SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-1070
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Olin Corporation
----------------
(Exact name of registrant as specified in its charter)
Virginia 13-1872319
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
501 Merritt 7, Norwalk, CT 06851
-------------------------- -----
(Address of principal executive offices) (Zip Code)
(203) 750-3000
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(Registrant's telephone number, including area code)
-----------------------------------------
(Former name, former address, and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No
----- -----
As of April 30, 1997 there were outstanding 51,149,190 shares of the
registrant's common stock.
<PAGE>
Part I - Financial Information
Item 1. Financial Statements.
<TABLE>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Balance Sheets
(In millions)
<CAPTION>
March 31, December 31,
1997 1996
--------- ------------
<S> <C> <C>
ASSETS
- ------
Cash and cash equivalents $ 249.8 $ 523.5
Short-term investments 87.9 87.3
Accounts receivable, net 414.7 320.5
Inventories 330.9 314.9
Other current assets 91.3 89.6
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Total current assets 1,174.6 1,335.8
Investments and advances 67.2 173.8
Property, plant and equipment
(less accumulated depreciation
of $1,454.0 and $1,353.1) 745.6 657.3
Other assets 175.7 172.5
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Total assets $2,163.1 $2,339.4
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Short-term borrowings and current
installments of long-term debt $ 134.9 $ 138.8
Accounts payable 245.5 267.9
Income taxes payable 27.9 127.4
Accrued liabilities 262.0 292.3
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Total current liabilities 670.3 826.4
Long-term senior debt 276.3 276.3
Other liabilities 283.6 290.7
Commitments and contingencies
Shareholders' equity:
Common stock, par value $1 per share:
Authorized 120.0 shares.
Issued 51.3 shares (52.2 in 1996) 51.3 52.2
Additional paid-in capital 456.1 493.8
Guaranteed ESOP obligations - (5.0)
Cumulative translation adjustment (14.3) (8.6)
Retained earnings 439.8 413.6
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Total shareholders' equity 932.9 946.0
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Total liabilities and
shareholders' equity $2,163.1 $2,339.4
======= =======
<FN>
- --------------------
The accompanying Notes to Condensed Financial Statements are an integral
part of the condensed financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Income
(In millions, except per share amounts)
<CAPTION>
Three Months
Ended March 31,
---------------
1997 1996
---- ----
<S> <C> <C>
Sales $ 591.2 $ 692.9
Operating expenses:
Cost of goods sold 449.9 528.4
Selling and administration 72.4 80.9
Research and development 7.4 10.0
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Operating income 61.5 73.6
Interest expense 7.5 7.9
Interest income 6.0 0.3
Other income 3.8 10.5
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Income from continuing operations before taxes 63.8 76.5
Income taxes 22.0 25.8
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Income from continuing operations 41.8 50.7
Loss from discontinued operations, net of taxes - (5.7)
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Net income 41.8 45.0
Preferred dividends - 1.5
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Net income available to common shareholders $ 41.8 $ 43.5
====== ======
Net income (loss) per common share:
Primary:
Continuing operations $ 0.81 $ 0.99
Discontinued operations - (0.12)
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Total net income $ 0.81 $ 0.87
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Fully diluted:
Continuing operations $ 0.80 $ 0.96
Discontinued operations - (0.11)
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Total net income $ 0.80 $ 0.85
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Dividends $ 0.30 $ 0.30
Average common shares outstanding - primary 51.9 49.6
Average common shares outstanding - fully diluted 52.2 51.9
<FN>
- ----------------------
The accompanying Notes to Condensed Financial Statements are an integral
part of the condensed financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statements of Cash Flows
(In millions)
<CAPTION>
Three Months
Ended March 31,
---------------
1997 1996
---- ----
<S> <C> <C>
Operating activities
- --------------------
Income from continuing operations $ 41.8 $ 50.7
Earnings of non-consolidated affiliates (2.2) (2.3)
Depreciation and amortization 26.7 33.5
Deferred taxes 1.8 2.4
Change in assets and liabilities net of
sale and purchase of businesses:
Receivables (98.9) (65.2)
Inventories (12.3) (26.8)
Other current assets (1.6) 2.5
Accounts payable and accrued liabilities (45.9) (50.9)
Income taxes payable 12.9 18.0
Noncurrent liabilities (5.0) (0.9)
Other operating activities 1.1 (3.3)
----- -----
Net cash and cash equivalents used for operating
activities of continuing operations (81.6) (42.3)
Discontinued operations:
Net loss - (5.7)
Change in net assets - 13.8
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Net operating activities (81.6) (34.2)
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Investing activities
- --------------------
Capital expenditures (13.9) (20.7)
Disposition of property, plant and equipment - 20.8
Business acquired in purchase transaction (2.0) -
Proceeds from sale of business - 5.5
Taxes paid on sale of business (112.4) -
Purchase of short-term investments (21.3) -
Proceeds from sale of short-term investments 20.7 -
Investments and advances-affiliated companies at equity (8.6) -
Other investing activities 0.1 0.5
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Net investing activities (137.4) 6.1
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Financing activities
- --------------------
Long-term debt repayments (5.0) -
Short-term borrowings 1.2 38.4
Purchase of Olin common stock (41.4) -
Repayment from ESOP 5.0 -
Stock options exercised 1.2 4.0
Dividends paid (15.7) (16.4)
Other financing activities - 0.1
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Net financing activities (54.7) 26.1
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Net decrease in cash and cash equivalents (273.7) (2.0)
Cash and cash equivalents, beginning of period 523.5 7.5
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Cash and cash equivalents, end of period $ 249.8 $ 5.5
===== =====
<FN>
- --------------------
The accompanying Notes to Condensed Financial Statements are an
integral part of the condensed financial statements.
</FN>
</TABLE>
<PAGE>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. The condensed financial statements included herein have been prepared
by the company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission and, in the opinion of the
company, reflect all adjustments (consisting only of normal accruals)
which are necessary to present fairly the results for interim periods.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations; however, the company believes that the
disclosures are adequate to make the information presented not
misleading. It is suggested that these condensed financial statements
be read in conjunction with the financial statements, accounting
policies and the notes thereto and management's discussion and analysis
of financial condition and results of operations included in the
company's Annual Report on Form 10-K for the year ended December 31,
1996.
2. Inventory consists of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ------------
<S> <C> <C>
Raw materials and supplies $ 162.7 $ 152.9
Work in process 149.3 144.6
Finished goods 181.5 171.8
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493.5 469.3
LIFO reserve (162.6) (154.4)
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Inventory, net $ 330.9 $ 314.9
====== ======
</TABLE>
Inventories are valued principally by the dollar value last-in, first-
out (LIFO) method of inventory accounting; in aggregate, such
valuations are not in excess of market. Elements of costs in
inventories include raw material, direct labor and manufacturing
overhead. Inventories under the LIFO method are based on annual
determination of quantities and costs as of the year-end; therefore,
the consolidated financial statements at March 31, 1997, reflect
certain estimates relating to inventory quantities and costs at
December 31, 1997.
3. Primary earnings per share are computed by dividing net income less the
ESOP preferred dividend requirement (to the date of its redemption in
1996) and the redemption adjustment (excess of fair value over book
value of ESOP shares redeemed) by the weighted average number of common
shares outstanding. In December 1996, the company redeemed the ESOP
preferred stock with shares of common stock of equivalent value. Fully
diluted earnings per share reflect the dilutive effect of stock options
and assume the conversion of outstanding ESOP preferred stock, until
its redemption in December 1996, into an equivalent number of common
shares at the date of issuance. Net income was reduced by an
additional ESOP contribution (differential between the common and the
ESOP preferred dividend rates under an assumed conversion) necessary to
satisfy the debt service requirement.
<PAGE>
4. An Employee Stock Ownership Plan (ESOP) was established in June 1989.
The ESOP purchased from the company approximately 1.3 million shares
($100 million) of a newly authorized 1.75 million share series of the
company's ESOP preferred stock, financed by $60 million of notes
guaranteed by the company and $40 million of borrowings from the
company. In December 1996, all outstanding shares of ESOP preferred
stock were redeemed to common stock of equivalent value. The notes
guaranteed by the company have been repaid in full and the related
guarantee of this debt has expired as of March 31, 1997.
5. In February 1997, the company completed its purchase of the remaining 50% of
Niachlor with a final payment of $2 million to E.I. du Pont de Nemours and
Company (DuPont). In December 1996, the company made an advance payment of
$75 million to DuPont. This acquisition was accounted for as a purchase in
1997 and consists primarily of property, plant and equipment.
6. In January 1996, the company sold its corporate headquarters. This
transaction generated a gain of approximately $7 million, which was reported
in Other Income. In March 1996, the company sold its electrostatics
business. This transaction did not have a material impact on the company's
results of operations.
7. On December 31, 1996, the company completed the spin-off of its Ordnance and
Aerospace businesses as Primex Technologies, Inc. ("Primex"). Under the
terms of the spin-off, the company distributed to its holders of common
stock as of the close of business on December 19, 1996, one Primex common
share for every ten shares of Olin common stock. The historical operating
results of these businesses are shown net of tax as discontinued operations
in the condensed statements of income.
8. In December 1996, the company sold its isocyanates businesses for $565
million in cash. The company's results of operations for the three months
ended March 31, 1996 include sales of $81.5 million and operating income of
$19.5 million from the isocyanates businesses.
9. At the annual shareholders' meeting in April 1997, the shareholders approved
an amendment to the Restated Articles of Incorporation to increase the
number of authorized shares of common stock from 60 million shares to 120
million shares. The board of directors had approved this amendment in
January 1997. The amendment was effective May 8, 1997.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
-------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
(in millions, except per share data)
<TABLE>
<CAPTION>
CONSOLIDATED Three Months
Ended March 31
--------------
1997 1996
---- ----
<S> <C> <C>
Sales $591.2 $692.9
Gross Margin 141.3 164.5
Selling and Administration 72.4 80.9
Interest Income 6.0 0.3
Other Income 3.8 10.5
Income from Continuing Operations 41.8 50.7
Net Income 41.8 45.0
Per Common Share:
Primary
Income from Continuing Operations 0.81 0.99
Net Income 0.81 0.87
Fully Diluted
Income from Continuing Operations 0.80 0.96
Net Income 0.80 0.85
</TABLE>
Three Months Ended March 31, 1997 Compared to 1996
- --------------------------------------------------
Sales decreased 15%. On a comparable basis, excluding the sales contributed by
the isocyanates businesses which were sold in December 1996, sales decreased 3%
due to a 2% decrease in volumes and a 1% decrease in both metal values and
selling prices, offset by a 1% increase from the inclusion of the sales from the
Niachlor acquisition (February 1997).
Selling and administration expenses as a percentage of sales was 12% in 1997 and
1996. Selling and administrative expenses, excluding the selling and
administration expense of the isocyanates businesses ($5.3), decreased due to
lower corporate administration expenses.
Research and development expenses, excluding the impact of the sale of the
isocyanates businesses ($2.2), decreased slightly.
The increase in interest income is due to the income earned on the proceeds from
the sale of the isocyanates businesses.
Other income in 1996 includes the $7 million gain on the sale of the company's
corporate headquarters.
The effective tax rate increased to 34.5% from 33.7%. The increase was
attributable primarily to the absence of tax benefits relating to the leveraged
ESOP and reduced tax benefits associated with foreign sales.
<TABLE>
<CAPTION>
CHEMICALS Three Months
Ended March 31,
---------------
1997 1996
---- ----
<S> <C> <C>
Sales:
Continuing Businesses $327.2 $333.0
Businesses Sold (a) -- 81.5
------ ------
Total Sales $327.2 $414.5
Operating Income:
Continuing Businesses $49.4 $40.9
Businesses Sold (a) -- 19.5
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Total Operating Income $ 49.4 $ 60.4
===== =====
<FN>
(a) Represents the sales and operating income of the isocyanates
businesses which were sold on December 4, 1996.
</FN>
</TABLE>
<PAGE>
Three Months Ended March 31, 1997 Compared to 1996
on a Continuing Business Basis
- --------------------------------------------------
Sales decreased 2% as lower volumes and selling prices were partially offset by
the inclusion of the sales of the remaining 50% of Niachlor which was acquired
in 1997. Operating income increased 21% due to improved pricing and lower
manufacturing costs in pool products. This improvement was offset in part by
lower volumes in Microelectronic Materials due to a slower-than-expected
recovery in the semiconductor industry and higher manufacturing costs at the
Mesa, AZ facility. For the total year, estimated higher volumes along with
increased prices are expected to enhance pool products' operating performance
and more than offset the impact of expected higher raw material and packaging
costs. Chlor-Alkali sales and operating income were equal to last year as the
additional sales from Niachlor were offset by lower overall pricing due to a
decline in caustic prices. In Biocides, the impact of higher sales volumes of
antidandruff agents was more than offset by additional costs to expand
production capabilities and for additional market-entry expenses. Hydrazine and
propellants sales and operating income were equal to last year, while sulfuric
acid's operating performance was behind last year's due to lower volumes and
higher manufacturing costs.
<TABLE>
<CAPTION>
METALS AND AMMUNITION Three Months
Ended March 31
--------------
1997 1996
---- ----
<S> <C> <C>
Sales $264.0 $278.4
Operating Income 12.1 13.2
</TABLE>
Three Months Ended March 31, 1997 Compared to 1996
- --------------------------------------------------
Sales and operating income decreased 5% and 8%, respectively. The decline in
sales is due to lower metal values and reduced demand for coinage, cupping and
strip products. Brass' lower shipments of cupping and strip products along with
the start-up costs associated with its new tube mill at Indianapolis, IN more
than offset the higher earnings at A.J. Oster and contributed to the decline in
operating income. Winchester's sales and operating results were about equal to
last year. Increased commercial sporting ammunition sales due to strong
international demand offset declines in military shipments.
ENVIRONMENTAL
In the first three months of 1997, the company spent approximately $4 million
for investigatory and remediation activities associated with former waste sites
and past operations. Spending for environmental investigatory and remedial
efforts for the full year 1997 is estimated to be $35 million. Cash outlays for
remedial and investigatory activities associated with former waste sites and
past operations were not charged to income but instead were charged to reserves
established for such costs identified and expensed to income in prior periods.
Associated costs of investigatory and remedial activities are provided for in
accordance with generally accepted accounting principles governing probability
and the ability to reasonably estimate future costs. Charges to income for
investigatory and remedial activities were $4 million for the three months ended
March 31, 1997. Charges to income for investigatory and remedial efforts were
material to operating results in 1996 and may be material to net income in 1997
and future years.
<PAGE>
The company's consolidated balance sheets included liabilities for future
environmental expenditures to investigate and remediate known sites amounting to
$148 million at March 31, 1997 and December 31, 1996, of which $113 million was
classified as other noncurrent liabilities. Those amounts did not take into
account any discounting of future expenditures or any consideration of insurance
recoveries or advances in technology. Those liabilities are reassessed
periodically to determine if environmental circumstances have changed and/or
remediation efforts and their costs can be better estimated. As a result of
these reassessments, future charges to income may be made for additional
liabilities.
Annual environmental-related cash outlays for site investigation and
remediation, capital projects and normal plant operations are expected to range
between $75-$90 million over the next several years. While the company does not
anticipate a material increase in the projected annual level of its
environmental-related costs, there is always the possibility that such increases
may occur in the future in view of the uncertainties associated with
environmental exposures. Environmental exposures are difficult to assess for
numerous reasons, including the identification of new sites, developments at
sites resulting from investigatory studies, advances in technology, changes in
environmental laws and regulations and their application, the scarcity of
reliable data pertaining to identified sites, the difficulty in assessing the
involvement and the financial capability of other potentially responsible
parties and the company's ability to obtain contributions from other parties and
the lengthy time periods over which site remediation occurs. It is possible
that some of these matters (the outcomes of which are subject to various
uncertainties) may be resolved unfavorably against the company.
LIQUIDITY, INVESTMENT ACTIVITY and OTHER FINANCIAL DATA
<TABLE>
<CAPTION>
Cash Flow Data Three Months
Provided by(used for)(in millions) Ended March 31,
---------------
1997 1996
---- ----
<S> <C> <C>
Net Operating Activities $(81.6) $(34.2)
Capital Expenditures (13.9) (20.7)
Net Investing Activities (137.4) 6.1
Net Financing Activities (54.7) 26.1
</TABLE>
Cash flow from operations and cash and cash equivalents on hand were used to
finance the company's seasonal working capital requirements, capital and
investment projects, dividends and the purchase of Olin common stock and for tax
payments on the sale of the isocyanates businesses.
Operating Activities
- --------------------
The increase in cash used for operating activities was due to lower operating
income and an increased investment in working capital. Higher receivable
levels, associated primarily with the Niachlor acquisition, was the primary
contributor to the increase in working capital.
Investing Activities
- --------------------
Capital spending of $13.9 million in 1997 was 25% lower than 1996, excluding
$2.1 million of capital spending of the isocyanates businesses. For the full
year 1997, capital spending is estimated to increase approximately 15-20% from
1996 (excluding $10.2 million of capital spending of the isocyanates businesses)
to provide additional capacity for certain Chemicals product lines. In February
1997, the board approved a new photoresist facility in North Kingston, RI to
support the rapid commercialization of advanced photoresists products. This
project is scheduled for completion in the second quarter of 1998.
<PAGE>
In February 1997, the company completed its purchase of the remaining 50% of
Niachlor with a final payment of $2 million to E.I. du Pont de Nemours and
Company (DuPont). In December 1996, the company made an advance payment of $75
million to DuPont. This acquisition was accounted for as a purchase in 1997 and
consists primarily of property, plant and equipment.
Investment spending in 1997 was primarily attributable to the Sunbelt project (a
joint venture formed by the Geon Company and the company in 1996). The plant
start-up associated with this venture is estimated to be in late 1997.
In the ethylene oxide/propylene oxide derivative products businesses, the
company is still seeking a buyer for part or all of its polyol, glycol and
surfactants businesses at its Doe Run facility in Brandenburg, KY. The company
expects to complete this transaction during 1997.
During the first quarter of 1997, the company paid taxes of approximately $112
million relating to the sale of its isocyanates businesses in December 1996.
Proceeds in 1996 from the sale of assets including the corporate headquarters
and the divestment of the electrostatics business approximated $26 million.
Financing Activities
- --------------------
At March 31, 1997, the company maintained committed credit facilities with banks
of $262 million, of which $259 million was available. The company believes that
these credit facilities are adequate to satisfy its liquidity needs for the near
future.
In 1996, the board of directors authorized the company to purchase up to 10% of
the company's common stock. A portion of the proceeds from the 1996 sales of
businesses will be used for this program which began in January 1997. During
the first quarter of 1997, the company used $41 million to repurchase 1,035,300
shares of its common stock.
At March 31, 1997, the percent of total debt to total capitalization (excluding
the reduction in equity for the Contributing Employee Ownership Plan at year-end
1996 and March 31, 1996) was 30.6%, up from 30.4% at year-end 1996 and down from
38.9% at March 31, 1996. The decrease from March 31, 1996 was due to no
domestic short-term borrowings outstanding at March 31, 1997.
New Accounting Standard
- -----------------------
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share," which specifies
the computation, presentation and disclosure requirements for earnings per
share. This statement is effective for both interim and annual periods ending
after December 15, 1997. The company does not expect that the application of
this standard will have a material effect on its present method of calculating
and reporting earnings per share.
Cautionary Statement
- --------------------
Cautionary Statement under Federal Securities Laws: The information in the
Results of Operations section, Environmental Matters section and the Liquidity,
Investment Activity and Other Financial Data sections contains forward-looking
statements that are based on management's beliefs, certain assumptions made by
management and current expectations, estimates and projections about the markets
and economy in which the company and its various divisions operate. Words such
as
<PAGE>
"expects," "believes," "should," "plans," "will," "estimates," and variations
of such words and similar expressions are intended to identify such forward-
looking statements. These statements are not guarantees of future performance
and involve certain risks, uncertainties and assumptions ("Future Factors")
which are difficult to predict. Therefore, actual outcomes and results may
differ materially from what is expected or forecasted in such forward-looking
statements. The company undertakes no obligation to update publicly any
forward-looking statements, whether as a result of future events, new
information or otherwise. Information on Future Factors which could cause
actual results to differ materially from those discussed in these sections
appears within such sections and in the last sentence of the section "1997
Outlook -- Cautionary Statement under Federal Securities Laws" contained in
Item 7 -- Management's Discussion and Analysis of Financial Condition and
Results of Operations of the company's 1996 Form 10-K (page 20 of the 1996
Annual Report to Shareholders), such last sentence being incorporated by
reference herein.
