<PAGE>
As filed with the Securities and Exchange Commission on August 13, 1998
Registration No. 333-__________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
Under the Securities Act of 1933
--------------
UNISOURCE WORLDWIDE, INC.
(exact name of registrant as specified in charter)
Delaware 13-5369500
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1100 Cassatt Road
Berwyn, Pennsylvania 19312
(Address of principal executive offices)(Zip Code)
--------------------
UNISOURCE WORLDWIDE, INC.
INCENTIVE COMPENSATION PLAN
(Full title of the Plan)
--------------------
Thomas A. Decker
Senior Vice President, General Counsel and Secretary
Unisource Worldwide, Inc.
1100 Cassatt Road
Berwyn, Pennsylvania 19312
(Name and address of agent for service)
(610) 296-4470
(Telephone number, including area code, of agent for service)
--------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
maximum maximum
Title of Amount offering aggregate Amount of
securities to to be price offering registration
be registered registered per unit price fee
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 2,500,000 $8.9375(2) $22,343,750 $6,591.41
$0.001
par value(1)
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) Including all related rights issued or issuable under the Registrant's
Rights Agreement.
(2) Calculated in accordance with Rule 457 (c) and (h) based upon the August 10,
1998 average of the high and low prices for Unisource Common Stock on the New
York Stock Exchange.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information
- -------------------------
A prospectus setting forth the information required by Part I of Form S-
8 will be sent or given to participants as specified by Rule 428(b)(1).
Item 2. Registrant Information and Employee Plan Annual Information
- --------------------------------------------------------------------
The documents incorporated by reference in Item 3 Part II of this Form
S-8 are incorporated by reference in the Section 10(a) prospectus relating to
this registration statement. The foregoing documents and all other documents
required to be delivered pursuant to Rule 428(b) are available without charge,
upon written or oral request, to Unisource Worldwide, Inc., 1100 Cassatt Road,
Berwyn, PA 19312, Attn: Corporate Communications Department (telephone number:
(610) 296-4470).
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
- ------------------------------------------------
The Registrant incorporates by reference herein the following documents:
a) the Registrant's Annual Report on Form 10-K for the year ended
September 30, 1997 (the "10-K");
b) the Registrant's Quarterly Report on Form 10-Q for the period ended
December 31, 1997;
c) the Registrant's Quarterly Report on Form 10-Q for the period ended
March 31, 1998; and
d) the Registrant's Current Reports on Form 8-K dated January 21,
1998, March 24, 1998, April 28, 1998 and July 30, 1998.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the
filing of a post-effective amendment indicating that all securities offered
hereby have been sold or which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference in this Registration Statement
and to be part thereof from the date of filing of such documents.
Item 4. Description of Securities
- ----------------------------------
Not Applicable.
Item 5. Interests of Named Experts and Counsel
- -----------------------------------------------
Not Applicable.
<PAGE>
Item 6. Indemnification of Directors and Officers
- -------------------------------------------------
The Delaware General Corporation Law (the "DGCL"), under which the
Registrant is organized, provides that the Registrant may indemnify persons who
incur certain liabilities or expenses by reason of such persons being or having
been directors, officers or employees of the Registrant or serving or having
served in such capacities or similar capacities at the Registrant's request for
other corporations or entities. Pursuant to the DGCL, the Registrant has
adopted provisions whereby the Registrant shall indemnify such persons against
such liabilities and expenses resulting from suits or other proceedings brought
by third persons and against expenses resulting from suits or other proceedings
brought in the right of the Registrant.
As permitted by law, the Registrant has purchased liability insurance
policies covering its directors and officers.
Item 7. Exemption from Registration Claimed
- -------------------------------------------
Not applicable.
Item 8. Exhibits
- ----------------
(4) Rights Agreement, between the Registrant and National City Bank (the
"Rights Agreement"), the form of which is incorporated herein by
reference to the Rights Agreement filed as an exhibit to the
Registrant's Registration Statement on Form 8-A.
(5) Opinion of Morgan, Lewis & Bockius LLP as to the validity of the
securities.
(23) Consent of Independent Auditors.
(24) Form of Power of Attorney.
(99) Unisource Worldwide, Inc. Incentive Compensation Plan.
<PAGE>
Item 9. Undertakings
- --------------------
(a) The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
<PAGE>
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressly
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all the requirements for filing on Form S-8, and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Berwyn, Pennsylvania, on the 12th day of August, 1998.
UNISOURCE WORLDWIDE, INC.
