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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
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 No. 1-2267
THE MEAD CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 31-0535759
(State of Incorporation) (I.R.S. Employer Identification No.)
MEAD WORLD HEADQUARTERS
COURTHOUSE PLAZA NORTHEAST
DAYTON, OHIO 45463
(Address of principal executive offices)
Registrant's telephone number, including area code: 513-495-6323
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes _X_ No __ .
The number of Common Shares outstanding at March 31, 1996 was 52,722,826.
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THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
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QUARTERLY PERIOD ENDED MARCH 31, 1996
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PART I - FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
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THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
BALANCE SHEETS
- --------------
(All dollar amounts in millions)
March 31, Dec. 31,
1996 1995
-------- --------
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 137.8 $ 292.6
Accounts receivable 516.2 585.7
Inventories 524.2 410.5
Other current assets 92.8 78.5
-------- --------
Total current assets 1,271.0 1,367.3
Investments and other assets:
Investees 134.8 141.0
Other assets 543.2 500.4
-------- --------
678.0 641.4
Property, plant and equipment 4,377.9 4,318.7
Less accumulated depreciation and
amortization (1,993.9) (1,954.6)
-------- --------
2,384.0 2,364.1
-------- --------
Total assets $4,333.0 $4,372.8
======== ========
LIABILITIES AND SHAREOWNERS' EQUITY
- -----------------------------------
Current liabilities:
Accounts payable $ 299.5 $ 380.5
Accrued liabilities 332.1 359.3
Income taxes payable 16.9 9.0
Current maturities of long-term debt 73.7 73.0
-------- --------
Total current liabilities 722.2 821.8
Long-term debt 726.0 694.8
Commitments and contingent liabilities
Deferred items 714.1 696.0
Shareowners' equity:
Common shares 157.3 157.8
Additional paid-in capital 2.1
Foreign currency translation adjustment (1.2) (.8)
Retained earnings 2,012.5 2,003.2
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2,170.7 2,160.2
-------- --------
Total liabilities and
shareowners' equity $4,333.0 $4,372.8
======== ========
See notes to financial statements.
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
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STATEMENTS OF EARNINGS
- ----------------------
(All dollar amounts in millions, except per share amounts)
First Quarter Ended
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March 31, April 2,
1996 1995
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Net sales $1,067.2 $1,240.8
Cost of products sold 863.2 1,018.9
-------- --------
Gross profit 204.0 221.9
Selling, and administrative expenses 134.9 136.7
-------- --------
Earnings from operations 69.1 85.2
Other revenues - net 6.3 13.4
Interest and debt expense (14.7) (18.3)
-------- --------
Earnings from continuing operations
before income taxes 60.7 80.3
Income taxes 22.5 30.6
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Earnings from continuing operations
before equity in net earnings (loss)
of investees 38.2 49.7
Equity in net earnings (loss)
of investees (7.3) 12.0
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Earnings from continuing operations 30.9 61.7
Discontinued operations 5.4
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Net earnings $ 36.3 $ 61.7
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Per common and common equivalent share:
Earnings from continuing operations $ .58 $1.07
Discontinued operations .10
----- -----
Net earnings $ .68 $1.07
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Cash dividends per common share $ .28 $ .25
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Average common and common equivalent
shares outstanding (millions) 53.5 57.7
===== =====
See notes to financial statements.
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
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STATEMENTS OF CASH FLOWS
- ------------------------
(All dollar amounts in millions)
First Quarter Ended
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March 31, April2,
1996 1995
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Cash flows from operating activities:
Net earnings $ 36.3 $61.7
Adjustments to reconcile net earnings to
net cash (used in) operating activities:
Depreciation, amortization and depletion of
property, plant and equipment 49.2 49.0
Depreciation and amortization of other assets 12.9 10.9
Deferred income taxes 7.1 13.3
Investees-earnings and dividends 6.8 (13.0)
Discontinued operations (5.4)
Other (8.7) (9.8)
Change in assets and liabilities:
Accounts receivable 69.5 (37.7)
Inventories (113.7) (60.0)
Other current assets (13.4) (12.3)
Accounts payable and accrued liabilities (103.6) (344.8)
Cash (used in) discontinued operations (1.2) (.9)
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Net cash (used in) operating activities (64.2) (343.6)
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Cash flows from investing activities:
Capital expenditures (77.6) (54.4)
Additions to equipment rented to others (13.0) (15.1)
Restricted funds 461.0
Proceeds from sale of business 19.6
Other (25.8) (1.9)
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Net cash provided by (used in) investing activities (96.8) 389.6
------ ------
Cash flows from financing activities:
Additional borrowings 32.8
Payments on borrowings (1.2) (144.9)
Cash dividends paid (14.8) (14.5)
Common shares issued 2.3 15.8
Common shares purchased (12.9) (241.5)
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Net cash provided by (used in) financing activities 6.2 (385.1)
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(Decrease) in cash and cash equivalents (154.8) (339.1)
Cash and cash equivalents at beginning of year 292.6 484.0
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Cash and cash equivalents at end of quarter $137.8 $144.9
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See notes to financial statements.
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
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NOTES TO FINANCIAL STATEMENTS
- -----------------------------
(All dollar amounts in millions)
A - FINANCIAL STATEMENTS
The balance sheet at December 31, 1995 is condensed financial information
taken from the audited balance sheet. The interim financial statements
are unaudited. In the opinion of management, all adjustments (which consist
only of normal recurring adjustments) necessary to present fairly the financial
position and results of operations for the interim periods presented have
been made.
B - ACCOUNTING POLICIES
On an interim basis, all costs subject to recurring year-end adjustments
have been estimated and allocated ratably to the quarters. Income taxes have
been provided based on the estimated tax rate for the respective years after
excluding infrequently occurring items whose specific tax effect is
reported during the same interim period as the related transaction.
C - INVENTORIES
The amount of inventories is (principally last-in, first-out method):
March 31, Dec. 31,
1996 1995
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Finished and semi-finished products $376.9 $270.4
Raw materials 92.8 86.9
Stores and supplies 54.5 53.2
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$524.2 $410.5
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D - INVESTEES
The summarized operating data for all investees is presented in the
following table:
First Quarter Ended
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March 31, April 2,
1996 1995
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Revenues $145.2 $191.2
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Gross profit (loss) $(15.4) $ 46.3
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Net earnings (loss) $(13.6) $ 26.5
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<PAGE>
E - ADDITIONAL INFORMATION ON CASH FLOWS
First Quarter Ended
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March 31, April 2,
1996 1995
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Cash paid for:
Interest $ 22.8 $ 28.2
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Income taxes $ 7.4 $308.4
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F - SHAREOWNERS' EQUITY
During the first quarter of 1996, the Company repurchased approximately
200,000 common shares on the open market. The Company has outstanding
authorization from the Board of Directors to repurchase up to five million
common shares, of which 1.1 million shares have been repurchased as of the end
of the first quarter of 1996.
G - DISCONTINUED OPERATIONS
Mead sold its previously discontinued Imaging business during the first
quarter of 1996. The sale resulted in a gain of $5.4 million, net of
income tax of $3.2 million.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
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AND RESULTS OF OPERATIONS
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RESULTS OF OPERATIONS
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Net Sales
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First quarter 1996 net sales of $1.07 billion were down 14% compared to
$1.24 billion for the same quarter of 1995, primarily due to lower volume. In
1995, Mead benefited from rising selling prices and strong demand. Those
conditions peaked late in 1995 and have since declined as customer and producer
inventories reached high levels. Furthermore, 1995 sales included those
of the fine paper mill in Kingsport, Tennessee that Mead sold early in the
second quarter of that year. Only Mead's Packaging Division and specialty paper
businesses posted sales gains over 1995. Sales during the quarter at
Mead's other operations were even with or below last year's levels.
Mead expects that market conditions for most of its businesses will stabilize in
the second quarter and begin to improve in the second half.
Operating Costs and Expenses
- ----------------------------
Gross profit as a percentage of sales improved to 19.1% for the first
quarter of 1996 compared to 17.9% for the same period in 1995. This improvement
was made despite declining selling prices, some weather-related and other
operating problems, and charges to 1996 earnings related to severance
costs at the Chillicothe, Ohio, fine paper mill and the closing of
Mead's Fairless Hills, Pennsylvania, packaging operation. Though prices
have declined in 1996 from 1995 highs, they still averaged higher than the
first quarter of 1995 for many of Mead's businesses and, thus, margin
percentages were above 1995 levels overall. Looking forward to the second
quarter, 1996 gross margin percentages are expected to trail 1995 levels given
the assumed selling price trends.
Selling and administrative expenses declined slightly to $134.9
million for the first quarter of 1996 from $136.7 million for the first
quarter of 1995 in some respect due to declining sales. As a percentage
of sales these expenses increased to 12.6% in the first quarter of 1996
compared to 11.0% for the same quarter of 1995.
Other Revenues
- --------------
Other revenues were $6.3 million in the first quarter of 1996 compared to
$13.4 million earned in the same quarter of 1995. The higher level of
other revenues in 1995, reflected income earned on the temporary investment of
the proceeds received from the late 1994 sale of its Electronic Publishing
business. By the end of the first quarter of 1995, a substantial portion
of these proceeds had been used for debt reduction, taxes, common share
repurchases and other corporate purposes.
Interest and Debt Expense
- -------------------------
First quarter interest and debt expense declined from $18.3 million in the
first quarter of 1995 to $14.7 million for 1996. Several factors
contributed to the decrease including the repayment of medium-term notes and
other debt during 1995, less miscellaneous debt costs in 1996, and more interest
capitalized in 1996.
Income Taxes
- ------------
Federal and state taxes on income decreased from $30.6 million in the first
quarter of 1995 to $22.5 million for the first quarter of 1996. The effective
<PAGE>
tax rate was 37.1% for the first quarter of 1996 compared to 38.1% for
first quarter of 1995. The improvement in the rate is due primarily to lower
taxes related to foreign operations.
Discontinued Operations
- -----------------------
Mead sold its Imaging business during the first quarter of 1996. The sale
resulted in an after-tax gain of $5.4 million, or $.10 per share.
Equity in Net Earnings of Investees
- -----------------------------------
Mead's investees, made up primarily of its 50% owned Northwood companies,
recorded a loss of $7.3 million for the first quarter of 1996 compared
with earnings of $12.0 million for the same quarter of 1995. World pulp
markets, strong throughout 1995, collapsed at the start of 1996. Northwood
experienced weak sales volume and selling prices for pulp and severe
weather-related operating problems. It also recorded a lower-of-cost-or-market
inventory write-down in the first quarter of 1996 to reflect the lower
selling prices. Additionally, demand for and selling prices of wood products
continue to be weak. During the quarter, Northwood's pulp and wood operations
took 15.5 and 5 days of market related downtime, respectively. Additional
downtime has been scheduled for the second quarter.
Financial Data by Business
- --------------------------
Paper Segment
First Quarter
------------------------------
1996 1995 % Change
---- ---- --------
(All dollar amounts in millions)
Net sales (to unaffiliated
customers) $269.4 $329.3 (18)%
Segment earnings before taxes 46.6 62.6 (26)%
First quarter net sales and earnings for the paper segment decreased from
1995 levels due primarily to lower sales volume. Also, the 1995 amounts
include the results of the Kingsport, Tennessee, fine paper mill that was sold
early in the second quarter of 1995. Selling prices declined steadily
throughout the first quarter of 1996, a trend that began in late 1995.
In contrast, selling prices rose steadily throughout the first quarter of 1995,
reaching a peak late in the year. Sales from Mead's Escanaba, Michigan,
publishing paper mill were down significantly from the prior year.
However, strong operations permitted this mill to post earnings that were down
approximately 10% from 1995. First quarter 1996 sales for the Chillicothe,
Ohio, fine paper mill were even with those of the same quarter of 1995.
Temporary operating problems and severance related expenses during the quarter,
however, reduced Chillicothe's first quarter 1996 earnings. Mead's specialty
paper mills at Menasha, Wisconsin and South Lee, Massachusetts, performed well
during the first quarter of 1996. By the end of the first quarter of 1996,
there were some signs that the market inventory adjustment is ending, but Mead
expects that 1996 will not see a return to the robust markets that prevailed
throughout 1995.
<PAGE>
Packaging and Paperboard segment
First Quarter
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1996 1995 % Change
---- ---- --------
(All dollar amounts in millions)
Net sales (to unaffiliated
customers) $325.8 $317.7 3%
Segment earnings before taxes 29.2 33.1 (12)%
First quarter 1996 net sales for the Packaging business were significantly
higher than those of the same quarter of 1995 for both foreign and
domestic operations. Segment earnings include a one-time charge related to the
recently announced closing of Packaging's Fairless Hills, Pennsylvania,
plant. 1996 sales for Mead's Alabama-based Coated Natural Kraft business were
virtually unchanged from the prior year, however, earnings were down
slightly. The second and third quarters are traditionally stronger for the
Coated Board system due to seasonal strength of the beverage packaging business.
Mead expects this business to perform at or above 1995 levels for the remainder
of 1996. Lower prices and weak demand for corrugating medium and reduced
volume in the converting operations caused Containerboard's 1996 first quarter
sales to trail those of the prior year. Containerboard's first quarter 1996
earnings were also affected by weather-related operating problems. Selling
prices for medium are not expected to increase until late second quarter
or early third quarter of 1996 due to current inventory levels. Converting
volume may continue to be weak for the remainder of the year.
Distribution and School and Office Products segment
First Quarter
------------------------------
1996 1995 % Change
---- ---- --------
(All dollar amounts in millions)
Net sales (to unaffiliated
customers) $472.0 $593.8 (21)%
Segment earnings before taxes 8.0 8.1 (1)%
For Zellerbach, Mead's distribution business, first quarter 1996 sales
were below last year in each of its three business units, but particularly in
its Printing Business Unit, for essentially the same reasons that impacted the
Paper Segment. Low volume caused 1996 earnings to be below those of 1995.
However, margins remained steady during the quarter, and paper mills have
indicated that shipments are now matching production levels and inventory
build is expected to stop. The first quarter of the year is typically a
slow quarter for Mead School and Office Products. The back-to-school season is
concentrated in the second and third quarters of the year. In 1995, there
was a tight supply for paper, and prices were rising. Retailers placed orders
early to obtain products ahead of announced price increases. Those
conditions do not exist in 1996 and, therefore, 1996 first quarter sales for
Mead School and Office Products are slightly below last year's levels. First
quarter 1996
<PAGE>
earnings for this division, however, exceeded 1995 amounts due to improved
margins on certain commodity items and favorable operating performance.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Working capital was $548.8 million at March 31, 1996 compared to $545.5
million at December 31, 1995. The current ratio increased to 1.8 at the
end of the first quarter of 1996 from 1.7 at the previous year end.
Inventories at the end of the quarter are higher than at year end and the end of
the first quarter of 1995. Part of the increase is due to the annual build in
anticipation of Mead School and Office Product's back-to-school season but
part is also due to the weaker demand for many of Mead's products. Lower
sales volume has also caused accounts receivable to be lower than at
December 31, 1995.
Capital expenditures totaled $77.6 million for the first quarter of 1996
compared to $54.4 million for the same quarter of 1995. Some of the
increase is attributable to the previously announced $185 million expansion at
Mead's Stevenson, Alabama, corrugating medium mill.
Borrowed capital (long-term debt) as a percent of total capital (long-term
debt plus shareowners' equity) was 25.1% at March 31, 1996 compared to
24.3% at December 31, 1995. In connection with the Stevenson expansion, Mead
borrowed $25 million pursuant to a tax-exempt financing. Mead also
completed a $7 million tax exempt financing related to projects at the Coated
Board Mahrt mill. During the first quarter of 1996, Mead repurchased 234,500
shares of its common stock under an April, 1995 Board of Directors
authorization. Thus far, Mead has repurchased more than 1.1 million shares
under that program.
At the end of the first quarter, Mead paid a fixed rate or a capped rate
on 85% of its debt and paid a floating rate of interest on the remainder. A
change of 1% in the floating interest rate, on an annual basis, would
result in a $.04 change in earnings per share for the year. The estimated
market value of long-term debt, excluding capital leases, was $8.7 million more
than the book value at the end of the first quarter of 1996.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
(3) (ii) Regulations of The Mead Corporation effective April
25, 1996.
(10) Material Contracts:
(1) Corporate Annual Incentive Plan for 1996 in which
executive officers participate.
(2) Corporate Long Term Incentive Plan effective 1996 in
which executive officers participate.
(3) Section 415 Excess Benefit Plan dated January 1, 1996
which executive officers participate.
(4) Excess Earnings Benefit Plan dated January 1, 1996
which executive officers participate.
(5) 1996 Stock Option Plan dated April 25, 1996 in which
directors and executive officers participate.
(6) Restricted Stock Plan effective December 10, 1987, as
amended through April 25, 1996, in which directors and
executive officers participate.
(11.1), (11.2) Calculations of Net Earnings per Share.
(27) Financial Data Schedule
(b) No current reports on Form 8-K were filed with the Commission in
the first quarter of 1996.
