Registration No. 33-_____
As filed with the Securities and Exchange Commission on November 30, 1994
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
Form S-8
Registration Statement
Under the Securities Act of 1933
_______________
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 and Zip Code)
_______________
JAMES RIVER CORPORATION OF VIRGINIA
1987 STOCK OPTION PLAN
(Full title of the plan)
CLIFFORD A. CUTCHINS, IV, ESQ., Senior Vice President,
General Counsel, Corporate Secretary
James River Corporation of Virginia
120 Tredegar Street
Richmond, Virginia 23219
(804) 644-5411
(Name, address, and telephone number of agent for service)
_______________
The securities covered by this registration statement will be
issued to employees of James River Corporation of Virginia ("James
River" or the "Company") from time to time pursuant to the James
River Corporation of Virginia 1987 Stock Option Plan, as amended and
restated (the "Stock Option Plan").
The registration statement is being filed to register additional
shares of James River's common stock, $.10 par value ("Common
Stock"), under the Stock Option Plan.
CALCULATION OF REGISTRATION FEE
Amount Proposed Proposed Amount
Title of securities to to be maximum maximum of
be registered registe offering aggregate registr
red price per offering ation
share (a) price (a) fee
Common Stock 2,000,0 $21.00 $42,000,000 $14,483
00
Rights to Purchase
Series M Cumulative (b) $100
Participating
Preferred Stock, $10
par value
(a) Estimated solely for the purpose of calculating the
registration fee; based upon the average of the high and low
prices for Common Stock reported in the Consolidated Reporting
System of the New York Stock Exchange on November 28, 1994.
(b) The Rights to Purchase Series M Cumulative Participating
Preferred Stock (the "Rights") will be attached to and traded with
shares of the Common Stock. Value attributable to such Rights, if
any, will be reflected in the market price of the shares of such
Common Stock. The fee paid represents the minimum statutory fee
pursuant to Section 6(b) of the Securities Act of 1933, as
amended.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents have been filed by James River
Corporation of Virginia ("James River" or the "Company") with the
Commission (File No. 1-7911) and are incorporated herein by
reference: (i) the Company's Annual Report on Form 10-K for the
fiscal year ended December 26, 1993; (ii) the Company's Proxy
Statement for the annual meeting held on April 28, 1994; (iii) the
Company's Quarterly Reports on Form 10-Q for the quarters ended March
27, 1994, June 26, 1994, and September 25, 1994; and (iv) the
Company's Current Reports on Form 8-K dated January 25, 1994,
February 22, 1994, April 21, 1994, April 27, 1994, June 1, 1994, June
29, 1994, July 5, 1994, July 21, 1994, August 22, 1994, September 28,
1994, October 26, 1994, and November 22, 1994.
Also filed with the Commission and incorporated herein by
reference are (i) the description of the Company's common stock, $.10
par value ("Common Stock"), included in the Registration Statement on
Form 8-A dated January 3, 1980, incorporating by reference the
description included under the heading "Description of Common Stock"
in Amendment No. 1 to Registration Statement No. 2-63209, as amended
by Amendment No. 4 to Application or Report on Form 8 dated July 28,
1992, and (ii) the description of the Rights to Purchase Series M
Cumulative Participating Preferred Stock (the "Rights") included in
the Registration Statement on Form 8-A dated March 3, 1989, as
amended by Amendment No. 1 to Application or Report on Form 8 dated
July 28, 1992.
All documents filed by James River pursuant to Sections 13(a),
13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), after the date hereof and prior to the
filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all
securities then remaining unsold shall be deemed to be incorporated
by reference herein and to be a part hereof from the date of filing
of such documents.
Item 4. Description of Securities
As the Common Stock and the Rights are registered under Section
12 of the Exchange Act, this item is not applicable.
Item 5. Interests of Named Experts and Counsel
This item is not applicable.
Item 6. Indemnification of Directors and Officers
Article 10 of the Virginia Stock Corporation Act allows, in
general, for indemnification, in certain circumstances, by a
corporation of any person threatened with or made a party to any
action, suit, or proceeding by reason of the fact that he or she is,
or was, a director, officer, employee, or agent of such corporation.