Date: August 12, 1998 By: /s/ Richard H. Bogan
--------------------------
(Richard H. Bogan)
Senior Vice President and Chief
Financial Officer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Ray B. Mundt Chairman and Chief August 12, 1998
- -------------------------- Executive Officer
(Ray B. Mundt) (Principal Executive Officer)
and Director
/s/ Richard H. Bogan Senior Vice President and August 12, 1998
- -------------------------- Chief Financial Officer
(Richard H. Bogan) (Principal Financial Officer)
/s/ Robert M. McLaughlin Vice President and Controller August 12, 1998
- -------------------------- (Principal Accounting Officer)
(Robert M. McLaughlin)
Paul J. Darling II* Director August 12, 1998
- --------------------------
(Paul J. Darling II)
James J. Forese* Director August 12, 1998
- --------------------------
(James J. Forese)
Dana G. Mead* Director August 12, 1998
- --------------------------
(Dana G. Mead)
Rogelio G. Sada* Director August 12, 1998
- --------------------------
(Rogelio G. Sada)
James W. Stratton* Director August 12, 1998
- --------------------------
(James W. Stratton)
* By: /s/ Thomas A. Decker
- --------------------------
Thomas A. Decker
Attorney-in-fact
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibits
- ------ --------
(4) Rights Agreement, between the Registrant and National City Bank (the
"Rights Agreement"), the form of which is incorporated herein by
reference to the Rights Agreement filed as an exhibit to the
Registrant's Registration Statement on Form 8-A.
(5) Opinion of Morgan, Lewis & Bockius LLP as to the validity of the
securities.
(23) Consent of Independent Auditors.
(24) Form of Power of Attorney.
(99) Unisource Worldwide, Inc. Incentive Compensation Plan.
<PAGE>
Exhibit 5
August 11, 1998
Unisource Worldwide, Inc.
1100 Cassatt Road
Berwyn, Pennsylvania 19312
Re: Unisource Worldwide, Inc. Registration Statement on Form S-8
-------------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Unisource Worldwide, Inc., a Delaware corporation
(the "Company"), in connection with the preparation of a registration statement
on Form S-8 (the "Registration Statement") to be filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act"),
relating to 2,500,000 shares of the Company's common stock, $0.001 par value per
share (the "Shares"), that may be awarded under the Company's Incentive
Compensation Plan (the "Plan"). We have examined copies of the Plan, the
Company's restated certificate of incorporation and such certificates, records,
statutes and other documents as we have deemed relevant in rendering this
opinion. As to matters of fact, we have relied on representations of officers of
the Company. In our examination, we have assumed the genuineness of documents
submitted to us as originals and the conformity with the original of all
documents submitted to us as copies thereof.
Based on the foregoing, it is our opinion that the Shares, when awarded in
accordance with the terms of the Plan, will be validly issued, fully paid and
nonassessable shares of common stock of the Company.
The opinion set forth above is limited to the General Corporation Law of the
State of Delaware.
<PAGE>
Unisource Worldwide, Inc.
Page 2
We hereby consent to the use of this opinion as Exhibit 5 to the Registration
Statement. In giving such opinion, we do not thereby admit that we are acting
within the category of persons whose consent is required under Section 7 of the
Act or the rules or regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ Morgan, Lewis & Bockius LLP
<PAGE>
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8) of Unisource Worldwide, Inc. pertaining to the Unisource Worldwide, Inc.
Incentive Compensation Plan of our reports dated October 21, 1997, with respect
to the consolidated financial statements and schedule of Unisource Worldwide,
Inc. incorporated and included in its Annual Report (Form 10-K) for the year
ended September 30, 1997, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
August 7, 1998
<PAGE>
Exhibit 24
FORM OF POWER OF ATTORNEY
-------------------------
The undersigned certifies that he is a Director of Unisource Worldwide,
Inc. ("Unisource").
The undersigned hereby appoints each of Hugh G. Moulton and Thomas A.
Decker as his attorneys-in-fact, each with the power of substitution, to
execute, on his behalf the foregoing registration statement on Form S-8, for
filing with the Securities and Exchange Commission ("SEC"), and to execute any
and all amendments to said registration statement, and to do all such other acts
and execute all such other documents which said attorney may deem necessary or
desirable.
Dated this ________________ day of ___________, 199__.
______________________________________________
[Name of Director]
<PAGE>
Exhibit 99
UNISOURCE WORLDWIDE, INC.
INCENTIVE COMPENSATION PLAN
As Amended and Restated as of January 28, 1998
----------------------------------------------
1. PURPOSE. The purpose of this Incentive Compensation Plan (the "Plan")
-------
of Unisource Worldwide, Inc. ("Unisource") is to motivate, recognize and reward
performance at the corporate, region and business unit levels that enhances
shareholder value.
2. EFFECTIVE DATE. This Plan shall become effective as of January 1,
--------------
1997. The Plan is an amendment, restatement and continuation of the Unisource
Worldwide, Inc. Restricted Stock Plan for Employees, the Unisource Worldwide,
Inc. Long-Term Incentive Compensation Plan, and the Unisource Worldwide, Inc.
