FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
For Registration of Certain Classes of Securities
Pursuant to Section 12(b) or (g) of the
Securities Exchange Act of 1934
_____________________
REYNOLDS METALS COMPANY
(Exact name of registrant as specified in its charter)
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Delaware 54-0355135
(State of incorporation (I.R.S. Employer
or organization) Identification No.)
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6601 West Broad Street 23261
Richmond, Virginia (Zip code)
(Address of principal executive
offices)
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If this form relates to the registration of a class of securities
pursuant to Section 12(b) of the Exchange Act and is effective pursuant
to General Instruction A.(c), check the following box. [x]
If this form relates to the registration of a class of securities
pursuant to Section 12(g) of the Exchange Act and is effective pursuant
to General Instruction A.(d), check the following box. [ ]
_____________________
Securities to be registered pursuant to Section 12(b) of the Act:
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Title of each class Name of each exchange on which each
to be so registered class is to be registered
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Rights to Purchase Series A New York Stock Exchange
Junior Participating Preferred
Stock, without par value
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_____________________
Securities Act registration statement file number to which this form relates:
Not applicable
Securities to be registered pursuant to Section 12(g) of the Act:
None
(Title of class)
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Item 1. Description of Registrant's Securities to be Registered.
On November 21, 1997, the Board of Directors of Reynolds
Metals Company, a Delaware corporation (the "Company"), declared
a dividend distribution of one Preferred Stock Purchase Right
(individually a "Right", and collectively the "Rights") for each
outstanding share of common stock, without par value (the "Common
Stock") of the Company, to stockholders of record at the close of
business on December 1, 1997 (the "Record Date"). Each Right
entitles the record holder to purchase from the Company, from and
after the Distribution Date (as defined below) one one-hundredth
of a share of the Company's Series A Junior Participating
Preferred Stock, without par value (the "Preferred Stock") at a
price of $300 (the "Purchase Price"), subject to adjustment in
certain circumstances. The Purchase Price may be paid, at the
election of the registered holder, by certified bank check or
money order payable to the order of the Company or The Chase
Manhattan Bank, N.A., as Rights Agent (the "Rights Agent"). The
description and terms of the Rights are set forth in a Rights
Agreement, dated as of December 1, 1997 (the "Rights Agreement"),
between the Company and the Rights Agent.
Initially, the Rights will be attached to and represented by
the certificates representing outstanding shares of Common Stock,
and no Rights Certificates will be distributed. The Rights will
separate from the Common Stock and a Distribution Date will occur
upon the earlier of (i) ten days following a public announcement
that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to
acquire, beneficial ownership of 20% or more of the outstanding
shares of Common Stock (the "Stock Acquisition Date"), or (ii)
ten 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 20% or more of
the outstanding shares of Common Stock. Until the Distribution
Date, (i) the Rights will be evidenced by the Common Stock
certificates and will be transferred with and only with such
Common Stock certificates, (ii) new Common Stock certificates
issued after December 1, 1997 will contain a notation
incorporating the Rights Agreement by reference and (iii) the
surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
As soon as practicable following the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common
Stock as of the close of business on the Distribution Date and,
thereafter, such separate Rights Certificates alone will evidence
the Rights. Except in certain limited circumstances, only shares
of Common Stock issued prior to the Distribution Date will be
issued with Rights.
The Rights are not exercisable until the Distribution Date
and will expire at the close of business on December 1, 2007,
unless earlier exercised or redeemed by the Company as described
below.
At any time following the Distribution Date, if (i) the
Company is the surviving corporation in a merger with an
Acquiring Person and its Common Stock is not changed or
exchanged, (ii) a Person becomes the beneficial owner of 25% or
more of the then outstanding shares of Common Stock (other than
pursuant to an offer for all outstanding shares of Common Stock
at a price and on terms which the majority of the Continuing
Directors (as hereinafter
<PAGE>
defined) determine to be fair to, and otherwise in the best
interests of, stockholders), or (iii) an Acquiring Person
receives equity securities (other than pursuant to a pro rata
distribution) from the Company, acquires from or transfers to the
Company assets with a fair market value exceeding $10,000,000 or
engages in certain other "self-dealing" transactions specified in
the Rights Agreement, the Rights Agreement requires that proper
provision be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof, Common
Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times the
exercise price of the Right. However, Rights are not exercisable
following the occurrence of the events set forth above until such
time as the Rights are no longer redeemable by the Company as set
forth below. Notwithstanding any of the foregoing, following the
occurrence of any of the events set forth in this paragraph, any
Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by an Acquiring Person
shall immediately become null and void.
For example, at an exercise price of $300 per Right, each
Right not owned by an Acquiring Person (or by certain related
parties) following an event set forth in the preceding paragraph
would entitle its holder to purchase $600 worth of Common Stock
(or other securities or assets, as noted above) for $300.
Assuming that the Common Stock had a per share value of $120 at
such time, the holder of each valid Right would be entitled to
purchase five shares of Common Stock for $300.
At any time following the Stock Acquisition Date, if (i) the
Company engages in a merger or consolidation in which the Company
is not the surviving corporation, (ii) the Company engages in a
merger or consolidation with another person in which the Company
is the surviving corporation, but in which all or part of the
Common Stock is changed or exchanged, or (iii) 50% or more of the
Company's assets or earning power is sold or transferred, the
Rights Agreement requires that proper provision be made so that
each holder of a Right (except Rights which previously have been
voided as set forth above) shall thereafter have the right to
receive, upon the exercise thereof, common stock of the acquiring
company having a value equal to two times the exercise price of
the Right. The Rights may not be so exercised in the case of a
merger or consolidation (a) which follows an offer described in
clause (ii) of the second preceding paragraph and (b) in which
the form and amount of consideration is the same as was paid in
such offer. The events set forth in this paragraph and in the
second preceding paragraph are referred to as the "Triggering
Events."
The Rights Agreement provides that the Company may not
consolidate or merge with, or sell 50% of the Company's assets or
earning power to, any person which has securities or is bound by
agreements which would substantially diminish the benefits of the
Rights.
The Purchase Price payable, and the number of one one-
hundredths of a share of Preferred Stock or other securities or
property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event
of a stock dividend on the Preferred Stock or other capital
stock, or a subdivision, combination or reclassification of the
Preferred Stock, (ii) upon the grant to holders of the Preferred
Stock of certain rights or warrants to subscribe for Preferred
Stock or securities convertible into Preferred Stock at less than
the
<PAGE>
current market price of the Preferred Stock, or (iii) upon the
distribution to holders of the Preferred Stock of evidences of
indebtedness or assets (excluding regular quarterly cash
dividends or dividends payable in Preferred Stock) or of
subscription rights or warrants (other than those referred to
above).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. The Company
may, in lieu of issuing fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-
hundredth of a share) upon exercise of the Rights, make a cash
payment based on the market price of the Preferred Stock on the
last trading date prior to the date of exercise.
If the Company is not able to issue shares of Preferred
Stock or Common Stock because of the absence of necessary
regulatory approval, restrictions contained in the Company's
Certificate of Incorporation or for any other reason, a person
exercising Rights will be entitled to receive a combination of
cash or property or other securities having a value equal to the
value of the shares of Preferred or Common Stock which would
otherwise have been issued upon exercise of the Rights.
At any time until ten 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 $.01 per Right, payable
in cash or securities or both (the "Redemption Price"). Upon
certain circumstances set forth in the Rights Agreement, the
decision to redeem shall require the concurrence of a majority of
the Continuing Directors. Thereafter, this right of redemption
may be reinstated if an Acquiring Person reduces his beneficial
ownership to 10% or less of the outstanding shares of Common
Stock in a transaction or series of transactions not involving
the Company and there are no other Acquiring Persons.
Immediately upon the action of the Board of Directors of the
Company ordering redemption of the Rights, with, where required,
the concurrence of a majority of the Continuing Directors, the
Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
After a Person becomes an Acquiring Person and before any
Acquiring Person acquires 50% or more of the outstanding shares
of Common Stock, the Company, with the approval of a majority of
Continuing Directors, may require a holder to exchange all or any
portion of the holder's Rights for one share of Common Stock or
one one-hundredth of a share of the Preferred Stock (or in
certain circumstances, other securities of the Company) per
Right.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends.
While the distribution of the Rights will not be taxable to
stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income at such time as the
Rights become exercisable or are exercised for Common Stock (or
other consideration) of the Company or for common stock of the
acquiring company as set forth above.
<PAGE>
Certain provisions of the Rights Agreement relating to the
principal economic terms of the Rights may not be amended at any
time. Other provisions may be amended by the Board of Directors
of the Company prior to the Distribution Date. Thereafter, these
provisions of the Rights Agreement may be amended by the Board
(in certain circumstances only with the concurrence of the
Continuing Directors) in order: to cure any ambiguity, defect or
inconsistency; to shorten or lengthen any time period under the
Rights Agreement; or in any other respect that will not adversely
affect the interest of holders of Rights (excluding the interest
of any Acquiring Person); provided, that no amendment to adjust
the time period governing redemption may be made if the Rights
are not redeemable at the time of such amendment.
Shares of Preferred Stock purchasable upon exercise of the
Rights will not be redeemable. Each one one-hundredth of a share
of Preferred Stock will be entitled to (i) an aggregate quarterly
dividend equal to the greater of (a) the quarterly dividend
declared per share of Common Stock or (b) $.10, (ii) upon
liquidation, a minimum preferential liquidation payment of $1.00
and an aggregate liquidation payment equal to the liquidation
payment made per share of Common Stock, (iii) one vote, voting
together with the shares of Common Stock and (iv) in the event of
any merger, consolidation or other transaction in which shares of
Common Stock are exchanged, the same amount received per share of
Common Stock. These rights are protected by customary anti-
dilution provisions. Because of the nature of the Preferred
Stock's dividend, liquidation and voting rights, the value of
each one one-hundredth of a share of Preferred Stock purchasable
upon exercise of each Right should approximate the value of one
share of Common Stock.
The term "Continuing Director" means any member of the
Company's Board of Directors who was a member of the Board prior
to the date of the Rights Agreement, and any person who is
subsequently elected to the Board if such person is recommended
or approved by a majority of the Continuing Directors.
Continuing Directors do not include an Acquiring Person, or any
representative thereof.
A copy of the Rights Agreement is available free of charge
from the Company upon written request therefor. This summary
description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement,
which is incorporated herein by reference.
Item 2. Exhibits.
1. Rights Agreement dated as of November 21, 1997 between
Reynolds Metals Company and The Chase Manhattan Bank,
N.A., as Rights Agent.
2. Restated Certificate of Incorporation of Reynolds
Metals Company setting forth the designation,
preferences and rights of Series A Junior Participating
Preferred Stock. (Incorporated by reference to the
Reynolds Metals Company Form 10-K for the period ended
December 31, 1996, File No. 1-1430, Exhibit 3.1).
3. Form of Rights Certificate (attached as Exhibit A to
the Rights Agreement filed as Exhibit 1 hereto).
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereto duly authorized.
Date: December 1, 1997
REYNOLDS METALS COMPANY
By: D. Michael Jones
D. Michael Jones
Senior Vice President and
General Counsel
<PAGE>
INDEX TO EXHIBITS
Exhibit No.
1. Rights Agreement dated as of November 21, 1997 between
Reynolds Metals Company and The Chase Manhattan Bank,
N.A., as Rights Agent.
2. Restated Certificate of Incorporation of Reynolds
Metals Company setting forth the designation,
preferences and rights of Series A Junior Participating
Preferred Stock. (Incorporated by reference to the
Reynolds Metals Company Form 10-K for the period ended
December 31, 1996, File No. 1-1430, Exhibit 3.1).
3. Form of Rights Certificate (attached as Exhibit A to
the Rights Agreement filed as Exhibit 1 hereto).
EXHIBIT 1
REYNOLDS METALS COMPANY
and
THE CHASE MANHATTAN BANK, N.A.