<PAGE>
Part II -- Other Information
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits
--------
3. Restated Articles of Incorporation, as amended through May 8, 1997
11. Computation of Per Share Earnings (Unaudited).
12. Computation of Ratio of Earnings to Fixed Charges (Unaudited).
27. Financial Data Schedule.
(b) Reports on Form 8-K
-------------------
Except for a report on Form 8-K filed January 15, 1997 with respect to
Items 2 and 7 thereof, no reports on Form 8-K were filed during the
quarter ended March 31, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OLIN CORPORATION
(Registrant)
By: A.W. Ruggiero
----------------------
A.W. Ruggiero
Senior Vice President and
Chief Financial Officer
(Authorized Officer)
Date: May 12, 1997
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
3. Restated Articles of Incorporation, as amended through May 8, 1997.
11. Computation of Per Share Earnings (Unaudited).
12. Computation of Ratio of Earnings to Fixed Charges (Unaudited).
27. Financial Data Schedule.
<PAGE>
EXHIBIT 3
RESTATED
ARTICLES OF INCORPORATION
OF
OLIN CORPORATION
AS AMENDED THROUGH JANUARY 21, 1986
<PAGE>
ARTICLES OF RESTATEMENT
OF
ARTICLES OF INCORPORATION
OF
OLIN CORPORATION
1) The name of the Corporation is Olin Corporation.
2) The text of the restated Articles of Incorporation of the Corporation is as
follows:
"FIRST: The name of the Corporation shall be Olin Corporation.
"SECOND: The principal office of the Corporation in the Commonwealth of
Virginia shall be at Abingdon, Virginia 24210.
"THIRD: The purposes for which the Corporation is formed are as follows: If,
when and to the extent lawful for a corporation organized under the laws of the
Commonwealth of Virginia (provided that none of the following powers and
purposes shall be construed so as to constitute the Corporation a railroad
company, a telegraph company, a telephone company, a canal company, a turnpike
company, or other company designated by law as a public service corporation or
which shall need to possess the right of eminent domain for the purpose of
taking and condemning lands within the Commonwealth of Virginia within the
meaning of the statutes thereof):
(1) to produce, manufacture, process, refine, treat, extract, store,
purchase or otherwise acquire, sell, deal in, transport, distribute, market,
handle and otherwise turn to account or dispose of, either in their natural
form or any altered, converted or manufactured form, chemicals and chemical
compositions of any state, form, nature, mixture or description, including,
without limiting the generality of the foregoing, salt, soda ash, caustic
soda, chlorine, ammonia, bicarbonate of soda, sulphuric acid, superphosphate,
mixed fertilizer, ammonium phosphate, ammonium sulphate, phosphoric acid,
sulphur, ethylene glycol, ethylene oxide, polyethylene and other organic
chemicals, and all mixtures, derivatives, products or by-products of such
chemicals;
(2) to produce, manufacture, process, refine, treat, store, purchase or
otherwise acquire, sell, deal in, transport, distribute, market, handle and
otherwise turn to account or dispose of ammunition, firearms, explosives,
munitions and stores of war, and components thereof;
(3) to produce, manufacture, process, refine, treat, extract, store,
purchase or otherwise acquire, sell, deal in, transport, distribute, market,
handle and otherwise turn to account or dispose of, either in their natural
form or in any altered, converted or manufactured form, drugs of every kind
and description and the constituent parts and elements thereof including,
without limiting the generality of the foregoing, all kinds of antibiotic,
pharmaceutical, medicinal-chemical, biological, veterinary, dental, hygienic,
medicinal-dietetic, household medicinal and toilet substances, products,
processes, compounds and compositions, and apparatus and medicinal, hospital
and druggists' supplies of every kind and description;
(4) to produce, manufacture, process, refine, treat, extract, store,
purchase or otherwise acquire, sell, deal in, transport, distribute, market,
handle and otherwise turn to account or dispose of, either in their natural
form or in any altered, converted or manufactured form, oil, gas and other
hydrocarbons, and compositions thereof, of any state, form, nature, mixture or
description, including, without limiting the generality of the foregoing,
methane, ethane, propane, butane, gasoline and kerosene, and all mixtures,
derivatives, products or by-products of such hydrocarbons;
<PAGE>
(5) to produce, manufacture, process, refine, treat, extract, store,
purchase or otherwise acquire, sell, deal in, transport, distribute, market,
handle and otherwise turn to account or dispose of iron, steel, copper, brass,
nickel, silver, aluminum and other metals and metal products, plastics and
plastic products, wood and wooden products, and paper and paper products;
(6) to acquire by lease, purchase, contract, concession or otherwise, and
to own, explore, exploit, develop, improve, operate, lease, enjoy, control,
manage or otherwise turn to account, and to mortgage, grant, sell, exchange,
convey or otherwise dispose of, any and all kinds of real estate, lands,
options, concessions, grants, land patents, timber lands, oil rights, gas
rights, and any other mineral rights, oil royalties, gas royalties, and any
other mineral royalties, and any other franchises, claims, rights, privileges,
easements, tenements, estates, hereditaments and interests in properties, real
or personal, tangible or intangible, of every description and nature
whatsoever, useful in the conduct of the business of the Corporation;
(7) to construct, build, purchase, lease or otherwise acquire, equip, hold,
own, improve, develop, manage, maintain, control, operate, lease, mortgage,
create liens upon, sell, convey or otherwise dispose of, or turn to account,
any and all factories, plants, refineries, laboratories, oil wells, gas wells,
mines, lumberyards, sawmills, installations, equipment, machinery, storage
tanks, tank cars, tank wagons, locomotives, railroad cars, tractors, trucks,
cars, airplanes, boats, barges, and other vehicles and vessels, pipe lines,
pumping stations, filling stations, railways, roadways, canals, water courses,
wharves, piers, docks, basins, and other structures, machines and apparatus of
every kind and description, and any and all rights and privileges therein,
useful in the conduct of the business of the Corporation;
(8) to apply for, register, obtain, purchase, lease, take licenses in
respect of or otherwise acquire, and to hold, own, use, operate, develop,
enjoy, turn to account, grant licenses and immunities in respect of,
manufacture under and to introduce, sell, assign, mortgage, pledge or
otherwise dispose of, and, in any manner deal with and contract with reference
to:
(a) inventions, devices, formulae, processes and any improvements and
modifications thereof, and
(b) letters patent, patent rights, patented processes, copyrights,
designs and similar rights, trade-marks, trade symbols and other
indications of origin and ownership granted by or recognized under the laws
of the United States of America or of any state or subdivision thereof, or
of any foreign country or subdivision thereof, and all rights connected
therewith or appertaining thereunto;
(9) to conduct and carry on any experimental and research work;
(10) to manufacture, process, purchase, sell and generally to trade and
deal in and with goods, wares and merchandise of every kind, nature and
description, and to engage and participate in any mercantile, industrial or
trading business of any kind or character whatsoever;
(11) to acquire by purchase, exchange, lease or otherwise and to own, hold,
use, develop, operate, sell, assign, lease, transfer, convey, exchange,
mortgage, pledge or otherwise dispose of or deal in and with, real and
personal property of every class or description and rights and privileges
therein wheresoever situate;
(12) to subscribe to, purchase or otherwise acquire, and to hold, mortgage,
pledge, sell, exchange or otherwise dispose of, securities (which term, for
the purpose of this Article THIRD, includes, without limitation of the
generality thereof, any shares of stock, bonds, debentures, notes, mortgages
or other obligations, and any certificates, receipts or other instruments
representing rights to receive, purchase or subscribe for the same, or
representing any other rights or interests therein or in any property or
assets) created or issued by any persons, firms, associations, corporations,
or governments or subdivisions thereof; to make payment therefor in any lawful
manner, and to exercise as owner or holder of any securities, any and all
rights, powers and privileges in respect thereof;
(13) to make, enter into, perform and carry out contracts of every kind and
description with any person, firm, association, corporation or government or
subdivision thereof;
<PAGE>
(14) to acquire by purchase, exchange or otherwise, all, or any part of, or
any interest in, the properties, assets, business and good will of any one or
more persons, firms, associations or corporations heretofore or hereafter
engaged in any business for which a corporation may now or hereafter be
organized under the laws of the Commonwealth of Virginia; to pay for the same
in cash, property or its own or other securities; to hold, operate,
reorganize, liquidate, sell or in any manner dispose of the whole or any part
thereof; and in connection therewith, to assume or guarantee performance of
any liabilities, obligations or contracts of such persons, firms, associations
or corporations, and to conduct the whole or any part of any business thus
acquired;
(15) to lend its uninvested funds from time to time to such extent, to such
persons, firms, associations, corporations, governments or subdivisions
thereof, and on such terms and on such security, if any, as the Board of
Directors of the Corporation may determine;
(16) to guarantee or become surety in respect to the payment of principal,
interest or dividends upon, and the performance of sinking fund or other
obligations of, any securities, and to guarantee in any way permitted by law
the performance of any of the contracts or other undertakings in which the
Corporation may otherwise be or become interested, of any person, firm,
association, corporation, government or subdivision thereof, or of any other
combination, organization or entity whatsoever;
(17) to borrow money for any of the purposes of the Corporation, from time
to time, and without limit as to amount; from time to time to issue and sell
its own securities in such amounts, on such terms and conditions, for such
purposes and for such prices, now or hereafter permitted by the laws of the
Commonwealth of Virginia and by these Articles of Incorporation, as the Board
of Directors of the Corporation may determine; and to secure such securities
by mortgage upon, or the pledge of, or the conveyance or assignment in trust
of, the whole or any part of the properties, assets, business and good will of
the Corporation, then owned or thereafter acquired;
(18) to purchase, hold, cancel, reissue, sell, exchange, transfer or
otherwise deal in its own securities from time to time to such extent and in
such manner and upon such terms as the Board of Directors of the Corporation
shall determine; provided that the Corporation shall not use its funds or
property for the purchase of its own shares of capital stock when such use
would cause any impairment of its capital, except to the extent permitted by
law; and provided further that shares of its own capital stock belonging to
the Corporation shall not be voted upon directly or indirectly;
(19) to organize or cause to be organized under the laws of the
Commonwealth of Virginia, or of any other State of the United States of
America, or of the District of Columbia, or of any territory, dependency,
colony or possession of the United States of America, or of any foreign
country, a corporation or corporations for the purpose of transacting,
promoting or carrying on any or all of the objects or purposes for which the
Corporation is organized, and to dissolve, wind up, liquidate, merge or
consolidate any such corporation or corporations or to cause the same to be
dissolved, wound up, liquidated, merged or consolidated;
(20) to conduct its business in any and all of its branches and maintain
offices both within and without the Commonwealth of Virginia, in any and all
States of the United States of America, in the District of Columbia, in any or
all territories, dependencies, colonies or possessions of the United States of
America, and in foreign countries;
(21) to such extent as a corporation organized under the laws of the
Commonwealth of Virginia may now or hereafter lawfully do, to do, either as
principal or agent and either alone or in connection with, or in partnership
with, other persons, firms, associations, corporations and other legal
entities, whether organized under the laws of the Commonwealth of Virginia or
otherwise, governments or subdivisions thereof, or individuals, all and
everything necessary, suitable, convenient or proper for, or in connection
with, or incident to, the accomplishment of any of the purposes or the
attainment of any one or more of the objects herein enumerated, or designed
directly or indirectly to promote the interests of the Corporation or to
enhance the
<PAGE>
value of its properties; and in general to do any and all things and exercise
any and all powers, rights and privileges which a corporation may now or
hereafter be organized to do or to exercise under the laws of the Commonwealth
of Virginia or under any act amendatory thereof, supplemental thereto or
substituted therefor.
The foregoing clauses shall be construed both as objects and powers, and each
as an independent right and power, and it is hereby expressly provided that the
enumeration herein of specific objects and powers shall not be held to limit or
restrict in any manner the general powers of this Corporation, and all the
powers and purposes hereinbefore enumerated shall be exercised, carried out and
enjoyed by this Corporation within the Commonwealth of Virginia and outside of
the Commonwealth of Virginia to such extent and in such manner as a corporation
of this character organized under the laws of the Commonwealth of Virginia may
properly and legally exercise, carry out and enjoy, but nothing herein contained
shall be deemed to authorize or permit this Corporation to carry on any business
or exercise any power or do any act which a corporation of this character,
formed under the laws of the Commonwealth of Virginia, may not at the time
lawfully carry on or do.
"FOURTH: The aggregate number of shares which the Corporation shall have
authority to issue shall be 70,000,000 shares, of which 10,000,000 shares shall
be Preferred Stock, par value $1 per share (hereinafter called Preferred Stock),
and 60,000,000 shares shall be Common Stock, par value $1 per share (hereinafter
called Common Stock).
The following is a description of each of said different classes of stock,
and a statement of the preferences, limitations, voting rights and relative
rights in respect of the shares of each such class:
1. The Board of Directors shall have authority, by resolution or
resolutions, at any time and from time to time to divide and establish any or
all of the unissued shares of Preferred Stock not then allocated to any series
of Preferred Stock into one or more series, and, without limiting the
generality of the foregoing, to fix and determine the designation of each such
series, the number of shares which shall constitute such series and the
following relative rights and preferences of the shares of each series so
established:
(a) The annual dividend rate payable on shares of such series, the time
of payment thereof, whether such dividends shall be cumulative or non-
cumulative, and the date or dates from which any cumulative dividends shall
commence to accrue;
(b) the price or prices at which and the terms and conditions, if any, on
which shares of such series may be redeemed;
(c) the amounts payable upon shares of such series in the event of the
voluntary or involuntary dissolution, liquidation or winding-up of the
affairs of the Corporation;
(d) the sinking fund provisions, if any, for the redemption or purchase
of shares of such series;
(e) the extent of the voting powers, if any, of the shares of such
series;
(f) the terms and conditions, if any, on which shares of such series may
be converted into shares of stock of the Corporation of any other class or
classes or into shares of any other series of the same or any other class
or classes;
(g) whether, and if so the extent to which, shares of such series may
participate with the Common Stock in any dividends in excess of the
preferential dividend fixed for shares of such series or in any
distribution of the assets of the Corporation, upon a liquidation,
dissolution or winding-up thereof, in excess of the preferential amount
fixed for shares of such series; and
(h) any other preferences and relative, optional or other special rights,
and qualifications, limitations or restrictions of such preferences or
rights, of shares of such series not fixed and determined by law or in this
Article FOURTH.
<PAGE>
2. Each series of Preferred Stock shall be so designated as to distinguish
the shares thereof from the shares of all other series. Different series of
Preferred Stock shall not be considered to constitute different classes of
shares for the purpose of voting by classes except as otherwise fixed by the
Board of Directors with respect to any series at the time of the creation
thereof.
3. So long as any shares of Preferred Stock are outstanding, the
Corporation shall not declare and pay or set apart for payment any dividends
(other than dividends payable in Common Stock or other stock of the
Corporation ranking junior to the Preferred Stock as to dividends) or make any
other distribution on such junior stock, if at the time of making such
declaration, payment or distribution the Corporation shall be in default with
respect to any dividend payable on, or any obligation to retire, shares of
Preferred Stock.
4. Shares of any series of Preferred Stock which have been redeemed or
otherwise reacquired by the Corporation (whether through the operation of a
sinking fund, upon conversion or otherwise) shall, upon cancellation in
accordance with law, have the status of authorized and unissued shares of
Preferred Stock and may be redesignated and reissued as a part of such series
or of any other series of Preferred Stock. Shares of Common Stock which have
been reacquired by the Corporation shall, upon cancellation in accordance with
law, have the status of authorized and unissued shares of Common Stock and may
be reissued.
5. Subject to the provisions of any applicable law or of the By-laws of
the Corporation as from time to time amended with respect to the closing of
the transfer books or the fixing of a record date for the determination of
stockholders entitled to vote, and except as otherwise provided by law or in
resolutions of the Board of Directors establishing any series of Preferred
Stock pursuant to the provisions of paragraph 1 of this Article FOURTH, the
holders of outstanding shares of Common Stock of the Corporation shall
exclusively possess voting power for the election of directors and for all
other purposes, each holder of record of shares of Common Stock of the
Corporation being entitled to one vote for each share of such stock standing
in his name on the books of the Corporation.
6. No holder of shares of stock of any class of the Corporation shall, as
such holder, have any right to subscribe for or purchase (a) any shares of
stock of any class of the Corporation, or any warrants, options or other
instruments that shall confer upon the holder thereof the right to subscribe
for or purchase or receive from the Corporation any shares of stock of any
class, whether or not such shares shall be unissued shares, now or hereafter
authorized, or shares acquired by the Corporation after the issue thereof, and
whether or not such shares of stock, warrants, options or other instruments
are issued for cash or services or property or by way of dividend or
otherwise, or (b) any other security of the Corporation which shall be
convertible into, or exchangeable for, any shares of stock of the Corporation
of any class or classes, or to which shall be attached or appurtenant any
warrant, option or other instrument that shall confer upon the holder of such
security the right to subscribe for or purchase or receive from the
Corporation any shares of its stock of any class or classes, whether or not
such shares shall be unissued shares, now or hereafter authorized, or shares
acquired by the Corporation after the issue thereof, and whether or not such
securities are issued for cash or services or property or by way of dividend
or otherwise, other than such right, if any, as the Board of Directors, in its
sole discretion, may from time to time determine. If the Board of Directors
shall offer to the holders of shares of stock of any class of the Corporation,
or any of them, any such shares of stock, options, warrants, instruments or
other securities of the Corporation, such offer shall not, in any way,
constitute a waiver or release of the right of the Board of Directors
subsequently to dispose of other securities of the Corporation without
offering the same to said holders.
7. Anything herein to the contrary notwithstanding, dividends upon shares
of any class of stock of the Corporation shall be payable only out of assets
legally available for the payment of such dividends, and the rights of the
holders of shares of stock of the Corporation in respect of dividends shall at
all times be subject to the power of the Board of Directors to determine what
dividends, if any, shall be declared and paid to the stockholders.
<PAGE>
8. Subject to the provisions hereof and except as otherwise provided by
law, shares of stock of any class of the Corporation may be issued for such
consideration and for such corporate purposes as the Board of Directors may
from time to time determine.
"FIFTH: The period of the duration of the Corporation is unlimited and
perpetual.
"SIXTH:
1. The number of directors shall be as specified in the By-laws of the
Corporation but such number may be increased or decreased from time to time in
such manner as may be prescribed in the By-laws. In no event shall such
number exceed 18. In the absence of a By-law specifying the number of
directors, the number shall be 15. Commencing with the 1985 annual meeting of
stockholders, the Board of Directors shall be divided into three classes,
Class I, Class II, and Class III, as nearly equal in number as possible. At
the 1985 annual meeting of stockholders, directors of the first class (Class
I) shall be elected to hold office for a term expiring at the 1986 annual
meeting of stockholders; directors of the second class (Class II) shall be
elected to hold office for a term expiring at the 1987 annual meeting of
stockholders; and directors of the third class (Class III) shall be elected to
hold office for a term expiring at the 1988 annual meeting of stockholders.
At each annual meeting of stockholders after 1985, the successors to the class
of directors whose term shall then expire shall be identified as being of the
same class as the directors they succeed and elected to hold office for a term
expiring at the third succeeding annual meeting of stockholders. When the
number of directors is changed, any newly-created directorships or any
decrease in directorships shall be so apportioned among the classes by the
Board of Directors as to make all classes as nearly equal in number as
possible.
2. Subject to the rights of the holders of any Preferred Stock then
outstanding, directors may be removed only with cause.
3. Subject to the rights of the holders of any Preferred Stock then
outstanding, newly-created directorships resulting from any increase in the
number of directors and any vacancies in the Board of Directors resulting from
death, resignation, disqualification, removal or other cause shall be filled
solely by the Board of Directors or at an annual meeting of stockholders by
the stockholders entitled to vote on the election of directors. Unless
otherwise provided by law, directors so chosen by the stockholders shall hold
office for a term expiring at the annual meeting of stockholders at which the
term of the class to which they have been elected expires. If the directors
remaining in office constitute fewer than a quorum of the Board, they may fill
the vacancy by the affirmative vote of a majority of the directors remaining
in office.
"SEVENTH: The amount of real estate to which the holdings of the Corporation
at any one time are to be limited is five million (5,000,000) acres.