Annual Bonus Plan, all of which were adopted effective January 1, 1997.
3. ELIGIBILITY. Full-time key employees of Unisource and its subsidiaries
-----------
shall be eligible to participate in the Plan. The Committee (as defined below)
shall select the executive officers who shall participate in the Plan, and the
Chief Operating Officer shall select the other eligible employees who shall
participate in the Plan.
4. ADMINISTRATION.
--------------
(a) The Plan shall be administered by a committee (the "Committee")
appointed by the Board of Directors of Unisource (the "Board"), as the Plan
applies to participants who are executive officers. The Committee shall consist
of two or more directors, each of whom is an "outside director," as defined in
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
and a "non-employee director," as defined in Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). If a Committee member
is intended to qualify as an "outside director" or "non-employee director" but
does not in fact so qualify, such nonqualification shall not invalidate any
Award (as defined below) made or other action taken by the Committee under the
Plan.
(b) The Plan shall be administered by the Chief Operating Officer of
Unisource, as the Plan applies to participants who are not executive officers.
However, if Unisource at any time has no Chief Operating Officer, the Plan shall
be administered by the Chief Executive Officer as the Plan relates to
participants who are not executive officers, and, in that event, all references
in the Plan to the "Chief Operating Officer" shall be deemed to refer to the
Chief Executive Officer.
(c) The Committee (with respect to executive officers) and the Chief
Operating Officer (with respect to participants who are not executive officers)
shall have full power and authority to interpret the Plan, to prescribe, amend
and rescind rules and regulations relating to the Plan, and to make all other
determinations and take all other actions deemed necessary or advisable in
administering the Plan.
1
<PAGE>
(d) The determinations of the Committee (with respect to executive
officers) and the Chief Operating Officer (with respect to participants who are
not executive officers) on matters relating to administration of the Plan shall
be conclusive and binding on all persons for all purposes. Neither the members
of the Committee nor the Chief Operating Officer shall be liable for any action
taken or any decision made in good faith relating to the Plan or any Award
hereunder. All powers of the Committee and Chief Operating Officer,
respectively, shall be executed in its sole discretion, in the best interest of
Unisource, not as a fiduciary, and in keeping with the objectives of the Plan,
and need not be uniform as to similarly situated individuals.
5. ANNUAL BONUSES AND LONG-TERM AWARDS.
-----------------------------------
(a) This Plan shall consist of two components: (i) annual bonus
awards that are based on financial performance during a fiscal year ("Annual
Bonuses") and (ii) long-term incentive compensation awards that are based on
financial performance during a period specified by the Committee or Chief
Operating Officer (as applicable) ("LTIP Awards"). Annual Bonuses and LTIP
Awards are referred to collectively as "Awards."
(b) All Annual Bonuses shall be paid in cash.
(c) LTIP Awards may be made in the form of Shares, cash, stock options
or any other form that the Committee or Chief Operating Officer (as applicable)
deems appropriate. Any LTIP Awards made in the form of stock options shall be
issued pursuant to the Unisource Worldwide, Inc. Stock Option Plan (the "Stock
Option Plan") and shall meet all the requirements of the Stock Option Plan.
LTIP Awards made in the form of Shares of restricted stock will be subject to
forfeiture and restrictions on transfer during the Performance Period (as
defined below) and any Vesting Period (as defined below) as determined by the
Committee or Chief Operating Officer (as applicable).
6. STOCK. There are authorized for issuance or delivery under the Plan an
-----
aggregate of 2,500,000 shares of Unisource's common stock ("Shares"), subject to
adjustment as provided hereinafter in Section 15. Such Shares may be authorized
but unissued Shares, whether now or hereafter authorized, or issued Shares which
have been reacquired by Unisource. If any LTIP Awards that are payable in
Shares under this Plan shall be canceled for any reason, the Shares for which
the Awards have been canceled shall again become available for the purpose of
this Plan. The number of Shares reserved for issuance or delivery under this
Plan applies to Shares issued under this Plan and does not apply to stock
options issued under the Stock Option Plan as described in Section 5 above.
7. LTIP AWARDS TO EXECUTIVE OFFICERS.
---------------------------------
(a) The Committee shall have the authority to make LTIP Awards to
executive officers. At the time an LTIP Award is made, the Committee shall
specify (i) the amount and form of the LTIP Award, (ii) the objective
performance goals that must be met in order for the executive officer to receive
all or any part of the LTIP Award, (iii) the time period
2
<PAGE>
within which the performance goals must be met (the "Performance Period"), and
(iv) the period of time (if any) after the end of the Performance Period during
which the executive officer must remain employed by Unisource or a subsidiary as
a condition of the LTIP Award (the "Vesting Period"). The Committee may specify
additional terms, not inconsistent with the Plan, by rules of general
application or by specific direction in connection with a particular Award or
group of Awards.
