FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- - ------------------------------------------------------------------
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to __________
Commission file number: 0-1732
MOSINEE PAPER CORPORATION
(Exact name of registrant as specified in charter)
WISCONSIN
1244 KRONENWETTER DRIVE (State of incorporation)
MOSINEE, WISCONSIN 54455-9099 39-0486870
(Address of principal (I.R.S. Employer
executive office) Identification Number)
Registrant's telephone number, including area code: 715-693-4470
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $2.50 PAR VALUE
(Title of each class)
- - ------------------------------------------------------------------
Indicate by check whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
report), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
-----
As of March 24, 1994, the aggregate market value of the common
stock shares held by non-affiliates was approximately
$217,172,000.
The number of common shares outstanding at March 2, 1994 was
7,148,443.
DOCUMENTS INCORPORATED BY REFERENCE
Proxy statement dated March 23, 1994; Pages 2 to 14* (Part III)
*To the extent noted herein
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
PART I
Item 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . 1
Item 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . 6
Item 3. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . 8
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS. . . . . . . . . . . . . . . . . . . . . . . 8
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS. . . . . . . . . . . . . . . . . 9
Item 6. SELECTED FINANCIAL DATA. . . . . . . . . . . . . . . 10
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION . . . . . . . . . 11
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. . . . . 20
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE. . . . . . . . . 49
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. . 50
Item 11. EXECUTIVE COMPENSATION. . . . . . . . . . . . . . . . 50
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . 50
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. . . . 50
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . 51
<PAGE>
PART I
ITEM 1. BUSINESS.
NATURE OF THE BUSINESS
Mosinee Paper Corporation was incorporated in Wisconsin in 1910.
The company and its subsidiaries (collectively, the "company")
operate in the pulp and paper industry. The company's Pulp and
Paper Division ("Pulp and Paper") produces and sells specialty
papers and its Mosinee Converted Products Division ("Converted
Products") produces and sells wax laminated and converted papers.
Bay West Paper Corporation ("Bay West") produces, converts and
sells towel and tissue paper products and The Sorg Paper Company
("Sorg Paper"), produces and sells specialty papers. Additional
wholly-owned subsidiaries are: Mosinee Paper International Inc.,
which administers export sales for the company and acts as a
foreign sales corporation (FSC); and Mosinee Holdings, Inc., which
operates a power plant in Middletown, Ohio to provide steam and
electricity to Sorg Paper and Bay West's towel and tissue paper
mill located there.
SEGMENT INFORMATION
The manufacture and sale of paper is the company's only line of
business.
PRINCIPAL PRODUCTS AND SERVICES
The principal product groups of the company are specialty papers,
laminated and converted papers and towel and tissue products.
SPECIALTY PAPERS
----------------
Specialty paper products are produced and sold by Pulp and Paper
and Sorg Paper. Principal products of Pulp and Paper include
industrial crepe, masking, gumming, converting and wax laminating,
foil laminating, flame resistant, interleaver, cable wrap,
electrical insulation, pressure sensitive backing, toweling, water
base and film coating and packaging papers. Sorg Paper produces
decorative laminate, deep-color and facial tissue, filter,
construction, parchtex, saturating, soapboard and soapwrap and
latex label papers. All products of the company's specialty paper
operations are sold to other manufactures or converters for
further processing and ultimate sale to end users. These
manufacturers and converters are in many industries including
housing, steel, aluminum and other metal producers, automotive,
consumer packaging, food processing, home appliance, consumer
goods and printing.
TOWEL AND TISSUE PRODUCTS
-------------------------
The towel and tissue products produced and sold by Bay West are
primarily for the commercial and institutional wash room products
markets that include recreation, health care, food service,
<PAGE>
manufacturing, education, automotive and dairy. The products
include roll and folded towels, tissue products, soaps, windshield
towels, dairy towels, household roll towels and glass cleaner. Bay
West products are sold through independent distributors to end
users both domestically and internationally.
CONVERTED PRODUCTS
------------------
Wax-laminated and converted papers produced by Converted Products
include roll, ream and skid wrap paper, can body stock,
impregnated paper and coated papers. These products are sold to
manufacturers and converters in the paper, can and corrugated
container industries.
EXPORT SALES
Mosinee Paper International, Inc. acts as a commissioned sales
agent for the export sales of the company and has elected to be
treated as a foreign sales corporation, or FSC, for federal income
tax purposes. During 1993, export sales of the company's products
amounted to nearly $19 million.
RAW MATERIALS
For paper making operations, fiber represents approximately half
of the cost of paper. The company satisfies its fiber requirements
using virgin fiber from pulpwood and chips, purchased bleached
pulp and both pre- and post-consumer waste or recyclable papers.
The types of paper being made and their intended uses determine
the type or quality of the fiber used. During 1993, Pulp and Paper
required 33,000 tons, or 27% of total fiber requirements, of
bleached pulp which it purchased on the open market. The balance,
representing unbleached pulp, was produced at its kraft pulp mill.
Sorg Paper is a non-integrated paper manufacturer and must
purchase all required fiber on the open market. During the year it
purchased 29,000 tons of bleached pulp, or 97% of its fiber
requirements. The balance of purchased fiber represented waste
papers, generally pre-consumer, available from printers and other
paper converters. Bay West produces all its fiber requirements
from its deink and direct entry systems. The fiber source for
these systems is low grade recyclable waste papers that were
relatively inexpensive and abundant. Bay West consumed over
121,000 tons of pre- and post-consumer waste papers during the
year.
Wood for Pulp and Paper's pulp mill is produced at its Mosinee
Industrial Forest in northwestern Wisconsin and purchased from
private landowners, public forests, and from other forest product
manufacturers. During 1993, Pulp and Paper consumed 36,000 cords
of pulpwood, or 24% of its total wood requirements, from its own
forests. The balance was available on the open market. Toward the
end of the year, increased demand for pulpwood and chips relative
to supply began to increase prices. The availability of adequate
pulpwood and chips is satisfactory, but higher prices are expected
during 1994.
Converted Products utilizes linerboard and various waxes to
produce its laminated papers. Linerboard is readily available from
<PAGE>
large paper mills, but experienced some price increase activity in
late 1993 and early 1994.
All other chemicals, dyes and sundry raw materials have remained
readily available with no anticipated shortages seen during 1994.
ENERGY
The company's paper mills require large amounts of steam and
electricity for production. Both Pulp and Paper and the Sorg
Paper/Bay West Middletown, Ohio complex have their own steam and
electricity generating facilities. Additionally, Pulp and Paper
operates a hydro-electric generating facility that produces a
portion of its electricity requirements. Both facilities have the
capability to purchase electricity from area utilities. The
primary fuel used at the Middletown complex is coal while Pulp and
Paper utilizes a mixture of coal, bark and sludge and also
operates a recovery boiler that recovers inorganic chemicals from
its pulping process.
PATENTS AND TRADEMARKS
The company obtains and files trademarks and patents as
appropriate for newly developed products. The company does not own
or hold material licenses, franchises or concessions.
SEASONAL NATURE OF BUSINESS
None of the products manufactured and sold by the company are
seasonal in nature. Bay West unit shipments, however, are
moderately higher during the summer and early fall months.
WORKING CAPITAL
As is customary in the paper industry, the company carries
adequate amounts of raw materials and finished goods inventory to
facilitate the manufacture and rapid delivery of paper products to
its customers.
MAJOR CUSTOMERS
No single customer accounted for 10% or more of consolidated net
sales during 1993.
BACKLOG
The sales backlog in dollars climbed to over $14 million, nearly
double the level at 1992 year end. The backlog was nearly $11
million at specialty paper operations, and amounted to
approximately twenty-eight days. Backlogs at converting
facilities, where customer orders are serviced from inventories,
generally represent orders being prepared for shipment. Backlogs
at all operations existing at year end are expected to be shipped
during 1994.
COMPETITIVE CONDITIONS
Competition in the paper industry in general has been strong as
capacity in excess of demand for many grades of paper has
heightened pricing pressure. The tissue portion of the industry
<PAGE>
has experienced the most severe competitive conditions during the
last three years due primarily to added capacity.
Specialty paper operations at Sorg Paper and Pulp and Paper
compete in many different niche markets. The highly technical
nature of specialty paper limits competition since not all paper
mills can produce the required papers. The competition is
generally based more upon quality and service to the customer than
price. However, as quality and service are improving at most paper
manufacturers and becoming expected attributes of the product,
price competition has begun to intensify among competitors in
specialty grades. The less technical specialty grades of paper
encounter more price competition since more paper mills have the
capability to produce them. Additionally, as demand for commodity
grade papers declines, producers of these commodity grades
temporarily may venture into the less technical specialty grades
to maintain production volumes, thereby increasing price
competition.
Competition in the commercial and institutional tissue markets,
which includes toweling, is among several large paper companies.
Bay West, although growing, is one of the smaller competitors in
this market. During the past three years capacity additions
outpaced demand and resulted in severe pricing pressures as
participants attempted to maintain sales volume. An improved
economy and less announced capacity increases should provide
modest reductions to the severe price competition among tissue
producers during 1994.
Wax-laminated and converted products compete with several similar
sized producers. Competition is primarily focused on price.
Additionally, wax-laminated roll wrap, for paper products sold in
roll form by paper mills, competes with polywrap as an alternative
roll wrap material.
RESEARCH AND DEVELOPMENT
The company is involved in research and development activities at
all locations. Generally, research at specialty paper operations
occurs in both the laboratory and actual paper machines in the
form of trial runs. Research at converting facilities is limited
to development, often in conjunction with suppliers, on new
laminating compounds. Tissue operations perform trial run research
in both deinking and paper production to improve product
capability and quality. Additionally, research is conducted to
improve existing, and develop the next generation, of product
dispensers. The amounts spent on research activities are not
material in relation to total operating expenses.
ENVIRONMENT
The paper industry is subject to stringent environmental laws and
regulations which govern the discharge of materials into the air
and ground and surface waters. Environmental regulations have
become more restrictive in the past and additional changes can be
anticipated in the future. The company is committed to full
compliance with all rules designed to protect the environment and
compliance with current rules is not expected to have a material
adverse effect on the company's earnings or competitive position.
There are no proposed regulatory changes of which the company is
<PAGE>
now aware which are expected to have a material effect on the
business or financial condition of the company, but it can be
anticipated that future environmental regulations will likely
increase the company's capital expenditures and operating costs.
Additional information concerning the company's status as a
potentially responsible party ("PRP") and other environmental
matters can be found in the first two paragraphs of Note 12 of the
Notes to Consolidated Financial Statements, page 41. As noted
therein, the company is of the opinion that any costs associated
with its status as a PRP will not have a material adverse effect
on the business and financial condition of the company.
EMPLOYEES
The company had 1,298 employees at the end of 1993. Hourly
employees at the company's paper making operations are covered
under collective bargaining agreements. During 1993 negotiations
were conducted which led to four year agreement at Sorg Paper.
During 1994 the company will be negotiating with the Union
Bargaining Committee at Bay West's Middletown, Ohio mill and it
looks forward to similar results. The company considers its
relationship with its employees to be excellent. Eligible
employees participate in retirement plans and group life,
disability and medical insurance programs.
EXECUTIVE OFFICERS OF THE COMPANY
The following information relates to Executive Officers of the
Company as of March 23, 1994:
SAN W. ORR, JR., 52
-------------------
Chairman of the Board since 1987
Director since 1972
Also Attorney, Estates of A.P. Woodson & Family and
Chairman of the Board of Wausau Paper Mills
Previously, Vice Chairman of the Board (1978-1987);
RICHARD L. RADT, 62
-------------------
Vice Chairman of the Board since August, 1993
Director since 1988
Previously, President and Chief Executive Officer (1987-1993)
and President and Chief Executive Officer of Wausau Paper
Mills Company (1977-1987)
DANIEL R. OLVEY, 45
-------------------
President and Chief Executive Officer since August, 1993,
Director since August, 1993
Previously, Executive Vice President and Chief Operating
Officer (1992-1993), Group Vice President-Specialty Paper
(1991-1992), Vice President-Finance; Secretary and Treasurer
(1989-1991); Vice President Finance, Secretary and Treasurer,
Wausau Paper Mills Company (1985-1989)
<PAGE>
GARY P. PETERSON, 45
--------------------
Sr. Vice President-Finance, Secretary and Treasurer since
August, 1993
Previously, Vice President-Finance (1991-1993); partner,
Wipfli Ullrich Bertelson CPAs (1981-1991).
STUART R. CARLSON, 47
---------------------
Sr. Vice President-Administration since August, 1993
Previously, Vice President-Human Resources (1991-1993);
Director of Human Resources, Georgia Pacific, Inc.
(1990-1991) and Corporate Director of Industrial Relations,
Great Northern Nekoosa Corporation (1989-1990)
ITEM 2. PROPERTIES.
The company's corporate headquarters are located in Mosinee,
Wisconsin. The building, which is owned by the company, was
constructed in 1985, and consists of approximately 38,000 square
feet. Executive officers and a corporate staff of approximately
17 persons who perform corporate accounting and financial, human
resource and MIS services are located in the corporate
headquarters
The following paragraphs provide information on the location and
general character of the company's facilities, including their
productive capacity and extent of utilization.
<TABLE>
PULP AND PAPER
LOCATION AND CAPACITY
---------------------
Mosinee, WI
Number of employees: 537
<CAPTION>
Practical 1993 Operating
Product Capacity* (tons) Actual (tons) Rate
------- ---------------- ------------- ---------
<S> <C> <C> <C>
Paper 109,000 99,000 91%
Pulp 88,000 87,000 99%
</TABLE>
<TABLE>
SORG PAPER
LOCATION AND CAPACITY
---------------------
Middletown, OH
Number of employees: 200
<CAPTION>
Practical 1993 Operating
Product Capacity* (tons) Actual (tons) Rate
------- ---------------- ------------- ---------
<S> <C> <C> <C>
Paper 32,000 30,300 95%
</TABLE>
<PAGE>
<TABLE>
BAY WEST
LOCATION AND CAPACITY
---------------------
Towel and Tissue Paper Mill
Middletown, OH
Number of employees: 172
<CAPTION>
Practical 1993 Operating
Product Capacity* (tons) Actual (tons) Rate
------- ---------------- ------------- ---------
<S> <C> <C> <C>
Towel 60,000 50,000 83%
Tissue 30,000 26,000 87%
Deink Pulp 100,000 80,000 80%
</TABLE>
<TABLE>
LOCATION AND CAPACITY
---------------------
Harrodsburg, KY
Number of employees: 293
<CAPTION>
Practical 1993 Operating
Product Capacity* (tons) Actual (tons) Rate
------- ---------------- ------------- ---------
<S> <C> <C> <C>
Converted
Towel & Tissue 104,000 62,000 60%
</TABLE>
<TABLE>
CONVERTED PRODUCTS
LOCATION AND CAPACITY
---------------------
Columbus, WI
Number of employees: 52
Jackson, MS
Number of employees: 20
<CAPTION>
Practical 1993 Operating
Product Capacity* (tons) Actual (tons) Rate
------- ---------------- ------------- ---------
<S> <C> <C> <C>
Laminated
Papers 114,000 40,000 35%
</TABLE>
MOSINEE INDUSTRIAL FOREST
LOCATION AND CAPACITY
---------------------
Solon Springs, WI
1993 production: 41,638 cords
1993 acreage: 88,700 acres
*"Practical capacity" is the amount of product a mill
can produce with existing equipment and workforce and
usually approximates maximum, or theoretical, capacity.
At the company's converting operations it reflects the
approximate maximum amount of product that can be made
on existing equipment, but would require additional days
and/or shifts of operation to achieve.
<PAGE>
ITEM 3. LEGAL PROCEEDINGS.
Legal proceedings are described in the first two paragraphs of
Note 12 of the Notes to Consolidated Financial Statements, page
41.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders in
the fourth quarter.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The company's common stock is traded on the Nasdaq National
Market under the symbol MOSI. The number of shareholders of
record as of March 2, 1994 was 1,925. In addition, the company
has received identification of 1,319 non-objecting beneficial
owners who own stock in "street name" or who are institutional
owners. The company also believes that it has approximately 1,273
beneficial owners who either did not reply or who object to being
disclosed. The total estimated number of shareholders as of
March 25, 1994 is 4,517. Information related to high and low
closing prices and dividends is set forth in Note 16 of Notes to
Consolidated Financial Statements, page 44. A description of
certain dividend restrictions under the company's credit agreement
is set forth in Note 7 of the Notes to Consolidated Financial
Statements, page 34.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
<CAPTION>
($ thousands except share data)
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Sales $244,821 $225,512 $197,424 $210,382 $233,114
Cost of sales(5) 201,317 195,034 166,312 167,303 192,944
Gross profit(5) 43,504 30,478 31,112 43,079 40,170
Operating expenses(1)(5) 25,147 23,287 26,819 23,853 35,896
Income from operations(1) 18,357 7,191 4,293 19,226 4,274
Interest expense 5,667 7,685 2,215 1 243
Other income (expense)(4) 4,697 553 (59) 399 147
Income before income taxes 17,387 59 2,019 19,624 4,178
Income taxes(2) 7,750 22 1,117 7,654 (2,473)
Net income (loss)(2)(3) 9,637 (8,500) 902 11,970 6,651
Net cash provided by
operating activities 26,936 16,201 9,722 15,405 21,172
Working capital 21,295 13,413 15,967 24,342 15,859
Capital additions 12,663 14,314 113,546 25,876 12,586
Depreciation, amortization
and depletion 15,017 15,839 10,859 8,661 9,738
Total assets 252,061 247,702 249,485 151,506 127,497
Long-term debt 96,260 100,000 110,085 13,847 1,020
Stockholders' equity 79,133 72,070 80,942 81,692 72,143
Total capitalization 175,393 172,070 191,027 95,539 73,163
Common stock:
Net income (loss) per
share(2)(3) 1.34 (1.21) .12 1.70 .92
Book value per share 11.07 10.08 11.45 11.65 10.25
Dividends declared
per share .36 .36 .36 .32 .28
Weighted average shares
outstanding 7,148,443 7,109,325 7,050,598 7,017,839 7,178,001
Number of stockholders
at year-end 4,488 4,804 4,520 4,824 5,368
<FN>
(1) Includes restructuring and relocation expenses of $1.4
million in 1991 and $16.7 million in 1989.
(2) 1989 reflects the cumulative effect of a change in
accounting principle of $5 million of income for the
adoption of SFAS No. 96.
(3) 1992 reflects the cumulative effect of a change in
accounting principle of $8.5 million expense for the
adoption of SFAS No. 106.
(4) 1993 other income reflects $5.5 million for a patent
infringement suit award.
(5) All years presented have been reclassified to conform to the
1993 presentation by decreasing cost of sales and increasing
operating expenses.
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION.
<TABLE>
OPERATIONS REVIEW
<CAPTION>
Net Sales
---------
- - ------------------------------------------------------------------
($ thousands) 1993 1992 1991
------------- ---- ---- ----
<S> <C> <C> <C>
Net sales $244,821 $225,512 $197,424
Percent increase 9% 14% -
- - ------------------------------------------------------------------
</TABLE>
Sales increased $19 million, or 9%, over the prior year. All
business units experienced increased volume of products sold. In
the aggregate, tons sold increased to 238,000 tons, over 10% or
22,000 tons, over the prior year. The increased volume was
relatively evenly spread between specialty paper and converted
products. The largest gain, in tons sold, was registered at Bay
West, accounting for 41% of the total increase. Export sales also
experienced an increase to nearly $19 million and now account for
nearly 8% of total net sales. Increased exports of Bay West towel
and tissue products more than offset declines in exported
specialty papers.
While sales volume improved, strong price competition in all areas
of the paper industry led to reduced selling prices. Excess
capacity in the paper industry offset much of the potential gain
from the general economic recovery that has progressed throughout
the year. Besides unfavorably affecting pricing, some product mix
deterioration resulted as less than optimal grades of paper were
produced to maintain operating volumes. During the year, some
tissue selling price relief was realized. With less new capacity
being announced than has been the case over the past several
years, some additional price strengthening may occur in 1994. In
summary, strong volume increases added nearly $33 million in sales
which was partially offset by unfavorable pricing effects of over
$9 million and less optimal product mix of over $4 million.
Sales increased in 1992 primarily due to volume which rose 32,000
tons over the prior year. Bay West, which led the increase in
total volume, accounted for 42% of the change followed by
Converted Products with a 39% share of the increase. These
operations were the focus of the 1990-1991 expansion program.
Specialty paper operations added 19% of the increase over the
prior year. The strong growth in volume at Bay West resulted from
expanding distribution nationally and gaining penetration in
international areas. Pricing for all operations was difficult
during the year reflecting the general economic slowness that
persisted throughout the year. Highly competitive pricing
continued during the year in the tissue area of our business as it
had during 1991. Capacity increases in excess of existing demand
caused serious price discounting among all tissue producers.
<PAGE>
Strong volume increases added approximately $36 million in sales
and was partially offset by unfavorable pricing effects of over $8
million.
During 1991, sales declined $13 million, or 6%, from the prior
year through lowered volume and reduced selling prices. Bay West
increased sales 11% on higher volume as distribution efforts were
increased in anticipation of the expansion underway. Pricing was
exceptionally competitive during the year in the tissue markets.
<TABLE>
<CAPTION>
GROSS PROFIT ON SALES
---------------------
- - ------------------------------------------------------------------
($ thousands) 1993 1992 1991
------------- ---- ---- ----
<S> <C> <C> <C>
Gross profit on sales $43,504 $30,478 $31,112
Percent increase/(decrease) 43% (2%) -
Gross profit margin 18% 14% 16%
- - ------------------------------------------------------------------
</TABLE>
Gross profit of nearly $44 million rose 43% over the more than $30
million reported last year. Gross profit margin improved to 18%
from the year earlier level of 14%. The improvement in gross
profit principally resulted from productivity improvements and
cost reductions at the Bay West towel and tissue mill during the
year. Production at this facility in 1992 was adversely affected
by equipment downtime and a prolonged learning curve. In 1993,
production at the Bay West mill increased 29%, or 17 thousand
tons, helping to absorb fixed production costs. Gross profit also
increased at all other operating units during the year. Strong
volume increases combined with aggressive cost reduction programs
offset lower selling prices at all units. Raw material prices,
which remained stable during most of the year, also contributed to
the improvement. There was some raw material price increase
activity, primarily in purchased pulps and pulpwood, toward the
end of the year. Gross profit for 1992 and 1991 has been restated
for reclassification of certain expenses from cost of sales to
selling and administrative expenses in the amounts of
$2.4 million and $2.2 million, respectively, to place those years
on a basis comparable to 1993.
Fiber represents approximately half of the cost of paper. The
company satisfies its fiber requirements using virgin fiber from
pulpwood and chips, purchased bleached pulp and both pre- and
post-consumer waste or recyclable papers. The types of paper being
made and their intended uses determine the type or quality of the
fiber used. During the year the Pulp and Paper Division required
33,000 tons of bleached pulp, or 27% of fiber needs, which were
purchased on the open market. The balance, representing unbleached
pulp, was produced at its kraft pulp mill. The pulpwood used to
produce pulp consumed 36,000 cords from Mosinee's Industrial
Forest, or 24% of wood requirements. The balance was available
from the open market. Sorg Paper is a non-integrated paper
manufacturer and must purchase all required fiber on the open
market. During the year it purchased 29,000 tons of virgin fiber,
or 97% of its total fiber requirements. The balance of purchased
fiber represented waste papers, generally pre-consumer wastes from
printers or paper converters. Bay West's towel and tissue mill
produces all its pulp requirements from its deink or direct entry
systems. The fiber requirements for these systems is low grade
recyclable waste papers that were relatively inexpensive and
abundant. Bay West consumed over 121,000 tons of waste paper
during the year.
<PAGE>
During 1992, gross profit of $30 million declined slightly from
the $31 million reported in the prior year and gross profit margin
declined to 14% from the 1991 level of 16%. Gross profit margins
declined at all operating units. The unfavorable gross profit and
gross profit margin comparisons primarily resulted from weak
selling prices. The Bay West towel and tissue mill experienced
excessive operating costs during its first year of operation
resulting from insufficient production and high broke, or "scrap",
generation levels. Higher deink pulp cost from low yields and high
raw material cost also unfavorably affected gross profit.
Gross profit at specialty paper operations remained nearly
constant as additional sales volume, a better product mix, higher
efficiencies and cost reduction programs offset temporary pulp
price increases and lower selling prices. Strong volume gains at
Converted Products Division similarly offset lower selling prices
and higher start-up related manufacturing cost. Bay West's
converting and distribution facility in Harrodsburg, Kentucky made
significant improvements in operating efficiencies during 1992,
meeting and at times exceeding planned levels for this period.
However, the depressed tissue market prices offset the favorable
effects of this improvement.
During 1991, gross profit of $31 million declined from $43 million
reported the year before. Gross profit margin dropped to 16% from
the prior year level of 20%. All operating units had lower gross
profit except Sorg Paper which benefited from lower purchased pulp
prices, aggressive cost management and production improvements.
1991 was a year of expansion. The relocation of Bay West and
employing a new workforce resulted in lower productivity that
gradually improved during the year. Bay West's paper mill in Ohio
experienced high operating cost and low productivity as the
workforce started up the newly constructed paper machines and
deink pulp facilities. Additionally, low yields and higher cost
waste papers needed to insure adequate deink pulp during start up
further reduced gross profit. A decline in purchased pulp prices
during the year provided some benefit to specialty paper
operations. General economic conditions adversely affected
profitability through reduced volumes and lower selling prices.
<PAGE>
<TABLE>
<CAPTION>
OPERATING EXPENSES
------------------
- - ------------------------------------------------------------------
($ thousands) 1993 1992 1991
------------- ---- ---- ----
<S> <C> <C> <C>
Selling and advertising $9,221 $10,052 $8,622
Percent increase/(decrease) (8%) 17% -
Administrative 15,926 13,235 16,781
Percent increase/(decrease) 20% (21%) -
Operating expenses before
restructuring 25,147 23,287 25,403
Percent increase/(decrease) 8% (8%) -
As a percent of net sales 10% 10% 13%
Restructuring costs - - 1,416
Total operating expenses 25,147 23,287 26,819
As a percent of net sales 10% 10% 14%
- - ------------------------------------------------------------------
</TABLE>
Operating expenses increased nearly $2 million, or 8%, from the
prior year level of $23 million. As a percent of net sales,
operating expenses remained at 10% reflecting the higher dollar
amount of sales.
Selling and advertising expenses declined nearly $1 million from
the prior year. Lower promotion and advertising programs at Bay
West and Sorg Paper accounted for the improvement. Major programs
were launched in 1992 to increase sales volumes for the expansion
of Bay West and help overcome the difficult economic conditions,
both domestic and international, to gain additional market
penetration and absorb added capacity. The benefits from these
reductions were partially offset by nominal inflation cost
increases, primarily in salaries and related benefits at all
operating units.
The nearly $3 million increase in administrative expenses during
the year is generally attributable to Stock Appreciation Rights
Plans (SAR) further described in Note 11 to the financial
statements. The SAR programs resulted in a charge, determined by
the market price of the company's stock, of nearly $2 million due
to a 22% increase in the stock price over the year compared to a
$1 million credit to expense last year when the company's stock
price had fallen at year end. This change in stock prices accounts
for most of 1993's increase over the prior year. Cost reduction
programs helped to offset modest inflationary increases in salary
and benefit expenses incurred at all operating units.
