<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 1996
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ to _________________
Commission file number 1-11113
RIVERWOOD HOLDING, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 58-2205241
- ----------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1013 Centre Road
Suite 350
Wilmington, Delaware 19805
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(Address of principal executive offices)
(Zip Code)
c/o Riverwood International Corporation
(770) 644-3000
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(Registrant's telephone number, including area code)
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(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 to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No .
----- -----
At November 6, 1996 there were 7,111,900 shares and 500,000 shares of the
registrant's Class A and Class B common stock, respectively, outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION*
* As used in this Form 10-Q, unless the context otherwise requires, "RIC"
refers to the corporation formerly named Riverwood International
Corporation, the "Predecessor" or the "Predecessor Company" refers to RIC
and its subsidiaries in respect of periods prior to the Merger (as defined
herein), the "Company" refers to the registrant, Riverwood Holding, Inc., a
Delaware corporation formerly named New River Holding, Inc. ("Holding") and
its subsidiaries, "RIC Holding" refers to RIC Holding, Inc., a Delaware
corporation, successor by merger to RIC and a wholly-owned subsidiary of
Holding, and "Riverwood" refers to Riverwood International Corporation, a
Delaware corporation formerly named Riverwood International USA, Inc. and a
wholly-owned subsidiary of RIC Holding.
I-1
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RIVERWOOD HOLDING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
ON MARCH 27, 1996, HOLDING, THROUGH ITS WHOLLY-OWNED SUBSIDIARY RIC HOLDING,
ACQUIRED ALL OF THE OUTSTANDING SHARES OF COMMON STOCK OF RIC. THE PURCHASE
METHOD OF ACCOUNTING WAS USED TO RECORD ASSETS ACQUIRED AND LIABILITIES ASSUMED
BY HOLDING. THE ALLOCATION OF THE PURCHASE PRICE AND ACQUISITION COSTS TO THE
ASSETS ACQUIRED AND LIABILITIES ASSUMED IS PRELIMINARY AT SEPTEMBER 28, 1996 AND
IS SUBJECT TO CHANGE PENDING FINALIZATION OF APPRAISALS AND OTHER STUDIES OF
FAIR VALUE AND FINALIZATION OF MANAGEMENT'S PLANS WHICH MAY RESULT IN THE
RECORDING OF ADDITIONAL LIABILITIES AS PART OF THE ALLOCATION OF THE PURCHASE
PRICE. AS A RESULT OF PURCHASE ACCOUNTING AND DISCONTINUED OPERATIONS (SEE NOTE
11), THE ACCOMPANYING FINANCIAL STATEMENTS OF THE PREDECESSOR AND THE COMPANY
ARE NOT COMPARABLE IN ALL MATERIAL RESPECTS SINCE THE FINANCIAL STATEMENTS
REPORT FINANCIAL POSITION, RESULTS OF OPERATIONS AND CASH FLOWS OF THESE TWO
SEPARATE ENTITIES. THE CONDENSED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31,
1995 WAS DERIVED FROM COMPLETE AUDITED FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
Company Predecessor
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September 28, December 31,
ASSETS 1996 1995
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<S> <C> <C>
Current Assets
Cash and equivalents $ 16,507 $ 35,870
Marketable securities, at cost (approximates market) 792 1,375
Receivables, net of allowances 186,838 187,621
Inventories 224,567 193,703
Prepaid expenses 11,338 23,229
Deferred tax assets 3,102 18,754
Net assets of discontinued operations 548,310 -
- --------------------------------------------------------------------------------------------------------------------
Total Current Assets 991,454 460,552
Property, Plant and Equipment, net of accumulated
depreciation of $55,656 in 1996 and $475,897 in 1995 1,649,898 1,227,203
Timber and Timberlands, less cost of timber harvested - 238,887
Investments in Net Assets of Equity Affiliates 135,326 119,592
Other Assets 395,789 155,094
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Total Assets $ 3,172,467 $ 2,201,328
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LIABILITIES
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Current Liabilities
Short-term debt $ 8,398 $ 60,692
Accounts payable 124,329 114,293
Compensation and employee benefits 51,989 56,495
Income taxes 37,337 4,688
Other accrued liabilities 106,337 58,384
- --------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 328,390 294,552
Long-Term Debt, less current portion 2,048,757 1,041,221
Long-Term Debt to Affiliate - 12,573
Deferred Income Taxes 26,801 232,195
Other Noncurrent Liabilities 79,947 58,477
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Total Liabilities 2,483,895 1,639,018
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Contingencies and Commitments (Note 8)
STOCKHOLDERS' EQUITY
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Preferred Stock - -
Common Stock 76 657
Capital in Excess of Par Value 761,068 526,814
(Accumulated Deficit) Retained Earnings (77,427) 45,309
Cumulative Currency Translation Adjustment 4,855 (10,470)
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Total Stockholders' Equity 688,572 562,310
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Total Liabilities and Stockholders' Equity $ 3,172,467 $ 2,201,328
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</TABLE>
See Notes to Condensed Consolidated Financial Statements.
I-2
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RIVERWOOD HOLDING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
ON MARCH 27, 1996, HOLDING, THROUGH ITS WHOLLY-OWNED SUBSIDIARY RIC HOLDING,
ACQUIRED ALL OF THE OUTSTANDING SHARES OF COMMON STOCK OF RIC. THE PURCHASE
METHOD OF ACCOUNTING WAS USED TO RECORD ASSETS ACQUIRED AND LIABILITIES ASSUMED
BY HOLDING. THE ALLOCATION OF THE PURCHASE PRICE AND ACQUISITION COSTS TO THE
ASSETS ACQUIRED AND LIABILITIES ASSUMED IS PRELIMINARY AT SEPTEMBER 28, 1996 AND
IS SUBJECT TO CHANGE PENDING FINALIZATION OF APPRAISALS AND OTHER STUDIES OF
FAIR VALUE AND FINALIZATION OF MANAGEMENT'S PLANS WHICH MAY RESULT IN THE
RECORDING OF ADDITIONAL LIABILITIES AS PART OF THE ALLOCATION OF THE PURCHASE
PRICE. AS A RESULT OF PURCHASE ACCOUNTING AND DISCONTINUED OPERATIONS (SEE NOTE
11), THE ACCOMPANYING FINANCIAL STATEMENTS OF THE PREDECESSOR AND THE COMPANY
ARE NOT COMPARABLE IN ALL MATERIAL RESPECTS SINCE THE FINANCIAL STATEMENTS
REPORT FINANCIAL POSITION, RESULTS OF OPERATIONS AND CASH FLOWS OF THESE TWO
SEPARATE ENTITIES.
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
-------------------------------------- ------------------------------------------------
Three months Six months Three months Three months Nine months
ended ended ended ended ended
September 28, 1996 September 28, 1996 March 27, 1996 Sept. 30, 1995 Sept. 30, 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $ 291,645 585,529 $ 293,649 $ 342,219 $1,021,660
Cost of Sales 250,148 528,946 232,701 266,024 790,495
Selling, General and Administrative 31,854 63,485 30,936 31,936 94,809
Research, Development and Engineering 2,506 4,260 2,031 2,016 8,226
Other Costs - - 11,114 3,582 19,717
Other Expenses, net 3,677 5,669 1,217 345 2,545
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Income (Loss) from Operations 3,460 (16,831) 15,650 38,316 105,868
Interest Income 373 599 329 330 1,717
Interest Expense 51,385 101,227 26,392 25,703 78,011
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(Loss) Income from Continuing
Operations before Income
Taxes and Equity in Net Earnings
of Affiliates (47,552) (117,459) (10,413) 12,943 29,574
Income Tax Expense (Benefit) 916 (1,356) (3,436) 5,696 13,013
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(Loss) Income from Continuing
Operations before Equity in
Net Earnings of Affiliates (48,468) (116,103) (6,977) 7,247 16,561
Equity in Net Earnings of Affiliates 5,678 10,300 4,927 9,384 28,037
- ---------------------------------------------------------------------------------------------------------------------------------
(Loss) Income from Continuing Operations (42,790) (105,803) (2,050) 16,631 44,598
Income from Discontinued Operations, net
of tax of $0 16,623 28,376 - - -
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Net (Loss) Income $ (26,167) $ (77,427) $ (2,050) $ 16,631 $ 44,598
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</TABLE>
See Notes to Condensed Consolidated Financial Statements.
I-3
<PAGE>
RIVERWOOD HOLDING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(THOUSANDS OF DOLLARS)
(UNAUDITED)
ON MARCH 27, 1996, HOLDING, THROUGH ITS WHOLLY-OWNED SUBSIDIARY RIC HOLDING,
ACQUIRED ALL OF THE OUTSTANDING SHARES OF COMMON STOCK OF RIC. THE PURCHASE
METHOD OF ACCOUNTING WAS USED TO RECORD ASSETS ACQUIRED AND LIABILITIES ASSUMED
BY HOLDING. THE ALLOCATION OF THE PURCHASE PRICE AND ACQUISITION COSTS TO THE
ASSETS ACQUIRED AND LIABILITIES ASSUMED IS PRELIMINARY AT SEPTEMBER 28, 1996 AND
IS SUBJECT TO CHANGE PENDING FINALIZATION OF APPRAISALS AND OTHER STUDIES OF
FAIR VALUE AND FINALIZATION OF MANAGEMENT'S PLANS WHICH MAY RESULT IN THE
RECORDING OF ADDITIONAL LIABILITIES AS PART OF THE ALLOCATION OF THE PURCHASE
PRICE. AS A RESULT OF PURCHASE ACCOUNTING AND DISCONTINUED OPERATIONS (SEE NOTE
11), THE ACCOMPANYING FINANCIAL STATEMENTS OF THE PREDECESSOR AND THE COMPANY
ARE NOT COMPARABLE IN ALL MATERIAL RESPECTS SINCE THE FINANCIAL STATEMENTS
REPORT FINANCIAL POSITION,
RESULTS OF OPERATIONS AND CASH FLOWS OF THESE TWO
SEPARATE ENTITIES.
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
--------------------- ------------------------------------
Six months Three months Nine months
ended ended ended
September 28,1996 March 27,1996 September 30, 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net (Loss) Income $ (77,427) $ (2,050) $ 44,598
Noncash Items Included in Net (Loss) Income:
Depreciation, amortization and cost of timber harvested 73,528 24,438 67,875
Write-up of inventories 28,423 - -
Deferred income taxes (3,101) (3,574) (4,849)
Pension, postemployment and postretirement
expense, net of benefits paid 1,113 1,861 (1,348)
Equity in net earnings of affiliates, net of dividends (8,284) (4,927) (24,032)
Amortization of debt issuance costs 8,045 619 2,025
Other - (2,350) (806)
(Increase) Decrease in Current Assets,
net of effects from the Merger:
Receivables (16,660) 14,737 (38,764)
Inventories (4,824) (14,659) (33,773)
Prepaid expenses 3,262 8,298 (3)
(Decrease) Increase in Current Liabilities,
net of effects from the Merger:
Accounts payable (13,518) 18,182 11,867
Compensation and employee benefits (4,084) (10,248) 9,400
Income taxes (4,426) (3,343) (8,760)
Other accrued liabilities 17,811 12,360 30,755
Decrease in Other Noncurrent Liabilities (4,063) (2,569) (2,273)
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Net Cash (Used in) Provided by Operating Activities (4,205) 36,775 51,912
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Cash Flows from Investing Activities:
Acquisition of RIC, net of cash acquired (1,365,202) - -
Purchases of Property, Plant and Equipment (74,369) (44,074) (118,802)
Acquisition of equipment previously leased
under operating leases (46,742) - -
Proceeds from maturity of marketable securities 167 439 2,630
Proceeds from Sales of Assets 3,214 623 14,988
Increase in Other Assets (12,260) (8,004) (2,557)
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Net Cash Used in Investing Activities (1,495,192) (51,016) (103,741)
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Cash Flows from Financing Activities:
Issuance of Debt 1,848,215 12,669 -
Increase in Debt Issuance Costs (92,820) - -
Net increase (decrease) in Notes Payable 146,909 (3,000) (13,000)
Proceeds from Issuance of Common Stock 761,143 838 2,556
Payments on Debt (30,244) (2,833) (5,181)
Predecessor Debt Paid at Merger (1,118,461) - -
Dividends - (2,630) (7,878)
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Net Cash Provided by (Used in) Financing Activities 1,514,742 5,044 (23,503)
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Effect of Exchange Rate Changes on Cash 1,161 (638) 135
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Net Increase (Decrease) in Cash and Equivalents 16,506 (9,835) (75,197)
Cash and Equivalents at Beginning of Period 1 35,870 117,712
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Cash and Equivalents at End of Period $ 16,507 $26,035 $ 42,515
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</TABLE>
See Notes to Condensed Consolidated Financial Statements.
I-4
<PAGE>
RIVERWOOD HOLDING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Holding, its wholly-owned subsidiaries RIC Holding and the corporation
formerly named CDRO Acquisition Corporation ("Acquisition Corp.") were
incorporated in 1995 to acquire the stock of RIC.
On March 27, 1996, Holding, through its wholly-owned subsidiaries, acquired all
of the outstanding shares of common stock of RIC. On such date, Acquisition
Corp. was merged (the "Merger") into RIC. RIC, as the surviving corporation in
the Merger, became a wholly-owned subsidiary of RIC Holding. On March 28, 1996,
RIC transferred substantially all of its properties and assets to Riverwood,
other than the capital stock of Riverwood, and RIC was merged (the "Subsequent
Merger") into RIC Holding. Thereupon, Riverwood was renamed "Riverwood
International Corporation." Upon consummation of the Subsequent Merger, RIC
Holding, as the surviving corporation in the Subsequent Merger, became the
parent company of Riverwood.
Holding and its subsidiaries conducted no significant business other than in
connection with the Merger and related transactions through March 27, 1996. The
condensed consolidated financial statements included herein have been prepared
by the Company without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in the financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. Although management believes that the
disclosures are adequate to make the information presented not misleading, it is
suggested that the Predecessor interim condensed financial statements be read in
conjunction with the Predecessor's most recent audited financial statements and
notes thereto. In the opinion of management, all adjustments, consisting of
normal recurring adjustments, except for purchase accounting adjustments
discussed herein, necessary for a fair presentation of the financial position,
results of operations and cash flows for the interim periods presented have been
made. Operating results for the interim periods are not necessarily indicative
of the results that may be expected for the fiscal year ending December 31,
1996.
In connection with the Merger, the purchase method of accounting was used to
establish and record a new cost basis for the assets acquired and liabilities
assumed. The allocation of the purchase price and acquisition costs to the
assets acquired and liabilities assumed is preliminary at September 28, 1996,
and is subject to change pending finalization of appraisals and other studies of
fair value and finalization of management's plans which may result in the
recording of additional liabilities as part of the allocation of the purchase
price. The difference between the purchase price and the preliminary fair
market values of the assets acquired and liabilities assumed was recorded as
goodwill.
The preliminary allocation of the $1,365.2 million net cash paid for the
acquisition is summarized as follows (in millions of dollars):
Current assets................................. $ 443.6
Property, plant and equipment.................. 2,138.4
Intangible assets.............................. 293.8
Other noncurrent assets........................ 135.6
Liabilities..................................... (1,646.2)
--------
Total........................................... $1,365.2
--------
--------
The condensed consolidated financial statements presented herein for the periods
prior to March 28, 1996, represent the Predecessor's financial position, results
of operations and cash flows prior to the Merger and, consequently, are stated
on the Predecessor's historical cost basis. The consolidated financial
statements as of September 28, 1996, and for the three and six months then
ended, reflect the adjustments which were made to record the Merger.
Accordingly, the financial statements of the Predecessor for periods prior to
March 28, 1996 are not comparable in all material respects with the financial
statements subsequent to the Merger date. The most significant differences
relate to amounts recorded for inventory, property, plant and equipment,
intangibles and debt which resulted in increased cost of sales, amortization,
depreciation and interest expense in the three and six months ended September
28, 1996 and in future periods.
I-5
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
For a summary of the Company's significant accounting policies, please refer to
the Company's report on Form 10-Q filed with the Securities and Exchange
Commission for the quarterly period ended June 29, 1996. For a summary of RIC's
significant accounting policies, please refer to RIC's annual report filed with
the Securities and Exchange Commission under Form 10-K for the year ended
December 31, 1995.
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual amounts could differ from those estimates.
NOTE 3 - INVENTORIES
Inventories are stated at the lower of cost or market. The cost of inventories
is determined principally on the first-in, first-out ("FIFO") basis. In
addition, average cost is used to determine the cost of certain U.S.
inventories.
The major classes of inventories were as follows:
(In thousands of dollars)
Company Predecessor
------------- -------------
September 28, December 31,
1996 1995
- ---------------------------------------------------------------------------
Finished goods $ 99,358 $ 67,336
Work-in-process 15,301 19,941
Raw materials 68,723 61,298
Supplies 41,185 45,128
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$224,567 $193,703
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At December 31, 1995, the cost of the Predecessor's inventory balances was
determined based on the last-in first-out (LIFO) method, resulting in a LIFO
reserve of approximately $29.4 million. In connection with the Merger, the
Company adjusted its inventory balances to estimated fair value which resulted
in the elimination of the Predecessor's LIFO reserve and a write up of the
acquired inventory to a value which exceeded the Predecessor's FIFO cost. The
initial estimated write up of inventory as reported in the second quarter of
1996 was approximately $40.1 million. In the third quarter of 1996, the Company
adjusted its estimates of fair value of inventories acquired in the Merger by
$4.2 million and reclassified $8.4 million of capital spare parts from
inventories to other assets. The result of these adjustments and
reclassification was to reduce the fair value write-up of inventories by
approximately $12.6 million to a value of approximately $27.5 million above the
Predecessor's FIFO cost. The write-up to inventory is being charged to cost of
sales as the inventory on hand at March 27, 1996 is sold. Approximately $25.7
million of this fair value write-up of inventories was charged to cost of sales
during the six months ended September 28, 1996. During the third quarter of
1996, the Company recognized a net credit to cost of sales of approximately $1.4
million, resulting from refinements to the estimated fair value of inventories
at the Merger date.
As it relates to discontinued operations (see Note 11), the Company wrote up its
acquired inventory to a value of $2.7 million above the Predecessor's FIFO cost.
Such write-up was charged to cost of sales during the second quarter of 1996 as
the inventory on hand at March 27, 1996 was sold during that quarter.
I-6
<PAGE>
NOTE 4 - INVESTMENTS IN NET ASSETS OF EQUITY AFFILIATES
The Company has investments in affiliates that are accounted for using the
equity method of accounting. The only significant investment is the Company's
50 percent investment in Igaras Papeis e Embalagens S.A. ("Igaras").
The following represents the summarized income statement information for Igaras,
of which the Company recognizes 50 percent in its results of operations:
<TABLE>
<CAPTION>
(In thousands of dollars)
Company Predecessor
----------------------------------- -----------------------------------------------------
Three months Six months Three months Three months Nine months
ended ended ended ended ended
Sept. 28, 1996 Sept. 28, 1996 March 27, 1996 Sept. 30, 1995 Sept. 30, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $ 58,458 $115,206 $59,573 $ 68,651 $ 212,159
Cost of Sales 38,675 76,613 39,127 34,527 102,051
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Gross Profit $ 19,783 $ 38,593 $20,446 $ 34,124 $ 110,108
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Income from Operations $ 14,885 $ 27,935 $14,275 $ 27,786 $ 89,507
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- -----------------------------------------------------------------------------------------------------------------------------------
Net Income $ 11,309 $ 20,066 $10,249 $ 18,765 $ 56,070
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Company received net dividends from its investments in affiliates that are
accounted for using the equity method of accounting totaling $0.7 million, $2.1
million, $0, $1.9 million and $3.4 million for the three and six months ended
September 28, 1996, the three months ended March 27, 1996 and September 30, 1995
and the nine months ended September 30, 1995, respectively.
NOTE 5 - INTANGIBLE ASSETS
Other Assets included intangible assets as follows:
(In thousands of dollars)
Company Predecessor
------- -------------
September 28, December 31,
1996 1995
- --------------------------------------------------------------------------------
Goodwill $ 246,824 $74,225
Patents, licenses,
and trademarks 46,929 9,827
Other - 5,765
- --------------------------------------------------------------------------------
293,753 89,817
Less, accumulated amortization 4,611 19,462
- --------------------------------------------------------------------------------
Total $ 289,142 $70,355
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In accordance with APB 16, the Company refined certain preliminary estimates of
fair value of assets acquired and liabilities assumed in the Merger, with a
corresponding increase to goodwill of approximately $12.6 million during the
third quarter of 1996.
NOTE 6 - LONG-TERM DEBT
In connection with the Merger, the Company entered into a credit agreement (the
"Senior Secured Credit Agreement") with certain lenders providing for new senior
secured credit facilities with aggregate commitments not to exceed $1,550
million (the "Senior Secured Credit Facilities"), including a $1,150 million
term loan facility (the "Term Loan Facility") and a $400 million revolving
credit facility (the "Revolving Facility"). In addition, Riverwood
International Machinery, Inc. ("RIMI), a wholly-owned subsidiary of Riverwood,
entered into a credit agreement (the "Machinery Credit Agreement," and together
with the Senior Secured Credit Agreement, the "Credit Agreements") providing for
a $140 million secured revolving credit facility (the "Machinery Facility," and
together with the Senior Secured Credit Facilities, the "Facilities") with
certain
I-7
<PAGE>
lenders for the purpose of financing or refinancing packaging machinery. In
connection with the Merger, the Company also completed an offering (the "Notes
Offering") of $250 million aggregate principal amount of 10 1/4% Senior Notes
due 2006 (the "Senior Notes") and $400 million aggregate principal amount of
10 7/8% Senior Subordinated Notes due 2008 (the "Senior Subordinated Notes" and,
together with the Senior Notes, the "Notes"). Furthermore, substantially all
outstanding indebtedness (with certain limited exceptions) and packaging
machinery leasing obligations of RIC and its subsidiaries were repaid or
terminated in connection with the Merger.
Prior to the sale of substantially all of the assets of the U.S.
Timberlands/Wood Products business segment (see Note 11), consent to the sale
was obtained from the lenders under the Credit Agreements. The Company has
applied $400.0 million of the sale proceeds to repay term loans under the Term
Loan Facility, including approximately $375.0 million of tranche "A" term loans,
approximately $18.4 million of tranche "B" term loans and approximately $6.6
million of tranche "C" term loans. Scheduled term loan principal payments under
the Term Loan Facility have been reduced to reflect this application of
proceeds.
Annual term loan amortization requirements under the Term Loan Facility prior to
the application of such sales proceeds (the original amortization requirements)
and subsequent to the application of such sale proceeds (the revised
amortization requirements) are as follows (in thousands of dollars):
Original Amortization Revised Amortization
Requirements Requirements
----------------------------------------------------
1997 $ 23,700 $ 988
1998 71,055 2,969
1999 106,060 28,006
2000 128,810 80,222
2001 186,085 124,731
Thereafter 634,290 513,084
----------------------------------------------------
Total $ 1,150,000 $ 750,000
----------------------------------------------------
----------------------------------------------------
The Company has applied the remaining sale proceeds to outstanding revolving
credit borrowings under the Revolving Credit Facility. This application of
proceeds did not involve any revolving credit commitment reduction and resulted
in revolving credit availability of approximately $350 million as of October 18,
1996.
Also, in connection with the sale of substantially all of the assets of the
U.S. Timberlands/Wood Products business segment (see Note 11), financial and
other covenants in the Company's Credit Agreements have been modified to reflect
the sale as well as the Company's financial results and current market and
operating conditions. Covenant modifications under the Credit Agreements
included the addition of a minimum EBITDA requirement, the elimination of a
maximum leverage ratio, the reduction of the interest coverage ratio, the
reduction of minimum consolidated net worth requirements, the reduction in
capital expenditure limits and a reduction in management stock repurchase
limits.
The Revolving Facility will mature in March 2003 and the Machinery Facility will
mature in March 2001, with all amounts then outstanding becoming due. The loans
under the Facilities bear interest at floating rates based upon the interest
rate option elected by the Company. The Senior Notes due 2006 and the Senior
Subordinated Notes due 2008 bear interest at rates of 10 1/4% and 10 7/8%,
respectively.
The Company uses interest rate swap and cap agreements to convert or cap a
portion of its variable rate Term Loan Facility to a fixed rate in order to
reduce the impact of interest rate changes on future income. The differential
to be paid or received under these agreements is recognized as an adjustment to
interest expense related to the debt. At September 28, 1996, the Company had
interest rate swap agreements (with a notional amount of $250 million under
which the Company will pay fixed rates of 6.0675 percent to 6.375 percent and
receive three-month LIBOR) and 7.0 percent, three-month LIBOR cap agreements
(with a notional amount of $400 million) that expire through November 30, 1998.
I-8
<PAGE>
The Credit Agreements impose restrictions on the Company's ability to make
capital expenditures and both the Credit Agreements and the Indentures governing
the Notes limit the Company's ability to incur additional indebtedness. Such
restrictions, together with the highly leveraged nature of the Company, could
limit the Company's ability to respond to market conditions, to meet its capital
spending program, to provide for unanticipated capital investments or to take
advantage of business opportunities. The covenants contained in the Credit
Agreements also, among other things, restrict the ability of the Company and its
subsidiaries to dispose of assets, incur guarantee obligations, repay the Notes,
pay dividends, create liens on assets, enter into sale and leaseback
transactions, make investments, loans or advances, make acquisitions, engage in
mergers or consolidations, make capital expenditures or engage in certain
transactions with affiliates, and otherwise restrict corporate activities. The
covenants contained in the Indentures governing the Notes also impose
restrictions on the operation of the Company's businesses.
NOTE 7 - COMMON STOCK
On March 27, 1996, Holding completed an offering of 7,500,000 shares of common
stock of Holding ("Holding Common Stock") to certain institutional investors for
$750 million. Holding has commenced an offering of Holding Common Stock to
certain members of management and key employees (the "Management Investors") of
the Company. As of September 28, 1996, the Company had issued 111,900 shares
of Holding Common Stock to Management Investors for $11.2 million.
On June 4, 1996, the Management Investors received a total of 296,550
non-qualified options to purchase additional shares of Holding Common Stock for
$100 per share (the "Stock Options"). Of these Stock Options, 223,800 options
vest over a five-year period and 72,750 options vest upon achievement of certain
financial goals or on December 4, 2005, whichever occurs first. As of
September 28, 1996, no Stock Options had vested. In accordance with the
provisions of Statement of Financial Standards No. 123, "ACCOUNTING FOR STOCK-
BASED COMPENSATION", the Company accounts for these Stock Options in accordance
with APB Opinion No. 25, "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES."
NOTE 8 - CONTINGENCIES AND COMMITMENTS
The Company is committed to compliance with all applicable laws and regulations.
Environmental law is, however, dynamic rather than static. As a result, costs,
which are unforeseeable at this time, may be incurred when new laws are enacted,
and when environmental agencies promulgate or revise rules and regulations. In
late 1993, the U.S. Environmental Protection Agency (the "EPA") proposed
regulations (generally referred to as the "cluster rules") that would mandate
more stringent controls on air and water discharges from the United States pulp
and paper mills. The Company expects, based on information presently available
from the EPA, that the cluster rules may be finally promulgated in 1997. The
Company estimates the capital spending that may be required to comply with the
cluster rules could reach $40 million to be spent over a three-year period
beginning in 1997.
The Louisiana Department of Environmental Quality ("DEQ") has notified the
Company by letter, dated December 19, 1995, that the Company may be liable for
the remediation of the release or threat of release of hazardous substances at a
wood treatment site in Shreveport, Louisiana, that the Company or its
predecessor previously operated and a former oil refinery site in Caddo Parish,
Louisiana, that the Company currently owns. The Company never operated the
refinery. In response to these DEQ letters, the Company has provided additional
information to the DEQ concerning these sites and has commenced its own
evaluation of any claims and remediation liabilities for which it may be
responsible. The Company received a letter from the DEQ dated May 20, 1996,
requesting a plan for soil and groundwater sampling of the wood treatment site.
The Company first met with the DEQ on July 18, 1996 and then submitted a soil
sampling plan to the DEQ. On September 6, 1996, the Company received from the
DEQ a letter requesting remediation of the former oil refinery site in Caddo
Parish, Louisiana. The Company will meet with the DEQ in November 1996 to
discuss this letter.
The Company is engaged in environmental remediation projects for certain
properties currently owned or operated by the Company and certain properties
divested by the Company for which responsibility was retained for pre-existing
conditions. The Company's costs in some instances cannot be estimated until the
remediation process is substantially underway. To address these contingent
environmental costs, the Company has accrued reserves where such costs are
probable and can be reasonably estimated. The Company believes that, based on
current information and regulatory requirements, the accruals established by the
Company for environmental expenditures are adequate. Based on current
knowledge, to the extent that additional costs may be incurred that exceed the
accrued reserves, such amounts are not expected to have a material impact on the
results of operations, cash flows or financial condition of the Company,
although no assurance can be given that material costs will not be incurred in
connection with clean-up activities at these properties, including the
Shreveport and Caddo Parish sites referred to above.
I-9
<PAGE>
The Company is a party to a number of lawsuits arising out of the conduct of its
business. While there can be no assurance as to their ultimate outcome, the
Company does not believe that these lawsuits will have a material impact on the
results of operations, cash flows or financial condition of the Company.
NOTE 9 - OTHER COSTS
Other Costs incurred by the Predecessor Company include expenses associated with
stock-based compensation plans, expenses related to RIC's review of strategic
alternatives and provision for environmental reserves.
NOTE 10 - INCOME TAXES
During the six months ended September 28, 1996, the Company recognized an income
tax benefit of $1.4 million on a Loss from Continuing Operations before Income
Taxes and Equity in Net Earnings of Affiliates of $117.5 million. This benefit
differed from the statutory federal income tax rate because of valuation
allowances established on net operating loss carryforwards in the U.S. and
certain international locations where the realization of such benefits is less
likely than not.
In the first quarter of 1996, the Predecessor Company recognized an income tax
benefit of $3.4 million on a Loss from Continuing Operations before Income Taxes
and Equity in Net Earnings of Affiliates of $10.4 million. The Predecessor
Company's effective income tax rate for both the three and nine months ended
September 30, 1995 was 44 percent.
NOTE 11 - DISCONTINUED OPERATIONS
On October 18, 1996, the Company sold substantially all of the assets of the
U.S. Timberlands/Wood Products business segment for cash of approximately $550
million (subject to certain postclosing adjustments). In addition, the buyer
assumed certain specified preclosing liabilities. Under the terms of the
agreement for such sale, the Company and the buyer entered into a long-term
supply agreement for the purchase by the Company, at market-based prices, of a
majority of the Company's requirements for pine pulpwood and residual chips at
its paper mill in West Monroe, Louisiana (the "West Monroe Mill"), as well as a
portion of the Company's needs for hardwood pulpwood at the West Monroe Mill.
The Company does not anticipate any significant gain or loss on the sale.
The operating results for the U.S. Timberlands/Wood Products business segment
have been classified as discontinued operations for the three and six months
ended September 28, 1996 in the Condensed Consolidated Statements of Operations.
The assets and liabilities of discontinued operations have been classified in
the Condensed Consolidated Balance Sheets as "Net assets of discontinued
operations," and as of September 28, 1996, reflect the preliminary fair value of
assets and liabilities of the U.S. Timberlands/Wood Products business segment.
Discontinued operations have not been segregated in the Condensed Consolidated
Statements of Cash Flows nor have they been reclassified as discontinued
operations in the Predecessor Company's Condensed Consolidated Statements of
Operations and Condensed Consolidated Balance Sheets.
Net sales of the discontinued U.S. Timberlands/Wood Products business segment
for the three and six months ended September 28, 1996 were $36.7 million and
$71.5 million, respectively, and income from operations for the same periods
were $17.8 million and $29.4 million, respectively.
The preliminary balance sheet data for the discontinued operations excludes
certain assets and liabilities maintained at the corporate level. The following
is a summary of the preliminary balance sheet data for the discontinued
operations as of September 28, 1996:
(In thousands of dollars)
-----------------------------------------------------------------
Current assets $ 21,291
Noncurrent 542,809
-----------------------------------------------------------------
Total assets 564,100
-----------------------------------------------------------------
Current liabilities 15,790
-----------------------------------------------------------------
Net assets of discontinued operations $ 548,310
-----------------------------------------------------------------
-----------------------------------------------------------------
I-10
<PAGE>
NOTE 12 - PRO FORMA DATA
The following unaudited pro forma financial data has been prepared assuming that
the Merger and related financings were consummated on January 1, 1995 and
excluding the results of operations of the U.S. Timberlands/Wood Products
business segment from all periods presented. In addition, the pro forma
financial data excludes the effect on earnings of the write-up of inventory to
fair value in connection with purchase accounting. This pro forma financial
data is presented for informational purposes and is not necessarily indicative
of the operating results that would have occurred had the Merger been
consummated on January 1, 1995, nor is it necessarily indicative of future
operations.
