<PAGE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ______________
COMMISSION FILE NUMBER 1-4001
UNION CAMP CORPORATION
<TABLE>
<S> <C>
VIRGINIA 13-5652423
- -------------------------------------------------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
1600 VALLEY ROAD, WAYNE, NEW JERSEY 07470
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
TELEPHONE: (973) 628-2000
- -------------------------------------------------------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
69,184,299 shares of Registrant's Common Stock, par value $1 Per Share,
were outstanding as of the close of business on September 30, 1998.
<PAGE>
<PAGE>
UNION CAMP CORPORATION
INDEX
-----
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I. FINANCIAL INFORMATION*
Item 1. Financial Statements. 2
Item 2. Management's Discussion and 8
Analysis of Financial Condition
and Results of Operations.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K. 13
</TABLE>
--------------------------------------------------
* A summary of the Registrant's significant accounting policies is contained in
the Registrant's Form 10-K for the year ended December 31, 1997 which has
previously been filed with the Commission.
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item I. Financial Statements.
UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
($ in thousands, except per share)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------------- -------------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $ 1,107,305 $ 1,126,902 $ 3,385,948 $ 3,289,618
Costs and other charges:
Cost of products sold 846,705 849,318 2,580,823 2,505,991
Selling and administrative expenses 123,377 125,165 371,314 377,134
Depreciation, amortization, and cost of timber harvested 79,314 77,064 234,635 232,505
Special charge 54,450 -- 54,450 --
----------- ----------- ----------- -----------
Income from operations 3,459 75,355 144,726 173,988
----------- ----------- ----------- -----------
Gross interest expense 31,569 31,852 95,989 95,067
Less capitalized interest (3,580) (2,922) (8,665) (7,114)
Other (income) expense - net 1,856 (1,084) 2,604 (2,619)
----------- ----------- ----------- -----------
Income (loss) before income taxes and minority interest (26,386) 47,509 54,798 88,654
----------- ----------- ----------- -----------
Income taxes:
Current (7,979) 12,620 15,008 20,480
Deferred 683 4,431 7,902 11,794
----------- ----------- ----------- -----------
Total income taxes (7,296) 17,051 22,910 32,274
----------- ----------- ----------- -----------
Minority interest (net of tax) (2,731) (2,899) (8,177) (8,592)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ (21,821) $ 27,559 $ 23,711 $ 47,788
=========== =========== =========== ===========
Basic earnings (loss) per share: ($0.32) $0.40 $0.34 $0.69
Diluted earnings (loss) per share: ($0.32) $0.40 $0.34 $0.69
Dividends per share $0.45 $0.45 $1.35 $1.35
</TABLE>
See also the accompanying notes to consolidated financial statements.
-2-
<PAGE>
<PAGE>
UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
($ in thousands)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net Income (Loss) $ (21,821) $ 27,559 $ 23,711 $ 47,788
Other comprehensive income, pre-tax:
Foreign currency translation 4,455 (9,998) 2,399 (16,349)
---------------- ---------------- ---------------- ----------------
Total other comprehensive income 4,455 (9,998) 2,399 (16,349)
---------------- ---------------- ---------------- ----------------
Comprehensive Income (Loss) $ (17,366) $ 17,561 $ 26,110 $ 31,439
================ ================ ================ ================
</TABLE>
See also the accompanying notes to consolidated financial statements.
-3-
<PAGE>
<PAGE>
UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
($ in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
--------------------- -------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 37,713 $ 34,878
Receivables-net 566,046 638,130
Inventories at lower of cost or market:
Finished goods 330,179 275,112
Raw materials 102,226 109,352
Supplies 109,624 110,849
----------------- ------------------
Total inventories 542,029 495,313
----------------- ------------------
Other current assets 56,259 43,256
----------------- ------------------
Total current assets 1,202,047 1,211,577
----------------- ------------------
Plant and equipment, at cost 6,913,965 6,800,477
Less: accumulated depreciation 3,587,300 3,404,918
----------------- ------------------
3,326,665 3,395,559
Timberlands, less cost of timber harvested 379,199 364,226
----------------- ------------------
Total property 3,705,864 3,759,785
----------------- ------------------
Other assets 283,474 270,339
----------------- ------------------
Total Assets $ 5,191,385 $ 5,241,701
================= ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 863,516 $ 803,018
Long-term debt 1,301,629 1,367,450
Deferred income taxes 752,233 744,677
Other liabilities and minority interest 308,867 290,838
Stockholders' equity:
Common stock - par value $1.00 per share 69,184 69,264
Capital in excess of par value 38,589 41,172
Retained earnings 1,874,309 1,944,623
Accumulated other comprehensive income (16,942) (19,341)
----------------- ------------------
Shares outstanding, 1998 - 69,184,299; 1997 - 69,264,160
Total Stockholders' Equity 1,965,140 2,035,718
----------------- ------------------
Total Liabilities and Stockholders' Equity $ 5,191,385 $ 5,241,701
================= ==================
</TABLE>
See also the accompanying notes to consolidated financial statements.
-4-
<PAGE>
<PAGE>
UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
($ in thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------------------------------------------------
1998 1997
---- ----
<S> <C> <C>
Cash Provided By (Used For) Operations:
Net income $23,711 $47,788
Adjustments to reconcile net income
to cash provided by operations:
Depreciation, amortization, and cost of company
timber harvested 234,635 232,505
Deferred income taxes 7,902 11,794
Special charge 54,450 -
Other 15,436 21,572
Changes in operational assets and liabilities:
Receivables 63,033 (38,422)
Inventories (43,036) (5,128)
Other assets 1,248 5,168
Accounts payable, taxes and other liabilities (40,401) (2,301)
-------------- --------------
Cash Provided By Operations 316,978 272,976
-------------- --------------
Cash (Used For) Provided By Investment Activities:
Capital expenditures:
Plant and equipment (164,011) (213,828)
Timberlands (22,735) (25,645)
Payments for acquired businesses - (13,890)
Other (29,234) 19,253
-------------- --------------
(215,980) (234,110)
-------------- --------------
Cash (Used For) Provided By Financing Activities:
Change in short-term notes payable 46,905 57,482
Repayments of long-term debt (59,464) (15,206)
Proceeds from the issuance of long-term debt 21,501 10,000
Common stock repurchases (13,002) -
Dividends paid (93,532) (93,681)
-------------- --------------
(97,592) (41,405)
-------------- --------------
Effect of exchange rate changes on cash (571) (1,680)
-------------- --------------
Increase (decrease) in cash and cash equivalents 2,835 (4,219)
Balance at beginning of year 34,878 44,917
-------------- --------------
Balance at end of period $37,713 $40,698
============== ==============
Supplemental cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $90,119 $94,946
Income taxes $30,536 $22,304
</TABLE>
See also the accompanying notes to consolidated financial statements.
-5-
<PAGE>
<PAGE>
UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Note 1. The information furnished in this report is unaudited but includes
all adjustments which, in the opinion of management, are necessary for
a fair presentation of results for the interim periods reported. The
adjustments made were of a normal recurring nature, except as detailed
below in Note 2.
Note 2. During the third quarter of 1998, the company recorded a $54 million
pre-tax non-recurring special charge ($36 million after-tax) to
operating income. Included in the charge was $31 million for employee
severance costs related to the elimination of approximately 540
positions, $17 million for asset write downs, and $6 million for other
costs. Included in the severance program are approximately 190
positions eliminated through a re-organization and restructuring of
the company's research and development activities; the elimination of
190 positions through the consolidation of the Packaging Group's
administrative support functions, and about 160 positions through a
series of organizational changes. Substantially all of the 540
positions will be eliminated by the end of 1999.
Note 3. The increase in "Other Current Assets" from December 31, 1997 is due
to the reclassification of $14.3 million to assets held for resale
from plant and equipment.
Note 4. Included in "Current Liabilities" are $169 million and $113 million of
commercial paper borrowings at September 30, 1998 and year-end 1997,
respectively.
Note 5. Included in "Other Liabilities and Minority Interest" at September 30,
1998 and year-end 1997 are $98.2 million and $90.0 million,
respectively, representing the minority interest in Union Camp's 68%
owned subsidiary, Bush Boake Allen.
Note 6. The company has guaranteed loans of up to $30 million made by a
financial institution to non-controlled entities. Each of the loan
guarantees has a term of four years or less and is secured by the
entity's assets or, in the case of one borrower, contains contractual
rights to obtain possession of stock in the business. The terms of one
guaranteed loan for $15 million made to a customer of the company
require a principal payment of $3.75 million during the fourth quarter
of 1998. In addition, this same customer is in negotiations with the
company to convert a $15 million past due trade account receivable to
an interest-bearing note, which would mature in 2001. The customer's
recent results of operations and anticipated cash flows indicate that
it is doubtful that its obligations relative to the loan guaranteed by
the company and the past due receivable will be fully met. As a
result, the company has estimated the potential for loss and recorded
a reserve against the exposure; however, on-going events and future
business conditions may require the company to record additional
charges.
</TABLE>
6
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Note 7. Earnings per share are computed on the basis of the average number of
common shares outstanding:
</TABLE>
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C> <C>
Quarter Ended September 30, Basic 69,251,024 69,546,878
Diluted 69,299,737 70,321,568
Nine Months Ended September 30, Basic 69,270,833 69,359,639
Diluted 69,669,667 69,795,368
</TABLE>
<TABLE>
<S> <C>
The diluted earnings per share calculation excludes the effect of
stock options when the options' exercise price exceed the average
market price of the common shares during the period. For the three and
nine months periods ended September 30, 1998, 4.0 million and 1.0
million options, respectively, were excluded. There were no
antidilutive options for the comparable periods of 1997.
Note 8. Certain amounts have been reclassified for 1997 to conform with the
1998 presentation.
</TABLE>
7
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
For the third quarter of 1998, the company recorded a net loss of $21.8 million
or $.32 per share (diluted). Included in the company's third quarter results was
a special, non-recurring charge amounting to $54.5 million pre-tax ($36.2
million or $.52 per share after-tax). The special charge represents the cost of
a series of restructuring and reorganization actions to further improve
profitability. Included in the charge was $31.2 million for employee severance
costs related to the elimination of approximately 540 positions, $16.8 million
for asset write downs, and $6.5 million for other costs. Substantially all of
the 540 positions will be eliminated by the end of 1999.
Third quarter net income before the effects of the special charge was $14.4
million or $.20 per share (diluted), compared with $27.6 million or $.40 per
share (diluted) for the third quarter of last year. Not including the effects of
the special charge, income from operations for the quarter was $57.9 million, a
23% decrease from last year's third quarter. The earnings decrease from the
prior year reflects a combination of lower average selling prices for uncoated
free sheet and lumber, higher wood costs, as well as a drop-off in linerboard
shipments, which was partially offset by higher average selling prices for
linerboard and overall production efficiencies.
Net income for the first nine months of 1998 before the effects of the special
charge was $59.9 million or $.86 per share (diluted), compared with $47.8
million or $.69 per share (diluted) for the same period last year. Operating
income for the first nine months of 1998 was $199.2 million, before the effects
of the special charge, which was a 14% increase above the $174.0 million
reported for the first nine months of 1997. Although earnings before the special
charge improved over the comparable prior year period, the economic turmoil in
Asia significantly impacted the worldwide supply/demand balance during 1998,
thereby affecting the markets and demand for the company's core products.
In comparison to the second quarter of this year, third quarter net income
before the effects of the special charge decreased by 24%. Third quarter income
from operations before the special charge also declined by 8% from this year's
second quarter. During this year's third quarter, industry wide excess inventory
levels have resulted in declining prices for all of the company's major
products. In recognition of these weaker markets, the company took approximately
100,000 tons of downtime primarily in its linerboard mills during the third
quarter of this year. The earnings decline from the second quarter of this year
primarily reflects the impact of downtime taken at one paper mill and weakness
in prices primarily for uncoated free sheet and linerboard.
Net sales for the third quarter were $1.1 billion, down slightly from the
previous year's comparable quarter, as well as this year's second quarter.
Overall, total paper products shipments were down 6% from last year's third
quarter.
<TABLE>
<CAPTION>
Third Third
Operating Profit by Segment ($000) Quarter 1998 Quarter 1997
- ---------------------------------- --------------- ---------------
<S> <C> <C>
Paper and Paperboard $ 35,116 $ 45,674
Packaging Products 8,026 6,424
Wood Products 4,281 18,776
Chemical 19,900 20,255
Corporate Items and Eliminations* (63,864) (15,774)
--------------- ---------------
Income from Operations $ 3,459 $ 75,355
=============== ===============
</TABLE>
*Current year results include a special charge of $54.5 million pre-tax.
Operating income for the Paper and Paperboard segment in the third quarter of
1998 was $35.1 million, compared to $45.7 million reported for the third quarter
of last year. The decline in operating profit was attributable to lower average
selling prices for uncoated free sheet, decreased shipments of domestic and
export linerboard, as well as higher wood costs, all of which were partially
offset by higher average selling prices for domestic and export linerboard.
