EXHIBIT 7
Item l. Description of Securities to Be Registered.
On November 20, 1987, the Board of Directors of Reynolds Metals
Company, a Delaware corporation (the "Company"), declared a dividend
distribution of one Preferred Stock Purchase Right (individually a "Right",
and collectively the "Rights") for each outstanding share of common stock,
without par value (the "Common Stock") of the Company, to stockholders of
record at the close of business on December l, 1987 (the "Record Date").
Each Right entitles the record holder to purchase from the Company, from and
after the Distribution Date (as defined below), one one-hundredth of a share
of the Company's Series A Junior Participating Preferred Stock, without par
value (the "Preferred Stock") at a price of $125 (the "Purchase Price"),
subject to adjustment in certain circumstances. The Purchase Price may be
paid, at the election of the registered holder, by certified bank check or
money order payable to the order of the Company or The Chase Manhattan Bank,
N.A., as Rights Agent (the "Rights Agent"). The description and terms of the
Rights are set forth in a Rights Agreement, dated as of November 23, 1987
(the "Rights Agreement"), between the Company and the Rights Agent.
Initially, the Rights will be attached to the certificates
representing outstanding shares of Common Stock, and no Rights Certificates
will be distributed. The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) fifteen (15) days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership of 20% or more of the outstanding
shares of Common Stock (the "Stock Acquisition Date"), or (ii) ten (10)
business days following the commencement of a tender offer or exchange offer
if, upon consummation thereof, the person or group making such offer would be
the beneficial owner of 30% or more of the outstanding shares of Common
Stock. Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such
Common Stock certificates, (ii) new Common Stock certificates issued after
December l, 1987 will contain a notation incorporating the Rights Agreement
by reference and (iii) the surrender for transfer of any certificates for
Common Stock outstanding will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, Rights Certificates will be
mailed to holders of record of the Common Stock as of the close of business
on the Distribution Date and, thereafter, such separate Rights Certificates
alone will evidence the Rights. Except in certain limited circumstances,
only shares of Common Stock issued prior to the Distribution Date will be
issued with Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on December l, 1997, unless earlier exercised
or redeemed by the Company as described below.
At any time following the Distribution Date, if (i) the Company is
the surviving corporation in a merger with an Acquiring Person and its Common
Stock is not changed or exchanged, (ii) a Person becomes the beneficial owner
of 30% or more of the then outstanding shares of Common Stock (other than
pursuant to an offer for all outstanding shares of Common Stock at a price
and on terms which the majority of the independent Directors determine to be
fair to, and otherwise in the best interests of, stockholders), or (iii) an
Acquiring Person receives equity securities (other than pursuant to a pro
rata distribution) from the Company, acquires from or transfers to the
Company assets with a fair market value exceeding $10,000,000 or engages in
certain other "self-dealing" transactions specified in the Rights Agreement,
the Rights Agreement requires that proper provision be made so that each
holder of a Right will thereafter have the right to receive, upon the
exercise thereof, Common Stock (or, in certain circumstances, cash, property
or other securities of the Company) having a value equal to two (2) times the
exercise price of the Right. However, Rights are not exercisable following
the occurrence of the events set forth above until such time as the Rights
are no longer redeemable by the Company as set forth below. Notwithstanding
any of the foregoing, following the occurrence of any of the events set forth
in this paragraph, any Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by an Acquiring
Person shall immediately become null and void.
For example, at an exercise price of $125 per Right, each Right not
owned by an Acquiring Person (or by certain related parties) following an
event set forth in the preceding paragraph would entitle its holder to
purchase $250 worth of Common Stock (or other securities or assets, as noted
above) for $125. Assuming that the Common Stock had a per share value of $50
at such time, the holder of each valid Right would be entitled to purchase
five shares of Common Stock for $125.
At any time following the Stock Acquisition Date, if (i) the
Company engages in a merger or consolidation in which the Company is not the
surviving corporation, (ii) the Company engages in a merger or consolidation
with another person in which the Company is the surviving corporation, but in
which all or part of the Common Stock is changed or exchanged, or (iii) 50%
or more of the Company's assets or earning power is sold or transferred, the
Rights Agreement requires that proper provision be made so that each holder
of a Right (except Rights which previously have been voided as set forth
above) shall thereafter have the right to receive, upon the exercise thereof,
common stock of the acquiring company having a value equal to two (2) times
the exercise price of the Right. The Rights may not be so exercised in the
case of a merger or consolidation (a) which follows an offer described in
clause (ii) of the second preceding paragraph and (b) in which the form and
amount of consideration is the same as was paid in such offer. The events
set forth in this paragraph and in the second preceding paragraph are
referred to as the "Triggering Events."
The Rights Agreement provides that the Company may not consolidate
or merge with, or sell 50% of the Company's assets or earning power to, any
person which has securities or is bound by agreements which would
substantially diminish the benefits of the Rights.
The Purchase Price payable, and the number of one one-hundredths of
a share of Preferred Stock or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on the Preferred Stock or other
capital stock, or a subdivision, combination or reclassification of the
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for Preferred Stock or securities
convertible into Preferred Stock at less than the current market price of the
Preferred Stock, or (iii) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets (excluding regular quarterly
cash dividends and dividends payable in Preferred Stock) or of subscription
rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least 1%
in such Purchase Price. The Company may, in lieu of issuing fractional
shares of Preferred Stock (other than fractions which are integral multiples
of one one-hundredth of a share, which may, at the election of the Company,
be evidenced by depositary receipts) upon exercise of the Rights, make a cash
payment based on the market price of the Preferred Stock on the last trading
date prior to the date of exercise.
At any time until fifteen (15) days following the Stock Acquisition
Date, the Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a price of $.05 per Right, payable in cash or securities
or both (the "Redemption Price"). Upon certain circumstances set forth in
the Rights Agreement, the decision to redeem shall require the concurrence of
a majority of the Continuing Directors. Thereafter, this right of redemption
may be reinstated if an Acquiring Person reduces his beneficial ownership to
10% or less of the outstanding shares of Common Stock in a transaction or
series of transactions not involving the Company and there are no other
Acquiring Persons. Immediately upon the action of the Board of Directors of
the Company ordering redemption of the Rights, with, where required, the
concurrence of a majority of the Continuing Directors, the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
The term "Continuing Director" means any member of the Company's
Board of Directors who was a member of the Board prior to the date of the
Rights Agreement, and any person who is subsequently elected to the Board if
such person is recommended or approved by a majority of the Continuing
Directors. Continuing Directors do not include an Acquiring Person, or any
representative thereof.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income at such time as
the Rights become exercisable or are exercised for Common Stock (or other
consideration) of the Company or for common stock of the acquiring company as
set forth above.
Certain provisions of the Rights Agreement relating to the
principal economic terms of the Rights may not be amended at any time. Other
provisions may be amended by the Board of Directors of the Company prior to
the Distribution Date. Thereafter, these provisions of the Rights Agreement
may be amended by the Board (in certain circumstances, only with the
concurrence of the Continuing Directors) in order: to cure any ambiguity,
defect or inconsistency; to shorten or lengthen any time period under the
Rights Agreement; or in any other respect that will not adversely affect the
interests of holders of Rights (excluding the interests of any Acquiring
Person); provided that no amendment to adjust the time period governing
redemption may be made if the Rights are not redeemable.
As of November 16, 1987 there were 53,873,209 shares of Common
Stock outstanding, 737,975 shares held by the Company in a special account
for purposes of incentive awards under the Company's Incentive Compensation
Plan, 943,525 shares reserved for issuance under the Company's Savings and
Investment Plan for Salaried Employees, 5,228,800 shares reserved for
issuance upon conversion of the Company's 6% Convertible Subordinated
Debentures due April l, 2012, and 3,267,652 shares reserved for Issuance
under stock option plans. Each outstanding share of Common Stock on December
l, 1987 will receive one Right. As long as the Rights are attached to the
shares of Common Stock and in certain other limited circumstances, the
Company will issue one Right with each new share of Common Stock, so that all
such shares will have attached Rights. One million shares of Preferred Stock
will initially be reserved for issuance upon exercise of the Rights.
The Rights have certain anti-takeover effects. The Rights
will cause substantial dilution to a person or group that attempts to acquire
the Company without conditioning the offer on the Rights being redeemed or a
substantial number of Rights being acquired. The Rights should not interfere
with any merger or other business combination approved by the Board of
Directors of the Company because the Rights are either redeemable or do not
go into effect under such circumstances.
Shares of Preferred Stock purchasable upon exercise of the
Rights will not be redeemable. Each one one-hundredth of a share of
Preferred Stock will be entitled to (i) an aggregate quarterly dividend equal
to the greater of (a) the quarterly dividend declared per share of Common
Stock or (b) $.10, (ii) upon liquidation, a minimum preferential liquidation
payment of $1.00 and an aggregate liquidation payment equal to the
liquidation payment made per share of Common Stock, (iii) one vote, voting
together with the shares of Common Stock and (iv) in the event of any merger,
consolidation or other transaction in which shares of Common Stock are
exchanged, the same amount received per share of Common Stock. These rights
are protected by customary anti-dilution provisions. Because of the nature
of the Preferred Stock's dividend, liquidation and voting rights, the value
of each one one-hundredth of a share of Preferred Stock purchasable upon
exercise of each Right should approximate the value of one share of Common
Stock.
The form of Rights Agreement between the Company and the
Rights Agent specifying the terms of the Rights, which includes as Exhibits
the Certificate of Designations of Series A Junior Participating Preferred
Stock setting forth the terms of the shares of Preferred Stock, the form of
Rights Certificate and the form of Summary of Rights, is attached hereto as
an Exhibit and incorporated herein by reference. The foregoing description
of the Rights is qualified by reference to such Exhibit.
Item 2. Exhibits.
(1) Form of Rights Agreement, dated as of November 23, 1987,
between Reynolds Metals Company and The Chase Manhattan Bank,
N.A. which includes as Exhibit A the Certificate of
Designations of Series A Junior Participating Preferred Stock
setting forth the terms of the Preferred Stock, as Exhibit B
the form of Rights Certificate and as Exhibit C the form of
Summary of Rights. Pursuant to the Rights Agreement, Rights
Certificates will not be mailed until after the earlier of (i)
the fifteenth day after the Stock Acquisition Date or (ii) the
tenth Business Day after the date of the commencement of a
tender or exchange offer by any person or group, if, upon
consummation thereof, such person or group would be the
beneficial owner of 30% or more of such outstanding Common
Stock.
Exhibit l
Rights Agreement
REYNOLDS METALS COMPANY
and
THE CHASE MANHATTAN BANK, N.A.