Rights Agent
__________
Rights Agreement
Dated as of December 1, 1997
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 5
Section 3. Issue of Rights Certificates 5
Section 4. Form of Rights Certificates 7
Section 5. Countersignature and Registration 8
Section 6. Transfer, Split Up, Combination and Exchange
of Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates 9
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights 10
Section 8. Cancellation and Destruction of Rights
Certificates 12
Section 9. Reservation of Availability of Capital Stock 13
Section 10. Preferred Stock Record Date 15
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights 16
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares 28
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power 28
Section 14. Fractional Rights and Fractional Shares 31
Section 15. Rights of Action 33
Section 16. Agreement of Rights Holders 33
Section 17. Rights Certificate Holder Not Deemed a
Stockholder 34
Section 18. Concerning the Rights Agent 34
Section 19. Merger or Consolidation or Change of Name
of Rights Agent 35
<PAGE>
Section 20. Duties of Rights Agent 36
Section 21. Change of Rights Agent 38
Section 22. Issuance of New Rights Certificates 39
Section 23. Redemption and Termination 40
Section 24. Exchange 41
Section 25. Notice of Certain Events 43
Section 26. Notices 44
Section 27. Supplements and Amendments 44
Section 28. Successors 45
Section 29. Determinations and Actions by the
Board of Directors, etc. 45
Section 30. Benefits of this Agreement 46
Section 31. Severability 46
Section 32. Governing Law 47
Section 33. Counterparts 47
Section 34. Descriptive Headings 47
<PAGE>
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of December 1, 1997 (the
"Agreement"), between Reynolds Metals Company, a Delaware
corporation (the "Company"), and The Chase Manhattan Bank, N.A.,
a national banking association (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on November 21, 1997 (the "Rights Dividend
Declaration Date"), the Board of Directors of the Company
authorized and declared a dividend distribution of one Preferred
Stock Purchase Right for each share of common stock, without par
value, of the Company (the "Common Stock") outstanding at the
close of business on December 1, 1997 (the "Record Date"), and
has authorized the issuance of one Preferred Stock Purchase Right
(as such number may be hereinafter adjusted pursuant to the
provisions of Section 11(p) hereof) for each share of Common
Stock of the Company issued or delivered (whether originally
issued or delivered from treasury) (i) between the Record Date
and the earliest of the Distribution Date, the Redemption Date
and the Final Expiration Date (as such terms are defined in
Sections 3 and 7 hereof), or (ii) after the Distribution Date but
before the earlier of the Redemption Date or the Final Expiration
Date, if such share of Common Stock became outstanding (A) upon
the exercise of a stock option, (B) pursuant to any employee plan
or arrangement, or (c) upon the conversion or exchange of a
security which option, plan, arrangement or security was granted,
established or issued, as the case may be, by the Company before
the Distribution Date, each Preferred Stock Purchase Right
initially representing the right to purchase one one-hundredth of
a share of Preferred Stock (as hereinafter defined) upon the
terms and subject to the conditions hereinafter set forth
(individually a "Right" and collectively the "Rights");
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereby agree
as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or
which, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of 20% or more of the
shares of Common Stock then outstanding, but shall not include
the Company, any Subsidiary of the Company, any employee benefit
<PAGE>
plan or employee stock plan of the Company or of any Subsidiary
of the Company, any dividend reinvestment plan of the Company, or
any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan.
(b) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as in effect on the
date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner"
of, and shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such
Person's Affiliates or Associates, directly or
indirectly, has the right or obligation to acquire
(whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own,"
(A) securities tendered pursuant to a tender or
exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, or
(B) at any time prior to the occurrence of a Triggering
Event, securities issuable upon exercise of the Rights,
or (C) from and after the occurrence of a Triggering
Event, securities issuable upon exercise of Rights
which were acquired by such Person or any of such
Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) or
Section 22 hereof (the "Original Rights") or pursuant
to Section 11(i) hereof in connection with an
adjustment made with respect to any Original Rights;
(ii) which such Person or any of such
Person's Affiliates or Associates, directly or
indirectly, has or shares the right to vote or dispose
of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act and any successor
provision thereto or
<PAGE>
thereof), including pursuant to any agreement,
arrangement or understanding, whether or not in
writing; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially
own," any security under this subparagraph (ii) as a
result of an agreement, arrangement or understanding to
vote such security if such agreement, arrangement or
understanding: (A) arises solely from a revocable proxy
given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and
Regulations under the Exchange Act, and (B) is not also
then reportable by such Person on Schedule 13D under
the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned (as defined
in clauses (i) and (ii) hereof), directly or
indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of
such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not
in writing), for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as
described in the proviso to subparagraph (ii) of this
paragraph (c)) or disposing of any voting securities of
the Company; provided, however, that nothing in this
paragraph (iii) shall cause a Person engaged in
business as an underwriter of securities to be the
"Beneficial Owner" of, or to "beneficially own", any
securities acquired through such Person's participation
in good faith in a firm commitment underwriting until
the expiration of forty days after the date of such
acquisition.
(d) "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in the
States of New York or Virginia are authorized or obligated by law
or executive order to close.
(e) "Close of business" on any given date shall mean
5:00 P.M., New York time, on such date; provided, however, that
if such date is not a Business Day it shall mean 5:00 P.M., New
York time, on the next succeeding Business Day.
<PAGE>
(f) "Common Stock" shall mean the common stock,
without par value, of the Company, except that "Common Stock"
when used with reference to any Person other than the Company
shall mean the capital shares of such Person with the greatest
voting power, or the equity securities or other equity interest
having power, directly or indirectly (through one or more tiers
of Persons), to control or direct the management of such Person.
(g) "Continuing Director" shall mean (i) any member of
the Board of Directors of the Company, while such Person is a
member of the Board, who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a
representative of an Acquiring Person or of any such Affiliate or
Associate, and was a member of the Board prior to the date of
this Agreement, or (ii) any Person who subsequently becomes a
member of the Board, while such Person is a member of the Board,
who is not an Acquiring Person, or an Affiliate or Associate of
an Acquiring Person or a representative of an Acquiring Person or
of any such Affiliate or Associate, if such Person's nomination
for election or election to the Board is recommended or approved
by a majority of the Continuing Directors on the date of such
nomination or election.
(h) "Distribution Date" shall have the meaning set
forth in Section 3(a) hereof.
(i) "Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
(j) "Final Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
(k) "Person" shall mean any individual, firm,
corporation, partnership or other entity.
(l) "Preferred Stock" shall mean shares of Series A
Junior Participating Preferred Stock, without par value, of the
Company having the rights and preferences set forth in the
Company's Restated Certificate of Incorporation in ARTICLE IV.
PREFERRED STOCK under the caption "SERIES A JUNIOR PARTICIPATING
<PAGE>
PREFERRED STOCK", a copy of the text of which is attached to this
Agreement as Exhibit A.
(m) "Purchase Price" shall have the meaning set forth
in Section 7(b) hereof.
(n) "Record Date" shall have the meaning set forth in
the first Whereas clause.
(o) "Section 11(a)(ii) Event" shall mean any event
described in Section 11(a)(ii) (A), (B) or (C) hereof.
(p) "Section 13 Event" shall mean any event described
in clause (x), (y) or (z) of Section 13(a) hereof.
(q) "Stock Acquisition Date" shall mean the first date
of public announcement (which, for purposes of this definition,
shall include, without limitation, a report filed pursuant to
Section 13(d) under the Exchange Act) by the Company or an
Acquiring Person, that an Acquiring Person has become such.
(r) "Subsidiary" shall mean, with reference to any
Person, any corporation or other entity of which securities or
other ownership interests having ordinary voting power, in the
absence of contingencies, to elect at least a majority of the
directors or other persons performing similar functions is
beneficially owned, directly or indirectly, by such Person, or
which is otherwise controlled by such Person.
(s) "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in
accordance with the terms and conditions hereof, and the Rights
Agent hereby accepts such appointment. The Company may from time
to time appoint such Co-Rights Agents as it may deem necessary or
desirable.
<PAGE>
Section 3. Issue of Rights Certificates. (a) Until the
close of business on the earlier of (i) the tenth day after the
Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the close of
business on the Record Date), or (ii) the tenth Business Day
after the date that a tender or exchange offer by any Person
(other than the Company, any Subsidiary of the Company, any
employee benefit plan or employee stock plan of the Company or of
any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the
terms of any such plan) is first published or sent or given
within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if upon consummation thereof,
such Person would be the Beneficial Owner of 20% or more of the
shares of Common Stock then outstanding (the earlier of (i) and
(ii) being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates for the
Common Stock registered in the names of the holders of the Common
Stock (which certificates for Common Stock shall be deemed also
to be certificates for Rights) and not by separate certificates,
and (y) the Rights will be transferable only in connection with
the transfer of the underlying shares of Common Stock (including
a transfer to the Company). As soon as practicable after the
Distribution Date, the Rights Agent will send by first-class,
postage prepaid mail, to each record holder of the Common Stock
as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, one
or more Rights Certificates, in substantially the form of Exhibit
B hereto (individually a "Rights Certificate" and collectively
the "Rights Certificates"), evidencing one Right for each share
of Common Stock so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights
per share of Common Stock has been made pursuant to Section 11(p)
hereof, the Company shall, at the time of distribution of the
Rights Certificates, make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that
Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights.
As of and after the Distribution Date, the Rights will be
evidenced solely by Rights Certificates.
(b) As promptly as practicable following the Record
Date, the Company will send a copy of a Summary of Rights to
Purchase Preferred Stock, in substantially the form attached
hereto as Exhibit C (the "Summary of Rights"), by first-class,
postage prepaid mail, to each record holder of Common Stock as of
<PAGE>
the close of business on the Record Date, at the address of such
holder shown on the records of the Company. With respect to
certificates for the Common Stock outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced
by such certificates for the Common Stock with or without a copy
of the Summary of Rights attached thereto and the registered
holders of the Common Stock shall also be the registered holders
of the associated Rights. Until the earlier of the Distribution
Date or the Expiration Date, the transfer of any certificates
representing shares of Common Stock with or without a copy of the
Summary of Rights attached thereto in respect of which Rights
have been issued shall also constitute the transfer of the Rights
associated with such Common Stock.
(c) Rights shall be issued in respect of all shares of
the Common Stock which are issued after the Record Date but prior
to the earlier of the Distribution Date or the Expiration Date.
Certificates issued after the Record Date, but prior to the
earlier of the Distribution Date or the Expiration Date, upon the
transfer or new issuance of shares of Common Stock shall also be
deemed to be certificates for Rights, and shall bear the
following legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the Rights
Agreement between Reynolds Metals Company and The Chase
Manhattan Bank, N.A., dated as of December 1, 1997 (as
amended from time to time, the "Rights Agreement"), the
terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal offices of
Reynolds Metals Company. Under certain circumstances, as
set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be
evidenced by this certificate. The Rights will expire at
the close of business on December 1, 2007 unless exercised
or redeemed prior thereto. Reynolds Metals Company will
mail to the holder of this certificate a copy of the Rights
Agreement, as in effect on the date of mailing, without
charge promptly after receipt of a written request therefor.
Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by, any Person who is,
was or becomes an Acquiring Person or any Affiliate or
Associate thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such
Person or by any subsequent holder, may become null and
void.
<PAGE>
Until the earlier of the Distribution Date or the Expiration
Date, the Rights associated with the Common Stock represented by
certificates for Common Stock whether or not containing the
foregoing legend shall be evidenced by such certificates alone
and registered holders of Common Stock shall also be the
registered holders of the associated Rights, and the transfer of
any of such certificates shall also constitute the transfer of
the Rights associated with the Common Stock represented by such
certificates.
Section 4. Form of Rights Certificates. (a) The Rights
Certificates (and the forms of election to purchase and of
assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit B hereto and may
have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company
may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or
to conform to usage. Subject to the provisions of Section 11 and
Section 22 hereof, the Rights Certificates, whenever distributed,
shall be dated as of the Record Date and on their face shall
entitle the holders thereof to purchase such number of one one-
hundredths of a share of Preferred Stock as shall be set forth in
the particular Rights Certificates at the price set forth in such
Rights Certificates, but the number of such one one-hundredths of
a share of Preferred Stock purchased upon the exercise of each
Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificates issued pursuant to Section
3(a) or Section 22 hereof that represents Rights beneficially
owned by: (i) an Acquiring Person or any Associate or Affiliate
of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person becomes such, or (iii) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement, or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors
<PAGE>
of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the
avoidance of Section 7(e) hereof, and any Rights Certificate
issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the
Rights represented hereby may be or become null and void in
the circumstances specified in Section 7(e) of the Rights
Agreement.
The provisions of Section 7(e) of this Agreement shall be
operative whether or not the foregoing legend is contained on any
such Rights Certificates. Notwithstanding anything contained
herein to the contrary, no Rights Certificate shall be so issued
that would represent Rights (i) which have already become void
under Section 7(e) hereof or (ii) which would become void under
Section 7(e) hereof upon the completion of any purported transfer
with respect to which such Rights Certificate would otherwise be
issued; and any Rights Certificate delivered to the Rights Agent
for transfer under the circumstances to which clause (ii) of this
sentence shall be applicable shall be cancelled by the Rights
Agent.
