FORM 10-QT
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended __________________
OR
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from September 1, 1997 to December 31, 1997
Commission file number: 0-7574
WAUSAU-MOSINEE PAPER CORPORATION
(Exact name of registrant as specified in charter)
WISCONSIN 39-0690900
(State of incorporation) (I.R.S Employer Identification Number)
1244 KRONENWETTER DRIVE
MOSINEE, WISCONSIN 54455-9099
(Address of principal executive office)
Registrant's telephone number, including area code: 715-693-4470
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 report), and (2) has been subject to such filing require-
ments for the past 90 days.
Yes X No _____
The number of common shares outstanding at December 31, 1997 was 57,801,767.
<PAGE>
WAUSAU-MOSINEE PAPER CORPORATION
AND SUBSIDIARIES
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of
Income, Four Months Ended
December 31, 1997 and 1996 (unaudited) 1
Condensed Consolidated Balance
Sheets, December 31, 1997 and
August 31, 1997 (unaudited) 2
Condensed Consolidated Statements
of Cash Flows, Four Months Ended
December 31, 1997 and 1996 (unaudited) 3
Notes to Condensed Consolidated
Financial Statements 4-7
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 7-11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of
Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 14-16
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
Wausau-Mosinee Paper Corporation and Subsidiaries
<CAPTION>
Four Months Ended
December 31,
($ thousands, except per share data -
unaudited) 1997 1996
<S> <C> <C>
NET SALES $319,767 $283,307
Cost of products sold 258,613 222,413
GROSS PROFIT 61,154 60,894
Selling, administrative and
research expenses 21,342 21,703
Expense of merger 13,503 0
OPERATING PROFIT 26,309 39,191
Interest income 29 112
Interest expense (2,725) (1,964)
Other income (expense) 388 (281)
EARNINGS BEFORE INCOME TAXES 24,001 37,058
Provision for income taxes 14,100 14,334
NET EARNINGS $ 9,901 $ 22,724
NET EARNINGS PER SHARE BASIC $ 0.17 $ 0.39
NET EARNINGS PER SHARE DILUTED $ 0.17 $ 0.39
WEIGHTED AVERAGE NUMBER OF
SHARES BASIC 57,798,529 58,504,007
WEIGHTED AVERAGE NUMBER OF
SHARES DILUTED 58,157,305 58,791,629
</TABLE>
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<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
Wausau-Mosinee Paper Corporation and Subsidiaries
<CAPTION>
($ thousands - unaudited) December 31, August 31,
1997 1997
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,584 $ 7,973
Receivables 69,674 79,115
Refundable income taxes 2,799 0
Inventories 143,610 133,151
Other current assets 16,262 17,511
Total current assets 234,929 237,750
Property, plant and equipment 604,930 596,233
Other assets 32,205 30,634
TOTAL ASSETS $872,064 $864,617
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 6,207 $ 6,290
Accounts payable 53,181 48,677
Accrued and other liabilities 48,888 47,346
Accrued income taxes 0 3,930
Total current liabilities 108,276 106,243
LONG-TERM LIABILITIES
Long-term debt 140,500 152,349
Deferred income taxes 92,947 86,936
Other long-term liabilities 88,926 86,195
Total long-term liabilities 322,373 325,480
Commitments and contingencies --- ---
Preferred stock of subsidiary 1,255 1,255
Total shareholders' equity 440,160 431,639
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $872,064 $864,617
</TABLE>
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<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Wausau-Mosinee Paper Corporation and Subsidiaries
<CAPTION>
Four Months Ended
December 31,
($ thousands - unaudited) 1997 1996
<S> <C> <C>
OPERATING ACTIVITIES:
Net earnings $ 9,901 $22,724
Noncash items:
Provision for depreciation, depletion
and amortization 16,681 15,004
Recognition of deferred revenue ( 13) ( 13)
Provision for losses on accounts
receivable 16 53
(Gain) loss on property, plant
and equipment disposals ( 692) 248
Deferred income taxes 6,409 3,893
Changes in operating assets and
liabilities:
Receivables 11,597 14,919
Inventories ( 11,348) ( 17,476)
Other assets ( 1,070) ( 1,491)
Accounts payable and other liabilities 7,928 13,112
Accrued and refundable income taxes ( 9,391) ( 3,372)
NET CASH PROVIDED BY OPERATING ACTIVITIES 30,018 47,601
INVESTING ACTIVITIES:
Capital expenditures ( 23,040) ( 21,902)
Proceeds from property, plant and
equipment disposals 394 323
Net cash distributed from funds
restricted for capital additions 0 2,547
NET CASH USED IN INVESTING ACTIVITIES ( 22,646) ( 19,032)
FINANCING ACTIVITIES:
Net payments under
revolving credit agreements ( 5,446) ( 24,449)
Repayments of long-term debt ( 116) ( 112)
Dividends paid ( 3,346) ( 2,847)
Proceeds from stock options exercised 88 0
Payments for purchase of company stock 0 ( 822)
NET CASH USED IN FINANCING ACTIVITIES ( 8,820) ( 28,230)
Net increase (decrease) in cash and
cash equivalents ( 1,448) 339
Cash and cash equivalents at beginning
of period 4,032 142
Cash and cash equivalents at end of
period $ 2,584 $ 481
Supplemental Cash Flow Information:
Interest paid - net of amount
capitalized $ 2,822 $ 2,315
Income taxes paid 17,093 13,837
</TABLE>
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<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The accompanying condensed financial statements, in the opinion
of management, reflect all adjustments which are normal and
recurring in nature and which are necessary for a fair statement
of the results for the periods presented. Some adjustments
involve estimates which may require revision in subsequent
interim periods or at year-end. In all regards, the financial
statements have been presented in accordance with generally
accepted accounting principles. Refer to notes to the financial
statements which appear in the 1997 Annual Report on form 10-K
for the company's accounting policies which are pertinent to
these statements.
Note 2. On December 17, 1997, Wausau Paper Mills Company ("Wausau")
completed a merger with Mosinee Paper Corporation ("Mosinee") in
which Mosinee became a wholly-owned subsidiary of Wausau.
Simultaneous with the consummation of the merger, Wausau changed
its name to Wausau-Mosinee Paper Corporation ("the company").
Wausau issued 1.4 shares of common stock for each share of
Mosinee outstanding common stock. A total of 21,281,795 shares
of the company's common stock were issued as a result of the
merger (after adjustment for fractional shares).
The merger qualified as a tax-free exchange and was accounted for
as a pooling of interests. Accordingly, all prior period
financial statements presented have been restated to include the
financial position, results of operations, and cash flows for
Wausau and Mosinee combined. Prior to the merger, Wausau's
fiscal year-end was August 31 and Mosinee's was December 31.
Subsequent to the merger, the company adopted a calendar year-
end.
The unaudited consolidated statements of income and cash flows
for the four months ended December 31, 1997 and 1996 reflect the
results of operations and cash flows for Wausau and Mosinee
combined. The unaudited consolidated balance sheet at
December 31, 1997 reflects the combined financial position of
Wausau and Mosinee. The unaudited combined balance sheet as of
August 31, 1997 presents the financial position of Wausau and
Mosinee as of August 31, 1997 and June 30, 1997, respectively.
As a result of Wausau and Mosinee having different fiscal years,
Mosinee's results of operations for the two-month period ended
August 31, 1997, has been excluded from previously reported
results of operations and, therefore, added to the opening
balance of the company's retained earnings at September 1, 1997.
Mosinee had net sales, expense, and net income of $58,667,000,
$54,405,000 and $4,262,000 respectively for the two-month period
ended August 31, 1997.
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<PAGE>
The results of operations for Wausau and Mosinee and the combined
amounts presented in the consolidated financial statements
follow.
<TABLE>
<CAPTION>
FOR THE FOUR MONTHS ENDED
DECEMBER 31,
($ thousands) 1997 1996
<S> <C> <C>
NET SALES:
WAUSAU $203,169 $179,075
MOSINEE 116,598 104,232
COMBINED $319,767 $283,307
NET INCOME:
WAUSAU $ 5,282 $ 13,820
MOSINEE 4,619 8,904
COMBINED $ 9,901 $ 22,724
</TABLE>
In connection with the merger the company incurred $13,503,000
($13,203,000 after taxes, or $0.23 per common share) of merger-
related costs which were charged to operations during the four
month period ended December 31, 1997.
Note 3. Selling, administrative and research expense include expenses for
stock-based incentive plans calculated by using the average price
of the company's stock at the close of the reporting period as if
all such plans had been exercised on that day. For the four
months ended December 31, 1997, these plans resulted in after-tax
income of $393,000 or less than $0.01 per share, compared to an
after-tax expense of $1,605,000 or $0.03 per share for the same
period last year.
<TABLE>
Note 4. Accounts receivable consisted of the following:
<CAPTION>
($ thousands) December 31, August 31,
1997 1997
<S> <C> <C>
Customer Accounts $74,482 $83,076
Misc. Notes and Accounts Receivable 3,932 4,318
78,414 87,394
Less: Allowances for Discounts,
Doubtful Accounts and Pending Credits 8,740 8,279
Net Receivables $69,674 $79,115
</TABLE>
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<PAGE>
<TABLE>
Note 5. The various components of inventories were as follows:
<CAPTION>
($ thousands) December 31, August 31,
1997 1997
<S> <C> <C>
Raw Materials and Supplies $ 87,486 $ 78,707
Finished Goods and Work in Process 76,279 73,960
Subtotal 163,765 152,667
Less: LIFO Reserve 20,155 19,516
Net inventories $143,610 $133,151
</TABLE>
Note 6. The accumulated depreciation on fixed assets was $385,679,000 as
of December 31, 1997 and $367,686,000 as of August 31, 1997.
Note 7. Earnings per share of common stock is based on the weighted
average number of common shares outstanding and gives effect to
applicable preferred stock dividends. The Sorg Paper Company
preferred stock dividends in arrears for the four months ended
December 31, 1997 and 1996 were $34,518.
<TABLE>
Note 8. A summary of long-term debt is as follows:
<CAPTION>
($ thousands) December 31, August 31,
1997 1997
<S> <C> <C>
Bonds, Mortgages and Similar Debt $140,449 $152,265
Capitalized Leases 51 84
Total Long-Term Debt $140,500 $152,349
</TABLE>
<TABLE>
Note 9. Dividends per share were as follows:
<CAPTION>
FOUR MONTHS ENDING
DECEMBER 31, DECEMBER 31,
1997 1996
<S> <C>
$0.0625 $0.0625
</TABLE>
The company's Board of Directors declared a cash dividend
payable January 15, 1998 to shareholders of record January 5,
1998. As a result of the additional stock issued to consummate
the merger, dividends payable at December 31, 1997 were
$3,616,000 compared to $2,282,000 for December 31, 1996.
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<PAGE>
Note 10. Certain legal proceedings are described under Part II, Item 1 of
this report.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS*
On December 17, 1997, Wausau Paper Mills Company ("Wausau") completed a
merger with Mosinee Paper Corporation ("Mosinee") in which Mosinee became
a wholly owned subsidiary of Wausau. Simultaneous with the consummation
of the merger, Wausau changed its name to Wausau-Mosinee Paper Corporation
("the company"). The merger qualified as a tax-free exchange and was
accounted for as a pooling of interests. Accordingly all financial
statements presented, Management's Discussion and Analysis of Financial
Condition and Results of Operations, and all other sections of this Form
10-Q are presented for the combined operations of Wausau and Mosinee as if
the merger had occurred at the beginning of each period presented.
Reference Note 2 of the Notes to Consolidated Financial Statements.
RESULTS OF OPERATIONS
Net Sales
For the four months ended December 31, 1997, net sales were the highest
ever for the combined operations of Wausau-Mosinee Paper Corporation
totaling $319.8 million, an increase of 12.9% over net sales in the
comparable period in 1996 of $283.3 million. Shipments in 1997 for all
three operating groups (Printing & Writing, Specialty Papers, Towel &
Tissue) were the highest ever for the four month period. Revenue and
shipment growth over the 1996 period was aided by the acquisitions of
B & J Supply in April, 1997 and Otis Specialty Papers in May, 1997.
Selling prices for the company's products declined from a year ago due
to competitive pressures on several products in the company's printing
and writing and specialty grades. A lower-priced mix of specialty
products and towel and tissue products also negatively impacted average
price realizations in the 1997 period compared to a year ago.
Shipments at the company's Printing and Writing Group were a record for
the four month period September through December and were 12.9% ahead of
last year's shipment level for the same four months. The acquisition of
B & J Supply in April, 1997 accounts for less than half of the shipment
improvement, with solid volume gains at both the paper manufacturing
operations and the converted products facilities making up the balance.
Order backlogs at December 31, 1997 were higher than a year ago.
Shipments of the company's specialty products were also the highest ever
for the four month period ending December, as a result of the addition of
the Otis Specialty Papers operations, acquired in May, 1997. Shipments
for the 1997 period exceeded last year by 22.6%. Shipments
* This discussion and analysis may contain forward-looking statements
(see Item 5).
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<PAGE>
decreased 5.2% at the Rhinelander mill, compared to a year ago, due to
weak demand for pressure sensitive and packaging products. The Pulp &
Paper and Sorg operations increased shipments in total by 4.3% in the 1997
period compared to 1996. Order backlogs for the Specialty Papers Group
were lower than a year ago despite the addition of the Otis mill as each
of the four operating facilities had a weak backlog at December 31, 1997
which was lower than a year ago. The weak market conditions resulted in
extending Rhinelander's normal planned December maintenance shutdown by
three days.
Shipments of the company's towel and tissue products for the four months
ended December 31, 1997 were also the highest ever for the four month
period increasing 25.0% over the same period in 1996. Four additional
lines of converting equipment were installed during 1997 providing the
additional capacity to achieve the volume gain. Towel and tissue product
backlogs were slightly lower, however, at December 31, 1997 than a year
ago.
Gross Profit
Gross profit for the four months ending December, 1997 was $61.2 million
or 19.1% of net sales, compared to last year's gross profit of $60.9
million or 21.5% of net sales. The gross profit margin for the four months
of 1997 declined from the previous year due primarily to competitive
pressures on prices for the company's paper products, a lower-priced mix
of specialty and towel and tissue products sold and higher pulp costs.
Pulp prices had risen by approximately $50 per metric ton since last
spring, however, the pulp markets weakened in December 1997 and January
1998 as a result of the economic problems in Asia. The company expects
more favorable pulp costs in the near term. Waste paper and softwood
pulpwood prices were also higher in the 1997 period compared to 1996.
The company's paper mills operated at capacity for the 1997 four month
period, with the exception of the Rhinelander mill which extended its
December maintenance shutdown by three days due to weak demand for its
technical specialty products. Total paper mill production was 11% higher
in the 1997 period versus 1996 due primarily to the acquisition of Otis
Specialty Papers in May, 1997. Total paper inventories at December 31,
1997 were 10% higher than paper inventory levels at December 31, 1996 as a
result of weak demand for specialty products and the Otis acquisition.
Selling, Administrative and Research Expenses
In connection with the merger of Wausau and Mosinee, the company incurred
pretax expenses related to the merger of $13.5 million which were charged
to operations in the four month period ending December 31, 1997. The
costs include all professional fees and other transaction costs for
executing the merger as well as the cost of the severance benefits paid to
the former CEO of Wausau. The merger costs on an after-tax basis were
$13.2 million or $.23 per share.
Selling, administrative and research expenses, excluding the merger costs,
were $21.3 million in the 1997 four month period, compared to $21.7
million in the same four month period last year. Adjustments for stock
price based incentive plans resulted in income of $.6 million in the 1997
period compared to expense of $2.6 million for the same period a year ago.
Higher costs in the
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<PAGE>
1997 period, excluding the impact of the incentive plan adjustments, are
primarily the result of the addition of the Otis mill which was acquired
in May, 1997 and B & J Supply which was purchased in April, 1997. In
addition, the recognition of $.5 in advertising costs was accelerated into
the 1997 period due to changing to a calendar year reporting basis.
Interest and Other Expense
Interest expense was $2.7 million in the four month period ended
December 31, 1997, compared to $2.0 million for the same period last year.
Interest expense, excluding capitalized interest, was higher in the 1997
period, compared to last year, due to the acquisitions of Otis Specialty
Papers for $55.1 million and B & J Supply for $8.2 million, which were
entirely debt financed. Capitalized interest was $.2 million and $.3
million for the 1997 and 1996 periods, respectively. Other income of $.4
million was recorded in the four month period ended December 31, 1997,
compared to other expense of $.3 million a year ago. The difference in
other income and expense between the two periods is primarily due to gains
from asset disposals in the 1997 period.
Income Taxes
The income tax provision in the four month period ended December 31, 1997
was $14.1 million, for an effective tax rate of 58.7%. The unusually high
tax rate is the result of $13.5 million in merger related expenses during
the period, most of which were not tax deductible. The after tax expense
of the merger costs was $13.2 million. Excluding the impact of the charge
for merger related expenses, the effective tax rate was 38.4%. The
effective tax rate for the same period in 1996 was 38.7%.