Indemnification is also authorized with respect to a criminal action
or proceeding where the person had no reasonable cause to believe
that his or her conduct was unlawful. Article 9 of the Virginia
Stock Corporation Act provides limitations on damages payable by
officers and directors, except in cases of willful misconduct or
knowing violation of criminal law or any federal or state securities
law.
Article VI of the Company's Amended and Restated Articles of
Incorporation provides for mandatory indemnification of any director
or officer of the Company who is, was, or is threatened to be made a
party to a proceeding (including a proceeding by or in right of the
Company) because he or she is or was a director or officer of the
Company or because he or she is or was serving the Company or other
legal entity in any capacity at the request of the Company while a
director or officer of the Company, against all liabilities and
reasonable expenses incurred in the proceeding, except such
liabilities and expenses as are incurred because of such director's
or officer's willful misconduct or knowing violation of the criminal
law.
The Company's Amended and Restated Articles of Incorporation
also provide that in every instance permitted under Virginia
corporate law in effect from time to time, the liability of a
director or officer of the Company to the Company or its shareholders
arising out of a single transaction, occurrence, or course of conduct
shall be limited to one dollar.
The Company maintains a standard policy of officers' and
directors' liability insurance.
Item 7. Exemption from Registration Claimed
This item is not applicable.
Item 8. Exhibits
4(a) Amended and Restated Articles of Incorporation of
James River Corporation of Virginia, as amended
effective January 4, 1990 (incorporated by reference
to Exhibit 3(a) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 26,
1993).
4(b) Articles of Amendment to the Amended and Restated
Articles of Incorporation of James River Corporation
of Virginia Designating the Series O 8-1/4%
Cumulative Preferred Stock ($10.00 par value),
effective October 1, 1992 (incorporated by reference
to Exhibit 3(b) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 26,
1993).
4(c) Articles of Amendment to the Amended and Restated
Articles of Incorporation of James River Corporation
of Virginia Designating the Series P 9% Cumulative
Convertible Preferred Stock ($10.00 par value)
(incorporated by reference to Exhibit 3.1 to the
Company's Current Report on Form 8-K dated June 29,
1994).
4(d) Bylaws of James River Corporation of Virginia,
amended as of April 28, 1994 (incorporated by
reference to Exhibit 3(c) to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 26, 1993).
4(e) 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
No. 1 to Application or Report on Form 8 dated July
28, 1992, amending the Registration Statement on
Form 8-A dated March 3, 1989).
5 Opinion of McGuire, Woods, Battle & Boothe -- filed
herewith. E-1
23(a) Consent of Coopers & Lybrand -- filed herewith. E-2
23(b) Consent of McGuire, Woods, Battle & Boothe --
included in Exhibit 5.
99 James River Corporation of Virginia 1987 Stock
Option Plan, 1993 Amendment and Restatement,
effective as of December 16, 1993 (the "Plan")
(incorporated by reference to Exhibit 10(j) to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 26, 1993).
Item 9. Undertakings
The undersigned registrant hereby undertakes:
(a) (1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933, as amended (the "Securities
Act");
(ii) To reflect in the Prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed by James River pursuant to Section 13 or Section
15(d) of the Exchange Act that are incorporated by reference in
the registration statement.
(2) That, for the purposes of determining any liability under
the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) That, for purposes of determining any liability under the
Securities Act, each filing of James River's annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and
controlling persons of James River pursuant to the foregoing
provisions, or otherwise, James River has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by James River of expenses incurred or paid by a director,
officer, or controlling person of James River in the successful
defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the
securities being registered, James River will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of
such issue.
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities
Act of 1933, James River Corporation of Virginia certifies that it
has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Richmond, Commonwealth of
Virginia on the 30th day of November, 1994.
JAMES RIVER CORPORATION
of Virginia
By:/s/Stephen E. Hare
Stephen E. Hare
Senior Vice President, Corporate Finance
and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in
the capacities indicated and on the date indicated below.
