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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: September 29, 1996 Commission File 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, VA 23219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (804) 644-5411
Not Applicable
(Former name, former address, and former fiscal year,
if changed since last report)
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
Number of shares of $.10 par value common stock outstanding as of November 1,
1996:
86,069,211 shares
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JAMES RIVER CORPORATION
of Virginia
QUARTERLY REPORT ON FORM 10-Q
September 29, 1996
TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION:
ITEM 1. Financial Statements:
Consolidated Balance Sheets as of September 29, 1996 and
December 31, 1995 3
Consolidated Statements of Operations for the quarters and
nine months ended September 29, 1996 and September 24, 1995 5
Consolidated Statements of Cash Flows for the nine months
ended September 29, 1996 and September 24, 1995 6
Notes to Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
PART II. OTHER INFORMATION:
ITEM 1. Legal Proceedings 17
ITEM 2. Changes in Securities 17
ITEM 3. Defaults Upon Senior Securities 17
ITEM 4. Submission of Matters to a Vote of Security Holders 17
ITEM 5. Other Information 17
ITEM 6. Exhibits and Reports on Form 8-K 18
SIGNATURES 19
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PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
JAMES RIVER CORPORATION
of Virginia and Subsidiaries
CONSOLIDATED BALANCE SHEETS
September 29, 1996 and December 31, 1995
(in millions, except share data)
September December
1996 1995
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 62.5 $ 66.1
Accounts receivable 787.2 847.3
Inventories 646.3 821.4
Prepaid expenses and other current assets 36.2 52.3
Deferred income taxes 79.8 83.4
Total current assets 1,612.0 1,870.5
Property, plant and equipment 5,794.0 6,181.0
Accumulated depreciation (2,070.4) (2,106.9)
Net property, plant and equipment 3,723.6 4,074.1
Investments in affiliates 152.9 146.8
Other assets 403.8 395.8
Goodwill 732.4 771.7
Total assets $ 6,624.7 $ 7,258.9
The accompanying notes are an integral part
of the consolidated financial statements.
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JAMES RIVER CORPORATION
of Virginia and Subsidiaries
CONSOLIDATED BALANCE SHEETS, Continued
(in millions, except share data)
September December
1996 1995
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 547.8 $ 560.5
Accrued liabilities 552.6 493.7
Current portion of long-term debt 13.3 44.8
Total current liabilities 1,113.7 1,099.0
Long-term debt 2,033.6 2,503.0
Accrued postretirement benefits
other than pensions 458.0 464.7
Deferred income taxes 461.7 489.3
Other long-term liabilities 278.2 448.7
Total liabilities 4,345.2 5,004.7
Preferred stock, $10 par value, 5,000,000
shares authorized, issuable in series;
shares outstanding, 3,630,581 738.4 740.3
Common stock, $.10 par value, 150,000,000
shares authorized; shares outstanding,
September 29, 1996 -- 85,964,212 and
December 31, 1995 -- 84,890,342 8.6 8.5
Additional paid-in capital 1,300.4 1,294.1
Retained earnings 232.1 211.3
Total shareholders' equity 2,279.5 2,254.2
Total liabilities and shareholders' equity $ 6,624.7 $7,258.9
The accompanying notes are an integral part
of the consolidated financial statements.
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JAMES RIVER CORPORATION
of Virginia and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarters (13 Weeks) and Nine Months (39 Weeks) Ended
September 29, 1996 and September 24, 1995
(in millions, except per share amounts)
Third Quarter Nine Months
1996 1995 1996 1995
Net sales $1,407.4 $1,734.7 $4,390.8 $5,220.2
Cost of goods sold 1,024.4 1,322.7 3,250.2 4,049.4
Selling and administrative expenses 252.1 271.6 804.1 799.5
Severance and other items
expenses (income) (30.3) 20.8 .1 25.8
Income from operations 161.2 119.6 336.4 345.5
Interest expense 40.4 54.5 128.5 176.3
Other income, net 6.1 15.3 14.5 32.9
Income before income taxes
and minority interest 126.9 80.4 222.4 202.1
Income tax expense:
Tax on current income 55.9 34.6 97.9 86.9
Effect of tax rate change 8.3 8.3
Total income tax expense 55.9 42.9 97.9 95.2
Income before minority interests 71.0 37.5 124.5 106.9
Minority interests (.1) (.2) (2.6) (2.1)
Net income $70.9 $ 37.3 $ 121.9 $ 104.8
Preferred dividend requirements (8.1) (14.6) (43.9) (43.8)
Net income applicable to common
shares $62.8 $ 22.7 $ 78.0 $ 61.0
Net income per common share
and common share equivalents $ .62 $ .27 $ .91 $ .73
Cash dividends per common share $ .15 $ .15 $ .45 $ .45
Weighted average number of common shares
and common share equivalents 101.4 84.8 85.7 84.2
The accompanying notes are an integral part
of the consolidated financial statements.
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JAMES RIVER CORPORATION
of Virginia and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months (39 Weeks) Ended
September 29, 1996 and September 24, 1995
(in millions)
1996 1995
Cash provided by (used for) operating activities:
Net income $ 121.9 $ 104.8
Depreciation expense and cost of timber harvested 304.2 352.3
Amortization of goodwill 15.8 17.2
Deferred income tax provision 32.7 19.4
Equity in earnings of unconsolidated affiliates (5.7) (18.4)
Dividends received from unconsolidated affiliates 7.8 20.1
Severance and other items .1 25.8
Retirement benefits expense in excess of funding (3.2) 9.5
Change in current assets and liabilities:
Accounts receivable .3 (63.8)
Inventories 77.2 (54.3)
Prepaid expenses and other current assets 6.3 (5.6)
Accounts payable and accrued liabilities 52.9 45.7
Other, net (38.4) (12.1)
Cash provided by operating activities 571.9 440.6
Cash provided by (used for) investing activities:
Expenditures for property, plant and equipment (287.8) (315.6)
Cash paid for acquistions, net (199.9)
Cash received from sale of assets 440.9 8.5
Proceeds on sale of partnership option 22.2
Other, net 5.9 18.7
Cash used for investing activities (40.9) (266.2)
Cash provided by (used for) financing activities:
Additions to long-term debt 3.4 7.8
Payments of long-term debt (469.9) (659.9)
Proceeds on spin-off of Crown Vantage Inc. 480.4
Common and preferred stock cash dividends paid (69.9) (80.8)
Common stock issued on exercise of stock options 3.7 62.5
Other, net (1.9)
Cash used for financing activities (534.6) (190.0)
Decrease in cash and cash equivalents (3.6) (15.6)
Cash and cash equivalents, beginning of period 66.1 59.3
Cash and cash equivalents, end of period $ 62.5 $ 43.7
The accompanying notes are an integral part
of the consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
In the opinion of management, the accompanying unaudited consolidated
financial statements of James River Corporation of Virginia and Subsidiaries
(the "Company" or "James River") contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the Company's
consolidated financial position as of September 29, 1996, and its results of
operations for the quarters (13 weeks) and the nine months (39 weeks) ended
September 29, 1996 and September 24, 1995, and its cash flows for the nine
months then ended. The balance sheet as of December 31, 1995, was derived from
audited financial statements as of that date. The results of operations for the
nine months ended September 29, 1996, are not necessarily indicative of the
results to be expected for the full year.
In 1995, the Company changed the fiscal year end of Jamont N.V. ("Jamont"),
the Company's European Consumer Products subsidiary, from November 30 to
December 31 to eliminate the one-month lag in reporting. Results for the quarter
and nine months ended September 24, 1995, have been restated. Certain amounts in
the prior year's financial statements and supporting footnote disclosures have
been reclassified to conform to the current year's presentation.
2. Acquisitions and Dispositions
On September 3, 1996, the Company purchased the remaining 14% minority
interest in Jamont N.V., under an existing put and call agreement, from
Europaper Inc. ("Europaper") for $199.9 million. Prior to the settlement, James
River's consolidation of Jamont N.V. included the Europaper minority interest at
a book value of $151 million. Concurrent with the receipt of the put exercise
notice from Europaper on June 29, 1996, James River recorded the acquisition of
the remaining 14% minority interest under the purchase method of accounting.
On August 22, 1996, the Company completed the sale of its Flexible
Packaging group for gross cash proceeds of $372.7 million. The Flexible
Packaging group included ten manufacturing facilities with 2,200 employees.
These facilities included four lamination and coating plants, five film and
converting plants, and a rigid plastics container plant. Net assets sold totaled
$333.4 million, net of total liabilities of $10.3 million. For the nine months
ended September 29, 1996, the Flexible Packaging group reported net sales of
$285 million and operating profit of $2.4 million. Proceeds from this
transaction were used to settle the Europaper put and reduce long-term debt.
Effective May 5, 1996, James River completed the sale of its specialty
operations business, which was a part of the North American Consumer Products
Business, for cash proceeds of approximately $30 million and a combination of
subordinated long-term notes and preferred stock. The specialty operations
business, with annual sales of approximately $125 million, , consisted of a
party goods facility, a specialty mill, and a foodservice specialties plant. In
January 1996, the Company completed the formation of a joint venture of its
Handi-Kup foam cup operations, formerly part of the North American Consumer
Products Business, with the WinCup foam cup operations of Benchmark Corporation
of Delaware. The Handi-Kup operations contributed to the joint venture included
four foam cup plants, with 1995 net sales of approximately $96 million. James
River received consideration of $26 million of cash, approximately $10 million
face value of subordinated long-term notes, and a 45% minority interest in the
joint venture.