<TABLE>
<CAPTION>
(In thousands of dollars)
Three months Six months Three months Three months Nine months
ended ended ended ended ended
September 28, 1996 September 28, 1996 March 27, 1996 September 30, 1995 September 30, 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $291,645 $836,657 $251,128 $300,323 $885,242
Net Loss $(44,211) $(82,024) $(43,576) $ (7,533) $(54,535)
</TABLE>
NOTE 13 - RELATED PARTY TRANSACTIONS
The Company receives certain management services provided by Clayton, Dubilier &
Rice, Inc. ("CD&R"), an affiliate of an equity investor in the Company. Charges
for such services, including reimbursement of expenses, totaled approximately
$0.3 million and $0.5 million for the three and six month periods ended
September 28, 1996, respectively, and were included in operating expenses in the
Condensed Consolidated Statements of Operations. Additionally, the Company paid
fees totaling approximately $15.4 million to CD&R and an affiliate of another
equity investor in connection with the Merger and related financing.
NOTE 14 - SUPPLEMENTAL CASH FLOW INFORMATION
Details of the Merger (see Note 1): (In thousands of dollars)
---------------------------------------------------------------------------
Fair value of assets acquired $3,037,406
Liabilities assumed 1,646,169
-------------------------------------------------------------------------
Cash paid 1,391,237
Less, cash acquired 26,035
-------------------------------------------------------------------------
Net cash paid for acquisition $1,365,202
-------------------------------------------------------------------------
-------------------------------------------------------------------------
I-11
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Directors
of Riverwood Holding, Inc.:
We have reviewed the condensed consolidated balance sheet of Riverwood Holding,
Inc. and its subsidiaries as of September 28, 1996, and the related condensed
consolidated statements of operations for the three and six month periods then
ended and cash flows for the six month period then ended. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial data and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
The condensed consolidated statements of operations of Riverwood International
Corporation for the three and nine months ended September 30, 1995 and the
condensed statements of cash flows for the nine months ended September 25, 1995
were reviewed by other accountants whose report dated October 18, 1995, stated
that they were not aware of any material modifications that should be made to
those statements in order for them to be in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Atlanta, Georgia
November 6, 1996
I-12
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Directors
of Riverwood International Corporation:
We have reviewed the condensed consolidated statements of operations and cash
flows of Riverwood International Corporation ("RIC") and subsidiaries for the
three month period ended March 27, 1996. These financial statements are the
responsibility of RIC's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial data and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Atlanta, Georgia
May 2, 1996
I-13
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
On March 27, 1996, Holding, through its wholly-owned subsidiaries, acquired all
of the outstanding shares of common stock of RIC. On such date, Acquisition
Corp. was merged into RIC. RIC, as the surviving corporation of the Merger,
became a wholly-owned subsidiary of RIC Holding. On March 28, 1996, RIC
transferred substantially all of its properties and assets to Riverwood, other
than the capital stock of Riverwood, and RIC was merged into RIC Holding.
Thereupon, Riverwood was renamed "Riverwood International Corporation." Upon
consummation of the Subsequent Merger, RIC Holding, as the surviving corporation
in the Subsequent Merger, became the parent company of Riverwood.
The Merger was accounted for as a purchase in accordance with APB 16. The
allocation of the purchase price and acquisition costs to the assets acquired
and liabilities assumed is preliminary at September 28, 1996, and is subject to
change pending finalization of appraisals and other studies of fair value and
finalization of management's plans which may result in the recording of
additional liabilities as part of the allocation of purchase price. Purchase
accounting results in increased cost of sales, amortization and depreciation.
Additionally, the new capital structure has resulted and will continue to result
in higher reported interest expense. The condensed consolidated financial
statements for periods prior to March 28, 1996 have been prepared on the
historical cost basis using accounting principles that had been adopted by RIC.
The Company's condensed consolidated balance sheet at September 28, 1996 is not
comparable with the December 31, 1995 historical balance sheet of the
Predecessor. As a result of purchase accounting and the effect of discontinued
operations, operating results subsequent to the Merger are not comparable to the
operating results prior to the Merger.
On October 18, 1996, the Company sold substantially all of the assets of the
U.S. Timberlands/Wood Products business segment for cash of approximately $550
million (subject to certain postclosing adjustments). In addition, the buyer
assumed certain specified preclosing liabilities. Under the terms of the
agreement for such sale, the Company and the buyer entered into a long-term
supply agreement for the purchase by the Company, at market-based prices, of a
majority of the West Monroe Mill's requirements for pine pulpwood and residual
chips, as well as a portion of the Company's needs for hardwood pulpwood at the
West Monroe Mill. The Company does not anticipate any significant gain or loss
on the sale. The operating results for the U.S. Timberlands/Wood Products
business segment have been classified as discontinued operations for the three
and six month periods ended September 28, 1996 in the Condensed Consolidated
Statements of Operations. The assets and liabilities of discontinued operations
as of September 28, 1996 have been classified in the Condensed Consolidated
Balance Sheets as "Net assets of discontinued operations." Discontinued
operations have not been segregated in the Condensed Consolidated Statements of
Cash Flows nor have they been reclassified as discontinued operations in the
Predecessor Company's Condensed Consolidated Statements of Operations and
Condensed Consolidated Balance Sheets. See "- Financial Condition, Liquidity
and Capital Resources."
Under the terms and definitions of the Senior Secured Credit Agreement and the
indentures (the "Indentures") for the Notes, certain expenses and costs are
excluded from the Company's (Loss) Income from Operations in determining EBITDA
(as defined below), including amortization, depreciation or expenses associated
with the write-up of inventory, fixed assets and intangible assets in accordance
with APB 16 and APB Opinion No. 17, "INTANGIBLE ASSETS", collectively referred
to as the "Purchased Asset Costs." In accordance with APB 16, the Company
refined certain preliminary estimates of fair value of assets acquired and
liabilities assumed in the Merger, with a corresponding increase to goodwill of
approximately $12.6 million during the third quarter of 1996. During the three
and six month periods ended September 28, 1996, the Company's (Loss) Income from
Operations and Income from Discontinued Operations included Purchased Asset
Costs as follows (in thousands of dollars):
<TABLE>
<CAPTION>
Three month period ended September 28, 1996
Coated Total Dis-
Board Container- Continuing continued
Description System board Corporate Operations Operations
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cost of sales $(742) $ (679) $ - $(1,421) $ -
Depreciation expense 5,731 743 43 6,517 1,138
Amortization of intangible assets 1,093 (43) 44 1,094 -
- ---------------------------------------------------------------------------------------------------------
Net impact on income from operations $ 6,082 $ 21 $ 87 $ 6,190 $1,138
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
I-14
<PAGE>
<TABLE>
<CAPTION>
Six month period ended September 28, 1996
COATED TOTAL DIS-
BOARD CONTAINER- CONTINUING CONTINUED
DESCRIPTION SYSTEM BOARD CORPORATE OPERATIONS OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cost of sales $27,501 $ (1,806) $ - $25,695 $2,728
Depreciation expense 15,214 2,010 (21) 17,203 1,982
Amortization of intangible assets 1,288 (93) 67 1,262 -
- --------------------------------------------------------------------------------------------------------------------------
Net impact on income from operations $44,003 $ 111 $ 46 $44,160 $4,710
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
GENERAL
The Company reports its results in two business segments: Coated Board System
and Containerboard. Beginning in the quarter ended June 29, 1996 and continuing
through the quarter ending September 28, 1996, the Company reports the U.S.
Timberlands/Wood Products business segment as discontinued operations. The
Coated Board System business segment includes the production and sale of coated
board for packaging cartons from the paper mills in West Monroe, Louisiana;
Macon, Georgia and Norrkoping, Sweden; converting operations at facilities in
the United States, Australia and Europe; and the design, manufacture and
installation of packaging machinery related to the assembly of beverage cartons.
The Containerboard business segment includes the production and sale of
linerboard, corrugating medium and kraft paper from paperboard mills in the
United States. The discontinued U.S. Timberlands/Wood Products business segment
includes timberlands and operations engaged in the supply of pulpwood to the
West Monroe Mill from the Company's U.S. timberlands, as well as the manufacture
and sale of lumber and plywood.
I-15
<PAGE>
The table below sets forth Net Sales, Income (Loss) from Operations and earnings
before interest, income taxes, depreciation, amortization, cost of timber
harvested and certain non-cash items ("EBITDA"), calculated in accordance with
definitions in the Senior Secured Credit Agreement and the Indentures and
excluding Other Costs of the Predecessor Company ("Pro Forma EBITDA") (in
thousands of dollars). The Company believes that EBITDA provides useful
information regarding the Company's debt service ability, but should not be
considered in isolation or as a substitute for the Condensed Consolidated
Statement of Operations or cash flow data.
<TABLE>
<CAPTION>
Company Predecessor
-------------------------------------------------------------------------------
Three Six Three Three Nine
Months Months Months Months Months
Ended Ended Ended Ended Ended
Sept. 28, Sept. 28, March 27, Sept. 30, Sept. 30,
1996 1996 1996 1995 1995
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales (Segment Data):
Coated Board System $ 252,293 $ 518,524 $234,608 $273,223 $ 763,851
Containerboard 39,352 67,005 25,496 33,559 148,766
U.S. Timberlands/Wood Products - - 37,336 38,450 122,352
Intersegment Eliminations - - (3,791) (3,013) (13,309)
--------- -------- -------- -------- --------
Net Sales $291,645 $ 585,529 $293,649 $342,219 $1,021,660
--------- -------- -------- -------- --------
--------- -------- -------- -------- --------
Income (Loss) from Operations
(Segment Data):
Coated Board System $ 20,911 $ 13,767 $ 24,638 $ 37,058 $ 77,312
Containerboard (12,141) (18,892) (5,955) 592 19,201
U.S. Timberlands/Wood Products - - 13,868 8,619 38,418
Corporate and Eliminations (5,310) (11,706) (16,901) (7,953) (29,063)
--------- -------- -------- -------- --------
Income (Loss) from Operations $ 3,460 $ (16,831) $ 15,650 $ 38,316 $ 105,868
--------- -------- -------- -------- --------
--------- -------- -------- -------- --------
Pro Forma EBITDA (Segment Data):
Coated Board System $ 44,862 $ 97,308 $ 47,174 $ 51,036 $ 129,793
Containerboard (7,398) (9,662) (1,242) 5,162 36,523
U.S. Timberlands/Wood Products 21,315 39,374 16,766 9,663 44,542
Corporate and Eliminations (4,018) (8,295) (6,565) (4,233) (16,102)
--------- -------- -------- -------- --------
Pro Forma EBITDA $ 54,761 $118,725 $ 56,133 $ 61,628 $194,756
--------- -------- -------- -------- --------
--------- -------- -------- -------- --------
</TABLE>
Included in Pro Forma EBITDA for the three and six months ended September 28,
1996 was an adjustment for certain non-cash items of $1.9 million and $3.2
million, respectively.
Prior to March 28, 1996, the Predecessor Company incurred expenses associated
with stock-based compensation plans, expenses related to RIC's review of
strategic alternatives and provision for environmental reserves. These expenses
were classified as Other Costs on the Condensed Consolidated Statement of
Operations. Stock-based compensation expense was allocated to each of the
business segments based upon the responsibility of the individuals holding or
exercising the stock incentive benefits. During the three months ended March
27, 1996, $1.2 million, $0.1 million, $0.2 million and $0.8 million of
stock-based compensation expense were allocated to the Coated Board System,
Containerboard and U.S. Timberlands/Wood Products business segments and
Corporate and Eliminations, respectively, as compared to $1.2 million, $0.4
million, $0.2 million and $1.8 million, respectively for the third quarter of
1995, and $7.8 million, $2.6 million, $1.1 million and $8.2 million,
respectively, for the nine months ended September 30, 1995. Expenses related to
RIC's review of strategic alternatives and environmental reserves were included
in Corporate and Eliminations for business segment reporting purposes.
I-16
<PAGE>
BUSINESS TRENDS AND INITIATIVES
The Company's cash flow from operations and EBITDA are influenced by selling
prices for its products and raw material costs, and are affected by a number
of significant business, economic and competitive factors. Many of these
factors are not within the Company's control. Historically, in the Coated
Board System business segment, the Company has experienced stable pricing for
its integrated beverage carton products, and moderately cyclical pricing for
its folding carton and open market coated board products. The Company's open
market coated board sales are affected by competition from competitors'
coated board and other substrates - solid bleached sulfate (SBS), recycled
clay coated news (CNN) and, internationally, white lined chip - as well as by
general market conditions. In the Containerboard business segment,
conditions in the cyclical worldwide commodity paperboard markets have a
substantial impact on the Company's containerboard sales.
The Company's financial performance for the first nine months of 1996 has
fallen short of its business plan for 1996, which had anticipated substantial
improvements over 1995 results. Although raw material costs for paperboard
generally remained stable or decreased in the 1996 nine-month period versus
the comparable 1995 period, a number of factors had a substantial negative
impact on paperboard sales volumes and prices. In the Coated Board System
business segment, the Company's open market coated board sales volume in 1996
is substantially below 1995 due to a combination of factors. First, overall
market softness arose as SBS prices dropped, bringing down coated board
pricing as well. Open market prices fell more rapidly than they had
historically, and delays in lowering the Company's selling prices resulted in
a loss of certain customer accounts. Second, product quality problems
arising from production issues at the West Monroe mill also resulted in a
loss of certain accounts or applications. The Company's folding carton and
coated board open market sales have also been negatively impacted in part by
a slower than expected recovery of general market conditions in European
markets. The Company believes that it has addressed and corrected the West
Monroe production issues and, as discussed below, is implementing longer term
initiatives designed to rebuild the Company's open market coated board sales
volumes, which continue to be substantially below the levels initially
planned for 1996. However, weakness in coated board open markets, including
depressed prices, has continued through the third quarter, and the Company
believes it is likely to continue for certain markets, particularly Europe,
for at least the remainder of 1996.
In the Containerboard business segment, the Company's results were adversely
affected by declines in market pricing that began in the latter part of 1995 and
have continued through the third quarter of 1996. Average transaction selling
prices for the Company's containerboard in the first nine months of 1996 were
below average transaction prices at the end of 1995. The Company also shifted
production from coated board to containerboard in the third quarter of 1996 to
correct imbalances in coated board inventory levels due to softness in worldwide
coated board open markets. This action resulted in increased containerboard
sales volumes but had a negative impact on the Company's results because of
depressed containerboard selling prices. The Company anticipates that it may
produce approximately 40,000 tons of containerboard on coated board machines
during the fourth quarter of 1996. Several major containerboard producers have
announced selling price increases of $30 per ton for the fourth quarter,
although there can be no assurance as to when or to what extent market price
levels may
I-17
<PAGE>
recover. In the event that the containerboard market experiences continued
weakness and industry inventory levels were to increase as a result, the
Company may consider effecting containerboard machine outages at its mills,
as it has in the past in response to industry weakness and excess capacity.
See "- Results of Operations First Nine Months of 1996 Compared with First
Nine Months of 1995 - Gross Profit."
The Company intends to pursue a number of long term initiatives designed to
improve productivity and profitability while continuing to implement its
Coated Board System business strategy. First, the Company is taking actions
to rebuild open market coated board sales volumes. The Company has established
key account relationships with a number of major independent converters,
involving multi-year commitments by the Company to supply a significant portion
of these customers' requirements for coated board. The Company is also
undertaking a comprehensive, long-term marketing initiative aimed at potential
new folding carton applications of coated board, which has met some initial
success. Second, the Company is undertaking a profit center-oriented
reorganization of its operations, designed to focus on profitability and to
reevaluate its commitment of assets to unprofitable business sectors, and to
provide greater control over costs and revenues, as well as managerial autonomy
and accountability. A major initial project currently underway is the
reorganization of the Company's North American packaging operations into three
business units, each of which will be a separate profit center serving a
different customer segment. Third, the Company expects to pursue a number of
cost saving measures, including reorganizing operations to remove duplication
and excess overhead, and streamlining and consolidating international and other
operations. Finally, the Company is taking actions to reevaluate and reduce
planned capital expenditures, and to reduce inventory levels, as well as
consider the sale of surplus assets. There can be no assurance, however, that
any of these business initiatives can be successfully implemented or will
result in improved cash flows from operations and EBITDA.
RESULTS OF OPERATIONS
The following is a discussion of the Company's results of operations. The
discussion is based upon (a) the three month period ended September 28, 1996,
exclusive of the net effect of Purchased Asset Costs made in this period, in
comparison to the three month period ended September 30, 1995, exclusive of
Other Costs and the U.S. Timberlands/Wood Products business segment results of
operations and (b) the six month period ended September 28, 1996, exclusive of
the net effect of Purchased Asset Costs made in this period, plus the three
month period ended March 27, 1996, exclusive of Other Costs and the U.S.
Timberlands/Wood Products business segment results of operations (the "nine
months ended September 28, 1996"), in comparison to the nine months ended
September 30, 1995, exclusive of Other Costs and the U.S. Timberlands/Wood
Products business segment results of operations, as follows (in thousands of
dollars):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------ -----------------------------------
% Increase % Increase
(Decrease) (Decrease)
Sept. 28, From Prior Sept. 30, Sept. 28, From Prior Sept. 30,
1996 Period 1995 1996 Period 1995
--------- ---------- -------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Sales (Segment Data):
Coated Board System $252,293 (7.7) $273,223 $753,133 (1.4) $763,884
Containerboard 39,352 17.3 33,559 92,501 (37.8) 148,766
------- ------- ------- -------
Net Sales 291,645 (4.9) 306,782 845,634 (7.3) 912,650
Cost of Sales 246,993 3.4 238,975 701,575 (2.7) 721,179
------- ------- ------- -------
Gross Profit 44,652 (34.1) 67,807 144,059 (24.8) 191,471
Selling, General and Administrative 31,931 2.1 31,268 94,159 1.5 92,746
Research, Development and Engineering 2,505 25.6 1,995 6,269 (23.2) 8,158
Other Expense, net 566 (60.7) 1,439 3,624 (19.5) 4,502
------- ------- ------- -------
Income from Operations $ 9,650 (70.9) $33,105 $40,007 (53.5) $86,065
------- ------- ------- -------
------- ------- ------- -------
Income from Operations (Segment Data):
Coated Board System $26,993 (29.5) $38,290 $83,651 (1.7) $85,117
Containerboard (12,120) - 1,007 (24,616) - 21,831
Corporate (5,223) 15.6 (6,192) (19,028) 8.9 (20,883)
------- ------- ------- -------
Income from Operations $ 9,650 (70.9) $33,105 $40,007 (53.5) $86,065
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
THIRD QUARTER 1996 COMPARED WITH THIRD QUARTER 1995
PAPERBOARD PRODUCTION
Total tons of paperboard produced at the Company's U.S. mills for the third
quarter of 1996 and 1995, were as follows:
------------------------------------------------------
Three Months Ended
(IN THOUSANDS OF TONS)
September 28, September 30,
1996 1995
------------------------------------------------------
Coated Board 207.7 251.7
Containerboard 141.2 113.6
------------------------------------------------------
348.9 365.3
------------------------------------------------------
------------------------------------------------------
The Company's U.S. mill production of containerboard increased by approximately
27,600 tons, while its production of coated board decreased by approximately
44,000 tons in the third quarter of 1996 as compared to the same period in 1995.
During the third quarter of 1996, the Company produced approximately 33,000 tons
of linerboard on coated board paper machines. This shift in production is a
result of the Company's efforts to produce and sell more linerboard than coated
board during the third quarter of 1996 to correct imbalances in the coated board
inventory levels due to softness in the worldwide coated board open markets.
NET SALES
As a result of the factors described below, the Company's Net Sales in the third
quarter of 1996 declined by $15.1 million, or 4.9 percent, compared with the
third quarter of 1995. Net Sales in the Coated Board System business segment
decreased by $20.9 million in the third quarter of 1996, or 7.7 percent, to
$252.3 million from $273.2 million in the third quarter of 1995, due primarily
to decreased sales volume in worldwide coated board open markets by
approximately 34,000 tons, or 29 percent, as well as lower sales volume in
folding carton markets and lower selling prices in U.S. coated board open
markets. These decreases were offset somewhat by continued sales growth in the
Company's domestic and worldwide integrated beverage markets as well as selling
price increases in U.S. integrated beverage markets. Net Sales in the
Containerboard business segment increased $5.8 million, or 17.3 percent, to
$39.4 million in the third quarter of 1996 from $33.6 million in
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the third quarter of 1995, due to an increase in containerboard sales volume in
the third quarter of 1996 as a result of the Company's efforts to produce and
sell more linerboard due to the softness in the worldwide coated board open
markets. The increase in the containerboard sales volumes were offset somewhat
by a decrease in selling prices as a result of the significant decline in
containerboard markets worldwide that began in the latter part of 1995 and has
continued into the third quarter of 1996. The Company's transaction prices for
linerboard in the third quarter of 1996 ranged from approximately $310 to $330
per ton as compared to approximately $470 to $490 per ton in third quarter of
1995 and $420 to $440 per ton at the end of fiscal 1995. See "-First Nine
Months of 1996 Compared with First Nine Months of 1995 - Gross Profit" and
"-Financial Condition, Liquidity and Capital Resources - Cash Flows" for a
further discussion of the Company's Containerboard business segment.
GROSS PROFIT
As a result of the factors discussed below, the Company's Gross Profit for the
third quarter of 1996 decreased $23.1 million, or 34.1 percent, to $44.7 million
from $67.8 million in the third quarter of 1995. The Company's gross profit
margin decreased to 15.3 percent for the third quarter of 1996 from 22.1 percent
in the third quarter of 1995. In the Containerboard business segment, Gross
Profit decreased $12.6 million in the third quarter of 1996 as compared to the
third quarter of 1995 to a loss of $9.9 million. This decrease was due
principally to sales volume increases as a result of the Company's efforts to
produce and sell more containerboard. These volumes were sold at selling prices
below production costs resulting from the significant decline in containerboard
selling prices that began in the latter part of 1995 and has continued into the
third quarter of 1996. Gross Profit in the Coated Board System business segment
decreased by $10.6 million, or 16.2 percent, to $54.9 million in the third
quarter of 1996 as compared to $65.5 million in the third quarter of 1995, while
that segment's gross profit margin decreased to 21.8 percent in the third
quarter of 1996 from 24.0 percent in the third quarter of 1995. The decrease in
the gross profit margin resulted principally from a shift in sales from coated
board open markets to lower margin U.S. integrated beverage products combined
with increased production costs in certain international folding carton markets
and lower selling prices in U.S. coated board open markets. These factors were
offset somewhat by selling price increases in U.S. domestic integrated beverage
markets.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, General and Administrative expenses increased $0.6 million, or 2.1
percent, to $31.9 million in the third quarter of 1996 as compared to $31.3
million in the third quarter of 1995.
RESEARCH, DEVELOPMENT AND ENGINEERING
Research, Development and Engineering expenses increased by $0.5 million to $2.5
million.
OTHER EXPENSES, NET
Other Expenses, net, decreased by approximately $0.9 million to $0.6 million.
INCOME FROM OPERATIONS
As a result of the above factors, the Company's Income from Operations in the
third quarter of 1996 decreased by $23.5 million, or 70.9 percent, to $9.6
million from $33.1 million in the third quarter of 1995, while the operating
margin as a percent of Net Sales decreased to 3.3 percent from 10.8 percent.
Income from Operations in the Containerboard business segment decreased $13.1
million to a loss of $12.1 million in the third quarter of 1996 from Income from
Operations of $1.0 million in the third quarter of 1995, primarily as a result
of the factors described above. Income from Operations in the Coated Board
System business segment decreased $11.3 million, or 29.5 percent, to $27.0
million in the third quarter of 1996 from $38.3 million in the third quarter of
1995, while the operating margin decreased to 10.7 percent from 14.0 percent for
the same periods, primarily as a result of the factors described above.
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FIRST NINE MONTHS OF 1996 COMPARED WITH FIRST NINE MONTHS OF 1995
PAPERBOARD PRODUCTION
Total tons of paperboard produced at the Company's U.S. mills for the first nine
months of 1996 and 1995, were as follows:
-------------------------------------------------------
Nine Months Ended
(IN THOUSANDS OF TONS)
September 28, September 30,
1996 1995
-------------------------------------------------------
Coated Board 687.1 704.8
Containerboard 336.2 371.4
-------------------------------------------------------
1,023.3 1,076.2
-------------------------------------------------------
-------------------------------------------------------
The Company's U.S. mill production of containerboard decreased approximately
35,200 tons, while the production of coated board decreased by approximately
17,700 tons in the first nine months of 1996 as compared to the same period of
1995. The decrease in containerboard production resulted from scheduled paper
machine maintenance outages combined with the medium paper machine outages in
1996 that did not occur in 1995, which were offset somewhat by the increase in
linerboard production in the third quarter of 1996 as a result of the Company's
efforts to produce and sell more linerboard than coated board to correct
imbalances in the coated board inventory levels due to softness in the worldwide
coated board open markets.
NET SALES
As a result of the factors described below, the Company's Net Sales in the first
nine months of 1996 decreased by $67.0 million, or 7.3 percent, compared with
the first nine months of 1995. Net Sales in the Containerboard business segment
decreased $56.3 million, or 37.8 percent, to $92.5 million in the first nine
months of 1996 from $148.8 million in the first nine months of 1995, due
principally to selling price and sales volume declines as a result of the
significant decline in containerboard markets worldwide that began in the latter
part of 1995 and has continued throughout the third quarter of 1996. See
"-Gross Profit" and "-Financial Condition, Liquidity and Capital Resources -
Cash Flows" for a further discussion of the Company's Containerboard business
segment. Net Sales in the Coated Board System business segment decreased by
$10.8 million in the first nine months of 1996, or 1.4 percent, to $753.1
million from $763.9 million in the first nine months of 1995, due primarily to
decreased sales volume as a result of an overall decline in demand in folding
carton and worldwide coated board open markets, and loss of volume to
competitors due to substitution by customers of competing substrates for the
Company's coated board in these markets due primarily to pricing pressures,
production issues at the West Monroe Mill and other competitive factors. These
decreases were offset somewhat by increased sales growth in the Company's
integrated beverage markets and selling price increases in U.S. domestic
integrated beverage markets.
GROSS PROFIT
As a result of the factors described below, the Company's Gross Profit for
the first nine months of 1996 decreased $47.4 million, or 24.8 percent, to
$144.1 million from $191.5 million in the first nine months of 1995. The
Company's gross profit margin decreased to 17.0 percent for the first nine
months of 1996 from 21.0 percent in the first nine months of 1995. In the
Containerboard business segment, Gross Profit decreased $46.1 million in the
first nine months of 1996 as compared to the first nine months of 1995 to a
loss of $19.1 million. This decrease was due primarily to selling price and
sales volume declines resulting from the significant decline in
containerboard markets worldwide that began in the latter part of 1995 and
has continued throughout the first nine months of 1996, as well as unabsorbed
fixed costs at the West Monroe Mill as a result of corrugating medium paper
outages effected in order to correct imbalances in containerboard inventories
in the first quarter of 1996. Gross Profit in the Coated Board System
business segment decreased by $1.5 million, or 0.9 percent, to $164.4 million
in the first nine months of 1996 as compared to $165.9 million in the first
nine months of 1995, while its gross profit margin increased to 21.8 percent
in the first nine months of 1996 from 21.7 percent in the first nine months
of 1995. The increase in the gross profit margin resulted primarily from
selling price increases in U.S. domestic integrated beverage markets, offset
by overall weakness in coated board open markets, a shift in sales mix to lower
margin products and increased production costs in certain international
folding carton markets.
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<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE
Selling, General and Administrative expenses increased approximately $1.4
million, or 1.5 percent, to $94.2 million for the nine months ended September
28, 1996 as a result of increases in selling, marketing and administrative
expenses to penetrate worldwide coated board markets which were somewhat offset
by a decrease in incentive compensation expenses.
RESEARCH, DEVELOPMENT AND ENGINEERING
Research, Development and Engineering expenses decreased by approximately $1.9
million, or 23.2 percent, to $6.3 million.
OTHER EXPENSES, NET
Other Expenses, net, decreased by approximately $0.9 million in the first nine
months of 1996 as compared to the same period of 1995.
INCOME FROM OPERATIONS
As a result of the above factors, the Company's Income from Operations in the
first nine months of 1996 decreased by $46.1 million, or 53.5 percent, to $40.0
million from the first nine months of 1995, while the operating margin as a
percent of Net Sales decreased to 4.7 percent from 9.4 percent. Income from
Operations in the Containerboard business segment decreased $46.4 million to a
loss of $24.6 million in the first nine months of 1996 from Income from
Operations of $21.8 million in the first nine months of 1995, primarily as a
result of the factors described above. Income from Operations in the Coated
Board System business segment decreased $1.4 million, or 1.7 percent, to $83.7
million in the first nine months of 1996 from $85.1 million in the first nine
months of 1995, while the operating margin remained constant at 11.1 percent for
both periods, primarily as a result of the factors described above.
U.S. DOLLAR CURRENCY EXCHANGE RATES
Fluctuations in U.S. dollar currency exchange rates did not have a significant
impact on Net Sales, Gross Profit, operating expenses or Income from Operations
of the Company or any of its business segments during the third quarter and the
first nine months of 1996 as compared to the same periods of 1995.
INTEREST INCOME, INTEREST EXPENSE, INCOME TAXES AND DISCONTINUED OPERATIONS
INTEREST INCOME
Interest Income remained relatively unchanged at $0.4 million in the third
quarter of 1996 as compared to the third quarter of 1995. Interest income
decreased $0.8 million to $0.9 million in the first nine months of 1996 from the
first nine months of 1995 primarily as a result of lower average balances of
cash and equivalents and marketable securities in 1996 as compared to 1995.
INTEREST EXPENSE
Interest Expense increased $25.7 million and $49.6 million to $51.4 million and
$127.6 million in the third quarter and the first nine months of 1996,
respectively, from the third quarter and the first nine months of 1995,
respectively, primarily as a result of the incremental indebtedness incurred in
connection with the Merger.
INCOME TAX (BENEFIT) EXPENSE
During the six months ended September 28, 1996, the Company recognized an income
tax benefit of $1.4 million on a Loss from Operations before Income Taxes and
Equity in Net Earnings of Affiliates of $117.5 million. This benefit differed
from the statutory federal income tax rate because of valuation allowances
established on net operating loss carry forward tax assets in the U.S. and
certain international locations where the realization of such benefits is less
likely than not.
In the first quarter of 1996, the Predecessor Company recognized an income tax
benefit of $3.4 million on a Loss from Operations before Income Taxes and Equity
in Net Earnings of Affiliates of $10.4 million. The Predecessor Company's
I-21
<PAGE>
effective income tax rate for both the three and nine months ended September 30,
1995 was 44 percent.
EQUITY IN NET EARNINGS OF AFFILIATES
Equity in Net Earnings of Affiliates is comprised primarily of the Company's
equity in net earnings of Igaras, an integrated containerboard producer located
in Brazil, which produces linerboard, corrugating medium and corrugated boxes,
which is accounted for under the equity method of accounting. Equity in Net
Earnings of Affiliates decreased $3.7 million and $12.8 million to $5.7 million
and $15.2 million in the third quarter and the first nine months of 1996,
respectively, from the third quarter and the first nine months of 1995,
respectively, primarily as a result of the significant decline in containerboard
markets worldwide.
DISCONTINUED OPERATIONS
On October 18, 1996, the Company sold substantially all of the assets of the
U.S. Timberlands/Wood Products business segment for cash of approximately $550
million (subject to certain postclosing adjustments). In addition, the buyer
assumed certain specified preclosing liabilities. The Company does not
anticipate any significant gain or loss on the sale. The operating results of
the U.S. Timberlands/Wood Products business segment are reported as discontinued
operations effective for the three and six months ended September 28, 1996, and
accordingly, the results of its operations are not included in the Company's
Income from Continuing Operations in the Condensed Consolidated Statements of
Operations for the three and six month periods ended September 28, 1996. Net
Sales in the U.S. Timberlands/Wood Products business segment increased by $1.3
million, or 3.7 percent primarily as a result of increased lumber selling prices
in the third quarter of 1996 as compared to the same period of 1995. Net
Sales in the U.S. Timberlands/Wood Products business segment decreased $4.0
million, or 3.6 percent in the first nine months of 1996 when compared with the
same period of 1995, due principally to decreased plywood selling prices, offset
somewhat by higher lumber selling prices. Excluding the effects of Purchased
Asset Costs for the three and six months ended September 28, 1996, and excluding
Other Costs for periods prior to the Merger, Income from Operations in the U.S.
Timberlands/Wood Products business segment increased $9.0 million, or 102.0
percent, in the third quarter of 1996, and increased $7.7 million, or 19.4
percent, in the first nine months of 1996 when compared to the same periods of
1995, primarily as a result of lower log costs and increased selling prices for
lumber.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company broadly defines liquidity as its ability to generate sufficient cash
flow from operating activities to meet its obligations and commitments. In
addition, liquidity includes the ability to obtain appropriate debt and equity
financing and to convert into cash those assets that are no longer required to
meet existing strategic and financial objectives. Therefore, liquidity cannot
be considered separately from capital resources that consist of current or
potentially available funds for use in achieving long-range business objectives
and meeting debt service commitments.
