EXHIBIT 10.37
REYNOLDS METALS COMPANY
LONG-TERM PERFORMANCE SHARE PLAN
As Amended and Restated
Effective April 16, 1999
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ARTICLE I
PURPOSE OF THE PLAN
The purpose of the Plan is to assist the Company in
attracting and retaining key employees by providing long-term
performance-based incentives.
ARTICLE II
DEFINITIONS
2.01 "Additional Income" shall have the meaning
specified in Section 5.01(b).
2.02 "Beneficiary" shall mean the individual or entity
designated by the Participant to receive any amounts allocated to
the Participant that remain in the Plan upon the death of the
Participant. If no such designation is made, or if the
designated individual predeceases the Participant or the entity
no longer exists, then the Beneficiary shall be the Participant's
estate.
2.03 "Board" shall mean the Board of Directors of the
Company.
2.04 "Company" shall mean Reynolds Metals Company, a
Delaware corporation.
2.05 "Company Stock" shall mean the Common Stock of the
Company, without par value.
2.06 "Effective Date" shall mean January 1, 1998.
2.07 "Election Period" shall mean for each Performance
Cycle the September of the third year of the Performance Cycle;
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provided, however, that for the initial two-year Performance
Cycle that begins January 1, 1998, and ends December 31, 1999,
the Election Period shall mean September of 1998; and further
provided that the Plan Committee in its discretion may designate
a different period for any Performance Cycle.
2.08 "Participant" shall mean each officer and other
key employee of the Company and its subsidiaries and affiliates
who is designated by the Plan Committee to receive a grant for a
Performance Cycle.
2.09 "Performance Cycle" shall mean initially the cycle
of two full calendar years beginning January 1, 1998, and ending
December 31, 1999, and otherwise shall mean a cycle of four full
calendar years. The initial four-year Performance Cycle shall
begin January 1, 1998, and end December 31, 2001. A new four-
year Performance Cycle shall begin January 1, 2000, and every
subsequent second January 1.
2.10 "Performance Share Units" shall mean the award
units granted by the Plan Committee for a Performance Cycle as
described in Article III.
2.11 "Phantom Stock" shall mean shares of Company Stock
credited to a Participant's account in accordance with this Plan.
2.12 "Plan" shall mean this Reynolds Metals Company
Long-Term Performance Share Plan, as amended from time to time.
2.13 "Plan Committee" shall mean the committee of
nonemployee directors appointed by the Board to administer the
Plan.
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2.14 "Termination" or "Terminated" shall mean a
Participant's termination of employment with the Company and any
subsidiary or affiliate of the Company.
ARTICLE III
GRANTS OF PERFORMANCE SHARE UNITS
As soon as feasible after the beginning of each
Performance Cycle, the Plan Committee shall (1) designate the
officers and other key employees of the Company and its
subsidiaries and affiliates who will participate in the Plan for
the Performance Cycle, (2) determine the Performance Share Units
to be granted to each such Participant, and (3) establish the
performance goal or goals that must be reached by the end of the
Performance Cycle in order for Participants to receive an award
from the Plan at the end of the Performance Cycle.
ARTICLE IV
CALCULATION AND PAYMENT OF AWARDS
4.01 (a) After the end of each Performance Cycle, each
Participant shall be entitled to receive an award for that
Performance Cycle if and to the extent the performance goals
established in accordance with Article III for that Performance
Cycle have been met. Except as otherwise specified herein, half
of the award shall be payable in cash to the Participant (the
"Cash Portion") and half of the award shall be in the form of
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shares of Phantom Stock credited to the Participant's account
(the "Phantom Stock Portion").
