SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 18, 1994
REYNOLDS METALS COMPANY
(Exact name of registrant as specified in its charter)
Delaware 1-1430 54-0355135
(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
6601 West Broad Street
P. O. Box 27003
Richmond, Virginia 23261-7003
(Address of Principal Executive Offices,
including zip code)
(804) 281-2000
(Registrant's Telephone Number, including area code)
Item 5. Other Events.
On January 25, 1994 the registrant completed the sale of 11,000,000 shares
of its 7% PRIDES*, Convertible Preferred Stock (the "Preferred Stock"),
including 1,000,000 shares purchased by underwriters in connection with the
exercise of an over-allotment option, under agreements with underwriters
entered into on January 18, 1994. A final form of prospectus dated January 18,
1994 (attached hereto as Exhibit 99 and incorporated herein by reference) to be
used in connection with the public offering of the Preferred Stock was filed
with the Securities and Exchange Commission on January 20, 1994.
* Service mark of Merrill Lynch & Co., Inc.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits.
Exhibit 1(a) Purchase Agreement dated January 18, 1994 between
Reynolds Metals Company, on the one hand, and Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and CS First Boston Corporation as
representatives (the "Representatives") of the several
Underwriters named in Schedule A thereto, on the other
Exhibit 1(b) Pricing Agreement dated January 18, 1994 between
Reynolds Metals Company and the Representatives
Exhibit 4(a) Certificate of Designations, Preferences, Rights and
Limitations of the 7% PRIDES, Convertible Preferred
Stock
Exhibit 4(b) Form of 7% PRIDES, Convertible Preferred Stock
certificate
Exhibit 99 Prospectus dated January 18, 1994
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
REYNOLDS METALS COMPANY
By: D. Michael Jones
D. Michael Jones
Vice President, General
Counsel and Secretary
Dated: January 26, 1994
INDEX TO EXHIBITS
EXHIBIT SEQUENTIAL
NO. DESCRIPTION OF EXHIBIT PAGE NO.
1(a) Purchase Agreement dated January 18, 1994 _____
between Reynolds Metals Company, on the one
hand, and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and CS First
Boston Corporation as representatives (the
"Representatives") of the several Underwriters
named in Schedule A thereto, on the other
1(b) Pricing Agreement dated January 18, 1994 _____
between Reynolds Metals Company and the
Representatives
4(a) Certificate of Designations, Preferences, Rights _____
and Limitations of the 7% PRIDES, Convertible
Preferred Stock
4(b) Form of 7% PRIDES, Convertible Preferred Stock _____
certificate
99 Prospectus dated January 18, 1994 _____
F:\BFH\SEC\8K\FORM8K94.118
EXHIBIT 1(a)
REYNOLDS METALS COMPANY
10,000,000 Shares
Preferred Redeemable Increased Dividend Equity Securities*
7% PRIDES*, Convertible Preferred Stock
(Stated Value $47.25 per Share)
PURCHASE AGREEMENT
January 18, 1994
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
CS FIRST BOSTON CORPORATION
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281
Dear Sirs:
Reynolds Metals Company, a Delaware corporation (the "Company"), confirms
its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), CS First Boston Corporation ("CS First Boston")
and each of the other Underwriters named in Schedule A hereto (collectively the
"Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 7), for whom Merrill Lynch and CS First Boston
are acting as representatives (in such capacity, Merrill Lynch and CS First
Boston shall hereinafter be referred to as the "Representatives"), with
respect to the sale by the Company and the purchase by the Underwriters, acting
severally and not jointly, of 10,000,000 shares of the Company's Preferred
Redeemable Increased Dividend Equity Securities*, 7% PRIDES*, Convertible
Preferred Stock and with respect to the grant by the Company to the
Underwriters, acting severally and not jointly, of the option described in
Section 2 hereof to purchase up to 1,000,000 additional shares of such
preferred stock to cover over-allotments. The aforesaid 10,000,000 shares of
preferred stock (the "Initial Securities") and all or any part of the 1,000,000
additional shares of preferred stock subject to the option described in Section
2 hereof (the "Option Securities") are collectively herein referred to as the
"Securities".
Prior to the purchase and public offering of the Securities by the several
Underwriters, the Company and the Representatives, acting on behalf of the
several Underwriters, shall enter into an agreement substantially in the form
_________________
* Service mark of Merrill Lynch & Co., Inc.
<PAGE>
of Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement may take
the form of an exchange of any standard form of written telecommunication
between the Company and the Representatives and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the
Securities will be governed by this Agreement, as supplemented by the Pricing
Agreement. From and after the date of the execution and delivery of the
Pricing Agreement, this Agreement shall be deemed to incorporate the Pricing
Agreement.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 33-51631) and a related
preliminary prospectus for the registration of the Securities under the
Securities Act of 1933, as amended (the "Act"), and has filed such amendments
thereto, if any, and such amended preliminary prospectuses as may have been
required to the date hereof, and will file such additional amendments thereto
and such amended prospectuses as may hereafter be required. Such registration
statement (as amended, if applicable) and the prospectus constituting a part
thereof (including in each case the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Act and the information, if any,
deemed to be part thereof pursuant to Rule 430A(b) under the Act), as from time
to time amended or supplemented pursuant to the Act, are hereinafter referred
to as the "Registration Statement" and the "Prospectus", respectively, except
that if any revised prospectus shall be provided to the Underwriters by the
Company for use in connection with the offering of the Securities which differs
from the Prospectus on file at the Commission at the time the Registration
Statement becomes effective (whether or not such revised prospectus is required
to be filed by the Company pursuant to Rule 424(b) under the Act), the term
"Prospectus" shall refer to such revised prospectus from and after the time it
is first provided to the Underwriters for such use.
1. (a) The Company represents and warrants to each Underwriter as of the
date hereof and as of the date of the Pricing Agreement (such latter date being
hereinafter referred to as the "Representation Date") as follows:
(i) At the time the Registration Statement becomes effective the
Registration Statement will comply in all material respects with the
requirements of the Act and the rules and regulations promulgated
thereunder and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Prospectus, at the
Representation Date (unless the term "Prospectus" refers to a prospectus
which has been provided to the Underwriters by the Company for use in
connection with the offering of the Securities which differs from the
Prospectus on file at the Commission at the time the Registration
Statement becomes effective, in which case at the time it is provided to
the Underwriters for such use) and at Closing Time referred to in Section
2, will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided, however, that the representations and warranties in
this subsection shall not apply to statements in or omissions from the
Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through the Representatives expressly for use in the
Registration Statement or the Prospectus;
(ii) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
applicable, and the rules and regulations of the Commission thereunder,
and none of such documents contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and any further
documents so filed and incorporated by reference in the Prospectus, when
such documents become effective or are filed with the Commission, as the
case may be, will conform in all material respects to the requirements of
the Act or the Exchange Act, as applicable, and the rules and regulations
of the Commission thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not apply
to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by any Underwriter
through the Representatives expressly for use in the Prospectus relating
to the Securities;
(iii) Neither the Company nor any of its Consolidated Subsidiaries
(as defined below) has sustained since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus any loss or interference with its business material to the
Company and its Consolidated Subsidiaries taken as a whole from fire,
explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Prospectus;
and, since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been (A) any
change in the capital stock of the Company (other than pursuant to
employee benefit plans, as defined in Rule 405 under the Act, or on the
conversion of convertible securities or on the exercise of warrants or
other rights outstanding on the date of this Agreement and except for
contributions of Common Stock to one or more of the pension plans the
assets of which are held under the Reynolds Metals Company Pension Plans
Master Trust), or increase of more than five percent in long-term debt
issued or guaranteed by the Company or any of its Consolidated
Subsidiaries as determined in accordance with generally accepted
accounting principles, or (B) any material adverse change or, to the best
knowledge of the Company after reasonable investigation, any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity or
results of operations of the Company and its Consolidated Subsidiaries
taken as a whole, otherwise than as set forth or contemplated in the
Prospectus (as used herein, the term "Consolidated Subsidiaries" means the
subsidiaries of the Company, the accounts of which are included in the
Consolidated Financial Statements of Reynolds Metals Company and
Consolidated Subsidiaries at the date of the latest audited financial
statements included or incorporated by reference in the Prospectus) and
(C) except for regular quarterly dividends on the Company's Common Stock,
without par value (the "Common Stock"), there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock;
(iv) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus and is duly qualified
or is in the process of qualifying as a foreign corporation for the
transaction of business and in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification; and each Material
Subsidiary (as defined below) of the Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws
of its jurisdiction of incorporation and is duly qualified as a foreign
corporation for the transaction of business and in good standing under the
laws of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification (as used
herein, the term "Material Subsidiary" means a subsidiary of the Company
which is a Significant Subsidiary under Rule 1-02 of Regulation S-X of the
Commission; provided, however, that the term "Material Subsidiary" shall
not be deemed to include Reynolds International, Inc. or Reynolds
International (Panama) Inc.);
(v) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable, and all of the issued shares of capital stock of each
Material Subsidiary of the Company have been duly and validly authorized
and issued, are fully paid and non- assessable and (except for directors'
qualifying shares) are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or claims, other than as
referred to in the Prospectus; and the Common Stock conforms to the
statements relating thereto contained in the Prospectus under "Description
of Capital Stock";
(vi) The Securities have been duly authorized, and, when the
Securities are issued and delivered pursuant to this Agreement and the
Pricing Agreement, the Securities will be validly issued and fully paid
and non-assessable; the Securities will be substantially in the form filed
as an exhibit to the Registration Statement; the Securities conform to the
descriptions thereof in the Prospectus under "Prospectus Summary - The
Offering" and "Description of PRIDES"; and the issuance of the Securities
is not subject to preemptive or other similar rights;
(vii) The shares of Common Stock issuable upon conversion of the
Securities have been duly and validly authorized and reserved for issuance
upon such conversion by all necessary corporate action and such shares,
when issued upon such conversion, will be duly and validly issued and will
be fully paid and non-assessable, and the issuance of such shares upon
such conversion will not be subject to preemptive or similar rights;
(viii) The Company is not in violation of its Restated Certificate
of Incorporation or By-Laws and neither the Company nor any of its
Material Subsidiaries is in default in the performance or observance of
any material obligation, agreement, covenant or condition contained in any
material contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Company or any of the Company's Material
Subsidiaries is a party, by which the Company or any of its Material
Subsidiaries is bound, or to which any of the property or assets of the
Company or any of the Company's Material Subsidiaries is subject, the
effect of which would require disclosure in the Prospectus in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; and the issue and sale of the Securities
and the compliance by the Company with all of the provisions of the
Securities, this Agreement and the Pricing Agreement, and the consummation
of the transactions herein and therein contemplated, will not result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any statute, indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of
the Company's Material Subsidiaries is a party or by which the Company or
any of the Company's Material Subsidiaries is bound, the Company's
Restated Certificate of Incorporation or By-Laws, or any applicable law or
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of the
Company's Material Subsidiaries or any of their properties; and no
consent, approval, authorization or order of any court or governmental
agency or body is required for the issue and sale of the Securities, the
compliance by the Company with all of the provisions of this Agreement or
the Pricing Agreement and consummation by the Company of the transactions
contemplated by this Agreement or the Pricing Agreement except such as may
be required under the Act, the Exchange Act, or state securities or Blue
Sky laws in connection with the purchase and distribution of the
Securities by the Underwriters;
(ix) There are no legal or governmental proceedings pending to which
the Company or any of the Company's Material Subsidiaries is a party or of
which any property of the Company or any of the Company's Material
Subsidiaries is the subject and which are required to be disclosed in the
Prospectus, other than as set forth in the Prospectus and other than
litigation incident to the kind of business conducted by the Company and
its Material Subsidiaries which, if determined adversely to the Company
and the Company's Material Subsidiaries, would not individually or in the
aggregate have a material adverse effect on the financial position,
stockholders' equity or results of operations of the Company and its
Consolidated Subsidiaries taken as a whole, and, to the best of the
Company's knowledge after reasonable investigation, no such proceedings
are threatened by governmental authorities or threatened by others;
(x) Ernst & Young, who have certified the consolidated financial
statements of Reynolds Metals Company and Consolidated Subsidiaries, are,
to the best knowledge of the Company, independent public accountants with
respect to Reynolds Metals Company and Consolidated Subsidiaries as
required by the Act and the rules and regulations of the Commission
thereunder;
(xi) The financial statements included or incorporated by reference
in the Registration Statement and the Prospectus present fairly the
consolidated financial position of the Company and its Consolidated
Subsidiaries, as at the dates indicated and the consolidated results of
their operations and cash flows for the periods specified; and except as
otherwise stated in the Registration Statement, said financial statements
have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis;
(xii) This Agreement has been, and, at the Representation Date, the
Pricing Agreement will have been, duly executed and delivered by the
Company; and
(xiii) Subject to the next sentence, the Company is in compliance
with all provisions of Section 517.075 of the Florida statutes, and all
rules and regulations promulgated thereunder relating to issuers doing
business in Cuba. The Company has made, and expects to continue making,
shipments to the U.S. military base located at Guantanamo Bay, Cuba, such
shipments in 1993 having consisted of consumer and related products sold
to DECA East Service Center.
(b) Any certificate signed by any officer of the Company and delivered to
the Representatives or the counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
2. (a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Company, at
the price per share set forth in the Pricing Agreement, the numbers of Initial
Securities set forth in Schedule A opposite the name of such Underwriter, plus
any additional number of Initial Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 7 hereof.
(i) If the Company has elected not to rely upon Rule 430A under the Act,
the initial public offering price and the purchase price per share to be paid
by the several Underwriters for the Securities have each been determined and
set forth in the Pricing Agreement, dated the date hereof, and an amendment to
the Registration Statement and the Prospectus will be filed before the
Registration Statement becomes effective.
(ii) If the Company has elected to rely upon Rule 430A under the Act, the
purchase price per share to be paid by the several Underwriters for the
Securities shall be an amount equal to the initial public offering price, less
an amount per share to be determined by agreement between the Representatives
and the Company. The initial public offering price and the purchase price,
when so determined, shall be set forth in the Pricing Agreement. In the event
that such prices have not been agreed upon and the Pricing Agreement has not
been executed and delivered by all parties thereto by the close of business on
the fourth business day following the date of this Agreement, this Agreement
shall terminate forthwith, without liability of any party to any other party,
unless otherwise agreed to by the Company and the Representatives.
(b) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company hereby grants an option to the Underwriters, severally and not jointly,
to purchase all or any part of the Option Securities at the purchase price set
forth in the Pricing Agreement, less an amount equal to any dividend declared
by the Company and payable on any Initial Security and not payable on such
Option Security. The option hereby granted will expire 30 days after (i) the
date the Registration Statement becomes effective, if the Company has elected
not to rely upon Rule 430A under the Act, or (ii) the Representation Date, if
the Company has elected to rely upon Rule 430A under the Act, and may be
exercised one time in whole or in part only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Representatives to
the Company setting forth the total number of Option Securities as to which the
several Underwriters are exercising the option and the time and date of payment
and delivery for such Option Securities. Such time and date of delivery (the
"Date of Delivery") shall be determined by the Representatives, but shall not
be later than seven full business days and not earlier than two full business
days after the exercise of said option, nor in any event prior to Closing Time,
as hereinafter defined, unless otherwise agreed to by the Representatives and
the Company. If the option is exercised as to all or any portion of the Option
Securities, each of the Underwriters, acting severally and not jointly, will
purchase that proportion of the total number of Option Securities then being
purchased which the number of Initial Securities set forth in Schedule A
opposite the name of such Underwriter bears to the total number of Initial
Securities, subject to such adjustments as the Representatives, in their
discretion, shall make to eliminate any sales or purchases of fractional
shares.
(c) Payment of the purchase price for, and delivery of the Initial
Securities shall be made at the office of Brown & Wood, One World Trade Center,
New York, New York 10048, or at such other place as shall be agreed upon by the
Representatives and the Company, at 10:00 AM., New York City time, on the fifth
business day following the date the Registration Statement becomes effective
(or, if the Company has elected to rely upon Rule 430A under the Act, the fifth
business day after execution of the Pricing Agreement), or such other time not
later than ten business days after such date as shall be agreed upon by the
Representatives and the Company (such time and date of payment and delivery
being herein called the "Closing Time"). In addition, in the event that any or
all of the Option Securities are purchased by the Underwriters, payment of the
purchase price for, and delivery of such Option Securities shall be made at the
above mentioned office of Brown & Wood, or at such other place as shall be
agreed upon by the Representatives and the Company, on the Date of Delivery as
specified in the notice from the Representatives to the Company. Payment shall
be made to the Company by certified or official bank check or checks drawn in
New York Clearing House funds or similar next day funds payable to the order of
the Company, against delivery to the Representatives of certificates for the
Securities to be purchased by them. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such authorized denominations
and registered in such names as the Representatives may request in writing at
least two business days before Closing Time or the Date of Delivery, as the
case may be. The Representatives, individually and not as representative of
the Underwriters, may (but shall not be obligated to) make payment of the
purchase price for the Securities to be purchased by any Underwriter whose
check has not been received by Closing Time, but such payment shall not relieve
such Underwriter from its obligation hereunder. The certificates for the
Initial Securities and the Option Securities, if any, will be made available
for examination and packaging by the Representatives not later than 10:00 A.M.
New York Time on the last business day prior to Closing Time or Date of
Delivery, as the case may be.
3. The Company covenants with each Underwriter as follows:
(a) The Company will notify the Representatives immediately upon
becoming aware of (i) the effectiveness of the Registration Statement and
any amendment thereto (including any post-effective amendment), (ii) the
receipt of any written comments from the Commission, (iii) any request by
the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information,
and (iv) the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
(b) The Company will give the Representatives notice of its
intention to file any amendment to the Registration Statement (including
any post-effective amendment) or any amendment or supplement to the
Prospectus (including any revised prospectus which the Company proposes
for use by the Underwriters in connection with the offering of the
Securities which differs from the prospectus on file at the Commission at
the time the Registration Statement becomes effective, whether or not such
revised prospectus is required to be filed pursuant to Rule 424(b) under
the Act), will furnish the Representatives with copies of any such
amendment or supplement or other document proposed to be filed a
reasonable amount of time prior to such proposed filing or use, as the
case may be, and will not file any such amendment or supplement or other
document or use any such prospectus to which the Representatives or
counsel for the Underwriters shall reasonably object.
(c) The Company will deliver to the Representatives as many signed
copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated by reference into the
Prospectus pursuant to Item 12 of Form S-3 under the Act) as the
Representatives may reasonably request and will also deliver to each of
the Representatives a conformed copy of the Registration Statement and of
each amendment thereto.
(d) The Company agrees promptly from time to time to take such
action as the Representatives may reasonably request to qualify such
Securities and the Common Stock into which the securities are convertible
for offering and sale under the securities laws of such states and other
jurisdictions as the Representatives may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution
of such Securities; provided, that in connection therewith the Company
shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction. In each
jurisdiction in which the Securities and the Common Stock have been so
qualified, the Company will file, upon the request of the Representatives,
such statements and reports, upon the request of the Representatives, as
may be required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year from the
effective date of the Registration Statement. The Company will promptly
advise the Representatives of the receipt by it of any notification with
respect to the suspension of the qualification of the Securities or the
Common Stock for sale in any jurisdiction or the initiating or threatening
of any proceeding for such purpose.
(e) The Company will furnish to the Underwriters, from time to time
during the period when the Prospectus is required to be delivered under
the Act or the Exchange Act, such number of copies of the Prospectus (as
amended or supplemented) as the Underwriters may reasonably request for
the purposes contemplated by the Act or the Exchange Act or the respective
applicable rules and regulations of the Commission thereunder; and if at
such time any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made when such Prospectus is delivered, not
misleading, or, if for any reason it shall be necessary during such period
to amend or supplement the Prospectus in order to comply with the Act,
notify the Representatives and upon the Representatives' request to file
such document and to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended
Prospectus or supplement to the Prospectus which will correct such
statement or omission or effect such compliance, and in case any
Underwriter is required to deliver a Prospectus in connection with sales
of the Securities at any time nine months or more after the time of issue
of the Prospectus, upon the Representatives' request but at the expense of
such Underwriter, to prepare and deliver to such Underwriter as many
copies as the Representatives may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act.
(f) If any event shall occur or condition exist as a result of which
it is necessary to amend or supplement the Prospectus in order to make the
Prospectus not misleading in the light of the circumstances existing at
the time it is delivered to a purchaser, the Company will forthwith amend
or supplement the Prospectus (in form and substance satisfactory to
counsel for the Underwriters), whether by filing documents pursuant to the
Exchange Act or otherwise, as may be necessary so that, as so amended or
supplemented, the Prospectus will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein in the light of the circumstances existing at the
time it is delivered to a purchaser, not misleading.
(g) The Company will make generally available to its security
holders as soon as practicable, but not later than 90 days after the close
of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the Act) covering a twelve month
period beginning not later than the first day of the Company's fiscal
quarter next following the "effective date" (as defined in said Rule 158)
of the Registration Statement.
(h) If, at the time that the Registration Statement becomes
effective, any information shall have been omitted therefrom in reliance
upon Rule 430A under the Act, then immediately following the execution of
the Pricing Agreement, the Company will prepare and file or transmit for
filing with the Commission in accordance with such Rule 430A and Rule
424(b) under the Act, copies of an amended Prospectus, or, if required by
such Rule 430A, a post-effective amendment to the Registration Statement
(including an amended Prospectus), containing all information so omitted.
(i) Except for Common Stock or options issued pursuant to
reservations, agreements, dividend reinvestment plans, employee benefit
plans (as defined in Rule 405 under the Act) or stock option plans or upon
conversion of the Securities and except for contributions of Common Stock
to one or more of the pension plans the assets of which are held under the
Reynolds Metals Company Pension Plans Master Trust, the Company will not
for a period of 90 days after the date hereof, without the
Representatives' prior written consent, directly or indirectly, sell,
offer to sell, grant any option for the sale of, or otherwise dispose of,
any shares of its capital stock or securities convertible into or
exchangeable for capital stock of the Company other than to the
Underwriters pursuant to this Agreement.
4. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Securities under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any preliminary prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Pricing Agreement, any
Blue Sky Survey and any other documents in connection with the offering,
purchase, sale and delivery of the Securities; (iii) all expenses in connection
with the qualification of the Securities for offering and sale under state
securities laws as provided in Section 3(d) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky and legal investment surveys;
(iv) any fees charged by securities rating services for rating the Securities;
(v) the filing fees, if any, incident to securing any required review by the
National Association of Securities Dealers, Inc. of the terms of the sale of
the Securities; (vi) the cost of preparing certificates for the Securities;
(vii) the fees and expenses incurred in connection with the quotation or
listing of the Securities and the Common Stock issuable upon conversion thereof
on the New York Stock Exchange; and (viii) all other costs and expenses
incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section. It is understood,
however, that, except as provided in this Section, Section 6 and Section 10
hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, transfer taxes on resale of any of the
Securities by them and any advertising expenses connected with any offers they
may make.