During 1991, operating expenses before restructuring increased
nearly $2 million, or 6% over the prior year, and as a percent of
net sales increased to 13%. Selling expenses increased as
marketing and sales staffs were expanded to facilitate growth
plans. Administrative expense increased due to over $2 million in
charges for SAR programs and a continuation for part of the year
of duplicate staffs involved in the relocation of Bay West to
Kentucky and establishment of administrative staff at their towel
and tissue mill in Ohio. Lowered incentive compensation and Thrift
Plan (401-k) contributions and other cost reductions partially
offset some of these increases.
<PAGE>
<TABLE>
<CAPTION>
INCOME FROM OPERATIONS
----------------------
- - ------------------------------------------------------------------
($ thousands) 1993 1992 1991
------------- ---- ---- ----
<S> <C> <C> <C>
Income from operations before
restructuring $18,357 $7,191 $5,709
Percent increase 155% 26% -
Restructuring costs - - 1,416
Income from operations after
restructuring 18,357 7,191 4,293
Percent increase 155% 68% -
- - ------------------------------------------------------------------
</TABLE>
Income from operations reached over $18 million, climbing 155%
over the prior year and near the record $19 million reported in
1990. As a percent of sales, income from operations improved to
over 7% during the year. Selling prices for paper, particularly in
the tissue market, remained below the prior year which had also
been adversely affected by depressed prices. Lowered operating
costs and higher sales volumes at all facilities, especially the
Bay West towel and tissue mill during the year, more than offset
the lower selling prices and resulted in the strong improvement.
During 1992, high operating costs at the Bay West towel and tissue
mill along with the depressed tissue selling prices offset
progress at other facilities and accounted for the modest
improvement over 1991.
In 1991, income from operations before restructuring of nearly $6
million resulted from lower sales volumes and selling prices due
in large part to the adverse economic conditions which persisted
all year. Higher operating costs associated with the expansion at
most operating units and high SAR program costs contributed to the
decline in profitability. Additionally, a charge of $1.4 million
for restructuring expense further lowered income from operations.
<TABLE>
<CAPTION>
OTHER INCOME AND EXPENSES
-------------------------
- - ------------------------------------------------------------------
($ thousands) 1993 1992 1991
------------- ---- ---- ----
<S> <C> <C> <C>
Interest income $17 $146 $43
Percent increase/(decrease) (88%) 240% -
Interest expense 5,667 7,685 2,215
Percent increase/(decrease) (26%) 247% -
Patent infringement award 5,529 - -
- - ------------------------------------------------------------------
</TABLE>
Interest income was received on a state income tax refund from
prior periods and a minimal amount from over-night investments of
excess cash. Interest expense on commercial paper and other
long-term debt totaled nearly $6 million this year compared to $8
million incurred in 1992 before immaterial amounts of capitalized
interest were deducted in both years. During 1991, interest
<PAGE>
expense of $4 million on short-term debt, commercial paper and
long-term bank notes was reduced by $2 million as interest was
capitalized as part of the cost of assets acquired. Average debt
level for 1993 of $99 million compared favorably to $111 million
during the prior year. This reduction, combined with lower
interest rate protection fees, accounted for the $2 million
decrease in interest expense. Near the end of 1993, the company's
interest rate protection agreement expired, and under existing
interest rates in effect at year-end 1993, will result in lower
interest expense.
In early 1993, the U.S. Court of Appeals for the Federal Circuit
upheld the District Court judgement awarded the company. The
District Court found that James River Corporation had infringed
upon certain washroom towel cabinet roll transfer mechanisms
patented by Bay West Paper Corporation, a subsidiary of the
company. The company received $5.5 million, including interest,
which is included in income before taxes.
<TABLE>
<CAPTION>
INCOME TAXES
------------
- - ------------------------------------------------------------------
($ thousands) 1993 1992 1991
------------- ---- ---- ----
<S> <C> <C> <C>
Income tax provision $7,750 $22 $1,117
Percent increase/(decrease) N/A (98%) -
Effective tax rate 44.6% 37.3% 55.3%
- - ------------------------------------------------------------------
</TABLE>
The income tax provision varies with reported income, tax credits
and federal, state and local tax rates. The 1993 provision for
income taxes increased due to the substantial improvement in
earnings and increased federal tax rates. The tax provision of
nearly $8 million in 1993 results in an effective tax rate of
44.6%. This rate reflects the enactment of Revenue Reconciliation
Act of 1993, which increased the marginal corporate tax rate,
requiring a charge to earnings of nearly $1 million to recognize
the adjustment of current and deferred taxes.
During 1992, the effective tax rate of 37.3% more closely
reflected the statutory rates in effect for the year. Also, in
1992, the adoption of the Statement of Financial Accounting
Standards No. 109 (SFAS No. 109), Accounting for Income Taxes,
allowed the recognition of deferred tax assets, subject to a
valuation allowance, for the tax benefit of state income tax loss
carryforwards. The ability to recognize a portion of this asset
minimizes the impact of the company not being able to offset
consolidated income with subsidiary losses.
In 1991, under previous accounting guidelines, the inability to
recognize deferred tax assets for state losses of subsidiaries
increased the effective tax rate to 55.3%, substantially higher
than the statutory rates in effect.
<PAGE>
<TABLE>
<CAPTION>
NET INCOME
----------
- - ------------------------------------------------------------------
($ thousands) 1993 1992 1991
------------- ---- ---- ----
<S> <C> <C> <C>
Net income/(loss) $9,637 $(8,500) $902
Percent increase N/A N/A -
Net income/(loss) per share 1.34 (1.21) 0.12
Percent increase N/A N/A -
- - ------------------------------------------------------------------
</TABLE>
Reflecting the above, net income for 1993 climbed to nearly $10
million, or $1.34 per share, over the prior year's loss of $8.5
million, or $1.21 loss per share.
Net income for 1992 was adversely affected by the adoption of
Statement of Financial Accounting Standards No. 106, Employers'
Accounting for Postretirement Benefits Other than Pensions. This
adoption required the company to charge income with the cost of
such benefits earned through December 31, 1991 by current
employees and retirees. The charge to record the entire liability
at January 1, 1992 was $13.3 million which generated a deferred
tax benefit of $4.8 million resulting in a net cumulative effect
of $8.5 million, or $1.20 per share.
The decline in net income reported in 1991 reflected general
economic conditions and high one-time operating expenses as
projects in the expansion plan were constructed, relocated and
started up.
Statement of Financial Accounting Standards (SFAS) No. 112,
Employers' Accounting for Postemployment Benefits, requires that
employers accrue a liability for compensation for future absences
of former or inactive employees and their beneficiaries and
covered dependents. SFAS No. 112 will be adopted as of January 1,
1994, the required adoption date, by recognizing a cumulative
effect expense in the range of $700,000 - $900,000, net of income
taxes. The company does not anticipate routine accrual expenses,
but, will record expenses in accordance with SFAS No. 112 when
events occur that require such accrual.
<TABLE>
<CAPTION>
LIQUIDITY AND CAPITAL RESOURCES
CASH PROVIDED BY OPERATING ACTIVITIES AND WORKING CAPITAL
---------------------------------------------------------
- - ------------------------------------------------------------------
($ thousands) 1993 1992 1991
------------- ---- ---- ----
<S> <C> <C> <C>
Cash provided by operating
activities $26,936 $16,201 $9,722
Percent increase 66% 67% -
Working capital 21,295 13,413 15,967
Percent increase/(decrease) 59% (16%) -
Current ratio 1.6:1 1.3:1 1.5:1
- - ------------------------------------------------------------------
</TABLE>
<PAGE>
Net cash provided by operating activities increased to nearly $27
million, the highest recorded by the company, or 66% over the $16
million provided in 1992. Improved sales of $19 million combined
with improved productivity and cost reduction efforts led to an
improved gross profit margin of $13 million providing additional
cash from operations that was partially offset by less than $2
million increase in accounts receivable. The company also received
over $5 million from a patent infringement suit award which nearly
offset the $6 million paid to banks for interest on outstanding
debt. Payments of $4 million for income taxes were offset by $2
million in tax refunds in contrast to $4 million in tax refunds
received in 1992.
Gross trade receivables of the company increased slightly over $2
million, or 12% over the prior year. Accounts receivable
allowances increased by $0.5 million in 1993 as a result of
increases in price related credits offset by a reduction in
doubtful accounts.
The company invested $12 million, near the planned level, in plant
and equipment additions in 1993. This level of capital spending,
limited to replacement of equipment required in normal operations,
allowed for sufficient cash to reduce the outstanding debt
incurred during the past two years for capital asset expansions.
Through improved cash from operations, cost reduction programs and
reduced capital spending, the company was able to repay $12
million of outstanding debt this year and return nearly $3 million
in cash dividends to shareholders.
The effect of all operating, investing and financing activities
for 1993 was to increase cash and cash equivalents by $0.7 million
to $1.5 million by the end of the year.
Working capital increased 59% to $21 million from the $13 million
reported last year, mainly due to the reduction of $8 million in
short-term debt. Increases in current assets such as receivables
and inventories resulting from increases in sales volumes and
manufacturing volumes were partially offset by increases in
accounts payable and other liabilities. The current ratio,
current assets divided by current liabilities, increased to 1.6:1
from the 1.3:1 reported last year.
<TABLE>
<CAPTION>
DEBT AND EQUITY
---------------
- - ------------------------------------------------------------------
($ thousands) 1993 1992 1991
------------- ---- ---- ----
<S> <C> <C> <C>
Long-term debt $ 96,260 $100,000 $110,085
Stockholders' equity 79,133 72,020 80,942
Total capitalization 175,393 172,020 191,027
Debt/capitalization ratio 55% 58% 58%
- - ------------------------------------------------------------------
</TABLE>
<PAGE>
While the company's financing arrangements do not require
scheduled repayments of its long-term debt, the company repaid $4
million of long-term debt and all of the $8 million in short-term
debt outstanding at the beginning of the year. The reduction in
long-term debt to $96 million improved upon planned debt reduction
by nearly $1 million. Improved efficiencies at Bay West's towel
and tissue mill and the receipt of the patent infringement award
were the main reasons for generating sufficient cash flows from
operations to repay the debt. The ratio of long-term debt to
total capitalization of 55% improved from the prior year
reflecting an increase in stockholders' equity due to stronger
earnings and a lower level of debt.
Early in the year the company refinanced its existing debt by
entering into a $130 million unsecured five-year credit facility.
By year-end, management's confidence in future cash generation
allowed this credit facility to be reduced by $20 million to $110
million. The company currently utilizes $50 million of this
credit agreement to support its participation in the commercial
paper markets. At year-end, approximately $44 million of
commercial paper was outstanding and classified as long-term debt.
Management believes that with prior years' major expansions
running close to designed levels and proper staffing now in place,
a continuing upward economic trend that allows for selling price
improvements will result in cash flow from operations which will
adequately service existing debt and allow for planned capital
expenditures for property and equipment of $22 million next year.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Management's Responsibility For Financial Reporting. . . . . . .20
Auditor's Report . . . . . . . . . . . . . . . . . . . . . . . .21
Consolidated Balance Sheets. . . . . . . . . . . . . . . . . . .23
Consolidated Statements of Stockholders' Equity. . . . . . . . .24
Consolidated Statements of Income. . . . . . . . . . . . . . . .25
Consolidated Statements of Cash Flows. . . . . . . . . . . . . .26
Notes to Consolidated Financial Statements . . . . . . . . . . .27
Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . .45
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The management of Mosinee Paper Corporation is responsible for the
integrity and objectivity of the consolidated financial
statements. Such financial statements were prepared in conformity
with generally accepted accounting principles applied on a
consistent basis throughout the periods. Some of the amounts
included in these financial statements are estimates based upon
management's best judgement of current conditions and
circumstances. Management is also responsible for preparing other
financial information included in this annual report.
The company's management depends on the company's system of
internal accounting controls to assure itself of the reliability
of the financial statements. The internal control system is
designed to provide reasonable assurance, at appropriate cost,
that assets are safeguarded and transactions are executed in
accordance with management's authorizations and recorded properly
to permit the preparation of financial statements in accordance
with generally accepted accounting principles. Periodic reviews of
internal controls are made by management and the internal audit
function and corrective action is taken if needed.
<PAGE>
The Audit Committee of the Board of Directors, consisting of
outside directors, provides oversight of financial reporting. The
company's internal audit function and independent public
accountants meet with the Audit Committee to discuss financial
reporting and internal control issues and have full and free
access to the Audit Committee.
The consolidated financial statements have been audited by the
company's independent auditors and their report is presented
below. The independent auditors are approved each year at the
annual shareholders' meeting based on a recommendation by the
Audit Committee and the Board of Directors.
DANIEL R. OLVEY GARY P. PETERSON
President and Sr. Vice President - Finance
Chief Executive Officer and Secretary and Treasurer
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Mosinee Paper Corporation
Mosinee, Wisconsin
We have audited the accompanying consolidated balance sheets of
MOSINEE PAPER CORPORATION and subsidiaries as of December 31, 1993
and 1992, and the related consolidated statements of stockholders'
equity, income and cash flows for each of the three years in the
period ended December 31, 1993 and the supporting schedules
appearing on pages 45-49. These consolidated financial statements
and supporting schedules are the responsibility of the company's
management. Our responsibility is to express an opinion on these
consolidated financial statements and supporting schedules based
on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
consolidated financial statements and supporting schedules are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements and supporting schedules. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of MOSINEE PAPER CORPORATION and subsidiaries at December
31, 1993 and 1992, and the results of their operations and cash
flows for each of the three years in the period ended December 31,
1993, and the supporting schedules appearing on pages 45-49
present fairly the information required to be set forth therein,
all in conformity with generally accepted accounting principles.
As discussed in Note 3 to the consolidated financial statements,
the company changed its methods of accounting for postretirement
benefits other than pensions and income taxes in 1992.
We hereby consent to the incorporation by reference of this report
in the Registration Statement on Form S-8 filed with the
Securities and Exchange Commission by Mosinee Paper Corporation on
April 19, 1991.
WIPFLI ULLRICH BERTELSON
February 2, 1994 Wipfli Ullrich Bertelson
Wausau, Wisconsin Certified Public Accountants
<PAGE>
<TABLE>
MOSINEE PAPER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
($ thousands) As of
December 31,
ASSETS 1993 1992
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,521 $ 841
Receivables, net 21,461 19,843
Refundable income taxes -- 2,005
Inventories 30,456 28,628
Deferred income taxes 3,541 1,759
Other current assets 728 583
------- -------
Total current assets 57,707 53,659
Property, plant and equipment, net 188,254 189,726
Other assets 6,100 4,317
------- -------
TOTAL ASSETS $252,061 $247,702
======== ========
LIABILITIES
Current Liabilities:
Current maturities of long-term debt $ -- $ 105
Short-term debt -- 8,064
Accounts payable 17,481 16,997
Accrued and other liabilities 18,506 14,963
Accrued income taxes 425 117
------- -------
Total current liabilities 36,412 40,246
Long-term debt 96,260 100,000
Deferred income taxes 18,081 13,101
Postretirement benefits 13,959 14,242
Other noncurrent liabilities 6,961 6,788
------- -------
Total liabilities 171,673 174,377
------- -------
Commitments and contingencies -- --
Preferred stock of subsidiary 1,255 1,255
------- -------
STOCKHOLDERS' EQUITY
Preferred stock - $1 par value, authorized
1,000,000 shares, none issued
Common stock - $2.50 par value
- 15,000,000 shares authorized
- 10,393,823 shares issued 25,984 25,984
Additional paid-in capital 13,851 13,851
Retained earnings 56,986 49,923
------- -------
Subtotals 96,821 89,758
Treasury stock at cost (17,688) (17,688)
------- -------
Total stockholders' equity 79,133 72,070
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $252,061 $247,702
======== ========
<FN>
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
MOSINEE PAPER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
Common Additional Total
($ thousands except share Stock-Shares Common Paid-in Retained Treasury Stock Stockholders'
data) Outstanding Stock Capital Earnings Shares Amount Equity
----------- ------ ---------- -------- ------------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances December 31, 1990 7,015,328 $25,849 $11,331 $62,631 (3,324,480) ($18,119) $81,692
Net income, 1991 902 902
Cash dividends declared on
Mosinee common stock (2,543) (2,543)
Redeem Mosinee common
script shares 15
Issue Mosinee common
stock 54,000 135 756 891
--------- ------- ------- ------- ---------- ------- -------
Balances December 31, 1991 7,069,343 25,984 12,087 60,990 (3,324,480) (18,119) (80,942)
Net loss, 1992 (8,500) (8,500)
Cash dividends declared on
Mosinee common stock (2,567) (2,567)
Sale of treasury stock 79,100 1,764 79,100 431 2,195
--------- ------- ------- ------- ---------- ------- -------
Balances December 31, 1992 7,148,443 25,984 13,851 49,923 (3,245,380) (17,688) 72,070
Net income, 1993 9,637 9,637
Cash dividends declared on
Mosinee common stock (2,574) (2,574)
--------- ------- ------- ------ ---------- ------- ------
Balances December 31, 1993 7,148,443 $25,984 $13,851 $56,986 (3,245,380) ($17,688) $79,133
========= ======= ======= ======= ========= ======= =======
<FN>
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
MOSINEE PAPER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
($ thousands except share For the Years
data) Ended December 31,
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Net sales $244,821 $225,512 $197,424
Cost of sales 201,317 195,034 166,312
------- ------- -------
Gross profit on sales 43,504 30,478 31,112
------- ------- -------
Operating expenses:
Selling and advertising 9,221 10,052 8,622
Administrative 15,926 13,235 16,781
Restructuring costs -- -- 1,416
------- ------- -------
Total operating expenses 25,147 23,287 26,819
------- ------- -------
Income from operations 18,357 7,191 4,293
Other income (expense):
Patent infringement award 5,529 -- --
Interest income 17 146 43
Interest expense (5,667) (7,685) (2,215)
Other (849) 407 (102)
------- ------- ------
Income before income taxes and
cumulative effect adjustment 17,387 59 2,019
Provision for income taxes 7,750 22 1,117
------- ------- ------
Income before cumulative effect
of changes in accounting
principles 9,637 37 902
Cumulative effect of changes in
accounting principles (net of
income taxes) -- (8,537) --
------- ------- ------
Net income (loss) $ 9,637 ($8,500) $ 902
======== ======= ========
Income (loss) per share
before cumulative effect of
changes in accounting principles $ 1.34 ($ 0.01) $ 0.12
Cumulative effect of changes in
accounting principles
(net of income taxes) -- ( 1.20) --
-------- -------- --------
Net income (loss) per share $ 1.34 ($ 1.21) $ 0.12
======== ======== ========
Weighted average common
shares outstanding 7,148,443 7,109,325 7,050,598
========= ========= =========
<FN>
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
MOSINEE PAPER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
For the Years
Ended December 31,
($ thousands) 1993 1992 1991
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 9,637 ($ 8,500) $ 902
Provision for depreciation, depletion
and amortization 15,017 15,839 10,859
Provision for postretirement benefits
other than pensions 1,550 14,762 --
Recognition of deferred revenue (40) (40) (22)
Provision for losses on accounts receivable 440 247 90
Gain on property, plant and equipment
disposals (28) (558) (6)
Deferred income taxes 3,198 (3,312) 4,087
Changes in operating assets and liabilities:
Accounts receivable (2,058) (3,238) (938)
Refundable income taxes 2,005 2,744 (4,749)
Inventories (1,828) (3,919) 5,766
Other assets (2,977) (2,032) (1,164)
Accounts payable and other liabilities 1,712 4,091 (4,921)
Accrued income taxes 308 117 (182)
------- ------- -------
Net cash provided by operating activities 26,936 16,201 9,722
------- ------- -------
Cash flows from investing activities:
Capital expenditures (11,963) (21,508) (105,458)
Proceeds from property, plant and
equipment disposals 190 5,957 140
------ ------ -------
Net cash used in investing activities (11,773) (15,551) (105,318)
------ ------ -------
Cash flows from financing activities:
Borrowings (payments) under credit agreements (11,804) (1,116) 95,585
Repayment of long-term debt (105) (148) (746)
Dividends paid (2,574) (2,559) (2,468)
Proceeds from issuance of company stock -- 2,195 891
------ ----- ------
Net cash provided by (used in)
financing activities (14,483) (1,628) 93,262
====== ===== ======
Net increase (decrease) in cash and
cash equivalents 680 (978) (2,334)
Cash and cash equivalents at beginning of year 841 1,819 4,153
------ ----- -----
Cash and cash equivalents at end of year $ 1,521 $ 841 $ 1,819
======= ======= =======
Supplemental Cash Flow Information:
Interest paid - net of amount capitalized $ 5,806 $ 7,774 $ 1,707
Income taxes paid (refunded) 2,239 (4,277) 1,961
<FN>
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
MOSINEE PAPER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation - The consolidated financial statements
include the accounts of Mosinee Paper Corporation and its
subsidiaries. All significant intercompany transactions and
balances have been eliminated in consolidation.
Cash Equivalents - The company considers all highly liquid debt
instruments with an original maturity of three months or less to
be cash equivalents.
Inventories - Substantially all inventories are stated at the
lower of cost, determined on the last-in, first-out method (LIFO),
or market. Inventories not on the LIFO method, primarily supply
items, are stated at cost (principally average cost) or market,
whichever is lower. Allocation of the LIFO reserve among the
components of inventories is impractical.
Property, Plant and Equipment - Depreciable property is stated at
cost less accumulated depreciation. Land, water power rights, and
construction in progress are stated at cost and timberlands are
stated at net depleted value. Facilities financed by leases, which
are essentially equivalent to installment purchases, are recorded
as assets and the related obligation as a long-term liability.
When property units are retired, or otherwise disposed of, the
applicable cost and accumulated depreciation thereon are removed
from the accounts. The resulting gain or loss, if any, is
reflected in income.
Depreciation is computed on the straight-line method for financial
statement purposes over 20 to 45 years for buildings and 3 to 20
years for machinery and equipment. Depletion on timberlands is
computed on the unit-of-production method. Depreciation expense
includes amortization on capitalized leases. Maintenance and
repair costs are charged to expense when incurred. Improvements
which extend the useful lives of the assets are added to the plant
and equipment accounts.
Revenue Recognition - Revenue is recognized upon shipment of goods
and transfer of title to the customer. Concentrations of credit
risk with respect to trade accounts receivable are generally
diversified due to the large number of entities comprising the
company's customer base and their dispersion across many different
industries and geographies.
Taxes - Deferred tax assets and liabilities are determined based
on the difference between the financial statement and tax bases of
assets and liabilities, as measured by the enacted tax rates which
will be in effect when these differences are expected to reverse.
Deferred tax expense is the result of changes in the deferred tax
asset and liability. The principal sources giving rise to such
differences are identified in Note 10. See Note 3 for change in
accounting policy for 1992.
<PAGE>
Per Share Data - Income per share is computed by dividing net
income less Sorg Paper preferred stock dividends by the weighted
average number of shares of common stock outstanding.
Statements of Cash Flows - The 1993 statement of cash flows is
prepared using the indirect method of presentation. Prior years'
statements of cash flows, which had been presented using the
direct method, have been reclassified to conform with the indirect
method.
Reclassifications - The 1992 and 1991 income statements have been
reclassified to conform to the 1993 presentation by decreasing
cost of sales and increasing selling and administrative expenses,
$2,356,000 for 1992 and $2,244,000 for 1991.
2 - SEGMENT INFORMATION
The company operates predominantly in the paper and allied
products industry. The company formed Mosinee Paper International,
Inc., a wholly-owned subsidiary located and domiciled in the U.S.
Virgin Islands, to administer the export sales made by the
company.
3 - CHANGES IN ACCOUNTING POLICIES
During 1992, the company adopted the provisions of Statements of
Financial Accounting Standards (SFAS) No. 106 "Employers'
Accounting for Postretirement Benefits Other than Pensions" and
SFAS No. 109 "Accounting for Income Taxes."
In December 1992, the company adopted SFAS No. 106 which requires
the estimated cost of retiree benefit payments, primarily health
and life insurance, to be accrued during the employees' active
service period. Previously, the cost of these benefits was
expensed as incurred. The company elected to immediately
recognize the accumulated liability as of January 1, 1992, which
resulted in a one-time non-cash charge against earnings of
$13,287,000 before taxes and $8,537,000 after taxes, or $1.20 per
share. The effect of this change on 1992 operating results was to
recognize an additional pre-tax expense of $967,000 and after-tax
expense of $585,000, or $.07 per share. Previously reported
quarterly earnings for 1992, as presented in Note 15, have been
restated for the effect of this change as if it had been adopted
on January 1, 1992. Additional information on retirement benefits
can be found in Note 6.
The company also adopted SFAS No. 109 during the first quarter of
1992. The cumulative effect of the accounting change at the time
of adoption and the current year effect on net income was
immaterial as the company had previously been on the liability
method of accounting for deferred taxes.
<PAGE>
4 - SUPPLEMENTAL BALANCE SHEET INFORMATION
<TABLE>
Supplemental information on certain balance sheet items consist of
the following:
<CAPTION>
($ thousands)
December 31,
Receivables 1993 1992
---- ----
<S> <C> <C>
Trade $22,428 $20,107
Other 612 742
------- -------
23,040 20,849
Less: Allowances (1,579) (1,006)
------ -------
$21,461 $19,843
======= =======
Inventories
Raw materials $12,794 $10,182
Finished goods and work in
process 16,247 18,455
Supplies 8,124 7,510
------- -------
37,165 36,147
Less: LIFO Reserve (6,709) (7,519)
------- -------
$30,456 $28,628
======= =======
Property, plant and equipment
Buildings $ 34,438 $ 30,994
Machinery and equipment 275,389 269,325
------- -------
Totals 309,827 300,319
Less: accumulated depreciation (130,064) (117,028)
-------- --------
Net depreciated value 179,763 183,291
Land 2,010 2,007
Timber and timberlands, net of
depletion 2,793 2,752
Water power rights 129 129
Construction in progress 3,559 1,547
----- -----
$188,254 $189,726
======== ========
Accrued and other liabilities
Payrolls $ 1,991 $ 1,123
Vacation Pay 3,834 3,741
Taxes, other than income 1,938 1,129
Employee retirement plans 2,032 1,152
Cash dividends declared 643 643
Insurance 1,414 1,209
Stock appreciation plans 4,163 2,706
Interest 351 490
Other 2,140 2,770
------- -------
$18,506 $14,963
======= =======
</TABLE>
<PAGE>
5 - LEASES
<TABLE>
The company maintains two leases for equipment that are classified
as capital leases. Property, plant and equipment includes the
following amounts for capitalized leases, amortization of which is
included in depreciation expense:
<CAPTION>
December 31,
($ thousands) 1993 1992
---- ----
<S> <C> <C>
Machinery and
equipment $540 $540
Less: accumulated
amortization 160 112
---- ----
Total $380 $428
==== ====
</TABLE>
The company has various operating leases for machinery and
equipment, automobiles, office equipment and warehouse space. In
1992, the company entered into a sales leaseback transaction for
converting equipment, accounted for as an operating lease.
