<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 (Fee Required)
For the fiscal year ended July 31, 1994 Commission file number 1-6528
WALLACE COMPUTER SERVICES, INC.
Exact name of registrant as specified in its charter
DELAWARE 36-2515832
State or other jurisdiction of I.R.S. Employer
Incorporation or organization Identification No.
4600 W. ROOSEVELT ROAD HILLSIDE, ILLINOIS 60162
Address of Principal Executive Offices Zip Code
Registrant's telephone number, including area code: (312) 626-2000
--------------
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
Common Stock, $1.00 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK $1.00 PAR VALUE
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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. X Yes No
--- ---
State the aggregate market value of the voting stock held by nonaffiliates of
the registrant. (The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within 60 days prior to the date of the
filing.)
$657,437,796 (BASED ON THE SEPTEMBER 30, 1994, CLOSING PRICE OF THESE
SHARES ON THE NEW YORK STOCK EXCHANGE)
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date (Applicable only to corporate
registrants.)
AS OF SEPTEMBER 30, 1994, 22,396,386 SHARES OF COMMON STOCK WERE
OUTSTANDING.
Documents incorporated by reference:
1. Annual Report to Stockholders for 1994 - Parts I, II, and IV of this
Form 10-K
2. Definitive Proxy Statement dated October 7, 1994 - Part III of this
Form 10-K
Indicate by check mark if the disclosure of delinquent filers pursuant to item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in part III or this form 10-K or any amendments to
this form 10-K. [ X ]
<PAGE>
TABLE OF CONTENTS
Form 10-K
Item No. Name of Item Page
- - -------- ------------ ----
Part I
Item 1 Business 3
Item 2 Properties 7
Item 3 Legal Proceedings 9
Item 4 Submission of Matters to a Vote of
Security Holders 9
Part II
Item 5 Market for the Registrant's Common Equity and
Related Stockholder Matters 10
Item 6 Selected Financial Data 10
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Item 8 Financial Statements and Supplementary Data 10
Item 9 Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure 10
Part III
Item 10 Directors and Executive Officers of the
Registrant 11
Item 11 Executive Compensation 13
Item 12 Security Ownership of Certain Beneficial
Owners and Management 13
Item 13 Certain Relationships and Related
Transactions 13
Part IV
Item 14 Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 14
Signatures 28
Report and Consent of Independent Public Accountants 29
2
<PAGE>
Wallace Computer Services, Inc. Fiscal 1994 10-K
Part I
ITEM 1 BUSINESS
As used in this report, the term "Company" is used to refer to the
Registrant and its wholly-owned subsidiary, Visible Computer Supply
Corporation.
(a) Developments
The Registrant was organized in June, l963 as "Wallace Business
Forms, Inc.", a Delaware corporation and is the successor to an
Illinois corporation known as "Wallace Press, Inc." that was
merged into the Registrant in August 1963. To better reflect the
nature of the Company's business, the Registrant changed its
corporate name in November 1981 from "Wallace Business Forms,
Inc." to "Wallace Computer Services, Inc.".
(b) Industry Segment
The Company is engaged predominantly in the computer services and
supply industry. Wallace sells a broad line of products and
services including business forms, commercial and promotional
graphics printing, computer labels, machine ribbons, computer
hardware and software, computer accessories, office products, and
electronic forms.
(c) Narrative Description of Business
(1) Principal Products and Services
Principal products and services supplied by the Company
include the design, manufacture and sale of business forms,
industrial and consumer catalogs, directories and price
lists, pressure sensitive labels, computer and business
machine ribbons, a standard line of office products forms,
and direct mail promotional printing. The Company also
markets computer accessory supplies, office supplies, and
computer hardware and software.
The only class of similar products that contributed 10% or
more of total sales for the past three years is printed
products. The contribution of printed products to total
sales was 90% for fiscal 1994, 89% for fiscal 1993, and 89%
for fiscal 1992.
3
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ITEM 1 Continued
(2) The principal raw material used by the Company is paper
which is purchased in the open market from numerous
suppliers in a variety of weights, widths, color and sizes.
The Company believes that it has adequate sources of supply
of raw materials to meet the requirements of its business.
The Company's current inventory levels are in line with the
inventory levels necessary to satisfy customer demand that
the Company anticipates for fiscal year 1995.
(3) Although certain features of the Company's products and
manufacturing processes are covered by owned or licensed
patents, the Company does not consider patents to be
critical to its business.
The Company believes that principal factors in its success
include its engineering, manufacturing, and distribution
capabilities.
(4) The tax forms product lines (which account for approximately
2% of consolidated net sales) are sold primarily in the
first six months of the Company's fiscal year.
(5) The Company continues to maintain a strong working capital
position, with a current ratio of 3.8 at July 31, 1994 (3.9
at July 31, 1993). The Company funds its operating needs
through internally generated funds. The Company has not
borrowed any money for working capital needs since 1974.
Business conditions require the Company to produce and store
inventories to meet its customers' requirements. Custom and
stock finished goods inventories are stored throughout the
United States in both public and company-owned warehouses.
Finished products represent 65.7% of total inventory at
July 31, 1994.
Substantially all of the Company's sales are made on terms
of Net 30 days. The accounts receivable balance at July 31,
1994, increased by 2.6%, in line with the increase in fourth
quarter sales. Further information on liquidity and capital
resources is contained in Management's Discussion and
Analysis of Financial Condition and Results of Operations on
page 14 of the Company's Annual Report to Stockholders for
1994, which is incorporated herein by reference.
(6) The Company is not dependent upon any one customer or a
group of customers under common control. No single customer
or group of customers accounts for more than 10% of
consolidated net sales.
4
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ITEM 1 Continued
(7) Within the computer services and supply industry, the
Company sells its products through three distribution
channels: 1) a direct sales force of approximately 700
employee sales representatives, 2) direct mail catalogs sent
to the customer, and 3) the office products
wholesaler/dealer distribution network.
The predominant distribution channel is the direct sales
force. The Company hires college graduates who start at a
base salary of $20,000 plus commissions. Sales
representatives are placed in one of the Company's 160 sales
offices located throughout the United States and are
assigned a specific geographic territory. Within this
assigned territory, a sales representative is free to sell
all of the Company's products to any customer. Sales
support for the direct sales force is provided by the
Corporate Marketing department. The Company has identified
the following specific markets as large users of its product
lines: financial services, telecommunications, retail,
transportation/distribution, utilities, and healthcare.
The direct mail catalog operation accounts for less than 3%
of the Company's sales. Customers are offered products
through a general catalog, plus monthly flyers that offer
special pricing on a limited number of products. The
general catalog carries approximately 8,000 items. Most of
the paper-based products in the catalog are produced by the
Company. Products sold through the catalog are either drop-
shipped directly from the manufacturer to the customer, or
shipped from the Company's warehouses in California,
Illinois, and Pennsylvania. Mailing lists are updated on a
regular basis through prospecting using purchased lists of
potential customers.
The office products wholesaler/dealer distribution network
accounts for less than 11% of the Company's sales. The
network is accessed through the use of both the Company's
direct sales force and a limited number of outside
manufacturer's representatives, both of whom are paid
commissions. The direct sales force is also paid an annual
salary. The wholesaler/dealer distribution network is
located throughout the United States and Canada. The
product line sold through the network consists mainly of
office and paper products and computer supplies. The
Company is also doing an increasing amount of business with
the office superstores, which are estimated to control
approximately one-fourth of the office products market.
5
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ITEM 1 Continued
(8) The Company services several markets, all of which are
highly competitive. None of these markets is dominated by
any one company. The principal markets served are business
forms, commercial printing, pressure sensitive labels, and
office/computer products. The largest market share of the
Company in any of these markets is in business forms, where
the Company is known to be one of the ten largest
manufacturers based upon sales.
The ten largest manufacturers account for about 70% of
business forms sales, which are estimated to be
approximately $7.3 billion for calendar 1994 ($7.5 billion
in 1993).
The commercial printing market served by the Company
includes the design and manufacture of industrial and
consumer catalogs, directories and price lists that require
computer manipulation of data for electronic type
composition. The Company primarily competes with commercial
printers. This market is highly competitive and is very
large in comparison to the Company's sales in this area,
with most work being done on a job bid basis.
The pressure sensitive label market is highly competitive
with over 1,600 converters in the United States. This
market is estimated to total approximately $2.5 billion.
The Company is both a manufacturer and distributor for the
$15.0 billion office products market. The Company's sales
are small in relation to the total market.
(9) The Company is continuously involved in research activities
relating to development of new products and improvement of
existing products (none of which are customer sponsored).
The amounts that the Company spends on research activities
are not significant in relation to annual sales volume.
(10) Compliance with federal, state and local provisions
governing the discharge of materials into the environment
has not had and is not anticipated to have a material effect
on the Company's capital expenditures, earnings or
competitive position.
6
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ITEM 1 Continued
(11) The total number of persons employed by the Company was
3,530 as of July 31, 1994.
(d) Foreign Operation and Export Sales
Net sales and income derived from export sales are not material.
ITEM 2 PROPERTIES
The Company's corporate offices are located in Hillside, Illinois, a
suburb of Chicago.
The Company believes that all of its properties are well maintained
and in good operating condition.
The following are the Company's principal properties:
<TABLE>
<CAPTION>
Approximate
Square
Location Footage Description
- - -------- ------- -----------
<S> <C> <C>
Gastonia, North Carolina 120,000 Business Forms Plant
- owned by Company.
Luray, Virginia 162,300 Business Forms Plant
- owned by Company.
Manchester, Vermont 162,300 Business Forms Plant
- owned by Company.
Marlin, Texas 115,700 Business Forms Plant
- owned by Company.
Metter, Georgia 126,600 Business Forms Plant
- owned by Company.
Osage, Iowa 152,500 Business Forms Plant
- owned by Company.
San Luis Obispo, 110,000 Business Forms Plant
California - owned by Company.
7
<PAGE>
ITEM 2 Continued
Approximate
Square
Location Footage Description
- - -------- ------- -----------
Hillside, Illinois 206,600 Press Division Plant
and Corporate Head-
quarters (35,000 square
feet) attached to plant
- owned by Company.
Bellwood, Illinois 30,000 Engineering Facilities -
lease ending March, 1997.
Hillside, Illinois 24,400 Additional Corporate offices
- owned by Company.
Brenham, Texas 84,160 Ribbon and Label
Manufacturing Plant
- owned by Company.
Streetsboro, Ohio 80,000 Label Manufacturing Plant
- owned by Company.
Wilson, North Carolina 54,800 Label Manufacturing Plant
- owned by Company.
Lodi, California 138,100 Warehouse and Distribution
Center and Manufacturing
Plant for the Label and TOPS
Divisions
- owned by Company.
St Charles, Illinois 293,000 Warehouse and Distribution
Center and Manufacturing
Plant for the Business Forms
and TOPS Divisions
- owned by Company.
Osage, Iowa 104,400 TOPS Business Forms Plant
- owned by Company.
Covington, Tennessee 168,200 TOPS Business Forms Plant
- owned by Company.
8
<PAGE>
ITEM 2 Continued
Approximate
Square
Location Footage Description
- - -------- ------- -----------
Allentown, Pennsylvania 101,400 Warehouse and Distribution
Center - owned by Company.
Clinton, Illinois 219,000 Colorforms Manufacturing
Plant - owned by Company.
Tonawanda, New York 113,000 Colorforms Manufacturing
Plant - owned by Company.
Elk Grove Village, Illinois 142,000 Colorforms Manufacturing
Plant and Hardware Systems
Office - owned by Company.
</TABLE>
Distribution warehouses and sales offices throughout the United States are
leased.
ITEM 3 LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company
is a party or any of its properties is subject.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
9
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Wallace Computer Services, Inc. Fiscal 1994 10-K
Part II
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The total number of holders of record of the Company's common stock
was 3,985 as of September 30, 1994. Information about the market and
payment of dividends for the Company's common stock is contained in
the 1994 Annual Report to Stockholders on page 16, and is incorporated
herein by reference.
ITEM 6 SELECTED FINANCIAL DATA
Selected financial data for each of the eleven years ended July 31,
1994, is contained in the Company's Annual Report to Stockholders for
1994, on pages 12-13, and is incorporated herein by reference.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Management's Discussion and Analysis of Financial Condition and
Results of Operations for the three years ended July 31, 1994, is
contained in the Company's Annual Report to Stockholders for 1994, on
pages 14-16, and is incorporated herein by reference.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated balance sheets of the Company as of July 31, 1994 and
1993, the consolidated statements of income, cash flows and
stockholders' equity for the years ended July 31, 1994, 1993 and 1992,
and the notes to consolidated financial statements, together with the
report of Arthur Andersen LLP thereon dated September 7, 1994, are
contained in the Company's Annual Report to Stockholders for 1994, on
pages 17-24, and are incorporated herein by reference. The quarterly
financial information for the years ended July 31, 1994 and 1993 is
included in the Management's Discussion and Analysis of Financial
Condition and Results of Operations, which is contained in the
Company's Annual Report to Stockholders for 1994 on page 16 and is
incorporated herein by reference.
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
10
<PAGE>
Wallace Computer Services, Inc. Fiscal 1994 10-K
Part III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the directors of the Company is contained in
the Company's definitive Proxy Statement dated October 7, 1994, on
pages 3-6, and is incorporated herein by reference.
EXECUTIVE OFFICERS OF THE COMPANY
(a) Names, ages and positions of the executive officers:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Robert J. Cronin 49 President and Chief Executive
Officer
Bruce D'Angelo 42 Vice President - Corporate Sales
Theodore Dimitriou 68 Chairman of the Board
Michael O. Duffield 42 Senior Vice President - Operations
Michael R. Finger 54 Vice President - General
Manager - Direct Mail Division
Michael J. Halloran 46 Vice President - Chief Financial
Officer and Secretary
Donald J. Hoffmann 56 Vice President - Engineering
and Research
Michael T. Leatherman 41 Vice President - Management
Information Services
Michael M. Mulcahy 52 Vice President - General
Manager - Colorforms Division
Michael T. Quane 45 Treasurer
Wayne E. Richter 38 Vice President - General
Manager - Label Division
</TABLE>
11
<PAGE>
ITEM 10 Continued
All officers are elected at the Annual Meeting of the Board of
Directors, which will be held immediately after the Annual
Meeting of Stockholders on November 9, 1994.
(b) Business Experience of the Executive Officers:
Mr. Cronin has been with the Company since 1967. He was elected
Chief Executive Officer in 1993. Mr. Cronin was previously
elected Chief Operating Officer in 1992. Prior to that time, Mr.
Cronin held various sales management positions, most recently
Senior Vice President - Sales from 1991 to 1992. Mr. Cronin is
also a director of the Company.
Mr. D'Angelo has been with the Company since 1980. He was
elected Vice President - Corporate Sales in 1992. Mr. D'Angelo
was previously General Manager - Label Division from 1990 to
1992, and has held management positions in both sales and
operations.
Mr. Dimitriou joined the Company in 1959. He was Chief Executive
Officer of the Company from 1992 to 1993. Prior to that time, he
was President and Chief Executive Officer of the Company from
1975 to 1992. He is also a director of the Company and has been
its Chairman of the Board since 1979.
Mr. Duffield has been with the Company since 1974. He was
elected Senior Vice President - Operations in 1992. Mr. Duffield
has previously held various manufacturing management positions,
most recently Vice President - Operations from 1990 to 1992.
Mr. Finger has been with the Company since 1965. He was elected
Vice President - General Manager - Direct Mail Division in 1990.
Mr. Finger previously held the position of Vice President -
General Manager - Label Division from 1986 to 1990.
Mr. Halloran has been with the Company since 1975. He was
elected Vice President - Chief Financial Officer and Secretary in
1987.
Mr. Hoffmann has been with the Company since 1969. He was
elected Vice President - Engineering and Research in 1986.
Mr. Leatherman joined the Company as Vice President - Management
Information Services in 1990. He previously held the position of
Managing Director at FSC Paper, where he had been employed since
1984.
12
<PAGE>
ITEM 10 Continued
Mr. Mulcahy has been with the Company since 1961. He was appointed
Vice President - Colorforms Division in 1992. Mr. Mulcahy previously
held various manufacturing management positions, most recently Vice
President - General Manager - Manufacturing Operations from 1991 to
1992.
Mr. Quane joined the Company as Treasurer in 1993. He previously held
the position of Vice President - Treasurer at Rymer Food Co., where he
had been employed since 1988.
Mr. Richter has been with the Company since 1979. He was elected Vice
President - General Manager - Label Division in 1992. Mr. Richter has
previously been Director of Manufacturing - Business Forms Division
from 1990 to 1992 and has held several operational management
positions at various locations.
There are no family relationships between these executives.
ITEM 11 EXECUTIVE COMPENSATION
Information concerning management remuneration and transactions for
the year ended July 31, 1994, is contained in the Company's
definitive Proxy Statement dated October 7, 1994, on pages 7-15, and
is incorporated herein by reference.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning the beneficial ownership of the Company's
common stock is contained in the Company's definitive Proxy Statement
dated October 7, 1994, on pages 2-3, and is incorporated herein by
reference.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
13
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Wallace Computer Services, Inc. Fiscal 1994 10-K
Part IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial statements and schedules are included in this Form 10-K
Annual Report as indicated below. Those portions of the 1994
Annual Report to Stockholders listed below are hereby
incorporated by reference.
<TABLE>
<CAPTION>
Page Number
---------------------
Form Annual Report
10-K to Stockholders
---- ---------------
<S> <C> <C>
Quarterly Financial Data for the years
ended July 31, 1994 and 1993 16
Consolidated Statements of Income
for the years ended July 31, 1994,
1993, and 1992 17
Consolidated Statements of
Stockholders' Equity for the years
ended July 31, 1994, 1993, and 1992 18
Consolidated Balance Sheets as of
July 31, 1994 and 1993 19
Consolidated Statements of Cash
Flows for the years ended July 31,
1994, 1993, and 1992 20
Notes to Consolidated Financial
Statements 21-24
Consent and Report of Independent
Public Accountants 29 24
Schedules -
I Marketable Securities 22
V Property, Plant & Equipment 24
14
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ITEM 14 Continued
Page Number
---------------------
Form Annual Report
10-K to Stockholders
---- ---------------
VI Accumulated Depreciation and
Amortization of Property,
Plant & Equipment 25
VIII Valuation and Qualifying
Accounts 26
X Supplementary Income
Statement Information 27
</TABLE>
Schedules Omitted
All other schedules have been omitted because they are not
applicable or not required or because the required information is
included in the financial statements or notes thereto.
(b) No reports on Form 8-K were filed during the last quarter of the
period covered by this report.
(c) Exhibit Index
3. ARTICLES OF INCORPORATION AND BY-LAWS
3.1A Restated Certificate of Incorporation of the Registrant as
filed with the Secretary of State of the State of Delaware
on January 7, 1987, (previously filed as part of Exhibit 3
to the Registrant's Annual Report on Form 10-K for the
fiscal year ended July 31, 1987, and incorporated herein by
reference to such Report)
3.1B Certificate of Amendment amending Section 1 of Article
FOURTH of the Certificate of Incorporation of the Registrant
as filed with the Secretary of State of the State of
Delaware on November 28, 1989 (previously filed as part of
Exhibit 3 to the Registrant's Annual Report on Form 10-K for
the fiscal year ended July 31, 1987, and incorporated herein
by reference to such Report)
3.1C Certificate of Designation, Preferences and Rights of Series
A Preferred Stock of the Registrant as filed with the
Secretary of State of the State of Delaware on March 15,
1990 (previously
15
<PAGE>
ITEM 14 Continued
filed as part of Exhibit 3 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended July 31, 1990, and
incorporated herein by reference to such Report)
3.2 Amended and Restated By-Laws of the Registrant as adopted on
September 7, 1994
4. INSTRUMENTS DEFINING RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES *
* The Registrant has not filed as an Exhibit any instrument
defining the rights of holders of long-term debt because the
Registrant and its consolidated subsidiaries do not have any
instrument with respect to long-term debt under which the total
amount of authorized securities exceeds 10% of the total assets
of the Registrant and its subsidiaries on a consolidated basis.
