SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE YEAR ENDED COMMISSION FILE
DECEMBER 26, 1993 NUMBER 1-7911
JAMES RIVER CORPORATION
OF VIRGINIA
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
VIRGINIA 54-0848173
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
120 TREDEGAR STREET, RICHMOND, VIRGINIA 23219
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
(804) 644-5411
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Common Stock, $.10 par value New York Stock Exchange
Rights to Purchase Series M New York Stock Exchange
Cumulative Participating
Preferred Stock, $10 par value
Series K $3.375 Cumulative New York Stock Exchange
Convertible Exchangeable
Preferred Stock, $10 par value
Depositary Shares Representing New York Stock Exchange
Series L $14.00 Cumulative
Convertible Exchangeable
Preferred Stock, $10 par value
Depositary Shares Representing New York Stock Exchange
Series O 8 1/4% Cumulative
Preferred Stock, $10 par value
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, and (2) has been subject to such filing
requirements for 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
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. ( )
Aggregate market value of voting stock held by non-affiliates of the regis-
trant, at close of business, February 17, 1994............. $1,559,764,283
Number of shares of $.10 par value common stock outstanding, as of February 17,
1994..................................................... 81,630,635
DOCUMENTS INCORPORATED BY REFERENCE:
(1) Portions of the registrant's Annual Report to Shareholders for the
year ended December 26, 1993, incorporated into Parts I and II hereof; and (2)
Portions of the registrant's definitive Proxy Statement for the Annual Meeting
of Shareholders to be held on April 28, 1994, incorporated into Part III
hereof.
JAMES RIVER CORPORATION OF VIRGINIA
Annual Report on Form 10-K
December 26, 1993
TABLE OF CONTENTS
PART I
Page
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . 14
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . 16
Item 4. Submission of Matters to a Vote of Security Holders. . . 16
Executive Officers of the Registrant . . . . . . . . . . 17
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters. . . . . . . . . . . . . . 20
Item 6. Selected Financial Data. . . . . . . . . . . . . . . . . 20
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . 20
Item 8. Financial Statements and Supplementary Data. . . . . . . 20
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . 21
PART III
Item 10. Directors and Executive Officers of the Registrant . . . 21
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . 21
Item 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . 21
Item 13. Certain Relationships and Related Transactions . . . . . 21
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K. . . . . . . . . . . . . . . . . . 22
<PAGE>
PART I
ITEM 1. BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS
James River Corporation of Virginia (together with its subsidiaries, "James
River" or the "Company") was founded in 1969 and is incorporated in the
Commonwealth of Virginia. James River is a manufacturer and marketer of
consumer products, including towel and tissue and disposable food and
beverage service products; food and consumer packaging, including folding
cartons, flexible packaging, and barrier packaging papers; and communications
papers, including uncoated business papers and coated printing papers. James
River is one of the industry leaders, in terms of sales within the United
States, in towel and tissue products, disposable food service items, folding
cartons, and flexible packaging, and, on the West Coast, in uncoated business
papers. Disclosures made herein are as of December 26, 1993 or for the 52-
week year then ended. Portions of the James River Corporation of Virginia
Annual Report to Shareholders for the year ended December 26, 1993 (the "1993
Annual Report") are incorporated in this Form 10-K by specific reference.
During its twenty-five year history, James River has pursued a strategy of
internal growth and acquisition which has allowed the Company to
significantly expand its business and broaden its product lines. Acquisition
and investment opportunities have been pursued which were designed to result
in production of high value-added products, to complement existing product
lines, to optimize geographical expansion, or to achieve backward or forward
integration, in order to maximize overall profitability. The Company's most
significant investment during the last five years was the February 1990
formation of Jamont N.V. ("Jamont"), a European consumer products joint
venture in which the Company currently has a 43% ownership interest. Jamont
manufactures and markets hygienic products, including tissue, feminine
hygiene items, and food service products, through facilities located in 12
European countries. Acquisitions and investments consummated during the
three years ended December 26, 1993 are discussed in Note 3 of Notes to
Consolidated Financial Statements in the 1993 Annual Report, which
information is incorporated herein by reference. James River continuously
evaluates acquisition opportunities, including opportunities for increased
participation in the European tissue market, which may result in firm
commitments at any time.
In August 1990, James River announced a plan for restructuring the Company's
operations in order to enhance shareholder value by divesting certain non-
strategic assets and refocusing the Company's resources. This plan provided
for the divestiture of 29 mills, including the Company's Specialty Papers
Business. As of the beginning of 1992, the 1990 program was terminated, with
the majority of the targeted mills sold or committed to be sold. Through
these disposals, the Company exited the specialty industrial papers market
and the coated free sheet market. As of the first day of 1992, the Company
reconsolidated the mills which remained unsold. In December 1992, James
River announced a second restructuring program, pursuant to which certain
under-performing operations and assets are being disposed of or consolidated
with other similar facilities. The Company's restructuring programs and
related dispositions are described in more detail in Notes 2 and 3 of Notes
to Consolidated Financial Statements in the 1993 Annual Report, which
information is incorporated herein by reference.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
James River conducts its business in three major segments: (i) the Consumer
Products segment, which manufactures and markets towel and tissue and food
and beverage service products; (ii) the Food and Consumer Packaging segment,
which provides retail packaging for food and consumer products; and (iii) the
Communications Papers segment, which manufactures and markets uncoated
business and printing papers, coated groundwood printing and publishing
papers, and premium printing papers. Financial information on the Company's
segments for the three years ended December 26, 1993 is presented in Note 17
of Notes to Consolidated Financial Statements in the 1993 Annual Report,
which information is incorporated herein by reference.
(c) NARRATIVE DESCRIPTION OF BUSINESS
Principal Products
James River processes basic raw materials, such as wood, wood pulp, and
plastic resins, into products which generally are close to or in their end
use form. These include towel and tissue products, foodservice items, food
packaging, and business and printing papers.
Consumer Products Business. The Consumer Products Business,
representing slightly less than one-half of the Company's consolidated sales,
produces towel and tissue products such as bathroom tissues, household roll
towels, and wipes, and foodservice products such as paper and plastic cups,
paper plates, napkins, and plastic cutlery. The Consumer Products Business
is organized along retail and commercial market channels, with each channel
carrying both towel and tissue products and foodservice products. The retail
group markets a number of popular national brands of towel and tissue and
foodservice products including Quilted Northern(r), Marina(r), and
Nice 'n Soft(r) bathroom tissue; Brawny(r) paper towels; Vanity Fair(r)
premium foodservice products; and Dixie(r) plates, cups, and cutlery; as well
as a number of regional brands. Retail products are marketed either
nationally or regionally, principally through grocery stores, mass merchants,
warehouse clubs, and drug stores. The commercial group markets the broadest
line of towel and tissue and foodservice products in the industry under the
Dixie(r), Marathon(r), Handi-Kup(r), and Canada Cup(r) brand names, as well
as a variety of regional brands. A national sales force sells these products
to fast food chains, sanitary paper distributors, janitorial supply
distributors, and foodservice distributors, for use in restaurants, hotels,
offices, factories, and schools.
In addition, Jamont, with sales of approximately $1.4 billion, produces
branded and private label tissue and foodservice products for the retail and
away-from-home markets in Europe. Jamont also produces feminine hygiene
products, as well as various nonwoven products and pharmacy supplies.
Jamont's branded products include Lotus(r) bathroom tissue and Vania(r)
feminine hygiene products, both of which occupy leading positions in the
French market, Tenderly bathroom tissue sold in Italy, and Colhogar bathroom
tissue sold in Spain.
Food and Consumer Packaging Business. The Food and Consumer Packaging
Business, accounting for approximately one-third of the Company's
consolidated sales, provides retail packaging for food and other consumer
products which have high-volume distribution. The Company prints and
converts paper, films, and paperboard into the broadest range of packaging
options available to food and consumer products customers. Products of this
business include folding cartons (such as ice cream cartons, cereal boxes,
and microwave packages), flexible packaging (such as potato chip bags, bread
bags, frozen vegetable packages, and cheese packages), and barrier papers
(such as food wrap and cereal box liners). Folding cartons are produced from
both bleached and recycled paperboard. Folding carton operations are
supported by a polyethylene extrusion coating plant and an automated carton
die manufacturing plant. Flexible packaging products include a wide variety
of multilayer packaging materials which are made primarily from plastic films
and films combined with paper and foil and incorporate unique packaging
properties designed to meet specific needs of the processed food industry.
Flexible packaging operations are supported by ink manufacturing and blending
plants which produce flexographic and rotogravure inks and lacquers. The
Company's folding carton and flexible packaging operations serve both
regional and national markets.
Communications Papers Business. The Company's Communications Papers
Business is primarily focused on three major product lines which represent
approximately 20% of the Company's consolidated sales: uncoated business and
commercial printing papers, coated groundwood printing papers, and premium
printing papers. Uncoated business and commercial printing papers serve the
commercial printing and office markets. These products meet the needs of the
printing and publishing markets and are sold either on a direct basis or
through merchants and brokers to consumers, publishers, and printers. The
Company's Word Pro(r) and private label business papers are used in offices
and by retail printers for copy machines and offset presses. James River
also produces numerous recycled business and printing papers including
Eureka!(tm) copy paper, formsbond, and offset printing papers; Echo(tm) web
offset printing papers; and Reclaim(r) formsbond and lightweight opaque web
printing papers. James River's coated groundwood printing and publishing
papers, produced at the St. Francisville, Louisiana, pulp and paper mill,
serve the catalog, magazine, and direct mail markets. The Company's premium
printing papers include specialty cast-coated products, writing papers, and
cover and text papers. These papers are produced at a number of smaller
mills located in the eastern United States and the United Kingdom. Branded
premium printing papers include James River's Curtis line of cover, text, and
writing papers, and King James(r) cast-coated papers. The Company also
produces a variety of recycled brands including Retreeve(r) cover, text, and
writing papers and Graphika!(r) laser writing papers, as well as a number of
recycled papers included in the Curtis and King James(r) lines.
Marketing
Marketing of the Company's consumer products, food and consumer packaging,
and communications papers is managed along channels or at the product group
level in order to supply customers with a broad line of products and to focus
on both national and regional market needs. The Company's products are
marketed through outside distributors and national sales organizations,
including James River's Commercial Products sales force which markets both
towel and tissue and foodservice products to the commercial markets. The
Company utilizes regional distribution centers located throughout the United
States to minimize inventories and customer transportation costs.
New Products
James River is continually improving the quality and design of its products
and expanding its product offerings to meet various customer needs. During
1993, each of the Company's three businesses introduced new products to the
marketplace, including a number of recycled products to meet the growing
demands of environmentally-conscious consumers.
The Company is continuing to expand its offerings of recycled products within
the Consumer Products Business; James River produces 100% recycled Quilted
Northern(r) bathroom tissue, Brawny(r) towels, and Northern(r) napkins, as
supplements to the Company's regular product lines. During 1993, the
Consumer Products Business also developed a new line of coordinated cups,
plates, and napkins under the Vanity Fair(r) brand name and introduced a new
Dixie(r) Seasons line of mix-and-match designs. A new Brawny(r) Pick-A-Size
paper towel, a product that allows consumers to choose the right amount of
towel for each task, was also introduced. The new Quilted Northern(r)
bathroom tissue, with improved product characteristics, was introduced early
in 1993. The commercial group initiated improved designs on the Dixie(r)
line of cups, plates, and mealservice accessories, including the new Rio(tm)
design and the Select design, which enables foodservice operators to feature
their name and promotional message on their cups. Also, a new line of
Sofpull(tm) paper towels was introduced that allows users to touch only the
towel they use.
The Company's Food and Consumer Packaging Business is continuing to provide
superior microwave packaging with its patented Quik Crisp(r) product. The
flexible packaging group is working with several customers in seeking other
uses for the new Mini-Pouch(tm) package; the Mini-Pouch(tm), which was
introduced in 1992, is a plastic pouch for liquids that reduces packaging
weight and volume and replaces the traditional half-pint milk carton. During
1993, the Company participated in the development of the new BBQ Bag(r) which
is designed for use with charcoal that contains its own fuel source. The
package is specially treated with solutions that help protect store shelf
environments from stains associated with ignition fluid in charcoal. James
River also has introduced its new PaceSetter(tm) coated recycled paperboard,
produced on the Company's completely rebuilt board machine in Kalamazoo,
Michigan, which is used for lightweight, high strength applications including
refrigerated and frozen food products.
During 1993, the Communications Papers Business continued to reinforce its
commitment to expanding its recycled printing and writing papers product
lines. The Company's office paper recycling plant in Halsey, Oregon, uses
deinked fiber to produce Eureka!(tm) 100 recycled copy paper which was
brought to market in 1993. This copy paper has been complemented by the
development of Eureka!(tm) formsbond, envelope papers, and recycled offset.
Raw Materials and Supplies
James River utilizes a variety of raw materials in its manufacturing
processes. These include wood, wood pulp, other natural and synthetic
fibrous materials, selected base papers and boards, plastic films, resins,
and chemicals. James River believes there is generally a sufficient supply
of these or substitutable raw materials. Fiber supplies in the Pacific
Northwest continue to be affected by reductions in the amount of federal
forest land available for harvest resulting from environmental pressures.
In addition to these materials, pulp and paper production depends on an
adequate supply of water, electric power, and various forms of fuel. The
Company currently generates slightly less than one-half of its electrical
power needs internally through turbine-generators and hydroelectric stations,
which are located principally in New England and the Southeast. The Company
operates or is associated with a number of cogeneration facilities which
produce electricity for internal use or for sale to local utilities and which
effectively generate steam used in the papermaking process, while reducing
both air and water emissions. James River generates more than one-half of
its fuel needs through the utilization of black liquor (which is a by-product
of the pulping process), wood waste, and other residue.
The Company's paper products are manufactured principally from wood pulp
which is produced internally or is purchased from external sources. James
River's virgin pulping facilities include those producing both chemical and
mechanical pulp. Additionally, the Company produces secondary fiber through
the recycling of wastepaper and other reclaimable fiber sources; this
secondary fiber is generally used for further internal paper production
processes. The capacity of James River's pulping facilities, including those
of the Company's unconsolidated affiliates, is summarized as follows:
Capacity
Pulp Type (Tons Per Year)
Chemical 2,230,000
Mechanical 185,000
Secondary 771,000
Total 3,186,000
In addition to the Company's internal sources, several types of pulp are
purchased from other suppliers in the United States, Canada, and other parts
of the world. Purchased pulp is used to supply partially integrated paper
mills, to obtain types of pulp not produced by the Company, or to minimize
transportation costs. Substantially all of the pulp acquired within the
United States is purchased at or below prevailing market prices through the
use of volume discounts. The Company also sells market pulp from mills with
excess pulp capacity.
Pulpwood and woodchips which are used in James River's pulp mills are
obtained from a combination of owned and leased lands, lands covered by
long-term cutting rights agreements, pulpwood and woodchip supply contracts,
and open market purchases. All of the timberlands controlled by James River
or its affiliates are managed on a sustained-yield basis, and the rate of
harvesting is generally equal to or less than the average growth rate. James
River presently has controlled access to the timber supply from a total of
approximately 3.3 million acres of timberland. Of this total, approximately
480,000 acres located in New England, the Southeast, and the Northwest were
acquired by James River as part of its acquisition of Diamond Occidental
Forest Inc. ("Diamond") in November 1993. An additional 2.6 million acres
located in Canada are leased by James River-Marathon, Ltd. ("Marathon") and
its joint venture affiliate, Dubreuil Forest Products Limited. The remaining
220,000 acres include lands which are the subject of cutting rights contracts
and managed land programs.
James River also purchases paper and paperboard from outside vendors for use
in its converting plants. The largest of these items is bleached paperboard
used for folding cartons, plates, and cups and as a coating base stock.
These products utilize bleached paperboard with weights ranging from standard
to very lightweight cup stock. James River produces over 75% of its bleached
paperboard needs at its Naheola, Alabama, and St. Francisville, Louisiana,
mills. The balance of the Company's requirements is purchased from outside
bleached paperboard producers, over one-half of which is acquired pursuant to
a long-term contract with prices that are at or below prevailing market
prices.
Trademarks and Patents
James River has a large number of trademarks and trade names under which it
conducts its business. Domestic trademarks include, among others, "Quilted
Northern," "Brawny," "Vanity Fair," "Nice 'n Soft," "Marina," "Dixie,"
"Superware," "Dixie/Marathon," "Quilt-Rap," "Qwik Crisp," "Eureka!," and
"Word Pro." Trademarks for all major products are registered. The Company
considers its trademarks, in the aggregate, to be material to its business,
and consequently, seeks trademark protection by all available means.
The Company also has a variety of material patents and licenses related to
its business. Patents are valid for 17 years from the date of issuance; the
duration of licenses is dependent upon the specific terms of each license.
There are no patents or licenses expiring in 1994 which management expects
would have a material effect on the Company's business.
Seasonal Business
While seasonal variation in demand is not a major factor in the Company's
business, the first and fourth quarters of the year are generally the lowest
in net sales and net income, due to reduced promotional efforts over the
holidays and to weather-related costs. Net sales and profit margins in the
Consumer Products Business are generally higher in the spring and summer
(second and third quarters) compared to the winter (fourth and first
quarters) due to the seasonal volume strength of the Dixie(r) paper cup and
plate business during the summer months. In addition, the commercial tissue
portion of the Consumer Products Business generally experiences softer sales
volumes in the fourth quarter, when many industrial customers are on extended
holiday shutdowns. Profit margins for the Company have also historically
been lower in the fourth and first quarters because of holiday, vacation, and
maintenance shutdowns and seasonal energy costs.
Working Capital
The Company has no working capital practices considered to be abnormal in
relation to either the paper industry or to common business practices in the
United States. As of December 26, 1993, working capital was $501 million.
However, James River's working capital levels as of the end of the previous
three years were higher than normal. As of December 27, 1992, the Company's
cash and short-term securities balances were significantly increased in
connection with James River's refinancing program, which is more fully
described in Management's Discussion and Analysis of Financial Condition and
Results of Operations in the 1993 Annual Report, which information is
incorporated herein by reference. As of December 29, 1991 and December 30,
1990, working capital was abnormally high due to the inclusion of balances
related to the 1990 restructuring program.
Customers
Sales to James River's five largest customers in the aggregate accounted for
approximately 18.0% of consolidated net sales in 1993, 16.7% in 1992, and
15.0% in 1991. For 1993, sales to the five largest customers of the Consumer
Products Business accounted for approximately 27% of its sales; sales to the
five largest customers of the Food and Consumer Packaging Business
represented approximately 22% of its sales; and sales to the five largest
customers of the Communications Papers Business accounted for approximately
30% of its sales. There were no individual customers, however, to which
sales exceeded 10% of James River's consolidated net sales. The Company's
loss of any customer would not have a material adverse effect on the
financial condition of the Company.
Order Backlog
In general, the Company maintains product inventories to meet delivery
requirements of its customers, and in most cases, the backlog of customer
orders is not significant in relation to sales. The Company's backlogs were
short, generally 10 to 30 days depending on the product, as of December 26,
1993 and December 27, 1992. Order backlog does not vary substantially on a
seasonal basis.
Government Contracts
This item, involving renegotiation of profits or termination of contracts at
the election of the government, is not applicable.
Competition
James River and its affiliates compete in several domestic and European
markets and are among the largest suppliers of paper products within the
major markets that they serve. Depending upon the characteristics of the
particular market involved, the Company competes on the basis of price,
product quality and performance, product development effectiveness, service,
and sales and distribution support. In addition, advertising and promotion
are important tools for competing in consumer markets.
Consumer Products Business. James River competes in both the retail
and commercial channels of the U.S. tissue market. The retail channel is
mature with an annual growth rate of 1% to 2%. The commercial channel has
had a slightly higher annual growth rate in recent years and is fueled by the
increases in the amount of time the U.S. population spends outside the home.
This channel is more significantly affected by downturns in the economy.
Marketing of towel and tissue products is generally characterized as being
highly competitive. During 1993, approximately 70% of the Company's net
sales of towel and tissue products were to retail markets and 30% to
commercial markets. Based on industry sales volume statistics, James River
is one of the two largest U.S. manufacturers of towel and tissue products.
Towel and tissue production in the U.S. is primarily concentrated among a few
large manufacturers. In the retail tissue market, James River is the number
two ranked producer, behind The Procter & Gamble Company. Other large retail
tissue producers include Scott Paper Company and Kimberly-Clark Corporation.
In the commercial tissue market, James River's primary competitors include
Fort Howard Paper Company and Scott Paper Company.
Jamont, the Company's 43% owned European tissue joint venture, holds the
overall number two position in the European tissue market with a market share
of approximately 15%, slightly behind Scott Paper Company. The European
tissue market is generally more fragmented compared to the U.S. market, with
a few, large pan-European producers and many smaller, regional producers.
Jamont's products generally hold either the number one or number two
positions in each market in which they compete, and they hold the leading
brand position in the French market. Jamont currently has no operations in
Germany, and therefore does not compete in that market.
The Company's sales of disposable foodservice items have increased over the
past several years through both internal growth and acquisitions, as well as
through the diversification of product lines. James River has one of the
broadest and most diversified product lines serving both the retail and
commercial segments of the disposable foodservice market. Approximately 50%
of the Company's disposable foodservice products are sold to commercial
markets and 50% to retail markets. In the retail tabletop market, James
River holds the leading position, with over 25% of the total market. In the
commercial tabletop market, James River also holds the leading market
position, slightly ahead of Sweetheart Cup Company, Inc. The remainder of
both the retail and commercial markets is generally served by smaller,
regional, non-integrated producers.
Several factors contribute to James River's competitive strengths in both the
tissue and foodservice markets. These include superior product quality,
strong research and development efforts, broad product lines, strong brand
franchises, innovative graphic design, and full-service distribution. The
Company is continually improving product quality and design in order to
deliver greater value to customers while reducing cost. In addition, James
River's emphasis on increasing its usage of recycled fiber enhances its
capabilities for recycled tissue, which is increasingly important to
environmentally conscious consumers.
Food and Consumer Packaging Business. The Food and Consumer Packaging
industry is characterized by relatively non-cyclical demand. James River's
Food and Consumer Packaging segment has grown over the past several years
primarily due to acquisitions and new product offerings. The Company is the
second largest producer of folding cartons, slightly behind Jefferson Smurfit
Corporation. James River is one of the few folding carton producers with
integrated manufacturing facilities for both bleached and recycled
paperboard. In flexible packaging, the Company estimates that it is one of
the largest producers of laminated and coextruded packaging products, along
with Bemis Company, Inc. The Company believes that it is the largest
producer of barrier papers used in food packaging. James River estimates its
overall portion of the combined food packaging market for flexible packaging
and folding cartons at approximately 19%, making it the leading supplier.
James River's folding carton and flexible packaging operations offer food
processors the broadest line of food packaging products available. The
Company has a well-established customer base that enables it to provide
enhanced packaging products for a significant number of new product
offerings. The Company also believes it is one of the technological leaders
in this industry. Through its pioneered enhanced microwave cooking packaging
for both folding carton and flexible packaging applications, the Company is
well situated to strengthen its leadership position in this fast-growing
segment of the market. James River is also well-known for its superior
graphic design and its web litho and flexographic printing capabilities.
Communications Papers Business. The Company has two large, integrated
mills serving the western business and printing papers market: its Camas,
Washington, mill and its Wauna, Oregon, mill. The Company estimates that it
is one of the largest producers of business papers in the western business
papers market. Major competitors in western business and printing papers
include Weyerhaeuser Company, Boise Cascade Corporation, and Georgia-Pacific
Corporation. James River's coated groundwood papers are produced at the
Company's St. Francisville, Louisiana, mill, which is located in a site that
is able to service all portions of the country, with particular emphasis on
the mid-western printing and publication markets. The Company estimates that
it has approximately 5% of the coated groundwood papers market. Major
competitors include Champion International Corporation, International Paper
Company, and Consolidated Papers, Inc. In premium printing papers, James
River has a substantial share of the high end of the text and cover market
and, next to Champion International Corporation, it is the largest producer
of cast-coated papers. James River believes that it is generally equal or
superior to its competitors in product development effectiveness, product
quality, and service.
Research and Development
The Company's major research and development centers are located in Neenah,
Wisconsin; Cincinnati, Ohio; and Camas, Washington. The Company has pilot
plants located in Camas, Washington, and Neenah, Wisconsin, providing pulp
and papermaking developmental work and experimental trials; pilot plant
facilities for film and board packaging, laminating, and printing are located
in the Company's Technology and Business Center in Cincinnati, Ohio.
Additionally, James River has engineering centers in Green Bay, Wisconsin;
Camas, Washington; Antioch, California; Easton, Pennsylvania; and Toronto,
Canada.
Other information with respect to James River's research and development
efforts is set forth in Note 1 of Notes to Consolidated Financial Statements
in the 1993 Annual Report, which information is incorporated herein by
reference.
Environmental Matters
Like its competitors, James River is subject to extensive regulation by
various federal, state, provincial, and local agencies concerning compliance
with environmental control statutes and regulations. These regulations
impose limitations on the discharge of materials into the environment,
including effluent and emission limitations, as well as require the Company
to obtain and operate in compliance with the conditions of permits and other
governmental authorizations.
James River has made and will continue to make substantial capital
investments and operating expenditures, as well as production adjustments, in
connection with compliance with environmental laws and regulations, including
the Clean Air Act Amendments of 1990 (the "Clean Air Act"), the Clean Water
Act, and the Resource Conservation and Recovery Act. During 1993, capital
expenditures totaling approximately $58 million were made by James River for
pollution control facilities and equipment. Estimates of costs for future
environmental compliance are necessarily imprecise due to, among other
things, the continuing emergence of new environmental laws and regulations
and environmental control or process technology developments. While the
Company believes that its environmental control costs are likely to increase
as environmental regulations become broader and more stringent, James River
is unable to predict, except as described below, the amount or timing of such
increases, or the extent to which the impact of any future regulations on
James River would be proportional to the impact on its competitors. Such
future regulations could materially increase the Company's capital
requirements in future years.
In December 1993, the U.S. Environmental Protection Agency ("EPA") published
draft rules (the "cluster rules") which contain proposed revisions to
effluent guidelines under the Clean Water Act in conjunction with the new
regulations relating to the discharge of certain substances under the Clean
Air Act. The final rules are scheduled to be issued in late 1995, with a
nominal compliance date of 1998. The new rules may require significant
changes in the pulping and/or bleaching process presently used in some U.S.
pulp mills, including several of James River's mills, necessitating
additional capital expenditures to achieve compliance by approximately 1998.
Based on preliminary estimates, the Company anticipates that such capital
expenditures could be at least $300 million for James River. This estimate
could change, depending on several factors, including, among others, (i) the
ability of the Company and other pulp manufacturers to convince the EPA that
the proposed regulations are unnecessarily complex, burdensome, and
environmentally unjustified; (ii) the outcome of potential administrative and
judicial challenges; (iii) new developments in control and process
technology; or (iv) any unfavorable revisions to the proposed cluster rules
based on public comment.
In addition, James River has been identified as a potentially responsible
party ("PRP") and is involved in remedial investigations and actions under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986,
or similar state laws regarding the past disposal of wastes at approximately
40 sites in the United States. Such statutes may impose joint and several
liability for the costs of remedial investigations and actions on the
entities that arranged for disposal of the wastes, the waste generators, the
waste transporters, and the owners and operators of waste sites. Responsible
parties (or any one of them, including the Company) may be required to bear
all of such costs regardless of fault, legality of the original disposal, or
ownership of the disposal site. The Company has settled or resolved actions
related to certain sites at minimal cost and has determined that it has no
responsibility with regard to certain other sites for which it has received
notification. In most cases, James River is one of many PRP's, and its
relative contributions of waste materials have been minor. At the Solvent
Recovery Services of New England site in Connecticut, James River has been
notified by the EPA that, based on records available at this time, the
Company appears to be one of the largest potentially responsible parties. As
is the case with most manufacturing and many other entities, there can be no
assurance that the Company will not be named as a PRP at additional sites in
the future or that the costs associated with such additional sites would not
be material.
In accordance with financial reporting requirements, including Statement of
Financial Accounting Standards No. 5, James River's policy is to accrue
remediation costs when it is probable that such costs will be incurred and
when they can be reasonably estimated. Information on the Company's accrued
remediation liabilities and accrued landfill closure liabilities are
discussed in Note 16 and Note 1, respectively, of Notes to Consolidated
Financial Statements in the 1993 Annual Report, which information is
incorporated herein by reference.
Personnel
As of December 26, 1993, James River had approximately 35,000 employees in
North America and at its European subsidiaries and affiliates. Approximately
21,000 persons are engaged directly in manufacturing operations; the
remaining 14,000 are employed in administrative, sales, research, and
technical positions. Approximately 19,000 of the Company's hourly domestic
employees are represented by collective bargaining units affiliated with
regional or national labor unions. Contracts covering 16,900 such employees
are to be renegotiated during 1994 through 1996. Management considers
employee relations to be generally good. Group life, hospitalization, and
medical insurance are available for employees and their families, and
substantially all employees are covered by retirement plans.
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES
The facilities of James River's consolidated operations are located
principally within the United States; however, the Company operates a pulp
mill and several converting facilities in Canada, as well as both papermaking
and converting facilities in the United Kingdom. As of December 26, 1993,
total assets of consolidated subsidiaries located outside of the United
States were approximately $225 million, or less than 5% of consolidated total
assets. Net sales of consolidated foreign operations to unaffiliated
customers totaled approximately $173 million during 1993, or almost 4% of the
Company's total net sales. Export sales from the Company's domestic
operations represented less than 10% of total sales to unaffiliated customers
during each of 1993, 1992, and 1991.
In recent years, James River has made significant geographical expansions,
primarily through joint ventures. As of December 26, 1993, the Company's
total investments in unconsolidated affiliates of $519 million included
approximately $499 million of investments in foreign affiliates. The largest
of James River's foreign investments is its 43% interest in Jamont, its pan-
European consumer products joint venture. With operations in 12 European
countries, Jamont is a major manufacturer of tissue and hygiene products in
Europe. Information regarding James River's investments in affiliates is
presented in Note 11 of Notes to Consolidated Financial Statements in the
1993 Annual Report, which information is incorporated herein by reference.
<PAGE>
ITEM 2. PROPERTIES
The pulp and papermaking facilities of James River and its affiliates, the
number of paper or paperboard machines, and the principal types of products
produced at each facility are as follows:
Paper
or
Pulp Board
Location Mills Paper Mach-
(Facility Name)(A) (B) Mills ines Principal Products
Domestic:
Alabama
Pennington (Naheola) 1 1 7 Tissue; bleached paperboard
Delaware
Newark (Curtis) 1 2 Premium printing papers
Louisiana
St. Francisville 2(E) 2 4 Coated groundwood; specialty
packaging papers; bleached
bristols; bleached packaging
Maine
Old Town 1 1 2 Tissue
Massachusetts
Adams 1 3 Premium printing papers
Michigan
Kalamazoo
(Board & Carton) 1(C) 2 2 Recycled paperboard
Parchment 1 6 Specialty packaging papers;
uncoated freesheet
Port Huron 1 4 Specialty packaging papers
Ypsilanti (Peninsular) 1 1 Premium printing papers
New Hampshire
Berlin/Gorham 1 1 6 Uncoated freesheet; tissue
New Jersey
Milford (Riegel) 1 4 Specialty packaging papers;
uncoated freesheet
New York
Carthage 1(C) 1 2 Tissue
Gouverneur (Natural Dam) 1 1 Tissue
Oregon
Halsey 1(C) 1 2 Tissue
Clatskanie (Wauna) 2(E) 1 5 Tissue; uncoated freesheet;
uncoated groundwood
Washington
Camas 1 1 12 Uncoated freesheet; tissue;
specialty packaging papers
Wisconsin
Ashland 1(C) 1 2 Tissue
Green Bay 1(C) 1 7 Tissue
Total domestic 13 20 72
<PAGE>
Paper
or
Pulp Board
Location Mills Paper Mach-
(Facility Name)(A) (B) Mills ines Principal Products
International:
Canada
Marathon 1 Kraft pulp
Finland
Nokia (F) 1(C) 1 3 Tissue
France
Gien (F) 1 3 Tissue
Grenoble (F) 1 1 Tissue
Louviers
(Hondouville) (F) 2(D) 1 2 Tissue
Muntzenheim (Kunheim) (F) 1 2 Tissue
Greece
Patras (Achaia) (F) 1 1 Tissue
Italy
Castelnuovo (F) 1 1 Tissue
Cava dei Tirreni (F) 1 1 Tissue
Potenza (Avigliano) (F) 1 1 Tissue
Netherlands
Cuijk (F) 1(C) 1 3 Tissue
Spain
Allo (F) 1 2 Tissue
Turkey
Karamursel (F) 1(C) 1 2 Tissue
United Kingdom
Mid-Glamorgan
(Bridgend) (F) 1(C) 1 3 Tissue
St. Andrews (Guardbridge) 1 3 Premium printing papers
Larne (F) 1(C) 1 2 Tissue
North Sheffield
(Oughtibridge) (F) 1(C) 1 3 Tissue
Penicuik (Sommerville) 1 2 Premium printing papers
Total international 9 17 35
Total 22 37 107
(A) The locations listed for James River's consolidated subsidiaries are
held in fee by the Company.
(B) Unless otherwise indicated, represents a chemical pulp facility.
(C) Includes one secondary fiber facility.
(D) Includes two secondary fiber facilities.
(E) Includes one groundwood pulp facility.
(F) Represents an operating facility of Jamont, the Company's 43% owned
unconsolidated affiliate.
James River's network of manufacturing facilities, including those of its
unconsolidated affiliates, provides for an annual virgin and recycled pulp
capacity of approximately 3 million tons and an annual paper and paperboard
capacity of approximately 4 million tons. The Company believes that its
production facilities, and those of its unconsolidated affiliates, are
suitable for their purposes and are adequate to support their businesses.
The extent of utilization of individual facilities varies; however, during
1993, James River's pulp and paper mills generally had production levels
between 85% and 90% of capacity.
James River and its affiliates also operate both integrated and
non-integrated converting plants which perform a variety of converting
operations. These converting plants (excluding converting operations which
may be performed at pulp and papermaking facilities already listed on the two
previous pages) are summarized as follows:
Number of Converting Plants
Principal Products Domestic International Total
Paper and plastic foodservice products 13 5 18
Folding cartons 15 15
Flexible packaging 10 10
Ink manufacturing and blending 6 6
Paper converting and other 4 10 14
Total 48 15 63
James River's manufacturing and converting facilities are complemented by an
integrated network of sales offices and distribution terminals.
Other Properties
The Company operates a trucking company and two short-line railroads,
primarily used to transport shipments of raw materials and finished goods
between plants and to distribution centers. The Company also operates a
public warehouse and terminal service that provides tug, barge, freight
interchange, and other services on the Columbia, Willamette, and Snake Rivers
in the Pacific Northwest.
ITEM 3. LEGAL PROCEEDINGS
The Company is not involved in any litigation the outcome of which management
believes would have a materially adverse effect on the Company's results of
operations, financial position, or competitive position. Information with
respect to legal proceedings is set forth in Note 16 of Notes to Consolidated
Financial Statements in the Company's 1993 Annual Report, which information
is incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the last
quarter of 1993.
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table reflects the name, age, length of service as an officer
of James River, and current position for each of the current executive
officers of the Company. Previous positions and areas of responsibility over
the past five years are included in the footnotes that follow the table.
Each officer is elected by the Board of Directors to serve a one-year term.
There is no family relationship between any of these officers or between any
such officer and any director of the Company; nor is there any arrangement or
understanding between any officer and any other person pursuant to which the
officer was selected.
Calendar
Year First
Age Elected as
Name (1) an Officer Current Position
Robert C. Williams (2) 64 1969 Chairman of the Board of
Directors, President, and
Chief Executive Officer
James K. Goodwin (3) 47 1991 Executive Vice President,
Consumer Products
Ernest S. Leopold (4) 60 1986 Executive Vice President,
Communications Papers
Norman K. Ryan (5) 57 1980 Executive Vice President,
Food & Consumer Packaging
Clifford A. Cutchins, IV (6) 45 1990 Senior Vice President,
General Counsel, Corporate
Secretary
Ronald B. Estridge (7) 59 1974 Senior Vice President,
Technology
Daniel J. Girvan (8) 45 1993 Senior Vice President, Human
Resources
Stephen E. Hare (9) 40 1990 Senior Vice President,
Corporate Finance and Chief
Financial Officer
Richard K. Lee (10) 53 1987 Senior Vice President, Group
Executive, Flexible Packaging
John M. Nevin (11) 58 1990 Senior Vice President,
Strategic Services
E. Lee Showalter (12) 57 1971 Senior Vice President, Fiber
Business
Ronald L. Singer (13) 49 1982 Senior Vice President, Group
Executive, International
Hygienics Products
(1) All ages are as of February 17, 1994.
(2) Mr. Williams was elected Chairman of the Board of Directors, President,
and Chief Executive Officer effective August 1, 1992. Since November 1,
1990, he had served as President and Chief Executive Officer. Prior to
November 1, 1990, he had served as President, Chief Operating Officer.
(3) Mr. Goodwin joined James River in May 1991 as Vice President, Corporate
Marketing Strategy. From January 1992 to April 1992, he served as Vice
President, Dixie Business. Effective May 1992, he was elected to his
current position. Prior to joining James River, he was Vice President,
Corporate Sales for The Procter & Gamble Company which he joined in
1968.
(4) Mr. Leopold joined James River in May 1986 as Senior Vice President,
Communications Papers, in connection with the acquisition of Crown
Zellerbach Corporation, which he had joined in 1959. Effective
September 1, 1990, he was elected to his current position.
(5) Mr. Ryan joined James River in December 1980 in connection with the
Company's acquisition of Brown Company, a pulp and papermaking
subsidiary of Gulf and Western Industries, Inc. From 1983 to June 1989,
he served in several managerial and executive positions in the
Paperboard Packaging Group. In July 1989, Mr. Ryan was elected Senior
Vice President, Paperboard Packaging Group. Effective September 1,
1990, he was elected to his current position. Prior to the acquisition
of Brown Company by James River, Mr. Ryan held various positions with
Brown Company which he joined in 1954.
(6) Mr. Cutchins joined James River in February 1990 in his current
position. From 1982 until joining James River, he was a Partner with
the law firm of McGuire, Woods, Battle & Boothe which he joined in 1975.
(7) Mr. Estridge has served in his current position since 1987. From 1984
to 1987, he served as Vice President, Group Executive, Specialty Papers
Business with the Company.
(8) Mr. Girvan joined James River in May 1986 as Director, Human Resources
(Communications Papers) in connection with the acquisition of Crown
Zellerbach Corporation which he joined in 1977. From 1989 to 1991, he
served as Director, Organizational Development (Communications Papers),
and from 1991 to 1992, he served as Vice President, Human Resources
Development (Corporate). He served as Vice President, Human Resources
(Consumer Products) from 1992 until November 1993, when he was elected
to his current position.
(9) Mr. Hare joined James River in June 1990 as Vice President, Treasurer.
From February 1992 to September 1992, he served as Vice President,
Corporate Finance. Effective October 1992, he was elected to his
current position. Prior to joining the Company, Mr. Hare served as a
Senior Vice President with Kidder, Peabody & Co., Inc. which he joined
in 1981.
(10) Mr. Lee joined James River in October 1987 and served as Vice President,
Business Development, Packaging Business from that time until November
1988 and as Group Vice President, Flexible Packaging Group from November
1988 to December 1989. As of December 14, 1989, he was elected to his
current position. Prior to joining James River, Mr. Lee had extensive
experience in the paper industry with the Marathon Division of American
Can Corporation, Champion International Corporation, and Waldorf
Corporation.
(11) Mr. Nevin joined James River in September 1990 as Senior Vice President,
Strategic Services. From May 1992 to October 1992, he served as Senior
Vice President, Towel & Tissue Operations and Strategic Services. From
November 1992 to February 1994, he served as Senior Vice President,
Tissue Operations and Corporate Logistics. Effective in March 1994, he
was elected to his current position. From June 1985 until joining James
River, he had been employed by International Paper Company where he
served as Vice President and Group Executive, Coated Publication Papers
and Pulp. Mr. Nevin joined International Paper Company in 1957.
(12) Mr. Showalter served as Senior Vice President, Strategic Services from
November 1992 until March 1994, when he was elected to his current
position. From 1987 to November 1992, he served as Senior Vice
President, Corporate Development. From 1984 to 1987 he served as Vice
President, Group Executive, Communications Papers Business with the
Company.
(13) Mr. Singer was elected to his current position effective February 25,
1990. He also serves as Chief Executive Officer of Jamont N.V., a
foreign affiliate of the Company. He formerly served as Senior Vice
President, Group Executive, Towel & Tissue Business since joining James
River in 1982 in connection with the acquisition of the Dixie-Northern
Division of American Can Company.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's common stock is listed on the New York Stock Exchange.
Information with respect to quarterly high and low sales prices for James
River's common stock, quarterly dividends, and other quarterly information
related to common shares is contained in Note 18 of Notes to Consolidated
Financial Statements in the 1993 Annual Report, which information is
incorporated herein by reference. The payment of dividends and the amounts
thereof will be dependent upon James River's earnings, financial position,
cash requirements, and other relevant factors. Common shares of the Company
reserved for issuance are described in Note 13 of Notes to Consolidated
Financial Statements in the 1993 Annual Report, which information is
incorporated herein by reference. In addition, covenants of certain of the
Company's senior note agreements impose restrictions on the amount of net
worth which, in turn, may limit the funds available for the payment of
dividends; these covenants are described under the heading "Liquidity and
Capital Resources - Financing Activities" in Management's Discussion and
Analysis of Financial Condition and Results of Operations and in Note 12 of
Notes to Consolidated Financial Statements in the 1993 Annual Report, which
information is incorporated herein by reference. On February 17, 1994, there
were approximately 21,000 shareholders of record of the Company's common
stock.
ITEM 6. SELECTED FINANCIAL DATA
See "Selected Financial Data - Operations" and "Selected Financial Data -
Financial Position, End of Year" on pages 70 through 73 of the 1993 Annual
Report, which information for fiscal years 1989 through 1993 is incorporated
herein by reference. The data presented for each period reflects operations
acquired from the respective acquisition dates. Acquisitions and investments
from 1991 through 1993 are described in Note 3 of Notes to Consolidated
Financial Statements in the 1993 Annual Report, which information is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations" on pages 32 through 40 of the 1993 Annual Report, which
information is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See the consolidated financial statements and supplementary information,
including selected quarterly financial information, under the headings
"Consolidated Statements of Operations," "Consolidated Balance Sheets,"
"Consolidated Statements of Cash Flows," "Consolidated Statements of Changes
in Capital Accounts," "Notes to Consolidated Financial Statements," and
"Supplemental Pro Forma Financial Information" on pages 42 through 69 of the
1993 Annual Report, which information is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
There have been no changes in or disagreements with accountants on accounting
and financial disclosures within the twenty-four months prior to the date of
the most recent financial statements included herein.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
For information with respect to the Company's Directors and Director
nominees, see "Election of Directors," "Information on Nominees," and "Board
of Directors and Committees" on pages 1 through 3 and "Compliance with
Section 16(a) of the Securities Exchange Act of 1934" on page 15 of the
Company's Proxy Statement for the Annual Meeting of Shareholders to be held
on April 28, 1994 (the "1994 Proxy Statement"), which information is
incorporated herein by reference. Information with respect to the Company's
Executive Officers is contained under the heading "Executive Officers of the
Registrant" on pages 17 through 19 of Part I of this Form 10-K Annual Report.
ITEM 11. EXECUTIVE COMPENSATION
See "Compensation of Directors" on page 3, "Stock Option Plan for Outside
Directors" and "Retirement Plan for Outside Directors" on page 4, "Executive
Compensation" on pages 7 through 10, "Performance Graph" on page 11, and
"Compensation Committee Report on Executive Compensation" on pages 12 through
15 of the Company's 1994 Proxy Statement, which information is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See "Stock Ownership of Management" and "Principal Shareholders" on pages 5
and 6 of the Company's 1994 Proxy Statement, which information is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Information on Nominees" on page 2 of the Company's 1994 Proxy
Statement, which information is incorporated herein by reference.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents Filed as Part of This Report:
1) Financial Statements:
The Consolidated Financial Statements of James River Corporation of
Virginia and Subsidiaries, the Notes to Consolidated Financial
Statements, and the Report of Independent Accountants listed below
are incorporated herein by reference from pages 41 through 68 of
the Company's 1993 Annual Report. With the exception of the
aforementioned information, and the information incorporated by
reference in numbered Items 1, 3, 5, 6, 7, and 8, no other data
appearing in the 1993 Annual Report is deemed to be "filed" as part
of this Form 10-K Annual Report.
"Report of Independent Accountants" (see page 41 of the 1993 Annual
Report) with respect to the financial statements listed below
"Consolidated Statements of Operations" for each of the three years
in the period ended December 26, 1993 (see page 42 of the 1993
Annual Report)
"Consolidated Balance Sheets" as of December 26, 1993 and December
27, 1992 (see page 43 of the 1993 Annual Report)
"Consolidated Statements of Cash Flows" for each of the three years
in the period ended December 26, 1993 (see page 44 of the 1993
Annual Report)
"Consolidated Statements of Changes in Capital Accounts" for each
of the three years in the period ended December 26, 1993 (see page
45 of the 1993 Annual Report)
"Notes to Consolidated Financial Statements" (see pages 46 through
68 of the 1993 Annual Report)
2) Financial Statement Schedules:
The following Financial Statement Schedules and the Report of
Independent Accountants on Financial Statement Schedules are filed
with this Annual Report on Form 10-K on the pages indicated below.
The Financial Statement Schedules should be read in conjunction
with the consolidated financial statements and the notes thereto
included in the 1993 Annual Report.
Description Pages
Report of Independent Accountants on Financial
Statement Schedules S-1
Description Pages
V. Property, Plant, and Equipment for the
years ended December 26, 1993, December 27,
1992, and December 29, 1991 S-2 thru S-4
VI. Accumulated Depreciation, Depletion, and
Amortization of Property, Plant, and
Equipment for the years ended December 26,
1993, December 27, 1992, and December 29,
1991 S-5 thru S-7
IX. Short-Term Borrowings for the years ended
December 26, 1993, December 27, 1992, and
December 29, 1991 S-8
X. Supplementary Income Statement Information
for the years ended December 26, 1993,
December 27, 1992, and December 29, 1991 S-9
Financial Statement Schedules, other than those listed above, have
been omitted as the required information either is not present, is
not present in amounts sufficient to require submission of the
schedules, or is otherwise reflected in the consolidated financial
statements or the notes thereto.
Separate financial statements for each 50% or less owned affiliate
have been omitted because James River's proportionate share of each
such company's profit before income taxes and total assets is less
than 20% of James River's respective consolidated amounts, and
James River's investment in each such company is less than 20% of
its consolidated assets.
3) Exhibits:
Each Exhibit is listed according to the number assigned to it in
the Exhibit Table of Item 601 of Regulation S-K. The Exhibits
identified with an asterisk (*) are management contracts or
compensatory plans available to certain key employees or directors.
Exhibit
Number Description Section
3(a) James River Corporation of Virginia Amended E-1
and Restated Articles of Incorporation, as
amended effective January 4, 1990, filed
herewith.
3(b) James River Corporation of Virginia Articles E-2
of Amendment to the Amended and Restated
Articles of Incorporation Designating the
Series O 8-1/4% Cumulative Preferred Stock
($10.00 par value), effective October 1,
1992, filed herewith.
3(c) Bylaws of James River Corporation of Virginia, E-3
to be amended as of April 28, 1994, filed
herewith.
4(a) Amended and Restated Rights Agreement dated
May 12, 1992, between James River Corporation
of Virginia and NationsBank of Virginia, N.A.,
as Rights Agent, and Amendment No. 1 to such
Agreement, dated June 8, 1992 (incorporated by
reference to Exhibits 2 and 3, respectively,
to the Company's filing of Amendment 1 dated
July 28, 1992 to its Form 8-A dated March 3,
1989).
4(b) $750,000,000 Credit Agreement dated as of May
7, 1992 (incorporated by reference to Exhibit
4 to the Company's Current Report on Form 8-K
dated May 7, 1992).
4(c) In reliance upon Item 601(b)(4)(iii)(A) of
Regulation S-K, various instruments defining
the rights of holders of long-term debt of the
Registrant and its subsidiaries are not being
filed because the total amount of securities
authorized and outstanding under each such
instrument does not exceed 10% of the total
assets of the Registrant and its subsidiaries
on a consolidated basis. The Registrant
hereby agrees to furnish a copy of any such
instrument to the Commission upon request.
10(a) * Employment contract for Robert C. Williams,
dated January 1, 1993 (incorporated by
reference to Exhibit 10(a) to the Company's
Annual Report on Form 10-K for the year ended
December 27, 1992).
10(b) * Ancillary letter agreement with Robert C.
Williams, dated January 1, 1993 (incorporated
by reference to Exhibit 10(b) to the Company's
Annual Report on Form 10-K for the year ended
December 27, 1992).
10(c) * Employment Agreement with Ernest S. Leopold,
dated June 11, 1986 (incorporated by reference
to Exhibit 10(d) to the Company's Annual
Report on Form 10-K for the year ended April
29, 1990).
10(d) * Ancillary letter agreement with Ernest S.
Leopold, dated October 26, 1992 (incorporated
by reference to Exhibit 10 to the Company's
Quarterly Report on Form 10-Q for the quarter
ended September 27, 1992).
10(e) * Employment Agreement with Ronald L. Singer, E-4
dated December 15, 1993, filed herewith.
10(f) * James River Corporation of Virginia Deferred
Compensation Plan for Outside Directors,
amended and restated effective as of July 1,
1989 (incorporated by reference to Exhibit
10(c) to the Company's Annual Report on Form
10-K for the year ended April 30, 1989).
10(g) * James River Corporation of Virginia Stock
Option Plan for Outside Directors, amended and
restated as of April 11, 1991 (incorporated by
reference to Exhibit 10(e) to the Company's
Transition Report on Form 10-K for the
transition period from April 30, 1990 to
December 30, 1990).
10(h) * James River Corporation of Virginia Retirement E-5
Plan for Outside Directors, 1994 Amendment and
Restatement, effective February 18, 1994,
filed herewith.
10(i) * James River Corporation of Virginia Amended
and Restated Stock Option Plan, dated April
12, 1984, and subsequently amended through
October 1, 1990 (incorporated by reference to
Exhibit 4 to the Company's Registration State-
ment on Form S-8 (Post-Effective Amendment No.
1 to Registration Statement No. 2-83979),
dated December 18, 1984, and Exhibit 10(c) to
the Company's Quarterly Report on Form 10-Q
for the quarter ended October 28, 1990).
10(j) * James River Corporation of Virginia 1987 Stock E-6
Option Plan, 1993 Amendment and Restatement,
effective as of December 16, 1993, filed
herewith.
10(k) * James River Corporation of Virginia Stock
Appreciation Rights Plan, dated April 9, 1987,
and subsequently amended through October 1,
1990 (incorporated by reference to Exhibit
10(f) to the Company's Annual Report on Form
10-K for the year ended April 26, 1987, and
Exhibit 10(e) to the Company's Quarterly
Report on Form 10-Q for the quarter ended
October 28, 1990).
10(l) * James River Corporation of Virginia Deferred E-7
Stock Plan, 1993 Amendment and Restatement,
effective December 16, 1993, filed herewith.
10(m) * James River Corporation of Virginia Supple- E-8
mental Deferral Plan, 1993 Amendment and
Restatement, effective as of January 1, 1994,
filed herewith.
10(n) * James River II (formerly Crown Zellerbach)
Salaried Employees Retirement Savings Plan,
amended and restated as of May 5, 1986, and
subsequently amended through January 1, 1993
(incorporated by reference to: (i) Exhibit
4(b) to the Crown Zellerbach Salaried
Employees Retirement Savings Plan Annual
Report on Form 11-K for the year ended Decem-
ber 31, 1986; (ii) Exhibits 4(b) and 4(c) to
the Crown Zellerbach Salaried Employees
Retirement Savings Plan Annual Report on Form
11-K for the year ended December 31, 1987;
(iii) Exhibits 4(d) and 4(e) to the Company's
Registration Statement on Form S-8 (File No.
33-25851), dated December 1, 1988; (iv)
Exhibits 4(f), 4(g), and 4(h) to the James
River II, Inc. Salaried Employees Retirement
Savings Plan Annual Report on Form 11-K for
the year ended December 31, 1989; (v) Exhibit
10(m) to the Company's Transition Report on
Form 10-K for the transition period from April
30, 1990 to December 30, 1990; (vi) Exhibits
4(e) and 4(f) to the James River II, Inc.
Salaried Employees Retirement Savings Plan
Annual Report on Form 11-K for the year ended
December 31, 1990; and (vii) Exhibit 4(g) to
the James River II Salaried Employees
Retirement Savings Plan Annual Report on Form
11-K for the year ended December 31, 1992).
10(o) * James River Corporation of Virginia 1993 E-9
Profit Sharing Plan for Salaried Employees,
effective as of December 27, 1993, filed
herewith.
10(p) * James River Corporation of Virginia 1994 E-10
Performance/Productivity Bonus Plan, effective
as of February 18, 1994, filed herewith.
10(q) * James River Corporation of Virginia Supple-
mental Benefit Plan, amended and restated
effective June 1, 1991 (incorporated by
reference to Exhibit 10(m) to the Company's
Annual Report on Form 10-K for the year ended
December 29, 1991).
11 Computation of Earnings Per Share, filed E-11
herewith.
12 Computation of Ratio of Earnings to Fixed E-12
Charges, filed herewith.
13 Certain sections of the Company's Annual E-13
Report to Shareholders for the year ended
December 26, 1993, filed herewith.
21 Subsidiaries of the Company as of December 26, E-14
1993, filed herewith.
23 Consent of Independent Accountants, filed E-15
herewith.
<PAGE>
b) Reports on Form 8-K:
During the last quarter of 1993 and subsequent thereto, the Company
filed the following Current Reports on Form 8-K:
Date of Report Event Reported
1) September 27, 1993 The completion of the renegotiation of an
affiliate's debt covenant.
2) October 21, 1993 The publication of the Company's results of
operations for the third quarter and nine months
ended September 26, 1993.
3) November 23, 1993 The issuance in a public offering of $250 million
of 6.70% Notes due November 15, 2003 and $150
million of 7-3/4% Debentures due November 15, 2023.
4) January 25, 1994 The publication of the Company's results of
operations for the fourth quarter and year ended
December 26, 1993.
5) February 22, 1994 The nomination of Anne Marie Whittemore, a partner
in the Richmond law firm of McGuire, Woods, Battle
& Boothe, to the Board of Directors of James River
and the announcement of other organizational
changes.
<PAGE>
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.
James River Corporation of Virginia
(Registrant)
By:/s/ Stephen E. Hare
Date: March 25, 1994 Senior Vice President, Corporate Finance
Chief Financial Officer
(Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: March 25, 1994 Signature and Title
By:/s/ Robert C. Williams
Chairman, President, and
Chief Executive Officer
By:/s/ Stephen E. Hare
Senior Vice President, Corporate Finance
Chief Financial Officer
(Principal Financial and Accounting Officer)
<PAGE>
Pursuant to General Instruction D to Form 10-K, this report has been
signed below by a majority of the Board of Directors:
FitzGerald Bemiss March 21, 1994
Date
W. J. Bowen March 21, 1994
Date
William T. Burgin March 21, 1994
Date
Richard H. Catlett, Jr. March 22, 1994
Date
Worley H. Clark, Jr. March 21, 1994
Date
William T. Comfort, Jr. March 21, 1994
Date
William V. Daniel March 21, 1994
Date
Bruce C. Gottwald March 23, 1994
Date
Robert M. O'Neil March 21, 1994
Date
Joseph T. Piemont March 21, 1994
Date
Robert C. Williams March 25, 1994
Date
William S. Woodside March 22, 1994
Date
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Shareholders of
James River Corporation of Virginia:
Our report on the consolidated financial statements of James River
Corporation of Virginia and Subsidiaries has been incorporated by reference
in this Form 10-K from page 41 of the 1993 Annual Report to Shareholders of
James River Corporation of Virginia. In connection with our audits of such
financial statements, we have also audited the related financial statement
schedules listed in Item 14(a)(2) of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND
Richmond, Virginia
January 25, 1994
<PAGE>
JAMES RIVER CORPORATION of Virginia and Subsidiaries
SCHEDULE V -- PROPERTY, PLANT, AND EQUIPMENT (a)
for the Year Ended December 26, 1993
(in thousands)
Column A Column B Column C Column D Column E Column F
Other
Balance at Changes- Balance
Beginning Additions Retire- Add at End
Classification of Period at Cost ments (Deduct) of Period
(b) (c)
Land and land
improvements $ 149,328 $ 3,998 $ (2,013) $ (3,508) $ 147,805
Buildings 594,175 53,153 (15,563) (9,256) 622,509
Machinery and
equipment 4,180,919 380,707 (172,027) (25,183) 4,364,416
Construction
in progress 246,632 (129,221) 1,014 1,006 119,431
Timber and
timberlands 22,428 137,326 159,754
$5,171,054 $331,065 $(188,589) $100,385 $5,413,915
(a) See Note 1 of Notes to Consolidated Financial Statements in the 1993
Annual Report with respect to significant accounting policies for
property, plant, and equipment and timber and timberlands.
(b) Represents the total of numerous expenditures of which no individual item
exceeds two percent of total assets.
(c) Includes (i) property acquired as a result of the acquisition of Diamond
Occidental Forest Inc., (ii) the reclassification of gross cost of
property, plant, and equipment to net assets held for sale related to
refinements of amounts associated with the 1992 restructuring program
(see Note 2 of Notes to Consolidated Financial Statements in the 1993
Annual Report), and (iii) the effect of foreign currency translation
adjustments. 1993 acquisitions are further described in Note 3 of Notes
to Consolidated Financial Statements in the 1993 Annual Report.
<PAGE>
JAMES RIVER CORPORATION of Virginia and Subsidiaries
SCHEDULE V -- PROPERTY, PLANT, AND EQUIPMENT (a)
for the Year Ended December 27, 1992
(in thousands)
Column A Column B Column C Column D Column E Column F
Other
Balance at Changes- Balance
Beginning Additions Retire- Add at End
Classification of Period at Cost ments (Deduct) of Period
(b) (c)
Land and land
improvements $ 109,742 $ 11,351 $ (853) $ 29,088 $ 149,328
Buildings 454,168 59,770 (2,260) 82,497 594,175
Machinery and
equipment 3,324,747 419,810 (126,067) 562,429 4,180,919
Construction in
progress 257,827 (21,250) (2,709) 12,764 246,632
$4,146,484 $469,681 $(131,889) $686,778 $5,171,054
(a) See Note 1 of Notes to Consolidated Financial Statements in the 1993
Annual Report with respect to significant accounting policies for
property, plant, and equipment. Certain amounts have been reclassified
to conform to the current year's presentation.
(b) Represents the total of numerous expenditures of which no individual item
exceeds two percent of total assets.
(c) Includes (i) the reclassification as of the first day of the year of $546
million gross cost of property, plant, and equipment from net assets held
for sale in connection with the termination of the 1990 restructuring
program (See Note 2 of Notes to Consolidated Financial Statements in the
1993 Annual Report); (ii) an increase in gross cost of property, plant,
and equipment of $247 million recorded in connection with the adoption of
SFAS 109 (See Note 5 of Notes to Consolidated Financial Statements in the
1993 Annual Report); (iii) the reclassification as of the last day of
1992 of $110 million gross cost of property, plant, and equipment to net
assets held for sale in connection with adoption of the 1992
restructuring program (see Note 2 of Notes to Consolidated Financial
Statements in the 1993 Annual Report); (iv) the effect of foreign
currency translation adjustments; and (v) the acquisition of the party
goods business formerly owned by The Mennen Company (see Note 3 of Notes
to Consolidated Financial Statements in the 1993 Annual Report).