(b) If and to the extent that an LTIP Award is made in Shares, the
maximum number of Shares that may be awarded to an executive officer for a
Performance Period shall be 100,000 Shares (subject to adjustment as described
in Section 15). If and to the extent that an LTIP Award is made in the form of
stock options, as described in the Stock Option Plan, the maximum aggregate
number of Shares with respect to which stock options may be granted to an
individual during a fiscal year is 500,000 Shares (subject to adjustment as
described in the Stock Option Plan). If and to the extent that an LTIP Award is
payable in cash, or in any form other than Shares or stock options, the maximum
amount that may be awarded to an executive officer in such form for a
Performance Period shall be $5,000,000.
(c) The Committee shall establish one or more objective performance
goals for each LTIP Award. The performance goals may relate to the performance
of an executive officer's business unit or the performance of Unisource and its
subsidiaries as a whole, or any combination of the foregoing. The Committee
shall use any objectively determinable performance goals, based on one or more
of the following business criteria, to measure performance: (i) stock price,
(ii) sales, (iii) earnings per share, (iv) return on equity, (v) return on
assets, (vi) growth in assets, (vii) total shareholder return, (viii) strategic
business criteria, consisting of one or more objectives based on meeting
specified revenue goals, market penetration goals, geographic business expansion
goals, cost targets or goals relating to acquisitions or divestitures, (ix)
asset management, (x) cash flow return on investment, or (xi) economic value per
share.
(d) LTIP Awards to executive officers whose compensation is or, in the
opinion of the Committee, is potentially subject to the compensation deduction
limits of Section 162(m) of the Code ("Section 162(m) Executives") are intended
to be considered "qualified performance based compensation" under Section 162(m)
of the Code. In order to satisfy the requirements of "qualified performance-
based compensation," the Committee shall establish the performance goals in
writing either before the beginning of the Performance Period or during a period
ending no later than the earlier of (i) 90 days after the beginning of the
Performance Period or (ii) the date on which 25% of the Performance Period has
been completed, or such other date as may required or permitted under the
applicable regulations under Section 162(m) of the Code. The performance goals
shall satisfy any applicable requirements for "qualified performance based
compensation," including the requirement that the achievement of the goals be
"substantially uncertain" at the time that they are established and that the
goals be defined in such a way that a third party with knowledge of the relevant
facts could determine whether and to what extent the performance goals have been
met. Notwithstanding anything in the Plan to the contrary, for any LTIP Award
that is "qualified performance based compensation" under Section
3
<PAGE>
162(m) of the Code, the Committee shall not have the power to increase the
amount of compensation that is payable upon achievement of the designated
performance goals.
(e) The amount and form of LTIP Awards, if any, made each year, the
executive officers to whom LTIP Awards are made, the performance goals
applicable to each LTIP Award, and the other terms and provisions of the LTIP
Award shall be wholly within the discretion of the Committee, subject to the
overall Share limit described in Section 6 and the individual limits described
in Section 7(b) above.
8. LTIP AWARDS TO PARTICIPANTS WHO ARE NOT EXECUTIVE OFFICERS.
----------------------------------------------------------
(a) The Chief Operating Officer shall have the authority to make LTIP
Awards to participants who are not executive officers. At the time an LTIP
Award is made, the Chief Operating Officer shall specify (i) the amount and form
of the LTIP Award, (ii) the objective performance goals that must be met in
order for the participant to receive all or any part of the LTIP Award, (iii)
the Performance Period within which the performance goals must be met, and (iv)
the Vesting Period (if any) for the LTIP Award. The Chief Operating Officer may
specify additional terms, not inconsistent with this Plan, by rules of general
application or by specific direction in connection with a particular Award or
group of Awards.
(b) The Chief Operating Officer shall establish one or more objective
performance goals for each LTIP Award. The performance goals may relate to the
performance of a participant's business unit or the performance of Unisource and
its subsidiaries as a whole, or any combination of the foregoing. The Chief
Operating Officer shall use any objectively determinable performance goals to
measure performance, including any one or more of the business criteria
described in Section 7(c) above. The amount and form of LTIP Awards, if any,
made each year, the employees to whom LTIP Awards are made, the performance
goals applicable to each LTIP Award, and the other terms and provisions of the
LTIP Award shall be wholly within the discretion of the Chief Operating Officer,
subject to the overall Share limit described in Section 6.