<TABLE>
Future minimum payments, by year and in the aggregate, under
noncancelable operating leases with initial or remaining terms of
one year or more consisted of the following at December 31, 1993:
<CAPTION>
Operating
($ thousands) Leases
---------
<S> <C>
1994 $1,327
1995 1,188
1996 1,153
1997 753
1998 147
Thereafter 350
------
Total minimum lease payments $4,918
======
</TABLE>
For 1992, the future minimum lease payments for capitalized leases
are reflected in the aggregate annual maturities of long-term debt
disclosed in Note 7. Rent expense for all operating leases of
plant and equipment was $3,081,000 in 1993, $2,698,000 in 1992 and
$1,154,000 in 1991.
<PAGE>
6 - RETIREMENT PLANS
PENSIONS
--------
Substantially all employees of the company are covered under
various pension plans. The defined benefit pension plan benefits
are based on the participants' years of service and either
compensation earned over certain final years of employment or
fixed benefit amounts for each year of service. The plans are
funded in accordance with federal laws and regulations.
<TABLE>
The net pension costs for all defined benefit pension plans
consist of the following components:
<CAPTION>
($ thousands) 1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Service cost $ 642 $ 641 $ 519
Interest cost 1,740 1,862 1,757
Actual return on assets (2,825) (2,343) (6,380)
Net amortization and
deferral 558 225 4,428
------- ------- -------
Net pension cost $ 115 $ 385 $ 324
======= ======= =======
</TABLE>
<PAGE>
<TABLE>
The following sets forth the funded status of the company's
defined benefit pension plans and the amounts reflected in the
accompanying consolidated balance sheets:
<CAPTION>
December 31,
----------------------------------------------------
($ thousands) 1993 1992
---- ----
Plans with Plans with Plans with Plans with
Assets Assets Assets Assets
exceeding Less than Exceeding Less than
Accumulated Accumulated Accumulated Accumulated
Benefit Benefit Benefit Benefit
Obligation Obligation Obligation Obligation
------------------------ ------------------------
<S> <C> <C> <C> <C>
Actuarial Present value of benefit
obligations at September 30
Vested benefit obligation ($ 6,206) ($14,640) ($ 5,998) ($13,236)
======= ======= ======= =======
Accumulated benefit obligation ($ 7,124) ($14,651) ($ 6,744) ($13,240)
======= ======= ======= =======
Projected benefit obligation ($ 9,547) ($14,678) ($ 9,201) ($13,240)
Fair value of plan assets at
September 30 16,277 9,800 15,930 9,504
------ ----- ------ -----
Projected benefit obligation (in
excess of) less than plan assets
at September 30 6,730 (4,878) 6,729 ( 3,736)
Unrecognized net gain (3,271) ( 834) ( 3,529) ( 1,765)
Unrecognized prior service cost 56 427 59 476
Unrecognized initial net
obligation (asset) (1,892) 422 ( 2,096) 574
Unrecognized acquisition tax
benefit - 825 - 917
Cash contributions to plans
subsequent to September 30 - 43 - 31
Adjustment required to recognize
minimum liability - ( 497) - ( 494)
------ ----- ------ -------
Consolidated balance sheets at
December 31 $ 1,623 ($ 4,492) $ 1,163 ($ 3,997)
======= ======= ======= =======
</TABLE>
The projected benefit obligations at September 30, were determined
using an assumed discount rate of 7.25% and 8% for 1993 and 1992,
respectively, and assumed compensation increases of 5% in 1993 and
5% and 6% in 1992. The assumed long-term rate of return on plan
assets was 9%. Plan assets consist principally of fixed income and
equity securities and includes $1,905,000 of Mosinee Paper
Corporation common stock.
The company's defined contribution pension plans, covering various
salaried employees, provide for company contributions based on
various formulas. The cost of such plans totaled $1,823,000 in
1993, $1,324,000 in 1992, and $1,189,000 in 1991.
The company has deferred compensation or supplemental retirement
agreements with certain present and past key officers, directors
and employees. The principal cost of such plans is being or has
been accrued over the period of active employment to the full
eligibility date. Certain payments, insignificant in amount, are
charged to expense when paid. Costs charged to operations under
such agreements approximated $89,000, $78,000, and $28,000 for
1993, 1992, and 1991, respectively.
<PAGE>
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
-------------------------------------------
In addition to providing pension benefits, the company provides
certain health care and nominal term life insurance benefits for
retired employees. Substantially all of the company's employees
may become eligible for those benefits if they reach normal
retirement age while working for the company.
Cost-sharing provisions, benefits and eligibility for various
employee groups vary by location and union agreements. Generally,
eligibility is attained after reaching age 55 or 62 with minimum
service requirements. Upon reaching age 65, the benefits become
coordinated with Medicare. The plans are unfunded and the company
funds the benefit costs on a current basis.
<TABLE>
The net postretirement benefit costs consists of the following
components:
<CAPTION>
December 31,
($ thousands) 1993 1992
---- ----
<S> <C> <C>
Service cost $ 457 $ 433
Interest cost 1,112 1,042
Net amortization and deferral ( 19) -
------ ------
Net postretirement benefit cost $1,550 $1,475
====== ======
</TABLE>
<TABLE>
The following table sets forth the accumulated postretirement
benefit obligation (APBO) of the plans as reported in the
accompanying consolidated balance sheet:
<CAPTION>
($ thousands) 1993 1992
---- ----
<S> <C> <C>
Retirees and dependents $ 8,189 $ 6,769
Fully eligible active
participants 1,837 2,391
Other active
participants 6,429 5,082
------- -------
Total APBO 16,455 14,242
Unrecognized net loss ( 2,496) -
------- -------
Accrued postretirement
benefit cost $13,959 $14,242
======= =======
</TABLE>
The 1993 assumed health care cost trend rate used in measuring the
accumulated postretirement benefit obligation was 12%, declining
by 1% annually for 6 years to an ultimate rate of 6%. The weighted
average discount rate used was 7.25%. For 1992, the obligation was
calculated using a health care cost trend rate of 12%, declining
by 0.625% annually for 8 years to an ultimate rate of 7%. The
weighted average discount rate was 8%.
<PAGE>
The effect of a 1% increase in the health care cost trend rate
would increase the APBO by $1,714,000 or 10.4% and $1,850,000 or
13.0%, at December 31, 1993 and 1992, respectively. The effect of
this change would increase the aggregate of the service cost and
interest cost by $243,000 or 15.7% in 1993, and $245,000 or 16.6%
in 1992.
FUTURE ACCOUNTING CHANGE
------------------------
Statement of Financial Accounting Standards (SFAS) No. 112
"Employers' Accounting for Postemployment Benefits" enacted by the
Financial Accounting Standards Board in November 1992, requires
that employers accrue a liability for former or inactive
employees, their beneficiaries and covered dependents compensation
for future absences. SFAS No. 112 will be adopted as of January 1,
1994, the required adoption date, by recognizing a cumulative
effect expense in the range of $700,000 - $900,000, net of income
taxes.
7 - LONG-TERM DEBT
<TABLE>
Long-term debt consists of the following:
<CAPTION>
($ thousands) December 31,
1993 1992
---- ----
<S> <C> <C>
Commercial paper $ 44,260 $ 46,581
Revolving credit agreements 52,000 53,419
Capital leases - 105
-------- --------
Total 96,260 100,105
Less: current maturities - 105
-------- --------
Long-term debt $ 96,260 $100,000
======== ========
</TABLE>
The company has a commercial paper placement agreement to issue up
to $50 million of unsecured debt obligations. The weighted average
interest rate on commercial paper outstanding at December 31, 1993
was 3.6%. The amounts have been classified as long-term as the
company intends, and has the ability, to refinance the obligations
under the revolving credit agreement.
A credit agreement with one bank as agent and certain financial
institutions as lenders was established April 16, 1993 to issue up
to $130 million of unsecured borrowings less the amount of
commercial paper outstanding. This agreement was amended
December 16, 1993 to reduce the issue amount to $110 million. The
term of this agreement is five years requiring no payments until
March 31, 1998, at which time, all outstanding amounts become due.
The company may, however, reduce the commitment amount prior to
that date without penalty. The weighted average interest rate at
December 31, 1993 was 3.7%. The agreement provides for various
<PAGE>
restrictive covenants, which includes maintaining minimum net
worth, interest coverage and debt to equity ratios and limits
dividend and other restricted payments to approximately $10
million.
The credit agreement provides for commitment and facility fees
during the revolving loan period. Commitment fees are 0.1875% per
annum of the unused portions of the commitment, payable quarterly.
Facility fees are 0.125% per annum of the total commitment,
payable quarterly.
The difference between the book value and the fair market value of
long-term debt is not material.
The company maintained an interest rate protection agreement
through November 6, 1993 for the revolving credit agreement. This
agreement provided for interest rate protection on $60 million the
first year, $85 million the second year and $50 million in the
third year. Under terms of the agreement, the company received
compensation when the 90 day LIBOR (London Interbank Offered Rate)
exceeds 9.5% in the first year, 10.5% in the second year and 11%
in the third year. The company paid compensation when LIBOR was
less than 7.5% in the first year, 7% the second year and 6.5% the
third year. Amounts paid or received are recognized as interest
rates deviate beyond the stated amounts and are included in
interest expense.
<TABLE>
8 - INTEREST EXPENSE AND CAPITALIZED INTEREST
<CAPTION>
($ thousands)
Total Net
Year Ended Interest Capitalized Interest
December 31, Expense Interest Expense
------------ -------- ----------- -------
<S> <C> <C> <C>
1993 $5,704 $ 37 $5,667
1992 7,806 121 7,685
1991 4,631 2,416 2,215
</TABLE>
9 - PREFERRED SHARE PURCHASE RIGHTS PLAN
Under the Rights Agreement dated June 26, 1986, amended February
21, 1991, each share of the company's common stock entitles its
holder to one nonvoting preferred share purchase right ("Right").
Rights become exercisable 10 days after a person or group acquires
20% or more of the company's outstanding common stock (an
"Acquiring Person"). The Board may reduce this threshold amount to
10%. The Right will entitle the holder to purchase from the
company .01 share of Series A Junior Participating Preferred Stock
at a price of $60. If the company is acquired in a merger or other
business combination, the holder may exercise the Right and
receive common stock of the acquiring company having a market
value equal to two times the exercise price of the Right. If a
person becomes an "Acquiring Person" the holder may exercise the
Right and receive common stock of the company having a market
value equal to two times the exercise price of the Right. Rights
are subject to redemption by the company for $.05 per Right until
a person or group becomes an Acquiring Person. After a person or
<PAGE>
group becomes an Acquiring Person, but before the Acquiring Person
acquires 50% of the company's common stock, the company may
exchange one share of common stock for each Right. Rights expire
on July 10, 1996. The company has reserved 100,000 shares of
Series A Junior Participating Preferred Stock.
10 - INCOME TAXES
<TABLE>
PROVISION FOR INCOME TAXES
--------------------------
The provision for income taxes is as follows:
<CAPTION>
($ thousands)
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Current tax expense
(credit):
Federal $3,880 ($2,016) ($3,752)
State 672 600 710
------ ------ ------
Total current 4,552 ( 1,416) ( 3,042)
------ ------ ------
Deferred tax expense
(credit):
Federal 3,412 2,034 4,325
State ( 214) ( 596) ( 166)
----- ------ ------
Total deferred 3,198 1,438 4,159
----- ------ ------
Total provision for
income taxes $7,750 $ 22 $ 1,117
====== ======= =======
</TABLE>
<TABLE>
RECONCILIATION FROM FEDERAL STATUTORY TO EFFECTIVE TAX RATE
-----------------------------------------------------------
<CAPTION>
($ thousands)
1993 1992 1991
----------------- ----------------- -----------------
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Federal statutory
rate $6,085 35.0% $ 20 34.0% $ 687 34.0%
State taxes,
net of
federal
benefit 852 4.9% 2 3.3% 359 17.8%
Adjustment to
deferred taxes
for enacted
changes in tax
rates 800 4.6% - - - -
Other - net 13 .1% - - 71 3.5%
------ ----- ------ ----- ------ -----
Consolidated
effective tax $7,750 44.6% $ 22 37.3% $1,117 55.3%
====== ===== ====== ===== ====== =====
</TABLE>
<PAGE>
The 1991 state tax percentage of 17.8 percent is a result of
subsidiaries of the company having unused state operating loss
carryovers. At the end of 1993, $37,500,000 of such carryovers
existed which may be used to offset future state taxable income in
various amounts through the year 2007. Because separate state tax
returns are filed, the company is not able to offset consolidated
income with the subsidiaries' losses. Under the provisions of
SFAS No. 109, the benefits of state tax losses are recognized as a
deferred tax asset, subject to appropriate valuation allowances,
which reduces the effective percentage from that obtained under
the previous accounting method. At December 31, 1993, the company
has unused alternative minimum tax credit carryforward of
approximately $7,271,000 which can be used to offset regular tax
liabilities through the year 2018.
DEFERRED INCOME TAXES
---------------------
<TABLE>
The significant components of deferred income tax expense for the
year ended December 31, 1993 and 1992 are as follows:
<CAPTION>
($ thousands) 1993 1992
------ ------
<S> <C> <C>
Deferred tax expense (exclusive
of the effect of other component
listed below) $2,398 $1,438
Adjustment to deferred tax assets
and liabilities for enacted
changes in tax laws and rates 800 -
------ ------
Total deferred tax expense $3,198 $1,438
====== ======
</TABLE>
<TABLE>
Deferred income taxes are provided for the temporary differences
between the financial reporting basis and the tax basis of the
company's assets and liabilities. The major temporary differences
that give rise to the deferred tax assets and liabilities at
December 31, are as follows:
<CAPTION>
($ thousands) 1993 1992
---- ----
<S> <C> <C>
Deferred tax assets:
Allowances on accounts receivable $ 638 $ 291
Accrued compensated absences 1,251 1,282
Stock appreciation rights plans 2,007 1,350
Pensions 832 934
Postretirement benefits 5,397 5,411
Reserves 1,020 986
State net operating loss carryforward 3,160 2,178
Alternative minimum tax credit carryforward 7,271 5,473
Other 245 358
-------- -------
Gross deferred tax assets 21,821 18,263
Less: valuation allowance ( 1,081) ( 937)
-------- -------
Net deferred tax assets 20,740 17,326
-------- -------
Deferred tax liabilities:
Property, plant and equipment ( 34,080) ( 27,845)
Deferred expenses ( 1,200) ( 823)
-------- --------
Total gross deferred tax liability ( 35,280) ( 28,668)
-------- --------
Net deferred tax liability ($14,540) ($11,342)
======== ========
</TABLE>
<PAGE>
<TABLE>
The total deferred tax liabilities (assets) as presented in the
accompanying balance sheets are as follows:
<CAPTION>
($ thousands)
1993 1992
---- ----
<S> <C> <C>
Net long-term deferred tax
liabilities $18,081 $ 13,101
------- --------
Gross current deferred tax
assets ( 4,622) ( 2,696)
Valuation allowance on
deferred tax assets 1,081 937
------- --------
Net current deferred tax
assets ( 3,541) ( 1,759)
------- --------
Net deferred tax liability $14,540 $ 11,342
======= ========
</TABLE>
A valuation allowance has been recognized for a subsidiary's state
tax loss carryforward as cumulative losses creates uncertainty
about the realization of the tax benefits in future years.
<TABLE>
For the year ended December 31, 1991, the components of deferred
tax expense were as follows:
<CAPTION>
($ thousands) 1991
----
<S> <C>
Depreciation $ 2,766
Accrued expenses ( 723)
Restructuring costs 1,977
Other 139
-------
Total deferred tax
provision $ 4,159
=======
</TABLE>
11 - STOCK OPTIONS AND APPRECIATION RIGHTS
The company has a non-qualified stock option plan under which
options to purchase 135,000 common shares may be issued to key
executive employees of the company or subsidiaries. The plan
provides for the granting of options at a price which is not less
than market value at the time of the grant. Options can be
exercised no sooner than six months or no later than twenty years
from the date of the grant. No accounting recognition is given
until the stock options are exercised.
<PAGE>
Two stock appreciation rights plans are maintained by the company.
The 1988 Stock Appreciation Rights Plan gives certain officers and
key employees the right to receive cash equal to the sum of the
appreciation in value of the stock and the value of reinvested
hypothetical cash dividends which would have been paid on the
stock covered by the grant. The 1988 Management Incentive Plan
gives certain management employees the right to receive similar
cash payments. The stock appreciation rights granted under the
plans may be exercised in whole or in installments and will vest
at such times as specified in the grant. In all instances, the
rights lapse if not exercised within 20 years of the grant date.
Compensation expense is recorded with respect to the rights, based
upon quoted market value of the shares and the exercise
provisions. The provision (credit) for incentive compensation
plans based upon the company's stock price, principally stock
appreciation rights, was $1,668,000 in 1993, ($1,155,000) in 1992,
and $2,513,000 in 1991.
<PAGE>
<TABLE>
The following table summarizes the activity relating to the
company's stock option and stock appreciation plans:
<CAPTION>
(In dollars or number of shares) 1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Stock options:
Options outstanding at - - 54,000
beginning of year
Granted 67,500 - -
Exercised - - (54,000)
------- ------- -------
Options outstanding at
end of year 67,500 - -
======= ======= =======
Options exercisable at
end of year - - -
======= ======= =======
Price of options exercised - - $16.50
======= ======= =======
Price of outstanding $30.00- - -
options 40.00
======= ======= =======
Stock appreciation rights:
Rights outstanding at 328,834 314,667 279,500
beginning of year
Granted 5,500 51,500 59,000
Exercised (29,000) (32,333) (12,333)
Terminated (6,000) (5,000) (11,500)
------- ------- -------
Rights outstanding at end
of year* 299,334 328,834 314,667
======= ======= =======
Rights exercisable at end
of year** 278,000 285,500 257,000
======= ======= =======
Price range of outstanding $11.00- $11.00- $11.00-
stock appreciation rights 29.88 29.88 29.88
======= ======= =======
<FN>
* 278,000 and 21,334 rights have been granted and remain
outstanding under the 1988 Stock Appreciation Rights Plan
and the 1988 Management Incentive Plan, respectively.
** Issued under the 1988 Stock Appreciation Rights Plan.
</TABLE>
<PAGE>
12 - CONTINGENCIES, LITIGATION, COMMITMENTS, AND RELATED
TRANSACTIONS
The company has been informed by the Wisconsin Department of
Natural Resources ("DNR") that a landfill, for which the company
may be a potentially responsible party, has been nominated by the
DNR for inclusion by the Environmental Protection Agency ("EPA")
on the National Priorities List ("NPL") established under the
federal Comprehensive Environmental Response, Compensation and
Liability Act (Superfund). The EPA has not placed the landfill on
the NPL nor has any other action been taken by the DNR or the EPA,
although the company and DNR continue to explore ways to initiate
an investigation outside of the Superfund program. The DNR has
also advised the company that it might be a potentially
responsible party at a second landfill which has not been
nominated on the NPL. The company, the DNR and other parties have
agreed to share certain costs of a remedial investigation and
feasibility study and in 1993, the company contributed $107,000 as
its allocated portion of the cost of remediation pursuant to the
cost sharing agreement. The company cannot predict what, if any,
additional costs will be borne by the company. The company
expects at least a portion of the costs paid to date, and any
which may be incurred in the future, to be reimbursed to the
company through insurance coverage. Based on the information
available, the company does not believe that any additional cost
associated with these landfills will have a material adverse
effect on the business and financial condition of the company.
In the ordinary course of conducting business, the company also
becomes involved in other environmental issues, investigations,
administrative proceedings and litigation relating to contracts
and other matters. While any proceeding or litigation has an
element of uncertainty, the company believes that the outcome of
any pending or threatened claim or lawsuit will not have a
material adverse effect on the business and financial condition of
the company.
Through the year 2006, the company is to pay a municipality a
minimum annual usage fee of approximately $150,000 paid on a
quarterly basis, to discharge industrial waste into the
municipality's wastewater treatment facility. The aggregate
amount of such required future minimum payments at December 31,
1993 was $2,107,000. In addition, the company is to pay monthly
contingent usage fees to the municipality based on the amount of
industrial waste discharged. Minimum and contingent usage fees
incurred totaled $611,000, $531,000 and $651,000 in 1993, 1992,
and 1991 respectively.
During 1992, the company sold 79,100 shares of its treasury stock
for $2,195,000 to various pension plans it maintains. The sale
price per share was determined using the trading price at the time
of the sale as reflected on Nasdaq.
<PAGE>
<TABLE>
13 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
<CAPTION>
($ thousands) 1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Non-cash investing
activities:
Fixed assets acquired
by "like-kind" exchange $ - $5,028 $ -
Fixed assets disposed
by "like-kind" exchange - (5,028) -
Property, plant and
equipment grants from $ - - 1,572
local governments
</TABLE>
In 1992, the company exchanged two airplanes with a total book
value of $5,028,000 for an airplane with an estimated value of
$5,200,000. The new equipment is recorded at $5,028,000, which
represents the book value of the items traded.
14 - PATENT INFRINGEMENT AWARD
On February 8, 1993, the U.S. Court of Appeals for the Federal
Circuit upheld the District Court judgement awarded Mosinee Paper
against James River Corporation. The District Court found that
James River had infringed upon certain washroom towel cabinet roll
transfer mechanisms patented by the Bay West Paper Corporation, a
subsidiary. Mosinee Paper's judgement of approximately $5.5
million, including interest, is included in the 1993 statement of
income.
<PAGE>
<TABLE>
15 - QUARTERLY INFORMATION (UNAUDITED)
<CAPTION>
(In thousands except share First Second Third Fourth
data) Qtr. Qtr. Qtr. Qtr. Annual
----- ------ ----- ------ ------
<S> <C> <C> <C> <C> <C>
1993
Net sales (1) $57,008 $60,334 $65,351 $62,128 $244,821
Gross profit 8,977 9,825 11,621 13,081 43,504
Net income 4,595 1,354 2,005 1,683 9,637
Net Income per share .64 .19 .28 .23 1.34
1992 (2)
Net sales $52,301 $57,551 $59,895 $55,765 $225,512
Gross profit (3) 8,052 7,765 7,233 7,428 30,478
Income (loss) before
cumulative effect of changes
in accounting principles (625) 730 (13) (55) 37
Cumulative effect of changes
in accounting principles
(net of income taxes) (8,537) - - - (8,537)
Net income (loss) (9,162) 730 (13) (55) (8,500)
Income (loss) per share:
Before cumulative effect
of changes in accounting
principles (.09) .10 (.01) (.01) (.01)
Cumulative effect of
changes in accounting
principles (net of income
taxes) (1.20) - - - (1.20)
Net income (loss) per share (1.29) .10 (.01) (.01) (1.21)
1991
Net sales $49,485 $46,440 $51,894 $49,605 $197,424
Gross profit (3) 8,827 5,842 8,565 7,878 31,112
Net income(loss) 417 (371) 1,769 (913) 902
Net Income (loss) per share .06 (.06) .25 (.13) .12
<FN>
(1) First quarter net sales are different from the first
quarter report to shareholders due to the elimination of
intercompany sales.
(2) Gross profits, net income (loss) and related per share
amounts have been restated as required by SFAS No. 106
"Employers' Accounting for Postretirement Benefits Other
Than Pensions".
(3) Gross profit has been revised to conform to the 1993
presentation which decreased cost of sales and increased
selling and administrative expenses, thus increasing gross
profit.
</TABLE>
<PAGE>
<TABLE>
16 - MARKET PRICES FOR COMMON SHARES
The Company's common shares are traded on the Nasdaq National
Market System under the Nasdaq symbol, MOSI. Price ranges and
dividends paid per share were as follows:
<CAPTION>
(In dollars)
1993 1992 1991
---- ---- ----
Prices Divi- Prices Divi- Prices Divi-
Qtr. High Low dends High Low dends High Low dends
------ ------ ----- ------ ------ ----- ------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1st $26.50 $21.50 $.09 $37.13 $28.00 $.09 $27.25 $18.50 $.09
2nd $27.00 $21.50 $.09 33.75 27.00 .09 34.00 26.00 .09
3rd $26.00 $21.75 $.09 29.50 24.25 .09 30.25 23.25 .09
4th $30.25 $22.75 $.09 26.25 20.25 .09 34.25 23.75 .09
</TABLE>
Prices reflect high and low closing price quotations on the Nasdaq
National Market System and do not reflect mark-ups, mark-downs or
commissions and may not represent actual transactions.
<TABLE>
FINANCIAL STATEMENT SCHEDULES
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES
($ THOUSANDS)
<CAPTION>
Balance at Balance
Beginning Deductions at End
------------------------
of Period Additions Collections Written Off of Period
---------- --------- ------------------------ ---------
<S> <C> <C> <C> <C> <C>
Year Ended Dec. 31, 1993:
Nicholas Arambasick $ 66 $ - $ 66 $ - $ -
Gerard Michaud 20 20
Charles Taylor 40 40
James Ploof 18 (1) 18
Ken Carlson 26 (1) 26
----- ----- ----- ----- -----
Total $ 126 $ 44 $ 66 $ 0 $ 104(2)
===== ===== ===== ===== =====
Year Ended Dec. 31, 1992:
Bruce J. Hynes $ 4 $ - $ 4 $ - $ -
Steven J. Sonn 3 3 -
Steven W. Davis 17 17 -
Mark Timm 10 10 -
Lee Faucett 2 2 -
Gerard Michaud 20 (1) 20
Nicholas Arambasick 66 (1) 66
Charles Taylor 40 (1) 40
----- ----- ----- ----- -----
Total $ 36 $ 126 $ 36 $ 0 $ 126(2)
===== ===== ===== ===== =====
Year Ended Dec. 31, 1991:
Thomas C. Casadonte $ 48 $ - $ 48 $ - $ -
Bruce J. Hynes 102 98 4
Steven J. Sonn 8 5 3
Steven W. Davis 17 (1) 17
Mark Timm 10 (1) 10
Lee Faucett 16 (1) 14 2
----- ----- ----- ----- -----
Total $ 158 $ 43 $ 165 $ 0 $ 36 (2)
===== ===== ===== ===== =====
<FN>
(1) Funds were advanced in the form of interest bearing demand
notes to facilitate relocation from former employment. The
advances are secured by personal residences.
(2) Amount reflected as current in the year-end Consolidated
Balance Sheet.
</TABLE>
<TABLE>
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
<CAPTION>
($ thousands) Balance at Other Balance
Beginning Changes at End of
Classifications of Period Additions Retirements In./(Dec.) Period
- - --------------- ---------- --------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Year ended Dec. 31, 1993
Buildings $ 30,994 $ 3,444 $ -- $ -- $ 34,438
Machinery and equipment 270,872 9,143 1,067 -- 278,948
Timber and timberlands 2,752 73 32 -- 2,793
Water power rights 129 -- -- -- 129
Land 2,007 3 -- 2,010
-------- -------- ------- ------ --------
Totals $306,754 $ 12,663 $ 1,099 $ 0 $318,318
======== ======== ======= ====== ========
Year ended Dec. 31, 1992
Buildings $ 32,598 $ 362 $ 1,477 ($ 489) $ 30,994
Machinery and equipment 262,943 13,886 6,446 489 270,872
Timber and timberlands 2,720 66 34 -- 2,752
Water power rights 129 -- -- -- 129
Land 2,082 -- 75 -- 2,007
-------- -------- ------- ------- --------
Totals $300,472 $ 14,314 $ 8,032 $ 0 $306,754
======== ======== ======= ======= ========
Year ended Dec. 31, 1991
Buildings $ 22,106 $ 10,569 $ 77 $ -- $ 32,598
Machinery and equipment 171,383 101,962 10,402 -- 262,943
Timber and timberlands 2,550 189 19 -- 2,720
Water power rights 129 -- -- -- 129
Land 1,257 826 1 -- 2,082
-------- -------- ------- ------- --------
Totals $197,425 $113,546 $10,499 $ 0 $300,472
======== ======== ======= ======= ========
<FN>
Additions to timber and timberlands are net of depletion.