5. The obligations of the several Underwriters hereunder shall be
subject, in their discretion, to the condition that all representations and
warranties and other statements of the Company herein are true and correct, the
condition that the Company shall have performed all of its respective
obligations hereunder, and the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M. on the date hereof, or with the consent of the
Representatives, at a later time and date, not later, however, than 5:30
P.M. on the first business day following the date hereof, or at such later
time and date as may be approved by the Underwriters; and at Closing Time
no stop order suspending the effectiveness of the Registration Statement
shall be in effect under the Act or proceedings therefor initiated or
threatened by the Commission. If the Company has elected to rely upon
Rule 430A under the Act, the price of the Securities and any information
previously omitted from the effective Registration Statement pursuant to
such Rule 430A shall have been transmitted to the Commission for filing
pursuant to Rule 424(b) under the Act within the prescribed time period,
and prior to Closing Time the Company shall have provided evidence
satisfactory to the Representatives of such timely filing, or a
post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements
of Rule 430A under the Act.
(b) At the Closing Time, Brown & Wood, counsel for the Underwriters,
shall have furnished to the Underwriters such opinion or opinions, dated
as of the Closing Time, with respect to the incorporation of the Company,
the validity of the Securities, the Registration Statement, the Prospectus
and other related matters as the Underwriters may reasonably request, and
such counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters.
(c) At the Closing Time, counsel for the Company satisfactory to the
Representatives shall have furnished to the Representatives their written
opinion, dated as of the Closing Time, in form and substance satisfactory
to the Representatives, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware. The Company has the requisite corporate power to
own its properties and conduct its business as described in the
Prospectus;
(ii) The Company has been duly qualified or is in the process
of qualifying as a foreign corporation for the transaction of
business and is in good standing under the laws of each jurisdiction
(other than that of its incorporation) in which it owns or leases
properties, or conducts any business, so as to require such
qualification;
(iii) The Company has an authorized capitalization as set forth
in the Prospectus and all of the issued shares of capital stock of
the Company have been duly and validly authorized and issued and are
fully paid and non-assessable;
(iv) Each Material Subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation and has
been duly qualified or is in the process of qualifying as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification; and all of the issued shares of capital stock of each
such Material Subsidiary have been duly and validly authorized and
issued and are fully paid and non-assessable;
(v) To the best of such counsel's knowledge, there are no legal
or governmental proceedings pending to which the Company or any of
the Company's Material Subsidiaries is a party or of which any
property of the Company or any of the Company's Material Subsidiaries
is subject, other than as set forth in the Prospectus and other than
proceedings none of which is material to the Company and its
Consolidated Subsidiaries taken as a whole; and to the best of such
counsel's knowledge no such proceedings are threatened by
governmental authorities or threatened by others;
(vi) This Agreement and the Pricing Agreement have been duly
authorized, executed and delivered by the Company;
(vii) The Securities have been duly and validly authorized by
all necessary corporate action and, when issued and delivered against
payment pursuant to this Agreement, will be validly issued and fully
paid and non-assessable; the Securities conform to the provisions of
the Certificate of Designations; the relative rights, preferences,
interests and powers of the Securities are as set forth in the
Certificate of Designations relating thereto, and all such provisions
are valid under the Delaware General Corporation Law; and the form of
certificate used to evidence the Securities is in due and proper form
and complies with all applicable requirements of the Delaware General
Corporation Law;
(viii) The issuance of the Securities is not subject to
preemptive or other similar rights;
(ix) The Securities and the Common Stock conform to the
descriptions thereof in the Prospectus under "Prospectus Summary -
The Offering", "Description of PRIDES" and "Description of Capital
Stock";
(x) The shares of Common Stock issuable upon conversion of the
Securities have been duly authorized and reserved for issuance upon
such conversion by all necessary corporate action; such shares, when
issued upon such conversion, will be duly and validly issued and will
be fully paid and non-assessable; and the issuance of such shares
upon such conversion are not subject to preemptive or similar rights;
(xi) The Company is not, and upon the issuance and sale of the
Securities the Company will not be, an "investment company" required
to register as such under the Investment Company Act of 1940, as
amended;
(xii) The issue and sale of the Securities and the compliance
by the Company with all of the provisions of the Securities, this
Agreement and the Pricing Agreement with respect to the Securities
and the consummation of the transactions herein and therein
contemplated will not result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any statute,
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument known to such counsel to which the Company or any of
the Company's Material Subsidiaries is a party or by which the
Company or any of the Company's Material Subsidiaries is bound, the
Company's Restated Certificate of Incorporation or By-Laws, or any
order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the Company or
any of its Material Subsidiaries or any of their properties;
(xiii) The Registration Statement is effective under the Act
and, to the best of such counsel's knowledge and information, no stop
order suspending the effectiveness of the Registration statement has
been issued under the Act or proceedings therefor initiated or
threatened by the Commission;
(xiv) The statements in the Prospectus under the caption
"Federal Income Tax Considerations" to the extent that they
constitute matters of federal law or legal conclusions pertaining
thereto, have been reviewed by such counsel and fairly present the
information therein in all material respects (such counsel being
entitled to rely with respect to such opinion on the opinion of
Robert A. Warwick, Esq., Tax Counsel of the Company);
(xv) No consent, approval, authorization or order of any court
or governmental agency or body is required for the issue and sale of
the Securities, the compliance by the Company with this Agreement or
the Pricing Agreement and the consummation by the Company of the
transactions contemplated by this Agreement or the Pricing Agreement,
except such as have been obtained under the Act, the Exchange Act and
such as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Securities by
the Underwriters;
(xvi) The documents incorporated by reference in the Prospectus
(other than the financial statements and related schedules therein,
the financial information set forth in Management's Discussion and
Analysis of Financial Condition and Results of Operations, and other
financial information, as to which such counsel need express no
opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all material
respects with the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder; and such counsel has no reason to believe that any of
such documents, when they became effective or were so filed, as the
case may be, contained, in the case of a registration statement which
became effective under the Act, an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading,
and, in the case of other documents which were filed under the Act or
the Exchange Act with the Commission, an untrue statement of a
material fact or omitted to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made when such documents were so filed, not
misleading;
(xvii) The Registration Statement and the Prospectus (other
than the financial statements and related schedules therein, the
financial information set forth in Management's Discussion and
Analysis of Financial Condition and Results of Operations, and other
financial information, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Act and the rules and regulations thereunder; the
information included in the Registration Statement in response to
Items 9 and 10 (insofar as it relates to such counsel) of Form S-3
are to the best of such counsel's knowledge materially accurate
statements or summaries of the matters therein set forth and fairly
present in all material respects the information called for with
respect to those matters by the Act and the rules and regulations
thereunder; such counsel has no reason to believe that, the
Registration Statement, at the time it became effective or at the
Representation Date, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus, at the Representation Date (unless the term "Prospectus"
refers to a prospectus which has been provided to the Underwriters by
the Company for use in connection with the offering of the Securities
which differs from the Prospectus on file at the Commission at the
Representation Date, in which case at the time it is first provided
to the Underwriters for such use) or at the Closing Time, contained
or contains an untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and
(xviii) Such counsel does not know of any contracts or other
documents of a character required to be filed as an exhibit to the
Registration Statement or required to be incorporated by reference in
the Prospectus or required to be described in the Registration
Statement or the Prospectus which are not filed or incorporated by
reference or described as required.
(d) At the time of the execution of this Agreement and at the
Closing Time, the independent accountants of the Company who have
certified the financial statements of the Company and its Consolidated
Subsidiaries included or incorporated by reference in the Registration
Statement shall have furnished to the Underwriters a letter, dated the
date of this Agreement, and a letter dated as of the Closing Time,
respectively, substantially to the effect set forth in Exhibit B hereto,
and as to such other matters as the Underwriters may reasonably request
and in form and substance satisfactory to the Representatives;
(e) (i) Neither the Company nor any of its Consolidated Subsidiaries
shall have sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus any
loss or interference with its business material to the Company and its
Consolidated Subsidiaries taken as a whole from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, and (ii) since
the respective dates as of which information is given in the Prospectus
there shall not have been any change in the capital stock of the Company
(other than pursuant to employee benefit plans, as defined in Rule 405
under the Act, or on the conversion of convertible securities or on the
exercise of warrants or other rights outstanding on the date of this
Agreement and except for contributions of Common Stock to one or more of
the pension plans the assets of which are held under the Reynolds Metals
Company Pension Plans Master Trust), or increase of more than five percent
in long-term debt issued or guaranteed by the Company or any of its
Consolidated Subsidiaries as determined in accordance with generally
accepted accounting principles or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
Consolidated Subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in Clause (i) or (ii), is in the judgment of the Representatives
so material and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Securities on the
terms and in the manner contemplated in the Prospectus;
(f) Subsequent to the date of this Agreement, no downgrading shall
have occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the Act,
and no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its ratings
of any of the Company's debt securities;
(g) Subsequent to the date of this Agreement, there shall not have
occurred any of the following: (i) a suspension in trading in the Common
Stock, or a suspension or material limitation in trading in securities
generally, on the New York Stock Exchange; (ii) a general moratorium on
commercial banking activities in New York declared by either Federal or
New York State authorities; or (iii) the outbreak or escalation of
hostilities involving the United States, or the declaration by the United
States of a national emergency or war, if the effect of any such event
specified in this Clause (iii) in the judgment of the Underwriters makes
it impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities on the terms and in the manner contemplated in
the Prospectus; and
(h) The Company shall have furnished or caused to be furnished to
the Representatives at the Closing Time a certificate or certificates of
officers of the Company, satisfactory to the Representatives, as to the
accuracy of the representations and warranties of the Company herein at
and as of such Closing Time and as to the performance by the Company of
all of its obligations hereunder to be performed at or prior to the
Closing Time, and as such other matters as the Representatives may
reasonably request, and the Company shall have furnished or caused to be
furnished certificates as to the matters set forth in subsections (a) and
(e) of this Section, and as to such other matters as the Representatives
may reasonably request.
(i) In the event the Underwriters exercise their option to purchase
all or any portion of the Option Securities, the representations and
warranties of the Company contained herein and the statements in any
certificates furnished by the Company hereunder shall be true and correct
as of the Date of Delivery, and the Representatives shall have received:
(i) A certificate or certificates, dated such Date of Delivery,
of officers of the Company, satisfactory to the Representatives,
confirming that the certificate or certificates delivered at Closing
Time pursuant to Section 5(h) hereof remain true and correct as of
such Date of Delivery.
(ii) The favorable opinion of counsel to the Company, in form
and substance satisfactory to counsel for the Underwriters, dated
such Date of Delivery, relating to the Option Securities and
otherwise substantially to the same effect as the opinion required by
Section 5(c) hereof.
(iii) The favorable opinion of Brown & Wood, counsel for the
Underwriters, dated such Date of Delivery, relating to the Option
Securities and otherwise to the same effect as the opinion required
by Section 5(b) hereof.
(iv) A letter from Ernst & Young, in form and substance
satisfactory to the Representatives and dated such Date of Delivery,
substantially the same in scope and substance as the letter furnished
to the Underwriters pursuant to Section 5(d) hereof, except that the
"specified date" in the letter furnished pursuant to this Section
5(i)(iv) shall be a date not more than five days prior to such Date
of Delivery.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Representatives by notice to the Company at any time at or prior to Closing
Time, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and Section 6 hereof.
6. (a) The Company will, indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any preliminary prospectus, the Registration
Statement, including the information deemed to be part of the Registration
Statement pursuant to Rule 430(b) under the Act, if applicable, the Prospectus
and any other prospectus relating to the Securities, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
each Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such action or
claim; provided, however, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any preliminary prospectus, the Registration
Statement, the Prospectus and any other prospectus relating to the Securities,
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representatives expressly for use in such document relating to the Securities.
(b) Each Underwriter will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus, the Registration Statement, the Prospectus and any
other prospectus relating to the Securities, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any preliminary prospectus, the
Registration Statement, the Prospectus and any other prospectus relating to the
Securities, or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter through the Representatives expressly for use therein; and will
reimburse the Company for any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending any such action or
claim.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. The
indemnifying party will not, without the prior written consent of the
indemnified party or parties, settle or compromise or consent to the entry of
any judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not any
indemnified party is a party to such claim, action, suit or proceeding), unless
such settlement, compromise, or consent includes an unconditional release of
such indemnified party and each officer, director of controlling person of such
indemnified party from all liability arising out of such claim, action, suit or
proceeding.
(d) If the indemnification provided for in this Section 6 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a)
or (b) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the offering of the Securities to which such loss, claim, damage or liability
(or action in respect thereof relates). If, however, the allocation provided
by the immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under subsection (c)
above, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and the Underwriters on the other in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from such offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company on the one
hand or such Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Securities underwritten by it and designated to the public were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11 (f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Underwriters in this subsection (d)
to contribute are several in proportion to their respective underwriting
obligations with respect to the Securities and not joint.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations of
the Underwriters under this Section 6 shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend, upon the
same terms and conditions, to each officer and director of the Company and to
each person, if any, who controls the Company within the meaning of the Act.
7. (a) If any Underwriter shall default in its obligation to purchase the
Securities which it has agreed to purchase under this Agreement and the Pricing
Agreement, the non-defaulting Underwriters may in their discretion arrange for
themselves or another party or other parties to purchase such Securities on the
terms contained herein. If within 36 hours after such default by any
Underwriter the non-defaulting Underwriters do not arrange for the purchase of
such Securities, then the Company shall be entitled to a further period of 36
hours within which to procure another party or other parties satisfactory to
the non-defaulting Underwriters to purchase such Securities on such terms. In
the event that, within the respective prescribed period, the non-defaulting
Underwriters notify the Company that they have so arranged for the purchase of
such Securities, or the Company notifies the non-defaulting Underwriters that
it has so arranged for the purchase of such Securities, the non-defaulting
Underwriters or the Company shall have the right to postpone the Closing Time
for such Securities for a period of not more than seven days in order to effect
whatever changes may thereby be made necessary in the Registration Statement or
the Prospectus, or in any other documents or arrangements, and the Company
agrees to file promptly any amendments or supplements to the Registration
Statement or the Prospectus which in the opinion of the non-defaulting
Underwriters may thereby be made necessary. The term Underwriter as used in
this Agreement shall include any person substituted under this Section with
like effect as if such person had originally been a party to this Agreement and
the Pricing Agreement.
(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters as provided in
subsection (a) above, the total number of the Securities which remains
unpurchased does not exceed one-eleventh of the total number of the Securities,
then the Company shall have the right to require each non-defaulting
Underwriter to purchase the number of Securities which such Underwriter agreed
to purchase under the Pricing Agreement and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the number
of Securities which such Underwriter agreed to purchase under the Pricing
Agreement) of the Securities of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters as provided in
subsection (a) above, the total number of Securities which remains unpurchased
exceeds one-eleventh of the total number of the Securities, as referred to in
subsection (b) above, or if the Company shall not exercise the right described
in subsection (b) above to require non-defaulting Underwriters to purchase
Securities of a defaulting Underwriter or Underwriters, then the Pricing
Agreement shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company, except for the expenses to be borne
by the Company and the Underwriters as provided in Section 4 hereof and the
indemnity and contribution agreements in Section 6 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
8. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Securities.
9. (a) The Representatives may terminate this Agreement, by notice to the
Company, at any time at or prior to Closing Time (i) if there shall have been,
since the date of this Agreement or since the respective dates as of which
information is given in the Registration Statement, any material adverse change
in the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its Consolidated Subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business, or (ii) if there shall have occurred any material adverse change in
the financial markets in the United States or any outbreak or escalation of
hostilities or other national or international calamity or crisis the effect of
which is such as to make it, in the Underwriters' reasonable judgment,
impracticable to market the Securities, or (iii) if trading in the Common Stock
shall have been suspended by the Commission or a national securities exchange,
or if trading generally on the New York Stock Exchange shall have been
suspended, or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required, by said
Exchange or by order of the Commission or any other governmental authority, or
if a banking moratorium has been declared by either federal or New York
authorities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except
as provided in Section 4, and provided further that Section 6 hereof shall
survive such termination.
10. If this Agreement shall be terminated pursuant to Section 7 hereof,
the Company shall not then be under any liability to any Underwriter with
respect to the Securities except as provided in Section 4 and Section 6 hereof,
but, if for any other reason Securities are not delivered by or on behalf of
the Company as provided herein, the Company will reimburse the Representatives
for all out-of-pocket expenses, including fees and disbursements of counsel,
reasonably incurred by the Representatives in making preparations for the
purchase, sale and delivery of the Securities, but the Company shall not then
be under any further liability to any Underwriter with respect to the
Securities except as provided in Section 4 and Section 6 hereof.
11. All statements, requests, notices and agreements hereunder shall be
in writing or by telegram if promptly confirmed in writing, and if to the
Underwriters shall be sufficient in all respects if delivered or sent by
registered mail to the Represenatives at the address set forth above; and if to
the Company shall be sufficient in all respects if delivered or sent by
registered mail to the address of the Company set forth in the Registration
Statement, Attention: Secretary; provided, however, that any notice to an
Underwriter pursuant to Section 6(c) hereof shall be delivered or sent by
registered mail to such Underwriter.
12. This Agreement and the Pricing Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters, the Company and, to the
extent provided in Section 6 and Section 8 hereof, the officers and directors
of the Company and each person who controls the Company or any Underwriter, and
their respective heirs, executors, administrators, successors and assigns, and
no other person shall acquire or have any right under or by virtue of this
Agreement or the Pricing Agreement. No purchaser of any of the Securities from
any Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
13. Time shall be of the essence for the Pricing Agreement.
14. This Agreement and the Pricing Agreement shall be construed in
accordance with the laws of the State of New York.
<PAGE>
15. This Agreement and the Pricing Agreement may be executed by any one
or more of the parties hereto and thereto in any number of counterparts, each
of which shall be deemed to be an original, but all such respective
counterparts shall together constitute one and the same instrument.
Very truly yours,
REYNOLDS METALS COMPANY
By: Henry S. Savedge, Jr.
Title: Executive Vice President
and Chief Financial Officer
Accepted as of the date hereof:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CS FIRST BOSTON CORPORATION
By MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: Samuel R. Chapin
(Authorized Officer or Attorney-in-fact)
For themselves and as Representatives of the other
Underwriters named in Schedule A hereto.
<PAGE>
SCHEDULE A
Number of
Name of Underwriter Initial Securities
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . . . . . . . . . . . 4,650,000
CS First Boston Corporation. . . . . . . . . . . . . . . . 4,650,000
Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . . . 100,000
Morgan Stanley & Co. Incorporated. . . . . . . . . . . . . 100,000
Salomon Brothers Inc . . . . . . . . . . . . . . . . . . . 100,000
S.G. Warburg & Co. Inc. . . . . . . . . . . . . . . . . . 100,000
Davenport & Co. of Virginia, Inc. . . . . . . . . . . . . 50,000
First Manhattan Co. . . . . . . . . . . . . . . . . . . . 50,000
Invemed Associates, Inc. . . . . . . . . . . . . . . . . . 50,000
Kemper Securities, Inc. . . . . . . . . . . . . . . . . . 50,000
Legg Mason Wood Walker, Incorporated . . . . . . . . . . . 50,000
Scott & Stringfellow, Inc. . . . . . . . . . . . . . . . . 50,000
Total . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000
EXHIBIT A
10,000,000 Shares
REYNOLDS METALS COMPANY
Preferred Redeemable Increased Dividend Equity Securities*
7% PRIDES*, Convertible Preferred Stock
(Stated Value $47.25 per Share)
PRICING AGREEMENT
January 18, 1994
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
CS FIRST BOSTON CORPORATION
as Representatives of the several Underwriters
named in the within-mentioned Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Dear Sirs:
Reference is made to the Purchase Agreement, dated January 18, 1994 (the
"Purchase Agreement"), relating to the purchase by the several Underwriters
named in Schedule A thereto (the "Underwriters"), for whom Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and CS First Boston
Corporation are acting as representatives (the "Representatives"), severally
and not jointly, of the above shares of 7% PRIDES*, Convertible Preferred Stock
(the "Securities") of Reynolds Metals Company (the "Company").
Pursuant to Section 2 of the Purchase Agreement, the Company agrees with
the Underwriters as follows:
1. The initial public offering price per share for the Securities
shall be $47.25.
2. The purchase price per share for the Securities to be paid by
the several Underwriters shall be $45.95, being an amount equal to the
initial public offering price set forth above, less $1.30 per share;
provided that the purchase price per share for any Option Securities (as
defined in the Purchase Agreement) purchased upon exercise of the
over-allotment option described in Section 2(b) of the Purchase Agreement
shall be reduced by an amount per share equal to any dividends per share
declared by the Company and payable on the Initial Securities (as defined
in the Purchase Agreement) but not payable on the Option Securities.
_________________
* Service mark of Merrill Lynch & Co., Inc.
<PAGE>
3. The dividend rate on the Securities will be 7% per annum.
4. Each Security is convertible at the option of the holder thereof
into .82 of a share of Common Stock, subject to adjustment in certain
events.
5. Payment of the purchase price for, and delivery of the
certificates for, the Securities shall be at the office of Brown & Wood,
New York, at 10:00 A.M. on the fifth business day after the execution of
this Pricing Agreement.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its
terms.
Very truly yours,
REYNOLDS METALS COMPANY
By _________________________
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CS FIRST BOSTON CORPORATION
By MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:______________________________________
(Authorized Officer or Attorney-in-fact)
For themselves and as Representatives of the other Underwriters
named in Schedule A to the Purchase Agreement.
EXHIBIT B
Pursuant to Section 5(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules examined by them and
included or incorporated by reference in the Registration Statement or the
Prospectus comply as to form in all material respects with the applicable
accounting requirements of the Act or the Exchange Act, as applicable, and
the related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the consolidated interim financial statements, selected financial data,
pro forma financial information and/or condensed financial statements
derived from audited financial statements of the Company for the periods
specified in such letter, as indicated in their reports thereon, copies of
which have been furnished to the representatives of the Underwriters (the
"Representatives");
(iii) In their opinion, the unaudited selected financial information
with respect to the consolidated results of operations and financial
position of the Company for the five most recent fiscal years included in
the Prospectus and included or incorporated by reference in Item 6 of the
Company's Annual Report on Form 10-K for the most recent fiscal year
agrees with the corresponding amounts (after restatement where applicable)
in the audited consolidated financial statements for the five such fiscal
years which were included or incorporated by reference in the Company's
Annual Reports on Form 10-K for such fiscal years;
(iv) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of
the minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included or incorporated by reference
in the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included or incorporated by reference in the Company's Quarterly
Reports on Form 10-Q incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Exchange Act as it applies to Form
10-Q and the related published rules and regulations thereunder or
are not in conformity with generally accepted accounting principles
applied on a basis substantially consistent with the basis for the
audited consolidated statements of income, consolidated balance
sheets and consolidated statements of cash flows included or
incorporated by reference in the Company's Annual Report on Form 10-K
for the most recent fiscal year;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with
the basis for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived the unaudited condensed
financial statements referred to in clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of
those statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there has been any decrease in the capital stock
of the Company, any increase in excess of five percent in the
consolidated long-term debt of the Company and consolidated
subsidiaries, any decrease in the consolidated net current assets of
the Company and its consolidated subsidiaries, or any decrease in
consolidated net assets of the Company and consolidated subsidiaries,
in each case as compared with amounts shown in the latest balance
sheet included or incorporated by reference in the Prospectus, except
in each case for increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in such
letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus to
the specified date referred to in Clause (E) there was any decrease
in net sales; consolidated income before income taxes, extraordinary
gain and cumulative effect of accounting change; or consolidated
income before extraordinary gain and cumulative effect of accounting
change, in each case as compared with the comparable period of the
preceding year and with any other period of corresponding length
specified by the Representatives, except in each case for increases
or decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(v) In addition to the examination referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (iv) above, they have carried out
certain specified procedures, not constituting an examination in
accordance with generally accepted auditing standards, with respect to
certain amounts, percentages and financial information specified by the
Representatives which are derived from the general accounting records of
the Company and its subsidiaries, which appear in the Prospectus
(excluding documents incorporated by reference), or in Part II of, or in
exhibits and schedules to, the Registration Statement specified by the
Representatives or in documents incorporated by reference in the
Prospectus specified by the Representatives, and have compared certain of
such amounts, percentages and financial information with the accounting
records of the Company and its subsidiaries and have found them to be in
agreement.