(b) A Participant whose employment is Terminated
before the last day of the Performance Cycle shall not be
entitled to any award for the Performance Cycle unless the
Participant's employment was Terminated on account of (i)
disability or immediate retirement, in either case for purposes
of the Reynolds Metals Company New Retirement Program for
Salaried Employees, (ii) death, (iii) a reduction in force for
purposes of the Company's Termination Allowance Policy, or (iv)
such other reason as the Plan Committee may determine. A
Participant who terminates for one of the specified reasons shall
be entitled to a pro rata portion of any award that would
otherwise be due the Terminated Participant after the end of the
Performance Cycle. This pro rata portion shall be determined by
multiplying the award that would otherwise be due the Terminated
Participant by a fraction, the numerator of which is equal to the
number of full calendar months the Participant worked before his
or her Termination and the denominator of which is the number of
months in the Performance Cycle. Any awards made in accordance
with this Section 4.01(b) shall be distributed to the Participant
(or the Participant's Beneficiary, in case of death) as soon as
feasible after the end of the Performance Cycle; except as
otherwise provided in Section 5.04 in case of the Participant's
death, no deferral or installment payment elections made with
respect to the Performance Cycle shall apply.
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4.02 The amount of the cash to be paid to a Participant
for a Performance Cycle with respect to the Cash Portion of an
award shall be determined by multiplying the number of
Performance Share Units payable in cash by the average closing
price of Company Stock on New York Stock Exchange Composite
Transactions for the last twenty (20) trading days of the
Performance Cycle. Except in the case of a voluntary or
mandatory deferral hereunder, the Cash Portion shall be paid out
to the Participant as soon as feasible after the end of the
Performance Cycle.
4.03 (a) The number of shares of Phantom Stock to be
initially credited to a Participant's account for a Performance
Cycle with respect to the Phantom Stock Portion of an award shall
be equal to the number of Performance Share Units payable in
Phantom Stock for the Performance Cycle.
(b) As of each date when cash dividends are paid on
Company Stock, each Participant's Phantom Stock account under the
Plan shall be adjusted to reflect dividend equivalents computed
in accordance with this Section 4.03(b). The dollar amount of
the dividend equivalent for each Participant shall equal the cash
dividends that would have been paid on the number of shares of
Phantom Stock credited to the Participant's account as of the
dividend record date if that number of shares of Phantom Stock
had actually been issued and outstanding on the record date.
This dividend equivalent for each Participant shall be converted
into a number representing additional shares of Phantom Stock by
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dividing (i) the total dollar amount of the Participant's
dividend equivalent by (ii) the arithmetic average of the high
and low sales prices of Company Stock as reported on New York
Stock Exchange Composite Transactions on the date when the cash
dividends are paid. The Participant's account under the Plan
shall then be credited with the determined number of shares of
Phantom Stock, including fractional shares calculated to three
decimal places.
(c) If any stock dividend is declared upon Company
Stock, or if there is any stock split, stock distribution, or
other recapitalization of the Company with respect to its Company
Stock, resulting in a split-up or combination or exchange of
shares, or if any special distribution is made to holders of
Company Stock, the aggregate number and kind of shares of Phantom
Stock credited to the account of a Participant under the Plan
shall be proportionately adjusted as the Plan Committee may deem
appropriate.
(d) No Participant shall receive any distribution
relating to Phantom Stock while the Participant is still employed
by the Company or any of its subsidiaries or affiliates. If a
Participant's employment is Terminated during a calendar year,
the Participant's Phantom Stock account shall be maintained under
the Plan through January 15 of the following year. As of such
January 15, the total number of shares of Phantom Stock credited
to the Participant's account (representing both awards and
dividend equivalents) shall be computed and a distribution made
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to the Participant as soon after January 15 as administratively
feasible. Distributions shall be in shares of Company Stock,
except that the cash value of any fractional share shall be paid
in cash. The cash value of the fractional share shall be based
on the arithmetic average of the high and low sales prices of
Company Stock as reported on New York Stock Exchange Composite
Transactions on January 15 (or on the preceding business day if
the New York Stock Exchange is not open on January 15). Unless
the Participant has elected to receive the distribution in
installments in accordance with Section 5.03, any distribution
relating to Phantom Stock shall be made in a single lump sum.
ARTICLE V
DEFERRAL OF PAYMENTS
5.01 (a) Each Participant who has not Terminated
employment shall have the right to elect to defer the receipt of
up to 85% of the Cash Portion payable with respect to a
Performance Cycle in accordance with Article IV. At the election
of the Participant, the amount deferred may be expressed (i) as a
percentage of the Cash Portion payable under Article IV, in
multiples of 5%, (ii) as a dollar amount, in multiples of $100,
or (iii) as either a percentage of the Cash Portion or a dollar
amount, in each case, in excess of a floor amount specified by
the Participant. In no case, however, may the total amount
deferred be less than $2,000 nor more than 85% of the
Participant's Cash Portion for the Performance Cycle. Any
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deferral election shall be made by the Participant during the
Election Period for the Performance Cycle to which the election
relates; once made, the election shall be irrevocable.
