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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the Fiscal Year Ended September 30, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from ____________ to
____________
Commission File Number 1-7626
UNIVERSAL FOODS CORPORATION
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(Exact name of registrant as specified in its charter)
WISCONSIN 39-0561070
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
433 EAST MICHIGAN STREET
MILWAUKEE, WISCONSIN 53202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414) 271-6755
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT
Title of each class Name of each exchange on which registered
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Common Stock, $.10 par value New York Stock Exchange, Inc.
Associated Preferred Share Purchase Rights
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT
None
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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 such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for at least the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock as of December 4, 1998: 53,954,874 shares of Common Stock, $.10
par value, including 2,793,753 treasury shares.
Aggregate market value of Universal Foods Corporation Common Stock,
excluding treasury shares, held by non-affiliates as of December 4, 1998 was
$1,186,069,331. In determining who are affiliates of the Company for purposes
of this computation, it is assumed that directors, officers, and any persons
filing a Schedule 13D or Schedule 13G are "affiliates" of the Company. The
characterization of such directors, officers, and other persons as affiliates
is for purposes of this computation only and should not be construed as a
determination or admission for any other purpose that any of such persons are,
in fact, affiliates of the Company.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of Universal Foods Corporation Annual Report to Shareholders
for the fiscal year ended September 30, 1998 (Parts I, II and IV of Form 10-K)
2. Portions of Universal Foods Corporation Notice of Annual Meeting and
Proxy Statement of the Company dated December 15, 1998 (Parts II and III of
Form 10-K)
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PART I
ITEM 1. BUSINESS -- FOOD AND OTHER INDUSTRIES
Universal Foods Corporation (the "Company") was incorporated in 1882 in
Wisconsin. Its principal executive offices are located at 433 East Michigan
Street, Milwaukee, Wisconsin 53202, telephone (414) 271-6755.
DESCRIPTION OF BUSINESS
Universal Foods Corporation is an industrial marketer of
high-performance components that add functionality to foods, cosmetics,
pharmaceuticals and other products. The Company's principal products include:
- -- flavors, flavor enhancers, and aroma chemicals for foods, beverages,
dairy/ice cream products, animal feed, personal care and household
items;
- -- certified synthetic and natural colors for foods, cosmetics, specialty
inks and pharmaceuticals;
- -- dehydrated vegetable products sold primarily to food processors; and
- -- a broad line of yeast products for commercial baking and other uses.
The Company has organized its business into five divisions: Flavor,
Color, Dehydrated Products, Red Star Yeast & Products, and Asia Pacific.
FLAVOR DIVISION
The Company is a leading manufacturer and supplier of flavors,
ingredient systems and aroma chemicals to the dairy, food processing, beverage,
personal care and household products industries worldwide. The Company has a
broad, distinctive and fully integrated product offering, ranging from savory
flavor components to fully formulated flavor systems for dairy, beverage, and
processed food applications.
During 1998 the Company combined its bioproducts business (which was
formerly operated as a separate division known as Red Star BioProducts) with its
Flavor Division. The bioproducts business served the food and animal feed
processing, as well as the bionutrient industries with a broad line of natural
extracts and specialty flavors. The Company produces various specialty extracts
from yeast, vegetable proteins, meat, milk protein and other natural products
which are used primarily as savory flavor, texture modifiers and enhancers in
processed foods. The nutritional and functional properties of these extracts
also make them useful in enzyme and pharmaceutical production. The Company
believes it is the leading supplier of yeast extracts and the second leading
supplier of hydrolized vegetable proteins in the U.S. market.
Strategic acquisitions have expanded Universal Flavors' product lines
and processing capabilities. The January 1994 acquisition of Destillaciones
Garcia de la Fuente, S.A. (DGF), based in Granada, Spain, provided a depth of
expertise for expanding into aroma chemicals, which are used to create flavors
as well as fragrances. In July 1994, Universal Flavors, through its
international subsidiary, purchased its partner's 51% interest in Azteca en
Ambesco de Mexico S.A. de C.V. This purchase brought beverages and dairy flavor
product lines to the Company's existing Mexican flavor business. In January
1998, the Company acquired Arancia Ingredients Especiales, S.A. de C.V., a
manufacturer of savory flavors and
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other food ingredients, improving access to the rapidly growing Latin American
savory flavor market. In April 1998, the Company acquired an English savory
and seasonings flavor manufacturer, DC Flavours Ltd., which further expanded
the Company's technology and worldwide market presence and also gives the
Company access to the snack food market, the fastest growing segment in
Europe's food market. In May 1998, the acquisition of substantially all of the
assets and business of the beverage business of German flavor manufacturer
Sundi GmbH, with its emphasis on all-natural flavor ingredients, provided the
Company with a point of entry into Germany, Europe's largest flavor market.
The Flavor Division operates through the Company's subsidiary,
Universal Flavor Corporation and its subsidiaries, with plants in Illinois,
Indiana, Michigan, Missouri, Wisconsin, Belgium, Canada, France, Germany, Italy,
Mexico, Spain, and the United Kingdom.
COLOR DIVISION
The Company believes it is the world's leading manufacturer of
certified food colors. It makes certified synthetic and natural colors for
domestic and international producers of beverages, bakery products, processed
foods, confections, pet foods, cosmetics and pharmaceuticals. It also makes
ink-jet inks and other high-purity organic dyes. The Color Division operates
through the Company's subsidiary, Warner-Jenkinson Company Inc., which has its
principal manufacturing facility in Missouri and other subsidiaries with plants
in New Jersey, Canada, Mexico, Italy, the United Kingdom, and the Netherlands.
The Company became a supplier of ink-jet inks for the ink-jet printer
market with the acquisition of Tricon Colors, Inc. in 1997. It produces
pharmaceutical colors, ink-jet inks and other high-purity organic dyes in the
Tricon plant, which is located in New Jersey. In September 1997, the Company
strengthened its presence in Latin America by acquiring certain assets of the
food color business of Pyosa, S.A. de C.V., which is located in Monterrey,
Mexico. In September 1998, the Company acquired Italian natural color producer
Reggiana Antociani S.R.L., a company which specializes in the production of
anthocyanin, which is extracted from grape skins for use in fruit juices,
flavored teas, wine coolers and fruit fillings, strengthening the Company's
offerings in natural colors, the fastest growing segment of the worldwide food
colors market.
DEHYDRATED PRODUCTS DIVISION
The Company believes it is the third largest producer of dehydrated
onion and garlic products in the United States. The Company is also one of the
largest producers and distributors of chili powder, paprika, chili pepper,
oleoresin (a liquid chili pepper used as a highly concentrated coloring agent),
and dehydrated vegetables such as parsley, celery and spinach. Domestically, the
Company sells dehydrated products to food manufacturers for use as ingredients
and also for repackaging under private labels for sale to the retail market and
to the food service industry. The Dehydrated Products Division operates in the
United States through the Company's subsidiary, Rogers Foods Inc., which has
its processing facilities in California.
The Company believes it is the leading dehydrator of specialty
vegetables in Europe. During 1994 and 1995, the Company acquired three European
dehydrated vegetable processors. The acquisitions give the Company a base from
which to expand its dehydrated products business internationally, as the
acquisitions included processing facilities in Ireland, the Netherlands, and
France. These acquisitions also expanded the Company's dehydrated technology
base to include freeze drying and frozen vegetables, puffed drying and vacuum
drying. Vegetables processed using these technologies rehydrate faster and
absorb water more effectively than vegetables processed using straight heat
drying methods. This is a benefit with today's convenience foods such as soups,
snacks and other dry foods.
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RED STAR YEAST & PRODUCTS DIVISION
The Company believes it is the largest North American supplier of yeast
to the commercial bakery market. It also exports yeast and related products
throughout the world. The Company specializes in the production of baker's yeast
in cream (liquid), compressed (semi-solid), and active dry form, as well as
nutritional yeast and yeast used in the wine-making process, which are all sold
under the RED STAR trademark. The Company sells active dry yeast to food
processors for inclusion in bread, pizza, and similar mixes.
The Company also manufactures compressed, active dry and fast-acting
dry yeast products in ready-to-use packages which are sold on grocery store
shelves and in convenient packages for food service use. The Company believes it
is the second largest supplier of yeast to the domestic retail market. In 1994,
the Company purchased a 20% interest in and entered into an agreement with
Minn-Dak Yeast Company, located in North Dakota, for contract
manufacturing under the Red Star label and to supply molasses, a major raw
material in yeast production.
Red Star Yeast & Product's domestic yeast plants are located in
Wisconsin, Maryland and California.
ASIA PACIFIC DIVISION
In 1997, the Company established the Asia Pacific Division as a
separate operating Division to focus on marketing its diverse product line in
the Pacific Rim under one unified name. Through the Asia Pacific Division, the
Company offers a full range of products from its other four divisions as well as
products developed by regional technical teams to appeal to local preferences.
Sales, marketing and technical functions previously directed by U.S. based
divisions are managed through the Asia Pacific Division's headquarters in
Singapore. Manufacturing operations are located in Australia, Hong Kong, New
Zealand, and the Philippines.
RESEARCH AND DEVELOPMENT/QUALITY ASSURANCE
The development of specialized products and services is a complex,
technical process calling upon the combined knowledge and talents of the
Company's research, development and quality assurance personnel. The Company
believes that its competitive advantage lies in its ability to work with its
customers to develop and deliver high-performance products which address the
broad, but unique and distinct, needs of those customers.
The Company's research, development and quality assurance personnel
make significant contributions toward improving existing products and developing
new products tailored to its customer's needs, while providing on-going
technical support and know-how to the Company's manufacturing activities. The
Company employs approximately 390 people in research, development and quality
assurance. Expenditures for research, development and quality assurance in 1998
were $29.4 million compared with $31.5 million in 1997 and $29.8 million in
1996. Of the foregoing amounts, approximately $18.7 million in 1998, $19.7
million in 1997 and $21.4 million in 1996 were research and development expenses
as defined by the Financial Accounting Standards Board.
As part of its commitment to quality as a competitive advantage, the
Company has undertaken efforts to achieve certification to the requirements
established by the International Organization for Standardization in Geneva,
Switzerland, through its ISO 9000 series of quality standards. Facilities
currently certified include Universal Flavors facilities in the United States,
Spain, Italy, the United Kingdom and Canada; Warner-Jenkinson facilities in the
United States, the Netherlands and United Kingdom; and Dehydrated Products
facilities in the United States, Ireland, France and the Netherlands.
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COMPETITION
All Company products are sold in highly competitive markets. While no
single factor is determinative, the Company's competitive position is based
principally on process and applications expertise, quality, technological
advances resulting from its research and development, and customer service and
support. Because of its highly differentiated products, the Company competes
with only a few companies across multiple ingredient lines, and is more likely
to encounter competition specific to an individual product.
-- Flavor. With the evolution of food processing as a global business,
competition to supply the flavor and fragrance industry has taken on an
increasingly global nature. Most of the Company's customers do not buy
all their flavor or fragrance products from a single supplier. As a
result, the Company does not compete with a single company in all
product categories.
-- Color. Although statistics are not available, the Company believes that
it is one of the world's largest producers of synthetic and natural
colors. State-of-the-art equipment, the latest process technology, a
Color Service Laboratory unequaled in the industry, and the most
complete range of synthetic and natural colors constitute the basis for
its market leadership position. Strategic acquisitions continue to
enhance product and process technology synergies, as well as a growing
international presence.
-- Dehydrated. Competition for dehydrated onion, garlic, capsicums,
carrots and parsley products, the main products of the Dehydrated
Products Division, is limited to three main competitors. Competition
for other dehydrated business is limited to single, as opposed to
multiple, product lines. State-of-the-art dehydration technology,
extensive plant breeding and seed development programs, and
comprehensive crop management techniques produce consistent,
top-quality dehydrated products which helps the Company maintain its
competitive position. Competition for dehydrated business is on the
basis of quality, customer service and price.
-- Yeast. The Company believes that it is the largest supplier of
commercial baker's yeast and the second largest supplier of retail
yeast in North America. In both the commercial and retail yeast areas,
the Company competes with several yeast producers. Competition for the
supply of yeast is on the basis of quality, customer service and price.
-- Asia Pacific. Because of the broad array of products available to
customers of the Asia Pacific Division, the Company is able to offer a
wider product base than many of its competitors. Competition is based
upon reliability in product quality, service and price as well as
technical support available to customers.
PRODUCTS AND APPLICATION ACTIVITIES
With the Company's strategic focus on high-performance ingredients and
ingredient systems, the Company's emphasis is in application activities and
processing improvements in the support of its customers' numerous new and
reformulated products. The Company maintains many of its proprietary processes
and formulae as trade secrets and under secrecy agreements with customers.
Lower calorie ingredients and non-nutritive sweeteners for dairy, food
and beverage applications are a focus of development activity for Universal
Flavors. Formulations for functional and textured beverages and flavors for
snack and main meal items offer opportunities as well. Development of savory
flavors has accelerated with the integration of the Company's BioProducts
Division in 1998.
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The development of natural food colors remains a growth opportunity for
the Color Division. With the 1997 acquisition of Tricon Colors, Inc., the Color
Division expanded its purification technology, with the primary opportunity in
colors for ink-jet printers.
European acquisitions in 1994 and 1995 expanded the Dehydrated Products
product line to include peas, carrots, beans, potatoes and other specialty
vegetables.
The Red Star Yeast & Products Division has been producing baker's yeast
for over 115 years, serving the commercial and consumer markets. The move to
cream yeast and the development of cream yeast delivery systems has
revolutionized the commercial baking industry, improving efficiencies and
increasing productivity. The development of yeast derivatives and other
specialty ingredients provide growth opportunities in bionutrients and
biotechnology markets such as pharmaceuticals, vitamins, vaccines and
bioremediation.
In addition, the discussion of operational activities in the "Business
Profile" on Pages 4 and 5 of the 1998 Annual Report to Shareholders is
incorporated by reference.
RAW MATERIALS
In producing its products, the Company uses a wide range of raw materials.
Chemicals and petrochemicals used to produce certified colors are obtained from
several domestic and foreign suppliers. Raw materials for natural colors, such
as carmine, beta carotene, annatto and turmeric, are purchased from overseas
and U.S. sources. In the production of flavors, the principal raw materials
include essential oils, aroma chemicals, botanicals, fruits and juices, and are
obtained from local vendors. Flavor enhancers and secondary flavors are
produced from brewer's yeast, baker's yeast from the Company's own operations,
and vegetable materials such as corn and soybean. The acquisition of the Biolux
Group in 1994 provides long-term supply arrangements on supplies of brewer's
yeast for European production needs. Chili peppers, onion, garlic and other
vegetables are acquired under annual contracts with numerous growers in the
western United States and Europe.
The principal raw material used in the production of yeast products is
molasses, which is purchased through brokers and producers, usually under yearly
fixed-price contracts. Processes have been developed to permit partial
replacement of molasses with alternate, readily-available substrates for use if
molasses supplies should become limited. In 1994, the Company entered into a
supply agreement with Minn-Dak Yeast Company, a major North American
molasses supplier, to provide additional assurances of adequate supplies of
molasses.
The Company believes that alternate sources of materials are available
to enable it to maintain its competitive position in the event of an
interruption in the supply of raw materials from a single supplier.
FOREIGN OPERATIONS
Note 11 of the Consolidated Financial Statements of the Company
contained in the Universal Foods Corporation 1998 Annual Report is incorporated
herein by reference.
PATENTS, FORMULAE AND TRADEMARKS
The Company owns or controls many patents, formulae and trademarks
related to its businesses. The businesses are not materially dependent upon
patent or trademark protection; however, trademarks, patents and formulae are
important for the continued consistent growth of the Company.
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EMPLOYEES
As of September 30, 1998, the Company employed 4,196 persons in the
U.S. and worldwide. 579 U.S. employees are represented by one of the 12 unions
with which the Company has collective bargaining relationships.
REGULATION
Compliance with government provisions regulating the discharge of
material into the environment, or otherwise relating to the protection of the
environment, did not have a material adverse effect on the Company's operations
for the year covered by this report. Compliance is not expected to have a
material adverse effect in the succeeding two years as well. As is true with the
food industry in general, the production, packaging, labeling and distribution
of the products of the Company are subject to the regulations of various
federal, state and local governmental agencies, in particular the U.S. Food &
Drug Administration.
ITEM 2. PROPERTIES
Domestically, the Company operated 16 manufacturing and processing
plants in eight states as of September 30, 1998. Three plants produced yeast,
two facilities produced flavor enhancers and other bioproducts, three produced
dehydrated products, five plants produced colors and related products, and three
plants produced flavors. None of these properties are held subject to any
material encumbrances. At September 30, 1998, the Company operated 27 foreign
manufacturing facilities located in 14 foreign countries. Of these facilities,
four produced flavor enhancers and other bioproducts, three manufactured
dehydrated and frozen vegetables, five produced colors, 14 produced or
distributed flavors and aroma chemicals, and one produced both
flavors and colors. In addition, the Company has minority interests
in seven companies located in the U.S. and five foreign countries.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to various legal proceedings related to its
business. The Company believes that adverse decisions in these proceedings
would not, in the aggregate, subject the Company to damages of a material
amount.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
the last quarter of fiscal 1998.
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ITEM 4(a). EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the registrant and their ages as of December
1, 1998 are as follows:
EXECUTIVE OFFICERS
Name Age Position
---- --- --------
Kenneth P. Manning 56 Chairman, President and Chief Executive Officer
Richard Carney 48 Vice President - Human Resources
Steven O. Cordier 42 Treasurer
Michael duBois 52 President - Flavor
Michael Fung 48 Vice President and Chief Financial Officer
John L. Hammond 52 Vice President, Secretary and General Counsel
Michael L. Hennen 45 Controller
Richard F. Hobbs 51 Vice President - Administration
R. Steven Martin 42 Vice President and Group Executive
James F. Palo 58 President - Dehydrated Products
Jorge Slater 51 President - Asia Pacific
K.T. Thomas Tchang 47 President - Red Star Yeast & Products
William Tesch 48 Vice President; Vice President - Operations,
Red Star Yeast & Products
Michael A. Wick 55 President - Color
Dr. Ho-Seung Yang 50 Vice President - Technologies
Messrs. Cordier, duBois, Fung, Hammond, Hennen, Martin, Slater, Tchang,
Tesch and Yang have been employed by the Company in an executive capacity for
less than five years. All of the other individuals named above have been
employed by the Company for at least five years.
Mr. Cordier joined the Company in October 1995 as Treasurer. From 1990
until joining the Company he was Director of Financial Planning at International
Flavors and Fragrances, Inc.
Mr. duBois joined the Company in May 1998 as President of the Flavor
Division. From 1994 until joining Universal Foods, Mr. duBois was employed by
Bush Boake Allen, Inc., a food technology company, first as Vice President Sales
and Marketing, Flavors North America, and, beginning in 1996 as Vice President
and General Manager, Seasonings Division. From 1992 to 1994 he served as Vice
President - Sales and Marketing, Flavor and Fruit Division for Sanofi
Bio-Industries, a flavor company. Prior to joining Sanofi Bio-Industries, Mr.
duBois held several positions with Firmenich, Incorporated, a fragrance and
flavor company.
Mr. Fung joined the Company in June 1995 as Vice President and Chief
Financial Officer. From 1992 to 1995 he served as Senior Vice President and
Chief Financial Officer for Vanstar Corporation, a leading provider of products
and services to design, build and manage computer network infrastructures
for large enterprises. From 1988 to 1992, Mr. Fung was Vice President and Chief
Financial Officer of Bass Pro Shops and Tracker Marine Corporation,
privately-held companies operated under common ownership involved in the
manufacture and marketing of outdoor sporting goods.
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Mr. Hammond joined the Company in January 1998, as Vice President,
Secretary and General Counsel. From 1992 to 1997, Mr. Hammond was employed by
The Providence Journal Company, a newspaper, cable and broadcast television
company, initially as Vice President-Legal, and subsequently as Vice President,
General Counsel and Chief Administrative Officer. From 1989 to 1992, Mr. Hammond
was Vice President, General Counsel and Secretary of Landstar System, Inc., a
trucking company. Prior to that, Mr. Hammond was employed by The Singer Company
for ten years and was Deputy General Counsel at the time of his departure.
Mr. Hennen joined the Company in January 1995 as Controller. From 1985
until joining the Company he was a Senior Manager at Deloitte & Touche LLP, a
public accounting firm providing audit and tax services to the Company as its
outside auditor.
Mr. Martin was elected Vice President and Group Executive in June 1997.
He joined the Company as Vice President - Marketing of its Red Star Yeast &
Products Division in 1993. In June 1995, Mr. Martin was elected President - Red
Star Yeast & Products Division. Prior to joining the Company, Mr. Martin was
with the Monsanto Company, now operating as Solutia, a chemical company, since
1978 in various management positions.
Mr. Slater was elected President - Asia Pacific Division in April
1998. Mr. Slater was hired by the Company in August of 1996 and served as Vice
President and Managing Director of the Asia Pacific Division prior to being
elected its President. From 1994 to 1996, Mr. Slater worked at McCormick &
Company, Inc., a spice and seasonings company, as Vice President and Managing
Director Asia Pacific. Prior to joining McCormick & Company, Inc., Mr. Slater
worked for Dole Packaged Foods Company and, prior to that, for International
Flavors and Fragrances, Inc.
Mr. Tchang was elected President - Red Star Yeast & Products Division
in September 1997. He joined the Company in 1995 as Vice President, Sales and
Marketing for the Company's BioProducts Division. Prior to joining the Company,
he was Marketing Director of Huntsman Specialty Chemicals Corp., a chemical
company, which purchased the Maleic Anhydride business of the specialty
chemicals division of the Monsanto Company. Prior to such purchase, Mr. Tchang
was employed by the Monsanto Company for 20 years in various manufacturing, and
later sales and marketing positions.
Mr. Tesch joined the Company in 1971, becoming Plant Manager of the Red
Star BioProducts Division in 1989. From 1993 to 1994, he was Director, Training
and Development of The Universal Way. From 1994 to 1996, he served as Vice
President, Manufacturing Operations of the Red Star BioProducts Division, and in
April 1996, Mr. Tesch was elected President of the Red Star BioProducts
Division, a position he held until the completion of the consolidation of the
Flavor and BioProducts Divisions in January 1998. From January 1998 until
July 1998, Mr. Tesch was the Vice President of Corporate Engineering. Mr. Tesch
is currently a corporate Vice President, and the Vice President of Operations
for Red Star Yeast & Products.
Dr. Yang was elected Vice President, Technologies in January 1998.
From 1990 to 1998, Dr. Yang was employed by Sunkyong Industries in Seoul, Korea,
where he held the positions of managing director of corporate planning and
development; managing director, group chairman's office and director, life
science and development.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The only market in which the common stock of the Company is traded
is the New York Stock Exchange. The range of the high and low sales prices as
quoted in the New York Stock Exchange - Composite Transaction tape for the
common stock of the Company and the amount of dividends declared for fiscal
1998 appearing under "Common Stock prices and dividends" on Page 32 of the
1998 Annual Report to Shareholders are incorporated by reference. Common
stock dividends were paid on a quarterly basis, and it is expected that
quarterly dividends will continue to be paid in the future. In addition to the
restrictions contained in its Amended and Restated Articles of Incorporation,
the Company is subject to restrictions on the amount of dividends which may be
paid on its common stock under the provisions of various credit agreements. On
the basis of the consolidated financial statements of the Company as of
September 30, 1998, $34,654,000 is available for the payment of dividends on
the common stock of the Company under the most restrictive loan covenants.
On January 27, 1994 the Board of Directors established a share
repurchase program which authorizes the Company to repurchase up to 5 million
shares (on a post-split basis). As of September 30, 1998, 3,061,096 shares had
been repurchased under that program.
On June 25, 1998, the Board of Directors of the Company adopted a
preferred stock shareholder rights plan which is described at Note 7 of Notes to
Consolidated Financial Statements - "Shareholders' Equity" on Pages 25 and 26 of
the 1998 Annual Report to Shareholders and which is incorporated by reference.
The number of shareholders of record on December 4, 1998 was 5,289.
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data required by this item is incorporated by
reference from the "Five-Year Review" and the notes thereto on Page 31 of the
1998 Annual Report to Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
"Management's Analysis of Operations and Financial Condition" is
incorporated by reference from Pages 13 through 17 of the 1998 Annual Report to
Shareholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is set forth under "Market Risk
Factors" on Pages 14 and 15 of the 1998 Annual Report to Shareholders and is
incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data required by this item
are set forth on Pages 18 through 30 and Page 32 of the 1998 Annual Report to
Shareholders and are incorporated by reference.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors and officers appearing under "Election
of Directors" (ending before "Committees of the Board of Directors") and "Other
Matters" on Pages 2 through 7 and Page 28, respectively, of the
Notice of Annual Meeting and Proxy Statement of the Company dated December 15,
1998, is incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information relating to compensation of directors and officers is
incorporated by reference from "Director Compensation and Benefits,"
"Compensation and Development Committee Report" and "Executive Compensation" on
Page 8 and Pages 10 through 16 of the Notice of Annual Meeting and Proxy
Statement of the Company dated December 15, 1998.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The discussion of securities ownership of certain beneficial owners and
management appearing under "Principal Shareholders" on Pages 9 and 10 of the
Notice of Annual Meeting and Proxy Statement of the Company dated December 15,
1998, is incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no family relationships between any of the directors,
nominees for director and officers of the Company nor any arrangement or
understanding between any director or officer or any other person pursuant to
which any of the nominees has been nominated. No director, nominee for director
or officer had any material interest, direct or indirect, in any business
transaction of the Company or any subsidiary during the period October 1, 1997
through September 30, 1998, or in any such proposed transaction. In the ordinary
course of business, the Company engages in business transactions with companies
whose officers or directors are also directors of the Company. These
transactions are routine in nature and are conducted on an arm's-length basis.
The terms of any such transactions are comparable at all times to those
obtainable in business transactions with unrelated persons.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed:
1. and 2. Financial Statements and Financial Statement Schedule.
(See following "List of Financial Statements and
Financial Statement Schedules.")
3. Exhibits. (See Exhibit Index following this report.)
(Other than Exhibit 10.1(a), no instruments defining
the rights of holders of long-term debt of the Company
and its consolidated subsidiaries are filed herewith
because no long-term debt instrument authorizes
securities exceeding 10% of the total consolidated
assets of the Company. The Company agrees to furnish
a copy of any such instrument to the Securities and
Exchange Commission upon request.)
(b) Reports on Form 8-K:
A report on Form 8-K, dated June 25, 1998, was filed on August 6, 1998
in connection with the adoption of the Share Purchase Rights Plan.
A report on Form 8-K, dated September 10, 1998, was filed on October
6, 1998 in connection with Amendment No. 1 to the Universal Foods Corporation
1998 Stock Option Plan.
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
Page Reference in
1998 Annual Report
1. Financial Statements To Shareholders
---------------------
The following consolidated financial statements
of Universal Foods Corporation and Subsidiaries
are incorporated by reference from the Annual
Report to Shareholders for the year ended
September 30, 1998.
Independent Auditors' Report 30
Consolidated Balance Sheets -- September 30,
1998 and 1997 19
Consolidated Earnings -- Years ended September 30,
1998, 1997, and 1996 18
Consolidated Shareholders' Equity -- Years ended
September 30, 1998, 1997 and 1996 20
Consolidated Cash Flows -- Years ended September 30,
1998, 1997 and 1996 21
Notes to Consolidated Financial Statements 22-29
13
<PAGE> 14
PAGE REFERENCE IN
2. FINANCIAL STATEMENT SCHEDULES FORM 10-K
- -------------------------------- -----------------
Independent Auditors' Report 14
Schedule II - Valuation and Qualifying Accounts and Reserves 15
All other schedules are omitted because they are inapplicable, not required by
the instructions or the information is included in the consolidated financial
statements or notes thereto.
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Directors
of Universal Foods Corporation:
We have audited the consolidated financial statements of Universal Foods
Corporation and subsidiaries as of September 30, 1998 and 1997 and for each of
the three years in the period ended September 30, 1998, and have issued our
report thereon dated November 12, 1998. Such consolidated financial statements
and report are included in your 1998 Annual Report to Shareholders and are
incorporated herein by reference. Our audits also included the consolidated
financial statement schedule of Universal Foods Corporation, listed in Item 14.
This consolidated financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
November 12, 1998
14
<PAGE> 15
SCHEDULE II
UNIVERSAL FOODS CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING
ACCOUNTS AND RESERVES
(IN THOUSANDS)
YEARS ENDED SEPTEMBER 30, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
Additions
Valuation Accounts Charged
Deducted in the Balance Balance At To Costs Balance
Sheet From The Assets To Beginning And At End Of
Which They Apply Of Period Expenses Deductions(A) Period
- ------------------------ ---------- --------- ------------- ---------
<S> <C> <C> <C> <C>
1996
Allowance for losses:
Trade accounts
receivable $3,768 $ 349 $ 608 $3,509
====== ====== ====== ======
1997
Allowance for losses:
Trade accounts
receivable $3,509 $ 572 $ 47 $4,034
====== ====== ====== ======
1998
Allowance for losses:
Trade accounts
receivable $4,034 $1,245 $ 731 $4,548
====== ====== ====== ======
</TABLE>
(A) Accounts written off, less recoveries.
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
UNIVERSAL FOODS CORPORATION
By: /s/ John L. Hammond
------------------------------
John L. Hammond, Vice President
Secretary & General Counsel
Dated: December 28, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below as of December 28, 1998, by the following persons
on behalf of the Registrant and in the capacities indicated.
/s/ Kenneth P. Manning Chairman of the Board, President and
- -------------------------------- Chief Executive Officer
Kenneth P. Manning
/s/ Michael Fung Vice President and Chief Financial
- -------------------------------- Officer
Michael Fung
/s/ Michael L. Hennen Corporate Controller
- --------------------------------
Michael L. Hennen
/s/ Michael E. Batten Director
- --------------------------------
Michael E. Batten
/s/ John F. Bergstrom Director
- --------------------------------
John F. Bergstrom
/s/ Dr. Fergus M. Clydesdale Director
- --------------------------------
Dr. Fergus M. Clydesdale
/s/ James A.D. Croft Director
- --------------------------------
James A.D. Croft
/s/ James L. Forbes Director
- --------------------------------
James L. Forbes
<PAGE> 17
/s/ Dr. Carol I. Waslien Ghazaii Director
- --------------------------------
Dr. Carol I. Waslien Ghazaii
/s/ William V. Hickey Director
- --------------------------------
William V. Hickey
/s/ Leon T. Kendall Director
- --------------------------------
Leon T. Kendall
/s/ James H. Keyes Director
- --------------------------------
James H. Keyes
/s/ Essie Whitelaw Director
- --------------------------------
Essie Whitelaw
S-2
<PAGE> 18
UNIVERSAL FOODS CORPORATION
EXHIBIT INDEX
1998 ANNUAL REPORT ON FORM 10-K
The Company will furnish a copy of any exhibit described below upon
request and upon reimbursement to the Company of its reasonable expenses of
furnishing such exhibit, which shall be limited to a photocopying charge of
$0.25 per page and, if mailed to the requesting party, the cost of first-class
postage.
<TABLE>
<CAPTION>
Incorporated by Filed
Exhibit Number Description Reference From Herewith
- -------------- ------------------------------------ ----------------------------------------- --------
<S> <C> <C> <C>
3.1 Universal Foods Corporation Amended X
and Restated Articles of
Incorporation, adopted November 12,
1998
3.2 Universal Foods Corporation Restated Exhibit 3.2 to Annual Report on Form 10-K
Bylaws for the fiscal year ended September 30,
1995 (Commission File No. 1-7626)
4.1 Rights Agreement, dated as of August Exhibit 1.1 to Registration Statement on
6, 1998, between Registrant and Form 8-A dated July 20, 1998 (Commission
Firstar Trust Company File No. 1-7626)
10.1 Material Contracts
10.1(a) Indenture between Registrant and Exhibit 4.1 to Registration Statement on
the First National Bank of Chicago, Form S-3 dated November 9, 1998 (Commission
as Trustee File 333-67015)
10.2 Management Contracts or
Compensatory Plans
10.2(a) Employment and Severance Agreement X
between Registrant and Kenneth P.
Manning dated November 5, 1987
10.2(b) Amendment dated May 10, 1988 to X
Employment and Severance Agreement
between Registrant and Kenneth P.
Manning
</TABLE>
Exhibit Index -- 1
<PAGE> 19
UNIVERSAL FOODS CORPORATION
EXHIBIT INDEX
1998 ANNUAL REPORT ON FORM 10-K
<TABLE>
<CAPTION>
Incorporated by Filed
Exhibit Number Description Reference From Herewith
- -------------- ------------------------------------ ----------------------------------------- --------
<S> <C> <C> <C>
10.2(c) 1985 Stock Plan for Executive X
Employees
10.2(d) Universal Foods Corporation 1990 X
Employee Stock Plan, as amended
September 10, 1998
10.2(e) Amendment No. 1 dated September 10, X
1998 to Universal Foods Corporation
1990 Employee Stock Plan
10.2(f) Universal Foods Corporation 1994 X
Employee Stock Plan, as amended
September 10, 1998
10.2(g) Amendment No. 1 dated September 10, X
1998 to Universal Foods Corporation
1994 Employee Stock Plan
10.2(h) Universal Foods Corporation 1998 X
Stock Option Plan, as amended
September 10, 1998
10.2(i) Amendment No. 1 dated September 10, Exhibit 99.1 to Current Report on Form 8-K
1998 to the Universal Foods dated October 6, 1998 (Commission File
Corporation 1998 Stock Option Plan No. 1-7626)
10.2(j) Director Stock Grant Plan, as amended X
November 14, 1991
10.2(k) Management Income Deferral Plan, X
including Amendment No. 1 thereto
dated September 10, 1998
10.2(l) Executive Income Deferral Plan, X
including Amendment No. 1 thereto
dated September 10, 1998
</TABLE>
Exhibit Index -- 2
<PAGE> 20
UNIVERSAL FOODS CORPORATION
EXHIBIT INDEX
1998 ANNUAL REPORT ON FORM 10-K
Exhibit Incorporated by Filed
Number Description Reference From Herewith
- ------- ------------------------------------ ------------------- ---------
10.2(m) Change of Control Employment and X
Severance Agreement between
Universal Foods Corporation and
Kenneth P. Manning dated September
10, 1998
10.2(n) Form of Amended and Restated X
Change of Control Employment
and Severance Agreement for
Executive Officers
10.2(o) Amended and Restated Trust Agreement X
dated September 10, 1998 between the
Registrant and Firstar Bank, Milwaukee,
N.A. ("Rabbi Trust A")
10.2(p) Trust Agreement, including Changes X
upon Appointment of Successor
Trustee dated as of February 1, 1998
between the Registrant and Firstar
Bank, Milwaukee, N.A.("Rabbi Trust
B")
10.2(q) Trust Agreement, including Changes X
upon Appointment of Successor
Trustee dated as of February 1, 1998
between the Registrant and Firstar
Bank, Milwaukee, N.A. ("Rabbi Trust
C")
10.2(r) Management Incentive Plan for X
Elected Corporate Officers
10.2(s) Management Incentive Plan for X
Division Presidents
10.2(t) Management Incentive Plan for X
Corporate Management
10.2(u) Management Incentive Plan for
Division Management X
Exhibit Index -- 3
<PAGE> 21
UNIVERSAL FOODS CORPORATION
EXHIBIT INDEX
1998 ANNUAL REPORT ON FORM 10-K
Exhibit Incorporated by Filed
Number Description Reference From Herewith
- ------- ------------------------------------ ------------------- ---------
10.2(v) Form of Agreement for Executive X
Officers (Supplemental
Executive Retirement Plan A),
including Amendment No. 1 thereto
dated September 10, 1998
10.2(w) Universal Foods Corporation X
Supplemental Benefit Plan,
including Amendment No. 1 thereto
dated September 10, 1998
10.2(x) Universal Foods Corporation X
Transition Retirement Plan,
including Amendment No. 1 thereto
dated September 10, 1998
13.1 Portions of Annual Report to X
Shareholders for the year ending
September 30, 1998 that are
incorporated by reference
21 Subsidiaries of the Registrant X
23 Consent of Deloitte & Touche LLP X
27 Financial Data Schedule X
99 Notice of Annual Meeting and Proxy Previously filed on
Statement dated December 15, 1998 Schedule 14A dated
December 15, 1998
(Commission File
No. 1-7626)
Except to the extent
incorporated by
reference, the Proxy
Statement shall not be
deemed to be filed with
the Securities and
Exchange Commission as
part of this Annual
Report on Form 10-K
Exhibit Index -- 4
<PAGE> 1
EXHIBIT 3.1
UNIVERSAL FOODS CORPORATION
-----------------
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
These Amended and Restated Articles of Incorporation, duly adopted
pursuant to Chapter 180 of the Wisconsin Statutes, supersede and take the place
of the existing Articles of Incorporation and all amendments and restatements
thereto.
ARTICLE I.
NAME.
SECTION 1.1. Name.
The name of the corporation is UNIVERSAL FOODS CORPORATION.
ARTICLE II.
PURPOSES.
SECTION 2.1. Purposes.
The purposes for which the corporation is organized are to engage in
any lawful activity within the purposes for which corporations may be organized
under the Wisconsin Business Corporation Law.
ARTICLE III.
CAPITAL STOCK.
SECTION 3.1. Number of Shares and Classes.
The aggregate number of shares which the corporation has authority to
issue is 100,250,000 divided into the following classes:
Subsection 3.1.1. Common Stock. 100,000,000 shares at the par value of
$0.10 per share designated as "Common Stock."
<PAGE> 2
Subsection 3.1.2. Cumulative Preferred Stock. 250,000 shares without
par value designated as "Cumulative Preferred Stock," of which 100,000 shares
are designated as Series A Participating Cumulative Preferred Stock pursuant to
Section 4.7 hereof.
ARTICLE IV.
PREFERENCES, LIMITATION AND RELATIVE RIGHTS OF
CUMULATIVE PREFERRED STOCK
SECTION 4.1. Dividends and Distributions on Cumulative Preferred Stock.
Subsection 4.1.1. The holders of Cumulative Preferred Stock of all
series shall be entitled to receive dividends at such rates, upon such
conditions and at such times as shall be stated in the resolution or resolutions
of the Board of Directors providing for the issuance thereof and not
inconsistent with the provisions hereof.
Subsection 4.1.2. No dividend or other distribution, except a dividend
payable solely in Common Stock, shall be paid on Common Stock, and no shares of
Common Stock shall be purchased, redeemed or otherwise acquired by the
corporation for a consideration, otherwise than in exchange for or through
application of the proceeds of the sale of other Common Stock, if the payment of
such dividend or distribution on Common Stock, or the making of any such
purchase, redemption or other acquisition of Common Stock, will result in
reducing the Consolidated Net Worth of the corporation below 150% of the
aggregate involuntary liquidation amounts of all outstanding shares of
Cumulative Preferred Stock.
Subsection 4.1.3. All dividends on Cumulative Preferred Stock shall be
without priority as between series, shall be paid out of net earnings or any
surplus properly applicable to the payment thereof, shall be cumulative and
shall be paid or set apart before any dividends or other distributions shall be
paid or set apart for Common Stock, provided, however, that dividends may be
declared and paid on Common Stock in Common Stock of the corporation. Any
dividends paid upon the Cumulative Preferred Stock in an amount less than full
cumulative dividends accrued and in arrears upon all Cumulative Preferred Stock
outstanding shall, if more than one series be outstanding, be distributed among
the different series in proportion to the aggregate amounts which would be
distributable to the Cumulative Preferred Stock of each series if full
cumulative dividends were declared and paid thereon.
Subsection 4.1.4. The Cumulative Preferred Stock shall entitle the
holder thereof to receive, out of net profits of the corporation or out of any
surplus applicable to the payment of such dividends in each fiscal year as
declared at any time by the Board of Directors, dividends at the rate fixed in
the resolution or resolutions adopted by the Board of Directors pursuant to
which the issuance of such Cumulative Preferred Stock shall be authorized. The
dividends on the Cumulative Preferred Stock shall be cumulative, so that if at
any time the full amount of dividends accrued and in arrears on the Cumulative
Preferred Stock shall not be paid, the deficiency shall be payable before any
dividends or other distributions shall be
-2-
<PAGE> 3
paid or set apart on the Common Stock, and before any sums shall be paid or set
apart for the redemption of less than all of the Cumulative Preferred Stock then
outstanding. Dividends on Cumulative Preferred Stock shall accrue from date of
issue. Whenever all dividends accrued and in arrears on Cumulative Preferred
Stock shall have been declared and shall have been paid or set apart, the Board
of Directors may declare dividends on Common Stock out of the remaining net
profits of the corporation, or out of surplus applicable to the payment of such
dividends, subject to the restriction set forth in Subsection 4.1.2 hereof.
SECTION 4.2. Issuance of Cumulative Preferred Stock.
Subsection 4.2.1. No stock having preference or priority in rights or
security over the Cumulative Preferred Stock may be issued unless first approved
by the affirmative vote of such majority of the Cumulative Preferred Stock then
outstanding as then required by law.
Subsection 4.2.2. No Cumulative Preferred Stock shall be issued which,
after giving effect to such issuance, would result in the aggregate involuntary
liquidation amount of all outstanding shares of Cumulative Preferred Stock
exceeding 66-2/3% of Consolidated Net Worth of the corporation.
SECTION 4.3. Rights of Holders of Cumulative Preferred Stock on Liquidation.
In the event of the voluntary liquidation or winding up of the
corporation, the holders of Cumulative Preferred Stock shall be entitled to
receive in full the fixed voluntary liquidation amount thereof plus accrued
dividends thereon, all as provided in the resolution or resolutions providing
for the issuance thereof, and no more, before any amount shall be paid to the
holders of Common Stock. In the event of the involuntary liquidation of the
corporation, the holders of the Cumulative Preferred Stock shall be entitled to
receive in full the fixed involuntary liquidation amount thereof, plus accrued
dividends thereon, all as provided in the resolution or resolutions providing
for the issuance thereof, and no more, before any amount shall be paid to the
holders of Common Stock. The holders of all series of Cumulative Preferred Stock
shall be entitled to receive all amounts described in the preceding provisions
of this Section 4.3 out of the assets of the corporation, whether from capital,
surplus or earnings. As used in this Section 4.3 "accrued dividends" means, in
respect to each share of Cumulative Preferred Stock, an amount equal to the
fixed dividend rate per annum for each share (without interest thereon), from
the date from which cumulative dividends commenced to accrue in respect of such
share to the date as of which the computation is to be made, less the aggregate
amount (without interest) of all dividends paid thereon or declared and set
aside for payment in respect thereof, whether or not any such dividends shall
have been earned. If, upon any such voluntary or involuntary liquidation, the
assets of the corporation distributable as aforesaid among the holders of the
Cumulative Preferred Stock shall be insufficient to permit payment to them of
the full preferential amounts aforesaid, then the entire assets of the
corporation available for distribution to shareholders shall be distributed
ratably among the holders of Cumulative Preferred Stock in proportion to the
full preferential amounts to which they are respectively entitled.
-3-
<PAGE> 4
The holders of Cumulative Preferred Stock shall not otherwise be
entitled to participate in any distribution of assets of the corporation which
shall be divided and distributed among the holders of Common Stock according to
their respective rights and preferences. No consolidation or merger of the
corporation with or into another corporation or corporations and no sale by the
corporation of all or substantially all of its assets shall be deemed a
liquidation or winding up of the corporation within the meaning of this Section
4.3.
SECTION 4.4. Voting Rights of Cumulative Preferred Stock.
The holders of the Cumulative Preferred Stock shall, together with the
holders of Common Stock (neither the Cumulative Preferred Stock nor the Common
Stock voting as a class), possess full voting rights for the election of
directors and for other purposes, and for such purposes the holders of
Cumulative Preferred Stock shall, subject to the provisions of the Bylaws of the
corporation and of the Wisconsin Business Corporation Law relative to the fixing
of the record date, be entitled to one vote for each share held by them
respectively.
SECTION 4.5. Directors' Authority to Establish Series of Cumulative Preferred
Stock.
The Cumulative Preferred Stock may be issued in series from time to
time, with such designations, preferences and other rights, qualifications,
limitations or restrictions thereof as shall be stated and expressed in the
resolution or resolutions providing for the issuance of such series and adopted
by the Board of Directors pursuant to the authority hereby given as provided by
the Wisconsin Business Corporation Law and not inconsistent with the provisions
hereof. Without limiting the authority granted to the Board of Directors in this
Section, each series shall have such (a) rate of dividend; (b) price at and
terms and conditions on which shares may be redeemed; (c) amount payable upon
shares in event of voluntary or involuntary liquidation; (d) sinking fund
provisions for the redemption or purchase of shares; and (e) terms and
conditions on which shares may be converted, if the shares of any series are
issued with the privilege of conversion; as shall be stated or expressed in the
resolution or resolutions of the Board of Directors providing for the issuance
thereof.
SECTION 4.6. Definitions.
Subsection 4.6.1. The term "Consolidated Net Worth" of the corporation
shall mean the Consolidated Net Worth of the corporation and all of its
subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles.
Subsection 4.6.2. The term "Subsidiary" shall mean any corporation or
association of which not less than a majority of the capital stock or shares
(having the power in all events to vote for the election of directors or
trustees) is owned and controlled by the corporation either directly or through
another Subsidiary.
-4-
<PAGE> 5
SECTION 4.7. Series A Participating Cumulative Preferred Stock.
Subsection 4.7.1. Designation and Amount. The shares of such series
shall be designated as "Series A Participating Cumulative Preferred Stock" (the
"Series A Preferred Stock") and the number of shares constituting the Series A
Preferred Stock shall be 100,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the corporation
convertible into Series A Preferred Stock.
Subsection 4.7.2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Cumulative Preferred Stock (or any similar stock) ranking pari passu
with the Series A Preferred Stock with respect to dividends, the holders of
shares of Series A Preferred Stock, in preference to the holders of Common
Stock, par value $0.10 per share ("Common Shares"), of the corporation, and of
any other junior stock, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of December, March, June
and September in each year (each such date being referred to in this Section 4.7
as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a share
of Series A Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount of
all cash dividends, and 1,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a dividend
payable in Common Shares or a subdivision of the outstanding Common Shares (by
reclassification or otherwise), declared on the Common Shares since the
immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In the event the corporation
shall at any time declare or pay any dividend on the Common Shares payable in
Common Shares, or effect a subdivision or combination or consolidation of the
outstanding Common Shares (by reclassification or otherwise than by payment of a
dividend in Common Shares) into a greater or lesser number of Common Shares,
then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the number of
Common Shares that were outstanding immediately prior to such event.
(B) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the
-5-
<PAGE> 6
date of issue of such shares, unless the date of issue of such shares is prior
to the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares of Series
A Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
Subsection 4.7.3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to one vote on all matters submitted to a vote of the shareholders of the
corporation.
(B) Except as otherwise provided in these Articles of
Incorporation, in any other Resolution of the Board of Directors creating a
series of Cumulative Preferred Stock or any similar stock, or by law, the
holders of shares of Series A Preferred Stock and the holders of Common Shares
and any other capital stock of the corporation having general voting rights
shall vote together as one class on all matters submitted to a vote of
shareholders of the corporation.
(C) Except as set forth in these Articles of Incorporation or
as otherwise provided by law, holders of Series A Preferred Stock shall have no
special voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Shares as set forth
herein) for taking any corporate action.
Subsection 4.7.4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Subsection
4.7.2 are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred Stock;
-6-
<PAGE> 7
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A Preferred Stock
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock,
provided that the corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock of
the corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A Preferred Stock, except in accordance with
a purchase offer made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The corporation shall not permit any subsidiary of the
corporation to purchase or otherwise acquire for consideration any shares of
stock of the corporation unless the corporation could, under paragraph (A) of
this Subsection 4.7.4, purchase or otherwise acquire such shares at such time
and in such manner.
Subsection 4.7.5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Cumulative Preferred Stock and may be reissued as part of a new series
of Cumulative Preferred Stock subject to the conditions and restrictions on
issuance set forth in these Articles of Incorporation or in any other Resolution
of the Board of Directors creating a series of Cumulative Preferred Stock or any
similar stock or as otherwise required by law.
Subsection 4.7.6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $250 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1,000
times the aggregate amount to be distributed per share to holders of
-7-
<PAGE> 8
Common Shares, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the corporation shall at any time
declare or pay any dividend on the Common Shares payable in Common Shares, or
effect a subdivision or combination or consolidation of the outstanding Common
Shares (by reclassification or otherwise than by payment of a dividend in Common
Shares) into a greater or lesser number of Common Shares, then in each such case
the aggregate amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of Common Shares outstanding immediately
after such event and the denominator of which is the number of Common Shares
that were outstanding immediately prior to such event.
Subsection 4.7.7. Consolidation, Merger, etc. In case the corporation
shall enter into any consolidation, merger, combination or other transaction in
which the Common Shares are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each Common Share is changed or exchanged. In the
event the corporation shall at any time declare or pay any dividend on the
Common Shares payable in Common Shares, or effect a subdivision or combination
or consolidation of the outstanding Common Shares (by reclassification or
otherwise than by payment of a dividend in Common Shares) into a greater or
lesser number of Common Shares, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or change of shares of
Series A Preferred Stock shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the number of
Common Shares that were outstanding immediately prior to such event.
Subsection 4.7.8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
Subsection 4.7.9. Rank. The Series A Preferred Stock shall be of equal
rank, with respect to the payment of dividends and the distribution of assets,
to all series of any other class of the corporation's Cumulative Preferred
Stock.
Subsection 4.7.10. Amendment. These Articles of Incorporation shall not
be amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred
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<PAGE> 9
Stock, voting together as a single class. In addition to the rights, preferences
and privileges accorded to the Series A Preferred Stock in this Section 4.7, the
Series A Preferred Stock shall have the rights, privileges and preferences, and
be subject to the limitations, accorded generally to the Cumulative Preferred
Stock in the foregoing Sections 4.1 through 4.6.
ARTICLE V.
PRE-EMPTIVE RIGHTS.
SECTION 5.1. Pre-emptive Rights.
No holder of any class of stock of the corporation shall, because of
such holder's ownership of said stock, have any pre-emptive or other right to
purchase, or subscribe for, or take any part of any class of stock, or any part
of the notes, debentures, bonds or other securities convertible into or carrying
options or warrants to purchase any class of stock of this corporation.
ARTICLE VI.
REGISTERED OFFICE; REGISTERED AGENT.
SECTION 6.1. Registered Office; Registered Agent.
The address of the registered office of the corporation is 433 East
Michigan Street, Milwaukee, Wisconsin 53202, and the registered agent at the
registered office of the corporation is John L. Hammond.
ARTICLE VII.
DIRECTORS; REMOVAL OF DIRECTORS.
SECTION 7.1. Directors.
The number of directors constituting the Board of Directors of the
corporation shall be fixed from time to time by the Bylaws of the corporation.
The Board of Directors of the corporation shall be divided into three (3)
classes. The term of office of the first class of directors shall expire at the
first annual meeting after their election, the term of office of the second
class shall expire at the second annual meeting after their election and that of
the third class shall expire at the third annual meeting after their election.
At each annual meeting after classification of the Board of Directors, the class
of directors whose term expires at the time of such election shall be elected to
hold office until the third succeeding annual meeting. The number of directors
in each class shall be as fixed from time to time in the Bylaws.
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SECTION 7.2. Removal of Directors.
A director may be removed from office by affirmative vote of two thirds
(2/3) of the outstanding shares entitled to vote for the election of such
director, taken at a meeting of shareholders called for that purpose, and any
vacancy so created may be filled by such shareholders.
ARTICLE VIII.
ACQUISITION OF SHARES.
SECTION 8.1. Acquisition of Shares.
The corporation is authorized by action of the Board of Directors
without consent of shareholders to purchase, take, receive or otherwise acquire
shares of the corporation subject to the provisions of Sections 180.0603,
180.0631, and 180.0640 of the Wisconsin Statutes and Section 4.1.2 hereof.
ARTICLE IX.
DISTRIBUTIONS.
SECTION 9.1. Distributions.
The Board of Directors may from time to time distribute to shareholders
in partial liquidation out of stated capital or net capital surplus of the
corporation, a portion of its assets, in cash or property.
ARTICLE X.
REPURCHASE OF COMMON STOCK.
SECTION 10.1. Repurchase Rights.
Subsection 10.1.1. In the event that any person (Acquiring Person) (i)
who is the beneficial owner, directly or indirectly, of more than fifty percent
of the Common Stock outstanding becomes the beneficial owner, directly or
indirectly, of any additional Common Stock pursuant to a tender offer or (ii)
becomes the beneficial owner, directly or indirectly, of more than fifty percent
of the Common Stock outstanding and any of such Common Stock was acquired
pursuant to a tender offer, each holder of Common Stock, other than the
Acquiring Person or a transferee of the Acquiring Person, shall have the right
until and including the thirtieth day following the date the notice to holders
of Common Stock referred to in Section 10.3 herein is mailed to have the Common
Stock held by such holder repurchased by the corporation at the Repurchase Price
determined as provided in
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Section 10.5 herein, and each holder of securities convertible into Common Stock
or of options, warrants, or rights exercisable to acquire Common Stock prior to
such thirtieth day, other than the Acquiring Person or a transferee of the
Acquiring Person, shall have the right simultaneously with the conversion of
such securities or exercise of such options, warrants, or rights to have the
Common Stock to be received thereupon by such holder repurchased by the
corporation at the Repurchase Price.
Subsection 10.1.2. All repurchase rights hereunder shall be subject to,
and limited by, any provision contained in the Wisconsin Statutes, in Article IV
hereof, or in any loan agreement entered into at any time by the corporation,
which limits the amounts which may be used by the corporation to repurchase
Common Stock of the corporation.
Subsection 10.1.3. No holder of Common Stock of the corporation shall
have any right to have Common Stock repurchased by the corporation pursuant to
this Article X if the corporation, acting through a majority of its Board of
Directors, shall within ten (10) days following the announcement or publication
of such tender offer or following any amendment of such tender offer recommend
to the holders of Common Stock that such tender offer be accepted.
SECTION 10.2. Definitions.
Subsection 10.2.1. The term "person" shall include an individual, a
corporation, partnership, trust or other entity. When two or more persons act as
a partnership, limited partnership, syndicate, or other group for the purpose of
acquiring Common Stock, such partnership, syndicate or group shall be deemed a
"person".
Subsection 10.2.2. For the purpose of determining whether a person is
an Acquiring Person, such person shall be deemed to beneficially own (i) all
Common Stock with respect to which such person has the capability to control or
influence the voting power in respect thereof and (ii) all Common Stock which
such person has the immediate or future right to acquire, directly or
indirectly, pursuant to agreements, through the exercise of options, warrants or
rights or through the conversion of convertible securities or otherwise; and all
Common Stock which such person has the right to acquire in such manner shall be
deemed to be outstanding shares, but Common Stock which any other person has the
right to acquire in such manner shall not be deemed to be outstanding shares.
Subsection 10.2.3. The acquisition of Common Stock by the corporation
or by any person controlled by the corporation shall not engender the right to
have Common Stock repurchased pursuant to this Article.
Subsection 10.2.4. The right to have Common Stock repurchased pursuant
to this Article shall attach to such shares and shall not be personal to the
holder thereof.
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<PAGE> 12
Subsection 10.2.5. The term "tender offer" shall mean an offer to
acquire or an acquisition of Common Stock pursuant to a request or invitation
for tenders or an offer to purchase such shares for cash, securities or any
other consideration.
Subsection 10.2.6. The term "market purchases" shall mean the
acquisition of Common Stock from holders of such shares in privately negotiated
transactions or in transactions effected through a broker or dealer.
Subsection 10.2.7. Subject to the provisions of Section 10.2.2 herein,
"outstanding shares" shall mean shares of Common Stock which at the time in
question have been issued by the corporation and not reacquired and held or
retired by it or held by any subsidiary of the corporation.
SECTION 10.3. Repurchase Procedure.
Not later than thirty (30) days following the date on which the
corporation receives credible notice that any person has become an Acquiring
Person whereupon the right shall be engendered to have Common Stock repurchased
by the corporation under this Article X, the corporation shall give written
notice, by first class mail, postage prepaid, at the address shown on the
records of the corporation, to each holder of record of Common Stock (and to any
other person known by the corporation to have rights to demand repurchase
pursuant to Section 10.1 of this Article) as of a date not more than seven (7)
days prior to the date of the mailing pursuant to this Section 10.3 and shall
advise each such holder of the right to have shares repurchased and the
procedures for such repurchase. In the event that the corporation fails to give
notice as required by this Section 10.3, any holder entitled to receive such
notice may within thirty (30) days thereafter serve written demand upon the
corporation to give such notice. If within thirty (30) days after the receipt of
written demand the corporation fails to give the required notice, such holder
may at the expense and on behalf of the corporation take such reasonable action
as may be appropriate to give notice or to cause notice to be given pursuant to
this Section 10.3.
Subsection 10.3.1. In the event Common Stock is subject to repurchase
in accordance with this Article X, the directors of the corporation shall
designate a Repurchase Agent, which shall be a corporation or association (i)
organized and doing business under the laws of the United States or any State,
(ii) subject to supervision or examination by Federal or State authority, (iii)
having combined capital and surplus of at least $5,000,000 and (iv) having the
power to exercise corporate trust powers.
Subsection 10.3.2. For a period of ninety days from the date of the
mailing of the notice to holders of Common Stock referred to in this Section
10.3, holders of Common Stock and other persons entitled to have Common Stock
repurchased pursuant to this Article X may, at their option, deposit
certificates representing all or less than all Common Stock held of record by
them with the Repurchase Agent together with written notice that the holder
elects to have such shares repurchased pursuant to this Article X. Repurchase
shall be
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<PAGE> 13
deemed to have been effected at the close of business on the day such
certificates are deposited in proper form with the Repurchase Agent.
Subsection 10.3.3. The corporation shall promptly deposit in trust with
the Repurchase Agent cash in an amount equal to the aggregate Repurchase Price
of all of the Common Stock deposited with the Repurchase Agent for purposes of
repurchase.
Subsection 10.3.4. As soon as practicable after receipt by the
Repurchase Agent of the cash deposit by the corporation referred to in this
Section 10.3, the Repurchase Agent shall issue its checks payable to the order
of the persons entitled to receive the Repurchase Price of the Common Stock in
respect of which such cash deposit was made.
Subsection 10.3.5. In the event the corporation is unable to deposit
with the Repurchase Agent cash in the full amount of the aggregate Repurchase
Price of all shares deposited for repurchase, because of limitations upon
repurchase of Common Stock contained in the Wisconsin Statutes, in Article IV
hereof, or in any loan agreement entered into at any time by the corporation,
the corporation shall promptly deposit with the Repurchase Agent the maximum
amount of cash which may be used for the repurchase of Common Stock, under the
most restrictive of the applicable limitations upon such repurchase. In the
event of deposit of less than the full aggregate Repurchase Price pursuant to
the provisions of this subsection, the Repurchase Agent shall use the amount so
deposited to repurchase the deposited shares pro tanto, in proportion to the
number of shares deposited by each shareholder for repurchase. Certificates
representing all shares which remain unpurchased shall be returned to the
depositors thereof as soon as practicable thereafter, and there shall be no
further repurchase rights with respect to such shares arising in connection with
the transactions already completed.
SECTION 10.4. Retired Stock.
All Common Stock with respect to which repurchase has been effected
pursuant to this Article X shall thereupon be deemed retired.
SECTION 10.5. Repurchase Price.
The Repurchase Price shall be the amount payable by the corporation in
respect of each share of Common Stock with respect to which repurchase has been
demanded pursuant to this Article X and shall be the greatest amount determined
on any of the following three bases:
(i) The highest price per share of Common Stock,
including any commission paid to brokers or dealers
for solicitation or whatever, at which Common Stock
held by the Acquiring Person were acquired pursuant
to a tender offer regardless of when such tender
offer was made or were acquired pursuant to any
market purchase or otherwise
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<PAGE> 14
within eighteen months prior to the notice to holders
of Common Stock referred to in Section 10.3 herein.
For purposes of this subsection (i), if the
consideration paid in any such acquisition of Common
Stock consisted, in whole or part, of consideration
other than cash, the Board of Directors of the
corporation shall take such action, as in its
judgment it deems appropriate, to establish the cash
value of such consideration, but such valuation shall
not be less than the cash value, if any, ascribed to
such consideration by the Acquiring Person.
(ii) The highest sale price per share of Common Stock for
any trading day during the eighteen months prior to
the notice to holders of Common Stock referred to in
Section 10.3 herein. For purposes of this subsection
(ii), the sale price for any trading day shall be the
last sale price per share of Common Stock traded on
the New York Stock Exchange or other national
securities exchange, or, if Common Stock of the
corporation is not then traded on a national
securities exchange, the mean of the closing bid and
asked price per share of Common Stock.
(iii) The amount of shareholders' equity in respect of each
outstanding share of Common Stock as determined in
accordance with generally accepted accounting
principles and as reflected in any published report
by the corporation as at the fiscal year quarter
ending immediately preceding the notice to
shareholders referred to in Section 10.3 herein.
Subsection 10.5.1. The determinations to be made pursuant to Section
10.5 shall be made by the Board of Directors not later than the date of the
notice to holders of Common Stock referred to in Section 10.3 herein. In making
such determination the Board of Directors may engage such persons, including
investment banking firms and the independent accountants, who have reported on
the most recent financial statements of the corporation, and utilize employees
and agents of the corporation, who will, in the judgment of the Board of
Directors, be of assistance to the Board of Directors.
Subsection 10.5.2. The determinations to be made pursuant to this
Section 10.5, when made by the Board of Directors acting in good faith on the
basis of such information and assistance as was then reasonably available for
such purpose, shall be conclusive and binding upon the corporation and its
shareholders, including any person referred to in Section 10.1 herein.
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EXHIBIT 10.2(a)
EXECUTIVE EMPLOYMENT CONTRACT
THIS AGREEMENT, made and entered into as of the 5th day of November,
1987 by and between Universal Foods Corporation, a Wisconsin corporation,
(hereinafter referred to as the "Company") and Kenneth P. Manning (hereinafter
referred to as "Executive");
W I T N E S S E T H:
WHEREAS, the Executive is presently employed by the Company as Group
Vice President; and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the Executive's contribution to the growth and success of the Company has
been substantial; and
WHEREAS, the Board desires to provide for the continued employment of
the Executive and to encourage the continued attention and dedication to the
Company of the Executive as a member of the Company's management; and
WHEREAS, the Executive is willing to commit himself to continue to serve
the Company, on the terms and conditions herein provided.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto mutually
covenant and agree as follows:
<PAGE> 2
1. Employment. The Company hereby agrees to continue to employ the
Executive, and the Executive hereby agrees to continue to serve the Company, on
the terms and conditions set forth herein.
2. Term. The employment of the Executive by the Company as provided in
Section 1 of this Agreement will commence on the date hereof and end on October
31, 1990, unless further extended or sooner terminated as hereinafter provided.