All references in this Exhibit B to the Prospectus shall be deemed to
refer to the Prospectus (including the documents incorporated by reference
therein) as defined in the Purchase Agreement as of the date of the letter
delivered on the date of the Pricing Agreement for purposes of such letter and
to the Prospectus (including the documents incorporated by reference therein)
in relation to the Securities for purposes of the letter delivered at the
Closing Time for the Securities.
EXHIBIT 1(b)
10,000,000 Shares
REYNOLDS METALS COMPANY
Preferred Redeemable Increased Dividend Equity Securities*
7% PRIDES*, Convertible Preferred Stock
(Stated Value $47.25 per Share)
PRICING AGREEMENT
January 18, 1994
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
CS FIRST BOSTON CORPORATION
as Representatives of the several Underwriters
named in the within-mentioned Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Dear Sirs:
Reference is made to the Purchase Agreement, dated January 18, 1994 (the
"Purchase Agreement"), relating to the purchase by the several Underwriters
named in Schedule A thereto (the "Underwriters"), for whom Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and CS First Boston
Corporation are acting as representatives (the "Representatives"), severally
and not jointly, of the above shares of 7% PRIDES*, Convertible Preferred Stock
(the "Securities") of Reynolds Metals Company (the "Company").
Pursuant to Section 2 of the Purchase Agreement, the Company agrees with
the Underwriters as follows:
1. The initial public offering price per share for the Securities
shall be $47.25.
2. The purchase price per share for the Securities to be paid by
the several Underwriters shall be $45.95, being an amount equal to the
initial public offering price set forth above, less $1.30 per share;
provided that the purchase price per share for any Option Securities (as
defined in the Purchase Agreement) purchased upon exercise of the
over-allotment option described in Section 2(b) of the Purchase Agreement
_________________
* Service mark of Merrill Lynch & Co., Inc.
<PAGE>
shall be reduced by an amount per share equal to any dividends per share
declared by the Company and payable on the Initial Securities (as defined
in the Purchase Agreement) but not payable on the Option Securities.
3. The dividend rate on the Securities will be 7% per annum.
4. Each Security is convertible at the option of the holder thereof
into .82 of a share of Common Stock, subject to adjustment in certain
events.
5. Payment of the purchase price for, and delivery of the
certificates for, the Securities shall be at the office of Brown & Wood,
New York, at 10:00 A.M. on the fifth business day after the execution of
this Pricing Agreement.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its
terms.
Very truly yours,
REYNOLDS METALS COMPANY
By Henry S. Savedge, Jr.
Title: Executive Vice President
and Chief Financial Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CS FIRST BOSTON CORPORATION
By MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By Samuel R. Chapin
(Authorized Officer or Attorney-in-fact)
For themselves and as Representatives of the other Underwriters
named in Schedule A to the Purchase Agreement.
EXHIBIT 4(a)
CERTIFICATE OF DESIGNATIONS,
PREFERENCES, RIGHTS AND LIMITATIONS OF
7% PRIDES, Convertible Preferred Stock
of
REYNOLDS METALS COMPANY
______________________
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
______________________
Reynolds Metals Company, a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), hereby
certifies that, under (i) authority conferred upon the Board of Directors
by the Restated Certificate of Incorporation of the Corporation, as amended
to date, (ii) the provisions of Sections 141(c) and 151 of the General
Corporation Law of the State of Delaware, and (iii) resolutions adopted by
the Board of Directors at its meeting on December 17, 1993, the 1993
Preferred Stock Committee of the Board of Directors at its meeting on
January 18, 1994 duly adopted the following resolution:
RESOLVED, that under (i) authority conferred upon the 1993
Preferred Stock Committee by the Board of Directors and (ii) authority
conferred upon the Board of Directors by the Restated Certificate of
Incorporation, as amended to date (the "Restated Certificate of
Incorporation"), the 1993 Preferred Stock Committee hereby authorizes
the issuance of 11,000,000 shares of authorized and unissued preferred
stock, without par value, of the Corporation, and hereby fixes the
designation, powers, preferences and relative, participating, optional
or other special rights, and the qualifications, limitations or
restrictions thereof, of such shares, in addition to those set forth
in the Restated Certificate of Incorporation, as follows, to be set
forth in a certificate of designations (the "Certificate of
Designations"):
Section 1. Designation and Size of Issue; Ranking. (a)
The distinctive designation of the series of preferred stock shall be
"7% PRIDES, Convertible Preferred Stock" (the "PRIDES"). The shares
are Preferred Redeemable Increased Dividend Equity Securities. The
number of shares constituting the PRIDES shall be 11,000,000 shares.
Each share of PRIDES shall have a stated value of $47.25.
(b) Any shares of the PRIDES which at any time have been
redeemed for, or converted into, Common Stock, without par value, of
the Corporation (the "Common Stock") or otherwise reacquired by the
Corporation shall, after such redemption, conversion or other
acquisition, resume the status of authorized and unissued shares of
preferred stock, without par value, of the Corporation (the "Preferred
Stock"), without designation as to series until such shares are once
more designated as part of a particular series by the Board of
Directors.
(c) The shares of PRIDES shall rank on a parity, both as to
payment of dividends and distribution of assets upon liquidation, with
any Preferred Stock issued by the Corporation after the date of this
Certificate of Designations that by its terms ranks pari passu with
the PRIDES.
Section 2. Dividends. (a) The holders of record of the
shares of PRIDES shall be entitled to receive, when and as declared by
the Board of Directors out of funds legally available therefor, cash
dividends ("Preferred Dividends") from the date of the issuance of the
shares of PRIDES at the rate per annum of 7 percent of the stated
value per share (equivalent to $3.31 per annum or $0.8275 per quarter
for each share of PRIDES), payable quarterly in arrears, on each April
1, July 1, October 1 and December 31 (each a "Dividend Payment Date")
or, if any such date is not a business day (as defined herein), the
Preferred Dividend due on such Dividend Payment Date shall be paid on
the next succeeding business day; provided, however, that, with
respect to any dividend period during which a redemption occurs, the
Corporation may, at its option, declare accrued Preferred Dividends
to, and pay such Preferred Dividends on, the date fixed for
redemption, in which case such Preferred Dividends shall be payable to
the holders of shares of PRIDES as of the record date for such
dividend payment and shall not be included in the calculation of the
related PRIDES Call Price (as defined herein). The first dividend
period shall be from the date of initial issuance of the shares of
PRIDES to but excluding April 1, 1994 and the first Preferred Dividend
shall be payable on April 1, 1994. Preferred Dividends on shares of
PRIDES shall be cumulative and shall accumulate from the date of
original issuance. Preferred Dividends on shares of PRIDES shall
cease to accrue on and after the Mandatory Conversion Date (as defined
herein) or on and after the date of their earlier conversion or
redemption, as the case may be. Preferred Dividends shall be payable
to holders of record as they appear on the stock register of the
Corporation on such record dates, not less than 15 nor more than 60
days preceding the payment date thereof, as shall be fixed by the
Board of Directors. Preferred Dividends payable on shares of PRIDES
for any period less than a full quarterly dividend period (or, in the
case of the first Preferred Dividend, from the date of initial
issuance of the shares of PRIDES to but excluding the first Dividend
Payment Date) shall be computed on the basis of a 360-day year of
twelve 30-day months and the actual number of days elapsed in any
period less than one month. Preferred Dividends shall accrue on a
daily basis whether or not there are funds of the Corporation legally
available for the payment of such dividends and whether or not such
Preferred Dividends are declared. Accrued but unpaid Preferred
Dividends shall cumulate as of the Dividend Payment Date on which they
first become payable, but no interest shall accrue on accumulated but
unpaid Preferred Dividends.
(b) As long as shares of PRIDES are outstanding, no
dividends (other than dividends payable in shares of, or warrants,
rights or options exercisable for or convertible into shares of,
Second Preferred Stock, $100 par value, of the Corporation (the
"Second Preferred Stock"), Common Stock or any other capital stock of
the Corporation ranking junior to the shares of PRIDES as to the
payment of dividends and the distribution of assets upon liquidation
(collectively, the "Junior Stock") and cash in lieu of fractional
shares in connection with any such dividend) shall be paid or declared
in cash or otherwise, nor shall any other distribution be made (other
than a distribution payable in Junior Stock and cash in lieu of
fractional shares in connection with any such distribution), on any
Junior Stock unless (i) full dividends on Preferred Stock (including
the shares of PRIDES) that does not constitute Junior Stock ("Parity
Preferred Stock") have been paid, or declared and set aside for
payment, for all dividend periods terminating at or before the date of
such Junior Stock dividend or distribution payment to the extent such
dividends are cumulative; (ii) dividends in full for the current
quarterly dividend period have been paid, or declared and set aside
for payment, on all Parity Preferred Stock to the extent such
dividends are cumulative; (iii) the Corporation has paid or set aside
all amounts, if any, then or theretofore required to be paid or set
aside for all purchase, retirement, and sinking funds, if any, for any
Parity Preferred Stock; and (iv) the Corporation is not in default on
any of its obligations to redeem any Parity Preferred Stock.
(c) As long as any shares of PRIDES are outstanding, no
shares of any Junior Stock may be purchased, redeemed, or otherwise
acquired by the Corporation or any of its subsidiaries (except in
connection with a reclassification or exchange of any Junior Stock
through the issuance of other Junior Stock (and cash in lieu of
fractional shares in connection therewith) or the purchase, redemption
or other acquisition of any Junior Stock with any Junior Stock (and
cash in lieu of fractional shares in connection therewith)) nor may
any funds be set aside or made available for any sinking fund for the
purchase or redemption of any Junior Stock unless: (i) full dividends
on Parity Preferred Stock have been paid, or declared and set aside
for payment, for all dividend periods terminating at or before the
date of such purchase, redemption or other acquisition to the extent
such dividends are cumulative; (ii) dividends in full for the current
quarterly dividend period have been paid, or declared and set aside
for payment, on all Parity Preferred Stock to the extent such
dividends are cumulative; (iii) the Corporation has paid or set aside
all amounts, if any, then or theretofore required to be paid or set
aside for all purchase, retirement, and sinking funds, if any, for any
Parity Preferred Stock; and (iv) the Corporation is not in default on
any of its obligations to redeem any Parity Preferred Stock.
(d) As long as any shares of PRIDES are outstanding,
dividends or other distributions may not be declared or paid on any
Parity Preferred Stock (other than dividends or other distributions
payable in Junior Stock and cash in lieu of fractional shares in
connection therewith), and the Corporation may not purchase, redeem or
otherwise acquire any Parity Preferred Stock (except with any Junior
Stock and cash in lieu of fractional shares in connection therewith),
unless either: (a)(i) full dividends on Parity Preferred Stock have
been paid, or declared and set aside for payment, for all dividend
periods terminating at or before the date of such Parity Preferred
Stock dividend, distribution, purchase, redemption or other
acquisition payment to the extent such dividends are cumulative; (ii)
dividends in full for the current quarterly dividend period have been
paid, or declared and set aside for payment, on all Parity Preferred
Stock to the extent such dividends are cumulative; (iii) the
Corporation has paid or set aside all amounts, if any, then or
theretofore required to be paid or set aside for all purchase,
retirement, and sinking funds, if any, for any Parity Preferred Stock;
and (iv) the Corporation is not in default on any of its obligations
to redeem any Parity Preferred Stock; or (b) with respect to the
payment of dividends only, any such dividends shall be declared and
paid pro rata so that the amounts of any dividends declared and paid
per share of PRIDES and each other share of Parity Preferred Stock
shall in all cases bear to each other the same ratio that accrued
dividends (including any accumulation with respect to unpaid dividends
for prior dividend periods, if such dividends are cumulative) per
share of PRIDES and such other shares of Parity Preferred Stock bear
to each other.
Section 3. Conversion or Redemption. (a) Unless
previously either redeemed or converted at the option of the holder in
accordance with the provisions of Section 3(c), on December 31, 1997
(the "Mandatory Conversion Date"), each outstanding share of PRIDES
shall mandatorily convert ("Mandatory Conversion") into (i) shares of
authorized Common Stock at the PRIDES Common Equivalent Rate (as
defined herein) in effect on the Mandatory Conversion Date and (ii)
the right to receive cash in an amount equal to all accrued and unpaid
Preferred Dividends on such share of PRIDES (other than previously
declared dividends payable to a holder of record as of a prior date)
to but excluding the Mandatory Conversion Date, whether or not
declared, out of funds legally available for the payment of Preferred
Dividends, subject to the right of the Corporation to redeem the
shares of PRIDES on or after December 31, 1996 (the "Initial
Redemption Date") and before the Mandatory Conversion Date and subject
to the conversion of the shares of PRIDES at the option of the holder
at any time before the Mandatory Conversion Date. The "PRIDES Common
Equivalent Rate" shall initially be one share of Common Stock for each
share of PRIDES and shall be subject to adjustment as set forth in
Sections 3(d) and 3(e). Shares of PRIDES shall cease to be
outstanding on the Mandatory Conversion Date. The Corporation shall
make such arrangements as it deems appropriate for the issuance of
certificates representing shares of Common Stock and for the payment
of cash in respect of such accrued and unpaid dividends, if any, or
cash in lieu of fractional shares, if any, in exchange for and
contingent upon surrender of certificates representing the shares of
PRIDES, and the Corporation may defer the payment of dividends on such
shares of Common Stock and the voting thereof until, and make such
payment and voting contingent upon, the surrender of certificates
representing the shares of PRIDES; provided, that the Corporation
shall give the holders of the shares of PRIDES such notice of any such
actions as the Corporation deems appropriate and upon surrender such
holders shall be entitled to receive such dividends declared and paid,
if any, on such shares of Common Stock subsequent to the Mandatory
Conversion Date.
(b)(i) Shares of PRIDES are not redeemable by the
Corporation before the Initial Redemption Date. At any time and from
time to time on or after that date until immediately before the
Mandatory Conversion Date, the Corporation shall have the right to
redeem, in whole or in part, the outstanding shares of PRIDES (subject
to the notice provisions set forth in Section 3(b)(iii)). Upon any
such redemption, the Corporation shall deliver to each holder thereof,
in exchange for each such share of PRIDES subject to redemption, the
greater of:
(A) the number of shares of Common Stock equal to the
applicable PRIDES Call Price (as defined herein) in effect on the
redemption date divided by the Current Market Price (as defined
herein) of the Common Stock, determined as of the second Trading
Day (as defined herein) immediately preceding the Notice Date (as
defined herein); or
(B) .82 of a share of Common Stock (subject to adjustment in
the same manner as the PRIDES Optional Conversion Rate (as
defined herein) is adjusted).
Preferred Dividends on the shares of PRIDES shall cease to accrue on
and after the date fixed for their redemption.
The "PRIDES Call Price" of each share of PRIDES shall be the
sum of (x) $48.077 on and after the Initial Redemption Date, to and
including March 31, 1997; $47.870 on and after April 1, 1997, to and
including June 30, 1997; $47.663 on and after July 1, 1997, to and
including September 30, 1997; $47.457 on and after October 1, 1997, to
and including November 30, 1997; and $47.25 on and after December 1,
1997, to and including December 31, 1997; and (y) all accrued and
unpaid Preferred Dividends thereon to but not including the date fixed
for redemption (other than previously declared Preferred Dividends
payable to a holder of record as of a prior date). If fewer than all
the outstanding shares of PRIDES are to be called for redemption,
shares of PRIDES to be called shall be selected by the Corporation
from outstanding shares of PRIDES not previously called by lot or pro
rata (as nearly as may be) or by any other method determined by the
Board of Directors in its sole discretion to be equitable.
(ii) The term "Current Market Price" per share of the
Common Stock on any date of determination means the lesser of (x) the
average of the Closing Prices (as defined herein) of the Common Stock
for the 15 consecutive Trading Days ending on and including such date
of determination, or (y) the Closing Price of the Common Stock for
such date of determination; provided, however, that, with respect to
any redemption of shares of PRIDES, if any event resulting in an
adjustment of the PRIDES Common Equivalent Rate occurs during the
period beginning on the first day of such 15-day period and ending on
the applicable redemption date, the Current Market Price as determined
pursuant to the foregoing shall be appropriately adjusted to reflect
the occurrence of such event.
(iii) The Corporation shall provide notice of any
redemption of the shares of PRIDES to holders of record of the shares
of PRIDES to be called for redemption not less than 15 nor more than
60 days before the date fixed for redemption. Any such notice shall
be provided by mail, sent to the holders of record of the shares of
PRIDES to be called at each such holder's address as it appears on the
stock register of the Corporation, first class postage prepaid;
provided, however, that failure to give such notice or any defect
therein shall not affect the validity of the proceeding for redemption
of any shares of PRIDES to be redeemed except as to the holder to whom
the Corporation has failed to give such notice or whose notice was
defective. A public announcement of any call for redemption shall be
made by the Corporation before, or at the time of, the mailing of such
notice of redemption. The term "Notice Date" with respect to any
notice given by the Corporation in connection with a redemption of the
shares of PRIDES means the date on which first occurs either the
public announcement of such redemption or the commencement of mailing
of the notice to the holders of shares of PRIDES, in each case
pursuant to this Section 3(b)(iii).
Each such notice shall state, as appropriate, the following
and may contain such other information as the Corporation deems
advisable:
(A) the redemption date;
(B) that all outstanding shares of PRIDES are to be
redeemed or, in the case of a redemption of fewer than all
outstanding shares of PRIDES, the number of such shares held by
such holder to be redeemed;
(C) the PRIDES Call Price, the number of shares of Common
Stock deliverable upon redemption of each share of PRIDES to be
redeemed and the Current Market Price used to calculate such
number of shares of Common Stock;
(D) the place or places where certificates for such shares
are to be surrendered for redemption; and
(E) that dividends on the shares of PRIDES to be redeemed
shall cease to accrue on and after such redemption date (except
as otherwise provided herein).
(iv) The Corporation's obligation to deliver shares of
Common Stock and provide funds upon redemption in accordance with this
Section 3(b) shall be deemed fulfilled if, on or before a redemption
date, the Corporation shall deposit with a bank or trust company, or
an affiliate of a bank or trust company, having an office or agency in
New York, New York and having (or such affiliate having) a combined
capital and surplus of at least $50,000,000 according to its last
published statement of condition, or shall set aside or make other
reasonable provision for the issuance of, such number of shares of
Common Stock as are required to be delivered by the Corporation
pursuant to this Section 3(b) upon the occurrence of the related
redemption of shares of PRIDES and for the payment of cash in lieu of
the issuance of fractional share amounts and accrued and unpaid
dividends payable in cash on the shares of PRIDES to be redeemed as
required by this Section 3(b), in trust for the account of the holders
of such shares of PRIDES to be redeemed (and so as to be and continue
to be available therefor), with irrevocable instructions and authority
to such bank or trust company that such shares and funds be delivered
upon redemption of the shares of PRIDES so called for redemption. Any
interest accrued on such funds shall be paid to the Corporation from
time to time. Any shares of Common Stock or funds so deposited and
unclaimed at the end of three years from such redemption date shall be
repaid and released to the Corporation, after which the holder or
holders of such shares of PRIDES so called for redemption shall look
only to the Corporation for delivery of shares of Common Stock and the
payment of any other funds due in connection with the redemption of
the shares of PRIDES.
(v) Each holder of shares of PRIDES called for redemption
must surrender the certificates evidencing such shares (properly
endorsed or assigned for transfer, if the Board of Directors shall so
require and the notice shall so state) to the Corporation at the place
designated in the notice of such redemption and shall thereupon be
entitled to receive certificates evidencing shares of Common Stock and
to receive any funds payable pursuant to this Section 3(b) following
such surrender and following the date of such redemption. In case
fewer than all the shares represented by any such surrendered
certificate are called for redemption, a new certificate shall be
issued at the expense of the Corporation representing the unredeemed
shares. If such notice of redemption shall have been given, and if on
the date fixed for redemption shares of Common Stock and funds
necessary for the redemption shall have been irrevocably either set
aside by the Corporation separate and apart from its other funds or
assets in trust for the account of the holders of the shares to be
redeemed (and so as to be and continue to be available therefor) or
deposited with a bank or trust company or an affiliate thereof as
provided herein or the Corporation shall have made other reasonable
provision therefor, then notwithstanding that the certificates
evidencing any shares of PRIDES so called for redemption shall not
have been surrendered, the shares represented thereby so called for
redemption shall be deemed no longer outstanding and Preferred
Dividends with respect to the shares so called for redemption and all
rights with respect to the shares so called for redemption shall
forthwith on and after such date cease and terminate (unless the
Corporation defaults on the payment of the redemption price), except
for (i) the rights of the holders to receive the shares of Common
Stock and funds, if any, payable pursuant to this Section 3(b) without
interest upon surrender of their certificates therefor and (ii) the
right of the holders, pursuant to Section 3(c) to convert the shares
of PRIDES called for redemption until immediately before the close of
business on any redemption date; provided, however, that holders of
shares of PRIDES at the close of business on a record date for any
payment of Preferred Dividends shall be entitled to receive the
Preferred Dividend payable on such shares on the corresponding
Dividend Payment Date notwithstanding the redemption of such shares
following such record date and before the Dividend Payment Date.
Holders of shares of PRIDES that are redeemed shall not be entitled to
receive dividends declared and paid on such shares of Common Stock,
and such shares of Common Stock shall not be entitled to vote, until
such shares of Common Stock are issued upon the surrender of the
certificates representing such shares of PRIDES and upon such
surrender such holders shall be entitled to receive such dividends
declared and paid on such shares of Common Stock subsequent to such
redemption date.
(c) Shares of PRIDES are convertible, in whole or in part,
at the option of the holders thereof ("Optional Conversion"), at any
time before the Mandatory Conversion Date, unless previously redeemed,
into shares of Common Stock at a rate of .82 of a share of Common
Stock for each share of PRIDES (the "PRIDES Optional Conversion
Rate"), subject to adjustment as set forth below. The right of
Optional Conversion of shares of PRIDES called for redemption shall
terminate immediately before the close of business on any redemption
date with respect to such shares.
Optional Conversion of shares of PRIDES may be effected by
delivering certificates evidencing such shares of PRIDES, together
with written notice of conversion and a proper assignment of such
certificates to the Corporation or in blank (and, if applicable, cash
payment of an amount equal to the Preferred Dividend attributable to
the current quarterly dividend period payable on such shares), to the
office of the transfer agent for the shares of PRIDES or to any other
office or agency maintained by the Corporation for that purpose and
otherwise in accordance with Optional Conversion procedures
established by the Corporation. Each Optional Conversion shall be
deemed to have been effected immediately before the close of business
on the date on which the foregoing requirements shall have been
satisfied. The Optional Conversion shall be at the PRIDES Optional
Conversion Rate in effect at such time and on such date.