Additions are comprised of general upgrades and expansion to property, plant and
equipment.
</TABLE>
<PAGE>
The following table summarizes capital expenditures on major
projects:
1993
Additions to fiber recovery system . . . . $ 1,200,000
Deink flotation system . . . . . . . . . . 1,100,000
1992
Additions to tissue machine . . . . . . . . $ 3,346,000
Aircraft (non-cash "like-kind" exchange) . 5,106,000
1991
Towel machine . . . . . . . . . . . . . . . $19,000,000
Tissue machine . . . . . . . . . . . . . . 30,000,000
Water treatment facility . . . . . . . . . 7,200,000
Deink plant . . . . . . . . . . . . . . . . 25,600,000
Completion of paper machine rebuild . . . . 8,700,000
The annual provisions for depreciation have been computed
utilizing the following ranges:
Buildings . . . . . . . . . . . . . . . . . 20 to 45 years
Equipment . . . . . . . . . . . . . . . . . 3 to 20 years
<PAGE>
<TABLE>
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
<CAPTION>
($ thousands) Balance at Other Balance
Beginning Changes at End of
Classifications of Period Additions Retirements In./(Dec.) Period
- - --------------- ---------- --------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Year ended Dec. 31, 1993
Buildings $ 7,868 $ 1,056 $ -- $ -- $ 8,924
Machinery and equipment 109,160 12,883 903 -- 121,140
-------- ------- ------- ------- --------
Totals $117,028 $13,939 $ 903 $ 0 $130,064
======== ======= ======= ======= ========
Year ended Dec. 31, 1992
Buildings $ 8,021 $ 856 $ 998 ($ 11) $ 7,868
Machinery and equipment 96,180 14,299 1,330 11 109,160
-------- ------- ------- ------- --------
Totals $104,201 $15,155 $ 2,328 $ 0 $117,028
======== ======= ======= ======= ========
Year ended Dec. 31, 1991
Buildings $ 7,277 $ 746 $ 2 $ -- $ 8,021
Machinery and equipment 96,618 9,623 10,061 -- 96,180
-------- ------- ------- ------- --------
Totals $103,895 $10,369 $10,063 $ 0 $104,201
======== ======= ======= ======= ========
</TABLE>
<TABLE>
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
($ THOUSANDS)
<CAPTION>
Allowance
for Allowance for Other
Doubtful Sales Returns Equipment Restructuring
Total Accounts and Discounts Writedowns Costs
----- --------- ------------- ---------- -----
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1990 $ 748 $400 $ 348 $6,388 $5,961
Charges to costs and expenses 3,487 170 3,317 1,416
Deductions (3,265) (190) (3,075) (6,388) (7,131)
------- ----- ------- ------- -------
Balances at December 31, 1991 $ 970 $380 $ 590 $ 0 $ 246
Charges to costs and expenses 3,270 464 2,806
Deductions (3,234) (329) (2,905) (246)
------- ----- ------- ------- -----
Balances at December 31, 1992 $1,006 $515 $ 491 $ 0 $ 0
Charges to costs and expenses 5,426 440 4,986
Deductions 4,853 602 4,251
----- --- ----- ------- -------
Balances at December 31, 1993 $1,579 $353 $1,226 $ 0 $ 0
====== ==== ====== ======= =======
</TABLE>
<PAGE>
<TABLE>
SCHEDULE IX - SHORT TERM BORROWINGS
($ THOUSANDS)
<CAPTION>
Maximum Average
At End Of Period Amount Amount Weighted Ave.
-----------------------
Weighted Outstanding Outstanding Int. Rate
Category of Aggregate Amount Average During the During the During the
Short-term Borrowings Outstanding Int. Rate Period Period(1) Period(1)
- - ---------------------------------------------------------------------------------------
Year Ended Dec. 31, 1993:
<S> <C> <C> <C> <C> <C>
Notes Payable to Banks $ 0 --- $13,477 $ 9,729(2) 3.84%(2)
====== ===== ======= ======= =====
Commercial Paper $ 0 --- $ --- (3) $ --- (3) ---
====== ===== ======= ======= =====
Year Ended Dec. 31, 1992:
Notes Payable to Banks $8,064(4) 3.90%(4) $14,752 $10,744 4.11%
====== ===== ======= ======= =====
Commercial Paper $ 0 --- $ --- (5) $ --- (5) ---
====== ===== ======= ======= =====
Year Ended Dec. 31, 1991:
Notes Payable to Banks $5,000(6) 4.94%(6) $15,000 $ 9,571 5.61%
====== ===== ======= ======= =====
Commercial Paper $ 0 --- $ --- (7) $ --- (7) ---
====== ===== ======= ======= =====
<FN>
(1) The average amount outstanding is computed by dividing the
total month-end balances by the number of months with
outstanding balances and the weighted average interest rate
is computed by averaging the interest rate on each
borrowing.
(2) Notes Payable to Banks includes $9,970 which was classified
as long-term beginning March 31, 1993, as the company's
revolving credit agreement provides the company with the
ability to refinance short-term borrowings. If this
classification had not been made, the Notes Payable to Banks
average amount outstanding and weighted average interest
rate would have been $9,809 and 3.74%, respectively.
(3) Commercial paper of $44,260 was classified as long-term as
the Company intends and has the ability to refinance under
the revolving credit agreement (see Note 7 to Consolidated
Financial Statements of the 1993 Annual Report to
Stockholders). If this classification had not been made,
the maximum amount and average amount of commercial paper
outstanding would have been $48,919 and $45,848,
respectively.
(4) Short-term debt of $3,419 was classified as long-term at
December 31, 1992, as the company's revolving credit
agreement provides the company with the ability to refinance
short-term borrowings. If this classification had not been
made, the Notes Payable to Banks at the end of the period
amount outstanding and weighted average interest rate would
have been $11,483 and 3.98%, respectively.
(5) Commercial paper of $46,581 was classified as long-term as
the company intends and has the ability to refinance the
obligation under the revolving credit agreement (see Note 8
to Consolidated Financial Statements of the 1992 Annual
Report to Stockholders). If this classification had not
been made, the maximum amount and average amount of
commercial paper outstanding would have been $49,445 and
$47,245, respectively.
(6) Short-term debt of $10,000 was classified as long-term at
December 31, 1991 as the company arranged a long-term line
of credit. (See Notes 9 and 15 of Notes to Consolidated
Financial Statements of the 1991 Annual Report to
Stockholders.) If this classification had not been made,
the Notes Payable to Banks at the end of period amount
outstanding and weighted average interest rate would have
been $15,000 and 5.2%, respectively.
(7) Commercial Paper of $47,380 was classified as long-term as
the Company intends, and has the ability, to refinance the
obligation under the revolving credit agreement (see Note 9
of Notes to Consolidated Financial Statements of the 1991
Annual Report to Stockholders). If this classification had
not been made, the maximum amount and average amount
outstanding of commercial paper would have been $47,380 and
$36,871, respectively.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
<CAPTION>
($ thousands) Charged to Costs and Expenses
Years Ended December 31,
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Maintenance and repair $12,231 $11,343 $7,875
</TABLE>
Amounts for taxes other than payroll and income taxes, royalties,
advertising costs and amortization of intangible assets are not
presented as such amounts are less than 1% of total sales.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information relating to directors of the company is incorporated
into this Form 10-K by this reference to the material set forth
under the caption "Election of Directors", pages 2 and 3, in the
company's proxy statement dated March 23, 1994 (the "1994 Proxy
Statement"). Information relating to executive officers of the
company is set forth in Part I, page 6.
ITEM 11. EXECUTIVE COMPENSATION.
Information relating to director compensation is incorporated into
this Form 10-K by this reference to the material set forth under
the subcaption "Director Compensation", pages 4 and 5, in the 1994
Proxy Statement. Information relating to the compensation of
executive officers is incorporated into this Form 10-K by this
reference to (1) the material set forth under the caption
"Executive Officer Compensation", page 7, through the material
immediately preceding the subcaption "Committees' Report on
Executive Compensation Policies", page 11, in the 1994 Proxy
Statement and (2) the material set forth under the subcaption
"Compensation Committee Interlocks and Insider Participation",
page 14, in the 1994 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Information relating to security ownership of certain beneficial
owners is incorporated into this Form 10-K by this reference to
the material set forth under the caption "Beneficial Ownership of
Common Stock", page 5, through the material immediately preceding
final two paragraphs, page 6, in the 1994 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.
Filed as part of this report and required by Item
14(d), are set forth on pages 21 to 49 herein.
<PAGE>
(b) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed by the company during
the fourth quarter of fiscal 1993.
(c) EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K.
The following exhibits are filed with the Securities and
Exchange Commission as part of this report.
EXHIBIT 3 - ARTICLES OF INCORPORATION AND BYLAWS
(a) Restated Articles of
Incorporation, as amended . . . . . . . . . . . 12-53(1)
(b) Restated Bylaws, as last
amended April 16, 1992. . . . . . . . . . . . . 54-89(1)
EXHIBIT 4 - INSTRUMENTS DEFINING THE RIGHTS OF SECURITY
HOLDERS
(a) Preferred Share Rights Agreement
dated June 26, 1986 as amended. . . . . . . . . . . 54
(b) Restated Articles of Incorporation
and Restated Bylaws (see Exhibit 3(a) and (b))
EXHIBIT 10 - MATERIAL CONTRACTS
*(a) Deferred Compensation Plan for Directors
as amended and restated June 17, 1993 . . . . . . . 148
*(b) 1985 Executive Stock Option
Plan dated June 27, 1985 . . . . . . . . . . . 83-95(5)
*(c) Mosinee Paper Corporation 1988 Stock
Appreciation Rights Plan, as amended 4/18/91. . 41-50(2)
*(d) 1993 and 1994 Incentive Compensation
Plan for Corporate Executive Officers . . . . . . . 165
*(e) Supplemental Retirement Benefit
Plan dated October 17, 1991 . . . . . . . . . . 63-71(2)
*(f) Supplemental Retirement Benefit Agreement
dated November 15, 1991 . . . . . . . . . . . . 72-76(2)
* Denotes Executive Compensation Plans and Arrangements.
EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS . . . . . 170
EXHIBIT 22 - SUBSIDIARIES OF REGISTRANT. . . . . . . . 167(1)
EXHIBIT 28 - ADDITIONAL EXHIBITS
Proxy Statement Dated March 21, 1994. . . . . . . . 172
<PAGE>
Page numbers set forth herein correspond to the page numbers
using the sequential numbering system, where such exhibit can
be found in the following Annual Reports on Form 10-K:
(1) Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1992; Commission File Number
0-1732.
(2) Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991; Commission File Number
0-1732.
(3) Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1990; Commission File Number
0-1732.
(4) Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1989; Commission File Number
0-1732.
(5) Exhibit 4(e) Form S-8 filed on April 19, 1991.
The above exhibits are available upon request in writing from
the Secretary, Mosinee Paper Corporation, 1244 Kronenwetter
Drive, Mosinee, Wisconsin 54455-9099.
SIGNATURES
Pursuant to the requirements of Section 13 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.
MOSINEE PAPER CORPORATION
Date March 29, 1994 GARY P. PETERSON
------------------------------------
Gary P. Peterson
Senior Vice-President,
Finance, Secretary and
Treasurer
(Principal Financial Officer)
<PAGE>
Pursuant to the requirement of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates
indicated.
SAN W. ORR, JR. RICHARD L. RADT
- - ------------------------------ -------------------------------
San W. Orr, Jr. Richard L. Radt
Chairman of the Board Vice Chairman of the Board
February 17, 1994 February 17, 1994
DANIEL R. OLVEY STANLEY F. STAPLES, JR.
- - ----------------------------- -------------------------------
Daniel R. Olvey Stanley F. Staples, Jr.
President and CEO Director
(Principal Executive Officer) February 17, 1994
February 17, 1994
RICHARD G. JACOBUS WALTER ALEXANDER
- - ------------------------------ -------------------------------
Richard G. Jacobus Walter Alexander
Director Director
February 17, 1994 February 17, 1994
DONALD E. JANIS
- - ------------------------------
Donald E. Janis
Corporate Controller
February 17, 1994
(Principal Accounting Officer)
<PAGE>
EXHIBIT 4(a)
MOSINEE PAPER CORPORATION
MOSINEE, WISCONSIN
PREFERRED SHARE RIGHTS AGREEMENT
Dated as of June 26, 1986
As Amended February 21, 1991
Mosinee Paper Corporation
and
M&I Marshall & Ilsley Bank
Rights Agent
Rights Agreement
Dated as of June 26, 1986
<PAGE>
RIGHTS AGREEMENT
----------------
Agreement, dated as of June 26, 1986, between Mosinee
Paper Corporation, a Wisconsin corporation (the "Company"), and
M&I Marshall & Ilsley Bank, a national banking association (the
"Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a
"Right") for each Common Share (as hereinafter defined) of the
Company outstanding on July 10, 1986, each Right representing the
right to purchase one one-hundredth of a share of Series A Junior
Participating Preferred Stock, par value $1.00 per share, of the
Company having the rights and preferences set forth in the form of
Certificate of Amendment attached hereto as Exhibit A, upon the
terms and subject to the conditions herein set forth, and has
further authorized the issuance of one Right with respect to each
Common Share that shall become outstanding between July 10, 1986
and the earliest of the Distribution Date, the Redemption Date and
the Final Expiration Date (as such terms are defined in Sections 3
and 7 hereof).
Accordingly, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as
follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter
defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 20% or more of the
Common Shares then outstanding, but shall not include the
Company, any wholly-owned Subsidiary (as such term is
hereinafter defined) of the Company or any employee benefit
plan of the Company or any Subsidiary of the Company, or any
entity holding Common Shares for or pursuant to the terms of
any such plan.
(b) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of
and shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire
(whether such right is exercisable immediately or only
<PAGE>
after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of
conversion rights, exchange rights, rights (other than
these Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by
or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or (B) the right
to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement,
arrangement or understanding to vote such security (1)
arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with,
the applicable rules and regulations of the Exchange Act
and (2) is not also then reportable on Schedule 13D
under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person
or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding for the purpose
of acquiring, holding, voting (except to the extent
contemplated by the proviso to Section l(c)(ii)(B)) or
disposing of any securities of the Company.
(d) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in
the State of New York are authorized or obligated by law or
executive order to close.
(e) "Close of business" on any given date shall mean
5:00 P.M., New York City time, on such date; provided,
however, that if such date is not a Business Day it shall
mean 5:00 P.M., New York City time, on the next succeeding
Business Day.
(f) "Common Shares" when used with reference to the
Company shall mean the shares of Common Stock, par value
$2.50 per share, of the Company. "Common Shares" when used
with reference to any Person other than the Company shall
mean the capital stock (or equity interest) with the greatest
voting power of such other Person or, if such other Person is
a Subsidiary of another Person, the Person or Persons which
ultimately controls such first-mentioned Person.
(g) "Person" shall mean any individual, firm,
corporation or other entity, and shall include any successor
(by merger or otherwise) of such entity.
(h) "Preferred Shares" shall mean the shares of
Series A Junior Participating Preferred Stock, par value
$1.00 per share, of the Company.
<PAGE>
(i) "Shares Acquisition Date" shall mean the first date
of public announcement by the Company or an Acquiring Person
that an Acquiring Person has become such.
(j) "Subsidiary" of any Person shall mean any
corporation or other entity of which a majority of the voting
power of the voting equity securities or equity interest is
owned, directly or indirectly, by such Person.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the Company
and the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the holders
of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it
may deem necessary or desirable.
Section 3. Issue of Right Certificates. (a) Until the
earlier of (i) the tenth day after the Shares Acquisition Date or
(ii) the tenth day after the date of the commencement of, or first
public announcement of the intent of any Person (other than the
Company, any wholly-owned Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or
any entity holding Common Shares for or pursuant to the terms of
any such Plan) to commence, a tender or exchange offer the
consummation of which would result in beneficial ownership by a
Person of 30% or more of the outstanding Common Shares (including
any such date which is after the date of this Agreement and prior
to the issuance of the Rights; the earlier of such dates being
herein referred to as the "Distribution Date"), (x) the Rights
will be evidenced (subject to the provisions of paragraph (b) of
this Section 3) by the certificates for Common Shares registered
in the names of the holders thereof (which certificates shall also
be deemed to be Right Certificates) and not by separate Right
Certificates, and (y) the right to receive Right Certificates will
be transferable only in connection with the transfer of Common
Shares. As soon as practicable after the Distribution Date, the
Rights Agent will send, by first-class, insured, postage-prepaid
mail, to each record holder of Common Shares as of the close of
business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right for each Common Share so held.
As of the Distribution Date, the Rights will be evidenced solely
by such Right Certificates.
(b) On July 10, 1986 or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights to
Purchase Preferred Shares, in substantially the form attached
hereto as Exhibit C (the "Summary of Rights"), by first-class,
postage-prepaid mail, to each record holder of Common Shares as of
the close of business on July 10, 1986, at the address of such
holder shown on the records of the Company. With respect to
certificates for Common Shares outstanding as of July 10, 1986,
until the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof
together with a copy of the Summary of Rights. Until the
Distribution Date (or the earlier of the Redemption Date or Final
<PAGE>
Expiration Date (as such terms are defined in Section 7 hereof)),
the surrender for transfer of any certificate for Common Shares
outstanding on July 10, 1986, with or without a copy of the
Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Common Shares
represented thereby.
(c) Certificates for Common Shares issued after
July 10, 1986 but prior to the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such terms
are defined in Section 7) shall have impressed on, printed on,
written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights
Agreement between Mosinee Paper Corporation and M&I
Marshall & Ilsley Bank, dated as of June 26, 1986 (the
"Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is
on file at the principal executive offices of Mosinee
Paper Corporation. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be
evidenced by this certificate. Mosinee Paper
Corporation will mail to the holder of this certificate
a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain
circumstances, Rights beneficially owned by Acquiring
Persons (as defined in the Rights Agreement) may become
null and void.
With respect to such certificates containing the foregoing legend,
until the Distribution Date, the Rights associated with the Common
Shares represented by such certificates shall be evidenced by such
certificates alone, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase Preferred
Shares and of assignment to be printed on the reverse thereof)
shall be substantially the same as Exhibit B hereto and may have
such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 22 hereof, the Right
Certificates, whenever issued, which are issued in respect of
Common Shares which were issued and outstanding as of July 10,
1986, shall be dated as of July 10, 1986, and all Right
Certificates which are issued in respect of other Common Shares
shall be dated as of the respective dates of issuance of such
Common Shares, and in each such case on their face shall entitle
the holders thereof to purchase such number of Preferred Shares as
shall be set forth therein at the price per Preferred Share set
forth therein (the "Purchase Price"), but the number of such Pre-
ferred Shares and the Purchase Price shall be subject to
adjustment as provided herein.
<PAGE>
Section 5. Countersignature and Registration. The
Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its President or any Executive Vice
President, Senior Vice President or Vice President, and by the
Secretary, an Assistant Secretary, Treasurer or an Assistant
Treasurer of the Company, either manually or by facsimile
signature, and have affixed thereto the Company's seal or a
facsimile thereof. The Right Certificates shall not be valid for
any purpose unless countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall
cease to be such officer of the Company before counter-signature
by the Rights Agent and issuance and delivery by the Company, such
Right Certificates, nevertheless, may be countersigned by the
Rights Agent, and issued and delivered by the Company with the
same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and
any Right Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal offices, books for
registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights
evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange
of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. Subject to the provisions of Section 14 hereof, at
any time after the close of business on the Distribution Date, and
at or prior to the close of business on the earlier of the
Redemption Date or the Final Expiration Date (as such terms are
defined in Section 7 hereof), any Right Certificate or Right
Certificates may be transferred, split up, combined or exchanged
for another Right Certificate or Right Certificates, entitling the
registered holder to purchase a like number of Preferred Shares as
the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring
to transfer, split up, combine or exchange any Right Certificate
shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to
be transferred, split up, combined or exchanged at the principal
office of the Rights Agent in Milwaukee, Wisconsin. Thereupon the
Rights Agent shall countersign and deliver to the person entitled
thereto a Right Certificate or Right Certificates, as the case may
be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or
exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
<PAGE>
satisfactory to them, and, at the Company's request, reimbursement
to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company
will make and deliver a new Right Certificate of like tenor to the
Rights Agent for delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights: Purchase Price;
Expiration Date of Rights. (a) The registered holder of any
Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part at any
time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse
side thereof duly executed, to the Rights Agent at the principal
office of the Rights Agent in Milwaukee, Wisconsin, together with
payment of the Purchase Price for each Preferred Share as to which
the Rights are exercised, at or prior to the close of business on
the earlier of (i) the close of business on July 10, 1996 (the
"Final Expiration Date"), or (ii) the date on which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date").
(b) The Purchase Price for each one one-hundredth of a
Preferred Share pursuant to the exercise of a Right shall
initially be $60, shall be subject to adjustment from time to time
as provided in Sections 11 and 13 hereof and shall be payable in
lawful money of the United States of America in accordance with
paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the
shares to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 in cash, or by certified
check or cashier's check payable to the order of the Company, the
Rights Agent shall thereupon promptly (i) requisition from any
transfer agent of the Preferred Shares certificates for the number
of Preferred Shares to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such
requests, (ii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of issuance of fractional shares
in accordance with Section 14, (iii) promptly after receipt of
such certificates, cause the same to be delivered to or upon the
order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, promptly deliver
such cash to or upon the order of the registered holder of such
Right Certificate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14
hereof.
<PAGE>
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose
of exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered
to the Rights Agent for cancellation or in cancelled form, or, if
surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Rights
Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel
and retire, any other Right Certificate purchased or acquired by
the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Right Certificates to the Com-
pany, or shall, at the written request of the Company, destroy
such cancelled Right Certificates, and in such case shall deliver
a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred
Shares. The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued
Preferred Shares or any Preferred Shares held in its treasury, the
number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights.
So long as the Preferred Shares issuable upon the
exercise of Rights may be listed on any national securities
exchange, the Company shall use its best efforts to cause, from
and after such time as the Rights become exercisable, all shares
reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise.
The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Preferred
Shares delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such Preferred Shares (subject to
payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable (except to the extent
provided by Section 180.40(6) of the Wisconsin Business
Corporation Law) shares.
The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer
taxes and charges which may be payable in respect of the issuance
or delivery of the Right Certificates or of any Preferred Shares
upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect
of any transfer or delivery of Right Certificates to a person
other than, or the issuance or delivery of certificates for the
Preferred Shares in a name other than that of, the registered
holder of the Right Certificate evidencing Rights surrendered for
exercise or to issue or deliver any certificates for Preferred
Shares upon the exercise of any Rights until any such tax shall
have been paid (any such tax being payable by the holder of such
Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
<PAGE>
Section 10. Preferred Shares Record Date. Each person
in whose name any certificate for Preferred Shares is issued upon
the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares represented
thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Preferred
Shares transfer books of the Company are closed, such person shall
be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding business day
on which the Preferred Shares transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights
of a holder of Preferred Shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase price, Number of
Shares or Number of Rights. The Purchase Price, the number of
Preferred Shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the
Preferred Shares payable in Preferred Shares, (B) subdivide the
outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares into a smaller number of Preferred Shares or (D)
issue any shares of its capital stock in a reclassification of the
Preferred Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is
the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at
the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date,
shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if
such Right had been exercised immediately prior to such date and
at a time when the Preferred Shares transfer books of the Company
were open, he would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would
require an adjustment under both Section 11(a)(i) and Section
11(a)(ii), the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).
(ii) In the event
(A) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after the
date of this Agreement, directly or indirectly, (1)
<PAGE>
shall merge into the Company or otherwise combine with
the Company and the Company shall be the continuing or
surviving corporation of such merger or combination and
the Common Shares of the Company shall remain
outstanding and not changed into or exchanged for stock
or other securities of any other Person or the Company
or cash or any other property, (2) shall, in one or more
transactions, other than in connection with the exercise
of Rights or in connection with the exercise or
conversion of securities exchangeable or convertible
into capital stock of the Company or any of its
Subsidiaries, transfer any assets to the Company or any
of its Subsidiaries in exchange (in whole or in part)
for shares of any class of capital stock of the Company
or any of its Subsidiaries or for securities exercisable
for or convertible into shares of any class of capital
stock of the Company or any of its Subsidiaries or
otherwise obtain from the Company or any of its
Subsidiaries, with or without consideration, any
additional shares of any class of capital stock of the
Company or any of its Subsidiaries or securities
exercisable for or convertible into shares of any class
of capital stock of the Company or any of its
Subsidiaries (other than as part of a pro rata
distribution to all holders of such shares of any class
of capital stock of the Company or any of its
Subsidiaries), (3) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise
dispose (in one or more transactions), to, from, with or
of, as the case may be, the Company or any of its
subsidiaries, assets (including securities) on terms and
conditions less favorable to the Company than the
Company would be able to obtain in arm's-length
negotiation with an unaffiliated third party, (4) shall
receive any compensation from the Company or any of the
Company's Subsidiaries other than compensation for
full-time employment as a regular employee at rates in
accordance with the Company's (or its Subsidiaries')
past practices, or (5) shall receive the benefit,
directly or indirectly (except proportionately as a
shareholder), of any loans, advances, guarantees,
pledges or other financial assistance or any tax credits
or other tax advantage provided by the Company or any of
its Subsidiaries, or
(B) during such time as there is an Acquiring
Person, there shall be any reclassification of
securities (including any reverse stock split), or
recapitalization of the Company, or any merger or
consolidation of the Company with any of its
Subsidiaries or any other transaction or series of
transactions involving the Company or any Subsidiaries
of the Company (whether or not with or into or otherwise
involving an Acquiring Person) which has the effect,
directly or indirectly, of increasing by more than 1%
the proportionate share of the outstanding shares of any
class of equity securities or of securities exercisable
for or convertible into securities of the Company or any
of its Subsidiaries which is directly or indirectly
<PAGE>
owned by any Acquiring Person or any Associate or
Affiliate of any Acquiring Person,
then, and in each such case, proper provision shall be made so
that each holder of a Right, except as provided below, shall
thereafter have a right to receive, upon exercise thereof at the
then current Purchase Price in accordance with the terms of this
Agreement, in lieu of Preferred Shares, such number of Common
Shares as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the then number of one
one-hundredths of a Preferred Share for which a Right is then
exercisable and dividing that product by (y) 50% of the current
per share market price of the Common Shares (determined pursuant
to Section 11(d)) on the fifth day after the earlier of the date
of the occurrence or the date of the first public announcement of
any one of the events listed above in this subparagraph (ii);
provided, however, that if the transaction that would otherwise
give rise to the foregoing adjustment is also subject to the
provisions of Section 13 hereof then only the provisions of
Section 13 hereof shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii). Notwithstanding the
foregoing, upon the occurrence of any of the events listed above
in this subparagraph (ii), any Rights that are or were on or after
the earlier of the Distribution Date or Shares Acquisition Date
beneficially owned by an Acquiring Person (or any Associate or
Affiliate of such Acquiring Person) shall become void and any
holder of such Rights shall thereafter have no right to exercise
such Rights under any provision of this Agreement. The Company
shall not enter into any transaction of the kind listed in this
subparagraph (ii) if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any
agreements or arrangements which, as a result of the consummation
of such transaction, would eliminate or otherwise substantially
diminish the benefits intended to be afforded by the Rights. Any
Right Certificate issued pursuant to Section 3 that represents
Rights beneficially owned by an Acquiring Person or any Associate
or Affiliate thereof and any Right Certificate issued at any time
upon the transfer of any Rights to an Acquiring Person or any
Associate or Affiliate thereof or to any nominee of such Acquiring
Person, Associate or Affiliate, and any Right Certificate issued
pursuant to Section 6 or Section 11 upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred
to in this sentence, shall contain the following legend:
The Rights represented by this Right Certificate were
issued to a Person who was an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). This
Right Certificate and the Rights represented hereby may
become void in the circumstances specified in Section
11(a)(ii) of the Rights Agreement.
