SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 10-Q
________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
________________
For the quarterly period ended June 30, 1995
Commission file number 1-1196
________________
ATLANTIC RICHFIELD COMPANY
(Exact name of registrant as specified in its charter)
_________________
Delaware 23-0371610
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
515 South Flower Street
Los Angeles, California 90071
(Address of principal executive offices) (Zip code)
__________________
(213) 486-3511
(Registrant's telephone number, including area code)
__________________
Not Applicable
(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 pre-ceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Number of shares of Common Stock, $2.50 par value, outstanding as of
June 30, 1995: 160,818,277.
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ATLANTIC RICHFIELD COMPANY AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
CONSOLIDATED STATEMENT OF INCOME
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
(Millions of dollars except 1995 1994 1995 1994
per share amounts) ---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Sales and other operating revenues,
including excise taxes . . . . . . $4,423 $4,174 $8,667 $7,974
Income from equity investments . . . 81 24 155 41
Interest . . . . . . . . . . . . . . 55 52 114 91
Other revenues . . . . . . . . . . . 126 87 206 156
----- ----- ----- -----
4,685 4,337 9,142 8,262
----- ----- ----- -----
Expenses
Trade purchases. . . . . . . . . . . 1,554 1,592 3,122 2,895
Operating expenses . . . . . . . . . 765 789 1,469 1,508
Selling, general and administrative
expenses . . . . . . . . . . . . . 436 429 838 824
Depreciation, depletion and
amortization . . . . . . . . . . . 407 414 819 835
Exploration expenses (including
undeveloped leasehold amortization) 105 91 195 195
Excise taxes . . . . . . . . . . . . 377 382 727 742
Taxes other than excise and income
taxes . . . . . . . . . . . . . . 195 184 389 368
Interest . . . . . . . . . . . . . . 197 187 400 371
Unusual items. . . . . . . . . . . . - 249 - 249
----- ----- ----- -----
4,036 4,317 7,959 7,987
----- ----- ----- -----
Income before income taxes and
minority interest. . . . . . . . . . 649 20 1,183 275
Provision (benefit) for taxes on
income . . . . . . . . . . . . . . . 227 (17) 412 80
Minority interest in earnings of
subsidiaries . . . . . . . . . . . . 31 13 58 22
----- ----- ----- -----
Net Income . . . . . . . . . . . . . . $ 391 $ 24 $ 713 $ 173
===== ===== ===== =====
Earned per Share . . . . . . . . . . . $ 2.39 $ 0.14 $ 4.36 $ 1.06
===== ===== ===== =====
Cash Dividends Paid per Share
of Common Stock. . . . . . . . . . . $1.375 $1.375 $ 2.75 $ 2.75
===== ===== ===== =====
</TABLE>
The accompanying notes are an integral part of these statements.
- 1 -
<PAGE>
<TABLE>
<CAPTION>
ATLANTIC RICHFIELD COMPANY
CONSOLIDATED BALANCE SHEET
June 30, December 31,
1995 1994
---- ----
(Millions)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents . . . . . . . . . . . $ 1,288 $ 1,394
Short-term investments. . . . . . . . . . . . . 2,254 2,991
Accounts receivable . . . . . . . . . . . . . . 1,488 1,446
Inventories . . . . . . . . . . . . . . . . . . 863 797
Prepaid expenses and other current assets . . . 370 185
------ ------
Total current assets. . . . . . . . . . . . . . 6,263 6,813
------ ------
Investments and long-term receivables:
Investments accounted for on the equity method. 472 348
Other investments and long-term receivables . . 306 297
------ ------
778 645
------ ------
Fixed assets:
Property, plant and equipment . . . . . . . . . 32,346 32,248
Less accumulated depreciation, depletion
and amortization . . . . . . . . . . . . . . . 16,699 16,526
------ ------
15,647 15,722
------ ------
Deferred charges and other assets . . . . . . . . 1,472 1,383
------ ------
Total assets. . . . . . . . . . . . . . . . . . . $24,160 $24,563
====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
- 2 -
<PAGE>
<TABLE>
<CAPTION>
ATLANTIC RICHFIELD COMPANY
CONSOLIDATED BALANCE SHEET
June 30, December 31,
1995 1994
---- ----
(Millions)
<S> <C> <C>
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable . . . . . . . . . . . . . . . . $ 1,203 $ 1,478
Accounts payable. . . . . . . . . . . . . . . 973 986
Long-term debt due within one year. . . . . . 684 630
Taxes payable, including excise taxes . . . . 285 253
Accrued interest. . . . . . . . . . . . . . . 191 183
Other . . . . . . . . . . . . . . . . . . . . 902 958
------ ------
Total current liabilities . . . . . . . . . . 4,238 4,488
------ ------
Long-term debt. . . . . . . . . . . . . . . . . 6,752 7,198
Deferred income taxes . . . . . . . . . . . . . 2,687 2,721
Other deferred liabilities and credits. . . . . 3,420 3,471
Minority interest . . . . . . . . . . . . . . . 453 407
Stockholders' equity:
Preference stocks . . . . . . . . . . . . . . 1 1
Common stock. . . . . . . . . . . . . . . . . 402 402
Capital in excess of par value of stock . . . 640 647
Retained earnings . . . . . . . . . . . . . . 5,612 5,342
Pension liability adjustment. . . . . . . . . (20) (20)
Net unrealized loss on investments. . . . . . (11) (38)
Foreign currency translation. . . . . . . . . (7) (51)
Treasury stock, at cost . . . . . . . . . . . (7) (5)
------ ------
Total stockholders' equity. . . . . . . . . . 6,610 6,278
------ ------
Total liabilities and stockholders' equity. . . $24,160 $24,563
====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
- 3 -
<PAGE>
<TABLE>
<CAPTION>
ATLANTIC RICHFIELD COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended
June 30,
----------------
1995 1994
---- ----
(Millions)
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . $ 713 $ 173
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization . . . . . . . 819 835
Dry hole expense and undeveloped leasehold amortization 92 96
Net gain on asset sales. . . . . . . . . . . . . . . . (11) -
Income from equity investments . . . . . . . . . . . . (155) (41)
Dividends from equity investments. . . . . . . . . . . 38 29
Noncash provisions greater (less) than cash payments . (205) 249
Deferred income taxes. . . . . . . . . . . . . . . . . 37 (135)
Changes in accounts receivable, inventories
and accounts payable . . . . . . . . . . . . . . . . (117) (128)
Changes in other working capital accounts. . . . . . . (134) (261)
Other. . . . . . . . . . . . . . . . . . . . . . . . . (22) (19)
----- -----
Net cash provided by operating activities. . . . . . 1,055 798
----- -----
Cash flows from investing activities:
Additions to fixed assets (including dry hole costs) . (752) (846)
Net cash provided by short-term investments. . . . . . 792 94
Proceeds from asset sales. . . . . . . . . . . . . . . 54 46
Payments received on notes from sale of assets . . . . - 48
Other. . . . . . . . . . . . . . . . . . . . . . . . . (73) 83
----- -----
Net cash provided (used) by investing activities . . 21 (575)
----- -----
Cash flows from financing activities:
Repayments of long-term debt . . . . . . . . . . . . . (573) (445)
Proceeds from issuance of long-term debt . . . . . . . 149 276
Net cash used by notes payable . . . . . . . . . . . . (283) (105)
Dividends paid . . . . . . . . . . . . . . . . . . . . (443) (442)
Treasury stock purchases . . . . . . . . . . . . . . . (24) -
Treasury stock contributed to benefit plans. . . . . . - 56
Other. . . . . . . . . . . . . . . . . . . . . . . . . (8) (19)
----- -----
Net cash used by financing activities. . . . . . . . (1,182) (679)
----- -----
Effect of exchange rate changes on cash. . . . . . . . . - 7
----- -----
Net decrease in cash and cash equivalents. . . . . . . . (106) (449)
Cash and cash equivalents at beginning of period . . . . 1,394 1,458
----- -----
Cash and cash equivalents at end of period . . . . . . . $1,288 $1,009
===== =====
</TABLE>
The accompanying notes are an integral part of these statements.
- 4 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
NOTE A. Basis of Presentation.
The foregoing financial information is unaudited and has been prepared
from the books and records of the Company. Certain previously reported
amounts have been restated to conform to classifications adopted in 1995.
In the opinion of the Company, the financial information reflects all
adjustments, consisting of normal recurring adjustments, necessary for a
fair presentation of the financial position and results of operations in
conformity with generally accepted accounting principles.
NOTE B. Restructuring Program.
During 1994, ARCO announced a restructuring program under which
approximately 2,400 positions were eliminated. The program covered all
operating units, excluding Lower 48 oil and gas operations, along with the
corporate headquarters. The Company accrued $347 million before tax
consisting primarily of personnel costs (pension enhancements, severance
and other ancillary costs) associated with the terminations. Approximately
$155 million of the $347 million related to severance and other ancillary
costs which will be paid from Company funds through 1996.
In 1993, ARCO announced a reorganization of its Lower 48 oil and gas
operations under which approximately 1,300 positions were eliminated. The
Company accrued $65 million related to severance and other ancillary costs.
Through June 30, 1995, approximately 3,000 employees have been
terminated under the two programs, and approximately $148 million of
severance and ancillary benefits have been paid and charged against the
accrual. Payments made do not necessarily correlate to the number of
terminations due to the ability of terminees to defer receipt of certain
payments.
NOTE C. Investments.
At June 30, 1995, investments were composed principally of U.S. Treasury
securities, corporate debt instruments, and municipal securities and were
principally included in cash equivalents or short-term investments
depending on their maturities, which generally ranged from one day to one
year. Investments in debt securities classified as held-to-maturity
("HTM") were recorded at amortized cost while investments in debt
securities classified as available-for-sale ("AFS") are reported at fair
value, with unrealized holding gains and losses, net of tax, reported in a
separate component of stockholders' equity.
The following summarizes investments in securities, principally debt
securities, at June 30, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
------------- --------------
Millions AFS HTM AFS HTM
--- --- --- ---
<S> <C> <C> <C> <C>
Aggregate fair value . . . . . . . . $1,900 $ 400 $1,300 $1,000
Gross unrealized holding losses. . . 24 - - -
Gross unrealized holding gains . . . 17 - - -
Amortized cost . . . . . . . . . . . 1,907 400 1,300 1,000
</TABLE>
- 5 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
For the three and six-month periods ended June 30, 1995 and 1994, gross
realized gains and losses on sales of AFS securities were insignificant.
For the three-month periods ended June 30, 1995 and 1994 proceeds from
sales of AFS securities were $600 million and $900 million, respectively.
For the six-month periods ended June 30, 1995 and 1994, proceeds from sales
of AFS securities were $1.4 billion and $3.0 billion, respectively. For
the six months ended June 30, 1995 and 1994, gross purchases, sales and
maturities were as follows:
<TABLE>
<CAPTION>
1995 1994
------------- -------------
Millions AFS HTM AFS HTM
--- --- --- ---
<S> <C> <C> <C> <C>
Gross purchases . . . . . . . . . . $1,700 $1,300 $3,300 $5,600
Gross sales . . . . . . . . . . . . 1,400 - 3,200 -
Gross maturities. . . . . . . . . . 300 2,100 30 6,100
</TABLE>
NOTE D. Inventories.
Inventories at June 30, 1995 and December 31, 1994 comprised the following:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---- ----
(Millions)
<S> <C> <C>
Crude oil and petroleum products. . . . . . . . . . $ 211 $ 172
Chemical products . . . . . . . . . . . . . . . . . 384 351
Other products. . . . . . . . . . . . . . . . . . . 34 46
Materials and supplies. . . . . . . . . . . . . . . 234 228
----- -----
Total. . . . . . . . . . . . . . . . . . . . . . $ 863 $ 797
===== =====
</TABLE>
NOTE E. Capital Stock.
Detail of the Company's capital stock was as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---- ----
(Thousands)
<S> <C> <C>
$3.00 Cumulative convertible preference
stock, par $1 . . . . . . . . . . . . . . . $ 70 $ 74
$2.80 Cumulative convertible preference
stock, par $1 . . . . . . . . . . . . . . . 764 795
Common stock, par $2.50 . . . . . . . . . . . 402,199 402,000
------- -------
Total. . . . . . . . . . . . . . . . . . . $403,033 $402,869
======= =======
</TABLE>
NOTE F. Capitalization of Interest.
Interest expense excluded capitalized interest of $13 million and $10
million, respectively, for the three-month periods ended June 30, 1995 and
1994, and $25 million and $17 million, respectively, for the six-month
periods ended June 30, 1995 and 1994.
- 6 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
NOTE G. Income Taxes.