Rights Agent
Rights Agreement
Dated as of November 23, 1987
TABLE OF CONTENTS
Section Page
l Certain Definitions 1
2 Appointment of Rights Agent 5
3 Issue of Rights Certificates 5
4 Form of Rights Certificates 7
5 Countersignature and Registration 8
6 Transfer, Split Up, Combination and
Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or
Stolen Rights Certificates 9
7 Exercise of Rights; Purchase Price;
Expiration Date of Rights 10
8 Cancellation and Destruction of
Rights Certificates 13
9 Reservation and Availability of
Capital Stock 13
10 Preferred Stock Record Date 15
11 Adjustment of Purchase Price,
Number and Kind of Shares or
Number of Rights 16
12 Certificate of Adjusted Purchase
Price or Number of Shares 28
13 Consolidation, Merger or Sale
or Transfer of Assets or Earning
Power 29
14 Fractional Rights and Fractional
Shares 32
15 Rights of Action 34
16 Agreement of Rights Holders 34
17 Rights Certificate Holder Not Deemed
a Stockholder 35
l8 Concerning the Rights Agent 36
19 Merger or Consolidation or Change of
Name of Rights Agent 36
20 Duties of Rights Agent 37
21 Change of Rights Agent 40
22 Issuance of New Rights Certificates 41
23 Redemption and Termination 41
24 Notice of Certain Events 43
25 Notices 44
26 Supplements and Amendments 45
27 Successors 46
28 Determinations and Actions by the
Board of Directors, etc. 46
29 Benefits of this Agreement 46
30 Severability 47
31 Governing Law 47
32 Counterparts 47
33 Descriptive Headings 48
Exhibit A - Form of Certificate of Designations of Series A
Junior Participating Preferred Stock
Exhibit B - Form of Rights Certificate
Exhibit C - Form of Summary of Rights
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of November 23, 1987 (the "Agreement"),
between Reynolds Metals Company, a Delaware corporation (the "Company"), and
The Chase Manhattan Bank, N.A., a national banking association (the "Rights
Agent").
W I T N E S S E T H :
WHEREAS, on November 20, 1987 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized and declared a dividend
distribution of one Preferred Stock Purchase Right for each share of common
stock, without par value, of the Company (the "Common Stock") outstanding at
the close of business on December 1, 1987 (the "Record Date"), and has
authorized the issuance of one Preferred Stock Purchase Right (as such number
may be hereinafter adjusted pursuant to the provisions of Section 11(p)
hereof) for each share of Common Stock of the Company issued or delivered
(whether originally issued or delivered from treasury) between the Record
Date and the Distribution Date (as such term is hereinafter defined) and as
otherwise provided herein, each Preferred Stock Purchase Right initially
representing the right to purchase one one-hundredth of a share of Preferred
Stock (as hereinafter defined) upon the terms and subject to the conditions
hereinafter set forth (individually a "Right" and collectively the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term
is hereinafter defined) and Associates (as such term is hereinafter defined)
of such Person, shall be the Beneficial Owner (as such term is hereinafter
defined) of 20% or more of the shares of Common Stock then outstanding, but
shall not include the Company, any Subsidiary of the Company, any employee
benefit plan or employee stock plan of the Company or of any Subsidiary of
the Company, any dividend reinvestment plan of the Company, or any Person or
entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right or obligation to
acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding
(whether or not in writing) or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner" of, or to
"beneficially own," (A) securities tendered pursuant to a tender or
exchange offer made by such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange, or (B) at any time prior to the occurrence of a Triggering
Event, securities issuable upon exercise of the Rights, or (C) from and
after the occurrence of a Triggering Event, securities issuable upon
exercise of Rights which were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Distribution Date or
pursuant to Section 3(a) or Section 22 hereof (the "Original Rights") or
pursuant to Section 11(i) hereof in connection with an adjustment made
with respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has or shares the right to vote or
dispose of or has "beneficial ownership" of (as determined pursuant to
Rule l3d-3 of the General Rules and Regulations under the Exchange Act
and any successor provision thereto or thereof), including pursuant to
any agreement, arrangement or understanding, whether or not in writing;
provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," any security under this
subparagraph (ii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and
in accordance with, the applicable provisions of the General Rules and
Regulations under the Exchange Act, and (B) is not also then reportable
by such Person on Schedule l3D under the Exchange Act (or any comparable
or successor report); or
(iii) which are beneficially owned (as defined in clauses (i)
and (ii) hereof), directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person (or any of such
Person's Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in
the proviso to subparagraph (ii) of this paragraph (c)) or disposing of
any voting securities of the Company.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the States of New York or
Virginia are authorized or obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00 P.M.,
New York time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York time, on the next succeeding
Business Day.
(f) "Common Stock" shall mean the common stock, without par
value, of the Company, except that "Common Stock" when used with reference to
any Person other than the Company shall mean the capital shares of such
Person with the greatest voting power, or the equity securities or other
equity interest having power to control or direct the management, of such
Person.
(g) "Continuing Director" shall mean (i) any member of the
Board of Directors of the Company, while such Person is a member of the
Board, who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring Person or of any such
Affiliate or Associate, and was a member of the Board prior to the date of
this Agreement, or (ii) any Person who subsequently becomes a member of the
Board, while such Person is a member of the Board, who is not an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a
representative of an Acquiring Person or of any such Affiliate or Associate,
if such Person's nomination for election or election to the Board is
recommended or approved by a majority of the Continuing Directors.
(h) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(i) "Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(j) "Final Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
(k) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(l) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, without par value, of the Company having the
rights and preferences set forth in the form of Certificate of Designations
attached to this Agreement as Exhibit A.
(m) "Purchase Price" shall have the meaning set forth in
Section 7(b) hereof.
(n) "Record Date" shall have the meaning set forth in the
first Whereas clause.
(o) "Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii) (A), (B) or (C) hereof.
(p) "Section 13 Event" shall mean any event described in
clause (x), (y) or (z) of Section 13(a) hereof.
(q) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act)
by the Company or an Acquiring Person, that an Acquiring Person has become
such.
(r) "Subsidiary" shall mean, with reference to any Person,
any corporation or other entity of which securities or other ownership
interests having ordinary voting power, in the absence of contingencies, to
elect at least a majority of the directors or other persons performing
similar functions is beneficially owned, directly or indirectly, by such
Person, or which is otherwise controlled by such Person.
(s) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of
the Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Stock) in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents
as it may deem necessary or desirable.
Section 3. Issue of Rights Certificates. (a) Until the close
of business on the earlier of (i) the fifteenth day after the Stock
Acquisition Date (or, if the fifteenth day after the Stock Acquisition Date
occurs before the Record Date, the close of business on the Record Date), or
(ii) the tenth Business Day after the date that a tender or exchange offer by
any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan or employee stock plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan) is
first published or sent or given within the meaning of Rule l4d-2(a) of the
General Rules and Regulations under the Exchange Act, if upon consummation
thereof, such Person would be the Beneficial Owner of 30% or more of the
shares of Common Stock then outstanding (the earlier of (i) and (ii) being
herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of paragraph (b) of this Section 3) by
the certificates for the Common Stock registered in the names of the holders
of the Common Stock (which certificates for Common Stock shall be deemed also
to be certificates for Rights) and not by separate certificates, and (y) the
Rights will be transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the Company). As
soon as practicable after the Distribution Date, the Rights Agent will send
by first-class, postage prepaid mail, to each record holder of the Common
Stock as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more Rights
Certificates, in substantially the form of Exhibit B hereto (individually a
"Rights Certificate" and collectively the "Rights Certificates"), evidencing
one Right for each share of Common Stock so held, subject to adjustment as
provided herein. In the event that an adjustment in the number of Rights per
share of Common Stock has been made pursuant to Section 11(p) hereof, the
Company shall, at the time of distribution of the Rights Certificates, make
the necessary and appropriate rounding adjustments (in accordance with
Section 14(a) hereof) so that Rights Certificates representing only whole
numbers of Rights are distributed and cash is paid in lieu of any fractional
Rights. As of and after the Distribution Date, the Rights will be evidenced
solely by Rights Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights, in substantially the form
attached hereto as Exhibit C (the "Summary of Rights"), by first-class,
postage prepaid mail, to each record holder of Common Stock as of the close
of business on the Record Date, at the address of such holder shown on the
records of the Company. With respect to certificates for the Common Stock
outstanding as of the Record Date, until the Distribution Date, the Rights
will be evidenced by such certificates for the Common Stock with or without
a copy of the Summary of Rights attached thereto and the registered holders
of the Common Stock shall also be the registered holders of the associated
Rights. Until the earlier of the Distribution Date or the Expiration Date,
the transfer of any certificates representing shares of Common Stock with or
without a copy of the Summary of Rights attached thereto in respect of which
Rights have been issued shall also constitute the transfer of the Rights
associated with such Common Stock.
(c) Rights shall be issued in respect of all shares of Common
Stock which are issued after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates issued after the
Record Date, but prior to the earlier of the Distribution Date or the
Expiration Date, upon the transfer or new issuance of shares of Common Stock
shall also be deemed to be certificates for Rights, and shall bear the
following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in the Rights Agreement between Reynolds
Metals Company and The Chase Manhattan Bank, N.A., dated as of November
23, 1987 (as amended from time to time, the "Rights Agreement"), the
terms of which are hereby incorporated herein by reference and a copy of
which is on file at the principal offices of Reynolds Metals Company.
Under certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer be
evidenced by this certificate. The Rights will expire at the close of
business on December l, 1997 unless exercised or redeemed prior thereto.
Reynolds Metals Company will mail to the holder of this certificate a
copy of the Rights Agreement, as in effect on the date of mailing,
without charge promptly after receipt of a written request therefor.
Under certain circumstances set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was or becomes an Acquiring
Person or any Affiliate or Associate thereof (as such terms are defined
in the Rights Agreement), whether currently held by or on behalf of such
Person or by any subsequent holder, may become null and void.
Until the earlier of the Distribution Date or the Expiration Date, the Rights
associated with the Common Stock represented by certificates for Common Stock
whether or not containing the foregoing legend shall be evidenced by such
certificates alone and registered holders of Common Stock shall also be the
registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the Common Stock represented by such certificates.