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 13, 1996
THE MEAD CORPORATION
- --------------------
(Registrant)
By G. T. GESWEIN
_________________________
G. T. Geswein
Controller and
Chief Accounting Officer
Exhibit 3(ii)
Effective April 25, 1996
REGULATIONS
of
THE MEAD CORPORATION
<PAGE>
REGULATIONS
OF
THE MEAD CORPORATION
-----------------
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders
of the Corporation, for the purpose of electing directors and
transacting such other business as may be specified in the notice
thereof, shall be held at such place either within or without the State
of Ohio as may be specified in such notice, upon such date in the month
of April of each year (other than a Saturday, Sunday or legal holiday)
as the Board of Directors shall determine or, in the absence of such
determination, on the fourth Thursday in April of each year.
Section 2. Special Meetings. Special meetings of the shareholders
may be called by (i) the Chairman of the Board or the President, or in
case of the President's absence, death or disability, any Vice-
President; or (ii) the directors by action at a meeting, or a majority
of the directors acting without a meeting. Special meetings shall be
called by the Secretary upon written request of shareholders holding of
record 50% or more of all shares outstanding and entitled to vote
thereat. Any such request for a special meeting shall state the purpose
or purposes of the meeting.
Special meetings of the shareholders may be held at such time and
place, either within or without the State of Ohio, as may be designated
in the notice thereof.
Section 3. Notice of Meetings. Except as otherwise provided by
law or unless waived, a written notice of each annual or special meeting
stating the time and place and the purposes thereof shall be personally
delivered or mailed to each shareholder of record entitled to notice
thereof, not more than sixty days nor less than ten days before any such
meeting. If mailed, such notice shall be addressed to the shareholder
at his address as it appears upon the records of the Corporation.
Notice of adjournment of a meeting need not be given if the time and
place to which it is adjourned are fixed and announced at such meeting.
Section 4. Quorum. The holders of record of shares entitling them
to exercise a majority of the voting power of the Corporation, present
in person or by proxy, shall constitute a quorum for all purposes, at
any meeting of shareholders, except when a greater proportion is
required by law, the articles of incorporation or these Regulations. At
any meeting at which a quorum is present, all questions and business
which shall come before the meeting shall be determined by the vote of
the holders of a majority of the shares entitled to vote thereon held by
shareholders present in person or by proxy at the meeting, except when a
different proportion is required by law, the articles of incorporation
or these Regulations.
<PAGE>
At any meeting, whether a quorum is present or not, the holders of
a majority of the voting shares held by shareholders present in person
or by proxy may adjourn from time to time and from place to place
without notice other than by announcement at the meeting. At any such
adjourned meeting at which a quorum is present, any business may be
transacted which could have been transacted at the meeting as originally
noticed or held.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Authority of Directors. Except where the law, the
articles of incorporation or these Regulations requires action to be
authorized or taken by the shareholders, all of the authority of the
Corporation shall be exercised, and the business and affairs of the
Corporation shall be managed, by or under the direction of the
directors.
Section 2. Directors. Unless changed in accordance with the
provisions of Section 3 of this Article II, the number of directors of
the Corporation shall be fixed at fourteen. Directors shall hold office
until the annual meeting next succeeding their election or until their
successors are chosen and qualified; provided, however, no director
shall be required to stand for election sooner than would have been
otherwise required due to participation as a member of a class of
directors elected in a year prior to 1996.
Section 3. Change in Number of Directors. The whole number of
directors and the number of directors in each class may be changed
either by the affirmative vote of the holders of record of at least 75%
of the voting power of the Corporation at a meeting of shareholders
called for that purpose and for the purpose of electing directors, or by
the affirmative vote of a majority of the directors. No reduction in
the number of directors, either by the shareholders or the directors,
shall of itself have the effect of shortening the term of any incumbent
director.
Section 4. Nominations. Only persons who are nominated in
accordance with the following procedures shall be eligible for election
as directors. Nominations of persons for election as directors of the
Corporation may be made at a meeting of shareholders (i) by or at the
direction of the Board of Directors or by any committee or person
appointed by the Board of Directors or (ii) by any shareholder of the
Corporation entitled to vote for the election of directors at the
meeting who complies with the notice procedures set forth in this
Section 4. Any nomination other than those governed by clause (i) of the
preceding sentence, shall be made pursuant to timely notice in writing
to the Secretary of the Corporation. To be timely, a shareholder's
notice shall be delivered to or mailed and received at the principal
executive offices of the Corporation not less than 50 days nor more than
75 days prior to the meeting; provided, however, that in the event that
less than 60 days' notice or prior public disclosure of the date of the
meeting is given or made to shareholders, notice by the shareholder to
be timely must be so received not later than the close of business on
the 10th day following the day on which such notice of the date of the
meeting was mailed or such public disclosure was made. Such
shareholder's notice to the Secretary shall set forth (a) as to each
person whom the shareholder proposes to nominate for election as a
director (i) the name, age, business address and residence address of such
<PAGE>
person, (ii) the principal occupation or employment of such person,
(iii) the class and number of any shares of the Corporation which are
beneficially owned by such person and (iv) any other information
relating to such person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to any then
existing rule or regulation promulgated under the Securities Exchange
Act of 1934, as amended; and (b) as to the shareholder giving the notice
(i) the name and record address of such shareholder and (ii) the class
and number of shares of the Corporation which are beneficially owned by
such shareholder. The Corporation may require any proposed nominee to
furnish such other information as may reasonably be required by the
Corporation to determine the eligibility of such proposed nominee to
serve as a director. No person shall be eligible for election as a
director unless nominated as set forth herein.
The chairman of the meeting shall, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance
with the foregoing procedure, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be
disregarded.
Section 5. Removal of Directors. No director may be removed prior
to the expiration of such director's term of office, except by the
affirmative vote of the holders of 75% of the voting power of the
Corporation entitled to vote in the election of directors; provided,
however, that unless all the directors are removed, no individual
director shall be removed if the votes of a sufficient number of shares
are cast against his removal which, if cumulatively voted at an election
of all the directors, would be sufficient to elect at least one
director.
Section 6. Vacancies. The remaining directors, though less than a
majority of the whole authorized number of directors, may, by the vote
of a majority of their number, fill any vacancy in the Board of
Directors however arising for the unexpired term thereof. Any person
elected to fill a vacancy in the Board of Directors shall hold office
until the expiration of the term of office for the class to which he is
elected and until his successor is elected and qualified.
Section 7. Meetings of the Board. The Board of Directors may, by
by-law or resolution, provide for regular meetings of the Board.
Special meetings of the Board of Directors may be held at any time
upon call of the Chairman of the Board, the President, any Vice-
President, or any two members of the Board.
Meetings of the Board of Directors may be held at any place either
within or without the State of Ohio. Written notice of the time and
place of each special meeting of the Board of Directors shall be given
by mailing the same to each director at his last known address at least
three days prior to the date of such meeting, or such notice may be
personally delivered or telegraphed in substance to each director not
less than twenty-four hours before the meeting, which notice need not
specify the purposes of the meeting. Such notice may be waived in
writing, either before or after the holding of such meeting, by any
director, which writing shall be filed with or entered upon the records
of the meeting. The attendance of any director at any such meeting
without protesting, prior to or at the commencement of the meeting, the
lack of proper notice shall be deemed to be a waiver by him of notice of
<PAGE>
such meeting. Notice of adjournment of a meeting need not be given if
the time and place to which it is adjourned are fixed and announced at
such meeting.
Section 8. Quorum for Meetings. A majority of the directors of
the Corporation shall constitute a quorum for the transaction of
business. The act of a majority of directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors.
Section 9. Secret Ballot. Upon the oral or written request of any
director, any matter to be voted upon by the Board of Directors, or any
committee thereof, shall be by secret ballot and such ballots shall then
be counted and reported by the secretary of the meeting.
ARTICLE III
COMMITTEES
Section 1. Committees. The Board of Directors, by resolution
adopted by a majority of the whole Board, may appoint three or more
directors to constitute one or more committees of directors. The
resolution establishing each such committee shall specify a designation
by which it shall be known and shall fix its powers and authority. The
Board of Directors may delegate to any such committee any of the
authority of the Board of Directors, however conferred, other than that
of filling vacancies among the directors or in any committee of the
directors.
The Board of Directors may likewise appoint one or more directors
as alternate members of any such committee, who may take the place of
any absent member or members at any meeting of such committee.
Each such committee shall serve at the pleasure of the Board of
Directors, shall act only in the intervals between meetings of the Board
of Directors, and shall be subject to the control and direction of the
Board of Directors. All actions by any such committee shall be subject
to revision and alteration by the Board of Directors provided that no
rights of third persons shall be adversely affected by any such revision
or alteration.
An act or authorization of an act by any such committee within the
authority delegated to it by the resolution establishing it shall be as
effective for all purposes as the act or authorization of the Board of
Directors.
Any such committee may act by a majority of its members at a
meeting or by a writing or writings signed by all of its members.
The Board of Directors may likewise appoint other members of any
committee who are not members of the Board of Directors who shall act in
an advisory capacity but who shall have no vote upon any matter of
business before the committee.
<PAGE>
ARTICLE IV
OFFICERS
Section 1. Officers. The officers of the Corporation shall be a
Chairman of the Board, a President, a Secretary, a Treasurer, and such
other officers, subordinate officers and assistants as the Board of
Directors may from time to time determine.
Any two or more offices may be held by one person, except the
offices of President and Vice-President.
Section 2. Election of Officers. All officers of the Corporation
shall be elected annually by the Board of Directors, and shall hold
office at the pleasure of the Board of Directors. The Board of
Directors may remove any officer at any time, with or without cause, by
a majority vote. The Board of Directors may fill any vacancy in any
office occurring from whatever cause.
Section 3. Authority and Duties of Officers. The officers of the
Corporation shall have such authority and shall perform such duties as
are determined by the Board of Directors.
ARTICLE V
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 1. Limitation of Liability. (a) No person shall be found
to have violated his duties to the Corporation as a director or officer
of the Corporation in any action brought against such director or
officer (including actions involving or affecting any of the following:
(i) a change or potential change in control of the Corporation; (ii) a
termination or potential termination of his service to the Corporation
as a director or officer; or (iii) his service in any other position or
relationship with the Corporation), unless it is proved by clear and
convincing evidence that the director or officer has not acted in good
faith, in a manner he reasonably believes to be in or not opposed to the
best interests of the Corporation, or with the care that an ordinarily
prudent person in a like position would use under similar circumstances.
Notwithstanding the foregoing, nothing contained in this paragraph (a)
limits relief available under Section 1701.60 of the Ohio Revised Code.
(b) In performing his duties, a director or officer shall be entitled
to rely on information, opinions, reports, or statements, including
financial statements and other financial data, that are prepared or
presented by: (i) one or more directors, officers, or employees of the
Corporation whom the director or officer reasonably believes are
reliable and competent in the matters prepared or presented; (ii)
counsel, public accountants, or other persons as to matters that the
director or officer reasonably believes are within the person's
professional or expert competence; or (iii) a committee of the directors
upon which he does not serve, duly established in accordance with the
provisions of these Regulations, as to matters within its designated
authority, which committee the director or officer reasonably believes
to merit confidence.
<PAGE>
(c) A director or officer in determining what he reasonably believes
to be in the best interests of the Corporation shall consider the
interests of the Corporation's shareholders and, in his discretion, may
consider (i) the interests of the Corporation's employees, suppliers,
creditors and customers; (ii) the economy of the state and nation; (iii)
community and societal considerations; and (iv) the long-term as well as
short-term interests of the Corporation and its shareholders, including
the possibility that these interests may be best served by the continued
independence of the Corporation.
(d) A director or officer shall be liable in damages for any action he
takes or fails to take as a director or officer only if it is proved by
clear and convincing evidence in a court of competent jurisdiction that
his action or failure to act involved an act or omission undertaken with
deliberate intent to cause injury to the Corporation or undertaken with
reckless disregard for the best interests of the Corporation.
Notwithstanding the foregoing, nothing contained in this paragraph (d)
affects the liability of directors under Section 1701.95 of the Ohio
Revised Code or limits relief available under Section 1701.60 of the
Ohio Revised Code.
Section 2. Indemnification. (a) In case any person was or is a
party, or is threatened to be made a party, to any threatened, pending,
or completed action, suit, or preceding, whether civil, criminal,
administrative, or investigative, other than an action by or in the
right of the Corporation, by reason of the fact that he is or was a
director, officer, employee, or agent of the Corporation, of is or was
serving at the request of the Corporation as a director, trustee,
officer, employee, or agent of another corporation, domestic or foreign,
nonprofit or for profit, partnership, joint venture, trust, or other
enterprise, the Corporation shall indemnify such person against
expenses, including attorney's fees, judgments, decrees, fines,
penalties, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding, if
he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Corporation, and with
respect to any matter the subject of a criminal action, suit, or
proceeding, he had no reasonable cause to believe that his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, or conviction, or upon a plea of nolo
contenders or its equivalent, shall not, itself, create a presumption
that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and with respect to any matter the subject of a criminal
action, suit or proceeding, that he had reasonable cause to believe that
his conduct was unlawful.
(b) In case any person was or is a party, or is threatened to be made
a party to any threatened, pending, or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee, or
agent of the Corporation, or is or was serving at the request of the
Corporation as a director, trustee, officer, employee, or agent of
another corporation, domestic or foreign, nonprofit or for profit,
partnership, joint venture, trust or other enterprise, the Corporation
shall indemnify such person against expenses, including attorney's fees,
actually and reasonably incurred by him in connection with the defense
or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, except that no
<PAGE>
indemnification shall be made in respect of any of the following: (i)
any claim, issue, or matter as to which such person is adjudged to be
liable for negligence or misconduct in the performance of this duty to
the Corporation unless and only to the extent that the court of common
pleas, or the court in which such action or suit was brought determines
upon application that, despite the adjudication of liability, but in
view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as the court of
common pleas or such other court shall deem proper; or (ii) any action
or suit in which the only liability asserted against a director is
pursuant to Section 1701.95 of the Ohio Revised Code.
(c) To the extent that a director, trustee, officer, employee, or
agent has been successful on the merits or otherwise in defense of any
action, suit, or proceeding referred to in paragraphs (a) and (b) of
this Section 2, or in defense of any claim, issue, or matter therein,
the Corporation shall indemnify him against expenses, including
attorney's fees, actually and reasonably incurred by him in connection
with the action, suit or proceeding.
(d) Any indemnification under paragraphs (a) and (b) of this Section
2, unless ordered by a court, shall be made by the Corporation only as
authorized in the specific case upon a determination that
indemnification of the director, trustee, officer, employee, or agent is
proper in the circumstances because he has met the applicable standard
of conduct set forth in paragraphs (a) and (b) of this Section 2. Such
determination shall be made as follows: (i) by a majority vote of a
quorum consisting of directors of the Corporation who were not and are
not parties to or threatened with any such action, suit, or proceeding;
(ii) if the quorum described in cause (i) of this paragraph (d) is not
obtainable or if a majority vote of a quorum of disinterested directors
so directs, in a written opinion by independent legal counsel other than
an attorney, or a firm having associated with it an attorney, who has
been retained by or who has performed services for the Corporation, or
any person to be indemnified within the past five years; (iii) by the
shareholders; or (iv) by the court of common pleas or the court in which
such action, suit, or proceeding was brought. Any determination made by
the disinterested directors under cause (i) of this paragraph (d) or by
independent legal counsel under cause (ii) of this paragraph (d) shall
be promptly communicated to the person who threatened or brought the
action or suit, by or in the right of the Corporation referred to in
paragraph (b) of this Section 2, and within ten days after the receipt
of such notification, such person shall have the right to petition the
court of common pleas or the court in which such action or suit was
brought to review the reasonableness of such determination.
(e) (i) Unless the only liability asserted against a director in any
action, suit, or proceeding referred to in paragraphs (a) and (b) of
this Section 2 is pursuant to Section 1701.95 of the Ohio Revised Code,
expenses, including attorney's fees, incurred by a director in defending
the action, suit, or proceeding, shall be paid by the Corporation as
they are incurred, in advance of the final disposition of the action,
suit, or proceeding upon receipt of an undertaking by or on behalf of
the director in which he agrees to do both of the following: (A) repay
such amount if it is proved by clear and convincing evidence in a court
of competent jurisdiction that his action or failure to act involved an
act or omission undertaken with deliberate intent to cause injury to the
Corporation or undertaken with reckless disregard for the best interests
of the Corporation; and (B) reasonably cooperate with the Corporation
concerning the action, suit, or proceeding.
<PAGE>
(ii) Expenses, including attorney's fees, incurred by a director,
trustee, officer, employee or agent in defending any action, suit or
proceeding referred to in paragraphs (a) and (b) of this Section 2 may
be paid by the Corporation as they are incurred in advance of the final
disposition of the action, suit or proceeding as authorized by the
directors in the specific case upon the receipt of an undertaking by or
on behalf of the director, trustee, officer, employee, or agent to repay
such amount, if it ultimately is determined that he is not entitled to
be indemnified by the Corporation.
(f) Expenses, including attorney's fees, amounts paid in settlement,
and (except in the case of an action by or in the right of the
Corporation) judgments, decrees, fines and penalties, incurred in
connection with any potential, threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative by any person by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, trustee,
officer, employee, or agent of another corporation, domestic or foreign,
nonprofit or for profit, partnership, joint venture, trust or other
enterprise, may be paid or reimbursed by the Corporation, as authorized
by the Board of Directors upon a determination that such payment or
reimbursement is in the best interests of the Corporation; provided,
however, that, unless all directors are interested, the interested
directors shall not participate and a quorum shall be one-third of the
disinterested directors.