CASH FLOWS
Cash and equivalents increased by approximately $17 million in the six months
ended September 28, 1996, primarily as a result of $1,515 million of net cash
provided by financing activities, offset in part by $1,495 million and $4
million of net cash used in investing and operating activities, respectively.
Cash used in investing activities related principally to the acquisition of RIC
and to purchases of property, plant and equipment (see "-Liquidity and Capital
Resources - Capital Expenditures").
Depreciation, amortization and cost of timber harvested during the six months
ended September 28, 1996 totaled approximately $74 million, and is expected to
be approximately $110 million to $120 million for nine months ended December 31,
1996.
The Company's cash flows from its operations and EBITDA are subject to moderate
seasonality with demand usually increasing in the spring and summer. The
Company's Coated Board System business segment experiences seasonality
principally due to the seasonality of the worldwide multiple packaging beverage
segment. Historically, the Company's Coated Board System business segment
reports its strongest sales in the second and third quarters of the fiscal year
driven by the seasonality of the Company's integrated beverage business.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
GENERALLY
The Company's liquidity needs arise primarily from debt service on the
substantial indebtedness incurred in connection with the Merger and from the
funding of its capital expenditures. As of September 28, 1996, the Company had
outstanding approximately $2,057 million of indebtedness, consisting primarily
of $650 million aggregate principal amount of the Notes, $1,150 million in term
loan borrowings under the Term Loan Facility and additional amounts under the
Revolving Facility, the Machinery Facility and other debt issues and facilities
(see Note 6 to the condensed consolidated financial statements). Proceeds from
the sale of substantially all of the assets of the U.S. Timberlands/Wood
Products business segment were used to pay down a significant portion of the
Company's senior secured indebtedness in October 1996. See "Liquidity and
Capital Resources - Debt Service".
HISTORICAL FINANCING ARRANGEMENTS
With certain limited exceptions, the debt of RIC and its subsidiaries at the
date of Merger was substantially refinanced or replaced in connection with the
Merger. RIMI was party to sale and leaseback arrangements with respect to
packaging machinery, under which RIMI sold and leased back certain of its
packaging machinery, and then subleased them to customers. The Company has
terminated such sale and leaseback arrangements and refinanced them with the new
$140 million Machinery Facility.
DEBT SERVICE
Principal and interest payments under the Facilities and interest payments on
the Notes represent significant liquidity requirements for the Company. With
respect to the $1,150 million borrowed under the Term Loan Facility at September
28, 1996, the Company was originally scheduled to make principal payments of
approximately $24 million in 1997, $71 million in 1998, $106 million in 1999,
$129 million in 2000, $186 million in 2001, $243 million in 2002, $225 million
in 2003 and $166 million in 2004. These scheduled principal payments have been
reduced through the use of the proceeds from the sale of substantially all of
the assets of the U.S. Timberlands/Wood Products business segment to pay down
the Term Loan Facility (see below). The Revolving Facility will mature in March
2003 and the $140 million Machinery Facility will mature in March 2001, with all
amounts then outstanding becoming due. The loans under the Facilities bear
interest at floating rates based upon the interest rate option elected by the
Company. The Senior Notes due 2006 and the Senior Subordinated Notes due 2008
bear interest at rates of 10 1/4% and 10 7/8%, respectively. As a result of the
substantial indebtedness incurred in connection with the Merger, the Company's
interest expense has increased and has had a greater proportionate impact on net
income in comparison to pre-Merger periods.
Prior to the sale of substantially all of the assets of the U.S.
Timberlands/Wood Products business segment, consent to the sale was obtained
from the lenders under the Credit Agreements. The Company has applied $400.0
million of the sales proceeds to repay term loans under the Term Loan Facility,
including approximately $375.0 million of tranche "A" term loans, approximately
$18.4 million of tranche "B" term loans and approximately $6.6 million of
tranche "C" term loans. Scheduled term loan principal payments under the Term
Loan Facility have been reduced to reflect this application of proceeds. Annual
term loan amortization requirements under the Term Loan Facility will now be
approximately $1.0 million, $3.0 million, $28.0 million, $80.2 million, $124.7
million, $173.0 million, $184.1 million and $146.0 million for the years 1997
through 2004, respectively. The Company has applied the remaining sale proceeds
to pay outstanding revolving credit borrowings under the Revolving Credit
Facility. This application of proceeds did not involve any revolving credit
commitment reduction and resulted in revolving credit availability of
approximately $350 million as of October 18, 1996.
CAPITAL EXPENDITURES
In connection with the Merger, the Company acquired assets with a fair value of
approximately $3,022 million (including cash of $26 million) and assumed
liabilities of approximately $1,631 million.
Capital spending for the six months ended September 28, 1996 was approximately
$74 million. The Company is in the process of modifying the pulp mill at the
Macon Mill and converting the linerboard paper machine at the Macon mill to
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<PAGE>
coated board production. The Company expects that the pulp mill modification
will cost approximately $32 million and is expected to be completed in early
1997 while the paper machine conversion is expected to cost approximately $85
million and is expected to be completed in mid-1997. For the six months
ended September 28, 1996, capital spending on these two projects totaled
approximately $26 million. To date, these projects are on budget and on
schedule. Other capital spending during this period related primarily to
increasing paper production efficiencies, increasing converting capacity, and
manufacturing packaging machinery. Additionally, at the date of the Merger,
the Company purchased $47 million of packaging machinery and a converting
press that were previously financed under operating lease arrangements. Total
capital spending for the twelve months ended December 31, 1996 is
expected to be approximately $170 million. The remaining capital spending for
fiscal 1996 is expected to relate principally to the pulp mill modification,
the conversion of the Macon Mill paper machine, the production of packaging
machinery, as well as productivity expenditures.
During the six months ended September 28, 1996, the Company sold assets for
approximately $3 million which consisted primarily of machinery and equipment of
the Company's last dedicated folding carton converting plant in the U.S.,
located in Kankakee, Illinois.
FINANCING SOURCES AND CASH FLOWS
The amount under the Revolving Facility that remained undrawn as of September
28, 1996, was approximately $241 million ,and at October 18, 1996, was
approximately $350 million after application of a portion of the proceeds
from the sale of substantially all of the assets of the U.S. Timberlands/Wood
Products business segment. Undrawn Revolving Facility availability is
expected to be used to pay taxes and other remaining costs of the Merger of
approximately $53 million and to meet future working capital and other
business needs of the Company. In connection with the Merger, the Company
terminated its then existing sale and leaseback arrangements with respect to
packaging machinery and replaced them with the $140 million Machinery
Facility, of which approximately $38 million was utilized at September 28,
1996. The Company's Australian bank lender agreed to keep its $37 million
Australian revolving facility in place following the closing of the
Subsequent Merger, and certain other debt and credit facilities existing
prior to the Merger have been maintained as well. The Company anticipates
pursuing additional working capital financing for its foreign operations as
its needs may require, and possibly implementing a receivables securitization
program.
The Company believes that cash generated from operations, together with
amounts available under the Revolving Facility, the Machinery Facility and
any other available financing sources, will be adequate to permit the Company
to meet its debt service obligations, capital expenditure program
requirements, ongoing operating costs and working capital needs, although no
assurance can be given in this regard. The Company's future financial and
operating performance, ability to service or refinance the Notes and to
repay, extend or refinance the Facilities and ability to comply with the
covenants and restrictions contained in its debt agreements, including the
Credit Agreements and the Indentures (see "- Covenant Restrictions"), will be
subject to future economic conditions and to financial, business and other
factors, many of which are beyond the Company's control, and will be
substantially dependent on its ability to successfully implement its overall
business strategy, as well as initiatives to improve profitability.
See "- Business Trends and Initiatives."
While the Company believes that Igaras has adequate liquidity, the Company
shares control of Igaras with its joint venture partner and future dividend
payments from Igaras, if any, would be subject to restrictions in the joint
venture agreement and would reflect only the Company's remaining interest of
50%. Under the Igaras joint venture agreement, Igaras is required to pay
dividends equal to at least 25% of its net profits. Due to currency
fluctuations, inflation and changes in political and economic conditions,
earnings from Brazilian operations have been subject to significant volatility.
There can be no assurance that such volatility will not recur in the future.
COVENANT RESTRICTIONS
In connection with the sale of substantially all of the assets of the U.S.
Timberlands/Wood Products business segment, financial and other covenants in the
Company's Credit Agreements have been modified to reflect the sale as well as
the Company's financial results and current market and operating conditions.
Covenant modifications under the Credit Agreements included the addition of a
minimum EBITDA requirement, the elimination of a maximum leverage ratio, the
reduction of the interest coverage ratio, the reduction of minimum consolidated
net worth requirements, the reduction in capital expenditure limits and a
reduction in management stock repurchase limits.
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<PAGE>
The initial application of the interest coverage covenant under the Credit
Agreements is as of December 1996. The Credit Agreements impose restrictions on
the Company's ability to make capital expenditures and both the Credit
Agreements and the Indentures governing the Notes limit the Company's ability to
incur additional indebtedness. Such restrictions, together with the highly
leveraged nature of the Company, could limit the Company's ability to respond to
market conditions, to meet its capital spending program, to provide for
unanticipated capital investments or to take advantage of business
opportunities. The covenants contained in the Credit Agreements also, among
other things, restrict the ability of the Company and its subsidiaries to
dispose of assets, incur guarantee obligations, repay the Notes, pay dividends,
create liens on assets, enter into sale and leaseback transactions, make
investments, loans or advances, make acquisitions, engage in mergers or
consolidations, make capital expenditures or engage in certain transactions with
affiliates, and otherwise restrict corporate activities. The covenants
contained in the Indentures governing the Notes also impose restrictions on the
operation of the Company's businesses.
ENVIRONMENTAL MATTERS
The Company is committed to compliance with all applicable environmental laws
and regulations. Environmental law is, however, dynamic rather than static. As
a result, costs, which are unforeseeable at this time, may be incurred when new
laws are enacted, and when environmental agencies promulgate or revise rules and
regulations. In late 1993, the EPA proposed regulations (generally referred to
as the "cluster rules") that would mandate more stringent controls on air and
water discharges from United States pulp and paper mills. The Company expects,
based on information presently available from the EPA, that the cluster rules
may be finally promulgated in 1997. The Company estimates the capital spending
that may be required to comply with the cluster rules could reach $40 million to
be spent over a three-year period beginning in 1997.
The DEQ notified the Company by letters, dated December 19, 1995, that the
Company may be liable for the remediation of the release or threat of release of
hazardous substances at a wood treatment site in Shreveport, Louisiana, that the
Company or its predecessor previously operated and a former oil refinery site
in Caddo Parish, Louisiana, that the Company currently owns. The Company never
operated the oil refinery. In response to these DEQ letters, the Company has
provided additional information to the DEQ concerning these sites and has
commenced its own evaluation of any claims and remediation liabilities for which
it may be responsible. The Company received a letter from the DEQ dated May
20, 1996, requesting a plan for soil and groundwater sampling of the wood
treatment site. The Company first met with the DEQ on July 18, 1996, and then
submitted a soil sampling plan to the DEQ. On September 6, 1996, the Company
received from the DEQ a letter requesting remediation of the former oil refinery
site in Caddo Parish, Louisiana. The Company will meet with the DEQ in November
1996 to discuss this letter.
The Company is engaged in environmental remediation projects for certain
properties currently owned or operated by the Company and certain properties
divested by the Company for which responsibility was retained for pre-existing
conditions. The Company's costs in some instances cannot be estimated until the
remediation process is substantially underway. To address these contingent
environmental costs, the Company has accrued reserves when such costs are
probable and can be reasonably estimated. The Company believes that, based on
current information and regulatory requirements, the accruals established by the
Company for environmental expenditures are adequate. Based on current
knowledge, to the extent that additional costs may be incurred that exceed the
accrued reserves, such amounts are not expected to have a material impact on the
results of operations, cash flows, or financial condition of the Company,
although no assurance can be given that material costs will not be incurred in
connection with clean-up activities at these properties, including the
Shreveport and Caddo Parish sites referred to above.
RELATING TO THE MERGER
U.S. TAXES
Pursuant to an election under section 338(h)(10) of the Internal Revenue Code,
the Merger will be treated for income tax purposes as a taxable sale of the
assets of RIC and a taxable sale of the assets of RIC's subsidiaries to which
such election applies. As a result, following the Merger the tax basis of the
assets of the Company will be substantially equal to the fair market value
thereof. The excess of the Merger consideration over the fair market value of
the net assets will be deductible over 15 years for federal income tax purposes.
Such amortization deductions and increased depreciation and other deductions
resulting from the fair market value tax basis of those assets, together with
deductions for interest on indebtedness and certain other expenses incurred in
connection with the Merger, are expected to reduce the Company's future taxable
income.
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<PAGE>
The Company has historically been included in the consolidated federal and
certain combined state income tax returns of a company formerly known as
Manville Corporation ("Manville"). The Company will now be included in the
consolidated federal and certain combined state income tax returns of Holding.
Pursuant to a previously existing tax sharing agreement between the Company and
Manville (the "Tax Sharing Agreement"), the Company was required to make tax
sharing payments to Manville (or Manville to make tax sharing payments to the
Company in certain cases) with respect to the Company's share of consolidated
federal and combined state and local income tax liabilities, generally computed
as if the Company were the parent of a separate consolidated group of companies.
The Tax Matters Agreement, dated as of October 25, 1995, among Manville, RIC,
RIC Holding and Acquisition Corp. (the "Tax Matters Agreement"), required that
the Tax Sharing Agreement be terminated effective upon the closing of the
Merger. The Tax Matters Agreement further required the Company to make tax
sharing payments after the closing of the Merger (or Manville to make tax
sharing payments to the Company in certain cases), calculated in a manner
generally consistent with past practices under the Tax Sharing Agreement, with
respect to the Company's share of consolidated federal and combined state and
local income tax liabilities for all pre-closing periods, excluding taxes
associated with the election under Section 338(h)(10) of the Internal Revenue
Code, to the extent such amounts have not previously been paid pursuant to the
Tax Sharing Agreement.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Certain of the statements contained in this report (other than the financial
statements and other statements of historical fact), including, without
limitation, statements as to management's expectations and belief presented in
this "Management's Discussion and Analysis of Financial Condition and Results of
Operations," are forward-looking statements. Forward-looking statements are
made based upon management's expectations and belief concerning future
developments and their potential effect upon the Company. There can be no
assurance that future developments will be in accordance with management's
expectations or that the effect of future developments on the Company will be
those anticipated by management. There are certain important factors that could
cause actual results to differ materially from estimates reflected in such
forward-looking statements, including changes in the level of sales volume of
coated board for beverage cartons and folding cartons, as well as for
containerboard, in the U.S. and abroad, changes in selling prices of the
products of the Company or its competitors, the Company's ability to realize
cost savings from productivity improvements and changes in the market for raw
materials which could impact the Company's production costs. For a discussion
of additional significant factors that impact the Company's operations, see "-
Business Trends and Initiatives".
While the Company periodically reassesses material trends and uncertainties
affecting the Company's results of operations and financial condition in
connection with its preparation of management's discussion and analysis of
results of operations and financial condition contained in its quarterly and
annual reports, the Company does not intend to review or revise any particular
forward-looking statement referenced herein in light of future events.
I-26
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable
ITEM 2. CHANGES IN SECURITIES.
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
As of April 3, 1996, the stockholders of Holding approved the sale of Holding
Common Stock and the grant of options to purchase Holding Common Stock to, and
the terms of employment agreements of, approximately 105 executives and other
key management employees.
ITEM 5. OTHER INFORMATION.
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
2.1 Asset Purchase Agreement, dated as of August 6, 1996, by and among
Plum Creek Timber Company, L.P., Riverwood International Corporation
and New River Timber, LLC (incorporated by reference to Exhibit 2 to
the Registrant's Current Report on Form 8-K filed August 22, 1996 and
Exhibit 2a to the Registrant's Current Report on Form 8-K filed
October 21, 1996 (Commission File No. 1-11113)).
2.2 Amendment to Asset Purchase Agreement, dated as of October 16, 1996,
among Plum Creek Timber Company, L.P., Riverwood International
Corporation and New River Timber, LLC (incorporated by reference to
Exhibit 2b to the Registrant's Current Report on Form 8-K filed
October 21, 1996 (Commission File No. 1-11113)).
3.1 Restated By-Laws of Riverwood Holding, Inc., as amended effective
October 8, 1996.
3.2 Restated By-Laws of RIC Holding, Inc., as amended effective October 8,
1996.
3.3 Restated By-Laws of Riverwood International Corporation, as amended
effective October 8, 1996.
4.1 Amendment No. 1, dated as of September 13, 1996, to the Credit
Agreement, dated as of March 20, 1996, among Riverwood International
Corporation, the lenders party thereto, and The Chase Manhattan Bank
(formerly known as Chemical Bank), as administrative agent
(incorporated by reference to Exhibit 4a to the Registrant's Current
Report on Form 8-K filed October 21, 1996 (Commission File No. 1-
11113)).
<PAGE>
4.2 Amendment No. 2, dated as of September 17, 1996, to the Credit
Agreement, dated as of March 20, 1996, among Riverwood International
Corporation, the lenders party thereto, and The Chase Manhattan Bank
(formerly known as Chemical Bank), as administrative agent
(incorporated by reference to Exhibit 4b to the Registrant's Current
Report on Form 8-K filed October 21, 1996 (Commission File No. 1-
11113)).
10.1 Filed as Exhibit 2.1 hereto.
(b) Reports on Form 8-K.
Form 8-K dated March 27, 1996, and filed with the Securities and Exchange
Commission on April 11, 1996, regarding the Merger.
Form 8-K dated August 7, 1996, and filed with the Securities and Exchange
Commission on August 22, 1996, regarding the asset purchase agreement to
sell substantially all of the U.S. Timberlands/Wood Products business
segment.
Form 8-K dated October 18, 1996, and filed with the Securities and Exchange
Commission on October 21, 1996, regarding the completion of the sale of
substantially all of the U.S. Timberlands/Wood Products business segment
and amendments to Credit Agreement.
II-1
<PAGE>
SIGNATURE
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.
RIVERWOOD HOLDING, INC.
------------------------------------------
(Registrant)
Date: November 8, 1996 By: /s/ Bill H. Chastain
-------------------------------------
Bill H. Chastain
Secretary
Date: November 8, 1996 By: /s/ James O. Egan
-------------------------------------
James O. Egan
Senior Vice President and
Chief Financial Officer
II-2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RIVERWOOD HOLDING, INC.
(formerly named New River Holding, Inc.)
RESTATED BY-LAWS
As amended effective as of October 8, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
RIVERWOOD HOLDING, INC.
RESTATED BY-LAWS
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01. Annual Meetings. . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Special Meetings . . . . . . . . . . . . . . . . . . . . 1
Section 1.03. Notice of Meetings; Waiver . . . . . . . . . . . . . . . 2
Section 1.04. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.05. Voting . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.06. Voting by Ballot . . . . . . . . . . . . . . . . . . . . 3
Section 1.07. Adjournment. . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.08. Proxies. . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.09. Organization; Procedure. . . . . . . . . . . . . . . . . 4
Section 1.10. Consent of Stockholders in Lieu of Meeting . . . . . . . 4
ARTICLE II BOARD OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . 5
Section 2.01. General Powers . . . . . . . . . . . . . . . . . . . . . 5
Section 2.02. Number and Term of Office. . . . . . . . . . . . . . . . 5
Section 2.03. Election of Directors. . . . . . . . . . . . . . . . . . 7
Section 2.04. Annual and Regular Meetings. . . . . . . . . . . . . . . 7
Section 2.05. Special Meetings; Notice . . . . . . . . . . . . . . . . 7
Section 2.06. Quorum; Voting . . . . . . . . . . . . . . . . . . . . . 8
Section 2.07. Adjournment. . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.08. Action Without a Meeting . . . . . . . . . . . . . . . . 8
Section 2.09. Regulations; Manner of Acting. . . . . . . . . . . . . . 8
Section 2.10. Action by Telephonic Communications. . . . . . . . . . . 9
Section 2.11. Resignations . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.12. Removal of Directors . . . . . . . . . . . . . . . . . . 9
Section 2.13. Vacancies and Newly Created
Directorships . . . . . . . . . . . . . . . . . . . 9
Section 2.14. Compensation . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.15. Reliance on Accounts and
Reports, etc. . . . . . . . . . . . . . . . . . . . 10
ARTICLE III EXECUTIVE COMMITTEE AND OTHER
COMMITTEES. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.01. How Constituted. . . . . . . . . . . . . . . . . . . . . 11
Section 3.02. Powers . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.03. Proceedings. . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.04. Quorum and Manner of Acting. . . . . . . . . . . . . . . 13
Section 3.05. Action by Telephonic Communications. . . . . . . . . . . 14
<PAGE>
Section 3.06. Absent or Disqualified Members of Additional Committees. 14
Section 3.07. Resignations . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.08. Removal. . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.09. Vacancies. . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.01. Number . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.02. Election . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.03. Salaries . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.04. Removal and Resignation; Vacancies . . . . . . . . . . . 15
Section 4.05. Authority and Duties of Officers . . . . . . . . . . . . 16
Section 4.06. The President and Chief Executive
Officer . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.07. The Chief Operating Officer. . . . . . . . . . . . . . . 17
Section 4.08. The Vice Presidents. . . . . . . . . . . . . . . . . . . 17
Section 4.09. The Secretary. . . . . . . . . . . . . . . . . . . . . . 17
Section 4.10. The Chief Financial Officer. . . . . . . . . . . . . . . 19
Section 4.11. The Treasurer. . . . . . . . . . . . . . . . . . . . . . 19
Section 4.12. Additional Officers. . . . . . . . . . . . . . . . . . . 20
Section 4.13. Security . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE V CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.01. Certificates of Stock. . . . . . . . . . . . . . . . . . 20
Section 5.02. Signatures; Facsimile. . . . . . . . . . . . . . . . . . 21
Section 5.03. Lost, Stolen or Destroyed
Certificates. . . . . . . . . . . . . . . . . . . . 21
Section 5.04. Transfer of Stock. . . . . . . . . . . . . . . . . . . . 21
Section 5.05. Record Date. . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.06. Registered Stockholders. . . . . . . . . . . . . . . . . 23
Section 5.07. Transfer Agent and Registrar . . . . . . . . . . . . . . 23
ARTICLE VI INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.01. Nature of Indemnity. . . . . . . . . . . . . . . . . . . 24
Section 6.02. Successful Defense . . . . . . . . . . . . . . . . . . . 25
Section 6.03. Determination That Indemnification
Is Proper . . . . . . . . . . . . . . . . . . . . . 25
Section 6.04. Advance Payment of Expenses. . . . . . . . . . . . . . . 25
Section 6.05. Procedure for Indemnification of Directors and Officers. 26
Section 6.06. Survival; Preservation of Other
Rights. . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.07. Insurance. . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.08. Severability . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.09. Definitions. . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VII OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.01. Registered Office. . . . . . . . . . . . . . . . . . . . 28
Section 7.02. Other Offices. . . . . . . . . . . . . . . . . . . . . . 28
ii
<PAGE>
ARTICLE VIII GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . 29
Section 8.01. Dividends. . . . . . . . . . . . . . . . . . . . . . . . 29
Section 8.02. Reserves . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 8.03. Execution of Instruments . . . . . . . . . . . . . . . . 29
Section 8.04. Corporate Indebtedness . . . . . . . . . . . . . . . . . 30
Section 8.05. Deposits . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.06. Checks . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.07. Sale, Transfer, etc. of Securities . . . . . . . . . . . 31
Section 8.08. Voting as Stockholder. . . . . . . . . . . . . . . . . . 31
Section 8.09. Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.10. Seal . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.11. Books and Records; Inspection. . . . . . . . . . . . . . 31
Section 8.12. Definitions. . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE IX AMENDMENT OF BY-LAWS. . . . . . . . . . . . . . . . . . . . . 33
Section 9.01. Amendment. . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE X CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 10.01. Construction . . . . . . . . . . . . . . . . . . . . . . 33
iii
<PAGE>
RIVERWOOD HOLDING, INC.
RESTATED BY-LAWS
As amended effective as of October 8, 1996
Certain defined terms used herein without definition shall have the
meanings set forth in Section 8.12.
ARTICLE I
STOCKHOLDERS
Section 1.01. ANNUAL MEETINGS. The annual meeting of the
stockholders of the Corporation for the election of directors and for the
transaction of such other business as properly may come before such meeting
shall be held at such place, either within or without the State of Delaware, and
at 10:00 a.m. local time on the first Tuesday in May (or, if such day is a legal
holiday, then on the next succeeding business day), or at such other date and
hour, as may be fixed from time to time by resolution of the Board of Directors
and set forth in the notice or waiver of notice of the meeting. [Sections
211(a), (b).](1)
Section 1.02. SPECIAL MEETINGS. Special meetings of the stockholders
may be called at any time by the Chairman or by the Board of Directors. A
special meeting shall be called by (subject to Section 4.06) the President and
Chief Executive Officer or by the Secretary, immediately upon receipt of a
written request therefor by stockholders holding in the aggregate not less than
a majority of the outstanding shares of the Corporation at the time entitled to
vote at any meeting of the stockholders. If such officers or the Board of
Directors shall fail to call such meeting within 20 days after receipt of such
request, any stockholder executing such request may call such meeting. Such
special meetings of the stockholders shall be held at such places, within or
without the State of Delaware, as shall be specified in the respective notices
or waivers of notice thereof. [Section 211(d).]
- --------------------
(1.) Citations are to the General Corporation Law of the State of Delaware as in
effect on August 15, 1995 (the "DGCL"), and are inserted for reference
only, and do not constitute a part of the By-Laws.
<PAGE>
Section 1.03. NOTICE OF MEETINGS; WAIVER. The Secretary or any
Assistant Secretary shall cause written notice of the place, date and hour of
each meeting of the stockholders, and, in the case of a special meeting, the
purpose or purposes for which such meeting is called, to be given personally or
by mail, not less than ten nor more than sixty days prior to the meeting, to
each stockholder of record entitled to vote at such meeting. If such notice is
mailed, it shall be deemed to have been given to a stockholder when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the record of stockholders of the Corporation, or, if
he shall have filed with the Secretary of the Corporation a written request that
notices to him be mailed to some other address, then directed to him at such
other address. Such further notice shall be given as may be required by law.
No notice of any meeting of stockholders need be given to any
stockholder who submits a signed waiver of notice, whether before or after the
meeting. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in a written
waiver of notice. The attendance of any stockholder at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business on the ground that
the meeting is not lawfully called or convened. [Sections 222, 229.]
Section 1.04. QUORUM. Except as otherwise required by law or by the
Certificate of Incorporation, the presence in person or by proxy of the holders
of record of a majority of the shares entitled to vote at a meeting of
stockholders shall constitute a quorum for the transaction of business at such
meeting. [Section 216.]
Section 1.05. VOTING. If, pursuant to Section 5.05 of these By-Laws,
a record date has been fixed, every holder of record of shares entitled to vote
at a meeting of stockholders shall be entitled to one vote for each share
outstanding in his name on the books of the Corporation at the close of business
on such record date. If no record date has been fixed, then every holder of
record of shares entitled to vote at a meeting of stockholders shall be entitled
to one vote for each share of stock standing in his name on the books of the
Corporation at the close of business on the day next preceding the day on which
notice
2
<PAGE>
of the meeting is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. Except as
otherwise required by law or by the Certificate of Incorporation, the vote of a
majority of the shares represented in person or by proxy at any meeting at which
a quorum is present shall be sufficient for the transaction of any business at
such meeting. [Sections 212(a), 216.]
Section 1.06. VOTING BY BALLOT. No vote of the stockholders need be
taken by written ballot or conducted by Inspectors of Elections unless otherwise
required by law. Any vote which need not be taken by ballot may be conducted in
any manner approved by the meeting.
Section 1.07. ADJOURNMENT. If a quorum is not present at any meeting
of the stockholders, the stockholders present in person or by proxy shall have
the power to adjourn any such meeting from time to time until a quorum is
present. Notice of any adjourned meeting of the stockholders of the Corporation
need not be given if the place, date and hour thereof are announced at the
meeting at which the adjournment is taken, provided, however, that if the
adjournment is for more than thirty days, or if after the adjournment a new
record date for the adjourned meeting is fixed pursuant to Section 5.05 of these
By-Laws, a notice of the adjourned meeting, conforming to the requirements of
Section 1.03 hereof, shall be given to each stockholder of record entitled to
vote at such meeting. At any adjourned meeting at which a quorum is present,
any business may be transacted that might have been transacted on the original
date of the meeting. [Section 222(c).]
Section 1.08. PROXIES. Any stockholder entitled to vote at any
meeting of the stockholders or to express consent to or dissent from corporate
action without a meeting may authorize another person or persons to vote at any
such meeting and express such consent or dissent for him by proxy. A
stockholder may authorize a valid proxy by executing a written instrument signed
by such stockholder, or by causing his or her signature to be affixed to such
writing by any reasonable means including, but not limited to, by facsimile
signature, or by transmitting or authorizing the transmission of a telegram,
cablegram or other means of electronic transmission to the person designated as
the holder of the proxy, a proxy solicitation firm or a like authorized agent.
No such proxy shall be voted or acted upon after the expiration of three years
from the date of such proxy, unless such proxy provides for a
3
<PAGE>
longer period. Every proxy shall be revocable at the pleasure of the
stockholder executing it, except in those cases where applicable law provides
that a proxy shall be irrevocable. A stockholder may revoke any proxy which is
not irrevocable by attending the meeting and voting in person or by filing an
instrument in writing revoking the proxy or by filing another duly executed
proxy bearing a later date with the Secretary. Proxies by telegram, cablegram
or other electronic transmission must either set forth or be submitted with
information from which it can be determined that the telegram, cablegram or
other electronic transmission was authorized by the stockholder. Any copy,
facsimile telecommunication or other reliable reproduction of a writing or
transmission created pursuant to this section may be substituted or used in lieu
of the original writing or transmission for any and all purposes for which the
original writing or transmission could be used, provided that such copy,
facsimile telecommunication or other reproduction shall be a complete
reproduction of the entire original writing or transmission. [Sections 212(b),
(c), (d), (e).]
Section 1.09. ORGANIZATION; PROCEDURE. At every meeting of
stockholders the presiding officer shall be (subject to Section 4.06) the
President and Chief Executive Officer or, in the event of his absence,
disability or other inability so to act, a presiding officer chosen by a
majority of the stockholders present in person or by proxy. The Secretary, or in
the event of his absence or disability, the Assistant Secretary, if any, or if
there be no Assistant Secretary, in the absence of the Secretary, an appointee
of the presiding officer, shall act as Secretary of the meeting. The order of
business and all other matters of procedure at every meeting of stockholders may
be determined by such presiding officer.
Section 1.10. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. To the
fullest extent permitted by law, whenever the vote of stockholders at a meeting
thereof is required or permitted to be taken for or in connection with any
corporate action, such action may be taken without a meeting, without prior
notice and without a vote of stockholders, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted and shall be delivered to the Corporation by
delivery to its registered office in the
4
<PAGE>
State of Delaware, its principal place of business, or an officer or agent of
the Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
Every written consent shall bear the date of signature of each
stockholder or member who signs the consent and no written consent shall be
effective to take the corporate action referred to therein unless, within sixty
days of the earliest dated consent delivered in the manner required by law to
the Corporation, written consents signed by a sufficient number of holders or
members to take action are delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of business, or
an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders or members are recorded. Delivery made
to the Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. [Section 228(a), (c)]
ARTICLE II
BOARD OF DIRECTORS
Section 2.01. GENERAL POWERS. Except as may otherwise be provided by
law, by the Certificate of Incorporation or by these By-Laws, the property,
affairs and business of the Corporation shall be managed by or under the
direction of the Board of Directors and the Board of Directors may exercise all
the powers of the Corporation. [Section 141(a).]
Section 2.02. NUMBER AND TERM OF OFFICE. Certain stockholders of the
Corporation shall have rights and obligations with respect to the nomination and
election of Directors as set forth in the Stockholders Agreement during the term
of such agreement. The number of Directors constituting the entire Board of
Directors shall be at least 10 and no more than 14, which number may be modified
from time to time by resolution of the Board of Directors, but in no event shall
the number of Directors be less than one, PROVIDED that for so long as Section 1
of the Stockholders Agreement is in effect the number of Directors shall in any
event be automatically increased or decreased in the manner set forth below:
5
<PAGE>
(a) If and to the extent permitted by applicable law, (1) upon the
termination for any reason of any Nominating Party's right to nominate one or
more persons to serve as a Director or Directors of the Corporation (including
any temporary termination attributable to the waiver by such Nominating Party of
its rights under the Stockholders Agreement), such Director or Directors shall
be deemed to be removed without cause in accordance with Section 141(k) of the
DGCL and the number of Directors shall be automatically reduced by such number
of Directors that the Nominating Party would otherwise be entitled to nominate
(or such lesser number the Nominating Party had previously elected to nominate)
and (2) upon the request of a Nominating Party to nominate one or more Directors
pursuant to Section 1 of the Stockholders Agreement, the number of Directors of
the Corporation shall be automatically increased by such number of Directors as
such Nominating Party is entitled to nominate (or such lesser number the
Nominating Party elects to nominate), PROVIDED that, if any such nominee is an
Unaffiliated Nominee, the number of Directors shall not be so increased unless
and until the Board of Directors of the Corporation shall have approved such
Unaffiliated Nominee.