Signature Title Date
/s/Robert C. Williams Chairman, President, and November 30, 1994
Robert C. Williams Chief Executive Officer and
Director (Principal Executive Officer)
/s/Stephen E. Hare Senior Vice President, November 30, 1994
Stephen E. Hare Corporate Finance and
Chief Financial Officer
(Principal Financial and Accounting Officer)
/s/FitzGerald Bemiss Director November 18, 1994
FitzGerald Bemiss
/s/William T. Burgin Director November 21, 1994
William T. Burgin
/s/Worley H. Clark, Jr. Director November 21, 1994
Worley H. Clark, Jr.
/s/William T. Comfort, Jr. Director November 28, 1994
William T. Comfort, Jr
/s/William V. Daniel Director November 18, 1994
William V. Daniel
/s/Bruce C. Gottwald Director November 18, 1994
Bruce C. Gottwald
/s/Robert M. O'Neil Director November 22, 1994
Robert M. O'Neil
/s/Joseph T. Piemont Director November 30, 1994
Joseph T. Piemont
/s/Anne M. Whittemore Director November 23, 1994
Anne M. Whittemore
EXHIBIT INDEX
Exhibit
Number Description Section
4(a) Amended and Restated Articles of Incorporation of
James River Corporation of Virginia, as amended
effective January 4, 1990 (incorporated by reference
to Exhibit 3(a) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 26,
1993).
4(b) Articles of Amendment to the Amended and Restated
Articles of Incorporation of James River Corporation
of Virginia Designating the Series O 8-1/4%
Cumulative Preferred Stock ($10.00 par value),
effective October 1, 1992 (incorporated by reference
to Exhibit 3(b) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 26,
1993).
4(c) Articles of Amendment to the Amended and Restated
Articles of Incorporation of James River Corporation
of Virginia Designating the Series P 9% Cumulative
Convertible Preferred Stock ($10.00 par value)
(incorporated by reference to Exhibit 3.1 to the
Company's Current Report on Form 8-K dated June 29,
1994).
4(d) Bylaws of James River Corporation of Virginia,
amended as of April 28, 1994 (incorporated by
reference to Exhibit 3(c) to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 26, 1993).
4(e) 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
No. 1 to Application or Report on Form 8 dated July
28, 1992, amending the Registration Statement on
Form 8-A dated March 3, 1989).
5 Opinion of McGuire, Woods, Battle & Boothe -- filed
herewith. E-1
23(a) Consent of Coopers & Lybrand -- filed herewith. E-2
23(b) Consent of McGuire, Woods, Battle & Boothe --
included in Exhibit 5.
99 James River Corporation of Virginia 1987 Stock
Option Plan, 1993 Amendment and Restatement,
effective as of December 16, 1993 (incorporated by
reference to Exhibit 10(j) to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 26, 1993).
Exhibit 5
November 30, 1994
James River Corporation
of Virginia
120 Tredegar Street
Richmond, Virginia 23219
Gentlemen:
We have acted as counsel to James River Corporation of
Virginia, a Virginia corporation ("James River"), in connection
with the Registration Statement on Form S-8 (the "Registration
Statement") James River proposes to file with the Securities and
Exchange Commission under the Securities Act of 1933, as amended,
with respect to 2,000,000 shares of common stock, par value
$0.10, of James River (the "Common Stock"), and Rights to
Purchase Series M Cumulative Participating Preferred Stock, par
value $10.00, of James River (the "Rights") attached in equal
number to the shares of the Common Stock to be offered under its
1987 Stock Option Plan, as amended and restated (the "Plan"). In
this capacity, we have examined the Registration Statement, the
Plan, the records of corporate proceedings of James River and
such other materials as we have deemed necessary to the issuance
of this opinion.
On the basis of the foregoing, we are of the opinion that:
(1) James River is a corporation duly organized and validly
existing under the laws of Virginia.
(2) The shares of Common Stock of James River to be offered
through the Plan have been validly authorized and, when
issued in accordance with the terms and provisions of
the Plan, will be legally issued, fully paid and non-
assessable.