(g) The indemnification authorized by this Section 2 shall not be
exclusive of, and shall be in addition to any other rights granted to
those seeking indemnification under the articles of incorporation or
these Regulations or any agreement, vote of shareholders or
disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office,
and shall continue as to a person who has ceased to be a director,
trustee, officer, employee, or agent and shall inure to the benefit of
the heirs, executors, and administrators of such a person.
(h) The Corporation may purchase and maintain insurance or furnish
similar protection, including but not limited to trust funds, letters of
credit or self-insurance, on behalf of or for any person who is or was a
director, officer, employee, or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, trustee,
officer, employee, or agent of another corporation, domestic or foreign,
nonprofit or for profit, partnership, joint venture, trust or other
enterprise, against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether
or not the Corporation would have indemnified him against such liability
under this Section 2. Insurance may be purchased from or maintained with
a person in which the Corporation has a financial interest. (i) The
authority of the Corporation to indemnify persons pursuant to paragraphs
(a) and (b) of this Section 2 does not limit the payment of expenses as
they are incurred, indemnification, insurance, or other protection that
may be provided pursuant to paragraphs (e), (f), (g) and (h) of this
Section 2. Paragraphs (a) and (b) of this Section 2 do not create any
obligation to repay or return payments made by the Corporation pursuant
to paragraphs (e), (f), (g) and (h) of this Section 2.
Section 3. Interpretation. As used in Article V, words of the
masculine gender shall include the feminine gender.
<PAGE>
ARTICLE VI
SEAL
The seal of the Corporation shall be circular with the words "THE
MEAD CORPORATION", and "OHIO" surrounding the word "SEAL".
ARTICLE VII
AMENDMENTS
These Regulations may be amended or repealed at any meeting of
shareholders called for that purpose by the affirmative vote of the
holders of record of shares entitling them to exercise a majority of the
voting power of the Corporation on such proposal; provided, however,
that Sections 2, 3, and 5 of Article II and this Article VII may not be
amended, modified or repealed, and no amendment to these Regulations
which is inconsistent therewith may be adopted, without the affirmative
vote of the holders of record of shares entitling them to exercise 75%
of the voting power of the Corporation on such proposal.
Exhibit 10(1)
CORPORATE ANNUAL INCENTIVE PLAN
-------------------------------
1996
----
OBJECTIVE
- ---------
The objective of the Corporate Annual Incentive Plan is to recognize and
reward Mead's key executive officers and division leaders for achieving
and sustaining superior business results.
PARTICIPATION ELIGIBILITY
- -------------------------
All Members of the Chairman's Co-ordinating Committee, the Treasurer, the
Controller and Division Presidents are participants in this plan.
PAYOUT ELIGIBILITY
- ------------------
Participants must be employees of the company, an affiliate or a
subsidiary at the end of the plan year to receive payout from this plan.
An appropriate proration of earned awards may be made in case of death,
disability, retirement, hire or transfer during the plan year. In such
cases, the incentive target will be pro-rated to reflect the months of
service.
INCENTIVE TARGET
- ----------------
The Incentive Target for each grade is the difference between Mead's
policy total cash compensation target and the midpoint. This Target will
be adjusted annually, based on market total cash compensation data. In
addition, the Compensation Committee may increase the incentive targets in
any plan year, to reflect Mead's competitive base salary position. For
the 1996 plan year, incentive targets for all grades have been increased
by 3%. The current year incentive targets are shown in Attachment 1.
TOTAL PAYOUT DETERMINATION
- --------------------------
Payout under this Plan for all Participants will be determined by an
assessment of:
1. Business Contract - the degree to which the Division or
Corporate functional unit has achieved its operational goals and produced
the expected financial results, and
2. Stretch Goals - the establishment and progress of management
objectives that demonstrate the executive's leadership through innovation,
and
3. Corporate Perspective - the contribution of the executive to
the synergy of the corporation, in balance to his or her division or
functional priorities, and
4. Mead Values - the climate that executive fosters within his
or her management team to encourage and reward others for high
performance: taking risks, develop innovative ideas, make hard management
decisions.
This assessment for each Participant shall be determined by the CEO.
<PAGE>
PAYOUT THRESHOLD
- ----------------
Senior Executives in grades 26 and above will not be eligible for payout unless
Mead's annual ROTC is 5% or higher. Other participants will not be eligible for
payout unless there are corporate earnings for the year.
ADMINISTRATION
- --------------
The Plan is administered by the Compensation Committee of the Board. The
Compensation Committee has delegated administration to the Corporate Vice
President, Human Resources.
RECOMMENDATIONS AND APPROVAL
- ----------------------------
The Compensation Committee reviews and approves total funding and individual
payouts under the plan, and the amount, use and replenishment of any reserve
funds. The Compensation Committee may also determine if payout will be in cash,
restricted stock, replaced with stock options, or a combination thereof.
The CEO recommends all individual payouts to the Compensation Committee of the
Board of Directors for approval. Payout for the CEO and the COO is recommended
to the Board of Directors by the Compensation Committee.
RESERVED RIGHTS
- ---------------
The Mead Corporation reserves the right to alter, amend, suspend or terminate
any or all provisions of this Corporate Annual Incentive Plan, except such
actions shall neither inhibit nor hinder the rights of any individual with
respect to earned and credited awards which have been deferred. Designation of
a position as eligible for participation neither guarantees the individual a
right to an incentive payment nor a right to continued employment.
<PAGE>
Attachment 1
CORPORATE ANNUAL INCENTIVE PLAN
-------------------------------
PAYOUT TARGETS
--------------
1996
----
1996 Policy Policy *Annual
Grade Midpoint Annual Target TCC Target Incentive Target
- ----- -------- ------------- ---------- ----------------
33 $708,240 $538,300 $1,246,500 $559,500
32 623,784 451,100 1,074,900 469,800
31 543,792 382,200 926,000 398,500
30 476,184 312,400 788,600 326,700
29 416,832 260,000 676,800 272,500
28 364,752 217,400 582,200 228,400
27 319,368 181,100 500,500 190,700
26 279,888 149,400 429,300 157,800
25 245,472 123,600 369,100 131,000
24 215,112 100,100 315,200 106,500
23 188,448 79,500 267,900 85,100
22 168,288 60,810 229,100 65,860
*For 1996 the above Incentive Targets include an addition of 3% of Midpoint.
Exhibit 10(2)
THE CORPORATE LONG TERM INCENTIVE PLAN
--------------------------------------
1996
----
OBJECTIVE
- ---------
The objective of the Corporate Long Term Incentive Plan is to reward
executives for adding value to the Corporation by providing a return that is
above the cost of capital, while strategically managing capital growth.
TERM OF THE PLAN
- ----------------
This Corporate Long Term Incentive Plan is a two year plan, with the
performance period ending December 31, 1996.
PARTICIPATION ELIGIBILITY
- -------------------------
All corporate executives grade 23 and above, members of the Chairman's Co-
ordinating Committee, plus Division Presidents.
PAYOUT ELIGIBILITY
- ------------------
Participants must be employees of the company, an affiliate or a subsidiary at
the end of each plan year to receive payout from this plan. An appropriate
proration of earned awards may be made in case of death, disability, retirement,
hire or transfer during the year.
INCENTIVE TARGET
- ----------------
The 1996 Incentive Target by grade is shown in Attachment 1. This Target will
be adjusted annually, based on competitive data.
The Incentive Target will be prorated for participants gaining or losing
eligibility, or for changes in grade during the full period of the plan.
TOTAL PAYOUT DETERMINATION
- --------------------------
This plan measures compound capital growth over 2 years, and the ROTC achieved
in the second year of this two year plan.
A single matrix (Attachment 2) determines the Mead Performance Factor (MPF),
which is based on Return on Total Capital and Growth in Capital. The MPF
is then multiplied by the Competitive Industry Factor (CIF) to determine the
final payout. The CIF is determined as:
Competitive = Mead ROTC X Mead ROTC
----------------- --------------------
Industry Factor All Industry ROTC Forest Products ROTC
where ROTC = (EAT + ((1-Tax Rate) X Current Interest Expense) X 100
------------------------------------------------
(Average Equity + Average Long-Term Debt)
The incentive payout is determined as:
Incentive Payout = Incentive Target X MPF X CIF
The above calculation shall not be further adjusted for any Participant on the
basis of individual contribution or in any other manner unless so defined
under the proration provisions herein.
<PAGE>
ADMINISTRATION
- --------------
The Plan is administered by the Compensation Committee of the Board. The
Compensation Committee has delegated administration to the Corporate Vice
President, Human Resources.
ACCOUNTING FOR PAYOUT
- ---------------------
Payout will be estimated periodically and required corporate accrual of payout
will be booked against earnings during the year. Approved incentive checks will
be prepared and expensed to earnings at the time of payout.
RECOMMENDATIONS AND APPROVAL
- ----------------------------
The Compensation Committee reviews and approves total funding and individual
payouts under the plan, and the amount, use and replenishment of any reserve
funds.
The CEO recommends all individual payouts to the Compensation Committee of the
Board of Directors for approval. Payouts for the CEO and the COO are approved
by the Board of Directors.
Form of payout will be determined by the Compensation Committee. Payout will
normally be delivered to all participants as 50% cash and 50% restricted stock
(with a 6-month vesting period). The Board of Directors may require a mandatory
deferral of all or any portion of the payout to ensure full deductibility of
compensation to any executive.
RESERVED RIGHTS
- ---------------
The Mead Corporation reserves the right to alter, amend, suspend or terminate
any or all provisions of this Corporate Long Term Incentive Plan, except such
actions shall neither inhibit nor hinder the rights of any individual with
respect to earned and credited awards which have been deferred. Designation of
a position as eligible for participation neither guarantees the individual a
right to an incentive payment nor a right to continued employment.
<PAGE>
Attachment 1
THE CORPORATE LONG TERM INCENTIVE PLAN
-------------------------------------
PAYOUT TARGETS
-------------
1996
----
Grade Incentive Target
----- ----------------
33 $ 538,300
32 451,100
31 382,200
30 312,400
29 260,000
28 217,400
27 181,100
26 149,400
25 123,600
24 100,100
23 79,500
22 60,810
Exhibit 10(3)
THE MEAD CORPORATION
SECTION 415 EXCESS BENEFIT PLAN
-------------------------------
<PAGE>
TABLE OF CONTENTS
SECTION 1 - GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 History and Purpose. . . . . . . . . . . . . . . . . . . 1
1.2 Plan Funding and Administration. . . . . . . . . . . . . 1
1.3 Applicable Law . . . . . . . . . . . . . . . . . . . . . 1
1.4 Gender and Number. . . . . . . . . . . . . . . . . . . . 2
1.5 Assignment . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Plan Year. . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2 - PARTICIPATION. . . . . . . . . . . . . . . . . . . . . . 2
2.1 Eligibility for Participation. . . . . . . . . . . . . . 2
2.2 Participation Not Contract of Employment . . . . . . . . 2
SECTION 3 - DETERMINATION OF SECTION 415 EXCESS BENEFIT AMOUNT . . . 2
3.1 Section 415 Excess Benefit Amount. . . . . . . . . . . . 2
3.2 Unlimited Accrued Benefit. . . . . . . . . . . . . . . . 3
3.3 Qualified Accrued Benefit. . . . . . . . . . . . . . . . 3
SECTION 4 - DISTRIBUTION OF SECTION 415 EXCESS BENEFIT . . . . . . . 3
4.1 Distribution to a Participant. . . . . . . . . . . . . . 3
4.2 Distribution to a Surviving Spouse . . . . . . . . . . . 4
4.3 Distribution in Discretionary Form . . . . . . . . . . . 4
4.4 Distribution to a Beneficiary. . . . . . . . . . . . . . 5
4.5 ECAP Credit in Lieu of Distribution. . . . . . . . . . . 5
4.6 Distribution of Incapacitated Persons. . . . . . . . . . 6
SECTION 5 - DISPUTE RESOLUTION . . . . . . . . . . . . . . . . . . . 6
5.1 Notice of Denial . . . . . . . . . . . . . . . . . . . . 6
5.2 Notice of Appeal . . . . . . . . . . . . . . . . . . . . 6
5.3 Decision on Appeal . . . . . . . . . . . . . . . . . . . 7
SECTION 6 - AMENDMENT AND TERMINATION. . . . . . . . . . . . . . . . 7
<PAGE>
THE MEAD CORPORATION SECTION 415 EXCESS BENEFIT PLAN
----------------------------------------------------
SECTION 1 - GENERAL
- -------------------
1.1 History and Purpose. Effective January 1, 1976, THE MEAD
-------------------
CORPORATION, an Ohio corporation ("Mead") established The Mead Excess
Benefits Plan (the "Prior Plan"). The Prior Plan was subsequently amended
and restated, effective May 1, 1979, amended, effective November 1, 1986,
and again amended and restated, effective October 27, 1988. The following
provisions constitute an amendment, restatement and continuation of the
portion of the Prior Plan that is intended to be an "excess plan" (as
defined in Section 3(36) of the Employee Retirement Income Security Act of
1974 ("ERISA")) into a separate plan which shall be effective January 1,
1996, and shall be known as THE MEAD CORPORATION SECTION 415 EXCESS
BENEFIT PLAN (the "Plan"). The sole purpose of the Plan is to supplement
the amount of the "Pension" (as defined in the Mead Retirement Plan)
payable to or on account of any employee or former employee of Mead or of
any "Affiliate" (as defined below) from The Mead Retirement Plan to the
extent, if any, that the amount of his Pension is limited by application
of the provisions of section 415 of the Internal Revenue Code of 1986 (the
"Code"). Mead and such Affiliates are sometimes referred to below
individually, as an "Employer" and, collectively, as the "Employers." The
term "Affiliate" means any entity during the period that it is, along with
Mead, a member of a controlled group of corporations, a controlled group
of trades and businesses, an affiliated service group or any other entity
designate by the Secretary of the Treasury (as described in sections
414(b), 414(c), 414(m), and 414(o), respectively, of the Code.
1.2 Plan Funding and Administration. The benefits payable under
------------------------------
the Plan are unfunded and are payable, when due, from the general assets of the
Employers or, in the sole discretion of the Compensation Committee of the
Board of Directors of Mead (the "Committee"), from the assets of a benefit
trust, the assets of which shall be subject to the claims of the unsecured
general creditors of the Employers. Notwithstanding the foregoing, in the
event of a "Potential Change in Control" (as defined in Section 3.02 of
Benefit Trust Agreement, a trust agreement established January 9, 1987 by
and between Mead and Society Bank, National Association) the provisions of
Benefit Trust Agreement shall become operative with respect to the Plan.
The Plan shall be administered by the Vice-President-Human Resources of
Mead (the "Administrator") who shall have the rights, powers and duties
with respect to the Plan that are hereinafter set forth.
1.3 Applicable Law. The Plan will be construed and administered in
-------------
accordance with the laws of the State of Ohio to the extent that those
laws are not preempted by the laws of the United States of America.
1.4 Gender and Number. Where the context admits, words in any
----------------
gender will include any other gender, words in the singular will include the
plural and words in the plural will include the singular.
1.5 Assignment. No Plan right or interest of any person under the
---------
Plan shall be assignable or transferable, in whole or in part, either directly
or otherwise, including without limitation thereto, by execution, levy,
attachment, garnishment, pledge or in any other manner, but excluding
transfers by reason of death or mental incompetency; no attempted
assignment or transfer thereof shall
<PAGE>
be effective; and no such right or interest shall be liable for, or
subject to, any obligation or liability of any person.
1.6 Plan Year. The term "Plan Year" means the calendar year.
---------
SECTION 2 - PARTICIPATION
- -------------------------
2.1 Eligibility for Participation. An employee shall become a
-----------------------------
Participant in the Plan on the date on which he first has a "Section 415
Excess Benefit" (as defined in subsection 3.1).
2.2 Participation Not Contract of Employment. The Plan does not
----------------------------------------
constitute a contract of employment and participation in the Plan will not
give any employee the right to be retained in the employ of the Employers
or Affiliates nor give any person any right or claim to any benefit under
the terms of the Plan unless such right or claim has specifically accrued
under the terms of the Plan.
SECTION 3 - DETERMINATION OF SECTION 415 EXCESS BENEFIT AMOUNT
- --------------------------------------------------------------
3.1 Section 415 Excess Benefit Amount. A Participant's "Section
---------------------------------
415 Excess Benefit" as at any date is an amount, if any, payable under this
Plan commencing on the Participant's "Normal Retirement Date" (as defined
in The Mead Retirement Plan), which, when expressed as an annual amount
payable as a single life annuity, is equal to the amount determined by
reducing the amount of his "Unlimited Accrued Benefit" (as defined in
subsection 3.2) as of that date by the amount of his "Qualified Accrued
Benefit" (as defined in subsection 3.3) as of that date. Notwithstanding
the foregoing provisions of this subsection, if a Participant continues in
the employ of the Employers and Affiliates after his Required Beginning
Date (as defined in The Mead Retirement Plan), the amount of his Section
415 Excess Benefit shall be recomputed as of the last day of each Plan
Year, beginning with the Plan Year during which the Participant's Required
Beginning Date occurs, taking into account amounts previously distributed
to him under the Plan. If any such recomputation results in an additional
Section 415 Excess Benefit amount, that amount shall be distributed to him
in accordance with paragraph 4.1(b).