Holders of shares of PRIDES at the close of business on a
record date for any payment of declared Preferred Dividends shall be
entitled to receive the Preferred Dividend payable on such shares of
PRIDES on the corresponding Dividend Payment Date notwithstanding the
Optional Conversion of such shares of PRIDES following such record
date and before such Dividend Payment Date. However, shares of PRIDES
surrendered for Optional Conversion after the close of business on a
record date for any payment of declared Preferred Dividends and before
the opening of business on the next succeeding Dividend Payment Date
must be accompanied by payment in cash of an amount equal to the
Preferred Dividends attributable to the current quarterly dividend
period payable on such date (unless such shares of PRIDES are subject
to redemption on a redemption date between such record date
established for such Dividend Payment Date and such Dividend Payment
Date). Except as provided above, upon any Optional Conversion of
shares of PRIDES, the Corporation shall make no payment of or
allowance for unpaid Preferred Dividends, whether or not in arrears,
on such shares of PRIDES as to which Optional Conversion has been
effected or for previously declared dividends or distributions on the
shares of Common Stock issued upon Optional Conversion.
(d) The PRIDES Common Equivalent Rate and the PRIDES
Optional Conversion Rate are each subject to adjustment from time to
time as provided below in this paragraph (d).
(i) If the Corporation shall pay a stock dividend or make a
distribution with respect to its Common Stock in shares of Common
Stock (including by way of reclassification of any shares of its
Common Stock), the PRIDES Common Equivalent Rate and the PRIDES
Optional Conversion Rate in effect at the opening of business on
the day following the date fixed for the determination by
stockholders entitled to receive such dividend or other
distribution shall each be increased by multiplying such PRIDES
Common Equivalent Rate and PRIDES Optional Conversion Rate by a
fraction of which the numerator shall be the sum of the number of
shares of Common Stock outstanding at the close of business on
the date fixed for such determination, immediately before such
dividend or distribution, plus the total number of shares of
Common Stock constituting such dividend or other distribution,
and of which the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date
fixed for such determination, immediately before such dividend or
distribution, such increase to become effective immediately after
the opening of business on the day following the date fixed for
such determination. For the purposes of this clause (i), the
number of shares of Common Stock at any time outstanding shall
not include shares held in the treasury of the Corporation but
shall include shares issuable in respect of certificates issued
in lieu of fractions of shares of Common Stock.
(ii) In case outstanding shares of Common Stock shall be
subdivided or split into a greater number of shares of Common
Stock, the PRIDES Common Equivalent Rate and the PRIDES Optional
Conversion Rate in effect at the opening of business on the day
following the day upon which such subdivision becomes effective
shall each be proportionately increased, and, conversely, in case
outstanding shares of Common Stock shall be combined into a
smaller number of shares of Common Stock, the PRIDES Common
Equivalent Rate and the PRIDES Optional Conversion Rate in effect
at the opening of business on the day following the day upon
which such combination becomes effective shall each be
proportionately reduced, such increases or reductions, as the
case may be, to become effective immediately after the opening of
business on the day following the day upon which such subdivision
or combination becomes effective.
(iii) If the Corporation shall, after the date of this
Certificate of Designations, issue rights or warrants to all
holders of its Common Stock entitling them (for a period not
exceeding 45 days from the date of such issuance) to subscribe
for or purchase shares of Common Stock at a price per share less
than the Current Market Price of the Common Stock (determined
pursuant to Section 3(b)(ii)) on the record date for the
determination of stockholders entitled to receive such rights or
warrants, then in each case the PRIDES Common Equivalent Rate and
the PRIDES Optional Conversion Rate shall each be adjusted by
multiplying the PRIDES Common Equivalent Rate and the PRIDES
Optional Conversion Rate in effect on such record date by a
fraction of which the numerator shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights
or warrants, immediately before such issuance, plus the number of
additional shares of Common Stock offered for subscription or
purchase pursuant to such rights or warrants, and of which the
denominator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants,
immediately before such issuance, plus the number of shares of
Common Stock which the aggregate offering price of the total
number of shares of Common Stock so offered for subscription or
purchase pursuant to such rights or warrants would purchase at
such Current Market Price (determined by multiplying such total
number of shares by the exercise price of such rights or warrants
and dividing the product so obtained by such Current Market
Price). Shares of Common Stock held by the Corporation or by
another corporation of which a majority of the shares entitled to
vote in the election of directors are held, directly or
indirectly, by the Corporation shall not be deemed to be
outstanding for purposes of such computation. Such adjustment
shall become effective at the opening of business on the business
day next following the record date for the determination of
stockholders entitled to receive such rights or warrants. To the
extent that shares of Common Stock are not delivered after the
expiration of such rights or warrants, the PRIDES Common
Equivalent Rate and the PRIDES Optional Conversion Rate shall
each be readjusted to the PRIDES Common Equivalent Rate and the
PRIDES Optional Conversion Rate which would then be in effect had
the adjustments made after the issuance of such rights or
warrants been made upon the basis of issuance of rights or
warrants in respect of only the number of shares of Common Stock
actually delivered.
(iv) If the Corporation shall pay a dividend or make a
distribution to all holders of its Common Stock consisting of
evidences of its indebtedness, cash or other assets (including
shares of capital stock of the Corporation other than Common
Stock but excluding any cash dividends or distributions, other
than Extraordinary Cash Distributions (as defined herein) and
dividends referred to in clauses (i) and (ii) above), or shall
issue to all holders of its Common Stock rights or warrants to
subscribe for or purchase any of its securities (other than those
referred to in clause (iii) above), then in each such case, the
PRIDES Common Equivalent Rate and the PRIDES Optional Conversion
Rate shall each be adjusted by multiplying the PRIDES Common
Equivalent Rate and the PRIDES Optional Conversation Rate in
effect on the record date for such dividend or distribution or
for the determination of stockholders entitled to receive such
rights or warrants, as the case may be, by a fraction of which
the numerator shall be the Current Market Price per share of the
Common Stock (determined pursuant to Section 3(b)(ii) on such
record date), and of which the denominator shall be such Current
Market Price per share of Common Stock less either (i) the fair
market value (as determined by the Board of Directors, whose
determination shall be conclusive) on such record date of the
portion of the assets or evidences of indebtedness so
distributed, or of such subscription rights or warrants,
applicable to one share of Common Stock, or (ii) if applicable,
the amount of the Extraordinary Cash Distributions. Such
adjustment shall become effective on the opening of business on
the business day next following the record date for such dividend
or distribution or for the determination of holders entitled to
receive such rights or warrants, as the case may be.
(v) Any shares of Common Stock issuable in payment of a
dividend or other distribution shall be deemed to have been
issued immediately before the close of business on the record
date for such dividend or other distribution for purposes of
calculating the number of outstanding shares of Common Stock
under this Section 3.
(vi) Anything in this Section 3 notwithstanding, the
Corporation shall be entitled (but shall not be required) to make
such upward adjustments in the PRIDES Common Equivalent Rate, the
PRIDES Optional Conversion Rate and the PRIDES Call Price in
addition to those set forth by this Section 3, as the
Corporation, in its sole discretion, shall determine to be
advisable, in order that any stock dividends, subdivision of
stock, distribution of rights to purchase stock or securities, or
distribution of securities convertible into or exchangeable for
stock (or any transaction that could be treated as any of the
foregoing transactions pursuant to Section 305 of the Internal
Revenue Code of 1986, as amended) hereafter made by the
Corporation to its stockholders shall not be taxable. The term
"Extraordinary Cash Distribution" means, with respect to any
consecutive 12-month period, all cash dividends and cash
distributions on the Common Stock during such period (other than
cash dividends and cash distributions for which a prior
adjustment to the PRIDES Common Equivalent Rate and PRIDES
Optional Conversion Rate was previously made) to the extent such
dividends and distributions exceed, on a per share of Common
Stock basis, 10% of the average daily Closing Price of the Common
Stock over such period.
(vii) In any case in which this Section 3(d) shall require
that an adjustment as a result of any event become effective at
the opening of business on the business day next following a
record date and the date fixed for conversion pursuant to Section
3(a) or redemption pursuant to Section 3(b) on and after such
record date, but before the occurrence of such event, the
Corporation may, in its sole discretion, elect to defer the
following until after the occurrence of such event: (A) issuing
to the holder of any shares of PRIDES surrendered for conversion
or redemption the fractional shares of Common Stock issuable
before giving effect to such adjustment; and (B) paying to such
holder any amount in cash in lieu of a fractional share of Common
Stock pursuant to Section 4.
(viii) All adjustments to the PRIDES Common Equivalent Rate
and the PRIDES Optional Conversion Rate shall be calculated to
the nearest 1/100th of a share of Common Stock. No adjustment in
the PRIDES Common Equivalent Rate or in the PRIDES Optional
Conversion Rate shall be required unless such adjustment would
require an increase or decrease of at least one percent therein;
provided, however, that any adjustments which by reason of this
Section 3(d) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All
adjustments to the PRIDES Common Equivalent Rate and PRIDES
Optional Conversion Rate shall be made successively.
(ix) At least 10 business days before taking any action
that could result in an adjustment affecting the PRIDES Common
Equivalent Rate or the PRIDES Optional Conversion Rate such that
the conversion price (for purposes of this section, an amount
equal to the PRIDES Call Price divided by the PRIDES Common
Equivalent Rate or the PRIDES Optional Conversion Rate,
respectively, as in effect from time to time) would be below the
then par value of the Common Stock, the Corporation shall take
any corporate action which may, in the opinion of its counsel, be
necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of Common Stock at the
PRIDES Common Equivalent Rate or the PRIDES Optional Conversion
Rate as so adjusted.
(x) Before redeeming any shares of PRIDES, the Corporation
shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly
and legally issue fully paid and nonassessable shares of Common
Stock upon such redemption.
(e) In case of any consolidation or merger to which the
Corporation is a party (other than a consolidation or merger in which
the Corporation is the surviving or continuing corporation and in
which the shares of Common Stock outstanding immediately before the
merger or consolidation remain unchanged), or in the case of any sale
or transfer to another corporation of the property of the Corporation
as an entirety or substantially as an entirety, or in the case of a
statutory exchange of securities with another corporation (other than
in connection with a merger or acquisition), each share of PRIDES
shall, after consummation of such transaction, be subject to (i)
conversion at the option of the holder into the kind and amount of
securities, cash, or other property receivable upon consummation of
such transaction by a holder of the number of shares of Common Stock
into which such share of PRIDES might have been converted immediately
before consummation of such transaction, (ii) conversion on the
Mandatory Conversion Date into the kind and amount of securities,
cash, or other property receivable upon consummation of such
transaction by a holder of the number of shares of Common Stock into
which such share of PRIDES would have been converted if the conversion
on the Mandatory Conversion Date had occurred immediately before the
date of consummation of such transaction, plus the right to receive
cash in an amount equal to all accrued and unpaid dividends on such
share of PRIDES (other than previously declared dividends payable to a
holder of record as of a prior date), and (iii) redemption on any
redemption date in exchange for the kind and amount of securities,
cash, or other property receivable upon consummation of such
transaction by a holder of the number of shares of Common Stock that
would have been issuable at the PRIDES Call Price in effect on such
redemption date upon a redemption of such share of PRIDES immediately
before consummation of such transaction, assuming that, if the Notice
Date for such redemption is not before such transaction, the Notice
Date had been the date of such transaction; and assuming in each case
that such holder of shares of Common Stock failed to exercise rights
of election, if any, as to the kind or amount of securities, cash, or
other property receivable upon consummation of such transaction
(provided that, if the kind or amount of securities, cash, or other
property receivable upon consummation of such transaction is not the
same for each non-electing share, then the kind and amount of
securities, cash, or other property receivable upon consummation of
such transaction for each non-electing share shall be deemed to be the
kind and amount so receivable per share by a plurality of the
non-electing shares). The kind and amount of securities into or for
which the shares of PRIDES shall be convertible or redeemable after
consummation of such transaction shall be subject to adjustment as
described in Section 3(d) following the date of consummation of such
transaction. The Corporation may not become a party to any such
transaction unless the terms thereof are consistent with the
foregoing.
(f) Whenever the PRIDES Common Equivalent Rate and PRIDES
Optional Conversion Rate are adjusted as provided in Section 3(d), the
Corporation shall:
(i) forthwith compute the adjusted PRIDES Common Equivalent
Rate and PRIDES Optional Conversion Rate in accordance with this
Section 3 and prepare a certificate signed by the Chief Financial
Officer, any Vice President, the Treasurer or the Controller of
the Corporation setting forth the adjusted PRIDES Common
Equivalent Rate and the PRIDES Optional Conversion Rate, the
method of calculation thereof in reasonable detail and the facts
requiring such adjustment and upon which such adjustment is
based, which certificate shall be conclusive, final and binding
evidence of the correctness of the adjustment, and shall file
such certificate forthwith with the transfer agent for the shares
of the PRIDES and the Common Stock;
(ii) make a prompt public announcement stating that the
PRIDES Common Equivalent Rate and PRIDES Optional Conversion Rate
have been adjusted and setting forth the adjusted PRIDES Common
Equivalent Rate and PRIDES Optional Conversion Rate;
(iii) mail a notice stating that the PRIDES Common
Equivalent Rate and the PRIDES Optional Conversion Rate have been
adjusted, the facts requiring such adjustment and upon which such
adjustment is based and setting forth the adjusted PRIDES Common
Equivalent Rate and PRIDES Optional Conversion Rate, to the
holders of record of the outstanding shares of PRIDES, at or
prior to the time the Corporation mails an interim statement, if
any, to its stockholders covering the fiscal quarter period
during which the facts requiring such adjustment occurred, but in
any event within 45 days of the end of such fiscal quarter
period.
(g) In case, at any time while any of the shares of PRIDES
are outstanding,
(i) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock, excluding any cash dividends
other than Extraordinary Cash Distributions; or
(ii) the Corporation shall authorize the issuance to all
holders of the Common Stock of rights or warrants to subscribe
for or purchase shares of the Common Stock or of any other
subscription rights or warrants; or
(iii) the Corporation shall authorize any reclassification
of the Common Stock (other than a subdivision or combination
thereof) or any consolidation or merger to which the Corporation
is a party and for which approval of any stockholders of the
Corporation is required (except for a merger of the Corporation
into one of its subsidiaries solely for the purpose of changing
the corporate domicile of the Corporation to another state of the
United States and in connection with which there is no
substantive change in the rights or privileges of any securities
of the Corporation other than changes resulting from differences
in the corporate statutes of the state the Corporation was then
domiciled in and the new state of domicile), or the sale or
transfer of all or substantially all of the assets of the
Corporation;
then the Corporation shall cause to be filed at each office or agency
maintained for the purpose of conversion of the shares of PRIDES, and
shall cause to be mailed to the holders of shares of PRIDES at their
last addresses as they shall appear on the stock register of the
Corporation, at least 10 business days before the date hereinafter
specified in clause (A) or (B) below (or the earlier of the dates
hereinafter specified, in the event that more than one date is
specified), a notice stating (A) the date on which a record is to be
taken for the purpose of such dividend, distribution, rights or
warrants, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend,
distribution, rights or warrants are to be determined, or (B) the date
on which any such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their Common
Stock for securities or other property (including cash), if any,
deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up. The failure to give
or receive the notice required by this paragraph (g) or any defect
therein shall not affect the legality or validity of any such
dividend, distribution, right or warrant or other action.
Section 4. No Fractional Shares. No fractional shares of
Common Stock shall be issued upon redemption or conversion of any
shares of the PRIDES. In lieu of any fractional share otherwise
issuable in respect of the aggregate number of shares of the PRIDES of
any holder that are redeemed or converted on any redemption date or
upon Mandatory Conversion or Optional Conversion, such holder shall be
entitled to receive an amount in cash (computed to the nearest cent)
equal to the same fraction of the (i) Current Market Price of the
Common Stock (determined as of the second Trading Day immediately
preceding the Notice Date) in the case of redemption, or (ii) Closing
Price of the Common Stock determined (A) as of the fifth Trading Day
immediately preceding the Mandatory Conversion Date, in the case of
Mandatory Conversion, or (B) as of the second Trading Day immediately
preceding the effective date of conversion, in the case of an Optional
Conversion by a holder. If more than one share of PRIDES shall be
surrendered for conversion or redemption at one time by or for the
same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate
number of shares of the PRIDES so surrendered or redeemed.
Section 5. Reservation of Common Stock. The Corporation
shall at all times reserve and keep available out of its authorized
and unissued Common Stock, solely for issuance upon the conversion or
redemption of shares of PRIDES, as herein provided, free from
preemptive rights, such maximum number of shares of Common Stock as
shall from time to time be issuable upon the Mandatory Conversion or
Optional Conversion or redemption of all the shares of PRIDES then
outstanding.
Section 6. Definitions. As used in this Certificate of
Designations:
(i) the term "business day" shall mean any day other than a
Saturday, 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;
(ii) the term "Closing Price", on any day, shall mean the
last sale price as shown on the New York Stock Exchange Composite
Tape on such day, or, in case no such sale takes place on such
day, the average of the reported closing bid and asked prices
regular way on the New York Stock Exchange, or, if the Common
Stock is not listed or admitted to trading on such Exchange, on
the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or, if not listed or
admitted to trading on any national securities exchange, the
average of the closing bid and asked prices of the Common Stock
on the over-the-counter market on the day in question as reported
by the National Association of Securities Dealers, Inc. Automated
Quotation System, or a similar generally accepted reporting
service, or if not so available in such manner, as furnished by
any New York Stock Exchange member firm selected from time to
time by the Board of Directors for that purpose;
(iii) the term "record date" shall be such date as from
time to time fixed by the Board of Directors with respect to the
receipt of dividends, the receipt of a redemption price upon
redemption or the taking of any action or exercise of any voting
rights permitted hereby; and
(iv) the term "Trading Day" shall mean a date on which the
New York Stock Exchange (or any successor to such Exchange) is
open for the transaction of business.
Section 7. Payment of Taxes. The Corporation shall pay any
and all documentary, stamp or similar issue or transfer taxes payable
in respect of the issue or delivery of shares of Common Stock on the
redemption or conversion of shares of PRIDES pursuant to Section 3;
provided, however, that the Corporation shall not be required to pay
any tax which may be payable in respect of any registration of
transfer involved in the issue or delivery of shares of Common Stock
in a name other than that of the registered holder of shares of PRIDES
redeemed or converted or to be redeemed or converted, and no such
issue or delivery shall be made unless and until the person requesting
such issue has paid to the Corporation the amount of any such tax or
has established, to the satisfaction of the Corporation, that such tax
has been paid.
Section 8. Liquidation Rights. In the event of any
voluntary or involuntary liquidation, dissolution, or winding up of
the Corporation, and subject to the rights of holders of any other
series of Preferred Stock, the holders of outstanding shares of PRIDES
are entitled to receive the sum of $47.25 per share, plus an amount
equal to any accrued and unpaid Preferred Dividends thereon, out of
the assets of the Corporation available for distribution to
stockholders, before any distribution of assets is made to holders of
Second Preferred Stock, Common Stock or any other capital stock
ranking junior to the shares of PRIDES upon liquidation, dissolution,
or winding up. If upon any voluntary or involuntary liquidation,
dissolution, or winding up of the Corporation, the assets of the
Corporation are insufficient to permit the payment of the full
preferential amounts payable with respect to the shares of PRIDES and
all other series of Parity Preferred Stock, the holders of shares of
PRIDES and of all other series of Parity Preferred Stock shall share
ratably in any distribution of assets of the Corporation in proportion
to the full respective preferential amounts to which they are
entitled. After payment of the full amount of the liquidating
distribution to which they are entitled, the holders of shares of
PRIDES shall not be entitled to any further participation in any
distribution of assets by the Corporation. A consolidation or merger
of the Corporation with or into one or more other corporations
(whether or not the Corporation is the corporation surviving such
consolidation or merger), or a sale, lease or exchange of all or
substantially all of the assets of the Corporation shall not be deemed
to be a voluntary or involuntary liquidation, dissolution, or winding
up of the Corporation.
Section 9. Voting Rights. (a) The holders of shares of
PRIDES shall have the right with the holders of Common Stock to vote
in the election of directors and upon each other matter coming before
any meeting of the holders of Common Stock on the basis of 4/5 of a
vote for each share of PRIDES held. The holders of shares of PRIDES
and the holders of Common Stock shall vote together as one class on
such matters except as otherwise provided by law or by the Restated
Certificate of Incorporation.
(b) In the event that dividends on the shares of PRIDES or
any other series of Preferred Stock shall be in arrears and unpaid for
six quarterly dividend periods, or if any series of Preferred Stock
(other than the PRIDES) shall be entitled for any other reason to
exercise voting rights, separate from the Common Stock, to elect any
directors of the Corporation ("Preferred Stock Directors"), the
holders of the shares of PRIDES (voting separately as a class with
holders of all other series of Preferred Stock upon which like voting
rights have been conferred and are exercisable), with each share of
PRIDES entitled to one vote on this and other matters in which
Preferred Stock votes as a group, shall be entitled to vote for the
election of two directors of the Corporation, such directors to be in
addition to the number of directors constituting the Board of
Directors immediately before the accrual of such right. Such right,
when vested, shall continue until all cumulative dividends accumulated
and payable on the shares of PRIDES and such other series of Preferred
Stock shall have been paid in full and the right of any other series
of Preferred Stock to exercise voting rights, separate from the Common
Stock, to elect Preferred Stock Directors shall terminate or have
terminated, and, when so paid and any such termination occurs or has
occurred, such right of the holders of the shares of PRIDES shall
cease. The term of office of any director elected by the holders of
the shares of PRIDES and such other series shall terminate on the
earlier of (i) the next annual meeting of stockholders at which a
successor shall have been elected and qualified or (ii) the
termination of the right of holders of the shares of PRIDES and such
other series to vote for such directors.
(c) The Corporation shall not, without the approval of the
holders of at least 66-2/3 percent of the shares of PRIDES then
outstanding: (i) amend, alter, or repeal any of the provisions of the
Restated Certificate of Incorporation or By-Laws of the Corporation so
as to affect adversely the powers, preferences or rights of the
holders of the shares of PRIDES then outstanding or reduce the minimum
time for any required notice to which the holders of the shares of
PRIDES then outstanding may be entitled (an amendment of the Restated
Certificate of Incorporation to authorize or create, or to increase
the authorized amount of, Junior Stock or any stock of any class
ranking on a parity with the PRIDES being deemed not to affect
adversely the powers, preferences, or rights of the holders of the
shares of PRIDES); (ii) authorize or create, or increase the
authorized amount of, any capital stock, or any security convertible
into capital stock of any class, ranking prior to the shares of PRIDES
either as to the payment of dividends or the distribution of assets
upon liquidation, dissolution or winding up of the Corporation; or
(iii) merge or consolidate with or into any other corporation, unless
each holder of shares of PRIDES immediately preceding such merger or
consolidation shall receive or continue to hold in the resulting
corporation the same number of shares, with substantially the same
rights and preferences, as correspond to the shares of PRIDES so held.
(d) The Corporation shall not, without the approval of the
holders of at least a majority of the shares of PRIDES then
outstanding: (i) increase the authorized number of shares of
Preferred Stock; or (ii) create any other class or classes of capital
stock of the Corporation ranking on a parity with the Preferred Stock,
either as to payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up of the Corporation, or create
any stock or other security convertible into or exchangeable for or
evidencing the right to purchase any stock of such other class ranking
on a parity with the Preferred Stock, or increase the authorized
number of shares of any such other class or amount of such other stock
or security.
