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Page 1 of 29 Pages
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
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Transition Period from to
For Quarter Ended September 30, 1996 Commission File Number 1-5112
ETHYL CORPORATION
(Exact name of registrant as specified in its charter)
VIRGINIA 54-0118820
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
330 SOUTH FOURTH STREET
P. O. BOX 2189
RICHMOND, VIRGINIA 23219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code - (804) 788-5000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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
Number of shares of common stock, $1 par value, outstanding as of October 31,
1996: 118,443,835.
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ETHYL CORPORATION
I N D E X
Page
Number
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets - September 30, 1996 and
December 31, 1995 3 - 4
Consolidated Statements of Income - Three Months and Nine
Months Ended September 30, 1996 and 1995 5
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1996 and 1995 6
Notes to Financial Statements 7 - 8
ITEM 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 9 - 12
PART II. OTHER INFORMATION
ITEM 5. Other Events 13
ITEM 6. Exhibits and Reports on Form 8-K 13
SIGNATURE 14
EXHIBIT INDEX 15
EXHIBIT 3.1 Corrected Restated Articles of Incorporation,
together with explanatory letter. 16 - 29
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
ETHYL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
September 30
1996 December 31
ASSETS (unaudited) 1995
------------ ------------
Current assets:
Cash and cash equivalents $ 32,630 $ 29,972
Accounts receivable, less allowance for doubtful
accounts (1996 - $2,340; 1995 - $2,317) 172,398 169,451
Inventories:
Finished goods 181,188 146,010
Raw materials 22,233 13,285
Stores, supplies and other 9,522 6,587
----------- --------
212,943 165,882
Deferred income taxes and prepaid expenses 19,670 23,207
----------- --------
Total current assets 437,641 388,512
----------- --------
Property, plant and equipment, at cost 763,750 713,635
Less accumulated depreciation and amortization (319,141) (285,327)
----------- --------
Net property, plant and equipment 444,609 428,308
----------- --------
Other assets and deferred charges 160,402 151,833
Goodwill and other intangibles - net of amortization 59,901 15,134
----------- --------
Total assets $ 1,102,553 $ 983,787
=========== ========
See accompanying notes to financial statements.
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ETHYL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
September 30
1996 December 31
LIABILITIES AND SHAREHOLDERS' EQUITY (unaudited) 1995
---------- -----------
Current liabilities:
Accounts payable $ 69,230 $ 55,903
Accrued expenses 64,681 58,682
Cash dividends payable 14,806 14,806
Long-term debt, current portion 9,000 -
Income taxes payable 30,977 16,379
---------- -----------
Total current liabilities 188,694 145,770
---------- -----------
Long-term debt 353,129 302,973
Other noncurrent liabilities 88,214 84,171
Deferred income taxes 41,936 40,745
Shareholders' equity:
Common stock ($1 par value)
Issued - 118,443,835 in 1996 and 1995 118,444 118,444
Additional paid-in capital 2,799 2,799
Foreign currency translation adjustments (669) 2,090
Retained earnings 310,006 286,795
---------- -----------
430,580 410,128
---------- -----------
Total liabilities and shareholders' equity $ 1,102,553 $ 983,787
========== ===========
See accompanying notes to financial statements.
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ETHYL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1996 1995 1996 1995
-------- --------- -------- ---------
Net sales $ 304,169 $ 241,672 $ 845,674 $ 700,493
Cost of goods sold 208,742 159,754 592,386 465,797
-------- --------- -------- ---------
Gross profit 95,427 81,918 253,288 234,696
Selling, general and administrative expenses 26,027 24,500 75,870 71,646
Research, development and testing expenses 18,105 18,854 52,133 57,359
Special charge - 4,750 - 4,750
-------- --------- -------- ---------
Operating profit 51,295 33,814 125,285 100,941
Interest and financing expenses 6,452 7,564 18,650 21,581
Other (income), net (303) (340) (1,258) (588)
-------- --------- -------- ---------
Income before income taxes 45,146 26,590 107,893 79,948
Income taxes 16,661 9,623 40,266 28,482
-------- --------- -------- ---------
Net Income $ 28,485 $ 16,967 $ 67,627 $ 51,466
======== ========= ======== =========
Earnings per share $ .24 $ .14 $ .57 $ .43
======== ========= ======== =========
Shares used to compute earnings per share 118,444 118,442 118,449 118,442
======== ========= ======== =========
Cash dividends per share of common stock $ .125 $ .125 $ .375 $ .375
======== ========= ======== =========
See accompanying notes to financial statements.
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ETHYL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars In Thousands)
(Unaudited)
Nine Months Ended
September 30
--------------------
1996 1995
-------- --------
Cash and cash equivalents at beginning of year $ 29,972 $ 31,166
-------- --------
Cash flows from operating activities:
Net income 67,627 51,466
Adjustments to reconcile net income to cash flows from
operating activities:
Depreciation and amortization 43,116 35,795
Special charge - 4,750
Working capital decreases, net of effects from
acquisition 35,151 10,012
Other, net 1,139 4,746
-------- --------
Cash provided from operating activities 147,033 106,769
-------- --------
Cash flows from investing activities:
Acquisition of business (net of $1,245 cash acquired) (133,032) -
Capital expenditures (23,804) (33,608)
Other, net (2,123) 2,149
-------- --------
Cash used in investing activities (158,959) (31,459)
-------- --------
Cash flows from financing activities:
Additional long-term debt 59,000 162,000
Repayment of long-term debt - (200,000)
Cash dividends paid (44,416) (44,416)
Other, net - 196
-------- --------
Cash provided from (used in) financing activities 14,584 (82,220)
-------- --------
Increase in cash and cash equivalents 2,658 (6,910)
-------- --------
Cash and cash equivalents at end of period $ 32,630 $ 24,256
======== ========
See accompanying notes to financial statements.