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3. Severance and Other Items
Results for the first nine months of 1996 included net nonrecurring
charges of $.1 million consisting of $35.3 million ($21.7 million net of tax
benefits, or $.26 per share) for costs related to severance and exit costs for
approximately 500 employees primarily at Corporate and North American Consumer
Products Business locations and approximately 80 employees at European Consumer
Products locations offset by net gains on business unit dispositions of $35.2
million ($17.0 million net of tax benefits, or $.20 per share) at Packaging and
North American Consumer Products business locations. During the past nine
months, the Company made severance payments on current and prior year accruals
of $13.7 million. Results for the first nine months of 1995 included
nonrecurring charges of $25.8 million ($17.6 million net of tax benefits and
minority interests, or $.20 per share) comprised of $21.0 million in severance
costs and $4.8 million of transaction costs associated with the spin-off of
Crown Vantage Inc.$4.8 million of transaction costs associated with the spin-off
of Crown Vantage Inc.
4. Other Income
The components of other income were as follows for the nine months ended
September 29, 1996, and September 24, 1995 (in millions):
September September
1996 1995
Interest and investment income $ 5.4 $ 6.4
Equity in earnings of
unconsolidated affiliates 5.7 17.9
Gain on sale of assets 5.2 4.3
Foreign currency exchange gain (loss) .4 (.5)
Other, net (2.2) 4.8
Total other income $ 14.5 $ 32.9
5. Income Taxes
The Company's effective income tax rate was 44% for the nine months ended
September 29, 1996, compared to 43% for the first nine months of 1995. The
increase in the effective tax rate from the prior year was primarily due to the
relative size of non-tax-deductible permanent differences.
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6. Inventories
The components of inventories were as follows as of September 29, 1996, and
December 31, 1995 (in millions):
September December
1996 1995
Raw materials $ 143.2 $ 197.1
Finished goods and work in process 414.7 557.6
Stores and supplies 135.6 151.4
693.5 906.1
Reduction to state certain inventories
at last-in, first-out cost (47.2) (84.7)
Total inventories $ 646.3 $ 821.4
7. Financial Instruments
The estimated fair value of the Company's $1,286 million notional amount of
interest rate swaps was a liability of $25 million as of September 29, 1996,
compared to a liability of $3 million as of December 31, 1995. The estimated
fair value of the Company's debt portfolio decreased to a liability in excess of
book value of $56 million as of September 29, 1996, from a liability in excess
of book value of $152 million as of December 31, 1995. As of September 29, 1996,
the carrying value of foreign exchange contracts was a net liability of $59
million and the estimated fair value of such contracts was a net liability of
$89 million, compared to net liabilities of $87 million and $108 million,
respectively, as of December 31, 1995. Additionally, as of September 29, 1996,
the pay-in-kind notes and related accrued interest received from the spin-off of
Crown Vantage Inc. with original gross book values totaling $89 million had a
fair value of approximately $94 million. The estimated fair values were based on
quoted market prices of comparable instruments and current market rates as of
September 29, 1996, and December 31, 1995.
8. Commitments and Contingent Liabilities
(a) 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. Future regulations could materially increase the
Company's capital requirements and certain operating expenses in
future years.
In December 1993, the U.S. Environmental Protection Agency
("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 likely to be issued
in early 1997, with a nominal compliance date of 2000. 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 1998 and 2000.
Based on its evaluation of the rules as they are currently expected to
be issued, the Company believes that capital expenditures of
approximately $100 million over a period of three or more years may be
required to bring James River's facilities into compliance. This
estimate could change, depending on several factors, including changes
to the proposed regulations, new developments in control and process
technology, and inflation.
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In addition, James River has been identified as a potentially
responsible party ("PRP"), along with others, at various EPA
designated Superfund sites and is involved in remedial investigations
and actions under federal and state laws. It is James River's policy
to accrue remediation costs when it is probable that such costs will
be incurred and when a range of loss can be reasonably estimated. As
of September 29, 1996, James River's accrued environmental
liabilities, including remediation and landfill closure costs, totaled
$23.0 million. The Company periodically reviews the status of all
significant existing or potential environmental issues and adjusts its
accruals as necessary. 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 PRP's. The Company believes that its share of the costs of
cleanup for its current remediation sites will not have a material
adverse impact on its consolidated financial position but could have a
material effect on consolidated results of operations in a given
quarter or year. 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.
(b) Bondholder Litigation:
In 1994, James River was sued in Morgan County, Alabama, in a
class action and in Bridgeport, Connecticut, by certain former holders
of James River's 10-3/4% Debentures due October 1, 2018. Most of these
Debentures were retired by means of a tender offer to all holders
commenced on September 18, 1992. The remainder were redeemed on
November 2, 1992. Merrill Lynch & Co., which acted as James River's
dealer manager for the tender, is also named as a defendant in the
Alabama case. In general, the complaints allege violations of a
covenant prohibiting use of lower cost borrowed funds to redeem the
Debentures before October 1, 1998, and of various disclosure
obligations, and seek damages in excess of $50 million plus punitive
damages in excess of $500 million. The Alabama case has been certified
as a class action and holders of approximately one-half of the
Debentures elected not to be part of the class. Most of the holders
electing out of the class are plaintiffs in the Connecticut case.
James River believes that these claims are without merit and intends
to defend them vigorously.
In May 1996, James River settled the claim of Teachers Insurance
and Annuity Association of America which had held approximately 16.54%
of the Debentures, for $425,000 plus reimbursement of attorneys' fees.
Although the ultimate disposition of legal proceedings cannot be
predicted with certainty, it is the 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 but could materially affect consolidated results of
operations in a given quarter or year.
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9. Segment Information
James River's net sales and income from operations by business segment were
as follows for the quarters and nine months ended September 29, 1996, and
September 24, 1995 (in millions):
Third Quarter Nine Months
September September September September
1996 1995 1996 1995
Net sales:
Consumer products:
North America $ 644.8 $ 700.1 $ 2,014.3 $ 1,996.3
Europe 418.6 405.6 1,284.8 1,222.2
Packaging 271.0 411.2 919.3 1,263.0
Communications papers 107.7 269.7 321.4 896.9
Intersegment elimination (34.7) (51.9) (149.0) (158.2)
Total net sales $ 1,407.4 $ 1,734.7 $ 4,390.8 $ 5,220.2
Operating profit (loss):
Consumer Products:
North America $ 82.9 $ 77.2 $ 210.7 $ 174.0
Europe 47.8 8.5 114.4 30.2
Packaging 20.5 8.5 70.7 43.0
Communications papers 5.0 60.8 12.2 165.5
General corporate expenses (25.3) (14.6) (71.5) (41.4)
Severance and other items
income (expense) 30.3 (20.8) (.1) (25.8)
Income from operations $ 161.2 $ 119.6 $ 336.4 $ 345.5
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10. Pro Forma Data
In August 1995, James River completed the spin-off to shareholders of a
large part of the Company's Communications Papers Business, along with the
specialty paper-based portion of its Packaging Business forming Crown Vantage
Inc. The following pro forma information assumes that the spin-off of Crown
Vantage Inc. occurred as of the beginning of 1995. The pro forma financial
information does not purport to be indicative of the results of operations which
would actually have been reported if the transaction had occurred for the period
indicated or which may be reported in the future.
Pro Forma Consolidated Operating Data Quarter Ended Nine Months Ended
(in millions, except per share data) September 24, 1995 September 24, 1995
Net sales:
Consumer products:
North America $ 702.2 $ 2,004.3
Europe 405.6 1,222.2
Packaging 357.7 1,061.2
Communications papers 153.4 451.0
Intersegment elimination (51.1) (155.2)
Total net sales $ 1,567.8 $ 4,583.5
Operating profit:
Consumer products:
North America $ 77.8 $ 176.0
Europe 8.4 30.1
Packaging 11.3 47.3
Communications papers 39.1 101.0
General corporate expenses (12.5) (35.5)
Severance and other items (20.8) (25.8)
Income from operations $ 103.3 $ 293.1
Net income $ 31.8 $ 91.1
Net income per common share $ .20 $ .56
11. Subsequent Event
In October 1996, James River completed the sale of the CZ Inks Division,
which was a part of the Packaging Business, with sales of approximately $35
million for the nine months ended September 29, 1996, to Progressive Ink
Company, LLC, for gross cash proceeds of approximately $27 million.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Overview
James River reported net income of $70.9 million, or $.62 per share, for
the third quarter ended September 29, 1996, compared with $37.3 million, or $.27
per share for the same quarter of the prior year. Net sales for the third
quarter were $1,407 million, compared to $1,735 million in the prior year. For
the nine months ended September 29, 1996, net income was $121.9 million, or $.91
per share, compared with $104.8 million, or $.73 per share in 1995. Net sales
for the first nine months of 1996 were $4,391 million compared to $5,220 million
in 1995. The comparability of these results was primarily impacted by
nonrecurring charges, the Flexible Packaging group divestiture in August of
1996, and the spin-off to shareholders of Crown Vantage Inc. (Crown Vantage)
in August, 1995 (see Note 10 of Notes to Consolidated Financial Statements).
Items Affecting Comparability
Nonrecurring severance and other items for the quarters and nine months
ended September 29, 1996, and September 24, 1995, were as follows (in millions,
except per share amounts):
September 29, 1996 September 24, 1995
Net Net
Income Per Income Per
Gross Impact Share Gross Impact Share
Quarters ended:
Severance and related
exit costs $16.6 $10.4 $.10 $16.0 $9.9 $.11
Net gain on asset divestitures (46.9) (24.2) ($.24)
Spin-off transaction costs 4.8 4.1 .05
Total expense (income) ($30.3) ($13.8) ($.14) $20.8 $14.0 $.16
Nine months ended:
Severance and related
exit costs $35.3 $21.7 $.26 $21.0 $13.5 $.15
Net gain on asset divestitures (35.2) (17.0) (.20)
Spin-off transaction costs 4.8 4.1 .05
Total expense $.1 $4.7 $.06 $25.8 $17.6 $.20
In the third quarter of 1996, the Company completed the divestiture of its
Flexible Packaging group. The Flexible Packaging group operations comprised $63
million and $128 million in net sales, and $(2.8) million and $(7.6) million in
operating losses in the third quarter of 1996 and 1995, respectively, and $285
million and $363 million in net sales and $2.4 million and $(11.0) million in
operating profit (loss) for the nine months ended September 29, 1996, and
September 24, 1995, respectively.
