EXHIBIT 1(a)
REYNOLDS METALS COMPANY
10,000,000 Shares
Preferred Redeemable Increased Dividend Equity Securities*
7% PRIDES*, Convertible Preferred Stock
(Stated Value $47.25 per Share)
PURCHASE AGREEMENT
January 18, 1994
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
CS FIRST BOSTON CORPORATION
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281
Dear Sirs:
Reynolds Metals Company, a Delaware corporation (the "Company"), confirms
its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), CS First Boston Corporation ("CS First Boston")
and each of the other Underwriters named in Schedule A hereto (collectively the
"Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 7), for whom Merrill Lynch and CS First Boston
are acting as representatives (in such capacity, Merrill Lynch and CS First
Boston shall hereinafter be referred to as the "Representatives"), with
respect to the sale by the Company and the purchase by the Underwriters, acting
severally and not jointly, of 10,000,000 shares of the Company's Preferred
Redeemable Increased Dividend Equity Securities*, 7% PRIDES*, Convertible
Preferred Stock and with respect to the grant by the Company to the
Underwriters, acting severally and not jointly, of the option described in
Section 2 hereof to purchase up to 1,000,000 additional shares of such
preferred stock to cover over-allotments. The aforesaid 10,000,000 shares of
preferred stock (the "Initial Securities") and all or any part of the 1,000,000
additional shares of preferred stock subject to the option described in Section
2 hereof (the "Option Securities") are collectively herein referred to as the
"Securities".
Prior to the purchase and public offering of the Securities by the several
Underwriters, the Company and the Representatives, acting on behalf of the
several Underwriters, shall enter into an agreement substantially in the form
_________________
* Service mark of Merrill Lynch & Co., Inc.
of Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement may take
the form of an exchange of any standard form of written telecommunication
between the Company and the Representatives and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the
Securities will be governed by this Agreement, as supplemented by the Pricing
Agreement. From and after the date of the execution and delivery of the
Pricing Agreement, this Agreement shall be deemed to incorporate the Pricing
Agreement.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 33-51631) and a related
preliminary prospectus for the registration of the Securities under the
Securities Act of 1933, as amended (the "Act"), and has filed such amendments
thereto, if any, and such amended preliminary prospectuses as may have been
required to the date hereof, and will file such additional amendments thereto
and such amended prospectuses as may hereafter be required. Such registration
statement (as amended, if applicable) and the prospectus constituting a part
thereof (including in each case the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Act and the information, if any,
deemed to be part thereof pursuant to Rule 430A(b) under the Act), as from time
to time amended or supplemented pursuant to the Act, are hereinafter referred
to as the "Registration Statement" and the "Prospectus", respectively, except
that if any revised prospectus shall be provided to the Underwriters by the
Company for use in connection with the offering of the Securities which differs
from the Prospectus on file at the Commission at the time the Registration
Statement becomes effective (whether or not such revised prospectus is required
to be filed by the Company pursuant to Rule 424(b) under the Act), the term
"Prospectus" shall refer to such revised prospectus from and after the time it
is first provided to the Underwriters for such use.
1. (a) The Company represents and warrants to each Underwriter as of the
date hereof and as of the date of the Pricing Agreement (such latter date being
hereinafter referred to as the "Representation Date") as follows:
(i) At the time the Registration Statement becomes effective the
Registration Statement will comply in all material respects with the
requirements of the Act and the rules and regulations promulgated
thereunder and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Prospectus, at the
Representation Date (unless the term "Prospectus" refers to a prospectus
which has been provided to the Underwriters by the Company for use in
connection with the offering of the Securities which differs from the
Prospectus on file at the Commission at the time the Registration
Statement becomes effective, in which case at the time it is provided to
the Underwriters for such use) and at Closing Time referred to in Section
2, will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided, however, that the representations and warranties in
this subsection shall not apply to statements in or omissions from the
Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through the Representatives expressly for use in the
Registration Statement or the Prospectus;
(ii) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
applicable, and the rules and regulations of the Commission thereunder,
and none of such documents contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and any further
documents so filed and incorporated by reference in the Prospectus, when
such documents become effective or are filed with the Commission, as the
case may be, will conform in all material respects to the requirements of
the Act or the Exchange Act, as applicable, and the rules and regulations
of the Commission thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not apply
to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by any Underwriter
through the Representatives expressly for use in the Prospectus relating
to the Securities;
(iii) Neither the Company nor any of its Consolidated Subsidiaries
(as defined below) has sustained since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus any loss or interference with its business material to the
Company and its Consolidated Subsidiaries taken as a whole from fire,
explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Prospectus;
and, since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been (A) any
change in the capital stock of the Company (other than pursuant to
employee benefit plans, as defined in Rule 405 under the Act, or on the
conversion of convertible securities or on the exercise of warrants or
other rights outstanding on the date of this Agreement and except for
contributions of Common Stock to one or more of the pension plans the
assets of which are held under the Reynolds Metals Company Pension Plans
Master Trust), or increase of more than five percent in long-term debt
issued or guaranteed by the Company or any of its Consolidated
Subsidiaries as determined in accordance with generally accepted
accounting principles, or (B) any material adverse change or, to the best
knowledge of the Company after reasonable investigation, any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity or
results of operations of the Company and its Consolidated Subsidiaries
taken as a whole, otherwise than as set forth or contemplated in the
Prospectus (as used herein, the term "Consolidated Subsidiaries" means the
subsidiaries of the Company, the accounts of which are included in the
Consolidated Financial Statements of Reynolds Metals Company and
Consolidated Subsidiaries at the date of the latest audited financial
statements included or incorporated by reference in the Prospectus) and
(C) except for regular quarterly dividends on the Company's Common Stock,