(e) Notwithstanding the provisions set forth in Sections
9(c) and 9(d), no such approval described therein of the holders of
the shares of PRIDES shall be required if, at or before the time when
such amendment, alteration, or repeal is to take effect or when the
authorization, creation, increase or issuance of any such prior or
parity stock or convertible security is to be made, or when such
consolidation or merger, voluntary liquidation, dissolution, or
winding up, sale, lease, conveyance, purchase, or redemption is to
take effect, as the case may be, provision is made for the redemption
of all shares of PRIDES at the time outstanding.
IN WITNESS WHEREOF, Reynolds Metals Company has caused this
certificate to be signed and attested this 20th day of January, 1994.
REYNOLDS METALS COMPANY
By: Henry S. Savedge, Jr.
Name: Henry S. Savedge, Jr.
Title: Executive Vice President and
Chief Financial Officer
Attest:
D. Michael Jones
Name: D. Michael Jones
Title: Vice President, General
Counsel and Secretary
EXHIBIT 4(b)
NUMBER SHARES
PP
7% PRIDES, CONVERTIBLE PREFERRED STOCK
STATED VALUE $47.25 PER SHARE
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
CUSIP 761763 50 7
SEE REVERSE FOR CERTAIN DEFINITIONS
[LOGO] REYNOLDS METALS COMPANY
This is to certify that _________________________________________________
is the owner of _________________________________________________________
FULLY PAID AND NON-ASSESSABLE SHARES OF 7% PRIDES, CONVERTIBLE PREFERRED
STOCK, STATED VALUE $47.25 PER SHARE, of Reynolds Metals Company
(hereinafter referred to as the "Corporation"), transferable on the books
of the Corporation by the holder hereof in person or by duly authorized
attorney upon surrender of this certificate properly endorsed. This
certificate and the shares represented hereby are issued and shall be held
subject to all the provisions of the Certificate of Incorporation, as
amended, of the Corporation (a copy of which certificate is on file with
the Transfer Agent), to all of which the holder by acceptance hereof
assents. This certificate is not valid until countersigned by the Transfer
Agent and registered by the Registrar.
WITNESS the seal of the Corporation and the signatures of its duly
authorized officers.
Dated:
Richard G. Holder
Countersigned and Registered: Chairman of the Board
MELLON SECURITIES TRUST COMPANY
(New York, N.Y.) Transfer Agent
and Registrar,
D. Michael Jones
Secretary
By
Authorized Signature.
[SEAL] [PICTURE]
<PAGE>
REYNOLDS METALS COMPANY
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS A COPY OF THE STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS
OF STOCK OR SERIES THEREOF, WHICH THE CORPORATION IS AUTHORIZED TO ISSUE,
AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES
AND/OR RIGHTS. ANY SUCH REQUEST MAY BE MADE TO THE CORPORATION OR THE
TRANSFER AGENT.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COMM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT - ..........Custodian..........
(Cust) (Minor)
under Uniform Gifts to Minors
Act..........................
(State)
Additional abbreviations may also be used though not in the above
list.
FOR VALUE RECEIVED,_______________________ hereby sell, assign and transfer
unto _______________________________________________
_________________________________________________________________[please
print or typewrite name and address including postal zip code of assignee]
__________________ Shares of the Capital Stock represented by the within
Certificate, and do hereby irrevocably constitute and appoint
_________________ Attorney to transfer the said stock on the books of the
within-named Corporation with such full power of substitution in the
premises.
Dated _______________
__________________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the Certificate, in every particular, without
alteration or enlargement, or any change whatever.
Signature(s) Guaranteed:
By
<PAGE>
APPENDIX
LIST OF GRAPHIC AND IMAGE INFORMATION
There appears in the lower right corner of the face of the certificate a
picture of four individuals with the words "AMERICAN BANK NOTE COMPANY."
printed thereunder.
EXHIBIT 99
[LOGO]
PROSPECTUS
10,000,000 Shares
REYNOLDS METALS COMPANY
7% PRIDES*
Convertible Preferred Stock, Stated Value $47.25 per Share
________________
The shares offered hereby are 10,000,000 shares of Preferred Redeemable
Increased Dividend Equity Securities*, 7% PRIDES*, Convertible Preferred Stock,
stated value $47.25 per share ("PRIDES"), of Reynolds Metals Company (the
"Company").
The annual dividend payable with respect to each share of PRIDES is $3.31.
Dividends will be cumulative from the date of issuance and will be payable
quarterly in arrears on each April 1, July 1, October 1 and December 31,
commencing April 1, 1994. The liquidation preference applicable to each share
of PRIDES is equal to the sum of (i) the per share price to the public shown
below, and (ii) the amount of accrued and unpaid dividends thereon.
On December 31, 1997 (the "Mandatory Conversion Date"), unless either
previously redeemed or converted at the option of the holder, each of the
outstanding shares of PRIDES will mandatorily convert into (i) one share of
Common Stock, without par value, of the Company (the "Common Stock"), subject
to adjustment in certain events, and (ii) the right to receive an amount in
cash equal to all accrued and unpaid dividends thereon.
Shares of PRIDES are not redeemable prior to December 31, 1996. At any
time and from time to time on or after December 31, 1996 until immediately
prior to the Mandatory Conversion Date, the Company may redeem any or all of
the outstanding shares of PRIDES. Upon any such redemption, each holder will
receive, in exchange for each share of PRIDES, the number of shares of Common
Stock equal to the sum of (i) $48.077, declining after December 31, 1996 as set
forth herein to $47.25 until the Mandatory Conversion Date, and (ii) all
accrued and unpaid dividends thereon (the "Call Price") divided by the Current
Market Price (as defined herein) on the applicable date of determination, but
in no event less than .82 of a share of Common Stock.
At any time prior to the Mandatory Conversion Date, unless previously
redeemed, each of the shares of PRIDES is convertible at the option of the
holder thereof into .82 of a share of Common Stock (equivalent to a conversion
price of $57.622 per share of Common Stock (the "Conversion Price")), subject
to adjustment in certain events. The number of shares of Common Stock a holder
will receive upon redemption, and the value of the shares received upon
conversion, will vary depending on the market price of the Common Stock from
time to time, all as set forth herein.
Dividends on the PRIDES will accrue at a higher rate than the rate at
which dividends are currently paid on the Common Stock. The opportunity for
equity appreciation afforded by an investment in the shares of PRIDES is less
than that afforded by an investment in the Common Stock because the Conversion
Price is higher than the per share price to the public of the shares of PRIDES
and the Company may, at its option, redeem the shares of PRIDES at any time on
or after December 31, 1996 and prior to the Mandatory Conversion Date, and may
be expected to do so if, among other circumstances, the Current Market Price of
the Common Stock exceeds the Call Price. In such event, a holder of a share of
PRIDES will receive less than one share of Common Stock, but no less than .82
of a share of Common Stock. The per share value of the Common Stock received
by holders of PRIDES may be more or less than the per share amount paid for the
PRIDES offered hereby, due to market fluctuations in the price of the Common
Stock. For a detailed description of the terms of the PRIDES, see "Description
of PRIDES".
SEE "INVESTMENT CONSIDERATIONS" FOR CERTAIN CONSIDERATIONS RELEVANT TO THE
SHARES OF PRIDES OFFERED HEREBY.
Application has been made to list the shares of PRIDES on the New York
Stock Exchange ("NYSE") and the Chicago Stock Exchange. On January 18, 1994,
the last reported sale price of the Common Stock on the NYSE was $47-1/4 per
share.
________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
==============================================================================
Price to Underwriting Proceeds to
Public(1) Discount(2) Company (1)(3)
______________________________________________________________________________
Per share of PRIDES . . . . . . $47.25 $1.30 $45.95
______________________________________________________________________________
Total(4) . . . . . . . . . . . . $472,500,000 $13,000,000 $459,500,000
==============================================================================
(1) Plus accrued dividends, if any, from the date of issue.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting".
(3) Before deducting expenses payable by the Company estimated at $401,844.38.
(4) The Company has granted to the Underwriters an option, exercisable within
30 days after the date of this Prospectus, to purchase up to an additional
1,000,000 shares of PRIDES to cover over-allotments, if any. If such
option is exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $519,750,000, $14,300,000 and
$505,450,000, respectively. See "Underwriting".
________________
The PRIDES are offered by the several Underwriters, subject to prior sale,
when, as and if issued to and accepted by them, and subject to approval of
certain legal matters by counsel for the Underwriters and certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the PRIDES offered hereby will be made in New York, New York, on or
about January 25, 1994.
* Service mark of Merrill Lynch & Co., Inc.
Merrill Lynch & Co. CS First Boston
________________
The date of this Prospectus is January 18, 1994.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports and other information with the Securities and Exchange Commission
(the "Commission"). Reports, proxy statements and other information filed by
the Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at certain of its Regional Offices, located at: Suite 1400, 500
West Madison Street, Chicago, IL 60661; and 13th Floor, Seven World Trade
Center, New York, NY 10048. Copies of such material can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. Such material can also be inspected at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, NY
10005, on which exchange the Common Stock is listed.
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "1933 Act"), with respect to the shares of PRIDES offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. Reference is hereby made to the Registration Statement and to the
exhibits thereto for further information with respect to the Company and the
shares of PRIDES.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission in
accordance with the provisions of the 1934 Act are incorporated herein by
reference and made a part hereof: (i) Annual Report on Form 10-K for the year
ended December 31, 1992, as amended by Amendments Nos. 1 and 2 on Form 10-K/A;
(ii) definitive Proxy Statement dated March 1, 1993 in connection with the
Company's Annual Meeting of Stockholders held on April 21, 1993; (iii)
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1993, June 30,
1993, and September 30, 1993; (iv) Current Reports on Form 8-K dated January
18, 1993, April 1, 1993, May 21, 1993, June 10, 1993, July 14, 1993, August 26,
1993, November 23, 1993, December 10, 1993, and December 30, 1993; (v)
description of the Common Stock contained in Exhibit 28.1 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992, as amended;
and (vi) description of the Preferred Stock Purchase Rights contained in the
Company's Registration Statement on Form 8-A dated November 23, 1987.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the 1934 Act after the date of this Prospectus and before the
termination of the offering made by this Prospectus shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document all or a portion of which is incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will furnish without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a
copy of any and all of the information which has been or may be incorporated
herein by reference, other than exhibits to such information unless such
exhibits are specifically incorporated by reference into such information.
Requests should be addressed to: Secretary, Reynolds Metals Company, 6601 West
Broad Street, Richmond, VA 23230 (telephone 804/281-2812).
_________________
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SHARES
OF PRIDES AND THE COMMON STOCK AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK
STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
<PAGE>
PROSPECTUS SUMMARY
The following summary should be read in conjunction with, and is qualified
in its entirety by, the detailed information and financial statements
(including the notes thereto) incorporated by reference in this Prospectus.
Unless otherwise indicated, all information in this Prospectus assumes that the
Underwriters' over-allotment option will not be exercised.
The Company
The Company, together with its consolidated subsidiaries, is a producer of
metals and other materials through its worldwide operations. It serves global
markets as a supplier and recycler of aluminum and other products, with its
core business being as an integrated producer of a wide variety of value-added
aluminum products. The Company produces alumina, carbon products and primary
and reclaimed aluminum, principally to supply the needs of its fabricating
operations. These fabricating operations produce aluminum sheet, plate, can,
foil and extruded products (including heat exchanger tubing, drive shafts,
bumpers and windows), flexible packaging and wheels, among other items. The
Company also produces a broad range of plastic products, including film, bags,
containers and lids, for consumer products, foodservice and packaging uses.
The Company markets an extensive line of consumer products under the Reynolds
brand name, including the well-known Reynolds Wrap aluminum foil. The Company
is also a gold producer through operations in Western Australia.
The Company's strategy is to continue improving its competitive position
as an integrated producer of value-added aluminum products, with emphasis on
growth opportunities in its core downstream fabricating operations, and to
expand its packaging and consumer products business. The Company has
undertaken continuing intensive cost reduction and performance improvement
programs to improve its competitiveness that include work force reductions,
permanent closures of higher cost facilities, disposal of uneconomic and
non-core assets, and operational and organizational restructuring. To
strengthen its downstream fabricating operations, the Company, among other
things, has acquired Miller Brewing Company's aluminum can and end
manufacturing operations, increasing the Company's U.S. can-making capacity by
almost 50%; has announced plans to expand its can-making capacity in South
America by participating in the construction of two can plants in Brazil and
Chile; has completed an expansion of an aluminum wheel plant to serve the
automotive market; and is nearing start-up of a new fabricating plant in
Indiana that will produce aluminum automotive extruded components. The
Company's packaging and consumer products business has been enhanced by the
addition of new products, such as Reynolds Micro-Redi microwavable containers,
the reintroduction of its Reynolds Cut-Rite wax paper sandwich bags, and the
expansion of facilities such as its plastics plant in Grottoes, Virginia.
The Offering
Securities . . . . . . . . . The PRIDES are shares of convertible preferred
stock and rank prior to the Common Stock as to
payment of dividends and distribution of assets
upon liquidation. The PRIDES mandatorily
convert into shares of Common Stock on December
31, 1997 (the "Mandatory Conversion Date"), and
the Company has the option to redeem the shares
of PRIDES, in whole or in part, at any time and
from time to time on or after December 31, 1996
and prior to the Mandatory Conversion Date at
the Call Price (as defined herein), payable in
shares of Common Stock. In addition, the PRIDES
are convertible into shares of Common Stock at
the option of the holder at any time prior to
the Mandatory Conversion Date as set forth
below.
Dividends. . . . . . . . . . Holders of shares of PRIDES will be entitled to
receive annual cumulative dividends at a rate
per annum of 7% of the stated value (equivalent
to a rate of $3.31 per annum for each share of
PRIDES), from the date of initial issuance,
payable quarterly in arrears on each April 1,
July 1, October 1 and December 31, or, if any
such date is not a business day, on the next
succeeding business day, commencing April 1,
1994. See "Description of PRIDES - Dividends".
Mandatory Conversion . . . . On the Mandatory Conversion Date, unless
previously redeemed or converted, each
outstanding share of PRIDES will mandatorily
convert into (i) one share of Common Stock,
subject to adjustment in certain events, and
(ii) the right to receive cash in an amount
equal to all accrued and unpaid dividends
thereon (other than previously declared
dividends payable to a holder of record on a
prior date). See "Description of PRIDES -
Mandatory Conversion of PRIDES". The value of
the Common Stock that may be received by holders
of PRIDES upon their mandatory conversion may be
more or less than the amount paid for the PRIDES
offered hereby due to market fluctuations in the
price of the Common Stock.
Optional Redemption. . . . . Shares of PRIDES are not redeemable prior to
December 31, 1996. At any time and from time to
time on or after December 31, 1996 until
immediately prior to the Mandatory Conversion
Date, the Company may redeem any or all of the
outstanding shares of PRIDES. Upon any such
redemption, each holder will receive, in
exchange for each share of PRIDES, the number of
shares of Common Stock equal to the sum of (i)
$48.077, declining after December 31, 1996 as
set forth herein to $47.25 until the Mandatory
Conversion Date, and (ii) all accrued and unpaid
dividends thereon (the "Call Price") divided by
the Current Market Price (as defined herein) on
the applicable date of determination, but in no
event less than .82 of a share of Common Stock.
See "Description of PRIDES - Optional
Redemption". The number of shares of Common
Stock to be delivered in payment of the
applicable Call Price will be determined on the
basis of the Current Market Price of the Common
Stock prior to the announcement of the
redemption, and the market price of the Common
Stock may vary between the date of such
determination and the subsequent delivery of
such shares.
Conversion at the
Option of the Holder . . . . At any time prior to the Mandatory Conversion
Date, unless previously redeemed, each share of
PRIDES is convertible at the option of the
holder thereof into .82 of a share of Common
Stock, equivalent to a conversion price of
$57.622 per share of Common Stock (the
"Conversion Price"), subject to adjustment as
described herein. The number of shares of
Common Stock a holder will receive upon
redemption, and the value of the shares received
upon conversion, will vary depending on the
market price of the Common Stock from time to
time, all as set forth herein. The right of
holders to convert shares of PRIDES called for
redemption will terminate immediately prior to
the close of business on the redemption date.
See "Description of PRIDES - Conversion at the
Option of the Holder".
Enhanced Dividend Yield;
Less Equity Appreciation
Than Common Stock. . . . . . Dividends will accrue on the PRIDES at a higher
rate than the rate at which dividends are
currently paid on the Common Stock. The
opportunity for equity appreciation afforded by
an investment in the PRIDES is less than that
afforded by an investment in the Common Stock
because the Conversion Price is higher than the
per share price to the public of the shares of
PRIDES and the Company may, at its option,
redeem the shares of PRIDES at any time on or
after December 31, 1996 and prior to the
Mandatory Conversion Date, and may be expected
to do so if, among other circumstances, the
Current Market Price of the Common Stock exceeds
the Call Price. In such event, a holder of a
share of PRIDES will receive less than one share
of Common Stock, but no less than .82 of a share
of Common Stock. A holder may also surrender
for conversion any PRIDES called for redemption
up to the close of business on the redemption
date, and a holder that so elects to convert
will receive .82 of a share of Common Stock per
share of PRIDES. The per share value of Common
Stock received by holders of PRIDES may be more
or less than the per share amount paid for the
PRIDES offered hereby, due to market
fluctuations in the price of Common Stock. See
"Description of PRIDES -Enhanced Dividend Yield;
Less Equity Appreciation than Common Stock".
Voting Rights. . . . . . . . The holders of shares of PRIDES will have the
right with the holders of Common Stock to vote
in the election of Directors and upon each other
matter coming before any meeting of the holders
of Common Stock on the basis of 4/5 of a vote
for each share of PRIDES. On such matters, the
holders of shares of PRIDES and the holders of
Common Stock will vote together as one class
except as otherwise provided by law or the
Company's Restated Certificate of Incorporation.
In addition, (i) in the event that dividends on
the shares of PRIDES or any other series of
Preferred Stock (as defined herein) with like
voting rights are in arrears and unpaid for six
quarterly dividend periods, and in certain other
circumstances, the holders of shares of PRIDES
(voting separately as a class with holders of
all other series of outstanding Preferred Stock
upon which like voting rights have been
conferred and are exercisable) will be entitled
to vote, on the basis of one vote for each share
of PRIDES, for the election of two Directors of
the Company, such Directors to be in addition to
the number of Directors constituting the Board
of Directors immediately prior to the accrual of
such right, and (ii) the holders of the shares
of PRIDES will have voting rights with respect
to certain alterations of the Company's Restated
Certificate of Incorporation and certain other
matters, voting on the same basis or separately
as a series. See "Description of PRIDES -
Voting Rights" and "Description of Capital Stock
- Common Stock".
Liquidation Preference
and Ranking. . . . . . . . . The shares of PRIDES will rank prior to the
Common Stock as to payment of dividends and
distribution of assets upon liquidation. The
liquidation preference of each share of PRIDES
is an amount equal to the sum of (i) the per
share price to the public shown on the cover
page of this Prospectus and (ii) all accrued and
unpaid dividends thereon. See "Description of
PRIDES - Dividends" and "Liquidation Rights".
New York Stock Exchange
Symbol of Common Stock . . . RLM
Listing. . . . . . . . . . . Application has been made to list the PRIDES on
the New York Stock Exchange and the Chicago
Stock Exchange under the symbol "RLMPrD".
Use of Proceeds. . . . . . . The net proceeds to the Company from the sale of
the PRIDES offered hereby will be used, together
with internally generated funds, (i) to repay a
portion of the short-term indebtedness incurred
in connection with the acquisition of Miller
Brewing Company's aluminum beverage can and end
manufacturing operations and (ii) for general
corporate purposes, which may include funding a
portion of the Company's 1994 capital
expenditure program and supporting strategic
expansion of the Company's core businesses,
either by construction of new facilities or
acquisitions, with focus in the areas of cans,
packaging and wheels.
INVESTMENT CONSIDERATIONS
Recent Losses
The Company has reported net losses in recent periods and anticipates a
loss for 1993. For 1992, the Company reported a net loss of $748.8 million, or
$12.56 per share. Of that amount, $639.6 million represented the cumulative
effects of adopting Statement of Financial Accounting Standards No.
106-Employers' Accounting for Postretirement Benefits Other Than Pensions and
No. 109-Accounting for Income Taxes. See "Selected Financial Information -
Accounting Changes". For the first nine months of 1993, the Company reported a
net loss of $83.5 million, or $1.40 per share. Earnings were insufficient to
cover combined fixed charges and preferred stock dividends in 1992 and for the
first nine months of 1993. See "Selected Financial Information". No assurance
can be given that earnings will be adequate in future periods to cover such
amounts.
The Company expects to report an operating loss for the fourth quarter of
1993. In addition, the Company has decided to take restructuring actions that
will result in after-tax charges for 1993 of approximately $200 million to $225
million, or $3.35 to $3.75 per share. See "Recent Developments". Unless the
aluminum pricing conditions discussed below improve, it will be difficult for
the Company to return to profitability in 1994.
In the second quarter of 1993, the Board of Directors of the Company
reduced the quarterly dividend on the Common Stock from $0.45 to $0.25 per
share, citing current and expected business conditions over the next twelve to
eighteen months. The dividend reduction will reduce the Company's cash outlays
by approximately $48 million per year. See "Common Stock Prices and
Dividends".
The Company has undertaken intensive cost reduction and performance
improvement programs and remains optimistic about the long-term prospects for
aluminum, particularly in view of strong growth opportunities in the Company's
major markets, such as automotive and packaging. However, the Company's
operating results continue to be adversely affected by historically low
aluminum prices and continuing recessions abroad, particularly in Europe and
Japan. No prediction can be made with certainty as to the timing or magnitude
of any improvement in the Company's future operating results.
Industry Conditions
A worldwide oversupply of aluminum, caused by high exports from the
Commonwealth of Independent States ("CIS"), start-up of substantial new
capacity in the industry and economic weakness, has severely depressed the
price of aluminum on world commodity markets. This supply-demand imbalance,
with its resultant effect on prices, has dramatically affected the aluminum
industry and the Company. The timing and magnitude of any improvements in
these conditions cannot be predicted with certainty.
Multilateral government negotiations are underway seeking to develop
strategies to integrate the CIS aluminum industries into the world market.
Whether such negotiations will be successful, and their ultimate effect on the
supply-demand imbalance if successful, cannot be predicted with certainty. If
multilateral negotiations are unsuccessful, unilateral trade sanctions
(including, for example, import quotas or anti-dumping actions) may be pursued
by governments or private parties. Such sanctions, if implemented, could
result in improved prices in certain countries or regions but could also
negatively impact the Company's globally integrated operations. The overall
impact such sanctions might have on the Company's results of operations or
competitive position therefore cannot be predicted with certainty.
Competition
The markets for most aluminum products are highly competitive. The
Company's principal competitors in the sale in North America of products
derived from primary aluminum are ten other domestic companies, a Canadian
company and other foreign companies. The Company also faces competition from
producers of reclaimed aluminum and plastic products and fabricators of
aluminum, among others. The Company's principal competitors in Europe are
seven major multinational producers and a number of smaller European producers
of aluminum semifabricated products. Certain of these competitors are larger
than the Company in terms of total assets and operations and have greater
financial resources. In addition, aluminum competes with other materials for
various applications, such as steel, plastics and glass, among others.