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The comparability of results was also affected by James River's spin-off of
Crown Vantage to common shareholders in August 1995, which included a large part
of what was formerly James River's Communications Papers Business as well as the
specialty paper-based portion of its Packaging Business. On a pro forma basis,
excluding the results attributable to the operations spun off to Crown Vantage,
net income would have been $31.8 million, or $.20 per share in the third quarter
of 1995 and $91.1 million, or $.56 per share for the nine months ended September
24, 1995.
North American Consumer Products Business
Operating profits for the North American Consumer Products Business
increased by 7%, from $77.2 million in the third quarter of 1995 to $82.9
million in the current quarter, while net sales decreased by 8% over the same
period, from $700 million to $645 million. The decrease in sales for the third
quarter was largely due to decreases in net sales of 3% and 5% in the retail and
commercial markets, respectively, partially offset by volume gains of
approximately 26% in the club market. The retail market's net sales declined
primarily due to average selling price decreases for towel and tissue products.
The decline in net sales in the commercial market stems from volume and pricing
decreases in the foodservice product lines. Operating profits continue to
benefit from the increase in club volume, decrease in raw material costs,
including pulp and wastepaper costs, and the benefit of cost reduction
initiatives. For the nine months ended September 29, 1996 operating profits were
$210.7 million, an increase of 21% over the comparable nine months in 1995, on
relatively flat net sales levels for those same periods reflecting reductions in
raw material costs and continued cost reduction benefits.
European Consumer Products Business
Operating profits for the European Consumer Products Business climbed to
$47.8 million in the current quarter, more than five times the $8.5 million
reported in the third quarter of 1995, while net sales improved over the same
period to $419 million in 1996 from $406 million in 1995. Operating profits for
this business for the nine months ended September 29, 1996, improved to $114.4
million from $30.2 million for the same period in the prior year on a 5%
increase in net sales. The improvement in the European Consumer Products
Business' results for both periods was attributable to a combination of stronger
finished products volumes, lower raw material costs and continuing cost
reductions. Finished products volumes were approximately 7% above the prior year
level, reflecting a combination of (i) weaker than normal 1995 volumes resulting
from price increase initiatives, (ii) product expansions benefiting 1996 volumes
and (iii) growth of volumes in certain smaller markets such as Spain, Italy and
the Netherlands. The volume increases have been somewhat offset by increases in
trade promotional spending as pricing has come under pressure due to significant
declines in the cost of market pulp. As a net buyer of approximately 450,000
tons per year of market pulp, the European Consumer Products Business has
benefited from the lower average pulp costs in 1996.
Packaging Business
Excluding the results attributable to the operations spun off to Crown
Vantage and the sale of the Flexible Packaging group, operating profits for the
Packaging Business improved to $23.3 million and to $68.3 million in the current
quarter and first nine months, respectively, an increase of 23% in the quarter
and 17% for the nine months above the $18.9 million and $58.3 million for the
comparable periods of the prior year. Net sales, adjusted for both the Crown
Vantage and Flexible Packaging transactions, declined 10% to $208 million from
$230 million for the current quarter and 9% to $634 million from $698 million
for the nine months compared to prior year. The improved profitability was
principally attributable to raw material and other cost reductions, partially
offset by unit volume declines. The cost of pulp and wastepaper were below both
the prior year's third quarter and nine month levels. For the nine months ended
September 29, 1996, the operations sold with the Flexible Packaging group
(closed in August 1996) and the CZ Inks Division (closed October 1996) comprised
less than one percent of the Company's consolidated operating profits and 9% of
the Packaging Business' operating profits.
<PAGE>
Communications Papers Business
On a pro forma basis, excluding the results attributable to the operations
spun off to Crown Vantage, operating profits for the Communications Papers
Business declined to $5.0 million in the third quarter of 1996 from $39.1
million in 1995 and the operating profits for the nine months decreased to $12.2
million from $101.0 million for the same period in 1995. On this same basis, net
sales declined to $108 million and to $321 million in the current quarter and
first nine months, respectively, both 29% below the $153 million and $451
million reported for the comparable periods of the prior year. Sales and
profitability were negatively impacted by a combination of declining selling
prices for uncoated free sheet grades of paper and reduced demand, continuing a
trend begun in the fourth quarter of 1995. Third quarter pricing for uncoated
free sheet was 32% to 37% below last year's third quarter while volumes
increased 9% from the prior year's quarter.
Other Income and Expense Items
General corporate expenses totaled $25.3 million and $71.5 million in the
third quarter and first nine months of 1996, respectively, compared to $14.6
million and $41.4 million for the same periods in the prior year. The majority
of the increase was related to costs incurred for installing new integrated
management information systems to support the Company's cost reduction programs.
Interest expense decreased from $176.3 million to $128.5 million between the
first nine months of 1995 and the first nine months of 1996. This decrease was
attributable to a reduction in average outstanding debt of $501 million during
the first three quarters of 1996. Other income decreased to $14.5 million in the
first nine months of 1996 from $32.9 million in 1995, principally due to reduced
earnings of pulp-producing unconsolidated affiliates. The change in the
effective tax rate for 1996 is discussed in Note 5 of Notes to Consolidated
Financial Statements.
Financial Condition
Cash provided by operating activities totaled $571.9 million for the nine
months ended September 29, 1996, compared with $440.6 million provided in the
comparable period of 1995. The Company's current ratio was 1.5 as of September
29, 1996, and 1.7 as of December 31, 1995, while working capital decreased to
$498 million from $772 million for the same periods. The decrease in working
capital was principally due to reductions in both the North American and
European Consumer Products businesses' inventories resulting from the lower cost
of purchased raw materials and increased sales volumes, as well as the
disposition of the Flexible Packaging group's assets in August, 1996.
Capital expenditures were $287.8 million for the first nine months of 1996,
compared to $315.6 million for the same period of 1995. The change in capital
expenditures was primarily due to the spun-off Crown Vantage operations included
in 1995. The Company realized cash proceeds of approximately $441 million during
the first nine months of 1996 from the sale of the Flexible Packaging group, the
sale of the specialty operations and the contribution of the Handi-Kup foam cup
operations to a joint venture as further described in Note 2 of Notes to
Consolidated Financial Statements. The Company paid approximately $200 million
during the third quarter of 1996 for the acquisition of the remaining 14%
interest in Jamont N.V. (See Note 2 of Notes to Consolidated Financial
Statements).
<PAGE>
Total indebtedness decreased by $501 million, from $2,548 million as of
December 31, 1995, to $2,047 million as of September 29, 1996, due to the
application of asset divestiture proceeds, operating cash flows and the positive
impact of foreign currency translation. As of September 29, 1996, the Company
had outstanding borrowings of approximately $471 million supported by revolving
credit facilities, including $386 million outstanding under such facilities, $34
million of commercial paper and $51 million of money market notes. Total
outstanding debt as of September 29, 1996, included approximately $1,501 million
of fixed rate and $546 million of floating rate obligations. Note 7 of Notes to
Consolidated Financial Statements describes the Company's interest rate swap
agreements and foreign currency contracts.
James River's ratio of total debt to total capitalization decreased to
47.2% as of the end of the third quarter, from 51.3% as of the prior year end,
resulting from the decrease in debt levels. For purposes of this calculation,
the Company defines total capitalization as the sum of current and long-term
debt, preferred and common equity and minority interests. As of June 29, 1996,
minority interests decreased by approximately $151 million resulting from the
consolidation of Jamont pursuant to the Europaper put agreement (See Note 2 of
Notes to Consolidated Financial Statements). Under the most restrictive
provisions of the Company's debt agreements, James River had additional
borrowing capacity of approximately $1.48 billion and net worth in excess of the
minimum requirements specified by such agreements of approximately $440 million
as of September 29, 1996.
In October 1996, James River completed the sale of the CZ Inks Division of
the Packaging Business to Progressive Ink Company, LLC, for gross cash proceeds
of approximately $27 million.
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
As previously disclosed, James River had been notified by the EPA of a
civil action filed in the federal court in New Hampshire related to certain
environmental violations at the Company's previously owned Berlin, New
Hampshire, mill. The Company agreed to a settlement of $200,000 as well as the
implementation of environmentally beneficial capital improvements which cost
approximately $500,000. As part of the Company's spin-off of certain of its
assets to Crown Vantage Inc. on August 25, 1995, the liability for the penalty
and the supplemental environmental improvement projects was transferred to Crown
Vantage Inc. The penalty was paid by Crown Vantage Inc. during the quarter ended
September 29, 1996, thereby concluding James River's potential liability in this
matter.
Item 2. CHANGES IN SECURITIES.
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES.
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
Item 5. OTHER INFORMATION.
None.
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
The exhibits listed below are filed as part of this
quarterly report. Each exhibit is listed according to the number
assigned to it in the Exhibit Table of Item 601 of Regulation
S-K.
Exhibit Starts
Number Description on Page
10(a) Employment Agreement for Miles L. Marsh, E-1
dated August 22, 1996, filed herewith.
10(b) Form of Employment Agreement for Executive E-2
Officers, filed herewith.
11 Computation of Earnings per Share, filed herewith 20
27(a) Financial Data Schedules for the nine months ended
September 29, 1996, (filed electronically only).
27(b) Financial Data Schedules restated for the nine months
ended September 24, 1995, (filed electronically only).
(b) Reports on Form 8-K:
During the quarter ended September 29, 1996, and subsequent thereto,
the Company filed the following Current Reports on Form 8-K:
Date of Report Event Reported
None
<PAGE>
SIGNATURES
Pursuant to the requirements 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
By:/s/William A. Paterson
--------------------------
William A. Paterson
Senior Vice President and Controller
(Principal Financial and Accounting Officer)
Date: November 8, 1996
Exhibit 10(a)
EMPLOYMENT AGREEMENT
AGREEMENT by and between James River Corporation of
Virginia, a Virginia corporation (the "Company") and Miles
L. Marsh (the "Executive"), dated as of the 22 day of
August, 1996.
