WAUSAU-MOSINEE PAPER CORPORATION
DIRECTORS' DEFERRED COMPENSATION PLAN
As amended March 4, 1999
WAUSAU-MOSINEE PAPER CORPORATION
DIRECTORS' DEFERRED COMPENSATION PLAN
1. ESTABLISHMENT OF PLAN. Wausau-Mosinee Paper Corporation (the
"Company") hereby amends and restates the Company's Directors' Deferred
Compensation Plan previously in effect and renames such plan, as herein
amended and restated, the Wausau-Mosinee Paper Corporation Directors'
Deferred Compensation Plan, all effective as of December 17, 1997 (the
"Plan").
2. PURPOSE. The purpose of the Plan is to provide an alternative
method of compensating members (the "Directors") of the Board of
Directors of the Company (the "Board"), 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
-1-
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) A "CHANGE OF CONTROL OF THE COMPANY" shall mean the happening
of any of the following events:
(1) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act (a "Person") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (A) the then outstanding Common Stock (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"); excluding, however, the following: (i) any
acquisition directly from the Company other than an acquisition by
virtue of the exercise of a conversion privilege unless the
security being so converted was itself acquired 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 entity controlled by the
-2-
Company, (iv) any acquisition pursuant to a transaction which
complies with clauses (A), (B), and (C) of subparagraph (3) of this
paragraph 3(b), (v) except as provided in paragraphs (iv) and (v),
any acquisition by any of the Woodson Entities or any of the Smith
Entities, or (vi) any increase in the proportionate number of
shares of Outstanding Company Common Stock or Outstanding Company
Voting Securities beneficially owned by a Person to 20% or more of
the shares of either of such classes of stock if such increase was
solely the result of the acquisition of Outstanding Company Common
Stock or Outstanding Company Voting Securities by the Company;
provided, however, that this clause (vi) shall not apply to any
acquisition of Outstanding Company Common Stock or Outstanding
Company Voting Securities not described in clauses (i), (ii),
(iii), (iv), or (v) of this paragraph (a) by the Person acquiring
such shares which occurs after such Person had become the
beneficial owner of 20% or more of either the Outstanding Company
Common Stock or Outstanding Company Voting Securities by reason of
share purchases by the Company; or (2) A change in the composition
of the Board such that the individuals who, as of the Effective
Date, constitute the Board (such Board shall be hereinafter
referred to as the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, for
purposes of the Plan, that any individual who becomes a member of
the Board subsequent to the Effective Date whose election, or
nomination for election by the Company's shareholders, was approved
by a vote of at least a majority of those individuals who are
members of the Board and who were also members of the Incumbent
Board (or deemed to be such pursuant to this proviso) shall be
-3-
deemed to be and shall be considered as though such individual were
a member of the Incumbent Board, but provided, further, that any
such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board shall not be so deemed or considered as a member of the
Incumbent Board; or (3) Consummation of a reorganization, merger
or consolidation, or sale or other disposition of all or
substantially all of the assets of the Company or the acquisition
of the assets or securities of any other entity (a "Corporate
Transaction"); excluding, however, such a Corporate Transaction
pursuant to which (A) all or substantially all of the individuals
and entities who are the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 60% of,
respectively, the 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 Corporate
Transaction (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) (the "Resulting Corporation") in
substantially the same proportions as their ownership, immediately
prior to such Corporate Transaction, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case
may be, (B) no Person (other than the Company,
-4-
any employee benefit plan (or related trust) of the Company, any
Woodson Entity, any Smith Entity, or such Resulting Corporation)
will beneficially own, directly or indirectly, 20% or more of,
respectively, the outstanding shares of common stock of the
Resulting Corporation or the combined voting power of the then
outstanding voting securities of such Resulting Corporation
entitled to vote generally in the election of directors except
to the extent that such ownership existed with respect to the
Company prior to the Corporate Transaction, and (C) individuals who
were members of the Incumbent Board will constitute at least a
majority of the members of the board of directors of the Resulting
Corporation; or (4) The Woodson Entities acquire beneficial
ownership of more than 35% of the Outstanding Company Common Stock
or Outstanding Company Voting Securities or of the outstanding
shares of common stock or 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 Resulting
Corporation; or (5) The Smith Entities acquire beneficial
ownership of more than 35% of the Outstanding Company Common Stock
or Outstanding Company Voting Securities or of the outstanding
shares of common stock or 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 Resulting
Corporation; or (6) The approval by the shareholders of the
Company of a complete liquidation or dissolution of the Company.
