-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kk4DK+1naYBHWy7kv0hYMhrKFODmgyyiRqIYVbg688RaACJ6hvoeCNsm4Xo4a/ZR QP5FvipnROe1TPtAGgY/ag== 0000950130-96-000793.txt : 19960311 0000950130-96-000793.hdr.sgml : 19960311 ACCESSION NUMBER: 0000950130-96-000793 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960308 SROS: CSX SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OLIN CORP CENTRAL INDEX KEY: 0000074303 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 131872319 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-01070 FILM NUMBER: 96533003 BUSINESS ADDRESS: STREET 1: 501 MERRITT 7 STREET 2: P O BOX 4500 CITY: NORWALK STATE: CT ZIP: 06856 BUSINESS PHONE: 2033562000 FORMER COMPANY: FORMER CONFORMED NAME: OLIN MATHIESON CHEMICAL CORP DATE OF NAME CHANGE: 19691008 10-K 1 FORM 10-K - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 10-K FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1995 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission file number 1-1070 OLIN CORPORATION (Exact name of registrant as specified in its charter) Virginia 13-1872319 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 501 Merritt 7 P.O. Box 4500 Norwalk, CT 06856-4500 (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (203) 750-3000 ---------------- SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- ----------------------- Common Stock New York Stock Exchange Chicago Stock Exchange Pacific Stock Exchange Series A Participating Cumulative Preferred New York Stock Exchange Stock Purchase Rights Chicago Stock Exchange Pacific Stock Exchange
---------------- SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE ---------------- 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 . Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [_] ---------------- As of January 31, 1996, the aggregate market value of registrant's voting stock held by non-affiliates of registrant was approximately $2,104,493,000. The appraised value of the ESOP Preferred Shares as indicated in the most recent independent appraiser's report was used in determining the market value of such Shares. ---------------- As of January 31, 1996, 24,803,000 shares of the registrant's common stock were outstanding. ---------------- DOCUMENTS INCORPORATED BY REFERENCE PORTIONS OF THE FOLLOWING DOCUMENTS ARE INCORPORATED BY REFERENCE IN THIS FORM 10-K AS INDICATED HEREIN:
PART OF 10-K DOCUMENT INTO WHICH INCORPORATED -------- ----------------------- 1995 Annual Report to Shareholders of Olin Parts I, II, and IV Proxy Statement relating to Olin's 1996 Part III Annual Meeting of Shareholders
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART I ITEM 1. BUSINESS GENERAL Olin Corporation is a Virginia corporation, incorporated in 1892, having its principal executive offices in Norwalk, Connecticut. It is a manufacturer concentrated in chemicals, metals, defense-related products and services, and ammunition. The chemicals segment is divided into three areas or divisions: Chemicals, Chlor-Alkali and Microelectronic Materials. Chemicals includes urethanes, pool chemicals, biocides, acids, and surfactants and fluids. Chlor- alkali includes chlor-alkali products, sodium hydrosulfite and high strength bleach products. Microelectronic Materials includes image-forming and related specialty chemicals and electronic interconnect materials and services. Products in the metals segment include copper and copper alloy sheet, strip, rod, wire, tube and fabricated parts and stainless steel strip. The defense and ammunition segment includes small, medium and large caliber military ammunition, sporting ammunition and advanced technology products and services for aerospace and defense customers. Information as to the sales and assets attributable to each of Olin's industry segments for each of the last ten fiscal years appears on page 24 of the 1995 Annual Report to Shareholders of Olin ("Shareholders Report") and in Exhibit 13 hereto. Such information in Exhibit 13 with respect to the last three fiscal years is incorporated by reference in this Report.* Information as to operating income of Olin's industry segments for each of the last three fiscal years contained in the Note "Segment Information" of the Notes to Financial Statements on pages 35 and 36 of the Shareholders Report and in Exhibit 13 hereto is incorporated herein by reference as contained in Exhibit 13. The term "Olin" as used herein means Olin Corporation and its subsidiaries unless the context indicates otherwise. - -------- * Except for material contained in Exhibit 13 hereto, the Shareholders Report is not "filed" as part of this Report. 1 PRODUCTS AND SERVICES The following is a list of the principal and certain other products and services provided by Olin and its affiliates as of December 31, 1995 within each industry segment. Principal products on the basis of annual sales are highlighted in bold face. CHEMICALS
MAJOR RAW MATERIALS PRODUCT LINE & COMPONENTS FOR OR DIVISION PRODUCTS & SERVICES MAJOR END-USES PLANTS & FACILITIES* PRODUCTS/SERVICES ------------ ---------------------------- ----------------------- ---------------------------- --------------------- Chlor-alkali Chlor-alkali CHLORINE/CAUSTIC SODA Pulp & paper Augusta, GA salt, electricity processing, chemical Charleston, TN manufacturing, water McIntosh, AL purification, Niagara Falls, NY (Niachlor) manufacture of vinyl chloride, bleach, swimming pool chemicals - ----------------------------------------------------------------------------------------------------------------------------- Other Chlor-alkali Sodium Hydrosulfite Paper, textile & clay Augusta, GA caustic soda, Products bleaching Charleston, TN sulfur dioxide Salto, Brazil --------------------------------------------------------------------------------------------------------------- HyPure(TM) products Industrial & Charleston, TN chlorine, caustic institutional cleaners, soda textile bleaching - ----------------------------------------------------------------------------------------------------------------------------- Chemicals Urethanes TOLUENE DIISOCYANATE Intermediate for Lake Charles, LA toluene, chlorine, (TDI) flexible foam used in Fukuoka, Japan (Kyodo nitric acid, furniture, bedding, TDI Limited Company) natural gas carpet underlay, transportation, packaging Flexible polyols Brandenburg, KY propylene oxide, Punta Camacho, Venezuela ethylene oxide Ibaraki-ken, Japan (Asahi-Olin Ltd.) --------------------------------------------------------------------------------------------------------------- Specialty polyols Elastomers, adhesives, Brandenburg, KY propylene oxide, coatings, sealants & Ibaraki-ken, Japan ethylene oxide rigid foam (Asahi-Olin Ltd.) --------------------------------------------------------------------------------------------------------------- Urethane systems Packaging & insulation Ibaraki-ken, Japan polyols, methylene (Asahi-Olin Ltd.) diphenyl diisocyanate Salto, Brazil --------------------------------------------------------------------------------------------------------------- Aliphatic isocyanates Coatings, elastomers, Brandenburg, KY chlorine, specialty adhesives & sealants Lake Charles, LA aliphatic amines - ----------------------------------------------------------------------------------------------------------------------------- Acids Virgin & regenerated Petroleum refining, Beaumont, TX sulfur, oxygen, sulfuric acid, nitric acid agricultural chemicals Lake Charles, LA ammonia Shreveport, LA - ----------------------------------------------------------------------------------------------------------------------------- Pool Chemicals HTH(R), SOCK-IT(R), Residential & Charleston, TN chlorine, lime, PULSAR(R), SUPER SOCK-IT(R), commercial pool Igarassu, Brazil (Nordesclor caustic soda DURATION(R) & CCH(R) sanitizing, water S.A.) CALCIUM HYPOCHLORITE purification Salto, Brazil Kempton Park, S. Africa (Aquachlor (Proprietary) Ltd.) --------------------------------------------------------------------------------------------------------------- PACE(R) Residential & Anaheim, CA chlorine, caustic CHLORINATED commercial pool Amboise, France soda, urea ISOCYANURATES sanitizing, water purification
