FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 0-1732
MOSINEE PAPER CORPORATION
(Exact name of registrant as specified in charter)
WISCONSIN 39-0486870
(State of incorporation) (I.R.S Employer Identification
Number)
1244 KRONENWETTER DRIVE
MOSINEE, WISCONSIN 54455-9099
(Address of principal executive office)
Registrant's telephone number, including area code: 715-693-4470
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
The number of common shares outstanding at September 30, 1997 was 15,201,721.
<PAGE>
MOSINEE PAPER CORPORATION
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1997
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of
Income, Three Months and Nine Months
Ended September 30, 1997 (unaudited) and
September 30, 1996 (unaudited) 1
Condensed Consolidated Balance
Sheets, September 30, 1997 (unaudited)
and December 31, 1996 (derived from
audited financial statements) 2
Condensed Consolidated Statements
of Cash Flows, Nine Months
Ended September 30, 1997 (unaudited)
and September 30, 1996 (unaudited) 3
Notes to Condensed Consolidated
Financial Statements 4
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 5
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
MOSINEE PAPER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
($ thousands, except 1997 1996 1997 1996
share data - unaudited)
<S> <C> <C> <C> <C>
Net sales $89,782 $81,761 $253,293 $237,130
Cost of sales 67,073 58,764 187,542 173,445
Gross profit on sales 22,709 22,997 65,751 63,685
Operating expenses:
Selling 3,052 3,140 9,244 8,487
Administrative 7,711 4,974 16,266 17,299
Total operating expenses 10,763 8,114 25,510 25,786
Income from operations 11,946 14,883 40,241 37,899
Other income (expense):
Interest expense ( 989) (1,056) (2,915) (3,512)
Other 182 72 319 143
Income before income taxes 11,139 13,899 37,645 34,530
Provision for income taxes 4,175 5,620 14,525 13,950
Net income $6,964 $8,279 $23,120 $20,580
Net income per share $0.46 $0.53 $1.52 $1.31
Weighted average common
shares outstanding 15,201,721 15,724,596 15,214,603 15,724,596
</TABLE>
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<PAGE>
<TABLE>
MOSINEE PAPER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
($ thousands * ) September 30, December 31,
1997 1996
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 350 $ 3,150
Receivables, net 31,457 23,407
Inventories 47,236 41,254
Deferred income taxes 8,275 7,225
Other 312 311
Total current assets 87,630 75,347
Property, plant and equipment 398,983 370,085
Less: accumulated depreciation 182,859 170,610
Net depreciated value 216,124 199,475
Other assets 13,021 10,207
TOTAL ASSETS $316,775 $285,029
LIABILITIES
Accounts payable $ 19,926 $ 18,262
Accrued and other liabilities 25,988 27,316
Accrued income taxes 1,569 2,420
Total current liabilities 47,483 47,998
Long-term debt 64,864 48,332
Deferred income taxes 38,685 35,538
Postretirement benefits 16,906 16,125
Other noncurrent liabilities 13,596 11,884
Total liabilities 181,534 159,877
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 - no par value, authorized
30,000,000 shares 58,678 58,678
Retained earnings 104,779 83,763
Subtotals 163,457 142,441
Treasury stock at cost (29,471) (18,544)
Total stockholders' equity 133,986 123,897
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $316,775 $285,029
<FN>
*The consolidated balance sheet at September 30, 1997 is unaudited. The
December 31, 1996 consolidated balance sheet is derived from audited financial
statements.
</TABLE>
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<PAGE>
<TABLE>
MOSINEE PAPER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Nine Months Ended
September 30,
($ thousands - unaudited) 1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 23,120 $ 20,580
Provision for depreciation, depletion
and amortization 14,177 13,014
Recognition of deferred revenue ( 30) ( 30)
Provision for losses on accounts receivable 24 224
Gain on property, plant and equipment
disposals ( 296) ( 136)
Deferred income taxes 2,097 7,350
Changes in operating assets and liabilities:
Receivables ( 5,372) ( 510)
Inventories ( 3,213) ( 5,410)
Other assets ( 4,497) ( 2,621)
Accounts payable and other liabilities 2,361 4,015
Accrued income taxes ( 851) 839
Net cash provided by operating activities 27,520 37,315
Cash flows from investing activities:
Capital expenditures ( 25,170) ( 16,564)
Acquisition of B & J Supply ( 6,235)
Proceeds from property, plant and
equipment disposals 450 311
Net cash used in investing activities ( 30,955) ( 16,253)
Cash flows from financing activities:
Borrowings (payments) under credit agreements 14,503 ( 19,058)
Dividends paid ( 2,941) ( 2,385)
Payments for purchase of company stock ( 10,927) ( 20)
Net cash provided by (used in) financing
activities 635 ( 21,463)
Net decrease in cash and cash equivalents ( 2,800) ( 401)
Cash and cash equivalents at beginning of year 3,150 2,416
Cash and cash equivalents at end of period $ 350 $ 2,015
Supplemental Cash Flow Information:
Interest paid - net of amount capitalized $ 2,867 $ 3,784
Income taxes paid 13,279 5,762
</TABLE>
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<PAGE>
MOSINEE PAPER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying financial statements, in the opinion of management,
reflect all adjustments which are normal and recurring in nature and
which are necessary for a fair statement of the results for the
periods presented. Some adjustments involve estimates which may
require revision in subsequent interim periods or at year-end. In all
regards, the financial statements have been presented in accordance
with generally accepted accounting principles.
<TABLE>
2. Inventories consist of the following:
<CAPTION>
($ thousands) Sept. 30, Dec. 31,
1997 1996
<S> <C> <C>
Raw material $19,991 $18,154
Finished goods and work in process 24,637 20,764
Supplies 9,873 8,944
Subtotal 54,501 47,862
Less: LIFO reserve 7,265 6,608
Net inventories $47,236 $41,254
</TABLE>
3. Earnings per share of common stock is based on the weighted average
number of common shares outstanding and gives effect to applicable
preferred stock dividends. Sorg Paper Company preferred stock
dividends in arrears for the nine months ended September 30, 1997 and
1996 were $51,840.
4. Net income includes expenses for incentive compensation plans based
upon the company's stock price. The company calculates this liability
using the average price of Mosinee Paper's stock at the close of each
fiscal quarter as if all earned incentive compensation plans had been
exercised on that day. For the three months ended September 30, 1997,
these plans resulted in an after-tax expense of $2,416,000 or $0.16
per share, compared to the third quarter of 1996 which produced an
after-tax expense of $183,000 or $0.01 per share. For the year-to-
date in 1997 these plans resulted in an after-tax expense of
$2,564,000 or $0.17 per share, compared to an after-tax expense of
$2,139,000 or $0.14 per share for the same period of 1996.
5. Prior year per share data has been restated for a 3 for 2 stock split
on May 15, 1997.
6. Certain legal proceedings are described under Part II, Item 1 of this
report.
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7. Refer to notes to the financial statements which appear in the 1996
annual report for the company's accounting policies which are
pertinent to these statements.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(All $ amounts are in thousands, except per share
amounts)
On August 25, 1997, the company announced a proposed merger with Wausau
Paper Mills Company. This report does not reflect any effect of the
proposed merger with Wausau Paper Mills Company.
RESULTS OF OPERATIONS
Quarterly and year-to-date sales increases produced record earnings before
stock incentive program charges. For the third quarter, sales of $89,782
increased 10% over the $81,761 reported for the third quarter last year.
This sales increase resulted from $9 million in volume increases offset by
$7 million in price decreases. Sales for the quarter of B & J Supply,
acquired April 1, 1997, accounted for the remaining $6 million increase.
Product sales mix had little effect on the change in sales. Year-to-date
sales of $253,293 increased 7% over the $237,130 reported for the same
nine month period last year. This increase followed the same trends as
the quarterly sales increase. Volume increases of $20 million were offset
by $14 million of price decreases, with the difference in the total sales
increase being the additional sales from B & J Supply. The volume
increases and pricing decreases were shared equally between the specialty
paper sales and the towel and tissue sales.
Cost of sales for the third quarter of $67,073 increased 14% over the
$58,764 reported for the third quarter of 1996. As a percent of net
sales, cost of sales increased to 75% from the year earlier level of 72%
primarily due to increased costs for pulp and wastepaper. For the nine
months year-to-date, cost of sales of $187,542 increased 8% over the
$173,445 reported for the same period last year. As a percent of net
sales, cost of sales increased 1% to the current level of 74%. This is
mainly due to raw material costs rising faster than sales price relief.
Gross profit, reflecting the above, decreased 1% to $22,709 for the third
quarter from the $22,997 reported for the same period last year. Gross
profit as a percent of sales for the quarter decreased to 25% compared to
the 28% for the third quarter last year. On a year-to-date basis, gross
profit of $65,751 increased 3% over the $63,685 reported last year. The
gross profit margin for 1997 is 26%, down from last year's level of 27%.
This reduction in margins is due principally to higher raw material costs
offset by a continued emphasis on cost reduction programs and higher
operating efficiencies.
Operating expenses for the third quarter of $10,763 increased 33%, over
the $8,114 reported for the third quarter last year. Selling expenses
decreased 3% from the third quarter last year, while administrative
expenses, excluding the effect of expense for incentive compensation
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programs based on the market price of the company's stock, declined $821,
or 18% from the same period last year. For the third quarter this year and
last year, a rise in stock prices increased the liability for incentive
compensation programs resulting in an expense of $3,865 in 1997 compared
to $307 in 1996. For the nine months year-to-date, incentive compensation
based on the company's stock price is an expense of $4,174 for 1997
compared to an expense of $3,588 last year. For both the quarter and nine
<PAGE>
month period this year, general inflationary increases in operating
expenses, along with increases in basic employee compensation and
retirement expense were offset by a reduction in costs for bonus programs
and company contributions to 401-K plans, as well as, general cost
reduction programs in other areas.
Reflecting the above, income from operations for the third quarter of
$11,946 decreased $2,937, or 20% from the year earlier level of $14,883.
Year-to-date income from operations of $40,241 increased 6% over the
$37,899 reported for the same period last year. Excluding the effects of
the incentive compensation based on the company's stock price, income from
operations for the third quarter 1997 would have been $15,811, or 4% over
the year earlier level of $15,190, and year-to-date levels would have been
$44,415 for 1997 and $41,487 for 1996.
Interest expense decreased 6% for the quarter and 17% year-to-date
reflecting the decrease in the average principal balance of outstanding
long-term debt for the nine months of 1997 compared to the same period of
1996. See "Liquidity and Capital Resources" below with respect to current
level indebtedness. Interest rates in effect remained relatively the same
when comparing the third quarter and year-to-date of 1997 to the same
periods of 1996. Other income and expense of $319 and $143 for the first
nine months of 1997 and 1996, respectively, is primarily due to gains on
disposals of assets.
As a result, income before taxes reached $11,139 for the third quarter of
1997 compared to $13,899 during the same period in 1996, a decrease of
20%. Pretax income for nine months of 1997 was $37,645, or 9% over the
$34,530 reported last year. The provisions for income taxes of $4,175 and
$5,620, for the third quarters of 1997 and 1996 and year-to-date
provisions of $14,525 and $13,950, respectively, are based on an
effective income tax rate of approximately 38.5% for 1997 and 40.4% for
1996.
Reflecting the above, net income for the third quarter 1997 of $6,964, or
$0.46 per share, declined from the $8,279, or $0.53 per share reported for
the same period last year. For the nine months, net income increased 12%
from the $20,580, or $1.31 per share reported last year, to $23,120, or
$1.52 for 1997.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities for the first nine months of 1997 of
$27,520 decreased nearly $10 million from the $37,315 provided during the
first nine months of 1996, with improved net income from operating
activities being offset by lower tax deferrals and an
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increase in accounts receivable from the increased sales volume. Cash
used in investing activities included $25,170 of capital expenditures
and $6,235 for the acquisition of B & J Supply. These capital
expenditures were partially offset by $450 of proceeds from the disposal
of capital assets. The primary capital spending during this period was
$8,109 for towel and tissue equipment at the Bay West Paper converting
operation for added capacity to keep pace with Bay West's sales volume
increases.
<PAGE>
Cash provided by or utilized in financing activities consisted of
borrowings under credit agreements of $14,503 for the nine months of 1997,
compared to payments on credit agreements last year of $19,058. Cash
dividends were paid to shareholders of $2,941 and $2,385 for the nine
months of 1997 and 1996, respectively. The company also utilized $10,927
of cash to buy back its own stock in 1997. Cash provided from operations
and financing activities less amounts utilized in investing activities
reduced cash by $2,800 from the year-end level of $3,150.
As of March 31, 1997, the company maintained a credit agreement with one
bank acting as agent and certain financial institutions as lenders to
issue up to $65,000 of unsecured borrowing less the amount of commercial
paper outstanding. This agreement was amended and restated on April 9,
1997, and expires on April 9, 2002, allowing for unsecured borrowings of
$90,000. The company also maintains a loan agreement with another bank
for $20,000, making the current total amount available for borrowing of
$110,000. As of September 30, 1997, the company had issued and outstanding
$24,264 of commercial paper and had other borrowings under the agreements
of $40,600 for a total debt of $64,864. This leaves approximately $45,000
currently available to supplement cash provided from operations for use in
the business which, at the present time, the company believes to be
adequate for the operation of the business and planned capital
expenditures.
Long-term debt as a percent of total capitalization increased to 32.6%
from the prior year-end level of 28.1%. Working capital of $40,147
increased $12,798 from the end of 1996 reflecting a significant increase
in accounts receivable due to the increased sales volume and increased
inventories due to various operating needs. The current ratio, reflecting
this increase, improved to 1.85:1 at September 30, 1997 from the year end
level of 1.57:1.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS:
On November 3, 1997, the Ohio Environmental Protection Agency issued a
draft permit which includes limitations on photoreactive compound
emissions at the Company's Bay West facility. The Company believes that
the proposed limitations are too restrictive and will seek to modify the
limitations in further permit discussions to be held with the Ohio
Environmental Protection Agency.
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On May 13, 1997, the State of Florida filed a civil complaint in the
Northern District of Florida against ten manufacturers of commercial
sanitary paper products, including the company's wholly-owned subsidiary,
Bay West Paper Corporation, alleging a conspiracy to fix prices starting
at least as early as 1993. In addition, on May 13, 1997, a private class
action suit was filed in the Northern District of Florida against the
same defendants, also alleging a conspiracy to fix prices. Related class
action suits have been filed in federal district courts in at least four
states and in the state courts of California and Tennessee. The
defendants have filed a motion in the California and Tennessee state
court proceedings to remove the cases to federal court. The defendants
in the private class action suits have filed a motion to transfer and
consolidate the suits with the multidistrict litigation panel. The
<PAGE>
company intends to vigorously defend these suits. While the company
does not believe, based on the information now available, that these
suits will have a material adverse effect on the operations,
liquidity or consolidated financial condition of the company, these
suits are only recently filed and there can be no assurance as to the
effect of their outcome on the company.
ITEM 5. OTHER INFORMATION:
ACQUISITION OF B & J SUPPLY
On April 1, 1997, the company acquired the business and assets of B & J
Supply, Inc. of Appleton, Wisconsin, a converter and nationwide supplier
of school papers, with a net asset purchase of $6.2 million and payment of
B & J Supply's existing debt of $2 million.
MOSINEE PAPER CORPORATION - WAUSAU PAPERS MILLS COMPANY MERGER
On August 24, 1997, the Company, Wausau Paper Mills Company ("Wausau"),
and WPM Holdings, Inc., a wholly-owned subsidiary of Wausau ("Merger
Sub"), entered into an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which Merger Sub will be merged with and into the
company (the "Merger") with the company being the surviving corporation.
Under the terms of the Merger Agreement, which was unanimously approved by
the Boards of Directors of the company and Wausau, each outstanding share
of company common stock will be converted into the right to receive 1.4
shares of Wausau common stock, with cash paid in lieu of fractional
shares. The Merger, which is subject to approval by the shareholders of
both the company and Wausau, regulatory approval and other customary
conditions, will be accounted for as a pooling of interests and is
expected to close by the end of calendar 1997.
Wausau operates paper mills in Wisconsin, New Hampshire and Maine and is a
leading producer of a wide range of virgin and recycled printing and
writing papers, two-thirds of which are colored papers, including
Astrobrights<reg-trade-mark>, a 25-year old national brand. These premium
printing and writing papers serve four major categories: text and cover,
index and bristol, imaging, and offset. More than 80% of Wausau's writing
and printing paper is sold in sheet form to paper distributors, the
remaining 20% is sold to converters that serve the greeting card and
announcement industry. In addition, Wausau is one of the nation's largest
manufacturers of supercalendered backing papers for pressure-sensitive
labeling applications.
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The company also manufactures specialty papers for a broad range of food
and medical and industrial applications, including protective barrier
papers for pet food, microwave popcorn and lightweight paper for
sterilized medical packaging. Wausau had revenues of $570 million and
net income of $48.9 million for its fiscal year ended August 31, 1997.
CAUTIONARY STATEMENT
This quarterly report contains certain of management's expectations and
other forward-looking information regarding the company. While the
company believes that these forward-looking statements are based on
reasonable assumptions, all such statements involve risk and
uncertainties that could cause actual results to differ materially from
those contemplated in this report. The assumptions, risks and
uncertainties relating to the forward-looking statements in this report
include those described under the caption "Cautionary Statements
<PAGE>
Regarding Forward-looking Information" in the company's Form 10-K for
the year ended December 31, 1996 and, from time to time, in the
company's other filings with the Securities and Exchange Commission.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits required by Item 601 of Regulation S-K
The following exhibits are filed with the Securities and Exchange
Commission as part of this report.
INCORPORATED
EXHIBIT<dagger>
2.1 Agreement and Plan of Merger dated August 24,
1997 among Registrant, Wausau Paper Mills
Company, and WPM Holdings, Inc. ................... 99.1(1)
3.1 Restated Articles of Incorporation, as last
amended April 26, 1995 ............................ 3(i)(2)
3.2 Restated Bylaws, as last amended April 16, 1992.... 3(b)(3)
3.3 Preferred Share Rights Agreement
dated July 1, 1996 ................................ l(4)
3.4 Amendment No. 1 to Rights Agreement dated
August 24, 1997 ................................... 99.2(1)
3.5 Restated Articles of Incorporation
and Restated Bylaws (see Exhibit 3.1 and 3.2)
10.1* Deferred Compensation Plan for Directors,
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as amended August 24, 1997
10.2* 1985 Executive Stock Option
Plan, as amended August 24, 1997
10.3* Mosinee Paper Corporation 1988 Stock
Appreciation Rights Plan, as amended 4/18/91 ...... 10(c)(6)
10.4* 1996 and 1997 Incentive Compensation
Plan for Corporate Executive Officers ............. 10(d)(7)
10.5* Supplemental Retirement Benefit
Plan dated October 17, 1991,
as amended August 24, 1997
10.6* Supplemental Retirement Benefit Agreement
dated November 15, 1991 .......................... 10(f)(6)
10.7* 1994 Executive Stock Option Plan,
as amended August 24, 1997
10.8* Mosinee Supplemental Retirement Plan,
as amended August 24, 1997
<PAGE>
10.9* Daniel R. Olvey Change of Control
Employment Agreement dated August 24, 1997
10.10* Gary P. Peterson Change of Control
Employment Agreement dated August 24, 1997
10.11* Stuart R. Carlson Change of Control
Employment Agreement dated August 24, 1997
10.12* Dennis M. Urbanek Change of Control
Employment Agreement dated August 24, 1997
10.13* David L. Canavera Change of Control
Employment Agreement dated August 24, 1997
10.14* Change of Control Severance Policy
dated August 24, 1997
* Denotes Executive Compensation Plans and Arrangements
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21.1 - Subsidiaries of Registrant ...................... 22(3)
27.1 - Financial data schedule
Where exhibit has been previously filed and is incorporated herein by
reference, exhibit numbers set forth herein correspond to the exhibit
number where such exhibit can be found in the following reports of the
registrant (Commission File No. 0-1732) filed with the Securities and
Exchange Commission:
(1) Current Report on Form 8-K dated August 24, 1997
(2) Quarterly report on Form 10-Q for the period ended June 30, 1996
(3) Annual Report on Form 10-K for the fiscal year ended December 31,
1992
(4) Form 8-A dated July 2, 1996
(5) Quarterly report on Form 10-Q for the period ended September 30,
1996
(6) Annual Report on Form 10-K for the fiscal year ended December 31,
1995
(7) Annual Report on Form 10-K for the fiscal year ended December 31,
1996
(8) Annual Report on Form 10-K for the fiscal year ended December 31,
1993
(b) Reports on Form 8-K:
The company filed a Form 8-K dated August 24, 1997 with respect
to the proposed merger with Wausau Paper Mills Company described under
Item 5.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MOSINEE PAPER CORPORATION
November 6, 1997 GARY P. PETERSON
Gary P. Peterson
Senior Vice President-Finance,
Secretary and Treasurer
(On behalf of the Registrant and as
Principal Financial Officer)
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<PAGE>
EXHIBIT INDEX<dagger>
TO
FORM 10-Q
OF
MOSINEE PAPER CORPORATION
FOR THE PERIOD ENDED SEPTEMBER 30, 1997
Pursuant to Section 102(d) of Regulation S-T
(17 C.F.R. <section>232.102(d))
EXHIBIT 10 - MATERIAL CONTRACTS*
10.1* Deferred Compensation Plan for Directors
as amended August 24, 1997
10.2* 1985 Executive Stock Option
Plan as amended August 24, 1997
10.5* Supplemental Retirement Benefit
Plan dated October 17, 1991,
as amended August 24, 1997
10.7* 1994 Executive Stock Option Plan,
as amended August 24, 1997
10.8* Mosinee Supplemental Retirement Plan
as amended August 24, 1997
10.9* Daniel R. Olvey Change of Control
Employment Agreement dated August 24, 1997
10.10* Gary P. Peterson Change of Control
Employment Agreement dated August 24, 1997
10.11* Stuart R. Carlson Change of Control
Employment Agreement dated August 24, 1997
10.12* Dennis M. Urbanek Change of Control
Employment Agreement dated August 24, 1997
10.13* David L. Canavera Change of Control
Employment Agreement dated August 24, 1997
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10.14* Change of Control Severance Policy
dated August 24, 1997
*All exhibits represent executive compensation plans and
arrangements.
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
<dagger>Exhibits required by Item 601 of Regulation S-K which have
been previously filed and are incorporated by reference are set forth
in Part IV, Item 14(c) of the Form 10-Q to which this Exhibit Index
relates.
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EXHIBIT 10.1
MOSINEE PAPER CORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS
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 conditions as the Participant may provide in such
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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
<PAGE>
securities under an employee benefit plan of the Company or any
of its subsidiaries, (iii) an underwriter temporarily holding
-2-
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
-3-
into voting securities of the surviving entity) in combination
with the ownership of any trustee or other fiduciary holding
securities under an employee benefit 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
-4-
<PAGE>
(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, without 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.
-5-
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
-6-
<PAGE>
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 9 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. Effective from and after November 1, 1996, each fiscal
year, a Participant may file a new election with the Company specifying
(1) the Account to which all Directors' Fees deferred subsequent to the
last day of such fiscal year (and prior to the effective date of any
subsequent election) shall be allocated and/or (2) the Account to which
all or any portion of the balance of his Accounts as of the last day of
such fiscal year shall be allocated. The transfer of a Participant's
Account balance shall be made in accordance with the following:
(1) in the case of a transfer from a Deferred Cash Account into a
Deferred Stock Account, that portion of the balance
-7-
in the Participant's Deferred Cash Account as of the last day of the
fiscal year in which the Participant has made an election to transfer
his Deferred Cash Balance shall be determined after giving effect to
all other adjustments required by this Plan and such portion shall be
debited from the Participant's Deferred Cash Account and credited to
his Deferred Stock Account effective as of the first day of the next
subsequent fiscal year.
(2) in the case of a transfer from a Deferred Stock Account into a
Deferred Cash Account, the number of Stock Equivalent Units in the
Participant's Deferred Stock Account as of the last day of the fiscal
year to which the Participant has made an election to transfer his
Deferred Stock Account shall be determined after giving effect to all
other adjustments required by this Plan and such Stock Equivalent
Units shall be converted into cash equivalent by multiplying the
number of such units by an amount equal to the per share Fair Market
Value of the Common Stock on the last day of the fiscal year.
Effective as of the first day of the next subsequent fiscal year the
Participant's Deferred Stock Account shall be debited by the number of
Stock Equivalent Units so transferred and the Participant's Deferred
Cash Account credited by the amount of cash equivalent so determined.
Any election made by a Participant in accordance with this paragraph 5
shall remain in effect until a new election filed by
-8-
<PAGE>
the Participant becomes effective. A Participant's initial election
shall be effective as of the date the Director becomes a Participant.
Notwithstanding any other provision of this Plan, no election shall
become effective if it is made by a Participant within six months of the
immediately preceding election filed by such Participant and any such
election shall be null and void.
(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 November 1, 1996, 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
November 1, 1996 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
-9-
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
<PAGE>
Account such number of additional Stock Equivalent Units as are determined
by dividing (1) the amount of
-10-
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, 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. In addition, in the event of any
corporate transaction, such as any merger, consolidation, separation,
including a spin-off, or other distribution of stock or property of the
Company, any reorganization (whether or not such reorganization comes
within the definition of such term in Section 368 of the Code) or any
partial or complete liquidation of the Company, the number of Stock
Equivalent Units credited to a Participant's Deferred Stock Account and
the kind of shares upon which they are based shall be adjusted (to the
nearest one-ten thousandth of a unit) so that such Stock Equivalent Units,
as so adjusted, are based upon the
-11-
common stock of the corporation that survives such transaction or of any
parent corporation of such surviving corporation (and references herein
to "Common Stock" shall thereafter be deemed to refer to such common
stock).
9. 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 9(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.
<PAGE>
(b) A Participant may elect, (1) before the first day of each fiscal
year, (2) subject to the automatic distribution provisions of paragraph
9(a)(2), which shall govern the
-12-
distribution of benefits in the event of Termination of Service which
occurs because of death or a Change of Control of the Company and (3)
prior to his Termination of Service 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.
Any election filed pursuant to this paragraph 9(b) shall be effective as
of to the approval of the Board of Directors as then in effect.
(c) If installment payments were elected by the Participant pursuant
to paragraph 9(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.
-13-
(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.
<PAGE>
In the event that a Participant dies after receiving payment of some, but
less than all, of the entire amount to which such
-14-
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.
10. 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.
-15-
11. 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
<PAGE>
general applicability to all Participants 9. All decisions of the Board
of Directors shall be final as to any Participant under this Plan.
-16-
(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 as amended effective as of
-17-
November 1, 1996 has been executed as of the 17th day of October, 1996 by
the undersigned duly authorized officer of the Company.
MOSINEE PAPER CORPORATION
Daniel R. Olvey
President and Chief Executive
Officer
-18-
EXHIBIT 10.2
MOSINEE PAPER CORPORATION
1985 EXECUTIVE STOCK OPTION PLAN
1. PURPOSE. The Mosinee Paper Corporation 1985 Executive Stock
Option Plan (the "Plan") is intended to attract and retain key executive
employees by permitting such employees of Mosinee Paper Corporation (the
"Company") or any parent or subsidiary of the Company to acquire
authorized and unissued, or reacquired, shares of common stock, $2.50 par
value, of the Company ("Stock") pursuant to purchase options. The
availability of the options and grants thereof will furnish additional
inducements to such employees to continue employment with the Company, or
any parent or subsidiary of the Company, and encourage them, by giving
them an opportunity to acquire a greater stake in the Company's success,
to increase their efforts to promote the best interests of the Company and
its stockholders. Subject to the provisions of the Plan, there may be
granted options containing such terms and conditions as shall be requisite
to constitute them "nonqualified stock options," i.e., options which are
not "incentive stock options" within the meaning of Section 422A of the
Internal Revenue Code of 1954, as amended (the "Code"). A key employee
may be granted and may hold one or more nonqualified stock options under
this Plan.