<PAGE>
JAMES RIVER CORPORATION of Virginia and Subsidiaries
SCHEDULE V -- PROPERTY, PLANT, AND EQUIPMENT (a)
for the Year Ended December 29, 1991
(in thousands)
Column A Column B Column C Column D Column E Column F
Other
Balance at Changes- Balance
Beginning Additions Retire- Add at End
Classification of Period at Cost ments (Deduct) of Period
(b) (c)
Land and land
improvements $ 106,623 $ 8,491 $ (5,496) $ 124 $ 109,742
Buildings 412,726 49,610 (1,934) (6,234) 454,168
Machinery and
equipment 2,987,687 412,848 (45,646) (30,142) 3,324,747
Construction
in progress 318,547 (3,475) (3,278) (53,967) 257,827
$3,825,583 $467,474 $(56,354) $(90,219) $4,146,484
(a) See Note 1 of Notes to Consolidated Financial Statements in the 1993
Annual Report with respect to significant accounting policies for
property, plant, and equipment. Certain amounts have been reclassified
to conform to the current year's presentation.
(b) Represents the total of numerous expenditures of which no individual item
exceeds two percent of total assets.
(c) Includes (i) property acquired as a result of the acquisition of Rampart
Packaging Inc. and the purchase of a folding carton operation from
Riverwood International, (ii) reclasses to other asset accounts with
respect to assets held for lease pursuant to the sale of the Specialty
Papers Business and property contributed to the Naheola Cogeneration
Limited Partnership, and (iii) the effect of foreign currency translation
adjustments. 1991 acquisitions are further described in Note 3 of Notes
to Consolidated Financial Statements in the 1993 Annual Report.
<PAGE>
JAMES RIVER CORPORATION of Virginia and Subsidiaries
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION, AND AMORTIZATION OF
PROPERTY, PLANT, AND EQUIPMENT (a)
for the Year Ended December 26, 1993
(in thousands)
Column A Column B Column C Column D Column E Column F
Additions Other
Balance at Charged to Changes- Balance
Beginning Costs and Retire- Add at End
Classification of Period Expenses ments (Deduct) of Period
(b)
Land improvements $ 24,742 $ 5,087 $ (889) $ 11 $ 28,951
Buildings 132,455 21,234 (1,921) 190 151,958
Machinery and
equipment 1,511,048 318,954 (164,872) (16,772) 1,648,358
Timber and
timberlands 13,156 13,156
$1,668,245 $358,431 $(167,682) $(16,571) $1,842,423
(a) See Note 1 of Notes to Consolidated Financial Statements in the 1993
Annual Report with respect to the Company's policies for providing for
depreciation and cost of timber harvested.
(b) Includes (i) the reclassification of accumulated depreciation on
property, plant, and equipment to net assets held for sale related to
refinements of amounts associated with the 1992 restructuring program
(see Note 2 of Notes to Consolidated Financial Statements in the 1993
Annual Report) and (ii) the effect of foreign currency translation
adjustments.
<PAGE>
JAMES RIVER CORPORATION of Virginia and Subsidiaries
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION, AND AMORTIZATION OF
PROPERTY, PLANT, AND EQUIPMENT (a)
for the Year Ended December 27, 1992
(in thousands)
Column A Column B Column C Column D Column E Column F
Additions Other
Balance at Charged to Changes- Balance
Beginning Costs and Retire- Add at End
Classification of Period Expenses ments (Deduct) of Period
(b)
Land improvements $ 20,644 $ 4,573 $ (575) $ 100 $ 24,742
Buildings 106,229 21,036 (172) 5,362 132,455
Machinery and
equipment 1,086,513 330,839 (118,056) 211,752 1,511,048
$1,213,386 $356,448 $(118,803) $217,214 $1,668,245
(a) See Note 1 of Notes to Consolidated Financial Statements in the 1993
Annual Report with respect to the Company's policies for providing for
depreciation. Certain amounts have been reclassified to conform to the
current year's presentation.
(b) Includes (i) the reclassification as of the first day of 1992 of $185
million of accumulated depreciation on property, plant, and equipment
from net assets held for sale in connection with the termination of the
1990 restructuring program (see Note 2 of Notes to Consolidated Financial
Statements in the 1993 Annual Report); (ii) an increase in accumulated
depreciation on property, plant, and equipment of $74 million recorded in
connection with the adoption of SFAS 109 (see Note 5 of Notes to
Consolidated Financial Statements in the 1993 Annual Report); (iii) the
reclassification as of the last day of 1992 of $44 million of accumulated
depreciation on property, plant, and equipment to net assets held for
sale in connection with the adoption of the 1992 restructuring program
(see Note 2 of Notes to Consolidated Financial Statements in the 1993
Annual Report) and (iv) the effect of foreign currency translation
adjustments.
<PAGE>
JAMES RIVER CORPORATION of Virginia and Subsidiaries
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION, AND AMORTIZATION OF
PROPERTY, PLANT, AND EQUIPMENT (a)
for the Year Ended December 29, 1991
(in thousands)
Column A Column B Column C Column D Column E Column F
Additions Other
Balance at Charged to Changes- Balance
Beginning Costs and Retire- Add at End
Classification of Period Expenses ments (Deduct) of Period
(b)
Land improvements $ 17,994 $ 2,784 $ 19 $ (153) $ 20,644
Buildings 86,620 14,618 6,972 (1,981) 106,229
Machinery and
equipment 877,567 274,199 (42,132) (23,121) 1,086,513
$982,181 $291,601 $(35,141) $(25,255) $1,213,386
(a) See Note 1 of Notes to Consolidated Financial Statements in the 1993
Annual Report with respect to the Company's policies for providing for
depreciation. Certain amounts have been reclassified to conform to the
current year's presentation.
(b) Includes (i) reclasses to other asset accounts with respect to assets
held for lease pursuant to the sale of the Specialty Papers Business and
property contributed to the Naheola Cogeneration Limited Partnership and
(ii) the effect of foreign currency translation adjustments.
<PAGE>
JAMES RIVER CORPORATION of Virginia and Subsidiaries
SCHEDULE IX -- SHORT-TERM BORROWINGS (a)
Years Ended December 26, 1993, December 27, 1992, and
December 29, 1991
(in thousands)
Column A Column B Column C Column D Column E Column F
Maximum Average Weighted
Amount Amount Average
Out- Out- Interest
Category of Balance Weighted standing standing Rate
Aggregate at End Average During During During
Short-term of Interest the the the
Year Ended Borrowings Period Rate Period Period Period
(b) (c) (d)
December 26, Borrowings
1993 from banks $103,300 3.3% $421,400 $231,979 3.4%
Commercial
paper 150,716 3.5% 351,749 269,778 3.4%
December 27, Borrowings
1992 from banks 274,936 3.7% 396,236 225,452 3.8%
Commercial
paper 237,752 4.0% 277,152 180,599 4.0%
December 29, Borrowings
1991 from banks -- -- 408,000 252,736 6.2%
Commercial
paper 42,362 5.3% 148,956 106,668 6.5%
(a) Borrowings from banks were made pursuant to promissory notes, with
interest based on money market rates. The terms of commercial paper were
negotiated at each issuance, with interest rates generally less than the
prime rate and maturities not exceeding 270 days. Any commercial paper
or outstanding bank borrowings have been included in long-term debt on
James River's consolidated balance sheet because of the availability of
long-term financing under a revolving credit agreement and the Company's
intent to refinance these amounts. See Note 12 of Notes to Consolidated
Financial Statements in the 1993 Annual Report.
(b) Represents the maximum amount outstanding at the end of any interim
period during the indicated fiscal year.
(c) The average amount outstanding during the period is calculated by
aggregating the daily outstanding principal balances and dividing by the
number of days in the fiscal year. 1993, 1992, and 1991, each included
364 days.
(d) The weighted average interest rate is calculated by dividing the actual
interest expense for the fiscal year by the respective average borrowings
outstanding, factored for the number of days in the fiscal year.
<PAGE>
JAMES RIVER CORPORATION of Virginia and Subsidiaries
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
(in thousands)
Column A Column B
Charged to Costs and Expenses for
the Fiscal Period Ended
December 26, December 27, December 29,
1993 1992 1991
Maintenance and repairs $297,590 $296,980 $252,321
Advertising costs 66,006 50,976 50,068
Taxes, other than payroll and income taxes, amortization of intangible
assets, and royalties were not material for presentation. Certain amounts
for prior years have been reclassified to conform to the current year's
presentation.
Exhibit 3(a)
JAMES RIVER CORPORATION OF VIRGINIA
AMENDED AND RESTATED ARTICLES OF INCORPORATION
ARTICLE I
NAME
The name of the corporation is James River Corporation of Virginia.
ARTICLE II
PURPOSES AND POWERS
A. Purposes. The purposes for which the Corporation is organized are
to acquire, own, manage and dispose of the capital stock and other securities
of paper manufacturing and all other types of corporations and to render to
such corporations, and to others, such advice and services as may be
permitted by law.
B. Powers. The Corporation shall have those powers conferred by the
laws of the Commonwealth of Virginia. It shall also have the power to
transact any business not prohibited by law or required to be stated in these
Articles of Incorporation.
ARTICLE III
CAPITAL STOCK
A. Authorized Stock. The aggregate number of shares of stock which
the Corporation shall have the authority to issue and the par value per share
are as follows:
Class No. of Shares Par Value
Common 150,000,000 $ .10
Preferred 5,000,000 10.00
B. Preemptive Rights. No holders of any class of stock of this
Corporation shall have any preemptive or other preferential right to purchase
or subscribe to (i) any shares of any class of stock of the Corporation,
whether now or hereafter authorized, (ii) any warrants, rights or options to
purchase any such stock, or (iii) any obligations convertible into any such
stock or into warrants, rights or options to purchase any such stock.
C. Voting Rights. The holders of the Common Stock shall, to the
exclusion of the holders of any other class of stock of the Corporation, have
the sole and full power to vote for the election of directors and for all
other purposes without limitation except only as otherwise provided in any
articles of serial designation applicable to any series of Preferred Stock,
and as otherwise expressly provided by the then existing statutes of the
Commonwealth of Virginia. The holders of the Common Stock shall have one
vote for each share of Common Stock held by them.
E-1
<PAGE>
D. Preferred Shares Issuable in Series. Authority is expressly vested
in the Board of Directors to divide the Preferred Stock into, and issue same
in, series and, within the following limitations, to fix and determine the
relative rights and preferences of the shares of any series so established,
and to provide for the issuance thereof. Each series shall be so designated
as to distinguish the shares thereof from the shares of all other series and
classes. All shares of the Preferred Stock shall be identical except as to
the following relative rights and preferences, as to which there may be
variations between different series:
(i) The rate of dividend, the time of payment, whether dividends
shall be cumulative and if so, the dates from which they shall be
cumulative, and the extent of participation rights, if any;
(ii) Any right to vote with holders of shares of any other series
or class and any right to vote as a class, either generally or as a
condition to specified corporate action;
(iii) The price at and the terms and conditions on which shares may
be redeemed;
(iv) The amount payable upon shares in event of involuntary
liquidation;
(v) The amount payable upon shares in event of voluntary
liquidation;
(vi) Sinking fund provisions for the redemption or purchase of
shares; and
(vii) The terms and conditions on which shares may be converted, if
the shares of any series are issued with the privilege of conversion.
Prior to the issuance of any shares of a series of Preferred Stock the
Board of Directors shall establish such series by adopting a resolution
setting forth the designation and number of shares of the series and the
relative rights and preferences thereof, to the extent permitted by the
provisions hereof, and the Corporation shall file in the office of the State
Corporation Commission of Virginia articles of serial designation as required
by law, and the Commission shall have issued a certificate of serial
designation.
All series of Preferred Stock shall rank on a parity as to dividends and
assets with all other series according to the respective dividend rates and
amounts distributable upon any voluntary or involuntary liquidation of the
Corporation fixed for each such series, and without the preference or
priority of any series over any other series; but all shares of the Preferred
Stock shall be preferred over the Common Stock as to both dividends and
amounts distributable upon any voluntary or involuntary liquidation of the
Corporation to the extent provided in any articles of serial designation
applicable thereto.
Before the date on which the Board of Directors approved these Amended and
Restated Articles of Incorporation, the Corporation had issued the following
listed series of Preferred Stock, namely, the Series A Cumulative Convertible
Preferred Stock, the Series B Cumulative Participating Preferred Stock, the
Series C Cumulative Participating Preferred Stock, the Series E Cumulative
Preferred Stock, the Series F Cumulative Convertible Preferred Stock, the
Series G $5.40 Cumulative Convertible Preferred Stock, the Series H Preferred
Stock, the Series I $5.85 Cumulative Convertible Preferred Stock, and the
Series J Preferred Stock. On that date all of the shares of each of the
aforesaid series which had been issued had been redeemed, converted or
otherwise acquired by the Corporation and no share of any such series
remained issued and outstanding. Each such series provided that shares of
the series, when purchased, redeemed or otherwise acquired by the
Corporation, would become authorized but unissued shares of Preferred Stock,
undesignated as to series.
On the date of these Amended and Restated Articles of Incorporation there
were issued and outstanding shares of the Series D Cumulative Preferred
Stock, the Series K $3.375 Cumulative Convertible Exchangeable Preferred
Stock and the Series L $14.00 Cumulative Convertible Exchangeable Preferred
Stock. On the date of these Amended and Restated Articles of Incorporation,
there were authorized, but unissued, 150,000 shares of the Series M
Cumulative Participating Preferred Stock. The dates on which each such
series was authorized by the Board of Directors and the preferences, limi-
tations and relative rights of the shares of each such series not otherwise
set forth in these Amended and Restated Articles of Incorporation are set
forth in Articles VII through X hereof.
On December 14, 1989, the Board of Directors designated 280,000 shares of
the authorized but unissued Preferred Stock as the Series N $14.00 Cumulative
Convertible Exchangeable Preferred Stock. The preferences, limitations and
relative rights of the shares of the Series N Preferred Stock not otherwise
set forth in these Amended and Restated Articles of Incorporation are set
forth in Article XI hereof.
ARTICLE IV
NUMBER OF DIRECTORS
The number of directors shall be as fixed in the bylaws in accordance with
law, and in the absence of a bylaw fixing the number of directors, the number
shall be eight.
ARTICLE V
VOTE TO AMEND OR RESTATE
As to each voting group entitled to vote on an amendment or restatement
of these Articles of Incorporation the vote required for approval shall be
(i) the vote required by the Virginia Stock Corporation Act (as applied
without regard to the effect of clause (iii) of this Article) if the effect
of the amendment or restatement is (a) to reduce the shareholder vote
required to approve a merger, a statutory share exchange, a sale of all or
substantially all of assets of the Corporation or the dissolution of the
Corporation, or (b) to delete all or any part of this clause (i) of this
Article; (ii) the vote required by the terms of these Articles of
Incorporation, as amended or as restated from time to time, if such terms
require the approval of more than a majority of the votes entitled to be cast
thereon by such voting group; or (iii) a majority of the votes entitled to be
cast thereon if neither clause (i) nor clause (ii) of this Article is
applicable.
ARTICLE VI
INDEMNIFICATION AND LIMIT ON LIABILITY
A. Definitions. For purposes of this Article VI the following
definitions shall apply:
(i) "Corporation" means this Corporation only and no predecessor
entity or other legal entity.
(ii) "Expenses" include counsel fees, expert witness fees, and
costs of investigation, litigation and appeal, as well as any amounts
expended in asserting a claim for indemnification.
(iii) "Liability" means the obligation to pay a judgment,
settlement, penalty, fine, or other such obligation, including, without
limitation, any excise tax assessed with respect to an employee benefit
plan.
(iv) "Legal Entity" means a corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise.
(v) "Predecessor Entity" means a legal entity the existence of
which ceased upon its acquisition by the Corporation in a merger or
otherwise.
(vi) "Proceeding" means any threatened, pending, or completed
action, suit, proceeding or appeal whether civil, criminal,
administrative or investigative and whether formal or informal.
B. Limitation on Liability. In every instance permitted by the Virginia
Stock Corporation Act, as it exists on the date hereof or may hereafter be
amended, the liability of a director or officer of the Corporation to the
Corporation or its shareholders arising out of a single transaction,
occurrence or course of conduct shall be limited to one dollar.
C. Indemnification of Directors and Officers. The Corporation shall
indemnify any individual who is, was or is threatened to be made a party to
a proceeding (including a proceeding by or in the right of the Corporation)
because he is or was a director or officer of the Corporation or because he
is or was serving the Corporation or any other legal entity in any capacity
at the request of the Corporation while a director or officer of the
Corporation, against all liabilities and reasonable expenses incurred in the
proceeding except such liabilities and expenses as are incurred because of
his willful misconduct or knowing violation of the criminal law. Service as
a director or officer of a legal entity controlled by the Corporation shall
be deemed service at the request of the Corporation. The determination that
indemnification under this Paragraph C is permissible and the evaluation as
to the reasonableness of expenses in a specific case shall be made, in the
case of a director, as provided by law, and in the case of an officer, as
provided in Paragraph D of this Article VI; provided, however, that if a
majority of the directors of the Corporation has changed after the date of
the alleged conduct giving rise to a claim for indemnification, such
determination and evaluation shall, at the option of the person claiming
indemnification, be made by special legal counsel agreed upon by the Board of
Directors and such person. Unless a determination has been made that
indemnification is not permissible, the Corporation shall make advances and
reimbursements for expenses incurred by a director or officer in a proceeding
upon receipt of an undertaking from him to repay the same if it is ultimately
determined that he is not entitled to indemnification. Such undertaking
shall be an unlimited, unsecured general obligation of the director or
officer and shall be accepted without reference to his ability to make
repayment. The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent shall not of
itself create a presumption that a director or officer acted in such a manner
as to make him ineligible for indemnification. The Corporation is authorized
to contract in advance to indemnify and make advances and reimbursements for
expenses to any of its directors or officers to the same extent provided in
this Paragraph C.
D. Indemnification of Others. The Corporation may, to a lesser extent
or to the same extent that it is required to provide indemnification and make
advances and reimbursements for expenses to its directors and officers
pursuant to Paragraph C, provide indemnification and make advances and
reimbursements for expenses to its employees and agents, the directors,
officers, employees and agents of its subsidiaries and predecessor entities,
and any person serving any other legal entity in any capacity at the request
of the Corporation, and, if authorized by general or specific action of the
Board of Directors, may contract in advance to do so. The determination that
indemnification under this Paragraph D is permissible, the authorization of
such indemnification and the evaluation as to the reasonableness of expenses
in a specific case shall be made as authorized from time to time by general
or specific action of the Board of Directors, which action may be taken
before or after a claim for indemnification is made, or as otherwise provided
by law. No person's rights under Paragraph C of this Article VI shall be
limited by the provisions of this Paragraph D.
E. Miscellaneous. Every reference in this Article VI to persons who are
or may be entitled to indemnification shall include all persons who formerly
occupied any of the positions referred to and their respective heirs,
executors and administrators. Special legal counsel selected to make
determinations under this Article may be counsel for the Corporation.
Indemnification pursuant to this Article shall not be exclusive of any other
right of indemnification to which any person may be entitled, including
indemnification pursuant to a valid contract, indemnification by legal
entities other than the Corporation and indemnification under policies of
insurance purchased and maintained by the Corporation or others. However, no
person shall be entitled to indemnification by the Corporation to the extent
he is indemnified by another, including an insurer. The Corporation is
authorized to purchase and maintain insurance against any liability it may
have under this Article VI or to protect any of the persons named above
against any liability arising from their service to the Corporation or any
other legal entity at the request of the Corporation regardless of the
Corporation's power to indemnify against such liability. The provisions of
this Article VI shall not be deemed to preclude the Corporation from entering
into contracts otherwise permitted by law with any individuals or legal
entities, including those named above. If any provision of this Article VI
or its application to any person or circumstance is held invalid by a court
of competent jurisdiction, the invalidity shall not affect other provisions
or applications of this Article VI, and to this end the provisions of this
Article VI are severable.
F. Application; Amendments. The provisions of this Article VI shall
apply to indemnification, advances and reimbursement for expenses made after
its adoption whether arising from conduct or events occurring before or after
such adoption. No amendment, modification or repeal of this Article VI shall
diminish the rights provided hereunder to any person arising from conduct or
events occurring before the adoption of such amendment, modification or
repeal.
ARTICLE VII
SERIES D CUMULATIVE PREFERRED STOCK
Pursuant to a resolution adopted by the Board of Directors of the
Corporation on November 23, 1977, 39,574 shares of Preferred Stock ($10 par
value) constitute a series of Preferred Stock designated as the Series D
Cumulative Preferred Stock (the "Series D Preferred Stock"), the shares of
which have the following voting powers, rights and preferences:
1. Dividends.
(a) The holders of shares of Series D Preferred Stock shall be
entitled to receive, if, when and as declared by the Board of Directors
of the Corporation, out of any funds legally available therefor, cash
dividends at the rate and payable on the dates hereinafter set forth.
The rate of dividends payable on the shares of Series D Preferred Stock
shall be $8.75 per share per annum and no more. Dividends shall be
payable in equal quarterly installments on the first day of each March,
June, September and December of each year, commencing the first day of
March of 1978. Dividends shall be cumulative and accrue on shares of
Series D Preferred Stock from and after the date of issue thereof.
Dividends payable on the first day of March of 1978 and on the date of
any redemption of shares of Series D Preferred Stock pursuant to
paragraph (a) of Section 3 hereof which is not the first day of March,
June, September or December shall be calculated on the basis of a 360-day
year and the actual number of days elapsed.
(b) No dividend whatsoever shall be declared or paid upon, or any
sum set apart for the payment of dividends upon, any shares of Parity
Stock for any dividend period unless a like proportionate dividend for
the same dividend period (ratably in proportion to the respective annual
dividend rates) shall have been declared and paid upon, or declared and
a sufficient sum set apart for the payment of such dividend upon, all
shares of Series D Preferred Stock outstanding. Unless full dividends,
to the extent that any amount of such dividends payable shall have become
determinable, on all shares of Series D Preferred Stock and any shares of
Prior Stock or Parity Stock for all past dividend periods and the then
current dividend period shall have been declared and paid, or declared
and a sum sufficient for the payment thereof set apart, and all mandatory
sinking fund payments required to be made pursuant to paragraph (b) of
Section 3 hereof have been made in full, no dividend whatsoever (other
than a dividend payable solely in Subordinate Stock) shall be declared or
paid upon, or any sum set apart for the payment of dividends upon, and no
other distribution shall be made upon, any shares of Junior Stock and no
shares of Junior Stock shall be purchased, redeemed or otherwise acquired
for value by the Corporation or by any Subsidiary and no monies shall be
paid into or set apart or made available for a sinking or other like fund
for the purchase, redemption or other acquisition for value of any such
shares by the Corporation or any Subsidiary.
(c) In addition to the provisions of paragraph (b) of this Section
l, no dividend whatsoever (other than a dividend payable solely in
Subordinate Stock) shall be declared or paid upon, or any sum set apart
for the payment of dividends upon, and no other distribution shall be
made upon, any shares of Junior Stock and no shares of Junior Stock shall
be purchased, redeemed or otherwise acquired for value by the Corporation
or any Subsidiary and no monies shall be paid into or set apart or made
available for a sinking or other like fund for the purchase, redemption
or other acquisition for value of any such shares by the Corporation or
any Subsidiary unless the sum of (w) the amount of such dividends and
distributions subsequent to April 24, 1977 plus (x) the excess of (A) the
amount expended in making, or paid into or set apart or made available
for a sinking or other like fund for, any such purchase, redemption or
the acquisition for value subsequent to April 24, 1977 over (B) the sum
of (i) the net proceeds received from the issuance or sale of Subordinate
Stock (other than to a Subsidiary) subsequent to April 24, 1977 plus (ii)
the principal amount of any indebtedness of the Corporation (other than
to a Subsidiary) which has been converted into Subordinate Stock
subsequent to April 24, 1977, is less than the sum of (y) $1,000,000 plus
(z) Consolidated Net Income earned after April 24, 1977; provided,
however that the provisions of this paragraph (c) shall not be applicable
in respect of (aa) the payment of any dividend, or the setting apart of
any sum for the payment of any dividend, on any shares of Junior Stock
within 60 days after the valid declaration thereof in compliance with
this paragraph (c), but the amount of all such dividends shall be taken
into account in any computation under clause (w) of this paragraph (c) or
(bb) the acquisition of any shares of Junior Stock by exchanging therefor
solely Subordinate Stock or from the proceeds of a substantially
concurrent sale for cash (other than to a Subsidiary) of Subordinate
Stock, and such shares so acquired by exchange or the amount expended
from such proceeds in making such acquisition shall not be taken into
account in any computation under clause (x) of this paragraph (c). For
the purposes of this paragraph (c), any dividend, distribution, purchase,
redemption or other acquisition paid or made other than in money shall be
valued as of the date thereof at its fair market value.
2. Voting Rights.
(a) The holders of shares of Series D Preferred Stock shall not be
entitled to any vote except to the extent provided herein or that such
holders are afforded a vote by the laws of the State of Virginia in
existence at the time any matter requiring such vote shall arise.
(b) The affirmative vote or consent of the holders of more than
sixty-six and two-thirds percent (66-2/3%), or such greater percentage as
shall at the time be required by law, of the outstanding shares of Series
D Preferred Stock (other than shares owned beneficially by the
Corporation or any Subsidiary), given in person or by proxy, either in
writing or at a meeting called for such purpose at which holders of
shares of Series D Preferred Stock shall vote separately as a class,
shall be necessary to effect any one or more of the following:
(i) Any amendment, alteration or repeal of any of the
provisions of this resolution or any of the other provisions of the
Articles of Incorporation or bylaws of the Corporation which affects
adversely the voting powers, rights or preferences of any shares of
Series D Preferred Stock or the holders thereof, it being understood
that any such amendment, alteration or repeal in order to increase the
number of Directors of the Corporation shall not be deemed to affect
adversely the voting powers, rights or preferences of any shares of
Series D Preferred Stock or the holders thereof;
(ii) The authorization of or the increase in the authorized
number of shares of Prior Stock;
(iii) The issue of shares of Prior Stock or Senior Stock, or the
issue of any debt obligations convertible into Prior Stock or Senior
Stock, if at the time of such issue, after giving effect thereto and
to the application of the proceeds therefrom, (x) the average of
Consolidated Net Income Available for Dividends for each of the two
fiscal years next preceding such issue shall be less than 150% of the
annual dividend requirements on all shares of Prior Stock and Parity
Stock except for (A) the annual dividend requirements on the
Corporation's Series B Cumulative Participating Preferred Stock
pursuant to Section 1 of the articles of serial designation therefor,
as now in effect, (B) the annual dividend requirements on the
Corporation's Series C Cumulative Participating Preferred Stock
pursuant to paragraph (b) of Section 1 of the articles of serial
designation therefor, as now in effect, and (C) the annual dividend
requirements on any other Prior Stock or Parity Stock issued in
connection with the acquisition by the Corporation of any business,
properties or assets (by way of consolidation, merger, purchase or
otherwise) to the extent of any amount of such annual dividend
requirement that is not a specified dollar amount per share but is
computed by reference to the before or after tax earnings, profits or
income of or the net cash flow or other similar or related measure of
the financial performance of such business, properties or assets so
acquired during periods ending subsequent to the effective date of
such acquisition or (y) Underlying Equity shall be less than the
amount to which the holders of all outstanding shares of Series D
Preferred Stock, Prior Stock and Senior Stock would be entitled upon
the involuntary liquidation, dissolution or winding up of the affairs
of the Corporation;
(iv) Any sale, lease or other disposition of substantially all
of the properties and assets of the Corporation; or
(v) Any consolidation of the Corporation with or any merger of
the Corporation into any other corporation unless the corporation with
which the Corporation is consolidated or into which it is merged shall
have after such consolidation or merger no authorized or outstanding
shares of any class of capital stock ranking senior to or equally with
the Series D Preferred Stock as to dividends or as to rights in
liquidation, dissolution or winding up of the affairs of such
resulting corporation except such class or classes of capital stock
of the same (or a lesser) number of authorized and outstanding shares
having the same voting powers, rights and preferences as the classes
of Prior Stock and Senior Stock of the Corporation immediately
preceding such consolidation or merger and each holder of outstanding
shares of Series D Preferred Stock immediately preceding such
consolidation or merger shall receive or continue to hold the same
number of shares of capital stock in such resulting corporation,
having the same voting powers, rights and preferences as the Series
D Preferred Stock is entitled to.
Notwithstanding the foregoing, without the written consent of each
holder of shares of Series D Preferred Stock outstanding, no amendment,
alteration or repeal of any of the provisions of this resolution or any
of the other provisions of the Articles of Incorporation of the
Corporation shall be made which would:
(aa) decrease the rate of dividends per annum on shares of
Series D Preferred Stock;
(bb) alter the cumulative or preferential nature of the
dividends on shares of Series D Preferred Stock or the date from
which such dividends are cumulative and accrue;
(cc) alter the quarterly dividend payment dates for shares
of Series D Preferred Stock;
(dd) decrease the liquidation prices in the case of
voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the Corporation for shares of Series D Preferred
Stock or affect adversely the rights and preferences of the shares
of Series D Preferred Stock or the holders thereof to receive
payment of such liquidation prices;
(ee) decrease the number of shares of Series D Preferred
Stock required to be redeemed on any sinking fund redemption date
through the operation of the mandatory sinking fund pursuant to
paragraph (b) of Section 3 hereof or the redemption price
applicable to mandatory redemptions of shares of Series D
Preferred Stock pursuant to such paragraph or otherwise alter any
of the other provisions of this resolution relating to the
mandatory sinking fund except to increase such number of shares
or such redemption price;
(ff) decrease the redemption prices applicable to optional
redemptions of shares of Series D Preferred Stock pursuant to
paragraphs (a) or (c) of Section 3 hereof; or
(gg) decrease the percentage requirement stated in the first
sentence of this paragraph (b) or alter any of the provisions of
this subparagraph including clauses (aa) through (gg) hereof or
the next succeeding sentence.
In addition, without the written consent of each holder of outstanding
shares of Series D Preferred Stock, the Corporation shall not enter into
any plan of exchange of all of the shares of Series D Preferred Stock for
shares of any class of capital stock of any other corporation pursuant to
Section 13.1-69.1 of the Virginia Stock Corporation Act or any similar
provision.
(c) The holders of shares of Series D Preferred Stock shall also
have the right to elect two members of the Board of Directors of the
Corporation at any time six or more quarterly dividends on any shares of
Series D Preferred Stock shall be in arrears and unpaid, in whole or in
part, whether or not declared and whether or not any funds shall be or
have been legally available for the payment thereof, or the Corporation
shall for any four quarterly periods, whether or not consecutive, have
failed to make in full the required mandatory sinking fund payments
pursuant to paragraph (b) of Section 3 hereof.
In the event the holders of shares of Series D Preferred Stock shall
become entitled to elect two Directors as above provided, unless a
regular meeting of the stockholders of the Corporation is to be held
within 60 days thereof for the purpose of electing Directors, the
Corporation shall promptly thereafter cause the number of Directors of
the Corporation to be increased by two, and, within 30 days thereafter,
shall call a special meeting of holders of shares of Series D Preferred
Stock for the purpose of electing such Directors to take place at the
time specified in the notice of meeting, to be not more than 60 days
after such holders become so entitled to elect two Directors and not less
than 10 or more than 50 days after the date on which such notice is
mailed. If such special meeting shall not have been so called by the
Corporation, or such regular meeting shall not be so held, a special
meeting may be called for such purpose at the expense of the Corporation
by the holders of not less than 5% of the outstanding shares of Series D
Preferred Stock. Notice of any such special meeting shall be given by
the person or persons calling the same to the holders of shares of Series
D Preferred Stock by first class mail, postage prepaid, at their last
addresses as shall appear on the stock transfer records of the
Corporation. At any such special meeting the holders of outstanding
shares of Series D Preferred Stock, voting as a single class, shall elect
two members of the Board of Directors of the Corporation.
If a regular meeting of the stockholders of the Corporation for the
purpose of electing Directors is to be held within 60 days after the time
of the holders of shares of Series D Preferred Stock become so entitled
to elect two Directors, then the holders of shares of Series D Preferred
Stock shall be given notice thereof in the same manner as any other
stockholders of the Corporation entitled to vote thereat, and, at such
regular meeting, the holders of outstanding shares of Series D Preferred
Stock, voting as a single class, shall elect two members of the Board of
Directors.
At each regular or special meeting of the stockholders of the
Corporation called for the purpose of electing Directors of the
Corporation (other than a special meeting of stockholders called to elect
Directors to fill vacancies created by the resignation, removal or death
of Directors other than Directors elected by the holders of outstanding
shares of Series D Preferred Stock, or any successor of any such
Director, or vacancies arising from an increase in the number of such
other Directors) subsequent to the calling of any such special or regular
meeting at which the holders of shares of Series D Preferred Stock shall
first be entitled to elect two Directors, the holders of outstanding
shares of Series D Preferred Stock, voting as a single class, shall elect
two members of the Board of Directors, and they shall be given notice
thereof in the same manner as any other stockholders of the Corporation
entitled to vote thereat.
Notwithstanding the foregoing provisions of this paragraph (c), at
such time as no dividends on any outstanding shares of Series D Preferred
Stock are in arrears and unpaid, in whole or in part, and all mandatory
sinking fund payments required to be made pursuant to paragraph (b) of
Section 3 hereof have been made in full, the voting power of the holders
of outstanding shares of Series D Preferred Stock shall cease, but always
subject to the same provisions of this paragraph (c) for the vesting of
such voting power upon the occurrence of like arrearages of dividends or
like failures to make mandatory sinking fund payments.
(d) The Directors (and any successor of any such Director pursuant
to paragraph (e) of this Section 2) elected by the holders of outstanding
shares of Series D Preferred Stock shall hold office until their
successors shall be elected; provided, however that their terms of office
shall automatically expire at such time as the voting power of holders of
outstanding shares of Series D Preferred Stock shall cease as provided in
paragraph (c) of this Section 2.
(e) If the office of any Director elected by the holders of
outstanding shares of Series D Preferred Stock (or any successor of any
such Director pursuant to this paragraph (e)) becomes vacant for any
reason, the remaining Director elected by the holders of shares of Series
D Preferred Stock may choose a successor who shall hold office for the
unexpired term in respect of which the vacancy occurred. If there shall
be vacancies in the offices of both Directors elected by the holders of
outstanding shares of Series D Preferred Stock, their successors shall be
elected by the holders of outstanding shares of Series D Preferred Stock
at a special meeting called for such purpose by the Corporation promptly
upon the occurrence of such vacancies, unless a regular meeting of
stockholders is to be held within 60 days thereof for the purpose of
electing Directors, to take place at the time specified in the notice of
meeting, to be not more than 60 days after the occurrence of such
vacancies and not less than 10 or more than 50 days after the date on
which such notice is mailed. If such special meeting shall not have been
so called by the Corporation, or such regular meeting shall not be so
held, a special meeting may be called for such purpose at the expense of
the Corporation by the holders of not less than 5% of the outstanding
shares of Series D Preferred Stock. Notice of any such special meeting
shall be given by the person or persons calling the same to the holders
of the shares of Series D Preferred Stock by first class mail, postage
prepaid, at their last addresses as shall appear on the stock transfer
records of the Corporation. At such special meeting the holders of
outstanding shares of Series D Preferred Stock, voting as a single class,
shall elect two Directors to fill such vacancies.
No Director elected by the holders of shares of Series D Preferred
Stock (or successor of any such Director) shall, during his term of
office, be removed, with or without cause, except upon the affirmative
vote of the holders of a majority of the outstanding shares of Series D
Preferred Stock.
(f) At any special or regular meeting of stockholders at which the
holders of the Series D Preferred Stock are entitled to vote, each
outstanding share of the Series D Preferred Stock shall entitle the
holder thereof to one vote, provided, however that shares then owned
beneficially by the Company or any Subsidiary shall not be entitled to
vote. The presence in person or by proxy of the holders of a majority of
the outstanding shares of Series D Preferred Stock entitled to vote shall
be required at any such regular or special meeting to constitute a quorum
of such class, and the absence of a quorum of the holders of any other
class of Capital Stock entitled to vote thereat shall not prevent the
holders of outstanding shares of Series D Preferred Stock from electing
two Directors at such meeting. A vote of the holders of a majority of
the outstanding shares of Series D Preferred Stock present in person or
by proxy at any such regular or special meeting at which a quorum is
present shall govern. In the absence of a quorum of the holders of
outstanding shares of Series D Preferred Stock at any such regular or
special meeting, the holders of a majority of the outstanding shares of
Series D Preferred Stock entitled to vote present in person or by proxy
shall have the power to adjourn the election of Directors to be elected
by such class from time to time without notice other than announcement at
such meeting until such quorum shall be present, but any such adjournment
shall not be made beyond the date of the calling of the next regular or
special meeting of the stockholders of the Corporation or special meeting
of the holders of shares of Series D Preferred Stock.
3. Redemption.
(a) The Corporation may, at its option, redeem at any time all, or
from time to time any portion of, the shares of Series D Preferred Stock
outstanding at the applicable redemption prices set forth below per
share:
If redeemed during the twelve months period ending November 30:
Redemption Redemption
Year Price Year Price
1978 $ 108.75 1988 $ 104.15
1979 108.29 1989 103.69
1980 107.83 1990 103.23
1981 107.37 1991 102.77
1982 106.91 1992 102.31
1983 106.45 1993 101.85
1984 105.99 1994 101.39
1985 105.53 1995 100.93
1986 105.07 1996 100.47
1987 104.61
and thereafter at $100 per share, plus in each case dividends accrued to
the date fixed for redemption; provided, however, that no such redemption
may be effected prior to December 1, 1987, directly or indirectly, from
or in anticipation of moneys borrowed by or for the account of the
Company (including, without limitation, moneys borrowed by any
Subsidiary) or from the proceeds of any Sale and Leaseback Transaction or
any issue of Capital Stock (other than Subordinate Stock or Capital Stock
immediately convertible into Subordinate Stock, provided that upon
original issuance of such convertible Capital Stock the price at which it
is convertible into Subordinate Stock shall not exceed 125% of the
average price for the Subordinate Stock in the principal market for such
Subordinate Stock for the preceding 30 trading days or of the book value
per share of such Subordinate Stock (determined as of the date of the
Corporation's most recent audited balance sheet in accordance with
generally accepted accounting principles)) if such borrowed money or such
proceeds from such Sale and Leaseback Transaction has an effective
interest cost to the Corporation, or such Capital Stock has a dividend
rate or cost to the Corporation, calculated in each case in accordance
with generally accepted financial practice, of less than 8-3/4% per
annum.
(b) As a mandatory sinking fund for the Series D Preferred Stock,
on the first day of March, June, September and December of each year,
commencing December 1, 1982 to and including September 1, 1997, the
Corporation shall redeem 600 shares (or the aggregate number of shares
outstanding if less than such number) of Series D Preferred Stock, and on
December 1, 1997 the Corporation shall redeem 4,000 shares (or the
aggregate number of shares outstanding if less than such number) of
Series D Preferred Stock, at a redemption price of $100 per share plus
dividends accrued to the date fixed for redemption. The dates on which
the Corporation shall be obligated to redeem shares of Series D Preferred
Stock pursuant to the provisions of the immediately preceding sentence
are hereinafter called "sinking fund redemption dates". The mandatory
sinking fund shall be cumulative so that if the Corporation shall fail to
redeem on any such sinking fund redemption date the full number of shares
then so required to be redeemed, the deficiency shall be added to the
number of shares required to be redeemed on the next succeeding sinking
fund redemption date. No optional redemption pursuant to paragraphs (a)
or (c) of this Section 3, nor any purchase or other acquisition, of
shares of Series D Preferred Stock shall entitle the Corporation to a
credit against the number of shares the Corporation shall be obligated to
redeem through the operation of the mandatory sinking fund on any such
sinking fund redemption date; provided, however, that, with the written
consent of a holder of shares of Series D Preferred Stock, the
Corporation shall have the right to apply, as a credit against the number
of shares required to be redeemed from such holder through the operation
of the mandatory sinking fund, any number of shares which the Corporation
may have previously acquired otherwise than through the operation of the
mandatory sinking fund from such holder and not theretofore applied as
such credit.
(c) As and for an optional sinking fund for the Series D Preferred
Stock, so long as there shall be no dividends on Series D Preferred Stock
in arrears and unpaid, in whole or in part, whether or not declared and
whether or not any funds shall be or have been legally available for the
payment thereof, and all mandatory sinking fund payments required to be
made pursuant to the provisions of paragraph (b) of this Section 3 have
been made in full, the Corporation may, at its option, redeem, at a
redemption price of $100 per share plus dividends accrued to the date
fixed for redemption, on any sinking fund redemption date which is the
first day of December, not less than 600 (or the aggregate number of
shares outstanding if, after giving effect to the mandatory sinking fund
requirement, less than such number) nor more than 2,400 shares of Series
D Preferred Stock. The optional sinking fund shall not be cumulative and
to the extent not availed of will terminate.
(d) In case less than all shares of Series D Preferred Stock
outstanding are to be redeemed, not more than 60 days prior to the date
fixed for redemption, the Corporation shall select the shares to be
redeemed. The Corporation shall prorate the total number of shares to be
so redeemed among the holders thereof in proportion, as nearly as may be,
to the number of shares registered in their respective names. In any
such proration, the Corporation shall make such adjustments, reallo-
cations and eliminations as it shall deem proper by increasing or
decreasing or eliminating the number of shares to be redeemed which would
be allocable to any one holder on the basis of exact proration by not
more than 10 shares to the end that the numbers of shares so prorated
shall be integral multiples of 10 shares. The Corporation in its
discretion may determine the particular certificates (if there are more
than one) representing shares registered in the name of a holder which
are to be redeemed.
(e) Not less than 30 nor more than 60 days prior to the date fixed
for any redemption pursuant to paragraphs (a), (b) or (c) of this Section
3 notice of redemption shall be given by first class mail, postage
prepaid, to the holders of record of the shares of the Series D Preferred
Stock to be redeemed at their last addresses as shown by the
Corporation's stock transfer records. The notice of redemption shall set
forth the number of shares to be redeemed, the date fixed for redemption,
the applicable redemption price or prices (including the amount of divi-
dends accrued to the date fixed for the redemption), the place or places
where certificates representing shares to be redeemed may be surrendered
and the paragraph or paragraphs of this Section 3 pursuant to which the
shares are to be redeemed. In the case of any redemption pursuant to
paragraph (a) of this Section 3 prior to December 1, 1987, the notice
shall demonstrate compliance with the provisions of such paragraph (a).
In case less than all outstanding shares are to be redeemed, the notice
of redemption shall also set forth the numbers of the certificates
representing shares to be redeemed and, in case less than all shares
represented by any such certificate are to be redeemed, the number of
shares represented by such certificate to be redeemed.
(f) If notice of redemption of any shares of Series D Preferred
Stock shall have been duly mailed as hereinabove provided, on or before
the date fixed for redemption the Corporation shall deposit in cash funds
sufficient to pay the redemption price (including dividends accrued to
the date fixed for redemption) of such shares in trust for the benefit of
the holders of shares to be redeemed with any bank or trust company in
the City of Richmond, State of Virginia, or Borough of Manhattan, City
and State of New York, having, or in the case of a Virginia bank or trust
company which is a subsidiary of a bank holding company registered under
the Bank Holding Company Act of 1956, as amended, whose parent holding
company has, capital and surplus aggregating at least $50,000,000 as of
the date of its most recent report of financial condition, named in such
notice, to be applied to the redemption of the shares so called for
redemption against surrender of the certificates representing shares so
redeemed for cancellation. From and after the time of such deposit all
shares for the redemption of which such deposit shall have been so made
shall, whether or not the certificates therefor shall have been
surrendered for cancellation, be deemed no longer to be outstanding for
any purpose and all rights with respect to such shares shall thereupon
cease and determine except the right to receive payment of the redemption
price (including dividends accrued to the date fixed for redemption), but
without interest. Any interest accrued on such funds shall be paid to
the Corporation from time to time. Any funds so deposited and unclaimed
at the end of five years from the date fixed for redemption shall be
repaid to the Corporation free of trust, and the holders of the shares
called for redemption who shall not have surrendered certificates
representing such shares prior to such repayment shall be deemed to be
unsecured creditors of the Corporation for the amount of the redemption
price (including dividends accrued to the date fixed for redemption)
thereof and shall look only to the Corporation for payment thereof,
without interest, subject to the laws of the State of Virginia.
(g) The Corporation shall also have the right to acquire shares of
Series D Preferred Stock otherwise than by redemption pursuant to
paragraphs (a), (b) or (c) of this Section 3 from time to time for such
consideration as may be acceptable to the holders thereof; provided,
however that if full dividends on all outstanding shares of Series D
Preferred Stock for all past dividend periods and the then current
dividend period shall not have been declared and paid or declared and a
sum sufficient for the payment thereof set apart or if all mandatory
sinking fund payments required to be made pursuant to the provisions of
paragraph (b) of this Section 3 have not been made in full, neither the
Corporation nor any Subsidiary shall so acquire any shares of Series D
Preferred Stock except in accordance with a purchase offer made on the
same terms to all holders of outstanding shares of Series D Preferred
Stock.
(h) Shares of the Series D Preferred Stock purchased, redeemed or
otherwise acquired by the Corporation shall not thereafter be disposed of
as shares of Series D Preferred Stock, but, upon issuance by the State
Corporation Commission of Virginia or any successor thereof of a
Certificate of Reduction, such shares shall become authorized and
unissued shares of Preferred Stock which may be designated as shares of
any other series. No additional shares of Preferred Stock, however, may
be classified as Series D Preferred Stock.
4. Liquidation. In the event of liquidation, dissolution or winding up
of the affairs of the Corporation, the holders of shares of the Series D
Preferred Stock then outstanding shall be entitled to be paid in cash out of
the net assets of the Corporation, including its capital, in the case of an
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, a liquidation price of the $100 per share or, in the case of a
voluntary liquidation, dissolution or winding up of the affairs of the
Corporation, an amount equal to the redemption price that would then be
applicable pursuant to clause (a) of Section 3 hereof, plus, in each case,
dividends accrued to the date of payment, and no more, before any
distribution or payment shall be made to the holders of shares of Common
Stock or any other class or series of Capital Stock ranking as to rights in
liquidation, dissolution or winding up of the affairs of the Corporation
junior to the Series D Preferred Stock, and, after payment to the holders of
shares of Series D Preferred Stock and to the holders of shares of other
classes and series of Preferred Stock of the amounts to which they are
respectively entitled, the balance of such assets, if any, shall be paid to
the holders of Common Stock according to their respective rights. For the
purposes of the preceding sentence, neither the consolidation of the
Corporation with nor the merger of the Corporation into any other corporation
nor the sale, lease or other disposition of substantially all of the
Corporation's properties and assets shall, without further corporate action,
be deemed a liquidation, dissolution or winding up of the affairs of the
Corporation. In case the net assets of the Corporation are insufficient to
pay to the holders of all outstanding shares of Series D Preferred Stock the
full amounts to which they are respectively entitled, the entire net assets
of the Corporation remaining shall be distributed ratably to the holders of
outstanding shares of Series D Preferred Stock and other classes and series
of Preferred Stock in proportion to the full amounts to which they are
respectively entitled.
5. Definitions. For the purposes of this resolution, the following
terms, unless the context other requires, shall have the following meanings:
"Capital Stock" means any capital stock of any class or series
(however designated) of the Corporation.
"Common Stock" means Capital Stock the holders of which are ordinarily
and generally, in the absence of contingencies, entitled to vote for the
election of a majority of the Board of Directors of the Corporation even
though the right so to vote has been suspended by the happening of such
a contingency.
"Consolidated Net Income" for any period means the amount of net
income (or net loss) of the Corporation and its consolidated
Subsidiaries, excluding the portion thereof, if any, allocable to
minority interests in such Subsidiaries for such period determined in
accordance with generally accepted accounting principles; provided,
however, that there shall not be included in Consolidated Net Income any
net income (or net loss) of any business, properties or assets acquired
after the date of issue of the shares of Series D Preferred Stock (by way
of merger, consolidation, purchase or otherwise) by the Corporation or
any Subsidiary for any period prior to the effective date of such
acquisition, whether such acquisition is accounted for as a pooling or
purchase.
"Consolidated Net Income Available for Dividends" for any period means
Consolidated Net Income, provided, however, that if Prior Stock or Senior
Stock is to be issued as a result of the consolidation with or merger
into the Corporation or any Subsidiary of another corporation, or the
acquisition by the Corporation or any Subsidiary of substantially all the
properties and assets of another corporation (or division of another
corporation if such division has maintained books and records as an
accounting entity), the Corporation may, but need not, include on a pro
forma basis in the calculation of Consolidated Net Income Available for
Dividends in each of the next two preceding fiscal years the results of
operations, if any, of such other corporation (or such division) for the
periods involved and shall include on a pro forma basis in such
calculations the result of operations of any corporation which was
previously consolidated with or merged into the Corporation or a
Subsidiary and of any other corporation (or division) substantially all
the properties and assets of which were previously acquired by the
Corporation or a Subsidiary for the periods involved if such results were
included on a pro forma basis in any previous calculation.
"Corporation" includes corporations, associations, companies and
business trusts.
"Dividends Accrued" means an amount equal to the rate of dividends on
the shares of Series D Preferred Stock per annum computed from the date
of issue of the shares of Series D Preferred Stock to the date to which
reference is made, whether or not such amount or any part thereof shall
have been declared as dividends and whether there shall be or have been
any funds out of which such dividends might legally be paid, less the
amount of dividends declared and paid and, if any dividends have been
declared but not paid, the amount set apart for the payment of such
dividends.
"Junior Stock" means any Capital Stock ranking as to dividends or as
to rights in liquidation, dissolution or winding up of the affairs of the
Corporation junior to the Series D Preferred Stock.
"Parity Stock" means any Capital Stock ranking as to dividends equally
with the Series D Preferred Stock.
"Prior Stock" means any Capital Stock ranking as to dividends or as
to rights in liquidation, dissolution or winding up of the affairs of the
Corporation prior to the Series D Preferred Stock.
"Sale and Leaseback Transaction" means with respect to any property
and arrangement with any person whereby the Corporation or any Subsidiary
leases from such persons such property (except for a term of not more
than three years by the end of which time it is intended that the use of
such property by the lessee will be discontinued and except for leases of
property by the Corporation from a Subsidiary or by a Subsidiary from the
Corporation or another Subsidiary), which property has been or is to be
sold or transferred by the Corporation or such Subsidiary to such person
with the intention of taking back a lease of such property.
"Senior Stock" means any Capital Stock ranking as to dividends or as
to rights in liquidation, dissolution or winding up of the affairs of the
Corporation equally with the Series D Preferred Stock.
"Subordinate Stock" means any Capital Stock ranking as to dividends
and as to rights in liquidation, dissolution or winding up of the affairs
of the Corporation junior to the Series D Preferred Stock.
"Subsidiary" means any corporation a majority of the outstanding
Voting Stock of which is owned, directly or indirectly, by the
Corporation or by one or more Subsidiaries or by the Corporation and one
or more Subsidiaries.
"Underlying Equity" means as of any time the portion of capital and
surplus of the Corporation (determined in accordance with generally
accepted accounting principles) that all holders of shares of Capital
Stock ranking as to rights in liquidation, dissolution or winding up of
the affairs of the Corporation junior to the Series D Preferred Stock
would be entitled to receive in the event of the involuntary liquidation,
dissolution or winding up of the affairs of the Corporation.
"Voting Stock", as applied to the capital stock of any corporation,
means stock of any class or classes (however designated) having ordinary
voting power for the election of a majority of the members of the board
of directors (or other governing body) of such corporation, other than
stock having such powers only by reason of the happening of a
contingency.
ARTICLE VIII
SERIES K $3.375 CUMULATIVE CONVERTIBLE EXCHANGEABLE
PREFERRED STOCK
Pursuant to a resolution adopted by the Board of Directors of the
Corporation on October 27, 1986, 2,000,000 shares of Preferred Stock ($10 par
value) constitutes a series of Preferred Stock designated as the Series K
$3.375 Cumulative Convertible Exchangeable Preferred Stock (the "Series K
Preferred Stock"), the shares of which have the following voting powers,
limitations, rights and preferences:
A. Dividends.
(1) The holders of the outstanding shares of Series K Preferred
Stock shall be entitled to receive, if, when and as declared by the Board
of Directors of the Corporation, out of any funds legally available
therefor, cash dividends at the rate and payable on the dates hereinafter
set forth. The rate of dividends payable on the shares of Series K
Preferred Stock shall be $3.375 per share per annum and no more.
Dividends shall be payable in equal quarterly installments on the first
day of February, May, August and November of each year (the "Payment
Dates"), commencing, in the case of any share of Series K Preferred
Stock, on that installment Payment Date which next follows the issuance
thereof. The initial dividend payment will be computed at the annual
rate for the period from the Issuance Date of Series K Preferred Stock to
the first installment Payment Date. Dividends shall be cumulative and
accumulate on the Series K Preferred Stock from and after the Issuance
Date. Dividends payable on the first installment Payment Date following
issuance and on the date fixed for any redemption of shares of Series K
Preferred Stock pursuant to Section C hereof which is not a Payment Date,
shall be calculated on the basis of a 360-day year and the actual number
of days elapsed.
(2) No dividend whatsoever shall be declared or paid upon, or any
sum set apart for the payment of dividends upon, any shares of Parity
Stock for any dividend period unless all dividends for all past dividend
periods have been declared and paid upon, or declared and a sufficient
sum set apart for the payment of such dividend upon, all shares of Series
K Preferred Stock outstanding.
(3) Unless full dividends (to the extent that the amount thereof
shall have become determinable) on all outstanding shares of Series K
Preferred Stock and any outstanding shares of Parity Stock due for all
past dividend periods shall have been declared and paid, or declared and
a sum sufficient for the payment thereof set apart, then, subject to the
rights of holders of shares of previously issued series of Preferred
Stock, (a) no dividend (other than a dividend payable solely in Junior
Stock) shall be declared or paid upon, or any sum set apart for the
payment of dividends upon, any shares of Junior Stock; (b) no other
distribution shall be made upon any shares of Junior Stock; (c) no shares
of Junior Stock shall be purchased, redeemed or otherwise acquired for
value by the Corporation or by any Subsidiary; and (d) no monies shall be
paid into or set apart or made available for a sinking or other like fund
for the purchase, redemption or other acquisition for value of any shares
of Junior Stock by the Corporation or any Subsidiary.
B. Voting Rights.
(1) Except for the voting rights expressly conferred by this
Section B and except to the extent provided by law, the holders of shares
of Series K Preferred Stock shall not be entitled (a) to vote on any
matter or (b) to receive notice of, or to participate in, any meeting of
stockholders of the Corporation at which the holders of shares of Series
K Preferred Stock are not entitled to vote.
(2) The approval of more than two-thirds of the votes entitled to
be cast by the holders of the outstanding shares of the Series K
Preferred Stock, voting as a separate voting group, shall be required for
the adoption of any amendment to the Articles of Incorporation, or any
bylaw, that materially adversely changes the preferences, limitations and
rights of the Series K Preferred Stock (it being expressly stated that an
increase in the number of Directors of the Corporation is not such an
adverse change, provided that this statement is made as a matter of
clarification and shall not be read as implying that in its absence such
an increase would institute such an adverse change) or for the
authorization of, or the increase in the authorized number of shares of,
a class of Capital Stock other than Junior Stock and Parity Stock. The
approval of a majority of the votes entitled to be cast by the holders of
the outstanding shares of Series K Preferred Stock, voting as a separate
voting group, shall be required for authorization of, or an increase in
the authorized number of shares of, any class of Parity Stock. Except
for cases covered by the two preceding sentences of this paragraph (2),
whenever the holders of the Series K Preferred Stock are entitled under
the Virginia Stock Corporation Act to vote as a separate voting group on
an amendment of the Articles of Incorporation, a plan of merger, or a
plan of share exchange, the vote required for the approval of such
amendment shall be a majority of all votes cast on the amendment, plan of
merger or plan of share exchange by the holders of the Series K Preferred
Stock at a meeting at which the holders of a majority of the outstanding
shares of Series K Preferred Stock are represented in person or by proxy.
(3) Whenever the holders of the Series K Preferred Stock are
entitled under the Virginia Stock Corporation Act to vote together with
the holders of one or more other series of Preferred Stock as a single
voting group (including a vote of the class of Preferred Stock as a
separate voting group) on any amendment of the Articles of Incorporation,
plan of merger or plan of share exchange, the vote required for the
approval of such amendment, plan of merger or plan of share exchange
shall be a majority of all votes cast on the amendment, plan of merger or
plan of share exchange by the holders of the shares included in such
voting group at a meeting at which the holders of a majority of the
outstanding shares included in such voting group are represented in
person or by proxy; provided that if at the time of such vote there shall
be outstanding any share of a series included in such voting group which
under the Articles of Incorporation or otherwise under the Virginia State
Corporation Act is not authorized as part of such voting group to approve
the amendment, plan of merger or plan of share exchange by such majority
vote, the vote required for its approval of such amendment, plan of
merger or plan of share exchange shall be more than two-thirds of all the
votes entitled to be cast by such voting group.
(4) The holders of the outstanding shares of Series K Preferred
Stock shall also have the right, voting together with the holders of any
other outstanding shares of Voting Preferred Stock (as hereinafter
defined) as a separate voting group, to elect two members of the Board of
Directors of the Corporation at any time six or more quarterly dividends
on any shares of Voting Preferred Stock shall be in arrears and unpaid,
in whole or in part, whether or not declared and whether or not any funds
shall be or have been legally available for payment thereof. For this
purpose, "Voting Preferred Stock" shall mean the Series K Preferred Stock
and each other series of Preferred Stock which shall have substantially
similar voting rights (including voting as one voting group with other
shares of Voting Preferred Stock) with respect to the election of
directors upon substantially similar arrearages of dividends. In such
event, unless a regular meeting of the stockholders of the Corporation is
to be held within 60 days thereof for the purpose of electing Directors,
the Corporation shall promptly thereafter cause the number of Directors
of the Corporation to be increased by two, and, within 30 days
thereafter, shall call a special meeting of the holders of the
outstanding shares of Voting Preferred Stock for the purpose of electing
such Directors to take place at the time specified in the notice of the
meeting, to be not more than 60 days after such holders become so
entitled to elect two Directors and not less than ten nor more than 50
days after the date on which such notice is mailed. If such special
meeting shall not have been so called by the Corporation, or such regular
meeting shall not be so held, a special meeting may be called for such
purpose at the expense of the Corporation by the holders of not less than
10% of the outstanding shares of any series of Voting Preferred Stock;
and notice of any such special meeting shall be given by the person or
persons calling the same to the holders of the outstanding shares of the
Voting Preferred Stock by first-class mail, postage prepaid, at their
last addresses as shall appear on the stock transfer records of the
Corporation. At any such special meeting the holders of the outstanding
shares of Voting Preferred Stock, voting as a separate voting group with
each share having one vote, shall elect two members of the Board of
Directors of the Corporation. If a regular meeting of the stockholders
of the Corporation for the purpose of electing Directors is to be held
within 60 days after the time the holders of the outstanding shares of
Voting Preferred Stock become so entitled to elect two Directors, then
the holders of the outstanding shares of Voting Preferred Stock shall be
given notice thereof in the same manner as other stockholders of the
Corporation entitled to vote thereat; and at such regular meeting, the
holders of the outstanding shares of Voting Preferred Stock, voting as a
separate voting group with each share having one vote, shall elect two
members of the Board of Directors. The right of the holders of the
Voting Preferred Stock, voting as a separate voting group, to elect two
members of the Board of Directors of the Corporation shall continue until
such time as no dividends on any outstanding shares of Voting Preferred
Stock are in arrears and unpaid, in whole or in part, at which time (i)
the voting power of the holders of the outstanding shares of Voting
Preferred Stock so to elect two directors shall cease, but always subject
to the same provisions of this paragraph (4) for the vesting of such
voting power upon the occurrence of each and every like arrearage of
dividends, and (ii) the term of office of each member of the Board of
Directors who was elected pursuant to this paragraph (4) shall
automatically expire.