Net Earnings
Net earnings for the four months ended December 31, 1997 were $9.9 million
or $0.17 per share, compared to $22.7 million or $0.39 per share for the
same period a year ago. Net earnings in the 1997 period include a $13.5
million pretax charge for merger related expenses. Net earnings were $23.1
million or $.40 per share, excluding the impact of the merger related
expenses. Net earnings for the four month period ended December 31, 1996
were negatively impacted by $0.04 per share due to curtailed pulp
production and increased maintenance costs associated with repairs to two
digesters at the Brokaw mill.
Cash Provided by Operations
For the four months ended December 31, 1997, cash provided by operations
was $30.0 million, compared to $47.6 million for the same period a year ago.
The decrease in cash provided by operations in the 1997 period is
primarily due to lower earnings as a result of merger related expenses
and lower selling prices, compared to a year ago.
Capital Expenditures
Capital expenditures totaled $23.0 million in the four month period ended
December 31, 1997, compared to $21.9 million for the same period last
year.
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<PAGE>
During the four months ended December 31, 1997, state-of-the-art web
inspection and cleaning devices were installed at the Rhinelander mill.
These devices have enabled the Rhinelander mill to make further advances
in the quality of its pressure sensitive products.
Work is continuing on several other major capital projects throughout the
company. At the Brokaw mill, a pulp mill digester and process upgrade
project is under construction, which will increase pulp production by 15%.
At the Groveton mill, work is underway on a capacity expansion project,
which will increase that mill's papermaking capacity by 5%. The company
continues to invest in additional towel and tissue converting equipment at
Bay West to keep pace with increasing sales volume.
Total capital expenditures are projected to be approximately $90 million
in 1998.
Financing
Long-term debt decreased $11.8 million in the four months ended
December 31, 1997 to $140.5 million. Long-term debt at December 31, 1997
consisted of $70.5 million outstanding under the company's revolving
credit facility, with effective interest rates ranging from 5.97% to
6.21%. In addition, the company had $9 million in notes to Prudential
Insurance Company of America and its subsidiaries, at a fixed rate of
6.03%, a $20 million loan agreement with a bank, with a fixed rate of
7.83%, and $19 million in variable rate development bonds, with an
interest rate of 4.45% at the end of December. There was also $21.9
million in commercial paper outstanding at December 31, 1997, with
effective interest rates ranging from 5.79% to 6.04%.
The company maintains a $105 million revolving credit facility with four
banks. The revolving credit facility that was in place at Mosinee prior to
the merger with Wausau was terminated.
Cash provided by operations and the revolving credit facility are expected
to meet current and anticipated working capital needs and dividend
requirements, as well as fund the company's planned capital expenditures.
The company believes additional financing is readily available, should it
be needed, to fund a major expansion or acquisition.
Common Stock Repurchase
On June 30, 1994, the company's Board of Directors authorized the re-
purchase of up to 1,856,250 shares (adjusted for subsequent stock
dividends or splits) of the company's common stock from time to time in
the open market or through privately negotiated transactions at prevailing
market prices. This authorization was reduced by the Board in December
1997 to the extent required to satisfy stock repurchase authorization
limits applicable as a result of the recent merger with Mosinee Paper
Corporation, which was accounted for as a pooling of interests. The
company may repurchase 1,085,196 shares under this modified authorization.
The company did not repurchase any shares of the company's common stock
during the four month period ended December 31, 1997.
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<PAGE>
Dividends
The Board of Directors declared a cash dividend of $.0625 per share
payable January 15, 1998 to shareholders of record as of Monday,
January 5, 1998. Since the company has changed from a fiscal year ending
in August to a calendar year reporting basis, no action was initiated by
the Board to increase the cash dividend. Future annual meetings will be
held in April and the Board of Directors will consider appropriate dividend
policy at that time. Future quarterly dividends are expected to be paid in
the months of May, August, November and February.
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<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On May 13, 1997, the State of Florida filed a civil complaint in the
Northern District of Florida against ten manufacturers of commercial
sanitary paper products, including the company's wholly owned subsidiary,
Bay West Paper Corporation, alleging a conspiracy to fix prices starting
at least as early as 1993. In addition, on May 13, 1997, a private class
action suit was filed in the Northern District of Florida against the same
defendants, also alleging a conspiracy to fix prices. Related class
action suits have been filed in federal district courts in at least four
states and in the state courts of California and Tennessee. The
defendants have filed a motion in the California and Tennessee state court
proceedings to remove the cases to federal court. The defendants in the
private class action suits have filed a motion to transfer and consolidate
the suits with the multi-district litigation panel. The company intends
to vigorously defend these suits. While the company does not believe,
based on the information now available, that these suits will have a
material adverse effect on the operations, liquidity or consolidated
financial condition of the company, these suits are only recently filed
and there can be no assurance as to the effect of their outcome on the
company.
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<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders of the company was held on December 17,
1997.
The matters voted upon, including the number of votes cast for, against or
withheld, as well as the number of abstentions and broker non-votes, as to
each such matter were as follows:
<TABLE>
<CAPTION>
Matter Shares Voted
Broker
For Against Withheld Abstain Non-Vote
<S> <C> <C> <C> <C> <C>
1. Election of Class I Directors
(a) San W. Orr, Jr. 32,811,522 N/A 194,964 N/A 0
(b) David B. Smith, Jr. 32,823,330 N/A 183,156 N/A 0
2. The issuance of shares of 30,705,874 47,469 N/A 66,842 2,186,301
common stock to shareholders
of, and pursuant to the
merger with, Mosinee Paper
Corporation.
3. Amendment of the articles 32,781,193 108,947 N/A 62,923 53,423
of incorporation to change
Registrant's corporate name
to "Wausau-Mosinee Paper
Corporation."
4. Approval of the 1991 31,873,440 694,384 N/A 267,848 170,814
Employee Stock Option Plan,
as amended.
5. Approval of the appointment 32,889,402 38,428 N/A 78,656 0
of Wipfli Ullrich Bertelson LLP
as independent auditors of the
corporation.
</TABLE>
ITEM 5. OTHER INFORMATION
Year 2000
Wausau-Mosinee Paper Corporation, like most companies today, is heavily
dependent upon computer technology to effectively carry out its day to day
operations. Until recently, most purchased and custom designed software
was not year 2000 compliant, meaning, the software wasn't designed to
properly handle dates beyond the year 1999. To ensure its computer
systems will be ready to handle dates of the year 2000 and beyond, the
company is executing a plan to upgrade its software to become year 2000
compliant. This process is expected to be completed in 1999. No material
costs or effects on operations are expected from the upgrade process.
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<PAGE>
Cautionary Statement
This report contains certain of management's expectations and other
forward-looking information regarding the company. While the company
believes that these forward-looking statements are based on reasonable
assumptions, all such statements involve risk and uncertainties that could
cause actual results to differ materially from those contemplated in this
report. The assumptions, risks and uncertainties relating to the forward-
looking statements in this report include those described under the
caption "Cautionary Statements Regarding Forward-looking Information" in
the company's Form 10-K for the year ended August 31, 1997 and, from time
to time, in the company's other filings with the Securities and Exchange
Commission.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K
The following exhibits are filed with the Securities and Exchange
Commission as part of this report.
Incorporated
Exhibit <dagger>
2.1 Agreement and Plan of Merger dated
August 24, 1997 among Registrant, Mosinee
Paper Corporation and WPM Holdings, Inc. ...........99.1{1}
3.1 Restated Articles of Incorporation, as
amended December 17, 1997 .......................... 4.1{2}
3.2 Restated Bylaws, as amended December 17, 1997 ...... 4.2{2}
4.1 Articles and Bylaws (see Exhibits 3.1 and 3.2)
10.1 Wausau-Mosinee Supplemental Retirement Plan
10.2 Incentive Compensation Plans, as amended
September 17, 1997 (Printing and Writing
Division and Technical Specialty Division)* ........10.2{3}
10.3 Corporate Management Incentive Plan, as amended
September 18, 1996* ................................10(c){4}
10.4 1988 Stock Appreciation Rights Plan, as amended
April 17, 1991* ....................................10(d){4}
10.5 1988 Management Incentive Plan, as amended
April 17, 1991* ....................................10(e){4}
10.6 1990 Stock Appreciation Rights Plan, as amended
April 17, 1991* ....................................10(f){4}
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10.7 Deferred Compensation Agreement dated March 2,
1990, as amended July 1, 1994* .....................10(h){5}
10.8 1991 Employee Stock Option Plan* ...................10.8{6}
10.9 1991 Dividend Equivalent Plan* .....................10(i){7}
<PAGE>
10.10 Supplemental Retirement Benefit Plan dated
January 16, 1992, as amended November 13, 1995* ....10{8}
10.11 Directors' Deferred Compensation Plan* .............10(k){7}
10.12 Director Retirement Benefit Policy* ................10(o){9}
10.13 Transition Benefit Agreement with President
and CEO* ...........................................10.13{6}
10.14 Mosinee Paper Corporation 1985 Executive Stock
Option Plan, as amended December 17, 1997*
10.15 Mosinee Paper Corporation 1988 Stock
Appreciation Rights Plan, as amended 4/18/91*
10.16 Mosinee Paper Corporation 1996 and 1997
Incentive Compensation Plan for Corporate
Executive Officers*
10.17 Mosinee Paper Corporation Supplemental
Retirement Benefit Plan dated October 17, 1991,
as amended August 24, 1997*
10.18 Mosinee Paper Corporation Supplemental
Retirement Benefit Agreement
dated November 15, 1991*
10.19 Mosinee Paper Corporation
1994 Executive Stock Option Plan,
as amended December 17, 1997*
27.1 Financial Data Schedule
-15-
<PAGE>
99.1 Subsidiaries as of December 31, 1997
*Executive compensation plans or arrangements.
<dagger> Where exhibit has been previously filed and incorporated
herein by reference, exhibit numbers set forth herein
correspond to the exhibit number of such exhibit in the follow-
ing reports of the registrant (Commission File No. 0-7574) filed
with the Securities and Exchange Commission.
(1) Current report on Form 8-K dated August 24, 1997.
(2) Registration Statement on Form S-8 dated December 17, 1997.
(3) Quarterly report Form 10-Q for the quarterly period ended
November 30, 1997.
(4) Annual report on Form 10-K for the fiscal year ended August 31,
1996.
(5) Annual report on Form 10-K for the fiscal year ended August 31,
1994.
(6) Annual report on Form 10-K for the fiscal year ended August 31,
1997.
(7) Quarterly report on Form 10-Q for the quarterly period ended
November 30, 1996.
(8) Quarterly report on Form 10-Q for the quarterly period ended
November 30, 1995.
(9) Annual report on Form 10-K for the fiscal year ended August 31,
1993.
(b) Reports on Form 8-K
The Registrant filed a Form 8-K dated December 17, 1997 reporting the
following:
Item 2. Consummation of merger in which WPM Holdings, Inc., a
wholly-owned subsidiary of the Registrant, was merged with
and into Mosinee Paper Corporation (the "Merger").
Change of Registrants' corporate name to "Wausau-Mosinee
Paper Corporation" from "Wausau Paper Mills Company."
Item 7. The following financial statements were filed:
(a) Mosinee Paper Corporation audited consolidated
financial statements as of December 31, 1996, and
December 31, 1995, and for each of the years in the
three-year period ended December 31, 1996
(b) Mosinee Paper Corporation unaudited condensed
consolidated financial statements as of September 30,
1997, and September 30, 1996 and for the nine months
then ended
Pro forma information relating to the Merger was filed on
February 4, 1998 on Form 8-K dated December 17, 1997.
Item 8. The Registrant's fiscal year was changed from August 31, to
December 31, effective December 31, 1997
-16-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WAUSAU-MOSINEE PAPER CORPORATION
February 13, 1998 By: GARY P. PETERSON
Gary P. Peterson
Senior Vice President-Finance,
Secretary and Treasurer
(On behalf of the Registrant and as
Principal Financial Officer)
-17-
<PAGE>
EXHIBIT INDEX
TO
FORM 10-QT
OF
WAUSAU-MOSINEE PAPER CORPORATION
FOR THE PERIOD ENDED DECEMBER 31, 1997
Pursuant to Section 102(d) of Regulation S-T
(17 C.F.R. <section> 232.102(d))
EXHIBIT 4.1 ARTICLES AND BYLAWS (SEE EXHIBITS 3.1 AND 3.2)
EXHIBIT 10.1 WAUSAU-MOSINEE SUPPLEMENTAL RETIREMENT PLAN
EXHIBIT 10.14 MOSINEE PAPER CORPORATION 1985 EXECUTIVE STOCK OPTION
PLAN, AS AMENDED DECEMBER 17, 1997
EXHIBIT 10.15 MOSINEE PAPER CORPORATION 1988 STOCK
APPRECIATION RIGHTS PLAN, AS AMENDED 4/18/91
EXHIBIT 10.16 MOSINEE PAPER CORPORATION 1996 AND 1997
INCENTIVE COMPENSATION PLAN FOR CORPORATE EXECUTIVE
OFFICERS
EXHIBIT 10.17 MOSINEE PAPER CORPORATION SUPPLEMENTAL
RETIREMENT BENEFIT PLAN DATED OCTOBER 17, 1991,
AS AMENDED AUGUST 24, 1997
EXHIBIT 10.18 MOSINEE PAPER CORPORATION SUPPLEMENTAL
RETIREMENT BENEFIT AGREEMENT
DATED NOVEMBER 15, 1991
EXHIBIT 10.19 MOSINEE PAPER CORPORATION
1994 EXECUTIVE STOCK OPTION PLAN,
AS AMENDED DECEMBER 17, 1997
EXHIBIT 27.1 FINANCIAL DATA SCHEDULE
EXHIBIT 99.1 SUBSIDIARIES AS OF DECEMBER 31, 1997
-18-
EXHIBIT 10.1
WAUSAU-MOSINEE SUPPLEMENTAL
RETIREMENT PLAN
<PAGE>
WAUSAU-MOSINEE SUPPLEMENTAL
RETIREMENT PLAN
PAGE
ARTICLE I PURPOSE AND ADMINISTRATION OF THE PLAN .............2
1.1 Purpose ..............................................2
1.2 Administration .......................................2
1.3 Effective Date .......................................2
ARTICLE II DEFINITIONS .......................................3
2.1 Definitions ..........................................3
2.2 Definitions Incorporated by Reference ................4
ARTICLE III PARTICIPATION ....................................5
3.1 Participation ........................................5
3.2 Service ..............................................5
3.3 Termination of Participation and Reemployment ........5
ARTICLE IV BENEFITS ..........................................6
4.1 Normal Retirement Benefits of Corporate Officers .....6
4.2 Normal Benefits of Other Executive Officers ..........6
4.3 Minimum Retirement Benefits of Executive Officers ....6
4.4 Early Retirement Benefits of Executive Officers ......6
4.5 Surviving Spouse Benefits ............................7
4.6 Form, Commencement and Duration of Payments ..........7
4.7 Change of Control ....................................8
4.8 Forfeiture of Benefits ..............................10
4.9 Inalienability of Benefits ..........................12
4.10 Facility of Payments ................................12
4.11 Claims Procedure ....................................12
ARTICLE V PROVISION FOR BENEFITS ............................13
5.1 Assets of the Company ...............................13
ARTICLE VI AMENDMENT AND TERMINATION OF THE PLAN ............14
6.1 Amendment ...........................................14
6.2 Termination .........................................14
-i-
ARTICLE VII MISCELLANEOUS ...................................15
7.1 Nonguarantee of Employment ..........................15
7.2 Action by the Company ...............................15
7.3 Agreement Binding on Successors .....................15
7.4 Construction ........................................15
7.5 Titles ..............................................15
7.6 Governing Law .......................................15
-ii-
<PAGE>
WAUSAU-MOSINEE SUPPLEMENTAL RETIREMENT PLAN
Wausau-Mosinee Paper Corporation, a Wisconsin corporation, hereby
establishes the Wausau-Mosinee Supplemental Retirement Plan in accordance
with the terms and conditions herein contained.
-1-
<PAGE>
ARTICLE I
PURPOSE AND ADMINISTRATION OF THE PLAN
1.1 PURPOSE. The Company hereby establishes the Plan for the purpose
of providing deferred compensation (within the meaning of Section 201(2)
of the Employee Retirement Income Security Act of 1974) for executive
officers of the Company.
1.2 ADMINISTRATION. The Plan shall be administered by the Company.
1.3 EFFECTIVE DATE. The effective date of the Plan shall be December
17, 1997.