1. Certain Definitions. The "Effective Date"
shall mean the first date after the date hereof on which a
Change of Control (as defined in Section 2) occurs.
Anything in this Agreement to the contrary notwithstanding,
if a Change of Control occurs and if the Executive's
employment with the Company is terminated prior to the date
on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termi
nation of employment (i) was at the request of a third party
who has taken steps reasonably calculated to effect a Change
of Control or (ii) otherwise arose in connection with or an
ticipation of a Change of Control, then for all purposes of
this Agreement the "Effective Date" shall mean the date im
mediately prior to the date of such termination of employ
ment.
2. Change of Control. For the purpose of this
Agreement, a "Change of Control" shall mean:
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Ex
change Act") (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of either (i) the then outstanding
shares of common stock of the Company (the "Outstanding
Company Common Stock") or (ii) the combined voting power of
the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i)
any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company or (iv) any acquisition by any corporation pursu
ant to a transaction which complies with clauses (i), (ii)
and (iii) of subsection (c) of this Section 2; or
E-1
<PAGE>
(b) Individuals who, as of the date hereof, consti
tute the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent
to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but exclud
ing, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or
removal of directors or other actual or threatened solicita
tion of proxies or consents by or on behalf of a Person
other than the Board; or
(c) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substan
tially all of the assets of the Company (a "Business Combina
tion"), in each case, unless, following such Business Combi
nation, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business Combina
tion beneficially own, directly or indirectly, more than 50%
of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election
of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of
the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person
(excluding any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20%
or more of, respectively, the then outstanding shares of com
mon stock of the corporation resulting from such Business
Combination or the combined voting power of the then
outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business
<PAGE>
Combination and (iii) at least a majority of the members of
the board of directors of the corporation resulting from
such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement,
or of the action of the Board, providing for such Business
Combination; or
(d) Approval by the shareholders of the Company of
a complete liquidation or dissolution of the Company.
3. Employment Period. The Company hereby agrees
to continue the Executive in its employ, and the Executive
hereby agrees to remain in the employ of the Company subject
to the terms and conditions of this Agreement, for the
period commencing on the date hereof and ending on the third
anniversary of such date (the "Employment Period");
provided, however, that commencing on the date one year
after the date hereof, and on each annual anniversary of
such date (such date and each annual anniversary thereof
shall be hereinafter referred to as the "Renewal Date"), un
less previously terminated, the Employment Period shall be
automatically extended so as to terminate three years from
such Renewal Date, unless at least 60 days prior to the
Renewal Date the Company shall give notice to the Executive
that the Employment Period shall not be so extended,
provided, further, however, that upon a Change of Control,
if the Executive is still employed by the Company, the
Employment Period shall be extended until the third
anniversary of the Effective Date, or if the Employment
Period has terminated prior to the Change of Control, a new
two year Employment Period shall commence upon a Change of
Control.
4. Terms of Employment. (a) Position and Duties.
(i) During the Employment Period, the Executive shall be
Chairman, Chief Executive Officer and President of the Com
pany and shall serve on the Company's Board of Directors and
shall have such duties, responsibilities and authority as
shall be consistent therewith.
(ii) During the Employment Period, and exclud
ing any periods of vacation and sick leave to which the Ex
ecutive is entitled, the Executive agrees to devote full at
tention and time during normal business hours to the
business and affairs of the Company and to use the
Executive's reasonable best efforts to perform faithfully
<PAGE>
and efficiently such responsibilities. During the
Employment Period it shall not be a violation of this
Agreement for the Executive to (A) serve on corporate, civic
or charitable boards or committees, (B) deliver lectures,
fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as
such activities do not significantly interfere with the
performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement.
It is expressly understood and agreed that to the extent
that any such activities have been conducted by the Ex
ecutive prior to the Effective Date, the continued conduct
of such activities (or the conduct of activities similar in
nature and scope thereto) subsequent to the Effective Date
shall not thereafter be deemed to interfere with the perfor
mance of the Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the
Employment Period, the Executive shall receive an annual
base salary ("Annual Base Salary") of not less than
$880,000. The Annual Base Salary shall be paid in equal bi-
weekly installments. During the Employment Period, the
Annual Base Salary shall be reviewed at least every 12
months. Any increase in Annual Base Salary shall not serve
to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be
reduced after any such increase and the term Annual Base
Salary as utilized in this Agreement shall refer to Annual
Base Salary as so increased.
(ii) Annual Bonus. In addition to Annual
Base Salary, the Executive shall be awarded, for each fiscal
year ending during the Employment Period, an annual bonus
(the "Annual Bonus") pursuant to the Company's Management
Incentive Plan, pro rated in the case of a bonus for any
year during which the Executive was employed for less than
12 months; provided, however, that for fiscal year 1996 the
Annual Bonus shall be no less than $600,000, and after the
Effective Date, the Annual Bonus shall be no less than the
Target Bonus under the Management Incentive Plan for the
year prior to the year in which the Change of Control occurs
(the "Minimum Bonus"). Each such Annual Bonus shall be paid
no later than the end of the third month of the fiscal year
next following the fiscal year for which the Annual Bonus is
awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.
<PAGE>
(iii) Stock Options. The Executive has been
granted a nonqualified stock option (the "Option") to
acquire 250,000 shares of the Company's common stock
pursuant to the Company's 1996 Stock Incentive Plan (the
"Stock Plan") at a price of $32.25 per share and has also
been granted 50,000 shares of Deferred Stock under the Stock
Plan (together, the "Equity Awards"). The Equity Awards
shall vest or become exercisable, as the case may be, with
respect to one-third of the award after one year, with
respect to an additional one-third of the award after two
years, and as to the final one-third of the award, after
three years, provided that the Option shall vest and become
immediately exercisable upon a Change of Control. All other
stock options, restricted stock awards and other stock
incentives shall vest and become immediately exercisable
upon a Change of Control.
(iv) Incentive, Savings and Retirement Plans.
During the Employment Period, the Executive shall be
eligible to participate in all incentive, savings and
retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company
and its affiliated companies, including, without limitation,
the James River Corporation of Virginia Miles L. Marsh
Supplemental Retirement Plan (the "MLMSRP"), provided
further that after the Effective Date in no event shall such
plans, practices, policies and programs provide the Ex
ecutive with incentive opportunities (measured with respect
to both regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable),
savings opportunities and retirement benefit opportunities,
in each case, less favorable, in the aggregate, than the
most favorable of those provided by the Company and its af
filiated companies for the Executive under such plans,
practices, policies and programs as in effect at any time
during the 120-day period immediately preceding the
Effective Date or if more favorable to the Executive, those
provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated
companies, after taking into account the difference in age
between the Executive and the peer executives.
(v) Welfare Benefit Plans. During the Employ
ment Period, the Executive and/or the Executive's family, as
the case may be, shall be eligible for participation in and
<PAGE>
shall receive all benefits under welfare benefit plans, prac
tices, policies and programs provided by the Company and its
affiliated companies (including, without limitation,
medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance
plans and programs) to the extent applicable generally to
other peer executives of the Company and its affiliated
companies, provided that after the Effective Date in no
event shall such plans, practices, policies and programs pro
vide the Executive with benefits which are less favorable,
in the aggregate, than the most favorable of such plans,
practices, policies and programs in effect for the Executive
at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive,
those provided generally at any time after the Effective
Date to other peer executives of the Company and its af
filiated companies.
(vi) Expenses. During the Employment Period,
the Executive shall be entitled to receive prompt reimburse
ment for all reasonable business expenses incurred by the
Executive.
(vii) Fringe Benefits. During the Employment
Period, the Executive shall be entitled to fringe benefits,
including, without limitation, tax and financial planning
services, payment of club dues, and an automobile of his
choice and payment of related expenses.
(viii) Vacation. During the Employment Pe
riod, the Executive shall be entitled to five weeks of paid
vacation annually.
5. Termination of Employment. (a) Death or Dis
ability. The Executive's employment shall terminate auto
matically upon the Executive's death during the Employment
Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employ
ment Period (pursuant to the definition of Disability set
forth below), it may give to the Executive written notice in
accordance with Section 12(b) of this Agreement of its inten
tion to terminate the Executive's employment. In such
event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"),
provided that, within the 30 days after such receipt, the
<PAGE>
Executive shall not have returned to full-time performance
of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from
the Executive's duties with the Company on a full-time basis
for 180 consecutive business days as a result of incapacity
due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the
Executive's legal representative.
(b) Cause. The Company may terminate the Execu
tive's employment during the Employment Period for Cause.
For purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the Ex
ecutive to perform substantially the Executive's duties
with the Company or one of its affiliates (other than
any such failure resulting from incapacity due to
physical or mental illness), after a written demand for
substantial performance is delivered to the Executive by
the Board or the Chief Executive Officer of the Company
which specifically identifies the manner in which the
Board or Chief Executive Officer believes that the
Executive has not substantially performed the
Executive's duties, or
(ii) the willful engaging by the Executive in il
legal conduct or gross misconduct which is materially
and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on
the part of the Executive, shall be considered "willful" un
less it is done, or omitted to be done, by the Executive in
bad faith or without reasonable belief that the Executive's
action or omission was in the best interests of the Company.
Any act, or failure to act, based upon authority given pur
suant to a resolution duly adopted by the Board or based
upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by
the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall
not be deemed to be for Cause unless and until there shall
have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of a majority of the
entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is
<PAGE>
provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the
Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.