Section 4. Form of Rights Certificates. (a) The Rights
Certificates (and the forms of election to purchase and of assignment to be
printed on the reverse thereof) shall each be substantially in the form set
forth in Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as
the Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the Rights may from
time to time be listed, or to conform to usage. Subject to the provisions of
Section 11 and Section 22 hereof, the Rights Certificates, whenever
distributed, shall be dated as of the Record Date and on their face shall
entitle the holders thereof to purchase such number of one one-hundredths of
a share of Preferred Stock as shall be set forth in the particular Rights
Certificates at the price set forth in such Right Certificate, but the number
of such one one-hundredths of a share of Preferred Stock purchased upon the
exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii)
a transferee of an Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement, or understanding
regarding the transferred Rights or (B) a transfer which the Board of
Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of
Section 7(e) hereof, and any Rights Certificate issued pursuant to Section 6
or Section 11 hereof upon transfer, exchange, replacement or adjustment of
any other Rights Certificate referred to in this sentence, shall contain (to
the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Rights Agreement.
The provisions of Section 7(e) of this Agreement shall be operative whether
or not the foregoing legend is contained on any such Rights Certificates.
Section 5. Countersignature and Registration. (a) The Rights
Certificates shall be executed on behalf of the Company by its Chairman of
the Board, its President or any Vice President, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The
Rights Certificates shall be countersigned by the Rights Agent either
manually or by facsimile signature, and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery
by the Company, such Rights Certificates, nevertheless, may be countersigned
by the Rights Agent and issued and delivered by the Company with the same
force and effect as though the person who signed such Rights Certificates had
not ceased to be such officer of the Company; and any Rights Certificate may
be signed on behalf of the Company by any person who, at the actual date of
the execution of such Rights Certificate, shall be a proper officer of the
Company to sign such Rights Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights-Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, the certificate number of each
of the Rights Certificates, the number of Rights evidenced on its face by
each of the Rights Certificates and the date of each of the Rights
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. (a)
Subject to the provisions of Section 4(b), Section 7(e) and Section 14
hereof, at any time after the close of business on the Distribution Date, and
at or prior to the close of business on the Expiration Date, any Rights
Certificate may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered holder to
purchase (or receive) a like number of one one-hundredths of a share of
Preferred Stock (or, following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as the Rights
Certificate surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any
Rights Certificate shall make such request in writing delivered to the Rights
Agent, and shall surrender the Rights Certificate to be transferred, split
up, combined or exchanged at the principal office or offices of the Rights
Agent designated for such purpose. Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer
of any such surrendered Rights Certificate until the registered holder shall
have completed and signed the certificate contained in the form of assignment
set forth on the reverse side of each such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to
Section 4(b), Section 7(e) and Section 14 hereof, countersign and deliver to
the Person entitled thereto a Rights Certificate or Rights Certificates, as
the case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights
Certificates.
(b) Upon receipt by the Company and the Rights Agent of (i)
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, (ii) in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and
reimbursement to them of all reasonable expenses incidental thereto, and
(iii) upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) Except as otherwise provided herein, the registered holder of
any Rights Certificate may exercise the Rights evidenced thereby in whole or
in part at any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase set forth on the reverse
side thereof and the certificate contained therein duly executed, to the
Rights Agent at the principal office or offices of the Rights Agent
designated for such purpose, together with payment of the Purchase Price with
respect to each surrendered Right for the total number of one one-hundredths
of a share (or other securities or property, as the case may be) as to which
such surrendered Rights are exercisable, at or prior to the earlier of (i)
the close of business on December l, 1997 (the "Final Expiration Date"), or
(ii) the time at which the Rights are redeemed as provided in Section 23
hereof (the earlier of (i) and (ii) being herein referred to as the
"Expiration Date").
(b) The purchase price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $125,
and shall be subject to adjustment from time to time as provided in Section
11 and Section 13(a) hereof (such price, as adjusted, being the "Purchase
Price") and shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase set forth on the reverse side
thereof and the certificate contained therein duly executed, accompanied by
payment, with respect to each Right so exercised, of the Purchase Price per
one one-hundredth of a share of Preferred Stock (or other shares, securities
or property, as the case may be) to be purchased as set forth below and an
amount equal to any applicable transfer tax, the Rights Agent shall, subject
to Section 20(k) hereof, promptly (i) (A) requisition from any transfer agent
of the shares of Preferred Stock (or make available, if the Rights Agent is
the transfer agent for the shares of Preferred Stock) certificates for the
total number of one one-hundredths of a share of Preferred Stock to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests subject to applicable law, or (B) if the
Company shall have elected to deposit the total number of shares of Preferred
Stock issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of one one-hundredths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with
the depositary agent) and the Company will direct the depositary agent to
comply with such request, (ii) requisition from the Company the amount of
cash, if any, to be paid in lieu of fractional shares in accordance with
Section 14 hereof, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder and (iv) after receipt thereof,
deliver such cash, if any, to or upon the order of the registered holder of
such Rights Certificate. The payment of the Purchase Price (as such amount
may be reduced pursuant to Section 11(a)(iii) hereof) shall be made by
certified bank check or money order payable to the order of the Company or
the Rights Agent. In the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights Agent, if and
when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, subject to the provisions of
Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a) (ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or any Associate or Affiliate
of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or
to any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a
transfer which the Board of Directors of the Company has determined is part
of a plan, arrangement or understanding which has as a primary purpose or
effect the avoidance of this Section 7(e), shall become null and void without
any further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable efforts to
insure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Rights
Certificates or other Person as a result of its making or failure to make any
determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action
with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall
have (i) completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise and (ii) provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and
no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by this Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company,
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Rights Certificates, and in
such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock. (a) The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized, unissued and unreserved shares of Preferred
Stock (and following the occurrence of a Triggering Event, out of its
authorized, unissued and unreserved shares of Common Stock and/or other
securities or out of its authorized and issued shares held in treasury) the
number of shares of Preferred Stock (and following the occurrence of a
Triggering Event, out of its authorized, unissued and unreserved shares of
Common Stock and/or other securities) that, as provided in this Agreement
including Section 11(a)(iii) hereof, will be sufficient to permit the
exercise in full of all outstanding Rights.
(b) So long as the shares of Preferred Stock (and following the
occurrence of a Triggering Event, Common Stock and/or other securities)
issuable and deliverable upon the exercise of the Rights are qualified to be
listed on any national securities exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable
(and the Company reasonably anticipates that a Right may be exercised), all
shares (or other securities) reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined pursuant to this
Agreement (including in accordance with Section 11(a)(iii) hereof), or as
soon as is required by law or regulation following the Distribution Date, as
the case may be, a registration statement under the Securities Act of 1933
(the "Securities Act"), with respect to the shares of Common Stock, Preferred
Stock, or other securities purchasable upon exercise of the Rights on an
appropriate form and, in the event the class of the Preferred Stock or other
securities is not then registered under the Exchange Act, file an appropriate
form to so register such Preferred Stock or other securities, (ii) cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Securities Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the date of the expiration of the
Rights. The Company will also take such action as may be appropriate under,
or to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights. The
Company may temporarily suspend, for a period of time not to exceed ninety
(90) days after the date set forth in clause (i) of the first sentence of
this Section 9(c), the exercisability of the Rights in order to prepare and
file such registration statement and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction if the requisite qualification
in such jurisdiction shall not have been obtained or the exercise thereof
would be in violation of applicable law.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all one one-hundredths of a share of
Preferred Stock (and following the Occurrence of a Triggering Event, Common
Stock and/or other securities) shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for a number of one one-hundredths of a
share of Preferred Stock (or Common Stock and/or other securities, as the
case may be) upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect of any
transfer or delivery of Rights Certificates to a person other than, or the
issuance or delivery of a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be)
in respect of a name other than that of, the registered holder of the Rights
Certificates evidencing Rights surrendered for exercise or to issue or
deliver any certificates for a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be)
in a name other than that of the registered holder upon the exercise of any
Rights until such tax shall have been paid (any such tax being payable by the
holder of such Rights Certificates at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose name any
certificate for a number of one one-hundredths of a share of Preferred Stock
(or Common Stock and/or other securities, as the case may be) is issued upon
the exercise of Rights shall for all purposes be deemed to have become the
holder of record of such fractional shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) represented thereby on,
and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and all applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which
the Preferred Stock (or Common Stock and/or other securities, as the case may
be) transfer books of the Company are closed, such Person shall be deemed to
have become the record holder of such shares (fractional or otherwise) on,
and such certificate shall be dated, the next succeeding Business Day on
which the Preferred Stock (or Common Stock and/or other securities, as the
case may be) transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Rights Certificate shall not
be entitled to any rights of a stockholder of the Company with respect to
shares (fractional or otherwise) for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or
other distributions or to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of the Company, except as
provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Preferred Stock payable in shares of
Preferred Stock or other capital stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller
number of shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in Section
11(a)(ii) and Section 7(e) hereof, the Purchase Price in effect at the time
of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of
shares of Preferred Stock or capital stock, as the case may be, issuable on
such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares of
Preferred Stock or capital stock, as the case may be, which, if such Right
had been exercised immediately prior to such date and at a time when the
Preferred Stock (or other capital stock, as the case may be) transfer books
of the Company were open, he would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall be
made prior to any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event:
(A) any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, at any time after the date of this Agreement, directly
or indirectly, (l) shall merge into the Company or otherwise combine
with the Company and the Company shall be the continuing or surviving
corporation of such merger or combination and the Common Stock of the
Company shall remain outstanding and unchanged, (2) shall, in one
transaction or a series of transactions, transfer any assets to the
Company or to any of its Subsidiaries in exchange (in whole or in part)
for shares of Common Stock, for other equity securities of the Company
or for securities exercisable for or convertible into shares of equity
securities of the Company (Common Stock or otherwise) or otherwise
obtain from the Company, with or without consideration, any additional
shares of such equity securities or securities exercisable for or
convertible into shares of such equity securities (other than pursuant
to a pro rata distribution to all holders of Common Stock), (3) shall
sell, purchase, lease, exchange, mortgage, pledge, transfer or otherwise
acquire or dispose of, in one transaction or a series of transactions,
to, from or with (as the case may be) the Company or any of its
Subsidiaries, inventory, property, plant, equipment or other operating
assets on terms and conditions less favorable to the Company than the
Company would be able to obtain in arm's-length negotiation with an
unaffiliated third party as determined in good faith by the Board of
Directors of the Company, other than pursuant to a transaction set forth
in Section 13(a) hereof, (4) shall sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire or dispose of in one
transaction or a series of transactions, to, from or with (as the case
may be) the Company or any of the Company's Subsidiaries (other than
incidental to the lines of business, if any, engaged in as of the date
hereof between the Company and such Acquiring Person or Associate or
Affiliate) inventory, property, plant, equipment or other operating
assets having an aggregate fair market value of more than $10,000,000,
other than pursuant to a transaction set forth in Section 13(a) hereof,
(5) shall receive any compensation from the Company or any of the
Company's Subsidiaries other than compensation for full-time employment
as a regular employee at rates in accordance with the Company's (or its
Subsidiaries') past practices, or (6) shall receive the benefit,
directly or indirectly (except proportionately as a stockholder or
except if resulting from a requirement of law or governmental
regulation), of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantage provided
by the Company or any of its Subsidiaries, or
(B) any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan or employee stock plan of the Company
or of any Subsidiary of the Company, any dividend reinvestment plan of
the Company, or any Person or entity organized, appointed or established
by the Company for or pursuant to the terms of any such plan), alone or
together with its Affiliates and Associates, shall, at any time after
the date hereof, become the Beneficial Owner of 30% or more of the
shares of Common Stock then outstanding, unless the event causing the
30% threshold to be crossed is a transaction set forth in Section 13(a)
hereof, or is an acquisition of Common Stock pursuant to a tender offer
or exchange offer for all outstanding shares of Common Stock at a price
and on terms determined by at least a majority of the members of the
Board of Directors who are not officers of the Company and who are not
representatives, nominees, Affiliates or Associates of an Acquiring
Person, after receiving advice from one or more investment banking
firms, to be (a) at a price which is fair to stockholders (taking into
account all factors which such members of the Board deem relevant
including, without limitation, prices which could reasonably be achieved
if the Company or its assets were sold on an orderly basis designed to
realize maximum value) and (b) otherwise in the best interests of the
Company and its stockholders, or
(C) during such time as there is an Acquiring Person, there
shall be a reclassification of securities (including any reverse stock
split), or recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or any other
similar transaction or series of transactions (whether or not with or
into or otherwise involving an Acquiring Person), involving the Company
or any of its Subsidiaries other than a transaction or transactions to
which the provisions of Section 13(a) apply which has the effect,
directly or indirectly, of increasing by more than 1% the proportionate
share of the outstanding shares of any class of equity securities of the
Company or any of its Subsidiaries which is directly or indirectly
beneficially owned by any Acquiring Person and any Associate or
Affiliate of any Acquiring Person, then, promptly following five (5)
days after the date of the occurrence of an event described in Section
11(a)(ii)(B) hereof and promptly following the occurrence of any event
described in Section 11(a)(ii)(A) or (C) hereof, proper provision shall
be made so that each holder of a Right (except as provided in Section
11(a)(iii), and in Section 7(e) hereof) shall thereafter have the right
to receive, upon exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, in lieu of a number of one
one-hundredths of a share of Preferred Stock, such number of shares of
Common Stock of the Company (such number of shares of Common Stock being
herein called the "Adjustment Shares") as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then
number of one one-hundredths of a share of Preferred Stock for which a
Right was exercisable by such holder immediately prior to the first
occurrence of a Section 11(a)(ii) Event, and (y) dividing that product
(such product, following such first occurrence, shall thereafter be
referred to as the "Purchase Price" for each Right and for all purposes
of this Agreement) by 50% of the current market price (determined
pursuant to Section 11(d) hereof) per share of Common Stock on the date
of such first occurrence.