-2-
<PAGE>
ARTICLE II
DEFINITIONS
2.1 DEFINITIONS. The following terms shall have the meanings set
forth below:
(a) "Average Compensation" means (1) an aggregate amount determined
by the sum of (A) the Participant's salary for a calendar year
and earned bonus attributable to such calendar year and (B) any
compensation deferred under a plan qualified under Section 401(k)
of the Code or under a plan which satisfies the requirements of
Section 125 of the Code during such calendar year, for the 5
calendar years of the Executive Officer's most recent 10 years of
Continuous Service as an Executive Officer in which the largest
aggregate amount of such compensation was earned and/or deferred
for him for service as an Executive Officer for all or any
portion of each of such calendar years, divided by (2) 12;
provided, however, that if a Participant did not perform services
for 5 calendar years as an Executive Officer, such determinations
shall be based on such earned and/or deferred compensation for
each complete calendar year in which the Participant was an
Executive Officer. For purposes of determining a Participant's
Average Compensation, compensation from Wausau Paper Mills
Company and Mosinee Paper Corporation earned prior to the
Effective Date for performance of services as an Executive
Officer shall be included.
(b) "Company" means Wausau-Mosinee Paper Corporation, a Wisconsin
corporation.
(c) "Early Retirement Age" means the date on which an Executive
Officer has attained age 55 and completed 10 years of Continuous
Service as an Executive Officer.
(d) "Executive Officer" means any person employed by the Company as
its President or a Vice President but shall not include any
officer of any division or subsidiary of the Company.
Notwithstanding the foregoing, any person employed by the Company
on the Effective Date who was a participant in the Mosinee
Supplemental Retirement Plan or the Wausau Paper Mills Company
Executive Officers' Deferred Compensation Retirement Plan on the
date immediately preceding the Effective Date shall be deemed to
be an "Executive Officer" for purposes of this Plan, regardless
of whether such individual would otherwise meeting the definition
of Executive Officer set forth in the preceding sentence, and any
service with the Company after the Effective Date by such
individual shall be considered service as an Executive Officer of
the Company.
(e) "Normal Retirement Age" means the date on which (1) an Executive
Officer has attained age 62 and completed 10 years of Continuous
Service as an Executive Officer or (2) an Executive Officer has
attained age 62 and had terminated employment with the Company
because of Disability.
-3-
(f) "Participant" means an Executive Officer of the Company who has
qualified to be a participant in the Plan in accordance with
Section 3.1.
<PAGE>
(g) "Plan" means the Wausau-Mosinee Supplemental Retirement Plan as
herein set forth.
(h) "Retirement Plan" shall mean the principal defined benefit
retirement plan as now in effect or hereafter amended, or any
successor plan which is qualified under Section 401(a) of the
Code, and maintained for salaried employees of the Company.
2.2 DEFINITIONS INCORPORATED BY REFERENCE. Each of the following
terms shall have the meaning set forth in the Retirement Plan and the
definition of each such term by the Retirement Plan is hereby incorporated
by this reference to the extent not inconsistent with the provisions of
this Plan:
(a) "Actuarial Equivalent"
(b) "Affiliated Employer"
(c) "Code"
(d) "Continuous Service"
(e) "Disability"
(f) "Retirement Benefit"
(g) "Surviving Spouse"
-4-
<PAGE>
ARTICLE III
PARTICIPATION
3.1 PARTICIPATION. Each Executive Officer shall become a Participant
as of the later of the Effective Date or the first day of his employment
by the Company in the capacity of an Executive Officer.
3.2 SERVICE.
(a) All Continuous Service as an Executive Officer shall be
recognized for purposes of this Plan, whether or not such
Continuous Service was performed prior to the Effective Date
hereof.
(b) Continuous Service by an individual for the Company in any
capacity other than as an Executive Officer shall not be
recognized for any purpose under this Plan.
(c) In the event a Participant or former Participant is reemployed by
the Company as an Executive Officer, all periods of Continuous
Service with the Company as an Executive Officer shall be
aggregated for purposes of this Plan.
(d) Notwithstanding anything herein to the contrary, if a Participant
was a participant in the Wausau Paper Mills Company Executive
Officers' Deferred Compensation Retirement Plan or the Mosinee
Supplemental Retirement Plan on December 16, 1997, all Continuous
Service recognized under such plans as of such date shall be
recognized for purposes of this Plan.
3.3 TERMINATION OF PARTICIPATION AND REEMPLOYMENT. A Participant
shall cease participation in the Plan on the later of (a) the earlier of
(1) the date his termination of employment with the Company and all
Affiliated Employers occurs or (2) the date he is no longer employed as an
Executive Officer by the Company or an Affiliated Employer, or (b) the
date the final benefit payment to which the Participant may be entitled
pursuant to this Plan is made.
-5-
<PAGE>
ARTICLE IV
BENEFITS
4.1 NORMAL RETIREMENT BENEFITS OF CORPORATE OFFICERS. Subject to the
limitations elsewhere contained in this Plan, an Executive Officer who
terminates his employment with the Company and each Affiliated Employer on
or after attaining his Normal Retirement Age and who was the President or
a corporate Vice President of the Company as of the most recent date on
which he performed service as an Executive Officer shall be entitled to a
normal retirement benefit payable in the form of a single life annuity
equal to the excess of:
(a) an amount equal to 50% of the Participant's Average Compensation,
over
(b) the amount of the Participant's accrued Retirement Benefit under
the Retirement Plan which would then be payable in the form of a
single life annuity.
4.2 NORMAL BENEFITS OF OTHER EXECUTIVE OFFICERS. Subject to the
limitations elsewhere contained in this Plan, an Executive Officer who
terminates his employment with the Company and each Affiliated Employer on
or after attaining his Normal Retirement Age and who was not the President
or a corporate Vice President of the Company as of the most recent date on
which he performed service as an Executive Officer, shall be entitled to a
retirement benefit payable in the form of a single life annuity determined
in accordance with the formula set forth in Section 4.1; provided,
however, that in making such determination, the term "40% of the
Participant's Average Compensation" shall be substituted for the term "50%
of the Participant's Average Compensation" in Section 4.1(a).
4.3 MINIMUM RETIREMENT BENEFITS OF EXECUTIVE OFFICERS.
Notwithstanding anything herein to the contrary, the normal retirement
benefit determined under Section 4.1 or 4.2, as applicable, shall not be
less than the Participant's accrued normal retirement benefit determined
under (a) Section 4.1 or 4.2, as applicable, under the Mosinee
Supplemental Retirement Plan or (b) Section 4.1 or 4.2, as applicable,
under the Wausau Paper Mills Company Executive Officers' Deferred
Compensation Retirement Plan, determined under the terms of such plans on
December 16, 1997.
4.4 EARLY RETIREMENT BENEFITS OF EXECUTIVE OFFICERS. Subject to the
limitations elsewhere contained in this Plan, an Executive Officer who
terminates his employment with the Company and each Affiliated Employer on
or after attaining his Early Retirement Age, but prior to attaining his
Normal Retirement Age, shall be entitled to an early retirement benefit in
the form of a single life annuity equal to the amount to which he would
have been entitled to under Section 4.1 or Section 4.2, as applicable,
taking into consideration the provisions of Section 4.3, if applicable, if
he had then attained his Normal Retirement Age; provided, however, that
such benefit shall be reduced by .4166% for each full calendar month, from
and including the month in which the Participant's 55th birthday occurs to
the month in which his 62nd birthday occurs, by which the calendar month
in which payment of the early retirement benefit provided for in
-6-
this Section 4.4 precedes the date on which such Participant would have
attained his Normal Retirement Age.
<PAGE>
4.5 SURVIVING SPOUSE BENEFITS. Subject to the limitations elsewhere
contained in this Plan, the Surviving Spouse of a Participant who dies
prior to commencement of any other benefit hereunder, including the
Surviving Spouse of a former Participant who terminated employment because
of Disability, shall be eligible for a Surviving Spouse benefit commencing
as of the last to occur of (1) the first day of the first month following
the month in which the Participant's death occurs or (2) the date on which
the Participant would have been eligible to receive payment of a benefit
under Section 4.4, or in the case of a Participant who terminated
employment because of Disability, commencing as of the date on which the
former Participant would have attained age 55, and such Surviving Spouse
benefit shall be equal to 50% of the monthly benefit which would have been
payable to the deceased Participant under this Plan if he had retired the
day before his death and payment of his benefit had commenced on such date
assuming, in the case of a former Participant who terminated employment
because of a Disability, that the benefit payable to such former
Participant at Normal Retirement Age under Section 4.1 or 4.2, as
applicable, would have been payable in reduced form at age 55 pursuant to
Section 4.4, and, assuming further, that in the case of a Participant or
former Participant who died prior to attaining age 55 or prior to the date
on which the Participant or former Participant had completed 10 years of
Continuous Service, that a benefit would have been payable to such
deceased Participant or former Participant as of the later of the dates
described in (1) and (2), above; provided, however, that the benefit
payable to the Surviving Spouse of a Participant or former Participant who
died prior to the completion of 5 years of Continuous Service shall be
reduced by 20% for each year of Continuous Service less than 5 accrued by
such deceased Participant or former Participant.
4.6 FORM, COMMENCEMENT AND DURATION OF PAYMENTS.
(a) A Participant may elect, subject to the approval of the Board of
Directors, (1) to receive the Actuarial Equivalent of the benefit
accrued by a Participant pursuant to Section 4.1, 4.2 or 4.4 in
any form of annuity payment option then available under the
Retirement Plan or (2) to receive the value of the benefit
accrued by a Participant pursuant to Section 4.1, 4.2 or 4.4 in
the form of a lump sum distribution. In the event a Participant
elects, with the approval of the Board of Directors, to receive a
lump sum distribution of the value of the benefit otherwise
provided for in Section 4.1, 4.2, or 4.4, the value of the lump
sum distribution under this Plan shall be determined in
accordance with the provisions for determining the value of a
lump sum distribution of the Participant's Retirement Benefit
under the terms of the Retirement Plan.
(b) Monthly benefit payments to the Participant (and, if applicable,
his Surviving Spouse) under Section 4.1, 4.2, 4.4 or 4.5, or a
lump sum payment provided for under Section 4.5(a) with respect
to a benefit accrued under Section 4.1, 4.2 or
-7-
4.4, shall commence on the first day of the month following the
Participant's termination of employment or, if applicable, the
date specified in Section 4.5 as the date on which the
Participant's Surviving Spouse became eligible for a Surviving
Spouse benefit, and shall continue, subject to the provisions of
<PAGE>
Section 4.8, until the month in which the death of the
Participant (or, if applicable, his Surviving Spouse) occurs;
provided, however, that a Participant or Surviving Spouse may
elect to defer receipt of an early retirement benefit or
Surviving Spouse benefit, as applicable, for any period of time
not in excess of the date on which the Participant would have
attained his Normal Retirement Age. Despite any other provision
of this Plan, a Participant who receives a benefit in the form of
a lump sum distribution shall not be entitled to any monthly
benefit otherwise provided for in this Plan.
4.7 CHANGE OF CONTROL.
(a) In the event a Change of Control of the Company occurs, the
Company shall pay to each Participant a lump sum amount equal to
the present value of the Participant's accrued normal retirement
benefit, as determined under Section 4.1, as of the first day of
the first month following such Change of Control of the Company
on which such Participant is not an employee of the Company,
whether or not such Change of Control of the Company occurred
prior to the date on which such Participant shall have ceased to
be an employee of the Company. Upon payment of the lump sum
amount provided for in this Section 4.7(a), the Company shall
have no further obligation to pay any benefits under this Plan.
Notwithstanding the foregoing, if a Participant has less than
five years of Continuous Service as of the date of the Change of
Control, the amount paid to such Participant under this Section
4.7(a) shall equal (i) the amount described in the first sentence
of this Section 4.7(a) times (ii) a fraction, the numerator of
which is the number of years and fractions thereof of the
Participant's Continuous Service as of the date of the Change of
Control and the denominator of which is five.
(b) In the event a Change of Control of the Company occurs after the
Participant's death and whether or not a benefit shall have then
become payable to the Participant's Surviving Spouse, the Company
shall pay to such Participant's Surviving Spouse, if then living,
the present value of the unpaid Surviving Spouse benefit. Upon
payment of the lump sum amount provided for in this
Section 4.7(b), the Company shall have no further obligation to
pay any benefits under this Plan. Notwithstanding the foregoing,
if a Participant had less than five years of Continuous Service
as of the date of his or her death before the Change of Control,
the amount paid to such Participant Surviving Spouse under this
Section 4.7(b) shall equal (i) the amount described in the first
sentence of this Section 4.7(a) times (ii) a fraction, the
numerator of which is the number of years
-8-
and fractions thereof of the Participant's Continuous Service as
of the date of death and the denominator of which is five.
(c) For purposes of this Plan, a "Change of Control of the Company"
shall mean:
(1) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
<PAGE>
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or more of either (A) the then outstanding shares of
common stock of the Company (the "Outstanding Company Common
Stock") or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to
vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (1), the following
acquisitions shall not constitute a Change of Control: (I)
any acquisition directly from the Company, (II) any
acquisition by the Company, (III) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company or (IV) any acquisition pursuant to a
transaction which complies with clauses (A), (B) and (C) of
subsection (3) of this Section 2; or
(2) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent
to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election
or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(3) Consummation by the Company of a reorganization,
merger, share exchange or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company or the acquisition of assets of another corporation
(a "Business Combination"), in each case, unless, following
such Business Combination, (A) all or substantially all of
the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to
such Business Combination
-9-
beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding
voting securities entitled to vote generally in the
election of directors, as the case may be, of the
corporation resulting from such Business Combination
(including, without limitation, a corporation
which as a result of such transaction owns the Company or
all or substantially all of the Company's assets either
directly or through one or more subsidiaries) in
<PAGE>
substantially the same proportions as their ownership,
immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (B) no Person
(excluding any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20%
or more of, respectively, the then outstanding shares of
common stock of the corporation resulting from such Business
Combination or the combined voting power of the then
outstanding voting securities of such corporation except to
the extent that such ownership existed with respect to the
Company prior to the Business Combination and (C) at least a
majority of the members of the board of directors of the
corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution
of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(4) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
(d) For purposes of this Plan, the term "Interested Shareholder"
shall mean any person (other than the Company or any of its
subsidiaries or any member of the Board of Directors as of the
effective date of this Plan or any affiliate of such person) who
first became the beneficial owner of 10% or more of the combined
voting power of the Company's then outstanding securities after
the effective date of this Plan.
(e) For purposes of this Plan, the present value of a Participant's
retirement benefit or the Surviving Spouse benefit shall be
determined by reference to the 1983 Individual Annuity Mortality
Table with an assumed interest rate equal to the "immediate
annuity rate" as then in effect as determined by the Pension
Benefit Guaranty Corporation and promulgated in Appendix B to 29
C.F.R. <section>2619.65 or any successor regulation adopted for
the same or substantially similar purpose.
4.8 FORFEITURE OF BENEFITS. Despite any other provision of this
Plan, a Participant's or Surviving Spouse's, as applicable, eligibility
for benefit payments under the Plan is expressly subject to the following
terms and conditions:
-10-
(a) The Company is and shall be entitled to the sole benefit and
exclusive ownership of any inventions or improvements in plant,
machinery and processes, and all patents for the same, and all
customer or price lists, trade secrets and other things of
similar type or nature used in the business of the Company that
may be made or discovered by a Participant while he is employed
by the Company, or, after the termination of his employment
period if arising out of his activities, knowledge or experience
gained while in the employment of the Company. In the event that
a Participant, during or after the termination of his employment,
discloses all or any portion of the list of the Company's
customers or the Company's pricing structure or all or any
portion of the Company's manufacturing process or any other trade
<PAGE>
secrets or confidential information to any person, firm,
corporation, associations or other entity for any reason or
purpose whatsoever, no payment of any benefit otherwise due the
Participant or his Surviving Spouse pursuant to this Plan shall
be made by the Company.
(b) In the event a Participant, without the prior written consent of
the Company and within a period of two years beginning on the
first day following the Participant's termination of employment
with the Company, directly or indirectly owns, manages, operates,
joins, controls, is employed by or participates in the ownership,
management, operation or control of, or is connected in any
manner with, any business of a type and character which, in the
opinion of the Company, results in the Participant then being
engaged in the field of activities in which he was engaged by the
Company at the time of termination (and within one year prior to
said termination) and such business is, in the opinion of the
Company, in direct or indirect competition in any market area
served by the Company with any business then conducted by the
Company in such market area, no payment of any benefit otherwise
due the Participant or his Surviving Spouse pursuant to this Plan
shall be made by the Company if the Participant fails to cease
such activity within fifteen days of the mailing to him by the
Company of the Company's opinion that he is in violation of the
restrictions contained in this Section 4.8(b).
(c) The Company shall have sole discretion to stop payment of any
benefit or refuse to make payments otherwise due the Participant
or his Surviving Spouse pursuant to this Plan if the
Participant's termination of employment with the Company or his
appointment to a position with the Company as other than an
Executive Officer was by reason of or because of the
Participant's fraud, embezzlement, misappropriation or similar
offense against the Company or any other state or federal felony
offense.