(3) We re-affirm our opinion regarding the Rights given to
James River's Board of Directors as confirmed in our
letter of February 9, 1989, a copy of which is attached
to this opinion. In our opinion regarding the Rights,
we discussed whether certain provisions of Section
13.1-638 of the Code of Virginia (the "Code") might
prohibit the restrictions on transfer imposed under the
agreement governing the Rights. The Code was amended,
effective July 1, 1990, to provide that,
notwithstanding such provisions of Section 13.1-638,
the terms of rights issued by a corporation may include
restrictions on transfer by designated persons or
classes of persons.
We hereby consent to the filing of this opinion with the
Securities and Exchange Commission as an exhibit to the
Registration Statement.
Very truly yours,
McGuire Woods Battle & Boothe
February 9, 1989
Board of Directors
James River Corporation
of Virginia
Tredegar Street
Richmond, Virginia 23217
Gentlemen:
This will confirm our opinion, given orally to the Board of
Directors of James River Corporation of Virginia, a Virginia
corporation (the "Company"), with respect to the Board of
Directors' adoption of a Shareholder Rights Plan (the "Plan") on
the terms set forth in the Rights Agreement (the "Rights
Agreement") which was submitted to the Board of Directors before
adoption. Under the Plan, the Board of Directors has authorized
the issuance by the Company of rights (the "Rights") to purchase
1/1000th of a share of the Company's Series M. Cumulative
Participating Preferred Stock, par value $10.00 per share
("Series M Preferred Stock"), as a dividend distribution to
holders of the Common Stock, par value $.10 per share (the
"Common Stock"), of the Company.
In connection with this opinion, we have reviewed the
amended and Restated Articles of Incorporation and Bylaws, as
amended, of the Company; the Rights Agreement; the resolutions
adopted by the Board of Directors on February 9, 1989, providing
among other things for the distribution of the Rights and
approving the Rights Agreement; the Company's proposed letter to
shareholders concerning the Rights distribution; and such other
matters as we consider necessary. We have examined those
Virginia statutes and judicial decisions as we have deemed
relevant. Although we have also examined certain statutes and
judicial decisions from other jurisdictions, we express no
opinion herein concerning the laws of any state other than
Virginia.
Summary of the Plan
Each Right issued under the Plan will entitle the holder to
purchase 1/1000th of a share of Series M Preferred Stock for
$150.00, subject to certain anti-dilution adjustments. However,
the Rights are not exercisable (and cannot be transferred
separately from the Common Stock) until the close of business on
the tenth day after the first date of public announcement that a
person or group has acquired beneficial ownership of ten percent
or more of the Common Stock (an "Acquiring Person") or after the
close of business on the tenth business day after the date a
person or group commences or first publicly announces its
intention to commence a tender or exchange offer the consummation
of which would result in beneficial ownership by such person or
group of ten percent or more of the Common Stock. In the event
that any other entity should merge or otherwise combine with the
Company or enter into certain specified transactions with it,
each Right would then entitle the holder to purchase that number
of shares of common stock of such other entity or, in the case of
certain transactions where the other entity is an Acquiring
Person, that number of shares of Common Stock, which at the time
of the transaction would have a market value of two times the
then exercise price of the Right. The Board of Directors of the
Company may redeem all of the Rights at a price of $.01 per Right
at any time until ten days after any person or group acquires
beneficial ownership of ten percent or more of the Common Stock.
Even after someone acquires beneficial ownership of ten percent
of the Common Stock and the Rights become nonredeemable, the
right of redemption will be reinstated if such person reduces its
equity position to five percent or less of the Common Stock in a
transaction or series of transactions not directly or indirectly
involving the Company or any of its subsidiaries.
Reasons for the Plan
We understand that the Board of Directors believes that the
current market price of the Common Stock does not reflect the
long-term potential of the Company. Given the present popularity
and ease of consummating an unsolicited takeover of a major
corporation, the Board of Directors believes that adoption of the
Plan will make the Company less vulnerable to abusive and unfair
takeover tactics by giving the Board of Directors the time and
flexibility to ensure that all shareholders are protected in
their right to retain their investment, or to secure full value
for it, while not precluding a fair acquisition of the Company.