3.2 Unlimited Accrued Benefit. A Participant's "Unlimited Accrued
-------------------------
Benefit" as at any date is an amount equal to the amount of his "Accrued
Benefit" (as determined in accordance with the provisions The Mead
Retirement Plan as of that date), but computed without regard to:
(a) the limitations of section 415 of the Code; or
(b) the amount of any otherwise applicable reduction in the amount
of his Accrued Benefit on account of any amount paid or
payable:
(i) to or on account of the Participant under any other
"qualified" defined benefit pension plan maintained by
any Employer; or
(ii) to an "alternate payee" (as defined in section 414(p) of
the Code).
<PAGE>
3.3 Qualified Accrued Benefit. A Participant's "Qualified Accrued
-------------------------
Benefit" as at any date is an amount equal to the amount of his Accrued
Benefit (as determined in accordance with the provisions of The Mead
Retirement Plan as of that date), but computed without regard to the
amounts described in paragraphs 3.2(b)(i) and (ii) above, and limited in
amount as required by the requirements of section 415 of the Code, as set
forth in The Mead Retirement Plan.
SECTION 4 - DISTRIBUTION OF SECTION 415 EXCESS BENEFIT
- ------------------------------------------------------
4.1 Distribution to a Participant. Subject to the following
-----------------------------
provisions of the Plan, the "Present Value" (as defined and determined under the
provisions of The Mead Retirement Plan) of the amount of a Participant's
Section 415 Excess Benefit shall be distributed to him, in a single lump
sum, as soon as administratively feasible (but not more than 6 months)
after:
(a) the date as of which payment of his Pension is made or
commenced under The Mead Retirement Plan in the case of a
Section 415 Excess Benefit attributable to his period of
participation ending prior to his Required Beginning Date; or
(b) the end of the Plan Year in which a right to an additional
benefit arises in the case of a Section 415 Excess Benefit
attributable to any period of participation beginning on his
Required Beginning Date.
Notwithstanding any other provision of the Plan, for purposes of this
Section if a Participant's Section 415 Excess Benefit described in
paragraph (a) above is subject to distribution at any date prior to the
Participant's Normal Retirement Date, then the amount of that benefit, as
otherwise determined in accordance with the provisions of subsection 3.1,
shall be reduced to reflect early commencement by application of any
reduction factors that are applicable in determining the amount of the
Pension payable to him under The Mead Retirement Plan as of that date.
4.2 Distribution to a Surviving Spouse. The surviving "Spouse" (as
---------------------------------
defined in The Mead Retirement Plan) of a deceased Participant who is
entitled to receive a Pre-Retirement Survivor Pension (as defined in The
Mead Retirement Plan) shall be entitled to receive a Surviving Spouse
Benefit from this Plan in an amount, if any, equal to the Present Value of
the monthly Pre-Retirement Survivor Pension that she would have received
under the provisions of The Mead Retirement Plan had the Participant's
Accrued Benefit under that Plan been an amount equal to the amount of his
Section 415 Excess Benefit. Subject to the following provisions of the
Plan, a Spouse's Surviving Spouse Benefit shall be distributed to her, in
a single lump sum, as soon as administratively feasible (but not more than
6 months) after the date as of which payment of her Pre-Retirement
Survivor Pension is commenced under The Mead Retirement Plan.
4.3 Distribution in Discretionary Form. Notwithstanding the provisions
----------------------------------
of subsection 4.1 and 4.2, but subject to the following provisions of this
subsection, the Committee, in its sole discretion, may direct that the
benefits payable in a single lump sum under subsection 4.1 or 4.2 be paid,
beginning when otherwise distributed under either of those subsections, to
the Participant or Surviving Spouse, as the case may be, in such periodic
form as the Committee shall decide. If the Committee exercises the
discretion vested in it by the provisions of the foregoing sentence, it
may, in its sole discretion, thereafter
<PAGE>
accelerate payments to the recipient if it is determined (as provided
below) that the Participant or Spouse, as the case may be, has experienced
an "Unforeseeable Emergency" (as defined below), provided that the amount
of any such accelerated payment shall not exceed the amount reasonably
needed to satisfy the recipient's emergency need. The term "Unforeseeable
Emergency" means severe financial hardship to the Participant or Spouse
resulting from a sudden and unexpected illness or accident of the
Participant or Spouse or of his or her "dependent" (as defined in section
152(a) of the Code), loss of the Participant's or Spouse's property due to
a casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant or
Spouse, as the case may be. In determining whether an Emergency
Distribution should be made consideration may be given to the extent to
which his or her Unforeseeable Emergency can be relieved through
reimbursement or compensation by insurance or otherwise or by liquidation
of the Participant's or Spouse's assets, to the extent the liquidation of
such assets would not itself cause severe financial hardship. A
determination with respect to whether a Participant or Spouse has
experienced an Unforeseeable Emergency shall be made:
(a) in the case of a Participant employed, or last employed, by an
Employer at a salary grade below salary grade 24 (exclusive of
an elected officer of an Employer) and of his Spouse, by the
Chairperson of the Committee; and
(b) in the case of a Participant employed, or last employed, by an
Employer at salary grade 24 or above or as an elected officer
of an Employer and his Spouse, by the Committee.
4.4 Distribution to a Beneficiary. If the Committee exercises the
-----------------------------
discretion vested in it by the first sentence of subsection 4.3 with
respect to any distribution payable under subsection 4.1 or 4.2 and the
Participant or Spouse dies prior to receiving periodic payments in an
aggregate amount equal to the Present Value of his or her Section 415
Excess Benefit or Surviving Spouse Benefit, as the case may be, determined
as of the date as of which periodic payments commenced, the undistributed
portion of the Present Value shall be distributed, in a single lump sum,
to a "Beneficiary" (as defined below) designated by him or her. The term
"Beneficiary" means, with respect to any Participant or Spouse, such
natural or legal person or persons as may be designated by him (who may be
designated contingently or successively). A Beneficiary designation will
be effective only when a signed and dated beneficiary designation form is
filed with the Committee while the Participant or Spouse is alive, which
form will cancel any beneficiary designation form signed and filed
earlier. If a Participant or Spouse is not survived by any Beneficiary,
the Committee shall make distribution to the legal representative or
representatives of the estate of the Participant or Spouse, as the case
may be.
4.5 ECAP Credit in Lieu of Distribution. With the approval of the
------------------------------------
Committee, which approval shall automatically be revoked by the
Committee's exercise of its discretion under subsection 4.3, a Participant
who is also a Participant in The Mead Corporation Executive Capital
Accumulation Plan ("ECAP") may irrevocably elect to waive his right to
receive any amount otherwise distributable to him pursuant to the
provisions of subsection 4.1 and to have the same amount credited for his
benefit and subsequently distributed to him under the terms of the ECAP.
An election made by a Participant in accordance with the provisions of
this subsection must be in such written form as the Committee shall
<PAGE>
decide and filed with the Plan Administrator at least one year in advance
of the date of the Participant's termination of employment with the
Employers and Affiliates. In no event shall this subsection be applicable
to any amount distributable to a Participant's surviving Spouse pursuant
to the provisions of subsection 4.2.
4.6 Distribution to Incapacitated Persons. Notwithstanding any other
-------------------------------------
provision of the Plan, if a person entitled to a distribution under the
Plan is determined by a court of competent jurisdiction to be physically,
mentally or legally incapacitated and unable to manage his financial
affairs and claim is made by a conservator or other person legally charged
by such court with the care of his person, the Committee shall make
distributions to such conservator or other person. Any distribution made
in accordance with this subsection shall fully acquit and discharge all
persons from all further liability on account thereof.
SECTION 5 - DISPUTE RESOLUTION
- ------------------------------
5.1 Notice of Denial. If any dispute arises with respect to a
----------------
Participant, Spouse or Beneficiary (a "Claimant") under the Plan, the
Administrator will provide the Claimant with a written notice of its
resolution of the dispute setting forth:
(a) the provisions of the Plan upon which the resolution was
based; and
(b) an explanation of this claims procedure.
If the Administrator rejects a Claimant's application for failure to
furnish certain necessary materials or information, the written notice to
the Claimant will explain what additional material is needed and why, and
advise the Claimant that he may refile a proper application. In the event
that the Administrator fails to take any action on the Claimant's initial
application within 90 days after receipt, the application will be deemed
denied, and the Claimant's appeal rights under subsection 5.2 will be in
effect as of the end of such period.
5.2 Notice of Appeal. Within 60 days after the receipt of the
----------------
Administrator's notice of resolution, the Claimant may file a written
notice of appeal of the resolution with the "Claims Reviewer" (as defined
below). In addition, within such appeal period, the Claimant may review
pertinent documents at such reasonable times and places as the Claims
Reviewer may specify and may submit any additional written material
pertinent to the appeal not set forth in the notice of appeal. The appeal
shall be determined by the Claims Reviewer, and the Claimant shall be
entitled to appear before the Claims Reviewer to present his claim. The
term "Claims Reviewer" means:
(a) in the case of a Participant employed, or last employed,
by an Employer at a salary grade below salary grade 24
(exclusive of an elected officer of an Employer) and of
his Spouse or Beneficiary, the Benefit Appeals
Committee, a committee appointed by the Corporate
Benefits Committee of Mead; and
(b) in the case of a Participant employed, or last employed,
by an Employer at salary grade 24 or above or as an
elected officer
<PAGE>
of an Employer and of his Spouse or Beneficiary, the
Chairperson of the Committee.
5.3 Decision on Appeal. The Benefit Appeals Committee or the
------------------
Chairperson of the Committee, as the case may be, will make a written
decision on the appeal not later than 60 days after its receipt of the
notice of appeal unless special circumstances require an extension of
time, in which case a decision will be given as soon as possible, but not
later that 120 days after receipt of the notice of appeal. The decision
on the appeal will be in writing and shall include specific reasons for
the decision, making specific reference to the provision of the Plan upon
which the decision was based.
SECTION 6 - AMENDMENT AND TERMINATION
- -------------------------------------
Mead, by action of the Committee, reserves the right to amend the
Plan at any time. The Plan will terminate on the date on which it is
terminated by Mead's Board of Directors. Neither an amendment or
termination of the Plan shall, of itself, reduce the amount of a
Participant's Section 415 Excess Benefit, which amount shall continue to
be adjusted from time to time pursuant to the provisions of Section 3
until distributed in accordance with the provisions of Section 4.
Exhibit 10(4)
THE MEAD CORPORATION
EXCESS EARNINGS BENEFIT PLAN
----------------------------
<PAGE>
TABLE OF CONTENTS
SECTION 1 - GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 History and Purpose. . . . . . . . . . . . . . . . . . . 1
1.2 Plan Funding and Administration. . . . . . . . . . . . . 1
1.3 Applicable Law . . . . . . . . . . . . . . . . . . . . . 2
1.4 Gender and Number. . . . . . . . . . . . . . . . . . . . 2
1.5 Assignment . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Plan Year. . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2 - PARTICIPATION. . . . . . . . . . . . . . . . . . . . . . 2
2.1 Eligibility for Participation. . . . . . . . . . . . . . 2
2.2 Participation Not Contract of Employment . . . . . . . . 2
SECTION 3 - DETERMINATION OF EXCESS EARNINGS BENEFIT AMOUNT. . . . . 2
3.1 Excess Earnings Benefit Amount . . . . . . . . . . . . . 2
3.2 Unlimited Accrued Benefit. . . . . . . . . . . . . . . . 3
3.3 Qualified Accrued Benefit. . . . . . . . . . . . . . . . 3
SECTION 4 - DISTRIBUTION OF EXCESS EARNINGS BENEFIT. . . . . . . . . 4
4.1 Distribution to a Participant. . . . . . . . . . . . . . 4
4.2 Distribution to a Surviving Spouse . . . . . . . . . . . 4
4.3 Distribution in Discretionary Form . . . . . . . . . . . 4
4.4 Distribution to a Beneficiary. . . . . . . . . . . . . . 5
4.5 ECAP Credit in Lieu of Distribution. . . . . . . . . . . 6
64.6Distribution to Incapacitated Persons. . . . . . . . . . 6
SECTION 5 - DISPUTE RESOLUTION . . . . . . . . . . . . . . . . . . . 6
5.1 Notice of Denial . . . . . . . . . . . . . . . . . . . . 6
5.2 Notice of Appeal . . . . . . . . . . . . . . . . . . . . 6
5.3 Decision on Appeal . . . . . . . . . . . . . . . . . . . 7
SECTION 6 - AMENDMENT AND TERMINATION. . . . . . . . . . . . . . . . 7
<PAGE>
THE MEAD CORPORATION EXCESS EARNINGS BENEFIT PLAN
-------------------------------------------------
SECTION 1 - GENERAL
- -------------------
1.1 History and Purpose. Effective January 1, 1976, THE MEAD
-------------------
CORPORATION, an Ohio corporation ("Mead") established The Mead Excess
Benefits Plan (the "Prior Plan"). The Prior Plan was subsequently
amended and restated, effective May 1, 1979, amended, effective November
1, 1986, and again amended and restated, effective October 27, 1988.
The following provisions constitute an amendment, restatement, and
continuation of the portion of the Prior Plan that is intended to be a
"top hat plan" (within the meaning of the Employee Retirement Income
Security Act of 1974 ("ERISA")) into a separate plan which shall be
effective January 1, 1996, and shall be known as THE MEAD CORPORATION
EXCESS EARNINGS BENEFIT PLAN (the "Plan"). The sole purpose of the Plan
is to supplement the amount of the "Pension" (as defined in the Mead
Retirement Plan) payable to or on account of any employee or former
employee of Mead or of any "Affiliate" (as defined below) from The Mead
Retirement Plan to the extent, if any, that the amount of his Pension is
limited by application of the provisions of section 401(a)(17) of the
Internal Revenue Code of 1986 (the "Code"). Mead and such Affiliates
are sometimes referred to below individually, as an "Employer" and,
collectively, as the "Employers." The term "Affiliate" means any entity
during the period that it is, along with Mead, a member of a controlled
group of corporations, a controlled group of trades and businesses, an
affiliated service group or any other entity designate by the Secretary
of the Treasury as described in sections 414(b), 414(c), 414(m), and
414(o), respectively, of the Code.
1.2 Plan Funding and Administration. The benefits payable under the Plan
------------------------------
are unfunded and are payable, when due, from the general assets of the
Employers or, in the sole discretion of the Compensation Committee of
the Board of Directors of Mead (the "Committee"), from the assets of a
benefit trust, the assets of which shall be subject to the claims of the
unsecured general creditors of the Employers. Notwithstanding the
foregoing, in the event of a "Potential Change in Control" (as defined
in Section 3.02 of Benefit Trust Agreement, a trust agreement
established January 9, 1987 by and between Mead and Society Bank,
National Association) the provisions of Benefit Trust Agreement shall
become operative with respect to the Plan. The Plan shall be
administered by the Vice-President-Human Resources of Mead (the
"Administrator") who shall have the rights, powers and duties with
respect to the Plan that are hereinafter set forth.
1.3 Applicable Law. The Plan will be construed and administered in
-------------
accordance with the laws of the State of Ohio to the extent that those
laws are not preempted by the laws of the United States of America.
1.4 Gender and Number. Where the context admits, words in any gender
----------------
will include any other gender, words in the singular will include the plural
and words in the plural will include the singular.
1.5 Assignment. No Plan right or interest of any person under the Plan
---------
shall be assignable or transferable, in whole or in part, either
directly or otherwise, including without limitation thereto, by
execution, levy, attachment,
<PAGE>
garnishment, pledge or in any other manner, but excluding transfers by
reason of death or mental incompetency; no attempted assignment or
transfer thereof shall be effective; and no such right or interest shall
be liable for, or subject to, any obligation or liability of any person.
1.6 Plan Year. The term "Plan Year" means the calendar year.
---------
SECTION 2 - PARTICIPATION
- -------------------------
2.1 Eligibility for Participation. An employee shall become a
-----------------------------
Participant in the Plan on the date on which he first has an "Excess
Earnings Benefit" (as defined in subsection 3.1).
2.2 Participation Not Contract of Employment. The Plan does not
----------------------------------------
constitute a contract of employment and participation in the Plan will
not give any employee the right to be retained in the employ of the
Employers or Affiliates nor give any person any right or claim to any
benefit under the terms of the Plan unless such right or claim has
specifically accrued under the terms of the Plan.
SECTION 3 - DETERMINATION OF EXCESS EARNINGS BENEFIT AMOUNT
- -----------------------------------------------------------
3.1 Excess Earnings Benefit Amount. A Participant's "Excess Earnings
------------------------------
Benefit" as at any date is an amount, if any, payable under this Plan
commencing on the Participant's "Normal Retirement Date" (as defined in
The Mead Retirement Plan), which, when expressed as an annual amount
payable as a single life annuity, is equal to the amount determined by
reducing the amount of his "Unlimited Accrued Benefit" (as defined in
subsection 3.2) as of that date by an amount equal to the sum of:
(a) the amount of his "Qualified Accrued Benefit" (as defined in
subsection 3.3) as of that date; and
(b) the amount of his "Section 415 Excess Benefit" (determined
in accordance with the provisions of The Mead Corporation
Section 415 Excess Benefit Plan).