Section 5. Countersignature and Registration. (a) The
Rights Certificates shall be executed on behalf of the Company by
its Chairman of the Board, any Vice Chairman of the Board, its
President or any Vice President, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be
countersigned by the Rights Agent either manually or by facsimile
signature, and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such
officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the Rights
Agent and issued and delivered by the Company with the same force
and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company;
<PAGE>
and any Rights Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such
Rights Certificate, shall be a proper officer of the Company to
sign such Rights Certificate, although at the date of the
execution of this Rights Agreement any such person was not such
an officer.
(b) Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its principal office or offices
designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration
and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective
holders of the Rights Certificates, the Certificate number of
each of the Rights Certificates, the number of rights evidenced
on its face by each of the Rights Certificates and the date of
each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates. (a) Subject to the provisions of Section 4(b),
Section 7(e) and Section 14 hereof, at any time after the close
of business on the Distribution Date, and at or prior to the
close of business on the Expiration Date, any Rights Certificate
may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered
holder to purchase (or receive) a like number of one one-
hundredths of a share of Preferred Stock (or, following a
Triggering Event, Common Stock, other securities, cash or other
assets, as the case may be) as the Rights Certificate surrendered
then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights
Certificate shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate to be
transferred, split up, combined or exchanged at the principal
office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the
registered holder shall have completed and signed the certificate
contained in the form of assignment set forth on the reverse side
of each such Rights Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as
the Company shall reasonably request. Thereupon the Rights Agent
<PAGE>
shall, subject to Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as
so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent
of (i) evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Rights Certificate, (ii) in
case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and reimbursement to them of all
reasonable expenses incidental thereto, and (iii) upon surrender
to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of
the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.
(a) Except as otherwise provided herein, the
registered holder of any Rights Certificate may exercise the
Rights evidenced thereby in whole or in part at any time after
the Distribution Date upon surrender of the Rights Certificate,
with the form of election to purchase set forth on the reverse
side thereof and the certificate contained therein duly executed,
to the Rights Agent at the principal office or offices of the
Rights Agent designated for such purpose, together with payment
of the Purchase Price with respect to each surrendered Right for
the total number of one one-hundredths of a share (or other
securities or property, as the case may be) as to which such
surrendered Rights are exercisable, at or prior to the earlier of
(i) the close of business on December 1, 2007 (the "Final
Expiration Date"), or (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the earlier of (i) and
(ii) being herein referred to as the "Expiration Date").
(b) The purchase price for each one one-hundredths of
a share of Preferred Stock pursuant to the exercise of a Right
shall initially be $300, and shall be subject to adjustment from
<PAGE>
time to time as provided in Section 11 and Section 13(a) hereof
(such price, as adjusted, being the "Purchase Price") and shall
be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase set
forth on the reverse side thereof and the certificate contained
therein duly executed, accompanied by payment, with respect to
each Right so exercised, of the Purchase Price per one one-
hundredth of a share of Preferred Stock (or other shares,
securities or property, as the case may be) to be purchased as
set forth below and an amount equal to any applicable transfer
tax, the Rights Agent shall, subject to Section 20(k) hereof,
promptly (i) (A) requisition from any transfer agent of the
shares Preferred Stock (or make available, if the Rights Agent is
the transfer agent for the shares of Preferred Stock)
certificates for the total number of one one-hundredths of a
share of Preferred Stock to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such
requests subject to applicable law, or (B) if the Company shall
have elected to deposit the total number of shares of Preferred
Stock issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-
hundredths of a share of Preferred Stock as are to be purchased
(in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company will direct the
depositary agent to comply with such requests, (ii) requisition
from the Company the amount of cash, if any, to be paid in lieu
of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or
names as may be designated by such holder and (iv) after receipt
thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. The payment of the
Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii) hereof) shall be made by certified bank check or money
order payable to the order of the Company or the Rights Agent.
In the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, pay cash
and/or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that
<PAGE>
such other securities, cash and/or other property are available
for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced
thereby, a new Rights Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights
Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section
11(a)(ii) Event, any Rights beneficially owned by (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the
Acquiring Person become such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void
without any further action and no holder of such Rights shall
have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company
shall use all reasonable efforts to insure that the provisions of
this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights Certificates or
other Person as a result of its making or failure to make any
determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth
<PAGE>
in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as
the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the
purpose of exercise, transfer, split up, combination or exchange
shall, if surrendered to the Company or any of its agents, be
delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled
by it, and no Rights Certificates shall be issued in lieu thereof
except as expressly permitted by this Agreement. The Company
shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any
other Rights Certificate purchased or acquired by the Company,
otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Rights Certificates to the Company, or
shall, at the written request of the Company, destroy such
canceled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation of Availability of Capital
Stock. (a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized, unissued and
unreserved shares of Preferred Stock (and following the
occurrence of a Triggering Event, out of its authorized, unissued
and unreserved shares of Common Stock and/or other securities or
out of its authorized and issued shares held in treasury) the
number of shares of Preferred Stock (and following the occurrence
of a Triggering Event, out of its authorized, unissued and
unreserved shares of Common Stock and/or other securities) that,
as provided in this Agreement including Section 11(a)(iii)
hereof, will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) So long as the shares of Preferred Stock (and
following the occurrence of a Triggering Event, Common Stock
and/or other securities) issuable and deliverable upon the
exercise of the Rights are qualified to be listed on any national
securities exchange, the Company shall use its best efforts to
<PAGE>
cause, from and after such time as the Rights become exercisable
(and the Company reasonably anticipates that a Right may be
exercised), all shares (or other securities) reserved for such
issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
(c) The Company shall use its best efforts to (i)
file, as soon as practicable following the earliest date after
the first occurrence of a Section 11(a)(ii) Event on which the
consideration to be delivered by the Company upon exercise of the
Rights has been determined pursuant to this Agreement (including
in accordance with Section 11(a)(iii) hereof), or as soon as is
required by law or regulation following the Distribution Date, as
the case may be, a registration statement under the Securities
Act of 1933 (the "Securities Act"), with respect to the shares of
Common Stock, Preferred Stock, or other securities purchasable
upon exercise of the Rights on an appropriate form and, in the
event the class of Preferred Stock or other securities is not
then registered under the Exchange Act, file an appropriate form
to so register such Preferred Stock or other securities, (ii)
cause such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable
for such securities, and (B) the date of the expiration of the
Rights. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities
or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence of
this Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to
become effective. Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in
effect. In the event any Right is exercised prior to the
occurrence of a Section 11(a)(ii) Event or a Section 13 Event,
the Company may defer for up to 90 days the issuance of Preferred
Shares upon such exercise in order to obtain any necessary
regulatory approval; and if, within such 90 days, the Company is
unable to obtain any required regulatory approval for the
issuance of Preferred Stock, or if the Company is otherwise
unable to issue Preferred Stock under the terms of its
<PAGE>
Certificate of Incorporation or for any other reason, then the
Company shall substitute for the shares of Preferred Stock
otherwise issuable upon exercise of the Right (1) cash, (2) a
reduction in the Purchase Price, (3) shares of Common Stock or
other equity securities of the Company, except to the extent that
the Company has not obtained any necessary regulatory approval
for such issuance, (4) debt securities of the Company, except to
the extent that the Company has not obtained any necessary
regulatory approval for such issuance, (5) other assets, or (6)
any combination of the foregoing, having an aggregate value equal
to the current market price (as defined in Section 11(d)(ii)) of
the shares of Preferred Stock for which such Right is
exercisable, where such aggregate value has been determined by
the Board of Directors of the Company based upon the advice of a
nationally recognized investment banking firm selected by the
Board of Directors of the Company. Notwithstanding any provision
of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification in
such jurisdiction shall not have been obtained or the exercise
thereof would be violation of applicable law.
(d) The Company covenants and agrees that it will
take all such action as may be necessary to ensure that all one
one-hundredths of a share of Preferred Stock (and following the
occurrence of a Triggering Event, Common Stock and/or other
securities) shall, at the time of delivery of the certificates
for such shares (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and
nonassessable.
(e) The Company further covenants and agrees that it
will pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of the
issuance or delivery of the Rights Certificates and of any
certificates for a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities, as the
case may be) upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable
in respect of any transfer or delivery of Rights Certificates to
a person other than, or the issuance or delivery of a number of
one one-hundredths of share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in respect of a name
other than that of, the registered holder of the Rights
Certificates evidencing Rights surrendered for exercise or to
issue or deliver any certificates for a number of one one-
<PAGE>
hundredths of a share of Preferred Stock (or Common Stock and/or
other securities, as the case may be) in a name other than that
of the registered holder upon the exercise of any Rights until
such tax shall have been paid (any such tax being payable by the
holder of such Rights Certificates at the time of surrender) or
until it has been established to the Company's satisfaction that
no such tax is due.
Section 10. Preferred Stock Record Date. Each person in
whose name any certificate for a number of one one-hundredths of a
share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder
of record of such fractional shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and all applicable
transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Preferred
Stock (or Common Stock and/or other securities, as the case may
be) transfer books of the Company are closed, such Person shall
be deemed to have become the record holder of such shares
(fractional or otherwise on, and such certificate shall be dated,
the next succeeding Business Day on which the Preferred Stock (or
Common Stock and/or other securities, as the case may be)
transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Rights Certificate
shall not be entitled to any rights of a stockholder of the
Company with respect to shares (fractional or otherwise) for
which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not
be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights. The Purchase Price, the number
and kind of shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the
<PAGE>
Preferred Stock payable in shares of Preferred Stock or other
capital stock, (B) subdivide the outstanding Preferred Stock, (C)
combine the outstanding Preferred Stock into a smaller number of
shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation),
except as otherwise provided in Section 11(a)(ii) and Section
7(e) hereof, the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and
kind of shares of Preferred Stock or capital stock, as the case
may be, issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall
be entitled to receive, upon payment of the Purchase Price then
in effect, the aggregate number and kind of shares of Preferred
Stock or capital stock, as the case may be, which, if such Right
had been exercised immediately prior to such date and at a time
when the Preferred Stock (or other capital stock, as the case may
be) transfer books of the Company were open, he would have owned
upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If an
event occurs which would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment
provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to any adjustment required pursuant to
Section 11(a)(ii) hereof.
(ii) In the event:
(A) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after
the date of this Agreement, directly or indirectly, (1)
shall merge into the Company or otherwise combine with
the Company and the Company shall be the continuing or
surviving corporation of such merger or combination and
the Common Stock of the Company shall remain
outstanding and unchanged, (2) shall, in one
transaction or a series of transactions, transfer any
assets to the Company or to any of its Subsidiaries in
exchange (in whole or in part) for shares of Common
Stock, for other equity securities of the Company or
for securities exercisable for or convertible into
shares of equity securities of the Company (Common
Stock or otherwise) or otherwise obtain from the
Company, with or without consideration, any additional
shares of such equity securities or securities
exercisable for or convertible into shares of such
<PAGE>
equity securities (other than pursuant to a pro rata
distribution to all holders of Common Stock), (3) shall
sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise acquire or dispose of, in one
transaction or a series of transactions, to, from or
with (as the case may be) the Company or any of its
Subsidiaries, inventory, property, plant, equipment or
other operating assets on terms and conditions less
favorable to the Company than the Company would be able
to obtain in arm's-length negotiation with an
unaffiliated third party as determined in good faith by
the Board of Directors of the Company, other than
pursuant to a transaction set forth in Section 13(a)
hereof, (4) shall sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire or
dispose of, in one transaction or a series of
transactions, to, from or with (as the case may be) the
Company or any of the Company's Subsidiaries (other
than incidental to the lines of business, if any,
engaged in as of the date hereof between the Company
and such Acquiring Person or Associate or Affiliate)
inventory, property, plant, equipment or other
operating assets having an aggregate fair market value
of more than $10,000,000, other than pursuant to a
transaction set forth in Section 13(a) hereof, (5)
shall receive any compensation from the Company or any
of the Company's Subsidiaries other than compensation
for full-time employment as a regular employee at rates
in accordance with the Company's (or its Subsidiaries')
past practices, or (6) shall receive the benefit,
directly or indirectly (except proportionately as a
stockholder or except if resulting from a requirement
of law or governmental regulation), of any loans,
advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantage
provided by the Company or any of its Subsidiaries, or
(B) any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan or
employee stock plan of the Company or of any Subsidiary
of the Company, any dividend reinvestment plan of the
Company, or any Person or entity organized, appointed
or established by the Company for or pursuant to the
terms of any such plan), alone or together with its
Affiliates and Associates, shall, at any time after the
date hereof, become the Beneficial Owner of 25% or more
of the shares of Common Stock then outstanding, unless
the event causing the 25% threshold to be crossed is a
transaction set forth in Section 13(a) hereof, or is an
acquisition of Common Stock pursuant to a tender offer
<PAGE>
made in the manner prescribed by Section 14(d) of the
Exchange Act for all outstanding shares of Common Stock
held by any Person other than such Acquiring Person and
its Associates or Affiliates at a price in cash and on
terms determined by at least a majority of the
Continuing Directors, after receiving advice from one
or more investment banking firms, to be (a) fair to
stockholders (taking into account all factors which
such members of the Board deem relevant including,
without limitation, values indicated in the light of
long-term prospects or business plans or aggregate
prices or values which could reasonably be achieved if
part or all of the Company or its assets were sold or
restructured on an orderly basis designed to realize
maximum long-term value) and (b) otherwise in the best
interests of the Company and its stockholders, or
(C) during such time as there is an Acquiring
Person, there shall be a reclassification of securities
(including any reverse stock split), or
recapitalization of the Company, or any merger or
consolidation of the Company with any of its
Subsidiaries or any other similar transaction or series
of transactions (whether or not with or into or
otherwise involving an Acquiring Person), involving the
Company or any of its Subsidiaries other than a
transaction or transactions to which the provisions of
Section 13(a) apply which has the effect, directly or
indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any
class of equity securities of the Company or any of its
Subsidiaries which is directly or indirectly
beneficially owned by any Acquiring Person and any
Associate or Affiliate of any Acquiring Person,
then, promptly following the occurrence of any event described in
Section 11(a)(ii)(A), (B) or (C) hereof, proper provision shall
be made so that each holder of a Right (except as provided in
Section 11 (a) (iii), and in Section 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof at
the then current Purchase Price in accordance with the terms of
this Agreement, in lieu of a number of one one-hundredths of a
share of Preferred Stock, such number of shares of Common Stock
of the Company (such number of shares of Common Stock being
herein called "Adjustment Shares") as shall equal the result
obtained by (x) multiplying the then current Purchase Price by
the then number of one one-hundredths of a share of Preferred
Stock for which a Right was exercisable by such holder
immediately prior to the first occurrence of a Section 11(a)(ii)
Event, and (y) dividing that product (such product, following
<PAGE>
such first occurrence, shall thereafter be referred to as the
"Purchase Price" for each Right and for all purposes of this
Agreement) by 50% of the current market price (determined
pursuant to Section 11(d) hereof) per share of Common Stock on
the date of such first occurrence; provided, that the Purchase
Price and the number of Adjustment Shares shall be further
adjusted as provided in this Agreement to reflect any events
occurring after the date of such first occurrence.