Compared with last year's third quarter, domestic and export linerboard
shipments decreased by 10% and 32%, while shipments of uncoated free sheet
remained level with last year. Third quarter average selling prices for uncoated
free sheet decreased 6%, while average
8
<PAGE>
<PAGE>
selling prices for domestic and export linerboard increased 14% and 1%
respectively, versus last year's comparable period. Compared to the preceding
quarter, uncoated free sheet prices declined 6%, and domestic and export
linerboard prices declined 4% and 7%, respectively.
Packaging Products segment operating income was $8.0 million for the third
quarter of 1998, compared with $6.4 million for last year's comparable quarter.
Earnings increased due to improved performances in the flexible packaging and
folding carton operations, which were partially offset by lower margins within
both the domestic and international corrugated container businesses. During the
third quarter of 1998, the company recognized a $1.5 million gain on the sale of
its Lakeland, Florida container operation. Earlier this year, the company
decided to sell its Newtown, Connecticut plant as an ongoing operation. The book
value of this asset has been reclassified into assets held for resale, which is
included within other current assets.
The company's other business groups reported decreased operating income compared
with last year's third quarter. The Wood Products segment reported third quarter
earnings of $4.3 million, a significant decrease from last year's third quarter,
due largely to a 16% decrease in the average selling price of lumber from the
third quarter of 1997, higher wood stumpage costs, as well as start up expenses
associated with the company's new laminated veneer lumber plant. These factors
were partially offset by an increase in particleboard shipments of 4%, compared
with last year's comparable period. The earnings decline in the Chemical segment
resulted from a significant decrease in operating profits in the Chemical
Products business due to the unfavorable impact of exchange rates, the economic
slowdown in the Asia Pacific region, higher fixed costs, and lower average
selling prices. Although unfavorable currency exchange rates and the Asia
Pacific economic slowdown also negatively impacted the company's Bush Boake
Allen business, the effectiveness of cost control programs more than offset the
negative impact.
Depreciation expense for the third quarter of 1998 increased 3% from last year's
comparable quarter, due to the completion of several capital projects. Gross
interest expense in the third quarter decreased slightly compared to the same
quarter last year.
Cash flow from operations for the first nine months of 1998 was $317.0 million,
compared with $273.0 million for last year's comparable period. The increase was
primarily due to the increased earnings for the first nine months of this year,
before the effect of the special charge, and a decrease in trade receivables,
which were partially offset by a build up in inventories, and a decline in
accounts payable. Capital expenditures for the first nine months of this year
totaled $186.7 million, compared with $239.5 million last year. Total debt
increased $8.9 million during the first nine months of 1998 due to increased
commercial paper borrowings. The ratio of total debt to total capital employed
increased slightly to 37.5% at September 30, 1998, compared with 36.8% at
year-end 1997.
Net working capital decreased to $338.5 million at September 30, 1998, from
$408.6 million at year-end 1997 primarily due to an increase in short-term
borrowings, and a decrease in trade receivables, which partially offset
increases in inventory levels.
In the third quarter of 1998, the Board of Directors increased the amount of
common stock that the company is authorized to repurchase by 5 million shares.
Prior to the increased authorization, the existing repurchase program had about
1.2 million shares remaining to be purchased. With this action, the shares
authorized for repurchase increased to approximately 6.2 million. During the
first nine months of 1998, the company repurchased 276,800 shares for
approximately $13.0 million.
During the third quarter of 1998, the company continued to negotiate the
conversion of a $15 million past due trade account receivable to an interest
bearing note which would mature in 2001. In addition, the company previously
guaranteed a loan from a financial institution on behalf of this customer for
$15 million, which is payable in four equal annual installments commencing in
the fourth quarter of 1998. The customer's recent results of operations and
anticipated cash flows indicate that it is doubtful that its obligations
relative to the loan guaranteed by the company and the past due receivable will
be fully met. As a result, the company has estimated the potential for loss and
recorded a reserve against the exposure; however, on-going events and future
business conditions may require the company to record additional charges. The
company has security interests in the customer's assets and is in contact with
the customer regarding its prospects and results of operation.
9
<PAGE>
<PAGE>
On January 1, 1999 certain member nations of the European Economic and Monetary
Union (EMU) will adopt a common currency, the "Euro". For a three-year
transition period, both the Euro and the members' national currencies will
remain in circulation. After June 30, 2002, the Euro will be the sole legal
tender for EMU countries. The company's current accounting systems will
accommodate the Euro conversion with minimal intervention. In addition, the
company does not expect that the adoption of the Euro currency unit will have a
material impact on its operations, financial condition or liquidity. The costs
of addressing the Euro conversion are not expected to be material and will be
charged to operations as incurred.
IMPACT OF YEAR 2000
The Year 2000 problem relates to computer systems that have time and
date-sensitive programs that were designed to read years beginning with "19,"
but may not properly recognize the year 2000. If a computer system or software
application used by the company or a third party dealing with the company fails
because of the inability of the system or application to properly read the year
"2000," the results could conceivably have a material adverse effect on the
company.
STATE OF READINESS. The company has instituted a Year 2000 Compliance Program
which embraces internal business systems, manufacturing and logistics systems,
process control systems, security and mechanical systems, and associated
software. The program includes, where appropriate and significant, efforts to
determine whether relevant third party vendors, suppliers and service providers
are also actively engaged in achieving Year 2000 compliance in products,
services, and software, whichever may apply. The company began its Year 2000
compliance efforts in mid-1996 with an initial emphasis on the business
applications of information technology.
Individual sites are responsible to their division management for achieving Year
2000 compliance. Project coordinators at each division oversee the site
activities and provide consolidated progress reporting for the business unit.
Their effort emphasizes the identification of business risk related to business
systems and technology infrastructure.
The Year 2000 program is organized to proceed in phases and to be implemented by
each production operation, information systems group, and administrative unit.
The management of this activity is being conducted by internal resources,
usually engineers in maintenance or project management at operational sites or
in division or corporate offices.
Year 2000 work has been assigned the following five phases:
<TABLE>
<S> <C>
Phase 1: Awareness: Awareness of the problem is communicated, compliance is
defined, and goals set.
Phase 2: Inventory: Inventory plans are developed. All sites complete
inventories. Information Services' data is inventoried for in-house
analysis.
Phase 3: Triage/Set Priorities: Assess the devices and software with potential
Year 2000 problems, consider likely impact on operations, and
prioritize remediation actions.
Phase 4: Detailed Assessment: Investigate devices and software that have a
Year 2000 compliance problem. Retain vendors as required and obtain
proposals for fixes or replacements.
Phase 5: Resolution, Testing, and Deployment: Repair, replace, provide work
arounds for non-compliant devices and software. Define test plans and
implement. Deploy upgrades and perform verification testing.
</TABLE>
The company's information services group currently has identified 237 major
business and technology systems. Ninety-five of these systems have been
designated as having higher risk. Approximately 70% of these systems are in the
final resolution, testing and deployment phase. In aggregate, all information
10
<PAGE>
<PAGE>
technology compliance efforts are scheduled to be completed by September 1999.
The company is primarily utilizing internal staff resources in the Year 2000
effort. No significant consulting or contract personnel resources are being used
for the Year 2000 effort. In 1999, less than 10% of the information services
budget is expected to be spent for the Year 2000 effort.
For each division, and for the corporation as a whole, major new systems are in
their fourth year of development, implementation or operation. Over this period,
the entire information technology infrastructure of the corporation has been
upgraded providing Year 2000 compliance as a by-product in most instances.
PROCESS CONTROL SYSTEMS. The Awareness and Inventory phases are essentially
complete at all the company's mills and plant facilities. The majority of these
sites are well into the Triage phase which assesses potential Year 2000
problems. Currently, no operation has reported the need to replace a major
system. The company expects to complete the final phase, Resolution, Testing and
Deployment, by mid-1999.
SUPPLIER RELATIONSHIPS. The company's purchasing function is guiding the
execution and tracking of Year 2000 readiness in its supply chain relationships.
In addition to sending letters requesting confirmation of compliance or
compliance planning, the operations are identifying key materials, levels of
dependence, existence of backup resources or safety stock requirements, and
organizing responses to specific vendor issues.
REPORTING AND PROGRESS TRACKING. The company is utilizing a comprehensive
project management methodology. Reporting requirements are consistent in most of
the operating units of the corporation. Summaries of detailed division plans are
reviewed for progress according to business area, risk of non-compliance and
scheduled completion of the standard phases.
COSTS. Both internal and external resources are being used to reprogram or
replace non-compliant technologies, and to appropriately test Year 2000
modifications. Such modifications are being funded through operating cash flows.
The company estimates the incremental cost of corrective actions will be
approximately $20 million. Included in these costs are $2.5 million of capital
expenditures. Approximately $7.0 million of the total estimated cost will be
spent in 1998. The company believes all necessary work will be completed in a
timely fashion. While it is possible that the costs of these remedial efforts
may be material to the results of operations in one or more quarters, management
believes these costs will not have a material adverse impact on the long-term
results of operations, liquidity, or consolidated financial position of the
company.
CONTINGENCY PLANNING. While the company currently expects no material adverse
consequences on its financial condition or results of operations due to Year
2000 issues, the company's beliefs and expectations are based on certain
assumptions that ultimately may prove to be inaccurate. Divisions are developing
specific contingency plans for most reasonably likely worst case scenarios.
These plans are expected to be complete by September 1999. To mitigate the
effects of the company's or significant suppliers' failure to remediate the year
2000 problem in a timely manner, the company would take appropriate actions.
These actions include the inventorying of critical raw materials and supplies,
increasing finished goods inventories, switching to alternative energy sources,
and making arrangements for alternate suppliers.
- --------------------------------------------------------------------------------
Statements in this report or in other company announcements that are not
historical are forward-looking statements that are subject to risks and
uncertainties that could cause actual results to differ materially. Such risks
and uncertainties with respect to the company include the effect of general
economic conditions, fluctuations in supply and demand for the company's
products including exports and potential imports, paper industry production
capacity, operating rates, competitive pricing pressures, that the company's
future "Year 2000" efforts reveal the costs of corrective action to be higher
than presently estimated and that, if the obligor of the $15 million trade
receivable and $15 million note guaranteed by the company defaults in its
payment obligations, the company's remedies may be insufficient.
- --------------------------------------------------------------------------------
11
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
During 1998 the Company discovered that a small power boiler
constructed at its Franklin, Virginia mill in 1986 had been operated
for brief periods at a rate in excess of its permit limit for sulfur
dioxide emissions. Such rate would have required the boiler to meet
more stringent emission limits on sulfur dioxide under New Source
Performance Standard regulations for stationary sources within the
time frame under which the boiler was constructed. The Company
notified the Virginia Department of Environmental Quality and Region
III of the United States Environmental Protection Agency and received
a notice of violation from the Virginia Department of Environmental
Quality. The Company anticipates that a penalty will be imposed.
Although the precise nature and amount of the penalty is not known at
this time, based upon the information currently available to it, the
Company believes the penalty could exceed $100,000.
Item 5. Other Information.
In June 1998 the Securities and Exchange Commission amended Rule 14a-4
under the Securities Exchange Act of 1934. The amended rule provides
that a proxy may confer discretionary authority to vote on any matter
at an annual meeting if the company did not have written notice of the
matter to be raised at the annual meeting at least 45 days in advance
of the anniversary of the mailing of proxy materials for the prior
year's annual meeting. The rule further provides that any advance
notice provision in a company's bylaws or articles of incorporation
will override the 45 day advance notice provision in the rule. The
Company adopted a 60 day advance notice provision in June 1990 to give
the Company adequate time to consider and react to such proposals. In
order to permit the Company to receive approximately the same advance
notice it would receive, in the absence of a bylaw provision, under
Rule 14a-4, the Company amended Article II, Section 1 of the Company's
bylaws on September 29, 1998 (with a subsequent minor change on
October 27, 1998) to provide that a stockholder who wishes to propose
the transaction of any business at any annual meeting of the Company's
stockholders, including the nomination of one or more persons for
election as directors, must provide written notice of such intent not
less than 90 days before the anniversary date of the annual meeting
(subject to the stated exceptions if the date of the meeting is more
than 30 days before or after the anniversary date of the prior year's
meeting). Accordingly, any stockholder wishing to propose the
transaction of business at the next annual meeting of stockholders
must notify the Corporate Secretary in writing no later than January
28, 1999.
-12-
<PAGE>
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits.
<TABLE>
<CAPTION>
No. Description
--- ------------
<S> <C>
3.2 Bylaws of Union Camp
Corporation through October
27, 1998.
10.1 Union Camp Corporation
Supplemental
Retirement Income Plan for
Executive Officers.
10.2 Union Camp Corporation
Severance Policy for Key
Employees.
27 Financial data schedule.
</TABLE>
b) Reports on Form 8-K.
No Current Report on Form 8-K was filed by the Registrant during
the third quarter of 1998.