Provision (benefit) for taxes on income:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1995 1994 1995 1994
---- ---- ---- ----
(Millions)
<S> <C> <C> <C> <C>
Federal:
Current . . . . . . . . . . . . . . . $ 133 $ 86 $ 273 $ 157
Deferred. . . . . . . . . . . . . . . 25 (88) 23 (103)
---- ---- ---- ----
158 (2) 296 54
---- ---- ---- ----
Foreign:
Current . . . . . . . . . . . . . . . 34 5 56 30
Deferred. . . . . . . . . . . . . . . 8 (15) 9 (9)
---- ---- ---- ----
42 (10) 65 21
---- ---- ---- ----
State:
Current . . . . . . . . . . . . . . . 19 18 46 28
Deferred. . . . . . . . . . . . . . . 8 (23) 5 (23)
---- ---- ---- ----
27 (5) 51 5
---- ---- ---- ----
Total . . . . . . . . . . . . . . $ 227 $ (17) $ 412 $ 80
==== ==== ==== ====
</TABLE>
- 7 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
Note G. Income Taxes (Continued).
Reconciliation of provision (benefit) for taxes on income with tax at
federal statutory rate:
<TABLE>
<CAPTION>
Three Months Ended
June 30,
------------------------------------
1995 1994
---------------- ----------------
Percent Percent
of of
Pretax Pretax
Amount Income Amount Income
------ ------- ------ -------
(Millions)
<S> <C> <C> <C> <C>
Income before income taxes and
minority interest. . . . . . . . . . $ 649 100.0 $ 20 100.0
===== ===== ===== =====
Tax at federal statutory rate. . . . . $ 227 35.0 $ 7 35.0
Increase (reduction) in taxes
resulting from:
Dividend exclusion . . . . . . . . . (19) (2.9) (3) (15.0)
Taxes on foreign income in
excess of statutory rate. . . . . . 23 3.5 21 105.0
Foreign deferred tax asset
recognition . . . . . . . . . . . . - - (26) (130.0)
State income taxes (net of
federal effect) . . . . . . . . . . 17 2.6 (4) (20.0)
Tax credits. . . . . . . . . . . . . (17) (2.6) (15) (75.0)
Other. . . . . . . . . . . . . . . . (4) (.6) 3 15.0
----- ----- ----- -----
Provision (benefit) for taxes on
income. . . . . . . . . . . . . . . . $ 227 35.0 $ (17) (85.0)
===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------------------
1995 1994
---------------- ----------------
Percent Percent
of of
Pretax Pretax
Amount Income Amount Income
------ ------- ------ -------
(Millions)
<S> <C> <C> <C> <C>
Income before income taxes and
minority interest. . . . . . . . . . $1,183 100.0 $ 275 100.0
===== ===== ===== =====
Tax at federal statutory rate. . . . . $ 414 35.0 $ 96 35.0
Increase (reduction) in taxes
resulting from:
Dividend exclusion . . . . . . . . (37) (3.1) (5) (1.8)
Taxes on foreign income in
excess of statutory rate . . . . . 39 3.3 46 16.7
Foreign deferred tax asset
recognition . . . . . . . . . . . - - (26) (9.5)
State income taxes (net of
federal effect). . . . . . . . . . 33 2.8 3 1.1
Tax credits . . . . . . . . . . . . (35) (3.0) (28) (10.2)
Other . . . . . . . . . . . . . . . (2) (.2) (6) (2.2)
----- ----- ----- -----
Provision for taxes on income. . . . . $ 412 34.8 $ 80 29.1
===== ===== ===== =====
</TABLE>
- 8 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
NOTE H. Earned Per Share.
Earned per share is based on the average number of common shares
outstanding during each period, including common stock equivalents that
consist of certain outstanding options and all outstanding convertible
securities.
The information necessary for the calculation of earned per share is as
follows:
<TABLE>
<CAPTION>
Three Months Ended
June 30,
------------------
1995 1994
---- ----
(Millions of Shares)
<S> <C> <C>
Average number of common shares outstanding. . . . . 160.8 160.4
Common stock equivalents . . . . . . . . . . . . . . 2.7 2.7
----- -----
Total . . . . . . . . . . . . . . . . . . . . . . 163.5 163.1
===== =====
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------
1995 1994
---- ----
(Millions of Shares)
<S> <C> <C>
Average number of common shares outstanding . . . . 160.8 160.3
Common stock equivalents. . . . . . . . . . . . . . 2.7 2.7
----- -----
Total. . . . . . . . . . . . . . . . . . . . . . 163.5 163.0
===== =====
</TABLE>
NOTE I. Supplemental Income Statement Information.
Taxes other than excise and income taxes comprised the following:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1995 1994 1995 1994
---- ---- ---- ----
(Millions)
<S> <C> <C> <C> <C>
Production/severance . . . . . . . . . $ 88 $ 76 $171 $142
Property . . . . . . . . . . . . . . . 45 46 93 96
Other. . . . . . . . . . . . . . . . . 62 62 125 130
--- --- --- ---
Total. . . . . . . . . . . . . . . . $195 $184 $389 $368
=== === === ===
</TABLE>
- 9 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
NOTE J. Supplemental Cash Flow Information.
Following is supplemental cash flow information for the six months ended
June 30, 1995 and 1994:
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------
1995 1994
---- ----
(Millions)
<S> <C> <C>
Gross sales and maturities of short-term
investments . . . . . . . . . . . . . . . . . . $ 2,524 $ 3,880
Gross purchases of short-term investments . . . . (1,732) (3,786)
------ ------
Net cash provided by short-term investments . . . $ 792 $ 94
====== ======
Gross proceeds from issuance of notes payable . . $ 4,670 $ 4,954
Gross repayments of notes payable . . . . . . . . (4,953) (5,059)
------ ------
Net cash used by notes payable. . . . . . . . . . $ (283) $ (105)
====== ======
Gross noncash provisions charged to income. . . . $ 212 $ 475
Cash payments of previously accrued items . . . . (417) (226)
------ ------
Noncash provisions greater (less) than cash
payments . . . . . . . . . . . . . . . . . . . $ (205) $ 249
====== ======
</TABLE>
Interest paid during the six-month periods ended June 30, 1995 and 1994
was $392 million and $373 million, respectively.
Income taxes paid during the six-month periods ended June 30, 1995 and
1994 were $475 million and $157 million, respectively.
- 10 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
NOTE K. Summarized Financial Information.
Summarized financial information for Lyondell Petrochemical Company
("Lyondell"), a company of which Atlantic Richfield owned a 49.9 percent
interest at June 30, 1995, was as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1995 1994 1995 1994
---- ---- ---- ----
(Millions)
<S> <C> <C> <C> <C>
Revenues (including sales to ARCO
and ARCO Chemical Company). . . $1,370 $ 900 $2,544 $1,724
Sales to ARCO and ARCO Chemical
Company . . . . . . . . . . . . 99 82 189 151
Operating income. . . . . . . . . 237 71 459 125
Net income. . . . . . . . . . . . 135 32 262 54
---------------------
ARCO's equity in net income of
Lyondell. . . . . . . . . . . . 67 16 131 27
Cash dividends received from
Lyondell. . . . . . . . . . . . 9 9 18 18
________________________
</TABLE>
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---- ----
(Millions)
<S> <C> <C>
Current assets. . . . . . . . . . . . . . . $ 802 $ 697
Noncurrent assets . . . . . . . . . . . . . 1,518 966
Current liabilities . . . . . . . . . . . . 814 433
Long-term debt. . . . . . . . . . . . . . . 588 707
Other liabilities . . . . . . . . . . . . . 208 192
Minority interest . . . . . . . . . . . . . 421 268
Stockholders' equity. . . . . . . . . . . . 289 63
</TABLE>
- 11 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
NOTE L. Other Commitments and Contingencies.
ARCO has commitments, including those related to the acquisition,
construction and development of facilities, all made in the normal course
of business.
At June 30, 1995 and December 31, 1994, there were contingent
liabilities primarily with respect to guarantees of securities of other
issuers of approximately $55 million and $75 million, respectively.
Following the March 1989 EXXON VALDEZ oil spill, Alyeska Pipeline
Service Company ("Alyeska") and Alyeska's owner companies were the subject
of numerous lawsuits by the State of Alaska, the United States and private
plaintiffs. ARCO Transportation Alaska, Inc. ("ATA") owns approximately 21
percent of Alyeska. Alyeska and its owner companies have settled the
federal and state claims and the lawsuits by private plaintiffs. Certain
issues relating to the liability for the spill remain unresolved between
the Exxon companies and Alyeska and its owner companies.
ARCO and former producers of lead pigments have been named as defendants
in cases filed by a municipal housing authority, a purported class and
several individuals seeking damages and injunctive relief as a consequence
of the presence of lead-based paint in certain housing units. ARCO is also
the subject or party to a number of other pending or threatened legal
actions.
In January 1995, the State of Montana presented to ARCO a revised demand
for damages of $635 million based on alleged injuries to natural resources
resulting from ARCO's mining and mineral processing businesses formerly
operated by Anaconda, ARCO's predecessor, in Montana. ARCO is contesting
the amount of this demand.
ARCO is subject to other loss contingencies pursuant to federal, state
and local environmental laws and regulations. These include possible
obligations to remove or mitigate the effects on the environment of the
disposal or release of certain chemical, mineral and petroleum substances
at various sites, including the restoration of natural resources located at
these sites and damages for loss of use and non-use values. ARCO is
currently participating in environmental assessments and cleanups under
these laws at federal Superfund and state-managed sites, as well as other
clean-up sites. ARCO may in the future be involved in additional
environmental assessments and cleanups, including the restoration of
natural resources and damages for loss of use and non-use values. The
amount of such future costs will depend on such factors as the unknown
nature and extent of contamination at many sites, the unknown timing,
extent and method of the remedial actions which may be required and the
determination of ARCO's liability in proportion to other responsible
parties. In addition, environmental loss contingencies include claims for
personal injuries allegedly caused by exposure to toxic materials
manufactured or used by ARCO.
ARCO continues to estimate the amount of these costs in periodically
establishing reserves based on progress made in determining the magnitude
of remediation costs, experience gained from sites on which remediation has
been completed, the timing and extent of remedial actions required by the
applicable governmental authorities and an evaluation of the amount of
ARCO's liability considered in light of the liability and financial where
withal of the other responsible parties. At June 30, 1995, the
environmental remediation reserve was $656 million. As the scope of ARCO's
obligations becomes more clearly defined, there may be changes in these
estimated costs, which might result in future charges against ARCO's
earnings.
- 12 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
NOTE L. Other Commitments and Contingencies (Continued).
ARCO's environmental remediation accrual covers federal Superfund and
state-managed sites as well as other clean-up sites, including service
stations, refineries, terminals, chemical facilities, third-party
landfills, former nuclear processing facilities, sites associated with
discontinued operations and sites formerly owned by ARCO. ARCO has been
named a potentially responsible party (PRP) for 126 sites. The number of
PRP sites in and of itself does not represent a relevant measure of
liability, because the nature and extent of environmental concerns varies
from site to site and ARCO's share of responsibility varies from sole
responsibility to very little responsibility. ARCO reviews all of the PRP
sites, along with other sites as to which no claims have been asserted, in
estimating the amount of the accrual. ARCO's future costs at these sites
could exceed the amount accrued by as much as $1 billion.
Approximately half of the accrual related to sites associated with
ARCO's discontinued operations, primarily mining activities in the states
of Montana, Utah and New Mexico. Another significant component related to
currently and formerly owned chemical, nuclear processing, and refining and
marketing facilities, and other sites which received wastes from these
facilities. The remainder related to other sites with reserves ranging
from $1 million to $10 million per site. No one site represents more than
15 percent of the total accrual. Substantially all amounts accrued are
expected to be paid out over the next five to six years.
Claims for recovery of remediation costs already incurred and to be
incurred in the future have been filed against various insurance companies
and other third parties. These claims have not been resolved. Due to the
uncertainty as to ultimate recovery from these parties, ARCO has neither
recorded any asset nor reduced any liability in anticipation of such
recovery.
Although any ultimate liability arising from any of the matters
described herein could result in significant expenses or judgments that, if
aggregated and assumed to occur within a single fiscal period, would be
material to ARCO's results of operations, the likelihood of such occurrence
is considered remote. On the basis of management's best assessment of the
ultimate amount and timing of these events, such expenses or judgments are
not expected to have a material adverse effect on ARCO's consolidated
financial statements.
The operations and consolidated financial position of ARCO continue to
be affected from time to time in varying degrees by domestic and foreign
political developments as well as legislation, regulations and litigation
pertaining to restrictions on production, imports and exports, tax
increases, environmental regulations, cancellation of contract rights and
expropriation of property. Both the likelihood of such occurrences and
their overall effect on ARCO vary greatly and are not predictable.
These uncertainties are part of a number of items that ARCO has taken
and will continue to take into account in periodically establishing
reserves.
- 13 -
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Second Quarter 1995 vs. Second Quarter 1994
Consolidated Earnings
The earnings increase in 1995 primarily reflected improved margins in
ARCO's chemical interests, higher crude oil prices, increased coal volumes
and the benefits of companywide cost reductions, partially offset by lower
refining and marketing margins and domestic natural gas prices.