(b) Deferred amounts shall be increased by an amount
of additional income (hereinafter referred to as "Additional
Income") computed at a specified rate and compounded annually on
December 31st from the date the amounts would have been paid in
accordance with Section 4.02 through the December 31st coincident
with or next following the Participant's Termination. The
specified rate for Cash Portions with respect to a Performance
Cycle shall be equal to the rate established under the Reynolds
Metals Company New Management Incentive Deferral Plan for amounts
deferred under that plan with respect to the last year of the
Performance Cycle.
(c) Unless the Participant has elected to receive
installment payments in accordance with Section 5.03, any amounts
deferred in accordance with this Section 5.01, including any
applicable Additional Income, shall be paid out to the
Participant as soon as feasible in the January following the
calendar year in which the Participant's employment Terminates.
5.02 The provisions of this Section 5.02 shall apply
only to a Participant who, at the time an election to defer is
made in accordance with Section 5.01, is subject to the Company's
Stock Ownership Guidelines for Officers (an "Officer"). Any such
Officer electing to defer payment of a Cash Portion may also
elect to have a specified part or all of such deferred amount
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subject to Phantom Stock Additional Income (as provided herein)
instead of having Additional Income computed at a specified rate
as set forth in Section 5.01(b). Phantom Stock Additional Income
shall be computed in accordance with the following rules:
(a) As of the date when the Cash Portion would have
been paid but for the deferral election, each Officer who
elects to receive Phantom Stock Additional Income shall have
his or her account under this Plan credited with a number of
shares of Phantom Stock, equal to the number of Performance
Share Units in the portion of the Cash Portion to which the
deferral election relates.
(b) As of each date when cash dividends are paid on
Company Stock, each Officer who elected to receive Phantom
Stock Additional Income shall also have the appropriate
portion of his or her account under this Plan adjusted to
reflect dividend equivalents as described in Section
4.03(b).
(c) If any stock dividend is declared upon Company
Stock, or if there is any stock split, stock distribution,
or other recapitalization of the Company with respect to its
Company Stock, resulting in a split-up or combination or
exchange of shares, or if any special distribution is made
to holders of Company Stock, the aggregate number and kind
of shares of Phantom Stock credited to the appropriate
portion of the account of an Officer under the Plan shall be
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proportionately adjusted as the Plan Committee may deem
appropriate.
(d) The election of Phantom Stock Additional Income
must be made at the same time as the election to defer the
Cash Portion in accordance with Section 5.01. Once made,
the election of Phantom Stock Additional Income shall be
irrevocable as to the Performance Cycle to which such
election applies.
(e) Distribution of any amounts to which this Section
5.02 applies shall be in shares of Company Stock and shall
be subject to the provisions of Section 4.03(d).
5.03 (a) All of a Participant's deferred amounts,
including any Phantom Stock Portion and any Additional Income and
dividend equivalents, shall be distributed to the Participant in
the January following the calendar year in which the
Participant's employment Terminates unless the Participant has
elected with respect to a Performance Cycle to receive the
distribution in annual installments over a period of five (5)
years. An election to receive installment payments shall be made
by the Participant during the Election Period for the Performance
Cycle to which the election relates, and if the installment
payment election relates to a Cash Portion, the installment
payment election shall be made at the same time as the election
to defer the Cash Portion. Once made, the installment payment
election shall be irrevocable.
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(b) Annual installments of amounts paid in cash shall
be in equal amounts, shall consist of the deferred amounts and
the Additional Income applicable thereto, and shall be paid as
soon as administratively feasible at the beginning of each
calendar year following the year in which the Participant
Terminates employment. If the Participant has elected to receive
distributions of Phantom Stock (whether arising from the
Participant's Phantom Stock Portion, a voluntary deferral, or a
mandatory deferral, and including in any event applicable
dividend equivalents) in five (5) annual installments, the
initial installment shall be distributed as soon as
administratively feasible after January 15 of the year following
the year of the Participant's Termination of employment and shall
equal one-fifth of the number of shares of Phantom Stock subject
to installment payments. The subsequent four annual installments
shall be paid as soon as administratively feasible after the next
four January 15 dates and shall equal in each case (i) the
remaining number of shares of Phantom Stock subject to
installment payments divided by (ii) the number of installment
payments remaining, including the installment about to be paid.