2. ELIGIBLE EMPLOYEES. The persons eligible to receive options
under the Plan shall be key executive employees (who may also be officers
or directors) of the Company or any parent or subsidiary of the Company
and who are selected by the
-1-
Executive Compensation & Bonus Committee (the "Committee") designated by
the Board of Directors of the Company (the "Board"). Directors of the
Company or any parent or subsidiary of the Company who are not also
employees of the Company or any parent or subsidiary of the Company shall
not be eligible to receive options under the Plan.
3. TIME AND MANNER OF GRANTING OPTIONS. From and after the
Effective Date of the Plan (as defined in Section 16 hereof) and
continuing to the close of business on the tenth anniversary of such
Effective Date, the Committee may, at such time or times as the Committee
may determine, grant to any one or more eligible employees ("Optionees")
nonqualified stock options, each such option to cover the purchase of such
number of shares of Stock upon such terms and conditions not inconsistent
with the Plan as the Committee shall from time to time determine.
No person shall have any right to an option or any other right
under the Plan unless and until an option shall be granted to such person
by the Committee. Subject to the provisions of Section 9 hereof, no more
than 90,000 shares of Stock shall be sold pursuant to the exercise of all
options granted hereunder. Any shares for which an option is granted
hereunder which for any reason are released from such option by expiration
or termination thereof or otherwise shall be available for reoptioning
under this Plan. The Company shall, forthwith upon the granting of an
option, mail or deliver to the Optionee a copy of the Plan and an option
certificate evidencing such
-2-
<PAGE>
option. Option certificates shall be in such form and shall contain such
terms and provisions not inconsistent with the Plan as the Committee
shall deem appropriate.
4. TERM OF OPTIONS. In no event shall any stock option granted
under the Plan be exercisable after the expiration of twenty years from
the date such option is granted.
5. TERMS AND CONDITIONS.
(a) Nonqualified stock options granted under this Plan shall
contain such provisions, not inconsistent with this Plan, as may be deemed
advisable by the Committee.
(b) The option price per share of Stock under any nonqualified
stock option granted hereunder shall be not less than one hundred per cent
(100%) of the fair market value of one share of Stock on the date such
option is granted.
6. MANNER OF EXERCISE OF OPTIONS.
(a) Subject to the provisions of Section 8 hereof, each option
granted hereunder shall become exercisable on the date specified in the
option agreement but in no event earlier than six months after the date of
grant. Any shares with respect to which an option becomes exercisable
shall remain available for purchase by exercise of the option in
accordance with its terms at any time or from time to time before the
option expires.
(b) Exercise shall be effected only by delivery to the Company
of an irrevocable written notice of the Optionee's election to exercise
the option with respect to a specified whole number of shares of Stock.
Such exercise must be followed within
-3-
five (5) business days by payment in cash to the Company of (i) the
amount of the option purchase price for the number of shares of Stock as
to which the option is then being exercised and (ii) the amount of any
applicable federal or state withholding taxes. The Optionee's failure to
so pay shall result in the forfeiture of his rights under the Plan for
the number of shares specified in the notice. No option may be exercised
with respect to a fractional share of Stock.
7. NON-TRANSFERABILITY. Options granted hereunder shall not be
transferable by an Optionee otherwise than by will or the laws of descent
and distribution and may, during the lifetime of an Optionee, be exercised
only by such Optionee.
8. EXERCISE AFTER TERMINATION OF EMPLOYMENT.
(a) For purposes of the Plan and each option granted under the
Plan, an Optionee's employment shall be deemed to have terminated at the
close of business on the day preceding the first date on which he is no
longer for any reason whatsoever employed by the Company or by any parent
or subsidiary of the Company, provided that the Committee may determine in
one or more particular cases that a leave of absence granted by the
employing corporation shall not result in the termination of an Optionee's
employment.
<PAGE>
(b) If an Optionee's employment is terminated by his voluntary
resignation or if he is discharged for cause, any option held by the
Optionee shall expire on the date of such termination. For purposes of
this section, "for cause" shall
-4-
mean affirmative acts in violation of federal, state, or local criminal
law.
(c) If an Optionee dies while such Optionee is an employee of
the Company or any parent or subsidiary of the Company or within three
months after his termination of employment for a reason other than
voluntary resignation or discharge for cause, any option held by such
Optionee at the date of the Optionee's death may be exercised by such
Optionee's estate or the person to whom such option is transferred by will
or the applicable laws of descent and distribution with respect to all or
any part of that number of shares of Stock as to which such option was
exercisable by the Optionee immediately before his death but only if the
date of exercise is both within 20 years from the Date of Grant (or such
shorter period in which the option would have expired if the Optionee had
lived and remained in the Company's employ) and within one year after the
date of the Optionee's death.
(d) If an Optionee's employment is terminated for any reason
other than voluntary resignation, discharge for cause or death, any option
held by the Optionee may be exercised at any time which is both before the
time the option would otherwise expire and within three months after the
date of such cessation of employment, but only with respect to that number
of shares of Stock which the Optionee would have been permitted to
purchase under his option immediately before the date of termination of
such Optionee's employment.
-5-
9. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION, ETC. If the
Company shall, after the Effective Date, change its Stock into a greater
or lesser number of shares through a stock dividend, stock split-up or
combination of shares, then
(i) the number of shares of Stock then subject to the Plan but
which are not then subject to any outstanding option;
(ii) the number of shares of Stock subject to each then
outstanding option or (to the extent not previously
exercised); and
(iii) the price per share payable upon exercise of each then
outstanding option, shall all be proportionately increased
or decreased as of the record date for such stock dividend,
stock split-up or combination of shares in order to give
effect thereto. Notwithstanding any such proportionate
increase or decrease, no fraction of a share of Stock shall
be issued upon the exercise of an option. If any split-up
or combination of shares shall involve a change of par
value, the shares of Stock subject to options theretofore or
thereafter granted shall be the shares of Stock as so
changed.
<PAGE>
If, after the Effective Date, there shall be any change in the
Stock of the Company other than through a stock dividend, stock split-up
or combination of shares, then if (and only if)
-6-
the Committee shall determine that such change equitably requires an
adjustment in the number or kind or option price of shares of Stock then
subject to an option, or the number or kind of shares remaining subject
to the Plan, such adjustment as the Committee shall determine is
equitable and as shall be approved by the Board shall be made and shall
be effective and binding for all purposes of such option and the Plan.
If any member of the Board shall, at the time of such approval, be an
Optionee, he shall not participate in action in connection with such
adjustment.
10. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Committee, which shall
consist of three or more persons selected by the Board from its members.
The Committee shall have authority to determine who are, from time to
time, eligible employees, to construe the Plan, to prescribe, amend and
rescind rules and regulations for the administration of the Plan, to amend
or modify the Plan in such manner as the Committee deems required to make
the Plan conform to the provisions of any federal or state laws, or
regulations issued thereunder, or practically workable, and to take any
other action necessary or advisable for the effective administration of
the Plan; provided, however, that no such amendment or modification of the
Plan shall affect the provisions of any option granted before such
amendment or modification to the detriment of any Optionee unless such
amendment or modification is required to comply with any applicable law or
regulation, and provided, further, that any
-7-
such amendment of the Plan extending the period within which options may
be granted under the Plan, or increasing the number of shares of Stock to
be optioned under the Plan (except as provided in Section 9 hereof), or
reducing the minimum purchase price per share provided in the Plan
(except as provided in Section 9 hereof), or changing the class of
employees to whom options may be granted under the Plan shall, in each
case, be subject to approval by the Board. Decisions of the Committee
shall be final. Members of the Committee may be removed by the Board.
Vacancies in the Committee may be filled, and additional members may be
appointed from time to time by the Board. The decision of a majority in
number of the members of the Committee, from time to time acting, shall
be deemed to be the decision of the Committee, and a majority in number
of members of the Committee, from time to time acting, shall constitute
a quorum of the Committee for the transaction of any business. No
member of the Committee may be an individual who is or has been for at
least one year prior to selection to the Committee, eligible for
participation in the Plan.
(b) The authority granted the Board of Directors in this section
of the Plan shall be exercised solely by those directors who are not, and
have not been for at least one year prior to such exercise, eligible for
participation in the Plan.
<PAGE>
11. STOCKHOLDERS' RIGHTS UPON EXERCISE. An Optionee shall not,
by reason of the Plan or any option granted pursuant to the Plan, have any
rights of a stockholder of the Company;
-8-
however, upon each exercise of an option under the Plan, the Optionee
shall have, with respect to the number of shares of Stock as to which
such option is then being exercised, all rights of a stockholder of
record from the date of such exercise, irrespective of whether
certificates to evidence the shares of Stock with respect to which the
option was exercised shall have been issued on such date.
12. THE RIGHT OF EMPLOYER TO TERMINATE EMPLOYMENT. Nothing
contained in the Plan or in any option granted pursuant to the Plan shall
confer upon any Optionee any right to be continued in the employment of
the Company, or any parent or subsidiary of the Company, or interfere in
any way with the right of such Optionee's employer to terminate his
employment at any time with or without cause.
13. GOVERNMENT APPROVALS. If at any time the Company shall be
advised by its counsel that the exercise of any option or the delivery of
shares of Stock upon the exercise of an option is required to be approved,
registered or qualified under any applicable law, or must be accompanied
or preceded by a prospectus or similar circular meeting the requirements
of any applicable law, the Company will use its best efforts to obtain
such approval, to effect such registrations and qualifications, or to
provide such prospectus or similar circular within a reasonable time, but
exercise of the options or delivery by the Company of certificates for
shares of Stock may be deferred until
-9-
such approvals, registrations or qualifications are effected, or until
such prospectus or similar circular is available.
14. DISCONTINUANCE OF THE PLAN. The Board may decrease the
number of shares issuable under the Plan or discontinue and terminate the
Plan at any time, but no such decrease, discontinuance or termination
shall affect any options granted before such decrease, discontinuance or
termination.
15. MERGER, REORGANIZATION OR CHANGE IN CONTROL.
(a) Nothing contained in this Plan or in any option granted
under the Plan shall in any way prohibit the Company from merging with or
consolidating into another corporation, or from selling or transferring
all or substantially all of its assets, or from distributing all or
substantially all of its assets to its stockholders in liquidation, or
from dissolving and terminating its corporate existence; and in any such
event (other than a merger in which the Company is the surviving
corporation and after which the Company remains an independent, publicly
held corporation), the Company or any surviving party to any such merger,
consolidation, or sale or transfer of assets may provide by resolution of
its Board of Directors that all rights of the person or persons entitled
to exercise then outstanding options granted under the Plan, and such
options, shall wholly and completely terminate at the time of any such
merger, consolidation, sale or transfer of assets, liquidation, or
<PAGE>
dissolution, except that adequate provision for such person or persons
shall be made in accordance with paragraph (b) below.
-10-
(b) In the event that (i) any individual, corporation,
partnership or other person or group of persons or entities becomes the
beneficial owner, directly or indirectly, of 45% or more of the Company's
then outstanding Common Stock ("Change in Control") or (ii) any merger,
consolidation, liquidation, dissolution or termination after which the
Company will not survive as an independent, publicly-owned corporation or
any sale or transfer of all or substantially all of the Company's assets
("Reorganization") occurs, then the Company shall pay with respect to each
outstanding option under this Plan an amount equal to (x) the difference
between the Fair Market Value (as defined in (c) below) and exercise price
of the option, multiplied by (y) the number of shares of Stock subject to
such option. Such payment shall be made in cash within 30 days after, in
the case of a Reorganization requiring approval by the Company
stockholders, the date of such approval and, in the case of a Change in
Control, the date upon which such change occurs.
(c) Solely for purposes of (b) above, "Fair Market Value" shall
mean the greater of (i) the highest price per share of the Company's
Common Stock (x) paid by the acquiring person within twelve months of the
occurrence of the Change in Control to effect such change or (y) provided
for in any agreement for the Reorganization or (ii) fair market value
determined in accordance with Section 17 of this Plan.
-11-
16. EFFECTIVE DATE OF PLAN, The Plan has been adopted by the
Board on __________________, 1985, and the Plan shall be deemed to have
become effective on such date.
17. MISCELLANEOUS.
(a) The transfer of an employee from the Company to a parent or
subsidiary of the Company or from a parent or subsidiary of the Company to
the Company or another parent or subsidiary of the Company shall not be a
termination of employment or an interruption of continuous employment for
the purposes of the Plan.
(b) As used in the Plan, the terms "parent" and "subsidiary"
shall have the meanings ascribed to them in Sections 421, 422A and 425 of
the Code.
(c) Except as otherwise provided, for purposes of this Plan, the
fair market value of a share of Stock on a specified day shall be the mean
between the high and low sale price per share as reported for such day (or
if such day is not a business day, for the immediately preceding business
day) on a national stock exchange, or if the Stock is not listed on such
an exchange, on the NASDAQ national market system.
(d) No option or shares of Stock issuable under the Plan shall
be transferable or assignable either by the voluntary or involuntary act
of the Optionee or by operation of law, or be liable for any debts or
liabilities of the Optionee, except as provided herein.
-12-
<PAGE>
18. Notwithstanding any other provision of this Plan or of any
option certificate relating to any option granted hereunder, the
consummation of the transactions contemplated by that certain Agreement
and Plan of Merger, dated as of August 24, 1997, by and among Wausau Paper
Mills Company, WPM Holdings, Inc. and the Company on substantially the
terms and conditions set forth therein as of August 24, 1997 shall not be
deemed to constitute a "Change in Control" or any other transaction
described in Section 15(b) of this Plan and of any corresponding or
similar provision of any such option certificate. Without limiting the
generality of the foregoing, the consummation of such transactions shall
not result in the payment of any cash to any holder of an option granted
under this Plan.
-13-
MOSINEE PAPER CORPORATION
1985 EXECUTIVE STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION
MOSINEE PAPER CORPORATION (the "Company"), for valuable
consideration, the receipt of which is hereby acknowledged, hereby grants
on this ______ day of _____________, 19__ (the "Date of Grant") to
("Optionee") a nonqualified stock option to purchase _______ shares of the
common stock, $2.50 par value, of the Company ("Stock") at a price of
$_____________ per share (the "Option Price"), subject to adjustment as
set forth in Section 7 hereof, upon the terms and conditions hereinafter
stated pursuant to the Company's 1985 Executive Stock Option Plan adopted
______________, 19__, (the "Plan"), all necessary or appropriate
determinations by the committee appointed under the Plan (the "Committee")
having been duly made.
1. AGREEMENT TO REMAIN IN EMPLOYMENT. Optionee agrees not to
voluntarily terminate his employment with the Company, or any parent or
subsidiary of the Company, within one year from the Date of Grant.
2. EXERCISE BY OPTIONEE. This option becomes exercisable with
respect to the total number of shares subject hereto on and after
_________________________. Once exercisable, any portion of this option
shall continue to be exercisable during the term of this option with
respect to the shares represented by such portion. This option is
exercisable during Optionee's
-1-
lifetime only by him and may be exercised by him in whole or in part only
if all of the following conditions are met at the time of exercise:
(a) The date of exercise is within 20 years from the Date of
Grant; and
(b) Optionee is employed by one or more of the Company or any
parent or subsidiary of the Company, or, if he is no longer
so employed, such employment had terminated no longer than
three months prior to the date of exercise.
<PAGE>
3. RESTRICTIONS ON TRANSFER. This option is not transferable
by Optionee otherwise than by will or the laws of descent and
distribution.
4. RESTRICTIONS ON EXERCISE AFTER TERMINATION OF EMPLOYMENT.
Notwithstanding anything herein to the contrary, in the event that
Optionee's employment with the Company or a parent or subsidiary of the
Company is terminated by reason of voluntary resignation or discharge for
cause (as defined in the Plan) this option shall expire on the date of
such termination.
5. EXERCISE AFTER OPTIONEE'S DEATH. In the event of Optionee's
death while in the employ of the Company or a parent or subsidiary of the
Company or after his termination of employment with the Company or a
parent or subsidiary of the Company for a reason which is not set forth in
Section 4 above, but within three months after such termination of
employment, this option, to the extent not already exercised, may be
exercised by his estate or his designee by will or the laws of descent and
distribution but only with respect to that number of
-2-
shares of Stock which Optionee would have been permitted to purchase upon
exercise of this option immediately before his termination of employment
and only if the date of exercise is both within 20 years from the Date of
Grant (or such shorter period in which the option would have expired if
the Optionee had lived and remained in the Company's employ) and within
one year after the date of Optionee's death.
6. MANNER OF EXERCISE.
(a) Exercise shall be effected only by delivery to the Company
of an irrevocable written notice of Optionee's election to exercise the
option with respect to a specified whole number of shares of Stock. The
exercise date shall be the date of such delivery. Any delivery effected
after the close of business shall be deemed received on the next
succeeding business day. No option may be exercised with respect to a
fractional share of Stock.
(b) The irrevocable written notice of Optionee's election to
exercise must be followed within five (5) business days by payment in cash
to the Company of the amount of the option purchase price for the number
of shares of Stock as to which the option is then being exercised and the
amount of any applicable federal and state withholding taxes. Optionee's
failure to so pay shall result in the forfeiture of his option rights
under this option to the number of shares specified in the notice.
-3-
(c) No such person shall be entitled to any rights as a
stockholder of the Company with respect to such shares until the option
purchase price for such shares is paid in full.
7. CHANGES IN CAPITALIZATION.
(a) If the Company shall, after the Date of Grant, change the
Stock into a greater or lesser number of shares through a stock dividend,
stock split-up or combination of shares, then the number of shares of
Stock subject to this option (to the extent not previously exercised), and
<PAGE>
the price per share payable upon exercise of this option, shall be
proportionately increased or decreased as of the record date of such stock
dividend, stock split-up or combination of shares in order to give effect
thereto. Notwithstanding any such proportionate increase or decrease, no
fraction of a share of Stock shall be issued upon the exercise of an
option. If any split-up or combination of shares shall involve a change
of the par value of the Stock, the shares of Stock subject to this option
shall be the shares of Stock as so changed.
(b) If, after the Date of Grant, there shall be any change in
the Stock of the Company other than through a stock dividend, stock split-
up or combination of shares, then if (and only if) the Committee shall
determine that such change equitably requires an adjustment in the number
or kind or Option Price of shares of Stock then subject to this option, or
the number of shares of Stock with respect to which this option may be
-4-
exercised, such adjustment as the Committee shall determine is equitable
shall be made.
8. RIGHT OF EMPLOYER TO TERMINATE EMPLOYMENT. Nothing
contained in this option shall confer upon Optionee any right to be
continued in the employment of the Company, or any parent or subsidiary of
the Company, or interfere in any way with the right of Optionee's said
employer to terminate his employment at any time with or without cause.
9. LISTING AND REGISTRATION OF SHARES. This option shall be
subject to the requirement that if at any time the Committee determines,
in its discretion, that the listing, registration, or qualification of the
shares subject to this option upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in
connection with, the issue or purchase of shares hereunder, this option
may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected
or obtained and the same shall have been free of any conditions not
acceptable to the Committee.
10. ADMINISTRATION. Subject to the provisions of this option,
the Committee shall be authorized to interpret this option, to make, amend
and rescind such rules as it deems necessary or advisable for the proper
administration of this option, to make all other determinations necessary
or advisable for the administration of this option and to correct any
defect
-5-
or supply any omission or reconcile any inconsistency in this
option in the manner and to the extent the Committee deems desirable to
make this option fully effective. The Committee may amend this option,
provided, however, that any such amendment shall be made only with the
consent of Optionee or other person or persons entitled to exercise this
option if the amendment would be detrimental to the rights of Optionee or
such other person unless such amendment is required to comply with any
applicable law or regulation.
11. MERGER, REORGANIZATION, OR CHANGE IN CONTROL. Nothing
contained in this option shall in any way prohibit the Company from
<PAGE>
merging with or consolidating into another corporation, or from selling or
transferring all or substantially all of its assets, or from distributing
all or substantially all of its assets to its stockholders in liquidation,
or from dissolving and terminating its corporate existence; and in any
such event (other than a merger in which the Company is the surviving
corporation and under the terms of which the shares of Stock outstanding
immediately prior to the merger remain outstanding and unchanged), the
Company or any surviving party to any such merger, consolidation, or sale
or transfer of assets may provide by resolution of its Board of Directors
that all rights of Optionee and this option shall wholly and completely
terminate at the time of any such merger, consolidation, sale or transfer
of assets, liquidation, or dissolution, except that adequate
-6-
provision for such person or persons shall be made in accordance with
Section 15(b) of the Plan.
This option is addressed to Optionee in duplicate and shall not
be effective until Optionee has executed this option and returned one copy
to the Company, thereby acknowledging that Optionee has read and agrees to
all the terms and conditions of this option and the Plan.
MOSINEE PAPER CORPORATION
By:________________________________
ACCEPTED this _____ day of
_____________________, 19__.
__________________________
Optionee
-7-
EXHIBIT 10.5
SUPPLEMENTAL RETIREMENT BENEFIT PLAN
This Supplemental Retirement Benefit Plan (the "Plan") is adopted
effective as of this 17th day of October, 1991, by Mosinee Paper
Corporation, a Wisconsin corporation, ("Mosinee") for the purposes of
providing deferred compensation in the form of supplemental retirement
benefits for San W. Orr, Jr. ("Mr. Orr") in recognition of his service to
Mosinee as its Chairman of the Board of Directors.
1. NORMAL SUPPLEMENTAL RETIREMENT BENEFIT. Beginning on the first
day of the first month following the last to occur of (a) Mr. Orr's
termination of employment with Mosinee or (b) Mr. Orr's 60th birthday, and
continuing on the first day of each succeeding month, Mosinee shall pay to
Mr. Orr, if he is then living, a monthly supplemental retirement benefit
(Mr. Orr's "Normal Supplemental Retirement Benefit") in an amount equal to
50% of one-twelfth of Mr. Orr's highest final average W-2 compensation for
the five consecutive calendar year period in which such compensation was
paid. Mr. Orr's Normal Supplemental Retirement Benefit shall not be
reduced or offset by the amount of any other payment then due him from
Mosinee or any other plan or program now or hereafter maintained by
Mosinee.
2. SURVIVING SPOUSE BENEFIT. From and after the first day of the
first month following the later of (a) the month in which Mr. Orr's death
occurs or (b) the month in which Mr. Orr would have attained his 60th
birthday if Mr. Orr's death occurs before
-1-
he has attained age 60, and continuing on the first day of each
succeeding month, Mosinee shall pay to Mr. Orr's spouse, if then
living (Mr. Orr's "Surviving Spouse"), a monthly benefit (the
"Supplemental Surviving Spouse Benefit") in an amount equal to 50% of
the Normal Supplemental Retirement Benefit to which Mr. Orr would have
then been entitled had he then been living.
3. CHANGE OF CONTROL OF MOSINEE.
(a) In the event a Change of Control of Mosinee occurs prior to
Mr. Orr's death, Mosinee shall pay to Mr. Orr a lump sum amount equal
to the present value of Mr. Orr's Normal Supplemental Retirement
Benefit, as determined hereunder, as of the first day of the first
month following such Change of Control of Mosinee on which Mr. Orr is
neither an employee nor a director of Mosinee, whether or not such
Change of Control occurred prior to the date on which Mr. Orr shall
have ceased to be an employee or a director of Mosinee. Upon payment
of the lump sum amount provided for in this subparagraph (a), Mosinee
shall have no further obligation to pay any benefits under this Plan.
(b) In the event a Change of Control occurs after Mr. Orr's
death and whether or not the Supplemental Surviving Spouse Benefit
shall have then become payable, Mosinee shall pay to Mr. Orr's
Surviving Spouse, if then living, the present value of the unpaid
Supplemental Surviving Spouse Benefit. Upon payment of the lump sum
amount provided for
-2-
<PAGE>
in this subparagraph (b), Mosinee shall have no further obligation to
pay any benefits under this Plan.
(c) For purposes of this Plan, a "Change of Control of Mosinee"
shall mean:
(1) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either (A) the then outstanding shares of common stock of Mosinee
(the "Outstanding Company Common Stock") or (B) the combined
voting power of the then outstanding voting securities of Mosinee
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (1), the following acquisitions
shall not constitute a Change of Control: (I) any acquisition
directly from Mosinee, (II) any acquisition by Mosinee, (III) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by Mosinee or any corporation controlled
by Mosinee or (IV) any acquisition pursuant to a transaction
which complies with clauses (A), (B) and (C) of subsection (3) of
this Section 2; or
-3-
(2) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof
whose election, or nomination for election by Mosinee's
shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(3) Consummation by Mosinee of a reorganization, merger,
share exchange or consolidation or sale or other disposition of
all or substantially all of the assets of Mosinee or the
acquisition of assets of another corporation (a "Business
Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such
-4-
Business Combination beneficially own, directly or indirectly,
more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation
<PAGE>
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction
owns Mosinee or all or substantially all of Mosinee's assets
either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding any
employee benefit plan (or related trust) of Mosinee or such
corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of
the corporation resulting from such Business Combination
or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such
ownership existed with respect to Mosinee prior to the Business
Combination and (C) at least a majority of the members of the
board of directors of the corporation resulting from such
-5-
Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement, or of the action
of the Board, providing for such Business Combination; or
(4) Approval by the shareholders of Mosinee of a complete
liquidation or dissolution of Mosinee.
Notwithstanding the foregoing, neither the approval by the
shareholders of Mosinee, nor the consummation, of the transactions
contemplated by that certain Agreement and Plan of Merger, dated as of
August 24, 1997, by and among Wausau Paper Mills Company, WPM
Holdings, Inc. and the Company on substantially the terms and
conditions set forth therein as of August 24, 1997 shall constitute a
Change of Control for purposes of this Agreement.
(d) For purposes of this Plan, the term "Interested Shareholder"
shall mean any person (other than Mosinee or any of its subsidiaries
or any member of the Board of Directors as of the effective date of
this Plan or any affiliate of such person) who first became the
beneficial owner of 10% or more of the combined voting power of
Mosinee's then outstanding securities after the effective date of this
Plan.
(e) For purposes of this Plan, the present value of Mr. Orr's
Normal Supplemental Retirement Benefit or the Supplemental Surviving
Spouse Benefit shall be determined by reference to the 1983 Individual
Annuity Mortality Table
-6-
with an assumed interest rate equal to the "immediate annuity rate"
as then in effect as determined by the Pension Benefit Guaranty
Corporation and promulgated in Appendix B to 29 C.F.R.
<section>2619.65 or any successor regulation adopted for the
same or substantially similar purpose.
4. SUPPLEMENTAL RETIREMENT BENEFITS IN ADDITION TO OTHER RIGHTS AND
BENEFITS. The rights and benefits conferred upon Mr. Orr (and Mr. Orr's
<PAGE>
Surviving Spouse) pursuant to this Plan shall be in addition to all other
rights and benefits conferred upon Mr. Orr by Mosinee by reason of his
employment.
5. NATURE OF MOSINEE'S OBLIGATIONS AND MR. ORR'S RIGHTS. Neither
Mr. Orr nor his Surviving Spouse, if any, shall acquire any right, title
or interest in the assets of Mosinee by reason of this Plan. To the
extent Mr. Orr or his Surviving Spouse shall acquire a right to receive
payments from Mosinee pursuant to this Plan, such right shall be no
greater than the right of any unsecured general creditor of Mosinee.