The 1995 results included a net after-tax benefit of $10 million
associated with insurance litigation settlements after partial offsets for
environmental and other charges. The 1994 second quarter results included
net charges of $154 million after tax, primarily related to restructuring
and personnel reductions.
Revenues
<TABLE>
<CAPTION>
Millions 1995 1994
---- ----
<S> <C> <C>
Sales and other operating revenues
Resources:
Oil and gas. . . . . . . . . . . . . . . . . $2,083 $2,090
Coal . . . . . . . . . . . . . . . . . . . . 201 155
Products:
Refining and marketing . . . . . . . . . . . 1,712 1,664
Transportation . . . . . . . . . . . . . . . 209 228
Intermediate chemicals and specialty
products . . . . . . . . . . . . . . . . . 1,149 824
Other. . . . . . . . . . . . . . . . . . . . 7 6
Elimination of intersegment amounts. . . . . (938) (793)
----- -----
Total. . . . . . . . . . . . . . . . . . . . $4,423 $4,174
===== =====
</TABLE>
The increase in 1995 sales and other operating revenues resulted
primarily from higher chemical products, crude oil and refined products
prices and higher coal and chemical products volumes, partially offset by
decreased crude oil trading activity, lower domestic natural gas prices and
lower refined products volumes.
The increase in 1995 income from equity investments primarily reflected
ARCO's higher earnings from its 49.9 percent equity interest in Lyondell
Petrochemical Company (Lyondell).
The increase in 1995 other revenues primarily resulted from insurance
litigation settlements.
Expenses
Trade purchases were lower primarily as a result of decreased crude oil
trading activity, partially offset by increased trade purchases of chemical
feedstocks and products.
- 14 -
<PAGE>
Included in the 1994 net charges of $154 million after tax were unusual
items of $249 million before tax, $153 million after tax related to
restructuring and personnel reductions.
Upstream Earnings
<TABLE>
<CAPTION>
Millions (after tax) 1995 1994
---- ----
<S> <C> <C>
Oil and Gas . . . . . . . . . . . . . . . $209 $81
Coal. . . . . . . . . . . . . . . . . . . $ 28 $12
</TABLE>
ARCO's earnings from worldwide oil and gas exploration and production
operations benefited from higher crude oil prices and lower operating
costs, partially offset by lower domestic natural gas prices and higher
dryhole costs in 1995. Included in the 1994 second quarter results was a
net charge of $38 million after tax related primarily to personnel
reductions in Alaska, partially offset by a tax benefit associated with
international operations.
Average Oil and Gas Prices
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
U.S.
Crude oil - per bbl . . . . . . . . . . $13.34 $10.30
Natural gas - per mcf . . . . . . . . . $ 1.38 $ 1.73
International
Crude Oil - per bbl . . . . . . . . . . $17.23 $15.20
Natural gas - per mcf . . . . . . . . . $ 2.58 $ 2.38
</TABLE>
Petroleum Liquids and Natural Gas Production
<TABLE>
<CAPTION>
Net Production 1995 1994
---- ----
<S> <C> <C>
U.S.
Petroleum liquids - bbld . . . . . . . 585,600 574,400
Natural gas - mmcfd . . . . . . . . . 987 969
Barrels of oil equivalent (BOE). . . . 750,100 735,900
International
Petroleum liquids - bbld . . . . . . . 68,400 81,100
Natural gas - mmcfd. . . . . . . . . . 535 527
BOE. . . . . . . . . . . . . . . . . . 157,600 168,900
</TABLE>
Increased petroleum liquids volumes from Point McIntyre and new fields,
including the Blenheim field in the North Sea which started up in March
1995, were offset by the sale of Malacca Straits assets in 1994, the impact
of price changes on Indonesian production sharing contract volumes and
natural field declines.
The increase in U.S. natural gas production resulted from strong
production performance in several offshore fields and operational
improvements in the San Juan Basin which are owned and produced by Vastar
Resources, Inc. (Vastar), partially offset by natural field declines. ARCO
holds an 82.3 percent interest in Vastar.
The higher international natural gas volumes in 1995 reflected increased
production in Indonesia, partially offset by lower gas volumes in the U.K.
North Sea.
- 15 -
<PAGE>
Coal Operations
The improved earnings in 1995 resulted from increased worldwide sales
volumes and higher export prices for Australian coals.
Downstream Earnings
<TABLE>
<CAPTION>
Millions (after tax) 1995 1994
---- ----
<S> <C> <C>
Refining and marketing . . . . . . . . . . $ 27 $ 16
Transportation . . . . . . . . . . . . . . $ 45 $ 25
Intermediate chemicals and
specialty products . . . . . . . . . . . $134 $ 68
</TABLE>
The results in 1995 reflected relatively weak West Coast refined product
margins, partially offset by operating cost reductions. The refining and
marketing results in 1995 included $5 million after tax for environmental
and litigation-related charges. The 1994 second quarter results included a
$28 million after-tax charge for restructuring.
The 1994 transportation results included restructuring charges of $26
million after tax.
For the intermediate chemicals and specialty products segment,
reflecting ARCO's 83.1 percent interest in ARCO Chemical Company, the
increased 1995 earnings primarily reflected improved margins for all major
products, particularly styrene monomer, as higher average selling prices
more than offset generally higher raw material costs. Increased sales
volumes for methyl tertiary butyl ether (MTBE) in the U.S. also contributed
to the increase.
Equity Affiliate
ARCO earned $67 million from its 49.9 percent equity interest in
Lyondell in the second quarter of 1995. This compared to $16 million in
the second quarter of 1994. The improvement resulted primarily from the
strong performance of Lyondell's chemical operations reflecting higher
olefins margins and volumes.
Tax Provision
The Company recorded a net tax benefit in the second quarter of 1994 as
a result of the recognition of a foreign deferred tax asset associated with
international oil and gas operations.
Six-Month Period Ended June 30, 1995 vs. Same Six-Month Period 1994
Consolidated Earnings
The earnings increase in the first six months of 1995 primarily
reflected improved margins in ARCO's chemical interests, higher crude oil
prices, increased chemical products and coal volumes and the benefits of
companywide cost reductions, partially offset by lower refining and
marketing margins and domestic natural gas prices.
- 16 -
<PAGE>
Revenues
The increased sales and other operating revenues for the first six
months of 1995 resulted primarily from higher crude oil, chemical and
refined products prices and higher chemical products and coal volumes,
partially offset by decreased crude oil trading activity, lower domestic
natural gas prices and refined products volumes.
The increase in income from equity investments for the first six months
of 1995 primarily reflected ARCO's earnings from its 49.9 percent equity
interest in Lyondell.
The increase in other revenues for the first six months of 1995
primarily resulted from insurance litigation settlements.
Expenses
Trade purchases increased in 1995 primarily as a result of increased
trade purchases of chemical feedstocks and products, partially offset by
decreased crude oil trading activity and lower domestic natural gas prices.
The first six months of 1994 included unusual items of $249 million
before tax, $153 million after tax related to restructuring and personnel
reductions.
Average Oil and Gas Prices
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
U.S.
Crude oil - per bbl . . . . . . . . . . $12.61 $ 9.02
Natural gas - per mcf . . . . . . . . . $ 1.30 $ 1.90
International
Crude Oil - per bbl . . . . . . . . . . $16.80 $14.49
Natural gas - per mcf . . . . . . . . . $ 2.58 $ 2.48
</TABLE>
Tax Provision
The Company's effective tax rate for the first six months of 1995 was
34.8 percent, compared to 29.1 percent for same period in 1994. The lower
effective rate in 1994 was primarily the result of the Company recognizing
a foreign deferred tax asset.
Financial Position and Liquidity
<TABLE>
<CAPTION>
Millions 1995
----
<S> <C>
Cash flow provided (used) by:
Operations . . . . . . . . . . . . . . . $ 1,055
Investing activities . . . . . . . . . . $ 21
Financing activities . . . . . . . . . . $(1,182)
</TABLE>
The net cash provided by investing activities in the first six months of
1995 primarily included a decrease in short-term investments of $792
million, partially offset by expenditures for additions to fixed assets of
$752 million.
- 17 -
<PAGE>
The net cash used in financing activities in the first six months of
1995 primarily included repayments of long-term debt of $573 million, a
decrease of $283 million in the Company's short-term debt position and
dividend payments of $443 million.
Cash and cash equivalents and short-term investments totaled $3.5
billion, and short-term borrowings were $1.2 billion at the end of the
second quarter of 1995.
It is expected that future cash requirements for capital expenditures,
dividends and debt repayments will come from cash generated from operating
activities, existing cash balances, and future financings.
Statements of Financial Accounting Standards Not Yet Adopted
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards(SFAS) No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of." The Company will have to implement SFAS No. 121 by the fiscal year
ended December 31, 1996. The provisions will require the Company to review
long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. If it is determined that an impairment loss has occurred
based on expected future cash flows, then the loss should be recognized in
the income statement and certain disclosures regarding the impairment
should be made in the financial statements. The Company has not yet
completed evaluating the impact, if any, of the provisions of SFAS No. 121.
_______________________________
Management cautions against projecting any future results based on
present earnings levels because of economic uncertainties, the extent and
form of existing or future governmental regulations and other possible
actions by governments.
- 18 -
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
1. Reference is made to the disclosure on page 16 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1994
(hereinafter, the "1994 Form 10-K Report") regarding Atlantic Richfield
Company v. AETNA Casualty and Surety Company of America, et al. (Case No.
BC 015575). ARCO has settled with several of the insurance company defen
dants and is discussing settlement with the others. Trial is scheduled to
begin later this year against those defendants with which ARCO is unable to
settle.
2. On June 27, 1995, three former ARCO Alaska, Inc. employees filed
an action in the Alaska Superior Court in Anchorage, titled Tesch, et al.
v. ARCO Alaska, Inc. (Case No. 3AN-95-3320-CI), purporting to represent a
class of all ARCO Alaska, Inc. employees classified as exempt from over-
time pay requirements within the preceding three years. The plaintiffs
claim that they and other exempt employees were not actually exempt under
Alaska law from overtime pay and are entitled to pay for unpaid overtime
and penalties in an unstated amount. Employees of Alyeska Pipeline Service
Company ("Alyeska"), in which ARCO Transportation Alaska, Inc. owns approx-
imately 21 percent, have filed two other purported class actions making
similar claims against Alyeska.
3. Reference is made to the Company's 1994 Form 10-K Report for infor-
mation on other legal proceedings matters reported herein.
Item 5. Other Information.
On July 24, 1995, the Board of Directors of the Company declared a
dividend of one common share purchase right (a "Right") for each
outstanding share of Common Stock, par value $2.50 per share (the "Common
Shares"), of the Company. The dividend is payable on August 18, 1995 to
the stockholders of record on that date. Each Right entitles the
registered holder to purchase from the Company one Common Share at a price
of $400.00 per share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement
between the Company and First Chicago Trust Company of New York, as Rights
Agent.
The Rights will be evidenced by and will be transferred with the Common
Share certificates until the Distribution Date. The Distribution Date is
defined as the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons has
acquired beneficial ownership of 15 percent or more of the outstanding Com-
mon Shares (an "Acquiring Person") or (ii) 10 business days following the
commencement of, or announcement of an intention to make, a tender or
exchange offer, the consummation of which would result in a person or group
becoming an Acquiring Person. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights will be
issued.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on August 18, 2005 unless redeemed prior to that date by the
Company. The Purchase Price payable, and the number of Common Shares or
other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution.
In the event that any person becomes an Acquiring Person, each holder
of a Right, other than Rights beneficially owned by the Acquiring Person
and its affiliates and associates (which will thereafter be void), will
have the right to receive, upon exercise of each Right, that number of Com-
mon Shares having a market value of two times the Purchase Price. If, after
the Distribution Date, the Company is acquired in a merger or other
business combination with, or 50 percent or more of its consolidated assets
or earning
- 19 -
<PAGE>
Item 5. Other Information (Continued).
power are sold to, the Acquiring Person, each holder of a Right will have
the right to receive, upon exercise of each Right that number of shares of
common stock of the acquiring company with a market value of two times the
Purchase Price.
At any time after an Acquiring Person crosses the 15 percent threshold
and prior to the acquisition by such person of 50 percect or more of the out-
standing Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by the Acquiring Person), in whole or in
part, at an exchange ratio of one Common Share per Right.
The Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a price of $.01 per Right prior to the acquisition by
an Acquiring Person of 15 percent or more of the outstanding Common Shares.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, except that after
any person becomes an Acquiring Person no such amendment may adversely affect
the interests of the other holders of the Rights.
Effective August 18, 1995, the Board of Directors ordered the redemption
of outstanding Common Stock Purchase Rights issued to stockholders of
record on June 9, 1986 (the "1986 Rights"). The redemption payment of
$0.10 per 1986 Right will be paid to stockholders of record on August 18,
1995. The payment will be included with the third quarter Common Stock
dividend.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
4 Rights Agreement, dated as of July 24, 1995, between the
Company and First Chicago Trust Company of New York, as Rights
Agent, with exhibits attached.