The Registrant has filed an agreement with the Securities and
Exchange Commission to furnish a copy of any instrument defining
the rights of holders of long-term debt to the Commission upon
request.
10. MATERIAL CONTRACTS
10.1 Form of Rights Agreement, dated as of March 14, 1990,
between Registrant and Harris Trust and Savings Bank,
as Rights Agent, which includes as Exhibit A the
Certificate of Designation, Preferences and Rights of
Series A Preferred Stock, as Exhibit B the form of
Rights Certificate, and as Exhibit C the form of
Summary of Rights (previously filed as Exhibit 28.2 to
the Registrant's Current Report on Form 8-K dated March
14, 1990, and incorporated herein by reference to such
Report)
10.2A Fourth Amended and Restated Agreement made and entered
into as of January l, 1993 between the Registrant and
Theodore Dimitriou (previously filed as part of Exhibit
10 to the Registrant's Annual Report on Form 10-K for
the fiscal year ended July 31, 1993, and incorporated
herein by reference to such Report)
10.2B First Amendment to Fourth Amended and Restated
Agreement made and entered into as of January 1, 1993
between the Registrant and Theodore Dimitriou
(previously filed as part of Exhibit 10 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended July 31, 1993, and incorporated herein by
reference to such Report)
16
<PAGE>
ITEM 14 Continued
10.3 1989 Stock Option Plan of the Registrant, which amends
and restates as a single, integrated plan the 1974 Non-
Qualified Stock Option Plan of the Registrant and the
1981 Incentive Stock Option Plan of the Registrant
(previously filed as part of Exhibit 10 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended July 31, 1990, and incorporated herein by
reference to such Report)
10.4 Executive Incentive Plan of the Registrant, as restated
to reflect Amendment No. 2 thereto, adopted as of
August 1, 1989 (previously filed as part of Exhibit 10
to the Registrant's Annual Report on Form 10-K for the
fiscal year ended July 31, 1991, and incorporated
herein by reference to such Report)
10.5A 1988 Deferred Compensation/Capital Accumulation Plan of
the Registrant (previously filed as part of Exhibit 10
to the Registrant's Annual Report on Form 10-K for the
fiscal year ended July 31, 1988, and incorporated
herein by reference to such Report)
10.5B 1989 Deferred Compensation/Capital Accumulation Plan of
the Registrant (previously filed as part of Exhibit 10
to the Registrant's Annual Report on Form 10-K for the
fiscal year ended July 31, 1990, and incorporated
herein by reference to such Report)
10.5C 1990 Deferred Compensation/Capital Accumulation Plan of
the Registrant (previously filed as part of Exhibit 10
to the Registrant's Annual Report on Form 10-K for the
fiscal year ended July 31, 1990, and incorporated
herein by reference to such Report)
10.5D 1991 Deferred Compensation/Capital Accumulation Plan of
the Registrant (previously filed as part of Exhibit 10
to the Registrant's Annual Report on Form 10-K for the
fiscal year ended July 31, 1991, and incorporated
herein by reference to such Report)
10.5E 1993 Deferred Compensation/Capital Accumulation Plan of
the Registrant (previously filed as part of Exhibit 10
to the Registrant's Annual Report on Form 10-K for the
fiscal year ended July 31, 1993, and incorporated
herein by reference to such Report)
10.5F 1994 Deferred Compensation/Capital Accumulation Plan of
the Registrant
10.6 Supplemental Profit-Sharing Plan of the Registrant
(previously filed as part of Exhibit 10 to the
Registrant's Annual Report on Form 10-
17
<PAGE>
ITEM 14 Continued
K for the fiscal year ended July 31, 1988, and
incorporated herein by reference to such Report)
10.7 Executive Severance Pay Plan of the Registrant
(previously filed as part of Exhibit 10 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended July 31, 1990, and incorporated herein by
reference to such Report)
10.8 Employee Annual Bonus Plan of the Registrant
10.9 Employee Long-Term Performance Plan of the Registrant
10.10 Employee Stock Option Guideline of the Registrant
10.11A 1988 Deferred Compensation/Capital Accumulation Plan
For Directors of the Registrant (previously filed as
part of Exhibit 10 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended July 31, 1988, and
incorporated herein by reference to such Report)
10.11B 1989 Deferred Compensation/Capital Accumulation Plan
for Directors of the Registrant (previously filed as
part of Exhibit 10 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended July 31, 1990, and
incorporated herein by reference to such Report)
10.11C 1993 Deferred Compensation/Capital Accumulation Plan
for Directors of the Registrant (previously filed as
part of Exhibit 10 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended July 31, 1993, and
incorporated herein by reference to such Report)
10.11D 1994 Deferred Compensation/Capital Accumulation Plan
for Directors of the Registrant
10.12 Retirement Plan for Outside Directors of the Registrant
(previously filed as part of Exhibit 10 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended July 31, 1990, and incorporated herein by
reference to such Report)
10.13 Employee Stock Purchase Plan of the Registrant
(previously filed as part of Exhibit 10 to the
Registrant's Annual Report on Form 10-
18
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ITEM 14 Continued
K for the fiscal year ended July 31, 1992, and
incorporated herein by reference to such Report)
10.14 Employee Severance Pay Plan of the Registrant
(previously filed as part of Exhibit 10 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended July 31, 1992, and incorporated herein by
reference to such Report)
10.15A Form of Indemnification Agreement with Director between
the Registrant and each of the following: Fred F.
Canning, Robert J. Cronin, Theodore Dimitriou, Richard
F. Doyle, R. Darrell Ewers, William M. Lane III,
William E. Olsen and Neele E. Stearns, Jr. (previously
filed as part of Exhibit 10 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended July 31,
1990, and incorporated herein by reference to such
Report)
10.15B Form of Addendum to Indemnification Agreement with
Director (Member of Profit Sharing Committee) between
the Registrant and William E. Olsen (previously filed
as part of Exhibit 10 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended July 31, 1990,
and incorporated herein by reference to such Report)
10.16A Form of Indemnification Agreement with Officer between
the Registrant and each of the following: Robert J.
Cronin, Bruce D'Angelo, Theodore Dimitriou, Michael O.
Duffield, Michael R. Finger, Michael J. Halloran,
Donald J. Hoffmann, Michael T. Leatherman, Michael M.
Mulcahy, Michael T. Quane and Wayne E. Richter
(previously filed as part of Exhibit 10 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended July 31, 1990, and incorporated herein by
reference to such Report)
10.16B Form of Addendum to Indemnification Agreement with
officer (Trustee of Profit Sharing and Retirement Trust
and Member of Profit Sharing Committee) between the
Registrant and each of the following: Robert J.
Cronin, Theodore Dimitriou and Michael J. Halloran
(previously filed as part of Exhibit 10 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended July 31, 1990, and incorporated herein by
reference to such Report)
10.17A Acquisition Agreement dated as of July 18, 1991, by and
among Wallace Computer Services, Inc., a Delaware
corporation, MGI Industries, Inc., a New Jersey
corporation, Colorforms
19
<PAGE>
ITEM 14 Continued
Incorporated, a Delaware corporation, Colorforms Image
Center, Inc., an Illinois corporation, Colorforms
Mailing Services, Inc., an Illinois corporation,
Evergreen Realty, a New York partnership, Frank A. Leo,
William J. O'Brien, Robert L. Patton, and R. Robert
Verniero, including Exhibits and General Schedules but
excluding Disclosure Schedules (previously filed as
part of Exhibit 2 to the Registrant's Current Report on
Form 8-K dated August 20, 1991, and incorporated herein
by reference to such Report)
10.17B Amendment No. 1 dated as of August 7, 1991 to
Acquisition Agreement dated as of July 18, 1991 by and
among Wallace Computer Services, Inc., a Delaware
corporation, MGI Industries, Inc., a New Jersey
corporation, Colorforms Incorporated, a Delaware
corporation, Colorforms Image Center, Inc., an Illinois
corporation, Colorforms Mailing Services, Inc., an
Illinois corporation, Evergreen Realty, a New York
partnership, Frank A. Leo, William J. O'Brien, Robert
L. Patton, and R. Robert Verniero, including Exhibits
and General Schedules but excluding Disclosure
Schedules (previously filed as part of Exhibit 2 to the
Registrant's Current Report on Form 8-K dated August
20, 1991, and incorporated herein by reference to the
Report)
10.17C Supplemental Agreement No. l dated as of August 7, 1991
in connection with Acquisition Agreement dated as of
July 18, 1991, as amended by Amendment No. l dated as
of August 7, 1991, by and among Wallace Computer
Services, Inc., a Delaware corporation, MGI Industries,
Inc., a New Jersey corporation, Colorforms
Incorporated, a Delaware corporation, Colorforms Image
Center, Inc., an Illinois corporation, Colorforms
Mailing Services, Inc., an Illinois corporation,
Evergreen Realty, a New York partnership, Frank A. Leo,
William J. O'Brien, Robert L. Patton, and R. Robert
Verniero (previously filed as part of Exhibit 2 to the
Registrant's Current Report on Form 8-K dated August
20, 1991, and incorporated herein by reference to such
Report)
10.17D Supplemental Agreement No. 2 dated as of August 7,
1991, in connection with Acquisition Agreement dated as
of July 18, 1991, as amended by Amendment No. l dated
as of August 7, 1991, by and among Wallace Computer
Services, Inc., a Delaware corporation, MGI Industries,
Inc., a New Jersey corporation, Colorforms
Incorporated, a Delaware corporation, Colorforms Image
Center, Inc., an Illinois corporation, Colorforms
Mailing Services, Inc., an Illinois corporation,
Evergreen Realty, a New
20
<PAGE>
ITEM 14 Continued
York partnership, Frank A. Leo, William J. O'Brien,
Robert L. Patton, and R. Robert Verniero (previously
filed as part of Exhibit 2 to the Registrant's Current
Report on Form 8-K dated August 20, 1991, and
incorporated herein by reference to such Report)
10.17E Amendment No. 2 dated as of August 31, 1993, to
Acquisition Agreement dated as of July 18, 1991, by and
among Wallace Computer Services, Inc., a Delaware
corporation (on its own behalf and as successor by
merger to MGI Industries, Inc., a New Jersey
corporation, and Colorforms Incorporated, a Delaware
corporation, Colorforms Image Center, Inc., an Illinois
corporation, and Colorforms Mailing Services, Inc., an
Illinois corporation), Evergreen Realty, a New York
partnership, Frank A. Leo, William J. O'Brien, Robert
C. Patton, and R. Robert Verniero (previously filed as
part of Exhibit 10 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended July 31, 1993, and
incorporated herein by reference to such Report)
13. ANNUAL REPORT TO SECURITY HOLDERS, FORM 10-Q OR QUARTERLY REPORT TO
SECURITY HOLDERS
13. Annual Report - Fiscal 1994 of the Registrant (filed as part of
this Report only to the extent portions thereof are expressly
incorporated by reference in this report)
22. SUBSIDIARIES OF REGISTRANT
22. The Registrant owns 100% of the stock of Visible Computer Supply
Corporation, an Illinois Corporation.
24. CONSENTS OF EXPERTS AND COUNSEL
24. See page 29 for consent of Arthur Andersen LLP.
28. ADDITIONAL EXHIBITS
28. Definitive Proxy Statement dated October 7, 1994.
21
<PAGE>
Wallace Computer Services, Inc. and Subsidiary
Schedule I - Marketable Securities - Other Investments
As of July 31, 1994
<TABLE>
<CAPTION>
Number of Shares Cost of Balance Sheet
Type of Issue Bond Principal Each Issue Market Value Value
- - ------------- ---------------- ---------- ------------ -------------
Other Government and Corporate Securities
<S> <C> <C> <C> <C>
Bonds
State
Alaska 90,000 $95,000 $94,000 $95,000
California 1,060,000 1,067,000 1,071,000 1,067,000
Florida 125,000 127,000 131,000 127,000
Georgia 1,000,000 1,000,000 1,000,000 1,000,000
Idaho 1,000,000 1,006,000 1,003,000 1,006,000
Illinois 2,000,000 2,000,000 2,000,000 2,000,000
Kentucky 2,700,000 2,702,000 2,702,000 2,702,000
Louisiana 555,000 574,000 570,000 574,000
Maine 250,000 251,000 251,000 251,000
Massachusetts 2,150,000 2,157,000 2,157,000 2,157,000
Missouri 100,000 100,000 100,000 100,000
South Carolina 430,000 430,000 430,000 430,000
Texas 1,000,000 1,003,000 1,000,000 1,003,000
Washington 500,000 505,000 504,000 505,000
County 3,050,000 3,127,000 3,116,000 3,127,000
City
Albuquerque, NM 455,000 468,000 466,000 468,000
Boise, ID 350,000 372,000 376,000 372,000
Chicago, IL 500,000 505,000 500,000 505,000
Chicago Suburban 500,000 533,000 529,000 533,000
Cincinnati, OH 3,000,000 3,000,000 3,000,000 3,000,000
Lisle, IL 500,000 500,000 500,000 500,000
New York, NY 5,175,000 5,202,000 5,199,000 5,202,000
Quincy, MA 25,000 25,000 27,000 25,000
Rochester, MN 3,000,000 3,000,000 3,000,000 3,000,000
Salem, VA 730,000 764,000 761,000 764,000
San Francisco, CA 250,000 250,000 254,000 250,000
Other
District of Columbia 750,000 750,000 746,000 750,000
Puerto Rico 3,000,000 3,000,000 3,000,000 3,000,000
Hedged Utility Portfolio 191,000 10,552,000 9,894,000 10,552,000
</TABLE>
22
<PAGE>
Wallace Computer Services, Inc. and Subsidiary
Schedule I - Marketable Securities - Other Investments
As of July 31, 1994
(continued)
<TABLE>
<CAPTION>
Number of Shares Cost of Balance Sheet
Type of Issue Bond Principal Each Issue Market Value Value
- - ------------- ---------------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
Preferred Stocks
Utilities 75,000 $1,866,000 $1,772,000 $1,866,000
Corporate 50,000 1,904,000 1,947,000 1,904,000
Municipal Bond Funds 1,639,000 7,516,000 7,519,000 7,516,000
Commercial Paper 3,000,000 2,992,000 2,999,000 2,992,000
All Other 68,000 68,000 68,000 68,000
-----------
$59,411,000
===========
</TABLE>
23
<PAGE>
Wallace Computer Services, Inc. and Subsidiary
Schedule V - Property, Plant and Equipment
For the years ended July 31
<TABLE>
<CAPTION>
Beginning Additions Retirements Other Ending
Balance At Cost Or Sales Changes (1) Balance
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1994
Land and Buildings $93,556,000 6,650,000 0 --- $100,206,000
Machinery and Equipment 304,826,000 27,578,000 2,790,000 2,016,000 331,630,000
Leasehold Improvements 464,000 0 56,000 --- 408,000
------------ ------------ ------------ ------------ ------------
Total $398,846,000 34,228,000 2,846,000 2,016,000 $432,244,000
============ ============ ============ ============ ============
1993
Land and Buildings $93,658,000 358,000 460,000 --- $93,556,000
Machinery and Equipment 276,913,000 31,460,000 3,547,000 --- 304,826,000
Leasehold Improvements 464,000 0 0 --- 464,000
------------ ------------ ------------ ------------ ------------
Total $371,035,000 31,818,000 4,007,000 --- $398,846,000
============ ============ ============ ============ ============
1992
Land and Buildings $82,386,000 4,416,000 3,233,000 10,089,000 $93,658,000
Machinery and Equipment 232,987,000 29,101,000 2,501,000 17,326,000 276,913,000
Leasehold Improvements 437,000 0 2,000 29,000 464,000
------------ ------------ ------------ ------------ ------------
Total $315,810,000 33,517,000 5,736,000 27,444,000 $371,035,000
============ ============ ============ ============ ============
<FN>
(1) Explanation of Other Changes by fiscal year:
Fiscal 1994: Reflects adoption of FASB 109 - Accounting for Income
Taxes.
Fiscal 1992: Acquisition of MGI Industries, Inc. and its subsidiaries
and affiliated companies and all of the assets of Evergreen Realty on
August 7, 1991.
</TABLE>
24
<PAGE>
Wallace Computer Services, Inc and Subsidiary
Schedule VI - Accumulated Depreciation and
Amortization of Property, Plant and Equipment
For the years ended July 31
<TABLE>
<CAPTION>
Beginning Charged Retirements Other Ending
Balance To Income Or Sales Changes Balance
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1994
Land and Buildings $23,868,000 3,441,000 0 --- $27,309,000
Machinery and Equipment 146,660,000 27,473,000 2,468,000 --- 171,665,000
Leasehold Improvements 447,000 14,000 53,000 --- 408,000
------------ ------------ ------------ ------------ ------------
Total $170,975,000 30,928,000 2,521,000 --- $199,382,000
============ ============ ============ ============ ============
1993
Land and Buildings $20,768,000 3,321,000 221,000 --- $23,868,000
Machinery and Equipment 124,513,000 25,203,000 3,056,000 --- 146,660,000
Leasehold Improvements 410,000 37,000 --- --- 447,000
------------ ------------ ------------ ------------ ------------
Total $145,691,000 28,561,000 3,277,000 --- $170,975,000
============ ============ ============ ============ ============
1992
Land and Buildings $18,803,000 3,347,000 1,382,000 --- $20,768,000
Machinery and Equipment 104,281,000 22,624,000 2,392,000 --- 124,513,000
Leasehold Improvements 375,000 37,000 2,000 --- 410,000
------------ ------------ ------------ ------------ ------------
Total $123,459,000 26,008,000 3,776,000 --- $145,691,000
============ ============ ============ ============ ============
</TABLE>
Depreciation and amortization for financial statement purposes are computed
using the straight line method over the following estimated useful lives of the
assets:
Buildings 40 years
Building Equipment 10 - 15 years
Machinery and Equipment 3 - 10 years
Leasehold Improvements Lease Period
25
<PAGE>
Wallace Computer Services, Inc. and Subsidiary
Schedule VIII - Valuation and Qualifying Accounts
For the years ended July 31
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Balance at Beginning of Year $1,849,000 $1,618,000 $1,644,000
Provision for Doubtful Accounts 893,000 1,127,000 941,000
Accounts Written Off Against Allowance 1,161,000 1,260,000 1,489,000
Recoveries Credited to Allowance 401,000 364,000 447,000
Other Charges (1) --- --- 75,000
---------- ---------- ----------
Balance at End of Year $1,982,000 $1,849,000 $1,618,000
========== ========== ==========
</TABLE>
(1) Acquisition of MGI Industries, Inc. and its subsidiaries and affiliated
companies and all of the assets of Evergreen Realty on August 7, 1991.