6. ASSIGNMENT BY MR. ORR PROHIBITED. This Plan and Mr. Orr's rights
and benefits hereunder (and the rights of his Surviving Spouse, if any)
shall not be subject to voluntary or involuntary sale, pledge,
hypothecation, transfer or assignment by Mr. Orr or such Surviving Spouse,
their personal representatives or heirs or any other person or persons or
organization or organizations succeeding to any of their rights and
benefits hereunder.
-7-
7. FUNDING. All benefits paid or payable pursuant to the terms of
this Plan shall be paid out of the general assets of Mosinee.
8. CLAIMS PROCEDURE. The claims procedure set forth in the Mosinee
Retirement Plan or any successor to such plan is incorporated herein by
this reference as the claims procedure for this Plan.
9. PLAN ADMINISTRATOR. The plan administrator and named fiduciary
of the Plan shall be Mosinee.
10. BINDING EFFECT. This Plan shall be binding upon and inure to the
benefit of (1) Mr. Orr and his Surviving Spouse and their personal
representatives and heirs and any other person or persons or organization
or organizations succeeding to any of Mr. Orr's rights or benefits
hereunder, and (2) Mosinee and its successors and assigns.
11. SEVERABILITY. The invalidity or unenforceability of any
provision of this Plan shall not invalidate or render unenforceable any
other provision of this agreement.
12. GOVERNING LAW. This Plan shall be governed by the Employee
Retirement Income Security Act of 1974, as amended, and to the extent not
preempted by such Act, by the laws of the State of Wisconsin.
IN WITNESS WHEREOF, Mosinee has caused this agreement to be executed
by its President thereunto duly authorized as of the day and year first
above written.
-8-
MOSINEE PAPER CORPORATION
By:________________________________
Richard L. Radt
As its President
-9-
EXHIBIT 10.7
MOSINEE PAPER CORPORATION
1994 STOCK OPTION PLAN
Mosinee Paper Corporation, a corporation with its principal place of
business located in Mosinee, Wisconsin (the "Company"), hereby adopts the
Mosinee Paper Corporation 1994 Stock Option Plan (the "Plan"), as set
forth herein.
Section 1. PURPOSE. The Plan is intended to attract and retain key
employees and directors by permitting key employees of the Company or any
parent or subsidiary of the Company and directors of the Company to
acquire authorized and unissued, or reacquired, shares of common stock of
the Company pursuant to purchase options. The availability of the options
and grants thereof will furnish additional inducements to such employees
to continue employment with the Company, or any parent or subsidiary of
the Company, and such directors to continue serving as directors of the
Company, and encourage them, by giving them an opportunity to acquire a
greater stake in the Company's success, to increase their efforts to
promote the best interests of the Company and its stockholders.
It is the express intent of the Company that, subject to Section
6.2(h) hereof, all options granted hereunder designated "Incentive Stock
Options" shall meet the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or any successor section or
sections. It is the further intent of the Company that options granted
hereunder designated "Non-Qualified Stock Options" shall not meet the
requirements of
-1-
Section 422 of the Code. A key employee or director may be granted and
may hold one or more options under this Plan.
Section 2. NUMBER OF SHARES AVAILABLE FOR OPTIONS. The aggregate
number of shares of common stock, no par value, of the Company (the
"Shares") which may be issued under options granted pursuant to the Plan
shall be 346.667.
Section 3. ADMINISTRATION OF THE PLAN.
Section 3.1 GENERAL. The Plan shall be administered by a committee
(the "Committee") consisting of at least two members designated by the
Board of Directors of the Company from among those of its members who are
not officers or employees of the Company or a parent or subsidiary of the
Company and who otherwise satisfy the definition of a "Non-Employee
Director" in Rule 16b-3(b)(3) promulgated under Section 16 of the
Securities Exchange Act of 1934 (the "Exchange Act") and the definition of
an "Outside Director" in the regulations under Section 162(m) of the Code.
In the absence of specific rules to the contrary, action by the Committee
shall require the consent of a majority of the members of the Committee,
expressed either orally at a meeting of the Committee or in writing in the
absence of a meeting.
Section 3.2 AUTHORITY OF COMMITTEE. The Committee shall have full
and complete authority to grant options to such eligible key employees on
such terms, which need not be the same as to all Employee Optionees, as
<PAGE>
will, in its discretion and subject only to the specific limitations
elsewhere contained in
-2-
the Plan, carry out the purpose of the Plan. The Committee shall also
have full and complete authority to interpret the Plan and adopt rules
governing the administration of the Plan. The Committee's decision on
any matter with respect to the Plan shall be final.
Section 3.3 INDEMNIFICATION OF COMMITTEE. To the extent permitted by
applicable law, the members of the Committee and each of them shall be
indemnified and saved harmless by the Company from any liability or claim
of liability which may arise from the administration of the Plan if the
acts giving rise to such liability or claim of liability were taken in
good faith and without negligence.
Section 4. ELIGIBLE EMPLOYEES AND DIRECTORS.
Section 4.1 KEY EMPLOYEES. Key employees (who may also be officers
or directors) of the Company (or any parent or subsidiary of the Company)
shall be eligible to be granted options pursuant to Section 5 of the Plan.
For purposes of the Plan, the term "key employee" shall include all
employees of all participating employers employed in management,
administrative or professional capacities.
Section 4.2 DIRECTORS. Directors of the Company (who may also be key
employees or officers of the Company (or any parent or subsidiary of the
Company)) shall be eligible to be granted options pursuant to Section 7 of
the Plan. Directors of the Company who are not also employees of the
Company (or any parent
-3-
or subsidiary of the Company) shall not be eligible to be granted options
under Section 5 of the Plan.
Section 5. GRANTING OF OPTIONS TO KEY EMPLOYEES. Options to purchase
Shares shall be granted to such key employees who are eligible to
participate in the Plan as the Committee may, from time to time and at any
time, select. Membership in a class of eligible key employees shall not,
without specific Committee action, entitle a key employee to receive an
option to purchase Shares. Eligible key employees selected by the
Committee shall be referred to herein as "Employee Optionees."
Section 6. TERMS AND CONDITIONS OF THE KEY EMPLOYEE OPTIONS.
Section 6.1 WRITTEN INSTRUMENT. Each option to purchase Shares
granted under Section 5 of the Plan shall be evidenced by a written option
agreement signed on behalf of the Company and the Employee Optionee which
sets forth the name of the Employee Optionee, the date granted, the price
at which the Shares subject to the option may be purchased (the "option
price"), whether the option is an Incentive Stock Option or a
Non-Qualified Stock Option, the number of Shares subject to the option and
such other terms and conditions consistent with the Plan as determined by
the Committee. The Committee may at the time of grant or at any time
thereafter impose such additional terms and conditions on the exercise of
such option as it deems necessary or desirable for compliance with Section
<PAGE>
16 of the Exchange Act and the regulations promulgated thereunder. Such
option agreement shall
-4-
incorporate by reference all applicable terms, conditions and limitations
set forth in the Plan.
Section 6.2 TERMS AND CONDITIONS OF THE KEY EMPLOYEE OPTIONS. In
addition to any other limitations, terms and conditions specified in the
Plan, each option granted under Section 5 of the Plan shall, as to each
Employee Optionee, satisfy the following requirements:
(a) DATE OF GRANT. Options must be granted on or before October
19, 2004.
(b) EXPIRATION. No Incentive Stock Option shall be exercisable
after the expiration of ten years from the date such option is granted.
No Non-Qualified Stock Option shall be exercisable after the expiration of
twenty years from the date such option is granted.
(c) PRICE. The option price as to any Share subject to either
an Incentive Stock Option or Non-Qualified Stock option granted under
Section 5 of the Plan will be not less than one hundred percent of the
fair market value of the Share on the date the option is granted. For
purposes of the Plan, the fair market value of a Share means:
(i) The mean between the high and the low prices at which
the Shares were traded if the Shares were then listed
for trading on a national or regional securities
exchange or were then traded on a bona fide over-the-
counter market; or
-5-
(ii) If the Shares were not traded on an exchange or a bona
fide over-the-counter market, a value determined by an
appraiser selected by the Committee.
In the event that the date on which the fair market value of a Share is to
be determined is a date on which there is no trading of the Shares on a
national or regional securities exchange or on the over-the-counter
market, such fair market value shall be determined by referring to the
next preceding business day on which trading occurs.
(d) TRANSFERABILITY.
(i) No Incentive Stock Option shall be transferable by an
Employee Optionee otherwise than by will or the laws of
descent and distribution nor can it be exercised by
anyone other than the Employee Optionee during the
Employee Optionee's lifetime.
(ii) The Committee may, in its discretion, authorize all or
a portion of any Non-Qualified Stock Options to be
granted to an Employee Optionee under Section 5 of the
Plan or which were granted to any Employee Optionee on
or before October 31, 1996, to permit transfer by the
Employee Optionee to (A) the spouse, children or
<PAGE>
grandchildren of the Employee Optionee ("Immediate
Family"),
-6-
(B) a trust for the exclusive benefit of the Employee
Optionee or the Employee Optionee's Immediate
Family, (C) a partnership in which the Employee
Optionee or the Employee Optionee's Immediate Family
are the only partners, or (D) to a former spouse of the
Employee Optionee pursuant to a domestic relations
order within the meaning of Rule 16a-12 promulgated
under Section 16 of the Exchange Act; provided,
however, that (X) there may not be consideration for
any such transfer, (Y) the written option agreement
required by Section 6.1, or any amendment thereof
approved by the Committee, must expressly provide for
transferability of the option evidenced in such
agreement in a manner consistent with this
Section 6.2(d), and (Z) once transferred pursuant to
the preceding provisions of this Section 6.2(d)(ii), no
subsequent transfer of any options shall be permitted
except a transfer by will or the laws of descent and
distribution. In authorizing all or any portion of an
option to be transferred, the Committee may impose any
conditions on exercise, prescribe a holding period for
the
-7-
Shares acquired upon such exercise and/or impose
any other conditions or limitations it deems desirable
or necessary in order to carry out the purposes and
requirements of the Plan. Following transfer, the
terms and conditions of the Plan and the written option
agreement relating to such option shall continue to be
applicable in all respects to the Employee Optionee
making such transfer and each transferred option shall
continue to be subject to the same terms and conditions
as were applicable immediately prior to transfer as if
such option had not been transferred, including, but
not limited to, the terms and conditions with respect
to the lapse and termination of such option. Neither
the Company, the Committee or any Employee Optionee
shall have any obligation to inform any transferee of
the termination or lapse of any option for any reason.
Notwithstanding any other provision of the Plan, (YY)
following the termination of employment of an Employee
Optionee, a transferred option shall be exercisable by
the transferee only to the extent, and for the periods
specified in Section 6(e) as if
-8-
such option had not been transferred and (ZZ) no
option granted prior to October 31, 1996, may be
transferred until such option has been held by the
Employee Optionee for a period of not less than six
months after the date on which such option was
granted.
<PAGE>
(e) EMPLOYMENT. No option granted under Section 5 of the Plan
shall be exercisable unless the Employee Optionee shall have been employed
by the Company (or any present or future parent or subsidiary of the
Company) during the period beginning on the date the option is granted and
ending on a date ninety days before the date of exercise (and subject to
Section 12 herein); provided, however, that in the event an Employee
Optionee dies while in the employ of the Company (or any present or future
parent or subsidiary of the Company) or within ninety days after such
employment had terminated, the employment period requirement described
above shall be deemed to have been satisfied.
(f) MINIMUM HOLDING PERIOD. No option granted prior to November
1, 1996, may be exercised before the date which is six months after the
date on which such option was granted. Each option granted under Section
5 of the Plan shall contain such additional or other restriction or
restrictions with respect to the stated percentage of Shares covered by
such option as to which such option may be exercised as the Committee may
deem
-9-
desirable or necessary in order to carry out the purposes and
requirements of the Plan.
(g) LIMITATION ON OPTION GRANTS. No Employee Optionee may be
granted options under Section 5 of the Plan in any calendar year with
respect to more than 50,000 Shares.
(h) ADDITIONAL RESTRICTIONS RELATING TO INCENTIVE STOCK OPTIONS.
To the extent that the aggregate fair market value (determined as of the
time the option is granted) of the Shares for which Incentive Stock
Options are exercisable for the first time by an individual during any
calendar year (under this Plan or any other plan of the Company or any of
its subsidiaries) exceeds $100,000 (or such other individual limit as may
be in effect under the Code on the date of grant), such options shall not
be Incentive Stock Options. No Incentive Stock Option shall be granted to
an employee who, at the time such option is granted, owns stock possessing
more than ten percent of the total combined voting power of all classes of
stock of the Company or any parent or subsidiary of the Company within the
meaning of Section 422(b)(6) of the Code unless: (i) at the time the
option is granted, the option price is at least one hundred ten percent of
the fair market value of the Shares subject to the option, and (ii) such
option by its terms is not exercisable after the expiration of five years
from the date such option is granted.
Section 7. GRANTING OF OPTIONS TO DIRECTORS. On January 1, 1997 Non-
Qualified Stock Options to purchase that number of Shares equal to the
product of 1,000 and the number of years
-10-
(determined by treating any partial year as a whole year) then remaining
in the term for which the director has been elected, reelected or
appointed shall be granted to each director of the Company. Such options
shall be expressly conditioned upon the approval of the amendments to the
Plan providing for the granting of options to directors pursuant to this
Section 7 and increasing the number of Shares which may be issued under
options granted pursuant to the Plan by the Company's stockholders at the
next annual meeting of the Company's stockholders, and such options shall
<PAGE>
not be effective if such amendments are not so approved. On June 1, 1997
and on each June 1 thereafter Non-Qualified Stock Options to purchase
that number of Shares equal to the product of 1,000 and the number of
years (determined by treating any partial year as a whole year) in the
term for which the director has been elected, reelected or appointed
shall be granted to each director of the Company who was elected,
reelected or appointed to the board of directors of the Company during
the previous twelve months. Directors of the Company who have been
granted Non-Qualified Stock Options pursuant to this Section 7 shall be
referred to herein as "Director Optionees".
Section 8. TERMS AND CONDITIONS OF THE DIRECTOR OPTIONS.
Section 8.1 WRITTEN INSTRUMENT. Each option to purchase Shares
granted under Section 7 of the Plan shall be evidenced by a written option
agreement signed on behalf of the Company and the Director Optionee which
sets forth the name of the Director Optionee, the date granted, the option
price, the number of
-11-
Shares subject to the option and the other terms and conditions set forth
below. Such option agreement shall incorporate by reference all
applicable terms, conditions and limitations set forth in the Plan.
Section 8.2 TERMS AND CONDITIONS OF THE OPTIONS. In addition to any
other limitations, terms and conditions specified in the Plan, each option
granted under Section 7 of the Plan shall, as to each Director Optionee,
satisfy the following requirements:
(a) DATE OF GRANT. Options must be granted on or before
October 19, 2004.
(b) EXPIRATION. Each option granted under Section 7 of the Plan
shall cease to be exercisable after the expiration of twenty years from
the date such option is granted.
(c) PRICE. The option price as to any Share subject to an
option granted under Section 7 of the Plan will be one hundred percent of
the fair market value of the Share on the date the option is granted. For
purposes of the Plan, the fair market value of a Share means:
(i) The mean between the high and the low prices at which
the Shares were traded if the Shares were then listed
for trading on a national or regional securities
exchange or were then traded on a bona fide over-the-
counter market; or
-12-
(ii) If the Shares were not traded on an exchange or a bona
fide over-the-counter market, a value determined by an
appraiser selected by the Committee.
In the event that the date on which the fair market value of a Share is to
be determined is a date on which there is no trading of the Shares on a
national or regional securities exchange or on the over-the-counter
market, such fair market value shall be determined by referring to the
next preceding business day on which trading occurs.
<PAGE>
(d) TRANSFERABILITY. Options granted under Section 7 of the
Plan may be transferred by the Director Optionee to (A) the spouse,
children or grandchildren of the Director Optionee ("Immediate Family"),
(B) a trust for the exclusive benefit of the Director Optionee or the
Director Optionee's Immediate Family, (C) a partnership in which the
Director Optionee or the Director Optionee's Immediate Family are the only
partners, or (D) to a former spouse of the Director Optionee pursuant to a
domestic relations order within the meaning of Rule 16a-12 promulgated
under Section 16 of the Exchange Act; provided, however, that (X) there
may not be consideration for any such transfer, and (Y) once transferred
pursuant to the preceding provisions of this Section 8.2(d), no subsequent
transfer of any options shall be permitted except a transfer by will or
the laws of descent and distribution. Following transfer, the terms and
conditions of the Plan and the written option agreement relating
-13-
to such option shall continue to be applicable in all respects to the
Director Optionee making such transfer and each transferred option shall
continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer as if such option had not been
transferred, including, but not limited to, the terms and conditions with
respect to the lapse and termination of such option. Neither the
Company, the Committee or any Director Optionee shall have any obligation
to inform any transferee of the termination or lapse of any option for
any reason. Notwithstanding any other provision of the Plan, following
the termination of a Director Optionee's membership on the board of
directors of the Company (including for this purpose membership as a
director emeritus of the Company) a transferred option shall be
exercisable by the transferee only to the extent, and for the periods
specified in Section 8.2(e) as if such option had not been transferred.
(e) BOARD MEMBERSHIP. No option granted under Section 7 of the
Plan shall be exercisable unless the Director Optionee shall have been a
member of the board of directors of the Company (including for this
purpose membership as a director emeritus of the Company) during the
period beginning on the date the option is granted and ending on a date
ninety days before the date of exercise (and subject to Section 12
herein); provided, however, that in the event a Director Optionee dies
while a member of the board of directors of the Company (including for
this purpose membership as a director emeritus of the Company) or within
-14-
ninety days after such membership had terminated, the board membership
period requirement described above shall be deemed to have been satisfied.
(f) LIMITATION ON OPTION GRANTS. No Director Optionee may be
granted options in any calendar year with respect to more than 4,000
Shares.
Section 9. EXERCISE AND PAYMENT OF OPTION PRICE.
Section 9.1 EXERCISE OF OPTIONS. Options shall be exercised as to
all or a portion of the Shares by delivery of an irrevocable written
notice to the Company setting forth the exact number of Shares as to which
the option is being exercised and including with such notice payment of
the option price (plus minimum required tax withholding for options held
by Employee Optionees). The date of exercise shall be the date such
<PAGE>
written notice and payment have been delivered to the Secretary of the
Company either in person or by depositing said notice and payment in the
United States mail, postage prepaid and addressed to such officer at the
Company's home office. No option may be exercised with respect to a
fractional share of stock. Notwithstanding the fact that an option has
been transferred pursuant to Section 6.2(d)(ii), the Employee Optionee
granted such option shall remain liable for any required tax withholding.
Section 9.2 PAYMENT FOR SHARES. Payment of the option price (plus
minimum required tax withholding for options held by an Employee Optionee
may be made by (a) tendering cash (in the form of a check or otherwise) in
such amount, or (b) with the
-15-
consent of the Committee, tendering Shares with a fair market value on
the date of exercise equal to such amount, or (c) delivering a properly
executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company the sale or loan proceeds equal
to such amount. Notwithstanding the fact that an option has been
transferred pursuant to Section 6.2(d)(ii), the Employee Optionee granted
such option shall remain liable for any required tax withholding.
Section 10. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. If the
Company shall, after the Effective Date, change its common stock into a
greater or lesser number of shares through a stock dividend, stock split-
up or combination of shares, then
(i) the number of Shares then subject to the plan but which
are not then subject to any outstanding option;
(ii) the number of Shares subject to each then outstanding
option (to the extent not previously exercised); and
(iii) the price per Share payable upon exercise
of each then outstanding option;
shall all be proportionately increased or decreased as of the record date
for such stock dividend, stock split-up or combination of shares in order
to give effect thereto. Notwithstanding any such proportionate increase
or decrease, no fraction of a Share shall be issued upon the exercise of
an option. If any split-up or combination of shares shall involve a
-16-
change of par value, the Shares subject to options theretofore or
thereafter granted shall be the Shares as so changed.
If, after the Effective Date, there shall be any change in the stock
of the Company other than through a stock dividend, stock split-up or
combination of shares, or other change listed in Section 11 herein, then
if (and only if) the Committee shall determine that such change equitably
requires an adjustment in the number or kind or option price of Shares
then subject to an option, or the number or kind of Shares remaining
subject to the Plan, such adjustment as the Committee shall determine is
equitable and as shall be approved by the Board shall be made and shall be
effective and binding for all purposes of such option and the Plan.
<PAGE>
Section 11. MERGER, REORGANIZATION, OR CHANGE IN CONTROL.
(a) Nothing contained in this Plan or in any option granted
under the Plan shall in any way prohibit the Company from merging with or
consolidating into another corporation, or from selling or transferring
all or substantially all of its assets, or from distributing all or
substantially all of its assets to its stockholders in liquidation, or
from dissolving and terminating its corporate existence; and in any such
event (other than a merger in which the Company is the surviving
corporation and after which the Company remains an independent, publicly
held corporation), the Company or any surviving party to any such merger,
consolidation, or sale or transfer of assets may provide by resolution of
its board of directors that all rights of the
-17-
person or persons entitled to exercise then outstanding options granted
under the Plan, and such options, shall wholly and completely terminate
at the time of any such merger, consolidation, sale or transfer of
assets, liquidation, or dissolution, except that adequate provision for
such person or persons shall be made in accordance with paragraph (b)
below.
(b) In the event that (i) any individual, corporation,
partnership or other person or group of persons or entities becomes the
beneficial owner, directly or indirectly, of 45% or more of the Company's
then outstanding common stock ("Change in Control"), or (ii) any merger,
consolidation, liquidation, dissolution or termination after which the
Company will not survive as an independent, publicly-owned corporation or
any sales or transfer of all or substantially all of the Company's assets
("Reorganization") occurs, then the Company shall pay with respect to each
outstanding option under this Plan an amount equal to (x) the difference
between the Fair Market Value (as defined in (c) below) and the exercise
price of the option, multiplied by (y) the number of Shares subject to
such option. Such payment shall be made in cash within 30 days after, in
the case of a Reorganization requiring approval by the Company
stockholders, the date of such approval and, in the case of a Change in
Control, the date upon which such change occurs.
(c) Solely for purposes of (b) above, "Fair Market Value" shall
mean the greater of (i) the highest price per share of the Company's
common stock paid by the acquiring person within
-18-
twelve months of the occurrence of the Change in Control to effect such
change or provided for in any agreement for the Reorganization, or (ii)
fair market value determined in accordance with Sections 6.2(c) and
8.2(c) of this Plan.
Section 12. TERMINATION OR LAPSE OF OPTIONS. Each option granted
under Section 5 of the Plan shall terminate or lapse upon the first to
occur of (a) the expiration date set forth in the applicable stock option
agreement, (b) the applicable date set forth in Section 6.2(b), (c) the
date of the Employee Optionee's voluntary resignation or termination for
cause, or (d) the date which is ninety days after the date of the Employee
Optionee's other termination of employment with the Company or any present
or future parent or subsidiary of the Company; provided, however, that in
the event of an Employee Optionee's death while in the employ of the
<PAGE>
Company or a parent or subsidiary of the Company or, if the Employee
Optionee is no longer so employed, in the event of the Employee Optionee's
death within ninety days after such employment had terminated, an option
may be exercised, to the extent exercisable by the Employee Optionee
immediately prior to his death, in whole or in part by the Employee
Optionee's estate or designee by will, or, if applicable, the transferee
of such option pursuant to Section 6.2(d), but only if the date of
exercise is on or before the first to occur of (i) the expiration date set
forth in the applicable stock option agreement, (ii) the applicable date
set forth in Section 6.2(b), or (iii) the date which is twelve months
after the date of the Employee Optionee's
-19-
death. For purposes of this section, "for cause" shall mean affirmative
acts in violation of federal, state, or local criminal law.
Each option granted under Section 7 of the Plan shall terminate or
lapse upon the first to occur at (a) the expiration date set forth in the
applicable stock option agreement, (b) the applicable date set forth in
Section 8.2(b), or (c) the date which is ninety days after the date the
Director Optionee's membership on the board of directors of the Company
(including for this purpose membership as a director emeritus of the
Company) terminated; provided, however, that in the event of a Director
Optionee's death while a member of the board of directors of the Company
(including for this purpose membership as a director emeritus of the
Company) or, if the Director Optionee Is no longer a member, in the event
of the Director Optionee's death within ninety days after such membership
had terminated, an option may be exercised, to the extent exercisable by
the Director Optionee immediately prior to his death, in whole or in part
by the Director Optionee's estate or designee by will, or, if applicable,
the transferee of such option pursuant to Section 8.2(d) but only if the
date of exercise is on or before the first to occur of (i) the expiration
date set forth in the applicable stock option agreement, (ii) the
applicable date set forth in Section 8.2(b), or (iii) the date which is
twelve months after the date of the Director Optionee's death.
-20-
Section 13. AMENDMENT AND TERMINATION OF PLAN.
Section 13.1 AMENDMENT OF PLAN. The board of directors of the
Company may amend the Plan from time to time and at any time; provided,
however, that no amendment shall adversely affect any option which has
been granted prior to the amendment and no amendment with respect to the
maximum number of Shares which may be issued pursuant to options or the
class of eligible individuals, or which materially increases benefits
accruing to Optionees under the Plan (within the meaning of Section 162(m)
of the Code) shall be effective unless approved by a majority of the
shares entitled to vote at a meeting of shareholders.
Section 13.2 TERMINATION OF PLAN. The Plan shall terminate on the
first to occur of (a) October 19, 2004 or (b) the date specified by the
board of directors of the Company as the effective date of Plan
termination; provided, however, that the termination of the Plan shall not
limit or otherwise affect any options outstanding on the date of
termination.
<PAGE>
Section 14. EFFECTIVE DATE. The effective date of the Plan shall be
October 20, 1994, the date of approval by the board of directors of the
Company.
Section 15. INVESTMENT INTENT. Shares acquired pursuant to the
exercise of an option, if not registered by the Company under the
Securities Act of 1933 (the "Act"), will be "restricted" stock which will
not be freely transferable by the holder after exercise of the option.
Each Employee Optionee, Director Optionee and assignee in interest of an
Optionee accordingly
-21-
represents, as a condition of participation in the Plan, that Shares
which are unregistered under the Act are being acquired for the Employee
Optionee's, or Director Optionee's (or his or her assignee's) own account
for investment only and not with a view to offer for sale or for sale in
connection with the distribution or transfer thereof.
Section 16. AVAILABILITY OF INFORMATION. The Company shall furnish
each Optionee with (a) a copy of the Plan and the Company's most recent
annual report to its shareholders at the time the option agreement
provided for in Section 6.1 or 8.1 is executed by the Optionee and (b) a
copy of each subsequent annual report, on or about the same date as such
report shall be made available to shareholders of the Company. The
Company will furnish, upon written request addressed to the Secretary of
the Company, but at no charge to the Optionee or any duly authorized
representative of the Optionee, copies of all reports filed by the Company
with the Securities and Exchange Commission or the commissioner of
securities of any state, including, but not limited to, the Company's
annual reports on Form 10-K, its quarterly reports on Form 10-Q, and its
proxy statements.
Section 17. CONDITIONS OF EMPLOYMENT. Participation in or
eligibility for participation in the Plan by an Employee Optionee shall
not confer upon any Employee Optionee the right to be continued as an
employee of the Company or any present or future parent or subsidiary of
the Company and the Company and its participating subsidiaries hereby
expressly reserve the right to
-22-
terminate the employment of any employee, with or without cause,
regardless of the Plan and any options granted pursuant to it.
Section 18. MISCELLANEOUS.
(a) The transfer of an Employee Optionee from the Company to a
parent or subsidiary of the Company or from a parent or subsidiary of the
Company to the Company or another parent or subsidiary of the Company
shall not be a termination of employment or an interruption of continuous
employment for the purpose of the Plan.