(iii) In the event that the number of shares
of Common Stock which are authorized but not
outstanding or reserved for issuance for purposes other
than upon exercise of the Rights is not sufficient to
permit the exercise in full of the Rights in accordance
with the foregoing subparagraph (ii) of this Section
11(a), the Company shall: (A) determine the excess of
(1) the value of the Adjustment Shares issuable upon
the exercise of a Right (the "Current Value") over (2)
the Purchase Price (such excess, the "Spread"), and (B)
with respect to each Right, make adequate provision to
substitute for the Adjustment Shares, upon payment of
the applicable Purchase Price, (1) cash, (2) a
reduction in the Purchase Price, (3) Common Stock or
other equity securities of the Company (including,
without limitation, preferred shares, or units of
preferred shares, which the Board of Directors of the
Company has deemed to be substantially economically
equivalent to the Common Stock (such preferred shares,
"common stock equivalents")), (4) debt securities of
the Company, (5) other assets, or (6) any combination
of the foregoing, having an aggregate value equal to
the Current Value, where such aggregate value has been
determined by the Board of Directors of the Company
based upon the advice of a nationally recognized
investment banking firm selected by the Board of
Directors of the Company; provided, however, if the
Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within
thirty (30) days following the first occurrence of (x)
a Section 11(a)(ii) Event or (y) the date on which the
Company's right of redemption pursuant to Section 23(a)
expires (the later of (x) and (y) being referred to
herein as the "Section 11(a)(ii) Trigger Date"), then
the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring
payment of the Purchase Price, Common Stock (to the
extent available) and then, if necessary, cash, which
in the aggregate are equal to the Spread. If the Board
of Directors of the Company shall determine in good
faith that it is likely that sufficient additional
<PAGE>
shares of Common Stock could be authorized for issuance
upon exercise in full of the Rights, the thirty (30)
day period set forth above may be extended by
resolution of the Board of Directors of the Company to
the extent necessary, but not more than ninety (90)
days following the first occurrence of a Section
11(a)(ii) Trigger Date, in order that the Company may
seek stockholder approval for the authorization of such
additional shares (such period, as it may be extended,
the "Substitution Period"). To the extent that the
Company determines that some action need be taken
pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e) hereof, that such action shall
apply uniformly to all outstanding Rights, and (y) may
suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek
any authorization of additional shares and/or to decide
the appropriate form of distribution to be made
pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension,
the Company shall issue a public announcement stating
that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement
at such time as the suspension is no longer in effect.
For purposes of this Section 11(a)(iii), the value of
the Common Stock shall be the current market price (as
determined pursuant to Section 11(d) hereof) per share
of Common Stock on the Section 11(a)(ii) Trigger Date
and the value of any "common stock equivalent" shall be
deemed to have the same value as the Common Stock on
such date.
(b) In case the Company shall fix a record date for
the issuance of rights (other than the Rights), options or
warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within forty-
five (45) calendar days after such record date) Preferred Stock,
(or shares having the same rights, privileges and preferences as
the Preferred Stock ("equivalent Preferred Stock")) or securities
convertible into Preferred Stock or equivalent Preferred Stock at
a price per share of Preferred Stock or equivalent Preferred
Stock (or having a conversion price per share, if a security
convertible into Preferred Stock or equivalent Preferred Stock)
less than the current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record
date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect
<PAGE>
immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of shares
of Preferred Stock which the aggregate offering price of the
total number of shares of Preferred Stock and/or equivalent
Preferred Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered)
would purchase at such current market price and the denominator
of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of additional
shares of Preferred Stock and/or equivalent Preferred Stock to be
offered for subscription or purchase (or into which the
convertible securities so to be offered are initially
convertible). In case such subscription price may be paid by
delivery of consideration part or all of which may be in a form
other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Preferred Stock owned by or
held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date
is fixed; and in the event that such rights or warrants are not
so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date
had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Preferred Stock (including any
such distribution made in connection with a consolidation or
merger in which the Company is the continuing corporation) of
evidences of indebtedness, cash (other than a regular quarterly
cash dividend paid out of the earnings or retained earnings of
the Company), assets (other than a dividend payable in Preferred
Stock, but including any dividend payable in shares other than
Preferred Stock) or subscription rights or warrants (excluding
those referred to in Section 11(b) hereof), the Purchase Price to
be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be
the current market price (as determined pursuant to Section 11(d)
hereof) per share of Preferred Stock on such record date, less
the fair market value (as determined in good faith by the Board
of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent) of the
<PAGE>
portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable
to a share of Preferred Stock and the denominator of which shall
be such current market price (as determined pursuant to Section
11(d) hereof) per share of Preferred Stock. Such adjustments
shall be made successively whenever such a record date is fixed,
and in the event that such distribution is not so made, the
Purchase Price shall be adjusted to be the Purchase Price which
would have been in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder,
other than computations made pursuant to Section 11(a)(iii)
hereof, the "current market price" per share of Common Stock on
any date shall be deemed to be the average of the daily closing
prices per share of Common Stock for the thirty consecutive
Trading Days (as such term is hereinafter defined) immediately
prior to such date, and for purposes of computations made
pursuant to Section 11(a)(iii) hereof, the "current market price"
per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of Common Stock for
the ten consecutive Trading Days immediately following such date;
provided, however, that in the event that the then current market
price per share of Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of
(i) any dividend or distribution on such Common Stock payable in
such shares of Common Stock or securities convertible into shares
of Common Stock (other than the Rights) or (ii) any subdivision,
combination or reclassification of such shares of Common Stock,
and prior to the expiration of the requisite thirty Trading Day
or ten Trading Day period, as set forth above, after the ex-
dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then,
in each such case, the "current market price" shall be properly
adjusted to take into account ex-dividend trading or trading
after any subdivision, combination or reclassification. The
closing price for each day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of
Common Stock are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on
the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares
<PAGE>
of Common Stock are not listed or admitted to trading on any
national securities exchange, the last quoted sale price or, if
not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation
System ("NASDAQ") or such other system then in use, or, if on any
such date the shares of Common Stock are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Common Stock selected by the Board of Directors of the Company.
If on any such date no market maker is making a market in the
Common Stock, the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Company
shall be used and shall be conclusive for all purposes. The term
"Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are
listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a
Business Day. If the Common Stock is not publicly held or not so
listed or traded, "current market price" per share shall mean the
fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose of any computation hereunder,
the "current market price" per share of Preferred Stock shall be
determined in the same manner as set forth above for the Common
Stock in Section 11(d)(i) (other than the last sentence thereof).
If the current market price per share of Preferred Stock cannot
be determined in the manner provided above or if the Preferred
Stock is not publicly held or listed or traded in a manner
described in Section 11(d)(i), the "current market price" per
share of Preferred Stock shall be conclusively deemed to be an
amount equal to 100 (as such number may be appropriately adjusted
for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring
after the date of this Agreement) multiplied by the current
market price per share of Common Stock. If neither the Common
Stock nor the Preferred Stock is publicly held or so listed or
traded, "current market price" per share of the Preferred Stock
shall mean the fair value per share as determined in good faith
by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes. For all purposes of this
Agreement, the "current market price" of one one-hundredth of a
<PAGE>
share of Preferred Stock shall be equal to the "current market
price" of one share of Preferred Stock divided by 100.
(e) Anything herein to the contrary notwithstanding,
no adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one
percent (1%) in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the
nearest one ten-thousandth of a share of Common Stock or other
share or one one-millionth of a share of Preferred Stock, as the
case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made
no later than the earlier of (i) three years from the date of the
transaction which mandates such adjustment, or (ii) the
Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any capital
shares other than Preferred Stock, thereafter the number of such
other shares receivable upon exercise of any Right and the
Purchase Price thereof shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock
contained in Sections 11(a), (b), (c), (d), (e), (g), (h), (i),
(j), (k) and (m) hereof, and the provisions of Sections 7, 9, 10,
12, 13, and 14 hereof with respect to the Preferred Stock shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase
Price, the number of one one-hundredths of a share of Preferred
Stock (or other consideration, as the case may be) purchasable
from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of
the Purchase Price as a result of the calculations made in
<PAGE>
Sections 11(b) and (c), each Right outstanding immediately prior
to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a share of Preferred Stock (calculated to
the nearest one one-millionth) obtained by (i) multiplying (x)
the number of one one-hundredths of a share covered by a Right
immediately prior to this adjustment, by (y) the Purchase Price
in effect immediately prior to such adjustment of the Purchase
Price, and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights,
in substitution for any adjustment in the number of one one-
hundredths of a share of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the
number of one one-hundredths of a share of Preferred Stock for
which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment
of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company
shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten days later
than the date of the public announcement. If Rights Certificates
have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of
Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights
to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all
the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be
<PAGE>
issued, executed and countersigned in the manner provided for
herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredths of a share of
Preferred Stock issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per one one-hundredths of
a share and the number of one one-hundredths of a share which
were expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then stated
value, if any, of the number of one one-hundredths of a share of
Preferred Stock issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable such number of one one-
hundredths of a share of Preferred Stock at such adjusted
Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of
a record date for a specified event, the Company may elect to
defer, until the occurrence of such event, the issuance to the
holder of any Right exercised after such record date the number
of one one-hundredths of a share of Preferred Stock and other
capital shares or securities of the Company, if any, issuable
upon such exercise over and above the number of one one-
hundredths of a share of Preferred Stock and other capital shares
and securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to
such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares
of Common Stock and other capital shares or securities upon the
occurrence of the event requiring such adjustment.