Notwithstanding the foregoing provisions of this subsection, if a
Participant continues in the employ of the Employers and Affiliates
after his Required Beginning Date (as defined in The Mead Retirement
Plan), the amount of his Excess Earnings Benefit shall be recomputed as
of the last day of each Plan Year, beginning with the Plan Year during
which the Participant's Required Beginning Date occurs, taking into
account amounts previously distributed to him under the Plan. If any
such recomputation results in an additional Excess Earnings Benefit
amount, that amount shall be distributed to him in accordance with
paragraph 4.1(b).
3.2 Unlimited Accrued Benefit. A Participant's "Unlimited Accrued
-------------------------
Benefit" as at any date is an amount equal to the amount of his "Accrued
Benefit" (as determined in accordance with the provisions of The Mead
Retirement Plan as of that date), computed without regard to:
(a) the limitations of section 415 of the Code;
<PAGE>
(b) the amount of any otherwise applicable reduction in the
amount of his Accrued Benefit on account of any amount paid
or payable:
(i) to or on account of the Participant under any other
"qualified" defined benefit pension plan maintained by
any Employer; or
(ii) to an "alternate payee" (as defined in section 414(p)
of the Code); or
(c) the limitation of section 401(a)(17) of the Code; but
(d) by taking into account the amount, if any, that:
(i) the Participant elects to defer under the terms of The
Mead Corporation Executive Capital Accumulation Plan
("EXCAP") for any applicable Plan Year, exclusive of
any portion of a deferral that is attributable to
long-term incentive compensation paid to him;
(ii) the fair market value of each share of common stock of
Mead issued, or deemed issued, to the Participant
(whether or not subject to a risk of forfeiture) in
lieu of cash payment of the Participant's base salary
or short term incentive compensation for any
applicable Plan Year, which value shall be determined
as the closing price of a share of such stock on the
New York Stock Exchange on the date payment is
otherwise due or, if no Mead common stock is traded on
that Exchange on that date for any reason, the next
preceding day on which Mead common stock was traded on
the New York Stock Exchange; and
(iii) any amount paid to the Participant paid to the
Participant in lieu of an annual incentive plan
payment and not deferred by him under EXCAP.
3.3 Qualified Accrued Benefit. A Participant's "Qualified Accrued
-------------------------
Benefit" as at any date is an amount equal to the amount of his Accrued
Benefit (as determined in accordance with the provisions of The Mead
Retirement Plan as of that date), but computed without regard to the
amounts described in paragraphs 3.2(b)(i), 3.2(b)(ii) and 3.2(d) above,
and limited in amount as required by the requirements of sections
401(a)(17) and 415 of the Code, as set forth in The Mead Retirement Plan.
SECTION 4 - DISTRIBUTION OF EXCESS EARNINGS BENEFIT
- ---------------------------------------------------
4.1 Distribution to a Participant. Subject to the following provisions
-----------------------------
of the Plan, the "Present Value" (as defined and determined under the
provisions of The Mead Retirement Plan) of the amount of a Participant's
Excess Earnings Benefit shall be distributed to him, in a single lump
sum, as soon as administratively feasible (but not more than 6 months)
after:
(a) the date as of which payment of his Pension is made or
commenced under The Mead Retirement Plan in the case of an
Excess Earnings
<PAGE>
Benefit attributable to his period of participation ending
prior to his Required Beginning Date; or
(b) the end of the Plan Year in which a right to an additional
benefit arises in the case of an Excess Earnings Benefit
attributable to any period of participation beginning on his
Required Beginning Date.
Notwithstanding any other provision of the Plan, for purposes of this
Section if a Participant's Excess Earnings Benefit described in
paragraph (a) above is subject to distribution at any date prior to the
Participant's Normal Retirement Date, then the amount of that benefit,
as otherwise determined in accordance with the provisions of subsection
3.1, shall be reduced to reflect early commencement by application of
any reduction factors that are applicable in determining the amount of
the Pension payable to him under The Mead Retirement Plan as of that
date.
4.2 Distribution to a Surviving Spouse. The surviving "Spouse" (as
---------------------------------
defined in The Mead Retirement Plan) of a deceased Participant who is
entitled to receive a Pre-Retirement Survivor Pension (as defined in The
Mead Retirement Plan) shall be entitled to receive a Surviving Spouse
Benefit from this Plan in an amount, if any, equal to the Present Value
of the monthly Pre-Retirement Survivor Pension that she would have
received under the provisions of The Mead Retirement Plan had the
Participant's Accrued Benefit under that Plan been an amount equal to
the amount of his Excess Earnings Benefit. Subject to the following
provisions of the Plan, a Spouse's Surviving Spouse Benefit shall be
distributed to her, in a single lump sum, as soon as administratively
feasible (but not more than 6 months) after the date as of which payment
of her Pre-Retirement Survivor Pension is commenced under The Mead
Retirement Plan.
4.3 Distribution in Discretionary Form. Notwithstanding the provisions
----------------------------------
of subsection 4.1 and 4.2, but subject to the following provisions of
this subsection, the Committee, in its sole discretion, may direct that
the benefits payable in a single lump sum under subsection 4.1 or 4.2 be
paid, beginning when otherwise distributable under either of those
subsections, to the Participant or Surviving Spouse, as the case may be,
in such periodic form as the Committee shall decide. If the Committee
exercises the discretion vested in it by the provisions of the foregoing
sentence, it may, in its sole discretion, thereafter accelerate payments
to the recipient if it is determined (as provided below) that the
Participant or Spouse, as the case may be, has experienced an
"Unforeseeable Emergency" (as defined below), provided that the amount
of any such accelerated payment shall not exceed the amount reasonably
needed to satisfy the recipient's emergency need. The term
"Unforeseeable Emergency" means severe financial hardship to the
Participant or Spouse resulting from a sudden and unexpected illness or
accident of the Participant or Spouse or of his or her "dependent" (as
defined in section 152(a) of the Code), loss of the Participant's or
Spouse's property due to a casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the
control of the Participant or Spouse, as the case may be. In
determining whether an Emergency Distribution should be made
consideration may be given to the extent to which his or her
Unforeseeable Emergency can be relieved through reimbursement or
compensation by insurance or otherwise or by liquidation of the
Participant's or Spouse's assets, to the extent the liquidation of such
assets would not itself cause severe financial hardship. A
determination with respect to whether a Participant or Spouse has
experienced an Unforeseeable Emergency shall be made:
<PAGE>
(a) in the case of a Participant employed, or last employed, by
an Employer at a salary grade below salary grade 24
(exclusive of an elected officer of an Employer) and of his
Spouse, by the Chairperson of the Committee acting for the
Committee; and
(b) in the case of a Participant employed, or last employed, by
an Employer at salary grade 24 or above or as an elected
officer of an Employer and of his Spouse, by the Committee.
4.4 Distribution to a Beneficiary. If the Committee exercises the
-----------------------------
discretion vested in it by the first sentence of subsection 4.3 with
respect to any distribution payable under subsection 4.1 or 4.2 and the
Participant or Spouse dies prior to receiving periodic payments in an
aggregate amount equal to the Present Value of his Excess Earnings or
Surviving Spouse Benefit, as the case may be, determined as of the date
as of which periodic payments commenced, the undistributed portion of
the Present Value shall be distributed, in a single lump sum, to a
"Beneficiary" (as defined below). The term "Beneficiary" means, with
respect to any married Participant, his Spouse and,with respect to any
unmarried Participant or Spouse, such natural or legal person or persons
as may be designated by him (who may be designated contingently or
successively). A Beneficiary designation will be effective only when a
signed and dated beneficiary designation form is filed with the
Committee while the Participant or Spouse is alive, which form will
cancel any beneficiary designation form signed and filed earlier. If a
Participant or Spouse is not survived by any Beneficiary, the Committee
shall make distribution to the legal representative or representatives
of the estate of the Participant or Spouse, as the case may be.
4.5 EXCAP Credit in Lieu of Distribution. With the approval of the
------------------------------------
Committee, which approval shall automatically be revoked by the
Committee's exercise of its discretion under subsection 4.3, a
Participant who is also a Participant in the EXCAP may elect to waive
his right to receive any amount otherwise distributable to him pursuant
to the provisions of subsection 4.1 and to have the same amount credited
for his benefit (as of the date distribution would have been made) and
subsequently distributed to him under the terms of the EXCAP. An
election made by a Participant in accordance with the provisions of this
subsection must be in such written form as the Committee shall decide
and filed with the Plan Administrator at least one year in advance of
the date of the Participant's termination of employment with the
Employers and Affiliates. An election made by a Participant pursuant to
the foregoing provisions of this subsection shall be revocable by him at
any time that is at least one year prior to the date of his termination
of employment with the Employers and Affiliates. In no event shall this
subsection be applicable to any amount distributable to a Participant's
surviving Spouse pursuant to the provisions of subsection 4.2.
4.6 Distribution to Incapacitated Persons. Notwithstanding any other
-------------------------------------
provision of the Plan, if a person entitled to a distribution under the
Plan is determined by a court of competent jurisdiction to be
physically, mentally or legally incapacitated and unable to manage his
financial affairs and claim is made by a conservator or other person
legally charged by such court with the care of his person, the Committee
shall make distribution to such conservator or other person. Any
distribution made in accordance with this subsection shall fully acquit
and discharge all persons from all further liability on account thereof.
<PAGE>
SECTION 5 - DISPUTE RESOLUTION
- ------------------------------
5.1 Notice of Denial. If any dispute arises with respect to a
----------------
Participant, Spouse or Beneficiary (a "Claimant") under the Plan, the
Administrator will provide the Claimant with a written notice of its
resolution of the dispute setting forth:
(a) the provisions of the Plan upon which the resolution
was based; and
(b) an explanation of this claims procedure.
If the Administrator rejects a Claimant's application for failure to
furnish certain necessary materials or information, the written notice
to the Claimant will explain what additional material is needed and why,
and advise the Claimant that he may refile a proper application. In the
event that the Administrator fails to take any action on the Claimant's
initial application within 90 days after receipt, the application will
be deemed denied, and the Claimant's appeal rights under subsection 5.2
will be in effect as of the end of such period.
5.2 Notice of Appeal. Within 60 days after the receipt of the
----------------
Administrator's notice of resolution, the Claimant may file a written
notice of appeal of the resolution with the "Claims Reviewer" (as
defined below). In addition, within such appeal period, the Claimant
may review pertinent documents at such reasonable times and places as
the Claims Reviewer may specify and may submit any additional written
material pertinent to the appeal not set forth in the notice of appeal.
The appeal shall be determined by the Claims Reviewer, and the Claimant
shall be entitled to appear before the Claims Reviewer to present his
claim. The term "Claims Reviewer" means:
(a) in the case of a Participant employed, or last
employed, by an Employer at a salary grade below
salary grade 24 (exclusive of an elected officer of an
Employer) and of his Spouse or Beneficiary, the
Benefit Appeals Committee, a committee appointed by
the Corporate Benefits Committee of Mead; and
(b) in the case of a Participant employed, or last
employed, by an Employer at salary grade 24 or above
or as an elected officer of an Employer and of his
Spouse or Beneficiary, the Chairperson of the
Committee.
5.3 Decision on Appeal. The Benefit Appeals Committee or the
------------------
Chairperson of the Committee, as the case may be, will make a written
decision on the appeal not later than 60 days after its receipt of the
notice of appeal unless special circumstances require an extension of
time, in which case a decision will be given as soon as possible, but
not later that 120 days after receipt of the notice of appeal. The
decision on the appeal will be in writing and shall include specific
reasons for the decision, making specific reference to the provision of
the Plan upon which the decision was based.
SECTION 6 - AMENDMENT AND TERMINATION
- -------------------------------------
Mead, by action of the Committee, reserves the right to amend the
Plan at any time. The Plan will terminate on the date on which it is
terminated by Mead's Board of Directors.
<PAGE>
Neither an amendment or termination of the Plan shall, of itself, reduce
the amount of a Participant's Excess Earnings Benefit, which amount
shall continue to be adjusted from time to time pursuant to the
provisions of Section 3 until distributed in accordance with the
provisions of Section 4.
Exhibit 10(5)
THE MEAD CORPORATION
1996 STOCK OPTION PLAN
----------------------
Section 1. Purposes.
- ---------- --------
The purposes of The Mead Corporation 1996 Stock Option Plan
(the "Plan") are (i) to provide incentives to officers, other key
employees and non-employee directors of the Company upon whose judgment,
initiative and efforts the long-term growth and success of the Company
is largely dependent; (ii) to assist the Company in attracting and re-
taining key employees and non-employee directors of proven ability; and
(iii) to increase the identity of interests of such key employees and
non-employee directors with those of the Company's shareholders by
providing such employees and directors with options to acquire Shares of
the Company.
Section 2. Definitions.
- ---------- -----------
For purposes of the Plan:
(a) "Acquisition Transaction" means a transaction of the
type described in Section 9(b)(ii).
(b) "Affiliate" means a person controlling, controlled by
or under common control with the Company.
(c) "Board of Directors" or "Board" means the Board of
Directors of the Company.
(d) "Change in Composition of the Board" means an event of
the type described in Section 9(b)(iv).
(e) "Change in Control" means a transaction of the type
described in Section 9(b)(iii).
(f) "Committee" means the committee referred to in Section 4.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Company" means The Mead Corporation, an Ohio
corporation; when used in the Plan with reference to employment,
"Company" shall include any Subsidiary of the Company.
(i) "Fair Market Value" means the average of the highest
sale price and the lowest sale price of a Share on the date the value of
a Share is to be determined, as reported on the New York Stock Exchange
- - Composite Transactions Tape or, if no sale is reported for such date,
then on the next preceding date for which a sale is reported.
(j) "Incentive Stock Option" means an option granted under
the Plan which qualifies as an incentive stock option under Section 422
of the Code.
<PAGE>
(k) "Initial Director" means a person who is a Non-Employee
Director at the date of requisite approval of this Plan by the share-
holders of the Company.
(l) "Limited Right" means a right granted under Section 9
of the Plan.
(m) "Non-Employee Director" means a member of the Board who
is not also an employee of the Company.
(n) "Nonqualified Option" means an option granted under the
Plan which does not qualify as an incentive stock option under Section
422 of the Code.
(o) "1934 Act" means the Securities Exchange Act of 1934,
as amended.
(p) "Reload Option" means a Nonqualified Option granted
under Section 6(d) of the Plan.
(q) "Share" or "Shares" means shares of common stock,
without par value, of the Company.
(r) "Subsequent Director" means a person who becomes a Non-
Employee Director subsequent to the date of requisite approval of this
Plan by the shareholders of the Company.
(s) "Subsidiary" means any corporation, partnership or
other person or entity at least 10% of the voting or equity interest of
which is owned or controlled, directly or indirectly, by the Company.
(t) "Tender Offer" means a tender offer or a request or
invitation for tenders or an exchange offer subject to regulation under
Section 14(d) of the 1934 Act and the rules and regulations thereunder,
as the same may be amended, modified or superseded from time to time.
(u) "Tax Date" means the date as of which the amount of the
withholding tax payment with respect to the exercise of a Nonqualified
Option is calculated.
Section 3. Shares Subject to the Plan.
- ---------- --------------------------
(a) Number of Shares. Subject to adjustment as provided in Section
----------------
11, the maximum number of Shares that may be issued and/or delivered
under the Plan upon the exercise of options is 4,000,000. Subject to
adjustment as provided in Section 11, the maximum number of Shares that
may be issued and/or delivered under the Plan to any individual over the
term of the Plan upon the exercise of options shall not exceed 400,000.
Such Shares may be either authorized and unissued or treasury Shares.
Any Shares (i) subject to an option which for any reason has terminated
or expired or has been cancelled prior to being fully exercised or (ii)
which have been received by the Company as full or partial payment for
Shares purchased pursuant to Section 8(b), may again be granted pursuant
to options under the Plan.
<PAGE>
(b) Subject to adjustment as provided in Section 11, the
maximum number of Limited Rights which may be granted under the Plan is
4,000,000. Subject to adjustment as provided in Section 11, the maximum
number of Limited Rights that may be granted under the Plan to any
individual over the term of the Plan shall not exceed 400,000. Any
Limited Rights granted under the Plan which for any reason terminate or
expire or have been cancelled prior to being fully exercised may again
be granted under the Plan.
Section 4. Administration.
- ---------- --------------
The Plan shall be administered by a committee (the
"Committee") of the Board of Directors, consisting of three or more
directors, who shall from time to time be appointed by, and serve at the
pleasure of, the Board of Directors. No director shall serve as a
member of the Committee if (i) he or she does not qualify as a disinter-
ested person with respect to the Plan under Rule 16b-3 (or any successor
provision) under the 1934 Act or (ii) he or she does not qualify as an
outside director within the meaning of Section 162(m) of the Code.