(b) As used in the Plan, the term "parent" and "subsidiary"
shall have the meanings ascribed to them in Sections 421, 422 and 424 of
the Code.
Section 19. GOVERNMENT APPROVALS. If at any time the Company shall
be advised by its counsel that the exercise of any option or the delivery
<PAGE>
of Shares upon the exercise of an option is required to be approved,
registered or qualified under any applicable law, or must be accompanied
or preceded by a prospectus or similar circular meeting the requirements
of any applicable law, the Company will use reasonable efforts to obtain
such approval, to effect such registrations and qualifications, or to
provide such prospectus or similar circular within a reasonable time, but
exercise of the options or delivery by the Company of certificates for
Shares may be deferred until such approvals, registrations or
qualifications are effected, or until such prospectus or similar circular
is available.
-23-
Section 19 [20]. Notwithstanding any other provision of this Plan or
of any option agreement relating to any option granted hereunder, the
consummation of the transactions contemplated by that certain Agreement
and Plan of Merger, dated as of August 24, 1997, by and among Wausau Paper
Mills Company, WPM Holdings, Inc. and the Company on substantially the
terms and conditions set forth therein as of August 24, 1997 shall not be
deemed to constitute a "Change in Control" or any other transaction
described in Section 11(b) of this Plan and of any corresponding or
similar provision of any such option agreement. Without limiting the
generality of the foregoing, the consummation of such transactions shall
not result in the payment of any cash to any holder of an option granted
under this Plan.
IN WITNESS WHEREOF, the Company has caused the Plan as amended
effective December 19, 1996 to be executed by its duly authorized officers
as of the 19th day of December, 1996.
MOSINEE PAPER CORPORATION
By:________________________________
Daniel R. Olvey, As its
President
ATTEST:
By:__________________________________
Gary P. Peterson, As its secretary
-24-
EXHIBIT 10.8
MOSINEE SUPPLEMENTAL RETIREMENT PLAN
Mosinee Paper Corporation, a Wisconsin corporation, hereby establishes
the Mosinee Supplemental Retirement Plan in accordance with the terms and
conditions herein contained.
ARTICLE I
PURPOSE AND ADMINISTRATION OF THE PLAN
1.1 PURPOSE. The Company hereby establishes the Plan for the purpose
of providing deferred compensation (within the meaning of section 201(2)
of the Employee Retirement Income Security Act of 1974) for executive
officers of the Company.
1.2 ADMINISTRATION. The Plan shall be administered by the Company.
1.3 EFFECTIVE DATE. The effective date of the Plan shall be
September 1, 1994.
-1-
ARTICLE II
DEFINITIONS
2.1 DEFINITIONS. The following terms shall have the meanings set
forth below:
(a) "Average Compensation" means (1) an aggregate amount determined
by the sum of (A) the Participant's salary for a calendar year
and earned bonus attributable to such calendar year and (B) any
compensation deferred under a plan qualified under Section 401(k)
of the Code or under a plan which satisfies the requirements of
section 125 of the Code during such calendar year, for the 5
calendar years of the Executive Officer's most recent 10 years of
Continuous Service as an Executive Officer in which the largest
aggregate amount of such compensation was earned and/or deferred
for him for service as an Executive Officer for all or any
portion of each of such calendar years, divided by (2) 12;
provided, however, that if a Participant did not perform services
for 5 calendar years as an Executive Officer, such determinations
shall be based on such earned and/or deferred compensation for
each complete calendar year in which the Participant was an
Executive Officer.
(b) "Early Retirement Age" means the date on which an Executive
Officer has attained age 55 and completed 10 years of Continuous
Service as an Executive Officer.
(c) "Executive Officer" means (1) the President and each corporate
Vice President of the Company, (2) the Vice President and General
Manager of each of The Sorg Paper Company or Bay West Paper
Corporation (3) the Vice President and General Manager of each of
the Pulp and Paper and Converted Products Divisions of the
Company and (4) such other officer or officers of the Company,
its subsidiaries or divisions as the Board of Directors of the
<PAGE>
Company may, from time to time and at any time designate by
resolution as an "Executive Officer" for purposes of this Plan.
(d) "Normal Retirement Age" means the date on which (1) an Executive
Officer has attained age 62 and completed 10 years of Continuous
Service as an Executive Officer or (2) an Executive Officer has
attained age 62 and had terminated employment with the Company
because of Disability.
(e) "Participant" means an Executive Officer of the Company who has
qualified to be a participant in the Plan in accordance with
Section 3.1.
-2-
(f) "Plan" means the Mosinee Supplemental Retirement Plan as herein
set forth.
(g) "Retirement Plan" shall mean the Mosinee Retirement Plan, as now
in effect or hereafter amended, or any successor plan which is
qualified under section 401(a) of the Code, and maintained for
salaried employees of the Company.
2.2 DEFINITIONS INCORPORATED BY REFERENCE. Each of the following
terms shall have the meaning set forth in the Retirement Plan and the
definition of each such term by the Retirement Plan is hereby incorporated
by this reference to the extent not inconsistent with the provisions of
this Plan:
(a) "Actuarial Equivalent"
(b) "Affiliated Employer"
(c) "Code"
(d) "Company"
(e) "Continuous Service"
(f) "Disability"
(g) "Retirement Benefit"
(h) "Surviving Spouse"
-3-
ARTICLE III
PARTICIPATION
3.1 PARTICIPATION. Each Executive Officer shall become a Participant
as of the first day of his employment by the Company in the capacity of an
Executive Officer.
3.2 SERVICE.
(a) All Continuous Service as an Executive Officer shall be
recognized for purposes of this Plan, whether or not such
Continuous Service was performed prior to the effective date
hereof.
<PAGE>
(b) Continuous Service by an individual for the Company in any
capacity other than as an Executive Officer shall not be
recognized for any purpose under this Plan.
(c) In the event a Participant or former Participant is reemployed by
the Company as an Executive Officer, all periods of Continuous
Service with the Company as an Executive Officer shall be
aggregated for purposes of this Plan.
3.3 TERMINATION OF PARTICIPATION AND REEMPLOYMENT. A Participant
shall cease participation in the Plan on the later of (a) the earlier of
(1) the date his termination of employment with the Company and all
Affiliated Employers occurs or (2) the date he is no longer employed as an
Executive Officer by the Company or an Affiliated Employer, or (b) the
date the final benefit payment to which the Participant may be entitled
pursuant to this Plan is made.
-4-
ARTICLE IV
BENEFITS
4.1 NORMAL RETIREMENT BENEFITS OF CORPORATE OFFICERS. Subject to the
limitations elsewhere contained in this Plan, an Executive Officer who
terminates his employment with the Company and each Affiliated Employer on
or after attaining his Normal Retirement Age and who was the President or
a corporate Vice President of the Company as of the most recent date on
which he performed service as an Executive Officer shall be entitled to a
normal retirement benefit payable in the form of a single life annuity
equal to the excess of:
(a) an amount equal to 50% of the Participant's Average Compensation,
over
(b) the amount of the Participant's accrued Retirement Benefit under
the Retirement Plan which would then be payable in the form of a
single life annuity.
4.2 NORMAL BENEFITS OF OTHER EXECUTIVE OFFICERS. Subject to the
limitations elsewhere contained in this Plan, an Executive Officer who
terminates his employment with the Company and each Affiliated Employer on
or after attaining his Normal Retirement Age and who was not the President
or a corporate Vice President of the Company as of the most recent date on
which he performed service as an Executive Officer, shall be entitled to a
retirement benefit payable in the form of a single life annuity determined
in accordance with the formula set forth in section 4.1; provided,
however, that in making such determination, the term "40% of the
Participant's Average Compensation" shall be substituted for the term "50%
of the Participant's Average Compensation" in section 4.1(a).
4.3 EARLY RETIREMENT BENEFITS OF EXECUTIVE OFFICERS. Subject to the
limitations elsewhere contained in this Plan, an Executive Officer who
terminates his employment with the Company and each Affiliated Employer on
or after attaining his Early Retirement Age, but prior to attaining his
Normal Retirement Age, shall be entitled to an early retirement benefit in
the form of a single life annuity equal to the amount to which he would
have been entitled to under section 4.1 or section 4.2, as applicable, if
he had then attained his Normal Retirement Age; provided, however, that
such benefit shall be reduced by .4166% for each full calendar month, from
<PAGE>
and including the month in which the Participant's 55th birthday occurs to
the month in which his 62nd birthday occurs, by which the calendar month
in which payment of the early retirement benefit provided for in this
section 4.3 precedes the date on which such Participant would have
attained his Normal Retirement Age.
-5-
4.4 SURVIVING SPOUSE BENEFITS. Subject to the limitations elsewhere
contained in this Plan, the Surviving Spouse of a Participant who dies
prior to commencement of any other benefit hereunder, including the
Surviving Spouse of a former Participant who terminated employment because
of Disability, shall be eligible for a Surviving Spouse benefit commencing
as of the last to occur of (1) the first day of the first month following
the month in which the Participant's death occurs or (2) the date on which
the Participant would have been eligible to receive payment of a benefit
under section 4.3, or in the case of a Participant who terminated
employment because of Disability, commencing as of the date on which the
former Participant would have attained age 55, and such Surviving Spouse
benefit shall be equal to 50% of the monthly benefit which would have been
payable to the deceased Participant under this Plan if he had retired the
day before his death and payment of his benefit had commenced on such date
assuming, in the case of a former Participant who terminated employment
because of a Disability, that the benefit payable to such former
Participant at Normal Retirement Age under section 4.1 or 4.2, as
applicable, would have been payable in reduced form at age 55 pursuant to
section 4.3, and, assuming further, that in the case of a Participant or
former Participant who died prior to attaining age 55 or prior to the date
on which the Participant or former Participant had completed 10 years of
Continuous Service, that a benefit would have been payable to such
deceased Participant or former Participant as of the later of the dates
described in (1) and (2), above; provided, however, that the benefit
payable to the Surviving Spouse of a Participant or former Participant who
died prior to the completion of 5 years of Continuous Service shall be
reduced by 20% for each year of Continuous Service less than 5 accrued by
such deceased Participant or former Participant.
4.5 FORM, COMMENCEMENT AND DURATION OF PAYMENTS.
(a) A Participant may elect, subject to the approval of the Board of
Directors, (1) to receive the Actuarial Equivalent of the benefit
accrued by a Participant pursuant to section 4.1, 4.2 or 4.3 in
any form of annuity payment option then available under the
Retirement Plan or (2) to receive the value of the benefit
accrued by a Participant pursuant to section 4.1, 4.2 or 4.3 in
the form of a lump sum distribution. In the event a Participant
elects, with the approval of the Board of Directors, to receive a
lump sum distribution of the value of the benefit otherwise
provided for in section 4.1, 4.2, or 4.3, the value of the lump
sum distribution under this Plan shall be determined in
accordance with the provisions for determining the value of a
lump sum distribution of the
-6-
Participant's Retirement Benefit under the terms of the
Retirement Plan.
<PAGE>
(b) Monthly benefit payments to the Participant (and, if applicable,
his Surviving Spouse) under section 4.1, 4.2, 4.3 or 4.4, or a
lump sum payment provided for under section 4.5(a) with respect
to a benefit accrued under section 4.1, 4.2 or 4.3, shall
commence on the first day of the month following the
Participant's termination of employment or, if applicable, the
date specified in section 4.4 as the date on which the
Participant's Surviving Spouse became eligible for a Surviving
Spouse benefit, and shall continue, subject to the provisions of
section 4.7, until the month in which the death of the
Participant (or, if applicable, his Surviving Spouse) occurs;
provided, however, that a Participant or Surviving Spouse may
elect to defer receipt of an early retirement benefit or
Surviving Spouse benefit, as applicable, for any period of time
not in excess of the date on which the Participant would have
attained his Normal Retirement Age. Despite any other provision
of this Plan, a Participant who receives a benefit in the form of
a lump sum distribution shall not be entitled to any monthly
benefit otherwise provided for in this Plan.
4.6 CHANGE OF CONTROL.
(a) In the event a Change of Control of the Company occurs, the
Company shall pay to each Participant a lump sum amount equal to
the present value of the Participant's accrued normal retirement
benefit, as determined under section 4.1, as of the first day of
the first month following such Change of Control of the Company
on which such Participant is not an employee of the Company,
whether or not such Change of Control of the Company occurred
prior to the date on which such Participant shall have ceased to
be an employee of the Company. Upon payment of the lump sum
amount provided for in this section 4.6(a), the Company shall
have no further obligation to pay any benefits under this Plan.
Notwithstanding the foregoing, if a Participant has less than
five years of Continuous Service as of the date of the Change of
Control, the amount paid to such Participant under this Section
4.6(a) shall equal (i) the amount described in the first sentence
of this Section 4.6(a) times (ii) a fraction, the numerator of
which is the number of years and fractions thereof of the
Participant's Continuous Service as of the date of the Change of
Control and the denominator of which is five.
-7-
(b) In the event a Change of Control of the Company occurs after the
Participant's death and whether or not a benefit shall have then
become payable to the Participant's Surviving Spouse, the Company
shall pay to such Participant's Surviving Spouse, if then living,
the present value of the unpaid Surviving Spouse benefit. Upon
payment of the lump sum amount provided for in this section
4.6(b), the Company shall have no further obligation to pay any
benefits under this Plan. Notwithstanding the foregoing, if a
Participant had less than five years of Continuous Service as of
the date of his or her death before the Change of Control, the
amount paid to such Participant Surviving Spouse under this
Section 4.6(b) shall equal (i) the amount described in the first
sentence of this Section 4.6(a) times (ii) a fraction, the
numerator of which is the number of years and fractions thereof
of the Participant's Continuous Service as of the date of death
and the denominator of which is five.
<PAGE>
(c) For purposes of this Plan, a "Change of Control of the Company"
shall mean:
(1) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or more of either (A) the then outstanding shares of
common stock of the Company (the "Outstanding Company Common
Stock") or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to
vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (1), the following
acquisitions shall not constitute a Change of Control: (I)
any acquisition directly from the Company, (II) any
acquisition by the Company, (III) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company or (IV) any acquisition pursuant to a
transaction which complies with clauses (A), (B) and (C) of
subsection (3) of this Section 2; or
(2) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided,
however, that any
-8-
individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened
election contest with respect to the election or removal
of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than
the Board; or
(3) Consummation by the Company of a reorganization,
merger, share exchange or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company or the acquisition of assets of another corporation
(a "Business Combination"), in each case, unless, following
such Business Combination, (A) all or substantially all of
the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may
be, of the corporation resulting from such Business
<PAGE>
Combination (including, without limitation, a corporation
which as a result of such transaction owns the Company or
all or substantially all of the Company's assets either
directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (B) no Person
(excluding any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20%
or more of, respectively, the then outstanding shares of
common stock of the corporation resulting from such Business
Combination or the combined voting power of the then
outstanding voting securities of
-9-
such corporation except to the extent that such ownership
existed with respect to the Company prior to the Business
Combination and (C) at least a majority of the members of
the board of directors of the corporation resulting from
such Business Combination were members of the Incumbent
Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for
such Business Combination; or
(4) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, neither the approval by the
shareholders of the Company, nor the consummation, of the transactions
contemplated by that certain Agreement and Plan of Merger, dated as of
August 24, 1997, by and among Wausau Paper Mills Company, WPM
Holdings, Inc. and the Company on substantially the terms and
conditions set forth therein as of August 24, 1997 shall constitute a
Change of Control for purposes of this Agreement.
(d) For purposes of this Plan, the term "Interested Shareholder"
shall mean any person (other than the Company or any of its
subsidiaries or any member of the Board of Directors as of the
effective date of this Plan or any affiliate of such person) who
first became the beneficial owner of 10% or more of the combined
voting power of the Company's then outstanding securities after
the effective date of this Plan.
(e) For purposes of this Plan, the present value of a Participant's
retirement benefit or the Surviving Spouse benefit shall be
determined by reference to the 1983 Individual Annuity Mortality
Table with an assumed interest rate equal to the "immediate
annuity rate" as then in effect as determined by the Pension
Benefit Guaranty Corporation and promulgated in Appendix B to 29
C.F.R. <section>2619.65 or any successor regulation adopted for
the same or substantially similar purpose.
4.7 FORFEITURE OF BENEFITS. Despite any other provision of this
Plan, a Participant's or Surviving Spouse's, as applicable, eligibility
for benefit payments under the Plan is expressly subject to the following
terms and conditions:
<PAGE>
(a) The Company is and shall be entitled to the sole benefit and
exclusive ownership of any inventions or improvements in plant,
machinery and processes, and all patents for the same, and all
customer or price lists,
-10-
trade secrets and other things of similar type or nature used in
the business of the Company that may be made or discovered by a
Participant while he is employed by the Company, or, after the
termination of his employment period if arising out of his
activities, knowledge or experience gained while in the
employment of the Company. In the event that a Participant,
during or after the termination of his employment, discloses
all or any portion of the list of the Company's customers or the
Company's pricing structure or all or any portion of the
Company's manufacturing process or any other trade
secrets or confidential information to any person, firm,
corporation, associations or other entity for any reason or
purpose whatsoever, no payment of any benefit otherwise due the
Participant or his Surviving Spouse pursuant to this Plan shall
be made by the Company.
(b) In the event a Participant, without the prior written consent of
the Company and within a period of two years beginning on the
first day following the Participant's termination of employment
with the Company, directly or indirectly owns, manages, operates,
joins, controls, is employed by or participates in the ownership,
management, operation or control of, or is connected in any
manner with, any business of a type and character which, in the
opinion of the Company, results in the Participant then being
engaged in the field of activities in which he was engaged by the
Company at the time of termination (and within one year prior to
said termination) and such business is, in the opinion of the
Company, in direct or indirect competition in any market area
served by the Company with any business then conducted by the
Company in such market area, no payment of any benefit otherwise
due the Participant or his Surviving Spouse pursuant to this Plan
shall be made by the Company if the Participant fails to cease
such activity within fifteen days of the mailing to him by the
Company of the Company's opinion that he is in violation of the
restrictions contained in this section 4.7(b).
(c) The Company shall have sole discretion to stop payment of any
benefit or refuse to make payments otherwise due the Participant
or his Surviving Spouse pursuant to this Plan if the
Participant's termination of employment with the Company or his
appointment to a position with the Company as other than an
Executive Officer was by reason of or because of the
Participant's fraud, embezzlement, misappropriation or
-11-
similar offense against the Company or any other state or
federal felony offense.
(d) Subject to the provisions of section 6.2, no benefit shall be
payable under this Plan to any Participant or Surviving Spouse
who, for any reason, is not eligible for and does not receive a
benefit under the provisions of the Retirement Plan.
<PAGE>
4.8 INALIENABILITY OF BENEFITS. A Participant's right to a benefit
under the Plan shall not be subject to voluntary or involuntary sale,
pledge, hypothecation, transfer or assignment by the Participant or by his
personal representatives or heirs, or any other person or persons or
organization or organizations succeeding to any of the Participant's
rights and benefits hereunder.
4.9 FACILITY OF PAYMENTS. Any benefit payable hereunder to any
person who is legally incapacitated may be paid to a court appointed legal
representative of such person.
4.10 CLAIMS PROCEDURE. Each Participant or Surviving Spouse whose
claim for benefits is denied, in whole or in part, shall be provided with
a notice, written in a manner calculated to be understood by such person,
setting forth the specific reasons for such denial and outlining the
review procedure of the Company. Each such Participant or Surviving
Spouse shall be given a reasonable opportunity for a full and fair review
by the Company of the decision by which the claim was denied.
-12-
ARTICLE V
PROVISION FOR BENEFITS
5.1 ASSETS OF THE COMPANY. Benefits which become payable under the
provisions of the Plan shall be paid directly by the Company out of its
assets. No assets of the Company shall be set aside or segregated for the
provision of such benefit payments. No Participant or Surviving Spouse,
nor any other potential or actual recipient of benefits under the
provisions of this Plan shall acquire any right, title or interest in the
assets of the Company by reason of the Plan and, to the extent that the
Participant, Surviving Spouse or such other recipient shall acquire a
right to receive payments from the Company pursuant to the Plan, such
right shall be no greater than the right of any unsecured general creditor
of the Company.
-13-
ARTICLE VI
AMENDMENT AND TERMINATION OF THE PLAN
6.1 AMENDMENT. The Company reserves the right to amend the Plan from
time to time and at any time, effective as of any specified current, prior
or future date; provided, however, that no such amendment shall modify or
reduce a Participant's accrued benefit as of the date such amendment is
adopted.
6.2 TERMINATION. The Company reserves the right to terminate the
Plan at any time and for any reason; provided, however, that upon
termination, each Participant's accrued benefit shall be fully vested
subject only to the provisions of section 4.7. A Participant's "accrued
benefit" shall mean the benefit which would be paid or payable pursuant to
this Plan following the Participant's termination of employment if the
Retirement Plan had terminated as of the same date on which the
termination of the Plan occurs (and provided for payment of accrued
Retirement Plan benefits upon the Participant's termination of employment)
multiplied by a fraction, the numerator of which is a Participant's years
<PAGE>
of Continuous Service recognized under section 3.2 and the denominator of
which is ten.
-14-
ARTICLE VII
MISCELLANEOUS
7.1 NONGUARANTEE OF EMPLOYMENT. Nothing contained in this Plan shall
be construed as a contract of employment between the Company and any
employee, as a right of any employee to be continued in the employment of
the Company as an Executive Officer or in any other capacity, or as a
limitation of the right of the Company to discharge any of its employees,
with or without cause.
7.2 ACTION BY THE COMPANY. Any action by the Company under this Plan
may be by resolution of its Board of Directors, or by any officer or
officers duly authorized by resolution of said Board to act with respect
to the Plan.
7.3 AGREEMENT BINDING ON SUCCESSORS. This agreement shall be binding
upon all persons entitled to benefits hereunder, and upon their respective
heirs and legal representatives and upon the Company, its successors and
assigns.
7.4 CONSTRUCTION. Except when otherwise indicated by the context,
any masculine terminology herein shall also include feminine, and the
definition of any term herein in singular shall also include the plural.
7.5 TITLES. Article and section titles are included for reference
purposes only and in the event of a conflict between a title and its
respective text the text shall control.
7.6 GOVERNING LAW. This Plan shall, to the extent not superseded by
the Employee Retirement Income Security Act of 1974, be governed by the
laws of the State of Wisconsin.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed on
its behalf on this ____ day of October, 1994.
MOSINEE PAPER CORPORATION
By:________________________________
Daniel R. Olvey
President and Chief Executive
Officer
-15-
EXHIBIT 10.9
CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
AGREEMENT by and between Mosinee Paper Corporation, a
Wisconsin corporation (the "Company") and Daniel R. Olvey (the
"Executive"), dated as of the 24th day of August, 1997.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility, threat
or occurrence of a Change of Control (as defined below) of the
Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of
Control and to encourage the Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the Executive
with compensation and benefits arrangements upon a Change of Control
which ensure that the compensation and benefits expectations of the
Executive will be satisfied and which are competitive with those of
other corporations. Therefore, in order to accomplish these
objectives, the Board has caused the Company to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS. (a) The "Effective Date" shall
mean the first date during the Change of Control Period (as defined
in Section 1(b)) on which a Change of Control (as defined in Section
2) occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the Executive's
employment with the Company is terminated prior to the date on which
the Change of Control occurs, and if it is reasonably demonstrated by
the Executive that such termination of employment (i) was at the
request of a third party who has taken steps reasonably calculated to
effect a Change of Control or (ii) otherwise arose in connection with
or anticipation of a Change of Control, then for all purposes of this
Agreement the "Effective Date" shall mean the date immediately prior
to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on the third anniversary of
the date hereof; provided, however, that commencing on the date one
year after the date hereof, and on each annual anniversary of such
date (such date and each annual anniversary thereof shall be
hereinafter referred to as
-1-
the "Renewal Date"), unless previously terminated, the Change of
Control Period shall be automatically extended so as to terminate
three years from such Renewal Date, unless at least 60 days prior to
the Renewal Date the Company shall give notice to the Executive that the
Change of Control Period shall not be so extended.
2. CHANGE OF CONTROL. For the purpose of this Agreement, a
"Change of Control" shall mean:
<PAGE>
(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of either
(i) the then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (ii) the combined
voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors
(the "Outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition
pursuant to a transaction which complies with clauses (i), (ii)
and (iii) of subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
-2-
(c) Consummation by the Company of a reorganization, merger,
share exchange or consolidation or sale or other disposition of
all or substantially all of the assets of the Company or the
acquisition of assets of another entity (a "Business
Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or
<PAGE>
more of, respectively, the then outstanding shares of common stock
of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership existed
with respect to the Company prior to the Business Combination and
(iii) at least a majority of the members of the board of directors
of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for
such Business Combination; or
(d) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, neither the approval by the
shareholders of the Company, nor the consummation, of the
transactions contemplated by that certain Agreement and Plan of
Merger, dated as of August 24, 1997, by and among Wausau Paper Mills
Company, WPM Holdings, Inc. and the Company on substantially the
terms and conditions set forth therein as of August 24, 1997 shall
constitute a Change of Control for purposes of this Agreement.
-3-
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue
the Executive in its employ, and the Executive hereby agrees to
remain in the employ of the Company subject to the terms and
conditions of this Agreement, for the period commencing on the
Effective Date and ending on the third anniversary of such date (the
"Employment Period").
4. TERMS OF EMPLOYMENT. (a) POSITION AND DUTIES. (i)
During the Employment Period, (A) the Executive's position (including
status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held, exercised
and assigned to the Executive at any time during the 120-day period
immediately preceding the Effective Date and (B) the Executive's
services shall be performed at the location where the Executive was
employed immediately preceding the Effective Date or any office or
location less than 35 miles from such location.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and
time during normal business hours to the business and affairs of the
Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable efforts to perform faithfully and efficiently
such responsibilities. During the Employment Period it shall not be
a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such
activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued
<PAGE>
conduct of such activities (or the conduct of activities similar in
nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the
Executive's responsibilities to the Company.
(b) COMPENSATION. (i) BASE SALARY. During the Employment
Period, the Executive shall receive an annual base salary ("Annual
Base Salary"), which shall be paid at a monthly rate, at least equal
to twelve times the highest monthly base salary paid or payable,
including any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of
the twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the
-4-
Annual Base Salary shall be reviewed no more than 12 months after the
last salary increase awarded to the Executive prior to the Effective Date
and thereafter at least annually. Any increase in Annual Base Salary
shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. Annual Base Salary shall not be
reduced after any such increase and the term Annual Base Salary as
utilized in this Agreement shall refer to Annual Base Salary as so
increased. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or
under common control with the Company.
(ii) ANNUAL BONUS. In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending during
the Employment Period, an annual bonus (the "Annual Bonus") in cash
at least equal to the Executive's highest bonus under the Company's
annual management incentive plans for the last three full fiscal
years prior to the Effective Date (annualized in the event that the
Executive was not employed by the Company for the whole of such
fiscal year) (the "Recent Annual Bonus"). Each such Annual Bonus
shall be paid no later than the end of the third month of the fiscal
year next following the fiscal year for which the Annual Bonus is
awarded, unless the Executive shall elect to defer the receipt of
such Annual Bonus.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During
the Employment Period, the Executive shall be entitled to participate
in all incentive, savings and retirement plans, practices, policies
and programs applicable generally to other peer executives of the
Company and its affiliated companies, but in no event shall such
plans, practices, policies and programs provide the Executive with
incentive opportunities (measured with respect to both regular and
special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company
and its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during the
120-day period immediately preceding the Effective Date or if more
favorable to the Executive, those provided generally at any time
after the Effective Date to other peer executives of the Company and
its affiliated companies.
