SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-01430
REYNOLDS METALS COMPANY
A Delaware Corporation
(I.R.S. Employer Identification No. 54-0355135)
6601 West Broad Street, P. O. Box 27003, Richmond, Virginia 23261-7003
Telephone Number (804) 281-2000
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes _X_ No ___
As of July 30, 1999, the Registrant had 62,887,628 shares of Common Stock, no
par value, outstanding and entitled to vote.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(millions, except per share amounts)
======================================================================
- ----------------------------------------------------------------------
Quarters Six months
ended ended
June 30 June 30
- ----------------------------------------------------------------------
1999 1998 1999 1998
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES $1,161 $1,579 $2,229 $3,111
COSTS AND EXPENSES
Cost of products sold 948 1,275 1,873 2,526
Selling, general and
administrative expenses 87 96 169 189
Depreciation and amortization 60 66 117 136
Interest 18 33 38 67
Operational restructuring effects - 304 - 304
- ----------------------------------------------------------------------
1,113 1,774 2,197 3,222
- ----------------------------------------------------------------------
EARNINGS
Income (loss) before income
taxes, extraordinary
loss and cumulative effect of
accounting change 48 (195) 32 (111)
Taxes on income (credit) 13 (72) 7 (46)
- ----------------------------------------------------------------------
Income (loss) before extraordinary
loss and cumulative effect of
accounting change 35 (123) 25 (65)
Extraordinary loss - (3) - (3)
Cumulative effect of accounting
change - - - (23)
- ----------------------------------------------------------------------
NET INCOME (LOSS) $ 35 $ (126) $ 25 $ (91)
======================================================================
EARNINGS PER SHARE
Basic:
Average shares outstanding 64 72 64 73
Income (loss) before
extraordinary loss and
cumulative effect of
accounting change $0.55 $(1.70) $0.40 $(0.89)
Extraordinary loss - (.04) - (.04)
Cumulative effect of
accounting change - - - (.32)
- ----------------------------------------------------------------------
Net income (loss) $0.55 $(1.74) $0.40 $(1.25)
======================================================================
Diluted:
Average shares outstanding 64 72 64 73
Income (loss) before
extraordinary loss and
cumulative effect of
accounting change $0.55 $(1.70) $0.40 $(0.89)
Extraordinary loss - (.04) - (.04)
Cumulative effect of
accounting change - - - (.32)
- ----------------------------------------------------------------------
Net income (loss) $0.55 $(1.74) $0.40 $(1.25)
======================================================================
CASH DIVIDENDS PER COMMON SHARE $0.35 $0.35 $0.70 $0.70
======================================================================
The accompanying notes to consolidated financial statements are
an integral part of these statements.
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
======================================================================
(millions) June 30 December 31
- ----------------------------------------------------------------------
1999 1998
- ----------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 39 $ 94
Receivables, less allowances of $9
(1998 - $14) 798 894
Inventories 536 500
Prepaid expenses and other 114 114
- ----------------------------------------------------------------------
Total current assets 1,487 1,602
Unincorporated joint ventures and
associated companies 1,569 1,478
Property, plant and equipment 4,294 4,282
Less allowances for depreciation and
amortization 2,298 2,258
- ----------------------------------------------------------------------
1,996 2,024
Deferred taxes and other assets 909 1,030
- ----------------------------------------------------------------------
Total assets $5,961 $6,134
======================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued and other
liabilities $ 774 $ 929
Short-term borrowings 305 116
Long-term debt 112 196
- ----------------------------------------------------------------------
Total current liabilities 1,191 1,241
Long-term debt 1,098 1,035
Postretirement benefits 1,019 1,029
Environmental, deferred taxes and other
liabilities 598 635
Stockholders' equity:
Common stock 1,538 1,533
Retained earnings 1,202 1,222
Treasury stock, at cost (626) (526)
Accumulated other comprehensive income (59) (35)
- ----------------------------------------------------------------------
Total stockholders' equity 2,055 2,194
- ----------------------------------------------------------------------
Contingent liabilities (Note 8)
Total liabilities and stockholders'
equity $5,961 $6,134
======================================================================
The accompanying notes to consolidated financial statements are an
integral part of these statements.
</TABLE>
3
<PAGE> 4
<TABLE>
<CAPTION>
CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
======================================================================
- ----------------------------------------------------------------------
Six months ended June 30 (millions) 1999 1998
- ----------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 25 $ (91)
Adjustments to reconcile to net cash provided by
(used in) operating activities:
Depreciation and amortization 117 136
Operational restructuring effects - 304
Deferred taxes and other (8) (104)
Extraordinary item - 3
Cumulative effect of accounting change - 23
Changes in operating assets and liabilities net
of effects of dispositions:
Accounts payable, accrued and other liabilities (66) (125)
Receivables (25) (15)
Inventories (49) 82
Environmental and restructuring liabilities (25) (24)
Other (32) (70)
- ----------------------------------------------------------------------
Net cash provided by (used in) operating activities (63) 119
INVESTING ACTIVITIES
Capital investments:
Operational (55) (57)
Strategic (165) (72)
Operational restructuring proceeds 204 273
Other (7) (3)
- ----------------------------------------------------------------------
Net cash provided by (used in) investing activities (23) 141
FINANCING ACTIVITIES
Increase (decrease) in short-term borrowings 191 (4)
Proceeds from long-term debt 250 100
Reduction of long-term debt (270) (60)
Cash dividends paid (45) (51)
Repurchase of common stock (100) (126)
Stock options exercised 5 11
- ----------------------------------------------------------------------
Net cash provided by (used in) financing activities 31 (130)
CASH AND CASH EQUIVALENTS
Net increase (decrease) (55) 130
At beginning of period 94 70
- ----------------------------------------------------------------------
At end of period $ 39 $ 200
======================================================================
The accompanying notes to consolidated financial statements are an
integral part of these statements.
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
=======================================================================
- -----------------------------------------------------------------------
Six months ended June 30 1999 1998
- -----------------------------------------------------------------------
<S> <C> <C>
SHARES (thousands):
Common stock
Balance at January 1 74,105 73,909
Issued under employee benefit plans 78 194
- -----------------------------------------------------------------------
Balance at June 30 74,183 74,103
- -----------------------------------------------------------------------
Treasury stock
Balance at January 1 (9,648) -
Purchased and held as Treasury stock (1,694) (2,009)
- -----------------------------------------------------------------------
Balance at June 30 (11,342) (2,009)
- -----------------------------------------------------------------------
Net common shares outstanding 62,841 72,094
- -----------------------------------------------------------------------
DOLLARS (millions):
Common stock
Balance at January 1 $1,533 $1,521
Issued under employee benefit plans 5 12
- -----------------------------------------------------------------------
Balance at June 30 $1,538 $1,533
- -----------------------------------------------------------------------
Retained earnings
Balance at January 1 $1,222 $1,253
Net income (loss) 25 (91)
Cash dividends declared for common stock (45) (51)
- -----------------------------------------------------------------------
Balance at June 30 $1,202 $1,111
- -----------------------------------------------------------------------
Treasury stock
Balance at January 1 $ (526) $ -
Purchased and held as Treasury stock (100) (126)
- -----------------------------------------------------------------------
Balance at June 30 $ (626) $ (126)
- -----------------------------------------------------------------------
Accumulated other comprehensive income (loss)
Balance at January 1 $ (35) $ (35)
Foreign currency translation adjustments (25) (9)
Income taxes 1 (6)
-----------------------
Other comprehensive income (loss) (24) (15)
- -----------------------------------------------------------------------
Balance at June 30 $ (59) $ (50)
- -----------------------------------------------------------------------
Total stockholders' equity $2,055 $2,468
- -----------------------------------------------------------------------
COMPREHENSIVE INCOME (millions):
Net income (loss) $ 25 $ (91)
Other comprehensive income (loss) (24) (15)
- -----------------------------------------------------------------------
Comprehensive income (loss) $ 1 $ (106)
- -----------------------------------------------------------------------
Comprehensive income (loss) was income of $30 million for the second
quarter of 1999 and a loss of $133 million in the second quarter of 1998.
The accompanying notes to consolidated financial statements are an
integral part of these statements.
</TABLE>
5
<PAGE> 6
REYNOLDS METALS COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Quarters Ended June 30, 1999 and 1998
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the interim
periods of 1999 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1999. For further information,
refer to the consolidated financial statements and footnotes thereto included
in the Company's annual report on Form 10-K for the year ended December 31,
1998. Certain amounts have been reclassified to conform to the 1999
presentation. In the tables, dollars are in millions, except per share and
per pound amounts, and shipments are in thousands of metric tons. A metric
ton is equivalent to 2,205 pounds.
2. ACCOUNTING POLICIES
CUMULATIVE EFFECT OF ACCOUNTING CHANGE
In 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position (SOP)
98-5, "Reporting on the Costs of Start-Up Activities." The SOP requires costs
of start-up activities and organization costs to be expensed as incurred. The
Company adopted the SOP in the second quarter of 1998 and recognized a charge
for the cumulative effect of accounting change of $23 million. First quarter
1998 results were retroactively restated to reflect this accounting change.
ACCOUNTING FOR THE COSTS OF DEVELOPING OR OBTAINING INTERNAL-USE SOFTWARE
In the first quarter of 1999, the Company adopted the Accounting Standards
Executive Committee of the American Institute of Certified Public Accountants'
Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." The SOP requires qualifying
computer software costs incurred in connection with obtaining or developing
software for internal use to be capitalized. In prior years, the Company
capitalized costs of purchased software and expensed internal costs of
developing software. The effect of adopting this SOP was not material to
interim 1999 results, and is not expected to be material for the full year.
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In 1998, the Financial Accounting Standards Board issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This
statement establishes new accounting and reporting standards for derivative
instruments and hedging activities. The Company must adopt this statement by
January 1, 2001. The Company has not determined the impact this statement
will have on its financial position or results of operations.
3. OPERATIONAL RESTRUCTURING
In the first quarter of 1999, the final closing of the sale of the Company's
Alabama can stock complex occurred. This sale essentially completed the
Company's restructuring activities.
In the first half of 1998, the Company sold the following:
o U.S. recycling operations
o Canadian extrusion facilities
o European rolling mill operations
o an Illinois sheet and plate plant
6
<PAGE> 7
4. EXTRAORDINARY LOSS
In the second quarter of 1998, the Company had an extraordinary loss of $3
million (net of income tax benefit of $1 million) resulting from debt
extinguishments.
5. EARNINGS PER SHARE
The following is a reconciliation of income and average shares for the basic
and diluted earnings per share computations for "Income (loss) before
extraordinary loss and cumulative effect of accounting change."
<TABLE>
<CAPTION>
Quarters ended June 30
----------------------------
1999 1998
----------------------------
<S> <C> <C>
Income (numerator):
Income (loss) before extraordinary loss and
cumulative effect of accounting change
(Basic and Diluted) $35 $(123)
Average shares (denominator):
Basic 64,141,000 72,056,000
Effect of dilutive securities:
Stock options 208,000 -
Stock potentially issuable under a long-term
incentive plan 62,000 -
----------------------------
Diluted 64,411,000 72,056,000
----------------------------
Per share amount:
Basic $.55 $(1.70)
Diluted $.55 $(1.70)
Antidilutive securities excluded:
Stock options 2,177,000 5,411,000
</TABLE>
<TABLE>
<CAPTION>
Six Months ended June 30
----------------------------
1999 1998
----------------------------
<S> <C> <C>
Income (numerator):
Income (loss) before extraordinary loss and
cumulative effect of accounting change
(Basic and Diluted) $25 $(65)
Average shares (denominator):
Basic 64,307,000 72,612,000
Effect of dilutive securities:
Stock options 116,000 -
Stock potentially issuable under a long-
term incentive plan 31,000 -
----------------------------
Diluted 64,454,000 72,612,000
----------------------------
Per share amount:
Basic $.40 $(0.89)
Diluted $.40 $(0.89)
Antidilutive securities excluded:
Stock options 3,148,000 5,493,000
</TABLE>
7
<PAGE> 8
6. FINANCING ARRANGEMENTS
In the first half of 1999, the Company:
o borrowed $150 million under its credit facilities that bear interest at
a variable rate (5.4% at June 30, 1999, based on the London Interbank
Offer Rate) and require repayment in a lump sum in 2001.
o issued $100 million of medium-term notes (at a fixed rate of 7%) which
require annual principal repayments of $20 million between 2005 and
2009.
8
<PAGE> 9
7. COMPANY OPERATIONS
Certain amounts for the second quarter and six months ended 1998 have been
reclassified to conform to the 1999 presentation. The principal
reclassification was to move corporate amounts from the Other category to
reconciling items.
<TABLE>
<CAPTION>
Packaging Construction
Base and and
Materials Consumer Distribution
============================================================================
<S> <C> <C> <C>
Second Quarter 1999
Customer aluminum shipments 215 38 51
Intersegment aluminum
shipments 48 - -
- ---------------------------------------------------------------------------
Total aluminum shipments 263 38 51
===========================================================================
Revenues:
Aluminum $314 $206 $170
Nonaluminum 85 148 79
Intersegment revenues -
aluminum 66 - -
- ---------------------------------------------------------------------------
Total revenues $465 $354 $249
===========================================================================
Segment operating income
(loss) $ 55 $ 42 $ 13
Inventory accounting
adjustments
Corporate amounts
- ---------------------------------------------------------------------------
Corporate operating income
Interest expense
Taxes on income
- ---------------------------------------------------------------------------
Net income
===========================================================================
Second Quarter 1998
Customer aluminum shipments 168 37 46
Intersegment aluminum
shipments 82 - -
- ---------------------------------------------------------------------------
Total aluminum shipments 250 37 46
===========================================================================
Revenues:
Aluminum $268 $205 $170
Nonaluminum 114 144 81
Intersegment revenues -
aluminum 126 - -
- ---------------------------------------------------------------------------
Total revenues $508 $349 $251
===========================================================================
Segment operating income
(loss) $ 95 $ 40 $ 8
Inventory accounting
adjustments
Corporate amounts
Operational restructuring
effects - net
- ---------------------------------------------------------------------------
Corporate operating income
(loss)
Interest expense
Taxes on income
Extraordinary loss
- ---------------------------------------------------------------------------
Net income (loss)
===========================================================================
The reconciling amounts for nonaluminum revenues relate to corporate
activities.
</TABLE>
9
<PAGE> 10
<TABLE>
<CAPTION>
Transportation Restructuring Other
============================================================================
<S> <C> <C> <C>
Second Quarter 1999
Customer aluminum shipments 20 - 16
Intersegment aluminum
shipments - - -
- ---------------------------------------------------------------------------
Total aluminum shipments 20 - 16
============================================================================
Revenues:
Aluminum $106 $ - $39
Nonaluminum - - 8
Intersegment revenues - - - -
aluminum
- ---------------------------------------------------------------------------
Total revenues $106 $ - $47
============================================================================
Segment operating income
(loss) $ (6) $ - $ -
Inventory accounting
adjustments
Corporate amounts
- ---------------------------------------------------------------------------
Corporate operating income
Interest expense
Taxes on income
- ---------------------------------------------------------------------------
Net income
============================================================================
Second Quarter 1998
Customer aluminum shipments 15 103 9
Intersegment aluminum shipments - 2 -
- ---------------------------------------------------------------------------
Total aluminum shipments 15 105 9
============================================================================
Revenues:
Aluminum $80 $461 $25
Nonaluminum - 4 11
Intersegment revenues - - 5 -
aluminum
- ---------------------------------------------------------------------------
Total revenues $80 $470 $36
============================================================================
Segment operating income (loss) $(7) $ 42 $ 1
Inventory accounting
adjustments
Corporate amounts
Operational restructuring
effects - net
- ---------------------------------------------------------------------------
Corporate operating income
(loss)
Interest expense
Taxes on income
Extraordinary loss
- ---------------------------------------------------------------------------
Net income (loss)
============================================================================
</TABLE>
<TABLE>
<CAPTION>
Total Reconciling
Segments Items Consolidated
============================================================================
<S> <C> <C> <C>
Second Quarter 1999
Customer aluminum shipments 340 - 340
Intersegment aluminum
shipments 48 (48) -
- ---------------------------------------------------------------------------
Total aluminum shipments 388 (48) 340
============================================================================
Revenues:
Aluminum $ 835 $ - $ 835
Nonaluminum 320 6 326
Intersegment revenues -
aluminum 66 (66) -
- ---------------------------------------------------------------------------
Total revenues $1,221 $ (60) $1,161
============================================================================
Segment operating income
(loss) $ 104 $ - $ 104
Inventory accounting
adjustments (4)
Corporate amounts (34)
- ---------------------------------------------------------------------------
Corporate operating income 66
Interest expense (18)
Taxes on income (13)
- ---------------------------------------------------------------------------
Net income $ 35
============================================================================
Second Quarter 1998
Customer aluminum shipments 378 - 378
Intersegment aluminum
shipments 84 (84) -
- ---------------------------------------------------------------------------
Total aluminum shipments 462 (84) 378
============================================================================
Revenues:
Aluminum $1,209 $ - $1,209
Nonaluminum 354 16 370
Intersegment revenues -
aluminum 131 (131) -
- ---------------------------------------------------------------------------
Total revenues $1,694 $ (115) $1,579
============================================================================
Segment operating income
(loss) $ 179 $ - $ 179
Inventory accounting
adjustments 1
Corporate amounts (38)
Operational restructuring
effects - net (304)
- ---------------------------------------------------------------------------
Corporate operating income
(loss) (162)
Interest expense (33)
Taxes on income 72
Extraordinary loss (3)
- ---------------------------------------------------------------------------
Net income (loss) $ (126)
============================================================================
</TABLE>
10
<PAGE> 11
7. COMPANY OPERATIONS - continued
<TABLE>
<CAPTION>
Packaging Construction
Base and and
Materials Consumer Distribution
=============================================================================
<S> <C> <C> <C>
Six Months ended June 30, 1999
Customer aluminum shipments 427 71 98
Intersegment aluminum shipments 104 - -
- -----------------------------------------------------------------------------
Total aluminum shipments 531 71 98
=============================================================================
Revenues:
Aluminum $ 616 $384 $329
Nonaluminum 160 282 157
Intersegment revenues - aluminum 147 - -
- ----------------------------------------------------------------------------
Total revenues $ 923 $666 $486
============================================================================
Segment operating income (loss) $ 69 $ 68 $ 21
Inventory accounting adjustments
Corporate amounts
- ----------------------------------------------------------------------------
Corporate operating income
Interest expense
Taxes on income
- ----------------------------------------------------------------------------
Net income
============================================================================
Six Months ended June 30, 1998
Customer aluminum shipments 313 67 92
Intersegment aluminum shipments 181 - -
- ----------------------------------------------------------------------------
Total aluminum shipments 494 67 92
============================================================================
Revenues:
Aluminum $ 515 $380 $335
Nonaluminum 229 280 163
Intersegment revenues - aluminum 289 - -
- ----------------------------------------------------------------------------
Total revenues $1,033 $660 $498
============================================================================
Segment operating income (loss) $ 174 $ 62 $ 16
Inventory accounting adjustments
Corporate amounts
Operational restructuring effects
- net
- ----------------------------------------------------------------------------
Corporate operating income (loss)
Interest expense
Taxes on income
Extraordinary loss
Cumulative effect of accounting
change
- ----------------------------------------------------------------------------
Net income (loss)
============================================================================
The reconciling amounts for nonaluminum revenues relate to corporate
activities.
</TABLE>
11
<TABLE>
<CAPTION>
Transportation Restructuring Other
============================================================================
<S> <C> <C> <C>
Six Months ended June 30, 1999
Customer aluminum shipments 37 - 30
Intersegment aluminum shipments - - -
- ----------------------------------------------------------------------------
Total aluminum shipments 37 - 30
============================================================================
Revenues:
Aluminum $200 $ - $64
Nonaluminum - - 9
Intersegment revenues -
aluminum - - -
- ----------------------------------------------------------------------------
Total revenues $200 $ - $73
============================================================================
Segment operating income (loss) $ (8) $ - $ 3
Inventory accounting
adjustments
Corporate amounts
- ----------------------------------------------------------------------------
Corporate operating income
Interest expense
Taxes on income
- ----------------------------------------------------------------------------
Net income
============================================================================
Six Months ended June 30, 1998
Customer aluminum shipments 31 219 18
Intersegment aluminum shipments - 4 -
- ----------------------------------------------------------------------------
Total aluminum shipments 31 223 18
============================================================================
Revenues:
Aluminum $167 $937 $55
Nonaluminum - 9 12
Intersegment revenues -
aluminum - 12 -
- ----------------------------------------------------------------------------
Total revenues $167 $958 $67
============================================================================
Segment operating income (loss) $ (7) $ 80 $ 2
Inventory accounting
adjustments
Corporate amounts
Operational restructuring
effects - net
- ----------------------------------------------------------------------------
Corporate operating income
(loss)
Interest expense
Taxes on income
Extraordinary loss
Cumulative effect of accounting
change
- ----------------------------------------------------------------------------
Net income (loss)
============================================================================
The reconciling amounts for nonaluminum revenues relate to corporate
activities.
</TABLE>
Total Reconciling
Segments Items Consolidated
============================================================================
[S] [C] [C] [C]
Six Months ended June 30, 1999
Customer aluminum shipments 663 - 663
Intersegment aluminum shipments 104 (104) -
- ----------------------------------------------------------------------------
Total aluminum shipments 767 (104) 663
============================================================================
Revenues:
Aluminum $1,593 $ - $1,593
Nonaluminum 608 28 636
Intersegment revenues -
aluminum 147 (147) -
- ----------------------------------------------------------------------------
Total revenues $2,348 $(119) $2,229
============================================================================
Segment operating income (loss) $ 153 $ - $ 153
Inventory accounting
adjustments (2)
Corporate amounts (81)
- ----------------------------------------------------------------------------
Corporate operating income 70
Interest expense (38)
Taxes on income (7)
- ----------------------------------------------------------------------------
Net income $ 25
============================================================================
Six Months ended June 30, 1998
Customer aluminum shipments 740 - 740
Intersegment aluminum shipments 185 (185) -
- ----------------------------------------------------------------------------
Total aluminum shipments 925 (185) 740
============================================================================
Revenues:
Aluminum $2,389 $ - $2,389
Nonaluminum 693 29 722
Intersegment revenues -
aluminum 301 (301) -
- ----------------------------------------------------------------------------
Total revenues $3,383 $(272) $3,111
============================================================================
Segment operating income (loss) $ 327 $ - $ 327
Inventory accounting
adjustments 4
Corporate amounts (71)
Operational restructuring
effects - net (304)
- ----------------------------------------------------------------------------
Corporate operating income
(loss) (44)
Interest expense (67)
Taxes on income 46
Extraordinary loss (3)
Cumulative effect of accounting
change (23)
- ----------------------------------------------------------------------------
Net income (loss) $ (91)
============================================================================
[/TABLE]
12
<PAGE> 13
8. CONTINGENT LIABILITIES
As previously disclosed in the Company's 1998 Form 10-K, the Company is
involved in various worldwide environmental improvement activities resulting
from past operations, including designation as a potentially responsible party
(PRP), with others, at various Environmental Protection Agency-designated
Superfund sites. The Company has recorded amounts (on an undiscounted basis)
which, in management's best estimate, will be sufficient to satisfy
anticipated costs of known remediation requirements.
Estimated costs for future environmental compliance and remediation are
necessarily imprecise because of factors such as:
o continuing evolution of environmental laws and regulatory requirements
o availability and application of technology
o identification of presently unknown remediation requirements
o cost allocations among PRPs
Further, it is not possible to predict the amount or timing of future costs of
environmental remediation that may subsequently be determined. Based on
information presently available, such future costs are not expected to have a
material adverse effect on the Company's competitive or financial position.
However, such costs could be material to results of operations in a future
interim or annual reporting period.
9. CANADIAN REYNOLDS METALS COMPANY, LTD. AND REYNOLDS ALUMINUM COMPANY OF
CANADA, LTD.
Financial statements and financial statement schedules for Canadian Reynolds
Metals Company, Ltd. and Reynolds Aluminum Company of Canada, Ltd. have been
omitted because certain securities registered under the Securities Act of
1933, of which these wholly owned subsidiaries of Reynolds Metals Company
(Reynolds) are obligors (thus subjecting them to reporting requirements under
Section 13 or 15(d) of the Securities Exchange Act of 1934), are fully and
unconditionally guaranteed by Reynolds. Financial information relating to
these companies is presented herein in accordance with Staff Accounting
Bulletin 53 as an addition to the footnotes to the financial statements of
Reynolds. Summarized financial information is as follows:
<TABLE>
<CAPTION>
Canadian Reynolds Metals Company, Ltd.
Quarters Ended June 30 Six Months Ended June 30
------------------------ --------------------------
1999 1998 1999 1998
------------------------ --------------------------
<S> <C> <C> <C> <C>
Net Sales:
Customers $132 $ 90 $242 $183
Parent and related companies 84 118 184 249
------------------------ --------------------------
$216 $208 $426 $432
Cost of products sold 189 176 385 361
Net income $ 9 $ 21 $ 15 $ 49
</TABLE>
<TABLE>
<CAPTION>
June 30 December 31
1999 1998
--------------------------------
<S> <C> <C>
Current assets $ 345 $ 155
Noncurrent assets 1,196 1,206
Current liabilities (121) (100)
Noncurrent liabilities (531) (379)
</TABLE>
13
<PAGE> 14
9. CANADIAN REYNOLDS METALS COMPANY, LTD. AND REYNOLDS ALUMINUM
COMPANY OF CANADA, LTD. - continued
<TABLE>
<CAPTION>
Reynolds Aluminum Company of Canada, Ltd.
Quarters Ended June 30 Six Months Ended June 30
------------------------ --------------------------
1999 1998 1999 1998
------------------------ --------------------------
<S> <C> <C> <C> <C>
Net Sales:
Customers $132 $112 $242 $231
Parent and related companies 84 114 184 239
------------------------ --------------------------
$216 $226 $426 $470
Cost of products sold 190 194 385 395
Net income $ 8 $ 18 $ 15 $ 47
</TABLE>
<TABLE>
<CAPTION>
June 30 December 31
1999 1998
-----------------------------
<S> <C> <C>
Current assets $ 334 $ 186
Noncurrent assets 1,212 1,228
Current liabilities (121) (103)
Noncurrent liabilities (538) (389)
</TABLE>
14
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following information should be read in conjunction with the
consolidated financial statements and related footnotes included
in the Company's 1998 Form 10-K along with the consolidated
financial statements and related footnotes included in and
referred to in this report. In the tables, dollars are in
millions, except per share and per pound amounts, and shipments
are in thousands of metric tons. A metric ton is equivalent to
2,205 pounds.
Management's Discussion and Analysis contains forecasts,
projections, estimates, statements of management's plans,
objectives and strategies for the Company and other forward-
looking statements. Please refer to the "Risk Factors" section
beginning on page 22, where we have summarized factors that could
cause actual results to differ materially from those projected in
a forward-looking statement or affect the extent to which a
particular projection is realized.
RECENT DEVELOPMENTS
- -------------------
By letter dated August 11, 1999, Alcoa Inc. made an
unsolicited offer to acquire all outstanding shares of
Reynolds in a transaction in which approximately half of the
shares would be exchanged for $65 cash and the remaining
half of the shares would be exchanged for the equivalent
value in Alcoa shares (or 0.9784 of a share of Alcoa.).
Alcoa also indicated that it would be willing to permit all
Reynolds stockholders to exchange all of their Reynolds
shares for Alcoa shares, if the Board of Reynolds or
Reynolds' stockholders found an all stock transaction to be
desirable.
At a special meeting held on August 15, 1999 to
consider the Alcoa offer, the Reynolds' Board of Directors
unanimously determined that the consideration offered by
Alcoa was inadequate for Reynolds stockholders. In reaching
its determination, the Board considered, among other things,
the opinion of Reynolds' financial advisor, Merrill Lynch &
Co. The Board also unanimously determined that Reynolds,
with the assistance of Merrill Lynch, should explore all
alternatives to maximize shareholder value, including the
sale of the company.
On August 16, 1999, Alcoa announced that it would
commence a cash tender offer during the week for all
outstanding shares of Reynolds at $65 per share. Alcoa also
stated that it would file during the week preliminary
consent solicitation materials to solicit written consent
to, among other things, remove the current Board of Reynolds
and elect an independent slate of directors that would
redeem Reynolds' rights plan and take certain other steps
that would facilitate a sale of the company.
RESULTS OF OPERATIONS
- ---------------------
Net income was $35 million for the second quarter of 1999 and $25
million for the six months of 1999 compared with net losses of
$126 million for the second quarter of 1998 and $91 million for
the six months of 1998. In addition to the extraordinary loss
and cumulative effect of accounting change shown in the table
below, the second quarter and six months of 1998 included non-
recurring, after-tax charges of $196 million for operational
restructuring. For additional information concerning the
operational restructuring charges, see Note 3 to the consolidated
financial statements.
Our pre-tax results for the second quarter and six months of 1999
were adversely affected by:
o lower realized aluminum pricing ($47 million in the second
quarter and $127 million in the six month period compared to the
1998 periods) which primarily affected the Base Materials global
business unit
o loss of income from sold operations was $42 million in the
second quarter and $80 million in the six month period compared
to the 1998 periods (these amounts include $17 million in the
second quarter of 1998 and $37 million in the six months of
1998 for the ceasing of depreciation of assets held for sale)
We offset a portion of the shortfall with increased shipping
volume in our Base Materials and Packaging and Consumer
businesses, lower conversion costs, and lower interest and SG&A
expenses. These benefits improved pre-tax results by $42 million
in the second quarter and $71 million in the six month period
compared to the 1998 periods. In addition, our results for the
six months of 1999 include foreign currency related losses and
charges, principally in Brazil, of $12 million that we recognized
in the first quarter of 1999.
15
<PAGE> 16
RESULTS OF OPERATIONS - continued
- ---------------------
<TABLE>
<CAPTION>
Second Quarter Six Months
---------------- ---------------
1999 1998 1999 1998
---------------- ---------------
<S> <C> <C> <C> <C>
RESULTS
Income (loss) before extraordinary
loss and cumulative effect of
accounting change $ 35 $ (123) $ 25 $ (65)
Extraordinary loss (see Note 4) - (3) - (3)
Cumulative effect of accounting change
(see Note 2) - - - (23)
---------------- ---------------
Net income (loss) $ 35 $ (126) $ 25 $ (91)
================ ===============
EARNINGS PER SHARE - BASIC
Income (loss) before extraordinary
loss and cumulative effect of
accounting change $0.55 $(1.70) $0.40 $(0.89)
Extraordinary loss - (.04) - (.04)
Cumulative effect of accounting change - - - (.32)
---------------- ----------------
Net income (loss) $0.55 $(1.74) $0.40 $(1.25)
================ ================
AVERAGE REALIZED PRICE PER POUND
Primary aluminum $0.67 $ 0.73 $0.66 $ 0.75
Fabricated aluminum products $1.89 $ 2.04 $1.90 $ 1.99
</TABLE>
GLOBAL BUSINESS UNITS
The Company is organized into four market-based, global business
units. The four global business units and their principal products are as
follows:
o Base Materials - alumina, carbon products, primary aluminum
ingot and billet, and electrical rod
o Packaging and Consumer - aluminum and plastic packaging and
consumer products; printing products
o Construction and Distribution - architectural construction
products and the distribution of a wide variety of aluminum and
stainless steel products
o Transportation - aluminum wheels, heat exchangers and
automotive structures
BASE MATERIALS
<TABLE>
<CAPTION>
Second Quarter Six Months
------------------ -----------------
1999 1998 1999 1998
------------------ -----------------
<S> <C> <C> <C> <C>
Aluminum shipments:
Customer 215 168 427 313
Internal 48 82 104 181
------------------ -----------------
Total 263 250 531 494
================== =================
Revenues:
Customer - aluminum $314 $268 $616 $ 515
- nonaluminum 85 114 160 229
Internal - aluminum 66 126 147 289
------------------ -----------------
Total $465 $508 $923 $1,033
================== =================
Operating income $ 55 $ 95 $ 69 $ 174
================== =================
</TABLE>
The increase in customer aluminum shipments in the second quarter
and six months of 1999 reflects strong demand for our value-added
products (foundry and sheet ingot, billet and rod), which made up
approximately 75% of the primary aluminum shipments in these
periods. Our available supply to meet customer demand has
increased because we no longer need to supply downstream
fabricating operations that have been sold, and we restarted
idled capacity in 1998.
16
<PAGE> 17
RESULTS OF OPERATIONS - continued
- ---------------------
GLOBAL BUSINESS UNITS
In addition to reflecting the changes in shipping volume,
aluminum revenues in the second quarter and six months of 1999
were significantly affected by lower prices for primary aluminum.
Nonaluminum revenues were lower because of:
o significantly lower prices for alumina - approximately 10%
to 15% lower than the second quarter and six months of 1998
o lower prices for carbon products
o lower customer shipments of alumina and carbon products due
to weaker demand and greater internal use resulting from our
restart of idled primary aluminum capacity in 1998
The most significant factor affecting operating profit in the
second quarter and six months of 1999 was lower prices for most
products. We were able to offset some of this decline with
higher shipments of primary aluminum products, improved capacity
utilization, and lower material and conversion costs.