without par value (the "Common Stock"), there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock;
(iv) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus and is duly qualified
or is in the process of qualifying as a foreign corporation for the
transaction of business and in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification; and each Material
Subsidiary (as defined below) of the Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws
of its jurisdiction of incorporation and is duly qualified as a foreign
corporation for the transaction of business and in good standing under the
laws of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification (as used
herein, the term "Material Subsidiary" means a subsidiary of the Company
which is a Significant Subsidiary under Rule 1-02 of Regulation S-X of the
Commission; provided, however, that the term "Material Subsidiary" shall
not be deemed to include Reynolds International, Inc. or Reynolds
International (Panama) Inc.);
(v) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable, and all of the issued shares of capital stock of each
Material Subsidiary of the Company have been duly and validly authorized
and issued, are fully paid and non- assessable and (except for directors'
qualifying shares) are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or claims, other than as
referred to in the Prospectus; and the Common Stock conforms to the
statements relating thereto contained in the Prospectus under "Description
of Capital Stock";
(vi) The Securities have been duly authorized, and, when the
Securities are issued and delivered pursuant to this Agreement and the
Pricing Agreement, the Securities will be validly issued and fully paid
and non-assessable; the Securities will be substantially in the form filed
as an exhibit to the Registration Statement; the Securities conform to the
descriptions thereof in the Prospectus under "Prospectus Summary - The
Offering" and "Description of PRIDES"; and the issuance of the Securities
is not subject to preemptive or other similar rights;
(vii) The shares of Common Stock issuable upon conversion of the
Securities have been duly and validly authorized and reserved for issuance
upon such conversion by all necessary corporate action and such shares,
when issued upon such conversion, will be duly and validly issued and will
be fully paid and non-assessable, and the issuance of such shares upon
such conversion will not be subject to preemptive or similar rights;
(viii) The Company is not in violation of its Restated Certificate
of Incorporation or By-Laws and neither the Company nor any of its
Material Subsidiaries is in default in the performance or observance of
any material obligation, agreement, covenant or condition contained in any
material contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Company or any of the Company's Material
Subsidiaries is a party, by which the Company or any of its Material
Subsidiaries is bound, or to which any of the property or assets of the
Company or any of the Company's Material Subsidiaries is subject, the
effect of which would require disclosure in the Prospectus in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; and the issue and sale of the Securities
and the compliance by the Company with all of the provisions of the
Securities, this Agreement and the Pricing Agreement, and the consummation
of the transactions herein and therein contemplated, will not result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any statute, indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of
the Company's Material Subsidiaries is a party or by which the Company or
any of the Company's Material Subsidiaries is bound, the Company's
Restated Certificate of Incorporation or By-Laws, or any applicable law or
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of the
Company's Material Subsidiaries or any of their properties; and no
consent, approval, authorization or order of any court or governmental
agency or body is required for the issue and sale of the Securities, the
compliance by the Company with all of the provisions of this Agreement or
the Pricing Agreement and consummation by the Company of the transactions
contemplated by this Agreement or the Pricing Agreement except such as may
be required under the Act, the Exchange Act, or state securities or Blue
Sky laws in connection with the purchase and distribution of the
Securities by the Underwriters;
(ix) There are no legal or governmental proceedings pending to which
the Company or any of the Company's Material Subsidiaries is a party or of
which any property of the Company or any of the Company's Material
Subsidiaries is the subject and which are required to be disclosed in the
Prospectus, other than as set forth in the Prospectus and other than
litigation incident to the kind of business conducted by the Company and
its Material Subsidiaries which, if determined adversely to the Company
and the Company's Material Subsidiaries, would not individually or in the
aggregate have a material adverse effect on the financial position,
stockholders' equity or results of operations of the Company and its
Consolidated Subsidiaries taken as a whole, and, to the best of the
Company's knowledge after reasonable investigation, no such proceedings
are threatened by governmental authorities or threatened by others;
(x) Ernst & Young, who have certified the consolidated financial
statements of Reynolds Metals Company and Consolidated Subsidiaries, are,
to the best knowledge of the Company, independent public accountants with
respect to Reynolds Metals Company and Consolidated Subsidiaries as
required by the Act and the rules and regulations of the Commission
thereunder;
(xi) The financial statements included or incorporated by reference
in the Registration Statement and the Prospectus present fairly the
consolidated financial position of the Company and its Consolidated
Subsidiaries, as at the dates indicated and the consolidated results of
their operations and cash flows for the periods specified; and except as
otherwise stated in the Registration Statement, said financial statements
have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis;
(xii) This Agreement has been, and, at the Representation Date, the
Pricing Agreement will have been, duly executed and delivered by the
Company; and
(xiii) Subject to the next sentence, the Company is in compliance
with all provisions of Section 517.075 of the Florida statutes, and all
rules and regulations promulgated thereunder relating to issuers doing
business in Cuba. The Company has made, and expects to continue making,
shipments to the U.S. military base located at Guantanamo Bay, Cuba, such
shipments in 1993 having consisted of consumer and related products sold
to DECA East Service Center.
(b) Any certificate signed by any officer of the Company and delivered to
the Representatives or the counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
2. (a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Company, at
the price per share set forth in the Pricing Agreement, the numbers of Initial
Securities set forth in Schedule A opposite the name of such Underwriter, plus
any additional number of Initial Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 7 hereof.
(i) If the Company has elected not to rely upon Rule 430A under the Act,
the initial public offering price and the purchase price per share to be paid
by the several Underwriters for the Securities have each been determined and
set forth in the Pricing Agreement, dated the date hereof, and an amendment to
the Registration Statement and the Prospectus will be filed before the
Registration Statement becomes effective.