(iii) In the event that there shall not be
sufficient Common Shares issued but not outstanding or authorized
but unissued to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the Company shall
take all such action as may be necessary to authorize additional
Common Shares for issuance upon exercise of the Rights.
<PAGE>
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of
Preferred Shares entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase
Preferred Shares (or shares having the same rights, privileges and
preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or
equivalent preferred share (or having a conversion price per
share, if a security convertible into Preferred Shares or
equivalent preferred shares) less than the current per share
market price of the Preferred Shares (as defined in Section 11(d))
on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred
Shares which the aggregate offering price of the total number of
Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such
current market price and the denominator of which shall be the
number of Preferred Shares outstanding on such record date plus
the number of additional Preferred Shares and/or equivalent
preferred shares to be offered for subscription or purchase (or
into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be
paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with
the Rights Agent. Preferred Shares owned by or held for the
account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and in the
event that such rights or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of the Preferred Shares
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness or assets (other than a
regular quarterly cash dividend or a dividend payable in Preferred
Shares) or subscription rights or warrants (excluding those
referred to in Section 11(b)), the Purchase Price to be in effect
after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by
a fraction, the numerator of which shall be the current per share
market price of the Preferred Shares (as defined in Section 11(d))
on such record date, less the fair market value (as determined in
good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights
or warrants applicable to one Preferred Share and the denominator
of which shall be such current per share market price of the
<PAGE>
Preferred Shares. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if
such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder,
the "current per share market price" of the Common Shares on any
date shall be deemed to be the average of the daily closing prices
per share of such Common Shares for the 30 consecutive Trading
Days (as such term is hereinafter defined) immediately prior to
such date; provided, however, that in the event that the current
per share market price of the Common Shares is determined during a
period following the announcement by the issuer of such Common
Shares of a dividend or distribution on such Common Shares payable
in such Common Shares or securities convertible into such Common
Shares, and prior to the expiration of 30 Trading Days after the
ex-dividend date for such dividend or distribution, then, and in
each such case, the current market price shall be appropriately
adjusted to reflect the current market price per Common Share
equivalent. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the
Common Shares are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Common
Shares are listed or admitted to trading or, if the Common Shares
are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or such
other system then in use, or, if on any such date the Common
Shares are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market
maker making a market in the Common Shares selected by the Board
of Directors of the Company. The term "Trading Day" shall mean a
day on which the principal national securities exchange on which
the Common Shares are listed or admitted to trading is open for
the transaction of business or, if the Common Shares are not
listed or admitted to trading on any national securities exchange,
a Monday, Tuesday, Wednesday, Thursday or Friday on which banking
institutions in the State of New York are not authorized or
obligated by law or executive order to close.
(ii) For the purpose of any computation hereunder,
the "current per share market price" of the Preferred Shares shall
be determined in the same manner as set forth above for Common
Shares in clause (i) of this Section 11(d). If the current per
share market price of the Preferred Shares cannot be determined in
the manner provided above, the "current per share market price" of
the Preferred Shares shall be conclusively deemed to be the
current per share market price of the Common Shares (appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one
<PAGE>
hundred. If neither the Common Shares nor the Preferred Shares
are publicly held or so listed or traded, "current per share
market price" shall mean the fair value per share as determined in
good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent.
(e) No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest
ten-thousandth of a Common Share or one-millionth of a Preferred
Share as the case may be. Notwithstanding the first sentence of
this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years from
the date of the transaction which requires such adjustment or (ii)
the date of the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to
Section 11(a), the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the
Company other than Preferred Shares, thereafter the number of such
other shares so receivable upon exercise of any Right shall be
subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect
to the shares contained in Section 11(a) through (c), inclusive,
and the provisions of Sections 7, 9, 10 and 13 with respect to the
Preferred Shares shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase
Price, the number of Preferred Shares purchasable from time to
time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of the
Purchase Price as a result of the calculations made in Section
11(b) and (c), each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price per one one-hundredth of
a Preferred Share, that number of one one-hundredths of a
Preferred Share (calculated to the nearest one-millionth of a
Preferred Share) obtained by (i) multiplying (x) the number of one
one-hundredths of a Preferred Share covered by a Right immediately
prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in
effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights,
in substitution for any adjustment in the number of Preferred
Shares purchasable upon the exercise of a Right. Each of the
<PAGE>
Rights outstanding after such adjustment of the number of Rights
shall be exercisable for the number of one one-hundredths of a
Preferred Share for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company
shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later
than the date of the public announcement. If Right Certificates
have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at
the option of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment,
and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall
be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in this
manner provided for herein and shall be registered in the names of
the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one-hundredths of a Preferred
Share issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to
express the Purchase Price per one one-hundredth of a share and
the number of shares which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below one one-hundredth of
the then par value, if any, of the Preferred Shares issuable upon
exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid
and nonassessable (except to the extent provided by Section
180.40(6) of the Wisconsin Business Corporation Law) Preferred
Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuing to the holder of
any Right exercised after such record date of the Preferred Shares
and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Preferred Shares
and other capital stock or securities of the Company, if any,
<PAGE>
issuable upon such exercise on the basis of the Purchase Price in
effect prior to such adjustment; provided, however, that the
Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive
such additional shares upon the occurrence of the event requiring
such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent that
it in its sole discretion shall determine to be advisable in order
that any consolidation or subdivision of the Preferred Shares,
issuance wholly for cash of any of Preferred Shares at less than
the current market price, issuance wholly for cash of Preferred
Shares or securities which by their terms are convertible into or
exchangeable for Preferred Shares, dividends on Preferred Shares
payable in Preferred Shares or issuance of rights, options or
warrants referred to hereinabove in subsection (b) of this Section
11, hereafter made by the Company to holders of its Preferred
Shares shall not be taxable to such shareholders.
(n) In the event that at any time after the date of
this Agreement and prior to the Distribution Date, the Company
shall (i) declare or pay any dividend on the Common Shares payable
in Common Shares or (ii) effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares) into a
greater or lesser number of Common Shares, then in any such case
(x) the number of one one-hundredths of a Preferred Share
purchasable after such event upon proper exercise of each Right
shall be determined by multiplying the number of one
one-hundredths of a Preferred Share so purchasable immediately
prior to such event by a fraction, the numerator of which is the
number of Common Shares outstanding immediately before such event
and the denominator of which is the number of Common Shares
outstanding immediately after such event and (y) action shall be
taken such that each Common Share outstanding immediately after
such event shall have issued with respect to it that number of
Rights which each Common Share outstanding immediately prior to
such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively
whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected. If an
event occurs which would require an adjustment under Section
11(a)(ii) and this Section 11(n), the adjustments provided for in
this Section 11(n) shall be in addition and prior to any
adjustment required pursuant to Section 11(a)(ii).
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in
Sections 11 and 13 hereof, the Company shall (a) promptly prepare
a certificate setting forth such adjustment, and a brief statement
of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the Common
Shares and the Preferred Shares a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right Certificate
in accordance with Section 25 hereof.
<PAGE>
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power. In the event, directly or indirectly,
(a) the Company shall consolidate with, or merge with and into,
any other Person (other than any employee benefit plan of the
Company, or any entity holding Common Shares for or pursuant to
the terms of any such plan), (b) any Person (other than any
employee benefit plan of the Company, or any entity holding Common
Shares for or pursuant to the terms of any such plan) shall
consolidate with the Company, or merge with and into the Company
and the Company shall be the continuing or surviving corporation
of such merger and, in connection with such merger, all or part of
the Common Shares shall be changed into or exchanged for stock or
other securities of any other Person (or the Company) or cash or
any other property, or (c) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets or
earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to
any other Person other than the Company or one or more of its
wholly-owned Subsidiaries, then, and in each such case, proper
provision shall be made so that (i) each holder of a Right (except
as otherwise provided herein) shall thereafter have the right to
receive, upon the exercise thereof at the then current Purchase
Price in accordance with the terms of this Agreement, such number
of Common Shares of such other Person (including the Company as
successor thereto or as the surviving corporation) as shall be
equal to the result obtained by (X) multiplying the then current
Purchase Price by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable (without taking into
account any adjustment previously made pursuant to Section
11(a)(ii)) and dividing that product by (Y) 50% of the current per
share market price of the Common Shares of such other Person
(determined pursuant to Section 11(d)) on the date of consummation
of such consolidation, merger, sale or transfer; (ii) the issuer
of such Common Shares shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale or transfer,
all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be deemed to
refer to such issuer; and (iv) such issuer shall take such steps
(including, but not limited to, the reservation of a sufficient
number of shares of its Common Shares in accordance with Section
9) in connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to the shares of its
Common Shares thereafter deliverable upon the exercise of the
Rights. The Company shall not enter into any transaction of the
kind referred to in this Section 13 if at the time of such
transaction there are any rights, warrants, instruments or
securities outstanding or any agreements or arrangements which, as
a result of the consummation of such transaction, would eliminate
or otherwise substantially diminish the benefits intended to be
afforded by the Rights. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the
Company and such issuer shall have executed and delivered to the
Rights Agent a supplemental agreement so providing. The
provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.
<PAGE>
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there shall
be paid to the registered holders of the Right Certificates with
regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this
Section 14(a), the current market value of a whole Right shall be
the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker
making a market in the Rights selected by the Board of Directors
of the Company. If on any such date no such market maker is
making a market in the Rights the fair value of the Rights on such
date as determined in good faith by the Board of Directors of the
Company shall be used.
(b) The Company shall not be required to issue
fractions of Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share) upon
exercise of the Rights or to distribute certificates which
evidence fractional Preferred Shares (other than fractions which
are integral multiples of one one-hundredth of a Preferred Share).
Fractions of Preferred Shares in integral multiples of one
one-hundredth of a Preferred Share may, at the election of the
Company, be evidenced by depositary receiPts, pursuant to an
appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that
the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares. In lieu of fractional
Preferred Shares that are not integral multiples of one
one-hundredth of a Preferred Share, the Company shall pay to the
registered holders of Right Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one Preferred Share.
For purposes of this Section 14(b), the current market value of a
Preferred Share stall be the closing price of a Preferred Share
(as determined pursuant to the second sentence of Section 11(d))
for the Trading Day immediately prior to the date of such
exercise.
<PAGE>
(c) The holder of a Right by the acceptance of the
Rights expressly waives his right to receive any fractional Rights
or any fractional shares upon exercise of a Right.
Section 15. Rights of Action. All rights of action in
respect of this Agreement, excepting the rights of action given to
the Right Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate
(or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any
other Right Certificate (or, prior to the Distribution Date, of
the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such
Right Certificate in the manner provided in such Right Certificate
and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be
entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the
obligations of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder
of a Right, by accepting the same, consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common
Shares;
(b) after the Distribution Date, the Right Certificates
are transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent in
Milwaukee, Wisconsin, duly endorsed or accompanied by a proper
instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat
the person in whose name the Right Certificate (or, Prior to the
Distribution Date, the associated Common Shares certificate) is
registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Right Certificate shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of the Preferred Shares or any other securities
of the Company which may at any time be issuable on the exercise
of the Rights represented thereby, nor shall anything contained
heroin or in any Right Certificate be construed to confer upon the
<PAGE>
holder of any Right Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in Section 24), or to
receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by such Right Certificate shall have
been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company
agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, it's reasonable expenses and counsel
fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of
its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything
done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of liability in
the premises.
The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or
omitted by it in connection with, its administration of this
Agreement in reliance upon any Right Certificate or certificate
for the Preferred Shares or Common Shares or for other securities
of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper person or
persons, or otherwise upon the advice of its counsel as set forth
in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name
of Rights Agent. Any corporation into which the Rights Agent or
any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided
that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21. In
case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates
shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the
<PAGE>
successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall
be changed and at such time any of the Right Certificates shall
have been countersigned but not delivered, the Rights Agent may
adopt the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of the
Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior
name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their acceptance
thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted
by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the
Company prior to taking or suffering any action hereunder, such
fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved
and established by a certificate signed by any one of the Chairman
of the Board, the President, any Vice President, the Treasurer or
the Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it Under
the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the
Company and any other Person only for its own negligence, bad
faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in
this Agreement or in the Right Certificates (except its
countersignature thereof) or be required to verify the same, but
all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by
the Rights Agent) or in respect of the validity or execution of
any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right
<PAGE>
Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void
pursuant to Section 11(a)(ii) hereof) or any adjustment in the
terms of the Rights (including the manner, method or amount
thereof) provided for in Sections 3, 11, 13 or 23, or the
ascertaining of the existence of facts that would require any such
change or adjustment (except with respect to the exercise of Right
evidenced by Right Certificates after actual notice that such
change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any Preferred Shares to be
issued pursuant to this Agreement or any Right Certificate or as
to whether any Preferred Shares will, when issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of its
duties hereunder from any one of the Chairman of the Board, the
President, any Vice President, the Secretary or the Treasurer of
the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be
liable for any action taken or suffered to be taken by it in good
faith in accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder, director,
officer or employee of the Rights Agent may buy, sell or deal in
any of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may
be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(i) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act,
default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent
or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common
Shares and Preferred Shares by registered or certified mail, and
to the holders of the Right Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent
upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer
<PAGE>
agent of the Common Shares and Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any
Right Certificate may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall
be a corporation organized and doing business under the laws of
the United States or of a state of the United States, in good
standing, having a principal office in the State of New York,
Illinois or Wisconsin, which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or
examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with
the predecessor Rights Agent and each transfer agent of the Common
Shares and Preferred Shares, and mail a notice thereof in writing
to the registerer holders of the Right Certificates. Failure to
give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Right Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price per share and the number or kind or
class of shares or other securities or property purchasable under
the Right Certificates made in accordance with the provisions of
this Agreement.
Section 23. Redemption. (a) The Board of Directors of
the Company may, at its option, at any time prior to such time as
any Person becomes an Acquiring Person redeem all but not less
than all the then outstanding Rights at a redemption price of $.05
per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the
"Redemption Price").
(b) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights,
<PAGE>
and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the
Redemption Price. Within 10 days after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall
give notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to all such holders at
their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry
books of the Transfer Agent for the Common Shares. Any notice
which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the payment of
the Redemption Price will be made. Neither the Company nor any of
its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that
specifically set forth in this Section 23, and other than in
connection with the purchase of Common Shares prior to the
Distribution Date.
Section 24. Notice of Certain Events. In case the
Company shall propose (a) to pay any dividend payable in stock of
any class to the holders of its Preferred Shares or to make any
other distribution to the holders of its Preferred Shares (other
than a regular quarterly cash dividend) or (b) to offer to the
holders of its Preferred Shares rights or warrants to subscribe
for or to purchase any additional Preferred Shares or shares of
stock of any class or any other securities, rights or options, or
(c) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of
outstanding Preferred Shares), or (d) to effect any consolidation
or merger into or with, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one or more transactions, of more than 50%
of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other Person, or (e) to effect the
liquidation, dissolution or winding up of the Company, then, in
each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 25 hereof, a notice of
such proposed action, which shall specify the record date for the
purposes of such stock dividend, or distribution of rights or
warrants, or the date on which such reclassification, con-
solidation, merger, sale, transfer, liquidation, dissolution, or
winding up is to take place and the date of participation therein
by the holders of the Common Shares and/or Preferred Shares, if
any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (a) or (b) above at least
20 days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and in the case of
any such other action, at least 20 days prior to the date of the
taking of such proposed action or the date of participation
therein by the holders of the Common Shares and/or Preferred
Shares, whichever shall be the earlier.
In case any of the events set forth in Section 11(a)(ii)
of this Agreement shall occur, then, in any such case, the Company
shall as soon as practicable thereafter give to each holder of a
Right Certificate, in accordance with Section 25 hereof, A notice
of the occurrence of such event, which shall specify the event and
<PAGE>
the consequences of the event to holders of Rights under Section
11(a)(ii) hereof.
Section 25. Notices. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Mosinee Paper Corporation
1244 Kronenwetter Drive
Mosinee, Wisconsin 54455
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Right Certificate to or on the
Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
M&I Marshall & Ilsley Bank
__________________________
Milwaukee, Wisconsin
Attention: ______________
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any Right
Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the
address of such holder as shown on the registry books of the
Company.
Section 26. Supplements and Amendments. The Company
and the Rights Agent may from time to time supplement or amend
this Agreement without the approval of any holders of Right
Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective
or inconsistent with any other provisions herein, or to make any
other provisions in regard to matters or questions arising
hereunder, which the Company and the Rights Agent may deem
necessary or desirable, including but not limited to extending the
Final Expiration Date and, provided that at the time of such
amendment there is no Acquiring Person, the period of time during
which the Rights may be redeemed, and which shall not adversely
affect the interests of the holders of Right Certificates.
Section 27. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 28. Benefits of this Agreement. Nothing in
this Agreement shall be construed to give to any person or
corporation other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the
<PAGE>
Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Shares).
Section 29. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 30. Governing Law. This Agreement and each
Right Certificate issued hereunder shall be deemed no be a
contract made under the laws of the State of Wisconsin and for all
purposes shall be governed by and construed in accordance with the
laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 31. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.
Section 32. Descriptive Headings. Descriptive headings
of the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year
first above written.
MOSINEE PAPER CORPORATION
Attest:
By:___________________________ By:___________________________
Title: Title:
M&I MARSHALL & ILSLEY BANK
Attest:
By:___________________________ By:___________________________
Title: Title:
<PAGE>
Exhibit A
---------
FORM OF
CERTIFICATE OF AMENDMENT
of
RESTATED ARTICLES OF INCORPORATION
of
MOSINEE PAPER CORPORATION
It is hereby certified that:
1. The name of the corporation (hereinafter called the
"Corporation") is Mosinee Paper Corporation.
2. The following resolution has been adopted by the
Board of Directors pursuant to Section 180.12 of the Wisconsin
Business Corporation Act:
RESOLVED, that pursuant to the authority granted to and
vested in the Board of Directors of this Corporation (hereinafter
called the "Board of Directors" or the "Board") in accordance with
the provisions of the Corporation's Restated Articles,of
Incorporation; as amended, the Board of Directors hereby creates a
series of Preferred Stock, par value $1.00 per share, of the
Corporation and hereby states the designation and number of
shares, and fixes the relative rights, preferences, and
limitations thereof (in addition to the provisions set forth in
the Restated Articles of Incorporation of the Corporation, which
are applicable to the Preferred Stock of all classes and series)
as follows, so that Article 4(a) of the Corporation's Restated
Articles of Incorporation be, and it hereby is, amended by
inserting therein the following Section 6 immediately preceding
Article 4(b):
6. Preferred Stock-Series A:
A. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred
Stock" (the "Series A Preferred Stock") and the number of shares
constituting such series shall be 150,000. Such number of shares
may be increased or decreased by resolution of the Board of
Directors; provided, that no decrease shall reduce the number of
shares of Series A Preferred Stock to a number less than that of
the shares then outstanding.
B. Dividends and Distributions.
---------------------------
(I) Subject to the prior and superior rights of the
holders of any shares of any series of capital stock of the
<PAGE>
Corporation ranking prior and superior to the shares of
Series A Preferred Stock with respect to dividends, the
holders of shares of Series A Preferred Stock, in preference
to the holders of Common Stock and of any other junior stock,
shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first day
of March, June, September and December in each year (each
such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of
(a) $5 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share
amount of all cash dividends, and 100 times the aggregate per
share amount (payable in kind) of all non-cash dividends or
other distributions, other than a dividend payable in shares
of Common Stock, par value $2.50 per share, of the
Corporation (the "Common Stock") or a subdivision of the
outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or,
with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share
of Series A Preferred Stock. In the event the Corporation
shall at any time declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in
each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to
such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(II) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in
paragraph (I) of this Section 6(B) immediately after it
declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $5
per share on the Series A ?referred Stock shall nevertheless
be payable on such subsequent Quarterly Dividend Payment
Date.
(III) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series A Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of
issue of such shares of Series A Preferred Stock, unless the
date of issue of such shares is prior to the record date for
<PAGE>
the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of shares of Series A
Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of
which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall he allocated
pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date
shall be not more than 60 days prior to the date fixed for
the payment thereof.
C. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(I) Each share of Series A Preferred Stock shall
entitle the holder thereof to 100 votes on all matters
submitted to a vote of the shareholders of the Corporation.
In the event the Corporation shall at any time declare or pay
any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the number of
votes per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction
the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(II) Except as otherwise provided herein or by law, the
holders of shares of Series A Preferred Stock and the holders
of shares of Common Stock shall vote together as one class on
all matters submitted to a vote of shareholders of the
Corporation.
(III) Except as set forth herein, holders of Series A
Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
D. Certain Restrictions.
--------------------
(I) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as
provided in Section B are in arrears, thereafter and until
<PAGE>
all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation
shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise
acquire for consideration any shares of stock ranking
junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution
or winding up) with the Series A Preferred Stock, except
dividends paid ratably on the Series A Preferred Stock
and all such parity stock on which dividends are payable
or in arrears in proportion to the total amounts to
which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either
as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, provided
that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv) purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or
any shares of stock ranking on a parity with the Series
A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined
by the Board of Directors) to all holders of such shares
upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates
and other relative rights and preferences of the
respective series and classes, shall determine in good
faith will result in fair and equitable treatment among
the respective series or classes.
(II) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless
the Corporation could, under paragraph (I) of this Section D
purchase or otherwise acquire such shares at such time and in
such manner.
E. Reacquired Shares. Any shares of Series A
Preferred Stock purchased or otherwise acquired by the Corporation
in any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred
Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance
set forth herein.
<PAGE>
F. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock
shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or
not declared, to the date of such payment, provided that the
holders of shares of Series A Preferred Stock shall be entitled to
receive an aggregate amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 100 times the
aggregate amount to be distributed per share to holders of Common
Stock, or (2) to the holders of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except distributions made
ratably on the Series A Preferred Stock and all other such parity
stock in proportion to the total amounts to which the holders of
all such shares are entitled upon such liquidation, dissolution or
winding up. In the event the Corporation shall at any time
declare or pay any dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then in each such case the aggregate amount to
which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of
the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
G. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case the shares
of Series A Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to the
aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for
which each share of Common Stock is changed or exchanged. In the
event the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of
shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such
event.
<PAGE>
H. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
I. Amendment. The Restated Articles of Incorporation,
as amended, of the Corporation shall not be amended in any manner
which would materially alter or change the powers, preferences or
special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series A Preferred
Stock, voting together as a single series.
3. Said resolution is the resolution duly adopted by
the Board of Directors of the Corporation on June 26, 1986,
pursuant to authority granted under Section 180.12 of the
Wisconsin Business Corporation Act.
4. The Restated Articles of Incorporation are amended
so that the designation and number of shares of the class and
series acted upon in the foregoing resolution, and the relative
rights, preferences and limitations of such class and series, are
as stated in the resolution.
IN WITNESS WHEREOF, this Certificate of Amendment of the
Restated Articles of Incorporation is executed on behalf of the
Corporation by its President and its Secretary, and sealed with
the seal of the Corporation, on this _____th day of June, 1986.
MOSINEE PAPER CORPORATION
By:_________________________________
James L. Kemerling
[SEAL] President and
Chief Executive Officer
By:______________________________
Daniel G. Briner
Vice President-Finance,
Secretary and Treasurer
<PAGE>
Exhibit B
---------
[Form of Right Certificate]
Certificate No. R- _________ Rights
NOT EXERCISABLE AFTER JULY 10, 1996 OR EARLIER IF NOTICE
OF REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.05 PER RIGHT ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES,
RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS (AS
DEFINED IN SECTION 11(a)(ii) OF THE RIGHTS AGREEMENT) OR
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND
VOID. [THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE
WERE ISSUED TO A PERSON WHO WAS AN ACQUIRING PERSON OR
AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). THIS
RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION
11(a)(ii) OF THE RIGHTS AGREEMENT.]*
* The portion of the legend in brackets shall be inserted
only if applicable.
Right Certificate
Mosinee Paper Corporation
This certifies that ________________, or registered
assigns, is the registered owner of the number of Rights set forth
above, each of which entitles the owner thereof, subject to the
terms, provisions and conditions of the Rights Agreement dated as
of June 26, 1986 (the "Rights Agreement") between Mosinee Paper
Corporation, a Wisconsin corporation (the "Company"), and M&I
Marshall & Ilsley Bank (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 P.M. (New York
City time) on July 10, 1996 at the principal office of the Rights
Agent in Milwaukee, Wisconsin, or at the office of its successors
as Rights Agent, one one-hundredth of a fully paid non-assessable
(except to the extent provided by Section 180.40(6) of the
Wisconsin Business Corporation Law) share of Series A Junior
Participating Preferred Stock, par value $1.00 per share (the "
Preferred Shares"), of the Company, at a purchase price of $60 per
one one-hundredth of a Preferred Share (the "Purchase Price"),
upon presentation and surrender of this Right Certificate with the
Form of Election to Purchase duly executed. The number of Rights
evidenced by this Right Certificate (and the number of one
one-hundredths of a Preferred Share which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per one
one-hundredth of a share set forth above, are the number and
Purchase Price as of June 26, 1986, based on the Preferred Shares
as constituted at such date.
<PAGE>
As provided in the Rights Agreement, the Purchase Price
and the number of one one-hundredths of a Preferred Share which
may be purchased upon the exercise of the Rights evidenced by this
Right Certificate are subject to modification and adjustment upon
the happening of certain events.
The, Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Right Certificates. Copies of the Rights Agreement are on file at
the principal executive offices of the Company and the
above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the Rights
Agent, may be exchanged for another Right Certificate& or Right
Certificate&s of like tenor and date evidencing Rights entitling
the holder to purchase a like aggregate number of Preferred Shares
as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part,
the holder shall be entitled to receive upon surrender hereof
another Right Certificate or Right Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may, but are not required to,
be redeemed by the Company at a redemption price of $.05 per
Right.