"EIGHTH: The following provisions are inserted for the regulation of the
business and for the conduct of the affairs of the Corporation, and it is
expressly provided that the same are to be in furtherance and not in limitation
or exclusion of the powers conferred by statute or otherwise:
1. Except where other notice is specifically required by statute, written
notice of any meeting of stockholders given as provided by the By-laws of the
Corporation shall be sufficient without publication or other form of notice.
2. A meeting of the stockholders, other than the annual meeting of
stockholders, may be held at any time but only upon the call of the Board of
Directors, the Chairman of the Board, the President or the holders of a
majority of the shares of issued and outstanding stock of the Corporation
entitled to vote at the meeting.
3. In furtherance and not in limitation of the powers conferred by the
laws of the Commonwealth of Virginia, the Board of Directors is expressly
authorized and empowered:
(a) To make, alter, amend and repeal the By-laws, subject to the power
of the stockholders to alter or repeal the By-laws made by the Board of
Directors.
<PAGE>
(b) Subject to the applicable provisions of the By-laws then in effect,
to determine, from time to time, whether and to what extent and at what
times and places and under what conditions and regulations the accounts
and books of the Corporation, or any of them, shall be open to the
inspection of the stockholders, and no stockholder shall have any right to
inspect any account or book or document of the Corporation, except as
conferred by the laws of the Commonwealth of Virginia, unless and until
authorized so to do by resolution of the Board of Directors or of the
stockholders of the Corporation.
(c) By resolution passed by a majority of the whole Board of Directors,
(i) to designate two or more of their number, to constitute an executive
committee, which, to the extent provided in such resolution, shall have
and may exercise the power of the Board of Directors in the management of
the business and affairs of the Corporation, and may have power to
authorize the seal of the Corporation to be affixed to all papers which
require it; and (ii) to appoint such other committees, agents and
representatives as may be necessary and convenient for the conduct or the
management of the business of the Corporation.
(d) To determine whether any, and, if any, what part, of the net
earnings of the Corporation or of its net assets in excess of its capital
shall be declared in dividends and paid to the stockholders, and to direct
and determine the use and disposition of any such net earnings or such net
assets in excess of capital for any lawful purpose of the Corporation,
and, without limiting the generality of the foregoing, from time to time
as the Board of Directors may deem necessary or desirable, to set aside
reserves for any purpose, to fix from time to time the amount of earnings
to be reserved for working capital and to set aside such reserves or make
such other provisions for additions, improvements and betterments to plant
and equipment, for expansion of the business of the Corporation (including
the acquisition of real and personal property for that purpose), for plans
for maintaining employment at the plants of the Corporation, and for other
plans for the benefit of employees generally.
(e) To establish pension, bonus, profit-sharing or other types of
incentive or compensation plans for the officers and employees (including
officers and employees who are also directors) of the Corporation and its
subsidiaries and to fix the amount of earnings to be distributed or shared
and to determine the persons to participate in any such plans and the
amounts of their respective participations.
(f) To issue and sell or grant options fort he purchase of shares of
Common Stock to officers and employees (including officers and employees
who are also directors) of the Corporation and its subsidiaries for such
consideration and on such terms and conditions as the Board of Directors
may from time to time determine.
In addition to the powers and authorities hereinbefore or by statute
expressly conferred upon it, the Board of Directors may exercise all such
powers and do all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions of the laws of the
Commonwealth of Virginia, of these Articles of Incorporation and of the By-
laws of the Corporation.
4. No contract or other transaction between the Corporation and any other
corporation and no other act of the Corporation shall, in the absence of
fraud, in any way be affected or invalidated by the fact that any of the
directors of the Corporation are pecuniarily or otherwise interested in, or
are directors or officers of, such other corporation. Any director of the
Corporation individually or any firm or association of which any director may
be a member, may be a party to, or may be pecuniarily or otherwise interested
in, any contract or transaction of the Corporation, provided that the fact
that he individually or such firm or association is so interested shall be
disclosed or shall have been known to the Board of Directors or a majority of
such members thereof as shall be present at any meeting of the Board of
Directors at which action upon any such contract or transaction shall be
taken. Any director of the Corporation who is also a director or officer of
such other corporation or who is so interested may be counted in determining
the existence of a quorum at any meeting of the Board of Directors which shall
authorize any such contract or transaction, and may vote thereat to authorize
any such contract or transaction, with like force and effect as if he were not
such director or officer of such other corporation or not so interested. Any
director of the Corporation may vote upon any contract or other
<PAGE>
transaction between the Corporation and any subsidiary or affiliated
corporation without regard to the fact that he is also a director of such
subsidiary or affiliated corporation.
Any contract, transaction or act of the Corporation or of the directors,
which shall be ratified by a majority of a quorum of the stockholders of the
Corporation at any annual meeting, or at any special meeting called for such
purpose, shall, insofar as permitted by law or by these Articles of
Incorporation, be as valid and as binding as though ratified by every
stockholder of the Corporation; provided, however, that any failure of the
stockholders to approve or ratify any such contract, transaction or act, when
and if submitted, shall not be deemed in any way to invalidate the same or
deprive the Corporation, its directors, officers or employees, of its or their
right to proceed with such contract, transaction or act.
Subject to any limitation in the By-laws, the members of the Board of
Directors shall be entitled to reasonable fees, salaries or other compensation
for their services and to reimbursement for their expenses as such members.
Nothing contained herein shall preclude any director from serving the
Corporation, or any subsidiary or affiliated corporation, in any other
capacity and receiving proper compensation therefor."
3. The Corporation hereby certifies that the foregoing restatement of the
Articles of Incorporation does not contain an amendment to the Articles of
Incorporation requiring shareholder approval, and that the Board of Directors
duly adopted such restatement on June 26, 1986.
OLIN CORPORATION
By /s/ E. McI. Cover
--------------------------
Vice President
Dated: July 8, 1986
<PAGE>
ARTICLES OF AMENDMENT
OF
THE ARTICLES OF INCORPORATION
OF
OLIN CORPORATION
under Section 13.1-639 of the Virginia Stock Corporation Act
FIRST: The name of the Corporation is Olin Corporation.
SECOND: The amendment adopted is to add a new Paragraph 9 to Article
Fourth to read as follows:
"9: ESOP Preferred Shares. There is hereby established a series of the
Corporation's authorized Preferred Stock, to be designated as the "ESOP
Preferred Shares, par value $1 per share." The designation and number, and
relative rights, preferences and limitations of the ESOP Preferred Shares,
insofar as not already fixed by any other provision of these Articles of
Incorporation, shall be as follows:
Section 1. Designation and Amount; Special Purpose Restricted Transfer
-----------------------------------------------------------
Issue.
- - ------
1.1 Designation. The shares of such series shall be designated as
-----------
"ESOP Preferred Shares, par value $1 per share" (the "ESOP Preferred Shares"),
and the number of shares constituting such series shall be 1,750,000.
1.2 Issuance. ESOP Preferred Shares shall be issued only to the
--------
trustee (the "Trustee") of the Olin Corporation Contributing Employee Ownership
Plan (the "Plan"), as amended from time to time, or any successor to the Plan,
including the Plan's employee stock ownership plan component (the "ESOP"). All
references to the holder of ESOP Preferred Shares shall mean the Trustee or any
company with which or into which the Trustee may merge or any successor trustee
for the Plan.
1.3 Transfer Upon Conversion; Redemption. Conversion of ESOP
------------------------------------
Preferred Shares into Common Stock can occur at the election of the holder of
ESOP Preferred Shares pursuant to Section 5.1(a) of this Paragraph 9 or
automatically in accordance with Section 5.2(a) of this Paragraph 9. Shares of
Common Stock issued upon any conversion may be transferred by the holder of
those shares as permitted by law. ESOP Preferred Shares shall be redeemable by
the Corporation upon the terms and conditions provided by Sections 6, 7 and 8 of
this Paragraph 9.
<PAGE>
Section 2. Dividends and Distributions.
---------------------------
2.1 Entitlement to Dividends. Subject to the provisions for
------------------------
adjustment in this Paragraph 9, the holders of ESOP Preferred Shares shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for dividends, cash dividends ("ESOP Preferred
Dividends") in an amount per share equal to 7.75% (seven and seventy-five one
hundredths percent) of the Initial Value per share per annum, and no more.
2.2 Payment of Dividends. Dividends shall be payable quarterly in
--------------------
arrears, one quarter on the 30th day of March, June, September and December of
each year (each a "Dividend Payment Date") commencing on September 30, 1989, to
holders of record at the start of business on that Dividend Date. If any
Dividend Payment Date falls on any day other than a "Business Day" (as defined
in Section 10 of this Paragraph 9), the dividend payment due on that Dividend
Payment Date shall be paid on the Business Day immediately preceding that
Dividend Payment Date.
2.3 Dividend Accrual. ESOP Preferred Dividends shall begin to accrue
----------------
on outstanding ESOP Preferred Shares from the date of issuance of such ESOP
Preferred Shares. ESOP Preferred Dividends shall accrue on a daily basis
whether or not the Corporation shall have current or retained earnings at the
time, but ESOP Preferred Dividends accrued after issuance of the ESOP Preferred
Shares for any period less than a full quarterly period between Dividend Payment
Dates (or, in the case of the first dividend payment, from the date of issuance
through the first Dividend Payment Date) shall be computed on the basis of a
360-day year of 30-day months. Accrued but unpaid ESOP Preferred Dividends
shall cumulate as of the Dividend Payment Date on which they first become
payable, but no interest shall accrue on accumulated but unpaid ESOP Preferred
Dividends.
2.4 Declaration of Dividends on other Stock.
---------------------------------------
(a) Parity Stock. So long as any ESOP Preferred Shares shall be
------------
outstanding, no dividend shall be declared or paid or set apart for payment on
any other series of stock ranking on a parity with the ESOP Preferred Shares as
to dividends, unless there shall also be or have been declared and paid or set
apart for payment when due on the ESOP Preferred Shares dividends through the
last preceding Dividend Payment Date before the dividend payment date of such
parity stock, ratably in proportion to the respective amounts of dividends
accumulated and unpaid through such dividend period on the ESOP Preferred Shares
and accumulated and unpaid
<PAGE>
on such parity stock through the dividend payment period on such parity stock
next preceding such parity stock dividend payment date.
(b) Junior Stock. If at any time, so long as any ESOP Preferred
------------
Shares shall be outstanding, full cumulative dividends on the ESOP Preferred
Shares have not been declared and paid or set apart for payment through the last
preceding Dividend Payment Date, the Corporation shall not declare or pay or set
apart for payment any dividends or make any other distributions, or make any
payment on account of the purchase, redemption or other retirement of any shares
of Common Stock or any other class of or series of the Corporation's stock
ranking as to dividends or as to distributions in the event of the Corporation's
liquidation, dissolution or winding-up, junior to the ESOP Preferred Shares
until full cumulative dividends on the ESOP Preferred Shares shall have been
paid or declared and set apart for payment.
(c) Limitations. The provisions of Sections 2.4(a) and 2.4(b) shall
-----------
not apply to (i) any dividend payable solely in any shares of any stock ranking
as to dividends and as to distributions in the event of the Corporation's
liquidation, dissolution or winding-up, junior to the ESOP Preferred Shares or
(ii) the acquisition of shares of any stock ranking, as to dividends or as to
distributions in the event of a liquidation, dissolution or winding-up of the
Corporation, junior to the ESOP Preferred Shares in exchange solely for shares
of any other stock ranking, as to dividends and as to distributions in the event
of a liquidation, dissolution or winding-up of the Corporation, junior to the
ESOP Preferred Shares.
Section 3. Voting.
------
3.1 Voting Rights. The holders of ESOP Preferred Shares shall have the
-------------
following voting rights:
(a) Voting with Common Stock. The holders of ESOP Preferred Shares
------------------------
shall be entitled to vote on all matters submitted to a vote of the shareholders
of the Corporation, voting together with the holders of Common Stock as a single
voting group.
(b) Number of Votes. The holder of each ESOP Preferred Share shall
---------------
be entitled to a number of votes equal to the number of shares of Common Stock
into which such ESOP Preferred Share could be converted in accordance with
Section 5.2(b) of this Paragraph 9 on the record date for determining the
shareholders entitled to vote, rounded to the nearest one one-hundredth of a
vote; it being understood that whenever the "Conversion Price"
<PAGE>
(as defined in Section 5.1(b) of this Paragraph 9) is adjusted as provided in
Section 9 of this Paragraph 9 the number of votes of the ESOP Preferred Shares
shall also be similarly adjusted.
(c) Extent of Voting Rights. Except as otherwise required by law or
-----------------------
set forth in this Paragraph 9, holders of ESOP Preferred Shares 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 in
this Paragraph 9) for the taking of any corporate action.
Section 4. Liquidation, Dissolution or Winding Up.
--------------------------------------
4.1 Rights of ESOP Preferred Shares Upon Liquidation, Dissolution or
----------------------------------------------------------------
Winding Up. Subject to the rights of the holders of any stock of the
- - ----------
Corporation ranking senior to or on a parity with the ESOP Preferred Shares in
respect of distributions, upon liquidation, dissolution or winding up, upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, the holder of ESOP Preferred Shares shall be entitled to receive,
out of the Corporation's assets that remain after full satisfaction of all
creditors' valid claims and that are available for payment to shareholders,
before any amount shall be paid or distributed among the holders of Common Stock
or any other shares ranking junior to the ESOP Preferred Shares in respect of
distributions upon the Corporation's liquidation, dissolution or winding up,
liquidating distributions in an amount per share equal to the Initial Value per
ESOP Preferred Share (as defined in Section 10 of this Paragraph 9) plus an
amount equal to all accrued and unpaid dividends on the ESOP Preferred Shares to
the date fixed for distribution, and no more. If, upon any liquidation,
dissolution or winding up of the Corporation, the amounts payable with respect
to the ESOP Preferred Shares and any other stock ranking as to any such
distribution on a parity with the ESOP Preferred Shares are not paid in full,
the holders of the ESOP Preferred Shares and such other stock shall share
ratably in any distribution of assets in proportion to the full respective
preferential amounts to which they are entitled. After payment of the full
amount to which the holder of ESOP Preferred Shares is entitled as provided by
the foregoing provisions of this Section 4.1, the holder of ESOP Preferred
Shares shall not be entitled to any further right or claim to any of the
remaining assets of the Corporation.
4.2 Merger or Consolidation not Deemed Liquidation, Dissolution or Winding
----------------------------------------------------------------------
Up. Neither the merger or consolidation of the Corporation with or into any
- - --
other corporation, nor the merger or consolidation of any other corporation with
or into the Corporation, nor the sale, lease, exchange or other transfer of all
or any
<PAGE>
portion of the assets of the Corporation, shall be deemed to be a dissolution,
liquidation or winding up of the affairs of the Corporation for purposes of this
Paragraph 9.
4.3 Rights Upon Merger or Consolidation. The holder of ESOP Preferred
-----------------------------------
Shares shall nevertheless be entitled in the event of any such merger or
consolidation to the rights provided by Section 8 of this Paragraph 9.
4.4 Notice. Written notice of any voluntary or involuntary liquidation,
------
dissolution or winding up of the Corporation, stating the payment date or dates
when, and the place or places where, the amounts distributable to the holder of
ESOP Preferred Shares in such circumstances shall be payable, shall be given by
hand delivery, by courier, by standard form of telecommunication, or by first-
class mail (postage prepaid), delivered, sent or mailed, as the case may be, not
less than twenty (20) days prior to any payment date stated in that notice, to
the holder of ESOP Preferred Shares, at the address shown on the books of the
Corporation.
Section 5. Conversion into Common Stock.
----------------------------
5.1 When Holder Entitled to Conversion,
----------------------------------
(a) Right to Elect Conversion. The holder of ESOP Preferred Shares
-------------------------
shall be entitled, at any time prior to the close of business on the date fixed
for redemption of such shares pursuant to Sections 6, 7 and 8 of this Paragraph
9, to cause any or all of such shares to be converted into shares of Common
Stock ("Holder Conversion").
(b) Conversion Price in Event of Holder Conversion. Each share of
----------------------------------------------
ESOP Preferred Shares shall have a conversion value, applicable to the
conversion price per share of Common Stock, equal to the Initial Value. The
initial conversion price per share of Common Stock shall also be equal to the
Initial Value but shall be adjusted as provided in Section 9 of this Paragraph 9
(and, as so adjusted, is hereinafter sometimes referred to as the "Conversion
Price") (that is, a conversion rate initially equivalent to one (1) share of
Common Stock for each ESOP Preferred Share converted, which is subject to
adjustment as the Conversion Price is adjusted as provided in Section 9 of this
Paragraph 9).
5.2 Automatic Conversion.
--------------------
(a) Events Resulting In Automatic Conversion. In the event of any
----------------------------------------
transfer of a certificate for ESOP Preferred Shares for purposes of evidencing
ownership of the shares in any person other than the Trustee, the
<PAGE>
ESOP Preferred Shares so transferred, upon such transfer and without any further
action by the Corporation or the holder thereof, shall be automatically
converted into shares of Common Stock ("Automatic Conversion").
(b) Automatic Conversion Rate. For purposes of this subsection (b),
-------------------------
the number of shares of Common Stock into which each such ESOP Preferred Share
shall be converted shall be the greater of (i) the number resulting from
dividing the most recent Fair Market Value established for such ESOP Preferred
Share by the Fair Market Value of the Common Stock on the effective date of
such conversion or (ii) the number of shares of Common Stock into which such
ESOP Preferred Share is then convertible in accordance with Section 5.1(b).
5.3 Rights of Transferee other than Trustee. No transferee of ESOP
---------------------------------------
Preferred Shares other than a trustee for the Plan shall have any of the voting
powers, preferences and relative, participating, optional or special rights
ascribed to ESOP Preferred Shares in this Paragraph 9 but, rather, only the
powers and rights pertaining to the Common Stock into which such ESOP Preferred
Shares shall be so automatically converted. In the event of such a conversion,
the transferee of the ESOP Preferred Shares shall be treated for all purposes as
the record holder of the shares of Common Stock into which such ESOP Preferred
Shares have been automatically converted as of the date of such transfer.
Certificates representing ESOP Preferred Shares shall bear a legend to reflect
the foregoing provisions of this Section 5.3.
5.4 Holder Conversion; Issuance of New Certificates. The holder of ESOP
-----------------------------------------------
Preferred Shares desiring to convert such shares into shares of Common Stock in
accordance with Section 5.1(a) of this Paragraph 9 shall surrender the
certificate or certificates representing the ESOP Preferred Shares being
converted, duly assigned or endorsed for transfer to the Corporation (or
accompanied by duly executed stock powers relating thereto), at the principal
executive office of the Corporation, accompanied by written notice of
conversion. Any notice of conversion shall specify (i) the number of shares of
ESOP Preferred Shares to be converted and the name or names in which such holder
wishes the certificate or certificates for Common Stock and for any ESOP
Preferred Shares not to be so converted to be issued and (ii) the address to
which such holder wishes delivery to be made of such new certificates to be
issued upon such conversion.
5.5 Effect of Automatic Conversion on ESOP Preferred Certificates;
--------------------------------------------------------------
Surrender. Upon any Automatic Conversion, each certificate which prior to the
- - ---------
conversion represented ESOP Preferred Shares shall be deemed for all purposes to
evidence ownership of the number of full shares of Common Stock into which the
same shall have
<PAGE>
been converted. Unless and until any such certificate shall be so surrendered in
the manner provided for in Section 5.4, dividends and other distributions
payable after the expiration of 90 days following the Automatic Conversion to
holders of Common Stock shall not be paid to the record holder of such
certificate, but there shall be paid to the record holder of such certificate
with respect to the shares of Common Stock into which the ESOP Preferred Shares
have been converted (i) upon such surrender, the amount of the dividends or
other distribution which shall have become payable on such shares after the
expiration of 90 days following the Automatic Conversion, but without interest,
and (ii) after such surrender, the amount of any dividends or other
distributions with a record date prior to surrender and the payment date of
which shall be subsequent to surrender, such amount to be paid on such payment
date.
5.6 Procedure for Issuance of Common Stock Certificates. Upon surrender
---------------------------------------------------
of a certificate representing an ESOP Preferred Share or Shares for conversion,
the Corporation shall issue and send by hand delivery, by courier or by first
class mail (postage prepaid) to the holder thereof or to such holder's designee,
at the address designated by such holder, a certificate or certificates for the
number of shares of Common Stock to which such holder shall be entitled upon
conversion. In the event that there shall have been surrendered a certificate
or certificates representing ESOP Preferred Shares, only part of which are to be
converted, the Corporation shall issue and send to such holder, in the manner
set forth in the preceding sentence, a new certificate or certificates
representing the number of ESOP Preferred Shares that shall not have been
converted.