(iii) In the event that the number of shares of Common Stock
which are authorized but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights is not sufficient to
permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii) of this Section 11(a), the Company shall:
(A) determine the excess of (l) the value of the Adjustment Shares
issuable upon the exercise of a Right (the "Current Value") over (2) the
Purchase Price (such excess, the "Spread"), and (B) with respect to each
Right, make adequate provision to substitute for the Adjustment Shares,
upon payment of the applicable Purchase Price, (1) cash, (2) a reduction
in the Purchase Price, (3) Common Stock or other equity securities of
the Company (including, without limitation, preferred shares, or units
of preferred shares, which the Board of Directors of the Company has
deemed to be substantially economically equivalent to the Common Stock
(such preferred shares, "common stock equivalents")), (4) debt
securities of the Company, (5) other assets, or (6) any combination of
the foregoing, having an aggregate value equal to the Current Value,
where such aggregate value has been determined by the Board of Directors
of the Company based upon the advice of a nationally recognized
investment banking firm selected by the Board of Directors of the
Company; provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty
(30) days following the first occurrence of (x) a Section 11(a)(ii)
Event or (y) the date on which the Company's right of redemption
pursuant to Section 23(a) expires (the later of (x) and (y) being
referred to herein as the "Section 11(a)(ii) Trigger Date"), then the
Company shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Purchase Price, Common
Stock (to the extent available) and then, if necessary, cash, which in
the aggregate are equal to the Spread. If the Board of Directors of the
Company shall determine in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon
exercise in full of the Rights, the thirty (30) day period set forth
above may be extended by resolution of the Board of Directors of the
Company to the extent necessary, but not more than ninety (90) days
following the first occurrence of a Section 11(a)(ii) Trigger Date, in
order that the Company may seek stockholder approval for the
authorization of such additional shares (such period, as it may be
extended, the "Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the first and/or
second sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution
Period in order to seek any authorization of additional shares and/or to
decide the appropriate form of distribution to be made pursuant to such
first sentence and to determine the value thereof. In the event of any
such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no
longer in effect. For purposes of this Section 11(a)(iii), the value of
the Common Stock shall be the current market price (as determined
pursuant to Section 11(d) hereof) per share of Common Stock on the
Section 11(a)(ii) Trigger Date and the value of any "common stock
equivalent" shall be deemed to have the same value as the Common Stock
on such date.
(b) In case the Company shall fix a record date for the
issuance of rights (other than the Rights), options or warrants to all
holders of Preferred Stock entitling them to subscribe for or purchase
(for a period expiring within forty-five (45) calendar days after such
record date) Preferred Stock, (or shares having the same rights,
privileges and preferences as the Preferred Stock ("equivalent Preferred
Stock")) or securities convertible into Preferred Stock or equivalent
Preferred Stock at a price per share of Preferred Stock or equivalent
Preferred Stock (or having a conversion price per share, if a security
convertible into Preferred Stock or equivalent Preferred Stock) less
than the current market price (as determined pursuant to Section 11(d)
hereof) per share of Preferred Stock on such record date, the Purchase
Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
shares of Preferred Stock outstanding on such record date, plus the
number of shares of Preferred Stock which the aggregate offering price
of the total number of shares of Preferred Stock and/or equivalent
Preferred Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would
purchase at such current market price and the denominator of which shall
be the number of shares of Preferred Stock outstanding on such record
date, plus the number of additional shares of Preferred Stock and/or
equivalent Preferred Stock to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible). In case such subscription price may be paid by delivery
of consideration part or all of which may be in a form other than cash,
the value of such consideration shall be as determined in good faith by
the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights. Preferred
Stock owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is
fixed; and in the event that such rights or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which
the Company is the continuing corporation) of evidences of indebtedness,
cash (other than a regular quarterly cash dividend paid out of the
earnings or retained earnings of the Company), assets (other than a
dividend payable in Preferred Stock, but including any dividend payable
in shares other than Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the current
market price (as determined pursuant to Section 11(d) hereof) per share
of Preferred Stock on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights
Agent) of the portion of the cash, assets or evidences of indebtedness
so to be distributed or of such subscription rights or warrants
applicable to a share of Preferred Stock and the denominator of which
shall be such current market price (as determined pursuant to Section
11(d) hereof) per share of Preferred Stock. Such adjustments shall be
made successively whenever such a record date is fixed, and in the event
that such distribution is not so made, the Purchase Price shall be
adjusted to be the Purchase Price which would have been in effect if
such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other
than computations made pursuant to Section 11(a)(iii) hereof, the
"current market price" per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of Common
Stock for the thirty (30) consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the "current
market price" per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of Common Stock for
the ten (10) consecutive Trading Days immediately following such date;
provided, however, that in the event that the then current market price
per share of Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (i) any dividend or
distribution on such Common Stock payable in such shares of Common Stock
or securities convertible into shares of Common Stock (other than the
Rights) or (ii) any subdivision, combination or reclassification of such
shares of Common Stock, and prior to the expiration of the requisite
thirty (30) Trading Day or ten (10) Trading Day period, as set forth
above, after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification,
then, in each such case, the "current market price" shall be properly
adjusted to take into account ex-dividend trading or trading after any
subdivision, combination or reclassification. The closing price for
each day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the
shares of Common Stock are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the shares of Common
Stock are listed or admitted to trading or, if the shares of Common
Stock are not listed or admitted to trading on any national securities
exchange, the last quoted sale price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or such other system then in use,
or, if on any such date the shares of Common Stock are not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common
Stock selected by the Board of Directors of the Company. If on any such
date no market maker is making a market in the Common Stock, the fair
value of such shares on such date as determined in good faith by the
Board of Directors of the Company shall be used and shall be conclusive
for all purposes. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the shares of Common
Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, a Business Day. If the
Common Stock is not publicly held or not so listed or traded, "current
market price" per share shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the
"current market price" per share of Preferred Stock shall be determined
in the same manner as set forth above for the Common Stock in Section
11(d)(i) (other than the last sentence thereof). If the current market
price per share of Preferred Stock cannot be determined in the manner
provided above or if the Preferred Stock is not publicly held or listed
or traded in a manner described in Section 11(d)(i), the "current market
price" per share of Preferred Stock shall be conclusively deemed to be
an amount equal to 100 (as such number may be appropriately adjusted for
such events as stock splits, stock dividends and recapitalizations with
respect to the Common Stock occurring after the date of this Agreement)
multiplied by the current market price per share of Common Stock. If
neither the Common Stock nor the Preferred Stock is publicly held or so
listed or traded, "current market price" per share of the Preferred
Stock shall mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be
conclusive for all purposes. For all purposes of this Agreement, the
"current market price" of one one-hundredth of a share of Preferred
Stock shall be equal to the "current market price" of one share of
Preferred Stock divided by 100.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 11 shall
be made to the nearest cent or to the nearest one ten-thousandth of a share
of Common Stock or other share or one one-millionth of a share of Preferred
Stock, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three (3) years from the date of the
transaction which mandates such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any capital shares other than Preferred Stock,
thereafter the number of such other shares receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a),
(b), (c), (d), (e), (g), (h), (i), (j), (k) and (m) hereof, and the
provisions of Sections 7, 9, 10, 12, 13 and 14 hereof with respect to the
Preferred Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of
a share of Preferred Stock (or other consideration, as the case may be)
purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number of one
one-hundredths of a share of Preferred Stock (calculated to the nearest one
one-millionth) obtained by (i) multiplying (x) the number of one
one-hundredths of a share covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained
by the Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-hundredths of a share of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding
after the adjustment in the number of Rights shall be exercisable for the
number of one one-hundredths of a share of Preferred Stock for which a Right
was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment
of the Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Rights Certificates have been
issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of
Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Rights Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Rights Certificates so to
be distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record
of Rights Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredths of a share of Preferred Stock issuable upon
the exercise of the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the Purchase Price per one
one-hundredths of a share and the number of one one-hundredths of a share
which were expressed in the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then stated value, if any, of the number of one
one-hundredths of a share of Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable such number of one one-hundredths
of a share of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, the issuance to the holder of any Right exercised after such record
date the number of one one-hundredths of a share of Preferred Stock and other
capital shares or securities of the Company, if any, issuable upon such
exercise over and above the number of one one-hundredths of a share of
Preferred Stock and other capital shares and securities of the Company, if
any, issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Company shall deliver
to such holder a due bill or other appropriate instrument evidencing such
holder's right to receive such additional shares of Common Stock and other
capital shares or securities upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and
to the extent that in their good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation
or subdivision of the Preferred Stock, (ii) issuance for cash of any shares
of the Preferred Stock at less than the current market price, (iii) issuance
wholly for cash of Preferred Stock or securities which by their terms are
convertible into or exchangeable for Preferred Stock, (iv) stock dividends or
(v) issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Preferred Stock shall not be
taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), (ii) merge with or into any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to, any other Person or
Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger or sale there are any
rights, warrants or other instruments or securities outstanding or agreements
in effect which would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale,
the shareholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its
Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution Date,
it will not, except as permitted by Section 23 or Section 26 hereof, take (or
permit any Subsidiary to take) any action if at the time such action is taken
it is reasonably foreseeable that such action will diminish substantially or
eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the date of this Agreement and
prior to the Distribution Date (i) declare a dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, or (iii) combine the outstanding share of
Common Stock into a smaller number of shares, the number of Rights associated
with each share of Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, shall be proportionately
adjusted so that the number of Rights thereafter associated with each share
of Common Stock following any such event shall equal the result obtained by
multiplying the number of Rights associated with each share of Common Stock
immediately prior to such event by a fraction the numerator which shall be
the total number of shares of Common Stock outstanding immediately prior to