-13-
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNION CAMP CORPORATION
-------------------------------------
(Registrant)
Date: November 12, 1998 /S/ Dirk R. Soutendijk
-------------------------------------
DIRK R. SOUTENDIJK
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
Date: November 12, 1998 /S/ John F. Haren
-------------------------------------
CONTROLLER
-14-
<PAGE>
<PAGE>
Exhibit 3.2
------------------------------------------------------------------------------
BY-LAWS
UNION CAMP CORPORATION
(AS AMENDED OCTOBER 27, 1998)
- -------------------------------------------------------------------------------
<PAGE>
<PAGE>
BY-LAWS
of
UNION CAMP CORPORATION
(AS AMENDED OCTOBER 27, 1998)
-----------------------------
ARTICLE I
Stock
SECTION 1. Form and Execution of Certificates. The certificates of shares
of stock of the Corporation shall be in such form not inconsistent with the
Articles of Incorporation as shall be approved by the Board of Directors.
Certificates of stock shall be signed by the Chairman of the Board, the
President or by a Vice President and the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary, except that where any such certificates
shall be countersigned by a transfer agent or by a registrar, other than the
Corporation, the signatures of any of the officers above specified may be
facsimiles, engraved or printed. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer at the date of its
issue.
SECTION 2. Regulations. The Board of Directors may make such rules and
regulations as it may deem expedient concerning the issue, transfer and
registration of certificates of stock and concerning certificates of stock
issued, transferred or registered in lieu or replacement of any lost, stolen,
destroyed or mutilated certificates of stock.
1
<PAGE>
<PAGE>
SECTION 3. Transfer Agent and Registrar. The Board of Directors may appoint
a transfer agent or transfer agents and a registrar or registrars of transfer
for any or all classes of the capital stock of the Corporation, and may require
stock certificates of any or all classes to bear the signature of either or
both.
SECTION 4. Closing of Transfer Books, Fixing of Record Date. The Board of
Directors may fix in advance a date, not exceeding 70 days preceding the date of
any meeting of stockholders, or the date for the payment of any dividend, or the
date for the determination of stockholders for any other proper purpose, as a
record date for the determination of the stockholders exclusively entitled to
notice of and to vote at any such meeting, or any adjournment thereof, or
entitled to receive payment of any such dividend, or for any other proper
purpose.
SECTION 5. Restrictions on Transfer. The Board of Directors may impose
restrictions on transfer of securities of the Corporation pursuant to the Rights
Agreement, dated as of January 25, 1996, by and between the Corporation and The
Bank of New York, as and to the extent required by such Rights Agreement, as
amended from time to time.
SECTION 6. Control Share Acquisitions. Article 14.1 of the Virginia Stock
Corporation Act shall not apply to acquisitions of the Corporation.
2
<PAGE>
<PAGE>
ARTICLE II
Stockholders
SECTION 1. Annual Meeting. The annual meeting of the stockholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held at such time, and at such place,
either within or without the State of Virginia, as may be designated in the
notice thereof, on the last Tuesday in April of each year if not a legal
holiday, but if a legal holiday, then on the next succeeding business day (such
last Tuesday in April or, if a legal holiday, the next succeeding business day,
being hereinafter referred to as the "Formula Date") or on such other date as
the Board of Directors may determine at any time in advance of the Formula Date.
At the annual meeting of stockholders, only such business shall be
conducted as shall have been properly brought before the meeting (a) by or at
the direction of the Board of Directors or (b) by any stockholder of the
Corporation who shall be entitled to vote at such meeting and who complies with
the procedures set forth in this Section 1.
In addition to any other applicable requirements, for business, including
the nomination of one or more persons for election as Directors, to be properly
brought before the annual meeting by a stockholder, such stockholder must have
given timely advance written notice thereof to the Secretary of the Corporation.
The Secretary shall deliver timely received notices to the Board of Directors or
a committee designated by the Board for review. To be timely, a stockholder's
notice must be received by the Secretary at the principal executive offices
of the
3
<PAGE>
<PAGE>
Corporation not less than ninety days in advance of the first anniversary
date of the annual meeting of shareholders for the preceding year; provided,
however, if and only if the annual meeting is not scheduled to be held within a
period which commences 30 days before such anniversary date and ends 30 days
after such anniversary date, such notice shall be given not later than 90 days
in advance of the meeting date unless the date of such meeting is not publicly
disclosed by the Corporation (by press release or by a document filed by the
Corporation with the Securities and Exchange Commission) at least 115 days prior
thereto, in which case such notice shall be given not later than the close of
business on the date that is 25 days following the first public disclosure by
the Corporation of the date of the annual meeting. In calculating days, the day
of such annual meeting shall not be included so that stockholders shall begin
counting with the day immediately preceding the day of the annual meeting which,
for purposes of such calculation, shall be one day in advance of the annual
meeting.
A stockholder's notice to the Secretary shall set forth as to each matter
of business the stockholder proposes to bring before the annual meeting: (a) a
description of the business intended to be brought before the annual meeting,
including the text of any resolution to be presented, and the reasons for
conducting such business at the annual meeting; (b) the name and address of the
stockholder proposing such business; (c) a representation that the stockholder
is a holder of record of stock of the Corporation entitled to vote at the annual
meeting and intends to appear in person or by proxy at the meeting to bring the
business specified in the notice before the meeting; (d) the class and number of
shares of stock of the Corporation owned (i) of record and (ii) beneficially by
the stockholder; and (e) any material interest of the stockholder in the
business to be brought before the meeting.
4
<PAGE>
<PAGE>
A stockholder's notice of intent to make a nomination of one or more
persons for election as Directors at the annual meeting of stockholders shall,
in addition to the information required above, set forth as to each such person:
(a) the name, age and business and residence addresses of the person; (b) the
principal occupation or employment of the person; (c) the class and number of
shares of stock of the Corporation owned (i) of record and (ii) beneficially by
the person; (d) a description of all arrangements or understandings between the
stockholder and the person and any other person or persons (naming such other
person or persons) pursuant to which the nomination or nominations are to be
made by the stockholder; (e) such other information regarding the person as
would be required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission, had the person been
nominated by the Board of Directors; and (f) the written consent of the person
to serve as a Director of the Corporation if so elected. The Corporation may
require any stockholder proposing to nominate one or more persons for election
as Directors to furnish such other information as may reasonably be required by
the Corporation to determine the eligibility of each such person to serve as a
Director of the Corporation.
In the event a stockholder attempts to bring business before the annual
meeting without complying with the provisions of this Section 1, the presiding
officer of the meeting shall determine and declare to the meeting that the
business was not properly brought before the meeting, and such business shall
not be transacted.
SECTION 2. Special Meeting. Special meetings of the stockholders for any
purpose or purposes may be held at any time and at any place, within or without
the State of Virginia, designated in the call thereof, whenever called by the
Board of Directors, the Chairman of the Board, the President, or as otherwise
provided by law.
5
<PAGE>
<PAGE>
SECTION 3. Notice. Written notice of every annual or special meeting of the
stockholders, stating the place, day and hour and purpose or purposes thereof,
shall be given to each stockholder of record entitled to vote thereat, either
personally or by mailing the notice to him at his address as it appears on the
stock transfer books of the Corporation. Where such notice of a stockholders'
meeting includes as a purpose thereof action with respect to an amendment of the
Articles of Incorporation or a reduction of stated capital or a plan of merger
or consolidation, such notice shall be given in the manner hereinabove provided,
but at least 25 and not more than 50 days before the date of any such meeting
and any such notice shall be accompanied by a copy of the proposed amendment or
plan of reduction or merger or consolidation.
SECTION 4. Quorum. A quorum at any meeting of the stockholders shall
consist of a majority of the stock of the Corporation entitled to vote, present
in person or by proxy, unless otherwise required by law or the Articles of
Incorporation. If at the time and place of the meeting there is present less
than a quorum, a majority of the stock present in person or by proxy and
entitled to vote, shall have power to adjourn the meeting from time to time
without notice until a quorum is secured, and thereupon any business may be
transacted which might have been transacted at the meeting as originally called.
SECTION 5. Organization. All meetings of the stockholders shall be presided
over by the Chairman of the Board, or in his absence, by the President, or in
his absence, by the Chairman of the Executive Committee. In case none of such
officers of the Corporation shall be present, a chairman shall be elected by the
vote of a majority of the stock present in person or by proxy entitled to vote.
The Secretary of the Corporation or an Assistant Secretary shall act as
6
<PAGE>
<PAGE>
secretary of every such meeting when present, and in the absence of either, the
presiding officer may appoint any other officer of the Corporation to act as
Secretary.
SECTION 6. Inspectors. At any annual or special meeting of stockholders,
inspectors of election may be appointed by the presiding officer of the meeting
for the purpose of opening and closing the polls, receiving and taking charge of
proxies, and receiving and counting the ballots or the votes of stockholders
otherwise given and shall in writing certify to the returns. No candidate for
election as director shall be appointed or act as inspector.
ARTICLE III
Directors
SECTION 1. Number, Vacancy. The property, business and affairs of the
Corporation shall be managed by a Board of 11 directors. Except as otherwise
provided by law or in these By-laws or in the Articles of Incorporation, the
directors shall be elected by the stockholders at each annual meeting of
stockholders and shall serve until the next succeeding annual meeting and until
their successors shall have been elected. In the event of any vacancy in the
directors resulting from death, resignation, disqualification, an increase by
thirty percent (30%) or less in the number of directors last elected by the
stockholders, or other cause, the remaining directors, although less than a
quorum, by an affirmative vote of a majority thereof, may fill such vacancy.
SECTION 2. Regular Meeting. Regular meetings of the Board of Directors
shall be held, either within or without the State of Virginia, as shall from
time to time be determined by the Board of Directors. After there has been such
determination and notice thereof has been given to each member of the Board of
Directors, no further notice shall be required for any such
7
<PAGE>
<PAGE>
regular meeting. The annual meeting of the Board of Directors may be held,
without notice, on the same day as and after the annual meeting of the
stockholders.
SECTION 3. Special Meeting. Special meetings of the Board of Directors
shall be held, either within or without the State of Virginia, upon the order of
the Board, or the call of the Chairman of the Board, the President, or three
directors. The Secretary, or other officer performing his duties, shall give
notice to each director of the time and place of each meeting, by mailing the
same at least two days before the meeting or by telegraphing or telephoning the
same prior to the meeting.
SECTION 4. Quorum. A majority of the number of directors fixed by these
By-laws shall constitute a quorum for the transaction of business except as
otherwise provided by law or the Articles of Incorporation or these By-laws, but
a majority of those present at the time and place of any meeting, although less
than a quorum, may adjourn from time to time without notice, until a quorum is
secured.
SECTION 5. Compensation. The Board of Directors shall have the authority
to fix the compensation of the directors and of members of the Executive
Committee and of other committees of the Board.
SECTION 6. Indemnification of Officers, Directors and Employees.
(a) Each director and officer of the Corporation shall be
indemnified by the Corporation against all costs and expenses reasonably
incurred by or imposed upon him in connection with or resulting from any action,
suit or proceeding to which he may be made a party by reason of his being or
having been a director or officer of the Corporation (whether or not he
continues to be a director or officer at the time of incurring such cost or
expense), except in relation to matters as to which a recovery shall be had
against him by reason of his having been
8
<PAGE>
<PAGE>
finally adjudged in such action, suit or proceeding to have been derelict in the
performance of his duty as such director or officer. The foregoing qualification
shall not, however, prevent a settlement by the Corporation prior to final
adjudication when such settlement appears to be in the interest of the
Corporation. The right of indemnification herein provided shall not be exclusive
of other rights to which any director or officer may be entitled as a matter of
law. (Adopted by the stockholders of the Corporation March 3, 1942.)
(b) As used in the following subsections of this Section 6:
"Applicant" means the person seeking indemnification pursuant to
this Section.
"Expenses" includes counsel fees.
"Liability" means the obligation to pay a judgment, settlement,
penalty, fine, including any excise tax assessed with respect to an employee
benefit plan, or reasonable expenses incurred with respect to a proceeding.
"Official capacity" means, (i) when used with respect to a
director, the office of director in the Corporation; or (ii) when used with
respect to an individual other than a director, the office in the Corporation
held by the officer or the employment or agency relationship undertaken by the
employee or agent on behalf of the Corporation.
"Official capacity" does not include service for any other
foreign or domestic corporation or any partnership, joint venture, trust,
employee benefit plan, or other enterprise.
"Party" includes an individual who was, is, or is threatened to
be made a named defendant or respondent in a proceeding.
9
<PAGE>
<PAGE>
"Proceeding" means any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative or investigative
and whether formal or informal.
(c) The Corporation shall indemnify any person who was or is a
party to any proceeding by reason of the fact that he is or was a director,
officer or employee of the Corporation, or is or was serving at the request of
the Corporation as a director, trustee, partner, officer or employee of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against any liability incurred by him in connection with such
proceeding if (i) he believed, in the case of conduct in his official capacity,
that his conduct was in the best interests of the Corporation, and in all other
cases that his conduct was at least not opposed to its best interests, and, in
the case of any criminal proceeding, had no reasonable cause to believe his
conduct was unlawful, (ii) in connection with a proceeding by or in the right of
the Corporation, he was not adjudged liable to the Corporation, and (iii) in
connection with any proceeding charging improper benefit to him, whether or not
involving action in his official capacity, he was not adjudged liable on the
basis that personal benefit was improperly received by him. A person is
considered to be serving an employee benefit plan at the corporation's request
if his duties to the corporation also impose duties on, or otherwise involve
services by, him to the plan or to participants in or beneficiaries of the plan.