5.7 Effective Date of Common Stock Issued Upon Holder Conversion. The
------------------------------------------------------------
issuance by the Corporation of shares of Common Stock upon a Holder Conversion
shall be effective as of the earlier of (i) the delivery to the holder of the
ESOP Preferred Shares or such holder's designee of the certificates representing
the shares of Common Stock issued upon conversion thereof or (ii) the
commencement of business on the second Business Day after the surrender of the
certificate or certificates for the ESOP Preferred Shares to be converted, duly
assigned or endorsed for transfer to the Corporation (or accompanied by duly
executed stock powers relating thereto) and accompanied by all documentation
required to effect the conversion, as provided by this Section 5. On and after
the effective date of any conversion, the person or persons entitled to receive
the Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common
<PAGE>
Stock (subject to the provisions of the second sentence of Section 5.5), but no
allowance or adjustment shall be made in respect of dividends payable to holders
of Common Stock in respect of any period prior to such effective date. The
Corporation shall not be obligated to pay any dividends that have been declared
and are payable to holders of ESOP Preferred Shares on a Dividend Payment Date
if such Dividend Payment Date for such dividend is subsequent to the effective
date of conversion of such shares.
5.8 Cash in Lieu of Fractional Shares. The Corporation shall not be
---------------------------------
obligated to deliver to the holder of ESOP Preferred Shares, or to any person
designated by such holder pursuant to Section 5.4 or to any transferee in a
transfer resulting in an Automatic Conversion, any fractional share of Common
Stock issuable upon any conversion and surrender of such ESOP Preferred Shares,
but in lieu thereof may make a cash payment equal to the proportionate amount of
the Fair Market Value of a share of Common Stock on the effective date of
conversion.
5.9 Common Stock Reserves. The Corporation shall at all times reserve and
---------------------
keep available out of its authorized and unissued Common Stock, solely for
issuance upon the conversion of ESOP Preferred Shares as herein provided, free
from any preemptive rights, such number of shares of Common Stock as shall from
time to time be issuable upon the conversion of all the ESOP Preferred Shares
then outstanding in accordance with Section 5.2. The Corporation shall prepare
and shall use its best efforts to obtain and keep in force such governmental or
regulatory permits or other authorizations as may be required by law, and shall
comply with all requirements as to registration or qualification of the Common
Stock, in order to enable the Corporation lawfully to issue and deliver to each
holder of record of ESOP Preferred Shares such number of shares of its Common
Stock as shall from time to time be sufficient to effect the conversion of all
ESOP Preferred Shares then outstanding and convertible into shares of Common
Stock in accordance with Section 5.2.
Section 6. Redemption.
----------
6.1 Redemption at the Option of the Corporation. The ESOP Preferred
-------------------------------------------
Shares shall be redeemable, in whole or in part, at the option of the
Corporation at any time after July 1, 1994 at redemption prices per share equal
to the respective percentages of the Initial Value of the ESOP Preferred Shares
so to be redeemed set forth below:
<PAGE>
During the Twelve-
Month Period Percentage of
Beginning July 1 of Initial Value
------------------- -------------
1994 103.875
1995 103.100
1996 102.325
1997 101.550
1998 100.775
1999 and 100.000
thereafter
plus, in each case, an amount equal to all accrued and unpaid dividends thereon
to the date fixed for redemption.
6.2 Mandatory Redemption Upon Certain Plan Events. If the Plan is
---------------------------------------------
terminated and must be liquidated immediately according to its terms or if the
ESOP within the Plan is terminated or eliminated from the Plan and must be
liquidated immediately according to the Plan's terms, and notwithstanding
anything to the contrary in Section 6.1, the Corporation shall, as soon
thereafter as practicable, call for redemption all then outstanding ESOP
Preferred Shares at redemption prices per share equal the respective percentages
of the Initial Value of the ESOP Preferred Shares so to be redeemed set forth
below:
During the Twelve-
Month Period Percentage of
Beginning July 1 of Initial Value
------------------- -------------
1989 107.750
1990 106.975
1991 106.200
1992 105.425
1993 104.650
1994 103.875
1995 103.100
1996 102.325
1997 101.550
1998 100.775
1999 and thereafter 100.000
plus in each case an amount equal to all accrued and unpaid dividends thereon to
the date fixed for redemption.
6.3 Payment of Redemption Price. The Corporation, at its option, may make
---------------------------
payment of the redemption price required upon any redemption of ESOP Preferred
Shares in cash, Marketable Obligations, in shares of Common Stock, or in a
combination of any two or all three of cash, Marketable Obligations or shares of
Common Stock; Marketable Obligations or shares of Common Stock must be valued
for such purposes at their Fair Market Value on the redemption date.
<PAGE>
6.4 Dividends on Shares Called for Redemption. From and after the date
-----------------------------------------
fixed for redemption, dividends on ESOP Preferred Shares called for redemption
will cease to accrue, such ESOP Preferred Shares will no longer be deemed to be
outstanding, and all rights in respect of such ESOP Preferred Shares shall
cease, except the right to receive the redemption price.
6.5 Notice of Redemption. Unless otherwise required by law, notice of
--------------------
redemption shall be sent to the holder of ESOP Preferred Shares at the address
shown on the books of the Corporation by hand delivery, by courier, by standard
form of telecommunication or by first class mail (postage pre-paid) delivered,
sent or mailed, as the case may be, not less than twenty (20) days nor more than
sixty (60) days prior to the redemption date. Each such notice shall state:
(i) the redemption date; (ii) the total number of ESOP Preferred Shares to be
redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of such ESOP Preferred Shares to be redeemed from such
holder; (iii) the redemption price; (iv) where the redemption price is to be
paid other than wholly in cash, a description of the amount of the redemption
price to be paid in Marketable Obligations or shares of Common Stock or a
combination thereof and a description of the terms and conditions of the
Marketable Obligations, if any, being so used; (v) the place or places where
certificates for such ESOP Preferred Shares are to be surrendered for payment of
the redemption price; (vi) that dividends on the ESOP Preferred Shares to be
redeemed will cease to accrue on such redemption date; and (vii) the conversion
rights of the ESOP Preferred Shares to be redeemed, the period within the
conversion rights may be exercised, and the Conversion Price and number of
shares of Common Stock issuable upon conversion of an ESOP Preferred Share at
the time. Upon surrender of the certificate for any ESOP Preferred Shares so
called for redemption and not previously converted (properly endorsed or
assigned for transfer, if the notice shall so state), such shares shall be
redeemed by the Corporation at the date fixed for redemption and at the
redemption price set forth in this Section 6.
6.6 Loss of Full Deduction on Change in Statute, Rule or Regulation;
----------------------------------------------------------------
Disqualification. In the event of a change in any statute, rule or regulation
- - ----------------
of the United States of America or any administrative or judicial interpretation
thereof that (i) has the effect of limiting or making unavailable to the
Corporation all or any of the tax deductions for contributions to the Plan or
for amounts paid (including dividends) on the ESOP Preferred Shares when such
amounts are available as provided under Section 404(k)(2) of the Internal
Revenue Code of 1986, as amended and in effect on the date ESOP Preferred Shares
are initially issued, (ii) affects, directly or indirectly, the
<PAGE>
treatment accorded the ESOP, the Plan, an ESOP Loan Agreement (as defined in
Section 10 of this Paragraph 9) or the Corporation under Section 133 or Section
404(k) of the Internal Revenue Code of 1986, as amended, or that materially
affects, directly or indirectly the treatment accorded the ESOP, the Plan, an
ESOP Loan Agreement or the Corporation under Section 404(a)(3), (7) or (9) of
the Internal Revenue Code of 1986, as amended; or in the event that for any
reason the Plan, the ESOP or any trust maintained for the Plan loses its
qualified status under either Section 401(a) or Section 501(a) of the Internal
Revenue Code of 1986, as amended, and that loss is not caused by a voluntary act
of the Corporation, by any trustee of a trust maintained for the Plan, or by any
other individual, then the Corporation may for a period of 30 days following the
determination that the Plan is no longer qualified, for a period of 30 days
following the determination that tax deductions for contributions to the Plan or
for amounts paid on the ESOP Preferred Shares are unavailable or limited, or for
a period of 30 days following a change that has the effect described in Section
6.6(ii) above, in its sole discretion and notwithstanding anything to the
contrary in Section 6.1 elect to redeem any or all of such ESOP Preferred Shares
for the greater of (i) a value per share equal to the Plan's remaining payment
obligations attributable to the ESOP Preferred Shares remaining unallocated in
the Plan (as part of the Plan's suspense account) as of the redemption date,
divided by the number of those unallocated shares or (ii) the Fair Market Value
of the ESOP Preferred Shares at the date of such redemption of the ESOP
Preferred Shares. For purposes of this Section 6.6 materially means more than a
30% diminution of the tax deductions available to the Corporation for any tax
year of the Corporation for contributions to the Plan from the deductions that
would have been available to the Corporation but for the change in statute, rule
or regulation.
6.7 Change in Accounting Treatment. In the event of a change in generally
------------------------------
accepted accounting principles, or the issuance of an opinion or interpretation
of generally accepted accounting principles by the Financial Accounting
Standards Board (the "FASB") or other group subordinate, successor, or with
powers similar to the FASB (including but not limited to the Securities and
Exchange Commission), to the effect that the ESOP Preferred Shares should be
treated as indebtedness rather than equity for some or all accounting purposes,
the Corporation may, in its sole discretion and notwithstanding anything to the
contrary in Section 6.1 for a period of 30 days following the Corporation's
receipt of advice from its independent accountants that the change must be
applied to the Corporation's financial statements, elect to redeem any or all of
the ESOP Preferred Shares for the greater of (i) the amount payable in respect
of the ESOP Preferred Shares upon liquidation of the Corporation pursuant to
<PAGE>
Section 4 of this Paragraph 9 or (ii) the Fair Market Value of the ESOP
Preferred Shares at the date of such redemption.
Section 7. Redemption Rights of Holder.
---------------------------
7.1 Holder's Right to Demand Redemption. ESOP Preferred Shares shall be
-----------------------------------
redeemed at the option of the holder at any time and from time to time upon
notice to the Corporation given not less than five (5) business days prior to
the date fixed by the holder in such notice for such redemption, upon
certification by such holder to the Corporation of the following events: (i)
when and to the extent necessary for such holder to provide for distributions
required to be made to participants under, or to satisfy an investment election
provided to participants in accordance with, the ESOP that is part of the Plan;
(ii) when and to the extent required to make any payments of principal, interest
or premium due and payable (whether as scheduled, upon acceleration or
otherwise) under an ESOP Loan Agreement or required to satisfy any indebtedness,
expenses or costs incurred by the holder for the benefit of the Plan when due;
or (iii) in the event that the ESOP that is part of the Plan is not initially
determined by the Internal Revenue Service to be qualified within the meaning of
Sections 401(a) and 4975(e)(7) of the Internal Revenue Code of 1986, as amended.
ESOP Preferred Shares shall be redeemed by the Corporation for cash or
Marketable Obligations or, if the Corporation so elects, in shares of Common
Stock, or a combination of any two or three of cash, Marketable Obligations or
shares of Common Stock. Marketable Obligations or shares of Common Stock must
be valued for such purposes at their Fair Market Value, and the redemption price
per share of ESOP Preferred shall be (1) for purposes of (i) of this Section 7.1
the Fair Market Value of an ESOP Preferred Share on the date fixed for
redemption (2) for all other purposes of this Section 7.1 the greater of the
Fair Market Value of an ESOP Preferred Share on the date fixed for redemption or
a value per share equal to the Plan's remaining payment obligations attributable
to the ESOP Preferred Shares remaining unallocated in the Plan (as part of the
Plan's suspense account) as of the redemption date, divided by the number of
those unallocated shares, in all instances plus accrued and unpaid dividends
thereon to the date fixed for redemption.
<PAGE>
Section 8. Consolidation, Merger, etc.
--------------------------
8.1 Effect of Consolidation, Merger, etc. on ESOP Preferred Shares When
-------------------------------------------------------------------
Common Stock Converted into Qualifying Employer Securities. In the event that
- - ----------------------------------------------------------
the Corporation shall consummate any consolidation or merger or similar business
combination, pursuant to which the outstanding shares of Common Stock are by
operation of law exchanged solely for or changed, reclassified or converted
solely into stock that constitutes "qualifying employer securities" (within the
meaning of Section 409(l) of the Internal Revenue Code of 1986, as amended, and
Section 407(d)(5) of the Employee Retirement Income Security Act of 1974 as
amended, or any successor provisions of law) with respect to a holder of ESOP
Preferred Shares and, if applicable, for a cash payment in lieu of any
fractional shares, the ESOP Preferred Shares of such holder shall, in connection
with such consolidation, merger or similar business combination, be assumed by
and shall become preferred stock of such successor or resulting corporation,
having in respect of such corporation, insofar as possible, the same powers,
preferences and relative, participating, optional or other special rights
(including the redemption rights provided by Sections 6, 7 and 8 of this
Paragraph 9), and the qualifications, limitations or restrictions thereon, that
the ESOP Preferred Shares had immediately prior to such transaction, except that
after such transaction each ESOP Preferred Share shall be convertible, otherwise
on the terms and conditions provided by Section 5 of this Paragraph 9, into the
number and kind of qualifying employer securities so receivable by a holder of
the number of shares of Common Stock into which such ESOP Preferred Shares could
have been converted immediately prior to such transaction.
8.2 Exception. If by virtue of the structure of such transaction, a
---------
holder of Common Stock is required to make an election with respect to the
nature and kind of consideration to be received in such transaction, which
election cannot practicably be made by the holder of the ESOP Preferred Shares,
then the ESOP Preferred Shares shall, by virtue of such transaction and on the
same terms as apply to the holders of Common Stock, be converted into or
exchanged for the aggregate amount of stock, securities, cash or other property
(payable in kind) receivable by a holder of the number of shares of Common Stock
into which such ESOP Preferred Shares could have been converted immediately
prior to such transaction in accordance with Section 5.2 of this Paragraph 9 had
such holder of Common Stock failed to exercise any rights of election to receive
any kind or amount of stock, securities, cash or other property (provided that,
if the kind or amount of qualifying employer securities receivable
<PAGE>
upon such transaction is not the same for each non-electing share of Common
Stock, then the kind and amount so receivable upon such transaction, in respect
of each share of Common Stock into which the ESOP Preferred Shares shall have
been deemed converted, shall be the kind and amount so receivable per share by
the plurality of the non-electing shares of Common Stock).
8.3 Adjustments. Appropriate provision shall be made in the Articles of
-----------
Merger providing, for any merger described in Section 8.1 in which the
Corporation is not the surviving or resulting corporation, for the rights of the
ESOP Preferred Shares as preferred stock of such successor or resulting
corporation in a transaction described in Section 8.1 to be subject to
successive adjustments after any such transaction as nearly equivalent as
practicable to the adjustments provided for by Section 9 of this Paragraph 9
prior to such transaction.
8.4 Conditions to Corporation Consummating Merger, Consolidation or
---------------------------------------------------------------
Similar Transaction. The Corporation shall not consummate any merger,
- - -------------------
consolidation or similar transaction described in Section 8.1 unless all then
outstanding ESOP Preferred Shares shall, except to the extent Section 6.5 shall
be applicable, be assumed and authorized by the successor or resulting
corporation as provided in this Section 8.
8.5 Effect of Merger, Consolidation etc. on ESOP Preferred Shares when
------------------------------------------------------------------
Common Stock Not Converted into Qualifying Employer Securities.
- - --------------------------------------------------------------
(a) When Conversion into Common Stock Results. In the event that the
-----------------------------------------
Corporation shall consummate any consolidation or merger or similar business
combination, pursuant to which the outstanding shares of Common Stock are by
operation of law exchanged for or changed, reclassified or converted into other
stock or securities or cash or any other property, or any combination thereof,
other than any such consideration that is constituted solely of qualifying
employer securities (as referred to in Section 8.1) and cash payments, if
applicable, in lieu of ESOP Preferred Shares could have been converted in
accordance with Section 5.2 of this Paragraph 9 immediately prior to such
transaction had such holder of Common Stock failed to exercise any rights of
election as to the kind or amount of stock, securities, cash or other property
receivable upon such transaction (provided that, if the kind or amount of stock,
securities, cash or other property receivable upon such transaction is not the
same for each non-electing share of Common Stock, then the kind and amount of
stock, securities, cash or other property receivable upon such transaction, in
respect of each share of Common Stock into which the ESOP Preferred Shares shall
have been deemed converted, shall be the kind and amount so receivable per share
by a plurality of the non-electing shares of Common Stock).
<PAGE>
8.6 Special Election of Redemption. In the event the Corporation shall
------------------------------
enter into any agreement providing for any consolidation or merger or similar
business combination described in Section 8.5, then the Corporation shall as
soon as practicable thereafter (and in any event at least ten (10) business days
before consummation of such transaction) give notice of such agreement and the
material terms thereof to the holder of ESOP Preferred Shares and the holder
shall have the right to elect, by written notice to the Corporation, to receive,
upon consummation of such transaction (if and when such transaction is
consummated), from the Corporation or the successor of the Corporation, in
redemption and retirement of such ESOP Preferred Shares, a cash payment equal to
the following amount per share:
During the Twelve-
Month Period Percentage of
Beginning July 1 of Initial Value
------------------- -------------
1989 107.750
1990 106.975
1991 106.200
1992 105.425
1993 104.650
1994 103.875
1995 103.100
1996 102.325
1997 101.550
1998 and 100.775
thereafter 100.000
No such notice of redemption shall be effective unless given to the Corporation
prior to the close of business on the fifth business day prior to consummation
of such transaction, unless the Corporation or the successor of the Corporation
shall waive such prior notice, but any notice of redemption so given prior to
such time may be withdrawn by notice of withdrawal given to the Corporation
prior to the close of business on the fifth business day prior to consummation
of such transaction.
Section 9. Anti-dilution Adjustments.
-------------------------
9.1 Subdivision of Common Stock; Combination of Common Stock; Payment of
--------------------------------------------------------------------
Dividend on or Distribution in Respect of Common Stock in Shares of Common
- - --------------------------------------------------------------------------
Stock.
- - -----
(a) Actions Covered. In the event the Corporation shall, at any time
---------------
or from time to time while any of the ESOP Preferred Shares are outstanding, (i)
pay a dividend or make a distribution in respect of the Common Stock in shares
of Common Stock, (ii) subdivide the outstanding shares of Common Stock, or
combine
<PAGE>
the outstanding shares of Common Stock into a smaller number of shares, in each
case whether by reclassification of shares, recapitalization of the Corporation
(including a recapitalization effected by a merger or consolidation to which
Section 8 hereof does not apply) or otherwise the Conversion Price shall be
adjusted as provided in Section 9.1(b).
(b) Formula For Adjustment. Upon the occurrence of an action
----------------------
described in Section 9.1(a) the Conversion Price in effect immediately prior to
such action shall be adjusted by multiplying such Conversion Price by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately before such event, and the denominator of which is the
number of shares of Common Stock outstanding immediately after such event. An
adjustment made pursuant to this Section 9.1 shall be given effect, upon payment
of such a dividend or distribution, as of the record date for the determination
of stockholders entitled to receive such dividend or distribution (on a
retroactive basis) and in the case of a subdivision or combination shall become
effective immediately as of the effective date thereof.
9.2 Issuance of Rights or Warrants to Purchase Common Stock As a Dividend
---------------------------------------------------------------------
or Distribution on Common Stock.
- - --------------------------------
(a) Actions Covered. In the event that the Corporation shall, at any
---------------
time or from time to time while any of the ESOP Preferred Shares are
outstanding, issue to holders of shares of Common Stock as a dividend or
distribution, including by way of a reclassification of shares or a
recapitalization of the Corporation, any right or warrant to purchase shares of
Common Stock (but not including as such a right or warrant any security
convertible into or exchangeable for shares of Common Stock) at a purchase price
per share less than the Fair Market Value of a share of Common Stock on the
Valuation Day the Conversion Price shall be adjusted as provided in Section
9.2(b).
