-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QS4OJ35kKaSQVIcgEHmKlHUDg/E0yZS7CPTPCPBfUMJMtprYiYhBStohG2pg55Zn 88Rl3BzZ3B8qSEQcbi1QXg== 0000950124-98-007741.txt : 19981230 0000950124-98-007741.hdr.sgml : 19981230 ACCESSION NUMBER: 0000950124-98-007741 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 29 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981228 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIVERSAL FOODS CORP CENTRAL INDEX KEY: 0000310142 STANDARD INDUSTRIAL CLASSIFICATION: BEVERAGES [2080] IRS NUMBER: 390561070 STATE OF INCORPORATION: WI FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-07626 FILM NUMBER: 98776568 BUSINESS ADDRESS: STREET 1: 433 EAST MICHIGAN ST CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4142716755 MAIL ADDRESS: STREET 1: PO BOX 737 CITY: MILWAUKEE STATE: WI ZIP: 53201 10-K 1 FORM 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended September 30, 1998 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ____________ to ____________ Commission File Number 1-7626 UNIVERSAL FOODS CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) WISCONSIN 39-0561070 - ---------------------------------------- -------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 433 EAST MICHIGAN STREET MILWAUKEE, WISCONSIN 53202 - ---------------------------------------- -------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (414) 271-6755 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT Title of each class Name of each exchange on which registered - -------------------------------------- ---------------------------------------- Common Stock, $.10 par value New York Stock Exchange, Inc. Associated Preferred Share Purchase Rights SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT None 2 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 such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days. Yes [ X ] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Indicate the number of shares outstanding of each of the issuer's classes of Common Stock as of December 4, 1998: 53,954,874 shares of Common Stock, $.10 par value, including 2,793,753 treasury shares. Aggregate market value of Universal Foods Corporation Common Stock, excluding treasury shares, held by non-affiliates as of December 4, 1998 was $1,186,069,331. In determining who are affiliates of the Company for purposes of this computation, it is assumed that directors, officers, and any persons filing a Schedule 13D or Schedule 13G are "affiliates" of the Company. The characterization of such directors, officers, and other persons as affiliates is for purposes of this computation only and should not be construed as a determination or admission for any other purpose that any of such persons are, in fact, affiliates of the Company. DOCUMENTS INCORPORATED BY REFERENCE 1. Portions of Universal Foods Corporation Annual Report to Shareholders for the fiscal year ended September 30, 1998 (Parts I, II and IV of Form 10-K) 2. Portions of Universal Foods Corporation Notice of Annual Meeting and Proxy Statement of the Company dated December 15, 1998 (Parts II and III of Form 10-K) 2 3 PART I ITEM 1. BUSINESS -- FOOD AND OTHER INDUSTRIES Universal Foods Corporation (the "Company") was incorporated in 1882 in Wisconsin. Its principal executive offices are located at 433 East Michigan Street, Milwaukee, Wisconsin 53202, telephone (414) 271-6755. DESCRIPTION OF BUSINESS Universal Foods Corporation is an industrial marketer of high-performance components that add functionality to foods, cosmetics, pharmaceuticals and other products. The Company's principal products include: - -- flavors, flavor enhancers, and aroma chemicals for foods, beverages, dairy/ice cream products, animal feed, personal care and household items; - -- certified synthetic and natural colors for foods, cosmetics, specialty inks and pharmaceuticals; - -- dehydrated vegetable products sold primarily to food processors; and - -- a broad line of yeast products for commercial baking and other uses. The Company has organized its business into five divisions: Flavor, Color, Dehydrated Products, Red Star Yeast & Products, and Asia Pacific. FLAVOR DIVISION The Company is a leading manufacturer and supplier of flavors, ingredient systems and aroma chemicals to the dairy, food processing, beverage, personal care and household products industries worldwide. The Company has a broad, distinctive and fully integrated product offering, ranging from savory flavor components to fully formulated flavor systems for dairy, beverage, and processed food applications. During 1998 the Company combined its bioproducts business (which was formerly operated as a separate division known as Red Star BioProducts) with its Flavor Division. The bioproducts business served the food and animal feed processing, as well as the bionutrient industries with a broad line of natural extracts and specialty flavors. The Company produces various specialty extracts from yeast, vegetable proteins, meat, milk protein and other natural products which are used primarily as savory flavor, texture modifiers and enhancers in processed foods. The nutritional and functional properties of these extracts also make them useful in enzyme and pharmaceutical production. The Company believes it is the leading supplier of yeast extracts and the second leading supplier of hydrolized vegetable proteins in the U.S. market. Strategic acquisitions have expanded Universal Flavors' product lines and processing capabilities. The January 1994 acquisition of Destillaciones Garcia de la Fuente, S.A. (DGF), based in Granada, Spain, provided a depth of expertise for expanding into aroma chemicals, which are used to create flavors as well as fragrances. In July 1994, Universal Flavors, through its international subsidiary, purchased its partner's 51% interest in Azteca en Ambesco de Mexico S.A. de C.V. This purchase brought beverages and dairy flavor product lines to the Company's existing Mexican flavor business. In January 1998, the Company acquired Arancia Ingredients Especiales, S.A. de C.V., a manufacturer of savory flavors and 3 4 other food ingredients, improving access to the rapidly growing Latin American savory flavor market. In April 1998, the Company acquired an English savory and seasonings flavor manufacturer, DC Flavours Ltd., which further expanded the Company's technology and worldwide market presence and also gives the Company access to the snack food market, the fastest growing segment in Europe's food market. In May 1998, the acquisition of substantially all of the assets and business of the beverage business of German flavor manufacturer Sundi GmbH, with its emphasis on all-natural flavor ingredients, provided the Company with a point of entry into Germany, Europe's largest flavor market. The Flavor Division operates through the Company's subsidiary, Universal Flavor Corporation and its subsidiaries, with plants in Illinois, Indiana, Michigan, Missouri, Wisconsin, Belgium, Canada, France, Germany, Italy, Mexico, Spain, and the United Kingdom. COLOR DIVISION The Company believes it is the world's leading manufacturer of certified food colors. It makes certified synthetic and natural colors for domestic and international producers of beverages, bakery products, processed foods, confections, pet foods, cosmetics and pharmaceuticals. It also makes ink-jet inks and other high-purity organic dyes. The Color Division operates through the Company's subsidiary, Warner-Jenkinson Company Inc., which has its principal manufacturing facility in Missouri and other subsidiaries with plants in New Jersey, Canada, Mexico, Italy, the United Kingdom, and the Netherlands. The Company became a supplier of ink-jet inks for the ink-jet printer market with the acquisition of Tricon Colors, Inc. in 1997. It produces pharmaceutical colors, ink-jet inks and other high-purity organic dyes in the Tricon plant, which is located in New Jersey. In September 1997, the Company strengthened its presence in Latin America by acquiring certain assets of the food color business of Pyosa, S.A. de C.V., which is located in Monterrey, Mexico. In September 1998, the Company acquired Italian natural color producer Reggiana Antociani S.R.L., a company which specializes in the production of anthocyanin, which is extracted from grape skins for use in fruit juices, flavored teas, wine coolers and fruit fillings, strengthening the Company's offerings in natural colors, the fastest growing segment of the worldwide food colors market. DEHYDRATED PRODUCTS DIVISION The Company believes it is the third largest producer of dehydrated onion and garlic products in the United States. The Company is also one of the largest producers and distributors of chili powder, paprika, chili pepper, oleoresin (a liquid chili pepper used as a highly concentrated coloring agent), and dehydrated vegetables such as parsley, celery and spinach. Domestically, the Company sells dehydrated products to food manufacturers for use as ingredients and also for repackaging under private labels for sale to the retail market and to the food service industry. The Dehydrated Products Division operates in the United States through the Company's subsidiary, Rogers Foods Inc., which has its processing facilities in California. The Company believes it is the leading dehydrator of specialty vegetables in Europe. During 1994 and 1995, the Company acquired three European dehydrated vegetable processors. The acquisitions give the Company a base from which to expand its dehydrated products business internationally, as the acquisitions included processing facilities in Ireland, the Netherlands, and France. These acquisitions also expanded the Company's dehydrated technology base to include freeze drying and frozen vegetables, puffed drying and vacuum drying. Vegetables processed using these technologies rehydrate faster and absorb water more effectively than vegetables processed using straight heat drying methods. This is a benefit with today's convenience foods such as soups, snacks and other dry foods. 4 5 RED STAR YEAST & PRODUCTS DIVISION The Company believes it is the largest North American supplier of yeast to the commercial bakery market. It also exports yeast and related products throughout the world. The Company specializes in the production of baker's yeast in cream (liquid), compressed (semi-solid), and active dry form, as well as nutritional yeast and yeast used in the wine-making process, which are all sold under the RED STAR trademark. The Company sells active dry yeast to food processors for inclusion in bread, pizza, and similar mixes. The Company also manufactures compressed, active dry and fast-acting dry yeast products in ready-to-use packages which are sold on grocery store shelves and in convenient packages for food service use. The Company believes it is the second largest supplier of yeast to the domestic retail market. In 1994, the Company purchased a 20% interest in and entered into an agreement with Minn-Dak Yeast Company, located in North Dakota, for contract manufacturing under the Red Star label and to supply molasses, a major raw material in yeast production. Red Star Yeast & Product's domestic yeast plants are located in Wisconsin, Maryland and California. ASIA PACIFIC DIVISION In 1997, the Company established the Asia Pacific Division as a separate operating Division to focus on marketing its diverse product line in the Pacific Rim under one unified name. Through the Asia Pacific Division, the Company offers a full range of products from its other four divisions as well as products developed by regional technical teams to appeal to local preferences. Sales, marketing and technical functions previously directed by U.S. based divisions are managed through the Asia Pacific Division's headquarters in Singapore. Manufacturing operations are located in Australia, Hong Kong, New Zealand, and the Philippines. RESEARCH AND DEVELOPMENT/QUALITY ASSURANCE The development of specialized products and services is a complex, technical process calling upon the combined knowledge and talents of the Company's research, development and quality assurance personnel. The Company believes that its competitive advantage lies in its ability to work with its customers to develop and deliver high-performance products which address the broad, but unique and distinct, needs of those customers. The Company's research, development and quality assurance personnel make significant contributions toward improving existing products and developing new products tailored to its customer's needs, while providing on-going technical support and know-how to the Company's manufacturing activities. The Company employs approximately 390 people in research, development and quality assurance. Expenditures for research, development and quality assurance in 1998 were $29.4 million compared with $31.5 million in 1997 and $29.8 million in 1996. Of the foregoing amounts, approximately $18.7 million in 1998, $19.7 million in 1997 and $21.4 million in 1996 were research and development expenses as defined by the Financial Accounting Standards Board. As part of its commitment to quality as a competitive advantage, the Company has undertaken efforts to achieve certification to the requirements established by the International Organization for Standardization in Geneva, Switzerland, through its ISO 9000 series of quality standards. Facilities currently certified include Universal Flavors facilities in the United States, Spain, Italy, the United Kingdom and Canada; Warner-Jenkinson facilities in the United States, the Netherlands and United Kingdom; and Dehydrated Products facilities in the United States, Ireland, France and the Netherlands. 5 6 COMPETITION All Company products are sold in highly competitive markets. While no single factor is determinative, the Company's competitive position is based principally on process and applications expertise, quality, technological advances resulting from its research and development, and customer service and support. Because of its highly differentiated products, the Company competes with only a few companies across multiple ingredient lines, and is more likely to encounter competition specific to an individual product. -- Flavor. With the evolution of food processing as a global business, competition to supply the flavor and fragrance industry has taken on an increasingly global nature. Most of the Company's customers do not buy all their flavor or fragrance products from a single supplier. As a result, the Company does not compete with a single company in all product categories. -- Color. Although statistics are not available, the Company believes that it is one of the world's largest producers of synthetic and natural colors. State-of-the-art equipment, the latest process technology, a Color Service Laboratory unequaled in the industry, and the most complete range of synthetic and natural colors constitute the basis for its market leadership position. Strategic acquisitions continue to enhance product and process technology synergies, as well as a growing international presence. -- Dehydrated. Competition for dehydrated onion, garlic, capsicums, carrots and parsley products, the main products of the Dehydrated Products Division, is limited to three main competitors. Competition for other dehydrated business is limited to single, as opposed to multiple, product lines. State-of-the-art dehydration technology, extensive plant breeding and seed development programs, and comprehensive crop management techniques produce consistent, top-quality dehydrated products which helps the Company maintain its competitive position. Competition for dehydrated business is on the basis of quality, customer service and price. -- Yeast. The Company believes that it is the largest supplier of commercial baker's yeast and the second largest supplier of retail yeast in North America. In both the commercial and retail yeast areas, the Company competes with several yeast producers. Competition for the supply of yeast is on the basis of quality, customer service and price. -- Asia Pacific. Because of the broad array of products available to customers of the Asia Pacific Division, the Company is able to offer a wider product base than many of its competitors. Competition is based upon reliability in product quality, service and price as well as technical support available to customers. PRODUCTS AND APPLICATION ACTIVITIES With the Company's strategic focus on high-performance ingredients and ingredient systems, the Company's emphasis is in application activities and processing improvements in the support of its customers' numerous new and reformulated products. The Company maintains many of its proprietary processes and formulae as trade secrets and under secrecy agreements with customers. Lower calorie ingredients and non-nutritive sweeteners for dairy, food and beverage applications are a focus of development activity for Universal Flavors. Formulations for functional and textured beverages and flavors for snack and main meal items offer opportunities as well. Development of savory flavors has accelerated with the integration of the Company's BioProducts Division in 1998. 6 7 The development of natural food colors remains a growth opportunity for the Color Division. With the 1997 acquisition of Tricon Colors, Inc., the Color Division expanded its purification technology, with the primary opportunity in colors for ink-jet printers. European acquisitions in 1994 and 1995 expanded the Dehydrated Products product line to include peas, carrots, beans, potatoes and other specialty vegetables. The Red Star Yeast & Products Division has been producing baker's yeast for over 115 years, serving the commercial and consumer markets. The move to cream yeast and the development of cream yeast delivery systems has revolutionized the commercial baking industry, improving efficiencies and increasing productivity. The development of yeast derivatives and other specialty ingredients provide growth opportunities in bionutrients and biotechnology markets such as pharmaceuticals, vitamins, vaccines and bioremediation. In addition, the discussion of operational activities in the "Business Profile" on Pages 4 and 5 of the 1998 Annual Report to Shareholders is incorporated by reference. RAW MATERIALS In producing its products, the Company uses a wide range of raw materials. Chemicals and petrochemicals used to produce certified colors are obtained from several domestic and foreign suppliers. Raw materials for natural colors, such as carmine, beta carotene, annatto and turmeric, are purchased from overseas and U.S. sources. In the production of flavors, the principal raw materials include essential oils, aroma chemicals, botanicals, fruits and juices, and are obtained from local vendors. Flavor enhancers and secondary flavors are produced from brewer's yeast, baker's yeast from the Company's own operations, and vegetable materials such as corn and soybean. The acquisition of the Biolux Group in 1994 provides long-term supply arrangements on supplies of brewer's yeast for European production needs. Chili peppers, onion, garlic and other vegetables are acquired under annual contracts with numerous growers in the western United States and Europe. The principal raw material used in the production of yeast products is molasses, which is purchased through brokers and producers, usually under yearly fixed-price contracts. Processes have been developed to permit partial replacement of molasses with alternate, readily-available substrates for use if molasses supplies should become limited. In 1994, the Company entered into a supply agreement with Minn-Dak Yeast Company, a major North American molasses supplier, to provide additional assurances of adequate supplies of molasses. The Company believes that alternate sources of materials are available to enable it to maintain its competitive position in the event of an interruption in the supply of raw materials from a single supplier. FOREIGN OPERATIONS Note 11 of the Consolidated Financial Statements of the Company contained in the Universal Foods Corporation 1998 Annual Report is incorporated herein by reference. PATENTS, FORMULAE AND TRADEMARKS The Company owns or controls many patents, formulae and trademarks related to its businesses. The businesses are not materially dependent upon patent or trademark protection; however, trademarks, patents and formulae are important for the continued consistent growth of the Company. 7 8 EMPLOYEES As of September 30, 1998, the Company employed 4,196 persons in the U.S. and worldwide. 579 U.S. employees are represented by one of the 12 unions with which the Company has collective bargaining relationships. REGULATION Compliance with government provisions regulating the discharge of material into the environment, or otherwise relating to the protection of the environment, did not have a material adverse effect on the Company's operations for the year covered by this report. Compliance is not expected to have a material adverse effect in the succeeding two years as well. As is true with the food industry in general, the production, packaging, labeling and distribution of the products of the Company are subject to the regulations of various federal, state and local governmental agencies, in particular the U.S. Food & Drug Administration. ITEM 2. PROPERTIES Domestically, the Company operated 16 manufacturing and processing plants in eight states as of September 30, 1998. Three plants produced yeast, two facilities produced flavor enhancers and other bioproducts, three produced dehydrated products, five plants produced colors and related products, and three plants produced flavors. None of these properties are held subject to any material encumbrances. At September 30, 1998, the Company operated 27 foreign manufacturing facilities located in 14 foreign countries. Of these facilities, four produced flavor enhancers and other bioproducts, three manufactured dehydrated and frozen vegetables, five produced colors, 14 produced or distributed flavors and aroma chemicals, and one produced both flavors and colors. In addition, the Company has minority interests in seven companies located in the U.S. and five foreign countries. ITEM 3. LEGAL PROCEEDINGS The Company is a party to various legal proceedings related to its business. The Company believes that adverse decisions in these proceedings would not, in the aggregate, subject the Company to damages of a material amount. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders during the last quarter of fiscal 1998. 8 9 ITEM 4(a). EXECUTIVE OFFICERS OF THE REGISTRANT The executive officers of the registrant and their ages as of December 1, 1998 are as follows: EXECUTIVE OFFICERS Name Age Position ---- --- -------- Kenneth P. Manning 56 Chairman, President and Chief Executive Officer Richard Carney 48 Vice President - Human Resources Steven O. Cordier 42 Treasurer Michael duBois 52 President - Flavor Michael Fung 48 Vice President and Chief Financial Officer John L. Hammond 52 Vice President, Secretary and General Counsel Michael L. Hennen 45 Controller Richard F. Hobbs 51 Vice President - Administration R. Steven Martin 42 Vice President and Group Executive James F. Palo 58 President - Dehydrated Products Jorge Slater 51 President - Asia Pacific K.T. Thomas Tchang 47 President - Red Star Yeast & Products William Tesch 48 Vice President; Vice President - Operations, Red Star Yeast & Products Michael A. Wick 55 President - Color Dr. Ho-Seung Yang 50 Vice President - Technologies Messrs. Cordier, duBois, Fung, Hammond, Hennen, Martin, Slater, Tchang, Tesch and Yang have been employed by the Company in an executive capacity for less than five years. All of the other individuals named above have been employed by the Company for at least five years. Mr. Cordier joined the Company in October 1995 as Treasurer. From 1990 until joining the Company he was Director of Financial Planning at International Flavors and Fragrances, Inc. Mr. duBois joined the Company in May 1998 as President of the Flavor Division. From 1994 until joining Universal Foods, Mr. duBois was employed by Bush Boake Allen, Inc., a food technology company, first as Vice President Sales and Marketing, Flavors North America, and, beginning in 1996 as Vice President and General Manager, Seasonings Division. From 1992 to 1994 he served as Vice President - Sales and Marketing, Flavor and Fruit Division for Sanofi Bio-Industries, a flavor company. Prior to joining Sanofi Bio-Industries, Mr. duBois held several positions with Firmenich, Incorporated, a fragrance and flavor company. Mr. Fung joined the Company in June 1995 as Vice President and Chief Financial Officer. From 1992 to 1995 he served as Senior Vice President and Chief Financial Officer for Vanstar Corporation, a leading provider of products and services to design, build and manage computer network infrastructures for large enterprises. From 1988 to 1992, Mr. Fung was Vice President and Chief Financial Officer of Bass Pro Shops and Tracker Marine Corporation, privately-held companies operated under common ownership involved in the manufacture and marketing of outdoor sporting goods. 9 10 Mr. Hammond joined the Company in January 1998, as Vice President, Secretary and General Counsel. From 1992 to 1997, Mr. Hammond was employed by The Providence Journal Company, a newspaper, cable and broadcast television company, initially as Vice President-Legal, and subsequently as Vice President, General Counsel and Chief Administrative Officer. From 1989 to 1992, Mr. Hammond was Vice President, General Counsel and Secretary of Landstar System, Inc., a trucking company. Prior to that, Mr. Hammond was employed by The Singer Company for ten years and was Deputy General Counsel at the time of his departure. Mr. Hennen joined the Company in January 1995 as Controller. From 1985 until joining the Company he was a Senior Manager at Deloitte & Touche LLP, a public accounting firm providing audit and tax services to the Company as its outside auditor. Mr. Martin was elected Vice President and Group Executive in June 1997. He joined the Company as Vice President - Marketing of its Red Star Yeast & Products Division in 1993. In June 1995, Mr. Martin was elected President - Red Star Yeast & Products Division. Prior to joining the Company, Mr. Martin was with the Monsanto Company, now operating as Solutia, a chemical company, since 1978 in various management positions. Mr. Slater was elected President - Asia Pacific Division in April 1998. Mr. Slater was hired by the Company in August of 1996 and served as Vice President and Managing Director of the Asia Pacific Division prior to being elected its President. From 1994 to 1996, Mr. Slater worked at McCormick & Company, Inc., a spice and seasonings company, as Vice President and Managing Director Asia Pacific. Prior to joining McCormick & Company, Inc., Mr. Slater worked for Dole Packaged Foods Company and, prior to that, for International Flavors and Fragrances, Inc. Mr. Tchang was elected President - Red Star Yeast & Products Division in September 1997. He joined the Company in 1995 as Vice President, Sales and Marketing for the Company's BioProducts Division. Prior to joining the Company, he was Marketing Director of Huntsman Specialty Chemicals Corp., a chemical company, which purchased the Maleic Anhydride business of the specialty chemicals division of the Monsanto Company. Prior to such purchase, Mr. Tchang was employed by the Monsanto Company for 20 years in various manufacturing, and later sales and marketing positions. Mr. Tesch joined the Company in 1971, becoming Plant Manager of the Red Star BioProducts Division in 1989. From 1993 to 1994, he was Director, Training and Development of The Universal Way. From 1994 to 1996, he served as Vice President, Manufacturing Operations of the Red Star BioProducts Division, and in April 1996, Mr. Tesch was elected President of the Red Star BioProducts Division, a position he held until the completion of the consolidation of the Flavor and BioProducts Divisions in January 1998. From January 1998 until July 1998, Mr. Tesch was the Vice President of Corporate Engineering. Mr. Tesch is currently a corporate Vice President, and the Vice President of Operations for Red Star Yeast & Products. Dr. Yang was elected Vice President, Technologies in January 1998. From 1990 to 1998, Dr. Yang was employed by Sunkyong Industries in Seoul, Korea, where he held the positions of managing director of corporate planning and development; managing director, group chairman's office and director, life science and development. 10 11 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The only market in which the common stock of the Company is traded is the New York Stock Exchange. The range of the high and low sales prices as quoted in the New York Stock Exchange - Composite Transaction tape for the common stock of the Company and the amount of dividends declared for fiscal 1998 appearing under "Common Stock prices and dividends" on Page 32 of the 1998 Annual Report to Shareholders are incorporated by reference. Common stock dividends were paid on a quarterly basis, and it is expected that quarterly dividends will continue to be paid in the future. In addition to the restrictions contained in its Amended and Restated Articles of Incorporation, the Company is subject to restrictions on the amount of dividends which may be paid on its common stock under the provisions of various credit agreements. On the basis of the consolidated financial statements of the Company as of September 30, 1998, $34,654,000 is available for the payment of dividends on the common stock of the Company under the most restrictive loan covenants. On January 27, 1994 the Board of Directors established a share repurchase program which authorizes the Company to repurchase up to 5 million shares (on a post-split basis). As of September 30, 1998, 3,061,096 shares had been repurchased under that program. On June 25, 1998, the Board of Directors of the Company adopted a preferred stock shareholder rights plan which is described at Note 7 of Notes to Consolidated Financial Statements - "Shareholders' Equity" on Pages 25 and 26 of the 1998 Annual Report to Shareholders and which is incorporated by reference. The number of shareholders of record on December 4, 1998 was 5,289. ITEM 6. SELECTED FINANCIAL DATA The selected financial data required by this item is incorporated by reference from the "Five-Year Review" and the notes thereto on Page 31 of the 1998 Annual Report to Shareholders. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION "Management's Analysis of Operations and Financial Condition" is incorporated by reference from Pages 13 through 17 of the 1998 Annual Report to Shareholders. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information required by this item is set forth under "Market Risk Factors" on Pages 14 and 15 of the 1998 Annual Report to Shareholders and is incorporated by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements and supplementary data required by this item are set forth on Pages 18 through 30 and Page 32 of the 1998 Annual Report to Shareholders and are incorporated by reference. ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 11 12 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information regarding directors and officers appearing under "Election of Directors" (ending before "Committees of the Board of Directors") and "Other Matters" on Pages 2 through 7 and Page 28, respectively, of the Notice of Annual Meeting and Proxy Statement of the Company dated December 15, 1998, is incorporated by reference. ITEM 11. EXECUTIVE COMPENSATION Information relating to compensation of directors and officers is incorporated by reference from "Director Compensation and Benefits," "Compensation and Development Committee Report" and "Executive Compensation" on Page 8 and Pages 10 through 16 of the Notice of Annual Meeting and Proxy Statement of the Company dated December 15, 1998. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The discussion of securities ownership of certain beneficial owners and management appearing under "Principal Shareholders" on Pages 9 and 10 of the Notice of Annual Meeting and Proxy Statement of the Company dated December 15, 1998, is incorporated by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS There are no family relationships between any of the directors, nominees for director and officers of the Company nor any arrangement or understanding between any director or officer or any other person pursuant to which any of the nominees has been nominated. No director, nominee for director or officer had any material interest, direct or indirect, in any business transaction of the Company or any subsidiary during the period October 1, 1997 through September 30, 1998, or in any such proposed transaction. In the ordinary course of business, the Company engages in business transactions with companies whose officers or directors are also directors of the Company. These transactions are routine in nature and are conducted on an arm's-length basis. The terms of any such transactions are comparable at all times to those obtainable in business transactions with unrelated persons. 12 13 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) Documents filed: 1. and 2. Financial Statements and Financial Statement Schedule. (See following "List of Financial Statements and Financial Statement Schedules.") 3. Exhibits. (See Exhibit Index following this report.) (Other than Exhibit 10.1(a), no instruments defining the rights of holders of long-term debt of the Company and its consolidated subsidiaries are filed herewith because no long-term debt instrument authorizes securities exceeding 10% of the total consolidated assets of the Company. The Company agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.) (b) Reports on Form 8-K: A report on Form 8-K, dated June 25, 1998, was filed on August 6, 1998 in connection with the adoption of the Share Purchase Rights Plan. A report on Form 8-K, dated September 10, 1998, was filed on October 6, 1998 in connection with Amendment No. 1 to the Universal Foods Corporation 1998 Stock Option Plan. LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES Page Reference in 1998 Annual Report 1. Financial Statements To Shareholders --------------------- The following consolidated financial statements of Universal Foods Corporation and Subsidiaries are incorporated by reference from the Annual Report to Shareholders for the year ended September 30, 1998. Independent Auditors' Report 30 Consolidated Balance Sheets -- September 30, 1998 and 1997 19 Consolidated Earnings -- Years ended September 30, 1998, 1997, and 1996 18 Consolidated Shareholders' Equity -- Years ended September 30, 1998, 1997 and 1996 20 Consolidated Cash Flows -- Years ended September 30, 1998, 1997 and 1996 21 Notes to Consolidated Financial Statements 22-29 13 14 PAGE REFERENCE IN 2. FINANCIAL STATEMENT SCHEDULES FORM 10-K - -------------------------------- ----------------- Independent Auditors' Report 14 Schedule II - Valuation and Qualifying Accounts and Reserves 15 All other schedules are omitted because they are inapplicable, not required by the instructions or the information is included in the consolidated financial statements or notes thereto. INDEPENDENT AUDITORS' REPORT To the Shareholders and Directors of Universal Foods Corporation: We have audited the consolidated financial statements of Universal Foods Corporation and subsidiaries as of September 30, 1998 and 1997 and for each of the three years in the period ended September 30, 1998, and have issued our report thereon dated November 12, 1998. Such consolidated financial statements and report are included in your 1998 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedule of Universal Foods Corporation, listed in Item 14. This consolidated financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/ Deloitte & Touche LLP DELOITTE & TOUCHE LLP Milwaukee, Wisconsin November 12, 1998 14 15 SCHEDULE II UNIVERSAL FOODS CORPORATION AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (IN THOUSANDS) YEARS ENDED SEPTEMBER 30, 1998, 1997, AND 1996
Additions Valuation Accounts Charged Deducted in the Balance Balance At To Costs Balance Sheet From The Assets To Beginning And At End Of Which They Apply Of Period Expenses Deductions(A) Period - ------------------------ ---------- --------- ------------- --------- 1996 Allowance for losses: Trade accounts receivable $3,768 $ 349 $ 608 $3,509 ====== ====== ====== ====== 1997 Allowance for losses: Trade accounts receivable $3,509 $ 572 $ 47 $4,034 ====== ====== ====== ====== 1998 Allowance for losses: Trade accounts receivable $4,034 $1,245 $ 731 $4,548 ====== ====== ====== ======
(A) Accounts written off, less recoveries. 15 16 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. UNIVERSAL FOODS CORPORATION By: /s/ John L. Hammond ------------------------------ John L. Hammond, Vice President Secretary & General Counsel Dated: December 28, 1998 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below as of December 28, 1998, by the following persons on behalf of the Registrant and in the capacities indicated. /s/ Kenneth P. Manning Chairman of the Board, President and - -------------------------------- Chief Executive Officer Kenneth P. Manning /s/ Michael Fung Vice President and Chief Financial - -------------------------------- Officer Michael Fung /s/ Michael L. Hennen Corporate Controller - -------------------------------- Michael L. Hennen /s/ Michael E. Batten Director - -------------------------------- Michael E. Batten /s/ John F. Bergstrom Director - -------------------------------- John F. Bergstrom /s/ Dr. Fergus M. Clydesdale Director - -------------------------------- Dr. Fergus M. Clydesdale /s/ James A.D. Croft Director - -------------------------------- James A.D. Croft /s/ James L. Forbes Director - -------------------------------- James L. Forbes 17 /s/ Dr. Carol I. Waslien Ghazaii Director - -------------------------------- Dr. Carol I. Waslien Ghazaii /s/ William V. Hickey Director - -------------------------------- William V. Hickey /s/ Leon T. Kendall Director - -------------------------------- Leon T. Kendall /s/ James H. Keyes Director - -------------------------------- James H. Keyes /s/ Essie Whitelaw Director - -------------------------------- Essie Whitelaw S-2 18 UNIVERSAL FOODS CORPORATION EXHIBIT INDEX 1998 ANNUAL REPORT ON FORM 10-K The Company will furnish a copy of any exhibit described below upon request and upon reimbursement to the Company of its reasonable expenses of furnishing such exhibit, which shall be limited to a photocopying charge of $0.25 per page and, if mailed to the requesting party, the cost of first-class postage.
Incorporated by Filed Exhibit Number Description Reference From Herewith - -------------- ------------------------------------ ----------------------------------------- -------- 3.1 Universal Foods Corporation Amended X and Restated Articles of Incorporation, adopted November 12, 1998 3.2 Universal Foods Corporation Restated Exhibit 3.2 to Annual Report on Form 10-K Bylaws for the fiscal year ended September 30, 1995 (Commission File No. 1-7626) 4.1 Rights Agreement, dated as of August Exhibit 1.1 to Registration Statement on 6, 1998, between Registrant and Form 8-A dated July 20, 1998 (Commission Firstar Trust Company File No. 1-7626) 10.1 Material Contracts 10.1(a) Indenture between Registrant and Exhibit 4.1 to Registration Statement on the First National Bank of Chicago, Form S-3 dated November 9, 1998 (Commission as Trustee File 333-67015) 10.2 Management Contracts or Compensatory Plans 10.2(a) Employment and Severance Agreement X between Registrant and Kenneth P. Manning dated November 5, 1987 10.2(b) Amendment dated May 10, 1988 to X Employment and Severance Agreement between Registrant and Kenneth P. Manning
Exhibit Index -- 1 19 UNIVERSAL FOODS CORPORATION EXHIBIT INDEX 1998 ANNUAL REPORT ON FORM 10-K
Incorporated by Filed Exhibit Number Description Reference From Herewith - -------------- ------------------------------------ ----------------------------------------- -------- 10.2(c) 1985 Stock Plan for Executive X Employees 10.2(d) Universal Foods Corporation 1990 X Employee Stock Plan, as amended September 10, 1998 10.2(e) Amendment No. 1 dated September 10, X 1998 to Universal Foods Corporation 1990 Employee Stock Plan 10.2(f) Universal Foods Corporation 1994 X Employee Stock Plan, as amended September 10, 1998 10.2(g) Amendment No. 1 dated September 10, X 1998 to Universal Foods Corporation 1994 Employee Stock Plan 10.2(h) Universal Foods Corporation 1998 X Stock Option Plan, as amended September 10, 1998 10.2(i) Amendment No. 1 dated September 10, Exhibit 99.1 to Current Report on Form 8-K 1998 to the Universal Foods dated October 6, 1998 (Commission File Corporation 1998 Stock Option Plan No. 1-7626) 10.2(j) Director Stock Grant Plan, as amended X November 14, 1991 10.2(k) Management Income Deferral Plan, X including Amendment No. 1 thereto dated September 10, 1998 10.2(l) Executive Income Deferral Plan, X including Amendment No. 1 thereto dated September 10, 1998
Exhibit Index -- 2 20 UNIVERSAL FOODS CORPORATION EXHIBIT INDEX 1998 ANNUAL REPORT ON FORM 10-K Exhibit Incorporated by Filed Number Description Reference From Herewith - ------- ------------------------------------ ------------------- --------- 10.2(m) Change of Control Employment and X Severance Agreement between Universal Foods Corporation and Kenneth P. Manning dated September 10, 1998 10.2(n) Form of Amended and Restated X Change of Control Employment and Severance Agreement for Executive Officers 10.2(o) Amended and Restated Trust Agreement X dated September 10, 1998 between the Registrant and Firstar Bank, Milwaukee, N.A. ("Rabbi Trust A") 10.2(p) Trust Agreement, including Changes X upon Appointment of Successor Trustee dated as of February 1, 1998 between the Registrant and Firstar Bank, Milwaukee, N.A.("Rabbi Trust B") 10.2(q) Trust Agreement, including Changes X upon Appointment of Successor Trustee dated as of February 1, 1998 between the Registrant and Firstar Bank, Milwaukee, N.A. ("Rabbi Trust C") 10.2(r) Management Incentive Plan for X Elected Corporate Officers 10.2(s) Management Incentive Plan for X Division Presidents 10.2(t) Management Incentive Plan for X Corporate Management 10.2(u) Management Incentive Plan for Division Management X Exhibit Index -- 3 21 UNIVERSAL FOODS CORPORATION EXHIBIT INDEX 1998 ANNUAL REPORT ON FORM 10-K Exhibit Incorporated by Filed Number Description Reference From Herewith - ------- ------------------------------------ ------------------- --------- 10.2(v) Form of Agreement for Executive X Officers (Supplemental Executive Retirement Plan A), including Amendment No. 1 thereto dated September 10, 1998 10.2(w) Universal Foods Corporation X Supplemental Benefit Plan, including Amendment No. 1 thereto dated September 10, 1998 10.2(x) Universal Foods Corporation X Transition Retirement Plan, including Amendment No. 1 thereto dated September 10, 1998 13.1 Portions of Annual Report to X Shareholders for the year ending September 30, 1998 that are incorporated by reference 21 Subsidiaries of the Registrant X 23 Consent of Deloitte & Touche LLP X 27 Financial Data Schedule X 99 Notice of Annual Meeting and Proxy Previously filed on Statement dated December 15, 1998 Schedule 14A dated December 15, 1998 (Commission File No. 1-7626) Except to the extent incorporated by reference, the Proxy Statement shall not be deemed to be filed with the Securities and Exchange Commission as part of this Annual Report on Form 10-K Exhibit Index -- 4 EX-3.1 2 AMENDED & RESTATED ARTICLES OF INCORPORATION 1 EXHIBIT 3.1 UNIVERSAL FOODS CORPORATION ----------------- AMENDED AND RESTATED ARTICLES OF INCORPORATION These Amended and Restated Articles of Incorporation, duly adopted pursuant to Chapter 180 of the Wisconsin Statutes, supersede and take the place of the existing Articles of Incorporation and all amendments and restatements thereto. ARTICLE I. NAME. SECTION 1.1. Name. The name of the corporation is UNIVERSAL FOODS CORPORATION. ARTICLE II. PURPOSES. SECTION 2.1. Purposes. The purposes for which the corporation is organized are to engage in any lawful activity within the purposes for which corporations may be organized under the Wisconsin Business Corporation Law. ARTICLE III. CAPITAL STOCK. SECTION 3.1. Number of Shares and Classes. The aggregate number of shares which the corporation has authority to issue is 100,250,000 divided into the following classes: Subsection 3.1.1. Common Stock. 100,000,000 shares at the par value of $0.10 per share designated as "Common Stock." 2 Subsection 3.1.2. Cumulative Preferred Stock. 250,000 shares without par value designated as "Cumulative Preferred Stock," of which 100,000 shares are designated as Series A Participating Cumulative Preferred Stock pursuant to Section 4.7 hereof. ARTICLE IV. PREFERENCES, LIMITATION AND RELATIVE RIGHTS OF CUMULATIVE PREFERRED STOCK SECTION 4.1. Dividends and Distributions on Cumulative Preferred Stock. Subsection 4.1.1. The holders of Cumulative Preferred Stock of all series shall be entitled to receive dividends at such rates, upon such conditions and at such times as shall be stated in the resolution or resolutions of the Board of Directors providing for the issuance thereof and not inconsistent with the provisions hereof. Subsection 4.1.2. No dividend or other distribution, except a dividend payable solely in Common Stock, shall be paid on Common Stock, and no shares of Common Stock shall be purchased, redeemed or otherwise acquired by the corporation for a consideration, otherwise than in exchange for or through application of the proceeds of the sale of other Common Stock, if the payment of such dividend or distribution on Common Stock, or the making of any such purchase, redemption or other acquisition of Common Stock, will result in reducing the Consolidated Net Worth of the corporation below 150% of the aggregate involuntary liquidation amounts of all outstanding shares of Cumulative Preferred Stock. Subsection 4.1.3. All dividends on Cumulative Preferred Stock shall be without priority as between series, shall be paid out of net earnings or any surplus properly applicable to the payment thereof, shall be cumulative and shall be paid or set apart before any dividends or other distributions shall be paid or set apart for Common Stock, provided, however, that dividends may be declared and paid on Common Stock in Common Stock of the corporation. Any dividends paid upon the Cumulative Preferred Stock in an amount less than full cumulative dividends accrued and in arrears upon all Cumulative Preferred Stock outstanding shall, if more than one series be outstanding, be distributed among the different series in proportion to the aggregate amounts which would be distributable to the Cumulative Preferred Stock of each series if full cumulative dividends were declared and paid thereon. Subsection 4.1.4. The Cumulative Preferred Stock shall entitle the holder thereof to receive, out of net profits of the corporation or out of any surplus applicable to the payment of such dividends in each fiscal year as declared at any time by the Board of Directors, dividends at the rate fixed in the resolution or resolutions adopted by the Board of Directors pursuant to which the issuance of such Cumulative Preferred Stock shall be authorized. The dividends on the Cumulative Preferred Stock shall be cumulative, so that if at any time the full amount of dividends accrued and in arrears on the Cumulative Preferred Stock shall not be paid, the deficiency shall be payable before any dividends or other distributions shall be -2- 3 paid or set apart on the Common Stock, and before any sums shall be paid or set apart for the redemption of less than all of the Cumulative Preferred Stock then outstanding. Dividends on Cumulative Preferred Stock shall accrue from date of issue. Whenever all dividends accrued and in arrears on Cumulative Preferred Stock shall have been declared and shall have been paid or set apart, the Board of Directors may declare dividends on Common Stock out of the remaining net profits of the corporation, or out of surplus applicable to the payment of such dividends, subject to the restriction set forth in Subsection 4.1.2 hereof. SECTION 4.2. Issuance of Cumulative Preferred Stock. Subsection 4.2.1. No stock having preference or priority in rights or security over the Cumulative Preferred Stock may be issued unless first approved by the affirmative vote of such majority of the Cumulative Preferred Stock then outstanding as then required by law. Subsection 4.2.2. No Cumulative Preferred Stock shall be issued which, after giving effect to such issuance, would result in the aggregate involuntary liquidation amount of all outstanding shares of Cumulative Preferred Stock exceeding 66-2/3% of Consolidated Net Worth of the corporation. SECTION 4.3. Rights of Holders of Cumulative Preferred Stock on Liquidation. In the event of the voluntary liquidation or winding up of the corporation, the holders of Cumulative Preferred Stock shall be entitled to receive in full the fixed voluntary liquidation amount thereof plus accrued dividends thereon, all as provided in the resolution or resolutions providing for the issuance thereof, and no more, before any amount shall be paid to the holders of Common Stock. In the event of the involuntary liquidation of the corporation, the holders of the Cumulative Preferred Stock shall be entitled to receive in full the fixed involuntary liquidation amount thereof, plus accrued dividends thereon, all as provided in the resolution or resolutions providing for the issuance thereof, and no more, before any amount shall be paid to the holders of Common Stock. The holders of all series of Cumulative Preferred Stock shall be entitled to receive all amounts described in the preceding provisions of this Section 4.3 out of the assets of the corporation, whether from capital, surplus or earnings. As used in this Section 4.3 "accrued dividends" means, in respect to each share of Cumulative Preferred Stock, an amount equal to the fixed dividend rate per annum for each share (without interest thereon), from the date from which cumulative dividends commenced to accrue in respect of such share to the date as of which the computation is to be made, less the aggregate amount (without interest) of all dividends paid thereon or declared and set aside for payment in respect thereof, whether or not any such dividends shall have been earned. If, upon any such voluntary or involuntary liquidation, the assets of the corporation distributable as aforesaid among the holders of the Cumulative Preferred Stock shall be insufficient to permit payment to them of the full preferential amounts aforesaid, then the entire assets of the corporation available for distribution to shareholders shall be distributed ratably among the holders of Cumulative Preferred Stock in proportion to the full preferential amounts to which they are respectively entitled. -3- 4 The holders of Cumulative Preferred Stock shall not otherwise be entitled to participate in any distribution of assets of the corporation which shall be divided and distributed among the holders of Common Stock according to their respective rights and preferences. No consolidation or merger of the corporation with or into another corporation or corporations and no sale by the corporation of all or substantially all of its assets shall be deemed a liquidation or winding up of the corporation within the meaning of this Section 4.3. SECTION 4.4. Voting Rights of Cumulative Preferred Stock. The holders of the Cumulative Preferred Stock shall, together with the holders of Common Stock (neither the Cumulative Preferred Stock nor the Common Stock voting as a class), possess full voting rights for the election of directors and for other purposes, and for such purposes the holders of Cumulative Preferred Stock shall, subject to the provisions of the Bylaws of the corporation and of the Wisconsin Business Corporation Law relative to the fixing of the record date, be entitled to one vote for each share held by them respectively. SECTION 4.5. Directors' Authority to Establish Series of Cumulative Preferred Stock. The Cumulative Preferred Stock may be issued in series from time to time, with such designations, preferences and other rights, qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions providing for the issuance of such series and adopted by the Board of Directors pursuant to the authority hereby given as provided by the Wisconsin Business Corporation Law and not inconsistent with the provisions hereof. Without limiting the authority granted to the Board of Directors in this Section, each series shall have such (a) rate of dividend; (b) price at and terms and conditions on which shares may be redeemed; (c) amount payable upon shares in event of voluntary or involuntary liquidation; (d) sinking fund provisions for the redemption or purchase of shares; and (e) terms and conditions on which shares may be converted, if the shares of any series are issued with the privilege of conversion; as shall be stated or expressed in the resolution or resolutions of the Board of Directors providing for the issuance thereof. SECTION 4.6. Definitions. Subsection 4.6.1. The term "Consolidated Net Worth" of the corporation shall mean the Consolidated Net Worth of the corporation and all of its subsidiaries determined on a consolidated basis in accordance with generally accepted accounting principles. Subsection 4.6.2. The term "Subsidiary" shall mean any corporation or association of which not less than a majority of the capital stock or shares (having the power in all events to vote for the election of directors or trustees) is owned and controlled by the corporation either directly or through another Subsidiary. -4- 5 SECTION 4.7. Series A Participating Cumulative Preferred Stock. Subsection 4.7.1. Designation and Amount. The shares of such series shall be designated as "Series A Participating Cumulative Preferred Stock" (the "Series A Preferred Stock") and the number of shares constituting the Series A Preferred Stock shall be 100,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series A Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the corporation convertible into Series A Preferred Stock. Subsection 4.7.2. Dividends and Distributions. (A) Subject to the rights of the holders of any shares of any series of Cumulative Preferred Stock (or any similar stock) ranking pari passu with the Series A Preferred Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of Common Stock, par value $0.10 per share ("Common Shares"), of the corporation, and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of December, March, June and September in each year (each such date being referred to in this Section 4.7 as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1 or (b) subject to the provision for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in Common Shares or a subdivision of the outstanding Common Shares (by reclassification or otherwise), declared on the Common Shares since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. In the event the corporation shall at any time declare or pay any dividend on the Common Shares payable in Common Shares, or effect a subdivision or combination or consolidation of the outstanding Common Shares (by reclassification or otherwise than by payment of a dividend in Common Shares) into a greater or lesser number of Common Shares, then in each such case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of Common Shares outstanding immediately after such event and the denominator of which is the number of Common Shares that were outstanding immediately prior to such event. (B) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the -5- 6 date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof. Subsection 4.7.3. Voting Rights. The holders of shares of Series A Preferred Stock shall have the following voting rights: (A) Subject to the provision for adjustment hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof to one vote on all matters submitted to a vote of the shareholders of the corporation. (B) Except as otherwise provided in these Articles of Incorporation, in any other Resolution of the Board of Directors creating a series of Cumulative Preferred Stock or any similar stock, or by law, the holders of shares of Series A Preferred Stock and the holders of Common Shares and any other capital stock of the corporation having general voting rights shall vote together as one class on all matters submitted to a vote of shareholders of the corporation. (C) Except as set forth in these Articles of Incorporation or as otherwise provided by law, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Shares as set forth herein) for taking any corporate action. Subsection 4.7.4. Certain Restrictions. (A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock as provided in Subsection 4.7.2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the corporation shall not: (i) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock; -6- 7 (ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock, provided that the corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or (iv) redeem or purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (B) The corporation shall not permit any subsidiary of the corporation to purchase or otherwise acquire for consideration any shares of stock of the corporation unless the corporation could, under paragraph (A) of this Subsection 4.7.4, purchase or otherwise acquire such shares at such time and in such manner. Subsection 4.7.5. Reacquired Shares. Any shares of Series A Preferred Stock purchased or otherwise acquired by the corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Cumulative Preferred Stock and may be reissued as part of a new series of Cumulative Preferred Stock subject to the conditions and restrictions on issuance set forth in these Articles of Incorporation or in any other Resolution of the Board of Directors creating a series of Cumulative Preferred Stock or any similar stock or as otherwise required by law. Subsection 4.7.6. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the corporation, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received $250 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Series A Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to be distributed per share to holders of -7- 8 Common Shares, or (2) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the corporation shall at any time declare or pay any dividend on the Common Shares payable in Common Shares, or effect a subdivision or combination or consolidation of the outstanding Common Shares (by reclassification or otherwise than by payment of a dividend in Common Shares) into a greater or lesser number of Common Shares, then in each such case the aggregate amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under the proviso in clause (1) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of Common Shares outstanding immediately after such event and the denominator of which is the number of Common Shares that were outstanding immediately prior to such event. Subsection 4.7.7. Consolidation, Merger, etc. In case the corporation shall enter into any consolidation, merger, combination or other transaction in which the Common Shares are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series A Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each Common Share is changed or exchanged. In the event the corporation shall at any time declare or pay any dividend on the Common Shares payable in Common Shares, or effect a subdivision or combination or consolidation of the outstanding Common Shares (by reclassification or otherwise than by payment of a dividend in Common Shares) into a greater or lesser number of Common Shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of Common Shares outstanding immediately after such event and the denominator of which is the number of Common Shares that were outstanding immediately prior to such event. Subsection 4.7.8. No Redemption. The shares of Series A Preferred Stock shall not be redeemable. Subsection 4.7.9. Rank. The Series A Preferred Stock shall be of equal rank, with respect to the payment of dividends and the distribution of assets, to all series of any other class of the corporation's Cumulative Preferred Stock. Subsection 4.7.10. Amendment. These Articles of Incorporation shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series A Preferred -8- 9 Stock, voting together as a single class. In addition to the rights, preferences and privileges accorded to the Series A Preferred Stock in this Section 4.7, the Series A Preferred Stock shall have the rights, privileges and preferences, and be subject to the limitations, accorded generally to the Cumulative Preferred Stock in the foregoing Sections 4.1 through 4.6. ARTICLE V. PRE-EMPTIVE RIGHTS. SECTION 5.1. Pre-emptive Rights. No holder of any class of stock of the corporation shall, because of such holder's ownership of said stock, have any pre-emptive or other right to purchase, or subscribe for, or take any part of any class of stock, or any part of the notes, debentures, bonds or other securities convertible into or carrying options or warrants to purchase any class of stock of this corporation. ARTICLE VI. REGISTERED OFFICE; REGISTERED AGENT. SECTION 6.1. Registered Office; Registered Agent. The address of the registered office of the corporation is 433 East Michigan Street, Milwaukee, Wisconsin 53202, and the registered agent at the registered office of the corporation is John L. Hammond. ARTICLE VII. DIRECTORS; REMOVAL OF DIRECTORS. SECTION 7.1. Directors. The number of directors constituting the Board of Directors of the corporation shall be fixed from time to time by the Bylaws of the corporation. The Board of Directors of the corporation shall be divided into three (3) classes. The term of office of the first class of directors shall expire at the first annual meeting after their election, the term of office of the second class shall expire at the second annual meeting after their election and that of the third class shall expire at the third annual meeting after their election. At each annual meeting after classification of the Board of Directors, the class of directors whose term expires at the time of such election shall be elected to hold office until the third succeeding annual meeting. The number of directors in each class shall be as fixed from time to time in the Bylaws. -9- 10 SECTION 7.2. Removal of Directors. A director may be removed from office by affirmative vote of two thirds (2/3) of the outstanding shares entitled to vote for the election of such director, taken at a meeting of shareholders called for that purpose, and any vacancy so created may be filled by such shareholders. ARTICLE VIII. ACQUISITION OF SHARES. SECTION 8.1. Acquisition of Shares. The corporation is authorized by action of the Board of Directors without consent of shareholders to purchase, take, receive or otherwise acquire shares of the corporation subject to the provisions of Sections 180.0603, 180.0631, and 180.0640 of the Wisconsin Statutes and Section 4.1.2 hereof. ARTICLE IX. DISTRIBUTIONS. SECTION 9.1. Distributions. The Board of Directors may from time to time distribute to shareholders in partial liquidation out of stated capital or net capital surplus of the corporation, a portion of its assets, in cash or property. ARTICLE X. REPURCHASE OF COMMON STOCK. SECTION 10.1. Repurchase Rights. Subsection 10.1.1. In the event that any person (Acquiring Person) (i) who is the beneficial owner, directly or indirectly, of more than fifty percent of the Common Stock outstanding becomes the beneficial owner, directly or indirectly, of any additional Common Stock pursuant to a tender offer or (ii) becomes the beneficial owner, directly or indirectly, of more than fifty percent of the Common Stock outstanding and any of such Common Stock was acquired pursuant to a tender offer, each holder of Common Stock, other than the Acquiring Person or a transferee of the Acquiring Person, shall have the right until and including the thirtieth day following the date the notice to holders of Common Stock referred to in Section 10.3 herein is mailed to have the Common Stock held by such holder repurchased by the corporation at the Repurchase Price determined as provided in -10- 11 Section 10.5 herein, and each holder of securities convertible into Common Stock or of options, warrants, or rights exercisable to acquire Common Stock prior to such thirtieth day, other than the Acquiring Person or a transferee of the Acquiring Person, shall have the right simultaneously with the conversion of such securities or exercise of such options, warrants, or rights to have the Common Stock to be received thereupon by such holder repurchased by the corporation at the Repurchase Price. Subsection 10.1.2. All repurchase rights hereunder shall be subject to, and limited by, any provision contained in the Wisconsin Statutes, in Article IV hereof, or in any loan agreement entered into at any time by the corporation, which limits the amounts which may be used by the corporation to repurchase Common Stock of the corporation. Subsection 10.1.3. No holder of Common Stock of the corporation shall have any right to have Common Stock repurchased by the corporation pursuant to this Article X if the corporation, acting through a majority of its Board of Directors, shall within ten (10) days following the announcement or publication of such tender offer or following any amendment of such tender offer recommend to the holders of Common Stock that such tender offer be accepted. SECTION 10.2. Definitions. Subsection 10.2.1. The term "person" shall include an individual, a corporation, partnership, trust or other entity. When two or more persons act as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring Common Stock, such partnership, syndicate or group shall be deemed a "person". Subsection 10.2.2. For the purpose of determining whether a person is an Acquiring Person, such person shall be deemed to beneficially own (i) all Common Stock with respect to which such person has the capability to control or influence the voting power in respect thereof and (ii) all Common Stock which such person has the immediate or future right to acquire, directly or indirectly, pursuant to agreements, through the exercise of options, warrants or rights or through the conversion of convertible securities or otherwise; and all Common Stock which such person has the right to acquire in such manner shall be deemed to be outstanding shares, but Common Stock which any other person has the right to acquire in such manner shall not be deemed to be outstanding shares. Subsection 10.2.3. The acquisition of Common Stock by the corporation or by any person controlled by the corporation shall not engender the right to have Common Stock repurchased pursuant to this Article. Subsection 10.2.4. The right to have Common Stock repurchased pursuant to this Article shall attach to such shares and shall not be personal to the holder thereof. -11- 12 Subsection 10.2.5. The term "tender offer" shall mean an offer to acquire or an acquisition of Common Stock pursuant to a request or invitation for tenders or an offer to purchase such shares for cash, securities or any other consideration. Subsection 10.2.6. The term "market purchases" shall mean the acquisition of Common Stock from holders of such shares in privately negotiated transactions or in transactions effected through a broker or dealer. Subsection 10.2.7. Subject to the provisions of Section 10.2.2 herein, "outstanding shares" shall mean shares of Common Stock which at the time in question have been issued by the corporation and not reacquired and held or retired by it or held by any subsidiary of the corporation. SECTION 10.3. Repurchase Procedure. Not later than thirty (30) days following the date on which the corporation receives credible notice that any person has become an Acquiring Person whereupon the right shall be engendered to have Common Stock repurchased by the corporation under this Article X, the corporation shall give written notice, by first class mail, postage prepaid, at the address shown on the records of the corporation, to each holder of record of Common Stock (and to any other person known by the corporation to have rights to demand repurchase pursuant to Section 10.1 of this Article) as of a date not more than seven (7) days prior to the date of the mailing pursuant to this Section 10.3 and shall advise each such holder of the right to have shares repurchased and the procedures for such repurchase. In the event that the corporation fails to give notice as required by this Section 10.3, any holder entitled to receive such notice may within thirty (30) days thereafter serve written demand upon the corporation to give such notice. If within thirty (30) days after the receipt of written demand the corporation fails to give the required notice, such holder may at the expense and on behalf of the corporation take such reasonable action as may be appropriate to give notice or to cause notice to be given pursuant to this Section 10.3. Subsection 10.3.1. In the event Common Stock is subject to repurchase in accordance with this Article X, the directors of the corporation shall designate a Repurchase Agent, which shall be a corporation or association (i) organized and doing business under the laws of the United States or any State, (ii) subject to supervision or examination by Federal or State authority, (iii) having combined capital and surplus of at least $5,000,000 and (iv) having the power to exercise corporate trust powers. Subsection 10.3.2. For a period of ninety days from the date of the mailing of the notice to holders of Common Stock referred to in this Section 10.3, holders of Common Stock and other persons entitled to have Common Stock repurchased pursuant to this Article X may, at their option, deposit certificates representing all or less than all Common Stock held of record by them with the Repurchase Agent together with written notice that the holder elects to have such shares repurchased pursuant to this Article X. Repurchase shall be -12- 13 deemed to have been effected at the close of business on the day such certificates are deposited in proper form with the Repurchase Agent. Subsection 10.3.3. The corporation shall promptly deposit in trust with the Repurchase Agent cash in an amount equal to the aggregate Repurchase Price of all of the Common Stock deposited with the Repurchase Agent for purposes of repurchase. Subsection 10.3.4. As soon as practicable after receipt by the Repurchase Agent of the cash deposit by the corporation referred to in this Section 10.3, the Repurchase Agent shall issue its checks payable to the order of the persons entitled to receive the Repurchase Price of the Common Stock in respect of which such cash deposit was made. Subsection 10.3.5. In the event the corporation is unable to deposit with the Repurchase Agent cash in the full amount of the aggregate Repurchase Price of all shares deposited for repurchase, because of limitations upon repurchase of Common Stock contained in the Wisconsin Statutes, in Article IV hereof, or in any loan agreement entered into at any time by the corporation, the corporation shall promptly deposit with the Repurchase Agent the maximum amount of cash which may be used for the repurchase of Common Stock, under the most restrictive of the applicable limitations upon such repurchase. In the event of deposit of less than the full aggregate Repurchase Price pursuant to the provisions of this subsection, the Repurchase Agent shall use the amount so deposited to repurchase the deposited shares pro tanto, in proportion to the number of shares deposited by each shareholder for repurchase. Certificates representing all shares which remain unpurchased shall be returned to the depositors thereof as soon as practicable thereafter, and there shall be no further repurchase rights with respect to such shares arising in connection with the transactions already completed. SECTION 10.4. Retired Stock. All Common Stock with respect to which repurchase has been effected pursuant to this Article X shall thereupon be deemed retired. SECTION 10.5. Repurchase Price. The Repurchase Price shall be the amount payable by the corporation in respect of each share of Common Stock with respect to which repurchase has been demanded pursuant to this Article X and shall be the greatest amount determined on any of the following three bases: (i) The highest price per share of Common Stock, including any commission paid to brokers or dealers for solicitation or whatever, at which Common Stock held by the Acquiring Person were acquired pursuant to a tender offer regardless of when such tender offer was made or were acquired pursuant to any market purchase or otherwise -13- 14 within eighteen months prior to the notice to holders of Common Stock referred to in Section 10.3 herein. For purposes of this subsection (i), if the consideration paid in any such acquisition of Common Stock consisted, in whole or part, of consideration other than cash, the Board of Directors of the corporation shall take such action, as in its judgment it deems appropriate, to establish the cash value of such consideration, but such valuation shall not be less than the cash value, if any, ascribed to such consideration by the Acquiring Person. (ii) The highest sale price per share of Common Stock for any trading day during the eighteen months prior to the notice to holders of Common Stock referred to in Section 10.3 herein. For purposes of this subsection (ii), the sale price for any trading day shall be the last sale price per share of Common Stock traded on the New York Stock Exchange or other national securities exchange, or, if Common Stock of the corporation is not then traded on a national securities exchange, the mean of the closing bid and asked price per share of Common Stock. (iii) The amount of shareholders' equity in respect of each outstanding share of Common Stock as determined in accordance with generally accepted accounting principles and as reflected in any published report by the corporation as at the fiscal year quarter ending immediately preceding the notice to shareholders referred to in Section 10.3 herein. Subsection 10.5.1. The determinations to be made pursuant to Section 10.5 shall be made by the Board of Directors not later than the date of the notice to holders of Common Stock referred to in Section 10.3 herein. In making such determination the Board of Directors may engage such persons, including investment banking firms and the independent accountants, who have reported on the most recent financial statements of the corporation, and utilize employees and agents of the corporation, who will, in the judgment of the Board of Directors, be of assistance to the Board of Directors. Subsection 10.5.2. The determinations to be made pursuant to this Section 10.5, when made by the Board of Directors acting in good faith on the basis of such information and assistance as was then reasonably available for such purpose, shall be conclusive and binding upon the corporation and its shareholders, including any person referred to in Section 10.1 herein. -14- EX-10.2.A 3 MANNING EMPLOYMENT CONTRACT 1 EXHIBIT 10.2(a) EXECUTIVE EMPLOYMENT CONTRACT THIS AGREEMENT, made and entered into as of the 5th day of November, 1987 by and between Universal Foods Corporation, a Wisconsin corporation, (hereinafter referred to as the "Company") and Kenneth P. Manning (hereinafter referred to as "Executive"); W I T N E S S E T H: WHEREAS, the Executive is presently employed by the Company as Group Vice President; and WHEREAS, the Board of Directors of the Company (the "Board") recognizes that the Executive's contribution to the growth and success of the Company has been substantial; and WHEREAS, the Board desires to provide for the continued employment of the Executive and to encourage the continued attention and dedication to the Company of the Executive as a member of the Company's management; and WHEREAS, the Executive is willing to commit himself to continue to serve the Company, on the terms and conditions herein provided. 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: 2 1. Employment. The Company hereby agrees to continue to employ the Executive, and the Executive hereby agrees to continue to serve the Company, on the terms and conditions set forth herein. 2. Term. The employment of the Executive by the Company as provided in Section 1 of this Agreement will commence on the date hereof and end on October 31, 1990, unless further extended or sooner terminated as hereinafter provided. On November 1, 1988, and on November l of each year thereafter, the term of the Executive's employment shall be automatically extended one (1) additional year; provided, however, that in no event shall the term of the Executive's employment extend beyond the end of the calendar month in which the Executive's 65th birthday occurs and provided further that no automatic extension of the term of the Executive's employment shall occur if the Executive is disabled, as determined pursuant to Section 8 of this Agreement, at the time such extension would otherwise automatically become effective. The Company has the right, upon a majority vote of the Board of Directors, to terminate the automatic annual extension of the Executive's term of employment provided herein, in which event this Agreement shall continue in effect only for a term of three years from and after such termination of the automatic annual extension of term, or until the Executive's normal retirement, whichever occurs first. Notwithstanding any other provision of this Agreement, in the event of a "Change of Control" (as hereinafter defined), the term of the Executive's employment shall be automatically extended for an additional period of time so that the Executive's term of employment shall extend to a date exactly three years from the date of such Change of Control subject to automatic extension of such term in accordance with the provisions set forth above in this Section 2. For purposes of this Agreement, a "Change of Control" shall be deemed to have taken place if: -2- 3 (a) A third person, including, without limitation, a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, other than a person or group approved by the Board of Directors of the Company, becomes the beneficial owner of shares of the Company having 30% or more of the total number of votes that may be cast for the election of directors of the Company; or (b) As a result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions (hereinafter referred to as a "Transaction"), the persons who were directors of the Company before the Transaction shall cease to constitute a majority of the Board of Directors of the Company or any successor to the Company. 3. Position and Duties. The Executive shall serve as Group Vice President of the Company and shall have such responsibilities and authority as may from time to time be assigned to the Executive by the Company's Board of Directors or the Chief Executive Officer of the Company. The Executive shall devote substantially all his working time and efforts to the business and affairs of the Company. 4. Place of Performance. In connection with the Executive's employment by the Company, the Executive shall be based in Milwaukee, Wisconsin (at the principal executive offices of the Company) except for required travel on the Company's business to an extent substantially consistent with his present business travel obligations. -3- 4 5. Compensation and Related Matters. (a) During the period of the Executive's employment hereunder, the Company shall pay to the Executive a salary at a rate of not less than $160,008 per annum in equal installments as nearly as practicable [on the fifteenth and last days of each month in arrears]. This base salary shall be reviewed on or before October 1st of each year following the date of this Agreement, while this Agreement remains in force, to ascertain whether in the judgment of the Board or such Committee to whom the Board may have delegated authority, such base salary should be increased and, if so increased, shall not thereafter during the term of this Agreement be decreased. Compensation of the Executive by salary payments shall not be deemed exclusive and shall not prevent the Executive from participating in any other compensation or benefit plan of the Company. The base salary payments (including any increased salary payments) hereunder shall not in any way limit or reduce any other obligation of the Company hereunder, and no other compensation, benefit or payment hereunder shall in any way limit or reduce the obligation of the Company to pay the Executive's base salary hereunder. In addition to the base salary described in this paragraph, the Executive shall receive bonuses if earned in the judgment of the Board of Directors or its delegee. (b) During the term of the Executive's employment hereunder, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in performing services hereunder, including all expenses of travel and living expenses while away from home on business or at the request of and in the service of the Company, provided that such expenses are incurred and accounted for in accordance with the policies and procedures presently established by the Company. -4- 5 (c) The Executive shall be entitled to participate in all of the Company's employee benefit plans and arrangements in effect on the date hereof (including, without limitation, each pension and retirement plan and arrangement, supplemental pension and retirement plan and arrangement, deferred compensation plan, profit sharing plan, stock option plan, health and split-dollar life insurance, disability plan, dental program, executive car program and vacation plan). The Executive shall be entitled to participate in or receive benefits under any employee benefit plan or arrangement made available by the Company in the future to its executives and key management employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements. Nothing paid to the Executive under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the salary payable to the Executive pursuant to paragraph (a) of this Section. (d) The Executive shall be entitled to the number of vacation days in each calendar year determined in accordance with the Company's vacation plan. The Executive shall also be entitled to all paid holidays given by the Company to its executives. (e) The Company shall furnish the Executive with office space, secretarial assistance and such other facilities and services as shall be suitable to the Executive's position and adequate for the performance of his duties as set forth in Section 3 hereof. 