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ETHYL CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(In Thousands Except Per-Share Amounts)
(Unaudited)
1. In the opinion of management, the accompanying consolidated financial
statements of Ethyl Corporation and Subsidiaries (the "Company")
contain all adjustments necessary to present fairly, in all material
respects, the Company's consolidated financial position as of
September 30, 1996, the consolidated results of operations for the
three and nine-month periods ended September 30, 1996 and 1995 and the
consolidated cash flows for the nine-month periods ended September 30,
1996 and 1995. All adjustments are of a normal, recurring nature.
The December 31, 1995 consolidated balance sheet data was derived from
audited financial statements but does not include all the information
and footnotes required by generally accepted accounting principles for
audited financial statements. Therefore, these financial statements
should be read in conjunction with the consolidated financial
statements and notes thereto included in the December 31, 1995 Annual
Report. The results of operations for the nine-month period ended
September 30, 1996, are not necessarily indicative of the results to
be expected for the full year.
2. On February 29, 1996, the Company completed the acquisition
of the worldwide lubricant additives business of Texaco Inc.,
("Texaco") including manufacturing and blending facilities,
identifiable intangibles and working capital. The acquisition,
accounted for under the purchase method, included a cash payment of
$134.2 million and a future contingent payment of up to $60 million.
The cash payment was financed primarily under the Company's revolving
credit agreement. The payment of up to $60 million will become due on
February 26, 1999, with interest payable on the contingent debt until
such date. The actual amount of the contingent payment and total
interest will be determined using an agreed-upon formula based on
volumes of certain acquired product lines shipped during the calendar
years 1996 through 1998, as specified in the contingent note
agreement. Texaco retained substantially all noncurrent liabilities.
As the Company's 1996 financial statements only include seven months
of operations of the recently acquired lubricant additives business,
the following selected unaudited pro forma information is being
provided to present a summary of the combined results of the Company
and the worldwide lubricant additives business of Texaco as if the
acquisition had occurred as of January 1, 1996 and 1995, giving effect
to adjustments for interest expense that would have been incurred to
finance the acquisition and other purchase accounting adjustments.
The pro forma data is for informational purposes only and may not
necessarily reflect the results of operations of Ethyl had the
acquired business operated as part of the Company for the nine-month
periods ended September 30, 1996 and 1995.
Nine Months Ended
September 30
-------------------------
1996 1995
--------- ---------
Net Sales $894,849 $975,271
Net Income $ 70,517 $ 66,185
Earnings Per Share $.60 $.56
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ETHYL CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
(In Thousands Except Per-Share Amounts)
(Unaudited)
3. Long-term debt consists of the following: September 30 December 31
1996 1995
----------- ----------
Variable-rate bank loans (average effective
interest rates were 5.9% for the nine month
period ended September 30, 1996 and 6.4%
for the year 1995) $320,000 $270,000
5.76% Bank Credit Agreement 9,000 -
8.6% to 8.86% Medium-Term Notes due
through 2001 33,750 33,750
------- --------
Total long-term debt 362,750 303,750
Less unamortized discount (621) (777)
------- --------
Net long-term debt 362,129 302,973
Less current portion (9,000) -
------- --------
$353,129 $302,973
======= ========
No portion of the $60 million contingent note principal related to the
purchase of the lubricant additives business from Texaco has been
recorded on the September 30,1996 balance sheet. Any principal or
interest amount ultimately paid on the note will be accounted for as
an adjustment to the purchase price when paid.
4. The special charge in 1995 relates to a provision for a legal
settlement by the Company with the civil division of the U. S.
Department of Justice resulting in an after tax charge of $4,150 or
$.04 per share.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following is management's discussion and analysis of certain significant
factors affecting the Company's results of operations during the periods
included in the accompanying consolidated statement of income and changes in
the Company's financial condition since year-end 1995. The Company's 1996
results of operations include the results of the lubricant additives business
of Texaco Inc. ("Texaco") since it was acquired on February 29, 1996, while
the balance sheet at September 30, 1996, includes a preliminary allocation of
the purchase price and other purchase accounting adjustments as well as
borrowing used to finance the acquisition.
Results of Operations
Third Quarter 1996 Compared to Third Quarter 1995
Net sales for the third quarter of 1996 amounted to $304.2 million, up $62.5
million from $241.7 million in the 1995 quarter. The increase in net sales
was due to higher shipments ($73.8 million), partially offset by the impact of
lower selling prices ($11.3 million). The increased sales reflected the
inclusion of $73.7 million of lubricant additives revenues from the worldwide
lubricant additives business of Texaco acquired on February 29, 1996, and also
higher shipments of certain other lubricant additives as well as higher
selling prices for antiknocks and other fuel additives, partly offset by lower
selling prices of lubricant additives products and lower shipments of lead
antiknocks.
Cost of goods sold in 1996 of $208.7 million increased $48.9 million from
$159.8 million in the 1995 quarter. The increase reflected the inclusion of
cost of goods sold of the worldwide lubricant additives business acquired from
Texaco ($60.9 million). The overall increase was due to higher shipments
($62.5 million) partly offset by the impact of lower costs ($13.6 million),
including lower per unit raw material costs in the 1996 quarter.
The net result of a 26% increase in net sales and a 31% increase in cost of
goods sold was that the gross profit margin decreased to 31.4% in the 1996
quarter from 33.9% in the 1995 quarter, mainly reflecting lower margins due to
continued soft market conditions in lubricant additives, and a change in
product mix reflecting an increase in the extent to which sales and profits
come from lubricant additives and other fuel additives.