26
<PAGE>
Wallace Computer Services, Inc. and Subsidiary
Schedule X - Supplementary Income Statement Information
For the years ended July 31
<TABLE>
<CAPTION>
Amounts Charged to Costs and
Expenses Exceeding 1% of Net Sales
----------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Maintenance and Repairs $9,064,000 $8,461,000 $8,530,000
========== ========== ==========
</TABLE>
27
<PAGE>
Wallace Computer Services, Inc Fiscal 1994 10-K
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on October 7, 1994.
Wallace Computer Services, Inc.
By /s/ Michael J. Halloran
------------------------------------
Michael J. Halloran
Vice President, Chief Financial
Officer and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in capacities indicated, on October 7, 1994.
/s/ Theodore Dimitriou /s/ R. Darrell Ewers
- - --------------------------------- ---------------------------------------
Theodore Dimitriou R. Darrell Ewers
Chairman of the Board Director
/s/ Robert J. Cronin /s/ William N. Lane III
- - --------------------------------- ---------------------------------------
Robert J. Cronin William N. Lane III
Director, President and Director
Chief Executive Officer
/s/ Fred F. Canning /s/ William E. Olsen
- - --------------------------------- ---------------------------------------
Fred F. Canning William E. Olsen
Director Director
/s/ Richard F. Doyle /s/ Neele E. Stearns, Jr
- - --------------------------------- ---------------------------------------
Richard F. Doyle Neele E. Stearns, Jr.
Director Director
28
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SCHEDULES
To Wallace Computer Services, Inc.
We have audited in accordance with generally accepted auditing standards, the
financial statements included in Wallace Computer Services, Inc.'s annual report
to shareholders incorporated by reference in this Form 10-K, and have issued our
report thereon dated September 7, 1994. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. The schedules listed
in the index on Pages 14 and 15 are the responsibility of the Company's
management and are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial statements.
These schedules have been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth in relation to the
basic financial statements taken as a whole.
Our report on the financial statements includes an explanatory paragraph with
respect to the change in the method of accounting for income taxes and post
retirement benefits in 1994 as discussed in Notes 7 and 8 to the financial
statements.
Arthur Andersen LLP
Chicago, Illinois
September 7, 1994
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports, dated September 7, 1994, included (or incorporated by reference) in
this Form 10-K, into the Company's previously filed Registration Statements on
Form S-8 (File No. 2-52229, No. 2-52357, No. 2-60252, No. 2-63000, No. 2-70022,
No. 2-87821, No. 33-10353 and No. 33-32706).
Arthur Andersen LLP
Chicago, Illinois
October 7, 1994
29
<PAGE>
Exhibit 3.2
AMENDED AND RESTATED BYLAWS
of
WALLACE COMPUTER SERVICES, INC.
(Effective as of September 7, 1994)
ARTICLE I
OFFICES AND BOOKS AND RECORDS
-----------------------------
Section 1.1. OFFICES.
The corporation may have such offices as the Board of Directors may from
time to time designate and the business of the corporation may from time to time
require.
Section 1.2. BOOKS AND RECORDS.
The corporation may keep its books and records at such places as the Board
of Directors may from time to time designate and the business of the corporation
may from time to time require.
ARTICLE II
STOCKHOLDERS
------------
Section 2.1. ANNUAL MEETING.
An annual meeting of stockholders for the purpose of electing directors and
the transaction of any other proper business shall be held each year on such
date and at such time as may be fixed by the Board of Directors. If, by the
tenth day preceding the first Wednesday in November of any year, the Board of
Directors shall not have fixed a date and time for an annual meeting of
stockholders for such year, the annual meeting shall be held on the first
Wednesday in November in such year at the hour of 10:00 a.m. in the place where
such meeting is to be held. If the date so fixed for the annual meeting shall
be a legal
- 1 -
<PAGE>
holiday in the place where such meeting is to be held, such meeting shall be
held on the next succeeding business day.
Section 2.2. SPECIAL MEETINGS.
Special meetings of stockholders may be called at any time by the Board of
Directors pursuant to a resolution approved by a majority of the entire Board of
Directors. *
Section 2.3. PLACE OF MEETING.
The Board of Directors may designate the place of meeting for any meeting
of stockholders. If no designation is made by the Board of Directors, the place
of meeting shall be the principal business office of the corporation.
Section 2.4. NOTICE OF MEETING.
Written or printed notice stating the place, day and hour of meeting and
the purpose or purposes for which the meeting is called shall be given not less
than 10 days nor more than 60 days before the date of each meeting of
stockholders, either personally or by mail, to each stockholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
given when deposited in the United States mail, postage prepaid, addressed to
the stockholder at his address as it appears on the stock transfer books of the
corporation.
Section 2.5. FIXING OF RECORD DATE.
Except as may be provided otherwise by law:
(a) For the purpose of determining stockholders entitled to notice of or
to vote at any meeting of stockholders or any adjournment thereof, or
stockholders entitled to receive payment of any dividend or other distribution,
or in order to make a determination of stockholders for any other proper
purpose, the Board of Directors may fix in advance a date as the record date for
any such determination of stockholders, which record date shall be not less than
10 days nor more than 60 days prior to the date of the meeting or of the payment
of a dividend or other event for which such record date is being fixed.
(b) If no record date is fixed for the determination of stockholders
entitled to notice of or to vote at a meeting of stockholders, or of
stockholders entitled to receive payment of a
- 2 -
<PAGE>
dividend or other distribution, or in order to make a determination of
stockholders for any other purpose, the record date for such determination of
stockholders shall be (i) in the case of a meeting of stockholders, the close of
business on the day next preceding the date on which notice of the meeting is
given, or (ii) in the case of a dividend or other distribution, the close of
business on the date on which the Board of Directors adopts the resolution
declaring such dividend or other distribution, or (iii) for any other purpose,
the date on which the Board of Directors adopts the resolution relating thereto.
(c) A determination of stockholders entitled to notice of or to vote at
any meeting of stockholders shall apply to any adjournment of such meeting,
unless the Board of Directors fixes a new record date for the adjourned meeting.
Section 2.6. VOTING LISTS.
The officer who has charge of the stock transfer books of the corporation
shall prepare and make, at least 10 days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at such meeting, arranged in
alphabetical order, showing the address of each stockholder and the number of
shares registered in the name of each stockholder. Such list shall be available
at either the place where the meeting is to be held or at another place,
specified in the notice of meeting, in the city where the meeting is to be held,
for a period of 10 days prior to the meeting and shall be open to examination by
any stockholder at any time during ordinary business hours during such 10-day
period, for any purpose germane to the meeting. Such list shall also be
produced and kept open at the time and place of the meeting during the whole
time thereof and shall be subject to inspection by any stockholder who is
present at the meeting. The original or duplicate stock transfer books shall be
the only evidence as to the identity of the stockholders entitled to examine any
such list or the stock transfer books of the corporation and to vote in person
or by proxy at any meeting of stockholders.
Section 2.7. QUORUM AND VOTING.
Except as may be provided otherwise in the Certificate of Incorporation:
(a) Stockholders holding a majority of the outstanding shares of stock of
the corporation entitled to vote, present in person or represented by proxy,
shall constitute a quorum at a meeting of stockholders, except that, when any
matter is to be voted on by a class or by a series voting as a class, the
holders
- 3 -
<PAGE>
of a majority of the shares of such class or series, present in person or
represented by proxy, shall constitute a quorum of such class or series for a
vote on such matter.
(b) In all matters other than the election of directors, the affirmative
vote of stockholders holding a majority of the shares of stock of the
corporation entitled to vote, present in person or represented by proxy, shall
be the act of the stockholders, except that, when any matter is to be voted on
by a class or by a series voting as a class, the affirmative vote of the holders
of a majority of the shares of such class or series, present in person or
represented by proxy, shall be the act of such class or series.
(c) Directors shall be elected by a plurality of the votes cast by
stockholders holding shares of stock of the corporation entitled to vote in the
election of directors, present in person or represented by proxy, except that,
when any directors are to be elected by a class or by a series voting as a
class, the directors to be elected by such class or series shall be elected by a
plurality of the votes cast by holders of the shares of such class or series,
present in person or represented by proxy.
(d) If less than a majority of the outstanding shares of stock is
represented at a meeting of stockholders, or if less than a majority of the
outstanding shares of any class or series is represented at a meeting of
stockholders where a matter is to be voted on by a class or by a series voting
as a class, a majority of the shares so represented may adjourn the meeting from
time to time without further notice. At such adjourned meeting at which a
quorum shall be represented, any business may be transacted that might have been
transacted at the meeting as originally notified.
(e) The stockholders represented at a duly organized meeting may continue
to transact business at such meeting, notwithstanding the withdrawal from the
meeting of a number of stockholders leaving less than a quorum at such meeting.
Section 2.8. PROXIES.
(a) Each stockholder entitled to vote at a meeting of stockholders may
authorize another person or persons to act for him by proxy, but no such proxy
shall be voted or acted upon after 3 years from its date, unless the proxy
provides for a longer period.
(b) Without limiting the manner in which a stockholder may authorize
another person or persons to act for him as proxy pursuant to subsection (a) of
this Section, the following shall
- 4 -
<PAGE>
constitute a valid means by which a stockholder may grant such authority:
(1) A stockholder may execute a writing authorizing another person or
persons to act for him as proxy. Execution may be accomplished by the
stockholder or his authorized officer, director, employee or agent signing
such writing or causing his signature to be affixed to such writing by any
reasonable means including, but not limited to, facsimile signature.
(2) A stockholder may execute a writing authorizing another person or
persons to act for him as proxy by transmitting or authorizing the
transmission of a telegram, cablegram, or other means of electronic
transmission to the person or persons who will be the holder of the proxy
or to a proxy solicitation firm, proxy support service organization or like
agent duly authorized by the person or persons who will be the holder of
the proxy to receive such transmission, provided that any such telegram,
cablegram or other means of electronic transmission must either set forth
or be submitted with information from which it can be determined that the
telegram, cablegram or other electronic transmission was authorized by the
stockholder. If it is determined that such a telegram, cablegram or other
electronic transmission is valid, the inspectors of election or, if there
are no inspectors of election, such other persons making such determination
shall specify the information upon which they relied.
(c) Any copy, facsimile telecommunication or other reliable reproduction
of the writing or transmission created pursuant to subsection (b) of this
Section may be substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original writing or
transmission could be used, provided that such copy, facsimile telecommunication
or other reproduction shall be a complete reproduction of the entire original
writing or transmission.
(d) A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the corporation generally.
Section 2.9. INSPECTORS OF ELECTION.
(a) The corporation shall, in advance of any meeting of stockholders,
appoint one or more inspectors of election to act
- 5 -
<PAGE>
at the meeting and make a written report thereof. The corporation may designate
one or more persons as alternate inspectors of election to replace any inspector
of election who fails to act. If no inspector of election or alternate
inspector of election is able to act at a meeting of stockholders, the person
presiding at the meeting shall appoint one or more inspectors of election to act
at the meeting. Each inspector of election, before entering upon the discharge
of his duties, shall take and sign an oath faithfully to execute the duties of
inspector of election with strict impartiality and according to the best of his
ability. The decision of a majority of the inspectors of election as to the
results of any vote of stockholders shall be binding upon the corporation and
its stockholders. Any competent person over the age of 21 may be appointed as
an inspector of election.
(b) Inspectors of election shall have the following responsibilities:
(i) to ascertain the number of shares outstanding and the
voting power of each;
(ii) to determine the shares represented at a meeting and the
validity of proxies and ballots;
(iii) to count all votes and ballots;
(iv) to determine and retain for a reasonable period a record of
the disposition of any challenges made to any determination by the
inspectors;
(v) to certify their determination of the number of shares
represented at the meeting and their count of all votes and ballots;
(vi) to determine whether the meeting itself is legally
constituted for the purpose of the actions to be taken by the stockholders;
and
(vii) to do all other acts and make all other determinations
necessary or appropriate in connection with conducting the vote of
stockholders and deciding the results thereof.
(c) In carrying out their responsibilities, inspectors of election shall
not have any obligation to do any of the following:
(i) to determine the names or addresses of the stockholders
entitled to vote (inspectors of election may
- 6 -
<PAGE>
rely on a list of stockholders as of the record date for the meeting
certified by either the transfer agent or the Secretary of the
corporation), or
(ii) to determine the date of mailing of the notice of meeting or
the persons to whom the notice of meeting was sent (inspectors of election
may rely on a certificate of either the transfer agent or the Secretary of
the corporation for such information).
(d) In carrying out their responsibilities, inspectors of election shall
have the authority, but not the obligation, to appoint or retain agents,
including, but not limited to, accountants, attorneys and custodians, to assist
the inspectors of election in the performance of their duties as the inspectors
of election. Any such agent so appointed by any inspector of election shall be
responsible only to the inspectors of election.
(e) Inspectors of election shall be entitled to possession of all proxies
and all ballots cast by stockholders or their proxies until they have determined
the results of the vote of stockholders, at which time they shall deliver such
proxies and ballots to the secretary of the meeting.
(f) The date and time of the opening and the closing of the polls for each
matter upon which the stockholders will vote at a meeting shall be announced at
the meeting. No ballot, proxies or votes, nor any revocations thereof or
changes thereto, shall be accepted by the inspectors of election after the
closing of the polls unless the Court of Chancery of the State of Delaware upon
application by a stockholder shall determine otherwise.
(g) In determining the validity and counting of proxies and ballots, the
inspectors of election shall be limited to an examination of the proxies, any
envelopes submitted with those proxies, any information provided in accordance
with Section 212(c)(2) of the General Corporation Law of the State of Delaware,
ballots and the regular books and records of the corporation, except that the
inspectors of election may consider other reliable information for the limited
purpose of reconciling proxies and ballots submitted by or on behalf of banks,
brokers, their nominees or similar persons which represent more votes than the
holder of a proxy is authorized by the record owner to cast or more votes than
the stockholder holds of record. If the inspectors of election consider other
reliable information for the limited purpose permitted in this subsection (g),
the inspectors of election shall, at the time they make their certification
pursuant to subsection (b)(v) of this Section, specify the precise information
considered by them, including the person or persons from whom they obtained the
information, when the information was obtained, the means by which the
information
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was obtained and the basis for their belief that such information is accurate
and reliable.
(h) Inspectors of election shall be entitled to reimbursement from the
corporation for all expenses reasonably incurred by them in connection with the
discharge of their responsibilities, including the fees and expenses of any
agents appointed by them. In addition, the corporation shall pay inspectors of
election a fee commensurate with the services rendered and the responsibilities
undertaken by them.
Section 2.10. STOCKHOLDER ACTION.
Any action required or permitted to be taken by any stockholders of the
corporation must be effected at a duly called annual or special meeting of such
stockholders and may not be effected by any consent in writing by such
stockholders. Except as otherwise required by law and subject to any special
rights of holders of preferred stock with respect to calling meetings of
preferred stockholders, special meetings of stockholders of the corporation may
be called only by the Board of Directors pursuant to a resolution approved by a
majority of the entire Board of Directors. *
ARTICLE III
BOARD OF DIRECTORS
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Section 3.1. GENERAL POWERS.
The business and affairs of the corporation shall be managed by or under
the direction of the Board of Directors, except as may be otherwise required by
law, by the Certificate of Incorporation or by these by-laws.
Section 3.2. NUMBER, ELECTION, TENURE AND QUALIFICATIONS; STOCKHOLDER
NOMINATIONS; VACANCIES; REMOVAL; RESIGNATION.
(a) NUMBER, ELECTION, TENURE AND QUALIFICATIONS. Subject to any special
rights of the holders of preferred stock to elect additional directors, the
number of directors of the corporation shall be fixed from time to time by a
majority of the entire Board of Directors. The directors (other than directors
elected by the holders of preferred stock voting as a class or series) shall be
classified, with respect to the time for which they severally hold office, into
three classes, as nearly equal in number as possible, as determined by the Board
of Directors, one class to be originally elected for a term expiring at the
annual meeting of stockholders to be held in 1986, another class to be
originally elected for a term expiring at the annual
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meeting of stockholders to be held in 1987, and another class to be originally
elected for a term expiring at the annual meeting of stockholders to be held in
1988, with each director in each class to hold office until his successor is
elected and qualified. At each annual meeting of stockholders, the successors
of the class of directors whose term expires at the meeting shall be elected to
hold office for a term expiring at the annual meeting of stockholders held in
the third year following the year of their election. Directors need not be
residents of the State of Delaware or stockholders of the corporation. *
(b) STOCKHOLDER NOMINATION OF DIRECTOR CANDIDATES. Advance notice of
stockholder nominations for directors shall be given in the manner provided in
Section 3.3 of these by-laws. *
(c) NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Subject to any special
rights of the holders of preferred stock with respect to filling vacancies in
directorships elected by preferred stockholders voting as a class, newly created
directorships resulting from any increase in the number of directors and any
vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal or other reason shall be filled by the affirmative
vote of a majority of the remaining directors then in office, or the sole
remaining director, even though less than a quorum of the Board of Directors.
Any director elected in accordance with the preceding sentence shall hold office
for the remainder of the full term of the class of directors in which the new
directorship was created or the vacancy occurred and until his successor is
elected and qualified. No decrease in the number of directors constituting the
Board of Directors shall shorten the term of any incumbent director. *
(d) REMOVAL. Subject to any special rights of the holders of preferred
stock with respect to the removal of directors elected by preferred stockholders
voting as a class, any director may be removed from office, at any time, with or
without cause, but only by the affirmative vote of the holders of at least 80%
of the combined voting power of the then outstanding shares of stock of the
corporation entitled to vote generally in the election of directors, voting
together as a single class. *
(e) RESIGNATION. Any director may resign at any time upon written notice
to the corporation directed to the Board of Directors and the Secretary. Such
resignation shall take effect at the time specified therein, and, unless
otherwise specified therein, no acceptance of such resignation shall be
necessary to make it effective. *
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Section 3.3. NOTIFICATION OF NOMINATIONS.
Subject to any special rights of the holders of preferred stock with
respect to the nomination of directors to be elected by preferred stockholders
voting as a class, nominations for the election of directors may be made by the
Board of Directors, or by a nominating committee appointed by the Board of
Directors, or by any stockholder entitled to vote generally in the election of
directors. However, a stockholder may nominate persons for directors at a
meeting of stockholders only if written notice of such stockholder's intent to
make such nomination or nominations has been given, either by personal delivery
or by United States mail, postage prepaid, to the Secretary not later than (i)
with respect to an election to be held at an annual meeting of stockholders, 90
days in advance of such meeting, and (ii) with respect to an election to be held
at a special meeting of stockholders for the election of directors, the close of
business on the seventh day following the date on which notice of such meeting
is first given to stockholders. Each such notice must set forth: (a) the name
and address of the stockholder who intends to make the nomination and of the
person or persons to be nominated for director; (b) a representation that the
stockholder is a holder of record of stock of the corporation entitled to vote
at such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (c) a description of all
arrangements or understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; (d) such other
information regarding each nominee proposed by such stockholder 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 nominee been nominated, or
intended to be nominated, by the Board of Directors; and (e) the consent of each
nominee to serve as a director of the corporation if so elected. The chairman
of the meeting may refuse to acknowledge the nomination of any person not made
in compliance with the foregoing procedure. *
Section 3.4. ANNUAL AND REGULAR MEETINGS.
An annual meeting of the Board of Directors shall be held, without any
notice other than this by-law, immediately after each annual meeting of
stockholders at the same place as such annual meeting of stockholders. The
Board of Directors may, by resolution, fix the time and place for the holding of
regular meetings without notice other than the resolution fixing the time and
place for the meeting.
