WAUSAU-MOSINEE PAPER CORPORATION
1988 STOCK APPRECIATION RIGHTS PLAN
As amended March 4, 1999
WAUSAU-MOSINEE PAPER CORPORATION
1988 STOCK APPRECIATION RIGHTS PLAN
1. PURPOSE.
The purpose of the Wausau-Mosinee Paper Corporation 1988 Stock
Appreciation Rights Plan (the "Plan") is to attract and retain
outstanding individuals as officers and key employees of Wausau-Mosinee
Paper Corporation (the "Corporation") and its subsidiaries, and to
furnish incentives to such individuals through rewards based upon the
performance of the common stock of the Corporation. To this end, the
Committee hereinafter designated may grant stock appreciation rights to
officers and other key employees of the Corporation and its
subsidiaries, on the terms and subject to the conditions set forth in
this Plan.
2. PARTICIPANTS.
Participants in the Plan shall consist of such officers and other
key employees of the Corporation and its subsidiaries as the Committee
in its sole discretion may select from time to time to receive stock
appreciation rights.
3. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by a Committee (the "Committee") of
at least three members appointed by the Board of Directors of the
Corporation from among its members. No person shall be appointed a
member of the Committee if, during the one year prior to the date on
which such person's service as a member of the Committee is to
commence, such person was granted or awarded equity securities of the
Corporation (within the meaning of Securities and Exchange Commission
Rule 16a-1(d)) under the Plan or any other plan of the Corporation or
any subsidiary of the Corporation. Subject to the provisions of the
Plan, the Committee shall have authority (i) to determine which
employees of the Corporation and its
-1-
subsidiaries shall be eligible for participation in the Plan; (ii) to
select employees to receive grants under the plan; (iii) to determine
the number of stock appreciation rights subject to the grant, the time
and conditions of exercise or vesting, the fair market value of the
common stock of the Corporation for purposes of the Plan, and all other
terms and conditions of any grant; and (iv) to prescribe the form of
agreement, certificate or other instrument evidencing the grant. The
Committee shall also have authority to interpret the Plan and to
establish, amend and rescind rules and regulations for the
administration of the Plan, and all such interpretations, rules and
regulations shall be conclusive and binding on all persons, provided,
however, that the Committee shall not exercise such authority in a
manner adversely and significantly affecting rights previously granted
unless the action taken is required to comply with any applicable law
or regulation.
4. EFFECTIVE DATE AND TERM OF PLAN.
The Plan shall become effective on July 20, 1988, the date of its
approval by the Board of Directors of the Corporation. The Plan shall
terminate ten years after it becomes effective, unless terminated
sooner by action of the Board of Directors. No further grants may be
made under the Plan after its termination, but the termination of the
Plan shall not affect the rights of any participant under, or the
authority of the Committee with respect to, any grants made prior to
termination.
5. SHARES SUBJECT TO THE PLAN.
Subject to adjustment as provided in paragraph 7 hereof, the
aggregate number of shares of common stock of the Corporation with
respect to which stock appreciation rights may be granted under the
Plan shall not exceed 25,000. Whenever a stock appreciation right
granted under the Plan can no
-2-
longer under any circumstances be exercised, the shares, if any, then
remaining subject to such stock appreciation right shall thereupon be
released from such stock appreciation right and shall thereafter be
available for additional grants of stock appreciation rights under the
Plan.
6. STOCK APPRECIATION RIGHTS.
(a) Grants. Stock appreciation rights entitling the grantee to
receive cash equal to the sum of (i) the appreciation in value of and
(ii) the value of the reinvested cash dividends which would have been
paid with respect to a stated number of shares of common stock of the
Corporation between the date of grant and the date of exercise (the
"hypothetical reinvested cash dividends") may be granted from time to
time to such officers and other key employees of the Corporation and
its subsidiaries as may be selected by the Committee.
(b) Terms of Grant. Stock appreciation rights shall be
exercisable in whole or in such installments and at such times as may
be determined by the Committee, provided that no stock appreciation
right shall be exercisable more than twenty years after the date of
grant. The Committee may at the time of grant or at any time
thereafter impose such additional terms and conditions on the exercise
of stock appreciation rights as it deems necessary or desirable for
compliance with Section 16(a) or 16(b) of the Securities Exchange Act
of 1934 and the rules and regulations thereunder.