(b) Formula for Adjustment. Upon the occurrence of an action
----------------------
described in Section 9.2(a), the Conversion Price in effect immediately prior to
such action shall be adjusted by mutiplying such Conversion Price by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
on the Valuation Day plus the number of shares of Common Stock which could be
purchased at the Fair Market Value of a share of Common Stock on the Valuation
Day for the maximum aggregate consideration payable upon exercise in full of all
such rights or warrants, and the denominator of which shall be the number of
shares of Common Stock outstanding
<PAGE>
on the Valuation Day plus the maximum number of shares of Common Stock that
could be acquired upon exercise in full of all such rights and warrants.
9.3 Issuance, Sale or Exchange of Common Stock for less than Fair Market
--------------------------------------------------------------------
Value.
- - -----
(a) Actions Covered. In the event the Corporation shall, at any time
---------------
or from time to time while any of the ESOP Preferred Shares are outstanding,
issue, sell or exchange shares of Common Stock (other than pursuant to any right
or warrant to purchase or acquire shares of Common Stock (including as such a
right or warrant any security convertible into or exchangeable for shares of
Common Stock) and other than pursuant to any employee or director incentive or
benefit plan or arrangement (including any employment, severance or consulting
agreement of the Corporation or any subsidiary of the Corporation heretofore or
hereafter adopted) for a consideration per share less than the Fair Market Value
of a share of Common Stock on the Valuation Day, then the Conversion Price shall
be adjusted as provided in Section 9.3(b).
(b) Formula for Adjustment. Upon the occurrence of an action
----------------------
described in Section 9.3(a), the Conversion Price in effect immediately prior to
such action shall be adjusted by multiplying such Conversion Price by a fraction
the numerator of which shall be the sum of (i) the Fair Market Value of all the
shares of Common Stock outstanding on the Valuation Day plus (ii) the Fair
Market Value of the consideration received by the Corporation in respect of such
issuance, sale or exchange of shares of Common Stock, and the denominator of
which shall be the product of (a) the Fair Market Value of a share of Common
Stock on the Valuation Day multiplied by (b) the sum of the number of shares of
Common Stock outstanding on the Valuation Day plus the number of shares of
Common Stock so issued, sold or exchanged by the Corporation.
9.4 Issuance, Sale or Exchange of Rights or Warrants to Purchase Common
-------------------------------------------------------------------
Stock for Less than Non-Dilutive Amount.
- - -------------- ------------------------
(a) Actions Covered. In the event the Corporation shall, at any time
---------------
or from time to time while any ESOP Preferred Shares are outstanding, issue,
sell or exchange any right or warrant to purchase or acquire shares of Common
Stock (including as such a right or warrant any security convertible into or
exchangeable for shares of Common Stock), other than any such issuance to
holders of shares of Common Stock as a dividend or distribution (including by
way of a reclassification of shares or a recapitalization of the Corporation)
and other than pursuant to any employee or director incentive or benefit plan or
arrangement (including any employment,
<PAGE>
severance or consulting agreement) of the Corporation or any subsidiary of the
Corporation heretofore or hereafter adopted, for a consideration having a
combined Fair Market Value, on the Valuation Day, less than the Non-Dilutive
Amount (as defined in Section 10 of this Paragraph 9), then the Conversion Price
shall be adjusted as provided in Section 9.4(b).
(b) Formula for Adjustment. Upon the occurrence of an action
----------------------
described in Section 9.4(a), the Conversion Price in effect immediately prior to
such action shall be adjusted by multiplying such Conversion Price by a fraction
the numerator of which shall be the sum of (I) the Fair Market Value of all the
shares of Common Stock outstanding on the Valuation Day plus (II) the Fair
Market Value of the consideration received by the Corporation in respect of such
issuance, sale or exchange of such right or warrant plus (III) the Fair Market
Value at the time of such issuance of the consideration which the Corporation
would receive upon exercise in full of all such rights or warrants, and the
denominator of which shall be the product of (i) the Fair Market Value of a
share of Common Stock on the Valuation Day multiplied by (ii) the sum of the
number of shares of Common Stock outstanding on such day plus the maximum number
of shares of Common Stock which could be acquired pursuant to such right or
warrant at the time of the issuance, sale or exchange of such right or warrant,
whether or not exercisable (or convertible or exchangeable) at such time.
9.5 Extraordinary Distribution.
--------------------------
(a) Actions Covered. In the event the Corporation shall, at any time
---------------
or from time to time while any of the ESOP Preferred Shares are outstanding,
make an Extraordinary Distribution in respect of the Common Stock, whether by
dividend, distribution, reclassification of shares or recapitalization of the
Corporation (including a recapitalization or reclassification effected by a
merger or consolidation to which Section 8 of this Paragraph 9 does not apply
or a Pro Rata Repurchase) of Common Stock, then the Conversion Price shall be
adjusted as provided in Section 9.5(b).
(b) Formula for Adjustment. Upon the occurrence of an action
----------------------
described in 9.5(a) the Conversion Price in effect immediately prior to such
Extraordinary Distribution shall be adjusted by multiplying such Conversion
Price by a fraction, the numerator of which is the difference between (i) the
product of (x) the number of shares of Common Stock outstanding immediately
before such Extraordinary Distribution minus in the case of a Pro Rata
Repurchase, the number of shares of Common Stock repurchased by the Corporation
multiplied
<PAGE>
by (y) the Fair Market Value of a share of Common Stock on the day before the
ex-dividend date with respect to an Extraordinary Distribution which is paid in
cash and on the distribution date with respect to an Extraordinary Distribution
which is paid other than in cash, or on the applicable expiration date
(including all extensions thereof) of any tender offer that is a Pro Rata
Repurchase, or on the date of purchase with respect to any Pro Rata Repurchase
that is not a tender offer, as the case may be, and (ii) the Fair Market Value
of the Extraordinary Distribution minus the aggregate amount of regularly
scheduled quarterly dividends declared by the Board of Directors of the
Corporation and paid by the Corporation in the twelve months immediately
preceding such Extraordinary Distribution or the aggregate purchase price of the
Pro Rata Repurchase, as the case may be; and the denominator of which shall be
the product of (a) the number of shares of Common Stock outstanding immediately
before such Extraordinary Distribution minus, in the case of a Pro Rata
Repurchase, the number of shares of Common Stock repurchased by the Corporation
multiplied by (b) the Fair Market Value of a share of Common Stock on the day
before the ex-dividend date with respect to an Extraordinary Distribution which
is paid in cash and on the distribution date with respect to an Extraordinary
Distribution which is paid other than in cash, or on the applicable expiration
date (including all extensions thereof) of any tender offer which is a Pro Rata
Repurchase or on the date of purchase with respect to any Pro Rata Repurchase
which is not a tender offer, as the case may be. The Corporation shall send the
holder of ESOP Preferred Shares (i) notice of its intent to make any such
dividend or distribution and (ii) notice of any offer by the Corporation to make
a Pro Rata Repurchase, in each case at the same time as, or as soon as
practicable after, such offer is first communicated (including by announcement
of a record date in accordance with the rules of any stock exchange on which the
Common Stock is listed or admitted to trading) to holders of Common Stock. Such
notice shall indicate the intended record date and the amount and nature of such
dividend or distribution, the terms of any Pro Rata Repurchase, and the number
of shares of Common Stock into which an ESOP Preferred Share may be converted at
such time.
9.6 Limitation on Obligation to Make Adjustment. Notwithstanding any
-------------------------------------------
other provisions of this Section 9, the Corporation shall not be required to
make any adjustment to the Conversion Price unless such adjustment would require
an increase or decrease of at least one percent (1%) in the Conversion Price.
Any lesser adjustment shall be carried forward and shall be made no later than
the time of, and together with, the next
<PAGE>
subsequent adjustment which, together with any adjustment or adjustments so
carried forward, shall amount to an increase or decrease of at least one percent
(1%) in the Conversion Price.
9.7 When Adjustment Equitably Required. If the Corporation shall make any
----------------------------------
dividend or distribution on the Common Stock or issue any Common Stock, other
capital stock or other security of the Corporation or any rights or warrants to
purchase or acquire any such security, which transaction does not result in an
adjustment to the Conversion Price pursuant to the foregoing provisions of this
Section 9, the Board of Directors of the Corporation shall consider whether such
action is of such a nature that an adjustment to the Conversion Price should
equitably be made in respect of such transaction. If in such case the Board of
Directors of the Corporation determines that an adjustment to the Conversion
Price should be made, an adjustment shall be made effective as of such date as
may be determined by the Board of Directors of the Corporation. The
determination of the Board of Directors of the Corporation whether an adjustment
to the Conversion Price should be made pursuant to the foregoing provisions of
this Section 9.7 and, if so, what adjustment should be made and when, shall be
final and binding on the Corporation and all shareholders of the Corporation.
The Corporation shall be entitled to make such additional adjustments in the
Conversion Price, in addition to those required by the foregoing provisions of
this Section 9, as shall be necessary in order that any dividend or distribution
in shares of capital stock of the Corporation, subdivision, reclassification or
combination of shares of stock of the Corporation or any recapitalization of the
Corporation shall not be taxable to the holders of the Common Stock.
9.8 Statements to be Filed. Whenever an adjustment to the Conversion
----------------------
Price and the related voting rights of the ESOP Preferred Shares is required
pursuant to this Paragraph 9, the Corporation shall forthwith place on file with
the Secretary of the Corporation, a statement signed by two officers of the
Corporation stating the adjusted Conversion Price determined as provided herein
and the resulting conversion ratio, and the voting rights (as appropriately
adjusted), of the ESOP Preferred Shares. Such statement shall set forth in
reasonable detail such facts as shall be necessary to show the reason and the
manner of computing such adjustment including any determination of Fair Market
Value involved in such computation. Promptly after each adjustment to the
Conversion Price and the related voting rights of the ESOP Preferred Shares, the
Corporation shall mail a notice thereof and of the then prevailing conversion
ratio to the holder of ESOP Preferred Shares.
<PAGE>
Section 10. Definitions.
-----------
10.1 Definitions to Apply. For purposes of this Paragraph 9, the following
--------------------
definitions shall apply:
"Business Day" shall mean each day that is not a Saturday, Sunday or a day
on which state or federally chartered banking institutions in New York, New York
are not required to be open.
"Common Stock" shall mean the Corporation's Common Stock, par value $1 per
share, as the same exists at the date of the issuance by the State Corporation
Commission of Virginia of a certificate of amendment with respect to Articles of
Amendment creating the ESOP Preferred Shares or any other class of stock
resulting from successive changes or reclassifications of such Common Stock
consisting solely of changes in par value, or from par value to no par value, or
from no par value to par value.
"ESOP Loan Agreement" shall mean any loan agreement (including a purchase-
money installment-payment obligation) obligating the trustee for the Plan's ESOP
to apply the ESOP's income and assets to satisfy debt incurred for the ESOP
incident to an acquisition of ESOP Preferred Shares for the ESOP.
"Extraordinary Distribution" shall mean any dividend or other distribution
to holders of Common Stock (effected while any of the ESOP Preferred Shares are
outstanding) (i) of cash, where the aggregate amount of such cash dividend or
distribution together with the amount of all cash dividends and distributions
made during the preceding period of 12 months on the Common Stock, when combined
with the aggregate amount of all Pro Rata Repurchases (for this purpose,
including only that portion of the aggregate purchase price of such Pro Rata
Repurchase which is in excess of the Fair Market Value of the Common Stock
repurchased as determined on the applicable expiration date (including all
extensions thereof) of any tender offer or exchange offer which is a Pro Rata
Repurchase, or the date of purchase with respect to any other Pro Rata
Repurchase which is not a tender offer or exchange offer made during such
period), exceeds twelve and one-half percent (12 1/2%) of the aggregate Fair
Market Value of all shares of Common Stock outstanding on the day before the ex-
dividend date with respect to such Extraordinary Distribution which is paid in
cash and on the distribution date with respect to an Extraordinary Distribution
that is paid other than in cash, and/or (ii) of any shares of capital stock of
the Corporation (other than shares of Common Stock), other securities of the
Corporation (other than securities of the type referred to in Section 9.2 or 9.4
of this Paragraph 9), evidences of indebtedness of the Corporation or any other
person or any other property (including shares of any subsidiary of the
Corporation) or any combination thereof. The Fair Market
<PAGE>
Value of an Extraordinary Distribution for purposes of Section 9.5 of this
Paragraph 9 shall be equal to the sum of the Fair Market Value of such
Extraordinary Distribution plus the amount of any cash dividends that are not
Extraordinary Distributions made during such 12-month period and not previously
included in the calculation of any adjustment pursuant to Section 9.5 of this
Paragraph 9.
"Fair Market Value" of publicly traded shares of Common Stock or any other
class of capital stock or other security of the Corporation or any other issuer
for any day shall mean the last reported sales price, regular way, or, in the
event that no sale takes place on such day, the average of the reported closing
bid and asked prices, regular way, in either case as reported on the New York
Stock Exchange Composite Tape or, if such security is not listed or admitted to
trading on the New York Stock Exchange, on the principal national securities
exchange on which such security is listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on the NASDAQ
National Market System or, if such security is not quoted on such National
Market System, the average of the closing bid and asked prices for such day in
the over-the counter marked as reported by NASDAQ or, if bid and asked prices
for such security on each such day shall not have been reported through NASDAQ,
the average of the bid and asked prices for such day as furnished by any New
York Stock Exchange member firm regularly making a market in such security
selected for such purpose by the Board of Directors of the Corporation or a
committee thereof. The "Fair Market Value" of any security that is not publicly
traded or of any other property shall mean the fair value thereof as determined
by an independent investment banking or appraisal firm experienced in the
valuation of such securities or property selected in good faith by the Board of
Directors of the Corporation or a committee thereof, or, if no such investment
banking or appraisal firm is in the good faith judgment of the Board of
Directors or such committee available to make such determination, as determined
in good faith by the Board of Directors of the Corporation or such committee
except that the Fair Market Value of an ESOP Preferred Share and in effect at
any given time shall be the then fair market value established for such ESOP
Preferred Share according to the Trust Agreement governing the Trustee who holds
the ESOP Preferred Shares. For purposes of this Paragraph 9, the Fair Market
Value of any security held by a trustee for the Plan is never less than
"adequate consideration" (as defined in Section 3(18) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) and the Fair Market Value of
any security to be transferred to a trustee for the plan is never more than
"adequate consideration" as defined in Section 3(18) of ERISA.
<PAGE>
"Initial Value" means the initial per share value established for the ESOP
Preferred Shares pursuant to the Stock Purchase Agreement between the
Corporation and the Trustee under the Plan pursuant to which the Trustee
purchases the ESOP Preferred Shares.
"Marketable Obligations" means "marketable obligations" as that term is
defined in Section 407(e) of the Employee Retirement Income Security Act of
1974, as amended.
"Non-Dilutive Amount" in respect of an issuance, sale or exchange by the
Corporation of any right or warrant to purchase or acquire shares of Common
Stock (including any security convertible into or exchangeable for shares of
Common Stock) shall mean the difference between (i) the product of the Fair
Market Value of a share of Common Stock on the Valuation Day multiplied by the
maximum number of shares of Common Stock which could be acquired on such date
upon the exercise in full of such rights and warrants (including upon the
conversion or exchange of all such convertible or exchangeable securities),
whether or not exercisable (or convertible or exchangeable) at such date, and
(ii) the aggregate amount payable pursuant to such right or warrant to purchase
or acquire such maximum number of shares of Common Stock; provided, however,
-------- -------
that in no event shall the Non-Dilutive Amount be less than zero. For purposes
of the foregoing sentence, in the case of a security convertible into or
exchangeable for shares of Common Stock, the amount payable pursuant to a right
or warrant to purchase or acquire shares of Common Stock shall be the Fair
Market Value of such security on the date of the issuance, sale or exchange of
such security by the Corporation.
"Pro Rata Repurchase" shall mean any purchase of shares of Common Stock by
the Corporation or any subsidiary thereof, whether for cash, shares of capital
stock of the Corporation, other securities of the Corporation, evidences of
indebtedness of the Corporation or any other person or any other property
(including shares of a subsidiary of the Corporation), or any combination
thereof, effected while any of the ESOP Preferred Shares are outstanding,
pursuant to any tender offer or exchange offer subject to Section 13(e) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or the
regulations thereunder, or any successor provision of law, or pursuant to any
other offer available to substantially all holders of Common Stock; provided,
--------
however, that no purchase of shares by the Corporation or any subsidiary thereof
- - -------
made in open market transactions shall be deemed a Pro Rata Repurchase. For
purposes of this definition shares shall be deemed to have been purchased by the
Corporation or any subsidiary thereof "in open market transactions" if they
have been purchased substantially in
<PAGE>
accordance with the requirements of Rule 10b-18 (as in effect under the Exchange
Act on the date ESOP Preferred Shares are initially issued by the Corporation)
or on such other terms and conditions as the Board of Directors of the
Corporation or a committee thereof in good faith shall have determined are
reasonably designed to prevent such purchases from having a material effect on
the trading market for the Common Stock.
"Valuation Day," with respect to any particular issuance, sale or exchange
of Common Stock, or rights or warrants to acquire shares of Common Stock
(including as such a right or warrant, any security convertible into or
exchangeable for shares of Common Stock) shall mean the business day immediately
preceding the earlier of (i) the date of the first public announcement of such
issuance, sale or exchange, or (ii) the date of such issuance, sale or exchange.
Section 11. Ranking; Retirement of Shares.
-----------------------------
11.1 Ranking. The ESOP Preferred Shares shall rank senior to the Common
-------
Stock as to the payment of dividends and the distribution of assets on
liquidation, dissolution and winding up of the Corporation, and, unless
otherwise provided in the Articles of Incorporation of the Corporation, as the
same may be amended, or an Article of Amendment relating to a subsequent series
of Preferred Stock, par value $1 per share, of the Corporation, the ESOP
Preferred Shares shall rank on a parity with all other series of the
Corporation's Preferred Stock, par value $1 per share, as to the payment of
dividends and the distribution of assets on liquidation, dissolution or winding
up.
11.2 Retirement. Any ESOP Preferred Shares acquired by the Corporation by
----------
reason of the conversion or redemption of such shares as provided by this
Paragraph 9, or otherwise so acquired, shall be retired as ESOP Preferred Shares
and restored to the status of authorized but unissued shares of Preferred Stock,
par value $1 per share, of the Corporation, undesignated as to series, and may
thereafter be reissued as part of a new series of such Preferred Shares as
permitted by law.
Section 12. Miscellaneous.
-------------
12.1 Notices. All notices referred to herein shall be in writing, and all
-------
notices hereunder shall be deemed to have been given upon the earlier of
delivery thereof if by hand delivery, by courier or by standard form of
telecommunication or three (3) business days after the mailing thereof if sent
by registered mail (unless first-class mail shall be specifically permitted for
such notice under the terms of this Paragraph 9) with postage prepaid,
addressed: (i) if to the Corporation, to its office at 120 Long Ridge Road,
Stamford, Connecticut 06904-1355
<PAGE>
(Attention: Corporate Secretary) or other agent of the Corporation designated as
permitted by this Paragraph 9 or (ii) if to the holder of the ESOP Preferred
Shares or Common Stock, as the case may be, to such holder at the address of
such holder as listed in the stock record books of the Corporation (which may
include the records of any transfer agent for the Common Stock), or (iii) to
such other address as the Corporation or any such holder, as the case may be,
shall have designated by notice similarly given.
12.2 Taxes. The Corporation shall pay any and all stock transfer and
-----
documentary stamp taxes that may be payable in respect of any issuance or
delivery of ESOP Preferred Shares or shares of Common Stock or other securities
issued on account of ESOP Preferred Shares pursuant hereto or certificates
representing such shares or securities. The Corporation shall not, however, be
required to pay any such tax that may be payable in respect of any transfer
involved in the issuance or delivery of ESOP Preferred Shares or Common Stock or
other securities in a name other than that in which the ESOP Preferred Shares
with respect to which such shares or other securities are issued or delivered
were registered, or in respect of any payment to any person with respect to any
such shares or securities other than a payment, to the registered holder
thereof, and shall not be required to make any such issuance, delivery or
payment unless and until the person otherwise entitled to such issuance,
delivery or payment has paid to the Corporation the amount of any such tax or
has established, to the satisfaction of the Corporation, that such tax has been
paid or is not payable.
12.3 Designations. In the event that a holder of ESOP Preferred Shares
------------
shall not by written notice designate the name in which the shares of Common
Stock to be issued upon conversion of such shares should be registered or to
whom payment upon redemption of ESOP Preferred Shares should be made or the
address to which the certificate or certificates representing such shares, or
such payment, should be sent, the Corporation shall be entitled to register such
shares, and make such payment, in the name of such holder of such ESOP Preferred
Shares as so shown on the records of the Corporation and to send the certificate
or certificates representing such shares, or such payment, to the address of
such holder as so shown on the records of the Corporation.