C. Redemption.
(1) The shares of Series K Preferred Stock are not redeemable
prior to November 1, 1988 unless the closing price of the Corporation's
Common Stock on the New York Stock Exchange shall have equalled or
exceeded 150% of the conversion price then in effect for at least 20
trading days within 30 consecutive trading days ending within five
trading days prior to the date notice of redemption is given. With
respect to redemption in that event prior to November 1, 1988 or with
respect to redemption on or after November 1, 1988 the Corporation may at
its option redeem all or any portion of the outstanding shares of Series
K Preferred Stock at a redemption price determined as follows: if
redeemed during the twelve months' period ending October 31 of each of
the following years, at the price per share indicated (in dollars):
Year Price Year Price
1987 $53.3750 1992 $51.6875
1988 53.0375 1993 51.3500
1989 52.7000 1994 51.0125
1990 52.3625 1995 50.6750
1991 52.0250 1996 50.3375
and thereafter at the price of $50 per share, plus in each case Dividends
Accumulated to the date fixed for redemption.
(2) In case less than all of the outstanding shares of Series K
Preferred Stock are to be redeemed, not more than 60 days prior to the
date fixed for redemption the Corporation shall select the shares to be
redeemed. The Corporation shall select by proration, by lot or otherwise
the shares to be so redeemed among the holders thereof. The Corporation
shall make such adjustments, reallocations and eliminations as it shall
deem proper by increasing or decreasing or eliminating the number of
shares to be redeemed which would be allocable to any one holder on the
basis of exact proration, selection by lot or any such other method of
selection by not more than ten shares to the end that the numbers of
shares so prorated shall be integral multiples of ten shares. The
Corporation in its discretion may select the particular certificates (if
there are more than one) representing shares registered in the name of a
holder that are to be redeemed.
(3) Not less than 30 nor more than 60 days prior to the date fixed
for any redemption pursuant to paragraph (1) of this Section C, notice of
redemption shall be given by first class mail, postage prepaid, to the
holders of record of the outstanding shares of the Series K Preferred
Stock to be redeemed at their last addresses as shown by the
Corporation's stock transfer records. The notice of redemption shall set
forth the number of shares to be redeemed, the date fixed for redemption,
the applicable redemption price or prices (including the amount of
Dividends Accumulated to the date fixed for the redemption), and the
place or places where certificates representing shares to be redeemed may
be surrendered. In case less than all outstanding shares are to be
redeemed, the notice of redemption shall also set forth the numbers of
the certificates representing shares to be redeemed and, in case less
than all shares represented by any such certificate are to be redeemed,
the number of shares represented by such certificate to be redeemed.
(4) If notice of redemption of any outstanding shares of Series K
Preferred Stock shall have been duly mailed as herein provided, on or
before the date fixed for redemption the Corporation shall deposit in
cash funds sufficient to pay the redemption price (including Dividends
Accumulated to the date fixed for redemption) of such shares in trust for
the benefit of the holders of shares to be redeemed with any bank or
trust company in the City of Richmond, State of Virginia, or Borough of
Manhattan, City and State of New York, having capital and surplus
aggregating at least $50,000,000 as of the date of its most recent report
of financial condition, named in such notice, to be applied to the
redemption of the shares so called for redemption against surrender for
cancellation of the certificates representing shares so redeemed. From
and after the time of such deposit all shares for the redemption of which
such deposit shall have been made shall, whether or not the certificates
therefor shall have been surrendered for cancellation, be deemed no
longer to be outstanding for any purpose, and all rights with respect to
such shares shall thereupon cease and determine except (i) the right to
receive payment of the redemption price (including Dividends Accumulated
to the date fixed for redemption), but without interest, and (ii) in the
case of any such deposit before the date fixed for redemption, the right
to convert such shares into shares of Common Stock, which conversion
right shall continue to be exercisable until, but not after, the close of
business on the date fixed for redemption. Any interest earned on funds
so deposited shall be paid to the Corporation from time to time. Any
funds so deposited and unclaimed at the end of three years from the date
fixed for redemption shall be repaid to the Corporation free of trust,
and the holders of the shares called for redemption who have not
surrendered certificates representing such shares prior to such repayment
shall be deemed to be unsecured creditors of the Corporation for the
amount of the redemption price (including Dividends Accumulated to the
date fixed for redemption) thereof and shall look only to the Corporation
for payment thereof, without interest, subject to the laws of the
Commonwealth of Virginia.
(5) The Corporation shall also have the right to acquire
outstanding shares of Series K Preferred Stock otherwise than by
redemption pursuant to paragraph (1) of this Section C from time to time
for such consideration as may be acceptable to the holders thereof;
provided, however that if full dividends on all the outstanding shares of
Series K Preferred Stock for all past dividend periods shall not have
been declared and paid or declared and a sum sufficient for the payment
thereof set apart, neither the Corporation nor any Subsidiary shall so
acquire any shares of Series K Preferred Stock except in accordance with
a purchase offer made on the same terms to all the holders of the
outstanding shares of Series K Preferred Stock.
(6) Shares of Series K Preferred Stock purchased, redeemed or
otherwise acquired by the Corporation and shares of Series K Preferred
Stock not issued on or within 30 days after the Issuance Date shall
become authorized and unissued shares of Preferred Stock which may be
designated as shares of any other series. No additional shares of
Preferred Stock, however, may be classified as Series K Preferred Stock.
D. Liquidation. In the event of liquidation, dissolution or winding up
of the affairs of the Corporation, whether voluntary or involuntary, the
holders of the shares of the Series K Preferred Stock then outstanding shall
be entitled to be paid in cash out of the net assets of the Corporation,
including its capital, a liquidation payment of $50 per share, plus, in each
case, Dividends Accumulated to the date of payment, and no more, before any
distribution or payment shall be made to the holders of shares of Junior
Stock and, after payment to the holders of the outstanding shares of Series
K Preferred Stock and to the holders of shares of other series of Preferred
Stock and classes of other Parity Stock of the amounts to which they are
respectively entitled, the balance of such assets, if any, shall be paid to
the holders of the Common Stock according to their respective rights. For
the purposes of the preceding sentence, neither the consolidation of the
Corporation with nor the merger of the Corporation into any other corporation
nor the sale, lease or other disposition of all or substantially all of the
Corporation's properties and assets shall, without further corporation
action, be deemed a liquidation, dissolution or winding up of the affairs of
the Corporation. In case the net assets of the Corporation are insufficient
to pay to the holders of the outstanding shares of Series K Preferred Stock
the full amounts to which they are respectively entitled, the entire net
assets of the Corporation remaining shall be distributed ratably to the
holders of the outstanding shares of Series K Preferred Stock, other series
of Preferred Stock and classes of other Parity Stock in proportion to the
full amounts to which they are respectively entitled.
E. Conversion.
(1) Each holder of any outstanding shares of Series K Preferred
Stock shall have the right, at any time, to convert any of such shares
into shares of Common Stock. Furthermore, as to any shares of Series K
Preferred Stock called for redemption, each such holder shall have the
right at any time prior to the close of business on the date fixed for
redemption (unless default shall be made by the Corporation in the
payment of the redemption price in which case such right of conversion
shall continue uninterrupted) to convert any of such shares into shares
of Common Stock. The number of shares of Common Stock into which each
share of Series K Preferred Stock shall be convertible shall be equal to
the number arrived at by dividing $50 by the conversion price per share
of the Common Stock fixed or determined as hereinafter provided. Such
conversion price shall initially be $40.75 per share, subject to the
adjustments hereinafter provided (such price as adjusted at any time
being hereinafter called the "Conversion Price".)
(2) The holder of any outstanding shares of Series K Preferred
Stock may exercise the conversion right provided in paragraph (1) above
as to all or any portion of the shares he holds by delivering to the
Corporation during regular business hours, at the principal office of the
Corporation or at such other place as may be designated in writing by the
Corporation, the certificate or certificates for the shares to be
converted, duly endorsed or assigned in blank or endorsed or assigned to
the Corporation (if required by it), accompanied by (a) written notice
stating that the holder elects to convert such shares and stating the
name or names (with address and applicable social security or other tax
identification number) in which the certificate or certificates for
shares of Common Stock are to be issued and (b) in the case of conversion
after the record date for the payment of dividends on the Series K
Preferred Stock, as determined by the Board of Directors of the
Corporation, but before the next Payment Date, an amount equal to the
full dividend installment to be paid on the next Payment Date
attributable to the shares of Series K Preferred Stock to be converted.
Conversion shall be deemed to have been effected on the date (the
"Conversion Date") when such delivery is made. As promptly as
practicable thereafter the Corporation shall issue and deliver to or upon
the written order of such holder, at such office or other place
designated by the Corporation, a certificate or certificates for the
number of full shares of Common Stock to which he is entitled and a check
or other order for the payment of cash due with respect to any fraction
of a share, as provided in paragraph (3) below. The person in whose name
the certificate or certificates for shares of Common Stock are to be
issued shall be deemed to have become a stockholder of record on the
Conversion Date, unless the transfer books of the Corporation are closed
on that date, in which event he shall be deemed to have become a
stockholder of record on the next succeeding date on which the transfer
books are open; but the Conversion Price shall be that in effect on the
Conversion Date.
(3) The Corporation shall not issue any fraction of a share upon
conversion of shares of the Series K Preferred Stock. If more than one
share of the Series K Preferred Stock shall be surrendered for conversion
at any time by the same holder, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the basis of the
total number of shares of Series K Preferred Stock so surrendered. If
any fractional interest in a share of Common Stock would be deliverable
upon conversion, the Corporation shall make an adjustment therefor in
cash based on the Fair Market Value, on the Conversion Date, of one share
of Common Stock. The "Fair Market Value" of one share of Common Stock,
as used in this Section E shall, if the Common Stock is traded in the
over-the-counter market, be deemed to be the mean between the asked and
bid prices on the date the value is required to be determined, as
reported by NASDAQ or any similar service, and if the Common Stock is
listed and traded on a national stock exchange, be deemed to be the
closing price of the Common Stock for such day derived from the New York
Stock Exchange Composite Tape, or if there be no New York Stock Exchange
Composite Tape, any similar service; provided, however, that if the
Common Stock is not traded on such date, then the Fair Market Value shall
be determined, in the manner hereinabove set forth, on the most recent
preceding business day on which the Common Stock was traded.
(4) The issuance of Common Stock on conversion of outstanding
shares of Series K Preferred Stock shall be made by the Corporation
without charge for expenses or for any tax in respect of the issuance of
such Common Stock, but the Corporation shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance and delivery of shares of Common Stock in any name other than
that of the holder of record on the books of the Corporation of the
outstanding shares of Series K Preferred Stock converted, and the
Corporation shall not be required to issue or deliver any certificate for
shares of Common Stock unless and until the person requesting the
issuance thereof shall have paid to the Corporation the amount of such
tax or shall have established to the satisfaction of the Corporation that
such tax has been paid.
(5) The Conversion Price shall be subject to the following
adjustments.
(a) Whenever the Corporation shall (i) pay a dividend on its
outstanding shares of Common Stock in shares of its Common Stock or
subdivide or otherwise split its outstanding shares of Common Stock,
or (ii) combine its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect at the effective date
of the happening of such event shall be adjusted so that the holders
of the Series K Preferred Stock, upon conversion of all thereof
immediately following such event, would be entitled to receive the
same aggregate number of shares of Common Stock as they would have
been entitled to receive immediately following such event if such
shares of Series K Preferred Stock had been converted immediately
prior thereto, or if there is a record date in respect of such event,
immediately prior to such record date.
(b) In case the Corporation shall issue rights, warrants or
options to all holders of its Common Stock entitling them (for a
period expiring within 90 days after the record date mentioned below)
to subscribe for or purchase shares of Common Stock at a price per
share less than the Current Market Value (as hereinafter defined) per
share of Common Stock on the record date mentioned below, the
Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect
immediately prior to the issuance of such rights, warrants or options
by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding at the close of business on the date of
issuance of such rights, warrants or options plus the number of shares
which the aggregate exercise price of the shares of Common Stock
called for by all such rights, warrants or options (excluding any
theretofore exercised) would purchase at such Current Market Value and
the denominator of which shall be the number of shares of Common Stock
outstanding at the close of business on the date of issuance of such
rights, warrants or options plus the number of additional shares of
Common Stock called for by all such rights, warrants or options
(excluding any theretofore exercised). Such adjustment shall be made
whenever such rights, warrants or options are issued and shall be
retroactively effective as of immediately after the record date for
the determination of stockholders entitled to receive such rights,
warrants or options. For the purposes of this Section E(5), the
"Current Market Value" per share of Common Stock on any date shall be
deemed to be the average of the Fair Market Value (as defined in
Section E(3)) of each of the 20 consecutive trading days commencing
40 trading days before such date (a trading day being a day on which
securities are traded in the over-the-counter market or, if the Common
Stock is then listed on any national stock exchange, on such
exchange).
(c) Whenever the Corporation shall make a distribution to
holders of Common Stock of evidences of its indebtedness or assets
(excluding dividends and distributions paid in cash out of funds
available for dividends in accordance with applicable law), or rights,
warrants or options to subscribe for or purchase securities of the
Corporation (other than those referred to in subdivision (b) of this
paragraph (5)), the Conversion Price immediately prior to such
distribution shall be adjusted by multiplying such Conversion Price
by a fraction, (i) the numerator of which shall be the denominator,
hereinbelow described, less the fair value (as conclusively determined
in good faith by the Board of Directors of the Corporation) at the
time of such distribution of that portion of the evidences of
indebtedness, assets, or the rights, warrants or options, distributed
which is applicable to one share of Common Stock, and (ii) the
denominator of which shall be the Current Market Value per share of
Common Stock on the next full business day after the record date fixed
for the determination of the holders of the Common Stock entitled to
such distribution. Such adjustment shall be retroactively effective
as of immediately after such record date.
(6) Notwithstanding any of the foregoing provisions of this
Section E, no adjustment of the Conversion Price shall be made if the
Corporation shall issue (i) Common Stock or rights, warrants or options
to purchase Common Stock pursuant to one or more stock purchase plans,
stock option plans, stock purchase contracts, incentive compensation
plans, or other remuneration plans for employees (including officers) of
the Corporation or its Subsidiaries adopted or approved by the Board of
Directors of the Corporation before or after the adoption of this
resolution or (ii) rights, warrants or options to purchase Common Stock
or other capital stock convertible into Common Stock pursuant to one or
more plans (the "Share Rights Plans") which in connection with certain
acquisitions of an interest in the Corporation may permit the holders of
such rights, warrants or options to subscribe for or to purchase shares
of Common Stock or such other capital stock at a price per share less
than the then Current Market Value per share of Common Stock. The
Corporation shall not adopt any Share Rights Plans unless in connection
therewith the Corporation provides that the holders of Series K Preferred
Stock will be entitled to receive substantially similar rights, warrants
or options upon conversion of Series K Preferred Stock.
(7) In any case in which this Section E provides that an
adjustment of the Conversion Price shall become effective retroactively
immediately after a record date for an event, the Corporation may defer
until the occurrence of such event (i) issuing to the holder of any
shares of Series K Preferred Stock converted after such record date and
before the occurrence of such event that number of shares of Common Stock
issuable upon such conversion that shall be in addition to the number of
shares of Common Stock which were issuable upon such conversion
immediately before the adjustment in the Conversion Price required in
respect of such event, and (ii) paying to such holder any cash in lieu of
a fractional share pursuant to this Section E.
(8) Anything in this Section E to the contrary notwithstanding, no
adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of greater than one
percent in such price; provided, however, that any adjustments which by
reason of this paragraph (8) are not required to be made shall be carried
forward and taken into account in making subsequent adjustments. All
calculations under this Section E shall be made to the nearest cent.
(9) Whenever the Conversion Price and subsequent charges to be
made therein are adjusted pursuant to this Section E, the Corporation
shall (i) promptly place on file at its principal office and at the
office of each transfer agent for the Series K Preferred Stock, if any,
a statement, signed by the Chairman or President of the Corporation and
by its Treasurer, showing in detail the facts requiring such adjustment
and a computation of the adjusted Conversion Price, and shall make such
statement available for inspection by stockholders of the Corporation,
and (ii) cause a notice to be mailed to each holder of record of the
outstanding shares of Series K Preferred Stock stating that such
adjustment has been made and setting forth the adjusted Conversion Price.
Unless the change in the Conversion Price is caused as a result of action
described in Section E(5)(a), the statement shall be accompanied by a
letter from the Corporation's independent public accountants stating that
the change has been made in accordance with the provisions of this
Article.
(10) In the event of any reclassification or recapitalization of
the outstanding shares of Common Stock (except a change in par value, or
from par value to no par value, or subdivision or other split or
combination of shares), or in case of any consolidation or merger to
which the Corporation is a party, except a merger in which the
Corporation is the surviving corporation and which does not result in any
such reclassification or recapitalization of the outstanding Common Stock
of the Corporation, or in case of any sale or conveyance to another
corporation of all or substantially all of the property of the
Corporation, effective provision shall be made by the Corporation or by
the successor or purchasing corporation (i) that the holder of each share
of Series K Preferred Stock then outstanding shall thereafter have the
right to convert such share into the kind and amount of stock and other
securities and property receivable, upon such reclassification,
recapitalization, consolidation, merger, sale or conveyance, by a holder
of the number of shares of Common Stock of the Corporation into which
such share of Series K Preferred Stock might have been converted
immediately prior thereto, and (ii) that there shall be subsequent
adjustments of the Conversion Price which shall be equivalent, as nearly
as practicable, to the adjustments provided for in this Section E. The
provisions of this paragraph (10) shall similarly apply to successive
reclassifications, charges, consolidations, mergers, sales or
conveyances.
(11) Shares of Common Stock issued on conversion of shares of
Series K Preferred Stock shall be issued as fully paid shares and shall
be nonassessable by the Corporation. The Corporation shall, at all
times, reserve and keep available for the purpose of effecting the
conversion of the outstanding shares of Series K Preferred Stock such
number of its duly authorized shares of Common Stock as shall be
sufficient to effect the conversion of all outstanding shares of Series
K Preferred Stock.
(12) Shares of Series K Preferred Stock converted as provided
herein shall become authorized and unissued shares of Preferred Stock
which may be designated as shares of any other series. No additional
shares of Preferred Stock, however, may be classified as Series K
Preferred Stock.
F. Exchange Provisions.
(1) The Series K Preferred Stock is exchangeable in whole only at
the option of the Corporation on any Payment Date beginning November 1,
1988 for Debentures to be issued under the indenture, dated as of October
24, 1986 (the "Indenture"), between the Corporation and Sovran Bank,
N.A., as Trustee. Holders of outstanding shares of Series K Preferred
Stock will be entitled to receive $50 principal amount of the Debentures
in exchange for each share of Series K Preferred Stock held by them at
the time of exchange. At such time (the "Effective Date" of the
exchange), the rights of the holders of Series K Preferred Stock as
stockholders of the Corporation shall cease (except the right to receive
on the date of exchange an amount equal to the amount of accumulated and
unpaid dividends to the date of exchange), and the person or persons
entitled to receive the Debentures issuable upon exchange shall be
treated for all purposes as the registered holder or holders of such
Debentures. The Corporation will give written notice of its intention to
exchange by first class mail, postage prepaid, to each holder of record
of the Series K Preferred Stock no less than 30 nor more than 60 days
prior to the date fixed for the exchange at his last address as shown on
the Corporation's stock transfer records. The notice will set forth the
Effective Date of the exchange and the place or places where certificates
representing shares to be exchanged shall be surrendered. The
Corporation will cause the Debentures to be authenticated on the
Effective Date of the exchange.
Upon surrender of the certificates for any share of Series K Preferred
Stock to be exchanged in accordance with the requirements set forth in
such notice, such shares shall be exchanged by the Corporation into
Debentures, as stated above. From and after the Effective Time of the
Exchange all shares of Series K Preferred Stock shall, whether or not the
certificates therefor shall have been surrendered for cancellation, (i)
be deemed no longer to be outstanding for any purpose, and all rights
with respect to such shares shall thereupon cease and determine except
the right to receive $50 principal amount of the Debentures in exchange
for each share of Series K Preferred Stock and (ii) become authorized and
unissued shares of Preferred Stock which may be designated as shares of
any other series. No additional shares of Preferred Stock, however, may
be classified as Series K Preferred Stock.
(2) The Debentures shall bear interest at a rate of 6-3/4% per
annum and shall be convertible at the option of the holder thereof into
shares of Common Stock. The number of shares of Common Stock issuable
upon conversion of each Debenture, the redemption provisions applicable
to the Debentures and the other terms of the Debentures, including the
form thereof, shall be as is set forth in the Indenture.
G. Definitions. For the purpose of this amendment, the word
"corporation" shall be deemed to include corporations, associations,
companies and business trusts and, unless the context otherwise requires, the
following terms shall have the following meanings:
"Capital Stock" means any capital stock of any class or series
(however designated) of the Corporation.
"Common Stock" means the Common Stock of the Corporation ($.10 par
value), the voting powers, rights and preferences of which are set forth
in the Articles of Incorporation of the Corporation.
"Conversion Date" is defined in Section E(2) hereof.
"Conversion Price" is defined in Section E(1) hereof.
"Current Market Value" is defined in Section E(5)(b) hereof.
"Debentures" means the Corporation's 6-3/4% Convertible Subordinated
Debentures due November l, 2016 issued pursuant to the Indenture.
"Dividends Accumulated" means with respect to any shares of Series K
Preferred Stock, an amount equal to the dividends thereon at the dividend
rate per annum computed from the Issuance Date to the date to which
reference is made, whether such amount or any part thereof shall have
been declared as dividends and whether there shall be or have been any
funds out of which such dividends might legally be paid, less the amount
of dividends declared and paid thereon and, if any dividends thereon have
been declared but not paid, the amount set apart for the payment of such
dividends.
"Fair Market Value" is defined in Section E(3) hereof.
"Indenture" is defined in Section F(1) hereof.
"Issuance Date" shall mean the first date of issuance of any shares
of Series K Preferred Stock.
"Junior Stock" means any Capital Stock ranking as to dividends or as
to rights in liquidation, dissolution or winding up of the affairs of the
Corporation junior to Series K Preferred Stock.
"Parity Stock" means any Capital Stock ranking as to dividends or as
to rights in liquidation, dissolution or winding up the affairs of the
Corporation equally with the Series K Preferred Stock.
"Payment Date" is defined in Section A(1) hereof.
"Record Date" is defined in Section A(1) hereof.
"Subsidiary" means any corporation a majority of the outstanding
Voting Stock of which is owned, directly or indirectly, by the
Corporation or by one or more Subsidiaries or by the Corporation and one
or more Subsidiaries. For this purpose, "Voting Stock" means stock of
any class or classes (however designated) having ordinary voting power
for the election of a majority of the members of the board of directors
(or other governing body) of such corporation, other than stock having
such powers only by reason of the happening of a contingency.
"Voting Preferred Stock" is defined in Section B(4) hereof.
ARTICLE IX
SERIES L $14.00 CUMULATIVE CONVERTIBLE EXCHANGEABLE
PREFERRED STOCK
Pursuant to a resolution adopted by the Board of Directors of the
Corporation on September 18, 1987, 1,000,000 shares of Preferred Stock ($10
par value) constitutes a series of Preferred Stock designated as the Series
L $14.00 Cumulative Convertible Exchangeable Preferred Stock (the "Series L
Preferred Stock"), the shares of which have the following voting powers,
limitations, rights and preferences:
A. Dividends.
(1) The holders of the outstanding shares of Series L Preferred
Stock shall be entitled to receive, if, when and as declared by the Board
of Directors of the Corporation, out of any funds legally available
therefor, cash dividends at the rate and payable on the dates hereinafter
set forth. The rate of dividends payable on the shares of Series L
Preferred Stock shall be $14.00 per share per annum and no more.
Dividends shall be payable in equal quarterly installments on the first
day of January, April, July and October of each year (the "Payment
Dates"), commencing, in the case of any share of Series L Preferred
Stock, on January 1, 1988. The initial dividend payment will be computed
at the annual rate for the period from the Issuance Date of Series L
Preferred Stock to the first installment Payment Date. Dividends shall
be cumulative and accumulate on the Series L Preferred Stock from and
after the Issuance Date. Dividends payable on the first installment
Payment Date following issuance and on the date fixed for any redemption
of shares of Series L Preferred Stock pursuant to Section C hereof which
is not a Payment Date, shall be calculated on the basis of a 360-day year
and the actual number of days elapsed.
(2) No dividend whatsoever shall be declared or paid upon, or any
sum set apart for the payment of dividends upon, any shares of Parity
Stock for any dividend period unless all dividends for all past dividend
periods have been declared and paid upon, or declared and a sufficient
sum set apart for the payment of such dividend upon, all shares of Series
L Preferred Stock outstanding.
(3) Unless full dividends (to the extent that the amount thereof
shall have become determinable) on all outstanding shares of Series L
Preferred Stock and any outstanding shares of Parity Stock due for all
past dividend periods shall have been declared and paid, or declared and
a sum sufficient for the payment thereof set apart, then, subject to the
rights of holders of shares of previously issued series of Preferred
Stock, (a) no dividend (other than a dividend payable solely in Junior
Stock) shall be declared or paid upon, or any sum set apart for the
payment of dividends upon, any shares of Junior Stock; (b) no other
distribution shall be made upon any shares of Junior Stock; (c) no shares
of Junior Stock shall be purchased, redeemed or otherwise acquired for
value by the Corporation or by any Subsidiary; and (d) no monies shall be
paid into or set apart or made available for a sinking or other like fund
for the purchase, redemption or other acquisition for value of any shares
of Junior Stock by the Corporation or any Subsidiary.
B. Voting Rights.
(1) Except for the voting rights expressly conferred by this
Section B and except to the extent provided by law, the holders of shares
of Series L Preferred Stock shall not be entitled (a) to vote on any
matter or (b) to receive notice of, or to participate in, any meeting of
stockholders of the Corporation at which the holders of shares of Series
L Preferred Stock are not entitled to vote.
(2) The approval of more than two-thirds of the votes entitled to
be cast by the holders of the outstanding shares of the Series L
Preferred Stock, voting as a separate voting group, shall be required for
the adoption of any amendment to the Articles of Incorporation, or any
bylaw, that materially adversely changes the preferences, limitations and
rights of the Series L Preferred Stock (it being expressly stated that an
increase in the number of Directors of the Corporation is not such an
adverse change, provided that this statement is made as a matter of
clarification and shall not be read as implying that in its absence such
an increase would institute such an adverse change) or for the
authorization of, or the increase in the authorized number of shares of,
a class of Capital Stock other than Junior Stock and Parity Stock. The
approval of a majority of the votes entitled to be cast by the holders of
the outstanding shares of Series L Preferred Stock, voting as a separate
voting group, shall be required for authorization of, or an increase in
the authorized number of shares of, any class of Parity Stock. Except
for cases covered by the two preceding sentences of this paragraph (2),
whenever the holders of the Series L Preferred Stock are entitled under
the Virginia Stock Corporation Act to vote as a separate voting group on
an amendment of the Articles of Incorporation, a plan of merger, or a
plan of share exchange, the vote required for the approval of such
amendment shall be a majority of all votes cast on the amendment, plan of
merger or plan of share exchange by the holders of the Series L Preferred
Stock at a meeting at which the holders of a majority of the outstanding
shares of Series L Preferred Stock are represented in person or by proxy.
(3) Whenever the holders of the Series L Preferred Stock are
entitled under the Virginia Stock Corporation Act to vote together with
the holders of one or more other series of Preferred Stock as a single
voting group (including a vote of the class of Preferred Stock as a
separate voting group) on any amendment of the Articles of Incorporation,
plan of merger or plan of share exchange, the vote required for the
approval of such amendment, plan of merger or plan of share exchange
shall be a majority of all votes cast on the amendment, plan of merger or
plan of share exchange by the holders of the shares included in such
voting group at a meeting at which the holders of a majority of the
outstanding shares included in such voting group are represented in
person or by proxy; provided that if at the time of such vote there shall
be outstanding any share of a series included in such voting group which
under the Articles of Incorporation or otherwise under the Virginia State
Corporation Act is not authorized as part of such voting group to approve
the amendment, plan of merger or plan of share exchange by such majority
vote, the vote required for its approval of such amendment, plan of
merger or plan of share exchange shall be more than two-thirds of all the
votes entitled to be cast by such voting group.
(4) The holders of the outstanding shares of Series L Preferred
Stock shall also have the right, voting together with the holders of any
other outstanding shares of Voting Preferred Stock (as hereinafter
defined) as a separate voting group, to elect two members of the Board of
Directors of the Corporation at any time six or more quarterly dividends
on any shares of Voting Preferred Stock shall be in arrears and unpaid,
in whole or in part, whether or not declared and whether or not any funds
shall be or have been legally available for payment thereof. For this
purpose, "Voting Preferred Stock" shall mean the Series L Preferred Stock
and each other series of Preferred Stock which shall have substantially
similar voting rights (including voting as one voting group with other
shares of Voting Preferred Stock) with respect to the election of
directors upon substantially similar arrearages of dividends. In such
event, unless a regular meeting of the stockholders of the Corporation is
to be held within 60 days thereof for the purpose of electing Directors,
the Corporation shall promptly thereafter cause the number of Directors
of the Corporation to be increased by two, and, within 30 days
thereafter, shall call a special meeting of the holders of the
outstanding shares of Voting Preferred Stock for the purpose of electing
such Directors to take place at the time specified in the notice of the
meeting, to be not more than 60 days after such holders become so
entitled to elect two Directors and not less than ten nor more than 50
days after the date on which such notice is mailed. If such special
meeting shall not have been so called by the Corporation, or such regular
meeting shall not be so held, a special meeting may be called for such
purpose at the expense of the Corporation by the holders of not less than
10% of the outstanding shares of any series of Voting Preferred Stock;
and notice of any such special meeting shall be given by the person or
persons calling the same to the holders of the outstanding shares of the
Voting Preferred Stock by first-class mail, postage prepaid, at their
last addresses as shall appear on the stock transfer records of the
Corporation. At any such special meeting the holders of the outstanding
shares of Voting Preferred Stock, voting as a separate voting group with
each share having one vote, shall elect two members of the Board of
Directors of the Corporation. If a regular meeting of the stockholders
of the Corporation for the purpose of electing Directors is to be held
within 60 days after the time the holders of the outstanding shares of
Voting Preferred Stock become so entitled to elect two Directors, then
the holders of the outstanding shares of Voting Preferred Stock shall be
given notice thereof in the same manner as other stockholders of the
Corporation entitled to vote thereat; and at such regular meeting, the
holders of the outstanding shares of Voting Preferred Stock, voting as a
separate voting group with each share having one vote, shall elect two
members of the Board of Directors. The right of the holders of the
Voting Preferred Stock, voting as a separate voting group, to elect two
members of the Board of Directors of the Corporation shall continue until
such time as no dividends on any outstanding shares of Voting Preferred
Stock are in arrears and unpaid, in whole or in part, at which time (i)
the voting power of the holders of the outstanding shares of Voting
Preferred Stock so to elect two directors shall cease, but always subject
to the same provisions of this paragraph (4) for the vesting of such
voting power upon the occurrence of each and every like arrearage of
dividends, and (ii) the term of office of each member of the Board of
Directors who was elected pursuant to this paragraph (4) shall
automatically expire.
C. Redemption.
(1) The shares of Series L Preferred Stock are not redeemable
prior to October 1, 1989. With respect to redemption thereafter, the
Corporation may at its option redeem all or any portion of the
outstanding shares of Series L Preferred Stock at a redemption price
determined as follows: if redeemed during the twelve months' period
ending September 30 of each of the following years, at the price per
share indicated (in dollars):
Year Price Year Price
1990 $211.20 1994 $205.60
1991 209.80 1995 204.20
1992 208.40 1996 202.80
1993 207.00 1997 201.40
and thereafter at the price of $200 per share, plus in each case
Dividends Accumulated to the date fixed for redemption.
(2) In case less than all of the outstanding shares of Series L
Preferred Stock are to be redeemed, not more than 60 days prior to the
date fixed for redemption the Corporation shall select the shares to be
redeemed. The Corporation shall select by proration, by lot or otherwise
the shares to be so redeemed among the holders thereof. The Corporation
shall make such adjustments, reallocations and eliminations as it shall
deem proper by increasing or decreasing or eliminating the number of
shares to be redeemed which would be allocable to any one holder on the
basis of exact proration, selection by lot or any such other method of
selection by not more than ten shares to the end that the numbers of
shares so prorated shall be integral multiples of ten shares. The
Corporation in its discretion may select the particular certificates (if
there are more than one) representing shares registered in the name of a
holder that are to be redeemed.
(3) Not less than 30 nor more than 60 days prior to the date fixed
for any redemption pursuant to paragraph (1) of this Section C, notice of
redemption shall be given by first class mail, postage prepaid, to the
holders of record of the outstanding shares of the Series L Preferred
Stock to be redeemed at their last addresses as shown by the
Corporation's stock transfer records. The notice of redemption shall set
forth the number of shares to be redeemed, the date fixed for redemption,
the applicable redemption price or prices (including the amount of
Dividends Accumulated to the date fixed for the redemption), and the
place or places where certificates representing shares to be redeemed may
be surrendered. In case less than all outstanding shares are to be
redeemed, the notice of redemption shall also set forth the numbers of
the certificates representing shares to be redeemed and, in case less
than all shares represented by any such certificate are to be redeemed,
the number of shares represented by such certificate to be redeemed.
(4) If notice of redemption of any outstanding shares of Series L
Preferred Stock shall have been duly mailed as herein provided, on or
before the date fixed for redemption the Corporation shall deposit in
cash funds sufficient to pay the redemption price (including Dividends
Accumulated to the date fixed for redemption) of such shares in trust for
the benefit of the holders of shares to be redeemed with any bank or
trust company in the City of Richmond, State of Virginia, or Borough of
Manhattan, City and State of New York, having capital and surplus
aggregating at least $50,000,000 as of the date of its most recent report
of financial condition, named in such notice, to be applied to the
redemption of the shares so called for redemption against surrender for
cancellation of the certificates representing shares so redeemed. From
and after the time of such deposit all shares for the redemption of which
such deposit shall have been made shall, whether or not the certificates
therefor shall have been surrendered for cancellation, be deemed no
longer to be outstanding for any purpose, and all rights with respect to
such shares shall thereupon cease and determine except (i) the right to
receive payment of the redemption price (including Dividends Accumulated
to the date fixed for redemption), but without interest, and (ii) in the
case of any such deposit before the date fixed for redemption, the right
to convert such shares into shares of Common Stock, which conversion
right shall continue to be exercisable until, but not after, the close of
business on the date fixed for redemption. Any interest earned on funds
so deposited shall be paid to the Corporation from time to time. Any
funds so deposited and unclaimed at the end of three years from the date
fixed for redemption shall be repaid to the Corporation free of trust,
and the holders of the shares called for redemption who have not
surrendered certificates representing such shares prior to such repayment
shall be deemed to be unsecured creditors of the Corporation for the
amount of the redemption price (including Dividends Accumulated to the
date fixed for redemption) thereof and shall look only to the Corporation
for payment thereof, without interest, subject to the laws of the
Commonwealth of Virginia.
(5) The Corporation shall also have the right to acquire
outstanding shares of Series L Preferred Stock otherwise than by
redemption pursuant to paragraph (1) of this Section C from time to time
for such consideration as may be acceptable to the holders thereof;
provided, however, that if full dividends on all the outstanding shares
of Series L Preferred Stock for all past dividend periods shall not have
been declared and paid or declared and a sum sufficient for the payment
thereof set apart, neither the Corporation nor any Subsidiary shall so
acquire any shares of Series L Preferred Stock except in accordance with
a purchase offer made on the same terms to all the holders of the
outstanding shares of Series L Preferred Stock.
(6) Shares of Series L Preferred Stock purchased, redeemed or
otherwise acquired by the Corporation and shares of Series L Preferred
Stock not issued on or within 30 days after the Issuance Date shall
become authorized and unissued shares of Preferred Stock which may be
designated as shares of any other series. No additional shares of
Preferred Stock, however, may be classified as Series L Preferred Stock.
D. Liquidation. In the event of liquidation, dissolution or winding up
of the affairs of the Corporation, whether voluntary or involuntary, the
holders of the shares of the Series L Preferred Stock then outstanding shall
be entitled to be paid in cash out of the net assets of the Corporation,
including its capital, a liquidation payment of $200 per share, plus, in each
case, Dividends Accumulated to the date of payment, and no more, before any
distribution or payment shall be made to the holders of shares of Junior
Stock and, after payment to the holders of the outstanding shares of Series
L Preferred Stock and to the holders of shares of other series of Preferred
Stock and classes of other Parity Stock of the amounts to which they are
respectively entitled, the balance of such assets, if any, shall be paid to
the holders of the Common Stock according to their respective rights. For
the purposes of the preceding sentence, neither the consolidation of the
Corporation with nor the merger of the Corporation into any other corporation
nor the sale, lease or other disposition of all or substantially all of the
Corporation's properties and assets shall, without further corporation
action, be deemed a liquidation, dissolution or winding up of the affairs of
the Corporation. In case the net assets of the Corporation are insufficient
to pay to the holders of the outstanding shares of Series L Preferred Stock
the full amounts to which they are respectively entitled, the entire net
assets of the Corporation remaining shall be distributed ratably to the
holders of the outstanding shares of Series L Preferred Stock, other series
of Preferred Stock and classes of other Parity Stock in proportion to the
full amounts to which they are respectively entitled.
E. Conversion.
(1) Each holder of any outstanding shares of Series L Preferred
Stock shall have the right, at any time, to convert any of such shares
into shares of Common Stock. Furthermore, as to any shares of Series L
Preferred Stock called for redemption, each such holder shall have the
right at any time prior to the close of business on the date fixed for
redemption (unless default shall be made by the Corporation in the
payment of the redemption price in which case such right of conversion
shall continue uninterrupted) to convert any of such shares into shares
of Common Stock. The number of shares of Common Stock into which each
share of Series L Preferred Stock shall be convertible shall be equal to
the number arrived at by dividing $200 by the conversion price per share
of the Common Stock fixed or determined as hereinafter provided. Such
conversion price shall initially be $40.00 per share, subject to the
adjustments hereinafter provided (such price as adjusted at any time
being hereinafter called the "Conversion Price".)
(2) The holder of any outstanding shares of Series L Preferred
Stock may exercise the conversion right provided in paragraph (1) above
as to all or any portion of the shares he holds by delivering to the
Corporation during regular business hours, at the principal office of the
Corporation or at such other place as may be designated in writing by the
Corporation, the certificate or certificates for the shares to be
converted, duly endorsed or assigned in blank or endorsed or assigned to
the Corporation (if required by it), accompanied by (a) written notice
stating that the holder elects to convert such shares and stating the
name or names (with address and applicable social security or other tax
identification number) in which the certificate or certificates for
shares of Common Stock are to be issued and (b) in the case of conversion
after the record date for the payment of dividends on the Series L
Preferred Stock, as determined by the Board of Directors of the
Corporation, but before the next Payment Date, an amount equal to the
full dividend installment to be paid on the next Payment Date
attributable to the shares of Series L Preferred Stock to be converted.
Conversion shall be deemed to have been effected on the date (the
"Conversion Date") when such delivery is made. As promptly as
practicable thereafter the Corporation shall issue and deliver to or upon
the written order of such holder, at such office or other place
designated by the Corporation, a certificate or certificates for the
number of full shares of Common Stock to which he is entitled and a check
or other order for the payment of cash due with respect to any fraction
of a share, as provided in paragraph (3) below. The person in whose name
the certificate or certificates for shares of Common Stock are to be
issued shall be deemed to have become a stockholder of record on the
Conversion Date, unless the transfer books of the Corporation are closed
on that date, in which event he shall be deemed to have become a
stockholder of record on the next succeeding date on which the transfer
books are open; but the Conversion Price shall be that in effect on the
Conversion Date.
(3) The Corporation shall not issue any fraction of a share upon
conversion of shares of the Series L Preferred Stock. If more than one
share of the Series L Preferred Stock shall be surrendered for conversion
at any time by the same holder, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the basis of the
total number of shares of Series L Preferred Stock so surrendered. If
any fractional interest in a share of Common Stock would be deliverable
upon conversion, the Corporation shall make an adjustment therefor in
cash based on the Fair Market Value, on the Conversion Date, of one share
of Common Stock. The "Fair Market Value" of one share of Common Stock,
as used in this Section E shall, if the Common Stock is traded in the
over-the-counter market, be deemed to be the mean between the asked and
bid prices on the date the value is required to be determined, as
reported by NASDAQ or any similar service, and if the Common Stock is
listed and traded on a national stock exchange, be deemed to be the
closing price of the Common Stock for such day derived from the New York
Stock Exchange Composite Tape, or if there be no New York Stock Exchange
Composite Tape, any similar service; provided, however, that if the
Common Stock is not traded on such date, then the Fair Market Value shall
be determined, in the manner hereinabove set forth, on the most recent
preceding business day on which the Common Stock was traded.
(4) The issuance of Common Stock on conversion of outstanding
shares of Series L Preferred Stock shall be made by the Corporation
without charge for expenses or for any tax in respect of the issuance of
such Common Stock, but the Corporation shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance and delivery of shares of Common Stock in any name other than
that of the holder of record on the books of the Corporation of the
outstanding shares of Series L Preferred Stock converted, and the
Corporation shall not be required to issue or deliver any certificate for
shares of Common Stock unless and until the person requesting the
issuance thereof shall have paid to the Corporation the amount of such
tax or shall have established to the satisfaction of the Corporation that
such tax has been paid.
(5) The Conversion Price shall be subject to the following
adjustments.
(a) Whenever the Corporation shall (i) pay a dividend on its
outstanding shares of Common Stock in shares of its Common Stock or
subdivide or otherwise split its outstanding shares of Common Stock,
or (ii) combine its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect at the effective date
of the happening of such event shall be adjusted so that the holders
of the Series L Preferred Stock, upon conversion of all thereof
immediately following such event, would be entitled to receive the
same aggregate number of shares of Common Stock as they would have
been entitled to receive immediately following such event if such
shares of Series L Preferred Stock had been converted immediately
prior thereto, or if there is a record date in respect of such event,
immediately prior to such record date.
(b) In case the Corporation shall issue rights, warrants or
options to all holders of its Common Stock entitling them (for a
period expiring within 90 days after the record date mentioned below)
to subscribe for or purchase shares of Common Stock at a price per
share less than the Current Market Value (as hereinafter defined) per
share of Common Stock on the record date mentioned below, the
Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect
immediately prior to the issuance of such rights, warrants or options
by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding at the close of business on the date of
issuance of such rights, warrants or options plus the number of shares
which the aggregate exercise price of the shares of Common Stock
called for by all such rights, warrants or options (excluding any
theretofore exercised) would purchase at such Current Market Value and
the denominator of which shall be the number of shares of Common Stock
outstanding at the close of business on the date of issuance of such
rights, warrants or options plus the number of additional shares of
Common Stock called for by all such rights, warrants or options
(excluding any theretofore exercised). Such adjustment shall be made
whenever such rights, warrants or options are issued and shall be
retroactively effective as of immediately after the record date for
the determination of stockholders entitled to receive such rights,
warrants or options. For the purposes of this Section E(5), the
"Current Market Value" per share of Common Stock on any date shall be
deemed to be the average of the Fair Market Value (as defined in
Section E(3)) of each of the 20 consecutive trading days commencing
40 trading days before such date (a trading day being a day on which
securities are traded in the over-the-counter market or, if the Common
Stock is then listed on any national stock exchange, on such
exchange).
(c) Whenever the Corporation shall make a distribution to
holders of Common Stock of evidences of its indebtedness or assets
(excluding dividends and distributions paid in cash out of funds
available for dividends in accordance with applicable law), or rights,
warrants or options to subscribe for or purchase securities of the
Corporation (other than those referred to in subdivision (b) of this
paragraph (5)), the Conversion Price immediately prior to such
distribution shall be adjusted by multiplying such Conversion Price
by a fraction, (i) the numerator of which shall be the denominator,
hereinbelow described, less the fair value (as conclusively determined
in good faith by the Board of Directors of the Corporation) at the
time of such distribution of that portion of the evidences of
indebtedness, assets, or the rights, warrants or options, distributed
which is applicable to one share of Common Stock, and (ii) the
denominator of which shall be the Current Market Value per share of
Common Stock on the next full business day after the record date fixed
for the determination of the holders of the Common Stock entitled to
such distribution. Such adjustment shall be retroactively effective
as of immediately after such record date.
(6) Notwithstanding any of the foregoing provisions of this
Section E, no adjustment of the Conversion Price shall be made if the
Corporation shall issue (i) Common Stock or rights, warrants or options
to purchase Common Stock pursuant to one or more stock purchase plans,
stock option plans, stock purchase contracts, incentive compensation
plans, or other remuneration plans for employees (including officers) of
the Corporation or its Subsidiaries adopted or approved by the Board of
Directors of the Corporation before or after the adoption of this
resolution or (ii) rights, warrants or options to purchase Common Stock
or other capital stock convertible into Common Stock pursuant to one or
more plans (the "Share Rights Plans") which in connection with certain
acquisitions of an interest in the Corporation may permit the holders of
such rights, warrants or options to subscribe for or to purchase shares
of Common Stock or such other capital stock at a price per share less
than the then Current Market Value per share of Common Stock. The
Corporation shall not adopt any Share Rights Plans unless in connection
therewith the Corporation provides that the holders of Series L Preferred
Stock will be entitled to receive substantially similar rights, warrants
or options upon conversion of Series L Preferred Stock.
(7) In any case in which this Section E provides that an
adjustment of the Conversion Price shall become effective retroactively
immediately after a record date for an event, the Corporation may defer
until the occurrence of such event (i) issuing to the holder of any
shares of Series L Preferred Stock converted after such record date and
before the occurrence of such event that number of shares of Common Stock
issuable upon such conversion that shall be in addition to the number of
shares of Common Stock which were issuable upon such conversion
immediately before the adjustment in the Conversion Price required in
respect of such event, and (ii) paying to such holder any cash in lieu of
a fractional share pursuant to this Section E.
(8) Anything in this Section E to the contrary notwithstanding, no
adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of greater than one
percent in such price; provided, however that any adjustments which by
reason of this paragraph (8) are not required to be made shall be carried
forward and taken into account in making subsequent adjustments. All
calculations under this Section E shall be made to the nearest cent.
(9) Whenever the Conversion Price and subsequent charges to be
made therein are adjusted pursuant to this Section E, the Corporation
shall (i) promptly place on file at its principal office and at the
office of each transfer agent for the Series L Preferred Stock, if any,
a statement, signed by the Chairman or President of the Corporation and
by its Treasurer, showing in detail the facts requiring such adjustment
and a computation of the adjusted Conversion Price, and shall make such
statement available for inspection by stockholders of the Corporation,
and (ii) cause a notice to be mailed to each holder of record of the
outstanding shares of Series L Preferred Stock stating that such
adjustment has been made and setting forth the adjusted Conversion Price.
Unless the change in the Conversion Price is caused as a result of action
described in Section E(5)(a), the statement shall be accompanied by a
letter from the Corporation's independent public accountants stating that
the change has been made in accordance with the provisions of this
Article.
(10) In the event of any reclassification or recapitalization of
the outstanding shares of Common Stock (except a change in par value, or
from par value to no par value, or subdivision or other split or
combination of shares), or in case of any consolidation or merger to
which the Corporation is a party, except a merger in which the
Corporation is the surviving corporation and which does not result in any
such reclassification or recapitalization of the outstanding Common Stock
of the Corporation, or in case of any sale or conveyance to another
corporation of all or substantially all of the property of the
Corporation, effective provision shall be made by the Corporation or by
the successor or purchasing corporation (i) that the holder of each share
of Series L Preferred Stock then outstanding shall thereafter have the
right to convert such share into the kind and amount of stock and other
securities and property receivable, upon such reclassification,
recapitalization, consolidation, merger, sale or conveyance, by a holder
of the number of shares of Common Stock of the Corporation into which
such share of Series L Preferred Stock might have been converted
immediately prior thereto, and (ii) that there shall be subsequent
adjustments of the Conversion Price which shall be equivalent, as nearly
as practicable, to the adjustments provided for in this Section E. The
provisions of this paragraph (10) shall similarly apply to successive
reclassifications, charges, consolidations, mergers, sales or
conveyances.
(11) Shares of Common Stock issued on conversion of shares of
Series L Preferred Stock shall be issued as fully paid shares and shall
be nonassessable by the Corporation. The Corporation shall, at all
times, reserve and keep available for the purpose of effecting the
conversion of the outstanding shares of Series L Preferred Stock such
number of its duly authorized shares of Common Stock as shall be
sufficient to effect the conversion of all outstanding shares of Series
L Preferred Stock.
(12) Shares of Series L Preferred Stock converted as provided
herein shall become authorized and unissued shares of Preferred Stock
which may be designated as shares of any other series. No additional
shares of Preferred Stock, however, may be classified as Series L
Preferred Stock.
F. Exchange Provisions.
(1) The Series L Preferred Stock is exchangeable in whole only at
the option of the Corporation on any Payment Date beginning October l,
1989 for Debentures to be issued under the indenture, dated as of October
24, 1986 (the "Indenture"), between the Corporation and Sovran Bank,
N.A., as Trustee as supplemented by a First Series Supplement dated as of
September 17, 1987. Holders of outstanding shares of Series L Preferred
Stock will be entitled to receive $200 principal amount of the Debentures
in exchange for each share of Series L Preferred Stock held by them at
the time of exchange. At such time (the "Effective Date" of the
exchange), the rights of the holders of Series L Preferred Stock as
stockholders of the Corporation shall cease (except the right to receive
on the date of exchange an amount equal to the amount of accumulated and
unpaid dividends to the date of exchange), and the person or persons
entitled to receive the Debentures issuable upon exchange shall be
treated for all purposes as the registered holder or holders of such
Debentures. The Corporation will give written notice of its intention to
exchange by first class mail, postage prepaid, to each holder of record
of the Series L Preferred Stock no less than 30 nor more than 60 days
prior to the date fixed for the exchange at his last address as shown on
the Corporation's stock transfer records. The notice will set forth the
Effective Date of the exchange and the place or places where certificates
representing shares to be exchanged shall be surrendered. The
Corporation will cause the Debentures to be authenticated on the
Effective Date of the exchange.
Upon surrender of the certificates for any share of Series L Preferred
Stock to be exchanged in accordance with the requirements set forth in
such notice, such shares shall be exchanged by the Corporation into
Debentures, as stated above. From and after the Effective Time of the
Exchange all shares of Series L Preferred Stock shall, whether or not the
certificates therefor shall have been surrendered for cancellation, (i)
be deemed no longer to be outstanding for any purpose, and all rights
with respect to such shares shall thereupon cease and terminate except
the right to receive $200 principal amount of the Debentures in exchange
for each share of Series L Preferred Stock and (ii) become authorized and
unissued shares of Preferred Stock which may be designated as shares of
any other series. No additional shares of Preferred Stock, however, may
be classified as Series L Preferred Stock.
(2) The Debentures shall bear interest at a rate of 7% per annum
and shall be convertible at the option of the holder thereof into shares
of Common Stock. The number of shares of Common Stock issuable upon
conversion of each Debenture, the redemption provisions applicable to the
Debentures and the other terms of the Debentures, including the form
thereof, shall be as is set forth in the Indenture.
G. Definitions. For the purpose of this amendment, the word "corpo-
ration" shall be deemed to include corporations, associations, companies and
business trusts and, unless the context otherwise requires, the following
terms shall have the following meanings:
"Capital Stock" means any capital stock of any class or series
(however designated) of the Corporation.
"Common Stock" means the Common Stock of the Corporation ($.10 par
value), the voting powers, rights and preferences of which are set forth
in the Articles of Incorporation of the Corporation.
"Conversion Date" is defined in Section E(2) hereof.
"Conversion Price" is defined in Section E(1) hereof.
"Current Market Value" is defined in Section E(5)(b) hereof.
"Debentures" means the Corporation's 7% Convertible Subordinated
Debentures due October 1, 2017 issued pursuant to the Indenture.
"Dividends Accumulated" means with respect to any shares of Series L
Preferred Stock, an amount equal to the dividends thereon at the dividend
rate per annum computed from the Issuance Date to the date to which
reference is made, whether such amount or any part thereof shall have
been declared as dividends and whether there shall be or have been any
funds out of which such dividends might legally be paid, less the amount
of dividends declared and paid thereon and, if any dividends thereon have
been declared but not paid, the amount set apart for the payment of such
dividends.
"Fair Market Value" is defined in Section E(3) hereof.
"Indenture" is defined in Section F(1) hereof.
"Issuance Date" shall mean the first date of issuance of any shares
of Series L Preferred Stock.
"Junior Stock" means any Capital Stock ranking as to dividends or as
to rights in liquidation, dissolution or winding up of the affairs of the
Corporation junior to Series L Preferred Stock.
"Parity Stock" means any Capital Stock ranking as to dividends or as
to rights in liquidation, dissolution or winding up the affairs of the
Corporation equally with the Series L Preferred Stock.
"Payment Date" is defined in Section A(1) hereof.
"Record Date" is defined in Section A(1) hereof.
"Subsidiary" means any corporation a majority of the outstanding
Voting Stock of which is owned, directly or indirectly, by the
Corporation or by one or more Subsidiaries or by the Corporation and one
or more Subsidiaries. For this purpose, "Voting Stock" means stock of
any class or classes (however designated) having ordinary voting power
for the election of a majority of the members of the board of directors
(or other governing body) of such corporation, other than stock having
such powers only by reason of the happening of a contingency.
"Voting Preferred Stock" is defined in Section B(4) hereof.
ARTICLE X
SERIES M PREFERRED STOCK
Pursuant to a resolution adopted by the Board of Directors of the
Corporation on February 9, 1989, 150,000 shares of Preferred Stock ($10 par
value) constitutes a series of Preferred Stock designated as the Series M
Cumulative Participating Preferred Stock (the "Series M Preferred Stock"),
the shares of which have the following voting powers, limitations, rights and
preferences:
A. Dividends and Distributions.
(1) The holders of shares of the Series M Preferred Stock, in
preference to the holders of Common Stock, $.10 par value, of the
Corporation (the "Common Stock") and of any other junior stock, shall be
entitled to receive, if, when and as declared by the Board of Directors
of the Corporation out of funds legally available therefor, quarterly
dividends payable in cash on the fifteenth day (or, if not a business
day, the preceding business day) of January, April, July and October in
each year (each such date being referred to herein 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 the Series M 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 shares of Common Stock,
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock 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 the Series M Preferred Stock. In the
event the Corporation shall at any time after the first issuance of any
share or fraction of a share of the Series M Preferred Stock declare or
pay any dividend on Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment
of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount per share to
which holders of shares of the Series M Preferred Stock shall be entitled
under clause (b) of the preceding sentence shall be adjusted by
multiplying the amount per share to which holders of shares of the Series
M Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence by a fraction the numerator of which
is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(2) The Corporation shall declare a dividend or distribution on
the Series M Preferred Stock as provided in paragraph (1) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared
on the Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $1 per share on the Series M Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(3) Dividends shall begin to accrue and be cumulative on
outstanding shares of the Series M Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of
the Series M Preferred Stock, 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 the Series M 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 the Series M 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 of the
Corporation may fix a record date for the determination of holders of
shares of the Series M 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.
B. Voting Rights. The holders of shares of the Series M Preferred Stock
shall have the following voting rights:
(1) Subject to the provision for adjustment hereinafter set forth,
each share of the Series M Preferred Stock shall entitle the holder
thereof to 1,000 votes on all matters submitted to a vote of the
shareholders of the Corporation. In the event the Corporation shall at
any time after the first issuance of any share or fraction of a share of
the Series M Preferred Stock declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the number of votes per share to which holders of
shares of the Series M Preferred Stock shall be entitled shall be
adjusted by multiplying the number of votes per share to which holders of
shares of the Series M Preferred Stock were entitled immediately prior to
such event by a fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(2) Except as otherwise provided herein or by law, the holders of
shares of the Series M Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to
a vote of shareholders of the Corporation.
(3) Except as set forth herein, holders of the Series M 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 Stock as set forth herein) for taking any corporate action.
C. Certain Restrictions.
(1) Whenever quarterly dividends or other dividends or
distributions payable on the Series M Preferred Stock as provided in
Section A are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of the
Series M Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(a) declare, set apart or pay dividends on or make any other
distributions on the Common Stock or any shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series M Preferred Stock;
(b) declare or pay dividends on 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 M
Preferred Stock, except dividends paid ratably on the Series M
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; or
(c) redeem or purchase or otherwise acquire for consideration
shares of the Series M Preferred Stock, any such parity stock or any
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) with the Series M Preferred Stock, or set
aside for or pay to any sinking fund therefor.
(2) 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
(1) of this Section C, purchase or otherwise acquire such shares at such
time and in such manner.
D. Reacquired Shares. Any shares of the Series M 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 Preferred Stock, $10 par value, and may be reissued as a new series
or a part of a new series of Preferred Stock, $10 par value, to be created by
resolution or resolutions of the Board of Directors.
E. Consolidation, Merger, etc. In case the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares
of the Series M Preferred Stock shall at the same time be similarly exchanged
or changed in 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 share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the first
issuance of any share of the Series M Preferred Stock declare or pay any
dividend on Common Stock payable in shares of Common Stock, or affect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then in each such case the amount set forth
in the preceding sentence with respect to the exchange or change of shares of
the Series M Preferred Stock shall be adjusted by multiplying such amount by
a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
F. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made
(a) to the holders of shares of Common Stock or of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to
the Series M Preferred Stock unless, prior thereto, the holders of shares of
the Series M Preferred Stock shall have received an amount per share equal to
the greater of (i) $150,000 or (ii) subject to the provision for adjustment
hereinafter set forth, 1,000 times the aggregate amount to be distributed per
share to holders of Common Stock, plus in each such case an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, or (b) to the holders of stock ranking
on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series M Preferred Stock, except distributions made
ratably on the Series M Preferred Stock and all other 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 after the first issuance of any share or
fraction of a share of the Series M Preferred Stock declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the aggregate amount per share to which
holders of shares of the Series M Preferred Stock shall be entitled under the
provision of clause (a) of the preceding sentence shall be adjusted by
multiplying the amount per share to which holders of shares of the Series M
Preferred Stock would have been entitled immediately prior to such event
under the provision of clause (a) of the preceding sentence by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
G. No Redemption. The shares of Series M Preferred Stock shall not be
redeemable.
H. Amendment. The Amended and Restated Articles of Incorporation of the
Corporation shall not be amended in any manner which would materially alter
or change the powers, preferences or special rights of the Series M Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of more than two-thirds of the outstanding shares of the Series M
Preferred Stock, voting together as a single voting group.
