Amended Through
October 29, 1988
COMPOSITE
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1985 SUPPLEMENT
TO
THE MEAD CORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS*
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WHEREAS, The Mead Corporation Deferred Compensation Plan for Directors
("Plan") was established for compensation earned on and after January 1, 1982,
for the benefit of eligible Directors; and
WHEREAS, the Plan has been amended on prior occasions; and
WHEREAS, it is currently desirable to supplement the Plan effective August
1, 1985 (the "Effective Date").
NOW THEREFORE, with respect only to amounts on the Deferred Compensation
Ledger on the Effective Date, amounts of 1985 earned compensation for which a
deferral election is in force on the Effective Date under Plan Section 4, and
amounts of compensation deferral permitted under this Supplement, the following
provisions determine Director rights and Company obligations under the Plan. All
other provisions of the Plan, to the extent not in conflict with this
Supplement, shall continue in effect.
(1) Amounts covered under the terms of this Supplement shall, on and
after the Effective Date, be maintained in a separate record (hereinafter
referred to as the "Supplemental Ledger").
(2) Contributions of an equal percentage of each compensation payment
earned during 1986 may be made to the Plan through December 31, 1986.
Participation through compensation deferral shall include annual retainer and
meeting fees but exclude expense reimbursement.
(3) The Director shall elect, on or before September 30, 1985, that all or
a portion of his/her account in the Supplemental Ledger be distributed under
Option A or under Option B or be divided between them.
(a) OPTION A - The Director or his/her Beneficiary will receive
fifteen (15 level annuity payments from his/her account in the Supplemental
Ledger commencing on the January 2 next following his/her Termination Date
or such later January 2 as shall have been chosen by the Director, but not
later than the January 2 of the Year following the year in which he/she
becomes or would have become age 72, the date chosen by him/her being
hereafter referred to as the "Annuity Starting Date."
(b) OPTION B - Commencement, method, and duration will be the same as
under Option A, except that four (4) additional annual payments commencing
on January 3, 1993 (hereinafter referred to in the aggregate as the "Annual
Payments"), shall be paid to the Director. The Annual Payments shall reduce
the amount otherwise payable to the Director or his/her Beneficiary on
his/her Annuity Starting Date in accordance with Option A. Each annual
installment of a Director's Annual Payments shall be equal to the pro rata
amount designated for Option B of the total of (i) amounts that were in the
Deferred Compensation Ledger on the Effective Date, (ii) amounts of 1985
earned compensation for which a deferred election is in force on the
Effective Date, and (iii) amounts of compensation deferral elected under
the terms of this Supplement. Notwithstanding the foregoing, no payment of
an annual installment of a Director's Annual Payments shall be made if such
installment coincides with or follows a Director's Annuity Starting Date.
Any annual installment of a Director's Annual Payments not made in
accordance with the preceding sentence shall be included in valuing the
Supplemental Ledger in accordance with (4) below.
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*This is a composite of the 1985 Supplement to The Mead Corporation
Deferred Compensation Plan for Directors, reflecting the supplement and all
amendments adopted through October 29, 1988. The Mead Corporation Deferred
Compensation Plan for Directors is set forth in a separate document.
Except as otherwise provided, election of Option A or Option B under the
foregoing paragraph shall be irrevocable and may not be subsequently changed.
Notwithstanding the Director's election of Option A or Option B, if this
Supplement is terminated prior to, or if his/her Termination Date for reasons
other than death or disability, precedes his/her 55th birthday, distribution of
his/her account in the Supplemental Ledger shall be made in one lump sum payment
on or before the last day of the month next following the date of such
occurrence. If the Director's Termination Date occurs due to death or
disability prior to his/her 55th birthday and the value of his/her account on
such Termination Date is less than $50,000, such account shall also be so
distributed in one lump sum. If the Director dies on or after his/her Annuity
Starting Date, remaining annuity installments, if any, shall continue to be
paid from the Plan. In all cases of death, a lump sum payment or a commencement
or continuation of a level annuity shall be to the Beneficiary designated
pursuant to Section 5(d) of the Plan.