<PAGE>
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that in their good faith judgment the Board of Directors
of the Company shall determine to be advisable in order that any
(i) consolidation or subdivision of the Preferred Stock, (ii)
issuance for cash of any shares of the Preferred Stock at less
than the current market price, (iii) issuance wholly for cash of
Preferred Stock or securities which by their terms are
convertible into or exchangeable for Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred
to in this Section 11, hereafter made by the Company to holders
of its Preferred Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall
not, at any time after the Distribution Date, (i) consolidate
with any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof), (ii)
merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o)
hereof), or (iii) sell or transfer (or permit any Subsidiary to
sell or transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or
more transactions each of which complies with Section 11(o)
hereof), if (x) at the time of or immediately after such
consolidation, merger or sale there are any rights, warrants or
other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior
to, simultaneously with or immediately after such consolidation,
merger or sale, the shareholders of the Person who constitutes,
or would constitute, the "Principal Party" for purposes of
Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and
Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23
or Section 27 hereof, take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably
<PAGE>
foreseeable that such action will diminish substantially or
eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time
after the date of this Agreement and prior to the Distribution
Date (i) declare a dividend on the outstanding shares of Common
Stock payable in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of
shares, the number of Rights associated with each share of Common
Stock then outstanding, or issued or delivered thereafter but
prior to the Distribution Date, shall be proportionately adjusted
so that the number of Rights thereafter associated with each
share of Common Stock following any such event shall equal the
result obtained by multiplying the number of Rights associated
with each share of Common Stock immediately prior to such event
by a fraction the numerator which shall be the total number of
shares of Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the
total number of shares of Common Stock outstanding immediately
following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in
Sections 11 or 13 hereof, the Company shall (a) promptly prepare
a certificate setting forth such adjustment and a brief statement
of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate,
and (c) mail a brief summary thereof to each holder of a Rights
Certificate (or, if prior to the Distribution Date, to each
holder of a certificate representing shares of Common Stock) in
accordance with Section 25 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any
adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. (a) In the event that, following the
Stock Acquisition Date, directly or indirectly, (x) the Company
shall consolidate with, or merge with and into, any other Person
(other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof or any employee benefit plan
of the Company or any Person holding Common Stock for or pursuant
<PAGE>
to the terms of any such plan), and the Company shall not be the
continuing or surviving corporation of such consolidation or
merger, (y) any Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof or any
employee benefit plan of the Company or any Person holding Common
Stock for or pursuant to the terms of any such plan) shall
consolidate with, or merge with or into, the Company, and the
Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of
Common Stock shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or
one or more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other
than the Company or any Subsidiary of the Company in one or more
transactions each of which complies with Section 11(o) hereof),
then, and in each such case and except as set forth in Section
13(d) hereof, proper provision shall be made so that: (i) each
holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the
terms of this Agreement, such number of validly authorized and
issued, fully paid, nonassessable and freely tradeable shares of
Common Stock of the Principal Party (as such term is hereinafter
defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Purchase Price by
the number of one one-hundredths of a share of Preferred Stock
for which a Right is exercisable by such holder immediately prior
to the first occurrence of a Section 13 Event (or, if a Section
11(a)(ii) Event has occurred prior to the Section 13 Event,
multiplying the Purchase Price in effect immediately prior to the
first occurrence of such event set forth in Section 11(a)(ii)
hereof by the number of one one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately
prior to such first occurrence) and dividing that product (such
product, following the first occurrence of a Section 13 Event,
shall be referred to as the "Purchase Price" for each Right and
for all purposes of this Agreement) by (2) 50% of the current
market price (determined pursuant to Section 11(d)(i) hereof with
respect to the Common Stock) per share of Common Stock of such
Principal Party on the date of consummation of the Section 13
Event; (ii) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such Section 13 Event, all the
<PAGE>
obligations and duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13
Event; (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient
number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its Common Stock
thereafter deliverable upon the exercise of the Rights; and (v)
the provisions of Section 11(a)(ii) hereof shall be of no effect
following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described
in clause (x) or (y) of the first sentence of Section
13(a), the Person that is the issuer of any securities
into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other
party to such merger or consolidation; and
(ii) in the case of any transaction described
in clause (z) of the first sentence of Section 13(a),
the Person that is the party receiving the greatest
portion of the assets or earning power transferred
pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock
of such Person is not at such time and has not been continuously
over the preceding twelve month period registered under Section
12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has
been so registered, "Principal Party" shall refer to such other
Person; (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Stock of two or
more of which are and have been so registered, "Principal Party:
shall refer to whichever of such Persons is the issuer of the
Common Stock having the greatest aggregate market value; and (3)
in case such Person is owned, directly or indirectly, by a joint
venture formed by two or more Persons that are not owned,
directly or indirectly, by the same Person, the rules set forth
in (1) and (2) above shall apply to each of the chains of
<PAGE>
ownership having an interest in such joint venture as if such
party were a "Subsidiary" of both or all of such joint ventures
and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as
their direct or indirect interests in such Person bear to the
total of such interests.
(c) The Company shall not consummate any Section 13
Event unless the Principal Party shall have a sufficient number
of authorized shares of its Common Stock which have not been
issued or reserved for issuance to permit the exercise in full of
the Rights in accordance with this Section 13 and unless prior
thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of
this Section 13 and further providing that, as soon as
practicable after the date of any Section 13 Event, the Principal
Party at its own expense will:
(i) prepare and file a registration
statement under the Securities Act, with respect to the
Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, and will use its
best efforts to cause such registration statement to
(A) become effective as soon as practicable after such
filing and (B) remain effective (with a prospectus at
all times meeting the requirements of the Securities
Act) until the Expiration Date;
(ii) use its best efforts to qualify or
register the Rights and the securities purchasable upon
exercise of the Rights under the Blue Sky laws of such
jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party and each
of its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.
In the event that a Section 13 Event shall occur at any time
after the occurrence of a Section 11(a)(ii) Event, the Rights
which have not theretofore been exercised shall thereafter become
exercisable only in the manner described in Section 13(a).
<PAGE>
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section
11(p) hereof, or to distribute Rights Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there
shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For
purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The
closing price of the Rights for any day shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the
Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights
are listed or admitted to trading, or if the Rights are not
listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If on
any such date no such market maker is making a market in the
Rights the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used
and shall be conclusive for all purposes.
(b) The Company shall not be required to issue
fractions of shares of Preferred Stock (other than fractions
which are integral multiples of one one-hundredth of a share of
Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-
hundredth of a share of Preferred Stock). In lieu of fractional
shares of Preferred Stock that are not integral multiples of one
<PAGE>
one-hundredth of a share of Preferred Stock, there shall be paid
to the registered holders of Rights Certificates at the time such
Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market price of one share of
Preferred Stock. For purposes of this Section 14(b), the current
market price of one share of Preferred Stock shall be the closing
price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior
to the date of such exercise.
(c) Following the occurrence of a Triggering Event,
the Company shall not be required to issue fractions of shares of
Common Stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Common Stock.
In lieu of fractional shares of Common Stock, the Company may pay
to the registered holders of Rights Certificates at the time such
Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market price of one share of
Common Stock. For purposes of this Section 14(c), the current
market price of one share of Common Stock shall be the closing
price of a share of Common Stock (as determined pursuant to
Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(d) The holder of a Right by the acceptance of the
Rights expressly waives his right to receive any fractional
Rights or any fractional shares upon exercise of a Right, except
as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in
respect of this Agreement, excepting the rights of the Rights Agent
under Section 18 hereof, are vested in the respective registered
holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock);
and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent
of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common
Stock), may, in his own behalf and for his own benefit, enforce,
and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of,
his right to exercise the Rights evidenced by such Rights
Certificate in the manner provided in such Rights Certificate and
in this Agreement. Without limiting the foregoing or any
<PAGE>
remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and shall
be entitled to specific performance of the obligations hereunder
and injunctive relief against actual or threatened violations of
the obligations hereunder of any Person subject to this
Agreement. Holders of Rights shall be entitled to recover the
reasonable costs and expenses, including attorneys' fees,
incurred by them in any action to enforce the provisions of this
Agreement.
Section 16. Agreement of Rights Holders. Every holder of a
Right by accepting the same consents and agrees with the Company
and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common
Stock;
(b) after the Distribution Date, the Rights
Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the principal office or offices of
the Rights Agent designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof,
the Company and the Rights Agent may deem and treat the person in
whose name a Rights Certificate (or, prior to the Distribution
Date, the associated Common Stock certificate) is registered as
the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights
Agent shall, subject to the last sentence of Section 7(e) hereof,
be required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to
the contrary, neither the Company nor the Rights Agent shall have
any liability to any holder of a Right or other Person as a result of
its inability to perform any of its obligations under this
<PAGE>
Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of
such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Rights Certificate shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of the number of one one-hundredths of a share
of Preferred Stock or any other securities of the Company which
may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in
any Rights Certificate be construed to confer upon the holder of
any Rights Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 24 hereof),
or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Rights Certificate
shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent. (a) The Company
agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel
fees and disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise
and performance of its duties hereunder. The Company also agrees
to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against
any claim or liability in the premises. Anything to the contrary
notwithstanding, in no event shall the Rights Agent be liable for
special, indirect, consequential loss or damage of any kind
<PAGE>
whatsoever (including but not limited to lost profits), even if
the Rights Agent has been advised of the likelihood of such loss
or damage.
(b) The Rights Agent shall be protected and shall
incur no liability for or in respect of any action taken,
suffered or omitted by it in connection with its administration
of this Agreement in reliance upon any Rights Certificate or
certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it
to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. (a) Any corporation into which the Rights Agent or
any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights
Agent shall be a party or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties
hereto; provided, however, that such corporation would be
eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent
shall be changed and at such time any of the Rights Certificates
shall have been countersigned but not delivered, the Rights Agent
may adopt the countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned,
the Rights Agent may countersign such Rights Certificates either
<PAGE>
in its prior name or in its changed name; and in all such cases
such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted
by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without limitation,
the identity of any Acquiring Person and the determination of
"current market price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved
and established by a certificate signed by the Chairman of the
Board, any Vice Chairman of the Board, the President, any
Executive Vice President, any Senior Vice President, the
Treasurer or the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to
the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon
such certificate.
(c) The Rights Agent shall be liable hereunder only
for its own negligence, bad faith or willful misconduct.
<PAGE>
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in
this Agreement or in the Rights Certificates or be required to
verify the same (except as to its countersignature on such Rights
Certificates), but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution and
delivery hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in
this Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the provisions of
Sections 3, 11, 13 or 23 hereof or responsible for the manner,
method or amount of any such adjustment or the ascertaining of
the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any such adjustment);
nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation
of any Common Stock or Preferred Stock to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any
Common Stock or Preferred Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of its
duties hereunder from the Chairman of the Board, any Vice
Chairman of the Board, the President, any Executive Vice
President, any Senior Vice President, the Treasurer and the
Secretary of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered to be taken
<PAGE>
by it in good faith in accordance with instructions of any such
officer.
(h) The Rights Agent and any stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in
any of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company
or otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(i) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct; provided, however,
reasonable care was exercised in the selection and continued
employment thereof.
(j) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties
hereunder or in the exercise of its rights if there shall be
reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the
certificate contained in the form of assignment or the form of
election to purchase set forth on the reverse thereof, as the
case may be, has either not been completed or indicates an
affirmative response to clause 1 and/or 2 thereof, the Rights
Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the
Company.
<PAGE>
Section 21. Change of Rights Agent. The Rights Agent or
any successor Rights Agent may resign and be discharged from its
duties under this Agreement upon thirty days' notice in writing
mailed to the Company, and to each transfer agent of the Common
Stock and Preferred Stock, by registered or certified mail, and
to the holders of the Rights Certificates by first-class mail.
The Company may remove the Rights Agent or any successor Rights
Agent upon thirty days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and Preferred Stock, by
registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment within
a period of thirty days after giving notice of such removal or
after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by
any registered holder of a Rights Certificate (who shall, with
such notice, submit his Rights Certificate for inspection by the
Company), then any registered holder of any Rights Certificate
may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent,
whether appointed by the Company or by such a court, shall be (a)
a corporation organized and doing business under the laws of the
United States or of the States of New York or Virginia (or of any
other state of the United States so long as such corporation is
authorized to do business in the States of New York or Virginia),
in good standing, having a principal office in the States of New
York or Virginia, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $100,000,000 or (b) an
affiliate of any such corporation described in clause (a) above.
After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act
or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time
held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose.
Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Common Stock and
Preferred Stock, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any
<PAGE>
defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Rights Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the
Rights Certificates made in accordance with the provisions of
this Agreement. In addition, in connection with the issuance or
sale of Common Stock following the Distribution Date and prior to
the Expiration Date, the Company (a) shall, with respect to
Common Stock so issued or sold (i) pursuant to the exercise of
stock options, (ii) under any employee benefit plan or
arrangement, or (iii) upon the exercise, conversion or exchange
of securities issued by the Company before the Distribution Date
and (b) may, in any other case, if deemed necessary or
appropriate by the Board of Directors of the Company, issue
Rights Certificates representing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that
(i) no such Rights Certificate shall be issued, if, and to the
extent that, the Company shall be advised by counsel that such
issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights
Certificate would be issued, and (ii) no such Rights Certificate
shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 23. Redemption and Termination. (a) The Board of
Directors of the Company may, at its option, at any time prior to
5:00 P.M., New York time, on the earlier of (i) the close of
business on the tenth day following the Stock Acquisition Date
(or, if the Stock Acquisition Date shall have occurred prior to
the Record Date, the close of business on the tenth day following
the Record Date), or (ii) the Final Expiration Date, redeem all
but not less than all the then outstanding Rights at a redemption
price of $.01 per Right, as such amount shall be appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price");
and the Company may, at its option, pay the Redemption Price
either in cash or securities or both having a current market
<PAGE>
price, as of a date determined by the Board of Directors, of
$.01; provided, however, in order for the Board of Directors of
the company to authorize redemption of the Rights at or after the
time a Person becomes an Acquiring Person, or at or after the
time of a change (resulting from a proxy or consent solicitation)
in a majority of the directors in office at the commencement of
such solicitation if any Person who is a participant in such
solicitation has stated (or if upon the commencement of such
solicitation, a majority of the Board of Directors has determined
in good faith) that such Person (or any of its Affiliates or
Associates) intends to take, or may consider taking, any action
which would result in such Person becoming an Acquiring Person or
which would cause the occurrence of a Triggering Event, then
there must be Continuing Directors in office at the time of such
authorization and such authorization must be approved by a
majority of such Continuing Directors; and provided, further,
however, that if following the occurrence of a Stock Acquisition
Date and following the expiration of the right of redemption
hereunder but prior to any Triggering Event (x) a Person who is
an Acquiring Person shall have transferred or otherwise disposed
of a number of shares of Common Stock in one transaction, or
series of transactions, not directly or indirectly involving the
Company or any of its Subsidiaries, which did not result in the
occurrence of a Triggering Event, such that such Person is
thereafter a Beneficial Owner of 10% or less of the outstanding
shares of Common Stock, and (y) there are no other Persons,
immediately following the occurrence of the event described in
clause (x) who are Acquiring Persons, then the right of
redemption shall be reinstated and thereafter be subject to the
provisions of this Section 23. Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not
be exercisable after the first occurrence of a Section 11(a)(ii)
Event until such time as the Company's right of redemption
hereunder has expired.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights
pursuant to paragraph (a) of this Section 23, evidence of which
shall have been filed with the Rights Agent and without any
further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for
each Right so held. Promptly after the action of the Board of
Directors ordering the redemption of the Rights, the Company
shall give notice of such redemption to the Rights Agent and the
holders of the then outstanding Rights by mailing such notice to
all such holders at each holder's last address as it appears upon
the registry books of the Rights Agent or, prior to the
<PAGE>
Distribution Date, on the registry books of the Transfer Agent
for the Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be
made.
Section 24. Exchange. (a) If at the time there are
Continuing Directors, with the affirmative vote of a majority of the
Continuing Directors, the Company may at any time after any
Person becomes an Acquiring Person, exchange all or part of the
then outstanding and exercisable Rights for shares of Common
Stock at an exchange ratio of one share of Common Stock per
Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof
(such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Notwithstanding the foregoing, the Company
shall not be empowered to effect such exchange at any time after
any Person (other that the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding shares of Common Stock for or
pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial
Owner of 50% or more of the shares of Common Stock then
outstanding.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights
pursuant to paragraph (a) of this Section 24 and without any
further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of
Common Stock, or that number of one-hundredths of a share of the
Preferred Stock, equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company
promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear
upon the registry books of the Rights Agent. Any notice which is
mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of Common
Stock for Rights will be effected and, in the event of any
partial exchange, the number of Rights to be exchanged. Any
partial exchange shall be effected pro rata based on the number
of Rights held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the
Company, at its option and with the affirmative vote of a
majority of the Continuing Directors, may substitute shares of
the Preferred Stock (or shares of equivalent Preferred Stock, as
such term is defined in Section 11(b) hereof) for each share of
Common Stock, at the initial rate of one one-hundredth of a share
of Preferred Stock, or an equivalent portion (in terms of
dividend, liquidation and voting rights) of such equivalent
Preferred Stock, for each share of Common Stock.
(d) In the event that there shall not be sufficient
shares of capital stock authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this
Section 24, the Company shall take all such action as may be
necessary to authorize additional shares for issuance upon
exchange of the Rights.
(e) The Company shall not be required to issue
fractions of shares of Common Stock or fractions of shares of
Preferred Stock (other than fractions which are integral
multiples of Preferred Stock), or to distribute certificates
which evidence any fractional shares. In lieu of such fractional
shares, the Company shall pay to the registered holders of the
Rights Certificates with regard to which such fractional shares
of Common Stock or of Preferred Stock would otherwise be issuable
an amount in cash equal to the same fraction of the current
market price of a whole share of Common Stock, or a whole share
of Preferred Stock, as the case may be. For the purposes of this
paragraph (e), the current market price of a whole share of
Common Stock shall be the closing price of a share of Common
Stock (as determined pursuant to Section 11(d)(i) hereof), and
the current market price of a share of Preferred Stock shall be
the closing price of a share of Preferred Stock (as determined
pursuant to Section 11(d)(ii) hereof), in either case for the
Trading Day immediately after the public announcement by the
Company that an exchange is to be effected pursuant to this
Section 24.
Section 25. Notice of Certain Events. (a) In case the
Company shall propose, at any time after the Distribution Date, (i) to
<PAGE>
pay any dividend payable in shares of any class to the holders of
Preferred Stock or to make any other distribution to the holders
of Preferred Stock (other than a regular quarterly cash dividend
paid out of earnings or retained earnings of the Company), or
(ii) to offer to the holders of Preferred Stock rights or
warrants to subscribe for or to purchase any additional shares of
Preferred Stock or shares of stock of any class or any other
securities, rights or options, or (iii) to effect any
reclassification of the Preferred Stock (other than a
reclassification involving only the subdivision of outstanding
shares of Preferred Stock), or (iv) to effect any consolidation
or merger into or with any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o)
hereof), or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other
transfer), in one transaction or series of related transactions,
of more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Person
(other than the Company and/or any of its Subsidiaries in one or
more transactions each of which complies with Section 11(o)
hereof), or (v) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall
give to each holder of a Rights Certificate, to the extent
feasible, and in accordance with Section 26 hereof, a notice of
such proposed action, which shall specify the record date for the
purposes of such share dividend, distribution of rights or
warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution,
or winding up is to take place and the date of participation
therein by the holders of Preferred Stock, if any such date is to
be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least twenty days
prior to the record date for determining holders of the Preferred
Stock for purposes of such action, and in the case of any such
other action, at least twenty days prior to the date of the
taking of such proposed action or the date of participation
therein by the holders of the Preferred Stock, whichever shall be
the earlier.
(b) In case any of the events set forth in Section
11(a)(ii) hereof shall occur, then, in any such case, (i) the
Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, to the extent feasible, in
accordance with Section 26 hereof, a notice of the occurrence of
such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) hereof and
(ii) all references in the preceding paragraph to Preferred Stock
<PAGE>
shall be deemed thereafter to refer to Common Stock and/or, if
appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the
holder of any Rights Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
Reynolds Metals Company
6601 West Broad Street
P. O. Box 27003
Richmond VA 23261
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company
or by the holder of any Rights Certificate to or on the Rights
Agent shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed
in writing with the Company) as follows:
The Chase Manhattan Bank, N.A.
c/o ChaseMellon Shareholder Services
85 Challenger Road
Ridgefield Park NJ 07660
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Rights Certificate (or if prior to the Distribution Date, to the
holder of certificates representing Common Stock) shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder
as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the
Distribution Date and subject to the next to last sentence of
this Section 27, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of certificates
representing Common Stock. From and after the Distribution Date
and subject to the next to last sentence of this Section 27, the
Company and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any
holders of Right Certificates in order (i) to cure any ambiguity,
<PAGE>
(ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions
herein, (iii) to change or supplement the provisions hereunder in
any manner which the Company may deem necessary or desirable and
which shall not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person), or (iv) to
shorten or lengthen any time period hereunder (which lengthening
or shortening, following the time as of which a Person becomes an
Acquiring Person, shall be effective only if there are Continuing
Directors and shall require the concurrence of a majority of such
Continuing Directors); provided, this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iv) of
this sentence, (A) a time period relating to when the Rights may
be redeemed at such time as the Rights are not then redeemable,
or (B) any other time period unless such lengthening is for the
purpose of protecting, enhancing or clarifying the rights of,
and/or the benefits to, the holders of Rights. Upon the delivery
of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance
with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment. Notwithstanding anything contained
in this Agreement to the contrary, no supplement or amendment
shall be made which changes the Redemption Price, the Final
Expiration Date, the Purchase Price, or the number of one one-
hundredths of a share of Preferred Stock for which a Right is
exercisable, provided that this Agreement may be amended to
change the type and number of securities into which a Right is
exercisable before the occurrence of any Triggering Event if,
after giving effect to such amendment, the new securities into
which each Right is so exercisable have a value equal to the
value of, and have voting rights at least equal to the voting
rights of, the securities into which such Right was exercisable
prior to such amendment (excluding any value attributable to any
minimum dividend payments and excluding any voting rights
operable in the case of non-payment of dividends). Prior to the
Distribution Date, the interests of the holders of Rights shall
be deemed coincident with the interests of the holders of Common
Stock.
Section 28. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights
Agent shall bind and inure to the benefit of their respective
successors and permitted assigns hereunder.
<PAGE>
Section 29. Determinations and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any
calculation of the number of shares of Common Stock outstanding
at any particular time, including for purposes of determining the
particular percentage of such outstanding Common Stock of which
any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3d(1)(i) of the General Rules
and Regulations under the Exchange Act as in effect as of the
date hereof. The Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of a majority
of the Continuing Directors) shall have the exclusive power and
authority to administer this Agreement and to exercise all rights
and powers specifically granted to the Board (with, where
specifically provided for herein, the concurrence of a majority
of the Continuing Directors) or the Company, or as may be
necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i)
interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to
redeem or not redeem the Rights or to amend the Agreement). All
such actions, calculations, interpretations and determinations
(including, for purposes of clause (ii) below, all omissions with
respect to the foregoing) which are done or made by the Board
(with, where specifically provided for herein, the concurrence of
a majority of the Continuing Directors) in good faith, shall (i)
be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and (ii)
not subject the Board (or the Continuing Directors) to any
liability to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, registered
holders of the Common Stock).
Section 31. Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
<PAGE>
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant
or restriction is held by such court or authority to be invalid,
void or unenforceable and the Board of Directors of the Company,
with the concurrence of a majority of the Continuing Directors in
the case of a determination after the Distribution Date,
determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose
or effect of this Agreement, the right of redemption set forth in
Section 23 hereof shall be reinstated and shall not expire until
the close of business on the tenth day following the date of such
determination by the Board of Directors.
Section 32. Governing Law. This Agreement, each Right and
each Rights Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with
the laws of such State applicable to contracts made and to be
performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed
in any number of counterparts and each of such counterparts shall
for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.
Section 34. Descriptive Headings. Descriptive headings of
the several Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction
of any of the provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
Attest: REYNOLDS METALS COMPANY
By Donna C. Dabney By Henry S. Savedge, Jr.
Name: Donna C. Dabney Name: Henry S. Savedge, Jr.
Title: Secretary Title: Executive Vice President and
Chief Financial Officer
Attest: THE CHASE MANHATTAN BANK, N.A.
By Jared Fassler By Joseph Lifrieri
Name: Jared Fassler Name: Joseph Lifrieri
Title: Assistant Vice Title: Senior Vice President
President
<PAGE>
EXHIBIT A
[Extract from Reynolds Metals Company Restated Certificate of Incorporation]
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
Section 1. Designation and Amount. The distinctive designation of
the series shall be "Series A Junior Participating Preferred Stock." The
shares constituting such series shall be without par value. The number of
shares constituting such series shall be 2,000,000, subject to increase or
decrease by action of the Board of Directors as evidenced by a certificate
of designations.
