WAUSAU-MOSINEE PAPER CORPORATION
DIVIDEND EQUIVALENT PLAN
As amended March 4, 1999
WAUSAU MOSINEE PAPER CORPORATION
DIVIDEND EQUIVALENT PLAN
1. PURPOSE.
The purpose of the Wausau-Mosinee Paper Corporation Dividend
Equivalent Plan (the "Plan") is to attract and retain outstanding
individuals as officers and key employees of Wausau-Mosinee Paper
Corporation (the "Company") and its subsidiaries, and to furnish
incentives to such individuals through rewards based upon the
performance of the Company and its common stock. To this end, the
Committee hereinafter designated may grant dividend equivalents to
officers and other key employees of the Company 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 Company and its subsidiaries as the Committee in
its sole discretion may select from time to time to receive dividend
equivalents.
3. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by a committee (the "Committee")
consisting of at least two members designated by the Board of Directors
of the Company from among those of its members who are not officers or
employees of the Company or a parent or subsidiary of the Company and
who otherwise satisfy the definition of a "Non-Employee Director" in
Rule 16b-3(b)(3) promulgated under Section 16 of the Securities
Exchange Act of 1934 (the "Exchange Act"). In the absence of specific
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rules to the contrary, action by the Committee shall require the
consent of a majority of the members of the Committee, expressed either
orally at a meeting of the Committee or in writing in the absence of a
meeting. Subject to the provisions of the Plan, the Committee shall
have authority (a) to determine which employees of the Company and its
subsidiaries shall be eligible for participation in the Plan; (b) to
select employees to receive grants under the Plan; (c) to determine the
number of dividend equivalents subject to the grant, the time and
conditions of vesting, and all other terms and conditions of any grant;
(d) to determine the fair market value of the common stock of the
Company for purposes of the Plan; and (e) 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 dividend equivalents
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 June 19, 1991, the date of its
approval by the Board of Directors of the Company. 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.
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5. SHARES SUBJECT TO THE PLAN.
Subject to adjustment as provided in Section 7 hereof, the
aggregate number of shares of common stock of the Company with respect
to which dividend equivalents may be granted under the Plan shall not
exceed 250,000. Whenever dividend equivalents granted under the Plan
are forfeited, the shares subject to such dividend equivalents shall
thereupon be released from such dividend equivalents and shall
thereafter be available for additional grants of dividend equivalents
under the Plan.
6. DIVIDEND EQUIVALENTS.
(a) Grants. Dividend equivalents entitling the grantee to receive
cash equal to the value of the hypothetical reinvested cash dividends
(defined below) which would have been paid with respect to a stated
number of shares of common stock of the Company between the date of
grant and the date of termination of the grantee's employment with the
Company and its subsidiaries may be granted from time to time to such
officers and other key employees of the Company and its subsidiaries as
may be selected by the Committee.
(b) Vesting of Grant. Dividend equivalents shall vest in whole or
in such installments and at such times as may be determined by the
Committee.
(c) Payment. The value of dividend equivalents granted prior to
December 16, 1996 shall be paid to the grantee (or his beneficiary in
the event of his death) in the amount determined in accordance with
this Section 6(c) upon the grantee's termination of employment with
the Company and its subsidiaries; provided, however, if the grantee's
termination occurred on his Retirement Date, the value of such dividend
equivalents shall be paid to the grantee (or his beneficiary in the
event of his death) on the first to occur of (i) his Retirement Date
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if the grantee had exercised a stock option granted in tandem with the
grant of such dividend equivalents on or before such Retirement Date,
(ii) if the grantee had not exercised a stock option granted in tandem
with the grant of such dividend equivalents on or before such
Retirement Date, the first date after his Retirement Date on which the
grantee exercises such stock option granted in tandem with the grant of
such dividend equivalents, and (iii) the second anniversary of such
grantee's Retirement Date; provided, however, in each case, that only
the value of such proportion of the dividend equivalent as it
corresponds to the proportion of shares subject to such option as are
exercised shall be paid. The value of dividend equivalents granted on
or after December 16, 1996 shall be paid to the grantee (or his
beneficiary in the event of his death) in the amount determined in
accordance with this Section 6(c) upon the first to occur of (i) the
grantee's termination of employment with the Company and its
subsidiaries and (ii) the date on which the grantee exercises a stock
option granted in tandem with the grant of such dividend equivalents;
provided, however, if the grantee's termination occurred on his
Retirement Date, the value of such dividend equivalents shall be paid
to the grantee (or his beneficiary in the event of his death) on the
first to occur of (i) the first date after his Retirement Date on which
the grantee exercises a stock option granted in tandem with the grant
of such dividend equivalents and (ii) the second anniversary of such
grantee's Retirement Date; provided, however, in each case, that only
the value of such proportion of the dividend equivalent as corresponds
to the proportion of shares subject to such option as are exercised
shall be paid. For purposes of this Plan, the term "Retirement Date"
shall mean the date on which the grantee's employment with the Company
(and any parent or subsidiary of the Company) terminates (including
termination because of death) if the grantee had
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then attained age 55 and completed ten calendar years of service with
the Company (or any parent or subsidiary of the Company). An option
shall be deemed to have been granted in tandem with a grant of dividend
equivalents if such option grant was made at or about the same date,
relates to the same number of shares of common stock and is subject to
the same conditions on vesting or exercise the grant of such dividend
equivalents. The value of the dividend equivalents to be paid pursuant
to this Section 6(c) shall be an amount in cash equal to the value of
the hypothetical reinvested cash dividends associated with the
aggregate number of shares of common stock of the Company with respect
to which such dividend equivalents have been granted to the grantee.