Bonneville Power Administration ("BPA") supplies electricity to
our smelters at Longview, Washington and Troutdale, Oregon. The
current contract with BPA expires in October 2001. BPA has
proposed reducing the amount of power supplied to the smelters by
one-third and pricing the power on a formula under which charges
would vary with world aluminum prices. Assuming "average" world
aluminum prices (with the basis for determining what is "average"
yet to be settled), the rate charged to Reynolds for the period
2001-2006 would increase by 13% over what we currently pay. We
would also have to find other sources for the balance of our
power needs. The BPA proposal is subject to full consideration
in a rate case, in which we can present arguments to improve the
offered rate, and other parties can challenge both the quantity
of power being provided to the Reynolds smelters and the rates at
which it is to be provided. We expect to participate actively in
the resolution of this issue and to continue assessing alternate
power sources for the two smelters.
We have a 10% equity interest in the Aluminum Smelter Company of
Nigeria. The smelter has closed indefinitely due to a lack of
working capital. The closing has no material effect on our
operations or financial position.
PACKAGING AND CONSUMER
<TABLE>
<CAPTION>
Second Quarter Six Months
---------------- ---------------
1999 1998 1999 1998
---------------- ---------------
<S> <C> <C> <C> <C>
Customer aluminum shipments 38 37 71 67
Revenues:
Customer - aluminum $206 $205 $384 $380
- nonaluminum 148 144 282 280
---------------- ---------------
Total $354 $349 $666 $660
================ ===============
Operating income $ 42 $ 40 $ 68 $ 62
================ ===============
</TABLE>
Shipments and revenues were higher in the second quarter and six
months of 1999 because of strong demand for most products,
despite declining demand in the tobacco market. The volume
impact on revenues was partly offset by pricing pressures in our
flexible packaging operations. Operating income was higher in
the second quarter and six months of 1999 because of the higher
shipping volume and lower conversion costs.
17
<PAGE> 18
RESULTS OF OPERATIONS - continued
- ---------------------
GLOBAL BUSINESS UNITS - continued
CONSTRUCTION AND DISTRIBUTION
<TABLE>
<CAPTION>
Second Quarter Six Months
---------------- ---------------
1999 1998 1999 1998
---------------- ---------------
<S> <C> <C> <C> <C>
Customer aluminum shipments 51 46 98 92
Revenues:
Customer - aluminum $170 $170 $329 $335
- nonaluminum 79 81 157 163
---------------- ---------------
Total $249 $251 $486 $498
================ ===============
Operating income $ 13 $ 8 $ 21 $ 16
================ ===============
</TABLE>
Shipments increased in the second quarter and six months of 1999
because of strong demand for most distribution products.
Shipments of construction products reflected weak conditions in
several markets outside the U.S., such as Germany and Southeast
Asia. Excluding Southeast Asia, sales of our aluminum composite
material, Reynobond, were ahead of last year and were
particularly strong in Europe and Latin America.
Revenues decreased because of lower prices for most products.
The decline in prices for aluminum products reflects the general
global weakening of aluminum prices from those realized in 1998.
Prices for stainless steel products were lower due to global
supply/demand imbalances and lower material costs.
The substantial increase in operating income reflects the
benefits of increased volume and margins. Conversion
costs and expenses were lower except for the effect of start-up
of construction operations in Europe and China. The effects of
lower prices were offset by lower material costs.
TRANSPORTATION
<TABLE>
<CAPTION>
Second Quarter Six Months
---------------- ---------------
1999 1998 1999 1998
---------------- ---------------
<S> <C> <C> <C> <C>
Customer aluminum shipments 20 15 37 31
Customer revenues $106 $80 $200 $167
Operating income (6) (7) (8) (7)
================ ===============
</TABLE>
Shipments and revenues were higher in the second quarter and six
months of 1999 because of strong demand for cast and forged
aluminum wheels. Our available supply increased due to improved
capacity utilization and the completion of the expansion of our
Virginia forged aluminum wheel plant in February 1999.
Operating profit was lower because of non-recurring start-up
costs relating to an engine cradle program at our Indiana
automotive structures plant (see below). This effect was
partially offset by lower material costs, improved shipping
volume and capacity utilization in wheel and heat exchanger
operations, and significant operating improvements at our Beloit,
Wisconsin wheel plant.
The Company and an automobile manufacturer are pioneering the
first, mass-produced, high-volume, all-aluminum engine cradle.
The engine cradle offers significant weight savings, reduces
noise and vibration, and provides important safety features. We
have incurred high start-up costs because of the complexity of
the production process and our acceleration of the timetable to
begin production. No other manufacturer has yet produced this
particular component, so we expect to maintain a competitive
advantage.
18
<PAGE> 19
RESULTS OF OPERATIONS - continued
- ---------------------
GLOBAL BUSINESS UNITS - continued
RESTRUCTURING
The final closing of the sale of the Alabama can stock complex
occurred at the end of the first quarter of 1999. The Company
had signed a definitive sales agreement in December 1998 covering
the disposition of the complex and agreed to operate it on behalf
of the buyer for a management fee until all administrative
aspects of the transaction could be completed. As a result, no
revenues or operating results are included in the Restructuring
category in 1999.
OTHER
The Other category consists principally of operations in emerging
markets, European extrusion operations and investments in Canada,
Latin America and Saudi Arabia.
RECONCILING ITEMS
The increase in corporate expenses in the six months of 1999 was
due to foreign currency related losses and charges, principally
in Brazil.
For additional information concerning the global business units,
see Note 7 to the consolidated financial statements.
INTEREST EXPENSE
Interest expense decreased in both 1999 periods because of:
o lower amounts of debt outstanding
o lower average interest rates due to extinguishing higher
cost debt
o higher amounts for capitalized interest
TAXES ON INCOME
The effective tax rates reflected in the income statement differ
from the U.S. federal statutory rate principally because of the
following:
o foreign taxes at different rates
o the effects of percentage depletion allowances
o credits and other tax benefits
YEAR 2000 READINESS DISCLOSURE
ISSUE
The year 2000 issue results from computer programs and systems
that rely on two digits rather than four to define the applicable
year. Such systems may treat a date using "00" as the year 1900
rather than the year 2000. As a result, computer systems could
fail to operate or make miscalculations, causing disruption of
business operations.
Left unrepaired, many of the Company's systems, including
information and computer systems and automated equipment, could
be affected by the year 2000 issue. Failure to adequately
address the issue could result in, among other things, the
temporary inability to manufacture products, process
transactions, send invoices, and/or engage in normal business
activities. We do not believe the products we sell require
remediation to address the year 2000 issue since they do not
depend on the calendar function in the electronic components.
GOAL
The Company has a formal program to address and resolve potential
exposure associated with information and non-information
technology systems arising from the year 2000 issue. Our goal is
that none of the Company's critical business operations or
computer processes we share with our suppliers and customers will
be substantially impaired by the advent of the year 2000.
19
<PAGE> 20
RESULTS OF OPERATIONS - continued
- ---------------------
YEAR 2000 READINESS DISCLOSURE - continued
GOAL - continued
Our program is led by our Year 2000 Program Management Office,
which recommends processes and tools for year 2000 remediation to
the Company's business units and monitors progress. The Program
Management Office consolidates progress information into monthly
status reports for review by management, the Company's internal
auditors and the Board of Directors. The Audit Committee of the
Board of Directors is also given periodic briefings on progress
and plans from the Program Management Office.
YEAR 2000 REMEDIATION PROJECT
We have substantially completed preparation of our critical, date-
sensitive computer systems, processes and interfacing software
for the year 2000. Our preparation included five phases: (1)
inventory, (2) planning, (3) conversion, (4) pre-installation
testing and (5) installation. We measure progress on remediation
projects as a percentage of actual staff hours expended to
staff hours projected. As of June 30, 1999, remediation of both our
information systems and our non-information systems (e.g.,
manufacturing and mechanical systems) was approximately 99%
complete. We continue to monitor our computer and software
vendors' readiness statements to assure that readiness changes in
their products do not negatively affect our systems.
QUALITY ASSURANCE
In addition to completing our year 2000 remediation project, we
are validating our remediation efforts with post-installation
testing of certain critical computer systems. During the
remainder of 1999, we also expect to respond to and initiate
requests to test with certain suppliers, customers and government
agencies after they ready their systems.
CONTINGENCY PLANNING
An ongoing key aspect of the Company's contingency planning for
the year 2000 focuses on assessment of the business impact on the
Company resulting from the possible failure of our suppliers to
provide needed products and services. We have surveyed those
suppliers who are deemed to be critical to each of our operating
locations, even though the products or services they provide may
not be material to the Company's business as a whole, to assess
their year 2000 readiness. We are currently monitoring over
1,800 suppliers and are rating them low, medium or high risk in
their progress toward being ready for the year 2000. Critical
suppliers rated as high risk are receiving our immediate
attention for contingency planning or other measures such as
identifying additional sources of supply for critical materials.
As of June 30, 1999, we were on schedule with our third party
evaluation, having completed approximately 64% of the projected
total effort that we currently estimate will be needed. Early in
the fourth quarter of 1999, we plan to have identified additional
sources of supply or developed other contingency plans with
respect to those critical suppliers who are not ranked as low
risk. We will continue monitoring these suppliers into the year
2000. In addition, we are responding to customer inquiries
regarding our year 2000 program and our progress in addressing
the issue. We also are evaluating the year 2000 readiness of
certain of our largest customers, none of which are material to
our operations as a whole. We have not determined the potential
costs of business disruptions from supplier or customer non-
performance.
The Company currently has in place operating procedures and
business continuity plans at its operating locations for
responding to unusual, disruptive situations such as power
shortages, failures by major suppliers and natural disasters.
These existing procedures and plans provide a solid foundation
for addressing many year 2000 issues. As unique risks are
identified and deemed sufficiently likely to occur, we will make
necessary adaptations or additions to our existing procedures and
plans.
Contingency planning and monitoring to determine realistic year
2000 issues beyond those already addressed will continue
throughout the year. Several reasonably likely worst case
scenarios involve shortages or unanticipated outages of energy
requirements. Our operations, particularly in the Base Materials
business, require significant quantities of energy. Curtailments
or disruptions of energy supplies would result in full or partial
shutdowns of these operations until energy availability could be
restored. In addition, an unanticipated loss of energy supply
could result in damage to production equipment. We continue to
assess these and other business disruption risks.
20
<PAGE> 21
RESULTS OF OPERATIONS - continued
- ---------------------
YEAR 2000 READINESS DISCLOSURE - continued
COSTS
The total cost of our Year 2000 remediation project is currently
expected to be approximately $22 million. As of June 30, 1999,
we had incurred approximately $21 million, which includes labor,
equipment and license costs. Our cost projections include
approximate costs for post-installation testing and contingency
planning.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
WORKING CAPITAL
<TABLE>
<CAPTION>
June 30 December 31
1999 1998
----------- -------------
<S> <C> <C>
Working capital $296 $361
Ratio of current assets
to current liabilities 1.2/1 1.3/1
</TABLE>
OPERATING ACTIVITIES
Cash from operating activities in the six months of 1999 was used
principally to fund accounts payable, accrued and other
liabilities and to increase inventories in anticipation of
improved shipping levels.
INVESTING ACTIVITIES
Capital investments totaled $220 million in the first half of
1999. This amount includes $55 million for operating
requirements (replacement equipment, environmental control
projects, etc.). The remainder was for strategic projects
(performance improvements, investments, etc.) principally carried
forward from 1998, including:
o expanding the Worsley Alumina Refinery in Australia
o modernizing U.S. foil plants
o acquiring two producers of flexographic separations and
plates for the packaging industry in the U.S. and Canada
o establishing a foodservice packaging and consumer products
subsidiary in Brazil
o expanding a plant in Europe that will produce composite
architectural products
o opening new metals distribution centers
o expanding a forged wheel plant in Virginia (completed in
February 1999)
o expanding and modifying an automotive structures plant in
Indiana
Total capital investments excluding acquisitions planned for 1999
(approximately $450 million) are primarily for those strategic
projects now under way and continuing operating requirements.
We expect to fund these capital investments primarily with
cash provided by operating activities supplemented with funds
from financing activities. While the projected 1999 capital
investments do not include amounts for acquisitions, we will
evaluate opportunities that arise.
Part of the proceeds from operational restructuring was used to
repurchase common stock.
FINANCING ACTIVITIES
In the first half of 1999, the Company:
o increased short-term borrowings by $191 million
o borrowed $150 million under our revolving credit facilities
(see Note 6)
o issued $100 million of medium-term notes (see Note 6),
reducing to $13 million the amount of debt securities available
for issuance under our shelf registration
21
<PAGE> 22
LIQUIDITY AND CAPITAL RESOURCES - continued
- -------------------------------
FINANCING ACTIVITIES - continued
o repurchased common stock with part of the proceeds from
sales of assets (see the Consolidated Statement of Changes in
Stockholders' Equity)
o filed a shelf registration statement with the Securities and
Exchange Commission to register an additional $150 million of
unsecured debt securities (which has not yet been declared
effective)
We used the proceeds from the borrowings to repay at maturity
$100 million of 9 3/8% debentures, to reduce borrowings under our
revolving credit facilities, to make other scheduled debt
payments and to supplementally fund operating and investing
activities.
PORTFOLIO REVIEW
In the first quarter of 1999, the final closing of the sale of
our can stock complex in Alabama occurred. This essentially
completed our restructuring activities.
RISK FACTORS
- ------------
This section should be read in conjunction with Part I, Item 1
(Business), Item 3 (Legal Proceedings) and Item 7 (Management's
Discussion and Analysis of Financial Condition and Results of
Operations) of the Company's 1998 Form 10-K and the preceding
portions of this Item.
This report contains (and oral communications made by or on
behalf of the Company may contain) forecasts, projections,
estimates, statements of management's plans, objectives and
strategies for the Company and other forward-looking statements<FN1>.
The Company's expectations for the future and related forward-
looking statements are based on a number of assumptions and
forecasts, including:
o world economic growth and other economic indicators
(including rates of inflation, industrial production, housing
starts and light vehicle sales)
o trends in the Company's key markets
o global aluminum supply and demand conditions
o primary aluminum prices
By their nature, forward-looking statements involve risk and
uncertainty, and various factors could cause the Company's actual
results to differ materially from those projected in a forward-
looking statement or affect the extent to which a particular
projection is realized.
The Company is cautiously optimistic about the demand for
aluminum for 1999. There are signs that the economies in Asia
are beginning to recover. The economic situation in South
America is also improving. The Company's outlook is for an
increase in global primary aluminum consumption for 1999 of 2% to
3%. If the global economy completes its recovery in 2000 to
2001, we expect global aluminum consumption to grow by
approximately 4% to 5% per year.
Economic and/or market conditions other than those forecasted by
the Company in the preceding paragraph could cause the Company's
actual results to differ materially from those projected in a
forward-looking statement or affect the extent to which a
particular projection is realized. The Company's outlook for
1999 and beyond could be jeopardized by a further delay of
economic recovery in Asia and South America.
[FN]
________________________
<FN1> Forward-looking statements can be identified generally as those
containing words such as "should," "will," "will likely result,"
"hope," "forecast," "outlook," "project," "estimate," "expect,"
"anticipate," or "plan" and words of similar effect.
</FN>
22
<PAGE> 23
RISK FACTORS - continued
- ------------
The following factors also could affect the Company's results:
o Primary aluminum is an internationally traded commodity.
The price of primary aluminum is subject to worldwide market
forces of supply and demand and other influences. Prices can be
volatile. Because primary aluminum makes up a significant
portion of the Company's shipments, changes in aluminum pricing
have a rapid effect on the Company's operating results. The
Company's use of contractual arrangements, including fixed-price
sales contracts, fixed-price supply contracts, and forward,
futures and option contracts, reduces its exposure to price
volatility but does not eliminate it.
o The markets for most aluminum products are highly
competitive. Certain of the Company's competitors are larger
than the Company in terms of total assets and operations and have
greater financial resources. Certain foreign governments are
involved in the operation and/or ownership of certain competitors
and may be motivated by political as well as economic
considerations. In addition, aluminum competes with other
materials, such as steel, plastics and glass, among others, for
various applications in the Company's key markets. Plastic
products compete with similar products made by the Company's
competitors, as well as with products made of glass, aluminum,
steel, paper, wood and ceramics, among others. Unanticipated
actions or developments by or affecting the Company's competitors
and/or the willingness of customers to accept substitutions for
the products sold by the Company could affect results.
o The Company spends substantial capital and operating amounts
relating to ongoing compliance with environmental laws. In
addition, the Company is involved in remedial investigations and
actions in connection with past disposal of wastes. The
identification of additional material remediation sites in the
future (that are presently unknown) at which the Company may be
named as a potentially responsible party could have a material
adverse effect on the Company's results of operations in a future
interim or annual reporting period. Moreover, estimating future
environmental compliance and remediation costs is imprecise due
to:
- continuing evolution of environmental laws and
regulatory requirements and uncertainties about
their application to the Company's operations
- availability and application of technology
- allocation of costs among potentially responsible parties
o The Company has investments and activities in various
emerging markets, including Russia, China, India and Brazil.
While emerging markets offer strong growth potential, they also
present a higher degree of risk than more developed markets. In
addition to the business risks inherent in developing and
servicing new markets, economic conditions may be more volatile,
legal systems less developed and predictable, and the possibility
of various types of adverse government action more pronounced.
o Unanticipated material legal proceedings or investigations,
or the disposition of those currently pending against the Company
other than as anticipated by management and counsel, could have a
material adverse effect on the Company's results of operations
for a particular reporting period.
o Changes in the costs or availability of supply of power,
resins, caustic soda, green coke and other raw materials can
materially affect results. Substantial increases in power costs,
particularly in the Pacific Northwest, may adversely affect the
Company's primary aluminum production plants which require
reliable, low-cost power.
o A number of the Company's operations are cyclical and can be
influenced by economic conditions.
o A failure to complete the Company's major capital projects,
such as expansion of the Worsley Alumina Refinery, as scheduled
and within budget or a failure to launch successfully new growth
or strategic business programs, such as the engine cradle
program, could affect the Company's results.
23
<PAGE> 24
RISK FACTORS - continued
- ------------
o The Company's results may be adversely affected if it fails
to meet its year 2000 readiness goals. While the Company
believes it has prepared substantially all of its information and
non-information systems for the advent of the year 2000, a
failure to locate and correct all relevant computer codes could
result in disruptions of Company operations, some of which may be
significant. Also, there can be no guarantee that other
companies with which the Company does business will be converted
on a timely basis or their failure to be year 2000 compliant will
not have an adverse effect on the Company.
o A strike at a customer facility or a significant downturn in
the business of a key customer supplied by the Company could
affect the Company's results.
In addition to the factors referred to above, the Company is
exposed to general financial, political, economic and
business risks in connection with its worldwide operations.
The Company continues to evaluate and manage its operations
in a manner to mitigate the effects from exposure to such
risks. In general, the Company's expectations for the
future are based on the assumption that conditions relating
to costs, currency values, competition and the legal,
regulatory, financial, political and business environments
in the worldwide economies and markets in which the Company
operates will not change significantly overall.
24
<PAGE> 25
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Forward, futures, option and swap contracts are designated to
manage market risks resulting from fluctuations in the aluminum,
natural gas, foreign currency and debt markets. Contracts used
to manage risks in these markets are not material.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Following the August 11, 1999 offer by Alcoa Inc. to acquire
the Registrant, seven putative class actions on behalf of
stockholders of the Registrant were filed in the Delaware
Court of Chancery against the Registrant and certain present
and former directors of the Registrant. The plaintiffs in
those actions allege, among other things, that the director
defendants have breached their fiduciary duties owed to the
plaintiffs and other stockholders of the Registrant by
failing to explore offers for the purchase of the Registrant
or to engage in meaningful discussions with interested
parties such as Alcoa; that they have attempted to deprive
the plaintiffs of the true value of their investment in the
Registrant; that they have failed to exercise ordinary care
and diligence in the exercise of their fiduciary
obligations; that they have attempted to entrench themselves
in office; and that they have prevented the Registrant's
stockholders from obtaining a fair price for their shares.
The plaintiffs seek to enjoin a merger or other business
combination of the Registrant with a third party unless
pursuant to a procedure such as an auction to obtain the
highest possible price for the Registrant. The plaintiffs
also seek the entry of an order directing the director
defendants, among other things, to carry out their fiduciary
duties to the plaintiffs, to maximize shareholder value, to
undertake an appropriate evaluation of the Registrant's net
worth as a merger/acquisition candidate, to "create an
active auction" for the Registrant, and to ensure that any
conflicts of interest between the director defendants and
their fiduciary obligation to maximize shareholder value are
resolved in the best interests of the Registrant's public
stockholders. In one of the actions, the plaintiffs also
seek the entry of an order directing the director defendants
not to use the Registrant's shareholder rights plan or other
defensive measures to impede any bona fide offers for the
Registrant. In addition, the plaintiffs seek damages in an
unspecified amount, costs and disbursements, including
attorneys' fees, and such other relief as the Delaware Court
of Chancery deems appropriate.
ITEM 2. CHANGES IN SECURITIES
(a) Recent Sales of Unregistered Securities
Under the Registrant's Stock Plan for Outside Directors (the
"Plan"), 126 phantom shares, in the aggregate, were granted
to the Registrant's nine outside Directors on April 1, 1999,
based on an average price of $48.4688 per share. These
phantom shares represent dividend equivalents paid on
phantom shares previously granted under the Plan. 756
phantom shares, in the aggregate, were granted to the nine
outside Directors on June 30, 1999, based on an average
price of $59.7813 per share. These phantom shares represent
a quarterly installment of each outside Director's annual
grant under the Plan.
To the extent that these grants constitute sales of equity
securities, the Registrant issued these phantom shares in
reliance on the exemption provided by Section 4(2) of the
Securities Act of 1933, as amended, taking into account the
nature of the Plan, the number of outside Directors
participating in the Plan, the sophistication of the outside
Directors and their access to the kind of information that a
registration statement would provide.
A description of the Plan is contained in the Registrant's
Form 10-K for the year ended December 31, 1998 in Part II,
Item 5 under the caption "Sale of Unregistered Securities".
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders of the Registrant was held on
May 20, 1999. The stockholders (i) elected the eleven nominees
named in the Registrant's proxy statement to serve as Directors,
(ii) approved the Reynolds Metals Company 1999 Nonqualified Stock
Option Plan, (iii) approved the amended Reynolds Metals Company
Performance
25
<PAGE> 26
Incentive Plan, (iv) ratified the selection of Ernst
& Young LLP as independent auditors of the Registrant for 1999,
(v) defeated a stockholder proposal requesting endorsement of the
CERES Principles, which provide standards for environmental
performance and reporting, (vi) defeated a stockholder proposal
related to global warming which requested the Registrant to make
a report to stockholders by August 1999 on the greenhouse gas
emissions from the Company's operations, and (vii) defeated a
stockholder proposal requesting that the Registrant retain an
investment banking firm to explore strategic alternatives for
maximizing shareholder value. The number of votes cast for,
against or withheld, the number of abstentions, and the number of
broker non-votes, as applicable, with respect to each matter were
as set forth below. No other matters were voted upon at the
meeting.
(i) Election of Directors
Number Of Votes Number Of Votes
Name Cast "For" Withheld
--------------------- ----------------- -----------------
Patricia C. Barron 45,774,488 11,272,376
John R. Hall 45,768,628 11,277,236
Robert L. Hintz 45,758,967 11,286,897
William H. Joyce 45,777,065 11,268,799
Mylle Bell Mangum 45,766,699 11,279,165
D. Larry Moore 45,773,007 11,272,857
Randolph N. Reynolds 47,206,350 9,839,514
James M. Ringler 45,773,741 11,272,123
Samuel C. Scott, III 45,781,170 11,264,694
Jeremiah J. Sheehan 47,184,026 9,861,838
Joe B. Wyatt 45,767,272 11,278,592
(ii) Adoption of Reynolds Metals Company 1999 Nonqualified
Stock Option Plan
Number of Votes Cast "For" 42,479,646
Number of Votes Cast "Against" 11,799,667
Number of Abstentions 2,766,551
(iii) Approval of amended Reynolds Metals Company Performance
Incentive Plan
Number of Votes Cast "For" 50,081,745
Number of Votes Cast "Against" 4,203,770
Number of Abstentions 2,760,348
(iv) Ratification of Selection of Ernst & Young LLP as
Independent Auditors
Number of Votes Cast "For" 54,130,539
Number of Votes Cast "Against" 262,989
Number of Abstentions 2,652,335
(v) Stockholder Proposal Relating to the CERES Principles
Number of Votes Cast "Against" 42,453,645
Number of Votes Cast "For" 3,908,409
Number of Abstentions 5,735,632
Number of Broker Non-Votes 4,948,178
26
<PAGE> 27
(vi) Stockholder Proposal Relating to Global Warming
Number of Votes Cast "Against" 43,519,803
Number of Votes Cast "For" 3,284,475
Number of Abstentions 5,293,409
Number of Broker Non-Votes 4,948,177
(vii) Stockholder Proposal to Retain an Investment
Banking Firm to Explore Alternatives for
Maximizing Shareholder Value
Number of Votes Cast "Against" 49,078,059
Number of Votes Cast "For" 7,967,805
ITEM 5. OTHER INFORMATION
On August 11, 1999, Alcoa Inc. made an unsolicited
offer to acquire all outstanding shares of Reynolds in a
transaction in which approximately half of the shares would
be exchanged for $65 cash and the remaining half of the
shares would be exchanged for the equivalent value in Alcoa
shares (or 0.9784 of a share of Alcoa.). On August 16,
1999, Alcoa announced that it would commence a cash tender
offer during the week for all outstanding shares of Reynolds
at $65 per share and that it would file preliminary consent
solicitation materials to solicit written consent, to among
other things, remove the current Board of Reynolds and elect
an independent slate of directors. For a discussion of these
matters, see "Recent Developments" under Part I, Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See Index to Exhibits.
(b) Reports on Form 8-K
During the second quarter of 1999, the Registrant
filed three Current Reports on Form 8-K
with the Commission, each of which reported matters
under Item 5:
(1) A Form 8-K filed April 1, 1999, reporting that the
Registrant had completed the sale of its Alloys can stock complex
in Alabama and its aluminum extrusion plant in Irurzun, Spain;
(2) A Form 8-K filed May 28, 1999, containing the remarks given
by Jeremiah J. Sheehan, Chairman of the Board and Chief Executive
Officer of the Registrant, at the Registrant's annual meeting of
stockholders held on May 20, 1999; and
(3) A Form 8-K filed June 1, 1999, reporting that at a meeting
of the Non-Ferrous Metals Analysts of New York, Mr. Sheehan had
provided a status report on the strategic planning and analysis
process the Registrant has undertaken involving management, the
Registrant's Board of Directors, and the Registrant's investment
bankers and containing excerpts from Mr. Sheehan's remarks.
27
<PAGE> 28
In addition, on July 20, 1999, the Registrant filed
a Current Report on Form 8-K reporting that it had
improved its segment reporting by removing corporate
amounts from the Other category and presenting them
as separate reconciling items. Filed with the
report are reclassified segment disclosures related
to the Registrant's financial reports for the
quarters ended March 31, 1999 and 1998, other
interim periods of 1998, and the fiscal years ended
December 31, 1998, 1997 and 1996.
28
<PAGE> 29
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
REYNOLDS METALS COMPANY
By /s/ Allen M. Earehart
-------------------------
Allen M. Earehart
Senior Vice President, Controller
(Chief Accounting Officer)
DATE: August 16, 1999
29
<PAGE>
INDEX TO EXHIBITS
(Attached herewith are Exhibits 10.3, 10.5, 10.8, 10.10, 10.17,
10.18, 10.19, 10.20, 10.28, 10.34, 10.37, 10.40, 10.41, 27)
EXHIBIT 2 - None
* EXHIBIT 3.1 - Restated Certificate of Incorporation,
as amended. (File No. 001-01430, 1998
Form 10-K Report, EXHIBIT 3.1)
* EXHIBIT 3.2 - By-laws, as amended. (File No. 001-01430,
1998 Form 10-K Report, EXHIBIT 3.2)
EXHIBIT 4.1 - Restated Certificate
of Incorporation. See EXHIBIT 3.1.
EXHIBIT 4.2 - By-Laws. See EXHIBIT 3.2.
* EXHIBIT 4.3 - Form of Common Stock Certificate.
(Registration Statement No. 333-79203 on
Form S-8, dated May 24, 1999, EXHIBIT
4.2)
* EXHIBIT 4.4 - Indenture dated as of April 1, 1989 (the
"Indenture") between Reynolds Metals
Company and The Bank of New York, as
Trustee, relating to Debt Securities.
(File No. 001-01430, Form 10-Q Report
for the Quarter Ended March 31, 1989,
EXHIBIT 4(c))
* EXHIBIT 4.5 - Amendment No. 1 dated as of November 1,
1991 to the Indenture. (File No. 001-
01430, 1991 Form 10-K Report, EXHIBIT
4.4)
* EXHIBIT 4.6 - Rights Agreement dated as of March 8,
1999 between Reynolds Metals Company and
ChaseMellon Shareholder Services, L.L.C.
(File No. 001-01430, Form 8-K Report
dated March 8, 1999, pertaining to
Preferred Stock Purchase Rights, EXHIBIT
4.1)
* EXHIBIT 4.7 - Form of Fixed Rate Medium-Term Note.
(Registration Statement No. 33-30882 on
Form S-3, dated August 31, 1989, EXHIBIT
4.3)
* EXHIBIT 4.8 - Form of Floating Rate Medium-Term Note.
(Registration Statement No. 33-30882 on
Form S-3, dated August 31, 1989, EXHIBIT
4.4)
* EXHIBIT 4.9 - Form of Book-Entry Fixed Rate Medium-Term
Note. (File No. 001-01430, 1991 Form 10-
K Report, EXHIBIT 4.15)
* EXHIBIT 4.10 - Form of Book-Entry Floating Rate Medium-Term
Note. (File No. 001-01430, 1991 Form 10-
K Report, EXHIBIT 4.16)
* EXHIBIT 4.11 - Form of 9% Debenture due August 15, 2003.
(File No. 001-01430, Form 8-K Report
dated August 16, 1991, Exhibit 4(a))
______________________
* Incorporated by reference.
<PAGE>
* EXHIBIT 4.12 - Articles of Continuance of Societe
d'Aluminium Reynolds du Canada,
Ltee/Reynolds Aluminum Company of
Canada, Ltd. (formerly known as Canadian
Reynolds Metals Company, Limited --
Societe Canadienne de Metaux Reynolds,
Limitee) ("RACC"), as amended. (File
No. 1-1430, 1995 Form 10-K Report,
EXHIBIT 4.13)
* EXHIBIT 4.13 - By-Laws of RACC, as amended. (File No. 001-
01430, Form 10-Q Report for the Quarter
Ended March 31, 1997, EXHIBIT 4.14)
* EXHIBIT 4.14 - Articles of Incorporation of Societe
Canadienne de Metaux Reynolds,
Ltee/Canadian Reynolds Metals Company,
Ltd. ("CRM"), as amended. (File No. 001-
01430, Form 10-Q Report for the Quarter
Ended September 30, 1997, EXHIBIT 4.15)
* EXHIBIT 4.15 - By-Laws of CRM, as amended. (File No. 001-
01430, Form 10-Q Report for the Quarter
Ended September 30, 1997, EXHIBIT 4.16)
* EXHIBIT 4.16 - Indenture dated as of April 1, 1993
among RACC, Reynolds Metals Company and
The Bank of New York, as Trustee. (File
No. 001-01430, Form 8-K Report dated
July 14, 1993, EXHIBIT 4(a))
* EXHIBIT 4.17 - First Supplemental Indenture, dated as of
December 18, 1995 among RACC, Reynolds
Metals Company, CRM and The Bank of New
York, as Trustee. (File No. 001-01430,
1995 Form 10-K Report, EXHIBIT 4.18)
* EXHIBIT 4.18 - Form of 6-5/8% Guaranteed Amortizing Note due
July 15, 2002. (File No. 001-01430,
Form 8-K Report dated July 14, 1993,
EXHIBIT 4(d))
=* EXHIBIT 10.1 - Reynolds Metals Company 1987
Nonqualified Stock Option Plan.
(Registration Statement No. 33-13822 on
Form S-8, dated April 28, 1987, EXHIBIT
28.1)
=* EXHIBIT 10.2 - Reynolds Metals Company 1992
Nonqualified Stock Option Plan.
(Registration Statement No. 33-44400 on
Form S-8, dated December 9, 1991,
EXHIBIT 28.1)
EXHIBIT 10.3 - Amendment and Restatement of Reynolds
Metals Company Performance Incentive
Plan, as adopted and executed May 21,
1999.
=* EXHIBIT 10.4 - Agreement dated December 9, 1987 between
Reynolds Metals Company and Jeremiah J.
Sheehan. (File No. 001-01430, 1987 Form
10-K Report, EXHIBIT 10.9)
EXHIBIT 10.5 - Amendment and Restatement of
Supplemental Death Benefit Plan for
Officers, as adopted and executed April
26, 1999.
=* EXHIBIT 10.6 - Financial Counseling Assistance Plan for
Officers. (File No. 001-01430, 1987
Form 10-K Report, EXHIBIT 10.11)
_______________________
* Incorporated by reference.
= Management contract or compensatory plan or arrangement
required to be filed as an exhibit pursuant to Item 601 of
Regulation S-K.
<PAGE>
=* EXHIBIT 10.7 - Management Incentive Deferral Plan.
(File No. 001-01430, 1987 Form 10-K
Report, EXHIBIT 10.12)
EXHIBIT 10.8 - Amendment and Restatement of Deferred
Compensation Plan for Outside Directors,
as adopted and executed April 28, 1999.