(c) Good Reason. The Executive's employment may
be terminated by the Executive for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent with the Executive's position (including
status, offices, titles and reporting requirements), au
thority, duties or responsibilities as contemplated by
Section 4(a) of this Agreement, or any other action by
the Company which results in a diminution in such posi
tion, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvert
ent action not taken in bad faith and which is remedied
by the Company promptly after receipt of notice thereof
given by the Executive;
(ii) any failure by the Company to comply with
any of the provisions of Section 4(b) of this Agreement,
other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is remedied
by the Company promptly after receipt of notice thereof
given by the Executive;
(iii) the Company's requiring the Executive to be
based at any office or location after the Effective Date
other than where the Executive was located immediately
prior to the Effective Date other than in connection
with a change of the Company's headquarters if the
Executive is relocated to such headquarters, or, after
the Effective Date, the Company's requiring the
Executive to travel on Company business to a substan
tially greater extent than required immediately prior to
the Effective Date;
(iv) any purported termination by the Company of
the Executive's employment otherwise than as expressly
permitted by this Agreement; or
<PAGE>
(v) any failure by the Company to comply with and
satisfy Section 11(c) of this Agreement.
For purposes of this Section 5(c), after the Effective Date,
any good faith determination of "Good Reason" made by the
Executive shall be conclusive. Anything in this Agreement
to the contrary notwithstanding, a termination by the
Executive for any reason during the 30-day period
immediately following the first anniversary of the Effective
Date shall be deemed to be a termination for Good Reason for
all purposes of this Agreement.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason,
shall be communicated by Notice of Termination to the other
party hereto given in accordance with Section 12(b) of this
Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the
date of receipt of such notice, specifies the termination
date (which date shall be not more than thirty days after
the giving of such notice). The failure by the Executive or
the Company to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive
or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting such
fact or circumstance in enforcing the Executive's or the
Company's rights hereunder.
(e) Date of Termination. "Date of Termination"
means (i) if the Executive's employment is terminated by the
Company for Cause, or by the Executive for Good Reason, the
date of receipt of the Notice of Termination or any later
date specified therein, as the case may be, (ii) if the
Executive's employment is terminated by the Company other
than for Cause or Disability, the Date of Termination shall
be the date on which the Company notifies the Executive of
such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Ter-
mination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.
<PAGE>
6. Obligations of the Company upon Termination and
Change of Control. (a) Good Reason; Other Than for Cause,
Death or Disability. If, during the Employment Period, the
Company shall terminate the Executive's employment other
than for Cause or Disability or the Executive shall
terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a
lump sum in cash within 30 days after the Date of Termi
nation the aggregate of the following amounts:
A. the sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the
extent not theretofore paid, (2) the product of (x)
the Minimum Bonus paid or payable with respect to
the year prior to the year in which the Effective
Date occurs and (y) a fraction, the numerator of
which is the number of days in the current fiscal
year through the Date of Termination, and the
denominator of which is 365 and (3) any
compensation previously deferred by the Executive
(together with any accrued interest or earnings
thereon) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2), and (3)
shall be hereinafter referred to as the "Accrued
Obligations"); and
B. the amount equal to the product of (1)
three, if the Date of Termination is on or after
the Effective Date, and two, if the Date of
Termination is before the Effective Date and (2)
the sum of (x) the Executive's Annual Base Salary
and (y) the Minimum Bonus; and
(ii) for three years after the Executive's Date of
Termination, if the Date of Termination is on or after
the Effective Date, and two years, if the Date of Termi
nation is before the Effective Date (in each case, the
"Separation Period") or such longer period as may be pro
vided by the terms of the appropriate plan, program,
practice or policy, the Company shall continue benefits
to the Executive and/or the Executive's family at least
<PAGE>
equal to those which would have been provided to them in
accordance with the plans, programs, practices and poli
cies described in Section 4(b)(v) of this Agreement if
the Executive's employment had not been terminated, in
cluding the cost of $3 million of term life insurance on
the Executive's life or, if more favorable to the Execu
tive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its
affiliated companies and their families, provided, how
ever, that if the Executive becomes reemployed with an
other employer and is eligible to receive medical or
other welfare benefits under another employer provided
plan, the medical and other welfare benefits described
herein shall be secondary to those provided under such
other plan during such applicable period of eligibility.
For purposes of determining eligibility (but not the
time of commencement of benefits) of the Executive for
retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be considered
to have remained employed during the Separation Period
and to have retired on the last day of such period;
(iii) the Company shall reimburse the Executive for
any losses and normal transaction expenses taken as a
result of the sale of his primary residence in either
Chicago or [Connecticut], such loss to take into account
the cost of purchase, improvements and all real estate
commissions; and
(iv) the Company shall deliver to the Executive
free and clear title to the Company car;
(v) to the extent not theretofore paid or pro
vided, the Company shall timely pay or provide to the
Executive any other amounts or benefits required to be
paid or provided or which the Executive is entitled to
receive under any plan, program, policy or practice or
contract or agreement of the Company and its affiliated
companies (such other amounts and benefits shall be here
inafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is termi
nated by reason of the Executive's death during the Employ
ment Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives under
this Agreement, other than for payment of Accrued
<PAGE>
Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination. With
respect to the provision of Other Benefits after the
Effective Date, the term Other Benefits as utilized in this
Section 6(b) shall include, without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to
receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies to
the estates and beneficiaries of peer executives of the
Company and such affiliated companies under such plans,
programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives
and their beneficiaries at any time during the 120-day
period immediately preceding the Effective Date or, if more
favorable to the Executive's estate and/or the Executive's
beneficiaries, as in effect on the date of the Executive's
death with respect to other peer executives of the Company
and its affiliated companies and their beneficiaries.
(c) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during
the Employment Period, this Agreement shall terminate
without further obligations to the Executive, other than for
payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be
paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination. With respect to the provision
of Other Benefits after the Effective Date, the term Other
Benefits as utilized in this Section 6(c) shall include, and
the Executive shall be entitled after the Disability
Effective Date to receive, disability and other benefits at
least equal to the most favorable of those generally
provided by the Company and its affiliated companies to
disabled executives and/or their families in accordance with
such plans, programs, practices and policies relating to dis
ability, if any, as in effect generally with respect to
other peer executives and their families at any time during
the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive and/or the
Executive's family, as in effect at any time thereafter
generally with respect to other peer executives of the
Company and its affiliated companies and their families.
<PAGE>
(d) Cause; Other than for Good Reason. If the
Executive's employment shall be terminated for Cause during
the Employment Period, this Agreement shall terminate
without further obligations to the Executive other than the
obligation to pay to the Executive (x) his Annual Base
Salary through the Date of Termination, (y) the amount of
any compensation previously deferred by the Executive, and
(z) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment
during the Employment Period, excluding a termination for
Good Reason, this Agreement shall terminate without further
obligations to the Executive, other than for Accrued Obliga
tions and the timely payment or provision of Other Benefits.
In such case, all Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date
of Termination. Upon a termination of the Executive's
employment for Cause by the Company or by the Executive
without Good Reason, the Executive shall forfeit all stock
options that are not vested on the Date of Termination.
(e) Change of Control. Within 10 days after a
Change of Control, the Company shall pay the Executive in a
lump sum in cash all nonqualified benefit plan balances and
other deferred amounts.
7. Non-exclusivity of Rights. Nothing in this
Agreement shall prevent or limit the Executive's continuing
or future participation in any plan, program, policy or prac
tice provided by the Company or any of its affiliated compa
nies and for which the Executive may qualify nor shall any
thing herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise en
titled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or
any of its affiliated companies at or subsequent to the Date
of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement
except as explicitly modified by this Agreement.
8. Full Settlement. The Company's obligation to
make the payments provided for in this Agreement and other
wise to perform its obligations hereunder shall not be af
fected by any set-off, counterclaim, recoupment, defense or
other claim, right or action which the Company may have
<PAGE>
against the Executive or others. In no event shall the Ex
ecutive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to
the Executive under any of the provisions of this Agreement
and such amounts shall not be reduced whether or not the Ex
ecutive obtains other employment. The Company agrees to pay
as incurred, to the full extent permitted by law, all legal
fees and expenses which the Executive may reasonably incur
as a result of any contest (regardless of the outcome
thereof) by the Company, the Executive or others of the
validity or enforceability of, or liability under, any provi
sion of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Execu
tive about the amount of any payment pursuant to this Agree
ment), plus in each case interest on any delayed payment at
the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Internal Revenue Code of 1986, as
amended (the "Code"); provided that the Company shall have
no such obligation if it is determined by a court that the
Company was not in breach of the Agreement and that the
Executive's claims were not made in good faith.
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary not
withstanding, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit
of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or oth
erwise, but determined without regard to any additional pay
ments required under this Section 9) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties are incurred by the Execu
tive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are herein
after collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes and any benefits that
result from the deductibility by the Executive of such taxes
(including, in each case, any interest or penalties imposed
with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
<PAGE>
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, in
cluding whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to
be utilized in arriving at such determination, shall be made
by Coopers & Lybrand LLP or such other certified public ac
counting firm as may be designated by the Executive (the "Ac
counting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is re
quested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, the Execu
tive shall appoint another nationally recognized accounting
firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Pay
ment, as determined pursuant to this Section 9, shall be
paid by the Company to the Executive within five days of the
receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required
to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 9(c) and the
Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for
the benefit of the Executive.
(c) The Executive shall notify the Company in writ
ing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall ap-
prise the Company of the nature of such claim and the date
on which such claim is requested to be paid. The Executive
<PAGE>
shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such no
tice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in
writing from time to time, including, without
limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in
order effectively to contest such claim, and
(iv) permit the Company to participate in any pro
ceedings relating to such claim;
provided, however, that the Company shall bear and pay di-
rectly all costs and expenses (including additional interest
and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and ex
penses. Without limitation on the foregoing provisions of
this Section 9(c), the Company shall control all proceedings
taken in connection with such contest and, at its sole op
tion, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine;
provided, however, that if the Company directs the Executive
<PAGE>
to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Execu
tive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable
year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 9(a) or
9(c), the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of
Section 9(c)) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by the Company pursuant
to Section 9(c), a determination is made that the Executive
shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writ
ing of its intent to contest such denial of refund prior to
the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required
to be paid.