- -------------------------------------------------------------------------------- * If site is not operated by Olin or a majority-owned, direct or indirect subsidiary, name of joint venture, affiliate or operator is indicated. Sites manufacture, distribute or market one or more of the identified products or services. 2 CHEMICALS (CONT'D)
MAJOR RAW MATERIALS PRODUCT LINE & COMPONENTS FOR OR DIVISION PRODUCTS & SERVICES MAJOR END-USES PLANTS & FACILITIES* PRODUCTS/SERVICES ------------ -------------------------- ------------------------ -------------------------- ------------------- Hydrazine Hydrazine solutions & Intermediate in blowing Lake Charles, LA chlorine, caustic hydrazine-based agents & agricultural McIntosh, AL soda, ammonia, propellants chemicals; boiler water dimethylamine, treatment, rocket & monomethylamine satellite propellants - ------------------------------------------------------------------------------------------------------------------ Biocides Omacide(R) IPBC, Antidandruff agents Rochester, NY pyridine, zinc Triadine(R) Biocides, in shampoo, preservative Swords, Ireland & copper salts, Zinc Omadine(R), in metal working fluids, chlorine, iodine Copper Omadine(R) & Sodium coatings, adhesives, Omadine(R) Biocides plastics, antifouling agent in marine paints ------------------------------------------------------------------------------------------------------------ Custom chemicals Finished products for Rochester, NY manufacturing agricultural, photographic, hair dye & general chemical industries - ------------------------------------------------------------------------------------------------------------------ Organics Anionic & nonionic Household, industrial & Brandenburg, KY ethylene oxide, surfactants, glycols, institutional cleaners, Punta Camacho, propylene oxide glycol ethers, fluids basestocks for water Venezuela based metal- working/hydraulic fluids - ------------------------------------------------------------------------------------------------------------------ Microelectronic Materials Electronic High purity acids & Used as process aids in Chandler, AZ various acids Chemicals solvents, dopants, semiconductor Mesa, AZ & solvents, vapor deposition manufacturing Nazareth, PA ammonia-based chemicals, specialty Seward, IL etchants etchants ------------------------------------------------------------------------------------------------------------ Photoresists & polyimides Used as semiconductor Brandenburg, KY diazo compounds, components and/or as East Providence, RI rubber polymers, process aids in Tempe, AZ novolak polymers, semiconductor Zwijndrecht, Belgium solvents, manufacturing Shizuoka, Japan (Fuji-Hunt photoinitiators, Electronics Technology polyimide polymers Co., Ltd.) Basle, Switzerland ------------------------------------------------------------------------------------------------------------ Dry & liquid toner systems Used in electrostatic Berea, OH resins, printers and offset Kallo, Belgium hydrocarbons platemaking systems
- -------------------------------------------------------------------------------- * If site is not operated by Olin or a majority-owned, direct or indirect subsidiary, name of joint venture, affiliate or operator is indicated. Sites manufacture, distribute or market one or more of the identified products or services. 3 CHEMICALS (CONT'D)
MAJOR RAW MATERIALS PRODUCT LINE & COMPONENTS FOR OR DIVISION PRODUCTS & SERVICES MAJOR END-USES PLANTS & FACILITIES* PRODUCTS/SERVICES ------------ ------------------------ ------------------------ ------------------------- --------------------- Interconnect High performance Integrated circuits & Manteca, CA specialty aluminum Materials integrated circuit multi-chip modules for alloys & specialty packaging materials computer, adhesives telecommunications, instrumentation & automotive products ------------------------------------------------------------------------------------------------------------------ High performance, All industry market New Bedford, MA all metals, metal high reliability, segments; computer, (Aegis, Inc.) alloys, metal hermetic metal METALScommunications, medical, matrix composites, packages for the industrial, special alloys and microelectronics instrumentation, glasses industry automotive, consumer, aerospace and military - ------------------------------------------------------------------------------------------------------------------------ Olin Brass COPPER & COPPER ALLOY Electronic connectors, Bryan, OH copper, zinc & SHEET & STRIP lead frames, electrical East Alton, IL other nonferrous (STANDARD & HIGH components, Indianapolis, IN metals PERFORMANCE) communications, Waterbury, CT automotive, builders' Iwata, Japan (Yamaha-Olin hardware, coinage Metal Corporation) ------------------------------------------------------------------------------------------------------------------ Network of metals Electronic connectors, Allentown, PA copper & copper alloy service centers electrical components, Alliance, OH sheet, strip, rod, communications, Caguas, PR tube & steel & automotive, builders' Carol Stream, IL aluminum strip hardware, household Warwick, RI products Watertown, CT Yorba Linda, CA ------------------------------------------------------------------------------------------------------------------ Beryllium copper strip High performance East Alton, IL beryllium copper electronic applications ------------------------------------------------------------------------------------------------------------------ POSIT-BOND(R) CLAD METAL Coinage strip & blanks East Alton, IL cupronickel, copper & aluminum ------------------------------------------------------------------------------------------------------------------ ROLLED COPPER FOIL, Printed circuit boards, Waterbury, CT copper, zinc & other COPPERBOND(R) FOIL, electrical & electronic, nonferrous metals, STAINLESS STEEL STRIP automotive stainless steel ------------------------------------------------------------------------------------------------------------------ COPPER ALLOY SEAMLESS Utility condensers, Cuba, MO copper, zinc & other & WELDED TUBE industrial heat Indianapolis, IN nonferrous metals exchangers, refrigeration & air conditioning, builders' hardware, automotive ------------------------------------------------------------------------------------------------------------------ Fabricated products Builders' hardware, East Alton, IL brass & stainless cartridge cases, shaped steel strip charge cones, transportation, household & recreational products ------------------------------------------------------------------------------------------------------------------ Copper & copper alloy Fasteners, electrical Indianapolis, IN copper, zinc & other rod & wire connectors, nonferrous metals transportation, plumbing & builders' hardware