=* EXHIBIT 10.9 - Form of Indemnification Agreement for
Directors and Officers. (File No. 001-
01430, 1998 Form 10-K Report, EXHIBIT
10.9)
EXHIBIT 10.10 - Form of Executive Severance Agreement, as
amended, between Reynolds Metals Company
and key executive personnel, including
each of the individuals listed in Item
4A of the 1998 Form 10-K Report.
=* EXHIBIT 10.11 - Amendment to Reynolds Metals Company
1987 Nonqualified Stock Option Plan
effective May 20, 1988. (File No. 001-
01430, Form 10-Q Report for the Quarter
Ended June 30, 1988, EXHIBIT 19(a))
=* EXHIBIT 10.12 - Amendment to Reynolds Metals Company
1987 Nonqualified Stock Option Plan
effective October 21, 1988. (File No.
001-01430, Form 10-Q Report for the
Quarter Ended September 30, 1988,
EXHIBIT 19(a))
=* EXHIBIT 10.13 - Amendment to Reynolds Metals Company
1987 Nonqualified Stock Option Plan
effective January 1, 1987. (File No.
001-01430, 1988 Form 10-K Report,
EXHIBIT 10.22)
=* EXHIBIT 10.14 - Form of Stock Option and Stock Appreciation
Right Agreement, as approved February
16, 1990 by the Compensation Committee
of the Company's Board of Directors.
(File No. 001-01430, 1989 Form 10-K
Report, EXHIBIT 10.24)
=* EXHIBIT 10.15 - Amendment to Reynolds Metals Company
1987 Nonqualified Stock Option Plan
effective January 18, 1991. (File No.
001-01430, 1990 Form 10-K Report,
EXHIBIT 10.26)
=* EXHIBIT 10.16 - Form of Stock Option Agreement, as approved
April 22, 1992 by the Compensation
Committee of the Company's Board of
Directors. (File No. 001-01430, Form 10-
Q Report for the Quarter Ended March 31,
1992, EXHIBIT 28(a))
EXHIBIT 10.17 - Amendment and Restatement of Reynolds
Metals Company Restricted Stock Plan for
Outside Directors, as adopted and
executed April 28, 1999.
EXHIBIT 10.18 - Amendment and Restatement of Reynolds
Metals Company New Management Incentive
Deferral Plan, as adopted and executed
April 28, 1999.
_______________________
* Incorporated by reference.
= Management contract or compensatory plan or arrangement
required to be filed as an exhibit pursuant to Item 601 of
Regulation S-K.
<PAGE>
EXHIBIT 10.19 - Amendment and Restatement of Reynolds
Metals Company Salary Deferral Plan for
Executives, as adopted and executed
April 28, 1999.
EXHIBIT 10.20 - Amendment and Restatement of Reynolds
Metals Company Supplemental Long-Term
Disability Plan for Executives, as
adopted and executed April 26, 1999.
=* EXHIBIT 10.21 - Amendment to Reynolds Metals Company
1987 Nonqualified Stock Option Plan
effective August 19, 1994. (File No.
001-01430, Form 10-Q Report for the
Quarter Ended September 30, 1994,
EXHIBIT 10.34)
=* EXHIBIT 10.22 - Amendment to Reynolds Metals Company
1992 Nonqualified Stock Option Plan
effective August 19, 1994. (File No.
001-01430, Form 10-Q Report for the
Quarter Ended September 30, 1994,
EXHIBIT 10.35)
=* EXHIBIT 10.23 - Form of Split Dollar Life Insurance Agreement
(Trustee Owner, Trustee Pays Premiums).
(File No. 001-01430, Form 10-Q Report
for the Quarter Ended June 30, 1995,
EXHIBIT 10.34)
=* EXHIBIT 10.24 - Form of Split Dollar Life Insurance Agreement
(Trustee Owner, Employee Pays Premium).
(File No. 001-01430, Form 10-Q Report
for the Quarter Ended June 30, 1995,
EXHIBIT 10.35)
=* EXHIBIT 10.25 - Form of Split Dollar Life Insurance Agreement
(Employee Owner, Employee Pays Premium).
(File No. 001-01430, Form 10-Q Report
for the Quarter Ended June 30, 1995,
EXHIBIT 10.36)
=* EXHIBIT 10.26 - Form of Split Dollar Life Insurance Agreement
(Third Party Owner, Third Party Pays
Premiums). (File No. 001-01430, Form 10-
Q Report for the Quarter Ended June 30,
1995, EXHIBIT 10.37)
=* EXHIBIT 10.27 - Form of Split Dollar Life Insurance Agreement
(Third Party Owner, Employee Pays
Premiums). (File No. 001-01430, Form 10-
Q Report for the Quarter Ended June 30,
1995, EXHIBIT 10.38)
EXHIBIT 10.28 - Amendment and Restatement of Reynolds
Metals Company 1996 Nonqualified Stock
Option Plan, as adopted and executed
April 15, 1999.
=* EXHIBIT 10.29 - Amendment to Reynolds Metals Company
1992 Nonqualified Stock Option Plan
effective January 1, 1993.
(Registration Statement No. 333-03947 on
Form S-8, dated May 17, 1996, EXHIBIT
99)
=* EXHIBIT 10.30 - Form of Stock Option Agreement, as approved
May 17, 1996 by the Compensation
Committee of the Company's Board of
Directors. (File No. 001-01430, Form 10-
Q Report for the Quarter Ended June 30,
1996, EXHIBIT 10.41)
____________________________
* Incorporated by reference.
= Management contract or compensatory plan or
arrangement required to be filed as an exhibit pursuant to
Item 601 of Regulation S-K.
<PAGE>
=* EXHIBIT 10.31 - Form of Three Party Stock Option Agreement,
as approved May 17, 1996 by the
Compensation Committee of the Company's
Board of Directors. (File No. 001-
01430, Form 10-Q Report for the Quarter
Ended June 30, 1996, EXHIBIT 10.42)
=* EXHIBIT 10.32 - Stock Option Agreement dated August 30, 1996
between Reynolds Metals Company and
Jeremiah J. Sheehan. (File No. 001-
01430, Form 10-Q Report for the Quarter
Ended September 30, 1996, EXHIBIT 10.43)
=* EXHIBIT 10.33 - Reynolds Metals Company Supplemental
Incentive Plan. (File No. 001-01430,
1996 Form 10-K Report, EXHIBIT 10.40)
EXHIBIT 10.34 - Amendment and Reinstatement of Reynolds
Metals Company Stock Plan for Outside
Directors, as adopted and executed April
28, 1999.
=* EXHIBIT 10.35 - Special Executive Severance Package for
Certain Employees who Terminate
Employment between January 1, 1997 and
June 30, 1999, (or, if earlier, the date
of completion of employment related
actions related to the Company's
portfolio review process, as designated
by the Company's Chief Executive
Officer), approved by the Compensation
Committee of the Company's Board of
Directors on January 17, 1997 and
extended on May 15, 1998. (File No. 001-
01430, 1996 Form 10-K Report, EXHIBIT
10.42)
=* EXHIBIT 10.36 - Special Award Program for Certain
Executives or Key Employees, as approved
by the Compensation Committee of the
Company's Board of Directors on January
17, 1997. (File No. 001-01430, 1996
Form 10-K Report, EXHIBIT 10.43)
EXHIBIT 10.37 - Amendment and Restatement of Reynolds
Metals Company Long-Term Performance
Share Plan, as adopted and executed
April 26, 1999.
* EXHIBIT 10.38 - Asset Purchase Agreement by and among Ball
Corporation, Ball Metal Beverage
Container Corp. and Reynolds Metals
Company dated as of April 22, 1998.
(File No. 001-01430, Form 10-Q Report
for the Quarter Ended June 30, 1998,
EXHIBIT 2)
=* EXHIBIT 10.39 - Reynolds Metals Company 1999
Nonqualified Stock Option Plan.
(Registration Statement No. 333-79203 on
Form S-8, dated May 24, 1999, EXHIBIT
4.5)
EXHIBIT 10.40 - Form of Stock Option Agreement, as approved
May 21, 1999 by the Compensation
Committee of the Company's Board of
Directors.
EXHIBIT 10.41 - Form of Three Party Stock Option Agreement,
as approved May 21, 1999 by the
Compensation Committee of the Company's
Board of Directors.
____________________________
* Incorporated by reference.
= Management contract or compensatory plan or
arrangement required to be filed as an exhibit pursuant to
Item 601 of Regulation S-K.
<PAGE>
EXHIBIT 11 - Omitted; see Part I, Item 1 for
computation of earnings per share.
EXHIBIT 15 - None
EXHIBIT 18 - None
EXHIBIT 19 - None
EXHIBIT 22 - None
EXHIBIT 23 - None
EXHIBIT 24 - None
EXHIBIT 27 - Financial Data Schedule
* EXHIBIT 99 - Description of Reynolds Metals Company
Capital Stock. (File No. 001-01430,
Form 10-Q Report for the Quarter Ended
March 31, 1999, EXHIBIT 99)
Pursuant to Item 601 of Regulation S-K, certain instruments
with respect to long-term debt of Reynolds Metals Company (the
"Registrant") and its consolidated subsidiaries are omitted
because such debt does not exceed ten percent of the total assets
of the Registrant and its subsidiaries on a consolidated basis.
The Registrant agrees to furnish a copy of any such instrument to
the Commission upon request.
____________________________
* Incorporated by reference.
EXHIBIT 10.3
REYNOLDS METALS COMPANY
PERFORMANCE INCENTIVE PLAN
As Amended and Restated
Effective January 1, 1999
<PAGE>
TABLE OF CONTENTS
Page
----
1. PURPOSE 1
2. ADMINISTRATION 1
3. PARTICIPATION 2
4. TARGET AWARD LEVELS 2
5. PERFORMANCE GOALS 3
6. DETERMINATION OF AWARDS 3
7. COMMUNICATION 3
8. PAYMENT OF AWARDS 4
9. COMPANY STOCK 7
10. EFFECTIVE DATE OF PLAN 7
11. SPECIAL PROVISIONS FOR TOP EXECUTIVES 7
<PAGE> 1
1. PURPOSE
-------
The purpose of the Performance Incentive Plan (the "Plan")
is to promote the financial success of Reynolds Metals
Company (the "Company") by:
(a) providing compensation opportunities which are
competitive with those of other major companies;
(b) supporting the Company's goal-setting and
strategic planning process; and
(c) motivating key executives to achieve annual
business goals by allowing them to share in the risks
and rewards of the business.
2. ADMINISTRATION
--------------
(a) The Plan shall be administered by the Compensation
Committee (the "Committee") of the Board of Directors
(the "Board"). No member of the Committee shall be
eligible to participate in the Plan.
(b) The Committee shall have the power and authority
to adopt, amend and rescind any administrative
guidelines, rules, regulations, and procedures deemed
appropriate to the administration of the Plan, and to
interpret and rule on any questions relating to any
provision of the Plan.
(c) The decisions of the Committee shall be final,
conclusive and binding on all parties, including the
Company and participating employees.
1
<PAGE> 2
(d) The Board may from time to time amend, suspend or
terminate the Plan, in whole or in part.
Notwithstanding the foregoing, the Board may, in any
circumstance where it deems such approval necessary or
desirable, and shall, to the extent necessary to
maintain compliance with Rule 16b-3 under the
Securities Exchange Act of 1934 as in effect from time
to time, require stockholder approval as a condition to
the effectiveness of any amendment or modification of
the Plan.
3. PARTICIPATION
-------------
Company officers and other key employees of the Company and
its subsidiaries who are recommended by the Chief Executive
Officer of the Company and who are approved by the Committee
shall be eligible for participation in the Plan during a
Plan year.
4. TARGET AWARD LEVELS
-------------------
After consultation with management, the Committee may
designate target award levels to be earned by participants
for a given Plan year. Such target awards may vary by
management level.
2
<PAGE> 3
5. PERFORMANCE GOALS
-----------------
To the fullest extent possible, management shall establish
performance goals for participants to help it determine the
awards it will recommend for the Plan year. Such goals may
relate to corporate performance, divisional performance, and
individual performance as appropriate to the purpose of the
Plan and the positions and responsibilities of the
participants.
6. DETERMINATION OF AWARDS
-----------------------
As soon as practicable following the close of each Plan
year, the Committee shall, after consultation with
management, determine the award earned by each participant
for the Plan year. In special cases of meritorious
performance, after consultation with management, the
Committee may make awards to individuals who were not
previously designated as eligible for participation during
the Plan year. If a participant has died during the Plan
year, an award may be made to the participant's spouse or
legal representative if the Committee so determines.
7. COMMUNICATION
-------------
Participants shall be advised in writing of their
participation in the Plan and of any performance goals
applicable to their awards.
3
<PAGE> 4
8. PAYMENT OF AWARDS
-----------------
(a) Awards shall be payable in cash as soon after the close
of the Plan year as feasible; provided, however, that
payment of part or all of any award may be deferred in
accordance with the terms of any incentive deferral
plan maintained from time to time by the Company.
(b) Any other provision of the Plan to the contrary
notwithstanding, except as otherwise determined by the
Committee in accordance with Paragraph 6(a) of the
Company's Stock Ownership Guidelines for Officers (the
"Guidelines"), the following provisions shall apply to
the payment of an award to any participant who is
subject to the Guidelines and who had not met the
applicable minimum stock ownership level of the
Guidelines as of the December 31 immediately preceding
the date of payment of an award under the Plan.
The award to any such participant shall be paid
part in cash and part in the form of shares of Common
Stock of the Company ("Shares"). The number of Shares
issued under this provision shall be equal to the
number of Shares that would have been necessary to
bring the participant into compliance with the
Guidelines as of the December 31 immediately preceding
the date of payment of the award; provided, however,
that in no
4
<PAGE> 5
event shall more than half of the value of a
participant's award be paid in the form of Shares; and
provided, further, that the part of the award for any
participant that is payable in Shares shall not exceed
the annual rate of base salary in effect for the
participant at the time of the award. The remainder of
the participant's award shall be paid in cash. Awards
of Shares shall be made without payment of a purchase
price.
Any payment in accordance with this Paragraph 8(b)
shall be subject to the following terms and conditions:
(i) An award shall be converted into Shares by
dividing (y) the cash value of the part
of the award to be paid in Shares by (z) the
arithmetic average of the high and low sales
prices of the Shares as reported on New York Stock
Exchange Composite Transactions on the date
preceding the date on which the award is paid.
Any fractional Share shall be paid in cash.
(ii) The mandatory share award provisions of
this Paragraph 8(b) shall not apply
to the extent the participant has already elected
under the Company's New Management Incentive
Deferral Plan (y) to defer a portion of his or her
award under the Plan and (z) to have such deferred
award be
5
<PAGE> 6
credited with additional income based on
shares of phantom stock of the Company.
(iii) Except to the extent a participant
has elected to have a deferred award
be credited with additional income based on shares
of phantom stock of the Company, any voluntary
deferral of the payment of part or all of an award
under the Plan shall apply only to the part of the
award that is payable in cash after the
application of this Paragraph 8(b); provided,
however, that any such voluntary deferral shall be
reduced as necessary to ensure the payment of all
applicable payroll taxes.
(iv) To the extent a participant is subject to
a mandatory deferral of the payment of
part or all of an award under the Plan, the
mandatory deferral shall apply first to the part
of the award that is payable in cash. To the
extent the award that would be paid in Shares
remains subject to the mandatory deferral, the
payment that would otherwise be made in the form
of Shares shall instead be deferred under the
Company's New Management Incentive Deferral Plan
to earn income based on shares of phantom stock of
the Company.
6
<PAGE> 7
9. COMPANY STOCK
-------------
Shares reserved for issuance under the Plan may be
authorized but unissued shares, shares reacquired by the
Company, or a combination of both, as the Board may from
time to time determine. If any stock dividend is declared
upon the Shares, or if there is any stock split, stock
distribution, or other recapitalization of the Company with
respect to the Shares, resulting in a split-up or
combination or exchange of Shares, or if any special
distribution is made to holders of Shares, the Shares
reserved for issuance under the Plan shall be
proportionately and appropriately adjusted.
10. EFFECTIVE DATE OF PLAN
----------------------
The Plan as originally adopted was effective for the fiscal
year commencing January 1, 1983 and continued in effect
thereafter as amended from time to time. This amended and
restated Plan shall be effective January 1, 1999, subject to
stockholder approval at the 1999 Annual Meeting, and shall
continue in effect, as amended from time to time, until it
is terminated by the Board.
11. SPECIAL PROVISIONS FOR TOP EXECUTIVES
-------------------------------------
Anything herein to the contrary notwithstanding, effective
with the 1996 calendar year, the following provisions shall
apply each calendar year to awards to participants who are
7
<PAGE> 8
designated by the Committee as "Top Executives" for that
calendar year. Top Executives shall be eligible for awards
only under this Paragraph 11.
(a) The provisions of this Paragraph 11, including the
designation of Top Executives each year, shall be
administered solely by those members of the Committee
(at least two) who are "outside directors" for purposes
of Section 162(m) of the Internal Revenue Code of 1986,
as amended (the "Code"). For the Top Executives, the
Plan shall be administered in a manner consistent with
the performance-based compensation requirements of
Section 162(m)(4) of the Code.
(b) No later than ninety days after the beginning of
each calendar year, the Committee shall establish in
writing (i) one or more Performance Goals (as defined
below) that must be reached in order for a Top
Executive to receive an award under the Plan for the
calendar year and (ii) the amount of the award to be
paid upon attainment of these goals. The Committee
shall have the discretion later to revise the amount to
be paid upon the attainment of these goals solely for
the purpose of reducing or eliminating the amount of
the award otherwise payable upon attainment of these
goals.
8
<PAGE> 9
(c) In establishing Performance Goals, the Committee
shall establish both the minimum Performance Goal(s)
(the "Minimum Goals") that must be reached in order for
the Top Executive to receive any award for the calendar
year and the maximum Performance Goal(s) (the "Maximum
Goals") that must be reached in order for the Top
Executive to receive the maximum award for the calendar
year. Between the Minimum Goals and the Maximum Goals,
the Committee may establish a range of intermediate
Performance Goals with a corresponding range of awards
between the minimum and maximum award opportunity. In
no event may a Top Executive's maximum award hereunder
for any calendar year exceed $2,500,000.
(d) A "Performance Goal" is an objective performance
goal established in writing by the Committee; it may be
based on net earnings, stock price, profit before
taxes, return on equity, return on capital, return on
assets, total return to shareholders, earnings per
share, debt rating, or economic value added, with the
specific goal or target in each case determined on a
basis specified by the Committee. For purposes of the
preceding sentence, the term "economic value added"
means (1) net operating profit (or loss) after taxes
minus (2) a capital charge. Performance Goals may be
absolute in their terms or measured against or in
9
<PAGE> 10
relationship to other companies comparably or otherwise
situated. Performance Goals may be particular to a Top
Executive or the division, department, branch, line of
business, subsidiary or other unit in which the Top
Executive works or with respect to which the Top
Executive has responsibility and/or may be based on the
performance of the Company generally. Performance
Goals may vary from Top Executive to Top Executive and
from calendar year to calendar year.
(e) The amount payable to a Top Executive shall be
based upon the achievement of the Performance Goals, as
certified in writing by the Committee after the end of
each calendar year. If the Committee believes that
factors outside the Performance Goals should also be
taken into account in determining the amount of the
award, the Committee shall have the discretion to
reduce, but not increase, the amount payable to a Top
Executive based on these outside factors. No payment
shall be made unless the Minimum Goals are achieved.
(f) Awards under this Paragraph 11 shall be paid out
in accordance with the provisions of Paragraph 8.
10
<PAGE> 11
Executed and adopted this ____ day of May, 1999, pursuant to
action taken by the Board of Directors of Reynolds Metals Company
at its meeting on March 8, 1999, and approved by the Stockholders
of Reynolds Metals Company at the 1999 Annual Meeting.
REYNOLDS METALS COMPANY
By:______________________
Vice President, Human
Resources
11
EXHIBIT 10.5
REYNOLDS METALS COMPANY
SUPPLEMENTAL DEATH BENEFIT PLAN FOR OFFICERS
As Amended and Restated
Effective April 16, 1999
<PAGE>
ARTICLE I
PURPOSE OF THE PLAN
The purpose of the Plan is to assist the Company in
attracting and retaining qualified individuals to serve as
officers and to provide eligible officers and other eligible
employees with supplemental death benefit coverage.
ARTICLE II
DEFINITIONS
2.01 "Basic Insurance Plan" shall mean the basic group
term life insurance plans for salaried employees and retirees
maintained by the Company at its expense to provide
noncontributory life insurance coverage based on annual earnings
(as that term is defined in the Basic Insurance Plan), as such
plans may be amended, modified or replaced from time to time.
2.02 "Beneficiary" shall mean the individual or entity
designated by the Participant to receive the death benefit
payable under the Plan upon the Participant's death. If no such
designation is made, or if the designated individual predeceases
the Participant or the entity no longer exists, then the
Beneficiary shall be the Participant's estate.
2.03 "Company" shall mean Reynolds Metals Company, a
Delaware corporation.
2.04 "Effective Date" shall mean January 1, 1987.
2.05 "Eligible Officer" shall mean an individual who is
employed by the Company or one of its subsidiaries on or after
the Effective Date and who has served as an officer during any
<PAGE> 2
three (3) year period. For purposes of the preceding sentence,
an officer is any individual (a) who is elected to serve as an
officer or assistant officer of the Company or (b) who is
otherwise treated as an officer of the Company for compensation
purposes as evidenced by virtue of having his compensation
approved by the Compensation Committee of the Board of Directors
of the Company.
2.06 "Participant" shall mean (a) each Eligible Officer
employed by the Company or one of its subsidiaries and (b) each
Eligible Officer who leaves the employ of the Company or one of
its subsidiaries on or after the Effective Date at a time when he
is eligible to receive an immediate retirement benefit from the
Company or a subsidiary. In addition, effective August 1, 1995,
the term "Participant" shall include any employee of the Company
or a subsidiary to the extent such individual (x) is eligible to
participate in the Split Dollar Program, and (y) elects to
participate in the Split Dollar Program, but (z) is determined by
the insurance company to be ineligible for Split Dollar Program
coverage during the underwriting process.
2.07 "Plan" shall mean this Reynolds Metals Company
Supplemental Death Benefit Plan for Officers.
2.08 "Plan Committee" shall mean the committee
appointed by the Chief Executive Officer of the Company to admin
ister the Plan.
2.09 "Split Dollar Program" shall mean the program of
life insurance offered by the Company under which an eligible
employee of the Company or a subsidiary waives coverage under the
2
<PAGE> 3
Basic Insurance Plan and instead becomes insured by an individual
permanent insurance policy owned by the eligible employee or by
an individual or entity designated by the eligible employee.
ARTICLE III
PLAN BENEFITS
3.01 If a Participant who has attained age sixty-five
(65) dies on or after the Effective Date while still employed by
the Company or one of its subsidiaries, the Company shall pay the
Participant's Beneficiary a supplemental death benefit equal to
the excess, if any, of (a) an amount equal to the Participant's
annual earnings in effect for purposes of the Basic Insurance
Plan at the time of death over (b) the sum of (i) the proceeds
actually paid under the Basic Insurance Plan upon the
Participant's death plus (b) in the case of any Participant who
is also covered by the Split Dollar Program, the equivalent of
the death benefit payable under the Split Dollar Program upon the
death of the Participant.
3.02 If a retired Participant dies on or after the
Effective Date while still covered by the Plan pursuant to
Section 2.06, the Company shall pay the Participant's Beneficiary
a supplemental death benefit equal to the excess, if any, of (a)
an amount equal to the Participant's annual earnings in effect
for purposes of the Basic Insurance Plan on the earlier of (i)
the date he retired or (ii) the first day of the month following
the date he attained age sixty-five (65) over (b) the sum of (y)
the proceeds actually paid under the Basic Insurance Plan upon
3
<PAGE> 4
the Participant's death plus (z) in the case of any Participant
who is also covered by the Split Dollar Program, the equivalent
of the death benefit payable under the Split Dollar Program upon
the death of the Participant.
3.03 Except as set forth in Sections 3.01 and 3.02
above, no benefit shall be paid under the Plan upon the death of
a Participant or former Participant.
ARTICLE IV
ADMINISTRATION
The Plan Committee shall have full responsibility and
authority to interpret and administer the Plan, including the
power to promulgate rules of Plan administration, the power to
settle any disputes as to rights or benefits arising from the
Plan, the power to appoint agents and delegate its duties, and
the power to make such decisions or take such actions as the Plan
Committee, in its sole discretion, deems necessary or advisable
to aid in the proper administration of the Plan. Actions and
determinations by the Plan Committee shall be final, binding and
conclusive for all purposes of this Plan.
ARTICLE V
AMENDMENT, SUSPENSION AND TERMINATION OF THE PLAN
5.01 The Board of Directors of the Company may from
time to time amend, suspend or terminate the Plan, in whole or in
part.
5.02 This Plan shall automatically terminate if the
4
<PAGE> 5
Basic Insurance Plan is modified so that life insurance coverage
thereunder for a salaried employee under age sixty-five (65) is
no longer equal to twice the employee's annual earnings (as that
term is defined in the Basic Insurance Plan).
5.03 No amendment, suspension or termination of the
Plan shall materially adversely affect the payment of a death
benefit already due under the Plan as the result of the death of
a Participant prior to such amendment, suspension or termination.
ARTICLE VI
FUNDING
No promises under this Plan shall be secured by any
specific assets of the Company, nor shall any assets of the
Company be designated as attributable or allocated to the satis
faction of such promises. Benefit payments shall be made from
the Company's general assets.
ARTICLE VII
GENERAL PROVISIONS
7.01 Neither the establishment of the Plan nor the pay
ment of any benefits hereunder nor any action of the Company, i
ncluding its Board of Directors, in connection therewith shall be
held or construed to confer upon any individual any legal right
to remain an officer or an employee of the Company.
7.02 No benefit under the Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or charge, except by will or the laws of
5
<PAGE> 6
descent and distribution, and any attempt thereat shall be void.
No such benefit shall, prior to receipt thereof, be in any manner
liable for or subject to the recipient's debts, contracts, liabil
ities, engagements, or torts.
7.03 This Plan shall inure to the benefit of, and be
binding upon, the Company and each Participant, and upon the suc
cessors and assigns of the Company and of each Participant.
7.04 The Company shall deduct from the amount of any
payments hereunder all taxes required to be withheld by
applicable laws.
7.05 This Plan shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Virginia.
Executed and adopted this 26 day of April, 1999,
pursuant to action taken by the Board of Directors of Reynolds
Metals Company at its meeting on April 16, 1999.
REYNOLDS METALS COMPANY
By /s/ D. Michael Jones
______________________________
Title: Senior Vice President and
General Counsel
EXHIBIT 10.8
REYNOLDS METALS COMPANY
DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS
As Amended and Restated
Effective March 8, 1999
<PAGE> 1
ARTICLE I
PURPOSE OF THE PLAN
The purpose of the Plan is to assist the Company in
attracting and retaining qualified individuals to serve as
Directors and to assist Directors in planning for their retire-
ment.
ARTICLE II
DEFINITIONS
2.01 "Beneficiary" shall mean the individual or entity
designated by the Participant to receive any amounts remaining in
the Plan upon the Participant's death. If no such designation is
made, or if the designated individual predeceases the Participant
or the entity no longer exists, then the Beneficiary shall be the
Participant's estate.
2.02 "Company" shall mean Reynolds Metals Company, a
Delaware corporation.
2.03 "Company Stock" shall mean the Common Stock of
the Company, without par value.
2.04 "Current Compensation" shall mean that portion of
Director Compensation which the Participant elects to accept
immediately in return for services performed for the Company.
2.05 "Deferred Compensation" shall mean that portion
of Director Compensation which the Participant elects to defer in
the manner provided for herein, until the time or times selected
for payment in accordance with Section 4.02.
- 1 -
<PAGE> 2
2.06 "Deferral Termination Date" shall mean one of the
following dates, as elected by the Participant: (a) the date on
which the Participant ceases to be a member of the Board of
Directors of the Company, (b) the date of the Participant's
seventieth (70th) birthday, or (c) the last day of such specified
year as the Participant shall elect.
2.07 "Director" shall mean a member of the Board of
Directors of the Company who is not an employee of the Company or
of one of its subsidiaries.
2.08 "Director Compensation" shall mean all
compensation received for services on and after January l, 1987,
as a member of the Board of Directors of the Company, as Chairman
of the Board, and as chairman or a member of a committee of the
Board, including retainers and meeting fees duly authorized by
the Board of Directors, but shall not include payments made in
reimbursement of travel and other out-of-pocket expenses.
2.09 "Effective Date" shall mean December l, 1986.
2.10 "Participant" shall mean a Director who submits a
written request pursuant to the terms of this Plan for deferral
of Director Compensation.
2.11 "Plan" shall mean this Reynolds Metals Company
Deferred Compensation Plan for Outside Directors.
2.12 "Plan Committee" shall mean the committee
appointed by the Chief Executive Officer of the Company to
administer the Plan.
- 2 -
<PAGE> 3
ARTICLE III
ELECTIONS TO DEFER DIRECTOR COMPENSATION
3.01 Before the start of each calendar year during the
term of the Plan, each Director, whether or not then a
Participant, shall have the right to elect to defer the receipt
of 25%, 50%, 75% or 100% of Director Compensation to be earned by
such Director in respect of such calendar year. At the time of
such election, the Director shall also elect with respect to such
Deferred Compensation:
(a) The Deferral Termination Date, as provided in
Section 2.06; provided, however, that if the Participant
elects Additional Compensation in the form of Stock
Equivalent Additional Compensation as provided in Section
4.01(b), the Deferral Termination Date must be the date
described in Section 2.06(a);
(b) The form of Additional Compensation, as provided
in Section 4.01; and
(c) The method of payment, as provided in Section
4.02.
3.02 An individual who becomes a Director after the
beginning of a calendar year may make the elections referred to
in Section 3.01 with respect to any Director Compensation to be
earned in respect of the remaining portion of such calendar year.
Any such election must be made within forty-five (45) days of the
date the Director first becomes eligible hereunder.
- 3 -
<PAGE> 4
3.03 An election made under Section 3.01 or 3.02 shall
be irrevocable as to the Director Compensation to which such
election applies, except as otherwise provided herein.
ARTICLE IV
PAYMENT OF DEFERRED COMPENSATION
4.01 Deferred Compensation shall be paid in cash
following the applicable Deferral Termination Date in accordance
with the provisions of Section 4.02. There shall be added to all
Deferred Compensation payments an amount of additional
compensation (hereinafter referred to as "Additional
Compensation") computed under subsection (a) or (b) below, as
elected by the Participant with regard to the Deferred
Compensation being paid:
(a) "Interest Equivalent Additional Compensation"
shall be computed at a specified rate and compounded semi-
annually on June 30th and December 31st from the date the
compensation would have been paid if it were Current
Compensation to the date of payment. Interest Equivalent
Additional Compensation shall be computed as follows:
(i) For Director Compensation deferred
on and after January 1, 1988, the rate at which
Interest Equivalent Additional Compensation is computed
shall be determined pursuant to this subsection (i).
Before the start of each calendar year, and before the
elections referred to in Section 3.01 are made with
regard to Director Compensation to be earned in respect
of such
- 4 -
<PAGE> 5
year, the Plan Committee shall determine the
rate applicable to Director Compensation deferred for
that year. This rate shall apply to amounts deferred
during that year until all such amounts are paid out.
(ii) For Director Compensation deferred
during 1987, the rate at which Interest Equivalent
Additional Compensation is computed shall continue to
be determined pursuant to the terms of the Plan in
effect on January l, 1987.
(b) "Stock Equivalent Additional Compensation" shall
be computed in accordance with this Section 4.01(b).
(i) As of each date when Director
Compensation would have been paid if it were Current
Compensation, each Participant who elected to receive
Stock Equivalent Additional Compensation shall have his
account under this Plan credited with a number of
equivalent shares of Company Stock determined by
dividing (A) the total dollar amount of such Deferred
Compensation by (B) the arithmetic average of the high
and low sales prices of Company Stock as reported on
New York Stock Exchange Composite Transactions on such
date. Fractional equivalent shares shall be calculated
to three decimal places.
(ii) As of each date when cash dividends
are paid on Company Stock, each Participant who elected
to receive Stock Equivalent Additional Compensation
shall also have his account under this Plan adjusted to
- 5 -
<PAGE> 6
reflect dividend equivalents computed pursuant to this
subsection (ii). The dollar amount of the dividend
equivalent for each Participant shall equal the cash
dividends that would have been paid on the number of
equivalent shares of Company Stock credited to the
Participant's account as of the dividend record date if
that number of equivalent shares had actually been
issued and outstanding on the record date. This
dividend equivalent for each Participant shall be
converted into a number representing equivalent shares
of Company Stock by dividing (A) the total dollar
amount of the Participant's dividend equivalent by (B)
the arithmetic average of the high and low sales prices
of Company Stock as reported on New York Stock Exchange
Composite Transactions on the date when the cash
dividends are paid. The Participant's account under
this Plan shall then be credited with the determined
number of equivalent shares of Company Stock, including
fractional shares calculated to three decimal places.
(iii) If any stock dividend is declared
upon Company Stock, or if there is any stock split,
stock distribution, or other recapitalization of the
Company with respect to its Company Stock, resulting in
a split-up or combination or exchange of shares, or if
any special distribution is made to holders of Company
Stock, the aggregate number and kind of equivalent
shares of Company Stock credited to the account of a
- 6 -
<PAGE> 7
Participant under the Plan shall be proportionately
adjusted as the Plan Committee may deem appropriate.