(b) During any period in which any Nominating Party has, and shall
have exercised, the right to nominate a Director as provided herein, in the
event of any vacancy or vacancies in the Board of Directors created by the
death, disability, retirement, resignation or removal, with or without cause, of
a Director so nominated, (1) the Board will request such Nominating Party to
nominate a candidate to be appointed by such Board to fill such vacancy or (2)
in the event that a candidate to fill such vacancy is to be elected at the
annual meeting of stockholders of the Corporation, such Nominating Party shall
have the right to nominate the individual to fill such vacancy, and the
provisions of Section 1(b) of the Stockholders Agreement shall apply with
respect to the nomination and election of such nominee to fill such vacancy.
(c) Each Director (whenever elected) shall hold office until his
successor has been duly elected and qualified, or until his earlier death,
resignation or removal. [Section 141(b).]
(d) During the term of the Stockholders Agreement, the Chairman of the
Board shall be selected by the Directors from one of the Directors nominated
pursuant to the Stockholders Agreement by the CDR Fund. The Chairman
6
<PAGE>
of the Board shall not be an officer of the Corporation, except that the
Chairman may act as the chief executive officer of the Corporation if elected to
that position by the Board of Directors, and shall preside at all meetings of
the Board of Directors at which he is present. [Section 141(b).]
Section 2.03. ELECTION OF DIRECTORS. Except as otherwise provided in
Sections 2.12 and 2.13 of these By-Laws, the Directors shall be elected at each
annual meeting of the stockholders. If the annual meeting for the election of
Directors is not held on the date designated therefor, the Directors shall cause
the meeting to be held as soon thereafter as convenient. At each meeting of the
stockholders for the election of Directors, provided a quorum is present, the
Directors shall be elected by a plurality of the votes validly cast in such
election. [Sections 211(b), (c), 216.]
Section 2.04. ANNUAL AND REGULAR MEETINGS. The annual meeting of the
Board of Directors for the purpose of electing officers and for the transaction
of such other business as may come before the meeting shall be held as soon as
possible following adjournment of the annual meeting of the stockholders at the
place of such annual meeting of the stockholders. Notice of such annual meeting
of the Board of Directors need not be given. The Board of Directors from time
to time may by resolution provide for the holding of regular meetings and fix
the place (which may be within or without the State of Delaware) and the date
and hour of such meetings. Notice of regular meetings need not be given,
provided, however, that if the Board of Directors shall fix or change the time
or place of any regular meeting, notice of such action shall be mailed promptly,
or sent by telegram, radio or cable, to each Director who shall not have been
present at the meeting at which such action was taken, addressed to him at his
usual place of business, or shall be delivered to him personally. Notice of
such action need not be given to any Director who attends the first regular
meeting after such action is taken without protesting the lack of notice to him,
prior to or at the commencement of such meeting, or to any Director who submits
a signed waiver of notice, whether before or after such meeting. [Sections
141(g), 229.]
Section 2.05. SPECIAL MEETINGS; NOTICE. Special meetings of the
Board of Directors shall be held whenever called by the Chairman of the Board or
by a majority of the Directors then in office, at such place (within or without
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the State of Delaware), date and hour as may be specified in the respective
notices or waivers of notice of such meetings. Special meetings of the Board of
Directors may be called on 24 hours' notice, if notice is given to each Director
personally or by telephone or telegram, or on five days' notice, if notice is
mailed to each Director, addressed to him at his usual place of business.
Notice of any special meeting need not be given to any Director who attends such
meeting without protesting the lack of notice to him, prior to or at the
commencement of such meeting, or to any Director who submits a signed waiver of
notice, whether before or after such meeting, and any business may be transacted
thereat. [Sections 141(g), 229.]
Section 2.06. QUORUM; VOTING. At all meetings of the Board of
Directors, the presence of a majority of the total then authorized number of
Directors shall constitute a quorum for the transaction of business. Except as
otherwise required by law, the vote of a majority of the Directors present at
any meeting at which a quorum is present shall be the act of the Board of
Directors. [Section 141(b).]
Section 2.07. ADJOURNMENT. A majority of the Directors present,
whether or not a quorum is present, may adjourn any meeting of the Board of
Directors to another time or place. No notice need be given of any adjourned
meeting unless the time and place of the adjourned meeting are not announced at
the time of adjournment, in which case notice conforming to the requirements of
Section 2.05 shall be given to each Director.
Section 2.08. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if all members of the Board of Directors consent thereto in
writing, and such writing or writings are filed with the minutes of proceedings
of the Board of Directors. [Section 141(f).]
Section 2.09. REGULATIONS; MANNER OF ACTING. To the extent
consistent with applicable law, the Certificate of Incorporation and these
By-Laws, the Board of Directors may adopt such rules and regulations for the
conduct of meetings of the Board of Directors and for the management of the
property, affairs and business of the Corporation as the Board of Directors may
deem appropriate. The Directors shall act only as a Board, and the individual
Directors shall have no power as such.
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Section 2.10. ACTION BY TELEPHONIC COMMUNICATIONS. Members of the
Board of Directors may participate in a meeting of the Board of Directors by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this provision shall constitute presence
in person at such meeting. [Section 141(i).]
Section 2.11. RESIGNATIONS. Any Director may resign at any time by
delivering a written notice of resignation, signed by such Director, to the
Chairman of the Board and a copy of such notice to the Secretary. Unless
otherwise specified therein, such resignation shall take effect upon delivery.
[Section 141(b).]
Section 2.12. REMOVAL OF DIRECTORS. Any Director may be removed at
any time, either for or without cause, upon the affirmative vote of the holders
of a majority of the outstanding shares of stock of the Corporation entitled to
vote for the election of such Director, cast at a special meeting of
stockholders called for the purpose, PROVIDED that so long as Section 1(d) of
the Stockholders Agreement is in effect, (a) no such removal without cause shall
occur except as provided in such Section and (b) in the event of the removal of
a Director nominated by a Nominating Party for cause, the provisions of Section
1(d) of the Stockholders Agreement shall apply with respect to the filling of
the vacancy created thereby. Any vacancy in the Board of Directors caused by
any such removal may be filled at such meeting by the stockholders entitled to
vote for the election of the Director so removed in accordance with Section 2.13
hereof. If such stockholders do not fill such vacancy at such meeting (or in
the written instrument effecting such removal, if such removal was effected by
consent without a meeting), such vacancy may be filled in the manner provided in
Section 2.13 of these By-Laws. [Section 141(k).]
Section 2.13. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. If any
vacancies shall occur in the Board of Directors, by reason of death,
resignation, removal or otherwise, or if the authorized number of Directors
shall be increased, the Directors then in office shall continue to act, and such
vacancies and newly created directorships may be filled by a majority of the
Directors then in office, although less than a quorum, PROVIDED that no such
vacancy in the Board of Directors shall be filled in a manner which fails to
comply with the requirements of Section 2.02 of
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these By-Laws and Section 1(d) of the Stockholders Agreement during the term of
such agreement, and PROVIDED, FURTHER, that the Board of Directors shall from
time to time make such requests for nominations of individuals to fill vacancies
in the Board of Directors as shall be necessary to cause compliance with the
requirements of such Section 2.02 and Section 1(d) of the Stockholders Agreement
during the term of such agreement. A Director elected to fill a vacancy or a
newly created directorship shall hold office until his successor has been
elected and qualified or until his earlier death, resignation or removal. Any
such vacancy or newly created directorship may also be filled at any time by
vote of the stockholders, in the manner provided in Section 1(d) of the
Stockholders Agreement during the term of such agreement. [Sections 141(b),
223.]
Section 2.14. COMPENSATION. The amount, if any, which each Director
shall be entitled to receive as compensation for his services as such shall be
fixed from time to time by resolution of the Board of Directors, PROVIDED that
(a) no director who is an officer or employee of CDR at any time that CDR is
providing consulting services to the Corporation or one or more of its
subsidiaries and (b) no director who is an officer or employee of the
Corporation, shall be entitled to receive any compensation for his or her
services as a Director (although such Director shall be entitled to be
reimbursed for any reasonable out-of-pocket expenses incurred in connection with
his or her services as a Director). [Section 141(h).]
Section 2.15. RELIANCE ON ACCOUNTS AND REPORTS, ETC. A Director, or
a member of any Committee designated by the Board of Directors shall, in the
performance of his duties, be fully protected in relying in good faith upon the
records of the Corporation and upon information, opinions, reports or statements
presented to the Corporation by any of the Corporation's officers or employees,
or Committees designated by the Board of Directors, or by any other person as to
the matters the member reasonably believes are within such other person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Corporation. [Section 141(e).]
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ARTICLE III
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 3.01. HOW CONSTITUTED. The Board of Directors, by resolution
adopted by a majority of the whole Board, (a) shall designate an Executive
Committee, a Compensation and Benefits Committee and an Audit Committee (each a
"Standing Committee" and, collectively, the "Standing Committees") and (b) may
designate one or more additional committees (each an "Additional Committee" and,
together with the Standing Committees, the "Committees"). During the term of
the Stockholders Agreement, each Standing Committee shall consist of such number
of Directors as provided by this Section 3.01. Each Additional Committee shall
consist of such number of Directors as from time to time may be fixed by the
Board of Directors. The Executive Committee shall consist of the chief
executive officer of the Corporation and four other Directors selected in the
manner provided in Section 2 of the Stockholders Agreement. One of the Directors
nominated by the CDR Fund (as provided in Section 2(a) of the Stockholders
Agreement) shall serve as the Chairman of the Executive Committee. Each of the
Compensation and Benefits Committee and the Audit Committee shall consist of
five Directors who shall be selected in the manner provided in Section 2 of the
Stockholders Agreement. Any Additional Committee may be abolished or re-
designated from time to time by the Board of Directors. The Board of Directors
may designate one or more Directors as alternate members of any Additional
Committee, who may replace any absent or disqualified member or members at any
meeting of such Additional Committee. Members of any Standing Committee or any
Additional Committee shall (and alternate members, if any of any Additional
Committee may) be designated at the annual meeting of the Board of Directors.
Each member of any Standing Committee or any Additional Committee (and any
alternate member of any Additional Committee) (whether designated at an annual
meeting of the Board of Directors or to fill a vacancy or otherwise) shall hold
office until his successor shall have been designated or until he shall cease to
be a Director, or until his earlier death, resignation or removal. [Sections
141 (b), (c).]
Section 3.02. POWERS. During the intervals between the meetings of
the Board of Directors, the Executive Committee, except as otherwise provided in
this section, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the
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property, affairs and business of the Corporation, including, without
limitation, all the powers and authority to make determinations from time to
time of the Fair Market Value of the Common Stock of the Corporation for
purposes of and as contemplated by (i) the Compensation Plan or (ii) any
agreement entered into from time to time by the Corporation or any of its
subsidiaries and a Management Investor evidencing any award to such Management
Investor granted under the Compensation Plan, including, without limitation, (x)
the management stock subscription agreements entered into from time to time by
the Corporation and certain Management Investors and (y) the management stock
option agreements entered into from time to time by the Corporation and certain
Management Investors. Each such other Committee, except as otherwise provided
in this section, shall have and may exercise such powers of the Board of
Directors as may be provided by resolution or resolutions of the Board of
Directors. Neither the Executive Committee nor any such other Committee shall
have the power or authority:
(a) to amend the Certificate of Incorporation (except that a
Committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of
Directors as provided in Section 151(a) of the DGCL, fix the designations
and any of the preferences or rights of such shares relating to dividends,
redemption, dissolution, any distribution of assets of the Corporation or
the conversion into, or the exchange of such shares for, shares of any
other class or classes or any other series of the same or any other class
or classes of stock of the Corporation or fix the number of shares of any
series of stock or authorize the increase or decrease of the shares of any
series);
(b) to adopt an agreement of merger or consolidation or a certificate
of ownership or merger;
(c) to recommend to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets;
(d) to recommend to the stockholders a dissolution of the Corporation
or a revocation of a dissolution;
(e) to declare a dividend;
(f) to authorize the issuance of stock;
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(g) to remove the President and Chief Executive Officer of the
Corporation or a Director;
(h) (i) to authorize the Corporation to enter into or amend any
agreement for the borrowing of funds which provides for additional
indebtedness in excess of $25 million or (ii) to authorize a material
modification of any existing facility, unless in the Executive Committee's
good faith judgment, such modification is not adverse to the Corporation;
(i) to authorize the Corporation to enter into any guarantee of
indebtedness in excess of $25 million;
(j) to authorize any new compensation or benefit program;
(k) to appoint or discharge the Corporation's
independent public accountants;
(l) to authorize the annual operating plan, annual capital
expenditure plan and strategic plan;
(m) to abolish or usurp the authority of the Board of Directors; or
(n) to amend these By-Laws of the Corporation.
The Executive Committee shall have, and any such other Committee may be granted
by the Board of Directors, power to authorize the seal of the Corporation to be
affixed to any or all papers which may require it. [Section 141(c).]
Section 3.03. PROCEEDINGS. Each such Committee may fix its own rules
of procedure and may meet at such place (within or without the State of
Delaware), at such time and upon such notice, if any, as it shall determine from
time to time. Each such Committee shall keep minutes of its proceedings and
shall present a report of such proceedings, including the minutes thereof, to
the Board of Directors at the meeting of the Board of Directors next following
any such proceedings.
Section 3.04. QUORUM AND MANNER OF ACTING. Except as may be
otherwise provided in the resolution creating any Additional Committee, at all
meetings of any Committee the presence of members (or alternate members)
constituting a majority of the total then authorized membership of such
Committee shall constitute a quorum for
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the transaction of business. The act of the majority of the members present at
any meeting at which a quorum is present shall be the act of such Committee.
Any action required or permitted to be taken at any meeting of any such
Committee may be taken without a meeting, if all members of such Committee shall
consent to such action in writing and such writing or writings are filed with
the minutes of the proceedings of the Committee. The members of any such
Committee shall act only as a Committee, and the individual members of such
Committee shall have no power as such. [Section 141(b), (c), (f).]
Section 3.05. ACTION BY TELEPHONIC COMMUNICATIONS. Members of any
Committee designated by the Board of Directors may participate in a meeting of
such Committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this provision shall
constitute presence in person at such meeting. [Section 141(i).]
Section 3.06. ABSENT OR DISQUALIFIED MEMBERS OF ADDITIONAL
COMMITTEES. In the absence or disqualification of a member of any Additional
Committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. [Section
141(c).]
Section 3.07. RESIGNATIONS. Any member (and any alternate member) of
any Committee may resign at any time by delivering a written notice of
resignation, signed by such member, to the Chairman or (unless the Chairman is
then acting as the chief executive officer of the Corporation) the President and
Chief Executive Officer. Unless otherwise specified therein, such resignation
shall take effect upon delivery. [Section 141(b).]
Section 3.08. REMOVAL. Any member (and any alternate member) of any
Committee may be removed at any time, either for or without cause, by resolution
adopted by a majority of the whole Board of Directors; PROVIDED that no such
action shall be taken with respect to any member of any Standing Committee that
is inconsistent with the provisions of Sections 1(d) and 2 of the Stockholders
Agreement during the term of such agreement.
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Section 3.09. VACANCIES. If any vacancy shall occur in any
Committee, by reason of disqualification, death, resignation, removal or
otherwise, the remaining members (and any alternate members) shall continue to
act, and any such vacancy may be filled by the Board of Directors, PROVIDED that
no vacancy in any Committee shall be filled in a manner which fails to comply
with the provisions of Section 2 of the Stockholders Agreement during the term
of such agreement.
ARTICLE IV
OFFICERS
Section 4.01. NUMBER. The officers of the Corporation shall be
chosen by the Board of Directors and shall be a President and Chief Executive
Officer, a Chief Operating Officer, a Chief Financial Officer, one or more Vice
Presidents, a Secretary and a Treasurer. The Board of Directors also may elect
one or more Assistant Secretaries and Assistant Treasurers in such numbers as
the Board of Directors may determine. The Board of Directors also may elect the
Chairman to act as the chief executive officer of the Corporation as provided in
Section 4.06. Any number of offices may be held by the same person. No officer
need be a Director of the Corporation. [Section 142(a), (b).]
Section 4.02. ELECTION. Unless otherwise determined by the Board of
Directors, the officers of the Corporation shall be elected by the Board of
Directors at the annual meeting of the Board of Directors, and shall be elected
to hold office until the next succeeding annual meeting of the Board of
Directors. In the event of the failure to elect officers at such annual
meeting, officers may be elected at any regular or special meeting of the Board
of Directors. Each officer shall hold office until his successor has been
elected and qualified, or until his earlier death, resignation or removal.
[Section 142(b).]
Section 4.03. SALARIES. The salaries of all officers and agents of
the Corporation shall be fixed by the Board of Directors.
Section 4.04. REMOVAL AND RESIGNATION; VACANCIES. Any officer may be
removed for or without cause at any time by the Board of Directors. Any officer
may resign at any time by delivering a written notice of resignation, signed by
such officer, to the Board of Directors, the Chairman or
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(unless the Chairman shall then be acting as the chief executive officer of the
Corporation) the President and Chief Executive Officer. Unless otherwise
specified therein, such resignation shall take effect upon delivery. Any
vacancy occurring in any office of the Corporation by death, resignation,
removal or otherwise, shall be filled by the Board of Directors. [Section
142(b), (e).]
Section 4.05. AUTHORITY AND DUTIES OF OFFICERS. The officers of the
Corporation shall have such authority and shall exercise such powers and perform
such duties as may be specified in these By-Laws, except that in any event each
officer shall exercise such powers and perform such duties as may be required by
law. [Section 142(a).]
Section 4.06. THE PRESIDENT AND CHIEF EXECUTIVE OFFICER. The
President and Chief Executive Officer shall, subject to the direction of, and
subject to general or specific resolutions approved by, the Board of Directors,
(a) preside at all meetings of the stockholders at which he is present, and be
the chief executive officer of the Corporation, (b) have general control and
supervision of the policies and operations of the Corporation, see that all
orders and resolutions of the Board of Directors are carried into effect, and
report to the Board of Directors, (c) manage and administer the Corporation's
business and affairs and perform all duties and exercise all powers usually
pertaining to the office of a chief executive officer of a corporation, (d) have
the authority to sign, in the name and on behalf of the Corporation, checks,
orders, contracts, leases, notes, drafts and other documents and instruments in
connection with the business of the Corporation, and together with the Secretary
or an Assistant Secretary, conveyances of real estate and other documents and
instruments to which the seal of the Corporation is affixed, (e) have the
authority to cause the employment or appointment of such employees and agents of
the Corporation as the conduct of the business of the Corporation may require,
to fix their compensation, and to remove or suspend any employee or agent
elected or appointed by the President and Chief Executive Officer or the Board
of Directors, and (f) have such other powers as are contemplated by the other
provisions of these By-Laws. The President and Chief Executive Officer shall
perform such other duties and have such other powers as the Board of Directors
or the Chairman may from time to time prescribe. Notwithstanding the foregoing,
and whether or not the President and Chief Executive Officer shall then be in
office, (i) the Board of Directors may elect the Chairman to act as the chief
executive officer of the Corporation,
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and (except to the extent required by the General Corporation Law of the State
of Delaware) may grant and delegate to the Chairman, acting in such capacity,
any or all of the authority, powers and duties, that otherwise may be held,
exercised or performed by the President and Chief Executive Officer as provided
in these By-Laws, and (ii) in the event that the Board of Directors elects the
Chairman to act as the chief executive officer of the Corporation, the President
and Chief Executive Officer shall no longer be the chief executive officer of
the Corporation, and shall not hold, exercise or perform any authority, powers
or duties as an officer of the Corporation other than as the Board of Directors
or the Chairman may prescribe.
Section 4.07. THE CHIEF OPERATING OFFICER. The Chief Operating
Officer shall be the chief operating officer of the Corporation and shall
perform, in general, all duties incident to the office of Chief Operating
Officer and shall be responsible for the operations of the Corporation,
including manufacturing, engineering, marketing, distribution, sales, labor
relations and administrative responsibilities and such other duties as may be
specified in these By-Laws or as may be assigned to him from time to time by
(subject to Section 4.06) the President and Chief Executive Officer (or, if the
Chairman is then acting as chief executive officer of the Corporation, by the
Chairman). The Chief Operating Officer shall report to the President and Chief
Executive Officer (or, if the Chairman is then acting as chief executive officer
of the Corporation, to the Chairman). In the absence of the President and Chief
Executive Officer (or, if the Chairman is then acting as chief executive officer
of the Corporation, the Chairman), the duties of such officer in such capacity
shall be performed and the powers of such officer in such capacity may be
exercised by the Chief Operating Officer; subject in any case to review and
superseding action by (subject to Section 4.06) the President and Chief
Executive Officer (or, if the Chairman is then acting as chief executive officer
of the Corporation, by the Chairman).
Section 4.08. THE VICE PRESIDENTS. Each Vice President shall perform
such duties and exercise such powers as may be assigned to him from time to time
by (subject to Section 4.06) the President and Chief Executive Officer (or, if
the Chairman is then acting as chief executive officer of the Corporation, by
the Chairman).
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Section 4.09. THE SECRETARY. The Secretary shall have the following
powers and duties:
(a) He shall keep or cause to be kept a record of all the proceedings
of the meetings of the stockholders and of the Board of Directors in books
provided for that purpose. [Section 142(a).]
(b) He shall cause all notices to be duly given in accordance with
the provisions of these By-Laws and as required by law.
(c) Whenever any Committee shall be appointed pursuant to a
resolution of the Board of Directors, he shall furnish a copy of such
resolution to the members of such Committee.
(d) He shall be the custodian of the records and of the seal of the
Corporation and cause such seal (or a facsimile thereof) to be affixed to
all certificates representing shares of the Corporation prior to the
issuance thereof and to all instruments the execution of which on behalf of
the Corporation under its seal shall have been duly authorized in
accordance with these By-Laws, and when so affixed he may attest the same.
(e) He shall properly maintain and file all books, reports,
statements, certificates and all other documents and records required by
law, the Certificate of Incorporation or these By-Laws.
(f) He shall have charge of the stock books and ledgers of the
Corporation and shall cause the stock and transfer books to be kept in such
manner as to show at any time the number of shares of stock of the
Corporation of each class issued and outstanding, the names (alphabetically
arranged) and the addresses of the holders of record of such shares, the
number of shares held by each holder and the date as of which each became
such holder of record.
(g) He shall sign (unless the Treasurer, an Assistant Treasurer or
Assistant Secretary shall have signed) certificates representing shares of
the Corporation the issuance of which shall have been authorized by the
Board of Directors.
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(h) He shall perform, in general, all duties incident to the office
of secretary and such other duties as may be specified in these By-Laws or
as may be assigned to him from time to time by the Board of Directors or
(subject to Section 4.06) the President and Chief Executive Officer (or, if
the Chairman is then acting as chief executive officer of the Corporation,
the Chairman).
Section 4.10. THE CHIEF FINANCIAL OFFICER. The Chief Financial
Officer shall be the chief financial officer of the Corporation and shall have
the following powers and duties:
(a) He shall have charge and supervision over and be responsible for
the moneys, securities, receipts and disbursements of the Corporation, and
shall keep or cause to be kept full and accurate records of all receipts of
the Corporation.
(b) He shall render to the Board of Directors or the Audit Committee,
whenever requested, a statement of the financial condition of the
Corporation and of all his transactions as Chief Financial Officer, and
render a full financial report at the annual meeting of the stockholders,
if called upon to do so.
(c) He shall be empowered from time to time to require from all
officers or agents of the Corporation reports or statements giving such
information as he may desire with respect to any and all financial
transactions of the Corporation.
(d) He shall perform, in general, all duties incident to the office
of chief financial officer and such other duties as may be specified in
these By-Laws or as may be assigned to him from time to time by the Board
of Directors or the Chairman of the Board.
(e) The Chief Financial Officer shall report to the President and
Chief Executive Officer (or, if the Chairman is then acting as chief
executive officer of the Corporation, to the Chairman).
Section 4.11. THE TREASURER. The Treasurer shall be the treasurer of
the Corporation and shall have the following powers and duties:
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(a) He shall cause the moneys and other valuable effects of the
Corporation to be deposited in the name and to the credit of the
Corporation in such banks or trust companies or with such bankers or other
depositaries as shall be selected in accordance with Section 8.05 of these
By-Laws.
(b) He shall cause the moneys of the Corporation to be disbursed by
checks or drafts (signed as provided in Section 8.06 of these By-Laws) upon
the authorized depositaries of the Corporation and cause to be taken and
preserved proper vouchers for all moneys disbursed.
(c) He may sign (unless an Assistant Treasurer or the Secretary or an
Assistant Secretary shall have signed) certificates representing stock of
the Corporation the issuance of which shall have been authorized by the
Board of Directors.
(d) He shall perform, in general, all duties incident to the office
of treasurer and such other duties as may be specified in these By-Laws or
as may be assigned to him from time to time by the Board of Directors or
the Chief Financial Officer, to whom he shall report.
Section 4.12. ADDITIONAL OFFICERS. The Board of Directors may
appoint such other officers and agents as it may deem appropriate, and such
other officers and agents shall hold their offices for such terms and shall
exercise such powers and perform such duties as may be determined from time to
time by the Board of Directors. The Board of Directors from time to time may
delegate to any officer or agent the power to appoint subordinate officers or
agents and to prescribe their respective rights, terms of office, authorities
and duties. Any such officer or agent may remove any such subordinate officer
or agent appointed by him, for or without cause. [Section 142(a), (b).]
Section 4.13. SECURITY. The Board of Directors may require any
officer, agent or employee of the Corporation to provide security for the
faithful performance of his duties, in such amount and of such character as may
be determined from time to time by the Board of Directors. [Section 142(c).]
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ARTICLE V
CAPITAL STOCK
Section 5.01. CERTIFICATES OF STOCK. The shares of the Corporation
shall be represented by certificates, provided that the Board of Directors may
provide by resolution or resolutions that some or all of any or all classes or
series of the stock of the Corporation shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until each
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock in the
Corporation represented by certificates and upon request every holder of
uncertificated shares shall be entitled to have a certificate signed by, or in
the name of the Corporation, by (subject to Section 4.06) the President and
Chief Executive Officer (or, if the President and Chief Executive Officer is not
then empowered to do so pursuant to Section 4.06, the Chairman) or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary, representing the number of shares registered in
certificate form. Such certificate shall be in such form as the Board of
Directors may determine, to the extent consistent with applicable law, the
Certificate of Incorporation and these By-Laws. [Section 158.]
Section 5.02. SIGNATURES; FACSIMILE. Any or all of such signatures
on the certificate may be a facsimile, engraved or printed, to the extent
permitted by law. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
[Section 158.]
Section 5.03. LOST, STOLEN OR DESTROYED CERTIFICATES. The Board of
Directors may direct that a new certificate be issued in place of any
certificate theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon delivery to the Board of Directors of an affidavit of
the owner or owners of such certificate, setting forth such allegation. The
Board of Directors may require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to give the Corporation a bond
sufficient to indemnify it against any
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claim that may be made against it on account of the alleged loss, theft or
destruction of any such certificate or the issuance of any such new certificate.
[Section 167.]
Section 5.04. TRANSFER OF STOCK. Upon surrender to the Corporation
or the transfer agent of the Corporation of a certificate for shares, duly
endorsed or accompanied by appropriate evidence of succession, assignment or
authority to transfer, the Corporation shall issue a new certificate to the
person entitled thereto, cancel the old certificate and record the transaction
upon its books. Within a reasonable time after the transfer of uncertificated
stock, the Corporation shall send to the registered owner thereof a written
notice containing the information required to be set forth or stated on
certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the DGCL.
Subject to the provisions of the Certificate of Incorporation and these By-Laws,
the Board of Directors may prescribe such additional rules and regulations as it
may deem appropriate relating to the issue, transfer and registration of shares
of the Corporation. [Section 151(f).]
Section 5.05. RECORD DATE. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date on which the resolution
fixing the record date is adopted by the Board of Directors, and which shall not
be more than sixty nor less than ten days before the date of such meeting. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting, provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
In order that the Corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the board of directors is
required by law, shall be the first date on which a signed written
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consent setting forth the action taken or proposed to be taken is delivered to
the Corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the Corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by law, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be at
the close of business on the day on which the Board of Directors adopts the
resolution taking such prior action.
In order that the Corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
[Section 213.]
Section 5.06. REGISTERED STOCKHOLDERS. Prior to due surrender of a
certificate for registration of transfer, the Corporation may treat the
registered owner as the person exclusively entitled to receive dividends and
other distributions, to vote, to receive notice and otherwise to exercise all
the rights and powers of the owner of the shares represented by such
certificate, and the Corporation shall not be bound to recognize any equitable
or legal claim to or interest in such shares on the part of any other person,
whether or not the Corporation shall have notice of such claim or interests.
Whenever any transfer of shares shall be made for collateral security, and not
absolutely, it shall be so expressed in the entry of the transfer if, when the
certificates are presented to the Corporation for transfer or uncertificated
shares are requested to be transferred, both the transferor and transferee
request the Corporation to do so. [Section 159.]
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Section 5.07. TRANSFER AGENT AND REGISTRAR. The Board of Directors
may appoint one or more transfer agents and one or more registrars, and may
require all certificates representing shares to bear the signature of any such
transfer agents or registrars.
ARTICLE VI
INDEMNIFICATION
Section 6.01. NATURE OF INDEMNITY. The Corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was or has agreed to become a director, officer, employee or agent of the
Corporation, or is or was serving or has agreed to serve at the request of the
Corporation as a director, officer, employee or agent, of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of any
action alleged to have been taken or omitted in such capacity, and may indemnify
any person who was or is a party or is threatened to be made a party to such an
action, suit or proceeding by reason of the fact that he is or was or has agreed
to become an employee or agent of the Corporation, or is or was serving or has
agreed to serve at the request of the Corporation as an employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him or on his behalf in
connection with such action, suit or proceeding and any appeal therefrom, if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding had no reasonable cause to believe his conduct was
unlawful; except that in the case of an action or suit by or in the right of the
Corporation to procure a judgment in its favor (1) such indemnification shall be
limited to expenses (including attorneys' fees) actually and reasonably incurred
by such person in the defense or settlement of such action or suit, and (2) no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of
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liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Delaware
Court of Chancery or such other court shall deem proper.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of NOLO CONTENDERE or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
[Section 145(a), (b).]
Section 6.02. SUCCESSFUL DEFENSE. To the extent that a director,
officer, employee or agent of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in Section
6.01 hereof or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith. [Section 145(c).]
Section 6.03. DETERMINATION THAT INDEMNIFICATION IS PROPER. Any
indemnification under Section 6.01 hereof (unless ordered by a court) shall be
made by the Corporation unless a determination is made that indemnification of
the director, officer, employee or agent is not proper in the circumstances
because he has not met the applicable standard of conduct set forth in Section
6.01 hereof. Any such determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) if there are no such directors, or, if such directors
so direct, by independent legal counsel in a written opinion, or (3) by the
stockholders. [Section 145(d).]
Section 6.04. ADVANCE PAYMENT OF EXPENSES. Expenses (including
attorneys' fees) incurred by a director or officer in defending any civil,
criminal, administrative or investigative action, suit or proceeding shall be
paid by the Corporation in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as authorized in this Article.
Such expenses (including attorneys' fees) incurred by other employees and agents
may be so paid upon such terms
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and conditions, if any, as the Board of Directors deems appropriate. The Board
of Directors may authorize the Corporation's counsel to represent such director,
officer, employee or agent in any action, suit or proceeding, whether or not the
Corporation is a party to such action, suit or proceeding. [Section 145(e).]