<PAGE>
(iv) WELFARE BENEFIT PLANS. During the Employment
Period, the Executive and/or the Executive's family, as the case may
be, shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation,
-5-
medical, prescription, dental, disability, salary continuance, employee
life, group life, accidental death and travel accident insurance plans
and programs) to the extent applicable generally to other peer executives
of the Company and its affiliated companies, but in no event shall such
plans, practices, policies and programs provide the Executive with
benefits which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for
the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, those provided
generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies.
(v) EXPENSES. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the
most favorable policies, practices and procedures of the Company and
its affiliated companies in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company
and its affiliated companies.
(vi) FRINGE BENEFITS. During the Employment Period,
the Executive shall be entitled to fringe benefits, including,
without limitation, tax and financial planning services, payment of
club dues, and, if applicable, use of an automobile and payment of
related expenses, in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated
companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(vii) OFFICE AND SUPPORT STAFF. During the Employment
Period, the Executive shall be entitled to an office or offices of a
size and with furnishings and other appointments, and to exclusive
personal secretarial and other assistance, at least equal to the most
favorable of the foregoing provided to the Executive by the Company
and its affiliated companies at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive, as provided generally at any time thereafter with respect
to other peer executives of the Company and its affiliated companies.
(viii) VACATION. During the Employment Period, the
Executive shall be entitled to paid vacation in ac-
-6-
cordance with the most favorable plans, policies, programs and practices
of the Company and its affiliated companies as in effect for the
<PAGE>
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
5. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY.
The Executive's employment shall terminate automatically upon the
Executive's death during the Employment Period. If the Company
determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of
Disability set forth below), it may give to the Executive written
notice in accordance with Section 12(b) of this Agreement of its
intention to terminate the Executive's employment. In such event,
the Executive's employment with the Company shall terminate effective
on the 30th day after receipt of such notice by the Executive (the
"Disability Effective Date"), provided that, within the 30 days after
such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this
Agreement, "Disability" shall mean the absence of the Executive from
the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to
the Executive or the Executive's legal representative.
(b) CAUSE. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of
this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the Executive
to perform substantially the Executive's duties with the Company
or one of its affiliates (other than any such failure resulting
from incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the
Company which specifically identifies the manner in which the
Board or Chief Executive Officer believes that the Executive has
not substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and demonstrably
injurious to the Company.
-7-
For purposes of this provision, no act or failure to act, on the
part of the Executive, shall be considered "willful" unless it is
done, or omitted to be done, by the Executive in bad faith or without
reasonable belief that the Executive's action or omission was in the
best interests of the Company. Any act, or failure to act, based
upon authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of the Chief Executive Officer or a
senior officer of the Company or based upon the advice of counsel for
the Company shall be conclusively presumed to be done, or omitted to
be done, by the Executive in good faith and in the best interests of
the Company. The cessation of employment of the Executive shall not
be deemed to be for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
<PAGE>
membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive
and the Executive is given an opportunity, together with counsel, to
be heard before the Board), finding that, in the good faith opinion
of the Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.
(c) GOOD REASON. The Executive's employment may be
terminated by the Executive for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section
4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 4(b) of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in
bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than as provided in Section
4(a)(i)(B) hereof or the Company's requiring the Executive to
travel on Company business to a substantially greater extent than
required immediately prior to the Effective Date;
-8-
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by
this Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive. Anything in
this Agreement to the contrary notwithstanding, a termination by the
Executive for any reason during the 30-day period beginning on the
180th day after the Effective Date shall be deemed to be a
termination for Good Reason for all purposes of this Agreement.
(d) NOTICE OF TERMINATION. Any termination by the Company
for Cause, or by the Executive for Good Reason, shall be communicated
by Notice of Termination to the other party hereto given in
accordance with Section 12(b) of this Agreement. For purposes of
this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a
<PAGE>
basis for termination of the Executive's employment under the
provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than
thirty days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination
any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the
Company, respectively, hereunder or preclude the Executive or the
Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, or
by the Executive for Good Reason, the date of receipt of the Notice
of Termination or any later date specified therein, as the case may
be, (ii) if the Executive's employment is terminated by the Company
other than for Cause or Disability, the date on which the Company
notifies the Executive of such termination and (iii) if the
Executive's employment is terminated by reason of death or
Disability, the date of death of the Executive or the Disability
Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) GOOD
REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If, during the
Employment Period, the Company shall terminate
-9-
the Executive's employment other than for Cause or Disability or the
Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination the
aggregate of the following amounts:
A. the sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the extent not
theretofore paid, (2) the product of (x) the higher of (I)
the Recent Annual Bonus and (II) the Annual Bonus paid or
payable, including any bonus or portion thereof which has
been earned but deferred (and annualized for any fiscal year
consisting of less than twelve full months or during which
the Executive was employed for less than twelve full months),
for the most recently completed fiscal year during the
Employment Period, if any (such higher amount being referred
to as the "Highest Annual Bonus") and (y) a fraction, the
numerator of which is the number of days in the current
fiscal year through the Date of Termination, and the
denominator of which is 365 and (3) any compensation
previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (1), (2), and
(3) shall be hereinafter referred to as the "Accrued
Obligations"); and
B. the amount equal to the product of (1) three
and (2) the sum of (x) the Executive's Annual Base Salary and
(y) the Highest Annual Bonus; and
<PAGE>
C. an amount equal to the difference between (1)
the aggregate benefit under the Company's qualified defined
benefit retirement plans (collectively, the "Retirement
Plan") and any excess or supplemental defined benefit
retirement plans in which the Executive participates other
than the Company's Supplemental Retirement Plan (the "SERP")
(collectively, the "Nonqualified Plans") which the Executive
would have accrued (whether or not vested) if the Executive's
employment had continued for three years after the Date of
Termination and (2) the actual vested benefit, if any, of the
Executive under the Retirement Plan and the SERP, determined
as of the Date of Termination (with the foregoing amounts to
be computed on an actuarial present value basis, using
actuarial assumptions no less favorable to the Executive than
the most favorable of those in effect for purposes of
computing benefit entitle-
-10-
ments under the Retirement Plan and the Nonqualified Plans at any
time from the day before the Effective Date through the Date of
Termination, and in the case of the amount described in clause
(1), treating the Executive as having earned as compensation in
each of the three years following the Date of Termination the
compensation that would have been that required by Section
4(b)(i) and Section 4(b)(ii) if his employment had continued
during those three years); and
D. an amount equal to the difference between (1)
the amount that would have been paid to the Executive upon
the Change of Control pursuant to Section 4.6(a) of the SERP
if the Executive's Average Compensation had been determined
by reference to the Executive's compensation for the five
calendar years during which the Executive's aggregate
compensation was the largest out of the thirteen calendar
years consisting of (A) the most recent ten years of
Continuous Service (as defined in the SERP) before the Change
of Control and (B) three additional hypothetical year of
Continuous Service during which the Executive's compensation
equalled that required by Section 4(b)(i) and Section
4(b)(ii), and (2) the amount that was actually paid to the
Executive pursuant to said Section 4.6(a) (with the foregoing
amounts to be computed on an actuarial present value basis as
of the Date of Termination);
(ii) for three years after the Executive's Date of
Termination, or such longer period as may be provided by the terms
of the appropriate plan, program, practice or policy, the Company
shall continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and
policies described in Section 4(b)(iv) of this Agreement if the
Executive's employment had not been terminated or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company
and its affiliated companies and their families, provided,
however, that if the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare
benefits under another employer-provided plan, the medical and
<PAGE>
other welfare benefits described herein shall be secondary to
those provided under such other plan during such applicable period
of eligibility, and for purposes of determining eligibility (but
not the time of commencement of benefits) of the Executive for
retiree benefits pursu-
-11-
ant to such plans, practices, programs and policies, the Executive
shall be considered to have remained employed until three years
after the Date of Termination and to have retired on the last day of
such period;
(iii) the Company shall, at its sole expense as incurred,
provide the Executive with outplacement services the scope and
provider of which shall be selected by the Executive in the
Executive's sole discretion; and
(iv) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provided or which the
Executive is eligible to receive under any plan, program, policy
or practice or contract or agreement of the Company and its
affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(b) DEATH. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other than
for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to
the Executive's estate or beneficiary, as applicable, in a lump sum
in cash within 30 days of the Date of Termination. With respect to
the provision of Other Benefits, the term Other Benefits as utilized
in this Section 6(b) shall include, without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to receive,
benefits at least equal to the most favorable benefits provided by
the Company and affiliated companies to the estates and beneficiaries
of peer executives of the Company and such affiliated companies under
such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives
and their beneficiaries at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive's estate and/or the Executive's beneficiaries, as in effect
on the date of the Executive's death with respect to other peer
executives of the Company and its affiliated companies and their
beneficiaries.
(c) DISABILITY. If the Executive's employment is terminated
by reason of the Executive's Disability during the Employment Period,
this Agreement shall terminate without further obligations to the
Executive, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits. Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section
-12-
<PAGE>
6(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits
at least equal to the most favorable of those generally provided by
the Company and its affiliated companies to disabled executives
and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at
any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect at any time thereafter generally
with respect to other peer executives of the Company and its
affiliated companies and their families.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to
the Executive other than the obligation to pay to the Executive (x)
the Annual Base Salary through the Date of Termination, (y) the
amount of any compensation previously deferred by the Executive, and
(z) Other Benefits, in each case to the extent theretofore unpaid.
If the Executive voluntarily terminates employment during the
Employment Period, excluding a termination for Good Reason, this
Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations and the timely payment
or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by
the Company or any of its affiliated companies and for which the
Executive may qualify, nor, subject to Section 12(f), shall anything
herein limit or otherwise affect such rights as the Executive may
have under any contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company
or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly
modified by this Agreement.
8. FULL SETTLEMENT; LEGAL FEES. The Company's obligation to
make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or others.
In no event shall the Ex-
-13-
ecutive be obligated to seek other employment or take any other action
by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and except as specifically provided in
Section 6(a)(ii), such amounts shall not be reduced whether or not the
Executive obtains other employment. The Company agrees to pay as
incurred, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any
<PAGE>
contest (regardless of the outcome thereof) by the Company, the Executive
or others of the validity or enforceability of, or liability or
entitlement under, any provision of this Agreement or any guarantee
of performance thereof (whether such contest is between the Company
and the Executive or between either of them and any third party, and
including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of
1986, as amended (the "Code").
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary not-
withstanding, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Section 9) (a
"Payment") would be subject to the excise tax imposed by Section 4999
of the Code or any corresponding provisions of state or local tax
laws, or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including
whether and when a Gross-Up Payment is required and the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by Ernst & Young LLP or such
other certified public accounting
-14-
firm as may be designated by the Executive (the "Accounting Firm"),
which shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the receipt of
notice from the Executive that there has been a Payment, or such earlier
time as is requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity or
group effecting the Change of Control, the Executive shall appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as
the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 9, shall be paid by the Company
to the Executive within five days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall
be binding upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder,
<PAGE>
it is possible that Gross-Up Payments which will not have been made
by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 9(c) and
the Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than
ten business days after the Executive is informed in writing of such
claim and shall apprise the Company of the nature of such claim and
the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period
following the date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that any payment
of taxes with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such period that
it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from
time to time, including,
-15-
without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 9(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible
manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the
<PAGE>
Company shall advance the amount of such payment to the Executive, on
an interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of
the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), the Executive
becomes entitled to receive any refund with respect to such claim,
the Executive shall (subject to the Company's complying with the
requirements of Section 9(c)) promptly pay
-16-
to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 9(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company
does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be
paid.
10. CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company
or any of its affiliated companies, and their respective businesses,
which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in
violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the
prior written consent of the Company or as may otherwise be required
by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the
provisions of this Section 10 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
11. SUCCESSORS. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company shall
not be assignable by the Executive otherwise than by will or the laws
of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal
representatives.
<PAGE>
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined
and any
-17-
successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
12. MISCELLANEOUS. (a) This Agreement shall be governed by
and construed in accordance with the laws of the State of Wisconsin,
without reference to principles of conflict of laws. The captions of
this Agreement are not part of the provisions hereof and shall have
no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto
or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party or
by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
IF TO THE EXECUTIVE:
Daniel R. Olvey
3002 Mountain Ct.
Wausau, WI 54401
IF TO THE COMPANY:
Mosinee Paper Corporation
1244 Kronen Wetter Drive
Mosinee, Wisconsin 54455
Attention: Secretary
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall
be required to be withheld pursuant to any applicable law or
regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of
<PAGE>
this Agreement or the failure to assert any right the Executive or
the Company may have hereunder, including, without limitation, the
right of the Execu-
-18-
tive to terminate employment for Good Reason pursuant to Section 5(c)
(i)-(v) of this Agreement, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.
(f) The Executive and the Company acknowledge that, except
as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the
Executive by the Company is "at will" and, prior to the Effective
Date, the Executive's employment may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in
which case the Executive shall have no further rights under this
Agreement. From and after the Effective Date this Agreement shall
supersede any other agreement between the parties with respect to the
subject matter hereof.
(g) The Company and the Executive hereby acknowledge that
any and all amounts that may become payable under Sections 6 and 9
hereof are intended as stipulated damages for the termination of the
Executive's employment, with the understanding that the actual
damages incurred by the Executive in such circumstances will be
difficult or impossible to determine.
(h) Notwithstanding any other provision of this Agreement,
this Agreement shall terminate, shall be void AB INITIO, and shall be
of no further force or effect from and after August 24, 1998, unless
a Change of Control has previously occurred or a proposal with
respect to a Change of Control is then pending.
-19-
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused this Agreement to be executed in
its name on its behalf, all as of the day and year first above
written.
___________________________________
Daniel R. Olvey
MOSINEE PAPER CORPORATION
By_________________________________
-20-
EXHIBIT 10.10
CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
AGREEMENT by and between Mosinee Paper Corporation, a
Wisconsin corporation (the "Company") and Gary P. Peterson (the
"Executive"), dated as of the 24th day of August, 1997.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility, threat
or occurrence of a Change of Control (as defined below) of the
Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of
Control and to encourage the Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the Executive
with compensation and benefits arrangements upon a Change of Control
which ensure that the compensation and benefits expectations of the
Executive will be satisfied and which are competitive with those of
other corporations. Therefore, in order to accomplish these
objectives, the Board has caused the Company to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS. (a) The "Effective Date" shall
mean the first date during the Change of Control Period (as defined
in Section 1(b)) on which a Change of Control (as defined in Section
2) occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the Executive's
employment with the Company is terminated prior to the date on which
the Change of Control occurs, and if it is reasonably demonstrated by
the Executive that such termination of employment (i) was at the
request of a third party who has taken steps reasonably calculated to
effect a Change of Control or (ii) otherwise arose in connection with
or anticipation of a Change of Control, then for all purposes of this
Agreement the "Effective Date" shall mean the date immediately prior
to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on the third anniversary of
the date hereof; provided, however, that commencing on the date one
year after the date hereof, and on each annual anniversary of such
date (such date and each annual anniversary thereof shall be
hereinafter referred to as
-1-
the "Renewal Date"), unless previously terminated, the Change of Control
Period shall be automatically extended so as to terminate three years
from such Renewal Date, unless at least 60 days prior to the Renewal Date
the Company shall give notice to the Executive that the Change of Control
Period shall not be so extended.
2. CHANGE OF CONTROL. For the purpose of this Agreement, a
"Change of Control" shall mean:
<PAGE>
(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of either
(i) the then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (ii) the combined
voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors
(the "Outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition
pursuant to a transaction which complies with clauses (i), (ii)
and (iii) of subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
-2-
(c) Consummation by the Company of a reorganization, merger,
share exchange or consolidation or sale or other disposition of
all or substantially all of the assets of the Company or the
acquisition of assets of another entity (a "Business
Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or
<PAGE>
more of, respectively, the then outstanding shares of common stock
of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership existed
with respect to the Company prior to the Business Combination and
(iii) at least a majority of the members of the board of directors
of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for
such Business Combination; or
(d) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, neither the approval by the
shareholders of the Company, nor the consummation, of the
transactions contemplated by that certain Agreement and Plan of
Merger, dated as of August 24, 1997, by and among Wausau Paper Mills
Company, WPM Holdings, Inc. and the Company on substantially the
terms and conditions set forth therein as of August 24, 1997 shall
constitute a Change of Control for purposes of this Agreement.
-3-
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue
the Executive in its employ, and the Executive hereby agrees to
remain in the employ of the Company subject to the terms and
conditions of this Agreement, for the period commencing on the
Effective Date and ending on the third anniversary of such date (the
"Employment Period").
4. TERMS OF EMPLOYMENT. (a) POSITION AND DUTIES. (i)
During the Employment Period, (A) the Executive's position (including
status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held, exercised
and assigned to the Executive at any time during the 120-day period
immediately preceding the Effective Date and (B) the Executive's
services shall be performed at the location where the Executive was
employed immediately preceding the Effective Date or any office or
location less than 35 miles from such location.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and
time during normal business hours to the business and affairs of the
Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable efforts to perform faithfully and efficiently
such responsibilities. During the Employment Period it shall not be
a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such
activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued
<PAGE>
conduct of such activities (or the conduct of activities similar in
nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the
Executive's responsibilities to the Company.
(b) COMPENSATION. (i) BASE SALARY. During the Employment
Period, the Executive shall receive an annual base salary ("Annual
Base Salary"), which shall be paid at a monthly rate, at least equal
to twelve times the highest monthly base salary paid or payable,
including any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of
the twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the
-4-
Annual Base Salary shall be reviewed no more than 12 months after the
last salary increase awarded to the Executive prior to the Effective Date
and thereafter at least annually. Any increase in Annual Base Salary
shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. Annual Base Salary shall not be
reduced after any such increase and the term Annual Base Salary as
utilized in this Agreement shall refer to Annual Base Salary as so
increased. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or
under common control with the Company.
(ii) ANNUAL BONUS. In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending during
the Employment Period, an annual bonus (the "Annual Bonus") in cash
at least equal to the Executive's highest bonus under the Company's
annual management incentive plans for the last three full fiscal
years prior to the Effective Date (annualized in the event that the
Executive was not employed by the Company for the whole of such
fiscal year) (the "Recent Annual Bonus"). Each such Annual Bonus
shall be paid no later than the end of the third month of the fiscal
year next following the fiscal year for which the Annual Bonus is
awarded, unless the Executive shall elect to defer the receipt of
such Annual Bonus.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During
the Employment Period, the Executive shall be entitled to participate
in all incentive, savings and retirement plans, practices, policies
and programs applicable generally to other peer executives of the
Company and its affiliated companies, but in no event shall such
plans, practices, policies and programs provide the Executive with
incentive opportunities (measured with respect to both regular and
special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company
and its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during the
120-day period immediately preceding the Effective Date or if more
favorable to the Executive, those provided generally at any time
after the Effective Date to other peer executives of the Company and
its affiliated companies.
<PAGE>
(iv) WELFARE BENEFIT PLANS. During the Employment
Period, the Executive and/or the Executive's family, as the case may
be, shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation,
-5-
medical, prescription, dental, disability, salary continuance, employee
life, group life, accidental death and travel accident insurance plans
and programs) to the extent applicable generally to other peer executives
of the Company and its affiliated companies, but in no event shall such
plans, practices, policies and programs provide the Executive with
benefits which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for
the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, those provided
generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies.
(v) EXPENSES. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the
most favorable policies, practices and procedures of the Company and
its affiliated companies in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company
and its affiliated companies.
(vi) FRINGE BENEFITS. During the Employment Period,
the Executive shall be entitled to fringe benefits, including,
without limitation, tax and financial planning services, payment of
club dues, and, if applicable, use of an automobile and payment of
related expenses, in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated
companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(vii) OFFICE AND SUPPORT STAFF. During the Employment
Period, the Executive shall be entitled to an office or offices of a
size and with furnishings and other appointments, and to exclusive
personal secretarial and other assistance, at least equal to the most
favorable of the foregoing provided to the Executive by the Company
and its affiliated companies at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive, as provided generally at any time thereafter with respect
to other peer executives of the Company and its affiliated companies.
(viii) VACATION. During the Employment Period, the
Executive shall be entitled to paid vacation in ac-
-6-
<PAGE>
cordance with the most favorable plans, policies, programs and practices
of the Company and its affiliated companies as in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
5. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY.
The Executive's employment shall terminate automatically upon the
Executive's death during the Employment Period. If the Company
determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of
Disability set forth below), it may give to the Executive written
notice in accordance with Section 12(b) of this Agreement of its
intention to terminate the Executive's employment. In such event,
the Executive's employment with the Company shall terminate effective
on the 30th day after receipt of such notice by the Executive (the
"Disability Effective Date"), provided that, within the 30 days after
such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this
Agreement, "Disability" shall mean the absence of the Executive from
the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to
the Executive or the Executive's legal representative.
(b) CAUSE. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of
this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the Executive
to perform substantially the Executive's duties with the Company
or one of its affiliates (other than any such failure resulting
from incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the
Company which specifically identifies the manner in which the
Board or Chief Executive Officer believes that the Executive has
not substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and demonstrably
injurious to the Company.
-7-
For purposes of this provision, no act or failure to act, on the
part of the Executive, shall be considered "willful" unless it is
done, or omitted to be done, by the Executive in bad faith or without
reasonable belief that the Executive's action or omission was in the
best interests of the Company. Any act, or failure to act, based
upon authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of the Chief Executive Officer or a
senior officer of the Company or based upon the advice of counsel for
the Company shall be conclusively presumed to be done, or omitted to
be done, by the Executive in good faith and in the best interests of
the Company. The cessation of employment of the Executive shall not
be deemed to be for Cause unless and until there shall have been
<PAGE>
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive
and the Executive is given an opportunity, together with counsel, to
be heard before the Board), finding that, in the good faith opinion
of the Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.
(c) GOOD REASON. The Executive's employment may be
terminated by the Executive for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section
4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 4(b) of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in
bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than as provided in Section
4(a)(i)(B) hereof or the Company's requiring the Executive to
travel on Company business to a substantially greater extent than
required immediately prior to the Effective Date;
-8-
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by
this Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive. Anything in
this Agreement to the contrary notwithstanding, a termination by the
Executive for any reason during the 30-day period beginning on the
180th day after the Effective Date shall be deemed to be a
termination for Good Reason for all purposes of this Agreement.
(d) NOTICE OF TERMINATION. Any termination by the Company
for Cause, or by the Executive for Good Reason, shall be communicated
by Notice of Termination to the other party hereto given in
accordance with Section 12(b) of this Agreement. For purposes of
this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this
<PAGE>
Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the
provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than
thirty days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination
any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the
Company, respectively, hereunder or preclude the Executive or the
Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, or
by the Executive for Good Reason, the date of receipt of the Notice
of Termination or any later date specified therein, as the case may
be, (ii) if the Executive's employment is terminated by the Company
other than for Cause or Disability, the date on which the Company
notifies the Executive of such termination and (iii) if the
Executive's employment is terminated by reason of death or
Disability, the date of death of the Executive or the Disability
Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) GOOD
REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If, during the
Employment Period, the Company shall terminate
-9-
the Executive's employment other than for Cause or Disability or the
Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination the
aggregate of the following amounts:
A. the sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the extent not
theretofore paid, (2) the product of (x) the higher of (I)
the Recent Annual Bonus and (II) the Annual Bonus paid or
payable, including any bonus or portion thereof which has
been earned but deferred (and annualized for any fiscal year
consisting of less than twelve full months or during which
the Executive was employed for less than twelve full months),
for the most recently completed fiscal year during the
Employment Period, if any (such higher amount being referred
to as the "Highest Annual Bonus") and (y) a fraction, the
numerator of which is the number of days in the current
fiscal year through the Date of Termination, and the
denominator of which is 365 and (3) any compensation
previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (1), (2), and
(3) shall be hereinafter referred to as the "Accrued
Obligations"); and
<PAGE>
B. the amount equal to the product of (1) three
and (2) the sum of (x) the Executive's Annual Base Salary and
(y) the Highest Annual Bonus; and
C. an amount equal to the difference between (1)
the aggregate benefit under the Company's qualified defined
benefit retirement plans (collectively, the "Retirement
Plan") and any excess or supplemental defined benefit
retirement plans in which the Executive participates other
than the Company's Supplemental Retirement Plan (the "SERP")
(collectively, the "Nonqualified Plans") which the Executive
would have accrued (whether or not vested) if the Executive's
employment had continued for three years after the Date of
Termination and (2) the actual vested benefit, if any, of the
Executive under the Retirement Plan and the SERP, determined
as of the Date of Termination (with the foregoing amounts to
be computed on an actuarial present value basis, using
actuarial assumptions no less favorable to the Executive than
the most favorable of those in effect for purposes of
computing benefit entitle-
-10-
ments under the Retirement Plan and the Nonqualified Plans at any
time from the day before the Effective Date through the Date of
Termination, and in the case of the amount described in clause
(1), treating the Executive as having earned as compensation in
each of the three years following the Date of Termination the
compensation that would have been that required by Section
4(b)(i) and Section 4(b)(ii) if his employment had continued
during those three years); and
D. an amount equal to the difference between (1)
the amount that would have been paid to the Executive upon
the Change of Control pursuant to Section 4.6(a) of the SERP
if the Executive's Average Compensation had been determined
by reference to the Executive's compensation for the five
calendar years during which the Executive's aggregate
compensation was the largest out of the thirteen calendar
years consisting of (A) the most recent ten years of
Continuous Service (as defined in the SERP) before the Change
of Control and (B) three additional hypothetical year of
Continuous Service during which the Executive's compensation
equalled that required by Section 4(b)(i) and Section
4(b)(ii), and (2) the amount that was actually paid to the
Executive pursuant to said Section 4.6(a) (with the foregoing
amounts to be computed on an actuarial present value basis as
of the Date of Termination);
(ii) for three years after the Executive's Date of
Termination, or such longer period as may be provided by the terms
of the appropriate plan, program, practice or policy, the Company
shall continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and
policies described in Section 4(b)(iv) of this Agreement if the
Executive's employment had not been terminated or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company
<PAGE>
and its affiliated companies and their families, provided,
however, that if the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare
benefits under another employer-provided plan, the medical and
other welfare benefits described herein shall be secondary to
those provided under such other plan during such applicable period
of eligibility, and for purposes of determining eligibility (but
not the time of commencement of benefits) of the Executive for
retiree benefits pursu-
-11-
ant to such plans, practices, programs and policies, the Executive
shall be considered to have remained employed until three years after
the Date of Termination and to have retired on the last day of such
period;
(iii) the Company shall, at its sole expense as incurred,
provide the Executive with outplacement services the scope and
provider of which shall be selected by the Executive in the
Executive's sole discretion; and
(iv) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provided or which the
Executive is eligible to receive under any plan, program, policy
or practice or contract or agreement of the Company and its
affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(b) DEATH. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other than
for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to
the Executive's estate or beneficiary, as applicable, in a lump sum
in cash within 30 days of the Date of Termination. With respect to
the provision of Other Benefits, the term Other Benefits as utilized
in this Section 6(b) shall include, without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to receive,
benefits at least equal to the most favorable benefits provided by
the Company and affiliated companies to the estates and beneficiaries
of peer executives of the Company and such affiliated companies under
such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives
and their beneficiaries at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive's estate and/or the Executive's beneficiaries, as in effect
on the date of the Executive's death with respect to other peer
executives of the Company and its affiliated companies and their
beneficiaries.
(c) DISABILITY. If the Executive's employment is terminated
by reason of the Executive's Disability during the Employment Period,
this Agreement shall terminate without further obligations to the
Executive, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits. Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days
<PAGE>
of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section
-12-
6(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits
at least equal to the most favorable of those generally provided by
the Company and its affiliated companies to disabled executives
and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at
any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect at any time thereafter generally
with respect to other peer executives of the Company and its
affiliated companies and their families.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to
the Executive other than the obligation to pay to the Executive (x)
the Annual Base Salary through the Date of Termination, (y) the
amount of any compensation previously deferred by the Executive, and
(z) Other Benefits, in each case to the extent theretofore unpaid.