- -------------------------------------------------------------------------------- * If site is not operated by Olin or a majority-owned, direct or indirect subsidiary, name of joint venture, affiliate or operator is indicated. Sites manufacture, distribute or market one or more of the identified products or services. 4 DEFENSE AND AMMUNITION
MAJOR RAW MATERIALS PRODUCT LINE & COMPONENTS FOR OR DIVISION PRODUCTS & SERVICES MAJOR END-USES PLANTS & FACILITIES* PRODUCTS/SERVICES ------------ ------------------------ ------------------------ -------------------- ---------------------------- Ordnance LARGE CALIBER MILITARY Used by tanks & Marion, IL various metals, propellants, AMMUNITION, PROJECTILES artillery Red Lion, PA subcontracted components & COMPONENTS St. Marks, FL St. Petersburg, FL ------------------------------------------------------------------------------------------------------------- MEDIUM CALIBER MILITARY Used by ground Downey, CA Ball Powder(R) propellant, AMMUNITION & COMPONENTS, vehicles, ships, Marion, IL explosives, various metals, air-dispensed munitions helicopters & aircraft subcontracted components ------------------------------------------------------------------------------------------------------------- BALL POWDER(R) Small caliber commercial St. Marks, FL nitrocellulose PROPELLANT, EXPLOSIVES ammunition, small, & research & development medium & large caliber for propulsion systems military ammunition ------------------------------------------------------------------------------------------------------------- Demilitarization of Contracts for disposal Marion, IL government-supplied medium & large caliber of U.S. Government St. Petersburg, FL ammunition & rocket ammunition & rocket surplus ammunition & motors motors rocket motors ------------------------------------------------------------------------------------------------------------- Government-owned Maintenance of U.S. Army Baraboo, WI subcontracted & arsenal operations laid-away production government-supplied (GOCO) plant components ------------------------------------------------------------------------------------------------------------- Gas generators Specialty solid- Marion, IL various metals, solid propellant gas propellant ingredients generators for missiles & subcontracted & aircraft components - ------------------------------------------------------------------------------------------------------------------- Aerospace Pulsed power systems Pulsed high voltage gen- San Leandro, CA subcontracted components, erators, nuclear radia- including capacitors tion simulators, accel- erators, high frequency modulators, military hardware survivability assessment, high power microwave systems, flash x-ray products ------------------------------------------------------------------------------------------------------------- Antiarmor systems Design, development & San Leandro, CA various metals, testing of advanced Tracy, CA subcontracted antiarmor warhead sys- Lucerne, Switzerland components, explosive tems for various anti- ingredients tank missiles; volume production of missile- body metal parts; load, assembly & pack of vari- ous explosive devices ------------------------------------------------------------------------------------------------------------- Low-voltage power Design, development, Redmond, WA electronic piece conditioning & test & production of parts, printed controlling devices; aircraft, missile, wireboards, formed digital test equipment; spacecraft, shipboard & metal parts airborne electronic van-mounted power products equipment & control devices for military & commercial applications; design, development, test & production of microprocessor-based stores test equipment for military aircraft
- -------------------------------------------------------------------------------- * If site is not operated by Olin or a majority-owned, direct or indirect subsidiary, name of joint venture, affiliate or operator is indicated. Sites manufacture, distribute or market one or more of the identified products or services. 5 DEFENSE AND AMMUNITION (CONT'D)
MAJOR RAW MATERIALS PRODUCT LINE & COMPONENTS FOR OR DIVISION PRODUCTS & SERVICES MAJOR END-USES PLANTS & FACILITIES* PRODUCTS/SERVICES ------------ ------------------------ ------------------------ -------------------- ----------------------- Aerospace Hydrazine rocket Directional control Moses Lake, WA various metals, (continued) engines; advanced rockets & propulsion Redmond, WA subcontracted propulsion systems & systems for satellite & components, components; inflation space vehicles, launch hydrazine liquid systems; specialty vehicles, tactical propellant, ammonium solid-propellant missiles & projectiles; nitrate-, sodium devices specialty solid- azide- and non-sodium propellant gas azide-based solid generator-based devices propellant for munitions ingredients dispensing, fire suppression, flotation & other inflation systems - ---------------------------------------------------------------------------------------------------------------- Winchester (R) WINCHESTER(R) SPORTING Hunters & recreational East Alton, IL brass, lead, steel, AMMUNITION (SHOT- shooters, law Geelong, Australia plastic, Ball Powder(R) SHELLS, SMALL CALIBER enforcement agencies propellant, CENTERFIRE & explosives RIMFIRE AMMUNITION) ---------------------------------------------------------------------------------------------------------- Small caliber military Infantry and mounted East Alton, IL brass, lead, Ball ammunition weapons Powder(R) propellant, explosives ---------------------------------------------------------------------------------------------------------- Government-owned Maintenance and Independence, MO brass, lead, Ball arsenal operation (GOCO) operation of U.S. Army Powder(R) propellant, small caliber military explosives, ammunition production government-supplied plant components ---------------------------------------------------------------------------------------------------------- Industrial products (8 Maintenance applications East Alton, IL brass, lead, gauge loads & powder- in power & concrete Geelong, Australia plastic, Ball actuated tool loads) industries, powder- Powder(R) propellant, actuated tools in explosives construction industry