the occurrence of the event and the denominator of which shall be the total
number of shares of Common Stock outstanding immediately following the
occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate, and (c)
mail a brief summary thereof to each holder of a Rights Certificate (or, if
prior to the Distribution Date, to each holder of a certificate representing
shares of Common Stock) in accordance with Section 25 hereof. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), and the Company shall
not be the continuing or surviving corporation of such consolidation or
merger, (y) any Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof) shall consolidate with,
or merge with or into, the Company, and the Company shall be the continuing
or surviving corporation of such consolidation or merger and, in connection
with such consolidation or merger, all or part of the outstanding shares of
Common Stock shall be changed into or exchanged for stock or other securities
of any other Person or cash or any other property, or (z) the Company shall
sell or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to any Person or
Persons (other than the Company or any Subsidiary of the Company in one or
more transactions each of which complies with Section 11(o) hereof), then,
and in each such case and except as set forth in Section 13(d) hereof, proper
provision shall be made so that: (i) each holder of a Right, except as
provided in Section 7(e) hereof, shall thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement, such number of validly authorized and
issued, fully paid, nonassessable and freely tradeable shares of Common Stock
of the Principal Party (as such term is hereinafter defined), not subject to
any liens, encumbrances, rights of first refusal or other adverse claims, as
shall be equal to the result obtained by (l) multiplying the then current
Purchase Price by the number of one one-hundredths of a share of Preferred
Stock for which a Right is exercisable by such holder immediately prior to
the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event
has occurred prior to the Section 13 Event, multiplying the Purchase Price in
effect immediately prior to the first occurrence of such event set forth in
Section 11(a)(ii) hereof by the number of one one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
first occurrence) and dividing that product (such product, following the
first occurrence of a Section 13 Event, shall be referred to as the "Purchase
Price" for each Right and for all purposes of this Agreement) by (2) 50% of
the current market price (determined pursuant to Section 11(d)(i) hereof with
respect to the Common Stock) per share of Common Stock of such Principal
Party on the date of consummation of the Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue
of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company' shall thereafter be
deemed to refer to such Principal Party, it being specifically intended that
the provisions of Section 11 hereof shall apply only to such Principal Party
following the first occurrence of a Section 13 Event; (iv) such Principal
Party shall take such steps (including, but not limited to, the reservation
of a sufficient number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its Common Stock thereafter deliverable upon the exercise
of the Rights; and (v) the provisions of Section 11(a)(ii) hereof shall be of
no effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a), the Person that is the
issuer of any securities into which shares of Common Stock of the
Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to such
merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
twelve (12) month period registered under Section 12 of the Exchange Act, and
such Person is a direct or indirect Subsidiary of another Person the Common
Stock of which is and has been so registered, "Principal Party" shall refer
to such other Person; (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Stock of two or more of which
are and have been so registered, "Principal Party" shall refer to whichever
of such Persons is the issuer of the Common Stock having the greatest
aggregate market value; and (3) in case such Person is owned, directly or
indirectly, by a joint venture formed by two or more Persons that are not
owned, directly or indirectly, by the same Person, the rules set forth in (l)
and (2) above shall apply to each of the chains of ownership having an
interest in such joint venture as if such party were a "Subsidiary" of both
or all of such joint ventures and the Principal Parties in each such chain
shall bear the obligations set forth in this Section 13 in the same ratio as
their direct or indirect interests in such Person bear to the total of such
interests.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a
sufficient number of authorized shares of Common Stock which have not
been issued or reserved for issuance to permit the exercise in full of
the Rights in accordance with this Section 13 and unless prior thereto
the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing for the terms set
forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable after the date of any consolidation, merger
or sale of assets mentioned in paragraph (a) of this Section 13, the
Principal Party at its own expense will:
(i) prepare and file a registration statement under the
Securities Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, and will
use its best efforts to cause such registration statement to (A) become
effective as soon as practicable after such filing and (B) remain
effective (with a prospectus at all times meeting the requirements of
the Securities Act) until the Expiration Date;
(ii) use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise of the Rights under the
Blue Sky laws of such jurisdictions as may be necessary or appropriate;
and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10
under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers
or consolidations or sales or other transfers. In the event that a Section
13 Event shall occur at any time after the occurrence of a Section 11(a)(ii)
Event, the Rights which have not theretofore been exercised shall thereafter
become exercisable only in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the
contrary, this Section 13 shall not be applicable to a transaction described
in subparagraphs (x) and (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons who acquired shares of Common Stock
pursuant to a tender offer or exchange offer for all outstanding shares of
Common Stock that complies with the provisions of Section 11(a)(ii)(B) hereof
(or a wholly-owned subsidiary of any such Person or Persons), (ii) the price
per Common Share offered in such transaction is not less than the price per
share of Common Stock paid to all holders of Common Stock whose shares were
purchased pursuant to such tender offer or exchange offer, and (iii) the form
of consideration being offered to the remaining holders of Common Stock
pursuant to such transaction is the same as the form of consideration paid
pursuant to such tender offer or exchange offer. Upon consummation of any
such transaction contemplated by this Section 13(d), all Rights hereunder
shall expire.
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof, or to distribute
Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price of
the Rights for any day shall be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the Rights are
not listed or admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading, or if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by NASDAQ or such other system
then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Rights selected by the
Board of Directors of the Company. If on any such date no such market maker
is making a market in the Rights the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the Company shall be
used and shall be conclusive for all purposes.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred
Stock (other than fractions which are integral multiples of one one-hundredth
of a share of Preferred Stock) . In lieu of fractional shares of Preferred
Stock that are not integral multiples of one one-hundredth of a share of
Preferred Stock, there shall be paid to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of one
one-hundredth of a share of Preferred Stock. For purposes of this Section
14(b), the current market value of one one-hundredth of a share of Preferred
Stock shall be one one-hundredth of the closing price of a share of Preferred
Stock (as determined pursuant to Section 11(d)(ii) hereof) for the Trading
Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of shares of Common Stock upon exercise of
the Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may
pay to the registered holders of Rights Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the same fraction
of the current market value of one share of Common Stock. For purposes of
this Section 14(c), the current market value of one share of Common Stock
shall be the closing price of a share of Common Stock (as determined pursuant
to Section 11(d) (i) hereof) for the Trading Day immediately prior to the
date of such exercise.
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares
upon exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Stock); and any registered holder of any Rights Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of
the Rights Agent or of the holder of any other Rights Certificate (or, prior
to the Distribution Date, of the Common Stock), may, in his own behalf and
for his own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
his right to exercise the Rights evidenced by such Rights Certificate in the
manner provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it
is specifically acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and shall be entitled
to specific performance of the obligations hereunder and injunctive relief
against actual or threatened violations of the obligations hereunder of any
Person subject to this Agreement. Holders of Rights shall be entitled to
recover the reasonable costs and expenses, including attorneys' fees,
incurred by them in any action to enforce the provisions of this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company
and the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on
the Rights Certificates or the associated Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall, subject to
the last sentence of Section 7(e) hereof, be required to be affected by any
notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or other Person as a result of its inability to perform any
of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation; provided, however, the
Company must use its best efforts to have any such order, decree or ruling
lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of one
one-hundredths of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate,
as such, any of the rights of a stockholder of the Company or any right to
vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.
Section 18. Concerning the Rights Agent. (a) The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and disbursements and other
disbursements incurred in the administration and execution of this Agreement
and the exercise and performance of its duties hereunder. The Company also
agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or
omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the
proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on
the part of any of the parties hereto; provided, however, that such
corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of
a predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor or in the name of
the successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been countersigned,
the Rights Agent may countersign such Rights Certificates either in its prior
name or in its changed name; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "current market price") be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, any Vice Chairman of the
Board, the President, any Executive Vice President, any Senior Vice
President, the Treasurer or the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution and delivery hereof by the Rights Agent) or
in respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11 or Section 13 hereof or responsible for
the manner, method or amount of any such adjustment or the ascertaining of
the existence of facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Rights Certificates after
actual notice of any such adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Common Stock or Preferred Stock to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any Common Stock or
Preferred Stock will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, any Vice Chairman of the Board, the President, any
Executive Vice President, any Senior Vice President, the Treasurer and the
Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction
in which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent
from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct; provided, however, reasonable care
was exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form
of assignment or the form of election to purchase set forth on the reverse
thereof, as the case may be, has either not been completed or indicates an
affirmative response to clause l and/or 2 thereof, the Rights Agent shall not
take any further action with respect to such requested exercise of transfer
without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' notice in writing mailed to the Company, and
to each transfer agent of the Common Stock and Preferred Stock, by registered
or certified mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty (30) days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Stock and Preferred Stock, by registered or certified
mail, and to the holders of the Rights Certificates by first-class mail. If
the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment within a period of
thirty (30) days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by any registered holder of a Rights
Certificate (who shall, with such notice, submit his Rights Certificate for
inspection by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States or of the
States of New York or Virginia (or of any other state of the United States so
long as such corporation is authorized to do business in the States of New
York or Virginia), in good standing, having a principal office in the States
of New York or Virginia, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$100,000,000 or (b) an affiliate of any such corporation described in clause
(a) above. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose.