6. Offices. The Executive agrees to serve without additional compensation, if elected or appointed thereto, as a director of the Company -5- 6 and any of its subsidiaries and in one or more executive offices of any of the Company's subsidiaries, provided that the Executive is indemnified for serving in any such capacities on a basis no less favorable than is currently provided by the Company's By-laws. 7. Death. If the Executive shall die during the term of his employment hereunder but prior to the delivery of a Notice of Termination (as hereinafter defined) by the Company or by the Executive for Good Reason (as hereinafter defined), the Executive's employment shall terminate and the provisions of any Company plans or programs providing death benefits shall become effective. 8. Disability. (a) If during the term of the Executive's employment hereunder he becomes disabled and thereby prevented from performing his duties, the Executive shall not be paid pursuant to paragraph 5(a) above, but rather the Company shall pay him commencing on the date of the disability until he reaches age 65 or the termination of his disability, whichever is first to occur, such amounts which an individual in his earnings category would be normally entitled to receive as full Long Term Disability ("LTD") coverage under the Company LTD plan then in effect, but not less than 60% of his base salary as determined under paragraph 5(a) above at the time of such disability. During the term of his disability, the Executive also shall receive the employee benefits (or service credits therefor, as the case may be) as provided in 5(c) above. The obligation to provide the foregoing disability benefits shall survive the termination of this Agreement provided the disability was incurred before termination. -6- 7 (b) To determine whether the Executive is disabled for the purposes of this Agreement, either party may from time to time request a medical examination of the Executive by a doctor on the staff of Milwaukee Medical Clinic, or as the parties may otherwise agree, and the written medical opinion of such doctor shall be conclusive and binding upon the parties as to whether or not the Executive has become disabled and the date when such disability arose. The cost of any such medical examinations shall be borne by the Company. 9. Termination by the Company. (a) Termination for Cause. This Agreement may be terminated by the Board of Directors at any time for cause which shall be defined to mean theft, dishonesty, fraudulent misconduct, disclosure of trade secrets, gross dereliction of duty (unless significantly changed after a Change of Control without the Executive's consent) or other grave misconduct on the part of the Executive which is substantially injurious to the Company. The Executive shall not be deemed to have been terminated for cause without (i) reasonable notice to the Executive setting forth the reasons for the Company's intention to terminate for cause, (ii) an opportunity for the Executive, together with his counsel, to be heard before the Board and (iii) delivery to the Executive of a Notice of Termination from the Board finding that in the good faith opinion of the Board the Executive was guilty of conduct set forth above in this Section, and specifying the particulars thereof in detail. In the event this Agreement is terminated for cause, the Executive shall forfeit his right to any and all benefits he would otherwise have been entitled to receive under this Agreement. -7- 8 (b) Prior to a Change of Control. The Company has the right to terminate the employment of the Executive prior to a Change of Control, upon at least thirty days' prior written notice, if such termination is approved by a majority vote of the Board taken at a meeting duly called to consider such matter. In the event of termination of the Executive's employment pursuant to this paragraph 9(b), the Company shall provide the Executive with the following "Termination Benefits"; provided, however, that the payment of the Bonus Amount shall be at the sole discretion of the Committee: (i) an amount equal to (A) the Executive's annual base salary in effect as of the date of such termination and, if the Committee so decides, (B) the amount of the Executive's bonus with respect to the most recently completed fiscal year (the amount described in this clause B is referred to in this Agreement as the "Bonus Amount") payable in twelve (12) substantially equal monthly installments commencing as of the first day of the next month following such termination of employment; and (ii) for a period ending upon (A) the payment of the last monthly installment under subparagraph 9(b)(i) above or (B) the Executive's obtaining new employment, whichever is earlier. The Executive shall continue to be covered at the expense of the Company by the same or equivalent hospital, medical, accident, disability and life insurance coverage as he was covered by immediately prior to his termination of employment with the Company. The Termination Benefits constitute liquidated damages and severance pay and shall be in lieu of further salary for periods following termination of the Executive's employment pursuant to paragraph 9(a) or 9(b), as the case may be. Upon payment of the Termination Benefits to the Executive, the Company shall have no further obligations to the Executive under this Agreement. -8- 9 (c) After a Change of Control. The Company has the right to terminate the employment of the Executive after a Change of Control, upon at least thirty days' prior written notice, if such termination is approved by a majority vote of the Board taken at a meeting duly called to consider such matter. If the Company shall terminate the employment of the Executive at any time during the term of his employment hereunder and after a Change of Control, other than for cause under paragraph 9(a) of this Agreement, then the Executive shall be entitled to the following "Change of Control Benefits": (i) The Company shall promptly pay the Executive a lump sum amount equal to three times the sum of (A) the Executive's annual base salary in effect as of such date of termination and (B) the amount of the largest bonus paid to the Executive by the Company with respect to any twelve-month period during the three years preceding such date of termination. (ii)The Executive will be entitled to receive pension and supplemental deferred compensation benefits in addition to those provided for him under the Company's Retirement Plan for Salaried Employees and his Supplemental Deferred Compensation Agreement, respectively. The amount of additional pension and supplemental deferred compensation benefits will be equal to the difference between the amount he (or in the event of his death, his surviving spouse or other beneficiary) would be actually entitled to receive upon retirement under the terms and conditions of such plan and agreement as in effect on the date of termination under this paragraph 9(c), and the amount he (or such surviving spouse or beneficiary) would have been entitled to receive under such terms and conditions if (A) his benefits under such plan and agreement had been fully vested on such date of termination; and -9- 10 (B) he had continued to work until attaining age 65 at a salary rate equal to his base salary increased by an amount equal to his largest bonus with respect to any twelve-month period during the three year period preceding such date of termination; 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 and supplemental deferred compensation benefits. The Executive shall be entitled to elect to receive his additional pension and supplemental deferred compensation benefits in any form (e.g. joint and survivor) that would have been available to him under the terms and conditions of the Company's Retirement Plan for Salaried Employees and Supplemental Deferred Compensation Agreement, respectively, as in effect on the date of termination under this paragraph 9(c), and (subject to reduction, if any, under such terms) at any time after he has attained the age at which early retirement is permitted. (iii) For a period ending two years from the date of termination under this paragraph 9(c) or three years from the date of the Change of Control, whichever is later, the Executive shall continue to be covered at the expense of the Company by the same or equivalent hospital, medical, accident, disability and life insurance coverage as he was covered by immediately prior to termination of his employment. (iv) It is the intention of the Company and the Executive that no portion of the Change of Control Benefits or any other payment under this Agreement, or payments to or for the benefit of the Executive under any other agreement or plan, be deemed to be an "excess parachute payment" as defined in Section 280G of the Code or its successors. It is agreed that the present value of the Change of Control Benefits and any other payments to or for the -10- 11 benefit of the Executive in the nature of compensation receipt of which are contingent on the Change of Control of the Company and to which Section 280G of the Code or any successor provision thereto applies (in the aggregate "Total Benefits") shall not exceed an amount equal to one dollar 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 (the "Excise Tax") or which the Company may pay without loss of deduction under Section 280G(a) of the Code or any successor provision thereto. Present value for purposes of this Agreement shall be calculated in accordance with Section 1274(b)(2) of the Code or any successor provision thereto. Within 45 days following delivery of the Notice of Termination or notice by either party to the other of its belief that there is a payment or benefit due the Executive which will result in an excess parachute payment, the Executive and the Company, at the Company's expense, shall obtain the opinion of such legal counsel (the opinion of legal counsel need not be unqualified), and certified public accountants as the Executive may choose, which sets forth (a) the amount of the Base Period Income of the Executive, (b) the present value of Total Benefits and (c) the amount and present value of any excess parachute payments. In the event that such opinions determine that there would be an excess parachute payment, the amount set forth in paragraph 9(c)(i) of this Agreement or any other payment determined by such counsel to be includible in Total Benefits, shall be reduced or eliminated as specified by the Executive in writing delivered to the Company within 30 days of his receipt of such opinions or, if the Executive fails to so notify the Company, then as the Company shall reasonably determine, so that under the bases of calculation set forth in such opinions the Total Benefits paid to the Executive shall be an amount equal to one dollar less than the maximum amount which the Executive may receive without becoming subject to the Excise Tax (the "Reduced -11- 12 Amount"). The provisions of this subparagraph 9(c)(iv), including the calculations, notices and opinions provided for herein shall be based upon the conclusive presumption that (x) the compensation and benefits provided for in Section 5 hereof and (y) any other compensation earned prior to the Change of Control by the Executive pursuant to the Company's compensation programs if payment of such other compensation would have been made in the future in any event, even though the timing of such payment is triggered by the Change of Control, are reasonable; provided, however, that in the event such legal counsel so requests in connection with the opinion required by this subparagraph 9(c)(iv), the Executive and the Company shall obtain, at the Company's expense, and the legal counsel may rely on in providing the opinion, the advice of a firm of recognized executive compensation consultants as to the reasonableness of any item of compensation to be received by the Executive. For purposes of this Agreement, the term "Base Period Income" shall be an amount equal to the Executive's "annualized includible compensation" from the Company for the "base Period" as defined in Sections 280G(d)(1) and (2) of the Code or any successor provisions thereto. In the event that the provisions of Sections 28OG and 4999 of the Code or any successor provision are repealed without succession this paragraph 9(c)(iv) shall be of no further force or effect. As a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by legal counsel and accountants as provided in this subparagraph 9(c)(iv), it is possible that amounts will have been paid or distributed by the Company to or for the benefit of the Executive pursuant to this Agreement which should not have been so paid or distributed ("Overpayment") or that additional amounts which will have not been paid or distributed by the Company to or for the benefit of the Executive -12- 13 pursuant to this Agreement could have been so paid or distributed ("Underpayment"), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that such legal counsel, based upon the assertion of a deficiency by the Internal Revenue Service against the Company or the Executive which such legal counsel believes has a high probability of success or other controlling precedent or substantial authority, determines that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for the benefit of the Executive shall be treated for all purposes as a loan to the Executive which the Executive shall repay to the Company together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that no amount shall be payable by the Executive to the Company if and to the extent such payment would not reduce the amount which is subject to taxation under Section 4999 of the Code. In the event that such legal counsel, based upon controlling precedent or other substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code. The Change of Control Benefits shall constitute liquidated damages and severance pay and upon payment of the Change of Control Benefits to the Executive the Company shall have no further obligation to the Executive under this Agreement except as set forth in the last preceding paragraph. 10. Termination by the Executive. (a) The Executive has the right to terminate his employment at any time upon thirty days' prior written notice. If the Executive terminates his employment for any reason other than death, disability, retirement, or Good -13- 14 Reason after a Change of Control, the Company may provide the Executive with any or all of the following "Discretionary Benefits," if any, in its sole discretion: (i) the continuation of the Executive's salary payments with a maximum continuation of up to twelve (12) months; and/or (ii) the Bonus Amount, or any fraction thereof, payable in equal monthly installments over the same period of time as the salary continuation under subparagraph 10(a)(i) above (the "Salary Continuation Period"), or if there is no such salary continuation and a Bonus Amount is to be paid, such Bonus Amount shall be payable in twelve (12) substantially equal monthly installments commencing as of the first day of the next month following termination of employment under this paragraph 10(a); and (iii) if the Company decides in its sole discretion to continue the Executive's salary under subparagraph 10(a)(i) above, the Executive shall continue to be covered at the expense of the Company by the same or equivalent hospital, medical, accident, disability and life insurance coverage as he was covered by immediately prior to his termination of employment pursuant to paragraph 10(a) of this Agreement, for a period ending at the end of the Salary Continuation Period, or upon the Executive's obtaining new employment, whichever is earlier. (b) The Executive may terminate his employment for Good Reason after a Change of Control. In the event of such termination, the Company shall pay the Executive the Change of Control Benefits as described in paragraph 9(c) of this Agreement. The Change of Control Benefits constitute liquidated damages -14- 15 and severance pay and upon payment thereof by the Company to the Executive, the Company shall have no further obligations to the Executive under this Agreement. For purposes of this Agreement, "Good Reason" shall mean: (i) Any breach of this Agreement by the Company; (ii) the assignment to the Executive of any duties inconsistent with, or the reduction of powers or functions associated with, his positions, duties, responsibilities and status with the Company immediately prior to a Change of Control, or any removal of the Executive from or any failure to re-elect the Executive to any positions or offices the Executive held immediately prior to such Change of Control, except in connection with the termination of the Executive's employment by the Company for cause or by reason of disability; (iii) the Company's mandatory transfer of the Executive to another geographic location other than Milwaukee, Wisconsin (the principal executive offices of the Company), except for required travel on the Company's business to an extent substantially consistent with the Executive's business travel obligations immediately prior to such Change of Control; (iv) the failure by the Company to continue in effect any employee benefit plan or arrangement as described in paragraph 5(c) hereof in which the Executive was participating immediately prior to a Change of Control, the taking of any action by the Company which would adversely affect the Executive's participation in, or materially reduce the Executive's benefits under, any of such plans or arrangements or deprive the Executive of any -15- 16 material fringe benefit enjoyed by the Executive immediately prior to such Change of Control; or (v) a significant adverse change, without the Executive's written consent, in working conditions or status 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 reduction in the level of support services, staff, secretarial and other assistance, office space and accoutrements available to a level below that which is reasonably necessary for the performance of the Executive's duties as set forth in Section 3 hereof. In the event that the Executive shall in good faith give a Notice of Termination (as hereinafter defined) for Good Reason and it shall thereafter be determined that Good Reason did not exist, the employment of the Executive shall, unless the Company and the Executive shall otherwise mutually agree, be deemed to have terminated, at the date of giving such purported Notice of Termination, by mutual consent of the Company and the Executive and the Executive shall be entitled to receive only Discretionary Benefits, if any, as described under paragraph 10(a) of this Agreement. 11. Notice of Termination. Any termination of the Executive's employment by the Company under Section 9 or by the Executive for Good Reason after a Change of Control shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. -16- 17 12. Interest and Costs. In the event that any payments due to the Executive hereunder shall fail to be paid when due, such unpaid amounts shall bear interest at the rate of 12% per annum and if such unpaid amounts are collected by law or through an attorney-at-law, the Executive shall also be entitled to collect reasonable attorneys' fees and all costs of collection. 13. Noncompetition. For a period of one year after the termination of active employment hereunder, the Executive shall not, within the United States, except as permitted by the Company's prior written consent, engage in, be employed by, or in any way advise or act for, or have any financial interest in any business which is a competitor of the Company. The ownership of less than Five Percent of any class of securities of any corporation listed on a national securities exchange or regularly traded over the counter even though such corporation may be a competitor of the Company as specified above, shall not be deemed as constituting a financial interest in such competitor. 14. Successors; Binding Agreement. (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which -17- 18 executes and delivers the agreement provided for in this Section 14 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law. (b) This Agreement and all rights of the Executive hereunder shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devises and legatees. If the Executive should die while any amounts would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's devisee, legatee, or other designee or, if there be no such designee, to the Executive's estate. 15. Notice. All notices, requests, demands and other communications required or permitted to be given by either party to the other party by this Agreement (including, without limitation, any Notice of Termination of employment) shall be in writing and shall be deemed to have been duly given when delivered personally or received by certified or registered mail, return receipt requested, postage prepaid, at the address of the other party, as follows: If to the Company, to: Universal Foods Corporation 433 East Michigan Street Milwaukee, Wisconsin 53202 Attention: Board of Directors and Secretary If to Executive, to: Mr. Kenneth P. Manning 2914 East Newberry Blvd. Milwaukee, Wisconsin 53211 -18- 19 Either party hereto may change its address for purposes of this Section 15 by giving fifteen (15) days prior notice to the other party hereto. 16. Severability. If any term or provision of this Agreement or the application hereof to any person or circumstance shall to any extent be invalid or unenforceable, the remainder of this Agreement or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 17. Headings. The headings in this Agreement are inserted for convenience of reference only and shall not be part of or control or affect the meaning of this Agreement. 18. Governing Law. This Agreement has been executed and delivered in the State of Wisconsin and shall in all respects be governed by, and construed and enforced in accordance with, the laws of the State of Wisconsin. 19. Payroll and Withholding Taxes. All payments to be made or benefits to be provided hereunder by the Company shall be subject to reduction for any applicable payroll-related or withholding taxes. 20. Entire Agreement. This Agreement supersedes any and all other oral or written agreements heretofore made relating to the subject matter hereof and constitutes the entire agreement of the parties relating to the subject matter hereof. -19- 20 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. UNIVERSAL FOODS CORPORATION ("Company") By /s/ Guy A. Osborn ------------------------------------ [CORPORATE SEAL] Attest /s/ T.M. O'Reilly, Sec. --------------------------------- EXECUTIVE /s/ Kenneth P. Manning (SEAL) ---------------------------------- -20- EX-10.2.B 4 AMENDMENT TO MANNING EMPLOYEMENT CONTRACT 1 EXHIBIT 10.2(b) AMENDMENT TO EXECUTIVE EMPLOYMENT CONTRACT THIS AMENDMENT, made and entered into as of the 10th day of May 1988, by and between Universal Foods Corporation, a Wisconsin corporation, (hereinafter referred to as the "Company") and Kenneth P. Manning (hereinafter referred to as "Executive"); W I T N E S S E T H: WHEREAS, the Company and the Executive desire to amend that certain Executive Employment Contract made and entered into as of November 5, 1987, by and between the Company and the Executive (hereinafter referred to as the "Executive Employment Contract"); and WHEREAS, the Executive is willing to commit himself to continue to serve the Company on the terms and conditions provided in the Executive Employment Contract as amended by this Amendment. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties hereto mutually agree to the following clarification and amendments to the Executive Employment Contract: 1. Change of Control. The Company and the Executive agree that a Change of Control (as defined in the Executive Employment Contract) shall be deemed to have taken place if either of the events described in subparagraph 2(i) or 2(ii) of the Executive Employment Contract shall have occurred. 2. Termination by the Executive. The last paragraph of Section 10 of the Executive Employment Contract is hereby eliminated and replaced in its entirety with the following paragraph: 2 In the event that the Executive shall in good faith give a Notice of Termination (as hereinafter defined) for Good Reason and it shall thereafter be determined that Good Reason did not exist, the employment of the Executive hereunder shall, at the Executive's option, continue after such determination; provided, that the Executive continued his employment during the dispute concerning his alleged Good Reason pursuant to his option to do so as provided in Section 11 of this Agreement and provided further, that in no event shall such employment extend beyond the Employment Period. If the Executive does not choose to continue his employment hereunder after such determination, the employment of the Executive shall be deemed to have terminated at the date of giving such purported Notice of Termination by mutual consent of the Company and the Executive; provided, however, that if the Executive exercises his option to continue his employment during the period of dispute concerning his alleged Good Reason as provided in Section 11 of this Agreement, the Executive shall be entitled to compensation and benefits during such continued employment in accordance with Section 5 of this Agreement. 3. Notice of Termination. The following sentence shall be added at the end of Section 11 of the Executive Employment Contract: In the event that one party notifies the other that a dispute exists concerning the termination, the Executive's employment under this Agreement shall, at the Executive's option, not be terminated until such dispute is finally resolved either by mutual written agreement of the parties or in accordance with Section 21 of this Agreement, as the case may be; provided, however, that in no event shall such employment extend beyond the Executive's term of employment as provided in Section 2 of this Agreement. -2- 3 4. Interest and Costs. The following sentence shall be added at the end of Section 12 of the Executive Employment Contract: Within ten (10) 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, such reasonable attorneys' fees and costs of collection in advance of the final disposition or conclusion of any dispute, legal or arbitration proceeding with respect to such collection. 5. Resolution of Disputes. A new Section 21 shall be added to the Executive Employment Contract as follows: 21. Resolution of Disputes. Any dispute arising out of this Agreement shall, at the Executive's option, be determined by arbitration under the rules of the American Arbitration Association then in effect or by litigation. Whether the dispute is to be settled by arbitration or litigation, the venue for the arbitration or litigation shall be Milwaukee, Wisconsin or, if the Executive is no longer residing or working in Milwaukee, Wisconsin, such venue shall, at the Executive's election, be the city in which the Executive resides. More specifically, if litigation is the method the Executive elects for settling any such dispute, venue for the litigation shall be in the Circuit Court of Milwaukee County or, if the Executive is no longer residing or working in Milwaukee, Wisconsin, such venue shall, at the Executive's election, be the county court for the county in which the Executive resides. The parties consent to jurisdiction in the selected venue notwithstanding their residence or situs. 6. Payment Obligations Absolute. A new Section 22 shall be added to the Executive Employment Contract as follows: -3- 4 22. Payment Obligations Absolute. The Company's obligation during and after the term of the Executive's employment hereunder to pay the Executive the compensation and to make the 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. All amounts payable by the Company hereunder shall be paid without notice (except as provided in Section 12 of this Agreement) or demand. The Company will not seek to recover all or any part of any such payment from the Executive or from whomsoever may be entitled thereto, for any reason whatsoever, except as provided in subparagraph 9(b)(ii) of this Agreement. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above. UNIVERSAL FOODS CORPORATION ("Company") [CORPORATE SEAL] By: /s/ John L. Hammond VP --------------------------------- Attest: /s/ T.M. O'Reilly, Sec. ----------------------------- EXECUTIVE /s/ Kenneth P. Manning ------------------------------------- Kenneth P. Manning 2093L 4/25/88 -4- EX-10.2.C 5 1985 STOCK PLAN FOR EXECUTIVE EMPLOYEES 1 EXHIBIT 10.2(c) 1985 STOCK PLAN FOR EXECUTIVE EMPLOYEES (NOTE: ALL REFERENCES TO THE NUMBER OF SHARES OF STOCK SET FORTH IN THIS STOCK PLAN FOR EXECUTIVE EMPLOYEES HAVE BEEN ADJUSTED TO GIVE EFFECT TO THE COMPANY'S 3-FOR-2 STOCK SPLITS ON AUGUST 7, 1986, OCTOBER 7, 1988 AND OCTOBER 16, 1989, AND THE COMPANY'S 2-FOR-1 STOCK SPLIT, EFFECTED IN THE FORM OF A 100% STOCK DIVIDEND, PAID TO SHAREHOLDERS OF RECORD ON MAY 6, 1998.) SECTION 1. ESTABLISHMENT, PURPOSE AND EFFECTIVE DATE OF PLAN 1.1 Establishment. Universal Foods Corporation, a Wisconsin corporation, hereby establishes the "1985 STOCK PLAN" (the "PLAN")for key employees. The Plan permits the grant of Stock Options, Stock Appreciation Rights, Restricted Stock and Formula Price Stock. 1.2 Purpose. The purpose of the Plan is to advance the interests of the Company, by encouraging and providing for the acquisition of an equity interest in the success of the Company by key employees, and by enabling the Company to attract and retain the services of key employees upon whose judgment, interest and special effort the successful conduct of its operations is largely dependent. 1.3 Effective Date. The Plan shall become effective as of the date of its adoption by the Board of Directors of the Company, subject to ratification by the shareholders of the Company within twelve months of the adoption date. SECTION 2. DEFINITIONS 2.1 Definitions. Whenever used herein, the following terms shall have their respective meanings set forth below: (a) "Board" means the Board of Directors of the Company. (b) "Code" means the Internal Revenue Code of 1954, as amended. (c) "Committee" means the Personnel Policy Committee of the Board consisting of three or more members of the Board who are not, and who have not been at any time within one year prior to appointment to the Committee, eligible to receive Stock under the Plan or any similar plan of the Company. (d) "Company" means Universal Foods Corporation, a Wisconsin corporation. (e) "Disability" means the permanent and total inability, by reason of physical or mental infirmity, or both, of a Participant to perform the 2 work customarily assigned to him by the Company. The determination of the existence or nonexistence of Disability shall be made by the Committee based on satisfactory medical evidence. (f) "Fair Market Value" means the last sale price of the Stock as reported by the New York Stock Exchange on a particular date. (g) "Formula Price Stock" means stock, subject to a permanent discount from Fair Market Value, granted to a Participant pursuant to Section 11 of this Plan. (h) "Option" means the right to purchase Stock at a stated price for a specified period of time. For purposes of the Plan an Option may be either (i) an "incentive stock option" within the meaning of Section 422A of the Code or (ii) a "nonstatutory stock option." (i) "Original Discount" means the amount by which the Fair Market Value of Formula Price Stock as of the date of purchase exceeds the purchase price determined by the Committee. (j) "Participant" means any individual designated by the Committee to participate in the Plan. (k) "Period of Restriction" means the period during which the transfer of shares of Restricted Stock is restricted pursuant to Section 10 of the Plan. (l) "Restricted Stock" means Stock granted to a Participant pursuant to Section 10 of the Plan. (m) "Retirement" (including "Early Retirement" and "Normal Retirement") means termination of employment under the terms of the Company's salaried pension plan. (n) "Stock" means the Common Stock of the Company, par value of $0.10. (o) "Stock Appreciation Right" means the right to receive a cash payment from the Company equal to the excess of the Fair Market Value of a share of stock at the date of exercise over a specified price fixed by the Committee, which shall not be less than 100% of the Fair Market Value of the Stock on the date of grant. In the case of a Stock Appreciation Right which is granted in conjunction with an Option, the specified price shall be the Option exercise price. A-2 3 2.2 Gender and Number. Except when otherwise indicated by the context, words in the masculine gender when used in the Plan shall include the feminine gender, the singular shall include the plural and the plural shall include the singular. SECTION 3. ELIGIBILITY AND PARTICIPATION 3.1 Eligibility and Participation. Participants in the Plan shall be selected by the Committee from among those key employees of the Company and its subsidiaries, including subsidiaries which become such after adoption of the Plan, who are recommended for participation by the Chief Executive Officer and who, in the opinion of the Committee, are in a position to contribute materially to the Company's continued growth and development and to its long-term financial success. SECTION 4. ADMINISTRATION 4.1 Administration. The Committee shall be responsible for the administration of the Plan. The Committee, by majority action thereof, is authorized to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, to provide for conditions and assurances deemed necessary or advisable to protect the interests of the Company and to make all other determinations necessary or advisable for the administration of the Plan, but only to the extent not contrary to the express provisions of the Plan. Determinations, interpretations or other actions made or taken by the Committee pursuant to the provisions of the Plan shall be final and binding and conclusive for all purposes and upon all persons whomsoever. SECTION 5. STOCK SUBJECT TO PLAN 5.1 Number. The total number of shares of Stock subject to issuance under the Plan may not exceed 2,700,000, subject to adjustment upon occurrence of any of the events indicated in Subsection 5.3. Of this total number, up to 1,012,500 shares of Stock may be granted in Restricted Stock and/or Formula Price Stock to Participants under the Plan. However, the number of shares of Formula Price Stock granted pursuant to Section 11 herein may not exceed 506,250. The shares to be delivered under the Plan may consist, in whole or in part, of authorized but unissued Stock or treasury Stock, not reserved for any other purpose. 5.2 Unused Stock. In the event any shares of Stock that are subject to an Option which, for any reason, expires or is terminated unexercised as to such A-3 4 shares, or any shares of Stock subject to a Restricted Stock or Formula Price Stock grant made under the Plan are reacquired by the Company pursuant to the Plan, such shares again shall become available for issuance under the Plan. 5.3 Adjustment in Capitalization. In the event of any change in the outstanding shares of Stock that occurs after ratification of the Plan by the shareholders of the Company by reason of a Stock dividend or split, recapitalization, merger, consolidation, combination, exchange of shares or other similar corporate change, the aggregate number of shares of Stock subject to each outstanding Option, and its stated Option price, shall be appropriately adjusted by the Committee, whose determination shall be conclusive; provided, however, that fractional shares shall be rounded to the nearest whole share. In such event, the Committee shall also have discretion to make appropriate adjustments in the number of shares subject to Restricted and Formula Price Stock grants then outstanding under the Plan pursuant to the terms of such grants or otherwise. SECTION 6. STOCK APPRECIATION RIGHTS SUBJECT TO PLAN 6.1 Plan Limitation. The number of Stock Appreciation Rights which may be granted pursuant to the Plan may not exceed 1,350,000. 6.2 Unexercised Rights. In the event any Stock Appreciation Rights expire unexercised, such Rights again shall become available for issuance under the Plan. 6.3 Adjustment in Capitalization. In the event of any change in the outstanding shares of Stock that occurs after ratification of the Plan by the shareholders of the Company by reason of a Stock dividend or split, recapitalization, merger, consolidation, combination, exchange of shares or other similar corporate change, the Committee shall make appropriate adjustments in the number of outstanding Rights and the related grant values. SECTION 7. DURATION OF PLAN 7.1 Duration of Plan. The Plan shall remain in effect, subject to the Board's right to earlier terminate the Plan pursuant to Section 15 hereof, until all Stock subject to it shall have been purchased or acquired pursuant to the provisions A-4 5 hereof. Notwithstanding the foregoing, no Option, Stock Appreciation Right, Restricted Stock or Formula Stock may be granted under the Plan on or after the tenth (10th) anniversary of the Plan's effective date. SECTION 8. STOCK OPTIONS 8.1 Grant of Options. Subject to the provisions of Sections 5 and 7, Options may be granted to Participants at any time and from time to time as shall be determined by the Committee. The Committee shall have complete discretion in determining the number of Options granted to each Participant. The Committee also shall determine whether an Option is to be an incentive stock option within the meaning of Section 422A of the Code or a nonstatutory stock option. However, in no event shall the Fair Market Value (determined at the date of grant) of Stock for which a Participant may be granted incentive stock options in any calendar year exceed $100,000 plus any unused carryover calculated in accordance with Section 422(A)(c)(4) of the Code. Nor shall any incentive stock option be granted to any person who owns, directly or indirectly, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company. Nothing in this Section 8 of the Plan shall be deemed to prevent the grant of nonstatutory stock options in excess of the maximum established by Section 422A of the Code. 8.2 Option Agreement. Each Option shall be evidenced by an Option agreement that shall specify the type of Option granted, the Option price, the duration of the Option, the number of shares of Stock to which the Option pertains and such other provisions as the Committee shall determine. 8.3 Option Price. No Option granted pursuant to the Plan shall have an Option price that is less than the Fair Market Value of the Stock on the date the Option is granted. 8.4 Duration of Options. Each Option shall expire at such time as the Committee shall determine at the time it is granted, provided, however, that no Option shall be exercisable later than the tenth (10th) anniversary date of its grant. 8.5 Exercise of Options. Options granted under the Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for all Participants. Notwithstanding the provisions of this Subsection 8.5, no incentive stock option granted to a Participant under the Plan shall be exercisable while there is A-5 6 outstanding (within the meaning of Section 422A(c)(7) of the Code) any other incentive stock option previously granted to such Participant under the Plan, or any other plan meeting the requirements of Section 422A of the Code, to purchase Stock. For this purpose, an incentive stock option will be considered "outstanding" until such option is exercised in full or expires by reason of lapse of time. 8.6 Payment. The Option price upon exercise of any Option shall be payable to the Company in full either (i) in cash or its equivalent, or (ii) by tendering shares of previously acquired Stock having a Fair Market Value at the time of exercise equal to the total Option price, or (iii) by a combination of (i)and (ii). The proceeds from such a payment shall be added to the general funds of the Company and shall be used for general corporate purposes. 8.7 Restrictions on Stock Transferability. The Committee shall impose such restrictions on any shares of Stock acquired pursuant to the exercise of an Option under the Plan as it may deem advisable, including, without limitation, restrictions under applicable Federal securities law, under the requirements of any stock exchange upon which such shares of Stock are then listed and under any blue sky or state securities laws applicable to such shares. 8.8 Termination of Employment Due to Death, Disability or Retirement. In the event the employment of a Participant is terminated by reason of death, Disability or Retirement, any outstanding Options shall become immediately exercisable at any time prior to the expiration date of the Options or within 12 months after such date of termination of employment, whichever period is the shorter. However, in the case of incentive stock options, the favorable tax treatment prescribed under Section 422A of the Code shall not be available if such options are not exercised within three months after such date of termination due to Retirement. 8.9 Termination of Employment Other than for Death, Disability or Retirement. If the employment of the Participant shall terminate for any reason other than death, Disability or Retirement, the rights under any then outstanding Option granted pursuant to the Plan shall terminate upon the expiration date of the Option or three months after such date of termination of employment, whichever first occurs. 8.10 Nontransferability of Options. No Option granted under the Plan may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, A-6 7 otherwise than by will or by the laws of descent and distribution. Further, all Options granted to a Participant under the Plan shall be exercisable during his lifetime only by such Participant. SECTION 9. STOCK APPRECIATION RIGHTS 9.1 Grant of Stock Appreciation Rights. Subject to the provisions of Sections 6 and 7, Stock Appreciation Rights may be granted to Participant. A Stock Appreciation Right shall relate only to a specific Option granted under the Plan and may relate to all or part of the Option shares covered by the related Option. 9.2 Exercise of Stock Appreciation Rights. Stock Appreciation Rights shall be exercisable at such time or times, on the conditions and to the extent and in the proportion, that the related Option is exercisable and may be exercised for all or part of the shares of Stock subject to the related Option. 9.3 Effect of Exercise. Upon exercise of any number of Stock Appreciation Rights, the number of Option shares subject to the related Option shall be reduced accordingly and such Option shares may not again be subjected to an Option under this Plan. The exercise of any number of Options shall result in an equivalent reduction in the number of Option shares covered by the related Stock Appreciation Right and such shares may not again be subject to a Stock Appreciation Right under this Plan; provided, however, that if a Stock Appreciation Right was granted for less than all of the Option shares covered by the related Option, no such reduction shall be made until such time as the number of shares exercised under the related Option exceeds the number of Option shares not covered by the Stock Appreciation Right. 9.4 Payment of Stock Appreciation Right Amount. Upon exercise of the Stock Appreciation Right, the holder shall be entitled to receive payment in cash of an amount (subject to Subsection 9.7 below) determined by multiplying: (a) The difference between the Fair Market Value of a share of Stock at the date of exercise over the price fixed by the Committee at the date of grant by (b) The number of shares with respect to which the Stock Appreciation Right is exercised. In the case of a Stock Appreciation Right which is granted in conjunction with an Incentive Stock Option, the amount determined under (a) above shall be determined by using a price fixed by the Committee at the date of grant which does not exceed the option price of the related Incentive Stock Option. A-7 8 9.5 Limit on Appreciation. The Committee may, in its sole discretion, establish (at the time of grant) a maximum amount per share which will be payable upon exercise of a Stock Appreciation Right. 9.6 Rule 16b-3 Requirements. Notwithstanding any other provision of the Plan, the Committee may impose such conditions on exercise of a Stock Appreciation Right (including, without limitation, the right of the Committee to limit the time of exercise to specified periods) as may be required to satisfy the requirements of Rule 16b-3 (or any successor rule) under the Securities Exchange Act of 1934. 9.7 Termination of Employment. In the event the employment of a Participant is terminated by reason of death, Disability, Retirement or any other reason, any Rights outstanding shall terminate in the same manner as specified for Options under Subsections 8.8 and 8.9 herein. SECTION 10. RESTRICTED STOCK 10.1 Grant of Restricted Stock. Subject to the provisions of Sections 5 and 7, the Committee, at any time and from time to time, may grant shares of Restricted Stock under the Plan to such Participants and in such amounts as it shall determine. Each grant of Restricted Stock shall be in writing. 10.2 Transferability. Except as provided in Section 10 hereof, the shares of Restricted Stock granted hereunder may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated for such period of time as shall be determined by the Committee and shall be specified in the Restricted Stock grant, or upon earlier satisfaction of other conditions as specified by the Committee in its sole discretion and set forth in the Restricted Stock grant. 10.3 Other Restrictions. The Committee shall impose such other restrictions on any shares of Restricted Stock granted pursuant to the Plan as it may deem advisable including, without limitation, restrictions under applicable Federal or state securities laws, and may legend the certificates representing Restricted Stock to give appropriate notice of such restrictions. 10.4 Certificate Legend. In addition to any legends placed on certificates pursuant to Subsection 10.3 hereof, each certificate representing shares of Restricted Stock granted pursuant to the Plan share bear the following legend: "The sale or other transfer of the shares of stock represented by this certificate, whether voluntary, involuntary or by operation of law, is subject to certain restrictions on transfer set forth in Universal Foods Corporation's A-8 9 1985 Stock Plan, rules of administration adopted pursuant to such Plan and a Restricted Stock grant dated _____________. A copy of the Plan, such rules and such Restricted Stock grant may be obtained from the Secretary of Universal Foods Corporation." 10.5 Removal of Restrictions. Except as otherwise provided in Section 10 hereof, shares of Restricted Stock covered by each Restricted Stock grant made under the Plan shall become freely transferable by the Participant after the last day of the Period of Restriction. Once the shares are released from the restrictions, the Participant shall be entitled to have the legend required by Subsection 10.4 removed from his Stock certificates. 10.6 Voting Rights. During the Period of Restriction, Participants holding shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those shares. 10.7 Dividends and Other Distributions. During the Period of Restriction, Participants holding shares of Restricted Stock granted hereunder shall be entitled to receive all dividends and other distributions paid with respect to those shares while they are so held. If any such dividends or distributions are paid in shares of Stock, the shares shall be subject to the same restrictions on transferability as the shares of Restricted Stock with respect to which they were paid. 10.8 Termination of Employment Due to Retirement. In the event that a Participant terminates his employment with the Company because of Normal Retirement, any remaining Period of Restriction applicable to the Restricted Stock pursuant to Subsection 10.2 hereof shall automatically terminate and, except as otherwise provided in Subsection 10.3, the shares of Restricted Stock shall thereby be free of restrictions and freely transferrable. In the event that a Participant terminates his employment with the Company because of Early Retirement, the Committee may, in its sole discretion, waive the restrictions remaining on any or all shares of Restricted Stock pursuant to Subsection 10.2 hereof and/or add such new restrictions to those shares of Restricted Stock as it deems appropriate. 10.9 Termination of Employment Due to Death or Disability. In the event a Participant terminates his employment with the Company because of death or Disability during the Period of Restriction, the restrictions applicable to the shares of Restricted Stock pursuant to Subsection 10.2 hereof shall terminate automatically with respect to that number of shares (rounded to the nearest whole number) equal to the total number of shares of Restricted Stock granted to A-9 10 such Participant multiplied by the number of full months which have elapsed since the date of grant divided by the maximum number of full months of the Period of Restriction. All remaining shares shall be forfeited and returned to the Company; provided, however, that the Committee may, in its sole discretion, waive the restrictions remaining on any or all such remaining shares. 10.10 Termination of Employment for Reasons Other than Death, Disability or Retirement. In the event that a Participant terminates his employment with the Company for any reason other than those set forth in Subsections 10.8 and 10.9 hereof during the Period of Restriction, then any shares of Restricted Stock still subject to restrictions at the date of such termination shall automatically be forfeited and returned to the Company; provided, however, that, in the event of an involuntary termination of the employment of a Participant by the Company, the Committee may, in its sole discretion, waive the automatic forfeiture of any or all such shares and/or may add such new restrictions to such shares of Restricted Stock as it deems appropriate. 10.11 Nontransferability of Restricted Stock. No shares of Restricted Stock granted under the Plan may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, otherwise than by will or by the laws of descent and distribution until the termination of the applicable Period of Restriction. All rights with respect to Restricted Stock granted to a Participant under the Plan shall be exercisable during his lifetime only by such Participant. 10.12 Election to Sell Shares to the Company. A participant, or in the case of his death his beneficiary or estate, may elect to sell to the Company up to one-half of the shares of Restricted Stock issued to him pursuant to the Plan and upon which the restrictions set forth in Subsections 10.2 and 10.3 lapsed. To the extent permitted by law, the Company shall purchase such shares. Each such sale must occur within sixty (60) days after the last day of the Period of Restriction for such shares and shall be for a price equal to the Fair Market Value determined as of the last business day of the Period of Restriction of the shares of Restricted Stock to be sold. Such price shall be payable in cash or by check in one lump sum payment, unless provisions relating to payment for such shares in installments are agreed to by the Company and the Participant (or his beneficiary or estate). SECTION 11. FORMULA PRICE STOCK 11.1 Award of Formula Price Stock. Subject to the provisions of Sections 5 and 7, the Committee may offer shares of Formula Price Stock to such Participants as it shall determine, at a price to be determined by the Committee, A-10 11 but in no event shall the price be less than fifty percent (50%) of the Stock's Fair Market Value on the date of the award. 11.2 Right of First Refusal. Before Formula Price Stock granted under this Plan may be offered for sale to a third party, the Participant first must offer it to the Company. The Company, upon receipt of written notice from the Participant, shall have the right to purchase all or any part of the offered shares at a price per share equal to the Fair Market Value on the date of the Participant's offer less the Original Discount to the Participant. If the Company does not elect to exercise its right of first refusal, such right, including the formula price, shall be retained by the Company and shall apply to any subsequent owners of the shares. 11.3 Exercise and Payment. Offers of Formula Price Stock to Participants shall be acceptable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for all Participants. The purchase price of Formula Price Stock upon acceptance of the offer shall be payable in full either (i)in cash or its equivalent, or (ii) by tendering shares of previously acquired stock having a fair market value at the time of exercise equal to the total purchase price, or (iii) by a combination of (i) and (ii). 11.4 Certificate Legend. Each certificate representing shares of Formula Price Stock granted pursuant to the Plan shall bear the following legend: "The sale or other transfer of the shares of stock represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to Universal Foods Corporation's right of first refusal to purchase the shares at a price equal to the stock's fair market value, as determined by the last sale price of the stock as reported by the New York Stock Exchange on the date of offer, less $_______________." 11.5 Voting Rights. Participants holding shares of Formula Price Stock granted hereunder may exercise full voting rights with respect to those shares. 11.6 Dividends and Other Distributions. Participants holding shares of Formula Price Stock granted hereunder shall be entitled to receive all dividends and other distributions paid with respect to those shares while they are so held. If any such dividends or distributions are paid in shares of Stock, the shares shall be subject to the same restrictions on transferability as the shares of Formula Price Stock with respect to which they were paid. A-11 12 11.7 Termination of Employment. In the event the employment of a Participant is terminated by reason of death, Disability, Retirement or any other reason, the Participant (or his beneficiary or estate) shall offer the shares of Formula Price Stock to the Company for purchase as described in Subsection 11.2 hereof. SECTION 12. BENEFICIARY DESIGNATION 12.1 Beneficiary Designation. Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his death before he receives any or all of such benefit. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee and will be effective only when filed by the Participant in writing with the Committee during his lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to his estate. SECTION 13. RIGHTS OF EMPLOYEES 13.1 Employment. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment at any time nor confer upon any Participant any right to continue in the employ of the Company. 13.2 Participation. No employee shall have a right to be selected as a Participant or, having been so selected, to be selected again as a Participant. SECTION 14. MERGER OR CONSOLIDATION 14.1 Treatment of Options and Stock Appreciation Rights. A dissolution or a liquidation of the Company or a merger and consolidation in which the Company is not the surviving corporation shall cause every Option and Stock Appreciation Right outstanding hereunder to terminate. However, the Participant shall have the right, except as limited by Subsection 14.4 hereof, to exercise any unexercised Options or Stock Appreciation Rights, whether or not then exercisable, subject to the provisions of the Plan immediately prior to such dissolution, liquidation, merger or consolidation. 14.2 Treatment of Restricted Stock. In the event of a merger or consolidation such that the Company is not the surviving corporation, all restrictions shall lapse, except as limited by Subsection 14.4 hereof, on the shares of A-12 13 Restricted Stock granted under the Plan and thereafter such shares shall be freely transferable by the Participant, subject to applicable federal or state securities laws. 14.3 Treatment of Formula Price Stock. Immediately prior to a merger or consolidation in which the Company is not the surviving corporation, the Participant shall be required, except as limited by Subsection 14.4 hereof, to offer the shares of Formula Price Stock to the Company for purchase as described in Subsection 11.2 hereof. 14.4 Limitation on Payments. If the receipt of any payment under this Section by any Participant shall, in the opinion of independent tax counsel of recognized standing selected by the Company, result in the payment by such Participant of any excise tax provided for in Section 28UG and Section 4999 of the Code, then the amount of such payment shall be reduced to the extent required, in the opinion of independent tax counsel selected as aforesaid, to prevent the imposition of such excise tax. SECTION 15. AMENDMENT, MODIFICATION AND TERMINATION OF PLAN 15.1 Amendment, Modification and Termination of Plan. The Board may at any time terminate, and from time to time may amend or modify the Plan, provided, however, that no such action of the Board, without approval of the shareholders, may: (a) Increase the total amount of Stock which may be issued under the Plan, except as provided in Subsections 5.1 and 5.3 of the Plan. (b) Change the provisions of the Plan regarding the Option price except as permitted by Subsection 5.3. (c) Materially increase the cost of the Plan or materially increase the benefits to Participants. (d) Extend the period during which Options, Stock Appreciation Rights, Restricted Stock, or Formula Stock may be granted. (e) Extend the maximum period after the date of grant during which Options may be exercised. No amendment, modification or termination of the Plan shall in any manner adversely affect any Options, Stock Appreciation Rights, Restricted Stock, or Formula Price Stock theretofore granted under the Plan, without the consent of the Participant. A-13 14 SECTION 16. TAX WITHHOLDING 16.1 Tax Withholding. Whenever shares of Stock are to be issued under the Plan, the Company shall have the power to require the recipient of the Stock to remit to the Company an amount sufficient to satisfy Federal, state and local withholding tax requirements. SECTION 17. INDEMNIFICATION 17.1 Indemnification. Each person who is or shall have been a member of the Committee or of the Board shall be indemnified and held harmless by the Company against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by him in connection with or resulting from any claim, action, suit or proceeding to which he may be a party or in which he may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him in settlement thereof, with the Company's approval, or paid by him in satisfaction of any judgment in any such action, suit or proceeding against him, provided he shall give the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. SECTION 18. REQUIREMENTS OF LAW 18.1 Requirements of Law. The granting of Options, Stock Appreciation Rights, Restricted Stock or Formula Price Stock, and the issuance of shares of Stock upon the exercise of an Option shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. 18.2 Governing Law. The Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Wisconsin. A-14 EX-10.2.D 6 1990 EMPLOYEE STOCK PLAN AS AMENDED 9/10/98 1 EXHIBIT 10.2(d) UNIVERSAL FOODS CORPORATION 1990 EMPLOYEE STOCK PLAN AS AMENDED AND RESTATED EFFECTIVE SEPTEMBER 10, 1998 (NOTE: ALL REFERENCES TO THE NUMBER OF SHARES OF STOCK SET FORTH IN THIS AMENDED AND RESTATED EMPLOYEE STOCK PLAN HAVE BEEN ADJUSTED TO GIVE EFFECT TO THE COMPANY'S 2-FOR-1 STOCK SPLIT, EFFECTED IN THE FORM OF A 100% STOCK DIVIDEND, PAID TO SHAREHOLDERS OF RECORD ON MAY 6, 1998.) SECTION 1. ESTABLISHMENT, PURPOSE AND EFFECTIVE DATE OF PLAN. 1.1 Establishment. Universal Foods Corporation, a Wisconsin corporation, hereby establishes the "UNIVERSAL FOODS CORPORATION 1990 EMPLOYEE STOCK PLAN" (the "Plan") for key employees. The Plan permits the grant of Stock Options, Stock Appreciation Rights and Restricted Stock. 1.2 Purpose. The purpose of the Plan is to advance the interests of the Company, by encouraging and providing for the acquisition of an equity interest in the success of the Company by key employees, and by enabling the Company to attract and retain the services of key employees upon whose judgment, interest and special effort the successful conduct of its operations is largely dependent. 1.3 Effective Date. The Plan shall become effective January 25, 1990, subject to ratification by the shareholders of the Company. SECTION 2. DEFINITIONS. 2.1 Definitions. Whenever used herein, the following terms shall have their respective meanings set forth below: (a) "Board" means the Board of Directors of the Company. (b) "Code" means the Internal Revenue Code of 1986, as amended. (c) "Committee" means the Personnel Policy Committee of the Board consisting of three or more members of the Board who are not, and who have not been at any time within one year prior to appointment to the Committee, eligible to receive Stock, Options or Stock Appreciation Rights under the Plan or any similar plan of the Company or its affiliates. 2 (d) "Company" means Universal Foods Corporation, a Wisconsin corporation. (e) "Fair Market Value" means the closing price of the Stock as reported by the New York Stock Exchange on a particular date. (f) "Option" means the right to purchase Stock at a stated price for a specified period of time. For purposes of the Plan an Option may be either (i) an "incentive stock option" within the meaning of Section 422A of the Code or (ii) a "nonstatutory stock option." (g) "Participant" means any individual designated by the Committee to participate in the Plan. (h) "Period of Restriction" means the period during which the transfer of shares of Restricted Stock is restricted pursuant to Section 10 of the Plan. (i) "Restricted Stock" means Stock granted to a Participant pursuant to Section 10 of the Plan. (j) "Stock" means the Common Stock of the Company, par value of $0.10. (k) "Stock Appreciation Right" means the right to receive a cash payment from the Company equal to the excess of the Fair Market Value of a share of Stock at the date of exercise over the Option exercise price fixed by the Committee, which shall not be less than 100% of the Fair Market Value of the Stock on the date of grant. 2.2 Gender and Number. Except when otherwise indicated by the context, words in the masculine gender when used in the Plan shall include the feminine gender, the singular shall include the plural and the plural shall include the singular. SECTION 3. ELIGIBILITY AND PARTICIPATION. 3.1 Eligibility and Participation. Participants in the Plan shall be selected by the Committee from among those key employees of the Company and its subsidiaries, including subsidiaries which become such after adoption of the Plan, who are recommended for participation by the Chief Executive Officer and who, in the opinion of the Committee, are in a position to contribute materially to the -2- 3 Company's continued growth and development and to its long-term financial success. No member of the Committee shall be eligible to participate in the Plan for a period of one year after having served on the Committee. SECTION 4. ADMINISTRATION. 4.1 Administration. The Committee shall be responsible for the administration of the Plan. The Committee, by majority action thereof, is authorized to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, to provide for conditions and assurances deemed necessary or advisable to protect the interests of the Company and to make all other determinations necessary or advisable for the administration of the Plan, but only to the extent not contrary to the express provisions of the Plan. Determinations, interpretations or other actions made or taken by the Committee pursuant to the provisions of the Plan shall be final and binding and conclusive for all purposes and upon all persons whomsoever. SECTION 5. STOCK SUBJECT TO PLAN. 5.1 Number. The total number of shares of Stock subject to issuance under the Plan may not exceed 2,600,000, subject to adjustment upon occurrence of any of the events indicated in Subsection 5.3. Of this total number, up to 800,000 shares of Stock may be granted in Restricted Stock to Participants under the Plan. The shares to be issued under the Plan may consist, in whole or in part, of authorized but unissued Stock or treasury Stock, not reserved for any other purpose. 5.2 Unused Stock. In the event any shares of Stock that are subject to an Option which, for any reason, expires, is cancelled or is terminated unexercised as to such shares, or any shares of Stock subject to a Restricted Stock grant made under the Plan are reacquired by the Company pursuant to the Plan, such shares again shall become available for issuance under the Plan. 5.3 Adjustment in Capitalization. In the event of any change in the outstanding shares of Stock that occurs after ratification of the Plan by the shareholders of the Company by reason of a Stock dividend or split, recapitalization, merger, consolidation, combination, spin-off, split-up, exchange of shares or other similar corporate change, the aggregate number of shares of Stock authorized for issuance under the Plan as well as Stock subject to each outstanding Option, and its stated Option price, shall be appropriately adjusted by the Committee, whose determination shall be conclusive; provided, however, that fractional shares shall be rounded to the nearest whole share. In such event, the Committee shall also have discretion to make appropriate adjustments in the -3- 4 number of shares authorized for issuance under the Plan as well as shares subject to Restricted Stock grants then outstanding under the Plan pursuant to the terms of such grants or otherwise. SECTION 6. STOCK APPRECIATION RIGHTS SUBJECT TO PLAN. 6.1 Plan Limitation. The number of Stock Appreciation Rights which may be granted pursuant to the Plan may not exceed 1,200,000. 6.2 Unexercised Rights. In the event any Stock Appreciation Rights expire, terminate or are cancelled unexercised, such Stock Appreciation Rights again shall become available for issuance under the Plan. 6.3 Adjustment in Capitalization. In the event of any change in the outstanding shares of Stock that occurs after ratification of the Plan by the shareholders of the Company by reason of a Stock dividend or split, recapitalization, merger, consolidation, combination, spin-off, split-up, exchange of shares or other similar corporate change, the Committee shall make appropriate adjustments in the number of outstanding Stock Appreciation Rights and the related grant values, whose determination shall be conclusive. SECTION 7. DURATION OF PLAN. 7.1 Duration of Plan. The Plan shall remain in effect, subject to the Board's right to earlier terminate the Plan pursuant to Section 14 hereof, until all Stock subject to it shall have been purchased or acquired pursuant to the provisions hereof. Notwithstanding the foregoing, no Option, Stock Appreciation Right, or Restricted Stock may be granted under the Plan on or after the tenth (10th) anniversary of the Plan's effective date. SECTION 8. STOCK OPTIONS. 8.1 Grant of Options. Subject to the provisions of Sections 5 and 7, Options may be granted to Participants at any time and from time to time as shall be determined by the Committee. The Committee shall have complete discretion in determining the number of Options granted to each Participant. The Committee also shall determine whether an Option is to be an incentive stock option within the meaning of Section 422A of the Code or a nonstatutory stock option. Incentive stock options shall be subject to the following limitations: (a) The Fair Market Value (determined at the date of grant) of Stock with respect to which incentive stock options are exercisable for -4- 5 the first time by a Participant during any calendar year shall not exceed $100,000. (b) No incentive stock option may be granted to any person who owns, directly or indirectly, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company. Nothing in this Section 8 of the Plan shall be deemed to prevent the grant of nonstatutory stock options in excess of the maximum established by Section 422A of the Code. 8.2 Option Agreement. Each Option shall be evidenced by an Option Agreement that shall specify the type of Option granted, the Option price, the duration of the Option, the number of shares of Stock to which the Option pertains and such other provisions as the Committee shall determine. 8.3 Option Price. No Option granted pursuant to the Plan shall have an Option price that is less than the Fair Market Value of the Stock on the date the Option is granted. 8.4 Duration of Options. Each Option shall expire at such time as the Committee shall determine, provided, however, that no incentive stock option shall be exercisable later than the tenth (10th) anniversary date of its grant. 8.5 Exercise of Options. Options granted under the Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for all Participants. Any Option granted to an elected officer, director or more than 10% shareholder may not be exercised until at least six months following the grant date. 8.6 Payment. The Option price of any Option shall be payable to the Company in full upon exercise (i) in cash or its equivalent including, in the discretion of the Committee, a promissory note issued to the Company by the Participant, which note shall (v) be secured by the Stock issued; (w) be for a term of not more than ten (10) years; (x) bear interest at a rate of not less than the prime rate (as determined by the Committee) in effect on the date such promissory note is issued; (y) require at least annual payments of principal and interest; and (z) contain such other terms and conditions as the Committee determines; provided, that in the case of the exercise of an incentive stock option which is outstanding as of September 10, 1998, such promissory note shall not be considered the equivalent of cash; (ii) by tendering shares of Stock having a Fair -5- 6 Market Value at the time of exercise equal to the total Option price; (iii) by a combination of cash and shares of Stock; or (iv) by electing to have the Company withhold from the shares of Stock otherwise issuable upon exercise of the Option that number of shares of Stock otherwise having a Fair Market Value at the time of exercise plus cash for any fractional share amounts, equal to the total Option price; provided that any such election by an elected officer, director or more than 10% shareholder of the Company with respect to an incentive stock option outstanding as of September 10, 1998 must be made during the ten-day period beginning on the third business day following the release of the Company's quarterly or annual summary statement of sales and earnings. The proceeds from such a payment shall be added to the general funds of the Company and shall be used for general corporate purposes. 8.7 Restrictions on Stock Transferability. The Committee shall impose such restrictions on any shares of Stock acquired pursuant to the exercise of an Option under the Plan as it may deem advisable, including, without limitation, restrictions under applicable Federal securities law, under the requirements of any stock exchange upon which such shares of Stock are then listed and under any blue sky or state securities laws applicable to such shares. 8.8 Nontransferability Of Options. No Option granted under the Plan may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, otherwise than by will or by the laws of descent and distribution. Further, all Options granted to a Participant under the Plan shall be exercisable during his lifetime only by such Participant. SECTION 9. STOCK APPRECIATION RIGHTS. 9.1 Grant of Stock Appreciation Rights. Subject to the provisions of Sections 6 and 7, Stock Appreciation Rights may be granted to Participants. A Stock Appreciation Right shall relate only to a specific Option granted under the Plan and may relate to all or part of the Option shares covered by the related Option. 9.2 Exercise of Stock Appreciation Rights. Stock Appreciation Rights shall be exercisable at such time or times, on the conditions and to the extent and in the proportion, that the related Option is exercisable and may be exercised for all or part of the shares of Stock subject to the related Option. Any Stock Appreciation Right granted to an elected officer, director or more than 10% shareholder of the Company may not be exercised until at least six months after the grant date and shall only be exercisable during the ten-day period beginning on the third business day following the release of the Company's quarterly or annual summary statement of sales and earnings. -6- 7 9.3 Effect of Exercise. Upon exercise of any number of Stock Appreciation Rights, the number of Option shares subject to the related Option shall be reduced accordingly and such Option shares may not again be subjected to an Option under the Plan. The exercise of any number of Options shall result in an equivalent reduction in the number of Option shares covered by the related Stock Appreciation Right and such shares may not again be subject to a Stock Appreciation Right under this Plan; provided, however, that if a Stock Appreciation Right was granted for less than all of the Option shares covered by the related Option, no such reduction shall be made until such time as the number of shares exercised under the related Option exceeds the number of Option shares not covered by the Stock Appreciation Right. 9.4 Payment of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation Right, the holder shall be entitled to receive payment in cash of an amount determined by multiplying: (a) The difference between the Fair Market Value of a share of Stock at the date of exercise over the price fixed by the Committee at the date of grant by (b) The number of shares with respect to which the Stock Appreciation Right is exercised. In the case of a Stock Appreciation Right which is granted in conjunction with an incentive stock option, the amount determined under (a) above shall be determined by using a price fixed by the Committee at the date of grant which does not exceed the Option price of the related incentive stock option. 9.5 Limit on Appreciation. The Committee may, in its sole discretion, establish (at the time of grant) a maximum amount per share which will be payable upon exercise of a Stock Appreciation Right. 9.6 Rule 16b-3 Requirements. Notwithstanding any other provision of the Plan, the Committee may impose such conditions on exercise of a Stock Appreciation Right (including, without limitation, the right of the Committee to limit the time of exercise to specified periods) as may be required to satisfy the requirements of Rule 16b-3 (or any successor rule) under the Securities Exchange Act of 1934. SECTION 10. RESTRICTED STOCK. 10.1 Grant of Restricted Stock. Subject to the provisions of Sections 5 and 7, the Committee, at any time and from time to time, may grant shares of -7- 8 Restricted Stock under the Plan to such Participants and in such amounts as it shall determine. Each grant of Restricted Stock shall be in writing. 10.2 Transferability. Except as provided in Section 10 hereof, the shares of Restricted Stock granted hereunder may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated for such period of time as shall be determined by the Committee and shall be specified in the Restricted Stock grant, or upon earlier satisfaction of other conditions as specified by the Committee in its sole discretion and set forth in the Restricted Stock grant. 10.3 Other Restrictions. The Committee shall impose such other restrictions on any shares of Restricted Stock granted pursuant to the Plan as it may deem advisable including, without limitation, restrictions under applicable Federal or state securities laws, and may legend the certificates representing Restricted Stock to give appropriate notice of such restrictions. Any Restricted Stock granted to an elected officer, director or more than 10% shareholder may not be sold for at least six months after the date it is granted. 10.4 Certificate Legend. In addition to any legends placed on certificates pursuant to Subsection 10.3 hereof, each certificate representing shares of Restricted Stock granted pursuant to the Plan share bear the following legend: "The sale or other transfer of the shares of stock represented by this certificate, whether voluntary, involuntary or by operation of law, is subject to certain restrictions on transfer set forth in the Universal Foods Corporation 1990 Employee Stock Plan, rules of administration adopted pursuant to such Plan and a Restricted Stock grant dated ___________, 19___. A copy of the Plan, such rules and such Restricted Stock grant may be obtained from the Secretary of Universal Foods Corporation." 10.5 Removal of Restrictions. Except as otherwise provided in Section 10 hereof, shares of Restricted Stock covered by each Restricted Stock grant made under the Plan shall become freely transferable by the Participant after the last day of the Period of Restriction. Once the shares are released from the restrictions, the Participant shall be entitled to have the legend required by Subsection 10.4 removed from his Stock certificates. 10.6 Voting Rights. During the Period of Restriction, Participants holding shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those shares. -8- 9 10.7 Dividends and Other Distributions. During the Period of Restriction, Participants holding shares of Restricted Stock granted hereunder shall be entitled to receive all dividends and other distributions paid with respect to those shares while they are so held. If any such dividends or distributions are paid in shares of Stock, the shares shall be subject to the same restrictions on transferability as the shares of Restricted Stock with respect to which they were paid. 10.8 Nontransferability of Restricted Stock. No shares of Restricted Stock granted under the Plan may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, otherwise than by will or by the laws of descent and distribution until the termination of the applicable Period of Restriction. All rights with respect to Restricted Stock granted to a Participant under the Plan shall be exercisable during his lifetime only by such Participant. 10.9 Election to Sell Shares to the Company. A Participant, or in the case of his death his beneficiary or estate, may elect to sell to the Company up to one-half of the shares of Restricted Stock issued to him pursuant to the Plan and upon which the restrictions set forth in Subsections 10.2 and 10.3 lapsed. To the extent permitted by law, the Company shall purchase all such shares. Each such sale must occur within sixty (60) days after the last day of the Period of Restriction for such shares and shall be for a price equal to the Fair Market Value determined as of the last business day of the Period of Restriction of the shares of Restricted Stock to be sold. Such price shall be payable in cash or by check in one lump sum payment, unless provisions relating to payment for such shares in installments are agreed to by the Company and the Participant (or his beneficiary or estate). SECTION 11. BENEFICIARY DESIGNATION. 11.1 Beneficiary Designation. Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his death before he receives any or all of such benefit. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee and will be effective only when filed by the Participant in writing with the Committee during his lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to his estate. SECTION 12. RIGHTS OF EMPLOYEES. 12.1 Employment. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment at any -9- 10 time nor confer upon any Participant any right to continue in the employ of the Company. 12.2 Participation. No employee shall have a right to be selected as a Participant or, having been so selected, to be selected again as a Participant. SECTION 13. CHANGE OF CONTROL. 13.1 A "Change of Control" of the Company means: (a) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (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 (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) 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"); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (1) any acquisition 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 corporation controlled by the Company or (4) any acquisition pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section; or (b) individuals who, as of September 10, 1998, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to September 10, 1998 whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or -10- 11 (c) consummation by the Company 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 assets of another entity (a "Business Combination"), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such business combination beneficially own, directly or indirectly, more than 50% of, respectively, the then 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 Business Combination (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) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or of such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board, providing for such Business Combination; or (d) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. 13.2 Treatment of Options and Stock Appreciation Rights. In the event of a Change of Control of the Company, all Options and Stock Appreciation Rights outstanding as of the date of such Change of Control, and which are not then exercisable and vested, shall become fully exercisable and vested immediately prior to such Change of Control. -11- 12 13.3 Treatment of Restricted Stock. In the event of a Change of Control of the Company, the restrictions applicable to any shares of Restricted Stock shall lapse and such shares shall become immediately vested and shall be freely transferable by the Participant, subject to any applicable Federal or state securities laws. 13.4 Certain Agreement Provisions Void. In the event of a Change of Control of the Company, any Forfeiture Provision (as hereinafter defined) contained in any Grant Agreement (as hereinafter defined) shall be null and void and of no further force and effect. For purposes of this Section 13.4: (a) "Grant Agreement" means an agreement between the Company and a Participant concerning the grant of nonstatutory stock options or Restricted Stock (but not incentive stock options) entered into prior to September 10, 1998. (b) "Forfeiture Provision" means a provision in a Grant Agreement which provides for the forfeiture of vested or unvested stock options or Restricted Stock, as the case may be, or the repayment to the Company of the "Option Spread" or "Restricted Stock Value" (as such terms are defined or used in the Grant Agreement), as the case may be, upon the occurrence, during or for a specified period after the termination of the Participant's employment with the Company or any subsidiary, of one or more of: (i) the Participant engaging in acts competitive with the Company or any subsidiary; (ii) the Participant soliciting the employees or customers of the Company or any subsidiary in a manner which is competitive with the Company or any subsidiary or disruptive to the business of the Company or any subsidiary; (iii) the Participant disclosing Information (as such term is defined in or used in such Grant Agreement) obtained during the course of the Participant's employment with the Company or any subsidiary; (iv) any actions of similar nature to the foregoing which are defined in such Grant Agreement as "Restricted Activities" or "Prohibited Activities"; or (v) the violation by the Participant of any written agreement between the Company and the Participant prohibiting all or any of the activities described in (i) through (iv), above. SECTION 14. AMENDMENT, MODIFICATION AND TERMINATION OF PLAN. 14.1 Amendment, Modification and Termination of Plan. The Board may at any time terminate, and from time to time may amend or modify the Plan, -12- 13 provided, however, that no such action of the Board, without approval of the shareholders, may: (a) Increase the total amount of Stock which may be issued under the Plan, except as provided in Subsections 5.1 and 5.3 of the Plan. (b) Materially modify the eligibility requirements as provided in Section 3. (c) Materially increase the benefits accruing to Participants under the Plan. SECTION 15. TAX WITHHOLDING. 15.1 Tax Withholding. Whenever shares of Stock are to be issued under the Plan, the Company shall have the power to withhold from any cash otherwise payable to the Participant or to require the recipient of the Stock to remit to the Company an amount sufficient to satisfy Federal, state and local withholding tax requirements. With the consent of the Committee, a Participant who is an appointed officer of the Company may remit cash, already owned Company stock or request the Company to satisfy withholding requirements from the exercised Option stock or Restricted Stock. SECTION 16. INDEMNIFICATION. 16.1 Indemnification. Each person who is or shall have been a member of the Committee or of the Board shall be indemnified and held harmless by the Company against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by him in connection with or resulting from any claim, action, suit or proceeding to which he may be a party or in which he may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him in settlement thereof, with the Company's approval, or paid by him in satisfaction of any judgment in any such action, suit or proceeding against him, provided he shall give the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Articles of Incorporation or bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. -13- 14 SECTION 17. REQUIREMENTS OF LAW. 17.1 Requirements of Law. The granting of Options, Stock Appreciation Rights or Restricted Stock and the issuance of shares of Stock upon the exercise of an option shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. 17.2 Governing Law. The Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Wisconsin. -14- EX-10.2.E 7 AMENDMENT #1 TO 1990 EMPLOYEE STOCK PLAN 1 EXHIBIT 10.2(e) AMENDMENT NO. 1 TO THE UNIVERSAL FOODS CORPORATION 1990 EMPLOYEE STOCK PLAN The Universal Foods Corporation 1990 Employee Stock plan (the "Plan") is hereby amended, effective as of September 10, 1998, as set forth below: 1. Section 8.6 of the Plan is amended to read in its entirety as follows: 8.6 Payment. The Option price of any Option shall be payable to the Company in full upon exercise (i) in cash or its equivalent including, in the discretion of the Committee, a promissory note issued to the Company by the Participant, which note shall (v) be secured by the Stock issued; (w) be for a term of not more than ten (10) years; (x) bear interest at a rate of not less than the prime rate (as determined by the Committee) in effect on the date such promissory note is issued; (y) require at least annual payments of principal and interest; and (z) contain such other terms and conditions as the Committee determines; provided, that in the case of the exercise of an incentive stock option which is outstanding as of September 10, 1998, such promissory note shall not be considered the equivalent of cash; (ii) by tendering shares of Stock having a Fair Market Value at the time of exercise equal to the total Option price; (iii) by a combination of cash and shares of Stock; or (iv) by electing to have the Company withhold from the shares of Stock otherwise issuable upon exercise of the Option that number of shares of Stock otherwise having a Fair Market Value at the time of exercise plus cash for any fractional share amounts, equal to the total Option price; provided that any such election by an elected officer, director or more than 10% shareholder of the Company with respect to an incentive stock option outstanding as of September 10, 1998 must be made during the ten-day period beginning on the third business day following the release of the Company's quarterly or annual summary statement of sales and earnings. The proceeds from such a payment shall be added to the general funds of the Company and shall be used for general corporate purposes. 2. Section 13 of the Plan is amended to read in its entirety as follows: Section 13. Change of Control. 13.1 A "Change of Control" of the Company means: 2 (a) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (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 (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) 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"); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (1) any acquisition 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 corporation controlled by the Company or (4) any acquisition pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section; or (b) individuals who, as of September 10, 1998, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to September 10, 1998 whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (c) consummation by the Company 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 assets of another entity (a "Business Combination"), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such business combination beneficially own, directly or indirectly, more 2 3 than 50% of, respectively, the then 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 Business Combination (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) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or of such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board, providing for such Business Combination; or (d) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. 13.2 Treatment of Options and Stock Appreciation Rights. In the event of a Change of Control of the Company, all Options and Stock Appreciation Rights outstanding as of the date of such Change of Control, and which are not then exercisable and vested, shall become fully exercisable and vested immediately prior to such Change of Control. 13.3 Treatment of Restricted Stock. In the event of a Change of Control of the Company, the restrictions applicable to any shares of Restricted Stock shall lapse and such shares shall become immediately vested and shall be freely transferable by the Participant, subject to any applicable Federal or state securities laws. 13.4 Certain Agreement Provisions Void. In the event of a Change of Control of the Company, any Forfeiture Provision (as hereinafter defined) 3 4 contained in any Grant Agreement (as hereinafter defined) shall be null and void and of no further force and effect. For purposes of this Section 13.4: (a) "Grant Agreement" means an agreement between the Company and a Participant concerning the grant of nonstatutory stock options or Restricted Stock (but not incentive stock options) entered into prior to the effective date of this amendment (September 10, 1998). (b) "Forfeiture Provision" means a provision in a Grant Agreement which provides for the forfeiture of vested or unvested stock options or Restricted Stock, as the case may be, or the repayment to the Company of the "Option Spread" or "Restricted Stock Value" (as such terms are defined or used in the Grant Agreement), as the case may be, upon the occurrence, during or for a specified period after the termination of the Participant's employment with the Company or any subsidiary, of one or more of: (i) the Participant engaging in acts competitive with the Company or any subsidiary; (ii) the Participant soliciting the employees or customers of the Company or any subsidiary in a manner which is competitive with the Company or any subsidiary or disruptive to the business of the Company or any subsidiary; (iii) the Participant disclosing Information (as such term is defined in or used in such grant Agreement) obtained during the course of the Participant's employment with the Company or any subsidiary; (iv) any actions of similar nature to the foregoing which are defined in such Grant Agreement as "Restricted Activities" or "Prohibited Activities"; or (v) the violation by the Participant of any written agreement between the Company and the Participant prohibiting all or any of the activities described in (i) through (iv), above. 4 EX-10.2.F 8 1994 EMPLOYEE STOCK PLAN AS AMENDED 9/10/98 1 EXHIBIT 10.2(f) UNIVERSAL FOODS CORPORATION 1994 EMPLOYEE STOCK PLAN AS AMENDED AND RESTATED EFFECTIVE SEPTEMBER 10, 1998 (NOTE: ALL REFERENCES TO THE NUMBER OF SHARES OF STOCK SET FORTH IN THIS AMENDED AND RESTATED EMPLOYEE STOCK PLAN HAVE BEEN ADJUSTED TO GIVE EFFECT TO THE COMPANY'S 2-FOR-1 STOCK SPLIT, EFFECTED IN THE FORM OF A 100% STOCK DIVIDEND, PAID TO SHAREHOLDERS OF RECORD ON MAY 6, 1998.) SECTION 1. ESTABLISHMENT, PURPOSE AND EFFECTIVE DATE OF PLAN. 1.1 Establishment. Universal Foods Corporation, a Wisconsin corporation, hereby establishes the "UNIVERSAL FOODS CORPORATION 1994 EMPLOYEE STOCK PLAN" (the "Plan") for key employees. The Plan permits the grant of Stock Options, Stock Appreciation Rights and Restricted Stock. 1.2 Purpose. The purpose of the Plan is to advance the interests of the Company, by encouraging and providing for the acquisition of an equity interest in the success of the Company by key employees, and by enabling the Company to attract and retain the services of key employees upon whose judgment, interest and special effort the successful conduct of its operations is largely dependent. 1.3 Effective Date. The Plan shall become effective January 27, 1994, subject to ratification by the shareholders of the Company. SECTION 2. DEFINITIONS. 2.1 Definitions. Whenever used herein, the following terms shall have their respective meanings set forth below: (a) "Award" means any Options, Stock Appreciation Rights, Restricted Stock or any other award made under the terms of the Plan. (b) "Board" means the Board of Directors of the Company. (c) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (d) "Committee" means the Compensation and Development Committee of the Board, which shall consist of not less than two directors, each of whom is a "disinterested person" within the 2 meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or any successor provision thereto. (e) "Company" means Universal Foods Corporation, a Wisconsin corporation. (f) "Fair Market Value" means the closing price of the Stock as reported by the New York Stock Exchange on a particular date. (g) "Option" means the right to purchase Stock at a stated price for a specified period of time. For purposes of the Plan an Option may be either (i) an "incentive stock option" within the meaning of Section 422 of the Code; or (ii) a "nonstatutory stock option." (h) "Participant" means any individual designated by the Committee to participate in the Plan. (i) "Period of Restriction" means the period during which the transfer of shares of Restricted Stock is restricted pursuant to Section 10 of the Plan. (j) "Restricted Stock" means Stock granted to a Participant pursuant to Section 10 of the Plan. (k) "Stock" means the Common Stock of the Company, par value of $0.10. (l) "Stock Appreciation Right" means the right to receive a cash payment from the Company equal to the excess of the Fair Market Value of a share of Stock at the date of exercise over the Option exercise price fixed by the Committee, which shall not be less than 100% of the Fair Market Value of the Stock on the date of grant. 2.2 Gender and Number. Except when otherwise indicated by the context, words in the masculine gender when used in the Plan shall include the feminine gender, the singular shall include the plural and the plural shall include the singular. SECTION 3. ELIGIBILITY AND PARTICIPATION. 3.1 Eligibility and Participation. Participants in the Plan shall be selected by the Committee from among those key employees of the Company and its -2- 3 subsidiaries, including subsidiaries which become such after adoption of the Plan, who are recommended for participation by the Chief Executive Officer and who, in the opinion of the Committee, are in a position to contribute materially to the Company's continued growth and development and to its long-term financial success. SECTION 4. ADMINISTRATION. 4.1 Administration. The Plan shall be administered by the Committee. The Committee, by majority action thereof, shall have complete and sole authority to designate key employees to be Participants; determine the type of Awards to be granted to Participants; determine the number of shares of Stock to be covered by Awards granted to Participants; determine the terms and conditions of any Award granted to Participants; interpret the Plan; prescribe, amend and rescind rules and regulations relating to the Plan; provide for conditions and assurances deemed necessary or advisable to protect the interests of the Company; and make all other determinations necessary or advisable for the administration of the Plan, but only to the extent not contrary to the express provisions of the Plan. Determinations, interpretations or other actions made or taken by the Committee pursuant to the provisions of the Plan shall be final and binding and conclusive for all purposes and upon all persons whomsoever. SECTION 5. STOCK SUBJECT TO PLAN. 5.1 Number. The total number of shares of Stock subject to issuance under the Plan may not exceed 2,400,000, subject to adjustment upon occurrence of any of the events indicated in Subsection 5.3. Of this total number, up to 500,000 shares of Stock may be granted in Restricted Stock to Participants under the Plan. No participant shall be granted Options, Stock Appreciation Rights or Restricted Stock that could result in such participant receiving more than 300,000 shares of Stock under the Plan. The shares to be issued under the Plan may consist, in whole or in part, of authorized but unissued Stock or treasury Stock, not reserved for any other purpose. 5.2 Unused Stock. In the event any shares of Stock that are subject to an Option which, for any reason, expires, is cancelled or is terminated unexercised as to such shares, such shares again shall become available for issuance under the Plan. 5.3 Adjustment in Capitalization. In the event of any change in the outstanding shares of Stock that occurs after ratification of the Plan by the shareholders of the Company by reason of a Stock dividend or split, recapitalization, merger, consolidation, combination, spin-off, split-up, exchange -3- 4 of shares or other similar corporate change, the aggregate number of shares of Stock authorized for issuance under the Plan as well as Stock subject to each outstanding Option, and its stated Option price, shall be appropriately adjusted by the Committee, whose determination shall be conclusive; provided, however, that fractional shares shall be rounded to the nearest whole share. In such event, the Committee shall also have discretion to make appropriate adjustments in the number of shares authorized for issuance under the Plan as well as shares subject to Restricted Stock grants then outstanding under the Plan pursuant to the terms of such grants or otherwise. SECTION 6. STOCK APPRECIATION RIGHTS SUBJECT TO PLAN. 6.1 Plan Limitation. The number of Stock Appreciation Rights which may be granted pursuant to the Plan may not exceed 800,000. 6.2 Unexercised Rights. In the event any Stock Appreciation Rights expire, terminate or are cancelled unexercised, such Stock Appreciation Rights again shall become available for issuance under the Plan. 6.3 Adjustment in Capitalization. In the event of any change in the outstanding shares of Stock that occurs after ratification of the Plan by the shareholders of the Company by reason of a Stock dividend or split, recapitalization, merger, consolidation, combination, spin-off, split-up, exchange of shares or other similar corporate change, the Committee shall make appropriate adjustments in the number of outstanding Stock Appreciation Rights and the related grant values, whose determination shall be conclusive. SECTION 7. DURATION OF PLAN. 7.1 Duration of Plan. The Plan shall remain in effect, subject to the Board's right to earlier terminate the Plan pursuant to Section 14 hereof, until all Stock subject to it shall have been purchased or acquired pursuant to the provisions hereof. Notwithstanding the foregoing, no Option, Stock Appreciation Right or Restricted Stock may be granted under the Plan on or after the tenth (10th) anniversary of the Plan's effective date. SECTION 8. STOCK OPTIONS. 8.1 Grant of Options. Subject to the provisions of Sections 5 and 7, Options may be granted to Participants at any time and from time to time as shall be determined by the Committee. The Committee shall have complete discretion in determining the number of Options granted to each Participant. The Committee also shall determine whether an Option is to be an incentive stock -4- 5 option within the meaning of Section 422 of the Code or a nonstatutory stock option. Incentive stock options shall be subject to the following limitations: (a) The Fair Market Value (determined at the date of grant) of Stock with respect to which incentive stock options are exercisable for the first time by a Participant during any calendar year shall not exceed $100,000. (b) No incentive stock option may be granted to any person who owns, directly or indirectly, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company. Nothing in this Section 8 of the Plan shall be deemed to prevent the grant of nonstatutory stock options in excess of the maximum established by Section 422 of the Code. 8.2 Option Agreement. Each Option shall be evidenced by an Option agreement that shall specify the type of Option granted, the Option price, the duration of the Option, the number of shares of Stock to which the Option pertains and such other provisions as the Committee shall determine. 8.3 Option Price. No Option granted pursuant to the Plan shall have an Option price that is less than the Fair Market Value of the Stock on the date the Option is granted. 8.4 Duration of Options. Each Option shall expire at such time as the Committee shall determine; provided, however, that no incentive stock option shall be exercisable later than the tenth (10th) anniversary date of its grant. 8.5 Exercise of Options. Options granted under the Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for all Participants. Any Option granted to an elected officer, director or more than 10% shareholder may not be exercised until at least six months following the grant date. 8.6 Payment. The Option price of any Option shall be payable to the Company in full upon exercise (i) in cash or its equivalent including, in the discretion of the Committee, a promissory note issued to the Company by the Participant, which note shall (v) be secured by the Stock issued; (w) be for a term of not more than ten (10) years; (x) bear interest at a rate of not less than the prime rate (as determined by the Committee) in effect on the date such promissory -5- 6 note is issued; (y) require at least annual payments of principal and interest; and (z) contain such other terms and conditions as the Committee determines; provided, that in the case of the exercise of an incentive stock option which is outstanding as of September 10, 1998, such promissory note shall not be considered the equivalent of cash; (ii) by tendering shares of Stock having a Fair Market Value at the time of exercise equal to the total Option price; (iii) by a combination of cash and shares of Stock; or (iv) by electing to have the Company withhold from the shares of Stock otherwise issuable upon exercise of the Option that number of shares of Stock otherwise having a Fair Market Value at the time of exercise plus cash for any fractional share amounts, equal to the total Option price; provided that any such election by an elected officer, director or more than 10% shareholder of the Company with respect to an incentive stock option outstanding as of September 10, 1998 must be made during the ten-day period beginning on the third business day following the release of the Company's quarterly or annual summary statement of sales and earnings. The proceeds from such a payment shall be added to the general funds of the Company and shall be used for general corporate purposes. 8.7 Restrictions on Stock Transferability. The Committee shall impose such restrictions on any shares of Stock acquired pursuant to the exercise of an Option under the Plan as it may deem advisable, including, without limitation, restrictions under applicable Federal securities law, under the requirements of any stock exchange upon which such shares of Stock are then listed and under any blue sky or state securities laws applicable to such shares. 8.8 Nontransferability of Options. No Option granted under the Plan may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, otherwise than by will or by the laws of descent and distribution. Further, all Options granted to a Participant under the Plan shall be exercisable during his lifetime only by such Participant. SECTION 9. STOCK APPRECIATION RIGHTS. 9.1 Grant of Stock Appreciation Rights. Subject to the provisions of Sections 6 and 7, Stock Appreciation Rights may be granted to Participants. A Stock Appreciation Right shall relate only to a specific Option granted under the Plan and may relate to all or part of the Option shares covered by the related Option. 9.2 Exercise of Stock Appreciation Rights. Stock Appreciation Rights shall be exercisable at such time or times, on the conditions and to the extent and in the proportion, that the related Option is exercisable and may be exercised for all or part of the shares of Stock subject to the related Option. Any Stock -6- 7 Appreciation Right granted to an elected officer, director or more than 10% shareholder of the Company may not be exercised until at least six months after the grant date and shall only be exercisable during the ten-day period beginning on the third business day following the release of the Company's quarterly or annual summary statement of sales and earnings. 9.3 Effect of Exercise. Upon exercise of any number of Stock Appreciation Rights, the number of Option shares subject to the related Option shall be reduced accordingly and such Option shares may not again be subjected to an Option under the Plan. The exercise of any number of Options shall result in an equivalent reduction in the number of Option shares covered by the related Stock Appreciation Right and such shares may not again be subject to a Stock Appreciation Right under this Plan; provided, however, that if a Stock Appreciation Right was granted for less than all of the Option shares covered by the related Option, no such reduction shall be made until such time as the number of shares exercised under the related Option exceeds the number of Option shares not covered by the Stock Appreciation Right. 9.4 Payment of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation Right, the holder shall be entitled to receive payment in cash of an amount determined by multiplying: (a) The difference between the Fair Market Value of a share of Stock at the date of exercise over the price fixed by the Committee at the date of grant by (b) The number of shares with respect to which the Stock Appreciation Right is exercised. In the case of a Stock Appreciation Right which is granted in conjunction with an incentive stock option, the amount determined under (a) above shall be determined by using a price fixed by the Committee at the date of grant which does not exceed the Option price of the related incentive stock option. 9.5 Limit on Appreciation. The Committee may, in its sole discretion, establish (at the time of grant) a maximum amount per share which will be payable upon exercise of a Stock Appreciation Right. 9.6 Rule 16b-3 Requirements. Notwithstanding any other provision of the Plan, the Committee may impose such conditions on exercise of a Stock Appreciation Right (including, without limitation, the right of the Committee to limit the time of exercise to specified periods) as may be required to satisfy the -7- 8 requirements of Rule 16b-3 (or any successor rule) under the Securities Exchange Act of 1934. SECTION 10. RESTRICTED STOCK. 10.1 Grant of Restricted Stock. Subject to the provisions of Sections 5 and 7, the Committee, at any time and from time to time, may grant shares of Restricted Stock under the Plan to such Participants and in such amounts as it shall determine. Each grant of Restricted Stock shall be in writing. 10.2 Transferability. Except as provided in Section 10 hereof, the shares of Restricted Stock granted hereunder may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated for such period of time as shall be determined by the Committee and shall be specified in the Restricted Stock grant, or upon earlier satisfaction of other conditions as specified by the Committee in its sole discretion and set forth in the Restricted Stock grant. 10.3 Other Restrictions. The Committee shall impose such other restrictions on any shares of Restricted Stock granted pursuant to the Plan as it may deem advisable including, without limitation, restrictions under applicable Federal or state securities laws, and may legend the certificates representing Restricted Stock to give appropriate notice of such restrictions. Any Restricted Stock granted to an elected officer, director or more than 10% shareholder may not be sold for at least six months after the date it is granted. 10.4 Certificate Legend. In addition to any legends placed on certificates pursuant to Subsection 10.3 hereof, each certificate representing shares of Restricted Stock granted pursuant to the Plan shall bear the following legend: "The sale or other transfer of the shares of stock represented by this certificate, whether voluntary, involuntary or by operation of law, is subject to certain restrictions on transfer set forth in the Universal Foods Corporation 1994 Employee Stock Plan, rules of administration adopted pursuant to such Plan and a Restricted Stock grant dated ____________, 19__. A copy of the Plan, such rules and such Restricted Stock grant may be obtained from the Secretary of Universal Foods Corporation." 10.5 Removal of Restrictions. Except as otherwise provided in Section 10 hereof, shares of Restricted Stock covered by each Restricted Stock grant made under the Plan shall become freely transferable by the Participant after the last day of the Period of Restriction. Once the shares are released from the -8- 9 restrictions, the Participant shall be entitled to have the legend required by Subsection 10.4 removed from his Stock certificates. 10.6 Voting Rights. During the Period of Restriction, Participants holding shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those shares. 10.7 Dividends and Other Distributions. During the Period of Restriction, Participants holding shares of Restricted Stock granted hereunder shall be entitled to receive all dividends and other distributions paid with respect to those shares while they are so held. If any such dividends or distributions are paid in shares of Stock, the shares shall be subject to the same restrictions on transferability as the shares of Restricted Stock with respect to which they were paid. 10.8 Nontransferability of Restricted Stock. No shares of Restricted Stock granted under the Plan may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, otherwise than by will or by the laws of descent and distribution until the termination of the applicable Period of Restriction. All rights with respect to the Restricted Stock granted to a Participant under the Plan shall be exercisable during his lifetime only by such Participant. 10.9 Election to Sell Shares to the Company. A Participant, or in the case of his death his beneficiary or estate, may elect to sell to the Company up to one-half of the shares of Restricted Stock issued to him pursuant to the Plan and upon which the restrictions set forth in Subsections 10.2 and 10.3 lapsed. To the extent permitted by law, the Company shall purchase all such shares. Each such sale must occur within sixty (60) days after the last day of the Period of Restriction for such shares and shall be for a price equal to the Fair Market Value determined as of the last business day of the Period of Restriction of the shares of Restricted Stock to be sold. Such price shall be payable in cash or by check in one lump sum payment, unless provisions relating to payment for such shares in installments are agreed to by the Company and the Participant (or his beneficiary or estate). SECTION 11. BENEFICIARY DESIGNATION. 11.1 Beneficiary Designation. Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his death before he receives any or all of such benefit. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee and will be effective only when filed by the Participant in writing with the Committee during his lifetime. In the absence of -9- 10 any such designation, benefits remaining unpaid at the Participant's death shall be paid to his estate. SECTION 12. RIGHTS OF EMPLOYEES. 12.1 Employment. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment at any time nor confer upon any Participant any right to continue in the employ of the Company. 12.2 Participation. No employee shall have a right to be selected as a Participant or, having been so selected, to be selected again as a Participant. SECTION 13. CHANGE OF CONTROL. 13.1 A "Change of Control" of the Company means: (a) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (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 (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) 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"); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (1) any acquisition 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 corporation controlled by the Company or (4) any acquisition pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section; or (b) individuals who, as of September 10, 1998, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to September 10, 1998 whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for -10- 11 this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (c) consummation by the Company 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 assets of another entity (a "Business Combination"), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such business combination beneficially own, directly or indirectly, more than 50% of, respectively, the then 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 Business Combination (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) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or of such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board, providing for such Business Combination; or (d) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. -11- 12 13.2 Treatment of Options and Stock Appreciation Rights. In the event of a Change of Control of the Company, all Options [and Stock Appreciation Rights] outstanding as of the date of such Change of Control, and which are not then exercisable and vested, shall become fully exercisable and vested immediately prior to such Change of Control. 13.3 Treatment of Restricted Stock. In the event of a Change of Control of the Company, the restrictions applicable to any shares of Restricted Stock shall lapse and such shares shall become immediately vested and shall be freely transferable by the Participant, subject to any applicable Federal or state securities laws. 13.4 Certain Agreement Provisions Void. In the event of a Change of Control of the Company, any Forfeiture Provision (as hereinafter defined) contained in any Grant Agreement (as hereinafter defined) shall be null and void and of no further force and effect. For purposes of this Section 13.4: (a) "Grant Agreement" means an agreement between the Company and a Participant concerning the grant of nonstatutory stock options or Restricted Stock (but not incentive stock options) entered into prior to September 10, 1998. (b) "Forfeiture Provision" means a provision in a Grant Agreement which provides for the forfeiture of vested or unvested stock options or Restricted Stock, as the case may be, or the repayment to the Company of the "Option Spread" or "Restricted Stock Value" (as such terms are defined or used in the Grant Agreement), as the case may be, upon the occurrence, during or for a specified period after the termination of the Participant's employment with the Company or any subsidiary, of one or more of: (i) the Participant engaging in acts competitive with the Company or any subsidiary; (ii) the Participant soliciting the employees or customers of the Company or any subsidiary in a manner which is competitive with the Company or any subsidiary or disruptive to the business of the Company or any subsidiary; (iii) the Participant disclosing Information (as such term is defined in or used in such Grant Agreement) obtained during the course of the Participant's employment with the Company or any subsidiary; (iv) any actions of similar nature to the foregoing which are defined in such Grant Agreement as "Restricted Activities" or "Prohibited Activities"; or (v) the violation by the Participant of any written agreement between the Company and the Participant prohibiting all or any of the activities described in (i) through (iv), above. -12- 13 13.5 Limitation on Payments. If the receipt of any payment under this Section in respect of an incentive stock option by any Participant shall, in the opinion of independent tax counsel of recognized standing selected by the Company, result in the payment by such Participant of any excise tax provided for in Section 280G and Section 4999 of the Code, then the amount of such payment shall be reduced to the extent required, in the opinion of independent tax counsel selected as aforesaid, to prevent the imposition of such excise tax. Nothing in this Section 13.5 shall be construed to deprive any Participant of or reduce such payment in respect of nonstatutory stock options, Stock Appreciation Rights, or Restricted Stock. SECTION 14. AMENDMENT, MODIFICATION AND TERMINATION OF PLAN. 14.1 Amendment, Modification and Termination of Plan. The Board may at any time terminate, and from time to time may amend or modify the Plan, provided, however, that no such action of the Board, without approval of the shareholders, may: (a) Increase the total amount of Stock which may be issued under the Plan, except as provided in Subsections 5.1 and 5.3 of the Plan. (b) Materially modify the eligibility requirements as provided in Section 3. (c) Materially increase the benefits accruing to Participants under the Plan. No amendment, modification or termination of the Plan shall in any manner adversely affect any Options, Stock Appreciation Rights or Restricted Stock theretofore granted under the Plan, without the consent of the Participant. SECTION 15. TAX WITHHOLDING. 15.1 Tax Withholding. Whenever shares of Stock are to be issued under the Plan, the Company shall have the power to withhold from any cash otherwise payable to the Participant or to require the recipient of the Stock to remit to the Company an amount sufficient to satisfy Federal, state and local withholding tax requirements. A Participant who is an elected officer of the Company may remit cash, already owned Company stock or request the Company to satisfy withholding requirements from the exercised Option stock or Restricted Stock. The Committee may establish such procedures as it deems appropriate for the settling of withholding obligations with Stock, including, without limitation, the -13- 14 establishment of such procedures as may be necessary to satisfy the requirements of Rule 16b-3 under the Securities Exchange Act of 1934 or any successor provisions thereto. SECTION 16. INDEMNIFICATION. 16.1 Indemnification. Each person who is or shall have been a member of the Committee or of the Board shall be indemnified and held harmless by the Company against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by him in connection with or resulting from any claim, action, suit or proceeding to which he may be a party or in which he may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him in settlement thereof, with the Company's approval, or paid by him in satisfaction of any judgment in any such action, suit or proceeding against him, provided he shall give the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Articles of Incorporation or bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. SECTION 17. REQUIREMENTS OF LAW. 17.1 Requirements of Law. The granting of Options, Stock Appreciation Rights or Restricted Stock and the issuance of shares of Stock upon the exercise of an option shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. 17.2 Governing Law. The Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Wisconsin. -14- EX-10.2.G 9 AMENDMENT # 1 TO 1994 EMPLOYEE STOCK PLAN 1 EXHIBIT 10.2(g) AMENDMENT NO. 1 TO THE UNIVERSAL FOODS CORPORATION 1994 EMPLOYEE STOCK PLAN The Universal Foods Corporation 1994 Employee Stock Plan (the "Plan") is hereby amended, effective as of September 10, 1998, as set forth below: 1. Section 8.6 of the Plan is amended to read in its entirety as follows: 8.6 Payment. The Option price of any Option shall be payable to the Company in full upon exercise (i) in cash or its equivalent including, in the discretion of the Committee, a promissory note issued to the Company by the Participant, which note shall (v) be secured by the Stock issued; (w) be for a term of not more than ten (10) years; (x) bear interest at a rate of not less than the prime rate (as determined by the Committee) in effect on the date such promissory note is issued; (y) require at least annual payments of principal and interest; and (z) contain such other terms and conditions as the Committee determines; provided, that in the case of the exercise of an incentive stock option which is outstanding as of September 10, 1998, such promissory note shall not be considered the equivalent of cash; (ii) by tendering shares of Stock having a Fair Market Value at the time of exercise equal to the total Option price; (iii) by a combination of cash and shares of Stock; or (iv) by electing to have the Company withhold from the shares of Stock otherwise issuable upon exercise of the Option that number of shares of Stock otherwise having a Fair Market Value at the time of exercise plus cash for any fractional share amounts, equal to the total Option price; provided that any such election by an elected officer, director or more than 10% shareholder of the Company with respect to an incentive stock option outstanding as of September 10, 1998 must be made during the ten-day period beginning on the third business day following the release of the Company's quarterly or annual summary statement of sales and earnings. The proceeds from such a payment shall be added to the general funds of the Company and shall be used for general corporate purposes. 2. Section 13 of the Plan is amended to read in its entirety as follows: Section 13. Change of Control. 13.1 A "Change of Control" of the Company means: 2 (a) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (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 (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) 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"); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (1) any acquisition 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 corporation controlled by the Company or (4) any acquisition pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section; or (b) individuals who, as of September 10, 1998, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to September 10, 1998 whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (c) consummation by the Company 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 assets of another entity (a "Business Combination"), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such business combination beneficially own, directly or indirectly, more 2 3 than 50% of, respectively, the then 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 Business Combination (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) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or of such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board, providing for such Business Combination; or (d) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. 13.2 Treatment of Options and Stock Appreciation Rights. In the event of a Change of Control of the Company, all Options [and Stock Appreciation Rights] outstanding as of the date of such Change of Control, and which are not then exercisable and vested, shall become fully exercisable and vested immediately prior to such Change of Control. 13.3 Treatment of Restricted Stock. In the event of a Change of Control of the Company, the restrictions applicable to any shares of Restricted Stock shall lapse and such shares shall become immediately vested and shall be freely transferable by the Participant, subject to any applicable Federal or state securities laws. 13.4 Certain Agreement Provisions Void. In the event of a Change of Control of the Company, any Forfeiture Provision (as hereinafter defined) 3 4 contained in any Grant Agreement (as hereinafter defined) shall be null and void and of no further force and effect. For purposes of this Section 13.4: (a) "Grant Agreement" means an agreement between the Company and a Participant concerning the grant of nonstatutory stock options or Restricted Stock (but not incentive stock options) entered into prior to the effective date of this amendment (September 10, 1998). (b) "Forfeiture Provision" means a provision in a Grant Agreement which provides for the forfeiture of vested or unvested stock options or Restricted Stock, as the case may be, or the repayment to the Company of the "Option Spread" or "Restricted Stock Value" (as such terms are defined or used in the Grant Agreement), as the case may be, upon the occurrence, during or for a specified period after the termination of the Participant's employment with the Company or any subsidiary, of one or more of: (i) the Participant engaging in acts competitive with the Company or any subsidiary; (ii) the Participant soliciting the employees or customers of the Company or any subsidiary in a manner which is competitive with the Company or any subsidiary or disruptive to the business of the Company or any subsidiary; (iii) the Participant disclosing Information (as such term is defined in or used in such grant Agreement) obtained during the course of the Participant's employment with the Company or any subsidiary; (iv) any actions of similar nature to the foregoing which are defined in such Grant Agreement as "Restricted Activities" or "Prohibited Activities"; or (v) the violation by the Participant of any written agreement between the Company and the Participant prohibiting all or any of the activities described in (i) through (iv), above. 13.5 Limitation on Payments. If the receipt of any payment under this Section in respect of an incentive stock option by any Participant shall, in the opinion of independent tax counsel of recognized standing selected by the Company, result in the payment by such Participant of any excise tax provided for in Section 280G and Section 4999 of the Code, then the amount of such payment shall be reduced to the extent required, in the opinion of independent tax counsel selected as aforesaid, to prevent the imposition of such excise tax. Nothing in this Section 13.5 shall be construed to deprive any Participant of or reduce such payment in respect of nonstatutory stock options, Stock Appreciation Rights, or Restricted Stock. 4 EX-10.2.H 10 1998 STOCK OPTION PLAN AS AMENDED 9/10/98 1 EXHIBIT 10.2(h) UNIVERSAL FOODS CORPORATION 1998 STOCK OPTION PLAN AS AMENDED AND RESTATED EFFECTIVE SEPTEMBER 10, 1998 (NOTE: ALL REFERENCES TO THE NUMBER OF SHARES OF STOCK SET FORTH IN THIS AMENDED AND RESTATED STOCK OPTION PLAN HAVE BEEN ADJUSTED TO GIVE EFFECT TO THE COMPANY'S 2-FOR-1 STOCK SPLIT, EFFECTED IN THE FORM OF A 100% STOCK DIVIDEND, PAID TO SHAREHOLDERS OF RECORD ON MAY 6, 1998). SECTION 1. ESTABLISHMENT, PURPOSE AND EFFECTIVE DATE OF PLAN. 1.1 Establishment. Universal Foods Corporation, a Wisconsin corporation, hereby establishes the "UNIVERSAL FOODS CORPORATION 1998 STOCK OPTION PLAN" (the "Plan") for officers and key employees. This Plan permits the grant of Stock Options and Restricted Stock. 1.2 Purpose. The purpose of this Plan is to advance the interests of the Company by encouraging and providing for the acquisition of an equity interest in the Company by officers and key employees, and by enabling the Company to attract and retain the services of officers and key employees upon whose judgment, interest and special effort the successful conduct of its operations is largely dependent. 1.3 Effective Date. This Plan shall become effective on the Effective Date. SECTION 2. DEFINITIONS. 2.1 Definitions. Whenever used herein, the following terms shall have the respective meanings set forth below: (a) "Award" means any Option or Restricted Stock, or any other benefit conferred under the terms hereof. (b) "Board" means the Board of Directors of the Company. (c) "Code" means the Internal Revenue Code of 1986, as amended. (d) "Committee" means the Compensation and Development Committee of the Board. 2 (e) "Company" means Universal Foods Corporation, a Wisconsin corporation, and its subsidiaries. (f) "Effective Date" means January 22, 1998, or such other date that this Plan is approved by the shareholders of the Company at an annual or special meeting thereof by a simple majority of the number of shares represented at such meeting in person or by proxy. (g) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (h) "Fair Market Value" means the closing price of a share of Stock on the date of the Award on the New York Stock Exchange as reported on the composite list used by the Wall Street Journal for reporting stock prices, or if no such sale shall have been made on that day, on the last preceding day on which there was such a sale. (i) "Option" means the right to purchase Stock at a stated price for a specified period of time. For purposes of this Plan an Option may be either: (i) an "incentive stock option" within the meaning of Section 422(b) of the Code; or (ii) an option which is not intended to qualify as an incentive stock option (a "nonstatutory stock option"). (j) "Participant" means any individual designated by the Committee to participate in this Plan. (k) "Period of Restriction" means the period during which the transfer of shares of Restricted Stock is restricted pursuant to Section 8 hereof. (l) "Restricted Stock" means Stock granted to a Participant pursuant to Section 8 hereof. (m) "Stock" means the Common Stock of the Company, par value of $0.10. 2.2 Gender and Number. Except when otherwise indicated by the context, words in the masculine gender when used in this Plan shall include the feminine gender, the singular shall include the plural and the plural shall include the singular. SECTION 3. ELIGIBILITY AND PARTICIPATION. Participants in this Plan shall be selected by the Committee from among those officers and key employees of the -2- 3 Company and its subsidiaries, including subsidiaries which become such after adoption hereof, who are recommended for participation by the Chief Executive Officer and who, in the opinion of the Committee, are in a position to contribute materially to the Company's continued growth and development and to its long-term financial success. The Committee's designation of any person to receive an Award shall not require the Committee to designate such person to receive an Award at any subsequent time. SECTION 4. ADMINISTRATION. 4.1 Administration. This Plan shall be administered by the Committee. 4.2 Powers and Authority of the Committee. The Committee, by majority action thereof, shall have complete and sole authority to: (a) designate officers and key employees to receive Awards; (b) determine the type of Awards to be granted to Participants; (c) determine the number of shares of Stock to be covered by Awards granted to Participants; (d) determine the terms and conditions of any Award granted to any Participant (which may, in the discretion of the Committee, differ from Participant to Participant), including, without limitation, provisions relating to the vesting of Options or Restricted Stock rights over a period of time, upon the attainment of specified performance goals, or otherwise; (e) interpret this Plan and apply its provisions, and prescribe, amend and rescind rules, regulations, procedures, and forms relating to this Plan; (f) authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of this Plan; (g) amend any outstanding agreement relating to any Award, subject to applicable legal restrictions and to the consent of the Participant who entered into such agreement; (h) prescribe the consideration for the grant of each Award hereunder and determine the sufficiency of such consideration; and -3- 4 (i) make all other determinations and take all other actions deemed necessary or advisable for the administration hereof and provide for conditions and assurances deemed necessary or advisable to protect the interests of the Company in connection herewith; but only to the extent that any of the foregoing are not contrary to the express provisions hereof. Determinations, interpretations or other actions made or taken by the Committee pursuant to the provisions hereof shall be final, binding and conclusive for all purposes and upon all persons. The Committee's decisions need not be uniform and may be made selectively among Participants, whether or not they are similarly situated. 4.3 Composition of the Committee. The Committee shall consist of not less than two directors. Each member of the Committee shall be both a "nonemployee director" (within the meaning of Rule 16b-3 under the Exchange Act) and an "outside director" (within the meaning of Section 162(m)(4)(C) of the Code); provided, however, that in the event any Committee member does not satisfy both conditions of the first clause of this sentence, then the Committee shall, with respect to any Award to be made to any Participant who is subject to Section 16 of the Exchange Act ("Section 16 Participant") or who is subject to the provisions of Section 162(m) of the Code, delegate its functions with respect to such Award to a subcommittee (of not less than two directors) which consists exclusively of members who meet both conditions of the first clause of this sentence. Further, the Committee may delegate to one or more senior officers of the Company any or all of the authority and responsibility of the Committee with respect to this Plan, other than with respect to Section 16 Participants or Participants who are subject to Section 162(m) of the Code. A majority of the members of the Committee (or subcommittee, as the case may be) shall constitute a quorum and all determinations of the Committee shall be made by a majority of its members. Any determination of the Committee may be made without notice or meeting of the Committee by a writing signed by a majority of the Committee members. SECTION 5. STOCK SUBJECT TO PLAN. 5.1 Number. The total number of shares of Stock reserved and available for issuance under this Plan shall initially be 2,400,000. The number of shares of Stock reserved and available for issuance hereunder shall be subject to adjustment upon occurrence of any of the events indicated in Subsection 5.3 hereof. Of this total number, not more than 600,000 shares may at any time consist of Restricted Stock. The shares to be issued under this Plan may consist, in whole or in part, of authorized but unissued Stock or treasury Stock, not reserved for any other purpose. -4- 5 5.2 Unused Stock. In the event any shares of Stock that are subject to an Award cease to be subject to such Award (whether due to expiration, cancellation, termination, forfeiture, or otherwise) without such shares of Stock being issued or cash being paid to the Participant, then the shares of Stock subject to such Award shall again become available for future Awards hereunder. 5.3 Adjustment in Capitalization. In the event of any change in the outstanding shares of Stock that occurs, whether prior to or after the Effective Date, by reason of a Stock dividend or split, recapitalization, merger, consolidation, combination, spin-off, split-up, exchange of shares or other similar corporate change, the aggregate number of shares of Stock authorized for issuance hereunder as well as Stock subject to each outstanding Award, and its stated Option or other price (as applicable), shall be appropriately adjusted by the Committee, whose determination shall be conclusive; provided, however, that fractional shares shall be rounded to the nearest whole share. In such event, the Committee shall also have the discretion to make appropriate adjustments in the number of shares of Stock authorized for issuance hereunder. SECTION 6. DURATION OF PLAN. This Plan shall remain in effect, subject to the Board's right to earlier terminate this Plan pursuant to Section 12 hereof, until all shares of Stock subject to it shall have been purchased or acquired pursuant to the provisions hereof. Notwithstanding the foregoing, no Award may be granted hereunder on or after the tenth (10th) anniversary of the Effective Date. SECTION 7. STOCK OPTIONS. 7.1 Grant of Options. Subject to the provisions of Sections 5 and 6 hereof, Options may be granted to Participants at any time and from time to time as shall be determined by the Committee. The Committee shall have complete discretion in determining the number of Options granted to each Participant. The Committee also shall determine whether an Option is to be an incentive stock option within the meaning of Section 422(b) of the Code or a nonstatutory stock option. 7.2 Incentive Stock Options. Incentive stock options shall be subject to the limitation that the Fair Market Value (determined on the date of grant) of all shares of Stock with respect to which incentive stock options are exercisable for the first time by a Participant during any calendar year shall not exceed $100,000. This limitation shall not apply to nonstatutory stock options. 7.3 Option Agreement. Each Option shall be evidenced by a written agreement ("Option Agreement") that shall specify the type of Option granted, the -5- 6 Option price, the duration of the Option, the number of shares of Stock to which the Option pertains, and such other provisions as the Committee shall determine. No Participant shall have any rights hereunder until an Option Agreement has been executed. 7.4 Option Price. No Option granted pursuant hereto shall have an Option price that is less than the Fair Market Value of the Stock on the date the Option is granted. 7.5 Duration of Options. Each Option shall expire at such time as the Committee shall determine; provided, however, that no incentive stock option shall be exercisable later than the tenth (10th) anniversary date of its grant. 7.6 Exercise of Options. Options granted hereunder shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for all Participants. 7.7 Payment. The Option price of any Option shall be payable to the Company in full upon exercise: (a) in cash or its equivalent, including, in the discretion of the Committee, a promissory note issued to the Company by the Participant (which note shall (i) be secured by the Stock issued; (ii) be for a term of not more than ten (10) years; (iii) bear interest at a rate of not less than the prime rate (as determined by the Committee) in effect on the date such promissory note is issued; (iv) require at least annual payments of principal and interest; and (v) contain such other terms and conditions as the Committee determines); (b) by tendering shares of Stock having a Fair Market Value at the time of exercise equal to the total Option price; (c) by a combination of cash or its equivalent (as defined in clause (a) above) and shares of Stock; or (d) by electing to have the Company withhold from the shares of Stock otherwise issuable upon exercise of the Option that number of shares of Stock having a Fair Market Value at the time of exercise plus cash for any fractional share amounts, equal to the total Option price. The proceeds from such a payment shall be added to the general funds of the Company and shall be used for general corporate purposes. -6- 7 7.8 Restrictions on Stock Transferability. The Committee shall impose such restrictions on any shares of Stock acquired pursuant to the exercise of an Option as it may deem advisable, including, without limitation, restrictions under applicable Federal securities laws, under the requirements of any stock exchange upon which such shares of Stock are then listed, and under any blue sky or state securities laws applicable to such shares. 7.9 Transferability of Options. The Committee may, in its discretion, and only by expressly so providing in the Option Agreement covering any Options (which Option Agreement must be approved by the Committee), permit all or a portion of Options to be granted to a Participant to be transferable by the Participant: (a) to the Participant's spouse, or natural or adoptive children or grandchildren ("Immediate Family Members"); (b) to a trust or trusts for the exclusive benefit of one or more Immediate Family Members; or (c) to a partnership in which all partners are Immediate Family Members; provided that there may be no consideration for any such transfer and the transferee shall be expressly prohibited from any further transfer of such Options other than by will or pursuant to the laws of descent and distribution. Following such transfer, any Options so transferred shall be subject to the same terms and conditions as were applicable immediately prior to such transfer, provided that for purposes of this Plan, the term "Participant" shall be deemed to include such transferee. The circumstances under which any transferred Option may be terminated, canceled, or forfeited (whether such circumstances are set forth in this Plan or in the Option Agreement covering such Options) shall be applied with respect to the transferor Participant to which the Option was originally granted. Unless expressly so provided in the Option Agreement covering an Option, no Option granted hereunder may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or pursuant to the laws of descent and distribution, and all Options granted to a Participant hereunder shall be exercisable during his lifetime only by such Participant. 7.10 Substitute Options. If the Company at any time should succeed to the business of another corporation through merger or consolidation, or through the acquisition of stock or assets of such corporation, Options may be granted under this Plan ("Substitute Options") in substitution of options previously granted by such corporation and which are outstanding at the date of the succession ("Surrendered Options"). The Committee shall have discretion to determine the extent to which such Substitute Options shall be granted, the persons to receive such Substitute Options, the number of Shares to be subject to such Substitute Options, and the terms and conditions of such Substitute Options (which terms and conditions shall, to the extent permissible within the terms and conditions of this Plan, be equivalent to the terms and conditions of the Surrendered Options). The Exercise Price of the Substitute Option may be determined without regard to -7- 8 Section 7.4 hereof; provided however, that the Exercise Price of each Substitute Option shall be an amount such that, in the sole and absolute judgment of the Committee (and if the Substitute Options are to be incentive stock options, in compliance with Section 424(a) of the Code), the economic benefit provided by such Substitute Option is not greater than the economic benefit represented by the Surrendered Option as of the date of the succession. 7.11 Forfeiture. Except as otherwise determined by the Committee and set forth in the Option Agreement, upon termination of employment of a Participant due to death, disability, or for any other reason, all Options not exercisable in accordance with the Option Agreement immediately prior to such termination shall be immediately and automatically forfeited to the Company. SECTION 8. RESTRICTED STOCK. 8.1 Grant of Restricted Stock. Subject to the provisions of Sections 5 and 6 hereof, the Committee, at any time and from time to time, may grant shares of Restricted Stock hereunder to such Participants and in such amounts as it shall determine. Each grant of Restricted Stock shall be evidenced by a written agreement ("Restricted Stock Agreement"). 8.2 Other Restrictions. The Committee shall, in the terms and conditions of the Restricted Stock Agreement, impose such restrictions on any shares of Restricted Stock granted pursuant to this Plan as it may deem advisable (including, without limitation, restrictions under applicable Federal or state securities laws), and may legend the certificates representing Restricted Stock to give appropriate notice of such restrictions. Any Restricted Stock granted to a Section 16 Participant may not be sold for at least six (6) months after the date it is granted. 8.3 Registration. Any Restricted Stock granted hereunder to a Participant may be evidenced in such manner as the Committee may deem appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of shares of Restricted Stock granted hereunder to a Participant, such certificate shall be registered in the name of the Participant and shall bear an appropriate legend (as determined by the Committee) referring to the terms, conditions and restrictions applicable to such Restricted Stock. In the event such Restricted Stock is issued in book-entry form, the depository and the Company's Transfer Agent shall be provided with notice referring to the terms, conditions and restrictions applicable to such Restricted Stock, together with such stop-transfer instructions as the Committee deems appropriate. -8- 9 8.4 Forfeiture. Except as otherwise determined by the Committee, upon termination of employment of a Participant due to death, disability, or for any other reason, during the applicable period of restriction, all shares of Restricted Stock still subject to restriction under the terms of the Restricted Stock Agreement shall be immediately and automatically forfeited to the Company. 8.5 Voting Rights. During the Period of Restriction, Participants holding shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those shares. 8.6 Dividends and Other Distributions. During the Period of Restriction, Participants holding shares of Restricted Stock granted hereunder shall be entitled to receive all dividends and other distributions paid with respect to those shares while they are so held. If any such dividends or distributions are paid in shares of Stock, the shares shall be subject to the same restrictions on transferability as the shares of Restricted Stock with respect to which they were paid. 8.7 Nontransferability of Restricted Stock. Except as provided in Section 8.8 hereof, no shares of Restricted Stock granted hereunder may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution, until the termination of the applicable Period of Restriction. All rights with respect to the Restricted Stock granted to a Participant hereunder shall be exercisable during his lifetime only by such Participant. 8.8 Election to Sell Shares to the Company. A Participant, or in the case of his death his beneficiary or estate, may elect to sell to the Company up to one-half of the shares of Restricted Stock issued to him pursuant to this Plan and upon which any restrictions set forth in the Restricted Stock Agreement have lapsed. To the extent permitted by law, the Company shall purchase all such shares of Restricted Stock. Each such sale must occur within sixty (60) days after the last day of the Period of Restriction for such shares of Restricted Stock and shall be for a price equal to the Fair Market Value determined as of the last business day of the Period of Restriction of the shares of Restricted Stock to be sold. Such price shall be payable in cash or by check in one lump sum payment, unless provisions relating to payment for such shares of Restricted Stock in installments are agreed to by the Committee and the Participant (or his beneficiary or estate). SECTION 9. BENEFICIARY DESIGNATION. Each Participant may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit hereunder is to be paid in case of his death -9- 10 before he receives any or all of such benefit. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee and will be effective only when filed by the Participant in writing with the Committee during his lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to his estate. SECTION 10. RIGHTS OF EMPLOYEES. Nothing in this Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment at any time nor confer upon any Participant any right to continue in the employment of the Company. SECTION 11. CHANGE OF CONTROL. (a) In the event of a "Change of Control" (as hereinafter defined): (i) each holder of an Option (A) shall have the right at any time thereafter to exercise the Option in full whether or not the Option was previously exercisable; and (B) shall have the right, exercisable by written notice to the Company within sixty (60) days after the Change of Control, to receive, in exchange for the surrender of an Option or any portion thereof to the extent the Option is then exercisable in accordance with clause (A), the highest of (1) an amount of cash equal to the difference between the Fair Market Value of the Stock covered by the Option or portion thereof that is so surrendered on the date of the Change of Control and the purchase price of such Stock under the Option; (2) an amount of cash equal to the difference between the highest price per share of Stock paid in the transaction giving rise to the Change of Control and the Option price multiplied by the number of shares of Stock covered by the Option; or (3) an amount of cash equal to the difference between the Fair Market Value of the Stock covered by the Option or portion thereof that is so surrendered, calculated on the date of surrender, and the purchase price of such Stock under the Option; provided that the right described in this clause (B) shall be exercisable only if a positive amount would be payable to the holder pursuant to the formula specified in this clause (B); (ii) restricted Stock that is not then vested shall vest upon the date of the Change of Control and each holder of such Restricted Stock shall have the right, exercisable by written notice to the Company within sixty (60) days after the Change of Control, to receive, in exchange for the surrender of such Restricted Stock, an amount of cash equal to the highest of (A) the Fair Market Value of such Restricted Stock on the date of surrender; (B) the -10- 11 highest price per share of Stock paid in the transaction giving rise to the Change of Control multiplied by the number of shares of Restricted Stock surrendered; or (C) the Fair Market Value of such Restricted Stock on the effective date of the Change of Control. (b) A "Change of Control" of the Company means: (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 of common stock of the Company (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"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (1) any acquisition 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 corporation controlled by the Company or (4) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section; or (ii) individuals who, as of September 10, 1998, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to September 10, 1998 whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) consummation by the Company 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 assets of another entity (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately -11- 12 prior to such business combination beneficially own, directly or indirectly, more than 50% of, respectively, the then 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 Business Combination (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) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or of such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board, providing for such Business Combination; or (iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. SECTION 12. AMENDMENT, MODIFICATION AND TERMINATION OF PLAN. 12.1 Amendments and Termination. The Board may at any time amend, alter, suspend, discontinue or terminate this Plan; provided, however, that stockholder approval of any amendment of this Plan shall be obtained if otherwise required by (a) the Code or any rules promulgated thereunder (in order to allow for incentive stock options to be granted hereunder or to enable the Company to comply with the provisions of Section 162(m) of the Code so that the Company can deduct compensation in excess of the limitation set forth therein), or (b) the listing requirements of the principal securities exchange or market on which the Stock is then traded (in order to maintain the listing or quotation of the Stock thereon). An amendment or termination of this Plan shall not adversely affect the rights of Participants with respect to Awards previously granted to them, and all unexpired Awards shall continue in force and effect after termination of this Plan except as they may lapse or be terminated by their own terms and conditions. -12- 13 12.2 Waiver of Conditions. The Committee may, in whole or in part, waive any conditions or other restrictions with respect to any Award granted hereunder. SECTION 13. TAXES. The Company shall be entitled to withhold the amount of any tax attributable to any amount payable or shares of Stock deliverable under this Plan after giving the person entitled to receive such amount or shares of Stock notice as far in advance as practicable, and the Company may defer making any such payment or delivery if any such tax may be pending unless and until indemnified to its satisfaction. A Participant may elect to pay all or a portion of the federal, state and local withholding taxes arising in connection with (a) the exercise of a nonstatutory stock option; (b) a disqualifying disposition of Stock received upon the exercise of an incentive stock option; (c) the lapse of restrictions on Restricted Stock, by electing to (i) have the Company withhold shares of Stock, (ii) tender back shares of Stock received in connection with such benefit, or (iii) deliver other previously owned shares of Stock, having a Fair Market Value equal to the amount to be withheld; provided, however, that the amount to be withheld shall not exceed the Participant's estimated total federal, state and local tax obligations associated with the transaction. The written election must be made on or before the date as of which the amount of tax to be withheld is determined. The Fair Market Value of fractional shares of Stock remaining after payment of the withholding taxes shall be paid to the Participant in cash. The Committee may, in its discretion, grant a cash bonus to a Participant who holds Restricted Stock to enable the Participant to pay all or a portion of the federal, state or local tax liability incurred by the Participant upon the vesting of Restricted Stock. The Company shall deduct from any cash bonus such amount as may be required for the purpose of satisfying the Company's obligation to withhold federal, state or local taxes. SECTION 14. INDEMNIFICATION. Each person who is or shall have been a member of the Committee or of the Board shall be indemnified and held harmless by the Company against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by him in connection with or resulting from any claim, action, suit or proceeding to which he may be a party or in which he may be involved by reason of any action taken or failure to act under this Plan and against and from any and all amounts paid by him in settlement thereof, with the Company's approval, or paid by him in satisfaction of any judgment in any such action, suit or proceeding against him, provided he shall give the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to -13- 14 which such persons may be entitled under the Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. SECTION 15. MISCELLANEOUS. Any Award may also be subject to other provisions (whether or not applicable to any Award made to any other Participant) as the Committee determines appropriate, including, without limitation, provisions for: (a) restrictions on resale or other disposition of financed shares; and (b) compliance with federal or state securities laws and stock exchange or market requirements. SECTION 16. REQUIREMENTS OF LAW. 16.1 Requirements of Law. The granting of Awards and the issuance of shares of Stock upon the exercise of any Option shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. 16.2 Governing Law. This Plan, and all agreements hereunder, shall be construed in accordance with and governed by the internal laws of the State of Wisconsin. -14- EX-10.2.J 11 DIRECTOR STOCK GRANT PLAN AS AMENDED 11/14/91 1 EXHIBIT 10.2 (j) UNIVERSAL FOODS CORPORATION DIRECTOR STOCK GRANT PLAN As amended November 14, 1991 1. Purpose. The purpose of the Universal Foods Corporation Director Stock Grant Plan (the "Plan") is to promote the best interests of Universal Foods Corporation (the "Company") and its shareholders by providing a means to attract and retain competent independent directors and to provide opportunities for stock ownership by such directors which will increase their proprietary interest in the Company and, consequently, their identification with the interests of the shareholders of the Company. 2. Administration. The Plan shall be administered by the Nominating Committee of the Board of Directors of the Company (the "Administrator"), subject to review by the Board of Directors (the "Board"). The administrator may adopt such rules and regulations for carrying out the Plan as it may deem proper and in the best interests of the Company. The interpretation by the Board of any provision of the Plan or any related documents shall be final. 3. Securities Subject to the Plan. The securities eligible for grant under the Plan shall be shares of the Company's common stock, $0.10 par value (including the associated Common Share Purchase Rights) ("Common Stock"), held from time to time by the Company as treasury shares; provided, however, that if and only if the shareholders of the Company approve the Plan in accordance with applicable shareholder approval requirements of the New York Stock Exchange, Inc. ("NYSE"), authorized and previously unissued shares of Common Stock may be issued under the Plan. 4. Director Grants. On October 1, 1990 and each October 1 thereafter ("Grant Date"), each member of the Board who is not an employee of the Company or any subsidiary of the Company shall receive a grant of Common Stock (a "Director Grant") pursuant to the Plan. 5. Grant Amount. Each Director Grant shall consist of such number of shares of Common Stock whose value on the Grant Date equals $3,000. For purposes of the Plan, the value of the Common Stock as of the Grant Date shall equal the closing sale price of a share of Common Stock on the NYSE on the Grant Date (or if no sale took place on such exchange on such date, the closing sale price on such exchange on the most recent preceding date on which a sale took place). 6. Restrictions on Transfer. The shares of Common Stock subject to each Director Grant are not transferable by the recipient for a period of six months after the Grant Date, except in the event of the death or disability of the recipient. All 2 certificates evidencing shares subject to Director Grants shall bear an appropriate legend evidencing such transfer restrictions. All dividends and voting rights accrue as of the Grant Date to the Director Grant. 7. Amendment of Plan. The Board shall have the right to amend the Plan at any time to cause the Plan to comply with the rules of the Securities and Exchange Commission under Section 16(b) of the Securities Exchange Act of 1934 (the "Section 16 Rules") or with the shareholder approval requirements of the NYSE, if applicable, or in any other manner, subject to applicable law, that does not cause the Plan to cease to comply with the Section 16 Rules. Without limitation, the Board shall have the right to amend the first sentence of Paragraph 5 of the Plan to provide that each Director Grant shall consist of such number of shares of Common Stock whose value on the Grant Date is any value not less than $3,000 and not more than $10,000. Notwithstanding the foregoing, the provisions of the Plan shall not be amended more than once every six months, other than to comport with changes in the Internal Revenue Code, the Employee Retirement Income Security Act, or the rules thereunder. 8. Effective Date and Term of Plan. The effective date of the Plan is September 14, 1990. The Plan shall terminate on such date as may be determined by the Board. -2- EX-10.2.K 12 MANAGEMENT INCOME DEFERRAL PLAN & AMENDMENT #1 1 EXHIBIT 10.2 (k) UNIVERSAL FOODS CORPORATION MANAGEMENT INCOME DEFERRAL PLAN JUNE 11, 1987 I. Purpose The Board of Directors of Universal Foods Corporation on June 11, 1987 established a voluntary income deferral plan to be offered to selected management employees, effective July 15, 1987, to provide an alternative for the executives unable to participate to the maximum extent in the Company sponsored 401(k) Plan because of tax code limitations. The plan will be administered by the Vice President, Human Resources, under the direction of the Benefits Administrative Committee. II. Participant Contributions Selected participants may elect to defer a portion of salary each year for a minimum of 4 years. (If less than 4 years to retirement, the commitment period will be reduced to 1, 2 or 3 years.) Minimum Annual Deferral - $2,500 Maximum Annual Deferral - Difference between pre-tax contribution allowed by 401(k) Plan and the legal limit ($7,000 at 7/15/87), rounded to the nearest $500. Contributions may be paid by payroll deductions or one-time deductions from annual incentive payments or any combination of the two. A participant's election to defer compensation must be made prior to the calendar year in which the compensation is earned except for initial participation at plan inception. Each year participants will be selected to enter or continue in the plan and make initial or additional deferrals during November and December which is the designated annual deferral election period. III. Interest Credits Monies deferred will be credited with a guaranteed minimum rate of interest (10% at 7/15/87) and at a higher rate if investment results are favorable. Participants will receive annual statements showing the status of their contributions and interest credits. 2 IV. Benefits A. At Retirement Upon retirement a participant may elect a guaranteed distribution payable monthly for 15 years based on annuitizing the participant's account balance at the guaranteed minimum rate of interest (10% at 7/15/87) or at a higher rate if investment results are favorable. In the event the participant does not survive to receive 180 monthly payments, the remaining payments will continue to his or her designated beneficiaries. Or Upon retirement, participant may elect to receive a benefit actuarially equivalent to the guaranteed 15-year payout described above and paid for the lifetime of the participant with 50% paid for the lifetime of the surviving spouse (joint and 50% to surviving spouse). The minimum to be paid will be equal to the 15-year guaranteed payment. The actuarial reductions, from the 15-year guaranteed amount, to obtain the joint and 50% to surviving spouse benefit are:
Age % Reduction 55 20 60 15 61 13 62 12 63 10 64 9 65 8
During the period retirement benefit payments are being paid, such payments will be adjusted upward if investment performance is favorable. B. At Death Before Retirement In the event a participant dies prior to retirement his or her designated beneficiaries will receive an annual survivor income benefit payable for 15 years. The annual payment will be determined by projecting the participant's deferral account to age 65 assuming: 1. the deferral commitment was completed, 2. guaranteed interest was credited annually from the initial date of participation until the date the participant would have retired, and 3. the projected account balance is annuitized at the guaranteed rate over 15 years. 3 C. Disability Benefits If a participant is disabled during the deferral period, his/her commitment to defer may be suspended. Benefits payable, both pre- and post-retirement, will be reduced pro-rata if the deferral commitment is never completed. V. Limitation on Participation The program will be offered to selected management employees. A Waiver of Participation must be signed when an eligible employee declines participation in the program at the time of the offer from the Company. VI. Rights Upon Termination of Employment Upon termination for any reason other than retirement, disability, or death, a participant will receive the accumulated account balance payable in a lump sum. The account balance will consist of all deferred monies plus interest credited at the guaranteed rate. VII. Beneficiary Designation Benefits payable by the Company under Section IV shall be paid as they come due to the beneficiary or beneficiaries the participant shall have designated in writing filed with the Company. The participant shall have the right to change or amend such beneficiary designation from time to time by a writing similarly filed. If the participant fails to make such beneficiary designation or if no beneficiary so designated survives the participant, payments shall be made, as they come due, to the duly appointed personal representative of the estate of the participant. VIII. No Transfer Except as permitted by Section VII, no rights of any kind under this Agreement shall, without the written consent of the Company, be transferable or assignable by the participant or any designated beneficiary or be subject to alienation, encumbrance, garnishment, attachment, execution or levy or seizure by legal process of any kind, voluntary or involuntary. IX. Rights of Corporation Universal Foods Corporation reserves the right to modify, amend or terminate the plan at any time, provided, however, that no such action shall have the effect of diminishing the benefits payable hereunder, with respect to any amounts already deferred by persons participating in or receiving benefits under this Plan, without the written consent of such person(s). 4 X. Change of Control of Company A. Notwithstanding any other provision of this plan, including specifically Paragraph IX above, in the event of a change of control of the Company, the Company shall continue to provide the benefits described in Section IV to employees who are participants in the plan when such change of control occurs. Further, any participant whose employment terminates after such change of control occurs, shall be eligible for the early retirement benefits regardless of his/her age or period of continuous service as of the date of his/her termination of employment, provided, however, the retirement income benefit will not commence until the participant attains age 55. B. For purposes of subsection (A) of this Section, the term "change of control of Company" means: (i) The acquisition of more than 30% of the outstanding shares of voting stock directly or indirectly by any person or group of persons acting in concert, excluding affiliates of the Company, by means of an offer made publicly to the holders of all or substantially all of the outstanding shares of any one or more classes of the voting stock of the Company to acquire such shares for cash, securities, other property or any combination thereof; or (ii) the sale, assignment or transfer by the Company of all or substantially all of its business and assets to any person, excluding affiliates of the Company; or (iii) a merger, consolidation or other business combination by the Company into or with any person in which neither the Company nor any subsidiary thereof is the continuing or successor corporation. (iv) As a result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election or any combination of the foregoing transactions, the persons who are directors of the Company before any of the foregoing transactions shall cease to constitute a majority of the Board of Directors of the Company or any successor to the Company. XI. Successors and Assigns If the Company sells, assigns or transfers all or substantially all of its business and assets to any person, excluding affiliates of the Company, or if the Company merges into or consolidates or otherwise combines with any person which is a continuing or successor entity, then the Company shall assign all of its right, title and interest in this plan as of the date of such event to the person which is either the acquiring successor corporation, and such person(s) shall assume and perform from and after the date of such assignment all of the terms, conditions and provisions imposed by this plan upon the Company. In case of such assignment by the Company and of such assumption and agreement by such person(s), all further rights as well as all other obligations of the Company under this Agreement thenceforth shall cease and terminate and thereafter the expression "the Company" wherever used herein shall be deemed to mean such person(s). 5 XII. Discontinuation of Contributions or Withdrawals Discontinuance of contributions or withdrawals from the participant's account shall be permitted only as a result of unanticipated, financial emergency and hardship which is beyond the control of the participant and only if this is necessary in light of the immediate and serious financial need of the participant. The amount, if any, a participant may withdraw or discontinue shall be determined by the Benefits Administrative Committee in its sole and exclusive discretion, but may not exceed the amount required to meet the participant's immediate financial need by reason of such emergency or hardship. A participant shall submit to the Benefits Administrative Committee a written request to withdraw or discontinue which shall include financial data and other information deemed necessary by the Benefits Administrative Committee to support the request. In the event of a withdrawal or discontinuance of contributions, payments to be made, pursuant to paragraph IV, shall be reduced appropriately to reflect such discontinuance or withdrawal. XIII. Miscellaneous A. The plan shall be binding upon the participant, his or her heirs, executors, administrators, successors and assigns and Universal Foods Corporation and its successors and assigns. The foregoing sentence shall not be construed as a waiver of the provisions of paragraph VIII. B. The benefits payable under the plan shall be independent of, and in addition to, any other plan or agreement relating to a participant's employment that may exist from time to time between the parties hereto, or any other compensation payable by Universal Foods Corporation to a participant, whether salary, bonus or otherwise. The plan shall not be deemed to constitute a contract of employment between the parties hereto, nor shall any provision hereof restrict the right of Universal Foods Corporation to discharge a participant or restrict the right of a participant to terminate his or her employment. C. Notwithstanding the provisions of Section IV-B, in the event a participant dies as a result of suicide within 25 calendar months of the calendar month during which compensation is first deferred pursuant to this plan, the beneficiary of such participant shall not be entitled to a death benefit under Section IV-B of the plan, but such beneficiary shall be entitled to receive the single sum benefit determined in accordance with the provisions of Section VI as if such deceased participant had separated from service on the date of such participant's death. D. In the event a participant's Qualified or Unfunded Retirement Plan benefit should be reduced in any way by the deferral of compensation under this plan, the equivalent of such lost benefit will be restored by the Company at the time of the participant's retirement or as mutually agreed upon between the Company and the participant. 6 AMENDMENT NO. 1 TO THE UNIVERSAL FOODS CORPORATION MANAGEMENT INCOME DEFERRAL PLAN The Universal Foods Corporation Management Income Deferral Plan ("the Plan") is hereby amended, effective as of September 10, 1998, as set forth below: 1. Section X(B) of the Plan is amended to read in its entirety as follows: B. For purposes of subsection (A) of this Section, the term "change of control of the Company" means: (i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (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 of common stock of the Company (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"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (1) any acquisition 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 corporation controlled by the Company or (4) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section; or (ii) individuals who, as of September 10, 1998, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to September 10, 1998 whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or 7 (iii) consummation by the Company 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 assets of another entity (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such business combination beneficially own, directly or indirectly, more than 50% of, respectively, the then 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 Business Combination (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) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or of such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board, providing for such Business Combination; or (iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. EX-10.2.L 13 EXECUTIVE INCOME DEFERRAL PLAN & AMENDMENT #1 1 EXHIBIT 10.2(l) UNIVERSAL FOODS CORPORATION EXECUTIVE INCOME DEFERRAL PLAN JUNE 11, 1987 I. Purpose The Board of Directors of Universal Foods Corporation on June 11, 1987 established a voluntary income deferral plan to be offered to selected executive employees, effective July 15, 1987, to provide an alternative for the executives unable to participate to the maximum extent in the Company sponsored 401(k) Plan because of tax code limitations, plus an opportunity for additional income deferral up to a maximum of 25% of total salary and bonus. The plan will be administered by the Vice President, Human Resources, under the direction of the Benefits Administrative Committee. II. Participant Contributions Selected participants may elect to defer a portion of salary each year for a minimum of 4 years. (If less than 4 years to retirement, the commitment period will be reduced to 1, 2 or 3 years.) Minimum Annual Deferral - $2,500 Maximum Annual Deferral - 25% of total salary and bonus, rounded to the nearest $500. Contributions may be paid by payroll deductions or one-time deductions from annual incentive payments or any combination of the two. A participant's election to defer compensation must be made prior to the calendar year in which the compensation is earned except for initial participation at plan inception. Each year participants will be selected to enter or continue in the plan and make initial or additional deferrals during November and December which is the designated annual deferral election period. III. Interest Credits Monies deferred will be credited with a guaranteed minimum rate of interest (10% at 7/15/87) and at a higher rate if investment results are favorable. Participants will receive annual statements showing the status of their contributions and interest credits. 2 IV. Benefits A. At Retirement Upon retirement a participant may elect a guaranteed distribution payable monthly for 15 years based on annuitizing the participant's account balance at the guaranteed minimum rate of interest (10% at 7/15/87) or at a higher rate if investment results are favorable. In the event the participant does not survive to receive 180 monthly payments, the remaining payments will continue to his or her designated beneficiaries. Or Upon retirement, participant may elect to receive a benefit actuarially equivalent to the guaranteed 15-year payout described above and paid for the lifetime of the participant with 50% paid for the lifetime of the surviving spouse (joint and 50% to surviving spouse). The minimum to be paid will be equal to the 15-year guaranteed payment. The actuarial reductions, from the 15-year guaranteed amount, to obtain the joint and 50% to surviving spouse benefit are:
Age % Reduction 55 20 60 15 61 13 62 12 63 10 64 9 65 8
During the period retirement benefit payments are being paid, such payments will be adjusted upward if investment performance is favorable. B. At Death Before Retirement In the event a participant dies prior to retirement his or her designated beneficiaries will receive an annual survivor income benefit payable for 15 years. The annual payment will be determined by projecting the participant's deferral account to age 65 assuming: 1. the deferral commitment was completed, 2. guaranteed interest was credited annually from the initial date of participation until the date the participant would have retired, and 3. the projected account balance is annuitized at the guaranteed rate over 15 years. 3 C. Disability Benefits If a participant is disabled during the deferral period, his/her commitment to defer may be suspended. Benefits payable, both pre- and post-retirement, will be reduced pro-rate if the deferral commitment is never completed. V. Limitation on Participation The program will be offered to selected management employees. A Waiver of Participation must be signed when an eligible employee declines participation in the program at the time of the offer from the Company. VI. Rights Upon Termination of Employment Upon termination for any reason other than retirement, disability, or death, a participant will receive the accumulated account balance payable in a lump sum. The account balance will consist of all deferred monies plus interest credited at the guaranteed rate. VII. Beneficiary Designation Benefits payable by the Company under Section IV shall be paid as they come due to the beneficiary or beneficiaries the participant shall have designated in writing filed with the Company. The participant shall have the right to change or amend such beneficiary designation from time to time by a writing similarly filed. If the participant fails to make such beneficiary designation or if no beneficiary so designated survives the participant, payments shall be made, as they come due, to the duly appointed personal representative of the estate of the participant. VIII. No Transfer Except as permitted by Section VII, no rights of any kind under this Agreement shall, without the written consent of the Company, be transferable or assignable by the participant or any designated beneficiary or be subject to alienation, encumbrance, garnishment, attachment, execution or levy or seizure by legal process of any kind, voluntary or involuntary. IX. Rights of Corporation Universal Foods Corporation reserves the right to modify, amend or terminate the plan at any time, provided, however, that no such action shall have the effect of diminishing the benefits payable hereunder, with respect to any amounts already deferred by persons participating in or receiving benefits under this Plan, without the written consent of such person(s). 4 X. Change of Control of Company A. Notwithstanding any other provision of this plan, including specifically Paragraph IX above, in the event of a change of control of the Company, the Company shall continue to provide the benefits described in Section IV to employees who are participants in the plan when such change of control occurs. Further, any participant whose employment terminates after such change of control occurs, shall be eligible for the early retirement benefits regardless of his/her age or period of continuous service as of the date of his/her termination of employment, provided, however, the retirement income benefit will not commence until the participant attains age 55. B. For purposes of subsection (A) of this Section, the term "change of control of Company" means: (i) The acquisition of more than 30% of the outstanding shares of voting stock directly or indirectly by any person or group of persons acting in concert, excluding affiliates of the Company, by means of an offer made publicly to the holders of all or substantially all of the outstanding shares of any one or more classes of the voting stock of the Company to acquire such shares for cash, securities, other property or any combination thereof; or (ii) the sale, assignment or transfer by the Company of all or substantially all of its business and assets to any person, excluding affiliates of the Company; or (iii) a merger, consolidation or other business combination by the Company into or with any person in which neither the Company nor any subsidiary thereof is the continuing or successor corporation. (iv) As a result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election or any combination of the foregoing transactions, the persons who are directors of the Company before any of the foregoing transactions shall cease to constitute a majority of the Board of Directors of the Company or any successor to the Company. XI. Successors and Assigns If the Company sells, assigns or transfers all or substantially all of its business and assets to any person, excluding affiliates of the Company, or if the Company merges into or consolidates or otherwise combines with any person which is a continuing or successor entity, then the Company shall assign all of its right, title and interest in this plan as of the date of such event to the person which is either the acquiring or successor corporation, and such person(s) shall assume and perform from and after the date of such assignment all of the terms, conditions and provisions imposed by this plan upon the Company. In case of such assignment by the Company and of such assumption and agreement by such person(s), all further rights as well as all other obligations of the Company under this Agreement thenceforth shall cease and terminate and thereafter the expression "the Company" wherever used herein shall be deemed to mean such person(s). 5 XII. Discontinuance of Contributions or Withdrawals Discontinuance of contributions or withdrawals from the participant's account shall be permitted only as a result of unanticipated, financial emergency and hardship which is beyond the control of the participant and only if this is necessary in light of the immediate and serious financial need of the participant. The amount, if any, a participant may withdraw or discontinue shall be determined by the Benefits Administrative Committee in its sole and exclusive discretion, but may not exceed the amount required to meet the participant's immediate financial need by reason of such emergency or hardship. A participant shall submit to the Benefits Administrative Committee a written request to withdraw or discontinue which shall include financial data and other information deemed necessary by the Benefits Administrative Committee to support the request. In the event of a withdrawal or discontinuance of contributions, payments to be made, pursuant to paragraph IV, shall be reduced appropriately to reflect such discontinuance or withdrawal. XIII. Miscellaneous A. The plan shall be binding upon the participant, his or her heirs, executors, administrators, successors and assigns and Universal Foods Corporation and its successors and assigns. The foregoing sentence shall not be construed as a waiver of the provisions of paragraph VIII. B. The benefits payable under the plan shall be independent of, and in addition to, any other plan or agreement relating to a participant's employment that may exist from time to time between the parties hereto, or any other compensation payable by Universal Foods Corporation to a participant, whether salary, bonus or otherwise. The plan shall not be deemed to constitute a contract of employment between the parties hereto, nor shall any provision hereof restrict the right of Universal Foods Corporation to discharge a participant or restrict the right of a participant to terminate his or her employment. C. Notwithstanding the provisions of Section IV-B, in the event a participant dies as a result of suicide within 25 calendar months of the calendar month during which compensation is first deferred pursuant to this plan, the beneficiary of such participant shall not be entitled to a death benefit under Section IV-B of the plan, but such beneficiary shall be entitled to receive the single sum benefit determined in accordance with the provisions of Section VI as if such deceased participant had separated from service on the date of such participant's death. D. In the event a participant's Qualified or Unfunded Retirement Plan benefit should be reduced in any way by the deferral of compensation under this plan, the equivalent of such lost benefit will be restored by the Company at the time of the participant's retirement or as mutually agreed upon between the Company and the participant. 6 AMENDMENT NO. 1 TO THE UNIVERSAL FOODS CORPORATION EXECUTIVE INCOME DEFERRAL PLAN The Universal Foods Corporation Executive Income Deferral Plan ("the Plan") is hereby amended, effective as of September 10, 1998, as set forth below: 1. Section X(B) of the Plan is amended to read in its entirety as follows: B. For purposes of subsection (A) of this Section, the term "change of control of the Company" means: (i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (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 of common stock of the Company (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"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (1) any acquisition 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 corporation controlled by the Company or (4) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section; or (ii) individuals who, as of September 10, 1998, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to September 10, 1998 whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or 7 (iii) consummation by the Company 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 assets of another entity (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such business combination beneficially own, directly or indirectly, more than 50% of, respectively, the then 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 Business Combination (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) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or of such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board, providing for such Business Combination; or (iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. EX-10.2.M 14 MANNING CHANGE OF CONTROL AGREEMENT 1 EXHIBIT 10.2(m) CHANGE OF CONTROL EMPLOYMENT AND SEVERANCE AGREEMENT AGREEMENT by and between Universal Foods Corporation, a Wisconsin corporation (the "Company"), and Kenneth P. Manning (the "Executive"), dated as of the 10th day of September, 1998. WHEREAS, the Board of Directors of the Company (the "Board"), has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive's full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations. Therefore, in order to accomplish these objectives, the Board has caused the Company to enter into this Agreement; WHEREAS, the Company and the Executive intend that, upon a Change of Control, this Agreement shall supersede and replace the Executive Employment Contract made and entered into as of November 5, 1987, and amended as of May 10, 1988, by and between the Company and the Executive (the "Prior Agreement"). NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. Certain Definitions. (a) The "Effective Date" shall mean the first date during the Change of Control Period (as defined in Section 1(b)) on which a Change of Control (as defined in Section 2) occurs. Anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if the Executive's employment with the Company is terminated prior to the date on which the Change of Control 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 of Control or (ii) otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of this Agreement the "Effective Date" shall mean the date immediately prior to the date of such termination of employment. (b) The "Change of Control Period" shall mean the period commencing on the date hereof and ending on the third anniversary of the date hereof; provided, however, that commencing on the date one year after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof shall be hereinafter referred to as the "Renewal Date"), unless previously terminated, the Change of Control Period shall be automatically extended so as to terminate three years from such Renewal Date, unless at least 60 days prior to the Renewal Date the Company shall give notice to the Executive that the Change of Control Period shall not be so extended. 2 2. Change of Control. For the purpose of this Agreement, a "Change of Control" shall mean: (a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (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 (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) 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"); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or (b) Individuals who, as of September 10, 1998, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to September 10, 1998, whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (c) Consummation by the Company 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 assets of another entity (a "Business Combination"), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then 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 Business Combination (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) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting 2 3 from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. 3. Employment Period. The Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the third anniversary of such date (the "Employment Period"). 4. Terms of Employment. (a) Position and Duties. (i) During the Employment Period, (A) the Executive's position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 120 day period immediately preceding the Effective Date and (B) the Executive's services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or any office location less than 35 miles from such location. (ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive's reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions, and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to the Company. (b) Compensation. (i) Base Salary. During the Employment Period, the Executive shall receive an annual base salary ("Annual Base Salary"), which shall be paid at a monthly rate, at least equal to twelve times the highest monthly base salary paid or payable, including any base salary which has been earned but deferred, to the Executive by the Company and its affiliated companies in respect of the twelve-month period immediately preceding the month in which the Effective Date occurs. During the Employment Period, the Annual Base Salary shall be reviewed and increased a minimum of 3% no more than 12 months after the last salary increase awarded to the Executive prior to the Effective Date and thereafter at least annually. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement and shall be commensurate with increases given to peer executives. Annual Base Salary shall not be reduced after any such increase and the term 3 4 "Annual Base Salary" as utilized in this Agreement shall refer to Annual Base Salary as so increased. As used in this Agreement, the term "affiliated companies" shall include any company controlled by, controlling or under common control with the Company. (ii) Annual Bonus. In addition to Annual Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Period, an annual bonus (the "Annual Bonus") in cash at least equal to the Executive's highest bonus under the Company's Management Incentive Plan, or any comparable bonus under any predecessor or successor plan, for the last three full fiscal years prior to the Effective Date (annualized in the event that the Executive was not employed by the Company for the whole of such fiscal year) (the "Recent Annual Bonus"). Each such Annual Bonus shall be paid no later than the end of the third month of the fiscal year next following the fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect to defer the receipt of such Annual Bonus. (iii) Incentive, Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all qualified and non-qualified incentive (cash and stock related), savings and retirement plans, and/or comparable practices, policies and programs applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Company and its affiliated companies for the Executive under such plans, practices, policies and programs as in effect at any time during the 120-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 other peer executives of the Company and its affiliated companies. (iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with benefits which are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for the Executive at any time during the 120-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 other peer executives of the Company and its affiliated companies. (v) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies, practices and procedures of the Company and its affiliated companies in effect for the Executive at any time during the 120-day period immediately 4 5 preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies. (vi) Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits, including, without limitation, tax and financial planning services, use of an automobile and payment of related expenses, in accordance with the most favorable plans, practices, programs and policies of the Company and its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies. (vii) Office and Support Staff. During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to exclusive personal secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive by the Company and its affiliated companies at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as provided generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies. (viii) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Company and its affiliated companies as in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies. 5. Termination of Employment. (a) Death or Disability. The Executive's employment shall terminate automatically upon the Executive's death during the Employment Period. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 12(b) of this Agreement of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" shall mean the absence of the Executive from the Executive's duties with the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive's legal representative. (a) Cause. The Company may terminate the Executive's employment during the Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean: (i) the willful and continued failure of the Executive to perform substantially the Executive's duties with the Company or one of its affiliates (other than any such failure 5 6 resulting from incapacity due to physical or mental illness), after a written demand for performance is delivered to the Executive by the non-employee member of the Board of Directors of the Company who has served longest (the "Senior Director") which specifically identifies the manner in which the Senior Director believes that the Executive has not substantially performed the Executive's duties, or (ii) the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company. For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail. Any termination of the Executive's employment by the Company during the Employment Period (other than a termination under Section 5(a)) shall be deemed to be a termination other than for Cause unless it meets all requirements of this Section 5(b). (c) Good Reason. The Executive's employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall mean: (i) the assignment to the Executive of any duties inconsistent in any respect with the Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 4(a) of this Agreement, or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; (ii) any failure by the Company to comply with any of the provisions of Section 4(b) of this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; (iii) the Company's requiring the Executive to be based at any office or location other than as provided in Section 4(a)(i)(B) hereof or the Company's requiring the Executive to travel on Company business to a substantially greater extent than required immediately prior to the Effective Date; 6 7 (iv) any purported termination by the Company of the Executive's employment otherwise than as expressly permitted by this Agreement; or (v) any failure by the Company to comply with and satisfy Section 11(c) of this Agreement. For purposes of this Section 5(c), any good faith determination of "Good Reason" made by the Executive shall be conclusive. Anything in this Agreement to the contrary notwithstanding, a termination by the Executive for any reason where the Date of Termination (as defined below) is during the 30-day period immediately following the first anniversary of the Effective Date shall be deemed to be a termination for Good Reason for all purposes of this Agreement. (d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive's or the Company's rights hereunder. (e) Date of Termination. "Date of Termination" means (i) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination and (iii) if the Executive's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be. 6. Obligations of the Company upon Termination. (a) Good Reason, Other Than for Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the Executive's employment other than for Cause or Disability or the Executive shall terminate employment for Good Reason: (i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the aggregate of the following amounts: A. the sum of (1) the Executive's Annual Base Salary through the Date of Termination to the extent not theretofore paid, (2) the product of (x) the higher of (I) the 7 8 Recent Annual Bonus and (II) the Annual Bonus paid or payable, including any bonus or portion thereof which has been earned but deferred (and annualized for any fiscal year consisting of less than twelve full months or during which the Executive was employed for less than twelve full months), for the most recently completed fiscal year during the Employment Period, if any (such higher amount being referred to as the "Highest Annual Bonus") and (y) a fraction, the numerator of which is the number of days in the current fiscal year of the Company through the Date of Termination, and the denominator of which is 365 and (3) any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon) and any accrued vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (1), (2), and (3) shall be hereinafter referred to as the "Accrued Obligations"); and B. the amount equal to the product of (1) three and (2) the sum of (x) the Executive's Annual Base Salary and (y) the Highest Annual Bonus; and C. the sum of (i) all vested and nonforfeitable amounts under the Company's savings and retirement plans (qualified and non-qualified) described in Section 4(b)(iii), (ii) the amount equal to the product of (x) three and (y) the highest aggregate annual amount contributed by the Company (as a Company contribution, and not a salary reduction) on behalf of the Executive, during the last three full fiscal years prior to the Effective Date, to the Company's Savings Plan, and Supplemental Benefits Plan, or any successor or replacement defined contribution plans, and (iii) the amount equal to the product of (x) the greater of (1) three and (2) the number of full years from the Date of Termination until the Executive would attain age 65 and (y) the highest aggregate annual amount contributed by the Company (as a Company contribution, and not a salary reduction) on behalf of the Executive, during the last three fiscal years prior to the Effective Date, to the Company's Transition Retirement Plan and Retirement Employee Stock Ownership Plan, or any successor or replacement defined contribution plans. (ii) for three years after the Executive's Date of Termination, the Company shall continue benefits to the Executive and/or the Executive's family at least equal to those which would have been provided to them in accordance with the plans, programs, practices and policies described in Section 4(b)(iv) of this Agreement if the Executive's employment had not been terminated or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies and their families, provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer-provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility. For purposes of determining eligibility (but not the time of commencement of benefits) of the Executive for retiree benefits pursuant to such plans, practices, programs and policies, the Executive shall be considered to have remained employed until three years after the Date of Termination and to have retired on the last day of such period; (iii) for purposes of calculating the Executive's benefits under the Company's Supplemental Executive Retirement Plan, the Executive will be deemed to have received three additional years of base salary in amounts equal to the Executive's Annual Base Salary as of the Date of Termination, as increased for purposes of this subparagraph in each of such three years, 8 9 by the percentage increase in the Executive's Annual Base Salary from the year prior to the year which the Date of Termination occurs to the year in which the Date of Termination occurs; (iv) the Company shall, at its sole expense as incurred, provide the Executive with outplacement services the scope and provider of which shall be selected by the Executive in his sole discretion; and (v) to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies (such other amounts and benefits shall be hereinafter referred to as the "Other Benefits"). (b) Death. If the Executive's employment is terminated by reason of the Executive's death during the Employment Period, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive's estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 6(b) shall include, without limitation, and the Executive's estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most favorable benefits provided by the Company and affiliated companies to the estates and beneficiaries of peer executives of the Company and such affiliated companies under such plans, programs, practices and policies relating to death benefits, if any, as in effect with respect to other peer executives and their beneficiaries at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive's death with respect to other peer executives of the Company and its affiliated companies and their beneficiaries. (c) Disability. If the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term "Other Benefits" as utilized in this Section 6(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability (the "Disability Benefit") and other benefits at least equal to the most favorable of those generally provided by the Company and its affiliated companies to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect generally with respect to other peer executives and their families at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect at any time thereafter generally with respect to other peer executives of the Company and its affiliated companies and their families; provided that the Executive shall receive an annual Disability Benefit commencing upon his Disability Effective Date at least equal to 60% of the Executive's Annual Base Salary, which shall be paid on a monthly basis until the earlier of (i) the date on which the Executive reaches age 65 or (ii) the termination of the Executive's Disability. During the period of the Disability, the Executive shall 9 10 also receive the employee benefits (or service credits therefor, as the case may be) under any employee benefit plan or arrangement as in effect on the Date of Termination (including, without limitation, each pension and retirement plan and arrangement, supplemental pension and retirement plan and arrangement, deferred compensation plan, profit sharing plan, stock option plan, health and split-dollar life insurance, disability plan, dental program, executive car program and vacation plan) or made available in the future to other peer executives of the Company, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements. (d) Cause; Other than for Good Reason. If the Executive's employment shall be terminated for Cause during the Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive (x) his Annual Base Salary through the Date of Termination, (y) the amount of any compensation previously deferred by the Executive, and (z) Other Benefits, in each case to the extent theretofore unpaid. If the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Executive, other than for Accrued Obligations and the timely payment or provision of Other Benefits. In such case, all Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. 7. Nonexclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies and for which the Executive may qualify (provided that the Executive hereby waives any right to participate in any severance plan, program or policy of the Company during the Employment Period), nor, subject to Section 12(f), shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement. 8. Full Settlement. The Company's obligations to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement. 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 for any reason. The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case 10 11 interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). 9. Certain Additional Payments by the Company. (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 9) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by Deloitte & Touche LLP or such certified public accounting firm as may be designated by the Executive (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the Company to the Executive within ten days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 9(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive. (c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the 11 12 Company of the nature of such claim and the date on which said claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall: (i) give the Company any information reasonably requested by the Company relating to such claim; (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company; (iii) cooperate with the Company in good faith in order to effectively contest such claim; and (iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or Income Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or to contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or Income Tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 9(c), the Executive becomes entitled to receive any refund with respect 12 13 to such claim, the Executive shall (subject to the Company's complying with the requirements of Section 9(c) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 9(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 10. Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive's employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). After termination of the Executive's employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this Section 10 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. 11. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. (c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. 12. Miscellaneous. (a) The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) Notices given pursuant to this Agreement shall be in writing and shall be deemed given when actually received by the Executive or actually received by the Company's 13 14 secretary. 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 Attention: Secretary (or President, if the Executive is then Secretary), 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. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. (d) The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. (f) The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company, the employment of the Executive by the Company is "at will" and, subject to Section 1(a) hereof, prior to the Effective Date, the Executive's employment and/or this Agreement may be terminated by either the Executive or the Company at any time prior to the Effective Date, in which case the Executive shall have no further rights under this Agreement. From and after the Effective Date, this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof, including the Prior Agreement. Prior to the Effective Date, the Prior Agreement shall remain in effect pursuant to its terms. 13. 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 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 Wisconsin. The parties consent to personal jurisdiction in each trial court in the selected venue having subject matter jurisdiction, and each party irrevocably consents to service of process in the manner provided hereunder for the giving of notices. 14 15 IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name and on its behalf, all as of the day and year first above written. UNIVERSAL FOODS CORPORATION By /s/ Richard F. Hobbs ------------------------------ Richard F. Hobbs Vice President--Administration /s/ Kenneth P. Manning ------------------------------ Kenneth P. Manning Address: 5240 North Lake Drive Whitefish Bay, WI 53217 15 EX-10.2.N 15 FORM OF CHANGE OF CTRL EMPLYMNT & SEVERANCE AGRMT 1 EXHIBIT 10.2(n) AMENDED AND RESTATED CHANGE OF CONTROL EMPLOYMENT AND SEVERANCE AGREEMENT AGREEMENT by and between Universal Foods Corporation, a Wisconsin corporation (the "Company"), and ______________ (the "Executive"), dated as of the 10th day of September, 1998. WHEREAS, the Board of Directors of the Company (the "Board"), has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive's full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations. Therefore, in order to accomplish these objectives, the Board caused the Company to enter into an Agreement with the Executive, dated ____________ (the "Prior Agreement"); and WHEREAS, the Board and the Executive desire to amend the Prior Agreement to provide certain modifications to the terms and conditions of the Prior Agreement. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. Certain Definitions. (a) The "Effective Date" shall mean the first date during the Change of Control Period (as defined in Section 1(b)) on which a Change of Control (as defined in Section 2) occurs. Anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if the Executive's employment with the Company is terminated prior to the date on which the Change of Control 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 of Control or (ii) otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of this Agreement the "Effective Date" shall mean the date immediately prior to the date of such termination of employment. (b) The "Change of Control Period" shall mean the period commencing on the date hereof and ending on the third anniversary of the date hereof; provided, however, that commencing on the date one year after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof shall be hereinafter referred to as the "Renewal Date"), unless previously terminated, the Change of Control Period shall be automatically extended so as to terminate three years from such Renewal Date, unless at least 60 days prior to the Renewal Date the Company shall give notice to the Executive that the Change of Control Period shall not be so extended. 2 2. Change of Control. For the purpose of this Agreement, a "Change of Control" shall mean: (a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (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 (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) 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"); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (D) any acquisition pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or (b) Individuals who, as of September 10, 1998, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to September 10, 1998, whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (c) Consummation by the Company 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 assets of another entity (a "Business Combination"), in each case unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then 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 Business Combination (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) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting 2 3 from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. 3. Employment Period. The Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the third anniversary of such date (the "Employment Period"). 4. Terms of Employment. (a) Position and Duties. (i) During the Employment Period, (A) the Executive's position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 120-day period immediately preceding the Effective Date and (B) the Executive's services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or any office location less than 35 miles from such location. (ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive's reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions, and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to the Company. (b) Compensation. (i) Base Salary. During the Employment Period, the Executive shall receive an annual base salary ("Annual Base Salary"), which shall be paid at a monthly rate, at least equal to twelve times the highest monthly base salary paid or payable, including any base salary which has been earned but deferred, to the Executive by the Company and its affiliated companies in respect of the twelve-month period immediately preceding the month in which the Effective Date occurs. During the Employment Period, the Annual Base Salary shall be reviewed and increased a minimum of 3% no more than 12 months after the last salary increase awarded to the Executive prior to the Effective Date and thereafter at least annually. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement and shall be commensurate with increases 3 4 given to peer executives. Annual Base Salary shall not be reduced after any such increase and the term "Annual Base Salary" as utilized in this Agreement shall refer to Annual Base Salary as so increased. As used in this Agreement, the term "affiliated companies" shall include any company controlled by, controlling or under common control with the Company. (ii) Annual Bonus. In addition to Annual Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Period, an annual bonus (the "Annual Bonus") in cash at least equal to the Executive's highest bonus under the Company's Management Incentive Plan, or any comparable bonus under any predecessor or successor plan, for the last three full fiscal years prior to the Effective Date (annualized in the event that the Executive was not employed by the Company for the whole of such fiscal year) (the "Recent Annual Bonus"). Each such Annual Bonus shall be paid no later than the end of the third month of the fiscal year next following the fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect to defer the receipt of such Annual Bonus. (iii) Incentive, Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all qualified and non-qualified incentive (cash and stock related), savings and retirement plans, and/or comparable practices, policies and programs applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Company and its affiliated companies for the Executive under such plans, practices, policies and programs as in effect at any time during the 120-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 other peer executives of the Company and its affiliated companies. (iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with benefits which are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for the Executive at any time during the 120-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 other peer executives of the Company and its affiliated companies. (v) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies, practices and procedures of the Company and its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at 4 5 any time thereafter with respect to other peer executives of the Company and its affiliated companies. (vi) Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits, including, without limitation, tax and financial planning services, use of an automobile and payment of related expenses, in accordance with the most favorable plans, practices, programs and policies of the Company and its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies. (vii) Office and Support Staff. During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to exclusive personal secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive by the Company and its affiliated companies at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as provided generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies. (viii) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Company and its affiliated companies as in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies. 5. Termination of Employment. (a) Death or Disability. The Executive's employment shall terminate automatically upon the Executive's death during the Employment Period. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 12(b) of this Agreement of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" shall mean the absence of the Executive from the Executive's duties with the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive's legal representative. (b) Cause. The Company may terminate the Executive's employment during the Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean: (i) the willful and continued failure of the Executive to perform substantially the Executive's duties with the Company or one of its affiliates (other than any such failure re- 5 6 sulting from incapacity due to physical or mental illness), after a written demand for performance is delivered to the Executive by the Chief Executive Officer of the Company which specifically identifies the manner in which the Chief Executive Officer believes that the Executive has not substantially performed the Executive's duties, or (ii) the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company. For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of the Company or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail. Any termination of the Executive's employment by the Company during the Employment Period (other than a termination under Section 5(a)) shall be deemed to be a termination other than for Cause unless it meets all requirements of this Section 5(b). (c) Good Reason. The Executive's employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall mean: (i) the assignment to the Executive of any duties inconsistent in any respect with the Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 4(a) of this Agreement, or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; (ii) any failure by the Company to comply with any of the provisions of Section 4(b) of this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; (iii) the Company's requiring the Executive to be based at any office or location other than as provided in Section 4(a)(i)(B) hereof or the Company's requiring the Executive to travel on Company business to a substantially greater extent than required immediately prior to the Effective Date; 6 7 (iv) any purported termination by the Company of the Executive's employment otherwise than as expressly permitted by this Agreement; or (v) any failure by the Company to comply with and satisfy Section 11(c) of this Agreement. For purposes of this Section 5(c), any good faith determination of "Good Reason" made by the Executive shall be conclusive. Anything in this Agreement to the contrary notwithstanding, a termination by the Executive for any reason where the Date of Termination (as defined below) is during the 30-day period immediately following the first anniversary of the Effective Date shall be deemed to be a termination for Good Reason for all purposes of this Agreement. (d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive's or the Company's rights hereunder. (e) Date of Termination. "Date of Termination" means (i) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination and (iii) if the Executive's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be. 6. Obligations of the Company upon Termination. (a) Good Reason, Other Than for Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the Executive's employment other than for Cause or Disability or the Executive shall terminate employment for Good Reason: (i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the aggregate of the following amounts: 7 8 A. the sum of (1) the Executive's Annual Base Salary through the Date of Termination to the extent not theretofore paid, (2) the product of (x) the higher of (I) the Recent Annual Bonus and (II) the Annual Bonus paid or payable, including any bonus or portion thereof which has been earned but deferred (and annualized for any fiscal year consisting of less than twelve full months or during which the Executive was employed for less than twelve full months), for the most recently completed fiscal year during the Employment Period, if any (such higher amount being referred to as the "Highest Annual Bonus") and (y) a fraction, the numerator of which is the number of days in the current fiscal year of the Company through the Date of Termination, and the denominator of which is 365 and (3) any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon) and any accrued vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (1), (2), and (3) shall be hereinafter referred to as the "Accrued Obligations"); and B. the amount equal to the product of (1) three and (2) the sum of (x) the Executive's Annual Base Salary and (y) the Highest Annual Bonus; and C. the sum of (i) all vested and nonforfeitable amounts under the Company's savings and retirement plans (qualified and non-qualified) described in Section 4(b)(iii) and (ii) the amount equal to the product of (x) three and (y) the highest aggregate annual amount contributed by the Company (as a Company contribution, and not a salary reduction) on behalf of the Executive, during the last three full fiscal years prior to the Effective Date, to the Company's Transition Retirement Plan, Savings Plan, Retirement Employee Stock Ownership Plan, and Supplemental Benefits Plan, or any successor or replacement defined contribution plans. (ii) for three years after the Executive's Date of Termination, the Company shall continue benefits to the Executive and/or the Executive's family at least equal to those which would have been provided to them in accordance with the plans, programs, practices and policies described in Section 4(b)(iv) of this Agreement if the Executive's employment had not been terminated or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies and their families, provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer-provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility. For purposes of determining eligibility (but not the time of commencement of benefits) of the Executive for retiree benefits pursuant to such plans, practices, programs and policies, the Executive shall be considered to have remained employed until three years after the Date of Termination and to have retired on the last day of such period; 8 9 (iii) for purposes of calculating the Executive's benefits under the Company's Supplemental Executive Retirement Plan, the Executive will be deemed to have received three additional years of base salary in amounts equal to the Executive's Annual Base Salary as of the Date of Termination as increased for purposes of this subparagraph in each of such three years by the percentage increase in the Executive's Annual Base Salary from the year prior to the year which the Date of Termination occurs to the year in which the Date of Termination occurs. (iv) the Company shall, at its sole expense as incurred, provide the Executive with outplacement services the scope and provider of which shall be selected by the Executive in his sole discretion; and (v) to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided, or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies (such other amounts and benefits shall be hereinafter referred to as the "Other Benefits"). (b) Death. If the Executive's employment is terminated by reason of the Executive's death during the Employment Period, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive's estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 6(b) shall include, without limitation, and the Executive's estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most favorable benefits provided by the Company and affiliated companies to the estates and beneficiaries of peer executives of the Company and such affiliated companies under such plans, programs, practices and policies relating to death benefits, if any, as in effect with respect to other peer executives and their beneficiaries at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive's death with respect to other peer executives of the Company and its affiliated companies and their beneficiaries. (c) Disability. If the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term "Other Benefits" as utilized in this Section 6(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable of those generally provided by the Company and its affiliated companies to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect generally with respect to other peer executives and their families at any time during the 120-day period immedi- 9 10 ately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect at any time thereafter generally with respect to other peer executives of the Company and its affiliated companies and their families. (d) Cause; Other than for Good Reason. If the Executive's employment shall be terminated for Cause during the Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive (x) his Annual Base Salary through the Date of Termination, (y) the amount of any compensation previously deferred by the Executive, and (z) Other Benefits, in each case to the extent theretofore unpaid. If the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Executive, other than for Accrued Obligations and the timely payment or provision of Other Benefits. In such case, all Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. 7. Nonexclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies and for which the Executive may qualify (provided, that the Executive hereby waives any right to participate in any severance plan, program, or policy of the Company during the Employment Period), nor, subject to Section 12(f), shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or any of its affiliated companies. Amounts which are vested benefits, or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of its affiliated companies at or subsequent to the Date of Termination, shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement. 8. Full Settlement. The Company's obligations to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement. 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 for any reason. The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). 9. Certain Additional Payments by the Company. (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be 10 11 determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 9) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code, or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by Deloitte & Touche LLP or such certified public accounting firm as may be designated by the Executive (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the Company to the Executive within ten days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 9(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive. (c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which said claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in 11 12 writing prior to the expiration of such period that it desires to contest such claim, the Executive shall: (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order to effectively contest such claim, and (iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or Income Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or to contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or Income Tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 9(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company's complying with the requirements of Section 9(c) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an 12 13 amount advanced by the Company pursuant to Section 9(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 10. Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive's employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). After termination of the Executive's employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this Section 10 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. 11. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. (c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. 12. Miscellaneous. (a) The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) Notices given pursuant to this Agreement shall be in writing and shall be deemed given when actually received by the Executive or actually received by the Company's secretary. 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 Attention: Secretary (or President, if the Executive is then Secretary), or if to the Executive, at the address set 13 14 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. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. (d) The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. (f) The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company, the employment of the Executive by the Company is "at will" and, subject to Section 1(a) hereof, prior to the Effective Date, the Executive's employment and/or this Agreement may be terminated by either the Executive or the Company at any time prior to the Effective Date, in which case the Executive shall have no further rights under this Agreement. From and after the Effective Date this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof, including the Prior Agreement. 13. 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 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 Wisconsin. The parties consent to personal jurisdiction in each trial court in the selected venue having subject matter jurisdiction, and each party irrevocably consents to service of process in the manner provided hereunder for the giving of notices. 14 15 IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name and on its behalf, all as of the day and year first above written. UNIVERSAL FOODS CORPORATION By _________________________________ Chairman, President & Chief Executive Officer _________________________________ Address: 15 EX-10.2.O 16 AMENDED & RESTATED TRUST AGREEMENT (RABBI A) 1 EXHIBIT 10.2(o) UNIVERSAL FOODS CORPORATION RABBI TRUST "A" AGREEMENT This Trust Agreement is made as of the 10th day of September, 1998 by and between UNIVERSAL FOODS CORPORATION, a Wisconsin corporation (the "Company"), and FIRSTAR BANK, MILWAUKEE, N.A. (the "Trustee"). RECITALS: (i) WHEREAS, the Company previously entered into a trust agreement dated January 18, 1988 ("Prior Trust Agreement") with Marshall & Ilsley Trust Company as trustee (the "Prior Trustee") for the purpose of funding the payment of benefits in the event of a change of control of the Company under various executive employment contracts for selected Company executives (the "Executives"); and (ii) WHEREAS, the Trustee succeeded the Prior Trustee under the Prior Trust Agreement on February 1, 1998; and (iii) WHEREAS, the Prior Trust Agreement is revocable by the Company because the trust thereunder has not been funded due to a change of control as provided therein, there is only one Executive employment agreement covered by the Prior Trust Agreement, and the Company, the remaining covered Executive and the Trustee desire to amend the Prior Trust Agreement to make various changes in the trust agreement, including the terms and conditions defined as a "Change of Control" of the Company; and (vi) WHEREAS, the Company, the remaining covered Executive and the Trustee now desire to amend and restate the trust agreement substantially in the form of the model rabbi trust issued by the Internal Revenue Service in Revenue Procedure 92-64 (hereinafter the "Trust") and administer all of the assets held by the Prior Trustee in the Trust as so amended and restated, which shall be held therein, subject to the claims of the Company's creditors in the event the Company becomes Insolvent, as herein defined, until paid in accordance with the terms of the remaining Executive employment agreement listed on Appendix A and any other Executive employment agreement designated by the Company to be covered by this Trust Agreement (the "Contracts") for the benefit of the Executives covered by the Contracts; and (v) WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of any Contract as an unfunded plan maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended; and (vi) WHEREAS, it is the intention of the Company to make contributions to the Trust to provide itself with a source of funds to assist it in the meeting of its liabilities under the Contracts; 2 NOW, THEREFORE, the parties do hereby amend and restate the Trust Agreement, as follows: SECTION 1. SUCCESSOR TRUST (a) The Company and Trustee hereby acknowledge the deposit with the Trustee of assets previously held under the Prior Trust Agreement, which shall continue as the principal of the Trust to be held, administered and disposed of by the Trustee as provided in this Trust Agreement. (b) The Trust shall become irrevocable upon a Change of Control, as defined herein. (c) The Trust is intended to be a grantor trust, of which the Company is the grantor, within the meaning of subpart E, part 1, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly. (d) The principal of the Trust, and any earnings thereon shall be held separate and apart from other funds of the Company and shall be used exclusively for the uses and purposes of paying benefits to Executives as required by the Contracts and claims of general creditors, as herein set forth. Executives shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Contracts and this Trust Agreement shall be mere unsecured contractual rights of Executives against the Company. Any assets held by the Trust will be subject to the claims of the Company's general creditors under federal and state law in the event the Company is Insolvent, as defined in Section 3(a) herein. (e) The Company, in its sole discretion, may at any time, or from time to time, make additional deposits of cash or other property in trust with the Trustee to augment the principal to be held, administered and disposed of by the Trustee as provided in this Trust Agreement. Neither the Trustee nor any Executive shall have any right to compel such additional deposits. (f) Upon a Change of Control as defined herein, the Company shall, within five (5) business days following the Change of Control, make an irrevocable contribution to the Trust in an amount that is sufficient to pay the Executives the benefits to which Executives would be entitled pursuant to the terms of the Contract(s) as of the date on which the Change of Control occurred; provided, however, payment of benefits through this Rabbi Trust A shall not duplicate any benefits payable to Executives through Rabbi Trust B (which provides for payment of benefits for several non-qualified benefit plans of the Company) or any other irrevocable trust arrangement providing for secured payment of benefits to Executives, notwithstanding that the benefits shall be payable upon a Change of Control pursuant to the terms of the Contracts. SECTION 2. PAYMENTS TO EXECUTIVES. (a) Upon a Change of Control, within five (5) business days following such Change of Control, the Company shall deliver to the Trustee a schedule (the "Payment Schedule") that 2 3 indicates the amounts payable in respect of each Executive, that provides a formula or other instructions acceptable to Trustee for determining the amounts so payable, the form in which such amount is to be paid (as provided for under the Contracts), and the time of commencement for payment of such amounts. Except as otherwise provided herein, the Trustee shall make payments to the Executives in accordance with such Payment Schedule. The Trustee shall make provision for the reporting and withholding of any federal, state or local taxes that may be required to be withheld with respect to the payment of benefits pursuant to the terms of the Contracts and shall pay amounts withheld to the appropriate taxing authorities or determine that such amounts have been reported, withheld and paid by the Company. (b) The entitlement of an Executive to benefits under a Contract shall be determined by the Company or such party as it shall designate, and any claim for such benefits shall be considered and reviewed under procedures determined by the Company and uniformly applied. (c) The Company may make payment of benefits directly to Executives as they become due under the terms of the Contracts. The Company shall notify the Trustee of its decision to make payment of benefits directly prior to the time amounts are payable to Executives. In addition, if the principal of the Trust, and any earnings thereon, are not sufficient to make payments of benefits in accordance with the terms of the Contracts, the Company shall make the balance of each such payment as it falls due. The Trustee shall notify the Company where principal and earnings are not sufficient. SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY WHEN THE COMPANY IS INSOLVENT. (a) The Trustee shall cease payment of benefits to Executives if the Company is Insolvent. Company shall be considered "Insolvent" for purposes of this Trust Agreement if (i) the Company is unable to pay its debts as they become due, or (ii) the Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. (b) At all times during the continuance of this Trust, as provided in Section l(d) hereof, the principal and income of the Trust shall be subject to claims of general creditors of the Company under federal and state law as set forth below. (1) The Board of Directors and the Chief Executive Officer of the Company shall have the duty to inform the Trustee in writing that the Company is Insolvent. If a person claiming to be a creditor of the Company alleges in writing to the Trustee that the Company has become Insolvent, the Trustee shall determine whether the Company is Insolvent and, pending such determination, the Trustee shall discontinue payment of benefits to Executives. (2) Unless the Trustee has actual knowledge that the Company is Insolvent, or has received notice from the Company or a person claiming to be a creditor alleging that the Company is Insolvent, the Trustee shall have no duty to inquire whether the Company is Insolvent. The Trustee may in all events rely on such evidence concerning whether the 3 4 Company is Insolvent as may be furnished to the Trustee and that provides the Trustee with a reasonable basis for making a determination whether the Company is Insolvent. (3) If at any time the Trustee has determined that the Company is Insolvent, the Trustee shall discontinue payments to Executives and shall hold the assets of the Trust for the benefit of the Company's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Executives to pursue their rights as general creditors of the Company with respect to benefits due under the Contracts or otherwise. (4) The Trustee shall resume the payment of benefits to Executives in accordance with Section 2 of this Trust Agreement only after the Trustee has determined that the Company is not Insolvent (or is no longer Insolvent). (c) Provided that there are sufficient assets, if the Trustee discontinues the payment of benefits from the Trust pursuant to Section 3(b) hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Executives under the terms of the Contracts for the period of such discontinuance, less the aggregate amount of any payments made to Executives by the Company in lieu of the payments provided for hereunder during any such period of discontinuance. SECTION 4. PAYMENTS TO COMPANY. Except as provided in Section 3 hereof, after a Change of Control, the Company shall have no right or power to direct the Trustee to return to the Company, or to divert to others, any of the Trust assets before all payment of benefits have been made to Executives pursuant to the terms of the Contracts, except in the case of a termination of the Trust pursuant to Section 12. SECTION 5. INVESTMENT AUTHORITY. (a) The Trustee may invest in securities (including stock or rights to acquire stock) or obligations issued by the Company. All rights associated with assets of the Trust shall be exercised by the Trustee or the person designated by the Trustee, and shall in no event be exercisable by or rest with Executives, except that voting rights with respect to Trust assets will be exercised by the Company. (b) The Company shall have the right at anytime, and from time to time in its sole discretion, to substitute assets of equal fair market value for any asset held by the Trust. This right is exercisable by the Company in a nonfiduciary capacity without the approval or consent of any person in a fiduciary capacity. SECTION 6. DISPOSITION OF INCOME. During the term of this Trust, to the extent not necessary for the payment of benefits after a Change of Control, all or part of the income received by the Trust, net of expenses and taxes, 4 5 shall be returned to the Company, as determined by the Company. SECTION 7. ACCOUNTING BY TRUSTEE. The Trustee shall keep accurate and detailed records of all investments, receipts, disbursements, and all other transactions required to be made, including such specific records as shall be agreed upon in writing between the Company and the Trustee. Within thirty (30) days after the removal or resignation of the Trustee, the Trustee shall deliver to the Company a written account of its administration of the Trust during such year or during the period from the close of the last preceding year to the date of such removal or resignation, setting forth all investments, receipts, disbursements and other transactions effected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds of such purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities and other property held in the Trust at the end of such year or as of the date of such removal or resignation, as the case may be. SECTION 8. RESPONSIBILITY OF TRUSTEE. (a) The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; provided, however, that the Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by the Company which is contemplated by, and in conformity with, the terms of the Contracts or this Trust and is given in writing by the Company. In the event of a dispute between the Company and a party, the Trustee may apply to a court of competent jurisdiction to resolve the dispute. (b) If the Trustee undertakes or defends any litigation arising in connection with this Trust, the Company agrees to indemnify the Trustee against the Trustee's costs, expenses and liabilities (including, without limitation, attorneys' fees and expenses) relating thereto and to be primarily liable for such payments. If the Company does not pay such costs, expenses and liabilities in a reasonably timely manner, the Trustee may obtain payment from the Trust. (c) The Trustee may consult with legal counsel (who may also be counsel for the Company generally) with respect to any of its duties or obligations hereunder. (d) The Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants or other professionals to assist it in performing any of its duties or obligations hereunder. (e) The Trustee shall have, without exclusion, all powers conferred on Trustees by applicable law, unless expressly provided otherwise herein; provided, however, that if an insurance policy is held as an asset of the Trust, the Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of 5 6 the policy to a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy. (f) Notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or to applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code. SECTION 9. COMPENSATION AND EXPENSES OF TRUSTEE. The Company shall pay all administrative costs and the Trustee's fees and expenses. If not so paid, the costs, fees and expenses shall be paid from the Trust. SECTION 10. RESIGNATION AND REMOVAL OF TRUSTEE. (a) The Trustee may resign at any time by written notice to the Company, which shall be effective no less than thirty (30) days after receipt of such notice unless the Company and the Trustee agree otherwise. (b) The Trustee may be removed by the Company on fifteen (15) days notice or upon shorter notice accepted by the Trustee. (c) Upon resignation or removal of the Trustee and appointment of a successor Trustee, all assets shall subsequently be transferred to the successor Trustee. The transfer shall be completed within thirty (30) days after receipt of notice of resignation, removal or transfer, unless the Company extends such time limit. (d) If the Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 11 hereof, by the effective date of resignation or removal under paragraphs (a) or (b) of this section. If no such appointment has been made, the Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of the Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust. SECTION 11. APPOINTMENT OF SUCCESSOR. If the Trustee resigns or is removed in accordance with Section 10(a) or (b) hereof, the Company may appoint any third party, such as a bank trust department or other party that may be granted corporate trustee powers under state law, as a successor to replace the Trustee upon resignation or removal. The appointment shall be effective when accepted in writing by the new Trustee, who shall have all of the rights and powers of the former Trustee, including ownership rights in the Trust assets. The former Trustee shall execute any instrument necessary or reasonably requested by the Company or the successor Trustee to evidence the transfer. 