On November 1, 1988, and on November l of each year thereafter, the term of the
Executive's employment shall be automatically extended one (1) additional year;
provided, however, that in no event shall the term of the Executive's employment
extend beyond the end of the calendar month in which the Executive's 65th
birthday occurs and provided further that no automatic extension of the term of
the Executive's employment shall occur if the Executive is disabled, as
determined pursuant to Section 8 of this Agreement, at the time such extension
would otherwise automatically become effective. The Company has the right, upon
a majority vote of the Board of Directors, to terminate the automatic annual
extension of the Executive's term of employment provided herein, in which event
this Agreement shall continue in effect only for a term of three years from and
after such termination of the automatic annual extension of term, or until the
Executive's normal retirement, whichever occurs first. Notwithstanding any other
provision of this Agreement, in the event of a "Change of Control" (as
hereinafter defined), the term of the Executive's employment shall be
automatically extended for an additional period of time so that the Executive's
term of employment shall extend to a date exactly three years from the date of
such Change of Control subject to automatic extension of such term in accordance
with the provisions set forth above in this Section 2. For purposes of this
Agreement, a "Change of Control" shall be deemed to have taken place if:
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(a) A third person, including, without limitation, a "group" as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, other than a person
or group approved by the Board of Directors of the Company, becomes the
beneficial owner of shares of the Company having 30% or more of the total number
of votes that may be cast for the election of directors of the Company; or
(b) As a result of, or in connection with, any cash tender or exchange
offer, merger or other business combination, sale of assets or contested
election, or any combination of the foregoing transactions (hereinafter referred
to as a "Transaction"), the persons who were directors of the Company before the
Transaction shall cease to constitute a majority of the Board of Directors of
the Company or any successor to the Company.
3. Position and Duties. The Executive shall serve as Group Vice
President of the Company and shall have such responsibilities and authority as
may from time to time be assigned to the Executive by the Company's Board of
Directors or the Chief Executive Officer of the Company. The Executive shall
devote substantially all his working time and efforts to the business and
affairs of the Company.
4. Place of Performance. In connection with the Executive's employment
by the Company, the Executive shall be based in Milwaukee, Wisconsin (at the
principal executive offices of the Company) except for required travel on the
Company's business to an extent substantially consistent with his present
business travel obligations.
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<PAGE> 4
5. Compensation and Related Matters.
(a) During the period of the Executive's employment hereunder, the
Company shall pay to the Executive a salary at a rate of not less than $160,008
per annum in equal installments as nearly as practicable [on the fifteenth and
last days of each month in arrears]. This base salary shall be reviewed on or
before October 1st of each year following the date of this Agreement, while this
Agreement remains in force, to ascertain whether in the judgment of the Board or
such Committee to whom the Board may have delegated authority, such base salary
should be increased and, if so increased, shall not thereafter during the term
of this Agreement be decreased. Compensation of the Executive by salary payments
shall not be deemed exclusive and shall not prevent the Executive from
participating in any other compensation or benefit plan of the Company. The base
salary payments (including any increased salary payments) hereunder shall not in
any way limit or reduce any other obligation of the Company hereunder, and no
other compensation, benefit or payment hereunder shall in any way limit or
reduce the obligation of the Company to pay the Executive's base salary
hereunder. In addition to the base salary described in this paragraph, the
Executive shall receive bonuses if earned in the judgment of the Board of
Directors or its delegee.
(b) During the term of the Executive's employment hereunder, the
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in performing services hereunder, including
all expenses of travel and living expenses while away from home on business or
at the request of and in the service of the Company, provided that such expenses
are incurred and accounted for in accordance with the policies and procedures
presently established by the Company.
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(c) The Executive shall be entitled to participate in all of the
Company's employee benefit plans and arrangements in effect on the date hereof
(including, without limitation, each pension and retirement plan and
arrangement, supplemental pension and retirement plan and arrangement, deferred
compensation plan, profit sharing plan, stock option plan, health and
split-dollar life insurance, disability plan, dental program, executive car
program and vacation plan). The Executive shall be entitled to participate in or
receive benefits under any employee benefit plan or arrangement made available
by the Company in the future to its executives and key management employees,
subject to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. Nothing paid to the Executive
under any plan or arrangement presently in effect or made available in the
future shall be deemed to be in lieu of the salary payable to the Executive
pursuant to paragraph (a) of this Section.
(d) The Executive shall be entitled to the number of vacation days in
each calendar year determined in accordance with the Company's vacation plan.
The Executive shall also be entitled to all paid holidays given by the Company
to its executives.
(e) The Company shall furnish the Executive with office space,
secretarial assistance and such other facilities and services as shall be
suitable to the Executive's position and adequate for the performance of his
duties as set forth in Section 3 hereof.
6. Offices. The Executive agrees to serve without additional
compensation, if elected or appointed thereto, as a director of the Company
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and any of its subsidiaries and in one or more executive offices of any of the
Company's subsidiaries, provided that the Executive is indemnified for serving
in any such capacities on a basis no less favorable than is currently provided
by the Company's By-laws.
7. Death. If the Executive shall die during the term of his employment
hereunder but prior to the delivery of a Notice of Termination (as hereinafter
defined) by the Company or by the Executive for Good Reason (as hereinafter
defined), the Executive's employment shall terminate and the provisions of any
Company plans or programs providing death benefits shall become effective.
8. Disability.
(a) If during the term of the Executive's employment hereunder he
becomes disabled and thereby prevented from performing his duties, the Executive
shall not be paid pursuant to paragraph 5(a) above, but rather the Company shall
pay him commencing on the date of the disability until he reaches age 65 or the
termination of his disability, whichever is first to occur, such amounts which
an individual in his earnings category would be normally entitled to receive as
full Long Term Disability ("LTD") coverage under the Company LTD plan then in
effect, but not less than 60% of his base salary as determined under paragraph
5(a) above at the time of such disability. During the term of his disability,
the Executive also shall receive the employee benefits (or service credits
therefor, as the case may be) as provided in 5(c) above. The obligation to
provide the foregoing disability benefits shall survive the termination of this
Agreement provided the disability was incurred before termination.
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(b) To determine whether the Executive is disabled for the purposes of
this Agreement, either party may from time to time request a medical examination
of the Executive by a doctor on the staff of Milwaukee Medical Clinic, or as the
parties may otherwise agree, and the written medical opinion of such doctor
shall be conclusive and binding upon the parties as to whether or not the
Executive has become disabled and the date when such disability arose. The cost
of any such medical examinations shall be borne by the Company.
9. Termination by the Company.
(a) Termination for Cause. This Agreement may be terminated by the Board
of Directors at any time for cause which shall be defined to mean theft,
dishonesty, fraudulent misconduct, disclosure of trade secrets, gross
dereliction of duty (unless significantly changed after a Change of Control
without the Executive's consent) or other grave misconduct on the part of the
Executive which is substantially injurious to the Company.
The Executive shall not be deemed to have been terminated for cause
without (i) reasonable notice to the Executive setting forth the reasons for the
Company's intention to terminate for cause, (ii) an opportunity for the
Executive, together with his counsel, to be heard before the Board and (iii)
delivery to the Executive of a Notice of Termination from the Board finding that
in the good faith opinion of the Board the Executive was guilty of conduct set
forth above in this Section, and specifying the particulars thereof in detail.
In the event this Agreement is terminated for cause, the Executive shall forfeit
his right to any and all benefits he would otherwise have been entitled to
receive under this Agreement.
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(b) Prior to a Change of Control. The Company has the right to terminate
the employment of the Executive prior to a Change of Control, upon at least
thirty days' prior written notice, if such termination is approved by a majority
vote of the Board taken at a meeting duly called to consider such matter. In the
event of termination of the Executive's employment pursuant to this paragraph
9(b), the Company shall provide the Executive with the following "Termination
Benefits"; provided, however, that the payment of the Bonus Amount shall be at
the sole discretion of the Committee:
(i) an amount equal to (A) the Executive's annual base salary in
effect as of the date of such termination and, if the Committee so decides, (B)
the amount of the Executive's bonus with respect to the most recently completed
fiscal year (the amount described in this clause B is referred to in this
Agreement as the "Bonus Amount") payable in twelve (12) substantially equal
monthly installments commencing as of the first day of the next month following
such termination of employment; and
(ii) for a period ending upon (A) the payment of the last monthly
installment under subparagraph 9(b)(i) above or (B) the Executive's obtaining
new employment, whichever is earlier. The Executive shall continue to be covered
at the expense of the Company by the same or equivalent hospital, medical,
accident, disability and life insurance coverage as he was covered by
immediately prior to his termination of employment with the Company. The
Termination Benefits constitute liquidated damages and severance pay and shall
be in lieu of further salary for periods following termination of the
Executive's employment pursuant to paragraph 9(a) or 9(b), as the case may be.
Upon payment of the Termination Benefits to the Executive, the Company shall
have no further obligations to the Executive under this Agreement.
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(c) After a Change of Control. The Company has the right to terminate
the employment of the Executive after a Change of Control, upon at least thirty
days' prior written notice, if such termination is approved by a majority vote
of the Board taken at a meeting duly called to consider such matter. If the
Company shall terminate the employment of the Executive at any time during the
term of his employment hereunder and after a Change of Control, other than for
cause under paragraph 9(a) of this Agreement, then the Executive shall be
entitled to the following "Change of Control Benefits":
(i) The Company shall promptly pay the Executive a lump sum amount
equal to three times the sum of (A) the Executive's annual base salary in effect
as of such date of termination and (B) the amount of the largest bonus paid to
the Executive by the Company with respect to any twelve-month period during the
three years preceding such date of termination.
(ii)The Executive will be entitled to receive pension and
supplemental deferred compensation benefits in addition to those provided for
him under the Company's Retirement Plan for Salaried Employees and his
Supplemental Deferred Compensation Agreement, respectively. The amount of
additional pension and supplemental deferred compensation benefits will be equal
to the difference between the amount he (or in the event of his death, his
surviving spouse or other beneficiary) would be actually entitled to receive
upon retirement under the terms and conditions of such plan and agreement as in
effect on the date of termination under this paragraph 9(c), and the amount he
(or such surviving spouse or beneficiary) would have been entitled to receive
under such terms and conditions if (A) his benefits under such plan and
agreement had been fully vested on such date of termination; and
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(B) he had continued to work until attaining age 65 at a salary rate equal to
his base salary increased by an amount equal to his largest bonus with respect
to any twelve-month period during the three year period preceding such date of
termination; provided, however, that in no event will the assumed period of
continued employment extend beyond the date on which the Executive elects to
begin receiving the additional pension and supplemental deferred compensation
benefits. The Executive shall be entitled to elect to receive his additional
pension and supplemental deferred compensation benefits in any form (e.g. joint
and survivor) that would have been available to him under the terms and
conditions of the Company's Retirement Plan for Salaried Employees and
Supplemental Deferred Compensation Agreement, respectively, as in effect on the
date of termination under this paragraph 9(c), and (subject to reduction, if
any, under such terms) at any time after he has attained the age at which early
retirement is permitted.
(iii) For a period ending two years from the date of termination
under this paragraph 9(c) or three years from the date of the Change of Control,
whichever is later, the Executive shall continue to be covered at the expense of
the Company by the same or equivalent hospital, medical, accident, disability
and life insurance coverage as he was covered by immediately prior to
termination of his employment.
(iv) It is the intention of the Company and the Executive that no
portion of the Change of Control Benefits or any other payment under this
Agreement, or payments to or for the benefit of the Executive under any other
agreement or plan, be deemed to be an "excess parachute payment" as defined in
Section 280G of the Code or its successors. It is agreed that the present value
of the Change of Control Benefits and any other payments to or for the
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benefit of the Executive in the nature of compensation receipt of which are
contingent on the Change of Control of the Company and to which Section 280G of
the Code or any successor provision thereto applies (in the aggregate "Total
Benefits") shall not exceed an amount equal to one dollar less than the maximum
amount which the Executive may receive without becoming subject to the tax
imposed by Section 4999 of the Code or any successor provision (the "Excise
Tax") or which the Company may pay without loss of deduction under Section
280G(a) of the Code or any successor provision thereto. Present value for
purposes of this Agreement shall be calculated in accordance with Section
1274(b)(2) of the Code or any successor provision thereto. Within 45 days
following delivery of the Notice of Termination or notice by either party to the
other of its belief that there is a payment or benefit due the Executive which
will result in an excess parachute payment, the Executive and the Company, at
the Company's expense, shall obtain the opinion of such legal counsel (the
opinion of legal counsel need not be unqualified), and certified public
accountants as the Executive may choose, which sets forth (a) the amount of
the Base Period Income of the Executive, (b) the present value of Total Benefits
and (c) the amount and present value of any excess parachute payments. In the
event that such opinions determine that there would be an excess parachute
payment, the amount set forth in paragraph 9(c)(i) of this Agreement or any
other payment determined by such counsel to be includible in Total Benefits,
shall be reduced or eliminated as specified by the Executive in writing
delivered to the Company within 30 days of his receipt of such opinions or, if
the Executive fails to so notify the Company, then as the Company shall
reasonably determine, so that under the bases of calculation set forth in such
opinions the Total Benefits paid to the Executive shall be an amount equal to
one dollar less than the maximum amount which the Executive may receive without
becoming subject to the Excise Tax (the "Reduced
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<PAGE> 12
Amount"). The provisions of this subparagraph 9(c)(iv), including the
calculations, notices and opinions provided for herein shall be based upon the
conclusive presumption that (x) the compensation and benefits provided for in
Section 5 hereof and (y) any other compensation earned prior to the Change of
Control by the Executive pursuant to the Company's compensation programs if
payment of such other compensation would have been made in the future in any
event, even though the timing of such payment is triggered by the Change of
Control, are reasonable; provided, however, that in the event such legal counsel
so requests in connection with the opinion required by this subparagraph
9(c)(iv), the Executive and the Company shall obtain, at the Company's expense,
and the legal counsel may rely on in providing the opinion, the advice of a firm
of recognized executive compensation consultants as to the reasonableness of any
item of compensation to be received by the Executive. For purposes of this
Agreement, the term "Base Period Income" shall be an amount equal to the
Executive's "annualized includible compensation" from the Company for the "base
Period" as defined in Sections 280G(d)(1) and (2) of the Code or any successor
provisions thereto. In the event that the provisions of Sections 28OG and 4999
of the Code or any successor provision are repealed without succession this
paragraph 9(c)(iv) shall be of no further force or effect.
As a result of the uncertainty in the application of Section 280G of the
Code at the time of the initial determination by legal counsel and accountants
as provided in this subparagraph 9(c)(iv), it is possible that amounts will have
been paid or distributed by the Company to or for the benefit of the Executive
pursuant to this Agreement which should not have been so paid or distributed
("Overpayment") or that additional amounts which will have not been paid or
distributed by the Company to or for the benefit of the Executive
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<PAGE> 13
pursuant to this Agreement could have been so paid or distributed
("Underpayment"), in each case, consistent with the calculation of the Reduced
Amount hereunder. In the event that such legal counsel, based upon the assertion
of a deficiency by the Internal Revenue Service against the Company or the
Executive which such legal counsel believes has a high probability of success or
other controlling precedent or substantial authority, determines that an
Overpayment has been made, any such Overpayment paid or distributed by the
Company to or for the benefit of the Executive shall be treated for all purposes
as a loan to the Executive which the Executive shall repay to the Company
together with interest at the applicable federal rate provided for in Section
7872(f)(2) of the Code; provided, however, that no amount shall be payable by
the Executive to the Company if and to the extent such payment would not reduce
the amount which is subject to taxation under Section 4999 of the Code. In the
event that such legal counsel, based upon controlling precedent or other
substantial authority, determines that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive together with interest at the applicable federal rate provided for in
Section 7872(f)(2) of the Code.
The Change of Control Benefits shall constitute liquidated damages and
severance pay and upon payment of the Change of Control Benefits to the
Executive the Company shall have no further obligation to the Executive under
this Agreement except as set forth in the last preceding paragraph.
10. Termination by the Executive.
(a) The Executive has the right to terminate his employment at any time
upon thirty days' prior written notice. If the Executive terminates his
employment for any reason other than death, disability, retirement, or Good
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<PAGE> 14
Reason after a Change of Control, the Company may provide the Executive with
any or all of the following "Discretionary Benefits," if any, in its sole
discretion:
(i) the continuation of the Executive's salary payments with a
maximum continuation of up to twelve (12) months; and/or
(ii) the Bonus Amount, or any fraction thereof, payable in equal
monthly installments over the same period of time as the salary continuation
under subparagraph 10(a)(i) above (the "Salary Continuation Period"), or if
there is no such salary continuation and a Bonus Amount is to be paid, such
Bonus Amount shall be payable in twelve (12) substantially equal monthly
installments commencing as of the first day of the next month following
termination of employment under this paragraph 10(a); and
(iii) if the Company decides in its sole discretion to continue the
Executive's salary under subparagraph 10(a)(i) above, the Executive shall
continue to be covered at the expense of the Company by the same or equivalent
hospital, medical, accident, disability and life insurance coverage as he was
covered by immediately prior to his termination of employment pursuant to
paragraph 10(a) of this Agreement, for a period ending at the end of the Salary
Continuation Period, or upon the Executive's obtaining new employment, whichever
is earlier.
(b) The Executive may terminate his employment for Good Reason after a
Change of Control. In the event of such termination, the Company shall pay the
Executive the Change of Control Benefits as described in paragraph 9(c) of this
Agreement. The Change of Control Benefits constitute liquidated damages
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<PAGE> 15
and severance pay and upon payment thereof by the Company to the Executive, the
Company shall have no further obligations to the Executive under this Agreement.
For purposes of this Agreement, "Good Reason" shall mean:
(i) Any breach of this Agreement by the Company;
(ii) the assignment to the Executive of any duties inconsistent
with, or the reduction of powers or functions associated with, his positions,
duties, responsibilities and status with the Company immediately prior to a
Change of Control, or any removal of the Executive from or any failure to
re-elect the Executive to any positions or offices the Executive held
immediately prior to such Change of Control, except in connection with the
termination of the Executive's employment by the Company for cause or by reason
of disability;
(iii) the Company's mandatory transfer of the Executive to another
geographic location other than Milwaukee, Wisconsin (the principal executive
offices of the Company), except for required travel on the Company's business to
an extent substantially consistent with the Executive's business travel
obligations immediately prior to such Change of Control;
(iv) the failure by the Company to continue in effect any employee
benefit plan or arrangement as described in paragraph 5(c) hereof in which the
Executive was participating immediately prior to a Change of Control, the taking
of any action by the Company which would adversely affect the Executive's
participation in, or materially reduce the Executive's benefits under, any of
such plans or arrangements or deprive the Executive of any
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<PAGE> 16
material fringe benefit enjoyed by the Executive immediately prior to such
Change of Control; or
(v) a significant adverse change, without the Executive's written
consent, in working conditions or status including but not limited to (A) a
significant change in the nature or scope of the Executive's authority, powers,
functions, duties or responsibilities, or (B) a reduction in the level of
support services, staff, secretarial and other assistance, office space and
accoutrements available to a level below that which is reasonably necessary for
the performance of the Executive's duties as set forth in Section 3 hereof.
In the event that the Executive shall in good faith give a Notice of
Termination (as hereinafter defined) for Good Reason and it shall thereafter be
determined that Good Reason did not exist, the employment of the Executive
shall, unless the Company and the Executive shall otherwise mutually agree, be
deemed to have terminated, at the date of giving such purported Notice of
Termination, by mutual consent of the Company and the Executive and the
Executive shall be entitled to receive only Discretionary Benefits, if any, as
described under paragraph 10(a) of this Agreement.
11. Notice of Termination. Any termination of the Executive's employment
by the Company under Section 9 or by the Executive for Good Reason after a
Change of Control shall be communicated by written Notice of Termination to the
other party hereto. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
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<PAGE> 17
12. Interest and Costs. In the event that any payments due to the
Executive hereunder shall fail to be paid when due, such unpaid amounts shall
bear interest at the rate of 12% per annum and if such unpaid amounts are
collected by law or through an attorney-at-law, the Executive shall also be
entitled to collect reasonable attorneys' fees and all costs of collection.
13. Noncompetition. For a period of one year after the termination of
active employment hereunder, the Executive shall not, within the United States,
except as permitted by the Company's prior written consent, engage in, be
employed by, or in any way advise or act for, or have any financial interest in
any business which is a competitor of the Company. The ownership of less than
Five Percent of any class of securities of any corporation listed on a national
securities exchange or regularly traded over the counter even though such
corporation may be a competitor of the Company as specified above, shall not be
deemed as constituting a financial interest in such competitor.
14. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company, by agreement in form and substance
satisfactory to the Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which
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<PAGE> 18
executes and delivers the agreement provided for in this Section 14 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) This Agreement and all rights of the Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devises and legatees. If the Executive should die while any amounts would still
be payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Executive's devisee, legatee, or other designee or, if
there be no such designee, to the Executive's estate.
15. Notice. All notices, requests, demands and other communications
required or permitted to be given by either party to the other party by this
Agreement (including, without limitation, any Notice of Termination of
employment) shall be in writing and shall be deemed to have been duly given when
delivered personally or received by certified or registered mail, return receipt
requested, postage prepaid, at the address of the other party, as follows:
If to the Company, to:
Universal Foods Corporation
433 East Michigan Street
Milwaukee, Wisconsin 53202
Attention: Board of Directors and Secretary
If to Executive, to:
Mr. Kenneth P. Manning
2914 East Newberry Blvd.
Milwaukee, Wisconsin 53211
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<PAGE> 19
Either party hereto may change its address for purposes of this Section 15 by
giving fifteen (15) days prior notice to the other party hereto.
16. Severability. If any term or provision of this Agreement or the
application hereof to any person or circumstance shall to any extent be invalid
or unenforceable, the remainder of this Agreement or the application of such
term or provision to persons or circumstances other than those as to which it is
held invalid or unenforceable shall not be affected thereby, and each term and
provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
17. Headings. The headings in this Agreement are inserted for
convenience of reference only and shall not be part of or control or affect the
meaning of this Agreement.
18. Governing Law. This Agreement has been executed and delivered in the
State of Wisconsin and shall in all respects be governed by, and construed and
enforced in accordance with, the laws of the State of Wisconsin.
19. Payroll and Withholding Taxes. All payments to be made or benefits
to be provided hereunder by the Company shall be subject to reduction for any
applicable payroll-related or withholding taxes.
20. Entire Agreement. This Agreement supersedes any and all other oral
or written agreements heretofore made relating to the subject matter hereof and
constitutes the entire agreement of the parties relating to the subject matter
hereof.
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<PAGE> 20
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
UNIVERSAL FOODS CORPORATION ("Company")
By /s/ Guy A. Osborn
------------------------------------
[CORPORATE SEAL] Attest /s/ T.M. O'Reilly, Sec.
---------------------------------
EXECUTIVE
/s/ Kenneth P. Manning (SEAL)
----------------------------------
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<PAGE> 1
EXHIBIT 10.2(b)
AMENDMENT TO EXECUTIVE EMPLOYMENT CONTRACT
THIS AMENDMENT, made and entered into as of the 10th day of May 1988,
by and between Universal Foods Corporation, a Wisconsin corporation,
(hereinafter referred to as the "Company") and Kenneth P. Manning (hereinafter
referred to as "Executive");
W I T N E S S E T H:
WHEREAS, the Company and the Executive desire to amend that certain
Executive Employment Contract made and entered into as of November 5, 1987, by
and between the Company and the Executive (hereinafter referred to as the
"Executive Employment Contract"); and
WHEREAS, the Executive is willing to commit himself to continue to
serve the Company on the terms and conditions provided in the Executive
Employment Contract as amended by this Amendment.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto mutually
agree to the following clarification and amendments to the Executive Employment
Contract:
1. Change of Control. The Company and the Executive agree that a Change
of Control (as defined in the Executive Employment Contract) shall be deemed to
have taken place if either of the events described in subparagraph 2(i) or 2(ii)
of the Executive Employment Contract shall have occurred.
2. Termination by the Executive. The last paragraph of Section 10 of
the Executive Employment Contract is hereby eliminated and replaced in its
entirety with the following paragraph:
<PAGE> 2
In the event that the Executive shall in good faith give a Notice of
Termination (as hereinafter defined) for Good Reason and it shall
thereafter be determined that Good Reason did not exist, the employment of
the Executive hereunder shall, at the Executive's option, continue after
such determination; provided, that the Executive continued his employment
during the dispute concerning his alleged Good Reason pursuant to his
option to do so as provided in Section 11 of this Agreement and provided
further, that in no event shall such employment extend beyond the
Employment Period. If the Executive does not choose to continue his
employment hereunder after such determination, the employment of the
Executive shall be deemed to have terminated at the date of giving such
purported Notice of Termination by mutual consent of the Company and the
Executive; provided, however, that if the Executive exercises his option
to continue his employment during the period of dispute concerning his
alleged Good Reason as provided in Section 11 of this Agreement, the
Executive shall be entitled to compensation and benefits during such
continued employment in accordance with Section 5 of this Agreement.
3. Notice of Termination. The following sentence shall be added at the
end of Section 11 of the Executive Employment Contract:
In the event that one party notifies the other that a dispute
exists concerning the termination, the Executive's employment under
this Agreement shall, at the Executive's option, not be terminated until
such dispute is finally resolved either by mutual written agreement of the
parties or in accordance with Section 21 of this Agreement, as the case
may be; provided, however, that in no event shall such employment extend
beyond the Executive's term of employment as provided in Section 2 of this
Agreement.
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<PAGE> 3
4. Interest and Costs. The following sentence shall be added at the end
of Section 12 of the Executive Employment Contract:
Within ten (10) days after the Executive's written request
therefor, the Company shall pay to the Executive, or such other person
or entity as the Executive may designate in writing to the Company,
such reasonable attorneys' fees and costs of collection in advance of
the final disposition or conclusion of any dispute, legal or
arbitration proceeding with respect to such collection.
5. Resolution of Disputes. A new Section 21 shall be added to the
Executive Employment Contract as follows:
21. Resolution of Disputes. Any dispute arising out of this
Agreement shall, at the Executive's option, be determined by
arbitration under the rules of the American Arbitration Association
then in effect or by litigation. Whether the dispute is to be settled
by arbitration or litigation, the venue for the arbitration or
litigation shall be Milwaukee, Wisconsin or, if the Executive is no
longer residing or working in Milwaukee, Wisconsin, such venue shall,
at the Executive's election, be the city in which the Executive
resides. More specifically, if litigation is the method the Executive
elects for settling any such dispute, venue for the litigation shall be
in the Circuit Court of Milwaukee County or, if the Executive is no
longer residing or working in Milwaukee, Wisconsin, such venue shall,
at the Executive's election, be the county court for the county in
which the Executive resides. The parties consent to jurisdiction in the
selected venue notwithstanding their residence or situs.
6. Payment Obligations Absolute. A new Section 22 shall be added to the
Executive Employment Contract as follows:
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<PAGE> 4
22. Payment Obligations Absolute. The Company's obligation
during and after the term of the Executive's employment hereunder to
pay the Executive the compensation and to make the arrangements
provided herein shall be absolute and unconditional and shall not be
affected by any circumstances, including, without limitation, any
setoff, counterclaim, recoupment, defense or other right which the
Company may have against him or anyone else. All amounts payable by the
Company hereunder shall be paid without notice (except as provided in
Section 12 of this Agreement) or demand. The Company will not seek to
recover all or any part of any such payment from the Executive or from
whomsoever may be entitled thereto, for any reason whatsoever, except
as provided in subparagraph 9(b)(ii) of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first written above.
UNIVERSAL FOODS CORPORATION
("Company")
[CORPORATE SEAL] By: /s/ John L. Hammond VP
---------------------------------
Attest: /s/ T.M. O'Reilly, Sec.
-----------------------------
EXECUTIVE
/s/ Kenneth P. Manning
-------------------------------------
Kenneth P. Manning
2093L 4/25/88
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<PAGE> 1
EXHIBIT 10.2(c)
1985 STOCK PLAN
FOR EXECUTIVE EMPLOYEES
(NOTE: ALL REFERENCES TO THE NUMBER OF SHARES OF STOCK SET FORTH IN
THIS STOCK PLAN FOR EXECUTIVE EMPLOYEES HAVE BEEN ADJUSTED TO GIVE EFFECT TO THE
COMPANY'S 3-FOR-2 STOCK SPLITS ON AUGUST 7, 1986, OCTOBER 7, 1988 AND OCTOBER
16, 1989, AND THE COMPANY'S 2-FOR-1 STOCK SPLIT, EFFECTED IN THE FORM OF A 100%
STOCK DIVIDEND, PAID TO SHAREHOLDERS OF RECORD ON MAY 6, 1998.)
SECTION 1. ESTABLISHMENT, PURPOSE AND EFFECTIVE DATE OF PLAN
1.1 Establishment. Universal Foods Corporation, a Wisconsin
corporation, hereby establishes the "1985 STOCK PLAN" (the "PLAN")for key
employees. The Plan permits the grant of Stock Options, Stock Appreciation
Rights, Restricted Stock and Formula Price Stock.
1.2 Purpose. The purpose of the Plan is to advance the interests of the
Company, by encouraging and providing for the acquisition of an equity interest
in the success of the Company by key employees, and by enabling the Company to
attract and retain the services of key employees upon whose judgment, interest
and special effort the successful conduct of its operations is largely
dependent.
1.3 Effective Date. The Plan shall become effective as of the date of
its adoption by the Board of Directors of the Company, subject to ratification
by the shareholders of the Company within twelve months of the adoption date.
SECTION 2. DEFINITIONS
2.1 Definitions. Whenever used herein, the following terms shall have
their respective meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1954, as amended.
(c) "Committee" means the Personnel Policy Committee of the Board
consisting of three or more members of the Board who are not,
and who have not been at any time within one year prior to
appointment to the Committee, eligible to receive Stock under
the Plan or any similar plan of the Company.
(d) "Company" means Universal Foods Corporation, a Wisconsin
corporation.
(e) "Disability" means the permanent and total inability, by
reason of physical or mental infirmity, or both, of a
Participant to perform the
<PAGE> 2
work customarily assigned to him by the Company. The
determination of the existence or nonexistence of Disability
shall be made by the Committee based on satisfactory medical
evidence.
(f) "Fair Market Value" means the last sale price of the Stock as
reported by the New York Stock Exchange on a particular date.
(g) "Formula Price Stock" means stock, subject to a permanent
discount from Fair Market Value, granted to a Participant
pursuant to Section 11 of this Plan.
(h) "Option" means the right to purchase Stock at a stated price
for a specified period of time. For purposes of the Plan an
Option may be either (i) an "incentive stock option" within
the meaning of Section 422A of the Code or (ii) a
"nonstatutory stock option."
(i) "Original Discount" means the amount by which the Fair Market
Value of Formula Price Stock as of the date of purchase
exceeds the purchase price determined by the Committee.
(j) "Participant" means any individual designated by the Committee
to participate in the Plan.
(k) "Period of Restriction" means the period during which the
transfer of shares of Restricted Stock is restricted pursuant
to Section 10 of the Plan.
(l) "Restricted Stock" means Stock granted to a Participant
pursuant to Section 10 of the Plan.
(m) "Retirement" (including "Early Retirement" and "Normal
Retirement") means termination of employment under the terms
of the Company's salaried pension plan.
(n) "Stock" means the Common Stock of the Company, par value of
$0.10.
(o) "Stock Appreciation Right" means the right to receive a cash
payment from the Company equal to the excess of the Fair
Market Value of a share of stock at the date of exercise over
a specified price fixed by the Committee, which shall not be
less than 100% of the Fair Market Value of the Stock on the
date of grant. In the case of a Stock Appreciation Right which
is granted in conjunction with an Option, the specified price
shall be the Option exercise price.
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<PAGE> 3
2.2 Gender and Number. Except when otherwise indicated by the context,
words in the masculine gender when used in the Plan shall include the feminine
gender, the singular shall include the plural and the plural shall include the
singular.
SECTION 3. ELIGIBILITY AND PARTICIPATION
3.1 Eligibility and Participation. Participants in the Plan shall be
selected by the Committee from among those key employees of the Company and its
subsidiaries, including subsidiaries which become such after adoption of the
Plan, who are recommended for participation by the Chief Executive Officer and
who, in the opinion of the Committee, are in a position to contribute materially
to the Company's continued growth and development and to its long-term financial
success.
SECTION 4. ADMINISTRATION
4.1 Administration. The Committee shall be responsible for the
administration of the Plan. The Committee, by majority action thereof, is
authorized to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan, to provide for conditions and assurances
deemed necessary or advisable to protect the interests of the Company and to
make all other determinations necessary or advisable for the administration of
the Plan, but only to the extent not contrary to the express provisions of the
Plan. Determinations, interpretations or other actions made or taken by the
Committee pursuant to the provisions of the Plan shall be final and binding and
conclusive for all purposes and upon all persons whomsoever.
SECTION 5. STOCK SUBJECT TO PLAN
5.1 Number. The total number of shares of Stock subject to issuance
under the Plan may not exceed 2,700,000, subject to adjustment upon occurrence
of any of the events indicated in Subsection 5.3. Of this total number, up to
1,012,500 shares of Stock may be granted in Restricted Stock and/or Formula
Price Stock to Participants under the Plan. However, the number of shares of
Formula Price Stock granted pursuant to Section 11 herein may not exceed
506,250. The shares to be delivered under the Plan may consist, in whole or in
part, of authorized but unissued Stock or treasury Stock, not reserved for any
other purpose.
5.2 Unused Stock. In the event any shares of Stock that are subject to
an Option which, for any reason, expires or is terminated unexercised as to such
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<PAGE> 4
shares, or any shares of Stock subject to a Restricted Stock or Formula Price
Stock grant made under the Plan are reacquired by the Company pursuant to the
Plan, such shares again shall become available for issuance under the Plan.
5.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock that occurs after ratification of the Plan by the
shareholders of the Company by reason of a Stock dividend or split,
recapitalization, merger, consolidation, combination, exchange of shares or
other similar corporate change, the aggregate number of shares of Stock subject
to each outstanding Option, and its stated Option price, shall be appropriately
adjusted by the Committee, whose determination shall be conclusive; provided,
however, that fractional shares shall be rounded to the nearest whole share. In
such event, the Committee shall also have discretion to make appropriate
adjustments in the number of shares subject to Restricted and Formula Price
Stock grants then outstanding under the Plan pursuant to the terms of such
grants or otherwise.
SECTION 6. STOCK APPRECIATION RIGHTS SUBJECT TO PLAN
6.1 Plan Limitation. The number of Stock Appreciation Rights which may
be granted pursuant to the Plan may not exceed 1,350,000.
6.2 Unexercised Rights. In the event any Stock Appreciation Rights
expire unexercised, such Rights again shall become available for issuance under
the Plan.
6.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock that occurs after ratification of the Plan by the
shareholders of the Company by reason of a Stock dividend or split,
recapitalization, merger, consolidation, combination, exchange of shares or
other similar corporate change, the Committee shall make appropriate adjustments
in the number of outstanding Rights and the related grant values.
SECTION 7. DURATION OF PLAN
7.1 Duration of Plan. The Plan shall remain in effect, subject to the
Board's right to earlier terminate the Plan pursuant to Section 15 hereof, until
all Stock subject to it shall have been purchased or acquired pursuant to the
provisions
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<PAGE> 5
hereof. Notwithstanding the foregoing, no Option, Stock Appreciation Right,
Restricted Stock or Formula Stock may be granted under the Plan on or after the
tenth (10th) anniversary of the Plan's effective date.
SECTION 8. STOCK OPTIONS
8.1 Grant of Options. Subject to the provisions of Sections 5 and 7,
Options may be granted to Participants at any time and from time to time as
shall be determined by the Committee. The Committee shall have complete
discretion in determining the number of Options granted to each Participant. The
Committee also shall determine whether an Option is to be an incentive stock
option within the meaning of Section 422A of the Code or a nonstatutory stock
option. However, in no event shall the Fair Market Value (determined at the date
of grant) of Stock for which a Participant may be granted incentive stock
options in any calendar year exceed $100,000 plus any unused carryover
calculated in accordance with Section 422(A)(c)(4) of the Code. Nor shall any
incentive stock option be granted to any person who owns, directly or
indirectly, stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company. Nothing in this Section 8 of the Plan shall
be deemed to prevent the grant of nonstatutory stock options in excess of the
maximum established by Section 422A of the Code.
8.2 Option Agreement. Each Option shall be evidenced by an Option
agreement that shall specify the type of Option granted, the Option price, the
duration of the Option, the number of shares of Stock to which the Option
pertains and such other provisions as the Committee shall determine.
8.3 Option Price. No Option granted pursuant to the Plan shall have an
Option price that is less than the Fair Market Value of the Stock on the date
the Option is granted.
8.4 Duration of Options. Each Option shall expire at such time as the
Committee shall determine at the time it is granted, provided, however, that no
Option shall be exercisable later than the tenth (10th) anniversary date of its
grant.
8.5 Exercise of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for all
Participants. Notwithstanding the provisions of this Subsection 8.5, no
incentive stock option granted to a Participant under the Plan shall be
exercisable while there is
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outstanding (within the meaning of Section 422A(c)(7) of the Code) any other
incentive stock option previously granted to such Participant under the Plan, or
any other plan meeting the requirements of Section 422A of the Code, to purchase
Stock. For this purpose, an incentive stock option will be considered
"outstanding" until such option is exercised in full or expires by reason of
lapse of time.
8.6 Payment. The Option price upon exercise of any Option shall be
payable to the Company in full either (i) in cash or its equivalent, or (ii) by
tendering shares of previously acquired Stock having a Fair Market Value at the
time of exercise equal to the total Option price, or (iii) by a combination of
(i)and (ii). The proceeds from such a payment shall be added to the general
funds of the Company and shall be used for general corporate purposes.
8.7 Restrictions on Stock Transferability. The Committee shall impose
such restrictions on any shares of Stock acquired pursuant to the exercise of an
Option under the Plan as it may deem advisable, including, without limitation,
restrictions under applicable Federal securities law, under the requirements of
any stock exchange upon which such shares of Stock are then listed and under any
blue sky or state securities laws applicable to such shares.
8.8 Termination of Employment Due to Death, Disability or Retirement.
In the event the employment of a Participant is terminated by reason of death,
Disability or Retirement, any outstanding Options shall become immediately
exercisable at any time prior to the expiration date of the Options or within 12
months after such date of termination of employment, whichever period is the
shorter. However, in the case of incentive stock options, the favorable tax
treatment prescribed under Section 422A of the Code shall not be available if
such options are not exercised within three months after such date of
termination due to Retirement.
8.9 Termination of Employment Other than for Death, Disability or
Retirement. If the employment of the Participant shall terminate for any reason
other than death, Disability or Retirement, the rights under any then
outstanding Option granted pursuant to the Plan shall terminate upon the
expiration date of the Option or three months after such date of termination of
employment, whichever first occurs.
8.10 Nontransferability of Options. No Option granted under the Plan
may be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated,
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otherwise than by will or by the laws of descent and distribution. Further, all
Options granted to a Participant under the Plan shall be exercisable during his
lifetime only by such Participant.
SECTION 9. STOCK APPRECIATION RIGHTS
9.1 Grant of Stock Appreciation Rights. Subject to the provisions of
Sections 6 and 7, Stock Appreciation Rights may be granted to Participant. A
Stock Appreciation Right shall relate only to a specific Option granted under
the Plan and may relate to all or part of the Option shares covered by the
related Option.
9.2 Exercise of Stock Appreciation Rights. Stock Appreciation Rights
shall be exercisable at such time or times, on the conditions and to the extent
and in the proportion, that the related Option is exercisable and may be
exercised for all or part of the shares of Stock subject to the related Option.
9.3 Effect of Exercise. Upon exercise of any number of Stock
Appreciation Rights, the number of Option shares subject to the related Option
shall be reduced accordingly and such Option shares may not again be subjected
to an Option under this Plan. The exercise of any number of Options shall result
in an equivalent reduction in the number of Option shares covered by the related
Stock Appreciation Right and such shares may not again be subject to a Stock
Appreciation Right under this Plan; provided, however, that if a Stock
Appreciation Right was granted for less than all of the Option shares covered by
the related Option, no such reduction shall be made until such time as the
number of shares exercised under the related Option exceeds the number of Option
shares not covered by the Stock Appreciation Right.
9.4 Payment of Stock Appreciation Right Amount. Upon exercise of the
Stock Appreciation Right, the holder shall be entitled to receive payment in
cash of an amount (subject to Subsection 9.7 below) determined by multiplying:
(a) The difference between the Fair Market Value of a share of
Stock at the date of exercise over the price fixed by the
Committee at the date of grant by
(b) The number of shares with respect to which the Stock
Appreciation Right is exercised.
In the case of a Stock Appreciation Right which is granted in
conjunction with an Incentive Stock Option, the amount determined under (a)
above shall be determined by using a price fixed by the Committee at the date of
grant which does not exceed the option price of the related Incentive Stock
Option.
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9.5 Limit on Appreciation. The Committee may, in its sole discretion,
establish (at the time of grant) a maximum amount per share which will be
payable upon exercise of a Stock Appreciation Right.
9.6 Rule 16b-3 Requirements. Notwithstanding any other provision of the
Plan, the Committee may impose such conditions on exercise of a Stock
Appreciation Right (including, without limitation, the right of the Committee to
limit the time of exercise to specified periods) as may be required to satisfy
the requirements of Rule 16b-3 (or any successor rule) under the Securities
Exchange Act of 1934.
9.7 Termination of Employment. In the event the employment of a
Participant is terminated by reason of death, Disability, Retirement or any
other reason, any Rights outstanding shall terminate in the same manner as
specified for Options under Subsections 8.8 and 8.9 herein.
SECTION 10. RESTRICTED STOCK
10.1 Grant of Restricted Stock. Subject to the provisions of Sections 5
and 7, the Committee, at any time and from time to time, may grant shares of
Restricted Stock under the Plan to such Participants and in such amounts as it
shall determine. Each grant of Restricted Stock shall be in writing.
10.2 Transferability. Except as provided in Section 10 hereof, the
shares of Restricted Stock granted hereunder may not be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated for such period of time
as shall be determined by the Committee and shall be specified in the Restricted
Stock grant, or upon earlier satisfaction of other conditions as specified by
the Committee in its sole discretion and set forth in the Restricted Stock
grant.
10.3 Other Restrictions. The Committee shall impose such other
restrictions on any shares of Restricted Stock granted pursuant to the Plan as
it may deem advisable including, without limitation, restrictions under
applicable Federal or state securities laws, and may legend the certificates
representing Restricted Stock to give appropriate notice of such restrictions.
10.4 Certificate Legend. In addition to any legends placed on
certificates pursuant to Subsection 10.3 hereof, each certificate representing
shares of Restricted Stock granted pursuant to the Plan share bear the following
legend:
"The sale or other transfer of the shares of stock represented by this
certificate, whether voluntary, involuntary or by operation of law, is
subject to certain restrictions on transfer set forth in Universal
Foods Corporation's
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1985 Stock Plan, rules of administration adopted pursuant to such Plan
and a Restricted Stock grant dated _____________. A copy of the Plan,
such rules and such Restricted Stock grant may be obtained from the
Secretary of Universal Foods Corporation."
10.5 Removal of Restrictions. Except as otherwise provided in Section
10 hereof, shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan shall become freely transferable by the Participant after
the last day of the Period of Restriction. Once the shares are released from the
restrictions, the Participant shall be entitled to have the legend required by
Subsection 10.4 removed from his Stock certificates.
10.6 Voting Rights. During the Period of Restriction, Participants
holding shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those shares.
10.7 Dividends and Other Distributions. During the Period of
Restriction, Participants holding shares of Restricted Stock granted hereunder
shall be entitled to receive all dividends and other distributions paid with
respect to those shares while they are so held. If any such dividends or
distributions are paid in shares of Stock, the shares shall be subject to the
same restrictions on transferability as the shares of Restricted Stock with
respect to which they were paid.
10.8 Termination of Employment Due to Retirement. In the event that a
Participant terminates his employment with the Company because of Normal
Retirement, any remaining Period of Restriction applicable to the Restricted
Stock pursuant to Subsection 10.2 hereof shall automatically terminate and,
except as otherwise provided in Subsection 10.3, the shares of Restricted Stock
shall thereby be free of restrictions and freely transferrable. In the event
that a Participant terminates his employment with the Company because of Early
Retirement, the Committee may, in its sole discretion, waive the restrictions
remaining on any or all shares of Restricted Stock pursuant to Subsection 10.2
hereof and/or add such new restrictions to those shares of Restricted Stock as
it deems appropriate.
10.9 Termination of Employment Due to Death or Disability. In the event
a Participant terminates his employment with the Company because of death or
Disability during the Period of Restriction, the restrictions applicable to the
shares of Restricted Stock pursuant to Subsection 10.2 hereof shall terminate
automatically with respect to that number of shares (rounded to the nearest
whole number) equal to the total number of shares of Restricted Stock granted to
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such Participant multiplied by the number of full months which have elapsed
since the date of grant divided by the maximum number of full months of the
Period of Restriction. All remaining shares shall be forfeited and returned to
the Company; provided, however, that the Committee may, in its sole discretion,
waive the restrictions remaining on any or all such remaining shares.
10.10 Termination of Employment for Reasons Other than Death,
Disability or Retirement. In the event that a Participant terminates his
employment with the Company for any reason other than those set forth in
Subsections 10.8 and 10.9 hereof during the Period of Restriction, then any
shares of Restricted Stock still subject to restrictions at the date of such
termination shall automatically be forfeited and returned to the Company;
provided, however, that, in the event of an involuntary termination of the
employment of a Participant by the Company, the Committee may, in its sole
discretion, waive the automatic forfeiture of any or all such shares and/or may
add such new restrictions to such shares of Restricted Stock as it deems
appropriate.
10.11 Nontransferability of Restricted Stock. No shares of Restricted
Stock granted under the Plan may be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated, otherwise than by will or by the laws of
descent and distribution until the termination of the applicable Period of
Restriction. All rights with respect to Restricted Stock granted to a
Participant under the Plan shall be exercisable during his lifetime only by such
Participant.
10.12 Election to Sell Shares to the Company. A participant, or in the
case of his death his beneficiary or estate, may elect to sell to the Company up
to one-half of the shares of Restricted Stock issued to him pursuant to the Plan
and upon which the restrictions set forth in Subsections 10.2 and 10.3 lapsed.
To the extent permitted by law, the Company shall purchase such shares. Each
such sale must occur within sixty (60) days after the last day of the Period of
Restriction for such shares and shall be for a price equal to the Fair Market
Value determined as of the last business day of the Period of Restriction of the
shares of Restricted Stock to be sold. Such price shall be payable in cash or by
check in one lump sum payment, unless provisions relating to payment for such
shares in installments are agreed to by the Company and the Participant (or his
beneficiary or estate).
SECTION 11. FORMULA PRICE STOCK
11.1 Award of Formula Price Stock. Subject to the provisions of
Sections 5 and 7, the Committee may offer shares of Formula Price Stock to such
Participants as it shall determine, at a price to be determined by the
Committee,
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but in no event shall the price be less than fifty percent (50%) of the Stock's
Fair Market Value on the date of the award.
11.2 Right of First Refusal. Before Formula Price Stock granted under
this Plan may be offered for sale to a third party, the Participant first must
offer it to the Company. The Company, upon receipt of written notice from the
Participant, shall have the right to purchase all or any part of the offered
shares at a price per share equal to the Fair Market Value on the date of the
Participant's offer less the Original Discount to the Participant. If the
Company does not elect to exercise its right of first refusal, such right,
including the formula price, shall be retained by the Company and shall apply to
any subsequent owners of the shares.
11.3 Exercise and Payment. Offers of Formula Price Stock to
Participants shall be acceptable at such times and be subject to such
restrictions and conditions as the Committee shall in each instance approve,
which need not be the same for all Participants. The purchase price of Formula
Price Stock upon acceptance of the offer shall be payable in full either (i)in
cash or its equivalent, or (ii) by tendering shares of previously acquired stock
having a fair market value at the time of exercise equal to the total purchase
price, or (iii) by a combination of (i) and (ii).
11.4 Certificate Legend. Each certificate representing shares of
Formula Price Stock granted pursuant to the Plan shall bear the following
legend:
"The sale or other transfer of the shares of stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is
subject to Universal Foods Corporation's right of first refusal to
purchase the shares at a price equal to the stock's fair market value,
as determined by the last sale price of the stock as reported by the
New York Stock Exchange on the date of offer, less $_______________."
11.5 Voting Rights. Participants holding shares of Formula Price Stock
granted hereunder may exercise full voting rights with respect to those shares.
11.6 Dividends and Other Distributions. Participants holding shares of
Formula Price Stock granted hereunder shall be entitled to receive all dividends
and other distributions paid with respect to those shares while they are so
held. If any such dividends or distributions are paid in shares of Stock, the
shares shall be subject to the same restrictions on transferability as the
shares of Formula Price Stock with respect to which they were paid.
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11.7 Termination of Employment. In the event the employment of a
Participant is terminated by reason of death, Disability, Retirement or any
other reason, the Participant (or his beneficiary or estate) shall offer the
shares of Formula Price Stock to the Company for purchase as described in
Subsection 11.2 hereof.
SECTION 12. BENEFICIARY DESIGNATION
12.1 Beneficiary Designation. Each Participant under the Plan may, from
time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in case of his death before he receives any or all of such benefit. Each
designation will revoke all prior designations by the same Participant, shall be
in a form prescribed by the Committee and will be effective only when filed by
the Participant in writing with the Committee during his lifetime. In the
absence of any such designation, benefits remaining unpaid at the Participant's
death shall be paid to his estate.
SECTION 13. RIGHTS OF EMPLOYEES
13.1 Employment. Nothing in the Plan shall interfere with or limit in
any way the right of the Company to terminate any Participant's employment at
any time nor confer upon any Participant any right to continue in the employ of
the Company.
13.2 Participation. No employee shall have a right to be selected as a
Participant or, having been so selected, to be selected again as a Participant.
SECTION 14. MERGER OR CONSOLIDATION
14.1 Treatment of Options and Stock Appreciation Rights. A dissolution
or a liquidation of the Company or a merger and consolidation in which the
Company is not the surviving corporation shall cause every Option and Stock
Appreciation Right outstanding hereunder to terminate. However, the Participant
shall have the right, except as limited by Subsection 14.4 hereof, to exercise
any unexercised Options or Stock Appreciation Rights, whether or not then
exercisable, subject to the provisions of the Plan immediately prior to such
dissolution, liquidation, merger or consolidation.
14.2 Treatment of Restricted Stock. In the event of a merger or
consolidation such that the Company is not the surviving corporation, all
restrictions shall lapse, except as limited by Subsection 14.4 hereof, on the
shares of
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Restricted Stock granted under the Plan and thereafter such shares shall be
freely transferable by the Participant, subject to applicable federal or state
securities laws.
14.3 Treatment of Formula Price Stock. Immediately prior to a merger or
consolidation in which the Company is not the surviving corporation, the
Participant shall be required, except as limited by Subsection 14.4 hereof, to
offer the shares of Formula Price Stock to the Company for purchase as described
in Subsection 11.2 hereof.
14.4 Limitation on Payments. If the receipt of any payment under this
Section by any Participant shall, in the opinion of independent tax counsel of
recognized standing selected by the Company, result in the payment by such
Participant of any excise tax provided for in Section 28UG and Section 4999 of
the Code, then the amount of such payment shall be reduced to the extent
required, in the opinion of independent tax counsel selected as aforesaid, to
prevent the imposition of such excise tax.
SECTION 15. AMENDMENT, MODIFICATION AND TERMINATION OF PLAN
15.1 Amendment, Modification and Termination of Plan. The Board may at
any time terminate, and from time to time may amend or modify the Plan,
provided, however, that no such action of the Board, without approval of the
shareholders, may:
(a) Increase the total amount of Stock which may be issued under
the Plan, except as provided in Subsections 5.1 and 5.3 of the
Plan.
(b) Change the provisions of the Plan regarding the Option price
except as permitted by Subsection 5.3.
(c) Materially increase the cost of the Plan or materially
increase the benefits to Participants.
(d) Extend the period during which Options, Stock Appreciation
Rights, Restricted Stock, or Formula Stock may be granted.
(e) Extend the maximum period after the date of grant during which
Options may be exercised.
No amendment, modification or termination of the Plan shall in any manner
adversely affect any Options, Stock Appreciation Rights, Restricted Stock, or
Formula Price Stock theretofore granted under the Plan, without the consent of
the Participant.
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SECTION 16. TAX WITHHOLDING
16.1 Tax Withholding. Whenever shares of Stock are to be issued under
the Plan, the Company shall have the power to require the recipient of the Stock
to remit to the Company an amount sufficient to satisfy Federal, state and local
withholding tax requirements.
SECTION 17. INDEMNIFICATION
17.1 Indemnification. Each person who is or shall have been a member of
the Committee or of the Board shall be indemnified and held harmless by the
Company against and from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit or proceeding to which he may be a party or in which he
may be involved by reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid by him in settlement thereof, with
the Company's approval, or paid by him in satisfaction of any judgment in any
such action, suit or proceeding against him, provided he shall give the Company
an opportunity, at its own expense, to handle and defend the same before he
undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company's Articles of Incorporation
or Bylaws, as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.
SECTION 18. REQUIREMENTS OF LAW
18.1 Requirements of Law. The granting of Options, Stock Appreciation
Rights, Restricted Stock or Formula Price Stock, and the issuance of shares of
Stock upon the exercise of an Option shall be subject to all applicable laws,
rules and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.
18.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Wisconsin.
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EXHIBIT 10.2(d)
UNIVERSAL FOODS CORPORATION
1990 EMPLOYEE STOCK PLAN
AS AMENDED AND RESTATED EFFECTIVE SEPTEMBER 10, 1998
(NOTE: ALL REFERENCES TO THE NUMBER OF SHARES OF STOCK SET FORTH IN
THIS AMENDED AND RESTATED EMPLOYEE STOCK PLAN HAVE BEEN ADJUSTED TO GIVE EFFECT
TO THE COMPANY'S 2-FOR-1 STOCK SPLIT, EFFECTED IN THE FORM OF A 100% STOCK
DIVIDEND, PAID TO SHAREHOLDERS OF RECORD ON MAY 6, 1998.)
SECTION 1. ESTABLISHMENT, PURPOSE AND EFFECTIVE DATE OF PLAN.
1.1 Establishment. Universal Foods Corporation, a Wisconsin
corporation, hereby establishes the "UNIVERSAL FOODS CORPORATION 1990 EMPLOYEE
STOCK PLAN" (the "Plan") for key employees. The Plan permits the grant of Stock
Options, Stock Appreciation Rights and Restricted Stock.
1.2 Purpose. The purpose of the Plan is to advance the interests of the
Company, by encouraging and providing for the acquisition of an equity interest
in the success of the Company by key employees, and by enabling the Company to
attract and retain the services of key employees upon whose judgment, interest
and special effort the successful conduct of its operations is largely
dependent.
1.3 Effective Date. The Plan shall become effective January 25, 1990,
subject to ratification by the shareholders of the Company.
SECTION 2. DEFINITIONS.
2.1 Definitions. Whenever used herein, the following terms shall have
their respective meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Committee" means the Personnel Policy Committee of the
Board consisting of three or more members of the Board who are not, and
who have not been at any time within one year prior to appointment to
the Committee, eligible to receive Stock, Options or Stock Appreciation
Rights under the Plan or any similar plan of the Company or its
affiliates.
<PAGE> 2
(d) "Company" means Universal Foods Corporation, a Wisconsin
corporation.
(e) "Fair Market Value" means the closing price of the Stock
as reported by the New York Stock Exchange on a particular date.
(f) "Option" means the right to purchase Stock at a stated
price for a specified period of time. For purposes of the Plan an
Option may be either (i) an "incentive stock option" within the meaning
of Section 422A of the Code or (ii) a "nonstatutory stock option."
(g) "Participant" means any individual designated by the
Committee to participate in the Plan.
(h) "Period of Restriction" means the period during which the
transfer of shares of Restricted Stock is restricted pursuant to
Section 10 of the Plan.
(i) "Restricted Stock" means Stock granted to a Participant
pursuant to Section 10 of the Plan.
(j) "Stock" means the Common Stock of the Company, par value
of $0.10.
(k) "Stock Appreciation Right" means the right to receive a
cash payment from the Company equal to the excess of the Fair Market
Value of a share of Stock at the date of exercise over the Option
exercise price fixed by the Committee, which shall not be less than
100% of the Fair Market Value of the Stock on the date of grant.
2.2 Gender and Number. Except when otherwise indicated by the context,
words in the masculine gender when used in the Plan shall include the feminine
gender, the singular shall include the plural and the plural shall include the
singular.
SECTION 3. ELIGIBILITY AND PARTICIPATION.
3.1 Eligibility and Participation. Participants in the Plan shall be
selected by the Committee from among those key employees of the Company and its
subsidiaries, including subsidiaries which become such after adoption of the
Plan, who are recommended for participation by the Chief Executive Officer and
who, in the opinion of the Committee, are in a position to contribute materially
to the
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Company's continued growth and development and to its long-term financial
success. No member of the Committee shall be eligible to participate in the Plan
for a period of one year after having served on the Committee.
SECTION 4. ADMINISTRATION.
4.1 Administration. The Committee shall be responsible for the
administration of the Plan. The Committee, by majority action thereof, is
authorized to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan, to provide for conditions and assurances
deemed necessary or advisable to protect the interests of the Company and to
make all other determinations necessary or advisable for the administration of
the Plan, but only to the extent not contrary to the express provisions of the
Plan. Determinations, interpretations or other actions made or taken by the
Committee pursuant to the provisions of the Plan shall be final and binding and
conclusive for all purposes and upon all persons whomsoever.
SECTION 5. STOCK SUBJECT TO PLAN.
5.1 Number. The total number of shares of Stock subject to issuance
under the Plan may not exceed 2,600,000, subject to adjustment upon occurrence
of any of the events indicated in Subsection 5.3. Of this total number, up to
800,000 shares of Stock may be granted in Restricted Stock to Participants under
the Plan. The shares to be issued under the Plan may consist, in whole or in
part, of authorized but unissued Stock or treasury Stock, not reserved for any
other purpose.
5.2 Unused Stock. In the event any shares of Stock that are subject to
an Option which, for any reason, expires, is cancelled or is terminated
unexercised as to such shares, or any shares of Stock subject to a Restricted
Stock grant made under the Plan are reacquired by the Company pursuant to the
Plan, such shares again shall become available for issuance under the Plan.
5.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock that occurs after ratification of the Plan by the
shareholders of the Company by reason of a Stock dividend or split,
recapitalization, merger, consolidation, combination, spin-off, split-up,
exchange of shares or other similar corporate change, the aggregate number of
shares of Stock authorized for issuance under the Plan as well as Stock subject
to each outstanding Option, and its stated Option price, shall be appropriately
adjusted by the Committee, whose determination shall be conclusive; provided,
however, that fractional shares shall be rounded to the nearest whole share. In
such event, the Committee shall also have discretion to make appropriate
adjustments in the
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number of shares authorized for issuance under the Plan as well as shares
subject to Restricted Stock grants then outstanding under the Plan pursuant to
the terms of such grants or otherwise.
SECTION 6. STOCK APPRECIATION RIGHTS SUBJECT TO PLAN.
6.1 Plan Limitation. The number of Stock Appreciation Rights which may
be granted pursuant to the Plan may not exceed 1,200,000.
6.2 Unexercised Rights. In the event any Stock Appreciation Rights
expire, terminate or are cancelled unexercised, such Stock Appreciation Rights
again shall become available for issuance under the Plan.
6.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock that occurs after ratification of the Plan by the
shareholders of the Company by reason of a Stock dividend or split,
recapitalization, merger, consolidation, combination, spin-off, split-up,
exchange of shares or other similar corporate change, the Committee shall make
appropriate adjustments in the number of outstanding Stock Appreciation Rights
and the related grant values, whose determination shall be conclusive.
SECTION 7. DURATION OF PLAN.
7.1 Duration of Plan. The Plan shall remain in effect, subject to the
Board's right to earlier terminate the Plan pursuant to Section 14 hereof, until
all Stock subject to it shall have been purchased or acquired pursuant to the
provisions hereof. Notwithstanding the foregoing, no Option, Stock Appreciation
Right, or Restricted Stock may be granted under the Plan on or after the tenth
(10th) anniversary of the Plan's effective date.
SECTION 8. STOCK OPTIONS.
8.1 Grant of Options. Subject to the provisions of Sections 5 and 7,
Options may be granted to Participants at any time and from time to time as
shall be determined by the Committee. The Committee shall have complete
discretion in determining the number of Options granted to each Participant. The
Committee also shall determine whether an Option is to be an incentive stock
option within the meaning of Section 422A of the Code or a nonstatutory stock
option. Incentive stock options shall be subject to the following limitations:
(a) The Fair Market Value (determined at the date of grant) of
Stock with respect to which incentive stock options are exercisable for
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the first time by a Participant during any calendar year shall not
exceed $100,000.
(b) No incentive stock option may be granted to any person who
owns, directly or indirectly, stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company.
Nothing in this Section 8 of the Plan shall be deemed to prevent the grant of
nonstatutory stock options in excess of the maximum established by Section 422A
of the Code.
8.2 Option Agreement. Each Option shall be evidenced by an Option
Agreement that shall specify the type of Option granted, the Option price, the
duration of the Option, the number of shares of Stock to which the Option
pertains and such other provisions as the Committee shall determine.
8.3 Option Price. No Option granted pursuant to the Plan shall have an
Option price that is less than the Fair Market Value of the Stock on the date
the Option is granted.
8.4 Duration of Options. Each Option shall expire at such time as the
Committee shall determine, provided, however, that no incentive stock option
shall be exercisable later than the tenth (10th) anniversary date of its grant.
8.5 Exercise of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for all
Participants. Any Option granted to an elected officer, director or more than
10% shareholder may not be exercised until at least six months following the
grant date.
8.6 Payment. The Option price of any Option shall be payable to the
Company in full upon exercise (i) in cash or its equivalent including, in the
discretion of the Committee, a promissory note issued to the Company by the
Participant, which note shall (v) be secured by the Stock issued; (w) be for a
term of not more than ten (10) years; (x) bear interest at a rate of not less
than the prime rate (as determined by the Committee) in effect on the date such
promissory note is issued; (y) require at least annual payments of principal and
interest; and (z) contain such other terms and conditions as the Committee
determines; provided, that in the case of the exercise of an incentive stock
option which is outstanding as of September 10, 1998, such promissory note shall
not be considered the equivalent of cash; (ii) by tendering shares of Stock
having a Fair
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Market Value at the time of exercise equal to the total Option price; (iii) by a
combination of cash and shares of Stock; or (iv) by electing to have the Company
withhold from the shares of Stock otherwise issuable upon exercise of the Option
that number of shares of Stock otherwise having a Fair Market Value at the time
of exercise plus cash for any fractional share amounts, equal to the total
Option price; provided that any such election by an elected officer, director or
more than 10% shareholder of the Company with respect to an incentive stock
option outstanding as of September 10, 1998 must be made during the ten-day
period beginning on the third business day following the release of the
Company's quarterly or annual summary statement of sales and earnings. The
proceeds from such a payment shall be added to the general funds of the Company
and shall be used for general corporate purposes.
8.7 Restrictions on Stock Transferability. The Committee shall impose
such restrictions on any shares of Stock acquired pursuant to the exercise of an
Option under the Plan as it may deem advisable, including, without limitation,
restrictions under applicable Federal securities law, under the requirements of
any stock exchange upon which such shares of Stock are then listed and under any
blue sky or state securities laws applicable to such shares.
8.8 Nontransferability Of Options. No Option granted under the Plan may
be sold, transferred, pledged, assigned or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and distribution. Further, all
Options granted to a Participant under the Plan shall be exercisable during his
lifetime only by such Participant.
SECTION 9. STOCK APPRECIATION RIGHTS.
9.1 Grant of Stock Appreciation Rights. Subject to the provisions of
Sections 6 and 7, Stock Appreciation Rights may be granted to Participants. A
Stock Appreciation Right shall relate only to a specific Option granted under
the Plan and may relate to all or part of the Option shares covered by the
related Option.
9.2 Exercise of Stock Appreciation Rights. Stock Appreciation Rights
shall be exercisable at such time or times, on the conditions and to the extent
and in the proportion, that the related Option is exercisable and may be
exercised for all or part of the shares of Stock subject to the related Option.