The Committee shall have and exercise all the power and
authority granted to it under the Plan. Subject to the provisions of
the Plan, the Committee shall in its sole discretion determine the
persons to whom, and the times at which, Incentive Stock Options,
Nonqualified Options, Reload Options and Limited Rights shall be grant-
ed; the number of Shares to be subject to each option; the option price
per Share; and the term of each option. In making such determinations,
the Committee may take into consideration each participant's present
and/or potential contribution to the success of the Company and any
other factors which the Committee may deem relevant and proper. Subject
to the provisions of the Plan, the Committee shall also interpret the
Plan; prescribe, amend and rescind rules and regulations relating to the
Plan; correct defects, supply omissions and reconcile any
inconsistencies in the Plan; and make all other determinations necessary
or advisable for the administration of the Plan. The Committee may in
its discretion change the terms of any Limited Right granted hereunder
in connection with an Incentive Stock Option to permit the Limited Right
to be exercisable even though the Fair Market Value of a Share on the
date of exercise does not exceed the exercise price of the related
option. Such determinations of the Committee shall be conclusive. A
majority of the Committee shall constitute a quorum for meetings of the
Committee, and the act of a majority of the Committee at a meeting, or
an act reduced to or approved in writing by all members of the
Committee, shall be the act of the Committee.
Section 5. Eligibility.
- ---------- -----------
From time to time during the term of the Plan, the Committee
may grant one or more Incentive Stock Options, Nonqualified Options and
Reload Options to any person who is then an officer or other key
employee of the Company. Each Non-Employee Director shall be eligible
to receive Nonqualified Options granted under the formula provision set
forth in Section 7 of the Plan.
Section 6. Terms and Conditions of Options.
- ---------- -------------------------------
(a) Written Agreement. The terms of each option granted under the
-----------------
Plan shall be set forth in a written agreement, the form of which shall
be approved by the Committee.
<PAGE>
(b) Terms and Conditions of General Application. The following
-------------------------------------------
terms and provisions shall apply to all options granted under the Plan,
except to the extent otherwise provided in Sections 6(c), 6(d), 6(e),
6(f) and 7 hereof, if applicable:
(1) No option may be granted under the Plan at an
option price per Share which is less than the Fair Market Value of
a Share on the date of grant.
(2) No option may be exercised more than ten years
after the date of grant.
(3) No option shall be exercisable within one year
after the date of grant. At the time an option is granted, the
Committee may provide that after such one year period, the option
may be exercised with respect to all Shares subject thereto, or
may be exercised with respect to only a specified number of Shares
over a specified period or periods.
(4) Except as provided in Sections 6(b)(5) and
6(b)(6), an option may be exercised only if the grantee of such
option has been continuously employed by the Company since the
date of grant. Whether authorized leave of absence or absence for
military or governmental service shall constitute a termination of
employment shall be determined by the Committee in its sole
discretion.
(5) At the time an option is granted, or at such other
time as the Committee may determine, the Committee may provide
that, if the grantee of the option ceases to be employed by the
Company for any reason (including retirement or disability) other
than death, the option will continue to be exercisable by the
holder (including a transferee under Section 10 hereof) for such
additional period (not to exceed the remaining term of such
option) after such termination of employment as the Committee may
provide.
(6) At the time an option is granted, the Committee
may provide that, if the grantee of such option dies while
employed by the Company or while entitled to the benefits of any
additional exercise period established by the Committee with
respect to such option in accordance with Section 6(b)(5), then
the option will continue to be exercisable by the person or
persons to whom the grantee's rights with respect to such option
shall have passed by will or by the laws of descent and
distribution (or in accordance with the procedures set forth in
Section 10 hereof) for such additional period after death (not to
exceed the remaining term of such option) as the Committee may
provide.
(7) At the time an option is granted, the Committee
may provide for any restriction or limitation on the exercise of
such option and/or for any restriction or limitation on the
transferability of the Shares issuable upon the exercise of such
option as it may deem appropriate.
(c) Additional Provisions Applicable to Incentive Stock Options.
-----------------------------------------------------------
The following additional terms and provisions shall apply to Incentive
Stock Options granted under the Plan, notwithstanding any provision of
Section 6(b) to the contrary:
<PAGE>
(1) No Incentive Stock Option shall be granted to an
officer or other employee who possesses directly or indirectly
(within the meaning of Section 424(d) of the Code) at the time of
grant more than 10% of the voting power of all classes of shares
of the Company or of any parent corporation or any corporation,
50% or more of the voting stock of which is owned or controlled,
directly or indirectly, by the Company, unless the option price is
at least 110% of the Fair Market Value of the Shares subject to
the option on the date the option is granted and the option is not
exercisable after the expiration of five years from the date of
grant.
(2) The aggregate Fair Market Value (determined on the
date an Incentive Stock Option is granted) of Shares with respect
to which Incentive Stock Options are exercisable for the first
time by any individual in any calendar year (under the Plan and
all of the plans of the Company and any Subsidiary and any parent
corporation) shall not exceed $100,000, or such other maximum
amount permitted by the Code.
(3) Any Stock Option granted under the Plan may
contain a feature providing for, upon the exercise thereof, the
grant of a Reload Option subject to and in accordance with the
terms and conditions set forth in Section 6(d) below.
(d) Additional Provisions Applicable to Reload Options. Whenever
--------------------------------------------------
the grantee of any option containing a reload feature (the "Original
Option") outstanding under this Plan exercises such Original Option, the
grantee of such Original Option (except as provided in Section 6(d)(5)
below) shall be granted on the date of such exercise (the "Reload Date")
a new Option (the "Reload Option") for a number of Shares (the "Original
Shares") equal to the number of Shares subject to the Original Option
being exercised less the number of Shares subject to the Original Option
which are (A) withheld by the Company as full or partial payment of the
option price for such Original Option, (B) otherwise disposed of for
purposes of having the proceeds applied for such purpose or (C) withheld
by the Company for purposes of tax withholding in accordance with Sec-
tion 8(d) hereof. The following additional terms and provisions shall
apply to Reload Options granted under the Plan, notwithstanding any
provision of Section 6(b) to the contrary:
(1) Option Price. The option price per Share covered by a
------------
Reload Option shall be an amount equal to the Fair Market Value
per Share as of the Reload Date.
(2) Expiration Date. Subject to Section 6(d)(4) below, the op
---------------
tion exercise period shall expire on, and the Reload Option shall
no longer be exercisable following, the tenth anniversary of the
Reload Date.
(3) Vesting Period. Reload Options granted under this Section
--------------
6(d) shall vest and become exercisable with respect to all Shares
covered thereby on the third anniversary of the Reload Date,
subject to Section 6(f) hereof.
(4) Automatic Cancellation. Except as otherwise provided in
----------------------
the agreement evidencing a Reload Option, a Reload Option shall be
immediately cancelled (without any action taken by the Company)
with respect to that number of Shares subject to such Reload
Option (such number of Shares being determined in accordance with
the succeeding sentence), effective
<PAGE>
immediately upon any sale, disposition or purported assignment or
transfer of any or all of the Original Shares subject to the
Original Option prior to the third anniversary of the Reload Date.
The number of Shares subject to the Reload Option so cancelled
shall equal the number of Original Shares subject to the Original
Option so sold, disposed of, assigned or transferred prior to the
third anniversary of the Reload Date; provided,
--------
however, that such Shares subject to the Reload Option shall not be
-------
cancelled if such Original Shares are used in connection with the
exercise of another option with respect to which Section 6(d)
hereof applies.
(5) Active Employee. No Reload Option shall be granted to any
---------------
person who is not employed by the Company at the time of exercise
of an Original Option.
(e) Waiver of Terms. Subject to the ten-year limitation in Section
---------------
6(b)(3), the Committee may waive or modify at any time, either before or
after the granting of an option (including a Reload Option but excluding
any option granted under Section 7 hereof) any condition or restriction
with respect to the exercise of such option imposed by or pursuant to
this Section 6 in such circumstances as the Committee may deem appro-
priate (including, without limitation, in the event the holder retires
with the approval of the Company, or in the event of a proposed
Acquisition Transaction, a Change in Control, Tender Offer for Shares,
or other similar transaction involving the Company).
(f) Acceleration Upon Certain Events. Notwithstanding any other
--------------------------------
provision of the Plan to the contrary, in the event of a Tender Offer
(other than an offer by the Company) for Shares pursuant to which the
offeror acquires Shares, or in the event of an Acquisition Transaction,
a Change in Control or a Change in Composition of the Board, all
outstanding options granted hereunder (including Reload Options and
options granted pursuant to Section 7 below) shall become exercisable in
full (whether or not otherwise exercisable) effective on the date of the
first purchase of Shares pursuant to the Tender Offer, or the date of
shareholder approval of the Acquisition Transaction, or the date of
filing of the Schedule 13D or shareholder authorization of the control
share acquisition giving rise in either case to the Change in Control,
or the date of the Change in Composition of the Board, as the case may
be (the occurrence of any such event is hereinafter referred to as an
"Acceleration"); provided, however, that no option shall be exercisable
under this subpart (f) until six months after the date of grant.
Section 7. Non-Employee Directors Formula Options.
- ---------- --------------------------------------
The following additional terms and provisions of this Sec-
tion 7 shall apply to grants of options to Non-Employee Directors under
the Plan, notwithstanding any provision of Section 6(b) to the contrary.
The provisions of this Section 7 shall not be amended more than once
every six months, other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, as amended, or the
rules promulgated thereunder.
(a) General. Non-Employee Directors shall receive Nonqualified
-------
Options under the Plan. The option price per Share shall equal the Fair
Market Value of a Share on the date of grant.
<PAGE>
(b) Initial Grants to Initial Directors. Upon the requisite
-----------------------------------
approval of the Plan by the shareholders of the Company, each Initial
Director shall be granted automatically an option to purchase 300
Shares.
(c) Initial Grants To Subsequent Directors. Each Subsequent Direc-
--------------------------------------
tor shall, at the time such director becomes a Non-Employee Director, be
granted automatically an option to purchase 300 Shares.
(d) Subsequent Grants To Directors. On January 3rd of each year
------------------------------
beginning on January 3, 1997, each continuing Initial Director shall be
granted automatically an option to purchase a number of Shares deter-
mined below. On January 3rd of each year subsequent to a Subsequent
Director's becoming a Non-Employee Director, each Subsequent Director
shall be granted automatically an option to purchase a number of Shares
determined below. The number of Shares subject to each grant made
pursuant to this paragraph (d) shall equal the product obtained by
multiplying (w) 300, by (x) an adjustment factor (the "Factor"). The
Factor shall equal the quotient obtained by dividing (y) the "base line
number" for average "total compensation" paid to directors by companies
with annual sales in excess of $4 billion, as published in the Hay Con-
sulting Group's "Directors Compensation Report" (or comparable successor
report) in the calendar year immediately preceding the year in which
such grant is made, which report covers compensation paid in the year
ending immediately prior to the year of publication, by (z) $36,246. In
the event that such Directors Compensation Report (or comparable
successor report) is not published with respect to any year, the Factor
shall equal one (1).
(e) Exercisability. Subject to Section 6(f) hereof, each option
--------------
granted under this Section 7 shall be exercisable as to 100 percent of
the Shares covered by the option on the first anniversary of the date
the option is granted.
(f) Termination. Upon the termination of a Non-Employee Director
-----------
from such position, for any reason, after such director has attained
either age 70 or ten (10) years of service as a director of the Company
(whether or not as a Non-Employee Director), each option granted to such
Non-Employee Director pursuant to this Section 7 which is exercisable at
the time of such termination shall remain exercisable for the remainder
of its term. Upon the termination of a Non-Employee Director from such
position, for any reason, prior to the attainment of age 70 or ten (10)
years of service as a director of the Company (whether or not as a Non-
Employee Director), all options granted to such Non-Employee Director
pursuant to this Section 7 which are exercisable at the time of such
termination shall remain exercisable for a period of one year following
the date of such termination, but in no event may the term of an option
be extended beyond its expiration date. Each option granted pursuant to
this Section 7 which is not exercisable at the time of such termination
shall be immediately cancelled.
Section 8. Exercise of Options.
- ---------- -------------------
(a) Notice of Exercise. The holder of an option granted under the
------------------
Plan may exercise all or part of such option by giving written notice of
exercise to the Committee or its designee; provided, however, that an
option may not be exercised for a fraction of a Share. No holder of an
option nor such holder's legal representatives, legatees, transferees or
distributees will be, or will be deemed to be, a holder of any Shares
covered by such option unless and until the option shall have been exer-
cised in accordance with the Plan.
<PAGE>
(b) Payment of Option Price. The option price for Shares with
-----------------------
respect to which an option is exercised shall be paid in full at the
time such notice is given. An option shall be deemed exercised on the
date the Committee or its designee receives written notice of exercise,
together with full payment for the Shares purchased. The option price
shall be paid to the Company either in cash or Shares (including Shares
withheld from the Shares otherwise receivable by the option holder upon
the exercise of the option) having a Fair Market Value equal to the
option price (or a combination of cash and Shares such that the sum of
the Fair Market Value of the Shares plus the cash equals the option
price). The Committee shall have the authority, subject to such
conditions and procedures that it deems necessary and advisable, to au-
thorize the use of a cashless exercise procedure with a registered bro-
ker/dealer.
(c) Payment in Cancellation of Option. The Committee shall have the
---------------------------------
authority in its sole discretion to authorize the payment to an option
holder (with the consent of such holder), in exchange for the cancel-
lation of all or a part of such holder's option (other than an option
granted under Section 7 hereof), of cash in an amount per Share not to
exceed the difference between the aggregate Fair Market Value on the
date of such cancellation of the Shares and the aggregate option price
of such Shares; provided, however, that if an Acceleration has occurred,
for purposes of this subparagraph, "Fair Market Value" on the date of
such cancellation shall be calculated in the same manner as the "exer-
cise value" of a Limited Right would be calculated under Section 9(c)
with respect to such date (whether or not any Limited Rights are
actually outstanding).
(d) Tax Withholding. With the approval of the Committee, the holder
---------------
of a Nonqualified Option may elect to have the Company retain from the
Shares to be issued upon the exercise of such option Shares having a
Fair Market Value on the Tax Date equal to all or any part of the
federal, state and local withholding tax payments (whether mandatory or
permissive) to be made by the holder with respect to the exercise of the
option (up to a maximum amount determined by the holder's top marginal
tax rate) in lieu of making such payments in cash. The Committee may
establish from time to time rules or limitations with respect to the
right of a holder to elect to have the Company retain Shares in
satisfaction of withholding payments; provided, however, that, in any
event, any such election made by a person subject to Section 16(b) of
the 1934 Act must be made in accordance with any applicable rules
established under such section.
Section 9. Limited Rights.
- ---------- --------------
(a) Grant of Limited Rights. The Committee may grant Limited Rights
-----------------------
with respect to any option granted under the Plan (other than an option
granted under Section 7) either at the time the option is granted or at
any time thereafter prior to the exercise, cancellation, termination or
expiration of such option. The number of Limited Rights covered by any
such grant shall not exceed, but may be less than, the number of Shares
covered by the related option. The term of any Limited Right shall be
the same as the term of the option to which it relates. The right of a
holder to exercise a Limited Right shall be cancelled if and to the
extent a related option is exercised, and the right of a holder to exer-
cise an option shall be cancelled if and to the extent a related Limited
Right is exercised.
(b) Events Permitting Exercise of Limited Rights. A Limited Right
--------------------------------------------
shall be exercisable only if and to the extent that the related option
is exercisable; provided, however, that notwithstanding the foregoing,
(x) a Limited
<PAGE>
Right shall not be exercisable during the first six months of its term,
and (y) in the case of a Limited Right issued in connection with an
Incentive Stock Option, such Limited Right shall not be exercisable
unless the Fair Market Value of a Share on the date of exercise exceeds
the exercise price of a Share subject to the related option. A Limited
Right which is otherwise exercisable may be exercised only during the
following periods:
(i) during a period of 30 days following the date of
expiration of a Tender Offer (other than an offer by the Company) for
Shares, if the offeror acquires Shares pursuant to such Tender Offer;
(ii) during a period of 30 days following the date of
approval by the shareholders of the Company of a definitive agreement:
(x) for the merger or consolidation of the Company into or with another
corporation, if the Company will not be the surviving corporation or
will become a subsidiary of another corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving or parent entity) at least 80% of the combined voting
power of the voting securities of the Company or such surviving or
parent entity outstanding immediately after such merger or
consolidation, or (y) for the sale of all or substantially all of the
assets of the Company (each of the foregoing transactions is hereinafter
referred to as an "Acquisition Transaction");
(iii) during a period of 30 days following: (x) the
date upon which the Company is provided a copy of a Schedule 13D (filed
pursuant to Section 13(d) of the 1934 Act and the rules and regulations
promulgated thereunder) indicating that any person or group (as such
terms are defined in Section 13(d)(3) of the 1934 Act) has become the
beneficial owner (as defined in Rule 13d-3 of the 1934 Act) of 20% or
more of the outstanding voting shares of the Company or (y) the date of
authorization, by both a majority of the voting power of the Company and
a majority of the portion of such voting power excluding the voting
power of interested shares, of a control share acquisition (as such term
is defined in Chapter 1701 of the Ohio Revised Code) (each of the
foregoing transactions is hereinafter referred to as a "Change in Con-
trol"); and
(iv) during a period of 30 days following a change in
the composition of the Board of Directors such that individuals who were
members of the Board of Directors on the date two years prior to such
change (or who were elected, or were nominated for election, by the
Company's shareholders with the affirmative vote of at least two-thirds
of the directors then still in office who were directors at the
beginning of such two year period) no longer constitute a majority of
the Board of Directors (such a change in composition is hereinafter
referred to as a "Change in Composition of the Board").