9. VESTING OF LTIP AWARDS; TERMINATION OF EMPLOYMENT; ADJUSTMENTS.
--------------------------------------------------------------
(a) LTIP Awards shall be subject to vesting requirements, under which
a participant must remain a full-time active employee of Unisource or its
subsidiaries through the Performance Period and any Vesting Period in order for
the participant to receive all or part of the LTIP Award. Unless the Committee
or Chief Operating Officer (as applicable) determines otherwise, the Vesting
Period shall be the three-year period following the end of the Performance
Period, with vesting to occur at the rate of one-third on the first anniversary
of the end of the Performance Period and one-third on each of the next two
anniversaries, if the participant remains a full-time active employee of
Unisource or its subsidiaries through the vesting dates, provided however, that
unless accelerated in accordance with the provisions of subparagraph 9(b), in no
event shall the vesting period be less than one year following the end of the
Performance Period. Except as otherwise provided in the Plan, an LTIP Award
shall be forfeited if the participant ceases to be a full-time active employee
of Unisource and its subsidiaries before
4
<PAGE>
the end of the Performance Period and Vesting Period. All LTIP Awards that are
forfeited upon termination of employment shall be immediately returned to
Unisource.
(b) If a participant becomes totally disabled (as defined in the
Unisource Long-Term Disability Plan), elects retirement pursuant to Unisource's
retirement plan, or dies during the Performance Period, the participant (or the
participant's estate) shall be entitled to receive a pro-rated LTIP Award as
determined by the Committee or Chief Operating Officer (as applicable), which
shall be payable, if earned, after the end of the Performance Period. Unless the
Committee or Chief Operating Officer (as applicable) determines otherwise, if a
participant becomes totally disabled, elects retirement pursuant to Unisource's
retirement plan or dies during the Vesting Period, the participant (or the
participant's estate) shall be fully vested in the LTIP Award, which shall be
payable as soon as is practicable after the participant's death, retirement or
disability.
(c) Notwithstanding the foregoing, the Committee or Chief Operating
Officer (as applicable) may determine that an LTIP Award shall become vested,
fully or partially, in any other circumstances that the Committee or Chief
Operating Officer (as applicable) deems appropriate; provided, however, that the
Committee shall not have the authority to accelerate vesting under this
subsection with respect to an LTIP Award of a Section 162(m) Executive if such
vesting would cause the LTIP Award to fail to meet the requirements for
"qualified performance based compensation" under Section 162(m).
(d) In the event a participant transfers to a position as a full-time
active employee of another business unit within Unisource or a subsidiary before
the end of the Performance Period, the Committee or Chief Operating Officer (as
applicable), may make an adjustment in the amount of the LTIP Award, the
Performance Period, the Vesting Period and the performance goals associated with
the LTIP Award, or may determine that the LTIP Award shall be forfeited in part
or in its entirety. Any such adjustment or forfeiture shall be made in the sole
discretion of the Committee or Chief Operating Officer (as applicable);
provided, however, that the Committee shall not have the authority to make such
an adjustment with respect to an LTIP Award of a Section 162(m) Executive if the
adjustment would cause the LTIP Award to fail to meet the requirements for
"qualified performance based compensation" under Section 162(m).
10. ANNUAL BONUSES.
--------------
(a) The Committee shall have the authority to grant Annual Bonuses to
executive officers, and the Chief Operating Officer shall have the authority to
grant Annual Bonuses to other participants. The Committee (with respect to
executive officers) and the Chief Operating Officer (with respect to other
participants) shall (i) designate those key employees who may be eligible for
Annual Bonuses under the Plan for a fiscal year, (ii) determine the performance
goals that must be satisfied as a condition to earning an Annual Bonus for a
fiscal year, (iii) determine the requirements and conditions for Annual Bonuses,
(iv) determine the amounts of Annual Bonuses, (v) determine the extent to which
the performance goals applicable to Annual Bonuses have been achieved, and (vi)
determine the time of payment of Annual
5
<PAGE>
Bonuses. The amount of Annual Bonuses, if any, made each year, the key employees
to whom Annual Bonuses are made, the performance goals applicable to each Annual
Bonus, and the other terms and conditions of Annual Bonuses shall be wholly
within the discretion of the Committee (with respect to executive officers) and
Chief Operating Officer (with respect to other participants), subject to the
individual limit for executive officers as described in Section 10(b) below. The
performance goals, amounts and conditions for Annual Bonuses may differ as among
employees or classes of employees.
(b) The Committee shall establish objective performance goals for
Annual Bonuses to executive officers. The performance goals may relate to the
performance of an executive officer's business unit or the performance of
Unisource and its subsidiaries as a whole, or any combination of the foregoing.
The Committee shall use any objectively determinable performance goals, based on
one or more of the following business criteria, to measure performance: (i)
stock price, (ii) sales, (iii) earnings per share, (iv) return on equity, (v)
return on assets, (vi) growth in assets, (vii) total shareholder return, (viii)
strategic business criteria, consisting of one or more objectives based on
meeting specified revenue goals, market penetration goals, geographic business
expansion goals, cost targets or goals relating to acquisitions or divestitures,
(ix) asset management, (x) cash flow return on investment, or (xi) economic
value per share. The maximum amount that may be awarded to an executive officer
through an Annual Bonus under the Plan for a fiscal year is $5,000,000.