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Section 3.5. SPECIAL MEETINGS.
Special meetings of the Board of Directors may be called by or at the
request of the Chairman of the Board or any two directors. The person or
persons calling a special meeting of the Board of Directors may fix the date and
place of such meeting and may fix any time within regular business hours as the
time for such meeting.
Section 3.6. NOTICE OF SPECIAL MEETINGS.
Notice of any special meeting of directors shall be given to each director
by mail at his business or residence address at least 5 days prior to the
meeting, or by courier, telegram or telex at his business address at least one
business day prior to the meeting, or by telephone at least 12 hours prior to
the meeting. If given by mail, such notice shall be deemed to be given when
deposited in the United States mail, postage prepaid, addressed to the director
at his business or residence address. If given by telegram, such notice shall
be deemed to be given when the telegram is delivered to the telegraph company.
Neither the business to be transacted at, nor the purpose of, any special
meeting of the Board of Directors need be specified in the notice of such
meeting.
Section 3.7. QUORUM; VOTE REQUIRED FOR ACTION.
Unless otherwise provided by law or in the Certificate of Incorporation,
the presence of a majority of the directors shall constitute a quorum for the
transaction of business. Except as otherwise provided by law, in the
Certificate of Incorporation or in these by-laws, the vote of a majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. In the event a quorum shall not be present at any
meeting of the Board of Directors, the directors who are present may by majority
vote adjourn the meeting from time to time until a quorum is present.
Section 3.8. COMMITTEES.
(a) The Board of Directors shall appoint the committees provided for in
Sections 3.9, 3.10, and 3.11 of these by-laws and may, by resolution passed by a
majority of the whole of the Board of Directors, establish and appoint other
standing or temporary committees and invest such committees with such duties and
powers as the Board of Directors may from time to time determine, subject to
such conditions and restrictions as may be imposed by law, in the Certificate of
Incorporation, or in these by-laws.
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(b) The Board of Directors may designate one or more alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee. In the event that an alternate member designated by the Board
of Directors is not available to replace an absent or disqualified member, the
member or members of a committee who are present at any meeting of such
committee and not disqualified from voting, whether or not representing a
quorum, may unanimously appoint another member of the Board of Directors to act
as a member of such committee at such meeting in the place of such absent or
disqualified member.
(c) Each committee shall keep minutes of its meetings and records of its
actions, shall cause the minutes of its meetings and records of its actions to
be filed in the minutes books of the corporation and shall distribute copies of
the minutes of its meetings and records of its actions to the Board of
Directors.
(d) Unless specified otherwise at the time of his appointment, the term of
each member of each committee shall be from the date of his appointment until
the next succeeding annual meeting of the Board of Directors or until his
successor shall have been duly appointed, provided, however, that the Board of
Directors may at any time in its sole discretion and for any reason remove any
member of a committee.
(e) Unless otherwise provided by law, in the Certificate of Incorporation,
in these-bylaws, or in the resolution establishing or appointing the committee,
the presence of a majority of the members of a committee shall constitute a
quorum for the transaction of business. Except as otherwise provided by law, in
the Certificate of Incorporation, in these by-laws, or in the resolution
establishing or appointing the committee, the vote of a majority of the members
of a committee present at a meeting at which a quorum is present shall be the
act of the committee. In the event a quorum shall not be present at any meeting
of a committee, the members of the committee who are present may by majority
vote adjourn the meeting from time to time until a quorum is present.
Section 3.9. EXECUTIVE COMMITTEE.
(a) At each annual meeting of the Board of Directors, the Board of
Directors shall, by a resolution adopted by a majority vote of the entire Board
of Directors, designate and appoint from its members an Executive Committee
consisting of three or more directors.
(b) The Executive Committee shall have and may exercise, to the fullest
extent permitted by law, all of the powers and
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authority of the Board of Directors in the management and direction of the
business and affairs of the corporation and may authorize the corporate seal to
be affixed to any document or instrument; provided, however, that, except as
otherwise expressly authorized from time to time by the Board of Directors and
as permitted by the Delaware General Corporation Law, the Executive Committee
shall not have any power or authority to:
(1) make, adopt, amend, alter or repeal any by-law;
(2) elect or appoint any director or elect, appoint or remove
any officer;
(3) recommend or submit to the stockholders any action that
requires approval of stockholders, including an amendment of the
Certificate of Incorporation, the sale, lease, or exchange of all or
substantially all of the corporation's property and assets, or the
dissolution or the revocation of a dissolution of the corporation;
(4) adopt an agreement of merger or consolidation under Section
251 or 252 of the Delaware General Corporation Law with, approve any
merger or consolidation with, or approve any acquisition of the
stock or the business and assets of, any party other than a
subsidiary of the corporation, except that, in the case of an
acquisition previously approved by the Board of Directors, the
Executive Committee shall have the power and authority to modify the
amount of consideration for such acquisition by an amount not in
excess of 25% of the previously approved consideration or $500,000,
whichever is less;
(5) declare a dividend or authorize the issuance of any stock;
(6) create any new committee or dissolve, alter the
responsibilities of, or fill any vacancy on any existing committee
appointed by the Board of Directors;
(7) make any substantive changes in or awards under the
corporation's employee benefit and compensation benefit plans;
(8) incur or guarantee any long-term debt (over 12 months) or
incur any short-term debt in excess of $500,000 at any time
outstanding; or
(9) make any capital commitment or expenditure in
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excess of $500,000 that could not otherwise be made without the prior
approval of the Board of Directors.
(c) Notwithstanding the provisions of Section 3.9(b)(2) of these by-laws,
in the event of the death, inability or refusal to act of the Chairman of the
Board and the President, the Executive Committee may determine who shall perform
the duties of the chief executive officer pending the election of successors to
the offices of Chairman of the Board and President.
Section 3.10. AUDIT COMMITTEE.
(a) At each annual meeting of the Board of Directors, the Board of
Directors shall, by a resolution adopted by a majority vote of the entire Board
of Directors, designate and appoint from its members an Audit Committee
consisting of three or more directors, none of whom is an officer or employee of
the corporation.
(b) The Audit Committee shall have the powers and responsibilities set
forth in the Audit Committee charter adopted by the Board of Directors on
January 12, 1989, as the same may be amended, modified and supplemented from
time to time by the Board of Directors.
Section 3.11. COMPENSATION COMMITTEE.
(a) At each annual meeting of the Board of Directors, the Board of
Directors shall, by a resolution adopted by a majority vote of the entire Board
of Directors, designate and appoint from its members a Compensation Committee
consisting of three or more directors,each of whom shall be a "disinterested"
person within the meaning of Reg. Section 240. 16b-3 issued under the Securities
Exchange Act of 1934 (hereinafter "1934 Act"), as from time to time modified or
amended, (hereinafter "Rule 16b-3"), and none of whom is subject to the
disclosure requirements set forth in Reg. Section 229.402 (j) of the 1934 Act
(hereinafter "Disinterested Director").
(b) The Compensation Committee shall have the following powers and
responsibilities:
(1) To review and recommend to the Board of Directors
compensation levels, bonus amounts and stock option grants of officers
and key managers;
(2) To request and review reports from the corporation's
management on the scope, competence, performance, and motivation of
management employees;
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(3) To develop, review and recommend to the Board of Directors
incentive, bonus, stock option and similar incentive plans or programs
and retirement and welfare plans or programs for officers and key
managers;
(4) To review and recommend to the Board of Directors
compensation levels of persons hired from "outside" the corporation to
the positions of Corporate Officer, Divisional Officer or General
Manager and all persons hired who are covered by an employment
contract;
(5) To interpret incentive, bonus, stock option and similar
incentive plans; and
(6) To develop, review and recommend to the Board of Directors
changes of major benefit and perquisite programs.
(c) Action taken by the Compensation Committee or at meetings duly called
shall require the affirmative vote of at least a majority of its members.
(d) Action taken by the Board of Directors with regard to officer and key
manager compensation levels and Plans or programs, which are not subject to
subparagraph (e) below, shall be voted upon only by the Disinterested Directors
and shall require the affirmative vote of at least a majority of those Directors
eligible to vote.
(e) Any action taken with regard to officer and key manager compensation
levels and Plans or programs, which involve the grant or award of an equity
security, including any derivative security,for which an exemption is claimed
under Rule 16b-3, shall be made by the Board of Directors, if each member
thereof is a Disinterested Director. In the event that the Board of Directors
is not comprised solely of Disinterested Directors, then the Compensation
Committee shall have full power to act with respect to such grant or award.
ARTICLE IV
OFFICERS
Section 4.1. NUMBER.
The officers of the corporation shall include a Chairman of the Board, a
President, one or more Vice-Presidents (one or more of whom may be designated as
an Executive Vice President or a Senior Vice President), a Secretary, a
Treasurer, one or more
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Assistant Secretaries, and one or more Assistant Treasurers. Any two or more
offices may be held by the same person, except the offices of President and
Secretary. Except for the Chairman of the Board, no officer needs to be a
director of the corporation.
Section 4.2. ELECTION AND TERM OF OFFICE.
The officers of the corporation shall be elected annually by the Board of
Directors at each annual meeting of the Board of
Directors. Each officer shall hold office until his successor shall have been
duly elected and shall have qualified or until his earlier death, resignation or
removal.
Section 4.3. RESIGNATION.
Any officer may resign at any time upon written notice to the Board of
Directors and the Secretary. Such resignation shall take effect at the time
specified therein, and, unless otherwise specified therein, no acceptance of
such resignation shall be necessary to make it effective.
Section 4.4. REMOVAL.
Any officer may be removed by the Board of Directors whenever in its
judgment the best interests of the corporation would be served thereby.
Section 4.5. VACANCIES.
A vacancy in any office caused by death, resignation, removal,
disqualification or otherwise may be filled by the Board of Directors whenever
in its judgment the best interests of the corporation would be served thereby.
Section 4.6. CHAIRMAN OF THE BOARD.
The Chairman of the Board shall be elected from the members of the Board of
Directors. The Chairman of the Board shall preside at all meetings of the Board
of Directors and at all meetings of stockholders. The Chairman of the Board may
sign or countersign certificates, contracts, agreements and other documents and
instruments in the name and on behalf of the corporation, unless and except to
the extent that any document or instrument is required by law or by the Board of
Directors to be signed or countersigned by another officer of the corporation.
The Chairman of the Board shall make such reports to the Board of
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Directors and the stockholders as the Board of Directors may from time to time
request and shall perform all such other duties as are incident to his office or
are properly requested by the Board of Directors.
Section 4.7. PRESIDENT.
The President shall be the chief executive officer of the corporation and
shall be responsible for the general supervision and control of the business and
affairs of the corporation, subject to the direction of the Board of Directors.
The President may sign or countersign certificates, contracts, agreements and
other documents and instruments in the name and on behalf of the corporation,
unless and except to the extent that any document or instrument is required by
law or by the Board of Directors to be signed or countersigned by another
officer of the corporation. The President shall make such reports to the
Chairman of the Board, the Board of Directors and the stockholders as the
Chairman of the Board or the Board of Directors may from time to time request
and shall perform all such other duties as are incident to his office or are
properly requested by the Chairman of the Board or the Board of Directors.
During the absence or disability of the Chairman of the Board, the President
shall have and may exercise all of the powers and shall discharge all of the
duties of the Chairman of the Board.
Section 4.8. EXECUTIVE VICE-PRESIDENT.
Should one Vice-President be designated by the Board of Directors as
Executive Vice-President (or in the event there be more than one Executive Vice-
President, the Executive Vice-Presidents in the order of their election), he
shall, in the absence or disability of the Chairman of the Board and the
President and subject to the control of the Board of Directors and the
provisions of Section 3.9(c) hereof, perform the duties and exercise the powers
of the President, and shall perform such other duties as shall, from time to
time, be assigned to him by the Board of Directors.
Section 4.9. VICE-PRESIDENTS.
Each Vice-President shall make such reports to the chief executive officer,
the Board of Directors and the stockholders as the chief executive officer or
the Board of Directors may from time to time request and shall perform all such
other duties as are incident to his office or are properly requested by the
chief executive officer or the Board of Directors.
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Section 4.10. SECRETARY.
The Secretary shall be custodian of the corporate records and of the
corporate seal and shall be responsible for: (a) keeping minutes of all
meetings of the Board of Directors and its committees and minutes of all
meetings of stockholders in one or more books provided for that purpose;
(b) ensuring that all notices are duly given to directors and stockholders in
accordance with the provisions of these by-laws and as required
by law; (c) ensuring that the corporate seal is properly affixed to all
documents and instruments to which the corporate seal is required to be affixed;
(d) ensuring that the corporation's transfer agent keeps a register of all
stockholders and a record of all stock transfers; and (e) performing all such
other duties as are incident to his office or are properly requested by the
chief executive officer or the Board of Directors.
Section 4.11. TREASURER.
The Treasurer shall be responsible for: (a) making appropriate
arrangements for the safe keeping of all funds and securities of the
corporation, (b) ensuring that proper records are maintained of all cash
receipts and disbursements by the corporation, and (c) performing all such other
duties as are incident to his office or are properly requested by the chief
executive officer or the Board of Directors. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful discharge of his
duties in such sum and with such surety or sureties as the Board of Directors
shall determine.
Section 4.12. ASSISTANT SECRETARIES.
During the absence or disability of the Secretary, the Assistant Secretary
(or, if there is more than one Assistant Secretary, the Assistant Secretary
designated by the chief executive officer to assume the powers and duties of the
Secretary) shall have and may exercise all of the powers and shall discharge all
of the duties of the Secretary. Each Assistant Secretary shall also perform all
such other duties as are incident to his office or are properly requested by the
chief executive officer, the Secretary or the Board of Directors.
Section 4.13. ASSISTANT TREASURERS.
During the absence or disability of the Treasurer, the Assistant Treasurer
(or, if there is more than one Assistant Treasurer, the Assistant Treasurer
designated by the chief executive officer to assume the powers and duties of the
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Treasurer) shall have and may exercise all of the powers and shall discharge all
of the duties of the Treasurer. Each Assistant Treasurer shall also perform all
such other duties as are incident to his office or are properly requested by the
chief executive officer, the Treasurer or the Board of Directors.
Section 4.14. DIVISIONAL OFFICERS.
The chief executive officer and the Board of Directors may appoint
divisional officers with such powers and duties as the chief executive officer
or the Board of Directors may from time to time assign to such divisional
officers.
Section 4.15. COMPENSATION OF OFFICERS.
The salaries, bonuses and other compensation of officers and divisional
officers shall be determined by the Board of Directors or, if and to the extent
these by-laws or the Board of Directors so authorizes or directs, by a committee
of the Board of Directors or, in the case of divisional officers, the chief
executive officer. No officer or divisional officer shall be prevented from
receiving any salary, bonus or other compensation that is determined by the
Board of Directors or, if the Board of Directors so authorizes or directs, by a
committee of the Board of Directors or, in the case of a divisional officer, the
chief executive officers, by reason of the fact that such officer or divisional
officer is also a director of the corporation.
Section 4.16. NO CONTRACTUAL RIGHTS.
No officer or divisional officer shall be deemed to have any rights or
claims against the corporation or be entitled to receive any compensation or
benefits by virtue of his election as an officer or appointment as a divisional
officer, except to the extent provided by law, in a contract authorized or
approved by the Board of Directors or, if the Board of Directors so authorizes
or directs, by a committee of the Board of Directors or, in the case of a
divisional officer, the chief executive officer, or in a plan, program or
arrangement authorized or approved by the Board of Directors or, if the Board of
Directors so authorizes or directs, by a committee of the Board of Directors.
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ARTICLE V
STOCK CERTIFICATES AND TRANSFERS
Section 5.1. STOCK CERTIFICATES.
Certificates representing shares of stock of the corporation shall be in
such form as shall be determined by the Board of Directors. Each certificate
shall be signed by the Chairman of the Board, the President or a Vice-President
and by the Secretary or an Assistant Secretary and sealed with the corporate
seal. In the event that an officer who has signed a certificate should cease to
hold the office in which he signed such certificate, such certificate may
nevertheless be issued by the corporation with the same effect as if he had
continued to serve in such office. All certificates shall be consecutively
numbered or otherwise identified. The name and address of the person to whom
shares of stock are issued, together with the certificate number, the number of
shares and the date of issuance, shall be entered in the stock transfer records
of the corporation. All certificates surrendered to the corporation for
transfer shall be canceled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
canceled, except that, in case of a mutilated certificate or a certificate that
is alleged to have been lost, stolen or destroyed, a new certificate may be
issued therefor upon such indemnity to the corporation and other terms and
conditions as the chief executive officer, the chief financial officer or the
Board of Directors may prescribe. The Board of Directors may appoint an
independent transfer agent or registrar, or both, for any class or series of
stock of the corporation, and, in the event that the Board of Directors should
appoint an independent transfer agent or registrar, or both, for any class or
series of stock of the corporation, the Board of Directors may authorize the use
of facsimile signatures and a facsimile corporate seal on any certificates
representing shares of such class or series.
Section 5.2. TRANSFER OF SHARES.
The transfer of shares of stock of the corporation shall be made on the
stock transfer books of the corporation by the holder of record thereof (or by
his legal representative or attorney-in-fact, who shall furnish proper evidence
of authority to transfer), upon surrender for cancellation of the certificate
for such shares. The person in whose name shares stand in the stock transfer
records of the corporation may be deemed by the corporation to be the absolute
owner thereof for all purposes.
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ARTICLE VI
BANK ACCOUNTS
Section 6.1. DEPOSITS.
Funds of the corporation shall be deposited to the credit of the
corporation with such banks, trust companies and other depositories as either
(i) the chief executive officer together with either the chief financial officer
or the Treasurer, jointly, or (ii) the Board of Directors shall from time to
time determine.
Section 6.2. CHECKS AND DRAFTS.
Checks, drafts and other orders for the payment of money issued in the name
of the corporation shall be signed by such officers, employees and agents and in
such manner as shall from time to time be determined by either (i) the Board of
Directors, or (ii) the chief executive officer together with either the chief
financial officer or the Treasurer, jointly, provided that such action shall be
reported by the Secretary to the Board of Directors at the next succeeding
meeting of the Board of Directors, except that such report of the Secretary
shall not be required if an authorized signatory is a plant manager, plant
superintendent or plant accountant and the checks, drafts and other orders for
the payment of money are drawn on a local disbursement bank account that is
maintained on an imprest basis.
Section 6.3. BANKING RESOLUTIONS.
The Board of Directors shall be deemed to have approved and adopted, and
the Secretary and any Assistant Secretary shall be authorized to certify the
approval and adoption by the Board of Directors of, any standard form of
resolutions necessary to enable the corporation to open and maintain accounts
with such banks, trust companies and other depositories, and to have checks,
drafts and other orders for the payment of money signed by such officers,
employees and agents and in such manner as either (i) the chief executive
officer together with either the chief financial officer or the Treasurer,
jointly, or (ii) the Board of Directors shall from time to time determine,
provided that a certified copy of such resolutions shall be placed in the minute
books in which proceedings of meetings of the Board of Directors are recorded,
and provided further that the Board of Directors is notified of the opening of
each such account, except if an authorized signatory is a plant manager, plant
superintendent or plant accountant and the checks, drafts and other orders for
the payment of money are drawn on a local disbursement bank account that is
maintained on an imprest basis.