(c) Exercise of Limited Rights. Upon exercise of a Limited Right,
--------------------------
the holder thereof shall receive from the Company a cash payment equal
to the excess of: (x) the aggregate "exercise value" on the date of
exercise (determined as provided below) of that number of Shares as is
equal to the number of Limited Rights being exercised over (y) the
aggregate exercise price under the related option of that number of
Shares as is equal to the number of Limited Rights being exercised. A
holder shall exercise a Limited Right by giving written notice of such
exercise to the Committee. A Limited Right shall be deemed exercised on
the date the Committee receives such written notice.
<PAGE>
The "exercise value" of a Limited Right on the date of
exercise shall be:
(i) in the case of an exercise during a period de-
scribed in Section 9(b)(i), the highest price per Share paid pursuant to
any Tender Offer which is in effect at any time during the 60-day period
prior to the date on which the Limited Right is exercised;
(ii) in the case of an exercise during a period
described in Section 9(b)(ii), the greater of: (x) the highest sale
price of a Share during the 30-day period prior to the date of
shareholder approval of the Acquisition Transaction, as reported on the
New York Stock Exchange - Composite Transactions Tape, or (y) the
highest fixed or formula per Share price payable pursuant to the
Acquisition Transaction (if determinable on the date of exercise);
(iii) in the case of an exercise during a period
described in Section 9(b)(iii), the greater of: (x) the highest sale
price of a Share during the 30-day period prior to the date the Company
is provided with a copy of the Schedule 13D, or the date of
authorization of the control share acquisition, as reported on the New
York Stock Exchange - Composite Transactions Tape, or (y) the highest
acquisition price of a Share shown on such Schedule 13D or to be paid in
such control share acquisition; and
(iv) in the case of an exercise during a period
described in Section 9(b)(iv), the highest sale price of a Share during
the 30-day period prior to the date of the Change in Composition of the
Board, as reported on the New York Stock Exchange - Composite Trans-
actions Tape.
Notwithstanding the foregoing, in no event shall the exercise value of a
Limited Right issued in connection with an Incentive Stock Option exceed
the maximum permissible exercise value for such a right for purposes of
Section 422 of the Code and the regulations and interpretations issued
pursuant thereto. Any securities or property which form part or all of
the consideration paid for Shares pursuant to a Tender Offer or
Acquisition Transaction shall be valued at the higher of (1) the
valuation placed on such securities or property by the person making
such Tender Offer or the other party to such Acquisition Transaction, or
(2) the value placed on such securities or property by the Committee.
(d) Compliance with Law. The exercise of Limited Rights by
-------------------
directors and officers of the Company shall be subject to, and comply
with, the applicable requirements of Rule 16b-3(e) under the 1934 Act
(or any successor provision), as the same may be amended, modified or
superseded from time to time.
Section 10. Transfers Upon Death; Nonassignability.
- ----------- --------------------------------------
Except as provided in this Section 10, options granted under
the Plan may not be sold, pledged, assigned, hypothecated or transferred
other than by will or the laws of descent and distribution and may be
exercised during the lifetime of the grantee only by such grantee or by
his guardian or legal representative.
Upon the death of an option holder, outstanding options held
by such holder may be exercised only by the executor or administrator of
the holder's
<PAGE>
estate or by a person who shall have acquired the right to such exercise
by will or by the laws of descent and distribution.
Subject to such conditions as the Committee may prescribe,
during an option grantee's lifetime, the Committee may permit the
transfer or assignment of an outstanding option by such grantee; pro-
vided, that such transfer or assignment shall not apply to (y) an option
which is an Incentive Stock Option (but only if nontransferability is
necessary in order for the option to qualify as an Incentive Stock
Option) and (z) an option granted to a person subject to Section l6 of
the l934 Act (but only if nontransferability is necessary in order for
the option to qualify for the exemption under Rule l6b-3 of the l934
Act).
Section 11. Adjustments Upon Changes in Capitalization.
- ----------- ------------------------------------------
In the event of a change in outstanding Shares by reason of
a Share dividend, recapitalization, merger, consolidation, split-up,
combination or exchange of shares, or the like, or in the event of any
similar corporate transaction which the Committee determines requires
the adjustments described herein, the maximum number of Shares subject
to option during the existence of the Plan, the number of Limited Rights
which may be granted under the Plan, the number of Shares subject to,
and the option price of, each outstanding option, the maximum number of
Shares or Limited Rights which may be granted to any individual over the
term of the Plan, the number of Limited Rights outstanding, the Fair
Market Value of a Share on the date a Limited Right is granted, and the
like shall be appropriately adjusted by the Committee (disregarding any
fractional Shares resulting therefrom), whose determination in each case
shall be conclusive.
Section 12. Conditions Upon Granting and Exercise of Options and Limited Rights
- ----------- -------------------------------------------------------------------
and Issuance of Shares.
----------------------
No option or Limited Right shall be granted, no option or
Limited Right shall be exercised and Shares shall not be issued or
delivered upon the exercise of an option unless the grant and exercise
thereof, and the issuance and/or delivery of Shares pursuant thereto, or
the payment therefor, shall comply with all relevant provisions of state
and federal law, including, without limitation, the Securities Act of
1933, as amended, the 1934 Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the
Shares then may be listed.
Section 13. Amendment and Termination of Plan.
- ----------- ---------------------------------
(a) Amendment. The Board of Directors may from time to time amend
---------
the Plan, or any provision thereof, in such respects as the Board of
Directors may deem advisable; provided, however, that any such amendment
shall be approved by the holders of Shares by such vote and otherwise in
compliance with applicable federal or state law (including Rule 16b-3
(or any successor provision) under the 1934 Act) or the requirements of
any stock exchange upon which the Shares may then be listed.
(b) Termination. The Board may at any time terminate the Plan.
-----------
<PAGE>
(c) Effect of Amendment or Termination. No amendment to or
----------------------------------
termination of the Plan shall adversely affect any option or Limited
Right previously granted under the Plan without the consent of the
holder thereof.
Section 14. Notices.
- ---------- -------
Each notice relating to this Plan shall be in writing and
delivered in person or by mail to the proper address. Each notice shall
be deemed to have been given on the date it is delivered or mailed,
except for a notice of exercise given in accordance with Section 8(b),
which shall be deemed to have been given on the date it is received by
the Committee with payment of the option price. Each notice to the
Committee shall be addressed as follows: The Mead Corporation, Mead
World Headquarters, Courthouse Plaza Northeast, Dayton, Ohio 45463,
Attention: Compensation Committee. Each notice to the holder of an
option or other person or persons then entitled to exercise an option
shall be addressed to such person or persons at the holder's address as
set forth in the records of the Company. Anyone to whom a notice may be
given under this Plan may designate a new address by written notice to
the party to that effect.
Section 15. Benefits of Plan.
- ----------- ----------------
This Plan shall inure to the benefit of and be binding upon
each successor and assign of the Company. All rights and obligations
imposed upon the holder of an option and all rights granted to the
Company under this Plan shall be binding upon such holder's heirs, legal
representatives and successors.
Section 16. Pronouns and Plurals.
- ----------- --------------------
All pronouns shall be deemed to refer to the masculine,
feminine, singular or plural, as the identity of the person or persons
may require.
Section 17. Shareholder Approval and Term of Plan.
- ----------- -------------------------------------
The Plan shall become effective upon its approval by the
affirmative vote of the holders of a majority of the Shares entitled to
vote thereon held by shareholders present in person or by proxy at any
shareholders' meeting at which a quorum is present. The Plan shall
expire on September 30, 2005, unless sooner terminated in accordance
with Section 13.
Section 18. Interpretation.
- ----------- --------------
The Plan is designed and intended to comply with Rule 16b-3
promulgated under the 1934 Act and Section 162(m) of the Code and all
provisions hereof shall be construed in a manner to so comply.
Exhibit 10(6)
THE MEAD CORPORATION
RESTRICTED STOCK PLAN
---------------------
ARTICLE I. GENERAL PROVISIONS
- ---------- ------------------
Section 1. Purpose. The purpose of The Mead Corporation Restricted Stock
---------- --------
Plan (the "Plan") is to provide certain compensation to eligible
directors and employees in the form of Common Shares ("Shares") of The
Mead Corporation (the "Company") which are restricted in accordance with
the terms and conditions set forth below and to encourage the continued
high level of performance of such directors and employees by increasing
the identity of interests of such directors and employees with the
shareholders of the Company. The Plan is intended to be an unfunded
program established for the purpose of providing compensation for
eligible directors and a select group of management employees and is
exempt from Parts 1 through 4 of Title I of the Employee Retirement
Income Security Act of 1974, as amended.
Section 2. Definitions. For purposes of the Plan, the following terms
---------- ------------
shall have the following meanings:
(a) "Board of Directors" means the Board of Directors of the
Company.
(b) "Change in Control" means the occurrence of any of the
following: (i) any "person" or "group" within the meaning of Sections
13(d) and 14(d) (2) of the Securities Exchange Act of 1934, as amended
(the "Act"), becomes the "beneficial owner" (as defined in Rule 13d-3
under the Act) of more than 25% of the then outstanding voting shares of
the Company otherwise than through a transaction arranged by, or
consummated with the prior approval of, the Board of Directors, or (ii)
during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors (and any new
director whose election by the Board of Directors or whose nomination
for election by the Company's shareholders was approved by a vote of at
least two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason
to constitute a majority thereof.
(c) "Committee" means the Compensation Committee of the Board of
Directors.
(d) "Company" means The Mead Corporation; however, when used
with reference to employment, "Company" also includes any corporation,
partnership or other person or entity at least 10% of the voting or
equity interest of which is owned or controlled, directly or indirectly,
by the Company.
(e) "Eligible Director" means any director of the Company who is
not also an employee of the Company.
<PAGE>
(f) "Eligible Employee" means any employee of the Company
selected by the Committee.
(g) "Grant Date" means the date on which Restricted Shares are
to be granted pursuant to Article II, Section 1.
(h) "Market Value" means the average of the highest sale price
and the lowest sale price of a Share on the date the value of a Share is
to be determined, as reported on the New York Stock Exchange - Composite
Transactions Tape (or other similar source) or, if no sale is reported
for such date, then on the next preceding date for which a sale is
reported.
(i) "Participant" means any individual who holds Restricted
Shares granted under the Plan.
(j) "Restriction Period" means (i) in the case of Restricted
Shares granted pursuant to Article II. Section 1(a) or (b), the period
of five years from the date the Restricted Shares are granted, (ii) in
the case of Restricted Shares granted pursuant to Article II. Section
1(c), the date the grantee becomes age 55 or six months from the date
the Restricted Shares are granted, whichever is later, and (iii) in the
case of Restricted Shares granted pursuant to Article III, the period of
six months or longer (as determined by the Committee) from the date
Restricted Shares are granted.
(k) "Restricted Shares" means any Shares issued or delivered
pursuant to the Plan which remain subject to the restrictions set forth
in Article I, Section 5 of the Plan.
(l) "Shares" means the Common Shares, without par value, of the
Company.
Section 3. Administration. (a) The Plan shall be administered by the
---------- ---------------
Committee. Subject to the express provisions of the Plan, the Committee
and the Board of Directors shall each have authority to construe and
interpret the Plan, to prescribe, amend, and rescind rules and
regulations relating to the Plan, and to make all other determinations
necessary or advisable for administering the Plan. The Committee or the
Board of Directors may correct any defect or supply any omission or
reconcile any inconsistency in the Plan in the manner and to the extent
it shall deem expedient to carry it into effect. The determination of
the Committee or the Board of Directors on any matters within the scope
of this section shall be conclusive. A majority of the Committee shall
constitute a quorum for meetings of the Committee, and the act of a
majority of the Committee at a meeting, or an act reduced to or approved
in writing by all members of the Committee, shall be the act of the
Committee.
In the case of Restricted Shares granted pursuant to Article III, the
Committee may in its discretion impose additional conditions or
restrictions as to the attainment of specified performance goals during
the Restriction Period for all or a portion of the shares or all or a
portion of the years in the Restriction Period.
(b) The Committee may waive or modify at any time any condition
or restriction (including, without limitation, any of the restrictions
set forth in Article I, Section 5) with respect to any Restricted Shares
issued pursuant to Article III.
<PAGE>
Section 4. Shares Subject to the Plan. Subject to adjustment as provided
---------- ---------------------------
in Section 1 of Article IV, the maximum number of Shares which may be
granted as Restricted Shares under the Plan is 500,000; the maximum
number of Shares which may be granted as Restricted Shares to any
individual pursuant to Section 2 of Article II is 20,000; and, the
maximum number of Shares which may be granted as Restricted Shares to
any eligible employee pursuant to Article III is 150,000. Shares
granted as Restricted Shares under the Plan may be authorized and
unissued Shares or Shares held in the Company's treasury. Any Shares
which are granted as Restricted Shares under the Plan and which are
thereafter forfeited by the participant may again be granted under the
Plan as Restricted Shares.
Section 5. Terms and Conditions of Restricted Shares. (a) Subject to the
---------- ------------------------------------------
provisions of paragraph (b) of this Section 5, Restricted Shares issued
pursuant to the Plan shall be subject to the following restrictions:
(i) the Participant shall not be entitled to receive delivery of
the certificate for such Restricted Shares until the expiration of the
Restriction Period;
(ii) such Restricted Shares shall not be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of during the
Restriction Period; and
(iii) all such Restricted Shares shall be forfeited and all right
of the Participant to such Restricted Shares shall terminate without
further obligations on the part of the Company if the Participant ceases
to be a director of the Company (in the case of a Participant who
received Restricted Shares as an Eligible Director) or an employee of
the Company (in the case of a Participant who received Restricted Shares
as an Eligible Employee) prior to the end of the Restriction Period.
Upon the forfeiture of Restricted Shares, such Shares shall be returned
to the status of authorized and unissued Shares or treasury Shares, as
determined by the Committee.
(b) Notwithstanding the provisions of paragraph (a) of this
Section 5, in the event a Participant ceases to be a director of the
Company (in the case of a Participant who received Restricted Shares as
an Eligible Director) or an employee of the Company (in the case of a
Participant who received Restricted Shares as an Eligible Employee)
prior to the end of a Restriction Period as a result of such
Participant's death, disability or normal retirement in accordance with
the Company's policies, then the restrictions set forth in paragraph (a)
of this Section 5 shall immediately cease to apply to (and all rights of
the Participant shall immediately vest with respect to):
(i) all of the Restricted Shares, if any, registered in the name
of such Participant which were granted pursuant to Section 1(c) or 2 of
Article II of the Plan or Article III of the Plan;
(ii) a number of the Restricted Shares, if any, registered in the
name of such Participant which were granted pursuant to Section 1(a) of
Article II of the Plan (rounded to the nearest whole share) determined
as if such restrictions had ceased with respect to 20% of such
Restricted Shares on the date on which such
<PAGE>
Restricted Shares were granted and on each anniversary of such date
occurring prior to the Participant's death, disability or retirement;
and
(iii) a number of the Restricted Shares, if any, registered in the
name of such Participant which were granted pursuant to Section 1(b) of
Article II of the Plan (rounded to the nearest whole share) equal to the
number of Restricted Shares which on the date such Restricted Shares
were granted had a Market Value equal to the product of $7,500 times the
number of full or partial calendar years expiring since such Restricted
Shares were granted and prior to the Participant's death, disability or
retirement.
In any event, all such Restricted Shares shall be forfeited and all
rights of the Participant to such Restricted Shares shall terminate
without further obligations on the part of the Company if the
Participant, directly or indirectly, individually or as an agent,
officer, director, employee, shareholder (excluding being the holder of
any stock which represents less than 1% interest in a corporation),
partner or in any other capacity whatsoever engages prior to the time
such restrictions cease to apply in any activity competitive with or
adverse to the Company's business or in the sale, distribution,
production or attempted sale or distribution of any goods, products or
services then sold or being developed by the Company.
(c) Upon the occurrence of a Change in Control, all of the
restrictions set forth in this Section 5 shall immediately cease to
apply to all Restricted Shares issued pursuant to the Plan, except to
the extent that the lapse of such restrictions would, in the opinion of
counsel selected by the Company's independent auditors, constitute
"parachute payments" within the meaning of Section 280G(b)(2)(A) of the
Internal Revenue Code (the "Code") and, when added to any other
"parachute payments" which would be received by the Participant pursuant
to the terms of any other plan, arrangement or agreement with the
Company, any person whose actions result in a change in control of the
Company or any person affiliated with the Company or such person, would
be subject to the tax imposed by Section 4999 of the Code.
(d) At the end of the Restriction Period, or at such earlier
time as it is provided for in paragraphs (b) or (c) of this Section 5,
the restrictions applicable to the Restricted Shares pursuant to this
Section 5 shall cease and a share certificate for the number of
Restricted Shares with respect to which the restrictions have ceased
shall be delivered, free of all such restrictions and all restrictive
legends, to the Participant or the Participant's beneficiary or estate,
as the case may be.
(e) If required by the Committee, each grant of Restricted
Shares shall be evidenced by a written agreement between the Company and
the Participant.
(f) In the event that the restrictions set forth in paragraph
(a) of this Section 5 shall cease to apply to any Restricted Shares
granted to Eligible Employees subject to Section 16 of the Act prior to
the date which is six months after the date of grant of such Restricted
Shares, then, notwithstanding any provision to the contrary in this
Section 5, the restrictions set forth in paragraphs (a)(i) and (a)(ii)
of this Section 5 shall continue in effect until the date which is six
months after the date of such grant.