Any Stock Appreciation Right granted to an elected officer, director or more
than 10% shareholder of the Company may not be exercised until at least six
months after the grant date and shall only be exercisable during the ten-day
period beginning on the third business day following the release of the
Company's quarterly or annual summary statement of sales and earnings.
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<PAGE> 7
9.3 Effect of Exercise. Upon exercise of any number of Stock
Appreciation Rights, the number of Option shares subject to the related Option
shall be reduced accordingly and such Option shares may not again be subjected
to an Option under the Plan. The exercise of any number of Options shall result
in an equivalent reduction in the number of Option shares covered by the related
Stock Appreciation Right and such shares may not again be subject to a Stock
Appreciation Right under this Plan; provided, however, that if a Stock
Appreciation Right was granted for less than all of the Option shares covered by
the related Option, no such reduction shall be made until such time as the
number of shares exercised under the related Option exceeds the number of Option
shares not covered by the Stock Appreciation Right.
9.4 Payment of Stock Appreciation Right Amount. Upon exercise of a
Stock Appreciation Right, the holder shall be entitled to receive payment in
cash of an amount determined by multiplying:
(a) The difference between the Fair Market Value of a share of
Stock at the date of exercise over the price fixed by the Committee at
the date of grant by
(b) The number of shares with respect to which the Stock
Appreciation Right is exercised.
In the case of a Stock Appreciation Right which is granted in conjunction with
an incentive stock option, the amount determined under (a) above shall be
determined by using a price fixed by the Committee at the date of grant which
does not exceed the Option price of the related incentive stock option.
9.5 Limit on Appreciation. The Committee may, in its sole discretion,
establish (at the time of grant) a maximum amount per share which will be
payable upon exercise of a Stock Appreciation Right.
9.6 Rule 16b-3 Requirements. Notwithstanding any other provision of the
Plan, the Committee may impose such conditions on exercise of a Stock
Appreciation Right (including, without limitation, the right of the Committee to
limit the time of exercise to specified periods) as may be required to satisfy
the requirements of Rule 16b-3 (or any successor rule) under the Securities
Exchange Act of 1934.
SECTION 10. RESTRICTED STOCK.
10.1 Grant of Restricted Stock. Subject to the provisions of Sections 5
and 7, the Committee, at any time and from time to time, may grant shares of
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<PAGE> 8
Restricted Stock under the Plan to such Participants and in such amounts as it
shall determine. Each grant of Restricted Stock shall be in writing.
10.2 Transferability. Except as provided in Section 10 hereof, the
shares of Restricted Stock granted hereunder may not be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated for such period of time
as shall be determined by the Committee and shall be specified in the Restricted
Stock grant, or upon earlier satisfaction of other conditions as specified by
the Committee in its sole discretion and set forth in the Restricted Stock
grant.
10.3 Other Restrictions. The Committee shall impose such other
restrictions on any shares of Restricted Stock granted pursuant to the Plan as
it may deem advisable including, without limitation, restrictions under
applicable Federal or state securities laws, and may legend the certificates
representing Restricted Stock to give appropriate notice of such restrictions.
Any Restricted Stock granted to an elected officer, director or more than 10%
shareholder may not be sold for at least six months after the date it is
granted.
10.4 Certificate Legend. In addition to any legends placed on
certificates pursuant to Subsection 10.3 hereof, each certificate representing
shares of Restricted Stock granted pursuant to the Plan share bear the following
legend:
"The sale or other transfer of the shares of stock represented by
this certificate, whether voluntary, involuntary or by operation of
law, is subject to certain restrictions on transfer set forth in the
Universal Foods Corporation 1990 Employee Stock Plan, rules of
administration adopted pursuant to such Plan and a Restricted Stock
grant dated ___________, 19___. A copy of the Plan, such rules and such
Restricted Stock grant may be obtained from the Secretary of Universal
Foods Corporation."
10.5 Removal of Restrictions. Except as otherwise provided in Section
10 hereof, shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan shall become freely transferable by the Participant after
the last day of the Period of Restriction. Once the shares are released from the
restrictions, the Participant shall be entitled to have the legend required by
Subsection 10.4 removed from his Stock certificates.
10.6 Voting Rights. During the Period of Restriction, Participants
holding shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those shares.
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<PAGE> 9
10.7 Dividends and Other Distributions. During the Period of
Restriction, Participants holding shares of Restricted Stock granted hereunder
shall be entitled to receive all dividends and other distributions paid with
respect to those shares while they are so held. If any such dividends or
distributions are paid in shares of Stock, the shares shall be subject to the
same restrictions on transferability as the shares of Restricted Stock with
respect to which they were paid.
10.8 Nontransferability of Restricted Stock. No shares of Restricted
Stock granted under the Plan may be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated, otherwise than by will or by the laws of
descent and distribution until the termination of the applicable Period of
Restriction. All rights with respect to Restricted Stock granted to a
Participant under the Plan shall be exercisable during his lifetime only by such
Participant.
10.9 Election to Sell Shares to the Company. A Participant, or in the
case of his death his beneficiary or estate, may elect to sell to the Company up
to one-half of the shares of Restricted Stock issued to him pursuant to the Plan
and upon which the restrictions set forth in Subsections 10.2 and 10.3 lapsed.
To the extent permitted by law, the Company shall purchase all such shares. Each
such sale must occur within sixty (60) days after the last day of the Period of
Restriction for such shares and shall be for a price equal to the Fair Market
Value determined as of the last business day of the Period of Restriction of the
shares of Restricted Stock to be sold. Such price shall be payable in cash or by
check in one lump sum payment, unless provisions relating to payment for such
shares in installments are agreed to by the Company and the Participant (or his
beneficiary or estate).
SECTION 11. BENEFICIARY DESIGNATION.
11.1 Beneficiary Designation. Each Participant under the Plan may, from
time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in case of his death before he receives any or all of such benefit. Each
designation will revoke all prior designations by the same Participant, shall be
in a form prescribed by the Committee and will be effective only when filed by
the Participant in writing with the Committee during his lifetime. In the
absence of any such designation, benefits remaining unpaid at the Participant's
death shall be paid to his estate.
SECTION 12. RIGHTS OF EMPLOYEES.
12.1 Employment. Nothing in the Plan shall interfere with or limit in
any way the right of the Company to terminate any Participant's employment at
any
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time nor confer upon any Participant any right to continue in the employ of the
Company.
12.2 Participation. No employee shall have a right to be selected as a
Participant or, having been so selected, to be selected again as a Participant.
SECTION 13. CHANGE OF CONTROL.
13.1 A "Change of Control" of the Company means:
(a) 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 (i) the then outstanding shares
of common stock of the Company (the "Outstanding Company Common Stock")
or (ii) 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 (a), the following
acquisitions shall not constitute a Change of Control: (1) any
acquisition directly from the Company, (2) any acquisition by the
Company, (3) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (4) any acquisition pursuant to a
transaction which complies with clauses (i), (ii) and (iii) of
subsection (c) of this Section; or
(b) individuals who, as of September 10, 1998, 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 September 10, 1998 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
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<PAGE> 11
(c) consummation by the Company of a reorganization, merger 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
entity (a "Business Combination"), in each case, unless, following such
Business Combination, (i) 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 beneficially
own, directly or indirectly, more than 50% 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 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, (ii) no Person (excluding any employee
benefit plan (or related trust) of the Company or of 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 prior to the Business Combination and (iii) 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 the action of
the Board, providing for such Business Combination; or
(d) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
13.2 Treatment of Options and Stock Appreciation Rights. In the event
of a Change of Control of the Company, all Options and Stock Appreciation Rights
outstanding as of the date of such Change of Control, and which are not then
exercisable and vested, shall become fully exercisable and vested immediately
prior to such Change of Control.
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<PAGE> 12
13.3 Treatment of Restricted Stock. In the event of a Change of Control
of the Company, the restrictions applicable to any shares of Restricted Stock
shall lapse and such shares shall become immediately vested and shall be freely
transferable by the Participant, subject to any applicable Federal or state
securities laws.
13.4 Certain Agreement Provisions Void. In the event of a Change of
Control of the Company, any Forfeiture Provision (as hereinafter defined)
contained in any Grant Agreement (as hereinafter defined) shall be null and void
and of no further force and effect. For purposes of this Section 13.4:
(a) "Grant Agreement" means an agreement between the Company and a
Participant concerning the grant of nonstatutory stock options or
Restricted Stock (but not incentive stock options) entered into prior
to September 10, 1998.
(b) "Forfeiture Provision" means a provision in a Grant Agreement
which provides for the forfeiture of vested or unvested stock options
or Restricted Stock, as the case may be, or the repayment to the
Company of the "Option Spread" or "Restricted Stock Value" (as such
terms are defined or used in the Grant Agreement), as the case may be,
upon the occurrence, during or for a specified period after the
termination of the Participant's employment with the Company or any
subsidiary, of one or more of: (i) the Participant engaging in acts
competitive with the Company or any subsidiary; (ii) the Participant
soliciting the employees or customers of the Company or any subsidiary
in a manner which is competitive with the Company or any subsidiary or
disruptive to the business of the Company or any subsidiary; (iii) the
Participant disclosing Information (as such term is defined in or used
in such Grant Agreement) obtained during the course of the
Participant's employment with the Company or any subsidiary; (iv) any
actions of similar nature to the foregoing which are defined in such
Grant Agreement as "Restricted Activities" or "Prohibited Activities";
or (v) the violation by the Participant of any written agreement
between the Company and the Participant prohibiting all or any of the
activities described in (i) through (iv), above.
SECTION 14. AMENDMENT, MODIFICATION AND TERMINATION OF PLAN.
14.1 Amendment, Modification and Termination of Plan. The Board may at
any time terminate, and from time to time may amend or modify the Plan,
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<PAGE> 13
provided, however, that no such action of the Board, without approval of the
shareholders, may:
(a) Increase the total amount of Stock which may be issued under
the Plan, except as provided in Subsections 5.1 and 5.3 of the Plan.
(b) Materially modify the eligibility requirements as provided in
Section 3.
(c) Materially increase the benefits accruing to Participants
under the Plan.
SECTION 15. TAX WITHHOLDING.
15.1 Tax Withholding. Whenever shares of Stock are to be issued under
the Plan, the Company shall have the power to withhold from any cash otherwise
payable to the Participant or to require the recipient of the Stock to remit to
the Company an amount sufficient to satisfy Federal, state and local withholding
tax requirements. With the consent of the Committee, a Participant who is an
appointed officer of the Company may remit cash, already owned Company stock or
request the Company to satisfy withholding requirements from the exercised
Option stock or Restricted Stock.
SECTION 16. INDEMNIFICATION.
16.1 Indemnification. Each person who is or shall have been a member of
the Committee or of the Board shall be indemnified and held harmless by the
Company against and from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit or proceeding to which he may be a party or in which he
may be involved by reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid by him in settlement thereof, with
the Company's approval, or paid by him in satisfaction of any judgment in any
such action, suit or proceeding against him, provided he shall give the Company
an opportunity, at its own expense, to handle and defend the same before he
undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company's Articles of Incorporation
or bylaws, as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.
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<PAGE> 14
SECTION 17. REQUIREMENTS OF LAW.
17.1 Requirements of Law. The granting of Options, Stock Appreciation
Rights or Restricted Stock and the issuance of shares of Stock upon the exercise
of an option shall be subject to all applicable laws, rules and regulations, and
to such approvals by any governmental agencies or national securities exchanges
as may be required.
17.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Wisconsin.
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EXHIBIT 10.2(e)
AMENDMENT NO. 1 TO THE
UNIVERSAL FOODS CORPORATION
1990 EMPLOYEE STOCK PLAN
The Universal Foods Corporation 1990 Employee Stock plan (the "Plan")
is hereby amended, effective as of September 10, 1998, as set forth below:
1. Section 8.6 of the Plan is amended to read in its entirety as follows:
8.6 Payment. The Option price of any Option shall be payable to
the Company in full upon exercise (i) in cash or its
equivalent including, in the discretion of the Committee, a
promissory note issued to the Company by the Participant,
which note shall (v) be secured by the Stock issued; (w) be
for a term of not more than ten (10) years; (x) bear interest
at a rate of not less than the prime rate (as determined by
the Committee) in effect on the date such promissory note is
issued; (y) require at least annual payments of principal and
interest; and (z) contain such other terms and conditions as
the Committee determines; provided, that in the case of the
exercise of an incentive stock option which is outstanding as
of September 10, 1998, such promissory note shall not be
considered the equivalent of cash; (ii) by tendering shares of
Stock having a Fair Market Value at the time of exercise equal
to the total Option price; (iii) by a combination of cash and
shares of Stock; or (iv) by electing to have the Company
withhold from the shares of Stock otherwise issuable upon
exercise of the Option that number of shares of Stock
otherwise having a Fair Market Value at the time of exercise
plus cash for any fractional share amounts, equal to the total
Option price; provided that any such election by an elected
officer, director or more than 10% shareholder of the Company
with respect to an incentive stock option outstanding as of
September 10, 1998 must be made during the ten-day period
beginning on the third business day following the release of
the Company's quarterly or annual summary statement of sales
and earnings. The proceeds from such a payment shall be added
to the general funds of the Company and shall be used for
general corporate purposes.
2. Section 13 of the Plan is amended to read in its entirety as follows:
Section 13. Change of Control.
13.1 A "Change of Control" of the Company means:
<PAGE> 2
(a) 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 (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) 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 (a), the following acquisitions shall not
constitute a Change of Control: (1) any acquisition directly
from the Company, (2) any acquisition by the Company, (3) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company or (4) any acquisition pursuant to a
transaction which complies with clauses (i), (ii) and (iii) of
subsection (c) of this Section; or
(b) individuals who, as of September 10, 1998, 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
September 10, 1998 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
(c) consummation by the Company of a reorganization, merger 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 entity (a "Business
Combination"), in each case, unless, following such Business
Combination, (i) 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 beneficially own, directly or indirectly, more
2
<PAGE> 3
than 50% 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 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,
(ii) no Person (excluding any employee benefit plan (or
related trust) of the Company or of 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 prior to the Business
Combination and (iii) 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 the
action of the Board, providing for such Business Combination;
or
(d) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
13.2 Treatment of Options and Stock Appreciation Rights. In
the event of a Change of Control of the Company, all Options and Stock
Appreciation Rights outstanding as of the date of such Change of Control, and
which are not then exercisable and vested, shall become fully exercisable and
vested immediately prior to such Change of Control.
13.3 Treatment of Restricted Stock. In the event of a Change
of Control of the Company, the restrictions applicable to any shares of
Restricted Stock shall lapse and such shares shall become immediately vested and
shall be freely transferable by the Participant, subject to any applicable
Federal or state securities laws.
13.4 Certain Agreement Provisions Void. In the event of a
Change of Control of the Company, any Forfeiture Provision (as hereinafter
defined)
3
<PAGE> 4
contained in any Grant Agreement (as hereinafter defined) shall be null and void
and of no further force and effect. For purposes of this Section 13.4:
(a) "Grant Agreement" means an agreement between the Company and a
Participant concerning the grant of nonstatutory stock options
or Restricted Stock (but not incentive stock options) entered
into prior to the effective date of this amendment (September
10, 1998).
(b) "Forfeiture Provision" means a provision in a Grant Agreement
which provides for the forfeiture of vested or unvested stock
options or Restricted Stock, as the case may be, or the
repayment to the Company of the "Option Spread" or "Restricted
Stock Value" (as such terms are defined or used in the Grant
Agreement), as the case may be, upon the occurrence, during or
for a specified period after the termination of the
Participant's employment with the Company or any subsidiary,
of one or more of: (i) the Participant engaging in acts
competitive with the Company or any subsidiary; (ii) the
Participant soliciting the employees or customers of the
Company or any subsidiary in a manner which is competitive
with the Company or any subsidiary or disruptive to the
business of the Company or any subsidiary; (iii) the
Participant disclosing Information (as such term is defined in
or used in such grant Agreement) obtained during the course of
the Participant's employment with the Company or any
subsidiary; (iv) any actions of similar nature to the
foregoing which are defined in such Grant Agreement as
"Restricted Activities" or "Prohibited Activities"; or (v) the
violation by the Participant of any written agreement between
the Company and the Participant prohibiting all or any of the
activities described in (i) through (iv), above.
4
<PAGE> 1
EXHIBIT 10.2(f)
UNIVERSAL FOODS CORPORATION
1994 EMPLOYEE STOCK PLAN
AS AMENDED AND RESTATED EFFECTIVE SEPTEMBER 10, 1998
(NOTE: ALL REFERENCES TO THE NUMBER OF SHARES OF STOCK SET FORTH IN
THIS AMENDED AND RESTATED EMPLOYEE STOCK PLAN HAVE BEEN ADJUSTED TO GIVE EFFECT
TO THE COMPANY'S 2-FOR-1 STOCK SPLIT, EFFECTED IN THE FORM OF A 100% STOCK
DIVIDEND, PAID TO SHAREHOLDERS OF RECORD ON MAY 6, 1998.)
SECTION 1. ESTABLISHMENT, PURPOSE AND EFFECTIVE DATE OF PLAN.
1.1 Establishment. Universal Foods Corporation, a Wisconsin
corporation, hereby establishes the "UNIVERSAL FOODS CORPORATION 1994 EMPLOYEE
STOCK PLAN" (the "Plan") for key employees. The Plan permits the grant of Stock
Options, Stock Appreciation Rights and Restricted Stock.
1.2 Purpose. The purpose of the Plan is to advance the interests of the
Company, by encouraging and providing for the acquisition of an equity interest
in the success of the Company by key employees, and by enabling the Company to
attract and retain the services of key employees upon whose judgment, interest
and special effort the successful conduct of its operations is largely
dependent.
1.3 Effective Date. The Plan shall become effective January 27, 1994,
subject to ratification by the shareholders of the Company.
SECTION 2. DEFINITIONS.
2.1 Definitions. Whenever used herein, the following terms shall have
their respective meanings set forth below:
(a) "Award" means any Options, Stock Appreciation Rights,
Restricted Stock or any other award made under the terms of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(d) "Committee" means the Compensation and Development Committee of
the Board, which shall consist of not less than two directors, each of
whom is a "disinterested person" within the
<PAGE> 2
meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended, or any successor provision thereto.
(e) "Company" means Universal Foods Corporation, a Wisconsin
corporation.
(f) "Fair Market Value" means the closing price of the Stock as
reported by the New York Stock Exchange on a particular date.
(g) "Option" means the right to purchase Stock at a stated price
for a specified period of time. For purposes of the Plan an Option may
be either (i) an "incentive stock option" within the meaning of Section
422 of the Code; or (ii) a "nonstatutory stock option."
(h) "Participant" means any individual designated by the Committee
to participate in the Plan.
(i) "Period of Restriction" means the period during which the
transfer of shares of Restricted Stock is restricted pursuant to
Section 10 of the Plan.
(j) "Restricted Stock" means Stock granted to a Participant
pursuant to Section 10 of the Plan.
(k) "Stock" means the Common Stock of the Company, par value of
$0.10.
(l) "Stock Appreciation Right" means the right to receive a cash
payment from the Company equal to the excess of the Fair Market Value
of a share of Stock at the date of exercise over the Option exercise
price fixed by the Committee, which shall not be less than 100% of the
Fair Market Value of the Stock on the date of grant.
2.2 Gender and Number. Except when otherwise indicated by the context,
words in the masculine gender when used in the Plan shall include the feminine
gender, the singular shall include the plural and the plural shall include the
singular.
SECTION 3. ELIGIBILITY AND PARTICIPATION.
3.1 Eligibility and Participation. Participants in the Plan shall be
selected by the Committee from among those key employees of the Company and its
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<PAGE> 3
subsidiaries, including subsidiaries which become such after adoption of the
Plan, who are recommended for participation by the Chief Executive Officer and
who, in the opinion of the Committee, are in a position to contribute materially
to the Company's continued growth and development and to its long-term financial
success.
SECTION 4. ADMINISTRATION.
4.1 Administration. The Plan shall be administered by the Committee.
The Committee, by majority action thereof, shall have complete and sole
authority to designate key employees to be Participants; determine the type of
Awards to be granted to Participants; determine the number of shares of Stock to
be covered by Awards granted to Participants; determine the terms and conditions
of any Award granted to Participants; interpret the Plan; prescribe, amend and
rescind rules and regulations relating to the Plan; provide for conditions and
assurances deemed necessary or advisable to protect the interests of the
Company; and make all other determinations necessary or advisable for the
administration of the Plan, but only to the extent not contrary to the express
provisions of the Plan. Determinations, interpretations or other actions made or
taken by the Committee pursuant to the provisions of the Plan shall be final and
binding and conclusive for all purposes and upon all persons whomsoever.
SECTION 5. STOCK SUBJECT TO PLAN.
5.1 Number. The total number of shares of Stock subject to issuance
under the Plan may not exceed 2,400,000, subject to adjustment upon occurrence
of any of the events indicated in Subsection 5.3. Of this total number, up to
500,000 shares of Stock may be granted in Restricted Stock to Participants under
the Plan. No participant shall be granted Options, Stock Appreciation Rights or
Restricted Stock that could result in such participant receiving more than
300,000 shares of Stock under the Plan. The shares to be issued under the Plan
may consist, in whole or in part, of authorized but unissued Stock or treasury
Stock, not reserved for any other purpose.
5.2 Unused Stock. In the event any shares of Stock that are subject to
an Option which, for any reason, expires, is cancelled or is terminated
unexercised as to such shares, such shares again shall become available for
issuance under the Plan.
5.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock that occurs after ratification of the Plan by the
shareholders of the Company by reason of a Stock dividend or split,
recapitalization, merger, consolidation, combination, spin-off, split-up,
exchange
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<PAGE> 4
of shares or other similar corporate change, the aggregate number of shares of
Stock authorized for issuance under the Plan as well as Stock subject to each
outstanding Option, and its stated Option price, shall be appropriately adjusted
by the Committee, whose determination shall be conclusive; provided, however,
that fractional shares shall be rounded to the nearest whole share. In such
event, the Committee shall also have discretion to make appropriate adjustments
in the number of shares authorized for issuance under the Plan as well as shares
subject to Restricted Stock grants then outstanding under the Plan pursuant to
the terms of such grants or otherwise.
SECTION 6. STOCK APPRECIATION RIGHTS SUBJECT TO PLAN.
6.1 Plan Limitation. The number of Stock Appreciation Rights which may
be granted pursuant to the Plan may not exceed 800,000.
6.2 Unexercised Rights. In the event any Stock Appreciation Rights
expire, terminate or are cancelled unexercised, such Stock Appreciation Rights
again shall become available for issuance under the Plan.
6.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock that occurs after ratification of the Plan by the
shareholders of the Company by reason of a Stock dividend or split,
recapitalization, merger, consolidation, combination, spin-off, split-up,
exchange of shares or other similar corporate change, the Committee shall make
appropriate adjustments in the number of outstanding Stock Appreciation Rights
and the related grant values, whose determination shall be conclusive.
SECTION 7. DURATION OF PLAN.
7.1 Duration of Plan. The Plan shall remain in effect, subject to the
Board's right to earlier terminate the Plan pursuant to Section 14 hereof, until
all Stock subject to it shall have been purchased or acquired pursuant to the
provisions hereof. Notwithstanding the foregoing, no Option, Stock Appreciation
Right or Restricted Stock may be granted under the Plan on or after the tenth
(10th) anniversary of the Plan's effective date.
SECTION 8. STOCK OPTIONS.
8.1 Grant of Options. Subject to the provisions of Sections 5 and 7,
Options may be granted to Participants at any time and from time to time as
shall be determined by the Committee. The Committee shall have complete
discretion in determining the number of Options granted to each Participant. The
Committee also shall determine whether an Option is to be an incentive stock
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<PAGE> 5
option within the meaning of Section 422 of the Code or a nonstatutory stock
option. Incentive stock options shall be subject to the following limitations:
(a) The Fair Market Value (determined at the date of grant) of
Stock with respect to which incentive stock options are exercisable for
the first time by a Participant during any calendar year shall not
exceed $100,000.
(b) No incentive stock option may be granted to any person who
owns, directly or indirectly, stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company.
Nothing in this Section 8 of the Plan shall be deemed to prevent the grant of
nonstatutory stock options in excess of the maximum established by Section 422
of the Code.
8.2 Option Agreement. Each Option shall be evidenced by an Option
agreement that shall specify the type of Option granted, the Option price, the
duration of the Option, the number of shares of Stock to which the Option
pertains and such other provisions as the Committee shall determine.
8.3 Option Price. No Option granted pursuant to the Plan shall have an
Option price that is less than the Fair Market Value of the Stock on the date
the Option is granted.
8.4 Duration of Options. Each Option shall expire at such time as the
Committee shall determine; provided, however, that no incentive stock option
shall be exercisable later than the tenth (10th) anniversary date of its grant.
8.5 Exercise of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for all
Participants. Any Option granted to an elected officer, director or more than
10% shareholder may not be exercised until at least six months following the
grant date.
8.6 Payment. The Option price of any Option shall be payable to the
Company in full upon exercise (i) in cash or its equivalent including, in the
discretion of the Committee, a promissory note issued to the Company by the
Participant, which note shall (v) be secured by the Stock issued; (w) be for a
term of not more than ten (10) years; (x) bear interest at a rate of not less
than the prime rate (as determined by the Committee) in effect on the date such
promissory
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<PAGE> 6
note is issued; (y) require at least annual payments of principal and interest;
and (z) contain such other terms and conditions as the Committee determines;
provided, that in the case of the exercise of an incentive stock option which is
outstanding as of September 10, 1998, such promissory note shall not be
considered the equivalent of cash; (ii) by tendering shares of Stock having a
Fair Market Value at the time of exercise equal to the total Option price; (iii)
by a combination of cash and shares of Stock; or (iv) by electing to have the
Company withhold from the shares of Stock otherwise issuable upon exercise of
the Option that number of shares of Stock otherwise having a Fair Market Value
at the time of exercise plus cash for any fractional share amounts, equal to the
total Option price; provided that any such election by an elected officer,
director or more than 10% shareholder of the Company with respect to an
incentive stock option outstanding as of September 10, 1998 must be made during
the ten-day period beginning on the third business day following the release of
the Company's quarterly or annual summary statement of sales and earnings. The
proceeds from such a payment shall be added to the general funds of the Company
and shall be used for general corporate purposes.
8.7 Restrictions on Stock Transferability. The Committee shall impose
such restrictions on any shares of Stock acquired pursuant to the exercise of an
Option under the Plan as it may deem advisable, including, without limitation,
restrictions under applicable Federal securities law, under the requirements of
any stock exchange upon which such shares of Stock are then listed and under any
blue sky or state securities laws applicable to such shares.
8.8 Nontransferability of Options. No Option granted under the Plan may
be sold, transferred, pledged, assigned or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and distribution. Further, all
Options granted to a Participant under the Plan shall be exercisable during his
lifetime only by such Participant.
SECTION 9. STOCK APPRECIATION RIGHTS.
9.1 Grant of Stock Appreciation Rights. Subject to the provisions of
Sections 6 and 7, Stock Appreciation Rights may be granted to Participants. A
Stock Appreciation Right shall relate only to a specific Option granted under
the Plan and may relate to all or part of the Option shares covered by the
related Option.
9.2 Exercise of Stock Appreciation Rights. Stock Appreciation Rights
shall be exercisable at such time or times, on the conditions and to the
extent and in the proportion, that the related Option is exercisable and may be
exercised for all or part of the shares of Stock subject to the related Option.
Any Stock
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<PAGE> 7
Appreciation Right granted to an elected officer, director or more than 10%
shareholder of the Company may not be exercised until at least six months after
the grant date and shall only be exercisable during the ten-day period beginning
on the third business day following the release of the Company's quarterly or
annual summary statement of sales and earnings.
9.3 Effect of Exercise. Upon exercise of any number of Stock
Appreciation Rights, the number of Option shares subject to the related Option
shall be reduced accordingly and such Option shares may not again be subjected
to an Option under the Plan. The exercise of any number of Options shall result
in an equivalent reduction in the number of Option shares covered by the related
Stock Appreciation Right and such shares may not again be subject to a Stock
Appreciation Right under this Plan; provided, however, that if a Stock
Appreciation Right was granted for less than all of the Option shares covered by
the related Option, no such reduction shall be made until such time as the
number of shares exercised under the related Option exceeds the number of Option
shares not covered by the Stock Appreciation Right.
9.4 Payment of Stock Appreciation Right Amount. Upon exercise of a
Stock Appreciation Right, the holder shall be entitled to receive payment in
cash of an amount determined by multiplying:
(a) The difference between the Fair Market Value of a share of
Stock at the date of exercise over the price fixed by the Committee at
the date of grant by
(b) The number of shares with respect to which the Stock
Appreciation Right is exercised.
In the case of a Stock Appreciation Right which is granted in conjunction with
an incentive stock option, the amount determined under (a) above shall be
determined by using a price fixed by the Committee at the date of grant which
does not exceed the Option price of the related incentive stock option.
9.5 Limit on Appreciation. The Committee may, in its sole discretion,
establish (at the time of grant) a maximum amount per share which will be
payable upon exercise of a Stock Appreciation Right.
9.6 Rule 16b-3 Requirements. Notwithstanding any other provision of the
Plan, the Committee may impose such conditions on exercise of a Stock
Appreciation Right (including, without limitation, the right of the Committee to
limit the time of exercise to specified periods) as may be required to satisfy
the
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<PAGE> 8
requirements of Rule 16b-3 (or any successor rule) under the Securities Exchange
Act of 1934.
SECTION 10. RESTRICTED STOCK.
10.1 Grant of Restricted Stock. Subject to the provisions of Sections 5
and 7, the Committee, at any time and from time to time, may grant shares of
Restricted Stock under the Plan to such Participants and in such amounts as it
shall determine. Each grant of Restricted Stock shall be in writing.
10.2 Transferability. Except as provided in Section 10 hereof, the
shares of Restricted Stock granted hereunder may not be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated for such period of time
as shall be determined by the Committee and shall be specified in the Restricted
Stock grant, or upon earlier satisfaction of other conditions as specified by
the Committee in its sole discretion and set forth in the Restricted Stock
grant.
10.3 Other Restrictions. The Committee shall impose such other
restrictions on any shares of Restricted Stock granted pursuant to the Plan as
it may deem advisable including, without limitation, restrictions under
applicable Federal or state securities laws, and may legend the certificates
representing Restricted Stock to give appropriate notice of such restrictions.
Any Restricted Stock granted to an elected officer, director or more than 10%
shareholder may not be sold for at least six months after the date it is
granted.
10.4 Certificate Legend. In addition to any legends placed on
certificates pursuant to Subsection 10.3 hereof, each certificate representing
shares of Restricted Stock granted pursuant to the Plan shall bear the following
legend:
"The sale or other transfer of the shares of stock represented by
this certificate, whether voluntary, involuntary or by operation of
law, is subject to certain restrictions on transfer set forth in the
Universal Foods Corporation 1994 Employee Stock Plan, rules of
administration adopted pursuant to such Plan and a Restricted Stock
grant dated ____________, 19__. A copy of the Plan, such rules and such
Restricted Stock grant may be obtained from the Secretary of Universal
Foods Corporation."
10.5 Removal of Restrictions. Except as otherwise provided in Section
10 hereof, shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan shall become freely transferable by the Participant after
the last day of the Period of Restriction. Once the shares are released from the
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<PAGE> 9
restrictions, the Participant shall be entitled to have the legend required by
Subsection 10.4 removed from his Stock certificates.
10.6 Voting Rights. During the Period of Restriction, Participants
holding shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those shares.
10.7 Dividends and Other Distributions. During the Period of
Restriction, Participants holding shares of Restricted Stock granted hereunder
shall be entitled to receive all dividends and other distributions paid with
respect to those shares while they are so held. If any such dividends or
distributions are paid in shares of Stock, the shares shall be subject to the
same restrictions on transferability as the shares of Restricted Stock with
respect to which they were paid.
10.8 Nontransferability of Restricted Stock. No shares of Restricted
Stock granted under the Plan may be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated, otherwise than by will or by the laws of
descent and distribution until the termination of the applicable Period of
Restriction. All rights with respect to the Restricted Stock granted to a
Participant under the Plan shall be exercisable during his lifetime only by such
Participant.
10.9 Election to Sell Shares to the Company. A Participant, or in the
case of his death his beneficiary or estate, may elect to sell to the Company up
to one-half of the shares of Restricted Stock issued to him pursuant to the Plan
and upon which the restrictions set forth in Subsections 10.2 and 10.3 lapsed.
To the extent permitted by law, the Company shall purchase all such shares. Each
such sale must occur within sixty (60) days after the last day of the Period of
Restriction for such shares and shall be for a price equal to the Fair Market
Value determined as of the last business day of the Period of Restriction of the
shares of Restricted Stock to be sold. Such price shall be payable in cash or by
check in one lump sum payment, unless provisions relating to payment for such
shares in installments are agreed to by the Company and the Participant (or his
beneficiary or estate).
SECTION 11. BENEFICIARY DESIGNATION.
11.1 Beneficiary Designation. Each Participant under the Plan may, from
time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in case of his death before he receives any or all of such benefit. Each
designation will revoke all prior designations by the same Participant, shall be
in a form prescribed by the Committee and will be effective only when filed by
the Participant in writing with the Committee during his lifetime. In the
absence of
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any such designation, benefits remaining unpaid at the Participant's death shall
be paid to his estate.
SECTION 12. RIGHTS OF EMPLOYEES.
12.1 Employment. Nothing in the Plan shall interfere with or limit in
any way the right of the Company to terminate any Participant's employment at
any time nor confer upon any Participant any right to continue in the employ of
the Company.
12.2 Participation. No employee shall have a right to be selected as a
Participant or, having been so selected, to be selected again as a Participant.
SECTION 13. CHANGE OF CONTROL.
13.1 A "Change of Control" of the Company means:
(a) 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 (i) the then outstanding shares
of common stock of the Company (the "Outstanding Company Common Stock")
or (ii) 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 (a), the following
acquisitions shall not constitute a Change of Control: (1) any
acquisition directly from the Company, (2) any acquisition by the
Company, (3) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (4) any acquisition pursuant to a
transaction which complies with clauses (i), (ii) and (iii) of
subsection (c) of this Section; or
(b) individuals who, as of September 10, 1998, 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 September 10, 1998 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
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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
(c) consummation by the Company of a reorganization, merger 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
entity (a "Business Combination"), in each case, unless, following such
Business Combination, (i) 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 beneficially
own, directly or indirectly, more than 50% 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 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, (ii) no Person (excluding any employee
benefit plan (or related trust) of the Company or of 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 prior to the Business Combination and (iii) 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 the action of
the Board, providing for such Business Combination; or
(d) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
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13.2 Treatment of Options and Stock Appreciation Rights. In the event
of a Change of Control of the Company, all Options [and Stock Appreciation
Rights] outstanding as of the date of such Change of Control, and which are not
then exercisable and vested, shall become fully exercisable and vested
immediately prior to such Change of Control.
13.3 Treatment of Restricted Stock. In the event of a Change of Control
of the Company, the restrictions applicable to any shares of Restricted Stock
shall lapse and such shares shall become immediately vested and shall be freely
transferable by the Participant, subject to any applicable Federal or state
securities laws.
13.4 Certain Agreement Provisions Void. In the event of a Change of
Control of the Company, any Forfeiture Provision (as hereinafter defined)
contained in any Grant Agreement (as hereinafter defined) shall be null and void
and of no further force and effect. For purposes of this Section 13.4:
(a) "Grant Agreement" means an agreement between the Company and a
Participant concerning the grant of nonstatutory stock options or
Restricted Stock (but not incentive stock options) entered into prior
to September 10, 1998.
(b) "Forfeiture Provision" means a provision in a Grant Agreement
which provides for the forfeiture of vested or unvested stock options
or Restricted Stock, as the case may be, or the repayment to the
Company of the "Option Spread" or "Restricted Stock Value" (as such
terms are defined or used in the Grant Agreement), as the case may be,
upon the occurrence, during or for a specified period after the
termination of the Participant's employment with the Company or any
subsidiary, of one or more of: (i) the Participant engaging in acts
competitive with the Company or any subsidiary; (ii) the Participant
soliciting the employees or customers of the Company or any subsidiary
in a manner which is competitive with the Company or any subsidiary or
disruptive to the business of the Company or any subsidiary; (iii) the
Participant disclosing Information (as such term is defined in or used
in such Grant Agreement) obtained during the course of the
Participant's employment with the Company or any subsidiary; (iv) any
actions of similar nature to the foregoing which are defined in such
Grant Agreement as "Restricted Activities" or "Prohibited Activities";
or (v) the violation by the Participant of any written agreement
between the Company and the Participant prohibiting all or any of the
activities described in (i) through (iv), above.
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13.5 Limitation on Payments. If the receipt of any payment under this
Section in respect of an incentive stock option by any Participant shall, in the
opinion of independent tax counsel of recognized standing selected by the
Company, result in the payment by such Participant of any excise tax provided
for in Section 280G and Section 4999 of the Code, then the amount of such
payment shall be reduced to the extent required, in the opinion of independent
tax counsel selected as aforesaid, to prevent the imposition of such excise tax.
Nothing in this Section 13.5 shall be construed to deprive any Participant of or
reduce such payment in respect of nonstatutory stock options, Stock Appreciation
Rights, or Restricted Stock.
SECTION 14. AMENDMENT, MODIFICATION AND TERMINATION OF PLAN.
14.1 Amendment, Modification and Termination of Plan. The Board may at
any time terminate, and from time to time may amend or modify the Plan,
provided, however, that no such action of the Board, without approval of the
shareholders, may:
(a) Increase the total amount of Stock which may be issued under
the Plan, except as provided in Subsections 5.1 and 5.3 of the Plan.
(b) Materially modify the eligibility requirements as provided in
Section 3.
(c) Materially increase the benefits accruing to Participants under
the Plan.
No amendment, modification or termination of the Plan shall in any manner
adversely affect any Options, Stock Appreciation Rights or Restricted Stock
theretofore granted under the Plan, without the consent of the Participant.
SECTION 15. TAX WITHHOLDING.
15.1 Tax Withholding. Whenever shares of Stock are to be issued under
the Plan, the Company shall have the power to withhold from any cash otherwise
payable to the Participant or to require the recipient of the Stock to remit to
the Company an amount sufficient to satisfy Federal, state and local withholding
tax requirements. A Participant who is an elected officer of the Company may
remit cash, already owned Company stock or request the Company to satisfy
withholding requirements from the exercised Option stock or Restricted Stock.
The Committee may establish such procedures as it deems appropriate for the
settling of withholding obligations with Stock, including, without limitation,
the
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establishment of such procedures as may be necessary to satisfy the requirements
of Rule 16b-3 under the Securities Exchange Act of 1934 or any successor
provisions thereto.
SECTION 16. INDEMNIFICATION.
16.1 Indemnification. Each person who is or shall have been a member of
the Committee or of the Board shall be indemnified and held harmless by the
Company against and from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit or proceeding to which he may be a party or in which he
may be involved by reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid by him in settlement thereof, with
the Company's approval, or paid by him in satisfaction of any judgment in any
such action, suit or proceeding against him, provided he shall give the Company
an opportunity, at its own expense, to handle and defend the same before he
undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company's Articles of Incorporation
or bylaws, as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.
SECTION 17. REQUIREMENTS OF LAW.
17.1 Requirements of Law. The granting of Options, Stock Appreciation
Rights or Restricted Stock and the issuance of shares of Stock upon the exercise
of an option shall be subject to all applicable laws, rules and regulations, and
to such approvals by any governmental agencies or national securities exchanges
as may be required.
17.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Wisconsin.
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<PAGE> 1
EXHIBIT 10.2(g)
AMENDMENT NO. 1 TO THE
UNIVERSAL FOODS CORPORATION
1994 EMPLOYEE STOCK PLAN
The Universal Foods Corporation 1994 Employee Stock Plan (the "Plan")
is hereby amended, effective as of September 10, 1998, as set forth below:
1. Section 8.6 of the Plan is amended to read in its entirety as follows:
8.6 Payment. The Option price of any Option shall be payable to
the Company in full upon exercise (i) in cash or its
equivalent including, in the discretion of the Committee, a
promissory note issued to the Company by the Participant,
which note shall (v) be secured by the Stock issued; (w) be
for a term of not more than ten (10) years; (x) bear interest
at a rate of not less than the prime rate (as determined by
the Committee) in effect on the date such promissory note is
issued; (y) require at least annual payments of principal and
interest; and (z) contain such other terms and conditions as
the Committee determines; provided, that in the case of the
exercise of an incentive stock option which is outstanding as
of September 10, 1998, such promissory note shall not be
considered the equivalent of cash; (ii) by tendering shares of
Stock having a Fair Market Value at the time of exercise equal
to the total Option price; (iii) by a combination of cash and
shares of Stock; or (iv) by electing to have the Company
withhold from the shares of Stock otherwise issuable upon
exercise of the Option that number of shares of Stock
otherwise having a Fair Market Value at the time of exercise
plus cash for any fractional share amounts, equal to the total
Option price; provided that any such election by an elected
officer, director or more than 10% shareholder of the Company
with respect to an incentive stock option outstanding as of
September 10, 1998 must be made during the ten-day period
beginning on the third business day following the release of
the Company's quarterly or annual summary statement of sales
and earnings. The proceeds from such a payment shall be added
to the general funds of the Company and shall be used for
general corporate purposes.
2. Section 13 of the Plan is amended to read in its entirety as follows:
Section 13. Change of Control.
13.1 A "Change of Control" of the Company means:
<PAGE> 2
(a) 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 (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) 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 (a), the following acquisitions shall not
constitute a Change of Control: (1) any acquisition directly
from the Company, (2) any acquisition by the Company, (3) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company or (4) any acquisition pursuant to a
transaction which complies with clauses (i), (ii) and (iii) of
subsection (c) of this Section; or
(b) individuals who, as of September 10, 1998, 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
September 10, 1998 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
(c) consummation by the Company of a reorganization, merger 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 entity (a "Business
Combination"), in each case, unless, following such Business
Combination, (i) 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 beneficially own, directly or indirectly, more
2
<PAGE> 3
than 50% 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 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,
(ii) no Person (excluding any employee benefit plan (or
related trust) of the Company or of 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 prior to the Business
Combination and (iii) 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 the
action of the Board, providing for such Business Combination;
or
(d) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
13.2 Treatment of Options and Stock Appreciation Rights. In the
event of a Change of Control of the Company, all Options [and Stock Appreciation
Rights] outstanding as of the date of such Change of Control, and which are not
then exercisable and vested, shall become fully exercisable and vested
immediately prior to such Change of Control.
13.3 Treatment of Restricted Stock. In the event of a Change of
Control of the Company, the restrictions applicable to any shares of Restricted
Stock shall lapse and such shares shall become immediately vested and shall be
freely transferable by the Participant, subject to any applicable Federal or
state securities laws.
13.4 Certain Agreement Provisions Void. In the event of a Change of
Control of the Company, any Forfeiture Provision (as hereinafter defined)
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<PAGE> 4
contained in any Grant Agreement (as hereinafter defined) shall be null and void
and of no further force and effect. For purposes of this Section 13.4:
(a) "Grant Agreement" means an agreement between the Company and a
Participant concerning the grant of nonstatutory stock options
or Restricted Stock (but not incentive stock options) entered
into prior to the effective date of this amendment (September
10, 1998).
(b) "Forfeiture Provision" means a provision in a Grant Agreement
which provides for the forfeiture of vested or unvested stock
options or Restricted Stock, as the case may be, or the
repayment to the Company of the "Option Spread" or "Restricted
Stock Value" (as such terms are defined or used in the Grant
Agreement), as the case may be, upon the occurrence, during or
for a specified period after the termination of the
Participant's employment with the Company or any subsidiary,
of one or more of: (i) the Participant engaging in acts
competitive with the Company or any subsidiary; (ii) the
Participant soliciting the employees or customers of the
Company or any subsidiary in a manner which is competitive
with the Company or any subsidiary or disruptive to the
business of the Company or any subsidiary; (iii) the
Participant disclosing Information (as such term is defined in
or used in such grant Agreement) obtained during the course of
the Participant's employment with the Company or any
subsidiary; (iv) any actions of similar nature to the
foregoing which are defined in such Grant Agreement as
"Restricted Activities" or "Prohibited Activities"; or (v) the
violation by the Participant of any written agreement between
the Company and the Participant prohibiting all or any of the
activities described in (i) through (iv), above.
13.5 Limitation on Payments. If the receipt of any payment under
this Section in respect of an incentive stock option by any Participant shall,
in the opinion of independent tax counsel of recognized standing selected by the
Company, result in the payment by such Participant of any excise tax provided
for in Section 280G and Section 4999 of the Code, then the amount of such
payment shall be reduced to the extent required, in the opinion of independent
tax counsel selected as aforesaid, to prevent the imposition of such excise tax.
Nothing in this Section 13.5 shall be construed to deprive any Participant of or
reduce such payment in respect of nonstatutory stock options, Stock Appreciation
Rights, or Restricted Stock.
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EXHIBIT 10.2(h)
UNIVERSAL FOODS CORPORATION
1998 STOCK OPTION PLAN
AS AMENDED AND RESTATED EFFECTIVE SEPTEMBER 10, 1998
(NOTE: ALL REFERENCES TO THE NUMBER OF SHARES OF STOCK SET FORTH IN
THIS AMENDED AND RESTATED STOCK OPTION PLAN HAVE BEEN ADJUSTED TO GIVE EFFECT TO
THE COMPANY'S 2-FOR-1 STOCK SPLIT, EFFECTED IN THE FORM OF A 100% STOCK
DIVIDEND, PAID TO SHAREHOLDERS OF RECORD ON MAY 6, 1998).
SECTION 1. ESTABLISHMENT, PURPOSE AND EFFECTIVE DATE OF PLAN.
1.1 Establishment. Universal Foods Corporation, a Wisconsin
corporation, hereby establishes the "UNIVERSAL FOODS CORPORATION 1998 STOCK
OPTION PLAN" (the "Plan") for officers and key employees. This Plan permits the
grant of Stock Options and Restricted Stock.
1.2 Purpose. The purpose of this Plan is to advance the interests of
the Company by encouraging and providing for the acquisition of an equity
interest in the Company by officers and key employees, and by enabling the
Company to attract and retain the services of officers and key employees upon
whose judgment, interest and special effort the successful conduct of its
operations is largely dependent.
1.3 Effective Date. This Plan shall become effective on the
Effective Date.
SECTION 2. DEFINITIONS.
2.1 Definitions. Whenever used herein, the following terms shall have
the respective meanings set forth below:
(a) "Award" means any Option or Restricted Stock, or any other
benefit conferred under the terms hereof.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the Compensation and Development Committee of
the Board.
<PAGE> 2
(e) "Company" means Universal Foods Corporation, a Wisconsin
corporation, and its subsidiaries.
(f) "Effective Date" means January 22, 1998, or such other date
that this Plan is approved by the shareholders of the Company at an
annual or special meeting thereof by a simple majority of the number of
shares represented at such meeting in person or by proxy.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(h) "Fair Market Value" means the closing price of a share of Stock
on the date of the Award on the New York Stock Exchange as reported on
the composite list used by the Wall Street Journal for reporting stock
prices, or if no such sale shall have been made on that day, on the
last preceding day on which there was such a sale.
(i) "Option" means the right to purchase Stock at a stated price
for a specified period of time. For purposes of this Plan an Option may
be either: (i) an "incentive stock option" within the meaning of
Section 422(b) of the Code; or (ii) an option which is not intended to
qualify as an incentive stock option (a "nonstatutory stock option").
(j) "Participant" means any individual designated by the Committee
to participate in this Plan.
(k) "Period of Restriction" means the period during which the
transfer of shares of Restricted Stock is restricted pursuant to
Section 8 hereof.
(l) "Restricted Stock" means Stock granted to a Participant
pursuant to Section 8 hereof.
(m) "Stock" means the Common Stock of the Company, par value of
$0.10.
2.2 Gender and Number. Except when otherwise indicated by the context,
words in the masculine gender when used in this Plan shall include the feminine
gender, the singular shall include the plural and the plural shall include the
singular.
SECTION 3. ELIGIBILITY AND PARTICIPATION. Participants in this Plan
shall be selected by the Committee from among those officers and key employees
of the
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Company and its subsidiaries, including subsidiaries which become such after
adoption hereof, who are recommended for participation by the Chief Executive
Officer and who, in the opinion of the Committee, are in a position to
contribute materially to the Company's continued growth and development and to
its long-term financial success. The Committee's designation of any person to
receive an Award shall not require the Committee to designate such person to
receive an Award at any subsequent time.
SECTION 4. ADMINISTRATION.
4.1 Administration. This Plan shall be administered by the Committee.
4.2 Powers and Authority of the Committee. The Committee, by majority
action thereof, shall have complete and sole authority to:
(a) designate officers and key employees to receive Awards;
(b) determine the type of Awards to be granted to Participants;
(c) determine the number of shares of Stock to be covered by Awards
granted to Participants;
(d) determine the terms and conditions of any Award granted to any
Participant (which may, in the discretion of the Committee, differ from
Participant to Participant), including, without limitation, provisions
relating to the vesting of Options or Restricted Stock rights over a
period of time, upon the attainment of specified performance goals, or
otherwise;
(e) interpret this Plan and apply its provisions, and prescribe,
amend and rescind rules, regulations, procedures, and forms relating to
this Plan;
(f) authorize any person to execute, on behalf of the Company, any
instrument required to carry out the purposes of this Plan;
(g) amend any outstanding agreement relating to any Award, subject
to applicable legal restrictions and to the consent of the Participant
who entered into such agreement;
(h) prescribe the consideration for the grant of each Award
hereunder and determine the sufficiency of such consideration; and
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(i) make all other determinations and take all other actions deemed
necessary or advisable for the administration hereof and provide for
conditions and assurances deemed necessary or advisable to protect the
interests of the Company in connection herewith;
but only to the extent that any of the foregoing are not contrary to the express
provisions hereof. Determinations, interpretations or other actions made or
taken by the Committee pursuant to the provisions hereof shall be final, binding
and conclusive for all purposes and upon all persons. The Committee's decisions
need not be uniform and may be made selectively among Participants, whether or
not they are similarly situated.
4.3 Composition of the Committee. The Committee shall consist of not
less than two directors. Each member of the Committee shall be both a
"nonemployee director" (within the meaning of Rule 16b-3 under the Exchange Act)
and an "outside director" (within the meaning of Section 162(m)(4)(C) of the
Code); provided, however, that in the event any Committee member does not
satisfy both conditions of the first clause of this sentence, then the Committee
shall, with respect to any Award to be made to any Participant who is subject to
Section 16 of the Exchange Act ("Section 16 Participant") or who is subject to
the provisions of Section 162(m) of the Code, delegate its functions with
respect to such Award to a subcommittee (of not less than two directors) which
consists exclusively of members who meet both conditions of the first clause of
this sentence. Further, the Committee may delegate to one or more senior
officers of the Company any or all of the authority and responsibility of the
Committee with respect to this Plan, other than with respect to Section 16
Participants or Participants who are subject to Section 162(m) of the Code. A
majority of the members of the Committee (or subcommittee, as the case may be)
shall constitute a quorum and all determinations of the Committee shall be made
by a majority of its members. Any determination of the Committee may be made
without notice or meeting of the Committee by a writing signed by a majority of
the Committee members.
SECTION 5. STOCK SUBJECT TO PLAN.
5.1 Number. The total number of shares of Stock reserved and available
for issuance under this Plan shall initially be 2,400,000. The number of shares
of Stock reserved and available for issuance hereunder shall be subject to
adjustment upon occurrence of any of the events indicated in Subsection 5.3
hereof. Of this total number, not more than 600,000 shares may at any time
consist of Restricted Stock. The shares to be issued under this Plan may
consist, in whole or in part, of authorized but unissued Stock or treasury
Stock, not reserved for any other purpose.
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<PAGE> 5
5.2 Unused Stock. In the event any shares of Stock that are subject to
an Award cease to be subject to such Award (whether due to expiration,
cancellation, termination, forfeiture, or otherwise) without such shares of
Stock being issued or cash being paid to the Participant, then the shares of
Stock subject to such Award shall again become available for future Awards
hereunder.
5.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock that occurs, whether prior to or after the Effective
Date, by reason of a Stock dividend or split, recapitalization, merger,
consolidation, combination, spin-off, split-up, exchange of shares or other
similar corporate change, the aggregate number of shares of Stock authorized for
issuance hereunder as well as Stock subject to each outstanding Award, and its
stated Option or other price (as applicable), shall be appropriately adjusted by
the Committee, whose determination shall be conclusive; provided, however, that
fractional shares shall be rounded to the nearest whole share. In such event,
the Committee shall also have the discretion to make appropriate adjustments in
the number of shares of Stock authorized for issuance hereunder.
SECTION 6. DURATION OF PLAN. This Plan shall remain in effect, subject
to the Board's right to earlier terminate this Plan pursuant to Section 12
hereof, until all shares of Stock subject to it shall have been purchased or
acquired pursuant to the provisions hereof. Notwithstanding the foregoing, no
Award may be granted hereunder on or after the tenth (10th) anniversary of the
Effective Date.
SECTION 7. STOCK OPTIONS.
7.1 Grant of Options. Subject to the provisions of Sections 5 and 6
hereof, Options may be granted to Participants at any time and from time to time
as shall be determined by the Committee. The Committee shall have complete
discretion in determining the number of Options granted to each Participant. The
Committee also shall determine whether an Option is to be an incentive stock
option within the meaning of Section 422(b) of the Code or a nonstatutory stock
option.
7.2 Incentive Stock Options. Incentive stock options shall be subject
to the limitation that the Fair Market Value (determined on the date of grant)
of all shares of Stock with respect to which incentive stock options are
exercisable for the first time by a Participant during any calendar year shall
not exceed $100,000. This limitation shall not apply to nonstatutory stock
options.
7.3 Option Agreement. Each Option shall be evidenced by a written
agreement ("Option Agreement") that shall specify the type of Option granted,
the
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<PAGE> 6
Option price, the duration of the Option, the number of shares of Stock to which
the Option pertains, and such other provisions as the Committee shall determine.
No Participant shall have any rights hereunder until an Option Agreement has
been executed.
7.4 Option Price. No Option granted pursuant hereto shall have an
Option price that is less than the Fair Market Value of the Stock on the date
the Option is granted.
7.5 Duration of Options. Each Option shall expire at such time as the
Committee shall determine; provided, however, that no incentive stock option
shall be exercisable later than the tenth (10th) anniversary date of its grant.
7.6 Exercise of Options. Options granted hereunder shall be exercisable
at such times and be subject to such restrictions and conditions as the
Committee shall in each instance approve, which need not be the same for all
Participants.
7.7 Payment. The Option price of any Option shall be payable to the
Company in full upon exercise:
(a) in cash or its equivalent, including, in the discretion of the
Committee, a promissory note issued to the Company by the Participant
(which note shall (i) be secured by the Stock issued; (ii) be for a
term of not more than ten (10) years; (iii) bear interest at a rate of
not less than the prime rate (as determined by the Committee) in effect
on the date such promissory note is issued; (iv) require at least
annual payments of principal and interest; and (v) contain such other
terms and conditions as the Committee determines);
(b) by tendering shares of Stock having a Fair Market Value at the
time of exercise equal to the total Option price;
(c) by a combination of cash or its equivalent (as defined in
clause (a) above) and shares of Stock; or
(d) by electing to have the Company withhold from the shares of
Stock otherwise issuable upon exercise of the Option that number of
shares of Stock having a Fair Market Value at the time of exercise plus
cash for any fractional share amounts, equal to the total Option price.
The proceeds from such a payment shall be added to the general funds of the
Company and shall be used for general corporate purposes.
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7.8 Restrictions on Stock Transferability. The Committee shall impose
such restrictions on any shares of Stock acquired pursuant to the exercise of an
Option as it may deem advisable, including, without limitation, restrictions
under applicable Federal securities laws, under the requirements of any stock
exchange upon which such shares of Stock are then listed, and under any blue sky
or state securities laws applicable to such shares.
7.9 Transferability of Options. The Committee may, in its discretion,
and only by expressly so providing in the Option Agreement covering any Options
(which Option Agreement must be approved by the Committee), permit all or a
portion of Options to be granted to a Participant to be transferable by the
Participant: (a) to the Participant's spouse, or natural or adoptive children or
grandchildren ("Immediate Family Members"); (b) to a trust or trusts for the
exclusive benefit of one or more Immediate Family Members; or (c) to a
partnership in which all partners are Immediate Family Members; provided that
there may be no consideration for any such transfer and the transferee shall be
expressly prohibited from any further transfer of such Options other than by
will or pursuant to the laws of descent and distribution. Following such
transfer, any Options so transferred shall be subject to the same terms and
conditions as were applicable immediately prior to such transfer, provided that
for purposes of this Plan, the term "Participant" shall be deemed to include
such transferee. The circumstances under which any transferred Option may be
terminated, canceled, or forfeited (whether such circumstances are set forth in
this Plan or in the Option Agreement covering such Options) shall be applied
with respect to the transferor Participant to which the Option was originally
granted. Unless expressly so provided in the Option Agreement covering an
Option, no Option granted hereunder may be sold, transferred, pledged, assigned
or otherwise alienated or hypothecated, other than by will or pursuant to the
laws of descent and distribution, and all Options granted to a Participant
hereunder shall be exercisable during his lifetime only by such Participant.
7.10 Substitute Options. If the Company at any time should succeed to
the business of another corporation through merger or consolidation, or through
the acquisition of stock or assets of such corporation, Options may be granted
under this Plan ("Substitute Options") in substitution of options previously
granted by such corporation and which are outstanding at the date of the
succession ("Surrendered Options"). The Committee shall have discretion to
determine the extent to which such Substitute Options shall be granted, the
persons to receive such Substitute Options, the number of Shares to be subject
to such Substitute Options, and the terms and conditions of such Substitute
Options (which terms and conditions shall, to the extent permissible within the
terms and conditions of this Plan, be equivalent to the terms and conditions of
the Surrendered Options). The Exercise Price of the Substitute Option may be
determined without regard to
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Section 7.4 hereof; provided however, that the Exercise Price of each Substitute
Option shall be an amount such that, in the sole and absolute judgment of the
Committee (and if the Substitute Options are to be incentive stock options, in
compliance with Section 424(a) of the Code), the economic benefit provided by
such Substitute Option is not greater than the economic benefit represented by
the Surrendered Option as of the date of the succession.
7.11 Forfeiture. Except as otherwise determined by the Committee and
set forth in the Option Agreement, upon termination of employment of a
Participant due to death, disability, or for any other reason, all Options not
exercisable in accordance with the Option Agreement immediately prior to such
termination shall be immediately and automatically forfeited to the Company.
SECTION 8. RESTRICTED STOCK.
8.1 Grant of Restricted Stock. Subject to the provisions of Sections 5
and 6 hereof, the Committee, at any time and from time to time, may grant shares
of Restricted Stock hereunder to such Participants and in such amounts as it
shall determine. Each grant of Restricted Stock shall be evidenced by a written
agreement ("Restricted Stock Agreement").
8.2 Other Restrictions. The Committee shall, in the terms and
conditions of the Restricted Stock Agreement, impose such restrictions on any
shares of Restricted Stock granted pursuant to this Plan as it may deem
advisable (including, without limitation, restrictions under applicable Federal
or state securities laws), and may legend the certificates representing
Restricted Stock to give appropriate notice of such restrictions. Any Restricted
Stock granted to a Section 16 Participant may not be sold for at least six (6)
months after the date it is granted.
8.3 Registration. Any Restricted Stock granted hereunder to a
Participant may be evidenced in such manner as the Committee may deem
appropriate, including, without limitation, book-entry registration or issuance
of a stock certificate or certificates. In the event any stock certificate is
issued in respect of shares of Restricted Stock granted hereunder to a
Participant, such certificate shall be registered in the name of the Participant
and shall bear an appropriate legend (as determined by the Committee) referring
to the terms, conditions and restrictions applicable to such Restricted Stock.
In the event such Restricted Stock is issued in book-entry form, the depository
and the Company's Transfer Agent shall be provided with notice referring to the
terms, conditions and restrictions applicable to such Restricted Stock, together
with such stop-transfer instructions as the Committee deems appropriate.
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8.4 Forfeiture. Except as otherwise determined by the Committee, upon
termination of employment of a Participant due to death, disability, or for any
other reason, during the applicable period of restriction, all shares of
Restricted Stock still subject to restriction under the terms of the Restricted
Stock Agreement shall be immediately and automatically forfeited to the Company.
8.5 Voting Rights. During the Period of Restriction, Participants
holding shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those shares.
8.6 Dividends and Other Distributions. During the Period of
Restriction, Participants holding shares of Restricted Stock granted hereunder
shall be entitled to receive all dividends and other distributions paid with
respect to those shares while they are so held. If any such dividends or
distributions are paid in shares of Stock, the shares shall be subject to the
same restrictions on transferability as the shares of Restricted Stock with
respect to which they were paid.
8.7 Nontransferability of Restricted Stock. Except as provided in
Section 8.8 hereof, no shares of Restricted Stock granted hereunder may be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution, until the termination
of the applicable Period of Restriction. All rights with respect to the
Restricted Stock granted to a Participant hereunder shall be exercisable during
his lifetime only by such Participant.
8.8 Election to Sell Shares to the Company. A Participant, or in the
case of his death his beneficiary or estate, may elect to sell to the Company up
to one-half of the shares of Restricted Stock issued to him pursuant to this
Plan and upon which any restrictions set forth in the Restricted Stock Agreement
have lapsed. To the extent permitted by law, the Company shall purchase all such
shares of Restricted Stock. Each such sale must occur within sixty (60) days
after the last day of the Period of Restriction for such shares of Restricted
Stock and shall be for a price equal to the Fair Market Value determined as of
the last business day of the Period of Restriction of the shares of Restricted
Stock to be sold. Such price shall be payable in cash or by check in one lump
sum payment, unless provisions relating to payment for such shares of Restricted
Stock in installments are agreed to by the Committee and the Participant (or his
beneficiary or estate).
SECTION 9. BENEFICIARY DESIGNATION. Each Participant may, from time
to time, name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit hereunder is to be paid in case of his death
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before he receives any or all of such benefit. Each designation will revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Committee and will be effective only when filed by the Participant in writing
with the Committee during his lifetime. In the absence of any such designation,
benefits remaining unpaid at the Participant's death shall be paid to his
estate.
SECTION 10. RIGHTS OF EMPLOYEES. Nothing in this Plan shall interfere
with or limit in any way the right of the Company to terminate any Participant's
employment at any time nor confer upon any Participant any right to continue in
the employment of the Company.
SECTION 11. CHANGE OF CONTROL.
(a) In the event of a "Change of Control" (as hereinafter defined):
(i) each holder of an Option (A) shall have the right at any time
thereafter to exercise the Option in full whether or not the Option was
previously exercisable; and (B) shall have the right, exercisable by
written notice to the Company within sixty (60) days after the Change
of Control, to receive, in exchange for the surrender of an Option or
any portion thereof to the extent the Option is then exercisable in
accordance with clause (A), the highest of (1) an amount of cash equal
to the difference between the Fair Market Value of the Stock covered by
the Option or portion thereof that is so surrendered on the date of the
Change of Control and the purchase price of such Stock under the
Option; (2) an amount of cash equal to the difference between the
highest price per share of Stock paid in the transaction giving rise to
the Change of Control and the Option price multiplied by the number of
shares of Stock covered by the Option; or (3) an amount of cash equal
to the difference between the Fair Market Value of the Stock covered by
the Option or portion thereof that is so surrendered, calculated on the
date of surrender, and the purchase price of such Stock under the
Option; provided that the right described in this clause (B) shall be
exercisable only if a positive amount would be payable to the holder
pursuant to the formula specified in this clause (B);
(ii) restricted Stock that is not then vested shall vest upon the
date of the Change of Control and each holder of such Restricted Stock
shall have the right, exercisable by written notice to the Company
within sixty (60) days after the Change of Control, to receive, in
exchange for the surrender of such Restricted Stock, an amount of cash
equal to the highest of (A) the Fair Market Value of such Restricted
Stock on the date of surrender; (B) the
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highest price per share of Stock paid in the transaction giving rise to
the Change of Control multiplied by the number of shares of Restricted
Stock surrendered; or (C) the Fair Market Value of such Restricted
Stock on the effective date of the Change of Control.