5.04 Any Participant may also irrevocably elect during
an Election Period that if the Participant dies before receiving
full distribution of all amounts for the Performance Cycle to
which the election relates, distribution to the Beneficiary of
any amounts remaining after the Participant's death shall be made
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in five (5) annual installments. Such installments shall be
computed and distributed as described in Section 5.03(b).
5.05 (a) Anything herein to the contrary
notwithstanding, the Plan Committee may direct that all unpaid
deferred amounts, including any Phantom Stock Portion and any
applicable Additional Income and dividend equivalents, be
accelerated and distributed in a lump sum if, in conjunction with
the termination of the Plan, the Plan Committee finds, in its
sole discretion, that extraordinary circumstances make such
acceleration of payments in the best interest of the Company;
provided, however, that no payment with respect to Phantom Stock
may be accelerated under this Section 5.05(a) unless the
accelerated payment will be exempt from short-swing profit
liability pursuant to the rules promulgated under Section 16(b)
of the Securities Exchange Act of 1934, as amended.
(b) Anything herein to the contrary notwithstanding,
if at any time a Change in Control (as defined in Section 11.02)
occurs, then all unpaid deferred amounts, including any Phantom
Stock Portion and any applicable Additional Income and dividend
equivalents, shall be accelerated and distributed in a lump sum.
5.06 (a) The provisions of this Section 5.06 shall
apply each calendar year to each Participant who is a Top
Executive (as defined below) at the time the Cash Portion of an
award is to be paid under the Plan in that year. To the extent a
Top Executive's Estimated Annual Compensation (as defined below)
would exceed One Million Dollars ($1,000,000) for the year,
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payment of any Cash Portion shall be automatically deferred in
accordance with this Section 5.06 to the extent necessary to
bring the top Executive's Estimated Annual Compensation below One
Million Dollars ($1,000,000). If necessary, all of a
Participant's Cash Portion shall be deferred, in which case any
applicable payroll taxes shall be deducted and paid from such Top
Executive's regular salary checks unless the Top Executive
reimburses the Company separately for such payroll taxes.
(b) Any mandatory deferral in accordance with this
Section 5.06 shall be subject to the following terms and
conditions:
(A) Except as otherwise provided in subsection (B)
below, amounts deferred under this Section 5.06 shall earn
Additional Income as described in Section 5.01(b). All
amounts shall be distributed to the Top Executive in a
single lump sum in the January following the calendar year
in which the Top Executive's employment Terminates unless
the Top Executive has elected to have any amounts deferred
in accordance with this Section 5.06 paid in annual
installments over a period of five (5) years as described
in, and in accordance with, Section 5.03.
(B) A Participant who anticipates being a Top
Executive subject to a mandatory deferral in accordance with
this Section 5.06 may elect to have any amounts subject to a
mandatory deferral earn Phantom Stock Additional Income in
accordance with the provisions of Section 5.02.
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(C) A Participant who anticipates being a Top
Executive subject to a mandatory deferral in accordance with
this Section 5.06 may elect in accordance with Section 5.04
that in case of such Top Executive's death before all
amounts subject to the mandatory deferral are distributed,
distribution to the Beneficiary of any amounts remaining
after the Participant's death shall be made in five (5)
annual installments. Such installments shall be computed
and distributed as described in Section 5.03(b).
(D) Any elections made under subsections (A), (B) and
(C) above shall be made at the same time, which time shall
be no later than the December 31st of the last year of the
Performance Cycle to which the Cash Portion relates. Once
made, any such election shall be irrevocable.