Environmental Regulation
The Company has spent and will spend substantial capital and operating
amounts relating to ongoing compliance with environmental laws, including
regulations to be implemented under the Clean Air Act Amendments of 1990 (the
"Act"). For example, based on information currently available, the Company
estimates that compliance with the Act's hazardous air pollutant standards
would require in excess of $200 million of capital expenditures beginning in
the latter half of this decade at the Company's U.S. primary aluminum
production plants. The ultimate effect of the Act on such plants and the
Company's other operations (and the actual amount of any such capital
expenditures) will depend on how the Act is interpreted and implemented
pursuant to regulations that are currently being developed and on such
additional factors as the evolution of environmental control technologies and
the economic viability of such operations at the time. As a result of
threatened legal proceedings relating to the Company's Massena, New York
primary aluminum production plant, significant portions of these capital
expenditures might have to be accelerated. If this occurs, the Company would
have to consider whether such expenditures would be prudent under prevailing
economic conditions and in light of the uncertainty as to standards ultimately
to be imposed by the Act. If the Company determined such expenditures were not
prudent, its alternatives would include curtailment of operations at the
Massena plant. Any such curtailment would not be expected to have a material
adverse effect on the Company's financial position or its ongoing results of
operations.
In addition, the Company has been identified as a potentially responsible
party ("PRP") and is involved in remedial investigations and remedial actions
under the Comprehensive Environmental Response, Compensation and Liability Act
and similar state laws regarding the past disposal of wastes at approximately
42 sites in the United States. Such statutes may impose joint and several
liability for the costs of such remedial investigations and actions on the
entities that arranged for disposal of the wastes, the waste transporters that
selected the disposal sites and the owners and operators of such sites;
responsible parties (or any one of them, including the Company) may be required
to bear all of such costs regardless of fault, legality of the original
disposal or ownership of the disposal site. The Company has also been notified
that it may be a PRP at certain additional sites. In addition, the Company is
investigating possible environmental contamination, which may also require
remedial action, at certain of its present and former United States
manufacturing facilities, including contamination by polychlorinated biphenyls
at its Massena, New York primary aluminum production plant which will require
remediation.
The Company's policy is to accrue remediation costs when it is probable
that such efforts will be required and the related costs can be reasonably
estimated. Estimated costs for future environmental compliance and remediation
are necessarily imprecise due to such factors as the continuing evolution of
environmental laws and regulatory requirements, the availability and
application of technology, the identification of presently unknown remediation
sites and the allocation of costs among PRP's. On a quarterly basis, the
Company evaluates the status of all significant existing or potential
environmental issues, develops or revises estimates of costs to satisfy known
remediation requirements and adjusts its accruals accordingly; at September 30,
1993, the accrual was $303.0 million. Based upon information presently
available, the Company does not expect that such future costs will have a
material adverse effect on its competitive or financial position or its ongoing
results of operations. However, it is not possible to predict the amount or
timing of future costs of environmental remediation requirements which may
subsequently be determined. Such costs could be material to future quarterly
or annual results of operations.
THE COMPANY
The Company, together with its consolidated subsidiaries, is a producer of
metals and other materials through its worldwide operations. It serves global
markets as a supplier and recycler of aluminum and other products, with its
core business being as an integrated producer of a wide variety of value-added
aluminum products. The Company produces alumina, carbon products and primary
and reclaimed aluminum, principally to supply the needs of its fabricating
operations. These fabricating operations produce aluminum sheet, plate, can,
foil and extruded products (including heat exchanger tubing, drive shafts,
bumpers and windows), flexible packaging and wheels, among other items. The
Company also produces a broad range of plastic products, including film, bags,
containers and lids, for consumer products, foodservice and packaging uses.
The Company markets an extensive line of consumer products under the Reynolds
brand name, including the well-known Reynolds Wrap aluminum foil. The
Company's largest market is packaging and containers, which includes consumer
products. The Company is also a gold producer through operations in Western
Australia.
The Company's strategy is to continue improving its competitive position
as an integrated producer of value-added aluminum products, with emphasis on
growth opportunities in its core downstream fabricating operations, and to
expand its packaging and consumer products business. The Company has
undertaken continuing intensive cost reduction and performance improvement
programs to improve its competitiveness that include work force reductions,
permanent closures of higher cost facilities, disposal of uneconomic and
non-core assets, and operational and organizational restructuring. To
strengthen its downstream fabricating operations, the Company, among other
things, has acquired Miller Brewing Company's aluminum can and end
manufacturing operations, increasing the Company's U.S. can-making capacity by
almost 50%; has announced plans to expand its can-making capacity in South
America by participating in the construction of two can plants in Brazil and
Chile; has completed an expansion of an aluminum wheel plant to serve the
automotive market; and is nearing start-up of a new fabricating plant in
Indiana that will produce aluminum automotive extruded components. The
Company's packaging and consumer products business has been enhanced by the
addition of new products, such as Reynolds Micro-Redi microwavable containers,
the reintroduction of its Reynolds Cut-Rite wax paper sandwich bags, and the
expansion of facilities such as its plastics plant in Grottoes, Virginia.
To describe more fully the nature of its operations, the Company has
separated its vertically integrated operations into two areas: (1) Production
and Processing and (2) Finished Products and Other Sales.
Production and Processing includes the refining of bauxite into alumina,
calcination of petroleum coke and production of prebaked carbon anodes, all of
which are vertically integrated with aluminum production and processing plants.
These plants produce and sell primary and reclaimed aluminum and a wide range
of semifinished aluminum mill products, including flat rolled products,
extruded and drawn products and other aluminum products. Examples of flat
rolled products include aluminum can stock and machined plate. Examples of
extruded and drawn products include heat exchanger tubing, drive shafts and
bumpers. Production and Processing also includes the sale of gold and other
nonaluminum products, technology, and various licensing, engineering and other
services related to the production and processing of aluminum.
Finished Products and Other Sales includes the manufacture and
distribution of various finished aluminum products, such as cans, containers,
flexible packaging products, foodservice and household foils, laminated and
printed foil and aluminum building products. Finished Products and Other Sales
also includes the sale of plastic bags and food wraps, plastic lidding and
container products, plastic film packaging, composite and nonaluminum building
products, and printing cylinders and machinery.
The Company's branded consumer products include recognized names such as:
Reynolds Wrap aluminum foil, Reynolds Plastic Wrap, Reynolds Crystal Color
Plastic Wrap, Reynolds Cut-Rite wax paper, Reynolds Freezer Paper and Reynolds
Baker's Choice baking cups.
Raw Materials and Aluminum Production
The Company has long-term arrangements to obtain bauxite and also obtains
bauxite in the open market. The Company refines bauxite into alumina at its
plant in Texas and also acquires alumina from two joint ventures in which it
has interests, one located in Western Australia and one in Germany. See the
next paragraph regarding recent reductions in alumina production at the Texas
alumina plant.
The Company owns and operates three primary aluminum production plants in
the United States and one in Canada. The Company is also entitled to a share
of the primary aluminum produced at three joint ventures in which it
participates, located in Canada, Germany, and Ghana. In addition, the Company
buys primary aluminum on the open market. Due to the continuing worldwide
aluminum supply-demand imbalance, the Company has temporarily shut down 88,000
metric tons of primary aluminum production capacity at two U.S. plants
(Massena, New York and Longview, Washington), effective in the fourth quarter
of 1993. Taking into account this latest curtailment, the Company has idled a
total of 209,000 metric tons, or 21% of its 991,000 metric tons of primary
aluminum capacity. The Company's Troutdale, Oregon plant, with a capacity of
121,000 metric tons, has been idle for over two years. In order to balance its
alumina supply system, the Company has temporarily reduced production by 20% at
its alumina plant in Texas in connection with the latest curtailment.
Production at the Texas alumina plant was previously reduced in connection with
the Troutdale curtailment; at December 1, 1993, the plant was operating at 64%
of capacity.
The Company produces reclaimed aluminum from aluminum scrap at facilities
located in Virginia and Alabama. See "Recent Developments".
Fabricating Operations
The Company's semifinished and finished aluminum products and nonaluminum
products are produced at numerous domestic and foreign plants wholly or partly
owned by the Company. The Company's products are generally sold to producers
and distributors of industrial and consumer products in various geographic
markets including the United States, Canada and Europe, among others. For
additional information, see "Recent Developments".
Precious Metals
The Company owns the Mt. Gibson and Marvel Loch gold projects and is a 40%
participant in the Boddington gold project, all located in Western Australia.
In 1992, Mt. Gibson produced for the Company's account 31,900 ounces of gold,
Boddington produced for the Company's account 138,300 ounces of gold and the
Marvel Loch gold project produced 101,200 ounces. For additional information,
see "Recent Developments".
General Information
The Company is a Delaware corporation with its principal executive offices
located at 6601 West Broad Street, Richmond, VA 23230 (telephone 804/281-2000).
RECENT DEVELOPMENTS
In the second quarter of 1993, the Company completed the sale of its
Michigan aluminum reclamation plant to ALRECO Acquisition Corp., a subsidiary
of FFS Inc.
In the second quarter of 1993, the Company acquired the remaining 50%
interest in the Mt. Gibson gold project that it did not own. In September
1993, the Company announced that it had retained Chemical Bank to assist it
with the possible sale of its 40% interest in the Boddington gold project.
On November 1, 1993, the Company acquired the aluminum beverage can and
end manufacturing operations of Miller Brewing Company ("Miller"), increasing
the Company's U.S. aluminum can capacity by almost 50 percent to 16 billion
cans per year. Included in the purchase were five plants located in Wisconsin,
New York, Texas, North Carolina and Georgia, having a combined annual capacity
of 5 billion aluminum beverage cans and ends. The Company also entered into a
long-term supply agreement with Miller to supply substantially all of Miller's
aluminum beverage can requirements.
The Company has decided to take actions to restructure certain of its
operations, principally in the fabricating area, to improve worldwide
performance at a time of extremely difficult market conditions in the aluminum
industry. The restructuring actions are in line with the Company's strategy of
redirecting resources to those areas that meet its goal of profitable growth
within the Company's core businesses. The Company currently estimates that the
restructuring actions will result in aggregate charges for 1993 ranging from
approximately $200 million to approximately $225 million, after tax, or $3.35
to $3.75 per share. The Company expects to announce the amount of the charge
with fourth quarter 1993 results by the end of January 1994. The most
significant operations affected will be portions of the Company's business
conducted at its McCook, Illinois sheet and plate plant.
As a result of its ongoing review of the economic viability of certain of
its operations, the Company decided in mid-November 1993 to discontinue
production of extruded irrigation tubing at its Torrance, California facility,
idling the extrusion press at such facility effective December 31, 1993, and to
eliminate extruded shapes operations at its Louisville, Kentucky extrusion
plant, focusing instead on production of heat exchanger tubing products. The
effects of these restructuring actions are included in the estimated charges
discussed above.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of PRIDES
offered hereby will be approximately $459.1 million (approximately $505.0
million if the Underwriters' over-allotment option is exercised in full). The
proceeds will be used, together with internally generated funds, (i) to repay a
portion of the short-term indebtedness (currently bearing interest at an
average annual rate of approximately 3.25%) incurred in connection with the
acquisition of Miller's aluminum beverage can and end manufacturing operations
and (ii) for general corporate purposes, which may include funding a portion of
the Company's 1994 capital expenditure program and supporting strategic
expansion of the Company's core businesses, either by construction of new
facilities or acquisitions, with focus in the areas of cans, packaging and
wheels.
To the extent the proceeds are not immediately applied for such purposes,
they will initially be invested in short-term marketable securities.
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization
of the Company at September 30, 1993, and as adjusted to reflect the issuance
and sale of the shares of PRIDES offered hereby (after deduction of the
underwriting discount and estimated expenses):
As of September 30, 1993
(Unaudited)
______________________________________
Actual As Adjusted
______ ___________
(In millions)
Long-term debt, less current
portion of $61.6 million . . . . . $1,980.2 $1,980.2
Stockholders' Equity:
PRIDES offered hereby . . . . . . - 459.1
Common stock. . . . . . . . . . . 754.5 754.5
Retained earnings . . . . . . . . 1,207.4 1,207.4
Cumulative currency
translation adjustments . . . . (48.0) (48.0)
Pension liability adjustment. . . (36.3) (36.3)
________ ________
Total Stockholders' Equity. . . . 1,877.6 2,336.7
________ ________
Total Capitalization. . . . . . . $3,857.8 $4,316.9
======== ========
The Company has decided to take actions to restructure certain of its
operations which will result in charges for 1993. See "Recent Developments".
<PAGE>
COMMON STOCK PRICES AND DIVIDENDS
The high and low sales prices for the Common Stock as reported on the NYSE
Composite Tape and the dividends declared per share during the periods
indicated are set forth below:
High Low Dividends
____ ___ _________
1992
First Quarter . . . . . . . . . . $59-3/8 $48-7/8 $.45
Second Quarter. . . . . . . . . . 64-3/8 54 .45
Third Quarter . . . . . . . . . . 60-1/2 48-5/8 .45
Fourth Quarter. . . . . . . . . . 56-5/8 47 .45
1993
First Quarter . . . . . . . . . . $58-7/8 $48-5/8 $.45
Second Quarter. . . . . . . . . . 49 42 .25
Third Quarter . . . . . . . . . . 52-3/4 41-5/8 .25
Fourth Quarter. . . . . . . . . . 48-7/8 41-1/8 .25
1994
First Quarter
(through January 18, 1994). . . $51-1/4 $44-7/8
See the cover page of this Prospectus for a recent price of the Common
Stock.
Certain credit agreements of the Company impose restrictions on the
declaration or payment of dividends on shares of capital stock of the Company
if specified events of default have occurred and are continuing. See
"Description of Capital Stock - Common Stock - Dividend Rights and Restrictions
on Payment of Dividends". In addition, dividends on the Common Stock may not
be paid if there are any unpaid accrued dividends on the Company's outstanding
Preferred Stock, which will consist of the shares of PRIDES which are being
offered hereby, and may include, upon the occurrence of certain events
described in "Description of Capital Stock - Common Stock - Preferred Stock
Purchase Rights", the Company's Series A Junior Participating Preferred Stock.
SELECTED FINANCIAL INFORMATION
The following table sets forth selected financial information relating to
the Company and its consolidated subsidiaries for the five years ended December
31, 1992 and for the nine months ended September 30, 1992 and 1993. The annual
amounts (except for the ratio of earnings to combined fixed charges and
preferred stock dividends) were derived from the consolidated financial
statements and exhibits of the Company and its consolidated subsidiaries
contained in the Company's Annual Reports on Form 10-K for the years ended
December 31, 1992, as amended, and 1990. The amounts for the nine-month
periods (except for the ratio of earnings to combined fixed charges and
preferred stock dividends and the balance sheet data for the 1992 nine-month
period) were derived from the unaudited consolidated financial statements of
the Company and its consolidated subsidiaries contained in the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1993. The
amounts for the nine-month periods are unaudited; however, in the opinion of
the Company, all adjustments (consisting only of normal recurring accruals)
necessary for a fair statement of the results of operations for such periods
have been made. Results for interim periods are not necessarily indicative of
results for a full year. This information should be read in conjunction with
the consolidated financial statements and notes thereto incorporated by
reference herein. See "Incorporation of Certain Documents by Reference".
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended
Years Ended December 31, September 30,
_______________________________________________________________________________________________________
1988 1989 1990 1991 1992 1992 1993
_______ ________ ________ ________ ________ ________ ________
(In millions, except per share and ratio amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Net sales . . . . . . . . . . . $5,567.1 $6,143.1 $6,022.4 $5,730.1 $5,592.6 $4,246.9 $3,922.9
Equity, interest and other
income . . . . . . . . . . . 51.5 68.0 53.3 54.4 27.7 20.1 18.1
Gain on sale of investment. . . - - - - 36.1 36.1 -
5,618.6 6,211.1 6,075.7 5,784.5 5,656.4 4,303.1 3,941.0
_______ _______ _______ _______ _______ _______ _______
Cost of products sold . . . . . 4,292.0 4,775.9 4,823.4 4,760.2 4,761.9 3,604.6 3,472.7
Selling, administrative and
general expenses . . . . . . 339.0 364.1 370.1 378.0 368.7 274.4 265.6
Depreciation and amortization . 183.6 199.8 214.2 265.1 284.0 213.0 213.8
Interest expense. . . . . . . . 145.3 113.0 96.1 160.9 166.8 126.0 120.6
Provision for estimated
environmental costs. . . . . - - 150.0 - 164.0 10.0 -
Operational restructuring
and asset revaluation
costs. . . . . . . . . . . . - - - - 106.4 21.0 -
_______ _______ _______ _______ _______ _______ _______
4,959.9 5,452.8 5,653.8 5,564.2 5,851.8 4,249.0 4,072.7
_______ _______ _______ _______ _______ _______ _______
Income (loss) before income
taxes and cumulative effects
of accounting changes. . . . 658.7 758.3 421.9 220.3 (195.4) 54.1 (131.7)
Taxes on income (credit). . . . 176.7 225.6 125.3 66.2 (86.2) 11.2 (48.2)
_______ _______ _______ _______ _______ _______ _______
Income (loss) before cumulative
effects of accounting
changes . . . . . . . . . . 482.0 532.7 296.6 154.1 (109.2) 42.9 (83.5)
Cumulative effects of accounting
changes . . . . . . . . . . - - - - (639.6) (639.6) -
_______ _______ _______ _______ _______ _______ _______
Net income (loss)(a). . . . . . $ 482.0 $ 532.7 $ 296.6 $ 154.1 $ (748.8) $ (596.7) $ (83.5)
======= ======= ======= ======= ========= ========= ========
Amounts per common share
Primary earnings (losses). . $ 9.01 $ 9.20 $ 5.01 $ 2.60 $ (12.56) $ (10.01) $ (1.40)
======= ======= ======= ======= ========= ========= ========
Cash dividends declared. . . $ .90 $ 1.70 $ 1.80 $ 1.80 $ 1.80 $ 1.35 $ .95
======= ======= ======= ======= ======== ======== =======
Ratio of earnings to combined
fixed charges and preferred
stock dividends(b) . . . . . 4.5 5.6 3.1 1.9 - 1.3 -
Balance Sheet Data:
Total assets . . . . . . . . . $5,031.7 $5,555.6 $6,527.1 $6,685.3 $6,897.0 $6,972.8 $6,832.3
======== ======== ======== ======== ======== ======== ========
Long-term debt, excluding
convertible subordinated
debentures (c). . . . . . . $1,080.1 $1,115.2 $1,741.5 $1,854.3 $1,797.7 $1,778.9 $1,980.2
======== ======== ======== ======== ======== ======== ========
Total stockholders' equity . . $2,040.1 $2,684.1 $2,928.4 $2,960.1 $2,060.0 $2,327.3 $1,877.6
======== ======== ======== ======== ======== ======== ========
_____________
<FN>
(a) Third quarter 1993 results included an after-tax charge of $8.0 million ($0.13 per share) to cover
the costs of the temporary curtailment of 88,000 metric tons of primary aluminum production capacity.
See "The Company--Raw Materials and Aluminum Production".
(b) The ratios of earnings to combined fixed charges and preferred stock dividends are not presented
for 1992 or for the nine months ended September 30, 1993 because earnings were inadequate to cover
combined fixed charges and preferred stock dividends by approximately $209 million and $144 million,
respectively. During the periods presented through the date hereof, no preferred stock was outstanding.
(c) In the first quarter of 1989, the Company called for redemption its 6% convertible subordinated
debentures due 2012, which were convertible into Common Stock of the Company. The Company issued
approximately 5.2 million shares of Common Stock upon conversion of substantially all of the $199.9
million of such debentures.
</TABLE>
<PAGE>
<PAGE>
Accounting Changes
In the fourth quarter of 1992, the Company elected early adoption of
Statement of Financial Accounting Standards (FAS) No. 106-Employers' Accounting
for Postretirement Benefits Other Than Pensions and No. 109-Accounting for
Income Taxes. The cumulative effects, as of January 1, 1992, of adopting FAS
106 and FAS 109 were charges of $610.0 million (net of taxes of $365.0 million)
and $29.6 million, respectively. The adoption of FAS 106 resulted in a
decrease in income before the cumulative effects of accounting changes for 1992
of $32.5 million ($52.0 million before tax) or $0.54 per share, while the
effect of adoption of FAS 109 on income before the cumulative effects of
accounting changes for the year was not significant.
DESCRIPTION OF CAPITAL STOCK
The Company is authorized by its Restated Certificate of Incorporation to
issue a total of 221,000,000 shares of capital stock, consisting of (i)
200,000,000 shares of common stock, without par value (the "Common Stock"),
(ii) 20,000,000 shares of preferred stock, without par value (the "Preferred
Stock"), and (iii) 1,000,000 shares of second preferred stock, $100 par value
(the "Second Preferred Stock"). Shares of Preferred Stock and Second Preferred
Stock are issuable in one or more series, each with such designations,
preferences, rights, qualifications, limitations and restrictions as the Board
of Directors of the Company may determine in resolutions providing for their
issuance.
As of December 31, 1993, there were issued, outstanding and entitled to
vote 60,488,863 shares of Common Stock. No shares of Preferred Stock or Second
Preferred Stock are currently outstanding, although the Board of Directors has
adopted resolutions authorizing the issuance of up to 2,000,000 shares of a
Series A Junior Participating Preferred Stock, without par value, issuable upon
the occurrence of certain events as described below in the section entitled
"Common Stock - Preferred Stock Purchase Rights". See also "Description of
PRIDES".
Common Stock
Dividend Rights and Restrictions on Payment of Dividends. Holders of
Common Stock are entitled to receive dividends, when and as declared by the
Board of Directors, subject to restrictions which may be imposed by (i)
resolutions providing for the issuance of series of Preferred Stock (including
the PRIDES) or Second Preferred Stock; and (ii) certain credit agreements of
the Company, as described below. Dividends on Preferred Stock and Second
Preferred Stock may be cumulative, and no payments or distributions (except in
Common Stock or other junior stock) may be made on Common Stock, nor may any
Common Stock be acquired by the Company, unless all past and current dividends
on Preferred Stock and Second Preferred Stock have been paid or provided for.
Under certain of the Company's credit agreements, the Company may not declare
or pay dividends on, make any payment on account of, or set apart assets for a
sinking or other analogous fund for the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of capital stock of the Company,
nor may the Company make any other distribution in respect thereof, if
specified events of default (including payment defaults and events relating to
bankruptcy, insolvency or reorganization) have occurred and are continuing. No
such events of default have occurred.
Voting Rights. Holders of Common Stock are entitled to one vote for each
share held of record and are not entitled to cumulate votes for the election of
directors. As a consequence, holders of more than 50% of the shares of Common
Stock voting for the election of directors can elect all of the directors if
they so choose; in such event, the holders of the remaining shares of Common
Stock would not be able to elect any directors. Holders of Common Stock have
voting powers on all matters requiring approval of stockholders, other than
certain matters subject to the voting rights of holders of the Company's
Preferred Stock and Second Preferred Stock to the extent provided in the
applicable resolutions authorizing their issuance or otherwise under Delaware
law.
Liquidation Rights. In the event of liquidation, dissolution or winding up
of the Company, holders of Common Stock are entitled to share ratably in the
assets of the Company remaining after payment or provision for payment of all
the Company's debts and other liabilities and after the holders of any
outstanding series of Preferred Stock and Second Preferred Stock have been paid
the full preferential amounts due them. Any preferential rights to be accorded
holders of Preferred Stock and Second Preferred Stock will be set forth in
resolutions of the Board of Directors authorizing issuance of any series.