No fractional Preferred Shares (other than fractions
which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by
depositary receipts) will be issued upon the exercise of any Right
or Rights evidenced hereby, but in lieu thereof a cash payment
will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder
of the Preferred Shares or of any other securities of the Company
which may at any time be issuable on the exercise hereof, nor
shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the
rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or, to receive notice of meetings
or other actions affecting shareholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights,
or otherwise, until the Right on Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights
Agreement.
<PAGE>
This Right Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the
Rights Agent.
WITNESS the facsimile signature of the proper officers
of the Company and its corporate seal. Dated as of July 10, 1986.
ATTEST: MOSINEE PAPER CORPORATION
______________________________ By:____________________________
Secretary President and
Chief Executive Officer
Countersigned:
M&I MARSHALL & ILSLEY BANK
By:___________________________
[Authorized Signature]
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED ____________________________________
hereby sells, assigns and transfers unto ________________________
_________________________________________________________________
(Please print name and address of transferee)
_________________________________________________________________
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint ____________________ Attorney, to transfer the within
Right Certificate on the books of the within-named Company, with
full power of substitution.
Dated: ___________________, 19__
____________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United
States.
- - -----------------------------------------------------------------
(To be completed if applicable)
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring
Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement).
____________________________________
Signature
<PAGE>
- - -----------------------------------------------------------------
[Form of Reverse Side of Right Certificate -- continued]
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate.)
To: MOSINEE PAPER CORPORATION:
The undersigned hereby irrevocably elects to exercise
___________________________ Rights represented by this Right
Certificate to purchase the Preferred Shares issuable upon the
exercise of such Rights and requests that certificates for such
Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance
remaining of such Rights shall be registered in the name of and
delivered to:
Please insert social security
or other identifying number
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
Dated: _____________________, 19__
___________________________________
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this Right
Certificate in every particular,
without alteration or enlargement or
any change whatsoever)
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United
States.
<PAGE>
[Form of Reverse Side of Right Certificate -- Continued]
- - -----------------------------------------------------------------
(To be completed if applicable)
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring
Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement).
____________________________________
Signature
- - -----------------------------------------------------------------
NOTICE
------
The signatures in the foregoing Forms of Assignment and
Election must correspond to the name as written upon the face of
this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above in the
Forms of Assignment and Election is not completed, the Company
will deem the beneficial owner of the Rights evidenced by this
Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and, in the
case of an Assignment, will affix a legend to that effect on any
Right Certificates issued in exchange for this Rights Certificate.
<PAGE>
Exhibit C
---------
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On June 26, 1986, the Board of Directors of Mosinee
Paper Corporation (the "Company") declared a dividend distribution
of one preferred share purchase right (a "Right") for each
outstanding share of common stock, par value $2.50 per share (the
"Common Shares"), of the Company. The distribution is payable on
July 10, 1986 to the shareholders of record on that date. Each
Right entitles the registered holder to purchase from the Company
one one-hundredth of a share of a Series A Junior Participating
Preferred Stock, par value $1.00 per share, of the Company (the
"Preferred Shares") at a price of $60 per one one-hundredth of a
Preferred Share (the "Purchase Price"), subject to adjustment.
The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and M&I
Marshall & Ilsley Bank, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a
public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") acquired, or obtained
the right to acquire, beneficial ownership of 20% or more of the
outstanding Common Shares or (ii) 10 days following the
commencement or announcement of an intention to make a tender
offer or exchange offer the consummation of which would result in
the beneficial ownership by a person or group of 30% or more of
such outstanding Common Shares (the earlier of such dates being
called the "Distribution Date"), the Rights will be evidenced,
with respect to any of the Common Share certificates outstanding
as of July 10, 1986, by such Common Share certificate with a copy
of this Summary of Rights attached thereto. The Rights Agreement
provides that, until the Distribution Date, the Rights will be
transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the
Rights), new Common Share certificates issued after July 10, 1986
upon transfer or new issuance of the Common Shares will contain a
notation incorporating the Rights Agreement by reference. Until
the Distribution Date (or earlier redemption or expiration of the
Rights), the surrender for transfer of any certificates for Common
Shares, outstanding as of July 10, 1986, even without such
notation or a copy of this Summary of Rights being attached
thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Shares as of the close
of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution
Date. The Rights will expire on July 10, 1996, unless earlier
redeemed by the Company as described below.
<PAGE>
The Purchase Price payable, and the number of Preferred
Shares or other securities or property issuable, upon exercise of
the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for Preferred Shares or
convertible securities at less than the current market price of
the Preferred Shares or (iii) upon the distribution to holders of
the Preferred Shares of evidences of indebtedness or assets
(excluding regular periodic cash dividends out of earnings or
retained earnings or dividends payable in Preferred Shares) or of
subscription rights or warrants (other than those referred to
above). The number of Rights and number of Preferred Shares
issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split, combination or stock
dividend on the Common Shares prior to the Distribution Date.
In the event that the Company were acquired in a merger
or other business combination transaction or more than 50% of its
consolidated assets or earning power were sold, proper provision
will be made so that each holder of a Right will thereafter have
the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of
common stock of the acquiring company which at the time of such
transaction would have a market value of two times the exercise
price of the Right. In the event that the Company were the
surviving corporation in a merger and the Common Shares were not
changed or exchanged, or in the event that an Acquiring Person
engages in one of a number of self-dealing transactions specified
in the Rights Agreement, proper provision will be made so that
each holder of a Right, other than Rights that were beneficially
owned by the Acquiring Person on the earlier of the Distribution
Date or the date an Acquiring Person acquires 2000 or more of the
outstanding Common Shares (which will thereafter be void), will
thereafter have the right to receive upon exercise that number of
Common Shares having a market value of two times the exercise
price of the Right.
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
Preferred Shares (other than fractions which are integral
multiples of one-hundredth of a Preferred Share, which may, at the
election of the Company, he evidenced by depositary receipts) will
be issued; in lieu thereof, an adjustment in cash will be made
based on the Market price of the Preferred Shares on the last
trading date prior to the date of exercise.
At any time prior to the acquisition by a person or
group of affiliated or associated persons of beneficial ownership
of 20% or more of the outstanding Common Shares, the Board of
Directors of the Company may redeem the Rights in whole, but not
in part, at a price of $.05 per Right (the "Redemption Price").
Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
<PAGE>
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration
Statement on Form 8-A dated ________________, 1986. A copy of the
Rights Agreement is available free of charge from the Rights
Agent. This summary description of the Rights does not purport to
be complete and is qualified in its entirety by reference to the
Rights Agreement, which is hereby incorporated herein by
reference.
Assignment and Assumption Agreement
-----------------------------------
This Assignment and Assumption Agreement (herein called the
"Agreement"), made and entered into as of the 30th day of June,
1987, by and among M&I Marshall & Ilsley Bank, a state banking
association (herein called "Assignor"), Continental Illinois
National Bank and Trust Company of Chicago, a national banking
association (herein called "Assignee"), and Mosinee Paper
Corporation, a Wisconsin corporation (herein called the
"Company").
W I T N E S S E T H:
--------------------
WHEREAS, the Assignor in June 26, 1986, entered into a
certain Rights Agreement with the Company (herein called the
"Rights Agreement") pursuant to which the Assignor agreed to act
as rights agent, depositary, transfer agent and registrar for the
Company in respect to its Rights (the "Rights Certificates"), upon
the terms and conditions set forth in the Rights Agreement, which
is incorporated herein by reference and made a part hereof for all
purposes; and
WHEREAS, the Rights Agreement provides that Assignor may
resign by delivery of written notice to the Company; and
WHEREAS, Assignor has given written notice to the Company of
its desire to resign as rights agent, such resignation to be
effective at the close of business on June 30, 1987 (herein called
the "Effective Time"); and
WHEREAS, the Company has appointed Assignee as the successor
rights agent, such appointment to be effective as of the Effective
Time; and
WHEREAS, the parties hereto desire to execute an instrument
whereby Assignor will transfer all its authority, powers and
rights in and under the Rights Agreement to Assignee and Assignee
will agree to assume and perform all the duties and obligations of
Assignor under the Depositary Agreement;
<PAGE>
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:
1. Assignment. Assignor assigns and transfers as of the
Effective Time all of its authority, power and rights in and under
the Rights Agreement to Assignee and Assignee, as successor rights
agent, shall, by virtue of this Agreement and the Rights
Agreement, be vested with all the authority, powers, rights and
immunities of Assignor to the same extent as if Assignee had been
originally named as Rights agent in the Rights Agreement.
2. Assumption. Assignee assumes and covenants to perform
from and after the Effective Time all the duties and obligations
of the Assignor under the Rights Agreement and Assignee, as
successor rights agent, shall, by virtue of this Agreement and the
Rights Agreement, be subject to all the duties and obligations of
Assignor to the same extent as if Assignee had been originally
named as rights agent in the Rights Agreement.
3. Notice. Within a reasonable period after the Effective
Time, the Company shall give notice of its appointment of a
successor rights agent to the Assignee and the registered holders
of the Rights Certificates, if any.
4. Transfer of Property. By agreement with the Assignee,
Assignor shall deliver and transfer to Assignee, at the expense of
the Company, any property held by Assignor, at the Effective Time
or thereafter, under the Rights Agreement.
5. Qualification. By execution of this Agreement, Assignee
represents and warrants to the Assignor and the Company that
Assignee is a corporation organized, in good standing and doing
business under the laws of the United States of America, and
authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by Federal or State
authority and has a combined capital and surplus of not less than
$50,000,000 as required by Section 21 (pg. 51) of the Rights
Agreement.
6. Additional Instruments. The Company agrees to make,
execute, acknowledge and deliver any and all additional
instruments in writing necessary or appropriate to fully and
effectually vest in and conform to Assignee all authority, powers,
rights, immunities, duties and obligations under the Rights
Agreement.
7. Counterpart Originals. This Agreement may be executed
in one or more counterparts, with each such counterpart
constituting an original and all such counterparts collectively
constituting one and the same instrument.
8. Amendment to Rights Agreement. The Rights Agreement is
hereby amended as follows:
a. The definition of "Principal Office" in Section
16(b) is amended to mean the Office of the Assignee, located
at 30 North LaSalle Street, Chicago, Illinois.
<PAGE>
b. The references to "Notice" in Section 25 is amended
to mean the Office of the Assignee, Continental Illinois
National Bank and Trust Company of Chicago, with offices
located at 30 North LaSalle Street, Chicago, Illinois.
WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto under their respective seals as of the day and year
first above written.
M&I MARSHALL & ILSLEY BANK
[Corporate Seal] By:___________________________
Attest:_______________________ Its:__________________________
CONTINENTAL ILLINOIS NATIONAL
BANK AND TRUST COMPANY OF
CHICAGO
[Corporate Seal] By:___________________________
Attest:_______________________ Its:__________________________
MOSINEE PAPER CORPORATION
[Corporate Seal] By:___________________________
Attest:_______________________ Its:__________________________
<PAGE>
AMENDMENT TO RIGHTS AGREEMENT
-----------------------------
AMENDMENT, dated as of February 21, 1991, between
Mosinee Paper Corporation, a Wisconsin corporation (the
"Company"), and Continental Bank, N.A., a national banking
association (the "Rights Agent"), to the Rights Agreement dated as
of June 26, 1986 (the "Rights Agreement") between the Company and
M&I Marshall & Ilsley Bank, a state banking association (the
"Predecessor Rights Agent").
The Company and the Predecessor Rights Agent have
heretofore executed and entered into the Rights Agreement and,
pursuant to Section 21 thereof, the Rights Agent has succeeded to
the powers, rights, duties and responsibilities of the Predecessor
Rights Agent under the Rights Agreement. Pursuant to Section 26
of the Rights Agreement, the Company and the Rights Agent may from
time to time supplement or amend the Rights Agreement in
accordance with the provisions of Section 26 thereof. All acts
and things necessary to make this Amendment a valid agreement,
enforceable according to its terms have been done and performed,
and the execution and delivery of this Amendment by the Company
and the Rights Agent have been in all respects duly authorized by
the Company and the Rights Agent.
In consideration of the foregoing and the mutual
agreements set forth herein, the parties hereto agree as follows:
1. Section 1(a) of the Rights Agreement is hereby
modified and amended to read, in its entirety as follows:
(a) "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter
defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 20% or more of the
Common Shares of the Company then outstanding, but shall not
include the Company, any Subsidiary (as such term is
hereinafter defined) of the Company or any employee benefit
plan of the Company or any Subsidiary of the Company, or any
entity holding Common Shares of the Company for or pursuant
to the terms of any such plan. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as
the result of an acquisition of Common Shares by the Company
which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially
owned by such Person to 20% or more of the Common Shares of
the Company then outstanding; provided, however, that if a
Person shall become the Beneficial Owner of 20% or more of
the Common Shares of the Company then outstanding by reason
of share purchases by the Company and shall, after such share
purchases by the Company, become the Beneficial Owner of any
additional Common Shares of the Company, then such Person
shall be deemed to be an "Acquiring Person." Notwithstanding
the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be
an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), has become such
<PAGE>
inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares of the
Company so that such Person would no longer be an Acquiring
Person, as defined pursuant to the foregoing provisions of
this paragraph (a), then such Person shall not be deemed to
be an "Acquiring Person" for any purposes of this Agreement.
2. Section 1(c) of the Rights Agreement is hereby
modified and amended to read in its entirety as follows:
(c) A Person shall be deemed the "Beneficial Owner" of
and shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire
(whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary
agreements with and between underwriters and selling
group members with respect to a bona fide public
offering of securities), or upon the exercise of
conversion rights, exchange rights, rights (other than
these Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by
or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or (B) the right
to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement,
arrangement or understanding to vote such security (1)
arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with,
the applicable rules and regulations promulgated under
the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable
or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person
or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (other than
customary agreements with and between underwriters and
selling group members with respect to a bona fide public
offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by
the proviso to Section 1(c)(ii)(B)) or disposing of any
securities of the Company.
<PAGE>
Notwithstanding anything in this definition of
Beneficial Ownership to the contrary, the phrase "then
outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean
the number of such securities then issued and outstanding
together with the number of such securities not then actually
issued and outstanding which such Person would be deemed to
own beneficially hereunder.
3. Section 3(a) of the Rights Agreement is hereby
modified and amended to read in its entirety as follows:
(a) Until the earlier of (i) the tenth day after the
Shares Acquisition Date or (ii) the tenth Business Day (or
such later date as may be determined by action of the Board
of Directors prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any
Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common
Shares for or pursuant to the terms of any such plan) of, or
of the first public announcement of the intention of any
Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common
Shares for or pursuant to the terms of any such plan) to
commence, a tender or exchange offer the consummation of
which would result in any Person becoming the Beneficial
Owner of Common Shares aggregating 20% or more of the then
outstanding Common Shares (including any such date which is
after the date of this Agreement and prior to the issuance
of the Rights; the earlier of such dates being herein
referred to as the "Distribution Date"), (x) the Rights will
be evidenced (subject to the provisions of paragraph (b)
hereof) by the certificates for Common Shares registered in
the names of the holders thereof (which certificates shall
also be deemed to be Right Certificates), and (y) the right
to receive Right Certificates will be transferable only in
connection with the transfer of Common Shares. As soon as
practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and
the Company will send or cause to be sent (and the Rights
Agent will, if requested, send) by first-class, insured,
postage-prepaid mail, to each record holder of Common Shares
as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company,
a Right Certificate, in substantially the form of Exhibit B
hereto (a "Right Certificate"), evidencing one Right for
each Common Share so held. As of the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
4. Section 3(c) of the Rights Agreement is hereby
modified and amended to read in its entirety as follows:
(c) Certificates for Common Shares issued after
June 30, 1987 but prior to the earliest of the Distribution
Date, the Redemption Date and the Final Expiration Date (as
such terms are defined in Section 7) shall have impressed
<PAGE>
on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in a
Rights Agreement between Mosinee Paper Corporation and
Continental Bank, N.A., dated as of June 26, 1986, as
amended (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy
of which is on file at the principal executive offices
of Mosinee Paper Corporation. Under certain
circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate.
Mosinee Paper Corporation will mail to the holder of
this certificate a copy of the Rights Agreement
without charge after receipt of a written request
therefor. Rights beneficially owned by Acquiring
Persons (as defined in the Rights Agreement) become
null and void.
The legend for certificates issued after July 10,
1986 and on or prior to June 30, 1987 shall be identical
except that it shall refer to M&I Marshall & Ilsley Bank
rather than to Continental Bank, N.A. With respect to such
certificates containing the legend set forth in this Section
3(c), until the Distribution Date, the Rights associated with
the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for
transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases
or acquires any Common Shares after July 10, 1986 but prior
to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that
the Company shall not be entitled to exercise any Rights
associated with the Common Shares that are no longer
outstanding.
5. The first sentence of Section 6 of the Rights
Agreement is hereby modified and amended to read in its entirety
as follows:
Subject to the provisions of Section 14 hereof, at any time
after the close of business on the Distribution Date, and at
or prior to the close of business on the earlier of the
Redemption Date or the Final Expiration Date (as such terms
are defined in Section 7 hereof), any Right Certificate or
Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section
11(a)(ii) hereof or that have been exchanged pursuant to
Section 24 hereof) may be transferred, split up, combined or
exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a
like number of Preferred Shares as the Right Certificate or
Right Certificates surrendered then entitled such holder to
purchase.
<PAGE>
6. Section 7(a) of the Rights Agreement is hereby
modified and amended by replacing the word "earlier" with the word
"earliest", deleting the word "or" appearing immediately prior to
the numeral "(ii)", deleting the period at the end thereof and
adding the following at the end thereof:
, or (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof.
7. Section 11(a)(ii) of the Rights Agreement is hereby
modified and amended to read in its entirety as follows:
(ii) Subject to Section 24 of this Agreement, in the
event any Person becomes an Acquiring Person, each holder of
a Right, except as provided below, shall thereafter have the
right to receive, upon exercise thereof at a price equal to
the then current Purchase Price multiplied by the number of
one one-hundredths of a Preferred Share for which a Right is
then exercisable, in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of
Common Shares of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price
by the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable and dividing that product
by (y) 50% of the then current per share market price of the
Company's Common Shares (determined pursuant to Section 11(d)
hereof) on the date of the occurrence of such event. In the
event that any Person shall become an Acquiring Person and
the Rights shall then be outstanding, the Company shall not
take any action which would eliminate or diminish the
benefits intended to be afforded by the Rights. From and
after the occurrence of such event, any Rights that are or
were acquired or beneficially owned by any Acquiring Person
(or any Associate or Affiliate of such Acquiring Person)
shall be void and any holder of such Rights shall thereafter
have no right to exercise such Rights under any provision of
this Agreement. No Right Certificate shall be issued
pursuant to Section 3 that represents Rights beneficially
owned by an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or
Affiliate thereof; no Right Certificate shall be issued at
any time upon the transfer of any Rights to an Acquiring
Person whose Rights would be void pursuant to the preceding
sentence or any Associate or Affiliate thereof or to any
nominee of such Acquiring Person, Associate or Affiliate; and
any Right Certificate delivered to the Rights Agent for
transfer to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence shall be canceled.
8. Section 11(a)(iii) of the Rights Agreement is
hereby modified and amended by adding the following at the end
thereof:
In the event the Company shall, after a good faith effort, be
unable to take all such action as may be necessary to
authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be
issuable upon exercise of a Right, a number of Preferred
<PAGE>
Shares or fraction thereof such that the current per share
market price of one Preferred Share multiplied by such number
or fraction is equal to the current per share market price of
one Common Share as of the date of issuance of such Preferred
Shares or fraction thereof.
9. Section 23(a) of the Rights Agreement is hereby
modified and amended by adding the following at the end thereof:
The redemption of the Rights by the Board of Directors may be
made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion
may establish.
10. The Rights Agreement is hereby further amended by
inserting the following new Section 24 to the Rights Agreement and
renumbering Sections 24 through 32 of the Rights Agreement (and
all cross-references thereto in the Rights Agreement) as Sections
25 through 33 respectively:
Section 24. Exchange. (a) The Board of Directors of
the Company may, at its option, at any time after any Person
becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of
Section 11(a)(ii) hereof) for Common Shares at an exchange
ratio of one Common Share per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall
not be empowered to effect such exchange at any time after
any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Shares for or
pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then
outstanding.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights
pursuant to paragraph (a) of this Section 24 and without any
further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of
a holder of such Rights shall be to receive that number of
Common Shares equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as
they appear upon the registry books of the Rights Agent. Any
notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which
the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of
<PAGE>
Rights which will be exchanged. Any partial exchange shall
be effected pro rata based on the number of Rights (other
than Rights which have become void pursuant to the provisions
of Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient
Common Shares issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional
Common Shares for issuance upon exchange of the Rights. In
the event the Company shall, after good faith effort, be
unable to take all such action as may be necessary to
authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be
issuable upon exchange of a Right, a number of Preferred
Shares or fraction thereof such that the current per share
market price of one Preferred Share multiplied by such number
or fraction is equal to the current per share market price of
one Common Share as of the date of issuance of such Preferred
Shares or fraction thereof.
(d) The Company shall not be required to issue
fractions of Common Shares or to distribute certificates
which evidence fractional Common Shares. In lieu of such
fractional Common Shares, the Company shall pay to the
registered holders of the Right Certificates with regard to
which such fractional Common Shares would otherwise be
issuable an amount in cash equal to the same fraction of the
current market value of a whole Common Share. For the
purposes of this paragraph (d), the current market value of a
whole Common Share shall be the closing price of a Common
Shares (as determined pursuant to the second sentence of
Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
11. Section 26 of the Rights Agreement (which shall
have been renumbered Section 27 as a result of paragraph 10 of
this Amendment) is hereby modified and amended by adding the
following at the end thereof:
Without limiting the foregoing, the Company may at any time
prior to such time as any Person becomes an Acquiring Person
amend this Agreement to reduce the thresholds set forth in
Section l(a) and Section 3(a) of this Agreement to not less
than the greater of (i) the sum of 0.001% and the largest
percentage of the outstanding Common Shares then known by the
Company to be beneficially owned by any Person (other than
the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any Subsidiary of the Company,
or any entity holding Common Shares for or pursuant to the
terms of any such plan) and (ii) 10%.
12. The legend on the Form of Right Certificate set
forth on the first page of Exhibit B to the Rights Agreement is
hereby modified and amended to read in its entirety as follows:
NOT EXERCISABLE AFTER JULY 10, 1996 OR EARLIER IF NOTICE OF
REDEMPTION OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT
<PAGE>
$.05 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. RIGHTS BENEFICIALLY OWNED BY ACQUIRING
PERSONS (AS DEFINED IN THE RIGHTS AGREEMENT) BECOME NULL AND
VOID.
13. This Amendment to the Rights Agreement shall be
governed by and construed in accordance with the laws of the State
of Wisconsin and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State.
14. This Amendment to the Rights Agreement may be
executed in any number of counterparts, each of which shall be an
original, but such counterparts shall together constitute one and
the same instrument. Terms not defined herein shall, unless the
context otherwise requires, have the meanings assigned to such
terms in the Rights Agreement.
15. In all respects not inconsistent with the terms and
provisions of this Amendment to the Rights Agreement, the Rights
Agreement is hereby ratified, adopted, approved and confirmed. In
executing and delivering this, the Rights Agent shall be entitled
to all the privileges and immunities afforded to the Rights Agent
under the terms and conditions of the Rights Agreement.
16. If any term, provision, covenant or restriction of
this Amendment to the Rights Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Amendment to the Rights Agreement, and of
the Rights Agreement, shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and attested, all as of the date and
year first above written.
Attest: MOSINEE PAPER CORPORATION
By:___________________________ By:____________________________
Attest: CONTINENTAL BANK, N.A.
By:__________________________ By:____________________________
<PAGE>
EXHIBIT 10(a)
MOSINEE PAPER CORPORATION
MOSINEE, WISCONSIN
DEFERRED COMPENSATION PLAN FOR DIRECTORS
As Amended and Restated
June 17, 1993
<PAGE>
MOSINEE PAPER CORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS
As Amended and Restated June 17, 1993
<PAGE>
1. RESTATEMENT OF PLAN. Mosinee Paper Corporation (the
"Company") hereby amends and restates the Mosinee Paper
Corporation Deferred Compensation Plan for Directors effective as
of June 17, 1993 (the "Plan").
2. PURPOSE. The purpose of the Plan is to establish an
alternative method of compensating members of the Board of
Directors of the Company (the "Directors"), whether or not they
otherwise receive compensation as employees of the Company, in
order to aid the Company in attracting and retaining as Directors
persons whose abilities, experience and judgment can contribute to
the continued progress of the Company and to provide a mechanism
by which the interests of the Directors and the shareholders can
be more closely aligned.
3. DEFINITIONS. As used in this Plan the following terms
shall have the meaning set forth in this paragraph 3:
(a) "BENEFICIARY" shall mean such person or persons, or
organization or organizations, as the Participant from time
to time may designate by a written designation filed with the
Company during the Participant's life. Any amounts payable
hereunder to a Participant's Beneficiary shall be paid in
such proportions and subject to such trusts, powers and
<PAGE>
conditions as the Participant may provide in such
designation. Each such designation, unless otherwise
expressly provided therein, may be revoked by the Participant
by a written revocation filed with the Company during the
Participant's life. If more than one such designation shall
be filed by a Participant with the Company, the last
designation so filed shall control over any revocable
designation filed prior to such filing. To the extent that
any amounts payable under this Plan to a Participant's
Beneficiary are not effectively disposed of pursuant to the
above provisions of this paragraph 3(a), either because no
designation was in effect at the Participant's death or
because a designation in effect at the Participant's death
failed to dispose of such amounts in their entirety, then for
purposes of this Plan, the Participant's "Beneficiary" as to
such undisposed of amounts shall be the Participant's estate.
(b) "CHANGE OF CONTROL OF THE COMPANY" shall be deemed to
have occurred when:
(1) any one of the following events occurs:
(A) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")), other than (i) the
Company or any of its subsidiaries, (ii) a trustee or
other fiduciary holding securities under an employee
benefit plan of the Company or any of its subsidiaries,
(iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a
company owned, directly or indirectly, by the
shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company,
is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company (not including in the
securities beneficially owned by such persons any
securities acquired directly from the Company or its
affiliates) representing more than 50% of the combined
voting power of the Company's then outstanding
securities; provided, however, that for the purpose of
determining whether any shareholder of the Company on
the date hereof becomes the beneficial owner of
securities of the Company representing more than 50% of
the combined voting power of the Company's then
outstanding securities, the securities of the Company
held by such shareholder on the date hereof shall not be
taken into account;
(B) the shareholders of the Company approve a
merger or consolidation of the Company or a share
exchange with any other company, other than a merger or
consolidation or share exchange 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 entity) in
combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit
<PAGE>
plan of the Company, at least 50% of the combined voting
power of the voting securities of the Company or such
surviving entity outstanding immediately after such
merger or consolidation or share exchange, or a merger
or consolidation or share exchange effected to implement
a recapitalization of the Company (or similar
transaction) in which no person acquires more than 50%
of the combined voting power of the Company's then
outstanding securities; or
(C) the shareholders of the Company approve a plan
of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or
substantially all of the Company's assets and
(2) a majority of the members of the Board of Directors
who are unaffiliated with an Interested Shareholder (defined
below) and who were members of the Board of Directors as of a
date prior to the date on which the Interested Shareholder
became an Interested Shareholder has not, by resolution prior
to (A) the person described in subparagraph (1)(A) becoming
the beneficial owner of 10% of the combined voting power of
the Company's then outstanding securities or (B) the approval
of shareholders described in (1)(B) or (C) the approval of
shareholders described in (1)(C), approved or recommended
such event. For purposes of this paragraph 3(b), the term
"Interested Shareholder" shall mean any person (other than
the Company or any of its subsidiaries or any member of the
Board of Directors as of the effective date of this Plan or
any affiliate of such person) who first became the beneficial
owner of 10% or more of the combined voting power of the
Company's then outstanding securities after the effective
date of this Plan.