Although we understand that the Company has no knowledge that any
person or group is presently engaged in such tactics with respect
to the Company, the Board of Directors is concerned that present
law and existing provisions of the Company's Amended and Restated
Articles of Incorporation and Bylaws do not provide adequate
protection against such tactics.
We understand that the Board of Directors' principal purpose
in adopting the Plan is to encourage any potential acquiror to
negotiate in advance with the Company, thereby enabling the Board
of Directors to act in the best interests of all the
shareholders. The Board of Directors has acknowledged that the
Plan is not intended to deter or prevent an offer which would be
in the best interests of all shareholders or to affect adversely
any person or group's ability to obtain representation on or
control of the Company's Board of Directors through proxy
contests.
Matters Considered by the Board of Directors
A committee of members of the Board of Directors considered
proposals similar to the Plan at a meeting held on January 31,
1989 and the entire Board of Directors considered such proposals
and the Plan at a meeting held on February 9, 1989. The
directors were assisted in their deliberations not only by
officers of the Company but also by independent financial
advisors and legal counsel. Factors discussed during these
meetings included (i) the takeover environment generally and as
it relates to paper and forest products companies; (ii) the
vulnerability of the Company to a takeover generally and to
particular takeover tactics, in light of present law and existing
provisions of the Company's Amended and Restated Articles of
Incorporation and Bylaws; (iii) the financial and other
characteristics of the Company which could make the Company an
attractive target; (iv) the provisions, purposes and potential
effects of the Plan; (v) whether the Plan is reasonably related
to and effective in accomplishing its intended purposes; (vi) the
effect of the Plan, if any, on potential offers for all of the
Common Stock; (vii) the redemption features of the Plan,
including the possibility that the Rights might become non-
redeemable and the consequences thereof in obtaining a fair price
for all shareholders in a subsequent negotiated transaction;
(viii) the potential effect of the Plan on the market price of
the Common Stock; and (ix) whether the exercise price under the
rights is reasonably related to the value of the Company.
The Board of Directors also considered that (i) Virginia has
a statute prohibiting for three years after certain significant
transactions between a corporation and any holder of at least ten
percent of its voting shares who acquires such percentage without
prior approval by the board of directors unless the acquisition
is approved by the majority of the disinterested directors and
the holders of two thirds of the shares other than the shares of
such holder and (ii) the Virginia legislature has passed a bill
which if approved by the Governor will, effective July 1, 1989,
provide that under certain circumstances shares acquired by a
person will have no voting rights unless voting rights are
granted by a resolution adopted by the shareholders. We
understand that the Board of Directors believes that the former
statute shows public policy in Virginia recognizes that the
acquisition of a ten percent interest without Board approval
presents a possible threat to the corporation and its other
shareholders, and that the Plan supplements the protection
provided by these statutes by helping to ensure that shareholders
realize the full long-term potential value for their Common
Stock.
It is our understanding that the Board of Directors has
concluded that the Rights (i) serve a legitimate corporate
purpose and are reasonably related to accomplishing that purpose,
(ii) have an exercise price which is reasonably related to the
value of the Company, (iii) are in the best interests of the
Company and its shareholders, and (iv) have not been proposed for
the purpose of perpetuating the directors' or management's
control over the Company.
Legal Authorization of the Rights
The Virginia Stock Corporation Act authorizes the board of
directors of a corporation to issue rights, options and warrants
for the purchase of shares of the corporation on such terms as it
may approve, except in limited circumstances not applicable here.
Section 13.1-646 of the Virginia code provides that:
A corporation may create or issue rights, options or
warrants for the purchase of shares of the corporation upon
such terms and conditions and for such consideration as may
be approved by the board of directors. If such rights,
options or warrants are to be issued to directors, officers
or employees as such of the corporation or any subsidiary
thereof, and not to the shareholders generally, their
issuance shall be authorized by the shareholders of the
corporation who are entitled to vote generally in the
election of directors, or shall be authorized by and
consistent with a plan approved or ratified by such
shareholders, unless the articles of incorporation provide
that shareholder approval is not required. (emphasis
supplied)
The terms of Section 13.1-646 are broad, and we have not
found any legislative history or judicial decision indicating
that the language of the statute should be narrowly construed so
as to deprive boards of directors of the authority to issue
rights similar to those contemplated under the Plan. We note
that similarly broadly-worded provisions of the Delaware General
Corporation Law have been held by the Delaware Supreme Court to
authorize a board of directors to issue rights with features
similar to those of the Plan. Moran v. Household International,
Inc., 500 A.2d 1346 (Del. 1985) ("Household"); Revlon, Inc. v.