(c) Termination of Employment or Death. If a grantee ceases to
be employed by the Corporation and any of its subsidiaries for any
reason other than death or attaining his Retirement Date, any stock
appreciation right held by such grantee may be exercised for a period
ending on the earlier of the 90th day following the date of such
cessation of employment
-3-
or the date of expiration of such stock appreciation right, but only
with respect to that number of shares of common stock for which such
right was exercisable immediately prior to the date of cessation of
employment.
If a grantee ceases to be employed by the Corporation or any of its
subsidiaries by reason of death prior to his Retirement Date, or dies
within 90 days after termination of his employment by the Corporation
or any of its subsidiaries prior to his having attained his Retirement
Date, any stock appreciation right held by such grantee may be
exercised, with respect to all or any part of the common stock of the
Corporation with respect to which such stock appreciation right was
exercisable by the grantee immediately prior to his death, for a period
ending on the first anniversary of the date of such grantee's death.
If a grantee attains his Retirement Date, any stock appreciation
right held by such grantee may be exercised for a period ending on the
second anniversary of such Retirement Date, but only with respect to
that number of shares of common stock for which such right was
exercisable immediately prior to the date of cessation of employment.
Notwithstanding any other provision of this Section 6(c), no stock
appreciation right shall be exercisable after the first to occur of (1)
the date specified in Section 6(b) or (2) the date specified by the
Committee in the grant evidencing such rights.
For purposes of this Plan, the term "Retirement Date" shall mean
the date on which the grantee's employment with the Corporation (and
any parent or subsidiary of the Corporation) terminates (including
termination because of death) if the Optionee had then attained age 55
and completed ten calendar years of service with the Corporation (or
any parent or subsidiary of the Corporation).
-4-
(d) Payment on Exercise. Upon exercise of a stock appreciation
right the grantee shall be paid within five business days an amount in
cash equal to the sum of (i) the amount by which the fair market value
of one share of the Corporation's common stock on the date of exercise
exceeds the date of grant value thereof multiplied by the number of
shares in respect of which the stock appreciation right is being
exercised and (ii) the value of the hypothetical reinvested cash
dividends associated therewith. The value of the hypothetical
reinvested cash dividends associated with a share in respect of which
the stock appreciation right is being exercised (the "exercised share")
shall be equal to the fair market value on the date of exercise of the
number of additional shares (or fraction thereof) of the Company's
common stock the grantee would have owned if it is assumed (1) that
cash dividends which would have been paid with respect to the exercised
share if the exercised share had been outstanding from the time of
grant had been paid in cash to the grantee and then immediately
reinvested by the grantee in the Company's common stock at the fair
market value thereof on the applicable dividend payment date, and (2)
that, once assumed issued, hypothetical shares resulting from assumed
dividend reinvestment themselves paid cash dividends (at the same time
and in the same amount as shares of the Corporation's outstanding
common stock) which were reinvested in a similar manner.
For purposes of this paragraph, the fair market value of a share of
common stock of the Corporation means:
(A) The mean between the high and the low prices at
which the common stock of the Corporation was traded if the
common
-5-
stock of the Corporation was then listed for trading on a
national or regional securities exchange; or
(B) The mean between the published bid and asked prices
of the common stock of the Corporation if the common stock of
the Corporation was then traded on a bona fide over-the
-counter market; or
(C) If the common stock of the Corporation was not
traded on an exchange or on a bona fide over-the-counter
market, a value determined by an appraiser selected by the
Committee.
In the event that the date of the exercise of a stock appreciation
right is a date on which there is no trading of the common stock of the
Corporation on a national or regional securities exchange or is a date
for which there is no published bid and asked prices if the stock is
traded on the over-the-counter market, such fair market value shall be
determined by referring to the next preceding business day on which
trading occurs or on which published prices are available.
(e) Additional Terms and Conditions. The agreement or instrument
evidencing the grant of stock appreciation rights may contain such
other terms, provisions and conditions not inconsistent with the Plan
as may be determined by the Committee in its sole discretion.
7. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION, ETC.