(d) Subject to the provisions of Section 6.2, no benefit shall be
payable under this Plan to any Participant or Surviving Spouse
who, for any reason, is not eligible for and does not receive a
benefit under the provisions of the Retirement Plan.
-11-
4.9 INALIENABILITY OF BENEFITS. A Participant's right to a benefit
under the Plan shall not be subject to voluntary or involuntary sale,
pledge, hypothecation, transfer or assignment by the Participant or by his
personal representatives or heirs, or any other person or persons or
organization or organizations succeeding to any of the Participant's
rights and benefits hereunder.
4.10 FACILITY OF PAYMENTS. Any benefit payable hereunder to any
person who is legally incapacitated may be paid to a court appointed legal
representative of such person.
4.11 CLAIMS PROCEDURE. Each Participant or Surviving Spouse whose
claim for benefits is denied, in whole or in part, shall be provided with
a notice, written in a manner calculated to be understood by such person,
setting forth the specific reasons for such denial and outlining the
<PAGE>
review procedure of the Company. Each such Participant or Surviving
Spouse shall be given a reasonable opportunity for a full and fair review
by the Company of the decision by which the claim was denied.
-12-
<PAGE>
ARTICLE V
PROVISION FOR BENEFITS
5.1 ASSETS OF THE COMPANY. Benefits which become payable under the
provisions of the Plan shall be paid directly by the Company out of its
assets. No assets of the Company shall be set aside or segregated for the
provision of such benefit payments. No Participant or Surviving Spouse,
nor any other potential or actual recipient of benefits under the
provisions of this Plan shall acquire any right, title or interest in the
assets of the Company by reason of the Plan and, to the extent that the
Participant, Surviving Spouse or such other recipient shall acquire a
right to receive payments from the Company pursuant to the Plan, such
right shall be no greater than the right of any unsecured general creditor
of the Company.
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<PAGE>
ARTICLE VI
AMENDMENT AND TERMINATION OF THE PLAN
6.1 AMENDMENT. The Company reserves the right to amend the Plan from
time to time and at any time, effective as of any specified current, prior
or future date; provided, however, that no such amendment shall modify or
reduce a Participant's accrued benefit as of the date such amendment is
adopted.
6.2 TERMINATION. The Company reserves the right to terminate the
Plan at any time and for any reason; provided, however, that upon
termination, each Participant's accrued benefit shall be fully vested
subject only to the provisions of Section 4.8. A Participant's "accrued
benefit" shall mean the benefit which would be paid or payable pursuant to
this Plan following the Participant's termination of employment if the
Retirement Plan had terminated as of the same date on which the
termination of the Plan occurs (and provided for payment of accrued
Retirement Plan benefits upon the Participant's termination of employment)
multiplied by a fraction, the numerator of which is a Participant's years
of Continuous Service recognized under Section 3.2 and the denominator of
which is ten.
-14-
<PAGE>
ARTICLE VII
MISCELLANEOUS
7.1 NONGUARANTEE OF EMPLOYMENT. Nothing contained in this Plan shall
be construed as a contract of employment between the Company and any
employee, as a right of any employee to be continued in the employment of
the Company as an Executive Officer or in any other capacity, or as a
limitation of the right of the Company to discharge any of its employees,
with or without cause.
7.2 ACTION BY THE COMPANY. Any action by the Company under this Plan
may be by resolution of its Board of Directors, or by any officer or
officers duly authorized by resolution of said Board to act with respect
to the Plan.
7.3 AGREEMENT BINDING ON SUCCESSORS. This agreement shall be binding
upon all persons entitled to benefits hereunder, and upon their respective
heirs and legal representatives and upon the Company, its successors and
assigns.
7.4 CONSTRUCTION. Except when otherwise indicated by the context,
any masculine terminology herein shall also include feminine, and the
definition of any term herein in singular shall also include the plural.
7.5 TITLES. Article and section titles are included for reference
purposes only and in the event of a conflict between a title and its
respective text the text shall control.
7.6 GOVERNING LAW. This Plan shall, to the extent not superseded by
the Employee Retirement Income Security Act of 1974, be governed by the
laws of the State of Wisconsin.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed on
its behalf on this ____ day of December, 1997.
WAUSAU-MOSINEE PAPER CORPORATION
By: DANIEL R. OLVEY
Daniel R. Olvey
President and Chief Executive
Officer
-15-
EXHIBIT 10.14
MOSINEE PAPER CORPORATION
1985 EXECUTIVE STOCK OPTION PLAN
1. PURPOSE. The Mosinee Paper Corporation 1985 Executive Stock
Option Plan (the "Plan") is intended to attract and retain key executive
employees by permitting such employees of Mosinee Paper Corporation (the
"Company") or any parent or subsidiary of the Company to acquire
authorized and unissued, or reacquired, shares of common stock, $2.50 par
value, of the Company ("Stock") pursuant to purchase options. The
availability of the options and grants thereof will furnish additional
inducements to such employees to continue employment with the Company, or
any parent or subsidiary of the Company, and encourage them, by giving
them an opportunity to acquire a greater stake in the Company's success,
to increase their efforts to promote the best interests of the Company and
its stockholders. Subject to the provisions of the Plan, there may be
granted options containing such terms and conditions as shall be requisite
to constitute them "nonqualified stock options," i.e., options which are
not "incentive stock options" within the meaning of Section 422A of the
Internal Revenue Code of 1954, as amended (the "Code"). A key employee
may be granted and may hold one or more nonqualified stock options under
this Plan.
2. ELIGIBLE EMPLOYEES. The persons eligible to receive options
under the Plan shall be key executive employees (who may also be officers
or directors) of the Company or any parent or subsidiary of the Company
and who are selected by such
-1-
committee as shall be designated by the Board of Directors of Wausau-Mosinee
Paper Corporation (the "Committee"). Members of the Board of Directors of the
Company (the "Board") or any parent or subsidiary of the Company who are not
also employees of the Company or any parent or subsidiary of the Company shall
not be eligible to receive options under the Plan.
3. TIME AND MANNER OF GRANTING OPTIONS. From and after the
Effective Date of the Plan (as defined in Section 16 hereof) and
continuing to the close of business on the tenth anniversary of such
Effective Date, the Committee may, at such time or times as the Committee
may determine, grant to any one or more eligible employees ("Optionees")
nonqualified stock options, each such option to cover the purchase of such
number of shares of Stock upon such terms and conditions not inconsistent
with the Plan as the Committee shall from time to time determine.
No person shall have any right to an option or any other right
under the Plan unless and until an option shall be granted to such person
by the Committee. Subject to the provisions of Section 9 hereof, no more
than 90,000 shares of Stock shall be sold pursuant to the exercise of all
options granted hereunder. Any shares for which an option is granted
hereunder which for any reason are released from such option by expiration
or termination thereof or otherwise shall be available for reoptioning
under this Plan. The Company shall, forthwith upon the granting of an
option, mail or deliver to the Optionee a copy of the Plan and an option
certificate evidencing such
-2-
<PAGE>
option. Option certificates shall be in such form and shall contain such
terms and provisions not inconsistent with the Plan as the Committee
shall deem appropriate.
4. TERM OF OPTIONS. In no event shall any stock option granted
under the Plan be exercisable after the expiration of twenty years from
the date such option is granted.
5. TERMS AND CONDITIONS.
(a) Nonqualified stock options granted under this Plan shall
contain such provisions, not inconsistent with this Plan, as may be deemed
advisable by the Committee.
(b) The option price per share of Stock under any nonqualified
stock option granted hereunder shall be not less than one hundred per cent
(100%) of the fair market value of one share of Stock on the date such
option is granted.
6. MANNER OF EXERCISE OF OPTIONS.
(a) Subject to the provisions of Section 8 hereof, each option
granted hereunder shall become exercisable on the date specified in the
option agreement but in no event earlier than six months after the date of
grant. Any shares with respect to which an option becomes exercisable
shall remain available for purchase by exercise of the option in
accordance with its terms at any time or from time to time before the
option expires.
(b) Exercise shall be effected only by delivery to the Company
of an irrevocable written notice of the Optionee's election to exercise
the option with respect to a specified whole number of shares of Stock.
Such exercise must be followed within
-3-
five (5) business days by payment in cash to the Company of (i) the
amount of the option purchase price for the number of shares of Stock as
to which the option is then being exercised and (ii) the amount of any
applicable federal or state withholding taxes. The Optionee's failure to
so pay shall result in the forfeiture of his rights under the Plan for
the number of shares specified in the notice. No option may be exercised
with respect to a fractional share of Stock.
7. NON-TRANSFERABILITY. Options granted hereunder shall not be
transferable by an Optionee otherwise than by will or the laws of descent
and distribution and may, during the lifetime of an Optionee, be exercised
only by such Optionee.
8. EXERCISE AFTER TERMINATION OF EMPLOYMENT.
(a) For purposes of the Plan and each option granted under the
Plan, an Optionee's employment shall be deemed to have terminated at the
close of business on the day preceding the first date on which he is no
longer for any reason whatsoever employed by the Company or by any parent
or subsidiary of the Company, provided that the Committee may determine in
one or more particular cases that a leave of absence granted by the
employing corporation shall not result in the termination of an Optionee's
employment.
<PAGE>
(b) If an Optionee's employment is terminated by his voluntary
resignation or if he is discharged for cause, any option held by the
Optionee shall expire on the date of such termination. For purposes of
this section, "for cause" shall
-4-
mean affirmative acts in violation of federal, state, or local criminal
law.
(c) If an Optionee dies while such Optionee is an employee of
the Company or any parent or subsidiary of the Company or within three
months after his termination of employment for a reason other than
voluntary resignation or discharge for cause, any option held by such
Optionee at the date of the Optionee's death may be exercised by such
Optionee's estate or the person to whom such option is transferred by will
or the applicable laws of descent and distribution with respect to all or
any part of that number of shares of Stock as to which such option was
exercisable by the Optionee immediately before his death but only if the
date of exercise is both within 20 years from the Date of Grant (or such
shorter period in which the option would have expired if the Optionee had
lived and remained in the Company's employ) and within one year after the
date of the Optionee's death.
(d) If an Optionee's employment is terminated for any reason
other than voluntary resignation, discharge for cause or death, any option
held by the Optionee may be exercised at any time which is both before the
time the option would otherwise expire and within three months after the
date of such cessation of employment, but only with respect to that number
of shares of Stock which the Optionee would have been permitted to
purchase under his option immediately before the date of termination of
such Optionee's employment.
-5-
9. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION, ETC. If the
Company shall, after the Effective Date, change its Stock into a greater
or lesser number of shares through a stock dividend, stock split-up or
combination of shares, then
(i) the number of shares of Stock then subject to the Plan but
which are not then subject to any outstanding option;
(ii) the number of shares of Stock subject to each then
outstanding option or (to the extent not previously
exercised); and
(iii) the price per share payable upon exercise of each then
outstanding option, shall all be proportionately increased
or decreased as of the record date for such stock dividend,
stock split-up or combination of shares in order to give
effect thereto. Notwithstanding any such proportionate
increase or decrease, no fraction of a share of Stock shall
be issued upon the exercise of an option. If any split-up
or combination of shares shall involve a change of par
value, the shares of Stock subject to options theretofore or
thereafter granted shall be the shares of Stock as so
changed.
<PAGE>
If, after the Effective Date, there shall be any change in the
Stock of the Company other than through a stock dividend, stock split-up
or combination of shares, then if (and only if)
-6-
the Committee shall determine that such change equitably requires an
adjustment in the number or kind or option price of shares of Stock then
subject to an option, or the number or kind of shares remaining subject
to the Plan, such adjustment as the Committee shall determine is
equitable and as shall be approved by the Board shall be made and shall
be effective and binding for all purposes of such option and the Plan.
If any member of the Board shall, at the time of such approval, be an
Optionee, he shall not participate in action in connection with such
adjustment.
10. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Committee, which shall
consist of three or more persons selected by the Board from its members.
The Committee shall have authority to determine who are, from time to
time, eligible employees, to construe the Plan, to prescribe, amend and
rescind rules and regulations for the administration of the Plan, to amend
or modify the Plan in such manner as the Committee deems required to make
the Plan conform to the provisions of any federal or state laws, or
regulations issued thereunder, or practically workable, and to take any
other action necessary or advisable for the effective administration of
the Plan; provided, however, that no such amendment or modification of the
Plan shall affect the provisions of any option granted before such
amendment or modification to the detriment of any Optionee unless such
amendment or modification is required to comply with any applicable law or
regulation, and provided, further, that any
-7-
such amendment of the Plan extending the period within which options may
be granted under the Plan, or increasing the number of shares of Stock to
be optioned under the Plan (except as provided in Section 9 hereof), or
reducing the minimum purchase price per share provided in the Plan
(except as provided in Section 9 hereof), or changing the class of
employees to whom options may be granted under the Plan shall, in each
case, be subject to approval by the Board. Decisions of the Committee
shall be final. Members of the Committee may be removed by the Board.
Vacancies in the Committee may be filled, and additional members may be
appointed from time to time by the Board. The decision of a majority in
number of the members of the Committee, from time to time acting, shall
be deemed to be the decision of the Committee, and a majority in number
of members of the Committee, from time to time acting, shall constitute
a quorum of the Committee for the transaction of any business. No
member of the Committee may be an individual who is or has been for at
least one year prior to selection to the Committee, eligible for
participation in the Plan.
(b) The authority granted the Board of Directors in this section
of the Plan shall be exercised solely by those directors who are not, and
have not been for at least one year prior to such exercise, eligible for
participation in the Plan.
<PAGE>
11. STOCKHOLDERS' RIGHTS UPON EXERCISE. An Optionee shall not,
by reason of the Plan or any option granted pursuant to the Plan, have any
rights of a stockholder of the Company;
-8-
however, upon each exercise of an option under the Plan, the Optionee
shall have, with respect to the number of shares of Stock as to which
such option is then being exercised, all rights of a stockholder of
record from the date of such exercise, irrespective of whether
certificates to evidence the shares of Stock with respect to which the
option was exercised shall have been issued on such date.
12. THE RIGHT OF EMPLOYER TO TERMINATE EMPLOYMENT. Nothing
contained in the Plan or in any option granted pursuant to the Plan shall
confer upon any Optionee any right to be continued in the employment of
the Company, or any parent or subsidiary of the Company, or interfere in
any way with the right of such Optionee's employer to terminate his
employment at any time with or without cause.
13. GOVERNMENT APPROVALS. If at any time the Company shall be
advised by its counsel that the exercise of any option or the delivery of
shares of Stock upon the exercise of an option is required to be approved,
registered or qualified under any applicable law, or must be accompanied
or preceded by a prospectus or similar circular meeting the requirements
of any applicable law, the Company will use its best efforts to obtain
such approval, to effect such registrations and qualifications, or to
provide such prospectus or similar circular within a reasonable time, but
exercise of the options or delivery by the Company of certificates for
shares of Stock may be deferred until
-9-
such approvals, registrations or qualifications are effected, or until
such prospectus or similar circular is available.
14. DISCONTINUANCE OF THE PLAN. The Board may decrease the
number of shares issuable under the Plan or discontinue and terminate the
Plan at any time, but no such decrease, discontinuance or termination
shall affect any options granted before such decrease, discontinuance or
termination.
15. MERGER, REORGANIZATION OR CHANGE IN CONTROL.
(a) Nothing contained in this Plan or in any option granted
under the Plan shall in any way prohibit the Company from merging with or
consolidating into another corporation, or from selling or transferring
all or substantially all of its assets, or from distributing all or
substantially all of its assets to its stockholders in liquidation, or
from dissolving and terminating its corporate existence; and in any such
event (other than a merger in which the Company is the surviving
corporation and after which the Company remains an independent, publicly
held corporation), the Company or any surviving party to any such merger,
consolidation, or sale or transfer of assets may provide by resolution of
its Board of Directors that all rights of the person or persons entitled
to exercise then outstanding options granted under the Plan, and such
options, shall wholly and completely terminate at the time of any such
merger, consolidation, sale or transfer of assets, liquidation, or
<PAGE>
dissolution, except that adequate provision for such person or persons
shall be made in accordance with paragraph (b) below.
-10-
(b) In the event that (i) any individual, corporation,
partnership or other person or group of persons or entities becomes the
beneficial owner, directly or indirectly, of 45% or more of the Company's
then outstanding Common Stock ("Change in Control") or (ii) any merger,
consolidation, liquidation, dissolution or termination after which the
Company will not survive as an independent, publicly-owned corporation or
any sale or transfer of all or substantially all of the Company's assets
("Reorganization") occurs, then the Company shall pay with respect to each
outstanding option under this Plan an amount equal to (x) the difference
between the Fair Market Value (as defined in (c) below) and exercise price
of the option, multiplied by (y) the number of shares of Stock subject to
such option. Such payment shall be made in cash within 30 days after, in
the case of a Reorganization requiring approval by the Company
stockholders, the date of such approval and, in the case of a Change in
Control, the date upon which such change occurs.