MacAndrew & Forbes Holdings, Inc. 506 A.2d 173 (Del. 1986)
("Revlon").
Based on the language of the Virginia statute, the Household
and Revlon cases and the absence of contrary Virginia precedent,
we believe that a Virginia court should hold that the Plan and
the issuance of the Rights are authorized by Section 13.1-646.
Restriction on Transfer to an Acquiring Person
The Plan provides that Rights cannot be transferred to any
person who is or, as a result of the transfer of Common Stock
related to the Rights, becomes, directly or indirectly, an
Acquiring Person or an associate or affiliate of an Acquiring
Person. Any such purported transfer will be void, and the
transferor will continue to own such Rights. This provision
would not prevent an Acquiring Person and its associates and
affiliates from owning in the aggregate up to ten percent of the
Rights.
Section 13.1-649 of the Virginia Code permits, among other
things, a restriction on transfer to any person or class of
persons, if the restriction is not "manifestly unreasonable."
Since the purpose of the Rights is to make the Company less
vulnerable to abusive and unfair takeover tactics by giving the
Board of Directors the time and flexibility to ensure that all
shareholders are protected in their right to retain their
investment, or to secure full value for it, while not precluding
a fair acquisition of the Company, we believe that a court
applying Virginia law should hold that (i) the restrictions on
transfer set forth in the Plan are for a reasonable purpose and
(ii) not permitting Rights to be transferred to an Acquiring
Person and its affiliates and associates is not manifestly
unreasonable. Without these restrictions on transfer, certain
types of unfair or coercive transactions could be pursued by a
potential acquiror without regard to the Rights, thereby
undermining the function of the Rights in encouraging a potential
acquiror to negotiate with the Board of Directors and to pay fair
value to the Company's shareholders.
Someone seeking to attack the Plan might argue that the
provisions of Section 13.1-638 of the Virginia Code (which
provides that all shares of a class must have preferences,
limitations and relative rights identical to those of other
shares) prohibit the discriminatory effect of the restrictions on
transfer imposed under the Plan.
Courts in some jurisdictions have held that rights plans
violate statutes similar to Section 13.1-638 because of
provisions which, in certain circumstances, invalidate rights
held by the potential acquiror. These courts have held that the
statutory provisions in question prohibit discrimination among
shareholders. See, e.g., Amalgamated Sugar Co. v. NL Industries,
Inc., 644 F. Supp. 1229 (S.D.N.Y. 1986), R. D. Smith & Co., Inc.
v. Preway, Inc. 644 F. Supp. 868 (W.D. Wis. 1986), The Bank of
New York Co. Inc. v. Irving Bank Corp., 528 N.Y.S. 2d 482 (N.Y.
Sup. Ct. 1988), aff'd without opinion, ____ A.D. 2d ____ (1st
Dept. Oct. 4, 1988). On the other hand, courts in other
jurisdictions dealing with similar plans and statutory
provisions, have held that the prohibition against discrimination
only extends to the shares and does not prohibit discrimination
among shareholders. Using this reasoning, these courts upheld
the provisions in the plans which restricted the exercisability
of the rights by certain holders. See, e.g., Dynamics Corp. of
America v. CTS Corp., 805 F. 2d 705 (7th Cir. 1986), Gelco Corp.
v. Coniston Partners, 652 F. Supp. 829 (D. Minn. 1986).
Whether or not Section 13.1-638 would prohibit attempts to
invalidate rights already held by a person because of
discrimination among existing security holders, we believe that a
court applying Virginia law should hold that any such principles
would be inapplicable to the transfer restrictions contained in
the Plan. These transfer restrictions may prevent a person from
acquiring more Rights but do not affect his ability to exercise
Rights previously acquired.
