SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 1, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-6187
BANTA CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 39-0148550
(State or other jurisdiction (IRS Employer
of incorporation or organization) I.D. Number)
225 Main Street, Menasha, Wisconsin 54952
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414) 751-7777
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes /X/ No / /
The registrant had outstanding on October 1, 1994, 20,079,007 shares of
$.10 par value common stock.
<PAGE>
BANTA CORPORATION AND SUBSIDIARIES
INDEX
PART I Financial Statements: Page Number
Unaudited Consolidated Condensed Balance Sheets
October 1, 1994 and January 1, 1994. . . . . . . . . . . . . . . 3
Unaudited Consolidated Condensed Statements of Earnings for
the Three and Nine Months Ended October 1, 1994
and October 2, 1993 . . . . . . . . . . . . . . . . . . . . . . 4
Unaudited Consolidated Condensed Statements of Cash Flows
for the Nine Months Ended October 1, 1994 and October 2, 1993. . 5
Notes to Unaudited Consolidated Condensed
Financial Statements . . . . . . . . . . . . . . . . . . . . . . 6
Management's Discussion and Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . . . . . . 7-8
PART II Other Information:
Item 6 Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 8
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . 10
<PAGE>
PART I Item 1 - Financial Statements
<TABLE>
BANTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
<CAPTION>
ASSETS October 1, 1994 January 1, 1994
<S> <C> <C>
Current Assets
Cash $ 110 $ 8,230
Receivables 157,394 125,004
Inventories 58,505 52,447
Other Current Assets 12,684 12,225
--------- ---------
Total Current Assets 228,693 197,906
--------- ---------
Plant and Equipment 512,164 430,357
Less Accumulated Depreciation 223,512 197,469
--------- ---------
Plant and Equipment, net 288,652 232,888
--------- ---------
Other Assets 13,814 9,303
Cost in Excess of Net Assets of Subsidiaries Acquired 24,085 17,336
--------- ---------
$ 555,244 $ 457,433
========= =========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities
Notes Payable $ 34,904 $ 20,800
Accounts Payable 51,346 27,364
Accrued Salaries and Wages 19,282 16,903
Other Accrued Liabilities 20,657 19,807
Current Maturities of Long-term Debt 8,045 6,861
--------- ---------
Total Current Liabilities 134,234 91,735
--------- ---------
Long-term Debt 70,987 45,603
Deferred Income Taxes 18,081 18,257
Other Non-current Liabilities 10,983 9,410
Shareholders' Investment
Preferred Stock - $10 par value; authorized 300,000 shares;
none issued - -
Common Stock - $.10 par value; authorized 75,000,000 shares;
20,079,007 and 19,996,532 shares issued, respectively 2,008 2,000
Amount in Excess of Par Value of Stock 55,941 54,436
Retained Earnings 263,010 235,992
--------- ---------
320,959 292,428
--------- ---------
$ 555,244 $ 457,433
========= =========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
BANTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Dollars in Thousands, Except Per Share Amounts)
<CAPTION>
Three Months Ended Nine Months Ended
October 1, 1994 October 2, 1993 October 1, 1994 October 2, 1993
<S> <C> <C> <C> <C>
Net sales $ 207,735 $184,379 $581,030 $512,334
Cost of goods sold 160,140 141,729 446,305 392,910
--------- -------- -------- --------
Gross earnings 47,595 42,650 134,725 119,424
Selling and administrative expense 24,638 21,288 73,806 65,432
--------- -------- -------- --------
Earnings from operations 22,957 21,362 60,919 53,992
Other income (expense):
Interest expense (1,386) (1,473) (3,751) (3,887)
Other, net 639 275 964 909
--------- -------- -------- --------
Earnings before income taxes 22,210 20,164 58,132 51,014
Provision for income taxes 8,900 8,600 23,300 20,700
--------- -------- -------- --------
Net earnings $ 13,310 $ 11,564 $ 34,832 $ 30,314
========= ======== ======== ========
Earnings per share of common stock $ .66 $ .57 $ 1.72 $ 1.51
========= ======== ======== ========
Average common shares outstanding 20,239,947 20,150,756 20,239,985 20,127,544
========== ========== ========== ==========
Cash dividends per common share $ .13 $ .12 $ .39 $ .35
========= ======== ======== ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
BANTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<CAPTION>
Nine Months Ended
October 1, 1994 October 2, 1993
<S> <C> <C>
Cash Flow From Operating Activities
Net earnings $ 34,832 $ 30,314
Depreciation and amortization 29,657 24,715
Deferred income taxes (654) 1,390
Change in assets and liabilities
Increase in receivables (20,723) (25,329)
Increase in inventories (3,467) (14,935)
Decrease (increase) in other current assets 220 (1,076)
Increase in accounts payable
and accrued liabilities 19,665 14,166
(Increase) decrease in other non-current assets (333) 2,360
Other, net 1,573 1,451
-------- --------
Cash provided by operating activities 60,770 33,056
-------- --------
Cash Flow From Investing Activities
Capital expenditures, net (67,162) (48,272)
Acquisition of businesses (29,831) --
-------- --------
Cash used for investing activities (96,993) (48,272)
-------- --------
Cash Flow From Financing Activities
Issuance of notes payable, net 14,104 13,860
Issuance of long-term debt 25,000 --
Repayment of long-term debt (4,700) (6,180)
Dividends paid (7,814) (6,904)
Proceeds from exercise of stock options 1,513 1,724
-------- --------
Cash provided by financing activities 28,103 2,500
-------- --------
Net decrease in cash (8,120) (12,716)
Cash at beginning of period 8,230 13,305
-------- --------
Cash at end of period $ 110 $ 589
======== ========
Cash payments for:
Interest, net of amount capitalized $ 3,891 $ 4,498
Income taxes 24,057 16,546
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
BANTA CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1) Basis of Presentation
The condensed financial statements included herein have been prepared by the
Corporation, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Corporation believes that
the disclosures are adequate to make the information presented not misleading.
It is suggested that these condensed financial statements be read in
conjunction with the financial statements and the notes thereto included in
the Corporation's latest annual report on Form 10-K.
In the opinion of Management, the aforementioned statements reflect all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the results for the interim periods.
2) Acquisitions:
Danbury Printing & Litho, Inc.
In March, 1994, the Corporation purchased substantially all of the assets of
Danbury Printing & Litho, Inc. ("Danbury") for approximately $16.3 million in
cash and assumed selected liabilities. Danbury, which reported sales of
approximately $35 million in 1993, has become part of the Corporation's Direct
Marketing Group, which is classified in the commercial market. This
acquisition was accounted for as a purchase and, accordingly, the accompanying
financial statements include Danbury's results beginning with the acquisition
date.
United Graphics Inc.
In August, 1994, the Corporation completed its acquisition of United Graphics
Inc. ("UGI") for approximately $9.5 million in cash and a $1.5 million note.
The Corporation also paid $4 million to former shareholders of UGI in exchange
for a covenant not to compete. UGI, which reported sales for its most recent
fiscal year of approximately $28 million, has become part of the Corporation's
Information Services Group, which is classified in the book market. This
acquisition was accounted for as a purchase and accordingly the accompanying
financial statements include UGI's results beginning with the acquisition
date.
3) Inventories
The majority of the inventories of the Corporation's printing operations are
accounted for at cost determined on a last-in, first-out (LIFO) basis, which
is not in excess of market. The remaining inventories are stated at the lower
of cost or market using the first-in, first-out (FIFO) method. Inventories
include material, labor and manufacturing overhead.