- -------------------------------------------------------------------------------- * If site is not operated by Olin or a majority-owned, direct or indirect subsidiary, name of joint venture, affiliate or operator is indicated. Sites manufacture, distribute or market one or more of the identified products or services. 6 RECENT DEVELOPMENTS On March 1, 1995, the 2.76 million shares of Olin's Series A Conversion Preferred Stock converted into shares of Olin's Common Stock on a one-for-one basis. On August 24, 1995, Olin announced it had completed its acquisition of Ciba Geigy AG's 50% share of OCG Microelectronic Materials ("OCG"), a joint venture formed by the two companies in 1990. OCG is a supplier of photoresists, polyimides and ancillary products with research and development, manufacturing, customer support and distribution capabilities in North America, Europe and Asia. On October 12, 1995, Olin announced that it completed the sale of its dry sanitizer plant in South Charleston, West Virginia and a related tabletting operation in Livonia, Michigan to Clearon Corp., a joint venture of Israel Chemicals Ltd. and its subsidiary Dead Sea Bromine Corporation. Also in 1995, Olin sold the SUN(R) brand of chlorinated isocyanurates to AquaClear Industries, Inc. of Watervliet, NY. These sales, which were previously approved by the Federal Trade Commission ("FTC"), were part of Olin's compliance with an FTC order that it divest its chlorinated isocyanurate pool chemicals assets it acquired in 1985. On November 19, 1995, Olin announced it was considering a spin-off of its Aerospace and Ordnance Divisions. Any decision requires the approval of Olin's Board of Directors and will depend on a variety of factors including the tax- free nature of the transaction and appropriate approvals of third parties including governmental authorities. On January 23, 1996, Olin announced that it had signed a letter of intent to sell its dry and liquid toner systems business which had 1995 sales of $13 million. INTERNATIONAL OPERATIONS Olin has sales offices and subsidiaries in various countries which support the worldwide export of products from the United States as well as overseas production facilities. In addition, Olin has manufacturing interests, both direct and through joint ventures, in several foreign countries. An Olin subsidiary in Ireland manufactures biocides for personal care and industrial applications; a Brazilian subsidiary manufactures urethane systems and solution sodium hydrosulfite. A micro-electronic materials subsidiary located in Belgium manufactures certain chemicals for the semiconductor industry and packages toners which are marketed throughout Europe. Hydrochim, S.A., a French subsidiary, is an isocyanurate repacking operation. Etoxyl, C.A., a Venezuelan subsidiary, manufactures urethane polyols and other specialty chemicals. A group of Olin subsidiaries markets photoresists, polyimides and other image-forming chemicals throughout Europe. A joint venture with Fuji Photo Film Co., Ltd. manufactures photoresists in Japan and markets them throughout the Far East. Nordesclor S.A., a joint venture with S.A. Industrias Votorantim, a Brazilian company, manufactures calcium hypochlorite. Through a joint venture with Sentrachem Limited, Olin has an interest in a plant in South Africa for the production of HTH(R) pool chemicals. Olin through a joint venture with Asahi Glass Company Ltd. has an interest in a plant in Japan for the production of urethane polyols and other specialty chemicals. Olin also has an interest in a plant in Venezuela for the production of ethylene oxide and ethylene glycol through a joint venture with Corimon, C.A., S.A.C.A., Petroquimica de Venezuela S.A. and the International Finance Corporation. A joint venture of Olin and Asahi Glass Company Ltd. has an interest in a TDI production plant in Japan with Mitsui Toatsu. 7 Yamaha-Olin Metal Corporation, a joint venture with Yamaha Corporation, manufactures high-performance copper alloys in Japan for sale to the electronics industry throughout the Far East. An Olin subsidiary loads and packs sporting and industrial ammunition in Australia. The geographic segment data contained in the Note "Segment Information" of the Notes to Financial Statements on pages 35 and 36 of the Shareholders Report and Exhibit 13 hereto are incorporated by reference in this Report as contained in Exhibit 13. CUSTOMERS AND DISTRIBUTION During 1995, no single nongovernment customer accounted for more than 1.2% of Olin's total consolidated sales and U.S. Government sales accounted for 16% of Olin's total consolidated sales. Products which Olin sells to industrial or commercial users or distributors for use in the production of other products constitute a major part of Olin's total sales. Some of its products, such as pool chemicals, sporting ammunition and brass, are sold to a large number of users or distributors, while others, such as certain industrial chemicals, are sold in substantial quantities to a relatively small number of industrial users. Most of Olin's products and services are marketed primarily through its sales force and sold directly to various industrial customers, the U.S. Government and its prime contractors, to wholesalers and other distributors. Chemicals. Principal customers of Olin's chemicals products include the pulp and paper industries, vinyl chloride manufacturers, household and industrial cleaner suppliers, municipal and industrial wastewater treatment companies, specialty chemical manufacturers, flexible and rigid foam suppliers, automotive companies, packaging suppliers, the refrigeration industry, manufacturers of adhesives, coatings, elastomers and sealants, suppliers of various consumer products including shampoos and swimming pool sanitizers, semiconductor manufacturers, non-impact computer printer manufacturers and defense contractors. Principal customers of Olin's interconnect materials business are suppliers to semiconductor manufacturers and major computer and telecommunications manufacturers. Metals. Principal customers of Olin's copper and copper alloy strip, sheet, rod, wire and seamless and welded tube include producers of electrical and electronic equipment, builders' hardware and appliances, the plumbing, automotive and air-conditioning industries and manufacturers of a variety of consumer goods. Olin manufactures cartridge brass for its ammunition business and for other ammunition makers. Olin also serves numerous high-technology markets through a thin-gauge reroll operation that produces stainless steels, high-temperature alloys and glass sealing alloys, in addition to copper and copper alloys. Posit-Bond(R) clad metal has made Olin a major supplier of metal to the U.S. Mint. Olin also sells various alloys to foreign governments for coinage purposes. The metal products business is also focused on the electronics market, providing high performance and high-quality materials needed by the electronics industry and other advanced technology customers. These materials include Olin- developed proprietary alloys and Copperbond(R) treated copper foil marketed to the printed circuit industry. Fabricated products are principally sold to ammunition manufacturers, the U.S. Armed Forces, building product suppliers, household product manufacturers and automotive manufacturers. Defense and Ammunition. The principal customers of the Ordnance division are the U.S. Department of Defense and certain foreign governments. Principal customers of the Aerospace division are the U.S. Government, major defense contractors, aerospace companies, telecommunications 8 companies and certain foreign governments. The principal users of the Winchester division's products are recreational shooters, hunters, law enforcement agencies, the power and concrete industries, the construction industry, the U.S. Armed Forces and certain foreign governments. GOVERNMENT SALES U.S. Government sales were approximately $513 million in 1995, $379 million in 1994 and $354 million in 1993. Approximately 85% of such 1995 sales were to the Department of Defense or agencies thereof. In addition, Olin operates certain Government-owned plants, including the Lake City Army Ammunition Plant in Independence, Missouri, for which Olin receives fee income. Products and services sold to the Government, to Government contractors or friendly foreign governments include ammunition, propellant and specialty defense products and services. Olin also manufactures