(ii) If the Company has elected to rely upon Rule 430A under the Act, the
purchase price per share to be paid by the several Underwriters for the
Securities shall be an amount equal to the initial public offering price, less
an amount per share to be determined by agreement between the Representatives
and the Company. The initial public offering price and the purchase price,
when so determined, shall be set forth in the Pricing Agreement. In the event
that such prices have not been agreed upon and the Pricing Agreement has not
been executed and delivered by all parties thereto by the close of business on
the fourth business day following the date of this Agreement, this Agreement
shall terminate forthwith, without liability of any party to any other party,
unless otherwise agreed to by the Company and the Representatives.
(b) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company hereby grants an option to the Underwriters, severally and not jointly,
to purchase all or any part of the Option Securities at the purchase price set
forth in the Pricing Agreement, less an amount equal to any dividend declared
by the Company and payable on any Initial Security and not payable on such
Option Security. The option hereby granted will expire 30 days after (i) the
date the Registration Statement becomes effective, if the Company has elected
not to rely upon Rule 430A under the Act, or (ii) the Representation Date, if
the Company has elected to rely upon Rule 430A under the Act, and may be
exercised one time in whole or in part only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Representatives to
the Company setting forth the total number of Option Securities as to which the
several Underwriters are exercising the option and the time and date of payment
and delivery for such Option Securities. Such time and date of delivery (the
"Date of Delivery") shall be determined by the Representatives, but shall not
be later than seven full business days and not earlier than two full business
days after the exercise of said option, nor in any event prior to Closing Time,
as hereinafter defined, unless otherwise agreed to by the Representatives and
the Company. If the option is exercised as to all or any portion of the Option
Securities, each of the Underwriters, acting severally and not jointly, will
purchase that proportion of the total number of Option Securities then being
purchased which the number of Initial Securities set forth in Schedule A
opposite the name of such Underwriter bears to the total number of Initial
Securities, subject to such adjustments as the Representatives, in their
discretion, shall make to eliminate any sales or purchases of fractional
shares.
(c) Payment of the purchase price for, and delivery of the Initial
Securities shall be made at the office of Brown & Wood, One World Trade Center,
New York, New York 10048, or at such other place as shall be agreed upon by the
Representatives and the Company, at 10:00 AM., New York City time, on the fifth
business day following the date the Registration Statement becomes effective
(or, if the Company has elected to rely upon Rule 430A under the Act, the fifth
business day after execution of the Pricing Agreement), or such other time not
later than ten business days after such date as shall be agreed upon by the
Representatives and the Company (such time and date of payment and delivery
being herein called the "Closing Time"). In addition, in the event that any or
all of the Option Securities are purchased by the Underwriters, payment of the
purchase price for, and delivery of such Option Securities shall be made at the
above mentioned office of Brown & Wood, or at such other place as shall be
agreed upon by the Representatives and the Company, on the Date of Delivery as
specified in the notice from the Representatives to the Company. Payment shall
be made to the Company by certified or official bank check or checks drawn in
New York Clearing House funds or similar next day funds payable to the order of
the Company, against delivery to the Representatives of certificates for the
Securities to be purchased by them. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such authorized denominations
and registered in such names as the Representatives may request in writing at
least two business days before Closing Time or the Date of Delivery, as the
case may be. The Representatives, individually and not as representative of
the Underwriters, may (but shall not be obligated to) make payment of the
purchase price for the Securities to be purchased by any Underwriter whose
check has not been received by Closing Time, but such payment shall not relieve
such Underwriter from its obligation hereunder. The certificates for the
Initial Securities and the Option Securities, if any, will be made available
for examination and packaging by the Representatives not later than 10:00 A.M.
New York Time on the last business day prior to Closing Time or Date of
Delivery, as the case may be.
3. The Company covenants with each Underwriter as follows:
(a) The Company will notify the Representatives immediately upon
becoming aware of (i) the effectiveness of the Registration Statement and
any amendment thereto (including any post-effective amendment), (ii) the
receipt of any written comments from the Commission, (iii) any request by
the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information,
and (iv) the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
(b) The Company will give the Representatives notice of its
intention to file any amendment to the Registration Statement (including
any post-effective amendment) or any amendment or supplement to the
Prospectus (including any revised prospectus which the Company proposes
for use by the Underwriters in connection with the offering of the
Securities which differs from the prospectus on file at the Commission at
the time the Registration Statement becomes effective, whether or not such
revised prospectus is required to be filed pursuant to Rule 424(b) under
the Act), will furnish the Representatives with copies of any such
amendment or supplement or other document proposed to be filed a
reasonable amount of time prior to such proposed filing or use, as the
case may be, and will not file any such amendment or supplement or other
document or use any such prospectus to which the Representatives or
counsel for the Underwriters shall reasonably object.
(c) The Company will deliver to the Representatives as many signed
copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated by reference into the
Prospectus pursuant to Item 12 of Form S-3 under the Act) as the
Representatives may reasonably request and will also deliver to each of
the Representatives a conformed copy of the Registration Statement and of
each amendment thereto.
(d) The Company agrees promptly from time to time to take such
action as the Representatives may reasonably request to qualify such
Securities and the Common Stock into which the securities are convertible
for offering and sale under the securities laws of such states and other
jurisdictions as the Representatives may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution
of such Securities; provided, that in connection therewith the Company
shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction. In each
jurisdiction in which the Securities and the Common Stock have been so
qualified, the Company will file, upon the request of the Representatives,
such statements and reports, upon the request of the Representatives, as
may be required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year from the
effective date of the Registration Statement. The Company will promptly
advise the Representatives of the receipt by it of any notification with
respect to the suspension of the qualification of the Securities or the
Common Stock for sale in any jurisdiction or the initiating or threatening
of any proceeding for such purpose.