(b) A "Change of Control" of the Company means:
(i) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of 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
(i), the following acquisitions shall not constitute a Change of
Control: (1) any acquisition directly from the Company, (2) any
acquisition by the Company, (3) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (4) any acquisition pursuant
to a transaction which complies with clauses (A), (B) and (C) of
subsection (iii) of this Section; or
(ii) individuals who, as of September 10, 1998, 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 September 10, 1998 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
(iii) consummation by the Company of a reorganization, merger 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
entity (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
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prior to such business combination beneficially own, directly or
indirectly, more than 50% 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 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 of 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 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 the action of
the Board, providing for such Business Combination; or
(iv) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
SECTION 12. AMENDMENT, MODIFICATION AND TERMINATION OF PLAN.
12.1 Amendments and Termination. The Board may at any time amend,
alter, suspend, discontinue or terminate this Plan; provided, however, that
stockholder approval of any amendment of this Plan shall be obtained if
otherwise required by (a) the Code or any rules promulgated thereunder (in order
to allow for incentive stock options to be granted hereunder or to enable the
Company to comply with the provisions of Section 162(m) of the Code so that the
Company can deduct compensation in excess of the limitation set forth therein),
or (b) the listing requirements of the principal securities exchange or market
on which the Stock is then traded (in order to maintain the listing or quotation
of the Stock thereon). An amendment or termination of this Plan shall not
adversely affect the rights of Participants with respect to Awards previously
granted to them, and all unexpired Awards shall continue in force and effect
after termination of this Plan except as they may lapse or be terminated by
their own terms and conditions.
-12-
<PAGE> 13
12.2 Waiver of Conditions. The Committee may, in whole or in part,
waive any conditions or other restrictions with respect to any Award granted
hereunder.
SECTION 13. TAXES. The Company shall be entitled to withhold the amount
of any tax attributable to any amount payable or shares of Stock deliverable
under this Plan after giving the person entitled to receive such amount or
shares of Stock notice as far in advance as practicable, and the Company may
defer making any such payment or delivery if any such tax may be pending unless
and until indemnified to its satisfaction. A Participant may elect to pay all or
a portion of the federal, state and local withholding taxes arising in
connection with (a) the exercise of a nonstatutory stock option; (b) a
disqualifying disposition of Stock received upon the exercise of an incentive
stock option; (c) the lapse of restrictions on Restricted Stock, by electing to
(i) have the Company withhold shares of Stock, (ii) tender back shares of Stock
received in connection with such benefit, or (iii) deliver other previously
owned shares of Stock, having a Fair Market Value equal to the amount to be
withheld; provided, however, that the amount to be withheld shall not exceed the
Participant's estimated total federal, state and local tax obligations
associated with the transaction. The written election must be made on or before
the date as of which the amount of tax to be withheld is determined. The Fair
Market Value of fractional shares of Stock remaining after payment of the
withholding taxes shall be paid to the Participant in cash.
The Committee may, in its discretion, grant a cash bonus to a
Participant who holds Restricted Stock to enable the Participant to pay all or a
portion of the federal, state or local tax liability incurred by the Participant
upon the vesting of Restricted Stock. The Company shall deduct from any cash
bonus such amount as may be required for the purpose of satisfying the Company's
obligation to withhold federal, state or local taxes.
SECTION 14. INDEMNIFICATION. Each person who is or shall have been a
member of the Committee or of the Board shall be indemnified and held harmless
by the Company against and from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit or proceeding to which he may be a party or in which he
may be involved by reason of any action taken or failure to act under this Plan
and against and from any and all amounts paid by him in settlement thereof, with
the Company's approval, or paid by him in satisfaction of any judgment in any
such action, suit or proceeding against him, provided he shall give the Company
an opportunity, at its own expense, to handle and defend the same before he
undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
-13-
<PAGE> 14
which such persons may be entitled under the Company's Articles of Incorporation
or Bylaws, as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.
SECTION 15. MISCELLANEOUS. Any Award may also be subject to other
provisions (whether or not applicable to any Award made to any other
Participant) as the Committee determines appropriate, including, without
limitation, provisions for: (a) restrictions on resale or other disposition of
financed shares; and (b) compliance with federal or state securities laws and
stock exchange or market requirements.
SECTION 16. REQUIREMENTS OF LAW.
16.1 Requirements of Law. The granting of Awards and the issuance of
shares of Stock upon the exercise of any Option shall be subject to all
applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
16.2 Governing Law. This Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the internal laws of the State of
Wisconsin.
-14-
<PAGE> 1
EXHIBIT 10.2 (j)
UNIVERSAL FOODS CORPORATION
DIRECTOR STOCK GRANT PLAN
As amended November 14, 1991
1. Purpose. The purpose of the Universal Foods Corporation
Director Stock Grant Plan (the "Plan") is to promote the best interests of
Universal Foods Corporation (the "Company") and its shareholders by providing a
means to attract and retain competent independent directors and to provide
opportunities for stock ownership by such directors which will increase their
proprietary interest in the Company and, consequently, their identification with
the interests of the shareholders of the Company.
2. Administration. The Plan shall be administered by the
Nominating Committee of the Board of Directors of the Company (the
"Administrator"), subject to review by the Board of Directors (the "Board"). The
administrator may adopt such rules and regulations for carrying out the Plan as
it may deem proper and in the best interests of the Company. The interpretation
by the Board of any provision of the Plan or any related documents shall be
final.
3. Securities Subject to the Plan. The securities eligible for
grant under the Plan shall be shares of the Company's common stock, $0.10 par
value (including the associated Common Share Purchase Rights) ("Common Stock"),
held from time to time by the Company as treasury shares; provided, however,
that if and only if the shareholders of the Company approve the Plan in
accordance with applicable shareholder approval requirements of the New York
Stock Exchange, Inc. ("NYSE"), authorized and previously unissued shares of
Common Stock may be issued under the Plan.
4. Director Grants. On October 1, 1990 and each October 1
thereafter ("Grant Date"), each member of the Board who is not an employee of
the Company or any subsidiary of the Company shall receive a grant of Common
Stock (a "Director Grant") pursuant to the Plan.
5. Grant Amount. Each Director Grant shall consist of such
number of shares of Common Stock whose value on the Grant Date equals $3,000.
For purposes of the Plan, the value of the Common Stock as of the Grant Date
shall equal the closing sale price of a share of Common Stock on the NYSE on the
Grant Date (or if no sale took place on such exchange on such date, the closing
sale price on such exchange on the most recent preceding date on which a sale
took place).
6. Restrictions on Transfer. The shares of Common Stock
subject to each Director Grant are not transferable by the recipient for a
period of six months after the Grant Date, except in the event of the death or
disability of the recipient. All
<PAGE> 2
certificates evidencing shares subject to Director Grants shall bear an
appropriate legend evidencing such transfer restrictions. All dividends and
voting rights accrue as of the Grant Date to the Director Grant.
7. Amendment of Plan. The Board shall have the right to amend
the Plan at any time to cause the Plan to comply with the rules of the
Securities and Exchange Commission under Section 16(b) of the Securities
Exchange Act of 1934 (the "Section 16 Rules") or with the shareholder approval
requirements of the NYSE, if applicable, or in any other manner, subject to
applicable law, that does not cause the Plan to cease to comply with the Section
16 Rules. Without limitation, the Board shall have the right to amend the first
sentence of Paragraph 5 of the Plan to provide that each Director Grant shall
consist of such number of shares of Common Stock whose value on the Grant Date
is any value not less than $3,000 and not more than $10,000. Notwithstanding the
foregoing, the provisions of the Plan shall not be amended more than once every
six months, other than to comport with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act, or the rules thereunder.
8. Effective Date and Term of Plan. The effective date of the
Plan is September 14, 1990. The Plan shall terminate on such date as may be
determined by the Board.
-2-
<PAGE> 1
EXHIBIT 10.2 (k)
UNIVERSAL FOODS CORPORATION
MANAGEMENT INCOME DEFERRAL PLAN
JUNE 11, 1987
I. Purpose
The Board of Directors of Universal Foods Corporation on June 11, 1987
established a voluntary income deferral plan to be offered to selected
management employees, effective July 15, 1987, to provide an
alternative for the executives unable to participate to the maximum
extent in the Company sponsored 401(k) Plan because of tax code
limitations. The plan will be administered by the Vice President, Human
Resources, under the direction of the Benefits Administrative
Committee.
II. Participant Contributions
Selected participants may elect to defer a portion of salary each year
for a minimum of 4 years. (If less than 4 years to retirement, the
commitment period will be reduced to 1, 2 or 3 years.)
Minimum Annual Deferral - $2,500
Maximum Annual Deferral - Difference between pre-tax
contribution allowed by 401(k) Plan and the legal
limit ($7,000 at 7/15/87), rounded to the nearest
$500.
Contributions may be paid by payroll deductions or one-time deductions
from annual incentive payments or any combination of the two.
A participant's election to defer compensation must be made prior to
the calendar year in which the compensation is earned except for
initial participation at plan inception. Each year participants will be
selected to enter or continue in the plan and make initial or
additional deferrals during November and December which is the
designated annual deferral election period.
III. Interest Credits
Monies deferred will be credited with a guaranteed minimum rate of
interest (10% at 7/15/87) and at a higher rate if investment results
are favorable.
Participants will receive annual statements showing the status of their
contributions and interest credits.
<PAGE> 2
IV. Benefits
A. At Retirement
Upon retirement a participant may elect a guaranteed
distribution payable monthly for 15 years based on annuitizing
the participant's account balance at the guaranteed minimum rate
of interest (10% at 7/15/87) or at a higher rate if investment
results are favorable. In the event the participant does not
survive to receive 180 monthly payments, the remaining payments
will continue to his or her designated beneficiaries.
Or
Upon retirement, participant may elect to receive a benefit
actuarially equivalent to the guaranteed 15-year payout
described above and paid for the lifetime of the participant
with 50% paid for the lifetime of the surviving spouse (joint
and 50% to surviving spouse). The minimum to be paid will be
equal to the 15-year guaranteed payment. The actuarial
reductions, from the 15-year guaranteed amount, to obtain the
joint and 50% to surviving spouse benefit are:
<TABLE>
<CAPTION>
Age % Reduction
<S> <C> <C>
55 20
60 15
61 13
62 12
63 10
64 9
65 8
</TABLE>
During the period retirement benefit payments are being paid,
such payments will be adjusted upward if investment performance
is favorable.
B. At Death Before Retirement
In the event a participant dies prior to retirement his or her
designated beneficiaries will receive an annual survivor income
benefit payable for 15 years. The annual payment will be
determined by projecting the participant's deferral account to
age 65 assuming:
1. the deferral commitment was completed,
2. guaranteed interest was credited annually from the initial
date of participation until the date the participant would
have retired, and
3. the projected account balance is annuitized at the guaranteed
rate over 15 years.
<PAGE> 3
C. Disability Benefits
If a participant is disabled during the deferral period, his/her
commitment to defer may be suspended. Benefits payable, both
pre- and post-retirement, will be reduced pro-rata if the
deferral commitment is never completed.
V. Limitation on Participation
The program will be offered to selected management employees. A Waiver
of Participation must be signed when an eligible employee declines
participation in the program at the time of the offer from the Company.
VI. Rights Upon Termination of Employment
Upon termination for any reason other than retirement, disability, or
death, a participant will receive the accumulated account balance
payable in a lump sum. The account balance will consist of all deferred
monies plus interest credited at the guaranteed rate.
VII. Beneficiary Designation
Benefits payable by the Company under Section IV shall be paid as they
come due to the beneficiary or beneficiaries the participant shall have
designated in writing filed with the Company. The participant shall
have the right to change or amend such beneficiary designation from
time to time by a writing similarly filed. If the participant fails to
make such beneficiary designation or if no beneficiary so designated
survives the participant, payments shall be made, as they come due, to
the duly appointed personal representative of the estate of the
participant.
VIII. No Transfer
Except as permitted by Section VII, no rights of any kind under this
Agreement shall, without the written consent of the Company, be
transferable or assignable by the participant or any designated
beneficiary or be subject to alienation, encumbrance, garnishment,
attachment, execution or levy or seizure by legal process of any kind,
voluntary or involuntary.
IX. Rights of Corporation
Universal Foods Corporation reserves the right to modify, amend or
terminate the plan at any time, provided, however, that no such action
shall have the effect of diminishing the benefits payable hereunder,
with respect to any amounts already deferred by persons participating
in or receiving benefits under this Plan, without the written consent
of such person(s).
<PAGE> 4
X. Change of Control of Company
A. Notwithstanding any other provision of this plan, including
specifically Paragraph IX above, in the event of a change of
control of the Company, the Company shall continue to provide
the benefits described in Section IV to employees who are
participants in the plan when such change of control occurs.
Further, any participant whose employment terminates after such
change of control occurs, shall be eligible for the early
retirement benefits regardless of his/her age or period of
continuous service as of the date of his/her termination of
employment, provided, however, the retirement income benefit
will not commence until the participant attains age 55.
B. For purposes of subsection (A) of this Section, the term "change
of control of Company" means:
(i) The acquisition of more than 30% of the outstanding
shares of voting stock directly or indirectly by any
person or group of persons acting in concert, excluding
affiliates of the Company, by means of an offer made
publicly to the holders of all or substantially all of
the outstanding shares of any one or more classes of the
voting stock of the Company to acquire such shares for
cash, securities, other property or any combination
thereof; or
(ii) the sale, assignment or transfer by the Company of all or
substantially all of its business and assets to any
person, excluding affiliates of the Company; or
(iii) a merger, consolidation or other business combination by
the Company into or with any person in which neither the
Company nor any subsidiary thereof is the continuing or
successor corporation.
(iv) As a result of, or in connection with, any cash tender or
exchange offer, merger or other business combination,
sale of assets or contested election or any combination
of the foregoing transactions, the persons who are
directors of the Company before any of the foregoing
transactions shall cease to constitute a majority of the
Board of Directors of the Company or any successor to the
Company.
XI. Successors and Assigns
If the Company sells, assigns or transfers all or substantially all of
its business and assets to any person, excluding affiliates of the
Company, or if the Company merges into or consolidates or otherwise
combines with any person which is a continuing or successor entity,
then the Company shall assign all of its right, title and interest in
this plan as of the date of such event to the person which is either
the acquiring successor corporation, and such person(s) shall assume
and perform from and after the date of such assignment all of the
terms, conditions and provisions imposed by this plan upon the Company.
In case of such assignment by the Company and of such assumption and
agreement by such person(s), all further rights as well as all other
obligations of the Company under this Agreement thenceforth shall cease
and terminate and thereafter the expression "the Company" wherever used
herein shall be deemed to mean such person(s).
<PAGE> 5
XII. Discontinuation of Contributions or Withdrawals
Discontinuance of contributions or withdrawals from the participant's
account shall be permitted only as a result of unanticipated,
financial emergency and hardship which is beyond the control of the
participant and only if this is necessary in light of the immediate and
serious financial need of the participant. The amount, if any, a
participant may withdraw or discontinue shall be determined by the
Benefits Administrative Committee in its sole and exclusive discretion,
but may not exceed the amount required to meet the participant's
immediate financial need by reason of such emergency or hardship. A
participant shall submit to the Benefits Administrative Committee a
written request to withdraw or discontinue which shall include
financial data and other information deemed necessary by the Benefits
Administrative Committee to support the request. In the event of a
withdrawal or discontinuance of contributions, payments to be made,
pursuant to paragraph IV, shall be reduced appropriately to reflect
such discontinuance or withdrawal.
XIII. Miscellaneous
A. The plan shall be binding upon the participant, his or her
heirs, executors, administrators, successors and assigns and
Universal Foods Corporation and its successors and assigns. The
foregoing sentence shall not be construed as a waiver of the
provisions of paragraph VIII.
B. The benefits payable under the plan shall be independent of, and
in addition to, any other plan or agreement relating to a
participant's employment that may exist from time to time
between the parties hereto, or any other compensation payable by
Universal Foods Corporation to a participant, whether salary,
bonus or otherwise. The plan shall not be deemed to constitute a
contract of employment between the parties hereto, nor shall any
provision hereof restrict the right of Universal Foods
Corporation to discharge a participant or restrict the right of
a participant to terminate his or her employment.
C. Notwithstanding the provisions of Section IV-B, in the event a
participant dies as a result of suicide within 25 calendar
months of the calendar month during which compensation is first
deferred pursuant to this plan, the beneficiary of such
participant shall not be entitled to a death benefit under
Section IV-B of the plan, but such beneficiary shall be entitled
to receive the single sum benefit determined in accordance with
the provisions of Section VI as if such deceased participant had
separated from service on the date of such participant's death.
D. In the event a participant's Qualified or Unfunded Retirement
Plan benefit should be reduced in any way by the deferral of
compensation under this plan, the equivalent of such lost
benefit will be restored by the Company at the time of the
participant's retirement or as mutually agreed upon between the
Company and the participant.
<PAGE> 6
AMENDMENT NO. 1 TO THE
UNIVERSAL FOODS CORPORATION
MANAGEMENT INCOME DEFERRAL PLAN
The Universal Foods Corporation Management Income Deferral Plan ("the
Plan") is hereby amended, effective as of September 10, 1998, as set forth
below:
1. Section X(B) of the Plan is amended to read in its entirety as
follows:
B. For purposes of subsection (A) of this Section, the
term "change of control of the Company" means:
(i) 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 (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 (i),
the following acquisitions shall not constitute a Change of
Control: (1) any acquisition directly from the Company, (2)
any acquisition by the Company, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the
Company or (4) any acquisition pursuant to a transaction which
complies with clauses (A), (B) and (C) of subsection (iii) of
this Section; or
(ii) individuals who, as of September 10, 1998, 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
September 10, 1998 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
<PAGE> 7
(iii) consummation by the Company of a reorganization, merger 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 entity (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 beneficially own, directly or indirectly, more
than 50% 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 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 of 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 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 the
action of the Board, providing for such Business Combination;
or
(iv) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
<PAGE> 1
EXHIBIT 10.2(l)
UNIVERSAL FOODS CORPORATION
EXECUTIVE INCOME DEFERRAL PLAN
JUNE 11, 1987
I. Purpose
The Board of Directors of Universal Foods Corporation on June 11, 1987
established a voluntary income deferral plan to be offered to selected
executive employees, effective July 15, 1987, to provide an alternative
for the executives unable to participate to the maximum extent in the
Company sponsored 401(k) Plan because of tax code limitations, plus an
opportunity for additional income deferral up to a maximum of 25% of
total salary and bonus. The plan will be administered by the Vice
President, Human Resources, under the direction of the Benefits
Administrative Committee.
II. Participant Contributions
Selected participants may elect to defer a portion of salary each year
for a minimum of 4 years. (If less than 4 years to retirement, the
commitment period will be reduced to 1, 2 or 3 years.)
Minimum Annual Deferral - $2,500
Maximum Annual Deferral - 25% of total salary and bonus,
rounded to the nearest $500.
Contributions may be paid by payroll deductions or one-time deductions
from annual incentive payments or any combination of the two.
A participant's election to defer compensation must be made prior to
the calendar year in which the compensation is earned except for
initial participation at plan inception. Each year participants will be
selected to enter or continue in the plan and make initial or
additional deferrals during November and December which is the
designated annual deferral election period.
III. Interest Credits
Monies deferred will be credited with a guaranteed minimum rate of
interest (10% at 7/15/87) and at a higher rate if investment results
are favorable.
Participants will receive annual statements showing the status of their
contributions and interest credits.
<PAGE> 2
IV. Benefits
A. At Retirement
Upon retirement a participant may elect a guaranteed
distribution payable monthly for 15 years based on annuitizing
the participant's account balance at the guaranteed minimum rate
of interest (10% at 7/15/87) or at a higher rate if investment
results are favorable. In the event the participant does not
survive to receive 180 monthly payments, the remaining payments
will continue to his or her designated beneficiaries.
Or
Upon retirement, participant may elect to receive a benefit
actuarially equivalent to the guaranteed 15-year payout
described above and paid for the lifetime of the participant
with 50% paid for the lifetime of the surviving spouse (joint
and 50% to surviving spouse). The minimum to be paid will be
equal to the 15-year guaranteed payment. The actuarial
reductions, from the 15-year guaranteed amount, to obtain the
joint and 50% to surviving spouse benefit are:
<TABLE>
<CAPTION>
Age % Reduction
<S> <C> <C>
55 20
60 15
61 13
62 12
63 10
64 9
65 8
</TABLE>
During the period retirement benefit payments are being paid,
such payments will be adjusted upward if investment performance
is favorable.
B. At Death Before Retirement
In the event a participant dies prior to retirement his or her
designated beneficiaries will receive an annual survivor income
benefit payable for 15 years. The annual payment will be
determined by projecting the participant's deferral account to
age 65 assuming:
1. the deferral commitment was completed,
2. guaranteed interest was credited annually from the initial
date of participation until the date the participant would
have retired, and
3. the projected account balance is annuitized at the guaranteed
rate over 15 years.
<PAGE> 3
C. Disability Benefits
If a participant is disabled during the deferral period,
his/her commitment to defer may be suspended. Benefits payable,
both pre- and post-retirement, will be reduced pro-rate if the
deferral commitment is never completed.
V. Limitation on Participation
The program will be offered to selected management employees. A Waiver
of Participation must be signed when an eligible employee declines
participation in the program at the time of the offer from the Company.
VI. Rights Upon Termination of Employment
Upon termination for any reason other than retirement, disability, or
death, a participant will receive the accumulated account balance
payable in a lump sum. The account balance will consist of all deferred
monies plus interest credited at the guaranteed rate.
VII. Beneficiary Designation
Benefits payable by the Company under Section IV shall be paid as they
come due to the beneficiary or beneficiaries the participant shall have
designated in writing filed with the Company. The participant shall
have the right to change or amend such beneficiary designation from
time to time by a writing similarly filed. If the participant fails to
make such beneficiary designation or if no beneficiary so designated
survives the participant, payments shall be made, as they come due, to
the duly appointed personal representative of the estate of the
participant.
VIII. No Transfer
Except as permitted by Section VII, no rights of any kind under this
Agreement shall, without the written consent of the Company, be
transferable or assignable by the participant or any designated
beneficiary or be subject to alienation, encumbrance, garnishment,
attachment, execution or levy or seizure by legal process of any kind,
voluntary or involuntary.
IX. Rights of Corporation
Universal Foods Corporation reserves the right to modify, amend or
terminate the plan at any time, provided, however, that no such action
shall have the effect of diminishing the benefits payable hereunder,
with respect to any amounts already deferred by persons participating
in or receiving benefits under this Plan, without the written consent
of such person(s).
<PAGE> 4
X. Change of Control of Company
A. Notwithstanding any other provision of this plan, including
specifically Paragraph IX above, in the event of a change of
control of the Company, the Company shall continue to provide
the benefits described in Section IV to employees who are
participants in the plan when such change of control occurs.
Further, any participant whose employment terminates after such
change of control occurs, shall be eligible for the early
retirement benefits regardless of his/her age or period of
continuous service as of the date of his/her termination of
employment, provided, however, the retirement income benefit
will not commence until the participant attains age 55.
B. For purposes of subsection (A) of this Section, the term "change
of control of Company" means:
(i) The acquisition of more than 30% of the outstanding
shares of voting stock directly or indirectly by any
person or group of persons acting in concert, excluding
affiliates of the Company, by means of an offer made
publicly to the holders of all or substantially all of
the outstanding shares of any one or more classes of the
voting stock of the Company to acquire such shares for
cash, securities, other property or any combination
thereof; or
(ii) the sale, assignment or transfer by the Company of all or
substantially all of its business and assets to any
person, excluding affiliates of the Company; or
(iii) a merger, consolidation or other business combination by
the Company into or with any person in which neither the
Company nor any subsidiary thereof is the continuing or
successor corporation.
(iv) As a result of, or in connection with, any cash tender or
exchange offer, merger or other business combination,
sale of assets or contested election or any combination
of the foregoing transactions, the persons who are
directors of the Company before any of the foregoing
transactions shall cease to constitute a majority of the
Board of Directors of the Company or any successor to the
Company.
XI. Successors and Assigns
If the Company sells, assigns or transfers all or substantially all of
its business and assets to any person, excluding affiliates of the
Company, or if the Company merges into or consolidates or otherwise
combines with any person which is a continuing or successor entity,
then the Company shall assign all of its right, title and interest in
this plan as of the date of such event to the person which is either
the acquiring or successor corporation, and such person(s) shall assume
and perform from and after the date of such assignment all of the
terms, conditions and provisions imposed by this plan upon the Company.
In case of such assignment by the Company and of such assumption and
agreement by such person(s), all further rights as well as all other
obligations of the Company under this Agreement thenceforth shall cease
and terminate and thereafter the expression "the Company" wherever used
herein shall be deemed to mean such person(s).
<PAGE> 5
XII. Discontinuance of Contributions or Withdrawals
Discontinuance of contributions or withdrawals from the participant's
account shall be permitted only as a result of unanticipated, financial
emergency and hardship which is beyond the control of the participant
and only if this is necessary in light of the immediate and serious
financial need of the participant. The amount, if any, a participant
may withdraw or discontinue shall be determined by the Benefits
Administrative Committee in its sole and exclusive discretion, but may
not exceed the amount required to meet the participant's immediate
financial need by reason of such emergency or hardship. A participant
shall submit to the Benefits Administrative Committee a written request
to withdraw or discontinue which shall include financial data and other
information deemed necessary by the Benefits Administrative Committee
to support the request. In the event of a withdrawal or discontinuance
of contributions, payments to be made, pursuant to paragraph IV, shall
be reduced appropriately to reflect such discontinuance or withdrawal.
XIII. Miscellaneous
A. The plan shall be binding upon the participant, his or her
heirs, executors, administrators, successors and assigns and
Universal Foods Corporation and its successors and assigns. The
foregoing sentence shall not be construed as a waiver of the
provisions of paragraph VIII.
B. The benefits payable under the plan shall be independent of, and
in addition to, any other plan or agreement relating to a
participant's employment that may exist from time to time
between the parties hereto, or any other compensation payable by
Universal Foods Corporation to a participant, whether salary,
bonus or otherwise. The plan shall not be deemed to constitute a
contract of employment between the parties hereto, nor shall any
provision hereof restrict the right of Universal Foods
Corporation to discharge a participant or restrict the right of
a participant to terminate his or her employment.
C. Notwithstanding the provisions of Section IV-B, in the event a
participant dies as a result of suicide within 25 calendar
months of the calendar month during which compensation is first
deferred pursuant to this plan, the beneficiary of such
participant shall not be entitled to a death benefit under
Section IV-B of the plan, but such beneficiary shall be entitled
to receive the single sum benefit determined in accordance with
the provisions of Section VI as if such deceased participant had
separated from service on the date of such participant's death.
D. In the event a participant's Qualified or Unfunded Retirement
Plan benefit should be reduced in any way by the deferral of
compensation under this plan, the equivalent of such lost
benefit will be restored by the Company at the time of the
participant's retirement or as mutually agreed upon between the
Company and the participant.
<PAGE> 6
AMENDMENT NO. 1 TO THE
UNIVERSAL FOODS CORPORATION
EXECUTIVE INCOME DEFERRAL PLAN
The Universal Foods Corporation Executive Income Deferral Plan ("the
Plan") is hereby amended, effective as of September 10, 1998, as set forth
below:
1. Section X(B) of the Plan is amended to read in its entirety as
follows:
B. For purposes of subsection (A) of this Section, the
term "change of control of the Company" means:
(i) 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 (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 (i),
the following acquisitions shall not constitute a Change of
Control: (1) any acquisition directly from the Company, (2)
any acquisition by the Company, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the
Company or (4) any acquisition pursuant to a transaction which
complies with clauses (A), (B) and (C) of subsection (iii) of
this Section; or
(ii) individuals who, as of September 10, 1998, 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
September 10, 1998 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
<PAGE> 7
(iii) consummation by the Company of a reorganization, merger 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 entity (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 beneficially own, directly or indirectly, more
than 50% 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 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 of 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 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 the
action of the Board, providing for such Business Combination;
or
(iv) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
<PAGE> 1
EXHIBIT 10.2(m)
CHANGE OF CONTROL
EMPLOYMENT AND SEVERANCE AGREEMENT
AGREEMENT by and between Universal Foods Corporation, a
Wisconsin corporation (the "Company"), and Kenneth P. Manning (the "Executive"),
dated as of the 10th day of September, 1998.
WHEREAS, the Board of Directors of the Company (the "Board"),
has determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued dedication of
the Executive, notwithstanding the possibility, threat or occurrence of a Change
of Control (as defined below) of the Company. The Board believes it is
imperative to diminish the inevitable distraction of the Executive by virtue of
the personal uncertainties and risks created by a pending or threatened Change
of Control and to encourage the Executive's full attention and dedication to the
Company currently and in the event of any threatened or pending Change of
Control, and to provide the Executive with compensation and benefits
arrangements upon a Change of Control which ensure that the compensation and
benefits expectations of the Executive will be satisfied and which are
competitive with those of other corporations. Therefore, in order to accomplish
these objectives, the Board has caused the Company to enter into this Agreement;
WHEREAS, the Company and the Executive intend that, upon a
Change of Control, this Agreement shall supersede and replace the Executive
Employment Contract made and entered into as of November 5, 1987, and amended as
of May 10, 1988, by and between the Company and the Executive (the "Prior
Agreement").
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date" shall mean
the first date during the Change of Control Period (as defined in Section 1(b))
on which a Change of Control (as defined in Section 2) occurs. Anything in this
Agreement to the contrary notwithstanding, if a Change of Control occurs and if
the Executive's employment with the Company is terminated prior to the date on
which the Change of Control occurs, and if it is reasonably demonstrated by the
Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or anticipation of a Change of Control,
then for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on the third anniversary of the date
hereof; provided, however, that commencing on the date one year after the date
hereof, and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "Renewal Date"),
unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate three years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall give notice
to the Executive that the Change of Control Period shall not be so extended.
<PAGE> 2
2. Change of Control. For the purpose of this Agreement, a "Change of
Control" shall mean:
(a) 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 (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) 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 (a), the following
acquisitions shall not constitute a Change of Control: (A) any acquisition
directly from the Company, (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (D)
any acquisition pursuant to a transaction which complies with clauses (i), (ii)
and (iii) of subsection (c) of this Section 2; or
(b) Individuals who, as of September 10, 1998, 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 September 10, 1998, 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
(c) Consummation by the Company of a reorganization, merger 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 entity (a
"Business Combination"), in each case, unless, following such Business
Combination, (i) 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 beneficially own, directly or indirectly, more than 50% 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 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, (ii) 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
prior to the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting
2
<PAGE> 3
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
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
3. Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the third anniversary of
such date (the "Employment Period").
4. Terms of Employment. (a) Position and Duties. (i) During the
Employment Period, (A) the Executive's position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 120 day period
immediately preceding the Effective Date and (B) the Executive's services shall
be performed at the location where the Executive was employed immediately
preceding the Effective Date or any office location less than 35 miles from such
location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions, and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary"), which
shall be paid at a monthly rate, at least equal to twelve times the highest
monthly base salary paid or payable, including any base salary which has been
earned but deferred, to the Executive by the Company and its affiliated
companies in respect of the twelve-month period immediately preceding the month
in which the Effective Date occurs. During the Employment Period, the Annual
Base Salary shall be reviewed and increased a minimum of 3% no more than 12
months after the last salary increase awarded to the Executive prior to the
Effective Date and thereafter at least annually. Any increase in Annual Base
Salary shall not serve to limit or reduce any other obligation to the Executive
under this Agreement and shall be commensurate with increases given to peer
executives. Annual Base Salary shall not be reduced after any such increase and
the term
3
<PAGE> 4
"Annual Base Salary" as utilized in this Agreement shall refer to Annual
Base Salary as so increased. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or under common
control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the "Annual Bonus") in cash at least equal to the Executive's
highest bonus under the Company's Management Incentive Plan, or any comparable
bonus under any predecessor or successor plan, for the last three full fiscal
years prior to the Effective Date (annualized in the event that the Executive
was not employed by the Company for the whole of such fiscal year) (the "Recent
Annual Bonus"). Each such Annual Bonus shall be paid no later than the end of
the third month of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive shall elect to defer the receipt
of such Annual Bonus.
(iii) Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all qualified and
non-qualified incentive (cash and stock related), savings and retirement plans,
and/or comparable practices, policies and programs applicable generally to other
peer executives of the Company and its affiliated companies, but in no event
shall such plans, practices, policies and programs provide the Executive with
incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in each
case, less favorable, in the aggregate, than the most favorable of those
provided by the Company and its affiliated companies for the Executive under
such plans, practices, policies and programs as in effect at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to
the Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the Employment Period, the Executive
and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies, but in no event shall
such plans, practices, policies and programs provide the Executive with benefits
which are less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies.
(v) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately
4
<PAGE> 5
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the Executive shall
be entitled to fringe benefits, including, without limitation, tax and financial
planning services, use of an automobile and payment of related expenses, in
accordance with the most favorable plans, practices, programs and policies of
the Company and its affiliated companies in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company and its affiliated companies at any time during
the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies as in effect
for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
5. Termination of Employment. (a) Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 12(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative.
(a) Cause. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) the willful and continued failure of the Executive to perform
substantially the Executive's duties with the Company or one of its affiliates
(other than any such failure
5
<PAGE> 6
resulting from incapacity due to physical or mental illness), after a written
demand for performance is delivered to the Executive by the non-employee member
of the Board of Directors of the Company who has served longest (the "Senior
Director") which specifically identifies the manner in which the Senior
Director believes that the Executive has not substantially performed the
Executive's duties, or
(ii) the willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the part
of the Executive, shall be considered "willful" unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation of employment
of the Executive shall not be deemed to be for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than three quarters of the entire membership
of the Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board), finding that,
in the good faith opinion of the Board, the Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail. Any termination of the Executive's employment by the Company
during the Employment Period (other than a termination under Section 5(a)) shall
be deemed to be a termination other than for Cause unless it meets all
requirements of this Section 5(b).
(c) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the provisions of
Section 4(b) of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any office
or location other than as provided in Section 4(a)(i)(B) hereof or the Company's
requiring the Executive to travel on Company business to a substantially greater
extent than required immediately prior to the Effective Date;
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<PAGE> 7
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section 11(c)
of this Agreement.
For purposes of this Section 5(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive. Anything in this Agreement to the
contrary notwithstanding, a termination by the Executive for any reason where
the Date of Termination (as defined below) is during the 30-day period
immediately following the first anniversary of the Effective Date shall be
deemed to be a termination for Good Reason for all purposes of this Agreement.
(d) Notice of Termination. Any termination by the Company for Cause, or
by the Executive for Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 12(b) of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.
6. Obligations of the Company upon Termination. (a) Good Reason, Other
Than for Cause, Death or Disability. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash within
30 days after the Date of Termination the aggregate of the following amounts:
A. the sum of (1) the Executive's Annual Base Salary through the
Date of Termination to the extent not theretofore paid, (2) the product of (x)
the higher of (I) the
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<PAGE> 8
Recent Annual Bonus and (II) the Annual Bonus paid or payable, including
any bonus or portion thereof which has been earned but deferred (and annualized
for any fiscal year consisting of less than twelve full months or during which
the Executive was employed for less than twelve full months), for the most
recently completed fiscal year during the Employment Period, if any (such
higher amount being referred to as the "Highest Annual Bonus") and (y) a
fraction, the numerator of which is the number of days in the current fiscal
year of the Company through the Date of Termination, and the denominator of
which is 365 and (3) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2), and (3) shall be hereinafter referred to
as the "Accrued Obligations"); and
B. the amount equal to the product of (1) three and (2) the sum of
(x) the Executive's Annual Base Salary and (y) the Highest Annual Bonus; and
C. the sum of (i) all vested and nonforfeitable amounts under the
Company's savings and retirement plans (qualified and non-qualified) described
in Section 4(b)(iii), (ii) the amount equal to the product of (x) three and (y)
the highest aggregate annual amount contributed by the Company (as a Company
contribution, and not a salary reduction) on behalf of the Executive, during the
last three full fiscal years prior to the Effective Date, to the Company's
Savings Plan, and Supplemental Benefits Plan, or any successor or replacement
defined contribution plans, and (iii) the amount equal to the product of (x) the
greater of (1) three and (2) the number of full years from the Date of
Termination until the Executive would attain age 65 and (y) the highest
aggregate annual amount contributed by the Company (as a Company contribution,
and not a salary reduction) on behalf of the Executive, during the last three
fiscal years prior to the Effective Date, to the Company's Transition Retirement
Plan and Retirement Employee Stock Ownership Plan, or any successor or
replacement defined contribution plans.
(ii) for three years after the Executive's Date of Termination, the
Company shall continue benefits to the Executive and/or the Executive's family
at least equal to those which would have been provided to them in accordance
with the plans, programs, practices and policies described in Section 4(b)(iv)
of this Agreement if the Executive's employment had not been terminated or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies and their families, provided, however, that if the Executive becomes
reemployed with another employer and is eligible to receive medical or other
welfare benefits under another employer-provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility. For purposes of
determining eligibility (but not the time of commencement of benefits) of the
Executive for retiree benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained employed until
three years after the Date of Termination and to have retired on the last day of
such period;
(iii) for purposes of calculating the Executive's benefits under the
Company's Supplemental Executive Retirement Plan, the Executive will be deemed
to have received three additional years of base salary in amounts equal to the
Executive's Annual Base Salary as of the Date of Termination, as increased for
purposes of this subparagraph in each of such three years,
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<PAGE> 9
by the percentage increase in the Executive's Annual Base Salary from the year
prior to the year which the Date of Termination occurs to the year in which the
Date of Termination occurs;
(iv) the Company shall, at its sole expense as incurred, provide the
Executive with outplacement services the scope and provider of which shall be
selected by the Executive in his sole discretion; and
(v) to the extent not theretofore paid or provided, the Company shall
timely pay or provide to the Executive any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company and
its affiliated companies (such other amounts and benefits shall be hereinafter
referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 6(b) shall
include, without limitation, and the Executive's estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive's death with respect to
other peer executives of the Company and its affiliated companies and their
beneficiaries.
(c) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term "Other Benefits" as utilized in this Section 6(c) shall
include, and the Executive shall be entitled after the Disability Effective Date
to receive, disability (the "Disability Benefit") and other benefits at least
equal to the most favorable of those generally provided by the Company and its
affiliated companies to disabled executives and/or their families in accordance
with such plans, programs, practices and policies relating to disability, if
any, as in effect generally with respect to other peer executives and their
families at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the Executive's
family, as in effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their families;
provided that the Executive shall receive an annual Disability Benefit
commencing upon his Disability Effective Date at least equal to 60% of the
Executive's Annual Base Salary, which shall be paid on a monthly basis until the
earlier of (i) the date on which the Executive reaches age 65 or (ii) the
termination of the Executive's Disability. During the period of the Disability,
the Executive shall
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also receive the employee benefits (or service credits therefor, as the case
may be) under any employee benefit plan or arrangement as in effect on the Date
of Termination (including, without limitation, each pension and retirement plan
and arrangement, supplemental pension and retirement plan and arrangement,
deferred compensation plan, profit sharing plan, stock option plan, health
and split-dollar life insurance, disability plan, dental program, executive car
program and vacation plan) or made available in the future to other peer
executives of the Company, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans and arrangements.
(d) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive (x) his Annual Base Salary through the Date of
Termination, (y) the amount of any compensation previously deferred by the
Executive, and (z) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the Employment
Period, excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued Obligations
and the timely payment or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination.
7. Nonexclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies
and for which the Executive may qualify (provided that the Executive hereby
waives any right to participate in any severance plan, program or policy of the
Company during the Employment Period), nor, subject to Section 12(f), shall
anything herein limit or otherwise affect such rights as the Executive may have
under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
8. Full Settlement. The Company's obligations to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement. Each and every
payment made hereunder by the Company shall be final, and the Company will not
seek to recover all or any part of such payment from the Executive for any
reason. The Company agrees to pay as incurred, to the full extent permitted by
law, all legal fees and expenses which the Executive may reasonably incur as a
result of any contest (regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or liability under,
any provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case
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interest on any delayed payment at the applicable Federal rate provided for in
Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the
"Code").
9. Certain Additional Payments by the Company. (a) Anything in this
Agreement to the contrary notwithstanding and except as set forth below, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 9) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the Executive of
all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Deloitte &
Touche LLP or such certified public accounting firm as may be designated by the
Executive (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by
the Company to the Executive within ten days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 9(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the
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Company of the nature of such claim and the date on which said claim is
requested to be paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such period that it desires
to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim;
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order to effectively
contest such claim; and
(iv) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or Income Tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 9(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or to contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or Income Tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 9(c), the Executive becomes entitled to receive any
refund with respect
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to such claim, the Executive shall (subject to the Company's complying with the
requirements of Section 9(c) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim
and the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
10. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
11. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.
12. Miscellaneous. (a) The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) Notices given pursuant to this Agreement shall be in writing and
shall be deemed given when actually received by the Executive or actually
received by the Company's
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secretary. If mailed, such notices shall be mailed by United States registered
or certified mail, return receipt requested, addressee only, postage prepaid,
if to the Company, to Attention: Secretary (or President, if the Executive is
then Secretary), or if to the Executive, at the address set forth below the
Executive's signature to this Agreement, or to such other address as the party
to be notified shall have theretofore given to the other party in writing.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will"
and, subject to Section 1(a) hereof, prior to the Effective Date, the
Executive's employment and/or this Agreement may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in which case
the Executive shall have no further rights under this Agreement. From and after
the Effective Date, this Agreement shall supersede any other agreement between
the parties with respect to the subject matter hereof, including the Prior
Agreement. Prior to the Effective Date, the Prior Agreement shall remain in
effect pursuant to its terms.
13. Governing Law; Resolution of Disputes. This Agreement and the
rights and obligations hereunder shall be governed by and construed in
accordance with the laws of the State of Wisconsin. Any dispute arising out of
this Agreement shall, at the Executive's election, be determined by arbitration
under the rules of the American Arbitration Association then in effect (in which
case both parties shall be bound by the arbitration award) or by litigation.
Whether the dispute is to be settled by arbitration or litigation, the venue for
the arbitration or litigation shall be in the judicial district encompassing the
city in which the Executive resides; provided that if the Executive is not then
residing in the United States, the election of the Executive with respect to
such venue shall be Wisconsin. The parties consent to personal jurisdiction in
each trial court in the selected venue having subject matter jurisdiction, and
each party irrevocably consents to service of process in the manner provided
hereunder for the giving of notices.
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IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of Directors,
the Company has caused these presents to be executed in its name and on its
behalf, all as of the day and year first above written.
UNIVERSAL FOODS CORPORATION
By /s/ Richard F. Hobbs
------------------------------
Richard F. Hobbs
Vice President--Administration
/s/ Kenneth P. Manning
------------------------------
Kenneth P. Manning
Address: 5240 North Lake Drive
Whitefish Bay, WI 53217
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<PAGE> 1
EXHIBIT 10.2(n)
AMENDED AND RESTATED CHANGE OF CONTROL
EMPLOYMENT AND SEVERANCE AGREEMENT
AGREEMENT by and between Universal Foods Corporation, a Wisconsin
corporation (the "Company"), and ______________ (the "Executive"), dated as of
the 10th day of September, 1998.
WHEREAS, the Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board
caused the Company to enter into an Agreement with the Executive, dated
____________ (the "Prior Agreement"); and
WHEREAS, the Board and the Executive desire to amend the Prior Agreement
to provide certain modifications to the terms and conditions of the Prior
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date" shall mean the first
date during the Change of Control Period (as defined in Section 1(b)) on which a
Change of Control (as defined in Section 2) occurs. Anything in this Agreement
to the contrary notwithstanding, if a Change of Control occurs and if the
Executive's employment with the Company is terminated prior to the date on which
the Change of Control occurs, and if it is reasonably demonstrated by the
Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or anticipation of a Change of Control,
then for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period commencing on
the date hereof and ending on the third anniversary of the date hereof;
provided, however, that commencing on the date one year after the date hereof,
and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "Renewal Date"),
unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate three years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall give notice
to the Executive that the Change of Control Period shall not be so extended.
<PAGE> 2
2. Change of Control. For the purpose of this Agreement, a "Change of
Control" shall mean:
(a) 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 (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) 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 (a), the following
acquisitions shall not constitute a Change of Control: (A) any acquisition
directly from the Company, (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or (D)
any acquisition pursuant to a transaction which complies with clauses (i), (ii)
and (iii) of subsection (c) of this Section 2; or
(b) Individuals who, as of September 10, 1998, 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 September 10, 1998, 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
(c) Consummation by the Company of a reorganization, merger 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 entity (a
"Business Combination"), in each case unless, following such Business
Combination, (i) 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 beneficially own, directly or indirectly, more than 50% 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 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, (ii) 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
prior to the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting
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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
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
3. Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the third anniversary of
such date (the "Employment Period").
4. Terms of Employment. (a) Position and Duties. (i) During the
Employment Period, (A) the Executive's position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 120-day period
immediately preceding the Effective Date and (B) the Executive's services shall
be performed at the location where the Executive was employed immediately
preceding the Effective Date or any office location less than 35 miles from such
location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions, and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary"), which
shall be paid at a monthly rate, at least equal to twelve times the highest
monthly base salary paid or payable, including any base salary which has been
earned but deferred, to the Executive by the Company and its affiliated
companies in respect of the twelve-month period immediately preceding the month
in which the Effective Date occurs. During the Employment Period, the Annual
Base Salary shall be reviewed and increased a minimum of 3% no more than 12
months after the last salary increase awarded to the Executive prior to the
Effective Date and thereafter at least annually. Any increase in Annual Base
Salary shall not serve to limit or reduce any other obligation to the Executive
under this Agreement and shall be commensurate with increases
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given to peer executives. Annual Base Salary shall not be reduced after any such
increase and the term "Annual Base Salary" as utilized in this Agreement shall
refer to Annual Base Salary as so increased. As used in this Agreement, the term
"affiliated companies" shall include any company controlled by, controlling or
under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the "Annual Bonus") in cash at least equal to the Executive's
highest bonus under the Company's Management Incentive Plan, or any comparable
bonus under any predecessor or successor plan, for the last three full fiscal
years prior to the Effective Date (annualized in the event that the Executive
was not employed by the Company for the whole of such fiscal year) (the "Recent
Annual Bonus"). Each such Annual Bonus shall be paid no later than the end of
the third month of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive shall elect to defer the receipt
of such Annual Bonus.
(iii) Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all qualified and
non-qualified incentive (cash and stock related), savings and retirement plans,
and/or comparable practices, policies and programs applicable generally to other
peer executives of the Company and its affiliated companies, but in no event
shall such plans, practices, policies and programs provide the Executive with
incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in each
case, less favorable, in the aggregate, than the most favorable of those
provided by the Company and its affiliated companies for the Executive under
such plans, practices, policies and programs as in effect at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to
the Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the Employment Period, the Executive
and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies, but in no event shall
such plans, practices, policies and programs provide the Executive with benefits
which are less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies.
(v) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
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any time thereafter with respect to other peer executives of the Company and its
affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the Executive shall
be entitled to fringe benefits, including, without limitation, tax and financial
planning services, use of an automobile and payment of related expenses, in
accordance with the most favorable plans, practices, programs and policies of
the Company and its affiliated companies in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company and its affiliated companies at any time during
the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies as in effect
for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
5. Termination of Employment. (a) Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 12(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative.
(b) Cause. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) the willful and continued failure of the Executive to perform
substantially the Executive's duties with the Company or one of its affiliates
(other than any such failure re-
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<PAGE> 6
sulting from incapacity due to physical or mental illness), after a written
demand for performance is delivered to the Executive by the Chief Executive
Officer of the Company which specifically identifies the manner in which the
Chief Executive Officer believes that the Executive has not substantially
performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three quarters of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail. Any termination of the Executive's
employment by the Company during the Employment Period (other than a termination
under Section 5(a)) shall be deemed to be a termination other than for Cause
unless it meets all requirements of this Section 5(b).
(c) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the provisions of
Section 4(b) of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any office
or location other than as provided in Section 4(a)(i)(B) hereof or the Company's
requiring the Executive to travel on Company business to a substantially greater
extent than required immediately prior to the Effective Date;
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<PAGE> 7
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section 11(c)
of this Agreement.
For purposes of this Section 5(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive. Anything in this Agreement to the
contrary notwithstanding, a termination by the Executive for any reason where
the Date of Termination (as defined below) is during the 30-day period
immediately following the first anniversary of the Effective Date shall be
deemed to be a termination for Good Reason for all purposes of this Agreement.
(d) Notice of Termination. Any termination by the Company for Cause, or
by the Executive for Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 12(b) of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.
6. Obligations of the Company upon Termination. (a) Good Reason, Other
Than for Cause, Death or Disability. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the
following amounts:
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<PAGE> 8
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore
paid, (2) the product of (x) the higher of (I) the Recent
Annual Bonus and (II) the Annual Bonus paid or payable,
including any bonus or portion thereof which has been earned
but deferred (and annualized for any fiscal year consisting of
less than twelve full months or during which the Executive was
employed for less than twelve full months), for the most
recently completed fiscal year during the Employment Period,
if any (such higher amount being referred to as the "Highest
Annual Bonus") and (y) a fraction, the numerator of which is
the number of days in the current fiscal year of the Company
through the Date of Termination, and the denominator of which
is 365 and (3) any compensation previously deferred by the
Executive (together with any accrued interest or earnings
thereon) and any accrued vacation pay, in each case to the
extent not theretofore paid (the sum of the amounts described
in clauses (1), (2), and (3) shall be hereinafter referred to
as the "Accrued Obligations"); and
B. the amount equal to the product of (1) three and
(2) the sum of (x) the Executive's Annual Base Salary and (y)
the Highest Annual Bonus; and
C. the sum of (i) all vested and nonforfeitable
amounts under the Company's savings and retirement plans
(qualified and non-qualified) described in Section 4(b)(iii)
and (ii) the amount equal to the product of (x) three and (y)
the highest aggregate annual amount contributed by the Company
(as a Company contribution, and not a salary reduction) on
behalf of the Executive, during the last three full fiscal
years prior to the Effective Date, to the Company's Transition
Retirement Plan, Savings Plan, Retirement Employee Stock
Ownership Plan, and Supplemental Benefits Plan, or any
successor or replacement defined contribution plans.
(ii) for three years after the Executive's Date of
Termination, the Company shall continue benefits to the Executive
and/or the Executive's family at least equal to those which would have
been provided to them in accordance with the plans, programs, practices
and policies described in Section 4(b)(iv) of this Agreement if the
Executive's employment had not been terminated or, if more favorable to
the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies and their families, provided, however, that if the Executive
becomes reemployed with another employer and is eligible to receive
medical or other welfare benefits under another employer-provided plan,
the medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during such
applicable period of eligibility. For purposes of determining
eligibility (but not the time of commencement of benefits) of the
Executive for retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be considered to have
remained employed until three years after the Date of Termination and
to have retired on the last day of such period;
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(iii) for purposes of calculating the Executive's benefits
under the Company's Supplemental Executive Retirement Plan, the
Executive will be deemed to have received three additional years of
base salary in amounts equal to the Executive's Annual Base Salary as
of the Date of Termination as increased for purposes of this
subparagraph in each of such three years by the percentage increase in
the Executive's Annual Base Salary from the year prior to the year
which the Date of Termination occurs to the year in which the Date of
Termination occurs.
(iv) the Company shall, at its sole expense as incurred,
provide the Executive with outplacement services the scope and provider
of which shall be selected by the Executive in his sole discretion; and
(v) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts
or benefits required to be paid or provided, or which the Executive is
eligible to receive under any plan, program, policy or practice or
contract or agreement of the Company and its affiliated companies (such
other amounts and benefits shall be hereinafter referred to as the
"Other Benefits").
(b) Death. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 6(b) shall
include, without limitation, and the Executive's estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive's death with respect to
other peer executives of the Company and its affiliated companies and their
beneficiaries.
(c) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term "Other Benefits" as utilized in this Section 6(c) shall
include, and the Executive shall be entitled after the Disability Effective Date
to receive, disability and other benefits at least equal to the most favorable
of those generally provided by the Company and its affiliated companies to
disabled executives and/or their families in accordance with such plans,
programs, practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at any time
during the 120-day period immedi-
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<PAGE> 10
ately preceding the Effective Date or, if more favorable to the Executive and/or
the Executive's family, as in effect at any time thereafter generally with
respect to other peer executives of the Company and its affiliated companies and
their families.
(d) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive (x) his Annual Base Salary through the Date of
Termination, (y) the amount of any compensation previously deferred by the
Executive, and (z) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the Employment
Period, excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued Obligations
and the timely payment or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination.
7. Nonexclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies
and for which the Executive may qualify (provided, that the Executive hereby
waives any right to participate in any severance plan, program, or policy of the
Company during the Employment Period), nor, subject to Section 12(f), shall
anything herein limit or otherwise affect such rights as the Executive may have
under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits, or which the Executive is
otherwise entitled to receive under any plan, policy, practice or program of or
any contract or agreement with the Company or any of its affiliated companies at
or subsequent to the Date of Termination, shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
8. Full Settlement. The Company's obligations to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement. Each and every
payment made hereunder by the Company shall be final, and the Company will not
seek to recover all or any part of such payment from the Executive for any
reason. The Company agrees to pay as incurred, to the full extent permitted by
law, all legal fees and expenses which the Executive may reasonably incur as a
result of any contest (regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or liability under,
any provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case interest on any delayed
payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of
the Internal Revenue Code of 1986, as amended (the "Code").
9. Certain Additional Payments by the Company. (a) Anything in this
Agreement to the contrary notwithstanding and except as set forth below, in the
event it shall be
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determined that any payment or distribution by the Company to or for the benefit
of the Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Section 9) (a "Payment")
would be subject to the excise tax imposed by Section 4999 of the Code, or any
interest or penalties are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Deloitte &
Touche LLP or such certified public accounting firm as may be designated by the
Executive (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by
the Company to the Executive within ten days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 9(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which said claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in
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writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order to effectively
contest such claim, and
(iv) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or Income Tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 9(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or to contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or Income Tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 9(c), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 9(c) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an
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amount advanced by the Company pursuant to Section 9(c), a determination is made
that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
10. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
11. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.
12. Miscellaneous. (a) The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) Notices given pursuant to this Agreement shall be in writing and
shall be deemed given when actually received by the Executive or actually
received by the Company's secretary. If mailed, such notices shall be mailed by
United States registered or certified mail, return receipt requested, addressee
only, postage prepaid, if to the Company, to Attention: Secretary (or President,
if the Executive is then Secretary), or if to the Executive, at the address set
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forth below the Executive's signature to this Agreement, or to such other
address as the party to be notified shall have theretofore given to the other
party in writing.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will"
and, subject to Section 1(a) hereof, prior to the Effective Date, the
Executive's employment and/or this Agreement may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in which case
the Executive shall have no further rights under this Agreement. From and after
the Effective Date this Agreement shall supersede any other agreement between
the parties with respect to the subject matter hereof, including the Prior
Agreement.
13. Governing Law; Resolution of Disputes. This Agreement and the
rights and obligations hereunder shall be governed by and construed in
accordance with the laws of the State of Wisconsin. Any dispute arising out of
this Agreement shall, at the Executive's election, be determined by arbitration
under the rules of the American Arbitration Association then in effect (in which
case both parties shall be bound by the arbitration award) or by litigation.
Whether the dispute is to be settled by arbitration or litigation, the venue for
the arbitration or litigation shall be in the judicial district encompassing the
city in which the Executive resides; provided that, if the Executive is not then
residing in the United States, the election of the Executive with respect to
such venue shall be Wisconsin. The parties consent to personal jurisdiction in
each trial court in the selected venue having subject matter jurisdiction, and
each party irrevocably consents to service of process in the manner provided
hereunder for the giving of notices.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name and on its behalf, all as of
the day and year first above written.
UNIVERSAL FOODS CORPORATION
By _________________________________
Chairman, President & Chief Executive
Officer
_________________________________
Address:
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EXHIBIT 10.2(o)
UNIVERSAL FOODS CORPORATION
RABBI TRUST "A" AGREEMENT
This Trust Agreement is made as of the 10th day of September, 1998 by
and between UNIVERSAL FOODS CORPORATION, a Wisconsin corporation (the
"Company"), and FIRSTAR BANK, MILWAUKEE, N.A. (the "Trustee").
RECITALS:
(i) WHEREAS, the Company previously entered into a trust agreement
dated January 18, 1988 ("Prior Trust Agreement") with Marshall & Ilsley Trust
Company as trustee (the "Prior Trustee") for the purpose of funding the payment
of benefits in the event of a change of control of the Company under various
executive employment contracts for selected Company executives (the
"Executives"); and
(ii) WHEREAS, the Trustee succeeded the Prior Trustee under the Prior
Trust Agreement on February 1, 1998; and
(iii) WHEREAS, the Prior Trust Agreement is revocable by the Company
because the trust thereunder has not been funded due to a change of control as
provided therein, there is only one Executive employment agreement covered by
the Prior Trust Agreement, and the Company, the remaining covered Executive and
the Trustee desire to amend the Prior Trust Agreement to make various changes in
the trust agreement, including the terms and conditions defined as a "Change of
Control" of the Company; and
(vi) WHEREAS, the Company, the remaining covered Executive and the
Trustee now desire to amend and restate the trust agreement substantially in the
form of the model rabbi trust issued by the Internal Revenue Service in Revenue
Procedure 92-64 (hereinafter the "Trust") and administer all of the assets held
by the Prior Trustee in the Trust as so amended and restated, which shall be
held therein, subject to the claims of the Company's creditors in the event the
Company becomes Insolvent, as herein defined, until paid in accordance with the
terms of the remaining Executive employment agreement listed on Appendix A and
any other Executive employment agreement designated by the Company to be covered
by this Trust Agreement (the "Contracts") for the benefit of the Executives
covered by the Contracts; and
(v) WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of any
Contract as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974,
as amended; and
(vi) WHEREAS, it is the intention of the Company to make contributions
to the Trust to provide itself with a source of funds to assist it in the
meeting of its liabilities under the Contracts;
<PAGE> 2
NOW, THEREFORE, the parties do hereby amend and restate the Trust
Agreement, as follows:
SECTION 1. SUCCESSOR TRUST
(a) The Company and Trustee hereby acknowledge the deposit with the
Trustee of assets previously held under the Prior Trust Agreement, which shall
continue as the principal of the Trust to be held, administered and disposed of
by the Trustee as provided in this Trust Agreement.
(b) The Trust shall become irrevocable upon a Change of Control, as
defined herein.
(c) The Trust is intended to be a grantor trust, of which the Company
is the grantor, within the meaning of subpart E, part 1, subchapter J, chapter
1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(d) The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of the Company and shall be used exclusively
for the uses and purposes of paying benefits to Executives as required by the
Contracts and claims of general creditors, as herein set forth. Executives shall
have no preferred claim on, or any beneficial ownership interest in, any assets
of the Trust. Any rights created under the Contracts and this Trust Agreement
shall be mere unsecured contractual rights of Executives against the Company.
Any assets held by the Trust will be subject to the claims of the Company's
general creditors under federal and state law in the event the Company is
Insolvent, as defined in Section 3(a) herein.
(e) The Company, in its sole discretion, may at any time, or from time
to time, make additional deposits of cash or other property in trust with the
Trustee to augment the principal to be held, administered and disposed of by the
Trustee as provided in this Trust Agreement. Neither the Trustee nor any
Executive shall have any right to compel such additional deposits.
(f) Upon a Change of Control as defined herein, the Company shall,
within five (5) business days following the Change of Control, make an
irrevocable contribution to the Trust in an amount that is sufficient to pay the
Executives the benefits to which Executives would be entitled pursuant to the
terms of the Contract(s) as of the date on which the Change of Control occurred;
provided, however, payment of benefits through this Rabbi Trust A shall not
duplicate any benefits payable to Executives through Rabbi Trust B (which
provides for payment of benefits for several non-qualified benefit plans of the
Company) or any other irrevocable trust arrangement providing for secured
payment of benefits to Executives, notwithstanding that the benefits shall be
payable upon a Change of Control pursuant to the terms of the Contracts.
SECTION 2. PAYMENTS TO EXECUTIVES.
(a) Upon a Change of Control, within five (5) business days following
such Change of Control, the Company shall deliver to the Trustee a schedule (the
"Payment Schedule") that
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indicates the amounts payable in respect of each Executive, that provides a
formula or other instructions acceptable to Trustee for determining the amounts
so payable, the form in which such amount is to be paid (as provided for under
the Contracts), and the time of commencement for payment of such amounts. Except
as otherwise provided herein, the Trustee shall make payments to the Executives
in accordance with such Payment Schedule. The Trustee shall make provision for
the reporting and withholding of any federal, state or local taxes that may be
required to be withheld with respect to the payment of benefits pursuant to the
terms of the Contracts and shall pay amounts withheld to the appropriate taxing
authorities or determine that such amounts have been reported, withheld and paid
by the Company.
(b) The entitlement of an Executive to benefits under a Contract shall
be determined by the Company or such party as it shall designate, and any claim
for such benefits shall be considered and reviewed under procedures determined
by the Company and uniformly applied.
(c) The Company may make payment of benefits directly to Executives as
they become due under the terms of the Contracts. The Company shall notify the
Trustee of its decision to make payment of benefits directly prior to the time
amounts are payable to Executives. In addition, if the principal of the Trust,
and any earnings thereon, are not sufficient to make payments of benefits in
accordance with the terms of the Contracts, the Company shall make the balance
of each such payment as it falls due. The Trustee shall notify the Company where
principal and earnings are not sufficient.
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST
BENEFICIARY WHEN THE COMPANY IS INSOLVENT.
(a) The Trustee shall cease payment of benefits to Executives if the
Company is Insolvent. Company shall be considered "Insolvent" for purposes of
this Trust Agreement if (i) the Company is unable to pay its debts as they
become due, or (ii) the Company is subject to a pending proceeding as a debtor
under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided in
Section l(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of the Company under federal and state law as set
forth below.
(1) The Board of Directors and the Chief Executive Officer of
the Company shall have the duty to inform the Trustee in writing that the
Company is Insolvent. If a person claiming to be a creditor of the Company
alleges in writing to the Trustee that the Company has become Insolvent, the
Trustee shall determine whether the Company is Insolvent and, pending such
determination, the Trustee shall discontinue payment of benefits to Executives.
(2) Unless the Trustee has actual knowledge that the Company
is Insolvent, or has received notice from the Company or a person claiming to be
a creditor alleging that the Company is Insolvent, the Trustee shall have no
duty to inquire whether the Company is Insolvent. The Trustee may in all events
rely on such evidence concerning whether the
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Company is Insolvent as may be furnished to the Trustee and that provides the
Trustee with a reasonable basis for making a determination whether the Company
is Insolvent.
(3) If at any time the Trustee has determined that the Company
is Insolvent, the Trustee shall discontinue payments to Executives and shall
hold the assets of the Trust for the benefit of the Company's general creditors.