Selling, general and administrative expenses combined with research,
development and testing expenses amounted to $44.1 million in the third
quarter 1996, up $0.7 million from $43.4 million in the third quarter 1995.
The increase primarily results from higher expenses related to marketing
activities for HITEC (R) 3000 performance additive ("MMT"), in spite of a
general reduction in research, development and testing expenses, and also
reflects the synergistic benefit of the acquisition and having the Company's
research laboratory more fully utilized. As a percentage of net sales,
selling, general and administrative expenses, including research, development
and testing expenses decreased to 14.5% during the 1996 quarter from 17.9%
during the 1995 quarter.
Operating profit in the 1996 quarter increased to $51.3 million, up $17.5
million from $33.8 million in the 1995 quarter. Most of the increase resulted
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from the effect of the acquired lubricant additives business, and the absence
of the third quarter 1995 special charge provision of $4.75 million for a
legal settlement by the company with the civil division of the U.S. Department
of Justice, offset in part by lower margins in the 1996 quarter reflecting
soft lubricant additives market conditions and changes in product mix.
Interest expense in third quarter 1996 decreased 15% to $6.5 million from $7.6
million in the 1995 quarter. The $1.1 million decline reflects $2.1 million
lower interest cost from lower average interest rates as a result of replacing
a $200 million, 9.8% note on September 1995, with lower cost variable-rate
debt as well as a $0.7 million reduction in other fees, largely offset by $1.7
million higher interest expense from an increase in average debt outstanding,
reflecting the effect of funds used to finance the Texaco lubricant additives
acquisition.
Other income, net, decreased to $303 thousand in the 1996 quarter from $340
thousand other income, net, in the 1995 quarter. The decrease reflects
changes in a number of nonoperating items, none of which are material in
either quarter.
Income Taxes
Income taxes in the third quarter 1996 increased 73% from the third quarter
1995, primarily due to a 70% increase in income before income taxes as well as
the impact of a higher effective income tax rate (36.9% in the 1996 quarter
versus 36.2% in the 1995 quarter). The third quarter 1995 effective tax rate
was lower than the 1996 rate primarily due to the benefit included in 1995
from a redetermination of prior years research and development tax credits
resulting from a change in federal tax regulations, as well as other favorable
adjustments related to prior tax years.
Nine Months 1996 Compared to Nine Months 1995
Net sales for the nine months 1996 amounted to $845.7 million, up $145.2
million from $700.5 million in nine months 1995. The increase in net sales
was due to higher shipments ($175.5 million), partially offset by the impact
of lower selling prices ($30.3 million). The increased sales reflected the
inclusion of $175.2 million of lubricant additives revenues from the worldwide
lubricant additives business of Texaco acquired on February 29, 1996, and also
reflected higher shipments of certain nonlead fuel additives as well as higher
selling prices for antiknocks and other fuel additives, partly offset by lower
selling prices of lubricant additives products and lower shipments of lead
antiknocks.
Cost of goods sold in 1996 of $592.4 million increased $126.6 million from
$465.8 million in the 1995 period. The increase primarily reflected the
inclusion of cost of goods sold of the worldwide lubricant additives business
acquired from Texaco ($148.6 million). The overall increase was primarily due
to higher shipments ($140.3 million) as well as an unfavorable foreign
exchange effect. The overall increase in 1996 was partially offset by lower
per unit raw material costs in the 1996 period and nonrecurring costs in nine
months 1995, including costs associated with the second quarter 1995 shutdown
of operations at a contract manufacturing site, the start-up of certain
lubricant additives facilities and the April 1995 strike at the Feluy,
Belgium, manufacturing plant.
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The net result of a 21% increase in net sales and a 27% increase in cost of
goods sold was that the gross profit margin decreased to 30.0% in the 1996
period from 33.5% in the 1995 period, mainly reflecting lower margins due to
continued soft market conditions in lubricant additives, and a change in
product mix reflecting an increase in the extent to which sales and profits
come from lubricant additives and other fuel additives.
Selling, general and administrative expenses combined with research,
development and testing expenses amounted to $128.0 million in the nine months
1996, down $1.0 million from $129.0 million in the nine months 1995. The
decrease primarily results from a general reduction in research, development
and testing expenses, and also largely reflects the synergistic benefit of the
acquisition and having the Company's research laboratory more fully utilized
and of having more of the 1996 research, development and testing expenses
scheduled in the second half of the year, partially offset by higher expenses
related to marketing activities for MMT. As a percentage of net sales, the
selling, general and administrative expenses, including research, development
and testing expenses, decreased to 15.1% during the 1996 period from 18.4%
during the 1995 period.
Operating profit in the nine months 1996 increased to $125.3 million, up $24.4
million from $100.9 million in the nine months 1995. Most of the increase
resulted from the effect of the acquired lubricant additives business, and the
absence of the 1995 special charge provision of $4.75 million for a legal
settlement, offset in part by lower margins in the 1996 period reflecting soft
lubricant additives market conditions and changes in product mix, as well as
an unfavorable foreign currency variance.
Interest expense in nine months 1996 decreased 14% to $18.6 million from $21.6
million in the 1995 period. The $3.0 million decline reflects $6.9 million
lower interest cost from lower average interest rates as a result of replacing
a $200 million, 9.8% note on September 15, 1995, with lower cost variable-rate
debt and a $1.2 million reduction in other fees, mostly offset by $3.8 million
higher interest expense from an increase in average debt outstanding,
reflecting the effect of funds used to finance the Texaco lubricant additives
acquisition, and a $1.3 million reduction in interest costs capitalized in the
1996 period.