4.02 A Participant's Deferred Compensation and Addi-
tional Compensation shall be paid to such Participant in a single
lump sum payment or in annual installments over a period of
between two (2) and ten (10) years, as elected by the
Participant, following the applicable Deferral Termination Date.
Such election as to payment period shall be made by the
Participant at the same time as the election of the Deferral
Termination Date in accordance with Sections 3.01 and 3.02 of
this Plan. The following rules shall apply to payments under
this Section 4.02:
(a) If Interest Equivalent Additional Compensation is
being paid on the Deferred Compensation, lump sum payments
shall be paid as soon as administratively feasible following
the year in which the Deferral Termination Date occurs.
Annual installments shall consist of equal amounts of
Deferred Compensation, and, together with the Interest
Equivalent Additional Compensation applicable thereto, shall
be paid as soon as administratively feasible in each
calendar year following the year in which the Deferral
Termination Date occurs. For purposes of this Plan, the
Interest Equivalent Additional Compensation applicable to
any installment payment shall equal (i) the total amount of
Interest Equivalent Additional Compensation then accrued and
applicable to the total Deferred Compensation being paid in
installments, divided by (ii) the number of installment
- 7 -
<PAGE> 8
payments remaining, including the installment about to be
paid.
(b) If Stock Equivalent Additional Compensation is
being paid on the Deferred Compensation, the amount of a
lump sum payment shall be equal to (i) the total number of
equivalent shares of Company Stock credited to the
Participant's account under this Plan as of the last day on
which the New York Stock Exchange, Inc. is open in the year
the Deferral Termination Date occurs, multiplied by (ii) the
closing sales price of Company Stock as reported on New York
Stock Exchange Composite Transactions on such date. This
lump sum payment shall be paid as soon as administratively
feasible following the later of (i) the end of the year in
which the Participant's Deferral Termination Date with
respect to such compensation occurs, or (ii) the date on
which all of the Participant's transactions under the Plan
shall be exempt or excluded from liability under Section
16(b) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"). If annual installments are elected
instead of a lump sum, the amount of the installment payment
to be made in a calendar year shall be computed by taking
(y) the amount that would have been payable after the end of
the preceding year had the entire amount remaining as of the
end of such year been paid as a single lump sum, divided by
(z) the number of installment payments remaining, including
the installment about to be paid. The first annual
installment shall be paid as soon as administratively
- 8 -
<PAGE> 9
feasible following the later of (i) the end of the year in
which the Participant's Deferral Termination Date with
respect to such compensation occurs, or (ii) the date on
which all of the Participant's transactions under the Plan
shall be exempt or excluded from liability under Section
16(b) of the 1934 Act. Each annual installment thereafter
shall be paid as soon as administratively feasible in each
calendar year following the year in which the Deferral
Termination Date occurs.
4.03 Payments in Case of Death. In the event of a
Participant's death, the remaining unpaid portion of such
Participant's Deferred Compensation and Additional Compensation
shall be accelerated and paid to the Participant's Beneficiary as
soon as practicable after the Participant's death.
4.04 (a) Subject to the provisions of Section
4.04(c), upon receipt of a written request from a Participant or
a Participant's legal representative, if the Participant is not
competent to manage his affairs, the Plan Committee may direct
that all or any part of the undelivered portion of Deferred
Compensation (together with the Additional Compensation
applicable thereto) be accelerated and paid in a lump sum if it
finds, in its sole discretion, that continued deferral of such
Deferred Compensation will cause such Participant severe
financial hardship.
(b) Subsection (a) above shall apply both to Director
Compensation deferred in previous years and to Director
Compensation being deferred during the year in which the
- 9 -
<PAGE> 10
acceleration of payments is approved, except that no Deferred
Compensation shall be paid out prior to the date such Deferred
Compensation would be payable if it were Current Compensation.
(c) Anything herein to the contrary notwithstanding,
the Plan Committee shall not accelerate any payment of Deferred
Compensation with respect to which Stock Equivalent Additional
Compensation is to be paid unless and until the accelerated
payment will be exempt from short-swing profit liability pursuant
to the rules promulgated under Section 16(b) of the 1934 Act.
4.05 (a) Anything herein to the contrary
notwithstanding, if at any time a Change in Control (as defined
below) occurs, then all unpaid Deferred Compensation (together
with the Additional Compensation applicable thereto) shall be
accelerated and paid out to each Participant in a single lump sum
within ten (10) days of the date of such Change in Control, with
Additional Compensation for this purpose computed through the
date of the Change in Control. This provision shall apply both
to Director Compensation deferred in previous years and to
Director Compensation being deferred during the year in which the
Change in Control occurs, except that no Deferred Compensation
shall be paid out prior to the date such Deferred Compensation
would be payable if it were Current Compensation. After the
Change in Control, no further amounts shall be deferred hereunder
for the remainder of the year.
(b) For purposes of this Section 4.05, "Change in
Control" shall mean the occurrence of any of the following:
- 10 -
<PAGE> 11
(i) Any Person (as defined below) becomes the
Beneficial Owner (as defined below), directly or indirectly,
of 15% or more of the Company's common stock, unless such
Person (A) is not deemed an "Acquiring Person" in accordance
with Section 1(a) of the Rights Agreement (as defined
below), or (B) became a Beneficial Owner of 15% or more of
the Company's common stock in a transaction that did not
constitute a Change in Control under Section 4.05(b)(iii)
hereof;
(ii) During any period of two consecutive years,
individuals who at the beginning of such period constitute
the Board (as defined below), and any new director (other
than a director designated by a person who has entered into
an agreement with the Company to effect a transaction
described in Sections 4.05(b)(i), (iii) or (iv)) whose
election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least
two-thirds of the directors then still in office who either
were directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute a least a
majority of the members of the Board;
(iii) The effective date of a merger or consolidation
of the Company or any of its subsidiaries with any other
entity, other than a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately before such merger or consolidation continuing
- 11 -
<PAGE> 12
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or
of any other corporation or entity that as a result of such
transaction owns the Company or all or substantially all of
the Company's assets, either directly or through one or more
subsidiaries (the "parent entity")) more than 51% of the
combined voting power of the voting securities of the parent
or surviving entity outstanding immediately after such
merger or consolidation and with the power to elect at least
a majority of the board of directors or other governing body
of such parent or surviving entity;
(iv) The approval by the shareholders of the Company
of a complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or
substantially all of the Company's assets; and
(v) There occurs any other event of a nature that
would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or in response to any
similar item on any similar schedule or form) under the 1934
Act, whether or not the Company is then subject to such
reporting requirement.
(vi) For purposes of this Section 4.05(b), the
following terms shall have the following meanings:
(A) "Person" shall have the meaning as set
forth in Sections 13(d) and 14(d) of the 1934 Act;
provided, however, that Person shall exclude (i) the
Company, (ii) any trustee or other fiduciary holding
- 12 -
<PAGE> 13
securities under an employee benefit plan of the
Company, and (iii) any corporation owned, directly or
indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership
of stock of the Company.
(B) "Beneficial Owner" shall have the meaning
given to such term in Rule 13d-3 under the 1934 Act;
provided, however, that Beneficial Owner shall exclude
any Person otherwise becoming a Beneficial Owner by
reason of the shareholders of the Company approving a
merger of the Company with another entity.
(C) "Rights Agreement" shall mean the Amended
and Restated Rights Agreement dated as of March 8, 1999
between the Company and ChaseMellon Shareholder
Services, L.L.C., as initially in effect.
(D) "Board" means the Board of Directors of the
Company.
ARTICLE V
ADMINISTRATION
The Plan Committee shall have full responsibility and
authority to interpret and administer the Plan, including the
power to promulgate rules of Plan administration, the power to
settle any disputes as to rights or benefits arising from the
Plan, the power to appoint agents and delegate its duties, and
the power to make such decisions or take such actions as the Plan
Committee, in its sole discretion, deems necessary or advisable
- 13 -
<PAGE> 14
to aid in the proper administration of the Plan. Actions and
determinations by the Plan Committee shall be final, binding and
conclusive for all purposes of this Plan.
ARTICLE VI
AMENDMENT, SUSPENSION AND TERMINATION OF THE PLAN
The Board of Directors of the Company may from time to
time amend, suspend or terminate the Plan, in whole or in part,
except that no such amendment, suspension or termination shall
materially adversely affect the rights of any Participant in
respect of Deferred Compensation previously earned by such
Participant and not yet paid. Anything herein to the contrary
notwithstanding, at any time before a Change in Control (as
defined in Section 4.05(b)) occurs, the Board may amend Section
4.05(b)(i) to change the percentage referred to therein to a
percentage that is not more than 25%, so long as such change is
consistent with contemporaneous change of a similar nature in the
Rights Agreement (as defined in Section 4.05(b)(vi)(C)).
ARTICLE VII
FUNDING
No promises under this Plan shall be secured by any
specific assets of the Company, nor shall any assets of the
Company be designated as attributable or allocated to the
satisfaction of such promises. Benefit payments shall be made
from the Company's general assets.
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ARTICLE VIII
GENERAL PROVISIONS
8.01 All elections by a Participant hereunder shall be
made in writing by the completion and delivery to the Company of
forms prescribed for such purpose within the time limits set
forth herein with respect to such election. In the event the
federal income tax treatment of deferred compensation is
unfavorably changed or interpreted, the Plan Committee may, in
its sole discretion, authorize Participants to change their
elections; provided, however, that the Plan Committee shall not
allow Participants to change their elections regarding any
Deferred Compensation with respect to which Stock Equivalent
Additional Compensation is to be paid unless the Plan Committee
determines that such change of elections and subsequent payment
of the Deferred Compensation to which the change relates will be
exempt from short-swing profit liability pursuant to the rules
promulgated under Section 16(b) of the 1934 Act.
8.02 Neither the establishment of the Plan nor the
payment of any benefits hereunder nor any action of the Company,
including its Board of Directors, in connection therewith shall
be held or construed to confer upon any individual any legal
right to remain on the Board of Directors of the Company.
8.03 No benefit under the Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, except by will or the laws of
descent and distribution, and any attempt thereat shall be void.
No such benefit shall, prior to receipt thereof, be in any manner
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<PAGE> 16
liable for or subject to the recipient's debts, contracts,
liabilities, engagements, or torts.
8.04 This Plan shall inure to the benefit of, and be
binding upon, the Company and each Participant, and upon the
successors and assigns of the Company and of each Participant.
8.05 The Company shall deduct from the amount of any
payments hereunder all taxes required to be withheld by
applicable laws.
8.06 This Plan shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Virginia.
Executed and adopted this 28 day of April, 1999,
pursuant to action taken by the Board of Directors of Reynolds
Metals Company at its meeting on March 8, 1999.
REYNOLDS METALS COMPANY
By /s/ D. Michael Jones
______________________________
Title: Senior Vice President and
General Counsel
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EXHIBIT 10.10
EXECUTIVE SEVERANCE AGREEMENT
This Agreement ("Agreement") is entered into on April
16, 1999 between REYNOLDS METALS COMPANY, a Delaware corporation
("Reynolds"), and [Name] ("Executive").
WHEREAS, the maintenance of a strong and experienced
management is essential in protecting and enhancing the best
interests of Reynolds and its stockholders, and in this
connection Reynolds recognizes that, as is the case with many
publicly held corporations, the possibility of a change in
control may arise and may result in the departure or distraction
of management personnel to the detriment of Reynolds and its
stockholders; and
WHEREAS, the Compensation Committee and the Board of
Directors of Reynolds have each determined that appropriate steps
should be taken to reinforce and encourage the continued
attention and dedication of members of management to their
regular duties without distraction arising from a possible change
in control or a proposed or threatened change in control of
Reynolds; and
WHEREAS, should Reynolds become subject to any proposed
or threatened change in control, it is imperative that the Board
be able to call upon management to advise the Board as to whether
such change in control would be in the best interests of Reynolds
and its stockholders, and to take such other actions as the Board
might determine to be appropriate, without concern that
management would be distracted by the personal uncertainties and
risks created by such a proposed or threatened change in control;
and
WHEREAS, the Compensation Committee and the Board have
received from independent consultants information concerning the
adoption of executive severance agreements by other corporations
and from management the estimated cost to Reynolds of adoption of
each of the material provisions of the form of executive
severance agreement presented at the meeting; and
WHEREAS, the Compensation Committee and the Board have
each carefully reviewed the information presented to them and
have determined that the anticipated benefits to Reynolds from
entering into such agreements with key executives designated by
the Compensation Committee, thereby encouraging their continued
attention and dedication to their duties, exceed the anticipated
costs to Reynolds of entering into such agreements; and
WHEREAS, the Compensation Committee and the Board have
each concluded that such agreements are in the best interests of
Reynolds and its stockholders; and
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WHEREAS, Executive is a key executive of Reynolds and
has been selected by the Compensation Committee to enter into
such an agreement with Reynolds;
NOW, THEREFORE, to assure Reynolds that it will have
the continued dedication of Executive and the availability of
Executive's advice and counsel notwithstanding the possibility,
threat or occurrence of a change in control of Reynolds, and to
induce Executive to remain in the employ of Reynolds, and for
other good and valuable consideration, Reynolds and Executive
agree as follows:
1. Services During Certain Events. If a third person
begins a tender or exchange offer, circulates a proxy to
stockholders, or takes other steps to effect a Change in Control
(as defined in Section 2), Executive agrees that Executive shall
not voluntarily leave the employ of Reynolds and shall render the
services contemplated in the recitals to this Agreement, until
the third person has abandoned or terminated such person's
efforts to effect a Change in Control or until a Change in
Control has occurred.
2. Termination Following Change in Control. Except
as provided in Section 4, Reynolds shall provide or cause to be
provided to Executive the rights and benefits described in
Section 3 if Executive's employment by Reynolds is terminated at
any time within two years following a Change in Control:
(a) Termination by Reynolds. By Reynolds for reasons
other than
(i) for Cause (as defined in Section 4); or
(ii) as a result of Executive's death,
permanent disability (as defined in Section 2(f)), or
retirement at or after age 65;
or
(b) Termination by Executive. By Executive following
the occurrence of any of the following events without
Executive's written consent:
(i) the assignment of Executive to any
duties or responsibilities that are adversely
inconsistent with Executive's position, duties,
responsibilities or status immediately preceding such
Change in Control, or a change in Executive's reporting
responsibilities or titles in effect at such time
resulting in a reduction of Executive's
responsibilities or position at Reynolds;
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<PAGE> 3
(ii) the reduction of Executive's annual base
salary (including any deferred portions thereof), or
the failure to increase Executive's annual base salary
at least once in each 15 month period, any such
increase to be at least at substantially the same level
as the increases received by other executives with
similar titles and duties;
(iii) the failure to continue in effect
the incentive plans, employee benefit plans, and other
compensation policies, practices and arrangements in
which Executive or Executive's eligible family members
were eligible to participate or participated
immediately before the Change in Control (including
without limitation, failure to provide Executive with a
number of paid vacation days to which Executive is
entitled on the basis of years of service with Reynolds
in accordance with Reynolds' vacation policy in effect
on the date of the Change in Control), or the failure
to continue Executive's participation on substantially
the same basis, both in terms of the amount of benefit
provided and the level of participation relative to
other participants;
(iv) the failure to pay to Executive any
portion of current compensation within 7 days of the
date such compensation is due, or to pay to Executive
any portion of an installment of deferred compensation
under any deferred compensation program within 30 days
of the date such compensation is due, but in any event,
if such compensation is due within a reasonable period
after the end of a calendar year, by the end of
February following such year end;
(v) the transfer of Executive to a location
more than 50 miles from Executive's location at the
time of the Change in Control, or a material increase
in the amount of travel normally required of Executive
in connection with Executive's employment by Reynolds;
(vi) the good faith determination by
Executive that due to the Change in Control (including
any changes in circumstances at Reynolds that directly
or indirectly affect Executive's position, duties,
responsibilities or status as in effect immediately
preceding such Change in Control) Executive is no
longer able effectively to discharge Executive's duties
and responsibilities; (For purposes of this Section
3(b), any such good faith determination by Executive
shall be conclusive and binding.);
(vii) any material breach by Reynolds of
any provision of this Agreement;
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<PAGE> 4
(viii) any purported termination of
Executive's employment that is not effected pursuant to
a Notice of Termination satisfying the requirements of
Section 2(d) hereof (and, if applicable, the
requirements of Section 2(e) hereof), which purported
termination shall not be effective for purposes of this
Agreement; or
(ix) any failure by Reynolds to obtain the
assumption of this Agreement by any successor to
Reynolds.
Any good faith determination by
Executive of the occurrence of any of the events
specified in paragraphs (i) through (ix) of this
Section 2(b) shall be conclusive and binding.
(c) Change in Control. For purposes of this
Agreement, a "Change in Control" shall mean the occurrence
of any of the following:
(i) Any Person (as defined below) becomes
the Beneficial Owner (as defined below), directly or
indirectly, of 15% or more of Reynolds' common stock,
unless such Person (A) is not deemed an "Acquiring
Person" in accordance with Section 1(a) of the Rights
Agreement (as defined below), or (B) became a
Beneficial Owner of 15% or more of Reynolds common
stock in a transaction that did not constitute a Change
in Control under Section 2(c)(iii) hereof;
(ii) During any period of two consecutive
years, individuals who at the beginning of such period
constitute the Board (as defined below), and any new
directors (other than a director designated by a person
who has entered into an agreement with Reynolds to
effect a transaction described in Sections 2(c)(i),
(iii) or (iv)) whose election by the Board or
nomination for election by Reynolds' shareholders was
approved by a vote of at least two-thirds of the
directors then still in office who either were
directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute at least a
majority of the members of the Board;
(iii) The effective date of a merger or
consolidation of Reynolds or any of its subsidiaries
with any other entity, other than a merger or
consolidation which would result in the voting
securities of Reynolds outstanding immediately before
such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted
into voting securities of theparent or surviving entity
or of any other corporation or entity that as a result
of such transaction owns entity)Reynolds or all or
substantially all of the assets of Reynolds, either
directly or through one or more
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<PAGE> 5
subsidiaries (a "parent entity")) more than 51%
of the combined voting power of the voting
securities of the parent or surviving entity
outstanding immediately after such merger or
consolidation and with the power to elect at least a
majority of the board of directors or other governing
body of such parent or surviving entity;
(iv) The approval by the shareholders of
Reynolds of a complete liquidation of Reynolds or an
agreement for the sale or disposition by Reynolds of
all or substantially all of Reynolds' assets; andor
(v) There occurs any other event of a nature
that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or
form) under the 1934 Act (as defined below), whether or
not Reynolds is then subject to such reporting
requirement.
(vi) Certain Definitions. For purposes of
this Section 2(c), the following terms shall have the
following meanings:
(A) "Person" shall have the
meaning as set forth in Sections 13(d) and 14(d)
of the 1934 Act (as defined below); provided
however, that Person shall exclude (i) Reynolds,
(ii) any trustee or other fiduciary holding
securities under an employee benefit plan of
Reynolds, and (iii) any corporation owned,
directly or indirectly, by the shareholders of
Reynolds in substantially the same proportions as
their ownership of stock of Reynolds.
(B) "Beneficial Owner" shall have
the meaning given to such term in Rule 13d-3 under
the 1934 Act; provided however, that Beneficial
Owner shall exclude any Person otherwise becoming
a Beneficial Owner by reason of the shareholders
of Reynolds approving a merger of Reynolds with
another entity.
(C) "Rights Agreement" shall mean
the Amended and Restated Rights Agreement dated as
of March 8, 1999 between Reynolds and ChaseMellon
Shareholder Services, L.L.C., as initially in
effect.
(D) "1934 Act" shall mean the
Securities Exchange Act of 1934, as amended.
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<PAGE> 6
(E) "Board" shall mean the board
of directors of Reynolds.
(d) Notice of Termination. Any purported termination
of Executive's employment under Section 2(a) (other than
termination due to death or retirement at or after age 65
which shall terminate Executive's employment automatically)
shall be communicated by written Notice of Termination to
Executive given in accordance with Section 9(l). Any
termination of Executive's employment under Section 2(b)
shall be communicated by written Notice of Termination to
Reynolds in accordance with Section 9(l). "Notice of
Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated.
(e) Date of Termination. "Date of Termination" shall
mean
(i) if Executive's employment is terminated
due to Executive's death, the date of Executive's
death;
(ii) if Executive's employment is terminated
due to retirement at or after age 65, the date of
Executive's retirement;
(iii) if Executive's employment is
terminated for permanent disability, 30 days after
Notice of Termination is given (provided that Executive
shall not have returned to full-time performance of
Executive's duties during such 30 day period);
(iv) if Executive's employment is terminated
by Executive pursuant to Section 2(b), the date
specified in the Notice of Termination, which shall be
at least 30 days from the date such Notice of
Termination is given; and
(v) if Executive's employment is terminated
for Cause, the date specified in the Notice of
Termination, which shall be at least 30 days from the
date such Notice of Termination is given.
Notwithstanding anything to the contrary contained
herein, if within 15 days after any Notice of Termination is
given, Executive notifies Reynolds that a dispute exists
concerning termination for Cause or permanent disability,
then the Date of Termination shall be the date on which the
dispute is finally determined, either by mutual written
agreement of Executive and Reynolds, or otherwise; provided
however, the Date of Termination shall be extended by a
notice of dispute only if
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<PAGE> 7
such notice is given in good faith and Executive
pursues the resolution of such dispute with
reasonable diligence.
(f) Definition of "permanent disability". For
purposes of this Agreement, "permanent disability" shall
mean a physical or mental infirmity which impairs
Executive's ability to substantially perform Executive's
duties under this Agreement and which continues for a period
of at least 12 consecutive months.
3. Rights and Benefits upon Termination. If
Executive's employment is terminated under any of the
circumstances set forth in Section 2 ("Termination"), Reynolds
agrees to provide or cause to be provided to Executive the
following rights and benefits:
(a) Salary and Incentive. Executive shall receive
within five business days of the Date of Termination a lump
sum payment in cash in an amount equal to three times
Executive's Earnings (as defined in this Section 3(a));
provided however, that if there are fewer than 36 months
remaining from the Date of Termination to the date when
Executive reaches age 65, the amount calculated pursuant to
this Section 3(a) shall be reduced by multiplying such
amount by a fraction, the numerator of which is the number
of months (including any fraction of a month) remaining to
age 65 and the denominator of which is 36.
For purposes of this Section 3(a), "Earnings" shall
mean the sum of (i) Executive's annual base salary (at the
rate in effect at the Date of Termination, or, if greater,
at the rate in effect immediately preceding the Change in
Control), plus (ii) an amount equal to the highest cash
target incentive opportunity established for Executive for
1998 or any future calendar year (without regard to any
possible deferred portions thereof). Earnings shall not
include any income attributable to options granted and
dividends on shares acquired pursuant to any stock option
plan maintained by Reynolds for its employees.
For purposes of Section 3(a) and Section 3(c), "highest
cash target incentive opportunity" means the largest "target
incentive opportunity" (as opposed to the "maximum incentive
opportunity") established for Executive's salary grade for
any year under the Reynolds Metals Company Performance
Incentive Plan and, if applicable, the Reynolds Metals
Company Supplemental Incentive Plan or under any successor
or replacement annual variable compensation plan(s).
(b) Stock Options. If Executive has any outstanding
options that will remain exercisable after Termination to
the extent the Compensation
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<PAGE> 8
Committee approves, then approval shall be
deemed to be granted as of Executive's Termination;
(c) Retirement Benefits. Executive shall receive
within five business days of the Date of Termination a lump
sum payment in cash in an amount equal to the actuarial
present value of the excess of (i) what would be Executive's
accrued age 65 benefit calculated pursuant to the applicable
formula in Reynolds' New Retirement Program for Salaried
Employees ("New Retirement Program") (as in effect at the
Date of Termination or, if more favorable to Executive, as
in effect immediately preceding the Change in Control), if
Executive were given additional credited service and age for
a period of 36 months following Termination (or such lesser
period as shall remain until Executive reaches age 65), with
annual earnings during the additional period determined as
if (A) Executive's annual base salary at the rate in effect
at the Date of Termination, or, if greater, immediately
preceding the Change in Control, were continued as base
salary for the additional period and (B) an amount equal to
the highest cash target incentive opportunity established
for Executive for 1998 or any subsequent calendar year
(without regard to any possible deferred portions thereof)
were paid to Executive on the third Friday of each February
of the additional period, such annual earnings to be
computed without regard to statutory restrictions on
benefits accrued or payable under qualified plans, over (ii)
Executive's accrued age 65 benefit, if any, payable under
the New Retirement Program, including any benefit payable
under Reynolds' Benefit Restoration Plan for New Retirement
Program. For purposes of this Section 3(c), actuarial
equivalents shall be computed as of the end of the 36 month
period and shall be determined using the same methods and
assumptions used under the New Retirement Program at the
Date of Termination or the date of a Change in Control,
whichever results in the greater amount.
(d) Welfare Benefit Plans. To the extent Executive is
eligible thereunder, Executive (and Executive's eligible
family members, to the extent applicable) shall continue to
be covered by (i) any group term, supplemental and/or split
dollar life insurance plan in effect for Executive on the
Date of Termination and (ii) the health care, accident and
disability benefit plans of Reynolds in effect on the Date
of Termination for employees in the same class or category
as Executive, subject in each case to the terms of such
plans and to Executive's making any required contributions
thereto, to the extent contributions are required of active
employees. If Executive is, or Executive's previously
eligible family members are, not eligible to continue to be
so covered under the terms of any such benefit plan or
program, or if Executive is, or Executive's eligible family
members are, eligible but the benefits applicable to
Executive or Executive's family members are not
substantially equivalent to the benefits
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<PAGE> 9
applicable to Executive or Executive's family members
immediately prior to the Date of Termination,
then, for a period of 36 months following the Date
of Termination (or until Executive reaches age
65, if sooner), Reynolds shall either (x)
provide such substantially equivalent benefits, or such
additional benefits as may be necessary to make the benefits
applicable to Executive and Executive's family members
substantially equivalent to those in effect before the Date
of Termination, through other sources, or (y) provide
Executive with a lump sum payment in such amount that, after
all taxes on that amount are paid, shall be equal to the
cost to Executive of providing such benefit coverage for
Executive and Executive's eligible family members; provided
however, that if during such period Executive should enter
into the employ of another company or firm which provides
substantially similar benefit coverage for Executive and
Executive's eligible family members, Executive's
participation in the comparable benefit provided by Reynolds
either directly or through other sources shall cease.
Unless Executive and Executive's eligible family members are
covered through the plan of another employer, at the
termination of the health care benefits coverage described
in this Section 3(d), Executive and Executive's eligible
family members shall be entitled to convert such coverage to
an individual policy to the extent this conversion privilege
is available; if such an individual policy is not then
available, Executive and Executive's eligible family members
shall be entitled to continuation coverage pursuant to
Section 4980B of the Internal Revenue Code of 1986, as
amended (the "Code"), and under any other applicable law, to
the extent required by such laws, as if Executive had
terminated employment with Reynolds on the date such health
care benefits coverage terminates. The lump sum shall be
determined on a present value basis using the interest rate
provided in Section 1274(b)(2)(B) of the Code on the Date of
Termination. In addition, the "Rule of 90" age and service-
based premium requirement under the Reynolds Retiree Health
Care Plan shall be waived to the extent it would otherwise
apply to Executive. Nothing contained in this Section 3(d)
shall be deemed to require or permit termination or
restriction of Executive's coverage under any plan or
program of Reynolds or any successor plan or program thereto
to which Executive is entitled under the terms of such plan
or program, whether at the end of the aforementioned
36-month period or at any other time.
(e) Vehicle. Within five business days of
Termination, Reynolds shall transfer to Executive, free and
clear of any liens or encumbrances, the ownership of the
vehicle, if any, provided by Reynolds to Executive at the
Date of Termination. After transfer of ownership, Executive
shall be solely responsible for maintaining the vehicle.
(f) Other Benefit Plans and Perquisites. The specific
arrangements referred to in this Section 3 are not intended
to exclude
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Executive's participation in other benefit plans
or enjoyment of other perquisites which are available to
executive personnel generally in the class or category of
Executive or to preclude such other compensation or benefits
as may be authorized from time to time by the Board of
Directors of Reynolds or by its Compensation Committee;
provided however, that any payments hereunder shall be in
lieu of, and not in addition to, any amounts that would
otherwise be payable to Executive upon termination of
employment pursuant to Reynolds' Termination Allowance
Policy or any successor severance pay plan.
(g) Excise Taxes. If Executive becomes entitled to
payments ("CIC Payments") from Reynolds or any Successor (as
defined below) that are subject to the tax ("Excise Tax")
imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), Executive shall receive at
the time specified below an additional amount ("Gross-Up
Payment") such that the net amount retained by Executive,
after deduction of any Excise Tax on the CIC Payments and
any federal, state and local income tax and Excise Tax upon
the payment provided for by this Section 3(g), shall be
equal to the CIC Payments (net of any required payroll
withholding taxes on the CIC Payments themselves). For
purposes of determining whether any payments will be subject
to the Excise Tax and the amount of such Excise Tax, (i) any
payments or benefits received or to be received by Executive
in connection with a Change in Control or Executive's
Termination (whether pursuant to the terms of this Agreement
or under any other plan, arrangement or agreement with
Reynolds, with any person whose actions result in a Change
in Control, or with any person affiliated with Reynolds or
such person (all such persons other than Reynolds,
"Successors")) shall be treated as "parachute payments"
within the meaning of Section 280G(b)(2) of the Code, and
all "excess parachute payments" within the meaning of
Section 280G(b)(1) shall be treated as subject to the Excise
Tax, unless in the opinion of tax counsel selected by
Reynolds' independent auditors and acceptable to Executive
such other payments or benefits (in whole or in part) do not
constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable
compensation for services actually rendered within the
meaning of Section 280G(b)(4) of the Code in excess of the
base amount within the meaning of Section 280G(b)(3) of the
Code, or are otherwise not subject to the Excise Tax, (ii)
the amount of the payments which shall be treated as subject
to the Excise Tax shall be equal to the lesser of (A) the
total amount of the payments or (B) the amount of excess
parachute payments within the meaning of Section 280G(b)(1)
(after applying clause (i) above), and (iii) the value of
any non-cash benefits or any deferred payment or benefit
shall be determined by Reynolds' independent auditors in
accordance with the principles of Sections 280G(d)(3) and
(4) of the Code. For purposes of determining the amount of
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<PAGE> 11
the Gross-Up Payment, Executive shall be deemed to pay
federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at
the highest marginal rate of taxation in the state and
locality of Executive's residence on the Date of
Termination, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state
and local taxes.
If the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the Date of
Termination, Executive shall repay to Reynolds at the time
that the amount of such reduction in Excise Tax is finally
determined the portion of the Gross-Up Payment attributable
to such reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal and state and
local income tax imposed on the Gross-Up Payment being
repaid by Executive if such repayment results in a reduction
in Excise Tax and/or a federal and state and local income
tax reduction) plus interest received by Executive
attributable to any Excise Tax refund. If the Excise Tax is
determined to exceed the amount taken into account hereunder
at the Date of Termination (including by reason of any
payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), Reynolds
shall make an additional gross-up payment in respect of such
excess (plus any interest payable with respect to such
excess) at the time that the amount of such excess is
finally determined.
The Gross-Up Payment shall be made not later than the
fifth business day following the Date of Termination;
provided however, that if the amount of such payment cannot
be finally determined on or before such day, Reynolds shall
pay Executive on such day an estimate as determined in good
faith by Reynolds of the minimum amount of such payment and
shall pay the remainder of such payment (together with
interest at the rate provided in Section 1274(b)(2)(B) of
the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth day after the Date
of Termination. If the amount of the estimated payments
exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by Reynolds to Executive
payable on the fifth business day after demand by Reynolds
(together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
Anything herein to the contrary notwithstanding, any
Gross-Up Payment otherwise due to Executive hereunder shall
be reduced by the amount of any similar type of gross-up
payments already received by Executive from Reynolds or any
Successor outside this Agreement.
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<PAGE> 12
(h) No Duty to Mitigate. Executive's entitlement to
benefits hereunder shall not be governed by any duty to
mitigate Executive's damages by seeking further employment
nor offset by any compensation which Executive may receive
from future employment.
(i) Payment Obligations Absolute. Reynolds'
obligation to pay or cause to be paid to Executive the
benefits and to make the arrangements provided in this
Section 3 shall be absolute and unconditional and shall not
be affected by any circumstances, including without
limitation any breach or alleged breach of Section 5, any
setoff, counterclaim, recoupment, defense or any other right
which Reynolds may have against Executive or anyone else.
All amounts payable by or on behalf of Reynolds hereunder
shall be paid without notice or demand. Each and every
payment made hereunder by or on behalf of Reynolds shall be
final and Reynolds and its subsidiaries shall not, for any
reason whatsoever, seek to recover all or any part of such
payment from Executive or from whoever shall be entitled
thereto.
4. Conditions to the Obligations of Reynolds.
Reynolds shall have no obligation to provide or cause to be
provided to Executive the rights and benefits described in
Section 3 hereof if either of the following events shall occur:
(a) Termination for Cause. Reynolds shall terminate
Executive's employment for Cause. For purposes of this
Agreement, termination of employment for "Cause" shall mean
termination solely for conviction of a felony or willful
engagement in illegal conduct which is materially and
demonstrably injurious to Reynolds; provided however,
Executive may not be deemed terminated for Cause unless and
until Reynolds has delivered to Executive a copy of a
resolution duly adopted by the affirmative vote of not less
than three-quarters of the entire membership of the Board
finding that, in the Board's good faith opinion, Executive
is guilty of conduct defined as justifying termination for
Cause and specifying the particulars thereof in reasonable
detail.