Stock appreciation rights shall be subject to adjustment by the
Committee in its sole discretion as to the number, kind and date of
grant value of shares or other consideration subject to such grants in
the event of changes in the outstanding common stock by reason of stock
dividends, stock splits, recapitalizations, reorganizations, mergers,
consolidations,
-6-
combinations, exchanges or other relevant changes in corporate
structure or capitalization occurring after the date of the grant of
any stock appreciation right, provided that if the Corporation shall
change its common stock into a greater or lesser number of shares
through a stock dividend, stock split-up, or combination of shares,
outstanding rights shall be adjusted proportionately, consistent with
existing law and regulation, to prevent inequitable results.
8. EFFECT OF LIQUIDATION, MERGER, CONSOLIDATION OR OTHER EVENTS.
Nothing contained in the Plan of in any stock appreciation right
granted under the Plan shall in any way prohibit the Corporation from
merging with or consolidating into another corporation, or from selling
or transferring all or substantially all of its assets, or from
distributing all or substantially all of its assets to its stockholders
in liquidation, or from dissolving and terminating its corporate
existence; and in any such event, all outstanding stock appreciation
rights granted under the Plan shall be deemed to have been exercised at
the time of any such merger, consolidation, sale or transfer of assets,
liquidation, or dissolution, except to the extent that any agreement or
undertaking of any party to such merger, consolidation, or sale or
transfer of assets, or any plan pursuant to which such liquidation or
dissolution is effected, shall make specific provision to continue such
stock appreciation rights and the rights of such person or persons
entitled to exercise such stock appreciation rights.
9. AMENDMENT AND TERMINATION OF PLAN.
The Plan may be amended or terminated by the Board of Directors of
the Corporation in any respect, provided, however, that the Board
shall not exercise such authority in a manner adversely and
significantly affecting rights previously granted unless the action
taken is required to comply with any applicable law or regulation.
-7-
10. MISCELLANEOUS.
(a) No Right to a Grant. Neither the adoption of the Plan nor any
action of the Board of Directors or of the Committee shall be deemed to
give any employee any right to be selected as a participant or to be
granted a stock appreciation right.
(b) Rights as Stockholder. No person shall have any rights as a
stockholder of the Corporation with respect to any shares covered by a
stock appreciation right.
(c) Employment. Nothing contained in this Plan shall be deemed to
confer upon any employee any right of continued employment with the
Corporation or any of its subsidiaries or to limit or diminish in any
way the right of the Corporation or any such subsidiary to terminate
his or her employment at any time with or without cause.
(d) Taxes. the Corporation shall be entitled to deduct from any
payment under the Plan the amount of any tax required by law to be
withheld with respect to such payment or may require any participant to
pay such amount to the Corporation prior to and as a condition of
making such payment.
(e) Nontransferability. No stock appreciation right shall be
transferable except by will or the laws of descent and distribution.
During the holder's lifetime, stock appreciation rights shall be
exercisable only by such holder.
11. CHANGE IN CONTROL.
(a) Definition of "Change in Control." For purposes of the Plan,
a "Change in Control" means the happening of any of the following
events:
(i) 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
-8-
promulgated under the Exchange Act) of 20% or more of either (A)
the then outstanding shares of common stock of the Corporation (the
"Outstanding Corporation Common Stock") or (B) the combined voting
power of the then outstanding voting securities of the Corporation
entitled to vote generally in the election of directors (the
"Outstanding Corporation Voting Securities"); excluding, however,
the following: (1) any acquisition directly from the Corporation
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 Corporation, (2) any acquisition by the
Corporation, (3) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Corporation or any
entity controlled by the Corporation, (4) any acquisition pursuant
to a transaction which complies with clauses (A), (B), and (C) of
paragraph (iii) of this Section 11(a), (5) except as provided in
paragraphs (iv) and (v), any acquisition by any of the Woodson
Entities or any of the Smith Entities, or (6) any increase in the
proportionate number of shares of Outstanding Corporation Common
Stock or Outstanding Corporation 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 Corporation Common Stock or Outstanding
Corporation Voting Securities by the Corporation; provided,
however, that this clause (6) shall not apply to any acquisition of
Outstanding Corporation Common Stock or Outstanding Corporation
Voting Securities not described in clauses (1), (2), (3), (4), or
(5) of this paragraph (i) by the Person acquiring such shares which
occurs after such Person had become the beneficial owner of 20%
-9-
or more of either the Outstanding Corporation Common Stock or
Outstanding Corporation Voting Securities by reason of share
purchases by the Corporation; or (ii) 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 Corporation'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
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 (iii) Consummation of a reorganization, merger
or consolidation, or sale or other disposition of all or
substantially all of the assets of the Corporation 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
-10-
of the individuals and entities who are the beneficial owners,
respectively, of the Outstanding Corporation Common Stock and
Outstanding Corporation 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 Corporation or all or substantially all of the
Corporation'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 Corporation Common Stock
and Outstanding Corporation Voting Securities, as the case may be,
(B) no Person (other than the Corporation, any employee benefit
plan (or related trust) of the Corporation, 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 Corporation 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
-11-
(iv) The Woodson Entities acquire beneficial ownership of
more than 35% of the Outstanding Corporation Common Stock or
Outstanding Corporation 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 (v) The Smith Entities acquire beneficial
ownership of more than 35% of the Outstanding Corporation
Common Stock or Outstanding Corporation 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 (vi) The approval by the shareholders of the
Corporation of a complete liquidation or dissolution of the
Corporation.