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ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1. AMENDMENT OF BY-LAWS.
Except as otherwise provided in the Certificate of Incorporation, these
by-laws may be amended or repealed at any annual meeting of stockholders (or at
any special meeting of stockholders duly called and noticed for that purpose) by
a majority vote of the shares of stock represented and entitled to vote at any
such meeting at which a quorum is present. Except as otherwise provided by law,
in the Certificate of Incorporation or in these by-laws, the Board of Directors
may by a vote of a majority of the entire Board of Directors alter, amend or
repeal these by-laws and adopt such other by-laws as in their judgment may be
advisable for the regulation of the conduct of the affairs of the
corporation. *
Section 7.2. SEAL.
The corporate seal shall have inscribed thereon the words "Corporate Seal"
and around the margin thereof the words "Wallace Computer Services, Inc.
Delaware".
Section 7.3. FISCAL YEAR.
The fiscal year of the corporation shall begin on the first day of August
of each year and end on the thirty-first day of July of the following year.
Section 7.4. AUDITS.
The accounts, books and records of the corporation shall be audited
promptly following the conclusion of each fiscal year by one or more
disinterested certified public accountants selected by the Board of Directors
and it shall be the duty of the Board of Directors to cause such audit to be
made promptly following the conclusion of each fiscal year.
Section 7.5. WAIVER OF NOTICE.
Whenever any notice is required to be given to any stockholder or any
director pursuant to the provisions of these by-laws, the Certificate of
Incorporation, or the General Corporation Law of the State of Delaware, a waiver
thereof in
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writing, signed by the person or persons entitled to such notice, whether signed
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Neither the business to be transacted at, nor the
purpose of, any annual or special meeting of the stockholders or the Board of
Directors need be specified in any waiver of notice of such meeting.
Section 7.6. ISSUANCE OF STOCK, ETC.
The issuance of any stock or other voting securities of the corporation,
the creation of any class or series of stock of the corporation, and the fixing
and determination of the number of shares, dividends, redemption rights,
conversion rights, voting rights, liquidation preferences, and other preferences
and relative, participating, optional and other special rights of any class or
series of stock of the corporation, and the qualifications, limitations and
restrictions thereof, shall require the approval and authorization of a majority
of the entire Board of Directors.
____________________________________
* Pursuant to Section 1 of Article TENTH of the Certificate of
Incorporation, Sections 2.2, 2.10, 3.2, 3.3 and 7.1 of the By-laws may not be
altered, amended or repealed, and no provision inconsistent with any such by-law
may be adopted, without the affirmative vote of the holders of at least 80% of
the combined voting power of the then outstanding shares of stock of the
corporation entitled to vote generally in the election of directors, voting
together as a single class.
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EXHIBIT 10.5F
WALLACE COMPUTER SERVICES, INC.
1994 DEFERRED COMPENSATION/CAPITAL ACCUMULATION PLAN
Wallace Computer Services, Inc. (the "Company") and its subsidiaries hereby
establish a non-qualified deferred compensation program for certain of their
employees as described herein. The following shall constitute the terms and
conditions of the Wallace Computer Services, Inc. 1994 Deferred
Compensation/Capital Accumulation Plan (the "Plan"), effective January 1, 1994
(the "Effective" Date). The Company and its subsidiaries are referred to below
collectively as the "Employers" and individually as an "Employer".
1. ADMINISTRATION. Full power and authority to construe, interpret and
administer the Plan shall be vested in the Compensation Committee of the
Board of Directors of the Company (the "Committee"). The Committee shall
have the authority to make determinations provided for or permitted to be
made under the Plan, to interpret the Plan, and to promulgate such rules
and regulations, if any, as the Committee considers necessary and
appropriate for the implementation of the Plan.
2. ELIGIBILITY AND PARTICIPATION. The Committee, in its sole discretion,
shall establish eligibility qualifications for participation in the Plan.
Participation shall be limited to key executives and a select group of
highly compensated employees of the Employers.
3. DEFERRED COMPENSATION.
A. Each Participant may make an irrevocable election in writing to defer
up to 20% of Compensation, as defined in Subsection 3B, paid during
the period January 1, 1994 through December 31, 1994 (the "Deferral
Amount"). Such amount shall not be less than $1,000. Deferred
compensation at the deferral percentage will be deducted from all
Compensation payable to the Participant during the deferral period.
B. "Compensation" means salary, bonuses, or commissions payable to the
Participant before reduction pursuant to this or any other employee
benefit plan.
C. The Employer shall establish and maintain a bookkeeping account in the
name of each Participant, which shall be known as the "Deferral
Account". It shall be credited with the Deferral Amount and interest
at the rate established by the Committee compounded annually from
January 1, 1994. As provided in Sections 4, 5, 6 and 7 of the Plan,
the interest rate on lump sum payments caused by certain events will
differ from the rate established by the Committee. Amounts paid to
the Participant or his Beneficiary pursuant to this Plan, shall be
deducted from the account balance as of the first day of the month in
which such payment is made.
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D. The Participant's Deferral Account shall at all times be reflected on
the Employer's books in accordance with generally accepted accounting
practices as a general unsecured and unfunded obligation of the
Employer and the Plan shall not give any person any right or security
interest in any asset of the Employer nor shall it imply any trust or
segregation of assets by the Employer. Payments from the
Participant's Deferral Account shall be made from the general assets
of the Employer.
4. TIME AND MANNER OF PAYMENT. The Participant's Deferral Account shall be
distributed as follows:
A. INSTALLMENT PAYMENTS.
(1) A Participant shall be entitled to fifteen (15) equal annual
installment payments commencing at age sixty-five (65) if one of
the following conditions is met:
a. the Participant remains in the continuous employ of the
Employers during the period from January 1, 1994 until the
Participant reaches age sixty-five (65); or
b. after a period of continuous employment with the Employers
beginning on or before January 1, 1994 the Participant
retires as defined in Subsection 4D.
(2) A Participant who attained age fifty-five (55) as of January 1,
1994 may elect, at the time of making the deferral election
pursuant to Subsection 3A, to receive ten (10) equal annual
installments commencing at age seventy (70) in lieu of
installment payments under Subsection 4A(1) if he becomes
eligible for such payments.
Installment payments shall be calculated to amortize fully the
accumulated value of the Deferral Amount over the payment period. For
purposes of this Subsection A, the interest rate to be credited in the
calculation of the accumulated value of the Deferral Amount shall be
the rate(s) established by the Committee at its sole discretion prior
to the beginning of the deferral period.
B. INTERIM PAYMENTS. A payment equal to the Participant's Deferral
Amount shall be paid to the Participant within a reasonable time after
January 1, 2001 if installment payments under Subsection A have not
then commenced and will not commence during the 2001 calendar year.
In addition, a payment equal to the Participant's Deferral Amount
shall be paid to the Participant within a reasonable time after
January 1, 2002 if installment payments under Subsection A have not
then commenced and will not commence during the 2002 calendar year.
These
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payments shall be charged to the Participant's Deferral Account as of
the first day of the month in which the payment is made. This
Subsection does not apply to Participants terminated under Subsection
C or Sections 5, 6, or 7B.
C. PAYMENT UPON TERMINATION. A Participant whose employment with the
Employers is voluntarily or involuntarily terminated prior to the
Participant's Retirement for reasons other than those described in
Sections 5 and 6 below, shall receive, as soon as practicable after
such termination, a lump sum payment in the amount of the accumulated
value of the Deferral Amount. For purposes of this Subsection C, the
rate to be credited in the calculation of the accumulated value of the
Deferral Amount shall be six percent (6%).
D. RETIREMENT. Retirement shall mean leaving the active employ of the
Employer at or after age sixty (60) or age fifty-five (55) with at
least twenty (20) years of service.
5. NON-COMPETITION. Notwithstanding any other provision of this Plan, if the
Committee at any time determines that a Participant, without having
obtained the prior written consent of the Committee or its designee, has
engaged in Competition with an Employer, as defined below, the sole amount
payable to Participant hereunder shall be a lump sum payment of the
accumulated value of the Deferral Amount, payable as soon as practicable
after such determination. For purposes of this Section 5, the simple rate
of interest applied to determine the accumulated value of the Deferral
Amount shall be two percent (2%) annually, without compounding. A
Participant shall be considered to have engaged in "Competition with an
Employer" if, while employed by an Employer or within twenty-four (24)
months of Participant's termination of employment with an Employer: (a) if
the Participant is or has been employed by an Employer in a sales capacity,
the Participant sells to, contacts, or deals with customers of an Employer
that the Participant called upon, or whose account(s) the Participant
directly or indirectly supervised on behalf of an Employer with respect to
products or services that are competitive with one or more products or
services of an Employer; (b) if the Participant is or has been employed by
an Employer in a nonsales capacity, the Participant renders services for a
new or existing competitor of an Employer with respect to products or
services that are competitive with those of an Employer within the
geographical area in which an Employer does business, except that the
Participant may accept employment with a competitor of an Employer whose
business is diversified and which in part of its business is not a
competitor of an Employer provided that prior to accepting such employment,
the Participant provides, and obtains for the Employers from such
competitor, separate written assurances satisfactory to the Employers that
the Participant will not render services directly or indirectly in
connection with one or more products or services that are competitive with
those of an Employer; and (c) the Participant hires, solicits, induces or
attempts to induce any employee of an Employer to leave its employ, engage
in any competing business, or to otherwise aid or assist any person or
company that is or intends to be in competition with an Employer.
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The foregoing provision shall be deemed in addition to and not in lieu of
any rights or remedies that an Employer might otherwise have with respect
to the conduct of a Participant during or after employment that breaches
any other contractual or common law duty to the Employer; this Section
shall not preclude Employer from seeking injunctive relief or actual or
punitive monetary damages, or both such relief and damages, with respect to
any wrongful conduct of a Participant, either during or subsequent to his
employment with an Employer.
6. Dishonest Conduct. Notwithstanding any other provision of this Plan, if
Participant's employment with an Employer is terminated at any time for
reason of dishonest or fraudulent conduct injurious to the Employer, the
sole amount payable to or on behalf of Participant hereunder shall be a
lump sum payment of the accumulated value of the Participant's Deferral
Amount, payable as soon as practicable after such termination of
employment. For purposes of this Section 6, the simple rate of interest to
be credited in the calculation of the accumulated value of the Deferral
Amount shall be zero percent (0%).
7. PAYMENT UPON DEATH OF PARTICIPANT.
A. If a Participant dies after age sixty-five (65), the Employer shall
pay any unpaid annual Installment Payments due the Participant under
Subsection 4A to the Participant's Beneficiary, commencing with the
next such payment due following the date of Participant's death.
B. If a Participant dies prior to age sixty-five (65), Installment
Payments described in Subsection 4A(1) shall be payable to the
Participant's Beneficiary, commencing at the time of the Participant's
death. Interim Payments described in Subsection 4B will not be made.
8. BENEFICIARY DESIGNATION. A Participant may, from time to time designate
any legal or natural person or persons (who may be designated contingently
or successively) as his Beneficiary to whom payments are to be made if the
Participant dies before receiving payment of all amounts due hereunder, by
signing a form approved by the Committee. A beneficiary designation form
shall be effective only after the signed form is filed with the Committee
while the Participant is alive. A properly filed designation shall cancel
all beneficiary designation forms filed earlier. If a Participant fails to
designate a Beneficiary as provided above, or if all designated
Beneficiaries of a Participant die before the Participant, or before
complete payment of all amounts due hereunder, the Committee, in its
discretion, may direct the Employers to pay the unpaid amounts to one or
more of such Participant's relatives by blood, adoption or marriage in any
manner permitted by law which the Committee considers to be appropriate,
including but not limited to payment to the legal representative or
representatives of the estate of the last to die of Participant and
Participant's designated Beneficiaries.
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9. DISABILITY. If Participant's employment with the Employers is terminated
prior to Participant's Retirement by reason of Participant's Disability,
Participant's employment with the Employers, for purposes of the Plan,
shall be deemed to continue until the earliest of his death, the date his
Disability ceases, or the date the Participant would have first been
eligible for Retirement and the provisions of the Plan shall be applicable
to such Participant to the same extent as if Participant were, in fact,
employed by the Employers during that period. However, if such termination
of employment occurs prior to January 1, 1995, the Participant's benefit
will be determined taking into account only the amount actually deferred by
the Participant during the Deferral Period.
A Participant shall be deemed to incur a Disability if, in the opinion of a
physician selected by the Committee, the Participant is no longer capable
of performing a substantial portion of the duties of his employment because
of a physical or mental disability which is likely to be permanent and
continuous during the remainder of the Participant's lifetime.
10. PAYMENT UPON A MATERIAL CHANGE OF CONTROL.
A. For purposes of this paragraph 10, a "Material Change" shall be deemed
to have occurred if any of the following should occur:
(1) the acquisition (in one or more transactions) of beneficial
ownership of twenty percent (20%) or more of the outstanding
shares of Common Stock of the Company by any person or entity (or
by any group of persons or entities acting in concert for the
purpose of acquiring, voting, holding or disposing of shares of
the Company's Common Stock). The Board of Directors may reduce
the ownership threshold to a percentage not less than ten percent
(10%);
(2) the election (in one or more elections) as directors comprising
one-fourth (1/4) or more of the Board of Directors of the Company
of persons who were not nominated or recommended by the Company's
incumbent Board of Directors; or
(3) the occurrence of any other event or state of facts that the
Board of Directors of the Company may determine (by the adoption
of a resolution) has, does, or would constitute a Material Change
for the purposes of this paragraph 10.
B. At the time of a Material Change, the Company shall remit to an
independent Trustee, the cumulative book balance in the Participant's
Deferral Account, representing individual Deferral Amounts plus
accrued interest.
At all times after the Material Change occurs, the exercise of
authority and
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responsibility in the administration of the Plan with respect to each
individual who was a Participant in the Plan immediately prior to the
date that the Material Change occurs (a "Protected Participant"), or
with respect to the Beneficiary of a Protected Participant, shall be
subject to a de novo standard of review by a court in any action
brought under Title I or ERISA. At all times after the Material
Change occurs, a bank that is organized under the laws of the United
States of America or one of its States, that has a combined capital
and surplus in excess of $250,000,000, and that is otherwise
independent of and has no material business relationships with the
Company or Related Company (as defined in paragraph 10C) shall be the
Trustee of the Trust and the authority to manage, acquire, and dispose
of all assets of the Trust shall be vested in that Trustee to the
extent not vested in one or more investment managers (as defined in
Section 3(38) of ERISA) who are selected by that Trustee and otherwise
independent of, and have no material business relationships with, the
Company or a Related Company.
C. The term "Related Company" means any corporation, trade, or business
during any period that it is, along with the Company, a member of a
controlled group of corporations, a controlled group of trades or
businesses, or an affiliated service group, as described in Section
414(b), 414(c), or 414(m), respectively, of the Internal Revenue Code.
D. Any Protected Participant (or a Beneficiary of a Protected
Participant) who brings any legal action after a Material Change to
enforce the provisions of this paragraph 10 or any other provisions of
the Plan or the Trust shall be entitled to recover from the Company
any and all attorneys' fees and other costs and expenses incurred in
enforcing such provisions for his benefit or for the benefit of any or
all Protected Participants (or Beneficiaries of Protected
Participants).
E. Notwithstanding any other Section except Section 6, if the
Participant's employment with the Employer terminates, for any reason
other than death, within the two-year (2) period beginning on the date
that a Material Change of Control of the Company (as described above)
occurs, payment shall be made to the Participant as soon as practical
after termination in a single lump sum in lieu of any other subsequent
payment under the Plan. The lump sum payment shall be equal to the
sum of the amounts determined by discounting, at an 8% rate of
interest, to the lump sum payment date, each payment that the
Participant would have received under the Plan (determined without
regard to Sections 5 and 6) after the date of such termination if
employment had continued without change through the date that the
Participant would have first been eligible for Retirement. Such
amount shall be determined by Clark/Bardes, Inc. or another firm
serving as insurance advisor for the Plan. If the Participant dies
after termination of employment but before payment of any amount under
this Section, then such amount shall be paid to the Beneficiary as
soon as practical after the Participant's death.
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F. Notwithstanding any other provision of the Plan, except as may
otherwise be provided in a resolution of the Board of Directors of the
Company adopted prior to the occurrence of a Material Change, the
provisions of this paragraph 10 may not be amended and shall continue
to apply, without amendment, in any successor plan.
11. FACILITY OF PAYMENT. If, in the Committee's opinion, a Participant or other
person entitled to benefits under the Plan is under a legal disability or
is in any way incapacitated so as to be unable to manage his financial
affairs, then the Committee may, until claim is made by a conservator or
other person legally charged with the care of his person or of his estate,
direct the Employer to make payment to a relative or friend of such person
for his benefit. Thereafter, any benefits under the Plan to which such
Participant or other person is entitled shall be paid to such conservator
or other person legally charged with the care of his person of his estate.
12. INSURANCE. An Employer may, in its sole discretion, purchase a policy or
policies of insurance on the life of any Participant or disability
insurance with respect to any Participant, the cash value, if any, and
proceeds of which may, but need not, be used by the Employer to satisfy
part or all of its obligations, hereunder. The Employer will be the owner
of any such policies and neither the Participant nor any other person or
entity claiming through the Participant shall have any ownership rights in
such policies or any proceeds thereof. The Participant, as a condition of
receiving any benefits hereunder, on behalf of himself of any person or
entity claiming through him, shall cooperate with the Employer in obtaining
any such insurance that the Employer desires to purchase by submitting to
such physical examinations, completing such forms, and making such records
available as may be required by the Employer from time to time.
13. EFFECT ON OTHER BENEFITS. The Deferral Amount of a Participant shall be
included in the Participant's 1994 compensation for purposes of calculating
the Participant's bonuses and awards under any incentive or similar
compensation plan or program of the Employer, insurance, and other employee
benefits, except that in accordance with the terms of any plan qualified
under Section 401 or Section 423(b) of the Internal Revenue Code maintained
by an Employer, the amount deferred under Section 3 shall not be included
as 1994 calendar year compensation in calculating the Participant's
benefits or contributions by or on behalf of the Participant under such
plan or plans. Payment under the Plan shall be excluded from compensation
in years paid for purposes of calculating a Participant's bonuses and
awards under any incentive or similar compensation plan or program of an
Employer, insurance, and other employee benefits, except that in accordance
with the terms of any plan qualified under Section 401 or Section 423(b) of
the Internal Revenue Code maintained by an Employer, payments made while
the Participant is an employee of an Employer shall be included as
compensation in the year paid.
14. NON-ALIENATION. Neither a Participant nor anyone claiming through him
shall have any
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right to commute, sell, assign, transfer or otherwise convey the right to
receive any payments hereunder, which payments and the rights thereto
hereby are expressly declared to be non-assignable and non-transferable,
nor shall any such right to receive payments hereunder be subject to the
claims of creditors of a Participant or anyone claiming through him to any
legal, equitable, or other proceeding or process for the enforcement of
such claims.
15. TAX WITHHOLDING. Notwithstanding the provisions of Section 13, an Employer
may withhold from any payment made by it under the Plan such amount or
amounts as may be required for purposes of complying with the tax
withholding or other provisions of the Internal Revenue Code or the Social
Security Act or any state or local income tax act or for purposes of paying
any estate, inheritance or other tax attributable to any amounts payable
hereunder.