and blends hydrazine- based fuels for the Government for use as a propellant for the space shuttle, satellites and expendable launch vehicles. The U.S. Mint purchases cupronickel for nickels and Posit-Bond(R) clad metal for other U.S. coins. Ammunition cups and strip are sold to Government contractors for ultimate delivery to the Government. Olin's Government business is performed under both cost reimbursement and fixed price contracts. Cost reimbursement contracts provide for the reimbursement of allowable costs plus the payment of a fixed fee, an incentive fee based upon actual performance as compared to contractual targets, or an award fee based upon unilateral evaluation by the Government. Olin's fixed price contracts are either firm fixed price contracts or incentive contracts under which Olin shares certain savings or overruns with the Government. Government contracts generally have provisions for audit by the Government, and cost reimbursement contracts have limitations on reimbursable costs. Contracts may be terminated at the Government's convenience upon payment of certain termination costs and, in some cases, profits. Because several of its divisions engage in government contracting activities and make sales to the U.S. Government, Olin is subject to extensive and complex U. S. Government procurement laws and regulations. These laws and regulations provide for ongoing government audits and reviews of contract procurement, performance and administration. Failure to comply, even inadvertently, with these laws and regulations and with laws governing the export of munitions and other controlled products and commodities could subject Olin or one or more of its businesses to civil and criminal penalties, and under certain circumstances, suspension and debarment from future government contracts for a specified period of time. Changes in the strategic direction of defense spending, the timing of defense procurements and specific defense program appropriation decisions may adversely affect the performance of the Defense and Ammunition segment and Olin in future years, including its income, liquidity, capital resources and financial condition. The precise impact of these decisions will depend upon the timing and size of changes and decisions, and Olin's ability to mitigate their impact with new business, business consolidations or cost reductions. In view of the continuing uncertainty regarding the size, content and priorities of the annual Department of Defense budget, the historical financial information of the Defense and Ammunition segment and, to a lesser extent, of Olin, may not be indicative of future performance. COMPETITION Olin is in active competition with businesses producing the same or similar products, as well as, in some instances, with businesses producing different products designed for the same uses. With respect to certain product groups, such as ammunition and copper alloys, and with respect to certain individual 9 products, such as pool chemicals, chlor-alkali and urethane products, Olin is one of the largest manufacturers or distributors in the United States. With respect to its many other products, Olin's share of total domestic sales varies greatly. EMPLOYEES As of December 31, 1995, Olin had approximately 13,000 employees (excluding approximately 1,250 employees at Government-owned, contractor-operated facilities), approximately 12,250 of whom were working in the United States and approximately 750 of whom were working in foreign countries. A majority of the hourly-paid employees are represented, for purposes of collective bargaining, by various labor unions. Some labor contracts extend for as long as five years, but during each year new agreements must be negotiated in a number of Olin's plants. Five major collective bargaining agreements at its East Alton, Illinois facility were renewed in 1995. Four major labor contracts will expire in 1996, three of which are at Olin's Lake Charles, Louisiana facility. While relations between Olin and its employees and their various representatives are generally considered satisfactory, there can be no assurance that new labor contracts can be concluded without work stoppages. No major work stoppages have occurred in the last three years. RESEARCH ACTIVITIES; PATENTS Olin's research activities are conducted both on a product-group and corporate-wide basis at a number of facilities. Company-sponsored research expenditures were approximately $39 million during 1995, $35 million during 1994 and $41 million during 1993. Customer-sponsored research expenditures (primarily U.S. Government) were approximately $45 million in 1995, $79 million in 1994 and $88 million in 1993. Olin owns, or is licensed under, a number of patents, patent applications and trade secrets covering its products and processes. Olin believes that, in the aggregate, the rights under such patents and licenses are important to its operations, but does not consider any patent or license or group thereof related to a specific process or product to be of material importance when viewed from the standpoint of Olin's total business. RAW MATERIALS AND ENERGY Olin purchases the major portion of its raw material requirements. The principal basic raw materials required by Olin for its production of chemicals are various hydrocarbons, salt, lime, electricity, propylene oxide, ethylene oxide, natural gas, toluene, sulfur and ammonia. Copper, zinc and various other nonferrous metals are required for the metals business. Lead, brass and propellant are the principal raw materials used in the ammunition business. Olin's principal basic raw materials are typically purchased pursuant to multiyear contracts. In addition, Olin uses many chemicals produced in its own operations as raw materials, intermediates or processing agents in the production of various other chemical products. In the manufacture of ammunition, Olin uses a substantial percentage of its own output of smokeless powder and cartridge brass. Additional information with respect to specific raw materials is set forth in the table above under the caption entitled "Products and Services." Electricity is the predominant energy source for Olin's manufacturing facilities. Most of Olin's facilities are served by utilities which generate electricity principally from coal and nuclear power. ENVIRONMENTAL AND TOXIC SUBSTANCES CONTROLS The establishment and implementation of federal, state and local standards to regulate air, water and land quality has affected and will continue to affect substantially all of Olin's plants. Federal legislation providing for regulation of the manufacture, transportation, use and disposal of hazardous 10 and toxic substances has imposed additional regulatory requirements on industry, particularly the chemicals industry. In addition, implementation of environmental laws, such as the Resource Conservation and Recovery Act and the Clean Air Act, has required and will continue to require new capital expenditures and will increase operating costs. Olin employs waste minimization and pollution prevention programs at its manufacturing sites. In order to help finance the cleanup of waste disposal sites, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986 ("Superfund"), imposed a tax on the sale of various chemicals, including chlorine, caustic and certain other chemicals produced by Olin, and on the disposal of certain hazardous wastes.