Preemptive Rights; Assessability. Holders of Common Stock have no
preemptive or conversion rights and there are no redemption or sinking fund
provisions applicable thereto. The outstanding shares of Common Stock are
fully paid and non-assessable.
Transfer Agent and Registrar. The transfer agent and registrar for the
Common Stock is Mellon Securities Trust Company, 85 Challenger Road, Overpeck
Centre, Ridgefield Park, New Jersey 07660.
Preferred Stock Purchase Rights. On November 20, 1987, the Board of
Directors of the Company declared a dividend distribution of one Preferred
Stock Purchase Right (a "Right") for each outstanding share of Common Stock to
stockholders of record at the close of business on December 1, 1987. Each
Right entitles the record holder to purchase from the Company, from and after
the Distribution Date (as defined below), one one-hundredth of a share of the
Company's Series A Junior Participating Preferred Stock, without par value (the
"Series A Preferred Stock"), at a price of $125 (the "Purchase Price"), subject
to adjustment in certain circumstances. The description and terms of the
Rights are set forth in a Rights Agreement, dated as of November 23, 1987 (the
"Rights Agreement"), between the Company and The Chase Manhattan Bank, N.A.
("Chase"), as amended. Mellon Securities Trust Company succeeded Chase as
Rights Agent under the Rights Agreement effective January 1, 1992.
The Distribution Date will occur upon the earlier of (i) 15 days following
a public announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding shares of Common Stock
(the "Stock Acquisition Date"), or (ii) 10 business days following the
commencement of a tender offer or exchange offer if, upon consummation thereof,
the person or group making such offer would be the beneficial owner of 30% or
more of the outstanding shares of Common Stock. Until the Distribution Date,
(i) the Rights will be evidenced by Common Stock certificates and will be
transferred only with such Common Stock certificates, (ii) new Common Stock
certificates issued after December 1, 1987 will contain a notation
incorporating the Rights Agreement by reference and (iii) the surrender for
transfer of any Common Stock certificate will also constitute the transfer of
the Rights associated with the Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on December 1, 1997, unless earlier exercised or
redeemed.
If, at any time following the Distribution Date, (i) the Company is the
surviving corporation in a merger with an Acquiring Person and the Common Stock
is not changed or exchanged, (ii) an Acquiring Person becomes the beneficial
owner of 30% or more of the outstanding shares of Common Stock (other than by
an offer for all outstanding shares of Common Stock at a price and on terms
which the majority of the independent directors of the Company determine to be
fair to, and otherwise in the best interests of, stockholders), or (iii) an
Acquiring Person receives equity securities (other than by a pro rata
distribution) from the Company, acquires from or transfers to the Company
assets with a fair market value exceeding $10,000,000 or engages in certain
other "self-dealing" transactions specified in the Rights Agreement, each
holder of a Right will have the right to receive, upon the exercise thereof,
Common Stock (or, in certain circumstances, cash, property or other securities
of the Company) having a value equal to two times the exercise price of the
Right. However, Rights are not so exercisable following the occurrence of such
events until they are no longer redeemable. In any such event, any Rights that
are, or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by an Acquiring Person will be null and void.
At any time following the Stock Acquisition Date, if (i) the Company
engages in a merger or consolidation in which it is not the surviving
corporation or in which it is the surviving corporation, but all or part of the
Common Stock is changed or exchanged, or (ii) 50% or more of the Company's
assets or earning power is transferred, each holder of a Right will have the
right to receive, upon the exercise thereof, common stock of the acquiring
company having a value equal to two times the exercise price of the Right. The
Rights may not be so exercised in the case of a merger or consolidation
(a) which follows an offer described in clause (ii) of the preceding paragraph
and (b) in which the form of consideration is the same as was paid in such
offer.
At any time until fifteen days following the Stock Acquisition Date, the
Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $.05 per Right, payable in cash or securities or both.
Thereafter, this right of redemption may be reinstated if an Acquiring Person
reduces his beneficial ownership to 10% or less of the outstanding shares of
Common Stock in a transaction or series of transactions not involving the
Company and there are no other Acquiring Persons.
Until a Right is exercised, the holder thereof will have no rights as a
stockholder of the Company, including, without limitation, the right to vote or
to receive dividends.
Shares of Series A Preferred Stock purchasable upon exercise of the Rights
will not be redeemable. Each one one-hundredth of a share of Series A
Preferred Stock will be entitled to (i) an aggregate quarterly dividend equal
to the greater of (a) the quarterly dividend declared per share of Common Stock
or (b) $.10, (ii) upon liquidation, a minimum preferential liquidation payment
of $1.00 and an aggregate liquidation payment equal to the liquidation payment
made per share of Common Stock, (iii) one vote, voting together with the shares
of Common Stock and (iv) in the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged, the same amount
received per share of Common Stock. These rights are protected by customary
anti-dilution provisions. Because of the nature of the Series A Preferred
Stock's dividend, liquidation and voting rights, the value of each one
one-hundredth of a share of Series A Preferred Stock purchasable upon exercise
of a Right should approximate the value of one share of Common Stock.
Delaware General Corporation Law Section 203
The Company is subject to the provisions of Section 203 of the General
Corporation Law of the State of Delaware ("DGCL Section 203"), the "business
combination" statute. In general, the statute prohibits a public Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless (i) prior to such
date, the board of directors of the corporation approved either the business
combination or the transaction that resulted in the stockholder becoming an
interested stockholder, (ii) upon consummation of the transaction that resulted
in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding certain shares
described in DGCL Section 203), or (iii) on or after such date, the business
combination is approved by the board of directors of the corporation and
authorized at an annual or special meeting of stockholders and by the
affirmative vote of at least two-thirds of the outstanding voting stock that is
not owned by the "interested stockholder". "Business combination" is defined
to include mergers, asset sales and certain other transactions resulting in a
financial benefit to a stockholder. An "interested stockholder" is defined
generally as a person who, together with affiliates and associates, owns (or,
within the prior three years, did own) 15% or more of a corporation's voting
stock. The Company's Restated Certificate of Incorporation does not exclude
the Company from the restrictions imposed under DGCL Section 203. Thus, such
statute could prohibit or delay the accomplishment of mergers or other takeover
or change in control attempts with respect to the Company and, accordingly, may
discourage attempts to acquire the Company.
Advance Notice Requirements
The Company's By-Laws require advance written notice of any business to be
conducted at an annual or special meeting of the stockholders (other than
business included in the proxy materials or brought before the meeting by or at
the direction of the Board of Directors or of the officer presiding over the
meeting). For such business to be properly before the meeting, the notice must
contain certain information concerning the item of business and the proposing
stockholder. The notice must be received by the Secretary of the Company (i)
in the case of a special meeting, not more than 10 days after the date of the
Company's written notice of the meeting and (ii) in the case of an annual
meeting, not less than 30 days before the anniversary date of the Company's
written notice of the previous year's annual meeting. These requirements could
have the effect of preventing a stockholder who had not furnished the necessary
notice from attempting to nominate directors or conduct business from the floor
during the course of the meeting and could therefore impair such stockholder's
ability to use such methods in connection with a proposed takeover of the
Company.
DESCRIPTION OF PRIDES
The summary contained herein of the terms of shares of PRIDES does not
purport to be complete and is subject to and qualified in its entirety by
reference to all of the provisions of the Company's Restated Certificate of
Incorporation and form of Certificate of Designations relating to the shares of
PRIDES (the "Certificate of Designations"), a copy of which has been filed as
an exhibit to the Registration Statement of which this Prospectus is a part.
The Company's Board of Directors and the 1993 Preferred Stock Committee
thereof have adopted resolutions authorizing the issuance of 11,000,000 shares
of 7% PRIDES, Convertible Preferred Stock, stated value $47.25 per share.
Dividends
Holders of shares of PRIDES will be entitled to receive, when and as
declared by the Board of Directors out of funds legally available therefor,
cash dividends from the date of initial issuance of the shares of PRIDES at the
rate per annum of 7% of the stated value per share (equivalent to $3.31 per
annum or $.8275 per quarter for each share of PRIDES), payable quarterly in
arrears on each April 1, July 1, October 1 and December 31, or, if any such
date is not a business day, on the next succeeding business day; provided,
however, that with respect to any dividend period during which a redemption
occurs, the Company may, at its option, declare accrued dividends to, and pay
such dividends on, the date fixed for redemption, in which case such dividends
would be payable in cash to the holders of shares of PRIDES as of the record
date for such dividend payment and would not be included in the calculation of
the related PRIDES Call Price as set forth below. The first dividend period
will be from the date of initial issuance of the shares of PRIDES to but
excluding April 1, 1994, and the first dividend will be payable on April 1,
1994. Dividends will cease to accrue in respect of the shares of PRIDES on the
Mandatory Conversion Date or on the date of their earlier conversion or
redemption.
Dividends will be payable to holders of record as they appear on the stock
register of the Company on such record dates, not less than 15 nor more than 60
days preceding the payment date thereof, as shall be fixed by the Board of
Directors. Dividends payable on shares of PRIDES for any period less than a
full quarterly dividend period will be computed on the basis of a 360-day year
of twelve 30-day months and the actual number of days elapsed in any period
less than one month.
Dividends on shares of PRIDES will accrue whether or not there are funds
legally available for the payment of such dividends and whether or not such
dividends are declared. Accrued but unpaid dividends on shares of PRIDES will
cumulate as of the dividend payment date on which they first become payable,
but no interest will accrue on accumulated but unpaid dividends on shares of
PRIDES.
The shares of PRIDES will rank on a parity, both as to payment of dividends
and distribution of assets upon liquidation, with any future preferred stock
issued by the Company that by its terms ranks pari passu with the shares of
PRIDES.
As long as any shares of PRIDES are outstanding, no dividends (other than
dividends payable in shares of, or warrants, rights or options exercisable for
or convertible into shares of, Common Stock, Second Preferred Stock or any
other capital stock of the Company ranking junior to the PRIDES as to the
payment of dividends or the distribution of assets upon liquidation ("Junior
Stock") and cash in lieu of fractional shares in connection with any such
dividend) will be paid or declared in cash or otherwise, nor will any other
distribution be made (other than a distribution payable in Junior Stock and
cash in lieu of fractional shares in connection with any such distribution), on
any Junior Stock unless (i) full dividends on Preferred Stock (including the
shares of PRIDES) that does not constitute Junior Stock ("Parity Preferred
Stock") have been paid, or declared and set aside for payment, for all dividend
periods terminating at or before the date of such Junior Stock dividend or
distribution payment to the extent such dividends are cumulative; (ii)
dividends in full for the current quarterly dividend period have been paid, or
declared and set aside for payment, on all Parity Preferred Stock to the extent
such dividends are cumulative; (iii) the Company has paid or set aside all
amounts, if any, then or theretofore required to be paid or set aside for all
purchase, retirement, and sinking funds, if any, for any Parity Preferred
Stock; and (iv) the Company is not in default on any of its obligations to
redeem any Parity Preferred Stock.
In addition, as long as any shares of PRIDES are outstanding, no shares of
any Junior Stock may be purchased, redeemed, or otherwise acquired by the
Company or any of its subsidiaries (except in connection with a
reclassification or exchange of any Junior Stock through the issuance of other
Junior Stock (and cash in lieu of fractional shares in connection therewith) or
the purchase, redemption or other acquisition of any Junior Stock with any
Junior Stock (and cash in lieu of fractional shares in connection therewith)),
nor may any funds be set aside or made available for any sinking fund for the
purchase or redemption of any Junior Stock unless: (i) full dividends on
Parity Preferred Stock have been paid, or declared and set aside for payment,
for all dividend periods terminating at or before the date of such purchase or
redemption to the extent such dividends are cumulative; (ii) dividends in full
for the current quarterly dividend period have been paid, or declared and set
aside for payment, on all Parity Preferred Stock to the extent such dividends
are cumulative; (iii) the Company has paid or set aside all amounts, if any,
then or theretofore required to be paid or set aside for all purchase,
retirement, and sinking funds, if any, for any Parity Preferred Stock; and (iv)
the Company is not in default on any of its obligations to redeem any Parity
Preferred Stock.
Subject to the provisions described above, such dividends or other
distributions (payable in cash, property, or Junior Stock) as may be determined
by the Board of Directors may be declared and paid on the shares of any Junior
Stock from time to time and Junior Stock may be purchased, redeemed or
otherwise acquired by the Company or any of its subsidiaries from time to time.
In the event of the declaration and payment of any such dividends or other
distributions, the holders of such Junior Stock will be entitled, to the
exclusion of holders of any Parity Preferred Stock, to share therein according
to their respective interests.
As long as any shares of PRIDES are outstanding, dividends or other
distributions may not be declared or paid on any Parity Preferred Stock (other
than dividends or other distributions payable in Junior Stock and cash in lieu
of fractional shares in connection therewith), and the Company may not
purchase, redeem or otherwise acquire any Parity Preferred Stock (except with
any Junior Stock and cash in lieu of fractional shares in connection
therewith), unless either: (a)(i) full dividends on Parity Preferred Stock
have been paid, or declared and set aside for payment, for all dividend periods
terminating at or before the date of such Parity Preferred Stock dividend,
distribution, purchase, redemption or other acquisition payment to the extent
such dividends are cumulative; (ii) dividends in full for the current quarterly
dividend period have been paid, or declared and set aside for payment, on all
Parity Preferred Stock to the extent such dividends are cumulative; (iii) the
Company has paid or set aside all amounts, if any, then or theretofore required
to be paid or set aside for all purchase, retirement, and sinking funds, if
any, for any Parity Preferred Stock; and (iv) the Company is not in default on
any of its obligations to redeem any Parity Preferred Stock; or (b) with
respect to the payment of dividends only, any such dividends will be declared
and paid pro rata so that the amounts of any dividends declared and paid per
share of PRIDES and each other share of Parity Preferred Stock will in all
cases bear to each other the same ratio that accrued dividends (including any
accumulation with respect to unpaid dividends for prior dividend periods, if
such dividends are cumulative) per share of PRIDES and such other shares of
Parity Preferred Stock bear to each other.
Mandatory Conversion of PRIDES
Unless previously either redeemed or converted at the option of the holder
into Common Stock, as hereinafter described, on the Mandatory Conversion Date,
each outstanding share of PRIDES will mandatorily convert into (i) shares of
Common Stock at the Common Equivalent Rate (as defined herein) in effect on
such date and (ii) the right to receive cash in an amount equal to all accrued
and unpaid dividends on such shares of PRIDES (other than previously declared
dividends payable to a holder of record as of a prior date) to the Mandatory
Conversion Date, whether or not declared, out of funds legally available for
the payment of dividends, subject to the right of the Company to redeem the
shares of PRIDES on or after December 31, 1996, and before the Mandatory
Conversion Date, as described below, and subject to the conversion of the
shares of PRIDES at the option of the holder at any time before the Mandatory
Conversion Date, as described below. The "Common Equivalent Rate" is initially
one share of Common Stock for each share of PRIDES and is subject to adjustment
as described below. Dividends will cease to accrue on the Mandatory Conversion
Date in respect of the shares of PRIDES then outstanding.
Because the price of the Common Stock is subject to market fluctuations,
the value of the Common Stock that may be received by holders of shares of
PRIDES upon their mandatory conversion may be more or less than the amount paid
for the shares of PRIDES offered hereby.
Optional Redemption
Shares of PRIDES are not redeemable by the Company before December 31,
1996. At any time and from time to time on or after that date until
immediately before the Mandatory Conversion Date, the Company will have the
right to redeem, in whole or in part, the outstanding shares of PRIDES. Upon
any such redemption, the Company will deliver to the holder thereof in exchange
for each share of PRIDES subject to redemption the greater of: (i) the number
of shares of Common Stock equal to the applicable Call Price (as described
below) in effect on the redemption date divided by the Current Market Price of
the Common Stock, determined as of the second trading day immediately preceding
the Notice Date (as defined below), or (ii) .82 of a share of Common Stock
(subject to adjustment in the same manner as the Optional Conversion Rate (as
defined below) is adjusted). Dividends will cease to accrue on the shares of
PRIDES on the date fixed for their redemption.
The Call Price of each share of PRIDES is the sum of (i) $48.077 on and
after December 31, 1996, to and including March 31, 1997; $47.870 on and after
April 1, 1997, to and including June 30, 1997; $47.663 on and after July 1,
1997, to and including September 30, 1997; $47.457 on and after October 1,
1997, to and including November 30, 1997; and $47.25 (being the price to the
public of a share of PRIDES appearing on the cover page of this Prospectus) on
and after December 1, 1997, to and including December 31, 1997; and (ii) all
accrued and unpaid dividends thereon to but not including the date fixed for
redemption (other than previously declared dividends payable to a holder of
record as of a prior date).
The "Current Market Price" per share of the Common Stock on any date of
determination means the lesser of (x) the average of the closing sale prices of
the Common Stock as reported on the NYSE Composite Tape for the 15 consecutive
trading days ending on and including such date of determination or (y) the
closing sale price of the Common Stock as reported on the NYSE Composite Tape
for such date of determination; provided, however, that, with respect to any
redemption of shares of PRIDES, if any event resulting in an adjustment of the
Common Equivalent Rate occurs during the period beginning on the first day of
such 15-day period and ending on the applicable redemption date, the Current
Market Price as determined pursuant to the foregoing will be appropriately
adjusted to reflect the occurrence of such event. The "Notice Date" with
respect to any notice given by the Company in connection with a redemption of
the shares of PRIDES means the date on which first occurs either the public
announcement of such redemption or the commencement of mailing of such notice
to the holders of shares of PRIDES.
If fewer than all the outstanding shares of PRIDES are to be called for
redemption, shares of PRIDES to be called will be selected by the Company from
outstanding shares of PRIDES not previously called by lot or pro rata (as
nearly as may be) or by any other method determined by the Board of Directors
in its sole discretion to be equitable.
The Company will provide notice of any redemption of shares of PRIDES to
holders of record of the shares of PRIDES to be called for redemption not less
than 15 nor more than 60 days before the date fixed for redemption.
Accordingly, the earliest Notice Date for any call for redemption of shares of
PRIDES will be November 1, 1996. Any such notice will be provided by mail,
sent to the holders of record of the shares of PRIDES to be called at each such
holder's address as it appears on the stock register of the Company, first
class postage prepaid; provided, however, that failure to give such notice or
any defect therein will not affect the validity of the proceeding for
redemption of any shares of PRIDES to be redeemed except as to the holder to
whom the Company has failed to give such notice or whose notice was defective.
On and after the redemption date, all rights of the holders of the shares of
PRIDES called for redemption will terminate except the right to receive the
redemption price (unless the Company defaults on the payment of the redemption
price). A public announcement of any call for redemption will be made by the
Company before, or at the time of, the mailing of such notice of redemption.
Each holder of shares of PRIDES called for redemption must surrender the
certificates evidencing such shares of PRIDES to the Company at the place
designated in the notice of redemption and will thereupon be entitled to
receive certificates for shares of Common Stock and cash for any fractional
share amount.
Conversion at the Option of the Holder
The shares of PRIDES are convertible, in whole or in part, at the option of
the holders thereof, at any time before the Mandatory Conversion Date, unless
previously redeemed, into shares of Common Stock at a rate of .82 of a share of
Common Stock for each share of PRIDES (the "Optional Conversion Rate"),
equivalent to a conversion price of $57.622 per share of Common Stock (the
"Conversion Price"), subject to adjustment as described below. The right to
convert shares of PRIDES called for redemption will terminate immediately
before the close of business on any redemption date with respect to such
shares.
Conversion of shares of PRIDES at the option of the holder may be effected
by delivering certificates evidencing such shares of PRIDES, together with
written notice of conversion and a proper assignment of such certificates to
the Company or in blank (and, if applicable, cash payment of an amount equal to
the dividend attributable to the current quarterly dividend period payable on
such shares), to the office of the transfer agent for PRIDES or to any other
office or agency maintained by the Company for that purpose and otherwise in
accordance with conversion procedures established by the Company. Each
optional conversion will be deemed to have been effected immediately before the
close of business on the date on which the foregoing requirements have been
satisfied. The conversion will be at the Optional Conversion Rate in effect at
such time and on such date.
Holders of shares of PRIDES at the close of business on a record date for
any payment of declared dividends will be entitled to receive the dividend
payable on such shares of PRIDES on the corresponding dividend payment date
notwithstanding the optional conversion of such shares of PRIDES following such
record date and before such dividend payment date. However, shares of PRIDES
surrendered for conversion after the close of business on a record date for any
payment of declared dividends and before the opening of business on the next
succeeding dividend payment date must be accompanied by payment in cash of an
amount equal to the dividend attributable to the current quarterly dividend
period payable on such date (unless such shares of PRIDES are subject to
redemption on a redemption date between such record date and such dividend
payment date). A holder of shares of PRIDES called for redemption on December
31, 1996 or any other dividend payment date will receive the dividend on such
shares of PRIDES payable on that date and will be able to convert such shares
of PRIDES after the record date for such dividend without paying an amount
equal to such dividend to the Company upon conversion. Except as provided
above, upon any optional conversion of shares of PRIDES, the Company will make
no payment of or allowance for unpaid dividends, whether or not in arrears, on
such shares of PRIDES, or for previously declared dividends or distributions on
the shares of Common Stock issued upon such conversion.
Enhanced Dividend Yield; Less Equity Appreciation than Common Stock
Dividends will accrue on the shares of PRIDES at a higher rate than the
rate at which dividends are currently paid on the Common Stock. The
opportunity for equity appreciation afforded by an investment in shares of
PRIDES is less than that afforded by an investment in the Common Stock because
the Conversion Price is higher than the per share price to the public of the
shares of PRIDES and the Company may, at its option, redeem the shares of
PRIDES at any time on or after December 31, 1996 and before the Mandatory
Conversion Date, and may be expected to do so, if, among other circumstances,
the Current Market Price of the Common Stock exceeds the Call Price for a share
of PRIDES. In such event, a holder of a share of PRIDES will receive less than
one share of Common Stock but no less than .82 of a share of Common Stock. A
holder may also surrender for conversion any shares of PRIDES called for
redemption up to the close of business on the redemption date, and a holder
that so elects to convert will receive .82 of a share of Common Stock per share
of PRIDES. The per share value of Common Stock received by holders of shares
of PRIDES may be more or less than the per share amount paid for the shares of
PRIDES offered hereby, due to market fluctuations in the price of the Common
Stock.
As a result of these provisions, holders of shares of PRIDES would be
expected to realize no equity appreciation if the Current Market Price of the
Common Stock is below the Conversion Price, and less than all of such
appreciation if the Current Market Price of the Common Stock is above the
Conversion Price. Holders of shares of PRIDES will realize the entire decline
in equity value if the Current Market Price of the Common Stock is less than
the price paid for a share of PRIDES.