(E) Anything in this Section 5.06(b) to the contrary
notwithstanding, if and to the extent a Participant who is a
Top Executive has already made a deferral election, a
Phantom Stock Additional Income election, or an installment
payment election with respect to the Cash Portion of an
award affected by this Section 5.06, the prior election(s)
shall automatically apply to all amounts subject to the
mandatory deferral provisions of this Section 5.06, and the
Top Executive shall not be permitted to make any different
or additional elections under subsections (A), (B) and/or
(C) above.
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(c) For purposes of this Section 5.06, a Top
Executive's "Estimated Annual Compensation" for a given year
shall be equal to (i) the Top Executive's anticipated salary for
the year as approved by the Compensation Committee in January of
the year (taking into account any approved increase to become
effective during the year), less any amounts the Top Executive
has voluntarily elected to defer under the Reynolds Metals
Company Salary Deferral Plan for Executives for the year, plus
(ii) the anticipated incentive compensation to be paid to the Top
Executive under the Reynolds Metals Company Supplemental
Incentive Plan, less any amounts the Top Executive has
voluntarily elected to defer under the Reynolds Metals Company
New Management Incentive Deferral Plan, plus (iii) the amount of
any previously deferred incentive compensation payable to the Top
Executive during the year that will count as compensation in the
year for purposes of Section 162(m) of the Internal Revenue Code
of 1986, as amended, plus (iv) the amount of miscellaneous or
imputed income (for items such as the imputed value of life
insurance and the use of a car or plane) that the Top Executive
had for the immediately preceding calendar year.
(d) "Top Executive" shall mean for any calendar year
any individual who may reasonably be expected to be a "covered
employee" for the year for purposes of Section 162(m) of the
Internal Revenue Code of 1986, as amended.
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ARTICLE VI
ADMINISTRATION
The Plan Committee shall have full responsibility and
authority to interpret and administer the Plan, including the
power to promulgate rules of Plan administration, the power to
settle any disputes as to rights or benefits arising from the
Plan, the power to appoint agents and delegate its duties, and
the power to make such decisions or take such actions as the Plan
Committee, in its sole discretion, deems necessary or advisable
to aid in the proper administration of the Plan. Actions and
determinations by the Plan Committee shall be final, binding and
conclusive for all purposes of this Plan.
ARTICLE VII
AMENDMENT, SUSPENSION AND TERMINATION OF THE PLAN
The Board may from time to time amend, suspend or
terminate the Plan, in whole or in part, except that no such
amendment, suspension or termination shall materially adversely
affect the rights of any Participant in respect of any awards
previously earned by such Participant and not yet paid. Anything
in the Plan to the contrary notwithstanding, at any time before a
Change in Control (as defined in Section 11.02) occurs, the Board
may amend Section 11.02(a) to change the percentage referred to
therein to a percentage that is not more than 25%, so long as
such change is consistent with contemporaneous change of a
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similar nature in the Rights Agreement (as defined in Section
11.02(f)(C)).
ARTICLE VIII
FUNDING
No promises under this Plan shall be secured by any
specific assets of the Company, nor shall any assets of the
Company be designated as attributable or allocated to the
satisfaction of such promises. Benefit payments shall be made
from the Company's general assets.
ARTICLE IX
COMPANY STOCK
Shares of Company Stock distributed under the Plan
shall be shares purchased by the Company on the open market or
shares held in the Company's treasury from time to time, or a
combination of both, as the Board may from time to time
determine.
ARTICLE X
GENERAL PROVISIONS
10.01 All elections by a Participant hereunder shall
be made in writing by the completion and delivery to the Company
of forms prescribed for such purpose within the time limits
established with respect to such election.
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10.02 Neither the establishment of the Plan nor the
payment of any benefits hereunder nor any action of the Company,
including its Board, in connection therewith shall be held or
construed to confer upon any individual any legal right to remain
an officer or an employee of the Company.
10.03 No benefit under the Plan shall be subject in
any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, except by will or the
laws of descent and distribution, and any attempt thereat shall
be void. No such benefit shall, prior to receipt thereof, be in
any manner liable for or subject to the recipient's debts,
contracts, liabilities, engagements, or torts.
10.04 This Plan shall inure to the benefit of, and be
binding upon, the Company and each Participant, and upon the
successors and assigns of the Company and of each Participant.