Section 2. Dividends and Distributions. (A) Subject to the prior
rights of the holders of any shares of any series of Preferred Stock
ranking prior to the shares of Series A Junior Participating Preferred
Stock with respect to dividends, the holders of shares of Series A Junior
Participating Preferred Stock shall be entitled to receive, when and as
declared by the Board of
<PAGE>
Directors out of funds legally available for the
payment of dividends, quarterly dividends payable in cash on the first day
of January, April, July and October in each year or such other days on
which dividends are declared with respect to the Common Stock (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Junior Participating
Preferred Stock, in an amount per share (rounded to the nearest cent) equal
to the greater of (a) $10 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in kind)
of all non-cash dividends or other distributions (other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise)), declared on the
Common Stock since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since
the first issuance of any share or fraction of a share of Series A Junior
Participating Preferred Stock. If the Corporation shall at any time after
November 20, 1987 (the "Rights Declaration Date") (i) declare any dividend
payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller number
of shares, then in each such case the amount to which holders of shares of
Series A Junior Participating Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in paragraph (A)
above immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock);
provided that, if no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend of
$10 per share on the Series A Junior Participating Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless (i) such date of issue is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or (ii) such
date of issue is either a Quarterly Dividend Payment Date or a date after
the record date for the determination of holders of shares of Series A
<PAGE>
Junior Participating Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of
which events such dividends shall begin to accrue and be cumulative from
such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Junior
Participating Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Junior Participating
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 60 days prior to
the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Junior Participating Preferred Stock shall entitle
the holder thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the number of votes per share to which
holders of shares of Series A Junior Participating Preferred Stock were
entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(C) (i) If and whenever at any time or times dividends payable on
shares of any Series A Junior Participating Preferred Stock shall have been
in arrears and unpaid in an aggregate amount equal to or exceeding the
amount of dividends payable thereon for six quarterly dividend periods,
then the holders of shares of any Series A Junior Participating Preferred
Stock, together with the holders of any other series of Preferred Stock as
to which dividends are in arrears and unpaid in an aggregate amount equal
to or exceeding the amount of dividends payable thereon for six quarterly
dividend periods, shall have the exclusive right, voting separately as a
class with such other series, to elect two
<PAGE>
directors of the Corporation,
such directors to be in addition to the number of directors constituting
the Board of Directors immediately prior to the accrual of such right, the
remaining directors to be elected by the other class or classes of stock
entitled to vote therefor at each meeting of stockholders held for the
purpose of electing directors.
(ii) Such voting right may be exercised initially either at a
special meeting of the holders of the Preferred Stock having such voting
right, called as hereinafter provided, or at any annual meeting of
stockholders held for the purpose of electing directors, and thereafter at
each such annual meeting until such time as all cumulative dividends
accumulated and payable on the shares of Series A Junior Participating
Preferred Stock shall have been paid in full, at which time such voting
right shall terminate, subject to revesting on the basis set forth in
paragraph (C)(i).
(iii) At any time when such voting right shall have vested in
holders of the Preferred Stock, and if such right shall not already have
been initially exercised, a proper officer of the Corporation shall, upon
the written request of the record holders of 10% in number of shares of
Preferred Stock having such voting right then outstanding, addressed to the
Secretary of the Corporation, call a special meeting of the holders of
Preferred Stock having such voting right and of any other class or classes
of stock having voting power with respect to the election of such
directors. Such meeting shall be held at the earliest practicable date
upon the notice required for annual meetings of stockholders at the place
for holding annual meetings of stockholders of the Corporation or, if none,
at a place designated by the Board of Directors. If such meeting is not
called by the proper officers of the Corporation within 30 days after the
personal service of such written request upon the Secretary of the
Corporation, or within 30 days after mailing the same within the United
States of America, by registered mail, addressed to the Secretary of the
Corporation at its principal office (such mailing to be evidenced by the
registry receipt issued by the postal authorities), then the record holders
of 10% in number of shares of the Preferred Stock then outstanding which
would be entitled to vote at such meeting may designate in writing one of
their number to call such meeting at the expense of the Corporation, and
such meeting may be called by such person so designated upon the notice
required for annual meetings of stockholders and shall be held at the same
place as is elsewhere provided for in this paragraph (C)(iii) or such other
place as is selected by such designated stockholder. Any holder of the
Preferred Stock who would be entitled to vote at such meeting shall have
access to the stock books of the Corporation for the purpose of causing a
meeting of stockholders to be called pursuant to the provisions of this
paragraph (C). Notwithstanding the provisions of this paragraph (C), no
such special meeting shall be called during a period within 90 days
immediately preceding the date fixed for the next annual meeting of
stockholders.
<PAGE>
(iv) At any meeting held for the purpose of electing directors at
which the holders of the Preferred Stock shall have the right to elect two
directors in addition to the number of directors constituting the Board of
Directors immediately prior to accrual of such right as provided herein,
the presence in person or by proxy of the holders of 40% of the then
outstanding shares of Preferred Stock having such right shall be required
and shall be sufficient to constitute a quorum of such class of the
election of directors by such class. At any such meeting or adjournment
thereof (i) the absence of a quorum of the holders of the Preferred Stock
having such right shall not prevent the election of directors other than
those to be elected by the holders of the Preferred Stock, and the absence
of a quorum or quorums of the holders of capital stock entitled to elect
such other directors shall not prevent the election of directors to be
elected by the holders of the Preferred Stock entitled to elect such
directors and (ii) except as otherwise required by law, in the absence of a
quorum of the holders of any class of stock entitled to vote for the
election of directors, a majority of the holders present in person or by
proxy of such class shall have the power to adjourn the meeting for the
election of directors which the holders of such class are entitled to
elect, from time to time, without notice other than announcement at the
meeting, until a quorum is present.
(v) Any vacancy in the Board of Directors in respect of a director
elected by holders of Preferred Stock pursuant to the voting right created
under this paragraph (C) shall be filled by vote of the remaining director
so elected, or if there be no such remaining director, by the holders of
Preferred Stock entitled to elect such director or directors at a special
meeting called in accordance with the procedures set forth in paragraph
(C)(iii), or, if no such special meeting is called, at the next annual
meeting of stockholders. Upon any termination of such voting right,
subject to the requirements of the General Corporation Law of Delaware, the
term of office of all directors elected by holders of Preferred Stock
voting separately as a class shall terminate.
(D) Except as set forth herein, or as required by law, holders of
Series A Junior Participating Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent they
are entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
Section 4. Certain Restrictions. (A) Whenever quarterly dividends
or other dividends or distributions payable on the Series A Junior
Participating Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series A Junior Participating
Preferred Stock outstanding shall have been paid in full, the Corporation
shall not:
<PAGE>
(i) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, except dividends paid ratably on the Series
A Junior Participating Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to
which the holders of all such shares are then entitled;
(ii) purchase or otherwise acquire for consideration any shares of
Series A Junior Participating Preferred Stock, or any shares of stock
ranking on a parity with the Series A Junior Participating Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under Article IV,
Section I of its Certificate of Incorporation or paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and cancelled
promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred
Stock unless, prior thereto, the holders of shares of Series A Junior
Participating Preferred Stock shall have received $100 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the "Series A
Liquidation Preference"). Following the payment of the full amount of the
Series A Liquidation Preference, no additional distributions shall be made
to the holders of shares of Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Common Stock shall have
received an amount per share (the "Common Adjustment") equal to
<PAGE>
the quotient obtained by dividing (i) the Series A Liquidation Preference by
(ii) 100 (as appropriately adjusted as set forth in paragraph C below to
reflect such events as stock splits, stock dividends and recapitalizations
with respect to the Common Stock) (such number in clause (ii), the
"Adjustment Number"). Following the payment of the full amount of the
Series A Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Junior Participating Preferred Stock and
Common Stock, respectively, holders of Series A Junior Participating
Preferred Stock and holders of shares of Common Stock shall receive their
ratable and proportionate share of the remaining assets to be distributed
in the ratio of the Adjustment Number to 1 with respect to such Preferred
Stock and Common Stock, on a per share basis, respectively.
(B) (i) If there are not sufficient assets available to permit
payment in full of the Series A Liquidation Preference and the liquidation
preferences of all other series of preferred stock, if any, which rank on a
parity with the Series A Junior Participating Preferred Stock, then such
assets as are available shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation preferences.
(ii) If there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such assets as are available shall be
distributed ratably to the holders of Common Stock.
(C) If the Corporation shall at any time after November 20, 1987 (i)
declare any dividend payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property,
then in any such case the shares of Series A Junior Participating Preferred
Stock shall at the same time be similarly exchanged or changed in an amount
per share (subject to the provision for adjustment hereinafter set forth)
equal to 100 times the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be, into which or for
which each share of Common Stock is changed or exchanged. If the
Corporation shall at any time after the Rights Declaration Date (i) declare
any dividend payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the amount set
<PAGE>
forth in the preceding sentence with respect to the exchange or change of
shares of Series A Junior Participating Preferred Stock shall be adjusted
by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Junior
Participating Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating Preferred
Stock shall rank junior to all other series of the Corporation's Preferred
Stock as to the payment of dividends and the distribution of assets, unless
the Issuing Resolution with respect to any such series shall provide
otherwise.
Section 10. Fractional Shares. Series A Junior Participating
Preferred Stock may be issued in fractions of a share which shall entitle
the holder, in proportion to such holder's fractional shares, to exercise
voting rights, receive dividends, participate in distributions and to have
the benefit of all other rights of holders of Series A Junior Participating
Preferred Stock.
<PAGE>
Exhibit B
[Form of Rights Certificate]
Certificate No. R-
____________Rights
NOT EXERCISABLE AFTER DECEMBER 1, 2007 OR EARLIER IF REDEEMED BY
THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION
OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT (AS DEFINED HEREIN). UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON
OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BE OR MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION
7(e) OF THE RIGHTS AGREEMENT.](1)
Rights Certificate
REYNOLDS METALS COMPANY
This certifies that _______________________, or registered
assigns, is the registered holder of the number of Rights set
forth above, each of which entitles the owner thereof, subject to
the terms, provisions and conditions of the Rights Agreement,
dated as of December 1, 1997 (as amended from time to time, the
"Rights Agreement"), between Reynolds Metals Company, a Delaware
corporation (the "Company"), and The Chase Manhattan Bank, N.A.
(the "Rights Agent"), to purchase from the Company at any time
prior to 5:00 P.M. (New York time) on December 1, 2007 at the
office or offices of the Rights Agent designated for such
purpose, or its successors as Rights Agents, one one-hundredth of
a share of the Company's Series A Junior Participating Preferred
Stock, without par value (the Preferred Stock"), at a purchase
price of $___ per one one-hundredth of a share (the "Purchase
Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase set forth on
the reverse hereof and the Certificate contained therein duly
executed. The Purchase Price shall be paid at the election of
_______________
(1) The portion of the legend in brackets shall be inserted only
if applicable and shall replace the preceding sentence.
<PAGE>
Exhibit B
Page 2
the holder by certified bank check or money order payable to the
order of the Company or the Rights Agent. The number of Rights
evidenced by this Rights Certificate, the number of one one-
hundredths of a share of Preferred Stock which may be purchased
upon exercise thereof and the Purchase Price per one one-
hundredth of a share of Preferred Stock, set forth above, are the
number of Rights, number of one one-hundredths of a share of
Preferred Stock and Purchase Price as of _______________, ____,
based on the Preferred Stock as constituted at such date.
Terms defined in the Rights Agreement have the same
respective meanings herein.
Upon the occurrence of a Section 11(a)(ii) Event, if the
Rights evidenced by this Rights Certificate are beneficially
owned by (i) an Acquiring Person or any Affiliate or Associate of
an Acquiring Person, (ii) a transferee of any such Acquiring
Person, Associate or Affiliate, or (iii) under a certain
circumstances specified in the Rights Agreement, a transferee of
a person who, concurrently with or after such transfer, became an
Acquiring Person, or an Affiliate or Associate of an Acquiring
Person, such Rights shall become null and void and no holder
hereof shall have any rights with respect to such Rights from and
after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price, the
number of one one-hundredths of a share of Preferred Stock and
the kind of securities which may be purchased upon the exercise
of the Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events,
including Triggering Events (as such term is defined in the
Rights Agreement).
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, including
certain rights of the Company to amend the Rights Agreement
without the consent of the holders of Rights Certificates, which
terms, provisions and conditions are hereby incorporated herein
by reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holder of the
Rights Certificate, which limitations of rights include the
temporary suspension of the exercisability of such Rights, and
the substitution of property deliverable upon exercise of such
Rights, under the specific circumstances set forth in the Rights
Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available
upon written request to the Rights Agent.
<PAGE>
Exhibit B
Page 3
The Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office or offices
of the Rights Agent designated for such purpose, may be exchanged
for another Rights Certificate or Rights Certificates of like
tenor and date evidencing Rights entitling the holder to purchase
a like aggregate number of one one-hundredths of a share of
Preferred Stock as the Rights evidenced by the Rights Certificate
or Rights Certificates surrendered shall have entitled such
holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon
surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be redeemed by the Board
of Directors of the Company at its option at a redemption price
of $.01 per Right at any time prior to the earlier of the close
of business on (i) the tenth day following the Stock Acquisition
Date (as such time period may be extended pursuant to the Rights
Agreement), and (ii) the Final Expiration Date. After the
expiration of the redemption period, the Company's right of
redemption may be reinstated if an Acquiring Person reduces his
beneficial ownership to 10% or less of the outstanding Common
Stock in a transaction or series of transactions not involving
the Company.