(c) Solely for purposes of (b) above, "Fair Market Value" shall
mean the greater of (i) the highest price per share of the Company's
Common Stock (x) paid by the acquiring person within twelve months of the
occurrence of the Change in Control to effect such change or (y) provided
for in any agreement for the Reorganization or (ii) fair market value
determined in accordance with Section 17 of this Plan.
-11-
16. EFFECTIVE DATE OF PLAN, The Plan has been adopted by the
Board on __________________, 1985, and the Plan shall be deemed to have
become effective on such date.
17. MISCELLANEOUS.
(a) The transfer of an employee from the Company to a parent or
subsidiary of the Company or from a parent or subsidiary of the Company to
the Company or another parent or subsidiary of the Company shall not be a
termination of employment or an interruption of continuous employment for
the purposes of the Plan.
(b) As used in the Plan, the terms "parent" and "subsidiary"
shall have the meanings ascribed to them in Sections 421, 422A and 425 of
the Code.
(c) Except as otherwise provided, for purposes of this Plan, the
fair market value of a share of Stock on a specified day shall be the mean
between the high and low sale price per share as reported for such day (or
if such day is not a business day, for the immediately preceding business
day) on a national stock exchange, or if the Stock is not listed on such
an exchange, on the NASDAQ national market system.
(d) No option or shares of Stock issuable under the Plan shall
be transferable or assignable either by the voluntary or involuntary act
of the Optionee or by operation of law, or be liable for any debts or
liabilities of the Optionee, except as provided herein.
-12-
<PAGE>
18. Notwithstanding any other provision of this Plan or of any
option certificate relating to any option granted hereunder, the
consummation of the transactions contemplated by that certain Agreement
and Plan of Merger, dated as of August 24, 1997, by and among Wausau Paper
Mills Company, WPM Holdings, Inc. and the Company on substantially the
terms and conditions set forth therein as of August 24, 1997 shall not be
deemed to constitute a "Change in Control" or any other transaction
described in Section 15(b) of this Plan and of any corresponding or
similar provision of any such option certificate. Without limiting the
generality of the foregoing, the consummation of such transactions shall
not result in the payment of any cash to any holder of an option granted
under this Plan.
-13-
MOSINEE PAPER CORPORATION
1985 EXECUTIVE STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION
MOSINEE PAPER CORPORATION (the "Company"), for valuable
consideration, the receipt of which is hereby acknowledged, hereby grants
on this ______ day of _____________, 19__ (the "Date of Grant") to
("Optionee") a nonqualified stock option to purchase _______ shares of the
common stock, $2.50 par value, of the Company ("Stock") at a price of
$_____________ per share (the "Option Price"), subject to adjustment as
set forth in Section 7 hereof, upon the terms and conditions hereinafter
stated pursuant to the Company's 1985 Executive Stock Option Plan adopted
______________, 19__, (the "Plan"), all necessary or appropriate
determinations by the committee appointed under the Plan (the "Committee")
having been duly made.
1. AGREEMENT TO REMAIN IN EMPLOYMENT. Optionee agrees not to
voluntarily terminate his employment with the Company, or any parent or
subsidiary of the Company, within one year from the Date of Grant.
2. EXERCISE BY OPTIONEE. This option becomes exercisable with
respect to the total number of shares subject hereto on and after
_________________________. Once exercisable, any portion of this option
shall continue to be exercisable during the term of this option with
respect to the shares represented by such portion. This option is
exercisable during Optionee's
-1-
lifetime only by him and may be exercised by him in whole or in part only
if all of the following conditions are met at the time of exercise:
(a) The date of exercise is within 20 years from the Date of
Grant; and
(b) Optionee is employed by one or more of the Company or any
parent or subsidiary of the Company, or, if he is no longer
so employed, such employment had terminated no longer than
three months prior to the date of exercise.
<PAGE>
3. RESTRICTIONS ON TRANSFER. This option is not transferable
by Optionee otherwise than by will or the laws of descent and
distribution.
4. RESTRICTIONS ON EXERCISE AFTER TERMINATION OF EMPLOYMENT.
Notwithstanding anything herein to the contrary, in the event that
Optionee's employment with the Company or a parent or subsidiary of the
Company is terminated by reason of voluntary resignation or discharge for
cause (as defined in the Plan) this option shall expire on the date of
such termination.
5. EXERCISE AFTER OPTIONEE'S DEATH. In the event of Optionee's
death while in the employ of the Company or a parent or subsidiary of the
Company or after his termination of employment with the Company or a
parent or subsidiary of the Company for a reason which is not set forth in
Section 4 above, but within three months after such termination of
employment, this option, to the extent not already exercised, may be
exercised by his estate or his designee by will or the laws of descent and
distribution but only with respect to that number of
-2-
shares of Stock which Optionee would have been permitted to purchase upon
exercise of this option immediately before his termination of employment
and only if the date of exercise is both within 20 years from the Date of
Grant (or such shorter period in which the option would have expired if
the Optionee had lived and remained in the Company's employ) and within
one year after the date of Optionee's death.
6. MANNER OF EXERCISE.
(a) Exercise shall be effected only by delivery to the Company
of an irrevocable written notice of Optionee's election to exercise the
option with respect to a specified whole number of shares of Stock. The
exercise date shall be the date of such delivery. Any delivery effected
after the close of business shall be deemed received on the next
succeeding business day. No option may be exercised with respect to a
fractional share of Stock.
(b) The irrevocable written notice of Optionee's election to
exercise must be followed within five (5) business days by payment in cash
to the Company of the amount of the option purchase price for the number
of shares of Stock as to which the option is then being exercised and the
amount of any applicable federal and state withholding taxes. Optionee's
failure to so pay shall result in the forfeiture of his option rights
under this option to the number of shares specified in the notice.
-3-
(c) No such person shall be entitled to any rights as a
stockholder of the Company with respect to such shares until the option
purchase price for such shares is paid in full.
7. CHANGES IN CAPITALIZATION.
(a) If the Company shall, after the Date of Grant, change the
Stock into a greater or lesser number of shares through a stock dividend,
stock split-up or combination of shares, then the number of shares of
Stock subject to this option (to the extent not previously exercised), and
<PAGE>
the price per share payable upon exercise of this option, shall be
proportionately increased or decreased as of the record date of such stock
dividend, stock split-up or combination of shares in order to give effect
thereto. Notwithstanding any such proportionate increase or decrease, no
fraction of a share of Stock shall be issued upon the exercise of an
option. If any split-up or combination of shares shall involve a change
of the par value of the Stock, the shares of Stock subject to this option
shall be the shares of Stock as so changed.
(b) If, after the Date of Grant, there shall be any change in
the Stock of the Company other than through a stock dividend, stock split-
up or combination of shares, then if (and only if) the Committee shall
determine that such change equitably requires an adjustment in the number
or kind or Option Price of shares of Stock then subject to this option, or
the number of shares of Stock with respect to which this option may be
-4-
exercised, such adjustment as the Committee shall determine is equitable
shall be made.
8. RIGHT OF EMPLOYER TO TERMINATE EMPLOYMENT. Nothing
contained in this option shall confer upon Optionee any right to be
continued in the employment of the Company, or any parent or subsidiary of
the Company, or interfere in any way with the right of Optionee's said
employer to terminate his employment at any time with or without cause.
9. LISTING AND REGISTRATION OF SHARES. This option shall be
subject to the requirement that if at any time the Committee determines,
in its discretion, that the listing, registration, or qualification of the
shares subject to this option upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in
connection with, the issue or purchase of shares hereunder, this option
may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected
or obtained and the same shall have been free of any conditions not
acceptable to the Committee.
10. ADMINISTRATION. Subject to the provisions of this option,
the Committee shall be authorized to interpret this option, to make, amend
and rescind such rules as it deems necessary or advisable for the proper
administration of this option, to make all other determinations necessary
or advisable for the administration of this option and to correct any
defect
-5-
or supply any omission or reconcile any inconsistency in this
option in the manner and to the extent the Committee deems desirable to
make this option fully effective. The Committee may amend this option,
provided, however, that any such amendment shall be made only with the
consent of Optionee or other person or persons entitled to exercise this
option if the amendment would be detrimental to the rights of Optionee or
such other person unless such amendment is required to comply with any
applicable law or regulation.
11. MERGER, REORGANIZATION, OR CHANGE IN CONTROL. Nothing
contained in this option shall in any way prohibit the Company from
<PAGE>
merging with or consolidating into another corporation, or from selling or
transferring all or substantially all of its assets, or from distributing
all or substantially all of its assets to its stockholders in liquidation,
or from dissolving and terminating its corporate existence; and in any
such event (other than a merger in which the Company is the surviving
corporation and under the terms of which the shares of Stock outstanding
immediately prior to the merger remain outstanding and unchanged), the
Company or any surviving party to any such merger, consolidation, or sale
or transfer of assets may provide by resolution of its Board of Directors
that all rights of Optionee and this option shall wholly and completely
terminate at the time of any such merger, consolidation, sale or transfer
of assets, liquidation, or dissolution, except that adequate
-6-
provision for such person or persons shall be made in accordance with
Section 15(b) of the Plan.
This option is addressed to Optionee in duplicate and shall not
be effective until Optionee has executed this option and returned one copy
to the Company, thereby acknowledging that Optionee has read and agrees to
all the terms and conditions of this option and the Plan.
MOSINEE PAPER CORPORATION
By:________________________________
ACCEPTED this _____ day of
_____________________, 19__.
__________________________
Optionee
-7-
EXHIBIT 10.15
MOSINEE PAPER CORPORATION
1988 STOCK APPRECIATION RIGHTS PLAN
1. PURPOSE.
The purpose of the Mosinee Paper Corporation 1988 Stock
Appreciation Rights Plan (the "Plan") is to attract and retain
outstanding individuals as officers and key employees of Mosinee
Paper Corporation (the "Corporation") and its subsidiaries, and to
furnish incentives to such individuals through rewards based upon
the performance of the common stock of the Corporation. To this
end, the Committee hereinafter designated may grant stock
appreciation rights to officers and other key employees of the
Corporation and its subsidiaries, on the terms and subject to the
conditions set forth in this Plan.
2. PARTICIPANTS.
Participants in the Plan shall consist of such officers
and other key employees of the Corporation and its subsidiaries as
the Committee in its sole discretion may select from time to time
to receive stock appreciation rights.
3. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by a Committee (the
"Committee") of at least three members appointed by the Board of
Directors of the Corporation from among its members. No person
shall be appointed a member of the Committee if, during the one
year prior to the date on which such person's service as a member
of the Committee is to commence, such person was granted or
awarded equity securities of the Corporation (within the meaning
of Securities and Exchange Commission Rule 16a-1(d)) under the
Plan or any other plan of the Corporation or any subsidiary of the
Corporation. Subject to the provisions of the Plan, the Committee
shall have authority (i) to determine which employees of the
Corporation and its subsidiaries shall be eligible for
participation in the Plan; (ii) to select employees to receive
grants under the Plan; (iii) to determine the number of stock
appreciation rights subject to the grant, the time and conditions
of exercise or vesting, the fair market value of the common stock
of the Corporation for purposes of the Plan, and all other terms
and conditions of any grant; and (iv) to prescribe the form of
agreement, certificate or other instrument evidencing the grant.
The Committee shall also have authority to interpret the Plan and
to establish, amend and rescind rules and regulations for the
administration of the Plan, and all such interpretations, rules
and regulations shall be conclusive and binding on all persons,
provided, however, that the Committee shall not exercise such
authority in a manner adversely and significantly affecting rights
previously granted unless the action taken is required to comply
with any applicable law or regulation.
<PAGE>
4. EFFECTIVE DATE AND TERM OF PLAN.
The Plan shall become effective on June 16, 1988, the
date of its approval by the Board of Directors of the Corporation.
The Plan shall terminate ten years after it becomes effective,
unless terminated sooner by action of the Board of Directors. No
further grants may be made under the Plan after its termination,
but the termination of the Plan shall not affect the rights of any
participant under, or the authority of the Committee with respect
to, any grants made prior to termination.
5. SHARES SUBJECT TO THE PLAN.
Subject to adjustment as provided in paragraph 7 hereof,
the aggregate number of shares of common stock of the Corporation
with respect to which stock appreciation rights may be granted
under the Plan shall not exceed 350,000. Whenever a stock
appreciation right granted under the Plan can no longer under any
circumstances be exercised, the shares, if any, then remaining
subject to such stock appreciation right shall thereupon be
released from such stock appreciation right and shall thereafter
be available for additional grants of stock appreciation rights
under the Plan.
6. STOCK APPRECIATION RIGHTS.
(a) Grants. Stock appreciation rights entitling the
grantee to receive cash equal to the sum of (i) the appreciation
in value of and (ii) the value of the reinvested cash dividends
which would have been paid with respect to a stated number of
shares of common stock of the Corporation between the date of
grant and the date of exercise (the "hypothetical reinvested cash
dividends") may be granted from time to time to such officers and
other key employees of the Corporation and its subsidiaries as may
be selected by the Committee.
(b) Terms of Grant. Stock appreciation rights shall
be exercisable in whole or in such installments and at such times
as may be determined by the Committee, provided that no stock
appreciation right shall be exercisable more than twenty years
after the date of grant. The Committee may at the time of grant
or at any time thereafter impose such additional terms and
conditions on the exercise of stock appreciation rights as it
deems necessary or desirable for compliance with Section 16(a) or
16(b) of the Securities Exchange Act of 1934 and the rules and
regulations thereunder.
(c) Termination of Employment or Death. If a grantee
ceases to be employed by the Corporation and any of its
subsidiaries for any reason other than death, any stock
appreciation right held by such grantee may be exercised for a
period ending on the earlier of the 90th day following the date of
such cessation of employment or the date of expiration of such
stock appreciation right, but only with respect to that number of
shares of common stock for which such right was exercisable
immediately prior to the date of cessation of employment.
If a grantee ceases to be employed by the Corporation or
any of its subsidiaries by reason of death, or dies within 90 days
<PAGE>
after termination of his employment by the Corporation or any of
its subsidiaries, any stock appreciation right held by such
grantee may be exercised, with respect to all or any part of the
common stock of the Corporation with respect to which such stock
appreciation right was exercisable by the grantee immediately
prior to his death, for a period ending on the earlier of the
first anniversary of the date of such grantee's death or the date
of expiration of such stock appreciation right.
(d) Payment on Exercise. Upon exercise of a stock
appreciation right the grantee shall be paid within five business
days an amount in cash equal to the sum of (i) the amount by which
the fair market value of one share of the Corporation's common
stock on the date of exercise exceeds the date of grant value
thereof multiplied by the number of shares in respect of which the
stock appreciation right is being exercised and (ii) the value of
the hypothetical reinvested cash dividends associated therewith.
The value of the hypothetical reinvested cash dividends associated
with a share in respect of which the stock appreciation right is
being exercised (the "exercised share") shall be equal to the fair
market value on the date of exercise of the number of additional
shares (or fraction thereof) of the Company's common stock the
grantee would have owned if it is assumed (1) that cash dividends
which would have been paid with respect to the exercised share if
the exercised share had been outstanding from the time of grant
had been paid in cash to the grantee and then immediately
reinvested by the grantee in the Company's common stock at the
fair market value thereof on the applicable dividend payment date,
and (2) that, once assumed issued, hypothetical shares resulting
from assumed dividend reinvestment themselves paid cash dividends
(at the same time and in the same amount as shares of the
Corporation's outstanding common stock) which were reinvested in a
similar manner.
For purposes of this paragraph, the fair market value of
a share of common stock of the Corporation means:
(A) The mean between the high and low prices at
which the common stock of the Corporation was traded if the
common stock of the Corporation was then listed for trading
on a national or regional securities exchange; or
(B) The mean between the published high and low
prices of the common stock of the Corporation if the common
stock of the Corporation was then traded on a bona fide
over-the-counter market; or
(C) If the common stock of the Corporation was not
traded on an exchange or on a bona fide over-the-counter
market, a value determined by an appraiser selected by the
Committee.
In the event that the date of the exercise of a stock appreciation
right is a date on which there is no trading of the common stock
of the Corporation on a national or regional securities exchange
or is a date for which there is no published bid and asked prices
if the stock is traded on the over-the-counter market, such fair
market value shall be determined by referring to the next
preceding business day on which trading occurs or on which
published prices are available.
<PAGE>
(e) Additional Terms and Conditions. The agreement or
instrument evidencing the grant of stock appreciation rights may
contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Committee
in its sole discretion.
7. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION, ETC.
Stock appreciation rights shall be subject to adjustment
by the Committee in its sole discretion as to the number, kind and
date of grant value of shares or other consideration subject to
such grants in the event of changes in the outstanding common
stock by reason of stock dividends, stock splits,
recapitalizations, reorganizations, mergers, consolidations,
combinations, exchanges or other relevant changes in corporate
structure or capitalization occurring after the date of the grant
of any stock appreciation right, provided that if the Corporation
shall change its common stock into a greater or lesser number of
shares through a stock dividend, stock split-up, or combination of
shares, outstanding rights shall be adjusted proportionately,
consistent with existing law and regulation, to prevent
inequitable results.