ARTICLE XI
SERIES N $14.00 CUMULATIVE CONVERTIBLE EXCHANGEABLE
PREFERRED STOCK
Pursuant to a resolution adopted by the Board of Directors of the
Corporation on December 14, 1989, 280,000 shares of Preferred Stock ($10.00
par value) constitutes a series of Preferred Stock designated as the Series
N $14.00 Cumulative Convertible Exchangeable Preferred Stock (the "Series N
Preferred Stock"), the shares of which have the following voting powers,
limitations, rights and preferences:
A. Dividends.
(1) The holders of the outstanding shares of Series N Preferred
Stock shall be entitled to receive, if, when and as declared by the Board
of Directors of the Corporation, out of any funds legally available
therefor, cash dividends at the rate and payable on the dates hereinafter
set forth. The rate of dividends payable on the shares of Series N
Preferred Stock shall be $14.00 per share per annum and no more.
Dividends shall be payable in equal quarterly installments on the first
day of January, April, July and October of each year (the "Payment
Dates"), commencing, in the case of any share of Series N Preferred
Stock, on April 1, 1990. The initial dividend payment will be computed
at the annual rate for the period from the Issuance Date of Series N
Preferred Stock to the first installment Payment Date. Dividends shall
be cumulative and accumulate on the Series N Preferred Stock from and
after the Issuance Date. Dividends payable on the first installment
Payment Date following issuance and on the date fixed for any redemption
of shares of Series N Preferred Stock pursuant to Section C hereof which
is not a Payment Date, shall be calculated on the basis of a 360-day year
and the actual number of days elapsed. Dividends will be payable to
holders of record as they appear on the stock books of the Corporation on
such record dates as shall be fixed by the Board of Directors of the
Corporation (the "Record Dates").
(2) No dividend whatsoever shall be declared or paid upon, or any
sum set apart for the payment of dividends upon, any shares of Parity
Stock for any dividend period unless all dividends for all past dividend
periods have been declared and paid upon, or declared and a sufficient
sum set apart for the payment of such dividend upon, all shares of Series
N Preferred Stock outstanding.
(3) Unless full dividends (to the extent that the amount thereof
shall have become determinable) on all outstanding shares of Series N
Preferred Stock and any outstanding shares of Parity Stock due for all
past dividend periods shall have been declared and paid, or declared and
a sum sufficient for the payment thereof set apart, then, subject to the
rights of holders of shares of previously issued series of Preferred
Stock, (a) no dividend (other than a dividend payable solely in Junior
Stock) shall be declared or paid upon, or any sum set apart for the
payment of dividends upon, any shares of Junior Stock; (b) no other
distribution shall be made upon any shares of Junior Stock; (c) no shares
of Junior Stock shall be purchased, redeemed or otherwise acquired for
value by the Corporation or by any Subsidiary; and (d) no monies shall be
paid into or set apart or made available for a sinking or other like fund
for the purchase, redemption or other acquisition for value of any shares
of Junior Stock by the Corporation or any Subsidiary.
B. Voting Rights.
(1) Except for the voting rights expressly conferred by this
Section B and except to the extent provided by law, the holders of shares
of Series N Preferred Stock shall not be entitled (a) to vote on any
matter or (b) to receive notice of, or to participate in, any meeting of
stockholders of the Corporation at which the holders of shares of Series
N Preferred Stock are not entitled to vote.
(2) The approval of more than two-thirds of the votes entitled to
be cast by the holders of the outstanding shares of the Series N
Preferred Stock, voting as a separate voting group, shall be required for
the adoption of any amendment to the Articles of Incorporation, or any
bylaw, that materially adversely changes the preferences, limitations and
rights of the Series N Preferred Stock (it being expressly stated that an
increase in the number of Directors of the Corporation is not such an
adverse change, provided that this statement is made as a matter of
clarification and shall not be read as implying that in its absence such
an increase would institute such an adverse change) or for the
authorization of, or the increase in the authorized number of shares of,
a class of Capital Stock other than Junior Stock and Parity Stock. The
approval of a majority of the votes entitled to be cast by the holders of
the outstanding shares of Series N Preferred Stock, voting as a separate
voting group, shall be required for authorization of, or an increase in
the authorized number of shares of, any class of Parity Stock. Except
for cases covered by the two preceding sentences of this paragraph (2),
whenever the holders of the Series N Preferred Stock are entitled under
the Virginia Stock Corporation Act to vote as a separate voting group on
an amendment of the Articles of Incorporation, a plan of merger, or a
plan of share exchange, the vote required for the approval of such
amendment shall be a majority of all votes cast on the amendment, plan of
merger or plan of share exchange by the holders of the Series N Preferred
Stock at a meeting at which the holders of a majority of the outstanding
shares of Series N Preferred Stock are represented in person or by proxy.
(3) Whenever the holders of the Series N Preferred Stock are
entitled under the Virginia Stock Corporation Act to vote together with
the holders of one or more other series of Preferred Stock as a single
voting group (including a vote of the class of Preferred Stock as a
separate voting group) on any amendment of the Articles of Incorporation,
plan of merger or plan of share exchange, the vote required for the
approval of such amendment, plan of merger or plan of share exchange
shall be a majority of all votes cast on the amendment, plan of merger or
plan of share exchange by the holders of the shares included in such
voting group at a meeting at which the holders of a majority of the
outstanding shares included in such voting group are represented in
person or by proxy; provided that if at the time of such vote there shall
be outstanding any share of a series included in such voting group which
under the Articles of Incorporation or otherwise under the Virginia State
Corporation Act is not authorized as part of such voting group to approve
the amendment, plan of merger or plan of share exchange by such majority
vote, the vote required for its approval of such amendment, plan of
merger or plan of share exchange shall be more than two-thirds of all the
votes entitled to be cast by such voting group.
(4) The holders of the outstanding shares of Series N Preferred
Stock shall also have the right, voting together with the holders of any
other outstanding shares of Voting Preferred Stock (as hereinafter
defined) as a separate voting group, to elect two members of the Board of
Directors of the Corporation at any time six or more quarterly dividends
on any shares of Voting Preferred Stock shall be in arrears and unpaid,
in whole or in part, whether or not declared and whether or not any funds
shall be or have been legally available for payment thereof. For this
purpose, "Voting Preferred Stock" shall mean the Series N Preferred Stock
and each other series of Preferred Stock which shall have substantially
similar voting rights (including voting as one voting group with other
shares of Voting Preferred Stock) with respect to the election of
directors upon substantially similar arrearages of dividends. In such
event, unless a regular meeting of the stockholders of the Corporation is
to be held within 60 days thereof for the purpose of electing Directors,
the Corporation shall promptly thereafter cause the number of Directors
of the Corporation to be increased by two, and, within 30 days
thereafter, shall call a special meeting of the holders of the
outstanding shares of Voting Preferred Stock for the purpose of electing
such Directors to take place at the time specified in the notice of the
meeting, to be not more than 60 days after such holders become so
entitled to elect two Directors and not less than ten nor more than 50
days after the date on which such notice is mailed. If such special
meeting shall not have been so called by the Corporation, or such regular
meeting shall not be so held, a special meeting may be called for such
purpose at the expense of the Corporation by the holders of not less than
10% of the outstanding shares of any series of Voting Preferred Stock;
and notice of any such special meeting shall be given by the person or
persons calling the same to the holders of the outstanding shares of the
Voting Preferred Stock by first-class mail, postage prepaid, at their
last addresses as shall appear on the stock transfer records of the
Corporation. At any such special meeting the holders of the outstanding
shares of Voting Preferred Stock, voting as a separate voting group with
each share having one vote, shall elect two members of the Board of
Directors of the Corporation. If a regular meeting of the stockholders
of the Corporation for the purpose of electing Directors is to be held
within 60 days after the time the holders of the outstanding shares of
Voting Preferred Stock become so entitled to elect two Directors, then
the holders of the outstanding shares of Voting Preferred Stock shall be
given notice thereof in the same manner as other stockholders of the
Corporation entitled to vote thereat; and at such regular meeting, the
holders of the outstanding shares of Voting Preferred Stock, voting as a
separate voting group with each share having one vote, shall elect two
members of the Board of Directors. The right of the holders of the
Voting Preferred Stock, voting as a separate voting group, to elect two
members of the Board of Directors of the Corporation shall continue until
such time as no dividends on any outstanding shares of Voting Preferred
Stock are in arrears and unpaid, in whole or in part, at which time (i)
the voting power of the holders of the outstanding shares of Voting
Preferred Stock so to elect two directors shall cease, but always subject
to the same provisions of this paragraph (4) for the vesting of such
voting power upon the occurrence of each and every like arrearage of
dividends, and (ii) the term of office of each member of the Board of
Directors who was elected pursuant to this paragraph (4) shall
automatically expire.
C. Redemption.
(1) After December 31, 1991, the Corporation may at its option
redeem all or any portion of the outstanding shares of Series N Preferred
Stock at a redemption price determined as follows: if redeemed during the
twelve months' period ending September 30 of each of the following years,
at the price per share indicated (in dollars):
Year Price Year Price
1992 208.40 1995 204.20
1993 207.00 1996 202.80
1994 205.60 1997 201.40
and thereafter at the price of $200 per share, plus in each case
Dividends Accumulated to the date fixed for redemption.
(2) In case less than all of the outstanding shares of Series N
Preferred Stock are to be redeemed, not more than 60 days prior to the
date fixed for redemption the Corporation shall select the shares to be
redeemed. The Corporation shall select by proration, by lot or otherwise
the shares to be so redeemed among the holders thereof. The Corporation
shall make such adjustments, reallocations and eliminations as it shall
deem proper by increasing or decreasing or eliminating the number of
shares to be redeemed which would be allocable to any one holder on the
basis of exact proration, selection by lot or any such other method of
selection by not more than ten shares to the end that the numbers of
shares so prorated shall be integral multiples of ten shares. The
Corporation in its discretion may select the particular certificates (if
there are more than one) representing shares registered in the name of a
holder that are to be redeemed.
(3) Not less than 30 nor more than 60 days prior to the date fixed
for any redemption pursuant to paragraph (1) of this Section C, notice of
redemption shall be given by first class mail, postage prepaid, to the
holders of record of the outstanding shares of the Series N Preferred
Stock to be redeemed at their last addresses as shown by the
Corporation's stock transfer records. The notice of redemption shall set
forth the number of shares to be redeemed, the date fixed for redemption,
the applicable redemption price or prices (including the amount of
Dividends Accumulated to the date fixed for the redemption), and the
place or places where certificates representing shares to be redeemed may
be surrendered. In case less than all outstanding shares are to be
redeemed, the notice of redemption shall also set forth the numbers of
the certificates representing shares to be redeemed and, in case less
than all shares represented by any such certificate are to be redeemed,
the number of shares represented by such certificate to be redeemed.
(4) If notice of redemption of any outstanding shares of Series N
Preferred Stock shall have been duly mailed as herein provided, on or
before the date fixed for redemption the Corporation shall deposit in
cash funds sufficient to pay the redemption price (including Dividends
Accumulated to the date fixed for redemption) of such shares in trust for
the benefit of the holders of shares to be redeemed with any bank or
trust company in the City of Richmond, State of Virginia, or Borough of
Manhattan, City and State of New York, having capital and surplus
aggregating at least $50,000,000 as of the date of its most recent report
of financial condition, named in such notice, to be applied to the
redemption of the shares so called for redemption against surrender for
cancellation of the certificates representing shares so redeemed. From
and after the time of such deposit all shares for the redemption of which
such deposit shall have been made shall, whether or not the certificates
therefor shall have been surrendered for cancellation, be deemed no
longer to be outstanding for any purpose, and all rights with respect to
such shares shall thereupon cease and determine except (i) the right to
receive payment of the redemption price (including Dividends Accumulated
to the date fixed for redemption), but without interest, and (ii) in the
case of any such deposit before the date fixed for redemption, the right
to convert such shares into shares of Common Stock, which conversion
right shall continue to be exercisable until, but not after, the close of
business on the date fixed for redemption. Any interest earned on funds
so deposited shall be paid to the Corporation from time to time. Any
funds so deposited and unclaimed at the end of three years from the date
fixed for redemption shall be repaid to the Corporation free of trust,
and the holders of the shares called for redemption who have not
surrendered certificates representing such shares prior to such repayment
shall be deemed to be unsecured creditors of the Corporation for the
amount of the redemption price (including Dividends Accumulated to the
date fixed for redemption) thereof and shall look only to the Corporation
for payment thereof, without interest, subject to the laws of the
Commonwealth of Virginia.
(5) The Corporation shall also have the right to acquire
outstanding shares of Series N Preferred Stock otherwise than by
redemption pursuant to paragraph (1) of this Section C from time to time
for such consideration as may be acceptable to the holders thereof;
provided, however, that if full dividends on all the outstanding shares
of Series N Preferred Stock for all past dividend periods shall not have
been declared and paid or declared and a sum sufficient for the payment
thereof set apart, neither the Corporation nor any Subsidiary shall so
acquire any shares of Series N Preferred Stock except in accordance with
a purchase offer made on the same terms to all the holders of the
outstanding shares of Series N Preferred Stock.
(6) Shares of Series N Preferred Stock purchased, redeemed or
otherwise acquired by the Corporation and shares of Series N Preferred
Stock not issued on or within 30 days after the Issuance Date shall
become authorized and unissued shares of Preferred Stock which may be
designated as shares of any other series. No additional shares of
Preferred Stock, however, may be classified as Series N Preferred Stock.
D. Liquidation. In the event of liquidation, dissolution or winding up
of the affairs of the Corporation, whether voluntary or involuntary, the
holders of the shares of the Series N Preferred Stock then outstanding shall
be entitled to be paid in cash out of the net assets of the Corporation,
including its capital, a liquidation payment of $200 per share, plus, in each
case, Dividends Accumulated to the date of payment, and no more, before any
distribution or payment shall be made to the holders of shares of Junior
Stock and, after payment to the holders of the outstanding shares of Series
N Preferred Stock and to the holders of shares of other series of Preferred
Stock and classes of other Parity Stock of the amounts to which they are
respectively entitled, the balance of such assets, if any, shall be paid to
the holders of the Common Stock according to their respective rights. For
the purposes of the preceding sentence, neither the consolidation of the
Corporation with nor the merger of the Corporation into any other corporation
nor the sale, lease or other disposition of all or substantially all of the
Corporation's properties and assets shall, without further corporate action,
be deemed a liquidation, dissolution or winding up of the affairs of the
Corporation. In case the net assets of the Corporation are insufficient to
pay to the holders of the outstanding shares of Series N Preferred Stock the
full amounts to which they are respectively entitled, the entire net assets
of the Corporation remaining shall be distributed ratably to the holders of
the outstanding shares of Series N Preferred Stock, other series of Preferred
Stock and classes of other Parity Stock in proportion to the full amounts to
which they are respectively entitled.
E. Conversion.
(1) Each holder of any outstanding shares of Series N Preferred
Stock shall have the right, at any time, to convert any of such shares
into shares of Common Stock. Furthermore, as to any shares of Series N
Preferred Stock called for redemption, each such holder shall have the
right at any time prior to the close of business on the date fixed for
redemption (unless default shall be made by the Corporation in the
payment of the redemption price in which case such right of conversion
shall continue uninterrupted) to convert any of such shares into shares
of Common Stock. The number of shares of Common Stock into which each
share of Series N Preferred Stock shall be convertible shall be equal to
the number arrived at by dividing $200 by the conversion price per share
of the Common Stock fixed or determined as hereinafter provided. Such
conversion price shall initially be $40.00 per share, subject to the
adjustments hereinafter provided (such price as adjusted at any time
being hereinafter called the "Conversion Price").
(2) The holder of any outstanding shares of Series N Preferred
Stock may exercise the conversion right provided in paragraph (1) above
as to all or any portion of the shares he holds by delivering to the
Corporation during regular business hours, at the principal office of the
Corporation or at such other place as may be designated in writing by the
Corporation, the certificate or certificates for the shares to be
converted, duly endorsed or assigned in blank or endorsed or assigned to
the Corporation (if required by it), accompanied by (a) written notice
stating that the holder elects to convert such shares and stating the
name or names (with address and applicable social security or other tax
identification number) in which the certificate or certificates for
shares of Common Stock are to be issued and (b) in the case of conversion
after the record date for the payment of dividends on the Series N
Preferred Stock, as determined by the Board of Directors of the
Corporation, but before the next Payment Date, an amount equal to the
full dividend installment to be paid on the next Payment Date
attributable to the shares of Series N Preferred Stock to be converted.
Conversion shall be deemed to have been effected on the date (the
"Conversion Date") when such delivery is made. As promptly as
practicable thereafter the Corporation shall issue and deliver to or upon
the written order of such holder, at such office or other place
designated by the Corporation, a certificate or certificates for the
number of full shares of Common Stock to which he is entitled and a check
or other order for the payment of cash due with respect to any fraction
of a share, as provided in paragraph (3) below. The person in whose name
the certificate or certificates for shares of Common Stock are to be
issued shall be deemed to have become a stockholder of record on the
Conversion Date, unless the transfer books of the Corporation are closed
on that date, in which event he shall be deemed to have become a
stockholder of record on the next succeeding date on which the transfer
books are open; but the Conversion Price shall be that in effect on the
Conversion Date.
(3) The Corporation shall not issue any fraction of a share upon
conversion of shares of the Series N Preferred Stock. If more than one
share of the Series N Preferred Stock shall be surrendered for conversion
at any time by the same holder, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the basis of the
total number of shares of Series N Preferred Stock so surrendered. If
any fractional interest in a share of Common Stock would be deliverable
upon conversion, the Corporation shall make an adjustment therefor in
cash based on the Fair Market Value, on the Conversion Date, of one share
of Common Stock. The "Fair Market Value" of one share of Common Stock,
as used in this Section E shall, if the Common Stock is traded in the
over-the-counter market, be deemed to be the mean between the asked and
bid prices on the date the value is required to be determined, as
reported by NASDAQ or any similar service, and if the Common Stock is
listed and traded on a national stock exchange, be deemed to be the
closing price of the Common Stock for such day derived from the New York
Stock Exchange Composite Tape, or if there be no New York Stock Exchange
Composite Tape, any similar service; provided, however, that if the
Common Stock is not traded on such date, then the Fair Market Value shall
be determined, in the manner hereinabove set forth, on the most recent
preceding business day on which the Common Stock was traded.
(4) The issuance of Common Stock on conversion of outstanding
shares of Series N Preferred Stock shall be made by the Corporation
without charge for expenses or for any tax in respect of the issuance of
such Common Stock, but the Corporation shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance and delivery of shares of Common Stock in any name other than
that of the holder of record on the books of the Corporation of the
outstanding shares of Series N Preferred Stock converted, and the
Corporation shall not be required to issue or deliver any certificate for
shares of Common Stock unless and until the person requesting the
issuance thereof shall have paid to the Corporation the amount of such
tax or shall have established to the satisfaction of the Corporation that
such tax has been paid.
(5) The Conversion Price shall be subject to the following
adjustments.
(a) Whenever the Corporation shall (i) pay a dividend on its
outstanding shares of Common Stock in shares of its Common Stock or
subdivide or otherwise split its outstanding shares of Common Stock,
or (ii) combine its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect at the effective date
of the happening of such event shall be adjusted so that the holders
of the Series N Preferred Stock, upon conversion of all thereof
immediately following such event, would be entitled to receive the
same aggregate number of shares of Common Stock as they would have
been entitled to receive immediately following such event if such
shares of Series N Preferred Stock had been converted immediately
prior thereto, or if there is a record date in respect of such event,
immediately prior to such record date.
(b) In case the Corporation shall issue rights, warrants or
options to all holders of its Common Stock entitling them (for a
period expiring within 90 days after the record date mentioned below)
to subscribe for or purchase shares of Common Stock at a price per
share less than the Current Market Value (as hereinafter defined) per
share of Common Stock on the record date mentioned below, the
Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect
immediately prior to the issuance of such rights, warrants or options
by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding at the close of business on the date of
issuance of such rights, warrants or options plus the number of shares
which the aggregate exercise price of the shares of Common Stock
called for by all such rights, warrants or options (excluding any
theretofore exercised) would purchase at such Current Market Value and
the denominator of which shall be the number of shares of Common Stock
outstanding at the close of business on the date of issuance of such
rights, warrants or options plus the number of additional shares of
Common Stock called for by all such rights, warrants or options
(excluding any theretofore exercised). Such adjustment shall be made
whenever such rights, warrants or options are issued and shall be
retroactively effective as of immediately after the record date for
the determination of stockholders entitled to receive such rights,
warrants or options. For the purposes of this Section E(5), the
"Current Market Value" per share of Common Stock on any date shall be
deemed to be the average of the Fair Market Value (as defined in
Section E(3)) on each of the 20 consecutive trading days commencing
40 trading days before such date (a trading day being a day on which
securities are traded in the over-the-counter market or, if the Common
Stock is then listed on any national stock exchange, on such
exchange).
(c) Whenever the Corporation shall make a distribution to
holders of Common Stock of evidences of its indebtedness or assets
(excluding dividends and distributions paid in cash out of funds
available for dividends in accordance with applicable law), or rights,
warrants or options to subscribe for or purchase securities of the
Corporation (other than those referred to in subdivision (b) of this
paragraph (5)), the Conversion Price immediately prior to such
distribution shall be adjusted by multiplying such Conversion Price
by a fraction, (i) the numerator of which shall be the denominator,
hereinbelow described, less the fair value (as conclusively determined
in good faith by the Board of Directors of the Corporation) at the
time of such distribution of that portion of the evidences of
indebtedness, assets, or the rights, warrants or options, distributed
which is applicable to one share of Common Stock, and (ii) the
denominator of which shall be the Current Market Value per share of
Common Stock on the next full business day after the record date fixed
for the determination of the holders of the Common Stock entitled to
such distribution. Such adjustment shall be retroactively effective
as of immediately after such record date.
(6) Notwithstanding any of the foregoing provisions of this
Section E, no adjustment of the Conversion Price shall be made if the
Corporation shall issue (i) Common Stock or rights, warrants or options
to purchase Common Stock pursuant to one or more stock purchase plans,
stock option plans, stock purchase contracts, incentive compensation
plans, or other remuneration plans for employees (including officers) of
the Corporation or its Subsidiaries adopted or approved by the Board of
Directors of the Corporation before or after the adoption of this
resolution or (ii) rights, warrants or options to purchase Common Stock
or other capital stock convertible into Common Stock pursuant to one or
more plans (the "Share Rights Plans") which in connection with certain
acquisitions of an interest in the Corporation may permit the holders of
such rights, warrants or options to subscribe for or to purchase shares
of Common Stock or such other capital stock at a price per share less
than the then Current Market Value per share of Common Stock. The
Corporation shall not adopt any Share Rights Plans unless in connection
therewith the Corporation provides that the holders of Series N Preferred
Stock will be entitled to receive substantially similar rights, warrants
or options upon conversion of Series N Preferred Stock.
(7) In any case in which this Section E provides that an
adjustment of the Conversion Price shall become effective retroactively
immediately after a record date for an event, the Corporation may defer
until the occurrence of such event (i) issuing to the holder of any
shares of Series N Preferred Stock converted after such record date and
before the occurrence of such event that number of shares of Common Stock
issuable upon such conversion that shall be in addition to the number of
shares of Common Stock which were issuable upon such conversion
immediately before the adjustment in the Conversion Price required in
respect of such event, and (ii) paying to such holder any cash in lieu of
a fractional share pursuant to this Section E.
(8) Anything in this Section E to the contrary notwithstanding, no
adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of greater than one
percent in such price; provided, however, that any adjustments which by
reason of this paragraph (8) are not required to be made shall be carried
forward and taken into account in making subsequent adjustments. All
calculations under this Section E shall be made to the nearest cent.
(9) Whenever the Conversion Price and subsequent changes to be
made therein are adjusted pursuant to this Section E, the Corporation
shall (i) promptly place on file at its principal office and at the
office of each transfer agent for the Series N Preferred Stock, if any,
a statement, signed by the Chairman or President of the Corporation and
by its Treasurer, showing in detail the facts requiring such adjustment
and a computation of the adjusted Conversion Price, and shall make such
statement available for inspection by stockholders of the Corporation,
and (ii) cause a notice to be mailed to each holder of record of the
outstanding shares of Series N Preferred Stock stating that such
adjustment has been made and setting forth the adjusted Conversion Price.
Unless the change in the Conversion Price is caused as a result of action
described in Section E(5)(a), the statement shall be accompanied by a
letter from the Corporation's independent public accountants stating that
the change has been made in accordance with the provisions of this
Article.
(10) In the event of any reclassification or recapitalization of
the outstanding shares of Common Stock (except a change in par value, or
from par value to no par value, or subdivision or other split or
combination of shares), or in case of any consolidation or merger to
which the Corporation is a party, except a merger in which the
Corporation is the surviving corporation and which does not result in any
such reclassification or recapitalization of the outstanding Common Stock
of the Corporation, or in case of any sale or conveyance to another
corporation of all or substantially all of the property of the
Corporation, effective provision shall be made by the Corporation or by
the successor or purchasing corporation (i) that the holder of each share
of Series N Preferred Stock then outstanding shall thereafter have the
right to convert such share into the kind and amount of stock and other
securities and property receivable, upon such reclassification,
recapitalization, consolidation, merger, sale or conveyance, by a holder
of the number of shares of Common Stock of the Corporation into which
such share of Series N Preferred Stock might have been converted
immediately prior thereto, and (ii) that there shall be subsequent
adjustments of the Conversion Price which shall be equivalent, as nearly
as practicable, to the adjustments provided for in this Section E. The
provisions of this paragraph (10) shall similarly apply to successive
reclassifications, charges, consolidations, mergers, sales or
conveyances.
(11) Shares of Common Stock issued on conversion of shares of
Series N Preferred Stock shall be issued as fully paid shares and shall
be nonassessable by the Corporation. The Corporation shall, at all
times, reserve and keep available for the purpose of effecting the
conversion of the outstanding shares of Series N Preferred Stock such
number of its duly authorized shares of Common Stock as shall be
sufficient to effect the conversion of all outstanding shares of Series
N Preferred Stock.
(12) Shares of Series N Preferred Stock converted as provided
herein shall become authorized and unissued shares of Preferred Stock
which may be designated as shares of any other series. No additional
shares of Preferred Stock, however, may be classified as Series N
Preferred Stock.
F. Exchange Provisions.
(1) The Series N Preferred Stock is exchangeable in whole only at
the option of the Corporation on any Payment Date after December 31,
1991, for Debentures to be issued under the indenture, dated as of
October 24, 1986 between the Corporation and Sovran Bank, N.A., as
Trustee as supplemented by a First Series Supplement dated as of
September 17, 1987 and a Second Series Supplement dated as of December 1,
1989 (such indenture as supplemented by the First Series Supplement and
the Second Series Supplement, the "Indenture"). Holders of outstanding
shares of Series N Preferred Stock will be entitled to receive $200
principal amount of the Debentures in exchange for each share of Series
N Preferred Stock held by them at the time of exchange. At such time
(the "Effective Date" of the exchange), the rights of the holders of
Series N Preferred Stock as stockholders of the Corporation shall cease
(except the right to receive on the date of exchange an amount equal to
the amount of accumulated and unpaid dividends to the date of exchange),
and the person or persons entitled to receive the Debentures issuable
upon exchange shall be treated for all purposes as the registered holder
or holders of such Debentures. The Corporation will give written notice
of its intention to exchange by first class mail, postage prepaid, to
each holder of record of the Series N Preferred Stock no less than 30 nor
more than 60 days prior to the date fixed for the exchange at his last
address as shown on the Corporation's stock transfer records. The notice
will set forth the Effective Date of the exchange and the place or places
where certificates representing shares to be exchanged shall be
surrendered. The Corporation will cause the Debentures to be
authenticated on the Effective Date of the exchange.
Upon surrender of the certificates for any share of Series N Preferred
Stock to be exchanged in accordance with the requirements set forth in
such notice, such shares shall be exchanged by the Corporation into
Debentures, as stated above. From and after the Effective Date of the
exchange all shares of Series N Preferred Stock shall, whether or not the
certificates therefor shall have been surrendered for cancellation, (i)
be deemed no longer to be outstanding for any purpose, and all rights
with respect to such shares shall thereupon cease and terminate except
the right to receive $200 principal amount of the Debentures in exchange
for each share of Series N Preferred Stock and the right to received
accumulated and unpaid dividends to the date of exchange and (ii) become
authorized and unissued shares of Preferred Stock which may be designated
as shares of any other series. No additional shares of Preferred Stock,
however, may be classified as Series N Preferred Stock.
(2) The Debentures shall bear interest at a rate of 7% per annum
and shall be convertible at the option of the holder thereof into shares
of Common Stock. The number of shares of Common Stock issuable upon
conversion of each Debenture, the redemption provisions applicable to the
Debentures and the other terms of the Debentures, including the form
thereof, shall be as is set forth in the Indenture.
G. Definitions. For the purpose of this amendment, the word
"corporation" shall be deemed to include corporations, associations,
companies and business trusts and, unless the context otherwise requires, the
following terms shall have the following meanings:
"Capital Stock" means any capital stock of any class or series
(however designated) of the Corporation.
"Common Stock" means the Common Stock of the Corporation ($.10 par
value), the voting powers, rights and preferences of which are set forth
in the Articles of Incorporation of the Corporation.
"Conversion Date" is defined in Section E(2) hereof.
"Conversion Price" is defined in Section E(1) hereof.
"Current Market Value" is defined in Section E(5)(b) hereof.
"Debentures" means the Corporation's Second Series 7% Convertible
Subordinated Debentures due October 1, 2017 issued pursuant to the
Indenture.
"Dividends Accumulated" means with respect to any shares of Series N
Preferred Stock, an amount equal to the dividends thereon at the dividend
rate per annum computed from the Issuance Date to the date to which
reference is made, whether such amount or any part thereof shall have
been declared as dividends and whether there shall be or have been any
funds out of which such dividends might legally be paid, less the amount
of dividends declared and paid thereon and, if any dividends thereon have
been declared but not paid, the amount set apart for the payment of such
dividends.
"Fair Market Value" is defined in Section E(3) hereof.
"Indenture" is defined in Section F(1) hereof.
"Issuance Date" shall mean the first date of issuance of any shares
of Series N Preferred Stock.
"Junior Stock" means any Capital Stock ranking as to dividends or as
to rights in liquidation, dissolution or winding up of the affairs of the
Corporation junior to Series N Preferred Stock.
"Parity Stock" means any Capital Stock ranking as to dividends or as
to rights in liquidation, dissolution or winding up the affairs of the
Corporation equally with the Series N Preferred Stock.
"Payment Date" is defined in Section A(1) hereof.
"Record Date" is defined in Section A(1) hereof.
"Subsidiary" means any corporation a majority of the outstanding
Voting Stock of which is owned, directly or indirectly, by the
Corporation or by one or more Subsidiaries or by the Corporation and one
or more Subsidiaries. For this purpose, "Voting Stock" means stock of
any class or classes (however designated) having ordinary voting power
for the election of a majority of the members of the board of directors
(or other governing body) of such corporation, other than stock having
such powers only by reason of the happening of a contingency.
"Voting Preferred Stock" is defined in Section B(4) hereof.
Exhibit 3(b)
JAMES RIVER CORPORATION OF VIRGINIA
Articles of Amendment to
the Amended and Restated Articles of Incorporation
Designating the
Series O 8-1/4% Cumulative Preferred Stock ($10.00 par value)
I. The name of the Corporation is James River Corporation of Virginia.
II. Pursuant to Sections 13.1-639 and 13.1-689 of the Virginia Stock
Corporation Act, the Board of Directors of the Corporation on September 8,
1992 duly adopted the following amendment to the Amended and Restated
Articles of Incorporation of the Corporation, adding Article XII thereto
which sets forth the designation and number of shares of a series of
Preferred Stock of the Corporation and certain preferences, limitations and
relative rights thereof and authorized a senior executive officer of the
Corporation to determine the remaining preferences, limitations and relative
rights thereof within limits specifically prescribed by the Board of
Directors and such senior executive officer made such determinations on
September 30, 1992:
Article XII
230,000 authorized but unissued shares of Preferred Stock ($10.00 par
value) are designated as a series of Preferred Stock to be called the Series
O 8-1/4% Cumulative Preferred Stock (the "Series O Preferred Stock"), with
the following voting powers, limitations, rights and preferences:
A. Dividends.
(1) The holders of the outstanding shares of Series O Preferred
stock shall be entitled to receive, if, when and as declared by the
Board of Directors of the Corporation, and when not prohibited by
law, cash dividends at the rate and payable on the dates
hereinafter set forth. The rate of dividends payable on the shares
of Series O Preferred Stock shall be $41.25 per share per annum
(rounded upward to the nearest whole $.01) and no more. Dividends
shall be payable in equal quarterly installments on the first day
of January, April, July and October of each year (the "Payment
Dates"), commencing, in the case of any share of Series O Preferred
Stock, on January 1, 1993. The initial dividend payment will be
computed at the annual rate for the period from the Issuance Date
of Series O Preferred Stock to the first installment Payment Date.
Dividends shall be cumulative and accumulate on the Series O
Preferred Stock from and after the Issuance Date. Dividends
payable on the first installment Payment Date following issuance
and on the date fixed for any redemption of shares of Series O
Preferred Stock pursuant to Section C hereof which is not a Payment
Date, shall be calculated on the basis of a 360-day year and the
actual number of days elapsed. Dividends will be payable to
holders of record as they appear on the stock books of the
Corporation on such record dates as shall be fixed by the Board
Directors of the Corporation (the "Record Dates").
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(2) No dividend whatsoever shall be declared or paid upon, or any
sum set apart for the payment of dividends upon, any shares of
Parity Stock for any dividend period unless all dividends for all
past dividend periods have been declared and paid upon, or declared
and a sufficient sum set apart for the payment of such dividend
upon, all shares of Series O Preferred Stock outstanding.
(3) Unless full dividends (to the extent that the amount thereof
shall have become determinable) on all outstanding shares of Series
O Preferred Stock and any outstanding shares of Parity Stock due
for all past dividend periods shall have been declared and paid, or
declared and a sum sufficient for the payment thereof set apart,
then, subject to the right of holders of shares of previously
issued series of Preferred Stock, (a) no dividend (other than a
dividend payable solely in Junior Stock) shall be declared or paid
upon, or any sum set apart for the payment of dividends upon, any
shares of Junior Stock; (b) no other distribution shall be made
upon any shares of Junior Stock; (c) no shares of Junior Stock
shall be purchased, redeemed or otherwise acquired for value by the
Corporation or by any Subsidiary; and (d) no monies shall be paid
into or set apart or made available for a sinking or other like
fund for the purchase, redemption or other acquisition for value of
any shares of Junior Stock by the Corporation or any Subsidiary.
B. Voting Rights.
(1) Except for the voting rights expressly conferred by this
Section B and except to the extent provided by law, the holders of
shares of Series O Preferred Stock shall not be entitled (a) to
vote on any matter or (b) to receive notice of, or to participate
in, any meeting of stockholders of the Corporation at which the
holders of shares of Series O Preferred Stock are not entitled to
vote.
(2) The approval of more than two-thirds of the votes entitled to
be cast by the holders of the outstanding shares of the Series O
Preferred Stock, voting as a separate voting group, shall be
required for the adoption of any amendment to the Articles of
Incorporation, or any bylaw, that materially adversely changes the
preferences, limitations and rights of the Series O Preferred Stock
(it being expressly stated that an increase in the number of
Directors of the Corporation is not such an adverse change,
provided that this statement is made as a matter of clarification
and shall not be read as implying that in its absence such an
increase would institute such an adverse change) or for the
authorization of, or the increase in the authorized number of
shares of, a class of Capital Stock other than Junior Stock and
Parity Stock. The approval of a majority of the votes entitled to
be cast by the holders of the outstanding shares of Series O
Preferred Stock, voting as a separate voting group, shall be
required for authorization of, or an increase in the authorized
number of shares of, any class of Parity Stock. Except for cases
covered by the two preceding sentences of this paragraph (2),
whenever the holders of the Series O Preferred Stock are entitled
under the Virginia Stock Corporation Act to vote as a separate
voting group on an amendment of the Articles of Incorporation, a
plan of merger, or a plan of share exchange, the vote required for
the approval of such amendment shall be a majority of all votes
cast on the amendment, plan of merger or plan of share exchange by
the holders of the Series O Preferred Stock at a meeting at which
the holders of a majority of the outstanding shares of Series O
Preferred Stock are represented in person or by proxy.
(3) Whenever the holders of the Series O Preferred Stock are
entitled under the Virginia Stock Corporation Act to vote together
with the holders of one or more other series of Preferred Stock as
a single voting group (including a vote of the class of Preferred
Stock as a separate voting group) on any amendment of the Articles
of Incorporation, plan of merger or plan of share exchange, the
vote required for the approval of such amendment, plan of merger or
plan of share exchange shall be a majority of all votes cast on the
amendment, plan of merger or plan of share exchange by the holders
of the shares included in such voting group at a meeting at which
the holders of a majority of the outstanding shares included in
such voting group are represented in person or by proxy; provided
that if at the time of such vote there shall be outstanding any
share of a series included in such voting group which under the
Articles of Incorporation or otherwise under the Virginia State
Corporation Act is not authorized as part of such voting group to
approve the amendment, plan of merger or plan of share exchange by
such majority vote, the vote required for its approval of such
amendment, plan of merger or plan of share exchange shall be more
than two-thirds of all the votes entitled to be cast by such voting
group.
(4) The holders of the outstanding shares of Series O Preferred
Stock shall also have the right, voting together with the holders
of any other outstanding shares of Voting Preferred Stock (as
hereinafter defined) as a separate voting group, to elect two
members of the Board of Directors of the Corporation at any time
six or more quarterly dividends on any shares of Voting Preferred
Stock shall be in arrears and unpaid, in whole or in part, whether
or not declared and whether or not any funds shall be or have been
legally available for payment thereof. For this purpose, "Voting
Preferred Stock" shall mean the Series O Preferred Stock and each
other series of Preferred Stock which shall have substantially
similar voting rights (including voting as one voting group with
other shares of Voting Preferred Stock) with respect to the
election of directors upon substantially similar arrearages of
dividends. In such event, unless a regular meeting of the
stockholders of the Corporation is to be held within 60 days
thereof for the purpose of electing Directors, the Corporation
shall promptly thereafter cause the number of Directors of the
Corporation to be increased by two, and, within 30 days thereafter,
shall call a special meeting of the holders of the outstanding
shares of Voting Preferred Stock for the purpose of electing such
Directors to take place at the time specified in the notice of the
meeting, to be not more than 60 days after such holders become so
entitled to elect two Directors and not less than ten nor more than
50 days after the date on which such notice is mailed. If such
special meeting shall not have been so called by the Corporation,
or such regular meeting shall not be so held, a special meeting may
be called for such purpose at the expense of the Corporation by the
holders of not less than 10% of the outstanding shares of any
series of Voting Preferred Stock; and notice of any such special
meeting shall be given by the person or persons calling the same to
the holders of the outstanding shares of the Voting Preferred Stock
by first-class mail, postage prepaid, at their last addresses as
shall appear on the stock transfer records of the Corporation. At
any such special meeting the holders of the outstanding shares of
Voting Preferred Stock, voting as a separate voting group with each
share having one vote, shall elect two members of the Board of
Directors of the Corporation. If a regular meeting of the
stockholders of the Corporation for the purpose of electing
Directors is to be held within 60 days after the time the holders
of the outstanding shares of Voting Preferred Stock become so
entitled to elect two Directors, then the holders of the
outstanding shares of Voting Preferred Stock shall be given notice
thereof in the same manner as other stockholders of the Corporation
entitled to vote thereat; and at such regular meeting, the holders
of the outstanding shares of Voting Preferred Stock, voting as a
separate voting group with each share having one vote, shall elect
two members of the Board of Directors. The right of the holders of
the Voting Preferred Stock, voting as a separate voting group, to
elect two members of the Board of Directors of the Corporation
shall continue until such time as no dividends on any outstanding
shares of Voting Preferred Stock are in arrears and unpaid, in
whole or in part, at which time (i) the voting power of the holders
of the outstanding shares of Voting Preferred Stock so to elect two
directors shall cease, but always subject to the same provisions of
this paragraph (4) for the vesting of such voting power upon the
occurrence of each and every like arrearage of dividends, and (ii)
the term of office of each member of the Board of Directors who was
elected pursuant to this paragraph (4) shall automatically expire.
C. Redemption.
(1) The shares of Series O Preferred Stock are not redeemable
prior to October 1, 1997. The Corporation may, at its option,
redeem shares of Series O Preferred Stock, in whole or in part, at
any time from time to time on or after October 1, 1997 at a
redemption price of $500 per share, plus in each case Dividends
Accumulated to the date fixed for redemption.
(2) In case less than all of the outstanding shares of Series O
Preferred Stock are to be redeemed, not more than 60 days prior to
the date fixed for redemption the Corporation shall select the
shares to be redeemed. The Corporation shall select by proration,
by lot or otherwise the shares to be so redeemed among the holders
thereof. The Corporation shall make such adjustments,
reallocations and eliminations as it shall deem proper by
increasing or decreasing or eliminating the number of shares to be
redeemed which would be allocable to any one holder on the basis of
exact proration, selection by lot or any such other method of
selection by not more than ten shares to the end that the number of
shares so prorated shall be integral multiples of ten shares. The
Corporation in its discretion may elect the particular certificates
(if there are more than one) representing shares registered in the
name of a holder that are to be redeemed.
(3) Not less than 30 nor more than 60 days prior to the date fixed
for any redemption pursuant to paragraph (1) of this Section C,
notice of redemption shall be given by first-class mail, postage
prepaid, to the holders of record of the outstanding shares of the
Series O Preferred Stock to be redeemed at their last addresses as
shown by the Corporation's stock transfer records. The notice of
redemption shall set forth the number of shares to be redeemed, the
date fixed for redemption, the applicable redemption price or
prices (including the amount of Dividends Accumulated to the date
fixed for the redemption), and the place or places where
certificates representing shares to be redeemed may be surrendered.
In case less than all outstanding shares are to be redeemed, the
notice of redemption shall also set forth the numbers of the
certificates representing shares to be redeemed and, in case less
than all shares represented by any such certificate are to be
redeemed, the number of shares represented by such certificate to
be redeemed.
(4) If notice of redemption of any outstanding shares of Series O
Preferred Stock shall have been duly mailed as herein provided, on
or before the date fixed for redemption the Corporation shall
deposit in cash funds sufficient to pay the redemption price
(including Dividends Accumulated to the date fixed for redemption)
of such shares in trust for the benefit of the holders of shares to
be redeemed with any bank or trust company in the City of Richmond,
State of Virginia, or Borough of Manhattan, City and State of New
York, having capital and surplus aggregating at least $50,000,000
as of the date of its most recent report of financial condition,
named in such notice, to be applied to the redemption of the shares
so called for redemption against surrender for cancellation of the
certificates representing shares so redeemed. From and after the
time of such deposit all shares for the redemption of which such
deposit shall have been made shall, whether or not the certificates
therefor shall have been surrendered for cancellation, be deemed no
longer to be outstanding for any purpose, and all rights with
respect to such shares shall thereupon cease and determine except
the right to receive payment of the redemption price (including
Dividends Accumulated to the date fixed for redemption), but
without interest. Any interest earned on funds so deposited shall
be paid to the Corporation from time to time. Any funds so
deposited and unclaimed at the end of three years from the date
fixed for redemption shall be repaid to the Corporation free of
trust, and the holders of the shares called for redemption who have
not surrendered certificates representing such shares prior to such
repayment shall be deemed to be unsecured creditors of the
Corporation for the amount of the redemption price (including
Dividends Accumulated to the date fixed for redemption) thereof and
shall look only to the Corporation for payment thereof, without
interest, subject to the laws of the Commonwealth of Virginia.
(5) The Corporation shall also have the right to acquire
outstanding shares of Series O Preferred Stock otherwise than by
redemption pursuant to paragraph (1) of this Section C from time to
time for such consideration as may be acceptable to the holders
thereof.
(6) Shares of Series O Preferred Stock purchased, redeemed or
otherwise acquired by the Corporation and shares of Series O
Preferred Stock not issued on or within 30 days after the Issuance
Date shall become authorized and unissued shares of Preferred Stock
which may be designated as shares of any other series. No
additional shares of Preferred Stock, however, may be classified as
Series O Preferred Stock.
D. Conversion.
The holders of shares of Series O Preferred Stock shall not have
any rights to convert such shares into shares of any other class or
series of capital stock of the Corporation.
E. Liquidation.
In the event of liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, the
holders of the shares of the Series O Preferred Stock then
outstanding shall be entitled to be paid in cash out of the net
assets of the Corporation, including its capital, a liquidation
payment of $500 per share, plus, in each case, Dividends
Accumulated to the date of payment, and no more, before any
distribution or payment shall be made to the holders of shares of
Junior Stock and, after payment to the holders of the outstanding
shares of Series O Preferred Stock and to the holders of shares of
other series of Preferred Stock and classes of other Parity Stock
of the amounts to which they are respectively entitled, the balance
of such assets, if any, shall be paid to the holders of the Common
Stock according to their respective rights. For the purposes of
the preceding sentence, neither the consolidation of the
Corporation with nor the merger of the Corporation into any other
corporation nor the sale, lease or other disposition of all or
substantially all of the Corporation's properties and assets shall,
without further corporation action, be deemed a liquidation,
dissolution or winding up of the affairs of the Corporation. In
case the net assets of the Corporation are insufficient to pay to
the holders of the outstanding shares of Series O Preferred Stock
the full amounts to which they are respectively entitled, the
entire net assets of the Corporation remaining shall be distributed
ratably to the holders of the outstanding shares of Series O
Preferred Stock, other series of Preferred Stock and classes of
other Parity Stock in proportion to the full amounts to which they
are respectively entitled.
F. Definitions.
For the purpose of this amendment, the word "corporation" shall be
deemed to include corporations, associations, companies and
business trusts and, unless the context otherwise requires, the
following terms shall have the following meanings:
"Capital Stock" means any capital stock of any class or series
(however designated) of the Corporation.
"Dividends Accumulated" means with respect to any shares of Series
O Preferred Stock, an amount equal to the dividends thereon at the
dividend rate per annum computed from the Issuance Date to the date
to which reference is made, whether such amount or any part thereof
shall have been declared as dividends and whether there shall be or
have been any funds out of which such dividends might legally be
paid, less the amount of dividends declared and paid hereon and, if
any dividends thereon have been declared but not paid, the amount
set apart for the payment of such dividends.
"Issuance Date" shall mean the first date of issuance of any shares
of Series O Preferred Stock.
"Junior Stock" means any Capital Stock ranking as to dividends or
as to rights in liquidation, dissolution or winding up of the
affairs of the Corporation junior to Series O Preferred Stock.
"Parity Stock" means any Capital Stock ranking as to dividends or
as to rights in liquidation, dissolution or winding up the affairs
of the Corporation equally with the Series O Preferred Stock.
"Payment Date" is defined in Section A(1) hereof.
"Record Date" is defined in Section A(1) hereof.
"Subsidiary" means any corporation a majority of the outstanding
Voting Stock of which is owned, directly or indirectly, by the
Corporation or by one or more Subsidiaries or by the Corporation
and one or more Subsidiaries. For this purpose, "Voting Stock"
means stock of any class or classes (however designated) having
ordinary voting power for the election of a majority of the members
of the board of directors (or other governing body) of such
corporation, other than stock having such powers only by reason of
the happening of a contingency.
"Voting Preferred Stock" is defined in Section B(4) hereof.
III. This amendment was adopted by the Board of Directors of the
Corporation without stockholder action and stockholder action was not
required.
September 30, 1992
Exhibit 3(c)
BYLAWS OF
JAMES RIVER CORPORATION OF VIRGINIA
(amended as of April 28, 1994)
ARTICLE I - MEETINGS OF STOCKHOLDERS
Section 1.1 Closing of Transfer Books and Fixing of Record Date. For
the purpose of determining stockholders entitled to notice of, or to vote at,
any meeting of stockholders or any adjournment thereof, or entitled to
receive payment of any dividend, or in order to make a determination of
stockholders for any other proper purpose, the Board of Directors or the
Executive Committee shall fix in advance a date as the record date for any
such determination of stockholders, such date to be not more than 70 days
before the meeting or action. When a determination of stockholders entitled
to vote at any meeting of stockholders has been made as provided in this
article, such determination shall apply to any adjournment thereof, except as
is otherwise provided by law.
Section 1.2 Place and Time of Meetings. Meetings of stockholders shall
be held at such place, either within or without the Commonwealth of Virginia,
and at such time, as may be provided in the notice of the meeting.
Section 1.3. Organization and Order of Business. The Chairman of the
Board of Directors (the "Chairman") or, in his absence, the President shall
serve as chairman at all meetings of the stockholders. In the absence of
both of the foregoing officers or if both of them decline to serve, a
majority of the shares entitled to vote at such meeting may appoint any
person to act as Chairman. The Secretary of the Corporation or, in his
absence, an Assistant Secretary, shall act as secretary at all meetings of
the stockholders. In the event that neither the Secretary nor any Assistant
Secretary is present, the Chairman may appoint any person to act as secretary
of the meeting.
The Chairman shall have the authority to make such rules and
regulations, to establish such procedures and to take such steps as he may
deem necessary or desirable for the proper conduct of each meeting of the
stockholders, including, without limitation, the authority to make the agenda
and to establish procedures for (i) the dismissal of business not properly
presented, (ii) the maintenance of order and safety, (iii) placing
limitations on the time allotted to questions or comments on the affairs of
the Corporation, (iv) placing restrictions on attendance at a meeting by
persons or classes of persons who are not stockholders or their proxies, (v)
restricting entry to a meeting after the time prescribed for the commencement
thereof and (vi) the commencement, conduct and close of voting on any matter.
Section 1.4 Annual Meeting. The annual meeting of stockholders shall
be held on the second Thursday in April of each year.
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At each annual meeting of stockholders, only such business shall be
conducted as is proper to consider and has been brought before the meeting
(i) by or at the direction of the Board of Directors or (ii) by a stockholder
of the Corporation who is a stockholder of record of a class of shares
entitled to vote on such business at the time of the giving of the notice
hereinafter described in this Section 1.4 and who complies with the notice
procedures set forth in this Section 1.4. In order to bring business before
an annual meeting of stockholders, a stockholder, in addition to complying
with any other applicable requirements, must have given timely written notice
of his intention to bring such business before the meeting to the Secretary
of the Corporation. To be timely, a stockholder's notice must be given,
either by personal delivery or by United States certified mail, postage
prepaid, addressed to the Secretary of the Corporation at the principal
office of the Corporation and received (i) on or after December 1st of the
year immediately preceding the year in which the meeting will be held and
before January 1st of the year in which the meeting will be held or (ii) not
less than 60 days before the date of the annual meeting if the date of such
meeting, as prescribed in these Bylaws, has been changed by more than 30
days.
Each such stockholder's notice shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (i) the name and
address, as they appear on the Corporation's stock transfer books, of the
stockholder proposing such business, (ii) the class and number of shares of
stock of the Corporation beneficially owned by such stockholder, (iii) a
representation that such stockholder is a stockholder of record and intends
to appear in person or by proxy at such meeting to bring before the meeting
the business specified in the notice, (iv) a brief description of the
business desired to be brought before the meeting, including the complete
text of any resolutions to be presented at the meeting and the reasons for
wanting to conduct such business, and (v) any material interest which the
stockholder has in such business.
The Secretary of the Corporation shall deliver each such stockholder's
notice that has been timely received to the Chairman or a committee
designated by the Board of Directors for review.
Notwithstanding the foregoing provisions of this Section 1.4, a
stockholder seeking to have a proposal included in the Corporation's proxy
statement for an annual meeting of stockholders shall comply with the
requirements of Regulation 14A under the Securities Exchange Act of 1934, as
amended from time to time, or with any successor regulation.
Section 1.5 Special Meetings. Special meetings of the stockholders may
be called by the Chairman, the President or the Board of Directors. Only
business within the purpose or purposes described in the notice for a special
meeting of stockholders may be conducted at the meeting.
Section 1.6 Notice of Meetings. Written notice stating the place, day
and hour of each meeting of stockholders and, in the case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
given by mail not less than ten nor more than 60 days before the date of the
meeting (except when a different time is required in these Bylaws or by law)
to each stockholder of record entitled to vote at such meeting and to such
nonvoting stockholders as may be required by law. Such notice shall be
deemed to be effective when deposited in the United States mail with postage
thereon prepaid, addressed to the stockholder at his address as it appears on
the stock transfer books of the Corporation.
Notice of a stockholders' meeting to act on (i) an amendment of the
Articles of Incorporation; (ii) a plan of merger or share exchange; (iii) the
sale, lease, exchange or other disposition of all or substantially all the
property of the Corporation otherwise than in the usual and regular course of
business, or (iv) the dissolution of the Corporation, shall be given, in the
manner provided above, not less than 25 nor more than 60 days before the date
of the meeting. Any notice given pursuant to this paragraph shall state that
the purpose, or one of the purposes, of the meeting is to consider such
action and shall be accompanied by (x) a copy of the proposed amendment, (y)
a copy of the proposed plan of merger or share exchange, or (z) a summary of
the agreement pursuant to which the proposed transaction will be effected.
If only a summary of the agreement is sent to the stockholders, the
Corporation shall also send a copy of the agreement to any stockholder who
requests it.
If a meeting is adjourned to a different date, time or place, notice
need not be given if the new date, time or place is announced at the meeting
before adjournment. However, if a new record date for an adjourned meeting
is fixed (which shall be done if the meeting is adjourned to a date more than
120 days after the date fixed for the original meeting), notice of such date
shall be given to those persons entitled to notice who are stockholders as of
the new record date, unless a court provides otherwise.
Section 1.7 Quorum and Voting Requirements. Each outstanding share of
common stock shall be entitled to one vote on each matter submitted to a vote
at a meeting of stockholders. Shares of other classes and series shall be
entitled to such vote as may be provided in the Articles of Incorporation.
Shares entitled to vote as a separate voting group may take action on a
matter at a meeting only if a quorum of those shares exists with respect to
that matter. Unless otherwise required by law, a majority of the votes
entitled to be cast on a matter by a voting group constitutes a quorum of
that voting group for action on that matter. Once a share is represented for
any purpose at a meeting, it is deemed present for quorum purposes for the
remainder of the meeting and for any adjournment of that meeting unless a new
record date is or shall be set for that adjourned meeting. If a quorum
exists, action on a matter, other than the election of directors, by a voting
group is approved if the votes cast within the voting group favoring the
action exceed the votes cast opposing the action, unless a greater number of
affirmative votes is required by law or by the Articles of Incorporation.
Directors shall be elected by a plurality of the votes cast by the shares
entitled to vote in the election at a meeting at which a quorum is present
unless a different vote in required by the Articles of Incorporation. Less
than a quorum may adjourn a meeting.
Section 1.8 Proxies. A stockholder may vote his shares in person or by
proxy. A stockholder may appoint a proxy to vote or otherwise act for him by
signing an appointment form, either personally or by his attorney-in-fact.
An appointment of a proxy is effective when received by the Secretary or
other officer or agent authorized to tabulate votes and is valid for 11
months unless a longer period is expressly provided in the appointment form.
An appointment of a proxy is revocable by the stockholder unless the
appointment form conspicuously states that it is irrevocable and the
appointment is coupled with an interest.
The death or incapacity of the stockholder appointing a proxy does not
affect the right of the Corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the Secretary or other
officer or agent authorized to tabulate votes before the proxy exercises his
authority under the appointment. An irrevocable appointment is revoked when
the interest with which it is coupled is extinguished. A transferee for
value of shares subject to an irrevocable appointment may revoke the
appointment if he did not know of its existence when he acquired the shares
and the existence of the irrevocable appointment was not noted conspicuously
on the certificate representing the shares. Subject to any legal limitations
on the right of the Corporation to accept the vote or other action of a proxy
and to any express limitation on the proxy's authority appearing on the face
of the appointment form, the Corporation is entitled to accept the proxy's
vote or other action as that of the stockholder making the appointment. Any
fiduciary entitled to vote any shares may vote such shares by proxy.
Section 1.9 Waiver of Notice; Attendance at Meeting. A stockholder may
waive any notice required by law, the Articles of Incorporation or these
Bylaws before or after the date and time of the meeting that is the subject
of such notice. The waiver shall be in writing, be signed by the stockholder
entitled to the notice, and be delivered to the Secretary of the Corporation
for inclusion in the minutes or filing with the corporate records.
A stockholder's attendance at a meeting (i) waives objection to lack of
notice or defective notice of the meeting, unless the stockholder at the
beginning of the meeting objects to holding the meeting or transacting
business at the meeting, and (ii) waives objection to consideration of a
particular matter at the meeting that is not within the purpose or purposes
described in the meeting notice, unless the stockholder objects to
considering the matter when it is presented.
Section 1.10 Action Without Meeting. Action required or permitted to
be taken at a stockholders' meeting may be taken without a meeting and
without action by the Board of Directors if the action is taken by all the
stockholders entitled to vote on the action. The action shall be evidenced
by one or more written consents describing the action taken, signed by all
the stockholders entitled to vote on the action, and delivered to the
Secretary of the Corporation for inclusion in the minutes or filing with the
corporate records. Action taken under this section shall be effective
according to its terms when all consents are in the possession of the
Corporation. A stockholder may withdraw a consent only by delivering a
written notice of withdrawal to the Corporation prior to the time that all
consents are in the possession of the Corporation.
If not otherwise fixed pursuant to the provisions of Section 1.1, the
record date for determining stockholders entitled to take action without a
meeting is the date the first stockholder signs the consent described in the
preceding paragraph.
If notice of proposed action is required to be given to nonvoting
stockholders and the action is to be taken by unanimous consent of the voting
stockholders, the Corporation shall give its nonvoting stockholders written
notice of the proposed action at least ten days before the action is taken.
The notice shall contain or be accompanied by the same material that would
have been required by law to be sent to nonvoting stockholders in a notice of
a meeting at which the proposed action would have been submitted to the
stockholders for action.
Section 1.11 Voting List. The officer or agent having charge of the
stock transfer books of the Corporation shall make, at least ten days before
each meeting of stockholders, a complete list of the stockholders entitled to
vote at such meeting or any adjournment thereof, with the address of and the
number of shares held by each. The list shall be arranged by voting group
and within each voting group by class or series of shares. Such list shall
be kept on file at the registered office of the Corporation, or at its
principal office or at the office of its transfer agent or registrar, for a
period of ten days prior to such meeting and shall be subject to the
inspection of any stockholder at any time during usual business hours. Such
list shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any stockholder during the
whole time of the meeting for the purposes thereof. The original stock
transfer books shall be prima facia evidence as to who are the stockholders
entitled to examine such list or transfer books or to vote at any meeting of
the stockholders. The right of a stockholder to inspect such list at any
other time shall be subject to the limitations established by law.
If the requirements of this section have not been substantially complied
with, the meeting shall, on the demand of any stockholder in person or by
proxy, be adjourned until such requirements are met. Refusal or failure to
prepare or make available the stockholders' list does not affect the validity
of action taken at the meeting prior to the making of any such demand, but
any action taken by the stockholders after the making of any such demand
shall be invalid and of no effect.
ARTICLE II - DIRECTORS
Section 2.1 General Powers. The Corporation shall have a Board of
Directors. All corporate powers shall be exercised by or under the authority
of, and the business and affairs of the Corporation managed under the
direction of, its Board of Directors, subject to any limitation set forth in
the Articles of Incorporation.