Inventory amounts at October 1, 1994 and January 1, 1994 are as follows:
<TABLE>
<CAPTION>
Dollars in Thousands
October 1, 1994 January 1, 1994
<S> <C> <C>
Raw Materials and Supplies $30,773 $25,502
Work-In-Process and Finished Goods 33,028 30,941
------- -------
FIFO value (current cost of all inventories) 63,801 56,443
Excess of current cost over carrying value
of LIFO inventories (5,296) (3,996)
------- -------
Net Inventories $58,505 $52,447
======= =======
</TABLE>
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have influenced the Corporation's financial position and results
of operations from the close of the latest fiscal year-end in comparison to
the corresponding interim period in the preceding year included in the
Unaudited Consolidated Condensed Balance Sheets, Statements of Earnings and
Statements of Cash Flows.
FINANCIAL CONDITION
Liquidity and Capital Resources
The Corporation's net working capital decreased $11.7 million during the
first three quarters of 1994. The Corporation's highest levels of business
activity generally occur during the third and fourth quarters. As a result
of this higher activity level and the impact of acquisitions in 1994,
current assets (other than cash) increased $38.9 million since the prior
year-end and current liabilities (other than debt) increased $27.2 million.
Short-term notes payable (generally commercial paper) were used to finance
the majority of the working capital requirements, as well as the acquisition
of UGI.
During the second quarter of 1994 the Corporation sold $25 million of
long-term debt at an interest rate of 7.62%. The proceeds from this debt
placement were used to repay short-term indebtedness which had been issued
earlier in the year primarily to finance capital expenditures and the
acquisition of Danbury.
RESULTS OF OPERATIONS
Net Sales
Sales for the third quarter of 1994 were $23 million (12.7%) higher than the
third quarter of 1993. The companies acquired during 1994 accounted for
approximately half of the sales gain. All of the Corporation's market
classifications reported sales increases (including the effects of
acquisitions) for the third quarter.
Sales for the first three quarters of 1994 increased $69 million (13.4%)
over 1993, with the acquisitions accounting for approximately one-third of
the increase. All market classifications reported sales increases for the
first nine months of 1994. The largest increase in sales was in the
commercial classification (including Danbury).
Cost of Goods Sold
Cost of goods sold as a percentage of sales increased from 76.9% for the
third quarter of 1993 to 77.1% for the third quarter of 1994. The primary
reasons for the overall reduction in margins included: 1) reduced margins
in the commercial classification due to pressure on prices and costs
associated with capacity additions that were not fully utilized during the
quarter and 2) a provision for LIFO inventory valuations of $1 million in
1994's third quarter compared with no provision in the third quarter of
1993. Margins in direct marketing materials were also reduced due to the
lower margins of Danbury being added to the mix. The margin reductions were
partially offset by margin increases in the book and magazine market
classifications.
Cost of goods sold as a percentage of sales increased from 76.7% for the
first nine months of 1993 to 76.8% for the first nine months of 1994. This
slight reduction in margins for the year-to-date period resulted from the
factors noted above that impacted the third quarter in addition to the
impact of lower margins at KCS Industries during the first half of 1994.
LIFO provisions did not impact the year-to-date margin comparisons as
significantly because a $1.3 million provision was recorded in the first
nine months of 1994 compared with an $800,000 provision recorded in the
comparable period of 1993.
<PAGE>
During the third quarter paper markets strengthened, causing some supply
challenges and price increase for our customers. While we expect paper
markets to continue strong, our purchasing contracts should ensure ample
paper supplies for our customers.
Selling and Administrative Expenses
Selling and administrative expenses were $3.4 million and $8.4 million
higher for the third quarter and first nine months of 1994, respectively,
than for the same periods of 1993. These increases are primarily due to
higher levels of activity and the inclusion of $1.5 million and $2.8 million
of costs incurred by the acquired businesses for the quarter and nine-month
period, respectively.
Interest Expense
Interest expense was $87,000 lower in the third quarter of 1994 than in the
third quarter of 1993 in spite of higher average borrowing levels and
interest rates because there was an increase of $189,000 in capitalized
interest. Interest expense was $137,000 lower for the first nine months of
1994 than for the first nine months of 1993. Similarly, this reduction is
due to an increase of $479,000 in the amount of interest which was
capitalized in the first nine months of 1994. The increased capitalized
interest both for the quarter and year-to-date periods is due to several
large capital projects that are being completed in 1994.
Income Taxes
Below is a reconciliation of the Corporation's effective tax rates:
<TABLE>
<CAPTION>
Third Quarter First Nine Months
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Federal Statutory Rate 35.0% 35.0% 35.0% 35.0%
State Tax Rate 5.1 5.0 5.1 5.1
Provision for Federal
Tax Rate Increase:
Retroactive tax on
earnings for the first
half of 1993 -- 1.5 -- --
Increase in deferred taxes -- 1.2 -- .5
----- ----- ----- -----
40.1% 42.7% 40.1% 40.6%
===== ===== ===== =====
</TABLE>
PART II: OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10(a) Letter agreement with Donald D. Belcher
10(b) Agreement with Donald D. Belcher dated September 1, 1994
(b) No reports on Form 8-K were filed during the quarter for which
this report is filed.
<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.
BANTA CORPORATION
/S/ GERALD A. HENSELER
Gerald A. Henseler
Executive Vice President and Chief Financial Officer
Date November 14, 1994
BANTA CORPORATION
EXHIBIT INDEX TO FORM 10-Q
For The Quarter Ended October 1, 1994
Exhibit Number
10(a) Letter agreement with Donald D. Belcher
10(b) Agreement with Donald D. Belcher dated September 1, 1994
VIA UPS
June 21, 1994
PERSONAL & CONFIDENTIAL
Mr. Donald D. Belcher
273 Monte Place
Arcadia, California 91006
RE: Banta Corporation
Dear Don:
The purpose of this letter is to set forth the terms of your proposed
employment by Banta.
Effective September 1, 1994, you will become President and Chief
Operating Officer of Banta and a member of the Board of Directors.
Effective January 1, 1995, you will become Chief Executive Officer and
effective upon the retirement of Calvin W. Aurand, Jr., you will become
Chairman of the Board.
Your annual salary, payable in accordance with Banta's normal
practices, will be $325,000, subject to review each year by the
Compensation Committee of Banta. You will participate in Banta's
Management Incentive Award Plan, including a minimum award for 1994 of
$120,000, Long Term Incentive Plan, and the usual "fringe benefit"
arrangements covering Banta executives, including health, disability
and life insurance and use of a company owned automobile. You will be
entitled to four weeks paid vacation each year and a club membership
which will be taxable income to you under present tax laws.
When you begin employment you will be granted a nonstatutory option to
purchase 30,000 shares of Banta common stock under Banta's 1991 Stock
Option Plan. You will be eligible to participate in additional option
grants to executives as determined by Banta's Compensation Committee.
The present practice of the Compensation Committee is to consider the
grant of options annually in the Fall of each year.
In order to provide you with some security in the event of a "change in
control" of Banta you will be offered a "Key Executive Employment and
Severance Agreement" ("KEESA"). It is understood that prior to any
"change in control" as defined in the KEESA, either you or Banta may
terminate your employment at any time. However, in the event that
Banta should terminate<PAGE>
June 21, 1994
Mr. Belcher
Page 2
your employment other than by reason of disability or for "cause" (as
defined in the KEESA) prior to a change in control, you will be
entitled to a severance payment equal to two years' salary and Banta
will continue to provide health insurance for two years.