6 7 SECTION 12. AMENDMENT OR TERMINATION. (a) Prior to a Change of Control, this Trust Agreement may be amended by a written instrument executed by the Trustee and the Company. Notwithstanding the foregoing, no such amendment shall conflict with the terms of the Contracts or shall make the Trust revocable after it has become irrevocable in accordance with Section l(b) hereof. (b) The Trust shall not terminate until the date on which Executives are no longer entitled to benefits pursuant to the terms of the Contracts, unless approved as provided in Section 12(c) hereof. (c) After a Change of Control, upon written approval of Executives entitled to payment of not less than sixty-five percent (65%) of benefits payable under the Payment Schedule, the Company may terminate this Trust prior to the time all benefits payable under the Payment Schedule have been made. All assets in the Trust at termination shall be returned to the Company. SECTION 13. MISCELLANEOUS. (a) Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof. (b) Benefits payable to Executives under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process. (c) This Trust Agreement shall be governed by and construed in accordance with the laws of Wisconsin. (d) For purposes of this Trust, Change of Control shall mean: (1) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of 20% or more of either (A) the then outstanding shares of common stock of the Company (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"); provided, however, that for purposes of this subsection (1), the following acquisitions shall not constitute a Change of Control: (I) any acquisition 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 corporation controlled by the Company or (IV) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (3) of this paragraph (d); or 7 8 (2) individuals who, as of September 10, 1998, constitute the Board of Directors (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a director subsequent to September 10, 1998 whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors; or (3) consummation by the Company 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 assets of another entity (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such business combination beneficially own, directly or indirectly, more than 50% of, respectively, the then 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 Business Combination (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) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or of such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board, providing for such Business Combination; or (4) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. 8 9 SECTION 14. EFFECTIVE DATE. The effective date of this amended and restated Trust Agreement shall be September 10, 1998. UNIVERSAL FOODS CORPORATION By: /s/ Kenneth P. Manning ----------------------------------- Name: Kenneth P. Manning --------------------------------- Title: Chairman, President and -------------------------------- Chief Executive Officer -------------------------------- FIRSTAR BANK, MILWAUKEE, N.A. By: /s/ Richard A. Whittow ----------------------------------- Name: Richard A. Whittow --------------------------------- Title: Vice President -------------------------------- 9 EX-10.2.P 17 TRUST AGREEMENT (RABBI B) 1 EXHIBIT 10.2(p) TRUST AGREEMENT TRUST AGREEMENT (the "Trust"), dated January 18, 1988, by and between Universal Foods Corporation, a Wisconsin corporation (the "Company"), and Marshall & Ilsley Trust Company (the "Trustee"). WHEREAS, the Company is obligated under the plans and agreements listed on Schedule A hereto, as the same may be amended from time to time (collectively the "Plans"), to make certain deferred and other payments to certain of the Company's present, future and former directors and executives (the "Executives"); and WHEREAS, the aforesaid obligations of the Company are not currently funded or otherwise secured; and WHEREAS, for purposes of assuring that payments are made in satisfaction of such obligations, the Company desires to establish a trust (the "Trust") and to deposit with the Trustee, subject only to the claims of the Company's existing or future general creditors, amounts of cash, marketable securities and life insurance policies sufficient to fund such payments, and to pay premiums on any such life insurance policies, as they may become due and payable; NOW, THEREFORE, in consideration of the mutual agreements contained herein and for other good and valuable consideration, the parties hereto agree as follows: 2 ARTICLE I THE PLANS SECTION 1.01 Plans. The Company Plans subject to this Agreement consist of the plans and agreements listed on Schedule A hereto, as the same may be amended from time to time. ARTICLE II TRUST AND THE TRUST CORPUS SECTION 2.01 Trust. (a) Contemporaneously with the execution of this Agreement, the Company is delivering to the Trustee to be held in trust hereunder the sum of One Thousand Dollars ($1,000). As soon as practicable after the date hereof, the Company shall deliver to the Trustee to be held in trust hereunder an amount in cash plus marketable securities and life insurance policies which will be sufficient to fund the Company's obligations to pay (i) to the Executives benefits due and payable to them under the Plans and (ii) to the appropriate insurers premiums due and payable on such life insurance policies. (b) Contemporaneously with the later payment by the Company pursuant to Section 2.01(a) hereof, the Company shall deliver to the Trustee a schedule (the "Payment Schedule") indicating (i) the amounts payable in respect of each Executive, or providing a formula or instructions acceptable to the Trustee for determining the amounts so payable, and the time of commencement -2- 3 for, and the form of, payment of such amounts in respect of the Plans and (ii) the amounts payable in respect of any premiums on any life insurance policies held in Trust. (c) At each September 30, the Company shall recalculate the amount of assets which would be required to be delivered pursuant to Section 2.01(a) as of such anniversary date. If the amount so calculated exceeds the fair market value of the assets then held in trust, the Company shall promptly (and in no event later than twenty-five (25) days from such anniversary date) pay to the Trustee (i) an amount in cash, marketable securities (valued at their fair market value) or life insurance policies or any combination thereof equal to such excess less (ii) the amount, if any, of interest and other income earned on the Trust Corpus and received by the Trustee during the year then ended at September 30. Contemporaneously with such payment, the Company shall deliver to the Trustee (i) a modified Payment Schedule indicating the amounts payable in respect of each Executive, or providing a formula or instructions acceptable to the Trustee for determining the amounts so payable, and the time of commencement for, and the form of, payment of such amounts and (ii) the amounts payable in respect of any premiums on any life insurance policies held in Trust. (d) The Trust shall be revocable by the Company at any time until thirty (30) days following the issuance by the Internal -3- 4 Revenue Service of tax rulings requested by the Company in connection with its establishment of this Trust; thereafter, this Trust shall be irrevocable. (e) This Trust is intended to be a grantor trust within the meaning of Section 671 of the Internal Revenue Code of 1986 and is to be construed accordingly. SECTION 2.02 Trust Corpus. (a) As used herein, the term "Trust Corpus" shall mean the amounts and assets delivered to the Trustee as described in Section 2.01(a) hereof plus all amounts and assets delivered thereafter pursuant to Section 2.01(c) hereof, in whatever form held or invested as provided herein. The Trust Corpus shall be held, invested and reinvested by the Trustee in cash, cash equivalents, marketable securities or life insurance policies on the lives of the Executives only in accordance with this Section 2.02. The Trustee shall use its good faith efforts to invest or reinvest from time to time all or such part of the Trust Corpus as it believes prudent under the circumstances (taking into account, among other things, anticipated cash requirements for the payment of benefits under the Plans) in any one or a combination of the following: (i) life insurance policies on the lives of the Executives; (ii) cash equivalents; and -4- 5 (iii) such equity or fixed income securities as are permitted in accordance with the investment guidelines which are, or when adopted by the Company shall be, attached hereto as Schedule B, as the same may be modified at any time and from time to time by the Company provided, however, that the Trustee shall not be liable for any failure to maximize the income earned on that portion of the Trust Corpus as is from time to time invested or reinvested as set forth above, nor for any loss of income due to liquidation of any investment which the Trustee, in its sole discretion, believes necessary to make payments or to reimburse expenses under the terms of this Trust. (b) Except as hereinafter provided, all interest and other income earned on the investment of the Trust Corpus, except dividends on and proceeds from life insurance policies, shall be the property of the Company and shall not constitute a part of the Trust Corpus. Within twenty (20) days after the end of each year ending September 30, the Trustee shall notify the Company of the amount of such interest and other income received by the Trustee during such year then ended. Such interest and other income received by the Trustee during each year ended September 30 shall be paid over to the Company by the Trustee within thirty (30) days after the end of each such year. The amount of such -5- 6 interest or other income so payable to the Company shall be reduced to the extent it offsets the excess otherwise required to be paid by the Company to the Trustee pursuant to Section 2.01(c) hereof, and only the remainder, if any, shall be paid to the Company. (c) All losses of income or principal in respect of, and expenses (including, as provided in Sections 5.01(f) and (g) hereof, any expenses of the Trustee) charged against, the Trust Corpus shall be for the account of the Company and the Company shall be obligated to promptly reimburse the Trust Corpus for any loss in principal amount of, or expense charged against, the Trust Corpus except to the extent that such amounts have been applied to reduce amounts payable to the Company pursuant to Section 2.02(b) hereof. ARTICLE III RELEASE OF THE TRUST CORPUS SECTION 3.01 Deliveries to Executives. (a) As soon as practicable following the execution of this Agreement, the Payment Schedule shall be delivered by the Company to each Executive. A modified Payment Schedule shall be delivered by the Company to each Executive at each time that a modified Payment Schedule is delivered by the Company to the -6- 7 Trustee under Section 2.01(c) hereof. Except as otherwise provided herein, the Trustee shall make payments to the Executives in accordance with the most recent Payment Schedule. (b) In the event that an Executive reasonably believes that the Payment Schedule, including any modified Payment Schedule, does not properly reflect the amount payable to such Executive or the timing or form of payment from the Trust Corpus in respect of any of the Plans in which he or she is a participant, such Executive shall be entitled to deliver to the Trustee written notice (the "Executive's Notice") setting forth the amount, timing or form of payment the Executive believes is proper under the relevant terms of the Plan or Plans. The Executive shall also deliver a copy of the Executive's Notice to the Company within three (3) business days of the delivery to the Trustee. Unless the Trustee receives written objection from the Company within ten (10) business days after receipt by the Trustee of such notice, the Trustee shall make the payment in accordance with the Executive's Notice. In the event the Trustee receives written objection from the Company within such ten (10) business day period and in the event the Company and Executive cannot agree on the terms of the Payment Schedule, the dispute shall be resolved in accordance with Section 6.03 hereof. (c) In the event that the aggregate amount payable in any calendar month to the Executives entitled to payments during such month exceeds the Trust Corpus, the Trustee shall -7- 8 borrow on any life insurance policies held in the Trust to the extent necessary to satisfy such payment obligations. If, notwithstanding such borrowing, the Trust Corpus is not sufficient to satisfy such payment obligations, the Trustee shall make a pro rata payment to each Executive entitled to a payment during such month based on the amount so payable to such Executive in proportion to the aggregate amount so payable to all such Executives. (d) The Trustee shall be permitted to withhold from any payment due to an Executive hereunder the amount required by law to be so withheld under federal, state and local wage withholding requirements or otherwise, and shall pay over to the appropriate government authority the amounts so withheld. (e) Except as otherwise provided herein, in the event of any final determination by the Internal Revenue Service or a court of competent jurisdiction, which determination is not appealable or the time for appeal or protest of which has expired, or the receipt by the Trustee of a substantially unqualified opinion of tax counsel selected by the Trustee, which determination determines, or which opinion opines, that the Executives or any particular Executive is subject to federal income taxation on amounts held in Trust hereunder prior to the distribution to the Executives or Executive of such amounts, the Trustee shall, on receipt by the Trustee of notice of such determination or of such opinion, -8- 9 pay to each Executive the portion of the Trust Corpus includible in such Executive's federal gross income. SECTION 3.02 Deliveries to Creditors of the Company. It is the intent of the parties hereto that the Trust Corpus is and shall remain at all times subject to the claims of the general creditors of the Company. Accordingly, the Company shall not create a security interest in the Trust Corpus in favor of the Executives or any creditor. If the Trustee receives the notice provided for in Section 3.03 hereof, or otherwise receives actual notice that the Company is insolvent or bankrupt as defined in Section 3.03 hereof, the Trustee shall make no further distributions of the Trust Corpus to any of the Executives but shall deliver the entire amount of the Trust Corpus only as a court of competent jurisdiction, or duly appointed receiver or other person authorized to act by such a court, may direct to make the Trust Corpus available to satisfy the claims of the Company's general creditors. The Trustee shall resume distribution of the Trust Corpus to the Executives under the terms hereof, upon no less than thirty (30) days advance notice to the Company, if it determines that the Company was not, or is no longer, bankrupt or insolvent. The Trustee may rely on such evidence concerning the status or solvency of the Company as may be furnished to the Trustee as will give the Trustee a reasonable basis for making such determination. -9- 10 SECTION 3.03 Notification of Bankruptcy or Insolvency. The Company, through its Board of Directors and Chief Executive Officer, shall notify the Trustee promptly in writing of the Company's bankruptcy or insolvency. Prior to receipt of such notice, the Trustee shall have no duty to inquire whether or not the Company is bankrupt or insolvent. The Company shall be deemed to be bankrupt or insolvent: (i) upon the entry of a decree or order by a court having jurisdiction adjudging the Company bankrupt or insolvent, or approving a petition seeking reorganization, arrangement, adjustment or composition of the Company under the Federal Bankruptcy Act, or appointing a receiver (or other similar official) of the Company, or ordering the winding up or liquidation of the affairs of the Company; (ii) upon the institution by the Company of proceedings to be adjudicated a bankrupt or insolvent, or the consent by the Company to the institution of bankruptcy or insolvency proceedings against it, or the filing by the Company of a petition seeking reorganization or relief under the Federal Bankruptcy Act, or the consent by the Company to the filing of any such petition or to the -10- 11 appointment of a receiver, trustee (or other similar official) of the Company, or the making by the Company of an assignment for the benefit of creditors, or the admission by the Company in writing of its inability to pay its debts as they mature; or (iii) if the Company is unable to pay its debts as they mature. ARTICLE IV TRUSTEE SECTION 4.01 Trustee. (a) The duties and responsibilities of the Trustee shall be limited to those expressly set forth in this Agreement, and no implied covenants or obligations shall be read into this Trust against the Trustee. (b) If all or any part of the Trust Corpus is at any time attached, garnished or levied upon by any court order, or in case the payment, assignment, transfer, conveyance or delivery of any such property shall be stayed or enjoined by any court order, or in case any order, judgment or decree shall be made or entered by a court affecting such property or any part thereof, then and in any of such events the Trustee is authorized, in its sole discretion, to rely upon and comply with any such order, writ, judgment or decree, and it shall not be liable to the Company (or any -11- 12 of its subsidiaries) or any Executive by reason of such compliance even though such order, writ, judgment or decree subsequently may be reversed, modified, annulled, set aside or vacated. (c) The Trustee shall maintain such books, records and accounts as may be necessary for the proper administration of the Trust Corpus, including, without limitation, as provided in Section 2.01 hereof, and shall render to the Company, on or prior to each October 31 following the date of this Trust until the termination of this Trust (and on the date of such termination), an accounting with respect to the Trust Corpus as of the end of the immediately preceding September 30 (and as of the date of such termination). Upon the written request of an Executive or the Company, the Trustee shall deliver to such Executive or the Company, as the case may be, a copy of such accounting and a record of any amounts delivered by the Company to the Trustee or paid by the Trustee with respect to such Executive. (d) The Trustee shall not be liable for any act taken or omitted to be taken hereunder if taken or omitted to be taken by it in good faith. The Trustee shall also be fully protected in relying upon any Payment Schedule, modified Payment Schedule or notice delivered or given hereunder which it in good faith believes to be genuine and executed and delivered in accordance with this Agreement. -12- 13 (e) The Trustee may consult with legal counsel to be selected by it, and the Trustee shall not be liable for any action taken or suffered by it in accordance with the advice of such counsel. (f) The Trustee shall be reimbursed by the Company for its reasonable expenses incurred in connection with the performance of its duties hereunder and shall be paid reasonable fees for the performance of such duties. (g) The Company agrees to indemnify and hold harmless the Trustee from and against any and all damages, losses, claims or expenses as incurred (including expenses of investigation and fees and disbursements of counsel to the Trustee and any taxes imposed on the Trust Corpus or income of the Trust) arising out of or in connection with the performance by the Trustee of its duties hereunder. Any amount payable to the Trustee under paragraph (f) of this Section 4.01 or this paragraph (g) shall be paid by the Company promptly upon demand therefor by the Trustee or, if the Trustee so chooses in its sole discretion, from the Trust Corpus. In the event that payment is made hereunder to the Trustee from the Trust Corpus, the Trustee shall promptly notify the Company in writing of the amount of such payment. The Company agrees that, upon receipt of such notice, it will deliver to the Trustee to be held in the Trust an amount in cash or marketable -13- 14 securities (valued at their fair market value) or some combination thereof equal to any payments made from the Trust Corpus to the Trustee pursuant to paragraph (f) of this Section 4.01 or this paragraph (g). The failure of the Company to transfer any such amount shall not in any way impair the Trustee's right to indemnification, reimbursement and payment pursuant to paragraph (f) of this Section 4.01 or this paragraph (g). (h) In the event that an Executive shall have the right under the terms of the Management Split Dollar Life Insurance Plan to purchase any policy on the Executive's life held by the Trustee, the Trustee shall, upon receipt of written notice from the Company of the Executive's intention to exercise such right, transfer such policy to the Company along with any loan, debt or obligation on such policy without any further consideration. SECTION 4.02 Powers. The Trustee shall have, in addition to any implied powers and duties which may be necessary to carry out the provisions of the Trust, and subject to the Company's express directions pursuant hereto, the following powers and duties: (a) To sell, exchange, hypothecate, convey and otherwise transfer any securities or other property held in the Trust, at public or private sale, for such prices and on such terms as the Trustee deems suitable, without the approval of any court and -14- 15 without any obligation upon any person dealing with the Trustee to see to the application of any money or other property delivered to it; (b) To hold uninvested or to deposit in any bank or savings and loan association such sums of cash as it deems reasonable and in the best interests of the Trust; (c) To exercise any right, including the right to vote, personally or by general or special proxies or powers of attorney, appurtenant to any securities or other property held in the Trust; (d) To exercise or sell any conversion privileges, subscription rights or other rights or options and to make any payments incidental thereto; (e) To oppose, consent to, or otherwise participate in, any reorganization, recapitalization or other changes affecting securities held in the Trust, to delegate discretionary powers to the extent permitted by law, and to pay expenses, assessments or charges in connection therewith; to retain any securities or other property allotted to the Trust in connection with any such reorganization, recapitalization or other changes; and to generally exercise any of the powers of an owner with respect to any securities or other property held in the Trust; (f) To hold securities or other property in its name as Trustee or in the name of one or more nominees or in bearer -15- 16 form; provided, the Trust records shall at all times show that such securities or property are part of the Trust; (g) To make, execute, acknowledge and deliver any instruments that may be necessary or appropriate to carry out the powers herein granted; (h) To consult and employ suitable agents, enrolled actuaries, auditors, legal counsel or other advisers as deemed necessary to assist in the performance of the Trustee's duties, and to pay reasonable expenses and compensation in connection therewith; (i) To enforce, abstain from enforcing, settle, modify, compromise, submit to arbitration or abandon any rights, obligations, claims, debts or damages due or owing to or from the Trust; to commence, defend and represent the Trust in all suits and legal and administrative proceedings; (j) To accept and retain any securities or other property received or acquired by the Trust, whether or not such property would normally be purchased or would then be authorized as investments hereunder; (k) To collect and receive any money or property due to the Trust and to give full discharge and acquittance therefor; -16- 17 (l) To prepare such periodic written reports or other accountings as required hereunder, and to furnish the Company and the Executives with such information which either may require for tax or other purposes; (m) To borrow money from any lender in such amounts and upon such terms and conditions as shall be deemed advisable or proper to carry out the purposes of the Trust and to pledge any securities or other property for the repayment of any such loan, provided that the Company may direct but not prohibit borrowing by the Trustee on any life insurance policies held in the Trust; (n) To register any securities held by it in its own name or in the name of any custodian of such property or of its nominee, including the nominee of any system for the central handling of securities, with or without the addition of words indicating that such securities are held in a fiduciary capacity and to deposit or arrange for the deposit of any such securities with such a system; (o) To transfer assets of the Trust Corpus to a successor trustee as provided in Section 4.03; (p) To adopt uniform rules of procedure and regulations necessary for the proper and efficient administration of the Trust, provided such rules are not inconsistent with the terms hereof, and to enforce such rules and regulations; and -17- 18 (q) To do all acts, though not specifically named herein, which the Trustee deems advisable to carry out the purpose of this Trust. SECTION 4.03 Successor Trustee. The Trustee may resign and be discharged from its duties hereunder at any time by giving notice in writing of such resignation to the Company and each Executive specifying a date (not less than thirty (30) days after the giving of such notice) when such resignation shall take effect. Promptly after such notice, the Company and Executives to whom at least sixty-five percent (65%) of all amounts covered by the most recent Payment Schedule are payable shall appoint a successor trustee, such trustee to become Trustee hereunder upon the resignation date specified in such notice. If the Company and such Executive(s) are unable to so agree upon a successor trustee within thirty (30) days after such notice, the Trustee shall be entitled, at the expense of the Company, to petition a United States District Court or any of the courts of the State of Wisconsin having jurisdiction to appoint its successor. The Trustee shall continue to serve until its successor accepts the trust and receives delivery of the Trust Corpus. The Company and such Executive(s) may at any time substitute a new trustee by giving fifteen (15) days notice thereof to the Trustee then acting. The Trustee and any successor thereto appointed hereunder shall be a commercial bank or trust company which is not an affiliate of the Company, -18- 19 but which is a national banking association or established under the laws of one of the states of the United States, and which has equity in excess of One Hundred Million Dollars ($100,000,000). ARTICLE V TERMINATION, AMENDMENT AND WAIVER SECTION 5.01 Termination. This Trust shall be terminated upon the earlier of either of the following events: (i) the exhaustion of the Trust Corpus; or (ii) the final payment of all amounts payable to all of the Executives pursuant to all of the Plans. Promptly upon termination of this Trust, any remaining portion of the Trust Corpus shall be paid to the Company. SECTION 5.02 Amendment and Waiver. This Trust may be amended only by an instrument in writing signed on behalf of the parties hereto, together with the written consent of Executives to whom at least sixty-five percent (65%) of all amounts covered by the most recent Payment Schedule are payable; provided that the Company, in any event, without the approval or consent of any Executive, may (i) include or exclude any Plan or Executive hereunder pursuant to Section 7.05 hereof and (ii) revise the investment guidelines attached as Exhibit B; and provided further that this Trust may not be amended to make it revocable after having become irrevocable in accordance with Section 2.01(d) hereof or to alter Section 5.01 hereof. The parties hereto, together with the consent of Executives to whom at least sixty-five percent (65%) of all amounts covered by the most recent Payment Schedule -19- 20 are payable, may at any time waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a party hereto or an Executive to any such waiver shall be valid if set forth in an instrument in writing signed on behalf of such party or Executive. Notwithstanding the foregoing, any such amendment or waiver may be made by written agreement of the parties hereto without obtaining the consent of the Executives if such amendment or waiver does not adversely affect the rights of the Executives hereunder. No such amendment or waiver relating to this Trust and adversely affecting the rights of a particular Executive hereunder shall be effective, unless such executive has agreed in writing to such amendment or waiver. ARTICLE VI GENERAL PROVISIONS SECTION 6.01 Further Assurances. The Company shall, at any time and from time to time, upon the reasonable request of the Trustee, execute and deliver such further instruments and do such further acts as may be necessary or proper to effectuate the purposes of this Trust. -20- 21 SECTION 6.02 Certain Provisions Relating to This Trust. (a) This Trust sets forth the entire understanding of the parties with respect to the subject matter hereof and supersedes any and all prior agreements, arrangements and understandings relating thereto. This Trust shall be binding upon and inure to the benefit of the parties and their respective successors and legal representatives. (b) This Trust shall be governed by and construed in accordance with the laws of the State of Wisconsin, other than and without reference to any provisions of such laws regarding choice of laws or conflict of laws. (c) In the event that any provision of this Trust or the application thereof to any person or circumstances shall be determined by a court of proper jurisdiction to be invalid or unenforceable to any extent, the remainder of this Trust, or the application of such provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each provision of this Trust shall be valid and enforced to the fullest extent permitted by law. SECTION 6.03 Arbitration. Any dispute between the Executives and the Company or the Trustee as to the interpretation or application of the provisions of this Trust and the amount, -21- 22 timing or form of any payment hereunder shall be determined exclusively by binding arbitration in Milwaukee, Wisconsin in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court of competent jurisdiction. All fees and expenses of such arbitration shall be paid by the Trustee and considered an expense of the Trust under Section 4.01(g) hereof. SECTION 6.04 Notices. Any notice, report demand or waiver required or permitted hereunder shall be in writing and shall be given personally or by prepaid registered or certified mail, return receipt requested, addressed as follows: If to the Company: Universal Foods Corporation 411 East Michigan Avenue Milwaukee, Wisconsin 53202 Attention: Terrence M. O'Reilly Vice President, Secretary and General Counsel If to the Trustee: Marshall & Ilsley Trust Company 770 North Water Street Milwaukee, Wisconsin 53202 Attention: James L. Neubauer Employee Benefits Trust Officer If to an Executive, to the address of such Executive as listed next to his name on Schedule C hereto or such other address as the Executive may set forth in a written notice to the Company and the Trustee or, as to an Executive who is not included under -22- 23 the Plans as of the date hereof but is included thereafter, the address set forth in the notice to the Trustee adding such Executive as a beneficiary. A notice shall be deemed received upon the date of delivery if given personally, or, if given by mail, upon the receipt thereof. SECTION 6.05 Trust Beneficiaries. Each Executive is an intended beneficiary under this Trust, and shall be entitled to enforce all terms and provisions hereof with the same force and effect as if such person had been a party hereto. The Executives shall have no preferred claim on, or any beneficial ownership in, the Trust Corpus, and all rights created hereunder and the Plans shall be mere unsecured contractual rights of the Executives against the Company and the status of the Executives shall only be as general unsecured creditors. Benefits to the Executives hereunder may not be anticipated, assigned, transferred, pledged or otherwise conveyed. The Company may, in its sole discretion, at any time and from time to time, by means of a modified Payment Schedule accompanied by revised Schedules A and C, (i) provide for coverage hereunder of any other Company plan, agreement or executive and (ii) upon termination of any Plan or final payment of all amounts thereunder, exclude such Plan and the Executives who are participants therein from coverage hereunder. -23- 24 IN WITNESS WHEREOF, the parties have executed this Trust as of the date first written above. UNIVERSAL FOODS CORPORATION By: /s/ Darrell E. Wilde ------------------------------- Darrell E. Wilde Senior Vice President MARSHALL & ILSLEY TRUST COMPANY By: /s/ Walter A. Lecocq ------------------------------- Walter A. Lecocq Vice President By: /s/ James L. Neubauer ------------------------------- James L. Neubauer Employee Benefits Trust Officer -24- 25 UNIVERSAL FOODS CORPORATION TRUST AGREEMENT FOR RABBI TRUST B Changes Upon Appointment of Successor Trustee WHEREAS, Marshall & Ilsley Trust Company has resigned as Trustee of Universal Foods Corporation Rabbi Trust B under Trust Agreement dated January 18, 1988; WHEREAS, it has been determined to be in the best interests of the parties to Rabbi Trust B to have Firstar Bank, Milwaukee, N.A. assume the duties of Trustee for Rabbi Trust B as soon as practicable after the resignation of the prior trustee to assure that all benefits payable through the Trust shall continue without interruption; and WHEREAS, it is in the best interests of the Executives for whom benefits are to be paid by Rabbi Trust B that the Trust Agreement be irrevocable. THEREFORE, it is hereby agreed by the parties to the Trust Agreement for Rabbi Trust B, pursuant to the next to last sentence of Section 5.02, Amendment and Waiver, of the Trust Agreement, that, effective February 1, 1998: 1. Firstar Bank, Milwaukee, N.A. shall be successor trustee to Marshall & Ilsley Trust Company. 2. The Trust Agreement for Rabbi Trust B shall be irrevocable. 3. The addresses for Notices to the Company and the Trustee provided in Section 6.04, Notices, shall be changed to reflect the actual addresses of the parties from time to time, with any party providing other parties notice of any change pursuant to the procedure of Section 6.04. IN WITNESS WHEREOF, the parties have executed this Changes Upon Appointment of Successor Trustee as of the 1st day of February, 1998. UNIVERSAL FOODS CORPORATION FIRSTAR BANK, MILWAUKEE, NA By: /s/ Kenneth P. Manning BY: /s/ Richard A. Whittow ---------------------- ---------------------- Name: Kenneth P. Manning Name: Richard A. Whittow ------------------ ------------------ Title: Chairman, President and Title: Vice President ----------------------- --------------- Chief Executive Officer ----------------------- EX-10.2.Q 18 TRUST AGREEMENT (RABBI C) 1 EXHIBIT 10.2 (q) TRUST AGREEMENT TRUST AGREEMENT (the "Trust"), dated September 8, 1988, by and between Universal Foods Corporation, a Wisconsin corporation (the "Company"), and Marshall & Ilsley Trust Company (the "Trustee"). WHEREAS, the Company is obligated under the plans and agreements listed on Schedule A hereto, as the same may be amended from time to time (collectively the "Plans"), to make certain deferred and other payments to certain of the Company's present, future and former directors and executives (the "Executives"); and WHEREAS, the aforesaid obligations of the Company are not currently funded or otherwise secured; and WHEREAS, for purposes of assuring that payments are made in satisfaction of such obligations, the Company desires to establish a trust (the "Trust") and to deposit with the Trustee, subject only to the claims of the Company's existing or future general creditors, amounts of cash or marketable securities or any combination thereof sufficient to fund such payments; NOW, THEREFORE, in consideration of the mutual agreements contained herein and for other good and valuable consideration, the parties hereto agree as follows: 2 ARTICLE I THE PLANS SECTION 1.01 Plans. The Company Plans subject to this Agreement consist of the plans and agreements listed on Schedule A hereto, as the same may be amended from time to time. ARTICLE II TRUST AND THE TRUST CORPUS SECTION 2.01 Trust. (a) Contemporaneously with the execution of this Agreement, the Company is delivering to the Trustee to be held in trust hereunder the sum of One Thousand Dollars ($1,000). As soon as practicable after the date hereof, the Company shall deliver to the Trustee to be held in trust hereunder an amount in cash or marketable securities or any combination thereof which will be sufficient to fund the Company's obligations to pay to the Executives benefits due and payable to them under the Plans. (b) Contemporaneously with the later payment by the Company pursuant to Section 2.01(a) hereof, the Company shall deliver to the Trustee a schedule (the "Payment Schedule") indicating (i) the amounts payable in respect of each Executive, or providing a formula or instructions acceptable to the Trustee for determining the amounts so payable, and the time of commencement for, and the form of, payment of such amounts in respect of the Plans. -2- 3 (c) At each September 30, the Company shall recalculate the amount of assets which would be required to be delivered pursuant to Section 2.01(a) as of such anniversary date. If the amount so calculated exceeds the fair market value of the assets then held in Trust, the Company shall promptly (and in no event later than twenty-five (25) days from such anniversary date) pay to the Trustee (i) an amount in cash or marketable securities (valued at their fair market value) or any combination thereof equal to such excess less (ii) the amount, if any, of interest and other income earned on the Trust Corpus and received by the Trustee during the year then ended at September 30. Contemporaneously with such payment, the Company shall deliver to the Trustee a modified Payment Schedule indicating the amounts payable in respect of each Executive, or providing a formula or instructions acceptable to the Trustee for determining the amounts so payable, and the time of commencement for, and the form of, payment of such amounts. (d) This Trust shall be irrevocable. (e) This Trust is intended to be a grantor trust within the meaning of Section 671 of the Internal Revenue Code of 1986 and is to be construed accordingly. SECTION 2.02 Trust Corpus. (a) As used herein, the term "Trust Corpus" shall mean the amounts and assets delivered to the Trustee as described in Section 2.01(a) hereof plus all amounts and assets delivered -3- 4 thereafter pursuant to Section 2.01(c) hereof, in whatever form held or invested as provided herein. The Trust Corpus shall be held, invested and reinvested by the Trustee in cash, cash equivalents and/or marketable securities only in accordance with this Section 2.02. The Trustee shall use its good faith efforts to invest or reinvest from time to time all or such part of the Trust Corpus as it believes prudent under the circumstances (taking into account, among other things, anticipated cash requirements for the payment of benefits under the Plans) in any one or a combination of the following: (i) cash equivalents; and (ii) such equity or fixed income securities as are permitted in accordance with the investment guidelines which are, or when adopted by the Company shall be, attached hereto as Schedule B, as the same may be modified at any time and from time to time by the Company provided, however, that the Trustee shall not be liable for any failure to maximize the income earned on that portion of the Trust Corpus as is from time to time invested or reinvested as set forth above, nor for any loss of income due to liquidation of any investment which the Trustee, in its sole discretion, believes necessary to make payments or to reimburse expenses under the terms of this Trust. -4- 5 (b) Except as hereinafter provided, all interest and other income earned on the investment of the Trust Corpus shall be the property of the Company and shall not constitute a part of the Trust Corpus. Within twenty (20) days after the end of each year ending September 30, the Trustee shall notify the Company of the amount of such interest and other income received by the Trustee during such year then ended. Such interest and other income received by the Trustee during each year ended September 30 shall be paid over to the Company by the Trustee within thirty (30) days after the end of each such year. The amount of such interest or other income so payable to the Company shall be reduced to the extent it offsets the excess otherwise required to be paid by the Company to the Trustee pursuant to Section 2.01(c) hereof, and only the remainder, if any, shall be paid to the Company. (c) All losses of income or principal in respect of, and expenses (including, as provided in Sections 5.01(f) and (g) hereof, any expenses of the Trustee) charged against, the Trust Corpus shall be for the account of the Company and the Company shall be obligated to promptly reimburse the Trust Corpus for any loss in principal amount of, or expense charged against, the Trust Corpus except to the extent that such amounts have been applied to reduce amounts payable to the Company pursuant to Section 2.02(b) hereof. -5- 6 ARTICLE III RELEASE OF THE TRUST CORPUS SECTION 3.01 Deliveries to Executives. (a) As soon as practicable following the execution of this Agreement, the Payment Schedule shall be delivered by the Company to each Executive. A modified Payment Schedule shall be delivered by the Company to each Executive at each time that a modified Payment Schedule is delivered by the Company to the Trustee under Section 2.01(c) hereof. Except as otherwise provided herein, the Trustee shall make payments to the Executives in accordance with the most recent Payment Schedule. (b) In the event that an Executive reasonably believes that the Payment Schedule, including any modified Payment Schedule, does not properly reflect the amount payable to such Executive or the timing or form of payment from the Trust Corpus in respect of any of the Plans in which he or she is a participant, such Executive shall be entitled to deliver to the Trustee written notice (the "Executive's Notice") setting forth the amount, timing or form of payment the Executive believes is proper under the relevant terms of the Plan or Plans. The Executive shall also deliver a copy of the Executive's Notice to the Company within three (3) business days of the delivery to the Trustee. Unless the Trustee receives written objection from the Company within ten (10) business days after receipt by the Trustee of such notice, the Trustee shall make the payment in accordance with the Executive's Notice. -6- 7 In the event the Trustee receives written objection from the Company within such ten (10) business day period and in the event the Company and Executive cannot agree on the terms of the Payment Schedule, the dispute shall be resolved in accordance with Section 6.03 hereof. (c) In the event that the aggregate amount payable in any calendar month to the Executives entitled to payments during such month exceeds the Trust Corpus, the Trustee shall make a pro rata payment to each Executive entitled to a payment during such month based on the amount so payable to such Executive in proportion to the aggregate amount so payable to all such Executives. (d) The Trustee shall be permitted to withhold from any payment due to an Executive hereunder the amount required by law to be so withheld under federal, state and local wage withholding requirements or otherwise, and shall pay over to the appropriate government authority the amounts so withheld. (e) Except as otherwise provided herein, in the event of any final determination by the Internal Revenue Service or a court of competent jurisdiction, which determination is not appealable or the time for appeal or protest of which has expired, or the receipt by the Trustee of a substantially unqualified opinion of tax counsel selected by the Trustee, which determination determines, or which opinion opines, that the Executives or any particular Executive is subject to federal income taxation on amounts -7- 8 held in Trust hereunder prior to the distribution to the Executives or Executive of such amounts, the Trustee shall, on receipt by the Trustee of notice of such determination or of such opinion, pay to each Executive the portion of the Trust Corpus includible in such Executive's federal gross income. SECTION 3.02 Deliveries to Creditors of the Company. It is the intent of the parties hereto that the Trust Corpus is and shall remain at all times subject to the claims of the general creditors of the Company. Accordingly, the Company shall not create a security interest in the Trust Corpus in favor of the Executives or any creditor. If the Trustee receives the notice provided for in Section 3.03 hereof, or otherwise receives actual notice that the Company is insolvent or bankrupt as defined in Section 3.03 hereof, the Trustee shall make no further distributions of the Trust Corpus to any of the Executives but shall deliver the entire amount of the Trust Corpus only as a court of competent jurisdiction, or duly appointed receiver or other person authorized to act by such a court, may direct to make the Trust Corpus available to satisfy the claims of the Company's general creditors. The Trustee shall resume distribution of the Trust Corpus to the Executives under the terms hereof, upon no less than thirty (30) days advance notice to the Company, if it determines that the Company was not, or is no longer, bankrupt or insolvent. The Trustee may rely on such evidence concerning the -8- 9 status or solvency of the Company as may be furnished to the Trustee as will give the Trustee a reasonable basis for making such determination. SECTION 3.03 Notification of Bankruptcy or Insolvency. The Company, through its Board of Directors and Chief Executive Officer, shall notify the Trustee promptly in writing of the Company's bankruptcy or insolvency. Prior to receipt of such notice, the Trustee shall have no duty to inquire whether or not the Company is bankrupt or insolvent. The Company shall be deemed to be bankrupt or insolvent: (i) upon the entry of a decree or order by a court having jurisdiction adjudging the Company bankrupt or insolvent, or approving a petition seeking reorganization, arrangement, adjustment or composition of the Company under the Federal Bankruptcy Act, or appointing a receiver (or other similar official) of the Company, or ordering the winding up or liquidation of the affairs of the Company; (ii) upon the institution by the Company of proceedings to be adjudicated a bankrupt or insolvent, or the consent by the Company to the institution of bankruptcy or insolvency proceedings -9- 10 against it, or the filing by the Company of a petition seeking reorganization or relief under the Federal Bankruptcy Act, or the consent by the Company to the filing of any such petition or to the appointment of a receiver, trustee (or other similar official) of the Company, or the making by the Company of an assignment for the benefit of creditors, or the admission by the Company in writing of its inability to pay its debts as they mature; or (iii) if the Company is unable to pay its debts as they mature. ARTICLE IV TRUSTEE SECTION 4.01 Trustee. (a) The duties and responsibilities of the Trustee shall be limited to those expressly set forth in this Agreement, and no implied covenants or obligations shall be read into this Trust against the Trustee. (b) If all or any part of the Trust Corpus is at any time attached, garnished or levied upon by any court order, or in case the payment, assignment, transfer, conveyance or delivery of any such property shall be stayed or enjoined by any court order, or in case any order, judgment or decree shall be made or entered -10- 11 by a court affecting such property or any part thereof, then and in any of such events the Trustee is authorized, in its sole discretion, to rely upon and comply with any such order, writ, judgment or decree, and it shall not be liable to the Company (or any of its subsidiaries) or any Executive by reason of such compliance even though such order, writ, judgment or decree subsequently may be reversed, modified, annulled, set aside or vacated. (c) The Trustee shall maintain such books, records and accounts as may be necessary for the proper administration of the Trust Corpus, including, without limitation, as provided in Section 2.01 hereof, and shall render to the Company, on or prior to each October 31 following the date of this Trust until the termination of this Trust (and on the date of such termination), an accounting with respect to the Trust Corpus as of the end of the immediately preceding September 30 (and as of the date of such termination). Upon the written request of an Executive or the Company, the Trustee shall deliver to such Executive or the Company, as the case may be, a copy of such accounting and a record of any amounts delivered by the Company to the Trustee or paid by the Trustee with respect to such Executive. (d) The Trustee shall not be liable for any act taken or omitted to be taken hereunder if taken or omitted to be taken by it in good faith. The Trustee shall also be fully protected in relying upon any Payment Schedule, modified Payment Schedule -11- 12 or notice delivered or given hereunder which it in good faith believes to be genuine and executed and delivered in accordance with this Agreement. (e) The Trustee may consult with legal counsel to be selected by it, and the Trustee shall not be liable for any action taken or suffered by it in accordance with the advice of such counsel. (f) The Trustee shall be reimbursed by the Company for its reasonable expenses incurred in connection with the performance of its duties hereunder and shall be paid reasonable fees for the performance of such duties. (g) The Company agrees to indemnify and hold harmless the Trustee from and against any and all damages, losses, claims or expenses as incurred (including expenses of investigation and fees and disbursements of counsel to the Trustee and any taxes imposed on the Trust Corpus or income of the Trust) arising out of or in connection with the performance by the Trustee of its duties hereunder. Any amount payable to the Trustee under paragraph (f) of this Section 4.01 or this paragraph (g) shall be paid by the Company promptly upon demand therefor by the Trustee or, if the Trustee so chooses in its sole discretion, from the Trust Corpus. In the event that payment is made hereunder to the Trustee from the Trust Corpus, the Trustee shall promptly notify the Company in writing of the amount of such payment. The Company agrees that, upon receipt of such notice, it will deliver to the -12- 13 Trustee to be held in the Trust an amount in cash or marketable securities (valued at their fair market value) or some combination thereof equal to any payments made from the Trust Corpus to the Trustee pursuant to paragraph (f) of this Section 4.01 or this paragraph (g). The failure of the Company to transfer any such amount shall not in any way impair the Trustee's right to indemnification, reimbursement and payment pursuant to paragraph (f) of this Section 4.01 or this paragraph (g). SECTION 4.02 Powers. The Trustee shall have, in addition to any implied powers and duties which may be necessary to carry out the provisions of the Trust, and subject to the Company's express directions pursuant hereto, the following powers and duties: (a) To sell, exchange, hypothecate, convey and otherwise transfer any securities or other property held in the Trust, at public or private sale, for such prices and on such terms as the Trustee deems suitable, without the approval of any court and without any obligation upon any person dealing with the Trustee to see to the application of any money or other property delivered to it; (b) To hold uninvested or to deposit in any bank or savings and loan association such sums of cash as it deems reasonable and in the best interests of the Trust; -13- 14 (c) To exercise any right, including the right to vote, personally or by general or special proxies or powers of attorney, appurtenant to any securities or other property held in the Trust; (d) To exercise or sell any conversion privileges, subscription rights or other rights or options and to make any payments incidental thereto; (e) To oppose, consent to, or otherwise participate in, any reorganization, recapitalization or other changes affecting securities held in the Trust, to delegate discretionary powers to the extent permitted by law, and to pay expenses, assessments or charges in connection therewith; to retain any securities or other property allotted to the Trust in connection with any such reorganization, recapitalization or other changes; and to generally exercise any of the powers of an owner with respect to any securities or other property held in the Trust; (f) To hold securities or other property in its name as Trustee or in the name of one or more nominees or in bearer form; provided, the Trust records shall at all times show that such securities or property are part of the Trust; (g) To make, execute, acknowledge and deliver any instruments that may be necessary or appropriate to carry out the powers herein granted; (h) To consult and employ suitable agents, enrolled actuaries, auditors, legal counsel or other advisers as deemed -14- 15 necessary to assist in the performance of the Trustee's duties, and to pay reasonable expenses and compensation in connection therewith; (i) To enforce, abstain from enforcing, settle, modify, compromise, submit to arbitration or abandon any rights, obligations, claims, debts or damages due or owing to or from the Trust; to commence, defend and represent the Trust in all suits and legal and administrative proceedings; (j) To accept and retain any securities or other property received or acquired by the Trust, whether or not such property would normally be purchased or would then be authorized as investments hereunder; (k) To collect and receive any money or property due to the Trust and to give full discharge and acquittance therefor; (1) To prepare such periodic written reports or other accountings as required hereunder, and to furnish the Company and the Executives with such information which either may require for tax or other purposes; (m) To borrow money from any lender in such amounts and upon such terms and conditions as shall be deemed advisable or proper to carry out the purposes of the Trust and to pledge any securities or other property for the repayment of any such loan; -15- 16 (n) To register any securities held by it in its own name or in the name of any custodian of such property or of its nominee, including the nominee of any system for the central handling of securities, with or without the addition of words indicating that such securities are held in a fiduciary capacity and to deposit or arrange for the deposit of any such securities with such a system; (o) To transfer assets of the Trust Corpus to a successor trustee as provided in Section 4.03; (p) To adopt uniform rules of procedure and regulations necessary for the proper and efficient administration of the Trust, provided such rules are not inconsistent with the terms hereof, and to enforce such rules and regulations; and (q) To do all acts, though not specifically named herein, which the Trustee deems advisable to carry out the purpose of this Trust. SECTION 4.03 Successor Trustee. The Trustee may resign and be discharged from its duties hereunder at any time by giving notice in writing of such resignation to the Company and each Executive specifying a date (not less than thirty (30) days after the giving of such notice) when such resignation shall take effect. Promptly after such notice, the Company and Executives to whom at least sixty-five percent (65%) of all amounts covered by the most recent Payment Schedule are payable shall appoint a successor -16- 17 trustee, such trustee to become Trustee hereunder upon the resignation date specified in such notice. If the Company and such Executive(s) are unable to so agree upon a successor trustee within thirty (30) days after such notice, the Trustee shall be entitled, at the expense of the Company, to petition a United States District Court or any of the courts of the State of Wisconsin having jurisdiction to appoint its successor. The Trustee shall continue to serve until its successor accepts the trust and receives delivery of the Trust Corpus. The Company and such Executive(s) may at any time substitute a new trustee by giving fifteen (15) days notice thereof to the Trustee then acting. The Trustee and any successor thereto appointed hereunder shall be a commercial bank or trust company which is not an affiliate of the Company, but which is a national banking association or established under the laws of one of the states of the United States, and which has equity in excess of One Hundred Million Dollars ($100,000,000). ARTICLE V TERMINATION, AMENDMENT AND WAIVER SECTION 5.01 Termination. This Trust shall be terminated upon the earlier of either of the following events: (i) the exhaustion of the Trust Corpus; or (ii) the final payment of all amounts payable to all of the Executives pursuant to all of the Plans. Promptly upon termination of this Trust, any remaining portion of the Trust Corpus shall be paid to the Company. -17- 18 SECTION 5.02 Amendment and Waiver. This Trust may be amended only by an instrument in writing signed on behalf of the parties hereto, together with the written consent of Executives to whom at least sixty-five percent (65%) of all amounts covered by the most recent Payment Schedule are payable; provided that the Company, in any event, without the approval or consent of any Executive, may (i) include or exclude any Plan or Executive hereunder pursuant to Section 7.05 hereof and (ii) revise the investment guidelines attached as Exhibit B; and provided further that this Trust may not be amended to make it revocable or to alter Section 5.01 hereof. The parties hereto, together with the consent of Executives to whom at least sixty-five percent (65%) of all amounts covered by the most recent Payment Schedule are payable, may at any time waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a party hereto or an Executive to any such waiver shall be valid if set forth in an instrument in writing signed on behalf of such party or Executive. Notwithstanding the foregoing, any such amendment or waiver may be made by written agreement of the parties hereto without obtaining the consent of the Executives if such amendment or waiver does not adversely affect the rights of the Executives hereunder. No such amendment or waiver relating to this Trust -18- 19 and adversely affecting the rights of a particular Executive hereunder shall be effective, unless such executive has agreed in writing to such amendment or waiver. ARTICLE VI GENERAL PROVISIONS SECTION 6.01 Further Assurances. The Company shall, at any time and from time to time, upon the reasonable request of the Trustee, execute and deliver such further instruments and do such further acts as may be necessary or proper to effectuate the purposes of this Trust. SECTION 6.02 Certain Provisions Relating to This Trust. (a) This Trust sets forth the entire understanding of the parties with respect to the subject matter hereof and supersedes any and all prior agreements, arrangements and understandings relating thereto. This Trust shall be binding upon and inure to the benefit of the parties and their respective successors and legal representatives. (b) This Trust shall be governed by and construed in accordance with the laws of the State of Wisconsin, other than and without reference to any provisions of such laws regarding choice of laws or conflict of laws. (c) In the event that any provision of this Trust or the application thereof to any person or circumstances shall be determined by a court of proper jurisdiction to be invalid or -19- 20 unenforceable to any extent, the remainder of this Trust, or the application of such provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each provision of this Trust shall be valid and enforced to the fullest extent permitted by law. SECTION 6.03 Arbitration. Any dispute between the Executives and the Company or the Trustee as to the interpretation or application of the provisions of this Trust and the amount, timing or form of any payment hereunder shall be determined exclusively by binding arbitration in Milwaukee, Wisconsin in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court of competent jurisdiction. All fees and expenses of such arbitration shall be paid by the Trustee and considered an expense of the Trust under Section 4.01(g) hereof. SECTION 6.04 Notices. Any notice, report demand or waiver required or permitted hereunder shall be in writing and shall be given personally or by prepaid registered or certified mail, return receipt requested, addressed as follows: If to the Company: Universal Foods Corporation 433 East Michigan Avenue Milwaukee, Wisconsin 53202 Attention: Terrence M. O'Reilly Vice President, Secretary and General Counsel -20- 21 If to the Trustee: Marshall & Ilsley Trust Company 770 North Water Street Milwaukee, Wisconsin 53202 Attention: James L. Neubauer Employee Benefits Trust Officer If to an Executive, to the address of such Executive as listed next to his name on Schedule C hereto or such other address as the Executive may set forth in a written notice to the Company and the Trustee or, as to an Executive who is not included under the Plans as of the date hereof but is included thereafter, the address set forth in the notice to the Trustee adding such Executive as a beneficiary. A notice shall be deemed received upon the date of delivery if given personally, or, if given by mail, upon the receipt thereof. SECTION 6.05 Trust Beneficiaries. Each Executive is an intended beneficiary under this Trust, and shall be entitled to enforce all terms and provisions hereof with the same force and effect as if such person had been a party hereto. The Executives shall have no preferred claim on, or any beneficial ownership in, the Trust Corpus, and all rights created hereunder and the Plans shall be mere unsecured contractual rights of the Executives against the Company and the status of the Executives shall only be as general unsecured creditors. Benefits to the Executives hereunder may not be anticipated, assigned, transferred, -21- 22 pledged or otherwise conveyed. The Company may, in its sole discretion, at any time and from time to time, by means of a modified Payment Schedule accompanied by revised Schedules A and C, (i) provide for coverage hereunder of any other Company plan, agreement or executive and (ii) upon termination of any Plan or final payment of all amounts thereunder, exclude such Plan and the Executives who are participants therein from coverage hereunder. IN WITNESS WHEREOF, the parties have executed this Trust as of the date first written above. UNIVERSAL FOODS CORPORATION By: /s/ D.E. Wilde, Vice President ------------------------------------ MARSHALL & ILSLEY TRUST COMPANY By: /s/ (Signature illegible on original) ------------------------------------ By: /s/ James L. Neubauer, Trust Officer ------------------------------------ -22- 23 UNIVERSAL FOODS CORPORATION TRUST AGREEMENT FOR RABBI TRUST C --------------------------------- Changes Upon Appointment of Successor Trustee WHEREAS, Marshall & Ilsley Trust Company has resigned as Trustee of Universal Foods Corporation Rabbi Trust C under Trust Agreement dated September 8, 1988; and WHEREAS, it has been determined to be in the best interests of the parties to Rabbi Trust C to have Firstar Bank, Milwaukee, N.A. assume the duties of Trustee for Rabbi Trust C as soon as practicable after the resignation of the prior trustee to assure that all benefits payable through the Trust shall continue without interruption. THEREFORE, it is hereby agreed by the parties to the Trust Agreement for Rabbi Trust C, pursuant to the next to last sentence of Section 5.02, Amendment and Waiver, of the Trust Agreement, that, effective -------------------- February 1, 1998: 1. Firstar Bank, Milwaukee, N.A. shall be successor trustee to Marshall & Ilsley Trust Company. 2. The addresses for Notices to the Company and the Trustee provided in Section 6.04, Notices, shall be changed to reflect ------- the actual addresses of the parties from time to time, with any party providing other parties notice of any change pursuant to the procedure of Section 6.04. IN WITNESS WHEREOF, the parties have executed this Changes Upon Appointment of Successor Trustee as of the 1st day of February, 1998. UNIVERSAL FOODS CORPORATION FIRSTAR BANK, MILWAUKEE, NA By: /s/ Kenneth P. Manning BY: /s/ Richard A. Whittow ---------------------- ---------------------- Name: Kenneth P. Manning Name: Richard A. Whittow ------------------ ------------------ Title: Chairman, President and Title: Vice President ----------------------- --------------- Chief Executive Officer ----------------------- EX-10.2.R 19 MANAGEMENT INCENTIVE PLAN FOR ELECTED CORP OFFICER 1 EXHIBIT 10.2(r) UNIVERSAL FOODS CORPORATION MANAGEMENT INCENTIVE PLAN FOR ELECTED CORPORATE OFFICERS I. THE PLAN The name of this Plan is the Universal Foods Corporation Management Incentive Plan for Elected Corporate Officers. The purpose of this Plan is to promote the interests of the shareholders and to provide incentive to those elected officers who can contribute most to the profitability of the Company. It is separate and distinct from other Company incentive plans currently in effect. II. DEFINITIONS In this Plan, the terms used will have the following definitions: A. "Board of Directors" means the Board of Directors of Universal Foods Corporation. B. "Bonus Award" means an award, either paid currently or paid on a deferred basis, as the result of the operation of this Plan. C. "Bonus Provision" means monies available for distribution as Bonus Awards as the result of the operation of this Plan. D. "Committee" means the committee provided for in Section III. E. "Company" means Universal Foods Corporation. F. "Employee" means any employee regularly employed by Universal Foods Corporation or any of its subsidiaries and paid on a salary basis. G. "Fiscal Year Salary" means base pay earned during the period October 1 through September 30 each Company operating year exclusive of any incentive or supplemental payments by the Company. H. "Independent Auditors" means with respect to any fiscal year, the independent public accounts appointed by the Board of Directors to certify to the Board of Directors the financial statements of the Company. 2 MANAGEMENT INCENTIVE PLAN FOR ELECTED CORPORATE OFFICERS PAGE 2 I. "Operating Income After Taxes" is defined as net earnings, as shown in the Company's Statement of Consolidated Earnings as certified by the Company's Independent Auditors, plus the after-tax costs of interest on long-term and short-term debt and the Bonus Awards for that fiscal year. This amount shall be further adjusted for extraordinary items of income or expense if, in the opinion of the Committee, it is appropriate to do so. J. "Plan" means this Management Incentive Plan for Major Corporate Executives. K. "Subsidiary" means with respect to any year, any corporation in which Universal Foods Corporation owns a stock interest of more than 50%, and the financial results of whose operations are consolidated with those of the Company in the financial statements included in the annual report to shareholders for that year. III. COMMITTEE A. The Board of Directors shall appoint a Compensation and Development Committee composed of at least three non-management members of the Company's Board of Directors. This Committee shall be known as the "Committee" and shall have full power and authority to interpret and administer the Plan in accordance with the Regulations. No member of the Committee shall be eligible to participate in the Plan while a member of the Committee. B. The Board of Directors may, from time to time, remove members from the Committee or add members thereto; and vacancies on the Committee, however caused, shall be filled by action of the Board of Directors. The Committee shall select one of its members as Chairman and shall hold its meetings at such times and places as it may determine. A majority of its members shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. Any decision or determination reduced to writing and signed by a majority of the members of the Committee shall be as fully effective as if it had been made at a meeting of the Committee duly called and held. The members of the Committee may receive such compensation for their services as the Board of Directors may determine. 3 MANAGEMENT INCENTIVE PLAN FOR ELECTED CORPORATE OFFICERS PAGE 3 IV. PLAN ADMINISTRATION The Committee shall have the power to adopt eligibility and other rules not inconsistent with the provisions of the Plan (hereinafter referred to as the "Regulations" and attached hereto as "Exhibit A") for the administration thereof and to alter, amend, or revoke any Regulations so adopted. V. PLAN PARTICIPATION Participation in the Plan shall be in accordance with the Regulations. A. At the beginning of each fiscal year, the Chairman, President and Chief Executive Officer shall submit to the Committee a written list of recommended participants in the Plan for that year. B. Not all officers and major executives need to be selected as participants, and selection as a participant one year does not automatically ensure selection in future years. C. At the end of each fiscal year, the Chairman, President and Chief Executive Officer shall submit to the Committee a written list of recommendations as to the amount of Bonus Award each participant in the Plan should receive for that fiscal year. D. The Committee's selection of the Employees to whom a Bonus Award shall be made and its determination of the amount and method of payment of each such Bonus Award shall be final. E. This Plan is not a part of the Company's regular compensation plan nor is it part of the Employee's regular compensation. VI. BONUS AWARD The performance measurement upon which the Bonus Award is based is determined in accordance with the Regulations for each fiscal year. 4 MANAGEMENT INCENTIVE PLAN FOR ELECTED CORPORATE OFFICERS PAGE 4 VII. CHANGE OF CONTROL OF COMPANY In the event of a change of control of the Company in accordance with an Employee's Severance or Employment Agreement and the Employee's subsequent termination of employment without cause by the successor entity, the "Change of Control Benefits" under the Employee's Severance or Employment Agreement in respect to this Plan shall be received as a severance payment by the Employee. VIII. SUCCESSORS AND ASSIGNS If the Company sells, assigns or transfers all or substantially all of its business and assets to any person, excluding affiliates of the Company, or if the Company merges into or consolidates or otherwise combines with any person which is a continuing or successor entity, then the Company shall assign all of its right, title and interest in this Plan as of the date of such event to the person which is either the acquiring or successor corporation, and such person(s) shall assume and perform from and after the date of such assignment all of the terms, conditions and provisions imposed by this Plan upon the Company. In case of such assignment by the Company and of such assumption and agreement by the Company and of such person(s), all further rights as well as all other obligations of the Company under this Agreement thenceforth shall cease and terminate and thereafter the expression "the Company" wherever used herein shall be deemed to mean such person(s). IX. PLAN AMENDMENTS The Board of Directors may suspend or discontinue the Plan at anytime. 5 UNIVERSAL FOODS CORPORATION MANAGEMENT INCENTIVE PLAN FOR ELECTED CORPORATE OFFICERS REGULATIONS F-99 These Regulations apply to the Elected Corporate Officers Management Incentive Plan for the fiscal year October 1, 1998 through September 30, 1999. 1. Participants will be notified of their selection and be provided with a copy of the Plan with specific provisions related to their level of participation. 2. An Employee may be selected as a participant after the beginning of a fiscal year and, if eligible, may receive, at the discretion of the Committee, a Bonus Award prorated to reflect duration of Plan participation. 3. A participant may receive a Bonus Award based on prorated participation in more than one plan, if eligible to do so, under provisions of the plan(s). 4. The Bonus Award granted to individual participants shall be based upon achievement of defined EPS objectives and, in certain cases, division sales operating profit as defined by the Management Incentive Plan for Division Presidents, copy attached if applicable. 5. The following schedule shows the maximum Bonus Award, as a percent of Fiscal Year Salary, that may be granted to various levels of participants under the Plan:
Division Title/Level EPS SOP Total ----------- --- --- ----- Chairman, President & r 85.0% 00.0% 85% Chief Executive Officer Vice President-Group Executive Vice President & Chief Financial Officer Vice President, Administration 65.0% 0.00% 65% Divisional Presidents 18.0% 42.0% 60% Corporate Staff Officers 45.0% 0.00% 45%
6. The bonus award amount may, at the sole discretion of the Chairman, President and Chief Executive Officer, be adjusted up or down by five to twenty percent (5% to 20%) to recognize individual performance. 7. The Bonus Award shall not be paid to participants who resigned or were discharged for cause prior to their receiving the Bonus Award unless the Committee decides otherwise. 6 MANAGEMENT INCENTIVE PLAN FOR ELECTED CORPORATE OFFICERS PAGE 6 8. If an Employee ceases to be a Plan participant during the fiscal year as a result of death, disability, or retirement under the Company's ESOP, the Employee or his/her estate may, at the discretion of the Committee, receive a pro-rata Bonus Award based upon the number of months spent as a participant. In such cases, the Committee may, at its discretion, increase the Bonus Award up to, but not in excess of, the amount that would have been earned for a full year of participation 7 EXHIBIT B - PERFORMANCE MEASURES ELECTED CORPORATE OFFICERS UNIVERSAL FOODS CORPORATION MANAGEMENT INCENTIVE PLAN FOR ELECTED CORPORATE OFFICERS PERFORMANCE MEASURES F-99 NAME TITLE - ---- ----- MAXIMUM BONUS AWARD AS PERCENTAGE OF FISCAL YEAR SALARY - ------------------------------------------------------------------------------- DIVISION EPS SOP TOTAL --- --- ----- 8 EXHIBIT C - PERFORMANCE MEASURES - SCHEDULE ELECTED CORPORATE OFFICERS UNIVERSAL FOODS CORPORATION MANAGEMENT INCENTIVE PLAN FOR ELECTED CORPORATE OFFICERS PERFORMANCE MEASURES-SCHEDULE F-99 GUIDELINES Upon the determination of the amount of the Bonus Provision for the fiscal year, an amount may be awarded by the Committee as a Bonus Award to selected Plan participants according to the following guidelines: 1. Formula Award The F-99 objective is to attain a Corporate Earnings Per Share for the fiscal year of $_________ (Target).