Section 6.05. PROCEDURE FOR INDEMNIFICATION OF DIRECTORS AND
OFFICERS. Any indemnification of a person seeking indemnification under
Sections 6.01 and 6.02, or advance of costs, charges and expenses to such person
under Section 6.04 of this Article, shall be made promptly, and in any event
within 30 days, upon the written request of such person. If a determination by
the Corporation that such person is entitled to indemnification pursuant to this
Article is required, and the Corporation fails to respond within sixty days to a
written request for indemnity, the Corporation shall be deemed to have approved
such request. If the Corporation denies a written request for indemnity or
advancement of expenses, in whole or in part, or if payment in full pursuant to
such request is not made within 30 days, the right to indemnification or
advances as granted by this Article shall be enforceable by the indemnified
person in any court of competent jurisdiction. Such person's costs and expenses
incurred in connection with successfully establishing his right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the Corporation. It shall be a defense to any such action (other
than an action brought to enforce a claim for the advance of costs, charges and
expenses under Section 6.04 of this Article where the required undertaking, if
any, has been received by the Corporation) that the claimant has not met the
standard of conduct set forth in Section 6.01 of this Article, but the burden of
proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, its independent legal counsel,
and its stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in Section 6.01
of this Article, nor the fact that there has been an actual determination by the
Corporation (including its Board of Directors, its independent legal counsel,
and its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
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Section 6.06. SURVIVAL; PRESERVATION OF OTHER RIGHTS. The foregoing
indemnification provisions shall be deemed to be a contract between the
Corporation and each director, officer, employee and agent who serves in any
such capacity at any time while these provisions as well as the relevant
provisions of the Delaware Corporation Law are in effect and any repeal or
modification thereof shall not affect any right or obligation then existing with
respect to any state of facts then or previously existing or any action, suit or
proceeding previously or thereafter brought or threatened based in whole or in
part upon any such state of facts. Such a "contract right" may not be modified
retroactively without the consent of such director, officer, employee or agent.
The indemnification and advancement of expenses provided by this
Article VI shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person. [Section 145(f), (j).]
Section 6.07. INSURANCE. The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was or has
agreed to become a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
or on his behalf in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article. [Section 145(g).]
Section 6.08. SEVERABILITY. If this Article or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify each director, officer, employee or
agent of the Corporation as to costs, charges and expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement with respect to any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Corporation, to the
fullest extent permitted by any
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applicable portion of this Article that shall not have been invalidated and to
the fullest extent permitted by applicable law.
Section 6.09. DEFINITIONS. For purposes of this Article VI, the
following terms shall have the following meanings:
(a) references to "the Corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees or agents so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise shall stand in the same position under the provisions
of this Article VI with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued;
(b) references to "other enterprises" shall include employee benefit
plans;
(c) references to "fines" shall include any excise taxes assessed on
a person with respect to an employee benefit plan; and
(d) references to "serving at the request of the Corporation" shall
include any service as a director, officer, employee or agent of the Corporation
which imposes duties on, or involves services by, such director, officer,
employee, or agent with respect to an employee benefit plan, its participants,
or beneficiaries.
ARTICLE VII
OFFICES
Section 7.01. REGISTERED OFFICE. The registered office of the
Corporation in the State of Delaware shall be located at Corporation Trust
Center, 1209 Orange Street in the City of Wilmington, County of New Castle.
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Section 7.02. OTHER OFFICES. The Corporation may maintain offices or
places of business at such other locations within or without the State of
Delaware as the Board of Directors may from time to time determine or as the
business of the Corporation may require.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01. DIVIDENDS. Subject to any applicable provisions of law
and the Certificate of Incorporation, dividends upon the shares of the
Corporation may be declared by the Board of Directors at any regular or special
meeting of the Board of Directors and any such dividend may be paid in cash,
property, or shares of the Corporation's Capital Stock; PROVIDED that stock
dividends on the Corporation's Class A Common Stock shall be paid in shares of
Class A Common Stock and dividends on the Corporation's Class B Common Stock
shall be paid in shares of Class B Common Stock.
A member of the Board of Directors, or a member of any Committee
designated by the Board of Directors, shall be fully protected in relying in
good faith upon the records of the Corporation and upon such information,
opinions, reports or statements presented to the Corporation by any of its
officers or employees, or Committees of the Board of Directors, or by any other
person as to matters the director reasonably believes are within such other
person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation, as to the value and amount
of the assets, liabilities and/or net profits of the Corporation, or any other
facts pertinent to the existence and amount of surplus or other funds from which
dividends might properly be declared and paid. [Sections 170, 172, 173.]
Section 8.02. RESERVES. There may be set aside out of any funds of
the Corporation available for dividends such sum or sums as the Board of
Directors, from time to time, in its absolute discretion, thinks proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation or for such other
purpose as the Board of Directors shall think conducive to the interest of the
Corporation, and the Board of Directors may similarly modify or abolish any such
reserve. [Section 171.]
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Section 8.03. EXECUTION OF INSTRUMENTS. The Board of Directors may
authorize the President and Chief Executive Officer or any other officer or
agent to enter into any contract or execute and deliver any instrument in the
name and on behalf of the Corporation. Any such authorization may be general or
limited to specific contracts or instruments.
Section 8.04. CORPORATE INDEBTEDNESS. No loan shall be contracted on
behalf of the Corporation, and no evidence of indebtedness shall be issued in
its name, unless authorized by the Board of Directors or, to the extent the
Executive Committee has the power to authorize such loan or evidence of
indebtedness, the Executive Committee. Such authorization may be general or
confined to specific instances. Loans so authorized may be effected at any time
for the Corporation from any bank, trust company or other institution, or from
any firm, corporation or individual. All bonds, debentures, notes and other
obligations or evidences of indebtedness of the Corporation issued for such
loans shall be made, executed and delivered as the Board of Directors or the
Executive Committee, as the case may be, shall authorize. When so authorized by
the Board of Directors or the Executive Committee, as the case may be, any part
of or all the properties, including contract rights, assets, business or good
will of the Corporation, whether then owned or thereafter acquired, may be
mortgaged, pledged, hypothecated or conveyed or assigned in trust as security
for the payment of such bonds, debentures, notes and other obligations or
evidences of indebtedness of the Corporation, and of the interest thereon, by
instruments executed and delivered in the name of the Corporation.
Section 8.05. DEPOSITS. Any funds of the Corporation may be
deposited from time to time in such banks, trust companies or other depositaries
as may be determined by (a) the Board of Directors or (subject to Section 4.06)
the President and Chief Executive Officer (or, if the Chairman is then acting as
chief executive officer of the Corporation, the Chairman) or (b) such officers
or agents as may be authorized to make such determination by the Board of
Directors or (subject to Section 4.06) the President and Chief Executive Officer
(or, if the Chairman is then acting as chief executive officer of the
Corporation, the Chairman).
Section 8.06. CHECKS. All checks or demands for money and notes of
the Corporation shall be signed by such officer or officers or such agent or
agents of the
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Corporation, and in such manner, as the Board of Directors or (subject to
Section 4.06) the President and Chief Executive Officer (or, if the Chairman is
then acting as chief executive officer of the Corporation, the Chairman) from
time to time may determine.
Section 8.07. SALE, TRANSFER, ETC. OF SECURITIES. To the extent
authorized by the Board of Directors, (subject to Section 4.06) the President
and Chief Executive Officer (or, if the Chairman is then acting as chief
executive officer of the Corporation, the Chairman) or any other officers
designated by the Board of Directors may sell, transfer, endorse, and assign any
shares of stock, bonds or other securities owned by or held in the name of the
Corporation, and may make, execute and deliver in the name of the Corporation,
under its corporate seal, any instruments that may be appropriate to effect any
such sale, transfer, endorsement or assignment.
Section 8.08. VOTING AS STOCKHOLDER. As directed by resolution of
the Board of Directors or the Executive Committee, (a) (subject to Section 4.06)
the President and Chief Executive Officer (or, if the Chairman is then acting as
chief executive officer of the Corporation, the Chairman) or any Vice President
shall have full power and authority on behalf of the Corporation to attend any
meeting of stockholders of any corporation in which the Corporation may hold
stock, and to act, vote (or execute proxies to vote) and exercise in person or
by proxy all other rights, powers and privileges incident to the ownership of
such stock, and (b) such officers acting on behalf of the Corporation shall have
full power and authority to execute any instrument expressing consent to or
dissent from any action of any such corporation without a meeting. The Board of
Directors may by resolution from time to time confer such power and authority
upon any other person or persons.
Section 8.09. FISCAL YEAR. The fiscal year of the Corporation shall
commence on the first day of January of each year (except for the Corporation's
first fiscal year which shall commence on the date of incorporation) and shall
terminate in each case on the last day of December.
Section 8.10. SEAL. The seal of the Corporation shall be circular in
form and shall contain the name of the Corporation, the year of its
incorporation and the words "Corporate Seal" and "Delaware". The form of such
seal shall be subject to alteration by the Board of Directors. The seal may be
used by causing it or a facsimile thereof to
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be impressed, affixed or reproduced, or may be used in any other lawful manner.
Section 8.11. BOOKS AND RECORDS; INSPECTION. Except to the extent
otherwise required by law, the books and records of the Corporation shall be
kept at such place or places within or without the State of Delaware as may be
determined from time to time by the Board of Directors.
Section 8.12. DEFINITIONS.
"Additional Committee": See Section 3.01.
"CDR" means Clayton, Dubilier & Rice, Inc., a Delaware corporation.
"CDR Fund" means Clayton, Dubilier & Rice Fund V Limited Partnership,
a Connecticut limited partnership, and any successors and assigns.
"Committee": See Section 3.01.
"Compensation Plan" means the Corporation's Stock Incentive and
Deferred Compensation Plan, as approved by the stockholders of the Corporation
and as in effect from time to time.
"Investor": See "Stockholders Agreement."
"Management Investor" means an executive or other key employee of the
Corporation or any of its subsidiaries who acquires shares of Class A Common
Stock of the Corporation, pursuant to the Compensation Plan or any agreement
entered into from time to time by the Corporation and such executive or other
key employee of the Corporation or any of its subsidiaries.
"Nominating Party" means any one of the investors named in Section
1(b) of the Stockholders Agreement entitled to nominate such number of persons
as specified therein for election to the Board of Directors of the Corporation.
"Standing Committee": See Section 3.01.
"Stockholders Agreement" means the Stockholders Agreement to be
entered into among the Corporation and each of CDR Fund, EXOR Group S.A., First
Plaza Group Trust, The 1818 Fund II, L.P., Madison Dearborn Capital Partners,
L.P., Chemical Equity Associates, HWH Investment Pte Ltd. and
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Wolfensohn-River LLC (each an "Investor" and, collectively, the "Investors"), as
amended and as in effect from time to time.
"Unaffiliated Nominee" means any person nominated for election to the
Board of Directors of the Corporation by a Nominating Party who is not an
employee, officer, general partner or general partner of the general partner of
the Nominating Party or of an Affiliate (as defined in Section 9 of the
Stockholders Agreement) of the Nominating Party.
ARTICLE IX
AMENDMENT OF BY-LAWS
Section 9.01. AMENDMENT. These By-Laws may be amended, altered or
repealed
(a) by resolution adopted by a majority of the Board of Directors at
any special or regular meeting of the Board if, in the case of such special
meeting only, notice of such amendment, alteration or repeal is contained
in the notice or waiver of notice of such meeting; or
(b) at any regular or special meeting of the stockholders if, in the
case of such special meeting only, notice of such amendment, alteration or
repeal is contained in the notice or waiver of notice of such meeting.
[Section 109(a).]
Notwithstanding the foregoing sentence, during the term of the
Stockholders Agreement, these By-Laws may not be amended, altered or repealed in
a manner inconsistent with the terms and provisions of the Stockholders
Agreement.
ARTICLE X
CONSTRUCTION
Section 10.01. CONSTRUCTION. In the event of any conflict between
the provisions of these By-Laws as in effect from time to time and (a) the
provisions of the certificate of incorporation of the Corporation as in effect
from time to time, or (b) the provisions of the Stockholders Agreement, the
provisions of such certificate of incorporation or the Stockholders Agreement,
as the case may be, shall be controlling.
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RIC HOLDING, INC.
RESTATED BY-LAWS
As amended effective as of October 8, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
RIC HOLDING, INC.
RESTATED BY-LAWS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C> <C>
ARTICLE I. STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01. Annual Meetings. . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Special Meetings . . . . . . . . . . . . . . . . . . . . 1
Section 1.03. Notice of Meetings; Waiver . . . . . . . . . . . . . . . 2
Section 1.04. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.05. Voting . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.06. Voting by Ballot . . . . . . . . . . . . . . . . . . . . 3
Section 1.07. Adjournment. . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.08. Proxies. . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.09. Organization; Procedure. . . . . . . . . . . . . . . . . 4
Section 1.10. Consent of Stockholders in Lieu of Meeting . . . . . . . 4
ARTICLE II. BOARD OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . 5
Section 2.01. General Powers . . . . . . . . . . . . . . . . . . . . . 5
Section 2.02. Number and Term of Office. . . . . . . . . . . . . . . . 5
Section 2.03. Election of Directors. . . . . . . . . . . . . . . . . . 7
Section 2.04. Annual and Regular Meetings. . . . . . . . . . . . . . . 7
Section 2.05. Special Meetings; Notice . . . . . . . . . . . . . . . . 8
Section 2.06. Quorum; Voting . . . . . . . . . . . . . . . . . . . . . 8
Section 2.07. Adjournment. . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.08. Action Without a Meeting . . . . . . . . . . . . . . . . 8
Section 2.09. Regulations; Manner of Acting. . . . . . . . . . . . . . 8
Section 2.10. Action by Telephonic Communications. . . . . . . . . . . 9
Section 2.11. Resignations . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.12. Removal of Directors . . . . . . . . . . . . . . . . . . 9
Section 2.13. Vacancies and Newly Created Directorships. . . . . . . 9
Section 2.14. Compensation . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.15. Reliance on Accounts and Reports, etc. . . . . . . . . . 10
ARTICLE III. EXECUTIVE COMMITTEE AND OTHER COMMITTEES . . . . . . . . . . 11
Section 3.01. How Constituted. . . . . . . . . . . . . . . . . . . . . 11
Section 3.02. Powers . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.03. Proceedings. . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.04. Quorum and Manner of Acting. . . . . . . . . . . . . . . 13
Section 3.05. Action by Telephonic Communications. . . . . . . . . . . 14
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 3.06. Absent or Disqualified Members of Additional Committees. 14
Section 3.07. Resignations . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.08. Removal. . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.09. Vacancies. . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IV. OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.01. Number . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.02. Election . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.03. Salaries . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.04. Removal and Resignation; Vacancies . . . . . . . . . . . 15
Section 4.05. Authority and Duties of Officers . . . . . . . . . . . . 15
Section 4.06. The President and Chief Executive Officer. . . . . . . . 16
Section 4.07. The Chief Operating Officer. . . . . . . . . . . . . . . 17
Section 4.08. The Vice Presidents. . . . . . . . . . . . . . . . . . . 17
Section 4.09. The Secretary. . . . . . . . . . . . . . . . . . . . . . 17
Section 4.10. The Chief Financial Officer. . . . . . . . . . . . . . . 18
Section 4.11. The Treasurer. . . . . . . . . . . . . . . . . . . . . . 19
Section 4.12. Additional Officers. . . . . . . . . . . . . . . . . . . 20
Section 4.13. Security . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE V. CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.01. Certificates of Stock. . . . . . . . . . . . . . . . . . 20
Section 5.02. Signatures; Facsimile. . . . . . . . . . . . . . . . . . 21
Section 5.03. Lost, Stolen or Destroyed Certificates . . . . . . . . . 21
Section 5.04. Transfer of Stock. . . . . . . . . . . . . . . . . . . . 21
Section 5.05. Record Date. . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.06. Registered Stockholders. . . . . . . . . . . . . . . . . 23
Section 5.07. Transfer Agent and Registrar . . . . . . . . . . . . . . 23
ARTICLE VI. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.01. Nature of Indemnity. . . . . . . . . . . . . . . . . . . 23
Section 6.02. Successful Defense . . . . . . . . . . . . . . . . . . . 25
Section 6.03. Determination That Indemnification Is Proper . . . . . . 25
Section 6.04. Advance Payment of Expenses. . . . . . . . . . . . . . . 25
Section 6.05. Procedure for Indemnification of Directors and
Officers . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.06. Survival; Preservation of Other Rights . . . . . . . . . 26
Section 6.07. Insurance. . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.08. Severability . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.09. Definitions. . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VII. OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.01. Registered Office. . . . . . . . . . . . . . . . . . . . 28
Section 7.02. Other Offices. . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE VIII. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . 28
Section 8.01. Dividends. . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.02. Reserves . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 8.03. Execution of Instruments . . . . . . . . . . . . . . . . 29
Section 8.04. Corporate Indebtedness . . . . . . . . . . . . . . . . . 29
Section 8.05. Deposits . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.06. Checks . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.07. Sale, Transfer, etc. of Securities . . . . . . . . . . . 30
Section 8.08. Voting as Stockholder. . . . . . . . . . . . . . . . . . 31
Section 8.09. Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.10. Seal . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.11. Books and Records; Inspection. . . . . . . . . . . . . . 31
Section 8.12. Definitions. . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IX. AMENDMENT OF BY-LAWS. . . . . . . . . . . . . . . . . . . . . 32
Section 9.01. Amendment. . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE X. CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 10.01. Construction . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
iii
<PAGE>
RIC HOLDING, INC.
RESTATED BY-LAWS
As amended effective as of October 8, 1996
Certain defined terms used herein without definition shall have the
meanings set forth in Section 8.12.
ARTICLE I.
STOCKHOLDERS
Section 1.01. ANNUAL MEETINGS. The annual meeting of the stockholders
of the Corporation for the election of directors and for the transaction of
such other business as properly may come before such meeting shall be held at
such place, either within or without the State of Delaware, and at 10:00 a.m.
local time on the first Tuesday in May (or, if such day is a legal holiday,
then on the next succeeding business day), or at such other date and hour, as
may be fixed from time to time by resolution of the Board of Directors and
set forth in the notice or waiver of notice of the meeting.
[Sections 211(a), (b).](1)
Section 1.02. SPECIAL MEETINGS. Special meetings of the stockholders
may be called at any time by the Chairman or by the Board of Directors. A
special meeting shall be called by (subject to Section 4.06) the President
and Chief Executive Officer or by the Secretary, immediately upon receipt of
a written request therefor by stockholders holding in the aggregate not less
than a majority of the outstanding shares of the Corporation at the time
entitled to vote at any meeting of the stockholders. If such officers or the
Board of Directors shall fail to call such meeting within 20 days after
receipt of such request, any stockholder executing such request may call such
meeting. Such special meetings of the stockholders shall be held at such
places, within or without the State of Delaware, as
- ------------
(1) Citations are to the General Corporation Law of the State of Delaware
as in effect on August 15, 1995 (the "DGCL"), and are inserted for
reference only, and do not constitute a part of the By-Laws.
<PAGE>
shall be specified in the respective notices or waivers of notice thereof.
[Section 211(d).]
Section 1.03. NOTICE OF MEETINGS; WAIVER. The Secretary or any
Assistant Secretary shall cause written notice of the place, date and hour of
each meeting of the stockholders, and, in the case of a special meeting, the
purpose or purposes for which such meeting is called, to be given personally
or by mail, not less than ten nor more than sixty days prior to the meeting,
to each stockholder of record entitled to vote at such meeting. If such
notice is mailed, it shall be deemed to have been given to a stockholder when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the record of stockholders of the
Corporation, or, if he shall have filed with the Secretary of the Corporation
a written request that notices to him be mailed to some other address, then
directed to him at such other address. Such further notice shall be given as
may be required by law.
No notice of any meeting of stockholders need be given to any
stockholder who submits a signed waiver of notice, whether before or after
the meeting. Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the stockholders need be specified in a
written waiver of notice. The attendance of any stockholder at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends a meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
[Sections 222, 229.]
Section 1.04. QUORUM. Except as otherwise required by law or by the
Certificate of Incorporation, the presence in person or by proxy of the
holders of record of a majority of the shares entitled to vote at a meeting
of stockholders shall constitute a quorum for the transaction of business at
such meeting. [Section 216.]
Section 1.05. VOTING. If, pursuant to Section 5.05 of these By-Laws, a
record date has been fixed, every holder of record of shares entitled to vote
at a meeting of stockholders shall be entitled to one vote for each share
outstanding in his name on the books of the Corporation at the close of
business on such record date. If no record date has been fixed, then every
holder of record of shares entitled to vote at a meeting of stockholders
shall be
2
<PAGE>
entitled to one vote for each share of stock standing in his name on the
books of the Corporation at the close of business on the day next preceding
the day on which notice of the meeting is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting
is held. Except as otherwise required by law or by the Certificate of
Incorporation, the vote of a majority of the shares represented in person or
by proxy at any meeting at which a quorum is present shall be sufficient for
the transaction of any business at such meeting. [Sections 212(a), 216.]
Section 1.06. VOTING BY BALLOT. No vote of the stockholders need be
taken by written ballot or conducted by Inspectors of Elections unless
otherwise required by law. Any vote which need not be taken by ballot may be
conducted in any manner approved by the meeting.
Section 1.07. ADJOURNMENT. If a quorum is not present at any meeting of
the stockholders, the stockholders present in person or by proxy shall have
the power to adjourn any such meeting from time to time until a quorum is
present. Notice of any adjourned meeting of the stockholders of the
Corporation need not be given if the place, date and hour thereof are
announced at the meeting at which the adjournment is taken, provided,
however, that if the adjournment is for more than thirty days, or if after
the adjournment a new record date for the adjourned meeting is fixed pursuant
to Section 5.05 of these By-Laws, a notice of the adjourned meeting,
conforming to the requirements of Section 1.03 hereof, shall be given to each
stockholder of record entitled to vote at such meeting. At any adjourned
meeting at which a quorum is present, any business may be transacted that
might have been transacted on the original date of the meeting.
[Section 222(c).]
Section 1.08. PROXIES. Any stockholder entitled to vote at any meeting
of the stockholders or to express consent to or dissent from corporate action
without a meeting may authorize another person or persons to vote at any such
meeting and express such consent or dissent for him by proxy. A stockholder
may authorize a valid proxy by executing a written instrument signed by such
stockholder, or by causing his or her signature to be affixed to such writing
by any reasonable means including, but not limited to, by facsimile
signature, or by transmitting or authorizing the transmission of a telegram,
cablegram or other means of electronic transmission to the person designated
as the holder of the proxy, a proxy solicitation
3
<PAGE>
firm or a like authorized agent. No such proxy shall be voted or acted upon
after the expiration of three years from the date of such proxy, unless such
proxy provides for a longer period. Every proxy shall be revocable at the
pleasure of the stockholder executing it, except in those cases where
applicable law provides that a proxy shall be irrevocable. A stockholder may
revoke any proxy which is not irrevocable by attending the meeting and voting
in person or by filing an instrument in writing revoking the proxy or by
filing another duly executed proxy bearing a later date with the Secretary.
Proxies by telegram, cablegram or other electronic transmission must either
set forth or be submitted with information from which it can be determined
that the telegram, cablegram or other electronic transmission was authorized
by the stockholder. Any copy, facsimile telecommunication or other reliable
reproduction of a writing or transmission created pursuant to this section
may be substituted or used in lieu of the original writing or transmission
for any and all purposes for which the original writing or transmission could
be used, provided that such copy, facsimile telecommunication or other
reproduction shall be a complete reproduction of the entire original writing
or transmission. [Sections 212(b), (c), (d), (e).]
Section 1.09. ORGANIZATION; PROCEDURE. At every meeting of stockholders
the presiding officer shall be (subject to Section 4.06) the President and
Chief Executive Officer or, in the event of his absence, disability or other
inability so to act, a presiding officer chosen by a majority of the
stockholders present in person or by proxy. The Secretary, or in the event of
his absence or disability, the Assistant Secretary, if any, or if there be no
Assistant Secretary, in the absence of the Secretary, an appointee of the
presiding officer, shall act as Secretary of the meeting. The order of
business and all other matters of procedure at every meeting of stockholders
may be determined by such presiding officer.
Section 1.10. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. To the
fullest extent permitted by law, whenever the vote of stockholders at a
meeting thereof is required or permitted to be taken for or in connection
with any corporate action, such action may be taken without a meeting,
without prior notice and without a vote of stockholders, if a consent or
consents in writing, setting forth the action so taken, shall be signed by
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such
4
<PAGE>
action at a meeting at which all shares entitled to vote thereon were present
and voted and shall be delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of business,
or an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested.
Every written consent shall bear the date of signature of each
stockholder or member who signs the consent and no written consent shall be
effective to take the corporate action referred to therein unless, within
sixty days of the earliest dated consent delivered in the manner required by
law to the Corporation, written consents signed by a sufficient number of
holders or members to take action are delivered to the Corporation by
delivery to its registered office in the State of Delaware, its principal
place of business, or an officer or agent of the Corporation having custody
of the book in which proceedings of meetings of stockholders or members are
recorded. Delivery made to the Corporation's registered office shall be by
hand or by certified or registered mail, return receipt requested.
[Section 228(a), (c).]
ARTICLE II.
BOARD OF DIRECTORS
Section 2.01. GENERAL POWERS. Except as may otherwise be provided by
law, by the Certificate of Incorporation or by these By-Laws, the property,
affairs and business of the Corporation shall be managed by or under the
direction of the Board of Directors and the Board of Directors may exercise all
the powers of the Corporation. [Section 141(a).]
Section 2.02. NUMBER AND TERM OF OFFICE. Certain stockholders of
Riverwood Holding, the sole stockholder of the Corporation, shall have rights
and obligations with respect to the nomination and election of Directors of the
Corporation as set forth in the Stockholders Agreement during the term of such
agreement. The number of Directors constituting the entire Board of Directors
shall be at least 10 and no more than 14, which number may be modified from time
to time by resolution of the Board of Directors, but in no event shall the
number of Directors be less than one,
5
<PAGE>
PROVIDED that for so long as Section 1 of the Stockholders Agreement is in
effect the number of Directors shall in any event be automatically increased
or decreased in the manner set forth below:
(a) If and to the extent permitted by applicable law, (1) upon the
termination for any reason of any Nominating Party's right to nominate one or
more persons to serve as a Director or Directors of the Corporation
(including any temporary termination attributable to the waiver by such
Nominating Party of its rights under the Stockholders Agreement), such
Director or Directors shall be deemed to be removed without cause in
accordance with Section 141(k) of the DGCL and the number of Directors shall
be automatically reduced by such number of Directors that the Nominating
Party would otherwise be entitled to nominate (or such lesser number the
Nominating Party had previously elected to nominate) and (2) upon the request
of a Nominating Party to nominate one or more Directors pursuant to Section 1
of the Stockholders Agreement, the number of Directors of the Corporation
shall be automatically increased by such number of Directors as such
Nominating Party is entitled to nominate (or such lesser number the
Nominating Party elects to nominate), PROVIDED that, if any such nominee is
an Unaffiliated Nominee, the number of Directors shall not be so increased
unless and until the Board of Directors of the Corporation shall have
approved such Unaffiliated Nominee.
(b) During any period in which any Nominating Party has, and shall have
exercised, the right to nominate a Director as provided herein, in the event
of any vacancy or vacancies in the Board of Directors created by the death,
disability, retirement, resignation or removal, with or without cause, of a
Director so nominated, (1) the Board will request such Nominating Party to
nominate a candidate to be appointed by such Board to fill such vacancy or
(2) in the event that a candidate to fill such vacancy is to be elected at
the annual meeting of stockholders of the Corporation, such Nominating Party
shall have the right to nominate the individual to fill such vacancy, and the
provisions of Section 1(b) of the Stockholders Agreement shall apply with
respect to the nomination and election of such nominee to fill such vacancy.
(c) Each Director (whenever elected) shall hold office until his
successor has been duly elected and qualified, or until his earlier death,
resignation or removal. [Section 141(b).]
6
<PAGE>
(d) During the term of the Stockholders Agreement, the Chairman of the
Board shall be selected by the Directors from one of the Directors nominated
pursuant to the Stockholders Agreement by the CDR Fund. The Chairman of the
Board shall not be an officer of the Corporation, except that the Chairman
may act as the chief executive officer of the Corporation if elected to that
position by the Board of Directors, and shall preside at all meetings of the
Board of Directors at which he is present. [Section 141(b).]
Section 2.03. ELECTION OF DIRECTORS. Except as otherwise provided in
Sections 2.12 and 2.13 of these By-Laws, the Directors shall be elected at
each annual meeting of the stockholders in a manner which complies with the
provisions of Section 2.02 of these By-Laws, and Section 1 of the
Stockholders Agreement during the term of such agreement. If the annual
meeting for the election of Directors is not held on the date designated
therefor, the Directors shall cause the meeting to be held as soon thereafter
as convenient. At each meeting of the stockholders for the election of
Directors, provided a quorum is present, the Directors shall be elected by a
plurality of the votes validly cast in such election.
[Sections 211(b), (c), 216.]
Section 2.04. ANNUAL AND REGULAR MEETINGS. The annual meeting of the
Board of Directors for the purpose of electing officers and for the
transaction of such other business as may come before the meeting shall be
held as soon as possible following adjournment of the annual meeting of the
stockholders at the place of such annual meeting of the stockholders. Notice
of such annual meeting of the Board of Directors need not be given. The
Board of Directors from time to time may by resolution provide for the
holding of regular meetings and fix the place (which may be within or without
the State of Delaware) and the date and hour of such meetings. Notice of
regular meetings need not be given, provided, however, that if the Board of
Directors shall fix or change the time or place of any regular meeting,
notice of such action shall be mailed promptly, or sent by telegram, radio or
cable, to each Director who shall not have been present at the meeting at
which such action was taken, addressed to him at his usual place of business,
or shall be delivered to him personally. Notice of such action need not be
given to any Director who attends the first regular meeting after such action
is taken without protesting the lack of notice to him, prior to or at the
commencement of such meeting, or to any Director who submits
7
<PAGE>
a signed waiver of notice, whether before or after such meeting.
[Sections 141(g), 229.]
Section 2.05. SPECIAL MEETINGS; NOTICE. Special meetings of the Board
of Directors shall be held whenever called by the Chairman of the Board or by
a majority of the Directors then in office, at such place (within or without
the State of Delaware), date and hour as may be specified in the respective
notices or waivers of notice of such meetings. Special meetings of the Board
of Directors may be called on 24 hours' notice, if notice is given to each
Director personally or by telephone or telegram, or on five days' notice, if
notice is mailed to each Director, addressed to him at his usual place of
business. Notice of any special meeting need not be given to any Director who
attends such meeting without protesting the lack of notice to him, prior to
or at the commencement of such meeting, or to any Director who submits a
signed waiver of notice, whether before or after such meeting, and any
business may be transacted thereat. [Sections 141(g), 229.]
Section 2.06. QUORUM; VOTING. At all meetings of the Board of
Directors, the presence of a majority of the total then authorized number of
Directors shall constitute a quorum for the transaction of business. Except
as otherwise required by law, the vote of a majority of the Directors present
at any meeting at which a quorum is present shall be the act of the Board of
Directors. [Section 141(b).]
Section 2.07. ADJOURNMENT. A majority of the Directors present, whether
or not a quorum is present, may adjourn any meeting of the Board of Directors
to another time or place. No notice need be given of any adjourned meeting
unless the time and place of the adjourned meeting are not announced at the
time of adjournment, in which case notice conforming to the requirements of
Section 2.05 shall be given to each Director.
Section 2.08. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if all members of the Board of Directors consent thereto in
writing, and such writing or writings are filed with the minutes of
proceedings of the Board of Directors. [Section 141(f).]
Section 2.09. REGULATIONS; MANNER OF ACTING. To the extent consistent
with applicable law, the Certificate of Incorporation and these By-Laws, the
Board of Directors
8
<PAGE>
may adopt such rules and regulations for the conduct of meetings of the Board
of Directors and for the management of the property, affairs and business of
the Corporation as the Board of Directors may deem appropriate. The
Directors shall act only as a Board, and the individual Directors shall have
no power as such.
Section 2.10. ACTION BY TELEPHONIC COMMUNICATIONS. Members of the
Board of Directors may participate in a meeting of the Board of Directors by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this provision shall constitute
presence in person at such meeting. [Section 141(i).]
Section 2.11. RESIGNATIONS. Any Director may resign at any time by
delivering a written notice of resignation, signed by such Director, to the
Chairman of the Board and a copy of such notice to the Secretary. Unless
otherwise specified therein, such resignation shall take effect upon
delivery. [Section 141(b).]
Section 2.12. REMOVAL OF DIRECTORS. Any Director may be removed at any
time, either for or without cause, upon the affirmative vote of the holders
of a majority of the outstanding shares of stock of the Corporation entitled
to vote for the election of such Director, cast at a special meeting of
stockholders called for the purpose, PROVIDED that so long as Section 1(d) of
the Stockholders Agreement is in effect, (a) no such removal without cause
shall occur except as provided in such Section 1(d) and (b) in the event of
the removal of a Director nominated by a Nominating Party for cause, the
provisions of Section 1(d) of the Stockholders Agreement shall apply with
respect to the filling of the vacancy created thereby. Any vacancy in the
Board of Directors caused by any such removal may be filled at such meeting
by the stockholders entitled to vote for the election of the Director so
removed in accordance with Section 2.13 hereof. If such stockholders do not
fill such vacancy at such meeting (or in the written instrument effecting
such removal, if such removal was effected by consent without a meeting),
such vacancy may be filled in the manner provided in Section 2.13 of these
By-Laws. [Section 141(k).]