You will be offered the opportunity to participate in a deferred
compensation program currently available to Banta officers. In
general, the program would permit you to defer up to $150,000 in
installments during a period of up to ten years. The amounts deferred
would be credited to your account along with semi-annual interest
credits at the rate of 10%. In the event of termination of your
employment prior to age 65 for any reason other than disability or
death (except for retirement after age 62), you would receive the
amount credited to your account in a lump sum payment. In the event of
termination due to death, disability or retirement after age 62, you
would receive benefits in amounts which would depend upon the amounts
you had deferred, the period of deferral and the availability and
amount of insurance funding the payments. The amount of these benefits
would be determined at the time you commence participation in the
program.
As a Banta employee you will be a participant in Banta's Salaried
Employees' Pension Plan and you will also participate in the
Supplemental Retirement Plan. As applied to your situation, these
plans will require five years of service before the benefits are
vested. The aggregate monthly benefits under the plans are based upon
a percentage of average monthly compensation in the five consecutive
years in which the highest compensation was earned, minus a percentage
of primary Social Security benefits, multiplied by the number of years
of service.
For each year you are employed by Banta up to five years you will earn
an additional annual retirement benefit of $15,000, payable in monthly
installments commencing at age 65. However, if you are employed for
five years or more so that you qualify for benefits under the Pension
Plan and Supplemental Plan, or if there is a termination of your
employment which would entitle you to the additional pension benefits
provided for in the KEESA, this benefit would be reduced by the amounts
you are entitled to receive under the Pension Plan and Supplemental
Plan or pursuant to the additional pension benefits provisions of the
KEESA. Further, in the event of your death, this benefit would be
reduced by 50% and would be paid to your wife for her life.
<PAGE>
June 2, 1994
Mr. Belcher
Page 3
Banta will pay or reimburse you for all of your moving expenses in
moving to the Menasha area and will pay you $25,000 to cover other
miscellaneous expenses. In addition, Banta will purchase your home in
Arcadia, or arrange for its purchase by a third party, at its appraised
value in accordance with Banta's policy.
I trust that the foregoing covers all of the terms which have been
discussed. If these terms are agreeable to you, please so indicate by
signing and dating the enclosed copy of this letter and returning it to
me.
Very truly yours,
BANTA CORPORATION
/S/ CALVIN W. AURAND, JR.
Calvin W. Aurand, Jr.
Chairman of the Board, President
and Chief Executive Officer
The foregoing is agreed to this
22nd day of June, 1994.
/S/ DONALD D. BELCHER
Donald D. Belcher
KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of
September, 1994, by and between Banta Corporation, a Wisconsin corporation
(hereinafter referred to as the "Company"), and Donald D. Belcher (hereinafter
referred to as the "Executive").
W I T N E S S E T H :
WHEREAS, the Executive is employed by the Company in a key executive
capacity and the Executive's services are valuable to the conduct of the
business of the Company;
WHEREAS, the Company recognizes that circumstances may arise in
which a change in control of the Company occurs, through acquisition or
otherwise, thereby causing uncertainty about the Executive's future employment
with the Company without regard to the Executive's competence or past
contributions which uncertainty may result in the loss of valuable services of
the Executive to the detriment of the Company and its shareholders, and the
Company and the Executive wish to provide reasonable security to the Executive
against changes in the Executive's relationship with the Company in the event
of any such change in control;
WHEREAS, the Company and the Executive are desirous that any
proposal for a change in control or acquisition of the Company will be
considered by the Executive objectively and with reference only to the best
interests of the Company and its shareholders; and
WHEREAS, the Executive will be in a better position to consider the
Company's best interests if the Executive is afforded reasonable security, as
provided in this
<PAGE>
Agreement, against altered conditions of employment which could result from
any such change in control or acquisition.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto mutually
covenant and agree as follows:
1. Definitions.
(a) Act. For purposes of this Agreement, the term "Act" means the
Securities Exchange Act of 1934, as amended.
(b) Affiliate and Associate. For purposes of this Agreement, the
terms "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations of the Act.
(c) Beneficial Owner. For purposes of this Agreement, a Person
shall be deemed to be the "Beneficial Owner" of any securities:
(i) which such Person or any of such Person's Affiliates or
Associates has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to beneficially
own, (A) securities tendered pursuant to a tender or exchange offer made by or
on behalf of such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase, or (B) securities
issuable upon exercise of Rights issued pursuant to the
<PAGE>
terms of the Company's Rights Agreement with First Wisconsin Trust Company
(n/k/a Firstar Trust Company), dated as of October 29, 1991, as amended from
time to time (or any successor to such Rights Agreement), at any time before
the issuance of such securities;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Act), including pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security under
this subparagraph (ii) as a result of an agreement, arrangement or
understanding to vote such security if the agreement, arrangement or
understanding: (A) arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations
under the Act and (B) is not also then reportable on a Schedule 13D under the
Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting (except pursuant to a revocable proxy as
described in Subsection 1(c)(ii) above) or disposing of any voting securities
of the Company.
<PAGE>
(d) Cause. "Cause" for termination by the Company of the
Executive's employment after the Effective Date shall, for purposes of this
Agreement, be limited to (i) misappropriation by the Executive of funds of the
Company; (ii) the Executive personally and secretly obtaining profits from
dealings with the Company; (iii) the Executive's unreasonable neglect of, or
refusal to perform, his duties or responsibilities (unless significantly
changed without the Executive's consent); and (iv) conviction of a serious
crime involving moral turpitude.
(e) Change in Control of the Company. For purposes of this
Agreement, a "Change in Control of the Company" shall be deemed to occur if
(i) any Person becomes the Beneficial Owner of more than 30% of the
outstanding voting stock of the Company, (A) in whole or in part by means of
an offer made to the holders of any one or more classes of such voting stock
to acquire such shares for cash, securities, other property or any combination
thereof, or (B) by any other means; (ii) the Company sells, transfers or
assigns all or substantially all of its business and assets; (iii) the Company
consolidates with or merges into any other corporation, unless the Company or
a subsidiary of the Company is the continuing or surviving corporation; (iv)
the Company acquires, whether through purchase, merger or otherwise, all or
substantially all of the operating assets or capital stock of another entity
and in connection with such acquisition persons are elected or appointed to
the Board of Directors of the Company who are not directors immediately prior
to such acquisition and such persons constitute a majority of the Board of
Directors after such acquisition; or (v) any Person succeeds in electing two
or more directors of the Company
<PAGE>
in any one election in opposition to those nominees proposed by management of
the Company.
(f) Code. For purposes of this Agreement, the term "Code" means
the Internal Revenue Code of 1986, including any amendments thereto or
successor tax codes thereof.
(g) Covered Termination. For purposes of this Agreement, the term
"Covered Termination" means any termination of the Executive's employment
during the Employment Period where the Termination Date is any date on or
prior to the end of such Employment Period.
(h) Effective Date. For purposes of this Agreement, the term
"Effective Date" shall mean the first date on which a Change in Control of the
Company occurs. Anything in this Agreement to the contrary notwithstanding,
if a Change in Control of the Company occurs and if the Executive's employment
with the Company or a subsidiary of the Company is terminated (whether by the
Company, the Executive or otherwise) during the period of 180 days prior to
the date on which the Change in Control of the Company 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 in Control of the Company or (ii) otherwise
arose in connection with or in anticipation of a Change in Control of the
Company, then for all purposes of this Agreement the "Effective Date" shall
mean the date immediately prior to the date of such termination of employment.
<PAGE>
(i) Employment Period. For purposes of this Agreement, the term
"Employment Period" means a period commencing on the Effective Date, and
ending at 11:59 p.m. Milwaukee Time on the earlier of the third anniversary of
such date or the Executive's Normal Retirement Date.