(b) Resignation as Director and/or Officer.
Executive shall not, promptly after the Date of Termination
and upon receiving a written request to do so, resign as a
director and/or officer of Reynolds and of each subsidiary
and affiliate of Reynolds for which Executive is then
serving as a director and/or officer.
5. Confidentiality; Non-Solicitation; Cooperation;
Consultancy.
(a) Confidentiality. Executive agrees that at all
times following Termination, Executive shall not, without the
prior written consent of Reynolds, disclose to any person, firm
or corporation any confidential information of
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<PAGE> 13
Reynolds or its subsidiaries which is now known to Executive
or which hereafter may become known to Executive as a
result of Executive's employment or association with
Reynolds and which is helpful to a competitor in any
material respect; provided however, that the foregoing
shall not apply to confidential information which
becomes publicly disseminated by means other than a breach of
this Agreement
(b) Non-Solicitation. Executive agrees that for a
period of three years following the Date of Termination (or until
Executive reaches age 65, whichever is sooner) Executive shall
not induce or attempt to induce, either directly or indirectly,
any management or executive employee of Reynolds or of any of its
subsidiaries to terminate such employee's employment.
(c) Cooperation. Executive agrees that, at all times
following Termination, Executive shall furnish such information
and render such assistance and cooperation as may reasonably be
requested in connection with any litigation or legal proceedings
concerning Reynolds or any of its subsidiaries (other than any
legal proceedings concerning Executive's employment). In
connection with such cooperation, Reynolds shall pay or reimburse
Executive for reasonable expenses actually incurred.
(d) Consultation. Executive agrees that for a period
of 36 months following the Date of Termination (or until
Executive reaches age 65, if sooner), Executive shall be
available to Reynolds and its subsidiaries for consultation with
senior officers of Reynolds and of its subsidiaries; provided
however, that Executive shall not be required to perform such
consulting services (i) for more than five days in any month and
(ii) for more than 30 hours in any month. It is expressly agreed
that Executive's consulting services will be required at such
time and such places as will result in the least inconvenience to
Executive, taking into consideration Executive's other business
commitments during such period which may obligate Executive to
honor such other commitments prior to Executive's rendering
services hereunder. It is further agreed that Executive's
consulting services shall be rendered by personal consultation at
Executive's principal residence or office, wherever maintained,
or by correspondence through mail, telephone, facsimile,
electronic mail or other similar modes of communication at times,
including weekends and evenings, most convenient to Executive.
Reynolds and Executive agree that if during such period Executive
should engage in full-time employment, Executive shall not be
required to consult at times that will conflict with Executive's
responsibilities with respect to such employment or if
Executive's employer denies Executive permission to act as a
consultant. In connection with such consulting services,
Reynolds shall pay or reimburse Executive for reasonable expenses
actually incurred.
(e) Remedies for Breach. It is recognized that
damages in the event of breach of paragraphs (a) and (b) of this
Section 5 by Executive would be
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<PAGE> 14
difficult, if not impossible, to ascertain, and it is
therefore agreed that Reynolds, in addition to and
without limiting any other remedy or right it may have,
shall have the right to an injunction or other equitable relief
in any court of competent jurisdiction, enjoining any such
breach. The existence of this right shall not preclude Reynolds
from pursuing any other rights and remedies at law or in equity
which Reynolds may have.
6. Term of Agreement. The term of this Agreement
shall become effective upon the execution hereof by Reynolds and
shall continue unless terminated by written agreement between
Executive and Reynolds. No benefits shall be payable hereunder
unless there has been a Change ofin Control before termination of
Executive's employment.
7. Suits, Actions, Proceedings and Expenses.
(a) Executive's compensation during any disagreement,
dispute, controversy, claim, suit, action or proceeding
(collectively, a "Dispute"), arising out of or relating to this
Agreement or the interpretation of this Agreement shall be as
follows. If there is a Termination followed by a Dispute as to
whether Executive is entitled to the payments and other benefits
provided under this Agreement, then, during the period of that
Dispute:
(i) Reynolds shall pay Executive fifty
percent (50%) of the amounts specified in Sections
3(a), 3(b) and 3(c) that are in Dispute;
(ii) Reynolds shall provide Executive with
the other benefits provided in Sections 3(d), 3(e),
3(f) and 3(g) of this Agreement; and
(iii) Reynolds shall pay Executive one
hundred percent (100%) of the amounts specified in
Sections 3(a), 3(b) and 3(c) that are not in Dispute;
provided however, if the Dispute is resolved against Executive,
Executive shall promptly refund to Reynolds all payments
Executive receives under Section 7(a)(i) of this Agreement, plus
interest at the rate provided in Section 1274(d)(b)(2)(B) of the
Code, compounded quarterly. If the Dispute is resolved in
Executive's favor, promptly after resolution of the Dispute,
Reynolds shall pay to Executive the sum that was withheld during
the period of the Dispute plus interest at the rate provided in
Section 1274(d)(b)(2)(B) of the Code, compounded quarterly.
(b) Reynolds shall pay to Executive all legal fees and
expenses incurred by Executive in connection with any Dispute
arising out of or relating to
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<PAGE> 15
this Agreement or the interpretation thereof
(including, without limitation, all such fees and expenses,
if any, (A) arising out of, or challenging the validity
or enforceability of, this Agreement or any provision
hereof, (B) incurred in contesting or disputing any termination
of Executive's employment, (C) seeking to obtain or enforce any
right or benefit provided by this Agreement, or (D) in connection
with any tax audit or proceeding to the extent attributable to
the application of Section 4999 of the Code to any payment or
benefit provided hereunder).
(c) If a Dispute arises out of or relates to this
Agreement or the interpretation of this Agreement, Executive
shall be entitled to an adjudication of the Dispute in the courts
of the United States of America located in the City of Richmond,
Virginia, and/or of the courts of the Commonwealth of Virginia in
the City of Richmond, Virginia or, at Executive's option, in
Chesterfield, Goochland, Hanover or Henrico Counties, and
Reynolds irrevocably and unconditionally consents to submit to
the exclusive jurisdiction of such courts for any Dispute.
Reynolds further agrees not to commence any action, suit or
proceeding relating thereto except in such courts. Reynolds and
Executive hereby irrevocably and unconditionally waive any
objection to the laying of venue of any action, suit or
proceeding arising out of this Agreement or the transactions
contemplated hereby in the courts of the United States of America
located in the City of Richmond, Virginia, and in the courts of
the Commonwealth of Virginia, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such
court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
(d) Alternatively, Executive, at Executive's option,
may seek an award in arbitration, in which event, Reynolds shall
appoint as the sole and exclusive arbiter of such Dispute a
committee of three members of the Board immediately before the
Change in Control, who are not directors of Reynolds or its
affiliates at the time of such Dispute. The decision of such
committee and the award of any monetary judgment or other relief
by such committee shall be final and binding upon Executive and
Reynolds and shall not be subject to appeal. Judgment may be
entered upon the decision and award of such committee by
Executive or Reynolds in any court of competent jurisdiction.
Reynolds shall pay the persons selected pursuant to this Section
7(c) a reasonable fee for their services, and shall reimburse
such persons for their expenses in this capacity. In addition,
Reynolds shall, to the maximum extent permitted by law, indemnify
and hold harmless such persons of and from any and all claims,
damages or expenses of any nature whatsoever relating to or
arising from their activities in this capacity. If Reynolds is
unable to appoint the committee referred to above after good
faith efforts to do so, or if such committee cannot reach
agreement, any remaining Dispute shall be settled, at Executive's
option, either by adjudication on the terms set forth above, or
by arbitration in the City of
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<PAGE> 16
Richmond in accordance with the commercial arbitration
rules then in effect of the American Arbitration
Association, before a panel of three arbitrators, two
of whom shall be selected by Reynolds and Executive,
respectively, and the third of whom shall be selected by the
other two arbitrators. Any award entered by the arbitrators
shall be final, binding and nonappealable and judgment may be
entered thereon by any party in accordance with applicable law in
any court of competent jurisdiction.
8. Successors; Binding Agreement.
(a) This Agreement shall inure to the benefit of and
be binding upon Reynolds and its successors and assigns.
Reynolds shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Reynolds to
expressly assume and agree to perform this Agreement. Failure of
Reynolds to obtain such assumption and agreement prior to a
Change in Control shall be a breach of this Agreement and shall
entitle Executive to terminate Executive's employment pursuant to
Section 2(b)(vii).
(b) This Agreement shall inure to the benefit of and
be enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amount
would still be payable hereunder if Executive had continued to
live, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement to
Executive's devisee, legatee or other designee or, if there is no
such designee, Executive's estate.
9. Miscellaneous.
(a) Assignment. No right, benefit or interest
hereunder shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or
charge, except by will or the laws of descent and distribution,
and any attempt thereat shall be void; and no right, benefit or
interest hereunder shall, prior to receipt of payment, be in any
manner liable for or subject to the recipient's debts, contracts,
liabilities, engagements or torts; provided however, that
Executive may assign any right, benefit or interest hereunder if
such assignment is permitted under the terms of any plan or
policy of insurance or annuity contract governing such right,
benefit or interest.
(b) Construction of Agreement. This Agreement is not,
and nothing herein shall be deemed to create, a commitment of
continued employment of Executive by Reynolds or by any of its
subsidiaries.
(c) Statutory References. Any reference in this
Agreement to a specific statutory provision shall include that
provision and any comparable
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<PAGE> 17
provision or provisions of future legislation amending,
modifying, supplementing or superseding the referenced provision.
(d) Amendment. This Agreement may not be amended,
modified or terminated except by written agreement of both
parties. Anything in this Agreement to the contrary
notwithstanding, at any time before a Change in Control occurs,
Executive shall, at Reynolds' written request enter into an
amendment to this Agreement to change the percentage referred to
in Section 2(c)(i) to a percentage that is not more than 25%, so
long as such change is consistent with a contemporaneous change
of a similar nature in the Rights Agreement.
(e) Waiver. No provision of this Agreement may be
waived except by a writing signed by the party to be bound
thereby. Executive may at any time or from time to time waive any
or all of the rights and benefits provided for herein which have
not been received by Executive at the time of such waiver. In
addition, prior to the last day of the calendar year in which
Executive's Termination occurs, Executive may waive any or all
rights and benefits provided for herein which have been received
by Executive; provided that Executive repays to Reynolds (or, if
the benefit was received from an employee benefit plan, to such
plan) the amount of the benefit received (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code). Any
waiver of benefits pursuant to this section shall be irrevocable.
(f) Severability. If any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for
any reason, the remaining provisions of this Agreement shall
remain in full force and effect to the fullest extent permitted
by law.
(g) Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be considered an
original and all of which together shall constitute one
agreement.
(h) Number and Gender. All words used in this
Agreement shall be construed to be of such number or gender as
the circumstances require.
(i) Taxes. Any payment or delivery required under
this Agreement shall be subject to all requirements of the law
with regard to withholding of taxes, filing, making of reports
and the like, and Reynolds shall use its best efforts to satisfy
promptly all such requirements.
(j) Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of
Delaware.
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<PAGE> 18
(k) Entire Agreement. This Agreement sets forth the
entire agreement of the parties hereto in respect of the subject
matter contained herein and supersedes all other prior
agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any
prior agreement of the parties hereto in respect of the subject
matter contained herein, including, without limitation, any prior
severance agreement, is hereby terminated and canceled; provided
however, except as specifically provided in Section 3(f)
regarding Reynolds' Termination Allowance Policy, any of
Executive's rights hereunder shall be in addition to any rights
Executive may otherwise have under benefit plans or agreements of
Reynolds to which Executive is a party or in which Executive is a
participant, including, but not limited to, any Reynolds'
sponsored employee benefit plans, long term share performance or
other long term incentive plans and stock option plans.
Provisions of this Agreement shall not in any way abrogate
Executive's rights under such other plans or agreements.
(l) Notice. All notices required or permitted to be
given under this Agreement shall be given in writing or other
permanently recorded form to the parties at the addresses set
forth below, or to such other address(es) as may be provided by
notice given in accordance with this Section 9(l):
If to Reynolds, to:
Reynolds Metals Company
Attention: Corporate Secretary
6601 West Broad Street
Richmond, Virginia 23230
Facsimile Number: 804-281-3740
If to Executive, to the address set forth below
Executive's signature line, or if no address appears at the
signature line, at the last known home address of Executive in
Reynolds' records.
A notice shall be deemed to have been duly given
(1) if delivered by hand or courier, on the date of
delivery;
(2) if sent by United States mail, 7 days after
posting;
(3) if sent by facsimile, on production of a
transmission report by the machine from which the facsimile
was sent which indicates that the facsimile was sent in its
entirety to the facsimile number of its recipient.
Facsimile notices shall be confirmed by sending the
original document by hand, courier or United States mail.
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<PAGE> 19
Each of the parties has therefore caused this Agreement to
be duly executed as of the 16th day of April, 1999.
REYNOLDS METALS COMPANY
By_______________________________
Title: Chairman of the Board and
Chief Executive Officer
EXECUTIVE
_________________________________
[Name]
Address: [Address1]
[Address2]
EXHIBIT 10.17
REYNOLDS METALS COMPANY
RESTRICTED STOCK PLAN FOR OUTSIDE DIRECTORS
As Amended and Restated
Effective March 8, 1999
<PAGE> 1
ARTICLE I
PURPOSE OF THE PLAN
The purposes of the Plan are to promote a greater
identity of interests between the Company's Directors and its
stockholders through increasing ownership of Company Stock by the
Directors and to assist the Company in attracting and retaining
qualified individuals to serve as Directors by affording them an
opportunity to share in the future successes of the Company.
ARTICLE II
DEFINITIONS
2.01 "Beneficiary" shall mean the individual or entity
designated by the Director to receive, upon the death of the
Director, undelivered shares of Restricted Stock as to which the
applicable restrictions have expired. If no such designation is
made, or if the designated individual predeceases the Director or
the entity no longer exists, then the Beneficiary shall be the
Director's estate.
2.02 "Board" shall mean the Board of Directors of the
Company.
2.03 "Company" shall mean Reynolds Metals Company, a
Delaware corporation.
2.04 "Company Stock" shall mean the Common Stock of
the Company, without par value, and such other stock and
securities as may be substituted therefor in accordance with
Section 5.02.
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<PAGE> 2
2.05 "Director" shall mean a member of the Board who
is not an employee of the Company or of one of its subsidiaries.
2.06 "Effective Date" shall mean April 20, 1994.
2.07 "Plan" shall mean this Reynolds Metals Company
Restricted Stock Plan for Outside Directors, as amended from time
to time.
2.08 "Restricted Stock" shall mean Company Stock
granted to a Director in accordance with Article III and subject
to the restrictions set forth in Section 4.03.
ARTICLE III
GRANTS OF RESTRICTED STOCK
3.01 On June 1, 1994, each Director elected to office
by the stockholders of the Company on April 20, 1994, shall
receive a grant of 1,000 shares of Restricted Stock. Except as
otherwise provided in Section 3.02, each individual who becomes a
Director after April 20, 1994, shall receive a grant of 1,000
shares of Restricted Stock 60 days after the date the individual
is first elected to the Board, whether by the Board or by
stockholders.
3.02 If an employee of the Company or of one of its
subsidiaries retires from employment with the Company or its
subsidiary, as applicable, and if such former employee is elected
to serve as a Director following retirement, then such former
employee shall become eligible to participate in the Plan and
shall receive a grant of 1,000 shares of Restricted Stock 60 days
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<PAGE> 3
after the date on which he or she is first elected or reelected
to the Board following his or her retirement.
ARTICLE IV
TERMS AND CONDITIONS OF GRANTS
4.01 The terms and conditions set forth in this
Article IV shall apply to each grant of shares of Restricted
Stock. Grants of Restricted Stock shall be made without payment
of a purchase price. If required by the Company, each such grant
shall be evidenced by a written agreement that sets forth the
specific terms of the grant in accordance with the Plan and that
is duly executed by or on behalf of the Company and the Director.
4.02 At the time of each grant, a share certificate or
certificates representing the number of shares of Restricted
Stock granted to a Director shall be registered in the Director's
name but shall be held by or on behalf of the Company for the
Director's account. The Director shall execute and deliver to
the Company a stock power duly endorsed in blank relating to such
shares of Restricted Stock. The Director shall have all the
rights and privileges of a stockholder as to such shares of
Restricted Stock, including the right to receive dividends and
the right to vote such shares, subject to the restrictions set
forth in Section 4.03.
4.03 The shares of Restricted Stock granted to any
Director under Article III shall be subject to the following
restrictions:
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<PAGE> 4
(a) Such shares may not be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of
until such time as such restrictions have expired as to such
shares as provided in Section 4.04.
(b) A Director shall not be entitled to delivery of a
share certificate representing any shares of Restricted
Stock until the expiration of such restrictions as to such
shares.
4.04 (a) Except as otherwise provided in Section
4.04(b), the restrictions applicable to shares of Restricted
Stock covered by any grant to any Director shall expire in
accordance with the terms of this Section 4.04(a). Restrictions
shall expire as to 200 shares of Restricted Stock on the later of
(i) the April 1 immediately following the date of grant or (ii)
the date that is the six-month anniversary of the date of grant,
and restrictions shall expire as to an additional 200 shares on
each successive April 1, so that by the fifth April 1 following
the date of grant, restrictions on all 1,000 shares shall have
expired; provided, however, that restrictions shall expire as to
shares of Restricted Stock only if the Director shall have
remained a member of the Board continuously from the date of
grant of such shares to the scheduled expiration date.
(b) If a Director ceases to be a member of the Board
because of death or Disability, the restrictions on 200 shares of
Restricted Stock shall expire as of the later of (i) the date the
Director ceases to be a member of the Board or (ii) the date that
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<PAGE> 5
is the six-month anniversary of the date of grant. Such 200
shares shall be in addition to any shares as to which the
restrictions have expired in accordance with the second sentence
of Section 4.04(a).
For purposes of this Section 4.04(b), the term
"Disability" shall have the same meaning as a "total disability"
as determined under the rules and procedures that apply under the
Company's Long Term Disability Plan for Salaried Employees.
4.05 All of the shares of Restricted Stock granted to
any Director as to which the restrictions have not previously
expired shall be forfeited immediately, and all rights of such
Director to such shares shall terminate without further
obligation on the part of the Company, if the Director shall
cease to be a member of the Board for any reason other than as
set forth in Section 4.04(b).
4.06 As soon as practicable after the expiration of
the restrictions on any shares of Restricted Stock as herein
provided, a share certificate for such shares shall be delivered,
free of all such restrictions, to the Director (or to the
Director's Beneficiary, if applicable) subject to the withholding
requirements of Section 7.04 (if applicable).
ARTICLE V
COMPANY STOCK
5.01 Shares of Company Stock granted or delivered
under the Plan may be authorized but unissued shares, shares
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<PAGE> 6
reacquired by the Company, or a combination of both, as the Board
may from time to time determine. Shares of Company Stock granted
under the Plan but subsequently forfeited shall continue to be
otherwise available for the purposes of the Plan.
5.02 If any stock dividend is declared upon Company
Stock, or if there is any stock split, stock distribution, or
other recapitalization of the Company with respect to Company
Stock, resulting in a split-up or combination or exchange of
shares, or if any special distribution is made to holders of
Company Stock, the number and kind of shares which may thereafter
be granted under the Plan shall be proportionately and
appropriately adjusted and the number and kind of shares then
being held by the Company as Restricted Stock shall be
proportionately and appropriately adjusted. Any new or
additional shares of Restricted Stock, or stock or other
securities substituted therefor, to which a Director may be
entitled under this Section 5.02 shall be subject to all of the
terms and conditions of Article IV.
ARTICLE VI
AMENDMENT, SUSPENSION AND TERMINATION OF THE PLAN
The Board may from time to time amend, suspend or
terminate the Plan, in whole or in part; provided, however, that
(a) without the Director's consent, no such amendment, suspension
or termination shall materially adversely affect the rights of
any Director in respect of Restricted Stock previously granted to
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<PAGE> 7
such Director and (b) the provisions of the Plan with respect to
individuals eligible to participate and the amount, price and
timing of grants hereunder shall not be amended more than once
every six months other than to comport with changes in the
Internal Revenue Code, the Employee Retirement Income Security
Act, or the rules thereunder. Notwithstanding the foregoing, the
Board may, in any circumstance where it deems such approval
necessary or desirable, and shall, to the extent necessary to
maintain compliance with Rule 16b-3 under the Securities Exchange
Act of 1934 as in effect from time to time, require stockholder
approval as a condition to the effectiveness of any amendment or
modification of the Plan. Anything herein to the contrary
notwithstanding, at any time before a Change in Control (as
defined in Section 8.02) occurs, the Board may amend Section
8.02(a) to change the percentage referred to therein to a
percentage that is not more than 25%, so long as such change is
consistent with contemporaneous change of a similar nature in the
Rights Agreement (as defined in Section 8.02(f)(C)).
ARTICLE VII
GENERAL PROVISIONS
7.01 Neither the establishment of the Plan nor the
payment of any benefits hereunder nor any action of the Company,
including the Board, in connection therewith shall be held or
construed to confer upon any individual any legal right to remain
on the Board.
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<PAGE> 8
7.02 No rights or benefits under the Plan shall be
subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, except by
will or the laws of descent and distribution, and any attempt
thereat shall be void. No such right or benefit shall, before
receipt thereof, be in any manner liable for or subject to the
recipient's debts, contracts, liabilities, engagements, or torts.
7.03 This Plan shall inure to the benefit of, and be
binding upon, the Company and each Director, and upon the
successors and assigns of the Company and of each Director.
7.04 The Company shall not be required to deliver any
fractional share of Common Stock but shall pay, in lieu thereof,
the fair market value (measured as of the date restrictions
lapse) of such fractional share to the Director (or the
Director's Beneficiary, if applicable).
7.05 Before the issuance or delivery of any shares of
Restricted Stock on which the restrictions have expired, the
Company shall require payment in cash by the Director of any
withholding taxes that the Company may be required by law to pay
with respect to the issuance or delivery of such shares.
7.06 Except as otherwise required by applicable
federal laws, this Plan shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Virginia.
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<PAGE> 9
ARTICLE VIII
CHANGE IN CONTROL PROVISIONS
8.01 Anything herein to the contrary notwithstanding,
if at any time a Change in Control (as defined in Section 8.02
below) occurs, then the restrictions on 200 shares of Restricted
Stock shall expire as of the date of the Change in Control. Such
200 shares shall be in addition to any shares as to which the
restrictions have expired in accordance with the second sentence
of Section 4.04(a). As soon as practicable following a Change in
Control, a share certificate for such 200 shares shall be
delivered in accordance with the provisions of Section 4.06.
8.02 For purposes of this Article VIII, "Change in
Control" shall mean the occurrence of any of the following:
(a) Any Person (as defined below) becomes the
Beneficial Owner (as defined below), directly or indirectly,
of 15% or more of the Company's common stock, unless such
Person (A) is not deemed an "Acquiring Person" in accordance
with Section 1(a) of the Rights Agreement (as defined
below), or (B) became a Beneficial Owner of 15% or more of
the Company's common stock in a transaction that did not
constitute a Change in Control under Section 8.02(c) hereof;
(b) During any period of two consecutive years,
individuals who at the beginning of such period constitute
the Board, and any new director (other than a director
designated by a person who has entered into an agreement
with the Company to effect a transaction described in
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<PAGE> 10
Section 8.02(a), (c) or (d)) whose election by the Board or
nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute a least a majority of the members of the Board;
(c) The effective date of a merger or consolidation of
the Company or any of its subsidiaries with any other
entity, other than a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately before such merger or consolidation continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or
of any other corporation or entity that as a result of such
transaction owns the Company or all or substantially all of
the Company's assets, either directly or through one or more
subsidiaries (the "parent entity")) more than 51% of the
combined voting power of the voting securities of the parent
or surviving entity outstanding immediately after such
merger or consolidation and with the power to elect at least
a majority of the board of directors or other governing body
of such parent or surviving entity;
(d) The approval by the shareholders of the Company of
a complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or
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<PAGE> 11
substantially all of the Company's assets; and
(e) There occurs any other event of a nature that
would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or in response to any
similar item on any similar schedule or form) under the 1934
Act (as defined below), whether or not the Company is then
subject to such reporting requirement.
(f) For purposes of this Section 8.02, the following
terms shall have the following meanings:
(A) "Person" shall have the meaning as set forth
in Sections 13(d) and 14(d) of the 1934 Act; provided,
however, that Person shall exclude (i) the Company,
(ii) any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, and
(iii) any corporation owned, directly or indirectly, by
the shareholders of the Company in substantially the
same proportions as their ownership of stock of the
Company.
(B) "Beneficial Owner" shall have the meaning
given to such term in Rule 13d-3 under the 1934 Act;
provided, however, that Beneficial Owner shall exclude
any Person otherwise becoming a Beneficial Owner by
reason of the shareholders of the Company approving a
merger of the Company with another entity.
(C) "Rights Agreement" shall mean the Amended and
Restated Rights Agreement dated as of March 8, 1999
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<PAGE> 12
between the Company and ChaseMellon Shareholder
Services, L.L.C., as initially in effect.
(D) "1934 Act" means the Securities Exchange Act
of 1934, as amended.
Executed and adopted this 28 day of April, 1999,
pursuant to action taken by the Board of Directors of Reynolds
Metals Company at its meeting on March 8, 1999.
REYNOLDS METALS COMPANY
By: /s/ D. Michael Jones
___________________________
Title: Senior Vice President
And General Counsel
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EXHIBIT 10.18
REYNOLDS METALS COMPANY
NEW MANAGEMENT INCENTIVE DEFERRAL PLAN
As Amended and Restated
Effective March 8, 1999
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ARTICLE I
PURPOSE OF THE PLAN
The purpose of the Plan is to assist the Company in
attracting and retaining key employees by providing an
opportunity for deferred taxation and capital accumulation.
ARTICLE II
DEFINITIONS
2.01 "Additional Income" shall have the meaning
specified in Section 4.01.
2.02 "Beneficiary" shall mean the individual or entity
designated by the Participant to receive any amounts remaining in
the Plan upon the Participant's death. If no such designation is
made, or if the designated individual predeceases the Participant
or the entity no longer exists, then the Beneficiary shall be the
Participant's estate.
2.03 "Company" shall mean Reynolds Metals Company, a
Delaware corporation.
2.04 "Current Compensation" shall mean that portion of
Incentive Compensation which the Participant accepts immediately
in return for services performed for the Company.
2.05 "Deferred Compensation" shall mean that portion of
Incentive Compensation which the Participant elects to defer in
the manner provided for herein, until the time or times selected
for payment in accordance with Section 4.02.
2.06 "Deferral Termination Date" shall mean one of the
following dates, as elected by the Participant: (a) the date on
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which the Participant is retired and entitled to an immediate
benefit under the New Retirement Program or (b) the last day of
such specified calendar year as the Participant shall elect;
provided, however, that the year specified in any election under
(b) must be at least five (5) years from the year during which
the Incentive Compensation subject to the deferral is earned; and
further provided, that regardless of any election made under (b),
a Participant's actual Deferral Termination Date shall in no
event be later than the date on which the Participant is actually
retired and entitled to an immediate benefit under the New
Retirement Program.
2.07 "Effective Date" shall mean September 1, 1994.
2.08 "Eligible Employee" shall mean such officers and
other key employees of the Company and its subsidiaries who are
recommended by the Chief Executive Officer of the Company each
year as eligible to defer Incentive Compensation hereunder.
2.09 "Incentive Compensation" shall mean the cash
incentive payable to Eligible Employees under the Company's
Performance Incentive Plan and/or its Supplemental Incentive
Plan.
2.10 "New Retirement Program" shall mean the Company's
New Retirement Program for Salaried Employees, as amended from
time to time.
2.11 "Participant" shall mean an Eligible Employee who
submits a written request pursuant to the terms of this Plan for
deferral of Incentive Compensation.
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2.12 "Performance Incentive Plan" shall mean the
Reynolds Metals Company Performance Incentive Plan, as amended
from time to time.
2.13 "Plan" shall mean this Reynolds Metals Company New
Management Incentive Deferral Plan.
2.14 "Plan Committee" shall mean the committee
appointed by the Board of Directors of the Company to administer
the Plan.
ARTICLE III
ELECTIONS TO DEFER INCENTIVE COMPENSATION
3.01 Each calendar year during the term of the Plan,
each Eligible Employee, whether or not then a Participant, shall
have the right to elect to defer the receipt of up to 85% of the
Incentive Compensation to be earned by such Eligible Employee in
respect of such calendar year. At the election of the Eligible
Employee, the amount deferred may be expressed (a) as a
percentage of Incentive Compensation, in multiples of 5%, (b) as
a dollar amount, in multiples of $100, or (c) as either a
percentage of the amount or a dollar amount, in each case, in
excess of a floor amount specified by the Eligible Employee. In
no case, however, may the total amount deferred be less than
$2,000 nor more than 85% of the Eligible Employee's Incentive
Compensation for the year. At the same time a deferral election
is made under this Section 3.01, the Eligible Employee shall also
elect the Deferral Termination Date applicable to such Deferred
Compensation, as provided in Section 2.06, and the method of
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payment of such Deferred Compensation, as provided in Section
4.02.
3.02 With respect to Incentive Compensation earned for
any year, the elections referred to in Section 3.01 must be made
during September of such year unless another time period is
specified by the Plan Committee.
3.03 The elections referred to in Section 3.01 shall be
irrevocable as to the Incentive Compensation to which such
elections apply, except as otherwise provided herein.
ARTICLE IV
PAYMENT OF DEFERRED COMPENSATION
4.01 All Deferred Compensation shall be increased by an
amount of additional income (hereinafter referred to as
"Additional Income") computed at a specified rate and compounded
annually on December 31st from the date the Incentive
Compensation would have been paid if it were Current Compensation
through the December 31st immediately preceding the date of each
payment. Each calendar year, before elections are made with
regard to Incentive Compensation to be earned in respect of such
calendar year, the Plan Committee shall determine the rate
applicable to Incentive Compensation deferred for that year.
This rate shall apply to amounts deferred for that year until all
such amounts are paid out. Deferred Compensation and any
applicable Additional Income shall be paid in cash following the
applicable Deferral Termination Date in accordance with the
provisions of Section 4.02.
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4.02 A Participant's Deferred Compensation and
Additional Income shall be paid to such Participant in a single
lump sum payment or in annual installments over a period of five
(5) or ten (10) years, as elected by the Participant, following
the applicable Deferral Termination Date. Such election as to
payment period shall be made by the Participant at the same time
as the election of the Deferral Termination Date in accordance
with Article III of this Plan. Lump sum payments shall be paid
as soon as administratively feasible in the January following the
year in which the Deferral Termination Date occurs. Annual
installments, which shall be in equal amounts and shall consist
of Deferred Compensation and the Additional Income applicable
thereto, shall be paid as soon as administratively feasible each
January of each calendar year following the year in which the
Deferral Termination Date occurs.
4.03 If a Participant's employment with the Company and
its subsidiaries terminates at a time when the Participant is not
entitled to an immediate benefit under the New Retirement
Program, or if the Participant becomes disabled for purposes of
the New Retirement Program, or if the Participant dies, any
remaining unpaid portion of such Participant's Deferred
Compensation and Additional Income shall be accelerated and paid
to the Participant (or to the Participant's Beneficiary, as the
case may be) in a single lump sum as soon as administratively
feasible in the January following the year in which the
Participant's termination, disability or death occurs.
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4.04 (a) Upon receipt of a written request from a
Participant (or if the Participant is not competent to manage his
affairs, from a Participant's legal representative), the Plan
Committee may direct that all or any part of the undelivered
portion of Deferred Compensation (together with the Additional
Income applicable thereto) be accelerated and paid in a lump sum
if it finds, in its sole discretion, that the Participant has
incurred a substantial unforeseen hardship. For purposes of this
subsection (a), a substantial unforeseen hardship is a severe
financial hardship resulting from extraordinary and unforeseeable
circumstances arising as a result of one or more recent events
beyond the control of the Participant. In no event, however, may
accelerated payments be made to the extent such hardship is or
may be relieved (i) through reimbursement or compensation by
insurance or otherwise, (ii) by liquidation of the Participant's
assets, to the extent the liquidation of such assets would not
itself cause severe hardship, or (iii) by cessation of deferrals
under the Plan. Acceleration of payments because of a
substantial unforeseen hardship may only be permitted to the
extent reasonably necessary to satisfy the hardship.
(b) The Plan Committee may direct that all unpaid
Deferred Compensation (together with the Additional Income
applicable thereto) be accelerated and paid in a lump sum if, in
conjunction with the termination of the Plan, the Plan Committee
finds, in its sole discretion, that extraordinary circumstances
make such acceleration of payments in the best interest of the
Company.
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(c) Subsections (a) and (b) above shall apply both to
Incentive Compensation deferred in previous years and to
Incentive Compensation being deferred during the year in which
the acceleration of payments is approved, except that no Deferred
Compensation shall be paid out prior to the date such Deferred
Compensation would be payable if it were Current Compensation.
4.05 (a) Anything herein to the contrary
notwithstanding, if at any time a Change in Control (as defined
below) occurs, then all unpaid Deferred Compensation (together
with the Additional Income applicable thereto) shall be
accelerated and paid out to each Participant in a single lump sum
within ten (10) days of the date of such Change in Control, with
Additional Income for this purpose computed through the date of
the Change in Control. This provision shall apply both to
Incentive Compensation deferred in previous years and to
Incentive Compensation being deferred during the year in which
the Change in Control occurs, except that no Incentive
Compensation shall be paid out prior to the date such Incentive
Compensation would be payable if it were Current Compensation.
