Reynolds Metals Company and Consolidated Subsidiaries - Page 10

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               together with accrued interest to the date fixed for                    
               redemption.                                                             
                    As a mandatory sinking fund for the retirement of                  
               the Debentures, the Company will, * * * pay to the                      
               Trustee, on or before the business day next preceding                   
               each sinking fund redemption date * * * an amount in                    
               cash equal to five percent * * * of the aggregate                       
               principal amount of Debentures outstanding at the close                 
               of business on March 1, 1979 (excluding any Debentures                  
               which shall have been converted on or prior to such                     
               date pursuant to Article Four).  * * * [Emphasis                        
               added.]                                                                 
               Section 5.05 of the indenture provides that, in the event of            
          a notice of redemption pursuant to sections 5.01 and 5.02,                   
          interest would accrue to a date specified in the notice and cease            
          to accrue thereafter.  Section 5.05 further excludes converted               
          debentures from the determination of the amount of funds needed              
          after a redemption call.  Section 5.07 provides for the repayment            
          to REMCC of the amount in the sinking fund not required for the              
          redemption of converted debentures.                                          
               Under Article Four of the indenture, a holder of debentures             
          had the right, at any time beginning March 31, 1969, and prior to            
          maturity or other redemption of the debentures, to exchange                  
          debentures for common shares of Metals at a fixed price,                     
          initially $46 per share (i.e., 21.74 shares per $1,000 principal             
          value of debentures), subject to adjustment under certain                    
          circumstances.  Section 4.01 provides that Metals would                      
          effectuate any such exchange absent an agreement between Metals              
          and RMECC that RMECC should do so.                                           






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