(j) Good Reason. For purposes of this Agreement, the Executive
shall have a "Good Reason" for termination of employment on or after the
Effective Date in the event of:
(i) any breach of this Agreement by the Company, including
specifically any breach by the Company of its agreements contained in Sections
4, 5 or 6 hereof;
(ii) the removal of the Executive from, or any failure to
reelect or reappoint the Executive to, any of the positions held with the
Company at any time during the 180-day period prior to the Effective Date or
any other positions with the Company to which the Executive shall thereafter
be elected, appointed or assigned, except in the event that such removal or
failure to reelect or reappoint (A) relates to the termination by the Company
of the Executive's employment for Cause or by reason of disability pursuant to
Section 12 hereof, or (B) is consented to in writing by the Executive;
(iii) a good faith determination by the Executive that
there has been a significant adverse change, without the Executive's written
consent, in the Executive's working conditions or status with the Company from
such working conditions or status in effect during the 180-day period prior to
the Effective Date,
<PAGE>
including but not limited to (A) a significant change in the nature or scope
of the Executive's authority, powers, functions, duties or responsibilities,
or (B) a significant reduction in the level of support services, staff,
secretarial and other assistance, office space and accoutrements; or
(iv) failure by the Company to obtain the Agreement referred to
in Section 18(a) hereof as provided therein.
(k) Normal Retirement Date. For purposes of this Agreement, the
term "Normal Retirement Date" means "Normal Retirement Date" as defined in the
Company's Salaried Employees Pension Plan, or any successor plan, as in effect
on the Effective Date.
(l) Notice of Termination. For purposes of this Agreement, the
term "Notice of Termination" means a written notice as contemplated by Section
14 hereof.
(m) Person. For purposes of this Agreement, the term "Person"
shall mean any individual, firm, partnership, corporation or other entity,
including any successor (by merger or otherwise) of such entity, or a group of
any of the foregoing acting in concert.
(n) Termination Date. For purposes of this Agreement, except as
otherwise provided in Section 10(b) and Section 18(a) hereof, the term
"Termination Date" means (i) if the Executive's employment is terminated by
the Executive's death, the date of death; (ii) if the Executive's employment
is terminated by reason of voluntary early retirement, as agreed in writing by
the Company and the Executive, the date of such early retirement which is set
forth in such written agreement; (iii) if the Executive's employment is
terminated for purposes of this Agreement by reason of disability pursuant to
Section 12 hereof, the earlier of thirty days after the Notice of Termination
is given or one day prior
<PAGE>
to the end of the Employment Period; (iv) if the Executive's employment is
terminated by the Executive voluntarily (other than for Good Reason), the date
the Notice of Termination is given; and (v) if the Executive's employment is
terminated by the Company (other than by reason of disability pursuant to
Section 12 hereof) or by the Executive for Good Reason, the earlier of thirty
days after the Notice of Termination is given or one day prior to the end of
the Employment Period. Notwithstanding the foregoing,
(A) If termination is for Cause pursuant to Section 1(d)(iii) of
this Agreement and if the Executive has cured the conduct constituting such
Cause as described by the Company in its Notice of Termination within such
thirty day or shorter period, then the Executive's employment hereunder shall
continue as if the Company had not delivered its Notice of Termination.
(B) If the Company shall give a Notice of Termination for Cause or
by reason of disability and the Executive in good faith notifies the Company
that a dispute exists concerning the termination within the fifteen day period
following receipt thereof, then the Executive may elect to continue his
employment during such dispute and the Termination Date shall be determined
under this paragraph. If the Executive so elects and it is thereafter
determined that Cause or disability (as the case may be) did exist, the
Termination Date shall be the earlier of (1) the date on which the dispute is
finally determined, either (x) by mutual written agreement of the parties or
(y) in accordance with Section 23 hereof, (2) the date of the Executive's
death, or (3) one day prior to the end of the Employment Period. If the
Executive so elects and it is thereafter determined that Cause or disability
(as the case may be) did not exist, then the employment of the Executive
<PAGE>
hereunder shall continue after such determination as if the Company had not
delivered its Notice of Termination and there shall be no Termination Date
arising out of such Notice. In either case, this Agreement continues, until
the Termination Date, if any, as if the Company had not delivered the Notice
of Termination except that, if it is finally determined that the Company
properly terminated the Executive for the reason asserted in the Notice of
Termination, the Executive shall in no case be entitled to a Termination
Payment (as hereinafter defined) arising out of events occurring after the
Company delivered its Notice of Termination.
(C) If the Executive shall in good faith give a Notice of
Termination for Good Reason and the Company notifies the Executive that a
dispute exists concerning the termination within the fifteen day period
following receipt thereof, then the Executive may elect to continue his
employment during such dispute and the Termination Date shall be determined
under this paragraph. If the Executive so elects and it is thereafter
determined that Good Reason did exist, the Termination Date shall be the
earlier of (1) the date on which the dispute is finally determined, either (x)
by mutual written agreement of the parties or (y) in accordance with Section
23 hereof, (2) the date of the Executive's death or (3) one day prior to the
end of the Employment Period. If the Executive so elects and it is thereafter
determined that Good Reason did not exist, then the employment of the
Executive hereunder shall continue after such determination as if the
Executive had not delivered the Notice of Termination asserting Good Reason
and there shall be no Termination Date arising out of such Notice. In either
case, this Agreement continues, until the Termination Date, if any, as if the
Executive had not delivered the Notice of
<PAGE>
Termination except that, if it is finally determined that Good Reason did
exist, the Executive shall in no case be denied the benefits described in
Sections 8(b) and 9 hereof (including a Termination Payment) based on events
occurring after the Executive delivered his Notice of Termination.
(D) If an opinion is required to be delivered pursuant to Section
9(b)(ii) hereof and such opinion shall not have been delivered, the
Termination Date shall be the earlier of the date on which such opinion is
delivered or one day prior to the end of the Employment Period.
(E) Except as provided in Paragraphs (B) and (C) above, if the
party receiving the Notice of Termination notifies the other party that a
dispute exists concerning the termination within the fifteen day period
following receipt thereof and it is finally determined that the reason
asserted in such Notice of Termination did not exist, then (1) if such Notice
was delivered by the Executive, the Executive will be deemed to have
voluntarily terminated his employment and (2) if delivered by the Company, the
Company will be deemed to have terminated the Executive other than by reason
of death, disability or Cause.
2. Termination or Cancellation Prior to the Effective Date. The
Company and the Executive shall each retain the right to terminate the
employment of the Executive at any time prior to the Effective Date. In the
event the Executive's employment is terminated prior to the Effective Date,
this Agreement shall be terminated and cancelled and of no further force and
effect and any and all rights and obligations of the parties hereunder shall
cease.
<PAGE>
3. Employment Period. If the Executive is employed by the Company
on the Effective Date, the Company will continue thereafter to employ the
Executive during the Employment Period, and the Executive will remain in the
employ of the Company, in accordance with and subject to the terms and
provisions of this Agreement.
4. Duties. During the Employment Period, the Executive shall, in
the most significant capacities and positions held by the Executive at any
time during the 180-day period preceding the Effective Date or in such other
capacities and positions as may be agreed to by the Company and the Executive
in writing, devote the Executive's best efforts and all of the Executive's
business time, attention and skill to the business and affairs of the Company,
as such business and affairs now exist and as they may hereafter be conducted.
The services which are to be performed by the Executive hereunder are to be
rendered in the same metropolitan area in which the Executive was principally
employed during the 180-day period prior to the Effective Date, or in such
other place or places as shall be mutually agreed upon in writing by the
Executive and the Company from time to time. Without the Executive's consent
the Executive shall not be required to be absent from such metropolitan area
more than 60 days in any fiscal year of the Company.