An Annuity Starting Date and/or the number of installments chosen by the
Director may be changed by the Compensation Committee, in its sole discretion,
but only, unless the Compensation Committee determines otherwise, in the event
of a severe financial hardship to the Director resulting from a sudden and
unexpected illness or accident to the Director or a dependent (as defined in
Section 152(a) of the Internal Revenue Code) of the Director, loss of the
Director's property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
the Director. In the event a change made pursuant to this paragraph affects a
Director who is a member of the Compensation Committee, such Director shall not
participate in the Compensation Committee's decision. The number of installments
payable to the Participant's designated Beneficiary may be changed by the
Compensation Committee on the same basis as set forth in this paragraph.
In the event the Termination Date of a Director who has elected Option B
occurs (for reasons other than death or disability) before receipt of all the
Annual Payments to which the Director is entitled, remaining payments to which
the Director or his/her Beneficiary shall be entitled shall be calculated as if
the Director had elected Option A. If such Director shall have received one or
more but not all of the Annual Payments, his/her Supplemental Ledger account
shall be valued pursuant to (4) below as if it had been reduced on the Effective
Date by the Effective Date value of Annual Payments received (discounted at
Basic plus Option B Incremental Rate) and credited thereafter with the Basic
plus Option A Incremental Rate. In the event the Termination Date of such a
Director precedes receipt of all Annual Payments because of death or disability,
or in the event all Annual Payments are not made due to coincidence with annuity
payments on or after the Annuity Starting Date, the Director or Beneficiary
shall receive payments from the Supplemental Ledger valued at the Basic plus
Option B Incremental Rate less any Annual Payments received by the Director.
(4) Except as provided below, the Director's Supplemental Ledger account
shall be valued on the Annuity Starting Date or earlier distribution date if
applicable, according to whichever of the following (a) or (b) produces the
highest value:
(a) as if all amounts had remained in the Deferred Compensation
Ledger on the Effective Date in their separate accounts established
pursuant to Section 5(a) of the Plan and were credited pursuant to Plan
Section 5(b) in the absence of this Supplement; or
(b) by crediting the Director's Supplemental Ledger account each Year
(with pro rata adjustment for partial years) with a percentage equal to the
nine-month average composite yield on single A bonds rounded to the nearest
1/10 of 1% as published in the S&P Indexes of the Security Markets for the
first nine months of the Second Calendar Year preceding the year such
percentage is credited (hereinafter referred to as the "Basic Rate"), PLUS
a percentage (hereinafter referred to as the "Incremental Rate") based on
the Director's age on the Effective Date and his/her choice of Option A or
Option B according to the following table:
Incremental Rate
Age Option A Option B
--- -------- --------
39 and under 4% 7%
40-44 5% 8%
45-49 7% 9%
50-54 8% 10%
55-59 11% 11%
60 and over 12% --
(2)
In no event, however, shall the valuation reflect the addition of the
Incremental Rate to the Basic Rate if the Director's Termination Date (for
reasons other than death or disability) precedes his/her 55th birthday, or if
prior to his/her 55th birthday, a distribution is made to a Director due to
adverse tax or economic consequences.
(5) All level annuities paid under this Supplement shall be computed using
an interest rate percentage equal to an average of the valuation percentages
credited under (4) above during the three-year period immediately preceding the
Year in which the first annuity payment is made to a Director.
(6) Except as provided in (7) below, the Board of Directors of the Company
may amend or terminate the Plan or this Supplement as provided in Section 7 of
the Plan.
(7) Notwithstanding any other provision contained herein, in no event,
including but not limited to termination or amendment of the Plan or Supplement
or liquidation or reorganization of the Company:
(a) shall a Director who has not reached his/her 55th birthday receive
less than the amount credited to the Director's Supplemental Ledger account
with interest at the Basic Rate, or the total amounts credited to his/her
Deferred Compensation Ledger accounts as provided in (4)(a) above, if
greater;
(b) shall the Basic Rate and Incremental Rate of interest which has
been or will be credited to the account of a Director who has reached
his/her 55th birthday, or the interest rate percentage for level annuities
provided in (5) above, be changed unless the tax laws of the United States
change to increase the cost of the Incremental Rate to the Company in which
event the Incremental Rate may be adjusted only to the extent necessary to
reflect such change in cost, nor shall the rights of the Director or
Beneficiary to commence or continue distributions from the Supplemental
Ledger (including its valuation) be affected.
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1. Adopted effective August 1, 1985.
2. Amendments to Section (3) and (5) adopted effective as of October 1,
1987.
(3)