Other income, net, increased to $1.3 million in the 1996 period from $0.6
million in the 1995 period. The increase reflects changes in a number of
nonoperating items, none of which are material in either period.
Income Taxes
Income taxes in the nine months 1996 increased 41% from the nine months 1995,
primarily due to a 35% increase in income before income taxes, as well as the
impact of a higher effective income tax rate (37.3% in the 1996 period versus
35.6% in the 1995 period). The nine months 1995 effective tax rate was lower
than the 1996 rate primarily due to the benefit included in 1995 from a
redetermination of prior years research and development tax credits resulting
from a change in federal tax regulations, as well as other favorable
adjustments related to prior tax years.
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Financial Condition and Liquidity
Cash and cash equivalents at September 30, 1996, were about $32.6 million,
which represents an increase of about $2.6 million from $30.0 million at
year-end 1995.
Cash flows were more than sufficient to cover operating activities during the
1996 period. Cash flows from operating activities of $147.0 million, together
with $59.0 million in additional long-term debt were used to fund the
acquisition of the worldwide lubricant additives business from Texaco for a
purchase price of $133.0 million, and to cover capital expenditures of $23.8
million and cash dividends to shareholders of $44.4 million, as well as an
increase in cash and cash equivalents of $2.6 million. Management anticipates
that cash provided from operations in the future will be sufficient to cover
the Company's operating expenses, service debt obligations, including reducing
long-term debt, and make dividend payments to shareholders.
The noncurrent portion of Ethyl's long-term debt amounted to $353.1 million at
September 30, 1996, representing an increase in long-term debt of about $50.1
million from December 31, 1995, primarily representing funds borrowed in
connection with the lubricant additives acquisition, partially offset by about
$75.3 million of repayments of amounts borrowed under the revolving credit
agreement, as well as $9.0 million reclassified to current portion of
long-term debt. The Company also has a contingent note associated with the
acquisition of up to $60 million payable to Texaco. The actual amount due on
the contingent note will be determined using an agreed upon formula based on
volumes of certain acquired product lines shipped during calendar years 1996
through 1998. The Company's long-term debt as a percent of total
capitalization was 45.1% at September 30, 1996, excluding the effect of the
contingent note, compared to 42.5% at December 31, 1995. The Company targets
a range of 30% to 50% for its long-term debt ratio, and intends to continue to
utilize its strong cash flows to reduce long-term debt outstanding.
The Company's capital spending program over the next three to five years is
expected to be somewhat higher than in 1995 but lower than in 1994 and 1993,
reflecting the prior year completion of major construction and expansion
programs. Capital spending for environmental and safety projects on nonplant
expansion and replacement related construction will likely increase from
current levels largely reflecting the acquisition of the lubricant additives
business from Texaco. The capital spending will be financed primarily with
cash provided from operations.
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PART II - Other Information
ITEM 5. Other Events
In Canada, in May 1995 legislation was introduced in the
Canadian Parliament to restrict the inter-provincial transport
of HiTEC 3000 (R) performance additive ("MMT") in Canada as
well as the import of MMT into Canada. When Parliament
adjourned in mid-December 1995, the legislation had not passed
the House of Commons. In April 1996 the legislation was
reintroduced, but it has not passed the House of Commons. On
September 10, 1996, the Company served notice on the Canadian
government that, if such legislation is enacted by Parliament,
the Company intends to file a claim against the Canadian
government for damages under an arbitration provision of the
North American Free Trade Agreement. The NAFTA provision
allows a company to bring before an arbitration panel claims
against NAFTA governments for alleged violations of their
obligations toward investors. Before the claim is filed,
there is a 90-day period for consultations between the Company
and the Canadian Government. The Company's management
contends the proposed legislation would violate Canada's
investment obligations by "expropriating" Ethyl's MMT business
in Canada, which would significantly impact the Toronto-based
subsidiary of Ethyl.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibit - 3.1 Corrected Restated Articles of
Incorporation, together with explanatory letter.
(b) No reports on Form 8-K have been filed during the
quarter for which this report is filed.
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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 there-unto duly authorized.
ETHYL CORPORATION
(Registrant)
Date: November 1, 1996 By: s/ Charles B. Walker
Charles B. Walker
Vice Chairman of the Board,
Chief Financial Officer
and Treasurer
(Principal Financial Officer)
Date: November 1, 1996 By: s/ Wayne C. Drinkwater
Wayne C. Drinkwater
Controller
(Principal Accounting Officer)
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EXHIBIT INDEX
Page
Number
Number and Name of Exhibit
Exhibit 3.1 Corrected Restated Articles of
Incorporation, together with explanatory
letter. 16
15
16
Exhibit 3.1
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074
Telephone (804) 788-8200
Facsimile (804) 788-8218
August 13, 1996
State Corporation Commission, Clerk's Office
1300 East Main Street
Richmond, Virginia 23219
Attention: Thomas J. Moore, Esq.
Ethyl Corporation
Dear Mr. Moore:
Enclosed please find for filing Articles of Restatement and the
Restated Articles of Incorporation on behalf of Ethyl Corporation (the
"Company"). Our check in the amount of $25.00 is enclosed for your filing
fee.
You will note that the Articles of Restatement are dated July 31,
1995. As we discussed last week, in July 1995, the Company's Board of
Directors approved, and the Company filed, Articles of Restatement with your
office that erroneously omitted the number of shares that were designated
"Series B". The designation of these shares as Series B had been authorized in
the Articles of Amendment filed with your office in 1987. In our view, the
enclosed Restated Articles of Incorporation, which correct this omission,
reflect the original intention of the Board. The Restated Articles of
Incorporation are otherwise identical to those filed on July 31, 1995.