(c) "COMMON STOCK" shall mean the common stock, $2.50 par
value, of the Company.
(d) "DIRECTORS' FEES" shall mean all of the compensation to
which a Director would otherwise become entitled for services
to be rendered as a Director.
(e) "FAIR MARKET VALUE" of the Common Stock on any day shall
be deemed to be the mean between the published high and low
sale prices at which the Common Stock is traded on a bona
fide over-the-counter market or, if such stock is not so
traded on such day, on the next preceding day on which the
Common Stock was so traded.
(f) "PARTICIPANT" shall mean a Director who has made an
election to defer Directors' Fees in accordance with
paragraph 4.
(g) "TERMINATION OF SERVICE" shall mean the bona fide
termination of a Participant's services as a member of the
Board of Directors of the Company.
<PAGE>
4. RIGHT TO DEFER DIRECTORS' FEES.
(a) Each Director may elect before January 1 of any fiscal
year of the Company to become a Participant and to defer the
payment of all of the Directors' Fees to which the Participant
would otherwise become entitled for services to be rendered during
each fiscal year subsequent to the date on which such election is
effective. An election by a Director to defer Directors' Fees
pursuant to this subparagraph (a) shall be effective with respect
to Directors' Fees earned during the first fiscal year beginning
after the date such election is made and during each subsequent
fiscal year until revoked or amended, provided that any such
revocation or amendment shall only be effective with respect to
fiscal years beginning after the date written notice of such
revocation or amendment is first received by the Company.
(b) Despite any other provision of subparagraph (a), if a
person becomes a Director during a fiscal year, such Director may
elect to become a Participant with respect to Directors' Fees
earned during the year in which he became a Director, provided
such election is made before such person begins to serve as a
Director. An election by a Director to defer Directors' Fees
pursuant to this subparagraph (b) shall be effective after the
date such election is made and received by the Company with
respect to Directors' Fees earned during the fiscal year in which
such election is made and during each subsequent fiscal year until
revoked or amended, provided that any such revocation or amendment
shall only be effective with respect to fiscal years beginning
after the date written notice of such revocation or amendment is
first received by the Company.
(c) Directors' Fees deferred by a Participant shall be
distributable in accordance with paragraph 10 hereof and only
after such Participant's Termination of Service. Any Directors'
Fees not subject to an election made in accordance with this
paragraph 4 shall be paid to the Director in cash.
5. ACCOUNTING AND ELECTIONS.
(a) The Company shall establish a Deferred Cash Account and
a Deferred Stock Account in the name of each Participant.
(b) Each Participant shall make an initial election at the
time his deferral election is filed pursuant to paragraph 4 to
have his deferred Directors' Fees allocated to his Deferred Cash
Account or his Deferred Stock Account. At any time prior to the
first day of any subsequent fiscal year, the Participant may file
a new election with the Company specifying the Account to which
all Directors' Fees earned in the subsequent fiscal year shall be
allocated, but in no event shall such election affect the
allocation of Directors' Fees deferred prior to the effective date
of such election. Any election made by a Participant in
accordance with this paragraph 5 shall remain in effect for the
fiscal year in which it is first effective and during each
subsequent fiscal year until a new election is filed by the
Participant. A Participant's initial election shall be effective
as of the date the Director becomes a Participant. Each other
election made pursuant to this subparagraph (b) shall only be
effective with respect to fiscal years beginning after the date
such election is first received by the Company.
<PAGE>
(c) As of each date on which the Company shall make a
payment of Director's Fees and a Participant has a deferral
election then in effect, there shall be credited to such
Participant's Deferred Cash Account or Deferred Stock Account, as
the case may be in accordance with such Participant's most recent
effective election, the Directors' Fees otherwise payable to such
Participant in cash as of such date.
(d) Despite any other provision of this Plan, the most
recent election in effect on June 16, 1993, made by a Participant
with respect to the crediting of his Director's Fees to such
Participant's Deferred Cash Account or Deferred Stock Account
shall remain in effect as of June 17, 1993 as if such election had
been made pursuant to subparagraph (a).
(e) Within 90 days of the end of each fiscal year in which
this Plan is in effect, the Company shall furnish each Participant
a statement of the year-end balance in such Participant's Deferred
Cash Account and Deferred Stock Account.
6. FORM FOR ELECTIONS. The Secretary of the Company shall
provide election forms for use by Directors in making an initial
election to become a Participant and for making all other
elections or designations permitted or required by the Plan.
7. DEFERRED CASH ACCOUNT. As of the last day of each
fiscal quarter, there shall be computed, with respect to each
Deferred Cash Account which is then in existence, an amount equal
to interest on the average daily balance in such Account during
such quarter, computed at a rate per annum equal to the prime rate
of interest then in effect at The Chase Manhattan Bank of New
York. The amount so determined shall be credited to and become
part of the balance of such Account as of the first day of the
next fiscal quarter.
8. DEFERRED STOCK ACCOUNT.
(a) As of each date on which the Company shall make a
payment of Director's Fees and a Participant has a deferral
election then in effect which provides for the deferral of payment
of such fees to the Participant's Deferred Stock Account, the
Directors' Fees otherwise payable to such Participant in cash as
of such date shall be converted into that number of "Stock
Equivalent Units" (rounded to the nearest one-ten thousandth of a
unit) determined by dividing the amount of such Directors' Fees by
an amount equal to the per share Fair Market Value of the Common
Stock on such date.
(b) On each date on which a dividend payable in cash or
property is paid on the Common Stock, there shall be credited to
each Deferred Stock Account such number of additional Stock
Equivalent Units as are determined by dividing (1) the amount of
the cash or other dividend which would have then been payable on
the number of shares of Common Stock equal to the number of Stock
Equivalent Units (including fractional shares) then represented in
such Account by (2) an amount equal to the per share Fair Market
Value of the Common Stock on such date. If the date on which a
dividend is paid on the Common Stock is the same date as of which
Directors' Fees are to be converted into Stock Equivalent Units,
<PAGE>
the dividend equivalent to be credited to such Account under this
paragraph 8 shall be determined after giving effect to the
conversion of the credit balance in such Account into Stock
Equivalent Units.
(c) The number of Stock Equivalent Units credited to a
Participant's Deferred Stock Account shall be adjusted (to the
nearest one-ten thousandth of a unit) to reflect any change in the
Common Stock resulting from a stock dividend, stock split-up,
combination, recapitalization or exchange of shares, or the like.
9. NO TRANSFERS BETWEEN ACCOUNTS. A Participant may not
transfer any portion of the balance of his Deferred Cash Account
to his Deferred Stock Account or any portion of his Deferred Stock
Account to his Deferred Cash Account.
10. DISTRIBUTION OF DEFERRED AMOUNTS.
(a) Distribution of amounts represented in a Participant's
Deferred Cash Account or a Deferred Stock Account shall be made in
accordance with the following:
(1) Payment of the balance of the Deferred Cash Account and
Deferred Stock Account of a Participant whose Termination of
Service occurs for a reason other than death and prior to a
Change of Control of the Company shall be made in a lump sum
as of the last day of the fiscal quarter coincident with or
immediately subsequent to the Participant's Termination of
Service unless the Participant elects otherwise in accordance
with the provisions of paragraph 10(b).
(2) In the event a Participant ceases to be a Director
because of his death or in connection with a Change of
Control of the Company, payment of the balance of his
Deferred Cash Account and Deferred Stock Account shall be
made in a lump sum as of the last day of the fiscal quarter
coincident with or immediately subsequent to the
Participant's Termination of Service.
(b) A Participant may, subject to the automatic distribution
provisions of paragraph 10(a)(2), which shall govern the
distribution of benefits in the event of Termination of Service
which occurs because of death or a Change of Control of the
Company, file one election prior to his Termination of Service
which specifies that payment of the balance of his Deferred Cash
Account and Deferred Stock Account shall be made in installments
and the:
(1) fiscal quarter in which distribution of the
Participant's Accounts shall begin (but in no event (A)
earlier than the Director's Termination of Service or (B)
later than the earlier of (i) the Director's 70th birthday or
(ii) the date five years after the date of the Director's
Termination of Service; and
(2) number of fiscal quarters over which such Accounts shall
be distributed to the Participant, which period shall not
extend beyond the end of the 40th fiscal quarter following
the fiscal quarter in which such distribution begins.
<PAGE>
Any election filed pursuant to this paragraph 10(b) shall be
subject to the approval of the Board of Directors as then in
effect.
(c) If installment payments were elected by the Participant
pursuant to paragraph 10(b), distributions shall be made in
quarterly installments beginning on the first day of the first
fiscal quarter following the date on which such Participant's
Termination of Service occurs or each other later fiscal quarter
as the Participant may have specified.
(1) In the case of a Deferred Cash Account with respect to
which installment payments were elected, the amount of each
quarterly installment shall be determined by dividing the
credit balance in such Account as of the distribution date by
the number of installments then remaining unpaid. The credit
balance in such Account shall then be reduced by the amount
of each distribution out of such Account.
(2) In the case of a Deferred Stock Account with respect to
which installment payments were elected, the amount to be
distributed as each quarterly installment shall be determined
as follows: (A) multiply the number of Stock Equivalent Units
(including any fraction thereof) then reflected in such
Account by the Fair Market Value of the Common Stock on such
date; (B) add to the product so determined the amount (if
any) which has been credited to such Account but which has
not been converted into Stock Equivalent Units; and (C)
divide the total so obtained by the number of installments
then remaining unpaid. The number of Stock Equivalent Units
represented in a Deferred Stock Account shall be reduced
forthwith by that number (rounded to the nearest one-ten
thousandth of a unit) determined by dividing the amount of
the distribution by the Fair Market Value of the Common Stock
taken into account for purposes of clause (A) of the
preceding sentence.
In the event that a Participant dies after receiving payment of
some, but less than all, of the entire amount to which such
Participant is entitled under this Plan, the unpaid balance shall
be paid in a lump sum to the Participant's Beneficiary.
(d) In the case of a Deferred Cash Account or a Deferred
Stock Account with respect to which payment is to be made in a
lump sum, the amount of such payment shall be determined as if
installment payments had been elected and the lump sum was the
last (but only) such payment.
(e) After a Participant's Termination of Service occurs,
neither such Participant or his Beneficiary shall have any right
to modify in any way the schedule for the distribution of amounts
credited to such Participant under this Plan as specified in the
last election filed by the Participant. However, upon a written
request submitted to the Secretary of the Company by the person
then entitled to receive payments under this Plan (who may be the
Participant, or a Beneficiary, the Board of Directors may in its
sole discretion, accelerate the time for payment of any one or
more installments remaining unpaid.
<PAGE>
11. INCOMPETENCY. If, in the opinion of the Board of
Directors of the Company, a Participant shall at any time be
mentally incompetent, any payment to which such Participant would
be entitled under this Plan may, with the approval of the Board of
Directors, be paid to the Participant's legal representative, or
to any other person for his benefit and in such case, the Board of
Directors may in its sole discretion, accelerate the time for
payment of any one or more installments remaining unpaid.
12. MISCELLANEOUS.
(a) This Plan shall be effective upon adoption by the Board
of Directors of the Company.
(b) Amounts payable hereunder may not be voluntarily or
involuntarily sold or assigned, and shall not be subject to any
attachment, levy or garnishment.
(c) Participation in this Plan by any person shall not
confer upon such person any right to be nominated for re-election
to the Board of Directors, or to be re-elected to the Board of
Directors.
(d) The Company shall not be obligated to reserve or
otherwise set aside funds for the payment of its obligations
hereunder, and the rights of any Participant under the Plan shall
be an unsecured claim against the general assets of the Company.
All amounts due Participants or Beneficiaries under this Plan
shall be paid out of the general assets of the Company.
(e) The Board of Directors shall have all powers necessary
to administer this Plan, including all powers of Plan
interpretation, of determining eligibility and the effectiveness
of elections and of deciding all other matters relating to the
Plan; provided, however, that no Participant shall take part in
any discussion of, or vote with respect to, a matter of Plan
administration which is personal to him and not of general
applicability to all Participants or shall act with respect to his
own election made pursuant to paragraph 10(b). All decisions of
the Board of Directors shall be final as to any Participant under
this Plan.
(f) The Board of Directors of the Company may amend this
Plan in any and all respects at any time, or from time to time, or
may terminate this Plan at any time, but any such amendment or
termination shall be without prejudice to any Participant's right
to receive amounts previously credited to such Participant under
this Plan.
In Witness Whereof, this Plan has been executed as of the
_____ day of June, 1993 by the undersigned duly authorized officer
of the Company.
MOSINEE PAPER CORPORATION
_____________________________
Richard L. Radt
President and Chief Executive
Officer
<PAGE>
EXHIBIT 10(d)
MOSINEE PAPER CORPORATION
MOSINEE, WISCONSIN
1993 AND 1994 INCENTIVE COMPENSATION PLAN
FOR CORPORATE EXECUTIVE OFFICERS
<PAGE>
EXHIBIT 10(d)
MOSINEE PAPER CORPORATION
1994 INCENTIVE COMPENSATION
PLAN FOR CORPORATE
EXECUTIVE OFFICERS
I. The President and Chief Executive Officer shall be entitled
to receive incentive compensation in accordance with the
following:
Range of
Incentive Compensation
Earnings Per Share Range (1) as a % of Base Salary (2)
---------------------------- -------------------------
$1.50 - 2.50 0 - 100%
(1) Earnings per share are to be adjusted for accruals on
SAR's, bonus expense and extraordinary items.
(2) Incremental earning results between performance range
will result in corresponding and proportional
adjustment in percentage of salary earned as incentive
compensation limited to the maximum percentage
indicated.
II. The Senior Vice President - Finance, Secretary and Treasurer
shall be entitled to receive incentive compensation in
accordance with the following:
Range of
Incentive Compensation
A. Earnings Per Share Range (1) as a % of Base Salary (2)
---------------------------- -------------------------
$1.50 - 2.50 0 - 75%
(1) See (1) above.
(2) See (2) above.
B. The Senior Vice President - Finance, Secretary and
Treasurer shall be entitled to incentive compensation
not in excess of an aggregate of 25% of base salary upon
achievement of objectives determined by the President
and Chief Executive Officer.
<PAGE>
III. The Senior Vice President - Administration shall be entitled
to receive incentive compensation in accordance with the
following:
Range of
Incentive Compensation
A. Earnings Per Share Range (1) as a % of Base Salary (2)
---------------------------- -------------------------
$1.50 - 2.50 0 - 55%
(1) See (1) above.
(2) See (2) above.
Range of
B. Converted Products Division Incentive Compensation
Operating Profit Range (3) as a % of Base Salary (2)
--------------------------- -------------------------
$3,300,000 - $4,300,000 0 - 20%
(2) See (2) above.
(3) Operating profit to be determined prior to bonus expense
and extraordinary items.
C. The Senior Vice President - Administration shall be
entitled to incentive compensation not in excess of an
aggregate of 25% of base salary upon achievement of
objectives determined by the President and Chief
Executive Officer.
<PAGE>
MOSINEE PAPER CORPORATION
1993 INCENTIVE COMPENSATION
PLAN FOR CORPORATE
EXECUTIVE OFFICERS
I. The President and Chief Executive Officer shall be entitled
to receive incentive compensation in accordance with the
following:
Range of
Incentive Compensation
as a % of
Operating Unit Performance (1) Base Salary (2)
------------------------------ ----------------------
Towel & Tissue - $100,000 to
$1,000,000 -0- to 28%
Pulp & Paper - $15,000,000 to
$21,500,000 -0- to 24%
Bay West Converting - $4,000,000
to $7,000,000 -0- to 16%
Converted Products - $3,500,000
to $4,800,000 -0- to 8%
Sorg - $100,000 to $1,000,000 -0- to 4%
1. Operating earnings are to be determined prior to bonus
expense and extraordinary items.
2. Incremental operating results between performance levels
will result in corresponding and proportional adjustment
in percentage of salary earned as incentive compensation
limited to the maximum percentage indicated.
II. The Executive Vice President and Chief Operating Officer, the
Vice President - Finance, and the Vice President - Human
Resources shall be entitled to receive incentive compensation
in accordance with the following:
Range of
Incentive Compensation
as a % of
A. Operating Unit Performance (1) Base Salary (2)
------------------------------ ----------------------
Towel & Tissue - $100,000 to
$1,000,000 -0- to 26.25%
Pulp & Paper - $15,000,000 to
$21,500,000 -0- to 22.5%
Bay West Converting - $4,000,000
to $7,000,000 -0- to 15.0%
Converted Products - $3,500,000
to $4,800,000 -0- to 7.5%
Sorg - $100,000 to $1,000,000 -0- to 3.75%
1. See (1) above.
2. See (2) above.
<PAGE>
B. Each participant shall be entitled to incentive compensation
not in excess of an aggregate of 25% of base salary upon
achievement of objectives determined by the President and
Chief Executive Officer.
<PAGE>
EXHIBIT 11
<TABLE>
MOSINEE PAPER CORPORATION
Statement of Computation of Per Share Earnings
For the Years Ended December 31, 1993, 1992, and 1991
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Net Earnings (Loss) for the Year $9,636,530 ($8,500,464) $ 902,457
Less: The Sorg Paper Company
Preferred Stock Dividends 69,036 69,036 69,036
---------- ---------- ----------
Earnings (Loss) Available to Mosinee
Paper Corporation Common Stock $9,567,494 ($8,569,500) $ 833,421
========== ========== ==========
Weighted Average Shares of Mosinee
Paper Corporation Common Stock
Outstanding During the Year 7,148,443 7,109,325 7,050,598
========== ========== ==========
Earnings (Loss) Per Share* $ 1.3384 ($ 1.2054) $ 0.1182
========== ========== ==========
Earnings (Loss) Per Share Rounded
to Nearest Cent $ 1.34 ($ 1.21) $ 0.12
========== ========== ==========
<FN>
*Earnings per Share = Earnings Available to Mosinee paper Corporation Common Stock
------------------------------------------------------------
Weighted Average Shares of Mosinee Paper Corporation Common
Stock Outstanding During the Year
</TABLE>
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
_______________
To Our Shareholders:
The annual meeting of shareholders of Mosinee Paper
Corporation will be held at the Westwood Conference Room, Westwood
Center, Wausau Insurance Companies, 1800 West Bridge Street,
Wausau, Wisconsin on Thursday, April 21, 1994, at 11:00 a.m.,
local time, for the following purposes:
1. To elect two Class II Directors for terms which will
expire at the annual meeting of shareholders to be held
in 1997.
2. To approve the appointment of Wipfli Ullrich Bertelson
CPAs as independent auditors for the year ending
December 31, 1994.
3. To transact such other business as may properly come
before the meeting.
PLEASE PROMPTLY VOTE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY IN THE ENCLOSED ENVELOPE.
DATED: March 23, 1994.
MOSINEE PAPER CORPORATION
Gary P. Peterson
Secretary
____________________________
A RETURN ENVELOPE REQUIRING NO POSTAGE IF MAILED IN THE UNITED
STATES IS ENCLOSED FOR YOUR CONVENIENCE IN SUBMITTING YOUR PROXY.
<PAGE>
MOSINEE PAPER CORPORATION MARCH 23, 1994
1244 KRONENWETTER DRIVE
MOSINEE, WISCONSIN 54455
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 21, 1994
SOLICITATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of
Mosinee Paper Corporation (the "Company") for use at the annual
meeting of shareholders to be held on April 21, 1994, and at any
adjournment thereof (the "Annual Meeting") for the purposes set
forth in the foregoing notice.
Officers, directors and employees of the Company may solicit
proxies by telephone, telegraph or in person in addition to
solicitation by mail. None of these persons will receive
additional compensation. Expenses incurred in connection with the
solicitation of proxies, including the reasonable expenses of
brokers, fiduciaries and other nominees in forwarding proxy
material, will be borne by the Company.
VOTING OF PROXIES
Each holder of the Company's common stock is entitled to one
vote in person or by proxy for each share held of record on all
matters to be voted upon at the Annual Meeting. Only shareholders
of record on March 2, 1994 are entitled to notice of and to vote
at the Annual Meeting.
With respect to the election of directors, shareholders may
vote in favor of the nominees specified on the accompanying proxy
card or may withhold their vote. Votes that are withheld will be
excluded entirely from the voting for directors and will have no
effect. The nominees receiving the largest number of votes will
be elected as directors of the Company.
On all matters other than the election of directors,
shareholders may vote in favor of a proposal, against a proposal
or abstain from voting. Abstentions on any matter presented to
the Annual Meeting will be treated as shares that are present and
entitled to vote for purposes of determining whether a quorum is
present, but such abstentions shall be treated as unvoted for
purposes of determining whether the matter has been approved by
the shareholders. If the votes cast in favor of a proposal (other
than the election of directors) exceed the votes cast against the
proposal, the matter will be approved by the shareholders.
<PAGE>
Brokers who hold shares of the Company's common stock in
street name for customers may have discretionary authority to vote
on certain matters when they have not received instructions from
beneficial owners, but may not have authority to vote the shares
on other matters. As to matters for which the broker cannot vote
shares held in street name, the shares will be recorded as a
"broker non-vote." Shares reported as broker non-votes will not
be considered present and entitled to vote with respect to the
matter and will not be counted for purposes of determining whether
a quorum is present.
A shareholder who executes the enclosed proxy may revoke it
at any time before it is voted by giving written notice to the
Secretary of the Company or oral notice to the presiding officer
at the Annual Meeting.
The persons named in the accompanying proxy card, as members
of the Proxy Committee of the Board of Directors, will vote the
shares subject to each proxy. The proxy in the accompanying form
will be voted as specified by each shareholder, but if no
specification is made, each proxy will be voted:
(1) TO ELECT Messrs. Richard G. Jacobus and Daniel R. Olvey
to terms of office as Class II Directors which will
expire at the annual meeting of shareholders to be held
in 1997 (see "Election of Directors"),
(2) TO APPROVE the appointment of Wipfli Ullrich Bertelson
CPAs as the Company's independent auditors for the year
ending December 31, 1994 (see "Approval of Independent
Auditors"), and
(3) IN THE BEST JUDGMENT of those named as proxies on the
enclosed form of proxy on any other matters to properly
come before the Annual Meeting (see summary of Company
bylaw requirements under "Shareholder Proposals"), the
approval of minutes and matters incident to the conduct
of the Annual Meeting or adjournment thereof.
ELECTION OF DIRECTORS
The Company's Restated Articles of Incorporation, as amended,
provide that the number of directors shall be determined by the
Board of Directors pursuant to the bylaws, but that there shall be
not less than three nor more than ten directors, divided into
three classes to be as nearly equal in size as possible. Except
in cases of the appointment of a director by the Board to fill a
vacancy resulting from the creation of a new directorship, one
class of directors is to be elected each year to serve a
three-year term. The Board has fixed the number of directors at
six, consisting of two Class I, Class II and Class III Directors,
respectively.
On August 19, 1993, Daniel R. Olvey was elected President and
Chief Executive Officer and a Class II Director of the Company and
Richard L. Radt was elected Vice Chairman. Mr. Olvey's election
filled a vacancy on the Board which had resulted from Clarence
Scholtens' resignation from the Board of Directors after having
reached the Board's mandatory retirement age.
<PAGE>
At the Annual Meeting, Richard G. Jacobus and Daniel R.
Olvey will be candidates for reelection to the Board of Directors.
Each of the nominees has consented to serve if elected, but in
case one or both of the nominees is not a candidate at the Annual
Meeting it is the intention of the Proxy Committee to vote for
such substitute or substitutes as may be designated by the Board.
The following information is furnished with respect to the
nominees and all other directors:
<TABLE>
<CAPTION>
CLASS
NAME, AGE, AND YEAR
PRINCIPAL OCCUPATION IN WHICH YEAR FIRST
OR EMPLOYMENT AND TERM WILL BECAME A
OTHER AFFILIATIONS EXPIRE DIRECTOR
- - -----------------------------------------------------------------
<S> <C> <C>
NOMINEES FOR A THREE-YEAR TERM
Richard G. Jacobus, 64, Class II 1985
President and Chief Executive 1997
Officer, Johnson International, Inc.
Daniel R. Olvey, 45, Class II 1993
President and Chief Executive 1997
Officer of the Company since
August, 1993; Mr. Olvey has served
in several executive capacities of
increasing responsibility with the
Company since 1991; previously, Vice
President Finance, Secretary and
Treasurer of Wausau Paper Mills
Company (1985-1991).
Richard L. Radt, 62, Class I 1988
Vice Chairman of the Board 1996
of the Company; previously,
President and Chief Executive
Officer of the Company.
Walter Alexander, 59, Class I 1987
President of Alexander 1996
Lumber Co.; also a director
of Old Second Bancorp, Inc.
San W. Orr, Jr., 52, Class III 1972
Chairman of the Board of 1995
the Company; Attorney, Estates
of A. P. Woodson & Family; also
Chairman of the Board of Wausau
Paper Mills Company and a director
of MDU Resources Group, Inc.
Stanley F. Staples, Jr., 69, Class III 1968
President, Alexander 1995
Properties, Inc. (investment
management); also a director of
Wausau Paper Mills Company and
MDU Resources Group, Inc.
</TABLE>
<PAGE>
COMMITTEES AND COMPENSATION OF THE BOARD OF DIRECTORS
COMMITTEES AND MEETINGS
The Board of Directors annually establishes Audit, Nominating
and Executive Compensation & Bonus Committees.
During 1993, Messrs. Staples, Jacobus and Alexander served as
members of the Audit Committee. The Audit Committee held two
meetings during 1993 to review the audit of the previous fiscal
year and the scope of the audit engagement and the range of audit
fees and nature of consulting fees.
The Nominating Committee consists of Messrs. Orr, Staples and
Alexander. The Nominating Committee met once in 1993 to consider
and recommend to the Board of Directors nominees for election as
directors. Inquiries concerning nominations with pertinent
background information should be directed to the Chairman of the
Nominating Committee in care of the Company. Pursuant to the
Company's bylaws, shareholders entitled to vote at the annual
meeting of shareholders to be held in 1995 may make nominations
from the floor only if proper notice of the proposed nomination
has been provided to the Secretary of the Company not earlier than
January 21, 1995 and not later than February 20, 1995. The precise
requirements, including the information required to be provided in
the notice and the procedures for notice in the event the date of
the annual meeting is changed, are set forth in the Company's
bylaws which may be obtained from the Secretary of the Company.
Messrs. Orr, Jacobus and Staples served as members of the
Executive Compensation & Bonus Committee during 1993. The
Committee met five times during 1993 to review and establish
executive compensation. The Committee is responsible for the
establishment and implementation of executive bonus programs,
including the granting of stock options. See subheading
"Committees' Report on Executive Compensation Policies," page ___.