EARNINGS PER SHARE (EPS) PERCENTAGE OF FORMULA AWARD 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 72% 79% 86% 93% 100%
2. Special Adjustments Upon the recommendation of the Chairman, President and Chief Executive Officer, the Committee may approve special adjustments to Earnings Per Share necessary to give consideration to unbudgeted and/or unplanned situations which developed after finalization of the operating budget. Such adjustments will be submitted for consideration only if required to correct major inequities. EX-10.2.S 20 MANAGEMENT INCENTIVE PLAN FOR DIVISION PRESIDENTS 1 EXHIBIT 10.2(s) UNIVERSAL FOODS CORPORATION MANAGEMENT INCENTIVE PLAN FOR DIVISION PRESIDENTS I. THE PLAN The name of this Plan is the Universal Foods Corporation Management Incentive Plan for Division Presidents. The purpose of the Plan is to promote the interests of the shareholders and to provide incentive to the Division Presidents who contribute to the profitability of the Company. It is separate and distinct from other Company incentive plans currently in effect. II. DEFINITIONS In this Plan, the terms used will have the following definitions: A. "Actual Average Assets Managed" means the twelve-month average of month-end balances of key assets and liabilities subject to Division control, as defined in Exhibit B, 2c. B. "Actual Sales Operating Profit" means profit reported on the Company's sales operating reports, as adjusted per Exhibit B, 2b. C. "Board of Directors" means the Board of Directors of Universal Foods Corporation. D. "Bonus Award" means an award, either paid currently or paid on a deferred basis, as the results of the operation of this Plan. E. "Business Unit" means a segmented profit center within a Division. F. "Committee" means the committee provided for in Section Ill. G. "Company" means Universal Foods Corporation. H. "Division" means a business entity designated as such by the Corporation normally segmented based on product line. I. "Employee" means any employee regularly employed by Universal Foods Corporation or any of its subsidiaries, and paid on a salary basis. J. "Fiscal Year Salary" means base pay earned during the period October 1 through September 30 each Company operating year exclusive of any incentive or supplemental payments by the Company. K. "Plan" means this Management Incentive Plan for Division Presidents. 2 MANAGEMENT INCENTIVE PLAN FOR DIVISION PRESIDENTS PAGE 2 L. "Targeted Average Assets Managed" means the Division average assets managed objective scheduled per Exhibit C. M. "Targeted Profit" means the Division profit objective scheduled per Exhibit C. III. COMMITTEE A. The Board of Directors shall appoint a Compensation and Development Committee composed of at least three non-management members of the Company's Board of Directors. This Committee shall be known as the "Committee" and shall have full power and authority to interpret and administer the Plan in accordance with the Regulations. No member of the Committee shall be eligible to participate in the Plan while a member of the Committee. B. The Board of Directors may, from time to time, remove members from the Committee or add members thereto; and vacancies on the Committee, however caused, shall be filled by action of the Board of Directors. The Committee shall select one of its members as Chairman and shall hold its meetings at such times and places as it may determine. A majority of its members shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. Any decision or determination reduced to writing and signed by a majority of the members of the Committee shall be as fully effective as if it had been made at a meeting of the Committee duly called and held. The members of the Committee may receive such compensation for their services as the Board of Directors may determine. IV. PLAN ADMINISTRATION The Committee shall have the power to adopt eligibility and other rules not inconsistent with the provisions of the Plan (hereinafter referred to as the "Regulations" and attached hereto as "Exhibit A") for the administration thereof and to alter, amend, or revoke any Regulations so adopted. 3 MANAGEMENT INCENTIVE PLAN FOR DIVISION PRESIDENTS PAGE 3 V. PLAN PARTICIPATION Participation in the Plan shall be in accordance with the Regulations. A. At the beginning of each fiscal year, the Chairman, President and Chief Executive Officer shall submit to the Committee a written list of recommended participants in the Plan for that year. B. Not all division presidents need to be selected as participants, and selection as a participant one year does not automatically ensure selection in future years. C. At the end of each fiscal year the Chairman, President and Chief Executive Officer shall submit to the Committee a written list of recommendations as to the amount of Bonus Award each participant in the Plan should receive for that fiscal year. D. The Committee's selection of the Employees to whom a Bonus Award shall be made and its determination of the amount and method of payment of each such Bonus Award shall be final. E. This Plan is not a part of the Company's regular compensation plan nor is it part of the employee's regular compensation. VI. BONUS AWARDS The performance measurement upon which the Bonus Award is based is determined in accordance with the Regulations for each fiscal year. VII. BONUS PROVISION All Bonus Awards under this Plan will be budgeted and funded within the operations of the specific Division in which participants are employed. 4 MANAGEMENT INCENTIVE PLAN FOR DIVISION PRESIDENTS PAGE 4 VIII. CHANGE OF CONTROL OF COMPANY In the event of a change of control of the Company in accordance with an Employee's Severance Agreement and the Employee's subsequent termination of employment without cause by the successor entity, the "Change of Control Benefits" under the Employee's Severance Agreement in respect to this Plan shall be received as a severance payment by the Employee. IX. SUCCESSORS AND ASSIGNS If the Company sells, assigns or transfers all or substantially all of its business and assets to any person, excluding affiliates of the Company, or if the Company merges into or consolidates or otherwise combines with any person which is a continuing or successor entity, then the Company shall assign all of its right, title and interest in this Plan as of the date of such event to the person which is either the acquiring or successor corporation, and such person(s) shall assume and perform from and after the date of such assignment all of the terms, conditions and provisions imposed by this Plan upon the Company. In case of such assignment by the Company and of such assumption and agreement by the Company and of such person(s), all further rights as well as all other obligations of the Company under this Agreement thenceforth shall cease and terminate and thereafter the expression "the Company" wherever used herein shall be deemed to mean such person(s). X. PLAN AMENDMENTS The Board of Directors may suspend or discontinue the Plan at any time. 5 EXHIBIT A REGULATIONS DIVISION PRESIDENTS UNIVERSAL FOODS CORPORATION MANAGEMENT INCENTIVE PLAN FOR DIVISION PRESIDENTS REGULATIONS F-99 These Regulations apply to the Management Incentive Plan for Division Presidents for the fiscal year October 1, 1998 through September 30, 1999. 1. Participants will be notified of their selection and be provided with a copy of the Plan with specific provisions related to their Division and level of participation. 2. An Employee may be selected as a participant after the beginning of a fiscal year and, if eligible, may, at the discretion of the Committee, receive a Bonus Award prorated to reflect duration of Plan participation. 3. A participant may receive a Bonus Award based on prorated participation in more than one plan, if eligible to do so under provisions of the plan(s). 4. The Bonus Award granted to individual participants shall be based upon achievement of defined target objectives (Formula). 5. The Bonus Award amount may, at the sole discretion of the Chairman, President and Chief Executive officer, be adjusted up or down by five to twenty percent (5% to 20%) to recognize individual performance. 6. The Bonus Award shall not be paid to participants who resigned or were discharged for cause prior to their receiving the Bonus Award unless the Committee decides otherwise. 7. If an Employee ceases to be a Plan participant during the fiscal year as a result of death, disability, or retirement under the Company's ESOP, the Employee or his/her estate may, at the discretion of the Committee, receive a pro-rata Bonus Award based upon the number of months spent as a participant. In such cases, the Committee may, at its discretion, increase the Bonus Award up to, but not in excess of, the amount that would have been earned for a full year of participation. 8. For the purpose of determining the appropriate Plan Award, profit changes due to fluctuation in currency exchange or internal hedges will not be considered. International business unit profit performance will be based upon actual vs. Budget comparisons in local currencies. 9. Upon the recommendations of the Chairman, President and Chief Executive Officer, the Committee may approve special adjustments to Incentive Targets necessary to give consideration to unbudgeted and/or unplanned situations which developed after finalization of the operating budget. Such adjustments will be submitted for consideration only if required to correct major inequities. 6 EXHIBIT B - PERFORMANCE MEASURES DIVISION PRESIDENTS UNIVERSAL FOODS CORPORATION MANAGEMENT INCENTIVE PLAN FOR DIVISION PRESIDENTS PERFORMANCE MEASURES F-99 NAME TITLE/DIVISION - ---- -------------- MAXIMUM BONUS AWARD AS PERCENTAGE OF FISCAL YEAR SALARY --------------------------------- FORMULA TOTAL ------- ----- I. The method by which Formula Bonus Awards will be earned has been designed to encourage the following: A. The setting of realistic operating budgets and performance thereto. B. The improvement of return on investment through maximization of profits and careful utilization of corporate assets. II. The Formula for Bonus Awards is: A. Participants will receive a formula portion of their Bonus Award in accordance with the attached table. B. Actual Sales Operating Profit for the Division is the profit reported on the Company's sales operating reports adjusted by adding back any interest expense, foreign taxes, or goodwill amortization which had been charged against the reported profit. C. Actual Average Assets Managed will be the twelve-month average of month-end balances of key assets and liabilities subject to Division control consisting of accounts receivable, inventories, accounts payable, accrued expenses and any other assets or liabilities specifically identifiable with a Division and so specified prior to the beginning of the fiscal year (such as advances to suppliers, deferred farming costs, etc.). D. If the Actual Assets Managed for the Division during the fiscal year exceed the Targeted Assets Managed, the increase will be multiplied by 25% and added to the Targeted Profit as a charge for the use of additional capital. If the Actual Average Assets Managed for the Division during the fiscal year are less than the Targeted Average Assets Managed, the reduction will be multiplied by 25% and subtracted from the Targeted Profit as a credit for the reduction in capital utilized. 7 EXHIBIT C - PERFORMANCE MEASURES-SCHEDULE DIVISION PRESIDENTS UNIVERSAL FOODS CORPORATION MANAGEMENT INCENTIVE PLAN FOR DIVISION PRESIDENTS PERFORMANCE MEASURES-SCHEDULE F-99 Division Name ACTUAL SALES OPERATING PERCENTAGE OF PROFIT AS A PERCENTAGE OF FORMULA TARGETED PROFIT AWARD EARNED Targeted Profit $ Targeted Average Assets Managed $ 8 F-99 MANAGEMENT INCENTIVE PLAN REQUEST FOR JANUARY, 2000 PAYMENT For the fiscal year ending September 30, 1999, the Company plans to date and distribute all incentive compensation checks on or before December 15, 1999. If you prefer to have your payment deferred until January, 2000, please complete the attached form and return it to Richard Carney no later than December 31, 1998. - -------------------------------------------------------------------------------- TO: RICHARD CARNEY VICE PRESIDENT, HUMAN RESOURCES UNIVERSAL FOODS CORPORATION 433 E. Michigan Street, Milwaukee, WI 53202 FROM: DATE: ____________________, 1998 RE: COMPENSATION PAYMENT DEFERRAL REQUEST I request and agree that my incentive compensation check for the year ending September 30, 1999 be dated and distributed in January, 2000. X __________________________________ (Signature) EX-10.2.T 21 MANAGEMENT INCENTIVE PLAN FOR CORP MANAGEMENT 1 EXHIBIT 10.2(t) - -------------------------------------------------------------------------------- UNIVERSAL FOODS CORPORATION MANAGEMENT INCENTIVE PLAN FOR CORPORATE MANAGEMENT - -------------------------------------------------------------------------------- I. THE PLAN The name of this Plan is the Universal Foods Corporation Management Incentive Plan for Corporate Management. The purpose of this Plan is to promote the interests of the shareholders and to provide incentive to those corporate management employees who can contribute most to the profitability of the Company. It is separate and distinct from other Company incentive plans currently in effect. II. DEFINITIONS In this Plan, the terms used will have the following definitions: A. "Board of Directors" means the Board of Directors of Universal Foods Corporation. B. "Bonus Award" means an award, either paid currently or paid on a deferred basis, as the result of the operation of this Plan. C. "Bonus Provision" means monies available for distribution as a Bonus Award as the result of the operation of this Plan. D. "Company" means Universal Foods Corporation. E. "Employee" means any employee regularly employed by Universal Foods Corporation, and paid on a salary basis. F. "Fiscal Year Salary" means base pay earned during the period October 1 through September 30 each Company operating year exclusive of any incentive or supplemental payments by the Company. G. "Independent Auditors" means with respect to any fiscal year, the independent public accountants appointed by the Board of Directors to certify to the Board of Directors the financial statements of the Company. H. "Earnings per share" is defined as net basis earnings per share, as shown in the Company's Statement of Consolidated Earnings as certified by the Company's Independent Auditors. Earnings per share shall be further adjusted for extraordinary items of income or expense if, in the opinion of the Chairman and the President and Chief Executive Officer, it is appropriate to do so. I. "Plan" means this Management Incentive Plan for Corporate Management. 2 MANAGEMENT INCENTIVE PLAN FOR CORPORATE MANAGEMENT PAGE 2 J. "Subsidiary" means with respect to any year, any corporation in which Universal Foods Corporation owns a stock interest of more than 50%, and the financial results of whose operations are consolidated with those of the Company in the financial statements included in the annual report to shareholders for that year. III. PLAN ADMINISTRATION The Board of Directors of Universal Foods Corporation has delegated to the Chairman and Chief Executive Officer the authority to adopt eligibility and other rules not inconsistent with the provisions of the Plan (hereinafter referred to as the "Regulations" and attached hereto as "Exhibit A") for the administration thereof and to alter, amend, or revoke any Regulations so adopted. IV. PLAN PARTICIPATION A. At the beginning of the fiscal year, the Chairman and Chief Executive Officer shall determine who should participate in the Plan for that fiscal year. B. Not all management employees need be selected as participants, and selection as a participant one year does not automatically ensure selection in future years, if such Plans should be implemented. C. At the end of each fiscal year, the Chairman and Chief Executive Officer shall determine the amount of Bonus Award each participant in the Plan should receive for that fiscal year. D. The Chairman and Chief Executive Officer's selection of the Employees to whom a Bonus Award shall be made and its determination of the amount and method of payment of each such Bonus Award shall be final. E. This Plan is not a part of the Company's regular compensation plan nor is it part of the Employee's regular compensation. V. BONUS AWARDS The performance measurement upon which the Bonus Award is based is determined in accordance with the Regulations for each fiscal year. VI. SUCCESSORS AND ASSIGNS If the Company sells, assigns or transfers all or substantially all of its business and assets to any person, excluding affiliates of the Company, or if the Company merges into or consolidates or otherwise combines with any person which is a continuing or successor entity, then the Company shall assign all of its right, title and interest in this Plan as of the date of such event to the person which is either the acquiring or 3 MANAGEMENT INCENTIVE PLAN FOR CORPORATE MANAGEMENT PAGE 3 successor corporation, and such person(s) shall assume and perform from and after the date of such assignment all of the terms, conditions and provisions imposed by this Plan upon the Company. In case of such assignment by the Company and of such assumption and agreement by the Company and of such person(s), all further rights as well as all other obligations of the Company under this Agreement thenceforth shall cease and terminate and thereafter the expression "the Company" wherever used herein shall be deemed to mean such person(s). VII. PLAN AMENDMENTS The Chairman and Chief Executive Officer may suspend or discontinue the Plan at anytime. 4 EXHIBIT A - REGULATIONS CORPORATE MANAGEMENT - -------------------------------------------------------------------------------- UNIVERSAL FOODS CORPORATION MANAGEMENT INCENTIVE PLAN FOR CORPORATE MANAGEMENT REGULATIONS F-99 - -------------------------------------------------------------------------------- These Regulations apply to the Corporate Management Incentive Plan for the fiscal year October 1, 1998 through September 30, 1999. 1. Participants will be notified of their selection and be provided with a copy of the Plan with specific provisions related to their level of participation. 2. An Employee may be selected as a participant after the beginning of a fiscal year and, if eligible, may receive a Bonus Award prorated to reflect duration of Plan participation. 3. A participant may receive a Bonus Award based on prorated participation in more than one plan if eligible to do so under provisions of the plan(s). 4. The Bonus Award granted to individual participants shall be based upon achievement of defined EPS objectives. 5. The bonus award amount may, at the decision of the Chairman and Chief Executive Officer, be adjusted up or down by five to twenty percent (5% to 20%) to recognize individual performance. 6. If an Employee ceases to be a Plan participant during the fiscal year, but remains in the Company's service, the Employee may, at the discretion of the Chairman and Chief Executive Officer, receive a pro-rata Bonus Award based upon the number of months spent as a participant. 7. The Bonus Award shall not be paid to participants who resigned or were discharged for cause prior to the completion of the fiscal year of the Plan unless the Chairman and Chief Executive Officer decides otherwise. 8. If an Employee ceases to be a Plan participant during the fiscal year as a result of death, disability, or retirement under the Company's ESOP, the Employee or his/her estate may, at the discretion of the Chairman and Chief Executive Officer, receive a pro-rata Bonus Award based upon the number of months spent as a participant. In such cases, the Chairman and Chief Executive Officer may increase the Bonus Award up to, but not in excess of, the amount that would have been earned for a full year of participation. 5 EXHIBIT B - PERFORMANCE MEASURES CORPORATE MANAGEMENT - -------------------------------------------------------------------------------- UNIVERSAL FOODS CORPORATION MANAGEMENT INCENTIVE PLAN FOR CORPORATE MANAGEMENT PERFORMANCE MEASURES F-99 - -------------------------------------------------------------------------------- NAME TITLE ---- ----- "PARTICIPANT_NAME" "TITLE"/"BUSINESS_UNIT" MAXIMUM BONUS AWARD AS PERCENTAGE OF FISCAL YEAR SALARY ----------------------------------------------- 6 F-99 MANAGEMENT INCENTIVE PLAN REQUEST FOR JANUARY 2000 PAYMENT For the fiscal year ending September 30, 1999, the Company plans to date and distribute all incentive compensation checks on or before December 15, 1999. If you prefer to have your payment deferred until January 2000, please complete the attached form and return it to Richard Carney no later than December 31, 1998. - -------------------------------------------------------------------------------- TO: RICHARD CARNEY VICE PRESIDENT, HUMAN RESOURCES UNIVERSAL FOOD CORPORATION 433 E. Michigan Street, Milwaukee, WI 53202 FROM: DATE: ____________________, 1998 RE: COMPENSATION PAYMENT DEFERRAL REQUEST I request and agree that my incentive compensation check for the year ending September 30, 1999 be dated and distributed in January 2000. X - ------------------------------------ Signature EX-10.2.U 22 MANAGEMENT INCENTIVE PLAN FOR DIVISION MANAGEMENT 1 EXHIBIT 10.2(u) - -------------------------------------------------------------------------------- UNIVERSAL FOODS CORPORATION MANAGEMENT INCENTIVE PLAN FOR DIVISION MANAGEMENT - -------------------------------------------------------------------------------- I. THE PLAN The name of this Plan is the Universal Foods Corporation Management Incentive Plan for Division Management. The purpose of the Plan is to promote the interests of the shareholders and to provide incentive to those Division management employees who can contribute most to the profitability of the Company. It is separate and distinct from other Company incentive plans currently in effect. II. DEFINITIONS In this Plan, the terms used will have the following definitions: A. "Actual Average Assets Managed" means the twelve-month average of month-end balances of key assets and liabilities subject to Division, Business Unit or Unit control, as defined in Exhibit B,2b) and c). B. "Actual Sales Operating Profit" means profit reported on the Company's sales operating reports, as defined in Exhibit B,2a) and c). C. "Bonus Award" means an award, either paid currently or paid on a deferred basis, as the result of the operation of this Plan. D. "Business Unit" means a segmented profit center within a Division. E. "Unit" means a segmented profit center within a Business Unit. F. "Company" means Universal Foods Corporation. G. "Division" means a business entity designated as such by the Corporation normally segmented based on product line. H. "Employee" means any employee regularly employed by Universal Foods Corporation or any of its subsidiaries and paid on a salary basis. I. "Fiscal Year Salary" means base pay earned during the period October 1 through September 30 of each Company operating year exclusive of any incentive or supplemental payments by the Company. J. "Plan" means this Management Incentive Plan for Division Management. K. "Targeted Average Assets Managed" means the Division, Business Unit or Unit Average Assets Managed scheduled per Exhibit B,2a. 2 MANAGEMENT INCENTIVE PLAN FOR DIVISION MANAGEMENT PAGE 2 L. "Targeted Profit" means the Division, Business Unit or Unit profit objective scheduled per Exhibit B,2a. III. PLAN ADMINISTRATION The Board of Directors of Universal Foods Corporation has delegated to the Chairman and Chief Executive Officer the authority to adopt eligibility and other rules not inconsistent with the provisions of the Plan (hereinafter referred to as the "Regulations" and attached hereto as "Exhibit A") for the administration thereof and to alter, amend, or revoke any Regulations so adopted. IV. PLAN PARTICIPATION Participation in the Plan shall be in accordance with the Regulations. A. At the beginning of the fiscal year, the Chairman and Chief Executive Officer shall determine who should participate in the Plan for that fiscal year, based on recommendations from the Division President or other Corporate Officer. B. Not all key Division or Business Unit employees need be selected as participants, and selection as a participant does not ensure selection in future plans, if such plans should be implemented. C. At the end of the fiscal year, the Division President shall recommend to the Chairman and Chief Executive Officer the amount of the Bonus Award each participant in the Plan should receive for that fiscal year. D. The Chairman and Chief Executive Officer's selection of the Employees to whom Bonus Awards shall be made and his/her determination of the amounts and methods of payment shall be final. E. This Plan is not a part of the Company's regular compensation plan nor is it part of the employee's regular compensation. V. BONUS AWARDS The performance measurement upon which the Bonus Award is based is determined in accordance with the Regulations for each fiscal year. VI. BONUS PROVISION All Bonus Awards under this Plan will be budgeted and funded within the operations of the specific Division/Business Unit/Unit in which participants are employed. 3 MANAGEMENT INCENTIVE PLAN FOR DIVISION MANAGEMENT PAGE 3 VII. SUCCESSORS AND ASSIGNS If the Company sells, assigns or transfers all or substantially all of its business and assets to any person, excluding affiliates of the Company, or if the Company merges into or consolidates or otherwise combines with any person which is a continuing or successor entity, then the Company shall assign all of its right, title and interest in this Plan as of the date of such event to the person which is either the acquiring or successor corporation, and such person(s) shall assume and perform from and after the date of such assignment all of the terms, conditions and provisions imposed by this Plan upon the Company. In case of such assignment by the Company and of such assumption and agreement by the Company and of such person(s), all further rights as well as all other obligations of the Company under this Agreement thenceforth shall cease and terminate and thereafter the expression "the Company" whenever used herein shall be deemed to mean such person(s). VIII. MISCELLANEOUS A. All expenses incurred in interpreting and administering the Plan shall be charged against the Division. IX. PLAN AMENDMENTS The Chairman and Chief Executive Office may suspend or discontinue the Plan at anytime. 4 EXHIBIT A - REGULATIONS DIVISION MANAGEMENT - -------------------------------------------------------------------------------- UNIVERSAL FOODS CORPORATION MANAGEMENT INCENTIVE PLAN FOR DIVISION MANAGEMENT REGULATIONS F-99 - -------------------------------------------------------------------------------- These Regulations apply to the Division Management Incentive Plan for the fiscal year October 1, 1998 through September 30, 1999. 1. Participants will be notified of their selection and be provided with a copy of the Plan with specific provisions related to their Division, Business Unit or Unit and level of participation. 2. An Employee may be selected as a participant after the beginning of a fiscal year and, if eligible, may receive a Bonus Award prorated to reflect duration of Plan participation. 3. A participant may receive a Bonus Award based on prorated participation in more than one Division, Business Unit or Unit activity, if eligible to do so under provisions of the plan(s) 4. The Bonus Award granted to individual participants shall be based upon achievement of defined target objectives (Actual Sales Operating Profit). 5. The Bonus Award amount may, on the recommendation of the Chairman and Chief Executive Officer and approval of the Committee, be adjusted up or down by five to twenty percent (5% to 20%) to recognize individual performance. 6. If an Employee ceases to be a Plan participant during the fiscal year, but remains in the Company's service, the Employee may, at the discretion of the Chairman and Chief Executive Officer, receive a pro-rata Bonus Award based upon the number of months spent as a participant. 7. The Bonus Award shall not be paid to participants who resigned or were discharged for cause prior to their receiving the Bonus Award unless the Chairman and Chief Executive Officer decides otherwise. 8. If an Employee ceases to be a Plan participant during the fiscal year as a result of death, disability, or retirement under the Company's ESOP, the Employee or his/her estate may, at the discretion of the Chairman and Chief Executive Officer, receive a pro-rata Bonus Award based upon the number of months spent as a participant. In such cases, the Chairman and Chief Executive Officer may increase the Bonus Award up to, but not in excess of, the amount that would have been earned for a full year of participation. 9. For the purpose of determining the appropriate Plan Award, profit changes due to fluctuation in currency exchange or internal hedges will not be considered. International business unit profit performance will be based upon actual vs. budget comparisons in local currencies. 5 EXHIBIT A - REGULATIONS DIVISION MANAGEMENT PAGE 2 10. Upon the recommendations of the Senior Corporate Officers, the Chairman and Chief Executive Officer may approve special adjustments to Incentive Targets necessary to give consideration to unbudgeted and/or unplanned situations which developed after finalization of the operating budget. Such adjustments will be submitted for consideration only if required to correct major inequities. 6 EXHIBIT B - PERFORMANCE MEASURES DIVISION MANAGEMENT - -------------------------------------------------------------------------------- UNIVERSAL FOODS CORPORATION MANAGEMENT INCENTIVE PLAN FOR DIVISION MANAGEMENT PERFORMANCE MEASURES F-99 - -------------------------------------------------------------------------------- ------------------------------------------------------ MAXIMUM BONUS AWARD AS PARTICIPANT NAME: PERCENTAGE OF FISCAL YEAR SALARY: TITLE: 1. The method by which the Bonus Awards will be earned has been designed to encourage the following: a) The setting of realistic operating budgets and performance thereto. b) The improvement of return on investment through maximization of profits and careful utilization of corporate assets. 2. Participants will receive their Bonus Award in accordance with the applicable Division, Business Unit or Unit Schedules (Exhibit C) for Sales Operating Profit or Sales Margin. a) Actual Sales Operating Profit for the Division is the profit reported on the Company's sales operating reports adjusted by adding back any interest expense, foreign taxes, or goodwill amortization which had been charged against the reported profit. b) Actual Average Assets Managed is the twelve-month average of month-end balances of key assets and liabilities subject to Division control consisting of accounts receivable, inventories, accounts payable, accrued expenses and any other assets or liabilities specifically identifiable with a Division and so specified prior to the beginning of the fiscal year (such as advances to suppliers, deferred farming costs, etc.). c) Adjustments If the Actual Assets Managed for the Division during the fiscal year exceed the Targeted Assets Managed, the increase will be multiplied by 25% and added to the Targeted Profit as a charge for the use of additional capital. If the Actual Average Assets Managed for the Division during the fiscal year are less than the Targeted Average Assets Managed, the reduction will be multiplied by 25% and subtracted from the Targeted Profit as a credit for the reduction in capital utilized. 7 EXHIBIT C - -------------------------------------------------------------------------------- UNIVERSAL FOODS CORPORATION MANAGEMENT INCENTIVE PLAN FOR DIVISION MANAGEMENT PERFORMANCE MEASURES-SCHEDULE F-99 - -------------------------------------------------------------------------------- PARTICIPANT NAME TITLE -------------------------------------------------------------------------- Actual Sales Operating Profit | % of Formula Award Earned as a % of Targeted Profit | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------------------------------------------- Targeted Sales Operating Profit $ Targeted Average Assets Managed $ 8 F-99 MANAGEMENT INCENTIVE PLAN REQUEST FOR JANUARY, 2000 PAYMENT For the fiscal year ending September 30, 1999, the Company plans to date and distribute all incentive compensation checks on or before December 15, 1999. If you prefer to have your payment deferred until January, 2000, please complete the attached form and return it to Richard Carney no later than December 31, 1998. - -------------------------------------------------------------------------------- TO: RICHARD CARNEY VICE PRESIDENT, HUMAN RESOURCES UNIVERSAL FOODS CORPORATION 433 E. Michigan Street, Milwaukee, WI 53202 FROM: DATE: , 1998 -------------------------- RE: COMPENSATION PAYMENT DEFERRAL REQUEST I request and agree that my incentive compensation check for the year ending September 30, 1999 be dated and distributed in January, 2000. X ----------------------------- (Signature) EX-10.2.V 23 FORM OF AGREEMENT SERP & AMENDMENT #1 1 EXHIBIT 10.2(v) UNIVERSAL FOODS CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN SECTION 1. PURPOSE Universal Foods Corporation (the "Company") hereby establishes a non-qualified supplemental executive retirement plan for certain key employees, as designated and described herein, which shall be known as the Universal Foods Corporation SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (the "Plan"). The purpose of the Plan is to enable the Company to attract, retain, and motivate certain key employees and to provide retirement and survivor benefits for the employees, their surviving spouses and designated beneficiaries. SECTION 2. DEFINITIONS For purposes of this Plan, certain words or phrases used herein will have the following meanings: A. "Board of Directors" means the Board of Directors of Universal Foods Corporation. B. "Disability" means permanent long-term disability for which the Executive would be entitled to long-term disability benefits under the Company's Disability Income Plan. Determination of such Disability applied to this Plan shall be made at the sole discretion of the Company and the decision of the Company shall be final. During periods of determined Disability, the 2 Executive shall be considered to be in the full employ of the Company for the purpose of this Plan. C. "Executive" means a selected employee of the Company designated to participate in the Plan by the Chief Executive Officer. D. "Fiscal Year" means the year beginning October 1 and ending September 30. E. "Company" means Universal Foods Corporation and all of its wholly-owned subsidiaries. F. "Normal Retirement Date" means the date the Executive attains age 62; or such date after the Executive attains age 55 and his or her age and years of continuous service with the Company equals or exceeds 85. G. "Early Retirement Date" means the date the Executive attains age 55 and has completed 10 or more years of continuous service with the Company. SECTION 3. DESIGNATION OF EMPLOYEE PARTICIPATING IN PLAN The Chief Executive officer shall have the sole discretion, from time to time, to designate which employees shall participate in the Plan. Such a designated employee shall be called "Executive." If an Executive declines participation in the Plan at the time of the offer from the Company, a Waiver of Participation form must be signed (Exhibit A attached hereto and incorporated herein by reference). 2 3 SECTION 4. EXECUTIVE CONTRIBUTION A. PRE APRIL 1, 1991 Executives who have participated in the Company's Management Split Dollar Life Insurance Plan prior to April 1, 1991 will, in each of the first seven years of participation, contribute an amount, based on IRS tables, equal to the term insurance premium applicable to a life insurance benefit of 3 times the Executive's base salary in effect for that Fiscal Year. B. POST APRIL 1, 1991 Executives beginning participation on or after April 1, 1991 will, in each year until death or retirement, whichever occurs earlier, contribute an amount, based on IRS tables, equal to the term insurance premium applicable to a life insurance benefit of 3 times the Executive's base salary in effect on the date of acceptance into the Plan. SECTION 5. BENEFITS Participating Executives, their spouses and designated beneficiaries shall be entitled to benefits under this Plan if the Executive is employed by the Company at time of death or until his or her Early Retirement Date, whichever occurs earlier. 3 4 Survivor Income Benefit The Executive will have a survivor income benefit payable to his or her designated beneficiary for a guaranteed 20 year period. The benefit will equal 25% of the Executive's base salary at the time of death or the average base salary during the 60 highest paid consecutive calendar months of the last 120 calendar months immediately prior to death, whichever is greater. Retirement Benefit At retirement, the Executive may elect to continue in effect a survivor income benefit payable to his or her designated beneficiary for a guaranteed 20 year period. The benefit will equal 25% of the Executive's base salary at the time of retirement or the average base salary during the 60 highest paid consecutive calendar months of the last 120 calendar months immediately prior to retirement, whichever is greater. (or) At retirement, the Executive may elect to receive a supplemental retirement income benefit payable to the Executive or his or her designated beneficiary for a guaranteed 20 year period. The benefit will be 25% of the Executive's base salary at the time of retirement or the average base salary during the 60 highest paid consecutive calendar months of the last 120 calendar months immediately prior to retirement, whichever is greater. (or) At retirement, the Executive may elect to receive an actuarially equivalent lifetime supplemental retirement income benefit in a joint and survivor form. The amount payable under this election will be reduced to cover the cost for providing the benefit over the life of the Executive and the spouse. The benefit for a surviving 4 5 spouse will be 50% of the benefit for the Executive. The minimum benefit to be paid to the Executive, spouse, or designated beneficiary will be equal to the guaranteed 20 year payout. The actuarial reductions, from the guaranteed 20 year amount, to obtain the 50% joint and survivor benefit are: % Age Reduction --- --------- 55 8 56 7 57 6 58 5 59 4 60 3 61 2 62 0 Early Retirement Benefit The retirement benefit will be reduced 3% for each full year Early Retirement precedes the Executive's Normal Retirement Date. Limitation on Benefits All benefits will be limited to the specified percentage of base salary. SECTION 6. MANNER OF PAYING BENEFITS Within 60 days following the death or retirement of the Executive, an initial benefit payment shall be made as defined under Section 5. All subsequent benefits under this Plan shall accrue on the first day of each succeeding month after death or retirement and shall be made on or about such day during the period for which benefits are payable. 5 6 SECTION 7. BENEFICIARY DESIGNATION The benefits payable by the Company under Section 5 shall be paid as they become due to the beneficiary or beneficiaries as designated by the Executive in writing on the Beneficiary Designation form (Exhibit B attached hereto and incorporated herein by reference). The Executive shall have the right to change or amend such beneficiary designation from time to time (without the consent of any prior beneficiary) by a writing similarly filed. If the Executive fails to make such beneficiary designation or if no beneficiary so designated survives the Executive, payments shall be made as they become due to the duly appointed personal representative of the estate of the Executive. SECTION 8. TERMINATION OF EMPLOYMENT If an Executive's employment with the Company is terminated prior to the Executive's Early Retirement Date, either by the Company or by the Executive, with or without cause, no further amounts shall be paid under any provision of this Plan. Disability or death shall not be deemed a termination of employment for purposes of this Section. SECTION 9. DISABILITY If the Executive becomes disabled under the Plan, Executive contributions will be waived until the Executive returns to full employment. Retirement benefits will not be payable under this Plan if the Executive is receiving benefits under the Company's Disability Income Plan. 6 7 SECTION 10. TITLE TO LIFE INSURANCE If the Company elects to purchase a life insurance contract to provide the Company with funds to make payments hereunder, the Company shall at all times be the sole owner of and beneficiary under such contract, and shall have the unrestricted right to use all amounts and to exercise all options and privileges thereunder without knowledge or consent of the Executive, his or her designated beneficiary or any third party. It being expressly agreed that neither the Executive, designated beneficiary, nor any third party shall have any right, title or interest whatsoever in or to any such contract. SECTION 11. PAYMENTS ARE NOT SECURED The Executive, his or her designated beneficiary or any third party having or claiming a right to payments hereunder or to any interest in this Plan shall rely solely on the unsecured promise of the Company and nothing herein shall be construed to give the Executive, his or her designated beneficiary or any third party any right, title, interest or claim in or to any specific asset, fund, reserve, account or property of any kind whatsoever owned by the Company or in which it may have any right, title or interest now or in the future. The Executive shall have the right to enforce his or her claim against the Company in the same manner as any unsecured creditor. SECTION 12. NON-ASSIGNABILITY OF BENEFITS Except as permitted by Section 7, no rights of any kind under this Plan shall without the written consent of the Company be transferable or assignable by the Executive or any designated beneficiary or be subject to alienation, 7 8 encumbrance, garnishment, attachment, execution, levy or seizure by legal process of any kind, voluntary or involuntary. SECTION 13. AMENDMENT This Plan may be amended at any time or from time to time by the Company. Any amendment shall not reduce the benefit of any participating Executive, or any party receiving benefits under this Plan without a consent in writing by the affected Executive or party. The failure of either the Company or any Executive to enforce any of the provisions hereof shall not be deemed a waiver thereof. No provision of this Plan shall be deemed to have been waived or modified unless such waiver or modification shall be in writing and signed by the appropriate party. The Company reserves the right to terminate the Plan at any time. The termination of the Plan shall not affect the benefits of any Executive, Executive's spouse or designated beneficiary covered by the Plan, prior to termination. SECTION 14. CHANGE OF CONTROL OF THE COMPANY A. Notwithstanding any other provision of this Plan, including specifically Sections 5 and 8 above, in the event of a change of control of the Company, the Company shall continue to provide the survivor income and retirement income benefits described in Section 5 above for Executives participating in the Plan when such change of control occurs. Further, any Executive whose employment terminates for any reason after such change of control occurs shall be eligible for the early retirement benefits regardless of his or her age 8 9 or period of continuous service as of the date of his or her termination of employment, provided, however, the supplemental retirement income benefit, if elected, will not commence until the Executive attains age 55. B. For purposes of subsection (A) of this section, the term "change of control of the Company" means: (i) The acquisition of more than 30% of the outstanding shares of voting stock of the Company in whole or in part by any person or group of persons acting in concert, excluding affiliates of the Company, by means of an offer made publicly to the holders of all or substantially all of the outstanding shares of any one or more classes of the voting stock of the Company to acquire such shares for cash, securities, other property or any combination thereof; or (ii) the sale, assignment or transfer by the Company of all or substantially all of its business and assets to any person, excluding affiliates of the Company; or (iii) a merger, consolidation or other business combination by the Company into or with any person in which neither the Company nor any subsidiary thereof is the continuing or successor corporation; or (iv) as a result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election or any combination of the foregoing transactions, the persons who are directors of the Company before any of the 9 10 foregoing transactions shall cease to constitute a majority of the Board of Directors of the Company or any successor to the Company. SECTION 15. SUCCESSORS AND ASSIGNS If the Company sells, assigns or transfers all or substantially all of its business and assets to any party, excluding affiliates of the Company, or if the Company merges into or consolidates or otherwise combines with any party which is a continuing or successor entity, then the Company shall assign all of its right, title and interest in this Plan as of the date of such event to the party which is either the acquiring or successor corporation, and such party shall assume and perform from and after the date of such assignment all of the terms, conditions and provisions imposed under this Plan by the Company. In case of such assignment by the Company and such assumption and agreement by such party all further rights as well as all other obligations of the Company under this Plan thenceforth shall cease and terminate and thereafter the expression "the Company" wherever used herein shall be deemed to mean such party. SECTION 16. NON-GUARANTEE OF EMPLOYMENT This Plan shall not be construed as giving the Executive the right to be retained as an employee of the Company for any period. SECTION 17. VESTING There is no vesting under the Plan. 10 11 SECTION 18. MISCELLANEOUS The Plan supersedes and modifies in all respects the Company's Management Split Dollar Life Insurance Plan, as amended through November 1, 1988. SECTION 19. NOTICES All notices, requests, demands and other communications under this Plan shall be in writing and delivered in person or by certified mail, postage prepaid as follows: Company: Universal Foods Corporation 433 East Michigan Street Milwaukee, Wisconsin 53201 Attn: Vice President - Human Resources Executive: IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of ---------------------------------------. (CORPORATE SEAL) ATTEST By: ------------------------------- ----------------------------------- Secretary Vice President Administration --------------------------------- Executive 11 12 Exhibit A UNIVERSAL FOODS CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN WAIVER OF PARTICIPATION On , I was given the opportunity to participate in ------------------------------ the Universal Foods Corporation Supplemental Executive Retirement Plan. In accordance with the policy established under the Plan, each designated Executive is given 60 days from the notice of designation (the "Notice") to participate before the offer is withdrawn, unless at a later date the offer is reinstated by Universal Foods Corporation. I acknowledge and understand this limitation relative to my participation in the plan. Because the elapsed time since receipt of the Notice exceeds 60 days, there will be no benefits available to me or to any of my beneficiaries under the Plan. I further understand that my future participation in the Plan is solely within the discretion of Universal Foods Corporation. Date: ------------------------------------ - --------------------------------- ------------------------------ (Witness) (Signature) 13 Exhibit B UNIVERSAL FOODS CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN Beneficiary Designation I, , hereby designate the following as my Primary ------------------------------- Beneficiary under my Supplemental Executive Retirement Plan with Universal Foods Corporation: - ---------------------------------- ------------------------------------ Primary Beneficiary's Name Relationship to Me If the Primary Beneficiary does not survive me or survives me, but dies before actual payment in full of my benefits, or if there be no named Primary Beneficiary, the remaining portion of my benefits shall be paid in equal shares to the following Contingent Beneficiaries. - ---------------------------------- ------------------------------------ Contingent Beneficiary's Name Relationship to Me - ---------------------------------- ------------------------------------ Contingent Beneficiary's Name Relationship to Me - ---------------------------------- ------------------------------------ Contingent Beneficiary's Name Relationship to Me Upon the death of a Contingent Beneficiary, any remaining portion of said benefits shall be paid in equal shares to his or her children living at the time each payment is to be made in accordance with the Plan. Upon the death of a Contingent Beneficiary who is not survived by a child or children, or upon the death of the last surviving child of a Contingent Beneficiary, any remaining portion of his or her beneficial interest shall be paid in equal shares to the then living Contingent Beneficiaries and the children of any then deceased Contingent Beneficiaries, any such child or children to be paid (as described in the preceding sentence) only the share the parent would receive if living. If none of the foregoing persons are living when any benefits under the Plan are payable, any remaining installments shall be paid to the personal representative of my estate. This form constitutes a revocation in full of any Beneficiary Designations previously made by me and may be changed or revoked by me at any time, provided that such subsequent designations be in writing and filed with Universal Foods Corporation. Witness: Date: ------------------------------- - --------------------------------- ------------------------------------ (Cannot be a Beneficiary) Signature of Employee Receipt of the above Beneficiary Designation is hereby acknowledged by: UNIVERSAL FOODS CORPORATION Date: By: -------------------------------------- -------------------------------- 14 AMENDMENT NO. 1 TO THE UNIVERSAL FOODS CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN The Universal Foods Corporation Supplemental Executive Retirement Plan ("the Plan") is hereby amended, effective as of September 10, 1998, as set forth below: 1. Section 14(B) of the Plan is amended to read in its entirety as follows: B. For purposes of subsection (A) of this Section, the term "change of control of the Company" means: (i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (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 of common stock of the Company (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"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (1) any acquisition 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 corporation controlled by the Company or (4) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section; or (ii) individuals who, as of September 10, 1998, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to September 10, 1998 whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or 15 (iii) consummation by the Company 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 assets of another entity (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such business combination beneficially own, directly or indirectly, more than 50% of, respectively, the then 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 Business Combination (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) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or of such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board, providing for such Business Combination; or (iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. EX-10.2.W 24 SUPPLEMENTAL BENEFIT PLAN & AMENDMENT #1 1 EXHIBIT 10.2 (w) UNIVERSAL FOODS SUPPLEMENTAL BENEFIT PLAN 2 UNIVERSAL FOODS SUPPLEMENTAL BENEFIT PLAN Section 1. Purpose. The purpose of this Plan is to reimburse certain employees for various reductions in qualified plan benefits in the Universal Foods Retirement Employee Stock Ownership Plan, the Universal Foods Transition Retirement Plan, the Universal Foods Corporation Savings Plan, and the Universal Foods Corporation Retirement Plan - General Participating Group, which reductions are caused by (i) restrictions in Sections 401(a)(17), 410, or 415 of the Internal Revenue Code, (ii) the maximum limitation on employer and employee contributions under Code Sections 401(k), 401(m), and 402(g), and (iii) the deferral of a portion of their cash compensation pursuant to nonqualified deferred compensation arrangements. Section 2. Definitions. (a) "Benefits Administrative Committee" means the Benefits Administrative Committee of the Company appointed by the Oversight Committee. (b) "Code" means the Internal Revenue Code of 1986, as amended. (c) "Company" means Universal Foods Corporation or any successor thereto. (d) "Deferred Compensation Limit" means the limitations, if any, imposed by the Internal Revenue Service on the recognition by qualified retirement plans of the amount of any direct cash compensation deferred pursuant to the Universal Foods Corporation Executive Income Deferral Plan and the Universal Foods Corporation Management Income Deferral Plan as adopted June ll, 1987 and amended from time to time. (e) "Employer" means the Company and any subsidiary or affiliate of the Company. (f) "ESOP" means the Universal Foods Retirement Employee Stock Ownership Plan as amended from time to time. (g) "Executive" means any employee of an Employer who is specifically designated by the Benefits Administrative Committee, on attached Appendix A, as eligible to participate in this Plan. (h) "415 Limit" means the limitations imposed by Code Section 415 on benefits and/or contributions for qualified retirement plans. 3 (i) "Oversight Committee" means the Oversight Committee of the Board of Directors of the Company. (j) "Plan Account" means a bookkeeping account maintained by the Benefits Administrative Committee for each Executive which determines the value of certain supplements hereunder from time to time. (k) "Rabbi Trust" means the trust established pursuant to the Trust Agreement dated January 18, 1988 between the Company and Marshall & Ilsley Trust Company which applies to various nonqualified deferred compensation programs for employees of the Company. (1) "Retirement Plan" means the Universal Foods Corporation Retirement Plan-General Participating Group as in effect on December 31, 1988. (m) "Savings Plan" means the Universal Foods Corporation Savings Plan as amended from time to time. (n) "Transition Plan" means the Universal Foods Transition Retirement Plan as amended from time to time. (o) "$200,000 Limit" means the limitation imposed by Code Section 401(a)(17) on a participant's annual compensation for purposes of calculating benefits under qualified retirement plans. (p) "UFC Stock" means common stock of the Company and/or noncallable preferred stock of the Company which is convertible into common stock of the Company. Section 3. Retirement Plan Supplement. (a) Effective October 1, 1982, the Universal Foods Corporation Unfunded Retirement Plan (the "Unfunded Plan") was adopted to provide eligible employees the benefits lost under the Retirement Plan on account of the benefit limitations of Code Section 415. The Unfunded Plan is being merged into this Plan as of December 31, 1988, and any and all rights of employees or former employees under the Unfunded Plan shall be converted to the benefits paid hereunder. (b) Eligible Executives are those Executives who as of December 31, 1988 are entitled to an accrued benefit under the Retirement Plan which is less than the Retirement Plan formula would otherwise provide as of such date on account of the 415 Limit and/or the Deferred Compensation Limit (such difference being the "excess benefit" for purposes of this Section 3). -2- 4 (c) The benefit under this Section 3 shall be the lump sum actuarial equivalent (using the actuarial assumptions employed to determine the "ESOP Transfer" amount from the Retirement Plan) of the excess benefit. Such lump sum amount, calculated as of the date of the actual ESOP Transfers from the Retirement Plan to the ESOP, shall accrue interest at eight and one-quarter percent (8-1/4%) through September 25, 1989. Such lump sum amount plus interest shall be allocated to the Executive's Plan Account as of September 25, 1989. Section 4. Savings Plan Matching Supplement. As of September 30, 1989 and each September 30 thereafter, an Executive's Plan Account shall be allocated an amount equal to the difference between (A) and (B), where: (A) is the amount of matching Employer contributions that would have been allocated to the account of the Executive for such year under the Savings Plan, assuming: (1) the Executive had made the maximum pre-tax deposits for the year, (2) the 415 Limit and $200,000 Limit were inapplicable, and (3) the limitations on employer and employee contributions under Code Sections 401(k), 401(m), and 402(g) were inapplicable, and (B) is the actual matching Employer contribution allocable to the Executive's Savings Plan account for the year. Section 5. ESOP Supplement. As of September 30, 1989 and each September 30 thereafter, an Executive's Plan Account shall be allocated an amount equal to the difference between (A) and (B), where: (A) is the amount of allocations that would have been made to the account of the Executive for such year pursuant to Section 4.02 of the ESOP, assuming the 415 Limit, the $200,000 Limit, and the Deferred Compensation Limit were inapplicable; and -3- 5 (B) is the actual Section 4.02 allocation to the Executive's ESOP account for the year. Section 6. Transition Supplement. As of September 30, 1989 and each September 30 thereafter, an Executive's Plan Account shall be allocated an amount equal to the amount of allocations that would have been made to the account of the Executive for such year pursuant to Section 4.02 of the Transition Plan, assuming the 415 Limit were inapplicable and the Executive were a participant in the Transition Plan with the benefit determined by the Benefits Administrative Committee. This Transition Supplement shall be the Executive's applicable dollar amount for such year as specified in Appendix A attached hereto. Section 7. Valuation Adjustments to Excess Plan Account. (a) The Benefits Administrative Committee shall maintain a bookkeeping record of the Plan Account for each Executive. The amount in each Account shall be adjusted from time to time by the allocations provided in Sections 3, 4, 5 and 6 above, the distributions provided in Section 8 below, and the adjustments for valuation specified below. (b) As of September 30, 1989, the portion of a Plan Account attributable to the Retirement Plan Supplement shall reflect the fair market value of the segregated assets in the Rabbi Trust attributable thereto as of such date. (c) The portions of a Plan Account attributable to the ESOP Supplement and Transition Plan Supplement and, after September 30, 1989, the Retirement Plan Supplement shall reflect the actual investment performance of the Executive's account under the ESOP. In the event the Executive has no such account, the Plan Account shall reflect the actual investment performance of the UFC Stock account under the ESOP. (d) The portion of a Plan Account attributable to the Savings Plan Matching Supplement shall be treated as being invested fully in the UFC Stock Fund under the Savings Plan. (e) In the event that the Benefits Administrative Committee utilizes the Rabbi Trust pursuant to Section 9 below, the actual earnings of the assets in the Rabbi Trust shall be irrelevant with respect to the value of an Executive's -4- 6 Plan Account except as described in (b) above. The adjustments to a portion of a Plan Account attributable to a particular Supplement, as required above, shall be made on the same dates that the valuations are conducted for the plan to which the particular Supplement relates or more frequently as determined by the Benefits Administrative Committee. Section 8. Benefit Payments. (a) An Executive shall only be vested in the Plan Account if such Executive is vested pursuant to the terms of the ESOP. Consistent with Section 5.08 of the ESOP, the Plan Accounts shall be fully vested and nonforfeitable in the event of a "change of control of the Company" which for this purpose means: (i) the acquisition of more than eighty-five percent (85%) of the outstanding shares of voting stock directly or indirectly by any person or group of persons acting in concert, excluding affiliates of the Company, by means of an offer made publicly to the holders of all or substantially all of the outstanding shares of any one or more classes of the voting stock of the Company to acquire such shares for cash, securities, other property or any combination thereof; or (ii) the sale, assignment or transfer by the Company of all or substantially all of its business and assets to any person, excluding affiliates of the Company; or (iii) a merger, consolidation or other business combination by the Company into or with any person in which neither the Company nor any subsidiary thereof is the continuing or successor corporation. (iv) As a result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election or any combination of the foregoing transactions, the persons who are directors of the Company before any of the foregoing transactions shall cease to constitute a majority of the -5- 7 Board of Directors of the Company or any successor to the Company. (b) Distribution of the vested Plan Account of an Executive shall be made in a lump sum cash payment within sixty (60) days after the end of the calendar quarter in which occurs the Executive's termination of employment with the Employers. (c) In the event the Executive dies prior to receipt of the Executive's Plan Account and either (i) the Executive's Account is vested pursuant to (a) above or (ii) the Executive dies while employed with the Employers, the amount of such Account shall be paid to the beneficiary designated by the Executive in a lump sum cash payment within sixty (60) days after the end of the calendar quarter in which the Executive's death occurs. A beneficiary may be designated by the Executive by a written statement to such effect filed with the Chairman of the Benefits Administrative Committee. In the event no beneficiary is validly designated or the designated beneficiary predeceased the Executive, the Executive's estate shall be the beneficiary hereunder. (d) In the event the Rabbi Trust invests in UFC Stock as an asset attributable to the Plan, an Executive or beneficiary eligible for a cash lump sum payment may elect to receive such distribution in UFC Stock in lieu of cash, but only to the extent and pursuant to the rules established by the Benefits Administrative Committee from time to time. Section 9. Rabbi Trust. (a) The Plan Account is utilized solely as a device for the measurement and determination of the amount to be paid to an Executive hereunder. Neither the Plan Accounts nor any other reserve established on the Company's books to reflect the liabilities under this Plan shall constitute or be treated as a trust fund of any kind. (b) Notwithstanding (a) above, the Company shall periodically fund the Rabbi Trust in order to maintain sufficient assets therein to equal the value from time to time of the Plan Accounts. (c) In the event the Rabbi Trust invests in UFC Stock as an asset attributable to the Plan, prior to an occasion for the exercise of UFC Stock voting rights, the Benefits Administrative Committee shall provide each Executive with notification of such occasion together with any other information being provided by the Company to its shareholders with respect to such occasion. Each Executive is entitled to direct the Benefits Administrative Committee as to the -6- 8 manner in which the portion of the UFC Stock owned by the Rabbi Trust attributable to his Plan Account is to be voted on such occasion; provided, that, with respect to any fractional share of such UFC Stock, it shall be combined with fractional shares in other Plan Accounts to be voted to reflect, to the extent the Benefits Administrative Committee determines it is possible, the directions of the Executives with fractional shares attributable to their Plan Accounts. The voting directions with respect to the UFC Stock of all Executives shall be communicated by the Benefits Administrative Committee to the Trustee for voting in accordance therewith; provided that the voting rights of any UFC Stock for which no direction is received, shall be exercised as directed by the Benefits Investment Committee of the Company in a manner it determines to be in the best interests of Participants. (d) In the event of any tender offer for shares of UFC Stock held in the Rabbi Trust attributable to the Plan, the Benefits Administrative Committee shall provide each Executive with notification of such tender offer together with any other information being provided to Company shareholders in connection with the tender offer. Each Executive is entitled to direct the Trustee as to whether or not and, if so, to what extent the portion of the UFC Stock owned by the Rabbi Trust attributable to his Plan Account is to be tendered in response to such tender offer. Any directions shall be communicated to the Trustee for responding to the tender offer in accordance therewith; provided that with respect to any UFC Stock for which no direction is received, the Benefits Investment Committee of the Company shall direct the Trustee to respond to the tender offer in a manner such Committee determines to be in the best interests of participants in the Plan. Section 10. Inter-Employer Reimbursements. Although any benefit payments or contributions to the Rabbi Trust hereunder shall be made by the Company, it shall be determined by the Benefits Administrative Committee whether any portion thereof is allocable to any other Employer on account of its employment of the applicable Executive. In any such case, the Company shall be reimbursed by such other Employer in the amount and manner determined by the Benefits Administrative Committee pursuant to uniformly applicable procedures. -7- 9 Section 11. Non-Alienation of Benefits. Neither an Executive nor his designated beneficiaries shall have the power to transfer, assign, anticipate or otherwise encumber in advance any of the payments provided in this Plan; nor shall any of said payments, nor any assets or funds of the Company or any Employer be subject to seizure for the payment of any of the Executive's or his beneficiaries' judgments, alimony or separate maintenance or be reached or transferred by operation of law in the event of the bankruptcy or insolvency of the Executive or any beneficiary. Section 12. Administration. The Benefits Administrative Committee shall have all such powers that may be necessary to carry out the provisions of the Plan, including without limitation, the power to delegate administrative matters to other persons, to construe and interpret the Plan, to adopt and revise rules, regulations and forms relating to and consistent with the Plan's terms, to amend Appendix A, as referenced in Section 2(g) hereof, in its sole discretion thereby adding or deleting any Executive or the Supplements which any Executive is eligible to receive under this Plan, and to make any other determination which it deems necessary or advisable for the implementation and administration of the Plan. Subject to the foregoing, all decisions and determinations by the Benefits Administrative Committee shall be final, binding and conclusive as to all parties, including without limitation any Executive and all other employees and persons. The Benefits Administrative Committee shall calculate the supplements in Sections 3, 4, 5 and 6 hereof in a manner which avoids duplicative benefits. Section 13. Limitation of Rights Against the Employers. Participation in this Plan, or any modifications thereof, or the payments of any benefits hereunder, shall not be construed as giving to any Executive any right to be retained in the service of the Employers, limiting in any way the right of the Employers to terminate such Executive's employment at any time, evidencing any agreement or understanding express or implied, that the Employers will employ such Executive in any particular position or at any particular rate of compensation and/or guaranteeing such Executive any right to receive any other form or amount of remuneration from the Employers. -8- 10 Section 14. Construction. The Plan shall be construed, administered and governed in all respects under and by the laws of the State of Wisconsin. Wherever any words are used herein in the masculine, they shall be construed as though they were used in the feminine for all cases where they would so apply; and wherever any words are used herein in the singular or the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply. The words "hereof", "herein", "hereunder" and other similar compounds of the word "here" shall mean and refer to this entire document and not to any particular paragraph. Section 15. Amendment or Termination of the Plan. The Oversight Committee shall have the right to amend, modify, terminate or discontinue the Plan at any time; and such action shall be final, binding and conclusive as to all parties, including any Executive, any beneficiary thereof and all other Employers' employees and persons. Notwithstanding the foregoing, any such Oversight Committee action to terminate or discontinue the Plan or to change the payment amounts or the time and manner of payment thereof as then provided in the Plan shall not be effective and operative with respect to benefits accrued as of such date, unless and until written consent thereto is obtained from each Executive affected by such action or, if any such Executive is not then living, from the beneficiary thereof. Section 16. Relationship to Employment Agreements. Except as otherwise expressly provided herein, this Plan does not affect the rights of any Executive under any employment or other compensation agreement with an Employer covering such Executive. This Plan supersedes and eliminates as a separate benefit the Universal Foods Corporation Unfunded Retirement Plan with respect to any Executive covered thereby who executes an acceptance in the form approved by the Benefits Administrative Committee. An Executive who is entitled to a benefit under the Universal Foods Corporation Unfunded Retirement Plan who fails to execute the acceptance shall be entitled to all benefits accrued as of December 31, 1988 under the terms of such Unfunded Retirement Plan but shall not have any Plan Account hereunder. Section 17. Successors and Assigns. The terms and conditions of the Plan, as amended and in effect from time to time, shall be binding upon the successors and assigns of the Employer, including without -9- 11 limitation any entity into which an Employer may be merged or with which an Employer may be consolidated. -10- 12 AMENDMENT NO. 1 TO THE UNIVERSAL FOODS CORPORATION SUPPLEMENTAL BENEFIT PLAN The Universal Foods Corporation Supplemental Benefit Plan ("the Plan") is hereby amended, effective as of September 10, 1998, as set forth below: 1. Section 8(a) of the Plan is amended to read in its entirety as follows: a. An Executive shall only be vested in the Plan Account if such Executive is vested pursuant to the terms of the ESOP. Consistent with Section 5.08 of the ESOP, the Plan Accounts shall be fully vested and nonforfeitable in the event of a "change of control of the Company" which for this purpose means: (i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (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 of common stock of the Company (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"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (1) any acquisition 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 corporation controlled by the Company or (4) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section; or (ii) individuals who, as of September 10, 1998, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to September 10, 1998 whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or 13 (iii) consummation by the Company 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 assets of another entity (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such business combination beneficially own, directly or indirectly, more than 50% of, respectively, the then 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 Business Combination (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) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or of such corporation resulting from such Business Combination) beneficially owns, directly of indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board, providing for such Business Combination; or (iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. EX-10.2.X 25 TRANSITION RETIREMENT PLAN & AMENDMENT #1 1 EXHIBIT 10.2(x) UNIVERSAL FOODS TRANSITION RETIREMENT PLAN 2 UNIVERSAL FOODS TRANSITION RETIREMENT PLAN Table of Contents