A person's conduct with respect to an employee benefit plan for a purpose he
believed to be in the interests of the participants and beneficiaries of the
plan is conduct that satisfies the requirements of this subsection.
(d) The termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not of
itself create a
10
<PAGE>
<PAGE>
presumption that the applicant did not meet the standard of
conduct described in subsection (c) of this Section.
(e) To the extent that the applicant has been successful on the merits
or otherwise in defense of any proceeding referred to in subsection (c) of this
Section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses actually and reasonably incurred by him in
connection therewith.
(f) Any indemnification under subsection (c) of this Section (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the applicant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in subsection (c).
The determination shall be made:
(i) By the Board of Directors by a majority vote of a
quorum consisting of directors not at the time parties to the
proceeding;
(ii) If a quorum cannot be obtained under paragraph (i) of this
subsection, by majority vote of a committee duly designated by the Board of
Directors (in which designation directors who are parties may participate),
consisting solely of two or more directors not at the time parties to the
proceeding;
(iii) By special legal counsel:
(A) Selected by the Board of Directors or its committee in the
manner prescribed in paragraph (i) or (ii) of this subsection; or
(B) If a quorum of the Board of Directors cannot be obtained
under paragraph (i) of this subsection and a committee cannot be designated
under paragraph (ii)
11
<PAGE>
<PAGE>
of this subsection, selected by majority vote of the full Board of Directors, in
which selection directors who are parties may participate; or
(iv) By the shareholders, but shares owned by or voted under the
control of directors who are at the time parties to the proceeding may not be
voted on the determination.
Authorization of indemnification and evaluation as to reasonableness
of expenses shall be made in the same manner as the determination that
indemnification is permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under paragraph (iii)
of this subsection to select counsel.
(g) (i) The Corporation may pay for or reimburse the reasonable
expenses incurred by any applicant who is a party to a proceeding in advance of
final disposition of the proceeding if:
(A) The applicant furnishes the Corporation a written statement
of his good faith belief that he has met the standard of conduct described in
subsection (c);
(B) The applicant furnishes the Corporation a written
undertaking, executed personally or on his behalf, to repay the advance if it
is ultimately determined that he did not meet the standard of conduct; and
(C) A determination is made that the facts then known to those
making the determination would not preclude indemnification under this Section.
(ii) The undertaking required by subparagraph (B) of paragraph (i) of
this subsection shall be an unlimited general obligation of the applicant but
need not be secured and may be accepted without reference to financial ability
to make repayment.
12
<PAGE>
<PAGE>
(iii) Determinations and authorizations of payments under this subsection
shall be made in the manner specified in subsection (f).
(h) The Board of Directors is hereby empowered, by majority vote of a
quorum of disinterested directors, to cause the Corporation to indemnify or
contract in advance to indemnify any person not specified in subsection (c) of
this Section who was or is a party to any proceeding, by reason of the fact that
he is or was an agent of the Corporation, or is or was serving at the request of
the Corporation as an agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, to the same extent as if such
person were specified as one to whom indemnification is granted in subsection
(c). The provisions of subsections (d) through (g) of this Section shall be
applicable to any indemnification provided hereafter pursuant to this subsection
(h).
(i) The Corporation may purchase and maintain insurance to indemnify
it against the whole or any portion of the liability assumed by it in accordance
with this Section and may also procure insurance, in such amounts as the Board
of Directors may determine, on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against any liability asserted against or incurred by him in any
such capacity or arising from his status as such, whether or not the Corporation
would have power to indemnify him against such liability under the provisions of
this Section.
(j) The Board of Directors is hereby empowered to cause the
Corporation to contract in advance to indemnify any person specified in
subsection (c) of this Section
13
<PAGE>
<PAGE>
provided that such contract does not permit indemnification if the proposed
indemnitee failed to meet the standard of conduct set forth in subsection (c).
(k) Every reference herein to directors, officers, employees or agents
shall include former directors, officers, employees and agents and their
respective heirs, executors and administrators. The indemnification hereby
provided and provided hereafter pursuant to the power hereby conferred on the
Board of Directors shall not be exclusive of any other rights to which any
person may be entitled, including any right under policies of insurance that may
be purchased and maintained by the Corporation or others, with respect to
claims, issues or matters in relation to which the Corporation would not have
the power to indemnify such person under the provisions of this Section.
(l) For the purposes of this Section, references to the "Corporation"
include all constituent corporations absorbed in a consolidation or merger as
well as the resulting or surviving corporation so that any person who is or was
a director, officer or employee of such a constituent corporation or is or was
serving at the request of such constituent corporation as a director, officer or
employee of another corporation, partnership, joint venture, trust or other
enterprise shall stand in the same position under the provisions of this Section
with respect to the resulting or surviving corporation as he would if he had
served the resulting or surviving corporation in the same capacity.
(m) If any part of this Section 6 shall be found, in any claim,
action, suit or proceeding, to be invalid or ineffective, the validity and the
effect of the remaining parts shall not be affected.
SECTION 7. Executive Committee. The Board of Directors may, by a resolution
adopted by a majority of the number of directors fixed by these By-laws, appoint
an Executive
14
<PAGE>
<PAGE>
Committee to consist of two or more directors as determined by the Board.
A majority of the members appointed shall constitute a quorum. Such
Committee shall have the power of the Board of Directors in the management of
the property, business and affairs of the Corporation, except the power to
declare dividends, or to approve an amendment of the Articles of Incorporation
or of these By-laws or to approve a plan of merger or consolidation. Such
Committee shall keep regular minutes of its proceedings and shall report to the
Board and be subject to its directions. The Board may fill vacancies therein in
the same manner as original appointments to such Committee. Meetings of the
Executive Committee shall be held, either within or without the State of
Virginia, upon the order of the Committee or the call of the Chairman of the
Executive Committee, or two or more members of the Committee. The Secretary, or
other officer performing his duties, shall give notice to each Executive
Committee member of the time and place of each Executive Committee meeting, by
mailing the same at least two days before the meeting or by telegraphing or
telephoning the same prior to the meeting.
SECTION 8. Other Committees. From time to time the Board of Directors by a
resolution adopted by a majority of the directors present at a meeting at which
a quorum is present may appoint any other committee or committees of directors
for any purpose or purposes, to the extent lawful, which shall have such powers
as shall be determined and specified by the Board of Directors in the resolution
of appointment. Meetings of any such committees shall be held either within or
without the State of Virginia, upon the order of such committee, or the call of
the Chairman, such committee, or two or more members of such committee. The
Secretary, or other officer performing his duties, shall give notice to each
member of such
15
<PAGE>
<PAGE>
committee of the time and place of each meeting of such committee, by mailing
the same at least two days before the meeting or by telegraphing or telephoning
the same prior to the meeting.
SECTION 9. Action Without a Meeting. Unless otherwise restricted by law or
the Articles of Incorporation, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting if a written consent, setting forth the action so to be taken,
shall be signed by all of the directors or all of the members of the committee,
as the case may be. Action taken under this Section is effective when the last
director signs the consent unless the consent specifies a different effective
date, in which event the action taken is effective as of the date specified
therein provided the consent states the date of execution by each director.
SECTION 10. Termination of Committee Membership. In the event any person shall
cease to be a director of the Corporation, such person shall simultaneously
therewith cease to be a member of any committee.
ARTICLE IV
Officers
SECTION 1. Officers. The officers of the Corporation shall be the Chairman
of the Board, the Vice Chairman of the Board, President, Chairman of the
Executive Committee, one or more Senior Executive Vice Presidents, Executive
Vice Presidents, Senior Vice Presidents, Vice Presidents, Secretary, Treasurer,
General Counsel, Comptroller, Assistant Secretaries, Assistant Treasurers, and
Assistant Comptrollers, and such other officers and agents as may be required by
law, or as may be deemed useful. The Chairman of the Board, the Vice Chairman of
the Board, the President and the Chairman of the Executive Committee shall each
be a member of the Board
16
<PAGE>
<PAGE>
of Directors. Any person may hold at the same time any two of the offices above
named, except the offices of President and Secretary.
SECTION 2. Election of Officers; Term of Office. All officers and agents
shall be elected annually by the Board of Directors at each annual meeting of
the Board. If the Board of Directors shall fail to fill any designated office at
an annual meeting or if any vacancy shall occur, or if any office shall be newly
created, such office may be filled at any meeting of the Board of Directors.
Each officer shall hold office until his successor is duly elected, or
until his earlier death, resignation or removal, provided that the terms of
office of all officers shall terminate at any annual meeting of the Board of
Directors at which the President is elected. The Board of Directors shall have
the power to remove any officer, with or without cause, at any time.
17
<PAGE>
<PAGE>
ARTICLE V
Powers and Duties of Officers
SECTION 1. Chairman of the Board. The Chairman of the Board shall be the
chief executive officer of the Corporation and shall have general supervision
over the business of the Corporation. He shall preside at all meetings of
the stockholders and the Board of Directors.
SECTION 2. Chairman of the Executive Committee. The Chairman of the
Executive Committee shall be the presiding officer of the Executive Committee
and shall have such other powers and duties as may be assigned to him by the
Board of Directors.
SECTION 3. President. The President shall be the chief operating officer
of the Corporation and shall have such other powers and duties as may from time
to time be assigned to him by the Board of Directors or the Chairman of
the Board.
SECTION 4. Other officers. All officers other than those expressly
referred to in this Article V shall have such powers and duties as usually
pertain to their respective offices, in addition to the powers and duties
conferred by law or by other sections of these By-laws, and such other duties
and powers as may be assigned to them by the Board of Directors, the Chairman of
the Board or the President.
ARTICLE VI
Fiscal Year
SECTION 1. Fiscal Year. The fiscal year of the Corporation shall end on
December 31 of each year.
18
<PAGE>
<PAGE>
ARTICLE VII
Checks, Notes, Drafts, Contracts, Etc.
SECTION 1. Checks, Notes, Drafts, Etc. All checks, notes, drafts or other
orders for the payment of money of the Corporation shall be signed, endorsed or
accepted in the name of the Corporation by such officer or person as may be
designated from time to time either by the Board of Directors or by an officer
authorized by the Board of Directors to make such designation.
SECTION 2. Execution of Contracts, Deeds, Etc. The Board of Directors may
authorize any officer or agent in the name and on behalf of the Corporation to
enter into or execute and deliver any and all deeds, bonds, mortgages, contracts
and other obligations or instruments, and such authority may be general or
confined to specific instances.
ARTICLE VIII
Seal
SECTION 1. Form. The Corporate Seal of the Corporation shall be the Seal
impressed on the margin hereof.
ARTICLE IX
Waiver of Notice
SECTION 1. Waiver of Notice. Any stockholder, director or
officer may waive any notice required to be given in accordance with law, these
By-laws or the Articles of Incorporation by attendance in person or by a writing
signed by the person or persons entitled to
19
<PAGE>
<PAGE>
said notice or by his proxy, whether before or after the time or event referred
to in said notice, which waiver shall be deemed equivalent to such notice.
ARTICLE X
Amendment to By-laws
SECTION 1. By the Directors. Except as otherwise provided by
law, the Board of Directors shall have the power to make, amend
and repeal the By-laws of the Corporation.
SECTION 2. By the Stockholders. By-laws made by the Board of Directors may
be repealed or changed, and new By-laws made, by the stockholders and the
stockholders may prescribe that any By-laws made by them shall not be altered,
amended or repealed by the directors. Any such action shall be taken at any
annual or special meeting of stockholders, provided that the notice of such
meeting shall have included such action among the purposes of the meeting.
20
<PAGE>
<PAGE>
Exhibit 10.1
UNION CAMP CORPORATION
SUPPLEMENTAL RETIREMENT INCOME PLAN
FOR EXECUTIVE OFFICERS
(EFFECTIVE FEBRUARY 23, 1993
AMENDED NOVEMBER 30, 1993,
APRIL 26, 1994
JUNE 24, 1996
AND OCTOBER 28, 1996)
PREAMBLE
The principal purpose of the Union Camp Corporation Supplemental Retirement
Income Plan for Executive Officers (the "Plan") is to ensure the payment of a
competitive level of retirement income to present members of the policy
committee of Union Camp Corporation (the "Company") in order to attract, retain
and motivate such members and to provide supplemental retirement benefits to
executive officers of the Company, identified by the Personnel, Nominating and
Compensation Committee of the Board of Directors of the Company (the "Board"),
who are then members of the policy committee or who join or have joined the
Company in mid-career and are responsible for a significant segment of the
Company's business and who otherwise would receive retirement benefits from the
Company which would not reflect their experience prior to employment with the
Company or would not be appropriate for the position of responsibility which
they hold with the Company.
1. DEFINITIONS.
1.1 Benefit. Benefit is the benefit provided to an Executive pursuant to
Section 2 of the Plan.