(e) The Company will furnish to the Underwriters, from time to time
during the period when the Prospectus is required to be delivered under
the Act or the Exchange Act, such number of copies of the Prospectus (as
amended or supplemented) as the Underwriters may reasonably request for
the purposes contemplated by the Act or the Exchange Act or the respective
applicable rules and regulations of the Commission thereunder; and if at
such time any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made when such Prospectus is delivered, not
misleading, or, if for any reason it shall be necessary during such period
to amend or supplement the Prospectus in order to comply with the Act,
notify the Representatives and upon the Representatives' request to file
such document and to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended
Prospectus or supplement to the Prospectus which will correct such
statement or omission or effect such compliance, and in case any
Underwriter is required to deliver a Prospectus in connection with sales
of the Securities at any time nine months or more after the time of issue
of the Prospectus, upon the Representatives' request but at the expense of
such Underwriter, to prepare and deliver to such Underwriter as many
copies as the Representatives may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act.
(f) If any event shall occur or condition exist as a result of which
it is necessary to amend or supplement the Prospectus in order to make the
Prospectus not misleading in the light of the circumstances existing at
the time it is delivered to a purchaser, the Company will forthwith amend
or supplement the Prospectus (in form and substance satisfactory to
counsel for the Underwriters), whether by filing documents pursuant to the
Exchange Act or otherwise, as may be necessary so that, as so amended or
supplemented, the Prospectus will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein in the light of the circumstances existing at the
time it is delivered to a purchaser, not misleading.
(g) The Company will make generally available to its security
holders as soon as practicable, but not later than 90 days after the close
of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the Act) covering a twelve month
period beginning not later than the first day of the Company's fiscal
quarter next following the "effective date" (as defined in said Rule 158)
of the Registration Statement.
(h) If, at the time that the Registration Statement becomes
effective, any information shall have been omitted therefrom in reliance
upon Rule 430A under the Act, then immediately following the execution of
the Pricing Agreement, the Company will prepare and file or transmit for
filing with the Commission in accordance with such Rule 430A and Rule
424(b) under the Act, copies of an amended Prospectus, or, if required by
such Rule 430A, a post-effective amendment to the Registration Statement
(including an amended Prospectus), containing all information so omitted.
(i) Except for Common Stock or options issued pursuant to
reservations, agreements, dividend reinvestment plans, employee benefit
plans (as defined in Rule 405 under the Act) or stock option plans or upon
conversion of the Securities and except for contributions of Common Stock
to one or more of the pension plans the assets of which are held under the
Reynolds Metals Company Pension Plans Master Trust, the Company will not
for a period of 90 days after the date hereof, without the
Representatives' prior written consent, directly or indirectly, sell,
offer to sell, grant any option for the sale of, or otherwise dispose of,
any shares of its capital stock or securities convertible into or
exchangeable for capital stock of the Company other than to the
Underwriters pursuant to this Agreement.
4. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Securities under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any preliminary prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Pricing Agreement, any
Blue Sky Survey and any other documents in connection with the offering,
purchase, sale and delivery of the Securities; (iii) all expenses in connection
with the qualification of the Securities for offering and sale under state
securities laws as provided in Section 3(d) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky and legal investment surveys;
(iv) any fees charged by securities rating services for rating the Securities;
(v) the filing fees, if any, incident to securing any required review by the
National Association of Securities Dealers, Inc. of the terms of the sale of
the Securities; (vi) the cost of preparing certificates for the Securities;
(vii) the fees and expenses incurred in connection with the quotation or
listing of the Securities and the Common Stock issuable upon conversion thereof
on the New York Stock Exchange; and (viii) all other costs and expenses
incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section. It is understood,
however, that, except as provided in this Section, Section 6 and Section 10
hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, transfer taxes on resale of any of the
Securities by them and any advertising expenses connected with any offers they
may make.
5. The obligations of the several Underwriters hereunder shall be
subject, in their discretion, to the condition that all representations and
warranties and other statements of the Company herein are true and correct, the
condition that the Company shall have performed all of its respective
obligations hereunder, and the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M. on the date hereof, or with the consent of the
Representatives, at a later time and date, not later, however, than 5:30
P.M. on the first business day following the date hereof, or at such later
time and date as may be approved by the Underwriters; and at Closing Time
no stop order suspending the effectiveness of the Registration Statement
shall be in effect under the Act or proceedings therefor initiated or
threatened by the Commission. If the Company has elected to rely upon
Rule 430A under the Act, the price of the Securities and any information
previously omitted from the effective Registration Statement pursuant to
such Rule 430A shall have been transmitted to the Commission for filing
pursuant to Rule 424(b) under the Act within the prescribed time period,
and prior to Closing Time the Company shall have provided evidence
satisfactory to the Representatives of such timely filing, or a
post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements
of Rule 430A under the Act.
(b) At the Closing Time, Brown & Wood, counsel for the Underwriters,
shall have furnished to the Underwriters such opinion or opinions, dated
as of the Closing Time, with respect to the incorporation of the Company,
the validity of the Securities, the Registration Statement, the Prospectus
and other related matters as the Underwriters may reasonably request, and
such counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters.