Not later than the effective date of any such appointment, the Company shall
file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock and Preferred Stock, and mail a notice
thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor Rights
Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights
in such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Common Stock following
the Distribution Date and prior to the Expiration Date, the Company (a)
shall, with respect to Common Stock so issued or sold (i) pursuant to the
exercise of stock options, (ii) under any employee benefit plan or
arrangement, or (iii) upon the exercise, conversion or exchange of securities
issued by the Company and (b) may, in any other case, if deemed necessary or
appropriate by the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material
adverse tax consequences to the Company or the Person to whom such Rights
Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise
have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination. (a) The Board of Directors of
the Company may, at its option, at any time prior to 5:00 P.M., New York
time, on the earlier of (i) the close of business on the fifteenth day
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall
have occurred prior to the Record Date, the close of business on the
fifteenth day following the Record Date), or (ii) the Final Expiration Date,
redeem all but not less than all the then outstanding Rights at a redemption
price of $.05 per Right, as such amount shall be appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such redemption price being hereinafter referred to as
the "Redemption Price"); and the Company may, at its option, pay the
Redemption Price either in cash or securities or both having a current market
price, as of a date determined by the Board of Directors, of $.05; provided,
however, in order for the Board of Directors of the Company to authorize
redemption of the Rights at or after the time a Person becomes an Acquiring
Person, then there must be Continuing Directors in office at the time of such
authorization and such authorization must be approved by a majority of such
Continuing Directors, provided, further, however, that if following the
occurrence of a Stock Acquisition Date and following the expiration of the
right of redemption hereunder but prior to any Triggering Event (x) a Person
who is an Acquiring Person shall have transferred or otherwise disposed of a
number of shares of Common Stock in one transaction, or series of
transactions, not directly or indirectly involving the Company or any of its
Subsidiaries, which did not result in the occurrence of a Triggering Event,
such that such Person is thereafter a Beneficial Owner of 10% or less of the
outstanding shares of Common Stock, and (y) there are no other Persons,
immediately following the occurrence of the event described in clause (x) who
are Acquiring Persons, then the right of redemption shall be reinstated and
thereafter be subject to the provisions of this Section 23. Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not be
exercisable after the first occurrence of a Section 11(a)(ii) Event until
such time as the Company's right of redemption hereunder has expired.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall have
been filed with the Rights Agent and without any further action and without
any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price for each Right so held. Promptly after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give
notice of such redemption to the Rights Agent and the holders of the then
outstanding Rights by mailing such notice to all such holders at each
holder's last address as it appears upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the
Transfer Agent for the Common Stock. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made.
Section 24. Notice of Certain Events. (a) In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in shares of any class to the holders of Preferred Stock or to make
any other distribution to the holders of Preferred Stock (other than a
regular quarterly cash dividend paid out of earnings or retained earnings of
the Company), or (ii) to offer to the holders of Preferred Stock rights or
warrants to subscribe for or to purchase any additional shares of Preferred
Stock or shares of stock of any class or any other securities, rights or
options, or (iii) to effect any reclassification of the Preferred Stock
(other than a reclassification involving only the subdivision of outstanding
shares of Preferred Stock), or (iv) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one transaction or series of related
transactions, of more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Person (other than the
Company and/or any of its Subsidiaries in one or more transactions each of
which complies with Section 11(o) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the
Company shall give to each holder of a Rights Certificate, to the extent
feasible, and in accordance with Section 25 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such share
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of Preferred Stock, if any such date is to be fixed,
and such notice shall be so given in the case of any action covered by clause
(i) or (ii) above at least twenty (20) days prior to the record date for
determining holders of the Preferred Stock for purposes of such action, and
in the case of any such other action, at least twenty (20) days prior to the
date of the taking of such proposed action or the date of participation
therein by the holders of the Preferred Stock, whichever shall be the
earlier.
(b) In case any of the events set forth in Section 11(a)(ii)
hereof shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible, in accordance with Section 25 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences
of the event to holders of Rights under Section 11(a)(ii) hereof and (ii) all
references in the preceding paragraph to Preferred Stock shall be deemed
thereafter to refer to Common Stock and/or, if appropriate, other securities.
Section 25. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Reynolds Metals Company
6601 Broad Street Road
P.O. Box 27003
Richmond, Virginia 23261
Attention:Secretary
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
The Chase Manhattan Bank, N.A.
One New York Plaza, 14th Floor
New York, New York 10081
Attention: Vice President
Shareholder Services Division
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or if
prior to the Distribution Date, to the holder of certificates representing
Common Stock) shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed to such holder at the address of such holder
as shown on the registry books of the Company.
Section 26. Supplements and Amendments. Prior to the Distribution Date
and subject to the next to last sentence of this Section 26, the Company and
the Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any holders of
certificates representing Common Stock. From and after the Distribution Date
and subject to the next to last sentence of this Section 26, the Company and
the Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Right Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to change or supplement the provisions hereunder in
any manner which the Company may deem necessary or desirable and which shall
not adversely affect the interests of the holders of Rights Certificates
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring
Person), or (iv) to shorten or lengthen any time period hereunder (which
lengthening or shortening, following the time as of which a Person becomes an
Acquiring Person, shall be effective only if there are Continuing Directors
and shall require the concurrence of a majority of such Continuing
Directors); provided, this Agreement may not be supplemented or amended to
lengthen, pursuant to clause (iv) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the Rights are
not then redeemable, or (B) any other time period unless such lengthening is
for the purpose of protecting, enhancing or clarifying the rights of, and/or
the benefits to, the holders of Rights. Upon the delivery of a certificate
from an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 26,
the Rights Agent shall execute such supplement or amendment. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or
amendment shall be made which changes the Redemption Price, the Final
Expiration Date, the Purchase Price, or the number of one one-hundredths of
a share of Preferred Stock for which a Right is exercisable, provided that
this Agreement may be amended to change the type and number of securities
into which a Right is exercisable if, after giving effect to such amendment,
the new securities into which each Right is exercisable have a value equal to
the value of the securities into which such Right was exercisable prior to
such amendment (excluding any value attributable to any minimum dividend
payments). Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Common
Stock.
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and permitted assigns
hereunder.
Section 28. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of shares
of Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding Common Stock of
which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule l3d-3d(l) (i) of the General Rules and Regulations
under the Exchange Act as in effect as of the date hereof. The Board of
Directors of the Company (with, where specifically provided for herein, the
concurrence of the Continuing Directors) shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board (with, where specifically provided for
herein, the concurrence of the Continuing Directors) or the Company, or as
may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights or to amend the Agreement).
All such actions, calculations, interpretations and determinations
(including, for purposes of clause (ii) below, all omissions with respect to
the foregoing) which are done or made by the Board (with, where specifically
provided for herein, the concurrence of the Continuing Directors) in good
faith, shall (i) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and (ii) not subject
the Board (or the Continuing Directors) to any liability to the holders of
the Rights.
Section 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to
the Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent
and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated; provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its
good faith judgment that severing the invalid language from this Agreement
would adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the close of business on the fifteenth day following the date of
such determination by the Board of Directors.
Section 31. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts
made and to be performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest: REYNOLDS METALS COMPANY
By/s/ Donald T. Cowles By /s/ R. Bern Crowl
Name: Donald T. Cowles Name: R. Bern Crowl
Title: Secretary and Title: Executive Vice President
Assistant and Chief Financial
General Counsel Officer
Attest: THE CHASE MANHATTAN BANK, N.A.
By/s/ Arthur E. Erickson By /s/ Robert C. Devlin
Name: Arthur E. Erickson Name: Robert C. Devlin
Title: Second Vice Title: Vice President
President
EXHIBIT A
FORM OF CERTIFICATE OF DESIGNATIONS,
PREFERENCES, RIGHTS AND LIMITATIONS OF
Series A Junior Participating Preferred Stock
of
REYNOLDS METALS COMPANY
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
Reynolds Metals Company, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), hereby
certifies that, pursuant to (i) authority conferred upon the Board of
Directors by the Composite Certificate of Incorporation of the Corporation,
as amended, (ii) the provisions of Sections 141(c) and 151 of said General
Corporation Law, and (iii) resolutions adopted by the Board of Directors at
its meeting on November 20, 1987, the Board of Directors duly adopted the
following resolutions creating a series of 1,000,000 shares of Preferred
Stock designated as Series A Junior Participating Preferred Stock:
RESOLVED, that, pursuant to authority conferred upon the Board of
Directors by the Composite Certificate of Incorporation of the Corporation,
as heretofore amended (hereinafter called the "Certificate of
Incorporation"), the Board of Directors hereby authorizes the issuance of up
to 1,000,000 shares (the "Preferred Stock") of authorized but unissued
Preferred Stock of the Corporation, and hereby fixes the designation, powers,
preferences and relative, participating, optional or other special rights,
and the qualifications, limitations or restrictions thereof, of such shares,
in addition to those set forth in the Certificate of Incorporation, as
follows, to be set forth in a certificate of designations (the "Certificate
of Designations"):
Section l. Designation and Amount. The distinctive designation of the
series shall be "Series A Junior Participating Preferred Stock." The shares
constituting such series shall be without par value. The number of shares
constituting such series shall be 1,000,000, subject to increase or decrease
by action of
the Board of Directors as evidenced by a certificate of designations.
Section 2. Dividends and Distributions. (A) Subject to the prior
rights of the holders of any shares of any series of Preferred Stock ranking
prior to the shares of Series A Junior Participating Preferred Stock with
respect to dividends, the holders of shares of Series A Junior Participating
Preferred Stock shall be entitled to receive, when and as declared by the
Board of Directors out of funds legally available for the payment of
dividends, quarterly dividends payable in cash on the first day of January,
April, July and October in each year or such other days on which dividends
are declared with respect to the Common Stock (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 A Junior Participating Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a)
$10 or (b) subject to the provision for adjustment hereinafter set forth, 100
times the aggregate per share amount of all cash dividends, and 100 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 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 Junior Participating Preferred
Stock. If the Corporation shall at any time after November 20, 1987 (the
"Rights Declaration Date") (i) declare any dividend 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 A Junior
Participating Preferred Stock 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.