For purposes of this paragraph 3(b), the term "Woodson Entities"
shall mean Aytchmonde P. Woodson, Leigh Yawkey Woodson and Alice
Richardson Yawkey, members of their respective families and their
-5-
respective descendants (the "Woodson Family"), heirs or legatees of any
of the Woodson Family members, transferees by will, laws of descent or
distribution or by operation of law of any of the foregoing (including
of any such transferees) (including any executor or administrator of
any estate of any of the foregoing), any trust established by any of
Aytchmonde P. Woodson, Leigh Yawkey Woodson, or Alice Richardson
Yawkey, whether pursuant to last will or otherwise, any partnership,
trust or other entity established primarily for the benefit of, or any
other Person the beneficial owners of which consist primarily of, any
of the foregoing or any Affiliates or Associates of any of the
foregoing or any charitable trust or foundation to which any of the
foregoing transfers or may transfer securities of the Company
(including any beneficiary or trustee, partner, manager or director of
any of the foregoing or any other Person serving any such entity
in a similar capacity).
For purposes of this paragraph 3(b), the term "Smith Entities"
shall mean David B. Smith and Katherine S. Smith, members of their
respective families and their respective descendants (the "Smith
Family"), heirs or legatees of any of the Smith Family members,
transferees by will, laws of descent or distribution or by operation
of law of any of the foregoing (including of any such transferees)
(including any executor or administrator of any estate of any of the
foregoing), any trust established by either of David B. Smith or
Katherine S. Smith, whether pursuant to last will or otherwise, any
partnership, trust or other entity established primarily for the
benefit of, or any other Person the beneficial owners of which consist
primarily of, any of the foregoing or any Affiliates or Associates of
any of the foregoing or any charitable trust or foundation to which any
of the foregoing transfers or may transfer securities of the Company
(including any beneficiary or trustee,
-6-
partner, manager or director of any of the foregoing or any other
Person serving any such entity in a similar capacity)
.
For purposes of this paragraph 3(b), the terms "Affiliate" and
"Associate" shall have the meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations under the Exchange Act as in
effect on the date of this Plan.
(c) "COMMON STOCK" shall mean the common stock, no 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.
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 or
any portion 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
-7-
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 all or any portion of the
Directors' Fees earned and payable (1) from and after the date on which
he is elected a Director if an election is filed on or before the date
of such election or (2), if no election is filed pursuant to clause
(1), on the first day of the first month immediately following the
month in such fiscal year in which such election is made. An election
by a Director to defer Directors' Fees pursuant to this subparagraph
(b) shall remain in effect until the last day of the fiscal year in
which such election is made and during each subsequent fiscal year
until revoked or amended, provided that any such revocation or
amendment shall only be effective with respect to fiscal years
beginning after the date written notice of such revocation or amendment
is first received by the Company.
(c) Directors' Fees deferred by a Participant shall be
distributable in accordance with paragraph 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.
-8-
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. 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 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
-9-
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 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 pursuant to this
paragraph 5 which changes the Account to which Directors' Fees
deferred in a subsequent fiscal year are to be allocated or changes
the Account to which any balance in such Participant's Accounts
shall be allocated shall be effective (1) until such election has
been approved by the Board or (2) if it is made by a Participant
within six months of the immediately preceding election filed by
such Participant and any such election which shall not have been
approved by the Board or which occurs within the period described
in clause (2) 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.
-10-
(d) Despite any other provision of this Plan, the most recent
election in effect on December 17, 1997 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 December 17, 1997 until changed by such Director for a future
fiscal year in accordance with the terms of the Plan.
(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.
(f) Effective as of March 31, 1998, each participant in the
Mosinee Paper Corporation Deferred Compensation Plan for Directors as
in effect on March 31, 1998 (the "Mosinee Plan") shall become a
Participant in the Plan (a "Mosinee Participant") and (1) the Deferred
Cash Account created in the name of each such Mosinee Participant
pursuant to paragraph 5(a) shall be credited with the balance, if any,
of such Mosinee Participant's Deferred Cash Account in the Mosinee Plan
as of March 31, 1998 and such Mosinee Participant's Deferred Cash
Account in the Mosinee Plan shall thereafter be represented by the
Deferred Cash Account established hereunder and shall be subject to all
terms and conditions of this Plan and (2) the Deferred Stock Account
created in the name of each such Mosinee Participant pursuant to
paragraph 5(a) shall be credited with the balance, if any, of such
Mosinee Participant's Deferred Stock Account in the Mosinee Plan as of
March 31, 1998 and such Mosinee Participant's Deferred Stock Account in
the Mosinee Plan shall thereafter be represented by the Deferred Stock
Account established hereunder and shall be subject to all terms and
conditions of this Plan. The Deferred Cash Account and the Deferred
Stock Account of any Mosinee Participant who is, on March 31,
-11-
1998, or who thereafter becomes, a Participant by virtue of being a
Director shall be combined with and maintained as one account with,
respectively, the Deferred Cash Account and the Deferred Stock Account
maintained for such Director with respect to his Directors' Fees.
6. FORM FOR ELECTIONS. The Secretary of the Company shall
provide election forms for use by Directors in making an initial
election to become a Participant and for making all other elections or
designations permitted or required by the Plan.