8. EFFECT OF LIQUIDATION, MERGER, CONSOLIDATION OR OTHER
EVENTS.
Nothing contained in the Plan or in any stock
appreciation right granted under the Plan shall in any way
prohibit the Corporation from merging with or consolidating into
another corporation, or from selling or transferring all or
substantially all of its assets, or from distributing all or
substantially all of its assets to its stockholders in
liquidation, or from dissolving and terminating its corporate
existence; and in any such event, all outstanding stock
appreciation rights granted under the Plan shall be deemed to have
been exercised at the time of any such merger, consolidation, sale
or transfer of assets, liquidation, or dissolution, except to the
extent that any agreement or undertaking of any party to such
merger, consolidation, or sale or transfer of assets, or any plan
pursuant to which such liquidation or dissolution is effected,
shall make specific provision to continue such stock appreciation
rights and the rights of such person or persons entitled to
exercise such stock appreciation rights.
9. AMENDMENT AND TERMINATION OF PLAN.
The Plan may be amended or terminated by the Board of
Directors of the Corporation in any respect, provided, however,
that the Board shall not exercise such authority in a manner
adversely and significantly affecting rights previously granted
unless the action taken is required to comply with any applicable
law or regulation.
10. MISCELLANEOUS.
(a) No Right to a Grant. Neither the adoption of the
Plan nor any action of the Board of Directors or of the Committee
shall be deemed to give any employee any right to be selected as a
participant or to be granted a stock appreciation right.
<PAGE>
(b) Rights as Stockholder. No person shall have any
rights as a stockholder of the Corporation with respect to any
shares covered by a stock appreciation right.
(c) Employment. Nothing contained in this Plan shall
be deemed to confer upon any employee any right of continued
employment with the Corporation or any of its subsidiaries or to
limit or diminish in any way the right of the Corporation or any
such subsidiary to terminate his or her employment at any time
with or without cause.
(d) Taxes. The Corporation shall be entitled to deduct
from any payment under the Plan the amount of any tax required by
law to be withheld with respect to such payment or may require any
participant to pay such amount to the Corporation prior to and as
a condition of making such payment.
(e) Nontransferability. No stock appreciation right
shall be transferable except by will or the laws of descent and
distribution. During the holder's lifetime, stock appreciation
rights shall be exercisable only by such holder.
EXHIBIT 10.16
INCENTIVE COMPENSATION PLANS
FOR
EXECUTIVE OFFICERS
(1996 AND 1997)
In 1997, Mr. Olvey will participate in an incentive compensation plan
which provides for a bonus opportunity ranging from 0% of base salary if
1996 earnings per share are at or below $2.20 to 100% if the 1997 earnings
per share are at least $3.30 per share. Mr. Peterson and Mr. Urbanek will
participate in similar plans which provide for a bonus equal to 75% and
80%, respectively, of their base salary based upon the same $2.20 to $3.30
range of earnings per share. Earnings per share will be adjusted for
accruals on SARs, bonus expense and extraordinary items. Mr. Peterson
will also be entitled to a maximum bonus of 25% of base salary upon
satisfaction of individual performance objectives established at the
beginning of the year by the President and CEO. Mr. Carlson will
participate in an incentive compensation plan under which 65% of his bonus
will be based on the operating profits of the Company's Specialty Paper
Division, 25% on satisfaction of individual performance objectives
established at the beginning of the year by the President and CEO and 10%
of the Company's earnings per share within the range described above.
Mr. Canavara will participate in an incentive compensation plan under
which 65% of his bonus will be based on operating profits at the Towel and
Tissue Division, 25% on satisfaction of individual performance objectives
established at the beginning of the year by the President and CEO and 10%
of the Company's earnings per share within the range described above.
During 1996, Mr. Olvey participated in an incentive compensation plan
which provided for a bonus opportunity ranging from 0% of base salary if
1996 earnings per share were at or below $1.20 to 100% if 1995 earnings
per share were at least $2.03 per share. Mr. Peterson and Mr. Carlson
participated in similar plans which provided for a bonus equal to 75% and
50%, respectively of their base salary based upon the same $1.20 to $2.03
range of earnings per share. Earnings per share were adjusted for
accruals on SARs, bonus expense and extraordinary items. Mr. Peterson and
Mr. Carlson participated in an incentive compensation plan based on the
operating profit of the Converted Products Division which provided for a
maximum bonus of 25% of Mr. Carlson's base salary.
EXHIBIT 10.17
SUPPLEMENTAL RETIREMENT BENEFIT PLAN
This Supplemental Retirement Benefit Plan (the "Plan") is adopted
effective as of this 17th day of October, 1991, by Mosinee Paper
Corporation, a Wisconsin corporation, ("Mosinee") for the purposes of
providing deferred compensation in the form of supplemental retirement
benefits for San W. Orr, Jr. ("Mr. Orr") in recognition of his service to
Mosinee as its Chairman of the Board of Directors.
1. NORMAL SUPPLEMENTAL RETIREMENT BENEFIT. Beginning on the first
day of the first month following the last to occur of (a) Mr. Orr's
termination of employment with Mosinee or (b) Mr. Orr's 60th birthday, and
continuing on the first day of each succeeding month, Mosinee shall pay to
Mr. Orr, if he is then living, a monthly supplemental retirement benefit
(Mr. Orr's "Normal Supplemental Retirement Benefit") in an amount equal to
50% of one-twelfth of Mr. Orr's highest final average W-2 compensation for
the five consecutive calendar year period in which such compensation was
paid. Mr. Orr's Normal Supplemental Retirement Benefit shall not be
reduced or offset by the amount of any other payment then due him from
Mosinee or any other plan or program now or hereafter maintained by
Mosinee.
2. SURVIVING SPOUSE BENEFIT. From and after the first day of the
first month following the later of (a) the month in which Mr. Orr's death
occurs or (b) the month in which Mr. Orr would have attained his 60th
birthday if Mr. Orr's death occurs before
-1-
he has attained age 60, and continuing on the first day of each
succeeding month, Mosinee shall pay to Mr. Orr's spouse, if then
living (Mr. Orr's "Surviving Spouse"), a monthly benefit (the
"Supplemental Surviving Spouse Benefit") in an amount equal to 50% of
the Normal Supplemental Retirement Benefit to which Mr. Orr would have
then been entitled had he then been living.
3. CHANGE OF CONTROL OF MOSINEE.
(a) In the event a Change of Control of Mosinee occurs prior to
Mr. Orr's death, Mosinee shall pay to Mr. Orr a lump sum amount equal
to the present value of Mr. Orr's Normal Supplemental Retirement
Benefit, as determined hereunder, as of the first day of the first
month following such Change of Control of Mosinee on which Mr. Orr is
neither an employee nor a director of Mosinee, whether or not such
Change of Control occurred prior to the date on which Mr. Orr shall
have ceased to be an employee or a director of Mosinee. Upon payment
of the lump sum amount provided for in this subparagraph (a), Mosinee
shall have no further obligation to pay any benefits under this Plan.
(b) In the event a Change of Control occurs after Mr. Orr's
death and whether or not the Supplemental Surviving Spouse Benefit
shall have then become payable, Mosinee shall pay to Mr. Orr's
Surviving Spouse, if then living, the present value of the unpaid
Supplemental Surviving Spouse Benefit. Upon payment of the lump sum
amount provided for
-2-
<PAGE>
in this subparagraph (b), Mosinee shall have no further obligation to
pay any benefits under this Plan.
(c) For purposes of this Plan, a "Change of Control of Mosinee"
shall mean:
(1) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either (A) the then outstanding shares of common stock of Mosinee
(the "Outstanding Company Common Stock") or (B) the combined
voting power of the then outstanding voting securities of Mosinee
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (1), the following acquisitions
shall not constitute a Change of Control: (I) any acquisition
directly from Mosinee, (II) any acquisition by Mosinee, (III) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by Mosinee or any corporation controlled
by Mosinee or (IV) any acquisition pursuant to a transaction
which complies with clauses (A), (B) and (C) of subsection (3) of
this Section 2; or
-3-
(2) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof
whose election, or nomination for election by Mosinee's
shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(3) Consummation by Mosinee of a reorganization, merger,
share exchange or consolidation or sale or other disposition of
all or substantially all of the assets of Mosinee or the
acquisition of assets of another corporation (a "Business
Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such
-4-
Business Combination beneficially own, directly or indirectly,
more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation
<PAGE>
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction
owns Mosinee or all or substantially all of Mosinee's assets
either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding any
employee benefit plan (or related trust) of Mosinee or such
corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of
the corporation resulting from such Business Combination
or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such
ownership existed with respect to Mosinee prior to the Business
Combination and (C) at least a majority of the members of the
board of directors of the corporation resulting from such
-5-
Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement, or of the action
of the Board, providing for such Business Combination; or
(4) Approval by the shareholders of Mosinee of a complete
liquidation or dissolution of Mosinee.
Notwithstanding the foregoing, neither the approval by the
shareholders of Mosinee, nor the consummation, of the transactions
contemplated by that certain Agreement and Plan of Merger, dated as of
August 24, 1997, by and among Wausau Paper Mills Company, WPM
Holdings, Inc. and the Company on substantially the terms and
conditions set forth therein as of August 24, 1997 shall constitute a
Change of Control for purposes of this Agreement.
(d) For purposes of this Plan, the term "Interested Shareholder"
shall mean any person (other than Mosinee or any of its subsidiaries
or any member of the Board of Directors as of the effective date of
this Plan or any affiliate of such person) who first became the
beneficial owner of 10% or more of the combined voting power of
Mosinee's then outstanding securities after the effective date of this
Plan.
(e) For purposes of this Plan, the present value of Mr. Orr's
Normal Supplemental Retirement Benefit or the Supplemental Surviving
Spouse Benefit shall be determined by reference to the 1983 Individual
Annuity Mortality Table
-6-
with an assumed interest rate equal to the "immediate annuity rate"
as then in effect as determined by the Pension Benefit Guaranty
Corporation and promulgated in Appendix B to 29 C.F.R.
<section>2619.65 or any successor regulation adopted for the
same or substantially similar purpose.
4. SUPPLEMENTAL RETIREMENT BENEFITS IN ADDITION TO OTHER RIGHTS AND
BENEFITS. The rights and benefits conferred upon Mr. Orr (and Mr. Orr's
<PAGE>
Surviving Spouse) pursuant to this Plan shall be in addition to all other
rights and benefits conferred upon Mr. Orr by Mosinee by reason of his
employment.
5. NATURE OF MOSINEE'S OBLIGATIONS AND MR. ORR'S RIGHTS. Neither
Mr. Orr nor his Surviving Spouse, if any, shall acquire any right, title
or interest in the assets of Mosinee by reason of this Plan. To the
extent Mr. Orr or his Surviving Spouse shall acquire a right to receive
payments from Mosinee pursuant to this Plan, such right shall be no
greater than the right of any unsecured general creditor of Mosinee.
6. ASSIGNMENT BY MR. ORR PROHIBITED. This Plan and Mr. Orr's rights
and benefits hereunder (and the rights of his Surviving Spouse, if any)
shall not be subject to voluntary or involuntary sale, pledge,
hypothecation, transfer or assignment by Mr. Orr or such Surviving Spouse,
their personal representatives or heirs or any other person or persons or
organization or organizations succeeding to any of their rights and
benefits hereunder.
-7-
7. FUNDING. All benefits paid or payable pursuant to the terms of
this Plan shall be paid out of the general assets of Mosinee.
8. CLAIMS PROCEDURE. The claims procedure set forth in the Mosinee
Retirement Plan or any successor to such plan is incorporated herein by
this reference as the claims procedure for this Plan.
9. PLAN ADMINISTRATOR. The plan administrator and named fiduciary
of the Plan shall be Mosinee.
10. BINDING EFFECT. This Plan shall be binding upon and inure to the
benefit of (1) Mr. Orr and his Surviving Spouse and their personal
representatives and heirs and any other person or persons or organization
or organizations succeeding to any of Mr. Orr's rights or benefits
hereunder, and (2) Mosinee and its successors and assigns.
11. SEVERABILITY. The invalidity or unenforceability of any
provision of this Plan shall not invalidate or render unenforceable any
other provision of this agreement.
12. GOVERNING LAW. This Plan shall be governed by the Employee
Retirement Income Security Act of 1974, as amended, and to the extent not
preempted by such Act, by the laws of the State of Wisconsin.
IN WITNESS WHEREOF, Mosinee has caused this agreement to be executed
by its President thereunto duly authorized as of the day and year first
above written.
-8-
MOSINEE PAPER CORPORATION
By: RICHARD L. RADT
Richard L. Radt
As its President
-9-
EXHIBIT 10.18
SUPPLEMENTAL RETIREMENT BENEFIT AGREEMENT
Agreement made as of this 15th day of November, 1991 by and
between Mosinee Paper Corporation, a Wisconsin corporation (the
"Corporation") and Richard L. Radt, of Wausau, Wisconsin
("Mr. Radt").
WITNESSETH:
WHEREAS, Mr. Radt is employed as President and Chief
Executive Officer of the Corporation and has performed his duties
in a manner highly satisfactory to the Corporation; and
WHEREAS, the Corporation has determined to provide Mr. Radt
with deferred compensation in the form of a supplemental
retirement benefit in recognition of Mr. Radt's agreement to
continue to perform services for the Corporation as its President
and Chief Executive Officer;
NOW, THEREFORE, the Corporation and Mr. Radt agree as
follows:
1. Payment of Supplemental Retirement Benefit.
(a) On the last to occur of (1) August 1, 1992, or (2)
the date which is fifteen days after the date of Mr. Radt's
termination of employment with each of the Corporation and
the Corporation's subsidiaries, the Corporation shall pay to
Mr. Radt, if then living, otherwise to Mr. Radt's Beneficiary
or Beneficiaries (determined in accordance with paragraph 3)
an amount equal to the Supplemental Retirement Benefit Amount
(determined in accordance with paragraph 2); provided,
however, that no payment shall be made to Mr. Radt's
Beneficiary or Beneficiaries pursuant to this subparagraph
(a) if a payment to such Beneficiary or Beneficiaries has
been made pursuant to subparagraph (b).
(b) If Mr. Radt dies prior to August 1, 1992, the
Corporation shall, within fifteen days of the date of his
death, pay to Mr. Radt's Beneficiary or Beneficiaries
(determined in accordance with paragraph 3) an amount equal
to the Supplemental Retirement Benefit Amount (determined in
accordance with paragraph 2).
2. Supplemental Retirement Benefit Amount.
(a) Subject to the provisions of subparagraph (b), the
"Supplemental Retirement Benefit Amount" shall be an amount
equal to the excess of (1) $214,312, over (2) that portion
of the lump sum present value of the monthly retirement
benefit payable to Mr. Radt under the Mosinee Retirement Plan
which is attributable to Credited Service accrued by Mr.
Radt, as determined under the Mosinee Retirement Plan,
through July 31, 1992. For purposes of this
subparagraph (a):
<PAGE>
(1) the lump sum present value of the monthly
retirement benefit payable under the Mosinee Retirement
Plan shall be determined in accordance with the
provisions of such plan governing lump sum payment
options, and
(2) the portion of the lump sum present value of
the monthly retirement benefit payable to Mr. Radt under
the Mosinee Retirement Plan which is attributable to
Credited Service accrued by Mr. Radt through July 31,
1992 shall be determined by multiplying the lump sum
present value of such retirement benefit by a fraction,
(i) the numerator of which is the number of months of
Credited Service accrued by Mr. Radt under the Mosinee
Retirement Plan as of July 31, 1992 and (ii) the
denominator of which is the total number of months of
Credited Service accrued by Mr. Radt under the Mosinee
Retirement Plan as of the date his employment with each
of the Corporation and the Corporation's subsidiaries
terminates.
(b) Despite any other provision of this Agreement, in
the event that Mr. Radt's termination of employment with each
of the Corporation and the Corporation's subsidiaries occurs
after July 31, 1992, the "Supplemental Retirement Benefit
Amount" shall be equal to (1) the amount of the "Supplemental
Retirement Benefit Amount" otherwise determined in
subparagraph (a) plus (2) interest on such amount calculated
for each calendar quarter, or portion thereof, at an annual
rate equal to the prime rate published in The Wall Street
Journal on the first day of such calendar quarter from and
after August 1, 1992 through the day immediately preceding
payment of the Supplemental Retirement Benefit Amount.