5. Compensation. During the Employment Period, the Executive
shall be compensated as follows:
(a) The Executive shall receive, at reasonable intervals (but not
less often than monthly) and in accordance with such standard policies as may
be in effect immediately prior to the Effective Date, an annual base salary in
cash equivalent of not less than twelve times the Executive's highest monthly
base salary for the twelve-month period immediately
<PAGE>
preceding the month in which the Effective Date occurs (which base salary
shall, unless otherwise agreed in writing by the Executive, include the
current receipt by the Executive of any amounts which, prior to the Effective
Date, the Executive had elected to defer, whether such compensation is
deferred under Section 401(k) of the Code or otherwise), subject to upward
adjustment as provided in Section 6 hereof (such salary amount as adjusted
upward from time to time is hereafter referred to as the "Annual Base
Salary").
(b) The Executive shall receive fringe benefits at least equal in
value to those provided for the Executive at any time during the 180-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
executives of the Company of comparable status and position to the Executive.
The Executive shall be reimbursed, at such intervals and in accordance with
such standard policies that are most favorable to the Executive which were in
effect at any time during the 180-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 executives of the Company of
comparable status and position to the Executive, for any and all monies
advanced in connection with the Executive's employment for reasonable and
necessary expenses incurred by the Executive on behalf of the Company,
including travel expenses.
(c) The Executive shall be included, to the extent eligible
thereunder (which eligibility shall not be conditioned on the Executive's
salary grade or on any other requirement which excludes persons of comparable
status and position to the Executive unless such exclusion was in effect for
such plan or an equivalent plan immediately prior to
<PAGE>
the Effective Date), in any and all plans providing benefits for the Company's
salaried employees in general, including but not limited to group life
insurance, hospitalization, medical, dental, profit sharing and stock bonus
plans; provided, that, in no event shall the aggregate level of benefits under
such plans in which the Executive is included be less than the aggregate level
of benefits under plans of the Company of the type referred to in this Section
5(c) in which the Executive was participating at any time during the 180-day
period immediately preceding the Effective Date.
(d) The Executive shall annually be entitled to not less than the
amount of paid vacation and not fewer than the number of paid holidays to
which the Executive was entitled annually at any time during the 180-day
period immediately preceding the Effective Date or such greater amount of paid
vacation and number of paid holidays as may be made available annually to
other executives of the Company of comparable status and position to the
Executive.
(e) The Executive shall be included in all plans providing
additional benefits to executives of the Company of comparable status and
position to the Executive, including but not limited to deferred compensation,
split-dollar life insurance, supplemental retirement, stock option, stock
appreciation, stock bonus and similar or comparable plans; provided, that, in
no event shall the aggregate level of benefits under such plans be less than
the aggregate level of benefits under plans of the Company of the type
referred to in this Section 5(e) in which the Executive was participating at
any time during the 180-day period immediately preceding the Effective Date;
and provided, further, that the Company's
<PAGE>
obligation to include the Executive in bonus or incentive compensation plans
shall be determined by Subsection 5(f) hereof.
(f) To assure that the Executive will have an opportunity to earn
incentive compensation after the Effective Date, the Executive shall be
included in a bonus plan of the Company which shall satisfy the standards
described below (such plan, the "Bonus Plan"). Bonuses under the Bonus Plan
shall be payable with respect to achieving such financial or other goals
reasonably related to the business of the Company as the Company shall
establish (the "Goals"), all of which Goals shall be attainable, prior to the
end of the Employment Period, with approximately the same degree of
probability as the goals under the Company's Management Incentive Award Plan,
or the successor to such plan, in the form most favorable to the Executive
which was in effect at any time during the 180-day period prior to the
Effective Date (the "MIA Plan") and in view of the Company's existing and
projected financial and business circumstances applicable at the time. The
amount of the bonus (the "Bonus Amount") that the Executive is eligible to
earn under the Bonus Plan shall be no less than the amount of the Executive's
maximum award provided in such MIA Plan (such bonus amount herein referred to
as the "Targeted Bonus"), and in the event the Goals are not achieved such
that the entire Targeted Bonus is not payable, the Bonus Plan shall provide
for a payment of a Bonus Amount equal to a portion of the Targeted Bonus
reasonably related to that portion of the Goals which were achieved. Payment
of the Bonus Amount shall not be affected by any circumstance occurring
subsequent to the end of the Employment Period, including termination of the
Executive's employment.
<PAGE>
6. Annual Compensation Adjustments. During the Employment Period,
the Board of Directors of the Company (or an appropriate committee thereof)
will consider and appraise, at least annually, the contributions of the
Executive to the Company, and in accordance with the Company's practice prior
to the Effective Date, due consideration shall be given, at least annually, to
the upward adjustment of the Executive's Annual Base Salary (i) commensurate
with increases generally given to other executives of the Company of
comparable status and position to the Executive, and (ii) as the scope of the
Company's operations or the Executive's duties expand.
7. Termination For Cause or Without Good Reason. If there is a
Covered Termination for Cause or due to the Executive's voluntarily
terminating his employment other than for Good Reason (any such terminations
to be subject to the procedures set forth in Section 14 hereof), then the
Executive shall be entitled to receive only Accrued Benefits pursuant to
Section 9(a) hereof.
8. Termination Giving Rise to a Termination Payment. (a) If
there is a Covered Termination by the Executive for Good Reason, or by the
Company other than by reason of (i) death, (ii) disability pursuant to Section
12 hereof, or (iii) Cause (any such terminations to be subject to the
procedures set forth in Section 14 hereof), then the Executive shall be
entitled to receive, and the Company shall promptly pay, Accrued Benefits and,
in lieu of further base salary for periods following the Termination Date, as
liquidated damages and additional severance pay and in consideration of the
covenant of the Executive set forth in Section 15(a) hereof, the Termination
Payment pursuant to Section 9(b) hereof.
<PAGE>
(b) If there is a Covered Termination and the Executive is entitled
to Accrued Benefits and the Termination Payment, then the Executive shall be
entitled to the following additional benefits:
(i) The Executive will be entitled to pension benefits in
addition to the most favorable benefits provided for him under any version of
the Company's Salaried Employees Pension Plan and the Company's Supplemental
Retirement Plan (or any successors to such plans) in effect at any time during
the 180-day period prior to the Effective Date (the "Retirement Plans"). The
amount of additional pension benefits will be equal to the difference between
the amount the Executive (or in the event of the Executive's death, the
Executive's surviving spouse or other beneficiary) would be actually entitled
to receive upon retirement under the terms and conditions of the Retirement
Plans and the amount the Executive (or such surviving spouse or beneficiary)
would have been entitled to receive under such terms and conditions if the
Executive's benefits under the Retirement Plans had been fully vested on the
Termination Date and he had continued to work until his 65th birthday at a
salary rate equal to the Executive's Annual Base Salary; provided, however,
that in no event will the assumed period of continued employment extend beyond
the date on which the Executive elects to begin receiving the additional
pension benefits. The Executive shall be entitled to elect to receive his
additional pension benefits in any form (e.g. joint and survivor) that would
have been available to him under the terms and conditions of the Retirement
Plans and (subject to reduction, if any, under such terms) at any time after
he has attained the age at which early retirement is
<PAGE>
permitted. In addition, if the Executive starts to receive his additional
pension benefits before the earliest date on which he is eligible for
unreduced Social Security benefits, the Executive will receive an amount equal
to the difference between his estimated unreduced Social Security benefit and
the actual benefit to which he is entitled until he attains the age when he is
eligible for unreduced benefits.