10. Confidential Information/Noncompetition. (a)
The Executive shall hold in a fiduciary capacity for the ben
efit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its af
filiated companies, and their respective businesses, which
shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affili
ated companies and which shall not be or become public knowl
edge (other than by acts by the Executive or representatives
<PAGE>
of the Executive in violation of this Agreement). After ter
mination of the Executive's employment with the Company, the
Executive shall not, without the prior written consent of
the Company or as may otherwise be required by law or legal
process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those
designated by it.
(b) In the event of a termination of the
Executive's employment prior to a Change of Control, until
the second anniversary of the Executive's Date of
Termination, the Executive will not directly or indirectly,
own, manage, operate, control or participate in the
ownership, management, operation or control of, or be
connected as an officer, employee, partner, director or
otherwise with, or have any financial interest in, any
business which is in competition with the Company or any of
its affiliates in any geographic area where such business is
being conducted during such period. Ownership, for personal
investment purposes only of not in excess of 2% of the
voting stock of any publicly held corporation shall not con
stitute a violation hereof.
11. Successors. (a) This Agreement is personal
to the Executive and without the prior written consent of
the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of
and be enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and as
signs.
(c) The Company will require any successor
(whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be
required to perform it if no such succession had taken
place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees
to perform this Agreement by operation of law, or otherwise.
<PAGE>
12. Miscellaneous. (a) This Agreement shall be
governed by and construed in accordance with the laws of the
Commonwealth of Virginia, without reference to principles of
conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or ef
fect. This Agreement may not be amended or modified other
wise than by a written agreement executed by the parties
hereto or their respective successors and legal representa
tives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to
the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Attention: Miles L. Marsh
965 East Deer Path Road
Lake Forest, IL 60045
If to the Company:
Attention: Clifford A. Cutchins
James River Corporation
120 Tredegar Street
Richmond Virginia, 23219
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee.
(c) The invalidity or unenforceability of any pro
vision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts pay
able under this Agreement such Federal, state, local or for
eign taxes as shall be required to be withheld pursuant to
any applicable law or regulation.
(e) The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or
any other provision of this Agreement or the failure to
<PAGE>
assert any right the Executive or the Company may have here
under, including, without limitation, the right of the Execu
tive to terminate employment for Good Reason pursuant to
Section 5(c)(i)-(v) of this Agreement, shall not be deemed
to be a waiver of such provision or right or any other
provision or right of this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set
the Executive's hand and, pursuant to the authorization from
its Board of Directors, the Company has caused these
presents to be executed in its name on its behalf, all as of
the day and year first above written.
/s/Miles L. Marsh
Miles L. Marsh
JAMES RIVER CORPORATION OF VIRGINIA
By /s/Daniel J. Girvan
Daniel J. Girvan
Exhibit 10(b)
EMPLOYMENT AGREEMENT
AGREEMENT by and between James River Corporation of
Virginia, a Virginia corporation (the "Company") and [NAME]
(the "Executive"), dated as of the 22 day of August, 1996.
1. Certain Definitions. The "Effective Date"
shall mean the first date after the date hereof on which a
Change of Control (as defined in Section 2) occurs.
Anything in this Agreement to the contrary notwithstanding,
if a Change of Control occurs and if the Executive's
employment with the Company is terminated prior to the date
on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termi
nation of employment (i) was at the request of a third party
who has taken steps reasonably calculated to effect a Change
of Control or (ii) otherwise arose in connection with or an
ticipation of a Change of Control, then for all purposes of
this Agreement the "Effective Date" shall mean the date im
mediately prior to the date of such termination of employ
ment.
2. Change of Control. For the purpose of this
Agreement, a "Change of Control" shall mean:
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Ex
change Act") (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of either (i) the then outstanding
shares of common stock of the Company (the "Outstanding
Company Common Stock") or (ii) the combined voting power of
the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i)
any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company or (iv) any acquisition by any corporation pursu
ant to a transaction which complies with clauses (i), (ii)
and (iii) of subsection (c) of this Section 2; or
E-2
<PAGE>
(b) Individuals who, as of the date hereof, consti
tute the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent
to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but exclud
ing, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or
removal of directors or other actual or threatened solicita
tion of proxies or consents by or on behalf of a Person
other than the Board; or
(c) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substan
tially all of the assets of the Company (a "Business Combina
tion"), in each case, unless, following such Business Combi
nation, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business Combina
tion beneficially own, directly or indirectly, more than 50%
of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election
of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of
the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person
(excluding any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20%
or more of, respectively, the then outstanding shares of com
mon stock of the corporation resulting from such Business
Combination or the combined voting power of the then
outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business
<PAGE>
Combination and (iii) at least a majority of the members of
the board of directors of the corporation resulting from
such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement,
or of the action of the Board, providing for such Business
Combination; or
(d) Approval by the shareholders of the Company of
a complete liquidation or dissolution of the Company.
3. Employment Period. The Company hereby agrees
to continue the Executive in its employ, and the Executive
hereby agrees to remain in the employ of the Company subject
to the terms and conditions of this Agreement, for the
period commencing on the date hereof and ending on the third
anniversary of such date (the "Employment Period");
provided, however, that commencing on the date one year
after the date hereof, and on each annual anniversary of
such date (such date and each annual anniversary thereof
shall be hereinafter referred to as the "Renewal Date"), un
less previously terminated, the Employment Period shall be
automatically extended so as to terminate three years from
such Renewal Date, unless at least 60 days prior to the
Renewal Date the Company shall give notice to the Executive
that the Employment Period shall not be so extended,
provided, further, however, that upon a Change of Control,
if the Executive is still employed by the Company, the
Employment Period shall be extended until the third
anniversary of the Effective Date, or if the Employment
Period has terminated prior to the Change of Control, a new
two year Employment Period shall commence upon a Change of
Control.
4. Terms of Employment. (a) Position and Duties.
(i) During the Employment Period, the Executive shall be
[POSITION] and shall have such duties, responsibilities and
authority as shall be consistent therewith.
(ii) During the Employment Period, and exclud
ing any periods of vacation and sick leave to which the Ex
ecutive is entitled, the Executive agrees to devote full at
tention and time during normal business hours to the
business and affairs of the Company and to use the
Executive's reasonable best efforts to perform faithfully
<PAGE>
and efficiently such responsibilities. During the
Employment Period it shall not be a violation of this
Agreement for the Executive to (A) serve on corporate, civic
or charitable boards or committees, (B) deliver lectures,
fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as
such activities do not significantly interfere with the
performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement.
It is expressly understood and agreed that to the extent
that any such activities have been conducted by the Ex
ecutive prior to the Effective Date, the continued conduct
of such activities (or the conduct of activities similar in
nature and scope thereto) subsequent to the Effective Date
shall not thereafter be deemed to interfere with the perfor
mance of the Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the
Employment Period, the Executive shall receive an annual
base salary ("Annual Base Salary") of not less than
[SALARY]. The Annual Base Salary shall be paid in equal bi-
weekly installments. During the Employment Period, the
Annual Base Salary shall be reviewed at least every 12
months. Any increase in Annual Base Salary shall not serve
to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be
reduced after any such increase and the term Annual Base
Salary as utilized in this Agreement shall refer to Annual
Base Salary as so increased.
(ii) Annual Bonus. In addition to Annual
Base Salary, the Executive shall be awarded, for each fiscal
year ending during the Employment Period, an annual bonus
(the "Annual Bonus") pursuant to the Company's Management
Incentive Plan, pro rated in the case of a bonus for any
year during which the Executive was employed for less than
12 months; provided, however, after the Effective Date, the
Annual Bonus shall be no less than the Executive's Target
Bonus under the Management Incentive Plan for the year prior
to the year in which the Change of Control occurs (the
"Minimum Bonus"). Each such Annual Bonus shall be paid no
later than the end of the third month of the fiscal year
next following the fiscal year for which the Annual Bonus is
awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.
<PAGE>
(iii) Incentive, Savings and Retirement
Plans. During the Employment Period, the Executive shall be
eligible to participate in all incentive, savings and
retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company
and its affiliated companies, provided further that after
the Effective Date in no event shall such plans, practices,
policies and programs provide the Executive with incentive
opportunities (measured with respect to both regular and spe
cial incentive opportunities, to the extent, if any, that
such distinction is applicable), savings opportunities and
retirement benefit opportunities, in each case, less favor
able, in the aggregate, than the most favorable of those pro
vided by the Company and its affiliated companies for the
Executive under such plans, practices, policies and programs
as in effect at any time during the 120-day period immedi
ately preceding the Effective Date or if more favorable to
the Executive, those provided generally at any time after
the Effective Date to other peer executives of the Company
and its affiliated companies, after taking into account the
difference in age between the Executive and the peer
executives.
(iv) Welfare Benefit Plans. During the Em
ployment Period, the Executive and/or the Executive's fam
ily, as the case may be, shall be eligible for participation
in and shall receive all benefits under welfare benefit
plans, practices, policies and programs provided by the
Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, em
ployee life, group life, accidental death and travel
accident insurance plans and programs) to the extent
applicable generally to other peer executives of the Company
and its affiliated companies, provided that after the
Effective Date in no event shall such plans, practices,
policies and programs provide the Executive with benefits
which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in
effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any
time after the Effective Date to other peer executives of
the Company and its affiliated companies.
(v) Expenses. During the Employment Period,
the Executive shall be entitled to receive prompt reimburse
ment for all reasonable business expenses incurred by the
Executive.
<PAGE>
(vi) Fringe Benefits. During the Employment
Period, the Executive shall be entitled to fringe benefits,
including, without limitation, tax and financial planning
services, payment of club dues, and an automobile of his
choice and payment of related expenses.
(vii) Vacation. During the Employment Pe
riod, the Executive shall be entitled to paid vacation in ac
cordance with the Vacation Policy as set forth in the
Company's Benefits and Policies Manual, but in no event less
than four weeks per year, as defined in the Benefits and
Policies Manual.