Nothing in this Trust Agreement shall in any way diminish any rights of
Executives to pursue their rights as general creditors of the Company with
respect to benefits due under the Contracts or otherwise.
(4) The Trustee shall resume the payment of benefits to
Executives in accordance with Section 2 of this Trust Agreement only after the
Trustee has determined that the Company is not Insolvent (or is no longer
Insolvent).
(c) Provided that there are sufficient assets, if the Trustee
discontinues the payment of benefits from the Trust pursuant to Section 3(b)
hereof and subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to
Executives under the terms of the Contracts for the period of such
discontinuance, less the aggregate amount of any payments made to Executives by
the Company in lieu of the payments provided for hereunder during any such
period of discontinuance.
SECTION 4. PAYMENTS TO COMPANY.
Except as provided in Section 3 hereof, after a Change of Control, the
Company shall have no right or power to direct the Trustee to return to the
Company, or to divert to others, any of the Trust assets before all payment of
benefits have been made to Executives pursuant to the terms of the Contracts,
except in the case of a termination of the Trust pursuant to Section 12.
SECTION 5. INVESTMENT AUTHORITY.
(a) The Trustee may invest in securities (including stock or rights to
acquire stock) or obligations issued by the Company. All rights associated with
assets of the Trust shall be exercised by the Trustee or the person designated
by the Trustee, and shall in no event be exercisable by or rest with Executives,
except that voting rights with respect to Trust assets will be exercised by the
Company.
(b) The Company shall have the right at anytime, and from time to time
in its sole discretion, to substitute assets of equal fair market value for any
asset held by the Trust. This right is exercisable by the Company in a
nonfiduciary capacity without the approval or consent of any person in a
fiduciary capacity.
SECTION 6. DISPOSITION OF INCOME.
During the term of this Trust, to the extent not necessary for the
payment of benefits after a Change of Control, all or part of the income
received by the Trust, net of expenses and taxes,
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shall be returned to the Company, as determined by the Company.
SECTION 7. ACCOUNTING BY TRUSTEE.
The Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions required to be
made, including such specific records as shall be agreed upon in writing between
the Company and the Trustee. Within thirty (30) days after the removal or
resignation of the Trustee, the Trustee shall deliver to the Company a written
account of its administration of the Trust during such year or during the period
from the close of the last preceding year to the date of such removal or
resignation, setting forth all investments, receipts, disbursements and other
transactions effected by it, including a description of all securities and
investments purchased and sold with the cost or net proceeds of such purchases
or sales (accrued interest paid or receivable being shown separately), and
showing all cash, securities and other property held in the Trust at the end of
such year or as of the date of such removal or resignation, as the case may be.
SECTION 8. RESPONSIBILITY OF TRUSTEE.
(a) The Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims; provided, however, that the
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by the Company which is contemplated by,
and in conformity with, the terms of the Contracts or this Trust and is given in
writing by the Company. In the event of a dispute between the Company and a
party, the Trustee may apply to a court of competent jurisdiction to resolve the
dispute.
(b) If the Trustee undertakes or defends any litigation arising in
connection with this Trust, the Company agrees to indemnify the Trustee against
the Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If the Company does not pay such costs, expenses and liabilities
in a reasonably timely manner, the Trustee may obtain payment from the Trust.
(c) The Trustee may consult with legal counsel (who may also be counsel
for the Company generally) with respect to any of its duties or obligations
hereunder.
(d) The Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder.
(e) The Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein;
provided, however, that if an insurance policy is held as an asset of the Trust,
the Trustee shall have no power to name a beneficiary of the policy other than
the Trust, to assign the policy (as distinct from conversion of
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the policy to a different form) other than to a successor Trustee, or to loan to
any person the proceeds of any borrowing against such policy.
(f) Notwithstanding any powers granted to the Trustee pursuant to this
Trust Agreement or to applicable law, the Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.
SECTION 9. COMPENSATION AND EXPENSES OF TRUSTEE.
The Company shall pay all administrative costs and the Trustee's fees
and expenses. If not so paid, the costs, fees and expenses shall be paid from
the Trust.
SECTION 10. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) The Trustee may resign at any time by written notice to the
Company, which shall be effective no less than thirty (30) days after receipt of
such notice unless the Company and the Trustee agree otherwise.
(b) The Trustee may be removed by the Company on fifteen (15) days
notice or upon shorter notice accepted by the Trustee.
(c) Upon resignation or removal of the Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within thirty (30) days after receipt
of notice of resignation, removal or transfer, unless the Company extends such
time limit.
(d) If the Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the effective date of
resignation or removal under paragraphs (a) or (b) of this section. If no such
appointment has been made, the Trustee may apply to a court of competent
jurisdiction for appointment of a successor or for instructions. All expenses of
the Trustee in connection with the proceeding shall be allowed as administrative
expenses of the Trust.
SECTION 11. APPOINTMENT OF SUCCESSOR.
If the Trustee resigns or is removed in accordance with Section 10(a)
or (b) hereof, the Company may appoint any third party, such as a bank trust
department or other party that may be granted corporate trustee powers under
state law, as a successor to replace the Trustee upon resignation or removal.
The appointment shall be effective when accepted in writing by the new Trustee,
who shall have all of the rights and powers of the former Trustee, including
ownership rights in the Trust assets. The former Trustee shall execute any
instrument necessary or reasonably requested by the Company or the successor
Trustee to evidence the transfer.
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<PAGE> 7
SECTION 12. AMENDMENT OR TERMINATION.
(a) Prior to a Change of Control, this Trust Agreement may be amended
by a written instrument executed by the Trustee and the Company. Notwithstanding
the foregoing, no such amendment shall conflict with the terms of the Contracts
or shall make the Trust revocable after it has become irrevocable in accordance
with Section l(b) hereof.
(b) The Trust shall not terminate until the date on which Executives
are no longer entitled to benefits pursuant to the terms of the Contracts,
unless approved as provided in Section 12(c) hereof.
(c) After a Change of Control, upon written approval of Executives
entitled to payment of not less than sixty-five percent (65%) of benefits
payable under the Payment Schedule, the Company may terminate this Trust prior
to the time all benefits payable under the Payment Schedule have been made. All
assets in the Trust at termination shall be returned to the Company.
SECTION 13. MISCELLANEOUS.
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Executives under this Trust Agreement may not
be anticipated, assigned (either at law or in equity), alienated, pledged,
encumbered or subjected to attachment, garnishment, levy, execution or other
legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of Wisconsin.
(d) For purposes of this Trust, Change of Control 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) (a "Person") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) 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 paragraph (d); or
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(2) individuals who, as of September 10, 1998, constitute the
Board of Directors (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board of Directors; provided, however, that any
individual becoming a director subsequent to September 10, 1998 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 of Directors; or
(3) consummation by the Company of a reorganization, merger 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 entity (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 beneficially own, directly or indirectly, more than 50% 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 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
of 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
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 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.
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SECTION 14. EFFECTIVE DATE.
The effective date of this amended and restated Trust Agreement shall
be September 10, 1998.
UNIVERSAL FOODS CORPORATION
By: /s/ Kenneth P. Manning
-----------------------------------
Name: Kenneth P. Manning
---------------------------------
Title: Chairman, President and
--------------------------------
Chief Executive Officer
--------------------------------
FIRSTAR BANK, MILWAUKEE, N.A.
By: /s/ Richard A. Whittow
-----------------------------------
Name: Richard A. Whittow
---------------------------------
Title: Vice President
--------------------------------
9
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EXHIBIT 10.2(p)
TRUST AGREEMENT
TRUST AGREEMENT (the "Trust"), dated January 18, 1988, by and between
Universal Foods Corporation, a Wisconsin corporation (the "Company"), and
Marshall & Ilsley Trust Company (the "Trustee").
WHEREAS, the Company is obligated under the plans and agreements listed
on Schedule A hereto, as the same may be amended from time to time (collectively
the "Plans"), to make certain deferred and other payments to certain of the
Company's present, future and former directors and executives (the
"Executives"); and
WHEREAS, the aforesaid obligations of the Company are not currently
funded or otherwise secured; and
WHEREAS, for purposes of assuring that payments are made in
satisfaction of such obligations, the Company desires to establish a trust (the
"Trust") and to deposit with the Trustee, subject only to the claims of the
Company's existing or future general creditors, amounts of cash, marketable
securities and life insurance policies sufficient to fund such payments, and to
pay premiums on any such life insurance policies, as they may become due and
payable;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the parties hereto agree
as follows:
<PAGE> 2
ARTICLE I
THE PLANS
SECTION 1.01 Plans. The Company Plans subject to this Agreement consist
of the plans and agreements listed on Schedule A hereto, as the same may be
amended from time to time.
ARTICLE II
TRUST AND THE TRUST CORPUS
SECTION 2.01 Trust.
(a) Contemporaneously with the execution of this Agreement, the Company
is delivering to the Trustee to be held in trust hereunder the sum of One
Thousand Dollars ($1,000). As soon as practicable after the date hereof, the
Company shall deliver to the Trustee to be held in trust hereunder an amount in
cash plus marketable securities and life insurance policies which will be
sufficient to fund the Company's obligations to pay (i) to the Executives
benefits due and payable to them under the Plans and (ii) to the appropriate
insurers premiums due and payable on such life insurance policies.
(b) Contemporaneously with the later payment by the Company pursuant to
Section 2.01(a) hereof, the Company shall deliver to the Trustee a schedule (the
"Payment Schedule") indicating (i) the amounts payable in respect of each
Executive, or providing a formula or instructions acceptable to the Trustee for
determining the amounts so payable, and the time of commencement
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for, and the form of, payment of such amounts in respect of the Plans and (ii)
the amounts payable in respect of any premiums on any life insurance policies
held in Trust.
(c) At each September 30, the Company shall recalculate the amount of
assets which would be required to be delivered pursuant to Section 2.01(a) as of
such anniversary date. If the amount so calculated exceeds the fair market value
of the assets then held in trust, the Company shall promptly (and in no event
later than twenty-five (25) days from such anniversary date) pay to the Trustee
(i) an amount in cash, marketable securities (valued at their fair market value)
or life insurance policies or any combination thereof equal to such excess less
(ii) the amount, if any, of interest and other income earned on the Trust Corpus
and received by the Trustee during the year then ended at September 30.
Contemporaneously with such payment, the Company shall deliver to the Trustee
(i) a modified Payment Schedule indicating the amounts payable in respect of
each Executive, or providing a formula or instructions acceptable to the Trustee
for determining the amounts so payable, and the time of commencement for, and
the form of, payment of such amounts and (ii) the amounts payable in respect of
any premiums on any life insurance policies held in Trust.
(d) The Trust shall be revocable by the Company at any time until
thirty (30) days following the issuance by the Internal
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<PAGE> 4
Revenue Service of tax rulings requested by the Company in connection with its
establishment of this Trust; thereafter, this Trust shall be irrevocable.
(e) This Trust is intended to be a grantor trust within the meaning of
Section 671 of the Internal Revenue Code of 1986 and is to be construed
accordingly.
SECTION 2.02 Trust Corpus.
(a) As used herein, the term "Trust Corpus" shall mean the amounts and
assets delivered to the Trustee as described in Section 2.01(a) hereof plus all
amounts and assets delivered thereafter pursuant to Section 2.01(c) hereof, in
whatever form held or invested as provided herein. The Trust Corpus shall be
held, invested and reinvested by the Trustee in cash, cash equivalents,
marketable securities or life insurance policies on the lives of the Executives
only in accordance with this Section 2.02. The Trustee shall use its good faith
efforts to invest or reinvest from time to time all or such part of the Trust
Corpus as it believes prudent under the circumstances (taking into account,
among other things, anticipated cash requirements for the payment of benefits
under the Plans) in any one or a combination of the following:
(i) life insurance policies on the lives of the
Executives;
(ii) cash equivalents; and
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(iii) such equity or fixed income securities as are permitted
in accordance with the investment guidelines which are, or when adopted
by the Company shall be, attached hereto as Schedule B, as the same may
be modified at any time and from time to time by the Company
provided, however, that the Trustee shall not be liable for any failure to
maximize the income earned on that portion of the Trust Corpus as is from time
to time invested or reinvested as set forth above, nor for any loss of income
due to liquidation of any investment which the Trustee, in its sole discretion,
believes necessary to make payments or to reimburse expenses under the terms of
this Trust.
(b) Except as hereinafter provided, all interest and other income
earned on the investment of the Trust Corpus, except dividends on and proceeds
from life insurance policies, shall be the property of the Company and shall not
constitute a part of the Trust Corpus. Within twenty (20) days after the end of
each year ending September 30, the Trustee shall notify the Company of the
amount of such interest and other income received by the Trustee during such
year then ended. Such interest and other income received by the Trustee during
each year ended September 30 shall be paid over to the Company by the Trustee
within thirty (30) days after the end of each such year. The amount of such
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interest or other income so payable to the Company shall be reduced to the
extent it offsets the excess otherwise required to be paid by the Company to the
Trustee pursuant to Section 2.01(c) hereof, and only the remainder, if any,
shall be paid to the Company.
(c) All losses of income or principal in respect of, and expenses
(including, as provided in Sections 5.01(f) and (g) hereof, any expenses of the
Trustee) charged against, the Trust Corpus shall be for the account of the
Company and the Company shall be obligated to promptly reimburse the Trust
Corpus for any loss in principal amount of, or expense charged against, the
Trust Corpus except to the extent that such amounts have been applied to reduce
amounts payable to the Company pursuant to Section 2.02(b) hereof.
ARTICLE III
RELEASE OF THE TRUST CORPUS
SECTION 3.01 Deliveries to Executives.
(a) As soon as practicable following the execution of this
Agreement, the Payment Schedule shall be delivered by the Company to each
Executive. A modified Payment Schedule shall be delivered by the Company to each
Executive at each time that a modified Payment Schedule is delivered by the
Company to the
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Trustee under Section 2.01(c) hereof. Except as otherwise provided herein, the
Trustee shall make payments to the Executives in accordance with the most recent
Payment Schedule.
(b) In the event that an Executive reasonably believes that the Payment
Schedule, including any modified Payment Schedule, does not properly reflect the
amount payable to such Executive or the timing or form of payment from the Trust
Corpus in respect of any of the Plans in which he or she is a participant, such
Executive shall be entitled to deliver to the Trustee written notice (the
"Executive's Notice") setting forth the amount, timing or form of payment the
Executive believes is proper under the relevant terms of the Plan or Plans. The
Executive shall also deliver a copy of the Executive's Notice to the Company
within three (3) business days of the delivery to the Trustee. Unless the
Trustee receives written objection from the Company within ten (10) business
days after receipt by the Trustee of such notice, the Trustee shall make the
payment in accordance with the Executive's Notice. In the event the Trustee
receives written objection from the Company within such ten (10) business day
period and in the event the Company and Executive cannot agree on the terms of
the Payment Schedule, the dispute shall be resolved in accordance with Section
6.03 hereof.
(c) In the event that the aggregate amount payable in any calendar
month to the Executives entitled to payments during such month exceeds the Trust
Corpus, the Trustee shall
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borrow on any life insurance policies held in the Trust to the extent necessary
to satisfy such payment obligations. If, notwithstanding such borrowing, the
Trust Corpus is not sufficient to satisfy such payment obligations, the Trustee
shall make a pro rata payment to each Executive entitled to a payment during
such month based on the amount so payable to such Executive in proportion to the
aggregate amount so payable to all such Executives.
(d) The Trustee shall be permitted to withhold from any payment due to
an Executive hereunder the amount required by law to be so withheld under
federal, state and local wage withholding requirements or otherwise, and shall
pay over to the appropriate government authority the amounts so withheld.
(e) Except as otherwise provided herein, in the event of any final
determination by the Internal Revenue Service or a court of competent
jurisdiction, which determination is not appealable or the time for appeal or
protest of which has expired, or the receipt by the Trustee of a substantially
unqualified opinion of tax counsel selected by the Trustee, which determination
determines, or which opinion opines, that the Executives or any particular
Executive is subject to federal income taxation on amounts held in Trust
hereunder prior to the distribution to the Executives or Executive of such
amounts, the Trustee shall, on receipt by the Trustee of notice of such
determination or of such opinion,
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pay to each Executive the portion of the Trust Corpus includible in such
Executive's federal gross income.
SECTION 3.02 Deliveries to Creditors of the Company. It is the intent
of the parties hereto that the Trust Corpus is and shall remain at all times
subject to the claims of the general creditors of the Company. Accordingly, the
Company shall not create a security interest in the Trust Corpus in favor of the
Executives or any creditor. If the Trustee receives the notice provided for in
Section 3.03 hereof, or otherwise receives actual notice that the Company is
insolvent or bankrupt as defined in Section 3.03 hereof, the Trustee shall make
no further distributions of the Trust Corpus to any of the Executives but shall
deliver the entire amount of the Trust Corpus only as a court of competent
jurisdiction, or duly appointed receiver or other person authorized to act by
such a court, may direct to make the Trust Corpus available to satisfy the
claims of the Company's general creditors. The Trustee shall resume distribution
of the Trust Corpus to the Executives under the terms hereof, upon no less than
thirty (30) days advance notice to the Company, if it determines that the
Company was not, or is no longer, bankrupt or insolvent. The Trustee may rely on
such evidence concerning the status or solvency of the Company as may be
furnished to the Trustee as will give the Trustee a reasonable basis for making
such determination.
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SECTION 3.03 Notification of Bankruptcy or Insolvency. The Company,
through its Board of Directors and Chief Executive Officer, shall notify the
Trustee promptly in writing of the Company's bankruptcy or insolvency. Prior to
receipt of such notice, the Trustee shall have no duty to inquire whether or not
the Company is bankrupt or insolvent. The Company shall be deemed to be
bankrupt or insolvent:
(i) upon the entry of a decree or order by a court having
jurisdiction adjudging the Company bankrupt or insolvent, or
approving a petition seeking reorganization, arrangement, adjustment
or composition of the Company under the Federal Bankruptcy Act, or
appointing a receiver (or other similar official) of the Company, or
ordering the winding up or liquidation of the affairs of the Company;
(ii) upon the institution by the Company of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by the Company to
the institution of bankruptcy or insolvency proceedings against it, or
the filing by the Company of a petition seeking reorganization or
relief under the Federal Bankruptcy Act, or the consent by the Company
to the filing of any such petition or to the
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appointment of a receiver, trustee (or other similar
official) of the Company, or the making by the Company of an
assignment for the benefit of creditors, or the admission by
the Company in writing of its inability to pay its debts as
they mature; or
(iii) if the Company is unable to pay its debts as they
mature.
ARTICLE IV
TRUSTEE
SECTION 4.01 Trustee.
(a) The duties and responsibilities of the Trustee shall be limited to
those expressly set forth in this Agreement, and no implied covenants or
obligations shall be read into this Trust against the Trustee.
(b) If all or any part of the Trust Corpus is at any time attached,
garnished or levied upon by any court order, or in case the payment, assignment,
transfer, conveyance or delivery of any such property shall be stayed or
enjoined by any court order, or in case any order, judgment or decree shall be
made or entered by a court affecting such property or any part thereof, then and
in any of such events the Trustee is authorized, in its sole discretion, to rely
upon and comply with any such order, writ, judgment or decree, and it shall not
be liable to the Company (or any
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of its subsidiaries) or any Executive by reason of such compliance even though
such order, writ, judgment or decree subsequently may be reversed, modified,
annulled, set aside or vacated.
(c) The Trustee shall maintain such books, records and accounts as may
be necessary for the proper administration of the Trust Corpus, including,
without limitation, as provided in Section 2.01 hereof, and shall render to the
Company, on or prior to each October 31 following the date of this Trust until
the termination of this Trust (and on the date of such termination), an
accounting with respect to the Trust Corpus as of the end of the immediately
preceding September 30 (and as of the date of such termination). Upon the
written request of an Executive or the Company, the Trustee shall deliver to
such Executive or the Company, as the case may be, a copy of such accounting and
a record of any amounts delivered by the Company to the Trustee or paid by the
Trustee with respect to such Executive.
(d) The Trustee shall not be liable for any act taken or omitted to be
taken hereunder if taken or omitted to be taken by it in good faith. The Trustee
shall also be fully protected in relying upon any Payment Schedule, modified
Payment Schedule or notice delivered or given hereunder which it in good faith
believes to be genuine and executed and delivered in accordance with this
Agreement.
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(e) The Trustee may consult with legal counsel to be selected by it,
and the Trustee shall not be liable for any action taken or suffered by it in
accordance with the advice of such counsel.
(f) The Trustee shall be reimbursed by the Company for its reasonable
expenses incurred in connection with the performance of its duties hereunder and
shall be paid reasonable fees for the performance of such duties.
(g) The Company agrees to indemnify and hold harmless the Trustee from
and against any and all damages, losses, claims or expenses as incurred
(including expenses of investigation and fees and disbursements of counsel to
the Trustee and any taxes imposed on the Trust Corpus or income of the Trust)
arising out of or in connection with the performance by the Trustee of its
duties hereunder. Any amount payable to the Trustee under paragraph (f) of this
Section 4.01 or this paragraph (g) shall be paid by the Company promptly upon
demand therefor by the Trustee or, if the Trustee so chooses in its sole
discretion, from the Trust Corpus. In the event that payment is made hereunder
to the Trustee from the Trust Corpus, the Trustee shall promptly notify the
Company in writing of the amount of such payment. The Company agrees that, upon
receipt of such notice, it will deliver to the Trustee to be held in the Trust
an amount in cash or marketable
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securities (valued at their fair market value) or some combination thereof equal
to any payments made from the Trust Corpus to the Trustee pursuant to paragraph
(f) of this Section 4.01 or this paragraph (g). The failure of the Company to
transfer any such amount shall not in any way impair the Trustee's right to
indemnification, reimbursement and payment pursuant to paragraph (f) of this
Section 4.01 or this paragraph (g).
(h) In the event that an Executive shall have the right under the terms
of the Management Split Dollar Life Insurance Plan to purchase any policy on the
Executive's life held by the Trustee, the Trustee shall, upon receipt of written
notice from the Company of the Executive's intention to exercise such right,
transfer such policy to the Company along with any loan, debt or obligation on
such policy without any further consideration.
SECTION 4.02 Powers.
The Trustee shall have, in addition to any implied powers and duties
which may be necessary to carry out the provisions of the Trust, and subject to
the Company's express directions pursuant hereto, the following powers and
duties:
(a) To sell, exchange, hypothecate, convey and otherwise transfer any
securities or other property held in the Trust, at public or private sale, for
such prices and on such terms as the Trustee deems suitable, without the
approval of any court and
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without any obligation upon any person dealing with the Trustee to see to the
application of any money or other property delivered to it;
(b) To hold uninvested or to deposit in any bank or savings and loan
association such sums of cash as it deems reasonable and in the best interests
of the Trust;
(c) To exercise any right, including the right to vote, personally or
by general or special proxies or powers of attorney, appurtenant to any
securities or other property held in the Trust;
(d) To exercise or sell any conversion privileges, subscription rights
or other rights or options and to make any payments incidental thereto;
(e) To oppose, consent to, or otherwise participate in, any
reorganization, recapitalization or other changes affecting securities held in
the Trust, to delegate discretionary powers to the extent permitted by law, and
to pay expenses, assessments or charges in connection therewith; to retain any
securities or other property allotted to the Trust in connection with any such
reorganization, recapitalization or other changes; and to generally exercise any
of the powers of an owner with respect to any securities or other property held
in the Trust;
(f) To hold securities or other property in its name as Trustee or in
the name of one or more nominees or in bearer
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form; provided, the Trust records shall at all times show that such securities
or property are part of the Trust;
(g) To make, execute, acknowledge and deliver any instruments that may
be necessary or appropriate to carry out the powers herein granted;
(h) To consult and employ suitable agents, enrolled actuaries,
auditors, legal counsel or other advisers as deemed necessary to assist in the
performance of the Trustee's duties, and to pay reasonable expenses and
compensation in connection therewith;
(i) To enforce, abstain from enforcing, settle, modify, compromise,
submit to arbitration or abandon any rights, obligations, claims, debts or
damages due or owing to or from the Trust; to commence, defend and represent the
Trust in all suits and legal and administrative proceedings;
(j) To accept and retain any securities or other property received or
acquired by the Trust, whether or not such property would normally be purchased
or would then be authorized as investments hereunder;
(k) To collect and receive any money or property due to the Trust and
to give full discharge and acquittance therefor;
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(l) To prepare such periodic written reports or other accountings as
required hereunder, and to furnish the Company and the Executives with such
information which either may require for tax or other purposes;
(m) To borrow money from any lender in such amounts and upon such terms
and conditions as shall be deemed advisable or proper to carry out the purposes
of the Trust and to pledge any securities or other property for the repayment of
any such loan, provided that the Company may direct but not prohibit borrowing
by the Trustee on any life insurance policies held in the Trust;
(n) To register any securities held by it in its own name or in the
name of any custodian of such property or of its nominee, including the nominee
of any system for the central handling of securities, with or without the
addition of words indicating that such securities are held in a fiduciary
capacity and to deposit or arrange for the deposit of any such securities with
such a system;
(o) To transfer assets of the Trust Corpus to a successor trustee as
provided in Section 4.03;
(p) To adopt uniform rules of procedure and regulations necessary for
the proper and efficient administration of the Trust, provided such rules are
not inconsistent with the terms hereof, and to enforce such rules and
regulations; and
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(q) To do all acts, though not specifically named herein, which the
Trustee deems advisable to carry out the purpose of this Trust.
SECTION 4.03 Successor Trustee. The Trustee may resign and be
discharged from its duties hereunder at any time by giving notice in writing of
such resignation to the Company and each Executive specifying a date (not less
than thirty (30) days after the giving of such notice) when such resignation
shall take effect. Promptly after such notice, the Company and Executives to
whom at least sixty-five percent (65%) of all amounts covered by the most recent
Payment Schedule are payable shall appoint a successor trustee, such trustee to
become Trustee hereunder upon the resignation date specified in such notice. If
the Company and such Executive(s) are unable to so agree upon a successor
trustee within thirty (30) days after such notice, the Trustee shall be
entitled, at the expense of the Company, to petition a United States District
Court or any of the courts of the State of Wisconsin having jurisdiction to
appoint its successor. The Trustee shall continue to serve until its successor
accepts the trust and receives delivery of the Trust Corpus. The Company and
such Executive(s) may at any time substitute a new trustee by giving fifteen
(15) days notice thereof to the Trustee then acting. The Trustee and any
successor thereto appointed hereunder shall be a commercial bank or trust
company which is not an affiliate of the Company,
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but which is a national banking association or established under the laws of one
of the states of the United States, and which has equity in excess of One
Hundred Million Dollars ($100,000,000).
ARTICLE V
TERMINATION, AMENDMENT AND WAIVER
SECTION 5.01 Termination. This Trust shall be terminated upon the
earlier of either of the following events: (i) the exhaustion of the Trust
Corpus; or (ii) the final payment of all amounts payable to all of the
Executives pursuant to all of the Plans. Promptly upon termination of this
Trust, any remaining portion of the Trust Corpus shall be paid to the Company.
SECTION 5.02 Amendment and Waiver. This Trust may be amended only by an
instrument in writing signed on behalf of the parties hereto, together with the
written consent of Executives to whom at least sixty-five percent (65%) of all
amounts covered by the most recent Payment Schedule are payable; provided that
the Company, in any event, without the approval or consent of any Executive, may
(i) include or exclude any Plan or Executive hereunder pursuant to Section 7.05
hereof and (ii) revise the investment guidelines attached as Exhibit B; and
provided further that this Trust may not be amended to make it revocable after
having become irrevocable in accordance with Section 2.01(d) hereof or to alter
Section 5.01 hereof. The parties hereto, together with the consent of Executives
to whom at least sixty-five percent (65%) of all amounts covered by the most
recent Payment Schedule
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are payable, may at any time waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto or an
Executive to any such waiver shall be valid if set forth in an instrument in
writing signed on behalf of such party or Executive. Notwithstanding the
foregoing, any such amendment or waiver may be made by written agreement of the
parties hereto without obtaining the consent of the Executives if such amendment
or waiver does not adversely affect the rights of the Executives hereunder. No
such amendment or waiver relating to this Trust and adversely affecting the
rights of a particular Executive hereunder shall be effective, unless such
executive has agreed in writing to such amendment or waiver.
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.01 Further Assurances. The Company shall, at any time and
from time to time, upon the reasonable request of the Trustee, execute and
deliver such further instruments and do such further acts as may be necessary or
proper to effectuate the purposes of this Trust.
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SECTION 6.02 Certain Provisions Relating to This Trust.
(a) This Trust sets forth the entire understanding of the parties with
respect to the subject matter hereof and supersedes any and all prior
agreements, arrangements and understandings relating thereto. This Trust shall
be binding upon and inure to the benefit of the parties and their respective
successors and legal representatives.
(b) This Trust shall be governed by and construed in accordance with
the laws of the State of Wisconsin, other than and without reference to any
provisions of such laws regarding choice of laws or conflict of laws.
(c) In the event that any provision of this Trust or the application
thereof to any person or circumstances shall be determined by a court of proper
jurisdiction to be invalid or unenforceable to any extent, the remainder of this
Trust, or the application of such provision to persons or circumstances other
than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each provision of this Trust shall be valid and enforced
to the fullest extent permitted by law.
SECTION 6.03 Arbitration. Any dispute between the Executives and the
Company or the Trustee as to the interpretation or application of the provisions
of this Trust and the amount,
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timing or form of any payment hereunder shall be determined exclusively by
binding arbitration in Milwaukee, Wisconsin in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court of competent jurisdiction. All fees and expenses
of such arbitration shall be paid by the Trustee and considered an expense of
the Trust under Section 4.01(g) hereof.
SECTION 6.04 Notices. Any notice, report demand or waiver required or
permitted hereunder shall be in writing and shall be given personally or by
prepaid registered or certified mail, return receipt requested, addressed as
follows:
If to the Company: Universal Foods Corporation
411 East Michigan Avenue
Milwaukee, Wisconsin 53202
Attention: Terrence M. O'Reilly
Vice President, Secretary
and General Counsel
If to the Trustee: Marshall & Ilsley Trust Company
770 North Water Street
Milwaukee, Wisconsin 53202
Attention: James L. Neubauer
Employee Benefits Trust Officer
If to an Executive, to the address of such Executive as listed next to his name
on Schedule C hereto or such other address as the Executive may set forth in a
written notice to the Company and the Trustee or, as to an Executive who is not
included under
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the Plans as of the date hereof but is included thereafter, the address set
forth in the notice to the Trustee adding such Executive as a beneficiary.
A notice shall be deemed received upon the date of delivery if given
personally, or, if given by mail, upon the receipt thereof.
SECTION 6.05 Trust Beneficiaries. Each Executive is an intended
beneficiary under this Trust, and shall be entitled to enforce all terms and
provisions hereof with the same force and effect as if such person had been a
party hereto. The Executives shall have no preferred claim on, or any beneficial
ownership in, the Trust Corpus, and all rights created hereunder and the Plans
shall be mere unsecured contractual rights of the Executives against the Company
and the status of the Executives shall only be as general unsecured creditors.
Benefits to the Executives hereunder may not be anticipated, assigned,
transferred, pledged or otherwise conveyed. The Company may, in its sole
discretion, at any time and from time to time, by means of a modified Payment
Schedule accompanied by revised Schedules A and C, (i) provide for coverage
hereunder of any other Company plan, agreement or executive and (ii) upon
termination of any Plan or final payment of all amounts thereunder, exclude such
Plan and the Executives who are participants therein from coverage hereunder.
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IN WITNESS WHEREOF, the parties have executed this Trust as of the date
first written above.
UNIVERSAL FOODS CORPORATION
By: /s/ Darrell E. Wilde
-------------------------------
Darrell E. Wilde
Senior Vice President
MARSHALL & ILSLEY TRUST COMPANY
By: /s/ Walter A. Lecocq
-------------------------------
Walter A. Lecocq
Vice President
By: /s/ James L. Neubauer
-------------------------------
James L. Neubauer
Employee Benefits Trust Officer
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UNIVERSAL FOODS CORPORATION
TRUST AGREEMENT FOR RABBI TRUST B
Changes Upon Appointment of Successor Trustee
WHEREAS, Marshall & Ilsley Trust Company has resigned as Trustee of
Universal Foods Corporation Rabbi Trust B under Trust Agreement dated
January 18, 1988;
WHEREAS, it has been determined to be in the best interests of the
parties to Rabbi Trust B to have Firstar Bank, Milwaukee, N.A. assume
the duties of Trustee for Rabbi Trust B as soon as practicable after
the resignation of the prior trustee to assure that all benefits
payable through the Trust shall continue without interruption; and
WHEREAS, it is in the best interests of the Executives for whom
benefits are to be paid by Rabbi Trust B that the Trust Agreement be
irrevocable.
THEREFORE, it is hereby agreed by the parties to the Trust Agreement
for Rabbi Trust B, pursuant to the next to last sentence of Section
5.02, Amendment and Waiver, of the Trust Agreement, that, effective
February 1, 1998:
1. Firstar Bank, Milwaukee, N.A. shall be successor trustee
to Marshall & Ilsley Trust Company.
2. The Trust Agreement for Rabbi Trust B shall be
irrevocable.
3. The addresses for Notices to the Company and the Trustee
provided in Section 6.04, Notices, shall be changed to reflect the
actual addresses of the parties from time to time, with any party
providing other parties notice of any change pursuant to the procedure
of Section 6.04.
IN WITNESS WHEREOF, the parties have executed this Changes Upon
Appointment of Successor Trustee as of the 1st day of February, 1998.
UNIVERSAL FOODS CORPORATION FIRSTAR BANK, MILWAUKEE, NA
By: /s/ Kenneth P. Manning BY: /s/ Richard A. Whittow
---------------------- ----------------------
Name: Kenneth P. Manning Name: Richard A. Whittow
------------------ ------------------
Title: Chairman, President and Title: Vice President
----------------------- ---------------
Chief Executive Officer
-----------------------
<PAGE> 1
EXHIBIT 10.2 (q)
TRUST AGREEMENT
TRUST AGREEMENT (the "Trust"), dated September 8, 1988, by and between
Universal Foods Corporation, a Wisconsin corporation (the "Company"), and
Marshall & Ilsley Trust Company (the "Trustee").
WHEREAS, the Company is obligated under the plans and agreements listed
on Schedule A hereto, as the same may be amended from time to time (collectively
the "Plans"), to make certain deferred and other payments to certain of the
Company's present, future and former directors and executives (the
"Executives"); and
WHEREAS, the aforesaid obligations of the Company are not currently
funded or otherwise secured; and
WHEREAS, for purposes of assuring that payments are made in
satisfaction of such obligations, the Company desires to establish a trust (the
"Trust") and to deposit with the Trustee, subject only to the claims of the
Company's existing or future general creditors, amounts of cash or marketable
securities or any combination thereof sufficient to fund such payments;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the parties hereto agree
as follows:
<PAGE> 2
ARTICLE I
THE PLANS
SECTION 1.01 Plans. The Company Plans subject to this Agreement consist
of the plans and agreements listed on Schedule A hereto, as the same may be
amended from time to time.
ARTICLE II
TRUST AND THE TRUST CORPUS
SECTION 2.01 Trust.
(a) Contemporaneously with the execution of this Agreement, the Company
is delivering to the Trustee to be held in trust hereunder the sum of One
Thousand Dollars ($1,000). As soon as practicable after the date hereof, the
Company shall deliver to the Trustee to be held in trust hereunder an amount in
cash or marketable securities or any combination thereof which will be
sufficient to fund the Company's obligations to pay to the Executives benefits
due and payable to them under the Plans.
(b) Contemporaneously with the later payment by the Company pursuant to
Section 2.01(a) hereof, the Company shall deliver to the Trustee a schedule (the
"Payment Schedule") indicating (i) the amounts payable in respect of each
Executive, or providing a formula or instructions acceptable to the Trustee for
determining the amounts so payable, and the time of commencement for, and the
form of, payment of such amounts in respect of the Plans.
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(c) At each September 30, the Company shall recalculate the amount of
assets which would be required to be delivered pursuant to Section 2.01(a) as of
such anniversary date. If the amount so calculated exceeds the fair market value
of the assets then held in Trust, the Company shall promptly (and in no event
later than twenty-five (25) days from such anniversary date) pay to the Trustee
(i) an amount in cash or marketable securities (valued at their fair market
value) or any combination thereof equal to such excess less (ii) the amount, if
any, of interest and other income earned on the Trust Corpus and received by the
Trustee during the year then ended at September 30. Contemporaneously with such
payment, the Company shall deliver to the Trustee a modified Payment Schedule
indicating the amounts payable in respect of each Executive, or providing a
formula or instructions acceptable to the Trustee for determining the amounts so
payable, and the time of commencement for, and the form of, payment of such
amounts.
(d) This Trust shall be irrevocable.
(e) This Trust is intended to be a grantor trust within the meaning of
Section 671 of the Internal Revenue Code of 1986 and is to be construed
accordingly.
SECTION 2.02 Trust Corpus.
(a) As used herein, the term "Trust Corpus" shall mean the amounts and
assets delivered to the Trustee as described in Section 2.01(a) hereof plus all
amounts and assets delivered
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thereafter pursuant to Section 2.01(c) hereof, in whatever form held or invested
as provided herein. The Trust Corpus shall be held, invested and reinvested by
the Trustee in cash, cash equivalents and/or marketable securities only in
accordance with this Section 2.02. The Trustee shall use its good faith efforts
to invest or reinvest from time to time all or such part of the Trust Corpus as
it believes prudent under the circumstances (taking into account, among other
things, anticipated cash requirements for the payment of benefits under the
Plans) in any one or a combination of the following:
(i) cash equivalents; and
(ii) such equity or fixed income securities as are permitted
in accordance with the investment guidelines which are, or
when adopted by the Company shall be, attached hereto as
Schedule B, as the same may be modified at any time and from
time to time by the Company
provided, however, that the Trustee shall not be liable for any failure to
maximize the income earned on that portion of the Trust Corpus as is from time
to time invested or reinvested as set forth above, nor for any loss of income
due to liquidation of any investment which the Trustee, in its sole discretion,
believes necessary to make payments or to reimburse expenses under the terms of
this Trust.
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(b) Except as hereinafter provided, all interest and other income
earned on the investment of the Trust Corpus shall be the property of the
Company and shall not constitute a part of the Trust Corpus. Within twenty (20)
days after the end of each year ending September 30, the Trustee shall notify
the Company of the amount of such interest and other income received by the
Trustee during such year then ended. Such interest and other income received by
the Trustee during each year ended September 30 shall be paid over to the
Company by the Trustee within thirty (30) days after the end of each such year.
The amount of such interest or other income so payable to the Company shall be
reduced to the extent it offsets the excess otherwise required to be paid by the
Company to the Trustee pursuant to Section 2.01(c) hereof, and only the
remainder, if any, shall be paid to the Company.
(c) All losses of income or principal in respect of, and expenses
(including, as provided in Sections 5.01(f) and (g) hereof, any expenses of the
Trustee) charged against, the Trust Corpus shall be for the account of the
Company and the Company shall be obligated to promptly reimburse the Trust
Corpus for any loss in principal amount of, or expense charged against, the
Trust Corpus except to the extent that such amounts have been applied to reduce
amounts payable to the Company pursuant to Section 2.02(b) hereof.
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ARTICLE III
RELEASE OF THE TRUST CORPUS
SECTION 3.01 Deliveries to Executives.
(a) As soon as practicable following the execution of this Agreement,
the Payment Schedule shall be delivered by the Company to each Executive. A
modified Payment Schedule shall be delivered by the Company to each Executive at
each time that a modified Payment Schedule is delivered by the Company to the
Trustee under Section 2.01(c) hereof. Except as otherwise provided herein, the
Trustee shall make payments to the Executives in accordance with the most recent
Payment Schedule.
(b) In the event that an Executive reasonably believes that the Payment
Schedule, including any modified Payment Schedule, does not properly reflect the
amount payable to such Executive or the timing or form of payment from the Trust
Corpus in respect of any of the Plans in which he or she is a participant, such
Executive shall be entitled to deliver to the Trustee written notice (the
"Executive's Notice") setting forth the amount, timing or form of payment the
Executive believes is proper under the relevant terms of the Plan or Plans. The
Executive shall also deliver a copy of the Executive's Notice to the Company
within three (3) business days of the delivery to the Trustee. Unless the
Trustee receives written objection from the Company within ten (10) business
days after receipt by the Trustee of such notice, the Trustee shall make the
payment in accordance with the Executive's Notice.
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In the event the Trustee receives written objection from the Company within such
ten (10) business day period and in the event the Company and Executive cannot
agree on the terms of the Payment Schedule, the dispute shall be resolved in
accordance with Section 6.03 hereof.
(c) In the event that the aggregate amount payable in any calendar
month to the Executives entitled to payments during such month exceeds the Trust
Corpus, the Trustee shall make a pro rata payment to each Executive entitled to
a payment during such month based on the amount so payable to such Executive in
proportion to the aggregate amount so payable to all such Executives.
(d) The Trustee shall be permitted to withhold from any payment due to
an Executive hereunder the amount required by law to be so withheld under
federal, state and local wage withholding requirements or otherwise, and shall
pay over to the appropriate government authority the amounts so withheld.
(e) Except as otherwise provided herein, in the event of any final
determination by the Internal Revenue Service or a court of competent
jurisdiction, which determination is not appealable or the time for appeal or
protest of which has expired, or the receipt by the Trustee of a substantially
unqualified opinion of tax counsel selected by the Trustee, which determination
determines, or which opinion opines, that the Executives or any particular
Executive is subject to federal income taxation on amounts
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held in Trust hereunder prior to the distribution to the Executives or Executive
of such amounts, the Trustee shall, on receipt by the Trustee of notice of such
determination or of such opinion, pay to each Executive the portion of the Trust
Corpus includible in such Executive's federal gross income.
SECTION 3.02 Deliveries to Creditors of the Company. It is the intent
of the parties hereto that the Trust Corpus is and shall remain at all times
subject to the claims of the general creditors of the Company. Accordingly, the
Company shall not create a security interest in the Trust Corpus in favor of the
Executives or any creditor. If the Trustee receives the notice provided for in
Section 3.03 hereof, or otherwise receives actual notice that the Company is
insolvent or bankrupt as defined in Section 3.03 hereof, the Trustee shall make
no further distributions of the Trust Corpus to any of the Executives but shall
deliver the entire amount of the Trust Corpus only as a court of competent
jurisdiction, or duly appointed receiver or other person authorized to act by
such a court, may direct to make the Trust Corpus available to satisfy the
claims of the Company's general creditors. The Trustee shall resume distribution
of the Trust Corpus to the Executives under the terms hereof, upon no less than
thirty (30) days advance notice to the Company, if it determines that the
Company was not, or is no longer, bankrupt or insolvent. The Trustee may rely on
such evidence concerning the
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<PAGE> 9
status or solvency of the Company as may be furnished to the Trustee as will
give the Trustee a reasonable basis for making such determination.
SECTION 3.03 Notification of Bankruptcy or Insolvency. The Company,
through its Board of Directors and Chief Executive Officer, shall notify the
Trustee promptly in writing of the Company's bankruptcy or insolvency. Prior to
receipt of such notice, the Trustee shall have no duty to inquire whether or not
the Company is bankrupt or insolvent. The Company shall be deemed to be bankrupt
or insolvent:
(i) upon the entry of a decree or order by a court having jurisdiction
adjudging the Company bankrupt or insolvent, or approving a petition
seeking reorganization, arrangement, adjustment or composition of the
Company under the Federal Bankruptcy Act, or appointing a receiver (or
other similar official) of the Company, or ordering the winding up or
liquidation of the affairs of the Company;
(ii) upon the institution by the Company of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by the Company to the
institution of bankruptcy or insolvency proceedings
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<PAGE> 10
against it, or the filing by the Company of a petition seeking
reorganization or relief under the Federal Bankruptcy Act, or the consent
by the Company to the filing of any such petition or to the appointment of
a receiver, trustee (or other similar official) of the Company, or the
making by the Company of an assignment for the benefit of creditors, or the
admission by the Company in writing of its inability to pay its debts as
they mature; or
(iii) if the Company is unable to pay its debts as they mature.
ARTICLE IV
TRUSTEE
SECTION 4.01 Trustee.
(a) The duties and responsibilities of the Trustee shall be limited to
those expressly set forth in this Agreement, and no implied covenants or
obligations shall be read into this Trust against the Trustee.
(b) If all or any part of the Trust Corpus is at any time attached,
garnished or levied upon by any court order, or in case the payment, assignment,
transfer, conveyance or delivery of any such property shall be stayed or
enjoined by any court order, or in case any order, judgment or decree shall be
made or entered
-10-
<PAGE> 11
by a court affecting such property or any part thereof, then and in any of such
events the Trustee is authorized, in its sole discretion, to rely upon and
comply with any such order, writ, judgment or decree, and it shall not be liable
to the Company (or any of its subsidiaries) or any Executive by reason of such
compliance even though such order, writ, judgment or decree subsequently may be
reversed, modified, annulled, set aside or vacated.
(c) The Trustee shall maintain such books, records and accounts as may
be necessary for the proper administration of the Trust Corpus, including,
without limitation, as provided in Section 2.01 hereof, and shall render to the
Company, on or prior to each October 31 following the date of this Trust until
the termination of this Trust (and on the date of such termination), an
accounting with respect to the Trust Corpus as of the end of the immediately
preceding September 30 (and as of the date of such termination). Upon the
written request of an Executive or the Company, the Trustee shall deliver to
such Executive or the Company, as the case may be, a copy of such accounting and
a record of any amounts delivered by the Company to the Trustee or paid by the
Trustee with respect to such Executive.
(d) The Trustee shall not be liable for any act taken or omitted to be
taken hereunder if taken or omitted to be taken by it in good faith. The Trustee
shall also be fully protected in relying upon any Payment Schedule, modified
Payment Schedule
-11-
<PAGE> 12
or notice delivered or given hereunder which it in good faith believes to be
genuine and executed and delivered in accordance with this Agreement.
(e) The Trustee may consult with legal counsel to be selected by it,
and the Trustee shall not be liable for any action taken or suffered by it in
accordance with the advice of such counsel.
(f) The Trustee shall be reimbursed by the Company for its reasonable
expenses incurred in connection with the performance of its duties hereunder and
shall be paid reasonable fees for the performance of such duties.
(g) The Company agrees to indemnify and hold harmless the Trustee from
and against any and all damages, losses, claims or expenses as incurred
(including expenses of investigation and fees and disbursements of counsel to
the Trustee and any taxes imposed on the Trust Corpus or income of the Trust)
arising out of or in connection with the performance by the Trustee of its
duties hereunder. Any amount payable to the Trustee under paragraph (f) of this
Section 4.01 or this paragraph (g) shall be paid by the Company promptly upon
demand therefor by the Trustee or, if the Trustee so chooses in its sole
discretion, from the Trust Corpus. In the event that payment is made hereunder
to the Trustee from the Trust Corpus, the Trustee shall promptly notify the
Company in writing of the amount of such payment. The Company agrees that, upon
receipt of such notice, it will deliver to the
-12-
<PAGE> 13
Trustee to be held in the Trust an amount in cash or marketable securities
(valued at their fair market value) or some combination thereof equal to any
payments made from the Trust Corpus to the Trustee pursuant to paragraph (f) of
this Section 4.01 or this paragraph (g). The failure of the Company to transfer
any such amount shall not in any way impair the Trustee's right to
indemnification, reimbursement and payment pursuant to paragraph (f) of this
Section 4.01 or this paragraph (g).
SECTION 4.02 Powers.
The Trustee shall have, in addition to any implied powers and duties
which may be necessary to carry out the provisions of the Trust, and subject to
the Company's express directions pursuant hereto, the following powers and
duties:
(a) To sell, exchange, hypothecate, convey and otherwise transfer any
securities or other property held in the Trust, at public or private sale, for
such prices and on such terms as the Trustee deems suitable, without the
approval of any court and without any obligation upon any person dealing with
the Trustee to see to the application of any money or other property delivered
to it;
(b) To hold uninvested or to deposit in any bank or savings and loan
association such sums of cash as it deems reasonable and in the best interests
of the Trust;
-13-
<PAGE> 14
(c) To exercise any right, including the right to vote, personally or
by general or special proxies or powers of attorney, appurtenant to any
securities or other property held in the Trust;
(d) To exercise or sell any conversion privileges, subscription rights
or other rights or options and to make any payments incidental thereto;
(e) To oppose, consent to, or otherwise participate in, any
reorganization, recapitalization or other changes affecting securities held in
the Trust, to delegate discretionary powers to the extent permitted by law, and
to pay expenses, assessments or charges in connection therewith; to retain any
securities or other property allotted to the Trust in connection with any such
reorganization, recapitalization or other changes; and to generally exercise any
of the powers of an owner with respect to any securities or other property held
in the Trust;
(f) To hold securities or other property in its name as Trustee or in
the name of one or more nominees or in bearer form; provided, the Trust records
shall at all times show that such securities or property are part of the Trust;
(g) To make, execute, acknowledge and deliver any instruments that may
be necessary or appropriate to carry out the powers herein granted;
(h) To consult and employ suitable agents, enrolled actuaries,
auditors, legal counsel or other advisers as deemed
-14-
<PAGE> 15
necessary to assist in the performance of the Trustee's duties, and to pay
reasonable expenses and compensation in connection therewith;
(i) To enforce, abstain from enforcing, settle, modify, compromise,
submit to arbitration or abandon any rights, obligations, claims, debts or
damages due or owing to or from the Trust; to commence, defend and represent the
Trust in all suits and legal and administrative proceedings;
(j) To accept and retain any securities or other property received or
acquired by the Trust, whether or not such property would normally be purchased
or would then be authorized as investments hereunder;
(k) To collect and receive any money or property due to the Trust and
to give full discharge and acquittance therefor;
(1) To prepare such periodic written reports or other accountings as
required hereunder, and to furnish the Company and the Executives with such
information which either may require for tax or other purposes;
(m) To borrow money from any lender in such amounts and upon such terms
and conditions as shall be deemed advisable or proper to carry out the purposes
of the Trust and to pledge any securities or other property for the repayment of
any such loan;
-15-
<PAGE> 16
(n) To register any securities held by it in its own name or in the
name of any custodian of such property or of its nominee, including the nominee
of any system for the central handling of securities, with or without the
addition of words indicating that such securities are held in a fiduciary
capacity and to deposit or arrange for the deposit of any such securities with
such a system;
(o) To transfer assets of the Trust Corpus to a successor trustee as
provided in Section 4.03;
(p) To adopt uniform rules of procedure and regulations necessary for
the proper and efficient administration of the Trust, provided such rules are
not inconsistent with the terms hereof, and to enforce such rules and
regulations; and
(q) To do all acts, though not specifically named herein, which the
Trustee deems advisable to carry out the purpose of this Trust.
SECTION 4.03 Successor Trustee. The Trustee may resign and be
discharged from its duties hereunder at any time by giving notice in writing of
such resignation to the Company and each Executive specifying a date (not less
than thirty (30) days after the giving of such notice) when such resignation
shall take effect. Promptly after such notice, the Company and Executives to
whom at least sixty-five percent (65%) of all amounts covered by the most recent
Payment Schedule are payable shall appoint a successor
-16-
<PAGE> 17
trustee, such trustee to become Trustee hereunder upon the resignation date
specified in such notice. If the Company and such Executive(s) are unable to so
agree upon a successor trustee within thirty (30) days after such notice, the
Trustee shall be entitled, at the expense of the Company, to petition a United
States District Court or any of the courts of the State of Wisconsin having
jurisdiction to appoint its successor. The Trustee shall continue to serve until
its successor accepts the trust and receives delivery of the Trust Corpus. The
Company and such Executive(s) may at any time substitute a new trustee by giving
fifteen (15) days notice thereof to the Trustee then acting. The Trustee and any
successor thereto appointed hereunder shall be a commercial bank or trust
company which is not an affiliate of the Company, but which is a national
banking association or established under the laws of one of the states of the
United States, and which has equity in excess of One Hundred Million Dollars
($100,000,000).
ARTICLE V
TERMINATION, AMENDMENT AND WAIVER
SECTION 5.01 Termination. This Trust shall be terminated upon the
earlier of either of the following events: (i) the exhaustion of the Trust
Corpus; or (ii) the final payment of all amounts payable to all of the
Executives pursuant to all of the Plans. Promptly upon termination of this
Trust, any remaining portion of the Trust Corpus shall be paid to the Company.
-17-
<PAGE> 18
SECTION 5.02 Amendment and Waiver. This Trust may be amended only by an
instrument in writing signed on behalf of the parties hereto, together with the
written consent of Executives to whom at least sixty-five percent (65%) of all
amounts covered by the most recent Payment Schedule are payable; provided that
the Company, in any event, without the approval or consent of any Executive, may
(i) include or exclude any Plan or Executive hereunder pursuant to Section 7.05
hereof and (ii) revise the investment guidelines attached as Exhibit B; and
provided further that this Trust may not be amended to make it revocable or to
alter Section 5.01 hereof. The parties hereto, together with the consent of
Executives to whom at least sixty-five percent (65%) of all amounts covered by
the most recent Payment Schedule are payable, may at any time waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto or an Executive to any such waiver shall be valid if set
forth in an instrument in writing signed on behalf of such party or Executive.
Notwithstanding the foregoing, any such amendment or waiver may be made by
written agreement of the parties hereto without obtaining the consent of the
Executives if such amendment or waiver does not adversely affect the rights of
the Executives hereunder. No such amendment or waiver relating to this Trust
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<PAGE> 19
and adversely affecting the rights of a particular Executive hereunder shall be
effective, unless such executive has agreed in writing to such amendment or
waiver.
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.01 Further Assurances. The Company shall, at any time and
from time to time, upon the reasonable request of the Trustee, execute and
deliver such further instruments and do such further acts as may be necessary or
proper to effectuate the purposes of this Trust.
SECTION 6.02 Certain Provisions Relating to This Trust.
(a) This Trust sets forth the entire understanding of the parties with
respect to the subject matter hereof and supersedes any and all prior
agreements, arrangements and understandings relating thereto. This Trust shall
be binding upon and inure to the benefit of the parties and their respective
successors and legal representatives.
(b) This Trust shall be governed by and construed in accordance with
the laws of the State of Wisconsin, other than and without reference to any
provisions of such laws regarding choice of laws or conflict of laws.
(c) In the event that any provision of this Trust or the application
thereof to any person or circumstances shall be determined by a court of proper
jurisdiction to be invalid or
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<PAGE> 20
unenforceable to any extent, the remainder of this Trust, or the application of
such provision to persons or circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby, and each provision
of this Trust shall be valid and enforced to the fullest extent permitted by
law.
SECTION 6.03 Arbitration. Any dispute between the Executives and the
Company or the Trustee as to the interpretation or application of the provisions
of this Trust and the amount, timing or form of any payment hereunder shall be
determined exclusively by binding arbitration in Milwaukee, Wisconsin in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court of
competent jurisdiction. All fees and expenses of such arbitration shall be paid
by the Trustee and considered an expense of the Trust under Section 4.01(g)
hereof.
SECTION 6.04 Notices. Any notice, report demand or waiver required or
permitted hereunder shall be in writing and shall be given personally or by
prepaid registered or certified mail, return receipt requested, addressed as
follows:
If to the Company: Universal Foods Corporation
433 East Michigan Avenue
Milwaukee, Wisconsin 53202
Attention: Terrence M. O'Reilly
Vice President, Secretary
and General Counsel
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<PAGE> 21
If to the Trustee: Marshall & Ilsley Trust Company
770 North Water Street
Milwaukee, Wisconsin 53202
Attention: James L. Neubauer
Employee Benefits Trust Officer
If to an Executive, to the address of such Executive as listed next to his name
on Schedule C hereto or such other address as the Executive may set forth in a
written notice to the Company and the Trustee or, as to an Executive who is not
included under the Plans as of the date hereof but is included thereafter, the
address set forth in the notice to the Trustee adding such Executive as a
beneficiary.
A notice shall be deemed received upon the date of delivery if given
personally, or, if given by mail, upon the receipt thereof.
SECTION 6.05 Trust Beneficiaries. Each Executive is an intended
beneficiary under this Trust, and shall be entitled to enforce all terms and
provisions hereof with the same force and effect as if such person had been a
party hereto. The Executives shall have no preferred claim on, or any beneficial
ownership in, the Trust Corpus, and all rights created hereunder and the Plans
shall be mere unsecured contractual rights of the Executives against the Company
and the status of the Executives shall only be as general unsecured creditors.
Benefits to the Executives hereunder may not be anticipated, assigned,
transferred,
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<PAGE> 22
pledged or otherwise conveyed. The Company may, in its sole discretion, at any
time and from time to time, by means of a modified Payment Schedule accompanied
by revised Schedules A and C, (i) provide for coverage hereunder of any other
Company plan, agreement or executive and (ii) upon termination of any Plan or
final payment of all amounts thereunder, exclude such Plan and the Executives
who are participants therein from coverage hereunder.
IN WITNESS WHEREOF, the parties have executed this Trust as of the date
first written above.
UNIVERSAL FOODS CORPORATION
By: /s/ D.E. Wilde, Vice President
------------------------------------
MARSHALL & ILSLEY TRUST COMPANY
By: /s/ (Signature illegible on original)
------------------------------------
By: /s/ James L. Neubauer, Trust Officer
------------------------------------
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<PAGE> 23
UNIVERSAL FOODS CORPORATION
TRUST AGREEMENT FOR RABBI TRUST C
---------------------------------
Changes Upon Appointment of Successor Trustee
WHEREAS, Marshall & Ilsley Trust Company has resigned as Trustee of
Universal Foods Corporation Rabbi Trust C under Trust Agreement dated
September 8, 1988; and
WHEREAS, it has been determined to be in the best interests of the
parties to Rabbi Trust C to have Firstar Bank, Milwaukee, N.A. assume
the duties of Trustee for Rabbi Trust C as soon as practicable after
the resignation of the prior trustee to assure that all benefits
payable through the Trust shall continue without interruption.
THEREFORE, it is hereby agreed by the parties to the Trust Agreement
for Rabbi Trust C, pursuant to the next to last sentence of Section
5.02, Amendment and Waiver, of the Trust Agreement, that, effective
--------------------
February 1, 1998:
1. Firstar Bank, Milwaukee, N.A. shall be successor trustee
to Marshall & Ilsley Trust Company.
2. The addresses for Notices to the Company and the Trustee
provided in Section 6.04, Notices, shall be changed to reflect
-------
the actual addresses of the parties from time to time, with
any party providing other parties notice of any change
pursuant to the procedure of Section 6.04.
IN WITNESS WHEREOF, the parties have executed this Changes Upon
Appointment of Successor Trustee as of the 1st day of February, 1998.
UNIVERSAL FOODS CORPORATION FIRSTAR BANK, MILWAUKEE, NA
By: /s/ Kenneth P. Manning BY: /s/ Richard A. Whittow
---------------------- ----------------------
Name: Kenneth P. Manning Name: Richard A. Whittow
------------------ ------------------
Title: Chairman, President and Title: Vice President
----------------------- ---------------
Chief Executive Officer
-----------------------
<PAGE> 1
EXHIBIT 10.2(r)
UNIVERSAL FOODS CORPORATION
MANAGEMENT INCENTIVE PLAN
FOR ELECTED CORPORATE OFFICERS
I. THE PLAN
The name of this Plan is the Universal Foods Corporation Management
Incentive Plan for Elected Corporate Officers. The purpose of this Plan
is to promote the interests of the shareholders and to provide
incentive to those elected officers who can contribute most to the
profitability of the Company. It is separate and distinct from other
Company incentive plans currently in effect.
II. DEFINITIONS
In this Plan, the terms used will have the following definitions:
A. "Board of Directors" means the Board of Directors of Universal
Foods Corporation.
B. "Bonus Award" means an award, either paid currently or paid on
a deferred basis, as the result of the operation of this Plan.
C. "Bonus Provision" means monies available for distribution as
Bonus Awards as the result of the operation of this Plan.
D. "Committee" means the committee provided for in Section III.
E. "Company" means Universal Foods Corporation.
F. "Employee" means any employee regularly employed by Universal
Foods Corporation or any of its subsidiaries and paid on a
salary basis.
G. "Fiscal Year Salary" means base pay earned during the period
October 1 through September 30 each Company operating year
exclusive of any incentive or supplemental payments by the
Company.
H. "Independent Auditors" means with respect to any fiscal year,
the independent public accounts appointed by the Board of
Directors to certify to the Board of Directors the financial
statements of the Company.
<PAGE> 2
MANAGEMENT INCENTIVE PLAN FOR ELECTED CORPORATE OFFICERS
PAGE 2
I. "Operating Income After Taxes" is defined as net earnings, as
shown in the Company's Statement of Consolidated Earnings as
certified by the Company's Independent Auditors, plus the
after-tax costs of interest on long-term and short-term debt
and the Bonus Awards for that fiscal year. This amount shall
be further adjusted for extraordinary items of income or
expense if, in the opinion of the Committee, it is appropriate
to do so.
J. "Plan" means this Management Incentive Plan for Major
Corporate Executives.
K. "Subsidiary" means with respect to any year, any corporation
in which Universal Foods Corporation owns a stock interest of
more than 50%, and the financial results of whose operations
are consolidated with those of the Company in the financial
statements included in the annual report to shareholders for
that year.
III. COMMITTEE
A. The Board of Directors shall appoint a Compensation and
Development Committee composed of at least three
non-management members of the Company's Board of Directors.
This Committee shall be known as the "Committee" and shall
have full power and authority to interpret and administer the
Plan in accordance with the Regulations. No member of the
Committee shall be eligible to participate in the Plan while a
member of the Committee.
B. The Board of Directors may, from time to time, remove members
from the Committee or add members thereto; and vacancies on
the Committee, however caused, shall be filled by action of
the Board of Directors. The Committee shall select one of its
members as Chairman and shall hold its meetings at such times
and places as it may determine. A majority of its members
shall constitute a quorum. All determinations of the Committee
shall be made by a majority of its members. Any decision or
determination reduced to writing and signed by a majority of
the members of the Committee shall be as fully effective as if
it had been made at a meeting of the Committee duly called and
held. The members of the Committee may receive such
compensation for their services as the Board of Directors may
determine.
<PAGE> 3
MANAGEMENT INCENTIVE PLAN FOR ELECTED CORPORATE OFFICERS
PAGE 3
IV. PLAN ADMINISTRATION
The Committee shall have the power to adopt eligibility and other rules
not inconsistent with the provisions of the Plan (hereinafter referred
to as the "Regulations" and attached hereto as "Exhibit A") for the
administration thereof and to alter, amend, or revoke any Regulations
so adopted.
V. PLAN PARTICIPATION
Participation in the Plan shall be in accordance with the Regulations.
A. At the beginning of each fiscal year, the Chairman, President
and Chief Executive Officer shall submit to the Committee a
written list of recommended participants in the Plan for that
year.
B. Not all officers and major executives need to be selected as
participants, and selection as a participant one year does not
automatically ensure selection in future years.
C. At the end of each fiscal year, the Chairman, President and
Chief Executive Officer shall submit to the Committee a
written list of recommendations as to the amount of Bonus
Award each participant in the Plan should receive for that
fiscal year.
D. The Committee's selection of the Employees to whom a Bonus
Award shall be made and its determination of the amount and
method of payment of each such Bonus Award shall be final.
E. This Plan is not a part of the Company's regular compensation
plan nor is it part of the Employee's regular compensation.
VI. BONUS AWARD
The performance measurement upon which the Bonus Award is based is
determined in accordance with the Regulations for each fiscal year.