(ii) Until the earlier of the end of the Employment Period or
such time as the Executive has obtained new employment and is covered by
benefits which in the aggregate are at least equal in value to the following
benefits, the Executive shall continue to be covered, at the expense of the
Company, by the most favorable life insurance, hospitalization, medical and
dental coverage provided to the Executive and his family during the 180-day
period immediately preceding the Effective Date or, if more favorable to
Executive, the coverage in effect generally at any time thereafter for
executives of the Company of comparable status and position to the Executive
and their families.
9. Payments Upon Termination.
(a) Accrued Benefits. For purposes of this Agreement, the
Executive's "Accrued Benefits" shall include the following amounts, payable as
described herein: (i) all base salary for the time period ending with the
Termination Date; (ii) reimbursement for any and all monies advanced in
connection with the Executive's employment for reasonable and necessary
expenses incurred by the Executive on behalf of the Company for the time
period ending with the Termination Date; (iii) any and all other cash earned
through the Termination Date and deferred at the election of the Executive or
pursuant to any deferred
<PAGE>
compensation plan then in effect; (iv) a lump sum payment of the bonus or
incentive compensation otherwise payable to the Executive with respect to the
year in which termination occurs to the extent provided by all bonus or
incentive compensation plan or plans in which the Executive is a participant;
and (v) all other payments and benefits to which the Executive (or in the
event of the Executive's death, the Executive's surviving spouse or other
beneficiary) may be entitled as compensatory fringe benefits or under the
terms of any benefit plan of the Company, including severance payments under
the Company's severance policies and practices in the form most favorable to
the Executive which were in effect at any time during the 180-day period prior
to the Effective Date. Payment of Accrued Benefits shall be made promptly in
accordance with the Company's prevailing practice with respect to Subsections
(i) and (ii) or, with respect to Subsections (iii), (iv) and (v), pursuant to
the terms of the benefit plan or practice establishing such benefits.
(b) Termination Payment. (i) Subject to the limits set forth
in Subsection 9(b)(ii) hereof, the Termination Payment shall be an amount
equal to (A) the Executive's Annual Base Salary, plus (B) the amount of the
highest annual bonus award (determined on an annualized basis, other than for
the bonus award for 1994, for any bonus award paid for a period of less than
one year and excluding any year for which the Executive did not participate in
any bonus plan) paid to the Executive with respect to the three complete
fiscal years preceding the Termination Date (the aggregate amount set forth in
(A) and (B) hereof shall hereafter be referred to as "Annual Cash
Compensation"), times the number of years or fractional
<PAGE>
portion thereof remaining in the Employment Period determined as of the
Termination Date; provided, however, that such amount shall not be less than
the amount of the Executive's Annual Cash Compensation and provided, further,
that if the Termination Date occurs prior to awards to the Company's officers
under the Company's MIA Plan for the Company's 1994 fiscal year, the amount
referred to in clause (B) above shall be deemed to be an amount equal to (x)
the Executive's Annual Base Salary multiplied by (y) a percentage equal to the
award percentage (on an annualized basis) that would have applied to the same
salary range as the Executive under the MIA Plan had a Change in Control of
the Company not occurred. The Termination Payment shall be paid to the
Executive in cash equivalent ten business days after the Termination Date;
provided, however, that if the Termination Date occurs prior to awards to the
Company's officers under the Company's MIA Plan for the Company's 1994 fiscal
year, the amount referred to in clause (B) above shall be paid within sixty
days following the end of such fiscal year. The Executive shall not be
required to mitigate the amount of the Termination Payment by securing other
employment or otherwise, nor will such Termination Payment be reduced by
reason of the Executive securing other employment or for any other reason.
The Termination Payment shall be in addition to any other severance payments
to which the Executive is entitled under the Company's severance policies and
practices in the form most favorable to the Executive which were in effect at
any time during the 180-day period prior to the Effective Date.
<PAGE>
(ii) Notwithstanding any other provision of this Agreement, if
any portion of the Termination Payment or any other payment under this
Agreement, or under any other agreement with or plan of the Company (in the
aggregate "Total Payments"), would constitute an "excess parachute payment,"
then the Total Payments to be made to the Executive shall be reduced such that
the value of the aggregate Total Payments that the Executive is entitled to
receive shall be One Dollar ($1) less than the maximum amount which the
Executive may receive without becoming subject to the tax imposed by Section
4999 of the Code (or any successor provision) or which the Company may pay
without loss of deduction under Section 280G(a) of the Code (or any successor
provision). For purposes of this Agreement, the terms "excess parachute
payment" and "parachute payments" shall have the meanings assigned to them in
Section 280G of the Code (or any successor provision), and such "parachute
payments" shall be valued as provided therein. Present value for purposes of
this Agreement shall be calculated in accordance with Section 1274(b)(2) of
the Code (or any successor provision). Within sixty days following delivery
of the Notice of Termination or notice by the Company to the Executive of its
belief that there is a payment or benefit due the Executive which will result
in an excess parachute payment as defined in Section 280G of the Code (or any
successor provision), the Executive and the Company, at the Company's expense,
shall obtain the opinion (which need not be unqualified) of nationally
recognized tax counsel selected by the Company's independent auditors and
acceptable to the Executive in his sole discretion, which sets forth (A) the
amount of the Base Period Income, (B) the
<PAGE>
amount and present value of Total Payments and (C) the amount and present
value of any excess parachute payments without regard to the limitations of
this Subsection 9(b)(ii). As used in this Subsection 9(b)(ii), the term "Base
Period Income" means an amount equal to the Executive's "annualized includible
compensation for the base period" as defined in Section 280G(d)(1) of the Code
(or any successor provision). For purposes of such opinion, the value of any
noncash benefits or any deferred payment or benefit shall be determined by the
Company's independent auditors in accordance with the principles of Sections
280G(d)(3) and (4) of the Code (or any successor provisions), which
determination shall be evidenced in a certificate of such auditors addressed
to the Company and the Executive. Such opinion shall be dated as of the
Termination Date and addressed to the Company and the Executive and shall be
binding upon the Company and the Executive. If such opinion determines that
there would be an excess parachute payment, the Termination Payment hereunder
or any other payment determined by such counsel to be includible in Total
Payments shall be reduced or eliminated as specified by the Executive in
writing delivered to the Company within thirty days of his receipt of such
opinion or, if the Executive fails to so notify the Company, then as the
Company shall reasonably determine, so that under the bases of calculations
set forth in such opinion there will be no excess parachute payment. The
provisions of this Subsection 9(b)(ii), including the calculations, notices
and opinions provided for herein, shall be based upon the conclusive
presumption that the following are reasonable: (1) the compensation and
benefits provided for in Section 5 hereof and (2) any other compensation,
including
<PAGE>
but not limited to the Accrued Benefits, earned prior to the Termination Date
by the Executive pursuant to the Company's compensation programs if such
payments would have been made in the future in any event, even though the
timing of such payment is triggered by the Change in Control of the Company or
the Termination Date.
(iii) (A) If, notwithstanding the provisions of Subsection
(ii) of this Section 9(b), but subject to paragraph (B), it is ultimately
determined by a court or pursuant to a final determination by the Internal
Revenue Service that any portion of Total Payments is subject to the tax (the
"Excise Tax") imposed by Section 4999 of the Code (or any successor
provision), the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") such that the net amount retained by the Executive after
deduction of any Excise Tax and any interest charges or penalties in respect
of the imposition of such Excise Tax (but not any federal, state or local
income tax) on the Total Payments, and any federal, state and local income tax
and Excise Tax upon the payment provided for by this Subsection (iii), shall
be equal to the Total Payments. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes at
the highest marginal rates of taxation in the state and locality of the
Executive's domicile for income tax purposes on the date the Gross-Up Payment
is made, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes.