During 1993, the Board of Directors met seven times,
including its annual organizational meeting. All of the directors
of the Company attended at least 75% of the aggregate number of
meetings of the Board and meetings of committees of the Board on
which they served.
DIRECTOR COMPENSATION
Directors received a base annual fee of $6,000 and $1,000 for
each meeting of the Board attended in 1993. No additional
compensation is paid to directors for service on committees.
Directors are reimbursed for normal and customary travel expenses
relating to meetings of the Board of Directors and Company
business.
<PAGE>
Under the Company's Deferred Compensation Plan for Directors,
directors may elect each year to defer fees otherwise payable in
cash during the year. Amounts deferred become payable after the
director's termination of service as a director in a lump sum or,
if the participants elect with the approval of the Company, in
quarterly installments over a period not in excess of 10 years.
Payments are made in a lump sum in the event a director's service
terminates as the result of a change of control of the Company, as
defined by the plan. During the period of deferral, a director
may elect that the deferred fees be credited with interest at the
prime rate in effect as of each calendar quarter at The Chase
Manhattan Bank of New York or that the deferred fees be converted
into stock equivalent units. If stock equivalent units are
elected, the director's account under the plan is credited with
common stock equivalent units which are determined by dividing the
amount deferred by the fair market value of the Company's common
stock on the date of deferral and common stock equivalent units
representing the fair market value of additional common stock
equal in amount to the cash dividends which would have been paid
on the accumulated stock equivalent units had they been actual
shares of common stock. Upon distribution, stock units are
converted to cash based upon the fair market value of the
Company's common stock at the time of distribution. During 1993,
Messrs. Orr, Olvey, Staples, Jacobus and Alexander participated in
the plan and deferred the director or meeting fees otherwise
payable to them.
The Company maintains a supplemental retirement benefit plan
under which Mr. Orr is entitled to receive a monthly retirement
benefit in an amount equal to 50% of his highest five-year average
monthly compensation beginning on the last to occur of his
termination of employment or attainment of age 60. Upon Mr. Orr's
death, his surviving spouse will be entitled to receive 50% of the
monthly benefit otherwise payable to Mr. Orr. The plan is
unfunded and provides for the accelerated payment of the present
value of benefits in a lump sum in the event of a change of
control of the Company, as defined in the plan.
BENEFICIAL OWNERSHIP OF COMMON STOCK
As of the close of business on March 2, 1994, the record
date, the Company had 7,215,943 shares of common stock outstanding
(including 67,500 shares subject to options exercisable within 60
days).
The following table sets forth, based on statements filed
with the Securities and Exchange Commission, the amount of common
stock of the Company which is deemed beneficially owned as of the
record date by each person known to the Company to be the
beneficial owner of more than 5% of the outstanding shares of the
Company's common stock.
<PAGE>
<TABLE>
<CAPTION>
Common Stock Percent
Name and Address Beneficially Owned of Class
- - ------------------------------------------------------------
<S> <C> <C>
Wilmington Trust Company 723,828(1) 10.03%
Rodney Square North
1100 N. Market Street
Wilmington, DE 19890-0001
<FN>
(1) Includes 721,131 shares, representing 9.99% of the
Company's common stock, which are held in several trusts
for the benefit of the descendants of A.P. Woodson and
family.
</TABLE>
The following table sets forth, based on statements filed
with the Securities and Exchange Commission or otherwise made to
the Company, the amount of common stock of the Company which is
deemed beneficially owned by each of the directors and each of the
executive officers of the Company named in the summary
compensation table on page 7 and all directors and executive
officers as a group.
<TABLE>
<CAPTION>
Shares of
Common Stock
Name Beneficially Owned Percent of Class
- - -----------------------------------------------------------------
<S> <C> <C>
Walter Alexander 5,000 *
Richard G. Jacobus 5,000 *
San W. Orr, Jr. 140,620 dagger(1) 1.95%
Richard L. Radt 3,000 *
Stanley F. Staples, Jr. 153,407(2) 2.13%
Daniel R. Olvey 38,500(3) *
Gary P. Peterson 15,200(4) *
Stuart R. Carlson 15,150 dagger(4) *
All directors and
executive officers as a
group (8 persons) 375,877 dagger(1)(2)(5) 5.21%
<FN>
*Less than 1%
Dagger Includes shares held by spouse and/or children.
(1) Includes 111,028 shares held by a trust of which
Mr. Orr is a co-trustee with shared voting and
investment power.
(2) Includes 15,712 shares held by a trust of which
Mr. Staples is a co-trustee with shared voting and
investment power and 132,946 shares held by two
charitable foundations both of which Mr. Staples serves
as an officer and a director.
(3) Includes 37,500 shares subject to options exercisable
within 60 days.
(4) Includes 15,000 shares subject to options exercisable
within 60 days.
(5) Includes 67,500 shares subject to options described in
footnotes (3) and (4).
</TABLE>
<PAGE>
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors and officers and persons who own more than
10% of the Company's common stock ("reporting persons") to file
reports of ownership and changes in ownership with the Securities
and Exchange Commission (the "SEC") and the Nasdaq National Market
System. Reporting persons are also required by SEC regulations to
furnish the Company with copies of all section 16(a) forms filed
by them with the SEC.
Based solely on its review of the copies of the section 16(a)
forms received by it or upon written representations from certain
of these reporting persons in lieu of such forms as to compliance
with the section 16(a) regulations, the Company is of the opinion
that during the 1993 fiscal year, all filing requirements
applicable under section 16 to the reporting persons were
satisfied.
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The table below sets forth compensation awarded, earned or
paid by the Company and its subsidiaries for services in all
capacities during each of the three years ended December 31, 1993,
1992 and 1991, to each person who served as the Company's Chief
Executive Officer ("CEO") during the 1993 fiscal year and each
executive officer of the Company, other than the CEO, as of
December 31, 1993, whose total annual salary and bonus
compensation for the most recent fiscal year exceeded $100,000.
<PAGE>
<TABLE>
Summary Compensation Table
<CAPTION>
Long-Term
Compensa-
Annual Compensation tion Awards
- - -----------------------------------------------------------------------------------------
Other Securities
Name and Annual Underlying All Other
Principal Compen- Options/ Compen-
Position Year Salary(1) Bonus sation SARs (#) sation(2)
- - -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard L. Radt; 1993 $222,304 $51,101 $0 0 $24,052(3)
Vice Chairman, 1992 $282,619 $ 0 $0 0 $16,822(3)
President and 1991 $268,240 $ 0 $0 0 $15,785(3)
CEO* and a
director
Daniel R. Olvey; 1993 $177,185 $79,678 $0 37,500(4) $16,052(3)
President and 1992 $139,012 $30,908 $0 25,000(5) $ 2,206
CEO*, 1991 $122,930 $15,150 $0 10,000(5) $ 2,726
Executive Vice
President and
Chief Operating
Officer
Gary P. 1993 $128,041 $69,012 $0 15,000(4) $11,863
Peterson; Senior 1992 $117,684 $50,017 $0 0 $ 2,185
Vice President, 1991 dagger $ 14,625 $ 2,000 $0 15,000(5) $ 0
Finance,
Secretary and
Treasurer
Stuart R. 1993 $118,407 $64,174 $0 15,000(4) $10,093
Carlson; Senior 1992 $107,182 $19,807 $0 0 $ 2,210
Vice President, 1991** $ 60,188 $ 8,000 $0 15,000(5) $ 517
Administration
<FN>
* Mr. Radt was elected Vice Chairman and Mr. Olvey was
elected President and CEO on August 19, 1993.
Dagger Mr. Peterson was elected Vice President-Finance,
Secretary and Treasurer on November 18, 1991.
** Mr. Carlson was elected as Vice President-Human
Resources on June 3, 1991.
(1) Includes compensation deferred by participants under
the Mosinee Thrift Plan. See note (2).
(2) Includes Company contributions under the Mosinee
Thrift Plan, a 401(k) plan under which matching
contributions are made by the Company according to a
fixed formula and, in part, based on the Company's
profits in excess of certain stated minimum amounts.
Thrift Plan contributions made by the Company vest
over a seven-year period. Contributions made in
1993, 1992 and 1991, on behalf of the individuals
named in the summary compensation table were as
follows:
Name 1993 1992 Dagger 1991
---- ---- ---- ----
Mr. Radt $12,052 $3,899 $3,785
Mr. Olvey $12,052 $3,083 $2,726
Mr. Peterson $11,863 $2,388 N/A *
Mr. Carlson $10,093 $2,304 $ 517*
Dagger Amounts indicated have been revised to reflect
post-1992 year-end adjustments. Previously reported
amounts were, respectively, $3,822, $2,206, $2,185
and $2,210.
*Mr. Peterson became eligible to participate on
November 18, 1991 and Mr. Carlson became eligible to
participate on June 3, 1991.
(3) Includes director fees, some of which were deferred
under the Deferred Compensation Plan for Directors
described under the heading "Committees and
Compensation of the Board of Directors," in the
following amounts: Mr. Radt: 1993, $12,000; 1992,
$13,000; 1991, $12,000; Mr. Olvey: 1993, $4,000.
(4) Stock options
(5) Stock appreciation rights
</TABLE>
<PAGE>
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The Company maintains a stock option plan and a stock
appreciation rights plan pursuant to which options to purchase the
Company's common stock and stock appreciation rights may be
granted to key employees. The following table presents certain
information with respect to grants of stock options during fiscal
1993 to executive officers named in the summary compensation
table. No stock appreciation rights were granted in 1993 to
executive officers.
<TABLE>
Option/SAR Grants in Last Fiscal Year
<CAPTION>
Alternative
Individual Grants Grant Date
Value
- - ------------------------------------------------------------------------------------------
% of Total
Number of Options/SARs
Securities Granted to
Underlying Employees in Exercise or Grant Date
Options/SARs Fiscal Base price Expiration Present
Name Granted (#) Year(1) ($/Sh)(2) Date Value $(3)
- - ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mr. Olvey 12,500 18.5% $30.00 10/21/13 $115.375
12,500 18.5% $35.00 10/21/13 $104,750
12,500 18.5% $40.00 10/21/13 $ 96,125
Mr. Peterson 5,000 7.41% $30.00 10/21/13 $ 46,150
5,000 7.41% $35.00 10/21/13 $ 41,900
5,000 7.41% $40.00 10/21/13 $ 38,450
Mr. Carlson 12,500 7.41% $30.00 10/21/13 $ 46,150
12,500 7.41% $35.00 10/21/13 $ 41,900
12,500 7.41% $40.00 10/21/13 $ 38,450
<FN>
(1) Based on 67,500 options granted to all employees.
(2) All exercise prices were above the underlying common
stock's fair market value of $24.75 on the grant
date.
(3) Determined pursuant to Black-Scholes option pricing
model. The estimated grant date present value
reflected in the above table is determined using the
Black-Scholes model. The material assumptions and
adjustments incorporated into the Black-Scholes model
in estimating the value of the options reflected in
the above table include: (a) exercise prices on the
options granted were greater than the value ($24.75)
of the underlying stock on the date of grant, (b) an
option term of 20 years, (c) an interest rate of
5.33% that represents the interest rate on a
long-term U.S. Treasury security, (d) volatility of
46% calculated using daily stock prices for the
one-year period prior to the grant date, (e)
dividends at the rate of $.36 per share representing
the annualized dividends paid with respect to a share
of common stock at the date of grant, and (f) a
reduction of approximately 40% to reflect the
probability of forfeiture due to termination prior to
vesting and the probability of a shortened option
term due to termination of employment prior to the
option expiration date. The actual value, if any, an
optionee will realize upon exercise of an option will
depend on the excess of the market value of the
Company's common stock over the exercise price on the
date the option is exercised. There is no assurance
that the market price of the common stock will
increase as assumed for purposes of this pricing
model and no projections as to the actual future
value of the Company's common stock are intended or
made. See subheading "Stock Based Compensation" on
page 13.
</TABLE>
<PAGE>
The following table sets forth information regarding the
exercise of stock options or stock appreciation rights ("SARs") in
fiscal 1993 by each of the executive officers named in the summary
compensation table and the December 31, 1993 value of unexercised
stock options or SARs held by such officers.
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
- - ------------------------------------------------------------------------------------------
<CAPTION>
Underlying Value of Unexercised In-the-
Unexercised Options/SARs Money Options/SARs at FY-
Acquired on Value at FY-End(#) End ($)(2)
Exercise Realized
Name (#)(1) ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
- - ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mr. Radt N/A N/A 137,000 Dagger 0 $2,905,375 Dagger $ 0
Mr. Olvey N/A N/A 0 12,500* $ 0 $ (3)*
0 12,500* $ (3)*
0 12,500* $ (3)*
25,000 Dagger $ 134,701 Dagger
10,000 Dagger $ 9,102 Dagger
15,000 Dagger $ 174,234 Dagger
Mr. Peterson N/A N/A 0 5,000* $ 0 $ (3)*
5,000* $ (3)*
5,000* $ (3)*
15,000 Dagger $ 23,577 Dagger
Mr. Carlson N/A N/A 0 5,000* $ 0 $ (3)*
5,000* $ (3)*
5,000* $ (3)*
15,000 Dagger $ 26,306 Dagger
<FN>
* Options which become exercisable April 21, 1994.
Dagger SARs exercisable only for cash.
(1) Not applicable; no options or SARs were exercised in
1993.
(2) Includes the value of hypothetical shares credited to
grantee under provisions of SARs which assume cash
dividends are paid on underlying shares and invested
in Company common stock; based on $29.75 value at
December 31, 1993.
(3) Exercise price exceeded fair market value of stock at
December 31, 1993.
</TABLE>
<PAGE>
PENSION PLAN BENEFITS
MOSINEE RETIREMENT PLAN
-----------------------
The following table reflects illustrative estimated single
life normal retirement benefits payable at age 65 by the
Retirement Plan on an annual basis to participants in selected
remuneration and years of service classifications. In estimating
the annual benefit, it is assumed that covered compensation for
years after 1993 will continue at the same rate as 1993. The
benefit amounts listed in the table are based on five-year average
cash compensation paid to a participant and are not subject to any
deduction for Social Security benefits or other offset amounts.
Benefits are limited by Internal Revenue Service rules which
provide that the maximum compensation which could be used in 1993
to determine benefits was $235,840. At December 31, 1993, the
credited years of service and the approximate average remuneration
covered by the Retirement Plan for the persons named in the
summary compensation table were: Messrs. Radt, 6 years, $235,840;
Olvey, 4 years, $183,000; Peterson, 2 years, $182,000; and
Carlson, 3 years, $134,000.
<TABLE>
<CAPTION>
Final Average Years of Service
Earnings 15 20 25 30*
------------------------------------------------------
<S> <C> <C> <C> <C>
$125,000.......$18,450 $24,600 $30,750 $36,900
$150,000.......$22,200 $29,600 $37,000 $44,400
$175,000.......$25,950 $34,600 $43,250 $51,900
$200,000.......$29,700 $39,600 $49,500 $59,400
$225,000.......$33,450 $44,600 $55,700 $66,900
$250,000.......$37,200 $49,600 $62,000 $74,400
$275,000.......$40,950 $54,600 $68,250 $81,900
$300,000.......$44,700 $59,600 $74,500 $89,400
<FN>
*Maximum number of years credited for benefit accrual
purposes.
</TABLE>
SUPPLEMENTAL RETIREMENT PLAN
----------------------------
The Company entered into a Supplemental Retirement Benefit
Agreement with Mr. Radt in November, 1991 under which Mr. Radt is
entitled to receive a lump sum supplemental retirement benefit
plus interest credited at a rate, adjusted quarterly, equal to the
prime rate as published in The Wall Street Journal. As of
December 31, 1993, the accrued value of this benefit, including
interest, was $141,696. The supplemental benefit is payable on
Mr. Radt's termination of employment and will continue to be
credited with interest until the date of payment. In the event of
Mr. Radt's death prior to payment of the supplemental benefit, the
supplemental benefit will be paid to Mr. Radt's beneficiary.
<PAGE>
COMMITTEES' REPORT ON EXECUTIVE COMPENSATION POLICIES
Compensation policies are established by the Executive
Compensation & Bonus Committee of the Board of Directors (the
"Compensation Committee") which establishes and reviews base
salaries of executive officers other than the Chairman of the
Board and is also responsible for the establishment and
implementation of executive bonus and incentive programs. The
salary of Mr. Orr, the Chairman of the Board of the Company, is
approved by the Board of Directors as a whole.
The Company's compensation program for executive officers may
include various grants under the Company's stock option and stock
appreciation rights ("SAR") plans. The Company's SAR plan is
administered by a separate committee appointed by the Board of
Directors. The stock option plan is administered by the
Compensation Committee. The SAR plan committee generally
considers recommendations of the Compensation Committee with
respect to grants, but each committee has full discretion and
control over whether a grant will be made and the amount and terms
of any such grant. Insofar as this report includes a description
of the compensation policies relating to the SAR plan, this report
is a joint report of the Compensation Committee and of the SAR
plan committee.
This report describes the policies of the committees and the
Company as in effect in 1993. As circumstances change and one or
more of the committees deem it appropriate, policies in effect
from time to time for years after 1993 may change.
GENERAL
-------
The Company's executive compensation policies are designed to
attract and retain individuals who have experience in the paper
industry or who otherwise have particular training or skills which
will satisfy particular requirements of the Company and to reward
job performance which the Compensation Committee believes to be at
or above the level expected of the Company's executive officers.
The total compensation paid to executive officers and the
retirement and other fringe benefits provided by the Company are
designed to offer a level of compensation which is competitive
with other paper companies or, in some cases, the operating units
of larger paper companies which are comparable to the Company.
Some, but not all, of the comparable companies used for purposes
of compensation comparisons are included in the thirty-five
companies which comprise the Media General MG Industry Group 381
index of paper company stock performance under the heading "Stock
Price Performance Graph." In making compensation comparisons, the
Committee uses only those companies whose operations are similar
to the Company or, in some cases, have operating units similar to
the Company. Given the disparity in size between companies which
operate in the paper industry and the difficulty in determining
the precise duties of executive officers of other companies, it is
difficult to draw exact comparisons with the compensation policies
of other companies and the determination of appropriate
compensation levels by the Compensation Committee is, therefore,
subjective.
<PAGE>
The Company's overall compensation policy is designed so that
a significant portion of each executive officer's compensation
package is directly tied to the performance of the Company through
a combination of annual incentive bonuses which are based on the
Company's financial performance during each fiscal year and stock
based incentive programs which reflect the performance of the
Company's common stock. The value of the stock based incentive
awards to executive officers increases or decreases in value as
the price of the Company's common stock increases or decreases in
the Nasdaq National Market System.
Beginning in 1994, the Company may not deduct compensation
paid to the CEO and each of the four most highly paid executive
officers named in the summary compensation table who are officers
on the last day of the year to the extent the compensation paid to
the individual officer exceeds $1 million. This limitation is
subject to certain exceptions for compensation paid pursuant to
performance based plans and amounts received through the exercise
of stock options and SARs provided certain requirements are met.
Amounts receivable by Company officers under stock options or SARs
granted before February 18, 1993 are not subject to this limit.
The Company does not expect any compensation paid in 1994 will
exceed the deductible limit. The Committee is reviewing this
limit and is determining what changes, if any, will be made in the
Company's compensation policies.
BASE SALARIES AND BENEFITS
--------------------------
The Compensation Committee considers a general survey of
paper industry compensation prepared by an independent
compensation and benefit consultant to assist it in determining an
appropriate and comparable level of base salary and benefits for
executive officers. Annual increases in base salary are
determined by the overall objective of maintaining competitive
salary levels, more general factors such as the rate of inflation,
and individual job performance. Individual job performance,
including satisfaction of individual performance objectives and
goals and the accomplishment of specified programs in appropriate
cases, is the most important factor considered by the Compensation
Committee in determining appropriate increases in base
compensation.
In the case of executive officers other than the CEO,
individual performance objectives and goals are established by the
CEO and the assessment of an individual's job performance is based
on annual performance evaluations conducted by the CEO. The CEO's
base salary is determined by the Compensation Committee on the
same basis as that of the Company's other executive officers,
except that it is the Compensation Committee which annually
establishes individual performance objectives for the CEO and
reviews his accomplishment of the objectives established by the
Compensation Committee.
In addition to base salary increases which reflected the
foregoing factors, Messrs. Olvey, Peterson and Carlson also
received increases in base salary in 1993 which reflect promotions
received during the year and their increased management
responsibilities and Mr. Radt's base salary was adjusted to
reflect his election as Vice Chairman and Mr. Olvey's assumption
of the duties of CEO.
<PAGE>
INCENTIVE COMPENSATION BASED ON FINANCIAL PERFORMANCE OF THE
------------------------------------------------------------
COMPANY AND INDIVIDUAL PERFORMANCE
- - ----------------------------------
The Company maintains incentive reward plans for executive
officers which provide for the payment of annual cash bonuses to
participants if annual Company financial and individual
performance objectives are met. The Compensation Committee, in
its sole discretion, annually establishes performance levels for
the plans and may throughout the year review and adjust the
standards for performance measurements, performance levels, and
the maximum cash bonuses (as a percentage of base salary) to be
paid.
In 1993, executive officers received incentive compensation,
based on each operating unit's attainment of operating income
within a specified minimum and maximum range for such unit. The
maximum bonus payable in 1993 to Mr. Radt with respect to
performance of the Company's various operating units was based on
achievement of the maximum specified operating income by each unit
and ranged from 4% to 28% of his base salary as CEO, with a
maximum aggregate bonus of 80% of base salary. The maximum
bonuses payable in 1993 to Mr. Olvey, who became President and CEO
on August 19, 1993, and to each other executive officer of the
Company was based on the achievement of the maximum specified
operating income by each Company's various operating units and
ranged from 3.75% to 26.25% of the officer's base salary with a
maximum aggregate bonus of 75% of base salary. Operating income
of each unit is determined prior to bonus expense and
extraordinary items.
In addition, during 1993 each executive officer other than
Mr. Radt was eligible to receive incentive compensation upon
satisfaction of individual performance objectives established at
the beginning of the year by Mr. Radt. The maximum aggregate
incentive compensation payable to an executive officer based upon
achievement of all individual performance objectives could not
exceed 25% of the officer's base salary.
STOCK BASED COMPENSATION
------------------------
Executive officers participate in the Company's stock option
and SAR plans at various levels. The stock option plan is
administered by the Compensation Committee and the SAR plan is
administered by a committee appointed by the Board of Directors.
Each of the committees may impose conditions or restrictions as to
exercise or vesting of grants under its respective plan. For
example, the aggregate number of options granted in 1993 to
executive officers were divided into three distinct increments
which were exercisable at successively higher exercise prices.
Neither of the committees has established formal criteria by which
the size of plan grants are determined, but each committee
considers the amount and terms of each grant already held by an
executive officer in determining the size and amount of any new
grant.
<PAGE>
The value of stock option and SAR grants are principally
related to the long-term performance of the Company's common stock
and therefore provide an identity of interests between the
Company's executive officers and its shareholders. However,
grantees of SARs benefit from the increase in value of the
underlying common stock and from the value of the hypothetical
cash dividends which would be paid with respect to a share of
stock. The value of such hypothetical dividends is determined as
if underlying shares subject to the SAR paid dividends in the same
amount as actual common stock and that such hypothetical cash
dividends are reinvested in shares of hypothetical stock on each
dividend payment date (and further assume that dividends are paid
and reinvested on the hypothetical stock in the same manner).
Therefore, executive officers who exercise SARs will benefit from
such grants regardless of an increase in the price of the
Company's common stock, but such value will be enhanced by
increases in the price of the Company's common stock and will be
of maximum value to the executive officer only if such increase in
the price of the common stock occurs. It is the intention of the
Company that the hypothetical dividend features of the SARs will
place the executive officers in the same position as shareholders
of the Company, thereby enhancing the officer's long-term
incentive and increasing his identity with the shareholders.
Options and SARs can be, but are not necessarily, granted on
an annual basis. See tables on pages 9 and 10.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
-----------------------------------------------------------
Mr. Orr is Chairman of the Compensation Committee and, as
Chairman of the Board of the Company, he is considered an employee
of the Company. See "Committees and Compensation of the Board of
Directors."
Executive Bonus and Compensation Committee
San W. Orr, Jr.
Richard G. Jacobus
Stanley F. Staples, Jr.
1990 SAR Plan Committee
Richard G. Jacobus
Stanley F. Staples, Jr.
Walter Alexander
STOCK PRICE PERFORMANCE GRAPH
The following graph and table compare the yearly percentage
change in the cumulative total shareholder return on the Company's
common stock for the five year period beginning December 31, 1988
with two indices published by Media General Financial Services.
The Media General Nasdaq Market Index indicates the performance of
all stocks which have been traded on the Nasdaq market during the
entire five year period. The Media General MG Industry Group 381-
Paper Products Index indicates the performance of thirty-five
companies in the paper products industry. The graph and table
assume that the value of the investment in the Company's common
stock and each index on December 31, 1988 was $100 and that all
dividends were reinvested.
<PAGE>
<TABLE>
[PERFORMANCE GRAPH FILED UNDER COVER OF FORM SE]
<CAPTION>
Value of Hypothetical Investment
December 31,
- - ------------------------------------------------------------------------------------------
1988 1989 1990 1991 1992 1993
- - ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mosinee Paper Corporation $100.00 $111.68 $134.37 $187.99 $159.36 $196.70
MG Paper Industry Group 381 Index $100.00 $113.35 $103.47 $130.21 $136.99 $143.13
MG Nasdaq Market Index $100.00 $112.89 $ 91.57 $117.56 $118.71 $142.40
</TABLE>
APPROVAL OF INDEPENDENT AUDITORS
The Board of Directors will present to the Annual Meeting a
resolution that the shareholders ratify the appointment of the
firm of Wipfli Ullrich Bertelson CPAs as independent auditors to
audit the books, records and accounts of the Company for the year
ending December 31, 1994. The firm has audited the Company's
books annually since 1931.
Representatives of Wipfli Ullrich Bertelson CPAs will be
present at the Annual Meeting and will have an opportunity to make
a statement or respond to appropriate questions.
SHAREHOLDER PROPOSALS
If any shareholder desires to submit a proposal for inclusion
in the proxy statement to be used in connection with the Annual
Meeting of Shareholders to be held in 1995, the proposal must be
in proper form and be received by the Company no later than
November 15, 1994.
Pursuant to the Company's bylaws, shareholders entitled to
vote at the annual meeting of shareholders to be held in 1995 may
bring business before the 1995 annual meeting for consideration
only if proper notice of the proposed business has been provided
to the Secretary of the Company not earlier than January 21, 1995
and not later than February 20, 1995. The precise requirements,
including the information required to be provided in the
shareholder notice and the procedures for notice in the event the
date of the annual meeting is changed, are set forth in the
Company's bylaws which may be obtained from the Secretary of the
Company. See "Committees and Compensation of Board of Directors"
regarding bylaw requirements relating to nominations from the
floor at the annual meeting of shareholders to be held in 1995.
<PAGE>
OTHER MATTERS
At this date, there are no other matters the Board of
Directors intends to present or has reason to believe others will
present to the Annual Meeting. If other matters now unknown to
the Board of Directors are properly presented at the Annual
Meeting, those named as proxies will vote in accordance with their
judgment.
DATED: March 23, 1994.
BY ORDER OF THE BOARD OF DIRECTORS
GARY P. PETERSON,
Secretary
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY.
