on such
taxes and the Excise Tax) imposed on the Gross-Up Payment, the Executive shall
retain an amount of the Gross-Up Payment equal to the Excise Tax imposed on the
Payment. The intent of the parties is that the Corporation shall be solely
responsible for, and shall pay, any Excise Tax on any Payment and Gross-Up
Payment and any income and employment taxes (including, without limitation,
penalties and interest) imposed on any Gross-Up Payment, as well as any loss of
tax deduction caused by the Gross-Up Payment and indemnify, defend and hold
Executive harmless against all such liabilities and related expenses. For
purposes of determining the amount of the Gross-Up Payment, the Executive shall
be deemed to pay federal income taxes at the highest marginal rates of federal
income taxation applicable to individuals in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rates of taxation applicable to individuals as are in effect in the
state and locality of the Executive's residence in the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in federal
income taxes that could be obtained from deduction of such state and local
taxes.
(b) All determinations required to be made under this Section,
including without limitation, whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment, shall be made by Price Waterhouse or in
the event they are unable or unwilling another nationally recognized accounting
firm, which firm must be reasonably acceptable to the Executive (the "Accounting
Firm"). The Corporation shall cause the Accounting Firm to provide detailed
supporting calculations to the Corporation and the Executive within fifteen (15)
business days after notice is given by the Corporation to the Accounting Firm,
or such earlier time as is requested by the Corporation. If the Corporation
fails to timely direct the Accounting Firm and provide it with necessary
information, Executive may do so two (2) business days after written notice to
the Corporation and the Accounting Firm shall make its determination based on
the information previously provided to the Accounting Firm and any information
or estimates provided by Executive. All fees and expenses of the Accounting firm
shall be borne solely by the Corporation. Any Gross-Up Payment as determined
pursuant to this Section 6, shall be paid by the Corporation within five (5)
days after receipt of the Accounting Firm's determination. The Accounting Firm
shall make its determinations using the substantial authority standard within
the meaning of Section 6662 of the Code. Any determination by the Accounting
Firm shall be binding upon the Corporation and the Executive in the absence of
material mathematical or legal
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May 31, 1996
Page 4
error. As a result of the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination by the Accounting Firm hereunder,
it is possible that Gross-Up Payment will not have been made by the Corporation
that should have been made ("Underpayment") or that Gross-Up Payment will have
been made that should not have been made ("Overpayment"), in each case,
consistent with the calculations required to be made hereunder. In the event
that the Executive hereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Corporation to the
Internal Revenue Service or other appropriate taxing authority on the
Executive's behalf or, if such Underpayment has been previously paid by the
Executive, to the Executive. In the event that the Accounting Firm determines
that an Overpayment has been made, any such Overpayment shall be treated for all
purposes as a loan to the Executive with interest at applicable federal rate
provided for in Section 7872(f)(2) of the Code, due and payable within ninety
(90) days after written demand to the Executive by the Corporation; provided,
however that Executive shall have no duty or obligation whatsoever to repay said
loan to the extent that the Executive's receipt of the Overpayment, or any
portion thereof, is includable in Executive's income and the Executive's
repayment of that amount is not fully deductible by the Executive for federal
and state income tax purposes. It is the intent of the preceding sentence that
tax consequences of any Overpayment shall be neutral to the Executive.
(c) The Corporation and the Executive agree to prepare and file
their respective tax returns (including any amendments thereto) and report their
respective deductions and income on a basis that is consistent with the analysis
that has been prepared by the Accounting Firm and any subsequent determination
by the Accounting Firm.
(d) In the event the Internal Revenue Service or any state taxing
authority proposes an adjustment to the taxes of the Executive which would give
rise to an Underpayment requiring indemnification by the Corporation hereunder,
then the Executive shall notify the Corporation in writing within fifteen (15)
days of the Executive's receipt of the proposed adjustment, provided that the
failure to provide such notice shall not relieve the Corporation of its
obligations under this Agreement with respect to any adjustment unless its
ability to contest such proposed adjustment is materially compromised. The
Executive agrees that thereafter the Corporation, at its own expense, shall have
the right to control the tax proceeding concerning such proposed adjustment,
including, among other things, agreeing to, contesting or compromising the
proposed adjustment. In the event the Corporation believes that there is
substantial authority that the Executive has made an Overpayment and is entitled
to a refund of federal or state taxes, then the Executive agrees to file a claim
for refund asserting such Overpayment and the Corporation shall have the right
to prosecute the claim for refund. The filing of any claim and any related
prosecution of such claim shall be at the sole expense of the Corporation.
7. Effect of Death. Death of the Executive shall have no effect
on the Surviving Corporation's obligation to make the payments provided pursuant
to Section 4 and 5 as modified
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May 31, 1996
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above. The last two sentences of Section 7 shall continue to apply as to
benefits to be paid pursuant to Section 5 and as to payments due in respect of
the Executive's death.
Sections 8 through 16 of the Change of Control Agreement shall continue
to apply without modification. In the event the Reorganization Agreement is
terminated, the Change of Control Agreement shall continue in full force and
effect without regard to the amendments and modifications made pursuant to this
letter. The following shall be added as a new Section 17.
[Remainder of page intentionally omitted]
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May 31, 1996
Page 6
17. Release. The Executive agrees that payments made pursuant to
the Change of Control Agreement, as amended, shall be in lieu of, and the
Executive hereby waives and releases any claim to, severance or other
termination payments under any other plan or arrangement of the Corporation, or
any other claim, right or cause of action relating to his employment with the
Corporation existing as of the date of this Agreement, provided that the
foregoing shall not apply to (i) any new agreement, regardless of when executed,
between the Executive and the Surviving Corporation, Parent or any affiliate of
Parent, or (ii) any plan applicable or other severance or termination otherwise
payable to Executive in connection with any termination which occurs more than
thirty (30) months after the closing of the Tender Offer.
Very truly yours,
UNIVAR CORPORATION
By______________________
Its___________________
Agreed and Accepted:
By ______________________
(the "Executive")
Royal Pakhoed N.V.
By_______________________
N.J. Westdijk
Chairman, Board of Management
UC Acquisition Corp.
By_______________________
N.J. Westdijk
Chairman and President
Cash payments
for surrender of
Stock Options,
Base Restricted
Compensation, Stock Awards
Target Inventive and Deferred
and Benefits Cash Incentives
pursuant to pursuant to
Amended Change of Stock Option
Officers Control Agreement Plans
- --------- ------------------ ----------------
William A. Butler $ 672,531.30 $ 574,817.90
Larry Bullock 494,426.55 573,047.87
Jeffrey Ellwood 689,716.48 359,601.97
James L. Fletcher 731,519.00 847,208.97
Paul H. Hough 1,596,363.05 3,094,022.41
H. Drew MacAfee 637,321.80 499,339.02
Gary E. Pruitt 817,019.70 670,919.97
------------- -------------
Totals $5,638,897.87 $6,618,958.11
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