Thank you very much for your assistance. Please feel free to call me
should you have any questions.
Sincerely,
S/ Louanna O. Heuhsen
Louanna O. Heuhsen
LOH:trf
Enclosures
cc: E. Whitehead Elmore, Esq.
Allen C. Goolsby, Esq.
McAlister C. Marshall, II, Esq.
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ARTICLES OF RESTATEMENT OF THE
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF ETHYL CORPORATION
1. The name of the corporation is Ethyl Corporation (the
"Corporation").
2. The Articles of Incorporation of the Corporation shall be
restated in the form attached hereto as Exhibit A.
3. The Restatement was duly adopted by the Board of Directors
of the Corporation without shareholder action. The Restatement does
not contain an amendment to the Articles of Incorporation requiring
shareholder approval.
IN WITNESS WHEREOF, these Articles of Restatement have been
executed on behalf of the Corporation by its duly authorized officer this
31st day of July, 1995.
ETHYL CORPORATION
By: s/ Steven M. Mayer
Title: Vice President
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EXHIBIT A
RESTATED ARTICLES OF INCORPORATION
of
ETHYL CORPORATION
ARTICLE I
The name of the Corporation is
ETHYL CORPORATION
ARTICLE II
The purposes of the Corporation are to develop, manufacture, produce,
improve, buy, sell and deal in any and all kinds of materials, chemicals,
plastics, petroleum, paper, machinery, metals, minerals and mineral products,
timber and wood products, and all ingredients, derivatives, products,
by-products, and compounds thereof or related in any way thereto and, without
limitation by reason of the foregoing, to engage in any business not required
to be stated in the articles of incorporation.
The Corporation shall have the power to make accommodation guarantees or
endorsements of the obligations of any other person or corporation.
ARTICLE III
The Corporation shall have authority to issue 400,000,000 shares of Common
Stock, $1 par value, and 10,000,000 shares of Cumulative Preferred Stock, with
a par value, if any, to be set forth hereinafter with respect to each series.
The Cumulative Preferred Stock may be issued in series as hereinafter
provided. The description of the Cumulative Preferred Stock and the Common
Stock, and the designations, preferences and voting powers of such classes of
stock or restrictions or qualifications thereof, and the terms on which such
stock is to be issued (together with certain related provisions for the
regulation of the business and for the conduct of the affairs of the
Corporation) shall be as hereinafter set forth in Parts A, B and C of this
Article III.
PART A. CUMULATIVE PREFERRED STOCK
1. Issuance in Series. The Cumulative Preferred Stock may be
issued from time to time in one or more series, with such distinctive
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serial designations, rights and preferences as shall be stated and expressed
herein or in the resolution or resolutions providing for the issue of shares
of a particular series, and in such resolution or resolutions providing for
the issue of shares of such series, the Board of Directors is expressly
authorized to fix:
(a) The annual dividend rate for such series, the dividend
payment dates, the date from which dividends on all shares of such
series issued shall be cumulative, and the extent of participation
rights, if any;
(b) The redemption price or prices, if any, for such series
and other terms and conditions on which shares of such series may be
retired or redeemed;
(c) The obligation, if any, of the Corporation to purchase and
retire or redeem shares of such series as a sinking fund, and the provisions
of any such sinking fund;
(d) The designation and maximum number of shares of such
series issuable;
(e) The right to vote, if any, with holders of shares of any
other series or class and any right to vote as a class, either generally
or as a condition to specified corporate action;
(f) The amount payable upon shares in event of involuntary
liquidation;
(g) The amount payable upon shares in event of voluntary
liquidation; and
(h) The rights, if any, of the holders of shares of such
series to convert such shares into other classes of stock of the
Corporation and the terms and conditions of such conversion.
All shares of Cumulative Preferred Stock of any one series
shall be identical with each other in all respects except, if so
determined by the Board of Directors, as to the dates from which
dividends thereon shall be cumulative; and all shares of Cumulative
Preferred Stock shall be of equal rank with each other, regardless
of series, and shall be identical with each other in all respects
except as provided herein or in the resolution or resolutions
providing for the issue of a particular series. In case dividends
on all shares of Cumulative Preferred Stock for any quarterly
dividend period are not paid in full, all such shares shall
participate ratably in any partial payment of dividends for such
period in proportion to the full amounts of dividends for such
period to which they are respectively entitled.
If and whenever, from time to time, the Board of Directors
shall determine to issue Cumulative Preferred Stock of any
series hereinafter designated, the Board shall, prior to the
issue of any shares of such new series, cause provisions
respecting it to be set out in articles of amendment filed with
the State Corporation Commission of Virginia. The Board of
Directors, in any such articles of amendment filed with the
State Corporation Commission of Virginia, may reclassify any of
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the authorized but unissued shares of any particular series as
shares or additional shares of any other series, or, unless
otherwise provided in the articles of amendment establishing any
particular series, increase any maximum number of shares
theretofore established for a particular series to any greater
number then authorized by the articles of incorporation.
2. Cumulative Preferred Stock, Convertible Series B. A series
of Cumulative Preferred Stock is hereby designated "Series B,"
which series shall have 2,000,000 shares and the following description and
terms:
(a) Dividends and Distributions.