Page ---- ARTICLE I. DEFINITION OF TERMS ............................................ 2 Section 1.01. Definitions ..................................... 2 Section 1.02. Construction .................................... 4 ARTICLE II. PARTICIPATION AND VESTING SERVICE ............................. 6 Section 2.01. Participation ................................... 6 Section 2.02. Vesting Service ................................. 6 Section 2.03. Period of Severance ............................. 6 Section 2.04. Eligibility for Allocations ..................... 6 ARTICLE III. CONTRIBUTIONS ................................................ 8 Section 3.01. Employer Contributions .......................... 8 Section 3.02. No Liability for Future Contributions ........... 8 Section 3.03. Funding Policy .................................. 8 ARTICLE IV. PARTICIPANTS' ACCOUNTS ........................................ 9 Section 4.01. Establishment of Accounts ....................... 9 Section 4.02. Allocation to Accounts .......................... 9 Section 4.03. Determination and Allocation of Changes in Value ................................ 9 Section 4.04. Maximum Annual Additions ........................ 9 ARTICLE V. BENEFITS .......................................................11 Section 5.01. Retirement ......................................11 Section 5.02. Death ...........................................11 Section 5.03. Disability ......................................11 Section 5.04. Other Severance from Service ....................11 Section 5.05. Distributions ...................................12 Section 5.06. Payment for Minor or Incompetent Person .........13 Section 5.07. Voting Rights and Tender Offers .................14 Section 5.08. Change of Control ...............................14 Section 5.09. Annual Statement ................................15 Section 5.10. Diversification .................................15 Section 5.11. Withholding/Rollover Rules ......................16 ARTICLE VI. ADMINISTRATION ................................................18
i 3
Page ---- Section 6.01. Allocation of Responsibility Among Fiduciaries for Plan and Trust Administration ...............18 Section 6.02. Appointment and Authority of Benefits Administrative Committee ........................18 Section 6.03. Use of Professional Services ....................20 Section 6.04. Fees and Expenses ...............................20 Section 6.05. Claims Procedure ................................20 Section 6.06. Trustee's Responsibilities ......................21 Section 6.07. Fiduciary Insurance and Indemnification .........21 Section 6.08. Agent for Service of Process ....................22 Section 6.09. Allocation of Fiduciary Responsibility ..........22 Section 6.10. Liability for Breach of Co-Fiduciary ............22 Section 6.11. Communications ..................................22 ARTICLE VII. TRUSTEE AND TRUST FUND .......................................23 Section 7.02. Investment of Trust Fund ........................23 Section 7.03. Acquisition of UFC Stock ........................23 ARTICLE VIII. AMENDMENT AND TERMINATION ...................................24 Section 8.01. Amendment .......................................24 Section 8.02. Termination .....................................24 Section 8.03. Non-Reversion of Assets .........................24 ARTICLE IX. GENERAL PROVISIONS ............................................25 Section 9.01. Participants to Furnish Information .............25 Section 9.02. Non-Guarantee of Employment or Other Benefits ...25 Section 9.03. Mergers, Consolidations and Transfers of Plan Assets .....................................25 Section 9.04. Spendthrift Clause ..............................25 Section 9.05. Exclusive Benefit ...............................26 Section 9.06. Successors and Assigns ..........................26 Section 9.07. Top-Heavy Restrictions ..........................26 Appendix A .................................................................29
ii 4 UNIVERSAL FOODS TRANSITION RETIREMENT PLAN Effective as of September 8, 1988, Universal Foods Corporation (the "Company") establishes this target benefit pension plan known as the Universal Foods Transition Retirement Plan (the "Plan") for the purpose of providing eligible employees and their beneficiaries with certain retirement and other benefits for their financial security. 5 ARTICLE I. DEFINITION OF TERMS Section 1.01. Definitions. The following words and phrases when used herein shall have the following respective meanings, unless the context clearly indicates otherwise: (a) "Affiliate" means any Employer and any other corporation which is a member of a controlled group of corporations (within the meaning of Section 1563(a) of the Code determined without regard to subsections (a)(4) or (e)(3)(C) thereof) which includes an Employer. (b) "Beneficiary" means the person, trust and/or other entity entitled to receive benefits in the event of the Participant's death. A Participant shall designate his Beneficiary on the form and in the manner prescribed by the Benefits Administrative Committee and such designation may be changed or withdrawn by the Participant at any time. The most recent valid designation on file with the Benefits Administrative Committee at the time of the Participant's death shall be the Beneficiary. Notwithstanding the foregoing, in the event the Participant is married at the time of his death, the Beneficiary shall be the Participant's spouse at such time unless such spouse consented in writing to the designation of an alternative Beneficiary after notice of the spouse's rights and such consent was witnessed (i) by a Plan representative appointed by the Benefits Administrative Committee or (ii) by a notary public. In the event no valid designation of a Beneficiary is on file with the Benefits Administrative Committee at the date of death or no designated Beneficiary survives him, the Participant's spouse shall be deemed the Beneficiary; in the further event the Participant is unmarried or his spouse does not survive him, the Participant's estate shall be deemed to be his Beneficiary. No spouse consent prior to the Participant's attainment of age thirty-five (35) shall be effective. (c) "Benefits Administrative Committee" means the Benefits Administrative Committee of the Company appointed by the Finance Committee. (d) "Benefits Investment Committee" means the Benefits Investment Committee of the Company appointed by the Finance Committee. (e) "Code" means the Internal Revenue Code of 1986, as interpreted and applied by regulations and rulings issued pursuant thereto, all as amended and in effect from time to time. (f) "Company" means Universal Foods Corporation, a Wisconsin corporation, or any successor thereto. 2 6 (g) "Employee" means any person actively employed on or after January 1, 1989 by an Employer on its United States payroll who is specifically designated in Appendix A attached hereto. An individual who is a "leased employee" as defined in Code Section 414(n) shall not be eligible to participate in the Plan. (h) "Employer" means the Company, Universal Flavor Corporation and each subsidiary or affiliate corporation with a United States payroll designated by the Benefits Administrative Committee as an Employer hereunder. (i) "Employment Commencement Date" means the first date on which a person completes an hour of service, which is an hour for which an Employee is directly or indirectly paid or entitled to payment by an Employer or any Affiliate, and shall include hours for which back pay has been awarded or paid. (j) "ERISA" means the Employee Retirement Income Security Act of 1974, as interpreted and applied by regulations and rulings issued pursuant thereto, all as amended and in effect from time to time. (k) "Finance Committee" means the Finance Committee of the Board of Directors of the Company. (1) "Participant" means any Employee who has satisfied the conditions of Section 2.01 hereof (m) "Plan" means the target benefit pension plan herein contained, as amended and in effect from time to time, which plan shall be known as the "Universal Foods Transition Retirement Plan". The governing documents for the Plan shall include this plan document, any amendments hereto, any agreement with any Trustee and any amendments thereto, resolutions of the Finance Committee relating hereto and such uniformly applicable rules, regulations and standards promulgated by the Benefits Administrative Committee consistent and in accordance with the terms hereof and ERISA requirements. (n) "Plan Year" means the twelve (12) month period ending on any September 30. (o) "Severance from Service" means the earliest to occur of the following: (i) the date that a Participant quits, retires, is terminated or dies, whichever occurs first; (ii) subject to Section 2.03 hereof, the first anniversary of the date a Participant commences a continuous absence 3 7 from service with the Affiliates for any other reason, such as illness, disability, layoff, vacation, or authorized leave of absence; provided, however, that for purposes of the Plan, "an authorized leave of absence" means an absence from active service with the Affiliates which an Affiliate authorizes pursuant to uniform rules consistently applied in like circumstances for its personnel who are similarly situated in respect to such Participant; or (iii) the date as of which the Participant is suffering from a disability as evidenced by receipt of either long-term disability benefits from a plan sponsored by the Employers or Social Security disability benefits. (p) "Trust" means the Trust adopted effective as of September 8, 1988 and as may be amended and in effect from time to time, between the Company and the Trustee for the purpose of funding, in whole or in part, the benefits provided hereunder. (q) "Trust Fund" means the assets of the Trust as in effect from time to time. (r) "Trustee" means Marshall & Ilsley Trust Company or any successor or successors thereto appointed to hold and administer the Trust. (s) "UFC Stock" means common stock of the Company. (t) "Valuation Date" means September 30, 1989 and each January 31, April 30, July 31 and October 31 thereafter. (u) "Vesting Service" means a Participant's years of employment which are credited under Section 2.02 hereof. Section 1.02. Construction. (a) Words used herein in the masculine gender shall include the feminine and words used herein in the singular shall include the plural in all cases where such would apply. The words "hereof", "herein", "hereunder" and other similar compounds of the word "here" shall refer to the entire Plan, not to a particular article or section hereof. Headings of articles, sections and subsections are for convenience of reference only; they constitute no part of the Plan and are not to be considered in the construction hereof. All references to statutory sections shall include the section so identified as amended from time to time or any other statute of similar import. 4 8 (b) The Plan is intended to be a target benefit plan meeting the requirements of Section 401(a) of the Code and shall be interpreted so as to comply with the applicable requirements thereof, where such requirements are not clearly contrary to the express terms hereof. In all other respects, the Plan shall be construed and its validity determined according to the laws of the State of Wisconsin to the extent such laws are not preempted by applicable requirements of federal law. In case any provision of the Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if said illegal or invalid provisions had never been included herein. 5 9 ARTICLE II. PARTICIPATION AND VESTING SERVICE Section 2.01. Participation. An Employee shall become a Participant hereunder as of October 1, 1988, except with respect to an Employee who is eligible to participate in the Universal Foods Corporation Pension Plan-Idaho Frozen Foods Participating Group for whom the entry date is July 1, 1989. Section 2.02. Vesting Service. Each Employee's eligibility for benefits hereunder shall be based in part upon such Employee's years of Vesting Service. Subject to Section 2.03 hereof, each Employee shall be credited with Vesting Service for the period beginning on his Employment Commencement Date and ending on the date of his Severance from Service, less any period(s) of severance during such period which exceed(s) twelve (12) months in duration. Service shall be calculated based on years, months and days. An Employee of an acquired business shall be given Vesting Service for employment prior to the acquisition date only to the extent determined by the Benefits Administrative Committee. Section 2.03. Period of Severance. (a) For purposes of this Article, a "period of severance" shall commence on an Employee's Severance from Service and shall end on the date the Employee first performs paid services as an employee of an Affiliate following such date, and said period shall be calculated in years, months and days. (b) If an Employee who is not entitled to a vested benefit pursuant to Article V hereof incurs a period of severance of at least twelve (12) months which equals or exceeds the period of Vesting Service, the Employee's Vesting Service earned prior to the period of severance shall be cancelled and disregarded under Section 2.02 for all purposes of the Plan; provided, however, that service shall be reinstated if individual is reemployed within a period of time not longer than seventy-two (72) months. (c) Any Employee shall cease to be a Participant upon incurring a Severance from Service. If rehired by an Affiliate within the requisite time provided in subsection (b) above, any forfeited amount shall be reinstated to an account in the individual's name and shall continue to vest pursuant to the provisions thereof. Except as otherwise expressly provided in Sections 3.01 and 4.02, no further Employer contributions shall be made to any Participant after his Severance from Service. Section 2.04. Eligibility for Allocations. Participants who are eligible for allocations of Employer contributions pursuant to Section 4.02 for any Plan Year shall be those identified below but shall not include any other Participant whose employment with the Employers was severed during the Plan Year due to any other reason: 6 10 (i) each Participant who is employed by an Employer on the last day of such Plan Year, treating a permanent layoff as a termination of employment but not a temporary layoff; (ii) each Participant whose service with an Employer was severed during such year on account of death, disability, or retirement on or after attainment of age fifty-five (55) with at least ten (10) years of Vesting Service, and (iii) with respect to any sale or closing of an Employer's location, to the extent specifically authorized by the Benefits Administrative Committee, any Participant whose Severance from Service was due to such sale or closing. Notwithstanding the foregoing, eligible Participants shall not include any former Participant who was rehired after a Severance from Service. 7 11 ARTICLE III. CONTRIBUTIONS Section 3.01. Employer Contributions. (a) Commencing with the Plan Year ending September 30, 1989 and for each Plan Year thereafter, the Employers shall contribute an aggregate amount which, when added to forfeitures allocable for such year pursuant to Section 5.04(b) hereof, equals the sum of the amounts for each Participant eligible for a contribution pursuant to Section 4.02 hereof, determined in accordance with Appendix A hereof. (b) The Employers' contribution for any Plan Year shall be paid to the Trust Fund not later than the time prescribed by law, including any extensions thereof, for filing the Employers' federal income tax returns with respect to such Plan Year. (c) If any Employer contributes an amount in excess of the amount it would otherwise have contributed but for a mistake of fact, such excess, less any losses thereon since its contribution, may, upon the request of the Employer, be returned to the Employer within one (1) year from the date of the mistaken contribution, but no such return shall cause any Participant's account to be reduced to an amount below the amount such account would contain if the mistaken contribution had not been made. (d) Notwithstanding subsection (a), the Employer contributions made to achieve the level of allocations required hereunder which are to be invested in UFC Stock (as compared to those which will be diversified pursuant to Section 5. 10) shall be determined by using an average of the closing prices of UFC Stock on the New York Stock Exchange for the last five (5) days of the Plan Year on which UFC Stock is actually traded, and contributing sufficient cash or UFC Stock so that as of the last day of the Plan Year the portion of an eligible Participant's account which is to be invested in UFC Stock shall be credited with the number of whole and fractional shares of UFC Stock which, when multiplied by the five (5) day average price, will equal the required allocation. Section 3.02. No Liability for Future Contributions. Benefits and distributions under the Plan shall be only such as can be provided by the Trust Fund assets, and there shall be no liability or obligation on the part of any Employer to make any further contributions except as otherwise provided herein. Section 3.03. Funding Policy. The funding policy for the Plan is that Employer contributions shall be made and the Trust Fund managed in a manner consistent with the Code, ERISA, and other applicable law for the purposes of providing the benefits described herein and, to the extent permitted by such law, defraying the reasonable expenses of administering the Plan and Trust Fund. 8 12 ARTICLE IV. PARTICIPANTS' ACCOUNTS Section 4.01. Establishment of Accounts. The Benefits Administrative Committee shall establish a separate account for each Participant; provided, however, that the establishment of separate Participant accounts shall not require a segregation of Trust Fund assets, and neither the Employers, Participants, former Participants, nor Beneficiaries shall acquire any right to or interest in any specific asset of the Trust Fund as a result of any allocation provided for herein. Section 4.02. Allocation to Accounts. The Benefits Administrative Committee, as of the end of the Plan Year, shall credit the Employers' contribution for that Plan Year and any forfeitures pursuant to Section 5.04(b) to the appropriate accounts of eligible Participants, as determined pursuant to Section 2.04, based on each Participant's applicable dollar amount for such year specified in Appendix A hereof, subject to a maximum contribution for any Participant determined pursuant to Section 4.04. For any Participant eligible for an allocation pursuant to Section 2.04(ii) or (iii), the applicable dollar amount shall be reduced so that the amount of the contribution for such year is equal to the applicable dollar amount multiplied by a fraction, the numerator of which is the number of nearest completed months (employment on the fifteenth (15th) day of the month being treated as a full month) and the denominator of which is twelve (12). Section 4.03. Determination and Allocation of Changes in Value. At the end of each Valuation Date and as of each September 30, the Benefits Administrative Committee shall increase or decrease each account with its proportionate share of any change in the fair market value of the Trust Fund assets since the preceding Valuation Date. Section 4.04. Maximum Annual Additions. (a) Notwithstanding the other provisions of this Plan, annual additions to the account of any Participant for a Plan Year shall not exceed the lesser of: (i) thirty thousand dollars ($30,000) as adjusted pursuant to Section 415(c)(1)(A) and (d)(1) of the Code; or (ii) twenty-five percent (25%) of the Participant's total compensation (as defined in subsection (c) of Section 415 of the Code using accrued, not paid, bonuses) from the Affiliates for such Plan Year. The term "annual additions" as used in this subsection shall mean the amount of the Employer's contributions and forfeitures for the Plan Year allocated to the account of the Participant. If a Participant also participates in another qualified defined contribution plan 9 13 maintained by an Employer, then the sum of his annual additions under this Plan and under such other plan shall not exceed the limitations described in (i) or (ii) above subject to any special limitations applicable to such other plan. In the event that at any September 30 such limitations would be exceeded, then the Participant's annual additions to his account shall be reduced as may be necessary to satisfy such limitations. (b) In addition, if a Participant is also participating in a qualified defined benefit plan which an Affiliate maintains on his behalf, the sum of the defined benefit fraction and the defined contribution fraction as defined in Section 415(e) will not exceed one (1) and the limitations of Code Section 415(e) are hereby incorporated by reference. If as of any September 30 such rules are violated, the benefit of any active defined benefit plan shall be reduced accordingly; otherwise, the annual additions for the Plan Year hereunder shall be reduced to satisfy such limitations. (c) In the event that either of the rules set forth in this Section would otherwise be violated, there shall be deducted from such Participant's account such amount as may be necessary to satisfy both of such rules; any such amount shall be treated as a forfeiture for purposes of Sections 3.01 and 4.02; provided that if such reallocation to the accounts of other Participants is not possible as the result of the application of this Section, then the reallocable amounts shall be credited to a suspense account subject to the following conditions: (i) amounts in the suspense account shall be allocated at such time, including termination of the Plan or complete discontinuance of Employer contributions, as the foregoing limitations permit, (ii) any income produced by such suspense account shall be held in the suspense account, (iii) no further Employer contributions shall be permitted until the foregoing limitations Permit their allocation to Participants' accounts, and (iv) upon termination of the Plan any unallocable amounts in the suspense account shall revert to the Company. 10 14 ARTICLE V. BENEFITS Section 5.01. Retirement. For any Participant hired by an Affiliate prior to attainment of age sixty (60), the account of such Participant shall be fully vested and nonforfeitable upon attainment of age sixty-five (65) if then employed with an Affiliate. For any Participant first hired by an Affiliate after attainment of age sixty (60), the account of such Participant shall be fully vested and nonforfeitable as of the fifth (5th) anniversary of such date of hire if then employed with an Affiliate. Payments shall commence as soon as practicable after the Participant's Severance from Service and be payable in accordance with Section 5.05. Section 5.02. Death. Upon a Participant's death before his Severance from Service for any other reason, the entire amount credited to his account shall be fully vested and nonforfeitable. Upon a Participant's death, whether before or after commencement of payment of benefits, the vested amount credited to his account shall be payable in accordance with Section 5.05 to the Participant's Beneficiary. Section 5.03. Disability. If a Participant's Severance from Service occurs on account of a disability as described in Section 1.01(o)(iii), the entire amount credited to his account shall be fully vested and nonforfeitable and shall be payable to him in accordance with Section 5.05. Section 5.04. Other Severance from Service. (a) Any Participant whose Severance from Service occurs by reason other than retirement, death or disability and who has completed five (5) or more years of Vesting Service, shall be fully vested and nonforfeitable with respect to the amount credited to his account, which amount shall be payable to him in accordance with Section 5.05. A Participant whose Severance from Service is due to a sale or closing of an Employer's location shall be fully vested in his entire account balance to the extent specifically authorized by the Benefits Administration Committee. (b) Any amounts in a Participant's account which are not vested under subsection (a) above upon his Severance from Service shall be maintained in such account and shall continue to share in investment earnings and losses under Article IV hereof until a forfeiture occurs. A conditional forfeiture shall occur on the September 30 immediately following the Participant's one year period of severance under Section 2.03 hereof. Except as otherwise provided in this subsection (b), forfeitures shall be added to Employer contributions and allocated under Section 4.02 hereof. In the event a former Participant is reemployed prior to such September 30, he shall not receive any further distribution until he again severs his service with the Employers, and any forfeitable amount shall remain in his account and continue to vest in accordance with subsection (a) above. In the event the 11 15 Participant is reemployed after such September 30 and within a period of time not longer than seventy-two (72) months (a "six year break in service"), his conditionally forfeited account shall be reestablished from forfeitures of other Participants or from a special Employer contribution as determined by the Benefits Administrative Committee, and such reconstituted account shall continue to vest in accordance with subsection (a). Upon a six year break in service, the conditional forfeiture shall become final regardless of the future employment of the Participant. Separate subaccounts shall be maintained for Employer contributions accrued with respect to a Participant before a six year break in service and after such a break. Section 5.05. Distributions. (a) Time. In the event of a Participant's Severance from Service with the Employers, the entire amount to which the Participant is entitled under the Plan shall be distributed to him or his Beneficiary, as the case may be, within sixty (60) days after the Valuation Date after the event giving rise to such distribution occurs. Notwithstanding any other provision in this Section, the account balance of a Participant shall be distributed no later than April 1 of the calendar year following the calendar year in which he attains age seventy and one-half (70 1/2). If a Participant who has severed his service or has incurred a disability subsequently dies prior to receiving his total distribution hereunder, the remainder of such distribution shall then be made to his Beneficiary. Except with respect to death benefits, no lump sum cash distribution in excess of Three Thousand Five Hundred Dollars ($3,500) shall be made prior to the Participant's attainment of age seventy and one-half (70 1/2) without the consent of the Participant to the extent required by law. (b) Form. The amount to which a Participant or his Beneficiary, as the case may be, is entitled hereunder shall be rendered, at the election of the recipient, in the form of (i) a lump sum distribution consisting entirely of cash or UFC Stock as determined by the Participant, except that cash shall be distributed in lieu of any fractional share of UFC Stock; or (ii) as an annuity, if such amount exceeds Three Thousand Five Hundred Dollars ($3,500). If a Participant is married at the time he is entitled to commencement of the distribution, the following rules apply: (iii) Except as elected to the contrary pursuant to (iv) below, the benefit shall be paid by purchasing a joint and survivor annuity contract from a licensed insurance 12 16 company using unisex actuarial factors and providing a monthly benefit for the life of the Participant commencing immediately and, if the Participant predeceases the Participant's spouse as of the commencement date, a survivor's benefit to the spouse for the spouse's remaining life equal to one-half of the monthly amount received by the Participant. (iv) A Participant may elect, in writing on a form provided by and filed with the Benefits Administrative Committee, against receiving payments in the form of such a joint and survivor annuity, but such election shall only be effective if the spouse consents to such election and acknowledges the effect of such waiver, such consent being witnessed by a Plan representative appointed by the Benefits Administrative Committee or a notary public. In the event (i) a Participant dies prior to commencement of annuity benefits hereunder, (ii) a Beneficiary is the applicable Participant's spouse, and (iii) the benefit payable to such spouse is in excess of Three Thousand Five Hundred Dollars ($3,500), unless such spouse elects in writing to receive the lump sum payment otherwise payable pursuant to subsection (i) above, the benefit payable to such spouse shall be paid by purchasing a life only annuity contract from a licensed insurance company using unisex actuarial factors and providing a monthly benefit for the life of the spouse commencing immediately. Any elections hereunder may be made or revoked at any time prior to the benefit commencement date, and the Benefits Administrative Committee shall provide the Participant and the spouse, as applicable, notice of their rights under this subsection in accordance with the requirements of applicable regulations at least ninety (90) days prior to such benefit commencement. Any spouse consent shall only be valid for benefits commencing within ninety (90) days of such consent. In addition, an unmarried Participant shall be provided a life only annuity contract unless the Participant elects to the contrary, to the extent and in the manner required by law. The provisions of the Plan are intended to comply with Code Section 401(a)(9) which prescribes certain rules regarding minimum distributions and requires that death benefits be incidental to retirement benefits. All distributions under the Plan shall be made in conformance with Section 401(a)(9) and the regulations thereunder which are incorporated herein by reference. The provisions of the Plan governing distributions are intended to apply in lieu of any default provisions prescribed in regulations; provided, however, that Code Section 401(a)(9) and the regulations thereunder override any Plan provisions inconsistent with such Code Section and regulations. Section 5.06. Payment for Minor or Incompetent Person. In the event that any amount is payable under the Plan to a minor or to any person deemed by the Benefits 13 17 Administrative Committee to be incompetent, either mentally or physically, such payment shall be made for the benefit of such minor or incompetent person in any of the following ways, as determined in the Benefits Administrative Committee's sole discretion: (a) to the legal representative of such minor or incompetent person; (b) directly to such minor or incompetent person; or (c) to some near relative of such minor or incompetent person to be used for the latter's benefit. The Benefits Administrative Committee shall not be required to see to the proper application of any such payment made to any person pursuant to the provisions of this Section 5.06. Section 5.07. Voting Rights and Tender Offers. (a) The voting rights of any UFC Stock held in the Trust Fund shall be exercised by the Trustee as directed by the Benefits Investment Committee in a manner it determines to be in the best interests of Participants. (b) In the event of any tender offer for shares of UFC Stock held in the Trust Fund, the Trustee shall respond to the tender offer with respect to any such shares as directed by the Benefits Investment Committee in a manner the Benefits Investment Committee determines to be in the best interests of Participants. Section 5.08. Change of Control. (a) For purposes of this Section, the term "change of control of Company" means: (i) the acquisition of more than eighty-five percent (85%) of the outstanding shares of voting stock directly or indirectly by any person or group of persons acting in concert, excluding affiliates of the Company, by means of an offer made publicly to the holders of all or substantially all of the outstanding shares of any one or more classes of the voting stock of the Company to acquire such shares for cash, securities, other property or any combination thereof; or (ii) the sale, assignment or transfer by the Company of all or substantially all of its business and assets to any person, excluding affiliates of the Company; or (iii) a merger, consolidation or other business combination by the Company into or with any person in which neither the Company nor any subsidiary thereof is the continuing or successor corporation. 14 18 (iv) As a result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election or any combination of the foregoing transactions, the persons who are directors of the Company before any of the foregoing transactions shall cease to constitute a majority of the Board of Directors of the Company or any successor to the Company. (b) In the event of a change of control of the Company, all account balances of all Participants employed on such date shall be fully vested and nonforfeitable. Section 5.09. Annual Statement. As soon as practicable following each October 31, and at such other times as it determines, the Benefits Administrative Committee shall provide each Participant with an annual statement reflecting the status of the Participant's account as of such date. Section 5.10. Diversification. (a) Subject to the rights of Participants under this Section and the maximum ten percent (10%) limitation on purchases of UFC Stock pursuant to Section 7.02, Participants' accounts shall be invested in UFC Stock. A qualified Participant may elect to invest the eligible diversification amount in accordance with the rules of this Section in a fixed income investment fund designated by the Benefits Administrative Committee. The right to invest hereunder is intended to enable a qualified Participant to diversify a portion of the amount allocated to his account among investments other than UFC Stock. (b) A Participant becomes a qualified Participant on the day following the Valuation Date coincidental with or immediately following his attainment of age thirty-five (35). A Participant remains a qualified Participant following his Severance from Service until his account has been completely distributed. (c) The eligible diversification amount shall be the result obtained by subtracting the diversified account (as defined below) from the product of (i) the Participant's elected diversification percentage times (ii) the sum of the Participant's vested account balances in the Plan and the Universal Foods Retirement Employee Stock Ownership Plan as of the Valuation Date preceding the effective date of the diversification election. A Participant's diversified amount is the sum of the Participant's account balances in the Plan and the Universal Foods Retirement Employee Stock Ownership Plan as of the applicable Valuation Date which are invested in the fixed income fund established under such plans. The Participant may elect any of the following percentages for diversification based on age: Participant's Age Diversification Percentage 15 19 Under 35 None 35-49 None or 25% 50-59 None, 25% or 50% 60 and over None, 25%, 50% or 75% In the event an election results in a negative number, that amount shall be transferred out of the fixed income fund and invested in UFC Stock. For all purposes of this Section, diversification into the fixed income fund shall first apply to the account balance under the Plan. (d) An election under this Section may be made as of the day following any Valuation Date by filing the form prescribed for such purpose by the Benefits Administrative Committee by the date required by such Committee. To the extent determined by the Benefits Administrative Committee, a separate diversification election shall be provided with respect to the allocation under Section 4.02 for any Plan Year with such effective date as may be determined by said Committee. (e) Effective September 8, 1998, the Plan shall be amended to satisfy the requirements for diversification under Code Section 401(a)(28). Section 5.11. Withholding/Rollover Rules. (a) This section applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this section, a distributee may elect, at the time and in the manner prescribed by the Administrative Committee, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover as such terms are defined herein. (b) An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent that such distribution is required under Section 401(a)(9) of the Code; and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (c) An eligible retirement plan is an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, or a qualified trust described in Section 401(a) of the Code, that accepts the distributee's eligible rollover 16 20 distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. (d) A distributee includes an employee or former employee. In addition, the employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, are distributees with regard to the interest of the spouse or former spouse. (e) A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee. 17 21 ARTICLE VI. ADMINISTRATION Section 6.01. Allocation of Responsibility Among Fiduciaries for Plan and Trust Administration. The Finance Committee, Benefits Administrative Committee and Trustee shall be "Named Fiduciaries" within the meaning of Section 402(a)(2) of ERISA. The Named Fiduciaries shall have only those specific powers, duties, responsibilities and obligations as are specifically given them under this Plan or the trust agreement. In general, the Finance Committee shall have the sole authority to appoint and remove the members of the Benefits Administrative Committee and to amend or terminate the Plan in whole or in part. The Benefits Administrative Committee shall have the responsibility for the administration of this Plan, which responsibility is specifically described in this Plan. The Trustee shall have the sole responsibility for the administration of the Trust and the management of the assets held thereunder, except to the extent such responsibility is delegated to any investment managers in accordance with such trust agreement. Each Named Fiduciary may rely upon any direction, information or action of any other Named Fiduciary as being proper, and is not required to inquire into the propriety of any such direction, information or action. It is intended under this Plan that each Named Fiduciary shall be responsible for the proper exercise of its own powers, duties, responsibilities and obligations under this Plan and shall not be responsible for any act or failure to act of another Named Fiduciary. An individual may serve in more than one fiduciary capacity hereunder. Section 6.02. Appointment and Authority of Benefits Administrative Committee. (a) The general responsibility for carrying out the provisions of the Plan shall be placed in the Benefits Administrative Committee which shall be comprised of not less than three (3) employees of the Employers or any Affiliate thereof appointed from time to time by the Finance Committee. The Benefits Administrative Committee may appoint from its number such officers and/or subcommittees with such powers as it shall determine and may authorize one or more of its number or any agent to execute or deliver any instrument or make any payment on its behalf. The Benefits Administrative Committee may designate and allocate any fiduciary responsibility to one or more of its members or to any other person or persons. It may retain counsel, employ agents and provide for such clerical, accounting and actuarial services as it may require. The foregoing sentence shall in no way affect the duty and obligation of the Benefits Administrative Committee to retain such services in connection with the carrying out of its duties and to designate an independent, qualified public accountant as provided in Section 6.03(b) hereof. (b) The Benefits Administrative Committee shall hold meetings upon such notice, at such place and at such times as it may from time to time determine. A meeting may be held in any manner as may be determined by the Benefits Administrative Committee, but in any event, where all members are not physically present, the actions of the Benefits 18 22 Administrative Committee shall be reduced to writing and sent to all members within ten (10) days of the date of such meeting. (c) A majority of the Benefits Administrative Committee shall constitute a quorum, and any action which the Plan authorizes or requires the Benefits Administrative Committee to take shall require the written approval or the affirmative vote of a majority of its members. (d) Members of the Benefits Administrative Committee shall not be paid any compensation from the assets of the Plan. (e) Subject to the provisions of the Plan, the Benefits Administrative Committee may from time to time establish rules for the transaction of its business. The determination of the Benefits Administrative Committee as to any disputed question pertaining to the Plan shall be conclusive. (f) Any member of the Benefits Administrative Committee may resign by delivering his written resignation to the Finance Committee. Any member of the Benefits Administrative Committee may be removed by the Finance Committee, and such removal shall be effective at such time as is provided for by the Finance Committee. Notice of such removal shall be conveyed to the member so removed in the manner provided by the Finance Committee. (g) In addition, the Benefits Administrative Committee shall have the following specific duties and authority under the Plan: (i) To determine a funding policy in accordance with Section 3.03 herein; (ii) To exercise the discretionary authority to determine eligibility for benefits and to construe the terms of the Plan; any such determination or construction shall be final and binding on all parties unless arbitrary and capricious; (iii) To prescribe and require the use of appropriate forms; (iv) To formulate, issue and apply rules and regulations; (v) To make appropriate determinations and calculations; (vi) To authorize and direct benefit payments; and 19 23 (vii) To prepare and file reports, notices, and any other documents relating to the Plan which may be required by law. The Benefits Administrative Committee shall exercise any authority allocated hereunder in any manner consistent with ERISA and the applicable provisions of the Plan. Section 6.03. Use of Professional Services. (a) The Benefits Administrative Committee may allocate fiduciary duties to any other person or persons. The Benefits Administrative Committee may employ agents, provide for clerical services as required and, subject to the approval of the Finance Committee, retain counsel. (b) The Benefits Administrative Committee shall, subject to the approval of the Finance Committee, engage an independent, qualified public accountant who shall audit the Plan and its assets in compliance with ERISA (and if the Benefits Administrative Committee so elects, subject to the approval of the Finance Committee, remove and appoint another such accountant). Section 6.04. Fees and Expenses. Where the Benefits Administrative Committee utilizes services as provided in Section 6.03 hereof, the Benefits Administrative Committee shall review the fees and other costs for these services and shall authorize the payment of such fees and costs. Such fees and costs and other expenses incurred or authorized by the Benefits Administrative Committee shall be paid by the Employers or from the Plan assets as determined by the Benefits Administrative Committee. Section 6.05. Claims Procedure. A Participant or Beneficiary may file with the Benefits Administrative Committee a claim with respect to the Plan. Any such claim shall be filed in writing stating the nature of the claim, the facts supporting the claim, the amount claimed and the name and address of the claimant. The Benefits Administrative Committee, within ninety (90) days (or one hundred eighty (180) days if special circumstances require an extension of time for processing the claim and the Benefits Administrative Committee notifies the claimant of such extension prior to ninety (90 days from the date of the initial filing of the claim) after receipt of the notice, shall render a written decision on the claim. If the claim shall be denied, either in whole or in part, the decision shall include the specific reason or reasons for the denial; specific reference to the pertinent Plan provision or provisions which is the basis for the denial; a description of any additional material or information necessary for the claimant to perfect the claim and an explanation why the information or material is necessary; and appropriate information as to the steps to be taken if the Participant or Beneficiary wishes to appeal the Benefits Administrative Committee's decision. The claimant may file with the Benefits Administrative Committee, within sixty (60) days after receiving such notification, a written notice of request for review of the Benefits Administrative Committee's decision. The 20 24 review shall be made by the Benefits Administrative Committee. The written notice of appeal should contain (i) a statement of the ground(s) for the appeal, (ii) a specific reference to the pertinent Plan provision or provisions on which the appeal is based, (iii) a statement of the argument(s) and authority (if any) supporting each ground for the appeal, and (iv) any other pertinent documents or comments which the claimant desires to submit in support of the appeal. The Benefits Administrative Committee shall render a written decision on the claim which shall include the specific reasons for the decision and a reference to the pertinent Plan provisions on which the decision was based within sixty (60) days (or one hundred twenty (120) days if special circumstances require an extension of time for processing the claim and the Benefits Administrative Committee notifies the claimant of such extension prior to sixty (60) days from the date of the initial filing of the claim) after receipt of the documents requested for review. A copy of the Benefits Administrative Committee's decision shall be mailed promptly to the claimant. If a Participant or Beneficiary shall not file written notice with the Benefits Administrative Committee at the times set forth above, the Participant or Beneficiary shall have waived all benefits other than as set forth in the notice from the Benefits Administrative Committee. The foregoing claims procedure shall be the only method by which claims of Participants, former Participants or Beneficiaries shall be decided under this Plan. Oral communications by potential claimants to the Benefits Administrative Committee shall have no force and effect hereunder. Section 6.06. Trustee's Responsibilities. The duties, authority and responsibility of any Trustee or other person handling all or any part of the Plan assets shall include and be limited to the duties, authority and responsibility expressly set forth in a written agreement between the Company and any such Trustee or other person. Section 6.07. Fiduciary Insurance and Indemnification. The Company or any Affiliate shall maintain and keep in force such insurance as the Benefits Administrative Committee shall determine to insure and protect the directors, officers, employees of the Company or any Affiliate thereof and any appropriately authorized delegates or appointees of them against any and all claims, damages, liability, loss, cost or expense (including attorneys' fees) arising out of or resulting from (including failure to act with respect to) any responsibility, duty, function or activity of any such person in relation to the Plan, including without limitation, the members of the Benefits Administrative Committee and directors, officers and employees of the Employers or any subsidiary or Affiliate thereof performing responsibilities, duties, functions, and/or actions at the direction or under the authority of any of the foregoing. In lieu of and/or as a supplement and in addition to the insurance referred to in the foregoing sentence, the Affiliates shall indemnify and hold harmless their directors, officers and employees against any and all claims, damages, liability, loss, cost or expense 21 25 (including attorneys' fees) arising out of or resulting from (including failure to act with respect to) any responsibility, duty, function or activity of any such person in relation to the Plan (or trust agreement, if applicable) including without limitation the members of the Benefits Administrative Committee and directors, officers and employees of the Affiliates performing responsibilities, duties, functions and/or actions at the direction or under the authority of any of the foregoing; provided, however, that no such indemnification shall extend to any matter as to which it shall have been adjudged by any court of competent jurisdiction that such person or persons have acted in bad faith or were guilty of gross negligence in the performance of any duties hereunder unless such Court shall, in view of all the circumstances of the case, determine that such person or persons are fairly and reasonably entitled to indemnification. Section 6.08. Agent for Service of Process. The Chairman of the Benefits Administrative Committee is hereby designated as the agent for service of legal process with respect to all matters pertaining to the Plan. Section 6.09. Allocation of Fiduciary Responsibility. This Article VI provides for "Named Fiduciaries" as required by Section 402(a)(1) of ERISA and a procedure for the allocation of responsibilities as required by Section 402(b)(2) of ERISA. If the Finance Committee or Benefits Administrative Committee allocates responsibility as herein provided, such Named Fiduciaries shall not be responsible for the actions of the person(s) to whom the responsibility is allocated except as provided in Section 405(c)(2) of ERISA. Section 6.10. Liability for Breach of Co-Fiduciary. The members of the Finance Committee and the Benefits Administrative Committee shall not be liable for the acts of commission or omission of another fiduciary unless (i) such member knowingly participated or knowingly attempted to conceal the act or omission of another fiduciary and he knew the act or omission was a breach of fiduciary responsibility by the other fiduciary; or (ii) such member has knowledge of a breach by the other fiduciary and shall not make reasonable efforts to remedy the breach; or (iii) such member's breach of the member's own fiduciary responsibility permitted the other fiduciary to commit a breach. Section 6.11. Communications. All requests, appeals, elections and other communications to the Benefits Administrative Committee shall be in writing and shall be by transmitting the same via the U.S. Mail, certified, return receipt requested, addressed as follows: Universal Foods Corporation 433 East Michigan Street Milwaukee, Wisconsin 53202 Attention: Chairman, Benefits Administrative Committee Universal Foods Transition Retirement Plan 22 26 ARTICLE VII. TRUSTEE AND TRUST FUND Section 7.01. Trustee and Trust Fund. The powers and duties of the Trustee with respect to the Plan and Trust Fund are set forth in the Trust. Section 7.02. Investment of Trust Fund. All Employer contributions made to the Trust Fund pursuant to this Plan shall be paid to the Trustee and, except as may otherwise be provided in the Trust, shall be held, invested and reinvested by the Trustee without distinction between principal and income, in such securities or in such other property, real or personal, wherever situated, as the Trustee shall deem advisable, including, but not limited to, shares of stock, common or preferred, whether or not listed on any exchange (including, without limitation, shares of UFC Stock), participations in mutual investment funds, bonds and mortgages, and other evidences of indebtedness or ownership, and participations in any common trust fund established or maintained by the Trustee for the collective investment of fiduciary funds and shall not be limited by any state statute or judicial decision prescribing or limiting investments appropriate for trustees; provided, however, that the Trustee shall not purchase Stock if, as a result of such purchase, the aggregate fair market value of all shares of UFC Stock held in the Trust Fund would exceed ten percent (10%) of the fair market value of all Trust Fund assets. Section 7.03. Acquisition of UFC Stock. It is intended that the Trustee qualify as an "agent independent of the issuer" within the meaning of Rule 10b-18 under the Securities Exchange Act of 1934, as amended, and accordingly neither the Company nor any Affiliate of the Company may exercise any direct or indirect control or influence over the times when, or the prices at which, the Trustee purchases shares of UFC Stock in the market, the amounts to be purchased, the manner in which the shares are to be purchased, or the selection of a broker or dealer through which purchases are executed. Purchases will not be made for the purpose of creating actual or apparent active trading in, or raising the price of, UFC Stock. Any such investment and reinvestment shall meet the applicable provisions of ERISA and the Code. 23 27 ARTICLE VIII. AMENDMENT AND TERMINATION Section 8.01. Amendment. The Company shall have the right, by action of the Finance Committee, to modify, alter or amend the Plan at any time and in any manner which does not cause any part of the Plan to be used for, or diverted to, any purpose other than the exclusive benefit of the Participants or Beneficiaries. Notwithstanding the foregoing, no amendment to the Plan shall decrease a Participant's accrued benefit or vested percentage or eliminate an optional form of distribution for a previously accrued benefit. Section 8.02. Termination. The Company shall have the right to terminate the Plan, in whole or in part, by action of the Finance Committee. An Employer may terminate its participation in the Plan by action of its board of directors. In the event of any termination, partial termination or permanent discontinuance of Employer contributions, the account balances of Participants affected by such action shall be fully vested and nonforfeitable. Section 8.03. Non-Reversion of Assets. In no event shall the Employers receive any amount from the Plan, except that, (i) to the extent that any contributions hereunder are made by a mistake of fact, such amount may, at the request of the Benefits Administrative Committee, be returned within one (1) year after it is made, (ii) all contributions hereto being hereby expressly conditioned on the deductibility of the contribution under Code Section 404, and to the extent such deduction is disallowed it may, at the request of the Benefits Administrative Committee, be returned within one (1) year after the disallowance of such deduction, and (iii) amounts may be returned pursuant to Section 4.04(c)(iv) hereof. 24 28 ARTICLE IX. GENERAL PROVISIONS Section 9.01. Participants to Furnish Information. Each Participant entitled to benefits under the Plan shall furnish to the Benefits Administrative Committee such evidence, data or information as the Benefits Administrative Committee considers necessary or desirable in order to administer the Plan properly. Section 9.02. Non-Guarantee of Employment or Other Benefits. Neither the establishment of the Plan, nor any modification or amendment hereof, nor the payment of benefits hereunder shall be construed as giving any Participant or other person whomsoever any legal or equitable right against the Employers, the Finance Committee, the Benefits Administrative Committee, the Benefits Investment Committee, or their respective members or the Trustee, or the right to payment of any benefits hereunder (unless the same shall be specifically provided herein) or as giving any Employee the right to be retained in the service of the Employers or the Affiliates. Section 9.03. Mergers, Consolidations and Transfers of Plan Assets. In the case of any merger, consolidation with, or transfer of assets or liabilities to any other plan, each Participant must be entitled (if the Plan then terminated) to receive a benefit immediately after the merger, consolidation, or transfer which is equal to or greater than the benefit the Participant would have been entitled to receive immediately before the merger, consolidation, or transfer (if the Plan then terminated) pursuant to the requirements of ERISA and the Code. Section 9.04. Spendthrift Clause. No Participant, former Participant or Beneficiary entitled to benefits hereunder shall have the right to transfer, assign, alienate, anticipate, pledge or encumber any part of such benefits, nor shall such benefits, or any part of the Plan assets or any contract from which such benefits are payable, be subject to seizure by legal process by any creditor of such Participant, former Participant or Beneficiary. In the event that such Participant or other person entitled to such benefits, or such creditor thereof, shall attempt to effect a division as hereinabove described, of any such benefit, the Plan may pay over to or apply on the behalf of such Participant, former Participant or Beneficiary, all or any part of such benefits to which such person would otherwise have been entitled hereunder. Notwithstanding the foregoing, the Trustee may recognize a qualified domestic relations order with respect to child support, alimony payments or marital property rights if such order contains sufficient information for the Benefits Administrative Committee to determine that it meets the applicable requirements of Section 414(p) of the Code. Such an order may permit distribution to an alternate payee prior to the time a Participant would be eligible for benefits hereunder. The Benefits Administrative Committee shall establish written procedures concerning the notification of interested parties and the determination of the validity of such orders. 25 29 Section 9.05. Exclusive Benefit. All contributions made under the Plan shall be paid to the Trust, and all property and funds of the Trust allocable to the Plan, including income from investments and from all other sources, shall be managed solely in the interest of Participants and Beneficiaries and for the exclusive purpose of: (i) providing benefits to Participants and Beneficiaries; and (ii) defraying reasonable expenses of administering the Plan. Section 9.06. Successors and Assigns. The Plan shall be binding upon the successors and assigns of the Employers. Section 9.07. Top-Heavy Restrictions. (a) Notwithstanding any provision to the contrary herein, in accordance with Code Section 416, if the Plan is a top-heavy plan for any Plan Year, then the provisions of this Section shall be applicable. The Plan is "top-heavy" for a Plan Year if as of its "determination date" (i.e., the last day of the preceding Plan Year or the last day of the Plan's first Plan Year, whichever is applicable), the total present value of the accrued benefits of key employees (as defined in Code Section 416(i)(1) and applicable regulations) exceeds sixty percent (60%) of the total present value of the accrued benefits of all employees under the Plan (excluding those of former key employees) (as such amounts are computed pursuant to Section 416(g) and applicable regulations using a five percent (5%) interest assumption and a 1971 GAM mortality assumption) unless such plan can be aggregated with other plans maintained by the applicable controlled group in either a permissive or required aggregation group and such group as a whole is not top-heavy. In addition, a plan is top-heavy if it is part of a required aggregation group which is top-heavy. Any plan of a controlled group may be included in a permissive aggregation group as long as together they satisfy the Code Section 401(a)(4) and 410 discrimination requirements. Plans of a controlled group which must be included in a required aggregation group (including any terminated plans) include any plan in which a key employee participates and any plan which enables such a plan to meet the Section 401(a)(4) or 410 discrimination requirements. The present values of aggregated plans are determined separately as of each plan's determination date and the results aggregated for the determination dates which fall in the same calendar year. A "controlled group" for purposes of this Section includes any group employers aggregated pursuant to Code Section 414(b), (c) or (m). The calculation of the present value shall be done as of a valuation date which for a defined contribution plan is the determination date and for a defined benefit plan is the date as of which funding calculations are generally made within the twelve month period ending on the determination date. Solely for the purpose of determining if the Plan, or any other plan included in a required aggregation group of which this Plan is a part, is top-heavy (within the meaning of Section 416(g) of the Code) the accrued benefit of an employee other than a key employee (within the meaning of Section 416(i)(1) of the Code) shall be determined under (i) the method, if any, that uniformly applies for accrual purposes under 26 30 all plans maintained by the Affiliates, or (ii) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional accrual rate of Section 411 (b)(1)(C) of the Code. (b) If the Plan is top-heavy in a Plan Year, nonkey employee participants who have not separated from service at the end of such Plan Year will receive allocations of Employer contributions and forfeitures under this Plan and/or the Universal Foods Retirement Employee Stock Ownership Plan at least equal to five percent (5%) of compensation (as defined in Code Section 415) for such year. (c) If the controlled group maintains a defined benefit plan and a defined contribution plan which both cover one or more of the same key employees, and if such plans are top-heavy, then the limitation of this Plan with respect to the Code Section 415(e) maximum benefit limitations shall be amended to refer to a 1.0 adjustment on the dollar limitation rather than a 1.25 adjustment. This provision shall not apply if the Plan is not "super top-heavy" and if the minimum benefit requirements of this Section are met when five percent (5%) is changed to seven and one-half percent (7.5%) for each year such plan is top-heavy. A plan is "super top-heavy" if the ratio referred to in subsection (a) above results in a percentage in excess of ninety percent (90%) rather than a percentage in excess of sixty percent (60%). (d) If the Plan is top-heavy in a Plan Year, the vesting schedule shall automatically be amended for any employee employed on the first day of such year or thereafter so that the vested percentage for employer-derived benefits is equal to the greater of the vesting provided under other provisions of the Plan or the following schedule:
Years of Service Nonforfeitable Percentage 1 0% 2 20% 3 40% 4 60% 5 80% 6 or more 100%
where "years of service" means the years credited for vesting purposes under the Plan or, if greater, the years required to be counted under Code Section 411 and applicable regulations thereto. If the Plan thereafter ceases to be top-heavy for a Plan Year, the vesting schedule above shall be disregarded and the original schedule applied, except with respect to any Participant with five (5) or more years of service and except that no Participant's vested percentage as of the end of the prior year shall be decreased. Any non-vested Participant who acquires a vested interest in the employer-derived benefit by operation of the 27 31 amended vesting schedule shall not be subject thereafter to a cancellation of service. Notwithstanding anything in this Section to the contrary, the amendment of the vesting schedule pursuant to this subsection shall not affect the calculation of benefit amounts or the determination of benefit commencement dates hereunder. 28 32 AMENDMENT NO. 1 TO THE UNIVERSAL FOODS CORPORATION TRANSITION RETIREMENT PLAN The Universal Foods Corporation Transition Retirement Plan ("the Plan") is hereby amended, effective as of September 10, 1998, as set forth below: 1. Section 5.08(a) of the Plan is amended to read in its entirety as follows: Section 5.08. Change of Control. (a) For purposes of this Section, the term change of control of the Company means: (i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (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 of common stock of the Company (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"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (1) any acquisition 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 corporation controlled by the Company or (4) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section; or (ii) individuals who, as of September 10, 1998, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to September 10, 1998 whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or 33 (iii) consummation by the Company 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 assets of another entity (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such business combination beneficially own, directly or indirectly, more than 50% of, respectively, the then 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 Business Combination (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) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or of such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board, providing for such Business Combination; or (iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. EX-13.1 26 PORTIONS OF 1998 ANNUAL REPORT 1 EXHIBIT 13.1 BUSINESS PROFILE UNIVERSAL FOODS CORPORATION IS AN INDUSTRIAL MARKETER OF HIGH-PERFORMANCE COLORS, FLAVORS, FLAVOR ENHANCERS, YEAST AND DEHYDRATED PRODUCTS. OUR OUTSTANDING PRODUCTS ADD FUNCTIONALITY TO FOODS, BEVERAGES, COSMETICS, PHARMACEUTICALS AND A VARIETY OF OTHER PRODUCTS. OUR TECHNICAL EXPERTISE AND APPLICATION KNOW-HOW SET US APART FROM OTHER SUPPLIERS SERVING THESE INDUSTRIES. [PIE CHART] FISCAL 1998 REVENUE BY DIVISION Flavor 39% Color 22% Yeast 18% Dehydrated 16% Asia Pacific 5%
Color Operates as: Warner-Jenkinson Company [BAR CHART] Revenue (in millions) 94 $143 95 $149 96 $159 97 $192 98 $195
BUSINESS We are the world's leading supplier of synthetic food colors, with a growing share of the international market for natural colors, specialty inks and cosmetic colors. Skilled chemists and color technicians provide customers with outstanding technical support in the development of high-performance colors and color systems that meet specific application requirements and performance characteristics. PRODUCTS Natural and synthetic colors and color systems for beverages, baked goods, confectioneries, dairy products, pharmaceuticals, cosmetics, personal care products, inks for ink-jet printers, and a variety of other applications. 1998 REVIEW Gross profit and operating income were up significantly due to an improved sales mix and greater manufacturing efficiencies. Sales of lakes, dispersions and cosmetic pigments grew as we emphasized our more technically sophisticated products. OUTLOOK/OPPORTUNITIES The competitive outlook remains favorable with increased demand for our specialized products. We continue to excel in our ability to provide superior technical support and service. Our focus remains on new products and applications in faster growing markets. ESTIMATED WORLD MARKET $2.8 billion CUSTOMERS PERCENT OF REVENUE Food Processors 70% Cosmetics Mfgrs./ Pharmaceutical Companies/Ink-Jet Printer Mgrs. 30% Dehydrated Products Operates as: Rogers Foods (U.S.) & Universal Dehydrates (Europe) [BAR CHART] Revenue (in millions) 94 $ 85 95 $117 96 $132 97 $135 98 $147
BUSINESS We are a leader in the U.S. production of dehydrated onion and garlic products, and the number one supplier of dehydrated vegetables in Europe. State-of-the-art dehydration technology, extensive plant breeding and seed development programs, and comprehensive crop management techniques produce consistent, top-quality dehydrated products. PRODUCTS Dehydrated onion, garlic, chili pepper, paprika, parsley, celery, spinach and other vegetables for use as ingredients by food manufacturers and sale under private labels to the retail market and food service industry. 1998 REVIEW Total sales grew faster than the overall market with record volumes in chili, onion and garlic products. Operating income increased as investments in operations and process improvements resulted in greater efficiencies and yields. OUTLOOK/OPPORTUNITIES Capacity and yields at our European operations are improving as we continue to transfer our dehydration and field management expertise to these locations. The focus remains on broadening our customer base and gaining additional market share. ESTIMATED WORLD MARKET $1.2 BILLION [PIE CHART] CUSTOMERS PERCENT OF REVENUE Food Processors 54% Spice Blenders 29% Repackers 9% Distributors/Retail 8%
4 2 Flavor Operates as: Universal Flavors [BAR CHART] Revenue* (in millions) 94 $300 95 $371 96 $359 97 $321 98 $347