(c) At the Closing Time, counsel for the Company satisfactory to the
Representatives shall have furnished to the Representatives their written
opinion, dated as of the Closing Time, in form and substance satisfactory
to the Representatives, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware. The Company has the requisite corporate power to
own its properties and conduct its business as described in the
Prospectus;
(ii) The Company has been duly qualified or is in the process
of qualifying as a foreign corporation for the transaction of
business and is in good standing under the laws of each jurisdiction
(other than that of its incorporation) in which it owns or leases
properties, or conducts any business, so as to require such
qualification;
(iii) The Company has an authorized capitalization as set forth
in the Prospectus and all of the issued shares of capital stock of
the Company have been duly and validly authorized and issued and are
fully paid and non-assessable;
(iv) Each Material Subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation and has
been duly qualified or is in the process of qualifying as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification; and all of the issued shares of capital stock of each
such Material Subsidiary have been duly and validly authorized and
issued and are fully paid and non-assessable;
(v) To the best of such counsel's knowledge, there are no legal
or governmental proceedings pending to which the Company or any of
the Company's Material Subsidiaries is a party or of which any
property of the Company or any of the Company's Material Subsidiaries
is subject, other than as set forth in the Prospectus and other than
proceedings none of which is material to the Company and its
Consolidated Subsidiaries taken as a whole; and to the best of such
counsel's knowledge no such proceedings are threatened by
governmental authorities or threatened by others;
(vi) This Agreement and the Pricing Agreement have been duly
authorized, executed and delivered by the Company;
(vii) The Securities have been duly and validly authorized by
all necessary corporate action and, when issued and delivered against
payment pursuant to this Agreement, will be validly issued and fully
paid and non-assessable; the Securities conform to the provisions of
the Certificate of Designations; the relative rights, preferences,
interests and powers of the Securities are as set forth in the
Certificate of Designations relating thereto, and all such provisions
are valid under the Delaware General Corporation Law; and the form of
certificate used to evidence the Securities is in due and proper form
and complies with all applicable requirements of the Delaware General
Corporation Law;
(viii) The issuance of the Securities is not subject to
preemptive or other similar rights;
(ix) The Securities and the Common Stock conform to the
descriptions thereof in the Prospectus under "Prospectus Summary -
The Offering", "Description of PRIDES" and "Description of Capital
Stock";
(x) The shares of Common Stock issuable upon conversion of the
Securities have been duly authorized and reserved for issuance upon
such conversion by all necessary corporate action; such shares, when
issued upon such conversion, will be duly and validly issued and will
be fully paid and non-assessable; and the issuance of such shares
upon such conversion are not subject to preemptive or similar rights;
(xi) The Company is not, and upon the issuance and sale of the
Securities the Company will not be, an "investment company" required
to register as such under the Investment Company Act of 1940, as
amended;
(xii) The issue and sale of the Securities and the compliance
by the Company with all of the provisions of the Securities, this
Agreement and the Pricing Agreement with respect to the Securities
and the consummation of the transactions herein and therein
contemplated will not result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any statute,
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument known to such counsel to which the Company or any of
the Company's Material Subsidiaries is a party or by which the
Company or any of the Company's Material Subsidiaries is bound, the
Company's Restated Certificate of Incorporation or By-Laws, or any
order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the Company or
any of its Material Subsidiaries or any of their properties;
(xiii) The Registration Statement is effective under the Act
and, to the best of such counsel's knowledge and information, no stop
order suspending the effectiveness of the Registration statement has
been issued under the Act or proceedings therefor initiated or
threatened by the Commission;
(xiv) The statements in the Prospectus under the caption
"Federal Income Tax Considerations" to the extent that they
constitute matters of federal law or legal conclusions pertaining
thereto, have been reviewed by such counsel and fairly present the
information therein in all material respects (such counsel being
entitled to rely with respect to such opinion on the opinion of
Robert A. Warwick, Esq., Tax Counsel of the Company);
(xv) No consent, approval, authorization or order of any court
or governmental agency or body is required for the issue and sale of
the Securities, the compliance by the Company with this Agreement or
the Pricing Agreement and the consummation by the Company of the
transactions contemplated by this Agreement or the Pricing Agreement,
except such as have been obtained under the Act, the Exchange Act and
such as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Securities by
the Underwriters;
(xvi) The documents incorporated by reference in the Prospectus
(other than the financial statements and related schedules therein,
the financial information set forth in Management's Discussion and
Analysis of Financial Condition and Results of Operations, and other
financial information, as to which such counsel need express no
opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all material
respects with the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder; and such counsel has no reason to believe that any of
such documents, when they became effective or were so filed, as the
case may be, contained, in the case of a registration statement which
became effective under the Act, an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading,
and, in the case of other documents which were filed under the Act or
the Exchange Act with the Commission, an untrue statement of a
material fact or omitted to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made when such documents were so filed, not
misleading;
(xvii) The Registration Statement and the Prospectus (other
than the financial statements and related schedules therein, the
financial information set forth in Management's Discussion and
Analysis of Financial Condition and Results of Operations, and other
financial information, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Act and the rules and regulations thereunder; the
information included in the Registration Statement in response to
Items 9 and 10 (insofar as it relates to such counsel) of Form S-3
are to the best of such counsel's knowledge materially accurate
statements or summaries of the matters therein set forth and fairly
present in all material respects the information called for with
respect to those matters by the Act and the rules and regulations
thereunder; such counsel has no reason to believe that, the
Registration Statement, at the time it became effective or at the
Representation Date, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus, at the Representation Date (unless the term "Prospectus"
refers to a prospectus which has been provided to the Underwriters by
the Company for use in connection with the offering of the Securities
which differs from the Prospectus on file at the Commission at the
Representation Date, in which case at the time it is first provided
to the Underwriters for such use) or at the Closing Time, contained
or contains an untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and
(xviii) Such counsel does not know of any contracts or other
documents of a character required to be filed as an exhibit to the
Registration Statement or required to be incorporated by reference in
the Prospectus or required to be described in the Registration
Statement or the Prospectus which are not filed or incorporated by
reference or described as required.