3. Mr. Radt's Beneficiary or Beneficiaries. For purposes
of this agreement, Mr. Radt's "Beneficiary or Beneficiaries" shall
mean such person or persons or organization or organizations as
Mr. Radt from time to time may designate by a written designation
filed with the Corporation during Mr. Radt's life. Any amounts
payable hereunder to Mr. Radt's Beneficiary or Beneficiaries shall
be paid in such proportions and subject to such trusts, powers and
conditions as Mr. Radt may provide in such designation. Each such
designation, unless otherwise expressly provided therein, may be
revoked by Mr. Radt by a written revocation filed with the
Corporation during Mr. Radt's life. If more than one such
designation shall be filed by Mr. Radt with the Corporation, the
last designation so filed shall control over any revocable
designation filed prior to such filing. To the extent that any
amounts payable under this agreement to Mr. Radt's Beneficiary or
Beneficiaries are not effectively disposed of pursuant to the
above provisions of this paragraph, either because no designation
was in effect at Mr. Radt's death or because a designation in
effect at Mr. Radt's death failed to dispose of such amounts in
their entirety, then for purposes of this agreement, Mr. Radt's
"Beneficiary or Beneficiaries" as to such undisposed of amounts
shall be Mr. Radt's estate.
<PAGE>
4. Supplemental Retirement Benefit in Addition to Other
Rights and Benefits. The rights and benefits conferred upon
Mr. Radt pursuant to this agreement shall be in addition to all
other rights and benefits conferred upon Mr. Radt by the
Corporation by reason of Mr. Radt's employment.
5. Nature of Corporation's Obligations and Mr. Radt's
Rights. Neither Mr. Radt nor any Beneficiary or Beneficiaries of
Mr. Radt shall acquire any right, title or interest in the assets
of the Corporation by reason of this agreement. To the extent
Mr. Radt or his Beneficiary or Beneficiaries shall acquire a right
to receive payments from the Corporation pursuant to this
agreement, such right shall be no greater than the right of any
unsecured general creditor of the Corporation.
6. Assignment by Mr. Radt Prohibited. This agreement and
Mr. Radt's rights and benefits hereunder shall not be subject to
voluntary or involuntary sale, pledge, hypothecation, transfer or
assignment by Mr. Radt or by his personal representatives or heirs
or any other person or persons or organization or organizations
succeeding to any of Mr. Radt's rights and benefits hereunder.
7. Binding Effect. This agreement shall be binding upon
and inure to the benefit of (1) Mr. Radt, his personal
representatives and heirs and any other person or persons or
organization or organizations succeeding to any of Mr. Radt's
rights or benefits hereunder, and (2) the Corporation and its
successors and assigns.
8. Severability. The invalidity or unenforceability of any
provision of this agreement shall not invalidate or render
unenforceable any other provision of this agreement.
9. Counterparts. This agreement may be executed in several
counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
10. Governing Law. This agreement shall be governed by the
laws of the State of Wisconsin.
IN WITNESS WHEREOF, the Corporation has caused this agreement
to be executed by an officer thereunto duly authorized, and
Mr. Radt has hereunto set his hand and seal, as of the day and
year first above written.
MOSINEE PAPER CORPORATION
By: DANIEL R. OLVEY
Daniel R. Olvey
As its Vice President - Finance
RICHARD L. RADT (Seal)
Richard L. Radt
<PAGE>
SUPPLEMENTAL RETIREMENT BENEFIT AGREEMENT
DESIGNATION OF BENEFICIARY
I, Richard L. Radt, designate the following person or persons
or organization or organizations as my Beneficiary or
Beneficiaries of any amounts otherwise due me under the
Supplemental Retirement Benefit Agreement dated November 15, 1991
and entered into by and between Mosinee Paper Corporation and me:
The acting trustee of that certain trust created by me under the
terms of a declaration of trust known as the Richard L. Radt Trust
Dated August 7, 1979, of which I now am trustee and Harris Trust
and Savings Bank, of Chicago, Illinois, now is named as successor
trustee. Said amounts shall be added to and disposed of as a part
of the trust property of said trust in accordance with the terms
of said declaration of trust, as in effect at my death.
Date: November___, 1991 ______________________________
Richard L. Radt
EXHIBIT 10.19
MOSINEE PAPER CORPORATION
1994 STOCK OPTION PLAN
Mosinee Paper Corporation, a corporation with its principal place of
business located in Mosinee, Wisconsin (the "Company"), hereby adopts the
Mosinee Paper Corporation 1994 Stock Option Plan (the "Plan"), as set
forth herein.
Section 1. PURPOSE. The Plan is intended to attract and retain key
employees and directors by permitting key employees of the Company or any
parent or subsidiary of the Company and directors of the Company to
acquire authorized and unissued, or reacquired, shares of common stock of
the Company pursuant to purchase options. The availability of the options
and grants thereof will furnish additional inducements to such employees
to continue employment with the Company, or any parent or subsidiary of
the Company, and such directors to continue serving as directors of the
Company, and encourage them, by giving them an opportunity to acquire a
greater stake in the Company's success, to increase their efforts to
promote the best interests of the Company and its stockholders.
It is the express intent of the Company that, subject to Section
6.2(h) hereof, all options granted hereunder designated "Incentive Stock
Options" shall meet the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or any successor section or
sections. It is the further intent of the Company that options granted
hereunder designated "Non-Qualified Stock Options" shall not meet the
requirements of
-1-
Section 422 of the Code. A key employee or director may be granted and
may hold one or more options under this Plan.
Section 2. NUMBER OF SHARES AVAILABLE FOR OPTIONS. The aggregate
number of shares of common stock, no par value, of the Company (the
"Shares") which may be issued under options granted pursuant to the Plan
shall be 346.667.
Section 3. ADMINISTRATION OF THE PLAN.
Section 3.1 GENERAL. The Plan shall be administered by such
committee (the "Committee") as shall be designated by the Board of
Directors of Wausau-Mosinee Paper Corporation, which such committee shall
have at least two members who are not officers or employees of the
Company or a parent or subsidiary thereof and who otherwise satisfy the
definition of a "Non-Employee Director" in Rule 16b-3(b)(3) promulgated
under Section 16 of the Securities Exchange Act of 1934 (the "Exchange
Act") and the definition of an "Outside Director" in the regulations
under Section 162(m) of the Code. In the absence of specific rules
to the contrary, action by the Committee shall require the consent of a
majority of the members of the Committee, expressed either orally at
a meeting of the Committee or in writing in the absence of a meeting.
Section 3.2 AUTHORITY OF COMMITTEE. The Committee shall have full
and complete authority to grant options to such eligible key employees on
such terms, which need not be the same as to all Employee Optionees, as
<PAGE>
will, in its discretion and subject only to the specific limitations
elsewhere contained in
-2-
the Plan, carry out the purpose of the Plan. The Committee shall also
have full and complete authority to interpret the Plan and adopt rules
governing the administration of the Plan. The Committee's decision on
any matter with respect to the Plan shall be final.
Section 3.3 INDEMNIFICATION OF COMMITTEE. To the extent permitted by
applicable law, the members of the Committee and each of them shall be
indemnified and saved harmless by the Company from any liability or claim
of liability which may arise from the administration of the Plan if the
acts giving rise to such liability or claim of liability were taken in
good faith and without negligence.
Section 4. ELIGIBLE EMPLOYEES AND DIRECTORS.
Section 4.1 KEY EMPLOYEES. Key employees (who may also be officers
or directors) of the Company (or any parent or subsidiary of the Company)
shall be eligible to be granted options pursuant to Section 5 of the Plan.
For purposes of the Plan, the term "key employee" shall include all
employees of all participating employers employed in management,
administrative or professional capacities.
Section 4.2 DIRECTORS. Directors of the Company (who may also be key
employees or officers of the Company (or any parent or subsidiary of the
Company)) shall be eligible to be granted options pursuant to Section 7 of
the Plan. Directors of the Company who are not also employees of the
Company (or any parent
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or subsidiary of the Company) shall not be eligible to be granted options
under Section 5 of the Plan.
Section 5. GRANTING OF OPTIONS TO KEY EMPLOYEES. Options to purchase
Shares shall be granted to such key employees who are eligible to
participate in the Plan as the Committee may, from time to time and at any
time, select. Membership in a class of eligible key employees shall not,
without specific Committee action, entitle a key employee to receive an
option to purchase Shares. Eligible key employees selected by the
Committee shall be referred to herein as "Employee Optionees."
Section 6. TERMS AND CONDITIONS OF THE KEY EMPLOYEE OPTIONS.
Section 6.1 WRITTEN INSTRUMENT. Each option to purchase Shares
granted under Section 5 of the Plan shall be evidenced by a written option
agreement signed on behalf of the Company and the Employee Optionee which
sets forth the name of the Employee Optionee, the date granted, the price
at which the Shares subject to the option may be purchased (the "option
price"), whether the option is an Incentive Stock Option or a
Non-Qualified Stock Option, the number of Shares subject to the option and
such other terms and conditions consistent with the Plan as determined by
the Committee. The Committee may at the time of grant or at any time
thereafter impose such additional terms and conditions on the exercise of
such option as it deems necessary or desirable for compliance with Section
<PAGE>
16 of the Exchange Act and the regulations promulgated thereunder. Such
option agreement shall
-4-
incorporate by reference all applicable terms, conditions and limitations
set forth in the Plan.
Section 6.2 TERMS AND CONDITIONS OF THE KEY EMPLOYEE OPTIONS. In
addition to any other limitations, terms and conditions specified in the
Plan, each option granted under Section 5 of the Plan shall, as to each
Employee Optionee, satisfy the following requirements:
(a) DATE OF GRANT. Options must be granted on or before October
19, 2004.
(b) EXPIRATION. No Incentive Stock Option shall be exercisable
after the expiration of ten years from the date such option is granted.
No Non-Qualified Stock Option shall be exercisable after the expiration of
twenty years from the date such option is granted.
(c) PRICE. The option price as to any Share subject to either
an Incentive Stock Option or Non-Qualified Stock option granted under
Section 5 of the Plan will be not less than one hundred percent of the
fair market value of the Share on the date the option is granted. For
purposes of the Plan, the fair market value of a Share means:
(i) The mean between the high and the low prices at which
the Shares were traded if the Shares were then listed
for trading on a national or regional securities
exchange or were then traded on a bona fide over-the-
counter market; or
-5-
(ii) If the Shares were not traded on an exchange or a bona
fide over-the-counter market, a value determined by an
appraiser selected by the Committee.
In the event that the date on which the fair market value of a Share is to
be determined is a date on which there is no trading of the Shares on a
national or regional securities exchange or on the over-the-counter
market, such fair market value shall be determined by referring to the
next preceding business day on which trading occurs.
(d) TRANSFERABILITY.
(i) No Incentive Stock Option shall be transferable by an
Employee Optionee otherwise than by will or the laws of
descent and distribution nor can it be exercised by
anyone other than the Employee Optionee during the
Employee Optionee's lifetime.
(ii) The Committee may, in its discretion, authorize all or
a portion of any Non-Qualified Stock Options to be
granted to an Employee Optionee under Section 5 of the
Plan or which were granted to any Employee Optionee on
or before October 31, 1996, to permit transfer by the
Employee Optionee to (A) the spouse, children or
<PAGE>
grandchildren of the Employee Optionee ("Immediate
Family"),
-6-
(B) a trust for the exclusive benefit of the Employee
Optionee or the Employee Optionee's Immediate
Family, (C) a partnership in which the Employee
Optionee or the Employee Optionee's Immediate Family
are the only partners, or (D) to a former spouse of the
Employee Optionee pursuant to a domestic relations
order within the meaning of Rule 16a-12 promulgated
under Section 16 of the Exchange Act; provided,
however, that (X) there may not be consideration for
any such transfer, (Y) the written option agreement
required by Section 6.1, or any amendment thereof
approved by the Committee, must expressly provide for
transferability of the option evidenced in such
agreement in a manner consistent with this
Section 6.2(d), and (Z) once transferred pursuant to
the preceding provisions of this Section 6.2(d)(ii), no
subsequent transfer of any options shall be permitted
except a transfer by will or the laws of descent and
distribution. In authorizing all or any portion of an
option to be transferred, the Committee may impose any
conditions on exercise, prescribe a holding period for
the
-7-
Shares acquired upon such exercise and/or impose
any other conditions or limitations it deems desirable
or necessary in order to carry out the purposes and
requirements of the Plan. Following transfer, the
terms and conditions of the Plan and the written option
agreement relating to such option shall continue to be
applicable in all respects to the Employee Optionee
making such transfer and each transferred option shall
continue to be subject to the same terms and conditions
as were applicable immediately prior to transfer as if
such option had not been transferred, including, but
not limited to, the terms and conditions with respect
to the lapse and termination of such option. Neither
the Company, the Committee or any Employee Optionee
shall have any obligation to inform any transferee of
the termination or lapse of any option for any reason.
Notwithstanding any other provision of the Plan, (YY)
following the termination of employment of an Employee
Optionee, a transferred option shall be exercisable by
the transferee only to the extent, and for the periods
specified in Section 6(e) as if
-8-
such option had not been transferred and (ZZ) no
option granted prior to October 31, 1996, may be
transferred until such option has been held by the
Employee Optionee for a period of not less than six
months after the date on which such option was
granted.
<PAGE>
(e) EMPLOYMENT. No option granted under Section 5 of the Plan
shall be exercisable unless the Employee Optionee shall have been employed
by the Company (or any present or future parent or subsidiary of the
Company) during the period beginning on the date the option is granted and
ending on a date ninety days before the date of exercise (and subject to
Section 12 herein); provided, however, that in the event an Employee
Optionee dies while in the employ of the Company (or any present or future
parent or subsidiary of the Company) or within ninety days after such
employment had terminated, the employment period requirement described
above shall be deemed to have been satisfied.
(f) MINIMUM HOLDING PERIOD. No option granted prior to November
1, 1996, may be exercised before the date which is six months after the
date on which such option was granted. Each option granted under Section
5 of the Plan shall contain such additional or other restriction or
restrictions with respect to the stated percentage of Shares covered by
such option as to which such option may be exercised as the Committee may
deem
-9-
desirable or necessary in order to carry out the purposes and
requirements of the Plan.
(g) LIMITATION ON OPTION GRANTS. No Employee Optionee may be
granted options under Section 5 of the Plan in any calendar year with
respect to more than 50,000 Shares.
(h) ADDITIONAL RESTRICTIONS RELATING TO INCENTIVE STOCK OPTIONS.
To the extent that the aggregate fair market value (determined as of the
time the option is granted) of the Shares for which Incentive Stock
Options are exercisable for the first time by an individual during any
calendar year (under this Plan or any other plan of the Company or any of
its subsidiaries) exceeds $100,000 (or such other individual limit as may
be in effect under the Code on the date of grant), such options shall not
be Incentive Stock Options. No Incentive Stock Option shall be granted to
an employee who, at the time such option is granted, owns stock possessing
more than ten percent of the total combined voting power of all classes of
stock of the Company or any parent or subsidiary of the Company within the
meaning of Section 422(b)(6) of the Code unless: (i) at the time the
option is granted, the option price is at least one hundred ten percent of
the fair market value of the Shares subject to the option, and (ii) such
option by its terms is not exercisable after the expiration of five years
from the date such option is granted.
Section 7. GRANTING OF OPTIONS TO DIRECTORS. On January 1, 1997 Non-
Qualified Stock Options to purchase that number of Shares equal to the
product of 1,000 and the number of years
-10-
(determined by treating any partial year as a whole year) then remaining
in the term for which the director has been elected, reelected or
appointed shall be granted to each director of the Company. Such options
shall be expressly conditioned upon the approval of the amendments to the
Plan providing for the granting of options to directors pursuant to this
Section 7 and increasing the number of Shares which may be issued under
options granted pursuant to the Plan by the Company's stockholders at the
next annual meeting of the Company's stockholders, and such options shall
<PAGE>
not be effective if such amendments are not so approved. On June 1, 1997
and on each June 1 thereafter Non-Qualified Stock Options to purchase
that number of Shares equal to the product of 1,000 and the number of
years (determined by treating any partial year as a whole year) in the
term for which the director has been elected, reelected or appointed
shall be granted to each director of the Company who was elected,
reelected or appointed to the board of directors of the Company during
the previous twelve months. Directors of the Company who have been
granted Non-Qualified Stock Options pursuant to this Section 7 shall be
referred to herein as "Director Optionees".
Section 8. TERMS AND CONDITIONS OF THE DIRECTOR OPTIONS.
Section 8.1 WRITTEN INSTRUMENT. Each option to purchase Shares
granted under Section 7 of the Plan shall be evidenced by a written option
agreement signed on behalf of the Company and the Director Optionee which
sets forth the name of the Director Optionee, the date granted, the option
price, the number of
-11-
Shares subject to the option and the other terms and conditions set forth
below. Such option agreement shall incorporate by reference all
applicable terms, conditions and limitations set forth in the Plan.
Section 8.2 TERMS AND CONDITIONS OF THE OPTIONS. In addition to any
other limitations, terms and conditions specified in the Plan, each option
granted under Section 7 of the Plan shall, as to each Director Optionee,
satisfy the following requirements:
(a) DATE OF GRANT. Options must be granted on or before
October 19, 2004.
(b) EXPIRATION. Each option granted under Section 7 of the Plan
shall cease to be exercisable after the expiration of twenty years from
the date such option is granted.