*includes revenue of combined Flavor and BioProducts divisions BUSINESS We are a leading manufacturer of flavors, flavor enhancers and flavor systems for the beverage, food and dairy industries. Flavor chemists and application technologists work closely with customers in the development of innovative products designed to meet the unique requirements of each application. PRODUCTS Flavors and ingredient systems for dairy, food and beverage products; specialty extracts from yeast, vegetable proteins, meat, milk protein and other natural products which are used primarily in savory flavors, texture modifiers and flavor enhancers in processed foods; and aroma chemicals and fragrances for personal care and household products. 1998 REVIEW Operating income increased sharply as we reduced costs and improved manufacturing efficiencies. The successful consolidation of the BioProducts business into the Flavor division resulted in lower costs and increased sales of our fully integrated line of flavor products. Two new technical development centers were completed and are now providing expanded service in customer applications. OUTLOOK/OPPORTUNITIES Recent acquisitions have strengthened our savory flavor business and improved our competitive position as we expand into new geographic markets. Improvements in technical capabilities and operations following the merger of BioProducts and Flavor will continue to have a positive impact on future performance. ESTIMATED WORLD MARKET $15 BILLION [PIE CHART] CUSTOMERS PERCENT OF REVENUE Food Processors 44% Dairy Product Companies 30% Beverage Companies 18% Other 8%
Yeast Operates as: Red Star Yeast & Products [BAR CHART] Revenue (in millions) 94 $163 95 $155 96 $156 97 $159 98 $164
BUSINESS We are the largest North American supplier of yeast to the commercial bakery market. Our outstanding reputation is built on our reliable production and delivery of consistent, high-quality yeast products for the commercial and retail markets. PRODUCTS A diversified line of yeast products including compressed, cream and active dry yeast for commercial and retail applications, such as bakery goods, pizza, frozen dough, prepared bread machine mixes and wine making. Yeast derivatives, vegetable hydrolysates and other bionutrients are produced for dairy starter cultures, pharmaceuticals, bioremediation and other applications in biotechnology. 1998 REVIEW Sales volumes of cream yeast increased as U.S. commercial baking companies continued to shift to cream yeast systems. Consolidation of manufacturing operations and improvements in our distribution system reduced costs and improved customer service. OUTLOOK/OPPORTUNITIES We will continue to gain market share as we convert major commercial baking customers to cream yeast systems. Programs are being implemented to strengthen our position in the retail yeast market. Our bionutrient product line of yeast and other protein derivatives offers additional opportunities for growth. ESTIMATED WORLD MARKET $2.3 BILLION [PIE CHART] CUSTOMERS PERCENT OF REVENUE Commercial Baking Companies 82% Individual Consumers 13% Other 5%
Asia Pacific Operates as: Universal Foods Corporation (Asia Pacific) [BAR CHART] Revenue (in millions) 94 - 95 - 96 - 97 $44 98 $43
BUSINESS The Asia Pacific division was established in fiscal 1997 to focus on marketing the company's diverse product line under one unified name. Through this division, we offer a wide range of products from our other divisions, as well as unique products developed by regional technical teams to satisfy local tastes and preferences. PRODUCTS Natural and synthetic colors and color systems for beverages, pharmaceuticals, confectioneries and cosmetics; flavors for carbonated and still beverages, ice cream, yogurt and flavored milk products; savory flavors for instant noodles and snack foods; and dehydrated products for a variety of food items. 1998 REVIEW Gross profit and operating income declined from the prior year due to the economic problems in Asia. Steps have been taken to reduce costs and carefully control expenses as we continue to position our company as a reliable, key supplier in the region. OUTLOOK/OPPORTUNITIES Despite near-term uncertainty, we remain committed to this strategically important geographic market. Opportunities for our products on a long-term basis continue to be outstanding. ESTIMATED REGIONAL MARKET $4 billion 5 3 Management's Analysis of operations and financial condition [ Years ended September 30, 1998, 1997 and 1996 ] Results of Operations Net earnings for 1998 were $72.6 million, or $1.40 per share diluted, compared with $64.7 million, or $1.26 per share diluted, for 1997 and $44.2 million, or $.85 per share diluted, for 1996. The 1996 earnings include pretax charges from unusual items of $25.0 million ($16.7 million after tax, or $.32 per share). Excluding unusual items, diluted net earnings per share increased 11.1% in 1998 and 7.7% in 1997. Revenue for 1998 increased to $856.8 million from $825.7 million in 1997 and $806.4 million in 1996. The Dehydrated Products and Flavor divisions reported strong revenue growth in 1998. Dehydrated revenue reflects strong volume increases in the U.S. business. Flavor division revenue includes modest gains in the U.S. and solid gains in the international business which benefited from 1998 acquisitions. Color and Red Star Yeast & Products reported modest revenue gains in 1998, while revenue for Asia Pacific was slightly lower than the prior year. In 1997, the Color and Dehydrated Products divisions reported solid revenue growth. Red Star Yeast & Products division revenue was flat reflecting the impact of customers moving to cream yeast, which reduces both revenue and product cost. Flavor division revenue declined in 1997 primarily from continued weakness in the dairy segment and slack demand for beef products in the U.K. [CHART] Net Earnings (in millions) (excluding unusual items) 94 $58.5 95 $56.9 96 $60.9 97 $64.7 98 $72.6
Revenue generated outside the United States, including exports, increased to 41% of revenue from 40% in 1997. Approximately 57% of 1998 and 1997 foreign revenue is derived from Europe. The Company also generates foreign revenue in Canada, Mexico and the Pacific Rim. Changes in foreign currency rates had no material effect on revenue and expenses in 1998, and management currently expects no significant impact from foreign currency rate changes in 1999. The cost of products sold was 64.9% of revenue in 1998, 66.7% in 1997 and 66.1% in 1996. The decrease of cost of products sold as a percent of revenue in 1998 reflects lower raw material costs in the Color and Red Star Yeast & Products divisions, combined with customers continuing to move to more sophisticated proprietary products. The increase of product costs in 1997 resulted primarily from decreased margins in the Flavor business, as market weakness in North America negatively impacted both pricing and capacity utilization. Selling and administrative expenses in 1998 increased 2.7% to $171.9 million from $167.4 million in 1997 and $164.2 million in 1996. Selling and administrative expenses were 20.1% of revenue in 1998, 20.3% in 1997, and 20.4% in 1996. Included in 1997 selling and administrative expenses are $7.5 million of integration expenses for the cost of combining the Company's BioProducts and Flavor divisions. Operating income increased $21.7 million in 1998 to $128.9 million from $107.2 million in 1997. Operating income was $83.9 million in 1996. All divisions, except Asia Pacific, reported strong operating income increases in 1998. The Flavor division's results were favorably impacted by acquisitions and savings from the BioProducts consolidation. Operating income in 1997 includes strong gains by the Color and Dehydrated Products divisions, reduced by $7.5 million of integration expenses. Color division results include Tricon Colors, Inc., which was acquired in the second quarter of 1997. Operating income in 1996 was reduced by unusual items which included a $20 million non-cash charge in adopting Statement of Financial Accounting Standards No. 121 (SFAS No. 121), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." The Company also recorded a $5 million restructuring charge in 1996 to address opportunities to streamline its production base, improve efficiency and reduce operating costs. The effective income tax rate was 32.5% in 1998, 28.5% in 1997 and 35.6% in 1996. The lower effective tax rates in 1998 and 1997 reflect settlements of prior years' issues and other items. Excluding the effect of these items, the effective tax rate would have been approximately 34.0% in 1998 and 1997. 13 4 Management's Analysis of operations and financial condition [ Years ended September 30, 1998, 1997 and 1996] Liquidity and Financial Position Cash provided by operating activities was $94.1 million in 1998, $93.7 million in 1997 and $92.0 million in 1996. The 1998 and 1997 amounts include increases in net earnings and depreciation, offset by an increase in net operating assets. Cash used for investing activities increased to $133.9 million in 1998 from $129.3 million in 1997 and $61.6 million in 1996. Cash used for acquisitions was $68.7 million in 1998 and $50.5 million in 1997. Capital expenditures totaled $66.1 million in 1998 and $73.5 million in 1997. Both years reflect expenditures for productivity improvements and plant expansions. In addition, the Flavor division completed construction of two technical centers in 1998. In 1999, capital expenditures are estimated to be between $65 million and $75 million; depreciation expense should approximate $45 million. [CHART] Foreign Revenue (in millions) 94 $232 95 $313 96 $325 97 $330 98 $347
Financing activities provided cash of $39.6 million in 1998 and $35.6 million in 1997. During 1998 and 1997 the Company repurchased 964,396 and 285,200 shares of treasury stock at a cost of $21.8 million and $5.8 million, respectively. Net additional borrowings were $75.0 million in 1998 compared to $59.8 million in 1997. The majority of the 1998 and 1997 borrowings were used to finance acquisitions. On November 9, 1998, the Company filed a shelf registration statement with the Securities and Exchange Commission pursuant to which the Company may from time to time issue debt securities of up to $300 million in the aggregate. The Company uses debt financing to lower its overall cost of capital, which increases the return to shareholders. The Company maintains debt levels considered prudent based on its cash flows, interest coverage and percentage of total debt to total capital. The Company has paid uninterrupted quarterly cash dividends since commencing public trading in its stock over thirty-five years ago. In 1998, dividends paid per share were $.53, up 1.9% from $.52 in 1997, which was an increase of 4.0% over 1996. The impact of inflation on both the Company's financial position and results of operations has been minimal and is not expected to adversely affect 1999 results. The Company's financial position continues to remain strong, enabling it to meet cash requirements for operations, capital expansion programs and dividends to shareholders. Market Risk Factors The Company is exposed to market risk, including changes in interest rates, currency exchange rates and commodity prices. To manage the volatility relating to these exposures on a consolidated basis, the Company nets the exposures to take advantage of natural offsets and enters into various derivative transactions for some of the remaining exposures pursuant to the Company's policies covering hedging practices. The financial impacts of these hedging instruments are offset by corresponding changes in the underlying exposures being hedged. The Company does not hold or issue derivative financial instruments for trading purposes. Note 1 to the consolidated financial statements includes a discussion of the Company's accounting policies for financial instruments. The Company manufactures and sells its products in a number of countries throughout the world and, as a result, is exposed to movements in foreign currency exchange rates. The major foreign currency exposures involve the markets in Western Europe, Mexico and Canada. The primary purpose of the Company's foreign currency hedging activities is to protect against the volatility associated with foreign currency sales, purchases of materials and other assets and liabilities created in the normal course of business. The Company utilizes forward exchange contracts with durations of generally less than 12 months. In addition, the Company enters into forward exchange contracts and foreign currency swaps to hedge intercompany financing transactions and foreign source income. 14 5 At September 30, 1998, unrealized gains and losses on outstanding foreign currency contracts are not material. As of September 30, 1998, the potential gain or loss in the fair value of the Company's outstanding foreign currency contracts, assuming a hypothetical 10% fluctuation in the currencies of such contracts, would be approximately $8.4 million. However, it should be noted that any change in the value of the contracts, real or hypothetical, would be significantly offset by an inverse change in the value of the underlying hedged items. In addition, this hypothetical calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar. The Company manages its debt structure and interest-rate risk through the use of fixed- and floating-rate debt and through the use of derivatives. The Company uses interest-rate swaps to hedge its exposure to interest rate changes, and also to lower its financing costs. Generally under these swaps, the Company agrees with a counterparty to exchange the difference between fixed-rate and floating-rate interest amounts based on an agreed notional principal amount. The Company's primary exposure is to U.S. interest rates. As of September 30, 1998, unrealized gains and losses related to interest rate swap agreements were not material nor would they have been material given a hypothetical 10% fluctuation in market interest rates. [CHART] Operating Margins (excluding unusual items) 94 11.7% 95 13.0% 96 13.5% 97 13.0% 98 15.0%
The Company is the purchaser of certain commodities such as corn, soybean meal and fruits. The Company generally purchases these commodities based upon market prices that are established with the vendor as part of the purchase process. In general, the Company does not use commodity financial instruments to hedge commodity prices due to a high correlation between the commodity cost and the ultimate selling price of the product. On occasion, the Company may enter into non-cancelable contracts, as deemed appropriate, to reduce the effect of price fluctuations on some future manufacturing requirements. Year 2000 The "Year 2000" ("Y2K") issue affects installed computer systems, network elements, software applications, and other business systems that have time sensitive programs that may not properly reflect or recognize the year 2000. Because many computers and computer applications define dates by the last two digits of the year, "00" may not be properly identified as the year 2000. This error could result in miscalculations or system errors. The Y2K issue may also affect the systems and applications of customers and vendors which could have an impact on the Company's ability to address Y2K. The Company has developed a comprehensive Project Plan ("the Plan") for addressing the Y2K issue. The Plan includes the following components: 1) vendor and systems surveys, including assessments of Company systems, applications and business-critical third-party systems; 2) development of action plans for compliance; 3) implementation of action plans; 4) application testing; 5) creation of Y2K rollover and disaster plans; 6) implementation of the Y2K rollover and disaster plans; and 7) post-Y2K strategies. To date, key financial, information and operational systems, including equipment with embedded microprocessors, have been inventoried, assessed and detailed plans are in place for the required system modifications or replacements. Because of the nature of development and implementation of action plans and systems testing, the Company has determined that there is significant overlap between these two phases. As a result, Plan implementation is expected to be substantially complete by July 1999, and testing by the end of September 1999. In addition, rollover and contingency plans to protect the businesses from Y2K issues will be developed and implemented during fiscal 1999. The costs of modifying software and engaging outside consultants has not been and is not expected to be material. During fiscal year 1999, the Company 15 6 Management's Analysis of operations and financial condition [ Years ended September 30, 1990, 1997 and 1996 ] estimates that it will incur capital expenditures of approximately $10.0 million as a result of accelerating the rollout of computer operating systems and replacing non-compliant process control systems in various plants. In addition, the Company estimates that during 1999, approximately 30% of its Information Technology ("IT") personnel will be dedicated to implementation of the Company's Plan. The foregoing allocation of resources is not expected to significantly impact other IT projects as many of the planned and in process projects are normal business system migrations that upgrade and improve the Company's current systems in addition to resolving Y2K issues. Presently, the Company does not expect Y2K issues to have a material effect on the Company's results of operations, liquidity or financial condition. The Company believes its overall risk of noncompliance with Y2K issues is reduced by the decentralized environment of the Company's information systems. The effect, if any, on the Company's results of operations if the Company's customers or its suppliers are not fully Y2K compliant is not reasonably estimable. [CHART] Total Debt to Total Capital 94 37.6% 95 34.3% 96 36.9% 97 41.1% 98 45.7%
Outlook This report contains forward-looking statements that reflect management's current assumptions and estimates of future economic circumstances, industry conditions, Company performance and financial results, and Year 2000 compliance. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for such forward-looking statements. A variety of factors could cause the Company's actual results and experience to differ materially from the anticipated results. These factors and assumptions include the pace and nature of new product introductions by the Company's customers; execution of the Company's acquisition program; industry and economic factors related to the Company's domestic and international business; the timely resolution of the Year 2000 issue by the Company and its customers and suppliers; and the outcome of various productivity-improvement and cost-reduction efforts. Universal Foods Corporation seeks to grow in both its primary market, the food industry, and in non-food markets. Current non-food applications include cosmetics, personal care products, pharmaceuticals, specialty inks and specialty chemicals. The Company believes that the technologies of the Flavor, Color and Yeast divisions continue to provide the greatest opportunities for growth in non-food applications. Within the food industry, the Company expects to increase revenue and profits by targeting key customers and specific applications that will provide the greatest opportunities for growth. The Company has been successful in strengthening relationships with its customers through its superior technical support and service. It views the continuing consolidation of customers within the food industry as an opportunity to be among the select companies to obtain primary supplier agreements. In addition, the Company will continue to develop and market more of its technically sophisticated products that provide higher returns. The Company also expects to increase total revenue through increased sales to customers outside of the United States. The Company continues to seek strategic acquisitions that will strengthen its existing business, enhance its technologies and take it into new product and geographic markets. The Company made four acquisitions during fiscal 1998. The acquisitions of DC Flavours Ltd., Arancia Ingredientes Especiales, S.A. de C.V., and the beverage business of Sundi GmbH expanded the product offerings of the Company's Flavor division and provided immediate access to new geographic markets in Europe, Mexico and South America. The acquisition of Reggiana Antociani S.R.L., strengthened the Company's Color division with important extraction process technology and additional offerings in natural color products. The Company's Asia Pacific division was established in 1997 to provide improved service and technical functions on behalf of the Company's other divisions. With the continued volatility of the Asian economy, the Company implemented a number of cost reduction 16 7 programs during fiscal 1998. Despite near-term uncertainty, the Company is committed to this strategically important geographic market and remains optimistic about the opportunities for its products on a long-term basis. Other Issues ENVIRONMENTAL ISSUES: Universal Foods has a proactive environmental program, which is transforming environmental issues into positive business opportunities to increase productivity and profitability resulting in a competitive advantage for our business. Increased emphasis is being placed on waste minimization to reduce any short and long-term environmental issues. All environmental compliance systems utilize the most cost-effective and innovative technology. These efforts continue on a world-wide basis with increased emphasis on the environmental aspects of European operations. New environmental control systems completed in 1998 include wastewater systems at Midleton, Ireland and Elberg, Netherlands. For fiscal 1999, new environmental systems are planned for facilities in Heverlee, Belgium and Strasbourg, France. [CHART] Capital Expenditures/Depreciation (in millions) 94 $55.1/$31.0 95 $42.6/$28.2 96 $59.0/$29.2 97 $73.5/$32.4 98 $66.1/$38.0
EQUAL OPPORTUNITY POLICY: Universal Foods is an Equal Opportunity Employer. The Company strives to create a working environment free of discrimination and harassment with respect to race, sex, color, national origin, religion, age, disability or Vietnam veteran era status, as well as to make reasonable accommodations in the employment of qualified individuals with disabilities. INDEPENDENT BOARD OF DIRECTORS: A majority of the members of the Company's Board of Directors are independent. Nominees for Board membership are selected to provide a diversity of domestic and international expertise, experience and achievements in general business and food-related fields which allows the Board to most effectively represent the interests of all the Company's shareholders. INDEPENDENT COMMITTEES: The audit, finance, nominating and compensation and development committees of the Board are composed of directors who are not employees of the Company. These committees, as well as the entire Board, consult with and are advised by outside consultants and experts in connection with their deliberations as needed. SCIENTIFIC ADVISORY COMMITTEE: As an advisory committee to the Board, this group reviews research and development programs with respect to the quality and scope of work undertaken, advises the Company on maintaining product leadership through technological innovation, reports on new technological trends and suggests new emphasis for research. EXECUTIVE COMPENSATION: A significant portion of executive compensation is tied to the Company's success in meeting specific performance goals. The overall objectives of this policy are to attract and retain the best possible executive talent, to motivate these executives to achieve the Company's business strategy goals, to link executive and shareholder interest through equity-based plans and to provide a program that recognizes individual contributions. CONFIDENTIAL VOTING: The Company provides for confidential shareholder voting by employing an independent tabulation service. Proxy cards which identify the particular vote of a shareholder are not seen by the Company unless it is necessary to meet legal requirements or a shareholder has made a written comment on the card. 17 8 Consolidated Earnings [ In thousands except per share amounts ]
YEARS ENDED SEPTEMBER 30, 1998 1997 1996 - ------------------------------------------------------------------------------------------------ EARNINGS Revenue $856,772 $ 825,714 $806,352 Cost of products sold 556,048 551,090 533,260 Selling and administrative expenses 171,862 167,390 164,186 Unusual items -- -- 25,000 ------------------------------ Operating income 128,862 107,234 83,906 Interest expense 21,185 16,798 15,266 ------------------------------ Earnings before income taxes 107,677 90,436 68,640 Income taxes 35,033 25,748 24,435 - ------------------------------------------------------------------------------------------------ Net earnings $ 72,644 $ 64,688 $ 44,205 ------------------------------ EARNINGS PER COMMON SHARE - BASIC $ 1.42 $ 1.27 $ .86 ------------------------------ EARNINGS PER COMMON SHARE - DILUTED $ 1.40 $ 1.26 $ .85 ------------------------------ AVERAGE COMMON SHARES OUTSTANDING - BASIC 51,155 51,026 51,597 ------------------------------ AVERAGE COMMON SHARES OUTSTANDING - DILUTED 51,837 51,390 51,936 ------------------------------
See notes to consolidated financial statements. 18 9 Consolidated Balance Sheets [ Dollars in thousands except per share amounts ]
SEPTEMBER 30, 1998 1997 - -------------------------------------------------------------------------------------------------- ASSETS Current Assets: Cash and cash equivalents $ 1,632 $ 1,258 Trade accounts receivable less allowance for losses of $4,548 and $4,034 121,833 117,259 Inventories 197,089 185,552 Prepaid expenses and other current assets 21,436 20,855 Prepaid income taxes 15,765 17,324 -------------------- Total current assets 357,755 342,248 Investments 32,400 26,540 Other assets 28,485 28,653 Intangibles-at cost, less accumulated amortization of $40,533 and $34,312 217,007 181,309 Property, Plant and Equipment: Cost: Land 17,365 16,360 Buildings 138,320 131,299 Machinery and equipment 469,915 388,402 -------------------- 625,600 536,061 Less accumulated depreciation 270,021 227,082 -------------------- 355,579 308,979 - -------------------------------------------------------------------------------------------------- Total assets $991,226 $887,729 -------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Short-term borrowings $ 42,773 $ 7,971 Accounts payable and accrued expenses 122,297 135,522 Salaries, wages and withholdings from employees 15,744 13,978 Income taxes 22,066 16,151 Current maturities of long-term debt 6,940 4,905 -------------------- Total current liabilities 209,820 178,527 Deferred income taxes 25,489 17,550 Other deferred liabilities 22,619 20,798 Accrued employee and retiree benefits 36,065 37,877 Long-term debt 291,588 252,526 Shareholders' Equity: Common stock par value $.10 a share, authorized 100,000,000 shares; issued 53,954,874 shares 5,396 5,396 Additional paid-in capital 74,663 74,076 Earnings reinvested in the business 416,949 371,444 -------------------- 497,008 450,916 Less: Treasury stock, 2,797,976 and 2,772,496 shares, respectively, at cost 51,979 45,742 Foreign currency translation and other 39,384 24,723 -------------------- 405,645 380,451 - -------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $991,226 $887,729 --------------------
See notes to consolidated financial statements. 19 10 Consolidated Shareholders' Equity
Other --------------------------- EARNINGS UNEARNED FOREIGN ADDITIONAL REINVESTED TREASURY STOCK PORTION OF CURRENCY [ Dollars in thousands COMMON PAID-IN IN THE ---------------- RESTRICTED TRANSLATION except per share amounts ] STOCK CAPITAL BUSINESS SHARES AMOUNT STOCK ADJUSTMENTS - ----------------------------------------------------------------------------------------------------------------------------- BALANCES AT SEPTEMBER 30, 1995 $5,396 $76,257 $314,883 1,755,922 $(24,770) $(1,335) $ (8,651) Net earnings for the year 44,205 Cash dividends paid - $.50 a share (25,798) Stock options exercised, net of 12,040 shares exchanged (788) (166,828) 2,451 Restricted stock (2) (4,000) 64 382 Other 12 2,686 (48) Translation adjustment for year (3,703) Purchase of treasury stock 1,526,236 (27,589) - ----------------------------------------------------------------------------------------------------------------------------- BALANCES AT SEPTEMBER 30, 1996 5,396 75,479 333,290 3,114,016 (49,892) (953) (12,354) Net earnings for the year 64,688 Cash dividends paid - $.52 a share (26,534) Stock options exercised, net of 38,496 shares exchanged (1,513) (609,638) 9,768 Restricted stock 109 (20,800) 334 (23) Other 1 3,718 (167) Translation adjustment for year (11,393) Purchase of treasury stock 285,200 (5,785) - ----------------------------------------------------------------------------------------------------------------------------- BALANCES AT SEPTEMBER 30, 1997 5,396 74,076 371,444 2,772,496 (45,742) (976) (23,747) Net earnings for the year 72,644 Cash dividends paid - $.53 a share (27,139) Stock options exercised, net of 63,958 shares exchanged (393) (802,674) 13,672 Benefit plans contribution 377 (100,000) 1,713 Restricted stock 128 (39,200) 734 (563) Other 475 2,958 (560) Translation adjustment for year (14,098) Purchase of treasury stock 964,396 (21,796) - ----------------------------------------------------------------------------------------------------------------------------- BALANCES AT SEPTEMBER 30, 1998 $5,396 $74,663 $416,949 2,797,976 $(51,979) $(1,539) $(37,845) ----------------------------------------------------------------------------------------
See notes to consolidated financial statements. 20 11 Consolidated Cash Flows [ Dollars in thousands ]
YEARS ENDED SEPTEMBER 30, 1998 1997 1996 - --------------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 72,644 $ 64,688 $ 44,205 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 38,011 32,399 29,178 Amortization 6,221 4,927 4,341 Impairment of long-lived assets and other unusual charges -- -- 25,000 (Gain) loss on sale of property, plant and equipment and other productive assets (3,277) 16 (332) Changes in operating assets and liabilities (net of effects from acquisition of businesses): Trade accounts receivable (1,111) (13,351) (2,041) Inventories (5,664) (13,418) 2,355 Prepaid expenses, income taxes and other assets (8,063) (283) (1,316) Accounts payable and accrued expenses (21,782) 7,844 (626) Salaries, wages and withholdings from employees 1,320 2,882 (357) Income taxes 7,516 2,044 (6,688) Deferred income taxes 8,056 4,838 (1,857) Other liabilities 182 1,160 145 - --------------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 94,053 93,746 92,007 ------------------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment (66,063) (73,502) (59,012) Acquisition of new businesses - net of cash acquired (68,670) (50,492) (529) Proceeds from disposition of business and sale of property, plant and equipment and other productive assets 6,656 438 658 Increase in investments (5,860) (5,719) (2,740) - --------------------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (133,937) (129,275) (61,623) ------------------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from additional borrowings 80,690 66,455 76,822 Reduction in debt (5,720) (6,651) (60,110) Purchase of treasury stock (21,796) (5,785) (27,589) Dividends (27,139) (26,534) (25,798) Proceeds from options exercised and other equity transactions 13,579 8,089 1,627 - --------------------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 39,614 35,574 (35,048) ------------------------------------------ Effect of exchange rate changes on cash and cash equivalents 644 (2,182) (658) - --------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 374 (2,137) (5,322) Cash and cash equivalents at beginning of year 1,258 3,395 8,717 - --------------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of year $ 1,632 $ 1,258 $ 3,395 ------------------------------------------ Cash paid during the year for: Interest $ 21,372 $ 16,062 $ 15,175 Income taxes 16,074 16,261 27,222 - ---------------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements. 21 12 Notes to Consolidated Financial Statements [ Tabular amounts in thousands except per share data ] [ Years ended September 30, 1998, 1997 and 1996 ] 1 Summary of Significant Accounting Policies NATURE OF BUSINESS The Company manufactures and distributes flavors, flavor enhancers, aroma chemicals, colors, dehydrated products and yeast for foods and other applications. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions are eliminated. USE OF ESTIMATES The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. CASH EQUIVALENTS The Company considers all highly liquid investments with maturities of three months or less when acquired to be cash equivalents. INVENTORIES Inventories are stated at the lower of cost or market. Cost is determined using primarily the first-in, first-out (FIFO) method. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are recorded at cost reduced by accumulated depreciation. Depreciation is provided over the estimated useful life using the straight-line method for financial reporting. Accelerated methods are used for income tax purposes. INTANGIBLES, GOODWILL AND LONG-LIVED ASSETS The excess cost over net assets of businesses acquired and other intangibles, principally formulae and customer lists, are being amortized using the straight-line method over periods ranging up to 40 years. In fiscal 1996, the Company adopted Statement of Financial Accounting Standards No. 121, ("SFAS No. 121"), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (see note 3). Under SFAS 121 long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or circumstances indicate that their carrying value may not be recoverable. Recoverability of other long-lived assets not included under SFAS No. 121, primarily investments in unconsolidated affiliates and goodwill not identified with impaired assets, will continue to be evaluated on a recurring basis. The primary indicators of recoverability are current or forecasted profitability over the estimated remaining life of these assets, based on the operating profit of the businesses directly related to these assets. If recoverability is unlikely based on the evaluation, the carrying amount is reduced by the amount it exceeds the forecasted operating profit and any estimated disposal value. FINANCIAL INSTRUMENTS The Company uses derivative financial instruments for the purpose of hedging currency and interest rate exposures which exist as part of ongoing business operations. As a policy, the Company does not engage in speculative or leveraged transactions, nor does the Company hold or issue financial instruments for trading purposes. INTEREST RATE SWAP AGREEMENTS The Company may utilize interest rate swap agreements to lower funding costs, to diversify sources of funding or to alter interest rate exposure. Amounts paid or received on interest rate swap agreements are deferred and recognized as adjustments to interest expense. Gains and losses realized upon the settlement of such contracts are deferred and amortized to interest expense over the remaining term of the debt instrument or are recognized immediately if the underlying instrument is settled. FOREIGN CURRENCY CONTRACTS The Company enters into forward and swap contracts to hedge transactions denominated in foreign currencies in order to reduce the currency risk associated with fluctuating exchange rates. Such contracts are used primarily to hedge certain intercompany cash flows, purchases of certain raw materials and finished goods and for payments arising from certain foreign currency denominated obligations. Realized and unrealized gains and losses from instruments qualifying as hedges are deferred as part of the cost basis of the underlying transaction. Realized and unrealized 22 13 gains and losses from foreign currency contracts used as economic hedges but not qualifying for hedge accounting are recognized currently as income or expense. TRANSLATION OF FOREIGN CURRENCIES For all significant foreign operations, the functional currency is the local currency. Assets and liabilities of foreign operations are translated into United States dollars at current exchange rates. Income and expense accounts are translated into United States dollars at average rates of exchange prevailing during the year. Adjustments resulting from the translation to U.S. dollars are included as foreign currency translation adjustments in shareholders' equity. Net transaction gains of $354,000 in 1998, $632,000 in 1997 and $23,000 in 1996, are included in earnings before income taxes. STOCK-BASED COMPENSATION The Company accounts for its stock-based compensation plans using the intrinsic value-based method in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25). EARNINGS PER SHARE In the first quarter of fiscal 1998, the Company adopted SFAS No. 128, "Earnings Per Share," which requires the disclosure of both diluted and basic earnings per share. Previously reported earnings per share amounts have been restated, as necessary, to conform to Statement No. 128 requirements. The difference between basic and diluted earnings per share is the dilutive effect of stock options and restricted stock. All earnings per share amounts are presented on a diluted basis unless otherwise noted. RECENTLY ISSUED ACCOUNTING STANDARDS In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income," and SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information." SFAS No. 130 establishes standards for reporting comprehensive income in financial statements and SFAS No. 131 expands certain reporting and disclosure requirements for segments from current standards. In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits." SFAS No. 132 revises employers' disclosures about pension and other postretirement benefit plans. The Company will adopt these statements in Fiscal 1999. The adoption of these statements will not have a financial impact on the Company. In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." This statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. The statement requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The Company is not required to adopt the statement until fiscal 2000. The Company is currently evaluating the effect that implementation of the new standard will have on its results of operations, financial position and cash flows. RECLASSIFICATIONS Certain previously reported amounts have been reclassified to conform to the current year presentation. 2 Acquisitions During fiscal 1998, the Company acquired four businesses for a total of $68,670,000. The preliminary allocations of purchase prices resulted in goodwill of $45,468,000 which is being amortized on a straight-line-basis over 40 years. The businesses acquired were: In January 1998, the Company acquired the stock of Arancia Ingredientes Especiales, S.A. de C.V., a manufacturer of savory flavors and other food ingredients. In April 1998, the Company acquired the stock of DC Flavours Ltd., a manufacturer of savory flavors and seasonings. In May 1998, the Company acquired substantially all of the assets and business of the beverage business of Sundi GmbH, a German flavor manufacturer. In September 1998, the Company acquired the stock of Reggiana Antociani S.R.L., a manufacturer of natural colors for the food and beverage industries. During the second quarter of 1997, the Company acquired Tricon Colors, Inc., an ink and dye producer, for cash of $44,492,000. The allocation of the purchase 23 14 Notes to Consolidated Financial Statements [ Years ended September 30, 1998, 1997 and 1996 ] price resulted in goodwill of $37,923,000 which is being amortized on a straight-line-basis over 40 years. In September 1997, the Company acquired certain assets of the food color business of Pyosa S.A., for cash and notes aggregating $7,500,000. The above acquisitions have been accounted for as purchases and, accordingly, their results of operations have been included in the financial statements since their respective dates of acquisition. On an unaudited pro-forma basis, the effects of the acquisitions were not significant to the Company's results of operations. 3 Restructuring, Integration and Other Charges In 1997, the Company recorded an integration charge of $7,500,000 ($4,600,000 after tax, or $.09 per share) for the cost of combining its BioProducts and Flavor divisions. This charge, which is classified in selling and administrative expenses, relates primarily to severance costs substantially all of which were paid in 1998. The Company adopted SFAS No. 121 as of the beginning of the fourth quarter of 1996. Certain long-lived assets which were held and used in the business were identified as impaired. The Company considers continued operating losses, or significant and long-term changes in industry conditions, to be its primary indicators of potential impairment. In 1996 an impairment was recognized when the future undiscounted cash flows of each asset was estimated to be less than the asset's related carrying value. As such, the carrying values of these assets were written down to the Company's estimates of fair value. Fair value was based on sales of similar assets, or other estimates of fair value such as discounting estimated future cash flows. The non-cash charge for adoption of this standard was $20,000,000 and resulted from changes in industry conditions, continued operating losses and from the Company grouping assets at a lower level than under its previous method of accounting. In addition, in 1996 the Company identified opportunities to streamline its production base, improve efficiency and enhance its competitiveness. Accordingly, the Company adopted a restructuring plan which included closing or reconfiguring a number of production facilities and reducing the workforce by approximately 130 employees. The restructuring charge of approximately $5,000,000 includes charges primarily related to severance costs, substantially all of which were paid in 1997. The total 1996 charge for adopting SFAS No. 121 and restructuring was $25,000,000 ($16,700,000 after tax, or $.32 per share). 4 Inventories Inventories include finished and in-process products totaling $145,135,000 and $132,150,000 at September 30, 1998 and 1997, respectively, and raw materials and supplies of $51,954,000 and $53,402,000 at September 30, 1998 and 1997, respectively. 5 Debt Long-term debt consists of the following obligations:
1998 1997 - ----------------------------------------------------------------- Payable in U.S. Dollars: 9.06% senior notes due through July 2004 $ 34,000 $ 38,000 7.59% senior notes due through December 2008 30,000 30,000 7.06% senior notes due through December 2002 30,000 - 6.99% senior notes due through December 2007 40,000 40,000 6.77% senior notes due through January 2010 15,000 15,000 6.70% senior notes due through December 2009 20,000 20,000 6.68% senior notes due through January 2011 15,000 15,000 6.38% senior notes due through December 2003 20,000 20,000 Commercial paper and other short-term notes 70,000 70,000 Various mortgage notes, capital lease obligations and other notes 4,714 5,702 Notes and credit facilities payable in foreign currencies 19,814 3,729 ----------------- 298,528 257,431 Current maturities 6,940 4,905 - ----------------------------------------------------------------- Total long-term debt $291,588 $252,526 =================
The Company has a $70,000,000 multicurrency revolving loan agreement with a group of three banks. Under the 24 15 agreement, the Company has the option to elect to have interest rates determined based upon the LIBOR rate plus margin or the certificate of deposit rate plus margin. A commitment fee is payable on the unused amount of credit. The facility matures in August 2003. Uncommitted lines of credit totaling $110,000,000 are also available to the Company from several banks. The Company issues short-term commercial paper obligations supported by committed lines of credit included in the Revolving Loan Agreement. The Company also issues other short-term notes. At September 30, 1998 and 1997, $70,000,000 of short-term borrowings were classified as long-term debt reflecting the Company's intent and ability, through the existence of the unused credit facility, to refinance these borrowings. The aggregate amounts of maturities on long-term debt each year for the five years subsequent to September 30, 1998 are as follows: 1999, $6,940,000; 2000, $8,146,000; 2001, $11,843,000; 2002, $13,948,000; and 2003, $87,960,000. Substantially all of the loan agreements contain restrictions concerning working capital, borrowings, investments and dividends. Earnings reinvested of $34,654,000 at September 30, 1998 were unrestricted. Short-term borrowings consist of commercial paper, bankers acceptances and loans to foreign subsidiaries denominated in local currencies which are borrowed under various foreign uncommitted lines of credit. The weighted average interest rates on short-term borrowings, including the $70,000,000 reclassified to long-term debt, were 5.75% and 5.78% at September 30, 1998 and 1997, respectively. 6 Financial Instruments and Risk Management FOREIGN CURRENCY CONTRACTS The Company uses forward exchange contracts to reduce the effect of fluctuating foreign currencies on short-term foreign currency-denominated intercompany transactions and other known foreign currency exposures. At September 30, 1998 and 1997, the Company had forward exchange contracts, generally with maturities of one year or less, of $65,709,000 and $105,726,000, respectively. In fiscal 1998, the Company entered into a swap agreement that converts $15,175,000 of short-term variable rate borrowing to a fixed rate (5.02%) borrowing payable in deutsche marks (27,000,000 DEM) on July 27, 2008. CONCENTRATIONS OF CREDIT RISK Counterparties to currency exchange contracts consist of large major international financial institutions. The Company continually monitors its positions and the credit ratings of the counterparties involved and limits the amount of credit exposure to any one party. While the Company may be exposed to potential losses due to the credit risk of non-performance by these counterparties, losses are not anticipated. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers, generally short payment terms, and their dispersion across geographic areas. FAIR VALUES The carrying amount of cash and cash equivalents, trade receivables, investments, financial instruments, accounts payable and short-term borrowings approximated fair value as of September 30, 1998 and 1997. The fair value of the Company's long-term debt, including current maturities, is estimated using discounted cash flows based on the Company's current incremental borrowing rates for similar types of borrowing arrangements. The fair value at September 30, 1998 and 1997 was approximately $314,669,000 and $261,978,000, respectively. 7 Shareholders' Equity On April 9, 1998, the Company declared a 2-for-1 stock split in the form of a 100% dividend, which was distributed on May 22, 1998, to shareholders of record on May 6, 1998. An amount equal to the par value of the shares issued was transferred from additional paid-in capital to the common stock account for all periods presented. Accordingly, all numbers of common shares, per share data and the amounts of shareholders' equity accounts for all periods presented in the consolidated financial statements have been restated to reflect the stock split. On June 25, 1998, the Board of Directors declared a dividend of one preferred share purchase right (a "Right") for each outstanding share of common stock, par value 25 16 Notes to Consolidated Financial Statements [ Years ended September 30, 1998, 1997 and 1996 ] of $.10 per share, of the Company. The dividend was paid on August 6, 1998, to the stockholders of record on that date. Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series A Participating Cumulative Preferred Stock, without par value (the "Preferred Share"), of the Company at a price of $125 per one one-thousandth of a Preferred Share, subject to adjustment. The Right becomes exercisable and tradable ten days after a person or group acquires 20% or more, or makes an offer to acquire 20% or more, of the Company's outstanding common stock. When exercisable, each Right entitles the holder to purchase $250 worth of Company common stock for $125. Further, upon the occurrence of a merger or transfer of more than 50% of the Company's assets, the Right entitles the holder to purchase common stock of an acquiring company having a market value equivalent to two times the exercise price of the Right. At no time does the Right have any voting power. The Right is subject to redemption by the Company's Board of Directors for $.01 per Right at any time prior to the date on which a person or group acquires beneficial ownership of 20% or more of the Company's common stock. The Rights expire on September 30, 2008. The Rights replace rights issued under a prior rights plan, which were redeemed on August 6, 1998. In January 1998, the shareholders approved the 1998 Stock Option Plan. Under the 1998 Plan up to 2,400,000 shares of common stock are available for awards, of which no more than 600,000 shares may be restricted stock. The Company may also issue up to 2,400,000 shares of common stock pursuant to the exercise of stock options or the grant of restricted stock under the 1994 Employee Stock Plan. Under the 1994 Plan, up to 500,000 shares may be awarded as restricted stock. Generally, stock options become exercisable over a three year vesting period and expire 10 years from the date of grant. Awarded shares of restricted stock become freely transferable at the end of five years. During the period of restriction, the employee has voting rights and is entitled to receive all dividends and other distributions paid with respect to the stock. The 1994 Plan also authorizes the grant of up to 800,000 stock appreciation rights (SARs) in connection with stock options. The Company has adopted the disclosure-only provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." Accordingly, no compensation cost has been recognized for the Company's stock option plans. If the Company had elected to recognize compensation cost based on the fair value of the options granted at grant date as prescribed by SFAS No. 123, net earnings and earnings per common share would have been reduced to the pro forma amounts indicated below:
1998 1997 1996 ------------------------- Pro forma net earnings $71,120 $63,626 $43,926 Pro forma net earnings per common share: Basic $ 1.39 $ 1.25 $ .85 Diluted 1.37 1.24 .85
The pro forma effect on net earnings is not representative of the pro forma effect on net earnings in future years because it does not take into consideration pro forma compensation expense related to grants made prior to 1996. The weighted-average fair value per share of options granted was $3.83 in 1998, $3.90 in 1997 and $3.89 in 1996. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:
1998 1997 1996 ----------------------- Dividend yield 2.5% 2.6% 3.1% Volatility 19% 19% 23% Risk-free interest rate 4.2% 5.8% 6.4% Expected term (years) 5 5 5
26 17 The changes in outstanding stock options during the three years ended September 30, 1998 are summarized below:
SHARES WEIGHTED OUTSTANDING AVERAGE OPTIONS AVAILABLE PRICE - ---------------------------------------------------------------------------------- Balances at September 30, 1995 3,232 1,943 $14.97 Granted 885 (885) 16.81 Restricted stock - (4) 15.56 Exercised (179) - 10.60 Cancelled (58) 58 17.17 - ---------------------------------------------------------------------------------- Balances at September 30, 1996 3,880 1,112 15.56 Granted 685 (685) 18.71 Restricted stock - (28) 20.09 Exercised (648) - 13.68 Cancelled (121) 121 16.81 - ---------------------------------------------------------------------------------- Balances at September 30, 1997 3,796 520 16.43 Authorized under the 1998 Plan - 2,400 - Granted 600 (600) 20.79 Restricted stock - (42) 21.56 Exercised (867) - 15.01 Cancelled (146) 146 17.80 - ---------------------------------------------------------------------------------- Balances at September 30, 1998 3,383 2,424 $17.61 ------------------------------------------------
WEIGHTED OPTIONS AVERAGE EXERCISABLE PRICE - ---------------------------------------------------------------------------------- September 30, 1996 2,352 $15.04 September 30, 1997 2,462 $15.75 September 30, 1998 2,208 $16.46
The following summarizes information concerning currently outstanding and exercisable options:
RANGE OF EXERCISE PRICE ----------------------- $11.79- $15.51- $19.01- 15.50 19.00 21.57 - ----------------------------------------------------------------------------------------------------------- Number outstanding 517 1,733 1,133 Weighted average remaining contractual life, in years 4.9 6.5 9.1 Weighted average exercise price $14.78 $16.51 $20.58 - ----------------------------------------------------------------------------------------------------------- Number exercisable 517 1,436 255 Weighted average exercise price $14.78 $16.51 $19.60
The Company is authorized to issue 250,000 shares of cumulative preferred stock, of which 100,000 shares are classified as Series A Participating Cumulative Preferred Stock and were initially reserved for issuance under the Rights plan. 8 Retirement Plans The Company provides benefits under defined contribution plans including a savings plan and ESOP. The savings plan covers substantially all domestic salaried and certain non-union hourly employees and provides for matching contributions up to 4% of each employee's salary. The ESOP covers substantially all domestic employees not covered by a defined benefit plan and provides for contributions of 6% to 10% of each employee's salary. Total expense for the Company's defined contribution plans was $6,746,000, $6,984,000 and $7,144,000 in 1998, 1997 and 1996, respectively. 9 Other Postretirement Benefits The Company provides certain health insurance benefits to eligible domestic retirees and their dependents. In 1997 the Company implemented programs intended to mitigate rising costs, including adopting a provision that limits its future obligation to absorb health care cost inflation. The amendment resulted in an unrecognized prior service gain of $4,318,000 which is being amortized over the employees average remaining service life. 27 18 Notes to Consolidated Financial Statements [ Years ended September 30, 1998, 1997 and 1996 ] Postretirement benefit expense includes the following components:
1998 1997 1996 ------------------------- Service cost $ 418 $ 419 $ 831 Interest cost on accumulated benefit obligation 966 959 1,212 Amortization of prior service cost (548) (548) (278) Other (425) (441) (363) ------------------------- Postretirement benefit expense $ 411 $ 389 $1,402 -------------------------
The Company continues to fund benefit costs on a pay-as-you-go basis, with retirees paying a portion of the costs. The status of the Company's postretirement benefit obligation is as follows:
1998 1997 ---------------- Actuarial present value of accumulated benefit obligation: Retirees $ 6,396 $ 6,629 Fully eligible active plan participants 1,658 1,763 Other active plan participants 5,066 4,898 ---------------- Accumulated benefit obligation 13,120 13,290 Unrecognized prior service cost 7,943 8,491 Unrecognized gain 10,874 10,503 ---------------- Postretirement benefits accrued $31,937 $32,284 ----------------
The weighted average discount rates used in determining the accumulated postretirement benefit obligation at September 30, 1998 and 1997 were 6.75% and 7.50%, respectively. The health care cost trend rates were assumed to be 8.50% in 1998 and 9.25% in 1997, gradually declining to 5.5% by the year 2002 and remaining at that level thereafter. A one percentage point increase in the assumed cost trend rate would increase the accumulated postretirement benefit obligation as of September 30, 1998 by approximately $2,126,000 and the aggregate of the service and interest cost components of the 1998 postretirement benefit expense by $227,000. 10 Income Taxes The provision for income taxes is as follows:
1998 1997 1996 ------------------------- Currently payable: Federal $12,831 $10,556 $14,179 State 3,195 3,192 2,683 Foreign 9,509 8,171 8,140 Deferred (benefit): Federal 8,640 3,426 1,792 State 1,059 403 180 Foreign (201) - (2,539) ------------------------- $35,033 $25,748 $24,435 -------------------------
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities consist of the following:
1998 1997 -------------------------- Deferred tax assets: Benefit plans $(18,501) $(19,466) Liabilities and reserves (9,417) (10,674) Other (16,393) (14,257) ------------------------ Gross deferred tax assets (44,311) (44,397) Valuation allowance 13,697 11,468 ------------------------ Total deferred tax assets (30,614) (32,929) ------------------------ Deferred tax liabilities: Property, plant and equipment 21,867 16,405 Other 18,471 16,750 ------------------------ Total deferred tax liabilities 40,338 33,155 ------------------------ Net deferred tax liabilities $ 9,724 $ 226 ========================
The effective tax rate differs from the statutory Federal income tax rate of 35% as described below:
1998 1997 1996 ----------------------- Taxes at statutory rate 35.0% 35.0% 35.0% State income taxes, net of Federal income tax benefit 2.6 2.6 2.7 Tax credits (3.9) (4.6) (3.3) Settlements of prior years' issues (1.4) (5.3) - Other, net 0.2 0.8 1.2 ----------------------- Effective tax rate 32.5% 28.5% 35.6%
======================= 28 19 The 1998 and 1997 effective tax rates were 32.5% and 28.5%, respectively, reflecting the reversal of tax accruals no longer required resulting from settlement of prior years' issues and other items. The 1998 and 1997 effective tax rates would have been 33.9% and 33.8%, respectively excluding the favorable impact of these items. Earnings before income taxes are summarized as follows:
1998 1997 1996 --------------------------- United States $ 81,311 $67,960 $55,228 Foreign 26,366 22,476 13,412 --------------------------- $107,677 $90,436 $68,640 ===========================
Domestic income taxes have not been provided on undistributed earnings of foreign subsidiaries which are considered to be permanently invested. If undistributed foreign earnings were to be remitted, foreign tax credits would substantially offset any resulting domestic tax liability. 11 Foreign Operations Summarized information relating to the Company's domestic and foreign operations are as follows:
1998 1997 1996 - ------------------------------------------------------------------ Revenue: United States $551,286 $544,123 $517,678 Europe 191,055 178,054 186,547 Other foreign 114,431 103,537 102,127 - ------------------------------------------------------------------ $856,772 $825,714 $806,352 ========================== Operating Income: United States $102,022 $ 84,859 $ 67,850 Europe 13,037 9,690 2,160 Other foreign 13,803 12,685 13,896 - ------------------------------------------------------------------ $128,862 $107,234 $ 83,906 ========================== Identifiable Assets: United States $552,020 $528,272 $438,474 Europe 316,575 246,379 234,686 Other foreign 122,631 113,078 107,312 - ------------------------------------------------------------------ $991,226 $887,729 $780,472 ==========================
Operating income for 1997 and 1996 includes pre-tax charges for restructuring, integration and other as follows:
1997 1996 - ------------------------------------------- United States $5,555 $11,100 Europe 1,700 13,900 Other foreign 245 - - ------------------------------------------- $7,500 $25,000 ================
Transfers of product between geographic areas are not significant. Operating income is total revenue less operating expenses. Identifiable assets include all assets identified with the operations in each geographic area, and an allocable portion of intangible assets recorded by the parent. 12 Contingencies The Company is involved in various claims and litigation arising in the normal course of business. In the opinion of management and Company counsel, the ultimate resolution of these actions will not materially affect the consolidated financial position, results of operations or cash flows of the Company. 29 20 Management's Responsibility for Financial Statements [ Years ended September 30, 1998, 1997 and 1996 ] The management of Universal Foods Corporation is responsible for preparation of the financial statements and other financial information included in this annual report. The financial statements have been prepared in accordance with generally accepted accounting principles. It is management's policy to maintain a control-conscious environment through an effective system of internal accounting controls. These controls are supported by the careful selection of competent and knowledgeable personnel and by the communication of standard accounting and reporting policies and procedures throughout the Company. These controls are adequate to provide reasonable assurance that assets are safeguarded against material loss or unauthorized use and to produce the records necessary for the preparation of reliable financial information. There are limits inherent in all systems of internal control based on the recognition that the costs of such systems should be related to the benefits to be derived. Management believes that its systems provide this appropriate balance. The control environment is complemented by the Company's internal audit function, which evaluates the adequacy of the controls, policies and procedures in place, as well as adherence to them, and recommends improvements for implementation when applicable. In addition, the Company's independent auditors, Deloitte & Touche LLP, have developed an understanding of the Company's accounting and financial controls and have conducted such tests as they considered necessary to render an opinion on the Company's financial statements. The Board of Directors pursues its oversight role with respect to the Company's financial statements through the Audit Committee, which is composed solely of outside directors. The Audit Committee recommends selection of the Company's auditors and meets with them and the internal auditors to review the overall scope and specific plans for their respective audits and results from those audits. The Committee also meets with management to review overall accounting policies relating to the reporting of financial results. Both the independent auditors and internal auditors have unrestricted access to the Audit Committee. /S/ Kenneth P. Manning /S/ Michael Fung Kenneth P. Manning Michael Fung Chairman, President and Vice President and Chief Executive Officer Chief Financial Officer Independent Auditors' Report To the Shareholders and Board of Directors of Universal Foods Corporation: We have audited the accompanying consolidated balance sheets of Universal Foods Corporation and subsidiaries as of September 30, 1998 and 1997, and the related consolidated statements of earnings, shareholders' equity and cash flows for each of the three years in the period ended September 30, 1998. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the companies as of September 30, 1998 and 1997, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 1998 in conformity with generally accepted accounting principles. /s/ Deloitte & Touche LLP Milwaukee, Wisconsin November 12, 1998 30 21 Five Year Review
[ Dollars in thousands except per share data ] 1998 1997 1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------------------------ Summary of Operations Revenue $ 856,772 100.0% $ 825,714 100.0% $ 806,352 100.0% $ 792,971 100.0% $ 929,863 100.0% Cost of products sold 556,048 64.9 551,090 66.7 533,260 66.1 518,194 65.3 616,752 66.3 Selling and administrative expenses 171,862 20.1 167,390 20.3 164,186 20.4 171,914 21.7 203,965 22.0 Unusual items - - - - 25,000 3.1 (26,847) (3.4) 12,125 1.3 - ------------------------------------------------------------------------------------------------------------------------------------ Operating income 128,862 15.0 107,234 13.0 83,906 10.4 129,710 16.4 97,021 10.4 Interest expense 21,185 2.4 16,798 2.0 15,266 1.9 15,107 1.9 15,888 1.7 - ------------------------------------------------------------------------------------------------------------------------------------ Earnings before income taxes 107,677 12.6 90,436 11.0 68,640 8.5 114,603 14.5 81,133 8.7 Income taxes 35,033 4.1 25,748 3.2 24,435 3.0 48,500 6.2 30,222 3.2 - ------------------------------------------------------------------------------------------------------------------------------------ Net earnings $ 72,644 8.5% $ 64,688 7.8% $ 44,205 5.5% $ 66,103 8.3% $ 50,911 5.5% =================================================================================================== Net earnings per common share: Basic $ 1.42 $ 1.27 $ .86 $ 1.27 $ .97 Diluted 1.40 1.26 .85 1.26 .97 =================================================================================================== Other Related Data Earnings per common share excluding unusual items: Basic $ 1.42 $ 1.27 $ 1.18 $ 1.09 $ 1.12 Diluted 1.40 1.26 1.17 1.09 1.11 Dividend per common share .53 .52 .50 .48 .46 Average shares outstanding: Basic 51,155,000 51,025,542 51,596,964 52,122,538 52,261,566 Diluted 51,836,577 51,389,997 51,936,078 52,338,578 52,568,144 Book value per common share $ 7.95 $ 7.45 $ 6.93 $ 6.95 $ 6.30 Price range per common share 18.72-25.44 15.94-20.69 14.00-20.50 13.06-17.44 $14.44-17.50 Share price at September 30 20.88 20.13 16.25 17.44 14.81 Research and development expenditures 29,413 31,510 29,824 28,558 32,217 Capital expenditures 66,063 73,502 59,012 42,562 55,071 Depreciation 38,011 32,399 29,178 28,206 31,012 Amortization 6,221 4,927 4,341 6,435 5,366 Total assets 991,226 887,729 780,472 776,870 763,664 Long-term debt 291,588 252,526 196,869 160,678 172,235 Shareholders' equity 405,645 380,451 350,966 361,780 327,390 Return on average shareholders' equity 18.4% 17.5% 12.2% 18.5% 16.1% Total debt to total capital 45.7% 41.1% 36.9% 34.3% 37.6% Employees 4,196 4,127 4,035 4,104 4,063 - ------------------------------------------------------------------------------------------------------------------------------------
The 1997 results include a pretax charge of $7.5 million for integrating two divisions. The 1996 results include pretax charges of $25 million relating to adopting SFAS No. 121 and restructuring costs. The 1995 results include a net pretax gain of $26.8 million relating to the sale of the Frozen Foods business, the cost of discontinuing a product line and other items. The 1994 results include a pretax restructuring charge of $12.1 million. 31 22 Quarterly Data [ Dollars in thousands except per share amounts ] [ Unaudited ]
EARNINGS EARNINGS GROSS NET PER SHARE PER SHARE REVENUE PROFIT EARNINGS BASIC DILUTED - ------------------------------------------------------------------ 1998 FIRST QUARTER $208,889 $71,882 $15,271 $.30 $.30 SECOND QUARTER 205,015 72,441 17,354 .34 .33 THIRD QUARTER 214,506 74,994 19,174 .37 .37 FOURTH QUARTER 228,362 81,407 20,845 .41 .40 - ------------------------------------------------------------------ 1997 First Quarter $193,484 $65,852 $13,883 $.27 $.27 Second Quarter 204,826 66,567 15,620 .31 .30 Third Quarter 209,725 69,410 16,748 .33 .33 Fourth Quarter 217,679 72,795 18,437 .36 .36 - ------------------------------------------------------------------
Common Stock Prices and Dividends
MARKETPRICE DIVIDENDS HIGH LOW PER SHARE - ----------------------------------------------- 1998 FIRST QUARTER $21.47 $18.72 $.1325 SECOND QUARTER 24.69 20.38 .1325 THIRD QUARTER 25.44 21.88 .1325 FOURTH QUARTER 24.00 20.06 .1325 - ----------------------------------------------- 1997 First Quarter $18.88 $15.94 $ .13 Second Quarter 18.94 16.63 .13 Third Quarter 19.63 16.00 .13 Fourth Quarter 20.69 18.44 .13 - -----------------------------------------------
32 EX-21 27 SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT 21 Universal Foods Corporation and Subsidiaries
State or other jurisdiction of Name incorporation - --------------------------------------------------- ------------- Universal Foods Corporation Wisconsin Subsidiaries: Universal Foods Canada Canada Universal Foods FSC Virgin Islands Universal Holding Inc. Nevada Universal Foods Corporation Ireland Ireland Universal Health Care Management Company Wisconsin Universal Foods (UK) Ltd United Kingdom Universal Foods Holding (Luxembourg) Sarl Luxembourg Universal Foods (Luxembourg) Sarl Luxembourg UF Holdings (Malta) Ltd Malta Universal Holdings Cayman Cayman Universal Foods Holding Deutschland GmbH Germany Minn-Dak Yeast Company North Dakota Yeast Industries Company Jordan General Milling Corporation Philippines Universal Foods Products Int'l Co. Ltd. Costa Rica Red Star De Peru Peru Leviatan Y Universal CIA Guatemala Productos Alimenticios Nacionales, SA Costa Rica Costa Rica Industrias Mexicana De Aliamentos SA Mexico Levadura Azteca SA De CV Mexico Universal Flavor Corporation Delaware Universal Flavors Canada, Inc. Canada Universal Flavors International, Inc. Indiana Universal Flavors France (SARL) France DGF Universal Fragrances S.A. Spain Universal Flavors NV Belgium Curt Georgi Imes/Universal Flavors SRL Italy Universal Flavors Mexico SA de CV Mexico DGF Universal Fragrances Mexico SA de CV Mexico Flavorburst Inc. Illinois Flavor Burst Co. Indiana Champlain Industries Inc. Delaware Arancia Ingredients Especiales SA de CV Mexico Arancia Flavors & Ingredients, Inc. Delaware Arendadora Aiesa SA de CV Mexico Biolux Finance, S.A. Belgium Red Star BioProducts, S.A. Belgium Red Star BioProducts, SAS France Promavil, S.A. Belgium Red Star BioProducts Limited United Kingdom Universal Flavors Limited United Kingdom DC Flavours Limited United Kingdom Sundi Aromen Distribution GmbH Germany Sundi Aromen GmbH Germany
2 Warner Jenkinson Universal Foods, BV The Netherlands Warner Jenkinson Canada Canada Tricon Colors, LLC New Jersey Warner Jenkinson Company Inc. New York Warner Jenkinson SA de CV Mexico Panamericana de Sabores, SA de CV Mexico WJ de Mexico, SA de CV Mexico Warner Jenkinson (Europe) Limited United Kingdom Warner Jenkinson Europe SARL France Quaterna SRL Italy Reggiana Antociana SRL Italy Silva Laon GmbH Germany Warner-Jenkinson Europe GmbH Germany Inter Agro USA Inc. New York Universal Dehydrates Ltd. Ireland Freshfield Foods, Ltd. Ireland Rogers Foods Inc. California Universal Dehydrates BV The Netherlands Universal Foods Limited United Kingdom Universal Dehydrates France SARL France Universal Foods Corporation (Asia/Pacific) Pte. Ltd. Singapore Universal Flavors (Thailand) Ltd. Thailand Universal Foods Corporation (Australia) Pty. Ltd. Australia Universal Foods Corporation (Japan) Japan Universal Flavors (Philippines), Inc. Philippines Universal Foods Corporation (China) Ltd. Hong Kong EX-23 28 CONSENT OF DELOITTE & TOUCHE LLP 1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Amendment No. 1 to Registration Statements No. 33-07235, 33-34555 and 33-55437, Registration Statements No. 33-27356, 333-35877 and 333-45931 of Universal Foods Corporation on Form S-8 and Registration Statement No. 333-67015 of Universal Foods Corporation on Form S-3 of our reports dated November 12, 1998, appearing in and incorporated by reference in the Annual Report on Form 10-K of Universal Foods Corporation for the year ended September 30, 1998. /s/ Deloitte & Touche LLP - ------------------------- DELOITTE & TOUCHE LLP Milwaukee, Wisconsin December 23, 1998 EX-27 29 FINANCIAL DATA SCHEDULE
5 UNIVERSAL FOODS CORPORATION YEAR ENDED SEPTEMBER 30, 1998 FINANCIAL DATA SCHEDULE. 1,000 12-MOS SEP-30-1998 OCT-01-1997 SEP-30-1998 1,632 0 126,381 4,548 197,089 357,755 625,600 270,021 991,226 209,820 291,588 0 0 5,396 400,249 991,226 856,772 856,772 556,048 556,048 0 1,245 21,185 107,677 35,033 72,644 0 0 0 72,644 1.42 1.40
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