5. Termination of Employment. (a) Death or Dis
ability. The Executive's employment shall terminate auto
matically upon the Executive's death during the Employment
Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employ
ment Period (pursuant to the definition of Disability set
forth below), it may give to the Executive written notice in
accordance with Section 12(b) of this Agreement of its inten
tion to terminate the Executive's employment. In such
event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"),
provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance
of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from
the Executive's duties with the Company on a full-time basis
for 180 consecutive business days as a result of incapacity
due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the
Executive's legal representative.
(b) Cause. The Company may terminate the Execu
tive's employment during the Employment Period for Cause.
For purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the Ex
ecutive to perform substantially the Executive's duties
with the Company or one of its affiliates (other than
any such failure resulting from incapacity due to
physical or mental illness), after a written demand for
substantial performance is delivered to the Executive by
<PAGE>
the Board or the Chief Executive Officer of the Company
which specifically identifies the manner in which the
Board or Chief Executive Officer believes that the
Executive has not substantially performed the
Executive's duties, or
(ii) the willful engaging by the Executive in il
legal conduct or gross misconduct which is materially
and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on
the part of the Executive, shall be considered "willful" un
less it is done, or omitted to be done, by the Executive in
bad faith or without reasonable belief that the Executive's
action or omission was in the best interests of the Company.
Any act, or failure to act, based upon authority given pur
suant to a resolution duly adopted by the Board or based
upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by
the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall
not be deemed to be for Cause unless and until there shall
have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of a majority of the
entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is
provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the
Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.
(c) Good Reason. The Executive's employment may
be terminated by the Executive for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent with the Executive's position (including
status, offices, titles and reporting requirements), au
thority, duties or responsibilities as contemplated by
Section 4(a) of this Agreement, or any other action by
the Company which results in a diminution in such posi
tion, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvert
ent action not taken in bad faith and which is remedied
by the Company promptly after receipt of notice thereof
given by the Executive;
<PAGE>
(ii) any failure by the Company to comply with
any of the provisions of Section 4(b) of this Agreement,
other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is remedied
by the Company promptly after receipt of notice thereof
given by the Executive;
(iii) the Company's requiring the Executive to be
based at any office or location after the Effective Date
other than where the Executive was located immediately
prior to the Effective Date other than in connection
with a change of the Company's headquarters if the
Executive is relocated to such headquarters, or, after
the Effective Date, the Company's requiring the
Executive to travel on Company business to a substan
tially greater extent than required immediately prior to
the Effective Date;
(iv) any purported termination by the Company of
the Executive's employment otherwise than as expressly
permitted by this Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 11(c) of this Agreement.
For purposes of this Section 5(c), after the Effective Date,
any good faith determination of "Good Reason" made by the
Executive shall be conclusive. Anything in this Agreement
to the contrary notwithstanding, a termination by the
Executive for any reason during the 30-day period
immediately following the first anniversary of the Effective
Date shall be deemed to be a termination for Good Reason for
all purposes of this Agreement.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason,
shall be communicated by Notice of Termination to the other
party hereto given in accordance with Section 12(b) of this
Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to
<PAGE>
provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the
date of receipt of such notice, specifies the termination
date (which date shall be not more than thirty days after
the giving of such notice). The failure by the Executive or
the Company to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive
or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting such
fact or circumstance in enforcing the Executive's or the
Company's rights hereunder.
(e) Date of Termination. "Date of Termination"
means (i) if the Executive's employment is terminated by the
Company for Cause, or by the Executive for Good Reason, the
date of receipt of the Notice of Termination or any later
date specified therein, as the case may be, (ii) if the
Executive's employment is terminated by the Company other
than for Cause or Disability, the Date of Termination shall
be the date on which the Company notifies the Executive of
such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Ter
mination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination and
Change of Control. (a) Good Reason; Other Than for Cause,
Death or Disability. If, during the Employment Period, the
Company shall terminate the Executive's employment other
than for Cause or Disability or the Executive shall
terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a
lump sum in cash within 30 days after the Date of Termi
nation the aggregate of the following amounts:
A. the sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the
extent not theretofore paid, (2) the product of (x)
the Minimum Bonus and (y) a fraction, the numerator
of which is the number of days in the current
fiscal year through the Date of Termination, and
the denominator of which is 365 and (3) any
compensation previously deferred by the Executive
<PAGE>
(together with any accrued interest or earnings
thereon) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2), and (3)
shall be hereinafter referred to as the "Accrued
Obligations"); and
B. the amount equal to the product of (1)
three, if the Date of Termination occurs on or
after the Effective Date, and two, if the Date of
Termination occurs before the Effective Date, and
(2) the sum of (x) the Executive's Annual Base
Salary and (y) the Minimum Bonus; and
C. if the Date of Termination occurs on or
after the Effective Date, an amount equal to the
excess of (a) the actuarial equivalent of the ben
efit under the Company's qualified defined benefit
retirement plan (the "Retirement Plan") (utilizing
actuarial assumptions no less favorable to the Ex
ecutive than those in effect under the Company's Re
tirement Plan immediately prior to the Effective
Date), and any excess or supplemental retirement
plan in which the Executive participates (together,
the "SERP") which the Executive would receive if
the Executive's employment continued for three
years after the Date of Termination assuming for
this purpose that all accrued benefits are fully
vested, and, assuming that the Executive's
compensation in each of the three years is that
required by Section 4(b)(i) and Section 4(b)(ii),
over (b) the actuarial equivalent of the
Executive's actual benefit (paid or payable), if
any, under the Retirement Plan and the SERP as of
the Date of Termination;
(ii) for three years, if the Date of Termination
occurs on or after the Effective Date, or two years, if
the Date of Termination occurs before the Effective Date
(in each case, the "Separation Period") after the
Executive's Date of Termination, or such longer period
as may be provided by the terms of the appropriate plan,
program, practice or policy, the Company shall continue
benefits to the Executive and/or the Executive's family
at least equal to those which would have been provided
to them in accordance with the plans, programs,
<PAGE>
practices and policies described in Section 4(b)(iv) of
this Agreement if the Executive's employment had not
been terminated or, if more favorable to the Executive,
as in effect generally at any time thereafter with re
spect to other peer executives of the Company and its
affiliated companies and their families, provided, how
ever, that if the Executive becomes reemployed with an
other employer and is eligible to receive medical or
other welfare benefits under another employer provided
plan, the medical and other welfare benefits described
herein shall be secondary to those provided under such
other plan during such applicable period of eligibility.
For purposes of determining eligibility (but not the
time of commencement of benefits) of the Executive for
retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be considered
to have remained employed during the Separation Period
and to have retired on the last day of such period;
(iii) the Company shall deliver to the Executive
free and clear title to the Company car;
(iv) to the extent not theretofore paid or pro
vided, the Company shall timely pay or provide to the
Executive any other amounts or benefits required to be
paid or provided or which the Executive is entitled to
receive under any plan, program, policy or practice or
contract or agreement of the Company and its affiliated
companies (such other amounts and benefits shall be here
inafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is termi
nated by reason of the Executive's death during the Employ
ment Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives under
this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination. With
respect to the provision of Other Benefits after the
Effective Date, the term Other Benefits as utilized in this
Section 6(b) shall include, without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to
receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies to
<PAGE>
the estates and beneficiaries of peer executives of the
Company and such affiliated companies under such plans,
programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives
and their beneficiaries at any time during the 120-day
period immediately preceding the Effective Date or, if more
favorable to the Executive's estate and/or the Executive's
beneficiaries, as in effect on the date of the Executive's
death with respect to other peer executives of the Company
and its affiliated companies and their beneficiaries.
(c) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during
the Employment Period, this Agreement shall terminate
without further obligations to the Executive, other than for
payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be
paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination. With respect to the provision
of Other Benefits after the Effective Date, the term Other
Benefits as utilized in this Section 6(c) shall include, and
the Executive shall be entitled after the Disability
Effective Date to receive, disability and other benefits at
least equal to the most favorable of those generally
provided by the Company and its affiliated companies to
disabled executives and/or their families in accordance with
such plans, programs, practices and policies relating to dis
ability, if any, as in effect generally with respect to
other peer executives and their families at any time during
the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive and/or the
Executive's family, as in effect at any time thereafter
generally with respect to other peer executives of the
Company and its affiliated companies and their families.
(d) Cause; Other than for Good Reason. If the
Executive's employment shall be terminated for Cause during
the Employment Period, this Agreement shall terminate
without further obligations to the Executive other than the
obligation to pay to the Executive (x) his Annual Base
Salary through the Date of Termination, (y) the amount of
any compensation previously deferred by the Executive, and
(z) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment
during the Employment Period, excluding a termination for
Good Reason, this Agreement shall terminate without further
<PAGE>
obligations to the Executive, other than for Accrued Obliga
tions and the timely payment or provision of Other Benefits.
In such case, all Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date
of Termination. Upon a termination of the Executive's
employment for Cause by the Company or by the Executive
without Good Reason, the Executive shall forfeit all stock
options that are not vested on the Date of Termination.
(e) Change of Control. Upon a Change of Control,
all stock options, restricted stock and other stock incen
tives held by the Executive shall vest and be immediately
exercisable. Within 10 days after a Change of Control, the
Company shall pay the Executive in a lump sum in cash all
nonqualified benefit plan balances and other deferred
amounts.
7. Non-exclusivity of Rights. Nothing in this
Agreement shall prevent or limit the Executive's continuing
or future participation in any plan, program, policy or prac
tice provided by the Company or any of its affiliated compa
nies and for which the Executive may qualify nor shall any
thing herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise en
titled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or
any of its affiliated companies at or subsequent to the Date
of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement
except as explicitly modified by this Agreement.