20 Form of letter to holders of the Company's Common Stock with
Summary of Rights included.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
No Current Reports on Form 8-K was filed during the quarte ended
June 30, 1995 and through the date hereof.
- 20 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ATLANTIC RICHFIELD COMPANY
(Registrant)
/s/ ALLAN L. COMSTOCK
Dated: August 8, 1995 _____________________________
(signature)
Allan L. Comstock
Vice President and Controller
(Duly Authorized Officer and
Principal Accounting Officer)
- 21 -
_______________________________________________________
_______________________________________________________
ATLANTIC RICHFIELD COMPANY
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Rights Agent
RIGHTS AGREEMENT
Dated as of July 24, 1995
_______________________________________________________
_______________________________________________________
<PAGE>
TABLE OF CONTENTS
Section 1. Certain Definitions . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . 6
Section 3. Issue of Right Certificates . . . . . . . . . . 7
Section 4. Form of Right Certificates. . . . . . . . . . . 10
Section 5. Countersignature and Registration . . . . . . . 10
Section 6. Transfer, Split Up, Combination and Exchange
of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates . . . . . . . 11
Section 7. Exercise of Rights; Purchase Price; Expira
tion Date of Rights . . . . . . . . . . . . . . 13
Section 8. Cancellation and Destruction of Right
Certificates. . . . . . . . . . . . . . . . . . 15
Section 9. Status and Availability of Common Shares . . . 16
Section 10. Common Shares Record Date . . . . . . . . . . . 17
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights . . . . . . . . . . 17
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares . . . . . . . . . . . . . . . 31
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power . . . . . . . . . . . . 31
Section 14. Fractional Rights and Fractional Shares . . . . 33
Section 15. Rights of Action . . . . . . . . . . . . . . . 35
Section 16. Agreement of Right Holders . . . . . . . . . . 36
Section 17. Right Certificate Holder Not Deemed a
Stockholder . . . . . . . . . . . . . . . . . . 36
Section 18. Concerning the Rights Agent . . . . . . . . . . 37
Section 19. Merger or Consolidation or Change of Name of
Rights Agent . . . . . . . . . . . . . . . . . 38
Section 20. Duties of Rights Agent . . . . . . . . . . . . 39
- i -
<PAGE>
TABLE OF CONTENTS (Continued)
Section 21. Change of Rights Agent . . . . . . . . . . . . 43
Section 22. Issuance of New Right Certificates . . . . . . 45
Section 23. Redemption . . . . . . . . . . . . . . . . . . 45
Section 24. Exchange . . . . . . . . . . . . . . . . . . . 47
Section 25. Notice of Certain Events . . . . . . . . . . . 49
Section 26. Notices . . . . . . . . . . . . . . . . . . . . 51
Section 27. Supplements and Amendments . . . . . . . . . . 52
Section 28. Successors . . . . . . . . . . . . . . . . . . 52
Section 29. Benefits of this Agreement . . . . . . . . . . 52
Section 30. Severability . . . . . . . . . . . . . . . . . 53
Section 31. Governing Law . . . . . . . . . . . . . . . . . 53
Section 32. Counterparts. . . . . . . . . . . . . . . . . . 53
Section 33. Descriptive Headings . . . . . . . . . . . . . 53
Section 34. Administration . . . . . . . . . . . . . . . . 53
- ii -
<PAGE>
RIGHTS AGREEMENT
This Rights Agreement dated as of July 24, 1995, between
Atlantic Richfield Company, a Delaware corporation (the "Company"),
and First Chicago Trust Company of New York (the "Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one common share purchase right (a
"Right") for each Common Share (as hereinafter defined) of the
Company outstanding at the Close of Business on August 18, 1995
(the "Record Date"), each Right representing the right to
purchase one Common Share, upon the terms and subject to the
conditions herein set forth, and has further authorized and
directed the issuance of one Right with respect to each Common
Share that shall become outstanding between the Record Date and
the earliest of the Distribution Date, the Redemption Date or the
Final Expiration Date (as such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto hereby agree as
follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
"Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Common Shares of the Company
then outstanding, but shall not include (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the
Company or any Subsidiary of the Company or (iv) any entity
- 1 -
<PAGE>
holding Common Shares for or pursuant to the terms of any
such plan. Notwithstanding the foregoing, (i) no Person
shall become an "Acquiring Person" as the result of an
acquisition of Common Shares by the Company which, by reducing
the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to 15% or more
of the Common Shares of the Company then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of
15% or more of the Common Shares of the Company then outstanding
by reason of share purchases by the Company and shall, after such
share purchases by the Company, become the Beneficial Owner of
any additional Common Shares of the Company, then such Person
shall be deemed to be an "Acquiring Person"; and (ii) if the
Board of Directors of the Company determines in good faith that a
Person who would otherwise be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph, has
become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such
Person would no longer be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph, then such
Person shall not be deemed to have become an "Acquiring Person"
for any purposes of this Agreement.
"Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), as in effect on the date of this
Agreement.
- 2 -
<PAGE>
A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates
or Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities),
written or otherwise, or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or
options, or otherwise; provided, however, that a Person shall not
be deemed to be the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange offer made
pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act by or on behalf
of such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or
exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially
own, any security if the agreement, arrangement or understanding
to vote such security (1) arises solely from a revocable proxy
or consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act
- 3 -
<PAGE>
and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of
such Person's Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with
respect to a bona fide public offering of securities), written or
otherwise, for the purpose of acquiring, holding, voting (except
to the extent contemplated by the proviso to section (B) of the
immediately preceding paragraph (ii)) or disposing of any
securities of the Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when
used with reference to a Person's Beneficial Ownership of
securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which
such Person would be deemed to own beneficially hereunder.
"Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of
New York are authorized or obligated by law or executive order to
close.
"Close of Business" on any given date shall mean 5:00 p.m.,
New York City time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., New York City
time, on the next succeeding Business Day.
- 4 -
<PAGE>
"Common Shares" when used with reference to the Company
shall mean the shares of common stock, par value $2.50 per share,
of the Company. "Common Shares" when used with reference to any
Person other than the Company shall mean the capital stock (or
equity interest) with the greatest voting power of such other
Person or, if such other Person is a Subsidiary of another
Person, the Person or Persons which ultimately control such first-
mentioned Person.
"common stock equivalents" shall have the meaning set forth
in section 11(a)(iii)(B)(3).
"Current Value" shall have the meaning set forth in Section
11(a)(iii)(A)(1) hereof.
"Distribution Date" shall have the meaning set forth in
Section 3 hereof.
"equivalent common shares" shall have the meaning set forth
in Section 11(b).
"Exchange Ratio" shall have the meaning set forth in Section 24(a).
"Final Expiration Date" shall mean August 18, 2005.
"Person" shall mean any individual, firm, corporation,
partnership, limited partnership, limited liability partnership,
business trust, limited liability company, unincorporated
association or other entity, and shall include any successor (by
merger or otherwise) of such entity.
"Purchase Price" shall have the meaning set forth in Section 7(b).
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<PAGE>
"Redemption Date" shall mean the date on which the Rights
are redeemed as provided in Section 23 hereof.
"Section 11(a)(ii) Trigger Date" shall have the meaning set
forth in Section 11(a)(iii) hereof.
"Right Certificate" shall mean a certificate evidencing a
Right in substantially the form of Exhibit A hereto.
"Shares Acquisition Date" shall mean the earlier of the date
of (i) the public announcement by the Company or an Acquiring
Person that an Acquiring Person has become such or (ii) the
public disclosure of facts by the Company or an Acquiring Person
indicating that an Acquiring Person has become such.
"Spread" shall have the meaning set forth in Section 11(a)
(iii)(A)(2) hereof.
"Subsidiary" of any Person shall mean any Person of which a
majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person.
"Summary of Rights" shall mean the Summary of Rights to
Purchase Common Shares in substantially the form of Exhibit B
hereto.
"Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance
with Section 3 hereof, shall prior to the Distribution
Date also be the holders of the Common Shares) in accordance
with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The
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Company may from time to time appoint such co-Rights Agents as
it may deem necessary or desirable.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the tenth day after the
Shares Acquisition Date or (ii) the tenth Business Day (or such
later date as may be determined by action of the Board of
Directors prior to such time as any Person becomes an Acquiring
Person) after the date of the commencement by any Person (other
than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company
or any entity holding Common Shares for or pursuant to the terms
of any such plan) of, or of the first public announcement of the
intention of any Person (other than any of the Persons referred
to in the preceding parenthetical) to commence, a tender or
exchange offer the consummation of which would result in any
Person becoming the Beneficial Owner of Common Shares aggregating
15% or more of the then outstanding Common Shares (including any
such date which is after the date of this Agreement and prior to
the issuance of the Rights; the earlier of such dates being
herein referred to as the "Distribution Date"), (x) the Rights
will be evidenced (subject to the provisions of Section 3(b)
hereof) by the certificates for Common Shares registered in the
names of the holders thereof (which certificates shall also be
deemed to be Right Certificates) and not by separate Right
Certificates, and (y) the right to receive Right Certificates
will be transferable only in connection with the transfer of
Common Shares. As soon as practicable after the Distribution
Date, the Company will prepare and execute, the Rights
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Agent will countersign, and the Company will send or cause to be
sent (and the Rights Agent will, if requested, send) by first-class,
insured, postage-prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, a
Right Certificate evidencing one Right for each Common Share so
held. As of the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights
by first-class, postage-prepaid mail, to each record holder of
Common Shares as of the Close of Business on the Record Date, at
the address of such holder shown on the records of the Company.
With respect to certificates for Common Shares outstanding as of
the Record Date, until the Distribution Date, the Rights will be
evidenced by such certificates registered in the names of the
holders thereof together with a copy of the Summary of Rights
attached thereto. Until the Distribution Date (or the earlier of
the Redemption Date or the Final Expiration Date), the surrender
for transfer of any certificate for Common Shares outstanding on
the Record Date, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the
Rights associated with the Common Shares evidenced thereby.
(c) Certificates for Common Shares which become
outstanding (including, without limitation, reacquired Common
Shares referred to in the last sentence of this paragraph (c))
after the Record Date but prior to the earliest of the Distribution
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Date, the Redemption Date or the Final Expiration Date
shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate also evidences and entitles
the holder hereof to certain rights (the
"Rights") as set forth in the Rights Agreement
between Atlantic Richfield Company and First
Chicago Trust Company of New York, dated as of
July 24, 1995 (the "Rights Agreement"), the
terms of which are hereby incorporated herein
by reference. A copy of the Rights Agreement
is on file at the principal executive offices
of Atlantic Richfield Company. Under certain
circumstances set forth in the Rights Agreement,
such Rights will be evidenced by separate
certificates and will no longer be evidenced
by this certificate. Atlatic Richfield Company
will mail to the holder of this certificate a
copy of the Rights Agreement without charge
after receipt of a written request therefor. As
described in Section 11(a)(ii) of the Rights
Agreement, Rights beneficially owned by any
Person who becomes an Acquiring Person (as
defined in the Rights Agreement) and certain
other Persons shall become null and void.
With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated with
the Common Shares represented by certificates shall be evidenced
by such certificates alone, and the surrender for transfer of any
such certificate shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby. In the
event that the Company purchases or acquires any Common Shares
after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares shall be deemed
canceled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Shares which are
no longer outstanding.
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Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase Common Shares
and of assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit A hereto and may have such marks
of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Rights may from time to time
be listed, or to conform to usage. Subject to the other provisions
of this Agreement, the Right Certificates shall entitle the
holders thereof to purchase such number of Common Shares as shall
be set forth therein at the Purchase Price, but the number of
Common Shares and the Purchase Price shall be subject to
adjustment as provided herein.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its Chief Executive Officer, its
President, any of its Vice Presidents, or its Treasurer, either
manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested
by the Secretary or any Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall
be countersigned by the Rights Agent and shall not be valid for
any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall
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cease to be such officer of the Company before countersignature
by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by
the Rights Agent and issued and delivered by the Company with the
same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company;
and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the Company to
sign such Right Certificate, although at the date of the execution
of this Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its principal office, books for
registration of the transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates
and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange
of Right Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates. Subject to the provisions of Section 14
hereof, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on
the earlier of the Redemption Date or the Final Expiration Date,
any Right Certificate or Right Certificates (other than Right
Certificates representing Rights that have become void pursuant
to Section 11(a)(ii) hereof or that have been exchanged pursuant
to Section 24 hereof) may be
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<PAGE>
transferred, split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered
holder to purchase a like number of Common Shares as the Right
Certificate or Right Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate
or Right Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the principal office of the Rights Agent.
Thereupon the Rights Agent shall countersign and deliver to
the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company
may require payment of a sum sufficient for any tax or governmental
charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction
or mutilation of a Right Certificate, and, in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory
to them, and, at the Company's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company
will make and deliver a new Right Certificate of like tenor to
the Rights Agent for delivery to the registered holder in lieu of
the Right Certificate so lost, stolen, destroyed or mutilated.