16. NON-SECURED PROMISE. The rights under this Plan of a Participant and any
person or entity claiming through him shall be solely those of an
unsecured, general creditor of the Employer. Any insurance policy or other
asset acquired or held by an Employer shall not be deemed to be held by the
Employer for or on behalf of a Participant, or any other person, or to be
security for the performance of any obligations hereunder of the Employer,
but shall, with respect to this Plan, be and remain a general, unpledged,
unrestricted asset of the Employer.
17. INDEPENDENCE OF PLAN. Except as otherwise expressly provided herein, this
Plan shall be independent of, and in addition to, any other employment
agreement or employment benefit agreement or plan or rights that may exist
from time to time between the parties hereto. This Plan shall not be
deemed to constitute a contract of employment between an Employer and a
Participant, nor shall any provision hereof restrict the right of an
Employer to discharge a Participant, or restrict the right of a Participant
to terminate his employment with an Employer.
18. PARAGRAPH HEADINGS. The Paragraph headings used in this Plan are for
convenience of reference only and shall not be considered in construing
this Plan.
19. RESPONSIBILITY FOR LEGAL EFFECT. Neither the Committee nor any Employer
makes any representations or warranties, express or implied, or assumes any
responsibility concerning the legal, tax, or other implications or effects
of this Plan.
20. COMMITTEE DETERMINATIONS FINAL. Each determination provided for in the
Plan shall be made in the absolute discretion of the Committee. Any such
determination shall be binding on all persons.
21. AMENDMENT. The Company may in its sole discretion amend the Plan from time
to time. No such amendment shall reduce a Participant's or Beneficiary's
benefits under the Plan to an amount less than an amount that he would have
been entitled to under the Plan on the
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later of the date the amendment is adopted or made effective if the Plan
had been terminated on that date.
22. TERMINATION AT THE EMPLOYER'S OPTION. Notwithstanding any other provision
of this Plan, the Company may terminate this Plan at any time if the
Committee, in its sole and absolute discretion, determines that any change
in federal or state law, or judicial or administrative interpretation
thereof, has materially affected the Employer's cost of providing the
benefits otherwise payable under this Plan, or for any other reason
whatsoever. Upon such termination, the sole amount payable to Participant
shall be a lump sum payment, as soon as practicable after such termination,
of the accumulated value of the Deferral Amount. For purposes of this
Section, the rate to be credited in the calculation of the accumulated
value of the Deferral Amount shall be the rate specified for Installment
Payments in Subsection 4A.
23. BINDING ON SUCCESSORS. The provisions of the Plan shall be binding upon
and shall inure to the benefit of the Company, any Related Company that
adopts the Plan, the Participants, and their respective successors in
interest and assigns, including, without limitation, the surviving
corporation in any merger or consolidation with the Company or such Related
Company and, to the extent provided in the Plan, the Beneficiaries of the
Participants. After a Material Change, except as may otherwise be
determined by a resolution of the Board of Directors of the Company adopted
prior to the occurrence of the Material Change, a successor in interest to
the Company or a Related Company that adopts the Plan shall be deemed to
have adopted the Plan and shall have all of the liabilities and obligations
of the Company or that Related Company under the Plan. Except as may
otherwise be determined by a resolution of the Board of Directors of the
Company adopted prior to the occurrence of a Material Change, the Company
shall require any person or entity that becomes a successor in interest to
the Company or a Related Company that adopts the plan to expressly assume
the Plan and agree to perform all of the obligations of the Company or that
Related Company, as the case may be, under the plan. For purposes of this
paragraph 23, following a Material Change, a successor in interest to the
Company or a Related Company that adopts the Plan shall include, without
limitation, any person or entity (or group of related or affiliated persons
or entities) that acquires (in a single transaction or a series of related
transactions) any businesses or assets of the Company or such Related
Company representing twenty-five percent (25%) or more of the Company's or
such Related Company's sales, operating profits, or operating assets.
24. CONTROLLING LAW. The Plan shall be construed in accordance with the laws
of the state of Illinois to the extent not pre-empted by laws of the United
States of America.
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EXHIBIT 10.8
WALLACE COMPUTER SERVICES INC
ANNUAL BONUS PLAN
SECTION 1. PLAN OBJECTIVES
A) To provide a means of rewarding key employees of Wallace Computer
Services, Inc. and its subsidiaries ("Company") for personal performance that
enhances the Company's financial performance and increases shareholder value.
B) To provide competitive levels of compensation to enable the Company to
attract and retain people who are able to contribute materially to the success
of the Company's business by their ability and ingenuity.
C) To recognize differences in the performance of individual Participants.
D) To recognize differences in the performance of the Company and
Divisions as demonstrated by financial performance.
SECTION 2. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by the Compensation Committee of the
Board of Directors ("Committee"). The membership of the Committee may be
reduced, changed, or increased from time to time at the absolute discretion of
the Board of Directors.
(b) The establishment and amendment of rules and regulations for the
Plan's administration shall be developed and proposed by the Committee and
approved by the Disinterested Directors (as defined in Section 3.11 of the By-
Laws). Similarly, the determination of those who may participate in the Plan,
and the amount of individual awards to such Participants shall be proposed by
the Committee and approved by the Disinterested Directors. The determination of
the award amounts may be delegated to one or more officers and/or managers of
the Company in accordance with the rules and regulations as may be prescribed or
adopted from time to time, except that the Disinterested Directors shall review
and approve the individual awards to be made to Participants. The Committee
shall have the sole power to interpret the Plan.
(c) The Committee members and the Disinterested Directors, may rely upon
any information supplied to them by any officer of the Company in connection
with the administration of the Plan.
SECTION 3. DEFINITIONS
(a) Investment - means the following:
+ Gross trade receivables
+ Gross inventories at standard cost
+ Net property, plant & equipment, less construction in progress
+ Net present value of building and equipment operating leases
+ Goodwill
+ Unamortized software development costs
- Trade accounts payable
- Unvouchered trade payables
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(b) Operating Profit After-Taxes - means the following:
Operating Income
+/- Change in Inventory reserves
+/- Change in Accounts Receivable reserves
+/- Change in Post retirement liability
+/- Other Unusual Income or Expense Items
+ Goodwill amortization
+ Interest expense
- Interest Income
+ Interest expense associated with operating leases
- Current Tax Expense on the sum of the above
(c) Actual Company Return on Investment - means the actual "Operating
Profit After-Taxes" of the Company for the Plan Year divided by the average of
the actual Company "Investment" at the beginning of the Plan Year and the actual
Company "Investment" at the end of the Plan Year.
(d) Actual Division Return on Investment - means for the respective
Division, actual "Operating Profit After-Taxes" of the Division for the Plan
Year divided by the average Company "Investment" as defined in (a) above.
(e) Targeted Company Return on Investment - means the budgeted "Operating
Profit After-Taxes" of the Company for the Plan Year divided by the average of
the actual Company "Investment" at the beginning of the Plan Year and the
budgeted Company "Investment" for the end of the Plan Year. Budgeted "Operating
Profit After-Taxes" and ending "Investment" are to be obtained from the final
annual budget book approved by the Board of Directors.
(f) Targeted Division Return on Investment - means for the respective
Division, budgeted "Operating Profit After-Taxes" of the Division for the Plan
Year divided by the average budgeted Company "Investment", as defined in (e)
above.
(g) Base Salary - means the amount of a Participant's base compensation as
of November 1 of a Plan Year without adjustment for bonuses, salary deferrals,
value of benefits, special payments, amounts contributed to a savings plan or
similar items.
(h) Employee - means persons employed by the Company or any subsidiary in
which the Company owns directly or indirectly all or a majority of the common
stock and shall include employees who are also Directors of the Company or of
any such subsidiary and may, at the discretion of the Committee and
Disinterested Directors, include persons who at the request of the Company
accept employment with any company in which the Company has a substantial
ownership interest.
(i) Participant - means an employee who has been nominated by the Committee
members and approved by the Disinterested Directors to participate in this Plan.
(j) Plan Year - means the one year period coincident with the Company's
fiscal year.
2
<PAGE>
SECTION 4. ELIGIBILITY
(a) ELIGIBLE POSITIONS. An employee shall be eligible for consideration
for an award under this Plan based on such criteria as the Committee members
shall recommend and Disinterested Directors shall approve from year to year. In
general, the CEO, all Vice Presidents and all Division General Managers may be
eligible for participation in the Plan. However, actual participation will
depend upon the contribution and impact each eligible employee may have on the
Company's value to its Shareholders, as determined by the CEO of the Company,
recommended by the Committee members and approved by the Disinterested
Directors.
(b) NOMINATION AND APPROVAL. Each Plan year, the CEO of the Company will
nominate eligible employees to participate in the plan for the next Plan Year.
The Disinterested Directors will have final authority to select Plan
Participants among eligible employees nominated by the CEO.
(c) INELIGIBLE POSITIONS. No Compensation Committee member or
Disinterested Director shall be a Participant of the Plan. Membership on any
other committee of the Board of Directors shall not by itself render an Employee
ineligible for participation in the Plan.
(d) CHANGES IN STATUS. A person whose employment begins, terminates, is
granted a leave of absence or whose responsibilities change making them
qualified to participate in the Plan (or leave the participating class), may, on
the recommendation of the Committee, and approval of the Disinterested
Directors, be awarded a bonus with respect to the period of service during the
year.
(e) OTHER PLANS. Nothing in this Plan shall be construed as preventing
the Company from establishing incentive or other variable compensation plans
applicable to Employees.
SECTION 5. INDIVIDUAL PARTICIPATION LEVELS
(a) Calculation of Bonus. Each Participant's bonus will be determined as
a function of the Participant's Base Salary, the Participant's Target Incentive
Award (provided in paragraph 5.b below), Company/Division Performance Factor
(provided in Section 6.a.) and the Individual Performance Factor (provided in
Section 6.b.) for the Plan year. Each Participant's Bonus will be calculated as
follows:
Participant's Base Salary (X) Targeted Incentive Award (X) Performance Factor
The performance factor will be determined from a matrix (provided as Exhibit A)
that factors both the Company/Division Performance Factor and the Individual
Performance Factor.
3
<PAGE>
(b) Targeted Incentive Awards. The Targeted Incentive Awards will be
determined according to the following schedule:
<TABLE>
<CAPTION>
Targeted Incentive Award
Executive Position (% of Base Salary)
------------------ ------------------
<S> <C>
CEO 45%
Sr. V.P. of Operations 35%
Corporate V.P.
Corporate Sales 30%
Chief Financial Officer 30%
Management Information Services 30%
Other Corporate V.P 25%
Division General Manager 25%
</TABLE>
The Disinterested Directors shall have full power to revise and adjust the
Targeted Incentive Awards and to revise the positions eligible to participate in
the Plan.
SECTION 6. PERFORMANCE FACTORS
For any Plan Year the Performance Factor will be determined from a matrix
(provided as Exhibit A) in which the "Y" axis represents the Company/Division
Performance factor and the "X" axis represents the Individual Performance
factor.
All Participants of the Plan except for Division General Managers (or other
Participants determined by the Committee members and Disinterested Directors)
will have one matrix in which the "Y" axis represents the Company Performance
Factor. Division General Managers will have two matrices each representing one-
half of the Targeted Incentive Award. The first matrix will have the "Y" axis
represented by the Company Performance Factor, the second matrix will have the
"Y" axis represented by the Division Performance Factor.
(a) COMPANY/DIVISION PERFORMANCE FACTOR. The "Y" axis will consist of
five boxes. The middle box will equal the Company/Division's "Targeted Return
on Investment." The value of each box above the top middle box will equal 105%
and 110% respectively, of the Targeted Return on Investment. The value of each
box below the middle box will be equal to 95% and 90% respectively, of the
Targeted Return on Investment.
(b) INDIVIDUAL PERFORMANCE FACTOR. The "X" axis represents the Individual
Performance Factor. The Individual Performance Factor equals the percentage of
Objective Points attained, to the Maximum Objective Points available.
Participants will be assigned objectives representing financial, operational
and/or individual goals. Objectives will be assigned point value that in
aggregate equal the Participant's Targeted Incentive Award. Whenever possible,
objectives should be supported by quantifiable benchmarks that can be measured
against a quantifiable monitoring system. When performance cannot be measured
according to a quantifiable monitoring system, the person to whom the
Participant reports will evaluate the Participant's performance.
Determination of a Participant's objectives and the point values assigned
to each objective will be the responsibility of the individual to whom the
Participant reports. The objectives and the point values assigned will be
subject to approval by the Committee members and Disinterested Directors.
The "X" axis will consist of four boxes, each representing a benchmark of a
Participant's Individual Performance Factor. The first box benchmark will equal
45%. The benchmarks of each box to the right of the first box will be 60%, 75%
and 90% respectively.
4
<PAGE>
SECTION 7. PAYMENT OF AWARDS
(a) Subject to the condition set forth in paragraph (b) below, payment of
awards shall be made no later than December 1 of the following plan year, and
only after the Committee members recommend and Disinterested Directors have
approved the awards. Awards shall be paid in cash.
(b) All awards are contingent upon the Participant remaining in the employ
of the Company during the Plan year and through November 1 of the following
fiscal year. In the event a Participant terminates or resigns from the Company
prior to the end of the contingent period, the award, at the recommendation of
the Committee and upon approval by the Disinterested Directors, may be forfeited
by the Participant. In the event of death or permanent disability, the
Participant or designated Beneficiary (as specified in the designation form
indexed as Exhibit B) will receive a prorata portion of the award equal to the
Participant's service period during the plan year.
(c) No Participant shall have any right with respect to any award until
such award shall be delivered to him.
(d) If the Disinterested Directors determine, in their discretion, that a
Participant at any time has engaged in any activity that the Disinterested
Directors determines was or is harmful to the Company, any unpaid award will be
forfeited by the Participant.
(e) There shall be deducted from all award payments any taxes required by
law to be withheld.
SECTION 8. GENERAL CONDITIONS
(a) Amendments. The Disinterested Directors may from time to time amend,
suspend or terminate in whole or in part, and if terminated, may reinstate any
or all of the provisions of the Plan.
(b) Interpretation of the Plan. Any interpretation of the Plan arising
out of or in connection with the construction, administration, and effect of the
Plan and of its rules and regulations shall lie within the Committee's absolute
discretion and shall be conclusive and binding upon all Participants and any
person claiming under or through any Participant.
(c) Rights to Continued Employment. The selection of any employee for
participation in the Plan shall not give such Participant any right to be
retained in the employ of the Company and the right and power of the Company to
dismiss or discharge any Participant is specifically reserved. Nor shall any
such Participant or any person claiming under or through the Participant have
any right or interest in the Plan, or any Award thereunder, unless and until all
terms, conditions and provisions of the Plan that affect such Participant have
been complied with as specified herein.
5
<PAGE>
(d) Adjustments to Performance Factors. When a performance goal is based
on Quantifiable financial or accounting measure, it may be necessary to exclude
significant non-budgeted or non-controllable amounts, gains or losses from
actual financial results in order to properly measure performance. The
Disinterested Directors will decide those items that shall be considered in
adjusting actual results. For example, some types of items that may be
considered for exclusion are:
(1) Any gains or losses that will be treated as extraordinary in the
Company's financial statements.
(2) Amounts, profits or losses of any entities acquired by the
Company during the Plan Year, assuming they were not included in
the budget and/or the goal.
(3) Material amounts not in the budget and/or the goals that are of
a non-recurring nature and are not considered to be in the
ordinary course of business.
(e) Expenses of the Plan. The expenses of administering this Plan shall
be borne by the Company.
(f) Governing Laws. The validity, construction, interpretation,
administration and effect of the Plan, and of its rules and regulations, and the
rights of any and all persons having or claiming to have an interest therein or
thereunder, shall be governed by, and determined exclusively and solely in
accordance with, the laws of the State of Delaware.
SECTION 9. INDEMNIFICATION OF THE COMMITTEE MEMBERS AND DIRECTORS BY THE
COMPANY.
(a) No Directors or of the Committee shall be liable for any act or
action, whether of commission or omission, taken by any other member, or by any
officer, agent or employee.
(b) Pursuant to the Certificate of Incorporation and Bylaws of the
Company, the Company hereby agrees to indemnify the Committee members and
Directors for and to hold each of them harmless against any and all liabilities,
losses, costs or expenses (including legal fees and expenses) of whatsoever kind
and nature which may be imposed on, incurred by or asserted against them at any
time by reason of their actions under this Plan if they did not act dishonestly
or in willful or grossly negligent violation of the law or regulation under
which such liability, loss, cost or expense is not insured against or exceed any
insurance recovery.
SECTION 10. EFFECTIVE DATE
This Plan shall be applicable for the fiscal year beginning August 1, 1994,
and subsequent fiscal years, unless modified by the Disinterested Directors as
prescribed in Section 8.
6
<PAGE>
EXHIBIT A
BONUS PERFORMANCE MATRIX
<TABLE>
<CAPTION>
Individual Objectives Achieved
45% 60% 75% 90%
----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
110.0% 100.0% 120.0% 140.0% 160.0%
Return 105.0% 80.0% 100.0% 120.0% 140.0%
on Target 60.0% 80.0% 100.0% 120.0%
Investment 95.0% 40.0% 60.0% 80.0% 100.0%
90.0% 20.0% 40.0% 60.0% 80.0%
</TABLE>
7
<PAGE>
EXHIBIT B
WALLACE COMPUTER SERVICES, INC
ANNUAL BONUS PLAN
BENEFICIARY DESIGNATION
PARTICIPANT INFORMATION
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- - ----------------------------------------------------------------------------------------------------------
LAST NAME FIRST NAME MIDDLE SOCIAL SECURITY #
- - ----------------------------------------------------------------------------------------------------------
STREET ADDRESS CITY STATE ZIP CODE
- - ----------------------------------------------------------------------------------------------------------
DATE OF BIRTH MARITAL STATUS EFFECTIVE DATE
/ / Married / / Not Married
- - ----------------------------------------------------------------------------------------------------------
<CAPTION>
BENEFICIARY DESIGNATION
- - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BENEFICIARY NAME RELATIONSHIP SOC. SEC. # BENEFIT %
1) ________________ __________________ __________________ ____
2) ________________ __________________ __________________ ____
3) ________________ __________________ __________________ ____
4) ________________ __________________ __________________ ____
Total 100%
- - ----------------------------------------------------------------------------------------------------------
</TABLE>
CONTINGENT BENEFICIARY DESIGNATION
In the event no Primary Beneficiary survives me, or qualifies to receive the
payment, or refuses to receive the payment:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- - ----------------------------------------------------------------------------------------------------------
BENEFICIARY NAME RELATIONSHIP SOC. SEC. # BENEFIT %
1) ________________ __________________ __________________ ____
2) ________________ __________________ __________________ ____
3) ________________ __________________ __________________ ____
4) ________________ __________________ __________________ ____
Total 100%
- - ----------------------------------------------------------------------------------------------------------
</TABLE>
__________________________________
Signature
__________________________________
Date
8
<PAGE>
EXHIBIT 10.9
WALLACE COMPUTER SERVICES, INC
LONG-TERM PERFORMANCE PLAN
SECTION 1. PLAN OBJECTIVES
A) To provide a means of rewarding key employees of Wallace Computer
Services, Inc. and its subsidiaries ("Company") for personal performance that
enhances the Company's financial performance and increases shareholder value.
B) To provide competitive levels of compensation to enable the Company to
attract and retain people who are able to contribute materially to the success
of the Company's business by their ability and ingenuity.
C) To recognize differences in the performance of the Company/Divisions as
demonstrated by financial performance.