(d) At the time of the execution of this Agreement and at the
Closing Time, the independent accountants of the Company who have
certified the financial statements of the Company and its Consolidated
Subsidiaries included or incorporated by reference in the Registration
Statement shall have furnished to the Underwriters a letter, dated the
date of this Agreement, and a letter dated as of the Closing Time,
respectively, substantially to the effect set forth in Exhibit B hereto,
and as to such other matters as the Underwriters may reasonably request
and in form and substance satisfactory to the Representatives;
(e) (i) Neither the Company nor any of its Consolidated Subsidiaries
shall have sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus any
loss or interference with its business material to the Company and its
Consolidated Subsidiaries taken as a whole from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, and (ii) since
the respective dates as of which information is given in the Prospectus
there shall not have been any change in the capital stock of the Company
(other than pursuant to employee benefit plans, as defined in Rule 405
under the Act, or on the conversion of convertible securities or on the
exercise of warrants or other rights outstanding on the date of this
Agreement and except for contributions of Common Stock to one or more of
the pension plans the assets of which are held under the Reynolds Metals
Company Pension Plans Master Trust), or increase of more than five percent
in long-term debt issued or guaranteed by the Company or any of its
Consolidated Subsidiaries as determined in accordance with generally
accepted accounting principles or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
Consolidated Subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in Clause (i) or (ii), is in the judgment of the Representatives
so material and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Securities on the
terms and in the manner contemplated in the Prospectus;
(f) Subsequent to the date of this Agreement, no downgrading shall
have occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the Act,
and no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its ratings
of any of the Company's debt securities;
(g) Subsequent to the date of this Agreement, there shall not have
occurred any of the following: (i) a suspension in trading in the Common
Stock, or a suspension or material limitation in trading in securities
generally, on the New York Stock Exchange; (ii) a general moratorium on
commercial banking activities in New York declared by either Federal or
New York State authorities; or (iii) the outbreak or escalation of
hostilities involving the United States, or the declaration by the United
States of a national emergency or war, if the effect of any such event
specified in this Clause (iii) in the judgment of the Underwriters makes
it impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities on the terms and in the manner contemplated in
the Prospectus; and
(h) The Company shall have furnished or caused to be furnished to
the Representatives at the Closing Time a certificate or certificates of
officers of the Company, satisfactory to the Representatives, as to the
accuracy of the representations and warranties of the Company herein at
and as of such Closing Time and as to the performance by the Company of
all of its obligations hereunder to be performed at or prior to the
Closing Time, and as such other matters as the Representatives may
reasonably request, and the Company shall have furnished or caused to be
furnished certificates as to the matters set forth in subsections (a) and
(e) of this Section, and as to such other matters as the Representatives
may reasonably request.
(i) In the event the Underwriters exercise their option to purchase
all or any portion of the Option Securities, the representations and
warranties of the Company contained herein and the statements in any
certificates furnished by the Company hereunder shall be true and correct
as of the Date of Delivery, and the Representatives shall have received:
(i) A certificate or certificates, dated such Date of Delivery,
of officers of the Company, satisfactory to the Representatives,
confirming that the certificate or certificates delivered at Closing
Time pursuant to Section 5(h) hereof remain true and correct as of
such Date of Delivery.
(ii) The favorable opinion of counsel to the Company, in form
and substance satisfactory to counsel for the Underwriters, dated
such Date of Delivery, relating to the Option Securities and
otherwise substantially to the same effect as the opinion required by
Section 5(c) hereof.
(iii) The favorable opinion of Brown & Wood, counsel for the
Underwriters, dated such Date of Delivery, relating to the Option
Securities and otherwise to the same effect as the opinion required
by Section 5(b) hereof.
(iv) A letter from Ernst & Young, in form and substance
satisfactory to the Representatives and dated such Date of Delivery,
substantially the same in scope and substance as the letter furnished
to the Underwriters pursuant to Section 5(d) hereof, except that the
"specified date" in the letter furnished pursuant to this Section
5(i)(iv) shall be a date not more than five days prior to such Date
of Delivery.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Representatives by notice to the Company at any time at or prior to Closing
Time, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and Section 6 hereof.
6. (a) The Company will, indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any preliminary prospectus, the Registration
Statement, including the information deemed to be part of the Registration
Statement pursuant to Rule 430(b) under the Act, if applicable, the Prospectus
and any other prospectus relating to the Securities, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
each Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such action or
claim; provided, however, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any preliminary prospectus, the Registration
Statement, the Prospectus and any other prospectus relating to the Securities,
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representatives expressly for use in such document relating to the Securities.
(b) Each Underwriter will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus, the Registration Statement, the Prospectus and any
other prospectus relating to the Securities, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any preliminary prospectus, the
Registration Statement, the Prospectus and any other prospectus relating to the
Securities, or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter through the Representatives expressly for use therein; and will
reimburse the Company for any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending any such action or
claim.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. The
indemnifying party will not, without the prior written consent of the
indemnified party or parties, settle or compromise or consent to the entry of
any judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not any
indemnified party is a party to such claim, action, suit or proceeding), unless
such settlement, compromise, or consent includes an unconditional release of
such indemnified party and each officer, director of controlling person of such
indemnified party from all liability arising out of such claim, action, suit or
proceeding.
(d) If the indemnification provided for in this Section 6 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a)
or (b) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the offering of the Securities to which such loss, claim, damage or liability
(or action in respect thereof relates). If, however, the allocation provided
by the immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under subsection (c)
above, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and the Underwriters on the other in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from such offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company on the one
hand or such Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Securities underwritten by it and designated to the public were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11 (f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Underwriters in this subsection (d)
to contribute are several in proportion to their respective underwriting
obligations with respect to the Securities and not joint.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations of
the Underwriters under this Section 6 shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend, upon the
same terms and conditions, to each officer and director of the Company and to
each person, if any, who controls the Company within the meaning of the Act.