Standard of Conduct of the Board of Directors
Directors of a corporation stand in a fiduciary relationship
to their corporation, and therefore impliedly to their
shareholders, and have a duty to exercise due care in making
decisions. To fulfill their obligations, directors must have
access to and consider reasonably available information relevant
to their decisions. Directors are generally protected against
liability for actions taken in exercise of their duties as
directors by the business judgment rule. This rule accords a
presumption of validity to directors' actions unless it is shown
that the directors acted in bad faith, fraudulently or in their
own self interest. Courts applying Virginia law have recognized
the business judgment rule. Penn v. Pemberton & Penn, 189 Va.
649, 53 S.E. 2d 823 (1949); Abella v. Universal Leaf Tobacco Co.,
Inc., 495 F. Supp. 713 (E.D. Va 1980), reconsidered at 546 F.
Supp. 795 (E.D. Va. 1980).
In the 1986 revision of the Virginia Stock Corporation Act,
the General Assembly adopted a statutory standard of conduct for
directors. If a director performs his duties in accordance with
this standard of conduct, he is not liable for any action taken
as a director. Thus the General Assembly has codified the
business judgment rule for directors of Virginia corporations.
To date there have been no judicial interpretations of the new
statute.
Section 13.1-690 of the Virginia Code sets forth the general
standard of conduct for directors and provides as follows:
A. A director shall discharge his duties as a director,
including his duties as a member of a committee, in
accordance with his good faith business judgment of the best
interests of the corporation.
B. Unless he has knowledge or information concerning the
matter in question that makes reliance unwarranted, a
director is entitled to rely on information, opinions,
reports or statements, including financial statements and
other financial data, if prepared or presented by:
1. One or more officers or employees of the
corporation whom the director believes, in good faith,
to be reliable and competent in the matters presented;
2. Legal counsel, public accountants, or other
persons as to matters the director believes, in good
faith, are within the person's professional or expert
competence; or
3. A committee of the board of directors of which he
is not a member if the director believes, in good
faith, that the committee merits confidence.
C. A director is not liable for any action taken as a
director, or any failure to take any action, if he performed
the duties of his office in compliance with this section.
D. A person alleging a violation of this section has the
burden of proving the violation. (emphasis supplied)
Commentary from the drafters of this section reflects an
intention to simplify the standard of conduct and to avoid
measuring the conduct against a reasonable man standard. Instead
courts should look to the director's good faith decision of what
is in the best interests of the corporation. The drafters
believed that under this standard, a director could be more
certain that he is acting properly than under previous judicial
decisions.
While there have been no Virginia cases applying Section
13.1-690 of the Virginia Code or the business judgment rule to
actions of boards of directors in issuing rights similar to those
contemplated by the Plan, several cases from other jurisdictions
have examined director conduct in just such a context. The most
notable of these cases is the Household case, in which the
Delaware Supreme Court held that the business judgment rule as
construed in that state applies to the adoption of a shareholder
rights plan. The Household court also recognized the propriety
of adopting such a plan in preparation for the possibility of an
unfriendly takeover attempt:
...pre-planning for the contingency of a hostile takeover
might reduce the risk that, under the pressure of a takeover
bid, management will fail to exercise reasonable judgment.
Therefore, in reviewing a pre-planned defensive mechanism it
seems even more appropriate to apply the business judgment
rule.
Moran v. Household International, Inc., supra, 500 A. 2d at
1350 (1985) emphasis supplied).
After the Household decision, the Delaware Supreme Court in
the Revlon case determined that the adoption of a rights plan
similar to the Plan was within the power of the board of
directors and was valid under the circumstances existing at the
time of its adoption. In an Illinois federal case applying
Indiana law (which was assumed to follow Delaware law), the court
dismissed arguments relating to the power of a board of directors
to adopt the rights plan under review, although it issued a
preliminary injunction against the plan on the grounds that under
the circumstances the particular plan was unreasonable in
relationship to the particular threat to the corporation.
Dynamics Corp. of America v. CTS Corp., 637 F. Supp. 406 (N.D.