D) To align the interests of management with shareholders.
SECTION 2. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by the Compensation Committee of the
Board of Directors ("Committee"). The membership of the Committee may be
reduced, changed, or increased from time to time at the absolute discretion of
the Board of Directors.
(b) The establishment and amendment of rules and regulations for the
Plan's administration shall be developed and proposed by the Committee and
approved by the Disinterested Directors (as defined in Section 3.11 of the By-
Laws). Similarly, the determination of those who may participate in the Plan,
and the amount of individual awards to such Participants shall be proposed by
the Committee and approved by the Disinterested Directors. The determinations
of the award amounts may be delegated to one or more officers and/or managers of
the Company in accordance with the rules and regulations as may be prescribed or
adopted from time to time, except that the Disinterested Directors shall review
and approve the individual awards to be made to Participants. The Committee
shall have the sole power to interpret the Plan.
(c) The Committee members and the Disinterested Directors, may rely upon
any information supplied to them by any officer of the Company in connection
with the administration of the Plan.
SECTION 3. DEFINITIONS
(a) Average Company Investment - means the average of the consolidated
quarter end investment for the Plan Year, calculated as follows:
+ Gross trade receivables
+ Gross inventories at standard cost
+ Net property, plant & equipment, less construction in progress
+ Net present value of building and equipment operating leases
+ Goodwill
+ Unamortized software development costs
- Trade accounts payable
- Unvouchered trade payables
<PAGE>
(b) Average Division Investment - means the average of the respective
division's quarter end investment for the Plan Year as calculated in a) above.
(c) Company Capital Employed - means the sum of the " Company Investment"
as defined in (a) above plus(minus) the following items:
+ Miscellaneous receivables
+ Prepaids, Deposits & Deferred Expenses (excluding deferred
income taxes)
- Miscellaneous Payables
- Dividends Payable
- Accrued compensation and related expenses
- Other accrued expenses
- Accrued profit sharing contribution
- Current taxes payable
(d) Actual Weighted Cost of Capital - means the weighted average of the
cost of equity and the after-tax cost of debt for the relevant Plan Year. The
Actual Weighted Cost of Capital (to the nearest tenth of a percent) will be
approved by the Disinterested Directors each Plan Year, as follows:
Actual Weighted Cost of Capital = ((Stockholders' Equity /
(Stockholders' Equity + Debt
Outstanding)) * Cost of Equity) +
((Debt Outstanding / (Stockholders'
Equity + Debt Outstanding)) * Cost
of Debt)
Cost of Equity = Risk Free Rate + (Wallace Computer Service's Beta *
5%)
Cost of Debt = Debt Yield * (1 - Statutory Federal and State tax
rate)
Stockholders' Equity and debt outstanding are to be as of the fiscal
year end preceding the relevant Plan Year. The capitalization
ratio of equity and debt to total capitalization used in the
Actual Weighted Cost of Capital will be approved by the
Disinterested Directors annually.
Risk Free Rate is the average daily closing yield rate on the 20
year U.S. Treasury Bonds for the month of July preceding the
relevant Plan Year
Beta is determined by reference to the Beta shown in the most
recently available Value Line report on the Company.
Debt yield is the weighted average yield of all borrowings included
in the Company's permanent capital.
(e) Capital Employed Capital Charge - means the hypothetical cost
associated with funds obtained from investors and lenders that is used to
operate the Company/Divisions. Capital Employed Capital Charge is expressed in
dollars and equals the budgeted "Company Capital Employed" as of the beginning
of the Plan Year, multiplied by the "Actual Weighted Cost of Capital".
(f) ROI Weighted Cost of Capital - expressed as a percentage, ROI Weighted
Cost of Capital equals the result of Capital Employed Capital Charge divided by
the budgeted "Company Investment" as of the beginning of the Plan Year.
(g) ROI Capital Charge - expressed in dollars, ROI Capital Charge equals
the "Average Corporate/Division Investment" multiplied by the "ROI Weighted Cost
of Capital."
2
<PAGE>
(h) Company Operating Profit After-Taxes - means the consolidated adjusted
operating profit after-taxes for the Plan Year, calculated as follows:
Operating Income
+/- Change in Inventory reserves
+/- Change in Accounts Receivable reserves
+/- Change in Post retirement liability
+/- Other Unusual Income or Expense Items
+ Goodwill amortization
+ Interest expense
- Interest Income
+ Interest expense associated with operating leases
- Current Tax Expense on the sum of the above
(i) Division Operating Profit After-Taxes - means a Division's adjusted
operating profit after-taxes for the Plan Year as calculated in (e) above.
(j) Value Added - means the excess or shortfall of the Company's/Division's
"Operating Profit After-Taxes" as compared to the "ROI Capital Charge". The
actual calculation is as follows:
(Company/Division Operating Profit After-Taxes ( - ) ROI Capital
Charge)
(k) Incremental Value Added - means the increase or decrease in the current
year "Value Added" as compared to the prior year "Value Added".
(l) Employee - means persons employed by the Company or any subsidiary in
which the Company owns directly or indirectly all or a majority of the common
stock and shall include employees who are also Directors of the Company or of
any such subsidiary and may, at the discretion of the Committee and
Disinterested Directors, include persons who at the request of the Company
accept employment with any company in which the Company has a substantial
ownership interest.
(m) Participant - means an employee who has been nominated by the Committee
members and Disinterested Directors to participate in this Plan.
(n) Plan Year - means the one year period coincident with the Company's
fiscal year.
SECTION 4. ELIGIBILITY
(a) ELIGIBLE POSITIONS. An employee shall be eligible for consideration
for an award under this Plan based on such criteria as the Committee members
shall recommend and Disinterested Directors shall approve from year to year. In
general, the CEO, all Vice Presidents, and all Division General Managers may be
eligible for participation in the Plan. However, actual participation will
depend upon the contribution and impact each eligible employee may have on the
Company's value to its Shareholders, as determined by the CEO of the Company,
and approved by the Disinterested Directors..
(b) NOMINATION AND APPROVAL. Each Plan Year, the CEO of the Company will
nominate eligible employees to participate in the Plan for the next Plan Year.
The Disinterested Directors will have final authority to select Plan
Participants among eligible employees nominated by the CEO.
(c) INELIGIBLE POSITIONS. No Committee member or Disinterested Director
shall be a Participant of the Plan. Membership on any other committee of the
Board of Directors shall not by itself render an Employee ineligible for
participation in the Plan.
3
<PAGE>
(d) CHANGES IN STATUS. A person whose employment begins, terminates, is
granted a leave of absence or whose responsibilities change making them
qualified to participate in the Plan (or leave the participating class), may, at
the discretion of the Disinterested Directors, be awarded a bonus with respect
to the period of service during the year.
(e) OTHER PLANS. Nothing in this Plan shall be construed as preventing
the Company from establishing incentive or other variable compensation plans
applicable to Employees.
SECTION 5. INDIVIDUAL PARTICIPATION LEVELS
(a) Calculation of Bonus. The Bonus is a function of the Participant's
bonus percentage (provided in 5b) multiplied by the "Value Added" for the Plan
Year.
The bonus calculation for the CEO, Sr. V.P. and Corporate V.P.'s will be
based upon "Average Company Investment" and "Company Operating Profit after
Taxes".
The bonus calculation for Participants with Division responsibilities will
be based upon the "Average Division Investment" and "Division Operating Profit
after Taxes" for their respective Division.
(b) Bonus Percentages. The bonus percentages will be determined according
to the following schedule:
<TABLE>
<CAPTION>
Executive Position Bonus %
------------------ -------
<S> <C>
CEO 2.0%
Sr. V.P. of Operations 1.5%
Corporate V.P.
Corporate Sales 1.0%
Chief Financial Officer 1.0%
Management Information Services 1.0%
Corporate V.P
Engineering and Research .75%
Marketing .75%
Division General Manager 2.0%
</TABLE>
The Disinterested Directors shall have full power to revise and adjust the
bonus percentages and to revise the positions eligible to participate in
the Plan.
(c) In the event that a division's "Value Added" is negative at the
inception of the Plan, then the Participant's bonus will be equal to the
Participant's Bonus % multiplied by the "Incremental Value Added". The
Participant's bonus will be calculated in this manner until the division's
"Value Added" is positive, at which time the bonus will be calculated as set
forth in (a) above.
SECTION 6. PAYMENT OF AWARDS
(a) Subject to the condition set forth in paragraphs (b), (c) and (d)
below, payment of awards shall be made no later than December 1, following the
end of the Plan Year, and only after the Disinterested Directors have approved
the awards. Awards shall be paid in cash.
4
<PAGE>
(b) All awards are contingent upon the Participant remaining in the employ
of the Company until the award is paid. In the event a Participant terminates
or resigns (other than retirement) from the Company prior to payment, the
award, at the discretion of the Disinterested Directors, may be forfeited by the
Participant. In the event of death or permanent disability, the Participant or
the designated beneficiary (as specified in the designation form indexed as
Exhibit A) will receive the Participant's accrued bonus balance, and a prorata
portion of the current year award equal to the Participant's service period
during the Plan Year.
(c) Bonuses will be deferred for a period of three years. During the three
year period, subsequent year bonuses that are negative can reduce, eliminate or
create a negative cumulative deferred amount. As a result, bonuses will be
paid out (3 years in arrears) provided that the cumulative deferred balance is
positive at the time of payment. If the cumulative deferred balance is
positive, but less than the bonus amount three years ago, then only the balance
of the cumulative deferred balance will be paid. The excess of the bonus amount
three years ago as compared to the cumulative deferred balance will be
forfeited.
(d) Upon retirement of a Participant, the unpaid cumulative deferred
balance will remain to be paid in arrears as established in (c) above. Although
the retired Participant will not accrue any additional bonuses, a phantom bonus
will be calculated during the arrear period as if the Participant was still an
active Participant. Negative phantom bonuses for the years subsequent to
retirement, will reduce or eliminate future payments as is the case in (c)
above. All payments to retired Participants will be made in cash.
(e) No Participant shall have any right with respect to any award until
such award shall be delivered to him.
(f) If the Disinterested Directors determine, in their discretion, that a
Participant at any time has engaged in any activity that the Disinterested
Directors determines was or is harmful to the Company, any unpaid award will be
forfeited by the Participant.
(g) There shall be deducted from all award payments, any taxes required by
law to be withheld.
SECTION 7. GENERAL CONDITIONS
(a) Amendments. The Disinterested Directors may from time to time amend,
suspend or terminate in whole or in part, and if terminated, may reinstate any
or all of the provisions of the Plan.
(b) Interpretation of the Plan. Any interpretation of the Plan arising
out of or in connection with the construction, administration, and effect of the
Plan and of its rules and regulations shall lie within the Committee's absolute
discretion and shall be conclusive and binding upon all Participants and any
person claiming under or through any Participant.
(c) Rights to Continued Employment. The selection of any employee for
participation in the Plan shall not give such Participant any right to be
retained in the employ of the Company and the right and power of the Company to
dismiss or discharge any Participant is specifically reserved. Nor shall any
such Participant or any person claiming under or through the Participant have
any right or interest in the Plan, or any Award thereunder, unless and until all
terms, conditions and provisions of the Plan that affect such Participant have
been complied with as specified herein.
5
<PAGE>
(d) Adjustments to Performance Factors. When a performance goal is based
on quantifiable financial or accounting measure, it may be necessary to exclude
significant non-budgeted or non-controllable amounts, gains or losses from
actual financial results in order to properly measure performance. The
Disinterested Directors will decide those items that shall be considered in
adjusting actual results. For example, some types of items that may be
considered for exclusion are:
(1) Any gains or losses that will be treated as extraordinary in the
Company's financial statements.
(2) Amounts, profits or losses of any entities acquired by the
Company during the Plan Year, assuming they were not included in
the budget and/or the goal.
(3) Material amounts not in the budget and/or the goals that are of a
non-recurring nature and are not considered to be in the ordinary
course of business.
(e) Expenses of the Plan. The expenses of administering this Plan shall
be borne by the Company.
(f) Governing Laws. The validity, construction, interpretation,
administration and effect of the Plan, and of its rules and regulations, and the
rights of any and all persons having or claiming to have an interest therein or
thereunder, shall be governed by, and determined exclusively and solely in
accordance with, the laws of the State of Delaware.
SECTION 8. INDEMNIFICATION OF THE COMMITTEE MEMBERS AND DIRECTORS BY THE
COMPANY.
(a) No member of the Board of Directors or of the Committee shall be
liable for any act or action, whether of commission or omission, taken by any
other member, or by any officer, agent or employee.
(b) Pursuant to the Certificate of Incorporation and Bylaws of the
Company, the Company hereby agrees to indemnify the Committee members and
Directors for and to hold each of them harmless against any and all liabilities,
losses, costs or expenses (including legal fees and expenses) of whatsoever kind
and nature which may be imposed on, incurred by or asserted against them at any
time by reason of their actions under this Plan if they did not act dishonestly
or in willful or grossly negligent violation of the law or regulation under
which such liability, loss, cost or expense is not insured against or exceed any
insurance recovery.
SECTION 9. EFFECTIVE DATE
This Plan shall be applicable for the fiscal year beginning August 1, 1994,
and subsequent fiscal years, unless modified by the Disinterested Directors as
prescribed in Section 7.
6
<PAGE>
EXHIBIT A
WALLACE COMPUTER SERVICES, INC
LONG-TERM PERFORMANCE PLAN
BENEFICIARY DESIGNATION
PARTICIPANT INFORMATION
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- - ----------------------------------------------------------------------------------------------------------
LAST NAME FIRST NAME MIDDLE SOCIAL SECURITY #
- - ----------------------------------------------------------------------------------------------------------
STREET ADDRESS CITY STATE ZIP CODE
- - ----------------------------------------------------------------------------------------------------------
DATE OF BIRTH MARITAL STATUS EFFECTIVE DATE
/ / Married / / Not Married
- - ----------------------------------------------------------------------------------------------------------
<CAPTION>
PRIMARY BENEFICIARY DESIGNATION
- - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BENEFICIARY NAME RELATIONSHIP SOC. SEC. # BENEFIT %
1) ________________ __________________ __________________ ____
2) ________________ __________________ __________________ ____
3) ________________ __________________ __________________ ____
4) ________________ __________________ __________________ ____
Total 100%
- - ----------------------------------------------------------------------------------------------------------
</TABLE>
CONTINGENT BENEFICIARY DESIGNATION
In the event no Primary Beneficiary survives me, or qualifies to receive the
payment, or refuses to receive the payment:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- - ----------------------------------------------------------------------------------------------------------
BENEFICIARY NAME RELATIONSHIP SOC. SEC. # BENEFIT %
1) ________________ __________________ __________________ ____
2) ________________ __________________ __________________ ____
3) ________________ __________________ __________________ ____
4) ________________ __________________ __________________ ____
Total 100%
- - ----------------------------------------------------------------------------------------------------------
</TABLE>
__________________________________
Signature
__________________________________
Date
7
<PAGE>
EXHIBIT 10.10
WALLACE COMPUTER SERVICES, INC
STOCK OPTION GUIDELINE
THE STOCK OPTION AWARDS AS A RESULT OF THE GUIDELINES LISTED HEREIN ARE SUBJECT
TO THE 1989 STOCK OPTION PLAN. THE GUIDELINES LISTED HEREIN DO NOT CONSTITUTE A
PLAN BUT ARE RATHER A MEANS OF DETERMINING THE NUMBER OF OPTION AWARDS TO BE
GRANTED.
SECTION 1. GUIDELINE OBJECTIVES
A) To provide a means of rewarding key employees of Wallace Computer
Services, Inc. and its subsidiaries ("Company") for personal performance that
enhances the Company's financial performance and increases shareholder value.
B) To provide competitive levels of compensation to enable the Company to
attract and retain people who are able to contribute materially to the success
of the Company's business by their ability and ingenuity.
C) To recognize differences in the performance of individual Participants.
D) To recognize differences in the performance of the Company as
demonstrated by financial performance.
SECTION 2. ADMINISTRATION OF THE GUIDELINE
(a) The Guideline shall be administered by the Compensation Committee of
the Board of Directors ("Committee"). The membership of the Committee may be
reduced, changed, or increased from time to time at the absolute discretion of
the Board of Directors.
(b) The establishment and amendment of rules and regulations for the
Guideline's administration shall be developed and proposed by the Committee and
approved by the Disinterested Directors (as defined in Section 3.11 of the By-
Laws). Similarly, the determination of those who may participate in the
Guideline, and the amount of individual awards to such Participants shall be
proposed by the Committee and approved by the Disinterested Directors. The
determinations of the award amount may be delegated to one or more officers
and/or managers of the Company in accordance with the rules and regulations as
may be prescribed or adopted from time to time, except that the Disinterested
Directors shall review and approve the individual awards to be made to
Participants. The Committee shall have the sole power to interpret the
Guideline.
(c) The Committee members and the Disinterested Directors, may rely upon
any information supplied to them by any officer of the Company in connection
with the administration of the Guideline.
<PAGE>
SECTION 3. DEFINITIONS
(a) Investment - means the following:
+ Gross trade receivables
+ Gross inventories at standard cost
+ Net property, plant & equipment, less construction in progress
+ Net present value of building and equipment operating leases
+ Goodwill
+ Unamortized software development costs
- Trade accounts payable
- Unvouchered trade payables
(b) Operating Profit After-Taxes - means the following:
Operating Income
+/- Change in Inventory reserves
+/- Change in Accounts Receivable reserves
+/- Change in Post retirement liability
+/- Other Unusual Income or Expense Items
+ Goodwill amortization
+ Interest expense
- Interest Income
+ Interest expense associated with operating leases
- Current Tax Expense on the sum of the above
(c) Actual Company Return on Investment - means the actual "Operating
Profit After-Taxes" of the Company for the Plan Year divided by the average of
the actual Company "Investment" at the beginning of the Plan Year and the actual
Company "Investment" at the end of the Plan Year.
(d) Targeted Company Return on Investment - means the budgeted "Operating
Profit After-Taxes" of the Company for the Plan Year divided by the average of
the actual Company "Investment" at the beginning of the Plan Year and the
budgeted Company "Investment" for the end of the Plan Year. Budgeted "Operating
Profit After-Taxes" and ending "Investment" are to be obtained from the final
annual budget book approved by the Board of Directors.
(e) Base Salary - means the amount of a Participant's base compensation as
of November 1 of a Plan Year without adjustment for bonuses, salary deferrals,
value of benefits, special payments, amounts contributed to a savings plan or
similar items.
(f) Employee - means persons employed by the Company or any subsidiary in
which the Company owns directly or indirectly all or a majority of the common
stock and shall include employees who are also Directors of the Company or of
any such subsidiary and may, at the discretion of the Committee and
Disinterested Directors, include persons who at the request of the Company
accept employment with any company in which the Company has a substantial
ownership interest.
(i) Participant - means an employee who has been nominated by the
Committee members and Disinterested Directors to participate in this Guideline.
(h) Plan Year - means the one year period coincident with the Company's
fiscal year.
2
<PAGE>
SECTION 4. ELIGIBILITY
(a) ELIGIBLE POSITIONS. An employee shall be eligible for consideration
to participate in this Guideline based on such criteria as the Committee members
shall recommend and Disinterested Directors shall approve from year to year. In
general, the CEO, all Vice Presidents and Division General Managers may be
eligible for participation in the Guideline. However, actual participation will
depend upon the contribution and impact each eligible employee may have on the
Company's value to its Shareholders, as determined by the CEO of the Company,
recommended by the Committee members and approved by the Disinterested
Directors.