1.2 Change in Control. A "Change in Control of the Company" shall be deemed
to have occurred if
(i) any "person," as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than the Company, any employee benefit plan sponsored by the
Company, any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or any corporation owned,
directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company), is or becomes (other than pursuant to a transaction which is
deemed to be a "Non-Qualifying Transaction" under clause (iii) of this
Section) the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing
-1-
<PAGE>
<PAGE>
50% or more of the combined voting power of the Company's then
outstanding securities eligible to vote for the election of the
Board (the "Company Voting Securities");
(ii) individuals who, on October 29, 1996, constitute the Board (the
"Incumbent Directors") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director
subsequent to October 29, 1996, whose election or nomination for
election was approved by a vote of at least two-thirds of the
Incumbent Directors then on the Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is
named as a nominee for director, without written objection to such
nomination) shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the Company
as a result of an actual or threatened election contest with respect
to directors (including without limitation in order to settle any such
contest) or any other actual or threatened solicitation of proxies by
or on behalf of any person other than the Board shall be an Incumbent
Director;
(iii) the consummation of a merger, consolidation, statutory share exchange
or similar form of corporate transaction involving the Company or any
of its subsidiaries that requires the approval of the Company's
stockholders, whether for such transaction or the issuance of
securities in the transaction (a "Business Combination"), unless
immediately following such Business Combination: (A) more than 50% of
the total voting power of (x) the corporation resulting from such
Business Combination (the "Surviving Corporation"), or (y) if
applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of 100% of the voting securities
eligible to elect directors of the Surviving Corporation (the "Parent
Corporation"), is represented by Company Voting Securities that were
outstanding immediately prior to such Business Combination (or, if
applicable, shares into which such Company Voting Securities were
converted pursuant to such Business Combination), (B) no person (other
than any employee benefit plan sponsored or maintained by the
Surviving Corporation or the Parent Corporation) is or becomes the
beneficial owner, directly or indirectly, of 25% or more of the total
voting power of the outstanding voting securities eligible to elect
directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and (C) at least a majority of
the members of the board of directors of the Parent Corporation (or,
if there is no Parent Corporation, the Surviving Corporation)
following the consummation of the Business Combination were Incumbent
-2-
<PAGE>
<PAGE>
Directors at the time of the Board's approval of the execution of the
initial agreement providing for such Business Combination (any
Business Combination which satisfies all of the criteria specified in
(A), (B) and (C) above shall be deemed to be a "Non-Qualifying
Transaction"); or
(iv) the stockholders of the Company approve a plan of complete liquidation
or dissolution of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets.
A Change in Control of the Company shall be deemed not to have occurred with
respect to the Executive if the Executive participates as an investor in the
acquiring entity (which shall include the Parent Corporation, when applicable)
in any such Change in Control transaction, unless such acquiring entity is a
publicly-traded corporation and the Executive's interest in such acquiring
entity immediately prior to the acquisition constitutes less than one percent
(1%) of both (1) the combined voting power of such entity's outstanding
securities and (2) the aggregate fair market value of such entity's outstanding
equity securities. For this purpose the Executive's interest in any equity
securities shall include any such interest of which the Executive is a
"beneficial owner" as defined in Rule 13d-3 under the Exchange Act.
Subject only to the provision in the immediately preceding paragraph, if the
Executive's employment terminates prior to a Change in Control of the Company
(including pursuant to an event which would constitute Good Reason), and the
Executive reasonably demonstrates that such termination of employment (or Good
Reason event leading to the Executive's termination) was at the request or
suggestion of a third party who had indicated an intention or taken steps
reasonably calculated to effect a Change in Control of the Company (a "Third
Party"), and a Change in Control of the Company involving such Third Party (or a
party competing with such Third Party to effectuate a Change in Control) does
occur, then for purposes of this Plan, the date immediately prior to the date of
the Executive's termination of employment shall be deemed to be the date of a
Change of Control of the Company. If a termination of the Executive's employment
occurs pursuant to the circumstances described in the immediately preceding
sentence, then for purposes of determining the timing of payments and benefits
to the Executive under Section 2, the date of the actual Change in Control of
the Company shall be treated as the Executive's date of termination of
employment under Section 2.
1.3 Code. The Internal Revenue Code of 1986, as amended from time to time.
-3-
<PAGE>
<PAGE>
1.4 Committee. The Committee is the Personnel, Nominating and Compensation
Committee of the Board or such other committee of the Board to which similar
responsibilities are delegated in the future.
1.5 Earnings. Earnings means the salary received by an Executive, plus the
amount of his annual target incentive, but excluding income attributable to
moving, group life insurance premiums, participation (except as provided below)
in any savings plan, restricted stock performance plan, stock options and
appreciation rights. Earnings shall exclude severance payments made pursuant to
the Company's Severance Policy for Key Employees or pursuant to a written
severance agreement between the Company and the Executive. In the case of an
Executive on overseas temporary assignment, Earnings shall include the
Executive's salary and annual target incentive but shall not include any
special, extra or supplemental payments of compensation pursuant to the
Company's Compensation and Relocation Guidelines for Overseas Assignments, other
than the overseas premium payable pursuant to such Guidelines, unless the
Retirement Board in its discretion provides otherwise pursuant to a
nondiscriminatory rule of uniform application. Earnings shall include amounts
which are contributed on behalf of an Executive to any plan by the Company
pursuant to a salary reduction agreement and which are not includible in the
gross income of the Executive under Sections 125, 402(e)(3) or 402(h)(1)(B) of
the Code and any amounts deferred and not includible in the gross income of the
Executive pursuant to any nonqualified plan intended to supplement the Company's
401(k) savings plan. Notwithstanding the above, the amount of the Executive's
actual annual bonus shall be substituted for his annual target bonus for any
period prior to 1994 if doing so would result in the Executive's Earnings being
higher.
1.6 Executive. The term Executive means the following members of the
Company's policy committee: Messrs. Ballengee, Boekenheide, Cartledge,
McClelland, Munford, Reed, Soutendijk and Trice; and such officers as the
Committee may from time to time designate as covered by the Plan if each such
officer is (i) a member of the Company's policy committee and/or (ii) an
executive officer of the Company who is responsible for a significant segment of
the Company's business and who when first employed by the Company already had
prior business or professional experience which was valuable to the Company and
relevant to the position for which he was employed. This term shall also include
the Executive's spouse in the event Benefit payments, as described hereinafter,
to such spouse have commenced under the Plan.
1.7 Final Average Earnings. Final Average Earnings means the average
Earnings of an Executive during the 60 consecutive calendar months of highest
aggregate Earnings during either the Executive's final 120 calendar months of
Service or, if the Executive has vested in a Benefit hereunder and been employed
for less than 120 calendar months, such
-4-
<PAGE>
<PAGE>
lesser number of calendar months of Service immediately prior to his termination
of employment.
1.8 Good Reason. "Good Reason" shall mean without the Executive's express
written consent, the occurrence after a Change in Control of the Company (except
as provided in Section 1.2 with respect to certain events occurring prior to a
Change in Control) of any of the following circumstances:
(a) the assignment to the Executive of any duties inconsistent with the
position in the Company that he held immediately prior to a Change in
Control of the Company (other than in the nature of a promotion), or a
diminution in his duties, responsibilities, employment status or
authority as compared to the Executive's duties, responsibilities,
employment status or authority in effect immediately prior to such
Change in Control;
(b) a reduction by the Company in the Executive's annual base salary as in
effect on the date of a Change in Control except for across-the-board
salary reductions similarly affecting all management personnel of the
Company and all management personnel of any person in control of the
Company;
(c) the relocation of the Company's offices at which the Executive is
principally employed immediately prior to the date of a Change in
Control of the Company to a location more than twenty-five (25) miles
from such location, or the Company's requiring the Executive to be
based anywhere other than the Company's offices at such location
except for required travel on the Company's business to an extent
substantially similar to his business travel obligations immediately
prior to a Change in Control;
(d) the failure by the Company to pay the Executive any portion of his
current compensation or to pay to him any portion of an installment of
deferred compensation under any deferred compensation program of the
Company within seven (7) days of the date such compensation is due;
(e) the failure by the Company to continue to provide substantially the
same compensation plans in which the Executive participated
immediately prior to a Change in Control of the Company, including
without limitation, a savings and investment plan, a stock option and
stock award plan, a restricted stock performance plan, and an annual
incentive compensation plan, unless an equitable arrangement (embodied
in an ongoing substitute or alternative plan) has been made with
respect to each such plan, or the failure by the Company to continue
the Executive's
-5-
<PAGE>
<PAGE>
participation therein (or in any such substitute or alternative plan)
on a basis not materially less favorable, both in terms of the amount
of benefits provided and the level of his participation relative to
other participants, than that which existed at the time of a Change in
Control of the Company;
(f) the failure by the Company to continue to provide the Executive with
benefits and coverage substantially similar to those provided to him
under any of the Company's pension, life insurance, medical, accident,
or disability plans in which he was participating at the time of a
Change in Control of the Company, the taking of any action by the
Company which would directly or indirectly materially reduce any of
such benefits, or the failure by the Company to provide the Executive
with the number of paid vacation days to which he is entitled on the
basis of years of service with the Company in accordance with the
Company's vacation policy for salaried employees in effect at the time
of a Change in Control of the Company; or
(g) The failure of any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to
perform that certain change in control severance agreement, if any,
between the Executive and the Company in the same manner and to the
same extent that the Company would be required to perform it if no
such succession had taken place, provided such succession constitutes
a Change in Control of the Company.
1.9 Primary Insurance Amount. The Primary Insurance Amount shall be the
Executive's primary insurance amount for Social Security purposes, determined on
the basis of the Executive's actual compensation with respect to years of
employment with the Company. With respect to years of employment, if any, prior
to employment with the Company, the Committee shall estimate the Executive's
income that is treated as wages for purposes of the Social Security Act. If the
Executive's employment with the Company is terminated prior to age 65, for years
following termination of employment, it shall be assumed for purposes of
calculating the Primary Insurance Amount that the Executive earns compensation
so as to accrue the maximum Social Security benefits.
1.10 Retirement Board. The Retirement Board provided for in the Retirement
Plan.
1.11 Retirement Plan. Retirement Plan means the Retirement Plan for
Salaried Employees of Union Camp Corporation.
-6-
<PAGE>
<PAGE>
1.12 Retirement Plan Commencement Date. Retirement Plan Commencement Date
means the date upon which the Executive commences to receive benefits under the
Retirement Plan.
1.13 Service. Service is an Executive's "Service" as defined in the
Retirement Plan.
2. SUPPLEMENTAL RETIREMENT BENEFIT.
2.1 Benefit. All supplemental retirement benefits under the Plan shall be
determined according to this Section 2. The base annual Benefit payable to the
Executive shall be equal to forty (40) percent of his Final Average Earnings
following ten years of Service, plus one and one-half (1 1/2) percent of such
earnings for each year of additional Service up to a maximum of fifty-five (55)
percent of his Final Average Earnings following twenty years of Service. This
amount shall be reduced by the sum of (i) the amount of any benefits paid or
payable to the Executive from any defined benefit pension plans maintained by
the Company, including the Retirement Plan and the related Supplemental
Retirement Plan of Union Camp Corporation (the "Company's Plans"), and any
benefits paid or payable from any retirement plans of any other employer
(whether tax-qualified or nonqualified) intended to provide retirement benefits
similar to the benefits provided under the Company's Plans, determined, in all
cases, by adjusting such benefits, using the tables and actuarial assumptions
under the Retirement Plan, to the same form as the Executive's benefits are paid
or payable from the Retirement Plan and assuming the Executive's retirement age
is the greater of (a) the age that the Executive retires under the Retirement
Plan or (b) the age with which the Executive is credited pursuant to the last
paragraph of Section 2.3, and (ii) one-half (1/2) of his annual Primary
Insurance Amount payable at age 65. The benefit remaining after this reduction
shall constitute the Executive's net annual Benefit.
2.2(a) Form and Timing of Payment. Subject to Sections 2.3, 3 and 4, the
net annual Benefit shall be payable to the Executive in either: (i) such form as
benefits are available to the Executive under the Retirement Plan or (ii) in a
single lump-sum payment as provided under Section 2.2(b). Except as provided
under Section 4.1 or the last paragraph of Section 2.2(b) below, such Benefit
shall commence (or, be paid out, in the case of a lump sum payment) upon the
Retirement Plan Commencement Date. However, to the extent a lump-sum payment is
not deductible in full in accordance with Section 162(m) of the Code, it shall
be paid, to the extent of deductibility, in the next one or more taxable years
until paid in full. Notwithstanding the foregoing, following a Change in Control
of the Company, the immediately preceding sentence shall not be applicable.