Section 2.2 Number and Term. The number of directors of the
Corporation shall be 10. This number may be changed from time to time by
amendment to these Bylaws to increase or decrease by 30 percent or less the
number of directors last elected by the stockholders, but only the
stockholders may increase or decrease the number by more than 30 percent. No
decrease in number shall have the effect of shortening the term of any
incumbent director. Each director shall hold office until his death,
resignation or removal or until his successor is elected.
Section 2.3 Nomination of Candidates. No person shall be eligible for
election as a director unless nominated (i) by the Board of Directors upon
recommendation of the Nominating Committee or otherwise or (ii) by a
stockholder entitled to vote on the election of directors pursuant to the
procedures set forth in this Section 2.3.
Nominations, other than those made by the Board of Directors, may be
made only by a stockholder who is a stockholder of record of a class of
shares entitled to vote for the election directors at the time of the giving
of the notice hereinafter described in this Section 2.3 and only if written
notice of the stockholder's intent to nominate one or more persons for
election as directors at a meeting of stockholders has been given, either by
personal delivery or by United States certified mail, postage prepaid,
addressed to the Secretary of the Corporation at the principal office of the
Corporation and received (i) on or after December 1st of the year immediately
preceding the year in which the meeting will be held and before January 1st
of the year in which the meeting will be held, if the meeting is to be an
annual meeting and clause (ii) is not applicable, or (ii) not less than 60
days before an annual meeting, if the date of the applicable annual meeting,
as prescribed in these Bylaws, has been changed by more than 30 days, or
(iii) not later than the close of business on the tenth day following the day
on which notice of a special meeting of stockholders called for the purpose
of electing directors is first given to stockholders.
Each such stockholder's notice shall set forth the following: (i) as to
the stockholder giving the notice (a) the name and address of such
stockholder as they appear on the Corporation's stock transfer books, (b) the
class and number of shares of stock of the Corporation beneficially owned by
such stockholder, (c) a representation that such stockholder is a stockholder
of record and intends to appear in person or by proxy at such meeting to
nominate the person or persons specified in the notice, and (d) a description
of all arrangements or understandings, if any, between such stockholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made; and (ii) as
to each person whom the stockholder wishes to nominate for election as a
director (a) the name, age, business address and, if known, residence address
of such person, (b) the principal occupation or employment of such person,
(c) the class and number of shares of the Corporation which are beneficially
owned by such person, and (d) all other information that is required to be
disclosed about nominees for election as directors in solicitations of
proxies for the election of directors under the Securities Exchange Act of
1934, as amended, or otherwise by the rules and regulations of the Securities
and Exchange Commission. In addition, each such notice shall be accompanied
by the written consent of each proposed nominee to serve as a director if
elected. Each such consent shall also contain a statement from the proposed
nominee to the effect that the information about him contained in the notice
is correct.
Section 2.4 Election. Except as provided in Section 2.5 of this
Article and in the Articles of Incorporation, the directors shall be elected
by the common stockholders at the annual meeting of stockholders, and those
nominees who receive the greatest number of votes shall be deemed elected
even though they do not receive a majority of the votes cast. No individual
shall be named or elected as a director without his prior consent.
Section 2.5 Removal; Vacancies. The stockholders may remove one or
more directors, with or without cause. If a director is elected by a voting
group, only the stockholders of that voting group may vote to remove him.
Unless the Articles of Incorporation require a greater vote, a director may
be removed if the number of votes cast to remove him constitutes a majority
of the votes entitled to be cast at an election of directors of the voting
group or voting groups by which such director was elected. A director may be
removed by the stockholders only at a meeting called for the purpose of
removing him and the notice of the meeting must state that the purpose, or
one of the purposes of the meeting, is removal of the director.
A vacancy on the Board of Directors, including a vacancy resulting from
the removal of a director or an increase in the number of directors, may be
filled by (i) the stockholders, (ii) the Board of Directors or (iii) the
affirmative vote of a majority of the remaining directors though less than a
quorum of the Board of Directors, and may, in the case of a resignation that
will become effective at a specified later date, be filled before the vacancy
occurs but the new director may not take office until the vacancy occurs.
Section 2.6 Compensation. The Board of Directors may fix the
compensation of directors for their services and may provide for the payment
of all expenses incurred by directors in attending regular and special
meetings of the Board of Directors.
ARTICLE III - DIRECTORS' MEETINGS
Section 3.1 Annual and Regular Meetings. An annual meeting of the
Board of Directors, which shall be considered a regular meeting, shall be
held immediately following each annual meeting of stockholders, for the
purpose of electing officers and carrying on such other business as may
properly come before the meeting. The Board of Directors may also adopt a
schedule of additional meetings which shall be considered regular meetings.
Regular meetings shall be held at such times and at such places, within or
without the Commonwealth of Virginia, as the Chairman or, in his absence, the
President, shall designate. If no place is designated, regular meetings
shall be held at the principal office of the Corporation.
Section 3.2 Special Meetings. Special meetings of the Board of
Directors shall be held on the call of the Chairman, the President or any
three members of the Board of Directors at the principal office of the
Corporation or at such other place as the Chairman, or in his absence, the
President, shall designate.
Section 3.3 Telephone Meetings. The Board of Directors may permit any
or all directors to participate in a regular or special meeting by, or
conduct the meeting through the use of, any means of communication by which
all directors participating may simultaneously hear each other during the
meeting. A director participating in a meeting by this means is deemed to be
present in person at the meeting.
Section 3.4 Notice of Meetings. No notice need be given of regular
meetings of the Board of Directors.
Notice of special meetings of the Board of Directors shall be given to
each director in person or delivered to his residence or business address, or
such other place as he may have directed in writing, not less than 24 hours
before the meeting by mail, messenger, telecopy, telegraph, or other means of
written communication or by telephoning such notice to him. Any such notice
shall set forth the time and place of the meeting and state the purpose for
which it is called.
Section 3.5 Quorum; Voting. A majority of the number of directors
fixed in these Bylaws shall constitute a quorum for the transaction of
business at a meeting of the Board of Directors. If a quorum is present when
a vote is taken, the affirmative vote of a majority of the directors present
is the act of the Board of Directors unless the act of a greater number is
required by law, the Articles of Incorporation or these Bylaws. A director
who is present at a meeting of the Board of Directors when corporate action
is taken is deemed to have assented to the action taken unless (i) he objects
at the beginning of the meeting, or promptly upon his arrival, to holding it
or transacting specified business at the meeting; or (ii) he votes against,
or abstains from, the action taken.
Section 3.6 Waiver of Notice; Attendance at Meeting. A director may
waive any notice required by law, the Articles of Incorporation, or these
Bylaws before or after the date and time stated in the notice, and such
waiver shall be equivalent to the giving of such notice. Except as provided
in the next paragraph of this section, the waiver shall be in writing, signed
by the director entitled to the notice and filed with the minutes or
corporate records.
A director's attendance at or participation in a meeting waives any
required notice to him of the meeting unless the director at the beginning of
the meeting or promptly upon his arrival objects to holding the meeting or
transacting business at the meeting and does not thereafter vote for or
assent to action taken at the meeting.
Section 3.7 Action Without Meeting. Action required or permitted to be
taken at a Board of Directors' meeting may be taken without a meeting if the
action is taken by all members of the Board. The action shall be evidenced
by one or more written consents describing the action taken, signed by each
director either before or after the action taken, and included in the minutes
or filed with the corporate records reflecting the action taken. Action
taken under this section shall be effective when the last director signs the
consent unless the consent specifies a different effective date in which
event the action taken is effective as of the date specified therein,
provided the consent states the date of execution by each director.
ARTICLE IV - COMMITTEE OF DIRECTORS
Section 4.1 Committees. The Board of Directors may create one or more
committees and appoint members of the Board of Directors to serve on them.
Unless otherwise provided herein, each committee shall have two or more
members who serve at the pleasure of the Board of Directors. The creation of
a committee and appointment of members to it shall be approved by the number
of directors required to take action under Section 3.5 of these Bylaws.
Section 4.2 Authority of Committees. To the extent specified by the
Board of Directors, each committee may exercise the authority of the Board of
Directors, except that a committee may not (i) approve or recommend to
stockholders action that is required by law to be approved by stockholders;
(ii) fill vacancies on the Board of Directors or any of its committees; (iii)
amend the Articles of Incorporation without stockholder approval; (iv) adopt,
amend, or repeal these Bylaws; (v) approve a plan of merger not requiring
stockholder approval; (vi) authorize or approve a distribution, except
according to a general formula or method prescribed by the Board of
Directors; or (vii) authorize or approve the issuance, or sale or contract
for sale of stock, or determine the designation and relative rights,
preferences, and limitations of a class or series of stock, except that the
Board of Directors may authorize a committee, or a senior executive officer
of the Corporation, to do so within limits specifically prescribed by the
Board of Directors.
Section 4.3 Executive Committee. The Board of Directors shall appoint
an Executive Committee consisting of two or more directors, which committee
shall have all of the authority of the Board of Directors except to the
extent such authority is limited by the provisions of Section 4.2.
Section 4.4 Audit Committee. The Board of Directors shall appoint an
Audit Committee consisting of not less than three directors, none of whom
shall be officers, which committee shall regularly review the adequacy of the
Corporation's internal financial controls, review with the Corporation's
independent public accountants the annual audit and other financial
statements, and recommend the selection of the Corporation's independent
public accountants.
Section 4.5 Nominating Committee. The Board of Directors shall appoint
a Nominating Committee consisting of not less than three directors, a
majority of whom shall not be officers or employees, which committee shall
recommend to the Board of Directors the names of persons to be nominated for
election as directors of the Corporation.
Section 4.6 Compensation Committee. The Board of Directors shall
appoint a compensation committee consisting of not less than three directors,
none of whom shall be officers, which committee shall recommend to the Board
of Directors the compensation of directors and those officers of the
Corporation who are directors, make awards under the Corporation's
discretionary employee benefit plans, and make recommendations from time to
time to the Board of Directors regarding the Corporation's compensation
program.
Section 4.7 Committee Meetings; Miscellaneous. The provisions of these
Bylaws which govern meetings, action without meetings, notice and waiver of
notice, and quorum and voting requirements of the Board of Directors shall
also apply to committees of directors and their members.
ARTICLE V - OFFICERS
Section 5.1 Officers. The officers of the Corporation shall be a
Chairman, a Chief Executive Officer, a President, a Secretary, a Chief
Financial Officer, and such additional officers, including Vice Presidents
and other officers, as the Chief Executive Officer or the Board of Directors
may deem necessary or advisable to conduct the business of the Corporation.
The Chairman and the President shall be members of the Board of Directors and
one of them shall be designated as Chief Executive Officer. The Board of
Directors shall also designate those officers who are deemed to be "Executive
Officers." Any two offices may be combined except the offices of President
and Secretary.
Section 5.2 Election, Term. Executive Officers shall be elected at
each annual meeting of the Board of Directors and shall hold office, unless
removed, until the next annual meeting of the Board of Directors or until
their successors are elected. All other officers shall be appointed by the
Chief Executive Officer and shall hold office, unless removed, until their
successors are appointed. Any officer may resign at any time upon written
notice to the authority which appointed him.
Section 5.3 Removal of Officers. Officers elected by the Board of
Directors may be removed, with or without cause, at any time by the Board of
Directors. Appointed officers may be similarly removed by the person having
the authority to appoint them.
Section 5.4 Duties of the Chief Executive Officer. The Chief Executive
Officer shall have general charge of, and be charged with, the duty of
supervision of the business of the Corporation. In addition, he shall
perform such duties, from time to time, as may be assigned to him by the
Board of Directors.
Section 5.5 Duties of the Chairman. Unless he declines to serve, the
Chairman shall preside at all meetings of the stockholders and the Board of
Directors and perform such duties, from time to time, as may be assigned to
him by the Board of Directors.
Section 5.6 Duties of the President. The President shall have such
powers and duties as generally pertain to that position and, in the absence
of the Chairman, unless he declines to serve, he shall preside at all
meetings of the stockholders and the Board of Directors. He shall further
perform such duties as may, from time to time, be assigned to him by the
Chief Executive Officer or the Board of Directors.
Section 5.7 Duties of the Secretary. The Secretary shall have the duty
to see that a record of the proceedings of each meeting of the stockholders
and the Board of Directors, and any committee of the Board of Directors, is
properly recorded and that notices of all such meetings are duly given in
accordance with the provisions of these Bylaws or as required by law; he may
affix the corporate seal to any document the execution of which is duly
authorized, and when so affixed may attest the same; and, in general, he
shall perform all duties incident to the office of secretary of a
corporation, and such other duties as, from time to time, may be assigned to
him by the Chief Executive Officer or the Board of Directors, or as may be
required by law.
Section 5.8 Duties of the Chief Financial Officer. The Chief Financial
Officer shall have charge of and be responsible for all securities, funds,
receipts and disbursements of the Corporation, and shall deposit or cause to
be deposited, in the name of the Corporation, all monies or valuable effects
in such banks, trust companies or other depositories as shall, from time to
time, be selected by or under authority granted by the Board of Directors; he
shall be custodian of the financial records of the Corporation; he shall keep
or cause to be kept full and accurate records of all receipts and
disbursements of the Corporation and shall render to the Chairman, the
President and the Board of Directors, whenever requested, an account of the
financial condition of the Corporation; and shall perform such duties as may
be assigned to him by the Chief Executive Officer or the Board of Directors.
Section 5.9 Duties of Other Officers. The other officers of the
Corporation shall have such authority and perform such duties as shall be
prescribed by the Board of Directors or by officers authorized to appoint
them to their respective offices. To the extent that such duties are not so
stated, such officers shall have such authority and perform the duties which
generally pertain to their respective offices, subject to the control of the
Chief Executive Officer or the Board of Directors.
Section 5.10 Voting Securities of Other Corporations. Any one of the
Chairman, the President or the Chief Financial Officer shall have power to
act for and vote on behalf of the Corporation at all meetings of the
stockholders of any corporation in which this Corporation holds stock, or in
connection with any consent of stockholders in lieu of any such meeting.
Section 5.11 Certain Agents. The Chief Executive Officer or such other
officer as he may authorize may from time to time engage employees of
subsidiaries of the Corporation to be agents for the Corporation to perform
staff or operational functions. Such persons may act on behalf of the
Corporation under such titles (including designations as divisional officers)
as may be specified from time to time by the Chief Executive Officer, but no
engagement under this section shall constitute such agent an employee or
officer of the Corporation. Such agents shall perform the duties assigned to
them from time to time by the Chief Executive Officer or by any other officer
of the Corporation authorized to make such assignments. Any such agent may
be removed, with or without cause, at any time by the Chief Executive
Officer. This section shall not limit the authority any officer or any other
employee of the Corporation may otherwise have respecting the engagement of
agents for the Corporation.
Section 5.12 Bonds. The Board of Directors may require that any or all
officers, employees and agents of the Corporation give bond to the
Corporation, with sufficient sureties, conditioned upon the faithful
performance of the duties of their respective offices or positions.
ARTICLE VI - CERTIFICATES OF STOCK
Section 6.1 Form. Stock of the Corporation shall, when fully paid, be
evidenced by certificates containing such information as is required by law
and approved by the Board of Directors. Certificates shall be signed by the
President or any Vice President and the Secretary or an Assistant Secretary
or the Treasurer or an Assistant Treasurer and may (but need not) be sealed
with the seal of the Corporation. Any such signature may be a facsimile,
engraved or printed, if the certificate is countersigned by a transfer agent,
or registered by a registrar, other than the Corporation itself or an
employee of the Corporation. In case any such officer who has signed or
whose facsimile signature has been placed upon any such certificate shall
have ceased to hold office before such certificate is issued, the certificate
shall, nevertheless, be valid.
Section 6.2 Lost, Stolen or Destroyed Stock Certificates. The
Corporation may issue a new stock certificate in the place of any certificate
theretofore issued which is alleged to have been lost, stolen or destroyed
and may require the owner of such certificate, or his legal representative,
to give the Corporation a bond, sufficient to indemnify it against any claim
that may be made against it on account of the alleged loss, theft or
destruction of any such certificate or the issuance of any such new
certificate.
Section 6.3 Transfer. The Board of Directors may make such rules and
regulations concerning the issue, registration and transfer of certificates
representing the stock of the Corporation as it deems necessary or proper and
may appoint transfer agents and registrars. Unless otherwise provided,
transfers of stock and of the certificates representing such stock shall be
made upon the books of the Corporation by surrender of the certificates for
the stock transferred, accompanied by written assignments given by the owners
or their attorneys-in-fact.
ARTICLE VII - VIRGINIA CONTROL
SHARE ACQUISITION STATUTE
The provisions of Article 14.1 of the Virginia Stock Corporation Act
(Section 13.1-728.1 et seq.) in effect on the 8th day of February, 1990, shall
not apply to the acquisition of shares of this Corporation.
ARTICLE VIII - MISCELLANEOUS PROVISIONS
Section 8.1 Corporate Seal. The corporate seal of the Corporation
shall be circular and shall have inscribed thereon, within and around the
circumference, "JAMES RIVER CORPORATION OF VIRGINIA". In the center shall be
the word "SEAL".
Section 8.2 Fiscal Year. The fiscal year of the Corporation shall be
determined in the discretion of the Board of Directors, but in the absence of
any such determination it shall be a fiscal year of either 52 or 53 weeks
ending on the last Sunday in December.
Section 8.3 Amendments. These Bylaws may be amended or repealed, and
new Bylaws may be made, at any regular or special meeting of the Board of
Directors by a majority of the Board. Bylaws made by the Board of Directors
may be repealed or changed and new Bylaws may be made by the stockholders,
and the stockholders may prescribe that any Bylaw made by them shall not be
altered, amended or repealed by the Board of Directors.
Exhibit 10(e)
December 15, 1993
JAMONT
Mr. Ronald L. Singer
9 Glen Avon Drive
Riverside, Connecticut 06878
Dear Ron:
This letter confirms our understanding with respect to your
responsibilities as head of Jamont N.V. (Jamont).
1. Effective June 12, 1990, you were elected Chief Executive Officer of
Jamont. In this capacity, you report to the Board of Directors of
Jamont and carry out all responsibilities delegated to you by this
Board with respect to managing Jamont. You will have your principal
office in Brussels and an office will be made available to you in
Norwalk, Connecticut. In carrying out your responsibilities to the
Board, you will keep the Chairman of the Board and the Chairman of the
Jamont Holdings N.V. Board briefed on major activities and
developments. Your broad goals and objectives shall be those
contained in the approved Strategic Plan of December, 1992 and
modifications thereof as directed by the Boards.
2. This Agreement is in effect until 6/11/95. Your base compensation for
1993 will be $400,000 as set by the Jamont Compensation Committee in
December, 1992. Your base salary will be increased to $500,000 on
1/1/94 and will be subject to annual review by the Compensation
Committee and the Board. You will receive a 1993 calendar year annual
incentive bonus (target 50%) that reflects your personal performance,
the business results of Jamont, and equitable total compensation for
CEOs of similar European companies. Your award will be determined by
the Compensation Committee and approved by the Board. In 1994, your
variable compensation will be based upon Jamont business ROE and a
plan developed by Jamont. You will remain a James River employee, be
paid by James River, and will be entitled to all James River benefits
accorded James River officers. Further, after signing this Agreement,
you will be awarded 50,000 Jamont options to add to the 100,000 you
already have. The option price shall be the fair market value at the
time of the award (according to the Stock Option Plans).
E-4
<PAGE>
By separate agreement, Jamont reimburses James River for your salary
and incentive pay, the cost of your other employee benefits, your
travel, entertainment, and living expenses as well as any severance
costs in this Agreement. Jamont pays directly or reimburses you for
certain costs such as your automobile. James River will bear the cost
of providing for your Norwalk office.
3. An apartment suitable for your position is provided and paid for by
the Company. The lease arrangement shall contain a diplomatic release
clause and to the extent there is residual liability upon termination
or reassignment, the Company will retain liability. Should it become
necessary to move from your current apartment at 37a Avenue
deObservatoire for any reason, Jamont shall reimburse you for the cost
of a comparable alternative apartment.
Jamont provides a company car for your use appropriate to your
position.
4. Because of the nature of your assignment, travel and time away from
home, you are encouraged to have your immediate family (son and wife)
visit you as often as makes sense considering school schedules and
other commitments. The Company will pay the cost of such family
visits following James River travel policy guidelines.
5. You are paid by James River in the United States, your center of
economic interest. If, in any calendar year, as a result of your
activities in Europe, there is an increase in foreign or United States
income taxes so that you must pay more total income taxes than if your
compensation had only been subject to United States income tax, an
amount equal to the increased taxes will be paid to you by James River
with an appropriate "gross up" to compensate you for the income taxes
incurred on the payment. This is consistent with the "tax
equalization" method used to compensate other James River American
expatriates. This obligation to "tax equalize" for any increase in
taxes above U.S. levels extends back to 1990 when you began working
for Jamont and continues for the entire period of this contract.
Should foreign tax authorities be successful in collecting back taxes
for any prior year, even if tax action is taken after the contract
expires, the cost of such taxes plus any cost of tax preparation and
dealing with tax authorities will be born by the Company consistent
with the James River expatriate policy. Jamont shall reimburse.
To the extent that personal expenditures are made in Belgium, the
James River expatriate policy relative to cost-of-living shall apply.
6. If Jamont terminates your employment before June 11, 1995, for reasons
other than Cause (as defined below), and you are not offered or do not
choose to accept alternative employment with James River, you will
receive compensation continuation for two years after your employment
terminates. This compensation continuation will be guaranteed by
James River. During that two-year period, you will receive
compensation continuation, paid on a monthly basis, equal to your
average cash compensation for the prior two years divided by twelve.
Your eligibility to receive any of the severance payments or benefits
under this Agreement is contingent upon your not becoming associated,
whether as an employee, officer, director, owner (other than owning
less than 5% of the stock of a publicly traded company), consultant or
agent, with any entity in competition with James River or its
affiliates, including Jamont, during the period for which you are
eligible to receive severance under this Agreement. In the event you
violate this condition for receipt of your severance, all severance
payments and benefits received while under this Agreement shall cease
immediately and any payments or benefits received while the condition
was being violated shall be returned to James River.
"Competition" as used in this provision shall mean directly or
indirectly engaging in any business activities within any state of the
Continental United States that are in competition with the business of
James River Corporation of Virginia or any of its subsidiaries in
those states, or directly or indirectly engaging in any business
activities within the countries of Great Britain, Ireland, France,
Spain, Belgium, Luxembourg, Netherlands, Denmark, Norway, Finland,
Italy, Greece, Turkey, Germany, Switzerland, Austria, Sweden, or any
other country in which Jamont is doing business at the time of your
termination of employment, that are in competition with the business
of Jamont in those countries. You acknowledge that James River and
Jamont engage in their businesses and sell their products throughout
the above-listed areas.
If you obtain employment with a non-competitor during the two-year
compensation continuation period, the payments will not be affected.
You shall cease to be considered an active employee of James River as
of the date of your termination of employment by James River, although
your health and insurance benefits shall continue to the end of the
period of compensation continuation or until you are provided such
benefits by a new employer. If you receive compensation payments
under this Agreement, the payments under this Agreement will be made
in lieu of any other salary continuation benefits provided by James
River or Jamont. During the period of severance, current life and
medical insurance benefits will be provided by the Company.
If you employment is terminated for reasons of than cause, the Company
will pay to transport your personal property and household effects
back to the U.S. and allow you to purchase your Company car at the
wholesale market value.
For the purposes of this Agreement, the term "Cause" means (i) you
have willfully and deliberately neglected the duties of the position
assigned to you by Jamont, or (ii) you have engaged in gross
misconduct as determined by the Jamont Board. If your employment
terminates for any reason other than termination by Jamont or James
River without Cause (such as termination by reason of your death,
retirement, or voluntary termination), the salary continuation
provisions of this Agreement shall not apply.
If your service with James River or Jamont is terminated, you agree
not to use or disclose any secret or confidential information, data or
trade secrets or technology or business strategies of James River as
set forth in the James River Confidentiality document which you have
signed.
7. In other respects, during your employment with James River, you shall
be entitled to receive employee benefits according to the terms of
James River's employee benefit policies and plans in effect from time
to time, and you shall comply with all requirements of James River in
carrying out your responsibilities.
8. All payments and benefits under this Agreement shall be made subject
to income tax, payroll tax and other required tax withholdings.
9. The Agreement shall be administered and interpreted by the
Compensation Committee of the Board of Directors of Jamont.
10. Your right to receive benefits under this Agreement does not give you
any proprietary interest in James River or Jamont or any of its
assets. You shall, for all purposes, be a general creditor of James
River and Jamont. Your interest under this Agreement cannot be
anticipated, sold, encumbered or pledged and shall not be subject to
the claims of your creditors. This Agreement does not prevent James
River or Jamont from terminating your employment.
Please signify your acceptance of the terms of this Letter of Agreement by
executing the enclosed copy of this letter below and returning it to R.C.
Williams.
Sincerely,
/s/Robert C. Williams
Robert C. Williams
Chairman, Jamont and
Chief Executive Officer
James River Corporation
Chairman of the Compensation Committee
Agreed to:
/s/Ronald L. Singer 9/2/93 /s/FitzGerald Bemiss 12/15/93
Ronald L. Singer FitzGerald Bemiss
Member, Compensation Committee, Jamont
/s/Sergio Cragnotti /s/Marcel Kilfiger 12/15/93
Sergio Cragnotti Marcel Kilfiger
Director and Member Director and Member
Compensation Committee, Jamont Compensation Committee, Jamont
Exhibit 10(h)
JAMES RIVER CORPORATION OF VIRGINIA
RETIREMENT PLAN FOR OUTSIDE DIRECTORS
1994 AMENDMENT AND RESTATEMENT
JAMES RIVER CORPORATION OF VIRGINIA (the "Company") hereby adopts this
1994 Amendment and Restatement of its Retirement Plan for Outside
Directors, effective as of February 18, 1994.
1. Purpose. The Board of Directors has adopted this Retirement Plan
for Outside Directors (the "Plan") in order to attract and retain the
services of Directors of the highest caliber and to reward them for their
services to the Company.
2. Definitions. Whenever used in the Plan, the following terms
shall have the meanings set forth below unless the context clearly requires
a different meaning:
(a) Annual Retainer Fee. The basic annual fee payable to an
active Outside Director for the Outside Director's services as a
Director, excluding meeting fees, special fees for serving as Chairman
of a committee, travel expenses or any other extraordinary form of
compensation.
(b) Board. The Company's Board of Directors.
(c) Committee. The committee appointed by the Board to
administer this Plan.
(d) Company. James River Corporation of Virginia, and any
successor by merger or otherwise.
(e) Director. A person who serves as an active member of the
Board on or after the Effective Date.
(f) Effective Date. December 16, 1993, which was the original
effective date of the Plan.
(g) Eligible Service. A Director's period of service as an
active Outside Director, measured in 12-month periods, beginning on
the date on which the Director first becomes an Outside Director and
ending on the date on which the Director ceases to be an Outside
Director, plus a Director's period of service, measured in 12-month
periods, as an active director of a predecessor company whose stock or
assets are acquired by the Company or a subsidiary. Service need not
be continuous, and nonconsecutive periods of service will be
aggregated to determine a Director's total Eligible Service. If an
Outside Director has a partial year of service consisting of less than
six months of service, the Outside Director shall not be credited with
a year of Eligible Service for the partial year. If an Outside
Director has a partial year of service consisting of at least six
months of service, the Outside Director shall be credited with one
year of Eligible Service for the partial year.
(h) Outside Director. A Director who is not and has not at any
time been a full-time employee of the Company or a subsidiary or
affiliate.
(i) Participant. An Outside Director who has completed at least
five years of Eligible Service.
(j) Payment Period. The period over which retirement payments
are to be made to a Participant pursuant to Section 4(a).
(k) Plan. The James River Corporation of Virginia Retirement
Plan for Outside Directors.
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<PAGE>
3. Eligibility. An Outside Director who completes five years of
Eligible Service shall become a Participant and shall be entitled to
receive benefits under the Plan at the time described in Section 4. If an
Outside Director fails to complete five years of Eligible Service, the
Outside Director shall not receive benefits under the Plan. If an Outside
Director becomes a full-time employee of the Company or a subsidiary or
affiliate, the Outside Director shall cease to be a Participant and shall
not receive benefits under the Plan.
4. Retirement Benefits.
(a) A Participant shall be entitled to receive an annual
retirement benefit from the Company beginning as soon as practicable
after the later of (i) the date on which the Participant attains age
65 or (ii) the date on which the Participant ceases to be a Director.
The annual benefit shall be equal to the Annual Retainer Fee in effect
as of the date on which the Participant ceases to be a Director. The
Participant shall be entitled to receive this annual benefit for a
period of years (the "Payment Period") equal to the lesser of (i) the
number of the Participant's years of Eligible Service or (ii) ten
years. The retirement benefit shall be paid annually on each
anniversary date of its commencement.
(b) As an alternative to the form of payment described in
Section 4(a), a Participant may request that the Company pay the
retirement benefit described above in a joint and 50% survivor form of
payment. Under this form of payment, the Participant shall receive a
reduced retirement benefit beginning at the date described in Section
4(a). The reduced benefit payable to the Participant shall be a
percentage of the annual benefit computed under Section 4(a), based on
the table attached to the Plan as Appendix A. If the Participant dies
during the Payment Period and the Participant has a surviving spouse
(as defined below), the surviving spouse shall receive an annual
benefit equal to 50% of the benefit that the Participant was receiving
before the Participant's death. The spouse's benefit shall be paid on
each anniversary date of the commencement of the Participant's
retirement benefit, and shall continue until the first to occur of (i)
the end of the Payment Period or (ii) the spouse's death. For
purposes of the Plan, a Participant's spouse is the person to whom the
Participant is married at the time the retirement benefit begins to be
paid to the Participant. A Participant may request this alternative
form of payment by submitting a written request to the Committee by
the latest of the following dates: (i) the date that is one year
before the Participant is entitled to begin receiving retirement
benefits, (ii) as soon as is practicable after the Participant first
becomes a Participant in the Plan, or (iii) as soon as is practicable
after the adoption of the February, 1994 Plan amendment. The
Committee shall have complete discretion to accept or reject a
Participant's request under this Section 4(b).
5. Benefits After a Participant's Death.
(a) If a Participant dies before beginning to receive retirement
benefits under the Plan, no death benefit shall be paid under the
Plan. If a Participant dies after beginning to receive retirement
benefits under the Plan and the Participant did not elect the
alternative form of payment described in Section 4(b), no death
benefit shall be paid under the Plan.
(b) If a Participant elects the alternative form of payment
described in Section 4(b), begins receiving retirement benefits, and
then dies during the Payment Period, the Participant's surviving
spouse shall be entitled to receive the 50% benefit described in
Section 4(b). If the Participant has no surviving spouse, no death
benefit shall be paid under the Plan.
6. Form of Payment. All benefits under the Plan shall be paid in
cash and shall be paid subject to any required income or payroll tax
withholding.
7. Committee. The Committee shall have full power and the express
discretionary authority to interpret, construe and administer the Plan, to
resolve any ambiguities, to make determinations with respect to the
eligibility for or amount of benefits, and to establish such rules and
regulations as it deems appropriate for the administration of the Plan.
The Committee may consult with counsel, who may be counsel to the Company,
and shall not incur any liability for any action taken in good faith in
reliance upon the advice of counsel. All actions of the Committee shall be
binding and conclusive on all persons for all purposes.
8. Rights Under the Plan. Title to and beneficial ownership of all
benefits described in the Plan shall at all times remain with the Company.
Participation in the Plan and the right to receive payments under the Plan
shall not give a Participant or the Participant's spouse any proprietary
interest in the Company or any of its assets. No trust fund shall be
created in connection with this Plan, and there shall be no required
funding of amounts that may become payable under this Plan. A Participant
and the Participant's spouse shall, for all purposes, be general creditors
of the Company. The interests of a Participant and the Participant's
spouse in the Plan cannot be transferred, assigned, anticipated, sold,
encumbered or pledged and shall not be subject to claims of their
creditors.
9. Successors. The Plan shall be binding upon the Participants and
their spouses and personal representatives. If the Company becomes a party
to any merger, consolidation, reorganization or other corporate
transaction, the Plan shall remain in full force and effect as an
obligation of the Company or its successor in interest.
10. Amendment and Termination. The Board reserves the right to amend
or terminate the Plan at any time without the consent of any Participant;
provided that no amendment or termination shall deprive a Participant of
the right to continue to receive payments under the Plan after payments
have begun.
11. Construction. The Plan shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed
this 25th day of February, 1994.
JAMES RIVER CORPORATION OF VIRGINIA
By/s/Clifford A. Cutchins, IV
Senior Vice President
General Counsel,
Corporate Secretary
<PAGE>
APPENDIX A
JAMES RIVER CORPORATION OF VIRGINIA
RETIREMENT PLAN FOR OUTSIDE DIRECTORS
50% JOINT AND SURVIVING SPOUSE ANNUITY OPTION REDUCTION FACTORS
Retirement Age Payment Period
10 9 8 7 6 5
65 0.946 0.952 0.958 0.964 0.970 0.976
66 0.942 0.948 0.954 0.961 0.967 0.974
67 0.937 0.944 0.951 0.958 0.965 0.972
68 0.933 0.940 0.947 0.954 0.962 0.969
69 0.928 0.935 0.943 0.951 0.959 0.967
70 0.923 0.931 0.939 0.947 0.956 0.964
71 0.917 0.926 0.934 0.943 0.952 0.961
72 0.912 0.920 0.929 0.939 0.948 0.958
Exhibit 10(j)
JAMES RIVER CORPORATION OF VIRGINIA
1987 STOCK OPTION PLAN
1993 AMENDMENT AND RESTATEMENT
JAMES RIVER CORPORATION OF VIRGINIA (the "Company") hereby adopts this
1993 Amendment and Restatement of the James River Corporation of Virginia
1987 Stock Option Plan, effective as of December 16, 1993.
1. PURPOSE. This Stock Option Plan (the "Plan") is intended to
advance the interests of the Company by providing certain key employees who
have substantial responsibility for the direction and management of the
Company, its subsidiaries, and its foreign affiliates with an opportunity
to acquire a proprietary interest in the Company and an additional
incentive to promote its success, as well as to encourage them to remain in
the employ of the Company, a subsidiary of the Company or a foreign
affiliate of the Company.
The Plan is intended to conform to the provisions of Securities and
Exchange Commission Rule 16b-3.
2. DEFINITIONS. As used in the Plan, the following terms have the
meanings indicated:
(a) "ACT" means the Securities Exchange Act of 1934, as amended.
(b) "APPLICABLE WITHHOLDING TAXES" means the aggregate amount of
federal, state and local income and payroll taxes that the Company is
required to withhold in connection with any exercise of an Option or
Release Right.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CHANGE OF CONTROL" means:
(i) The acquisition by any unrelated Person of beneficial
ownership (as that term is used for purposes of the Act) of 20%
or more of the then outstanding shares of common stock of the
Company or the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in
the election of directors. The term "unrelated Person" means any
Person other than (x) the Company, its Subsidiaries, and its
Foreign Affiliates, (y) an employee benefit plan or trust of the
Company or its Subsidiaries or Foreign Affiliates, and (z) a
Person that acquires stock of the Company pursuant to an
agreement with the Company that is approved by the Board in
advance of the acquisition, unless the acquisition results in a
Change of Control pursuant to subsection (ii) below.
(ii) As the result of, or in connection with, any 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 were directors of the Company
before such transactions shall cease to constitute a majority of
the Board of Directors of the Company or any successor to the
Company.
(e) "CODE" means the Internal Revenue Code of 1986, as amended.
(f) "COMMITTEE" means the committee appointed by the Board as
described under Section 13.
(g) "COMPANY" means James River Corporation of Virginia, a
Virginia corporation.
(h) "COMPANY STOCK" means common stock of the Company. In the
event of a change in the capital structure of the Company (as provided
in Section 12), the shares resulting from such a change shall be
deemed to be Company Stock within the meaning of the Plan.
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<PAGE>
(i) "CORPORATE CHANGE" means a consolidation, merger,
dissolution, or liquidation of the Company, a Subsidiary or a Foreign
Affiliate, or a sale or distribution of assets or stock (other than in
the ordinary course of business) of the Company, a Subsidiary, or a
Foreign Affiliate; provided that, unless the Committee determines
otherwise, a Corporate Change shall only be considered to have
occurred with respect to Participants whose business unit is affected
by the Corporate Change.
(j) "DATE OF GRANT" means the date on which an Option is granted
by the Committee.
(k) "FAIR MARKET VALUE" means (i) if the Company Stock is traded
on an exchange, the mean of the highest and lowest registered sales
prices of the Company Stock on the exchange on which the Company Stock
generally has the greatest trading volume or (ii) if the Company Stock
is traded in the over-the-counter market, the mean between the closing
bid and asked prices as reported by NASDAQ. Fair Market Value shall be
determined as of the applicable date specified in the Plan or, if
there are no trades on such date, the value shall be determined as of
the last preceding day on which the Company Stock is traded.
(l) "FOREIGN AFFILIATE" means an entity that is not organized
under the laws of the United States, or any state thereof or any
political subdivision of any state, and in which the Company has,
directly or indirectly, a substantial interest.
(m) "INCENTIVE STOCK OPTION" means an Option intended to meet
the requirements of, and qualify for favorable federal income tax
treatment under, Code Section 422.
(n) "INSIDER" means a person subject to Section 16(b) of the
Act.
(o) "NONSTATUTORY STOCK OPTION" means an Option that does not
meet the requirements of Code Section 422, or that is not intended to
be an Incentive Stock Option and is so designated.
(p) "OPTION" means a right to purchase Company Stock granted
under the Plan, at a price determined in accordance with the Plan.
(q) "PARENT" means, with respect to any corporation, a parent of
that corporation within the meaning of Code section 424(e).
(r) "PARTICIPANT" means an employee who receives a Stock Option
under the Plan.
(s) "PERSON" means an individual, entity or group (as that term
is used for purposes of the Act).
(t) "RELEASE RIGHT" means a right to receive amounts from the
Company upon the exercise of a Nonstatutory Option, as described in
Section 7.
(u) "RULE 16b-3" means Rule 16b-3 of the Securities and Exchange
Commission promulgated under the Act. A reference in the Plan to Rule
16b-3 shall include a reference to any corresponding subsequent rule
or any amendments to Rule 16b-3 enacted after the effective date of
the Plan.
(v) "SUBSIDIARY" means with respect to any corporation, a
subsidiary of that corporation within the meaning of Code Section
424(f).
(w) "10% SHAREHOLDER" means a 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 or any Parent or
Subsidiary of the Company. Indirect ownership of stock shall be
determined in accordance with Code Section 424(d).
(x) "WINDOW PERIOD" means the period beginning on the third
business day and ending on the twelfth business day following the
release for publication of quarterly or annual summary statements of
the Company's sales and earnings. The release for publication shall be
deemed to have occurred if the specified financial data (i) appears on
a wire service, (ii) appears in a financial news service, (iii)
appears in a newspaper of general circulation, or (iv) is otherwise
made publicly available.
3. STOCK. Subject to Section 12 of the Plan, there shall be reserved
for issuance under the Plan an aggregate of 8,000,000 shares of Company
Stock, which shall be authorized, but unissued, shares. The aggregate
number of shares of Company Stock reserved shall be reduced by the issuance
of shares upon the exercise of Options, but it shall not be reduced if
Options, for any reason, expire or terminate unexercised or, to the extent
permissible under Rule 16b-3, if shares are released pursuant to Release
Rights or are retained by the Company in payment of Applicable Withholding
Taxes, and such shares may again be subjected to an Option under the Plan.
The Committee is expressly authorized to make an award of Options to a
Participant conditioned upon the surrender for cancellation of an existing
Option.
4. ELIGIBILITY. All present and future key employees of the Company,
or any Subsidiary or Foreign Affiliate of the Company, whether now existing
or hereafter created or acquired, shall be eligible to receive Options
under the Plan. The Committee shall have the power and complete discretion,
as provided in Section 13, to select eligible employees to receive Options
and to determine for each employee the terms and conditions and the number
of shares to be allocated to each employee as part of each Option. Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options.
5. GRANT OF STOCK OPTIONS.
(a) Whenever the Committee deems it appropriate to grant
Options, notice shall be given to the Participant stating the number
of shares for which Options are granted, the Option price per share,
whether the Options are Incentive Stock Options or Nonstatutory Stock
Options, whether and the extent to which Release Rights are granted,
and the conditions to which the grant and exercise of the Options are
subject. This notice, when duly accepted in writing by the
Participant, shall become a stock option agreement between the Company
and the Participant.
(b) The exercise price of shares of Company Stock covered by an
Option shall be not less than 100% of the Fair Market Value of such
shares on the Date of Grant; provided that if an Incentive Stock
Option is granted to a Participant who, at the time of the grant, is a
10% Shareholder, then the exercise price of the shares covered by the
Incentive Stock Option shall be not less than 110% of the Fair Market
Value of such shares on the Date of Grant.
(c) An employee may not receive awards of Options under the Plan
with respect to more than 300,000 shares of Company Stock during any
one-year period.
(d) The grant of an Option shall not obligate the Company or any
Subsidiary or Foreign Affiliate of the Company to pay an employee any
particular amount of remuneration, to continue the employment of the
employee after the grant, or to make further grants to the employee at
any time thereafter.
6. TERM AND LIMITATIONS ON EXERCISE.
(a) Options may be exercised, in whole or in part, but only with
respect to whole shares of Common Stock, at such times and under such
conditions as may be specified in the Participant's stock option
agreement. The Committee may impose such vesting conditions and other
requirements as the Committee deems appropriate, and the Committee may
include such provisions regarding a Change of Control or Corporate
Change as the Committee deems appropriate.
(b) The term of an Incentive Stock Option shall be ten years
from the Date of Grant, except that an Incentive Stock Option granted
to a 10% Shareholder may not have a term in excess of five years. The
Committee shall establish the term of a Nonstatutory Stock Option in
the Participant's stock option agreement. No Option may be exercised
after the expiration of its term or, except as set forth in the
Participant's stock option agreement, after the termination of the
Participant's employment. The Committee shall set forth in the
Participant's stock option agreement when, and under what
circumstances, an Option may be exercised after termination of the
Participant's employment.
(c) An Incentive Stock Option, by its terms, shall be
exercisable in any calendar year only to the extent that the aggregate
Fair Market Value (determined at the Date of Grant) of the Company
Stock with respect to which Incentive Stock Options are exercisable by
the Participant for the first time during the calendar year does not
exceed $100,000 (the Limitation Amount). Incentive Stock Options
granted under the Plan and all other plans of the Company and any
Parent or Subsidiary of the Company shall be aggregated for purposes
of determining whether the Limitation Amount has been exceeded. The
Committee may impose such conditions as it deems appropriate on an
Incentive Stock Option to ensure that the foregoing requirement is
met. If Incentive Stock Options that first become exercisable in a
calendar year exceed the Limitation Amount, the excess Options will be
treated as Nonstatutory Stock Options to the extent permitted by law.
(d) If a Participant dies and if the Participant's stock option
agreement provides that part or all of the Option may be exercised
after the Participant's death, then such portion may be exercised by
the Participant's legatees or distributees or by the personal
representative of the Participant's estate during the time period
specified in the stock option agreement.
(e) Notwithstanding anything herein to the contrary, when
granting Options to employees of a Foreign Affiliate, the Committee
shall have complete discretion and authority to grant such Options in
accordance with all present and future applicable laws.
7. RELEASE RIGHTS.
(a) Whenever the Committee deems it appropriate, Release Rights
may be granted in connection with all or any part of a Nonstatutory
Option. Release Rights shall be evidenced in writing as part of the
stock option agreement to which they pertain.
(b) With respect to any exercise of an Option coupled with a
Release Right, the following terms shall have the meanings indicated:
(i) The Exercise Price shall be the price per share at
which the Option may be exercised.
(ii) The Market Price shall be the Fair Market Value per
share of the Company Stock covered by the Option on the date of
exercise.
(iii) The Exercise Number (EN) shall be that portion of the
number of shares which the Participant is currently eligible to
receive upon the exercise of Options and which the Participant
desires to use, either by exercise or by receipt of cash.
(iv) The Tax Rate (TR) shall be that percentage which is
equal to the highest marginal rate at which the Participant's
ordinary income would have been taxed for federal income tax
purposes during the most recent preceding calendar year for which
he filed a federal income tax return (or an amended return) had
the gain realized on account of his exercise of privileges
granted pursuant to this Plan been included in such tax return.
(v) The Releasable Number (RN) shall be that number of
shares (or the next lowest whole number of shares) determined in
accordance with the following formula:
RN = (EN) . (TR)
Notwithstanding the foregoing, the Releasable Number may be
increased if and to the extent necessary to cause the amount of
cash to be paid upon the exercise of Release Rights to be
sufficient to cover the Applicable Withholding Taxes with respect
to the exercise of the Options and Release Rights.
(c) Concurrently with any exercise of an Option that is coupled
with a Release Right, the Participant may release from the Option any
number of whole shares up to the Releasable Number for such exercise
and shall receive in payment for such release an amount in cash equal
to the product of the number of shares so released times the amount by
which the Market Price exceeds the Exercise Price. Such release shall
be effected by an instrument in writing in form satisfactory to the
Committee. If the Releasable Number, as finally determined, shall be
less than the number specified in such writing as released, the
release shall be effective as though the Releasable Number were
substituted for the number specified. Notwithstanding anything herein
to the contrary, to the extent required by Rule 16b-3 or by other
properly adopted law, rules or regulations, the exercise of an Option
and the right of a Participant to exercise a Release Right and to
receive cash therefor shall be effective only if consented to by the
Committee.
(d) Upon the exercise of a Release Right and surrender of the
related portion of the underlying Option, the Option, to the extent
surrendered, shall not thereafter be exercisable.
(e) Subject to any further conditions upon exercise imposed by
the Committee, a Release Right shall be exercisable only to the extent
that the related Option is exercisable, and a Release Right shall
expire no later than the date on which the related Option expires.
(f) A Release Right may only be exercised at a time when the
Fair Market Value of the Company Stock covered by the Release Right
exceeds the exercise price of the Company Stock covered by the
underlying Option.
(g) If and to the extent required by Rule 16b-3, an Insider may
only exercise a Release Right during a Window Period or otherwise
pursuant to the requirements of Rule 16b-3, and a Release Right held
by an Insider shall not be exercisable during the first six months of
its term. The exercise of a Release Right by an Insider shall be made
in accordance with Rule 16b-3.
8. METHOD OF EXERCISE OF OPTIONS AND RELEASE RIGHTS.
(a) Options and Release Rights may be exercised by giving
written notice of the exercise to the Company, stating the number of
shares the Participant has elected to purchase under the Option and
the number of Release Rights the Participant has elected to exercise.
Such notice shall be effective only if accompanied by the exercise
price in full in cash; provided that, if the terms of an Option so
permit, the Participant (i) may deliver, or cause to be withheld from
the Option shares, shares of Company Stock (valued at their Fair
Market Value on the date of exercise) in satisfaction of all or any
part of the exercise price, or (ii) may deliver a properly executed
exercise notice, together with irrevocable instructions to a broker to
deliver promptly to the Company, from the sale or loan proceeds with
respect to the sale of Company Stock or a loan secured by Company
Stock, the amount necessary to pay the exercise price and, if required
by the Committee, Applicable Withholding Taxes.
(b) Each Participant shall agree, as a condition of the exercise
of an Option or Release Right, to pay to the Company, or to make
arrangements satisfactory to the Company regarding the payment of,
Applicable Withholding Taxes. The Committee may grant Options that
permit a Participant to elect to satisfy Applicable Withholding Taxes
by delivering shares of Company Stock or by directing the Company to
retain that number of shares of Company Stock that will satisfy all or
a specified portion of the Applicable Withholding Taxes. The
Committee may also grant Options with automatic withholding of shares
to satisfy Applicable Withholding Taxes. The Committee shall have the
sole discretion to approve or disapprove any election, and any
election by an Insider must comply with Rule 16b-3. Until the
Applicable Withholding Taxes have been paid or arrangements
satisfactory to the Company have been made, no stock certificate shall
be issued upon the exercise of an Option or cash paid upon the
exercise of a Release Right.
(c) The Company may place on a certificate representing Company
Stock issued upon the exercise of an Option any legend deemed
desirable by the Company's counsel to comply with federal or state
securities laws, and the Company may require a customary written
indication of the Participant's investment intent. Until the
Participant has made all required payments, including any Applicable
Withholding Taxes, and has been issued a certificate for the shares of
Company Stock acquired, the Participant shall possess no shareholder
rights with respect to the shares.
(d) Notwithstanding anything herein to the contrary, with
respect to Insiders, Options and Release Rights shall always be
granted and exercised in such a manner as to conform to the provisions
of Rule 16b-3.
9. NONTRANSFERABILITY OF OPTIONS AND RELEASE RIGHTS.
(a) Options and Release Rights, by their terms, shall not be
transferable except by will or by the laws of descent and distribution
and shall be exercisable, during the Participant's lifetime, only by
the Participant.
(b) Notwithstanding the foregoing, the Committee may grant
Nonstatutory Stock Options and Release Rights that permit a
Participant to transfer the Options and Release Rights to a family
member (as defined by the Committee) or to a trust established by the
Participant or a family member; provided that no Incentive Stock
Options may be transferrable, and no Options granted to Insiders may
be transferrable unless and except to the extent permitted by Rule
16b-3. The Committee may impose on any transferrable Options and
Release Rights such limitations and conditions as the Committee deems
appropriate.
10. EFFECTIVE DATE OF THE PLAN. This Plan was originally effective as
of February 12, 1987. The 1993 Amendment and Restatement of the Plan shall
be effective as of December 16, 1993. The restated Plan shall be submitted
to the shareholders of the Company for approval. Options granted before the
1993 Amendment and Restatement shall be governed by the terms of the Plan
as in effect before the 1993 Amendment and Restatement, except to the
extent that the Committee, in its sole discretion, specifies otherwise. The
provisions of the 1993 Amendment and Restatement shall not apply to an
Option or Release Right granted on or before February 17, 1993 if such
provisions would cause the Option or Release Right to be subject to the
limitations of Code Section 162(m).
11. TERMINATION, MODIFICATION. If not sooner terminated by the Board,
the Plan shall terminate at the close of business on February 12, 1997. No
Options shall be awarded under the Plan after its termination. The Board
may terminate the Plan or may amend the Plan in such respects as it shall
deem advisable; provided that (i) if and to the extent required by the Code
or Rule 16b-3, no change shall be made that increases the total number of
shares of Company Stock reserved for issuance pursuant to Options granted
under the Plan (except pursuant to Section 12), materially modifies the
requirements as to eligibility for participation in the Plan,or materially
increases the benefits accruing to Participants under the Plan, unless such
change is authorized by the shareholders of the Company and (ii) to the
extent required to meet the requirements of Code Section 162(m) for
performance-based compensation, any amendment that makes a material change
to the Plan must be approved by the shareholders of the Company. The Board
may unilaterally amend the Plan and Options as it deems appropriate to
ensure compliance with Rule 16b-3 and to cause Options to meet the
applicable requirements of the Code. Except as provided in the preceding
sentence, a termination or amendment of the Plan shall not, without the
consent of the Participant, adversely affect a Participant's rights under
an Option previously granted to the Participant.
12. CHANGE IN CAPITAL STRUCTURE.
(a) In the event of a stock dividend, stock split, combination
of shares, recapitalization, merger, consolidation or other change in
the Company's capital stock (including, but not limited to, the
creation or issuance to shareholders generally of rights, options or
warrants for the purchase of common stock or preferred stock of the
Company), the number and kind of shares of stock or other securities
to be issued under the Plan (under Options then outstanding and
Options to be granted in the future), the exercise price, and any
other relevant provisions shall be appropriately adjusted by the
Committee, whose determination shall be binding on all persons. If the
adjustment would produce fractional shares with respect to any
unexercised Option, the Committee may adjust appropriately the number
of shares covered by the Option so as to eliminate the fractional
shares.
(b) In the event the Company distributes to its shareholders as
a dividend, or sells or causes to be sold to a Person other than the
Company or a Subsidiary or affiliate, shares of stock in any
corporation (a Spin-off Company) which, immediately before the
distribution or sale, was a majority-owned subsidiary of the Company,
the Committee shall have the power, in its sole discretion, to make
such adjustments as the Committee deems appropriate. The Committee may
make adjustments in the number and kind of shares or other securities
to be issued under the Plan (under Options then outstanding and
Options to be granted in the future), the exercise price, and any
other relevant provisions, and, without limiting the foregoing, may
substitute securities of the Spin-off Company for securities of the
Company. The Committee shall make such adjustments as it determines to
be appropriate, considering the economic effect of the distribution or
sale on the interests of the Company's shareholders and the
Participants in the businesses operated by the Spin-off Company. The
Committee's determination shall be binding on all persons. If the
adjustment would produce fractional shares with respect to any
unexercised Option, the Committee may adjust appropriately the number
of shares covered by the Option so as to eliminate the fractional
shares.
(c) If a Change of Control or Corporate Change occurs, the
Committee may take such actions with respect to outstanding Options
and Release Rights as the Committee deems appropriate. These actions
may include, but shall not be limited to, accelerating the expiration
date of any or all outstanding Options and Release Rights and the
dates on which any part of the Options and Release Rights may be
exercised, in which case they shall be exercisable in full on dates
designated by the Committee. The effectiveness of such acceleration,
and any exercise of Options and Release Rights pursuant thereto with
respect to shares in excess of the number of shares which could have
been exercised in the absence of such acceleration, shall be
conditioned upon the consummation of the applicable Change of Control
or Corporate Change.
(d) Notwithstanding anything in the Plan to the contrary, the
Committee may take the foregoing actions without the consent of any
Participant, and the Committee's determination shall be conclusive and
binding on all persons for all purposes. The Committee shall make its
determinations consistent with Rule 16b-3 and the applicable
provisions of the Code.
13. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Committee. The
Committee shall be appointed by the Board and shall consist of not
less than two members of the Board. The Committee shall be the
Compensation Committee of the Board, unless the Board shall appoint
another compensation committee to administer the Plan. If and to the
extent required by Rule 16b-3, all members of the Committee shall be
disinterested persons, as that term is defined in Rule 16b-3, and the
Committee shall be comprised solely of two or more outside directors,
as that term is defined for purposes of Code Section 162(m). If any
member of the Committee fails to qualify as an outside director or (to
the extent required by Rule 16b-3) a disinterested person, such person
shall immediately cease to be a member of the Committee and shall not
take part in future Committee deliberations. The Board from time to
time may appoint members of the Committee and may fill vacancies,
however caused, in the Committee.
(b) The Committee shall have authority to impose such
limitations or conditions upon an Option or Release Right as the
Committee deems appropriate to achieve the objectives of the Plan.
Without limiting the foregoing and in addition to the powers set forth
elsewhere in the Plan, the Committee shall have the power and complete
discretion to determine (i) which eligible employees shall receive
Options and whether Options shall be Incentive Stock Options or
Nonstatutory Stock Options, (ii) the number of shares of Company Stock
to be covered by each Option, (iii) when, whether and to what extent
Release Rights shall be granted in connection with Options, (iv) the
Fair Market Value of Company Stock, (v) the time or times at which
Options shall be granted, (vi) whether an Option shall become vested
over a period of time, according to a performance-based vesting
schedule or otherwise, and when it shall be fully vested, (vii)
whether the Participant, the Company or a business unit has met the
conditions set forth in the Plan or the stock option agreement with
respect to the exercisability of the Option, (viii) when Options may
be exercised, (ix) whether a Change of Control or Corporate Change
exists, (x) conditions relating to the length of time before
disposition of Company Stock received upon the exercise of Options is
permitted, (xi) notice provisions relating to the sale of Company
Stock acquired under the Plan, and (xii) any additional requirements
relating to Options and Release Rights that the Committee deems
appropriate. Notwithstanding the foregoing, no tandem stock options
(where two stock options are issued together and the exercise of one
option affects the right to exercise the other option) may be issued
in connection with Incentive Stock Options.
(c) The Committee shall have the power to amend the terms of
previously granted Options, so long as the terms as amended are
consistent with the terms of the Plan and, where applicable,
consistent with the qualification of the Option as an Incentive Stock
Option. The consent of the Participant must be obtained with respect
to any amendment that would adversely affect a Participant's rights
under the Option, except that such consent will not be required if the
amendment is for the purpose of complying with Rule 16b-3 or any
requirement of the Code applicable to the Option.
(d) The Committee may adopt rules and regulations for carrying
out the Plan. The Committee shall have the express discretionary
authority to construe and interpret the Plan and the stock option
agreements, to resolve any ambiguities, to define any terms, and to
make any other determinations required by the Plan or the stock option
agreements. The interpretation and construction of any provision of
the Plan or a stock option agreement by the Committee shall be final
and conclusive. The Committee may consult with counsel, who may be
counsel to the Company, and shall not incur any liability for any
action taken in good faith in reliance upon the advice of counsel.
(e) A majority of the members of the Committee shall constitute
a quorum, and all actions of the Committee shall be taken by a
majority of the members present. Any action may be taken by a written
instrument signed by all of the members, and any action so taken shall
be fully effective as if it had been taken at a meeting.
14. NOTICE. All notices and other communications required or
permitted to be given under this Plan shall be in writing and shall be
deemed to have been duly given if delivered personally or mailed first
class, postage prepaid, as follows (a) if to the Company - at its principal
business address to the attention of the Treasurer; (b) if to any
Participant - at the last address of the Participant known to the sender at
the time the notice or other communication is sent.
15. INTERPRETATION. The terms of this Plan are subject to all present
and future regulations and rulings of the Secretary of the Treasury
relating to the qualification of Incentive Stock Options under the Code and
the qualification of the Plan as performance-based compensation under Code
Section 162(m), and they are subject to all present and future rulings of
the Securities Exchange Commission with respect to Rule 16b-3. If any
provision of the Plan would cause Incentive Stock Options to fail to meet
the applicable requirements of the Code, would cause the Plan to fail to
meet the Code Section 162(m) requirements for performance-based
compensation, or would cause the Plan to fail to meet the requirements of
Rule 16b-3 as applicable to Insiders, then that provision of the Plan shall
be void and of no effect. The terms of this Plan shall be governed by the
laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed on
this 10th day of December, 1993.
JAMES RIVER CORPORATION OF VIRGINIA
By /S/ CLIFFORD A. CUTCHINS, IV
Senior Vice President,
General Counsel,
Corporate Secretary
Exhibit 10(l)
JAMES RIVER CORPORATION OF VIRGINIA
DEFERRED STOCK PLAN
1993 AMENDMENT AND RESTATEMENT
JAMES RIVER CORPORATION OF VIRGINIA, a Virginia corporation (the
"Company"), has adopted this 1993 Amendment and Restatement of its Deferred
Stock Plan, effective as of December 16, 1993. The Company further amended
this Plan at its February 1994 Board of Directors meeting, effective as of
December 16, 1993. This document reflects the amendment.
1. PURPOSE. This Deferred Stock Plan (the "Plan") is intended to
advance the interests of the Company by providing certain senior executive
officers of the Company and its subsidiaries with an additional incentive
to promote the Company's success and to encourage them to remain in the
employ of the Company or a subsidiary of the Company. The Plan is intended
to conform to the provisions of Rule 16b-3 of the Securities Exchange Act
of 1934.