<PAGE>
(B) If legislation is enacted that would require the Company's
shareholders to approve this Agreement, prior to a Change in Control of the
Company, due solely to the provision contained in paragraph (A) of this
Subsection 9(b)(iii), then
(1) from and after such time as shareholder approval would be
required, until shareholder approval is obtained as required by such
legislation, paragraph (A) shall be of no force and effect;
(2) if the Company seeks shareholder approval of any other
agreement providing similar benefits to any other executive of the Company,
the Company shall seek shareholder approval of this Agreement at the same
shareholders meeting or meetings at which the shareholders consider any such
other agreement; and
(3) the Company and the Executive shall use their best efforts to
consider and agree in writing upon an amendment to this Subsection 9(b)(iii)
such that, as amended, this Subsection would provide the Executive with the
benefits intended to be afforded to the Executive by paragraph (A) without
requiring shareholder approval.
10. Death. (a) Except as provided in Section 10(b) hereof, in the
event of a Covered Termination due to the Executive's death, the Executive's
estate, heirs and beneficiaries shall receive all the Executive's Accrued
Benefits through the Termination Date.
(b) In the event the Executive dies after a Notice of Termination
is given (i) by the Company or (ii) by the Executive for Good Reason, the
Executive's estate, heirs and beneficiaries shall be entitled to the benefits
described in Section 10(a) hereof and,
<PAGE>
subject to the provisions of this Agreement, to such Termination Payment as
the Executive would have been entitled to had the Executive lived. For
purposes of this Subsection 10(b), the Termination Date shall be the earlier
of thirty days following the giving of the Notice of Termination, subject to
extension pursuant to Section 1(n) hereof, or one day prior to the end of the
Employment Period.
11. Retirement. If, during the Employment Period, the Executive
and the Company shall execute an agreement providing for the early retirement
of the Executive from the Company, or the Executive shall otherwise give
notice that he is voluntarily choosing to retire early from the Company, the
Executive shall receive Accrued Benefits through the Termination Date;
provided, that if the Executive's employment is terminated by the Executive
for Good Reason or by the Company other than by reason of death, disability or
Cause and the Executive also, in connection with such termination, elects
voluntary early retirement, the Executive shall also be entitled to receive a
Termination Payment pursuant to Section 8(a) hereof.
12. Termination for Disability. If, during the Employment Period,
as a result of the Executive's disability due to physical or mental illness or
injury (regardless of whether such illness or injury is job-related), the
Executive shall have been absent from the Executive's duties hereunder on a
full-time basis for a period of 180 days during any 194-day period and, within
thirty days after the Company notifies the Executive in writing that it
intends to terminate the Executive's employment (which notice shall not
constitute the Notice of Termination contemplated below), the Executive shall
not have returned to the performance of the Executive's duties hereunder on a
full-time basis, the Company may
<PAGE>
terminate the Executive's employment for purposes of this Agreement pursuant
to a Notice of Termination given in accordance with Section 14 hereof. If the
Executive's employment is terminated on account of the Executive's disability
in accordance with this Section, the Executive shall receive Accrued Benefits
in accordance with Section 9(a) hereof and shall remain eligible for all
benefits provided by any long term disability programs of the Company in
effect at the time of such termination.
13. Stock Options. Following a Change in Control of the Company,
all stock options held by the Executive as of the Effective Date (and not
otherwise exercised) will become exercisable in full notwithstanding any
percentage limitations on the exercise of the options and, notwithstanding any
termination of the Executive's employment, shall remain exercisable for a
period of not less than three months after the date of the Change in Control
of the Company; provided, however, that no option shall be exercisable after
the expiration date specified therefor in the applicable stock option
agreement.
14. Termination Notice and Procedure. Any Covered Termination by
the Company or the Executive (other than a termination of the Executive's
employment referenced in the last sentence of Section 1(h) hereof) shall be
communicated by written Notice of Termination to the Executive, if such Notice
is given by the Company, and to the Company, if such Notice is given by the
Executive, all in accordance with the following procedures and those set forth
in Section 24 hereof:
(a) If such termination is for disability, Cause or Good Reason,
the Notice of Termination shall indicate in reasonable detail the facts and
circumstances alleged to provide a basis for such termination.
<PAGE>
(b) Any Notice of Termination by the Company shall have been
approved, prior to the giving thereof to the Executive, by a resolution duly
adopted by a majority of the directors of the Company (or any successor
corporation) then in office.
(c) The Executive shall have thirty days, or such longer period as
the Company may determine to be appropriate, to cure any conduct or act, if
curable, alleged to provide grounds for termination of the Executive's
employment for Cause under this Agreement pursuant to Subsection 1(d)(iii)
hereof.
(d) The recipient of any Notice of Termination shall personally
deliver or mail in accordance with Section 24 hereof written notice of any
dispute relating to such Notice of Termination to the party giving such Notice
within fifteen days after receipt thereof. After the expiration of such
fifteen days, the contents of the Notice of Termination shall become final and
not subject to dispute.
15. Further Obligations of the Executive.
(a) Competition. The Executive agrees that, in the event of any
Covered Termination where the Executive is entitled to Accrued Benefits and
the Termination Payment, the Executive shall not, during the balance of the
Employment Period, without the prior written approval of the Company's Board
of Directors, participate in the management of, be employed by or own any
business enterprise at a location within the United States that engages in
substantial competition with the Company or its subsidiaries, where such
enterprise's revenues from any printing services amount to 10% or more of such
enterprise's net revenues and sales for its most recently completed fiscal
year; provided, however, that nothing in this Section 15(a) shall prohibit the
Executive from owning stock or other
<PAGE>
securities of a competitor amounting to less than five percent of the
outstanding capital stock of such competitor.
(b) Confidentiality. During and following the Executive's
employment by the Company, the Executive shall hold in confidence and not
directly or indirectly disclose or use or copy or make lists of any
confidential information or proprietary data of the Company, except to the
extent authorized in writing by the Board of Directors of the Company or
required by any court or administrative agency, other than to an employee of
the Company or a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by the Executive of duties as
an executive of the Company. Confidential information shall not include any
information known generally to the public or any information of a type not
otherwise considered confidential by persons engaged in the same business or a
business similar to that of the Company. All records, files, documents and
materials, or copies thereof, relating to the business of the Company which
the Executive shall prepare, or use, or come into contact with, shall be and
remain the sole property of the Company and shall be promptly returned to the
Company upon termination of employment with the Company.
16. Expenses and Interest. If, after the Effective Date, (i) a
dispute arises with respect to the enforcement of the Executive's rights under
this Agreement or (ii) any legal or arbitration proceeding shall be brought to
enforce or interpret any provision contained herein or to recover damages for
breach hereof, in either case so long as the Executive is not acting in bad
faith, the Executive shall recover from the Company any reasonable attorneys'
fees and necessary costs and disbursements incurred as a result of such
<PAGE>
dispute, legal or arbitration proceeding ("Expenses"), and prejudgment
interest on any money judgment or arbitration award obtained by the Executive
calculated at the rate of interest announced by Firstar Bank Milwaukee,
National Association, Milwaukee, Wisconsin from time to time as its prime or
base lending rate from the date that payments to him should have been made
under this Agreement. Within ten days after the Executive's written request
therefor, the Company shall pay to the Executive, or such other person or
entity as the Executive may designate in writing to the Company, the
Executive's reasonable Expenses in advance of the final disposition or
conclusion of any such dispute, legal or arbitration proceeding.