After the Change in Control, no further amounts shall be deferred
hereunder for the remainder of the year.
(b) For purposes of this Section 4.05, "Change in
Control" shall mean the occurrence of any of the following:
(i) Any Person (as defined below) becomes the
Beneficial Owner (as defined below), directly or indirectly,
of 15% or more of the Company's common stock, unless such
Person (A) is not deemed an "Acquiring Person" in accordance
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with Section 1(a) of the Rights Agreement (as defined
below), or (B) became a Beneficial Owner of 15% or more of
the Company's common stock in a transaction that did not
constitute a Change in Control under Section 4.05(b)(iii)
hereof;
(ii) During any period of two consecutive years,
individuals who at the beginning of such period constitute
the Board (as defined below), and any new director (other
than a director designated by a person who has entered into
an agreement with the Company to effect a transaction
described in Section 4.05(b)(i), (iii) or (iv)) whose
election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least
two-thirds of the directors then still in office who either
were directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute a least a
majority of the members of the Board;
(iii) The effective date of a merger or
consolidation of the Company or any of its subsidiaries with
any other entity, other than a merger or consolidation which
would result in the voting securities of the Company
outstanding immediately before such merger or consolidation
continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving
entity or of any other corporation or entity that as a
result of such transaction owns the Company or all or
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substantially all of the Company's assets, either directly
or through one or more subsidiaries (the "parent entity"))
more than 51% of the combined voting power of the voting
securities of the parent or surviving entity outstanding
immediately after such merger or consolidation and with the
power to elect at least a majority of the board of directors
or other governing body of such parent or surviving entity;
(iv) The approval by the shareholders of the
Company of a complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets; and
(v) There occurs any other event of a nature that
would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or in response to any
similar item on any similar schedule or form) under the 1934
Act (as defined below), whether or not the Company is then
subject to such reporting requirement.
(vi) For purposes of this Section 4.05(b), the
following terms shall have the following meanings:
(A) "Person" shall have the meaning as set
forth in Sections 13(d) and 14(d) of the 1934 Act;
provided, however, that Person shall exclude (i)
the Company, (ii) any trustee or other fiduciary
holding securities under an employee benefit plan
of the Company, and (iii) any corporation owned,
directly or indirectly, by the shareholders of the
Company in substantially the same proportions as
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their ownership of stock of the Company.
(B) "Beneficial Owner" shall have the
meaning given to such term in Rule 13d-3 under the
1934 Act; provided, however, that Beneficial Owner
shall exclude any Person otherwise becoming a
Beneficial Owner by reason of the shareholders of
the Company approving a merger of the Company with
another entity.
(C) "Rights Agreement" shall mean the
Amended and Restated Rights Agreement dated as of
March 8, 1999 between the Company and ChaseMellon
Shareholder Services, L.L.C., as initially in
effect.
(D) "1934 Act" means the Securities Exchange
Act of 1934, as amended.
(E) "Board" means the Board of Directors of
the Company.
ARTICLE V
ADMINISTRATION
The Plan Committee shall have full responsibility and
authority to interpret and administer the Plan, including the
power to promulgate rules of Plan administration, the power to
settle any disputes as to rights or benefits arising from the
Plan, the power to appoint agents and delegate its duties, and
the power to make such decisions or take such actions as the Plan
Committee, in its sole discretion, deems necessary or advisable
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to aid in the proper administration of the Plan. Actions and
determinations by the Plan Committee shall be final, binding and
conclusive for all purposes of this Plan.
ARTICLE VI
AMENDMENT, SUSPENSION AND TERMINATION OF THE PLAN
The Board of Directors of the Company may from time to
time amend, suspend or terminate the Plan, in whole or in part,
except that no such amendment, suspension or termination shall
materially adversely affect the rights of any Participant in
respect of Deferred Compensation previously earned by such
Participant and not yet paid. Anything in the Plan to the
contrary notwithstanding, at any time before a Change in Control
(as defined in Section 4.05(b)) occurs, the Board may amend
Section 4.05(b)(i) to change the percentage referred to therein
to a percentage that is not more than 25%, so long as such change
is consistent with contemporaneous change of a similar nature in
the Rights Agreement (as defined in Section 4.05(b)(vi)(C)).
ARTICLE VII
FUNDING
No promises under this Plan shall be secured by any
specific assets of the Company, nor shall any assets of the
Company be designated as attributable or allocated to the
satisfaction of such promises. Benefit payments shall be made
from the Company's general assets.
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ARTICLE VIII
GENERAL PROVISIONS
8.01 All elections by a Participant hereunder shall be
made in writing by the completion and delivery to the Company of
forms prescribed for such purpose within the time limits
established with respect to such election.
8.02 Neither the establishment of the Plan nor the
payment of any benefits hereunder nor any action of the Company,
including its Board of Directors, in connection therewith shall
be held or construed to confer upon any individual any legal
right to remain an officer or an employee of the Company.
8.03 No benefit under the Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, except by will or the laws of
descent and distribution, and any attempt thereat shall be void.
No such benefit shall, prior to receipt thereof, be in any manner
liable for or subject to the recipient's debts, contracts,
liabilities, engagements, or torts.
8.04 This Plan shall inure to the benefit of, and be
binding upon, the Company and each Participant, and upon the
successors and assigns of the Company and of each Participant.
8.05 The Company shall deduct from the amount of any
payments hereunder all taxes required to be withheld by
applicable laws.
8.06 This Plan shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Virginia.
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ARTICLE IX
PHANTOM STOCK ADDITIONAL INCOME
9.01 The provisions of this Article IX shall apply only
to an Eligible Employee who, at the time an election to defer
Incentive Compensation is made in accordance with Article III, is
subject to the Company's Stock Ownership Guidelines for Officers
(an "Officer"). Any such Officer electing to defer Incentive
Compensation may also elect to have a specified part or all of
such deferred Incentive Compensation subject to Phantom Stock
Additional Income (as provided herein) instead of having
Additional Income computed at a specified rate as set forth in
Section 4.01.
9.02 Phantom Stock Additional Income shall be computed
in accordance with this Section 9.02.
(a) As of the date when Incentive Compensation would
have been paid if it were Current Compensation, each Officer
who elected to receive Phantom Stock Additional Income shall
have his or her account under this Plan credited with a
number of equivalent shares of the Company's Common Stock,
without par value ("Company Stock") determined by dividing
(i) the total dollar amount of such Deferred Compensation by
(ii) the arithmetic average of the high and low sales prices
of Company Stock as reported on New York Stock Exchange -
Composite Transactions on such date. Fractional equivalent
shares shall be calculated to three decimal places.
(b) As of each date when cash dividends are paid on
Company Stock, each Officer who elected to receive Phantom
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Stock Additional Income shall also have his or her account
under this Plan adjusted to reflect dividend equivalents
computed pursuant to this subsection (b). The dollar amount
of the dividend equivalent for each Officer shall equal the
cash dividends that would have been paid on the number of
equivalent shares of Company Stock credited to the Officer's
account as of the dividend record date if that number of
equivalent shares had actually been issued and outstanding
on the record date. This dividend equivalent for each
Officer shall be converted into a number representing
equivalent shares of Company Stock by dividing (i) the total
dollar amount of the Officer's dividend equivalent by (ii)
the arithmetic average of the high and low sales prices of
Company Stock as reported on New York Stock Exchange -
Composite Transactions on the date when the cash dividends
are paid. The Officer's account under this Plan shall then
be credited with the determined number of equivalent shares
of Company Stock, including fractional shares calculated to
three decimal places.
(c) If any stock dividend is declared upon Company
Stock, or if there is any stock split, stock distribution,
or other recapitalization of the Company with respect to its
Company Stock, resulting in a split-up or combination or
exchange of shares, or if any special distribution is made
to holders of Company Stock, the aggregate number and kind
of equivalent shares of Company Stock credited to the
account of an Officer under the Plan shall be
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proportionately adjusted as the Plan Committee may deem
appropriate.
9.03 Any election of Phantom Stock Additional Income in
accordance with this Article IX shall be subject to the following
terms and conditions:
(a) The election of Phantom Stock Additional Income
must be made at the same time as the election to defer
Incentive Compensation.
(b) The election of Phantom Stock Additional Income
shall be irrevocable as to the Incentive Compensation to
which such election applies.
(c) The Deferral Termination Date shall be the date on
which the Officer is retired and entitled to an immediate
benefit under the New Retirement Program.
(d) Any Officer electing Phantom Stock Additional
Income may also irrevocably elect at the same time that if
the Officer dies before receiving full payment of any
deferred Incentive Compensation subject to Phantom Stock
Additional Income, payments after death will be made in the
form of five (5) annual installments.
(e) If Phantom Stock Additional Income is being paid
on Deferred Compensation, the amount of a lump sum payment
shall be equal to (i) the total number of equivalent shares
of Company Stock credited to the Officer's account under
this Plan as of the last day on which the New York Stock
Exchange, Inc. is open in the year the Deferral Termination
Date occurs, multiplied by (ii) the closing sales price of
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Company Stock as reported on New York Stock Exchange -
Composite Transactions on such date. This lump sum payment
shall be paid as soon as administratively feasible following
the end of the year. If annual installments are elected
instead of a lump sum, the amount of the installment payment
to be made in a calendar year shall be computed by taking
(y) the amount that would have been payable after the end of
the preceding year had the entire amount remaining as of the
end of such year been paid as a single lump sum, divided by
(z) the number of installment payments remaining, including
the installment about to be paid. Annual installments shall
be paid as soon as administratively feasible in each
calendar year following the year in which the Deferral
Termination Date occurs. All payments under the Plan shall
be made in cash.
(f) Anything in Sections 4.04 and 4.05 to the contrary
notwithstanding, no payment of Deferred Compensation with
respect to which Phantom Stock Additional Income is to be
paid may be accelerated unless the accelerated payment will
be exempt from short-swing profit liability pursuant to the
rules promulgated under Section 16(b) of the Securities
Exchange Act of 1934, as amended.
9.04 Unless the context clearly indicates otherwise,
any reference in the Plan to Additional Income, including but not
limited to references found in Sections 4.04 and 4.05, shall
include Phantom Stock Additional Income.
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Executed and adopted this 28 day of April, 1999,
pursuant to action taken by the Board of Directors of Reynolds
Metals Company at its meeting on March 8, 1999.
REYNOLDS METALS COMPANY
By /s/ D. Michael Jones
______________________________
Title: Senior Vice President and
General Counsel
EXHIBIT 10.19
REYNOLDS METALS COMPANY
SALARY DEFERRAL PLAN FOR EXECUTIVES
As Amended and Restated
Effective March 8, 1999
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ARTICLE I
PURPOSE OF THE PLAN
The purpose of the Plan is to assist the Company in
attracting and retaining key employees by providing an
opportunity for deferred taxation and capital accumulation.
ARTICLE II
DEFINITIONS
2.01 "Adjusted Deferred Salary" shall have the meaning
specified in Section 3.02.
2.02 "Beneficiary" shall mean the individual or entity
designated by the Participant to receive any amounts remaining in
the Plan upon the Participant's death. If no such designation is
made, or if the designated individual predeceases the Participant
or the entity no longer exists, then the Beneficiary shall be the
Participant's estate.
2.03 "Company" shall mean Reynolds Metals Company, a
Delaware corporation.
2.04 "Deferred Salary" shall mean that portion of a
Participant's Salary which the Participant elects to defer in the
manner provided for herein, until the time or times selected for
payment in accordance with Section 4.01 at the time the
Participant first elects to participate in the Plan.
2.05 "Deferral Termination Date" shall mean the
December 31st of (a) the year in which the Participant's
employment with the Company and any subsidiary terminates, or (b)
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any of the three years following the year of termination, as
elected by the Participant in accordance with Section 4.01 at the
time the Participant first elects to participate in the Plan.
2.06 "Effective Date" shall mean June 1, 1994.
2.07 "Eligible Employee" shall mean for any year any
officer or employee of the Company or a subsidiary (a) who is
eligible to participate in the Savings and Investment Plan on
December 1 of the preceding year and (b) whose annual rate of
Salary in effect on December 1 of the preceding year exceeds the
limitation imposed as of such December 1 on the amount of annual
compensation that can be taken into account in computing
contributions or benefits under a qualified plan pursuant to
Section 401(a)(17) of the Internal Revenue Code.
2.08 "Internal Revenue Code" shall mean the Internal
Revenue Code of 1986, as amended. Any reference to a specific
section of the Internal Revenue Code shall include that section
and any comparable section or sections of future legislation
amending, modifying, supplementing, or superseding the referenced
section.
2.09 "Participant" shall mean an Eligible Employee who
submits a written request pursuant to the terms of this Plan for
deferral of Salary.
2.10 "Phantom Investment Alternative" shall mean any of
the investment funds available from time to time under the
Savings and Investment Plan.
2.11 "Plan" shall mean this Reynolds Metals Company
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Salary Deferral Plan for Executives.
2.12 "Plan Committee" shall mean the committee
appointed by the Board of Directors of the Company to administer
the Plan.
2.13 "Salary" shall mean the base salary payable to an
Eligible Employee by the Company or a subsidiary.
2.14 "Savings and Investment Plan" shall mean the
Reynolds Metals Company Savings and Investment Plan for Salaried
Employees, as in effect from time to time.
ARTICLE III
ELECTIONS TO DEFER SALARY
3.01 Each year during the term of the Plan, each
Eligible Employee, whether or not then a Participant, shall have
the right to elect to defer the receipt of Salary in accordance
with and subject to the following terms and conditions:
(a) Elections with respect to a year shall
apply only to Salary otherwise payable during such year
to the Eligible Employee in excess of the annual
compensation limitation imposed for that year under
Section 401(a)(17) of the Internal Revenue Code.
Eligible Employees may elect to defer receipt of not
less than 5% nor more than 90% of Salary in excess of
this limit, in multiples of 5%.
(b) For Salary earned in 1995 and future
years, an election to defer Salary must be made between
December
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1 and December 31 of the year immediately
preceding the year in which the Salary is earned.
(c) For Salary earned in 1994, an election to
defer must be made between June 1 and June 30, 1994,
and such election will apply only to Salary earned
between July 1 and December 31, 1994. Solely for
purposes of this initial election period in June of
1994, the definition of "Eligible Employee" in Section
2.07 shall be applied as if the date "June 1, 1994"
were substituted for "December 1 of the preceding year"
and "December 1".
(d) Elections shall be irrevocable as to the
Salary to which such elections apply, except as
otherwise provided herein.
3.02 At the same time a deferral election is made
under Section 3.01 with regard to Salary to be earned in a
specified year, the Participant shall also elect the Phantom
Investment Alternative(s) that the Participant wishes to have
apply to any Salary deferred in accordance with such deferral
election. At any point in time, a Participant's Adjusted
Deferred Salary under this Plan shall equal the value the
Participant would have had under the Savings and Investment Plan
if all amounts deferred under this Plan had actually been
contributed to the Savings and Investment Plan and invested in
the designated investment fund(s) under the Savings and
Investment Plan from the time the Deferred Salary would have been
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paid to the Participant but for the deferral. All elections made
under this Section 3.02 shall be in accordance with and subject
to the following terms and conditions:
(a) A Participant may elect any Phantom
Investment Alternative available for current
contributions under the terms of the Savings and
Investment Plan at the time the deferral election is
being made. To the extent necessary to administer this
Plan, any election of Phantom Investment Alternative(s)
under this Section 3.02 will be required to comply with
administrative rules in effect from time to time under
the Savings and Investment Plan; this means, for
example, that Participants may be required to elect
Phantom Investment Alternatives in multiples of 5% or
10%.
(b) If an investment fund under the Savings
and Investment Plan is eliminated after a Participant
in this Plan has made an election under this Section
3.02, any Deferred Salary the value of which is
dependent on such eliminated investment fund shall, as
of the date the investment fund is eliminated, be
treated for purposes of this Section 3.02 as if the
Adjusted Deferred Salary became invested in whatever
investment fund would automatically be chosen under the
terms of the Savings and Investment Plan if a
participant in that plan did not elect a new investment
fund.
(c) Except as otherwise specifically provided
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herein, any election of Phantom Investment
Alternative(s) shall be irrevocable as to the Deferred
Salary to which such election applies, and such
election shall continue to apply to the Deferred Salary
until it is paid out in accordance with Article IV.
ARTICLE IV
PAYMENT OF DEFERRED COMPENSATION
4.01 The first time an Eligible Employee elects to
defer Salary in accordance with Section 3.01, the Eligible
Employee shall also elect at the same time a Deferral Termination
Date and a payment schedule in accordance with the provisions of
this Section 4.01:
(a) The Deferral Termination Date must be the
December 31st of either (i) the year in which the
Participant's employment with the Company and any
subsidiary terminates, or (ii) any of the three years
following the year of termination, as elected by the
Participant.
(b) Payments shall be made to the Participant
(i) in a single lump sum payment or (ii) in annual
installments over a period of five (5) years, as
elected by the Participant, following the applicable
Deferral Termination Date.
(c) A Participant's election of a Deferral
Termination Date and of a schedule of payments pursuant
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to this Section 4.01 shall be irrevocable and shall
apply to all Salary deferred under this Plan by such
Participant, both in the first year and in succeeding
years, except as specifically provided herein.
4.02 A Participant's Adjusted Deferred Salary shall be
paid in cash following the applicable Deferral Termination Date
in accordance with the provisions of this Section 4.02.
(a) Lump sum payments shall be paid as soon
as administratively feasible in the January following
the year in which the Deferral Termination Date occurs.
The amount of any lump sum payment shall equal the
value of the Participant's Adjusted Deferred Salary on
the December 31st immediately preceding the date of
payment.
(b) Annual installments shall be paid as soon
as administratively feasible in the January of each of
the five calendar years following the year in which the
Deferral Termination Date occurs. The amount of the
first installment shall equal one-fifth of the value of
the Participant's Adjusted Deferred Salary on the
December 31st immediately preceding the date of
payment. The amount of the second installment shall
equal one-fourth of the value of the Participant's
Adjusted Deferred Salary on the December 31st
immediately preceding the date of payment of the second
installment. In similar manner, the amounts of the
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<PAGE> 8
third and fourth installments shall be one-third and
one-half, respectively, of the value of the
Participant's Adjusted Deferred Salary on the December
31st immediately preceding the date of the respective
payment. The fifth installment shall equal the entire
value of the Adjusted Deferred Salary remaining on the
December 31st immediately preceding the date of
payment.
4.03 If a Participant dies, any remaining unpaid
portion of such Participant's Adjusted Deferred Salary shall be
accelerated and paid to the Participant's Beneficiary in cash in
a single lump sum as soon as administratively feasible in the
January following the year in which the Participant's death
occurs. The amount of the payment shall equal the value of the
Participant's Adjusted Deferred Salary remaining on the December
31st immediately preceding the date of payment.
4.04 (a) Upon receipt of a written request from a
Participant (or if the Participant is not competent to manage his
affairs, from a Participant's legal representative), the Plan
Committee may direct that all or any part of the Participant's
Adjusted Deferred Salary be accelerated and paid in a lump sum if
it finds, in its sole discretion, that the Participant has
incurred a substantial unforeseen hardship. For purposes of this
Section 4.04(a), a substantial unforeseen hardship is a severe
financial hardship resulting from extraordinary and unforeseeable
circumstances arising as a result of one or more recent events
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<PAGE> 9
beyond the control of the Participant. In no event, however, may
accelerated payments be made to the extent such hardship is or
may be relieved (i) through reimbursement or compensation by
insurance or otherwise, (ii) by liquidation of the Participant's
assets, to the extent the liquidation of such assets would not
itself cause severe hardship, or (iii) by cessation of deferrals
under the Plan. Acceleration of payments because of a
substantial unforeseen hardship may only be permitted to the
extent reasonably necessary to satisfy the hardship.
(b) The Plan Committee may direct that all unpaid
Adjusted Deferred Salary be accelerated and paid to all
Participants in a lump sum if, in conjunction with the
termination of the Plan, the Plan Committee finds, in its sole
discretion, that extraordinary circumstances make such
acceleration of payments in the best interest of the Company.
(c) Subsections (a) and (b) above shall apply both to
Salary deferred in previous years and to Salary being deferred
during the year in which the acceleration of payments is
approved, except that no Deferred Salary shall be paid out prior
to the date such Deferred Salary would be paid to the Participant
but for the deferral.
(d) Anything herein to the contrary notwithstanding,
the Plan Committee shall not accelerate any payment of Deferred
Salary with respect to which the Participant has elected an
investment measured by the performance of the Company's Common
Stock unless the accelerated payment will be exempt from short-
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<PAGE> 10
swing profit liability pursuant to the rules promulgated under
Section 16(b) of the Securities Exchange Act of 1934, as amended.
4.05 (a) Anything herein to the contrary
notwithstanding, if at any time a Change in Control (as defined
below) occurs, then all unpaid Adjusted Deferred Salary shall be
accelerated and paid out to each Participant in a single lump sum
within ten (10) days of the date of such Change in Control, with
Adjusted Deferred Salary for this purpose computed through the
date of the Change in Control. This provision shall apply both
to Salary deferred in previous years and to Salary being deferred
during the year in which the Change in Control occurs, except
that no Deferred Salary shall be paid out prior to the date such
Deferred Salary would be paid to the Participant but for the
deferral. After the Change in Control, no further amounts shall
be deferred hereunder for the remainder of the year.
(b) For purposes of this Section 4.05, "Change in
Control" shall mean the occurrence of any of the following:
(i) Any Person (as defined below) becomes
the Beneficial Owner (as defined below), directly or
indirectly, of 15% or more of the Company's common
stock, unless such Person (A) is not deemed an
"Acquiring Person" in accordance with Section 1(a) of
the Rights Agreement (as defined below), or (B) became
a Beneficial Owner of 15% or more of the Company's
common stock in a transaction that did not constitute a
Change in Control under Section 4.05(b)(iii) hereof;
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<PAGE> 11
(ii) During any period of two consecutive
years, individuals who at the beginning of such period
constitute the Board (as defined below), and any new
director (other than a director designated by a person
who has entered into an agreement with the Company to
effect a transaction described in Section 4.05(b)(i),
(iii) or (iv)) whose election by the Board or
nomination for election by the Company's shareholders
was approved by a vote of at least two-thirds of the
directors then still in office who either were
directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute a least a
majority of the members of the Board;
(iii) The effective date of a merger or
consolidation of the Company or any of its subsidiaries
with any other entity, other than a merger or
consolidation which would result in the voting
securities of the Company outstanding immediately
before such merger or consolidation continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving
entity or of any other corporation or entity that as a
result of such transaction owns the Company or all or
substantially all of the Company's assets, either
directly or through one or more subsidiaries (the
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<PAGE> 12
"parent entity")) more than 51% of the combined voting
power of the voting securities of the parent or
surviving entity outstanding immediately after such
merger or consolidation and with the power to elect at
least a majority of the board of directors or other
governing body of such parent or surviving entity;
(iv) The approval by the shareholders of the
Company of a complete liquidation of the Company or an
agreement for the sale or disposition by the Company of
all or substantially all of the Company's assets; and
(v) There occurs any other event of a nature
that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or
form) under the 1934 Act (as defined below), whether or
not the Company is then subject to such reporting
requirement.
(vi) For purposes of this Section 4.05(b),
the following terms shall have the following meanings:
(A) "Person" shall have the
meaning as set forth in Sections 13(d) and 14(d)
of the 1934 Act; provided, however, that Person
shall exclude (i) the Company, (ii) any trustee or
other fiduciary holding securities under an
employee benefit plan of the Company, and (iii)
any corporation owned, directly or indirectly, by
the shareholders of the
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<PAGE> 13
Company in substantially the same proportions
as their ownership of stock of the Company.
(B) "Beneficial Owner" shall have
the meaning given to such term in Rule 13d-3 under
the 1934 Act; provided, however, that Beneficial
Owner shall exclude any Person otherwise becoming
a Beneficial Owner by reason of the shareholders
of the Company approving a merger of the Company
with another entity.
(C) "Rights Agreement" shall mean
the Amended and Restated Rights Agreement dated as
of March 8, 1999 between the Company and
ChaseMellon Shareholder Services, L.L.C., as
initially in effect.
(D) "1934 Act" means the Securities
Exchange Act of 1934, as amended.
(E) "Board" means the Board of
Directors of the Company.
ARTICLE V
ADMINISTRATION
The Plan Committee shall have full responsibility and
authority to interpret and administer the Plan, including the
power to promulgate rules of Plan administration, the power to
settle any disputes as to rights or benefits arising from the
Plan, the power to appoint agents and delegate its duties, and
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<PAGE> 14
the power to make such decisions or take such actions as the Plan
Committee, in its sole discretion, deems necessary or advisable
to aid in the proper administration of the Plan. Actions and
determinations by the Plan Committee shall be final, binding and
conclusive for all purposes of the Plan.
ARTICLE VI
AMENDMENT, SUSPENSION AND TERMINATION OF THE PLAN
The Board of Directors of the Company may from time to
time amend, suspend or terminate the Plan, in whole or in part,
except that no such amendment, suspension or termination shall
materially adversely affect the rights of any Participant in
respect of Deferred Salary previously earned by such Participant
and not yet paid. Anything in the Plan to the contrary
notwithstanding, at any time before a Change in Control (as
defined in Section 4.05(b)) occurs, the Board of Directors of the
Company may amend Section 4.05(b)(i) to change the percentage
referred to therein to a percentage that is not more than 25%, so
long as such change is consistent with contemporaneous change of
a similar nature in the Rights Agreement (as defined in Section
4.05(b)(vi)(C)).
ARTICLE VII
FUNDING
No promises under this Plan shall be secured by any
specific assets of the Company, nor shall any assets of the
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<PAGE> 15
Company be designated as attributable or allocated to the
satisfaction of such promises. Benefit payments shall be made
from the Company's general assets.
ARTICLE VIII
GENERAL PROVISIONS
8.01 All elections by a Participant hereunder shall be
made in writing by the completion and delivery to the Company of
forms prescribed for such purpose within the time limits
established with respect to such election.
8.02 Neither the establishment of the Plan nor the
payment of any benefits hereunder nor any action of the Company,
including its Board of Directors, in connection therewith shall
be held or construed to confer upon any individual any legal
right to remain an officer or an employee of the Company.
8.03 No benefit under the Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, except by will or the laws of
descent and distribution, and any attempt thereat shall be void.
No such benefit shall, prior to receipt thereof, be in any manner
liable for or subject to the recipient's debts, contracts,
liabilities, engagements, or torts.
8.04 This Plan shall inure to the benefit of, and be
binding upon, the Company and each Participant, and upon the
successors and assigns of the Company and of each Participant.
8.05 The Company shall deduct from the amount of any
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<PAGE> 16
payments hereunder all taxes required to be withheld by
applicable laws.
8.06 This Plan shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Virginia.
Executed and adopted this 28 day of April, 1999,
pursuant to action taken by the Board of Directors of Reynolds
Metals Company at its meeting on March 8, 1999.
REYNOLDS METALS COMPANY
By: /s/ D. Michael Jones
______________________________
Title: Senior Vice President and
General Counsel
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EXHIBIT 10.20
REYNOLDS METALS COMPANY
SUPPLEMENTAL LONG TERM DISABILITY PLAN FOR EXECUTIVES
As Amended and Restated
Effective April 16, 1999
<PAGE> 1
ARTICLE I
PURPOSE OF THE PLAN
The purpose of the Plan is to assist the Company in
attracting and retaining qualified individuals to serve as
executives and to provide eligible executives with supplemental
long term disability coverage.
ARTICLE II
DEFINITIONS
2.01 "Company" shall mean Reynolds Metals Company, a
Delaware corporation.
2.02 "Effective Date" shall mean January 1, 1994.
2.03 "Eligible Executive" shall mean an individual (a)
who is employed by the Company or one of its subsidiaries as a
salaried employee on or after the Effective Date and (b) whose
monthly earnings (as that term is defined in the Long Term
Disability Plan) when multiplied by twelve would equal or exceed
$200,000.
2.04 "Long Term Disability Plan" shall mean the group
long term disability plan for salaried employees maintained by
the Company to provide long term disability coverage based on
monthly earnings (as that term is defined in the Long Term
Disability Plan), as such plan may be amended, modified or
replaced from time to time.
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<PAGE> 2
2.05 "Participant" shall mean each Eligible Executive
who is covered by the Long Term Disability Plan.
2.06 "Plan" shall mean this Reynolds Metals Company
Supplemental Long Term Disability Plan for Executives.
2.07 "Plan Committee" shall mean the committee
appointed by the Chief Executive Officer of the Company to admin
ister the Plan.
ARTICLE III
PLAN BENEFITS
3.01 If a Participant is receiving benefits from the
Long Term Disability Plan, the Company shall pay the Participant
a supplemental long term disability benefit each month equal to
the excess, if any, of (a) an amount equal to what the
Participant's benefit would be under the terms of the Long Term
Disability Plan if the maximum benefit under that plan were
$25,000 a month over (b) the benefit actually paid to the
Participant under the Long Term Disability Plan for the month.
3.02 Except as set forth in Section 3.01 above, no
benefit shall be paid under the Plan upon the disability of a
Participant. No benefit shall be payable under the Plan in any
event for any month during which the Participant is not eligible
for and in receipt of payments under the Long Term Disability
Plan.
3.03 In no event shall any benefit be payable under
the Plan after a Participant retires.
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<PAGE> 3
ARTICLE IV
ADMINISTRATION
The Plan Committee shall have full responsibility and
authority to interpret and administer the Plan, including the
power to promulgate rules of Plan administration, the power to
settle any disputes as to rights or benefits arising from the
Plan, the power to appoint agents and delegate its duties, and
the power to make such decisions or take such actions as the Plan
Committee, in its sole discretion, deems necessary or advisable
to aid in the proper administration of the Plan. Actions and
determinations by the Plan Committee shall be final, binding and
conclusive for all purposes of the Plan.
ARTICLE V
AMENDMENT, SUSPENSION AND TERMINATION OF THE PLAN
5.01 The Board of Directors of the Company may from
time to time amend, suspend or terminate the Plan, in whole or in
part.
5.02 The Plan shall automatically terminate if the
Long Term Disability Plan is modified so that the benefit payable
thereunder can equal or exceed $25,000 a month.
5.03 No amendment, suspension or termination of the
Plan shall materially adversely affect the payment of a benefit
already due under the Plan as the result of the disability of a
Participant prior to such amendment, suspension or termination.
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<PAGE> 4
ARTICLE VI
FUNDING
No promises under the Plan shall be secured by any
specific assets of the Company, nor shall any assets of the
Company be designated as attributable or allocated to the satis
faction of such promises. Benefit payments shall be made from
the Company's general assets.
ARTICLE VII
GENERAL PROVISIONS
7.01 Neither the establishment of the Plan nor the pay
ment of any benefits hereunder nor any action of the Company, i
ncluding its Board of Directors, in connection therewith shall be
held or construed to confer upon any individual any legal right
to remain an officer or an employee of the Company or any of its
subsidiaries.
7.02 No benefit under the Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or charge, except by will or the laws of
descent and distribution, and any attempt thereat shall be void.
No such benefit shall, prior to receipt thereof, be in any manner
liable for or subject to the recipient's debts, contracts, liabil
ities, engagements, or torts.
7.03 The Plan shall inure to the benefit of, and be
binding upon, the Company and each Participant, and upon the
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<PAGE> 5
successors and assigns of the Company and of each Participant.
7.04 The Company shall deduct from the amount of any
payments hereunder all taxes required to be withheld by
applicable laws.
7.05 The Plan shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Virginia.
Executed and adopted this 26 day of April, 1999,
pursuant to action taken by the Board of Directors of Reynolds
Metals Company at its meeting on April 16, 1999.
REYNOLDS METALS COMPANY
By /s/ D. Michael Jones
______________________________
Title: Senior Vice President and
General Counsel
-5-
EXHIBIT 10.28
REYNOLDS METALS COMPANY
1996 NONQUALIFIED STOCK OPTION PLAN
As Amended and Restated
Effective April 1, 1999
<PAGE> 1
ARTICLE I
DEFINITIONS
1.01 "Board" shall mean the Board of Directors of the
Company.
1.02 "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
1.03 "Committee" shall mean the Committee established
under Section 3.01 to administer the Plan.
1.04 "Company" shall mean Reynolds Metals Company, a
Delaware corporation.
1.05 "Company Stock" shall mean Common Stock of the
Company and such other stock and securities as may be substituted
therefor pursuant to Section 6.02.
1.06 "Eligible Employee" shall mean any officer or
regular salaried employee of the Company or a Subsidiary who
satisfies all of the requirements of Section 2.02; provided,
however, that no individual who is not a regular salaried
employee of the Company or a Subsidiary may be granted a stock
option hereunder if such individual is deemed at the time of the
grant to be an "officer" of the Company for purposes of Section
16(a) of the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.
1.07 "Fair Market Value" shall mean, with respect to
Company Stock, the closing price of Company Stock (a) as reported
on New York Stock Exchange-Composite Transactions (or other
appropriate reporting vehicle as determined by the Committee) for
a specified date or (b) if no such report for Company Stock is
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<PAGE> 2
available for such date, the closing price of Company Stock as
reported for the next preceding day on which Company Stock was
traded and for which such report is available.
1.08 "Grantee" shall mean any person who has been
granted a stock option, either with or without related stock
appreciation rights, under the Plan.