2. DEFINITIONS. Whenever used in the Plan, the following terms shall
have the meanings set forth below unless the context clearly requires a
different meaning:
a. "ACT" The Securities Exchange Act of 1934, as amended.
b. "APPLICABLE WITHHOLDING TAXES" The aggregate amount of
federal, state and local income and payroll taxes that the Company is
required to withhold in connection with a distribution under the Plan.
c. "AWARD" An award of deferred stock under the Plan.
d. "BENEFICIARY" The person or entity determined to be a
Participant's Beneficiary pursuant to Section 11.
e. "BOARD" The Company's Board of Directors.
f. "BOOK ACCOUNT" A book account established on the records of
the Company for a Participant.
g. "CHANGE OF CONTROL"
i. The acquisition by any unrelated Person of beneficial
ownership (as that term is used for purposes of the Act) of 20%
or more of the then outstanding shares of common stock of the
Company or the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in
the election of directors. The term unrelated Person means any
Person other than (x) the Company, its subsidiaries, and its
affiliates, (y) an employee benefit plan or trust of the Company
or its subsidiaries or affiliates, and (z) a Person that acquires
stock of the Company pursuant to an agreement with the Company
that is approved by the Board in advance of the acquisition,
unless the acquisition results in a Change of Control pursuant to
subsection (ii) below.
ii. As the result of, or in connection with, any 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 were directors of the Company
before such transactions shall cease to constitute a majority of
the Board of Directors of the Company or any successor to the
Company.
h. "CODE" The Internal Revenue Code of 1986, as amended.
i. "COMMITTEE" The committee appointed by the Board to
administer this Plan.
j. "COMPANY" James River Corporation of Virginia, and any
successor by merger or otherwise.
E-7
<PAGE>
k. "COMPANY STOCK" Common stock of the Company. In the event of
a change in the capital structure of the Company (as provided in
Section 14), the shares resulting from such a change shall be deemed
to be Company Stock within the meaning of the Plan.
l. "CORPORATE CHANGE" A consolidation, merger, dissolution, or
liquidation of the Company or a subsidiary, or a sale or distribution
of assets or stock (other than in the ordinary course of business) of
the Company or a subsidiary; provided that, unless the Committee
determines otherwise, a Corporate Change shall only be considered to
have occurred with respect to Participants whose business unit is
affected by the Corporate Change.
m. "INSIDER" A person subject to Section 16(b) of the Act.
n. "PARTICIPANT" A senior executive officer of the Company or a
subsidiary who has been selected by the Committee to participate in
the Plan.
o. "PERSON" An individual, entity or group (as that term is
used for purposes of the Act).
p. "PLAN" The James River Corporation of Virginia Deferred
Stock Plan.
q. "RULE 16b-3" Rule 16b-3 of the Act, including any
corresponding subsequent rule or any amendments to Rule 16b-3 enacted
after the effective date of the Plan.
3. ELIGIBILITY. The Committee shall grant Awards to certain senior
executive officers of the Company and its subsidiaries who have rendered,
and who are expected to continue to render, extraordinarily valuable
services that are vital to the long-term success of the Company and its
subsidiaries. The Committee shall choose the Participants and shall
determine the value of the Award to be granted to each Participant and the
vesting schedule and other terms of the Award.
4. AWARDS. The value of an Award shall be determined as a dollar
amount. As of the date of the Award, the Award shall be converted into
hypothetical shares of Company Stock at the fair market value of the
Company Stock as of the business day immediately preceding the date on
which the Award is granted. The Company shall establish a Book Account on
its records for the Participant and shall credit to the Participant's Book
Account the number of hypothetical shares of Company Stock granted pursuant
to the Award. No actual shares of Company Stock or other certificates shall
be issued when an Award is granted.
5. DIVIDENDS.
a. As of the last day of each fiscal year of the Company, each
Participant's Book Account shall be adjusted to take into account
dividends that were declared on Company Stock during the fiscal year.
The Committee shall first determine the amount of dividends that were
declared as of each record date during the fiscal year with respect to
shares of Company Stock equal to the number of hypothetical shares of
Company Stock that were credited to the Participant's Book Account as
of the record date. The total dividends shall then be converted into
hypothetical shares of Company Stock by dividing the amount of the
dividends by the fair market value of the Company Stock on the last
business day of the fiscal year, and the nearest whole number of
hypothetical shares of Company Stock so determined shall be credited
to the Participant's Book Account.
b. For the year in which the final payment is to be made from a
Participant's Book Account, dividends shall be credited to the
Participant's Book Account as of the date of the final payment.
Dividends will be credited in a manner similar to that described
above, based on the amount of dividends declared on Company Stock
since the last day of the preceding fiscal year and the fair market
value of Company Stock at the time payment is made.
6. VESTING. A Participant's interest in the amount credited to his
Book Account from time to time shall become vested in accordance with a
vesting schedule established by the Committee. The vesting schedule shall
provide that a Participant's interest shall become vested in annual
increments over a period of time determined by the Committee, beginning no
earlier than the first anniversary of the date on which the Award is
granted. The Committee may establish a different vesting schedule for each
Participant. If a Participant dies while he is employed by the Company or a
subsidiary, his interest in his Book Account shall become 100% vested. If a
Participant becomes disabled while he is employed by the Company or a
subsidiary, 50% of his non-vested interest in his Book Account shall become
vested, and the balance of his non-vested interest shall be forfeited. The
Committee shall have complete discretion to determine whether a Participant
has become disabled.
7. ELECTION OF FORM OF PAYMENT. When the Committee determines that
an Award is to be granted, the Committee shall give the Participant an
opportunity to elect, from the forms of payment described below, the form
in which the amount credited to his Book Account is to be paid. The
Participant must make the election in writing when he is first notified
that he will be granted an Award. The election shall be irrevocable and may
not be modified by the Participant.
a. PRE-RETIREMENT FORM. The Participant may elect the
pre-retirement form of payment, under which the amount credited to his
Book Account will be paid to him in increments as it becomes vested.
b. POST-RETIREMENT FORM. The Participant may elect the
post-retirement form of payment, under which the amount credited to
his Book Account will be paid to the Participant in substantially
equal annual installments after his retirement from employment with
the Company and its subsidiaries at or after age 65. At the time the
Participant makes his election, the Participant shall designate the
period over which the installment payments will be made. The Committee
will have discretion to modify the form of installment payment
designated by the Participant, if the Committee deems such a
modification to be appropriate and in the best interests of the
Company. If a Participant elects the post-retirement form of payment
and dies after the installment payments begin, the remaining
installments will be paid to the Participant's Beneficiary.
All elections under this Section 7 shall be made subject to the provisions
of Section 10.
8. TERMINATION OF EMPLOYMENT; FORFEITURES. If a Participant dies or
otherwise terminates employment before he reaches age 65, any portion of
the Participant's vested interest in his Book Account that has not
previously been distributed shall be paid to the Participant (or, in the
case of his death, to his Beneficiary) as follows:
a. Unless the Committee determines otherwise, if (i) the
Participant's termination of employment occurs because he retires at
or after age 55, dies or becomes disabled and (ii) the Participant
elected the post-retirement form of payment pursuant to Section 7(b),
then the Participant's vested interest in his Book Account shall be
paid in the manner selected by the Participant pursuant to Section
7(b), commencing at a date determined by the Committee.
b. In all other cases, the distributable amount shall be paid
in substantially equal annual installments over a 15-year period, or
in such other form of payment, within a period not exceeding 15 years,
as the Committee deems appropriate and in the best interests of the
Company.
The Participant's non-vested interest in his Book Account shall be
forfeited if his employment terminates for any reason before age 65, in
which case an amount equal to his non-vested interest as of the date on
which his employment terminates shall be debited from his Book Account.
9. PAYMENT.
a. The amount credited to each Participant's Book Account shall
be paid to the Participant according to the form of payment selected
by the Participant pursuant to Section 7, unless the Participant dies
or otherwise terminates employment before age 65 and except as
provided in Section 10. If the Participant dies or otherwise
terminates employment before age 65, the Participant or his
Beneficiary shall be entitled to payments only pursuant to Section 8,
subject to the provisions of Section 10. Distributions shall be made
within 30 days after the specified payment date.
b. The Committee shall determine whether a payment shall be
made (i) in whole shares of Company Stock equal to the number of
hypothetical whole shares of Company Stock to be distributed or (ii)
in a combination of whole shares of Company Stock and cash, in such
proportions as the Committee deems appropriate. When a payment is made
partly in cash, the hypothetical shares of Company Stock then credited
to the Participant's Book Account shall be valued, for purposes of the
payment, at the fair market value of Company Stock at the time the
payment is made. The Committee shall have sole discretion to determine
the form of payment.
c. The Company shall not be required to issue or deliver any
certificate for shares of Company Stock before (i) the admission of
such shares to listing on any stock exchange on which the Company
Stock may then be listed, (ii) completion of any required registration
or other qualification of such shares under state or federal law or
regulation that the Committee shall, in its sole discretion, determine
is necessary or advisable, and (iii) the Committee shall have been
advised by counsel that all applicable legal requirements have been
complied with.
d. All benefits under the Plan shall be paid subject to
required Applicable Withholding Taxes. Applicable Withholding Taxes
will automatically be withheld from all payments.
10. DEFERRAL OF PAYMENT.
a. The Committee shall defer payment of a Participant's Plan
benefit if and to the extent that the sum of (i) the Participant's
Plan benefit, plus (ii) all other compensation paid or payable to the
Participant for the fiscal year in which the Plan benefit would
otherwise be paid, exceeds the maximum amount of compensation that the
Company may deduct under Code Section 162(m) with respect to the
Participant for the year. A benefit deferred pursuant to this Section
10(a) shall be paid in the first fiscal year of the Company in which
the sum of the Participant's Plan benefit and all other compensation
paid or payable to the Participant does not exceed the maximum amount
of compensation deductible by the Company under Code Section 162(m).
This Section 10(a) shall only apply to Participants and Plan benefits
covered by Code Section 162(m) and shall apply only if and to the
extent that the deferral will cause the Plan benefits to be deductible
in a future year.
b. The Committee may defer payment of part or all of a Plan
benefit with respect to a Participant who is an Insider, to the extent
necessary or appropriate to comply with Rule 16b-3.
c. The Committee shall have sole discretion to determine
whether and to what extent Plan benefits are to be deferred pursuant
to this Section 10 and when deferred payments shall be made. The
Committee's determination shall be final and binding.
11. BENEFICIARY. A Participant may designate, on a form provided by
the Committee, one or more Beneficiaries to receive any payments that are
to be made under the Plan after the Participant's death. If a Participant
makes no valid designation, or if the designated Beneficiary fails to
survive the Participant or otherwise fails to receive the benefits, then
the Participant's Beneficiary shall be the first of the following persons
who survives the Participant: (a) the Participant's spouse (that is, the
person to whom the Participant is legally married when the Participant
dies), (b) the Participant's surviving descendants, PER STIRPES, or (c) the
personal representative of the Participant's estate.
12. FAIR MARKET VALUE OF COMMON STOCK. For purposes of the Plan, if
the Company Stock is traded in the over-the-counter market, its fair market
value on a given day shall be the mean between the closing bid and asked
prices on such day as reported by NASDAQ. If the Company Stock is traded on
an exchange, its fair market value on a given day shall be the closing
price of the Company Stock on such day on the exchange on which it
generally has the greatest trading volume. Fair market value shall be
determined as of the applicable date specified in the Plan or, if there are
no trades on such date, the value shall be determined as of the last
preceding day on which the Company Stock is traded.
13. ADMINISTRATION.
a. The Plan shall be administered by a Committee of two or more
directors of the Company, who shall be appointed by the Board. If and
to the extent required by Rule 16b-3, the Committee shall consist
solely of disinterested persons as that term is defined in Rule 16b-3.
If any member of the Committee fails to qualify as a disinterested
person, such person shall immediately cease to be a member of the
Committee and shall not take part in future Committee deliberations.
The Board from time to time may appoint members of the Committee and
may fill vacancies, however caused, in the Committee.
b. The Committee may adopt rules and regulations from time to
time for carrying out the Plan. The Committee may impose such
restrictions and requirements on Awards as it deems appropriate to
ensure compliance with Rule 16b-3.
c. The Committee has the express discretionary authority to
construe and interpret the Plan, to resolve any ambiguities, to define
any terms, to make determinations with respect to the eligibility for
or amount of benefits, and to make any other determinations required
by the Plan. The interpretation and construction of the Plan's
provisions by the Committee shall be final and conclusive. The
Committee may consult with counsel, who may be counsel to the Company,
and shall not incur any liability for any action taken in good faith
in reliance upon the advice of counsel. All actions of the Committee
shall be binding and conclusive on all persons for all purposes.
14. CHANGE IN CAPITAL STRUCTURE.
a. In the event of a stock dividend, stock split, combination
of shares, recapitalization, merger, consolidation or other change in
the Company's capital stock (including, but not limited to options or
warrants for the purchase of common stock or preferred stock of the
Company), the number and kind of shares of stock or other securities
to be issued under the Plan, the number and kind of hypothetical
shares of stock or other securities allocated to Book Accounts, and
any other relevant provisions shall be appropriately adjusted by the
Committee, whose determination shall be binding on all persons. If the
adjustment would produce fractional shares with respect to any Award,
the Committee may adjust appropriately the number of shares covered by
the Award so as to eliminate the fractional shares.
b. In the event the Company distributes to its shareholders as
a dividend, or sells or causes to be sold to a Person other than the
Company or a subsidiary or affiliate, shares of stock in any
corporation (a Spin-off Company) which, immediately before the
distribution or sale, was a majority-owned subsidiary of the Company,
the Committee shall have the power, in its sole discretion, to make
such adjustments as the Committee deems appropriate. The Committee may
make adjustments in the number and kind of shares or other securities
to be issued under the Plan, the number and kind of hypothetical
shares of stock or other securities allocated to Book Accounts, and
any other relevant provisions, and, without limiting the foregoing,
may substitute securities of the Spin-off Company for securities of
the Company. The Committee shall make such adjustments as it
determines to be appropriate, considering the economic effect of the
distribution or sale on the interests of the Company's shareholders
and the Participants in the businesses operated by the Spin-off
Company. The Committee's determination shall be binding on all
persons. If the adjustment would produce fractional shares with
respect to any Award, the Committee may adjust appropriately the
number of shares covered by the Award so as to eliminate the
fractional shares.
c. If a Change of Control or Corporate Change occurs, the
Committee may take such actions with respect to outstanding Awards as
the Committee deems appropriate. These actions may include, but shall
not be limited to, accelerating the vesting and payment of Awards. The
effectiveness of such acceleration shall be conditioned upon the
consummation of the applicable Change of Control or Corporate Change.
d. Notwithstanding anything in the Plan to the contrary, the
Committee may take the foregoing actions without the consent of any
Participant, and the Committee's determination shall be conclusive and
binding on all persons for all purposes. The Committee shall make its
determinations consistent with Rule 16b-3 and the applicable
provisions of the Code.
15. NUMBER. Up to 2,050,000 shares of Company Stock may be issued
pursuant to the Plan, subject to the provisions of Section 14.
16. CLAIMS PROCEDURE.
a. Each Participant (or Beneficiary of a deceased Participant)
shall be entitled to file with the Committee a written claim for
benefits under this Plan. The Committee will review the claim. If the
claim is denied, in whole or in part, the Committee will furnish the
claimant, within 90 days after the Committee's receipt of the claim
(or within 180 days after such receipt, if special circumstances
require an extension of time), a written notice of denial of the claim
containing the following:
i. Specific reasons for the denial,
ii. Specific reference to the pertinent Plan provisions on
which the denial is based,
iii. A description of any additional material or information
necessary for the claimant to perfect the claim, and an
explanation of why the material or information is necessary, and
iv. An explanation of the claims review procedure.
b. The claimant may request a review of the claim denial by an
appeals committee appointed by the Board. The review may be requested
in writing at any time within 90 days after the claimant receives
written notice of the denial of his claim. The committee shall afford
the claimant a full and fair review of the decision denying the claim
and, if so requested, shall:
i. Permit the claimant to review any documents that are
pertinent to the claim,
ii. Permit the claimant to submit to the committee issues
and comments in writing, and
iii. Afford the claimant an opportunity to meet with a
quorum of the committee as part of the review procedure.
The committee's decision on review shall be made in writing and
shall be issued within 60 days following receipt of the request for
review. The period for decision may be extended to a date not later
than 120 days after such receipt if the committee determines that
special circumstances require an extension. The decision on review
shall include specific reasons for the decision and specific
references to the Plan provisions on which the decision of the
committee is based.
17. RIGHTS UNDER THE PLAN. Title to and beneficial ownership of all
benefits described in the Plan shall at all times remain with the Company.
Participation in the Plan, the crediting of amounts to Book Accounts, and
the right to receive payments under this Plan shall not give a Participant
or Beneficiary any proprietary interest in the Company, any subsidiary or
any of their assets. No trust fund shall be created in connection with the
Plan, and there shall be no required funding of amounts that may become
payable under the Plan. A Participant and his Beneficiary shall, for all
purposes, be general creditors of the Company. The interests of a
Participant and his Beneficiary in the Plan cannot be assigned,
anticipated, sold, encumbered or pledged and shall not be subject to claims
of their creditors. Nothing in the Plan shall confer upon any Participant
the right to continue in the employ of the Company or any subsidiary or
shall interfere with or restrict in any way the rights of the Company and
its subsidiaries to discharge an employee at any time for any reason
whatsoever, with or without good cause.
18. TERMINATION OF THE PLAN. Awards may be granted at any time until
the Plan is terminated by the Board, or until such earlier date when
termination of the Plan shall be required by applicable law.
19. AMENDMENTS. The Board may from time to time make such changes in
and additions to the Plan as it may deem proper; provided that, if and to
the extent required by Rule 16b-3, no change shall be made that increases
the number of shares of Common Stock that may be issued under the Plan
(except pursuant to Section 14), expands the class of persons eligible to
receive Awards, or materially increases the benefits accruing to
Participants under the Plan, unless such change is authorized by the
shareholders. The Board may unilaterally amend the Plan as it deems
appropriate to ensure compliance with Rule 16b-3. Except as provided in the
preceding sentence, the termination of the Plan or any change or addition
to the Plan shall not, without the consent of a Participant who is
adversely affected thereby, alter any Awards previously granted to the
Participant.
20. EFFECTIVE DATE. The Plan became effective on June 14, 1984. The
1993 Amendment and Restatement shall be effective as of December 16, 1993,
and shall be submitted to the shareholders of the Company for approval.
Awards granted before the 1993 Amendment and Restatement shall be governed
by the terms of the Plan as in effect before the 1993 Amendment and
Restatement, except as provided in Section 9(d) and except to the extent
that the Committee, in its sole discretion, specifies otherwise. The
provisions of the 1993 Amendment and Restatement shall not apply to an
Award granted on or before February 17, 1993 if such provisions would cause
the Award to be subject to the limitations of Code Section 162(m).
21. SUCCESSORS. The Plan shall be binding upon the Participants and
their Beneficiaries and personal representatives. If the Company becomes a
party to any merger, consolidation, reorganization or other corporate
transaction, the Plan shall remain in full force and effect as an
obligation of the Company or its successor in interest.
22. CONSTRUCTION. The Plan shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed on
this 24th day of February, 1994.
JAMES RIVER CORPORATION OF VIRGINIA
By /S/ CLIFFORD A. CUTCHINS, IV
Senior Vice President,
General Counsel,
Corporate Secretary
Exhibit 10(m)
JAMES RIVER CORPORATION OF VIRGINIA
SUPPLEMENTAL DEFERRAL PLAN
1993 AMENDMENT AND RESTATEMENT
JAMES RIVER CORPORATION OF VIRGINIA, a Virginia corporation (the
"Company") hereby amends and restates its Supplemental Deferral Plan (the
"Plan"). This amendment and restatement shall be effective as of January
1, 1994.
Section I
Purpose of the Plan
The Plan is an unfunded deferred compensation plan for a select
group of management and highly compensated employees. The Plan is intended
to provide eligible employees with an opportunity to defer the portion of
their compensation that they are prevented from deferring under the James
River Corporation of Virginia Stock Purchase Plan (the "Stock Purchase
Plan") as a result of limitations imposed by the Internal Revenue Code.
Section II
Definitions
Whenever used in this Plan, the following terms shall have the
meanings set forth below, unless the context clearly requires a different
meaning:
A. Account: The book account maintained on the records of the
Employer for each Participant, by which the Employer shall record the
Participant's Deferrals, Matching Credits and Dividends pursuant to this
Plan.
B. Beneficiary: The person or entity entitled to receive
benefits upon the Participant's death under the Stock Purchase Plan or, if
there is none, the personal representative of the Participant's estate.
C. Board of Directors: The Board of Directors of the Company.
D. Company: James River Corporation of Virginia, and any
successor by merger or otherwise.
E. Company Stock: Common Stock issued by the Company.
F. Compensation: A Participant's "Compensation" as defined in
the Stock Purchase Plan, without regard to the Limitations.
G. Deferral: The Compensation deferred by a Participant under
Section 3.2 of this Plan.
H. Deferral Election: An election filed by a Participant to
have Deferrals made under this Plan.
I. Dividends: Hypothetical dividends on Company Stock, which
shall be credited to Participants' Accounts pursuant to Section 5.4 of this
Plan.
J. Effective Date: November 6, 1989. The effective date of
the Plan restatement is January 1, 1994.
K. Eligible Employee: A management or highly compensated
salaried employee of the Employer who is a Participant in the Stock
Purchase Plan and whose Compensation for the Plan Year exceeds the maximum
amount permitted to be taken into account under the Limitations. This Plan
shall be maintained solely for a select group of management or highly
compensated employees of the Employer.
L. Employer: The Company and the subsidiaries and affiliates
of James River that adopt or have adopted the Stock Purchase Plan for the
benefit of their eligible employees.
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M. Insider: Any person subject to Section 16(b) of the
Securities Exchange Act of 1934.
N. Internal Revenue Code: The Internal Revenue Code of 1986,
as amended.
O. Limitations: The limitation of the Stock Purchase Plan
under which the amount of an employee's annual Compensation that may be
taken into account for purposes of the Stock Purchase Plan may not exceed
$150,000, or an adjusted amount pursuant to Sections 401(a)(17) and 415(d)
of the Internal Revenue Code.
P. Matching Credits: The matching amounts credited to a Par-
ticipant's Account pursuant to Section 5.2 of this Plan.
Q. Participant: Each Eligible Employee who has elected to
participate in this Plan.
R. Plan: This James River Corporation of Virginia Supplemental
Deferral Plan, as in effect from time to time.
S. Plan Administrator: The administrative committee appointed
to administer the Stock Purchase Plan from time to time.
T. Plan Year: The calendar year.
U. Pre-Tax Contributions: Pre-tax salary reduction
contributions made on behalf of employees under the Stock Purchase Plan.
V. Stock Purchase Plan: The James River Corporation of
Virginia Stock Purchase Plan, as in effect from time to time.
Section III
Participation
3.1 Election to Participate:
(a) An Eligible Employee may become a Participant in this Plan
as of any January 1 by filing a Deferral Election with his Employer before
the January 1 as of which the Eligible Employee's participation is to
become effective. If an employee first becomes an Eligible Employee during
a Plan Year, the Eligible Employee may become a Participant by filing a
Deferral Election with his Employer within 15 days after he is notified
that he has become an Eligible Employee.
(b) All Deferral Elections must be made on forms provided by the
Plan Administrator for that purpose.
3.2 Deferral Elections:
(a) By making a Deferral Election, a Participant shall elect to
defer Compensation that he is not permitted to contribute to the Stock Pur-
chase Plan because of the Limitations. The deferred Compensation shall be
considered a Deferral under this Plan. The Deferral Election shall direct
the Employer to reduce the Participant's Compensation in excess of the
Limitations by a percentage specified by the Participant in the Deferral
Election. The specified percentage may not exceed the contribution
percentage in effect for the Participant under the Stock Purchase Plan as
of the effective date of the Deferral Election.
(b) A Participant may make Deferrals to this Plan during a Plan
Year only if he has made the maximum amount of contributions to the Stock
Purchase Plan permitted under Section 402(g) of the Internal Revenue Code
or under the terms of the Stock Purchase Plan.
(c) A Participant's Deferral Election shall apply only to
Compensation earned after the effective date of the Deferral Election.
Deferral Elections may only be made prospectively. A Participant's
Deferral Election shall continue in effect until the Participant (i) files
a new Deferral Election as of a January 1, (ii) ceases Deferrals under this
Plan pursuant to Section 3.3, or (iii) becomes entitled to receive benefits
under this Plan, whichever occurs first.
3.3 Change of Elections:
(a) A Participant may not revoke or otherwise change his Defer-
ral Election under this Plan after commencement of the Plan Year to which
the Deferral Election relates. The Plan Administrator may revoke or change
a Participant's Deferral Election prospectively after commencement of the
Plan Year if the Participant experiences financial hardship or under other
extraordinary circumstances, as the Plan Administrator, in its sole
discretion, deems appropriate.
(b) If a Participant ceases to be an Eligible Employee, the
Participant's Deferrals and Matching Credits will cease as of the end of
the payroll period in which the Participant ceases to be an Eligible
Employee.
(c) If a Participant's Deferrals cease, but he continues to be
employed by the Employer, the Participant's Account shall continue to be
credited with Dividends pursuant to Section 5.4 of this Plan until the
Account is distributed pursuant to Section 6.2.
3.4 Special Rules for Insiders: Notwithstanding anything in the
Plan to the contrary, the Plan Administrator may impose on Insiders such
restrictions regarding participation, Deferrals, distributions and other
matters as the Committee deems appropriate to comply with Rule 16b-3 of the
Securities Exchange Act of 1934.
Section IV
Participant Accounts
Each Participant's Employer shall establish an Account for the
Participant on its records. The Employer shall credit to the Participant's
Account the Deferrals, Matching Credits and Dividends that are required to
be credited to the Account pursuant to this Plan. The Account shall be a
bookkeeping account only, and no assets shall be segregated for the benefit
of a Participant.
Section V
Credits to Accounts
5.1 Participant Deferrals: As of the end of each pay period,
the Employer will credit each Participant's Account with an amount equal to
the Participant's elected Deferrals for the pay period.
5.2 Matching Credits: As of the end of each pay period, the
Employer will credit each Participant's Account with a Matching Credit that
matches a percentage of the Participant's Deferrals under this Plan based
on the matching percentages in effect at the time under the Stock Purchase
Plan. Before July 1, 1994, the matching percentages in effect for non-tax
deferred contributions under the Stock Purchase Plan shall be used. On and
after July 1, 1994, the matching percentages in effect for Pre-Tax
Contributions shall be used.
5.3 Conversion to Hypothetical Shares: Each time Deferrals,
Matching Credits or Dividends are credited to an Account, the amount
credited shall be converted into hypothetical shares of Company Stock,
based on the fair market value of Company Stock as of the date on which the
amount is credited to the Account. No actual shares of Company Stock or
other certificates shall be issued pursuant to this Plan.
5.4 Dividends: As of each record date for a dividend on Company
Stock, each Participant's Account shall be credited with hypothetical Divi-
dends, based on the number of hypothetical shares of Company Stock that
were credited to the Participant's Account as of the record date. The
Dividends shall then be converted into hypothetical shares of Company Stock
by dividing the amount of the Dividends by the fair market value of the
Company Stock on the record date for the dividend, and the number of hypo-
thetical shares of Company Stock so determined shall be credited to the
Participant's Account.
5.5 Effect of Stock Dividends and Similar Changes: The Plan
Administrator shall make appropriate adjustments in the number and kind of
shares of hypothetical Company Stock credited to Accounts and any other
relevant provisions if there are any changes in the Company Stock by reason
of a stock dividend, stock split, combination of shares, recapitalization,
merger, consolidation, spin-off or other corporate transaction or action
that makes such adjustment appropriate.
Section VI
Vesting and Payment of Benefits
6.1 Vesting of Accounts: Each Participant shall be 100% vested
in his Account under the Plan.
6.2 Benefits: When a Participant terminates employment with the
Employer and its subsidiaries and affiliates, the Participant's Employer
shall pay the Participant (or his Beneficiary, in the event of his death)
an amount in cash equal to the fair market value of shares of Company Stock
equal to the number of hypothetical shares of Company Stock then credited
to the Participant's Account. Except as provided in Section 6.3, the
payment shall be made in a single lump sum cash payment as soon as
practicable after the Participant's termination of employment. For
purposes of determining the amount of the payment, the fair market value of
shares of Company Stock shall be determined as of the date of the
Participant's termination of employment or, in the case of benefits
deferred pursuant to Section 6.3, as of the last day of the month preceding
the distribution date. All payments under the Plan shall be made in cash,
and no shares of Company Stock shall be distributed pursuant to the Plan.
6.3 Deferral of Payment: The Plan Administrator shall defer
payment of a Participant's Plan benefit if and to the extent that the sum
of (a) the Participant's Plan benefit, plus (b) all other compensation paid
or payable to the Participant for the fiscal year in which the Plan benefit
would otherwise be paid, exceeds the maximum amount of compensation that
the Employer may deduct under Section 162(m) of the Internal Revenue Code
with respect to the Participant for the year. A benefit deferred pursuant
to this Section 6.3 shall be paid in the first fiscal year of the Employer
in which the sum of the Participant's Plan benefit and all other
compensation paid or payable to the Participant does not exceed the maximum
amount of compensation deductible by the Employer under Section 162(m) of
the Internal Revenue Code. This Section 6.3 shall only apply to
Participants and Plan benefits covered by Section 162(m) of the Internal
Revenue Code and shall apply only if and to the extent that the deferral
will cause the Plan benefits to be deductible in a future year. The Plan
Administrator shall have sole discretion to determine whether and to what
extent Plan benefits are to be deferred pursuant to this Section 6.3 and
when deferred payments shall be made. The Plan Administrator's
determination shall be final and binding.
6.4 Dividends: Before a distribution is made pursuant to this
Section VI, the Employer shall credit to the Participant's Account the
Deferrals, Matching Credits and Dividends, if any, that relate to the
portion of the Plan Year that precedes the distribution date and that have
not yet been credited to the Participant's Account pursuant to Sections
5.1, 5.2 and 5.4 of this Plan.
6.5 Withholding: All payments made under this Plan shall be
subject to applicable income and payroll withholding taxes.
Section VII
Administration
7.1 Plan Administrator: The Plan Administrator shall have full
power and the express discretionary authority to construe and interpret the
Plan, to resolve any ambiguities, to define any terms, to make
determinations with respect to the eligibility for or amount of benefits,
and to make any other determinations required by the Plan. All actions of
the Plan Administrator under the Plan shall be binding and conclusive on
all persons for all purposes. The Plan Administrator may adopt rules and
regulations necessary to carry out this Plan and may delegate its
ministerial duties to one or more employees of the Employer. The Plan Ad-
ministrator may consult with counsel, who may be counsel to the Employer,
and shall not incur any liability for any action taken in good faith in
reliance upon the advice of counsel.
7.2 Fair Market Value of Company Stock: For purposes of this
Plan, if the Company Stock is traded on an exchange, its fair market value
on a given date shall be the closing price of the Company Stock on such
date (or on the nearest preceding date on which Company Stock was traded)
on the exchange on which Company Stock generally has the greatest trading
volume. If the Company Stock is traded in the over-the-counter market, its
fair market value on a given date shall be the mean between the closing bid
and asked prices on such date (or on the nearest preceding date on which
Company Stock was traded), as reported by NASDAQ. If the Company Stock is
not traded on an exchange or in the over-the-counter market, the Plan
Administrator shall determine the fair market value of Company Stock as it
deems appropriate.
7.3 Claims Procedure: Each Participant (or Beneficiary of a
deceased Participant) shall be entitled to file with the Plan Administrator
a written claim for benefits under this Plan. The Plan Administrator will
review the claim. If the claim is denied, in whole or in part, the Plan
Administrator will furnish the claimant, within 90 days after the Plan
Administrator's receipt of the claim (or within 180 days after such
receipt, if special circumstances require an extension of time), a written
notice of denial of the claim containing the following:
(a) Specific reasons for the denial,
(b) Specific reference to the pertinent Plan provisions on which
the denial is based,
(c) A description of any additional material or information
necessary for the claimant to perfect the claim, and an explanation of why
the material or information is necessary, and
(d) An explanation of the claims review procedure.
The claimant may request a review of the claim denial by an appeals
committee appointed by the Board of Directors. The review may be requested
in writing at any time within 90 days after the claimant receives written
notice of the denial of his claim. The committee shall afford the claimant
a full and fair review of the decision denying the claim and, if so
requested, shall:
(i) permit the claimant to review any documents that are
pertinent to the claim,
(ii) permit the claimant to submit to the committee issues
and comments in writing, and
(iii) afford the claimant an opportunity to meet with a
quorum of the committee as part of the review procedure.
The committee's decision on review shall be made in writing and shall be
issued within 60 days following receipt of the request for review. The
period for decision may be extended to a date not later than 120 days after
such receipt if the committee determines that special circumstances require
an extension. The decision on review shall include specific reasons for
the decision and specific references to the Plan provisions on which the
decision of the committee is based.
Section VIII
Miscellaneous
8.1 Rights Under the Plan: Title to and beneficial ownership of
all benefits described in the Plan shall at all times remain with the
Employer. Participation in this Plan, the crediting of amounts to
Accounts, and the right to receive payments under this Plan shall not give
a Participant or Beneficiary any proprietary interest in the Employer or
any of its assets. No trust fund shall be created in connection with this
Plan, and there shall be no required funding of amounts that may become
payable under this Plan. A Participant and his Beneficiary shall, for all
purposes, be general creditors of the Employer. The interest of a Par-
ticipant and his Beneficiary in this Plan cannot be transferred, assigned,
anticipated, sold, encumbered or pledged and shall not be subject to claims
of their creditors. Nothing in this Plan shall confer upon any Participant
the right to continue in the employ of the Employer or to continue as a
Participant or shall interfere with or restrict in any way the rights of
the Employer to discharge an employee at any time for any reasons
whatsoever, with or without cause. The benefits provided under this Plan
shall not be deemed compensation for purposes of any other benefit plans of
the Employer.
8.2 Successors: This Plan shall be binding upon the
Participants and their Beneficiaries, successors and personal representa-
tives. If an Employer becomes a party to any merger, consolidation,
reorganization or other corporate transaction, this Plan shall remain in
full force and effect as an obligation of the Employer or its successor in
interest.
8.3 ERISA Exemption: This Plan is an unfunded plan of deferred
compensation covering a select group of management or highly compensated
employees and is intended to be exempt from the participation, vesting,
funding and fiduciary provisions of the Employee Retirement Income Security
Act of 1974, as amended.
8.4 Amendment and Termination: The Company reserves the right
to amend or terminate this Plan by action of the Board of Directors at any
time without the consent of any Participant or Beneficiary. However, no
amendment or termination shall deprive any Participant or Beneficiary of
the right to receive, pursuant to the terms of this Plan, the amount
credited to the Participant's Account as of the last day of the month
before the date on which the action is taken by the Board of Directors.
8.5 Construction: This Plan shall be governed by and construed
in accordance with the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the Company as caused this Plan to be
executed on this 30th day of December, 1993.
JAMES RIVER CORPORATION OF VIRGINIA
By/s/Joseph L. Fischer
Vice President, Employee Relations
Exhibit 10(o)
JAMES RIVER CORPORATION OF VIRGINIA
1993 PROFIT SHARING PLAN
FOR SALARIED EMPLOYEES
EFFECTIVE AS OF DECEMBER 27, 1993
JAMES RIVER CORPORATION OF VIRGINIA, a Virginia corporation (the
"Company"), hereby adopts the 1993 Profit Sharing Plan for Salaried
Employees (the "Plan"), subject to shareholder approval. This Plan
supersedes the Company's existing Profit Sharing Plan for Salaried
Employees, effective for the Company's fiscal year beginning December 27,
1993, and subsequent years. The Plan has been adopted by the Board of
Directors of the Company and will be submitted to the Company's
shareholders for approval at the 1994 annual shareholders' meeting.
1. PURPOSE. The Plan is a bonus plan and is intended to advance the
interests of the Company by providing eligible salaried employees with
annual incentives to increase the productivity of the Company and its
subsidiaries.
2. DEFINITIONS. Whenever used in the Plan, the following terms shall
have the meanings set forth below unless the context clearly requires a
different meaning:
(a) CODE. The Internal Revenue Code of 1986, as amended.
(b) COMMITTEE. The compensation committee appointed by the Board
to administer this Plan pursuant to Section 9.
(c) COMPANY. James River Corporation of Virginia and any
successor by merger or otherwise.
(d) DISABLED. The meaning given this term in the James River
Corporation of Virginia Long Term Disability Plan, as in effect from
time to time.
(e) DIVESTITURE. A sale or other divestiture by the Company of
the business unit in which an employee is employed.
(f) EARLY RETIREMENT DATE. The meaning given this term in the
James River Corporation of Virginia Retirement Plan for Salaried and
Other Non-Bargaining Unit Employees, as in effect from time to time.
(g) JOB ELIMINATION. The elimination of an employee's position
under circumstances in which the employee is entitled to salary
continuation under the terms of the James River Corporation of
Virginia Salary Continuation Plan, as in effect from time to time.
(h) NON-EXEMPT EMPLOYEE. An employee who is not exempt from the
minimum wage and maximum hour requirements of the Fair Labor Standards
Act.
(i) NORMAL RETIREMENT DATE. The meaning given this term in the
James River Corporation of Virginia Retirement Plan for Salaried and
Other Non-Bargaining Unit Employees, as in effect from time to time.
(j) PLAN. The James River Corporation of Virginia Profit Sharing
Plan for Salaried Employees.
(k) PROFIT SHARING POOL. The total amount designated to be paid
as profit sharing awards for a fiscal year pursuant to Section 5.
(l) RL. The responsibility level assigned to an employee
pursuant to the attached Chart 2.
(m) SALARY. An employee's base salary in effect as of the last
day of the fiscal year (pro rated for employees who are entitled only
to a pro rata distribution), plus, in the case of a Non-Exempt
Employee, any overtime paid to the employee during the fiscal year.
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3. ELIGIBILITY.
(a) Except as provided below, all regular non-bargaining unit
salaried employees (excluding employees who participate in other
short-term bonus or incentive plans) of the Company and its U.S. and
Canadian subsidiaries are eligible to participate in the Plan.
Employees who transfer to regular non-bargaining unit salaried status
during a fiscal year and eligible employees who cease participating in
other short-term bonus or incentive plans will be eligible to
participate in this Plan on a time-weighted basis from their date of
eligibility. Employees who transfer to hourly or bargaining unit
status or who become eligible to participate in other short-term bonus
or incentive plans will be eligible to receive PRO RATA awards for the
portion of the fiscal year in which the employees were actively at
work in an eligible position.
(b) Except as set forth below, only employees who are employed
by the Company or a U.S. or Canadian subsidiary through the end of the
applicable fiscal year shall be eligible to receive awards for the
fiscal year. Employees who are hired during the fiscal year will
participate in the Plan on a time-weighted basis from their date of
employment. Employees who die, become Disabled or retire on or after
their Early Retirement Date or Normal Retirement Date, and employees
whose employment is terminated on account of temporary layoff, Job
Elimination or Divestiture of the business unit in which the employee
was employed will be eligible to receive pro rata awards for the
portion of the fiscal year in which the employees were actively
employed by the Company or a subsidiary. For purposes of the Plan, an
employee's employment will be considered to be terminated on account
of a Divestiture if the employee ceases to be an employee of the
Company and its subsidiaries as of the date of, and as a direct result
of, the Divestiture of the business unit in which the employee was
employed.
(c) Employees of foreign operations (other than employees of
Canadian subsidiaries) will not participate in the Plan.
4. CRITERIA FOR PROFIT SHARING AWARDS.
(a) Before the beginning of each fiscal year, the Committee
shall establish the performance goals for the year, by establishing in
writing the levels of pre-tax, pre-profit sharing profits and return
on equity to be used for purposes of Chart 1 for the year. The
attached Chart 1 shall be used for the fiscal year beginning in 1993
and each subsequent year until the Committee revises Chart 1 (using
the same format and criteria) before the beginning of a fiscal year.
The performance goals for a fiscal year may not be modified after the
year begins.
(b) For purposes of the Plan, pre-tax, pre-profit sharing
profits and return on equity shall be determined based on the audited
financial statements of the Company and its U.S. and Canadian
subsidiaries and shall exclude extraordinary charges and income.
(c) Each eligible employee will be assigned a responsibility
level (RL)equating to the employee's salary grade level according to
Chart 2.
(d) Awards will be calculated for each eligible employee based
on the employee's Salary multiplied by the applicable bonus
percentage. The bonus percentage will be determined by the formula
described below.
5. CALCULATION OF PROFIT SHARING POOL. The total amount designated
to be paid as profit sharing awards for the fiscal year (the Profit Sharing
Pool) shall be a percentage of the consolidated pre-tax, pre-profit sharing
profits, before extraordinary items, of the Company and its U.S. and
Canadian subsidiaries for the fiscal year, as determined by return on
equity for the year according to Chart 1. The Committee may reduce the
total Profit Sharing Pool before the end of the fiscal year if the
Committee deems such a reduction to be in the best interests of the
Company.
6. CALCULATION OF INDIVIDUAL AWARDS. After the Profit Sharing Pool
is determined pursuant to Section 5, individual awards will be calculated
for all eligible employees as follows:
Profit
Individual Employee's Employee's RL / Sharing Pool /
Award = Salary x Salary-Weighted x Total Eligible
Average RL for Employees'
All Eligible Salaries
Employees
7. FINAL EMPLOYEE AWARD.
(a) An employee's profit sharing award for a fiscal year will be
the award computed for the employee pursuant to Section 6; provided,
however, that an employee's profit sharing award may not exceed
$1,000,000 for any fiscal year. If an employee's award would
otherwise exceed this limit, the amount in excess of this limit shall
be added back to the Profit Sharing Pool and allocated to the other
eligible employees according to the formula described above.
(b) Before any profit sharing awards may be paid for a fiscal
year, the Committee shall certify that the performance goals set forth
in Chart 1 and the other requirements of the Plan have been satisfied
for the fiscal year. No payments shall be made unless and until the
Committee makes this certification.
8. PAYMENT OF AWARDS.
(a) Awards shall be paid in cash as soon as is practicable
following the end of the fiscal year for which they are computed. All
awards under the Plan shall be paid subject to federal, state and
local income and payroll tax withholding.
(b) An employee shall receive no profit sharing award for a year
if the employee's employment with the Company and its subsidiaries
terminates prior to the last day of the fiscal year for any reason
other than death, Disability, retirement on or after the employee's
Early Retirement Date or Normal Retirement Date, temporary layoff, Job
Elimination or a Divestiture of the business unit in which the
employee was employed. An employee who terminates employment for one
of the reasons described in the preceding sentence shall receive a pro
rata award pursuant to Section 3(b). An employee shall not forfeit an
award if the employee terminates employment after the end of the
applicable fiscal year, but prior to the distribution of the award for
such year.
(c) If an employee dies and is subsequently entitled to receive
an award under the Plan, the award shall be paid to the personal
representative of the employee's estate.
9. ADMINISTRATION.
(a) The Plan shall be administered by the compensation committee
of the Board of Directors (the Committee), which shall be comprised
solely of two or more outside directors, as that term is defined for
purposes of Code Section 162(m). If any member of the Committee fails
to qualify as an outside director, such person shall immediately cease
to be a member of the Committee and shall not take part in future
Committee deliberations.
(b) The Committee may adopt rules and regulations for carrying
out the Plan, and the Committee may take such actions as it deems
appropriate to ensure that the Plan is administered in the best
interests of the Company. The Committee has the authority to construe
and interpret the Plan, resolve any ambiguities, and make
determinations with respect to the eligibility for or amount of
benefits. The interpretation, construction and administration of the
Plan by the Committee shall be final and conclusive. The Committee may
consult with counsel, who may be counsel to the Company, and shall not
incur any liability for any action taken in good faith in reliance
upon the advice of counsel.
10. RIGHTS. Participation in the Plan and the right to receive
bonuses under the Plan shall not give an employee any proprietary interest
in the Company, any subsidiary or any of their assets. No trust fund shall
be created in connection with the Plan, and there shall be no required
funding of amounts that may become payable under the Plan. An employee
shall for all purposes be a general creditor of the Company. The interests
of an employee cannot be assigned, anticipated, sold, encumbered or pledged
and shall not be subject to the claims of his creditors. Nothing in the
Plan shall confer upon any employee the right to continue in the employ of
the Company or any subsidiary or shall interfere with or restrict in any
way the right of the Company and its subsidiaries to discharge an employee
at any time for any reason whatsoever, with or without cause.
11. SUCCESSORS. The Plan shall be binding on the employees and their
personal representatives. If the Company becomes a party to any merger,
consolidation, reorganization or other corporate transaction, the Plan
shall remain in full force and effect as an obligation of the Company or
its successor in interest.
12. AMENDMENT AND TERMINATION. The Board may amend or terminate the
Plan at any time as it deems appropriate; provided that (i) no amendment or
termination of the Plan after the end of a fiscal year may increase or
decrease the total profit sharing awards for the fiscal year just ended and
(ii) to the extent required to meet the requirements of Code Section 162(m)
for performance-based compensation, any amendment that makes a material
change to the Plan must be approved by the shareholders of the Company. The
Board is specifically authorized to amend the Plan as necessary or
appropriate to comply with Code Section 162(m) and regulations issued
thereunder.
13. INTERPRETATION. If any provision of the Plan would cause the Plan
to fail to meet the Code Section 162(m) requirements for performance-based
compensation, then that provision of the Plan shall be void and of no
effect. The Plan shall be interpreted according to the laws of the
Commonwealth of Virginia.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed
this 24th day of February, 1994.
JAMES RIVER CORPORATION OF VIRGINIA
By: /S/ CLIFFORD A. CUTCHINS, IV
Senior Vice President,
General Counsel,
Corporate Secretary
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Appendix (1) Exhibit 10(o)
Narrative description of graphic material pursuant to Rule 304(a) of
Regulation S-T
Chart 1: A graph showing the corporate return on equity on the x-axis
ranging from zero to thirty and the profit sharing pool as a percent of
pretax dollars on the y-axis ranging from zero to ten.
The curve starts at two on the x-axis and intersects at 8.5% pretax
dollars and 10% corporate return on equity and then flattens out at 9% net
pretax profit from 14% to 30% corporate return on equity.
Chart 2: A chart showing salary grades (SG), ranging from 20 to 74 and the
corresponding responsibility levels (RL) for each grade ranging from .50 to
6.35.
Exhibit 10(p)
JAMES RIVER CORPORATION OF VIRGINIA
1994 PERFORMANCE/PRODUCTIVITY BONUS PLAN
JAMES RIVER CORPORATION OF VIRGINIA (the "Company") hereby adopts the
1994 Performance/Productivity Bonus Plan, effective as of February 18,
1994.
1. Purpose. This 1994 Performance/Productivity Bonus Plan (the
"Plan") is intended to advance the interests of the Company by providing
certain employees who have significant responsibilities in key management
areas with the opportunity to earn a bonus based on individual performance
and productivity. The bonus is an incentive to promote the success of the
Company, as well as to encourage employees to remain in the employ of the
Company.
The Company intends to substitute variable performance-related
compensation for fixed compensation under certain circumstances. It is
anticipated that, in certain cases, bonus awards may be paid to
participants under the Plan in lieu of annual merit increases. The
performance/productivity bonuses under the Plan will be paid for individual
performance regardless of Company performance. The Company's 1993 Profit
Sharing Plan for Salaried Employees will provide benefits based on Company
performance. The Plan will be in effect for the Company's fiscal year
beginning December 27, 1993.
2. Definitions. As used in the Plan, the following terms have the
meanings indicated:
(a) "Board" means the Board of Directors of the Company.
(b) "CBC" means the Corporate Business Council, which consists
of executive officers of the Company and its subsidiaries.
(c) "Company" means James River Corporation of Virginia, a
Virginia corporation.
(d) "Compensation Committee" means the Compensation Committee of
the Board.
(e) "HR Department" means the corporate Human Resources
department of the Company.
(f) "Participant" means an employee who is designated as a
participant in the Plan pursuant to Section 3.
(g) "1994 Year" means the fiscal year of the Company beginning
December 27, 1993.
3. Eligibility. Exempt salaried employees of the Company and its
subsidiaries who have significant responsibilities in key management areas
and who hold positions for which measurable performance goals can be
established will be eligible to participate in the Plan. All members of
the CBC will be Participants in the Plan. The HR Department will designate
other eligible employees to participate in the Plan, based on
recommendations made by the CBC members. An exempt employee is an employee
who is not subject to the minimum wage and maximum hour requirements of the
Fair Labor Standards Act.
E-10
<PAGE>
4. Bonus Criteria. Each Participant will prepare, with his or her
supervisor, individual goals that are based on productivity and performance
and that can be measured and discussed at the end of the 1994 Year.
Members of the CBC and the Compensation Committee may review Participants'
goals to ensure that the goals are appropriate for the Plan. No later than
December 5, 1994, each CBC member will evaluate the achievement of the
performance goals by his or her subordinates and will determine to what
extent the goals have been met. The Compensation Committee will evaluate
the achievement of the performance goals by the members of the CBC.
5. Bonus Awards.
(a) Bonus awards will be computed before the end of the 1994
Year. The bonus awards will average approximately 5% of the total
base salaries of the Participants for the 1994 Year. Individual
awards will be based on each Participant's achievement of his or her
goals, and awards will be a percentage of the Participant's base
salary. A Participant's base salary in effect on the last day of the
1994 Year will be used for this purpose. A Participant must be an
employee of the Company or a subsidiary on the last day of the 1994
Year in order to receive a bonus award under the Plan. Participants
who are hired after the Plan is implemented will be eligible to
receive pro rated bonuses for the 1994 Year.
(b) The HR Department will determine the bonus awards for all
Participants who are not members of the CBC, based on recommendations
made by the CBC members. The Compensation Committee will determine
the bonus awards for the CBC members. Bonus awards will be paid only
to Participants whose work performance merits payment of an award, and
a Participant will have no right to receive a bonus award under the
Plan.
(c) Bonus awards will be paid in cash no later than February 1,
1995. All awards will be paid subject to federal, state and local
income and payroll tax withholding.
6. Plan Administration. The Plan will be administered by the
Compensation Committee and the HR Department. The Compensation Committee,
the HR Department and the members of the CBC will have complete discretion
to carry out their responsibilities under the Plan. In the event of any
dispute, the Compensation Committee will have the express discretionary
authority to construe and interpret the Plan, to resolve any ambiguities,
and to make final determinations with respect to the eligibility for or
amount of benefits. The interpretation, construction and administration of
the Plan by the Compensation Committee and the HR Department will be final
and conclusive. The Compensation Committee and the HR Department may
consult with counsel, who may be counsel to the Company, and will not incur
any liability for any action taken in good faith in reliance upon the
advice of counsel.
7. Termination, Modification. The Board may terminate or change the
Plan in such respects as it will deem advisable; provided that no such
termination or change after the end of the fiscal year may increase or
decrease the total bonus pool for that year.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed
this 18th day of February, 1994.
JAMES RIVER CORPORATION OF VIRGINIA
By:/s/Clifford A. Cutchins, IV
Senior Vice President,
General Counsel,
Corporate Secretary
Exhibit 11
JAMES RIVER CORPORATION
of Virginia
AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE (a)
For the Three Years Ended December 26, 1993
(in thousands, except per share data)
Year Ended
December December December
PRIMARY 26, 1993 27, 1992 29, 1991
Net income (loss) $ (346) $(427,340) $78,291
Less preferred stock dividend
requirements (b) (32,822) (26,494) (24,613)
Net income (loss), as adjusted for
the primary calculation $(33,168) $(453,834) $53,678
Weighted average number of common
shares and common share
equivalents:
Common shares outstanding 81,610 81,559 81,400
Issuable upon exercise of out-
standing stock options and
pursuant to a deferred stock
award plan 1,529 1,048 2,475
Less assumed acquisition of
common shares, using proceeds
from stock options and a defer-
red stock award plan, under the
treasury stock method (1,253) (851) (2,016)
81,886 81,756 81,859
Primary earnings (loss) per share $(.40) $(5.55) $.66
(a) See Note 1 of Notes to Consolidated Financial Statements in the 1993
Annual Report.
(b) See Note 14 of Notes to Consolidated Financial Statements in the 1993
Annual Report.
E-11
<PAGE>
Exhibit 11 (continued)
JAMES RIVER CORPORATION
of Virginia
AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE (a)
For the Three Years Ended December 26, 1993
(in thousands, except per share data)
Year Ended
December December December
FULLY DILUTED 26, 1993 27, 1992 29, 1991
Net income (loss) $ (346) $(427,340) $78,291
Less preferred stock dividend
requirements (b) (32,822) (26,494) (24,613)
Net income (loss), as adjusted for
the fully diluted calculation $(33,168) $(453,834) $53,678
Weighted average number of common
shares and common share
equivalents:
Common shares outstanding 81,610 81,559 81,400
Issuable upon exercise of out-
standing stock options and
pursuant to a deferred stock
award plan 1,674 1,048 2,484
Less assumed acquisition of
common shares, using proceeds
from stock options and a defer-
red stock award plan, under the
treasury stock method (1,369) (851) (2,013)
81,915 81,756 81,871
Fully diluted earnings (loss)
per share $(.40) $(5.55) $.66
(a) See Note 1 of Notes to Consolidated Financial Statements in the 1993
Annual Report.
(b) See Note 14 of Notes to Consolidated Financial Statements in the 1993
Annual Report.
E-11
Exhibit 12
JAMES RIVER CORPORATION of Virginia
and Subsidiaries
<TABLE>
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (a)
(Dollar amounts in 000's)
<CAPTION>
Fiscal Year Ended
April April December December December December
30, 1989 29, 1990 30, 1990 29, 1991 27, 1992 26, 1993
(53 weeks) (52 weeks) (35 weeks) (52 weeks) (52 weeks) (52 weeks)
(b) (c,d)
<S> <C> <C> <C> <C> <C> <C>
Pretax income (loss) from
continuing operations,
before minority interests $446,954 $371,501 $ 44,352 $115,170 $(182,817) $ 14,115
Add:
Interest charged to
operations 171,964 198,743 133,716 191,344 192,962 183,035
Portion of rental
expense representative
of interest factor
(assumed to be one-third) 19,900 23,400 15,100 19,891 19,426 19,094
Total earnings, as
adjusted $638,818 $593,644 $193,168 $326,405 $ 29,571 $216,244
Fixed charges:
Interest charged to
operations $171,964 $198,743 $133,716 $191,344 $192,962 $183,035
Capitalized interest 28,793 25,475 10,759 31,740 12,778 5,291
Portion of rental expense
representative of
interest factor
(assumed to be one-third) 19,900 23,400 15,100 19,891 19,426 19,094
Total fixed charges $220,657 $247,618 $159,575 $242,975 $225,166 $207,420
Ratio 2.90 2.40 1.21 1.34 -- 1.04
See accompanying footnote explanations.
E-12
<PAGE>
Exhibit 12 (continued)
JAMES RIVER CORPORATION of Virginia
and Subsidiaries
NOTES
(a) In computing the ratio of earnings to fixed charges, earnings consist of
income before income taxes, minority interests, and fixed charges
excluding capitalized interest. Fixed charges consist of interest
expense, capitalized interest, and that portion of rental expense
(one-third) deemed representative of the interest factor. Earnings
and fixed charges also include the Company's proportionate share of such
amounts for unconsolidated affiliates which owned 50% or more and
distributed income from less than 50% owned affiliates.
(b) During 1990, the Company changed its fiscal year from one ending on the
last Sunday in April to one ending on the last Sunday in December.
During this period, the Company initiated an operational restructuring
program designed to focus the Company's operations on those businesses
in which it commands a substantial market share and which are less
cyclical. In connection with that program, the Company recorded a $200
million pretax charge which has been included in the calculation of the
ratio of earnings to fixed charges for this period.
(c) During 1992, the Company initiated a productivity enhancement program
and recorded a $112 million pretax charge which has been included in the
calculation of the ratio of earnings to fixed charges for this year.
(d) For the year ended December 27, 1992, earnings were inadequate to cover
fixed charges. The amount of the deficiency was $195.6 million.
</TABLE>
E-12
Exhibit 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS -- 1993 COMPARED WITH 1992
Overview
James River's consolidated net sales of $4.6 billion in 1993 were 1.6% lower
than 1992 net sales of $4.7 billion. The company reported a net loss of $0.3
million in 1993, or $.40 per share after preferred dividends. The 1993 loss
included a charge of $11.0 million, or $.13 per share, representing the
cumulative increase in the deferred tax liability resulting from the 1%
increase in the statutory federal income tax rate. The 1993 reported results
also included interest income of $14.3 million ($8.7 million net of tax
benefits, or $.11 per share) received in connection with the favorable
settlement of certain prior years' income tax returns, as well as a charge of
$2.2 million ($1.3 million net of tax benefits, or $.02 per share) on the
write-off of an investment. Excluding these nonrecurring or unusual items,
James River had net income of $3.3 million, or a loss of $.36 per share after
preferred stock dividends, in 1993.
James River reported a net loss of $427.3 million in 1992, or $5.55 per
share. The Company's 1992 results were impacted by the adoption of new
accounting standards for income taxes and for postretirement benefits other
than pensions, the implementation of a program to refinance $567 million of
long-term debt, and the adoption of a new restructuring program targeted at
the disposal or consolidation of certain less efficient facilities. The 1992
reported loss included charges for these nonrecurring or unusual items
consisting of (i) an after-tax net charge of $273.8 million, or $3.35 per
share, for the combined effects of changes in accounting resulting from the
adoption of the two new accounting pronouncements; (ii) an after-tax charge
of $31.4 million, or $.38 per share, on the early extinguishment of debt; and
(iii) a restructuring charge of $111.7 million ($71.4 million net of tax
benefits, or $.87 per share) associated with the 1992 restructuring program.
In addition, the Company recorded one-time environmental and other costs of
$31.0 million ($19.7 million net of tax benefits, or $$.25 per share) during
1992. Excluding these nonrecurring and unusual items, the Company had a net
loss of $31.0 million, or $.70 per share, in 1992.
James River adopted Statement of Financial Accounting Standards No. 106,
"Employers' Accounting of Postretirement Benefits Other Than Pensions" ("SFAS
106"), in the fourth quarter of 1992, effective as of the first day of that
year. The company elected full recognition of the transition liability upon
adoption, resulting in a one-time charge of $500 million ($309.7 million net
of tax benefits, or $3.79 per share). The Company also adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"), as of the beginning of 1992. The adoption of SFAS 109 resulted in a
one-time increase in net income of $35.9 million, or $.44 per share.
[Operating Income - Consumer Products bar chart which appears in the
margin is omitted here; see description in Appendix A to this Exhibit 13]
E-13
<PAGE>
The goal of the 1992 restructuring program was to reduce annual
operating expenses by $200 million, principally through the disposal and
consolidation of under-performing assets and other cost reduction and
productivity initiatives. During 1993, the Company sold, closed, or reduced
operations at several locations, as further described in Note 2 of Notes to
Consolidated Financial Statements, and achieved staffing reductions of 2,240.
The affected facilities generally represented smaller, higher cost, less
efficient operations and included plants from each of the Company's three
business segments. The majority of the business previously conducted at
these facilities has been transferred to other less than fully utilized James
River manufacturing sites, thereby increasing utilizations and reducing
overhead costs. However, while the Company realized significant benefits
from the restructuring efforts, weaknesses in pricing and continued
competitive conditions in many product lines partially offset these benefits.
James River continues to evaluate other asset rationalization opportunities
throughout the Company.