The value of the hypothetical reinvested cash dividends associated with
a share of common stock of the Company in respect of which a dividend
equivalent has been granted shall be equal to the fair market value on
the date of payment of the value of such dividend equivalents is
provided for herein of the number of shares (or fraction thereof) of
the Company's common stock which the grantee would have owned if it is
assumed (i) that cash dividends which would have been paid with respect
to the share if the share had been outstanding from the date of grant
of the dividend equivalent 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 (ii) 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
Company's outstanding common stock) which were reinvested in a similar
manner.
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(d) Additional Terms and Conditions. The agreement or instrument
evidencing the grant of dividend equivalents may contain such other
terms, provisions and conditions not inconsistent with the Plan as may
be determined by the Committee in its sole discretion. The Committee
may at the time of grant or at any time thereafter impose such
additional terms and conditions on dividend equivalents 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.
7. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION, ETC.
Dividend equivalents shall be subject to adjustment by the
Committee in its sole discretion as to the number of shares subject to
such grants in the event of changes in the outstanding common stock of
the Company by reason of stock dividends, stock splits,
recapitalizations, reorganizations, mergers, consolidations,
combinations, exchanges or other relevant changes in corporate
structure or capitalization occurring after the date of the grant of
any dividend equivalent, provided that if the Company 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
dividend equivalents 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 or in any dividend equivalent granted
under the Plan shall in any way prohibit the Company from merging with
or consolidating into another company, 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
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from dissolving and terminating its corporate existence; and in any
such event, payment shall be made with respect to all then outstanding
dividend equivalents (whether or not then vested) as if all of the
grantees of such dividend equivalents had terminated employment with
the Company and its subsidiaries at the time of 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 dividend equivalents and the
rights of the grantees under such dividend equivalents.
9. AMENDMENT AND TERMINATION OF PLAN.
The Plan may be amended or terminated by the Board of Directors of
the Company in any respect; provided, however, that the Board shall not
exercise such authority in a manner adversely and significantly
affecting dividend equivalents previously granted unless the action
taken is required to comply with any applicable law or regulation.
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 dividend equivalent.
(b) Rights as Stockholder. No person shall have any rights as a
stockholder of the Company with respect to any shares covered by
dividend equivalents.
(c) Employment. Nothing contained in this Plan shall be deemed to
confer upon any employee any right of continued employment with the
Company or any of its subsidiaries or to limit or diminish in any way
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the right of the Company or any such subsidiary to terminate his or her
employment at any time with or without cause.
(d) Taxes. The Company 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 Company prior to and as a condition of making
such payment.
(e) Nontransferability. No dividend equivalent shall be
transferable.
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 promulgated under the Exchange Act) of 20% or more of
either (A) the then outstanding Shares (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: (1) 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, (2) any acquisition by the Company, (3) any acquisition by
any employee benefit plan (or related trust) sponsored or
maintained by the Company or any entity controlled by the Company,
(4) any acquisition pursuant to a transaction which complies with
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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
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 (6) shall not apply to any acquisition of
Outstanding Company Common Stock or Outstanding Company 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% or more of
either the Outstanding Company Common Stock or Outstanding Company
Voting Securities by reason of share purchases by the Company; 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
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 deemed
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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 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
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Transaction, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no
Person (other than the Company, 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
(iv) 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
(v) 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
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(vi) The approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
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 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 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
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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 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. In the event of a Change in
Control,
(i) all dividend equivalents outstanding on the date on which
such Change in Control has occurred (the "Change in Control Date")
shall, to the extent not then vested, immediately become vested in
full, and
(ii) each grantee may elect, with respect to each dividend
equivalent held by such grantee on the Change in Control Date (the
grantee's "Election Right"), to surrender such dividend equivalent
for an immediate lump sum cash payment in an amount equal to the
value of the hypothetical reinvested cash dividends associated with
the aggregate number of shares of common stock of the Company with
respect to which such dividend equivalents have been granted to the
grantee; provided, however, that the value of such hypothetical
reinvested cash dividends shall be determined by the greater of (A)
the Change in Control Price or (B) the highest fair market value
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of a share of common stock 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 of common stock 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
other noncash consideration shall be determined in the sole
discretion of the Committee.
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