If the Executive voluntarily terminates employment during the
Employment Period, excluding a termination for Good Reason, this
Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations and the timely payment
or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by
the Company or any of its affiliated companies and for which the
Executive may qualify, nor, subject to Section 12(f), shall anything
herein limit or otherwise affect such rights as the Executive may
have under any contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company
or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly
modified by this Agreement.
8. FULL SETTLEMENT; LEGAL FEES. The Company's obligation to
make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or others.
In no event shall the Ex-
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ecutive be obligated to seek other employment or take any other action
by way of mitigation of the amounts payable to the Executive under any of
<PAGE>
the provisions of this Agreement and except as specifically provided in
Section 6(a)(ii), such amounts shall not be reduced whether or not the
Executive obtains other employment. The Company agrees to pay as
incurred, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive
or others of the validity or enforceability of, or liability or
entitlement under, any provision of this Agreement or any guarantee
of performance thereof (whether such contest is between the Company
and the Executive or between either of them and any third party, and
including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of
1986, as amended (the "Code").
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Section 9) (a
"Payment") would be subject to the excise tax imposed by Section 4999
of the Code or any corresponding provisions of state or local tax
laws, or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including
whether and when a Gross-Up Payment is required and the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by Ernst & Young LLP or such
other certified public accounting
-14-
firm as may be designated by the Executive (the "Accounting Firm"), which
shall provide detailed supporting calculations both to the Company and
the Executive within 15 business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 9, shall be paid by the Company
<PAGE>
to the Executive within five days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall
be binding upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder,
it is possible that Gross-Up Payments which will not have been made
by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 9(c) and
the Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than
ten business days after the Executive is informed in writing of such
claim and shall apprise the Company of the nature of such claim and
the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period
following the date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that any payment
of taxes with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such period that
it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from
time to time, including,
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without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 9(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible
<PAGE>
manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on
an interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of
the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), the Executive
becomes entitled to receive any refund with respect to such claim,
the Executive shall (subject to the Company's complying with the
requirements of Section 9(c)) promptly pay
-16-
to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 9(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company
does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be
paid.
10. CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company
or any of its affiliated companies, and their respective businesses,
which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in
violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the
prior written consent of the Company or as may otherwise be required
by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the
provisions of this Section 10 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
<PAGE>
11. SUCCESSORS. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company shall
not be assignable by the Executive otherwise than by will or the laws
of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined
and any
-17-
successor to its business and/or assets as aforesaid which assumes
and agrees to perform this Agreement by operation of law, or otherwise.
12. MISCELLANEOUS. (a) This Agreement shall be governed by
and construed in accordance with the laws of the State of Wisconsin,
without reference to principles of conflict of laws. The captions of
this Agreement are not part of the provisions hereof and shall have
no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto
or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party or
by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
IF TO THE EXECUTIVE:
Gary P. Peterson
4003 Mountain Lane
Wausau, WI 54401
IF TO THE COMPANY:
Mosinee Paper Corporation
1244 Kronen Wetter Drive
Mosinee, Wisconsin 54455
Attention: Secretary
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
<PAGE>
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall
be required to be withheld pursuant to any applicable law or
regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of
this Agreement or the failure to assert any right the Executive or
the Company may have hereunder, including, without limitation, the
right of the Execu-
-18-
tive to terminate employment for Good Reason pursuant to Section 5(c)
(i)-(v) of this Agreement, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.
(f) The Executive and the Company acknowledge that, except
as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the
Executive by the Company is "at will" and, prior to the Effective
Date, the Executive's employment may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in
which case the Executive shall have no further rights under this
Agreement. From and after the Effective Date this Agreement shall
supersede any other agreement between the parties with respect to the
subject matter hereof.
(g) The Company and the Executive hereby acknowledge that
any and all amounts that may become payable under Sections 6 and 9
hereof are intended as stipulated damages for the termination of the
Executive's employment, with the understanding that the actual
damages incurred by the Executive in such circumstances will be
difficult or impossible to determine.
(h) Notwithstanding any other provision of this Agreement,
this Agreement shall terminate, shall be void AB INITIO, and shall be
of no further force or effect from and after August 24, 1998, unless
a Change of Control has previously occurred or a proposal with
respect to a Change of Control is then pending.
-19-
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused this Agreement to be executed in
its name on its behalf, all as of the day and year first above
written.
__________________________________
Gary P. Peterson
MOSINEE PAPER CORPORATION
By________________________________
-20-
EXHIBIT 10.11
CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
AGREEMENT by and between Mosinee Paper Corporation, a
Wisconsin corporation (the "Company") and Stuart R. Carlson (the
"Executive"), dated as of the 24th day of August, 1997.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility, threat
or occurrence of a Change of Control (as defined below) of the
Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of
Control and to encourage the Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the Executive
with compensation and benefits arrangements upon a Change of Control
which ensure that the compensation and benefits expectations of the
Executive will be satisfied and which are competitive with those of
other corporations. Therefore, in order to accomplish these
objectives, the Board has caused the Company to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS. (a) The "Effective Date" shall
mean the first date during the Change of Control Period (as defined
in Section 1(b)) on which a Change of Control (as defined in Section
2) occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the Executive's
employment with the Company is terminated prior to the date on which
the Change of Control occurs, and if it is reasonably demonstrated by
the Executive that such termination of employment (i) was at the
request of a third party who has taken steps reasonably calculated to
effect a Change of Control or (ii) otherwise arose in connection with
or anticipation of a Change of Control, then for all purposes of this
Agreement the "Effective Date" shall mean the date immediately prior
to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on the third anniversary of
the date hereof; provided, however, that commencing on the date one
year after the date hereof, and on each annual anniversary of such
date (such date and each annual anniversary thereof shall be
hereinafter referred to as
-1-
the "Renewal Date"), unless previously terminated, the Change of
Control Period shall be automatically extended so as to terminate
three years from such Renewal Date, unless at least 60 days prior to
the Renewal Date the Company shall give notice to the Executive that
the Change of Control Period shall not be so extended.
2. CHANGE OF CONTROL. For the purpose of this Agreement, a
"Change of Control" shall mean:
<PAGE>
(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of either
(i) the then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (ii) the combined
voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors
(the "Outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition
pursuant to a transaction which complies with clauses (i), (ii)
and (iii) of subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
-2-
(c) Consummation by the Company of a reorganization, merger,
share exchange or consolidation or sale or other disposition of
all or substantially all of the assets of the Company or the
acquisition of assets of another entity (a "Business
Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or
<PAGE>
more of, respectively, the then outstanding shares of common stock
of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership existed
with respect to the Company prior to the Business Combination and
(iii) at least a majority of the members of the board of directors
of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for
such Business Combination; or
(d) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, neither the approval by the
shareholders of the Company, nor the consummation, of the
transactions contemplated by that certain Agreement and Plan of
Merger, dated as of August 24, 1997, by and among Wausau Paper Mills
Company, WPM Holdings, Inc. and the Company on substantially the
terms and conditions set forth therein as of August 24, 1997 shall
constitute a Change of Control for purposes of this Agreement.
-3-
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue
the Executive in its employ, and the Executive hereby agrees to
remain in the employ of the Company subject to the terms and
conditions of this Agreement, for the period commencing on the
Effective Date and ending on the third anniversary of such date (the
"Employment Period").
4. TERMS OF EMPLOYMENT. (a) POSITION AND DUTIES. (i)
During the Employment Period, (A) the Executive's position (including
status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held, exercised
and assigned to the Executive at any time during the 120-day period
immediately preceding the Effective Date and (B) the Executive's
services shall be performed at the location where the Executive was
employed immediately preceding the Effective Date or any office or
location less than 35 miles from such location.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and
time during normal business hours to the business and affairs of the
Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable efforts to perform faithfully and efficiently
such responsibilities. During the Employment Period it shall not be
a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such
activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued
<PAGE>
conduct of such activities (or the conduct of activities similar in
nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the
Executive's responsibilities to the Company.
(b) COMPENSATION. (i) BASE SALARY. During the Employment
Period, the Executive shall receive an annual base salary ("Annual
Base Salary"), which shall be paid at a monthly rate, at least equal
to twelve times the highest monthly base salary paid or payable,
including any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of
the twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the
-4-
Annual Base Salary shall be reviewed no more than 12 months after the
last salary increase awarded to the Executive prior to the Effective Date
and thereafter at least annually. Any increase in Annual Base Salary
shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. Annual Base Salary shall not be
reduced after any such increase and the term Annual Base Salary as
utilized in this Agreement shall refer to Annual Base Salary as so
increased. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or
under common control with the Company.
(ii) ANNUAL BONUS. In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending during
the Employment Period, an annual bonus (the "Annual Bonus") in cash
at least equal to the Executive's highest bonus under the Company's
annual management incentive plans for the last three full fiscal
years prior to the Effective Date (annualized in the event that the
Executive was not employed by the Company for the whole of such
fiscal year) (the "Recent Annual Bonus"). Each such Annual Bonus
shall be paid no later than the end of the third month of the fiscal
year next following the fiscal year for which the Annual Bonus is
awarded, unless the Executive shall elect to defer the receipt of
such Annual Bonus.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During
the Employment Period, the Executive shall be entitled to participate
in all incentive, savings and retirement plans, practices, policies
and programs applicable generally to other peer executives of the
Company and its affiliated companies, but in no event shall such
plans, practices, policies and programs provide the Executive with
incentive opportunities (measured with respect to both regular and
special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company
and its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during the
120-day period immediately preceding the Effective Date or if more
favorable to the Executive, those provided generally at any time
after the Effective Date to other peer executives of the Company and
its affiliated companies.
<PAGE>
(iv) WELFARE BENEFIT PLANS. During the Employment
Period, the Executive and/or the Executive's family, as the case may
be, shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation,
-5-
medical, prescription, dental, disability, salary continuance, employee
life, group life, accidental death and travel accident insurance plans
and programs) to the extent applicable generally to other peer executives
of the Company and its affiliated companies, but in no event shall such
plans, practices, policies and programs provide the Executive with
benefits which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for
the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, those provided
generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies.
(v) EXPENSES. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the
most favorable policies, practices and procedures of the Company and
its affiliated companies in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company
and its affiliated companies.
(vi) FRINGE BENEFITS. During the Employment Period,
the Executive shall be entitled to fringe benefits, including,
without limitation, tax and financial planning services, payment of
club dues, and, if applicable, use of an automobile and payment of
related expenses, in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated
companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(vii) OFFICE AND SUPPORT STAFF. During the Employment
Period, the Executive shall be entitled to an office or offices of a
size and with furnishings and other appointments, and to exclusive
personal secretarial and other assistance, at least equal to the most
favorable of the foregoing provided to the Executive by the Company
and its affiliated companies at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive, as provided generally at any time thereafter with respect
to other peer executives of the Company and its affiliated companies.
(viii) VACATION. During the Employment Period, the
Executive shall be entitled to paid vacation in ac-
-6-
<PAGE>
cordance with the most favorable plans, policies, programs and practices
of the Company and its affiliated companies as in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
5. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY.
The Executive's employment shall terminate automatically upon the
Executive's death during the Employment Period. If the Company
determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of
Disability set forth below), it may give to the Executive written
notice in accordance with Section 12(b) of this Agreement of its
intention to terminate the Executive's employment. In such event,
the Executive's employment with the Company shall terminate effective
on the 30th day after receipt of such notice by the Executive (the
"Disability Effective Date"), provided that, within the 30 days after
such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this
Agreement, "Disability" shall mean the absence of the Executive from
the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to
the Executive or the Executive's legal representative.
(b) CAUSE. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of
this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the Executive
to perform substantially the Executive's duties with the Company
or one of its affiliates (other than any such failure resulting
from incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the
Company which specifically identifies the manner in which the
Board or Chief Executive Officer believes that the Executive has
not substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and demonstrably
injurious to the Company.
-7-
For purposes of this provision, no act or failure to act, on the
part of the Executive, shall be considered "willful" unless it is
done, or omitted to be done, by the Executive in bad faith or without
reasonable belief that the Executive's action or omission was in the
best interests of the Company. Any act, or failure to act, based
upon authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of the Chief Executive Officer or a
senior officer of the Company or based upon the advice of counsel for
the Company shall be conclusively presumed to be done, or omitted to
be done, by the Executive in good faith and in the best interests of
the Company. The cessation of employment of the Executive shall not
be deemed to be for Cause unless and until there shall have been
<PAGE>
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive
and the Executive is given an opportunity, together with counsel, to
be heard before the Board), finding that, in the good faith opinion
of the Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.
(c) GOOD REASON. The Executive's employment may be
terminated by the Executive for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section
4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 4(b) of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in
bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than as provided in Section
4(a)(i)(B) hereof or the Company's requiring the Executive to
travel on Company business to a substantially greater extent than
required immediately prior to the Effective Date;
-8-
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by
this Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive. Anything in
this Agreement to the contrary notwithstanding, a termination by the
Executive for any reason during the 30-day period beginning on the
180th day after the Effective Date shall be deemed to be a
termination for Good Reason for all purposes of this Agreement.
(d) NOTICE OF TERMINATION. Any termination by the Company
for Cause, or by the Executive for Good Reason, shall be communicated
by Notice of Termination to the other party hereto given in
accordance with Section 12(b) of this Agreement. For purposes of
this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this
<PAGE>
Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the
provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than
thirty days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination
any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the
Company, respectively, hereunder or preclude the Executive or the
Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, or
by the Executive for Good Reason, the date of receipt of the Notice
of Termination or any later date specified therein, as the case may
be, (ii) if the Executive's employment is terminated by the Company
other than for Cause or Disability, the date on which the Company
notifies the Executive of such termination and (iii) if the
Executive's employment is terminated by reason of death or
Disability, the date of death of the Executive or the Disability
Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) GOOD
REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If, during the
Employment Period, the Company shall terminate
-9-
the Executive's employment other than for Cause or Disability or the
Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination the
aggregate of the following amounts:
A. the sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the extent not
theretofore paid, (2) the product of (x) the higher of (I)
the Recent Annual Bonus and (II) the Annual Bonus paid or
payable, including any bonus or portion thereof which has
been earned but deferred (and annualized for any fiscal year
consisting of less than twelve full months or during which
the Executive was employed for less than twelve full months),
for the most recently completed fiscal year during the
Employment Period, if any (such higher amount being referred
to as the "Highest Annual Bonus") and (y) a fraction, the
numerator of which is the number of days in the current
fiscal year through the Date of Termination, and the
denominator of which is 365 and (3) any compensation
previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (1), (2), and
(3) shall be hereinafter referred to as the "Accrued
Obligations"); and
<PAGE>
B. the amount equal to the product of (1) three
and (2) the sum of (x) the Executive's Annual Base Salary and
(y) the Highest Annual Bonus; and
C. an amount equal to the difference between (1)
the aggregate benefit under the Company's qualified defined
benefit retirement plans (collectively, the "Retirement
Plan") and any excess or supplemental defined benefit
retirement plans in which the Executive participates other
than the Company's Supplemental Retirement Plan (the "SERP")
(collectively, the "Nonqualified Plans") which the Executive
would have accrued (whether or not vested) if the Executive's
employment had continued for three years after the Date of
Termination and (2) the actual vested benefit, if any, of the
Executive under the Retirement Plan and the SERP, determined
as of the Date of Termination (with the foregoing amounts to
be computed on an actuarial present value basis, using
actuarial assumptions no less favorable to the Executive than
the most favorable of those in effect for purposes of
computing benefit entitle-
-10-
ments under the Retirement Plan and the Nonqualified Plans at
any time from the day before the Effective Date through the Date
of Termination, and in the case of the amount described in clause
(1), treating the Executive as having earned as compensation in
each of the three years following the Date of Termination the
compensation that would have been that required by Section
4(b)(i) and Section 4(b)(ii) if his employment had continued
during those three years); and
D. an amount equal to the difference between (1)
the amount that would have been paid to the Executive upon
the Change of Control pursuant to Section 4.6(a) of the SERP
if the Executive's Average Compensation had been determined
by reference to the Executive's compensation for the five
calendar years during which the Executive's aggregate
compensation was the largest out of the thirteen calendar
years consisting of (A) the most recent ten years of
Continuous Service (as defined in the SERP) before the Change
of Control and (B) three additional hypothetical year of
Continuous Service during which the Executive's compensation
equalled that required by Section 4(b)(i) and Section
4(b)(ii), and (2) the amount that was actually paid to the
Executive pursuant to said Section 4.6(a) (with the foregoing
amounts to be computed on an actuarial present value basis as
of the Date of Termination);
(ii) for three years after the Executive's Date of
Termination, or such longer period as may be provided by the terms
of the appropriate plan, program, practice or policy, the Company
shall continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and
policies described in Section 4(b)(iv) of this Agreement if the
Executive's employment had not been terminated or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company
<PAGE>
and its affiliated companies and their families, provided,
however, that if the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare
benefits under another employer-provided plan, the medical and
other welfare benefits described herein shall be secondary to
those provided under such other plan during such applicable period
of eligibility, and for purposes of determining eligibility (but
not the time of commencement of benefits) of the Executive for
retiree benefits pursu-
-11-
ant to such plans, practices, programs and policies, the Executive
shall be considered to have remained employed until three years after
the Date of Termination and to have retired on the last day of such
period;
(iii) the Company shall, at its sole expense as incurred,
provide the Executive with outplacement services the scope and
provider of which shall be selected by the Executive in the
Executive's sole discretion; and
(iv) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provided or which the
Executive is eligible to receive under any plan, program, policy
or practice or contract or agreement of the Company and its
affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(b) DEATH. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other than
for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to
the Executive's estate or beneficiary, as applicable, in a lump sum
in cash within 30 days of the Date of Termination. With respect to
the provision of Other Benefits, the term Other Benefits as utilized
in this Section 6(b) shall include, without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to receive,
benefits at least equal to the most favorable benefits provided by
the Company and affiliated companies to the estates and beneficiaries
of peer executives of the Company and such affiliated companies under
such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives
and their beneficiaries at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive's estate and/or the Executive's beneficiaries, as in effect
on the date of the Executive's death with respect to other peer
executives of the Company and its affiliated companies and their
beneficiaries.
(c) DISABILITY. If the Executive's employment is terminated
by reason of the Executive's Disability during the Employment Period,
this Agreement shall terminate without further obligations to the
Executive, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits. Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days
<PAGE>
of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section
-12-
6(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits
at least equal to the most favorable of those generally provided by
the Company and its affiliated companies to disabled executives
and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at
any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect at any time thereafter generally
with respect to other peer executives of the Company and its
affiliated companies and their families.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to
the Executive other than the obligation to pay to the Executive (x)
the Annual Base Salary through the Date of Termination, (y) the
amount of any compensation previously deferred by the Executive, and
(z) Other Benefits, in each case to the extent theretofore unpaid.
If the Executive voluntarily terminates employment during the
Employment Period, excluding a termination for Good Reason, this
Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations and the timely payment
or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by
the Company or any of its affiliated companies and for which the
Executive may qualify, nor, subject to Section 12(f), shall anything
herein limit or otherwise affect such rights as the Executive may
have under any contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company
or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly
modified by this Agreement.
8. FULL SETTLEMENT; LEGAL FEES. The Company's obligation to
make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or others.
In no event shall the Ex-
-13-
ecutive be obligated to seek other employment or take any other action
by way of mitigation of the amounts payable to the Executive under any of
<PAGE>
the provisions of this Agreement and except as specifically provided in
Section 6(a)(ii), such amounts shall not be reduced whether or not the
Executive obtains other employment. The Company agrees to pay as
incurred, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive
or others of the validity or enforceability of, or liability or
entitlement under, any provision of this Agreement or any guarantee
of performance thereof (whether such contest is between the Company
and the Executive or between either of them and any third party, and
including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of
1986, as amended (the "Code").
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Section 9) (a
"Payment") would be subject to the excise tax imposed by Section 4999
of the Code or any corresponding provisions of state or local tax
laws, or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including
whether and when a Gross-Up Payment is required and the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by Ernst & Young LLP or such
other certified public accounting
-14-
firm as may be designated by the Executive (the "Accounting Firm"), which
shall provide detailed supporting calculations both to the Company and
the Executive within 15 business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 9, shall be paid by the Company
<PAGE>
to the Executive within five days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall
be binding upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder,
it is possible that Gross-Up Payments which will not have been made
by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 9(c) and
the Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than
ten business days after the Executive is informed in writing of such
claim and shall apprise the Company of the nature of such claim and
the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period
following the date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that any payment
of taxes with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such period that
it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from
time to time, including,
-15-
without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 9(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible
<PAGE>
manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on
an interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of
the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), the Executive
becomes entitled to receive any refund with respect to such claim,
the Executive shall (subject to the Company's complying with the
requirements of Section 9(c)) promptly pay
-16-
to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 9(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company
does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be
paid.
10. CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company
or any of its affiliated companies, and their respective businesses,
which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in
violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the
prior written consent of the Company or as may otherwise be required
by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the
provisions of this Section 10 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
<PAGE>
11. SUCCESSORS. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company shall
not be assignable by the Executive otherwise than by will or the laws
of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined
and any
-17-
successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
12. MISCELLANEOUS. (a) This Agreement shall be governed by
and construed in accordance with the laws of the State of Wisconsin,
without reference to principles of conflict of laws. The captions of
this Agreement are not part of the provisions hereof and shall have
no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto
or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party or
by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
IF TO THE EXECUTIVE:
Stuart R. Carlson
1650 Church Road
Mosinee, WI 54455
IF TO THE COMPANY:
Mosinee Paper Corporation
1244 Kronen Wetter Drive
Mosinee, Wisconsin 54455
Attention: Secretary
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
<PAGE>
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall
be required to be withheld pursuant to any applicable law or
regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of
this Agreement or the failure to assert any right the Executive or
the Company may have hereunder, including, without limitation, the
right of the Execu-
-18-
tive to terminate employment for Good Reason pursuant to Section 5(c)
(i)-(v) of this Agreement, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.
(f) The Executive and the Company acknowledge that, except
as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the
Executive by the Company is "at will" and, prior to the Effective
Date, the Executive's employment may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in
which case the Executive shall have no further rights under this
Agreement. From and after the Effective Date this Agreement shall
supersede any other agreement between the parties with respect to the
subject matter hereof.
(g) The Company and the Executive hereby acknowledge that
any and all amounts that may become payable under Sections 6 and 9
hereof are intended as stipulated damages for the termination of the
Executive's employment, with the understanding that the actual
damages incurred by the Executive in such circumstances will be
difficult or impossible to determine.
(h) Notwithstanding any other provision of this Agreement,
this Agreement shall terminate, shall be void AB INITIO, and shall be
of no further force or effect from and after August 24, 1998, unless
a Change of Control has previously occurred or a proposal with
respect to a Change of Control is then pending.
-19-
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused this Agreement to be executed in
its name on its behalf, all as of the day and year first above
written.
___________________________________
Stuart R. Carlson
MOSINEE PAPER CORPORATION
By_________________________________
-20-
EXHIBIT 10.12
CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
AGREEMENT by and between Mosinee Paper Corporation, a
Wisconsin corporation (the "Company") and Dennis M. Urbanek (the
"Executive"), dated as of the 24th day of August, 1997.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility, threat
or occurrence of a Change of Control (as defined below) of the
Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of
Control and to encourage the Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the Executive
with compensation and benefits arrangements upon a Change of Control
which ensure that the compensation and benefits expectations of the
Executive will be satisfied and which are competitive with those of
other corporations. Therefore, in order to accomplish these
objectives, the Board has caused the Company to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS. (a) The "Effective Date" shall
mean the first date during the Change of Control Period (as defined
in Section 1(b)) on which a Change of Control (as defined in Section
2) occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the Executive's
employment with the Company is terminated prior to the date on which
the Change of Control occurs, and if it is reasonably demonstrated by
the Executive that such termination of employment (i) was at the
request of a third party who has taken steps reasonably calculated to
effect a Change of Control or (ii) otherwise arose in connection with
or anticipation of a Change of Control, then for all purposes of this
Agreement the "Effective Date" shall mean the date immediately prior
to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on the third anniversary of
the date hereof; provided, however, that commencing on the date one
year after the date hereof, and on each annual anniversary of such
date (such date and each annual anniversary thereof shall be
hereinafter referred to as
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the "Renewal Date"), unless previously terminated, the Change of Control
Period shall be automatically extended so as to terminate three years
from such Renewal Date, unless at least 60 days prior to the Renewal Date
the Company shall give notice to the Executive that the Change of Control
Period shall not be so extended.
2. CHANGE OF CONTROL. For the purpose of this Agreement, a
"Change of Control" shall mean:
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(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of either
(i) the then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (ii) the combined
voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors
(the "Outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition
pursuant to a transaction which complies with clauses (i), (ii)
and (iii) of subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
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(c) Consummation by the Company of a reorganization, merger,
share exchange or consolidation or sale or other disposition of
all or substantially all of the assets of the Company or the
acquisition of assets of another entity (a "Business
Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or
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more of, respectively, the then outstanding shares of common stock
of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership existed
with respect to the Company prior to the Business Combination and
(iii) at least a majority of the members of the board of directors
of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for
such Business Combination; or
(d) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, neither the approval by the
shareholders of the Company, nor the consummation, of the
transactions contemplated by that certain Agreement and Plan of
Merger, dated as of August 24, 1997, by and among Wausau Paper Mills
Company, WPM Holdings, Inc. and the Company on substantially the
terms and conditions set forth therein as of August 24, 1997 shall
constitute a Change of Control for purposes of this Agreement.
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3. EMPLOYMENT PERIOD. The Company hereby agrees to continue
the Executive in its employ, and the Executive hereby agrees to
remain in the employ of the Company subject to the terms and
conditions of this Agreement, for the period commencing on the
Effective Date and ending on the third anniversary of such date (the
"Employment Period").
4. TERMS OF EMPLOYMENT. (a) POSITION AND DUTIES. (i)
During the Employment Period, (A) the Executive's position (including
status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held, exercised
and assigned to the Executive at any time during the 120-day period
immediately preceding the Effective Date and (B) the Executive's
services shall be performed at the location where the Executive was
employed immediately preceding the Effective Date or any office or
location less than 35 miles from such location.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and
time during normal business hours to the business and affairs of the
Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable efforts to perform faithfully and efficiently
such responsibilities. During the Employment Period it shall not be
a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such
activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued
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conduct of such activities (or the conduct of activities similar in
nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the
Executive's responsibilities to the Company.
(b) COMPENSATION. (i) BASE SALARY. During the Employment
Period, the Executive shall receive an annual base salary ("Annual
Base Salary"), which shall be paid at a monthly rate, at least equal
to twelve times the highest monthly base salary paid or payable,
including any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of
the twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the
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Annual Base Salary shall be reviewed no more than 12 months after the
last salary increase awarded to the Executive prior to the Effective Date
and thereafter at least annually. Any increase in Annual Base Salary
shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. Annual Base Salary shall not be
reduced after any such increase and the term Annual Base Salary as
utilized in this Agreement shall refer to Annual Base Salary as so
increased. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or
under common control with the Company.