(b) NOMINATION AND APPROVAL. Each Plan Year, the CEO of the Company will
nominate eligible employees to participate in the Guideline for that Plan Year.
The Disinterested Directors will have final authority to select Participants
among eligible employees nominated by the CEO.
(c) INELIGIBLE POSITIONS. No Committee member or Disinterested Director
shall be a Participant of the Guideline. Membership on any other committee of
the Board of Directors shall not by itself render an Employee ineligible for
participation in the Guideline.
(d) CHANGES IN STATUS. A person whose employment begins or whose
responsibilities change making them qualified to participate in the Guideline
(or leave the participating class), may, on the recommendation of the Committee,
and approval of the Disinterested Directors, be eligible to participate in the
Guideline.
(e) OTHER PLANS. Nothing in this Guideline shall be construed as
preventing the Company from establishing incentive or other variable
compensation plans eligible to Employees.
(f) DISCRETIONARY AWARDS. The CEO may recommend discretionary option
awards to employees of the Company who are not Participants of the Guideline.
Such awards will be given to recognize these employees for their achievements
and contribution to the Company. All discretionary awards will be approved by
the Disinterested Directors.
SECTION 5. INDIVIDUAL PARTICIPATION LEVELS
(a) Calculation of Award. Each Participant's award will be determined as
a function of the Participant's Target Award (provided in paragraph 5.b below),
Company Performance Factor (provided in Section 6.a.) and the Individual
Performance Factor (provided in Section 6.b.) for the Plan Year. Each
Participant's award will be calculated as follows:
Target Award (X) Performance Factor
The performance factor will be determined from a matrix (provided as
Exhibit A) that considers both the Company Performance Factor and the
Individual Performance Factor.
3
<PAGE>
(b) Target Awards. The Target Awards will be determined according to the
following schedule:
<TABLE>
<CAPTION>
Executive Position Target Award
------------------ ------------
<S> <C>
CEO 9,500
Sr. V.P. 5,700
Corporate V.P. (CFO, Sales & MIS) 4,750
Corporate V.P. (all others) 3,800
Division V.P. 2,850
Division General Manager 2,850
</TABLE>
The target award of the CEO will be adjusted annually to equal:
Target award = CEO base salary DIVIDED BY stock price as of the
preceding Plan year end.
The target awards of the other executive positions will retain the same ratio to
the CEO (i.e., Sr. V.P. 60%, Corporate V.P. 50%, etc.)
The Disinterested Directors, shall have full power to revise and adjust the
Target Awards and to revise the positions eligible to participate in the
Guideline.
SECTION 6. PERFORMANCE FACTORS
For any Plan Year the Performance Factor will be determined from a matrix
(provided as Exhibit A) in which the "Y" axis represents the Company Performance
factor and the "X" axis represents the Individual Performance factor.
(a) COMPANY PERFORMANCE FACTOR. The "Y" axis will consist of five boxes.
The middle box will equal the Company's "Targeted Return on Investment." The
value of each box above the top middle box will equal 105% and 110%
respectively, of the Targeted Return on Investment. The value of each box below
the middle box will be equal to 95% and 90% respectively, of the Targeted Return
on Investment.
(b) INDIVIDUAL PERFORMANCE FACTOR The "X" axis represents the Individual
Performance Factor. The "X" axis will consist of three boxes, each representing
a benchmark of the Participant's Individual Performance Factor. The first box
benchmark will equal 45%. The benchmarks of each box to the right of the first
box will be 60% and 90% respectively. Each Participant's actual performance
factor will equal the percentage as computed in the Annual Bonus Plan.
SECTION 7. GRANTING OF AWARDS
(a) Subject to the condition set forth in paragraph (b) below, granting of
awards shall be approved at the Board of Director meeting following the Annual
Shareholder meeting.
(b) All awards are contingent upon the Participant remaining in the employ
of the Company. In the event a Participant terminates or resigns from the
Company prior to the awards being granted, the Participant will forfeit all
rights to the awards.
(c) No Participant shall have any right with respect to any award until
such award shall be delivered to him.
4
<PAGE>
SECTION 8. GENERAL CONDITIONS
(a) Amendments. The Disinterested Directors may from time to time amend,
suspend or terminate in whole or in part, and if terminated, may reinstate any
or all of the provisions of the Guideline.
(b) Interpretation of the Guideline. Any interpretation of the Guideline
arising out of or in connection with the construction, administration, and
effect of the Guideline and of its rules and regulations shall lie within the
Committee's absolute discretion and shall be conclusive and binding upon all
Participants and any person claiming under or through any Participant.
(c) Rights to Continued Employment. The selection of any employee for
participation in the Guideline shall not give such Participant any right to be
retained in the employ of the Company and the right and power of the Company to
dismiss or discharge any Participant is specifically reserved. Nor shall any
such Participant or any person claiming under or through the Participant have
any right or interest in the Guideline, or any Award thereunder, unless and
until all terms, conditions and provisions of the Guideline that affect such
Participant have been complied with as specified herein.
(d) Adjustments to Return on Investment/Performance Factors. When a goal
is based on Quantifiable financial or accounting measure, it may be necessary to
exclude significant non-budgeted or non-controllable amounts, gains or losses
from actual financial results in order to properly measure performance. The
Disinterested Directors will decide those items that shall be considered in
adjusting actual results. For example, some types of items that may be
considered for exclusion are:
(1) Any gains or losses that will be treated as extraordinary in the
Company's financial statements.
(2) Amounts, profits or losses of any entities acquired by the
Company during the Plan Year, assuming they were not included in
the budget and/or the goal.
(3) Material amounts not in the budget and/or the goals that are of a
non-recurring nature and are not considered to be in the ordinary
course of business.
(e) Expenses of the Guideline. The expenses of administering this
Guideline shall be borne by the Company.
(f) Governing Laws. The validity, construction, interpretation,
administration and effect of the Guideline, and of its rules and regulations,
and the rights of any and all persons having or claiming to have an interest
therein or thereunder, shall be governed by, and determined exclusively and
solely in accordance with, the laws of the State of Delaware.
SECTION 9. INDEMNIFICATION OF THE COMMITTEE MEMBERS AND DIRECTORS BY THE
COMPANY.
(a) No member of the Board of Directors or of the Committee shall be
liable for any act or action, whether of commission or omission, taken by any
other member, or by any officer, agent or employee.
5
<PAGE>
(b) Pursuant to the Certificate of Incorporation and Bylaws of the
Company, the Company hereby agrees to indemnify the Committee members and
Directors for and to hold each of them harmless against any and all liabilities,
losses, costs or expenses (including legal fees and expenses) of whatsoever kind
and nature which may be imposed on, incurred by or asserted against them at any
time by reason of their actions under this Guideline if they did not act
dishonestly or in willful or grossly negligent violation of the law or
regulation under which such liability, loss, cost or expense is not insured
against or exceeds any insurance recovery.
SECTION 10. EFFECTIVE DATE
This Guideline shall be applicable for the fiscal year beginning August 1,1994,
and subsequent fiscal years, unless modified by the Disinterested Directors as
prescribed in Section 8.
6
<PAGE>
EXHIBIT A
OPTION PERFORMANCE MATRIX
<TABLE>
<CAPTION>
Individual Objectives Achieved
45% 60% 90%
----- ----- -----
<S> <C> <C> <C> <C>
110.0% 133.0% 167.0% 200.0%
Return 105.0% 100.0% 133.0% 167.0%
on Target 67.0% 100.0% 133.0%
Investment 95.0% 33.0% 67.0% 100.0%
90.0% 10.0% 33.0% 67.0%
</TABLE>
7
<PAGE>
EXHIBIT 10.11D
WALLACE COMPUTER SERVICES, INC.
1994 DEFERRED COMPENSATION/CAPITAL ACCUMULATION PLAN
FOR DIRECTORS
Wallace Computer Services, Inc. (the "Company") hereby establishes a
non-qualified deferred compensation program for the members of its Board of
Directors who are eligible under, and elect to participate in, the Plan. The
following shall constitute the terms and conditions of the Wallace Computer
Services, Inc. 1994 Deferred Compensation/Capital Accumulation Plan for
Directors (the "Plan"), effective January 1, 1994 (the "Effective" Date).
1. ADMINISTRATION. Full power and authority to construe, interpret and
administer the Plan shall be vested in the Compensation Committee of the
Board of Directors of the Company (the "Committee"). The Committee shall
have the authority to make determinations provided for or permitted to be
made under the Plan, to interpret the Plan, and to promulgate such rules
and regulations, if any, as the Committee considers necessary and
appropriate for the implementation of the Plan.
2. ELIGIBILITY AND PARTICIPATION. All members of the Company's Board of
Directors on November, 1993 shall be eligible for participation in the
Plan. Eligible Directors who elect to participate in accordance with
Section 3 will become "Participants".
3. DEFERRED COMPENSATION.
A. Each Participant may make an irrevocable election in writing to defer
up to 100% of Compensation, as defined in Subsection 3B, paid for the
period January 1, 1994 through December 31, 1994 (the "Deferral
Amount"). Such amount shall not be less than $1,000. Deferred
compensation at the deferral percentage will be deducted from all
Compensation payable to the Participant during the deferral period.
B. "Compensation" means director's fees and meeting fees payable by the
Company to the Participant.
C. The Company shall establish and maintain a bookkeeping account in the
name of each Participant, which shall be known as the "Deferral
Account". It shall be credited with the Deferral Amount and interest
at the rate established by the Committee compounded annually from
January 1, 1994. As provided in Section 5 of the Plan, the interest
rate on lump sum payments caused by certain events will differ from
the rate established by the Committee. Amounts paid to the
Participant or a designated Beneficiary pursuant to this Plan, shall
be deducted from the account balance as of the first
1
<PAGE>
day of the month in which such payment is made.
D. The Participant's Deferral Account shall at all times be reflected on
the Company's books in accordance with generally accepted accounting
practices as a general unsecured and unfunded obligation of the
Company and the Plan shall not give any person any right or security
interest in any asset of the Company nor shall it imply any trust or
segregation of assets by the Company. Payments from the Participant's
Deferral Account shall be made from the general assets of the Company.
4. TIME AND MANNER OF PAYMENT. The Participant's Deferral Account shall be
distributed as follows:
A. INSTALLMENT PAYMENTS.
(1) A Participant shall be entitled to fifteen (15) equal annual
installment payments commencing at age sixty-five (65).
(2) A Participant who attained age fifty-five (55) as of January 1,
1994 may elect, at the time of making the deferral election
pursuant to Subsection 3A, to receive ten (10) equal annual
installments commencing at age seventy (70) in lieu of
installment payments under Subsection 4A(1) if he becomes
eligible for such payments.
(3) A Participant who attained age fifty-five (55) as of January 1,
1994 and who was a Director of the Company on November 7, 1984
may elect, at the time of making the deferral election pursuant
to Subsection 3A, to receive ten (10) equal annual installments
commencing at age seventy-two (72) in lieu of installment
payments under Subsection 4A(1) if he becomes eligible for such
payments.
Installment payments shall be calculated to amortize fully the
accumulated value of the Deferral Amount over the payment period. For
purposes of this Subsection A, the interest rate to be credited in the
calculation of the accumulated value of the Deferral Amount shall be
the rate(s) established by the Committee at its sole discretion prior
to the beginning of the deferral period.
B. INTERIM PAYMENTS. A payment equal to the Participant's Deferral
Amount shall be paid to the Participant within a reasonable time after
January 1, 2001 if installment payments under Subsection A have not
then commenced and will not commence during the 2001 calendar year.
In addition, a payment equal to the Participant's Deferral Amount
shall be paid to the Participant within a reasonable time after
January 1, 2002 if installment payments under Subsection A have not
then commenced and will not commence during the 2002 calendar year.
These
2
<PAGE>
payments shall be charged to the Participant's Deferral Account as of
the first day of the month in which the payment(s) is made. This
Subsection does not apply to Participants terminated under Section 5.
5. DISHONEST CONDUCT. Notwithstanding any other provision of this Plan, if
Participant's directorship with the Company is terminated at any time for
reason of dishonest or fraudulent conduct injurious to the Company, the
sole amount payable to or on behalf of Participant hereunder shall be a
lump sum payment of the accumulated value of the Participant's Deferral
Amount, payable as soon as practicable after such termination. For
purposes of this Section 5, no interest is to be credited to the Deferral
Amount.
6. PAYMENT UPON DEATH OF PARTICIPANT.
A. If a Participant dies after age sixty-five (65), then the Company
shall pay any unpaid annual Installment Payments due the Participant
under Subsection 4A to the Participant's Beneficiary, commencing with
the next such payment due following the date of Participant's death.
B. If a Participant dies prior to age sixty-five (65), Installment
Payments described in Subsection 4A(1) shall be payable to the
Participant's Beneficiary, commencing at the time of the Participant's
death. Interim Payments described in Subsection 4B will not be made.
7. BENEFICIARY DESIGNATION. A Participant may from time to time designate any
legal or natural person or persons (who may be designated contingently or
successively) as the Beneficiary to whom payments are to be made if the
Participant dies before receiving payment of all amounts due hereunder, by
signing a form approved by the Committee. A beneficiary designation form
shall be effective only after the signed form is filed with the Committee
while the Participant is alive. A properly filed designation shall cancel
all beneficiary designation forms filed earlier. If a Participant fails to
designate a Beneficiary as provided above, or if all designated
Beneficiaries of a Participant die before the Participant, or before
complete payment of all amounts due hereunder, the Committee, in its
discretion, may direct the Company to pay the unpaid amounts to one or more
of such Participant's relatives by blood, adoption or marriage in any
manner permitted by law which the Committee considers to be appropriate,
including but not limited to payment to the legal representative or
representatives of the estate of the last to die of Participant and
Participant's designated Beneficiaries.
8. FACILITY OF PAYMENT. If, in the Committee's opinion, a Participant or
other person entitled to benefits under the Plan is under a legal
disability or is in any way incapacitated so as to be unable to manage his
financial affairs, then the Committee may, until claim is made by a
conservator or other person legally charged with the care of his person or
of his estate, direct the Company to make payment to a relative or friend
of such person for his benefit. Thereafter, any benefits under the
3
<PAGE>
Plan to which such Participant or other person is entitled shall be paid to
such conservator or other person legally charged with the care of his
person of his estate.
9. INSURANCE. The Company may, in its sole discretion, purchase a policy or
policies of insurance on the life of any Participant, the cash value, if
any, and proceeds of which may, but need not, be used by the Employer to
satisfy part or all of its obligations, hereunder. The Company will be the
owner of any such policies and neither the Participant nor any other person
or entity claiming through the Participant shall have any ownership rights
in such policies or any proceeds thereof. The Participant, as a condition
of receiving any benefits hereunder, on behalf of himself or any person or
entity claiming through him, shall cooperate with the Company in obtaining
any such insurance that the Company desires to purchase by submitting to
such physical examinations, completing such forms, and making such records
available as may be required by the Company from time to time.
10. NON-ALIENATION. Neither a Participant nor anyone claiming through him
shall have any right to commute, sell, assign, transfer or otherwise convey
the right to receive any payments hereunder, which payments and the rights
thereto hereby are expressly declared to be non-assignable and
non-transferable, nor shall any such right to receive payments hereunder be
subject to the claims of creditors of a Participant or anyone claiming
through him to any legal, equitable, or other proceeding or process for the
enforcement of such claims.
11. TAX WITHHOLDING. The Company may withhold from any payment made by it
under the Plan such amount or amounts as may be required for purposes of
complying with the tax withholding or other provisions of the Internal
Revenue Code or the Social Security Act or any state or local income tax
act or for purposes of paying any estate, inheritance or other tax
attributable to any amounts payable hereunder.
12. NON-SECURED PROMISE. The rights under this Plan of a Participant and any
person or entity claiming through him shall be solely those of an
unsecured, general creditor of the Company. Any insurance policy or other
asset acquired or held by the Company shall not be deemed to be held by the
Company for or on behalf of a Participant, or any other person, or to be
security for the performance of any obligations hereunder of the Company,
but shall, with respect to this Plan, be and remain a general, unpledged,
unrestricted asset of the Company.
13. INDEPENDENCE OF PLAN. Except as otherwise expressly provided herein, this
Plan shall be independent of, and in addition to, any other agreement or
that may exist from time to time between the parties hereto. This Plan
shall not be deemed to constitute a right to be retained as a member of the
Board of Directors of the Company.
14. PARAGRAPH HEADINGS. The Paragraph headings used in this Plan are for
convenience of
4
<PAGE>
reference only and shall not be considered in construing this Plan.
15. RESPONSIBILITY FOR LEGAL EFFECT. Neither the Committee nor the Company
makes any representations or warranties, express or implied, or assumes any
responsibility concerning the legal, tax, or other implications or effects
of this Plan.
16. COMMITTEE DETERMINATIONS FINAL. Each determination provided for in the
Plan shall be made in the absolute discretion of the Committee. Any such
determination shall be binding on all persons.
17. AMENDMENT. The Company may in its sole discretion amend the Plan from time
to time. No such amendment shall reduce a Participant's or Beneficiary's
benefits under the Plan to an amount less than an amount that he would have
been entitled to under the Plan on the later of the date the amendment is
adopted or made effective if the Plan had been terminated on that date.
18. TERMINATION AT THE COMPANY'S OPTION. Notwithstanding any other provision
of this Plan, the Company may terminate this Plan at any time if the
Committee, in its sole and absolute discretion, determines that any change
in federal or state law, or judicial or administrative interpretation
thereof, has materially affected the Company's cost of providing the
benefits otherwise payable under this Plan, or for any other reason
whatsoever. Upon such termination, the sole amount payable to Participant
shall be a lump sum payment, as soon as practicable after such termination,
of the accumulated value of the Deferral Amount. For purposes of this
Section, the rate to be credited in the calculation of the accumulated
value of the Deferral Amount shall be the rate specified for Installment
Payments in Subsection 4A.
19. SUCCESSORS, ACQUISITIONS, MERGERS, CONSOLIDATIONS. The terms and
conditions of this Plan and each Deferral Election shall inure to the
benefit of and bind the Company, the Participants, their successors,
assigns, and personal representatives.
20. CONTROLLING LAW. The Plan shall be construed in accordance with the laws
of the state of Illinois to the extent not pre-empted by laws of the United
States of America.
5
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1994
<PERIOD-START> AUG-01-1993
<PERIOD-END> JUL-31-1994
<CASH> 17,587
<SECURITIES> 59,411
<RECEIVABLES> 97,160
<ALLOWANCES> (1,982)
<INVENTORY> 69,543
<CURRENT-ASSETS> 248,226
<PP&E> 432,244
<DEPRECIATION> (199,382)
<TOTAL-ASSETS> 538,592
<CURRENT-LIABILITIES> 64,794
<BONDS> 23,500
<COMMON> 22,393
0
0
<OTHER-SE> 387,746
<TOTAL-LIABILITY-AND-EQUITY> 538,592
<SALES> 588,173
<TOTAL-REVENUES> 588,173
<CGS> 363,488
<TOTAL-COSTS> 516,543
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 893
<INTEREST-EXPENSE> 1,325
<INCOME-PRETAX> 73,856
<INCOME-TAX> 26,588
<INCOME-CONTINUING> 47,268
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 663
<NET-INCOME> 47,931
<EPS-PRIMARY> 2.16
<EPS-DILUTED> 2.16
</TABLE>