12.4 Payments. Unless otherwise provided in the Articles of Incorporation,
--------
as the same may be amended, of the Corporation, all payments in the form of
dividends, distributions on voluntary or involuntary dissolution, liquidation or
winding-up or otherwise made upon the ESOP Preferred Shares and any other stock
ranking on a parity with the ESOP Preferred Shares with respect to such dividend
or distribution shall be pro rata, so
<PAGE>
that amounts paid per ESOP Preferred Share and such other stock shall in all
cases bear to each other the same ratio that the required dividends,
distributions or payments, as the case may be, then payable per share on the
ESOP Preferred Shares and such other stock bear to each other.
THIRD: The amendment of the Articles of Incorporation was duly adopted by
the Board of Directors of the Corporation on June 20, 1989 without shareholder
action, which shareholder action was not required.
IN WITNESS WHEREOF, the undersigned has executed these Articles of Amendment
as of this 20th day of June, 1989.
OLIN CORPORATION
By /s/ E. McI. Cover
-----------------------
Vice President
<PAGE>
ARTICLES OF AMENDMENT
of
ARTICLES OF INCORPORATION
of
OLIN CORPORATION
1. The name of the Corporation is Olin Corporation.
2. The amendment adopted is to add the following Article NINTH to the Articles
of Incorporation of the Corporation, as heretofore amended:
"NINTH: Except as expressly otherwise required in these Articles of
Incorporation, an amendment or restatement of these Articles requiring
shareholder approval shall be approved by a majority of the votes
entitled to be cast by each voting group that is entitled to vote on
the matter, unless in submitting an amendment or restatement to the
shareholders the Board of Directors shall require a greater vote."
3. The amendment was adopted by the Board of Directors on December 14, 1989.
4. The amendment was adopted by the Board of Directors without shareholder
action. Shareholder action was not required.
Dated: December 15, 1989
OLIN CORPORATION
By /s/ E. McI. Cover
-----------------------------
E. McI. Cover, Vice President
<PAGE>
ARTICLES OF AMENDMENT
OF
THE ARTICLES OF INCORPORATION
OF
OLIN CORPORATION
under Section 13.1-639 of the Virginia Stock Corporation Act
FIRST: The name of the Corporation is Olin Corporation.
SECOND: The amendment adopted is to add a new Paragraph 10 to Article Fourth to
read as follows:
"10: Series A Conversion Preferred Stock. There is hereby established a
series of the Corporation's authorized Preferred Stock, to be designated as the
"Series A Conversion Preferred Stock, par value $1 per share." The designation
and number, and relative rights, preferences and limitations of the Series A
Conversion Preferred Stock, insofar as not already fixed by any other provision
of these Articles of Incorporation, shall be as follows:
Section 1. Designation and Amount.
----------------------
1.1 Designation and Amount. The shares of such series shall be designated
----------------------
as "Series A Conversion Preferred Stock, par value $1 per share" (the "Series A
Preferred Stock"), and the number of shares constituting such series shall be
2,760,000.
Section 2. Dividends and Distributions.
---------------------------
2.1 Dividends. In respect of the period beginning on the date of
---------
issuance of the Series A Preferred Stock and ending on and including March 1,
1995 (the "Preferred Period"), the holders of outstanding shares of the Series A
Preferred Stock will be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available therefor, cumulative
preferential cash dividends accruing at the per share rate of $3.64 per annum or
$.91 per quarterly period for each ending of the quarterly periods ending on
February 28 (or, for 1992 only, on February 29), May 31, August 31 and November
30, and no more ("Preferential Dividends"), payable in arrears on each
succeeding March 1, June 1, September 1 and December 1, respectively (each such
date being hereinafter referred to as a "Preferential Dividend Payment Date"),
commencing June 1, 1992. If any Preferential Dividend Payment Date shall not be
a Business Day, then the Preferential Dividend Payment Date shall be on the next
succeeding Business Day. Each such dividend will be payable to holders of
record as they appear on the stock books of the Corporation on such record
dates, not less than 10 nor more than 70 days preceding the payment dates
thereof, as shall be fixed by the Board of Directors.
2.2 Dividend Accrual. Dividends on the Series A Preferred Stock in
----------------
respect of the Preferred Period shall accrue on a daily basis commencing on the
date of issuance of the Series A Preferred Stock, and accrued dividends for each
quarterly dividend period shall cumulate, to the extent not paid, from the
preferential Dividend Payment Date first following the quarter for which they
accrue. Preferential Dividends shall accrue whether or not the Corporation
shall have earnings, whether or not there shall be funds legally available for
the payment of such dividends and whether or not such dividends are declared.
Accumulated dividends shall not bear interest. Dividends (or cash amounts equal
to accrued and unpaid dividends) payable on the Series A Preferred Stock for any
period longer or shorter than a quarterly dividend period shall be computed on
the basis of a 360-day year of twelve 30-day months.
<PAGE>
2.3 Declaration of Dividends on and Redemptions of other Stock.
----------------------------------------------------------
(a) Parity Stock. So long as any Series A Preferred Stock are outstanding,
------------
no dividend shall be declared or paid or set apart for payment on any other
series of stock ranking on a parity with the Series A Preferred Stock as to
dividends, unless there shall also be or have been declared and paid or set
apart for payment when due on the Series A Preferred Stock dividends through the
last preceding Preferential Dividend Payment Date before the dividend payment
date of such parity stock, ratably in proportion to the respective amounts of
dividends accumulated and unpaid through such dividend period on the Series A
Preferred Stock and accumulated and unpaid on such parity stock through the
dividend payment period on such parity stock preceding such parity stock
dividend payment date. So long as any shares of the Series A Preferred Stock
are outstanding, unless all Preferential Dividends accumulated on all
outstanding shares of the Series A Preferred Stock through the most recent
Preferential Dividend Payment Date have been paid in full, no stock of the
Corporation ranking on a parity with the Series A Preferred Stock as to payment
of dividends may be redeemed (pursuant to a sinking fund or otherwise),
purchased or otherwise acquired for any consideration by the Corporation except
(i) by means of a redemption pursuant to which all outstanding shares of the
Series A Preferred Stock and all Preferred Stock of the Corporation ranking on a
parity with the Series A Preferred Stock as to payment of dividends and upon
liquidation, dissolution or winding up are redeemed or pursuant to which a pro
rata redemption is made from all holders of the Series A Preferred Stock and all
stock of the Corporation so ranking on a parity, the amount allocable to each
series of such stock being determined on the basis of the aggregate liquidation
preference of the outstanding shares of each series and the shares of each
series being redeemed only on a pro rata basis, (ii) by conversion of such
parity Preferred Stock into, or exchange of such parity Preferred Stock for,
stock of the Corporation ranking junior to the Series A Preferred Stock as to
payment of dividends and upon liquidation, dissolution or winding up or (iii) in
accordance with the provisions of clause (i) of the first sentence of Section
7.1 of paragraph 9 of Article FOURTH.
(b) Junior Stock. If at any time, so long as any Series A Preferred Stock
------------
shall be outstanding, full cumulative dividends on the Series A Preferred Stock
have not been declared and paid or set apart for payment through the last
preceding Preferential Dividend Payment Date, the Corporation shall not declare
or pay or set apart for payment any dividends or make any other distributions,
or make any payment on account of the purchase, redemption or other retirement
of any shares of Common Stock or any other class of or series of the
Corporation's stock ranking as to dividends or as to distributions in the event
of the Corporation's liquidation, dissolution or winding up, junior to the
Series A Preferred Stock until full cumulative dividends on the Series A
Preferred Stock shall have been paid or declared and set apart for payment.
(c) Limitations. The provisions of Section 2.3(a) and 2.3(b) shall
-----------
not apply to (i) any dividend payable solely in any shares of any stock ranking
as to dividends and as to distributions in the event of the Corporation's
liquidation, dissolution or winding up, junior to the Series A Preferred Stock
or (ii) the acquisition of shares of any stock ranking, as to dividends or as to
distributions in the event of a liquidation, dissolution or winding up of the
Corporation, junior to the Series A Preferred Stock in exchange solely for
shares of any other stock ranking, as to dividends and as to distributions in
the event of a liquidation, dissolution or winding up of the Corporation, junior
to the Series A Preferred Stock.
Section 3. Voting.
------
3.1 Voting Rights. The holders of Series A Preferred Stock shall have
-------------
the following voting rights:
(a) Election of Directors. In the event that the Corporation shall have
---------------------
failed to declare and pay or set apart for payment in full the Preferential
Dividends accumulated on the outstanding shares of Series A Preferred Stock for
any six quarterly dividend payment periods, whether or not consecutive (a
"Preferential Dividend Non-Payment"), the number of directors of the Corporation
shall be increased by two and the holders of outstanding shares of Series A
Preferred Stock, voting together as a single voting group with all other series
of Preferred Stock ranking junior to or on a parity with the Series A Preferred
Stock with respect to dividends and then entitled to vote on the election of
such directors, shall be entitled to elect such additional directors until the
full dividends accumulated on all outstanding shares of Series A Preferred Stock
have been declared and paid or set
<PAGE>
apart for payment. Upon the occurrence of a Preferential Dividend Non-Payment,
the Board of Directors of the Corporation shall within a reasonable period call
a special meeting of the holders of shares of Series A Preferred Stock and all
other holders of each series of Preferred Stock ranking junior to or on a parity
with the Series A Preferred Stock with respect to the payment of dividends who
are then entitled to participate in the election of such additional directors
for the purpose of electing the additional directors provided by the foregoing
provisions. If and when all accumulated dividends on the Series A Preferred
Stock have been declared and paid or set aside for payment in full, the holders
of shares of Series A Preferred Stock shall be divested of the special voting
rights provided by this paragraph, subject to revesting in the event of each and
every subsequent Preferential Dividend Non-Payment. Upon termination of such
special voting rights attributable to all holders of Series A Preferred Stock
and each other series of Preferred Stock ranking junior to or on a parity with
the Series A Preferred Stock with respect to payment of dividends, the term of
office of each director elected by the holders of shares of Series A Preferred
Stock and such junior or parity Preferred Stock (a "Preferred Stock Director")
pursuant to such special voting rights shall forthwith terminate and the number
of directors constituting the entire Board of Directors shall be reduced by the
number of Preferred Stock Directors. Any Preferred Stock Director may be removed
by, and shall not be removed otherwise than by, the vote of the holders of
record of a majority of the outstanding shares of Series A Preferred Stock and
all other series of Preferred Stock ranking junior to or on a parity with the
Series A Preferred Stock with respect to the payment of dividends who were
entitled to participate in such Preferred Stock Director's election, voting as a
separate class, at a meeting called for such purpose. So long as a Preferential
Dividend Non-Payment shall continue, any vacancy in the office of a Preferred
Stock Director may be filled by written consent of the Preferred Stock Director
remaining in office or, if none remains in office, by vote of the holders of
record of a majority of the outstanding shares of Series A Preferred Stock and
all other series of Preferred Stock ranking junior to or on a parity with the
Series A Preferred Stock with respect to the payment of dividends who are then
entitled to participate in the election of such Preferred Stock Directors as
provided above. Holders of shares of Series A Preferred Stock shall not, as such
stockholders, be entitled to vote on the election or removal of directors other
than Preferred Stock Directors, but shall not be divested of any other voting
rights provided to such stockholders by law with respect to any other matter to
be acted upon by the stockholders of the Corporation.
(b) Amendment or Alteration of the Articles of Incorporation. So long as
--------------------------------------------------------
any shares of Series A Preferred Stock are outstanding, the Corporation shall
not amend any of the provisions of its Articles of Incorporation (1) to
authorize or create any shares of stock ranking senior to the Series A Preferred
Stock as to dividends or as to distributions in the event of the Corporation's
liquidation, dissolution or winding up or (2) to alter or change the rights,
preferences or limitations of the Series A Preferred Stock so as to affect such
rights, preferences or limitations adversely without, in each case, the
affirmative vote of the holders of at least two-thirds of the total number of
outstanding shares of the Series A Preferred Stock, voting together as a single
voting group with any other series of Preferred Stock that is (i) affected in
the same or a substantially similar manner and (ii) entitled by law, by the
Articles of Incorporation or by resolution of the Corporation's Board of
Directors to vote on such amendment, in person or by proxy, at a meeting called
for that purpose as permitted by law and the Articles of Incorporation or the
By-Laws. For purposes of this paragraph, any such amendment that would
authorize or create any series of Preferred Stock out of the authorized shares
of Preferred Stock, or that would authorize or create any shares of stock
(whether or not already authorized) ranking junior to or on a parity with the
Series A Preferred Stock as to dividends and as to distributions in the event of
the Corporation's liquidation, dissolution or winding up, shall not be
considered to affect adversely the rights, preferences or limitations of the
outstanding shares of Series A Preferred Stock.
(c) Extent of Voting Rights. Except as otherwise required by law or
-----------------------
set forth in this Paragraph 10, holders of Series A Preferred Stock shall have
no voting rights, and their consent shall not be required for the taking of any
corporate action.
Section 4. Liquidation, Dissolution or Winding Up.
--------------------------------------
4.1 Rights of Series A Preferred Stock Upon Liquidation, Dissolution
----------------------------------------------------------------
or Winding Up. Subject to the rights of the holders of any stock of the
- - -------------
Corporation ranking senior to or on a parity with the Series A Preferred Stock
in respect of distributions upon liquidation, dissolution or winding up, upon
any voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, the holders of Series A Preferred Stock shall
<PAGE>
be entitled to receive, out of the Corporation's assets that remain after full
satisfaction of all creditors' valid claims and that are available for payment
to shareholders, before any amount shall be paid or distributed among the
holders of Common Stock or any other shares ranking junior to the Series A
Preferred Stock in respect of distributions upon the Corporation's liquidation,
dissolution or winding up, liquidating distributions in an amount per share
equal to the sum of $41.50 plus an amount equal to all Preferential Dividends
accrued and unpaid to the date fixed for distribution, and no more. If, upon any
liquidation, dissolution or winding up of the Corporation, the amounts payable
with respect to the Series A Preferred Stock and any other stock ranking as to
any such distribution on a parity with the Series A Preferred Stock are not paid
in full, the holders of the Series A Preferred Stock and such other stock shall
share ratably in any distribution of assets in proportion to the full respective
preferential amounts to which they are entitled. After payment of the full
amount to which the holders of Series A Preferred Stock are entitled as provided
by the foregoing provisions of this Section 4.1, the holders of Series A
Preferred Stock shall not be entitled to any further right or claim to any of
the remaining assets of the Corporation.
4.2 Merger or Consolidation not Deemed Liquidation, Dissolution or
--------------------------------------------------------------
Winding Up. Neither the merger or consolidation of the Corporation with or into
- -----------
any other corporation, nor the merger or consolidation of any other corporation
with or into the Corporation, nor the sale, lease, exchange or other transfer of
all or any portion of the assets of the Corporation, shall be deemed to be a
dissolution, liquidation or winding up of the affairs of the Corporation for
purposes of this Paragraph 10.
4.3 Rights Upon Merger or Consolidation. The holder of Series A
-----------------------------------
Preferred Stock shall nevertheless be entitled in the event of any Merger or
Consolidation (as defined in Section 5.2) to the rights provided by Section 5.2
of this Paragraph 10.
4.4 Notice. Written notice of any voluntary or involuntary
------
liquidation, dissolution or winding up of the Corporation, stating the payment
date or dates when, and the place or places where, the amounts distributable to
the holders of shares of Series A Preferred Stock in such circumstances shall be
payable, shall be given by hand delivery, by courier, by standard form of
telecommunication or by first-class mail (postage prepaid), delivered, sent or
mailed as the case may be, not less than twenty (20) days prior to the payment
date stated in that notice, to each holder of shares of Series A Preferred
Stock, at the address shown for such holder on the books of the Corporation.
Section 5. Conversion into Common Stock.
----------------------------
5.1 Mandatory Conversion. Unless earlier called for redemption in
--------------------
accordance with the provisions hereof, on March 1, 1995 (the "Mandatory
Conversion Date"), all outstanding shares of Series A Preferred Stock shall be
converted automatically into, through the issue thereof by the Corporation in
the manner provided hereinafter, fully paid and non-assessable shares of Common
Stock. On such date, each holder of shares of Series A Preferred Stock, upon
conversion of the Series A Preferred Stock, shall receive (i) the number of
shares of Common Stock equal to the product of the Common Equivalent Rate in
effect on the Mandatory Conversion Date, multiplied by the number of shares of
Series A Preferred Stock owned by such holder and (ii) an amount in cash equal
to all accrued and unpaid dividends on such shares of Series A Preferred Stock
to and including the Mandatory Conversion Date, whether or not earned or
declared, out of funds legally available therefor (and dividends shall cease to
accrue as of the Mandatory Conversion Date).
5.2 Upon Certain Mergers or Consolidations or Other Events. Upon
------------------------------------------------------
either (a) immediately prior to the effectiveness of a merger or consolidation
of the Corporation that results in the conversion or exchange of the Common
Stock into, or results in holders of the Common Stock having the right to
receive, other securities or other property (whether of the Corporation or any
other entity) (any such merger or consolidation is referred to herein as a
"Merger or Consolidation"), or (b) immediately prior to the close of business on
the Business Day immediately preceding the Distribution Date (the occurrence of
the Distribution Date is referred to herein as the "Distribution Date Event"),
then, in either event each outstanding share of Series A Preferred Stock shall
be converted automatically into (i) one share of Common Stock multiplied by the
Common Equivalent Rate in effect on the effective date of a Merger or
Consolidation or on such Business Day immediately preceding the Distribution
Date, as the case may be; plus (ii) the right to receive an amount of cash equal
to all accrued and unpaid dividends on such
<PAGE>
share of Series A Preferred Stock to and including the Settlement Date (and
dividends shall cease to accrue as of the Settlement Date); plus (iii) the right
to receive an amount of cash initially equal to $4.32, declining by $.003861 on
each day from and including January 23, 1992 (computed on the basis of a 360-day
year of twelve 30-day months) to $.23 on January 1, 1995, and equal to zero
thereafter, in each case determined with reference to the Settlement Date,
unless sooner redeemed. At the option of the Corporation, it may deliver on the
Settlement Date, in lieu of the cash amounts described in clauses (ii) and
(iii), a number of shares of Common Stock equal to one times a fraction, the
numerator of which is the aggregate of the cash amounts described in such
clauses (ii) and (iii) and the denominator of which is the Current Market Price
of the Common Stock determined, in the case of a Merger or Consolidation, as of
the second Trading Date immediately preceding the Notice Date, and in the case
of a Distribution Date Event, as of the second Trading Date immediately
preceding the Distribution Date. Such option may be exercised by the Corporation
with respect to any or all the outstanding shares of Series A Preferred Stock,
but if for less than all, then the shares as to which such option is so
exercised shall be selected by lot or pro rata (as nearly as may be) or by any
other method determined by the Board of Directors of the Corporation in its sole
discretion to be equitable.
5.3 Procedure for Issuance of Common Stock Certificates. Upon
---------------------------------------------------
surrender of a certificate representing a share or shares of Series A Preferred
Stock for conversion, the Corporation shall issue and send by hand delivery, by
courier or by first class mail (postage prepaid) to the holder thereof or to
such holder's designee, at the address designated by such holder, a certificate
or certificates for the number of shares of Common Stock to which such holder
shall be entitled upon conversion.
5.4 Effective Date of Common Stock Issued Upon Conversion. The
-----------------------------------------------------
issuance by the Corporation of shares of Common Stock upon any conversion
thereof shall be effective as of the Mandatory Conversion Date, in the case of
conversion pursuant to Section 5.1, as of the time immediately before the
effective time of a Merger or Consolidation, in the case of conversion pursuant
to clause (a) of Section 5.2, or as of the Settlement Date, in the case of
conversion pursuant to clause (b) of Section 5.2. On and after the effective
date of any conversion, the person or persons entitled to receive the Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock (subject to the
provisions of the following sentence), but no allowance or adjustment shall be
made in respect of dividends payable to holders of Common Stock in respect of
any period prior to such effective date. Unless and until a certificate
representing a share or shares of Series A Preferred Stock shall have been
surrendered in the manner provided for in Section 5.3, dividends and other
distributions payable on the Common Stock after the expiration of 90 days
following the conversion of such share or shares to Common Stock shall not be
paid to the record holder of such certificate, but there shall be paid to the
record holder of such certificate with respect to the share or shares of Common
Stock into which such share or shares of Series A Preferred Stock shall have
been converted (i) upon such surrender, the amount of the dividends or other
distributions which shall have become payable on such share or shares of Common
Stock after the expiration of 90 days following such conversion, but without
interest, and (ii) after such surrender, the amount of any dividends or other
distributions on the Common Stock with a record date prior to surrender and the
payment date of which shall be subsequent to surrender, such amount to be paid
on such payment date. The Corporation shall not be obligated to pay any
dividends that have been declared and are payable to holders of shares of Series
A Preferred Stock on a Preferential Dividend Payment Date if such Preferential
Dividend Payment Date for such dividend is subsequent to the effective date of
conversion of such shares.