(ii) ANNUAL BONUS. In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending during
the Employment Period, an annual bonus (the "Annual Bonus") in cash
at least equal to the Executive's highest bonus under the Company's
annual management incentive plans for the last three full fiscal
years prior to the Effective Date (annualized in the event that the
Executive was not employed by the Company for the whole of such
fiscal year) (the "Recent Annual Bonus"). Each such Annual Bonus
shall be paid no later than the end of the third month of the fiscal
year next following the fiscal year for which the Annual Bonus is
awarded, unless the Executive shall elect to defer the receipt of
such Annual Bonus.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During
the Employment Period, the Executive shall be entitled to participate
in all incentive, savings and retirement plans, practices, policies
and programs applicable generally to other peer executives of the
Company and its affiliated companies, but in no event shall such
plans, practices, policies and programs provide the Executive with
incentive opportunities (measured with respect to both regular and
special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company
and its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during the
120-day period immediately preceding the Effective Date or if more
favorable to the Executive, those provided generally at any time
after the Effective Date to other peer executives of the Company and
its affiliated companies.
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(iv) WELFARE BENEFIT PLANS. During the Employment
Period, the Executive and/or the Executive's family, as the case may
be, shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation,
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medical, prescription, dental, disability, salary continuance, employee
life, group life, accidental death and travel accident insurance plans
and programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies, but in no event
shall such plans, practices, policies and programs provide the Executive
with benefits which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for
the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, those provided
generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies.
(v) EXPENSES. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the
most favorable policies, practices and procedures of the Company and
its affiliated companies in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company
and its affiliated companies.
(vi) FRINGE BENEFITS. During the Employment Period,
the Executive shall be entitled to fringe benefits, including,
without limitation, tax and financial planning services, payment of
club dues, and, if applicable, use of an automobile and payment of
related expenses, in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated
companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(vii) OFFICE AND SUPPORT STAFF. During the Employment
Period, the Executive shall be entitled to an office or offices of a
size and with furnishings and other appointments, and to exclusive
personal secretarial and other assistance, at least equal to the most
favorable of the foregoing provided to the Executive by the Company
and its affiliated companies at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive, as provided generally at any time thereafter with respect
to other peer executives of the Company and its affiliated companies.
(viii) VACATION. During the Employment Period, the
Executive shall be entitled to paid vacation in ac-
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cordance with the most favorable plans, policies, programs and practices
of the Company and its affiliated companies as in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
5. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY.
The Executive's employment shall terminate automatically upon the
Executive's death during the Employment Period. If the Company
determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of
Disability set forth below), it may give to the Executive written
notice in accordance with Section 12(b) of this Agreement of its
intention to terminate the Executive's employment. In such event,
the Executive's employment with the Company shall terminate effective
on the 30th day after receipt of such notice by the Executive (the
"Disability Effective Date"), provided that, within the 30 days after
such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this
Agreement, "Disability" shall mean the absence of the Executive from
the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to
the Executive or the Executive's legal representative.
(b) CAUSE. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of
this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the Executive
to perform substantially the Executive's duties with the Company
or one of its affiliates (other than any such failure resulting
from incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the
Company which specifically identifies the manner in which the
Board or Chief Executive Officer believes that the Executive has
not substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and demonstrably
injurious to the Company.
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For purposes of this provision, no act or failure to act, on the
part of the Executive, shall be considered "willful" unless it is
done, or omitted to be done, by the Executive in bad faith or without
reasonable belief that the Executive's action or omission was in the
best interests of the Company. Any act, or failure to act, based
upon authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of the Chief Executive Officer or a
senior officer of the Company or based upon the advice of counsel for
the Company shall be conclusively presumed to be done, or omitted to
be done, by the Executive in good faith and in the best interests of
the Company. The cessation of employment of the Executive shall not
be deemed to be for Cause unless and until there shall have been
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delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive
and the Executive is given an opportunity, together with counsel, to
be heard before the Board), finding that, in the good faith opinion
of the Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.
(c) GOOD REASON. The Executive's employment may be
terminated by the Executive for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section
4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 4(b) of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in
bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than as provided in Section
4(a)(i)(B) hereof or the Company's requiring the Executive to
travel on Company business to a substantially greater extent than
required immediately prior to the Effective Date;
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(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by
this Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive. Anything in
this Agreement to the contrary notwithstanding, a termination by the
Executive for any reason during the 30-day period beginning on the
180th day after the Effective Date shall be deemed to be a
termination for Good Reason for all purposes of this Agreement.
(d) NOTICE OF TERMINATION. Any termination by the Company
for Cause, or by the Executive for Good Reason, shall be communicated
by Notice of Termination to the other party hereto given in
accordance with Section 12(b) of this Agreement. For purposes of
this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this
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Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the
provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than
thirty days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination
any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the
Company, respectively, hereunder or preclude the Executive or the
Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, or
by the Executive for Good Reason, the date of receipt of the Notice
of Termination or any later date specified therein, as the case may
be, (ii) if the Executive's employment is terminated by the Company
other than for Cause or Disability, the date on which the Company
notifies the Executive of such termination and (iii) if the
Executive's employment is terminated by reason of death or
Disability, the date of death of the Executive or the Disability
Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) GOOD
REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If, during the
Employment Period, the Company shall terminate
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the Executive's employment other than for Cause or Disability or the
Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination the
aggregate of the following amounts:
A. the sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the extent not
theretofore paid, (2) the product of (x) the higher of (I)
the Recent Annual Bonus and (II) the Annual Bonus paid or
payable, including any bonus or portion thereof which has
been earned but deferred (and annualized for any fiscal year
consisting of less than twelve full months or during which
the Executive was employed for less than twelve full months),
for the most recently completed fiscal year during the
Employment Period, if any (such higher amount being referred
to as the "Highest Annual Bonus") and (y) a fraction, the
numerator of which is the number of days in the current
fiscal year through the Date of Termination, and the
denominator of which is 365 and (3) any compensation
previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (1), (2), and
(3) shall be hereinafter referred to as the "Accrued
Obligations"); and
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B. the amount equal to the product of (1) three
and (2) the sum of (x) the Executive's Annual Base Salary and
(y) the Highest Annual Bonus; and
C. an amount equal to the difference between (1)
the aggregate benefit under the Company's qualified defined
benefit retirement plans (collectively, the "Retirement
Plan") and any excess or supplemental defined benefit
retirement plans in which the Executive participates other
than the Company's Supplemental Retirement Plan (the "SERP")
(collectively, the "Nonqualified Plans") which the Executive
would have accrued (whether or not vested) if the Executive's
employment had continued for three years after the Date of
Termination and (2) the actual vested benefit, if any, of the
Executive under the Retirement Plan and the SERP, determined
as of the Date of Termination (with the foregoing amounts to
be computed on an actuarial present value basis, using
actuarial assumptions no less favorable to the Executive than
the most favorable of those in effect for purposes of
computing benefit entitle-
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ments under the Retirement Plan and the Nonqualified Plans at
any time from the day before the Effective Date through the Date
of Termination, and in the case of the amount described in clause
(1), treating the Executive as having earned as compensation in
each of the three years following the Date of Termination the
compensation that would have been that required by Section
4(b)(i) and Section 4(b)(ii) if his employment had continued
during those three years); and
D. an amount equal to the difference between (1)
the amount that would have been paid to the Executive upon
the Change of Control pursuant to Section 4.6(a) of the SERP
if the Executive's Average Compensation had been determined
by reference to the Executive's compensation for the five
calendar years during which the Executive's aggregate
compensation was the largest out of the thirteen calendar
years consisting of (A) the most recent ten years of
Continuous Service (as defined in the SERP) before the Change
of Control and (B) three additional hypothetical year of
Continuous Service during which the Executive's compensation
equalled that required by Section 4(b)(i) and Section
4(b)(ii), and (2) the amount that was actually paid to the
Executive pursuant to said Section 4.6(a) (with the foregoing
amounts to be computed on an actuarial present value basis as
of the Date of Termination);
(ii) for three years after the Executive's Date of
Termination, or such longer period as may be provided by the terms
of the appropriate plan, program, practice or policy, the Company
shall continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and
policies described in Section 4(b)(iv) of this Agreement if the
Executive's employment had not been terminated or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company
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and its affiliated companies and their families, provided,
however, that if the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare
benefits under another employer-provided plan, the medical and
other welfare benefits described herein shall be secondary to
those provided under such other plan during such applicable period
of eligibility, and for purposes of determining eligibility (but
not the time of commencement of benefits) of the Executive for
retiree benefits pursu-
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ant to such plans, practices, programs and policies, the Executive
shall be considered to have remained employed until three years after
the Date of Termination and to have retired on the last day of such
period;
(iii) the Company shall, at its sole expense as incurred,
provide the Executive with outplacement services the scope and
provider of which shall be selected by the Executive in the
Executive's sole discretion; and
(iv) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provided or which the
Executive is eligible to receive under any plan, program, policy
or practice or contract or agreement of the Company and its
affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(b) DEATH. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other than
for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to
the Executive's estate or beneficiary, as applicable, in a lump sum
in cash within 30 days of the Date of Termination. With respect to
the provision of Other Benefits, the term Other Benefits as utilized
in this Section 6(b) shall include, without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to receive,
benefits at least equal to the most favorable benefits provided by
the Company and affiliated companies to the estates and beneficiaries
of peer executives of the Company and such affiliated companies under
such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives
and their beneficiaries at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive's estate and/or the Executive's beneficiaries, as in effect
on the date of the Executive's death with respect to other peer
executives of the Company and its affiliated companies and their
beneficiaries.
(c) DISABILITY. If the Executive's employment is terminated
by reason of the Executive's Disability during the Employment Period,
this Agreement shall terminate without further obligations to the
Executive, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits. Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days
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of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section
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6(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits
at least equal to the most favorable of those generally provided by
the Company and its affiliated companies to disabled executives
and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at
any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect at any time thereafter generally
with respect to other peer executives of the Company and its
affiliated companies and their families.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to
the Executive other than the obligation to pay to the Executive (x)
the Annual Base Salary through the Date of Termination, (y) the
amount of any compensation previously deferred by the Executive, and
(z) Other Benefits, in each case to the extent theretofore unpaid.
If the Executive voluntarily terminates employment during the
Employment Period, excluding a termination for Good Reason, this
Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations and the timely payment
or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by
the Company or any of its affiliated companies and for which the
Executive may qualify, nor, subject to Section 12(f), shall anything
herein limit or otherwise affect such rights as the Executive may
have under any contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company
or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly
modified by this Agreement.
8. FULL SETTLEMENT; LEGAL FEES. The Company's obligation to
make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or others.
In no event shall the Ex-
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ecutive be obligated to seek other employment or take any other action
by way of mitigation of the amounts payable to the Executive under any of
<PAGE>
the provisions of this Agreement and except as specifically provided in
Section 6(a)(ii), such amounts shall not be reduced whether or not the
Executive obtains other employment. The Company agrees to pay as
incurred, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive
or others of the validity or enforceability of, or liability or
entitlement under, any provision of this Agreement or any guarantee
of performance thereof (whether such contest is between the Company
and the Executive or between either of them and any third party, and
including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of
1986, as amended (the "Code").
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Section 9) (a
"Payment") would be subject to the excise tax imposed by Section 4999
of the Code or any corresponding provisions of state or local tax
laws, or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including
whether and when a Gross-Up Payment is required and the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by Ernst & Young LLP or such
other certified public accounting
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firm as may be designated by the Executive (the "Accounting Firm"), which
shall provide detailed supporting calculations both to the Company and
the Executive within 15 business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 9, shall be paid by the Company
<PAGE>
to the Executive within five days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall
be binding upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder,
it is possible that Gross-Up Payments which will not have been made
by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 9(c) and
the Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than
ten business days after the Executive is informed in writing of such
claim and shall apprise the Company of the nature of such claim and
the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period
following the date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that any payment
of taxes with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such period that
it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from
time to time, including,
-15-
without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 9(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible
<PAGE>
manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on
an interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of
the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), the Executive
becomes entitled to receive any refund with respect to such claim,
the Executive shall (subject to the Company's complying with the
requirements of Section 9(c)) promptly pay
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to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 9(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company
does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be
paid.
10. CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company
or any of its affiliated companies, and their respective businesses,
which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in
violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the
prior written consent of the Company or as may otherwise be required
by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the
provisions of this Section 10 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
<PAGE>
11. SUCCESSORS. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company shall
not be assignable by the Executive otherwise than by will or the laws
of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined
and any
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successor to its business and/or assets as aforesaid which assumes
and agrees to perform this Agreement by operation of law, or
otherwise.
12. MISCELLANEOUS. (a) This Agreement shall be governed by
and construed in accordance with the laws of the State of Wisconsin,
without reference to principles of conflict of laws. The captions of
this Agreement are not part of the provisions hereof and shall have
no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto
or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party or
by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
IF TO THE EXECUTIVE:
Dennis M. Urbanek
1505 Pine View Lane
Wausau, WI 54403
IF TO THE COMPANY:
Mosinee Paper Corporation
1244 Kronen Wetter Drive
Mosinee, Wisconsin 54455
Attention: Secretary
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
<PAGE>
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall
be required to be withheld pursuant to any applicable law or
regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of
this Agreement or the failure to assert any right the Executive or
the Company may have hereunder, including, without limitation, the
right of the Execu-
-18-
tive to terminate employment for Good Reason pursuant to Section 5(c)
(i)-(v) of this Agreement, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.
(f) The Executive and the Company acknowledge that, except
as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the
Executive by the Company is "at will" and, prior to the Effective
Date, the Executive's employment may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in
which case the Executive shall have no further rights under this
Agreement. From and after the Effective Date this Agreement shall
supersede any other agreement between the parties with respect to the
subject matter hereof.
(g) The Company and the Executive hereby acknowledge that
any and all amounts that may become payable under Sections 6 and 9
hereof are intended as stipulated damages for the termination of the
Executive's employment, with the understanding that the actual
damages incurred by the Executive in such circumstances will be
difficult or impossible to determine.
(h) Notwithstanding any other provision of this Agreement,
this Agreement shall terminate, shall be void AB INITIO, and shall be
of no further force or effect from and after August 24, 1998, unless
a Change of Control has previously occurred or a proposal with
respect to a Change of Control is then pending.
-19-
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused this Agreement to be executed in
its name on its behalf, all as of the day and year first above
written.
___________________________________
Dennis M. Urbanek
MOSINEE PAPER CORPORATION
By_________________________________
-20-
EXHIBIT 10.13
CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
AGREEMENT by and between Mosinee Paper Corporation, a
Wisconsin corporation (the "Company") and David L. Canavera (the
"Executive"), dated as of the 24th day of August, 1997.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility, threat
or occurrence of a Change of Control (as defined below) of the
Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of
Control and to encourage the Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the Executive
with compensation and benefits arrangements upon a Change of Control
which ensure that the compensation and benefits expectations of the
Executive will be satisfied and which are competitive with those of
other corporations. Therefore, in order to accomplish these
objectives, the Board has caused the Company to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS. (a) The "Effective Date" shall
mean the first date during the Change of Control Period (as defined
in Section 1(b)) on which a Change of Control (as defined in Section
2) occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the Executive's
employment with the Company is terminated prior to the date on which
the Change of Control occurs, and if it is reasonably demonstrated by
the Executive that such termination of employment (i) was at the
request of a third party who has taken steps reasonably calculated to
effect a Change of Control or (ii) otherwise arose in connection with
or anticipation of a Change of Control, then for all purposes of this
Agreement the "Effective Date" shall mean the date immediately prior
to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on the third anniversary of
the date hereof; provided, however, that commencing on the date one
year after the date hereof, and on each annual anniversary of such
date (such date and each annual anniversary thereof shall be
hereinafter referred to as
-1-
the "Renewal Date"), unless previously terminated, the Change of Control
Period shall be automatically extended so as to terminate three years
from such Renewal Date, unless at least 60 days prior to the Renewal
Date the Company shall give notice to the Executive that the Change of
Control Period shall not be so extended.
2. CHANGE OF CONTROL. For the purpose of this Agreement, a
"Change of Control" shall mean:
<PAGE>
(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of either
(i) the then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (ii) the combined
voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors
(the "Outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition
pursuant to a transaction which complies with clauses (i), (ii)
and (iii) of subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
-2-
(c) Consummation by the Company of a reorganization, merger,
share exchange or consolidation or sale or other disposition of
all or substantially all of the assets of the Company or the
acquisition of assets of another entity (a "Business
Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or
<PAGE>
more of, respectively, the then outstanding shares of common stock
of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership existed
with respect to the Company prior to the Business Combination and
(iii) at least a majority of the members of the board of directors
of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for
such Business Combination; or
(d) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, neither the approval by the
shareholders of the Company, nor the consummation, of the
transactions contemplated by that certain Agreement and Plan of
Merger, dated as of August 24, 1997, by and among Wausau Paper Mills
Company, WPM Holdings, Inc. and the Company on substantially the
terms and conditions set forth therein as of August 24, 1997 shall
constitute a Change of Control for purposes of this Agreement.
-3-
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue
the Executive in its employ, and the Executive hereby agrees to
remain in the employ of the Company subject to the terms and
conditions of this Agreement, for the period commencing on the
Effective Date and ending on the third anniversary of such date (the
"Employment Period").
4. TERMS OF EMPLOYMENT. (a) POSITION AND DUTIES. (i)
During the Employment Period, (A) the Executive's position (including
status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held, exercised
and assigned to the Executive at any time during the 120-day period
immediately preceding the Effective Date and (B) the Executive's
services shall be performed at the location where the Executive was
employed immediately preceding the Effective Date or any office or
location less than 35 miles from such location.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and
time during normal business hours to the business and affairs of the
Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable efforts to perform faithfully and efficiently
such responsibilities. During the Employment Period it shall not be
a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such
activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued
<PAGE>
conduct of such activities (or the conduct of activities similar in
nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the
Executive's responsibilities to the Company.
(b) COMPENSATION. (i) BASE SALARY. During the Employment
Period, the Executive shall receive an annual base salary ("Annual
Base Salary"), which shall be paid at a monthly rate, at least equal
to twelve times the highest monthly base salary paid or payable,
including any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of
the twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the
-4-
Annual Base Salary shall be reviewed no more than 12 months after the
last salary increase awarded to the Executive prior to the Effective Date
and thereafter at least annually. Any increase in Annual Base Salary
shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. Annual Base Salary shall not be
reduced after any such increase and the term Annual Base Salary as
utilized in this Agreement shall refer to Annual Base Salary as so
increased. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or
under common control with the Company.
(ii) ANNUAL BONUS. In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending during
the Employment Period, an annual bonus (the "Annual Bonus") in cash
at least equal to the Executive's highest bonus under the Company's
annual management incentive plans for the last three full fiscal
years prior to the Effective Date (annualized in the event that the
Executive was not employed by the Company for the whole of such
fiscal year) (the "Recent Annual Bonus"). Each such Annual Bonus
shall be paid no later than the end of the third month of the fiscal
year next following the fiscal year for which the Annual Bonus is
awarded, unless the Executive shall elect to defer the receipt of
such Annual Bonus.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During
the Employment Period, the Executive shall be entitled to participate
in all incentive, savings and retirement plans, practices, policies
and programs applicable generally to other peer executives of the
Company and its affiliated companies, but in no event shall such
plans, practices, policies and programs provide the Executive with
incentive opportunities (measured with respect to both regular and
special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company
and its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during the
120-day period immediately preceding the Effective Date or if more
favorable to the Executive, those provided generally at any time
after the Effective Date to other peer executives of the Company and
its affiliated companies.
<PAGE>
(iv) WELFARE BENEFIT PLANS. During the Employment
Period, the Executive and/or the Executive's family, as the case may
be, shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation,
-5-
medical, prescription, dental, disability, salary continuance, employee
life, group life, accidental death and travel accident insurance plans
and programs) to the extent applicable generally to other peer executives
of the Company and its affiliated companies, but in no event shall such
plans, practices, policies and programs provide the Executive with
benefits which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for
the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, those provided
generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies.
(v) EXPENSES. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the
most favorable policies, practices and procedures of the Company and
its affiliated companies in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company
and its affiliated companies.
(vi) FRINGE BENEFITS. During the Employment Period,
the Executive shall be entitled to fringe benefits, including,
without limitation, tax and financial planning services, payment of
club dues, and, if applicable, use of an automobile and payment of
related expenses, in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated
companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(vii) OFFICE AND SUPPORT STAFF. During the Employment
Period, the Executive shall be entitled to an office or offices of a
size and with furnishings and other appointments, and to exclusive
personal secretarial and other assistance, at least equal to the most
favorable of the foregoing provided to the Executive by the Company
and its affiliated companies at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive, as provided generally at any time thereafter with respect
to other peer executives of the Company and its affiliated companies.
(viii) VACATION. During the Employment Period, the
Executive shall be entitled to paid vacation in ac-
-6-
<PAGE>
cordance with the most favorable plans, policies, programs and practices
of the Company and its affiliated companies as in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
5. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY.
The Executive's employment shall terminate automatically upon the
Executive's death during the Employment Period. If the Company
determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of
Disability set forth below), it may give to the Executive written
notice in accordance with Section 12(b) of this Agreement of its
intention to terminate the Executive's employment. In such event,
the Executive's employment with the Company shall terminate effective
on the 30th day after receipt of such notice by the Executive (the
"Disability Effective Date"), provided that, within the 30 days after
such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this
Agreement, "Disability" shall mean the absence of the Executive from
the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to
the Executive or the Executive's legal representative.
(b) CAUSE. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of
this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the Executive
to perform substantially the Executive's duties with the Company
or one of its affiliates (other than any such failure resulting
from incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the
Company which specifically identifies the manner in which the
Board or Chief Executive Officer believes that the Executive has
not substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and demonstrably
injurious to the Company.
-7-
For purposes of this provision, no act or failure to act, on the
part of the Executive, shall be considered "willful" unless it is
done, or omitted to be done, by the Executive in bad faith or without
reasonable belief that the Executive's action or omission was in the
best interests of the Company. Any act, or failure to act, based
upon authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of the Chief Executive Officer or a
senior officer of the Company or based upon the advice of counsel for
the Company shall be conclusively presumed to be done, or omitted to
be done, by the Executive in good faith and in the best interests of
the Company. The cessation of employment of the Executive shall not
be deemed to be for Cause unless and until there shall have been
<PAGE>
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive
and the Executive is given an opportunity, together with counsel, to
be heard before the Board), finding that, in the good faith opinion
of the Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.
(c) GOOD REASON. The Executive's employment may be
terminated by the Executive for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section
4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 4(b) of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in
bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than as provided in Section
4(a)(i)(B) hereof or the Company's requiring the Executive to
travel on Company business to a substantially greater extent than
required immediately prior to the Effective Date;
-8-
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by
this Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive. Anything in
this Agreement to the contrary notwithstanding, a termination by the
Executive for any reason during the 30-day period beginning on the
180th day after the Effective Date shall be deemed to be a
termination for Good Reason for all purposes of this Agreement.
(d) NOTICE OF TERMINATION. Any termination by the Company
for Cause, or by the Executive for Good Reason, shall be communicated
by Notice of Termination to the other party hereto given in
accordance with Section 12(b) of this Agreement. For purposes of
this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this
<PAGE>
Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the
provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than
thirty days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination
any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the
Company, respectively, hereunder or preclude the Executive or the
Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, or
by the Executive for Good Reason, the date of receipt of the Notice
of Termination or any later date specified therein, as the case may
be, (ii) if the Executive's employment is terminated by the Company
other than for Cause or Disability, the date on which the Company
notifies the Executive of such termination and (iii) if the
Executive's employment is terminated by reason of death or
Disability, the date of death of the Executive or the Disability
Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) GOOD
REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If, during the
Employment Period, the Company shall terminate
-9-
the Executive's employment other than for Cause or Disability or the
Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination the
aggregate of the following amounts:
A. the sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the extent not
theretofore paid, (2) the product of (x) the higher of (I)
the Recent Annual Bonus and (II) the Annual Bonus paid or
payable, including any bonus or portion thereof which has
been earned but deferred (and annualized for any fiscal year
consisting of less than twelve full months or during which
the Executive was employed for less than twelve full months),
for the most recently completed fiscal year during the
Employment Period, if any (such higher amount being referred
to as the "Highest Annual Bonus") and (y) a fraction, the
numerator of which is the number of days in the current
fiscal year through the Date of Termination, and the
denominator of which is 365 and (3) any compensation
previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (1), (2), and
(3) shall be hereinafter referred to as the "Accrued
Obligations"); and
<PAGE>
B. the amount equal to the product of (1) three
and (2) the sum of (x) the Executive's Annual Base Salary and
(y) the Highest Annual Bonus; and
C. an amount equal to the difference between (1)
the aggregate benefit under the Company's qualified defined
benefit retirement plans (collectively, the "Retirement
Plan") and any excess or supplemental defined benefit
retirement plans in which the Executive participates other
than the Company's Supplemental Retirement Plan (the "SERP")
(collectively, the "Nonqualified Plans") which the Executive
would have accrued (whether or not vested) if the Executive's
employment had continued for three years after the Date of
Termination and (2) the actual vested benefit, if any, of the
Executive under the Retirement Plan and the SERP, determined
as of the Date of Termination (with the foregoing amounts to
be computed on an actuarial present value basis, using
actuarial assumptions no less favorable to the Executive than
the most favorable of those in effect for purposes of
computing benefit entitle-
-10-
ments under the Retirement Plan and the Nonqualified Plans at any
time from the day before the Effective Date through the Date of
Termination, and in the case of the amount described in clause
(1), treating the Executive as having earned as compensation in
each of the three years following the Date of Termination the
compensation that would have been that required by Section
4(b)(i) and Section 4(b)(ii) if his employment had continued
during those three years); and
D. an amount equal to the difference between (1)
the amount that would have been paid to the Executive upon
the Change of Control pursuant to Section 4.6(a) of the SERP
if the Executive's Average Compensation had been determined
by reference to the Executive's compensation for the five
calendar years during which the Executive's aggregate
compensation was the largest out of the thirteen calendar
years consisting of (A) the most recent ten years of
Continuous Service (as defined in the SERP) before the Change
of Control and (B) three additional hypothetical year of
Continuous Service during which the Executive's compensation
equalled that required by Section 4(b)(i) and Section
4(b)(ii), and (2) the amount that was actually paid to the
Executive pursuant to said Section 4.6(a) (with the foregoing
amounts to be computed on an actuarial present value basis as
of the Date of Termination);
(ii) for three years after the Executive's Date of
Termination, or such longer period as may be provided by the terms
of the appropriate plan, program, practice or policy, the Company
shall continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and
policies described in Section 4(b)(iv) of this Agreement if the
Executive's employment had not been terminated or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company
<PAGE>
and its affiliated companies and their families, provided,
however, that if the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare
benefits under another employer-provided plan, the medical and
other welfare benefits described herein shall be secondary to
those provided under such other plan during such applicable period
of eligibility, and for purposes of determining eligibility (but
not the time of commencement of benefits) of the Executive for
retiree benefits pursu-
-11-
ant to such plans, practices, programs and policies, the Executive
shall be considered to have remained employed until three years after
the Date of Termination and to have retired on the last day of such
period;
(iii) the Company shall, at its sole expense as incurred,
provide the Executive with outplacement services the scope and
provider of which shall be selected by the Executive in the
Executive's sole discretion; and
(iv) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provided or which the
Executive is eligible to receive under any plan, program, policy
or practice or contract or agreement of the Company and its
affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(b) DEATH. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other than
for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to
the Executive's estate or beneficiary, as applicable, in a lump sum
in cash within 30 days of the Date of Termination. With respect to
the provision of Other Benefits, the term Other Benefits as utilized
in this Section 6(b) shall include, without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to receive,
benefits at least equal to the most favorable benefits provided by
the Company and affiliated companies to the estates and beneficiaries
of peer executives of the Company and such affiliated companies under
such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives
and their beneficiaries at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive's estate and/or the Executive's beneficiaries, as in effect
on the date of the Executive's death with respect to other peer
executives of the Company and its affiliated companies and their
beneficiaries.