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<PAGE>
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.
(a) The registered holder of any Right Certificate
(other than a holder whose Rights have become void pursuant to
Section 11(a)(ii) hereof or have been exchanged pursuant to
Section 24 hereof), may exercise the Rights evidenced thereby in
whole or in part at any time after the Distribution Date upon
surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights
Agent at its principal office, together with payment of the
Purchase Price for each Common Share as to which the Rights are
exercised, at or prior to the earliest of (i) the Close of
Business on the Final Expiration Date, (ii) the Redemption Date,
or (iii) the time at which such Rights are exchanged as provided
in Section 24 hereof.
(b) The purchase price for each Common Share to be
purchased upon the exercise of a Right shall initially be $400.00
(the "Purchase Price"), shall be subject to adjustment from time
to time as provided in Sections 11 and 13 hereof and shall be
payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and
certificate duly executed, accompanied by payment of the Purchase
Price for the number of Common Shares to be purchased and an
amount equal to any applicable transfer tax required to be paid by
the holder of such Right Certificate in accordance with Section 9
hereof by cash, certified check, cashier's check or money order
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<PAGE>
payable to the order of the Company, the Rights Agent
shall thereupon promptly (i) (A) requisition from any transfer
agent of the Common Shares certificates for the number of Common
Shares to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests,
or (B) requisition from any depositary agent for the Common
Shares depositary receipts representing such number of Common
Shares as are to be purchased (in which case certificates for the
Common Shares represented by such receipts shall be deposited by
the transfer agent with the depositary agent) and the Company
hereby directs the depositary agent to comply with such request,
(ii) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional Common Shares
in accordance with Section 14 hereof, (iii) after receipt of such
certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after
receipt, deliver such cash to or upon the order of the registered
holder of such Right Certificate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent
to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate
or to his duly authorized assigns, subject to the provisions
of Section 14 hereof.
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<PAGE>
(e) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate following the form of
election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as
the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered
to the Rights Agent for cancellation or in canceled form, or, if
surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Rights
Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel
and retire, any other Right Certificate purchased or acquired by
the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Right Certificates to the
Company, or shall, at the written request of the Company, destroy
such canceled Right Certificates, and in such case shall deliver
a certificate of destruction thereof to the Company.
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<PAGE>
Section 9. Status and Availability of Common Shares.
(a) The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all Common
Shares delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such Common Shares (subject to
payment of the Purchase Price), be duly and validly authorized
and issued and fully paid and non-assessable shares.
(b) The Company further covenants and agrees that it
will pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of the
issuance or delivery of the Right Certificates or of any Common
Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable
in respect of any transfer or delivery of Right Certificates to a
person other than, or the issuance or delivery of certificates or
depositary receipts for the Common Shares in a name other than
that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or to issue or to
deliver any certificates or depositary receipts for Common Shares
upon the exercise of any Rights until any such tax shall have
been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been
established to the Company's reasonable satisfaction that no such
tax is due.
(c) The Company covenants and agrees that it will cause
to be reserved and kept available, out of its authorized and
unissued Common Shares or any Common Shares held in its treasury,
the number of Common Shares that will be sufficient to permit the
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<PAGE>
exercise in full of all outstanding Rights in accordance with
Section 7 hereof.
Section 10. Common Shares Record Date. Each person in whose
name any certificate for Common Shares is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder
of record of the Common Shares represented thereby on, and such
certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes)
was made. Prior to the exercise of the Rights evidenced thereby,
the holder of a Right Certificate shall not be entitled to any
rights of a holder of Common Shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided
herein.
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights. The Purchase Price, the number of
Common Shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the
Common Shares payable in Common Shares, (B) subdivide the outstanding
Common Shares, (C) combine the outstanding Common Shares into a
smaller number of Common Shares or (D) issue any shares of its
capital stock in a reclassification of the Common Shares (including
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any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this
Section 11(a), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and
kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exer-
cised after such time shall be entitled to receive the aggregate
number and kind of shares of capital stock which, if such Right
had been exercised immediately prior to such date, he would have
owned upon such exercise and been entitled to receive by virtue
of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate
par value of the shares of capital stock of the Company issuable
upon exercise of one Right.
(ii) Subject to the following paragraph of this
subparagraph (ii) and to Section 24 of this Agreement, in the
event any Person shall become an Acquiring Person, each holder of
a Right shall thereafter have a right to receive, upon exercise
thereof at a price equal to the then current Purchase Price
multiplied by the number of Common Shares for which a Right is
then exercisable, in accordance with the terms of this Agreement
and in lieu of such number of Common Shares for which a Right is
then exercisable, such number of Common Shares of the Company as
shall equal the result obtained by (x) multiplying the then
current Purchase Price by the number of Common Shares for which a
Right is then exercisable and
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dividing that product by (y) 50% of the then current per share
market price of the Common Shares (determined pursuant to Section
11(d) hereof) on the date such Person became an Acquiring Person.
In the event that any Person shall become an Acquiring Person and
the Rights shall then be outstanding, the Company shall not take
any action which would eliminate or diminish the benefits intended
to be afforded by the Rights.
From and after the occurrence of such events, any
Rights that are or were acquired or beneficially owned by such
Acquiring Person (or any Associate or Affiliate of such Acquiring
Person) shall be void and any holder of such Rights shall there-
after have no right to exercise such Rights under any provision
of this Agreement. No Right Certificate shall be issued pursuant
to Section 3 that represents Rights beneficially owned by an
Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof; no
Right Certificate shall be issued at any time upon the transfer
of any Rights to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or
Affiliate; and any Right Certificate delivered to the Rights
Agent for transfer to an Acquiring Person whose Rights would be
void pursuant to the preceding sentence or any Associate or
Affiliate thereof shall be canceled.
(iii) In the event that the number of Common
Shares which are authorized by the Company's certificate of
incorporation and not outstanding or subscribed for, or reserved
or otherwise committed for issuance for purposes other than upon
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exercise of the Rights, are not sufficient to permit the holder
of each Right to purchase the number of Common Shares to which he
would be entitled upon the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of paragraph (a)
of this Section 11, or should the Board of Directors so elect,
the Company shall: (A) determine the excess of (1) the value
of the Common Shares issuable upon the exercise of a Right
(calculated as provided in the last sentence of this subparagraph
(iii)) pursuant to Section 11(a)(ii) hereof (the "Current Value")
over (2) the Purchase Price (such excess, the "Spread"), and (B)
with respect to each Right, make adequate provision to substitute
for such Common Shares, upon payment of the applicable Purchase
Price, any one or more of the following having an aggregate value
determined by the Board of Directors to be equal to the Current
Value: (1) cash, (2) a reduction in the Purchase Price, (3)
Common Shares or other equity securities of the Company
(including, without limitation, shares, or units of shares, of
preferred stock which the Board of Directors of the Company has
determined to have the same value as the Common Shares (such
shares of preferred stock, "common stock equivalents"), (4) debt
securities of the Company, or (5) other assets; provided,
however, if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within thirty (30)
days following the later of (x) the first occurrence of an event
triggering the rights to purchase Common Shares described in
Section 11(a)(ii) and (y) the date on which the Company's right
of redemption pursuant to Section 23(a) expires (the later of
(x) and (y) being referred to herein as the "Section
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<PAGE>
11(a)(ii) Trigger Date"), then the Company shall be obligated
to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, Common Shares
(to the extent available) and then, if necessary, cash, which
shares and cash have an aggregate value equal to the Spread.
If the Board of Directors of the Company shall determine in good
faith that it is likely that sufficient additional Common Shares
could be authorized for issuance upon exercise in full of the
Rights, the thirty (30) day period set forth above may be extended
to the extent necessary, but not more than ninety (90) days after
the Section 11(a)(ii) Trigger Date, in order that the Company may
seek stockholder approval for the authorization of such additional
shares (such period, as it may be extended, the "Substitution Period").
To the extent that the Company determines that some action need be
taken pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Company (x) shall provide, subject to
Section 7(e) hereof and the last paragraph of Section 11(a)(ii)
hereof, that such action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate
form of distribution to be made pursuant to such first sentence
and to determine the value thereof. In the event of any such
suspension, the Company shall make a public announcement, and
shall deliver to the Rights Agent a statement, stating that the
exercisability of the Rights has been temporarily suspended. At such
time as the suspension is no longer in effect, the Company shall make
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another public announcement, and deliver to the Rights Agent
a statement, so stating. For purposes of this Section 11(a)(iii),
the value of the Common Shares shall be the current per share
market price (as determined pursuant to Section 11(d)(i) hereof)
of the Common Shares on the Section 11(a)(ii) Trigger Date and
the value of any common stock equivalent shall be deemed to have
the same value as the Common Shares on such date.
(b) In case the Company shall fix a record date for
the issuance of rights, options or warrants to all holders of
Common Shares entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or
purchase Common Shares (or shares having the same rights,
privileges and preferences as the Common Shares ("equivalent
common shares")) or securities convertible into Common Shares or
equivalent common shares at a price per Common Share or
equivalent common share (or having a conversion price per share,
if a security convertible into Common Shares or equivalent common
shares) less than the then current per share market price of the
Common Shares (as defined in Section 11(d)) on such record date,
the Purchase Price to be in effect after such record date shall
be adjusted by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of
which shall be the number of Common Shares outstanding on such
record date plus the number of Common Shares which the aggregate
offering price of the total number of Common Shares and/or
equivalent common shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be
offered) would purchase at such current market
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<PAGE>
price and the denominator of which shall be the number of Common
Shares outstanding on such record date plus the number of additional
Common Shares and/or equivalent common shares to be offered for
subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon exercise
of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in
good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent. Common Shares owned by or held for the account of
the Company shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such
rights, options or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for
the making of a distribution to all holders of the Common Shares
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness or assets
(other than a regular quarterly cash dividend or a dividend payable
in Common Shares) or subscription rights or warrants (excluding
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<PAGE>
those referred to in Section 11(b) hereof), the Purchase Price
to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior
to such record date by a fraction, the numerator of which
shall be the then current per share market price of the
Common Shares on such record date, less the fair market
value (as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the
assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to one Common
Share and the denominator of which shall be such current per
share market price of the Common Shares; provided, however, that
in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares
of capital stock of the Company to be issued upon exercise of one
Right. Such adjustments shall be made successively whenever such
a record date is fixed; and in the event that such distribution
is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record
date had not been fixed.
(d) (i) For the purpose of any computation hereunder,
the "current per share market price" of any security (a
"Security" for the purpose of this Section 11(d)(i)) on any date
shall be deemed to be the average of the daily closing prices per
share of such Security for the 30 consecutive Trading Days (as
such term is hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current per share
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market price of the Security is determined during a period
following the announcement by the issuer of such Security of (A)
a dividend or distribution on such Security payable in shares of
such Security or securities convertible into such shares, or (B)
any subdivision, combination or reclassification of such Security
and prior to the expiration of 30 Trading Days after the ex-
dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then,
and in each such case, the current per share market price shall
be appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each
day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock
Exchange or, if the Security is not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the
Security is not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-
counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ")
or such other system then in use, or, if on any such date the
Security is not quoted by any such
- 25 -
<PAGE>
organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market
in the Security selected by the Board of Directors of the
Company. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the Security
is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day.
(ii) For the purpose of any computation here-
under, the "current per share market price" of the Common Shares
shall be determined in accordance with the method set forth in
Section 11(d)(i). If the Common Shares are not publicly listed
or traded, "current per share market price" shall mean the fair
value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are
not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations
under this Section 11 shall be made to the nearest cent or
to the nearest one ten-thousandth of a Common Share, or one
ten-thousandth of any other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by
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<PAGE>
this Section 11 shall be made no later than three years from the
date of the transaction which requires such adjustment.
(f) If as a result of an adjustment made pursuant to
Section 11(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital
stock of the Company other than Common Shares, the number of such
other shares so receivable upon exercise of any Right shall
thereafter be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Shares contained in Section
11(a) through (c), inclusive, and the provisions of Sections 7,
9, 10 and 13 with respect to the Common Shares shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase
Price, the number of Common Shares purchasable from time to time
hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of
the Purchase Price as a result of the calculations made in
Sections 11(b) and (c), each Right outstanding immediately prior
to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of
Common Shares (calculated to the nearest one ten-thousandth of a
Common Share) obtained by (i) multiplying (x) the number of
shares covered
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<PAGE>
by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment
of the Purchase Price and (ii) dividing the product so obtained
by the Purchase Price in effect immediately after such adjustment
of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights
in substitution for any adjustment in the number of Common Shares
purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall
be exercisable for the number of Common Shares for which a Right
was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of
its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the
date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been distributed,
shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been distributed, upon
each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of
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<PAGE>
record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights
to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment,
and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates to
be so distributed shall be issued, executed and countersigned in
the manner provided for herein and shall be registered in the
names of the holders of record of Right Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of Common Shares issuable upon the
exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price and
the number of Common Shares which were expressed in the initial
Right Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value
of the Common Shares issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and non-assessable Common
Shares at such adjusted Purchase Price.