7. (a) If any Underwriter shall default in its obligation to purchase the
Securities which it has agreed to purchase under this Agreement and the Pricing
Agreement, the non-defaulting Underwriters may in their discretion arrange for
themselves or another party or other parties to purchase such Securities on the
terms contained herein. If within 36 hours after such default by any
Underwriter the non-defaulting Underwriters do not arrange for the purchase of
such Securities, then the Company shall be entitled to a further period of 36
hours within which to procure another party or other parties satisfactory to
the non-defaulting Underwriters to purchase such Securities on such terms. In
the event that, within the respective prescribed period, the non-defaulting
Underwriters notify the Company that they have so arranged for the purchase of
such Securities, or the Company notifies the non-defaulting Underwriters that
it has so arranged for the purchase of such Securities, the non-defaulting
Underwriters or the Company shall have the right to postpone the Closing Time
for such Securities for a period of not more than seven days in order to effect
whatever changes may thereby be made necessary in the Registration Statement or
the Prospectus, or in any other documents or arrangements, and the Company
agrees to file promptly any amendments or supplements to the Registration
Statement or the Prospectus which in the opinion of the non-defaulting
Underwriters may thereby be made necessary. The term Underwriter as used in
this Agreement shall include any person substituted under this Section with
like effect as if such person had originally been a party to this Agreement and
the Pricing Agreement.
(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters as provided in
subsection (a) above, the total number of the Securities which remains
unpurchased does not exceed one-eleventh of the total number of the Securities,
then the Company shall have the right to require each non-defaulting
Underwriter to purchase the number of Securities which such Underwriter agreed
to purchase under the Pricing Agreement and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the number
of Securities which such Underwriter agreed to purchase under the Pricing
Agreement) of the Securities of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters as provided in
subsection (a) above, the total number of Securities which remains unpurchased
exceeds one-eleventh of the total number of the Securities, as referred to in
subsection (b) above, or if the Company shall not exercise the right described
in subsection (b) above to require non-defaulting Underwriters to purchase
Securities of a defaulting Underwriter or Underwriters, then the Pricing
Agreement shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company, except for the expenses to be borne
by the Company and the Underwriters as provided in Section 4 hereof and the
indemnity and contribution agreements in Section 6 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
8. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Securities.
9. (a) The Representatives may terminate this Agreement, by notice to the
Company, at any time at or prior to Closing Time (i) if there shall have been,
since the date of this Agreement or since the respective dates as of which
information is given in the Registration Statement, any material adverse change
in the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its Consolidated Subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business, or (ii) if there shall have occurred any material adverse change in
the financial markets in the United States or any outbreak or escalation of
hostilities or other national or international calamity or crisis the effect of
which is such as to make it, in the Underwriters' reasonable judgment,
impracticable to market the Securities, or (iii) if trading in the Common Stock
shall have been suspended by the Commission or a national securities exchange,
or if trading generally on the New York Stock Exchange shall have been
suspended, or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required, by said
Exchange or by order of the Commission or any other governmental authority, or
if a banking moratorium has been declared by either federal or New York
authorities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except
as provided in Section 4, and provided further that Section 6 hereof shall
survive such termination.
10. If this Agreement shall be terminated pursuant to Section 7 hereof,
the Company shall not then be under any liability to any Underwriter with
respect to the Securities except as provided in Section 4 and Section 6 hereof,
but, if for any other reason Securities are not delivered by or on behalf of
the Company as provided herein, the Company will reimburse the Representatives
for all out-of-pocket expenses, including fees and disbursements of counsel,
reasonably incurred by the Representatives in making preparations for the
purchase, sale and delivery of the Securities, but the Company shall not then
be under any further liability to any Underwriter with respect to the
Securities except as provided in Section 4 and Section 6 hereof.
11. All statements, requests, notices and agreements hereunder shall be
in writing or by telegram if promptly confirmed in writing, and if to the
Underwriters shall be sufficient in all respects if delivered or sent by
registered mail to the Represenatives at the address set forth above; and if to
the Company shall be sufficient in all respects if delivered or sent by
registered mail to the address of the Company set forth in the Registration
Statement, Attention: Secretary; provided, however, that any notice to an
Underwriter pursuant to Section 6(c) hereof shall be delivered or sent by
registered mail to such Underwriter.
12. This Agreement and the Pricing Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters, the Company and, to the
extent provided in Section 6 and Section 8 hereof, the officers and directors
of the Company and each person who controls the Company or any Underwriter, and
their respective heirs, executors, administrators, successors and assigns, and
no other person shall acquire or have any right under or by virtue of this
Agreement or the Pricing Agreement. No purchaser of any of the Securities from
any Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
13. Time shall be of the essence for the Pricing Agreement.
14. This Agreement and the Pricing Agreement shall be construed in
accordance with the laws of the State of New York.
15. This Agreement and the Pricing Agreement may be executed by any one
or more of the parties hereto and thereto in any number of counterparts, each
of which shall be deemed to be an original, but all such respective
counterparts shall together constitute one and the same instrument.
Very truly yours,
REYNOLDS METALS COMPANY
By: Henry S. Savedge, Jr.
Title: Executive Vice President
and Chief Financial Officer
Accepted as of the date hereof:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CS FIRST BOSTON CORPORATION
By MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: Samuel R. Chapin
(Authorized Officer or Attorney-in-fact)
For themselves and as Representatives of the other
Underwriters named in Schedule A hereto.