8. Full Settlement. The Company's obligation to
make the payments provided for in this Agreement and other
wise to perform its obligations hereunder shall not be af
fected by any set-off, counterclaim, recoupment, defense or
other claim, right or action which the Company may have
against the Executive or others. In no event shall the Ex
ecutive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to
the Executive under any of the provisions of this Agreement
and such amounts shall not be reduced whether or not the Ex
ecutive obtains other employment. The Company agrees to pay
as incurred, to the full extent permitted by law, all legal
fees and expenses which the Executive may reasonably incur
<PAGE>
as a result of any contest (regardless of the outcome
thereof) by the Company, the Executive or others of the
validity or enforceability of, or liability under, any provi
sion of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Execu
tive about the amount of any payment pursuant to this Agree
ment), plus in each case interest on any delayed payment at
the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Internal Revenue Code of 1986, as
amended (the "Code"); provided that the Company shall have
no such obligation if it is determined by a court that the
Company was not in breach of the Agreement and that the
Executive's claims were not made in good faith.
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary not
withstanding, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit
of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or oth
erwise, but determined without regard to any additional pay
ments required under this Section 9) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties are incurred by the Execu
tive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are herein
after collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes and any benefits that
result from the deductibility by the Executive of such taxes
(including, in each case, any interest or penalties imposed
with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, in
cluding whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to
be utilized in arriving at such determination, shall be made
by Coopers & Lybrand LLP or such other certified public ac-
<PAGE>
counting firm as may be designated by the Executive (the "Ac
counting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is re
quested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, the Execu
tive shall appoint another nationally recognized accounting
firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Pay
ment, as determined pursuant to this Section 9, shall be
paid by the Company to the Executive within five days of the
receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required
to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 9(c) and the
Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for
the benefit of the Executive.
(c) The Executive shall notify the Company in writ
ing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall ap
prise the Company of the nature of such claim and the date
on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such no
tice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
<PAGE>
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in
writing from time to time, including, without
limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in
order effectively to contest such claim, and
(iv) permit the Company to participate in any pro
ceedings relating to such claim;
provided, however, that the Company shall bear and pay di
rectly all costs and expenses (including additional interest
and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and ex
penses. Without limitation on the foregoing provisions of
this Section 9(c), the Company shall control all proceedings
taken in connection with such contest and, at its sole op
tion, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine;
provided, however, that if the Company directs the Executive
to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Execu
tive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable
<PAGE>
year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 9(a) or
9(c), the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of
Section 9(c)) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by the Company pursuant
to Section 9(c), a determination is made that the Executive
shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writ
ing of its intent to contest such denial of refund prior to
the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required
to be paid.
10. Confidential Information/Noncompetition. (a)
The Executive shall hold in a fiduciary capacity for the ben
efit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its af
filiated companies, and their respective businesses, which
shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affili
ated companies and which shall not be or become public knowl
edge (other than by acts by the Executive or representatives
of the Executive in violation of this Agreement). After ter
mination of the Executive's employment with the Company, the
Executive shall not, without the prior written consent of
the Company or as may otherwise be required by law or legal
process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those
designated by it.
<PAGE>
(b) In the event of a termination of the
Executive's employment prior to a Change of Control, until
the second anniversary of the Executive's Date of
Termination, the Executive will not directly or indirectly,
own, manage, operate, control or participate in the
ownership, management, operation or control of, or be
connected as an officer, employee, partner, director or
otherwise with, or have any financial interest in, any
business which is in competition with the Company or any of
its affiliates in any geographic area where such business is
being conducted during such period. Ownership, for personal
investment purposes only of not in excess of 2% of the
voting stock of any publicly held corporation shall not con
stitute a violation hereof.
11. Successors. (a) This Agreement is personal
to the Executive and without the prior written consent of
the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of
and be enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and as
signs.
(c) The Company will require any successor
(whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be
required to perform it if no such succession had taken
place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees
to perform this Agreement by operation of law, or otherwise.
12. Miscellaneous. (a) This Agreement shall be
governed by and construed in accordance with the laws of the
Commonwealth of Virginia, without reference to principles of
conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or ef
fect. This Agreement may not be amended or modified other
wise than by a written agreement executed by the parties
hereto or their respective successors and legal representa
tives.
<PAGE>
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to
the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Attention: [NAME]
[ADDRESS]
If to the Company:
Attention: Daniel J. Girvan
120 Tredegar Street
Richmond, Virginia 23219
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee.
(c) The invalidity or unenforceability of any pro
vision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts pay
able under this Agreement such Federal, state, local or for
eign taxes as shall be required to be withheld pursuant to
any applicable law or regulation.
(e) The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or
any other provision of this Agreement or the failure to as
sert any right the Executive or the Company may have here
under, including, without limitation, the right of the Execu
tive to terminate employment for Good Reason pursuant to
Section 5(c)(i)-(v) of this Agreement, shall not be deemed
to be a waiver of such provision or right or any other
provision or right of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the Executive has hereunto set
the Executive's hand and, pursuant to the authorization from
its Board of Directors, the Company has caused these
presents to be executed in its name on its behalf, all as of
the day and year first above written.
______________________________
[NAME]
James River Corporation of Virginia
By /s/Daniel J. Girvan
Daniel J. Girvan
Exhibit 11
JAMES RIVER CORPORATION of Virginia
COMPUTATION OF EARNINGS PER SHARE
For the Quarters (13 Weeks) and Nine Months (39 Weeks) Ended
September 29, 1996 and September 24, 1995
(in millions, except per share amounts)
Third Quarter Nine Months
PRIMARY: 1996 1995 1996 1995
Net earnings applicable
to common shares $ 62.8 $ 22.7 $ 78.0 $ 61.0
Weighted average number of common
shares and common share equivalents:
Common shares outstanding 85.5 83.4 85.1 82.4
Issuable upon exercise of outstanding
stock options and pursuant to a
deferred stock award plan 1.9 3.7 2.0 5.0
Assumed conversion of dilutive
convertible preferred stock 15.4
Less assumed acquisition of common
shares, using proceeds from stock
options and the impact of a deferred
stock award plan, under the treasury
stock method (1.4) (2.3) (1.4) (3.2)
101.4 84.8 85.7 84.2
Primary earnings per common share $ .62 $ .27 $ .91 $ .73
<PAGE>
Exhibit 11 (continued)
JAMES RIVER CORPORATION of Virginia
COMPUTATION OF EARNINGS PER SHARE
For the Quarters (13 Weeks) and Nine Months (39 Weeks) Ended
September 29, 1996 and September 24, 1995
(in millions, except per share amounts)
Third Quarter Nine Months
Fully Diluted: 1996 1995 1996 1995
Net Earnings Applicable
To Common Shares $ 69.0 $ 22.7 $ 78.0 $ 61.0
Weighted Average Number Of Common
Shares And Common Share Equivalents:
Common Shares Outstanding 85.5 83.4 85.1 82.4
Issuable Upon Exercise Of Outstanding
Stock Options And Pursuant To A
Deferred Stock Award Plan 3.2 3.7 2.6 5.0
Assumed Conversion Of Dilutive
Convertible Preferred Stock 27.5
Less Assumed Acquisition Of Common
Shares, Using Proceeds From Stock
Options And The Impact Of A Deferred
Stock Award Plan, Under The Treasury
Stock Method (2.6) (2.3) (1.9) (3.2)
113.6 84.8 85.8 84.2
Fully Diluted Earnings Per Common Share $ .61 $ .27 $ .91 .73
<PAGE>
Exhibit 11 (continued)
JAMES RIVER CORPORATION of Virginia
NOTES TO COMPUTATIONS OF EARNINGS
PER SHARE
Primary earnings per common share is computed by dividing net income, after
deducting dividends on outstanding preferred shares, by the weighted average
number of common shares and dilutive common share equivalents outstanding during
the period. Common share equivalents consist of shares issuable pursuant to
stock options, a deferred stock award plan and Series P 9% Cumulative
Convertible Preferred Stock, and are calculated using an average market price
for the period.
Fully diluted earnings per common share is computed using the same method
as for the primary computation except that (i) common share equivalents are
computed using the higher of the market price at the end of the period or the
average market price for the period, and (ii) the average number of common
shares and dilutive common share equivalents outstanding is increased by the
assumed conversion, if dilutive, of the Company's Series K $3.375 Cumulative
Convertible Exchangeable Preferred Stock, its Series L $14.00 Cumulative
Convertible Exchangeable Preferred Stock, its Series N $14.00 Cumulative
Convertible Exchangeable Preferred Stock, and its Series P 9% Cumulative
Convertible Preferred Stock. Conversions of all convertible preferred stocks
have been assumed for the third quarter of 1996, as such conversions are
dilutive; however, such conversions are not dilutive for the other periods
presented.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from James River
Corporation of Virginia's September 29, 1996, Form 10-Q financial statements and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000053117
<NAME> JAMES RIVER CORPORATION OF VIRGINIA
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-END> SEP-29-1996
<CASH> 63
<SECURITIES> 0
<RECEIVABLES> 787
<ALLOWANCES> 0
<INVENTORY> 646
<CURRENT-ASSETS> 1,612
<PP&E> 5,794
<DEPRECIATION> 2,070
<TOTAL-ASSETS> 6,625
<CURRENT-LIABILITIES> 1,114
<BONDS> 2,034
0
738
<COMMON> 9
<OTHER-SE> 1,533
<TOTAL-LIABILITY-AND-EQUITY> 6,625
<SALES> 4,391
<TOTAL-REVENUES> 4,391
<CGS> 3,250
<TOTAL-COSTS> 3,250
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 129
<INCOME-PRETAX> 222
<INCOME-TAX> 98
<INCOME-CONTINUING> 122
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 122
<EPS-PRIMARY> .91
<EPS-DILUTED> .91
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains restated summary financial information originally
extracted from James River Corporation of Virginia's September 24, 1995, Form
10-Q financial statements as restated in the September 29, 1996, Form 10-Q
financial statements and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<RESTATED>
<CIK> 0000053117
<NAME> JAMES RIVER CORPORATION OF VIRGINIA
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
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0
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