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<PAGE>
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of
a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuing to the
holder of any Right exercised after such record date of the
Common Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the
Common Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill
or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those adjust-
ments expressly required by this Section 11, as and to the extent
that it in its sole discretion shall determine to be advisable in
order that any (i) consolidation or subdivision of the Common
Shares, (ii) issuance wholly for cash of any Common Shares at
less than the current market price, (iii) issuance wholly for
cash of Common Shares or securities which by their terms are
convertible into or exchangeable for Common Shares, (iv) dividends
on Common Shares payable in Common Shares or (v) issuance of
any rights, options or warrants referred to hereinabove in
Section 11(b), hereafter made by the Company to holders of its
Common Shares shall not be taxable to such stockholders.
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<PAGE>
Section 12. Certificate of Adjustment. Whenever an
adjustment is made as provided in Sections 11 and 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth
such adjustment, and a brief statement of the facts accounting
for such adjustment, (b) file with the Rights Agent and with
each transfer agent for the Common Shares a copy of such
certificate and (c) mail a brief summary thereof to each holder
of a Right Certificate in accordance with Section 25 hereof.
The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power. In the event that, directly or
indirectly, (a) the Company shall consolidate with, or
merge with and into, any other Person, (b) any Person shall
consolidate with the Company, or merge with and into the Company
and the Company shall be the continuing or surviving corporation
of such merger and, in connection with such merger, all or part
of the Common Shares shall be changed into or exchanged for stock
or other securities of any other Person (or the Company) or cash
or any other property, or (c) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets or
earning power aggregating 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to
any other Person other than the Company or one or more of its
wholly-owned Subsidiaries, then, and in each such case, proper
provision shall be made so that (i) each holder of a Right
(except as otherwise provided herein) shall thereafter
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<PAGE>
have the right to receive, upon the exercise thereof at a price
equal to the then current Purchase Price multiplied by the number
of Common Shares for which a Right is then exercisable, in accord-
ance with the terms of this Agreement and in lieu of such number
of Common Shares for which a Right is then exercisable, such
number of Common Shares of such other Person (including the
Company as successor thereto or as the surviving corporation) as
shall equal the result obtained by (A) multiplying the then
current Purchase Price by the number of Common Shares for which a
Right is then exercisable and dividing that product by (B) 50% of
the then current per share market price of the Common Shares of
such other Person (determined pursuant to Section 11(d) hereof)
on the date of consummation of such consolidation, merger, sale
or transfer; (ii) the issuer of such Common Shares shall
thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and
duties of the Company pursuant to this Agreement; (iii) the term
"Company" shall thereafter be deemed to refer to such issuer; and
(iv) such issuer shall take such steps (including, but not
limited to, the reservation of a sufficient number of its Common
Shares in accordance with Section 9 hereof) in connection with
such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to the Common Shares thereafter
deliverable upon the exercise of the Rights. The Company
covenants and agrees that it shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the
Company and such issuer shall have executed and delivered to the
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<PAGE>
Rights Agent a supplemental agreement so providing. The Company
shall not enter into any transaction of the kind referred to in
this Section 13 if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any
agreements or arrangements which, as a result of the consummation
of such transaction, would eliminate or substantially diminish
the benefits intended to be afforded by the Rights. The provisions
of this Section 13 shall similarly apply to successive mergers
or consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates which
evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not
listed or admitted to trading on the New York
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<PAGE>
Stock Exchange, as reported in the principal consolidated transac-
tion reporting system with respect to securities listed on the
principal national securities exchange on which the Rights are listed
or admitted to trading or, if the Rights are not listed or admitted
to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected
by the Board of Directors of the Company. If on any such date no
such market maker is making a market in the Rights, the fair
value of the Rights on such date as determined in good faith by
the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue
fractions of Common Shares upon exercise of the Rights or to
distribute certificates which evidence fractional Common Shares.
In lieu of fractional Common Shares, the Company shall pay to
each registered holder of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one Common
Share as the fraction of one Common Share that such holder would
otherwise receive upon the exercise of the aggregate number of
rights exercised by such holder. For the purposes of this
Section 14(b), the current market value of a Common Share
shall be the closing price of a Common Share (as determined
pursuant to the second sentence of
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<PAGE>
Section 11(d)(i) hereof) for the Trading Day immediately prior
to the date of such exercise.
(c) The holder of a Right by the acceptance of the
Right expressly waives any right to receive fractional Rights or
fractional shares upon exercise of a Right.
Section 15. Rights of Action. All rights of action in
respect of this Agreement, excepting the rights of action given
to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate
(or, prior to the Distribution Date, of the Common Shares) may,
without the consent of the Rights Agent or of the holder of any
other Right Certificate (or, prior to the Distribution Date, of
the Common Shares), in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such
Right Certificate in the manner provided in such Right Certificate
and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled
to specific performance of the obligations under, and injunctive relief
against actual or threatened violations of the obligations of any
Person subject to, this Agreement.
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<PAGE>
Section 16. Agreement of Right Holders. Every holder of
a Right, by accepting the same, consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common
Shares;
(b) after the Distribution Date, the Right
Certificates are transferable only on the registry books main-
tained by the Rights Agent if surrendered at the principal office
of the Rights Agent, duly endorsed or accompanied by a proper
instrument of transfer with a completed form of certification; and
(c) the Company and the Rights Agent may deem and
treat the person in whose name the Right Certificate (or, prior
to the Distribution Date, the associated Common Shares
certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated
Common Shares certificate made by anyone other than the Company
or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to
the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose
the holder of the Common Shares or any other securities of the
Company which may at any time be issuable on the exercise of the
Rights represented thereby nor shall anything contained herein or
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<PAGE>
in any Right Certificate be construed to confer upon the holder
of any Right Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Right Certificate
shall have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees
to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and its reasonable expenses
incurred in the administration and execution of this Agreement
and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense,
incurred without negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration
of this Agreement, including the costs and expenses of defending
against any claim of liability in the premises.
The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or
omitted by it in connection with, its administration of this
Agreement in reliance upon any Right Certificate or certificate for
Common Shares or for other securities of the Company, instrument of
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<PAGE>
assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or
other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged,
by the proper person or persons, or otherwise upon the advice of
counsel as set forth herein.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation into which the Rights Agent
or any successor Rights Agent may be merged or with which
it may be consolidated, or any corporation resulting from any
merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation
succeeding to the stock transfer or corporate trust business
of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part
of any of the parties hereto, provided that such corporation
would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time
such successor Rights Agent shall succeed to the agency created
by this Agreement any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent
and deliver such Right Certificates so countersigned; and in case
at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such
Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in
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<PAGE>
all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have
been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in
its prior name or in its changed name; and in all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their acceptance
thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted
by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the
Company prior to taking or suffering any action hereunder, such
fact or matter (unless other evidence in respect thereof be herein
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<PAGE>
specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the General Counsel, the Treasurer
or the Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it
under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the
Company and any other Person only for its own negligence, bad
faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in
this Rights Agreement or in the Right Certificates (except its
countersignatures thereof) or be required to verify the same, but
all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Rights
Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in
this Rights Agreement or in any Rights Certificate; nor shall it
be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11(a)(ii)
hereof) or any
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<PAGE>
adjustment in the terms of the Rights (including the
manner, method or amount thereof) or the ascertaining of the
existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after actual notice that such
change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any Common Shares to be
issued pursuant to this Agreement or any Rights Certificate or as
to whether any Common Shares will, when issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will inform the Rights
Agent promptly upon its determination that a Person has become an
Acquiring Person and the Rights Agent will not be responsible for
determining the status of a Person as an Acquiring Person prior
to such notification, except as such status may be indicated in
the Assignment or Election to Purchase of a Rights Certificate.
The Company also agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of its
duties hereunder from any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the
General Counsel, the Secretary or the Treasurer of the Company, and
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<PAGE>
to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any
action taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while
waiting for those instructions. Any application by the Rights
Agent for written instructions from the Company may, at the
option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent with respect
to its duties or obligations under this Rights Agreement and the
date on and/or after which such action shall be taken or omitted
and the Rights Agent shall not be liable for any action taken or
omitted in accordance with a proposal included in any such
application on or after the date specified therein (which date shall
not be less than three business days after the date any such
officer actually receives such application, unless any such
officer shall have consented in writing to an earlier date)
unless, prior to taking or omitting any such action, the Rights
Agent has received written instructions in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in
any of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company
or otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the
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<PAGE>
Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(i) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent
or any successor Rights Agent may resign and be discharged
from its duties under this Agreement upon 30 days' notice
in writing mailed to the Company and to each transfer agent
of the Common Shares by registered or certified mail, and
to the holders of the Right Certificates by first-class mail
at the Company's expense. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as
the case may be, and to each transfer agent of the Common Shares
by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment
within a period of 30 days after giving notice of such removal
or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the
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<PAGE>
holder of a Right Certificate (who shall, with such notice, submit
his Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any court
of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (i) a corporation organized
and doing business under the laws of the United States or of the
State of New York (or of any other state of the United States so
long as such corporation is authorized to do business as a
banking institution in the State of New York, in good standing,
having an office in the State of New York, which is authorized
under such laws to exercise corporate trust or stock transfer
powers and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50
million dollars or (ii) a subsidiary of a corporation described
in clause (i) of this sentence. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent
any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary
for the purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with
the predecessor Rights Agent and each transfer agent of the
Common Shares, and mail a notice thereof in writing to the
registered holders of the Right Certifi-
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<PAGE>
cates at the Company's expense. Failure to give any notice
provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Not-
withstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Right Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this
Agreement.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at its
option, at any time prior to such time as any Person becomes an
Acquiring Person, redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption
Price"). The redemption of the Rights by the Board of Directors
may be made effective at such time, on such basis and subject to
such conditions as the Board of Directors in its sole discretion
may establish.
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<PAGE>
(b) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights
pursuant to paragraph (a) of this Section 23, and without any
further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. The
Company shall promptly give public notice of any such redemption;
provided, however, that the failure to give, or any defect in,
any such notice shall not affect the validity of such redemption.
Within 10 days after such action of the Board of Directors
ordering the redemption of the Rights pursuant to paragraph (a),
the Company shall mail a notice of redemption to all the holders
of the then outstanding Rights at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to
the Distribution Date, on the registry books of the transfer
agent for the Common Shares. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the
holder receives the notice. If the payment of the Redemption
Price is not included with such notice, each such notice shall
state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights
at any time in any manner other than that specifically set forth
in this Section 23 or in Section 24 hereof, and other than in
connection with the purchase of Common Shares prior to the
Distribution Date.
- 46 -
<PAGE>
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its
option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii) hereof) for
Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after
any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Shares for or pursuant
to the terms of any such plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of a
majority of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights
pursuant to subsection (a) of this Section 24 and without any
further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares
equal to the number of such Rights held by such holder multiplied
by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; provided, however, that the failure
to give, or
- 47 -
<PAGE>
any defect in, such notice shall not affect the validity
of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights
at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Shares for Rights will
be effected and, in the event of any partial exchange, the number
of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of
Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the
Company, at its option, may substitute common stock equivalents
for Common Shares exchangeable for Rights, at the initial rate of
one common stock equivalent for each Common Share, appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof.
(d) In the event that there shall not be sufficient
Common Shares or common stock equivalents authorized by the
Company's certificate of incorporation and not outstanding or
subscribed for, or reserved or otherwise committed for issuance
for purposes other than upon exercise of Rights, to permit any
exchange of Rights as contemplated in accordance with this
Section 24, the Company shall take all such action as may be
necessary to authorize
- 48 -
<PAGE>
additional Common Shares or common stock equivalents for
issuance upon exchange of the Rights.