1.09 "Option Period" shall mean the period of time
provided pursuant to Section 4.04 within which a stock option may
be exercised.
1.10 "Plan" shall mean the Reynolds Metals Company 1996
Nonqualified Stock Option Plan, as amended from time to time.
1.11 "Stockholder Approval" shall mean approval by the
affirmative vote of the stockholders of the Company present in
person or by proxy and entitled to vote, representing a majority
of the votes cast at a meeting duly called for that purpose and
at which a quorum shall be present.
1.12 "Subsidiary" shall mean any corporation now or
hereafter in existence in which the Company owns, directly or
indirectly, a voting stock interest of more than fifty percent
(50%).
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<PAGE> 3
ARTICLE II
PARTICIPATION
2.01 Purpose. The purpose of the Plan is to further
the growth and success of the Company and its Subsidiaries by
providing key employees with additional incentive to contribute
to such growth and success and by aiding the Company in
attracting and retaining key employees.
2.02 Eligibility. Key employees of the Company and its
Subsidiaries (including officers and employees who may be members
of the Board) who, in the sole opinion of the Committee,
contribute significantly to the growth and success of the Company
or a Subsidiary shall be eligible for options to purchase Company
Stock and related stock appreciation rights under the Plan. From
among all such Eligible Employees, the Committee shall determine
from time to time those Eligible Employees to whom options and
related stock appreciation rights, if any, shall be granted. No
Eligible Employee shall have any right whatsoever to receive
options or stock appreciation rights unless so determined by the
Committee.
2.03 No Employment Rights. The Plan shall not be
construed as conferring any rights upon any person for a
continuation of employment, nor shall it interfere with the
rights of the Company or any Subsidiary to terminate the
employment of any person or to take any other action affecting
such person.
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<PAGE> 4
ARTICLE III
COMMITTEE
3.01 Administration. The Plan shall be administered by
a Committee of at least three (3) persons, all of whom shall be
members of the Board, appointed from time to time by the Board.
The Board shall appoint one member of the Committee to act as
Chairman. Vacancies shall be filled in the same manner as
original appointments. The Committee shall hold meetings upon
such notice and at such place or places, and at such time or
times as it may from time to time determine. A majority of the
members of the Committee at the time in office shall constitute a
quorum for the transaction of business, and the acts of a
majority of the members participating in any meeting at which a
quorum is present shall be the acts of the Committee. The
Committee may act without a meeting if a consent in writing
setting forth the action so taken shall be signed by all of the
members of the Committee and filed with the minutes of the
Committee. As of the time that the Committee exercises its
discretion in administering the Plan, all of the members of the
Committee shall be "disinterested persons" as contemplated by
Rule l6b-3, as in effect at such time, under the Securities
Exchange Act of 1934, as amended.
3.02 Authority of Committee. Subject to the provisions
of the Plan, the Committee shall have full and final authority to
determine:
(a) the persons to whom options shall be granted,
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<PAGE> 5
(b) the number of shares to be included in each
option,
(c) the price at which the shares included in each
option may be purchased,
(d) the period or periods of time within which each
option may be exercised, and
(e) the stock appreciation rights, if any, related to
each option.
In no case, however, shall a Grantee be awarded options to
purchase in the aggregate more than three hundred thousand
(300,000) shares of Company Stock under the Plan. Nothing
contained in this Plan shall be construed to give any person the
right to be granted an option or stock appreciation right. The
Committee is empowered, in its discretion, (i) to modify, extend
or renew any option or stock appreciation right theretofore
granted, subject to the limitations set forth in Articles IV and
V, and (ii) to adopt such rules and regulations and take such
other action as it shall deem necessary or proper for the
administration of the Plan; provided, however, that except to the
extent provided under Section 6.02, the Committee shall not have
the power to reprice options or stock appreciation rights that
have been granted previously under the Plan. The Committee shall
also have authority to interpret the Plan, and the decision of
the Committee on any questions concerning the interpretation of
the Plan shall be final and conclusive. The Committee may
consult with counsel, who may be counsel for the Company, and
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<PAGE> 6
shall not incur any liability for any action taken in good faith
in reliance upon the advice of counsel.
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<PAGE> 7
ARTICLE IV
TERMS OF OPTIONS
4.01 General. Grants of options shall be made without
the payment of a purchase price by any Grantee. Each option
granted under the Plan shall be evidenced by a stock option
agreement between the Company and the Grantee which shall contain
the terms and conditions required by this Article IV, and such
other terms and conditions, not inconsistent herewith, as the
Committee may deem appropriate in each case.
4.02 Option Price. The price at which each share of
Company Stock covered by an option may be purchased shall be
determined in each case by the Committee and set forth in each
stock option agreement. In no event shall such price be less
than one hundred percent (100%) of the Fair Market Value of
Company Stock on the date the option is granted.
4.03 Period for Exercise. Each stock option agreement
shall state the period or periods of time within which the option
may be exercised by the Grantee, in whole or in part, which shall
be the period or periods of time as may be determined by the
Committee, provided that:
(a) No option may be exercised within one (l) year
from the date the option is granted;
(b) No Option Period may exceed ten (l0) years from
the date the option is granted;
(c) If the Grantee's employment by the Company and its
Subsidiaries terminates because of the Grantee's
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<PAGE> 8
retirement or disability, or for any other reason with the
approval of the Committee, any option outstanding and exercisable
as of the date of termination (and, in the Committee's sole
discretion, any option outstanding but not yet exercisable
as of such date) may be exercised by the Grantee following
the date of termination (to the extent permitted by Section
4.03(a) and in accordance with the terms of the stock option
agreement);
(d) If the Grantee dies during the Option Period
either while in the employ of the Company or a Subsidiary or
following the date of termination of employment as described
in subsection (c) above, any option otherwise outstanding
and exercisable as of the date of death may be exercised
following such death in accordance with the terms of the
stock option agreement, by the person or persons entitled to
do so under the Grantee's last will and testament, or if the
Grantee shall fail to make testamentary disposition of his
or her option or shall die intestate, by the person or
persons entitled to receive said option under the intestate
laws; and
(e) If the Grantee's employment by the Company and its
Subsidiaries terminates for reasons other than death,
retirement, disability, or other reasons approved by the
Committee pursuant to subsection (c) above, then any
outstanding option shall be deemed terminated immediately
and shall not thereafter be exercisable by the Grantee.
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<PAGE> 9
4.04 Exercise of Option. Subject to Section 4.03, each
option may be exercised in whole or in part from time to time as
specified in the stock option agreement. Each Grantee may
exercise an option by giving written notice of the exercise to
the Company, specifying the number of shares to be purchased,
accompanied by payment in full of the purchase price therefor; if
required, the Grantee shall also pay an amount equal to the
applicable withholding taxes as soon as administratively
feasible. The purchase price may be paid in cash, by check, or,
with the approval of the Committee, in shares of Company Stock
having at the time the option is exercised an aggregate Fair
Market Value equal to the purchase price of the shares acquired
pursuant to the exercise of the option, or a combination thereof.
Likewise, the applicable withholding taxes may be paid in cash,
by check, or, with the approval of the Committee, in shares of
Company Stock (including shares received from the exercise of the
option) having at the time the option is exercised an aggregate
Fair Market Value equal to such withholding taxes, or a
combination thereof. A Grantee may also exercise an option by
way of the Company's broker-assisted stock option exercise
program, provided such program is available to the Grantee at the
time of the option's exercise. An option shall become
nonexercisable and shall be treated as voluntarily surrendered to
the extent that the related stock appreciation right is
exercised. No Grantee shall be under any obligation to exercise
any option granted hereunder. The Grantee may exercise the
option or not in his or her sole discretion.
-9-
<PAGE> 10
4.05 Date Option Granted. For purposes of the Plan, a
stock option shall be considered as having been granted on the
date on which the Committee authorized the grant of the option,
except where the Committee has designated a later date, in which
event the later date shall constitute the date of grant of the
option; provided, however, that in either case notice of the
grant of the option shall be given to the employee within a
reasonable time.
4.06 No Incentive Stock Options. No option granted
under the Plan shall be treated as an incentive stock option for
purposes of Sections 421 and 422A of the Code or any comparable
section or sections of future legislation amending, modifying,
supplementing or superseding those sections.
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<PAGE> 11
ARTICLE V
STOCK APPRECIATION RIGHTS
5.01 General. Each stock appreciation right granted
under the Plan shall be evidenced by a stock appreciation right
agreement between the Company and the Grantee which shall contain
the terms and conditions required by this Article V, and such
other terms and conditions, not inconsistent herewith, as the
Committee may deem appropriate in each case. Each stock
appreciation right shall relate to a specific option granted
under the Plan and shall be granted to the Grantee either
concurrently with the grant of such option or at such later time
as may be determined by the Committee; provided, however, that
the grant of a stock appreciation right shall not otherwise
change the terms of the underlying option. A stock appreciation
right shall entitle a Grantee to receive a number of shares of
Company Stock (without payment to the Company, except for
applicable withholding taxes), cash, or shares and cash, as
determined by the Committee in accordance with this Article.
5.02 Number of Shares or Amount of Cash. Unless
otherwise determined by the Committee, in its sole discretion,
and provided in the stock appreciation right agreement, the
number of shares which shall be issued pursuant to the exercise
of a right shall be determined by dividing:
(a) that portion, as elected by the Grantee in the
notice of exercise, of the total number of shares of Company
Stock (i) which the Grantee is eligible to purchase as of
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<PAGE> 12
the exercise date under the related option and (ii) as to
which stock appreciation rights have been granted, but not
exercised, multiplied by the amount (if any) by which the
Fair Market Value of Company Stock on the exercise date
exceeds the price per share at which the related option
could have been exercised on the exercise date, by
(b) the Fair Market Value of Company Stock on the
exercise date;
provided, however, that fractional shares shall not be issued and
in lieu thereof a cash adjustment equal to the same fraction of
the Fair Market Value on the exercise date shall be paid. In
lieu of issuing Company Stock on the exercise of a right, the
Committee in its sole discretion may elect to pay the cash
equivalent of the Fair Market Value on the exercise date of any
or all the shares of Company Stock which would otherwise be
issuable upon exercise of the right. The Committee may require
that in order to be paid cash upon the exercise of a stock
appreciation right, certain Grantees must exercise the right
during a limited window period following the public release of
the Company's quarterly or annual earnings report, as established
pursuant to Securities and Exchange Commission rules. If this
restriction applies to a Grantee when he or she exercises a stock
appreciation right for cash, the amount received upon exercise of
the right shall be based on the highest Fair Market Value during
the limited window period.
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<PAGE> 13
5.03 Exercise. Each stock appreciation right may be
exercised in whole or in part from time to time, to the extent
that the option to which it relates shall be exercisable and to
the extent permitted by its stock appreciation right agreement;
provided, however, that no stock appreciation right may be
exercised until the expiration of six (6) months from the date of
its grant. Each Grantee may exercise a stock appreciation right
by giving written notice to the Company, specifying the number of
shares as to which such right is being exercised, accompanied by
an amount equal to the applicable withholding taxes, if
necessary. The date the Company receives the written notice is
herein referred to as the "exercise date." No Grantee shall be
under any obligation to exercise any stock appreciation right
granted hereunder. The Grantee may exercise the right or not in
his or her sole discretion. A stock appreciation right shall
become nonexercisable and shall be forfeited to the extent that
the related option is exercised.
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<PAGE> 14
ARTICLE VI
COMPANY STOCK
6.01 Number of Shares. The aggregate number of shares
of Company Stock that may be sold or delivered under the Plan
shall not exceed two million (2,000,000) shares. Shares of
Company Stock sold or delivered under the Plan may be authorized
but unissued shares, shares reacquired by the Company, or a
combination of both, as the Board may from time to time
determine. Shares of Company Stock not purchased under any
option granted under the Plan which are no longer available for
purchase thereunder by virtue of the total or partial expiration,
termination or voluntary surrender of the option and which were
not issued upon exercise of a related stock appreciation right
shall continue to be otherwise available for the purposes of the
Plan. Notwithstanding the above, however, upon surrender of any
portion of an option in connection with the exercise of the
related stock appreciation right, the number of shares of Company
Stock subject to the surrendered portion of the option (in lieu
of the number of shares, if any, issued pursuant to the exercise
of the related stock appreciation rights) shall be charged
against the maximum number of shares of Company Stock issuable
under the Plan, and such number of shares of Company Stock shall
not be available for future options and/or stock appreciation
rights.
6.02 Recapitalization. If any stock dividend is
declared upon the Company Stock, or if there is any stock split,
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<PAGE> 15
stock distribution, or other recapitalization of the Company with
respect to its Company Stock, resulting in a split-up or
combination or exchange of shares, or if any special distribution
is made to holders of Company Stock, the aggregate number and
kind of shares which may thereafter be offered under the Plan
shall be proportionately and appropriately adjusted and the
number and kind of shares then subject to options granted under
the Plan and the per share option price therefor shall be
proportionately and appropriately adjusted, without any change in
the aggregate purchase prices to be paid therefor, all as the
Committee may deem appropriate. Such adjusted option price and
number and kinds of shares also shall be used to determine the
amount payable by the Company upon the exercise of any stock
appreciation rights associated with any such option as set forth
in Article V hereof. In the event the Company is merged or
consolidated with or into another corporation, or substantially
all of its assets are sold to another corporation, appropriate
provisions will be made for the protection and continuation of
any outstanding options and stock appreciation rights by the
substitution, on an equitable basis, of appropriate stock or
other securities of the surviving or purchasing or new parent
corporation.
-15-
<PAGE> 16
ARTICLE VII
GENERAL
7.01 Nontransferability. No option or stock
appreciation right granted under the Plan shall be transferable
or assignable by the Grantee except by last will and testament or
the laws of descent and distribution. During the Grantee's
lifetime, options and stock appreciation rights shall be
exercisable only by the Grantee or by the Grantee's guardian or
legal representative.
7.02 General Restriction. Each option and each stock
appreciation right shall be subject to the requirement that if at
any time the Board or the Committee shall determine, in its
discretion, that the listing, registration, or qualification of
securities upon any securities exchange or under any state or
federal or other applicable law, or the consent or approval of
any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such option
or right or the issue or purchase of securities thereunder, such
option or right may not be exercised in whole or in part unless
such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not
acceptable to the Board or the Committee.
7.03 No Rights as Stockholder. The holder of an option
or stock appreciation right shall not have any rights of a
stockholder with respect to the shares subject to the option or
right until such shares shall have been delivered to him or her.
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<PAGE> 17
7.04 Effective Date and Duration of Plan. The Plan
shall become effective January l, 1996, subject to Stockholder
Approval. No stock options shall be granted under the Plan after
December 31, 2000.
7.05 Amendments. The Board may from time to time
amend, modify, suspend or terminate the Plan; provided, however,
that no such action shall (a) impair without the Grantee's
consent any option or stock appreciation right theretofore
granted under the Plan or deprive any Grantee of any shares of
Company Stock which he or she may have acquired through or as a
result of the Plan or (b) be made without Stockholder Approval
where such change would increase the total number of shares that
may be issued under the Plan (other than as provided in Section
6.02). Notwithstanding the foregoing, the Board may, in any
circumstance where it deems such approval necessary or desirable,
and shall, to the extent necessary to maintain compliance with
Rule 16b-3 under the Securities Exchange Act of 1934 as in effect
from time to time, require Stockholder Approval as a condition to
the effectiveness of any amendment or modification of the Plan.
Anything in the Plan to the contrary notwithstanding, at any time
before a Change in Control (as defined in Section 7.07(b))
occurs, the Board may amend Section 7.07(b)(i) to change the
percentage referred to therein to a percentage that is not more
than 25%, so long as such change is consistent with
contemporaneous change of a similar nature in the Rights
Agreement (as defined in Section 7.07(b)(vi)).
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<PAGE> 18
7.06 Construction. Except as otherwise required by
applicable federal laws, the Plan shall be governed by, and
construed in accordance with, the laws of the Commonwealth of
Virginia.
7.07 Change in Control. (a) Anything herein to the
contrary notwithstanding, if there is a Change in Control of the
Company (as defined in subsection (b) below), all options and
stock appreciation rights already granted hereunder shall become
immediately exercisable; provided that to the extent necessary to
be exempt from Section 16(b) of the 1934 Act (as defined below),
the date as of which options and stock appreciation rights first
become exercisable pursuant to this Section 7.07 by grantees who
are officers or directors of the Company may in no event be
earlier than six (6) months from the date the option or stock
appreciation right is granted.
(b) For purposes of this Section 7.07, "Change in
Control" shall mean the occurrence of any of the following:
(i) Any Person (as defined below) becomes
the Beneficial Owner (as defined below), directly or
indirectly, of 15% or more of the Company's common
stock, unless such Person (A) is not deemed an
"Acquiring Person" in accordance with Section 1(a) of
the Rights Agreement (as defined below) or (B) became a
Beneficial Owner of 15% or more of the Company's common
stock in a transaction that did not constitute a Change
in Control under Section 7.07(b)(iii);
(ii) During any period of two consecutive
years, individuals who at the beginning of such period
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<PAGE> 19
constitute the Board, and any new directors (other than
a director designated by a person who has entered into
an agreement with the Company to effect a transaction
described in Sections 7.07(b)(i), (iii) or (iv)) whose
election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at
least two-thirds of the directors then still in office
who either were directors at the beginning of the
period or whose election or nomination for election was
previously so approved, cease for any reason to
constitute a least a majority of the members of the
Board;
(iii) The effective date of a merger or
consolidation of the Company with any other entity,
other than a merger or consolidation which would result
in the voting securities of the Company outstanding
immediately before such merger or consolidation
continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity or of any other
corporation or entity that as a result of such
transaction owns the Company or all or substantially
all of the assets of the Company, either directly or
through one or more subsidiaries (a "parent entity"))
more than 51% of the combined voting power of the
voting securities of the parent or surviving entity
outstanding immediately after such merger or
consolidation and with the power to elect at least a
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<PAGE> 20
majority of the board of directors or other governing
body of such parent or surviving entity;
(iv) The approval by the shareholders of the
Company of a complete liquidation of the Company or an
agreement for the sale or disposition by the Company of
all or substantially all of the Company's assets; or
(v) There occurs any other event of a nature
that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or
form) under the 1934 Act, whether or not the Company is
then subject to such reporting requirement.
(vi) Certain Definitions. For purposes of
this Section 7.07(b), the following terms shall have
the following meanings:
(A) "Person" shall have the meaning as set
forth in Sections 13(d) and 14(d) of the 1934 Act;
provided, however, that Person shall exclude (i)
the Company, (ii) any trustee or other fiduciary
holding securities under an employee benefit plan
of the Company, and (iii) any corporation owned,
directly or indirectly, by the shareholders of the
Company in substantially the same proportions as
their ownership of stock of the Company.
(B) "Beneficial Owner" shall have the
meaning given to such term in Rule 13d-3 under the
1934 Act; provided, however, that Beneficial Owner
shall exclude any Person otherwise becoming a
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<PAGE> 21
Beneficial Owner by reason of the shareholders of
the Company approving a merger of the Company with
another entity.
(C) "Rights Agreement" shall mean the
Amended and Restated Rights Agreement dated as of
March 8, 1999 between the Company and ChaseMellon
Shareholder Services, L.L.C., as initially in
effect.
(D) "1934 Act" shall mean the Securities
Exchange Act of 1934, as amended.
Executed and adopted this 15th day of April, 1999, in
accordance with action taken by the Board of Directors at its
meeting held on March 8, 1999.
REYNOLDS METALS COMPANY
By: /s/ D. Michael Jones
_________________________
Title: Senior Vice President
and General Counsel
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EXHIBIT 10.34
REYNOLDS METALS COMPANY
STOCK PLAN FOR OUTSIDE DIRECTORS
As Amended and Restated
Effective March 8, 1999
<PAGE> 1
ARTICLE I
PURPOSE OF THE PLAN
The purposes of the Plan are to promote a greater
identity of interests between the Company's Directors and its
stockholders through grants of Phantom Stock and to assist the
Company in attracting and retaining qualified individuals to
serve as Directors by affording them an opportunity to share in
the future successes of the Company.
ARTICLE II
DEFINITIONS
2.01 "Beneficiary" shall mean the individual or
entity designated by the Director to receive any amounts
allocated to the Director that remain in the Plan upon the death
of the Director. If no such designation is made, or if the
designated individual predeceases the Director or the entity no
longer exists, then the Beneficiary shall be the Director's
estate.
2.02 "Board" shall mean the Board of Directors of
the Company.
2.03 "Company" shall mean Reynolds Metals Company, a
Delaware corporation.
2.04 "Company Stock" shall mean the Common Stock of
the Company, without par value.
2.05 "Director" shall mean a voting member of the
Board (a) who is not an employee of the Company or of one of its
1
<PAGE> 2
subsidiaries and (b) who is not entitled, as a result of previous
employment by any of them, to receive any retirement benefits
from the Company or from any company that is or has been a
subsidiary.
2.06 "Effective Date" shall mean January 1, 1997.
2.07 "Phantom Stock" shall mean shares of Company
Stock credited to a Director in accordance with Article III.
2.08 "Plan" shall mean this Reynolds Metals Company
Stock Plan for Outside Directors, as amended from time to time.
ARTICLE III
GRANTS OF PHANTOM STOCK
3.01 Each Director shall be granted 225 shares of
Phantom Stock under the Plan each calendar year; provided,
however, that beginning April 1 in the year in which all
restrictions on shares granted to a Director under the Reynolds
Metals Company Restricted Stock Plan for Outside Directors have
lapsed, such Director shall be granted shares of Phantom Stock
under the Plan at an annual rate of 425 shares per year. Grants
shall be credited to Directors' accounts under the Plan in four
equal quarterly installments on the last day of each calendar
quarter. A Director who ceases to be a member of the Board
during a calendar quarter shall be credited on the last day of
that quarter with a proportionate share of the quarterly
allocation based on the Director's service during the quarter.
2
<PAGE> 3
3.02 In addition to the Phantom Stock grants
described in Section 3.01 above, the account of each Director who
is serving as a Director on January 1, 1997, shall be credited as
of such date with an additional initial grant of Phantom Stock.
The number of shares of Phantom Stock in this initial grant shall
be determined in accordance with the action taken by the Board at
its meeting on November 15, 1996.
3.03 As of each date when cash dividends are paid on
Company Stock, each Director's account under the Plan shall also
be adjusted to reflect dividend equivalents computed in
accordance with this Section 3.03. The dollar amount of the
dividend equivalent for each Director shall equal the cash
dividends that would have been paid on the number of shares of
Phantom Stock credited to the Director's account as of the
dividend record date if that number of shares of Phantom Stock
had actually been issued and outstanding on the record date.
This dividend equivalent for each Director shall be converted
into a number representing additional shares of Phantom Stock by
dividing (a) the total dollar amount of the Director's dividend
equivalent by (b) the arithmetic average of the high and low
sales prices of Company Stock as reported on New York Stock
Exchange - Composite Transactions on the date when the cash
dividends are paid. The Director's account under this Plan shall
then be credited with the determined number of shares of Phantom
Stock, including fractional shares calculated to three decimal
places.
3
<PAGE> 4
3.04 If any stock dividend is declared upon Company
Stock, or if there is any stock split, stock distribution, or
other recapitalization of the Company with respect to its Company
Stock, resulting in a split-up or combination or exchange of
shares, or if any special distribution is made to holders of
Company Stock, the aggregate number and kind of shares of Phantom
Stock credited to the account of a Director under the Plan shall
be proportionately and appropriately adjusted.
ARTICLE IV
PAYMENT OF PLAN ACCOUNTS
4.01 No Director shall receive any payment under the
Plan while serving as a Director. If a Director resigns or
retires during a calendar year, the Director's account shall be
maintained under the Plan through January 15 of the following
year. As of such January 15, the total number of shares of
Phantom Stock credited to the Director's account (representing
both grants and dividend equivalents) shall be computed and a
distribution made to the Director as soon after January 15 as
administratively feasible. Distributions shall be in shares of
Company Stock, except that any fractional share shall be paid in
cash. The cash value of the fractional share shall be based on
the arithmetic average of the high and low sales prices of
Company Stock as reported on New York Stock Exchange - Composite
Transactions on January 15 (or on the preceding business day if
the New York Stock Exchange is not open on January 15).
4
<PAGE> 5
4.02 Except as otherwise specifically provided in
Section 4.03 below, any payment shall be made in a single lump
sum.
4.03 (a) Payment of Phantom Stock credited to a
Director's account from time to time in accordance with Section
3.01, including any dividend equivalents attributable to such
Phantom Stock, shall be made in a single lump sum unless the
Director elects before December 31 of any year to have the
Phantom Stock (including dividend equivalents attributable
thereto) credited during the following calendar year paid out in
five annual installments. Once made, any such election is
irrevocable for the calendar year to which it applies. A new
election will be required each December if installments are
desired for the following calendar years.
If the Director elects payment in the form of five
annual installments, the initial installment shall be paid as
soon as administratively feasible after January 15 of the year
following the year of the Director's resignation or retirement
and shall equal one-fifth of the number of shares of Phantom
Stock subject to installment payments. The subsequent four
annual installments shall be paid as soon as administratively
feasible after the next four January 15 dates and shall equal in
each case (i) the remaining number of shares of Phantom Stock
subject to installment payments divided by (ii) the number of
installment payments remaining, including the installment about
to be paid.
5
<PAGE> 6
(b) Payment of Phantom Stock credited to a Director's
account in accordance with Section 3.02, including any dividend
equivalents attributable to such Phantom Stock, shall be made in
a single lump sum.
4.04 In the event of a Director's death, the
remaining unpaid portion of such Director's Phantom Stock
credited under the Plan, including any applicable dividend
equivalents, shall be paid in a single lump sum to the Director's
Beneficiary as soon as administratively feasible after January 15
of the year following the calendar year of the Participant's
death. The payment shall be in shares of Company Stock, except
that the value of any fractional share shall be computed as
described in Section 4.01 and paid in cash.
ARTICLE V
COMPANY STOCK
Shares of Company Stock distributed under the Plan may
be shares purchased by the Company on the open market or shares
held in the Company's treasury from time to time, or a
combination of both, as the Board may from time to time
determine.
ARTICLE VI
AMENDMENT, SUSPENSION AND TERMINATION OF THE PLAN
The Board may from time to time amend, suspend or
terminate the Plan, in whole or in part; provided, however, that
6
<PAGE> 7
without the Director's consent, no such amendment, suspension or
termination shall materially adversely affect the rights of any
Director in respect of previous grants to such Director.
Anything herein to the contrary notwithstanding, at any time
before a Change in Control (as defined in Section 8.02) occurs,
the Board may amend Section 8.02(a) to change the percentage
referred to therein to a percentage that is not more than 25%, so
long as such change is consistent with contemporaneous change of
a similar nature in the Rights Agreement (as defined in Section
8.02(f)(C).
ARTICLE VII
GENERAL PROVISIONS
7.01 Neither the establishment of the Plan nor the
payment of any benefits hereunder nor any action of the Company,
including the Board, in connection therewith shall be held or
construed to confer upon any individual any legal right to remain
on the Board.
7.02 No rights or benefits under the Plan shall be
subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, except by
will or the laws of descent and distribution, and any attempt
thereat shall be void. No such right or benefit shall, before
receipt thereof, be in any manner liable for or subject to the
recipient's debts, contracts, liabilities, engagements, or torts.
7
<PAGE> 8
7.03 This Plan shall inure to the benefit of, and be
binding upon, the Company and each Director, and upon the
successors and assigns of the Company and of each Director.
7.04 The Company shall not be required to deliver
any fractional share of Common Stock but shall pay, in lieu
thereof, the cash value (measured as of the January 15
immediately preceding the distribution) of such fractional share
to the Director (or the Director's Beneficiary, if applicable).
The cash value of a fractional share shall be computed as
described in Section 4.01.
7.05 Except as otherwise required by applicable
federal laws, this Plan shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Virginia.
ARTICLE VIII
CHANGE IN CONTROL PROVISIONS
8.01 Anything herein to the contrary
notwithstanding, if at any time a Change in Control (as defined
below) occurs, then all Phantom Stock credited to each Director's
account (representing both grants and dividend equivalents) shall
be accelerated and distributed in a lump sum within twenty (20)
days of the date of the Change in Control. Distributions shall
be in shares of Company Stock, except that any fractional shares
shall be paid in cash. The cash value of any fractional share
shall be computed as described in Section 4.01, except that the
8
<PAGE> 9
date of the Change in Control shall be substituted for the
"January 15" date in Section 4.01.
8.02 For purposes of this Article VIII, "Change in
Control" shall mean the occurrence of any of the following:
(a) Any Person (as defined below) becomes the
Beneficial Owner (as defined below), directly or indirectly,
of 15% or more of the Company's common stock, unless such
Person (i) is not deemed an "Acquiring Person" in accordance
with Section 1(a) of the Rights Agreement (as defined
below), or (ii) became a Beneficial Owner of 15% or more of
the Company's common stock in a transaction that did not
constitute a Change in Control under Section 8.02(c) hereof;
(b) During any period of two consecutive years,
individuals who at the beginning of such period constitute
the Board, and any new director (other than a director
designated by a person who has entered into an agreement
with the Company to effect a transaction described in
Section 8.02(a), (c) or (d)) whose election by the Board or
nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute a least a majority of the members of the Board;
(c) The effective date of a merger or consolidation of
the Company or any of its subsidiaries with any other
9
<PAGE> 10
entity, other than a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately before such merger or consolidation continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or
of any other corporation or entity that as a result of such
transaction owns the Company or all or substantially all of
the Company's assets, either directly or through one or more
subsidiaries (the "parent entity")) more than 51% of the
combined voting power of the voting securities of the parent
or surviving entity outstanding immediately after such
merger or consolidation and with the power to elect at least
a majority of the board of directors or other governing body
of such parent or surviving entity;
(d) The approval by the shareholders of the Company of
a complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or
substantially all of the Company's assets; and
(e) There occurs any other event of a nature that
would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or in response to any
similar item on any similar schedule or form) under the 1934
Act (as defined below), whether or not the Company is then
subject to such reporting requirement.
(f) For purposes of this Section 8.02, the following
terms shall have the following meanings:
10
<PAGE> 11
(A) "Person" shall have the meaning as set forth
in Sections 13(d) and 14(d) of the 1934 Act; provided,
however, that Person shall exclude (i) the Company,
(ii) any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, and
(iii) any corporation owned, directly or indirectly, by
the shareholders of the Company in substantially the
same proportions as their ownership of stock of the
Company.
(B) "Beneficial Owner" shall have the meaning
given to such term in Rule 13d-3 under the 1934 Act;
provided, however, that Beneficial Owner shall exclude
any Person otherwise becoming a Beneficial Owner by
reason of the shareholders of the Company approving a
merger of the Company with another entity.
(C) "Rights Agreement" shall mean the Amended and
Restated Rights Agreement dated as of March 8, 1999
between the Company and ChaseMellon Shareholder
Services, L.L.C., as initially in effect.
(D) "1934 Act" means the Securities Exchange Act
of 1934, as amended.
11
<PAGE> 12
Executed and adopted this 28 day of April, 1999,
pursuant to action taken by the Board of Directors of Reynolds
Metals Company at its meeting on March 8, 1999.
REYNOLDS METALS COMPANY
By /s/ D. Michael Jones
_______________________________
Title: Senior Vice President and
General Counsel
12
EXHIBIT 10.37
REYNOLDS METALS COMPANY
LONG-TERM PERFORMANCE SHARE PLAN
As Amended and Restated
Effective April 16, 1999
<PAGE> 1
ARTICLE I
PURPOSE OF THE PLAN
The purpose of the Plan is to assist the Company in
attracting and retaining key employees by providing long-term
performance-based incentives.
ARTICLE II
DEFINITIONS
2.01 "Additional Income" shall have the meaning
specified in Section 5.01(b).
2.02 "Beneficiary" shall mean the individual or entity
designated by the Participant to receive any amounts allocated to
the Participant that remain in the Plan upon the death of the
Participant. If no such designation is made, or if the
designated individual predeceases the Participant or the entity
no longer exists, then the Beneficiary shall be the Participant's
estate.
2.03 "Board" shall mean the Board of Directors of the
Company.
2.04 "Company" shall mean Reynolds Metals Company, a
Delaware corporation.
2.05 "Company Stock" shall mean the Common Stock of the
Company, without par value.
2.06 "Effective Date" shall mean January 1, 1998.
2.07 "Election Period" shall mean for each Performance
Cycle the September of the third year of the Performance Cycle;
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<PAGE> 2
provided, however, that for the initial two-year Performance
Cycle that begins January 1, 1998, and ends December 31, 1999,
the Election Period shall mean September of 1998; and further
provided that the Plan Committee in its discretion may designate
a different period for any Performance Cycle.
2.08 "Participant" shall mean each officer and other
key employee of the Company and its subsidiaries and affiliates
who is designated by the Plan Committee to receive a grant for a
Performance Cycle.
2.09 "Performance Cycle" shall mean initially the cycle
of two full calendar years beginning January 1, 1998, and ending
December 31, 1999, and otherwise shall mean a cycle of four full
calendar years. The initial four-year Performance Cycle shall
begin January 1, 1998, and end December 31, 2001. A new four-
year Performance Cycle shall begin January 1, 2000, and every
subsequent second January 1.
2.10 "Performance Share Units" shall mean the award
units granted by the Plan Committee for a Performance Cycle as
described in Article III.
2.11 "Phantom Stock" shall mean shares of Company Stock
credited to a Participant's account in accordance with this Plan.
2.12 "Plan" shall mean this Reynolds Metals Company
Long-Term Performance Share Plan, as amended from time to time.