After a Person becomes an Acquiring Person and before any
Acquiring Person acquires 50% or more of the outstanding shares
of Common Stock, the Company has the option to require the
exchange of all or any portion of the Rights evidenced by this
Certificate for one share of Common Stock or one one-hundredth of
a share of Preferred Stock (or in certain circumstances, other
securities of the Company) per Right.
The Company may, in lieu of issuing fractional shares of
Preferred Stock upon the exercise of any Right or Rights
evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock,
which may, at the election of the Company, be evidenced by
depositary receipts), make a cash payment as provided in the
Rights Agreement.
No holder of this Rights Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder
of the shares of Preferred Stock or of any other securities of
the Company which may at any time be issuable on the exercise
hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such,
any of the rights of a stockholder of the Company or any right to
vote for the election of directors or upon any matter submitted
<PAGE>
Exhibit B
Page 4
to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in
the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this
Rights Certificate shall have been exercised as provided in the
Rights Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights
Agent.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal.
Dated as of _______________, [19][20]___.
ATTEST: REYNOLDS METALS COMPANY
______________________________ By___________________________
Secretary Title:
Countersigned:
THE CHASE MANHATTAN BANK, N.A.
By____________________________
Authorized Signature
<PAGE>
EXHIBIT B
Page 5
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED _________________________________________________
hereby sells, assigns and transfers unto____________________________
____________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint ________________________________ Attorney, to transfer
the within Rights Certificate on the books of the within-named
Company with full power of substitution.
Dated: _______________, [19][20]___
________________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being
sold, assigned and transferred by or on behalf of a Person who is
or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, he [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is, was
or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _____________, [19][20]__ _____________________________
Signature
<PAGE>
Exhibit B
Page 6
NOTICE
The signatures to the foregoing Assignment and
Certificate must correspond to the name as written upon the face
of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>
Exhibit B
Page 7
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise
________ Rights represented by the Rights Certificate.)
To: REYNOLDS METALS COMPANY
The undersigned hereby irrevocably elects to exercise
__________ Rights represented by this Rights Certificate to
purchase the shares of Preferred Stock issuable upon the exercise
of the Rights (or such other securities of the Company or of any
other person which may be issuable upon the exercise of the
Rights) and request that certificates for such shares be issued
in the name of and delivered to:
(Please print name and address)
________________________________________________________________
Please insert social security
or other identifying number:____________________________________
If such number of Rights shall not be all the Rights
evidenced by this Rights Certificate, a new Rights Certificate
for the balance of such Rights shall be registered in the name of
and delivered to:
________________________________________________________________
(Please print name and address)
Please insert social security
or other identifying number:____________________________________
Dated: ______________, [19][20]___
_____________________________
Signature
Signature Guaranteed:
<PAGE>
Exhibit B
Page 8
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [
] are [ ] are not being exercised by or on behalf of a Person
who is or was an Acquiring Person or an Affiliate or Associate of
an Acquiring Person (as such terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, he [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is, was
or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ______________, [19][20]___ ________________________
Signature
Signature Guaranteed:
NOTICE
The signatures to the foregoing Election to Purchase
and Certificate must correspond to the name as written upon the
face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT C
SUMMARY OF
RIGHTS TO PURCHASE
PREFERRED STOCK
_____________________
On November 21, 1997, the Board of Directors of Reynolds
Metals Company, a Delaware corporation (the "Company"), declared
a dividend distribution of one Preferred Stock Purchase Right
(individually a "Right", and collectively the "Rights") for each
outstanding share of common stock, without par value (the "Common
Stock") of the Company, to stockholders of record at the close of
business on December 1, 1997 (the "Record Date"). Each Right
entitles the record holder to purchase from the Company, from and
after the Distribution Date (as defined below) one one-hundredth
of a share of the Company's Series A Junior Participating
Preferred Stock, without par value (the "Preferred Stock") at a
price of $300 (the "Purchase Price"), subject to adjustment in
certain circumstances. The Purchase Price may be paid, at the
election of the registered holder, by certified bank check or
money order payable to the order of the Company or The Chase
Manhattan Bank, N.A., as Rights Agent (the "Rights Agent"). The
description and terms of the Rights are set forth in a Rights
Agreement, dated as of December 1, 1997 (the "Rights Agreement"),
between the Company and the Rights Agent.
Initially, the Rights will be attached to and represented by
the certificates representing outstanding shares of Common Stock,
and no Rights Certificates will be distributed. The Rights will
separate from the Common Stock and a Distribution Date will occur
upon the earlier of (i) ten days following a public announcement
that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to
acquire, beneficial ownership of 20% or more of the outstanding
shares of Common Stock (the "Stock Acquisition Date"), or (ii)
ten 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 20% or more of
the outstanding shares of Common Stock. Until the Distribution
Date, (i) the Rights will be evidenced by the Common Stock
certificates and will be transferred with and only with such
Common Stock certificates, (ii) new Common Stock certificates
issued after December 1, 1997 will contain a notation
incorporating the Rights Agreement by reference and (iii) the
surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
As soon as practicable following the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common
Stock as of the close of business on the Distribution Date and,
thereafter, such separate Rights Certificates alone will evidence
the Rights. Except in certain limited circumstances, only shares
of Common Stock issued prior to the Distribution Date will be
issued with Rights.
The Rights are not exercisable until the Distribution Date and
will expire at the close of business on December 1, 2007, unless
earlier exercised or redeemed by the Company as described below.
At any time following the Distribution Date, if (i) the
Company is the surviving corporation in a merger with an
Acquiring Person and its Common Stock is not changed or
exchanged, (ii) a Person becomes the beneficial owner of 25% or
more of the then outstanding shares of Common Stock (other than
pursuant to an offer for all outstanding shares of Common Stock
at a price and on terms which the majority of the Continuing
Directors (as hereinafter defined) determine to be fair to, and
otherwise in the best interests of, stockholders), or (iii) an
Acquiring Person receives equity securities (other than pursuant
to a pro rata distribution) from the Company, acquires from or
transfers to the Company assets with a fair market value
exceeding $10,000,000 or engages in certain other "self-dealing"
transactions specified in the Rights Agreement, the Rights
Agreement requires that proper provision be made so that each
holder of a Right will thereafter have the right to receive, upon
the exercise thereof, Common Stock (or, in certain circumstances,
cash, property or other securities of the
<PAGE>
Company) having a value equal to two times the exercise price of
the Right. However, Rights are not exercisable following the
occurrence of the events set forth above until such time as the
Rights are no longer redeemable by the Company as set forth
below. Notwithstanding any of the foregoing, following the
occurrence of any of the events set forth in this paragraph, any
Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by an Acquiring Person
shall immediately become null and void.
For example, at an exercise price of $300 per Right, each
Right not owned by an Acquiring Person (or by certain related
parties) following an event set forth in the preceding paragraph
would entitle its holder to purchase $600 worth of Common Stock
(or other securities or assets, as noted above) for $300.
Assuming that the Common Stock had a per share value of $120 at
such time, the holder of each valid Right would be entitled to
purchase five shares of Common Stock for $300.
At any time following the Stock Acquisition Date, if (i) the
Company engages in a merger or consolidation in which the Company
is not the surviving corporation, (ii) the Company engages in a
merger or consolidation with another person in which the Company
is the surviving corporation, but in which all or part of the
Common Stock is changed or exchanged, or (iii) 50% or more of the
Company's assets or earning power is sold or transferred, the
Rights Agreement requires that proper provision be made so that
each holder of a Right (except Rights which previously have been
voided as set forth above) shall thereafter have the right to
receive, upon the exercise thereof, common stock of the acquiring
company having a value equal to two times the exercise price of
the Right. The Rights may not be so exercised in the case of a
merger or consolidation (a) which follows an offer described in
clause (ii) of the second preceding paragraph and (b) in which
the form and amount of consideration is the same as was paid in
such offer. The events set forth in this paragraph and in the
second preceding paragraph are referred to as the "Triggering
Events."
The Rights Agreement provides that the Company may not
consolidate or merge with, or sell 50% of the Company's assets or
earning power to, any person which has securities or is bound by
agreements which would substantially diminish the benefits of the
Rights.
The Purchase Price payable, and the number of one one-
hundredths of a share of Preferred Stock or other securities or
property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event
of a stock dividend on the Preferred Stock or other capital
stock, or a subdivision, combination or reclassification of the
Preferred Stock, (ii) upon the grant to holders of the Preferred
Stock of certain rights or warrants to subscribe for Preferred
Stock or securities convertible into Preferred Stock at less than
the current market price of the Preferred Stock, or (iii) upon
the distribution to holders of the Preferred Stock of evidences
of indebtedness or assets (excluding regular quarterly cash
dividends or dividends payable in Preferred Stock) or of
subscription rights or warrants (other than those referred to
above).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. The Company
may, in lieu of issuing fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-
hundredth of a share) upon exercise of the Rights, make a cash
payment based on the market price of the Preferred Stock on the
last trading date prior to the date of exercise.
If the Company is not able to issue shares of Preferred Stock
or Common Stock because of the absence of necessary regulatory
approval, restrictions contained in the Company's Certificate of
Incorporation or for any other reason, a person exercising Rights
will be entitled to receive a combination of cash or property or
other securities having a value equal to the value of the shares
of Preferred or Common Stock which would otherwise have been
issued upon exercise of the Rights.
At any time until ten 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 $.01 per Right, payable
in cash or securities or
<PAGE>
both (the "Redemption Price"). Upon certain circumstances set
forth in the Rights Agreement, the decision to redeem shall
require the concurrence of a majority of the Continuing
Directors. Thereafter, this right of redemption may be reinstated
if an Acquiring Person reduces his beneficial ownership to 10% or
less of the outstanding shares of Common Stock in a transaction
or series of transactions not involving the Company and there are
no other Acquiring Persons. Immediately upon the action of the
Board of Directors of the Company ordering redemption of the
Rights, with, where required, the concurrence of a majority of
the Continuing Directors, the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption
Price.
After a Person becomes an Acquiring Person and before any
Acquiring Person acquires 50% or more of the outstanding shares
of Common Stock, the Company, with the approval of a majority of
Continuing Directors, may require a holder to exchange all or any
portion of the holder's Rights for one share of Common Stock or
one one-hundredth of a share of the Preferred Stock (or in
certain circumstances, other securities of the Company) per
Right.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends.
While the distribution of the Rights will not be taxable to
stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income at such time as the
Rights become exercisable or are exercised for Common Stock (or
other consideration) of the Company or for common stock of the
acquiring company as set forth above.
Certain provisions of the Rights Agreement relating to the
principal economic terms of the Rights may not be amended at any
time. Other provisions may be amended by the Board of Directors
of the Company prior to the Distribution Date. Thereafter, these
provisions of the Rights Agreement may be amended by the Board
(in certain circumstances only with the concurrence of the
Continuing Directors) in order: to cure any ambiguity, defect or
inconsistency; to shorten or lengthen any time period under the
Rights Agreement; or in any other respect that will not adversely
affect the interest of holders of Rights (excluding the interest
of any Acquiring Person); provided, that no amendment to adjust
the time period governing redemption may be made if the Rights
are not redeemable at the time of such amendment.
Shares of Preferred Stock purchasable upon exercise of the
Rights will not be redeemable. Each one one-hundredth of a share
of Preferred Stock will be entitled to (i) an aggregate quarterly
dividend equal to the greater of (a) the quarterly dividend
declared per share of Common Stock or (b) $.10, (ii) upon
liquidation, a minimum preferential liquidation payment of $1.00
and an aggregate liquidation payment equal to the liquidation
payment made per share of Common Stock, (iii) one vote, voting
together with the shares of Common Stock and (iv) in the event of
any merger, consolidation or other transaction in which shares of
Common Stock are exchanged, the same amount received per share of
Common Stock. These rights are protected by customary anti-
dilution provisions. Because of the nature of the Preferred
Stock's dividend, liquidation and voting rights, the value of
each one one-hundredth of a share of Preferred Stock purchasable
upon exercise of each Right should approximate the value of one
share of Common Stock.
The term "Continuing Director" means any member of the
Company's Board of Directors who was a member of the Board prior
to the date of the Rights Agreement, and any person who is
subsequently elected to the Board if such person is recommended
or approved by a majority of the Continuing Directors.
Continuing Directors do not include an Acquiring Person, or any
representative thereof.
A copy of the Rights Agreement is filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement
of the Company on Form 8-A. A copy of the Rights Agreement is
available free of charge from the Company upon written request
therefor. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated herein
by reference.