-7-
<PAGE>
<PAGE>
(b) (Lump Sum Payment Election. Subject to the approval, in its sole
discretion, of the Retirement Board, an Executive may irrevocably elect in
writing to receive the net annual Benefit provided by the Plan in the form of a
single lump-sum payment. An Executive may elect a lump-sum payment at any time
up to, but no later than one year in advance of the earlier of his Retirement
Plan Commencement Date or normal retirement date under the Retirement Plan. The
amount of the lump-sum payment shall be determined by calculating the
Executive's net annual Benefit as a single life annuity and converting such
annuity to a present value. The rate that shall be used to calculate such
present value shall be determined on the first business day of each calendar
quarter in accordance with the following formula and shall apply to each
lump-sum payment made in such calendar quarter:
The rate shall be the net after-tax rate derived by multiplying one
(1) minus the current U.S. income tax rate expected to be applicable to the
Company for financial reporting purposes by the sum of (a) and (b), where:
(a) is the average of (i) the interest rate on 10 year U.S.
Treasuries and (ii) the interest rate on 30 year U.S. Treasuries, and,
(b) is the average of the spread on 10 and 30 year taxable debt
of industrial companies with similar credit rating to that of the
Company over the 10 and 30 year U.S. Treasuries, respectively.
If payment of any part of the lump-sum amount must be deferred due to its
non-deductibility pursuant to Section 162(m) of the Code, the amount of the
lump-sum payment to be deferred shall be converted back into a single life
annuity form of payment using the interest rate assumption used to calculate the
amount of the lump-sum payment. As soon as the payment of all or any part of the
deferred lump-sum payment can be deducted by the Company, such single life
annuity shall be converted to a present value, using the rate set forth above as
in effect for the calendar quarter in which the payment occurs and using the
Executive's age as of the Retirement Plan Commencement Date.
Notwithstanding anything to the contrary in this Section 2.2(b), if, an
Executive's employment is terminated by the Company or the Executive terminates
his employment for Good Reason during the two (2) year period following a Change
in Control of the Company (or, if following a Change in Control of the Company
the Executive's date of termination occurs, during the term of the Executive's
change in control severance agreement, if any)or prior to a Change in Control of
the Company under the circumstances set forth in the last paragraph of Section
1.2, and (ii) the Executive is vested
-8-
<PAGE>
<PAGE>
in his benefit pursuant to Section 2.3, the Company shall pay to the Executive
within thirty (30) days following the Executive's date of termination the amount
of the Benefit accrued by the Executive (as of the Executive's date of
termination) under this Plan and in such case, the Executive shall not be
eligible to elect the form of payment of the Benefit, but, rather shall receive
such Benefit in the form of a single lump-sum payment.
(c) Death Benefits. If, at the Executive's death prior to his Retirement
Plan Commencement Date he is entitled to a payment hereunder and is currently
married, subject to Section 4.3, his surviving spouse shall be entitled to
payments determined in accordance with Article VIII of the Retirement Plan based
upon the Executive's net annual Benefit, commencing upon the day following the
last day of the month in which the Executive dies and, if a lump-sum payment
election shall have been made by the Executive under Section 2.2(b), such
election shall be void and of no effect.
Notwithstanding the preceding paragraph, if a lump-sum payment is due to
the Executive pursuant to the last paragraph of Section 2.2(b) and the
Executive's death occurs prior to its payment, such lump-sum amount shall be
paid to the Executive's surviving spouse (or, if the Executive was not married,
to his designated beneficiary or, if none, his estate) within thirty (30) days
following the Executive's date of termination of employment.
2.3 Eligibility for Benefit. No Benefit shall be payable unless the
Executive shall have completed at least 10 years of Service on his date of
termination of employment; provided, however, that a Benefit shall become vested
to an Executive who, as of the date of a Change in Control of the Company,
either (i) has at least ten (10) years of Service or (ii) has attained age 55
and has completed at least five (5) years of Service or (iii) has attained at
least the age and completed at least the Service as follows:
<TABLE>
<CAPTION>
Age Upon Service
Change in Control Required
------------------ ----------
<S> <C>
51 years 9 Years
52 Years 8 Years
53 Years 7 Years
54 years 6 Years
</TABLE>
In the event an Executive who vests pursuant to clause (ii) or (iii) in the
prior sentence has completed, on the date his employment terminates, less than
ten (10) years of Service, his base annual Benefit shall be forty (40) percent
of his Final Average Earnings.
-9-
<PAGE>
<PAGE>
An Executive who is vested in a Benefit hereunder upon a Change in Control
of the Company shall be credited with three (3) additional years of age and
Service (but not beyond age sixty-five (65) and twenty (20) years of Service)
under this Plan if within two (2) years following a Change in Control of the
Company (or, if following a Change in Control of the Company the Executive's
date of termination of employment occurs, during the term of the Executive's
change in control severance agreement, if any) or prior to a Change in Control
of the Company under the circumstances set forth in the last paragraph of
Section 1.2 his employment is terminated by the Company or he terminates his
employment for Good Reason.
2.4 Vesting. Subject to Sections 2.3, 3 and 4.4, the Benefit of each
Executive under the Plan shall at all times be 100% vested and nonforfeitable.
3. COMPETITION WITH COMPANY; CAUSE. Subject to Section 5 and the last paragraph
of this Section 3, but notwithstanding any other provision of the Plan to the
contrary, no Benefits or no further Benefits, as the case may be, shall be paid
to an Executive if the Committee reasonably determines that such Executive has:
(i) To the detriment of the Company or any affiliate, directly or
indirectly acquired, without the prior written consent of the Committee, an
interest in any other company, firm, association, or organization (other
than an investment interest of less than 1% in a publicly-owned company or
organization), the business of which is in direct competition with the
business (present or future) of the Company or any of its affiliates;
(ii) To the detriment of the Company or any affiliate, directly or
indirectly competed with the Company or any affiliate as an owner,
employee, partner, director or contractor of a business, in a field of
business activity in which the Executive has been primarily engaged on
behalf of the Company or any affiliate or in which he has considerable
knowledge as a result of his employment by the Company or any affiliate,
either for his own benefit or with any person other than the Company or any
affiliate, without the prior written consent of the Committee; or
(iii) Been discharged from employment with the Company or any
affiliate for "cause." "Cause" shall include the occurrence of any of the
following events or such other dishonest or disloyal act or omission as the
Committee reasonably determines in its sole discretion to be "cause":
(a) The Executive has misappropriated any funds or property of
the Company or any affiliate;
-10-
<PAGE>
<PAGE>
(b) The Executive has, without the prior knowledge or written
consent of the Committee, obtained personal profit as a result of any
transaction by a third party with the Company or any affiliate; or
(c) The Executive has sold or otherwise imparted to any person,
firm, or corporation the names of the customers of the Company or any
affiliate or any confidential records, data, formulae, specifications
and other trade secrets or other information of value to the Company
or any affiliate derived by his association with the Company or any
affiliate.
In any case described in this Section 3, the Executive shall be given prior
written notice that no Benefits or no further Benefits, as the case may be, will
be paid to such Executive. Such written notice shall specify the particular
acts(s), or failures to act, on the basis of which the decision to terminate his
Benefits has been made.
Notwithstanding the preceding provisions of this Section 3, following a
Change in Control of the Company, this Section 3 shall not be applicable.
4. TERMINATION OF EMPLOYMENT PRIOR TO AGE 65. If the Executive terminates
employment prior to age 65 for any reason, his rights and Benefits under the
Plan will be determined in accordance with this Section 4.
4.1 Deferral. At the option of the Company, commencement of Benefit
payments under the Plan can be deferred until the Executive attains age 65. If
no such deferral is elected by the Company, the commencement date of Benefit
payments shall be the Retirement Plan Commencement Date, provided the Executive
terminates employment with the Company with the written consent of the
Committee. Notwithstanding the preceding provisions of this Section 4.1,
following a Change in Control of the Company, no deferral of Benefit payments
may be elected by the Company pursuant to this Section 4.1.
4.2 Benefit Adjustment. If the Executive commences to receive Benefits
hereunder prior to age 62 (including, for purposes of determining such age, any
additional age with which the Executive was credited under Section 2.3), his
Benefit shall be reduced in accordance with the early retirement benefit
provisions of the Retirement Plan.
4.3 Death or Disability. If the employment of the Executive with the
Company terminates prior to age 65 but after completion
-11-
<PAGE>
<PAGE>
of at least 10 years of Service with the Company, due to reasons of death or
total and permanent disability, as determined by the Company's physician, the
Executive or his surviving spouse will be eligible for Benefit payments pursuant
to Section 2.
4.4 Company Consent. Except for termination of employment under Section 4.3
above, if the Executive terminates employment with the Company prior to age 65
without the express, written consent of the Committee, all rights of the
Executive to Benefits hereunder shall thereupon terminate. However, in the event
of a termination of employment at any time following a Change in Control of the
Company, the immediately preceding sentence shall not be applicable.
5. DISPUTES. If any dispute arises under the Plan between the Company and an
Executive as to the amount or timing of any Benefit payable under the Plan or as
to the persons entitled thereto, such dispute shall be resolved by binding
arbitration proceedings initiated by either party to the dispute in accordance
with the rules of the American Arbitration Association and the results of such
proceedings shall be conclusive on both parties and shall not be subject to
judicial review. If the disputed Benefits involve the Benefits of an Executive
who is no longer employed by the Company or any affiliate, the Company shall pay
or continue to pay the Benefit (except a Benefit payable in a lump-sum pursuant
to Section 2.2(b)) until the results of the arbitration proceedings are
determined unless such claim is patently without merit; provided, however, that
if the results of the arbitration proceedings are adverse to the Executive, then
in such event the recipient of the Benefits shall be obligated to repay the
excess benefits to the Company. The Company shall pay any and all legal fees and
expenses incurred by the Executive in seeking to obtain or enforce any rights
under the Plan, provided that the Executive is successful in obtaining or
enforcing such rights.
6. ADMINISTRATION. The Committee shall be responsible for the administration of
the Plan and may delegate to any management committee, employee, director or
agent its responsibility to perform any act hereunder, including without
limitation those matters involving the exercise of discretion, provided that
such delegation shall be subject to revocation at any time at its discretion.
The Committee shall have the authority to interpret the provisions of the Plan
and construe all of its terms, to adopt, amend, and rescind rules and
regulations for the administration of the Plan, and generally to conduct and
administer the Plan and to make all determinations in connection with the Plan
as may be necessary or advisable, other than those determinations delegated to
management employees or independent third parties by the Board. All such actions
of the Committee shall be conclusive and binding upon all Executives.
-12-
<PAGE>
<PAGE>
7. AMENDMENT. The Plan may not be terminated, suspended or amended except by
action of the Committee, and may not be amended to terminate or reduce or
adversely affect Benefits (including vesting and any other rights accruing upon
a Change in Control of the Company) to any Executive then participating in the
Plan without the written approval of such Executive.
8. GOVERNING LAW; BINDING EFFECT. The Plan shall be governed and construed and
enforceable in accordance with the laws of the State of New Jersey. If the
Company is consolidated, merged or otherwise combined with or into another
corporation, or if another entity purchases all, or substantially all of the
Company's assets the surviving or acquiring corporation shall succeed to the
Company's rights and obligations under the Plan. The Plan shall inure to the
benefit of, and is enforceable by, the Executive and the Executive's personal or
legal representatives, executors, administrators, successors, heirs, devisees,
and legatees, to the extent any such persons succeed to the Executive's
interests hereunder from time to time.
9. NATURE OF OBLIGATIONS. The plan is unfunded, and the Company will make
Benefit payments solely on a current disbursement basis, provided, however, that
the Company reserves the right to purchase insurance contracts, which may or may
not be in the name of an Executive, or establish one or more trusts to provide
alternative sources of Benefit payments under this Plan.
10. NOTICE. Any notice or filing required or permitted to be given to the
Company shall be sufficient if in writing and hand delivered or when sent by
registered or certified mail to the principal office of the Company, directed to
the attention of the Secretary of the Company. Any notice to the Executive must
be in writing and is effective when delivered or when mailed by registered or
certified mail, return receipt requested, postage prepaid to the Executive or
his personal representatives at his last known address.
11. EMPLOYMENT. Nothing contained in the Plan nor any action taken hereunder
shall be construed as a contract guaranteeing the Executive continued status as
an employee.
12. VALIDITY. In the event any provision of this Plan is held invalid, void, or
unenforceable, the same shall not affect in any respect whatsoever the validity
of any other provision of this Plan.
13. ASSIGNMENT. An Executive may not assign, alienate, anticipate, or otherwise
encumber any rights, duties or amounts which he may be entitled to receive under
the Plan.
-13-
<PAGE>
<PAGE>
14. PROTECTIVE PROVISIONS. Each Executive shall cooperate in good faith with the
Company in furnishing any and all information reasonably requested by the
Company in order to determine and facilitate Benefit payments under the Plan.
15. GENDER, SINGULAR AND PLURAL. All pronouns in any variations thereof shall be
deemed to refer to the masculine or feminine as the identity of the person or
persons may require. As the context may require, the singular may be read as the
plural and the plural as the singular.
16. CAPTIONS. The captions to the Sections of the Plan are for convenience only
and shall not control or affect the meaning or construction of any of its
provisions.
-14-
<PAGE>
<PAGE>
Exhibit 10.2
Union Camp Corporation
Severance Policy for Key Employees
Union Camp Corporation (the "Company") considers it essential to the best
interests of its stockholders to foster the continuous employment of key
management personnel. In this connection, the Board of Directors of the Company
(the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control of the Company may exist
and that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Company's management to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a Change in
Control of the Company (as defined herein).