(i) The holders of shares of Series B shall be
entitled to receive, when and as declared by the Board of
Directors out offunds legally available therefor, dividends
payable quarterly on the first day of each January, April,
July and October (each such date being referred to herein
as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series B, in
an amount per share (rounded to the nearest cent) equal to
the greater of (a) $50.00 or (b) subject to the provision
for adjustment hereinafter set forth, 1000 times the
aggregate per share amount of all cash dividends, and
1000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions
other than a dividend payable in shares of Common Stock or
a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise), declared on the Common
Stock, par value $1.00 per share, of the Corporation (the
"Common Stock") since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Preferred
Stock. In the event the Corporation shall at any time
after October 5, 1987 (the "Rights Declaration Date") (i)
declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount to which
holders of shares of Series B were entitled immediately prior
to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(ii) The Corporation shall declare a dividend or
distribution on the Series B as provided in subsection
(i) above immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been
declared on the Common Stock during the period between
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any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $50.00
per share on the Series B Preferred Stock shall nevertheless
be payable on such subsequent Quarterly Dividend Payment Date.
(iii) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series B from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of
Series B, unless the date of issue of such shares is prior to
the record date for the first Quarterly Dividend Payment, in
which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of shares of Series B
entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends
shall not bear interest. Dividends paid on the shares of Series
B in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record date
for the determination of holders of shares of Series B entitled
to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 70 days prior
to the date fixed for the payment thereof.
(iv) Dividends in full shall not be declared or paid
or set apart for payment on the Series B for a dividend period
terminating on the Quarterly Dividend Payment Date unless
dividends in full have been declared or paid or set apart for
payment on the Cumulative Preferred Stock of all series (other
than series with respect to which dividends are not cumulative
from a date prior to such dividend date) for the respective
dividend periods terminating on such dividend date.
(b) Voting Rights. The holders of shares of Series B shall
have the following voting rights:
(i) Subject to the provision for adjustment hereinafter
set forth, each share of Series B shall entitle the holder thereof
to 1000 votes on all matters submitted to a vote of the shareholders
of the Corporation. In the event the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each
such case the number of votes per share to which holders
of shares of Series B were entitled immediately prior to
such event shall be adjusted by multiplying such number by a
fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(ii) Except as otherwise provided herein or in the Bylaws,
the holders of shares of Series B and the holders of shares of
Common Stock shall vote together as one voting group on all
matters submitted to a vote of stockholders of the Corporation.
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(iii) In addition, in the event that at any time or from
time to time while any shares of the Series B are outstanding,
six or more quarterly dividends, whether consecutive or not, on
any shares of the Series B shall be in arrears and unpaid,
whether or not earned or declared, then the holders of all of
the outstanding shares of the Series B together with any other
series of Cumulative Preferred Stock then entitled to such a
vote under the terms of the Articles of Incorporation of the
Corporation, voting as a single class, shall be entitled to
elect two members of the Board of Directors of the Corporation.
Immediately after the occurrence of such event, the Corporation
shall cause the number of directors of the Corporation to be
increased by two and (unless a regular meeting of stockholders
of the Corporation is to be held within sixty (60) days for the
purpose of electing directors) shall give prompt notice to the
holders of all of the outstanding shares of the Cumulative
Preferred Stock then so entitled to such a vote of a special
meeting of such holders to take place within sixty (60) days
after the occurrence of such event. If such meeting shall not
have been called as so provided, such meeting may be called at
the expense of the Corporation by the holders of not less than
five percent (5%) of such Cumulative Preferred Stock at the time
outstanding, on written notice specifying the time and place of
the meeting given by mail not less than ten (10) days or more
than thirty (30) days before the date of such meeting specified
in such notice. At such meeting the holders of all of such
Cumulative Preferred Stock at the time outstanding, voting as a
single class, shall have the right to elect two (2) members of
the Board of Directors of the Corporation.
If a regular meeting of the stockholders of the Corporation
for the purpose of electing directors is to be held within sixty
(60) days after the occurrence of such event then at such
meeting, and, in any event, at each subsequent meeting of the
stockholders of the Corporation called for the purpose of
electing directors, the holders of such Cumulative Preferred
Stock at the time outstanding, voting as a single class, shall
have the right to elect two (2) members of the Board of
Directors on the same conditions as stated above.
At any special or regular meeting provided for in the next
two preceding subsections, each outstanding share of such
Cumulative Preferred Stock shall be entitled to one vote for the
election of the directors provided for herein; the holders of a
majority of the shares of such Cumulative Preferred Stock at the
time outstanding shall constitute a quorum; and a plurality vote
of such quorum shall govern.
The directors elected by the holders of such Cumulative
Preferred Stock shall hold office until their successors shall
be elected; provided that their term of office shall
automatically expire at such time as all dividends on all
outstanding shares of such Cumulative Preferred Stock in arrears
shall have been paid in full.
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(iv) Except as otherwise provided in the Articles of
Incorporation, holders of Series B shall have no special voting
rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as
set forth herein) for taking any corporate action.
(c) Certain Restrictions.
(i) Whenever quarterly dividends or other dividends or
distributions payable on the Series B as provided in subsection
(a) are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares
of Series B outstanding shall have been paid in full, the
Corporation shall not
(1) declare or pay or set apart for payment any
dividends (other than dividends payable in shares of
any class or classes of stock of the Corporation ranking
junior to the Series B) or make any other distributions
on, any class of stock of the Corporation ranking junior
(either as to dividends or upon liquidation, dissolution
or winding up) to the Series B and shall not redeem,
purchase or otherwise, acquire, directly or indirectly,
whether voluntarily, for a sinking fund, or otherwise
any shares of any class of stock of the Corporation
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series B, provided that,
notwithstanding the foregoing, the Corporation may at any time
redeem, purchase or otherwise acquire shares of stock of any
such junior class in exchange for, or out of the net cash
proceeds from the concurrent sale of other shares of stock of
any such junior class;
(2) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution
or winding up) with the Series B, except dividends paid
ratably on the Series B and all such parity stock on which
dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are
then entitled;
(3) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding
up) with the Series B, provided that the Corporation may at
any time redeem, purchase or otherwise acquire shares of
any such parity stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends
or upon dissolution, liquidation or winding up) to the
Series B;
(4) purchase or otherwise acquire for consideration any
shares of Series B, or any shares of stock ranking on a parity
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with the Series B, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms
as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(ii) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation
could, under subsection (i) of this subsection (c), purchase or
otherwise acquire such shares at such time and in such manner.