SCHEDULE A
Number of
Name of Underwriter Initial Securities
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . . . . . . . . . . . 4,650,000
CS First Boston Corporation. . . . . . . . . . . . . . . . 4,650,000
Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . . . 100,000
Morgan Stanley & Co. Incorporated. . . . . . . . . . . . . 100,000
Salomon Brothers Inc . . . . . . . . . . . . . . . . . . . 100,000
S.G. Warburg & Co. Inc. . . . . . . . . . . . . . . . . . 100,000
Davenport & Co. of Virginia, Inc. . . . . . . . . . . . . 50,000
First Manhattan Co. . . . . . . . . . . . . . . . . . . . 50,000
Invemed Associates, Inc. . . . . . . . . . . . . . . . . . 50,000
Kemper Securities, Inc. . . . . . . . . . . . . . . . . . 50,000
Legg Mason Wood Walker, Incorporated . . . . . . . . . . . 50,000
Scott & Stringfellow, Inc. . . . . . . . . . . . . . . . . 50,000
Total . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000
EXHIBIT A
10,000,000 Shares
REYNOLDS METALS COMPANY
Preferred Redeemable Increased Dividend Equity Securities*
7% PRIDES*, Convertible Preferred Stock
(Stated Value $47.25 per Share)
PRICING AGREEMENT
January 18, 1994
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
CS FIRST BOSTON CORPORATION
as Representatives of the several Underwriters
named in the within-mentioned Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Dear Sirs:
Reference is made to the Purchase Agreement, dated January 18, 1994 (the
"Purchase Agreement"), relating to the purchase by the several Underwriters
named in Schedule A thereto (the "Underwriters"), for whom Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and CS First Boston
Corporation are acting as representatives (the "Representatives"), severally
and not jointly, of the above shares of 7% PRIDES*, Convertible Preferred Stock
(the "Securities") of Reynolds Metals Company (the "Company").
Pursuant to Section 2 of the Purchase Agreement, the Company agrees with
the Underwriters as follows:
1. The initial public offering price per share for the Securities
shall be $47.25.
2. The purchase price per share for the Securities to be paid by
the several Underwriters shall be $45.95, being an amount equal to the
initial public offering price set forth above, less $1.30 per share;
provided that the purchase price per share for any Option Securities (as
defined in the Purchase Agreement) purchased upon exercise of the
over-allotment option described in Section 2(b) of the Purchase Agreement
shall be reduced by an amount per share equal to any dividends per share
declared by the Company and payable on the Initial Securities (as defined
in the Purchase Agreement) but not payable on the Option Securities.
_________________
* Service mark of Merrill Lynch & Co., Inc.
3. The dividend rate on the Securities will be 7% per annum.
4. Each Security is convertible at the option of the holder thereof
into .82 of a share of Common Stock, subject to adjustment in certain
events.
5. Payment of the purchase price for, and delivery of the
certificates for, the Securities shall be at the office of Brown & Wood,
New York, at 10:00 A.M. on the fifth business day after the execution of
this Pricing Agreement.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its
terms.
Very truly yours,
REYNOLDS METALS COMPANY
By _________________________
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CS FIRST BOSTON CORPORATION
By MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:______________________________________
(Authorized Officer or Attorney-in-fact)
For themselves and as Representatives of the other Underwriters
named in Schedule A to the Purchase Agreement.
EXHIBIT B
Pursuant to Section 5(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules examined by them and
included or incorporated by reference in the Registration Statement or the
Prospectus comply as to form in all material respects with the applicable
accounting requirements of the Act or the Exchange Act, as applicable, and
the related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the consolidated interim financial statements, selected financial data,
pro forma financial information and/or condensed financial statements
derived from audited financial statements of the Company for the periods
specified in such letter, as indicated in their reports thereon, copies of
which have been furnished to the representatives of the Underwriters (the
"Representatives");
(iii) In their opinion, the unaudited selected financial information
with respect to the consolidated results of operations and financial
position of the Company for the five most recent fiscal years included in
the Prospectus and included or incorporated by reference in Item 6 of the
Company's Annual Report on Form 10-K for the most recent fiscal year
agrees with the corresponding amounts (after restatement where applicable)
in the audited consolidated financial statements for the five such fiscal
years which were included or incorporated by reference in the Company's
Annual Reports on Form 10-K for such fiscal years;
(iv) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of
the minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included or incorporated by reference
in the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included or incorporated by reference in the Company's Quarterly
Reports on Form 10-Q incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Exchange Act as it applies to Form
10-Q and the related published rules and regulations thereunder or
are not in conformity with generally accepted accounting principles
applied on a basis substantially consistent with the basis for the
audited consolidated statements of income, consolidated balance
sheets and consolidated statements of cash flows included or
incorporated by reference in the Company's Annual Report on Form 10-K
for the most recent fiscal year;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with
the basis for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived the unaudited condensed
financial statements referred to in clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of
those statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there has been any decrease in the capital stock
of the Company, any increase in excess of five percent in the
consolidated long-term debt of the Company and consolidated
subsidiaries, any decrease in the consolidated net current assets of
the Company and its consolidated subsidiaries, or any decrease in
consolidated net assets of the Company and consolidated subsidiaries,
in each case as compared with amounts shown in the latest balance
sheet included or incorporated by reference in the Prospectus, except
in each case for increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in such
letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus to
the specified date referred to in Clause (E) there was any decrease
in net sales; consolidated income before income taxes, extraordinary
gain and cumulative effect of accounting change; or consolidated
income before extraordinary gain and cumulative effect of accounting
change, in each case as compared with the comparable period of the
preceding year and with any other period of corresponding length
specified by the Representatives, except in each case for increases
or decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(v) In addition to the examination referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (iv) above, they have carried out
certain specified procedures, not constituting an examination in
accordance with generally accepted auditing standards, with respect to
certain amounts, percentages and financial information specified by the
Representatives which are derived from the general accounting records of
the Company and its subsidiaries, which appear in the Prospectus
(excluding documents incorporated by reference), or in Part II of, or in
exhibits and schedules to, the Registration Statement specified by the
Representatives or in documents incorporated by reference in the
Prospectus specified by the Representatives, and have compared certain of
such amounts, percentages and financial information with the accounting
records of the Company and its subsidiaries and have found them to be in
agreement.
All references in this Exhibit B to the Prospectus shall be deemed to
refer to the Prospectus (including the documents incorporated by reference
therein) as defined in the Purchase Agreement as of the date of the letter
delivered on the date of the Pricing Agreement for purposes of such letter and
to the Prospectus (including the documents incorporated by reference therein)
in relation to the Securities for purposes of the letter delivered at the
Closing Time for the Securities.