(c) Annual Bonuses payable to Section 162(m) Executives are intended to
be considered "qualified performance based compensation" under Section 162(m) of
the Code. In order to comply with Section 162(m), the Committee shall establish
the performance goals in writing either before the beginning of the fiscal year
or during a period ending no later than the earlier of (i) 90 days after the
beginning of the fiscal year or (ii) the date on which 25% of the fiscal year
has been completed, or such other date as may be required or permitted under the
applicable regulations under Section 162(m) of the Code. The performance goals
shall satisfy any applicable requirements for "qualified performance based
compensation," including the requirement that the achievement of the goals be
"substantially uncertain" at the time that they are established and that the
goals be defined in such a way that a third party with knowledge of the relevant
facts could determine whether and to what extent the performance goals have been
met. Notwithstanding anything in the Plan to the contrary, for any Annual Bonus
that is "qualified performance based compensation" under Section 162(m) of the
Code, the Committee shall not have the power to increase the amount of
compensation that is payable upon achievement of the designated performance
goals.
(d) Except as otherwise provided in the Plan, no Annual Bonus shall be
payable to a participant who ceases to be a full-time active employee of
Unisource and its subsidiaries before the end of the fiscal year to which the
Annual Bonus relates. Unless the Committee or Chief Operating Officer (as
applicable) determines otherwise, if a participant becomes totally disabled (as
defined in the Unisource Long-Term Disability Plan) or dies during the fiscal
year, the participant (or the participant's estate) shall be entitled to receive
a pro-rated Annual Bonus for the fiscal year, as determined by the Committee or
Chief Operating Officer (as applicable). The pro-rated Annual Bonus shall be
payable, if earned, after the end of the fiscal
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year. The Committee or Chief Operating Officer (as applicable) may determine
that an Annual Bonus shall become payable, fully or partially, in any other
circumstances that the Committee or Chief Operating Officer (as applicable)
deems appropriate; provided, however, that the Committee shall not have the
authority to make such a determination with respect to an Annual Bonus of a
Section 162(m) Executive if such determination would cause the Annual Bonus to
fail to meet the requirements for "qualified performance based compensation"
under Section 162(m).
(e) In the event a participant transfers to a position as a full-time
active employee of another business unit within Unisource or a subsidiary during
a fiscal year, the Committee or Chief Operating Officer (as applicable), may
make an adjustment in the amount of the Annual Bonus and the performance goals
associated with the Annual Bonus, or may determine that the Annual Bonus shall
not be payable in part or in its entirety. Any such adjustment or determination
shall be made in the sole discretion of the Committee or Chief Operating Officer
(as applicable); provided, however, that the Committee shall not have the
authority to make such an adjustment or determination with respect to an Annual
Bonus of a Section 162(m) Executive if the adjustment would cause the Annual
Bonus to fail to meet the requirements for "qualified performance based
compensation" under Section 162(m).
11. CERTIFICATION; FORFEITURE.
-------------------------
(a) At the end of each Performance Period (with respect to LTIP
Awards) and fiscal year (with respect to Annual Bonuses), the Committee (with
respect to executive officers) and the Chief Operating Officer (with respect to
participants who are not executive officers) shall determine whether and to what
extent the performance goals have been met, and shall certify in writing the
extent to which the performance goals have been met. Unisource shall notify
participants of the performance results and the effect of such performance on
their LTIP Awards and Annual Bonuses. If and to the extent that the Committee
or Chief Operating Officer (as applicable) does not certify that the performance
goals have been met, the LTIP Awards for the Performance Period or Annual
Bonuses for the fiscal year (as applicable) shall not be paid.
(b) After the Committee and Chief Operating Officer have certified
attainment of the performance goals as described above, and after completion of
any Vesting Period with respect to LTIP Awards, Unisource shall cause such
amounts as are earned pursuant to the applicable LTIP Awards and Annual Bonuses
to be paid to the participants, subject to withholding taxes and subject to
deferral, if applicable, under any of Unisource's deferred compensation plans
that may apply to the participants.
12. RESTRICTED STOCK.
----------------
(a) If Shares of restricted stock are issued as LTIP Awards, Unisource
shall retain possession of such Shares until all restrictions on the Shares have
lapsed. During the Performance Period and Vesting Period, a participant may not
sell, assign, transfer, pledge or otherwise dispose of Shares of restricted
stock, except, in the event of the participant's death, by will or by the laws
of descent and distribution. Any certificate issued for a Share of restricted
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stock shall contain a legend giving appropriate notice of the restrictions on
the restricted stock. The participant shall be entitled to have the legend
removed from the stock certificate covering the Shares when all restrictions on
such Shares have lapsed.