For purposes of this Policy, a Key Employee shall be any employee of the
Company designated by the Personnel, Compensation and Nominating Committee of
the Board (or such other committee of the Board to which similar
responsibilities are delegated in the future) or the Chairman of the Board or
the President of the Company and listed on Schedule I hereto.
I. Eligibility for Severance Benefits.
A Key Employee shall receive the severance benefits provided for in this
Policy if the Company terminates his employment with the Company other than for
Cause or if the Key Employee terminates his employment with the Company for Good
Reason during the two-year period following a Change in Control of the Company
(as these terms are hereinafter defined).
1. Change in Control. No benefits shall be payable under this Policy unless
a Change in Control of the Company shall have occurred. For purposes of this
Policy, a Change in Control of the Company shall be deemed to have occurred upon
the occurrence of one of the following events:
(a) any "person", as such term is used in Sections 13 (d) and 14 (d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other
than the Company, any employee benefit plan sponsored by the Company, any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, or any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company), is or becomes (other than pursuant to a
transaction which is deemed to be a "Non-Qualifying
-1-
<PAGE>
<PAGE>
Transaction" under Section I(c)) the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act) , directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the
Corporation's then outstanding securities eligible to vote for the election of
the Board (the "Company Voting Securities");
(b) individuals who, on October 29, 1996, constitute the Board (the
"Incumbent Directors") cease for any reason to constitute at least a majority of
the Board, provided that any person becoming a director subsequent to October
29, 1996, whose election or nomination for election was approved by a vote of at
least two-thirds of the Incumbent Directors then on the Board (either by a
specific vote or by approval of the proxy statement of the Company in which such
person is named as a nominee for director, without written objection to such
nomination) shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to directors
(including without limitation in order to settle any such contest) or any other
actual or threatened solicitation of proxies by or on behalf of any person other
than the Board shall be an Incumbent Director;
(c) the consummation of a merger, consolidation, statutory share
exchange or similar form of corporate transaction involving the Company or any
of its subsidiaries that requires the approval of the Company's stockholders,
whether for such transaction or the issuance of securities in the transaction (a
"Business Combination"), unless immediately following such Business Combination:
(A) more than 50% of the total voting power of (x) the corporation resulting
from such Business Combination (the "Surviving Corporation"), or (y) if
applicable, the ultimate parent corporation that directly or indirectly has
beneficial ownership of 100% of the voting securities eligible to elect
directors of the Surviving Corporation (the "Parent Corporation"), is
represented by Company Voting Securities that were outstanding immediately prior
to such Business Combination (or, if applicable, shares into which such Company
Voting Securities were converted pursuant to such Business Combination), (B) no
person (other than any employee benefit plan sponsored or maintained by the
Surviving Corporation or the Parent Corporation) is or becomes the beneficial
owner, directly or indirectly, of 25% or more of the total voting power of the
outstanding voting securities eligible to elect directors of the Parent
Corporation (or, if there is no Parent Corporation, the Surviving Corporation)
and (C) at least a majority of the members of the board of directors of the
Parent Corporation (or, if there is no Parent Corporation, the Surviving
Corporation) following the consummation of the Business Combination were
Incumbent Directors at the time of the Board's approval of the execution of the
initial agreement providing for such Business Combination (any Business
Combination which satisfies all of the criteria specified in (A), (B) and (C)
above shall be deemed to be a "Non-Qualifying Transaction"); or
(d) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets.
-2-
<PAGE>
<PAGE>
Anything in this Policy to the contrary notwithstanding, a Change in Control
of the Company shall be deemed not to have occurred with respect to any Key
Employee who participates as an investor in the acquiring entity (which shall
include the Parent Corporation when applicable) in such Change in Control
transaction, unless such acquiring entity is a publicly-traded corporation and
the Key Employee's interest in such acquiring entity immediately prior to the
acquisition constitutes less than one percent (1%) of both (1) the combined
voting power of such entity's outstanding securities and (2) the aggregate fair
market value of such entity's outstanding equity securities. For this purpose
the Key Employee's interest in any equity securities shall include any such
interest of which such Key Employee is a "beneficial owner" as defined in Rule
13d-3 under the Exchange Act.
2. Cause. For purposes of this Policy, termination by the Company of a Key
Employee's employment for Cause shall mean termination (a) upon the willful and
continued failure by the Key Employee to substantially perform his duties with
the Company (other than any such failure resulting from his incapacity due to
physical or mental condition or illness or any such actual or anticipated
failure after the issuance of a Notice of Termination (as defined in Section
I.5) by the Key Employee for Good Reason (as defined in Section I.4)), after a
written demand for substantial performance is delivered to the Key Employee by
the Board, which demand specifically identifies the manner in which the Board
believes the Key Employee has not substantially performed his duties, or (b) the
willful engaging by the Key Employee in conduct that is demonstrably and
materially injurious to the Company, monetarily or otherwise. For purposes of
this Section, no act, or failure to act, on the part of the Key Employee shall
be deemed "willful" unless done, or omitted to be done, by him not in good faith
and without reasonable belief that his action or omission was in the best
interest of the Company. Notwithstanding the foregoing, a Key Employee shall not
be deemed to have been terminated for Cause unless and until there shall have
been delivered to such Key Employee a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire membership
of the Board at a meeting of the Board (after reasonable notice to the Key
Employee and an opportunity for such Key Employee, together with his counsel, to
be heard before the Board), finding that in the good faith opinion of the Board
he is guilty of conduct set forth above in this Section I.2 and specifying the
particulars thereof in detail.
3. Disability. Notwithstanding anything in this Policy to the contrary, if,
as a result of incapacity due to physical or mental condition or illness, a Key
Employee is absent from the full-time performance of his duties with the Company
for six (6) consecutive months and such period of absence commenced prior to a
Change in Control of the Company, the Company may give the Key Employee at least
30 days prior written notice of his removal from the list of Key Employees
covered by this Policy, and if the Key Employee shall not have returned to
full-time performance of his duties by the date of removal specified in such
notice, he shall be removed from the list of Key Employees covered by this
Policy on such date and no benefit shall be payable hereunder.
-3-
<PAGE>
<PAGE>
4. Good Reason. Good Reason shall mean, without the Key Employee's express
written consent, the occurrence of any of the following circumstances during the
two-year period following a Change in Control of the Company, unless, in the
case of paragraphs (c), (d) or (e), such circumstances are fully corrected prior
to the Date of Termination specified in the Notice of Termination:
(a) a reduction by the Company in the Key Employee's annual base
salary as in effect on the date the Key Employee is covered by this Policy or as
the same may be increased from time to time thereafter except for
across-the-board salary reductions similarly affecting all management personnel
of the Company and all management personnel of any person in control of the
Company;
(b) the failure by the Company to pay to the Key Employee any portion
of his current compensation or to pay to such employee any portion of an
installment of deferred compensation under any deferred compensation program of
the Company within seven (7) days of the date such compensation is due;
(c) the failure by the Company to continue to provide substantially
the same compensation plans in which the Key Employee participated immediately
prior to the Change in Control of the Company, including without limitation, as
of the date hereof, a savings and investment plan, a stock option and stock
award plan, and an incentive compensation plan, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to each such plan, or the failure by the Company to continue the Key
Employee's participation therein (or in such substitute or alternative plan) on
a basis not materially less favorable, both in terms of the amount of benefits
provided and the level of the Key Employee's participation relative to other
participants, than that which existed at the time of the Change in Control of
the Company;
(d) the failure by the Company to continue to provide the Key Employee
with benefits and coverages substantially similar to those provided to the Key
Employee under any of the Company's pension, life insurance, medical, accident,
or disability plans in which the Key Employee was participating at the time of
the Change in Control of the Company, the taking of any action by the Company
which would directly or indirectly materially reduce any of such benefits, or
the failure by the Company to provide the Key Employee with the number of paid
vacation days to which the Key Employee is entitled on the basis of years of
service with the Company in accordance with the Company's vacation policy for
salaried employees in effect at the time of the Change in Control of the
Company; or
(e) any purported termination of employment that is not effected
pursuant to a Notice of Termination satisfying the requirements of Section I.5
hereof (and, if applicable, the requirements of Section I.2 hereof), which
purported termination shall not be effective for purposes of this Policy.
-4-
<PAGE>
<PAGE>
A Key Employee's right to terminate his employment pursuant to this Section I.4
shall not be affected by his incapacity due to physical or mental condition or
illness. A Key Employee's continued employment shall not constitute consent to,
or a waiver of rights with respect to, any circumstance constituting Good Reason
hereunder.
5. Notice of Termination. Any purported termination of employment by the
Company or by the Key Employee after a Change in Control of the Company shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section VI hereof. "Notice of Termination" shall mean a notice
that shall indicate the specific termination provision in this Policy relied
upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of employment under the provision so
indicated.
6. Date of Termination, Etc. "Date of Termination" shall mean the date
specified in the Notice of Termination (which, in the case of a termination for
Cause shall not be less than thirty (30) days from the date such Notice of
Termination is given, and in the case of a termination for Good Reason shall not
be less than fifteen (15) nor more than sixty (60) days from the date such
Notice of Termination is given); provided, however, that if prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination under the terms of this Policy, then the Date of
Termination shall be the date on which the dispute is finally resolved
(provided, that, notwithstanding when the dispute is finally resolved, the Date
of Termination shall be deemed to occur for purposes of Section II while this
Policy is in effect), either by mutual written agreement of the parties, by a
binding arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected); and
provided, further, that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence. Any
such notice of dispute must be in writing and delivered or mailed to the other
party, and such notice shall set forth the specific reasons for the dispute. A
Key Employee has the right to appeal to the Board or its delegate in writing any
notice of dispute given by the Company within sixty days of receipt thereof by
the Key Employee. Within sixty days thereafter, the Key Employee shall be given
a written decision of his appeal from the Board or its delegate, which decision
shall clearly set forth the specific reasons for the decision, including
specific references to pertinent provisions of this Policy. If the Key Employee
disputes the decision, such dispute shall be resolved by arbitration as provided
in Section III hereof. Notwithstanding the pendency of any such dispute, the
Company will continue to pay to the Key Employee his full compensation in effect
immediately prior to when the Notice of Termination giving rise to the dispute
was given (including, but not limited to, base salary) and continue the Key
Employee as a participant in all compensation, benefit and insurance plans in or
by which he was participating or covered immediately prior to when the Notice of
Termination giving rise to the dispute was given,
-5-
<PAGE>
<PAGE>
until the dispute is finally resolved in accordance with this Section I.6.
Amounts paid under this Section I.6 are in addition to all other amounts due
under this Policy, and shall not be offset against or reduce any other amounts
due under this Policy. No amount payable hereunder shall be reduced by any
compensation earned by a Key Employee as the result of employment by another
employer.
II. Computation of Severance Benefit.
If the Key Employee's employment by the Company shall be terminated by the
Company other than for Cause or if the Key Employee terminates employment for
Good Reason during the two-year period following a Change in Control of the
Company (except as otherwise provided in Section I.6, if applicable), then the
Key Employee shall be entitled to the benefits provided below:
(a) the Company shall pay to the Key Employee (i) his base salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given and the value of his accrued and "banked" vacation as of
the Date of Termination, no later than the fifth day following the Date of
Termination; (ii) any outstanding amounts due and owing as of the Date of
Termination under the Company's incentive compensation plan (or any additional,
successor or substitute plan thereto), no later than the fifth day following the
Date of Termination (or, if later, such date by which such amounts may
reasonably be calculated), plus all other amounts to which the Key Employee is
entitled under any compensation or benefit plan or policy of the Company, at the
time such payments are due; and (iii) if such termination of employment occurs
during the remainder of the calendar year in which the change in control of the
Company occurs, to the extent not provided under the applicable plan, a pro rata
annual target incentive no later than the fifth day following the Date of
Termination under the Company's annual incentive plan (or any successor plan
thereto) to the extent the Key Employee is a participant in such plan (and such
pro rata payment is not made thereunder). Such pro rata payment shall be equal
to the product of (x) the quotient resulting from dividing the number of days
the Key Employee was employed during such year through the Date of Termination
by three hundred and sixty-five (365) and (y) the Key Employee's annual target
incentive under such plan (or any successor plan thereto) for such year;
(b) in lieu of any further salary and bonus payments to the Key
Employee for periods subsequent to the Date of Termination and in lieu of other
severance benefits, the Company shall pay to the Key Employee, at the time
specified in Section II(f) in a lump sum, a severance benefit equal to (i) 200%
of the greater of (A) the Key Employee's annual rate of base salary in effect
immediately prior to the Date of Termination and (B) the Key Employee's annual
rate of base salary in effect immediately prior to the Change of Control of the
Company, plus (ii) 200% of the greater of (x) the amount of the Key Employee's
annual target incentive in effect immediately prior to the date on which the
Change in Control occurs and (y) the Key Employee's annual target incentive with
respect to the year in which the Date of Termination occurs.