1995 1994 1993 ---- ---- ---- (IN MILLIONS) Cash Outlays: Remedial and Investigatory Spending..................... $25 $37 $44 Capital Spending........................................ 9 11 11 Plant Operations........................................ 36 34 38 --- --- --- Total Cash Outlays........................................ $70 $82 $93 === === ===
Olin is party to various governmental and private environmental actions associated with waste disposal sites and manufacturing facilities. Associated costs of investigatory and remedial activities are provided for in accordance with generally accepted accounting principles governing probability and the ability to reasonably estimate future costs. Charges to income for investigatory and remedial efforts were material to operating results in 1995, 1994 and 1993 and may be material to net income in future years. Cash outlays for remedial and investigatory activities associated with former waste sites and past operations were not charged to income but instead were charged to reserves established for such costs identified and expensed to income in prior years; charges to income were $25 million, $17 million, and $85 million in 1995, 1994 and 1993, respectively. A significant portion of the 1993 charge to income resulted from expanded volumes of contaminants uncovered while remediating a particular site, combined with the availability of more definitive data from progressing investigatory activities concerning both the nature and extent of contamination and remediation alternatives at other sites. Cash outlays for normal plant operations for the disposal of waste and the operation and maintenance of pollution control equipment and facilities to ensure compliance with mandated and voluntarily imposed environmental quality standards were charged to income. Historically, Olin has funded its environmental capital expenditures through cash flow from operations and expects to do so in the future. Olin's estimated environmental liability at the end of 1995 was attributable to 74 sites, 34 of which were on the National Priority List ("NPL"). Eleven sites accounted for approximately 80% of such liability and, of the remaining sites, no one site accounted for more than three percent of such liability. Three of these eleven sites were in the investigatory stage of the remediation process. In this stage, remedial investigation and feasibility studies are conducted by either Olin, the United States Environmental Protection Agency ("EPA") or other potentially responsible parties ("PRP's") and a Record of Decision ("ROD") or its equivalent has not been issued. At another three of the eleven sites, a ROD or its equivalent has been issued by either the EPA or responsible state agency and Olin, either alone or as a member of a PRP group, was engaged in performing the remedial measures required by that ROD. At the remaining five of the eleven sites, part of the site is subject to a ROD and another part is still in the investigative stage of remediation. All eleven sites were either former manufacturing facilities or waste sites containing contamination generated by those facilities. Total environmental-related cash outlays for 1996 are estimated to be $85 million, of which $34 million is expected to be spent on investigatory and remedial efforts, $17 million on capital projects and $34 million on normal plant operations. 11 Annual environmental-related cash outlays for site investigation and remediation, capital projects and normal plant operations are expected to range between $85-100 million over the next several years. While Olin does not anticipate a material increase in the projected annual level of its environmental-related costs, there is always the possibility that such increases may occur in the future in view of the uncertainties associated with environmental exposures. Environmental exposures are difficult to assess for numerous reasons, including the identification of new sites, developments at sites resulting from investigatory studies, advances in technology, changes in environmental laws and regulations and their application, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and financial capability of other potentially responsible parties and Olin's ability to obtain contributions from other parties and the time periods (sometimes lengthy) over which site remediation occurs. It is possible that some of these matters (the outcomes of which are subject to various uncertainties) may be resolved unfavorably against Olin. See also Item 3, "Legal Proceedings" below, the Note "Environmental" of the Notes to Financial Statements contained in the Shareholders Report and Exhibit 13 hereto, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" incorporated in this Report for additional information regarding environmental matters affecting Olin. ITEM 2. PROPERTIES Olin has plants at 36 separate locations in 19 states and Puerto Rico and six plants in six foreign countries. Most plants are owned; a number of small plants and portions of one major plant are leased. Listed under Item 1 above in the table set forth under the caption "Products and Services" are the locations at or from which Olin's products and services are manufactured, distributed or marketed by segment. Olin leases warehouses, terminals and distribution offices and space for executive and branch sales offices and service departments throughout the country and overseas. ITEM 3. LEGAL PROCEEDINGS (a) In December 1979, an action was commenced in the U.S. District Court in New York by the United States against Occidental Chemical Corporation (then known as Hooker Chemical & Plastics Corporation) ("Oxychem"), certain related companies, Olin and the City of Niagara Falls, New York, alleging that chemical wastes are migrating in violation of environmental laws or regulations from a site in Niagara Falls where Oxychem and Olin own adjacent, inactive chemical waste landfills. The United States is seeking injunctive relief and an order requiring Oxychem and Olin, among other things, to secure the landfill site, install a leachate collection system and treat whatever leachate is collected, as well as an order requiring Oxychem and Olin to place $16.5 million in trust or provide a bond to ensure that the site will be secured. The United States is also seeking civil penalties for each day of alleged violation of the Clean Water Act which currently has a maximum daily penalty of $25,000. In November 1980, the State of New York filed a complaint as co-plaintiff in the same action based upon essentially the same factual allegations as in the suit brought by the United States. The State is seeking $100 million in compensatory damages and $100 million in punitive damages. The State is also requesting a court order to abate the alleged nuisance and penalties of $10,000 per day for alleged violations of each of four provisions of New York's Environmental Conservation Law. In 1983, the State filed a motion to amend its complaint to include a count under CERCLA (Comprehensive Environmental Response, Compensation and Liability Act of 1980) alleging damage to natural resources. In 1986, the Department of Justice filed a motion to amend its complaint to include a CERCLA and SARA (Superfund Amendments and Reauthorization Act of 1986) count. Oxychem and Olin have filed in opposition to the motions and the court has deferred a ruling on both motions. 