2.13 "Plan Committee" shall mean the committee of
nonemployee directors appointed by the Board to administer the
Plan.
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<PAGE> 3
2.14 "Termination" or "Terminated" shall mean a
Participant's termination of employment with the Company and any
subsidiary or affiliate of the Company.
ARTICLE III
GRANTS OF PERFORMANCE SHARE UNITS
As soon as feasible after the beginning of each
Performance Cycle, the Plan Committee shall (1) designate the
officers and other key employees of the Company and its
subsidiaries and affiliates who will participate in the Plan for
the Performance Cycle, (2) determine the Performance Share Units
to be granted to each such Participant, and (3) establish the
performance goal or goals that must be reached by the end of the
Performance Cycle in order for Participants to receive an award
from the Plan at the end of the Performance Cycle.
ARTICLE IV
CALCULATION AND PAYMENT OF AWARDS
4.01 (a) After the end of each Performance Cycle, each
Participant shall be entitled to receive an award for that
Performance Cycle if and to the extent the performance goals
established in accordance with Article III for that Performance
Cycle have been met. Except as otherwise specified herein, half
of the award shall be payable in cash to the Participant (the
"Cash Portion") and half of the award shall be in the form of
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<PAGE> 4
shares of Phantom Stock credited to the Participant's account
(the "Phantom Stock Portion").
(b) A Participant whose employment is Terminated
before the last day of the Performance Cycle shall not be
entitled to any award for the Performance Cycle unless the
Participant's employment was Terminated on account of (i)
disability or immediate retirement, in either case for purposes
of the Reynolds Metals Company New Retirement Program for
Salaried Employees, (ii) death, (iii) a reduction in force for
purposes of the Company's Termination Allowance Policy, or (iv)
such other reason as the Plan Committee may determine. A
Participant who terminates for one of the specified reasons shall
be entitled to a pro rata portion of any award that would
otherwise be due the Terminated Participant after the end of the
Performance Cycle. This pro rata portion shall be determined by
multiplying the award that would otherwise be due the Terminated
Participant by a fraction, the numerator of which is equal to the
number of full calendar months the Participant worked before his
or her Termination and the denominator of which is the number of
months in the Performance Cycle. Any awards made in accordance
with this Section 4.01(b) shall be distributed to the Participant
(or the Participant's Beneficiary, in case of death) as soon as
feasible after the end of the Performance Cycle; except as
otherwise provided in Section 5.04 in case of the Participant's
death, no deferral or installment payment elections made with
respect to the Performance Cycle shall apply.
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4.02 The amount of the cash to be paid to a Participant
for a Performance Cycle with respect to the Cash Portion of an
award shall be determined by multiplying the number of
Performance Share Units payable in cash by the average closing
price of Company Stock on New York Stock Exchange Composite
Transactions for the last twenty (20) trading days of the
Performance Cycle. Except in the case of a voluntary or
mandatory deferral hereunder, the Cash Portion shall be paid out
to the Participant as soon as feasible after the end of the
Performance Cycle.
4.03 (a) The number of shares of Phantom Stock to be
initially credited to a Participant's account for a Performance
Cycle with respect to the Phantom Stock Portion of an award shall
be equal to the number of Performance Share Units payable in
Phantom Stock for the Performance Cycle.
(b) As of each date when cash dividends are paid on
Company Stock, each Participant's Phantom Stock account under the
Plan shall be adjusted to reflect dividend equivalents computed
in accordance with this Section 4.03(b). The dollar amount of
the dividend equivalent for each Participant shall equal the cash
dividends that would have been paid on the number of shares of
Phantom Stock credited to the Participant's account as of the
dividend record date if that number of shares of Phantom Stock
had actually been issued and outstanding on the record date.
This dividend equivalent for each Participant shall be converted
into a number representing additional shares of Phantom Stock by
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dividing (i) the total dollar amount of the Participant's
dividend equivalent by (ii) the arithmetic average of the high
and low sales prices of Company Stock as reported on New York
Stock Exchange Composite Transactions on the date when the cash
dividends are paid. The Participant's account under the Plan
shall then be credited with the determined number of shares of
Phantom Stock, including fractional shares calculated to three
decimal places.
(c) If any stock dividend is declared upon Company
Stock, or if there is any stock split, stock distribution, or
other recapitalization of the Company with respect to its Company
Stock, resulting in a split-up or combination or exchange of
shares, or if any special distribution is made to holders of
Company Stock, the aggregate number and kind of shares of Phantom
Stock credited to the account of a Participant under the Plan
shall be proportionately adjusted as the Plan Committee may deem
appropriate.
(d) No Participant shall receive any distribution
relating to Phantom Stock while the Participant is still employed
by the Company or any of its subsidiaries or affiliates. If a
Participant's employment is Terminated during a calendar year,
the Participant's Phantom Stock account shall be maintained under
the Plan through January 15 of the following year. As of such
January 15, the total number of shares of Phantom Stock credited
to the Participant's account (representing both awards and
dividend equivalents) shall be computed and a distribution made
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to the Participant as soon after January 15 as administratively
feasible. Distributions shall be in shares of Company Stock,
except that the cash value of any fractional share shall be paid
in cash. The cash value of the fractional share shall be based
on the arithmetic average of the high and low sales prices of
Company Stock as reported on New York Stock Exchange Composite
Transactions on January 15 (or on the preceding business day if
the New York Stock Exchange is not open on January 15). Unless
the Participant has elected to receive the distribution in
installments in accordance with Section 5.03, any distribution
relating to Phantom Stock shall be made in a single lump sum.
ARTICLE V
DEFERRAL OF PAYMENTS
5.01 (a) Each Participant who has not Terminated
employment shall have the right to elect to defer the receipt of
up to 85% of the Cash Portion payable with respect to a
Performance Cycle in accordance with Article IV. At the election
of the Participant, the amount deferred may be expressed (i) as a
percentage of the Cash Portion payable under Article IV, in
multiples of 5%, (ii) as a dollar amount, in multiples of $100,
or (iii) as either a percentage of the Cash Portion or a dollar
amount, in each case, in excess of a floor amount specified by
the Participant. In no case, however, may the total amount
deferred be less than $2,000 nor more than 85% of the
Participant's Cash Portion for the Performance Cycle. Any
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<PAGE> 8
deferral election shall be made by the Participant during the
Election Period for the Performance Cycle to which the election
relates; once made, the election shall be irrevocable.
(b) Deferred amounts shall be increased by an amount
of additional income (hereinafter referred to as "Additional
Income") computed at a specified rate and compounded annually on
December 31st from the date the amounts would have been paid in
accordance with Section 4.02 through the December 31st coincident
with or next following the Participant's Termination. The
specified rate for Cash Portions with respect to a Performance
Cycle shall be equal to the rate established under the Reynolds
Metals Company New Management Incentive Deferral Plan for amounts
deferred under that plan with respect to the last year of the
Performance Cycle.
(c) Unless the Participant has elected to receive
installment payments in accordance with Section 5.03, any amounts
deferred in accordance with this Section 5.01, including any
applicable Additional Income, shall be paid out to the
Participant as soon as feasible in the January following the
calendar year in which the Participant's employment Terminates.
5.02 The provisions of this Section 5.02 shall apply
only to a Participant who, at the time an election to defer is
made in accordance with Section 5.01, is subject to the Company's
Stock Ownership Guidelines for Officers (an "Officer"). Any such
Officer electing to defer payment of a Cash Portion may also
elect to have a specified part or all of such deferred amount
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<PAGE> 9
subject to Phantom Stock Additional Income (as provided herein)
instead of having Additional Income computed at a specified rate
as set forth in Section 5.01(b). Phantom Stock Additional Income
shall be computed in accordance with the following rules:
(a) As of the date when the Cash Portion would have
been paid but for the deferral election, each Officer who
elects to receive Phantom Stock Additional Income shall have
his or her account under this Plan credited with a number of
shares of Phantom Stock, equal to the number of Performance
Share Units in the portion of the Cash Portion to which the
deferral election relates.
(b) As of each date when cash dividends are paid on
Company Stock, each Officer who elected to receive Phantom
Stock Additional Income shall also have the appropriate
portion of his or her account under this Plan adjusted to
reflect dividend equivalents as described in Section
4.03(b).
(c) If any stock dividend is declared upon Company
Stock, or if there is any stock split, stock distribution,
or other recapitalization of the Company with respect to its
Company Stock, resulting in a split-up or combination or
exchange of shares, or if any special distribution is made
to holders of Company Stock, the aggregate number and kind
of shares of Phantom Stock credited to the appropriate
portion of the account of an Officer under the Plan shall be
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<PAGE> 10
proportionately adjusted as the Plan Committee may deem
appropriate.
(d) The election of Phantom Stock Additional Income
must be made at the same time as the election to defer the
Cash Portion in accordance with Section 5.01. Once made,
the election of Phantom Stock Additional Income shall be
irrevocable as to the Performance Cycle to which such
election applies.
(e) Distribution of any amounts to which this Section
5.02 applies shall be in shares of Company Stock and shall
be subject to the provisions of Section 4.03(d).
5.03 (a) All of a Participant's deferred amounts,
including any Phantom Stock Portion and any Additional Income and
dividend equivalents, shall be distributed to the Participant in
the January following the calendar year in which the
Participant's employment Terminates unless the Participant has
elected with respect to a Performance Cycle to receive the
distribution in annual installments over a period of five (5)
years. An election to receive installment payments shall be made
by the Participant during the Election Period for the Performance
Cycle to which the election relates, and if the installment
payment election relates to a Cash Portion, the installment
payment election shall be made at the same time as the election
to defer the Cash Portion. Once made, the installment payment
election shall be irrevocable.
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(b) Annual installments of amounts paid in cash shall
be in equal amounts, shall consist of the deferred amounts and
the Additional Income applicable thereto, and shall be paid as
soon as administratively feasible at the beginning of each
calendar year following the year in which the Participant
Terminates employment. If the Participant has elected to receive
distributions of Phantom Stock (whether arising from the
Participant's Phantom Stock Portion, a voluntary deferral, or a
mandatory deferral, and including in any event applicable
dividend equivalents) in five (5) annual installments, the
initial installment shall be distributed as soon as
administratively feasible after January 15 of the year following
the year of the Participant's Termination of employment and shall
equal one-fifth of the number of shares of Phantom Stock subject
to installment payments. The subsequent four annual installments
shall be paid as soon as administratively feasible after the next
four January 15 dates and shall equal in each case (i) the
remaining number of shares of Phantom Stock subject to
installment payments divided by (ii) the number of installment
payments remaining, including the installment about to be paid.
5.04 Any Participant may also irrevocably elect during
an Election Period that if the Participant dies before receiving
full distribution of all amounts for the Performance Cycle to
which the election relates, distribution to the Beneficiary of
any amounts remaining after the Participant's death shall be made
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<PAGE> 12
in five (5) annual installments. Such installments shall be
computed and distributed as described in Section 5.03(b).
5.05 (a) Anything herein to the contrary
notwithstanding, the Plan Committee may direct that all unpaid
deferred amounts, including any Phantom Stock Portion and any
applicable Additional Income and dividend equivalents, be
accelerated and distributed in a lump sum if, in conjunction with
the termination of the Plan, the Plan Committee finds, in its
sole discretion, that extraordinary circumstances make such
acceleration of payments in the best interest of the Company;
provided, however, that no payment with respect to Phantom Stock
may be accelerated under this Section 5.05(a) unless the
accelerated payment will be exempt from short-swing profit
liability pursuant to the rules promulgated under Section 16(b)
of the Securities Exchange Act of 1934, as amended.
(b) Anything herein to the contrary notwithstanding,
if at any time a Change in Control (as defined in Section 11.02)
occurs, then all unpaid deferred amounts, including any Phantom
Stock Portion and any applicable Additional Income and dividend
equivalents, shall be accelerated and distributed in a lump sum.
5.06 (a) The provisions of this Section 5.06 shall
apply each calendar year to each Participant who is a Top
Executive (as defined below) at the time the Cash Portion of an
award is to be paid under the Plan in that year. To the extent a
Top Executive's Estimated Annual Compensation (as defined below)
would exceed One Million Dollars ($1,000,000) for the year,
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payment of any Cash Portion shall be automatically deferred in
accordance with this Section 5.06 to the extent necessary to
bring the top Executive's Estimated Annual Compensation below One
Million Dollars ($1,000,000). If necessary, all of a
Participant's Cash Portion shall be deferred, in which case any
applicable payroll taxes shall be deducted and paid from such Top
Executive's regular salary checks unless the Top Executive
reimburses the Company separately for such payroll taxes.
(b) Any mandatory deferral in accordance with this
Section 5.06 shall be subject to the following terms and
conditions:
(A) Except as otherwise provided in subsection (B)
below, amounts deferred under this Section 5.06 shall earn
Additional Income as described in Section 5.01(b). All
amounts shall be distributed to the Top Executive in a
single lump sum in the January following the calendar year
in which the Top Executive's employment Terminates unless
the Top Executive has elected to have any amounts deferred
in accordance with this Section 5.06 paid in annual
installments over a period of five (5) years as described
in, and in accordance with, Section 5.03.
(B) A Participant who anticipates being a Top
Executive subject to a mandatory deferral in accordance with
this Section 5.06 may elect to have any amounts subject to a
mandatory deferral earn Phantom Stock Additional Income in
accordance with the provisions of Section 5.02.
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<PAGE> 14
(C) A Participant who anticipates being a Top
Executive subject to a mandatory deferral in accordance with
this Section 5.06 may elect in accordance with Section 5.04
that in case of such Top Executive's death before all
amounts subject to the mandatory deferral are distributed,
distribution to the Beneficiary of any amounts remaining
after the Participant's death shall be made in five (5)
annual installments. Such installments shall be computed
and distributed as described in Section 5.03(b).
(D) Any elections made under subsections (A), (B) and
(C) above shall be made at the same time, which time shall
be no later than the December 31st of the last year of the
Performance Cycle to which the Cash Portion relates. Once
made, any such election shall be irrevocable.
(E) Anything in this Section 5.06(b) to the contrary
notwithstanding, if and to the extent a Participant who is a
Top Executive has already made a deferral election, a
Phantom Stock Additional Income election, or an installment
payment election with respect to the Cash Portion of an
award affected by this Section 5.06, the prior election(s)
shall automatically apply to all amounts subject to the
mandatory deferral provisions of this Section 5.06, and the
Top Executive shall not be permitted to make any different
or additional elections under subsections (A), (B) and/or
(C) above.
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<PAGE> 15
(c) For purposes of this Section 5.06, a Top
Executive's "Estimated Annual Compensation" for a given year
shall be equal to (i) the Top Executive's anticipated salary for
the year as approved by the Compensation Committee in January of
the year (taking into account any approved increase to become
effective during the year), less any amounts the Top Executive
has voluntarily elected to defer under the Reynolds Metals
Company Salary Deferral Plan for Executives for the year, plus
(ii) the anticipated incentive compensation to be paid to the Top
Executive under the Reynolds Metals Company Supplemental
Incentive Plan, less any amounts the Top Executive has
voluntarily elected to defer under the Reynolds Metals Company
New Management Incentive Deferral Plan, plus (iii) the amount of
any previously deferred incentive compensation payable to the Top
Executive during the year that will count as compensation in the
year for purposes of Section 162(m) of the Internal Revenue Code
of 1986, as amended, plus (iv) the amount of miscellaneous or
imputed income (for items such as the imputed value of life
insurance and the use of a car or plane) that the Top Executive
had for the immediately preceding calendar year.
(d) "Top Executive" shall mean for any calendar year
any individual who may reasonably be expected to be a "covered
employee" for the year for purposes of Section 162(m) of the
Internal Revenue Code of 1986, as amended.
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<PAGE> 16
ARTICLE VI
ADMINISTRATION
The Plan Committee shall have full responsibility and
authority to interpret and administer the Plan, including the
power to promulgate rules of Plan administration, the power to
settle any disputes as to rights or benefits arising from the
Plan, the power to appoint agents and delegate its duties, and
the power to make such decisions or take such actions as the Plan
Committee, in its sole discretion, deems necessary or advisable
to aid in the proper administration of the Plan. Actions and
determinations by the Plan Committee shall be final, binding and
conclusive for all purposes of this Plan.
ARTICLE VII
AMENDMENT, SUSPENSION AND TERMINATION OF THE PLAN
The Board may from time to time amend, suspend or
terminate the Plan, in whole or in part, except that no such
amendment, suspension or termination shall materially adversely
affect the rights of any Participant in respect of any awards
previously earned by such Participant and not yet paid. Anything
in the Plan to the contrary notwithstanding, at any time before a
Change in Control (as defined in Section 11.02) occurs, the Board
may amend Section 11.02(a) to change the percentage referred to
therein to a percentage that is not more than 25%, so long as
such change is consistent with contemporaneous change of a
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<PAGE> 17
similar nature in the Rights Agreement (as defined in Section
11.02(f)(C)).
ARTICLE VIII
FUNDING
No promises under this Plan shall be secured by any
specific assets of the Company, nor shall any assets of the
Company be designated as attributable or allocated to the
satisfaction of such promises. Benefit payments shall be made
from the Company's general assets.
ARTICLE IX
COMPANY STOCK
Shares of Company Stock distributed under the Plan
shall be shares purchased by the Company on the open market or
shares held in the Company's treasury from time to time, or a
combination of both, as the Board may from time to time
determine.
ARTICLE X
GENERAL PROVISIONS
10.01 All elections by a Participant hereunder shall
be made in writing by the completion and delivery to the Company
of forms prescribed for such purpose within the time limits
established with respect to such election.
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10.02 Neither the establishment of the Plan nor the
payment of any benefits hereunder nor any action of the Company,
including its Board, in connection therewith shall be held or
construed to confer upon any individual any legal right to remain
an officer or an employee of the Company.
10.03 No benefit under the Plan shall be subject in
any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, except by will or the
laws of descent and distribution, and any attempt thereat shall
be void. No such benefit shall, prior to receipt thereof, be in
any manner liable for or subject to the recipient's debts,
contracts, liabilities, engagements, or torts.
10.04 This Plan shall inure to the benefit of, and be
binding upon, the Company and each Participant, and upon the
successors and assigns of the Company and of each Participant.
10.05 The Company shall not be required to deliver any
fractional share of Common Stock but shall pay, in lieu thereof,
the cash value (measured as of the January 15 immediately
preceding the distribution) of such fractional share to the
Participant (or the Participant's Beneficiary, if applicable).
The cash value of a fractional share shall be computed as
described in Section 4.03(d).
10.06 If any cash payment under Section 11.01 would
make a Change in Control transaction ineligible for pooling of
interests accounting under APB No. 16 that would have been
eligible for such accounting treatment but for such cash payment,
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<PAGE> 19
then the Plan Committee shall be empowered to substitute for up
to 50% of the cash payable to a Participant under Section 11.01
Company Stock (or securities into which Company Stock has been
converted), with the number of shares of Company Stock or of such
other securities to be determined on the basis set forth in
Sections 4.03(a) and 4.03(c).
10.07 The Company shall either (a) deduct from the
amount of any payments hereunder all taxes required to be
withheld by applicable laws or (b) make such other arrangements
as may be necessary or appropriate to meet its withholding
obligations.
10.08 This Plan shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Virginia.
ARTICLE XI
CHANGE IN CONTROL PROVISIONS
11.01 Anything in this Plan to the contrary
notwithstanding, if at any time during a Performance Cycle a
Change in Control (as defined in Section 11.02) occurs, then such
Performance Cycle shall be terminated, and
(a) if such Performance Cycle has been in effect for
one year or more, each Participant shall be paid in cash an
amount equal to the target award for such Participant for
such Performance Cycle determined as if the date of the
Change in Control were the end of the Performance Cycle;
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(b) if such Performance Cycle has been in effect for
less than one year, each Participant shall be paid in cash
an amount equal to one fourth of the target award for such
Participant for such Performance Cycle determined as if the
date of the Change in Control were the end of the
Performance Cycle; and
(c) any Terminated Participant entitled to a pro rata
award under Section 4.01(b) shall receive a payment
equivalent to that provided in Section 11.01(a) or (b)
above, as applicable, pro-rated as provided in Section
4.01(b), except that for purposes of determining the pro-
ration of the amount payable under Section 11.01(b), the
denominator to be used shall be 12.
11.02 For purposes of this Article XI, "Change in
Control" shall mean the occurrence of any of the following:
(a) Any Person (as defined below) becomes the
Beneficial Owner (as defined below), directly or indirectly,
of 15% or more of the Company's common stock, unless such
Person (A) is not deemed an "Acquiring Person" in accordance
with Section 1(a) of the Rights Agreement (as defined
below), or (B) became a Beneficial Owner of 15% or more of
the Company's common stock in a transaction that did not
constitute a Change in Control under Section 11.02(c)
hereof;
(b) During any period of two consecutive years,
individuals who at the beginning of such period constitute
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the Board, and any new director (other than a director
designated by a person who has entered into an agreement
with the Company to effect a transaction described in
Section 11.02(a), (c) or (d)) whose election by the Board or
nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute a least a majority of the members of the Board;
(c) The effective date of a merger or consolidation of
the Company or any of its subsidiaries with any other
entity, other than a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately before such merger or consolidation continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or
of any other corporation or entity that as a result of such
transaction owns the Company or all or substantially all of
the Company's assets, either directly or through one or more
subsidiaries (the "parent entity")) more than 51% of the
combined voting power of the voting securities of the parent
or surviving entity outstanding immediately after such
merger or consolidation and with the power to elect at least
a majority of the board of directors or other governing body
of such parent or surviving entity;
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<PAGE> 22
(d) The approval by the shareholders of the Company of
a complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or
substantially all of the Company's assets; and
(e) There occurs any other event of a nature that
would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or in response to any
similar item on any similar schedule or form) under the 1934
Act (as defined below), whether or not the Company is then
subject to such reporting requirement.
(f) For purposes of this Section 11.02, the following
terms shall have the following meanings:
(A) "Person" shall have the meaning as set forth
in Sections 13(d) and 14(d) of the 1934 Act; provided,
however, that Person shall exclude (i) the Company,
(ii) any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, and
(iii) any corporation owned, directly or indirectly, by
the shareholders of the Company in substantially the
same proportions as their ownership of stock of the
Company.
(B) "Beneficial Owner" shall have the meaning
given to such term in Rule 13d-3 under the 1934 Act;
provided, however, that Beneficial Owner shall exclude
any Person otherwise becoming a Beneficial Owner by
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<PAGE> 23
reason of the shareholders of the Company approving a
merger of the Company with another entity.
(C) "Rights Agreement" shall mean the Amended and
Restated Rights Agreement dated as of March 8, 1999
between the Company and ChaseMellon Shareholder
Services, L.L.C., as initially in effect.
(D) "1934 Act" means the Securities Exchange Act
of 1934, as amended.
11.03 (a) If a Participant receives any payments
under Section 11.01 (CIC Payments") that are subject to the tax
("Excise Tax") imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code"), the Participant shall also
receive at the time specified below an additional amount ("Gross-
Up Payment") such that the net amount retained by the
Participant, after deduction of any Excise Tax on the CIC
Payments and any federal, state and local income tax and Excise
Tax upon the payment provided for by this Section 11.03(a), shall
be equal to the CIC Payments (net of any required payroll
withholding taxes on the CIC Payments themselves). For purposes
of determining whether any payments under this Article XI will be
subject to the Excise Tax and the amount of such Excise Tax, (i)
any payments or benefits received by the Participant in
connection with a change in control (whether pursuant to the
terms of this Plan or under any other plan, arrangement or
agreement with the Company, with any person whose actions result
in a Change in Control, or with any person affiliated with the
Company or such person (all such
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<PAGE> 24
persons other than the Company, "Successors")) shall
be treated as "parachute payments" within the meaning
of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280G(b)(1)
shall be treated as subject to the Excise Tax, unless in the
opinion of tax counsel selected by the Company's independent
auditors such payments or benefits (in whole or in part) do not
constitute parachute payments, or such excess parachute payments
(in whole or in part) represent reasonable compensation for
services actually rendered within the meaning of Section
280G(b)(4) of the Code in excess of the base amount within the
meaning of Section 280G(b)(3) of the Code, or are otherwise not
subject to the Excise Tax, (ii) the amount of the payments which
shall be treated as subject to the Excise Tax shall be equal to
the lesser of (A) the total amount of the payments under this
Article XI or (B) the amount of excess parachute payments within
the meaning of Section 280G(b)(1) (after applying clause (i)
above), and (iii) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Participant
shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local
income taxes at the highest marginal rate of taxation in the
state and locality of the Participant's residence on the date of
the payment under Section
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11.01, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes.
(b) If the Excise Tax is subsequently determined to be
less than the amount taken into account hereunder at the date of
the payment, the Participant shall repay to the Company at the
time that the amount of such reduction in Excise Tax is finally
determined the portion of the Gross-Up Payment attributable to
such reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal and state and local
income tax imposed on the Gross-Up Payment being repaid by the
Participant if such repayment results in a reduction in Excise
Tax and/or a federal and state and local income tax reduction)
plus interest received by the Participant attributable to any
Excise Tax refund. If the Excise Tax is determined to exceed the
amount taken into account hereunder at the date of payment
(including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional gross-up payment in respect
of such excess (plus any interest payable with respect to such
excess) at the time that the amount of such excess is finally
determined.
(c) The Gross-Up Payment shall be made not later than
the tenth business day following the date of the payment under
Section 11.01; provided however, that if the amount of such
payment cannot be finally determined on or before such day, the
Company shall pay the Participant on such day an estimate as
determined in good faith by the Company of the minimum amount of
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such payment and shall pay the remainder of such payment
(together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined but in no event later than the sixtieth day after the
date of the payment under Section 11.01. If the amount of the
estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company
to the Participant payable on the tenth business day after demand
by the Company (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code).
(d) Anything herein to the contrary notwithstanding,
any Gross-Up Payment otherwise due to a Participant hereunder
shall be reduced by the amount of any similar type of gross-up
payments received by the Participant from the Company or any
Successor outside this Plan.
Executed and adopted this 26 day of April,
1999, pursuant to action taken by the Board of Directors of
Reynolds Metals Company at its meetings on March 8, 1999 and
April 16, 1999.
REYNOLDS METALS COMPANY
By: /s/ D. Michael Jones
___________________________
Title: Senior Vice President
and General Counsel
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EXHIBIT 10.40
STOCK OPTION AGREEMENT
THIS AGREEMENT, dated May 21, 1999, between REYNOLDS
METALS COMPANY, a Delaware corporation ("Reynolds"), and [INIT]
[NAME] ("Optionee").
WHEREAS, the Committee designated to administer the
Reynolds Metals Company 1999 Nonqualified Stock Option Plan
("Plan") has selected Optionee as an Eligible Employee (as
defined in the Plan) to whom an option is to be granted under the
Plan, and has recognized that through Optionee's efforts and
because of Optionee's responsibilities, Optionee is in a position
to contribute substantially to the overall success and growth of
Reynolds;
NOW, THEREFORE, the parties agree as follows:
1. Reynolds grants to Optionee an option to
purchase from Reynolds the number of shares of its
Common Stock, no par value, listed on the Schedule(s)
hereto and executed by Reynolds and Optionee, at the
prices indicated opposite such shares on such
Schedule(s), and otherwise in accordance with the terms
and conditions stated in the Plan.
2. Subject to the terms of the Plan, the option
shall be exercisable in whole or part, from time to
time, on and after the date or dates indicated opposite
such shares on the Schedule(s) hereto, but in no event
later than the earlier of (a) ten years from the date
of the grant or (b) the date specified in the Plan
relating to Optionee's termination of employment with
Reynolds and its subsidiaries. No option may be
exercised for less than 100 shares of Common Stock
unless the Optionee is electing to exercise all the
remaining options then exercisable on the applicable
Schedule.
3. This Agreement is at all times subject to the
terms and conditions of the Plan, which terms and
conditions are incorporated herein by reference.
Optionee is aware that under the Plan no option may be
exercised if his or her employment terminates for any
reason within one year of the date of the grant, except
as otherwise permitted under the terms of the Plan.
4. All notices to Reynolds must be in writing,
addressed to the Director, Employee Financial Services,
Reynolds Metals Company, 6601 West Broad Street,
Richmond, Virginia 23230-1701, and are effective upon
receipt.
<PAGE>
5. The effectiveness of this Agreement and of any
grant of an option hereunder are subject to compliance
with all applicable laws and regulations and to receipt
of any governmental approvals necessary for the
performance by the parties of their obligations
hereunder, including but not limited to compliance with
and approvals under all applicable exchange control and
securities laws.
IN WITNESS WHEREOF, Reynolds and Optionee have executed
this Agreement in duplicate as of the date first above written.
REYNOLDS METALS COMPANY
By_______________________________
_________________________________
Optionee
EXHIBIT 10.41
THREE PARTY STOCK OPTION AGREEMENT
THIS AGREEMENT, dated May 21, 1999, among REYNOLDS
METALS COMPANY, a Delaware corporation ("Reynolds"), REYNOLDS
ALUMINUM HOLLAND, B. V. , a Netherlands corporation
("Subsidiary"), and [NAME] ("Optionee").
WHEREAS, the Committee designated to administer the
Reynolds Metals Company 1999 Nonqualified Stock Option Plan
("Plan") has selected Optionee as an Eligible Employee (as
defined in the Plan) to whom an option is to be granted under the
Plan, and has recognized that through Optionee's efforts and
because of Optionee's responsibilities, Optionee is in a position
to contribute substantially to the overall success and growth of
Reynolds and Subsidiary;
NOW, THEREFORE, the parties agree as follows:
1. Optionee will have an option to purchase from
Subsidiary the number of shares of Reynolds Common
Stock, no par value, listed on the Schedule(s) hereto,
at the prices indicated opposite such shares on such
Schedule(s), and otherwise in accordance with the terms
and conditions stated in the Plan. Reynolds agrees on
the date of any option exercise by Optionee to transfer
to Subsidiary the number of shares of Reynolds Common
Stock to which such exercise relates in exchange for
the payment to Reynolds by Subsidiary of the Fair
Market Value (as defined in the Plan) of such shares.
2. Subject to the terms of the Plan, the option
shall be exercisable in whole or part, from time to
time, on and after the date or dates indicated opposite
such shares on the Schedule(s) hereto, but in no event
later than the earlier of (a) ten years from the date
of the grant or (b) the date specified in the Plan
relating to Optionee's termination of employment with
Reynolds and its subsidiaries. No option may be
exercised for less than 100 shares of Common Stock
unless the Optionee is electing to exercise all the
remaining options then exercisable on the applicable
Schedule.
3. This Agreement is at all times subject to the
terms and conditions of the Plan, which terms and
conditions are incorporated herein by reference.
Optionee is aware that under the Plan no option may be
exercised if his or her employment terminates for any
reason within one year of the date of the grant, except
as otherwise permitted under the terms of the Plan.
<PAGE>
4. All notices by Optionee hereunder must be
delivered both to Reynolds and to Subsidiary and must
be in writing, in the English language, and addressed
to, in the case of Subsidiary, A Member of the
Supervisory Board, Reynolds Aluminium Holland,
Industrieweg 15, Postbus 30, 3840 AA Harderwijk, The
Netherlands, and in the case of Reynolds, the Director,
Employee Financial Services, Reynolds Metals Company,
6601 West Broad Street, Richmond, Virginia 23230-1701.
Notices by Optionee will be effective upon the later
of their receipt by Reynolds or by Subsidiary.
5. Subsidiary's obligations hereunder may be
assigned to Reynolds or to any corporation now or
hereafter in existence (a) in which Reynolds owns,
directly or indirectly, a voting stock interest of more
than fifty percent (50%) or (b) which is otherwise
considered a "Subsidiary" for purposes of the Plan.
Any such assignment shall relieve Subsidiary of all
obligations hereunder.
6 The effectiveness of this Agreement and of any
grant of an option hereunder are subject to compliance
with all applicable laws and regulations and to receipt
of any governmental approvals necessary for the
performance by the parties of their obligations
hereunder, including but not limited to compliance with
and approvals under all applicable exchange control and
securities laws.
IN WITNESS WHEREOF, Reynolds, Subsidiary and Optionee
have executed this Agreement in triplicate as of the date first
above written.
REYNOLDS METALS COMPANY
By______________________________
REYNOLDS ALUMINUM HOLLAND, B. V.
By_____________________________
________________________________
Optionee
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the Reynolds Metals
Company Condensed Balance Sheet (Unaudited) for June 30, 1999 and Consolidated
Statement of Income (Unaudited) for the six months ended June 30, 1999 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 39
<SECURITIES> 0
<RECEIVABLES> 807<F1>
<ALLOWANCES> 9
<INVENTORY> 536
<CURRENT-ASSETS> 1487
<PP&E> 4294
<DEPRECIATION> 2298
<TOTAL-ASSETS> 5961
<CURRENT-LIABILITIES> 1191
<BONDS> 1098
0
0
<COMMON> 1538
<OTHER-SE> 517
<TOTAL-LIABILITY-AND-EQUITY> 5961
<SALES> 2229
<TOTAL-REVENUES> 2229
<CGS> 1873
<TOTAL-COSTS> 1873
<OTHER-EXPENSES> 117
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38
<INCOME-PRETAX> 32
<INCOME-TAX> 7
<INCOME-CONTINUING> 25
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25
<EPS-BASIC> .40
<EPS-DILUTED> .40
<FN>
<F1>This amount represents total receivables, since trade receivables are not
broken out separately at interim dates, in accordance with S-X 10-01(2).
</FN>
</TABLE>