-6-
<PAGE>
<PAGE>
(c) for a twenty-four (24) month period commencing on the Date of
Termination continued coverage under the Company's life, disability, accident,
and health insurance plans in which the Key Employee participated immediately
prior to the Notice of Termination (or the Company will otherwise arrange to
provide equivalent benefits). Notwithstanding the foregoing, the Company shall
not provide a benefit otherwise receivable by the Key Employee pursuant to this
paragraph (c) during any period in which an equivalent benefit is actually
provided to the Key Employee during the twenty-four (24) month period following
his termination of employment, and the Key Employee must report to the Company
any such benefit actually received by him; and
(d) notwithstanding any election the Key Employee may have made under
any of the applicable plans and any provisions to the contrary in any such
plans, the Company shall pay to the Key Employee at the time specified in
Section II (f), a lump sum amount, in cash, equal to the sum of (i) all amounts
credited to the Key Employee's book account described in Article V, Section 3 of
the Union Camp Corporation Supplemental Retirement Plan (the "ERISA Excess
Plan") and (ii) the actuarial equivalent of the supplemental pension benefit
(determined as a straight life annuity commencing at the greater of age 62 or
the Key Employee's age at the Date of Termination) that the Key Employee has
accrued under Article IV, Section 1 of the ERISA Excess Plan as of the Date of
Termination (for this purpose, "actuarial equivalent" shall be determined using
the same assumptions utilized under the Company's Retirement Plan for Salaried
Employees immediately prior to the Change in Control). This lump sum payment
shall be in full settlement of all benefits accrued by the Key Employee under
the ERISA Excess Plan, provided, however, to the extent such lump sum payment
would duplicate any benefits paid to you under the terms of such plan it shall
be reduced to the extent necessary to prevent the duplicative payment of
benefits.
Notwithstanding anything in this Policy to the contrary, if the Key Employee is
over age 63 as of the Date of Termination, (i) the 200% multiplier set forth in
Section II(b) above to determine the Key Employee's severance benefit shall be
reduced by 8.33% for each full month that the Key Employee's age is in excess of
63 as of the Date of Termination and (ii) his continued benefits pursuant to
Section II(c) above shall cease at age 65.
(e) Notwithstanding anything in this Policy to the contrary, in the event it
shall be determined that any payment, award, benefit or distribution (or any
acceleration of any payment, award, benefit or distribution) by the Company (or
any of its affiliated entities) or any entity which effectuates a Change in
Control (or any of its affiliated entities) to or for the benefit of the Key
Employee (whether pursuant to the terms of this Policy or otherwise, but
excluding a Gross-Up Payment, as hereinafter defined) (the "Payments") would be
subject to the excise tax (the "Excise Tax"), imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") then the Company shall
pay the Key Employee an additional payment (a "Gross-Up Payment") in an amount
such that
-7-
<PAGE>
<PAGE>
after payment by the Key Employee of all taxes (including any Excise Tax)
imposed upon the Gross-Up Payment, the Key Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments. For purposes
of determining the amount of the Gross-Up Payment, the Key Employee shall be
deemed to (i) pay federal income taxes at the highest marginal rates of federal
income taxation for the calendar year in which the Gross-Up Payment is to be
made and (ii) pay applicable state and local income taxes at the highest
marginal rate of taxation for the calendar year in which the Gross-Up Payment is
to be made, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes. In the event that the
Excise Tax is subsequently determined by a final determination (by a court or an
Internal Revenue Service proceeding which as been finally and conclusively
resolved or by mutual agreement of the Key Employee and the Company) to be less
than the amount taken into account hereunder at the time of termination of
employment, the Key Employee shall repay to the Company at the time that the
amount of such reduction in Excise Tax is so determined the portion of the
Gross-Up Payment which would not have been paid to the Key Employee had the
Gross-Up Payment calculation been based upon such reduced Excise Tax, plus
interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder at the time of the termination of
employment (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such excess (plus interest
payable at the rate provided in Section 1274(b)(2)(B) of the Code with respect
to such excess) at the time that the amount of such excess is finally
determined. Notwithstanding the foregoing provisions of this Section II(e), if
it shall be determined that the Key Employee is entitled to a Gross-Up Payment,
but that the Payments would not be subject to the Excise Tax if the Payments
were reduced by an amount that is less than 10% of the portion of the Payments
that would be treated as "parachute payments" under Section 280G of the Code,
then the amounts payable to the Key Employee under this Policy shall be reduced
(but not below zero) to the maximum amount that could be paid to the Key
Employee without giving rise to the Excise Tax (the "Safe Harbor Cap"), and no
Gross-Up Payment shall be made to the Key Employee. The reduction of the amounts
payable hereunder, if applicable, shall be made by reducing first the payments
under Section II(b), unless an alternative method of reduction is elected by the
Key Employee. For purposes of reducing the Payments to the Safe Harbor Cap, only
amounts payable under this Policy (and no other Payments) shall be reduced. If
the reduction of the amounts payable hereunder would not result in a reduction
of the Payments to the Safe Harbor Cap, no amounts payable under this Policy
shall be reduced pursuant to this provision.
(f) The payments provided for in Section II(b), Section II(d) and
Section II(e) hereof shall be made not later than the thirtieth (30th) day
following the Date of Termination; provided, however, that if the amounts of
such payments cannot be finally determined on or before such day, the Company
shall pay to the Key Employee on such day an estimate, as determined in good
faith by the Company, of the minimum amount of such payments and shall pay the
remainder of such payments (together with
-8-
<PAGE>
<PAGE>
interest at the rate provided in section 1274 (b) (2) (B) of the Code) as soon
as the amount thereof can be determined. In the event that the amount of the
estimated payments exceed the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Key Employee, payable
on the fifth day after demand by the Company (together with interest at the rate
provided in section 1274(b)(2)(B) of the Code). All determinations required to
be made under Section II(e), including whether and when a Gross-Up Payment is
required, the amount of such Gross-Up Payment, the reduction of the Payments to
the Safe Harbor Cap and the assumptions to be utilized in arriving at such
determinations, shall be made by the public accounting firm that is retained by
the Company as of the date immediately prior to the Change in Control of the
Company (the "Accounting Firm") which shall provide for review detailed
supporting calculations both to the Company and the Key Employee within fifteen
(15) business days of the receipt of notice from the Company or the Key Employee
that a Notice of Termination has been provided under this Policy, or such
earlier time as is requested by the Company (collectively, the "Determination").
In the event that the Accounting Firm is serving as accountant or auditor for
the individual, entity or group effecting the Change in Control (or does not
undertake to provide the Determination), the Company shall appoint another
public accounting firm to make the Determination required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company
and the Company shall enter into any agreement requested by the Accounting Firm
in connection with the performance of the services hereunder.
(g) Except as provided in Section II(c) hereof, the Key Employee shall
not be required to mitigate the amount of any payment provided for in this
Section II by seeking other employment or otherwise, nor shall the amount of any
payment or benefit provided for in this Section II be reduced by any
compensation earned by the Key Employee as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Key Employee to the Company, or otherwise.
III. Claims and Arbitration; Legal Fees.
(a) Any dispute or controversy between the Company and a Key Employee
arising under or in connection with this Policy shall be settled exclusively by
arbitration in Wayne, New Jersey in accordance with the commercial rules of the
American Arbitration Association then in effect. The Company shall bear all
costs and expenses arising in connection with any arbitration proceeding
pursuant to this Section III(a). Judgment may be entered on the arbitrator's
award in any court having jurisdiction; provided, however, that the Key Employee
shall be entitled to seek specific performance of the right to be paid pursuant
to Section I.6 until the Date of Termination during the pendency of any dispute
or controversy arising under or in connection with this Policy.
-9-
<PAGE>
<PAGE>
(b) The Company shall pay to the Key Employee all legal fees and
expenses incurred by such Key Employee in connection with the interpretation or
enforcement of this Policy (including all such fees and expenses, if any,
incurred in contesting or disputing any termination hereunder or in seeking to
obtain or enforce any right or benefit provided by this Policy or in connection
with any tax audit or proceeding to the extent attributable to the application
of section 4999 of the Code, to any payment or benefit provided hereunder).
IV. No Fiduciary Relationship, Trust or Employment Contract.
This Policy is a legally enforceable obligation of the Company; provided,
that nothing contained in this Policy and no action taken pursuant to the
provisions of this Policy shall create or be construed to create a contract for
employment between the Company and the Key Employee covered hereby. All
references to sections of the Exchange Act, the Code or the ERISA Excess Plan
shall be deemed also to refer to any successor provisions to such sections. Any
payments provided for hereunder shall be paid net of any applicable withholding
required under foreign, federal, state or local law. The obligations of the
Company under Sections I.6, II and V shall survive the expiration of the term of
this Policy, with respect to Sections I.6 and II, to the extent benefits become
due and owing under such provisions and, with respect to Section V, to the
extent the Company continues to have obligations under this Policy.
V. Assumption of obligation.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Policy in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession which constitutes a Change in
Control of the Company shall be a breach of this Policy and shall entitle the
Key Employee to compensation and benefits from the Company in the same amount
and on the same terms to which such Key Employee would be entitled hereunder if
he terminated employment for Good Reason following a Change in Control of the
Company, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Policy, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid, or otherwise.
(b) Any rights that shall have accrued to the Key Employee under this
Policy prior to his death shall inure to the benefit of and be enforceable by
his personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees to the extent any such persons
succeed to his interests hereunder from time to time. If the Key Employee should
die while any amount would still be payable to him hereunder had he continued to
live, all such amounts, unless otherwise provided herein,
-10-
<PAGE>
<PAGE>
shall be paid in accordance with the terms of this Policy to such person or
persons appointed in writing by the Key Employee (provided that the Key Employee
has delivered a copy of such appointment to the Company) or, if no such person
is appointed, to his estate.
VI. Notices.
Notices and all other communications provided for in the Policy, including
any Notice of Termination, shall be in writing and shall be deemed to have been
duly given when delivered or mailed by United States certified or registered
mail, return receipt requested, postage prepaid, provided that all notice to the
Company shall be directed to the attention of the Secretary of the Company.
Notwithstanding the foregoing, any notice actually received by the other party
shall be deemed to have been duly given.
VII. Governing Law; Validity.
The validity, interpretation, construction and performance of the
provisions of this Policy shall be governed by the laws of the State of New
Jersey without regard to the conflict of law principles thereof. The invalidity
or unenforceability of any provision of this Policy shall not affect the
validity or enforceability of any other provision of this Policy which shall
remain in full force and effect.
VIII. Amendment and Termination.
Prior to a Change in Control of the Company, the Board may terminate or
amend the Policy at any time by a written instrument. During the two-year period
following a Change in Control of the Company, the Policy may not be amended or
terminated without the written consent of all Key Employees actively employed by
the Company both immediately prior to the Change in Control of the Company and
at the date of such proposed amendment.
IX. Designation and Removal of Key Employees.
Prior to a Change in Control of the Company, the Chairman of the Board or
the President of the Company or the Personnel, Compensation and Nominating
Committee may at any time, in his or its sole discretion, add employees (up to
such number of employees who may be covered by this Policy as determined from
time to time by the Board of Directors) to and remove employees from Schedule I,
the list of covered Key Employees. During the two-year period following a Change
in Control of the Company, no Key Employee may be removed from the list of
covered Key Employees unless his employment is terminated for Cause, death or
voluntary termination by such Key Employee of his employment other than for Good
Reason and except for removal from said list for Disability as provided in
Section I.3.
-11-
<PAGE>
<PAGE>
X. Gender.
The masculine pronoun wherever used in this Policy includes the feminine
pronoun.
Effective March 7, 1989,
Amended and restated October 29, 1996
END
-12-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1998 AND THE CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 37,713
<SECURITIES> 0
<RECEIVABLES> 587,649
<ALLOWANCES> 21,603
<INVENTORY> 542,029
<CURRENT-ASSETS> 1,202,047
<PP&E> 7,293,164
<DEPRECIATION> 3,587,300
<TOTAL-ASSETS> 5,191,385
<CURRENT-LIABILITIES> 863,516
<BONDS> 1,301,629
<COMMON> 69,184
0
0
<OTHER-SE> 1,895,956
<TOTAL-LIABILITY-AND-EQUITY> 5,191,385
<SALES> 3,385,948
<TOTAL-REVENUES> 3,385,948
<CGS> 2,580,823
<TOTAL-COSTS> 3,241,222<F1>
<OTHER-EXPENSES> 2,604
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 87,324
<INCOME-PRETAX> 54,798
<INCOME-TAX> 22,910
<INCOME-CONTINUING> 23,711<F2>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,711
<EPS-PRIMARY> 0.34
<EPS-DILUTED> 0.34
<FN>
<F1> INCLUDES A SPECIAL CHARGE OF $54.5 MILLION PRE-TAX RELATING TO
RESTRUCTURING AND REORGANIZATION CHARGES AND ASSET WRITE-DOWNS.
<F2> REFLECTS ADJUSTMENT FOR MINORITY INTEREST (NET OF TAX) OF $8,177
</FN>
</TABLE>