(B) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in paragraph (A)
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, if no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $10 per share
on the Series A Junior Participating Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares, unless
(i) such date of issue is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or (ii) such date of issue is
either a Quarterly Dividend Payment Date or a date after the record date for
the determination of holders of shares of Series A Junior Participating
Preferred Stock 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 A Junior Participating Preferred Stock 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 A Junior
Participating Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 60
days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Junior Participating Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend 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 A Junior Participating Preferred Stock 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.
(B) Except as otherwise provided herein or by law, the holders of shares
of Series A Junior Participating Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) (i) If and whenever at any time or times dividends payable on shares
of any Series A Junior Participating Preferred Stock shall have been in
arrears and unpaid in an aggregate amount equal to or exceeding the amount of
dividends payable thereon for six quarterly dividend periods, then the
holders of shares of any Series A Junior Participating Preferred Stock,
together with the holders of any other series of Preferred Stock as to which
dividends are in arrears and unpaid in an aggregate amount equal to or
exceeding the amount of dividends payable thereon for six quarterly dividend
periods, shall have the exclusive right, voting separately as a class with
such other series, to elect two directors of the Corporation, such directors
to be in addition to the number of directors constituting the Board of
Directors immediately prior to the accrual of such right, the remaining
directors to be elected by the other class or classes of stock entitled to
vote therefor at each meeting of stockholders held for the purpose of
electing directors.
(ii) Such voting right may be exercised initially either at a special
meeting of the holders of the Preferred Stock having such voting right,
called as hereinafter provided, or at any annual meeting of stockholders held
for the purpose of electing directors, and thereafter at each such annual
meeting until such time as all cumulative dividends accumulated and payable
on the shares of Series A Junior Participating Preferred Stock shall have
been paid in full, at which time such voting right shall terminate, subject
to revesting on the basis set forth in paragraph (C)(i).
(iii) At any time when such voting right shall have vested in holders of
the Preferred Stock, and if such right shall not already have been initially
exercised, a proper officer of the Corporation shall, upon the written
request of the record holders of 10% in number of shares of Preferred Stock
having such voting right then outstanding, addressed to the Secretary of the
Corporation, call a special meeting of the holders of Preferred Stock having
such voting right and of any other class or classes of stock having voting
power with respect to the election of such directors. Such meeting shall be
held at the earliest practicable date upon the notice required for annual
meetings of stockholders at the place for holding annual meetings of
stockholders of the Corporation or, if none, at a place designated by the
Board of Directors. If such meeting is not called by the proper officers of
the Corporation within 30 days after the personal service of such written
request upon the Secretary of the Corporation, or within 30 days after
mailing the same within the United States of America, by registered mail,
addressed to the Secretary of the Corporation at its principal office (such
mailing to be evidenced by the registry receipt issued by the postal
authorities), then the record holders of 10% in number of shares of the
Preferred Stock then outstanding which would be entitled to vote at such
meeting may designate in writing one of their number to call such meeting at
the expense of the Corporation, and such meeting may be called by such person
so designated upon the notice required for annual meetings of stockholders
and shall be held at the same place as is elsewhere provided for in this
paragraph (C)(iii) or such other place as is selected by such designated
stockholder. Any holder of the Preferred Stock who would be entitled to vote
at such meeting shall have access to the stock books of the Corporation for
the purpose of causing a meeting of stockholders to be called pursuant to the
provisions of this paragraph (C). Notwithstanding the provisions of this
paragraph (C), no such special meeting shall be called during a period within
90 days immediately preceding the date fixed for the next annual meeting of
stockholders.
(iv) At any meeting held for the purpose of electing directors at which
the holders of the Preferred Stock shall have the right to elect two
directors in addition to the number of directors constituting the Board of
Directors immediately prior to accrual of such right as provided herein, the
presence in person or by proxy of the holders of 40% of the then outstanding
shares of Preferred Stock having such right shall be required and shall be
sufficient to constitute a quorum of such class of the election of directors
by such class. At any such meeting or adjournment thereof (i) the absence of
a quorum of the holders of the Preferred Stock having such right shall not
prevent the election of directors other than those to be elected by the
holders of the Preferred Stock, and the absence of a quorum or quorums of the
holders of capital stock entitled to elect such other directors shall not
prevent the election of directors to be elected by the holders of the
Preferred Stock entitled to elect such directors and (ii) except as otherwise
required by law, in the absence of a quorum of the holders of any class of
stock entitled to vote for the election of directors, a majority of the
holders present in person or by proxy of such class shall have the power to
adjourn the meeting for the election of directors which the holders of such
class are entitled to elect, from time to time, without notice other than
announcement at the meeting, until a quorum is present.
(v) Any vacancy in the Board of Directors in respect of a director
elected by holders of Preferred Stock pursuant to the voting right created
under this paragraph (C) shall be filled by
vote of the remaining director so elected, or if there be no such remaining
director, by the holders of Preferred Stock entitled to elect such director
or directors at a special meeting called in accordance with the procedures
set forth in paragraph (C)(iii), or, if no such special meeting is called, at
the next annual meeting of stockholders. Upon any termination of such voting
right, subject to the requirements of the General Corporation Law of
Delaware, the term of office of all directors elected by holders of Preferred
Stock voting separately as a class shall terminate.
(D) Except as set forth herein, or as required by law, holders of Series
A Junior Participating Preferred Stock 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.
Section 4. Certain Restrictions. (A) Whenever quarterly dividends or
other dividends or distributions payable on the Series A Junior Participating
Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared,
on shares of Series A Junior Participating Preferred Stock outstanding shall
have been paid in full, the Corporation shall not:
(i) 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 A Junior
Participating Preferred Stock, except dividends paid ratably on the Series A
Junior Participating Preferred Stock 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;
(ii) purchase or otherwise acquire for consideration any shares of
Series A Junior Participating Preferred Stock, or any shares of stock ranking
on a parity with the Series A Junior Participating Preferred Stock, 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.
(B) 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
Article IV, Section I of its Certificate of Incorporation or paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued
as part of a new series of 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.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any
liquidation (voluntary or otherwise), 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 A Junior Participating Preferred Stock unless,
prior thereto, the holders of shares of Series A Junior Participating
Preferred Stock shall have received $100 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 A Liquidation
Preference"). Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions shall be made to the
holders of shares of Series A Junior Participating Preferred Stock 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 (i) the Series A Liquidation Preference by (ii) 100 (as
appropriately adjusted as set forth in paragraph C below to reflect such
events as stock splits, stock dividends and recapitalizations with respect to
the Common Stock) (such number in clause (ii), the "Adjustment Number").
Following the payment of the full amount of the Series A Liquidation
Preference and the Common Adjustment in respect of all outstanding shares of
Series A Junior Participating Preferred Stock and Common Stock, respectively,
holders of Series A Junior Participating Preferred Stock 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 l with respect to such Preferred Stock and Common Stock, on a per share
basis, respectively.
(B) (i) If there are not sufficient assets available to permit payment
in full of the Series A Liquidation Preference and the liquidation
preferences of all other series of preferred stock, if any, which rank on a
parity with the Series A Junior
Participating Preferred Stock, then such assets as are available shall be
distributed ratably to the holders of such parity shares in proportion to
their respective liquidation preferences. (ii) If there are not sufficient
assets available to permit payment in full of the Common Adjustment, then
such assets as are available shall be distributed ratably to the holders of
Common Stock.
(C) If the Corporation shall at any time after November 20, 1987 (i)
declare any dividend 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 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.
Section 7. 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 A Junior Participating Preferred Stock 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 100 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. If the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend 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 A Junior Participating Preferred
Stock 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.
Section 8. No Redemption. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of the Corporation's Preferred Stock as
to the payment of dividends and the distribution of assets, unless the
Issuing Resolution with respect to any such series shall provide otherwise.
Section 10. Fractional Shares. Series A Junior Participating Preferred
Stock 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 A Junior Participating Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and
do affirm the foregoing as true under the penalties of perjury this _____th
day of ________, 1987.
Name:
Title:
Attest:
Name:
Title:
EXHIBIT B
[Form of Rights Certificate]
Certificate No. R- _________ Rights
NOT EXERCISABLE AFTER DECEMBER l, 1997 OR EARLIER IF REDEEMED BY THE COMPANY.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.05
PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT (AS DEFINED HEREIN).
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON
OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE
OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON
OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND
THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
Rights Certificate
REYNOLDS METALS COMPANY
This certifies that ____________________, or registered assigns, is
the registered holder of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Rights Agreement, dated as of November 23, 1987 (as amended from time
to time, the "Rights Agreement"), between Reynolds Metals Company, a Delaware
corporation (the "Company"), and The Chase Manhattan Bank, N.A. (the "Rights
Agent"), to purchase from the Company at any time prior to 5:00 P.M. (New
York time) on December l, 1997 at the office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent, one
one-hundredth of a share of the Company's Series A Junior Participating
Preferred Stock, without par value (the Preferred Stock"), at a purchase
price of $125 per one one-hundredth of a share (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate with the Form of
Election to Purchase set forth on the reverse hereof and the Certificate
contained therein duly executed. The Purchase Price shall be paid at the
election of the holder by certified bank check or money order payable
*The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
to the order of the Company or the Rights Agent. The number of Rights
evidenced by this Rights Certificate, the number of one one-hundredths of a
share of Preferred Stock which may be purchased upon exercise thereof and the
Purchase Price per one one-hundredth of a share of Preferred Stock, set forth
above, are the number of Rights, number of one one-hundredths of a share of
Preferred Stock and Purchase Price as of __________ __ 1987, based on the
Preferred Stock as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or any
Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement), (ii) a transferee of any such Acquiring Person,
Associate or Affiliate, or (iii) under certain circumstances specified in the
Rights Agreement, a transferee of a person who, concurrently with or after
such transfer, became an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, such Rights shall become null and void and no holder hereof
shall have any rights with respect to such Rights from and after the
occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price, the number of
one one-hundredths of a share of Preferred Stock and the kind of securities
which may be purchased upon the exercise of the Rights evidenced by this
Rights Certificate are subject to modification and adjustment upon the
happening of certain events, including Triggering Events (as such term is
defined in the Rights Agreement).