(c) PRICE. The option price as to any Share subject to an
option granted under Section 7 of the Plan will be one hundred percent of
the fair market value of the Share on the date the option is granted. For
purposes of the Plan, the fair market value of a Share means:
(i) The mean between the high and the low prices at which
the Shares were traded if the Shares were then listed
for trading on a national or regional securities
exchange or were then traded on a bona fide over-the-
counter market; or
-12-
(ii) If the Shares were not traded on an exchange or a bona
fide over-the-counter market, a value determined by an
appraiser selected by the Committee.
In the event that the date on which the fair market value of a Share is to
be determined is a date on which there is no trading of the Shares on a
national or regional securities exchange or on the over-the-counter
market, such fair market value shall be determined by referring to the
next preceding business day on which trading occurs.
<PAGE>
(d) TRANSFERABILITY. Options granted under Section 7 of the
Plan may be transferred by the Director Optionee to (A) the spouse,
children or grandchildren of the Director Optionee ("Immediate Family"),
(B) a trust for the exclusive benefit of the Director Optionee or the
Director Optionee's Immediate Family, (C) a partnership in which the
Director Optionee or the Director Optionee's Immediate Family are the only
partners, or (D) to a former spouse of the Director Optionee pursuant to a
domestic relations order within the meaning of Rule 16a-12 promulgated
under Section 16 of the Exchange Act; provided, however, that (X) there
may not be consideration for any such transfer, and (Y) once transferred
pursuant to the preceding provisions of this Section 8.2(d), no subsequent
transfer of any options shall be permitted except a transfer by will or
the laws of descent and distribution. Following transfer, the terms and
conditions of the Plan and the written option agreement relating
-13-
to such option shall continue to be applicable in all respects to the
Director Optionee making such transfer and each transferred option shall
continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer as if such option had not been
transferred, including, but not limited to, the terms and conditions with
respect to the lapse and termination of such option. Neither the
Company, the Committee or any Director Optionee shall have any obligation
to inform any transferee of the termination or lapse of any option for
any reason. Notwithstanding any other provision of the Plan, following
the termination of a Director Optionee's membership on the board of
directors of the Company (including for this purpose membership as a
director emeritus of the Company) a transferred option shall be
exercisable by the transferee only to the extent, and for the periods
specified in Section 8.2(e) as if such option had not been transferred.
(e) BOARD MEMBERSHIP. No option granted under Section 7 of the
Plan shall be exercisable unless the Director Optionee shall have been a
member of the board of directors of the Company (including for this
purpose membership as a director emeritus of the Company) during the
period beginning on the date the option is granted and ending on a date
ninety days before the date of exercise (and subject to Section 12
herein); provided, however, that in the event a Director Optionee dies
while a member of the board of directors of the Company (including for
this purpose membership as a director emeritus of the Company) or within
-14-
ninety days after such membership had terminated, the board membership
period requirement described above shall be deemed to have been satisfied.
(f) LIMITATION ON OPTION GRANTS. No Director Optionee may be
granted options in any calendar year with respect to more than 4,000
Shares.
Section 9. EXERCISE AND PAYMENT OF OPTION PRICE.
Section 9.1 EXERCISE OF OPTIONS. Options shall be exercised as to
all or a portion of the Shares by delivery of an irrevocable written
notice to the Company setting forth the exact number of Shares as to which
the option is being exercised and including with such notice payment of
the option price (plus minimum required tax withholding for options held
by Employee Optionees). The date of exercise shall be the date such
<PAGE>
written notice and payment have been delivered to the Secretary of the
Company either in person or by depositing said notice and payment in the
United States mail, postage prepaid and addressed to such officer at the
Company's home office. No option may be exercised with respect to a
fractional share of stock. Notwithstanding the fact that an option has
been transferred pursuant to Section 6.2(d)(ii), the Employee Optionee
granted such option shall remain liable for any required tax withholding.
Section 9.2 PAYMENT FOR SHARES. Payment of the option price (plus
minimum required tax withholding for options held by an Employee Optionee
may be made by (a) tendering cash (in the form of a check or otherwise) in
such amount, or (b) with the
-15-
consent of the Committee, tendering Shares with a fair market value on
the date of exercise equal to such amount, or (c) delivering a properly
executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company the sale or loan proceeds equal
to such amount. Notwithstanding the fact that an option has been
transferred pursuant to Section 6.2(d)(ii), the Employee Optionee granted
such option shall remain liable for any required tax withholding.
Section 10. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. If the
Company shall, after the Effective Date, change its common stock into a
greater or lesser number of shares through a stock dividend, stock split-
up or combination of shares, then
(i) the number of Shares then subject to the plan but which
are not then subject to any outstanding option;
(ii) the number of Shares subject to each then outstanding
option (to the extent not previously exercised); and
(iii) the price per Share payable upon exercise
of each then outstanding option;
shall all be proportionately increased or decreased as of the record date
for such stock dividend, stock split-up or combination of shares in order
to give effect thereto. Notwithstanding any such proportionate increase
or decrease, no fraction of a Share shall be issued upon the exercise of
an option. If any split-up or combination of shares shall involve a
-16-
change of par value, the Shares subject to options theretofore or
thereafter granted shall be the Shares as so changed.
If, after the Effective Date, there shall be any change in the stock
of the Company other than through a stock dividend, stock split-up or
combination of shares, or other change listed in Section 11 herein, then
if (and only if) the Committee shall determine that such change equitably
requires an adjustment in the number or kind or option price of Shares
then subject to an option, or the number or kind of Shares remaining
subject to the Plan, such adjustment as the Committee shall determine is
equitable and as shall be approved by the Board shall be made and shall be
effective and binding for all purposes of such option and the Plan.
<PAGE>
Section 11. MERGER, REORGANIZATION, OR CHANGE IN CONTROL.
(a) Nothing contained in this Plan or in any option granted
under the Plan shall in any way prohibit the Company from merging with or
consolidating into another corporation, or from selling or transferring
all or substantially all of its assets, or from distributing all or
substantially all of its assets to its stockholders in liquidation, or
from dissolving and terminating its corporate existence; and in any such
event (other than a merger in which the Company is the surviving
corporation and after which the Company remains an independent, publicly
held corporation), the Company or any surviving party to any such merger,
consolidation, or sale or transfer of assets may provide by resolution of
its board of directors that all rights of the
-17-
person or persons entitled to exercise then outstanding options granted
under the Plan, and such options, shall wholly and completely terminate
at the time of any such merger, consolidation, sale or transfer of
assets, liquidation, or dissolution, except that adequate provision for
such person or persons shall be made in accordance with paragraph (b)
below.
(b) In the event that (i) any individual, corporation,
partnership or other person or group of persons or entities becomes the
beneficial owner, directly or indirectly, of 45% or more of the Company's
then outstanding common stock ("Change in Control"), or (ii) any merger,
consolidation, liquidation, dissolution or termination after which the
Company will not survive as an independent, publicly-owned corporation or
any sales or transfer of all or substantially all of the Company's assets
("Reorganization") occurs, then the Company shall pay with respect to each
outstanding option under this Plan an amount equal to (x) the difference
between the Fair Market Value (as defined in (c) below) and the exercise
price of the option, multiplied by (y) the number of Shares subject to
such option. Such payment shall be made in cash within 30 days after, in
the case of a Reorganization requiring approval by the Company
stockholders, the date of such approval and, in the case of a Change in
Control, the date upon which such change occurs.
(c) Solely for purposes of (b) above, "Fair Market Value" shall
mean the greater of (i) the highest price per share of the Company's
common stock paid by the acquiring person within
-18-
twelve months of the occurrence of the Change in Control to effect such
change or provided for in any agreement for the Reorganization, or (ii)
fair market value determined in accordance with Sections 6.2(c) and
8.2(c) of this Plan.
Section 12. TERMINATION OR LAPSE OF OPTIONS. Each option granted
under Section 5 of the Plan shall terminate or lapse upon the first to
occur of (a) the expiration date set forth in the applicable stock option
agreement, (b) the applicable date set forth in Section 6.2(b), (c) the
date of the Employee Optionee's voluntary resignation or termination for
cause, or (d) the date which is ninety days after the date of the Employee
Optionee's other termination of employment with the Company or any present
or future parent or subsidiary of the Company; provided, however, that in
the event of an Employee Optionee's death while in the employ of the
<PAGE>
Company or a parent or subsidiary of the Company or, if the Employee
Optionee is no longer so employed, in the event of the Employee Optionee's
death within ninety days after such employment had terminated, an option
may be exercised, to the extent exercisable by the Employee Optionee
immediately prior to his death, in whole or in part by the Employee
Optionee's estate or designee by will, or, if applicable, the transferee
of such option pursuant to Section 6.2(d), but only if the date of
exercise is on or before the first to occur of (i) the expiration date set
forth in the applicable stock option agreement, (ii) the applicable date
set forth in Section 6.2(b), or (iii) the date which is twelve months
after the date of the Employee Optionee's
-19-
death. For purposes of this section, "for cause" shall mean affirmative
acts in violation of federal, state, or local criminal law.
Each option granted under Section 7 of the Plan shall terminate or
lapse upon the first to occur at (a) the expiration date set forth in the
applicable stock option agreement, (b) the applicable date set forth in
Section 8.2(b), or (c) the date which is ninety days after the date the
Director Optionee's membership on the board of directors of the Company
(including for this purpose membership as a director emeritus of the
Company) terminated; provided, however, that in the event of a Director
Optionee's death while a member of the board of directors of the Company
(including for this purpose membership as a director emeritus of the
Company) or, if the Director Optionee Is no longer a member, in the event
of the Director Optionee's death within ninety days after such membership
had terminated, an option may be exercised, to the extent exercisable by
the Director Optionee immediately prior to his death, in whole or in part
by the Director Optionee's estate or designee by will, or, if applicable,
the transferee of such option pursuant to Section 8.2(d) but only if the
date of exercise is on or before the first to occur of (i) the expiration
date set forth in the applicable stock option agreement, (ii) the
applicable date set forth in Section 8.2(b), or (iii) the date which is
twelve months after the date of the Director Optionee's death.
-20-
Section 13. AMENDMENT AND TERMINATION OF PLAN.
Section 13.1 AMENDMENT OF PLAN. The board of directors of the
Company may amend the Plan from time to time and at any time; provided,
however, that no amendment shall adversely affect any option which has
been granted prior to the amendment and no amendment with respect to the
maximum number of Shares which may be issued pursuant to options or the
class of eligible individuals, or which materially increases benefits
accruing to Optionees under the Plan (within the meaning of Section 162(m)
of the Code) shall be effective unless approved by a majority of the
shares entitled to vote at a meeting of shareholders.
Section 13.2 TERMINATION OF PLAN. The Plan shall terminate on the
first to occur of (a) October 19, 2004 or (b) the date specified by the
board of directors of the Company as the effective date of Plan
termination; provided, however, that the termination of the Plan shall not
limit or otherwise affect any options outstanding on the date of
termination.
<PAGE>
Section 14. EFFECTIVE DATE. The effective date of the Plan shall be
October 20, 1994, the date of approval by the board of directors of the
Company.
Section 15. INVESTMENT INTENT. Shares acquired pursuant to the
exercise of an option, if not registered by the Company under the
Securities Act of 1933 (the "Act"), will be "restricted" stock which will
not be freely transferable by the holder after exercise of the option.
Each Employee Optionee, Director Optionee and assignee in interest of an
Optionee accordingly
-21-
represents, as a condition of participation in the Plan, that Shares
which are unregistered under the Act are being acquired for the Employee
Optionee's, or Director Optionee's (or his or her assignee's) own account
for investment only and not with a view to offer for sale or for sale in
connection with the distribution or transfer thereof.
Section 16. AVAILABILITY OF INFORMATION. The Company shall furnish
each Optionee with (a) a copy of the Plan and the Company's most recent
annual report to its shareholders at the time the option agreement
provided for in Section 6.1 or 8.1 is executed by the Optionee and (b) a
copy of each subsequent annual report, on or about the same date as such
report shall be made available to shareholders of the Company. The
Company will furnish, upon written request addressed to the Secretary of
the Company, but at no charge to the Optionee or any duly authorized
representative of the Optionee, copies of all reports filed by the Company
with the Securities and Exchange Commission or the commissioner of
securities of any state, including, but not limited to, the Company's
annual reports on Form 10-K, its quarterly reports on Form 10-Q, and its
proxy statements.
Section 17. CONDITIONS OF EMPLOYMENT. Participation in or
eligibility for participation in the Plan by an Employee Optionee shall
not confer upon any Employee Optionee the right to be continued as an
employee of the Company or any present or future parent or subsidiary of
the Company and the Company and its participating subsidiaries hereby
expressly reserve the right to
-22-
terminate the employment of any employee, with or without cause,
regardless of the Plan and any options granted pursuant to it.
Section 18. MISCELLANEOUS.
(a) The transfer of an Employee Optionee from the Company to a
parent or subsidiary of the Company or from a parent or subsidiary of the
Company to the Company or another parent or subsidiary of the Company
shall not be a termination of employment or an interruption of continuous
employment for the purpose of the Plan.
(b) As used in the Plan, the term "parent" and "subsidiary"
shall have the meanings ascribed to them in Sections 421, 422 and 424 of
the Code.
Section 19. GOVERNMENT APPROVALS. If at any time the Company shall
be advised by its counsel that the exercise of any option or the delivery
<PAGE>
of Shares upon the exercise of an option is required to be approved,
registered or qualified under any applicable law, or must be accompanied
or preceded by a prospectus or similar circular meeting the requirements
of any applicable law, the Company will use reasonable efforts to obtain
such approval, to effect such registrations and qualifications, or to
provide such prospectus or similar circular within a reasonable time, but
exercise of the options or delivery by the Company of certificates for
Shares may be deferred until such approvals, registrations or
qualifications are effected, or until such prospectus or similar circular
is available.
-23-
Section 19 [20]. Notwithstanding any other provision of this Plan or
of any option agreement relating to any option granted hereunder, the
consummation of the transactions contemplated by that certain Agreement
and Plan of Merger, dated as of August 24, 1997, by and among Wausau Paper
Mills Company, WPM Holdings, Inc. and the Company on substantially the
terms and conditions set forth therein as of August 24, 1997 shall not be
deemed to constitute a "Change in Control" or any other transaction
described in Section 11(b) of this Plan and of any corresponding or
similar provision of any such option agreement. Without limiting the
generality of the foregoing, the consummation of such transactions shall
not result in the payment of any cash to any holder of an option granted
under this Plan.
IN WITNESS WHEREOF, the Company has caused the Plan as amended
effective December 19, 1996 to be executed by its duly authorized officers
as of the 19th day of December, 1996.
MOSINEE PAPER CORPORATION
By: DANIEL R. OLVEY
Daniel R. Olvey, As its
President
ATTEST:
By: GARY P. PETERSON
Gary P. Peterson, As its secretary
-24-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE FOUR MONTHS ENDED DECEMBER 31,
1997 OF WAUSAU-MOSINEE PAPER CORPORATION AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 2,584
<SECURITIES> 0
<RECEIVABLES> 78,414
<ALLOWANCES> 8,740
<INVENTORY> 143,610
<CURRENT-ASSETS> 234,929
<PP&E> 990,609
<DEPRECIATION> 385,679
<TOTAL-ASSETS> 872,064
<CURRENT-LIABILITIES> 108,276
<BONDS> 140,500
<COMMON> 168,554
0
0
<OTHER-SE> 271,606
<TOTAL-LIABILITY-AND-EQUITY> 872,064
<SALES> 319,767
<TOTAL-REVENUES> 319,767
<CGS> 258,613
<TOTAL-COSTS> 293,458
<OTHER-EXPENSES> (417)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,725
<INCOME-PRETAX> 24,001
<INCOME-TAX> 14,100
<INCOME-CONTINUING> 9,901
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,901
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
EXHIBIT 99.1
SUBSIDIARIES OF WAUSAU-MOSINEE PAPER CORPORATION
January 20, 1998
1. Rhinelander Paper Company, Inc., a Wisconsin corporation
2. Wausau Papers Export Corporation, a Wisconsin corporation
3. Wausau Papers International, Inc., a U.S. Virgin Islands corporation
4. Wausau Papers of New Hampshire, Inc., a Delaware corporation
5. Wausau Papers Otis Mill Inc., a Delaware corporation
6. Mosinee Paper Corporation, a Wisconsin corporation
Subsidiaries of Mosinee Paper Corporation:
(a) The Sorg Paper Company, an Ohio corporation
(i) The Middletown Hydraulic Company, an Ohio corporation
(b) Dickson Forest Products, Inc.<dagger>, a South Dakota
corporation
(c) Mosinee Paper International, Inc., a U.S. Virgin Islands
corporation
(d) Mosinee Holdings, Inc., a Wisconsin corporation
(e) Bay West Paper Corporation, a Wisconsin corporation
<dagger>On January 11, 1986, substantially all the assets of
Dickson Forest Products, Inc. were sold.