(b) During the Performance Period and any Vesting Period, each
participant shall have the right to vote any Shares that are subject to an
outstanding LTIP Award of restricted stock and to receive any dividends or other
distributions paid on such Shares, subject to any restrictions deemed
appropriate by the Committee (with respect to executive officers) or the Chief
Operating Officer (with respect to participants who are not executive officers).
Stock distributed in connection with a stock split or a stock dividend, and any
other property distributed as a dividend, shall be subject to the same
restrictions and risk of forfeiture as the restricted stock with respect to
which such stock or other property is distributed.
13. CHANGE OF CONTROL.
-----------------
(a) If a Change of Control (as defined below) occurs, unless the
Committee (with respect to executive officers) or the Chief Operating Officer
(with respect to participants who are not executive officers) determines
otherwise, outstanding LTIP Awards shall become fully vested. The Committee or
Chief Operating Officer (as applicable) may determine that outstanding LTIP
Awards shall not become fully vested in the event of a Change of Control, or
that they shall become only partially vested. The Committee or Chief Operating
Officer (as applicable) may also make adjustments in the amount and form of LTIP
Awards, the Performance Period, the Vesting Period and the performance goals
associated with an LTIP Award, or may convert Shares into shares of a successor
corporation, as the Committee or Chief Operating Officer (as applicable) deems
appropriate. Any such action or adjustment shall be made in the sole discretion
of the Committee or Chief Operating Officer (as applicable), and the Committee
shall take into consideration the requirements for "qualified performance based
compensation" under Section 162(m) of the Code, as they relate to LTIP Awards of
Section 162(m) Executives.
(b) If a Change of Control occurs, the Committee (with respect to
executive officers) or the Chief Operating Officer (with respect to participants
who are not executive officers) shall determine whether and to what extent
Annual Bonuses shall be payable for the fiscal year in which the Change of
Control occurs. Any such determination shall be made in the sole discretion of
the Committee or Chief Operating Officer (as applicable), and the Committee
shall take into consideration the requirements for "qualified performance based
compensation" under Section 162(m) of the Code as they relate to Annual Bonuses
of Section 162(m) Executives.
(c) As used herein, a "Change of Control" shall be deemed to have
occurred if:
(1) Any "person" (as such terms is used in Section 13(d) and 14(d)
of the Exchange
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Act) becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of Unisource representing 20% or
more of the voting power of the then outstanding securities of Unisource; or
(2) The shareholders of Unisource approve (or, if shareholder
approval is not required, the Board approves) an agreement providing for (i) the
merger or consolidation of Unisource with another corporation where the
shareholders of Unisource, immediately prior to the merger or consolidation,
will not beneficially own, immediately after the merger or consolidation, shares
entitling such shareholders to more than 50% of all votes to which all
shareholders of the surviving corporation would be entitled in the election of
directors (without consideration of the rights of any class of stock to elect
directors by a separate class vote), (ii) the sale or other disposition of all
or substantially all of the assets of Unisource, or (iii) a liquidation or
dissolution of Unisource.
(3) Notwithstanding anything in the Plan to the contrary, in the
event of a Change of Control, no action shall be taken that would make the
Change of Control ineligible for pooling of interests accounting treatment if,
in the absence of such right, the Change of Control would qualify for such
treatment and Unisource intends to use such treatment with respect to the Change
of Control.
14. TAX WITHHOLDING. All Awards shall be subject to applicable federal,
---------------
state, city, non-U.S. and other tax withholding requirements. Unisource shall
have the right to withhold from amounts payable under this Plan and from other
compensation payable to the participant amounts necessary to satisfy withholding
requirements with respect to Awards, or Unisource may require that the
participant pay to Unisource the amount of any such taxes that Unisource is
required to withhold with respect to an Award. If the Committee or Chief
Operating Officer (as applicable) so permits, a participant may elect to satisfy
Unisource's tax withholding obligation with respect to an Award by having
Unisource withhold the amount payable under the Award by up to one-half of the
total payment.
15. ADJUSTMENTS TO SHARES. If the outstanding shares of Unisource common
---------------------
stock are increased, decreased or exchanged for a different number or kind of
shares or other securities, or if additional shares or other property (other
than ordinary cash dividends) are distributed with respect to such shares of
Unisource common stock or other securities, through merger, consolidation, sale
of all or substantially all of the assets of Unisource, reorganization,
recapitalization, reclassification, dividend, stock split, reverse stock split,
spin off, split off, or other distribution with respect to such shares of common
stock or other securities, the Committee (with respect to executive officers)
and the Chief Operating Officer (with respect to participants who are not
executive officers) may make an appropriate and proportionate adjustment in (i)
the number and kinds of Shares reserved for issuance under the Plan, (ii) the
maximum number and kind of Shares that may be granted to an executive officer,
and (iii) the number and kind of Shares subject to then outstanding LTIP Awards
under the Plan. No fractional shares will be issued under the Plan on account
of any such adjustments.