<PAGE> 4
MANAGEMENT INCENTIVE PLAN FOR ELECTED CORPORATE OFFICERS
PAGE 4
VII. CHANGE OF CONTROL OF COMPANY
In the event of a change of control of the Company in accordance with
an Employee's Severance or Employment Agreement and the Employee's
subsequent termination of employment without cause by the successor
entity, the "Change of Control Benefits" under the Employee's Severance
or Employment Agreement in respect to this Plan shall be received as a
severance payment by the Employee.
VIII. SUCCESSORS AND ASSIGNS
If the Company sells, assigns or transfers all or substantially all of
its business and assets to any person, excluding affiliates of the
Company, or if the Company merges into or consolidates or otherwise
combines with any person which is a continuing or successor entity,
then the Company shall assign all of its right, title and interest in
this Plan as of the date of such event to the person which is either
the acquiring or successor corporation, and such person(s) shall assume
and perform from and after the date of such assignment all of the
terms, conditions and provisions imposed by this Plan upon the Company.
In case of such assignment by the Company and of such assumption and
agreement by the Company and of such person(s), all further rights as
well as all other obligations of the Company under this Agreement
thenceforth shall cease and terminate and thereafter the expression
"the Company" wherever used herein shall be deemed to mean such
person(s).
IX. PLAN AMENDMENTS
The Board of Directors may suspend or discontinue the Plan at anytime.
<PAGE> 5
UNIVERSAL FOODS CORPORATION
MANAGEMENT INCENTIVE PLAN
FOR ELECTED CORPORATE OFFICERS
REGULATIONS F-99
These Regulations apply to the Elected Corporate Officers Management Incentive
Plan for the fiscal year October 1, 1998 through September 30, 1999.
1. Participants will be notified of their selection and be provided with a
copy of the Plan with specific provisions related to their level of
participation.
2. An Employee may be selected as a participant after the beginning of a
fiscal year and, if eligible, may receive, at the discretion of the
Committee, a Bonus Award prorated to reflect duration of Plan
participation.
3. A participant may receive a Bonus Award based on prorated participation
in more than one plan, if eligible to do so, under provisions of the
plan(s).
4. The Bonus Award granted to individual participants shall be based upon
achievement of defined EPS objectives and, in certain cases, division
sales operating profit as defined by the Management Incentive Plan for
Division Presidents, copy attached if applicable.
5. The following schedule shows the maximum Bonus Award, as a percent of
Fiscal Year Salary, that may be granted to various levels of participants
under the Plan:
<TABLE>
<CAPTION>
Division
Title/Level EPS SOP Total
----------- --- --- -----
<S> <C> <C> <C>
Chairman, President & r 85.0% 00.0% 85%
Chief Executive Officer
Vice President-Group Executive
Vice President & Chief Financial Officer
Vice President, Administration 65.0% 0.00% 65%
Divisional Presidents 18.0% 42.0% 60%
Corporate Staff Officers 45.0% 0.00% 45%
</TABLE>
6. The bonus award amount may, at the sole discretion of the Chairman,
President and Chief Executive Officer, be adjusted up or down by five to
twenty percent (5% to 20%) to recognize individual performance.
7. The Bonus Award shall not be paid to participants who resigned or were
discharged for cause prior to their receiving the Bonus Award unless the
Committee decides otherwise.
<PAGE> 6
MANAGEMENT INCENTIVE PLAN FOR ELECTED CORPORATE OFFICERS
PAGE 6
8. If an Employee ceases to be a Plan participant during the fiscal year as
a result of death, disability, or retirement under the Company's ESOP,
the Employee or his/her estate may, at the discretion of the Committee,
receive a pro-rata Bonus Award based upon the number of months spent as a
participant.
In such cases, the Committee may, at its discretion, increase the Bonus
Award up to, but not in excess of, the amount that would have been earned
for a full year of participation
<PAGE> 7
EXHIBIT B - PERFORMANCE MEASURES
ELECTED CORPORATE OFFICERS
UNIVERSAL FOODS CORPORATION
MANAGEMENT INCENTIVE PLAN
FOR ELECTED CORPORATE OFFICERS
PERFORMANCE MEASURES F-99
NAME TITLE
- ---- -----
MAXIMUM BONUS AWARD AS PERCENTAGE
OF FISCAL YEAR SALARY
- -------------------------------------------------------------------------------
DIVISION
EPS SOP TOTAL
--- --- -----
<PAGE> 8
EXHIBIT C - PERFORMANCE MEASURES - SCHEDULE
ELECTED CORPORATE OFFICERS
UNIVERSAL FOODS CORPORATION
MANAGEMENT INCENTIVE PLAN
FOR ELECTED CORPORATE OFFICERS
PERFORMANCE MEASURES-SCHEDULE F-99
GUIDELINES
Upon the determination of the amount of the Bonus Provision for the fiscal year,
an amount may be awarded by the Committee as a Bonus Award to selected Plan
participants according to the following guidelines:
1. Formula Award
The F-99 objective is to attain a Corporate Earnings Per Share
for the fiscal year of $_________ (Target).
<TABLE>
<CAPTION>
EARNINGS PER SHARE (EPS) PERCENTAGE OF
FORMULA AWARD
<S> <C>
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
72%
79%
86%
93%
100%
</TABLE>
2. Special Adjustments
Upon the recommendation of the Chairman, President and Chief
Executive Officer, the Committee may approve special
adjustments to Earnings Per Share necessary to give
consideration to unbudgeted and/or unplanned situations which
developed after finalization of the operating budget. Such
adjustments will be submitted for consideration only if
required to correct major inequities.
<PAGE> 1
EXHIBIT 10.2(s)
UNIVERSAL FOODS CORPORATION
MANAGEMENT INCENTIVE PLAN
FOR DIVISION PRESIDENTS
I. THE PLAN
The name of this Plan is the Universal Foods Corporation Management
Incentive Plan for Division Presidents. The purpose of the Plan is to
promote the interests of the shareholders and to provide incentive to
the Division Presidents who contribute to the profitability of the
Company. It is separate and distinct from other Company incentive plans
currently in effect.
II. DEFINITIONS
In this Plan, the terms used will have the following definitions:
A. "Actual Average Assets Managed" means the twelve-month average
of month-end balances of key assets and liabilities subject to
Division control, as defined in Exhibit B, 2c.
B. "Actual Sales Operating Profit" means profit reported on the
Company's sales operating reports, as adjusted per Exhibit B,
2b.
C. "Board of Directors" means the Board of Directors of Universal
Foods Corporation.
D. "Bonus Award" means an award, either paid currently or paid on
a deferred basis, as the results of the operation of this
Plan.
E. "Business Unit" means a segmented profit center within a
Division.
F. "Committee" means the committee provided for in Section Ill.
G. "Company" means Universal Foods Corporation.
H. "Division" means a business entity designated as such by the
Corporation normally segmented based on product line.
I. "Employee" means any employee regularly employed by Universal
Foods Corporation or any of its subsidiaries, and paid on a
salary basis.
J. "Fiscal Year Salary" means base pay earned during the period
October 1 through September 30 each Company operating year
exclusive of any incentive or supplemental payments by the
Company.
K. "Plan" means this Management Incentive Plan for Division
Presidents.
<PAGE> 2
MANAGEMENT INCENTIVE PLAN FOR DIVISION PRESIDENTS
PAGE 2
L. "Targeted Average Assets Managed" means the Division average
assets managed objective scheduled per Exhibit C.
M. "Targeted Profit" means the Division profit objective
scheduled per Exhibit C.
III. COMMITTEE
A. The Board of Directors shall appoint a Compensation and
Development Committee composed of at least three
non-management members of the Company's Board of Directors.
This Committee shall be known as the "Committee" and shall
have full power and authority to interpret and administer the
Plan in accordance with the Regulations. No member of the
Committee shall be eligible to participate in the Plan while a
member of the Committee.
B. The Board of Directors may, from time to time, remove members
from the Committee or add members thereto; and vacancies on
the Committee, however caused, shall be filled by action of
the Board of Directors. The Committee shall select one of its
members as Chairman and shall hold its meetings at such times
and places as it may determine. A majority of its members
shall constitute a quorum. All determinations of the Committee
shall be made by a majority of its members. Any decision or
determination reduced to writing and signed by a majority of
the members of the Committee shall be as fully effective as if
it had been made at a meeting of the Committee duly called and
held. The members of the Committee may receive such
compensation for their services as the Board of Directors may
determine.
IV. PLAN ADMINISTRATION
The Committee shall have the power to adopt eligibility and other rules
not inconsistent with the provisions of the Plan (hereinafter referred
to as the "Regulations" and attached hereto as "Exhibit A") for the
administration thereof and to alter, amend, or revoke any Regulations
so adopted.
<PAGE> 3
MANAGEMENT INCENTIVE PLAN FOR DIVISION PRESIDENTS
PAGE 3
V. PLAN PARTICIPATION
Participation in the Plan shall be in accordance with the Regulations.
A. At the beginning of each fiscal year, the Chairman, President
and Chief Executive Officer shall submit to the Committee a
written list of recommended participants in the Plan for that
year.
B. Not all division presidents need to be selected as
participants, and selection as a participant one year does not
automatically ensure selection in future years.
C. At the end of each fiscal year the Chairman, President and
Chief Executive Officer shall submit to the Committee a
written list of recommendations as to the amount of Bonus
Award each participant in the Plan should receive for that
fiscal year.
D. The Committee's selection of the Employees to whom a Bonus
Award shall be made and its determination of the amount and
method of payment of each such Bonus Award shall be final.
E. This Plan is not a part of the Company's regular compensation
plan nor is it part of the employee's regular compensation.
VI. BONUS AWARDS
The performance measurement upon which the Bonus Award is based is
determined in accordance with the Regulations for each fiscal year.
VII. BONUS PROVISION
All Bonus Awards under this Plan will be budgeted and funded within the
operations of the specific Division in which participants are employed.
<PAGE> 4
MANAGEMENT INCENTIVE PLAN FOR DIVISION PRESIDENTS
PAGE 4
VIII. CHANGE OF CONTROL OF COMPANY
In the event of a change of control of the Company in accordance with
an Employee's Severance Agreement and the Employee's subsequent
termination of employment without cause by the successor entity, the
"Change of Control Benefits" under the Employee's Severance Agreement
in respect to this Plan shall be received as a severance payment by the
Employee.
IX. SUCCESSORS AND ASSIGNS
If the Company sells, assigns or transfers all or substantially all of
its business and assets to any person, excluding affiliates of the
Company, or if the Company merges into or consolidates or otherwise
combines with any person which is a continuing or successor entity,
then the Company shall assign all of its right, title and interest in
this Plan as of the date of such event to the person which is either
the acquiring or successor corporation, and such person(s) shall assume
and perform from and after the date of such assignment all of the
terms, conditions and provisions imposed by this Plan upon the Company.
In case of such assignment by the Company and of such assumption and
agreement by the Company and of such person(s), all further rights as
well as all other obligations of the Company under this Agreement
thenceforth shall cease and terminate and thereafter the expression
"the Company" wherever used herein shall be deemed to mean such
person(s).
X. PLAN AMENDMENTS
The Board of Directors may suspend or discontinue the Plan at any time.
<PAGE> 5
EXHIBIT A REGULATIONS
DIVISION PRESIDENTS
UNIVERSAL FOODS CORPORATION
MANAGEMENT INCENTIVE PLAN
FOR DIVISION PRESIDENTS
REGULATIONS F-99
These Regulations apply to the Management Incentive Plan for Division Presidents
for the fiscal year October 1, 1998 through September 30, 1999.
1. Participants will be notified of their selection and be provided with a
copy of the Plan with specific provisions related to their Division and
level of participation.
2. An Employee may be selected as a participant after the beginning of a
fiscal year and, if eligible, may, at the discretion of the Committee,
receive a Bonus Award prorated to reflect duration of Plan participation.
3. A participant may receive a Bonus Award based on prorated participation
in more than one plan, if eligible to do so under provisions of the
plan(s).
4. The Bonus Award granted to individual participants shall be based upon
achievement of defined target objectives (Formula).
5. The Bonus Award amount may, at the sole discretion of the Chairman,
President and Chief Executive officer, be adjusted up or down by five to
twenty percent (5% to 20%) to recognize individual performance.
6. The Bonus Award shall not be paid to participants who resigned or were
discharged for cause prior to their receiving the Bonus Award unless the
Committee decides otherwise.
7. If an Employee ceases to be a Plan participant during the fiscal year as
a result of death, disability, or retirement under the Company's ESOP,
the Employee or his/her estate may, at the discretion of the Committee,
receive a pro-rata Bonus Award based upon the number of months spent as a
participant.
In such cases, the Committee may, at its discretion, increase the Bonus
Award up to, but not in excess of, the amount that would have been earned
for a full year of participation.
8. For the purpose of determining the appropriate Plan Award, profit changes
due to fluctuation in currency exchange or internal hedges will not be
considered. International business unit profit performance will be based
upon actual vs. Budget comparisons in local currencies.
9. Upon the recommendations of the Chairman, President and Chief Executive
Officer, the Committee may approve special adjustments to Incentive
Targets necessary to give consideration to unbudgeted and/or unplanned
situations which developed after finalization of the operating budget.
Such adjustments will be submitted for consideration only if required to
correct major inequities.
<PAGE> 6
EXHIBIT B - PERFORMANCE MEASURES
DIVISION PRESIDENTS
UNIVERSAL FOODS CORPORATION
MANAGEMENT INCENTIVE PLAN
FOR DIVISION PRESIDENTS
PERFORMANCE MEASURES F-99
NAME TITLE/DIVISION
- ---- --------------
MAXIMUM BONUS AWARD AS PERCENTAGE
OF FISCAL YEAR SALARY
---------------------------------
FORMULA TOTAL
------- -----
I. The method by which Formula Bonus Awards will be earned has been
designed to encourage the following:
A. The setting of realistic operating budgets and performance
thereto.
B. The improvement of return on investment through maximization
of profits and careful utilization of corporate assets.
II. The Formula for Bonus Awards is:
A. Participants will receive a formula portion of their Bonus
Award in accordance with the attached table.
B. Actual Sales Operating Profit for the Division is the profit
reported on the Company's sales operating reports adjusted by
adding back any interest expense, foreign taxes, or goodwill
amortization which had been charged against the reported
profit.
C. Actual Average Assets Managed will be the twelve-month average
of month-end balances of key assets and liabilities subject to
Division control consisting of accounts receivable,
inventories, accounts payable, accrued expenses and any other
assets or liabilities specifically identifiable with a
Division and so specified prior to the beginning of the fiscal
year (such as advances to suppliers, deferred farming costs,
etc.).
D. If the Actual Assets Managed for the Division during the
fiscal year exceed the Targeted Assets Managed, the increase
will be multiplied by 25% and added to the Targeted Profit as
a charge for the use of additional capital.
If the Actual Average Assets Managed for the Division during
the fiscal year are less than the Targeted Average Assets
Managed, the reduction will be multiplied by 25% and
subtracted from the Targeted Profit as a credit for the
reduction in capital utilized.
<PAGE> 7
EXHIBIT C - PERFORMANCE MEASURES-SCHEDULE
DIVISION PRESIDENTS
UNIVERSAL FOODS CORPORATION
MANAGEMENT INCENTIVE PLAN
FOR DIVISION PRESIDENTS
PERFORMANCE MEASURES-SCHEDULE F-99
Division Name
ACTUAL SALES OPERATING PERCENTAGE OF
PROFIT AS A PERCENTAGE OF FORMULA
TARGETED PROFIT AWARD EARNED
Targeted Profit $
Targeted Average Assets Managed $
<PAGE> 8
F-99 MANAGEMENT INCENTIVE PLAN
REQUEST FOR JANUARY, 2000 PAYMENT
For the fiscal year ending September 30, 1999, the Company plans to date and
distribute all incentive compensation checks on or before December 15, 1999. If
you prefer to have your payment deferred until January, 2000, please complete
the attached form and return it to Richard Carney no later than December 31,
1998.
- --------------------------------------------------------------------------------
TO: RICHARD CARNEY
VICE PRESIDENT, HUMAN RESOURCES
UNIVERSAL FOODS CORPORATION
433 E. Michigan Street, Milwaukee, WI 53202
FROM:
DATE: ____________________, 1998
RE: COMPENSATION PAYMENT DEFERRAL REQUEST
I request and agree that my incentive compensation check for the year ending
September 30, 1999 be dated and distributed in January, 2000.
X __________________________________
(Signature)
<PAGE> 1
EXHIBIT 10.2(t)
- --------------------------------------------------------------------------------
UNIVERSAL FOODS CORPORATION
MANAGEMENT INCENTIVE PLAN
FOR CORPORATE MANAGEMENT
- --------------------------------------------------------------------------------
I. THE PLAN
The name of this Plan is the Universal Foods Corporation Management
Incentive Plan for Corporate Management. The purpose of this Plan is to
promote the interests of the shareholders and to provide incentive to
those corporate management employees who can contribute most to the
profitability of the Company. It is separate and distinct from other
Company incentive plans currently in effect.
II. DEFINITIONS
In this Plan, the terms used will have the following definitions:
A. "Board of Directors" means the Board of Directors of Universal
Foods Corporation.
B. "Bonus Award" means an award, either paid currently or paid on a
deferred basis, as the result of the operation of this Plan.
C. "Bonus Provision" means monies available for distribution as a
Bonus Award as the result of the operation of this Plan.
D. "Company" means Universal Foods Corporation.
E. "Employee" means any employee regularly employed by Universal
Foods Corporation, and paid on a salary basis.
F. "Fiscal Year Salary" means base pay earned during the period
October 1 through September 30 each Company operating year
exclusive of any incentive or supplemental payments by the
Company.
G. "Independent Auditors" means with respect to any fiscal year, the
independent public accountants appointed by the Board of Directors
to certify to the Board of Directors the financial statements of
the Company.
H. "Earnings per share" is defined as net basis earnings per share,
as shown in the Company's Statement of Consolidated Earnings as
certified by the Company's Independent Auditors. Earnings per
share shall be further adjusted for extraordinary items of income
or expense if, in the opinion of the Chairman and the President
and Chief Executive Officer, it is appropriate to do so.
I. "Plan" means this Management Incentive Plan for Corporate
Management.
<PAGE> 2
MANAGEMENT INCENTIVE PLAN FOR CORPORATE MANAGEMENT
PAGE 2
J. "Subsidiary" means with respect to any year, any corporation in
which Universal Foods Corporation owns a stock interest of more
than 50%, and the financial results of whose operations are
consolidated with those of the Company in the financial statements
included in the annual report to shareholders for that year.
III. PLAN ADMINISTRATION
The Board of Directors of Universal Foods Corporation has delegated to
the Chairman and Chief Executive Officer the authority to adopt
eligibility and other rules not inconsistent with the provisions of the
Plan (hereinafter referred to as the "Regulations" and attached hereto
as "Exhibit A") for the administration thereof and to alter, amend, or
revoke any Regulations so adopted.
IV. PLAN PARTICIPATION
A. At the beginning of the fiscal year, the Chairman and Chief
Executive Officer shall determine who should participate in the
Plan for that fiscal year.
B. Not all management employees need be selected as participants, and
selection as a participant one year does not automatically ensure
selection in future years, if such Plans should be implemented.
C. At the end of each fiscal year, the Chairman and Chief Executive
Officer shall determine the amount of Bonus Award each participant
in the Plan should receive for that fiscal year.
D. The Chairman and Chief Executive Officer's selection of the
Employees to whom a Bonus Award shall be made and its
determination of the amount and method of payment of each such
Bonus Award shall be final.
E. This Plan is not a part of the Company's regular compensation plan
nor is it part of the Employee's regular compensation.
V. BONUS AWARDS
The performance measurement upon which the Bonus Award is based is
determined in accordance with the Regulations for each fiscal year.
VI. SUCCESSORS AND ASSIGNS
If the Company sells, assigns or transfers all or substantially all of
its business and assets to any person, excluding affiliates of the
Company, or if the Company merges into or consolidates or otherwise
combines with any person which is a continuing or successor entity,
then the Company shall assign all of its right, title and interest in
this Plan as of the date of such event to the person which is either
the acquiring or
<PAGE> 3
MANAGEMENT INCENTIVE PLAN FOR CORPORATE MANAGEMENT
PAGE 3
successor corporation, and such person(s) shall assume and perform from
and after the date of such assignment all of the terms, conditions and
provisions imposed by this Plan upon the Company.
In case of such assignment by the Company and of such assumption and
agreement by the Company and of such person(s), all further rights as
well as all other obligations of the Company under this Agreement
thenceforth shall cease and terminate and thereafter the expression
"the Company" wherever used herein shall be deemed to mean such
person(s).
VII. PLAN AMENDMENTS
The Chairman and Chief Executive Officer may suspend or discontinue
the Plan at anytime.
<PAGE> 4
EXHIBIT A - REGULATIONS
CORPORATE MANAGEMENT
- --------------------------------------------------------------------------------
UNIVERSAL FOODS CORPORATION
MANAGEMENT INCENTIVE PLAN
FOR CORPORATE MANAGEMENT
REGULATIONS F-99
- --------------------------------------------------------------------------------
These Regulations apply to the Corporate Management Incentive Plan for the
fiscal year October 1, 1998 through September 30, 1999.
1. Participants will be notified of their selection and be provided with a
copy of the Plan with specific provisions related to their level of
participation.
2. An Employee may be selected as a participant after the beginning of a
fiscal year and, if eligible, may receive a Bonus Award prorated to
reflect duration of Plan participation.
3. A participant may receive a Bonus Award based on prorated participation
in more than one plan if eligible to do so under provisions of the
plan(s).
4. The Bonus Award granted to individual participants shall be based upon
achievement of defined EPS objectives.
5. The bonus award amount may, at the decision of the Chairman and Chief
Executive Officer, be adjusted up or down by five to twenty percent (5%
to 20%) to recognize individual performance.
6. If an Employee ceases to be a Plan participant during the fiscal year,
but remains in the Company's service, the Employee may, at the
discretion of the Chairman and Chief Executive Officer, receive a
pro-rata Bonus Award based upon the number of months spent as a
participant.
7. The Bonus Award shall not be paid to participants who resigned or were
discharged for cause prior to the completion of the fiscal year of the
Plan unless the Chairman and Chief Executive Officer decides otherwise.
8. If an Employee ceases to be a Plan participant during the fiscal year
as a result of death, disability, or retirement under the Company's
ESOP, the Employee or his/her estate may, at the discretion of the
Chairman and Chief Executive Officer, receive a pro-rata Bonus Award
based upon the number of months spent as a participant.
In such cases, the Chairman and Chief Executive Officer may increase
the Bonus Award up to, but not in excess of, the amount that would have
been earned for a full year of participation.
<PAGE> 5
EXHIBIT B - PERFORMANCE MEASURES
CORPORATE MANAGEMENT
- --------------------------------------------------------------------------------
UNIVERSAL FOODS CORPORATION
MANAGEMENT INCENTIVE PLAN
FOR CORPORATE MANAGEMENT
PERFORMANCE MEASURES F-99
- --------------------------------------------------------------------------------
NAME TITLE
---- -----
"PARTICIPANT_NAME" "TITLE"/"BUSINESS_UNIT"
MAXIMUM BONUS AWARD AS PERCENTAGE
OF FISCAL YEAR SALARY
-----------------------------------------------
<PAGE> 6
F-99 MANAGEMENT INCENTIVE PLAN
REQUEST FOR JANUARY 2000 PAYMENT
For the fiscal year ending September 30, 1999, the Company plans to date and
distribute all incentive compensation checks on or before December 15, 1999. If
you prefer to have your payment deferred until January 2000, please complete the
attached form and return it to Richard Carney no later than December 31, 1998.
- --------------------------------------------------------------------------------
TO: RICHARD CARNEY
VICE PRESIDENT, HUMAN RESOURCES
UNIVERSAL FOOD CORPORATION
433 E. Michigan Street, Milwaukee, WI 53202
FROM:
DATE: ____________________, 1998
RE: COMPENSATION PAYMENT DEFERRAL REQUEST
I request and agree that my incentive compensation check for the year ending
September 30, 1999 be dated and distributed in January 2000.
X
- ------------------------------------
Signature
<PAGE> 1
EXHIBIT 10.2(u)
- --------------------------------------------------------------------------------
UNIVERSAL FOODS CORPORATION
MANAGEMENT INCENTIVE PLAN
FOR DIVISION MANAGEMENT
- --------------------------------------------------------------------------------
I. THE PLAN
The name of this Plan is the Universal Foods Corporation Management
Incentive Plan for Division Management. The purpose of the Plan is to
promote the interests of the shareholders and to provide incentive to
those Division management employees who can contribute most to the
profitability of the Company. It is separate and distinct from other
Company incentive plans currently in effect.
II. DEFINITIONS
In this Plan, the terms used will have the following definitions:
A. "Actual Average Assets Managed" means the twelve-month average of
month-end balances of key assets and liabilities subject to
Division, Business Unit or Unit control, as defined in Exhibit
B,2b) and c).
B. "Actual Sales Operating Profit" means profit reported on the
Company's sales operating reports, as defined in Exhibit B,2a) and
c).
C. "Bonus Award" means an award, either paid currently or paid on a
deferred basis, as the result of the operation of this Plan.
D. "Business Unit" means a segmented profit center within a Division.
E. "Unit" means a segmented profit center within a Business Unit.
F. "Company" means Universal Foods Corporation.
G. "Division" means a business entity designated as such by the
Corporation normally segmented based on product line.
H. "Employee" means any employee regularly employed by Universal
Foods Corporation or any of its subsidiaries and paid on a salary
basis.
I. "Fiscal Year Salary" means base pay earned during the period
October 1 through September 30 of each Company operating year
exclusive of any incentive or supplemental payments by the
Company.
J. "Plan" means this Management Incentive Plan for Division
Management.
K. "Targeted Average Assets Managed" means the Division, Business
Unit or Unit Average Assets Managed scheduled per Exhibit B,2a.
<PAGE> 2
MANAGEMENT INCENTIVE PLAN FOR DIVISION MANAGEMENT
PAGE 2
L. "Targeted Profit" means the Division, Business Unit or Unit profit
objective scheduled per Exhibit B,2a.
III. PLAN ADMINISTRATION
The Board of Directors of Universal Foods Corporation has delegated to
the Chairman and Chief Executive Officer the authority to adopt
eligibility and other rules not inconsistent with the provisions of the
Plan (hereinafter referred to as the "Regulations" and attached hereto
as "Exhibit A") for the administration thereof and to alter, amend, or
revoke any Regulations so adopted.
IV. PLAN PARTICIPATION
Participation in the Plan shall be in accordance with the Regulations.
A. At the beginning of the fiscal year, the Chairman and Chief
Executive Officer shall determine who should participate in the
Plan for that fiscal year, based on recommendations from the
Division President or other Corporate Officer.
B. Not all key Division or Business Unit employees need be selected
as participants, and selection as a participant does not ensure
selection in future plans, if such plans should be implemented.
C. At the end of the fiscal year, the Division President shall
recommend to the Chairman and Chief Executive Officer the amount
of the Bonus Award each participant in the Plan should receive for
that fiscal year.
D. The Chairman and Chief Executive Officer's selection of the
Employees to whom Bonus Awards shall be made and his/her
determination of the amounts and methods of payment shall be
final.
E. This Plan is not a part of the Company's regular compensation plan
nor is it part of the employee's regular compensation.
V. BONUS AWARDS
The performance measurement upon which the Bonus Award is based is
determined in accordance with the Regulations for each fiscal year.
VI. BONUS PROVISION
All Bonus Awards under this Plan will be budgeted and funded within the
operations of the specific Division/Business Unit/Unit in which
participants are employed.
<PAGE> 3
MANAGEMENT INCENTIVE PLAN FOR DIVISION MANAGEMENT
PAGE 3
VII. SUCCESSORS AND ASSIGNS
If the Company sells, assigns or transfers all or substantially all of
its business and assets to any person, excluding affiliates of the
Company, or if the Company merges into or consolidates or otherwise
combines with any person which is a continuing or successor entity,
then the Company shall assign all of its right, title and interest in
this Plan as of the date of such event to the person which is either
the acquiring or successor corporation, and such person(s) shall assume
and perform from and after the date of such assignment all of the
terms, conditions and provisions imposed by this Plan upon the Company.
In case of such assignment by the Company and of such assumption and
agreement by the Company and of such person(s), all further rights as
well as all other obligations of the Company under this Agreement
thenceforth shall cease and terminate and thereafter the expression
"the Company" whenever used herein shall be deemed to mean such
person(s).
VIII. MISCELLANEOUS
A. All expenses incurred in interpreting and administering the Plan
shall be charged against the Division.
IX. PLAN AMENDMENTS
The Chairman and Chief Executive Office may suspend or discontinue the
Plan at anytime.
<PAGE> 4
EXHIBIT A - REGULATIONS
DIVISION MANAGEMENT
- --------------------------------------------------------------------------------
UNIVERSAL FOODS CORPORATION
MANAGEMENT INCENTIVE PLAN
FOR DIVISION MANAGEMENT
REGULATIONS F-99
- --------------------------------------------------------------------------------
These Regulations apply to the Division Management Incentive Plan for the fiscal
year October 1, 1998 through September 30, 1999.
1. Participants will be notified of their selection and be provided
with a copy of the Plan with specific provisions related to their
Division, Business Unit or Unit and level of participation.
2. An Employee may be selected as a participant after the beginning
of a fiscal year and, if eligible, may receive a Bonus Award
prorated to reflect duration of Plan participation.
3. A participant may receive a Bonus Award based on prorated
participation in more than one Division, Business Unit or Unit
activity, if eligible to do so under provisions of the plan(s)
4. The Bonus Award granted to individual participants shall be based
upon achievement of defined target objectives (Actual Sales
Operating Profit).
5. The Bonus Award amount may, on the recommendation of the Chairman
and Chief Executive Officer and approval of the Committee, be
adjusted up or down by five to twenty percent (5% to 20%) to
recognize individual performance.
6. If an Employee ceases to be a Plan participant during the fiscal
year, but remains in the Company's service, the Employee may, at
the discretion of the Chairman and Chief Executive Officer,
receive a pro-rata Bonus Award based upon the number of months
spent as a participant.
7. The Bonus Award shall not be paid to participants who resigned or
were discharged for cause prior to their receiving the Bonus Award
unless the Chairman and Chief Executive Officer decides otherwise.
8. If an Employee ceases to be a Plan participant during the fiscal
year as a result of death, disability, or retirement under the
Company's ESOP, the Employee or his/her estate may, at the
discretion of the Chairman and Chief Executive Officer, receive a
pro-rata Bonus Award based upon the number of months spent as a
participant.
In such cases, the Chairman and Chief Executive Officer may
increase the Bonus Award up to, but not in excess of, the amount
that would have been earned for a full year of participation.
9. For the purpose of determining the appropriate Plan Award, profit
changes due to fluctuation in currency exchange or internal hedges
will not be considered. International business unit profit
performance will be based upon actual vs. budget comparisons in
local currencies.
<PAGE> 5
EXHIBIT A - REGULATIONS
DIVISION MANAGEMENT
PAGE 2
10. Upon the recommendations of the Senior Corporate Officers, the
Chairman and Chief Executive Officer may approve special
adjustments to Incentive Targets necessary to give consideration
to unbudgeted and/or unplanned situations which developed after
finalization of the operating budget. Such adjustments will be
submitted for consideration only if required to correct major
inequities.
<PAGE> 6
EXHIBIT B - PERFORMANCE MEASURES
DIVISION MANAGEMENT
- --------------------------------------------------------------------------------
UNIVERSAL FOODS CORPORATION
MANAGEMENT INCENTIVE PLAN
FOR DIVISION MANAGEMENT
PERFORMANCE MEASURES F-99
- --------------------------------------------------------------------------------
------------------------------------------------------
MAXIMUM BONUS AWARD AS
PARTICIPANT NAME: PERCENTAGE OF FISCAL YEAR
SALARY:
TITLE:
1. The method by which the Bonus Awards will be earned has been designed to
encourage the following:
a) The setting of realistic operating budgets and performance thereto.
b) The improvement of return on investment through maximization of
profits and careful utilization of corporate assets.
2. Participants will receive their Bonus Award in accordance with the
applicable Division, Business Unit or Unit Schedules (Exhibit C) for Sales
Operating Profit or Sales Margin.
a) Actual Sales Operating Profit for the Division is the profit reported
on the Company's sales operating reports adjusted by adding back any
interest expense, foreign taxes, or goodwill amortization which had
been charged against the reported profit.
b) Actual Average Assets Managed is the twelve-month average of
month-end balances of key assets and liabilities subject to Division
control consisting of accounts receivable, inventories, accounts
payable, accrued expenses and any other assets or liabilities
specifically identifiable with a Division and so specified prior to
the beginning of the fiscal year (such as advances to suppliers,
deferred farming costs, etc.).
c) Adjustments
If the Actual Assets Managed for the Division during the fiscal year
exceed the Targeted Assets Managed, the increase will be multiplied
by 25% and added to the Targeted Profit as a charge for the use of
additional capital.
If the Actual Average Assets Managed for the Division during the
fiscal year are less than the Targeted Average Assets Managed, the
reduction will be multiplied by 25% and subtracted from the Targeted
Profit as a credit for the reduction in capital utilized.
<PAGE> 7
EXHIBIT C
- --------------------------------------------------------------------------------
UNIVERSAL FOODS CORPORATION
MANAGEMENT INCENTIVE PLAN FOR DIVISION MANAGEMENT
PERFORMANCE MEASURES-SCHEDULE F-99
- --------------------------------------------------------------------------------
PARTICIPANT NAME TITLE
--------------------------------------------------------------------------
Actual Sales Operating Profit | % of Formula Award Earned
as a % of Targeted Profit |
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Targeted Sales Operating Profit $
Targeted Average Assets Managed $
<PAGE> 8
F-99 MANAGEMENT INCENTIVE PLAN
REQUEST FOR JANUARY, 2000 PAYMENT
For the fiscal year ending September 30, 1999, the Company plans to date and
distribute all incentive compensation checks on or before December 15, 1999. If
you prefer to have your payment deferred until January, 2000, please complete
the attached form and return it to Richard Carney no later than December 31,
1998.
- --------------------------------------------------------------------------------
TO: RICHARD CARNEY
VICE PRESIDENT, HUMAN RESOURCES
UNIVERSAL FOODS CORPORATION
433 E. Michigan Street, Milwaukee, WI 53202
FROM:
DATE: , 1998
--------------------------
RE: COMPENSATION PAYMENT DEFERRAL REQUEST
I request and agree that my incentive compensation check for the year ending
September 30, 1999 be dated and distributed in January, 2000.
X
-----------------------------
(Signature)
<PAGE> 1
EXHIBIT 10.2(v)
UNIVERSAL FOODS CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
SECTION 1. PURPOSE
Universal Foods Corporation (the "Company") hereby establishes a
non-qualified supplemental executive retirement plan for certain key
employees, as designated and described herein, which shall be known as
the Universal Foods Corporation SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(the "Plan").
The purpose of the Plan is to enable the Company to attract, retain,
and motivate certain key employees and to provide retirement and
survivor benefits for the employees, their surviving spouses and
designated beneficiaries.
SECTION 2. DEFINITIONS
For purposes of this Plan, certain words or phrases used herein will
have the following meanings:
A. "Board of Directors" means the Board of Directors of Universal
Foods Corporation.
B. "Disability" means permanent long-term disability for which
the Executive would be entitled to long-term disability
benefits under the Company's Disability Income Plan.
Determination of such Disability applied to this Plan shall be
made at the sole discretion of the Company and the decision of
the Company shall be final. During periods of determined
Disability, the
<PAGE> 2
Executive shall be considered to be in the full employ of the
Company for the purpose of this Plan.
C. "Executive" means a selected employee of the Company
designated to participate in the Plan by the Chief Executive
Officer.
D. "Fiscal Year" means the year beginning October 1 and ending
September 30.
E. "Company" means Universal Foods Corporation and all of its
wholly-owned subsidiaries.
F. "Normal Retirement Date" means the date the Executive attains
age 62; or such date after the Executive attains age 55 and
his or her age and years of continuous service with the
Company equals or exceeds 85.
G. "Early Retirement Date" means the date the Executive attains
age 55 and has completed 10 or more years of continuous
service with the Company.
SECTION 3. DESIGNATION OF EMPLOYEE PARTICIPATING IN PLAN
The Chief Executive officer shall have the sole discretion, from time
to time, to designate which employees shall participate in the Plan.
Such a designated employee shall be called "Executive."
If an Executive declines participation in the Plan at the time of the
offer from the Company, a Waiver of Participation form must be signed
(Exhibit A attached hereto and incorporated herein by reference).
2
<PAGE> 3
SECTION 4. EXECUTIVE CONTRIBUTION
A. PRE APRIL 1, 1991
Executives who have participated in the Company's Management
Split Dollar Life Insurance Plan prior to April 1, 1991 will,
in each of the first seven years of participation, contribute
an amount, based on IRS tables, equal to the term insurance
premium applicable to a life insurance benefit of 3 times the
Executive's base salary in effect for that Fiscal Year.
B. POST APRIL 1, 1991
Executives beginning participation on or after April 1, 1991
will, in each year until death or retirement, whichever occurs
earlier, contribute an amount, based on IRS tables, equal to
the term insurance premium applicable to a life insurance
benefit of 3 times the Executive's base salary in effect on
the date of acceptance into the Plan.
SECTION 5. BENEFITS
Participating Executives, their spouses and designated beneficiaries
shall be entitled to benefits under this Plan if the Executive is
employed by the Company at time of death or until his or her Early
Retirement Date, whichever occurs earlier.
3
<PAGE> 4
Survivor Income Benefit
The Executive will have a survivor income benefit payable to his or her
designated beneficiary for a guaranteed 20 year period. The benefit
will equal 25% of the Executive's base salary at the time of death or
the average base salary during the 60 highest paid consecutive calendar
months of the last 120 calendar months immediately prior to death,
whichever is greater.
Retirement Benefit
At retirement, the Executive may elect to continue in effect a survivor
income benefit payable to his or her designated beneficiary for a
guaranteed 20 year period. The benefit will equal 25% of the
Executive's base salary at the time of retirement or the average base
salary during the 60 highest paid consecutive calendar months of the
last 120 calendar months immediately prior to retirement, whichever is
greater.
(or)
At retirement, the Executive may elect to receive a supplemental
retirement income benefit payable to the Executive or his or her
designated beneficiary for a guaranteed 20 year period. The benefit
will be 25% of the Executive's base salary at the time of retirement or
the average base salary during the 60 highest paid consecutive calendar
months of the last 120 calendar months immediately prior to retirement,
whichever is greater.
(or)
At retirement, the Executive may elect to receive an actuarially
equivalent lifetime supplemental retirement income benefit in a joint
and survivor form. The amount payable under this election will be
reduced to cover the cost for providing the benefit over the life of
the Executive and the spouse. The benefit for a surviving
4
<PAGE> 5
spouse will be 50% of the benefit for the Executive. The minimum
benefit to be paid to the Executive, spouse, or designated beneficiary
will be equal to the guaranteed 20 year payout.
The actuarial reductions, from the guaranteed 20 year amount, to obtain
the 50% joint and survivor benefit are:
%
Age Reduction
--- ---------
55 8
56 7
57 6
58 5
59 4
60 3
61 2
62 0
Early Retirement Benefit
The retirement benefit will be reduced 3% for each full year Early
Retirement precedes the Executive's Normal Retirement Date.
Limitation on Benefits
All benefits will be limited to the specified percentage of base
salary.
SECTION 6. MANNER OF PAYING BENEFITS
Within 60 days following the death or retirement of the Executive, an
initial benefit payment shall be made as defined under Section 5. All
subsequent benefits under this Plan shall accrue on the first day of
each succeeding month after death or retirement and shall be made on or
about such day during the period for which benefits are payable.
5
<PAGE> 6
SECTION 7. BENEFICIARY DESIGNATION
The benefits payable by the Company under Section 5 shall be paid as
they become due to the beneficiary or beneficiaries as designated by
the Executive in writing on the Beneficiary Designation form (Exhibit
B attached hereto and incorporated herein by reference). The Executive
shall have the right to change or amend such beneficiary designation
from time to time (without the consent of any prior beneficiary) by a
writing similarly filed. If the Executive fails to make such
beneficiary designation or if no beneficiary so designated survives
the Executive, payments shall be made as they become due to the duly
appointed personal representative of the estate of the Executive.
SECTION 8. TERMINATION OF EMPLOYMENT
If an Executive's employment with the Company is terminated prior to
the Executive's Early Retirement Date, either by the Company or by the
Executive, with or without cause, no further amounts shall be paid
under any provision of this Plan. Disability or death shall not be
deemed a termination of employment for purposes of this Section.
SECTION 9. DISABILITY
If the Executive becomes disabled under the Plan, Executive
contributions will be waived until the Executive returns to full
employment. Retirement benefits will not be payable under this Plan if
the Executive is receiving benefits under the Company's Disability
Income Plan.
6
<PAGE> 7
SECTION 10. TITLE TO LIFE INSURANCE
If the Company elects to purchase a life insurance contract to provide
the Company with funds to make payments hereunder, the Company shall at
all times be the sole owner of and beneficiary under such contract, and
shall have the unrestricted right to use all amounts and to exercise
all options and privileges thereunder without knowledge or consent of
the Executive, his or her designated beneficiary or any third party. It
being expressly agreed that neither the Executive, designated
beneficiary, nor any third party shall have any right, title or
interest whatsoever in or to any such contract.
SECTION 11. PAYMENTS ARE NOT SECURED
The Executive, his or her designated beneficiary or any third party
having or claiming a right to payments hereunder or to any interest in
this Plan shall rely solely on the unsecured promise of the Company and
nothing herein shall be construed to give the Executive, his or her
designated beneficiary or any third party any right, title, interest or
claim in or to any specific asset, fund, reserve, account or property
of any kind whatsoever owned by the Company or in which it may have any
right, title or interest now or in the future. The Executive shall have
the right to enforce his or her claim against the Company in the same
manner as any unsecured creditor.
SECTION 12. NON-ASSIGNABILITY OF BENEFITS
Except as permitted by Section 7, no rights of any kind under this Plan
shall without the written consent of the Company be transferable or
assignable by the Executive or any designated beneficiary or be subject
to alienation,
7
<PAGE> 8
encumbrance, garnishment, attachment, execution, levy or seizure by
legal process of any kind, voluntary or involuntary.
SECTION 13. AMENDMENT
This Plan may be amended at any time or from time to time by the
Company. Any amendment shall not reduce the benefit of any
participating Executive, or any party receiving benefits under this
Plan without a consent in writing by the affected Executive or party.
The failure of either the Company or any Executive to enforce any of
the provisions hereof shall not be deemed a waiver thereof. No
provision of this Plan shall be deemed to have been waived or modified
unless such waiver or modification shall be in writing and signed by
the appropriate party. The Company reserves the right to terminate the
Plan at any time. The termination of the Plan shall not affect the
benefits of any Executive, Executive's spouse or designated beneficiary
covered by the Plan, prior to termination.
SECTION 14. CHANGE OF CONTROL OF THE COMPANY
A. Notwithstanding any other provision of this Plan, including
specifically Sections 5 and 8 above, in the event of a change of
control of the Company, the Company shall continue to provide
the survivor income and retirement income benefits described in
Section 5 above for Executives participating in the Plan when
such change of control occurs. Further, any Executive whose
employment terminates for any reason after such change of
control occurs shall be eligible for the early retirement
benefits regardless of his or her age
8
<PAGE> 9
or period of continuous service as of the date of his or her
termination of employment, provided, however, the supplemental
retirement income benefit, if elected, will not commence until
the Executive attains age 55.
B. For purposes of subsection (A) of this section, the term
"change of control of the Company" means:
(i) The acquisition of more than 30% of the outstanding
shares of voting stock of the Company in whole or in
part by any person or group of persons acting in
concert, excluding affiliates of the Company, by
means of an offer made publicly to the holders of all
or substantially all of the outstanding shares of any
one or more classes of the voting stock of the
Company to acquire such shares for cash, securities,
other property or any combination thereof; or
(ii) the sale, assignment or transfer by the Company of
all or substantially all of its business and assets
to any person, excluding affiliates of the Company;
or
(iii) a merger, consolidation or other business combination
by the Company into or with any person in which
neither the Company nor any subsidiary
thereof is the continuing or successor corporation;
or
(iv) as a result of, or in connection with, any cash
tender or exchange offer, merger or other business
combination, sale of assets or contested election or
any combination of the foregoing transactions, the
persons who are directors of the Company before any
of the
9
<PAGE> 10
foregoing transactions shall cease to
constitute a majority of the Board of Directors of
the Company or any successor to the Company.
SECTION 15. SUCCESSORS AND ASSIGNS
If the Company sells, assigns or transfers all or substantially all of
its business and assets to any party, excluding affiliates of the
Company, or if the Company merges into or consolidates or otherwise
combines with any party which is a continuing or successor entity, then
the Company shall assign all of its right, title and interest in this
Plan as of the date of such event to the party which is either the
acquiring or successor corporation, and such party shall assume and
perform from and after the date of such assignment all of the terms,
conditions and provisions imposed under this Plan by the Company. In
case of such assignment by the Company and such assumption and
agreement by such party all further rights as well as all other
obligations of the Company under this Plan thenceforth shall cease and
terminate and thereafter the expression "the Company" wherever used
herein shall be deemed to mean such party.
SECTION 16. NON-GUARANTEE OF EMPLOYMENT
This Plan shall not be construed as giving the Executive the right to
be retained as an employee of the Company for any period.
SECTION 17. VESTING
There is no vesting under the Plan.
10
<PAGE> 11
SECTION 18. MISCELLANEOUS
The Plan supersedes and modifies in all respects the Company's
Management Split Dollar Life Insurance Plan, as amended through
November 1, 1988.
SECTION 19. NOTICES
All notices, requests, demands and other communications under this Plan
shall be in writing and delivered in person or by certified mail,
postage prepaid as follows:
Company:
Universal Foods Corporation
433 East Michigan Street
Milwaukee, Wisconsin 53201
Attn: Vice President - Human Resources
Executive:
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of
---------------------------------------.
(CORPORATE SEAL)
ATTEST
By:
------------------------------- -----------------------------------
Secretary Vice President
Administration
---------------------------------
Executive
11
<PAGE> 12
Exhibit A
UNIVERSAL FOODS CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
WAIVER OF PARTICIPATION
On , I was given the opportunity to participate in
------------------------------
the Universal Foods Corporation Supplemental Executive Retirement Plan. In
accordance with the policy established under the Plan, each designated Executive
is given 60 days from the notice of designation (the "Notice") to participate
before the offer is withdrawn, unless at a later date the offer is reinstated by
Universal Foods Corporation. I acknowledge and understand this limitation
relative to my participation in the plan.
Because the elapsed time since receipt of the Notice exceeds 60 days, there will
be no benefits available to me or to any of my beneficiaries under the Plan. I
further understand that my future participation in the Plan is solely within the
discretion of Universal Foods Corporation.
Date:
------------------------------------
- --------------------------------- ------------------------------
(Witness) (Signature)
<PAGE> 13
Exhibit B
UNIVERSAL FOODS CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Beneficiary Designation
I, , hereby designate the following as my Primary
-------------------------------
Beneficiary under my Supplemental Executive Retirement Plan with Universal Foods
Corporation:
- ---------------------------------- ------------------------------------
Primary Beneficiary's Name Relationship to Me
If the Primary Beneficiary does not survive me or survives me, but dies before
actual payment in full of my benefits, or if there be no named Primary
Beneficiary, the remaining portion of my benefits shall be paid in equal shares
to the following Contingent Beneficiaries.
- ---------------------------------- ------------------------------------
Contingent Beneficiary's Name Relationship to Me
- ---------------------------------- ------------------------------------
Contingent Beneficiary's Name Relationship to Me
- ---------------------------------- ------------------------------------
Contingent Beneficiary's Name Relationship to Me
Upon the death of a Contingent Beneficiary, any remaining portion of said
benefits shall be paid in equal shares to his or her children living at the time
each payment is to be made in accordance with the Plan. Upon the death of a
Contingent Beneficiary who is not survived by a child or children, or upon the
death of the last surviving child of a Contingent Beneficiary, any remaining
portion of his or her beneficial interest shall be paid in equal shares to the
then living Contingent Beneficiaries and the children of any then deceased
Contingent Beneficiaries, any such child or children to be paid (as described in
the preceding sentence) only the share the parent would receive if living.
If none of the foregoing persons are living when any benefits under the Plan are
payable, any remaining installments shall be paid to the personal representative
of my estate.
This form constitutes a revocation in full of any Beneficiary Designations
previously made by me and may be changed or revoked by me at any time, provided
that such subsequent designations be in writing and filed with Universal Foods
Corporation.
Witness: Date:
-------------------------------
- --------------------------------- ------------------------------------
(Cannot be a Beneficiary) Signature of Employee
Receipt of the above Beneficiary Designation is hereby acknowledged by:
UNIVERSAL FOODS CORPORATION
Date: By:
-------------------------------------- --------------------------------
<PAGE> 14
AMENDMENT NO. 1 TO THE
UNIVERSAL FOODS CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Universal Foods Corporation Supplemental Executive Retirement Plan
("the Plan") is hereby amended, effective as of September 10, 1998, as set forth
below:
1. Section 14(B) of the Plan is amended to read in its entirety
as follows:
B. For purposes of subsection (A) of this Section, the
term "change of control of the Company" means:
(i) 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 (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 (i),
the following acquisitions shall not constitute a Change of
Control: (1) any acquisition directly from the Company, (2)
any acquisition by the Company, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the
Company or (4) any acquisition pursuant to a transaction which
complies with clauses (A), (B) and (C) of subsection (iii) of
this Section; or
(ii) individuals who, as of September 10, 1998, 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
September 10, 1998 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
<PAGE> 15
(iii) consummation by the Company of a reorganization, merger 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 entity (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 beneficially own, directly or indirectly, more
than 50% 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 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 of 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 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 the
action of the Board, providing for such Business Combination;
or
(iv) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
<PAGE> 1
EXHIBIT 10.2 (w)
UNIVERSAL FOODS SUPPLEMENTAL BENEFIT PLAN
<PAGE> 2
UNIVERSAL FOODS SUPPLEMENTAL BENEFIT PLAN
Section 1. Purpose.
The purpose of this Plan is to reimburse certain employees for various
reductions in qualified plan benefits in the Universal Foods Retirement Employee
Stock Ownership Plan, the Universal Foods Transition Retirement Plan, the
Universal Foods Corporation Savings Plan, and the Universal Foods
Corporation Retirement Plan - General Participating Group, which reductions are
caused by (i) restrictions in Sections 401(a)(17), 410, or 415 of the Internal
Revenue Code, (ii) the maximum limitation on employer and employee contributions
under Code Sections 401(k), 401(m), and 402(g), and (iii) the deferral of a
portion of their cash compensation pursuant to nonqualified deferred
compensation arrangements.
Section 2. Definitions.
(a) "Benefits Administrative Committee" means the Benefits
Administrative Committee of the Company appointed by the Oversight Committee.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Company" means Universal Foods Corporation or any successor
thereto.
(d) "Deferred Compensation Limit" means the limitations, if any,
imposed by the Internal Revenue Service on the recognition by qualified
retirement plans of the amount of any direct cash compensation deferred pursuant
to the Universal Foods Corporation Executive Income Deferral Plan and the
Universal Foods Corporation Management Income Deferral Plan as adopted June ll,
1987 and amended from time to time.
(e) "Employer" means the Company and any subsidiary or affiliate of the
Company.
(f) "ESOP" means the Universal Foods Retirement Employee Stock
Ownership Plan as amended from time to time.
(g) "Executive" means any employee of an Employer who is specifically
designated by the Benefits Administrative Committee, on attached Appendix A, as
eligible to participate in this Plan.
(h) "415 Limit" means the limitations imposed by Code Section 415 on
benefits and/or contributions for qualified retirement plans.
<PAGE> 3
(i) "Oversight Committee" means the Oversight Committee of the Board of
Directors of the Company.
(j) "Plan Account" means a bookkeeping account maintained by the
Benefits Administrative Committee for each Executive which determines the value
of certain supplements hereunder from time to time.
(k) "Rabbi Trust" means the trust established pursuant to the Trust
Agreement dated January 18, 1988 between the Company and Marshall & Ilsley Trust
Company which applies to various nonqualified deferred compensation programs for
employees of the Company.
(1) "Retirement Plan" means the Universal Foods Corporation Retirement
Plan-General Participating Group as in effect on December 31, 1988.
(m) "Savings Plan" means the Universal Foods Corporation Savings Plan
as amended from time to time.
(n) "Transition Plan" means the Universal Foods Transition Retirement
Plan as amended from time to time.
(o) "$200,000 Limit" means the limitation imposed by Code Section
401(a)(17) on a participant's annual compensation for purposes of calculating
benefits under qualified retirement plans.
(p) "UFC Stock" means common stock of the Company and/or noncallable
preferred stock of the Company which is convertible into common stock of the
Company.
Section 3. Retirement Plan Supplement.
(a) Effective October 1, 1982, the Universal Foods Corporation Unfunded
Retirement Plan (the "Unfunded Plan") was adopted to provide eligible employees
the benefits lost under the Retirement Plan on account of the benefit
limitations of Code Section 415. The Unfunded Plan is being merged into this
Plan as of December 31, 1988, and any and all rights of employees or former
employees under the Unfunded Plan shall be converted to the benefits paid
hereunder.
(b) Eligible Executives are those Executives who as of December 31,
1988 are entitled to an accrued benefit under the Retirement Plan which is less
than the Retirement Plan formula would otherwise provide as of such date on
account of the 415 Limit and/or the Deferred Compensation Limit (such difference
being the "excess benefit" for purposes of this Section 3).
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<PAGE> 4
(c) The benefit under this Section 3 shall be the lump sum actuarial
equivalent (using the actuarial assumptions employed to determine the "ESOP
Transfer" amount from the Retirement Plan) of the excess benefit. Such lump sum
amount, calculated as of the date of the actual ESOP Transfers from the
Retirement Plan to the ESOP, shall accrue interest at eight and one-quarter
percent (8-1/4%) through September 25, 1989. Such lump sum amount plus interest
shall be allocated to the Executive's Plan Account as of September 25, 1989.
Section 4. Savings Plan Matching Supplement.
As of September 30, 1989 and each September 30 thereafter, an
Executive's Plan Account shall be allocated an amount equal to the difference
between (A) and (B), where:
(A) is the amount of matching Employer contributions that would
have been allocated to the account of the Executive for such year
under the Savings Plan, assuming:
(1) the Executive had made the maximum pre-tax
deposits for the year,
(2) the 415 Limit and $200,000 Limit were
inapplicable, and
(3) the limitations on employer and employee
contributions under Code Sections 401(k),
401(m), and 402(g) were inapplicable, and
(B) is the actual matching Employer contribution allocable to
the Executive's Savings Plan account for the year.
Section 5. ESOP Supplement.
As of September 30, 1989 and each September 30 thereafter, an
Executive's Plan Account shall be allocated an amount equal to the difference
between (A) and (B), where:
(A) is the amount of allocations that would have been made to
the account of the Executive for such year pursuant to Section
4.02 of the ESOP, assuming the 415 Limit, the $200,000 Limit,
and the Deferred Compensation Limit were inapplicable; and
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<PAGE> 5
(B) is the actual Section 4.02 allocation to the Executive's
ESOP account for the year.
Section 6. Transition Supplement.
As of September 30, 1989 and each September 30 thereafter, an
Executive's Plan Account shall be allocated an amount equal to the amount of
allocations that would have been made to the account of the Executive for such
year pursuant to Section 4.02 of the Transition Plan, assuming the 415 Limit
were inapplicable and the Executive were a participant in the Transition Plan
with the benefit determined by the Benefits Administrative Committee. This
Transition Supplement shall be the Executive's applicable dollar amount for such
year as specified in Appendix A attached hereto.
Section 7. Valuation Adjustments to Excess Plan Account.
(a) The Benefits Administrative Committee shall maintain a
bookkeeping record of the Plan Account for each Executive. The amount in each
Account shall be adjusted from time to time by the allocations provided in
Sections 3, 4, 5 and 6 above, the distributions provided in Section 8 below, and
the adjustments for valuation specified below.
(b) As of September 30, 1989, the portion of a Plan Account
attributable to the Retirement Plan Supplement shall reflect the fair market
value of the segregated assets in the Rabbi Trust attributable thereto as of
such date.
(c) The portions of a Plan Account attributable to the ESOP
Supplement and Transition Plan Supplement and, after September 30, 1989, the
Retirement Plan Supplement shall reflect the actual investment performance of
the Executive's account under the ESOP. In the event the Executive has no such
account, the Plan Account shall reflect the actual investment performance of the
UFC Stock account under the ESOP.
(d) The portion of a Plan Account attributable to the Savings Plan
Matching Supplement shall be treated as being invested fully in the UFC Stock
Fund under the Savings Plan.
(e) In the event that the Benefits Administrative Committee utilizes
the Rabbi Trust pursuant to Section 9 below, the actual earnings of the assets
in the Rabbi Trust shall be irrelevant with respect to the value of an
Executive's
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<PAGE> 6
Plan Account except as described in (b) above. The adjustments to a portion of a
Plan Account attributable to a particular Supplement, as required above, shall
be made on the same dates that the valuations are conducted for the plan to
which the particular Supplement relates or more frequently as determined by the
Benefits Administrative Committee.
Section 8. Benefit Payments.
(a) An Executive shall only be vested in the Plan Account if such
Executive is vested pursuant to the terms of the ESOP. Consistent with Section
5.08 of the ESOP, the Plan Accounts shall be fully vested and nonforfeitable in
the event of a "change of control of the Company" which for this purpose means:
(i) the acquisition of more than eighty-five percent (85%)
of the outstanding shares of voting stock directly or
indirectly by any person or group of persons acting in
concert, excluding affiliates of the Company, by means
of an offer made publicly to the holders of all or
substantially all of the outstanding shares of any
one or more classes of the voting stock of the Company
to acquire such shares for cash, securities, other
property or any combination thereof; or
(ii) the sale, assignment or transfer by the Company of all
or substantially all of its business and assets to any
person, excluding affiliates of the Company; or
(iii) a merger, consolidation or other business combination
by the Company into or with any person in which neither
the Company nor any subsidiary thereof is the continuing
or successor corporation.
(iv) As a result of, or in connection with, any cash
tender or exchange offer, merger or other business
combination, sale of assets or contested election or
any combination of the foregoing transactions, the
persons who are directors of the Company before any of
the foregoing transactions shall cease to constitute a
majority of the
-5-
<PAGE> 7
Board of Directors of the Company or any successor to
the Company.
(b) Distribution of the vested Plan Account of an Executive
shall be made in a lump sum cash payment within sixty (60) days after
the end of the calendar quarter in which occurs the Executive's
termination of employment with the Employers.
(c) In the event the Executive dies prior to receipt of the
Executive's Plan Account and either (i) the Executive's Account is
vested pursuant to (a) above or (ii) the Executive dies while employed
with the Employers, the amount of such Account shall be paid to the
beneficiary designated by the Executive in a lump sum cash payment
within sixty (60) days after the end of the calendar quarter in which
the Executive's death occurs. A beneficiary may be designated by the
Executive by a written statement to such effect filed with the Chairman
of the Benefits Administrative Committee. In the event no beneficiary
is validly designated or the designated beneficiary predeceased the
Executive, the Executive's estate shall be the beneficiary hereunder.
(d) In the event the Rabbi Trust invests in UFC Stock as an
asset attributable to the Plan, an Executive or beneficiary eligible
for a cash lump sum payment may elect to receive such distribution in
UFC Stock in lieu of cash, but only to the extent and pursuant to the
rules established by the Benefits Administrative Committee from time
to time.
Section 9. Rabbi Trust.
(a) The Plan Account is utilized solely as a device for the
measurement and determination of the amount to be paid to an Executive
hereunder. Neither the Plan Accounts nor any other reserve established
on the Company's books to reflect the liabilities under this Plan shall
constitute or be treated as a trust fund of any kind.
(b) Notwithstanding (a) above, the Company shall periodically
fund the Rabbi Trust in order to maintain sufficient assets therein to
equal the value from time to time of the Plan Accounts.
(c) In the event the Rabbi Trust invests in UFC Stock as an
asset attributable to the Plan, prior to an occasion for the exercise
of UFC Stock voting rights, the Benefits Administrative Committee shall
provide each Executive with notification of such occasion together with
any other information being provided by the Company to its shareholders
with respect to such occasion. Each Executive is entitled to direct the
Benefits Administrative Committee as to the
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<PAGE> 8
manner in which the portion of the UFC Stock owned by the Rabbi Trust
attributable to his Plan Account is to be voted on such occasion; provided,
that, with respect to any fractional share of such UFC Stock, it shall be
combined with fractional shares in other Plan Accounts to be voted to reflect,
to the extent the Benefits Administrative Committee determines it is possible,
the directions of the Executives with fractional shares attributable to their
Plan Accounts. The voting directions with respect to the UFC Stock of all
Executives shall be communicated by the Benefits Administrative Committee to
the Trustee for voting in accordance therewith; provided that the voting rights
of any UFC Stock for which no direction is received, shall be exercised as
directed by the Benefits Investment Committee of the Company in a manner it
determines to be in the best interests of Participants.
(d) In the event of any tender offer for shares of UFC Stock held in
the Rabbi Trust attributable to the Plan, the Benefits Administrative Committee
shall provide each Executive with notification of such tender offer together
with any other information being provided to Company shareholders in connection
with the tender offer. Each Executive is entitled to direct the Trustee as to
whether or not and, if so, to what extent the portion of the UFC Stock owned by
the Rabbi Trust attributable to his Plan Account is to be tendered in response
to such tender offer. Any directions shall be communicated to the Trustee for
responding to the tender offer in accordance therewith; provided that with
respect to any UFC Stock for which no direction is received, the Benefits
Investment Committee of the Company shall direct the Trustee to respond to the
tender offer in a manner such Committee determines to be in the best interests
of participants in the Plan.
Section 10. Inter-Employer Reimbursements.
Although any benefit payments or contributions to the Rabbi Trust
hereunder shall be made by the Company, it shall be determined by the Benefits
Administrative Committee whether any portion thereof is allocable to any other
Employer on account of its employment of the applicable Executive. In any such
case, the Company shall be reimbursed by such other Employer in the amount and
manner determined by the Benefits Administrative Committee pursuant to uniformly
applicable procedures.
-7-
<PAGE> 9
Section 11. Non-Alienation of Benefits.
Neither an Executive nor his designated beneficiaries shall have the
power to transfer, assign, anticipate or otherwise encumber in advance any of
the payments provided in this Plan; nor shall any of said payments, nor any
assets or funds of the Company or any Employer be subject to seizure for the
payment of any of the Executive's or his beneficiaries' judgments, alimony or
separate maintenance or be reached or transferred by operation of law in the
event of the bankruptcy or insolvency of the Executive or any beneficiary.
Section 12. Administration.
The Benefits Administrative Committee shall have all such powers that
may be necessary to carry out the provisions of the Plan, including without
limitation, the power to delegate administrative matters to other persons, to
construe and interpret the Plan, to adopt and revise rules, regulations and
forms relating to and consistent with the Plan's terms, to amend Appendix A, as
referenced in Section 2(g) hereof, in its sole discretion thereby adding or
deleting any Executive or the Supplements which any Executive is eligible to
receive under this Plan, and to make any other determination which it deems
necessary or advisable for the implementation and administration of the Plan.
Subject to the foregoing, all decisions and determinations by the Benefits
Administrative Committee shall be final, binding and conclusive as to all
parties, including without limitation any Executive and all other employees and
persons. The Benefits Administrative Committee shall calculate the supplements
in Sections 3, 4, 5 and 6 hereof in a manner which avoids duplicative benefits.