<PAGE>
(g) Notwithstanding any provision to the contrary in this
Section 5, but subject nonetheless to paragraph (c) of this Section 5,
in the case of Restricted Shares granted pursuant to Article III, if the
Participant fails to attain specified performance goals set forth with
respect to such Restricted Shares during the Restriction Period, the
Participant will forfeit such Restricted Shares to the extent specified
in the grant of such Restricted Shares and the right of the Participant
to such Restricted Shares shall terminate to the extent specified in the
grant of such Restricted Shares without any further obligations on the
part of the Company.
Section 6. Rights as a Shareholder.
---------- ------------------------
(a) Upon the grant of Restricted Shares pursuant to Article II
or Article III of the Plan, the Company shall issue a share registered
in the name of the Participant bearing the following legend and any
other legend required by any federal or state securities laws:
"The transferability of this certificate and the Common Shares
represented hereby are subject to the restrictions, terms and conditions
(including forfeiture and restrictions against sale, assignment,
transfer, pledge, hypothecation and other disposition) set forth in The
Mead Corporation Restricted Stock Plan. Copies of such Plan will be
mailed to any shareholder without charge within five days after receipt
of written request therefor addressed to Secretary, The Mead
Corporation, Mead World Headquarters, Courthouse Plaza Northeast,
Dayton, OH 45463."
Each such share shall be retained by the Company until the restrictions
set forth in Article I, Section 5(a) cease to apply to the Shares.
(b) Upon the issuance of Restricted Shares pursuant to
paragraph (a) of this Section 6, the Participant shall, subject to all
of the terms, conditions and restrictions set forth in the Plan, have
all of the rights of a holder of Shares, including the right to vote and
to receive dividends and other distributions with respect thereto.
ARTICLE II. RESTRICTED SHARES FOR ELIGIBLE DIRECTORS
- ----------- ----------------------------------------
Section 1. Grant of Restricted Shares to Eligible Directors. (a) On the
---------- -------------------------------------------------
third business day of January, 1988 and on each fifth anniversary of
such date during the term of the Plan, (each such date is hereinafter
referred to as a "Grant Date"), the Company shall grant a number of
Restricted Shares to each then Eligible Director determined by dividing
$37,500 by the Market Value of a Share on the Grant Date (rounded to the
nearest whole shares).
(b) If during the term of the Plan any person becomes an
Eligible Director on a date other than a Grant Date, the Company shall
grant such person a number of Restricted Shares determined by dividing
$37,500 (less the product of $7,500 times the number of full years since
the last Grant Date) by the Market Value of a Share (rounded to the
nearest whole share) on the date of such person's election to the Board
of Directors.
(c) Each Eligible Director shall automatically receive a grant
of a number of Restricted Shares of the Company equal to the quotient
obtained by dividing (i) 5,000, by (ii) the Market Value per Share on
the date the Plan, as amended, is approved by the Shareholders (the
"Initial Grant"). Thereafter, on
<PAGE>
the third business day of January, 1997 and on each annual anniversary
of such date during the term of the Plan, the Company shall grant and
each Eligible Director shall automatically receive a number of
Restricted Shares which shall equal the product obtained by multiplying
the Initial Grant by an adjustment factor (the "Factor"). The Factor
shall equal the quotient obtained by dividing (y) the base line number
for average total compensation paid to directors by companies with
annual sales in excess of $4 billion, as published in the Hay Consulting
Group's "Directors Compensation Report" (or comparable successor report)
in the calendar year immediately preceding the year in which such grant
is made, which report covers compensation paid in the year ending
immediately prior to the year of publication, by (z) 36,246. In the
event that such Directors Compensation Report (or comparable successor
report) is not published with respect to any year, the Factor shall
equal one (1).
Section 2. Election to Receive Compensation as Restricted Shares. (a) Not
---------- ------------------------------------------------------
later than June 1 of each year during the term of the Plan, the
Committee shall cause each Eligible Director to be furnished with an
appropriate form which enables the director to elect to receive payment
in Restricted Shares of a minimum of 20% up to a maximum of 100% (in
increments of 10%) of the annual retainer fee to be earned by such
director for service on the Board of Directors during the following
calendar year which is paid on or after the first day of such calendar
year. In order to be effective, the election form must be signed by the
director and must be returned to the Committee or its delegate not later
than July 1 of the year prior to the year with respect to which the
election is being made. All such elections are irrevocable.
(b) A new Eligible Director may, by filing the prescribed
election form, elect to receive the annual retainer fee as Restricted
Shares as provided in paragraph (a) of this Section 2 only if the
election form is signed and filed at least six months prior to the date
of payment of the annual retainer fee to such director.
(c) If an Eligible Director has elected to receive all or a
portion of the annual retainer fee as Restricted Shares as provided in
this Section 2, then on the date such fee would otherwise be payable,
the Company shall grant to such director a number of Restricted Shares
determined by dividing the compensation so to be received by the Market
Value of a Share on such date such other compensation would otherwise be
payable (rounded to the nearest whole share).
ARTICLE III. RESTRICTED SHARES FOR ELIGIBLE EMPLOYEES
- ------------ ----------------------------------------
Section 1. Grant of Restricted Shares to Eligible Employees. From time
---------- -------------------------------------------------
to time during the term of the Plan, the Committee may determine that
Restricted Shares shall be granted to Eligible Employees either as
payment for all or a portion of the compensation to be paid to any
Eligible Employee pursuant to the Company's incentive compensation
plans, or for any other reason consistent with the purposes of the Plan.
Restricted Shares to be granted as payment for all or a portion of
incentive compensation shall be granted on the date the compensation is
awarded, and the number of Restricted Shares so granted shall be
determined by dividing the amount of such compensation by the Market
Value of a Share on the date the compensation is awarded (rounded to the
nearest whole Share).
<PAGE>
ARTICLE IV. MISCELLANEOUS
- ----------- -------------
Section 1. Adjustments Upon Changes in Capitalization. Upon any change
---------- -------------------------------------------
in the outstanding Shares by virtue of a share dividend or split,
recapitalization, merger, consolidation, combination or exchange of
shares or other similar change, the number of Restricted Shares which
may be granted under the Plan (or the class of shares which may be
granted as Restricted Shares) shall be adjusted appropriately by the
Committee, whose determination with respect to such adjustment shall be
conclusive. Unless the Committee shall otherwise determine, any
securities and other property received by a Participant in connection
with or as a result of any such change with respect to Restricted Shares
(excluding dividends paid in cash) shall be subject to the restrictions
then applicable to Restricted Shares under the Plan (including
forfeiture), and shall be deposited promptly with the Company to be held
in custody until the restrictions cease to apply to the Restricted
Shares to which such securities or other property relates.
Notwithstanding the foregoing, however, in the event any rights to
purchase Shares are issued pursuant to the Company's Shareholder Rights
Plan (or any successor plan) with respect to Restricted Shares, such
rights shall cease to be subject to the restrictions applicable to the
underlying Restricted Shares at such time, if any, as such rights become
exercisable.
Section 2. Compliance with Laws. The issuance or delivery of Shares
---------- ---------------------
pursuant to the Plan shall be subject to, and shall comply with, any
applicable requirements of federal and state securities laws, rules and
regulations (including, without limitation, the provisions of the
Securities Act of 1933, the Securities Exchange Act of 1934 and the
rules and regulations promulgated thereunder), any securities exchange
upon which the Shares may be listed and any other law or regulation
applicable thereto, and the Company shall not be obligated to issue or
deliver any Shares pursuant to the Plan if such issuance or delivery
would violate any such requirements. The foregoing shall not, however,
be deemed to require the Company to effect any registration of Shares
under any such law or regulation.
Section 3. Amendment and Termination. (a) The Board of Directors may from
---------- --------------------------
time to time amend the Plan, or any provision thereof, in such respects
as the Board of Directors may deem advisable; provided, however, that
any such amendment must be approved by the holders of Shares entitling
them to exercise a majority of the voting power of the Company if such
amendment would:
(i) materially increase the benefits accruing to
participants under the Plan;
(ii) materially increase the aggregate number of Shares
which may be issued and/or delivered or the number of Shares which may
be granted to any individual under the Plan;
(iii) materially modify the requirements as to eligibility
for participation in the Plan.
(b) The Plan shall terminate and no additional Restricted
Shares shall be granted under the Plan after September 30, 2005;
provided, however, that the Board of Directors may earlier terminate the
Plan at any time.
<PAGE>
(c) No amendment to or termination or expiration of the
Plan shall adversely affect any Restricted Shares previously granted
under the Plan without the consent of the holder thereof.
(d) Notwithstanding paragraph (a) of this Section 3, the
provisions of Section 1 of Article II may not be amended more than once
every six months other than to comport with changes in the Code, ERISA
or the rules thereunder.
Section 4. Notices. Each notice relating to the Plan shall be in writing
---------- --------
and delivered in person or by mail to the proper address. Each notice
shall be deemed to have been given on the date it is delivered or mailed
except that an election to receive compensation as Restricted Shares
pursuant to Article II, Section 2 shall be deemed to have been given on
the date it is received by the Committee. Each notice to the Committee
shall be addressed as follows: The Mead Corporation, Mead World
Headquarters, Courthouse Plaza Northeast, Dayton, Ohio 45463, Attention:
Secretary. Each notice to a Participant shall be addressed to the
Participant's address as set forth in the records of the Company.
Anyone to whom a notice may be given under this Plan may designate a new
address by written notice to the Company or to the Participants, as the
case may be.
Section 5. Benefits of Plan. The Plan shall inure to the benefit of, and
---------- -----------------
shall be binding upon, each successor and assign of the Company. All
rights and obligations imposed upon a Participant and all rights granted
to the Company under this Plan shall be binding upon such Participant's
heirs, legal representatives and successors. Nothing in the Plan shall
be deemed to create any obligation on the part of the Company to
nominate any director for re-election or to continue the employment of
any employee.
Section 6. Taxes. (a) The Company shall have the right to require, prior
---------- ------
to the issuance or delivery of any Restricted Shares, payment by the
Participant of any taxes required by law with respect to the issuance or
delivery of such Restricted Shares.
(b) On any date on or after January 1, 1994 that
restrictions applicable to Restricted Shares granted (or to be granted)
hereunder shall have ceased pursuant to Article I, Section 5 (the "Lapse
Date"), and with respect to persons subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the "1934 Act") on any date
thereafter through the end of the next following period (the "Window
Period") specified in Rule 16b-3(e)(3) (or any successor rule) under the
1934 Act, the Participant to whom such Restricted Shares were granted
may elect to have the Company retain, from the Restricted Shares to be
delivered at the end of the Restriction Period, Shares having a Market
Value on the date of delivery equal to all or any part of the federal,
state and local withholding tax payments (whether mandatory or
permissive) to be made by the Participant with respect to ceasing of the
restrictions (up to the maximum amount determined by the Participant's
top marginal tax rate) in lieu of making such payments in cash; provided
that such election may also be made in advance of the Lapse Date and
will be effective on the date specified in the notice of election
(subject, as applicable, to Section 16 of the 1934 Act), and further
provided that, with respect to a Lapse Date that has occurred or will
occur between January 1, 1994 and October 28, 1994, the election may be
made by persons subject to and in accordance with Section 16 of the 1934
Act through the end of the first Window Period which commences on,
includes or follows October 28, 1994. The Committee may establish from
time to time rules or limitations with respect to the right of a
Participant to elect to have the Company retain Restricted Shares
<PAGE>
in satisfaction of withholding payments; provided, however, that, in any
event, any such rules or limitations must be in accordance with Section
16 of the 1934 Act and any applicable rules established under such
Section.
Section 7. Governing Law. All grants of Restricted Shares shall be made
---------- --------------
and accepted in the State of Ohio. The laws of the State of Ohio shall
control the interpretation and performance of the provisions of the
Plan.
Section 8. Effective Date of the Plan. The effective date of the Plan
---------- ---------------------------
shall be December 10, 1987; provided, however, that if the Plan is not
approved at the 1988 Annual Meeting of Shareholders by the holders of at
least a majority of the outstanding voting power of of the Company, the
Plan shall immediately terminate. No dividends shall be paid prior to
the 1988 Annual Meeting of Shareholders with respect to any Restricted
Shares granted prior to such meeting. If the Plan is not approved at
such meeting, all Restricted Shares granted prior thereto shall be
retained by the Company, and the Company shall pay to the Participant in
whose name such Restricted Shares were registered an amount equal to the
Market Value on the date of grant of a number of Shares equal to such
number of Restricted Shares.
--------------------------------------
NOTE:
(1) Adopted by the Board of Directors of the Company on December
11, 1987.
(2) Approved by the shareholders of the Company on April 28,
1988.
(3) Addition of Article II, Section 2, subsection (d) adopted by
the Board of Directors of the Company on December 15, 1989 (deleted
February 28, 1991).
(4) Amendment to Article I, Section 2, subsection (h) adopted by
the Board of Directors of the Company on January 25, 1990.
(5) Amendments to Article I, Section 2, subsections (d) and (j);
Article I, Section 3, subsection (a); and Article III, Section 1; and
addition of Article 2, Section 5, subsection (g), adopted by the Board
of Directors of the Company on January 24, 1991, and approved by the
shareholders of the Company on April 25, 1991.
(6) Amendments to Article II, Section 2, subsections (a) and
(b); and addition of Article I, Section 5, subsection (f) and Article
IV, Section 3, subsection (d) adopted by the Board of Directors of the
Company on February 28, 1991.
(7) Amendments to Article I, Section 5, subsection (b); and
addition of Article I, Section 5, subsection (b)(iii), adopted by the
Board of Directors of the Company on July 23, 1992.
(8) Amendment to Article IV, Section 6, subsection (b) adopted
by the Board of Directors of the Company on April 28, 1994.
<PAGE>
(9) Amendments to Article I, Section 2(j), Section 4, Section
5(b)(i), Section 6, Article II, Section 1(c), Article IV, Section 3(b)
adopted by the Board of Directors of the Company on October 28, 1995,
and approved by the shareholders of the Company on April 25, 1996.
EXHIBIT (11.1)
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
CALCULATION OF PRIMARY NET EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
- --------------------------------------------------------------------------
(All amounts in thousands, except per share amounts)
First Quarter Ended
--------------------
March 31, April 2,
1996 1995
------- -------
NET EARNINGS APPLICABLE TO COMMON AND COMMON
EQUIVALENT SHARES $36,346 $61,742
======= =======
AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING:
Average number of common shares outstanding 52,779 56,759
Dilutive effect of stock options after
application of treasury stock method 693 909
------- -------
AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 53,472 57,668
======= =======
PRIMARY NET EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE $ .68 $ 1.07
======= =======
EXHIBIT (11.2)
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
CALCULATION OF FULLY DILUTED NET EARNINGS PER COMMON AND COMMON
- ---------------------------------------------------------------
EQUIVALENT SHARE (1)
- --------------------
(All amounts in thousands, except per share amounts)
First Quarter Ended
--------------------
March 31, April 2,
1996 1995
------- -------
NET EARNINGS APPLICABLE TO COMMON AND COMMON
EQUIVALENT SHARES $36,346 $61,742
======= =======
AVERAGE NUMBER OF SHARES OUTSTANDING ON A
FULLY DILUTED BASIS:
Shares used in calculating primary earnings
per share 53,472 57,668
Additional dilutive effect of stock options after
application of treasury stock method 25 43
------- -------
AVERAGE NUMBER OF SHARES OUTSTANDING ON A
FULLY DILUTED BASIS 53,497 57,711
======= =======
FULLY DILUTED NET EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE $ .68 $ 1.07
======= =======
(1) This calculation is submitted in accordance with 17 CFR
229.601(b)(11) although not required by APB Opinion No. 15 because it
results in dilution of less than 3%.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT ON FORM 10-Q OF THE MEAD CORPORATION FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
THIS SCHEDULE SHALL NOT BE DEEMED TO BE FILED FOR PURPOSES OF SECTION 11 OF THE
SECURITIES ACT OF 1933, SECTION 18 OF THE SECURITIES EXCHANGE ACT OF 1934 AND
SECTION 323 OF THE TRUST INDENTURE ACT OF 1939, OR OTHERWISE SUBJECT TO THE
LIABILITIES OF SUCH SECTIONS, NOR SHALL IT BE DEEMED A PART OF ANY REGISTRATION
STATEMENT TO WHICH IT RELATES.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1996
<CASH> 138
<SECURITIES> 0
<RECEIVABLES> 516
<ALLOWANCES> 0
<INVENTORY> 524
<CURRENT-ASSETS> 1,271
<PP&E> 4,378
<DEPRECIATION> 1,994
<TOTAL-ASSETS> 4,333
<CURRENT-LIABILITIES> 722
<BONDS> 726
0
0
<COMMON> 157
<OTHER-SE> 2,013
<TOTAL-LIABILITY-AND-EQUITY> 4,333
<SALES> 0
<TOTAL-REVENUES> 1,067
<CGS> 0
<TOTAL-COSTS> 863
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15
<INCOME-PRETAX> 61
<INCOME-TAX> 23
<INCOME-CONTINUING> 31
<DISCONTINUED> 5
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36
<EPS-PRIMARY> .68
<EPS-DILUTED> 0
</TABLE>