10.05 The Company shall not be required to deliver any
fractional share of Common Stock but shall pay, in lieu thereof,
the cash value (measured as of the January 15 immediately
preceding the distribution) of such fractional share to the
Participant (or the Participant's Beneficiary, if applicable).
The cash value of a fractional share shall be computed as
described in Section 4.03(d).
10.06 If any cash payment under Section 11.01 would
make a Change in Control transaction ineligible for pooling of
interests accounting under APB No. 16 that would have been
eligible for such accounting treatment but for such cash payment,
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then the Plan Committee shall be empowered to substitute for up
to 50% of the cash payable to a Participant under Section 11.01
Company Stock (or securities into which Company Stock has been
converted), with the number of shares of Company Stock or of such
other securities to be determined on the basis set forth in
Sections 4.03(a) and 4.03(c).
10.07 The Company shall either (a) deduct from the
amount of any payments hereunder all taxes required to be
withheld by applicable laws or (b) make such other arrangements
as may be necessary or appropriate to meet its withholding
obligations.
10.08 This Plan shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Virginia.
ARTICLE XI
CHANGE IN CONTROL PROVISIONS
11.01 Anything in this Plan to the contrary
notwithstanding, if at any time during a Performance Cycle a
Change in Control (as defined in Section 11.02) occurs, then such
Performance Cycle shall be terminated, and
(a) if such Performance Cycle has been in effect for
one year or more, each Participant shall be paid in cash an
amount equal to the target award for such Participant for
such Performance Cycle determined as if the date of the
Change in Control were the end of the Performance Cycle;
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(b) if such Performance Cycle has been in effect for
less than one year, each Participant shall be paid in cash
an amount equal to one fourth of the target award for such
Participant for such Performance Cycle determined as if the
date of the Change in Control were the end of the
Performance Cycle; and
(c) any Terminated Participant entitled to a pro rata
award under Section 4.01(b) shall receive a payment
equivalent to that provided in Section 11.01(a) or (b)
above, as applicable, pro-rated as provided in Section
4.01(b), except that for purposes of determining the pro-
ration of the amount payable under Section 11.01(b), the
denominator to be used shall be 12.
11.02 For purposes of this Article XI, "Change in
Control" shall mean the occurrence of any of the following:
(a) Any Person (as defined below) becomes the
Beneficial Owner (as defined below), directly or indirectly,
of 15% or more of the Company's common stock, unless such
Person (A) is not deemed an "Acquiring Person" in accordance
with Section 1(a) of the Rights Agreement (as defined
below), or (B) became a Beneficial Owner of 15% or more of
the Company's common stock in a transaction that did not
constitute a Change in Control under Section 11.02(c)
hereof;
(b) During any period of two consecutive years,
individuals who at the beginning of such period constitute
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the Board, and any new director (other than a director
designated by a person who has entered into an agreement
with the Company to effect a transaction described in
Section 11.02(a), (c) or (d)) whose election by the Board or
nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute a least a majority of the members of the Board;
(c) The effective date of a merger or consolidation of
the Company or any of its subsidiaries with any other
entity, other than a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately before such merger or consolidation continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or
of any other corporation or entity that as a result of such
transaction owns the Company or all or substantially all of
the Company's assets, either directly or through one or more
subsidiaries (the "parent entity")) more than 51% of the
combined voting power of the voting securities of the parent
or surviving entity outstanding immediately after such
merger or consolidation and with the power to elect at least
a majority of the board of directors or other governing body
of such parent or surviving entity;
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(d) The approval by the shareholders of the Company of
a complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or
substantially all of the Company's assets; and
(e) There occurs any other event of a nature that
would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or in response to any
similar item on any similar schedule or form) under the 1934
Act (as defined below), whether or not the Company is then
subject to such reporting requirement.
(f) For purposes of this Section 11.02, the following
terms shall have the following meanings:
(A) "Person" shall have the meaning as set forth
in Sections 13(d) and 14(d) of the 1934 Act; provided,
however, that Person shall exclude (i) the Company,
(ii) any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, and
(iii) any corporation owned, directly or indirectly, by
the shareholders of the Company in substantially the
same proportions as their ownership of stock of the
Company.