12 The U.S. Environmental Protection Agency ("EPA") notified Olin and Oxychem of an aggregate of $3,050,000 in agency oversight costs on the project. Under a stipulation entered into by all parties in 1984, Olin and Oxychem undertook a site remedial investigation which was completed in October 1988. Subsequently, the parties entered into a further stipulation under which Oxychem and Olin conducted a feasibility study of possible remedial measures. Olin does not expect these stipulations to have any further effect on the outcome of this matter. The remedial investigation and feasibility study was completed in July 1990. On September 24, 1990, EPA issued a Proposed Remedial Action Plan and on September 29, 1990 a Record of Decision ("ROD"). The EPA- selected remedy was estimated to cost $30 million. On September 30, 1991, the EPA issued an administrative order directing Olin and Oxychem to implement the remedy identified in the September 29, 1990 Record of Decision. Olin and Oxychem have agreed to perform the remedy identified on such order. The cost of any remedy is expected to be shared by Olin and Oxychem in an agreed-upon proportion. Olin believes that any liability incurred by it in this matter will not be materially adverse to its financial condition. (b) In June 1987, the EPA issued a ROD recommending remedial actions and ecological studies with respect to mercury contamination at the site of Olin's former mercury cell chlor-alkali plant in Saltville, Virginia. In August 1987, EPA, under Section 122 of CERCLA, asked Olin to undertake the work called for in the ROD, and Olin agreed to do so. Olin's commitment was required to be incorporated into a Consent Decree to be filed with a federal district court. EPA's draft of the Consent Decree included a proposed $1.4 million Clean Water Act penalty for past unpermitted discharges from a muck pond at the site, as well as $570,000 in reimbursement of past EPA costs. In response to Olin's request, EPA agreed to reduce the costs to $456,000 and to sever the penalty from the CERCLA action, making it the subject of separate negotiations after execution of the Consent Decree. In 1988, the proposed $1.4 million Clean Water Act penalty was severed from the Consent Decree entered into by Olin and filed with the U.S. District Court for the Western District of Virginia, and the EPA has taken no further action with respect to any proposed penalty. Pursuant to the Decree, in November 1988 Olin submitted to EPA, Region III, a work plan for remedial action, including additional stormwater run-on control around Pond #5 and construction of a wastewater treatment plant for the outfall from Pond #5. Olin also submitted for EPA approval a work plan for further remedial investigation of the impact of mercury from the site on groundwater flowing into the North Fork Holston River and its sediment from the site to a point twenty-seven miles downstream at the Tennessee border. During 1989 work plans pursuant to the Consent Decree between EPA and Olin were approved by EPA. Final payment of past EPA costs of $228,000 plus interest was made on November 21, 1989, in accordance with the Consent Decree. On September 5, 1991, EPA advised Olin of potential liability for contaminated soils which were being removed in conjunction with construction of the Rte. 634 bridge in Saltville. Olin and EPA signed a Consent Order authorizing Olin to do the soil removal, which has been completed. Olin completed the remedial investigation and feasibility study of the former plant site, including Ponds # 5 and 6 in 1994. On January 18, 1995, EPA issued a Proposed Remedial Action Plan for a 30-day public comment period. The plan called for a cap to be constructed over Pond #5, and the excavation and retorting of soil and sediment from the former chlorine plant site. Olin filed comments with the EPA during the public comment period in support of alternatives to the proposed remediation plan for the site. EPA issued a Record of Decision on September 29, 1995 recognizing in substantial part Olin's comments. The Record of Decision calls for covering the former waste ponds, treatment of runoff from the ponds, and additional monitoring and investigation. The Record of Decision does not address remediation of the former chlorine plant site or the river, which are the subject of the additional investigation. 13 On August 29, 1994, EPA notified Olin of the company's potential liability with respect to the "Graveyard Dump Site," located north of the former plant site. The site is relatively small, occupying about one half acre. EPA's investigation found about 20 capacitors and miscellaneous debris scattered around the site as well as evidence of PCB contamination in the soils. Negotiations with EPA ensued and Olin and EPA signed an Administrative Order by Consent, effective January 5, 1995, in which Olin agreed to perform certain response activities at the site, primarily the removal and disposal of PCB- contaminated electrical equipment and soils. The majority of the work has been completed and the remainder is expected to be completed in 1996. On March 15, 1995, EPA notified Olin of liability for lead and asbestos present at the former steam-generating plant (power plant) at the site. On July 11, 1995, Olin and EPA entered into an Administrative Order on Consent in which Olin agreed to remove asbestos and lead, and demolish the power plant. The work is expected to be done during 1996 and 1997. Olin believes that any liability incurred by it in this matter will not be materially adverse to its financial condition. (c) In May 1994, Olin discovered that an Ordnance Division employee may have modified inspection and testing software used on certain medium caliber ammunition production lines at its Marion, Illinois facility to permit inspections to be performed at tolerances which may not have been fully compliant with applicable contract specifications. Upon discovering the issue, Olin promptly notified U.S. Government contracting representatives, voluntarily disclosed the circumstances then known to the Department of Defense's Office of the Inspector General and expressed its intent to fully investigate the matter and take all necessary corrective actions. In September 1994, a federal grand jury in the United States District Court for the Southern District of Illinois issued two subpoenas to Olin requesting production of documents relating generally to certain medium caliber ammunition programs and specifically to the software modification described above. Subsequently, Olin has received additional subpoenas and several Marion employees have received subpoenas to testify before the grand jury. Olin has fully complied with the subpoenas and is committed to fully cooperating with Government officials to resolve the matter. Olin cannot predict the ultimate outcome of the investigation but believes that it will not be materially adverse to its results of operations or financial position. (d) As part of the continuing environmental investigation by federal, state and local governments of waste disposal sites, Olin has entered into a number of settlement agreements requiring it to contribute to the cost of the investigation and cleanup of a number of sites. This process of investigation and cleanup is expected to continue. (e) Olin and its subsidiaries are defendants in various other legal actions arising out of their normal business activities, none of which is considered by management to be material. 14 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted to a vote of security holders during the three months ended December 31, 1995. Executive Officers of Olin Corporation as of March 1, 1996
SERVED AS AN OLIN NAME AND AGE OFFICE OFFICER SINCE - ------------ ------ ------------- John W. Johnstone, Jr. Chairman of the Board 1980 (63)................... Donald W. Griffin (59).. President and Chief Executive Officer 1983 Michael E. Campbell Executive Vice President 1987 (48)................... James G. Hascall (57)... Executive Vice President 1985 Joseph M. Gaffney (49).. Senior Vice President 1981 Peter C. Kosche (53).... Senior Vice President 1993 Anthony W. Ruggiero Senior Vice President and Chief Financial 1995 (54)................... Officer Leon B. Anziano (53).... Vice President and President, Chlor-Alkali 1993 Products Division Robert A. Beyerl (53)... Vice President and Controller 1994 Douglas J. Cahill (36).. Vice President and President, Winchester 1996 Division Angelo A. Catani (63)... Vice President and President, Ordnance 1993 Division Patrick J. Davey (52)... Vice President and President, Chemicals 1993 Division George B. Erensen (52).. Vice President, Taxes and Risk Management 1990 Johnnie M. Jackson, Jr. Vice President, General Counsel and 1995 (50)................... Secretary Janet M. Pierpont (48).. Vice President and Treasurer 1990 Joseph D. Rupp (45)..... Vice President and President, Brass 1996 Division William W. Smith (61)... Vice President and President, Aerospace 1993 Division Steven T. Warshaw (47).. Vice President and President, Olin 1996 Microelectronic Materials Division