(e) The Company shall not be required to issue
fractions of Common Shares or to distribute certificates which
evidence fractional Common Shares. In lieu of such fractional
Common Shares, the Company shall pay to the registered holders of
the Right Certificates with regard to which such fractional
Common Shares would otherwise be issuable an amount in cash equal
to the same fraction of the current per share market value of a
whole Common Share. For the purposes of this paragraph (e), the
current per share market value of a whole Common Share shall be
the closing price of a Common Share (as determined pursuant to
the second sentence of Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of exchange pursuant to this
Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall after the Distribution
Date propose (i) to pay any dividend payable in stock of any
class to the holders of its Common Shares or to make any other
distribution to the holders of its Common Shares (other than a
regular quarterly cash dividend), (ii) to offer to the holders
of its Common Shares rights or warrants to subscribe for or to
purchase any additional Common Shares or shares of stock of any
class or any other securities, rights or options, (iii) to effect
any reclassification of its Common Shares (other than a
reclassification involving only the subdivision of outstanding
Common Shares), (iv) to effect any consolidation or merger into
or with, or to effect any sale or other transfer (or to permit
one or more of its
- 49 -
<PAGE>
Subsidiaries to effect any sale or other transfer), in
one or more transactions, of 50% or more of the
assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to
declare or pay any dividend on the Common Shares payable in
Common Shares or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares), then,
in each such case, the Company shall give to each holder of a
Right Certificate, in accordance with Section 26 hereof, a notice
of such proposed action, which shall specify the record date for
the purposes of such stock dividend, or distribution of rights or
warrants, or the date on which such reclassification, consoli-
dation, merger, sale, transfer, liquidation, dissolution, or
winding up is to take place and the date of participation therein
by the holders of the Common Shares, if any such date is to be
fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least 10 days prior
to the record date for determining holders of the Common Shares
for purposes of such action, and in the case of any such other
action, at least 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the
holders of the Common Shares, whichever shall be the earlier.
(b) In case any event set forth in Section 11(a)(ii)
hereof shall occur, then the Company shall as soon as practicable
thereafter give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of
- 50 -
<PAGE>
such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section
11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized
by this Agreement to be given or made by the Rights Agent or
by the holder of any Right Certificate to or on the Company
shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Atlantic Richfield Company
515 South Flower Street
Los Angeles, California 90071
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Right Certificate to or on the
Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
First Chicago Trust Company of New York
525 Washington Boulevard
Suite 4660
Tenders & Exchange Administration
Jersey City, NJ 07310
Attention: Ralph Persico
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Right Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the
- 51 -
<PAGE>
address of such holder as shown on the registry books of the
Company.
Section 27. Supplements and Amendments. The Company
may from time to time, and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement
without the approval of any holders of Right Certificates
in order to cure any ambiguity, to correct or supplement
any provision contained herein which may be defective or
inconsistent with any other provisions herein, or to make any
change to or delete any provision hereof or to adopt any other
provisions with respect to the Rights which the Company may deem
necessary or desirable. Any such supplement or amendment will be
evidenced by a writing signed by the Company and the Rights
Agent; provided, however, that from and after such time as any
Person becomes an Acquiring Person, this Agreement shall not be
amended or supplemented in any manner which would adversely
affect the interests of the holders of Rights (other than an
Acquiring Person and its Affiliates and Associates).
Section 28. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation
other than the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall be
- 52 -
<PAGE>
for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Shares).
Section 30. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court
of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 31. Governing Law. This Agreement and
each Right Certificate issued hereunder shall be deemed
to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and construed
in accordance with the laws of such State applicable to contracts
to be made and performed entirely within such State.
Section 32. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions
hereof.
Section 34. Administration. The Board of Directors of
the Company shall have the exclusive power and authority to
administer and interpret the provisions of this Agreement and to
- 53 -
<PAGE>
exercise all rights and powers specifically granted to the Board
of Directors or the Company or as may be necessary or advisable
in the administration of this Agreement. All such actions,
calculations, determinations and interpretations which are done
or made by the Board of Directors in good faith shall be final,
conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties and shall not subject
the Board of Directors to any liability to the holders of the
Rights.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the day and
year first above written.
ATLANTIC RICHFIELD COMPANY
Attest:
/s/ K. A. KINGSBURY /s/ TERRY G. DALLAS
By: ________________________ By:____________________________
Terry G. Dallas
Title: Assoc. Corp. Sec. Vice President and Treasurer
FIRST CHICAGO TRUST COMPANY OF
NEW YORK
Attest:
/s/ THOMAS A. FERRARI /s/ GREGORY P. DENMAN
By: _________________________ By:_______________________________
Gregory P. Denman
Title: Vice President Assistant Vice President
- 54 -
<PAGE>
Form of Right Certificate
Certificate No. R- ___________ Rights
NOT EXERCISABLE AFTER AUGUST 18, 2005 OR
EARLIER IF REDEMPTION OR EXCHANGE OCCURS.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT
$.01 PER RIGHT AND TO EXCHANGE ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY
OWNED BY AN ACQUIRING PERSON OR ANY ASSOCIATES
OR AFFILIATES THEREOF (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID.
Right Certificate
______________________________________
This certifies that ________________________, or
registered assigns, is the registered owner of the number of
Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of July 24, 1995 (the "Rights
Agreement"), between Atlantic Richfield Company, a Delaware
corporation (the "Company"), and First Chicago Trust Company
of New York (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such
term is defined in the Rights Agreement) and prior to
5:00 P.M., New York City time, on August 18, 2005 at the
principal office of the Rights Agent, or at the office of its
successor as Rights Agent, one fully paid non-assessable
share of Common Stock, par value $2.50 per share (the
"Common Shares"), of the Company, at a purchase price of
$_________ per Common Share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with
the certification and the Form of Election to Purchase duly
executed. The number of Rights evidenced by this Right
Certificate (and the number of Common Shares which may be
purchased upon exercise hereof) set forth above, and the
Purchase Price set forth above, are the number and Purchase
Price as of _________________, 1995, based on the Common
Shares as constituted at such date. As provided in the
Rights Agreement, the Purchase Price and the number of
Common Shares which may be purchased upon the exercise of
the Rights evidenced by this Right Certificate are subject
to modification and adjustment upon the happening of
certain events.
From and after the occurrence of any of the events
described in Section 11(a)(ii) of the Rights Agreement, if the
A-1
<PAGE>
Rights evidenced by this Right Certificate are or were at
any time on or after the earlier of (x) the Shares Acquisition
Date (as such term is defined in the Rights Agreement) and
(y) the Distribution Date (as such term is defined in the
Rights Agreement) beneficially owned by an Acquiring Person
or an Associate or Affiliate of an Acquiring Person (as such
terms are defined in the Rights Agreement), such Rights
shall become void, and any holder of such Rights shall
thereafter have no right to exercise such Rights.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which
terms, provisions and conditions are hereby incorporated
herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights
Agent, the Company and the holders of the Right
Certificates. Copies of the Rights Agreement are on file at
the principal executive offices of the Company and the above-
mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the
Rights Agent, may be exchanged for another Right Certificate
or Right Certificates of like tenor and date evidencing
Rights entitling the holder to purchase a like aggregate
number of Common Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have
entitled such holder to purchase. If this Right Certificate
shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or
Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate (i) may be redeemed by
the Company at a redemption price of $.01 per Right or (ii)
may be exchanged in whole or in part for Common Shares.
No fractional Common Shares will be issued upon the
exercise of any Right or Rights evidenced hereby, but in
lieu thereof a cash payment will be made, as provided in the
Rights Agreement.
No holder of this Right Certificate shall be entitled
to vote or receive dividends or be deemed for any purpose
the holder of the Common Shares or of any other securities
of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in the Rights
Agreement), or to
A-2
<PAGE>
receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in
the Rights Agreement.
This Right Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by
the Rights Agent.
WITNESS the facsimile signature of the proper officers
of the Company and its corporate seal. Dated as of __________, ____.
ATLANTIC RICHFIELD COMPANY
Attest:
__________________________ By:_______________________________
Countersigned:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Rights Agent
By:_________________________
Authorized Signature
A-3
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ________________________________________
hereby sells, assigns and transfers unto _______________________
________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
_________________________ Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with full
power of substitution.
Dated: ____________, ____
_______________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United States.
-------------------------------------------------------------------
The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially
owned by an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement).
______________________________
Signature
-------------------------------------------------------------------
A-4
<PAGE>
Form of Reverse Side of Right Certificate--continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To _______________________________:
The undersigned hereby irrevocably elects to exercise
____________ Rights represented by this Right Certificate to
purchase the Common Shares issuable upon the exercise of such
Rights and requests that certificates for such Common Shares
be issued in the name of:
Please insert social security
or other identifying number
______________________________________________________________
(Please print name and address)
______________________________________________________________
If such number of Rights shall not be all the Rights
evidenced by this Right Certificate, a new Right Certificate
for the balance remaining of such Rights shall be registered
in the name of and delivered to:
Please insert social security
or other identifying number
_____________________________________________________________
(Please print name and address)
_____________________________________________________________
_____________________________________________________________
Dated: ________________, ______
____________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
A-5
<PAGE>
Form of Reverse Side of Right Certificate--continued
trust company having an office or correspondent in the United
States.
-------------------------------------------------------------------
The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially
owned by an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement).
_____________________________
Signature
-------------------------------------------------------------------
NOTICE
The signature in the foregoing Forms of Assignment and
Election must conform to the name as written upon the face
of this Right Certificate in every particular, without
alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the
Form of Assignment or the Form of Election to Purchase, as
the case may be, is not completed, the Company and the
Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement) and such Assignment or Election to
Purchase will not be honored.
A-6
<PAGE>
SUMMARY OF RIGHTS
TO PURCHASE COMMON SHARES
On July 24, 1995, the Board of Directors of Atlantic
Richfield Company (the "Company") declared a dividend of one
common share purchase right (a "Right") for each outstanding
share of Common Stock, par value $2.50 per share (the
"Common Shares"), of the Company. The dividend is payable
on August 18, 1995 (the "Record Date") to the stockholders
of record on that date. Each Right entitles the registered
holder to purchase from the Company one Common Share at a
price of $400.00 per share (the "Purchase Price"), subject
to adjustment. The description and terms of the Rights are
set forth in a Rights Agreement (the "Rights Agreement")
between the Company and First Chicago Trust Company of New
York, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a
public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired bene-
ficial ownership of 15% or more of the outstanding Common
Shares or (ii) 10 business days (or such later date as may
be determined by action of the Board of Directors prior to
such time as any Person becomes an Acquiring Person)
following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial
ownership by a person or group of 15% or more of such
outstanding Common Shares (the earlier of such dates being
called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Share
certificates outstanding as of the Record Date, by such
Common Share certificate with a copy of this Summary of Rights
attached thereto.
The Rights Agreement provides that, until the Distri-
bution Date, the Rights will be transferred with and only
with the Common Shares. Until the Distribution Date (or
earlier redemption or expiration of the Rights), new Common
Share certificates issued after the Record Date, upon
transfer or new issuance of Common Shares will contain a
notation incorporating the Rights Agreement by reference.
Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any
certificates for Common Shares outstanding as of the Record
Date, even without such notation or a copy of this Summary
of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed
to holders of record of the Common Shares as of the Close of
Business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
B-1
<PAGE>
The Rights are not exercisable until the Distribution
Date. The Rights will expire on August 18, 2005 (the "Final
Expiration Date"), unless the Final Expiration Date is
extended or unless the Rights are earlier redeemed by the
Company, in each case, as described below.
The Purchase Price payable, and the number of Common
Shares or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time
to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification
of, the Common Shares, (ii) upon the grant to holders of
the Common Shares of certain rights or warrants to subscribe
for or purchase Common Shares at a price, or securities
convertible into Common Shares with a conversion price,
less than the then current market price of the Common
Shares or (iii) upon the distribution to holders of the
Common Shares of evidences of indebtedness or assets
(excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Common
Shares) or of subscription rights or warrants (other than
those referred to above).
In the event that, after the Distribution Date, the
Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earn
ing power are sold, proper provision will be made so that each
holder of a Right will thereafter have the right to receive,
upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction will
have a market value of two times the exercise price of the
Right. In the event that any person becomes an Acquiring
Person, proper provision shall be made so that each holder of
a Right, other than Rights beneficially owned by the Acquiring
Person and its Affiliates and Associates (which will there
after be void), will thereafter have the right to receive upon
exercise that number of Common Shares having a market value of
two times the exercise price of the Right. If the Company does
not have sufficient Common Shares to satisfy such obligation
to issue Common Shares, or if the Board of Directors so
elects, the Company shall deliver upon payment of the exercise
price of a Right an amount of cash or securities equivalent in
value to the Common Shares issuable upon exercise of a Right;
provided that, if the Company fails to meet such obligation
within 30 days following the later of (x) the first occurrence
of an event triggering the right to purchase Common Shares and
(y) the date on which the Company's right to redeem the Rights
expires, the Company must deliver, upon exercise of a Right
but without requiring payment of the exercise price then in
effect, Common Shares (to the extent available) and cash equal
in value to the difference between the value of the Common
Shares otherwise issuable upon the exercise of a Right and the
exercise price then in effect. The Board of Directors may
extend the 30-day period described above for up to an additional
60 days to permit the taking of action that may be necessary to
B-2
<PAGE>
authorize sufficient additional Common Shares to permit the
issuance of Common Shares upon the exercise in full of the
Rights.
At any time after the acquisition by a person or group
of affiliated or associated persons of beneficial ownership
of 15% or more of the outstanding Common Shares and prior to
the acquisition by such person or group of 50% or more of
the outstanding Common Shares, the Board of Directors of the
Company may exchange the Rights (other than Rights owned by
such person or group which have become void), in whole or in
part, at an exchange ratio of one Common Share per Right
(subject to adjustment).