16. ADJUSTMENTS TO PERFORMANCE GOALS. If any performance goal, criterion
--------------------------------
or target for any Performance Period or fiscal year is affected by special
factors (including material
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changes in accounting policies or practices, material acquisitions or
dispositions of property, or other unusual items) that, in the judgment of the
Committee or Chief Operating Officer (as applicable) should or should not be
taken into account, in whole or in part, in the equitable administration of the
Plan, the Committee or Chief Operating Officer (as applicable) may, for any
purpose of the Plan, adjust such goal, criterion or target, as the case may be,
for such Performance Period or fiscal year (and subsequent periods as
appropriate), or any combination of them, and may make credits, payments and
reductions accordingly under the Plan; provided, however, that the Committee
shall not have the authority to make any such adjustment with respect to an
Award to a Section 162(m) Executive that would cause the Award to fail to meet
the requirements for "qualified performance based compensation" under Section
162(m).
17. NONASSIGNMENT. Awards, and the rights and privileges conferred
-------------
hereby, may not be transferred, assigned, pledged or hypothecated in any way,
whether by operation of law or otherwise (except by will or by the laws of
descent and distribution in the event a participant dies), shall not be subject
to execution, attachment or similar process, and shall not be subject to the
claims of a participant's creditors.
18. PLAN AND AWARD NOT TO AFFECT EMPLOYMENT. Neither this Plan nor any
---------------------------------------
Award shall confer on any employee any right to continue in the employ of
Unisource or a subsidiary.
19. OTHER BENEFITS. Neither the receipt of an LTIP Award nor the issuance
--------------
of Shares or payment of other compensation pursuant to an LTIP Award shall be
deemed compensation for purposes of computing benefits under any retirement
plan, nor shall it affect any benefits under any other benefit plan now or
hereafter in effect under which the availability or amount of benefit is related
to the level of compensation, unless the Committee or Chief Operating Officer
(as applicable) determines otherwise.
20. AMENDMENT AND TERMINATION. The Board shall have complete power and
-------------------------
authority to terminate and in any respect amend or modify the Plan, except to
the extent that the approval of Unisource's shareholders is required under
Section 162(m) of the Code or other applicable law. No amendment, modification
or termination of the Plan may have a material adverse effect on the rights of a
participant with respect to any Award previously granted, without his or her
consent.
21. GOVERNMENT AND OTHER REGULATIONS. The obligation of Unisource to
--------------------------------
issue and transfer Shares under the Plan shall be subject to all applicable
laws, rules and regulations, and to such approvals by any governmental agencies
as may be required. No Shares shall be issued or transferred in connection with
any Award unless and until all legal requirements applicable to the issuance or
transfer or such Shares have been complied with to the satisfaction of the
Committee or the Chief Operating Officer (as applicable). The Committee or the
Chief Operating Officer (as applicable) shall have the right to condition any
Award on the participant's undertaking in writing to comply with such
restrictions on his or her subsequent disposition of such Shares as the
Committee or the Chief Operating Officer (as applicable) shall deem necessary or
advisable as a result of any applicable law, regulation or official
interpretation thereof, and certificates representing such Shares may be
legended to reflect any such restrictions. Certificates
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<PAGE>
representing Shares issued or transferred under the Plan will be subject to such
stop-transfer orders and other restrictions as may be required by applicable
laws, regulations and interpretations, including any requirement that a legend
be placed thereon. Nothing contained in the Plan shall be construed to limit the
authority of Unisource to exercise its corporate rights and powers.
22. COMPLIANCE WITH RULE 16b-3 AND SECTION 162(m). With respect to
---------------------------------------------
persons subject to Section 16 of the Exchange Act, it is the intent of Unisource
that the Plan and all transactions under the Plan comply with all applicable
provisions of Rule 16b-3 or its successors under the Exchange Act. Any Awards
to executive officers that are intended to qualify as "qualified performance
based compensation" under Section 162(m) of the Code shall be administered in a
manner consistent with the regulations under Section 162(m). With respect to
Awards that are intended to qualify as "qualified performance based
compensation," if any applicable provision of the Plan or any provision of the
Award does not comply with or is inconsistent with the requirements of Section
162(m) or the regulations thereunder, such provision shall be construed or
deemed amended to the extent necessary to conform to such requirements, and no
provision shall be deemed to confer on the Committee or any other person
discretion to increase the amount of compensation otherwise payable in
connection with any such Award upon attainment of the performance objectives.
23. GOVERNING LAW. The Plan shall be governed by and construed in
-------------
accordance with the laws of the Commonwealth of Pennsylvania.
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