5.5 Cash in Lieu of Fractional Shares. The Corporation shall not be
---------------------------------
obligated to deliver to any holder of Series A Preferred Stock any fractional
share of Common Stock issuable upon any conversion of such Series A Preferred
Stock, but in lieu thereof may make a cash payment equal to the proportionate
amount of the Current Market Price of a share of Common Stock determined, in any
case other than a Distribution Date Event, as of the second Trading Date
immediately preceding the relevant Notice Date and, in the case of a
Distribution Date Event, as of the second Trading Date immediately preceding the
Distribution Date.
5.6 Common Stock Reserves. The Corporation shall at all times reserve and
---------------------
keep available out of its authorized and unissued Common Stock, solely for
issuance upon the conversion of Series A Preferred Stock as herein provided,
free from any preemptive rights, such number of shares of Common Stock as shall
from time to time be issuable upon the conversion of all the Series A Preferred
Stock then outstanding in accordance with this
<PAGE>
Section 5. The Corporation shall prepare and shall use its best efforts to
obtain and keep in force such governmental or regulatory permits or other
authorizations as may be required by law, and shall comply with all requirements
as to registration or qualification of the Common Stock, in order to enable the
Corporation lawfully to issue and deliver to each holder of record of Series A
Preferred Stock such number of shares of its Common Stock as shall from time to
time be sufficient to effect the conversion of all Series A Preferred Stock then
outstanding and convertible into shares of Common Stock in accordance with this
Section 5.
5.7 Notice of Conversion. Unless otherwise required by law, notice of
--------------------
any conversion other than the Mandatory Conversion shall be sent to each holder
of Series A Preferred Stock at the address shown for such holder on the books of
the Corporation by first-class mail (postage pre-paid) mailed not less than
thirty (30) days nor more than sixty (60) days prior to the Settlement Date;
provided, however, that if the timing of the effectiveness of a Merger or
- - -------- -------
Consolidation or the Distribution Date makes it impossible to provide at least
30 days notice, the Corporation shall provide such notice as soon as practicable
prior to such effectiveness or the Distribution Date. Such notice shall specify
whether the Corporation is exercising any option to deliver shares of Common
Stock in lieu of cash and, if so, the Current Market Price (or, if the relevant
Current Market Price is not available at the time such notice is sent, the
manner in which such Current Market Price will be determined) to be used to
calculate the number of such shares.
Section 6. Redemption.
----------
6.1 Right to Call for Redemption. At any time and from time to time
----------------------------
prior to the Mandatory Conversion Date, the Corporation shall have the right to
call, in whole or in part, the outstanding shares of Series A Preferred Stock
for redemption (subject to the notice provisions set forth in Section 6.5).
Upon such call, the Corporation shall deliver to the holders thereof in exchange
for each such share, called for redemption, (a) a number of shares of Common
Stock equal to one times a fraction, the numerator of which is the Call Price on
the redemption date and the denominator of which is the Current Market Price of
the Common Stock determined as of the second Trading Date immediately preceding
the Notice Date, and (b) an amount in cash equal to all accrued and unpaid
dividends on each such share of Series A Preferred Stock to the redemption date.
If fewer than all the outstanding shares of Series A Preferred Stock are to be
called, the shares of Series A Preferred Stock to be called shall be selected by
the Corporation from the outstanding shares of Series A Preferred Stock not
previously called by lot or pro rata (as nearly as may be) or by any other
method determined by the Board of Directors of the Corporation in its sole
discretion to be equitable.
6.2 Dividends on Shares Called for Redemption. From and after the date
-----------------------------------------
fixed for redemption, dividends on shares of Series A Preferred Stock called for
redemption will cease to accrue, such shares of Series A Preferred Stock will no
longer be deemed to be outstanding, and all rights in respect of such shares
Series A Preferred Stock shall cease, except the right to receive the redemption
price.
6.3 Cash in Lieu of Fractional Shares. The Corporation shall not be
---------------------------------
obligated to deliver to any holder of Series A Preferred Stock any fractional
share of Common Stock issuable upon any redemption of such Series A Preferred
Stock, but in lieu thereof may make a cash payment equal to the proportionate
amount of the Current Market Price of a share of Common Stock determined as of
the second Trading Date immediately preceding the Notice Date.
6.4 Effective Date of Common Stock Issued Upon Redemption. The issuance by
-----------------------------------------------------
the Corporation of shares of Common Stock upon redemption in accordance with
this Section 6 shall be deemed to be effective as of the date fixed for
redemption. On and after the effective date of any redemption the person or
persons entitled to receive the Common Stock issuable upon such redemption shall
be treated for all purposes as the record holder or holders of such shares of
Common Stock (subject to the provisions of the following sentence), but no
allowance or adjustment shall be made in respect of dividends payable to holders
of Common Stock in respect of any period prior to such effective date. Unless
and until a certificate representing a share or shares of Series A Preferred
Stock shall have been surrendered in the manner provided for in Section 6.5,
dividends and other distributions payable on the Common Stock after the
expiration of 90 days following the redemption of such share or shares shall not
be paid to the record holder of such certificate, but there shall be paid to the
record holder of such certificate with respect to
<PAGE>
the share or shares of Common Stock to be exchanged for such redeemed share or
shares of Series A Preferred Stock (i) upon such surrender, the amount of
dividends or other distributions which shall have become payable on such shares
of Common Stock after the expiration of 90 days following redemption, but
without interest, and (ii) after such surrender, the amount of any dividends or
other distributions on the Common Stock with a record date prior to surrender
and the payment date of which shall be subsequent to surrender, such amount to
be paid on such payment date.
6.5 Notice of Redemption. Unless otherwise required by law, notice of
--------------------
redemption shall be sent to each holder of Series A Preferred Stock at the
address shown on the books of the Corporation by first class mail (postage pre-
paid) mailed not less than thirty (30) days nor more than sixty (60) days prior
to the redemption date. Each such notice shall state: (i) the redemption date;
(ii) the total number of shares of Series A Preferred Stock to be redeemed and,
if fewer than all the shares held by such holder are to be redeemed, the number
of such shares of Series A Preferred Stock to be redeemed from such holder;
(iii) the Call Price; and (iv) that dividends on the Series A Preferred Stock to
be redeemed will cease to accrue on such redemption date. Upon surrender of the
certificate for any shares of Series A Preferred Stock so called for redemption
and not previously converted (properly endorsed or assigned for transfer, if the
notice shall so state), such shares shall be redeemed by the Corporation at the
date fixed for redemption and at the redemption price set forth in this Section
6.
Section 7. Anti-dilution Adjustments.
-------------------------
7.1 Common Equivalent Rate; Adjustments. The Common Equivalent Rate to be
-----------------------------------
used to determine the number of shares of Common Stock to be delivered on the
conversion of Series A Preferred Stock into shares of Common Stock pursuant to
Section 5 shall be initially one share of Common Stock for one share of Series A
Preferred Stock; provided, however, that the Common Equivalent Rate shall be
-------- -------
subject to adjustment from time to time as provided in this Section 7.1. All
adjustments to the Common Equivalent Rate shall be calculated to the nearest
1/100th of a share of Common Stock (or if there is not a nearest 1/100th of a
share, to the next lower 1/100th of a share).
(i) If the Corporation shall:
(1) pay a dividend or make a distribution with respect to the Common
Stock in shares of the Common Stock,
(2) subdivide or split its outstanding shares of the Common Stock,
(3) combine its outstanding shares of the Common Stock into a smaller
number of shares, or
(4) issue by reclassification of its shares of the Common Stock any
shares of common stock of the Corporation, then, in any such event, the
Common Equivalent Rate in effect immediately prior thereto shall be
adjusted so that the holder of a share of the Series A Preferred Stock
shall be entitled to receive on the conversion of such share of the Series
A Preferred Stock, the number of shares of the Common Stock which such
holder would have owned or been entitled to receive after the happening of
any of the events described above in this clause (i) had such share of the
Series A Preferred Stock been surrendered for conversion at the Common
Equivalent Rate in effect immediately prior to such time. Such adjustment
shall become effective at the opening of business on the Business Day next
following the record date for determination of stockholders entitled to
receive such dividend or distribution in the case of a dividend or
distribution and shall become effective immediately after the effective
date in case of a subdivision, split, combination or reclassification. Any
shares of the Common Stock issuable in payment of a dividend shall be
deemed to have been issued immediately prior to the close of business on
the record date for such dividend for purposes of calculating the number of
outstanding shares of the Common Stock under clauses (ii) and (iii) below.
<PAGE>
(ii) If the Corporation shall distribute rights or warrants to all
holders of the Common Stock entitling them (for a period not exceeding 45
days from the date of such issuance) to subscribe for or purchase shares of
the Common Stock at a price per share less than the Current Market Price
per share of the Common Stock on the record date for the determination of
stockholders entitled to receive such rights or warrants, then in each case
the Common Equivalent Rate shall be adjusted by multiplying the Common
Equivalent Rate in effect immediately prior thereto by a fraction, of which
the numerator shall be the number of shares of the Common Stock outstanding
on the date of distribution of such rights or warrants, immediately prior
to such distribution, plus the number of additional shares of the Common
Stock offered for subscription or purchase, and of which the denominator
shall be the number of shares of the Common Stock outstanding on the date
of distribution of such rights or warrants, immediately prior to such
distribution, plus the number of shares which the aggregate offering price
of the total number of shares so offered for subscription or purchase would
purchase at such Current Market Price (determined by multiplying such total
number of shares by the exercise price of such rights or warrants and
dividing the product so obtained by such Current Market Price). Shares of
the Common Stock owned by the Corporation or by another company of which a
majority of the shares entitled to vote in the election of directors are
held, directly or indirectly, by the Corporation shall not be deemed to be
outstanding for purposes of such computation. Such adjustment shall become
effective at the opening of business on the Business Day next following
the record date for the determination of stockholders entitled to receive
such rights or warrants. To the extent that shares of the Common Stock are
not delivered after the expiration of such rights or warrants, the Common
Equivalent Rate shall be readjusted to the Common Equivalent Rate which
would then be in effect had the adjustments made upon the distribution of
such rights or warrants been made upon the basis of delivery of only the
number of shares of the Common Stock actually delivered.
(iii) If the Corporation shall pay a dividend or make a distribution
to all holders of the Common Stock of evidence of its indebtedness or other
assets (including shares of capital stock of the Corporation but excluding
any cash dividends or distributions and dividends referred to in clause (i)
above), or shall distribute to all holders of the Common Stock rights or
warrants to subscribe for or purchase securities of the Corporation or any
of its subsidiaries (other than those referred to clause (ii) above), then
in each such case the Common Equivalent Rate shall be adjusted by
multiplying the Common Equivalent Rate in effect immediately prior to the
date of such distribution by a fraction, of which the numerator shall be
the Current Market Price per share of the Common Stock on the record date
mentioned below, and of which the denominator shall be such Current Market
Price per share of the Common Stock less the fair market value (as
determined by the Board of Directors of the Corporation, whose
determination shall be conclusive) as of such record date of the portion of
the evidence of the indebtedness or other assets so distributed, or of such
rights or warrants, applicable to one share of the Common Stock. Such
adjustment shall become effective on the opening of business on the
Business Day next following the record date for the determination of
stockholders entitled to receive such distribution.
(iv) Anything in this Section 7.1 notwithstanding, the Corporation
shall be entitled to make such upward adjustments in the Common Equivalent
Rate, in addition to those required by this Section 7.1, as the Corporation
in its discretion shall determine to be advisable, so that any stock
dividends, subdivision of shares, distribution of rights to purchase stock
or securities, or distribution of securities convertible into or
exchangeable for stock (or any transaction which could be treated as any of
the foregoing transactions pursuant to Section 305 of the Internal Revenue
Code of 1986, as amended) hereafter made by the Corporation to its
stockholders will not be taxable.
(v) In any case in which this Section 7.1 shall require that an
adjustment as a result of any event become effective at the opening of
business on the Business Day next following a record date and the date
fixed for conversion pursuant to Section 5.1 or Section 5.2 occurs after
such record date, but before the occurrence of such event, the Corporation
may in its sole discretion elect to defer the following until after the
occurrence of such event:
<PAGE>
(1) issuing to the holder of any shares of the Series A Preferred
Stock surrendered for conversion the additional shares of the Common Stock
issuable upon such conversion over and above the shares of the Common Stock
issuable upon such conversion on the basis of the Common Equivalent Rate
prior to adjustment; and
(2) paying to such holder any amount in cash in lieu of a fractional
share of the Common Stock pursuant to Section 5.5.
7.2 Notice of Adjustments. Whenever the Common Equivalent Rate is
---------------------
adjusted as herein provided, the Corporation shall (i) forthwith compute the
adjusted Common Equivalent Rate in accordance with Section 7.1 and prepare a
certificate signed by the Chief Executive Officer, the Chairman, the President,
any Vice President or the Treasurer of the Corporation setting forth the
adjusted Common Equivalent Rate, the method of calculation thereof in reasonable
detail and the facts requiring such adjustment and upon which such adjustment is
based, and file such certificate forthwith with the transfer agent or agents for
the Series A Preferred Stock and the Common Stock; and (ii) mail a notice
stating that the Common Equivalent Rate has been adjusted, the facts requiring
such adjustment and upon which such adjustment is based and setting forth the
adjusted Common Equivalent Rate to the holders of the outstanding shares of the
Series A Preferred Stock at or prior to the time the Corporation mails an
interim statement to its stockholders covering the quarterly period during which
the facts requiring such adjustment occurred, but in any event within 45 days of
the end of such quarterly period.
Section 8. Definitions.
-----------
8.1 Definitions to Apply. For purposes of this Paragraph 10, the
--------------------
following definitions shall apply:
"Business Day" shall mean each day that is not a Saturday, Sunday or a day
on which state or federally chartered banking institutions in New York, New York
are not required to be open.
"Call Price" shall mean the per share price for the Series A Preferred
Stock, which shall be initially $58.27, declining by $.003861 on each day from
and including January 23, 1992 (computed on the basis of a 360-day year of
twelve 30-day months) to $54.18 on January 1, 1995 and equal to $53.95
thereafter, if not sooner redeemed.
"Closing Price" on any day shall mean the closing sale price regular way on
such day or, in case no such sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in each case on the New York
Stock Exchange, or, if the Common Stock is not listed or admitted to trading on
such Exchange, on the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or, if not listed or admitted to trading
on any national securities exchange, the average of the closing bid and asked
prices of the Common Stock on the over-the- counter market on the day in
question as reported by the National Quotation Bureau Incorporated, or a
similarly generally accepted reporting service, or if not so available in such
manner as furnished by any New York Stock Exchange member firm selected from
time to time by the Board of Directors of the Corporation for that purpose.
"Common Equivalent Rate" shall mean a ratio initially equal to one share of
Common Stock for one share of Series A Preferred Stock and subject thereafter to
adjustment as provided in Section 7.1.
"Common Stock" shall mean the Corporation's Common Stock, par value $1 per
share, as the same exists at the date of the issuance by the State Corporation
Commission of Virginia of a certificate of amendment with respect to Articles of
Amendment creating the Series A Preferred Stock, or any other class of stock
resulting from successive changes or reclassifications of such Common Stock
consisting solely of changes in par value, or from par value to no par value, or
from no par value to par value.
"Current Market Price" shall mean on any date of determination the average
of the Closing Prices of a share of the Common Stock for the five consecutive
Trading Dates ending on and including such date of determination (appropriately
adjusted to take into account the occurrence during such five day period of any
event that results in an adjustment of the Common Equivalent Rate); provided,
however, that if the Closing Price for the
<PAGE>
Trading Date next following such five-day period (the "next-day closing price")
is less than 95% of such average, then the Current Market Price per share of
Common Stock on such date of determination will be the next-day closing price;
and provided, further, that if any adjustment of the Common Equivalent Rate
becomes effective as of any date during the period beginning on the first day of
such five-day period and ending on the date on which shares of the Series A
Preferred Stock are to be redeemed or converted, then the Current Market Price
as determined pursuant to the foregoing will be properly adjusted to reflect
such adjustment.
"Distribution Date" shall have the meaning set forth in the Rights
Agreement dated as of February 27, 1986, between the Corporation and
Manufacturers Hanover Trust, as Rights Agent, as the same may be further
amended, modified or supplemented (the "Rights Agreement").
"Notice Date" with respect to any notice given by the Corporation in
connection with a redemption or conversion of any of the Series A Preferred
Stock shall be the date of the commencement of the mailing of such notice to the
holders of such Series A Preferred Stock.
"Settlement Date" shall mean the following: with respect to a Distribution
Date Event, the Business Day immediately preceding the Distribution Date, and
with respect to a Merger or Consolidation, the Business Day on which the
effective time of the Merger or Consolidation occurs.
"Trading Date" shall mean a date on which the New York Stock Exchange (or
any successor to such Exchange) is open for the transaction of business.
Section 9. Ranking; Retirement of Shares; Increase in Shares.
-------------------------------------------------
9.1 Ranking. The Series A Preferred Stock shall rank senior to the
-------
Common Stock as to the payment of dividends and the distribution of assets on
liquidation, dissolution and winding up of the Corporation, and, unless
otherwise provided in the Articles of Incorporation of the Corporation, as the
same may be amended, or in Articles of Amendment relating to a subsequent series
of Preferred Stock, par value $1 per share, of the Corporation, the Series A
Preferred Stock shall rank on a parity with all other series of the
Corporation's Preferred Stock, par value $1 per share, as to the payment of
dividends or other distributions and the distribution of assets on liquidation,
dissolution or winding up.
9.2 Retirement. Any Series A Preferred Stock acquired by the Corporation
----------
by reason of the conversion or redemption of such shares as provided by this
Paragraph 10, or otherwise so acquired, shall be retired as Series A Preferred
Stock and restored to the status of authorized but unissued shares of Preferred
Stock, par value $1 per share, of the Corporation, undesignated as to series,
and may thereafter be reissued as part of a new series of such Preferred Shares
as permitted by law.
9.3 Increase in Shares. The number of shares of Series A Preferred Stock
------------------
may, to the extent of the Corporation's authorized and unissued Preferred Stock,
be increased by further resolution duly adopted by the Board of Directors and
the filing of an amendment to the Articles of Incorporation of the Corporation.
Section 10. Miscellaneous.
-------------
10.1 Notices. All notices referred to herein referred to herein shall
-------
be in writing, and all notices hereunder shall be deemed to have been given upon
the earlier of delivery thereof if by hand delivery, by courier or by standard
form of telecommunication or three (3) business days after the mailing thereof
if sent by registered mail (unless first-class mail shall be specifically
permitted for such notice under the terms of this Paragraph 10) with postage
prepaid, addressed: (i) if to the Corporation, to its office at 120 Long Ridge
Road, Stamford, Connecticut 06904-1355 (Attention: Corporate Secretary) or
other agent of the Corporation designated as permitted by this Paragraph 10 or
(ii) if to the holder of the Series A Preferred Stock or Common Stock, as the
case may be, to such holder at the address of such holder as listed in the stock
record books of the Corporation (which may include the records of any transfer
agent for the Series A Preferred Stock or Common Stock), or (iii) to such other
address as the Corporation or any such holder, as the case may be, shall have
designated by notice similarly given.
<PAGE>
10.2 Taxes. The Corporation shall pay any and all stock transfer and
-----
documentary stamp taxes that may be payable in respect of any issuance or
delivery of Series A Preferred Stock or shares of Common Stock or other
securities issued on account of Series A Preferred Stock pursuant hereto or
certificates representing such shares or securities. The Corporation shall not,
however, be required to pay any such tax that may be payable in respect of any
transfer involved in the issuance or delivery of Series A Preferred Stock or
Common Stock or other securities in a name other than that in which the Series A
Preferred Stock with respect to which such shares or other securities are issued
or delivered were registered, or in respect of any payment to any person with
respect to any such shares or securities other than a payment, to the registered
holder thereof, and shall not be required to make any such issuance, delivery or
payment unless and until the person otherwise entitled to such issuance,
delivery or payment has paid to the Corporation the amount of any such tax or
has established, to the satisfaction of the Corporation, that such tax has been
paid or is not payable.