17. Payment Obligations Absolute. The Company's obligation during
and after the Employment Period to pay the Executive the amounts and to make
the benefit and other arrangements provided herein shall be absolute and
unconditional and shall not be affected by any circumstances, including,
without limitation, any setoff, counterclaim, recoupment, defense or other
right which the Company may have against him or anyone else. Except as
provided in Section 16 of this Agreement, all amounts payable by the Company
hereunder shall be paid without notice or demand. Each and every payment made
hereunder by the Company shall be final, and the Company will not seek to
recover all or any part of such payment from the Executive, or from whomsoever
may be entitled thereto, for any reason whatsoever.
18. Successors. (a) If the Company sells, assigns or transfers
all or substantially all of its business and assets to any Person or if the
Company merges into or consolidates or otherwise combines (where the Company
does not survive such combination)
<PAGE>
with any Person (any such event, a "Sale of Business"), then the Company shall
assign all of its right, title and interest in this Agreement as of the date
of such event to such Person, and the Company shall cause such Person, by
written agreement in form and substance reasonably satisfactory to the
Executive, to expressly assume and agree to perform from and after the date of
such assignment all of the terms, conditions and provisions imposed by this
Agreement upon the Company. Failure of the Company to obtain such agreement
prior to the effective date of such Sale of Business shall be a breach of this
Agreement constituting "Good Reason" hereunder, except that for purposes of
implementing the foregoing, the date upon which such Sale of Business becomes
effective shall be deemed the Termination Date. In case of such assignment by
the Company and of assumption and agreement by such Person, as used in this
Agreement, "Company" shall thereafter mean such Person which executes and
delivers the agreement provided for in this Section 18 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation
of law, and this Agreement shall inure to the benefit of, and be enforceable
by, such Person. The Executive shall, in his discretion, be entitled to
proceed against any or all of such Persons, any Person which theretofore was
such a successor to the Company (as defined in the first paragraph of this
Agreement) and the Company (as so defined) in any action to enforce any rights
of the Executive hereunder. Except as provided in this Subsection, this
Agreement shall not be assignable by the Company. This Agreement shall not be
terminated by the voluntary or involuntary dissolution of the Company.
(b) This Agreement and all rights of the Executive shall inure to
the benefit of and be enforceable by the Executive's personal or legal
representatives, executors,
<PAGE>
administrators, heirs and beneficiaries. All amounts payable to the Executive
under Sections 7, 8, 9, 10, 11, 12 and 16 hereof if the Executive had lived
shall be paid, in the event of the Executive's death, to the Executive's
estate, heirs and representatives; provided, however, that the foregoing shall
not be construed to modify any terms of any benefit plan of the Company, as
such terms are in effect on the Effective Date, that expressly govern benefits
under such plan in the event of the Executive's death.
19. Severability. The provisions of this Agreement shall be
regarded as divisible, and if any of said provisions or any part hereof are
declared invalid or unenforceable by a court of competent jurisdiction, the
validity and enforceability of the remainder of such provisions or parts
hereof and the applicability thereof shall not be affected thereby.
20. Amendment. This Agreement may not be amended or modified at
any time except by written instrument executed by the Company and the
Executive.
21. Withholding. The Company shall be entitled to withhold from
amounts to be paid to the Executive hereunder any federal, state or local
withholding or other taxes or charges which it is from time to time required
to withhold; provided, that the amount so withheld shall not exceed the
minimum amount required to be withheld by law. The Company shall be entitled
to rely on an opinion of nationally recognized tax counsel if any question as
to the amount or requirement of any such withholding shall arise.
22. Certain Rules of Construction. No party shall be considered as
being responsible for the drafting of this Agreement for the purpose of
applying any rule construing ambiguities against the drafter or otherwise. No
draft of this Agreement shall
<PAGE>
be taken into account in construing this Agreement. Any provision of this
Agreement which requires an agreement in writing shall be deemed to require
that the writing in question be signed by the Executive and an authorized
representative of the Company.
23. Governing Law; Resolution of Disputes. This Agreement and the
rights and obligations hereunder shall be governed by and construed in
accordance with the laws of the State of Wisconsin. Any dispute arising out
of this Agreement shall, at the Executive's election, be determined by
arbitration under the rules of the American Arbitration Association then in
effect (in which case both parties shall be bound by the arbitration award) or
by litigation. Whether the dispute is to be settled by arbitration or
litigation, the venue for the arbitration or litigation shall be Menasha,
Wisconsin or, at the Executive's election, if the Executive is no longer
residing or working in the Menasha, Wisconsin metropolitan area, in the
judicial district encompassing the city in which the Executive resides;
provided, that, if the Executive is not then residing in the United States,
the election of the Executive with respect to such venue shall be either
Menasha, Wisconsin or in the judicial district encompassing that city in the
United States among the thirty cities having the largest population (as
determined by the most recent United States Census data available at the
Termination Date) which is closest to the Executive's residence. The parties
consent to personal jurisdiction in each trial court in the selected venue
having subject matter jurisdiction notwithstanding their residence or situs,
and each party irrevocably consents to service of process in the manner
provided hereunder for the giving of notices.
24. Notice. Notices given pursuant to this Agreement shall be in
writing and, except as otherwise provided by Section 14(d) hereof, shall be
deemed given when
<PAGE>
actually received by the Executive or actually received by the Company's
Secretary or any officer of the Company other than the Executive. If mailed,
such notices shall be mailed by United States registered or certified mail,
return receipt requested, addressee only, postage prepaid, if to the Company,
to Banta Corporation, Attention: Secretary, River Place, 225 Main Street,
Menasha, WI 54952, or if to the Executive, at the address set forth below the
Executive's signature to this Agreement, or to such other address as the party
to be notified shall have theretofore given to the other party in writing.
25. No Waiver. No waiver by either party at any time of any breach
by the other party of, or compliance with, any condition or provision of this
Agreement to be performed by the other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same time or any prior
or subsequent time.
26. Headings. The headings herein contained are for reference only
and shall not affect the meaning or interpretation of any provision of this
Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first written above.
BANTA CORPORATION
By: /S/ CALVIN W. AURAND, JR.
Calvin W. Aurand, Jr.
Chairman of the Board and Chief
Executive Officer
Attest: /S/ RONALD D. KNEEZEL
Ronald D. Kneezel
Secretary
EXECUTIVE
/S/ DONALD D. BELCHER
(SEAL) Donald D. Belcher
273 Monte Place
Arcadia, California 91006
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED IN THE BANTA CORPORATION QUARTERLY REPORT FOR
THE PERIOD ENDED OCTOBER 1, 1994 WHICH WAS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> OCT-01-1994
<CASH> 110
<SECURITIES> 0
<RECEIVABLES> 157,394
<ALLOWANCES> 0
<INVENTORY> 58,505
<CURRENT-ASSETS> 228,693
<PP&E> 512,164
<DEPRECIATION> 223,512
<TOTAL-ASSETS> 555,244
<CURRENT-LIABILITIES> 134,234
<BONDS> 70,987
<COMMON> 2,008
0
0
<OTHER-SE> 318,951
<TOTAL-LIABILITY-AND-EQUITY> 555,244
<SALES> 581,030
<TOTAL-REVENUES> 581,030
<CGS> 446,305
<TOTAL-COSTS> 446,305
<OTHER-EXPENSES> 73,806
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,751
<INCOME-PRETAX> 58,132
<INCOME-TAX> 23,300
<INCOME-CONTINUING> 34,832
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,832
<EPS-PRIMARY> 1.72
<EPS-DILUTED> 1.72
</TABLE>