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require
an adjustment of at least 1% in such Purchase Price. No
fractional Common Shares will be issued and in lieu thereof,
an adjustment in cash will be made based on the market price
of the Common Shares on the last trading day prior to the
date of exercise.
At any time prior to the acquisition by a person or
group of affiliated or associated persons of beneficial
ownership of 15% or more of the outstanding Common Shares,
the Board of Directors of the Company may redeem the Rights
in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"). The redemption of the Rights may be made
effective at such time, on such basis and with such conditions
as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders
of the Rights, except that from and after such time as any
person becomes an Acquiring Person no such amendment may
adversely affect the interests of the holders of the Rights
(other than the Acquiring Person and its Affiliates and
Associates).
Until a Right is exercised, the holder thereof, as
such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to
receive dividends.
A copy of the Rights Agreement has been filed with
the Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A dated ____________________,
_____. A copy of the Rights Agreement is available free of
charge from the Company. This summary description of the
Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference.
B-3
ARCO [LOGO] 515 South Flower Street
Los Angeles, California 90071
Mike R. Bowlin
Chairman and
Chief Executive Officer
August 18, 1995
To Our Stockholders:
Effective today, your Board of Directors ordered the
redemption of outstanding common stock purchase rights (the "1986
Rights") originally issued to stockholders of record on June 9,
1986. Stockholders of record on August 18, 1995, are entitled to
receive a redemption payment of $.10 for each 1986 Right as more
fully described below. Your Board of Directors also declared a
dividend distribution of common stock purchase rights (the "Rights")
to stockholders of record today. The attached Summary of Rights
provides information on the nature of the Rights granted today
and the circumstances under which they may be exercised.
As a holder of common stock, the 1986 Rights are attached to
and represented by your common stock certificate. Each share of
outstanding common stock possesses one 1986 Right. On or about
September 15, 1995 the Company will send the $.10 per share
payment to each stockholder of record today. You do not need to
take any action to receive this payment. This payment will be
included with your third quarter common stock dividend and will
be reported for 1995 to the Internal Revenue Service on Form
1099-DIV as ordinary dividend income, along with your quarterly
dividends.
First Chicago Trust Company of New York previously replaced
Morgan Guaranty Trust Company of New York as Rights Agent under
the Rights Agreement dated as of May 27, 1986. First Chicago is
also the Rights Agent under the new Rights Agreement dated as of
July 24, 1995 (the "Rights Agreement").
If you have any questions about the redemption of your 1986
Rights, please contact the Rights Agent at 1-800-446-2617.
The Rights issued today are similar to the 1986 Rights.
These Rights contain provisions to protect stockholders in the
event of an unsolicited attempt to acquire the Company, including
a gradual accumulation of shares in the open market, a partial or
two-tier tender offer that does not treat all stockholders
equally, an unfair squeeze-out merger and other abusive takeover
tactics which the Board believes are not in the best interest of
stockholders. These tactics can unfairly pressure stockholders,
squeeze them out of their investment without giving them any real
choice and deprive them of the full value of their shares. Over
1,640 companies, including 51% of the companies in the Business
Week 1000, 55% of the companies in the Fortune 500 and 67% of the
companies in the Fortune 200 have issued rights to protect their
stockholders against these tactics. We consider the Rights to be
the best available means of protecting both your right to retain
your equity investment in the Company and the full value of that
investment, while not foreclosing a fair acquisition bid for the
Company.
The Rights are not being distributed in response to any
specific effort to acquire control of the Company, and the Board
is not aware of any such effort. The Rights Agreement is being
adopted to strengthen the ability of the Board to protect your
interests.
The Rights issued today will expire in ten years.
Initially, the Rights will not be exercisable, certificates will
not be sent to you, and the Rights will automatically trade with
the common shares. However, ten days after a person or group
acquires 15% or more of the Company's shares, or ten business
days (or such later date as may be determined by the Board prior
to a person or group acquiring 15% or more of the Company's
shares) after a person or group announces an offer, the consum-
mation of which would result in such person or group owning 15%
or more of the shares (even if no purchases actually occur), the
Rights will become exercisable and separate certificates repre-
senting the Rights will be distributed. We expect that the Rights
would begin to trade independently from the Company's shares at
that time. At no time will the Rights have any voting power.
<PAGE>
If any person or group acquires 15% or more of the Company's
outstanding common stock, the "flip-in" provision of the Rights
will be triggered and the Rights will entitle a holder (other
than such person or any member of such group) to buy a number of
additional shares of common stock of the Company having a market
value of twice the exercise price of each Right. Thus, for
example, if at the time of the 15% acquisition the Company's
stock were to have a market value per share equal to $200, the
holder of each Right (other than such person or any member of such
group) would be entitled to receive 4 shares of common stock for $400.
If the Company is involved in a merger or other business
combination at any time after a person or group has acquired 15%
or more of the Company's shares, the Rights will entitle a holder
to buy a number of shares of common stock of the acquiring
company having a market value of twice the exercise price of each
Right. For example, if at the time of the business combination
the acquiring company's stock has a per share value of $100, the
holder of each Right would be entitle to receive 8 shares of the
acquiring company's common stock for $400, i.e., at a 50% discount.
Following the acquisition by any person or group of 15% or
more of the Company's common stock, but only prior to the
acquisition by a person or group of a 50% stake, the Board of
Directors will also have the ability to exchange the unexercised
Rights (other than Rights held by such person or group), in whole
or in part, for one share of common stock per Right. This
provision will have an economically diluting effect on the
acquirer, and provide a benefit to the remaining rightsholders
that is similar to the flip-in without requiring rightsholders to
go through the process and expense of exercising their Rights.
The Rights are not intended to prevent a takeover of the
Company and will not do so. However, they should deter any
attempt to acquire the Company in a manner or on terms not
approved by the Board. The Rights are designed to deal with the
very serious problem of another person or company using abusive
tactics to deprive the Company's Board and its stockholders of
any real opportunity to determine the destiny of the Company.
The Rights may be redeemed by the Company for one cent per
Right prior to the time that 15% or more of the Company's shares
have been accumulated by a single acquirer or group. Therefore
the Rights should not interfere with any merger or other business
combination approved by the Board prior to that time.
Issuance of the rights does not in any way weaken the
financial strength of the Company or interfere with its business
plans. The issuance of the Rights has no diluting effect, will
not affect reported earnings per share and will not change the
way in which you can presently trade the Company's shares. In
addition, the issuance of the Rights is not taxable to you or the
Company, although you may recognize taxable income upon the
occurrence of certain subsequent events. Please consult your own
tax advisor as to the particular tax consequences of the Rights
and of the $.10 per share payment with respect to the 1986
Rights. The Rights will only be exercisable if and when a
problem arises of the type they were created to address. They
will then operate to protect you against being deprived of your
right to share in the full measure of your Company's long-term
potential.
Your Board was aware when it acted that some people have
advanced arguments that securities of the kind we are issuing
deter legitimate acquisition proposals. We carefully considered
these views and concluded that the arguments are speculative and
do not justify leaving stockholders without any protection
against unfair treatment by an acquirer--who, after all, is
seeking such acquirer's own advantage, not yours. Your Board
believes that these Rights represent a sound and reasonable means
of addressing the complex issues of corporate policy created by
the current takeover environment.
In declaring this Rights dividend we have expressed our
confidence in the Company's future and reaffirmed our
determination that you, our stockholders, be given every
opportunity to participate fully in that future.
On Behalf of the Board of Directors,
/s/ MIKE R. BOWLIN
Mike R. Bowlin
<PAGE>
SUMMARY OF RIGHTS
TO PURCHASE COMMON SHARES
On July 24, 1995, the Board of Directors of Atlantic
Richfield Company (the "Company") declared a dividend of one
common share purchase right (a "Right") for each outstanding
share of Common Stock, par value $2.50 per share (the "Common
Shares"), of the Company. The dividend is payable on August 18,
1995 (the "Record Date") to the stockholders of record on that
date. Each Right entitles the registered holder to purchase from
the Company one Common Share at a price of $400 per share (the
"Purchase Price"), subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and First Chicago Trust
Company of New York, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired beneficial ownership
of 15% or more of the outstanding Common Shares or (ii) 10
business days (or such later date as may be determined by action
of the Board of Directors prior to such time as any Person
becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange
offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of such outstanding
Common Shares (the earlier of such dates being called the "Distri-
bution Date"), the Rights will be evidenced, with respect to any
of the Common Share certificates outstanding as of the Record
Date, by such Common Share certificate with a copy of this
Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the
Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date, upon transfer or new
issuance of Common Shares will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or
a copy of this Summary of Rights being attached thereto, will
also constitute the transfer of the Rights associated with the
Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate certifi-
cates evidencing the Rights ("Right Certificates") will be mailed
to holders of record of the Common Shares as of the Close of
Business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on August 18, 2005 (the "Final Expiration
Date"), unless the Final Expiration Date is extended or unless
the Rights are earlier redeemed by the Company, in each case, as
described below.
The Purchase Price payable, and the number of Common Shares
or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common
Shares, (ii) upon the grant to holders of the Common Shares of
certain rights or warrants to subscribe for or purchase Common
Shares at a price, or securities convertible into Common Shares
with a conversion price, less than the then current market price
of the Common Shares or (iii) upon the distribution to holders of
the Common Shares of evidences of indebtedness or assets
(excluding regular periodic cash dividends paid out of earnings
or retained earnings or dividends payable in Common Shares) or of
subscription rights or warrants (other than those referred to
above).
In the event that, after the Distribution Date, the Company
is acquired in a merger or other business combination transaction
or 50% or more of its consolidated assets or earning power are
sold, proper provision will be made so that each holder of a
Right will thereafter have the right to receive, upon the
exercise thereof at the then current exercise price of the Right,
that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of
two times the exercise price of the Right. In the event that any
person becomes an Acquiring Person, proper provision shall be
made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person and its Affiliates and
Associates (which will thereafter be void), will thereafter have
the right to receive upon exercise that number of Common Shares
having a market value of two times the exercise price of the
Right. If the Company does not have sufficient
<PAGE>
Common Shares to satisfy such obligation to issue Common Shares,
or if the Board of Directors so elects, the Company shall deliver
upon payment of the exercise price of a Right an amount of cash
or securities equivalent in value to the Common Shares issuable
upon exercise of a Right; provided that, if the Company fails to
meet such obligation within 30 days following the later of (x)
the first occurrence of an event triggering the right to purchase
Common Shares and (y) the date on which the Company's right to
redeem the Rights expires, the Company must deliver, upon exercise
of a Right but without requiring payment of the exercise price then
in effect, Common Shares (to the extent available) and cash equal
in value to the difference between the value of the Common Shares
otherwise issuable upon the exercise of a Right and the exercise
price then in effect. The Board of Directors may extend the 30-
day period described above for up to an additional 60 days to
permit the taking of action that may be necessary to authorize
sufficient additional Common Shares to permit the issuance of
Common Shares upon the exercise in full of the Rights.
At any time after the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 15%
or more of the outstanding Common Shares and prior to the
acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company
may exchange the Rights (other than Rights owned by such person
or group which have become void), in whole or in part, at an
exchange ratio of one Common Share per Right (subject to
adjustment).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
Common Shares will be issued and in lieu thereof, an adjustment
in cash will be made based on the market price of the Common
Shares on the last trading day prior to the date of exercise.
At any time prior to the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 15%
or more of the outstanding Common Shares, the Board of Directors
of the Company may redeem the Rights in whole, but not in part,
at a price of $.01 per Right (the "Redemption Price"). The
redemption of the Rights may be made effective at such time, on
such basis and with such conditions as the Board of Directors in
its sole discretion may establish. Immediately upon any
redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of
the Rights, except that from and after such time as any person
becomes an Acquiring Person no such amendment may adversely
affect the interests of the holders of the Rights (other than the
Acquiring Person and its Affiliates and Associates).
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registra-
tion Statement on Form 8-A dated August 9, 1995. A copy of the
Rights Agreement is available free of charge from the Company.
This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to
the Rights Agreement, which is hereby incorporated herein by
reference.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Income and the Consolidated Balance Sheet and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,288
<SECURITIES> 2,254
<RECEIVABLES> 1,488
<ALLOWANCES> 0
<INVENTORY> 863
<CURRENT-ASSETS> 6,263
<PP&E> 32,346
<DEPRECIATION> 16,699
<TOTAL-ASSETS> 24,160
<CURRENT-LIABILITIES> 4,238
<BONDS> 6,752
<COMMON> 402
0
1
<OTHER-SE> 6,207
<TOTAL-LIABILITY-AND-EQUITY> 24,160
<SALES> 8,667
<TOTAL-REVENUES> 9,142
<CGS> 6,526
<TOTAL-COSTS> 6,721
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 400
<INCOME-PRETAX> 1,183
<INCOME-TAX> 412
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 713
<EPS-PRIMARY> $4.36
<EPS-DILUTED> $4.36
</TABLE>