Section 2.13. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. If any
vacancies shall occur in the Board of Directors, by reason of death,
resignation, removal or
9
<PAGE>
otherwise, or if the authorized number of Directors shall be increased, the
Directors then in office shall continue to act, and such vacancies and newly
created directorships may be filled by a majority of the Directors then in
office, although less than a quorum, PROVIDED that no such vacancy in the
Board of Directors shall be filled in a manner which fails to comply with the
requirements of Section 2.02 of these By-Laws, and Section 1(d) of the
Stockholders Agreement during the term of such agreement, and PROVIDED,
FURTHER, that the Board of Directors shall from time to time make such
requests for nominations of individuals to fill vacancies in the Board of
Directors as shall be necessary to cause compliance with the requirements of
such Section 2.02, and Section 1(d) of the Stockholders Agreement during the
term of such agreement. A Director elected to fill a vacancy or a newly
created directorship shall hold office until his successor has been elected
and qualified or until his earlier death, resignation or removal. Any such
vacancy or newly created directorship may also be filled at any time by vote
of the stockholders, in the manner provided in Section 1(d) of the
Stockholders Agreement during the term of such agreement.
[Sections 141(b), 223.]
Section 2.14. COMPENSATION. The amount, if any, which each Director
shall be entitled to receive as compensation for his services as such shall
be fixed from time to time by resolution of the Board of Directors, PROVIDED
that (a) no director who is an officer or employee of CDR at any time that
CDR is providing consulting services to the Corporation or one or more of its
subsidiaries and (b) no director who is an officer or employee of the
Corporation, shall be entitled to receive any compensation for his or her
services as a Director (although such Director shall be entitled to be
reimbursed for any reasonable out-of-pocket expenses incurred in connection
with his or her services as a Director). [Section 141(h).]
Section 2.15. RELIANCE ON ACCOUNTS AND REPORTS, ETC. A Director, or a
member of any Committee designated by the Board of Directors shall, in the
performance of his duties, be fully protected in relying in good faith upon
the records of the Corporation and upon information, opinions, reports or
statements presented to the Corporation by any of the Corporation's officers
or employees, or Committees designated by the Board of Directors, or by any
other person as to the matters the member reasonably believes are within such
other person's professional or expert competence and who has been selected
with reasonable care by or on behalf of the Corporation. [Section 141(e).]
10
<PAGE>
ARTICLE III.
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 3.01. HOW CONSTITUTED. The Board of Directors, by resolution
adopted by a majority of the whole Board, (a) shall designate an Executive
Committee, a Compensation and Benefits Committee and an Audit Committee
(each, a "Standing Committee" and, collectively, the "Standing Committees")
and (b) may designate one or more additional committees (each, an "Additional
Committee" and, together with the Standing Committees, the "Committees").
During the term of the Stockholders Agreement, each Standing Committee shall
consist of such number of Directors as provided by this Section 3.01. Each
Additional Committee shall consist of such number of Directors as from time
to time may be fixed by the Board of Directors. The Executive Committee
shall consist of the chief executive officer of the Corporation and four
other Directors selected in the manner provided in Section 2 of the
Stockholders Agreement. One of the Directors nominated by the CDR Fund (as
provided in Section 2(a) of the Stockholders Agreement) shall serve as the
Chairman of the Executive Committee. Each of the Compensation and Benefits
Committee and the Audit Committee shall consist of five Directors who shall
be selected in the manner provided in Section 2 of the Stockholders
Agreement. Any Additional Committee may be abolished or re-designated from
time to time by the Board of Directors. The Board of Directors may designate
one or more Directors as alternate members of any Additional Committee, who
may replace any absent or disqualified member or members at any meeting of
Additional Committee. Members of any Standing Committee or any Additional
Committee shall (and alternate members, if any, of any Additional Committee
may) be designated at the annual meeting of the Board of Directors. Each
member of any Standing Committee or any Additional Committee (and any
alternate member of any Additional Committee) (whether designated at an
annual meeting of the Board of Directors or to fill a vacancy or otherwise)
shall hold office until his successor shall have been designated or until he
shall cease to be a Director, or until his earlier death, resignation or
removal. [Section 141(b),(c).]
Section 3.02. POWERS. During the intervals between the meetings of the
Board of Directors, the Executive Committee, except as otherwise provided in
this section, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the
11
<PAGE>
property, affairs and business of the Corporation. Each such other
Committee, except as otherwise provided in this section, shall have and may
exercise such powers of the Board of Directors as may be provided by
resolution or resolutions of the Board of Directors. Neither the Executive
Committee nor any such other Committee shall have the power or authority:
(a) to amend the Certificate of Incorporation (except that a
Committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of
Directors as provided in Section 151(a) of the DGCL, fix the designations
and any of the preferences or rights of such shares relating to dividends,
redemption, dissolution, any distribution of assets of the Corporation or
the conversion into, or the exchange of such shares for, shares of any
other class or classes or any other series of the same or any other class
or classes of stock of the Corporation or fix the number of shares of any
series of stock or authorize the increase or decrease of the shares of any
series);
(b) to adopt an agreement of merger or consolidation or a certificate
of ownership or merger;
(c) to recommend to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets;
(d) to recommend to the stockholders a dissolution of the Corporation
or a revocation of a dissolution;
(e) to declare a dividend;
(f) to authorize the issuance of stock;
(g) to remove the President and Chief Executive Officer of the
Corporation or a Director;
(h) (i) to authorize the Corporation to enter into or amend any
agreement for the borrowing of funds which provides for additional
indebtedness in excess of $25 million or (ii) to authorize a material
modification of any existing facility, unless, in the Executive Committee's
good faith judgment, such modification is not adverse to the Corporation;
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(i) to authorize the Corporation to enter into any guarantee of
indebtedness in excess of $25 million;
(j) to authorize any new compensation or benefit program;
(k) to appoint or discharge the Corporation's independent public
accountants;
(l) to authorize the annual operating plan, annual capital
expenditure plan and strategic plan;
(m) to abolish or usurp the authority of the Board of Directors; or
(n) to amend these By-Laws of the Corporation.
The Executive Committee shall have, and any such other Committee may be granted
by the Board of Directors, power to authorize the seal of the Corporation to be
affixed to any or all papers which may require it. [Section 141(c).]
Section 3.03. PROCEEDINGS. Each such Committee may fix its own rules of
procedure and may meet at such place (within or without the State of
Delaware), at such time and upon such notice, if any, as it shall determine
from time to time. Each such Committee shall keep minutes of its proceedings
and shall present a report of such proceedings, including the minutes
thereof, to the Board of Directors at the meeting of the Board of Directors
next following any such proceedings.
Section 3.04. QUORUM AND MANNER OF ACTING. Except as may be otherwise
provided in the resolution creating any Additional Committee, at all meetings
of any Committee the presence of members (or alternate members) constituting
a majority of the total then authorized membership of such Committee shall
constitute a quorum for the transaction of business. The act of the majority
of the members present at any meeting at which a quorum is present shall be
the act of such Committee. Any action required or permitted to be taken at
any meeting of any such Committee may be taken without a meeting, if all
members of such Committee shall consent to such action in writing and such
writing or writings are filed with the minutes of the proceedings of the
Committee. The members of any such Committee shall act only as a Committee,
and the individual members of such Committee shall have no power as such.
[Section 141(b), (c), (f).]
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Section 3.05. ACTION BY TELEPHONIC COMMUNICATIONS. Members of any
Committee designated by the Board of Directors may participate in a meeting
of such Committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this provision shall
constitute presence in person at such meeting. [Section 141(i).]
Section 3.06. ABSENT OR DISQUALIFIED MEMBERS OF ADDITIONAL COMMITTEES.
In the absence or disqualification of a member of any Additional Committee,
the member or members thereof present at any meeting and not disqualified
from voting, whether or not he or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member. [Section 141(c).]
Section 3.07. RESIGNATIONS. Any member (and any alternate member) of
any Committee may resign at any time by delivering a written notice of
resignation, signed by such member, to the Chairman or (unless the Chairman
is then acting as the chief executive officer of the Corporation) the
President and Chief Executive Officer. Unless otherwise specified therein,
such resignation shall take effect upon delivery. [Section 141(b).]
Section 3.08. REMOVAL. Any member (and any alternate member) of any
Committee may be removed at any time, either for or without cause, by
resolution adopted by a majority of the whole Board of Directors; PROVIDED
that no such action shall be taken with respect to any member of any Standing
Committee that is inconsistent with the provisions of Sections 1(d) and 2 of
the Stockholders Agreement during the term of such agreement.
Section 3.09. VACANCIES. If any vacancy shall occur in any Committee,
by reason of disqualification, death, resignation, removal or otherwise, the
remaining members (and any alternate members) shall continue to act, and any
such vacancy may be filled by the Board of Directors; PROVIDED that no
vacancy in any Committee shall be filled in a manner which fails to comply
with the provisions of Section 2 of the Stockholders Agreement during the
term of such agreement.
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ARTICLE IV.
OFFICERS
Section 4.01. NUMBER. The officers of the Corporation shall be chosen
by the Board of Directors and shall be a President and Chief Executive
Officer, a Chief Operating Officer, a Chief Financial Officer, one or more
Vice Presidents, a Secretary and a Treasurer. The Board of Directors also
may elect one or more Assistant Secretaries and Assistant Treasurers in such
numbers as the Board of Directors may determine. The Board of Directors also
may elect the Chairman to act as the chief executive officer of the
Corporation as provided in Section 4.06. Any number of offices may be held
by the same person. No officer need be a Director of the Corporation.
[Section 142(a), (b).]
Section 4.02. ELECTION. Unless otherwise determined by the Board of
Directors, the officers of the Corporation shall be elected by the Board of
Directors at the annual meeting of the Board of Directors, and shall be
elected to hold office until the next succeeding annual meeting of the Board
of Directors. In the event of the failure to elect officers at such annual
meeting, officers may be elected at any regular or special meeting of the
Board of Directors. Each officer shall hold office until his successor has
been elected and qualified, or until his earlier death, resignation or
removal. [Section 142(b).]
Section 4.03. SALARIES. The salaries of all officers and agents of the
Corporation shall be fixed by the Board of Directors.
Section 4.04. REMOVAL AND RESIGNATION; VACANCIES. Any officer may be
removed for or without cause at any time by the Board of Directors. Any
officer may resign at any time by delivering a written notice of resignation,
signed by such officer, to the Board of Directors, the Chairman or (unless
the Chairman shall then be acting as the chief executive officer of the
Corporation) the President and Chief Executive Officer. Unless otherwise
specified therein, such resignation shall take effect upon delivery. Any
vacancy occurring in any office of the Corporation by death, resignation,
removal or otherwise, shall be filled by the Board of Directors.
[Section 142(b), (e).]
Section 4.05. AUTHORITY AND DUTIES OF OFFICERS. The officers of the
Corporation shall have such authority and shall exercise such powers and
perform such duties as
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may be specified in these By-Laws, except that in any event each officer
shall exercise such powers and perform such duties as may be required by law.
[Section 142(a).]
Section 4.06. THE PRESIDENT AND CHIEF EXECUTIVE OFFICER. The President
and Chief Executive Officer shall, subject to the direction of, and subject
to general or specific resolutions approved by, the Board of Directors, (a)
preside at all meetings of the stockholders at which he is present, and be
the chief executive officer of the Corporation, (b) have general control and
supervision of the policies and operations of the Corporation, see that all
orders and resolutions of the Board of Directors are carried into effect, and
report to the Board of Directors, (c) manage and administer the Corporation's
business and affairs and perform all duties and exercise all powers usually
pertaining to the office of a chief executive officer of a corporation, (d)
have the authority to sign, in the name and on behalf of the Corporation,
checks, orders, contracts, leases, notes, drafts and other documents and
instruments in connection with the business of the Corporation, and together
with the Secretary or an Assistant Secretary, conveyances of real estate and
other documents and instruments to which the seal of the Corporation is
affixed, (e) have the authority to cause the employment or appointment of
such employees and agents of the Corporation as the conduct of the business
of the Corporation may require, to fix their compensation, and to remove or
suspend any employee or agent elected or appointed by the President and Chief
Executive Officer or the Board of Directors, and (f) have such other powers
as are contemplated by the other provisions of these By-Laws. The President
and Chief Executive Officer shall perform such other duties and have such
other powers as the Board of Directors or the Chairman may from time to time
prescribe. Notwithstanding the foregoing, and whether or not the President
and Chief Executive Officer shall then be in office, (i) the Board of
Directors may elect the Chairman to act as the chief executive officer of the
Corporation, and (except to the extent required by the General Corporation
Law of the State of Delaware) may grant and delegate to the Chairman, acting
in such capacity, any or all of the authority, powers and duties, that
otherwise may be held, exercised or performed by the President and Chief
Executive Officer as provided in these By-Laws, and (ii) in the event that
the Board of Directors elects the Chairman to act as the chief executive
officer of the Corporation, the President and Chief Executive Officer shall
no longer be the chief executive officer of the Corporation, and shall not
hold, exercise or
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perform any authority, powers or duties as an officer of the Corporation
other than as the Board of Directors or the Chairman may prescribe.
Section 4.07. THE CHIEF OPERATING OFFICER. The Chief Operating Officer
shall be the chief operating officer of the Corporation and shall perform, in
general, all duties incident to the office of Chief Operating Officer and
shall be responsible for the operations of the Corporation, including
manufacturing, engineering, marketing, distribution, sales, labor relations
and administrative responsibilities and such other duties as may be specified
in these By-Laws or as may be assigned to him from time to time by (subject
to Section 4.06) the President and Chief Executive Officer (or, if the
Chairman is then acting as chief executive officer of the Corporation, by the
Chairman). The Chief Operating Officer shall report to the President and
Chief Executive Officer (or, if the Chairman is then acting as chief
executive officer of the Corporation, to the Chairman). In the absence of
the President and Chief Executive Officer (or, if the Chairman is then acting
as chief executive officer of the Corporation, the Chairman), the duties of
such officer in such capacity shall be performed and the powers of such
officer in such capacity may be exercised by the Chief Operating Officer;
subject in any case to review and superseding action by (subject to Section
4.06) the President and Chief Executive Officer (or, if the Chairman is then
acting as chief executive officer of the Corporation, by the Chairman).
Section 4.08. THE VICE PRESIDENTS. Each Vice President shall perform
such duties and exercise such powers as may be assigned to him from time to
time by (subject to Section 4.06) the President and Chief Executive Officer
(or, if the Chairman is then acting as chief executive officer of the
Corporation, by the Chairman).
Section 4.09. THE SECRETARY. The Secretary shall have the following
powers and duties:
(a) He shall keep or cause to be kept a record of all the proceedings
of the meetings of the stockholders and of the Board of Directors in books
provided for that purpose. [Section 142(a).]
(b) He shall cause all notices to be duly given in accordance with
the provisions of these By-Laws and as required by law.
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(c) Whenever any Committee shall be appointed pursuant to a
resolution of the Board of Directors, he shall furnish a copy of such
resolution to the members of such Committee.
(d) He shall be the custodian of the records and of the seal of the
Corporation and cause such seal (or a facsimile thereof) to be affixed to
all certificates representing shares of the Corporation prior to the
issuance thereof and to all instruments the execution of which on behalf of
the Corporation under its seal shall have been duly authorized in
accordance with these By-Laws, and when so affixed he may attest the same.
(e) He shall properly maintain and file all books, reports,
statements, certificates and all other documents and records required by
law, the Certificate of Incorporation or these By-Laws.
(f) He shall have charge of the stock books and ledgers of the
Corporation and shall cause the stock and transfer books to be kept in such
manner as to show at any time the number of shares of stock of the
Corporation of each class issued and outstanding, the names (alphabetically
arranged) and the addresses of the holders of record of such shares, the
number of shares held by each holder and the date as of which each became
such holder of record.
(g) He shall sign (unless the Treasurer, an Assistant Treasurer or
Assistant Secretary shall have signed) certificates representing shares of
the Corporation the issuance of which shall have been authorized by the
Board of Directors.
(h) He shall perform, in general, all duties incident to the office
of secretary and such other duties as may be specified in these By-Laws or
as may be assigned to him from time to time by the Board of Directors or
(subject to Section 4.06) the President and Chief Executive Officer (or, if
the Chairman is then acting as chief executive officer of the Corporation,
the Chairman).
Section 4.10. THE CHIEF FINANCIAL OFFICER. The Chief Financial Officer
shall be the chief financial officer of the Corporation and shall have the
following powers and duties:
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(a) He shall have charge and supervision over and be responsible for
the moneys, securities, receipts and disbursements of the Corporation, and
shall keep or cause to be kept full and accurate records of all receipts of
the Corporation.
(b) He shall render to the Board of Directors or the Audit Committee,
whenever requested, a statement of the financial condition of the
Corporation and of all his transactions as Chief Financial Officer, and
render a full financial report at the annual meeting of the stockholders,
if called upon to do so.
(c) He shall be empowered from time to time to require from all
officers or agents of the Corporation reports or statements giving such
information as he may desire with respect to any and all financial
transactions of the Corporation.
(d) He shall perform, in general, all duties incident to the office
of chief financial officer and such other duties as may be specified in
these By-Laws or as may be assigned to him from time to time by the Board
of Directors or the Chairman of the Board.
(e) The Chief Financial Officer shall report to the President and
Chief Executive Officer (or, if the Chairman is then acting as chief
executive officer of the Corporation, to the Chairman).
Section 4.11. THE TREASURER. The Treasurer shall be the treasurer of
the Corporation and shall have the following powers and duties:
(a) He shall cause the moneys and other valuable effects of the
Corporation to be deposited in the name and to the credit of the
Corporation in such banks or trust companies or with such bankers or other
depositaries as shall be selected in accordance with Section 8.05 of these
By-Laws.
(b) He shall cause the moneys of the Corporation to be disbursed by
checks or drafts (signed as provided in Section 8.06 of these By-Laws) upon
the authorized depositaries of the Corporation and cause to be taken and
preserved proper vouchers for all moneys disbursed.
(c) He may sign (unless an Assistant Treasurer or the Secretary or an
Assistant Secretary shall have
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signed) certificates representing stock of the Corporation the issuance of
which shall have been authorized by the Board of Directors.
(d) He shall perform, in general, all duties incident to the office
of treasurer and such other duties as may be specified in these By-Laws or
as may be assigned to him from time to time by the Board of Directors or
the Chief Financial Officer, to whom he shall report.
Section 4.12. ADDITIONAL OFFICERS. The Board of Directors may appoint
such other officers and agents as it may deem appropriate, and such other
officers and agents shall hold their offices for such terms and shall
exercise such powers and perform such duties as may be determined from time
to time by the Board of Directors. The Board of Directors from time to time
may delegate to any officer or agent the power to appoint subordinate
officers or agents and to prescribe their respective rights, terms of office,
authorities and duties. Any such officer or agent may remove any such
subordinate officer or agent appointed by him, for or without cause.
[Section 142(a), (b).]
Section 4.13. SECURITY. The Board of Directors may require any
officer, agent or employee of the Corporation to provide security for the
faithful performance of his duties, in such amount and of such character as
may be determined from time to time by the Board of Directors.
[Section 142(c).]
ARTICLE V.
CAPITAL STOCK
Section 5.01. CERTIFICATES OF STOCK. The shares of the Corporation
shall be represented by certificates, provided that the Board of Directors
may provide by resolution or resolutions that some or all of any or all
classes or series of the stock of the Corporation shall be uncertificated
shares. Any such resolution shall not apply to shares represented by a
certificate until each certificate is surrendered to the Corporation.
Notwithstanding the adoption of such a resolution by the Board of Directors,
every holder of stock in the Corporation represented by certificates and upon
request every holder of uncertificated shares shall be entitled to have a
certificate signed by, or in the name of the Corporation, by (subject to
Section 4.06)
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the President and Chief Executive Officer (or, if the President and Chief
Executive Officer is not then empowered to do so pursuant to Section 4.06,
the Chairman) or a Vice President, and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary, representing the
number of shares registered in certificate form. Such certificate shall be
in such form as the Board of Directors may determine, to the extent
consistent with applicable law, the Certificate of Incorporation and these
By-Laws. [Section 158.]
Section 5.02. SIGNATURES; FACSIMILE. Any or all of such signatures on
the certificate may be a facsimile, engraved or printed, to the extent
permitted by law. In case any officer, transfer agent or registrar who has
signed, or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer, transfer agent or registrar at the date of
issue. [Section 158.]
Section 5.03. LOST, STOLEN OR DESTROYED CERTIFICATES. The Board of
Directors may direct that a new certificate be issued in place of any
certificate theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon delivery to the Board of Directors of an affidavit
of the owner or owners of such certificate, setting forth such allegation.
The Board of Directors may require the owner of such lost, stolen or
destroyed certificate, or his legal representative, to give the Corporation a
bond sufficient to indemnify it against any claim that may be made against it
on account of the alleged loss, theft or destruction of any such certificate
or the issuance of any such new certificate. [Section 167.]
Section 5.04. TRANSFER OF STOCK. Upon surrender to the Corporation or
the transfer agent of the Corporation of a certificate for shares, duly
endorsed or accompanied by appropriate evidence of succession, assignment or
authority to transfer, the Corporation shall issue a new certificate to the
person entitled thereto, cancel the old certificate and record the
transaction upon its books. Within a reasonable time after the transfer of
uncertificated stock, the Corporation shall send to the registered owner
thereof a written notice containing the information required to be set forth
or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of
the DGCL. Subject to the provisions of the Certificate of Incorporation and
these
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By-Laws, the Board of Directors may prescribe such additional rules and
regulations as it may deem appropriate relating to the issue, transfer and
registration of shares of the Corporation. [Section 151(f).]
Section 5.05. RECORD DATE. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a
record date, which record date shall not precede the date on which the
resolution fixing the record date is adopted by the Board of Directors, and
which shall not be more than sixty nor less than ten days before the date of
such meeting. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of
the meeting, provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
In order that the Corporation may determine the stockholders entitled to
consent to corporate action in writing without a meeting, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the board of
directors is required by law, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in the
State of Delaware, its principal place of business, or an officer or agent of
the Corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Delivery made to the Corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board of Directors and
prior action by the Board of Directors is required by law, the record date
for determining stockholders entitled to consent to corporate action in
writing without a meeting shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such prior action.
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In order that the Corporation may determine the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record
date is adopted, and which record date shall be not more than sixty days
prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto. [Section 213.]
Section 5.06. REGISTERED STOCKHOLDERS. Prior to due surrender of a
certificate for registration of transfer, the Corporation may treat the
registered owner as the person exclusively entitled to receive dividends and
other distributions, to vote, to receive notice and otherwise to exercise all
the rights and powers of the owner of the shares represented by such
certificate, and the Corporation shall not be bound to recognize any
equitable or legal claim to or interest in such shares on the part of any
other person, whether or not the Corporation shall have notice of such claim
or interests. Whenever any transfer of shares shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer if, when the certificates are presented to the Corporation for
transfer or uncertificated shares are requested to be transferred, both the
transferor and transferee request the Corporation to do so. [Section 159.]
Section 5.07. TRANSFER AGENT AND REGISTRAR. The Board of Directors may
appoint one or more transfer agents and one or more registrars, and may
require all certificates representing shares to bear the signature of any
such transfer agents or registrars.
ARTICLE VI.
INDEMNIFICATION
Section 6.01. NATURE OF INDEMNITY. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the
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fact that he is or was or has agreed to become a director, officer, employee
or agent of the Corporation, or is or was serving or has agreed to serve at
the request of the Corporation as a director, officer, employee or agent, of
another corporation, partnership, joint venture, trust or other enterprise,
or by reason of any action alleged to have been taken or omitted in such
capacity, and may indemnify any person who was or is a party or is threatened
to be made a party to such an action, suit or proceeding by reason of the
fact that he is or was or has agreed to become an employee or agent of the
Corporation, or is or was serving or has agreed to serve at the request of
the Corporation as an employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by him or on his behalf in connection with such
action, suit or proceeding and any appeal therefrom, if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation, and, with respect to any criminal action
or proceeding had no reasonable cause to believe his conduct was unlawful;
except that in the case of an action or suit by or in the right of the
Corporation to procure a judgment in its favor (1) such indemnification shall
be limited to expenses (including attorneys' fees) actually and reasonably
incurred by such person in the defense or settlement of such action or suit,
and (2) no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Delaware Court of Chancery
or the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which the Delaware Court of Chancery or such
other court shall deem proper.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of NOLO CONTENDERE or its equivalent,
shall not, of itself, create a presumption that the person did not act in
good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful. [Section 145(a), (b).]
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Section 6.02. SUCCESSFUL DEFENSE. To the extent that a director,
officer, employee or agent of the Corporation has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred to
in Section 6.01 hereof or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith. [Section 145(c).]
Section 6.03. DETERMINATION THAT INDEMNIFICATION IS PROPER. Any
indemnification under Section 6.01 hereof (unless ordered by a court) shall
be made by the Corporation unless a determination is made that
indemnification of the director, officer, employee or agent is not proper in
the circumstances because he has not met the applicable standard of conduct
set forth in Section 6.01 hereof. Any such determination shall be made (1)
by a majority vote of the directors who are not parties to such action, suit
or proceeding, even though less than a quorum, or (2) if there are no such
directors, or, if such directors so direct, by independent legal counsel in a
written opinion, or (3) by the stockholders. [Section 145(d).]
Section 6.04. ADVANCE PAYMENT OF EXPENSES. Expenses (including
attorneys' fees) incurred by a director or officer in defending any civil,
criminal, administrative or investigative action, suit or proceeding shall be
paid by the Corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Corporation as authorized in
this Article. Such expenses (including attorneys' fees) incurred by other
employees and agents may be so paid upon such terms and conditions, if any,
as the Board of Directors deems appropriate. The Board of Directors may
authorize the Corporation's counsel to represent such director, officer,
employee or agent in any action, suit or proceeding, whether or not the
Corporation is a party to such action, suit or proceeding. [Section 145(e).]
Section 6.05. PROCEDURE FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Any indemnification of a person seeking indemnification under Sections 6.01
and 6.02, or advance of costs, charges and expenses to such person under
Section 6.04 of this Article, shall be made promptly, and in any event within
30 days, upon the written request of such person. If a determination by the
Corporation that such person is entitled to indemnification pursuant to this
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Article is required, and the Corporation fails to respond within sixty days
to a written request for indemnity, the Corporation shall be deemed to have
approved such request. If the Corporation denies a written request for
indemnity or advancement of expenses, in whole or in part, or if payment in
full pursuant to such request is not made within 30 days, the right to
indemnification or advances as granted by this Article shall be enforceable
by the indemnified person in any court of competent jurisdiction. Such
person's costs and expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
action shall also be indemnified by the Corporation. It shall be a defense
to any such action (other than an action brought to enforce a claim for the
advance of costs, charges and expenses under Section 6.04 of this Article
where the required undertaking, if any, has been received by the Corporation)
that the claimant has not met the standard of conduct set forth in Section
6.01 of this Article, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, its independent legal counsel, and its stockholders) to have made
a determination prior to the commencement of such action that indemnification
of the claimant is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 6.01 of this Article, nor
the fact that there has been an actual determination by the Corporation
(including its Board of Directors, its independent legal counsel, and its
stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 6.06. SURVIVAL; PRESERVATION OF OTHER RIGHTS. The foregoing
indemnification provisions shall be deemed to be a contract between the
Corporation and each director, officer, employee and agent who serves in any
such capacity at any time while these provisions as well as the relevant
provisions of the Delaware Corporation Law are in effect and any repeal or
modification thereof shall not affect any right or obligation then existing
with respect to any state of facts then or previously existing or any action,
suit or proceeding previously or thereafter brought or threatened based in
whole or in part upon any such state of facts. Such a "contract right" may
not be modified retroactively without the consent of such director, officer,
employee or agent.
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The indemnification and advancement of expenses provided by this Article
VI shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any by-law, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person. [Section 145(f), (j).]
Section 6.07. INSURANCE. The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was or has
agreed to become a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him or on his behalf in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article.
[Section 145(g).]
Section 6.08. SEVERABILITY. If this Article or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director, officer, employee or
agent of the Corporation as to costs, charges and expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement with
respect to any action, suit or proceeding, whether civil, criminal,
administrative or investigative, including an action by or in the right of
the Corporation, to the fullest extent permitted by any applicable portion of
this Article that shall not have been invalidated and to the fullest extent
permitted by applicable law.
Section 6.09. DEFINITIONS. For purposes of this Article VI, the
following terms shall have the following meanings:
(a) references to "the Corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any constituent
of a constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and authority to
indemnify its directors, officers, employees or agents so that any person who
is or was a
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director, officer, employee or agent of such constituent corporation, or is
or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise shall stand in the same position under the
provisions of this Article VI with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if
its separate existence had continued;
(b) references to "other enterprises" shall include employee benefit
plans;
(c) references to "fines" shall include any excise taxes assessed on a
person with respect to an employee benefit plan; and
(d) references to "serving at the request of the Corporation" shall
include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries.
ARTICLE VII.
OFFICES
Section 7.01. REGISTERED OFFICE. The registered office of the
Corporation in the State of Delaware shall be located at Corporation Trust
Center, 1209 Orange Street in the City of Wilmington, County of New Castle.
Section 7.02. OTHER OFFICES. The Corporation may maintain offices or
places of business at such other locations within or without the State of
Delaware as the Board of Directors may from time to time determine or as the
business of the Corporation may require.
ARTICLE VIII.
GENERAL PROVISIONS
Section 8.01. DIVIDENDS. Subject to any applicable provisions of law
and the Certificate of Incorporation, dividends upon the shares of the
Corporation may be declared by the Board of Directors at any regular or
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special meeting of the Board of Directors and any such dividend may be paid
in cash, property, or shares of the Corporation's Capital Stock.
A member of the Board of Directors, or a member of any Committee
designated by the Board of Directors, shall be fully protected in relying in
good faith upon the records of the Corporation and upon such information,
opinions, reports or statements presented to the Corporation by any of its
officers or employees, or Committees of the Board of Directors, or by any
other person as to matters the director reasonably believes are within such
other person's professional or expert competence and who has been selected
with reasonable care by or on behalf of the Corporation, as to the value and
amount of the assets, liabilities and/or net profits of the Corporation, or
any other facts pertinent to the existence and amount of surplus or other
funds from which dividends might properly be declared and paid.
[Sections 170, 172, 173.]
Section 8.02. RESERVES. There may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of
Directors, from time to time, in its absolute discretion, thinks proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the Corporation or for such
other purpose as the Board of Directors shall think conducive to the interest
of the Corporation, and the Board of Directors may similarly modify or
abolish any such reserve. [Section 171.]
Section 8.03. EXECUTION OF INSTRUMENTS. The Board of Directors may
authorize the President and Chief Executive Officer or any other officer or
agent to enter into any contract or execute and deliver any instrument in the
name and on behalf of the Corporation. Any such authorization may be general
or limited to specific contracts or instruments.
Section 8.04. CORPORATE INDEBTEDNESS. No loan shall be contracted on
behalf of the Corporation, and no evidence of indebtedness shall be issued in
its name, unless authorized by the Board of Directors or, to the extent the
Executive Committee has the power to authorize such loan or evidence of
indebtedness, the Executive Committee. Such authorization may be general or
confined to specific instances. Loans so authorized may be effected at any
time for the Corporation from any bank, trust company or other institution,
or from any firm, corporation or individual.
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All bonds, debentures, notes and other obligations or evidences of
indebtedness of the Corporation issued for such loans shall be made, executed
and delivered as the Board of Directors or the Executive Committee, as the
case may be, shall authorize. When so authorized by the Board of Directors
or the Executive Committee, as the case may be, any part of or all the
properties, including contract rights, assets, business or good will of the
Corporation, whether then owned or thereafter acquired, may be mortgaged,
pledged, hypothecated or conveyed or assigned in trust as security for the
payment of such bonds, debentures, notes and other obligations or evidences
of indebtedness of the Corporation, and of the interest thereon, by
instruments executed and delivered in the name of the Corporation.
Section 8.05. DEPOSITS. Any funds of the Corporation may be deposited
from time to time in such banks, trust companies or other depositaries as may
be determined by (a) the Board of Directors or (subject to Section 4.06) the
President and Chief Executive Officer (or, if the Chairman is then acting as
chief executive officer of the Corporation, the Chairman) or (B) such
officers or agents as may be authorized to make such determination by the
Board of Directors or (subject to Section 4.06) the President and Chief
Executive Officer (or, if the Chairman is then acting as chief executive
officer of the Corporation, the Chairman).
Section 8.06. CHECKS. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such agent or
agents of the Corporation, and in such manner, as the Board of Directors or
(subject to Section 4.06) the President and Chief Executive Officer (or, if
the Chairman is then acting as chief executive officer of the Corporation,
the Chairman) from time to time may determine.