7. DEFERRED CASH ACCOUNT. As of the last day of each fiscal
quarter, there shall be computed, with respect to each Deferred Cash
Account which is then in existence, an amount equal to interest on the
average daily balance in such Account during such quarter, computed at
a rate per annum equal to the prime rate of interest then in effect at
The Chase Manhattan Bank of New York. The amount so determined shall
be credited to and become part of the balance of such Account as of the
first day of the next fiscal quarter.
8. DEFERRED STOCK ACCOUNT.
(a) As of each date on which the Company shall make a payment of
Director's Fees and a Participant has a deferral election then in
effect which provides for the deferral of payment of such fees to the
Participant's Deferred Stock Account, the Directors' Fees otherwise
payable to such Participant in cash as of such date shall be converted
into that number of "Stock Equivalent Units" (rounded to the nearest
one-ten thousandth of a unit) determined by dividing the amount of such
Directors' Fees by an amount equal to the per share Fair Market Value
of the Common Stock on such date.
(b) On each date on which a dividend payable in cash or property
is paid on the Common Stock, there shall be credited to each Deferred
Stock Account such number of additional Stock Equivalent Units as are
-12-
determined by dividing (1) the amount of the cash or other dividend
which would have then been payable on the number of shares of Common
Stock equal to the number of Stock Equivalent Units (including
fractional shares) then represented in such Account by (2) an amount
equal to the per share Fair Market Value of the Common Stock on such
date. If the date on which a dividend is paid on the Common Stock is
the same date as of which Directors' Fees are to be converted into
Stock Equivalent Units, the dividend equivalent to be credited to such
Account under this paragraph 8 shall be determined after giving effect
to the conversion of the credit balance in such Account into Stock
Equivalent Units.
(c) The number of Stock Equivalent Units credited to a
Participant's Deferred Stock Account shall be adjusted (to the nearest
one-ten thousandth of a unit) to reflect any change in the Common Stock
resulting from a stock dividend, stock split-up, combination,
recapitalization or exchange of shares, or the like.
9. 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).
-13-
(2) In the event a Participant ceases to be a Director because of
his death or in connection with a Change of Control of the Company,
payment of the balance of his Deferred Cash Account and Deferred
Stock Account shall be made in a lump sum as of the last day of the
fiscal quarter coincident with or immediately subsequent to the
Participant's Termination of Service.
(b) A Participant may 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 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:
(A) fiscal quarter in which distribution of the Participant's
Accounts shall begin (but in no event (i) earlier than the
Director's Termination of Service or (ii) later than the earlier
of (a) the Director's 70th birthday or (b) the date five years
after the date of the Director's Termination of Service; and
(B) 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 the first day of the first fiscal year which begins next
subsequent to the fiscal year in which (1) such election has been made
and (2) such election has been approved by the Board.
(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
-14-
following the date on which such Participant's Termination of Service
occurs or each other later fiscal quarter as the Participant may have
specified.
(1) In the case of a Deferred Cash Account with respect to which
installment payments were elected, the amount of each quarterly
installment shall be determined by dividing the credit balance in
such Account as of the distribution date by the number of
installments then remaining unpaid. The credit balance in such
Account shall then be reduced by the amount of each distribution
out of such Account.
(2) In the case of a Deferred Stock Account with respect to which
installment payments were elected, the amount to be distributed as
each quarterly installment shall be determined as follows: (A)
multiply the number of Stock Equivalent Units (including any
fraction thereof) then reflected in such Account by the Fair Market
Value of the Common Stock on such date; (B) add to the product so
determined the amount (if any) which has been credited to such
Account but which has not been converted into Stock Equivalent
Units; and (C) divide the total so obtained by the number of
installments then remaining unpaid. The number of Stock Equivalent
Units represented in a Deferred Stock Account shall be reduced
forthwith by that number (rounded to the nearest one-ten thousandth
of a unit) determined by dividing the amount of the distribution by
the Fair Market Value of the Common Stock taken into account for
purposes of clause (A) of the preceding sentence.
In the event that a Participant dies after receiving payment of some,
but less than all, of the entire amount to which such Participant is
entitled under this Plan, the unpaid balance shall be paid in a lump
sum to the Participant's Beneficiary.
-15-
(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 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, 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, be paid to the Participant's legal representative, or to any
other person for his benefit and in such case, the Board may in its
sole discretion, accelerate the time for payment of any one or more
installments remaining unpaid.
11. MISCELLANEOUS.
(a) This Plan shall be effective upon adoption by the Board.
(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, or
to be re-elected to the Board.
-16-
(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 shall have all powers necessary to administer this
Plan, including all powers of Plan interpretation, of determining
eligibility, and the effectiveness of elections, and of deciding all
other matters relating to the Plan; provided, however, that no
Participant shall take part in any discussion of, or vote with respect
to, a matter of Plan administration which is personal to him, and not
of general applicability to all Participants. All decisions of the
Board shall be final as to any Participant under this Plan.
(f) The Board 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.
-17-