For purposes of this Section 11(a), the term "Woodson Entities" shall
mean Aytchmonde P. Woodson, Leigh Yawkey Woodson and Alice Richardson
Yawkey, members of their respective families and their 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
-12-
of the foregoing or any charitable trust or foundation to which any of
the foregoing transfers or may transfer securities of the Corporation
(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 Section 11(a), 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 Corporation (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 Section 11(a), 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.
(b) Effects of Change in Control.
(i) In the event of a Change in Control,
-13-
(A) all stock appreciation rights ("SARs") outstanding
on the date on which such Change in Control has occurred (the
"Change in Control Date") shall, to the extent not then
exercisable or vested, immediately become exercisable in full,
and
(B) each grantee may elect, with respect to each SAR
held by such grantee on the Change in Control Date (the
grantee's "Election Right"), to surrender such SAR for an
immediate lump sum cash payment in an amount equal to the
product of (1) the number of shares of common stock of the
Corporation ("Shares") then subject to the SAR as to which the
election is being exercised, multiplied by (2) the excess, if
any, of (a) the greater of (i) the Change in Control Price or
(ii) the highest Fair Market Value of a Share on any day in
the 60-day period ending on the Change in Control Date, over
(b) the date of grant value of such SAR. Upon exercise of a
grantee's Election Right, the value of all hypothetical
reinvested cash dividends associated with such SAR shall also
be determined by the greater of (i) the Change in Control
Price or (ii) the highest Fair Market Value of a Share on any
day in the 60-day period ending on the Change in Control Date.
For purposes of this Section 11(b), the "Change in Control
Price" shall mean, if the Change in Control is the result of a
tender or exchange offer or a Corporate Transaction (as
defined in Section 11(a)(iii), the highest price per Share
paid in such tender or exchange offer or Corporate
Transaction. To the extent that the consideration paid in any
such transaction consists all or in part of securities or
other noncash consideration, the value of such securities or
-14-
other noncash consideration shall be determined in the sole
discretion of the Committee.
(ii) The exercise of an Election Right must be in writing,
specify the SAR or SARs and the number of Shares as to which the
election is being exercised, and be delivered to the Secretary of
the Corporation either in person or by depositing said notice and
payment in the United States mail, postage pre-paid and addressed
to such officer at the Corporation's home office on or before the
60th day following the Change in Control Date.
(iii) All payments due an grantee pursuant to the provisions
of this Section 11(b) shall be made by the Corporation on or before
the first to occur of (A) the date provided in this Plan for
payment upon exercise of an SAR and (B) the 5th business day
following the date on which the grantee's election has been
delivered to the Corporation pursuant to Section 11(b)(ii).
(iv) Notwithstanding any other provision of this Section
11(b), if the grant or the exercise of a grantee's Election Right
or payment of cash provided for in this Section 11(b)would make a
Change in Control transaction ineligible for pooling-of-interests
accounting treatment under APB No. 16, that, but for the nature of
such grant or exercise of Election Rights, would otherwise be
eligible for such pooling-of-interests accounting treatment, the
Committee shall have the right and authority to modify, eliminate,
or terminate the Election Right to the extent necessary to preserve
such pooling-of-interests accounting treatment.
-15-