10.3 Designations. In the event that a holder of Series A Preferred Stock
------------
shall not by written notice designate the name in which shares of Common Stock
to be issued upon conversion of such shares should be registered or to whom
payment upon redemption of Series A Preferred Stock should be made or the
address to which the certificate or certificates representing such shares, or
such payment, should be sent, the Corporation shall be entitled to register such
shares, and make such payment, in the name of such holder of such Series A
Preferred Stock as shown on the records of the Corporation and to send the
certificate or certificates representing such shares, or such payment, to the
address of such holder as so shown on the records of the Corporation.
10.4 Payments. Unless otherwise provided in the Articles of
--------
Incorporation, as the same may be amended, of the Corporation, all payments in
the form of dividends, distributions on voluntary or involuntary dissolution,
liquidation or winding up or otherwise made upon the Series A Preferred Stock
and any other stock ranking on a parity with the Series A Preferred Stock, with
respect to such dividend or distribution shall be pro rata, so that amounts paid
per Series A Preferred Stock and such other stock shall in all cases bear to
each other the same ratio that the required dividends, distributions or
payments, as the case may be, then payable per share on the Series A Preferred
Stock and other such stock bear to each other."
THIRD: The amendment of the Articles of Incorporation was duly adopted by
the Board of Directors of the Corporation on January 13, 1992 without
shareholder action, which shareholder action was not required.
IN WITNESS WHEREOF, the undersigned has executed these Articles of Amendment
as of this 13th day of January, 1992.
OLIN CORPORATION
By /s/ E. McIntosh Cover
---------------------
Vice President
<PAGE>
CONFORMED COPY
ARTICLES OF AMENDMENT
OF
THE ARTICLES OF INCORPORATION
OF
OLIN CORPORATION
under Section 13.1-639 of the Virginia Stock Corporation Act
FIRST: The name of the Corporation is Olin Corporation.
SECOND: The amendment adopted is to add a new Paragraph 10 to
Article Fourth, to read as follows:
"10: Series A Participating Cumulative Preferred Stock. There is
hereby established a series of the Corporation's authorized Preferred Stock, to
be designated as the "Series A Participating Cumulative Preferred Stock, par
value $1 per share." The designation and number, and relative rights,
preferences and limitations of the Series A Participating Cumulative Preferred
Stock, insofar as not already fixed by any other provision of these Articles of
Incorporation, shall be as follows:
SECTION 1. Designation and Number of Shares. The shares of such
---------------------------------
series shall be designated as "Series A Participating Cumulative Preferred
Stock" (the "Series A Preferred Stock"), par value $1 per share. The number of
shares initially constituting the Series A Preferred Stock shall be 250,000;
provided, however, that, if more than a total of 250,000 shares of Series A
- - -------- -------
Preferred Stock shall be issuable upon the exercise of Rights (the "Rights")
issued pursuant to the Rights Agreement dated as of February 27, 1996, between
the Corporation and Chemical Mellon Shareholder Services, L.L.C., as Rights
Agent (the "Rights Agreement"), the Board of Directors of the Corporation,
pursuant to Section 13.1-639 of the Virginia Stock Corporation Act, shall direct
by resolution or resolutions that articles of amendment of the Articles of
Incorporation of the Corporation be properly executed and filed with the State
Corporation Commission of Virginia providing for the total number of shares of
Series A Preferred Stock authorized to be issued to be increased (to the extent
that the Articles of Incorporation then permit) to the largest number of whole
shares (rounded up to the nearest whole number) issuable upon exercise of such
Rights.
SECTION 2. Dividends or Distributions. (a) Subject to the prior and
---------------------------
superior rights of the holders of shares of any other series of Preferred Stock
or other class of capital stock of the Corporation ranking prior and superior to
the shares of Series A Preferred Stock with respect to dividends, the holders of
shares of the Series A Preferred Stock shall be entitled to receive, when, as
and if declared by the Board of Directors, out of the assets of the Corporation
legally available therefor, (i) quarterly dividends payable in cash on the last
day of each fiscal quarter in each year, or such other dates as the Board of
Directors of the Corporation shall approve (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 a
fraction of a share of Series A Preferred Stock, in the amount of $.01 per whole
share (rounded to the nearest cent), less the amount of all cash dividends
declared on the Series A Preferred Stock pursuant to the following clause (ii)
since the immediately preceding
<PAGE>
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock (the total of which shall not, in any event, be less
than zero) and (ii) dividends payable in cash on the payment date for each cash
dividend declared on the Common Stock in an amount per whole share (rounded to
the nearest cent) equal to the Formula Number (as hereinafter defined) then in
effect times the cash dividends then to be paid on each share of Common Stock.
In addition, if the Corporation shall pay any dividend or make any distribution
on the Common Stock payable in assets, securities or other forms of non-cash
consideration (other than dividends or distributions solely in shares of Common
Stock), then, in each such case, the Corporation shall simultaneously pay or
make on each outstanding whole share of Series A Preferred Stock a dividend or
distribution in like kind equal to the Formula Number then in effect times such
dividend or distribution on each share of the Common Stock. As used herein, the
"Formula Number" shall be 1,000; provided, however, that, if at any time after
-------- -------
February 27, 1996, the Corporation shall (x) declare or pay any dividend on the
Common Stock payable in shares of Common Stock or make any distribution on the
Common Stock in shares of Common Stock, (y) subdivide (by a stock split or
otherwise) the outstanding shares of Common Stock into a larger number of shares
of Common Stock or (z) combine (by a reverse stock split or otherwise) the
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, then, in each such event, the Formula Number shall be adjusted to a
number determined by multiplying the Formula Number in effect immediately prior
to such event by a fraction, the numerator of which is the number of shares of
Common Stock that are outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that are
outstanding immediately prior to such event (and rounding the result to the
nearest whole number); and provided further, that, if at any time after
-------- -------
February 27, 1996, the Corporation shall issue any shares of its capital
stock in a merger, reclassification, or change of the outstanding shares of
Common Stock, then, in each such event, the Formula Number shall be
appropriately adjusted to reflect such merger, reclassification or change so
that each share of Preferred Stock continues to be the economic equivalent of a
Formula Number of shares of Common Stock prior to such merger, reclassification
or change.
(b) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in Section 2(a) immediately prior to or at
the same time it declares a dividend or distribution on the Common Stock (other
than a dividend or distribution solely in shares of Common Stock); provided,
--------
however, that, in the event no dividend or distribution (other than a dividend
- - -------
or distribution in shares of Common Stock) 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 $.01 per
share on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a dividend or distribution declared thereon, which
record date shall be the same as the record date for any corresponding dividend
or distribution on the Common Stock.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from and after the Quarterly Dividend Payment
Date next preceding the date of original issue of such shares of Series A
Preferred Stock; provided, however, that dividends on such shares that are
-------- -------
originally issued after the record date for the determination of holders of
shares of Series A Preferred Stock entitled to receive a quarterly dividend and
on or prior to the next succeeding Quarterly Dividend Payment Date shall begin
to accrue and be cumulative from and after such Quarterly Dividend Payment Date.
Notwithstanding the foregoing, dividends on shares of Series A Preferred Stock
that are originally issued prior to the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a quarterly
dividend on the first Quarterly Dividend Payment Date shall be calculated as if
cumulative from and after the last day of the fiscal quarter next preceding the
date of original issuance of such shares. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such
<PAGE>
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.
(d) So long as any shares of the Series A Preferred Stock are
outstanding, no dividends or other distributions shall be declared, paid or
distributed, or set aside for payment or distribution, on the Common Stock,
unless, in each case, the dividend required by this Section 2 to be declared on
the Series A Preferred Stock shall have been declared.
(e) The holders of the shares of Series A Preferred Stock shall not
be entitled to receive any dividends or other distributions, except as provided
herein.
SECTION 3. Voting Rights. The holders of shares of Series A
-------------
Preferred Stock shall have the following voting rights:
(a) Each holder of Series A Preferred Stock shall be entitled to a
number of votes equal to the Formula Number then in effect, for each share of
Series A Preferred Stock held of record on each matter on which holders of the
Common Stock or shareholders generally are entitled to vote, multiplied by the
maximum number of votes per share which any holder of the Common Stock or
shareholders generally then have with respect to such matter (assuming any
holding period or other requirement to vote a greater number of shares is
satisfied).
(b) Except as otherwise provided herein or by applicable law, the
holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock shall vote together as one class for the election of directors of
the Corporation and on all other matters submitted to a vote of shareholders of
the Corporation.
(c) If, at the time of any annual meeting of shareholders for the
election of directors, the equivalent of six quarterly dividends (whether or not
consecutive) payable on any share or shares of Series A Preferred Stock are in
default, the number of directors constituting the Board of Directors of the
Corporation shall be increased by two. In addition to voting together with the
holders of Common Stock for the election of other directors of the Corporation,
the holders of record of the Series A Preferred Stock, voting separately as a
class to the exclusion of the holders of Common Stock, shall be entitled at said
meeting of shareholders (and at each subsequent annual meeting of shareholders),
unless all dividends in arrears have been paid or declared and set apart for
payment prior thereto, to vote for the election of two directors of the
Corporation, the holders of any Series A Preferred Stock being entitled to cast
a number of votes per share of Series A Preferred Stock equal to the Formula
Number. Until the default in payments of all dividends that permitted the
election of said directors shall cease to exist, any director who shall have
been so elected pursuant to the next preceding sentence may be removed at any
time, either with or without cause, only by the affirmative vote of the holders
of the shares of Series A Preferred Stock at the time entitled to cast a
majority of the votes entitled to be cast for the election of any such director
at a special meeting of such holders called for that purpose, and any vacancy
thereby created may be filled by the vote of such holders. If and when such
default shall cease to exist, the holders of the Series A Preferred Stock shall
be divested of the foregoing special voting rights, subject to revesting in the
event of each and every subsequent like default in payments of dividends. Upon
the termination of the foregoing special voting rights, the terms of office of
all persons who may have been elected directors pursuant to said special voting
rights shall forthwith terminate, and the number of directors constituting the
Board of Directors shall be reduced by two. The voting rights granted by this
Section 3(c) shall be in addition to any other voting rights granted to the
holders of the Series A Preferred Stock in this Section 3.
<PAGE>
(d) Except as provided herein, in Section 11 or by applicable law,
holders of Series A 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 authorizing or taking
any corporate action.
SECTION 4. Certain Restrictions. (a) Whenever quarterly dividends
---------------------
or other dividends or distributions payable on the Series A 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 Preferred Stock outstanding shall have been paid in full, the Corporation
shall not
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) 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 Preferred Stock,
except dividends paid ratably on the Series A 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;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock;
provided that the Corporation may at any time redeem, purchase or otherwise
--------
acquire shares of any such parity stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with
the Series A 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 paragraph (a) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
SECTION 5. Liquidation Rights. Upon the liquidation, dissolution or
-------------------
winding up of the Corporation, whether voluntary or involuntary, no distribution
shall be made (a) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock, unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received an amount equal to the accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, plus an amount equal to the greater of (i) $.01 per whole share or
(ii) an aggregate amount per share equal to the Formula Number then in effect
times the aggregate amount to be distributed per share to holders of Common
Stock or (b) to the holders of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred Stock and all
other such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up.
<PAGE>
SECTION 6. 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 or any other property, then, in any such case, the then
outstanding shares of Series A Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share equal to the Formula
Number then in effect times the aggregate amount of stock, securities, cash or
any other property (payable in kind), as the case may be, into which or for
which each share of Common Stock is exchanged or changed. In the event both
this Section 6 and Section 2 appear to apply to a transaction, this Section 6
will control.
SECTION 7. No Redemption; No Sinking Fund. (a) The shares of Series
-------------------------------
A Preferred Stock shall not be subject to redemption by the Corporation or at
the option of any holder of Series A Preferred Stock; provided, however, that
-------- -------
the Corporation may purchase or otherwise acquire outstanding shares of Series A
Preferred Stock in the open market or by offer to any holder or holders of
shares of Series A Preferred Stock.
(b) The shares of Series A Preferred Stock shall not be subject to or
entitled to the operation of a retirement or sinking fund.
SECTION 8. Ranking. The Series A Preferred Stock shall rank junior
--------
to all other series of Preferred Stock of the Corporation, unless the Board of
Directors shall specifically determine otherwise in fixing the powers,
preferences and relative, participating, optional and other special rights of
the shares of such series and the qualifications, limitations and restrictions
thereof.
SECTION 9. Fractional Shares. The Series A Preferred Stock shall be
------------------
issuable upon exercise of the Rights issued pursuant to the Rights Agreement in
whole shares or in any fraction of a share that is one-thousandth (1/1,000) of a
share or any integral multiple of such fraction which shall entitle the holder,
in proportion to such holder's fractional shares, to receive dividends, exercise
voting rights, participate in distributions and have the benefit of all other
rights of holders of Series A Preferred Stock. In lieu of fractional shares,
the Corporation, prior to the first issuance of a share or a fraction of a share
of Series A Preferred Stock, may elect (a) to make a cash payment as provided in
the Rights Agreement for fractions of a share other than one-thousandth
(1/1,000) of a share or any integral multiple thereof or (b) to issue depository
receipts evidencing such authorized fraction of a share of Series A Preferred
Stock pursuant to an appropriate agreement between the Corporation and a
depository selected by the Corporation; provided that such agreement shall
--------
provide that the holders of such depository receipts shall have all the rights,
privileges and preferences to which they are entitled as holders of the Series A
Preferred Stock.
SECTION 10. Reacquired Shares. Any shares of Series A Preferred
------------------
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock, par value $1 per share, of the Corporation,
undesignated as to series, and may thereafter be reissued as part of a new
series of such Preferred Shares as permitted by law.
SECTION 11. Amendment. None of the powers, preferences and relative,
----------
participating, optional and other special rights of the Series A Preferred Stock
as provided herein or in the Articles of Incorporation shall be amended in any
manner that would alter or change the powers, preferences, rights or privileges
of the holders of Series A Preferred Stock so as to affect such holders
adversely without the affirmative vote of the holders of at least 66-2/3% of the
outstanding shares of Series A Preferred Stock, voting as a separate class;
provided, however, that no such amendment approved by the holders of at least
- - -------- -------
66-2/3% of the outstanding shares of Series A Preferred Stock shall be deemed to
apply to the powers, preferences, rights or privileges of any
<PAGE>
holder of shares of Series A Preferred Stock originally issued upon exercise of
a Right after the time of such approval without the approval of such holder.
THIRD: This amendment of the Articles of Incorporation was duly
adopted by the Board of Directors of the Corporation on January 25, 1996,
without shareholder action, which shareholder action was not required.
FOURTH: All shares of the Corporation's Series A Conversion Preferred
Stock previously outstanding have been converted and are no longer outstanding.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment as of this 27th day of February, 1996.
OLIN CORPORATION
by
/s/Johnnie M. Jackson, Jr.
--------------------------------
Name: Johnnie M. Jackson, Jr.
Title: Vice President, General
Counsel and Secretary
<PAGE>
ARTICLES OF AMENDMENT OF
THE
RESTATED ARTICLES OF INCORPORATION
OF
OLIN CORPORATION
I.
The name of the corporation is Olin Corporation (the "Corporation").
II.
The first sentence of Article Fourth of the Corporation's Restated Articles
of Incorporation is amended and restated to provide as follows:
FOURTH: The aggregate number of shares that the Corporation
shall have authority to issue shall be 10,000,000 shares of
Preferred Stock, par value $1 per share (hereinafter called
Preferred Stock), and 120,000,000 shares of Common Stock, par
value $1 per share (hereinafter called Common Stock).
III.
The foregoing amendment (the "Amendment") was proposed by the Corporation's
Board of Directors and submitted to the shareholders of the Corporation, who
approved the Amendment at a meeting held on April 24, 1997, in accordance with
the Virginia Stock Corporation Act.
IV.
Holders of shares of Common Stock of the Corporation were eligible to vote
on the adoption of the Amendment. On the record date for the meeting of
shareholders, 52,082,729 shares of Common Stock of the Corporation were
outstanding. Of those shares, 44,863,862 shares were voted for the Amendment,
3,244,282 shares were voted against the Amendment and 473,458 shares abstained.
The number of shares of Common Stock voted for the Amendment was sufficient to
approve the Amendment.
The undersigned Vice President, General Counsel and Secretary of the
Corporation declares that the facts herein stated are true as of April 29, 1997.
OLIN CORPORATION
By: /s/ Johnnie M. Jackson, Jr.
---------------------------------
Name: Johnnie M. Jackson, Jr.
Title: Vice President, General
Counsel and Secretary
<PAGE>
Exhibit 11
<TABLE>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Computation of Per Share Earnings (Unaudited)
(In millions, except per share data)
<CAPTION>
Three Months
Ended March 31,
--------------
1997 1996
---- ----
<S> <C> <C>
Primary earnings per share
- --------------------------
Primary earnings:
Continuing operations:
Income from continuing operations $41.8 $50.7
Less ESOP preferred dividend, net of tax benefit - (1.6)
---- ----
Income from continuing operations $41.8 $49.1
===== =====
Loss from discontinued operations $ - $(5.7)
===== =====
Primary shares:
Weighted average shares outstanding 51.9 49.6
===== =====
Primary earnings (loss) per share:
Continuing operations $0.81 $0.99
Discontinued operations - (0.12)
---- ----
Total $0.81 $0.87
===== =====
Fully diluted earnings per share
- --------------------------------
Fully diluted earnings:
Income from continuing operations $41.8 $ 50.7
Less additional ESOP contribution - (0.8)
---- ----
Income from continuing operations $41.8 $49.9
===== =====
Loss from discontinued operations $ - $(5.7)
===== =====
Fully diluted shares:
Weighted average number of common
shares outstanding and common
stock equivalents 51.9 49.6
Dilutive effect of:
Stock options 0.3 0.3
ESOP preferred stock - 2.0
---- ----
Fully diluted shares 52.2 51.9
===== =====
Fully diluted earnings (loss) per share:
Continuing operations $0.80 $0.96
Discontinued operations - (0.11)
---- ----
Total $0.80 $0.85
===== =====
</TABLE>
<PAGE>
Exhibit 12
<TABLE>
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges (Unaudited)
(In millions)
<CAPTION>
Three Months
Ended March 31,
---------------
1997 1996(a)
---- -------
<S> <C> <C>
Earnings:
Income from continuing operations before taxes $ 63.8 $ 76.5
Add (deduct):
Income taxes of 50% owned affiliates 0.7 0.6
Equity in income of less than 50%
owned affiliates (0.8) (0.5)
Interest capitalized, net of amortization (0.5) -
Fixed charges as described below 12.0 12.7
----- -----
Total $ 75.2 $ 89.3
===== =====
Fixed Charges:
Interest expense $ 8.1 $ 8.0
Estimated interest factor in rent expense 3.9 4.7
----- -----
Total $ 12.0 $ 12.7
===== =====
Ratio of earnings to fixed charges 6.3 7.0
=== ===
<FN>
(a) Computation of ratio of earnings to fixed charges has been restated to
reflect the spin-off of Primex Technologies, Inc.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Financial Statements contained in Item 1 of Form 10-Q for the period ended
March 31, 1997 and is qualified in its entirety by reference to such
financial statements. Figures are rounded to the nearest 100,000 (except EPS).
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 249,800
<SECURITIES> 87,900
<RECEIVABLES> 414,700
<ALLOWANCES> 0
<INVENTORY> 330,900
<CURRENT-ASSETS> 1,174,600
<PP&E> 2,199,600
<DEPRECIATION> (1,454,000)
<TOTAL-ASSETS> 2,163,100
<CURRENT-LIABILITIES> 670,300
<BONDS> 276,300
0
0
<COMMON> 51,300
<OTHER-SE> 881,600
<TOTAL-LIABILITY-AND-EQUITY> 2,163,100
<SALES> 591,200
<TOTAL-REVENUES> 591,200
<CGS> 449,900
<TOTAL-COSTS> 449,900
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,500
<INCOME-PRETAX> 63,800
<INCOME-TAX> 22,000
<INCOME-CONTINUING> 41,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,800
<EPS-PRIMARY> 0.81
<EPS-DILUTED> 0.80
</TABLE>