(c) DISABILITY. If the Executive's employment is terminated
by reason of the Executive's Disability during the Employment Period,
this Agreement shall terminate without further obligations to the
Executive, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits. Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days
<PAGE>
of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section
-12-
6(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits
at least equal to the most favorable of those generally provided by
the Company and its affiliated companies to disabled executives
and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at
any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect at any time thereafter generally
with respect to other peer executives of the Company and its
affiliated companies and their families.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to
the Executive other than the obligation to pay to the Executive (x)
the Annual Base Salary through the Date of Termination, (y) the
amount of any compensation previously deferred by the Executive, and
(z) Other Benefits, in each case to the extent theretofore unpaid.
If the Executive voluntarily terminates employment during the
Employment Period, excluding a termination for Good Reason, this
Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations and the timely payment
or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by
the Company or any of its affiliated companies and for which the
Executive may qualify, nor, subject to Section 12(f), shall anything
herein limit or otherwise affect such rights as the Executive may
have under any contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company
or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly
modified by this Agreement.
8. FULL SETTLEMENT; LEGAL FEES. The Company's obligation to
make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or others.
In no event shall the Ex-
-13-
ecutive be obligated to seek other employment or take any other action
by way of mitigation of the amounts payable to the Executive under any of
<PAGE>
the provisions of this Agreement and except as specifically provided in
Section 6(a)(ii), such amounts shall not be reduced whether or not the
Executive obtains other employment. The Company agrees to pay as
incurred, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive
or others of the validity or enforceability of, or liability or
entitlement under, any provision of this Agreement or any guarantee
of performance thereof (whether such contest is between the Company
and the Executive or between either of them and any third party, and
including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of
1986, as amended (the "Code").
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Section 9) (a
"Payment") would be subject to the excise tax imposed by Section 4999
of the Code or any corresponding provisions of state or local tax
laws, or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including
whether and when a Gross-Up Payment is required and the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by Ernst & Young LLP or such
other certified public accounting
-14-
firm as may be designated by the Executive (the "Accounting Firm"), which
shall provide detailed supporting calculations both to the Company and
the Executive within 15 business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 9, shall be paid by the Company
<PAGE>
to the Executive within five days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall
be binding upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder,
it is possible that Gross-Up Payments which will not have been made
by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 9(c) and
the Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than
ten business days after the Executive is informed in writing of such
claim and shall apprise the Company of the nature of such claim and
the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period
following the date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that any payment
of taxes with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such period that
it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from
time to time, including,
-15-
without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 9(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible
<PAGE>
manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on
an interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of
the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), the Executive
becomes entitled to receive any refund with respect to such claim,
the Executive shall (subject to the Company's complying with the
requirements of Section 9(c)) promptly pay
-16-
to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 9(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company
does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be
paid.
10. CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company
or any of its affiliated companies, and their respective businesses,
which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in
violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the
prior written consent of the Company or as may otherwise be required
by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the
provisions of this Section 10 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
<PAGE>
11. SUCCESSORS. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company shall
not be assignable by the Executive otherwise than by will or the laws
of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined
and any
-17-
successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
12. MISCELLANEOUS. (a) This Agreement shall be governed by
and construed in accordance with the laws of the State of Wisconsin,
without reference to principles of conflict of laws. The captions of
this Agreement are not part of the provisions hereof and shall have
no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto
or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party or
by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
IF TO THE EXECUTIVE:
David L. Canavera
426 Faulkner Lane
Danville, KY 40422
IF TO THE COMPANY:
Mosinee Paper Corporation
1244 Kronen Wetter Drive
Mosinee, Wisconsin 54455
Attention: Secretary
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
<PAGE>
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall
be required to be withheld pursuant to any applicable law or
regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of
this Agreement or the failure to assert any right the Executive or
the Company may have hereunder, including, without limitation, the
right of the Execu-
-18-
tive to terminate employment for Good Reason pursuant to Section 5(c)
(i)-(v) of this Agreement, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.
(f) The Executive and the Company acknowledge that, except
as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the
Executive by the Company is "at will" and, prior to the Effective
Date, the Executive's employment may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in
which case the Executive shall have no further rights under this
Agreement. From and after the Effective Date this Agreement shall
supersede any other agreement between the parties with respect to the
subject matter hereof.
(g) The Company and the Executive hereby acknowledge that
any and all amounts that may become payable under Sections 6 and 9
hereof are intended as stipulated damages for the termination of the
Executive's employment, with the understanding that the actual
damages incurred by the Executive in such circumstances will be
difficult or impossible to determine.
(h) Notwithstanding any other provision of this Agreement,
this Agreement shall terminate, shall be void AB INITIO, and shall be
of no further force or effect from and after August 24, 1998, unless
a Change of Control has previously occurred or a proposal with
respect to a Change of Control is then pending.
-19-
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused this Agreement to be executed in
its name on its behalf, all as of the day and year first above
written.
___________________________________
David L. Canavera
MOSINEE PAPER CORPORATION
By_________________________________
-20-
EXHIBIT 10.14
CHANGE OF CONTROL SEVERANCE POLICY
Introduction
The Board of Directors of Mosinee Paper Corporation recognizes
that, from time to time, the Company may explore potential transactions
that could result in a Change of Control of the Company. This possibility
and the uncertainty it creates may result in the loss or distraction of
employees of the Company and its Subsidiaries to the detriment of the
Company and its shareholders.
The Board considers the avoidance of such loss and distraction to
be essential to protecting and enhancing the best interests of the Company
and its shareholders. The Board also believes that when a Change of
Control is perceived as imminent, or is occurring, the Board should be
able to receive and rely on disinterested service from employees regarding
the best interests of the Company and its shareholders without concern
that employees might be distracted or concerned by the personal
uncertainties and risks created by the perception of an imminent or
occurring Change of Control.
In addition, the Board believes that it is consistent with the
Company's employment practices and policies and in the best interests of
the Company and its shareholders to treat fairly its employees whose
employment terminates in connection with or following a Change of Control.
Accordingly, the Board has determined that appropriate steps
should be taken to assure the Company of the continued employment and
attention and dedication to duty of its employees and to seek to ensure
the availability of their continued service, notwithstanding the
possibility or occurrence of a Change of Control.
Therefore, in order to fulfill the above purposes, the following
plan has been developed and is hereby adopted.
ARTICLE I
ESTABLISHMENT OF PLAN
As of the Effective Date, the Company hereby establishes a
separation compensation plan known as the Mosinee Paper Corporation Change
of Control Severance Policy, as set forth in this document.
-1-
ARTICLE II
DEFINITIONS
As used herein the following words and phrases shall have the
following respective meanings unless the context clearly indicates
otherwise:
(a) ANNUAL BONUS. The highest amount a Participant received as
an annual bonus under the Company's Performance Bonus Plan and/or any
other annual bonus plan, program or policy in any of the three years prior
to a termination of employment entitling the Participant to a Separation
Benefit.
<PAGE>
(b) ANNUAL COMPENSATION. The sum of a Participant's Required
Base Salary and Annual Bonus.
(c) BASE SALARY. The amount a Participant is entitled to
receive as wages or salary on an annualized basis, excluding all bonus,
overtime, health additive and incentive compensation, payable by an
Employer as consideration for the Participant's services.
(d) BOARD. The Board of Directors of Mosinee Paper Corporation.
(e) CHANGE OF CONTROL. "Change of Control" shall mean:
(i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (A) the then
outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company
Voting Securities"); provided, however, that for purposes of this
subsection (i), the following acquisitions shall not constitute a
Change of Control: (I) any acquisition directly from the Company,
(II) any acquisition by the Company, (III) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the Company or (IV) any
acquisition pursuant to a transaction which complies with clauses (A),
(B) and (C) of subsection (iii) of this Section 2(e); or
(ii) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for
-2-
any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal
of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(iii) Consummation by the Company of a reorganization,
merger, share exchange or consolidation or sale or other disposition
of all or substantially all of the assets of the Company or the
acquisition of assets of another entity (a "Business Combination"), in
each case, unless, following such Business Combination, (A) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly,
more than 60% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as
<PAGE>
the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a
result of such transaction owns the Company or all or substantially
all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding any employee
benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly
or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such
ownership existed with respect to the Company prior to the Business
Combination and (C) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination
were members of the Incumbent Board at the time of the execution of
the
-3-
initial agreement, or of the action of the Board, providing for
such Business Combination; or
(iv) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, neither the approval by the shareholders of
the Company, nor the consummation, of the transactions contemplated by
that certain Agreement and Plan of Merger, dated as of August 24, 1997, by
and among Wausau Paper Mills Company, WPM Holdings, Inc. and the Company
on substantially the terms and conditions set forth therein as of August
24, 1997 shall constitute a Change of Control for purposes of this Plan.
(f) CODE. The Internal Revenue Code of 1986, as amended from
time to time.
(g) COMMITTEE. The Compensation Committee of the Board.
(h) COMPANY. Mosinee Paper Corporation and any successor
thereto.
(i) EFFECTIVE DATE. Such date as the Board shall designate in
its resolution approving the Plan.
(j) EMPLOYEE. Any employee of an Employer.
(k) EMPLOYER. The Company or a Subsidiary of the Company which
has adopted the Plan pursuant to Article V hereof.
(l) PARTICIPANT. An Employee who meets the eligibility
requirements of Section 3.1.
(m) PLAN. The Mosinee Paper Corporation Change of Control
Severance Policy.
<PAGE>
(n) REQUIRED BASE SALARY. With respect to any Participant, the
higher of (x) the Participant's Base Salary as in effect immediately prior
to the Change of Control and (y) the Participant's highest Base Salary in
effect at any time thereafter.
(o) SEPARATION BENEFIT. The benefit payable in accordance with
Section 4.3 of the Plan.
(p) SUBSIDIARY. Any corporation in which the Company, directly
or indirectly, holds a majority of the voting
-4-
power of such corporation's outstanding shares of capital stock.
(q) WEEKLY COMPENSATION. A Participant's Annual Compensation
divided by 52.
(r) YEAR OF SERVICE. A twelve-month continuous period of
employment, including periods of vacation, lay-off, leave of absence or
disability, with an Employer or any affiliate of an Employer or their
predecessors or successors.
ARTICLE III
ELIGIBILITY
3.1 PARTICIPATION. Each Employee who is not a party to an
employment agreement with the Company which shall be effective in the
event of a Change of Control shall be eligible to be designated by the
Board or the Committee as a Participant in the Plan. An Employee once
designated as a Participant may be excluded from the Plan by action of the
Committee at any time prior to the occurrence of a Change of Control
provided that such exclusion is not in connection with or in anticipation
of a then-pending or proposed Change of Control.
3.2 DURATION OF PARTICIPATION. A Participant shall cease to be
a Participant in the Plan when he ceases to be an Employee of any Employer
or ceases to be a member of the group of Employees designated as eligible
to participate in the Plan, unless, at the time he ceases to be an
Employee or a member of a group of Employees, such Participant is entitled
to payment of a Separation Benefit as provided in the Plan or there has
been an event or occurrence described in Section 4.2(a) which would enable
the Participant to terminate his employment and receive a Separation
Benefit. A Participant entitled to payment of a Separation Benefit or any
other amounts under the Plan shall remain a Participant in the Plan until
the full amount of the Separation Benefit and any other amounts payable
under the Plan have been paid to the Participant.
ARTICLE IV
SEPARATION BENEFITS
4.1 RIGHT TO SEPARATION BENEFIT. A Participant shall be
entitled to receive from his Employer a Separation Benefit in the amount
provided in Section 4.3 if, at any time after a Change of Control has
occurred and on or before the second anniversary thereof, the
Participant's employment by
-5-
<PAGE>
an Employer shall terminate for any reason specified in Section 4.2(a),
whether the termination is voluntary or involuntary. Any Separation
Benefits payable hereunder are intended as stipulated damages for the
termination of the Participant's employment, with the understanding that
the actual damages incurred by a Participant in such circumstances will
be difficult or impossible to determine.
4.2 TERMINATION OF EMPLOYMENT.
(a) TERMINATIONS WHICH GIVE RISE TO SEPARATION BENEFITS
UNDER THIS PLAN. (i) Except as set forth in subsection (b) below, any
termination of employment with an Employer by action of the Employer or
any of its affiliates within two years after a Change of Control
(excluding any transfer to another Employer) shall entitle a Participant
to a Separation Benefit in accordance with Section 4.3.
(ii) If within two years after a Change of Control a
Participant's Base Salary is reduced below the Required Base Salary, the
Participant may terminate his employment within 90 days of the occurrence
of such reduction and be entitled to the Separation Benefits in accordance
with Section 4.3.
(iii) If within two years after a Change of Control a
Participant's duties and responsibilities or the program of benefits
offered to a Participant are materially and adversely diminished in
comparison to the duties and responsibilities or the program of benefits
enjoyed by the Participant immediately prior to the Change of Control, he
may terminate his employment within 90 days of the occurrence of such
diminution and be entitled to the Separation Benefits in accordance with
Section 4.3.
(iv) If within two years after a Change of Control a
Participant is required to be based at a location more than 50 miles from
the location where the Participant was based and performed services
immediately prior to the Change of Control, he may terminate his
employment within 90 days of such requirement and be entitled to the
Separation Benefits in accordance with Section 4.3.
(v) If within two years after a Change of Control, an
Employer or any affiliate of an Employer sells or otherwise distributes or
disposes of the subsidiary, branch or other business unit in which the
Participant was employed before such sale, distribution or disposition and
the requirements of subsection (b)(iv) of this Section 4.2 are not met, a
Participant may terminate his employment within 90 days after such sale,
distribution or disposition and
-6-
be entitled to the Separation Benefits in accordance with Section 4.3.
(b) TERMINATIONS WHICH DO NOT GIVE RISE TO SEPARATION
BENEFITS UNDER THIS PLAN. If a Participant's employment is terminated
after a Change of Control for Cause, disability, retirement, or a
qualified sale of business (as those terms are defined below), the
Participant shall not be entitled to Separation Benefits under the Plan,
regardless of the occurrence of a Change of Control.
(i) A termination for disability shall have occurred
where a Participant is terminated because illness or injury has prevented
<PAGE>
him from performing his duties (as they existed immediately prior to the
illness or injury) on a full-time basis for 180 consecutive business days.
(ii) A termination by retirement shall have occurred
where a Participant's termination is due to his voluntary normal or early
retirement under a pension plan sponsored by his Employer or its
affiliates, as defined in such plan.
(iii) A termination for Cause shall have occurred where
a Participant is terminated because of:
(A) the willful and continued failure of the Employee
to perform substantially the Employee's duties with the Company
or one of its affiliates (other than any such failure resulting
from incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to the
Employee by the Board or an elected officer of the Company which
specifically identifies the manner in which the Board or the
elected officer believes that the Employee has not substantially
performed the Employee's duties, or
(B) the willful engaging by the Employee in illegal
conduct or gross misconduct which is materially and demonstrably
injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of
the Employee, shall be considered "willful" unless it is done, or omitted
to be done, by the Employee in bad faith or without reasonable belief that
the Employee's action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant
to a resolution duly adopted by the Board or based upon the advice of
counsel for the Company shall be conclusively
-7-
presumed to be done, or omitted to be done, by the Employee in good faith
and in the best interests of the Company.
(iv) A termination due to a qualified sale of business
shall have occurred where, within two years after a Change of Control, an
Employer or an affiliate of an Employer has sold, distributed or otherwise
disposed of the subsidiary, branch or other business unit in which the
Participant was employed before such sale, distribution or disposition and
the Participant has been offered employment with the purchaser of such
subsidiary, branch or other business unit or the corporation or other
entity which is the owner thereof on substantially the same terms and
conditions under which he worked for the Employer (including, without
limitation, base salary, duties and responsibilities, program of benefits
and location where based). Such terms and conditions shall also include,
without limitation, a legally binding agreement or plan covering such
Participant, providing that upon a termination of employment with the
subsidiary, branch or business unit (or the corporation or other entity
which is the owner thereof) or any successor of the kind described in
Article VI of this Plan, within two years after the Change of Control of
the Company, the Participant's employer or any successor will pay to each
such former Participant an amount equal to the Separation Benefit and
other benefits that such former Participant would have received under the
Plan had he been a Participant at the time of such termination. For
purposes of this subsection, the new employer plan or agreement must treat
<PAGE>
service with any Employer (irrespective of whether the Employer was an
affiliate of the Company or the Employee was a Participant at the time of
such service) and the new employer as continuous service for purposes of
calculating separation benefits.
4.3 SEPARATION BENEFITS.
(a) IN GENERAL. If a Participant's employment terminates
in circumstances entitling him to a Separation Benefit as provided in
Section 4.2(a), the Participant's Employer or the Company shall provide
such Participant with a Separation Benefit as follows:
(i) the Company shall pay such Participant, within ten days after
the date such termination takes effect (the "Date of
Termination"), a cash lump sum equal to the excess of (A) the
Participant's Weekly Compensation (determined immediately before
the Date of Termination) times the "Multiple" (as defined in
Section 4.3(b) below) over (B) the amount of any severance pay or
pay in lieu of notice required to be paid to such Employee under
applicable law ("Statutory Severance"); and
-8-
(ii) the Company shall continue to provide such Participant, for
a number of weeks after the Date of Termination equal to the
Multiple, with life and medical/dental insurance coverage at
least as favorable as the coverage in force on the Date of
Termination, with no increase in the employee contribution rate.
(b) DEFINITION OF "MULTIPLE". The "Multiple" shall mean
the sum of (i) the number of the Participant's completed Years of Service
and (ii) the quotient (rounded down to the nearest whole number) of the
Participant's Required Base Salary, divided by $5,000; provided, however,
that the Multiple shall not be less than 4 nor greater than 52.
4.4 OTHER BENEFITS PAYABLE. The Separation Benefit described in
Section 4.3 above shall be payable in addition to, and not in lieu of, all
other accrued or vested or earned but deferred compensation, rights,
options or other benefits which may be owed to a Participant upon or
following termination, including but not limited to accrued vacation or
sick pay, amounts or benefits payable under any bonus or other
compensation plans, stock option plan, stock ownership plan, stock
purchase plan, life insurance plan, health plan, disability plan or
similar or successor plan, and Statutory Severance.
4.5 CERTAIN REDUCTION OF PAYMENTS BY THE COMPANY.
(a) For purposes of this Section 4.5, (i) a Payment shall
mean any payment or distribution in the nature of compensation to or for
the benefit of a Participant, whether paid or payable pursuant to this
Plan or otherwise; (ii) Separation Payment shall mean a Payment paid or
payable pursuant to this Plan (disregarding this Section); (iii) Net After
Tax Receipt shall mean the Present Value of a Payment net of all taxes
imposed on a Participant with respect thereto under Sections 1 and 4999 of
the Internal Revenue Code of 1986, as amended (the "Code"), and any
corresponding provisions of state and local income tax laws, determined by
applying the highest marginal tax rates that are expected to apply to the
Participant's taxable income for the relevant taxable year; (iv) "Present
Value" shall mean such value determined in accordance with Section
<PAGE>
280G(d)(4) of the Code; and (v) "Reduced Amount" shall mean the greatest
aggregate amount of Separation Payments which (a) is less than the sum of
all Separation Payments and (b) results in aggregate Net After Tax
Receipts which are equal to or greater than the Net After Tax Receipts
which would result if the Participant were paid the sum of all Separation
Payments.
-9-
(b) Anything in this Agreement to the contrary
notwithstanding, in the event Ernst & Young LLP or such other certified
public accounting firm designated by the Participant (the "Accounting
Firm") shall determine that receipt of all Payments would subject the
Participant to tax under Section 4999 of the Code, it shall determine
whether some amount of Separation Payments would meet the definition of a
"Reduced Amount." If the Accounting Firm determines that there is a
Reduced Amount, the aggregate Separation Payments shall be reduced to such
Reduced Amount. All fees payable to the Accounting Firm shall be paid
solely by the Company.
(c) If the Accounting Firm determines that aggregate
Separation Payments should be reduced to the Reduced Amount, the Company
shall promptly give the Participant notice to that effect and a copy of
the detailed calculation thereof, and the Participant may then elect, in
his sole discretion, which and how much of the Separation Payments shall
be eliminated or reduced (as long as after such election the present value
of the aggregate Separation Payments equals the Reduced Amount), and shall
advise the Company in writing of his election within ten days of his
receipt of notice. If no such election is made by the Participant within
such ten-day period, the Company may elect which of such Separation
Payments shall be eliminated or reduced (as long as after such election
the present value of the aggregate Separation Payments equals the Reduced
Amount) and shall notify the Participant promptly of such election. All
determinations made by the Accounting Firm under this Section shall be
binding upon the Company and the Participant and shall be made within 60
days of a termination of employment of the Participant. As promptly as
practicable following such determination, the Company shall pay to or
distribute for the benefit of the Participant such Separation Payments as
are then due to the Participant under this Plan and shall promptly pay to
or distribute for the benefit of the Participant in the future such
Separation Payments as become due to the Participant under this Plan.
(d) While it is the intention of the Company to reduce the
amounts payable or distributable to the Participants hereunder only if the
aggregate Net After Tax Receipts to a Participant would thereby be
increased, as a result of the uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that amounts will have been paid
or distributed by the Company to or for the benefit of a Participant
pursuant to this Plan which should not have been so paid or distributed
("Overpayment") or that additional amounts which will have not been paid
or distributed by the Company to or for the benefit of a Participant
pursuant to this Plan could have been so paid or distributed
-10-
("Underpayment"), in each case, consistent with the calculation of the
Reduced Amount hereunder. In the event that the Accounting Firm, based
either upon the assertion of a deficiency by the Internal Revenue Service
<PAGE>
against the Company or the Participant which the Accounting Firm believes
has a high probability of success determines that an Overpayment has been
made, any such Overpayment paid or distributed by the Company to or for
the benefit of a Participant shall be treated for all purposes as a loan
to the Participant which the Participant shall repay to the Company
together with interest at the applicable federal rate provided for in
Section 7872(f)(2) of the Code; provided, however, that no such loan shall
be deemed to have been made and no amount shall be payable by a
Participant to the Company if and to the extent such deemed loan and
payment would not either reduce the amount on which the Participant is
subject to tax under Section 1 and Section 4999 of the Code or generate a
refund of such taxes. In the event that the Accounting Firm, based upon
controlling precedent or substantial authority, determines that an
Underpayment has occurred, any such Underpayment shall be promptly paid by
the Company to or for the benefit of the Participant together with
interest at the applicable federal rate provided for in Section 7872(f)(2)
of the Code.
4.6 PAYMENT OBLIGATIONS ABSOLUTE.
Upon a Change of Control, subject to Section 4.5, the obligations
of the Company and the Employer to pay the Separation Benefits described
in Section 4.3 shall be absolute and unconditional and shall not be
affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company or any
of its Subsidiaries may have against any Participant. In no event shall a
Participant be obligated to seek other employment or take any other action
by way of mitigation of the amounts payable to a Participant under any of
the provisions of this Plan, nor shall the amount of any payment hereunder
be reduced by any compensation earned by a Participant as a result of
employment by another employer.
ARTICLE V
PARTICIPATING EMPLOYERS
As of the Effective Date, this Plan shall be deemed adopted by
each Subsidiary of the Company. Upon such adoption, each Subsidiary shall
become an Employer hereunder and the provisions of the Plan shall be fully
applicable to the Employees of that Subsidiary who are eligible to be
Participants.
-11-
ARTICLE VI
SUCCESSOR TO COMPANY
This Plan shall bind any successor of the Company, its assets or
its businesses (whether direct or indirect, by purchase, merger,
consolidation or otherwise), in the same manner and to the same extent
that the Company would be obligated under this Plan if no succession had
taken place.
In the case of any transaction in which a successor would not by
the foregoing provision or by operation of law be bound by this Plan, the
Company shall require such successor expressly and unconditionally to
assume and agree to perform the Company's obligations under this Plan, in
the same manner and to the same extent that the Company would be required
<PAGE>
to perform if no such succession had taken place. The term "Company," as
used in this Plan, shall mean the Company as hereinbefore defined and any
successor or assignee to the business or assets which by reason hereof
becomes bound by this Plan.
ARTICLE VII
DURATION, AMENDMENT AND TERMINATION
7.1 DURATION. If a Change of Control has not occurred and no
proposal with respect to a Change of Control is then pending, this Plan
shall expire on August 24, 1998, unless sooner terminated as provided in
Section 7.2, or unless extended for an additional period or periods by
resolution adopted by the Board.
If a Change of Control occurs, this Plan shall continue in full
force and effect and shall not terminate or expire until after all
Participants who become entitled to any payments hereunder shall have
received such payments in full and all adjustments required to be made
pursuant to Section 4.5 have been made.
7.2 AMENDMENT AND TERMINATION. The Plan may be terminated or
amended in any respect by resolution adopted by a majority of the Board,
unless a Change of Control has previously occurred. However, in
connection with or in anticipation of a then-pending or proposed Change of
Control, this Plan may not be terminated or amended in any manner which
would adversely affect the rights or potential rights of Participants. If
a Change of Control occurs, the Plan shall no longer be subject to
amendment, change, substitution, deletion, revocation or termination in
any respect which adversely affects the rights of Participants.
-12-
7.3 FORM OF AMENDMENT. The form of any amendment or termination
of the Plan shall be a written instrument signed by a duly authorized
officer or officers of the Company, certifying that the amendment or
termination has been approved by the Board. An amendment of the Plan in
accordance with the terms hereof shall automatically effect a
corresponding amendment to all Participants' rights hereunder. A
termination of the Plan shall in accordance with the terms hereof
automatically effect a termination of all Participants' rights and
benefits hereunder.
ARTICLE VIII
MISCELLANEOUS
8.1 INDEMNIFICATION. If a Participant institutes any legal
action in seeking to obtain or enforce, or is required to defend in any
legal action the validity or enforceability of, or entitlement to, any
right or benefit provided by this Plan, the Company or the Employer will
pay for all actual legal fees and expenses incurred (as incurred) by such
Participant, regardless of the outcome of such action.
8.2 EMPLOYMENT STATUS. This Plan does not constitute a contract
of employment or impose on the Participant or the Participant's Employer
any obligation to retain the Participant as an Employee, to change the
status of the Participant's employment, or to change the Company's
policies or those of its Subsidiaries' regarding termination of
employment.
<PAGE>
8.3 VALIDITY AND SEVERABILITY. The invalidity or
unenforceability of any provision of the Plan shall not affect the
validity or enforceability of any other provision of the Plan, which shall
remain in full force and effect, and any prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
8.4 GOVERNING LAW. The validity, interpretation, construction
and performance of the Plan shall in all respects be governed by the laws
of Wisconsin, without reference to principles of conflict of law.
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1997 OF MOSINEE PAPER CORPORATION AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 349,510
<SECURITIES> 0
<RECEIVABLES> 33,721,927
<ALLOWANCES> 2,264,909
<INVENTORY> 47,235,774
<CURRENT-ASSETS> 87,629,782
<PP&E> 398,982,570
<DEPRECIATION> 182,858,564
<TOTAL-ASSETS> 316,775,378
<CURRENT-LIABILITIES> 47,483,283
<BONDS> 64,864,210
<COMMON> 58,678,056
0
0
<OTHER-SE> 104,778,326
<TOTAL-LIABILITY-AND-EQUITY> 316,775,378
<SALES> 253,292,726
<TOTAL-REVENUES> 253,292,726
<CGS> 187,541,335
<TOTAL-COSTS> 213,051,459
<OTHER-EXPENSES> (318,639)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,914,819
<INCOME-PRETAX> 37,645,399
<INCOME-TAX> 14,525,000
<INCOME-CONTINUING> 23,120,399
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,120,399
<EPS-PRIMARY> 1.52
<EPS-DILUTED> 0
</TABLE>