Ill. 1986), aff'd, 794 F. 2d 250 (7th Cir. 1986).
The basic principles of the business judgment rule and of
Section 13.1-690 of the Virginia Code are, we believe, quite
similar under Virginia and Delaware law. Accordingly, we believe
that the analysis and conclusions of the Delaware Supreme Court
on such issues arising under Delaware law would be favorably
considered by a Virginia court in considering whether the
adoption of the Plan was a proper exercise of business judgment
under Section 13.1-690.
Given the broad authorization contained in Section 13.1-646
with respect to the power of boards of directors to create and
issue rights on such terms as it determines and the provisions of
Section 13.1-690 which protect directors from liability for
actions taken in exercise of their good faith business judgment
of the best interests of the corporation, we believe a Virginia
court should apply the Household and Revlon decisions and their
reasoning to the decision of the Board of Directors to adopt the
Plan and to issue the Rights.
Subsequent Board Decisions
This opinion is limited to the adoption of the Plan by the
Board of Directors. Any further action or inaction by the Board
of Directors with respect to the Plan, including a decision
relating to the redemption of the Rights, will be judged in light
of all relevant facts and circumstances applicable at the time.
The courts have generally been supportive of a board's decision
not to redeem the rights so long as the rights are being used to
protect the corporation and its shareholders from an inadequate
offer, to give the Board time to consider alternatives or seek a
higher offer or to foster an auction process. See, e.g., CRTF
Corporation v. Federated Department Stores, Civ. No. 487, 1485,
1548 (S.D.N.Y. March 18, 1988), BNS Inc. v. Koppers Company,
Inc., 683 F. Supp. 458 (D. Del. 1988), Facet Enterprises, Inc. v.
The Prospect Group, Inc., C.A. No. 9746 (Del. Ch. April 11,
1988), Tate & Lyle PLC v. Staley Continental, Inc., [1987-88
Transfer Binder] Fed. Sec. L. Rep. (CCH) paragraph 93,764 (Del.
Ch. May 9, 1988). However, recently some courts have ordered the
redemption of the rights after the corporation has had a
reasonable opportunity to explore alternatives thereby permitting
the shareholders to choose whether to tender into an all cash
offer. See, e.g., Southdown, Inc. v. Moore McCormack Resources,
Inc., C.A. No. 14-88-557 (S.D. Tex. April 14, 1988), Mills
Acquisition Co. v. Macmillan, Inc., [Current] Fed. Sec. L. Rep.
(CCH) paragraph 94,071 (Del. Ch. Oct. 17, 1988), rev'd on other
grounds, [Current] Fed. Sec. L. Re. paragraph 94,072 (Del. Supr.
Nov. 2, 1988), City Capital Associated Ltd. Partnership v.
Interco Inc., C.A. 10105 (Del. Ch. Nov. 1, 1988) Grand
Metropolitan PLC v. Pillsbury Co., C.A. 10319 (Del. Ch. Dec. 16,
1988).
Opinion
Based upon the foregoing, we are of the opinion that a court
applying Virginia law should hold that:
1. The adoption of the Plan and declaration of the rights
dividend distribution was a matter properly within the business
judgment of the Board of Directors of the Company.
2. All corporate action required under the laws of
Virginia has been taken (i) for the authorization of issuance of
the Rights in accordance with the terms of the Rights Agreement,
(ii) for the authorization of issuance of the Series M Preferred
Stock in accordance with the Articles of Incorporation of the
Company, and (iii) for the Rights, when issued, to be validly
issued.
This opinion is furnished solely for your benefit and may
not be relied on by any other person.
Very truly yours,
McGuire Woods Battle & Boothe
Exhibit 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this
registration statement on Form S-8, pertaining to the James River
Corporation of Virginia 1987 Stock Option Plan, of our reports dated
January 25, 1994, on our audits of the consolidated financial
statements and financial statement schedules of James River
Corporation of Virginia and Subsidiaries ("James River") 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 reports are
included therein or incorporated by reference in James River's Annual
Report on Form 10-K for the fiscal year ended December 26, 1993.
COOPERS & LYBRAND
Richmond, Virginia
November 30, 1994