Section 8.07. SALE, TRANSFER, ETC. OF SECURITIES. To the extent
authorized by the Board of Directors, (subject to Section 4.06) the President
and Chief Executive Officer (or, if the Chairman is then acting as chief
executive officer of the Corporation, the Chairman) or any other officers
designated by the Board of Directors may sell, transfer, endorse, and assign
any shares of stock, bonds or other securities owned by or held in the name
of the Corporation, and may make, execute and deliver in the name of the
Corporation, under its corporate seal, any instruments that may be
appropriate to effect any such sale, transfer, endorsement or assignment.
30
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Section 8.08. VOTING AS STOCKHOLDER. As directed by resolution of the
Board of Directors or the Executive Committee, (a) (subject to Section 4.06)
the President and Chief Executive Officer (or, if the Chairman is then acting
as chief executive officer of the Corporation, the Chairman) or any Vice
President shall have full power and authority on behalf of the Corporation to
attend any meeting of stockholders of any corporation in which the
Corporation may hold stock, and to act, vote (or execute proxies to vote) and
exercise in person or by proxy all other rights, powers and privileges
incident to the ownership of such stock, and (b) such officers acting on
behalf of the Corporation shall have full power and authority to execute any
instrument expressing consent to or dissent from any action of any such
corporation without a meeting. The Board of Directors may by resolution from
time to time confer such power and authority upon any other person or persons.
Section 8.09. FISCAL YEAR. The fiscal year of the Corporation shall
commence on the first day of January of each year (except for the
Corporation's first fiscal year which shall commence on the date of
incorporation) and shall terminate in each case on the last day of December.
Section 8.10. SEAL. The seal of the Corporation shall be circular in
form and shall contain the name of the Corporation, the year of its
incorporation and the words "Corporate Seal" and "Delaware". The form of
such seal shall be subject to alteration by the Board of Directors. The seal
may be used by causing it or a facsimile thereof to be impressed, affixed or
reproduced, or may be used in any other lawful manner.
Section 8.11. BOOKS AND RECORDS; INSPECTION. Except to the extent
otherwise required by law, the books and records of the Corporation shall be
kept at such place or places within or without the State of Delaware as may
be determined from time to time by the Board of Directors.
Section 8.12. DEFINITIONS.
"Additional Committee": See Section 3.01.
"CDR" means Clayton, Dubilier & Rice, Inc., a Delaware corporation.
"CDR Fund" means Clayton, Dubilier & Rice Fund V Limited Partnership, a
Connecticut limited partnership, and any successors and assigns.
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"Committee": See Section 3.01.
"Investor": See "Stockholders Agreement."
"Nominating Party" means any one of the investors named in Section 1(b)
of the Stockholders Agreement entitled to nominate such number of persons as
specified therein for election to the Board of Directors of the Corporation.
"Riverwood Holding": Riverwood Holding, Inc., a Delaware corporation
and the sole stockholder of the Corporation.
"Standing Committee": See Section 3.01.
"Stockholders Agreement" means the Stockholders Agreement entered into
among Riverwood Holding and each of CDR Fund, EXOR Group S.A., First Plaza
Group Trust, The 1818 Fund II, L.P., Madison Dearborn Capital Partners, L.P.,
Chemical Equity Associates, HWH Investment Pte Ltd. and Wolfensohn-River LLC
(each an "Investor" and, collectively, the "Investors"), as amended and as in
effect from time to time.
"Unaffiliated Nominee" means any person nominated for election to the
Board of Directors of the Corporation by a Nominating Party who is not an
employee, officer, general partner or general partner of the general partner
of the Nominating Party or of an Affiliate (as defined in Section 9 of the
Stockholders Agreement) of the Nominating Party.
ARTICLE IX.
AMENDMENT OF BY-LAWS
Section 9.01. AMENDMENT. These By-Laws may be amended, altered or
repealed
(a) by resolution adopted by a majority of the Board of Directors at
any special or regular meeting of the Board if, in the case of such special
meeting only, notice of such amendment, alteration or repeal is contained
in the notice or waiver of notice of such meeting; or
(b) at any regular or special meeting of the stockholders if, in the
case of such special meeting only, notice of such amendment, alteration or
repeal is
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contained in the notice or waiver of notice of such meeting.
[Section 109(a).]
Notwithstanding the foregoing sentence, during the term of the
Stockholders Agreement, these By-Laws may not be amended, altered or repealed
in a manner inconsistent with the terms and provisions of the Stockholders
Agreement.
ARTICLE X.
CONSTRUCTION
Section 10.1. CONSTRUCTION. In the event of any conflict between the
provisions of these By-Laws as in effect from time to time and (a) the
provisions of the certificate of incorporation of the Corporation as in
effect from time to time, or (b) the provisions of the Stockholders
Agreement, the provisions of such certificate of incorporation or the
Stockholders Agreement, as the case may be, shall be controlling.
33
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- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
RIVERWOOD INTERNATIONAL CORPORATION
(formerly named Riverwood International U.S.A., Inc.)
RESTATED BY-LAWS
As amended effective as of October 8, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
RIVERWOOD INTERNATIONAL CORPORATION
RESTATED BY-LAWS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C> <C>
ARTICLE I STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01. Annual Meetings. . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Special Meetings . . . . . . . . . . . . . . . . . . . 1
Section 1.03. Notice of Meetings; Waiver . . . . . . . . . . . . . . 2
Section 1.04. Quorum . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.05. Voting . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.06. Voting by Ballot . . . . . . . . . . . . . . . . . . . 3
Section 1.07. Adjournment. . . . . . . . . . . . . . . . . . . . . . 3
Section 1.08. Proxies. . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.09. Organization; Procedure. . . . . . . . . . . . . . . . 4
Section 1.10. Consent of Stockholders in Lieu of Meeting . . . . . . 4
ARTICLE II BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . 5
Section 2.01. General Powers . . . . . . . . . . . . . . . . . . . . 5
Section 2.02. Number and Term of Office. . . . . . . . . . . . . . . 5
Section 2.03. Election of Directors. . . . . . . . . . . . . . . . . 7
Section 2.04. Annual and Regular Meetings. . . . . . . . . . . . . . 7
Section 2.05. Special Meetings; Notice . . . . . . . . . . . . . . . 8
Section 2.06. Quorum; Voting . . . . . . . . . . . . . . . . . . . . 8
Section 2.07. Adjournment. . . . . . . . . . . . . . . . . . . . . . 8
Section 2.08. Action Without a Meeting . . . . . . . . . . . . . . . 8
Section 2.09. Regulations; Manner of Acting. . . . . . . . . . . . . 8
Section 2.10. Action by Telephonic Communications. . . . . . . . . . 9
Section 2.11. Resignations . . . . . . . . . . . . . . . . . . . . . 9
Section 2.12. Removal of Directors . . . . . . . . . . . . . . . . . 9
Section 2.13. Vacancies and Newly Created Directorships . . . . . . 9
Section 2.14. Compensation . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 2.15. Reliance on Accounts and Reports, etc. . . . . . . . . 10
ARTICLE III EXECUTIVE COMMITTEE AND OTHER COMMITTEES . . . . . . . . 11
Section 3.01. How Constituted. . . . . . . . . . . . . . . . . . . . 11
Section 3.02. Powers . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.03. Proceedings. . . . . . . . . . . . . . . . . . . . . . 13
Section 3.04. Quorum and Manner of Acting. . . . . . . . . . . . . . 13
Section 3.05. Action by Telephonic Communications. . . . . . . . . . 14
Section 3.06. Absent or Disqualified Members of Additional
Committees . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.07. Resignations . . . . . . . . . . . . . . . . . . . . . 14
Section 3.08. Removal. . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.09. Vacancies. . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IV OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.01. Number . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.02. Election . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.03. Salaries . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.04. Removal and Resignation; Vacancies . . . . . . . . . . 15
Section 4.05. Authority and Duties of Officers . . . . . . . . . . . 15
Section 4.06. The President and Chief Executive Officer . . . . . . 16
Section 4.07. The Chief Operating Officer. . . . . . . . . . . . . . 17
Section 4.08. The Vice Presidents. . . . . . . . . . . . . . . . . . 17
Section 4.09. The Secretary. . . . . . . . . . . . . . . . . . . . . 17
Section 4.10. The Chief Financial Officer. . . . . . . . . . . . . . 18
Section 4.11. The Treasurer. . . . . . . . . . . . . . . . . . . . . 19
Section 4.12. Additional Officers. . . . . . . . . . . . . . . . . . 20
Section 4.13. Security . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE V CAPITAL STOCK. . . . . . . . . . . . . . . . . . . . . . 20
Section 5.01. Certificates of Stock. . . . . . . . . . . . . . . . . 20
Section 5.02. Signatures; Facsimile. . . . . . . . . . . . . . . . . 21
Section 5.03. Lost, Stolen or Destroyed Certificates . . . . . . . . 21
Section 5.04. Transfer of Stock. . . . . . . . . . . . . . . . . . . 21
Section 5.05. Record Date. . . . . . . . . . . . . . . . . . . . . . 22
Section 5.06. Registered Stockholders. . . . . . . . . . . . . . . . 23
Section 5.07. Transfer Agent and Registrar . . . . . . . . . . . . . 23
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE VI INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . 23
Section 6.01. Nature of Indemnity. . . . . . . . . . . . . . . . . . 23
Section 6.02. Successful Defense . . . . . . . . . . . . . . . . . . 24
Section 6.03. Determination That Indemnification Is Proper . . . . . 25
Section 6.04. Advance Payment of Expenses. . . . . . . . . . . . . . 25
Section 6.05. Procedure for Indemnification of Directors and
Officers . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.06. Survival; Preservation of Other Rights . . . . . . . . 26
Section 6.07. Insurance. . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.08. Severability . . . . . . . . . . . . . . . . . . . . . 27
Section 6.09. Definitions. . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VII OFFICES. . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.01. Registered Office. . . . . . . . . . . . . . . . . . . 28
Section 7.02. Other Offices. . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VIII GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . 28
Section 8.01. Dividends. . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.02. Reserves . . . . . . . . . . . . . . . . . . . . . . . 29
Section 8.03. Execution of Instruments . . . . . . . . . . . . . . . 29
Section 8.04. Corporate Indebtedness . . . . . . . . . . . . . . . . 29
Section 8.05. Deposits . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.06. Checks . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.07. Sale, Transfer, etc. of Securities . . . . . . . . . . 30
Section 8.08. Voting as Stockholder. . . . . . . . . . . . . . . . . 30
Section 8.09. Fiscal Year. . . . . . . . . . . . . . . . . . . . . . 31
Section 8.10. Seal . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.11. Books and Records; Inspection. . . . . . . . . . . . . 31
Section 8.12. Definitions. . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IX AMENDMENT OF BY-LAWS . . . . . . . . . . . . . . . . . . 32
Section 9.01. Amendment. . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE X CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . 33
Section 10.01. Construction . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
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RIVERWOOD INTERNATIONAL CORPORATION
RESTATED BY-LAWS
As amended effective as of October 8, 1996
Certain defined terms used herein without definition shall have the
meanings set forth in Section 8.12.
ARTICLE I
STOCKHOLDERS
Section 1.01. ANNUAL MEETINGS. The annual meeting of the stockholders
of the Corporation for the election of directors and for the transaction of such
other business as properly may come before such meeting shall be held at such
place, either within or without the State of Delaware, and at 10:00 a.m. local
time on the first Tuesday in May (or, if such day is a legal holiday, then on
the next succeeding business day), or at such other date and hour, as may be
fixed from time to time by resolution of the Board of Directors and set forth in
the notice or waiver of notice of the meeting. [Sections 211(a), (b).](1)
Section 1.02. SPECIAL MEETINGS. Special meetings of the stockholders
may be called at any time by the Chairman or by the Board of Directors. A
special meeting shall be called by (subject to Section 4.06) the President
and Chief Executive Officer or by the Secretary, immediately upon receipt of
a written request therefor by stockholders
- ------------
(1) Citations are to the General Corporation Law of the State of Delaware
as in effect on August 15, 1995 (the "DGCL"), and are inserted for
reference only, and do not constitute a part of the By-Laws.
<PAGE>
holding in the aggregate not less than a majority of the outstanding shares
of the Corporation at the time entitled to vote at any meeting of the
stockholders. If such officers or the Board of Directors shall fail to call
such meeting within 20 days after receipt of such request, any stockholder
executing such request may call such meeting. Such special meetings of the
stockholders shall be held at such places, within or without the State of
Delaware, as shall be specified in the respective notices or waivers of
notice thereof. [Section 211(d).]
Section 1.03. NOTICE OF MEETINGS; WAIVER. The Secretary or any
Assistant Secretary shall cause written notice of the place, date and hour of
each meeting of the stockholders, and, in the case of a special meeting, the
purpose or purposes for which such meeting is called, to be given personally
or by mail, not less than ten nor more than sixty days prior to the meeting,
to each stockholder of record entitled to vote at such meeting. If such
notice is mailed, it shall be deemed to have been given to a stockholder when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the record of stockholders of the
Corporation, or, if he shall have filed with the Secretary of the Corporation
a written request that notices to him be mailed to some other address, then
directed to him at such other address. Such further notice shall be given as
may be required by law.
No notice of any meeting of stockholders need be given to any
stockholder who submits a signed waiver of notice, whether before or after
the meeting. Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the stockholders need be specified in a
written waiver of notice. The attendance of any stockholder at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends a meeting for the express purpose of objecting, at
the beginning of the meeting, to the trans-
2
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action of any business on the ground that the meeting is not lawfully called
or convened. [Sections 222, 229.]
Section 1.04. QUORUM. Except as otherwise required by law or by the
Certificate of Incorporation, the presence in person or by proxy of the
holders of record of a majority of the shares entitled to vote at a meeting
of stockholders shall constitute a quorum for the transaction of business at
such meeting. [Section 216.]
Section 1.05. VOTING. If, pursuant to Section 5.05 of these By-Laws, a
record date has been fixed, every holder of record of shares entitled to vote
at a meeting of stockholders shall be entitled to one vote for each share
outstanding in his name on the books of the Corporation at the close of
business on such record date. If no record date has been fixed, then every
holder of record of shares entitled to vote at a meeting of stockholders
shall be entitled to one vote for each share of stock standing in his name on
the books of the Corporation at the close of business on the day next
preceding the day on which notice of the meeting is given, or, if notice is
waived, at the close of business on the day next preceding the day on which
the meeting is held. Except as otherwise required by law or by the
Certificate of Incorporation, the vote of a majority of the shares
represented in person or by proxy at any meeting at which a quorum is present
shall be sufficient for the transaction of any business at such meeting.
[Sections 212(a), 216.]
Section 1.06. VOTING BY BALLOT. No vote of the stockholders need be
taken by written ballot or conducted by Inspectors of Elections unless otherwise
required by law. Any vote which need not be taken by ballot may be conducted in
any manner approved by the meeting.
Section 1.07. ADJOURNMENT. If a quorum is not present at any meeting
of the stockholders, the stockholders present in person or by proxy shall
have the power to adjourn any such meeting from time to time until a quorum is
3
<PAGE>
present. Notice of any adjourned meeting of the stockholders of the
Corporation need not be given if the place, date and hour thereof are
announced at the meeting at which the adjournment is taken, provided,
however, that if the adjournment is for more than thirty days, or if after
the adjournment a new record date for the adjourned meeting is fixed pursuant
to Section 5.05 of these By-Laws, a notice of the adjourned meeting,
conforming to the requirements of Section 1.03 hereof, shall be given to each
stockholder of record entitled to vote at such meeting. At any adjourned
meeting at which a quorum is present, any business may be transacted that
might have been transacted on the original date of the meeting.
[Section 222(c).]
Section 1.08. PROXIES. Any stockholder entitled to vote at any meeting
of the stockholders or to express consent to or dissent from corporate action
without a meeting may authorize another person or persons to vote at any such
meeting and express such consent or dissent for him by proxy. A stockholder
may authorize a valid proxy by executing a written instrument signed by such
stockholder, or by causing his or her signature to be affixed to such writing
by any reasonable means including, but not limited to, by facsimile
signature, or by transmitting or authorizing the transmission of a telegram,
cablegram or other means of electronic transmission to the person designated
as the holder of the proxy, a proxy solicitation firm or a like authorized
agent. No such proxy shall be voted or acted upon after the expiration of
three years from the date of such proxy, unless such proxy provides for a
longer period. Every proxy shall be revocable at the pleasure of the
stockholder executing it, except in those cases where applicable law provides
that a proxy shall be irrevocable. A stockholder may revoke any proxy which
is not irrevocable by attending the meeting and voting in person or by filing
an instrument in writing revoking the proxy or by filing another duly
executed proxy bearing a later date with the Secretary. Proxies by telegram,
cablegram or other electronic transmission must either set forth or be
submitted with information from which it can be determined that the
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telegram, cablegram or other electronic transmission was authorized by the
stockholder. Any copy, facsimile telecommunication or other reliable
reproduction of a writing or transmission created pursuant to this section
may be substituted or used in lieu of the original writing or transmission
for any and all purposes for which the original writing or transmission could
be used, provided that such copy, facsimile telecommunication or other
reproduction shall be a complete reproduction of the entire original writing
or transmission. [Sections 212(b), (c), (d), (e).]
Section 1.09. ORGANIZATION; PROCEDURE. At every meeting of
stockholders the presiding officer shall be (subject to Section 4.06) the
President and Chief Executive Officer or, in the event of his absence,
disability or other inability so to act, a presiding officer chosen by a
majority of the stockholders present in person or by proxy. The Secretary,
or in the event of his absence or disability, the Assistant Secretary, if
any, or if there be no Assistant Secretary, in the absence of the Secretary,
an appointee of the presiding officer, shall act as Secretary of the meeting.
The order of business and all other matters of procedure at every meeting of
stockholders may be determined by such presiding officer.
Section 1.10. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. To the
fullest extent permitted by law, whenever the vote of stockholders at a
meeting thereof is required or permitted to be taken for or in connection
with any corporate action, such action may be taken without a meeting,
without prior notice and without a vote of stockholders, if a consent or
consents in writing, setting forth the action so taken, shall be signed by
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote thereon were present and voted and shall
be delivered to the Corporation by delivery to its registered office in the
State of Delaware, its principal place of business, or an officer or agent of
the Corporation having custody of the book in which
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proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested.
Every written consent shall bear the date of signature of each
stockholder or member who signs the consent and no written consent shall be
effective to take the corporate action referred to therein unless, within
sixty days of the earliest dated consent delivered in the manner required by
law to the Corporation, written consents signed by a sufficient number of
holders or members to take action are delivered to the Corporation by
delivery to its registered office in the State of Delaware, its principal
place of business, or an officer or agent of the Corporation having custody
of the book in which proceedings of meetings of stockholders or members are
recorded. Delivery made to the Corporation's registered office shall be by
hand or by certified or registered mail, return receipt requested.
[Section 228(a), (c).]
ARTICLE II
BOARD OF DIRECTORS
Section 2.01. GENERAL POWERS. Except as may otherwise be provided by
law, by the Certificate of Incorporation or by these By-Laws, the property,
affairs and business of the Corporation shall be managed by or under the
direction of the Board of Directors and the Board of Directors may exercise
all the powers of the Corporation. [Section 141(a).]
Section 2.02. NUMBER AND TERM OF OFFICE. Certain stockholders of
Riverwood Holding, the sole stockholder of the sole stockholder of the
Corporation, shall have rights and obligations with respect to the nomination
and election of Directors of the Corporation as set forth in the Stockholders
Agreement during the term of such agreement. The
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number of Directors constituting the entire Board of Directors shall be at
least 10 and no more than 14, which number may be modified from time to time
by resolution of the Board of Directors, but in no event shall the number of
Directors be less than one, PROVIDED that for so long as Section 1 of the
Stockholders Agreement is in effect the number of Directors shall in any
event be automatically increased or decreased in the manner set forth below:
(a) If and to the extent permitted by applicable law, (1) upon the
termination for any reason of any Nominating Party's right to nominate one or
more persons to serve as a Director or Directors of the Corporation
(including any temporary termination attributable to the waiver by such
Nominating Party of its rights under the Stockholders Agreement), such
Director or Directors shall be deemed to be removed without cause in
accordance with Section 141(k) of the DGCL and the number of Directors shall
be automatically reduced by such number of Directors that the Nominating
Party would otherwise be entitled to nominate (or such lesser number the
Nominating Party had previously elected to nominate) and (2) upon the request
of a Nominating Party to nominate one or more Directors pursuant to Section 1
of the Stockholders Agreement, the number of Directors of the Corporation
shall be automatically increased by such number of Directors as such
Nominating Party is entitled to nominate (or such lesser number the
Nominating Party elects to nominate), PROVIDED that, if any such nominee is
an Unaffiliated Nominee, the number of Directors shall not be so increased
unless and until the Board of Directors of the Corporation shall have
approved such Unaffiliated Nominee.
(b) During any period in which any Nominating Party has, and shall have
exercised, the right to nominate a Director as provided herein, in the event
of any vacancy or vacancies in the Board of Directors created by the death,
disability, retirement, resignation or removal, with or without cause, of a
Director so nominated, (1) the Board will request such Nominating Party to
nominate a candidate
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to be appointed by such Board to fill such vacancy or (2) in the event that a
candidate to fill such vacancy is to be elected at the annual meeting of
stockholders of the Corporation, such Nominating Party shall have the right
to nominate the individual to fill such vacancy, and the provisions of
Section 1(b) of the Stockholders Agreement shall apply with respect to the
nomination and election of such nominee to fill such vacancy.
(c) Each Director (whenever elected) shall hold office until his
successor has been duly elected and qualified, or until his earlier death,
resignation or removal. [Section 141(b).]
(d) During the term of the Stockholders Agreement, the Chairman of the
Board shall be selected by the Directors from one of the Directors nominated
pursuant to the Stockholders Agreement by the CDR Fund. The Chairman of the
Board shall not be an officer of the Corporation, except that the Chairman
may act as the chief executive officer of the Corporation if elected to that
position by the Board of Directors, and shall preside at all meetings of the
Board of Directors at which he is present. [Section 141(b).]
Section 2.03. ELECTION OF DIRECTORS. Except as otherwise provided in
Sections 2.12 and 2.13 of these By-Laws, the Directors shall be elected at
each annual meeting of the stockholders in a manner which complies with the
provisions of Section 2.02 of these By-Laws, and Section 1 of the
Stockholders Agreement during the term of such agreement. If the annual
meeting for the election of Directors is not held on the date designated
therefor, the Directors shall cause the meeting to be held as soon thereafter
as convenient. At each meeting of the stockholders for the election of
Directors, provided a quorum is present, the Directors shall be elected by a
plurality of the votes validly cast in such election.
[Sections 211(b), (c), 216.]
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Section 2.4. ANNUAL AND REGULAR MEETINGS. The annual meeting of the
Board of Directors for the purpose of electing officers and for the
transaction of such other business as may come before the meeting shall be
held as soon as possible following adjournment of the annual meeting of the
stockholders at the place of such annual meeting of the stockholders. Notice
of such annual meeting of the Board of Directors need not be given. The
Board of Directors from time to time may by resolution provide for the
holding of regular meetings and fix the place (which may be within or without
the State of Delaware) and the date and hour of such meetings. Notice of
regular meetings need not be given, provided, however, that if the Board of
Directors shall fix or change the time or place of any regular meeting,
notice of such action shall be mailed promptly, or sent by telegram, radio or
cable, to each Director who shall not have been present at the meeting at
which such action was taken, addressed to him at his usual place of business,
or shall be delivered to him personally. Notice of such action need not be
given to any Director who attends the first regular meeting after such action
is taken without protesting the lack of notice to him, prior to or at the
commencement of such meeting, or to any Director who submits a signed waiver
of notice, whether before or after such meeting. [Sections 141(g), 229.]
Section 2.5. SPECIAL MEETINGS; NOTICE. Special meetings of the Board
of Directors shall be held whenever called by the Chairman of the Board or by
a majority of the Directors then in office, at such place (within or without
the State of Delaware), date and hour as may be specified in the respective
notices or waivers of notice of such meetings. Special meetings of the Board
of Directors may be called on 24 hours' notice, if notice is given to each
Director personally or by telephone or telegram, or on five days' notice, if
notice is mailed to each Director, addressed to him at his usual place of
business. Notice of any special meeting need not be given to any Director who
attends such meeting without protesting the lack of notice to him, prior to
or at the commencement of such meeting, or
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to any Director who submits a signed waiver of notice, whether before or
after such meeting, and any business may be transacted thereat.
[Sections 141(g), 229.]
Section 2.06. QUORUM; VOTING. At all meetings of the Board of
Directors, the presence of a majority of the total then authorized number of
Directors shall constitute a quorum for the transaction of business. Except
as otherwise required by law, the vote of a majority of the Directors present
at any meeting at which a quorum is present shall be the act of the Board of
Directors. [Section 141(b).]
Section 2.07. ADJOURNMENT. A majority of the Directors present, whether
or not a quorum is present, may adjourn any meeting of the Board of Directors
to another time or place. No notice need be given of any adjourned meeting
unless the time and place of the adjourned meeting are not announced at the
time of adjournment, in which case notice conforming to the requirements of
Section 2.05 shall be given to each Director.
Section 2.08. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if all members of the Board of Directors consent thereto in
writing, and such writing or writings are filed with the minutes of
proceedings of the Board of Directors. [Section 141(f).]
Section 2.09. REGULATIONS; MANNER OF ACTING. To the extent consistent
with applicable law, the Certificate of Incorporation and these By-Laws, the
Board of Directors may adopt such rules and regulations for the conduct of
meetings of the Board of Directors and for the management of the property,
affairs and business of the Corporation as the Board of Directors may deem
appropriate. The Directors shall act only as a Board, and the individual
Directors shall have no power as such.
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Section 2.10. ACTION BY TELEPHONIC COMMUNICATIONS. Members of the
Board of Directors may participate in a meeting of the Board of Directors by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this provision shall constitute
presence in person at such meeting. [Section 141(i).]
Section 2.11. RESIGNATIONS. Any Director may resign at any time by
delivering a written notice of resignation, signed by such Director, to the
Chairman of the Board and a copy of such notice to the Secretary. Unless
otherwise specified therein, such resignation shall take effect upon
delivery. [Section 141(b).]
Section 2.12. REMOVAL OF DIRECTORS. Any Director may be removed at any
time, either for or without cause, upon the affirmative vote of the holders
of a majority of the outstanding shares of stock of the Corporation entitled
to vote for the election of such Director, cast at a special meeting of
stockholders called for the purpose, PROVIDED that so long as Section 1(d) of
the Stockholders Agreement is in effect, (a) no such removal without cause
shall occur except as provided in such Section 1(d) and (B) in the event of
the removal of a Director nominated by a Nominating Party for cause, the
provisions of Section 1(d) of the Stockholders Agreement shall apply with
respect to the filling of the vacancy created thereby. Any vacancy in the
Board of Directors caused by any such removal may be filled at such meeting
by the stockholders entitled to vote for the election of the Director so
removed in accordance with Section 2.13 hereof. If such stockholders do not
fill such vacancy at such meeting (or in the written instrument effecting
such removal, if such removal was effected by consent without a meeting),
such vacancy may be filled in the manner provided in Section 2.13 of these
By-Laws. [Section 141(k).]
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Section 2.13. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. If any
vacancies shall occur in the Board of Directors, by reason of death,
resignation, removal or otherwise, or if the authorized number of Directors
shall be increased, the Directors then in office shall continue to act, and
such vacancies and newly created directorships may be filled by a majority of
the Directors then in office, although less than a quorum, PROVIDED that no
such vacancy in the Board of Directors shall be filled in a manner which
fails to comply with the requirements of Section 2.02 of these By-Laws, and
Section 1(d) of the Stockholders Agreement during the term of such agreement,
and PROVIDED, FURTHER, that the Board of Directors shall from time to time
make such requests for nominations of individuals to fill vacancies in the
Board of Directors as shall be necessary to cause compliance with the
requirements of such Section 2.02, and Section 1(d) of the Stockholders
Agreement during the term of such agreement. A Director elected to fill a
vacancy or a newly created directorship shall hold office until his successor
has been elected and qualified or until his earlier death, resignation or
removal. Any such vacancy or newly created directorship may also be filled
at any time by vote of the stockholders, in the manner provided in Section
1(d) of the Stockholders Agreement during the term of such agreement.
[Sections 141(b), 223.]
Section 2.14. COMPENSATION. The amount, if any, which each Director
shall be entitled to receive as compensation for his services as such shall
be fixed from time to time by resolution of the Board of Directors, PROVIDED
that (A) no director who is an officer or employee of CDR at any time that
CDR is providing consulting services to the Corporation or one or more of its
subsidiaries and (b) no director who is an officer or employee of the
Corporation, shall be entitled to receive any compensation for his or her
services as a Director (although such Director shall be entitled to be
reimbursed for any reasonable out-of-pocket expenses incurred in connection
with his or her services as a Director). [Section 141(h).]
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Section 2.15. RELIANCE ON ACCOUNTS AND REPORTS, ETC. A Director, or a
member of any Committee designated by the Board of Directors shall, in the
performance of his duties, be fully protected in relying in good faith upon
the records of the Corporation and upon information, opinions, reports or
statements presented to the Corporation by any of the Corporation's officers
or employees, or Committees designated by the Board of Directors, or by any
other person as to the matters the member reasonably believes are within such
other person's professional or expert competence and who has been selected
with reasonable care by or on behalf of the Corporation. [Section 141(e).]
ARTICLE III
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 3.01. HOW CONSTITUTED. The Board of Directors, by resolution
adopted by a majority of the whole Board, (A) shall designate an Executive
Committee, a Compensation and Benefits Committee and an Audit Committee
(each, a "Standing Committee" and, collectively, the "Standing Committees")
and (B) may designate one or more additional committees (each, an "Additional
Committee" and, together with the Standing Committees, the "Committees").
During the term of the Stockholders Agreement, each Standing Committee shall
consist of such number of Directors as provided by this Section 3.01. Each
Additional Committee shall consist of such number of Directors as from time
to time may be fixed by the Board of Directors. The Executive Committee
shall consist of the chief executive officer of the Corporation and four
other Directors selected in the manner provided in Section 2 of the
Stockholders Agreement. One of the Directors nominated by the CDR Fund (as
provided in Section 2(a) of the Stockholders Agreement) shall serve as the
Chairman of the Executive Committee. Each of the Compensation and Benefits
Committee and the Audit Committee shall consist of five Directors who shall
be selected in the manner provided in Section 2 of the Stockholders
Agreement.
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Any Additional Committee may be abolished or re-designated from time to time
by the Board of Directors. The Board of Directors may designate one or more
Directors as alternate members of any Additional Committee, who may replace
any absent or disqualified member or members at any meeting of Additional
Committee. Members of any Standing Committee or any Additional Committee
shall (and alternate members, if any, of any Additional Committee may) be
designated at the annual meeting of the Board of Directors. Each member of
any Standing Committee or any Additional Committee (and any alternate member
of any Additional Committee) (whether designated at an annual meeting of the
Board of Directors or to fill a vacancy or otherwise) shall hold office until
his successor shall have been designated or until he shall cease to be a
Director, or until his earlier death, resignation or removal.
[Section 141(b),(c).]
Section 3.02. POWERS. During the intervals between the meetings of the
Board of Directors, the Executive Committee, except as otherwise provided in
this section, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the property, affairs and business of
the Corporation. Each such other Committee, except as otherwise provided in
this section, shall have and may exercise such powers of the Board of
Directors as may be provided by resolution or resolutions of the Board of
Directors. Neither the Executive Committee nor any such other Committee shall
have the power or authority:
(a) to amend the Certificate of Incorporation (except that a
Committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of
Directors as provided in Section 151(a) of the DGCL, fix the designations
and any of the preferences or rights of such shares relating to dividends,
redemption, dissolution, any distribution of assets of the Corporation or
the conversion into, or the exchange of such shares for, shares of any
other class or classes
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or any other series of the same or any other class or classes of stock of
the Corporation or fix the number of shares of any series of stock or
authorize the increase or decrease of the shares of any series);
(b) to adopt an agreement of merger or consolidation or a certificate
of ownership or merger;
(c) to recommend to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets;
(d) to recommend to the stockholders a dissolution of the Corporation
or a revocation of a dissolution;
(e) to declare a dividend;
(f) to authorize the issuance of stock;
(g) to remove the President and Chief Executive Officer of the
Corporation or a Director;
(h) (i) to authorize the Corporation to enter into or amend any
agreement for the borrowing of funds which provides for additional
indebtedness in excess of $25 million or (ii) to authorize a material
modification of any existing facility, unless, in the Executive Committee's
good faith judgment, such modification is not adverse to the Corporation;
(i) to authorize the Corporation to enter into any guarantee of
indebtedness in excess of $25 million;
(j) to authorize any new compensation or benefit program;
(k) to appoint or discharge the Corporation's independent public
accountants;
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(l) to authorize the annual operating plan, annual capital
expenditure plan and strategic plan;
(m) to abolish or usurp the authority of the Board of Directors; or
(n) to amend these By-Laws of the Corporation.