Section 13. Limitation of Rights Against the Employers.
Participation in this Plan, or any modifications thereof, or the
payments of any benefits hereunder, shall not be construed as giving to any
Executive any right to be retained in the service of the Employers, limiting in
any way the right of the Employers to terminate such Executive's employment at
any time, evidencing any agreement or understanding express or implied, that the
Employers will employ such Executive in any particular position or at any
particular rate of compensation and/or guaranteeing such Executive any right to
receive any other form or amount of remuneration from the Employers.
-8-
<PAGE> 10
Section 14. Construction.
The Plan shall be construed, administered and governed in all respects
under and by the laws of the State of Wisconsin. Wherever any words are used
herein in the masculine, they shall be construed as though they were used in the
feminine for all cases where they would so apply; and wherever any words are
used herein in the singular or the plural, they shall be construed as though
they were used in the plural or the singular, as the case may be, in all cases
where they would so apply. The words "hereof", "herein", "hereunder" and other
similar compounds of the word "here" shall mean and refer to this entire
document and not to any particular paragraph.
Section 15. Amendment or Termination of the Plan.
The Oversight Committee shall have the right to amend, modify,
terminate or discontinue the Plan at any time; and such action shall be final,
binding and conclusive as to all parties, including any Executive, any
beneficiary thereof and all other Employers' employees and persons.
Notwithstanding the foregoing, any such Oversight Committee action to terminate
or discontinue the Plan or to change the payment amounts or the time and manner
of payment thereof as then provided in the Plan shall not be effective and
operative with respect to benefits accrued as of such date, unless and until
written consent thereto is obtained from each Executive affected by such action
or, if any such Executive is not then living, from the beneficiary thereof.
Section 16. Relationship to Employment Agreements.
Except as otherwise expressly provided herein, this Plan does not
affect the rights of any Executive under any employment or other compensation
agreement with an Employer covering such Executive. This Plan supersedes and
eliminates as a separate benefit the Universal Foods Corporation Unfunded
Retirement Plan with respect to any Executive covered thereby who executes an
acceptance in the form approved by the Benefits Administrative Committee. An
Executive who is entitled to a benefit under the Universal Foods Corporation
Unfunded Retirement Plan who fails to execute the acceptance shall be entitled
to all benefits accrued as of December 31, 1988 under the terms of such Unfunded
Retirement Plan but shall not have any Plan Account hereunder.
Section 17. Successors and Assigns.
The terms and conditions of the Plan, as amended and in effect from
time to time, shall be binding upon the successors and assigns of the Employer,
including without
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<PAGE> 11
limitation any entity into which an Employer may be merged or with which an
Employer may be consolidated.
-10-
<PAGE> 12
AMENDMENT NO. 1 TO THE
UNIVERSAL FOODS CORPORATION
SUPPLEMENTAL BENEFIT PLAN
The Universal Foods Corporation Supplemental Benefit Plan ("the Plan")
is hereby amended, effective as of September 10, 1998, as set forth below:
1. Section 8(a) of the Plan is amended to read in its entirety as
follows:
a. An Executive shall only be vested in the Plan Account if
such Executive is vested pursuant to the terms of the ESOP.
Consistent with Section 5.08 of the ESOP, the Plan Accounts
shall be fully vested and nonforfeitable in the event of a
"change of control of the Company" which for this purpose
means:
(i) 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 (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 (i),
the following acquisitions shall not constitute a Change of
Control: (1) any acquisition directly from the Company, (2)
any acquisition by the Company, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the
Company or (4) any acquisition pursuant to a transaction which
complies with clauses (A), (B) and (C) of subsection (iii) of
this Section; or
(ii) individuals who, as of September 10, 1998, 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
September 10, 1998 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
<PAGE> 13
(iii) consummation by the Company of a reorganization, merger 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 entity (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 beneficially own, directly or indirectly, more
than 50% 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 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 of such corporation resulting from
such Business Combination) beneficially owns, directly of
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 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 the
action of the Board, providing for such Business Combination;
or
(iv) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
<PAGE> 1
EXHIBIT 10.2(x)
UNIVERSAL FOODS TRANSITION RETIREMENT PLAN
<PAGE> 2
UNIVERSAL FOODS TRANSITION RETIREMENT PLAN
Table of Contents
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE I. DEFINITION OF TERMS ............................................ 2
Section 1.01. Definitions ..................................... 2
Section 1.02. Construction .................................... 4
ARTICLE II. PARTICIPATION AND VESTING SERVICE ............................. 6
Section 2.01. Participation ................................... 6
Section 2.02. Vesting Service ................................. 6
Section 2.03. Period of Severance ............................. 6
Section 2.04. Eligibility for Allocations ..................... 6
ARTICLE III. CONTRIBUTIONS ................................................ 8
Section 3.01. Employer Contributions .......................... 8
Section 3.02. No Liability for Future Contributions ........... 8
Section 3.03. Funding Policy .................................. 8
ARTICLE IV. PARTICIPANTS' ACCOUNTS ........................................ 9
Section 4.01. Establishment of Accounts ....................... 9
Section 4.02. Allocation to Accounts .......................... 9
Section 4.03. Determination and Allocation of
Changes in Value ................................ 9
Section 4.04. Maximum Annual Additions ........................ 9
ARTICLE V. BENEFITS .......................................................11
Section 5.01. Retirement ......................................11
Section 5.02. Death ...........................................11
Section 5.03. Disability ......................................11
Section 5.04. Other Severance from Service ....................11
Section 5.05. Distributions ...................................12
Section 5.06. Payment for Minor or Incompetent Person .........13
Section 5.07. Voting Rights and Tender Offers .................14
Section 5.08. Change of Control ...............................14
Section 5.09. Annual Statement ................................15
Section 5.10. Diversification .................................15
Section 5.11. Withholding/Rollover Rules ......................16
ARTICLE VI. ADMINISTRATION ................................................18
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 6.01. Allocation of Responsibility Among Fiduciaries
for Plan and Trust Administration ...............18
Section 6.02. Appointment and Authority of Benefits
Administrative Committee ........................18
Section 6.03. Use of Professional Services ....................20
Section 6.04. Fees and Expenses ...............................20
Section 6.05. Claims Procedure ................................20
Section 6.06. Trustee's Responsibilities ......................21
Section 6.07. Fiduciary Insurance and Indemnification .........21
Section 6.08. Agent for Service of Process ....................22
Section 6.09. Allocation of Fiduciary Responsibility ..........22
Section 6.10. Liability for Breach of Co-Fiduciary ............22
Section 6.11. Communications ..................................22
ARTICLE VII. TRUSTEE AND TRUST FUND .......................................23
Section 7.02. Investment of Trust Fund ........................23
Section 7.03. Acquisition of UFC Stock ........................23
ARTICLE VIII. AMENDMENT AND TERMINATION ...................................24
Section 8.01. Amendment .......................................24
Section 8.02. Termination .....................................24
Section 8.03. Non-Reversion of Assets .........................24
ARTICLE IX. GENERAL PROVISIONS ............................................25
Section 9.01. Participants to Furnish Information .............25
Section 9.02. Non-Guarantee of Employment or Other Benefits ...25
Section 9.03. Mergers, Consolidations and Transfers of
Plan Assets .....................................25
Section 9.04. Spendthrift Clause ..............................25
Section 9.05. Exclusive Benefit ...............................26
Section 9.06. Successors and Assigns ..........................26
Section 9.07. Top-Heavy Restrictions ..........................26
Appendix A .................................................................29
</TABLE>
ii
<PAGE> 4
UNIVERSAL FOODS TRANSITION RETIREMENT PLAN
Effective as of September 8, 1988, Universal Foods Corporation
(the "Company") establishes this target benefit pension plan known as the
Universal Foods Transition Retirement Plan (the "Plan") for the purpose of
providing eligible employees and their beneficiaries with certain retirement and
other benefits for their financial security.
<PAGE> 5
ARTICLE I. DEFINITION OF TERMS
Section 1.01. Definitions. The following words and phrases
when used herein shall have the following respective meanings, unless the
context clearly indicates otherwise:
(a) "Affiliate" means any Employer and any other corporation
which is a member of a controlled group of corporations (within the meaning of
Section 1563(a) of the Code determined without regard to subsections (a)(4) or
(e)(3)(C) thereof) which includes an Employer.
(b) "Beneficiary" means the person, trust and/or other entity
entitled to receive benefits in the event of the Participant's death. A
Participant shall designate his Beneficiary on the form and in the manner
prescribed by the Benefits Administrative Committee and such designation may be
changed or withdrawn by the Participant at any time. The most recent valid
designation on file with the Benefits Administrative Committee at the time of
the Participant's death shall be the Beneficiary. Notwithstanding the foregoing,
in the event the Participant is married at the time of his death, the
Beneficiary shall be the Participant's spouse at such time unless such spouse
consented in writing to the designation of an alternative Beneficiary after
notice of the spouse's rights and such consent was witnessed (i) by a Plan
representative appointed by the Benefits Administrative Committee or (ii) by a
notary public. In the event no valid designation of a Beneficiary is on file
with the Benefits Administrative Committee at the date of death or no designated
Beneficiary survives him, the Participant's spouse shall be deemed the
Beneficiary; in the further event the Participant is unmarried or his spouse
does not survive him, the Participant's estate shall be deemed to be his
Beneficiary. No spouse consent prior to the Participant's attainment of age
thirty-five (35) shall be effective.
(c) "Benefits Administrative Committee" means the Benefits
Administrative Committee of the Company appointed by the Finance Committee.
(d) "Benefits Investment Committee" means the Benefits
Investment Committee of the Company appointed by the Finance Committee.
(e) "Code" means the Internal Revenue Code of 1986, as
interpreted and applied by regulations and rulings issued pursuant thereto, all
as amended and in effect from time to time.
(f) "Company" means Universal Foods Corporation, a Wisconsin
corporation, or any successor thereto.
2
<PAGE> 6
(g) "Employee" means any person actively employed on or after
January 1, 1989 by an Employer on its United States payroll who is specifically
designated in Appendix A attached hereto. An individual who is a "leased
employee" as defined in Code Section 414(n) shall not be eligible to participate
in the Plan.
(h) "Employer" means the Company, Universal Flavor Corporation
and each subsidiary or affiliate corporation with a United States payroll
designated by the Benefits Administrative Committee as an Employer hereunder.
(i) "Employment Commencement Date" means the first date on
which a person completes an hour of service, which is an hour for which an
Employee is directly or indirectly paid or entitled to payment by an Employer or
any Affiliate, and shall include hours for which back pay has been awarded or
paid.
(j) "ERISA" means the Employee Retirement Income Security Act
of 1974, as interpreted and applied by regulations and rulings issued pursuant
thereto, all as amended and in effect from time to time.
(k) "Finance Committee" means the Finance Committee of the
Board of Directors of the Company.
(1) "Participant" means any Employee who has satisfied the
conditions of Section 2.01 hereof
(m) "Plan" means the target benefit pension plan herein
contained, as amended and in effect from time to time, which plan shall be known
as the "Universal Foods Transition Retirement Plan". The governing documents for
the Plan shall include this plan document, any amendments hereto, any agreement
with any Trustee and any amendments thereto, resolutions of the Finance
Committee relating hereto and such uniformly applicable rules, regulations and
standards promulgated by the Benefits Administrative Committee consistent and in
accordance with the terms hereof and ERISA requirements.
(n) "Plan Year" means the twelve (12) month period ending on
any September 30.
(o) "Severance from Service" means the earliest to occur of
the following:
(i) the date that a Participant quits, retires,
is terminated or dies, whichever occurs
first;
(ii) subject to Section 2.03 hereof, the first
anniversary of the date a Participant
commences a continuous absence
3
<PAGE> 7
from service with the Affiliates for any
other reason, such as illness, disability,
layoff, vacation, or authorized leave of
absence; provided, however, that for
purposes of the Plan, "an authorized leave
of absence" means an absence from active
service with the Affiliates which an
Affiliate authorizes pursuant to uniform
rules consistently applied in like
circumstances for its personnel who are
similarly situated in respect to such
Participant; or
(iii) the date as of which the Participant is
suffering from a disability as evidenced by
receipt of either long-term disability
benefits from a plan sponsored by the
Employers or Social Security disability
benefits.
(p) "Trust" means the Trust adopted effective as of September
8, 1988 and as may be amended and in effect from time to time, between the
Company and the Trustee for the purpose of funding, in whole or in part, the
benefits provided hereunder.
(q) "Trust Fund" means the assets of the Trust as in effect
from time to time.
(r) "Trustee" means Marshall & Ilsley Trust Company or any
successor or successors thereto appointed to hold and administer the Trust.
(s) "UFC Stock" means common stock of the Company.
(t) "Valuation Date" means September 30, 1989 and each January
31, April 30, July 31 and October 31 thereafter.
(u) "Vesting Service" means a Participant's years of
employment which are credited under Section 2.02 hereof.
Section 1.02. Construction. (a) Words used herein in the
masculine gender shall include the feminine and words used herein in the
singular shall include the plural in all cases where such would apply. The words
"hereof", "herein", "hereunder" and other similar compounds of the word "here"
shall refer to the entire Plan, not to a particular article or section hereof.
Headings of articles, sections and subsections are for convenience of reference
only; they constitute no part of the Plan and are not to be considered in the
construction hereof. All references to statutory sections shall include the
section so identified as amended from time to time or any other statute of
similar import.
4
<PAGE> 8
(b) The Plan is intended to be a target benefit plan meeting
the requirements of Section 401(a) of the Code and shall be interpreted so as to
comply with the applicable requirements thereof, where such requirements are not
clearly contrary to the express terms hereof. In all other respects, the Plan
shall be construed and its validity determined according to the laws of the
State of Wisconsin to the extent such laws are not preempted by applicable
requirements of federal law. In case any provision of the Plan shall be held
illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining provisions of the Plan, and the Plan shall be construed and
enforced as if said illegal or invalid provisions had never been included
herein.
5
<PAGE> 9
ARTICLE II. PARTICIPATION AND VESTING SERVICE
Section 2.01. Participation. An Employee shall become a
Participant hereunder as of October 1, 1988, except with respect to an Employee
who is eligible to participate in the Universal Foods Corporation Pension
Plan-Idaho Frozen Foods Participating Group for whom the entry date is July 1,
1989.
Section 2.02. Vesting Service. Each Employee's eligibility for
benefits hereunder shall be based in part upon such Employee's years of Vesting
Service. Subject to Section 2.03 hereof, each Employee shall be credited with
Vesting Service for the period beginning on his Employment Commencement Date and
ending on the date of his Severance from Service, less any period(s) of
severance during such period which exceed(s) twelve (12) months in duration.
Service shall be calculated based on years, months and days. An Employee of an
acquired business shall be given Vesting Service for employment prior to the
acquisition date only to the extent determined by the Benefits Administrative
Committee.
Section 2.03. Period of Severance. (a) For purposes of this
Article, a "period of severance" shall commence on an Employee's Severance from
Service and shall end on the date the Employee first performs paid services as
an employee of an Affiliate following such date, and said period shall be
calculated in years, months and days.
(b) If an Employee who is not entitled to a vested benefit
pursuant to Article V hereof incurs a period of severance of at least twelve
(12) months which equals or exceeds the period of Vesting Service, the
Employee's Vesting Service earned prior to the period of severance shall be
cancelled and disregarded under Section 2.02 for all purposes of the Plan;
provided, however, that service shall be reinstated if individual is reemployed
within a period of time not longer than seventy-two (72) months.
(c) Any Employee shall cease to be a Participant upon
incurring a Severance from Service. If rehired by an Affiliate within the
requisite time provided in subsection (b) above, any forfeited amount shall be
reinstated to an account in the individual's name and shall continue to vest
pursuant to the provisions thereof. Except as otherwise expressly provided in
Sections 3.01 and 4.02, no further Employer contributions shall be made to any
Participant after his Severance from Service.
Section 2.04. Eligibility for Allocations. Participants who
are eligible for allocations of Employer contributions pursuant to Section 4.02
for any Plan Year shall be those identified below but shall not include any
other Participant whose employment with the Employers was severed during the
Plan Year due to any other reason:
6
<PAGE> 10
(i) each Participant who is employed by an
Employer on the last day of such Plan Year,
treating a permanent layoff as a termination
of employment but not a temporary layoff;
(ii) each Participant whose service with an
Employer was severed during such year on
account of death, disability, or retirement
on or after attainment of age fifty-five
(55) with at least ten (10) years of Vesting
Service, and
(iii) with respect to any sale or closing of an
Employer's location, to the extent
specifically authorized by the Benefits
Administrative Committee, any Participant
whose Severance from Service was due to such
sale or closing.
Notwithstanding the foregoing, eligible Participants shall not include any
former Participant who was rehired after a Severance from Service.
7
<PAGE> 11
ARTICLE III. CONTRIBUTIONS
Section 3.01. Employer Contributions. (a) Commencing with the
Plan Year ending September 30, 1989 and for each Plan Year thereafter, the
Employers shall contribute an aggregate amount which, when added to forfeitures
allocable for such year pursuant to Section 5.04(b) hereof, equals the sum of
the amounts for each Participant eligible for a contribution pursuant to Section
4.02 hereof, determined in accordance with Appendix A hereof.
(b) The Employers' contribution for any Plan Year shall be
paid to the Trust Fund not later than the time prescribed by law, including any
extensions thereof, for filing the Employers' federal income tax returns with
respect to such Plan Year.
(c) If any Employer contributes an amount in excess of the
amount it would otherwise have contributed but for a mistake of fact, such
excess, less any losses thereon since its contribution, may, upon the request of
the Employer, be returned to the Employer within one (1) year from the date of
the mistaken contribution, but no such return shall cause any Participant's
account to be reduced to an amount below the amount such account would contain
if the mistaken contribution had not been made.
(d) Notwithstanding subsection (a), the Employer contributions
made to achieve the level of allocations required hereunder which are to be
invested in UFC Stock (as compared to those which will be diversified pursuant
to Section 5. 10) shall be determined by using an average of the closing prices
of UFC Stock on the New York Stock Exchange for the last five (5) days of the
Plan Year on which UFC Stock is actually traded, and contributing sufficient
cash or UFC Stock so that as of the last day of the Plan Year the portion of an
eligible Participant's account which is to be invested in UFC Stock shall be
credited with the number of whole and fractional shares of UFC Stock which, when
multiplied by the five (5) day average price, will equal the required
allocation.
Section 3.02. No Liability for Future Contributions. Benefits
and distributions under the Plan shall be only such as can be provided by the
Trust Fund assets, and there shall be no liability or obligation on the part of
any Employer to make any further contributions except as otherwise provided
herein.
Section 3.03. Funding Policy. The funding policy for the Plan
is that Employer contributions shall be made and the Trust Fund managed in a
manner consistent with the Code, ERISA, and other applicable law for the
purposes of providing the benefits described herein and, to the extent permitted
by such law, defraying the reasonable expenses of administering the Plan and
Trust Fund.
8
<PAGE> 12
ARTICLE IV. PARTICIPANTS' ACCOUNTS
Section 4.01. Establishment of Accounts. The Benefits
Administrative Committee shall establish a separate account for each
Participant; provided, however, that the establishment of separate Participant
accounts shall not require a segregation of Trust Fund assets, and neither the
Employers, Participants, former Participants, nor Beneficiaries shall acquire
any right to or interest in any specific asset of the Trust Fund as a result of
any allocation provided for herein.
Section 4.02. Allocation to Accounts. The Benefits
Administrative Committee, as of the end of the Plan Year, shall credit the
Employers' contribution for that Plan Year and any forfeitures pursuant to
Section 5.04(b) to the appropriate accounts of eligible Participants, as
determined pursuant to Section 2.04, based on each Participant's applicable
dollar amount for such year specified in Appendix A hereof, subject to a maximum
contribution for any Participant determined pursuant to Section 4.04. For any
Participant eligible for an allocation pursuant to Section 2.04(ii) or (iii),
the applicable dollar amount shall be reduced so that the amount of the
contribution for such year is equal to the applicable dollar amount multiplied
by a fraction, the numerator of which is the number of nearest completed months
(employment on the fifteenth (15th) day of the month being treated as a full
month) and the denominator of which is twelve (12).
Section 4.03. Determination and Allocation of Changes in
Value. At the end of each Valuation Date and as of each September 30, the
Benefits Administrative Committee shall increase or decrease each account with
its proportionate share of any change in the fair market value of the Trust Fund
assets since the preceding Valuation Date.
Section 4.04. Maximum Annual Additions. (a) Notwithstanding
the other provisions of this Plan, annual additions to the account of any
Participant for a Plan Year shall not exceed the lesser of:
(i) thirty thousand dollars ($30,000) as
adjusted pursuant to Section 415(c)(1)(A)
and (d)(1) of the Code; or
(ii) twenty-five percent (25%) of the
Participant's total compensation (as defined
in subsection (c) of Section 415 of the Code
using accrued, not paid, bonuses) from the
Affiliates for such Plan Year.
The term "annual additions" as used in this subsection shall mean the amount of
the Employer's contributions and forfeitures for the Plan Year allocated to the
account of the Participant. If a Participant also participates in another
qualified defined contribution plan
9
<PAGE> 13
maintained by an Employer, then the sum of his annual additions under this Plan
and under such other plan shall not exceed the limitations described in (i) or
(ii) above subject to any special limitations applicable to such other plan. In
the event that at any September 30 such limitations would be exceeded, then the
Participant's annual additions to his account shall be reduced as may be
necessary to satisfy such limitations.
(b) In addition, if a Participant is also participating in a
qualified defined benefit plan which an Affiliate maintains on his behalf, the
sum of the defined benefit fraction and the defined contribution fraction as
defined in Section 415(e) will not exceed one (1) and the limitations of Code
Section 415(e) are hereby incorporated by reference. If as of any September 30
such rules are violated, the benefit of any active defined benefit plan shall be
reduced accordingly; otherwise, the annual additions for the Plan Year hereunder
shall be reduced to satisfy such limitations.
(c) In the event that either of the rules set forth in this
Section would otherwise be violated, there shall be deducted from such
Participant's account such amount as may be necessary to satisfy both of such
rules; any such amount shall be treated as a forfeiture for purposes of Sections
3.01 and 4.02; provided that if such reallocation to the accounts of other
Participants is not possible as the result of the application of this Section,
then the reallocable amounts shall be credited to a suspense account subject to
the following conditions:
(i) amounts in the suspense account shall be
allocated at such time, including
termination of the Plan or complete
discontinuance of Employer contributions, as
the foregoing limitations permit,
(ii) any income produced by such suspense account
shall be held in the suspense account,
(iii) no further Employer contributions shall be
permitted until the foregoing limitations
Permit their allocation to Participants'
accounts, and
(iv) upon termination of the Plan any unallocable
amounts in the suspense account shall revert
to the Company.
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<PAGE> 14
ARTICLE V. BENEFITS
Section 5.01. Retirement. For any Participant hired by an
Affiliate prior to attainment of age sixty (60), the account of such Participant
shall be fully vested and nonforfeitable upon attainment of age sixty-five (65)
if then employed with an Affiliate. For any Participant first hired by an
Affiliate after attainment of age sixty (60), the account of such Participant
shall be fully vested and nonforfeitable as of the fifth (5th) anniversary of
such date of hire if then employed with an Affiliate. Payments shall commence as
soon as practicable after the Participant's Severance from Service and be
payable in accordance with Section 5.05.
Section 5.02. Death. Upon a Participant's death before his
Severance from Service for any other reason, the entire amount credited to his
account shall be fully vested and nonforfeitable. Upon a Participant's death,
whether before or after commencement of payment of benefits, the vested amount
credited to his account shall be payable in accordance with Section 5.05 to the
Participant's Beneficiary.
Section 5.03. Disability. If a Participant's Severance from
Service occurs on account of a disability as described in Section 1.01(o)(iii),
the entire amount credited to his account shall be fully vested and
nonforfeitable and shall be payable to him in accordance with Section 5.05.
Section 5.04. Other Severance from Service. (a) Any
Participant whose Severance from Service occurs by reason other than retirement,
death or disability and who has completed five (5) or more years of Vesting
Service, shall be fully vested and nonforfeitable with respect to the amount
credited to his account, which amount shall be payable to him in accordance with
Section 5.05. A Participant whose Severance from Service is due to a sale or
closing of an Employer's location shall be fully vested in his entire account
balance to the extent specifically authorized by the Benefits Administration
Committee.
(b) Any amounts in a Participant's account which are not
vested under subsection (a) above upon his Severance from Service shall be
maintained in such account and shall continue to share in investment earnings
and losses under Article IV hereof until a forfeiture occurs. A conditional
forfeiture shall occur on the September 30 immediately following the
Participant's one year period of severance under Section 2.03 hereof. Except as
otherwise provided in this subsection (b), forfeitures shall be added to
Employer contributions and allocated under Section 4.02 hereof. In the event a
former Participant is reemployed prior to such September 30, he shall not
receive any further distribution until he again severs his service with the
Employers, and any forfeitable amount shall remain in his account and continue
to vest in accordance with subsection (a) above. In the event the
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<PAGE> 15
Participant is reemployed after such September 30 and within a period of time
not longer than seventy-two (72) months (a "six year break in service"), his
conditionally forfeited account shall be reestablished from forfeitures of other
Participants or from a special Employer contribution as determined by the
Benefits Administrative Committee, and such reconstituted account shall continue
to vest in accordance with subsection (a). Upon a six year break in service, the
conditional forfeiture shall become final regardless of the future employment of
the Participant. Separate subaccounts shall be maintained for Employer
contributions accrued with respect to a Participant before a six year break in
service and after such a break.
Section 5.05. Distributions. (a) Time. In the event of a
Participant's Severance from Service with the Employers, the entire amount to
which the Participant is entitled under the Plan shall be distributed to him or
his Beneficiary, as the case may be, within sixty (60) days after the Valuation
Date after the event giving rise to such distribution occurs. Notwithstanding
any other provision in this Section, the account balance of a Participant shall
be distributed no later than April 1 of the calendar year following the calendar
year in which he attains age seventy and one-half (70 1/2). If a Participant who
has severed his service or has incurred a disability subsequently dies prior to
receiving his total distribution hereunder, the remainder of such distribution
shall then be made to his Beneficiary. Except with respect to death benefits, no
lump sum cash distribution in excess of Three Thousand Five Hundred Dollars
($3,500) shall be made prior to the Participant's attainment of age seventy and
one-half (70 1/2) without the consent of the Participant to the extent required
by law.
(b) Form. The amount to which a Participant or his
Beneficiary, as the case may be, is entitled hereunder shall be rendered, at the
election of the recipient, in the form of
(i) a lump sum distribution consisting entirely
of cash or UFC Stock as determined by the
Participant, except that cash shall be
distributed in lieu of any fractional share
of UFC Stock; or
(ii) as an annuity, if such amount exceeds Three
Thousand Five Hundred Dollars ($3,500).
If a Participant is married at the time he is entitled to commencement of the
distribution, the following rules apply:
(iii) Except as elected to the contrary pursuant
to (iv) below, the benefit shall be paid by
purchasing a joint and survivor annuity
contract from a licensed insurance
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<PAGE> 16
company using unisex actuarial factors and
providing a monthly benefit for the life of
the Participant commencing immediately and,
if the Participant predeceases the
Participant's spouse as of the commencement
date, a survivor's benefit to the spouse for
the spouse's remaining life equal to
one-half of the monthly amount received by
the Participant.
(iv) A Participant may elect, in writing on a
form provided by and filed with the Benefits
Administrative Committee, against receiving
payments in the form of such a joint and
survivor annuity, but such election shall
only be effective if the spouse consents to
such election and acknowledges the effect of
such waiver, such consent being witnessed by
a Plan representative appointed by the
Benefits Administrative Committee or a
notary public.
In the event (i) a Participant dies prior to commencement of annuity benefits
hereunder, (ii) a Beneficiary is the applicable Participant's spouse, and (iii)
the benefit payable to such spouse is in excess of Three Thousand Five Hundred
Dollars ($3,500), unless such spouse elects in writing to receive the lump sum
payment otherwise payable pursuant to subsection (i) above, the benefit payable
to such spouse shall be paid by purchasing a life only annuity contract from a
licensed insurance company using unisex actuarial factors and providing a
monthly benefit for the life of the spouse commencing immediately. Any elections
hereunder may be made or revoked at any time prior to the benefit commencement
date, and the Benefits Administrative Committee shall provide the Participant
and the spouse, as applicable, notice of their rights under this subsection in
accordance with the requirements of applicable regulations at least ninety (90)
days prior to such benefit commencement. Any spouse consent shall only be valid
for benefits commencing within ninety (90) days of such consent. In addition, an
unmarried Participant shall be provided a life only annuity contract unless the
Participant elects to the contrary, to the extent and in the manner required by
law. The provisions of the Plan are intended to comply with Code Section
401(a)(9) which prescribes certain rules regarding minimum distributions and
requires that death benefits be incidental to retirement benefits. All
distributions under the Plan shall be made in conformance with Section 401(a)(9)
and the regulations thereunder which are incorporated herein by reference. The
provisions of the Plan governing distributions are intended to apply in lieu of
any default provisions prescribed in regulations; provided, however, that Code
Section 401(a)(9) and the regulations thereunder override any Plan provisions
inconsistent with such Code Section and regulations.
Section 5.06. Payment for Minor or Incompetent Person. In the
event that any amount is payable under the Plan to a minor or to any person
deemed by the Benefits
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<PAGE> 17
Administrative Committee to be incompetent, either mentally or physically, such
payment shall be made for the benefit of such minor or incompetent person in any
of the following ways, as determined in the Benefits Administrative Committee's
sole discretion: (a) to the legal representative of such minor or incompetent
person; (b) directly to such minor or incompetent person; or (c) to some near
relative of such minor or incompetent person to be used for the latter's
benefit. The Benefits Administrative Committee shall not be required to see to
the proper application of any such payment made to any person pursuant to the
provisions of this Section 5.06.
Section 5.07. Voting Rights and Tender Offers. (a) The voting
rights of any UFC Stock held in the Trust Fund shall be exercised by the Trustee
as directed by the Benefits Investment Committee in a manner it determines to be
in the best interests of Participants.
(b) In the event of any tender offer for shares of UFC Stock
held in the Trust Fund, the Trustee shall respond to the tender offer with
respect to any such shares as directed by the Benefits Investment Committee in a
manner the Benefits Investment Committee determines to be in the best interests
of Participants.
Section 5.08. Change of Control. (a) For purposes of this
Section, the term "change of control of Company" means:
(i) the acquisition of more than eighty-five
percent (85%) of the outstanding shares of
voting stock directly or indirectly by any
person or group of persons acting in
concert, excluding affiliates of the
Company, by means of an offer made publicly
to the holders of all or substantially all
of the outstanding shares of any one or more
classes of the voting stock of the Company
to acquire such shares for cash, securities,
other property or any combination thereof;
or
(ii) the sale, assignment or transfer by the
Company of all or substantially all of its
business and assets to any person, excluding
affiliates of the Company; or
(iii) a merger, consolidation or other business
combination by the Company into or with any
person in which neither the Company nor any
subsidiary thereof is the continuing or
successor corporation.
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<PAGE> 18
(iv) As a result of, or in connection with, any
cash tender or exchange offer, merger or
other business combination, sale of assets
or contested election or any combination of
the foregoing transactions, the persons who
are directors of the Company before any of
the foregoing transactions shall cease to
constitute a majority of the Board of
Directors of the Company or any successor to
the Company.
(b) In the event of a change of control of the Company, all
account balances of all Participants employed on such date shall be fully vested
and nonforfeitable.
Section 5.09. Annual Statement. As soon as practicable
following each October 31, and at such other times as it determines, the
Benefits Administrative Committee shall provide each Participant with an annual
statement reflecting the status of the Participant's account as of such date.
Section 5.10. Diversification. (a) Subject to the rights of
Participants under this Section and the maximum ten percent (10%) limitation on
purchases of UFC Stock pursuant to Section 7.02, Participants' accounts shall be
invested in UFC Stock. A qualified Participant may elect to invest the eligible
diversification amount in accordance with the rules of this Section in a fixed
income investment fund designated by the Benefits Administrative Committee. The
right to invest hereunder is intended to enable a qualified Participant to
diversify a portion of the amount allocated to his account among investments
other than UFC Stock.
(b) A Participant becomes a qualified Participant on the day
following the Valuation Date coincidental with or immediately following his
attainment of age thirty-five (35). A Participant remains a qualified
Participant following his Severance from Service until his account has been
completely distributed.
(c) The eligible diversification amount shall be the result
obtained by subtracting the diversified account (as defined below) from the
product of (i) the Participant's elected diversification percentage times (ii)
the sum of the Participant's vested account balances in the Plan and the
Universal Foods Retirement Employee Stock Ownership Plan as of the Valuation
Date preceding the effective date of the diversification election. A
Participant's diversified amount is the sum of the Participant's account
balances in the Plan and the Universal Foods Retirement Employee Stock Ownership
Plan as of the applicable Valuation Date which are invested in the fixed income
fund established under such plans. The Participant may elect any of the
following percentages for diversification based on age:
Participant's Age Diversification Percentage
15
<PAGE> 19
Under 35 None
35-49 None or 25%
50-59 None, 25% or 50%
60 and over None, 25%, 50% or 75%
In the event an election results in a negative number, that amount shall be
transferred out of the fixed income fund and invested in UFC Stock. For all
purposes of this Section, diversification into the fixed income fund shall first
apply to the account balance under the Plan.
(d) An election under this Section may be made as of the day
following any Valuation Date by filing the form prescribed for such purpose by
the Benefits Administrative Committee by the date required by such Committee. To
the extent determined by the Benefits Administrative Committee, a separate
diversification election shall be provided with respect to the allocation under
Section 4.02 for any Plan Year with such effective date as may be determined by
said Committee.
(e) Effective September 8, 1998, the Plan shall be amended to
satisfy the requirements for diversification under Code Section 401(a)(28).
Section 5.11. Withholding/Rollover Rules. (a) This section
applies to distributions made on or after January 1, 1993. Notwithstanding any
provision of the Plan to the contrary that would otherwise limit a distributee's
election under this section, a distributee may elect, at the time and in the
manner prescribed by the Administrative Committee, to have any portion of an
eligible rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover as such terms are defined
herein.
(b) An eligible rollover distribution is any distribution of
all or any portion of the balance to the credit of the distributee, except that
an eligible rollover distribution does not include: any distribution that is one
of a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of ten years or more; any
distribution to the extent that such distribution is required under Section
401(a)(9) of the Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(c) An eligible retirement plan is an individual retirement
account described in Section 408(a) of the Code, an individual retirement
annuity described in Section 408(b) of the Code, an annuity plan described in
Section 403(a) of the Code, or a qualified trust described in Section 401(a) of
the Code, that accepts the distributee's eligible rollover
16
<PAGE> 20
distribution. However, in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an individual retirement
account or individual retirement annuity.
(d) A distributee includes an employee or former employee. In
addition, the employee's or former employee's surviving spouse and the
employee's or former employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Section 414(p)
of the Code, are distributees with regard to the interest of the spouse or
former spouse.
(e) A direct rollover is a payment by the Plan to the eligible
retirement plan specified by the distributee.
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<PAGE> 21
ARTICLE VI. ADMINISTRATION
Section 6.01. Allocation of Responsibility Among Fiduciaries
for Plan and Trust Administration. The Finance Committee, Benefits
Administrative Committee and Trustee shall be "Named Fiduciaries" within the
meaning of Section 402(a)(2) of ERISA. The Named Fiduciaries shall have only
those specific powers, duties, responsibilities and obligations as are
specifically given them under this Plan or the trust agreement. In general, the
Finance Committee shall have the sole authority to appoint and remove the
members of the Benefits Administrative Committee and to amend or terminate the
Plan in whole or in part. The Benefits Administrative Committee shall have the
responsibility for the administration of this Plan, which responsibility is
specifically described in this Plan. The Trustee shall have the sole
responsibility for the administration of the Trust and the management of the
assets held thereunder, except to the extent such responsibility is delegated to
any investment managers in accordance with such trust agreement. Each Named
Fiduciary may rely upon any direction, information or action of any other Named
Fiduciary as being proper, and is not required to inquire into the propriety of
any such direction, information or action. It is intended under this Plan that
each Named Fiduciary shall be responsible for the proper exercise of its own
powers, duties, responsibilities and obligations under this Plan and shall not
be responsible for any act or failure to act of another Named Fiduciary. An
individual may serve in more than one fiduciary capacity hereunder.
Section 6.02. Appointment and Authority of Benefits
Administrative Committee. (a) The general responsibility for carrying out the
provisions of the Plan shall be placed in the Benefits Administrative Committee
which shall be comprised of not less than three (3) employees of the Employers
or any Affiliate thereof appointed from time to time by the Finance Committee.
The Benefits Administrative Committee may appoint from its number such officers
and/or subcommittees with such powers as it shall determine and may authorize
one or more of its number or any agent to execute or deliver any instrument or
make any payment on its behalf. The Benefits Administrative Committee may
designate and allocate any fiduciary responsibility to one or more of its
members or to any other person or persons. It may retain counsel, employ agents
and provide for such clerical, accounting and actuarial services as it may
require. The foregoing sentence shall in no way affect the duty and obligation
of the Benefits Administrative Committee to retain such services in connection
with the carrying out of its duties and to designate an independent, qualified
public accountant as provided in Section 6.03(b) hereof.
(b) The Benefits Administrative Committee shall hold meetings
upon such notice, at such place and at such times as it may from time to time
determine. A meeting may be held in any manner as may be determined by the
Benefits Administrative Committee, but in any event, where all members are not
physically present, the actions of the Benefits
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<PAGE> 22
Administrative Committee shall be reduced to writing and sent to all members
within ten (10) days of the date of such meeting.
(c) A majority of the Benefits Administrative Committee shall
constitute a quorum, and any action which the Plan authorizes or requires the
Benefits Administrative Committee to take shall require the written approval or
the affirmative vote of a majority of its members.
(d) Members of the Benefits Administrative Committee shall not
be paid any compensation from the assets of the Plan.
(e) Subject to the provisions of the Plan, the Benefits
Administrative Committee may from time to time establish rules for the
transaction of its business. The determination of the Benefits Administrative
Committee as to any disputed question pertaining to the Plan shall be
conclusive.
(f) Any member of the Benefits Administrative Committee may
resign by delivering his written resignation to the Finance Committee. Any
member of the Benefits Administrative Committee may be removed by the Finance
Committee, and such removal shall be effective at such time as is provided for
by the Finance Committee. Notice of such removal shall be conveyed to the member
so removed in the manner provided by the Finance Committee.
(g) In addition, the Benefits Administrative Committee shall
have the following specific duties and authority under the Plan:
(i) To determine a funding policy in accordance
with Section 3.03 herein;
(ii) To exercise the discretionary authority to
determine eligibility for benefits and to
construe the terms of the Plan; any such
determination or construction shall be final
and binding on all parties unless arbitrary
and capricious;
(iii) To prescribe and require the use of
appropriate forms;
(iv) To formulate, issue and apply rules and
regulations;
(v) To make appropriate determinations and
calculations;
(vi) To authorize and direct benefit payments;
and
19
<PAGE> 23
(vii) To prepare and file reports, notices, and
any other documents relating to the Plan
which may be required by law.
The Benefits Administrative Committee shall exercise any authority allocated
hereunder in any manner consistent with ERISA and the applicable provisions of
the Plan.
Section 6.03. Use of Professional Services. (a) The Benefits
Administrative Committee may allocate fiduciary duties to any other person or
persons. The Benefits Administrative Committee may employ agents, provide for
clerical services as required and, subject to the approval of the Finance
Committee, retain counsel.
(b) The Benefits Administrative Committee shall, subject to
the approval of the Finance Committee, engage an independent, qualified public
accountant who shall audit the Plan and its assets in compliance with ERISA (and
if the Benefits Administrative Committee so elects, subject to the approval of
the Finance Committee, remove and appoint another such accountant).
Section 6.04. Fees and Expenses. Where the Benefits
Administrative Committee utilizes services as provided in Section 6.03 hereof,
the Benefits Administrative Committee shall review the fees and other costs for
these services and shall authorize the payment of such fees and costs. Such fees
and costs and other expenses incurred or authorized by the Benefits
Administrative Committee shall be paid by the Employers or from the Plan assets
as determined by the Benefits Administrative Committee.
Section 6.05. Claims Procedure. A Participant or Beneficiary
may file with the Benefits Administrative Committee a claim with respect to the
Plan. Any such claim shall be filed in writing stating the nature of the claim,
the facts supporting the claim, the amount claimed and the name and address of
the claimant. The Benefits Administrative Committee, within ninety (90) days (or
one hundred eighty (180) days if special circumstances require an extension of
time for processing the claim and the Benefits Administrative Committee notifies
the claimant of such extension prior to ninety (90 days from the date of the
initial filing of the claim) after receipt of the notice, shall render a written
decision on the claim. If the claim shall be denied, either in whole or in part,
the decision shall include the specific reason or reasons for the denial;
specific reference to the pertinent Plan provision or provisions which is the
basis for the denial; a description of any additional material or information
necessary for the claimant to perfect the claim and an explanation why the
information or material is necessary; and appropriate information as to the
steps to be taken if the Participant or Beneficiary wishes to appeal the
Benefits Administrative Committee's decision. The claimant may file with the
Benefits Administrative Committee, within sixty (60) days after receiving such
notification, a written notice of request for review of the Benefits
Administrative Committee's decision. The
20
<PAGE> 24
review shall be made by the Benefits Administrative Committee. The written
notice of appeal should contain (i) a statement of the ground(s) for the appeal,
(ii) a specific reference to the pertinent Plan provision or provisions on which
the appeal is based, (iii) a statement of the argument(s) and authority (if any)
supporting each ground for the appeal, and (iv) any other pertinent documents or
comments which the claimant desires to submit in support of the appeal. The
Benefits Administrative Committee shall render a written decision on the claim
which shall include the specific reasons for the decision and a reference to the
pertinent Plan provisions on which the decision was based within sixty (60) days
(or one hundred twenty (120) days if special circumstances require an extension
of time for processing the claim and the Benefits Administrative Committee
notifies the claimant of such extension prior to sixty (60) days from the date
of the initial filing of the claim) after receipt of the documents requested for
review. A copy of the Benefits Administrative Committee's decision shall be
mailed promptly to the claimant. If a Participant or Beneficiary shall not file
written notice with the Benefits Administrative Committee at the times set forth
above, the Participant or Beneficiary shall have waived all benefits other than
as set forth in the notice from the Benefits Administrative Committee.
The foregoing claims procedure shall be the only method by
which claims of Participants, former Participants or Beneficiaries shall be
decided under this Plan. Oral communications by potential claimants to the
Benefits Administrative Committee shall have no force and effect hereunder.
Section 6.06. Trustee's Responsibilities. The duties,
authority and responsibility of any Trustee or other person handling all or any
part of the Plan assets shall include and be limited to the duties, authority
and responsibility expressly set forth in a written agreement between the
Company and any such Trustee or other person.
Section 6.07. Fiduciary Insurance and Indemnification. The
Company or any Affiliate shall maintain and keep in force such insurance as the
Benefits Administrative Committee shall determine to insure and protect the
directors, officers, employees of the Company or any Affiliate thereof and any
appropriately authorized delegates or appointees of them against any and all
claims, damages, liability, loss, cost or expense (including attorneys' fees)
arising out of or resulting from (including failure to act with respect to) any
responsibility, duty, function or activity of any such person in relation to the
Plan, including without limitation, the members of the Benefits Administrative
Committee and directors, officers and employees of the Employers or any
subsidiary or Affiliate thereof performing responsibilities, duties, functions,
and/or actions at the direction or under the authority of any of the foregoing.
In lieu of and/or as a supplement and in addition to the
insurance referred to in the foregoing sentence, the Affiliates shall indemnify
and hold harmless their directors, officers and employees against any and all
claims, damages, liability, loss, cost or expense
21
<PAGE> 25
(including attorneys' fees) arising out of or resulting from (including failure
to act with respect to) any responsibility, duty, function or activity of any
such person in relation to the Plan (or trust agreement, if applicable)
including without limitation the members of the Benefits Administrative
Committee and directors, officers and employees of the Affiliates performing
responsibilities, duties, functions and/or actions at the direction or under the
authority of any of the foregoing; provided, however, that no such
indemnification shall extend to any matter as to which it shall have been
adjudged by any court of competent jurisdiction that such person or persons have
acted in bad faith or were guilty of gross negligence in the performance of any
duties hereunder unless such Court shall, in view of all the circumstances of
the case, determine that such person or persons are fairly and reasonably
entitled to indemnification.
Section 6.08. Agent for Service of Process. The Chairman of
the Benefits Administrative Committee is hereby designated as the agent for
service of legal process with respect to all matters pertaining to the Plan.
Section 6.09. Allocation of Fiduciary Responsibility. This
Article VI provides for "Named Fiduciaries" as required by Section 402(a)(1) of
ERISA and a procedure for the allocation of responsibilities as required by
Section 402(b)(2) of ERISA. If the Finance Committee or Benefits Administrative
Committee allocates responsibility as herein provided, such Named Fiduciaries
shall not be responsible for the actions of the person(s) to whom the
responsibility is allocated except as provided in Section 405(c)(2) of ERISA.
Section 6.10. Liability for Breach of Co-Fiduciary. The
members of the Finance Committee and the Benefits Administrative Committee shall
not be liable for the acts of commission or omission of another fiduciary unless
(i) such member knowingly participated or knowingly attempted to conceal the act
or omission of another fiduciary and he knew the act or omission was a breach of
fiduciary responsibility by the other fiduciary; or (ii) such member has
knowledge of a breach by the other fiduciary and shall not make reasonable
efforts to remedy the breach; or (iii) such member's breach of the member's own
fiduciary responsibility permitted the other fiduciary to commit a breach.
Section 6.11. Communications. All requests, appeals, elections
and other communications to the Benefits Administrative Committee shall be in
writing and shall be by transmitting the same via the U.S. Mail, certified,
return receipt requested, addressed as follows:
Universal Foods Corporation
433 East Michigan Street
Milwaukee, Wisconsin 53202
Attention: Chairman, Benefits Administrative Committee
Universal Foods Transition Retirement Plan
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<PAGE> 26
ARTICLE VII. TRUSTEE AND TRUST FUND
Section 7.01. Trustee and Trust Fund. The powers and duties of
the Trustee with respect to the Plan and Trust Fund are set forth in the Trust.
Section 7.02. Investment of Trust Fund. All Employer
contributions made to the Trust Fund pursuant to this Plan shall be paid to the
Trustee and, except as may otherwise be provided in the Trust, shall be held,
invested and reinvested by the Trustee without distinction between principal and
income, in such securities or in such other property, real or personal, wherever
situated, as the Trustee shall deem advisable, including, but not limited to,
shares of stock, common or preferred, whether or not listed on any exchange
(including, without limitation, shares of UFC Stock), participations in mutual
investment funds, bonds and mortgages, and other evidences of indebtedness or
ownership, and participations in any common trust fund established or maintained
by the Trustee for the collective investment of fiduciary funds and shall not be
limited by any state statute or judicial decision prescribing or limiting
investments appropriate for trustees; provided, however, that the Trustee shall
not purchase Stock if, as a result of such purchase, the aggregate fair market
value of all shares of UFC Stock held in the Trust Fund would exceed ten percent
(10%) of the fair market value of all Trust Fund assets.
Section 7.03. Acquisition of UFC Stock. It is intended that
the Trustee qualify as an "agent independent of the issuer" within the meaning
of Rule 10b-18 under the Securities Exchange Act of 1934, as amended, and
accordingly neither the Company nor any Affiliate of the Company may exercise
any direct or indirect control or influence over the times when, or the prices
at which, the Trustee purchases shares of UFC Stock in the market, the amounts
to be purchased, the manner in which the shares are to be purchased, or the
selection of a broker or dealer through which purchases are executed. Purchases
will not be made for the purpose of creating actual or apparent active trading
in, or raising the price of, UFC Stock. Any such investment and reinvestment
shall meet the applicable provisions of ERISA and the Code.
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ARTICLE VIII. AMENDMENT AND TERMINATION
Section 8.01. Amendment. The Company shall have the right, by
action of the Finance Committee, to modify, alter or amend the Plan at any time
and in any manner which does not cause any part of the Plan to be used for, or
diverted to, any purpose other than the exclusive benefit of the Participants or
Beneficiaries. Notwithstanding the foregoing, no amendment to the Plan shall
decrease a Participant's accrued benefit or vested percentage or eliminate an
optional form of distribution for a previously accrued benefit.
Section 8.02. Termination. The Company shall have the right to
terminate the Plan, in whole or in part, by action of the Finance Committee. An
Employer may terminate its participation in the Plan by action of its board of
directors. In the event of any termination, partial termination or permanent
discontinuance of Employer contributions, the account balances of Participants
affected by such action shall be fully vested and nonforfeitable.
Section 8.03. Non-Reversion of Assets. In no event shall the
Employers receive any amount from the Plan, except that, (i) to the extent that
any contributions hereunder are made by a mistake of fact, such amount may, at
the request of the Benefits Administrative Committee, be returned within one (1)
year after it is made, (ii) all contributions hereto being hereby expressly
conditioned on the deductibility of the contribution under Code Section 404, and
to the extent such deduction is disallowed it may, at the request of the
Benefits Administrative Committee, be returned within one (1) year after the
disallowance of such deduction, and (iii) amounts may be returned pursuant to
Section 4.04(c)(iv) hereof.
24
<PAGE> 28
ARTICLE IX. GENERAL PROVISIONS
Section 9.01. Participants to Furnish Information. Each
Participant entitled to benefits under the Plan shall furnish to the Benefits
Administrative Committee such evidence, data or information as the Benefits
Administrative Committee considers necessary or desirable in order to administer
the Plan properly.
Section 9.02. Non-Guarantee of Employment or Other Benefits.
Neither the establishment of the Plan, nor any modification or amendment hereof,
nor the payment of benefits hereunder shall be construed as giving any
Participant or other person whomsoever any legal or equitable right against the
Employers, the Finance Committee, the Benefits Administrative Committee, the
Benefits Investment Committee, or their respective members or the Trustee, or
the right to payment of any benefits hereunder (unless the same shall be
specifically provided herein) or as giving any Employee the right to be retained
in the service of the Employers or the Affiliates.
Section 9.03. Mergers, Consolidations and Transfers of Plan
Assets. In the case of any merger, consolidation with, or transfer of assets or
liabilities to any other plan, each Participant must be entitled (if the Plan
then terminated) to receive a benefit immediately after the merger,
consolidation, or transfer which is equal to or greater than the benefit the
Participant would have been entitled to receive immediately before the merger,
consolidation, or transfer (if the Plan then terminated) pursuant to the
requirements of ERISA and the Code.
Section 9.04. Spendthrift Clause. No Participant, former
Participant or Beneficiary entitled to benefits hereunder shall have the right
to transfer, assign, alienate, anticipate, pledge or encumber any part of such
benefits, nor shall such benefits, or any part of the Plan assets or any
contract from which such benefits are payable, be subject to seizure by legal
process by any creditor of such Participant, former Participant or Beneficiary.
In the event that such Participant or other person entitled to such benefits, or
such creditor thereof, shall attempt to effect a division as hereinabove
described, of any such benefit, the Plan may pay over to or apply on the behalf
of such Participant, former Participant or Beneficiary, all or any part of such
benefits to which such person would otherwise have been entitled hereunder.
Notwithstanding the foregoing, the Trustee may recognize a qualified domestic
relations order with respect to child support, alimony payments or marital
property rights if such order contains sufficient information for the Benefits
Administrative Committee to determine that it meets the applicable requirements
of Section 414(p) of the Code. Such an order may permit distribution to an
alternate payee prior to the time a Participant would be eligible for benefits
hereunder. The Benefits Administrative Committee shall establish written
procedures concerning the notification of interested parties and the
determination of the validity of such orders.
25
<PAGE> 29
Section 9.05. Exclusive Benefit. All contributions made under
the Plan shall be paid to the Trust, and all property and funds of the Trust
allocable to the Plan, including income from investments and from all other
sources, shall be managed solely in the interest of Participants and
Beneficiaries and for the exclusive purpose of:
(i) providing benefits to Participants and
Beneficiaries; and
(ii) defraying reasonable expenses of administering
the Plan.
Section 9.06. Successors and Assigns. The Plan shall be
binding upon the successors and assigns of the Employers.
Section 9.07. Top-Heavy Restrictions. (a) Notwithstanding any
provision to the contrary herein, in accordance with Code Section 416, if the
Plan is a top-heavy plan for any Plan Year, then the provisions of this Section
shall be applicable. The Plan is "top-heavy" for a Plan Year if as of its
"determination date" (i.e., the last day of the preceding Plan Year or the last
day of the Plan's first Plan Year, whichever is applicable), the total present
value of the accrued benefits of key employees (as defined in Code Section
416(i)(1) and applicable regulations) exceeds sixty percent (60%) of the total
present value of the accrued benefits of all employees under the Plan (excluding
those of former key employees) (as such amounts are computed pursuant to Section
416(g) and applicable regulations using a five percent (5%) interest assumption
and a 1971 GAM mortality assumption) unless such plan can be aggregated with
other plans maintained by the applicable controlled group in either a permissive
or required aggregation group and such group as a whole is not top-heavy. In
addition, a plan is top-heavy if it is part of a required aggregation group
which is top-heavy. Any plan of a controlled group may be included in a
permissive aggregation group as long as together they satisfy the Code Section
401(a)(4) and 410 discrimination requirements. Plans of a controlled group which
must be included in a required aggregation group (including any terminated
plans) include any plan in which a key employee participates and any plan which
enables such a plan to meet the Section 401(a)(4) or 410 discrimination
requirements. The present values of aggregated plans are determined separately
as of each plan's determination date and the results aggregated for the
determination dates which fall in the same calendar year. A "controlled group"
for purposes of this Section includes any group employers aggregated pursuant to
Code Section 414(b), (c) or (m). The calculation of the present value shall be
done as of a valuation date which for a defined contribution plan is the
determination date and for a defined benefit plan is the date as of which
funding calculations are generally made within the twelve month period ending on
the determination date. Solely for the purpose of determining if the Plan, or
any other plan included in a required aggregation group of which this Plan is a
part, is top-heavy (within the meaning of Section 416(g) of the Code) the
accrued benefit of an employee other than a key employee (within the meaning of
Section 416(i)(1) of the Code) shall be determined under (i) the method, if any,
that uniformly applies for accrual purposes under
26
<PAGE> 30
all plans maintained by the Affiliates, or (ii) if there is no such method, as
if such benefit accrued not more rapidly than the slowest accrual rate permitted
under the fractional accrual rate of Section 411 (b)(1)(C) of the Code.
(b) If the Plan is top-heavy in a Plan Year, nonkey employee
participants who have not separated from service at the end of such Plan Year
will receive allocations of Employer contributions and forfeitures under this
Plan and/or the Universal Foods Retirement Employee Stock Ownership Plan at
least equal to five percent (5%) of compensation (as defined in Code Section
415) for such year.
(c) If the controlled group maintains a defined benefit plan
and a defined contribution plan which both cover one or more of the same key
employees, and if such plans are top-heavy, then the limitation of this Plan
with respect to the Code Section 415(e) maximum benefit limitations shall be
amended to refer to a 1.0 adjustment on the dollar limitation rather than a 1.25
adjustment. This provision shall not apply if the Plan is not "super top-heavy"
and if the minimum benefit requirements of this Section are met when five
percent (5%) is changed to seven and one-half percent (7.5%) for each year
such plan is top-heavy. A plan is "super top-heavy" if the ratio referred to in
subsection (a) above results in a percentage in excess of ninety percent (90%)
rather than a percentage in excess of sixty percent (60%).
(d) If the Plan is top-heavy in a Plan Year, the vesting
schedule shall automatically be amended for any employee employed on the first
day of such year or thereafter so that the vested percentage for
employer-derived benefits is equal to the greater of the vesting provided under
other provisions of the Plan or the following schedule:
<TABLE>
<CAPTION>
Years of Service Nonforfeitable Percentage
<S> <C> <C>
1 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
</TABLE>
where "years of service" means the years credited for vesting purposes under the
Plan or, if greater, the years required to be counted under Code Section 411 and
applicable regulations thereto. If the Plan thereafter ceases to be top-heavy
for a Plan Year, the vesting schedule above shall be disregarded and the
original schedule applied, except with respect to any Participant with five (5)
or more years of service and except that no Participant's vested percentage as
of the end of the prior year shall be decreased. Any non-vested Participant who
acquires a vested interest in the employer-derived benefit by operation of the
27
<PAGE> 31
amended vesting schedule shall not be subject thereafter to a cancellation of
service. Notwithstanding anything in this Section to the contrary, the amendment
of the vesting schedule pursuant to this subsection shall not affect the
calculation of benefit amounts or the determination of benefit commencement
dates hereunder.
28
<PAGE> 32
AMENDMENT NO. 1 TO THE
UNIVERSAL FOODS CORPORATION
TRANSITION RETIREMENT PLAN
The Universal Foods Corporation Transition Retirement Plan ("the Plan")
is hereby amended, effective as of September 10, 1998, as set forth below:
1. Section 5.08(a) of the Plan is amended to read in its entirety
as follows:
Section 5.08. Change of Control. (a) For purposes of this
Section, the term change of control of the Company means:
(i) 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 (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 (i),
the following acquisitions shall not constitute a Change of
Control: (1) any acquisition directly from the Company, (2)
any acquisition by the Company, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the
Company or (4) any acquisition pursuant to a transaction which
complies with clauses (A), (B) and (C) of subsection (iii) of
this Section; or
(ii) individuals who, as of September 10, 1998, 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
September 10, 1998 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
<PAGE> 33
(iii) consummation by the Company of a reorganization, merger 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 entity (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 beneficially own, directly or indirectly, more
than 50% 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 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 of 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 prior to the Business
Combination and (C) at least a majority of the members of
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 the
action of the Board, providing for such Business Combination;
or
(iv) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
<PAGE> 1
EXHIBIT 13.1
BUSINESS PROFILE
UNIVERSAL FOODS CORPORATION IS AN INDUSTRIAL MARKETER OF HIGH-PERFORMANCE
COLORS, FLAVORS, FLAVOR ENHANCERS, YEAST AND DEHYDRATED PRODUCTS.
OUR OUTSTANDING PRODUCTS ADD FUNCTIONALITY TO FOODS, BEVERAGES, COSMETICS,
PHARMACEUTICALS AND A VARIETY OF OTHER PRODUCTS.
OUR TECHNICAL EXPERTISE AND APPLICATION KNOW-HOW SET US APART FROM OTHER
SUPPLIERS SERVING THESE INDUSTRIES.
[PIE CHART]
FISCAL 1998
REVENUE BY DIVISION
<TABLE>
<S> <C>
Flavor 39%
Color 22%
Yeast 18%
Dehydrated 16%
Asia Pacific 5%
</TABLE>
Color
Operates as:
Warner-Jenkinson Company
[BAR CHART]
Revenue
(in millions)
<TABLE>
<S> <C>
94 $143
95 $149
96 $159
97 $192
98 $195
</TABLE>
BUSINESS
We are the world's leading supplier of synthetic food colors, with a growing
share of the international market for natural colors, specialty inks and
cosmetic colors. Skilled chemists and color technicians provide customers with
outstanding technical support in the development of high-performance colors and
color systems that meet specific application requirements and performance
characteristics.
PRODUCTS
Natural and synthetic colors and color systems for beverages, baked goods,
confectioneries, dairy products, pharmaceuticals, cosmetics, personal care
products, inks for ink-jet printers, and a variety of other applications.
1998 REVIEW
Gross profit and operating income were up significantly due to an improved sales
mix and greater manufacturing efficiencies. Sales of lakes, dispersions and
cosmetic pigments grew as we emphasized our more technically sophisticated
products.
OUTLOOK/OPPORTUNITIES
The competitive outlook remains favorable with increased demand for our
specialized products. We continue to excel in our ability to provide superior
technical support and service. Our focus remains on new products and
applications in faster growing markets.
ESTIMATED WORLD MARKET
$2.8 billion
CUSTOMERS PERCENT OF REVENUE
Food Processors 70%
Cosmetics Mfgrs./
Pharmaceutical
Companies/Ink-Jet
Printer Mgrs. 30%
Dehydrated Products
Operates as:
Rogers Foods (U.S.) &
Universal Dehydrates (Europe)
[BAR CHART]
Revenue
(in millions)
<TABLE>
<S> <C>
94 $ 85
95 $117
96 $132
97 $135
98 $147
</TABLE>
BUSINESS
We are a leader in the U.S. production of dehydrated onion and garlic products,
and the number one supplier of dehydrated vegetables in Europe. State-of-the-art
dehydration technology, extensive plant breeding and seed development programs,
and comprehensive crop management techniques produce consistent, top-quality
dehydrated products.
PRODUCTS
Dehydrated onion, garlic, chili pepper, paprika, parsley, celery, spinach and
other vegetables for use as ingredients by food manufacturers and sale under
private labels to the retail market and food service industry.
1998 REVIEW
Total sales grew faster than the overall market with record volumes in chili,
onion and garlic products. Operating income increased as investments in
operations and process improvements resulted in greater efficiencies and yields.
OUTLOOK/OPPORTUNITIES
Capacity and yields at our European operations are improving as we continue to
transfer our dehydration and field management expertise to these locations. The
focus remains on broadening our customer base and gaining additional market
share.
ESTIMATED WORLD MARKET
$1.2 BILLION
[PIE CHART]
CUSTOMERS
PERCENT OF REVENUE
<TABLE>
<S> <C>
Food Processors 54%
Spice Blenders 29%
Repackers 9%
Distributors/Retail 8%
</TABLE>
4
<PAGE> 2
Flavor
Operates as:
Universal Flavors
[BAR CHART]
Revenue*
(in millions)
<TABLE>
<S> <C>
94 $300
95 $371
96 $359
97 $321
98 $347
</TABLE>
*includes revenue of combined Flavor and BioProducts divisions
BUSINESS
We are a leading manufacturer of flavors, flavor enhancers and flavor systems
for the beverage, food and dairy industries. Flavor chemists and application
technologists work closely with customers in the development of innovative
products designed to meet the unique requirements of each application.
PRODUCTS
Flavors and ingredient systems for dairy, food and beverage products; specialty
extracts from yeast, vegetable proteins, meat, milk protein and other natural
products which are used primarily in savory flavors, texture modifiers and
flavor enhancers in processed foods; and aroma chemicals and fragrances for
personal care and household products.
1998 REVIEW
Operating income increased sharply as we reduced costs and improved
manufacturing efficiencies. The successful consolidation of the BioProducts
business into the Flavor division resulted in lower costs and increased sales of
our fully integrated line of flavor products. Two new technical development
centers were completed and are now providing expanded service in customer
applications.
OUTLOOK/OPPORTUNITIES
Recent acquisitions have strengthened our savory flavor business and improved
our competitive position as we expand into new geographic markets. Improvements
in technical capabilities and operations following the merger of BioProducts and
Flavor will continue to have a positive impact on future performance.
ESTIMATED WORLD MARKET
$15 BILLION
[PIE CHART]
CUSTOMERS
PERCENT OF REVENUE
<TABLE>
<S> <C>
Food Processors 44%
Dairy Product
Companies 30%
Beverage Companies 18%
Other 8%
</TABLE>
Yeast
Operates as:
Red Star Yeast & Products
[BAR CHART]
Revenue
(in millions)
<TABLE>
<S> <C>
94 $163
95 $155
96 $156
97 $159
98 $164
</TABLE>
BUSINESS
We are the largest North American supplier of yeast to the commercial bakery
market. Our outstanding reputation is built on our reliable production and
delivery of consistent, high-quality yeast products for the commercial and
retail markets.