Conversion Adjustments
The Common Equivalent Rate and the Optional Conversion Rate are each
subject to adjustment as appropriate in certain circumstances, including if the
Company (a) pays a stock dividend or makes a distribution with respect to its
Common Stock in shares of Common Stock; (b) subdivides or splits its
outstanding Common Stock; (c) combines its outstanding Common Stock into a
smaller number of shares; (d) issues by reclassification of its shares of
Common Stock any shares of Common Stock; (e) issues certain rights or warrants
to all holders of its Common Stock; or (f) pays a dividend or distributes to
all holders of its Common Stock evidences of its indebtedness, cash or other
assets (including capital stock of the Company other than Common Stock but
excluding any cash dividends or distributions, other than "Extraordinary Cash
Distributions", and dividends referred to in clause (a) above). In addition,
the Company will be entitled (but will not be required) to make upward
adjustments in the Common Equivalent Rate, the Optional Conversion Rate and the
Call Price as the Company, in its discretion, determines to be advisable, in
order that any stock dividend, subdivision of shares, distribution of rights to
purchase stock or securities, or distribution of securities convertible into or
exchangeable for stock (or any transaction which could be treated as any of the
foregoing transactions under Section 305 of the Internal Revenue Code of 1986,
as amended) hereafter made by the Company to its stockholders will not be
taxable. "Extraordinary Cash Distribution" means, with respect to any
consecutive 12-month period, all cash dividends and cash distributions on the
Common Stock during such period (other than cash dividends and cash
distributions for which a prior adjustment to the Common Equivalent Rate and
Optional Conversion Rate was previously made) to the extent such dividends and
distributions exceed, on a per share of Common Stock basis, 10% of the average
daily closing price of the Common Stock over such period. All adjustments to
the Common Equivalent Rate and the Optional Conversion Rate will be calculated
to the nearest 1/100th of a share of Common Stock. No adjustment in the Common
Equivalent Rate or the Optional Conversion Rate will be required unless such
adjustment would require an increase or decrease of at least one percent
therein; provided, however, that any adjustments which, by reason of the
foregoing, are not required to be made will be carried forward and taken into
account in any subsequent adjustment. All adjustments will be made
successively.
Whenever the Common Equivalent Rate and the Optional Conversion Rate are
adjusted as provided in the preceding paragraph, the Company will file with the
transfer agent for the shares of PRIDES a certificate with respect to such
adjustment, make a prompt public announcement thereof and mail a notice to
holders of the shares of PRIDES providing specified information with respect to
such adjustment. At least 10 business days before taking any action that could
result in certain adjustments in the Common Equivalent Rate and the Optional
Conversion Rate, the Company will notify each holder of shares of PRIDES
concerning such proposed action.
Adjustment for Certain Consolidation or Mergers
In case of (i) any consolidation or merger to which the Company is a party
(other than a merger or consolidation in which the Company is the surviving or
continuing corporation and in which the shares of Common Stock outstanding
immediately before the merger or consolidation remain unchanged), (ii) any sale
or transfer to another corporation of the property of the Company as an
entirety or substantially as an entirety, or (iii) any statutory exchange of
securities with another corporation (other than in connection with a merger or
acquisition), each share of PRIDES will, after consummation of such
transaction, be subject to (A) conversion at the option of the holder into the
kind and amount of securities, cash, or other property receivable upon
consummation of such transaction by a holder of the number of shares of Common
Stock into which such share of PRIDES might have been converted immediately
before consummation of such transaction, (B) conversion on the Mandatory
Conversion Date into the kind and amount of securities, cash, or other property
receivable upon consummation of such transaction by a holder of the number of
shares of Common Stock into which such share of PRIDES would have been
converted if the conversion on the Mandatory Conversion Date had occurred
immediately before the date of consummation of such transaction, plus the right
to receive cash in an amount equal to all accrued and unpaid dividends on such
share of PRIDES (other than previously declared dividends payable to a holder
of record as of a prior date), and (C) redemption on any redemption date in
exchange for the kind and amount of securities, cash, or other property
receivable upon consummation of such transaction by a holder of the number of
shares of Common Stock that would have been issuable at the Call Price in
effect on such redemption date upon a redemption of such shares of PRIDES
immediately before consummation of such transaction, assuming that, if the
Notice Date for such redemption is not before such transaction, the Notice Date
had been the date of such transaction; and assuming in each case that such
holder of shares of Common Stock failed to exercise rights of election, if any,
as to the kind or amount of securities, cash, or other property receivable upon
consummation of such transaction (provided that, if the kind or amount of
securities, cash, or other property receivable upon consummation of such
transaction is not the same for each non-electing share, then the kind and
amount of securities, cash, or other property receivable upon consummation of
such transaction for each non-electing share will be deemed to be the kind and
amount so receivable per share by a plurality of the non-electing shares). The
kind and amount of securities into or for which the shares of PRIDES will be
convertible or redeemable after consummation of such transaction will be
subject to adjustment as described above under the caption "Conversion
Adjustments" following the date of consummation of such transaction. The
Company may not become a party to any such transaction unless the terms thereof
are consistent with the foregoing.
Fractional Shares
No fractional shares of Common Stock will be issued upon redemption or
conversion of shares of PRIDES. In lieu of any fractional share otherwise
issuable in respect of the aggregate number of shares of PRIDES of any holder
that are redeemed or converted on any redemption date or upon mandatory
conversion or any optional conversion, such holder will be entitled to receive
an amount in cash equal to the same fraction of the (i) Current Market Price of
the Common Stock, determined as of the second trading day immediately preceding
the Notice Date, in the case of redemption, or (ii) Closing Price (as defined
in the Certificate of Designations) of the Common Stock determined (A) as of
the fifth trading day immediately preceding the Mandatory Conversion Date, in
the case of mandatory conversion, or (B) as of the second trading day
immediately preceding the effective date of conversion, in the case of an
optional conversion by a holder.
Rights Agreement
Reference is made to the section "Description of Capital Stock--Common
Stock--Preferred Stock Purchase Rights" for a description of the Company's
Rights Agreement. Shares of Common Stock issued upon conversion or redemption
of the shares of PRIDES may be entitled to receive Rights in accordance with
the terms and conditions of the Rights Agreement. The method of calculation of
the Current Market Price of the Common Stock does not take into account any
separate value of the Rights, except to the extent any such value may be
reflected in the Current Market Price.
Liquidation Rights
In the event of any voluntary or involuntary liquidation, dissolution, or
winding up of the Company, and subject to the rights of holders of any other
series of Preferred Stock, the holders of outstanding shares of PRIDES are
entitled to receive an amount equal to the per share price to the public of the
shares of PRIDES shown on the cover page of this Prospectus, plus accrued and
unpaid dividends thereon, out of the assets of the Company available for
distribution to stockholders, before any distribution of assets is made to
holders of Common Stock, Second Preferred Stock or any other capital stock
ranking junior to PRIDES upon liquidation, dissolution, or winding up.
If upon any voluntary or involuntary liquidation, dissolution, or winding
up of the Company, the assets of the Company are insufficient to permit the
payment of the full preferential amounts payable with respect to the shares of
PRIDES and all other series of Parity Preferred Stock, the holders of shares of
PRIDES and of all other series of Parity Preferred Stock will share ratably in
any distribution of assets of the Company in proportion to the full respective
preferential amounts to which they are entitled. After payment of the full
amount of the liquidating distribution to which they are entitled, the holders
of shares of PRIDES will not be entitled to any further participation in any
distribution of assets by the Company. A consolidation or merger of the
Company with or into one or more other corporations (whether or not the Company
is the corporation surviving such consolidation or merger), or a sale, lease or
exchange of all or substantially all of the assets of the Company will not be
deemed to be a voluntary or involuntary liquidation, dissolution, or winding up
of the Company.
Voting Rights
The holders of shares of PRIDES will have the right with the holders of
Common Stock to vote in the election of Directors and upon each other matter
coming before any meeting of the holders of Common Stock on the basis of 4/5 of
a vote for each share of PRIDES held. The holders of shares of PRIDES and the
holders of Common Stock will vote together as one class on such matters except
as otherwise provided by law or by the Company's Restated Certificate of
Incorporation.
In the event that dividends on the shares of PRIDES or any other series of
Preferred Stock are in arrears and unpaid for six quarterly dividend periods,
or if any other series of Preferred Stock is entitled for any other reason to
exercise voting rights, separate from the Common Stock, to elect any Directors
of the Company ("Preferred Stock Directors"), the holders of the shares of
PRIDES (voting separately as a class with holders of all other series of
Preferred Stock upon which like voting rights have been conferred and are
exercisable), with each share of PRIDES entitled to one vote on this and other
matters in which Preferred Stock votes as a group, will be entitled to vote for
the election of two Directors, such Directors to be in addition to the number
of Directors constituting the Board of Directors immediately before the accrual
of such right. Such right, when vested, will continue until all dividends in
arrears and payable on the shares of PRIDES and such other series of Preferred
Stock have been paid in full and the right of any other series of Preferred
Stock to exercise voting rights, separate from the Common Stock, to elect
Preferred Stock Directors of the Company terminates or has terminated, and,
when so paid and any such termination occurs or has occurred, such right of the
holders of the shares of PRIDES will cease. The term of office of any Director
elected by the holders of the shares of PRIDES and such other series will
terminate on the earlier of (i) the next annual meeting of stockholders at
which a successor has been elected and qualified or (ii) the termination of the
right of holders of the shares of PRIDES and such other series to vote for such
Directors.
The Company will not, without the approval of the holders of at least
66-2/3 percent of the shares of PRIDES then outstanding: (i) amend, alter, or
repeal any of the provisions of the Restated Certificate of Incorporation or
By-Laws of the Company so as to affect adversely the powers, preferences, or
rights of the holders of the shares of PRIDES then outstanding or reduce the
minimum time for any required notice to which the holders of the shares of
PRIDES then outstanding may be entitled (an amendment of the Restated
Certificate of Incorporation to authorize or create, or to increase the
authorized amount of, Common Stock, Second Preferred Stock or other Junior
Stock or any stock of any class ranking on a parity with the shares of PRIDES
being deemed not to affect adversely the powers, preferences, or rights of the
holders of the shares of PRIDES); (ii) authorize or create, or increase the
authorized amount of, any stock of any class, or any security convertible into
capital stock of any class, ranking prior to the shares of PRIDES either as to
the payment of dividends or the distribution of assets upon liquidation,
dissolution or winding up of the Company; or (iii) merge or consolidate with or
into any other corporation, unless each holder of shares of PRIDES immediately
preceding such merger or consolidation receives or continues to hold in the
resulting corporation the same number of shares, with substantially the same
rights and preferences, as correspond to the shares of PRIDES so held.
The Company will not, without the approval of the holders of at least a
majority of the shares of PRIDES then outstanding: (i) increase the authorized
number of shares of Preferred Stock; or (ii) create, or increase the authorized
number of shares of, any other class or classes of capital stock of the Company
ranking on a parity with the Preferred Stock, either as to payment of dividends
or the distribution of assets upon liquidation, dissolution or winding up of
the Company, or create any stock or other security convertible into or
exchangeable for or evidencing the right to purchase any stock of such other
class ranking on a parity with the Preferred Stock, or increase the authorized
number of shares of any such other class or amount of such other stock or
security.
Notwithstanding the provisions summarized in the preceding two paragraphs,
no such approval described therein of the holders of the shares of PRIDES will
be required if, at or before the time when such amendment, alteration, or
repeal is to take effect or when the authorization, creation, increase or
issuance of any such prior or parity stock or convertible security is to be
made, or when such consolidation or merger, voluntary liquidation, dissolution,
or winding up, sale, lease, conveyance, purchase, or redemption is to take
effect, as the case may be, provision is made for the redemption of all shares
of PRIDES at the time outstanding.
Transfer Agent and Registrar
Mellon Securities Trust Company, 85 Challenger Road, Overpeck Centre,
Ridgefield Park, New Jersey 07660 will act as transfer agent and registrar for,
and paying agent for the payment of dividends on, the shares of PRIDES.
Miscellaneous
Upon issuance, the shares of PRIDES will be fully paid and nonassessable.
Holders of shares of PRIDES have no preemptive rights. The Company will at all
times reserve and keep available out of its authorized and unissued Common
Stock, solely for issuance upon the conversion or redemption of shares of
PRIDES, such number of shares of Common Stock as will from time to time be
issuable upon the conversion or redemption of all the shares of PRIDES then
outstanding. Shares of PRIDES redeemed for, or converted into, Common Stock of
the Company or otherwise reacquired by the Company will resume the status of
authorized and unissued shares of Preferred Stock, undesignated as to series,
and will be available for subsequent issuance.
FEDERAL INCOME TAX CONSIDERATIONS
The Company has received an opinion from its tax counsel, Robert A.
Warwick, Esq., which addresses certain of the federal income tax consequences
under existing law of the purchase, ownership, and disposition of the shares of
PRIDES. A copy of that opinion is filed as an exhibit to the Registration
Statement of which this Prospectus is a part, and the following summary of such
tax consequences is qualified in its entirety by reference thereto, including
the assumptions set forth therein. The Company does not intend to seek a
ruling from the Internal Revenue Service (the "IRS") with respect to any of
these tax consequences. The summary is presented for informational purposes
only and is limited to a summary of the federal income tax consequences to
investors who are citizens or residents of the United States or that are U.S.
corporations. State, local and foreign tax consequences, tax consequences to
special classes of investors, including tax-exempt organizations, insurance
companies, banks, or dealers in securities, and tax consequences applicable to
shares of PRIDES where the right to receive dividends has been stripped from
the underlying security have not been summarized. Tax consequences may vary
depending upon the particular status of an investor. The summary is limited to
taxpayers who will hold shares of PRIDES or Common Stock received upon
conversion or redemption of shares of PRIDES as "capital assets" within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the
"Code"). The summary is based upon current law, applicable Treasury
Regulations, judicial authority, and current administrative rulings and
practice, including certain amendments to the Code, made in 1989, 1990 and
1993, which have not yet been subject to definitive interpretation by the IRS
or the courts. There can be no assurance that future changes in applicable law
or administrative and judicial interpretations thereof will not adversely
affect the tax consequences summarized herein or that there will not be
differences of opinion as to the interpretation of applicable law.
The following summary does not constitute, and should not be considered as,
legal or tax advice to prospective investors. Each potential investor should
consult with its own tax adviser before determining whether to purchase shares
of PRIDES.
Dividends
Dividends paid on shares of PRIDES will be taxable as ordinary income to
the extent of the Company's current or accumulated earnings and profits.
Dividends received by corporations out of such earnings and profits will
generally qualify for the 70 percent dividends-received deduction, so long as
the holder has held its shares of PRIDES for a sufficient time (generally more
than 45 days) and the shares of PRIDES were not acquired with borrowed funds
directly attributable to the shares of PRIDES under Section 246A of the Code.
Where the dividends-received deduction is available, a portion of the amount
deducted may have to be included by a corporation in computing its possible
liability for alternative minimum tax.
Under certain circumstances, a corporation that receives an "extraordinary
dividend," as defined in Section 1059 of the Code, is required to reduce its
stock basis by the non-taxed portion of such dividend (generally, the portion
claimed as a dividends-received deduction). Quarterly dividends not in arrears
paid to an original holder of shares of PRIDES generally will not constitute
extraordinary dividends under Section 1059(c). Under a special rule in Section
1059(f), any dividend with respect to "disqualified preferred stock" is treated
as an extraordinary dividend; however, while the issue is not free from doubt
due to the lack of authority directly on point, the shares of PRIDES should not
constitute "disqualified preferred stock."
Conversion into Common Stock
As a general rule, no gain or loss will be recognized by a holder on the
conversion of shares of PRIDES into shares of Common Stock if no cash is
received. Dividend income may be recognized, however, to the extent cash is
received in payment of dividends in arrears. In addition, gain may be
recognized upon the receipt by a holder of cash in lieu of a fractional share
of Common Stock.
The tax basis of the shares of Common Stock received upon conversion will
generally be equal to the tax basis of the shares of PRIDES converted (adjusted
to reflect any income or gain recognized on the conversion). The holding
period of the shares of such Common Stock will generally include the holding
period of the shares of PRIDES converted.
Call or Conversion Premium
Under certain circumstances, Section 305 of the Code requires that any
excess of the redemption price of preferred stock over its issue price is
includable in income, before receipt, as a constructive dividend. While the
issue is not free from doubt due to a lack of authority directly on point, a
holder of shares of PRIDES should not be required to include any call or
conversion premium in income as a redemption premium under Section 305 of the
Code.
Adjustment of Conversion Rate
Certain adjustments (or failures to make adjustments) to the conversion
rate, based on the Company's issuance of certain rights, warrants, evidences of
its indebtedness, securities, or other assets to holders of its Common Stock,
which have the effect of increasing the proportionate interest of a holder of
shares of PRIDES in the Company's assets or earnings and profits, may result in
constructive distributions taxable as dividends to such holder, which may
constitute (and cause other dividends to constitute) extraordinary dividends to
corporate holders.
Backup Withholding
Certain noncorporate holders may be subject to backup withholding at a rate
of 31 percent on dividends and certain consideration received upon the call or
conversion of the shares of PRIDES. Generally, backup withholding applies only
when the taxpayer fails to furnish or certify a proper Taxpayer Identification
Number or when the taxpayer is notified by the IRS that the taxpayer has failed
to report payments of interest and dividends properly. Holders should consult
their tax advisers regarding their qualification for exemption from backup
withholding and the procedure for obtaining any applicable exemption.
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement") between the Company and each of the underwriters named
below (the "Underwriters") for whom Merrill Lynch, Pierce, Fenner & Smith
Incorporated and CS First Boston Corporation are acting as representatives (the
"Representatives"), the Company has agreed to sell to the Underwriters, and
each of the Underwriters severally has agreed to purchase from the Company, the
number of shares of PRIDES set forth opposite each Underwriter's name.
Number of
Underwriter Shares of PRIDES
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . 4,650,000
CS First Boston Corporation . . . . . . . . 4,650,000
Goldman, Sachs & Co. . . . . . . . . . . . 100,000
Morgan Stanley & Co. Incorporated . . . . . 100,000
Salomon Brothers Inc . . . . . . . . . . . 100,000
S.G. Warburg & Co. Inc. . . . . . . . . . . 100,000
Davenport & Co. of Virginia, Inc. . . . . . 50,000
First Manhattan Co. . . . . . . . . . . . . 50,000
Invemed Associates, Inc. . . . . . . . . . 50,000
Kemper Securities, Inc. . . . . . . . . . . 50,000
Legg Mason Wood Walker, Incorporated . . . . 50,000
Scott & Stringfellow, Inc. . . . . . . . . 50,000
----------
Total . . . . . . . . . . . . . 10,000,000
In the Purchase Agreement, the Underwriters severally have agreed, subject
to the terms and conditions set forth therein, to purchase all of the shares of
PRIDES being sold pursuant to the Purchase Agreement if any of the shares being
sold pursuant to the Purchase Agreement are purchased. Under certain
circumstances, the commitments of non-defaulting Underwriters may be increased.
The Representatives have advised the Company that they propose initially to
offer the PRIDES to the public at the public offering price set forth on the
cover page of the Prospectus and to certain dealers at such price less a
concession not in excess of $.78 per share. The Underwriters may allow, and
such dealers may reallow, a discount not in excess of $.10 per share on sales
to certain other dealers. After the initial public offering, the public
offering price, concession and discount may be changed.
The Company has granted to the Underwriters an option, exercisable for 30
days after the date of this Prospectus, to purchase up to 1,000,000 shares of
PRIDES at the price to the public set forth on the cover page of the
Prospectus, less the underwriting discount. The Underwriters may exercise this
option only to cover over-allotments, if any, made on the sale of PRIDES
offered hereby. To the extent that the Underwriters exercise this option, each
of the Underwriters will have a firm commitment, subject to certain conditions,
to purchase the same percentage of such shares as the number of shares of
PRIDES to be purchased by each Underwriter shown in the foregoing table bears
to the total number of shares initially offered hereby.
The Company has agreed, for a period of 90 days after the date of this
Prospectus, to not, without the prior written consent of the Representatives,
directly or indirectly, sell, offer to sell, grant any option for the sale of,
or otherwise dispose of, any shares of its capital stock or securities
convertible into or exchangeable for capital stock of the Company other than to
the Underwriters pursuant to the Purchase Agreement, subject to certain
exceptions set forth in the Purchase Agreement.
Prior to this offering, there has been no public market for the PRIDES.
The initial public offering price for the PRIDES was determined by negotiations
among the Company and the Representatives. Among the factors considered in
determining the price to the public were the market price of the Company's
Common Stock, an assessment of the Company's recent results of operations, the
future prospects of the Company and the industry in general, market prices of
securities of other companies engaged in activities similar to the Company and
prevailing conditions in the securities market. There can be no assurance that
an active trading market will develop for the PRIDES or that the PRIDES will
trade in the public market subsequent to the offering at or above the initial
public offering price.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the 1933 Act, and to contribute to
payments that the Underwriters may be required to make in respect thereof.
The Underwriters and their affiliates have performed various investment
banking and commercial banking services for the Company and its affiliates, for
which they have received customary compensation. William O. Bourke and Charles
A. Sanders, directors of the Company, are directors of Merrill Lynch & Co.,
Inc., the parent of Merrill Lynch, Pierce, Fenner & Smith Incorporated, and
Robert L. Hintz, a director of the Company, is a director of Scott &
Stringfellow, Inc.
LEGAL OPINIONS
Certain aspects of the legality of the shares of PRIDES offered hereby, and
the Common Stock issuable upon the conversion or redemption thereof, will be
passed upon for the Company by D. Michael Jones, Esq., Vice President, General
Counsel and Secretary of the Company. Certain legal matters with respect to
the shares of PRIDES offered hereby will be passed upon for the Underwriters by
Brown & Wood, New York, New York.
Mr. Jones, in his capacity as Vice President, General Counsel and Secretary
of the Company, is paid a salary by the Company and is a participant in various
employee benefit plans offered to employees of the Company. Robert A. Warwick,
Esq., in his capacity as Tax Counsel of the Company, is paid a salary by the
Company and is a participant in various employee benefit plans offered to
employees of the Company.
EXPERTS
The consolidated financial statements of Reynolds Metals Company appearing
in the Company's Annual Report (Form 10-K) for the year ended December 31,
1992, as amended, have been audited by Ernst & Young, independent auditors, as
set forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
<PAGE>
<PAGE>
No person is authorized to give
any information or to make any
representation other than those
contained in this Prospectus in
connection with the offer contained 10,000,000 Shares
herein and, if given or made, such
information or representation must [LOGO]
not be relied upon as having been
authorized. This Prospectus does REYNOLDS METALS
not constitute an offer to sell or COMPANY
a solicitation of an offer to buy
any securities other than the
securities to which this Prospectus
relates and shall not constitute an
offer to sell or a solicitation of
an offer to buy such securities in
any circumstances in which such
offer or solicitation is unlawful.
Neither the delivery of this
Prospectus nor any sale made
hereunder shall, under any
circumstances, create any 7% PRIDES*
implication that the information
contained herein is correct as
of any time subsequent to the
date of such information.
Convertible Preferred Stock,
Stated Value $47.25 per Share
____________________________
TABLE OF CONTENTS PROSPECTUS
____________________________
Page
Available Information . . . . . . . . 2
Incorporation of Certain Documents
by Reference . . . . . . . . . . . . 2
Prospectus Summary. . . . . . . . . . 3 Merrill Lynch & Co.
Investment Considerations . . . . . . 6
The Company . . . . . . . . . . . . . 8 CS First Boston
Recent Developments . . . . . . . . . 9
Use of Proceeds . . . . . . . . . . . 10
Capitalization . . . . . . . . . . . 10
Common Stock Prices and Dividends . . 11
Selected Financial Information . . . 12 January 18, 1994
Description of Capital Stock . . . . 13
Description of PRIDES . . . . . . . 15
Federal Income Tax Considerations . . 22
Underwriting . . . . . . . . . . . . 23
Legal Opinions . . . . . . . . . . . 24 *Service mark of Merrill Lynch
Experts . . . . . . . . . . . . . . . 24 & Co., Inc.