(B) "Beneficial Owner" shall have the meaning
given to such term in Rule 13d-3 under the 1934 Act;
provided, however, that Beneficial Owner shall exclude
any Person otherwise becoming a Beneficial Owner by
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reason of the shareholders of the Company approving a
merger of the Company with another entity.
(C) "Rights Agreement" shall mean the Amended and
Restated Rights Agreement dated as of March 8, 1999
between the Company and ChaseMellon Shareholder
Services, L.L.C., as initially in effect.
(D) "1934 Act" means the Securities Exchange Act
of 1934, as amended.
11.03 (a) If a Participant receives any payments
under Section 11.01 (CIC Payments") that are subject to the tax
("Excise Tax") imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code"), the Participant shall also
receive at the time specified below an additional amount ("Gross-
Up Payment") such that the net amount retained by the
Participant, after deduction of any Excise Tax on the CIC
Payments and any federal, state and local income tax and Excise
Tax upon the payment provided for by this Section 11.03(a), shall
be equal to the CIC Payments (net of any required payroll
withholding taxes on the CIC Payments themselves). For purposes
of determining whether any payments under this Article XI will be
subject to the Excise Tax and the amount of such Excise Tax, (i)
any payments or benefits received by the Participant in
connection with a change in control (whether pursuant to the
terms of this Plan or under any other plan, arrangement or
agreement with the Company, with any person whose actions result
in a Change in Control, or with any person affiliated with the
Company or such person (all such
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persons other than the Company, "Successors")) shall
be treated as "parachute payments" within the meaning
of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280G(b)(1)
shall be treated as subject to the Excise Tax, unless in the
opinion of tax counsel selected by the Company's independent
auditors such payments or benefits (in whole or in part) do not
constitute parachute payments, or such excess parachute payments
(in whole or in part) represent reasonable compensation for
services actually rendered within the meaning of Section
280G(b)(4) of the Code in excess of the base amount within the
meaning of Section 280G(b)(3) of the Code, or are otherwise not
subject to the Excise Tax, (ii) the amount of the payments which
shall be treated as subject to the Excise Tax shall be equal to
the lesser of (A) the total amount of the payments under this
Article XI or (B) the amount of excess parachute payments within
the meaning of Section 280G(b)(1) (after applying clause (i)
above), and (iii) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Participant
shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local
income taxes at the highest marginal rate of taxation in the
state and locality of the Participant's residence on the date of
the payment under Section
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11.01, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes.
(b) If the Excise Tax is subsequently determined to be
less than the amount taken into account hereunder at the date of
the payment, the Participant shall repay to the Company at the
time that the amount of such reduction in Excise Tax is finally
determined the portion of the Gross-Up Payment attributable to
such reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal and state and local
income tax imposed on the Gross-Up Payment being repaid by the
Participant if such repayment results in a reduction in Excise
Tax and/or a federal and state and local income tax reduction)
plus interest received by the Participant attributable to any
Excise Tax refund. If the Excise Tax is determined to exceed the
amount taken into account hereunder at the date of payment
(including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional gross-up payment in respect
of such excess (plus any interest payable with respect to such
excess) at the time that the amount of such excess is finally
determined.
(c) The Gross-Up Payment shall be made not later than
the tenth business day following the date of the payment under
Section 11.01; provided however, that if the amount of such
payment cannot be finally determined on or before such day, the
Company shall pay the Participant on such day an estimate as
determined in good faith by the Company of the minimum amount of
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such payment and shall pay the remainder of such payment
(together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined but in no event later than the sixtieth day after the
date of the payment under Section 11.01. If the amount of the
estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company
to the Participant payable on the tenth business day after demand
by the Company (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code).
(d) Anything herein to the contrary notwithstanding,
any Gross-Up Payment otherwise due to a Participant hereunder
shall be reduced by the amount of any similar type of gross-up
payments received by the Participant from the Company or any
Successor outside this Plan.
Executed and adopted this 26 day of April,
1999, pursuant to action taken by the Board of Directors of
Reynolds Metals Company at its meetings on March 8, 1999 and
April 16, 1999.
REYNOLDS METALS COMPANY
By: /s/ D. Michael Jones
___________________________
Title: Senior Vice President
and General Counsel
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