PRODUCTS
A diversified line of yeast products including compressed, cream and active dry
yeast for commercial and retail applications, such as bakery goods, pizza,
frozen dough, prepared bread machine mixes and wine making. Yeast derivatives,
vegetable hydrolysates and other bionutrients are produced for dairy starter
cultures, pharmaceuticals, bioremediation and other applications in
biotechnology.
1998 REVIEW
Sales volumes of cream yeast increased as U.S. commercial baking companies
continued to shift to cream yeast systems. Consolidation of manufacturing
operations and improvements in our distribution system reduced costs and
improved customer service.
OUTLOOK/OPPORTUNITIES
We will continue to gain market share as we convert major commercial baking
customers to cream yeast systems. Programs are being implemented to strengthen
our position in the retail yeast market. Our bionutrient product line of yeast
and other protein derivatives offers additional opportunities for growth.
ESTIMATED WORLD MARKET
$2.3 BILLION
[PIE CHART]
CUSTOMERS
PERCENT OF REVENUE
<TABLE>
<S> <C>
Commercial Baking Companies 82%
Individual Consumers 13%
Other 5%
</TABLE>
Asia Pacific
Operates as:
Universal Foods Corporation
(Asia Pacific)
[BAR CHART]
Revenue
(in millions)
<TABLE>
<S> <C>
94 -
95 -
96 -
97 $44
98 $43
</TABLE>
BUSINESS
The Asia Pacific division was established in fiscal 1997 to focus on marketing
the company's diverse product line under one unified name. Through this
division, we offer a wide range of products from our other divisions, as well as
unique products developed by regional technical teams to satisfy local tastes
and preferences.
PRODUCTS
Natural and synthetic colors and color systems for beverages, pharmaceuticals,
confectioneries and cosmetics; flavors for carbonated and still beverages, ice
cream, yogurt and flavored milk products; savory flavors for instant noodles and
snack foods; and dehydrated products for a variety of food items.
1998 REVIEW
Gross profit and operating income declined from the prior year due to the
economic problems in Asia. Steps have been taken to reduce costs and carefully
control expenses as we continue to position our company as a reliable, key
supplier in the region.
OUTLOOK/OPPORTUNITIES
Despite near-term uncertainty, we remain committed to this strategically
important geographic market. Opportunities for our products on a long-term basis
continue to be outstanding.
ESTIMATED REGIONAL MARKET
$4 billion
5
<PAGE> 3
Management's Analysis of operations and financial condition
[ Years ended September 30, 1998, 1997 and 1996 ]
Results of Operations
Net earnings for 1998 were $72.6 million, or $1.40 per share diluted, compared
with $64.7 million, or $1.26 per share diluted, for 1997 and $44.2 million, or
$.85 per share diluted, for 1996. The 1996 earnings include pretax charges from
unusual items of $25.0 million ($16.7 million after tax, or $.32 per share).
Excluding unusual items, diluted net earnings per share increased 11.1% in 1998
and 7.7% in 1997.
Revenue for 1998 increased to $856.8 million from $825.7 million in 1997 and
$806.4 million in 1996. The Dehydrated Products and Flavor divisions reported
strong revenue growth in 1998. Dehydrated revenue reflects strong volume
increases in the U.S. business. Flavor division revenue includes modest gains in
the U.S. and solid gains in the international business which benefited from 1998
acquisitions. Color and Red Star Yeast & Products reported modest revenue gains
in 1998, while revenue for Asia Pacific was slightly lower than the prior year.
In 1997, the Color and Dehydrated Products divisions reported solid revenue
growth. Red Star Yeast & Products division revenue was flat reflecting the
impact of customers moving to cream yeast, which reduces both revenue and
product cost. Flavor division revenue declined in 1997 primarily from continued
weakness in the dairy segment and slack demand for beef products in the U.K.
[CHART]
Net Earnings (in millions)
(excluding unusual items)
<TABLE>
<S> <C>
94 $58.5
95 $56.9
96 $60.9
97 $64.7
98 $72.6
</TABLE>
Revenue generated outside the United States, including exports, increased to 41%
of revenue from 40% in 1997. Approximately 57% of 1998 and 1997 foreign revenue
is derived from Europe. The Company also generates foreign revenue in Canada,
Mexico and the Pacific Rim. Changes in foreign currency rates had no material
effect on revenue and expenses in 1998, and management currently expects no
significant impact from foreign currency rate changes in 1999.
The cost of products sold was 64.9% of revenue in 1998, 66.7% in 1997 and 66.1%
in 1996. The decrease of cost of products sold as a percent of revenue in 1998
reflects lower raw material costs in the Color and Red Star Yeast & Products
divisions, combined with customers continuing to move to more sophisticated
proprietary products. The increase of product costs in 1997 resulted primarily
from decreased margins in the Flavor business, as market weakness in North
America negatively impacted both pricing and capacity utilization.
Selling and administrative expenses in 1998 increased 2.7% to $171.9 million
from $167.4 million in 1997 and $164.2 million in 1996. Selling and
administrative expenses were 20.1% of revenue in 1998, 20.3% in 1997, and 20.4%
in 1996. Included in 1997 selling and administrative expenses are $7.5 million
of integration expenses for the cost of combining the Company's BioProducts and
Flavor divisions.
Operating income increased $21.7 million in 1998 to $128.9 million from $107.2
million in 1997. Operating income was $83.9 million in 1996. All divisions,
except Asia Pacific, reported strong operating income increases in 1998. The
Flavor division's results were favorably impacted by acquisitions and savings
from the BioProducts consolidation. Operating income in 1997 includes strong
gains by the Color and Dehydrated Products divisions, reduced by $7.5 million of
integration expenses. Color division results include Tricon Colors, Inc., which
was acquired in the second quarter of 1997. Operating income in 1996 was reduced
by unusual items which included a $20 million non-cash charge in adopting
Statement of Financial Accounting Standards No. 121 (SFAS No. 121), "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of." The Company also recorded a $5 million restructuring charge in 1996 to
address opportunities to streamline its production base, improve efficiency and
reduce operating costs.
The effective income tax rate was 32.5% in 1998, 28.5% in 1997 and 35.6% in
1996. The lower effective tax rates in 1998 and 1997 reflect settlements of
prior years' issues and other items. Excluding the effect of these items, the
effective tax rate would have been approximately 34.0% in 1998 and 1997.
13
<PAGE> 4
Management's Analysis of operations and financial condition
[ Years ended September 30, 1998, 1997 and 1996]
Liquidity and Financial Position
Cash provided by operating activities was $94.1 million in 1998, $93.7 million
in 1997 and $92.0 million in 1996. The 1998 and 1997 amounts include increases
in net earnings and depreciation, offset by an increase in net operating assets.
Cash used for investing activities increased to $133.9 million in 1998 from
$129.3 million in 1997 and $61.6 million in 1996. Cash used for acquisitions was
$68.7 million in 1998 and $50.5 million in 1997. Capital expenditures totaled
$66.1 million in 1998 and $73.5 million in 1997. Both years reflect expenditures
for productivity improvements and plant expansions. In addition, the Flavor
division completed construction of two technical centers in 1998. In 1999,
capital expenditures are estimated to be between $65 million and $75 million;
depreciation expense should approximate $45 million.
[CHART]
Foreign Revenue (in millions)
<TABLE>
<S> <C>
94 $232
95 $313
96 $325
97 $330
98 $347
</TABLE>
Financing activities provided cash of $39.6 million in 1998 and $35.6 million in
1997. During 1998 and 1997 the Company repurchased 964,396 and 285,200 shares of
treasury stock at a cost of $21.8 million and $5.8 million, respectively. Net
additional borrowings were $75.0 million in 1998 compared to $59.8 million in
1997. The majority of the 1998 and 1997 borrowings were used to finance
acquisitions. On November 9, 1998, the Company filed a shelf registration
statement with the Securities and Exchange Commission pursuant to which the
Company may from time to time issue debt securities of up to $300 million in the
aggregate. The Company uses debt financing to lower its overall cost of capital,
which increases the return to shareholders. The Company maintains debt levels
considered prudent based on its cash flows, interest coverage and percentage of
total debt to total capital.
The Company has paid uninterrupted quarterly cash dividends since commencing
public trading in its stock over thirty-five years ago. In 1998, dividends paid
per share were $.53, up 1.9% from $.52 in 1997, which was an increase of 4.0%
over 1996.
The impact of inflation on both the Company's financial position and results of
operations has been minimal and is not expected to adversely affect 1999
results.
The Company's financial position continues to remain strong, enabling it to meet
cash requirements for operations, capital expansion programs and dividends to
shareholders.
Market Risk Factors
The Company is exposed to market risk, including changes in interest rates,
currency exchange rates and commodity prices. To manage the volatility relating
to these exposures on a consolidated basis, the Company nets the exposures to
take advantage of natural offsets and enters into various derivative
transactions for some of the remaining exposures pursuant to the Company's
policies covering hedging practices. The financial impacts of these hedging
instruments are offset by corresponding changes in the underlying exposures
being hedged. The Company does not hold or issue derivative financial
instruments for trading purposes. Note 1 to the consolidated financial
statements includes a discussion of the Company's accounting policies for
financial instruments.
The Company manufactures and sells its products in a number of countries
throughout the world and, as a result, is exposed to movements in foreign
currency exchange rates. The major foreign currency exposures involve the
markets in Western Europe, Mexico and Canada. The primary purpose of the
Company's foreign currency hedging activities is to protect against the
volatility associated with foreign currency sales, purchases of materials and
other assets and liabilities created in the normal course of business. The
Company utilizes forward exchange contracts with durations of generally less
than 12 months. In addition, the Company enters into forward exchange contracts
and foreign currency swaps to hedge intercompany financing transactions and
foreign source income.
14
<PAGE> 5
At September 30, 1998, unrealized gains and losses on outstanding foreign
currency contracts are not material. As of September 30, 1998, the potential
gain or loss in the fair value of the Company's outstanding foreign currency
contracts, assuming a hypothetical 10% fluctuation in the currencies of such
contracts, would be approximately $8.4 million. However, it should be noted that
any change in the value of the contracts, real or hypothetical, would be
significantly offset by an inverse change in the value of the underlying hedged
items. In addition, this hypothetical calculation assumes that each exchange
rate would change in the same direction relative to the U.S. dollar.
The Company manages its debt structure and interest-rate risk through the use of
fixed- and floating-rate debt and through the use of derivatives. The Company
uses interest-rate swaps to hedge its exposure to interest rate changes, and
also to lower its financing costs. Generally under these swaps, the Company
agrees with a counterparty to exchange the difference between fixed-rate and
floating-rate interest amounts based on an agreed notional principal amount. The
Company's primary exposure is to U.S. interest rates. As of September 30, 1998,
unrealized gains and losses related to interest rate swap agreements were not
material nor would they have been material given a hypothetical 10% fluctuation
in market interest rates.
[CHART]
Operating Margins (excluding unusual items)
<TABLE>
<S> <C>
94 11.7%
95 13.0%
96 13.5%
97 13.0%
98 15.0%
</TABLE>
The Company is the purchaser of certain commodities such as corn, soybean meal
and fruits. The Company generally purchases these commodities based upon market
prices that are established with the vendor as part of the purchase process. In
general, the Company does not use commodity financial instruments to hedge
commodity prices due to a high correlation between the commodity cost and the
ultimate selling price of the product. On occasion, the Company may enter into
non-cancelable contracts, as deemed appropriate, to reduce the effect of price
fluctuations on some future manufacturing requirements.
Year 2000
The "Year 2000" ("Y2K") issue affects installed computer systems, network
elements, software applications, and other business systems that have time
sensitive programs that may not properly reflect or recognize the year 2000.
Because many computers and computer applications define dates by the last two
digits of the year, "00" may not be properly identified as the year 2000. This
error could result in miscalculations or system errors. The Y2K issue may also
affect the systems and applications of customers and vendors which could have an
impact on the Company's ability to address Y2K.
The Company has developed a comprehensive Project Plan ("the Plan") for
addressing the Y2K issue. The Plan includes the following components: 1) vendor
and systems surveys, including assessments of Company systems, applications and
business-critical third-party systems; 2) development of action plans for
compliance; 3) implementation of action plans; 4) application testing; 5)
creation of Y2K rollover and disaster plans; 6) implementation of the Y2K
rollover and disaster plans; and 7) post-Y2K strategies.
To date, key financial, information and operational systems, including equipment
with embedded microprocessors, have been inventoried, assessed and detailed
plans are in place for the required system modifications or replacements.
Because of the nature of development and implementation of action plans and
systems testing, the Company has determined that there is significant overlap
between these two phases. As a result, Plan implementation is expected to be
substantially complete by July 1999, and testing by the end of September 1999.
In addition, rollover and contingency plans to protect the businesses from Y2K
issues will be developed and implemented during fiscal 1999.
The costs of modifying software and engaging outside consultants has not been
and is not expected to be material. During fiscal year 1999, the Company
15
<PAGE> 6
Management's Analysis of operations and financial condition
[ Years ended September 30, 1990, 1997 and 1996 ]
estimates that it will incur capital expenditures of approximately $10.0 million
as a result of accelerating the rollout of computer operating systems and
replacing non-compliant process control systems in various plants. In addition,
the Company estimates that during 1999, approximately 30% of its Information
Technology ("IT") personnel will be dedicated to implementation of the Company's
Plan. The foregoing allocation of resources is not expected to significantly
impact other IT projects as many of the planned and in process projects are
normal business system migrations that upgrade and improve the Company's current
systems in addition to resolving Y2K issues.
Presently, the Company does not expect Y2K issues to have a material effect on
the Company's results of operations, liquidity or financial condition. The
Company believes its overall risk of noncompliance with Y2K issues is reduced by
the decentralized environment of the Company's information systems. The effect,
if any, on the Company's results of operations if the Company's customers or its
suppliers are not fully Y2K compliant is not reasonably estimable.
[CHART]
Total Debt to Total Capital
<TABLE>
<S> <C>
94 37.6%
95 34.3%
96 36.9%
97 41.1%
98 45.7%
</TABLE>
Outlook
This report contains forward-looking statements that reflect management's
current assumptions and estimates of future economic circumstances, industry
conditions, Company performance and financial results, and Year 2000 compliance.
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
such forward-looking statements. A variety of factors could cause the Company's
actual results and experience to differ materially from the anticipated results.
These factors and assumptions include the pace and nature of new product
introductions by the Company's customers; execution of the Company's acquisition
program; industry and economic factors related to the Company's domestic and
international business; the timely resolution of the Year 2000 issue by the
Company and its customers and suppliers; and the outcome of various
productivity-improvement and cost-reduction efforts.
Universal Foods Corporation seeks to grow in both its primary market, the food
industry, and in non-food markets. Current non-food applications include
cosmetics, personal care products, pharmaceuticals, specialty inks and specialty
chemicals. The Company believes that the technologies of the Flavor, Color and
Yeast divisions continue to provide the greatest opportunities for growth in
non-food applications.
Within the food industry, the Company expects to increase revenue and profits by
targeting key customers and specific applications that will provide the greatest
opportunities for growth. The Company has been successful in strengthening
relationships with its customers through its superior technical support and
service. It views the continuing consolidation of customers within the food
industry as an opportunity to be among the select companies to obtain primary
supplier agreements. In addition, the Company will continue to develop and
market more of its technically sophisticated products that provide higher
returns. The Company also expects to increase total revenue through increased
sales to customers outside of the United States.
The Company continues to seek strategic acquisitions that will strengthen its
existing business, enhance its technologies and take it into new product and
geographic markets. The Company made four acquisitions during fiscal 1998. The
acquisitions of DC Flavours Ltd., Arancia Ingredientes Especiales, S.A. de C.V.,
and the beverage business of Sundi GmbH expanded the product offerings of the
Company's Flavor division and provided immediate access to new geographic
markets in Europe, Mexico and South America. The acquisition of Reggiana
Antociani S.R.L., strengthened the Company's Color division with important
extraction process technology and additional offerings in natural color
products.
The Company's Asia Pacific division was established in 1997 to provide improved
service and technical functions on behalf of the Company's other divisions. With
the continued volatility of the Asian economy, the Company implemented a number
of cost reduction
16
<PAGE> 7
programs during fiscal 1998. Despite near-term uncertainty, the Company is
committed to this strategically important geographic market and remains
optimistic about the opportunities for its products on a long-term basis.
Other Issues
ENVIRONMENTAL ISSUES: Universal Foods has a proactive environmental program,
which is transforming environmental issues into positive business opportunities
to increase productivity and profitability resulting in a competitive advantage
for our business. Increased emphasis is being placed on waste minimization to
reduce any short and long-term environmental issues. All environmental
compliance systems utilize the most cost-effective and innovative technology.
These efforts continue on a world-wide basis with increased emphasis on the
environmental aspects of European operations. New environmental control systems
completed in 1998 include wastewater systems at Midleton, Ireland and Elberg,
Netherlands. For fiscal 1999, new environmental systems are planned for
facilities in Heverlee, Belgium and Strasbourg, France.
[CHART]
Capital Expenditures/Depreciation (in millions)
<TABLE>
<S> <C>
94 $55.1/$31.0
95 $42.6/$28.2
96 $59.0/$29.2
97 $73.5/$32.4
98 $66.1/$38.0
</TABLE>
EQUAL OPPORTUNITY POLICY: Universal Foods is an Equal Opportunity Employer. The
Company strives to create a working environment free of discrimination and
harassment with respect to race, sex, color, national origin, religion, age,
disability or Vietnam veteran era status, as well as to make reasonable
accommodations in the employment of qualified individuals with disabilities.
INDEPENDENT BOARD OF DIRECTORS: A majority of the members of the Company's Board
of Directors are independent. Nominees for Board membership are selected to
provide a diversity of domestic and international expertise, experience and
achievements in general business and food-related fields which allows the Board
to most effectively represent the interests of all the Company's shareholders.
INDEPENDENT COMMITTEES: The audit, finance, nominating and compensation and
development committees of the Board are composed of directors who are not
employees of the Company. These committees, as well as the entire Board, consult
with and are advised by outside consultants and experts in connection with their
deliberations as needed.
SCIENTIFIC ADVISORY COMMITTEE: As an advisory committee to the Board, this group
reviews research and development programs with respect to the quality and scope
of work undertaken, advises the Company on maintaining product leadership
through technological innovation, reports on new technological trends and
suggests new emphasis for research.
EXECUTIVE COMPENSATION: A significant portion of executive compensation is tied
to the Company's success in meeting specific performance goals. The overall
objectives of this policy are to attract and retain the best possible executive
talent, to motivate these executives to achieve the Company's business strategy
goals, to link executive and shareholder interest through equity-based plans and
to provide a program that recognizes individual contributions.
CONFIDENTIAL VOTING: The Company provides for confidential shareholder voting by
employing an independent tabulation service. Proxy cards which identify the
particular vote of a shareholder are not seen by the Company unless it is
necessary to meet legal requirements or a shareholder has made a written comment
on the card.
17
<PAGE> 8
Consolidated Earnings
[ In thousands except per share amounts ]
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30, 1998 1997 1996
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EARNINGS
Revenue $856,772 $ 825,714 $806,352
Cost of products sold 556,048 551,090 533,260
Selling and administrative expenses 171,862 167,390 164,186
Unusual items -- -- 25,000
------------------------------
Operating income 128,862 107,234 83,906
Interest expense 21,185 16,798 15,266
------------------------------
Earnings before income taxes 107,677 90,436 68,640
Income taxes 35,033 25,748 24,435
- ------------------------------------------------------------------------------------------------
Net earnings $ 72,644 $ 64,688 $ 44,205
------------------------------
EARNINGS PER COMMON SHARE - BASIC $ 1.42 $ 1.27 $ .86
------------------------------
EARNINGS PER COMMON SHARE - DILUTED $ 1.40 $ 1.26 $ .85
------------------------------
AVERAGE COMMON SHARES OUTSTANDING - BASIC 51,155 51,026 51,597
------------------------------
AVERAGE COMMON SHARES OUTSTANDING - DILUTED 51,837 51,390 51,936
------------------------------
</TABLE>
See notes to consolidated financial statements.
18
<PAGE> 9
Consolidated Balance Sheets
[ Dollars in thousands except per share amounts ]
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998 1997
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 1,632 $ 1,258
Trade accounts receivable less allowance for losses of $4,548 and $4,034 121,833 117,259
Inventories 197,089 185,552
Prepaid expenses and other current assets 21,436 20,855
Prepaid income taxes 15,765 17,324
--------------------
Total current assets 357,755 342,248
Investments 32,400 26,540
Other assets 28,485 28,653
Intangibles-at cost, less accumulated amortization of $40,533 and $34,312 217,007 181,309
Property, Plant and Equipment:
Cost:
Land 17,365 16,360
Buildings 138,320 131,299
Machinery and equipment 469,915 388,402
--------------------
625,600 536,061
Less accumulated depreciation 270,021 227,082
--------------------
355,579 308,979
- --------------------------------------------------------------------------------------------------
Total assets $991,226 $887,729
--------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings $ 42,773 $ 7,971
Accounts payable and accrued expenses 122,297 135,522
Salaries, wages and withholdings from employees 15,744 13,978
Income taxes 22,066 16,151
Current maturities of long-term debt 6,940 4,905
--------------------
Total current liabilities 209,820 178,527
Deferred income taxes 25,489 17,550
Other deferred liabilities 22,619 20,798
Accrued employee and retiree benefits 36,065 37,877
Long-term debt 291,588 252,526
Shareholders' Equity:
Common stock par value $.10 a share, authorized 100,000,000 shares;
issued 53,954,874 shares 5,396 5,396
Additional paid-in capital 74,663 74,076
Earnings reinvested in the business 416,949 371,444
--------------------
497,008 450,916
Less: Treasury stock, 2,797,976 and 2,772,496 shares, respectively, at cost 51,979 45,742
Foreign currency translation and other 39,384 24,723
--------------------
405,645 380,451
- --------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $991,226 $887,729
--------------------
</TABLE>
See notes to consolidated financial statements.
19
<PAGE> 10
Consolidated Shareholders' Equity
<TABLE>
<CAPTION>
Other
---------------------------
EARNINGS UNEARNED FOREIGN
ADDITIONAL REINVESTED TREASURY STOCK PORTION OF CURRENCY
[ Dollars in thousands COMMON PAID-IN IN THE ---------------- RESTRICTED TRANSLATION
except per share amounts ] STOCK CAPITAL BUSINESS SHARES AMOUNT STOCK ADJUSTMENTS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES AT SEPTEMBER 30, 1995 $5,396 $76,257 $314,883 1,755,922 $(24,770) $(1,335) $ (8,651)
Net earnings for the year 44,205
Cash dividends paid - $.50 a share (25,798)
Stock options exercised, net of
12,040 shares exchanged (788) (166,828) 2,451
Restricted stock (2) (4,000) 64 382
Other 12 2,686 (48)
Translation adjustment for year (3,703)
Purchase of treasury stock 1,526,236 (27,589)
- -----------------------------------------------------------------------------------------------------------------------------
BALANCES AT SEPTEMBER 30, 1996 5,396 75,479 333,290 3,114,016 (49,892) (953) (12,354)
Net earnings for the year 64,688
Cash dividends paid - $.52 a share (26,534)
Stock options exercised, net of
38,496 shares exchanged (1,513) (609,638) 9,768
Restricted stock 109 (20,800) 334 (23)
Other 1 3,718 (167)
Translation adjustment for year (11,393)
Purchase of treasury stock 285,200 (5,785)
- -----------------------------------------------------------------------------------------------------------------------------
BALANCES AT SEPTEMBER 30, 1997 5,396 74,076 371,444 2,772,496 (45,742) (976) (23,747)
Net earnings for the year 72,644
Cash dividends paid - $.53 a share (27,139)
Stock options exercised, net of
63,958 shares exchanged (393) (802,674) 13,672
Benefit plans contribution 377 (100,000) 1,713
Restricted stock 128 (39,200) 734 (563)
Other 475 2,958 (560)
Translation adjustment for year (14,098)
Purchase of treasury stock 964,396 (21,796)
- -----------------------------------------------------------------------------------------------------------------------------
BALANCES AT SEPTEMBER 30, 1998 $5,396 $74,663 $416,949 2,797,976 $(51,979) $(1,539) $(37,845)
----------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
20
<PAGE> 11
Consolidated Cash Flows
[ Dollars in thousands ]
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30, 1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 72,644 $ 64,688 $ 44,205
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation 38,011 32,399 29,178
Amortization 6,221 4,927 4,341
Impairment of long-lived assets and other unusual charges -- -- 25,000
(Gain) loss on sale of property, plant and equipment and
other productive assets (3,277) 16 (332)
Changes in operating assets and liabilities (net of effects
from acquisition of businesses):
Trade accounts receivable (1,111) (13,351) (2,041)
Inventories (5,664) (13,418) 2,355
Prepaid expenses, income taxes and other assets (8,063) (283) (1,316)
Accounts payable and accrued expenses (21,782) 7,844 (626)
Salaries, wages and withholdings from employees 1,320 2,882 (357)
Income taxes 7,516 2,044 (6,688)
Deferred income taxes 8,056 4,838 (1,857)
Other liabilities 182 1,160 145
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 94,053 93,746 92,007
------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment (66,063) (73,502) (59,012)
Acquisition of new businesses - net of cash acquired (68,670) (50,492) (529)
Proceeds from disposition of business and sale of property,
plant and equipment and other productive assets 6,656 438 658
Increase in investments (5,860) (5,719) (2,740)
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (133,937) (129,275) (61,623)
------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from additional borrowings 80,690 66,455 76,822
Reduction in debt (5,720) (6,651) (60,110)
Purchase of treasury stock (21,796) (5,785) (27,589)
Dividends (27,139) (26,534) (25,798)
Proceeds from options exercised and other equity transactions 13,579 8,089 1,627
- ---------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 39,614 35,574 (35,048)
------------------------------------------
Effect of exchange rate changes on cash and cash equivalents 644 (2,182) (658)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 374 (2,137) (5,322)
Cash and cash equivalents at beginning of year 1,258 3,395 8,717
- ---------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 1,632 $ 1,258 $ 3,395
------------------------------------------
Cash paid during the year for:
Interest $ 21,372 $ 16,062 $ 15,175
Income taxes 16,074 16,261 27,222
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
21
<PAGE> 12
Notes to Consolidated Financial Statements
[ Tabular amounts in thousands except per share data ]
[ Years ended September 30, 1998, 1997 and 1996 ]
1 Summary of Significant Accounting Policies
NATURE OF BUSINESS The Company manufactures and distributes flavors, flavor
enhancers, aroma chemicals, colors, dehydrated products and yeast for foods and
other applications.
PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the
accounts of the Company and its subsidiaries. All significant intercompany
accounts and transactions are eliminated.
USE OF ESTIMATES The preparation of the consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting periods. Actual results could differ from those estimates.
CASH EQUIVALENTS The Company considers all highly liquid investments with
maturities of three months or less when acquired to be cash equivalents.
INVENTORIES Inventories are stated at the lower of cost or market. Cost is
determined using primarily the first-in, first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are recorded at cost
reduced by accumulated depreciation. Depreciation is provided over the estimated
useful life using the straight-line method for financial reporting.
Accelerated methods are used for income tax purposes.
INTANGIBLES, GOODWILL AND LONG-LIVED ASSETS The excess cost over net assets of
businesses acquired and other intangibles, principally formulae and customer
lists, are being amortized using the straight-line method over periods ranging
up to 40 years. In fiscal 1996, the Company adopted Statement of Financial
Accounting Standards No. 121, ("SFAS No. 121"), "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (see note 3).
Under SFAS 121 long-lived assets and certain identifiable intangibles are
reviewed for impairment whenever events or circumstances indicate that their
carrying value may not be recoverable.
Recoverability of other long-lived assets not included under SFAS No. 121,
primarily investments in unconsolidated affiliates and goodwill not identified
with impaired assets, will continue to be evaluated on a recurring basis. The
primary indicators of recoverability are current or forecasted profitability
over the estimated remaining life of these assets, based on the operating profit
of the businesses directly related to these assets. If recoverability is
unlikely based on the evaluation, the carrying amount is reduced by the amount
it exceeds the forecasted operating profit and any estimated disposal value.
FINANCIAL INSTRUMENTS The Company uses derivative financial instruments for the
purpose of hedging currency and interest rate exposures which exist as part of
ongoing business operations. As a policy, the Company does not engage in
speculative or leveraged transactions, nor does the Company hold or issue
financial instruments for trading purposes.
INTEREST RATE SWAP AGREEMENTS The Company may utilize interest rate swap
agreements to lower funding costs, to diversify sources of funding or to
alter interest rate exposure. Amounts paid or received on interest rate
swap agreements are deferred and recognized as adjustments to interest
expense. Gains and losses realized upon the settlement of such contracts
are deferred and amortized to interest expense over the remaining term of
the debt instrument or are recognized immediately if the underlying
instrument is settled.
FOREIGN CURRENCY CONTRACTS The Company enters into forward and swap
contracts to hedge transactions denominated in foreign currencies in order
to reduce the currency risk associated with fluctuating exchange rates.
Such contracts are used primarily to hedge certain intercompany cash
flows, purchases of certain raw materials and finished goods and for
payments arising from certain foreign currency denominated obligations.
Realized and unrealized gains and losses from instruments qualifying as
hedges are deferred as part of the cost basis of the underlying
transaction. Realized and unrealized
22
<PAGE> 13
gains and losses from foreign currency contracts used as economic hedges
but not qualifying for hedge accounting are recognized currently as income
or expense.
TRANSLATION OF FOREIGN CURRENCIES For all significant foreign operations, the
functional currency is the local currency. Assets and liabilities of foreign
operations are translated into United States dollars at current exchange rates.
Income and expense accounts are translated into United States dollars at average
rates of exchange prevailing during the year. Adjustments resulting from the
translation to U.S. dollars are included as foreign currency translation
adjustments in shareholders' equity. Net transaction gains of $354,000 in 1998,
$632,000 in 1997 and $23,000 in 1996, are included in earnings before income
taxes.
STOCK-BASED COMPENSATION The Company accounts for its stock-based compensation
plans using the intrinsic value-based method in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB
25).
EARNINGS PER SHARE In the first quarter of fiscal 1998, the Company adopted SFAS
No. 128, "Earnings Per Share," which requires the disclosure of both diluted and
basic earnings per share. Previously reported earnings per share amounts have
been restated, as necessary, to conform to Statement No. 128 requirements. The
difference between basic and diluted earnings per share is the dilutive effect
of stock options and restricted stock. All earnings per share amounts are
presented on a diluted basis unless otherwise noted.
RECENTLY ISSUED ACCOUNTING STANDARDS In June 1997, the FASB issued SFAS No. 130,
"Reporting Comprehensive Income," and SFAS No. 131, "Disclosures About Segments
of an Enterprise and Related Information." SFAS No. 130 establishes standards
for reporting comprehensive income in financial statements and SFAS No. 131
expands certain reporting and disclosure requirements for segments from current
standards. In February 1998, the FASB issued SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits." SFAS No. 132
revises employers' disclosures about pension and other postretirement benefit
plans. The Company will adopt these statements in Fiscal 1999. The adoption of
these statements will not have a financial impact on the Company.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. The
statement requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. The Company is not required to adopt the statement until fiscal
2000. The Company is currently evaluating the effect that implementation of the
new standard will have on its results of operations, financial position and cash
flows.
RECLASSIFICATIONS Certain previously reported amounts have been reclassified to
conform to the current year presentation.
2 Acquisitions
During fiscal 1998, the Company acquired four businesses for a total of
$68,670,000. The preliminary allocations of purchase prices resulted in goodwill
of $45,468,000 which is being amortized on a straight-line-basis over 40 years.
The businesses acquired were:
In January 1998, the Company acquired the stock of Arancia Ingredientes
Especiales, S.A. de C.V., a manufacturer of savory flavors and other
food ingredients.
In April 1998, the Company acquired the stock of DC Flavours Ltd., a
manufacturer of savory flavors and seasonings.
In May 1998, the Company acquired substantially all of the assets and
business of the beverage business of Sundi GmbH, a German flavor
manufacturer.
In September 1998, the Company acquired the stock of Reggiana Antociani
S.R.L., a manufacturer of natural colors for the food and beverage
industries.
During the second quarter of 1997, the Company acquired Tricon Colors, Inc., an
ink and dye producer, for cash of $44,492,000. The allocation of the purchase
23
<PAGE> 14
Notes to Consolidated Financial Statements
[ Years ended September 30, 1998, 1997 and 1996 ]
price resulted in goodwill of $37,923,000 which is being amortized on a
straight-line-basis over 40 years. In September 1997, the Company acquired
certain assets of the food color business of Pyosa S.A., for cash and notes
aggregating $7,500,000.
The above acquisitions have been accounted for as purchases and, accordingly,
their results of operations have been included in the financial statements since
their respective dates of acquisition. On an unaudited pro-forma basis, the
effects of the acquisitions were not significant to the Company's results of
operations.
3 Restructuring, Integration and Other Charges
In 1997, the Company recorded an integration charge of $7,500,000 ($4,600,000
after tax, or $.09 per share) for the cost of combining its BioProducts and
Flavor divisions. This charge, which is classified in selling and administrative
expenses, relates primarily to severance costs substantially all of which were
paid in 1998.
The Company adopted SFAS No. 121 as of the beginning of the fourth quarter of
1996. Certain long-lived assets which were held and used in the business were
identified as impaired. The Company considers continued operating losses, or
significant and long-term changes in industry conditions, to be its primary
indicators of potential impairment. In 1996 an impairment was recognized when
the future undiscounted cash flows of each asset was estimated to be less than
the asset's related carrying value. As such, the carrying values of these assets
were written down to the Company's estimates of fair value. Fair value was based
on sales of similar assets, or other estimates of fair value such as discounting
estimated future cash flows. The non-cash charge for adoption of this standard
was $20,000,000 and resulted from changes in industry conditions, continued
operating losses and from the Company grouping assets at a lower level than
under its previous method of accounting.
In addition, in 1996 the Company identified opportunities to streamline its
production base, improve efficiency and enhance its competitiveness.
Accordingly, the Company adopted a restructuring plan which included closing or
reconfiguring a number of production facilities and reducing the workforce by
approximately 130 employees. The restructuring charge of approximately
$5,000,000 includes charges primarily related to severance costs, substantially
all of which were paid in 1997.
The total 1996 charge for adopting SFAS No. 121 and restructuring was
$25,000,000 ($16,700,000 after tax, or $.32 per share).
4 Inventories
Inventories include finished and in-process products totaling $145,135,000 and
$132,150,000 at September 30, 1998 and 1997, respectively, and raw materials and
supplies of $51,954,000 and $53,402,000 at September 30, 1998 and 1997,
respectively.
5 Debt
Long-term debt consists of the following obligations:
<TABLE>
<CAPTION>
1998 1997
- -----------------------------------------------------------------
<S> <C> <C>
Payable in U.S. Dollars:
9.06% senior notes due
through July 2004 $ 34,000 $ 38,000
7.59% senior notes due
through December 2008 30,000 30,000
7.06% senior notes due
through December 2002 30,000 -
6.99% senior notes due
through December 2007 40,000 40,000
6.77% senior notes due
through January 2010 15,000 15,000
6.70% senior notes due
through December 2009 20,000 20,000
6.68% senior notes due
through January 2011 15,000 15,000
6.38% senior notes due
through December 2003 20,000 20,000
Commercial paper and other
short-term notes 70,000 70,000
Various mortgage notes, capital
lease obligations and other notes 4,714 5,702
Notes and credit facilities payable
in foreign currencies 19,814 3,729
-----------------
298,528 257,431
Current maturities 6,940 4,905
- -----------------------------------------------------------------
Total long-term debt $291,588 $252,526
=================
</TABLE>
The Company has a $70,000,000 multicurrency revolving loan agreement with a
group of three banks. Under the
24
<PAGE> 15
agreement, the Company has the option to elect to have interest rates determined
based upon the LIBOR rate plus margin or the certificate of deposit rate plus
margin. A commitment fee is payable on the unused amount of credit. The facility
matures in August 2003. Uncommitted lines of credit totaling $110,000,000 are
also available to the Company from several banks.
The Company issues short-term commercial paper obligations supported by
committed lines of credit included in the Revolving Loan Agreement. The Company
also issues other short-term notes. At September 30, 1998 and 1997, $70,000,000
of short-term borrowings were classified as long-term debt reflecting the
Company's intent and ability, through the existence of the unused credit
facility, to refinance these borrowings.
The aggregate amounts of maturities on long-term debt each year for the five
years subsequent to September 30, 1998 are as follows: 1999, $6,940,000; 2000,
$8,146,000; 2001, $11,843,000; 2002, $13,948,000; and 2003, $87,960,000.
Substantially all of the loan agreements contain restrictions concerning working
capital, borrowings, investments and dividends. Earnings reinvested of
$34,654,000 at September 30, 1998 were unrestricted.
Short-term borrowings consist of commercial paper, bankers acceptances and loans
to foreign subsidiaries denominated in local currencies which are borrowed under
various foreign uncommitted lines of credit. The weighted average interest rates
on short-term borrowings, including the $70,000,000 reclassified to long-term
debt, were 5.75% and 5.78% at September 30, 1998 and 1997, respectively.
6 Financial Instruments and Risk Management
FOREIGN CURRENCY CONTRACTS The Company uses forward exchange contracts to reduce
the effect of fluctuating foreign currencies on short-term foreign
currency-denominated intercompany transactions and other known foreign currency
exposures. At September 30, 1998 and 1997, the Company had forward exchange
contracts, generally with maturities of one year or less, of $65,709,000 and
$105,726,000, respectively. In fiscal 1998, the Company entered into a swap
agreement that converts $15,175,000 of short-term variable rate borrowing to a
fixed rate (5.02%) borrowing payable in deutsche marks (27,000,000 DEM) on July
27, 2008.
CONCENTRATIONS OF CREDIT RISK Counterparties to currency exchange contracts
consist of large major international financial institutions. The Company
continually monitors its positions and the credit ratings of the counterparties
involved and limits the amount of credit exposure to any one party. While the
Company may be exposed to potential losses due to the credit risk of
non-performance by these counterparties, losses are not anticipated.
Concentrations of credit risk with respect to accounts receivable are limited
due to the large number of customers, generally short payment terms, and their
dispersion across geographic areas.
FAIR VALUES The carrying amount of cash and cash equivalents, trade receivables,
investments, financial instruments, accounts payable and short-term borrowings
approximated fair value as of September 30, 1998 and 1997. The fair value of the
Company's long-term debt, including current maturities, is estimated using
discounted cash flows based on the Company's current incremental borrowing rates
for similar types of borrowing arrangements. The fair value at September 30,
1998 and 1997 was approximately $314,669,000 and $261,978,000, respectively.
7 Shareholders' Equity
On April 9, 1998, the Company declared a 2-for-1 stock split in the form of a
100% dividend, which was distributed on May 22, 1998, to shareholders of record
on May 6, 1998. An amount equal to the par value of the shares issued was
transferred from additional paid-in capital to the common stock account for all
periods presented. Accordingly, all numbers of common shares, per share data and
the amounts of shareholders' equity accounts for all periods presented in the
consolidated financial statements have been restated to reflect the stock split.
On June 25, 1998, the Board of Directors declared a dividend of one preferred
share purchase right (a "Right") for each outstanding share of common stock, par
value
25
<PAGE> 16
Notes to Consolidated Financial Statements
[ Years ended September 30, 1998, 1997 and 1996 ]
of $.10 per share, of the Company. The dividend was paid on August 6, 1998, to
the stockholders of record on that date. Each Right entitles the registered
holder to purchase from the Company one one-thousandth of a share of Series A
Participating Cumulative Preferred Stock, without par value (the "Preferred
Share"), of the Company at a price of $125 per one one-thousandth of a Preferred
Share, subject to adjustment. The Right becomes exercisable and tradable ten
days after a person or group acquires 20% or more, or makes an offer to acquire
20% or more, of the Company's outstanding common stock. When exercisable, each
Right entitles the holder to purchase $250 worth of Company common stock for
$125. Further, upon the occurrence of a merger or transfer of more than 50% of
the Company's assets, the Right entitles the holder to purchase common stock of
an acquiring company having a market value equivalent to two times the exercise
price of the Right. At no time does the Right have any voting power. The Right
is subject to redemption by the Company's Board of Directors for $.01 per Right
at any time prior to the date on which a person or group acquires beneficial
ownership of 20% or more of the Company's common stock. The Rights expire on
September 30, 2008. The Rights replace rights issued under a prior rights plan,
which were redeemed on August 6, 1998.
In January 1998, the shareholders approved the 1998 Stock Option Plan. Under the
1998 Plan up to 2,400,000 shares of common stock are available for awards, of
which no more than 600,000 shares may be restricted stock. The Company may also
issue up to 2,400,000 shares of common stock pursuant to the exercise of stock
options or the grant of restricted stock under the 1994 Employee Stock Plan.
Under the 1994 Plan, up to 500,000 shares may be awarded as restricted stock.
Generally, stock options become exercisable over a three year vesting period and
expire 10 years from the date of grant. Awarded shares of restricted stock
become freely transferable at the end of five years. During the period of
restriction, the employee has voting rights and is entitled to receive all
dividends and other distributions paid with respect to the stock. The 1994 Plan
also authorizes the grant of up to 800,000 stock appreciation rights (SARs) in
connection with stock options.
The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." Accordingly, no compensation cost has
been recognized for the Company's stock option plans. If the Company had elected
to recognize compensation cost based on the fair value of the options granted at
grant date as prescribed by SFAS No. 123, net earnings and earnings per common
share would have been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1998 1997 1996
-------------------------
<S> <C> <C> <C>
Pro forma net earnings $71,120 $63,626 $43,926
Pro forma net earnings
per common share:
Basic $ 1.39 $ 1.25 $ .85
Diluted 1.37 1.24 .85
</TABLE>
The pro forma effect on net earnings is not representative of the pro forma
effect on net earnings in future years because it does not take into
consideration pro forma compensation expense related to grants made prior to
1996.
The weighted-average fair value per share of options granted was $3.83 in 1998,
$3.90 in 1997 and $3.89 in 1996.
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following assumptions:
<TABLE>
<CAPTION>
1998 1997 1996
-----------------------
<S> <C> <C> <C>
Dividend yield 2.5% 2.6% 3.1%
Volatility 19% 19% 23%
Risk-free interest rate 4.2% 5.8% 6.4%
Expected term (years) 5 5 5
</TABLE>
26
<PAGE> 17
The changes in outstanding stock options during the three years ended September
30, 1998 are summarized below:
<TABLE>
<CAPTION>
SHARES WEIGHTED
OUTSTANDING AVERAGE
OPTIONS AVAILABLE PRICE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Balances at
September 30, 1995 3,232 1,943 $14.97
Granted 885 (885) 16.81
Restricted stock - (4) 15.56
Exercised (179) - 10.60
Cancelled (58) 58 17.17
- ----------------------------------------------------------------------------------
Balances at
September 30, 1996 3,880 1,112 15.56
Granted 685 (685) 18.71
Restricted stock - (28) 20.09
Exercised (648) - 13.68
Cancelled (121) 121 16.81
- ----------------------------------------------------------------------------------
Balances at
September 30, 1997 3,796 520 16.43
Authorized under the
1998 Plan - 2,400 -
Granted 600 (600) 20.79
Restricted stock - (42) 21.56
Exercised (867) - 15.01
Cancelled (146) 146 17.80
- ----------------------------------------------------------------------------------
Balances at
September 30, 1998 3,383 2,424 $17.61
------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
WEIGHTED
OPTIONS AVERAGE
EXERCISABLE PRICE
- ----------------------------------------------------------------------------------
<S> <C> <C>
September 30, 1996 2,352 $15.04
September 30, 1997 2,462 $15.75
September 30, 1998 2,208 $16.46
</TABLE>
The following summarizes information concerning currently outstanding and
exercisable options:
<TABLE>
<CAPTION>
RANGE OF EXERCISE PRICE
-----------------------
<S> <C> <C> <C>
$11.79- $15.51- $19.01-
15.50 19.00 21.57
- -----------------------------------------------------------------------------------------------------------
Number outstanding 517 1,733 1,133
Weighted average remaining
contractual life, in years 4.9 6.5 9.1
Weighted average
exercise price $14.78 $16.51 $20.58
- -----------------------------------------------------------------------------------------------------------
Number exercisable 517 1,436 255
Weighted average
exercise price $14.78 $16.51 $19.60
</TABLE>
The Company is authorized to issue 250,000 shares of cumulative preferred stock,
of which 100,000 shares are classified as Series A Participating Cumulative
Preferred Stock and were initially reserved for issuance under the Rights plan.
8 Retirement Plans
The Company provides benefits under defined contribution plans including a
savings plan and ESOP. The savings plan covers substantially all domestic
salaried and certain non-union hourly employees and provides for matching
contributions up to 4% of each employee's salary. The ESOP covers substantially
all domestic employees not covered by a defined benefit plan and provides for
contributions of 6% to 10% of each employee's salary. Total expense for the
Company's defined contribution plans was $6,746,000, $6,984,000 and $7,144,000
in 1998, 1997 and 1996, respectively.
9 Other Postretirement Benefits
The Company provides certain health insurance benefits to eligible domestic
retirees and their dependents. In 1997 the Company implemented programs intended
to mitigate rising costs, including adopting a provision that limits its future
obligation to absorb health care cost inflation. The amendment resulted in an
unrecognized prior service gain of $4,318,000 which is being amortized over the
employees average remaining service life.
27
<PAGE> 18
Notes to Consolidated Financial Statements
[ Years ended September 30, 1998, 1997 and 1996 ]
Postretirement benefit expense includes the following components:
<TABLE>
<CAPTION>
1998 1997 1996
-------------------------
<S> <C> <C> <C>
Service cost $ 418 $ 419 $ 831
Interest cost on accumulated
benefit obligation 966 959 1,212
Amortization of prior
service cost (548) (548) (278)
Other (425) (441) (363)
-------------------------
Postretirement benefit expense $ 411 $ 389 $1,402
-------------------------
</TABLE>
The Company continues to fund benefit costs on a pay-as-you-go basis, with
retirees paying a portion of the costs.
The status of the Company's postretirement benefit obligation is as follows:
<TABLE>
<CAPTION>
1998 1997
----------------
<S> <C> <C>
Actuarial present value of
accumulated benefit obligation:
Retirees $ 6,396 $ 6,629
Fully eligible active plan
participants 1,658 1,763
Other active plan participants 5,066 4,898
----------------
Accumulated benefit obligation 13,120 13,290
Unrecognized prior service cost 7,943 8,491
Unrecognized gain 10,874 10,503
----------------
Postretirement benefits accrued $31,937 $32,284
----------------
</TABLE>
The weighted average discount rates used in determining the accumulated
postretirement benefit obligation at September 30, 1998 and 1997 were 6.75% and
7.50%, respectively. The health care cost trend rates were assumed to be 8.50%
in 1998 and 9.25% in 1997, gradually declining to 5.5% by the year 2002 and
remaining at that level thereafter. A one percentage point increase in the
assumed cost trend rate would increase the accumulated postretirement benefit
obligation as of September 30, 1998 by approximately $2,126,000 and the
aggregate of the service and interest cost components of the 1998 postretirement
benefit expense by $227,000.
10 Income Taxes
The provision for income taxes is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------------------------
<S> <C> <C> <C>
Currently payable:
Federal $12,831 $10,556 $14,179
State 3,195 3,192 2,683
Foreign 9,509 8,171 8,140
Deferred (benefit):
Federal 8,640 3,426 1,792
State 1,059 403 180
Foreign (201) - (2,539)
-------------------------
$35,033 $25,748 $24,435
-------------------------
</TABLE>
The tax effects of temporary differences that give rise to significant portions
of deferred tax assets and liabilities consist of the following:
<TABLE>
<CAPTION>
1998 1997
--------------------------
<S> <C> <C>
Deferred tax assets:
Benefit plans $(18,501) $(19,466)
Liabilities and reserves (9,417) (10,674)
Other (16,393) (14,257)
------------------------
Gross deferred tax assets (44,311) (44,397)
Valuation allowance 13,697 11,468
------------------------
Total deferred tax assets (30,614) (32,929)
------------------------
Deferred tax liabilities:
Property, plant and equipment 21,867 16,405
Other 18,471 16,750
------------------------
Total deferred tax liabilities 40,338 33,155
------------------------
Net deferred tax liabilities $ 9,724 $ 226
========================
</TABLE>
The effective tax rate differs from the statutory Federal income tax rate of 35%
as described below:
<TABLE>
<CAPTION>
1998 1997 1996
-----------------------
<S> <C> <C> <C>
Taxes at statutory rate 35.0% 35.0% 35.0%
State income taxes,
net of Federal income
tax benefit 2.6 2.6 2.7
Tax credits (3.9) (4.6) (3.3)
Settlements of prior
years' issues (1.4) (5.3) -
Other, net 0.2 0.8 1.2
-----------------------
Effective tax rate 32.5% 28.5% 35.6%
</TABLE> =======================
28
<PAGE> 19
The 1998 and 1997 effective tax rates were 32.5% and 28.5%, respectively,
reflecting the reversal of tax accruals no longer required resulting from
settlement of prior years' issues and other items. The 1998 and 1997 effective
tax rates would have been 33.9% and 33.8%, respectively excluding the favorable
impact of these items.
Earnings before income taxes are summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---------------------------
<S> <C> <C> <C>
United States $ 81,311 $67,960 $55,228
Foreign 26,366 22,476 13,412
---------------------------
$107,677 $90,436 $68,640
===========================
</TABLE>
Domestic income taxes have not been provided on undistributed earnings of
foreign subsidiaries which are considered to be permanently invested. If
undistributed foreign earnings were to be remitted, foreign tax credits would
substantially offset any resulting domestic tax liability.
11 Foreign Operations
Summarized information relating to the Company's domestic and foreign operations
are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
- ------------------------------------------------------------------
<S> <C> <C> <C>
Revenue:
United States $551,286 $544,123 $517,678
Europe 191,055 178,054 186,547
Other foreign 114,431 103,537 102,127
- ------------------------------------------------------------------
$856,772 $825,714 $806,352
==========================
Operating Income:
United States $102,022 $ 84,859 $ 67,850
Europe 13,037 9,690 2,160
Other foreign 13,803 12,685 13,896
- ------------------------------------------------------------------
$128,862 $107,234 $ 83,906
==========================
Identifiable Assets:
United States $552,020 $528,272 $438,474
Europe 316,575 246,379 234,686
Other foreign 122,631 113,078 107,312
- ------------------------------------------------------------------
$991,226 $887,729 $780,472
==========================
</TABLE>
Operating income for 1997 and 1996 includes pre-tax charges for restructuring,
integration and other as follows:
<TABLE>
<CAPTION>
1997 1996
- -------------------------------------------
<S> <C> <C>
United States $5,555 $11,100
Europe 1,700 13,900
Other foreign 245 -
- -------------------------------------------
$7,500 $25,000
================
</TABLE>
Transfers of product between geographic areas are not significant. Operating
income is total revenue less operating expenses. Identifiable assets include all
assets identified with the operations in each geographic area, and an allocable
portion of intangible assets recorded by the parent.
12 Contingencies
The Company is involved in various claims and litigation arising in the normal
course of business. In the opinion of management and Company counsel, the
ultimate resolution of these actions will not materially affect the consolidated
financial position, results of operations or cash flows of the Company.
29
<PAGE> 20
Management's Responsibility for Financial Statements
[ Years ended September 30, 1998, 1997 and 1996 ]
The management of Universal Foods Corporation is responsible for preparation of
the financial statements and other financial information included in this annual
report. The financial statements have been prepared in accordance with generally
accepted accounting principles.
It is management's policy to maintain a control-conscious environment through an
effective system of internal accounting controls. These controls are supported
by the careful selection of competent and knowledgeable personnel and by the
communication of standard accounting and reporting policies and procedures
throughout the Company. These controls are adequate to provide reasonable
assurance that assets are safeguarded against material loss or unauthorized use
and to produce the records necessary for the preparation of reliable financial
information. There are limits inherent in all systems of internal control based
on the recognition that the costs of such systems should be related to the
benefits to be derived. Management believes that its systems provide this
appropriate balance.
The control environment is complemented by the Company's internal audit
function, which evaluates the adequacy of the controls, policies and procedures
in place, as well as adherence to them, and recommends improvements for
implementation when applicable. In addition, the Company's independent auditors,
Deloitte & Touche LLP, have developed an understanding of the Company's
accounting and financial controls and have conducted such tests as they
considered necessary to render an opinion on the Company's financial statements.
The Board of Directors pursues its oversight role with respect to the Company's
financial statements through the Audit Committee, which is composed solely of
outside directors. The Audit Committee recommends selection of the Company's
auditors and meets with them and the internal auditors to review the overall
scope and specific plans for their respective audits and results from those
audits. The Committee also meets with management to review overall accounting
policies relating to the reporting of financial results. Both the independent
auditors and internal auditors have unrestricted access to the Audit Committee.
/S/ Kenneth P. Manning /S/ Michael Fung
Kenneth P. Manning Michael Fung
Chairman, President and Vice President and
Chief Executive Officer Chief Financial Officer
Independent Auditors' Report
To the Shareholders and Board of Directors of Universal Foods Corporation:
We have audited the accompanying consolidated balance sheets of Universal Foods
Corporation and subsidiaries as of September 30, 1998 and 1997, and the related
consolidated statements of earnings, shareholders' equity and cash flows for
each of the three years in the period ended September 30, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the companies as of September 30,
1998 and 1997, and the results of their operations and their cash flows for each
of the three years in the period ended September 30, 1998 in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Milwaukee, Wisconsin
November 12, 1998
30
<PAGE> 21
Five Year Review
<TABLE>
<CAPTION>
[ Dollars in thousands
except per share data ] 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Summary of Operations
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue $ 856,772 100.0% $ 825,714 100.0% $ 806,352 100.0% $ 792,971 100.0% $ 929,863 100.0%
Cost of products sold 556,048 64.9 551,090 66.7 533,260 66.1 518,194 65.3 616,752 66.3
Selling and
administrative expenses 171,862 20.1 167,390 20.3 164,186 20.4 171,914 21.7 203,965 22.0
Unusual items - - - - 25,000 3.1 (26,847) (3.4) 12,125 1.3
- ------------------------------------------------------------------------------------------------------------------------------------
Operating income 128,862 15.0 107,234 13.0 83,906 10.4 129,710 16.4 97,021 10.4
Interest expense 21,185 2.4 16,798 2.0 15,266 1.9 15,107 1.9 15,888 1.7
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings before
income taxes 107,677 12.6 90,436 11.0 68,640 8.5 114,603 14.5 81,133 8.7
Income taxes 35,033 4.1 25,748 3.2 24,435 3.0 48,500 6.2 30,222 3.2
- ------------------------------------------------------------------------------------------------------------------------------------
Net earnings $ 72,644 8.5% $ 64,688 7.8% $ 44,205 5.5% $ 66,103 8.3% $ 50,911 5.5%
===================================================================================================
Net earnings per
common share:
Basic $ 1.42 $ 1.27 $ .86 $ 1.27 $ .97
Diluted 1.40 1.26 .85 1.26 .97
===================================================================================================
Other Related Data
Earnings per common
share
excluding unusual
items:
Basic $ 1.42 $ 1.27 $ 1.18 $ 1.09 $ 1.12
Diluted 1.40 1.26 1.17 1.09 1.11
Dividend per common
share .53 .52 .50 .48 .46
Average shares
outstanding:
Basic 51,155,000 51,025,542 51,596,964 52,122,538 52,261,566
Diluted 51,836,577 51,389,997 51,936,078 52,338,578 52,568,144
Book value per
common share $ 7.95 $ 7.45 $ 6.93 $ 6.95 $ 6.30
Price range per
common share 18.72-25.44 15.94-20.69 14.00-20.50 13.06-17.44 $14.44-17.50
Share price at
September 30 20.88 20.13 16.25 17.44 14.81
Research and
development
expenditures 29,413 31,510 29,824 28,558 32,217
Capital expenditures 66,063 73,502 59,012 42,562 55,071
Depreciation 38,011 32,399 29,178 28,206 31,012
Amortization 6,221 4,927 4,341 6,435 5,366
Total assets 991,226 887,729 780,472 776,870 763,664
Long-term debt 291,588 252,526 196,869 160,678 172,235
Shareholders' equity 405,645 380,451 350,966 361,780 327,390
Return on average
shareholders' equity 18.4% 17.5% 12.2% 18.5% 16.1%
Total debt to total
capital 45.7% 41.1% 36.9% 34.3% 37.6%
Employees 4,196 4,127 4,035 4,104 4,063
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The 1997 results include a pretax charge of $7.5 million for integrating two
divisions.
The 1996 results include pretax charges of $25 million relating to adopting SFAS
No. 121 and restructuring costs.
The 1995 results include a net pretax gain of $26.8 million relating to the sale
of the Frozen Foods business, the cost of discontinuing a product line and other
items.
The 1994 results include a pretax restructuring charge of $12.1 million.
31
<PAGE> 22
Quarterly Data
[ Dollars in thousands except per share amounts ]
[ Unaudited ]
<TABLE>
<CAPTION>
EARNINGS EARNINGS
GROSS NET PER SHARE PER SHARE
REVENUE PROFIT EARNINGS BASIC DILUTED
- ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1998
FIRST QUARTER $208,889 $71,882 $15,271 $.30 $.30
SECOND QUARTER 205,015 72,441 17,354 .34 .33
THIRD QUARTER 214,506 74,994 19,174 .37 .37
FOURTH QUARTER 228,362 81,407 20,845 .41 .40
- ------------------------------------------------------------------
1997
First Quarter $193,484 $65,852 $13,883 $.27 $.27
Second Quarter 204,826 66,567 15,620 .31 .30
Third Quarter 209,725 69,410 16,748 .33 .33
Fourth Quarter 217,679 72,795 18,437 .36 .36
- ------------------------------------------------------------------
</TABLE>
Common Stock Prices and Dividends
<TABLE>
<CAPTION>
MARKETPRICE DIVIDENDS
HIGH LOW PER SHARE
- -----------------------------------------------
<S> <C> <C> <C>
1998
FIRST QUARTER $21.47 $18.72 $.1325
SECOND QUARTER 24.69 20.38 .1325
THIRD QUARTER 25.44 21.88 .1325
FOURTH QUARTER 24.00 20.06 .1325
- -----------------------------------------------
1997
First Quarter $18.88 $15.94 $ .13
Second Quarter 18.94 16.63 .13
Third Quarter 19.63 16.00 .13
Fourth Quarter 20.69 18.44 .13
- -----------------------------------------------
</TABLE>
32
<PAGE> 1
EXHIBIT 21
Universal Foods Corporation and Subsidiaries
<TABLE>
<CAPTION>
State or other
jurisdiction of
Name incorporation
- --------------------------------------------------- -------------
<S> <C>
Universal Foods Corporation Wisconsin
Subsidiaries:
Universal Foods Canada Canada
Universal Foods FSC Virgin Islands
Universal Holding Inc. Nevada
Universal Foods Corporation Ireland Ireland
Universal Health Care Management Company Wisconsin
Universal Foods (UK) Ltd United Kingdom
Universal Foods Holding (Luxembourg) Sarl Luxembourg
Universal Foods (Luxembourg) Sarl Luxembourg
UF Holdings (Malta) Ltd Malta
Universal Holdings Cayman Cayman
Universal Foods Holding Deutschland GmbH Germany
Minn-Dak Yeast Company North Dakota
Yeast Industries Company Jordan
General Milling Corporation Philippines
Universal Foods Products Int'l Co. Ltd. Costa Rica
Red Star De Peru Peru
Leviatan Y Universal CIA Guatemala
Productos Alimenticios Nacionales, SA Costa Rica Costa Rica
Industrias Mexicana De Aliamentos SA Mexico
Levadura Azteca SA De CV Mexico
Universal Flavor Corporation Delaware
Universal Flavors Canada, Inc. Canada
Universal Flavors International, Inc. Indiana
Universal Flavors France (SARL) France
DGF Universal Fragrances S.A. Spain
Universal Flavors NV Belgium
Curt Georgi Imes/Universal Flavors SRL Italy
Universal Flavors Mexico SA de CV Mexico
DGF Universal Fragrances Mexico SA de CV Mexico
Flavorburst Inc. Illinois
Flavor Burst Co. Indiana
Champlain Industries Inc. Delaware
Arancia Ingredients Especiales SA de CV Mexico
Arancia Flavors & Ingredients, Inc. Delaware
Arendadora Aiesa SA de CV Mexico
Biolux Finance, S.A. Belgium
Red Star BioProducts, S.A. Belgium
Red Star BioProducts, SAS France
Promavil, S.A. Belgium
Red Star BioProducts Limited United Kingdom
Universal Flavors Limited United Kingdom
DC Flavours Limited United Kingdom
Sundi Aromen Distribution GmbH Germany
Sundi Aromen GmbH Germany
</TABLE>
<PAGE> 2
Warner Jenkinson Universal Foods, BV The Netherlands
Warner Jenkinson Canada Canada
Tricon Colors, LLC New Jersey
Warner Jenkinson Company Inc. New York
Warner Jenkinson SA de CV Mexico
Panamericana de Sabores, SA de CV Mexico
WJ de Mexico, SA de CV Mexico
Warner Jenkinson (Europe) Limited United Kingdom
Warner Jenkinson Europe SARL France
Quaterna SRL Italy
Reggiana Antociana SRL Italy
Silva Laon GmbH Germany
Warner-Jenkinson Europe GmbH Germany
Inter Agro USA Inc. New York
Universal Dehydrates Ltd. Ireland
Freshfield Foods, Ltd. Ireland
Rogers Foods Inc. California
Universal Dehydrates BV The Netherlands
Universal Foods Limited United Kingdom
Universal Dehydrates France SARL France
Universal Foods Corporation (Asia/Pacific) Pte. Ltd. Singapore
Universal Flavors (Thailand) Ltd. Thailand
Universal Foods Corporation (Australia) Pty. Ltd. Australia
Universal Foods Corporation (Japan) Japan
Universal Flavors (Philippines), Inc. Philippines
Universal Foods Corporation (China) Ltd. Hong Kong
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Amendment No. 1 to Registration
Statements No. 33-07235, 33-34555 and 33-55437, Registration Statements No.
33-27356, 333-35877 and 333-45931 of Universal Foods Corporation on Form S-8
and Registration Statement No. 333-67015 of Universal Foods Corporation on Form
S-3 of our reports dated November 12, 1998, appearing in and incorporated by
reference in the Annual Report on Form 10-K of Universal Foods Corporation for
the year ended September 30, 1998.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
December 23, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
UNIVERSAL FOODS CORPORATION YEAR ENDED SEPTEMBER 30, 1998 FINANCIAL DATA
SCHEDULE.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<CASH> 1,632
<SECURITIES> 0
<RECEIVABLES> 126,381
<ALLOWANCES> 4,548
<INVENTORY> 197,089
<CURRENT-ASSETS> 357,755
<PP&E> 625,600
<DEPRECIATION> 270,021
<TOTAL-ASSETS> 991,226
<CURRENT-LIABILITIES> 209,820
<BONDS> 291,588
0
0
<COMMON> 5,396
<OTHER-SE> 400,249
<TOTAL-LIABILITY-AND-EQUITY> 991,226
<SALES> 856,772
<TOTAL-REVENUES> 856,772
<CGS> 556,048
<TOTAL-COSTS> 556,048
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,245
<INTEREST-EXPENSE> 21,185
<INCOME-PRETAX> 107,677
<INCOME-TAX> 35,033
<INCOME-CONTINUING> 72,644
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 72,644
<EPS-PRIMARY> 1.42
<EPS-DILUTED> 1.40
</TABLE>