Operating earnings increased from a loss of $62.4 million in 1992
(including the $111.7 million restructuring charge) to income of $114.0 in
1993. Results for the Company's Consumer Products Business and its Food and
Consumer Packaging Business improved significantly compared to 1992; however,
losses in the Communications Papers Business increased slightly.
Selected Industry Segment Data
Year Ended December
(in millions) 1993 1992(a) 1991(a)
Net sales:
Consumer Products $2,358 $2,404 $2,395
Food and Consumer Packaging 1,569 1,565 1,561
Communications Papers 901 918 775
Intersegment eliminations (178) (159) (169)
Total net sales $4,650 $4,728 $4,562
Income (loss) from operations:
Consumer Products $111 $ 71 $129
Food and Consumer Packaging 104 89 142
Communications Papers (58) (55) 33
Restructuring charge (117)
General corporate expenses (43) (50) (60)
Income (loss) from operations 114 (62) 244
Interest expense 137 149 138
Other income 42 24 27
Income tax expense (benefit) 19 (65) 55
Net income (loss) before extraordinary
item and accounting changes 0 (122) 78
Extraordinary item, net of tax (31)
Cumulative effect of accounting changes,
net of taxes (274)
Net income (loss) $ 0 $(427) $ 78
(a) Certain amounts previously reported in the Food and Consumer Packaging
segment in 1992 and 1991 are now reflected in the Consumer Products
segment for all years.
Consumer Products Business
Net sales for the Consumer Products Business declined approximately 2%
compared to the prior year, while operating profits increased over 56%, from
$71 million in 1992 to $111.3 million in 1993. Volumes in the retail
business increased approximately 2% over the prior year, while retail tissue
posted modest improvements in net realizations. The Company's successful
rollout of new Quilted Northern(r) bathroom tissue and a new promotional
campaign for Brawny(r) paper towels increased market shares during the year.
In commercial tissue, while volume slightly trailed the prior year, net
pricing increased by approximately 5%. Volumes in the Dixie(r) commercial
business were level compared to the prior year; however, pricing continued to
decline, primarily due to downward pressures from falling bleached paperboard
prices. The Consumer Products Business made significant progress in reducing
costs, and staffing was reduced by approximately 700 employees during the
year.
Food and Consumer Packaging Business
Sales in the Food and Consumer Packaging Business remained level at $1.6
billion in both 1992 and 1993. Unit volume increases of approximately 6%
during 1993 were substantially offset by continuing declines in pricing.
Pricing remained under pressure throughout 1993, as food packaging customers
continued to reduce their base of packaging suppliers and to form long-term
strategic supplier relationships, while demanding margin concessions.
Operating profits of $104 million in 1993 increased 16% compared to $89
million in 1992, and operating margins improved. Increased operating profits
were attributable to both reduced costs and to the absence of the one-time
events that negatively affected the second half of 1992. These events
included the strike at certain Midwest converting plants, the extended
downtime taken in Kalamazoo, Michigan, to complete the rebuild of the K-1
machine, and the unusually high level of customer inventory balancing which
occurred at the end of 1992. Total staffing in the Food and Consumer
Packaging Business was reduced by over 450 employees during 1993 in
connection with the restructuring program. In addition, several plants were
closed or downsized, with production transferred to other facilities.
Average resin costs for 1993 were slightly lower than the prior year.
Production on the Kalamazoo coated recycled board machine, which started up
at the beginning of the year, increased gradually throughout the year. By the
end of 1993, this machine had reached initial targeted production levels.
[Operating Income - Food and Consumer Packaging bar chart which appears
in the margin is omitted here; see description in Appendix A to this Exhibit
13]
Communications Papers Business
Sales in the Communications Papers Business decreased from $918 million in
1992 to $901 million in 1993, while operating losses increased slightly from
$55 million to $58 million. The Communications Papers Business continued to
experience extremely difficult market conditions which have plagued the
industry and caused a steady decline in profitability since 1990. This
business has been hurt by significant levels of industry overcapacity and
reduced demand, resulting in an extremely competitive pricing environment.
During the first half of 1993, pricing increases were put in place in both
uncoated free sheet and coated groundwood papers. However, new industry
capacity, increasing competition from imports, and a lack of significant
improvement in worldwide demand resulted in an inability to sustain the
increases. As of the end of 1993, pricing levels for many of the Company's
grades had deteriorated to beginning-of-year levels. Pricing has declined by
over $360 per ton in xerographic papers, over $230 per ton in forms bond, and
over $140 per ton in coated groundwood papers, compared to peak levels
realized in the late 1980s. The Company's cost reduction efforts have
somewhat softened the impact of weakening prices, with staffing reduced by
over 950 employees during 1993. This business has also focused on upgrading
its product mix and targeting niche markets. Fiber supply costs in the
Pacific Northwest continued to be significantly higher than in other portions
of the U.S., due to reductions in the amount of federal forest land available
for harvest resulting from environmental pressures.
Interest Expense, Other Income, and Income Taxes
Gross interest costs declined by $19 million, from $161.9 million in 1992 to
$142.9 million in 1993. Net interest expense decreased by only $11.5
million, however, reflecting reduced levels of capitalized interest resulting
from declines in capital spending in 1993. The decreased gross interest
costs were principally the result of the Company's refinancing program,
described under "Liquidity and Capital Resources." As of December 26, 1993,
James River's weighted-average interest rate on total debt was 7.37%. Total
outstanding debt of $2.0 billion included $537 million of floating rate debt
and $1.5 billion of fixed rate debt. The Company's ratio of cash flow to
interest (defined as cash flow from operations plus interest expense, divided
by total interest cost) was 4.0 in 1993 compared to 2.9 in 1992.
Other income increased significantly, from $24.7 million in 1992 to
$42.1 million in 1993, principally due to $14.3 million of interest income
received in 1993 in connection with the favorable settlement of certain prior
years' income tax returns. Equity in earnings of affiliates decreased from
$10.2 million in 1992 to $7.8 million in 1993. Earnings of Jamont N.V.
("Jamont"), the Company's 43% owned European tissue joint venture, were
significantly below the prior year's, reflecting the effects of substantially
weaker tissue pricing resulting from recessionary economic conditions and
excess capacity in Europe. Earnings of Aracruz Celulose S.A. ("Aracruz")
were also below those of the prior year, reflecting the declines in worldwide
pulp prices. Further detail of the components of other income is included in
Note 4 of Notes to Consolidated Financial Statements.
The effective tax rate was 42.7% in 1993, excluding the cumulative
impact of the increase in the federal tax rate, compared to 34.6% in 1992.
The effective tax rate increased in 1993 principally due to the increased
relative size of nondeductible items. Further detail on income taxes is
included in Note 5 of Notes to Consolidated Financial Statements.
RESULTS OF OPERATIONS -- 1992 COMPARED WITH 1991
Overview
As of the beginning of 1992, James River terminated its 1990 restructuring
program. This program had provided for the divestiture of 29 mills,
including the Company's Specialty Papers Business. During 1991, the
operating results of the facilities to be divested and interest expense
attributable thereto were excluded from reported results and charged against
the accrued restructuring liability. At the termination of this program, 26
mills had been divested. The Company retained the Berlin and Groveton, New
Hampshire, communications papers mills and the Ashland, Wisconsin, recycled
tissue mill (collectively, the "Retained Operations"), which were unsold, as
well as its full 80% ownership interest in the Marathon, Ontario, pulp mill
("Marathon"), of which 30% had been held for sale. The Retained Operations
and Marathon were reconsolidated as of the beginning of 1992.
James River's reported net sales of $4.7 billion for the year ended
December 27, 1992, were approximately 4% higher than the sales of $4.6
billion reported in 1991; however, on a pro forma basis, reflecting the
reconsolidation of the Retained Operations and Marathon in 1991, sales
declined approximately 2%. The Company's 1992 net loss of $427.3 million, or
$5.55 per share, included net one-time charges totaling $396.3 million after
taxes, or $4.85 per share. These one-time charges are further described
above, under "Results of Operations -- 1993 Compared with 1992."
The Company reported net income of $78.3 million, or $.66 per share, in
1991. On a pro forma basis, assuming the reconsolidation of the Retained
Operations and Marathon and the adoptions of SFAS 106 and SFAS 109 prior to
the beginning of 1991, net income for 1991 would have been approximately $38
million, or $.16 per share. (See "Supplemental Pro Forma Financial
Information" on page 69 of this Annual Report.)
In addition to the one-time charges for the cumulative effect of the
adoptions of SFAS 106 and SFAS 109 in 1992, these new accounting
pronouncements also increased annual pretax costs. SFAS 106 increased 1992
pretax benefit expenses by approximately $27.7 million. SFAS 109 required
the Company to restate certain assets and liabilities acquired in prior
business combinations, resulting in an increase to property, plant, and
equipment of $173 million and to 1992 depreciation expense of $13 million.
James River's operating results for 1992 declined significantly from
those of 1991. The decline was reflected in decreases in operating results
for each of the Company's three businesses. Intense competition continued
unabated in retail and commercial towel and tissue markets, food packaging
markets, and uncoated free sheet and coated publications papers markets.
Excess industry capacity, coupled with recessionary pressures, exacerbated
competitive activity, depressing pricing throughout 1992. These decreases
continued trends identified in 1991 for both the Consumer Products Business
and the Communications Papers Business.
As 1992 and 1991 are not directly comparable due to the adoption of new
accounting standards and the reconsolidation of the Retained Operations and
Marathon in 1992, sales and operating profit comparisons by business segment
discussed herein are based on the supplemental pro forma financial
information included on page 69 of this Annual Report. This information
presents 1991 results on a pro forma basis, as though the Retained Operations
and Marathon were reconsolidated and the new accounting standards were
adopted in prior to the beginning of that year.
[Operating Income - Communications Papers bar chart which appears in the
margin is omitted here; see description in Appendix A to this Exhibit 13]
Consumer Products Business
Revenues for the Consumer Products Business remained level at $2.4 billion in
both 1991 and 1992. Operating profits of $71.0 million in 1992 declined 31%
from the $103.6 million reported on a pro forma basis in 1991. Similar to
the prior year, 1992 was characterized by very competitive markets,
particularly in retail towel and tissue, and recessionary pressures that were
experienced in all market channels. In addition, with declining pulp prices,
fully integrated tissue producers such as James River were at a competitive
disadvantage to producers who were less than fully integrated. Volume
declined in the second half of the year for James River's retail towel and
tissue products, in the face of heavy promotional spending and discounting by
competitors that was not fully matched by the Company. Promotional spending
by James River declined in 1992, resulting in lower selling and
administrative expenses. Inventories increased above target levels in the
fourth quarter of 1992 in connection with these volume declines, resulting in
higher than normal year-end curtailments of production. As 1992 closed,
however, volumes and market share were recovering and inventories had been
successfully brought back to normal levels. In the commercial tissue
business, volume increases were more than offset by downward pricing
pressures caused by excess industry capacity. Results for the Dixie(r) plate
and cup business were below 1991's, as the unusually cool and rainy summer
depressed sales in this business's strongest season.
[Current Ratio bar chart which appears in the margin is omitted here;
see description in Appendix A to this Exhibit 13]
Food and Consumer Packaging Business
Sales in 1992 of $1.6 billion in the Food and Consumer Packaging Business
were comparable to 1991's sales, while operating profit declined
approximately 30% from $128 million in 1991, on a pro forma basis, to $89
million in 1992. This business performed well in the first half of 1992,
with operating margins averaging over 8%; however, a combination of factors
adversely affected the second half of 1992, significantly reducing operating
margins. Packaging markets grew increasingly competitive in the latter half
of 1992, as food processors searched for cost reductions through the
consolidation of supplier relationships resulting in reduced margins for this
business. In addition, this business experienced severe levels of customer
inventory corrections late in 1992, reducing year-end sales and causing
higher than normal curtailments of production. Increases in resin costs for
flexible packaging, which the Company was unable to pass through in end-
product pricing, negatively influenced earnings as well. This business was
also impacted by a strike during July and August of 1992 at certain Midwest
converting plants and by downtime taken in October and November associated
with the complete rebuild of the Kalamazoo, Michigan, coated recycled board
machine. This rebuild doubled the capacity of this machine from 100,000 to
200,000 tons per year.
Communications Papers Business
Sales for the Communications Papers Business decreased from $972 million in
1991 to $918 million in 1992, while operating losses increased from $12
million on a pro forma basis in 1991 to $55 million in 1992. The
Communications Papers Business was hurt by the substantial levels of industry
overcapacity in printing and business papers, combined with recessionary
conditions which reduced demand for these products. These conditions
resulted in unprecedented declines in pricing, with pricing for uncoated free
sheet reaching a 16-year low during the fourth quarter of 1992. Costs for
wood chips in the Pacific Northwest were similar to those of 1991.
Interest Expense, Other Income, and Income Taxes
Net interest expense increased to $149.1 million in 1992 from $138 million in
1991; however, total interest costs decreased to $161.9 million from $169.7
million for the same periods. The increase in net interest expense reflected
decreases in interest costs charged directly against the accrued
restructuring liability from $17.8 million in 1991 (including $9.4 million
related to the Retained Operations and Marathon) to $0.7 million in 1992. In
addition, capitalized interest decreased slightly from $13.9 million in 1991
to $12.1 million in 1992. Lower total interest costs in 1992 resulted
primarily from reductions in interest rates on floating rate debt. As of
December 27, 1992, James River's long-term debt of $2.4 billion included
approximately $800 million of floating rate debt and $1.6 billion of fixed
rate debt. The company's ratio of cash flow to interest was 2.9 in 1992
compared to 2.5 in 1991.
Other income decreased slightly from $26.8 million in 1991 to $24.7
million in 1992. Increases in equity in earnings of affiliates from $6.4
million in 1991 to $10.2 million in 1992 were offset by increases in foreign
currency exchange losses from $5 million in 1991 to $9.6 million in 1992.
Equity in earnings of affiliates for 1991 reflected the Company's 80% share
of the losses of Marathon. These losses were not reflected in other income
in 1992, as Marathon was reconsolidated as of the beginning of that year.
The Company's equity in earnings of Jamont decreased slightly, reflecting
softening European market conditions. Equity in earnings of Aracruz also
decreased in 1992 compared to 1991, because of the inclusion of large
currency gains in Aracruz's 1991 earnings.
James River's effective tax rate decreased from 41.0% in 1991 to 34.6%
in 1992. This decrease resulted from a combination of the adoption of SFAS
109, the change from a pretax income position to a pretax loss position, and
increased permanent differences in connection with the 1992 restructuring
charge.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities
During 1993, cash provided by operations increased over 40%, from $313
million in 1992 to $441 million in 1993. Cash provided by operations
exceeded the total of capital spending and common and preferred dividends by
$28 million in 1993.
Investing Activities
Capital expenditures totaled $331 million in 1993, a decrease of
approximately 30% compared with $470 million of capital expenditures in 1992.
Capital spending declined due to the completion of several of the Company's
large capital projects during 1992 and to internal restraints placed on new
capital spending in order to improve cash flow. During 1992, James River
completed its $120 million rebuild of the Kalamazoo, Michigan, coated
recycled board machine, its $71 million deinking facility at the Halsey,
Oregon, tissue mill, and its new Dixie(r) plate plant in Bowling Green,
Kentucky. Capital spending in 1993 included approximately $125 million in
the Consumer Products Business, $64 million in the Food and Consumer
Packaging Business, $138 million in the Communications Papers Business, and
$4 million in other expenditures. Spending in 1993 in the Communications
Papers Business included $67 million related to the rebuild of the chemical
recovery unit at the Berlin, New Hampshire, mill. This project represents
the completion of the Company's seven-year program to rebuild or replace
recovery boilers at each of its chemical pulping facilities. It is estimated
that capital spending in 1994 will remain at levels similar to 1993, based on
a continued focus by management on capital spending and due to the completion
of all major projects for chemical recovery unit rebuilds and capacity
expansions. Contractual capital commitments as of December 26, 1993, were
not material.
[Capital Expenditures and Cash Flow from Operations bar chart which
appears in the margin is omitted here; see description in Appendix A to this
Exhibit 13]
In May 1993, the Company received notice, under an existing put and call
agreement, that Occidental Forest Inc. would sell its 77% ownership interest
in Diamond Occidental Forest Inc. ("Diamond") to James River for $198
million. At the put notice date, James River held 23% of Diamond, which
owned in excess of 820,000 acres of timberlands, principally in New England
and the Southeast. The Company consolidated Diamond effective as of the put
notice date. In November 1993, James River paid $193 million (net of $5
million in cash received from Diamond) for the remaining shares of Diamond.
James River realized a total of approximately $178 million in cash
during 1993 from the sale of assets and from the redemption of preferred
stock. A total of $131 million in proceeds were received during 1993 in
connection with the sales of the Company's Groveton, New Hampshire,
communications papers mill, its Pepperell, Massachusetts, specialty papers
mill, and over 300,000 acres of Diamond timberlands. The Company received
approximately $47 million on the redemption of the Specialty Coatings
International, Inc. preferred stock, which had originally been received in
1991 in conjunction with James River's sale of its Specialty Papers Business.
Financing Activities
During 1993, James River reduced its total outstanding debt by $326 million,
from $2.4 billion as of December 27, 1992, to $2.0 billion as of December 26,
1993, utilizing a combination of excess cash and cash provided by operations.
Borrowings during 1993 totaled $456 million and included $250 million of 6.7%
ten-year notes and $150 million of 7.75% thirty-year debentures. In
addition, the Company acquired debt of approximately $27 million in
connection with the consolidation of Diamond. Approximately $809 million of
debt was repaid, including payments pursuant to scheduled maturities of $123
million, reductions in outstanding levels of borrowings supported by
revolving credit facilities of $288 million, $307 million of early
retirements pursuant to the 1992 refinancing program, and $91 million of
other refinancings.
[Total Capitalization bar chart which appears in the margin is omitted
here; see description in Appendix A to this Exhibit 13]
During the fourth quarter of 1992, the Company commenced a refinancing
program pursuant to which a total of $567 million principal amount of long-
term debt was refinanced to take advantage of reduced long-term interest
rates. Under this program, approximately $260 million of refinancings were
completed in 1992 and the remaining $307 million were completed by the end of
April 1993. The Company accrued the full amount of the extraordinary loss on
the early extinguishment of debt in 1992.
The Company's most restrictive covenants contain limitations on
borrowings and require the maintenance of a minimum amount of net worth. As
of December 26, 1993, under the most restrictive provisions of the Company's
debt agreements, the Company had additional borrowing capacity in excess of
$400 million and net worth in excess of the minimum requirements of
approximately $300 million.
The Company's ratios of total debt to total capital decreased from 52.8%
as of the end of 1992 to 50.9% as of the end of 1993. The 1993 ratio
decreased principally due to the reduction in total debt. The Company
defines total capitalization as the sum of current and long-term debt and
equity accounts.
During 1993, the Company's working capital decreased by approximately
$268 million. Current assets decreased by approximately $415 million,
including a decrease in cash and short-term securities of $352 million, from
$375 million as of the end of 1992 to a more normal level of $24 million as
of the end of 1993. As of December 27, 1992, cash was increased
significantly above normal levels in conjunction with the refinancing
program. The excess cash was used to reduce debt during 1993. Current
liabilities decreased by $147 million, including a decrease in the current
portion of long-term debt of $115 million. The current ratio decreased to
1.64 as of December 26, 1993, from 1.83 as of the prior year end.
The Company believes that its financial resources are adequate to
support its capital needs and commitments. James River and its subsidiaries
currently have revolving credit facilities which provide for borrowings of up
to approximately $800 million at competitive rates for general corporate
purposes (see Note 12 of Notes to Consolidated Financial Statements). The
Company also has a $500 million commercial paper program which is supported
by the revolving credit facilities. In addition, James River has agreements
with several banks under which it may borrow funds on an uncommitted basis at
below-prime rates. Such funds, although uncommitted, continue to be
available to the Company. On December 26, 1993, the Company had total
borrowings of $287 million which were supported by the revolving credit
facilities, including $33 million outstanding under such facilities, $151
million of commercial paper, and $103 of short-term bank borrowings.
During 1993, James River entered into foreign currency contracts that
hedge a portion of the foreign currency exposure of its investment in Jamont.
These agreements are described in Note 8 of Notes to Consolidated Financial
Statements.
The Company's debt ratings are investment grade. In May 1993, Standard
& Poor's downgraded the Company's senior debt ratings from BBB+ to BBB and
its preferred stock ratings from BBB to BBB-, while affirming the Company's
A-2 commercial paper rating. Simultaneously, Standard & Poor's removed James
River from CreditWatch, on which the Company had been placed in January 1993;
however, they maintained a negative rating outlook.
Cash dividends on common stock were declared at an annual rate of $.60
per share during the year. The Company's historical dividend policy is to
pay 20% of earnings per share to its common shareholders. Although the
depressed earnings have caused dividends to exceed that rate for the past
four years, the Company's financial condition has not warranted a reduction
in dividends in response to conditions which management believes to be
temporary.
Put and Call Agreements
As of December 26, 1993, James River had put and call arrangements in
connection with its investments in Jamont and the Naheola Cogeneration
Limited Partnership. These agreements, which are more fully described in
Note 16 of Notes to Consolidated Financial Statements, include options
pursuant to which the Company could purchase or be required to purchase
additional equity interests at various times in the future.
Under an agreement with Rayne Holdings Inc. ("Rayne"), which owns
approximately 43% of Jamont, James River may purchase Rayne's interest in
Jamont (the "Rayne Shares") at an escalating, formula-based price at any time
until June 15, 1996, and again between September 1, 1996, and June 15, 1998.
Rayne may put 80% of the Rayne Shares to James River during the summer of
1996 and the remaining 20% of such shares during the summer of 1998, at a
proportionate amount of the then formula-based price. James River also has
a put and call agreement with EuroPaper Inc. ("EuroPaper"), which owns the
remaining 14% interest in Jamont. EuroPaper may put their Jamont shares to
James River in May 1996, and James River may call these shares in August
1996, each at a fixed price of 1.04 billion French francs ($180.6 million
using exchange rates in effect as of December 26, 1993). The current
recessionary conditions in Europe have significantly reduced industry growth
rates and industry overcapacity has developed, resulting in a very
competitive pricing environment. While these current conditions create an
element of uncertainty, management believes that the European economy will
recover and that, by the defined put exercise dates, the value of Jamont will
not be significantly less than the defined purchase prices at such dates,
before considering currency risk. These options are subject to currency risk
because the underlying assets are reported in various European currencies;
however, hedge accounting is not available to diminish such risk on the Rayne
option as it is denominated in U.S. dollars.
James River also has put and call options with respect to its Alabama
joint venture, Naheola Cogeneration Limited Partnership. These options are at
market value, and management believes that the conditions under which James
River may be required to purchase its partner's interest are unlikely to
occur.
[Total Assets bar chart which appears in the margin is omitted here; see
description in Appendix A to this Exhibit 13]
Environmental Matters
Like its competitors, James River is subject to extensive regulation by
various federal, state, provincial, and local agencies concerning compliance
with environmental control statutes and regulations. These regulations
impose limitations on the discharge of materials into the environment,
including effluent and emission limitations, as well as require the Company
to obtain and operate in compliance with the conditions of permits and other
governmental authorizations.
James River has made and will continue to make substantial capital
investments and operating expenditures, as well as production adjustments, in
connection with compliance with environmental laws and regulations, including
the Clean Air Act Amendments of 1990 (the "Clean Air Act"), the Clean Water
Act, the Resource Conservation and Recovery Act, and others. During 1993,
capital expenditures totaling approximately $58 million were made by James
River for pollution control facilities and equipment. Estimates of costs for
future environmental compliance are necessarily imprecise due to, among other
things, the continuing emergence of new environmental laws and regulations
and environmental control or process technology developments.
In December 1993, the U.S. Environmental Protection Agency ("EPA")
published draft rules, informally referred to as the "cluster rules," which
contain proposed revisions to effluent guidelines under the Clean Water Act
in conjunction with new regulations relating to the discharge of certain
substances under the Clean Air Act. The final rules are scheduled to be
issued in late 1995, with a nominal compliance date of 1998. The new rules
may require significant changes in the pulping and/or bleaching process
presently used in some U.S. pulp mills, including several of James River's
mills, necessitating additional capital expenditures to achieve compliance by
approximately 1998. Based on preliminary estimates, the Company anticipates
that such capital expenditures could be at least $300 million for James
River. This estimate could change, depending on several factors, including,
among others, the ability of the Company and other pulp manufacturers to
convince the EPA that the proposed regulations are unnecessarily complex,
burdensome, and environmentally unjustified; the outcome of potential
administrative and judicial challenges; new developments in control and
process technology; and inflation.
[Working Capital bar chart which appears in the margin is omitted here;
see description in Appendix A to this Exhibit 13]
In addition, James River has been identified as a potentially
responsible party ("PRP") and is involved in remedial investigations and
actions under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, or similar state laws regarding the past
disposal of wastes at approximately 40 sites in the United States. Such
statutes may impose joint and several liability for the costs of remedial
investigations and actions on the entities that arranged for disposal of the
wastes, the waste generators, the waste transporters, and the owners and
operators of waste sites. Responsible parties (or any one of them, including
the Company) may be required to bear all of such costs regardless of fault,
legality of the original disposal, or ownership of the disposal site. The
Company has settled or resolved actions related to certain sites at minimal
cost and has determined that it has no responsibility with regard to certain
other sites for which it has received notification. In most cases, James
River is one of many PRP's, and its relative contributions of waste materials
have been minor. At the Solvent Recovery Services of New England site in
Connecticut, James River has been notified by the EPA that, based on records
available at this time, the Company appears to be one of the largest
"potentially responsible parties." Note 16 of Notes to Consolidated
Financial Statements, which should be read in conjunction herewith, provides
information on the Company's accrued remediation liabilities. As is the case
with most manufacturing and many other entities, there can be no assurance
that the Company will not be named as a PRP at additional sites in the future
or that the cost associated with such additional sites would not be material.
[Annual Rate of Cash Dividends per Common Share bar chart which appears
in the margin is omitted here; see description in Appendix A to this Exhibit
13]
Effects of Changing Prices
In the opinion of management, recognizing the effects of restating assets to
reflect the impact of inflation would not have a material impact on reported
earnings for the fiscal periods presented. The Company utilizes the last-in,
first-out inventory valuation method for substantially all raw materials and
finished goods. This method generally matches the most current costs of
manufactured goods to current revenues and thus tends to reflect the impact
of inflation in cost of goods sold. Furthermore, as a result of the
Company's capital program and acquisitions, approximately 75% of the
Company's gross fixed assets have been recorded at amounts equivalent to fair
market values or current cost since 1986. Accordingly, the Company believes
that any increase in depreciation expense that would result from restating
fixed assets to current cost would not be material.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Shareholders of
James River Corporation of Virginia:
We have audited the accompanying consolidated balance sheets of James River
Corporation of Virginia and Subsidiaries as of December 26, 1993 and December
27, 1992, and the related consolidated statements of operations, cash flows,
and changes in capital accounts for each of the three fiscal years in the
period ended December 26, 1993. These financial statements are the
responsibility of the management of James River Corporation of Virginia. 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, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
James River Corporation of Virginia and Subsidiaries as of December 26, 1993
and December 27, 1992, and the consolidated results of their operations and
their cash flows for each of the three fiscal years in the period ended
December 26, 1993, in conformity with generally accepted accounting
principles.
As discussed in Notes 5 and 7 to the consolidated financial statements,
effective as of the beginning of 1992, the Company changed its method of
accounting for income taxes to conform with Statement of Financial Accounting
Standards No. 109 and its method of accounting for postretirement benefits
other than pensions to conform with Statement of Financial Accounting
Standards No. 106.
COOPERS & LYBRAND
Richmond, Virginia
January 25, 1994
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
James River Corporation of Virginia and Subsidiaries
52 Weeks 52 Weeks 52 Weeks
Ended Ended Ended
(in thousands, except December 26, December 27, December 29,
per share amounts) 1993 1992 1991
Net sales $4,650,195 $4,728,179 $4,561,726
Cost of goods sold 3,858,586 3,976,714 3,551,875
Selling and administrative
expenses 677,586 702,145 765,871
Restructuring charge 111,720
Income (loss) from
operations 114,023 (62,400) 243,980
Interest expense 137,594 149,087 138,004
Other income, net 42,133 24,691 26,779
Income (loss) before income
taxes, extraordinary
item, and the cumulative
effect of accounting
changes 18,562 (186,796) 132,755
Income tax expense (benefit):
Tax on current income or
loss 7,927 (64,721) 54,464
Effect of tax rate change 10,981
Total income tax expense
(benefit) 18,908 (64,721) 54,464
Net income (loss) before
extraordinary item and
the cumulative effect of
accounting changes (346) (122,075) 78,291
Extraordinary loss on early
extinguishment of debt,
net of income tax benefit
of $19,227 (31,423)
Cumulative effect of changes
in accounting principles:
Change in accounting for
income taxes 35,923
Change in accounting for
postretirement benefits
other than pensions, net
of income tax benefit of
$189,534 (309,765)
Net income (loss) $ (346) $ (427,340) $ 78,291
Preferred dividend
requirements (32,822) (26,494) (24,613)
Net income (loss)
applicable to common
shares $ (33,168) $ (453,834) $ 53,678
Net income (loss) per common
share and common share
equivalent:
Before extraordinary item
and the cumulative effect
of accounting changes $(.40) $(1.82) $.66
Extraordinary loss on early
extinguishment of debt (.38)
Cumulative effect of change
in accounting for income
taxes .44
Cumulative effect of change
in accounting for
postretirement benefits
other than pensions (3.79)
Net income (loss) per
share $(.40) $(5.55) $.66
Weighted-average number of
common shares and common
share equivalents 81,915 81,756 81,871
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
CONSOLIDATED BALANCE SHEETS
James River Corporation of Virginia and Subsidiaries
December 26, December 27,
(in thousands) 1993 1992
ASSETS
Current assets:
Cash and short-term securities $ 23,620 $ 375,492
Accounts receivable 422,894 414,773
Inventories 666,464 686,704
Prepaid expenses and other
current assets 22,939 39,818
Deferred income taxes 83,538 101,529
Net assets held for sale 62,868 78,850
Total current assets 1,282,323 1,697,166
Property, plant, and equipment:
Land and improvements 147,805 149,328
Buildings 622,509 594,175
Machinery and equipment 4,364,416 4,180,919
Construction in progress 119,431 246,632
5,254,161 5,171,054
Accumulated depreciation (1,829,267) (1,668,245)
3,424,894 3,502,809
Timber and timberlands, net 146,598
Net property, plant, and
equipment 3,571,492 3,502,809
Investments in affiliates 519,448 587,756
Other assets 324,724 390,576
Goodwill 153,315 158,029
Total assets $5,851,302 $6,336,336
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 616,192 $ 604,767
Income taxes payable 4,463 3,650
Current portion of long-term debt 97,287 212,734
Accrued restructuring liability 63,134 107,066
Total current liabilities 781,076 928,217
Long-term debt 1,942,836 2,153,868
Accrued postretirement benefits
other than pensions 541,823 514,016
Other long-term liabilities 186,965 191,371
Deferred income taxes 430,421 435,202
Total liabilities 3,883,121 4,222,674
Shareholders' equity:
Preferred stock 454,108 454,348
Common stock, $.10 par value;
shares outstanding,
December 1993-81,628
and December 1992-81,578 8,163 8,158
Additional paid-in capital 1,219,043 1,217,859
Retained earnings 286,867 433,297
Total shareholders' equity 1,968,181 2,113,662
Total liabilities and
shareholders' equity $5,851,302 $6,336,336
The accompanying notes are an integral part
of the consolidated financial statements
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
James River Corporation of Virginia and Subsidiaries
52 Weeks 52 Weeks 52 Weeks
Ended Ended Ended
December 26, December 27, December 29,
(in thousands) 1993 1992 1991
Cash provided by (used for)
operating activities:
Net income (loss) $ (346) $(427,340) $ 78,291
Items not affecting cash:
Extraordinary loss on early
extinguishment of debt, net
of income tax benefit 31,423
Cumulative effect of change in
accounting for income taxes (35,923)
Cumulative effect of change in
accounting for postretirement
benefits other than pensions,
net of income tax benefit 309,765
Depreciation expense and cost
of timber harvested 358,431 356,448 291,601
Deferred income tax provision
(benefit) 11,856 (75,726) 14,492
Restructuring charge 111,720
Undistributed earnings of
unconsolidated affiliates (6,582) (9,872) (6,178)
Amortization and other 15,508 23,313 10,020
Change in current assets and
liabilities, net of effects of
acquisitions and dispositions:
Accounts receivable (4,132) (8,439) 6,753
Inventories 13,796 9,995 46,879
Prepaid expenses and other
current assets 13,204 16,744 (3,153)
Net assets held for sale 1,740 3,684 26,450
Accounts payable and accrued
liabilities 25,513 34,610 (17,994)
Income taxes payable 16,929 17,282 (9,012)
Accrued restructuring
liability (42,816) (30,513) (62,561)
Retirement benefit funding (in
excess of) less than expense 34,688 (6,811) (57,118)
Other, net 2,787 (7,396) (29,159)
Cash provided by operating
activities 440,576 312,964 289,311
Cash provided by (used for)
investing activities:
Expenditures for property, plant,
and equipment (331,065) (469,681) (467,474)
Cash paid for acquisitions, net (192,736) (31,734) (26,506)
Cash received from sale of
assets 130,650 21,844 293,808
Cash received on redemption of
SCI preferred stock 47,050
Other, net 12,116 4,723 12,833
Cash used for investing
activities (333,985) (474,848) (187,339)
Cash provided by (used for)
financing activities:
Additions to long-term debt 456,220 948,830 399,450
Payments of long-term debt (808,848) (493,101) (381,148)
Premiums paid on early
extinguishment of debt (24,200) (26,450)
Preferred stock issued, net of
issuance costs 96,566
Common and preferred stock cash
dividends paid (81,713) (73,517) (69,364)
Other, net 78 (36) 2,251
Cash provided by (used for)
financing activities (458,463) 452,292 (48,811)
Increase (decrease) in cash and
short-term securities (351,872) 290,408 53,161
Cash and short-term securities,
beginning of year 375,492 85,084 31,923
Cash and short-term securities,
end of year $ 23,620 $ 375,492 $ 85,084
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL ACCOUNTS
James River Corporation of Virginia and Subsidiaries
52 Weeks 52 Weeks 52 Weeks
Ended Ended Ended
December 26, December 27, December 29,
(in thousands) 1993 1992 1991
Preferred stock
Balance, beginning of year $ 454,348 $ 354,588 $ 354,828
Issuance of Series O
preferred stock 100,000
Preferred stock sinking
fund requirements (240) (240) (240)
Balance, end of year $ 454,108 $ 454,348 $ 354,588
Common shareholders' equity
Common stock:
Balance, beginning of year $ 8,158 $ 8,150 $ 8,130
Exercise of stock options
and awards 5 8 20
Balance, end of year 8,163 8,158 8,150
Additional paid-in capital:
Balance, beginning of year 1,217,859 1,219,997 1,216,340
Exercise of stock options
and awards 1,229 1,296 3,657
Preferred stock issuance
costs (45) (3,434)
Balance, end of year 1,219,043 1,217,859 1,219,997
Retained earnings:
Balance, beginning of year 433,297 992,651 987,775
Net income (loss) (346) (427,340) 78,291
Common stock cash
dividends declared (48,963) (48,942) (44,774)
Preferred stock cash
dividends declared (32,818) (26,583) (24,610)
Change in equity component
of minimum pension
liability (6,768) (21,011) 6,104
Foreign currency
translation (57,535) (35,478) (10,135)
Balance, end of year 286,867 433,297 992,651
Common shareholders'
equity, end of year $1,514,073 $1,659,314 $2,220,798
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
Note 1. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements present the operating results and
financial position of James River Corporation of Virginia and its majority
owned subsidiaries ("James River" or the "Company"). Significant
intercompany balances and transactions have been eliminated. Investments in
unconsolidated affiliates which are at least 20% owned are accounted for
using the equity method and are stated at cost plus the Company's share of
undistributed earnings and foreign currency translation adjustments, as
applicable, since acquisition.
Fiscal Year
James River's fiscal year includes the 52 or 53 weeks ending on the last
Sunday in December. The years ended December 26, 1993, December 27, 1992,
and December 29, 1991 each included 52 weeks. Certain foreign affiliates
have been included on the basis of closing dates which lag the Company's
fiscal year end by one month.
Cash and Short-Term Securities
The Company invests excess cash in marketable securities, including
commercial paper, government repurchase agreements, and time deposits, with
original maturities of three months or less.
Inventories
Inventories are stated at the lower of cost or market and include the cost of
materials, labor, and manufacturing overhead. The last-in, first-out cost
flow assumption is used for valuing substantially all domestic inventories
other than stores and supplies. Other inventories are valued using
first-in, first-out or average cost assumptions.
Net Assets Held for Sale
Net assets held for sale represent total assets, less liabilities of
operations to be divested or phased out by the Company as part of its
restructuring programs.
Property, Plant, and Equipment
Property, plant, and equipment is stated at cost, less accumulated
depreciation. Expenditures for improvements which increase asset values or
extend useful lives are capitalized. Maintenance and repair costs are
expensed as incurred. For financial reporting purposes, depreciation is
computed using the straight-line method over the estimated useful lives of
the respective assets, which range from 20 to 45 years for buildings and 5 to
20 years for machinery and equipment. For income tax purposes, depreciation
is calculated using accelerated methods. Certain assets are depreciated
using composite depreciation methods; accordingly, no gain or loss is
recognized on partial sales or retirements of these assets.
Timber and Timberlands
Timber and timberlands are stated at cost, less accumulated cost of timber
harvested. Cost of timber harvested is recorded as timber is cut at rates
which are determined annually based on the relationship of unamortized timber
cost to the estimated volume of recoverable timber.
Intangible Assets
The excess of the purchase price over the fair value of identifiable net
assets of acquired companies is allocated to goodwill and amortized over 40
years. Goodwill is presented net of accumulated amortization of $38.6
million as of December 26, 1993 and $33.9 million as of December 27, 1992.
Differences between the Company's carrying value of investments in
unconsolidated affiliates and its share of the underlying net assets of such
affiliates are amortized over periods of up to 40 years.
Landfill Closure Costs
The Company accrues for estimated landfill closure costs over the periods
that benefit from the use of the landfills. Accrued landfill closure
liabilities totaled $13.8 million as of December 26, 1993 and $13.9 million
as of December 27, 1992.
Interest Costs
The Company capitalizes interest costs as part of the cost of constructing
certain facilities and equipment. Total interest costs incurred, amounts
capitalized in fixed asset accounts or charged against the restructuring
liability, and interest paid were as follows:
(in thousands) 1993 1992 1991
Total interest costs $142,885 $161,865 $169,744
Interest capitalized (5,291) (12,094) (13,948)
Interest charged against accrued
restructuring liability (684) (17,792)
Net interest expense $137,594 $149,087 $138,004
Interest paid $151,563 $171,089 $168,815
Research and Development
Research and development expenditures are expensed as incurred. Direct and
readily identifiable indirect research and development costs totaled $41.8
million in 1993, $43.8 million in 1992, and $45.9 million in 1991.
Income Taxes
Effective as of the first day of 1992, James River adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109"), and reported the cumulative effect of this change in
accounting principle in the consolidated statement of operations. SFAS 109
requires recognition of deferred tax liabilities and assets for the expected
future tax consequences of temporary differences and income tax credits.
Deferred tax liabilities and assets are determined based on the differences
between the financial and tax bases using enacted tax rates in effect for the
year in which such differences are expected to reverse. The effect of a
change in tax rates on deferred tax liabilities and assets is recognized in
net income in the period in which the tax rate change is enacted.
Foreign Currency Translation
The accounts of most foreign subsidiaries and affiliates are measured using
local currency as the functional currency. For those entities, assets and
liabilities are translated into U.S. dollars at period-end exchange rates,
and income and expense accounts are translated at average monthly exchange
rates. Net exchange gains or losses resulting from such translation are
excluded from net earnings and accumulated as a separate component of
retained earnings. Gains and losses from foreign currency transactions are
included in other income. The U.S. dollar is used as the functional currency
for subsidiaries and affiliates operating in highly inflationary economies,
for which both translation adjustments and gains and losses on foreign
currency transactions are included in other income.
Hedge Agreements
The Company periodically enters into foreign currency contracts and interest
rate swap agreements to manage the risk from exchange rate fluctuations and
interest rate exposure. Translation gains and losses on hedges of net
investments are deferred and accumulated in the foreign currency translation
component of shareholders' equity. Gains and losses on interest rate swaps
are recognized in the results of operations as incurred.
Net Income (Loss) Per Common Share and Common Share Equivalent
Net income (loss) per common share is computed based on the weighted-average
number of common shares and dilutive common share equivalents outstanding
during the period. Net income (loss) used in these computations is reduced
by preferred dividend requirements. Fully diluted earnings per share are
considered to be equal to primary earnings per share in all periods presented
because the assumed conversion of potentially dilutive securities which are
not common share equivalents was either not dilutive or resulted in
immaterial dilution.
Reclassifications
Certain amounts in the prior years' financial statements and supporting
footnote disclosures have been reclassified to conform to the current year's
presentation.
<PAGE>
Note 2. Restructuring Programs
1992 Program
In December 1992, James River recorded a $111.7 million restructuring charge
($71.4 million net of tax benefits, or $.87 per share) in connection with the
implementation of its 1992 restructuring program. This restructuring charge
covers the costs of a productivity enhancement plan which includes the
disposal and consolidation of certain under-performing operations and assets,
related severance expenses, and organizational streamlining.
During 1993, as part of this program, James River sold its Groveton, New
Hampshire, communications papers mill. In addition, several other facilities
have been closed or operations reduced. Operations which were closed
included the Williamsport, Pennsylvania, party goods facility, the Sunnyside,
Washington, flexible packaging plant, the Modesto, California, folding carton
plant, and the Minerva, Ohio, food-wrap plant, while operations at the
Dayton, Ohio, flexible packaging plant have been reduced. The majority of
the products previously manufactured at these facilities has been relocated
to other James River plants.
1990 Program
In August 1990, the Company adopted a restructuring program designed to
refocus the Company. The program provided for the divestiture of 29 mills,
including the Company's Specialty Papers Business. During 1991, the
operating results of those operations which were to be divested and interest
expense attributable to such facilities were charged against the accrued
restructuring liability.
In February 1992, James River announced the termination of the 1990
restructuring program, as it was substantially complete. The Company also
announced that it would retain the Berlin/Gorham and Groveton, New Hampshire,
communications papers mills and the Ashland, Wisconsin, recycled tissue mill
(collectively, the "Retained Operations"), which were unsold, as well as its
full 80% ownership interest in the Marathon, Ontario, pulp mill ("Marathon"),
of which 30% had been held for sale. The Retained Operations and Marathon
were reconsolidated as of the beginning of 1992.
Pro forma results for 1991, adjusted to reflect the consolidation of the
Retained Operations and Marathon, are presented under the heading
Supplemental Pro Forma Financial Information, herein.
<PAGE>
Note 3. Acquisitions, Dispositions, and Related Transactions
1993
In early 1993, the Company sold its Pepperell, Massachusetts, specialty
papers mill to Merrimac Paper Company. In March 1993, the Company received
approximately $47 million in cash in connection with the redemption of its
shares of Specialty Coatings International, Inc. ("SCI") preferred stock.
James River originally received the SCI preferred stock in April 1991 as part
of the consideration for the sale of the Company's Specialty Papers Business,
as discussed below. The proceeds represented the then-current face value of
the preferred stock, as previously adjusted based on SCI's operating results.
In April 1993, the Company completed the sale of its Groveton, New Hampshire,
communications papers mill to Wausau Paper Mills Company pursuant to the 1992
restructuring program. In September 1993, the Company completed the sale of
its 49% interest in Fabrica de Papel, a Mexican tissue producer.
In May 1993, the Company received notice, under an existing put and call
agreement, that Occidental Forest Inc. ("OFI") would sell its 77% ownership
in Diamond Occidental Forest Inc. ("Diamond") to James River for $198
million. At the time of the notice, James River owned 23% of Diamond. James
River consolidated Diamond concurrent with the receipt of the put exercise
notice from OFI. In October 1993, Diamond completed the sale of more than
300,000 acres of timberlands to the Hancock Timber Resource Group. Proceeds
from this and other Diamond land sales during 1993, which totaled
approximately $100 million, were applied to James River's purchase of the
remaining interest in Diamond. This purchase, which included approximately
500,000 acres of timberlands located principally in the Northeast and the
Southeast, was completed in November 1993.
1992
In March 1992, as of part of its 1990 restructuring program, James River
completed the sale of the assets of its South Glens Falls, New York, tissue
mill.
In September 1992, James River acquired the paper products business of
The Mennen Company; this business produces a premium line of party goods.
1991
In April 1991, James River completed the sale of the assets of its Specialty
Papers Business to SCI. The transaction involved the sale of 16 mills and
the lease of another five mills. In consideration for the assets sold, James
River received approximately $271 million in cash and $52 million face value
of exchangeable preferred stock. In August 1991, James River sold the assets
of its carbonizing papers mill located in Wiggins, Mississippi, to Coastal
Paper Company ("Coastal Paper"), a joint venture formed by James River and a
private individual. In September 1991, James River completed the sale of its
Solka Floc(r) powdered cellulose business in Berlin, New Hampshire. Each of
these divestitures was part of the 1990 restructuring program.
In March 1991, James River made a capital contribution to the Naheola
Cogeneration Limited Partnership (the "Naheola Partnership") of certain steam
and power assets (see Note 11).
In August 1991, James River acquired the stock of Rampart Packaging
Inc., a Virginia manufacturer of high performance plastic food containers.
In September 1991, James River acquired a folding carton operation located in
Charlotte, North Carolina.
Summary
Acquisitions and dispositions for the three years ended December 26, 1993 are
summarized below. The purchase prices of acquisitions were allocated to the
acquired assets based on their respective fair values. Had each of these
transactions occurred as of the beginning of the year indicated, the
aggregate pro forma effect on the Company's operations would not have been
material to that year.
(in thousands) 1993 1992 1991
Acquisitions of consolidated entities:
Fair value of assets acquired $241,598 $46,477 $28,348
Liabilities assumed or created (43,898) (6,936) (1,842)
Cash paid for acquisitions 197,700 39,541 26,506
Cash acquired (4,964) (7,807)
Cash paid for acquisitions, net $192,736 $31,734 $26,506
Dispositions:
Fair value of assets sold $135,350 $26,844 $349,808
Non-cash consideration received (4,700) (5,000) (56,000)
Cash received from sale of
assets $130,650 $21,844 $293,808
<PAGE>
Note 4. Other Income
The components of other income were as follows:
(in thousands) 1993 1992 1991
Interest income $24,864 $14,641 $12,594
Equity in earnings of
unconsolidated affiliates 7,771 10,194 6,360
Royalty and commission income 2,940 4,738 4,547
Gain on sale of assets 2,924 1,872
Minority interests in losses
of subsidiaries 1,898 1,304
Foreign currency exchange losses (3,281) (9,571) (4,997)
Write-off of investment in
preferred stock (2,168)
Other, net 7,185 3,385 6,403
Total other income $42,133 $24,691 $26,779
Interest income for the year ended December 26, 1993 included $14.3 million
of interest received in connection with the favorable settlement of certain
prior years' income tax returns. The 1993 gain on the sale of assets
represented the Company's gain on the sale of its investment interest in
Fabrica de Papel and gains on the sale of miscellaneous non-operating assets.
The 1993 preferred stock write-off was related to James River's investment in
Patriot Paper Corporation. This stock was received in 1990 as part of the
consideration for the sale of the Company's Hyde Park, Massachusetts, mill.
The 1991 gain on the sale of assets arose from the sale of the Company's oil
barging and bunkering business.
<PAGE>
Note 5. Income Taxes
The components of income (loss) before income taxes, extraordinary item, and
accounting changes were as follows:
(in thousands) 1993 1992 1991
Domestic $24,592 $ (85,194) $129,260
Foreign (6,030) 10,118 3,495
Restructuring charge,
principally domestic (111,720)
Income (loss) before income
taxes, extraordinary item,
and accounting changes $18,562 $(186,796) $132,755
Income tax expense (benefit), excluding income taxes on the extraordinary
item and accounting changes, consisted of the following:
(in thousands) 1993 1992 1991
Current:
Federal $ 1,293 $ 1,677 $33,017
State 2,780 5,265 3,625
Foreign 2,979 4,063 3,330
Total current income
tax provision 7,052 11,005 39,972
Deferred:
Federal 18,311 (59,567) 13,892
State (1,811) (12,496) 4,177
Foreign (4,644) (3,663) (3,577)
Total deferred income
tax provision (benefit) 11,856 (75,726) 14,492
Income tax expense (benefit) $18,908 $(64,721) $54,464
Cash payments for income taxes totaled approximately $6.6 million in 1993,
$8.6 million in 1992, and $44.9 million in 1991.
In August 1993, the Omnibus Budget Reconciliation Act of 1993 was
enacted and provided for, among other things, an increase in the federal
corporate income tax rate from 34% to 35%, retroactive to January 1, 1993.
James River recorded a charge of approximately $11 million to increase its
deferred tax liability for the effect of this increase in tax rates.
Effective as of the beginning of 1992, James River adopted SFAS 109,
which requires the use of the liability method of accounting for income
taxes. In connection with the adoption of SFAS 109, the Company recorded a
credit of $35.9 million, or $.44 per share, in 1992. Prior years' financial
statements were not restated to reflect the provisions of SFAS 109. The
adoption of SFAS 109 also required that the Company restate certain assets
and liabilities acquired in prior business combinations and the related
deferred taxes payable. Property, plant, and equipment was increased by $173
million, resulting in increased annual depreciation expense of approximately
$13 million. The net impact of the adoption of SFAS 109 on the net deferred
tax liability was a credit of $141 million.
No provision for income taxes has been made for $85.1 million of
undistributed earnings of certain of the Company's foreign subsidiaries and
affiliates which have been indefinitely reinvested. It is not practicable to
determine the amount of U.S. income tax which would be payable if such
undistributed foreign earnings were repatriated through dividend remittances
because any U.S. taxes payable on such dividends would be offset, at least in
part, by foreign tax credits.
Principal reasons for the difference between the federal statutory
income tax rate on income (loss) before income taxes, extraordinary item, and
accounting changes and the Company's effective income tax rate were as
follows:
Percent of Pretax Income or (Loss)
1993 1992 1991
Federal statutory income tax rate 35.0% (34.0)% 34.0%
State income taxes, net of federal
income tax effect 3.1 (2.6) 3.9
Excess of book over tax basis of
acquired fixed assets 5.2
Impact of taxes provided on
restructuring 1.0 (3.3)
Amortization of goodwill 7.7 .9 1.2
Other items, net (3.1) .1
Effective income tax rate
on current income (loss) 42.7% (34.6)% 41.0%
Effect of increase in federal
income tax rate 59.2%
Effective income tax rate 101.9% (34.6)% 41.0%
The income tax effects of temporary differences that gave rise to the net
deferred tax liability as of December 26, 1993 and December 27, 1992 were as
follows:
(in thousands) 1993 1992
Current deferred tax (assets) liabilities:
Excess of book over tax restructuring charges $(23,073) $ (40,642)
Accrued vacation pay (22,156) (20,710)
Workers' compensation and other claims (21,746) (19,004)
Postretirement benefits other than pensions (10,892) (10,629)
Early extinguishment of debt (9,186)
Net operating loss carryforwards (7,500) (6,000)
Other items, net 1,829 4,642
Total net current deferred tax asset (83,538) (101,529)
Noncurrent deferred tax (assets) liabilities:
Excess of book over tax basis of assets 731,867 689,955
Pension benefits 69,555 76,005
Unremitted earnings of foreign subsidiaries
and affiliates 15,865 18,369
Other items, net 3,762 756
Postretirement benefits other than pensions (204,352) (189,431)
Other liabilities and reserves (21,601) (29,500)
Net operating loss carryforwards (57,906) (64,430)
Alternative minimum tax credit carryforwards (87,328) (49,825)
General business and foreign tax credit
carryforwards (19,441) (16,697)
Total net noncurrent deferred tax liability 430,421 435,202
Net deferred tax liability $346,883 $333,673
Prior to the adoption of SFAS 109, deferred income taxes resulted from timing
differences in the recognition of revenues, expenses, and tax credits for tax
and financial reporting purposes. The significant components of the deferred
tax provision for 1991 were as follows: change in accrued restructuring
liability, $38.6 million; excess of tax over book depreciation, $27.6
million; asset dispositions and retirements, $(37.3) million; alternative
minimum tax credit carryforwards generated, $(18.4) million; and other, net,
$4.0 million.
During 1993, the Company received tax refunds from the Internal Revenue
Service as a result of the favorable settlement of certain prior years'
income tax returns. The principal amount of such refunds, totaling $10.6
million, was credited to deferred income taxes, as a deferred tax asset had
been previously recorded to provide for these refunds. The Internal Revenue
Service is currently reviewing the Company's federal income tax returns for
the years 1987 through 1989 and the returns of certain acquired companies for
years ending prior to their acquisition by James River. In the opinion of
management, potential adjustments resulting from these examinations will not
have a material effect on the Company's financial condition.
As of December 26, 1993, for federal income tax purposes, the Company
had a net operating loss ("NOL") carryforward of $115.2 million available to
offset future regular taxable income and an alternative minimum tax ("AMT")
NOL carryforward of $37.5 million available to offset future alternative
minimum taxable income. Both of these carryforwards expire in 2008. The
Company also had approximately $19.4 million of general business tax and
foreign tax credit carryforwards for tax purposes which expire from 1994
through 2007. In addition, the Company had AMT credit carryforwards of
$87.3 million which have been reflected as a reduction of deferred taxes.
AMT credits may generally be carried forward indefinitely and used in future
years to the extent the Company's regular tax liability exceeds the AMT
liability for such future years.
<PAGE>
Note 6. Pension Plans
James River sponsors various contributory and noncontributory pension plans
which cover substantially all employees. The Company also participates in
several multiemployer retirement plans which provide defined benefits to
employees covered under certain collective bargaining agreements. Benefits
under the majority of plans for hourly employees are primarily based on
stated benefits per year of credited service. Benefits for salaried
employees are primarily related to compensation and years of credited
service. The Company makes contributions to its plans sufficient to meet the
minimum funding requirements of applicable laws and regulations plus
additional amounts, if any, as the Company, in consultation with its
actuaries, deems to be appropriate. Contributions to multiemployer plans are
generally based on negotiated labor contracts. Plan assets consist
principally of equity securities and corporate and government obligations.
The components of net pension cost were as follows:
(in thousands) 1993 1992 1991
Service cost $ 18,376 $ 19,239 $ 17,727
Interest accrued on projected
benefit obligation 94,149 88,692 87,444
Net investment (income) loss on
plan assets:
Actual (163,730) (125,709) (225,357)
Deferral of difference between actual
and expected investment income 50,643 16,328 117,605
Net amortization 13,806 6,955 2,573
Contributions to multiemployer
pension plans 5,588 5,829 5,661
Less net pension cost attributable
to operations held for sale (2,088)
Net pension cost $ 18,832 $ 11,334 $ 3,565
Net amortization included amortization of the net transition asset, net
experience gains and losses, and prior service costs over approximately 15 to
20 years.
The actuarial assumptions used in determining net pension costs were as
follows:
1993 1992 1991
Discount rate 8.0% 8.5% 9.0%
Assumed rate of increase in
compensation levels 5.5% 6.0% 6.0%
Expected long-term rate of return
on plan assets 10.5% 10.5% 10.5%
As of December 26, 1993, benefit obligations were determined using a discount
rate of 7.375% and an assumed rate of increase in compensation levels of
5.5%. The effect of the change in the discount rate was an increase in the
accumulated benefit obligation of $80.5 million.
<PAGE>
<TABLE>
The following table sets forth the funded status of the Company's plans:
<CAPTION>
1993 1992
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
(in thousands) Benefits Assets Benefits Assets
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefits $ 904,738 $315,562 $ 789,774 $288,364
Nonvested benefits 34,550 27,574 39,899 29,293
Accumulated benefit obligation 939,288 343,136 829,673 317,657
Effect of projected future salary
increases 27,067 382 45,622 432
Projected benefit obligation 966,355 343,518 875,295 318,089
Plan assets at fair value 1,079,680 273,905 1,006,650 265,987
Plan assets in excess of (less than)
projected benefit obligation 113,325 (69,613) 131,355 (52,102)
Unrecognized net loss 82,258 70,919 66,631 60,395
Unrecognized prior service cost 31,149 28,060 29,838 30,451
Unrecognized net transition asset (13,678) (4,686) (15,384) (5,874)
Minimum pension liability (93,924) (84,540)
Net pension asset (liability) $ 213,054 $(69,244) $ 212,440 $(51,670)
Other assets included net noncurrent pension assets of $237.7 million as of December 26, 1993 and
$245.3 million as of December 27, 1992, exclusive of the additional minimum pension liabilities. As
of December 26, 1993, $93.9 million of additional minimum pension liabilities for underfunded plans
were included in other long-term liabilities, offset by an intangible asset of $30.1 million and a
charge of $39.0 million to retained earnings, net of deferred taxes of $24.8 million. As of December
27, 1992, the additional minimum pension liability of $84.5 million was offset by an intangible asset
of $32.7 million and a charge to retained earnings of $32.2 million, net of deferred taxes of $19.6
million.
</TABLE>
<PAGE>
Note 7. Postretirement Benefits Other Than Pensions
James River provides certain medical and life insurance benefits to eligible
retired employees. Salaried employees hired before January 1, 1993 generally
become eligible for retiree medical benefits after reaching age 55 with 15
years of service or after reaching age 65. Under the salaried plan, post-age
65 eligible retirees are reimbursed for a portion of the cost of premiums of
Medicare supplement insurance policies, based upon vested years of service.
Post-age 65 salaried retirees are also reimbursed for certain prescription
drug costs, less deductibles. Pre-age 65 eligible retirees are paid a stated
percentage of covered medical expenses, less deductibles. Salaried employees
hired after January 1, 1993 are not eligible for retiree medical benefits.
Benefits, eligibility, and cost-sharing provisions for hourly employees vary
by location and collective bargaining unit. All of the Company's retiree
medical plans are unfunded.
In December 1992, James River adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions" ("SFAS 106"), effective as of the first day of that year.
This statement requires the accrual of the cost of providing postretirement
benefits, including medical and life insurance coverage, during the years
that employees render service. The Company elected immediate recognition of
the cumulative effect of the change in accounting for postretirement benefits
of $499.3 million ($309.8 million net of income tax benefits of $189.5
million, or $3.79 per share), which represented the accumulated benefit
obligation existing as of the first day of 1992. The effect of this change
on 1992 operating results, after recording the cumulative effect for years
prior to 1992, was an increase in pretax expenses of $27.7 million ($17.2
million after taxes). The pro forma effect of the change on years prior to
1992 was not determinable. Prior to 1992, postretirement medical and life
insurance costs were generally expensed as claims were paid. Postretirement
medical and life insurance benefits expensed in 1991 were $17.2 million.
The components of net periodic postretirement benefit cost for 1993 and
1992 were as follows:
(in thousands) 1993 1992
Service cost $12,362 $13,510
Interest cost on accumulated postretirement
benefit obligation 43,059 41,205
Net amortization (5,078) (2,038)
Net periodic postretirement benefit cost $50,343 $52,677
Net amortization included amortization of prior service costs and net
experience gains and losses over approximately 15 years. The discount rate
used in determining the net periodic postretirement benefit cost was 8.5% for
1993 and 1992.