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holder of the Rights Certificate,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in
the Rights Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available upon
written request to the Rights Agent.
The Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of one one-hundredths of a share of
Preferred Stock as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered shall have entitled such holder to purchase. If
this Rights Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Board of Directors of the Company
at its option at a redemption price of $.05 per Right at any time prior to
the earlier of the close of business on (i) the fifteenth day following the
Stock Acquisition Date (as such time period may be extended pursuant to the
Rights Agreement), and (ii) the Final Expiration Date. After the expiration
of the redemption period, the Company's right of redemption may be reinstated
if an Acquiring Person reduces his beneficial ownership to 10% or less of the
outstanding Common Stock in a transaction or series of transactions not
involving the Company.
The Company may, in lieu of issuing fractional shares of Preferred Stock
upon the exercise of any Right or Rights evidenced hereby (other than
fractions which are integral multiples of one one-hundredth of a share of
Preferred Stock, which may, at the election of the Company, be evidenced by
depositary receipts), make a cash payment as provided in the Rights
Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the shares of
Preferred Stock or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action,
or to receive notice of meetings or other actions affecting stockholders
(except as provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by
this Rights Certificate shall have been exercised as provided in the Rights
Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been counter-signed by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of ___________, 19
ATTEST: REYNOLDS METALS COMPANY
_______________________ By___________________________
Secretary Title:
Countersigned:
THE CHASE MANHATTAN BANK, N.A.
By____________________________
Authorized Signature
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED _________________________________________
hereby sells, assigns and transfers unto ___________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ___________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company with full power of substitution.
Dated: ___________________, 19
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(l) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such
terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, he [ ] did [ ] did not acquire the Rights evidenced by
this Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated: ____________, 19 _____________________________
Signature
NOTICE
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to
exercise Rights represented by the Rights Certificate.)
To: REYNOLDS METALS COMPANY
The undersigned hereby irrevocably elects to exercise ________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person which may be issuable upon
the exercise of the Rights) and requests that certificates for such shares be
issued in the name of and delivered to:
(Please print name and address)
Please insert social security
or other identifying number: ______________________________
If such number of Rights shall not be all the Rights evidenced
by this Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
(Please print name and address)
Please insert social security
or other identifying number: _____________________________
Dated:________________, 19
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(l) the Rights evidenced by this Rights Certif-
icate [ ] are [ ] are not being exercised by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate of an Acquiring
Person (as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of
the undersigned, he [ ] did [ ] did not acquire the Rights evidenced by
this Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated: ___________, 19 _____________________________
Signature
Signature Guaranteed:
NOTICE
The signatures to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On November 20, 1987, the Board of Directors of Reynolds Metals Company,
a Delaware corporation (the "Company"), declared a dividend distribution of
one Preferred Stock Purchase Right (individually a "Right", and collectively
the "Rights") for each outstanding share of common stock, without par value
(the "Common Stock") of the Company, to stockholders of record at the close
of business on December 1, 1987 (the "Record Date"). Each Right entitles the
record holder to purchase from the Company, from and after the Distribution
Date (as defined below) one one-hundredth of a share of the Company's Series
A Junior Participating Preferred Stock, without par value (the "Preferred
Stock") at a price of $125 (the "Purchase Price"), subject to adjustment in
certain circumstances. The Purchase Price may be paid, at the election of the
registered holder, by certified bank check or money order payable to the
order of the Company or The Chase Manhattan Bank, N.A., as Rights Agent (the
"Rights Agent"). The description and terms of the Rights are set forth in a
Rights Agreement, dated as of November 23, 1987 (the "Rights Agreement"),
between the Company and the Rights Agent.
Initially, the Rights will be attached to the certificates representing
outstanding shares of Common Stock, and no Rights Certificates will be
distributed. The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) fifteen (15) days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership of 20% or more of the outstanding
shares of Common Stock (the "Stock Acquisition Date"), or (ii) ten (10)
business days following the commencement of a tender offer or exchange offer
if, upon consummation thereof, the person or group making such offer would be
the beneficial owner of 30% or more of the outstanding shares of Common
Stock. Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such
Common Stock certificates, (ii) new Common Stock certificates issued after
December l, 1987 will contain a notation incorporating the Rights Agreement
by reference and (iii) the surrender for transfer of any certificates for
Common Stock outstanding will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, Rights Certificates will be
mailed to holders of record of the Common Stock as of the close of business
on the Distribution Date and, thereafter, such separate Rights Certificates
alone will evidence the Rights. Except in certain limited circumstances,
only shares of Common Stock issued prior to the Distribution Date will be
issued with Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on December l, 1997, unless earlier exercised
or redeemed by the Company as described below.
At any time following the Distribution Date, if (i) the Company is the
surviving corporation in a merger with an Acquiring Person and its Common
Stock is not changed or exchanged, (ii) a Person becomes the beneficial owner
of 30% or more of the then outstanding shares of Common Stock (other than
pursuant to an offer for all outstanding shares of Common Stock at a price
and on terms which the majority of the independent Directors determine to be
fair to, and otherwise in the best interests of, stockholders), or (iii) an
Acquiring Person receives equity securities (other than pursuant to a pro
rata distribution) from the Company, acquires from or transfers to the
Company assets with a fair market value exceeding $10,000,000 or engages in
certain other "self-dealing" transactions specified in the Rights Agreement,
the Rights Agreement requires that proper provision be made so that each
holder of a Right will thereafter have the right to receive, upon the
exercise thereof, Common Stock (or, in certain circumstances cash, property
or other securities of the Company) having a value equal to two (2) times the
exercise price of the Right. However, Rights are not exercisable following
the occurrence of the events set forth above until such time as the Rights
are no longer redeemable by the Company as set forth below. Notwithstanding
any of the foregoing, following the occurrence of any of the events set forth
in this paragraph, any Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by an Acquiring
Person shall immediately become null and void.
For example, at an exercise price of $125 per Right, each Right not
owned by an Acquiring Person (or by certain related parties) following an
event set forth in the preceding paragraph would entitle its holder to
purchase $250 worth of Common Stock (or other securities or assets, as noted
above) for $125. Assuming that the Common Stock had a per share value of $50
at such time, the holder of each valid Right would be entitled to purchase
five shares of Common Stock for $125.
At any time following the Stock Acquisition Date, if (i) the Company
engages in a merger or consolidation in which the Company is not the
surviving corporation, (ii) the Company engages in a merger or consolidation
with another person in which the Company is the surviving corporation, but in
which all or part of the Common Stock is changed or exchanged, or (iii) 50%
or more of the Company's assets or earning power is sold or transferred, the
Rights Agreement requires that proper provision be made so that each holder
of a Right (except Rights which previously have been voided as set forth
above) shall thereafter have the right to receive, upon the exercise thereof,
common stock of the acquiring company having a value equal to two (2) times
the exercise price of the Right. The Rights may not be so exercised in the
case of a merger or consolidation (a) which follows an offer described in
clause (ii) of the second preceding paragraph and (b) in which the form and
amount of consideration is the same as was paid in such offer. The events
set forth in this paragraph and in the second preceding paragraph are
referred to as the "Triggering Events."
The Rights Agreement provides that the Company may not consolidate or
merge with, or sell 50% of the Company's assets or earning power to, any
person which has securities or is bound by agreements which would
substantially diminish the benefits of the Rights.
The Purchase Price payable, and the number of one one-hundredths of a
share of Preferred Stock or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on the Preferred Stock or other
capital stock, or a subdivision, combination or reclassification of the
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for Preferred Stock or securities
convertible into Preferred Stock at less than the current market price of the
Preferred Stock, or (iii) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets (excluding regular quarterly
cash dividends or dividends payable in Preferred Stock) or of subscription
rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. The Company may, in lieu of issuing fractional shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share, which may, at the election of the Company, be
evidenced by depositary receipts) upon exercise of the Rights, make a cash
payment based on the market price of the Preferred Stock on the last trading
date prior to the date of exercise.
At any time until fifteen (15) days following the Stock Acquisition
Date, the Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a price of $.05 per Right, payable in cash or securities
or both (the "Redemption Price"). Upon certain circumstances set forth in
the Rights Agreement, the decision to redeem shall require the concurrence of
a majority of the Continuing Directors. Thereafter, this right of redemption
may be reinstated if an Acquiring Person reduces his beneficial ownership to
10% or less of the outstanding shares of Common Stock in a transaction or
series of transactions not involving the Company and there are no other
Acquiring Persons. Immediately upon the action of the Board of Directors of
the Company ordering redemption of the Rights, with, where required, the
concurrence of a majority of the Continuing Directors, the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
The term "Continuing Director" means any member of the Company's Board
of Directors who was a member of the Board prior to the date of the Rights
Agreement, and any person who is subsequently elected to the Board if such
person is recommended or approved by a majority of the Continuing Directors.
Continuing Directors do not include an Acquiring Person, or any
representative thereof.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income at such time as
the Rights become exercisable or are exercised for Common Stock (or other
consideration) of the Company or for common stock of the acquiring company as
set forth above.
Certain provisions of the Rights Agreement relating to the
principal economic terms of the Rights may not be amended at any time. Other
provisions may be amended by the Board of Directors of the Company prior to
the Distribution Date. Thereafter, these provisions of the Rights Agreement
may be amended by the Board (in certain circumstances only with the
concurrence of the Continuing Directors) in order: to cure any ambiguity,
defect or inconsistency; to shorten or lengthen any time period under the
Rights Agreement; or in any other respect that will not adversely affect the
interests of holders of Rights (excluding the interests of any Acquiring
Person); provided that no amendment to adjust the time period governing
redemption may be made if the Rights are not redeemable.
Shares of Preferred Stock purchasable upon exercise of the Rights
will not be redeemable. Each one one-hundredth of a share of Preferred Stock
will be entitled to an aggregate quarterly dividend equal to the greater of
(a) the quarterly dividend declared per share of Common Stock or (b) $.10,
(ii) upon liquidation, a minimum preferential liquidation payment of $1.00
and an aggregate liquidation payment equal to the liquidation payment made
per share of Common Stock, (iii) one vote, voting together with the shares of
Common Stock and (iv) in the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged, the same amount
received per share of Common Stock. These rights are protected by customary
anti-dilution provisions. Because of the nature of the Preferred Stock's
dividend, liquidation and voting rights, the value of each one one-hundredth
of a share of Preferred Stock purchasable upon exercise of each Right should
approximate the value of one share of Common Stock.
A copy of the Rights Agreement is filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement of the Company
on Form 8-A. A copy of the Rights Agreement is available free of charge from
the Company upon written request therefor. This summary description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated herein by reference.