The Executive Committee shall have, and any such other Committee may be granted
by the Board of Directors, power to authorize the seal of the Corporation to be
affixed to any or all papers which may require it. [Section 141(c).]
Section 3.03. PROCEEDINGS. Each such Committee may fix its own rules of
procedure and may meet at such place (within or without the State of
Delaware), at such time and upon such notice, if any, as it shall determine
from time to time. Each such Committee shall keep minutes of its proceedings
and shall present a report of such proceedings, including the minutes
thereof, to the Board of Directors at the meeting of the Board of Directors
next following any such proceedings.
Section 3.04. QUORUM AND MANNER OF ACTING. Except as may be otherwise
provided in the resolution creating any Additional Committee, at all meetings
of any Committee the presence of members (or alternate members) constituting
a majority of the total then authorized membership of such Committee shall
constitute a quorum for the transaction of business. The act of the majority
of the members present at any meeting at which a quorum is present shall be
the act of such Committee. Any action required or permitted to be taken at
any meeting of any such Committee may be taken without a meeting, if all
members of such Committee shall consent to such action in writing and such
writing or writings are filed with the minutes of the proceedings of the
Committee. The members of any such Committee shall act only as a Committee,
and the individual members of such Committee shall have no power as such.
[Section 141(b), (c), (f).]
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Section 3.05. ACTION BY TELEPHONIC COMMUNICATIONS. Members of any
Committee designated by the Board of Directors may participate in a meeting
of such Committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this provision shall
constitute presence in person at such meeting. [Section 141(i).]
Section 3.06. ABSENT OR DISQUALIFIED MEMBERS OF ADDITIONAL COMMITTEES.
In the absence or disqualification of a member of any Additional Committee,
the member or members thereof present at any meeting and not disqualified
from voting, whether or not he or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member. [Section 141(c).]
Section 3.07. RESIGNATIONS. Any member (and any alternate member) of
any Committee may resign at any time by delivering a written notice of
resignation, signed by such member, to the Chairman or (unless the Chairman
is then acting as the chief executive officer of the Corporation) the
President and Chief Executive Officer. Unless otherwise specified therein,
such resignation shall take effect upon delivery. [Section 141(b).]
Section 3.08. REMOVAL. Any member (and any alternate member) of any
Committee may be removed at any time, either for or without cause, by
resolution adopted by a majority of the whole Board of Directors; PROVIDED
that no such action shall be taken with respect to any member of any Standing
Committee that is inconsistent with the provisions of Sections 1(d) and 2 of
the Stockholders Agreement during the term of such agreement.
Section 3.09. VACANCIES. If any vacancy shall occur in any Committee,
by reason of disqualification, death, resignation, removal or otherwise, the
remaining members (and any alternate members) shall continue to act,
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and any such vacancy may be filled by the Board of Directors; PROVIDED that
no vacancy in any Committee shall be filled in a manner which fails to comply
with the provisions of Section 2 of the Stockholders Agreement during the
term of such agreement.
ARTICLE IV
OFFICERS
Section 4.01. NUMBER. The officers of the Corporation shall be chosen
by the Board of Directors and shall be a President and Chief Executive
Officer, a Chief Operating Officer, a Chief Financial Officer, one or more
Vice Presidents, a Secretary and a Treasurer. The Board of Directors also
may elect one or more Assistant Secretaries and Assistant Treasurers in such
numbers as the Board of Directors may determine. The Board of Directors also
may elect the Chairman to act as the chief executive officer of the
Corporation as provided in Section 4.06. Any number of offices may be held
by the same person. No officer need be a Director of the Corporation.
[Section 142(a), (b).]
Section 4.02. ELECTION. Unless otherwise determined by the Board of
Directors, the officers of the Corporation shall be elected by the Board of
Directors at the annual meeting of the Board of Directors, and shall be
elected to hold office until the next succeeding annual meeting of the Board
of Directors. In the event of the failure to elect officers at such annual
meeting, officers may be elected at any regular or special meeting of the
Board of Directors. Each officer shall hold office until his successor has
been elected and qualified, or until his earlier death, resignation or
removal. [Section 142(b).]
Section 4.03. SALARIES. The salaries of all officers and agents of the
Corporation shall be fixed by the Board of Directors.
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Section 4.04. REMOVAL AND RESIGNATION; VACANCIES. Any officer may be
removed for or without cause at any time by the Board of Directors. Any
officer may resign at any time by delivering a written notice of resignation,
signed by such officer, to the Board of Directors, the Chairman or (unless
the Chairman shall then be acting as the chief executive officer of the
Corporation) the President and Chief Executive Officer. Unless otherwise
specified therein, such resignation shall take effect upon delivery. Any
vacancy occurring in any office of the Corporation by death, resignation,
removal or otherwise, shall be filled by the Board of Directors.
[Section 142(b), (e).]
Section 4.05. AUTHORITY AND DUTIES OF OFFICERS. The officers of the
Corporation shall have such authority and shall exercise such powers and
perform such duties as may be specified in these By-Laws, except that in any
event each officer shall exercise such powers and perform such duties as may
be required by law. [Section 142(a).]
Section 4.06. THE PRESIDENT AND CHIEF EXECUTIVE OFFICER. The President
and Chief Executive Officer shall, subject to the direction of, and subject
to general or specific resolutions approved by, the Board of Directors, (a)
preside at all meetings of the stockholders at which he is present, and be
the chief executive officer of the Corporation, (b) have general control and
supervision of the policies and operations of the Corporation, see that all
orders and resolutions of the Board of Directors are carried into effect, and
report to the Board of Directors, (c) manage and administer the Corporation's
business and affairs and perform all duties and exercise all powers usually
pertaining to the office of a chief executive officer of a corporation, (d)
have the authority to sign, in the name and on behalf of the Corporation,
checks, orders, contracts, leases, notes, drafts and other documents and
instruments in connection with the business of the Corporation, and together
with the Secretary or an Assistant Secretary, conveyances of real estate and
other documents and instruments to which the seal of the Corporation is
affixed, (e) have
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the authority to cause the employment or appointment of such employees and
agents of the Corporation as the conduct of the business of the Corporation
may require, to fix their compensation, and to remove or suspend any employee
or agent elected or appointed by the President and Chief Executive Officer or
the Board of Directors, and (f) have such other powers as are contemplated by
the other provisions of these By-Laws. The President and Chief Executive
Officer shall perform such other duties and have such other powers as the
Board of Directors or the Chairman may from time to time prescribe.
Notwithstanding the foregoing, and whether or not the President and Chief
Executive Officer shall then be in office, (i) the Board of Directors may
elect the Chairman to act as the chief executive officer of the Corporation,
and (except to the extent required by the General Corporation Law of the
State of Delaware) may grant and delegate to the Chairman, acting in such
capacity, any or all of the authority, powers and duties, that otherwise may
be held, exercised or performed by the President and Chief Executive Officer
as provided in these By-Laws, and (ii) in the event that the Board of
Directors elects the Chairman to act as the chief executive officer of the
Corporation, the President and Chief Executive Officer shall no longer be the
chief executive officer of the Corporation, and shall not hold, exercise or
perform any authority, powers or duties as an officer of the Corporation
other than as the Board of Directors or the Chairman may prescribe.
Section 4.07. THE CHIEF OPERATING OFFICER. The Chief Operating Officer
shall be the chief operating officer of the Corporation and shall perform, in
general, all duties incident to the office of Chief Operating Officer and
shall be responsible for the operations of the Corporation, including
manufacturing, engineering, marketing, distribution, sales, labor relations
and administrative responsibilities and such other duties as may be specified
in these By-Laws or as may be assigned to him from time to time by (subject
to Section 4.06) the President and Chief Executive Officer (or, if the
Chairman is then acting as chief executive officer of the Corporation, by the
Chairman). The Chief
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Operating Officer shall report to the President and Chief Executive Officer
(or, if the Chairman is then acting as chief executive officer of the
Corporation, to the Chairman). In the absence of the President and Chief
Executive Officer (or, if the Chairman is then acting as chief executive
officer of the Corporation, the Chairman), the duties of such officer in such
capacity shall be performed and the powers of such officer in such capacity
may be exercised by the Chief Operating Officer; subject in any case to
review and superseding action by (subject to Section 4.06) the President and
Chief Executive Officer (or, if the Chairman is then acting as chief
executive officer of the Corporation, by the Chairman).
Section 4.08. THE VICE PRESIDENTS. Each Vice President shall perform
such duties and exercise such powers as may be assigned to him from time to
time by (subject to Section 4.06) the President and Chief Executive Officer
(or, if the Chairman is then acting as chief executive officer of the
Corporation, by the Chairman).
Section 4.09. THE SECRETARY. The Secretary shall have the following
powers and duties:
(a) He shall keep or cause to be kept a record of all the proceedings
of the meetings of the stockholders and of the Board of Directors in books
provided for that purpose. [Section 142(a).]
(b) He shall cause all notices to be duly given in accordance with
the provisions of these By-Laws and as required by law.
(c) Whenever any Committee shall be appointed pursuant to a
resolution of the Board of Directors, he shall furnish a copy of such
resolution to the members of such Committee.
(d) He shall be the custodian of the records and of the seal of the
Corporation and cause such seal (or
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a facsimile thereof) to be affixed to all certificates representing
shares of the Corporation prior to the issuance thereof and to all
instruments the execution of which on behalf of the Corporation under
its seal shall have been duly authorized in accordance with these
By-Laws, and when so affixed he may attest the same.
(e) He shall properly maintain and file all books, reports,
statements, certificates and all other documents and records required by
law, the Certificate of Incorporation or these By-Laws.
(f) He shall have charge of the stock books and ledgers of the
Corporation and shall cause the stock and transfer books to be kept in such
manner as to show at any time the number of shares of stock of the
Corporation of each class issued and outstanding, the names (alphabetically
arranged) and the addresses of the holders of record of such shares, the
number of shares held by each holder and the date as of which each became
such holder of record.
(g) He shall sign (unless the Treasurer, an Assistant Treasurer or
Assistant Secretary shall have signed) certificates representing shares of
the Corporation the issuance of which shall have been authorized by the
Board of Directors.
(h) He shall perform, in general, all duties incident to the office
of secretary and such other duties as may be specified in these By-Laws or
as may be assigned to him from time to time by the Board of Directors or
(subject to Section 4.06) the President and Chief Executive Officer (or, if
the Chairman is then acting as chief executive officer of the Corporation,
the Chairman).
Section 4.10. THE CHIEF FINANCIAL OFFICER. The Chief Financial Officer
shall be the chief financial officer
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of the Corporation and shall have the following powers and duties:
(a) He shall have charge and supervision over and be responsible for
the moneys, securities, receipts and disbursements of the Corporation, and
shall keep or cause to be kept full and accurate records of all receipts of
the Corporation.
(b) He shall render to the Board of Directors or the Audit Committee,
whenever requested, a statement of the financial condition of the
Corporation and of all his transactions as Chief Financial Officer, and
render a full financial report at the annual meeting of the stockholders,
if called upon to do so.
(c) He shall be empowered from time to time to require from all
officers or agents of the Corporation reports or statements giving such
information as he may desire with respect to any and all financial
transactions of the Corporation.
(d) He shall perform, in general, all duties incident to the office
of chief financial officer and such other duties as may be specified in
these By-Laws or as may be assigned to him from time to time by the Board
of Directors or the Chairman of the Board.
(e) The Chief Financial Officer shall report to the President and
Chief Executive Officer (or, if the Chairman is then acting as chief
executive officer of the Corporation, to the Chairman).
Section 4.11. THE TREASURER. The Treasurer shall be the treasurer of
the Corporation and shall have the following powers and duties:
(a) He shall cause the moneys and other valuable effects of the
Corporation to be deposited in the name and to the credit of the
Corporation in such banks or
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trust companies or with such bankers or other depositaries as shall
be selected in accordance with Section 8.05 of these By-Laws.
(b) He shall cause the moneys of the Corporation to be disbursed by
checks or drafts (signed as provided in Section 8.06 of these By-Laws) upon
the authorized depositaries of the Corporation and cause to be taken and
preserved proper vouchers for all moneys disbursed.
(c) He may sign (unless an Assistant Treasurer or the Secretary or an
Assistant Secretary shall have signed) certificates representing stock of
the Corporation the issuance of which shall have been authorized by the
Board of Directors.
(d) He shall perform, in general, all duties incident to the office
of treasurer and such other duties as may be specified in these By-Laws or
as may be assigned to him from time to time by the Board of Directors or
the Chief Financial Officer, to whom he shall report.
Section 4.12. ADDITIONAL OFFICERS. The Board of Directors may appoint
such other officers and agents as it may deem appropriate, and such other
officers and agents shall hold their offices for such terms and shall
exercise such powers and perform such duties as may be determined from time
to time by the Board of Directors. The Board of Directors from time to time
may delegate to any officer or agent the power to appoint subordinate
officers or agents and to prescribe their respective rights, terms of office,
authorities and duties. Any such officer or agent may remove any such
subordinate officer or agent appointed by him, for or without cause.
[Section 142(a), (b).]
Section 4.13. SECURITY. The Board of Directors may require any
officer, agent or employee of the Corporation to provide security for the
faithful performance of his duties, in such amount and of such character as
may be
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determined from time to time by the Board of Directors. [Section 142(c).]
ARTICLE V
CAPITAL STOCK
Section 5.01. CERTIFICATES OF STOCK. The shares of the Corporation
shall be represented by certificates, provided that the Board of Directors
may provide by resolution or resolutions that some or all of any or all
classes or series of the stock of the Corporation shall be uncertificated
shares. Any such resolution shall not apply to shares represented by a
certificate until each certificate is surrendered to the Corporation.
Notwithstanding the adoption of such a resolution by the Board of Directors,
every holder of stock in the Corporation represented by certificates and upon
request every holder of uncertificated shares shall be entitled to have a
certificate signed by, or in the name of the Corporation, by (subject to
Section 4.06) the President and Chief Executive Officer (or, if the President
and Chief Executive Officer is not then empowered to do so pursuant to
Section 4.06, the Chairman) or a Vice President, and by the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary, representing
the number of shares registered in certificate form. Such certificate shall
be in such form as the Board of Directors may determine, to the extent
consistent with applicable law, the Certificate of Incorporation and these
By-Laws. [Section 158.]
Section 5.02. SIGNATURES; FACSIMILE. Any or all of such signatures on
the certificate may be a facsimile, engraved or printed, to the extent permitted
by law. In case any officer, transfer agent or registrar who has signed, or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he
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were such officer, transfer agent or registrar at the date of issue.
[Section 158.]
Section 5.03. LOST, STOLEN OR DESTROYED CERTIFICATES. The Board of
Directors may direct that a new certificate be issued in place of any
certificate theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon delivery to the Board of Directors of an affidavit
of the owner or owners of such certificate, setting forth such allegation.
The Board of Directors may require the owner of such lost, stolen or
destroyed certificate, or his legal representative, to give the Corporation a
bond sufficient to indemnify it against any claim that may be made against it
on account of the alleged loss, theft or destruction of any such certificate
or the issuance of any such new certificate. [Section 167.]
Section 5.04. TRANSFER OF STOCK. Upon surrender to the Corporation or
the transfer agent of the Corporation of a certificate for shares, duly
endorsed or accompanied by appropriate evidence of succession, assignment or
authority to transfer, the Corporation shall issue a new certificate to the
person entitled thereto, cancel the old certificate and record the
transaction upon its books. Within a reasonable time after the transfer of
uncertificated stock, the Corporation shall send to the registered owner
thereof a written notice containing the information required to be set forth
or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of
the DGCL. Subject to the provisions of the Certificate of Incorporation and
these By-Laws, the Board of Directors may prescribe such additional rules and
regulations as it may deem appropriate relating to the issue, transfer and
registration of shares of the Corporation. [Section 151(f).]
Section 5.05. RECORD DATE. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a
record date, which record date shall not precede the date on which
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the resolution fixing the record date is adopted by the Board of Directors,
and which shall not be more than sixty nor less than ten days before the date
of such meeting. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting, provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
In order that the Corporation may determine the stockholders entitled to
consent to corporate action in writing without a meeting, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the board of
directors is required by law, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in the
State of Delaware, its principal place of business, or an officer or agent of
the Corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Delivery made to the Corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board of Directors and
prior action by the Board of Directors is required by law, the record date
for determining stockholders entitled to consent to corporate action in
writing without a meeting shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such prior action.
In order that the Corporation may determine the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any
rights or the stock-
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holders entitled to exercise any rights in respect of any change, conversion
or exchange of stock, or for the purpose of any other lawful action, the
Board of Directors may fix a record date, which record date shall not precede
the date upon which the resolution fixing the record date is adopted, and
which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board
of Directors adopts the resolution relating thereto. [Section 213.]
Section 5.06. REGISTERED STOCKHOLDERS. Prior to due surrender of a
certificate for registration of transfer, the Corporation may treat the
registered owner as the person exclusively entitled to receive dividends and
other distributions, to vote, to receive notice and otherwise to exercise all
the rights and powers of the owner of the shares represented by such
certificate, and the Corporation shall not be bound to recognize any
equitable or legal claim to or interest in such shares on the part of any
other person, whether or not the Corporation shall have notice of such claim
or interests. Whenever any transfer of shares shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer if, when the certificates are presented to the Corporation for
transfer or uncertificated shares are requested to be transferred, both the
transferor and transferee request the Corporation to do so. [Section 159.]
Section 5.07. TRANSFER AGENT AND REGISTRAR. The Board of Directors may
appoint one or more transfer agents and one or more registrars, and may
require all certificates representing shares to bear the signature of any
such transfer agents or registrars.
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ARTICLE VI
INDEMNIFICATION
Section 6.01. NATURE OF INDEMNITY. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is
or was or has agreed to become a director, officer, employee or agent of the
Corporation, or is or was serving or has agreed to serve at the request of
the Corporation as a director, officer, employee or agent, of another
corporation, partnership, joint venture, trust or other enterprise, or by
reason of any action alleged to have been taken or omitted in such capacity,
and may indemnify any person who was or is a party or is threatened to be
made a party to such an action, suit or proceeding by reason of the fact that
he is or was or has agreed to become an employee or agent of the Corporation,
or is or was serving or has agreed to serve at the request of the Corporation
as an employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or on his behalf in connection with such action, suit or
proceeding and any appeal therefrom, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal action or proceeding
had no reasonable cause to believe his conduct was unlawful; except that in
the case of an action or suit by or in the right of the Corporation to
procure a judgment in its favor (1) such indemnification shall be limited to
expenses (including attorneys' fees) actually and reasonably incurred by such
person in the defense or settlement of such action or suit, and (2) no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Delaware Court of Chancery or
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the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which the Delaware Court of Chancery or such
other court shall deem proper.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of NOLO CONTENDERE or its equivalent,
shall not, of itself, create a presumption that the person did not act in
good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful. [Section 145(a), (b).]
Section 6.02. SUCCESSFUL DEFENSE. To the extent that a director,
officer, employee or agent of the Corporation has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred to
in Section 6.01 hereof or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith. [Section 145(c).]
Section 6.03. DETERMINATION THAT INDEMNIFICATION IS PROPER. Any
indemnification under Section 6.01 hereof (unless ordered by a court) shall
be made by the Corporation unless a determination is made that
indemnification of the director, officer, employee or agent is not proper in
the circumstances because he has not met the applicable standard of conduct
set forth in Section 6.01 hereof. Any such determination shall be made (1)
by a majority vote of the directors who are not parties to such action, suit
or proceeding, even though less than a quorum, or (2) if there are no such
directors, or, if such directors so direct, by independent legal counsel in a
written opinion, or (3) by the stockholders. [Section 145(d).]
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Section 6.04. ADVANCE PAYMENT OF EXPENSES. Expenses (including
attorneys' fees) incurred by a director or officer in defending any civil,
criminal, administrative or investigative action, suit or proceeding shall be
paid by the Corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Corporation as authorized in
this Article. Such expenses (including attorneys' fees) incurred by other
employees and agents may be so paid upon such terms and conditions, if any,
as the Board of Directors deems appropriate. The Board of Directors may
authorize the Corporation's counsel to represent such director, officer,
employee or agent in any action, suit or proceeding, whether or not the
Corporation is a party to such action, suit or proceeding. [Section 145(e).]
Section 6.05. PROCEDURE FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Any indemnification of a person seeking indemnification under Sections 6.01
and 6.02, or advance of costs, charges and expenses to such person under
Section 6.04 of this Article, shall be made promptly, and in any event within
30 days, upon the written request of such person. If a determination by the
Corporation that such person is entitled to indemnification pursuant to this
Article is required, and the Corporation fails to respond within sixty days
to a written request for indemnity, the Corporation shall be deemed to have
approved such request. If the Corporation denies a written request for
indemnity or advancement of expenses, in whole or in part, or if payment in
full pursuant to such request is not made within 30 days, the right to
indemnification or advances as granted by this Article shall be enforceable
by the indemnified person in any court of competent jurisdiction. Such
person's costs and expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
action shall also be indemnified by the Corporation. It shall be a defense
to any such action (other than an action brought to enforce a claim for the
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advance of costs, charges and expenses under Section 6.04 of this Article
where the required undertaking, if any, has been received by the Corporation)
that the claimant has not met the standard of conduct set forth in Section
6.01 of this Article, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, its independent legal counsel, and its stockholders) to have made
a determination prior to the commencement of such action that indemnification
of the claimant is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 6.01 of this Article, nor
the fact that there has been an actual determination by the Corporation
(including its Board of Directors, its independent legal counsel, and its
stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 6.06. SURVIVAL; PRESERVATION OF OTHER RIGHTS. The foregoing
indemnification provisions shall be deemed to be a contract between the
Corporation and each director, officer, employee and agent who serves in any
such capacity at any time while these provisions as well as the relevant
provisions of the Delaware Corporation Law are in effect and any repeal or
modification thereof shall not affect any right or obligation then existing
with respect to any state of facts then or previously existing or any action,
suit or proceeding previously or thereafter brought or threatened based in
whole or in part upon any such state of facts. Such a "contract right" may
not be modified retroactively without the consent of such director, officer,
employee or agent.
The indemnification and advancement of expenses provided by this Article
VI shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any by-law, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action in his
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official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person. [Section 145(f), (j).]
Section 6.07. INSURANCE. The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was or has
agreed to become a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him or on his behalf in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article.
[Section 145(g).]
Section 6.08. SEVERABILITY. If this Article or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction,
then the Corporation shall nevertheless indemnify each director, officer,
employee or agent of the Corporation as to costs, charges and expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
with respect to any action, suit or proceeding, whether civil, criminal,
administrative or investigative, including an action by or in the right of
the Corporation, to the fullest extent permitted by any applicable portion of
this Article that shall not have been invalidated and to the fullest extent
permitted by applicable law.
Section 6.09. DEFINITIONS. For purposes of this Article VI, the
following terms shall have the following meanings:
(a) references to "the Corporation" shall include, in addition to
the resulting corporation, any constituent corporation (including any
constituent of a
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constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify
its directors, officers, employees or agents so that any person who is
or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
shall stand in the same position under the provisions of this Article VI
with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate
existence had continued;
(b) references to "other enterprises" shall include employee benefit
plans;
(c) references to "fines" shall include any excise taxes assessed on
a person with respect to an employee benefit plan; and
(d) references to "serving at the request of the Corporation" shall
include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee benefit
plan, its participants, or beneficiaries.
ARTICLE VII
OFFICES
Section 7.01. REGISTERED OFFICE. The registered office of the
Corporation in the State of Delaware shall be located at Corporation Trust
Center, 1209 Orange Street in the City of Wilmington, County of New Castle.
Section 7.02. OTHER OFFICES. The Corporation may maintain offices or
places of business at such other loca-
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tions within or without the State of Delaware as the Board of Directors may
from time to time determine or as the business of the Corporation may require.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01. DIVIDENDS. Subject to any applicable provisions of law
and the Certificate of Incorporation, dividends upon the shares of the
Corporation may be declared by the Board of Directors at any regular or
special meeting of the Board of Directors and any such dividend may be paid
in cash, property, or shares of the Corporation's Capital Stock.
A member of the Board of Directors, or a member of any Committee
designated by the Board of Directors, shall be fully protected in relying in
good faith upon the records of the Corporation and upon such information,
opinions, reports or statements presented to the Corporation by any of its
officers or employees, or Committees of the Board of Directors, or by any
other person as to matters the director reasonably believes are within such
other person's professional or expert competence and who has been selected
with reasonable care by or on behalf of the Corporation, as to the value and
amount of the assets, liabilities and/or net profits of the Corporation, or
any other facts pertinent to the existence and amount of surplus or other
funds from which dividends might properly be declared and paid.
[Sections 170, 172, 173.]
Section 8.02. RESERVES. There may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of
Directors, from time to time, in its absolute discretion, thinks proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the Corporation or for such
other purpose as the Board of
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Directors shall think conducive to the interest of the Corporation, and the
Board of Directors may similarly modify or abolish any such reserve.
[Section 171.]
Section 8.03. EXECUTION OF INSTRUMENTS. The Board of Directors may
authorize the President and Chief Executive Officer or any other officer or
agent to enter into any contract or execute and deliver any instrument in the
name and on behalf of the Corporation. Any such authorization may be general
or limited to specific contracts or instruments.
Section 8.04. CORPORATE INDEBTEDNESS. No loan shall be contracted on
behalf of the Corporation, and no evidence of indebtedness shall be issued in
its name, unless authorized by the Board of Directors or, to the extent the
Executive Committee has the power to authorize such loan or evidence of
indebtedness, the Executive Committee. Such authorization may be general or
confined to specific instances. Loans so authorized may be effected at any
time for the Corporation from any bank, trust company or other institution,
or from any firm, corporation or individual. All bonds, debentures, notes
and other obligations or evidences of indebtedness of the Corporation issued
for such loans shall be made, executed and delivered as the Board of
Directors or the Executive Committee, as the case may be, shall authorize.
When so authorized by the Board of Directors or the Executive Committee, as
the case may be, any part of or all the properties, including contract
rights, assets, business or good will of the Corporation, whether then owned
or thereafter acquired, may be mortgaged, pledged, hypothecated or conveyed
or assigned in trust as security for the payment of such bonds, debentures,
notes and other obligations or evidences of indebtedness of the Corporation,
and of the interest thereon, by instruments executed and delivered in the
name of the Corporation.
Section 8.05. DEPOSITS. Any funds of the Corporation may be deposited
from time to time in such banks, trust companies or other depositaries as may
be
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determined by (a) the Board of Directors or (subject to Section 4.06) the
President and Chief Executive Officer (or, if the Chairman is then acting as
chief executive officer of the Corporation, the Chairman) or (b) such
officers or agents as may be authorized to make such determination by the
Board of Directors or (subject to Section 4.06) the President and Chief
Executive Officer (or, if the Chairman is then acting as chief executive
officer of the Corporation, the Chairman).
Section 8.06. CHECKS. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such agent or
agents of the Corporation, and in such manner, as the Board of Directors or
(subject to Section 4.06) the President and Chief Executive Officer (or, if
the Chairman is then acting as chief executive officer of the Corporation,
the Chairman) from time to time may determine.
Section 8.07. SALE, TRANSFER, ETC. OF SECURITIES. To the extent
authorized by the Board of Directors, (subject to Section 4.06) the President
and Chief Executive Officer (or, if the Chairman is then acting as chief
executive officer of the Corporation, the Chairman) or any other officers
designated by the Board of Directors may sell, transfer, endorse, and assign
any shares of stock, bonds or other securities owned by or held in the name
of the Corporation, and may make, execute and deliver in the name of the
Corporation, under its corporate seal, any instruments that may be
appropriate to effect any such sale, transfer, endorsement or assignment.
Section 8.08. VOTING AS STOCKHOLDER. As directed by resolution of the
Board of Directors or the Executive Committee, (a) (subject to Section 4.06) the
President and Chief Executive Officer (or, if the Chairman is then acting as
chief executive officer of the Corporation, the Chairman) or any Vice President
shall have full power and authority on behalf of the Corporation to attend any
meeting of stockholders of any corporation in which the Corporation may hold
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stock, and to act, vote (or execute proxies to vote) and exercise in person
or by proxy all other rights, powers and privileges incident to the ownership
of such stock, and (B) such officers acting on behalf of the Corporation
shall have full power and authority to execute any instrument expressing
consent to or dissent from any action of any such corporation without a
meeting. The Board of Directors may by resolution from time to time confer
such power and authority upon any other person or persons.
Section 8.09. FISCAL YEAR. The fiscal year of the Corporation shall
commence on the first day of January of each year (except for the
Corporation's first fiscal year which shall commence on the date of
incorporation) and shall terminate in each case on the last day of December.
Section 8.10. SEAL. The seal of the Corporation shall be circular in
form and shall contain the name of the Corporation, the year of its
incorporation and the words "Corporate Seal" and "Delaware". The form of
such seal shall be subject to alteration by the Board of Directors. The seal
may be used by causing it or a facsimile thereof to be impressed, affixed or
reproduced, or may be used in any other lawful manner.
Section 8.11. BOOKS AND RECORDS; INSPECTION. Except to the extent
otherwise required by law, the books and records of the Corporation shall be
kept at such place or places within or without the State of Delaware as may
be determined from time to time by the Board of Directors.
Section 8.12. DEFINITIONS.
"Additional Committee": See Section 3.01.
"CDR" means Clayton, Dubilier & Rice, Inc., a Delaware corporation.
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"CDR Fund" means Clayton, Dubilier & Rice Fund V Limited Partnership, a
Connecticut limited partnership, and any successors and assigns.
"Committee": See Section 3.01.
"Investor": See "Stockholders Agreement."
"Nominating Party" means any one of the investors named in Section 1(b)
of the Stockholders Agreement entitled to nominate such number of persons as
specified therein for election to the Board of Directors of the Corporation.
"Riverwood Holding": Riverwood Holding, Inc., a Delaware corporation
and the sole stockholder of the sole stockholder of the Corporation.
"Standing Committee": See Section 3.01.
"Stockholders Agreement" means the Stockholders Agreement entered into
among Riverwood Holding and each of CDR Fund, EXOR Group S.A., First Plaza
Group Trust, The 1818 Fund II, L.P., Madison Dearborn Capital Partners, L.P.,
Chemical Equity Associates, HWH Investment Pte Ltd. and Wolfensohn-River LLC
(each an "Investor" and, collectively, the "Investors"), as amended and as in
effect from time to time.
"Unaffiliated Nominee" means any person nominated for election to the
Board of Directors of the Corporation by a Nominating Party who is not an
employee, officer, general partner or general partner of the general partner
of the Nominating Party or of an Affiliate (as defined in Section 9 of the
Stockholders Agreement) of the Nominating Party.
39
<PAGE>
ARTICLE IX
AMENDMENT OF BY-LAWS
Section 9.01. AMENDMENT. These By-Laws may be amended, altered or
repealed
(a) by resolution adopted by a majority of the Board of Directors at
any special or regular meeting of the Board if, in the case of such special
meeting only, notice of such amendment, alteration or repeal is contained
in the notice or waiver of notice of such meeting; or
(b) at any regular or special meeting of the stockholders if, in the
case of such special meeting only, notice of such amendment, alteration or
repeal is contained in the notice or waiver of notice of such meeting.
[Section 109(a).]
Notwithstanding the foregoing sentence, during the term of the
Stockholders Agreement, these By-Laws may not be amended, altered or repealed
in a manner inconsistent with the terms and provisions of the Stockholders
Agreement.
ARTICLE X
CONSTRUCTION
Section 10.01. CONSTRUCTION. In the event of any conflict between the
provisions of these By-Laws as in effect from time to time and (a) the
provisions of the certificate of incorporation of the Corporation as in
effect from time to time, or (b) the provisions of the Stockholders
Agreement, the provisions of such certificate of incorporation or the
Stockholders Agreement, as the case may be, shall be controlling.
40
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM RIVERWOOD
HOLDING, INC.'S CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF
OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 28, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> MAR-28-1996
<PERIOD-END> SEP-28-1996
<CASH> 16,507
<SECURITIES> 792
<RECEIVABLES> 164,790
<ALLOWANCES> 2,294
<INVENTORY> 224,567
<CURRENT-ASSETS> 991,454
<PP&E> 1,649,898
<DEPRECIATION> 55,656
<TOTAL-ASSETS> 3,172,467
<CURRENT-LIABILITIES> 328,390
<BONDS> 2,048,757
0
0
<COMMON> 76
<OTHER-SE> 688,496
<TOTAL-LIABILITY-AND-EQUITY> 3,172,467
<SALES> 585,529
<TOTAL-REVENUES> 585,529
<CGS> 528,946
<TOTAL-COSTS> 528,946
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 543
<INTEREST-EXPENSE> 101,227
<INCOME-PRETAX> (117,459)
<INCOME-TAX> (1,356)
<INCOME-CONTINUING> (105,803)
<DISCONTINUED> 28,376
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (77,427)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