Summary information on the Company's plans was as follows:
(in thousands) 1993 1992
Accumulated postretirement benefit obligation:
Retirees $246,053 $179,852
Fully eligible active participants 109,350 123,617
Other active participants 226,995 212,651
Total accumulated postretirement benefit
obligation 582,398 516,120
Unrecognized net loss (87,694) (3,660)
Unrecognized prior service cost 75,119 29,556
Accrued postretirement benefit cost $569,823 $542,016
As of December 26, 1993 and December 27, 1992, the Company has included $28.0
million of accrued postretirement benefit costs in accrued liabilities,
representing the estimated current portion of this liability.
The discount rate used in determining the accumulated postretirement
benefit obligation was 7.5% as of December 26, 1993 and 8.5% as of December
27, 1992. The effect of this change in the discount rate was an increase in
the accumulated benefit obligation of $37.3 million. The assumed health care
cost trend rate used in measuring the accumulated postretirement benefit
obligation was 11.5% in 1993, declining by .5% per year through 2003 and
declining by .25% per year from 2004 through 2007, to an ultimate rate of
5.5%. If the health care cost trend rate assumptions were increased by 1%,
the accumulated postretirement benefit obligation as of December 26, 1993
would have increased by 16%. The effect of this change on the sum of the
service cost and interest cost components of net periodic postretirement
benefit cost for 1993 would have been an increase of 20%.
<PAGE>
Note 8. Foreign Currency Translation and Hedge Agreements
The change in retained earnings resulting from the translation of assets and
liabilities of foreign subsidiaries and affiliates, net of the effect of
exchange rate hedges, was as follows:
(in thousands) 1993 1992
Balance, beginning of year $ 18,990 $54,185
Translation adjustments, net of taxes (57,535) (35,195)
Balance, end of year $(38,545) $18,990
Currency Exchange Rate Hedge Agreements
The Company has entered into foreign currency contracts that hedge a portion
of the foreign currency exposure of its net investment in Jamont N.V.
("Jamont"). As of December 26, 1993, the Company had outstanding foreign
currency contracts covering a total notional principal amount of $488
million, primarily denominated in French francs, British pounds, Belgian
francs, and Spanish pesetas. Currency gains and losses on the contracts are
recorded in the foreign currency translation component of retained earnings.
These contracts mature on September 1, 1998. In connection with these
contracts, the Company has entered into interest rate swap agreements to
manage the related interest rate exposure. Gains and losses on these
agreements are included in other income as incurred.
The counterparties to the Company's foreign currency contracts and
interest rate swap agreements consist of a number of major international
financial institutions. The Company continually monitors its positions with,
and the credit quality of, these financial institutions and does not
anticipate nonperformance by the counterparties.
Fair Value of Foreign Currency Hedge Agreements
As of December 26, 1993, the carrying value of foreign currency contracts was
a net liability of $4.1 million and the fair value, based on quoted market
prices of comparable instruments, was a net liability of $11.8 million.
<PAGE>
Note 9. Supplemental Balance Sheet Information
Short-Term Securities
Short-term securities, with a cost of $21.4 million as of December 26, 1993
and $374.1 million as of December 27, 1992, consisted primarily of commercial
paper, government repurchase agreements, and time deposits. The carrying
value of cash and short-term securities approximates fair value because of
the short maturity of these instruments.
Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities included the following:
(in thousands) 1993 1992
Accounts payable $252,144 $221,606
Accrued liabilities:
Compensated absences 73,471 73,878
Employee insurance benefits 63,009 56,790
Interest payable 24,333 33,011
Postretirement benefits
other than pensions 28,000 28,000
Advertising and promotion 34,691 26,932
Accrued premium on early
extinguishment of debt 24,200
Salaries and incentive compensation 20,068 22,302
Taxes payable, other than income taxes 30,983 20,693
Dividends payable 20,467 20,398
Other items 69,026 76,957
Total accounts payable and accrued
liabilities $616,192 $604,767
<PAGE>
Note 10. Inventories
Inventory components and their valuation methods were as follows:
(in thousands) 1993 1992
Components:
Raw materials $161,093 $165,963
Finished goods and work in process 425,640 455,804
Stores and supplies 139,457 140,037
726,190 761,804
Subtraction to state certain inventories
at last-in, first-out cost (59,726) (75,100)
Total inventories $666,464 $686,704
Valued at lower of cost or market:
Last-in, first-out $522,483 $512,937
First-in, first-out or average 143,981 173,767
Total inventories $666,464 $686,704
<PAGE>
Note 11. Investments in Affiliates
As of December 26, 1993, James River's principal investments in affiliates
accounted for using the equity method included investments in Jamont, Aracruz
Celulose S.A. ("Aracruz"), the Naheola Partnership, Dubreuil Forest Products
Limited ("Dubreuil"), and Coastal Paper.
Jamont, in which James River has a 43% indirect ownership interest, is
a major producer of towel and tissue products with operations in twelve
European countries. James River is a party to put and call agreements
related to the remaining 57% of Jamont; such agreements are further described
in Note 16. Aracruz, in which James River has a 5.2% indirect ownership
interest, is a major Brazilian eucalyptus pulp producer. James River's
investment in Aracruz is accounted for using the equity method, as the
Company has direct ownership interests in excess of 20% in certain
intervening holding companies. James River has a 50% ownership interest in
the Naheola Partnership, which owns and operates a $300 million chemical
recovery cogeneration facility at the Company's Pennington, Alabama, pulp and
paper mill. Dubreuil, in which James River has a 40% indirect ownership
interest, operates a sawmill in Dubreuilville, Ontario. James River owns 50%
of Coastal Paper, which operates a lightweight papers mill in Mississippi.
During 1993, James River acquired the remaining 77% interest in Diamond
and consolidated its operations which were previously accounted for under the
equity method. Also during 1993, the Company sold its 49% interest in
Fabrica de Papel. As of the beginning of 1992, James River reconsolidated
Marathon, in which it has an 80% ownership interest, in conjunction with the
termination of the Company's 1990 restructuring program. During 1991, 50% of
Marathon was accounted for using the equity method and 30% was included in
net assets held for sale.
Changes in James River's investments in affiliates during 1993 and 1992
were as follows:
(in thousands) 1993 1992
Balance, beginning of year $587,756 $619,692
Equity in net income 7,771 10,194
Foreign currency translation
adjustments, net (49,775) (23,852)
Consolidation of net assets of affiliates (19,616) (20,069)
Sale of investment (2,967)
Dividends received (1,189) (322)
Other, net (2,532) 2,113
Balance, end of year $519,448 $587,756
James River's share of undistributed earnings of affiliates included in
consolidated retained earnings was $96.8 million as of December 26, 1993 and
$84.2 million as of December 27, 1992.
The summarized financial information presented below represents an
aggregation of 100% of the principal companies accounted for by the equity
method.
(in thousands) 1993 1992
Condensed income statement information:
Revenues $1,524,932 $1,752,703
Gross profit 358,881 411,822
Net earnings 23,752 23,902
Condensed balance sheet information:
Current assets $ 771,385 $ 999,827
Noncurrent assets, including
intangibles 2,102,622 2,530,328
Current liabilities 657,590 917,279
Noncurrent liabilities 891,524 1,037,250
Minority interests 189,397 233,378
Equity 1,135,496 1,342,248
James River's share of equity $ 561,603 $ 656,068
<PAGE>
Note 12. Indebtedness
Long-term debt consisted of the following:
(in thousands) 1993 1992
Commercial paper and borrowings supported
by revolving credit facilities $ 287,100 $ 550,365
Unsecured notes and debentures:
Floating rate notes, payable from 1994
to 1995 250,000 250,000
6.7% notes, payable in 2003 249,444
6.75% notes, payable in 1999 199,547 199,469
7.57% average interest rate medium-term
notes, payable from 1997 to 2004 200,000 200,000
7.75% debentures, payable in 2023 149,685
8.125% notes, payable to 1994 22,445
8.18% average interest rate notes,
payable to 2009 30,848 46,348
8.375% notes, payable in 2001 199,211 199,112
8.8% notes, payable to 1994 33,333
8.875% debentures, payable to 2000 45,000
9.05% notes, payable in 1993 90,000
9.25% notes, payable to 2001 65,440
9.25% debentures, payable to 2005 45,132
9.25% debentures, payable in 2021 200,000 200,000
9.5% notes, payable in 1995 56,000
9.75% notes, payable from 1996 to 1998 54,000
9.77% note, payable from 2005 to 2014 200,000 200,000
10% notes, payable from 2001 to 2011 30,000
12.25% notes, payable to 1996 19,250
Revenue bonds, average interest rate 7.44%,
payable to 2023 74,288 56,696
Subordinated notes, payable to 1995 4,012
Total 2,040,123 2,366,602
Less current portion 97,287 212,734
Long-term debt $1,942,836 $2,153,868
Minimum Principal Payments
Minimum principal payments on long-term debt, excluding commercial paper and
revolving credit borrowings, for the next five years are as follows:
(in millions) 1994 1995 1996 1997 1998
Scheduled maturities $80.9 $180.9 $7.7 $101.2 $1.6
If the current level of commercial paper and borrowings supported by
revolving credit agreements remains outstanding until the expiration of the
underlying or supporting agreements, additional payments of $16.5 million and
$270.6 million would be required in 1994 and 1997, respectively. It is the
Company's current intention to refinance or renew such agreements prior to
their expiration.
Refinancing Program
During the fourth quarter of 1992, James River recorded an extraordinary loss
of $50.6 million ($31.4 million net of tax benefits, or $.38 per share) in
connection with the early retirement of a total of $566.8 million principal
amount of notes and debentures which were targeted for refinancing. The
aggregate purchase price of such indebtedness was $613.8 million, financed
principally through newly issued debt and preferred stock. During 1992,
$259.3 million principal amount of such refinancings were completed, and the
remaining $307.5 million were completed by the end of April 1993.
Notes and Debentures
During November 1993, the Company issued $250 million of 6.7% ten-year notes
and $150 million of 7.75% thirty-year debentures. Proceeds from these
issuances were used to refinance short-term borrowings and to finance a
portion of the Diamond purchase price (see Note 3).
In October 1992, the Company issued $200 million of 6.75% seven-year
notes, and during November and December 1992, the Company issued $200 million
of medium-term notes. In December 1992, the Company acquired $250 million of
floating rate bank financing payable in 1994 and 1995; these agreements had
an average interest rate of 4.02% as of December 26, 1993 and December 27,
1992. Portions of the proceeds from these issuances were used to finance the
Company's early retirement of debt.
The Company's most restrictive debt agreements contain limitations on
borrowings and require maintenance of a minimum amount of net worth. As of
December 26, 1993, under the most restrictive provisions of the Company's
debt agreements, the Company had additional borrowing capacity in excess of
$400 million and net worth in excess of the minimum requirement of
approximately $300 million.
Certain of the Company's notes and revenue bonds are collateralized by
assets consisting of property, plant, and equipment, accounts receivable, and
inventories. Such assets are immaterial in relation to total assets.
Revolving Credit Facilities
As of December 26, 1993, James River and its consolidated subsidiaries had
revolving credit agreements with various domestic and foreign banks providing
for unsecured borrowings of up to approximately $800 million. On that date,
the Company had outstanding $33.1 million under the revolving credit
facilities at an average interest rate of 5.2%.
The interest rates associated with the revolving credit agreements are
primarily based, at the option of the Company, on the prime rate, the London
Interbank Offered Rate, certificate of deposit rates, or bankers' acceptance
rates. Annual commitment fees during the revolving loan periods range from
.0625% to .3575% of the unused portion of the commitments; additionally,
certain agreements provide for facility fees which may range from .1875% to
.25% of the committed amounts. Approximately $20 million of the revolving
credit agreements expire in 1994; the remaining $780 million of agreements
expire in May 1997.
Commercial Paper and Short-Term Borrowing Agreements
As of December 26, 1993, James River had a commercial paper program providing
for commercial paper issuances of up to $500 million. In addition, James
River had agreements with several banks providing for short-term borrowings,
dependent upon bank availability. Commercial paper and short-term borrowings
generally bear interest at below-prime rates. As of December 26, 1993, the
Company had $150.7 million of outstanding commercial paper and $103.3 million
of outstanding short-term borrowings at average interest rates of 3.5% and
3.3%, respectively. Because of the availability of long-term financing under
the terms of the revolving credit agreements and the Company's intention to
refinance these amounts, these borrowings have been classified as long-term
debt.
Fair Value of Indebtedness
As of December 26, 1993 and December 27, 1992, the estimated fair value of
the Company's long-term debt, including current maturities, was $2,192
million and $2,442 million, respectively. The fair value was estimated based
on quoted market prices for the same or similar debt issues or on current
rates offered as of the end of each year for debt with similar terms and
remaining maturities.
<PAGE>
Note 13. Common Stock
The Company has 150 million authorized shares of common stock, $.10 par value
("Common Stock"), of which 81,628,047 shares were outstanding on December 26,
1993. Common shares reserved for issuance as of December 26, 1993 were as
follows:
1993
Stock option plans 8,188,935
Deferred stock plan 1,731,461
Conversion of Series K preferred stock 2,453,982
Conversion of Series L preferred stock 5,000,000
Conversion of Series N preferred stock 1,320,210
Total common shares reserved for issuance 18,694,588
Shareholder Rights Plan
James River has a shareholder rights plan pursuant to which preferred stock
purchase rights ("Rights") are issued at the rate of one Right for each share
of Common Stock. Each Right entitles its holder to purchase one
one-thousandth of a share of Series M Cumulative Participating Preferred
Stock ("Series M") at an exercise price of $150, subject to adjustment. Due
to the nature of its dividend, liquidation, and voting rights, the economic
value of one one-thousandth of a share of Series M that may be acquired upon
the exercise of each Right should approximate the economic value of one share
of Common Stock. The Rights will only be exercisable if a person or group
acquires, has the right to acquire, or has commenced a tender offer for 15%
or more of the outstanding Common Stock. The Rights are nonvoting, pay no
dividends, and may be redeemed by the Company for $.01 per Right at any time
before the tenth day (subject to adjustment) after a 15% position is
acquired. The Rights have no effect on earnings per share until they become
exercisable and expire on March 1, 1999, unless earlier exercised or
redeemed.
After the Rights are exercisable, if the Company is acquired in a merger
or other business combination, or if 50% or more of the Company's assets are
sold, each Right will entitle its holder (other than the acquiring person or
group) to purchase, at the then-current exercise price, common stock of the
acquiring person having a value of twice the exercise price. In addition, in
the event a 15% or greater shareholder (i) acquires the Company through a
merger where James River is the surviving corporation, (ii) engages in
certain self-dealing transactions, or (iii) increases his ownership other
than through a cash tender offer providing fair value to all holders of
Common Stock, each Right will entitle its holder (other than the acquiring
person or group) to purchase, at the then-current exercise price, Common
Stock having a value of twice the exercise price.
<PAGE>
Note 14. Preferred Stock
The Company is authorized to issue up to five million shares of preferred
stock, $10 par value. The preferred shares are issuable in series with
varying dividend rates, redemption rights, conversion terms, sinking fund
provisions, liquidation values, and voting rights. Outstanding preferred
stock, stated at liquidation value, was as follows:
Shares
Liquidation Outstanding Liquidation Value
Value December 26, (in thousands)
Per Share 1993 1993 1992
Series D $100 13,000 $ 1,300 $ 1,540
Series K 50 1,999,995 100,000 100,000
Series L 200 1,000,000 200,000 200,000
Series N 200 264,042 52,808 52,808
Series O 500 200,000 100,000 100,000
Total preferred stock 3,477,037 $454,108 $454,348
The Company has reserved 150,000 preferred shares for the issuance of Series
M preferred stock under the Shareholder Rights Plan.
The Series D Cumulative Preferred Stock ("Series D") has an annual
dividend of $8.75 per share, payable quarterly. The Series D is redeemable
by the holders at a per share price declining from $101.39 as of December 26,
1993 to $100 in December 1996 and thereafter, plus accrued dividends.
Quarterly sinking fund payments of $60,000 are required until December 1997
when a final payment of $400,000 is due.
The Series K $3.375 Cumulative Convertible Exchangeable Preferred Stock
("Series K") has an annual dividend of $3.375 per share and is convertible at
the option of the holder into Common Stock at $40.75 per share (approximately
1.23 shares of Common Stock per share of Series K). The Series K is
redeemable by the Company at a per share price declining from $51.01 as of
December 26, 1993 to $50 in November 1996 and thereafter, plus accrued
dividends. The Series K is exchangeable at the option of the Company for
6.75% Convertible Subordinated Debentures due November 1, 2016 (the "6.75%
Debentures") at $50 principal amount per share of Series K. The 6.75%
Debentures, if issued, will be convertible at the option of the holder into
Common Stock on the same terms as the Series K.
The Series L $14.00 Cumulative Convertible Exchangeable Preferred Stock
("Series L") and the Series N $14.00 Cumulative Convertible Exchangeable
Preferred Stock ("Series N") are each held in the form of depositary shares,
with each depositary share representing a one-quarter interest in a preferred
share. The Series L and the Series N each have an annual dividend of $14 per
share ($3.50 per depositary share) and are convertible at the option of the
holder into Common Stock at $40 per share (five shares of Common Stock for
each preferred share, or 1.25 shares of Common Stock per depositary share).
The Series L and Series N are each redeemable by the Company at a per share
price declining from $205.60 as of December 26, 1993 to $200 in October 1997
and thereafter, plus accrued dividends. The Series L and Series N are each
exchangeable at the option of the Company for 7% Convertible Subordinated
Debentures due October 1, 2017 (the "7% Debentures") at $200 principal amount
per preferred share ($50 per depositary share). The 7% Debentures, if
issued, will be convertible at the option of the holder into Common Stock on
the same terms as the preferred shares.
James River issued its Series O 8-1/4% Cumulative Preferred Stock
("Series O") in October 1992. The Series O is also held in the form of
depositary shares, with each depositary share representing a one-twentieth
interest in a share of Series O. The Series O has an annual dividend of
$41.25 per share ($2.06 per depositary share). The Series O is not
redeemable prior to October 1, 1997. On or after that date, it will be
redeemable by the Company at $500 per share ($25 per depositary share), plus
accrued dividends.
<PAGE>
Note 15. Employee Benefit Plans
Stock Options
The Company's stock option plans provide for the granting of options to
purchase Common Stock to certain officers and key employees. Options are
granted at exercise prices equal to the fair market value of such stock as of
the date of grant and have terms of ten years. Options granted after
February 1987 generally become exercisable in three equal annual increments
commencing as early as one year from the date of grant. Options issued
before February 1987 generally become exercisable in four equal annual
increments commencing four years from the date of grant. As of December 26,
1993, there were approximately 840 employees holding options. Shares of
Common Stock available for future option grants totaled 2,621,762 as of
December 26, 1993; 764,480 as of December 27, 1992; and 1,211,400 as of
December 29, 1991.
The Company has a stock option plan for outside directors under which
stock options are granted to directors who are not full-time employees of the
Company. These options are granted at exercise prices equal to the fair
market value of the Common Stock on the date of grant, are exercisable upon
grant, and have terms of ten years. As of December 26, 1993, eleven of the
Company's directors held options under this plan. Shares of common stock
available for future option grants to directors totaled 159,000 as of
December 26, 1993; 172,000 as of December 27, 1992; and 185,000 as of
December 29, 1991.
Stock option activity under all option plans for the three years ended
December 26, 1993 was as follows:
Option Price
Number Per Total
of Shares Share Range (in thousands)
Balance, December 30, 1990 4,570,439 $ 6.17 - 41.38 $114,667
Granted 990,190 19.13 - 27.69 25,494
Canceled (494,543) 6.17 - 41.06 (13,875)
Exercised (167,351) 6.17 - 25.25 (2,552)
Balance, December 29, 1991 4,898,735 6.17 - 41.38 123,734
Granted 1,063,750 17.63 - 22.81 20,985
Canceled (564,675) 18.13 - 41.19 (14,110)
Exercised (56,690) 6.17 - 20.06 (733)
Expired (56,506) 20.13 - 41.06 (1,653)
Balance, December 27, 1992 5,284,614 16.25 - 41.38 128,223
Granted 631,540 17.88 - 22.63 13,202
Canceled (377,402) 17.33 - 35.75 (9,080)
Exercised (18,125) 17.46 - 20.06 (358)
Expired (112,454) 20.06 - 39.69 (3,206)
Balance, December 26, 1993 5,408,173 $16.25 - 41.38 $128,781
Exercisable as of:
December 29, 1991 1,158,104 $ 6.17 - 41.38 $29,475
December 27, 1992 2,364,173 16.25 - 41.38 59,851
December 26, 1993 3,475,958 16.25 - 41.38 85,253
Stock Appreciation Rights
Pursuant to the Company's stock appreciation rights plan, officers and key
employees were granted stock appreciation rights ("SAR's") with terms of ten
years which generally become exercisable in four equal annual increments
commencing four years from the date of grant. Upon exercise, holders of
SAR's are paid cash or, at the option of the Company, Common Stock in an
amount equal to the appreciation in market value of such stock between the
grant date and the exercise date. Beginning in 1987, the granting of
additional SAR's was discontinued. As of December 26, 1993, there were
approximately 290 employees holding SAR's. Compensation expense for SAR's
was not material for each of the three years in the period ended December 26,
1993.
SAR's activity for the three years ended December 26, 1993 was as
follows:
Market Value on Date of Grant
Number Per Total
of SAR's Share Range (in thousands)
Balance, December 30, 1990 440,788 $ 6.17 - 34.19 $10,524
Canceled (47,364) 16.96 - 34.19 (1,402)
Exercised (94,875) 6.17 - 25.50 (1,018)
Balance, December 29, 1991 298,549 6.17 - 34.19 8,104
Canceled (23,714) 16.96 - 33.56 (700)
Exercised (9,771) 6.17 - 19.21 (123)
Expired (5,213) 22.37 - 30.54 (152)
Balance, December 27, 1992 259,851 16.25 - 34.19 7,129
Canceled (14,267) 16.96 - 31.75 (402)
Exercised (14,150) 16.25 - 19.21 (245)
Expired (10,434) 19.06 - 30.54 (287)
Balance, December 26, 1993 221,000 $16.42 - 34.19 $ 6,195
Exercisable as of:
December 29, 1991 188,898 $ 6.17 - 34.19 $4,821
December 27, 1992 221,759 16.25 - 34.19 5,971
December 26, 1993 220,943 16.42 - 34.19 6,193
Deferred Stock Plan
The Company's Deferred Stock Plan provides for the award of hypothetical
shares of Common Stock ("Units") to certain officers and key employees. Each
award vests in equal annual increments over various periods. The value of
each Unit on the award date is equal to the current market value of a share
of Common Stock. Benefits will be paid in cash and Common Stock as vested
or, at the option of the holder, over varying periods after retirement. As
of December 26, 1993, Units were held by 63 employees and currently vest over
periods of up to eight years. The Company recognized compensation expense
under the Deferred Stock Plan of $2.2 million in 1993, $.8 million in 1992,
and $1.4 million in 1991.
Deferred Stock Plan activity for the three years ended December 26, 1993
was as follows:
1993 1992 1991
Outstanding Units, beginning of year 324,436 377,585 439,807
Granted 351,500 22,400 28,600
Accrued dividends 17,406 10,715 13,323
Distributed (47,416) (57,253) (63,627)
Canceled (15,421) (29,011) (40,518)
Outstanding Units, end of year 630,505 324,436 377,585
Stock Purchase Plans for Employees
The Company's stock purchase plan is available to substantially all domestic
employees. Participating employees may contribute, through periodic payroll
deductions, up to 10% of their compensation. Participant contributions of up
to 6% of compensation are matched by the Company at rates ranging from 50% to
110%; participant contributions in excess of 6% of compensation are not
matched. Participant and matching contributions are invested in Common Stock
through periodic open market purchases, except that after reaching age
59-1/2, participants may elect to transfer all or a portion of the value of
their accounts to a fixed income investment fund. As of December 26, 1993,
there were approximately 22,000 participants in the stock purchase plan, and
the plan held 12.7 million shares of Common Stock and $10.3 million of other
investments. Company contributions to this plan totaled $16.4 million in
1993, $17.4 million in 1992, and $18.6 million in 1991.
The Company also administers a subsidiary's savings plan to which
contributions are no longer being made. On December 26, 1993, this plan held
1.1 million shares of Common Stock and $30.9 million of other investments.
In addition, the Company maintains two stock purchase plans for the benefit
of certain foreign employees. As of December 26, 1993, approximately 130,000
shares of Common Stock were held in these plans.
<PAGE>
Note 16. Commitments and Contingent Liabilities
Leases
The Company leases certain facilities, vehicles, and equipment over varying
periods. None of the agreements contain unusual renewal or purchase options.
As of December 26, 1993, future minimum rental payments under operating
leases were as follows:
Minimum
(in thousands) Rentals
1994 $ 33,976
1995 24,179
1996 21,044
1997 18,610
1998 14,901
Later years 73,665
Total future minimum rentals $186,375
Rent expense totaled $57.3 million in 1993, $58.3 million in 1992, and $59.7
million in 1991. Leases which may be considered capital leases are not
material.
Litigation and Environmental Matters
The Company is a party to various legal proceedings generally incidental to
its business and is subject to a variety of environmental and pollution
control laws and regulations. As is the case with other companies in similar
industries, James River faces exposure from actual or potential claims and
legal proceedings involving environmental matters. Although the ultimate
disposition of legal proceedings cannot be predicted with certainty, it is
the present opinion of the Company's management that the outcome of any claim
which is pending or threatened, either individually or on a combined basis,
will not have a materially adverse effect on the consolidated financial
condition of James River.
In addition, James River has been identified as a potentially
responsible party, along with others, at various U.S. Environmental
Protection Agency ("EPA") designated superfund sites and is involved in
remedial investigations and actions under federal and state laws. It is the
Company's policy to accrue remediation costs when it is probable that such
costs will be incurred and when they can be reasonably estimated. James
River's accrued environmental remediation liabilities totaled $22.2 million
and $22.1 million for the years ended December 26, 1993 and December 27,
1992, respectively. The Company periodically reviews the status of all
significant existing or potential environmental issues and adjusts its
accrual as necessary to reflect management's best estimate of James River's
ultimate liability for such costs. Estimates of costs for future remediation
are necessarily imprecise due to, among other things, the identification of
presently unknown remediation sites and the allocation of costs among
potentially responsible parties. The Company believes that its share of the
ultimate costs of cleanup for its current remediation sites will not have a
material adverse impact on its financial condition.
In December 1993, the EPA published draft rules which contain proposed
regulations affecting pulp and paper industry discharges of wastewater and
gaseous emissions ("cluster rules"). The final rules are scheduled to be
issued in late 1995, with a nominal compliance date of 1998. These rules may
require significant changes in the pulping and/or bleaching process presently
used in some U.S. pulp mills, including several of James River's mills. The
implementation of the rules could materially increase the Company's capital
expenditures between 1996 and 1998.
Put and Call Agreements
James River is a party to put and call arrangements in connection with its
investment in Jamont. James River and Rayne Holdings Inc. ("Rayne"), a
British Virgin Islands company, each own 50% of Jamont Holdings N.V.
("Holdings"), which owns approximately 86% of Jamont. James River and Rayne
are parties to a put and call agreement that provides various options by
which James River may purchase Rayne's interest in Holdings (the "Option
Shares"). James River has the option, exercisable until June 15, 1996, and
again between September 1, 1996 and June 15, 1998, to purchase either 80% or
100% of the Option Shares at escalating amounts pursuant to a formula (the
"Formula Price"). In addition, Rayne may put 80% of the Option Shares to
James River during July and August 1996 and the remaining 20% during July and
August 1998 at a proportionate value equal to the then Formula Price. If it
has not otherwise been acquired, James River also has the option to purchase
the remaining 20% of the Option Shares during September 1998 for 20% of the
then Formula Price. The Formula Price was approximately $625 million in
December 1993 for 100% of the Option Shares. In connection with this put and
call agreement, the Company has obtained a letter of credit securing the
contingent obligation to purchase 80% of the Option Shares.
In March 1993, EuroPaper Inc., ("EuroPaper") an unrelated entity,
purchased the approximate 14% interest in Jamont previously owned by Nokia
Corporation. In connection with this transaction, EuroPaper entered into a
put and call agreement with James River. Pursuant to the agreement,
EuroPaper may put its interest in Jamont (the "EuroPaper Shares") to James
River during May 1996 and James River may call the EuroPaper Shares during
August 1996, each at a fixed price of approximately 1.04 billion French
francs (approximately $180.6 million using exchange rates in effect as of
December 26, 1993). In addition, Holdings has a separate call agreement with
EuroPaper under which it may call the EuroPaper Shares through April 1996 at
a scheduled escalating price.
While the current recessionary conditions in Europe create a degree of
uncertainty, management believes that the European economy will recover and
that, by the defined put exercise dates, the value of Jamont will not be
significantly less than the specified purchase prices at such exercise dates,
excluding the potential impact of currency translation losses, if any.
James River and CRSS Capital, Inc. ("CRSS") each own 50% of the Naheola
Partnership. James River has an option to purchase CRSS's interest at fair
value. CRSS also has an option to put its interest in the partnership to
James River at fair value. CRSS's option may only be exercised (i) if the
facility becomes subject to regulation as a public utility, (ii) if
production levels at the Naheola mill fall below certain levels due to the
Company's shifting of production to other mills, or (iii) if the Naheola mill
is sold to a competitor of CRSS; management believes the probability of the
occurrence of any of these events is remote.
It is not practicable to estimate the fair value of these put and call
arrangements, as they relate to untraded entities, and their ultimate values
will be affected by future operating performance and market conditions.
<PAGE>
Note 17. Segment Information
The Company operates in the following industry segments: (i) the Consumer
Products segment, which consists of the manufacture and marketing of towel
and tissue and disposable foodservice products; (ii) the Food and Consumer
Packaging segment, which manufactures folding cartons, flexible packaging,
and barrier packaging papers, principally for food and other consumer
products; and (iii) the Communications Papers segment, which manufactures and
markets uncoated business and printing papers, coated groundwood printing and
publishing papers, and premium printing papers. Information about the
Company's business segments for the three years ended December 26, 1993 is
presented below. As a result of a reconfiguration of the Company's segments
as of the beginning of 1993, certain amounts previously reported in the Food
and Consumer Packaging segment in prior years now are reflected in the
Consumer Products segment.
(in thousands) 1993 1992 1991
Net sales:
Consumer products $2,358,136 $2,404,364 $2,394,843
Food and consumer packaging 1,568,454 1,565,054 1,560,923
Communications papers 901,326 917,974 774,989
Intersegment elimination (177,721) (159,213) (169,029)
Total net sales $4,650,195 $4,728,179 $4,561,726
Operating profit (loss):
Consumer products $111,286 $ 71,048 $128,811
Food and consumer packaging 103,827 89,168 141,914
Communications papers (58,400) (55,028) 33,030
Restructuring charge (117,851)
General corporate expenses (42,690) (49,737) (59,775)
Income (loss) from operations 114,023 (62,400) 243,980
Interest expense 137,594 149,087 138,004
Other income, net 42,133 24,691 26,779
Income tax expense (benefit) 18,908 (64,721) 54,464
Net income (loss) before
extraordinary item and
accounting changes $ (346) $(122,075) $ 78,291
Depreciation and amortization:
Consumer products $170,041 $173,274 $149,578
Food and consumer packaging 65,764 61,237 49,960
Communications papers 123,930 123,433 90,025
Corporate 6,118 6,582 9,068
Total depreciation and
amortization $365,853 $364,526 $298,631
Capital expenditures:
Consumer products $124,673 $214,990 $250,438
Food and consumer packaging 63,742 146,748 102,246
Communications papers 138,496 104,655 102,195
Corporate 4,154 3,288 12,595
Total capital expenditures $331,065 $469,681 $467,474
Total assets, end of year:
Consumer products $2,158,102 $2,194,918 $2,059,382
Food and consumer packaging 1,088,977 1,071,188 923,435
Communications papers 1,575,839 1,524,059 1,437,710
Corporate 1,028,384 1,546,171 1,206,067
Total assets $5,851,302 $6,336,336 $5,626,594
Profits on intersegment sales were not material. Corporate assets consist
primarily of cash and short-term securities, current deferred income taxes,
investments in unconsolidated affiliates, and the net pension asset.
Investments in unconsolidated affiliates consisted of the Company's 50% or
less ownership interests in affiliates located principally in Europe.
Facilities of the Company's consolidated operations are located principally
within the United States. As of December 26, 1993, total assets of
consolidated subsidiaries located outside of the United States were
approximately $225 million. During each of the three years in the period
ended December 26, 1993, sales to foreign markets from the Company's domestic
operations represented less than 10% of total sales to unaffiliated
customers; no single customer accounted for more than 10% of total sales in
any year.
<PAGE>
<TABLE>
Note 18. Selected Quarterly Financial Data (Unaudited)
<CAPTION>
Per Common Share
Net Net
Income Income
(Loss) (Loss)
Before Before
Extraor- Extraor-
dinary dinary
(in thousands, Item and Net Item and Divi-
except per Net Gross Accounting Income Accounting dends Stock Price
share amounts) Sales Profit Changes (Loss) Changes Declared High Low
<S> <C> <C> <C> <C> <C> <C> <C> <C>
December 1993:
(a,b)
1st Quarter $1,113,625 $178,905 $ (10,130) $ (10,130) $ (.22) $.15 $19-7/8 $16-1/4
2nd Quarter 1,198,134 214,797 13,736 13,736 .06 .15 23-3/8 18-5/8
3rd Quarter 1,183,507 211,254 1,185 1,185 (.08) .15 23 19-1/2
4th Quarter 1,154,929 186,653 (5,137) (5,137) (.16) .15 22 18-1/4
December 1992:
(c,d,e,f)
1st Quarter 1,136,353 187,958 (14,001) (287,843) (.25) .15 23-3/8 19-1/8
2nd Quarter 1,236,625 233,453 10,299 10,299 .06 .15 22-5/8 20
3rd Quarter 1,213,523 201,331 3,025 3,025 (.04) .15 21-7/8 18
4th Quarter 1,141,678 128,723 (121,398) (152,821) (1.59) .15 19-1/4 17
December 1991:
(g)
1st Quarter 1,169,510 290,840 39,398 39,398 .41 .10(h) 29-1/4 23-3/4
2nd Quarter 1,169,085 264,461 22,668 22,668 .20 .15 27-3/4 24-1/4
3rd Quarter 1,118,814 226,648 8,467 8,467 .03 .15 26-3/4 19-3/4
4th Quarter 1,104,317 227,902 7,758 7,758 .02 .15 22-3/4 17
<PAGE>
(a) During the second quarter of 1993, James River received $8.9 million in
interest income ($5.4 million after taxes, or $.07 per share) in
connection with the favorable settlement of certain prior years' income
tax returns. Also during the second quarter, the Company recorded a
pretax impairment loss of $2.2 million ($1.3 million net of tax
benefits, or $.02 per share) related to the write-off of an investment.
(b) During the third quarter of 1993, James River recorded a charge of $11
million, or $.13 per share, to increase its deferred tax liability as of
the beginning of the year for the effect of the 1% increase in the
statutory federal income tax rate. Also during the third quarter, the
Company received an additional $5.4 million of interest income ($3.3
million after taxes, or $.04 per share) in connection with the favorable
settlement of certain prior years' income tax returns.
(c) Effective as of the beginning of 1992, James River adopted SFAS 109.
This change in accounting principle increased net income for the first
quarter by $35.9 million ($.44 per share).
(d) During the fourth quarter of 1992, James River adopted SFAS 106,
retroactive to the beginning of 1992. The Company recorded a charge of
$499.3 million ($309.8 million net of tax benefits, or $3.79 per share)
in the first quarter for the cumulative effect of this change in
accounting principle. Results for the first three quarters of 1992 were
restated for the effect of this change.
(e) During the first quarter of 1992, James River accrued approximately $13
million of pretax charges ($8.7 million net of tax benefits, or $.11 per
share) for the refinement of estimates of restructuring costs and
environmental and litigation costs. During the fourth quarter of 1992,
the Company accrued approximately $18 million of pretax charges ($11
million net of tax benefits, or $.14 per share) including accruals for
landfill closure costs and certain environmental liabilities associated
with divested operations.
(f) During the fourth quarter of 1992, the Company recorded an extraordinary
loss of $50.6 million ($31.4 million net of tax benefits, or $.38 per
share) on the early extinguishment of $567 million principal amount of
notes and debentures. Also during the fourth quarter, the Company
recorded a pretax restructuring charge of $111.7 million ($71.4 million
net of tax benefits, or $.87 per share) to cover costs associated with
a productivity enhancement program.
(g) During 1991, results for the Company's Berlin/Gorham and Groveton, New
Hampshire, communications papers mills, its Ashland, Wisconsin, tissue
mill, and its Marathon, Ontario, pulp mill, including interest expense
attributable thereto, were excluded from consolidated results. These
facilities were held for sale pursuant to the Company's 1990
restructuring program. As of the beginning of 1992, the 1990
restructuring program was terminated and these operations were
reconsolidated.
(h) In March 1991, dividend payment dates were rescheduled from payment at
the end of January, April, July, and October to payment at the end of
March, June, September, and December in order to conform to the
Company's new fiscal year end. This dividend covering two months was
paid at two-thirds of the full quarterly rate.
</TABLE>
<PAGE>
Supplemental Pro Forma Financial Information (Unaudited)
During 1992, James River adopted the new accounting standards on income taxes
(SFAS 109) and on postretirement benefits other than pensions (SFAS 106).
Effective as of the first day of 1992, the Company terminated its 1990
restructuring program, resulting in the reconsolidation of the Retained
Operations and Marathon (see Note 2). These actions made reported results
for 1993 and 1992 not comparable to those of 1991. Accordingly, the
following pro forma information is presented to report 1993, 1992, and 1991
on a more comparable basis. Results for 1991 have been adjusted to reflect:
(i) the reconsolidation of the Retained Operations and Marathon, (ii) the pro
forma increase in depreciation expense assuming SFAS 109 had been adopted in
1991, and (iii) the pro forma increase in benefit costs assuming SFAS 106 had
been adopted in 1991. The pro forma effects of the adoptions of SFAS 109 and
SFAS 106 on 1991 results have been estimated based on the actual change in
expenses that resulted from such adoptions in 1992, as the actual effects on
1991 results are not determinable. In addition, 1992 and 1991 segment
information has been restated to conform with a reconfiguration of the
Company's segments as of the beginning of 1993. Certain amounts previously
reported in the Food and Consumer Packaging segment in prior years now are
reflected in the Consumer Products segment.
(in thousands, except Pro forma
per share amounts) 1993 1992 1991
Net sales:
Consumer products $2,358,136 $2,404,364 $2,438,255
Food and consumer packaging 1,568,454 1,565,054 1,573,940
Communications papers 901,326 917,974 971,983
Intersegment elimination (177,721) (159,213) (169,029)
Total net sales $4,650,195 $4,728,179 $4,815,149
Operating profit (loss):
Consumer products $111,286 $ 71,048 $103,600
Food and consumer packaging 103,827 89,168 128,164
Communications papers (58,400) (55,028) (11,902)
General corporate expenses (42,690) (49,737) (61,241)
Restructuring charge (117,851)
Income (loss) from
operations $114,023 $(62,400) $158,621
Net income (loss) before
extraordinary item and
accounting changes $(346) $(122,075) $37,870
Net income (loss) per share
before extraordinary item
and accounting changes $(.40) $(1.82) $.16
<PAGE>
<TABLE>
Selected Financial Data -- Operations(a)
(in thousands, except ratios and per share amounts)
<CAPTION>
December December December December April April
1993 1992 1991 1990(b) 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Operations
Net sales $4,650,195 $4,728,179 $4,561,726 $3,391,481 $5,949,987 $5,871,773
Cost of goods sold 3,858,586 3,976,714 3,551,875 2,564,024 4,664,351 4,508,603
Selling and administrative
expenses 677,586 702,145 765,871 499,922 825,837 798,398
Restructuring charge 111,720 199,976
Income (loss) from
operations 114,023 (62,400) 243,980 127,559 459,799 564,772
Interest expense 137,594 149,087 138,004 104,207 182,155 161,535
Other income, net 42,133 24,691 26,779 28,135 90,163 34,138
Income (loss) before
income taxes,
extraordinary items,
and accounting changes 18,562 (186,796) 132,755 51,487 367,807 437,375
Income tax expense
(benefit) 18,908 (64,721) 54,464 41,809 146,243 182,310
Net income (loss) before
extraordinary items
and accounting changes (346) (122,075) 78,291 9,678 221,564 255,065
Extraordinary items and
accounting changes, net
of income tax benefits (305,265)
Net income (loss) $ (346) $ (427,340) $ 78,291 $ 9,678 $ 221,564 $ 255,065
Interest on convertible
notes, net of income
taxes
Preferred dividend
requirements (32,822) (26,494) (24,613) (16,578) (21,589) (21,418)
Net income (loss)
applicable to common
shares $ (33,168) $ (453,834) $ 53,678 $ (6,900) $ 199,975 $ 233,647
Other Data
Per common share
(fully diluted):
Net income (loss) before
extraordinary items
and accounting changes $ (.40) $ (1.82) $ .66 $ (.08) $ 2.45 $ 2.87
Extraordinary items and
accounting changes (3.73)
Net income (loss) $ (.40) $ (5.55) $ .66 $ (.08) $ 2.45 $ 2.87
Annual rate of dividends
declared per share $ .60 $ .60 $ .60 $ .60 $ .60 $ .48
Weighted average number of
common shares and
equivalents
(fully diluted) 81,915 81,756 81,871 81,783 81,702 81,471
Common shares outstanding
at year end 81,628 81,578 81,504 81,295 81,181 81,060
Cash dividend payout ratio +100% +100% 88.6% +100% 34.4% 23.5%
Ratio of earnings to
interest 1.1 .5 1.6 2.8 2.6 3.1
Effective income tax rate 42.7% 34.6% 41.0% 81.2% 39.8% 41.7%
(a) Adjusted for three-for-two common stock splits on June 23, 1986 and June 20, 1983.
(b) Represents the 35-week transition period resulting from the change in fiscal year.
</TABLE>
<PAGE>
<TABLE>
Selected Financial Data -- Operations (a)
(in thousands, except ratios and per share amounts)
<CAPTION>
April April April April April April
1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C>
Operations
Net sales $5,097,978 $4,479,001 $2,606,950 $2,492,009 $2,301,076 $1,656,112
Cost of goods sold 3,918,701 3,404,032 1,964,910 1,895,647 1,728,243 1,253,365
Selling and administrative
expenses 751,556 667,106 456,772 385,816 355,620 264,807
Restructuring charge
Income (loss) from
operations 427,721 407,863 185,268 210,546 217,213 137,940
Interest expense 115,527 111,564 44,281 52,310 55,796 50,761
Other income, net 65,324 59,982 9,057 12,687 9,170 3,363
Income (loss) before
income taxes,
extraordinary items,
and accounting changes 377,518 356,281 150,044 170,923 170,587 90,542
Income tax expense
(benefit) 168,508 186,417 54,756 69,572 72,592 35,394
Net income (loss) before
extraordinary items
and accounting changes 209,010 169,864 95,288 101,351 97,995 55,148
Extraordinary items and
accounting changes, net
of income tax benefits
Net income (loss) $ 209,010 $ 169,864 $ 95,288 $ 101,351 $ 97,995 $ 55,148
Interest on convertible
notes, net of income
taxes 1,498 5,381 7,659 6,892
Preferred dividend
requirements (15,230) (4,000) (7,577) (9,082) (7,664) (791)
Net income (loss)
applicable to common
shares $ 193,780 $ 165,864 $ 89,209 $ 97,650 $ 97,990 $ 61,249
Other Data
Per common share
(fully diluted):
Net income (loss) before
extraordinary items
and accounting changes $ 2.36 $ 2.03 $ 1.73 $ 1.93 $ 1.97 $ 1.47
Extraordinary items and
accounting changes
Net income (loss) $ 2.36 $ 2.03 $ 1.73 $ 1.93 $ 1.97 $ 1.47
Annual rate of dividends
declared per share $ .40 $ .40 $ .37 $ .37 $ .27 $ .18
Weighted average number of
common shares and
equivalents (fully
diluted) 82,272 81,838 51,525 50,579 49,695 41,597
Common shares outstanding
at year end 81,193 82,354 51,672 43,575 39,729 36,923
Cash dividend payout ratio 22.5% 21.4% 27.2% 18.2% 13.6% 15.1%
Ratio of earnings to
interest 3.6 3.6 3.2 3.6 3.7 2.6
Effective income tax rate 44.6% 52.3% 36.5% 40.7% 42.6% 39.1%
(a) Adjusted for three-for-two common stock splits on June 23, 1986 and June 20, 1983.
(b) Represents the 35-week transition period resulting from the change in fiscal year.
<PAGE>
Cash dividend payout ratio:
The sum of common and preferred stock cash dividends declared, divided
by net income (loss).
Ratio of earnings to interest:
Income (loss) before restructuring charges, extraordinary items, the
cumulative effect of accounting changes, interest expense, and income
taxes, divided by total interest cost. Total interest cost is interest
expense, plus capitalized interest, plus interest charged to the accrued
restructuring liability, as applicable.
Effective income tax rate:
Income tax expense (benefit) before the cumulative effect of changes in
statutory income tax rates, divided by net income (loss) before income
taxes, extraordinary items, and the cumulative effect of accounting
changes.
</TABLE>
<PAGE>
<TABLE>
Selected Financial Data -- Financial Position, End of Year(a)
(in thousands, except ratios and per share amounts)
<CAPTION>
December December December December April April
1993 1992 1991 1990(b) 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Financial Position,
End of Year
Cash and short-term
securities $ 23,620 $ 375,492 $ 85,084 $ 31,923 $ 75,580 $ 24,424
Accounts receivable 422,894 414,773 389,633 394,804 544,020 567,072
Inventories 666,464 686,704 631,608 673,924 783,072 799,434
Other current assets 106,477 141,347 51,700 48,549 51,695 65,207
Net assets held for sale 62,868 78,850 375,270 761,501
Total current assets 1,282,323 1,697,166 1,533,295 1,910,701 1,454,367 1,456,137
Property, plant, and
equipment, net 3,571,492 3,502,809 2,933,098 2,843,402 3,491,938 3,385,977
Investments in affiliates 519,448 587,756 619,692 600,874 494,957 376,657
Other assets 324,724 390,576 368,071 205,383 175,254 114,121
Goodwill 153,315 158,029 172,438 181,041 201,879 225,241
Total assets $5,851,302 $6,336,336 $5,626,594 $5,741,401 $5,818,395 $5,558,133
Accounts payable and
accrued liabilities $ 616,192 $ 604,767 $ 481,872 $ 501,393 $ 631,331 $ 605,781
Current portion of
long-term debt 97,287 212,734 130,949 86,145 156,086 102,640
Other current liabilities 4,463 3,650 6,172 17,092 24,384 26,164
Accrued restructuring
liability 63,134 107,066 86,498 184,133
Total current
liabilities 781,076 928,217 705,491 788,763 811,801 734,585
Long-term debt 1,942,836 2,153,868 1,758,125 1,801,926 1,771,185 1,918,288
Other long-term
liabilities and
minority interests 728,788 705,387 113,467 142,081 139,616 96,337
Deferred income taxes 430,421 435,202 474,125 441,558 537,826 460,693
Redeemable preferred
stock 1,300 1,540 1,780 2,020 2,200 2,440
Non-redeemable preferred
stock 452,808 452,808 352,808 352,808 352,808 300,000
Common shareholders'
equity 1,514,073 1,659,314 2,220,798 2,212,245 2,202,959 2,045,790
Total liabilities and
shareholders' equity $5,851,302 $6,336,336 $5,626,594 $5,741,401 $5,818,395 $5,558,133
Working capital $ 501,247 $ 768,949 $ 827,804 $1,121,938 $ 642,566 $ 721,552
Other Data
Capital expenditures
(excluding acquisitions) 331,065 469,681 467,474 272,144 574,599 684,613
Depreciation expense 358,431 356,448 291,601 198,066 300,907 245,549
Per Common Share:
Market Price:
High $ 23.38 $ 23.38 $ 29.25 $ 27.12 $ 34.38 $ 30.75
Low 16.25 17.00 17.00 18.50 22.75 21.12
Year-end 18.50 18.00 19.88 26.38 22.88 28.50
Book value 18.55 20.34 27.25 27.21 27.14 25.24
Average weekly trading
volume (shares) 669 985 910 699 819 810
Return on average capital
employed 2.9% 1.4% 6.0% 11.1% 10.8% 12.8%
Return on average common
equity (2.1)% (3.6)% 2.4% 8.8% 9.4% 11.9%
Ratio of long-term debt
to total capitalization 49.7% 50.5% 40.6% 41.2% 40.9% 45.0%
Current ratio 1.64 1.83 2.17 2.42 1.79 1.98
(a) Adjusted for three-for-two common stock splits on June 23, 1986 and June 20, 1983.
(b) Represents the 35-week transition period resulting from the change in fiscal year, as applicable.
</TABLE>
<PAGE>
<TABLE>
Selected Financial Data -- Financial Position, End of Year (a)
(in thousands, except ratios and per share amounts)
<CAPTION>
April April April April April April
1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C>
Financial Position,
End of Year
Cash and short-term
securities $ 42,636 $ 116,764 $ 36,125 $ 32,090 $ 24,978 $ 96,625
Accounts receivable 532,922 439,784 248,445 235,901 212,319 153,600
Inventories 802,047 713,690 395,955 401,702 379,817 302,912
Other current assets 66,309 72,876 63,237 72,029 18,183 14,066
Net assets held for sale
Total current assets 1,443,914 1,343,114 743,762 741,722 635,297 567,203
Property, plant, and
equipment, net 2,935,738 2,529,563 1,205,792 984,017 811,599 573,873
Investments in affiliates 269,333
Other assets 132,112 97,083 22,672 15,151 12,973 11,041
Goodwill 224,620 240,712
Total assets $5,005,717 $4,210,472 $1,972,226 $1,740,890 $1,459,869 $1,152,117
Accounts payable and
accrued liabilities $ 618,591 $ 546,548 $ 269,215 $ 257,649 $ 270,255 $ 200,639
Current portion of
long-term debt 81,413 69,438 10,064 9,098 5,720 3,922
Other current liabilities 30,110 15,301 23,722 26,116 8,174
Accrued restructuring
liability
Total current
liabilities 730,114 631,287 303,001 292,863 284,149 204,561
Long-term debt 1,622,990 1,280,428 646,498 563,132 442,917 427,450
Other long-term
liabilities and
minority interests 103,433 178,514 71,703 61,352 72,800 122,691
Deferred income taxes 366,785 266,147 197,941 144,879 89,229 43,217
Redeemable preferred
stock 4,918 6,898 8,879 96,838 104,082 9,904
Non-redeemable preferred
stock 300,000 100,000
Common shareholders'
equity 1,877,477 1,747,198 744,204 581,826 466,692 344,294
Total liabilities and
shareholders' equity $5,005,717 $4,210,472 $1,972,226 $1,740,890 $1,459,869 $1,152,117
Working capital $ 713,800 $ 711,827 $ 440,761 $ 448,859 $ 351,148 $ 362,642
Other Data
Capital expenditures
(excluding acquisitions) 623,079 508,973 281,058 218,221 132,988 77,043
Depreciation expense 201,960 162,606 81,739 66,432 53,064 32,096
Per Common Share:
Market Price:
High $ 39.00 $ 43.75 $ 31.12 $ 23.00 $ 28.12 $ 20.75
Low 18.50 22.00 17.12 15.63 18.12 6.00
Year-end 24.63 36.00 30.75 17.33 19.50 19.67
Book value 23.12 21.22 14.40 13.35 11.63 9.32
Average weekly trading
volume (shares) 1,437 1,280 753 488 302 292
Return on average capital
employed 12.2% 17.4% 12.2% 16.7% 21.1% 21.0%
Return on average common
equity 10.7% 10.0% 13.2% 17.7% 22.4% 22.6%
Ratio of long-term debt
to total capitalization 42.7% 40.9% 46.2% 45.4% 43.7% 54.7%
Current ratio 1.98 2.13 2.45 2.53 2.24 2.77
(a) Adjusted for three-for-two common stock splits on June 23, 1986 and June 20, 1983.
(b) Represents the 35-week transition period resulting from the change in fiscal year, as applicable.
<PAGE>
Book value per common share:
Common shareholders' equity less unrecognized accretion or unamortized
discount on preferred stock, divided by outstanding shares of common
stock.
Return on average capital employed:
Income (loss) before restructuring charges, extraordinary items, the
cumulative effect of accounting changes, interest expense, and income
taxes, divided by average capital employed. Capital employed is
calculated as total assets, excluding assets held for sale, minus non-
interest bearing current liabilities. Income for the 35-week transition
period ended December 1990 has been annualized.
Return on average common equity:
Income (loss) applicable to common shares before after-tax restructuring
charges, extraordinary items, and the cumulative effect of accounting
changes, divided by average common shareholders' equity. Common
shareholders' equity has been adjusted to exclude net restructuring
charges, extraordinary items, and accounting changes which occurred in
that year. Income for the 35-week transition period ended December 1990
has been annualized.
Ratio of long-term debt to total capitalization:
Long-term debt divided by the sum of long-term debt, redeemable and non-
redeemable preferred stock, and common shareholders' equity.
Current ratio:
Total current assets divided by total current liabilities.
</TABLE>
<PAGE>
Exhibit 13 - Appendix A
Operating Income - Consumer Products bar chart as defined by the following
data points:
(in millions) 1991 1992 1993
1st Quarter $47.4 $15.3 $23.2
2nd Quarter 46.7 30.8 33.9
3rd Quarter 22.6 32.8 33.6
4th Quarter 12.1 (7.8) 20.6
Operating Income - Food and Consumer Packaging bar chart as defined by the
following data points:
(in millions) 1991 1992 1993
1st Quarter $37.9 $31.8 $23.3
2nd Quarter 39.6 33.7 29.7
3rd Quarter 33.8 16.9 22.3
4th Quarter 30.6 6.7 28.5
Operating Income - Communications Papers bar chart as defined by the
following data points:
(in millions) 1991 1992 1993
1st Quarter $20.6 $(15.4) $(20.3)
2nd Quarter 3.1 (6.4) (12.3)
3rd Quarter 3.1 (6.3) (6.4)
4th Quarter 6.3 (26.9) (19.4)
Current Ratio bar chart as defined by the following data points:
1989 1990 1990* 1991 1992 1993
Current ratio 1.98 1.79 2.42 2.17 1.83 1.64
* Fiscal year end changed to last Sunday in December.
Capital Expenditures and Cash Flow from Operations bar chart as defined by
the following data points:
(in millions) 1989 1990 1990* 1991 1992 1993
Capital expenditures $685 $575 $457 $468 $470 $331
Cash flow from operations 535 588 431 289 313 441
* 53 weeks ended December 30, 1990, as recast for the change in fiscal year.
Total Capitalization bar chart as defined by the following data points:
(in billions) 1989 1990 1990* 1991 1992 1993
Long-term debt $1.92 $1.77 $1.80 $1.76 $2.16 $1.95
Total preferred stock .30 .36 .36 .35 .45 .45
Common shareholders' equity 2.05 2.20 2.21 2.22 1.66 1.51
* Fiscal year end changed to last Sunday in December.
Total Assets bar chart as defined by the following data points:
(in billions) 1989 1990 1990* 1991 1992 1993
Current assets $1.46 $1.45 $1.91 $1.53 $1.70 $1.28
Net fixed and other assets 4.10 4.37 3.83 4.10 4.64 4.57
* Fiscal year end changed to last Sunday in December.
Working Capital bar chart as defined by the following data points:
(in millions) 1989 1990 1990* 1991 1992 1993
Working capital $722 $643 $1,122 $828 $769 $501
* Fiscal year end changed to last Sunday in December.
Annual Rate of Cash Dividends Per Common Share bar chart as defined by the
following data points:
(in dollars) 1989 1990 1990* 1991 1992 1993
Annual rate of cash dividends $.48 $.60 $.60 $.60 $.60 $.60
* Fiscal year end changed to last Sunday in December.
Exhibit 21
JAMES RIVER CORPORATION of Virginia
SUBSIDIARIES (a)(b)
as of December 26, 1993
James River Corporation of Virginia, a corporation organized under the
laws of Virginia, has the following majority-owned subsidiaries:
Organized Under
Name the Laws of
Berlin Mills Railway, Inc. New Hampshire
Brusara Participacoes, Ltda Brazil
Canada Cup, Inc. Ontario
Crown Zellerbach A.G. Switzerland
Crown Zellerbach International, Inc. Delaware
Diamond Occidental Forest Inc. Delaware
GB Papers Limited Scotland
Historic Upper Brandon, Inc. Virginia
ILC Inc. Virginia
James River Acquisition, Inc. Virginia
James River Fiber Company Virginia
James River Fine Papers Limited Scotland
James River International Holdings, Ltd. Virginia
James River-Marathon, Ltd. Ontario
James River-Mississippi, Inc. Delaware
James River New Castle, Inc. Delaware
James River-New Hampshire Electric, Inc. New Hampshire
James River Paper Company, Inc. Virginia
James River-Pennington, Inc. Alabama
James River Timber Corporation Alabama
E-14
<PAGE>
Exhibit 21 (continued)
Organized Under
Name the Laws of
James River Tredegar, Inc. Virginia
James River UK Holdings Limited England
Jarapar Participacoes, Ltda Brazil
JOHIO, Inc. Ohio
JRFP International Limited Scotland
Meridian & Bigbee Railroad Company Mississippi
Riverside Transportation, Inc. Virginia
St. Francis Insurance Company, Ltd. Bermuda
Scotflow Limited Scotland
William Sommerville & Son, Ltd. Scotland
(a) Certain subsidiaries which, if considered in the aggregate, would not
constitute a significant subsidiary are not listed.
(b) Unconsolidated affiliates for which the Company owns, directly or
indirectly, 50% or less of the outstanding voting stock and which are
not controlled by the Company have been excluded from this listing.
E-14
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference:
(i) in Registration Statement No. 33-50284 on Form S-8 pertaining to the
James River Corporation of Virginia Stock Purchase Plan;
(ii) in Registration Statement No. 33-25851 on Form S-8 pertaining to
the James River II, Inc. Salaried Employees Retirement Savings Plan;
(iii) in Registration Statement No. 33-45079 on Form S-8 pertaining to
the James River Corporation of Virginia UK Employee Share Accumulation Plan;
(iv) in Registration Statement No. 33-43207 on Form S-8 pertaining to
the James River Corporation of Virginia Canadian Employees Stock Purchase
Plan;
(v) in Registration Statement No. 33-43894 on Form S-8 pertaining to the
James River Corporation of Virginia Stock Option Plan for Outside Directors;
(vi) in Post-Effective Amendment No. 1 to Registration Statement No.
2-83979 on Form S-8, serving as Post-Effective Amendment No. 5 to
Registration Statement No. 2-64057, and as Post-Effective Amendment No. 2 to
Registration Statement No. 2-76900, each pertaining to the James River
Corporation of Virginia Stock Option Plan; and
(vii) in Registration Statement No. 33-43594 on Form S-8 pertaining to
the James River Corporation of Virginia 1987 Stock Option Plan,
of our report, dated January 25, 1994 on our audits of the consolidated
financial statements and financial statement schedules of James River
Corporation of Virginia and Subsidiaries as of December 26, 1993 and December
27, 1992, and for each of the three fiscal years in the period ended December
26, 1993, which report is included in this Annual Report on Form 10-K.
COOPERS & LYBRAND
Richmond, Virginia
March 24, 1994
E-15