(d) Reacquired Shares. Any shares of Series B purchased or
otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition
thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Cumulative Preferred Stock and
may be reissued as part of a new series of Cumulative Preferred
Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on
issuance set forth herein.
(e) Liquidation, Dissolution or Winding Up.
(i) Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, no distribution
shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or
winding up) to the Series B unless, prior thereto, the holders
of shares of Series B shall have received $3,000.00 per share,
plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of
such payment (the "Series B Liquidation Preference"). Following
the payment of the full amount of the Series B Liquidation
Preference, no additional distributions shall be made to the
holders of shares of Series B unless, prior thereto, the holders
of shares of Common Stock shall have received an amount per
share (the "Common Adjustment") equal to the quotient obtained
by dividing (1) the Series B Liquidation Preference by (2) 1000
(as appropriately adjusted as set forth in subsection (iii)
below to reflect such events as stock splits, stock dividends
and recapitalizations with respect to the Common Stock) (such
number in clause (ii) being hereinafter referred to as the
"Adjustment Number"). Following the payment of the full amount
of the Series B Liquidation Preference and the Common Adjustment
in respect of all outstanding shares of Series B and Common
Stock, respectively, holders of Series B and holders of shares
of Common Stock shall receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio of
the Adjustment Number to 1 with respect to such Series B and
Common Stock, on a per share basis, respectively.
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(ii) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series B
Liquidation Preference and the liquidation preferences of all
other series of Cumulative Preferred Stock, if any, that rank on
a parity with the Series B, then such remaining assets shall be
distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the
event, however, that there are not sufficient assets available
to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of
Common Stock.
(iii) In the event the Corporation shall at any time after
the Rights Declaration Date (1) declare any dividend on Common
Stock payable in shares of Common Stock, (2) subdivide the
outstanding Common Stock, or (3) combine the outstanding Common
Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment Number by a
fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(f) Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction
in which the shares of Common Stock are exchanged for or changed into
other stock or securities, cash and/or any other property, then in any
such case the shares of Series B shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 1000 times the aggregate
amount of stock, securities, cash and/or any other property (payable in
kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series B shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(g) Redemption. The outstanding shares of Series B may be
redeemed at the option of the Board of Directors as a whole, but not in
part, at any time, at which no person beneficially owns more than 20%
of the outstanding Common Stock of the Corporation at a cash price per
share equal to (i) 100% of the product of the Adjustment Number times
the Average Market Value (as such term is hereinafter defined) of the
Common Stock, plus (ii) all dividends which on the redemption date have
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accrued on the shares to be redeemed and have not been paid or
declared and a sum sufficient for the payment thereof set apart,
without interest; provided, however, that if and whenever any
quarterly dividend shall have accrued on the Series B that has not
been paid or declared and a sum sufficient for the payment thereof
set apart, the Corporation may not purchase or otherwise acquire
any shares of Series B unless all shares of such stock at the
time outstanding are so purchased or otherwise acquired. The
"Average Market Value" is the average of the closing sale prices
of a share of the Common Stock during the 30 day period
immediately preceding the date before the redemption date on the
Composite Tape for New York Stock Exchange Listed Stocks, or, if
such stock is not quoted on the Composite Tape, on the New York
Stock Exchange, or, if such stock is not listed on such
Exchange, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934, as
amended, on which such stock is listed, or, if such stock is not
listed on any such exchange, the average of the closing bid
quotations with respect to a share of Common Stock during such
30-day period on the National Association of Securities Dealers,
Inc. Automated Quotations System or any system then in use, or
if no such quotations are available, the fair market value of a
share of the Common Stock as determined by the Board of Directors
in good faith.
(h) Ranking. The Series B shall rank junior to all other
series of the Corporation's Cumulative Preferred Stock as to the
payment of dividends and the distribution of assets, unless the
terms of any such series shall provide otherwise.
(i) Amendment. The Corporation shall not create any other
class or classes of stock ranking prior to the Series B either as to
dividends or liquidation, or increase the authorized number of shares
of any such other class of stock, or amend, alter, or repeal any of
the provisions of the Articles of Incorporation or the resolution
or resolutions adopted by the Board of Directors authorizing the
Series B so as to adversely affect the preferences, rights or
powers of the Series B without the affirmative vote of the holders of
more than two-thirds of the outstanding shares of the Series B, voting
separately as one voting group.
(j) Fractional Shares. Series B may be issued in fractions
of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit
of all other rights of holders of Series B.
PART B. COMMON STOCK
1. Voting Rights. The holders of the Common Stock shall, to
the exclusion of the holders of any other class of stock of the
Corporation, have the sole and full power to vote for the
election of directors and for all other purposes without
limitation except only as provided in sections 1 and 2 of Part
A, and as otherwise expressly provided by the then existing
statutes of the Commonwealth of Virginia. The holders of the
Common Stock shall have one (1) vote for each share of Common
Stock held by them.
2. Dividends. Subject to the provisions hereinabove set forth
with respect to Cumulative Preferred Stock, the holders of shares
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of Common Stock shall be entitled to receive dividends if, when and as
declared by the Board of Directors out of funds legally available therefor.
PART C. PRE-EMPTIVE RIGHTS
1. No holder of Cumulative Preferred Stock shall as such holder
have any pre-emptive or preferential right to purchase or subscribe
to (i) any shares of any class of stock of the Corporation, whether
now or hereafter authorized, (ii) any warrants, rights or options to
purchase any such stock, or (iii) any obligations convertible into
any such stock or into warrants, rights or options to purchase any
such stock.
2. The holders of Common Stock shall have no pre-emptive rights
to purchase or subscribe to any shares of Cumulative Preferred Stock
or to any shares of any class of stock of the Corporation that may be
issued on conversion of any shares of Cumulative Preferred Stock.
ARTICLE IV
1. Number of Directors. Unless otherwise fixed in the By-Laws,
the number of directors of the Corporation shall be eighteen (18),
but in no event shall such number be less than three (3).
2. Indemnification of Directors and Officers.
(a) To the full extent that the Virginia Stock Corporation
Act, as it existed on May 27, 1988, the effective date of this
section, or as hereafter amended, permits the limitation or
elimination of the liability of Directors and officers, no
Director or officer of the Corporation made a party to any
proceeding shall be liable to the Corporation or its
stockholders for monetary damages arising out of any
transaction, occurrence or course of conduct, whether occurring
prior or subsequent to the effective date of this section.
(b) To the full extent permitted by the Virginia Stock
Corporation Act, as it existed on May 28, 1988, the effective
date of this section, or as hereafter amended, the Corporation
shall indemnify any person who is or was a party to any
proceeding by reason of the fact that (i) he is or was a
Director or officer of the Corporation, or (ii) he is or was
serving at the request of the Corporation as a director,
trustee, partner or officer of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise,
against any liability incurred by him in connection with such
proceeding. A person is considered to be serving an employee
benefit plan at the Corporation's request if his duties to the
Corporation also impose duties on, or otherwise involve services
by, him to the plan or to participants in or beneficiaries of
the plan. The Board of Directors is hereby empowered, by a
majority vote of a quorum of the disinterested Directors, to
enter into a contract to indemnify any Director or officer in
respect of any proceeding arising from any act or omission,
whether occurring before or after the execution of such contract.
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(c) The Board of Directors is hereby empowered, by majority
vote of a quorum of the disinterested Directors, to cause the
Corporation to indemnify or contract to indemnify any person not
specified in subsection (a) or (b) of this section who was, is
or may become a party to any proceeding, by reason of the fact
that he is or was an employee, agent or consultant of the
Corporation, or is or was serving at the request of the
Corporation as an employee, agent or consultant of another
corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise, to the same extent as if such person
were specified as one to whom indemnification is granted in
subsection (b) of this section.
(d) The provisions of this section shall be applicable to all
proceedings commenced after the effective date hereof arising
from any act or omission, whether occurring before or after such
effective date. No amendment or repeal of this section shall
have any effect on the rights provided under this section with
respect to any act or omission occurring prior to such amendment
or repeal. The Corporation shall promptly take all such
actions, and make all such determinations, as shall be necessary
or appropriate to comply with its obligation to make any
indemnity under this section and shall pay or reimburse promptly
all reasonable expenses, including attorneys' fees, incurred by
such Director or officer in connection with such actions and
determinations or proceedings of any kind arising therefrom.
(e) In the event there has been a change in the composition of
a majority of the Board of Directors after the date of the
alleged act or omission with respect to which indemnification is
claimed, any determination as to indemnification and advancement
of expenses with respect to any claim for indemnification made
pursuant to this section shall be made by special legal counsel
agreed upon by the Board of Directors and the applicant. If the
Board of Directors and the applicant are unable to agree upon
such special legal counsel, the Board of Directors and the
applicant each shall select a nominee, and the nominees shall
select such special legal counsel.
(f) Every reference herein to Directors, officers, trustees,
partners, employees, agents or consultants shall include former
Directors, officers, trustees, partners, employees, agents or
consultants and their respective heirs, executors and
administrators. The indemnification hereby provided and
provided hereafter pursuant to the power hereby conferred by
this section on the Board of Directors shall not be exclusive of
any other rights to which any person may be entitled, including
any right under policies of insurance that may be purchased and
maintained by the Corporation or others, with respect to claims,
issues or matters in relation to which the Corporation would not
have the power to indemnify such person under the provisions of
this section. Such rights shall not prevent or restrict the
power of the Corporation to make or provide for any further
indemnity, or provisions for determining entitlement to
indemnity, pursuant to one or more indemnification agreements,
bylaws, or other arrangements (including, without limitation,
creation of trust funds or security interests funded by letters
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of credit or other means) approved by the Board of Directors
(whether or not any of the Directors of the Corporation shall be
a party to or beneficiary of any such agreements, bylaws or
arrangements); provided, however, that any provision of such
agreements, bylaws or other arrangements shall not be effective
if and to the extent that it is determined to be contrary to
this section or applicable laws of the Commonwealth of Virginia.
(g) Each provision of this section shall be severable and an
adverse determination as to any such provision shall in no way
affect the validity of any other provision.
(h) Unless otherwise defined, terms used in this section shall
have the definitions assigned to them in the Virginia Stock
Corporation Act, as it exists on the date hereof or as hereafter
amended.
ARTICLE V
Any amendment or restatement of these Articles other than an
amendment or restatement that amends or affects the shareholder vote
required by the Virginia Stock Corporation Act to approve a merger,
statutory share exchange, sale of all or substantially all of the
Corporation's assets or the dissolution of the Corporation shall be
approved by a majority of the votes entitled to be cast by each
shareholder voting group that is entitled to vote on the matter.
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