No family relationship exists between any of the above-named executive officers or between any of them and any Director of Olin. Such officers were elected to serve as such, subject to the By-Laws, until their respective successors are chosen. Each of the above-named executive officers, except L.B. Anziano, R.A. Beyerl, A.A. Catani, D.J. Cahill, P.J. Davey, J.M. Jackson, Jr., P.C. Kosche, A.W. Ruggiero, J.D. Rupp, W.W. Smith and S.T. Warshaw, has served Olin as an executive officer for not less than the past five years. Leon B. Anziano was elected a Corporate Vice President on April 29, 1993. Prior to that time, since 1988, he has served Olin in the following management capacities: Group Vice President & General Manager, Industrial Chemicals; Group Vice President & General Manager, Urethanes; and President, Basic Chemicals Division. Robert A. Beyerl was elected a Corporate Vice President and Controller on April 26, 1994. Prior to that time, since 1989, he has served Olin in the following management capacities: Director of Internal Audit; the Financial Officer for the Defense Systems Group; and the Financial Officer for the Chemicals Group. 15 Douglas J. Cahill was elected a Corporate Vice President on January 1, 1996. He was appointed President of the Winchester Division on July 1, 1995. Prior to that time, he served as General Manager of the Chemicals Division's pool business. Angelo A. Catani was elected a Corporate Vice President on April 29, 1993. Prior to that time, since 1988, he has served Olin in a management capacity as President, Ordnance Division. Patrick J. Davey was elected a Corporate Vice President on April 29, 1993. Prior to that time, since 1988, he has served Olin in the following management capacities: Group Vice President, Water Products & Services; and President, Performance Chemicals Division. Johnnie M. Jackson, Jr. was elected a Corporate Vice President on April 27, 1995. Prior to that time, since 1989, he has served Olin in the following capacities: General Counsel--Corporate Resources and Secretary, Associate General Counsel--Corporate Resources and Secretary and Deputy General Counsel. Peter C. Kosche was elected a Corporate Senior Vice President on January 1, 1996 and had been a Corporate Vice President since 1993. Prior to 1993 and since 1988, he has served Olin in the following management capacities: General Manager, Pool Chemicals; and Division Vice President, Materials Management. Anthony W. Ruggiero joined Olin on August 30, 1995 and was elected a Corporate Senior Vice President and Chief Financial Officer on September 29, 1995. From 1990 to 1995, he served as Senior Vice President and Chief Financial Officer of The Reader's Digest Association, Inc. Joseph D. Rupp was elected a Corporate Vice President on January 1, 1996 and also serves as President, Brass Division. Prior to that time, since 1985, he served as Vice President, Manufacturing and Engineering for the Brass Division. William W. Smith was elected a Corporate Vice President on April 29, 1993. Prior to that time, since 1988, he has served Olin in a management capacity as President, Aerospace Division. Steven T. Warshaw was elected a Corporate Vice President on January 1, 1996 and serves as President, Olin Microelectronic Materials Division. Prior to that time, since 1990, he has served Olin as Senior Vice President and General Manager, Olin Electronic Materials, President, OCG Microelectronic Materials, Vice President and General Manager, Performance Urethanes. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS As of January 31, 1996, there were approximately 11,900 record holders of Olin Common Stock. Olin Common Stock is traded on the New York, Chicago and Pacific Stock Exchanges. Information concerning the high and low sales prices of Olin Common Stock and dividends paid on Olin Common Stock during each quarterly period in 1995 and 1994 appears on page 37 of the Shareholders Report and in Exhibit 13 hereto and is incorporated herein by reference as contained in Exhibit 13. Among the provisions of Olin's agreements with its long-term lenders are restrictions relating to payment of dividends and acquisition of common stock. At December 31, 1995, retained earnings of approximately $301 million were not so restricted. 16 ITEM 6. SELECTED FINANCIAL DATA The information relating to the last five fiscal years contained under the caption "Ten-Year Financial Summary" appearing on page 25 of the Shareholders Report and in Exhibit 13 hereto is incorporated by reference in this Report as contained in Exhibit 13. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing on pages 17 through 23 of the Shareholders Report and in Exhibit 13 hereto is incorporated by reference in this Report as contained in Exhibit 13. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements of Olin Corporation and subsidiaries and the related notes thereto together with the report thereon of KPMG Peat Marwick LLP dated January 25, 1996, appearing on pages 26 through 38 of the Shareholders Report and in Exhibit 13 hereto, are incorporated by reference in this Report as contained in Exhibit 13. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The biographical information relating to Olin's Directors under the heading "Item 1--Election of Directors" in the Proxy Statement relating to Olin's 1996 Annual Meeting of Shareholders ("Proxy Statement") is incorporated by reference in this Report. See also the list of executive officers following Item 4 of this Report. The information regarding compliance with Section 16 of the Securities Exchange Act of 1934, as amended, contained in the last paragraph under the heading "Security Ownership of Directors and Officers" in the Proxy Statement is incorporated by reference in this Report. ITEM 11. EXECUTIVE COMPENSATION The information under the heading "Executive Compensation" in the Proxy Statement (but excluding the Report of the Compensation and Nominating Committee on Executive Compensation appearing on pages 11 through 14 of the Proxy Statement and the graph appearing on page 18 of the Proxy Statement) is incorporated by reference in this Report. The information under the headings "Additional Information Regarding the Board of Directors--Compensation of Directors," and "Additional Information Regarding the Board of Directors-- Directors Retirement Plan" in the Proxy Statement is incorporated by reference in this Report. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information concerning holdings of Olin stock by certain beneficial owners contained under the heading "Certain Beneficial Owners" in the Proxy Statement and the information concerning beneficial ownership of Olin stock by Directors and officers of Olin under the heading "Security Ownership of Directors and Officers" in the Proxy Statement are incorporated by reference in this Report. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Not applicable. 17 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a)1. FINANCIAL STATEMENTS Consolidated financial statements of Olin Corporation and subsidiaries and the related notes thereto together with the report thereon of KPMG Peat Marwick LLP dated January 25, 1996, appearing on pages 26 through 38 of the Shareholders Report and in Exhibit 13 hereto are incorporated by reference in this Report as contained in Exhibit 13. 2. FINANCIAL STATEMENT SCHEDULES Schedules not included herein are omitted because they are inapplicable or not required or because the required information is given in the consolidated financial statements and notes thereto. Separate financial statements of 50% or less owned subsidiaries accounted for by the equity method are not summarized herein and have been omitted because, in the aggregate, they would not constitute a significant subsidiary. 3. EXHIBITS Management contracts and compensatory plans and arrangements are listed as Exhibits 10(a) through 10(cc) below. 3(a) Olin's Restated Articles of Incorporation as amended effective February 27, 1996. (b) By-Laws of Olin as amended effective February 29, 1996. 4(a) Articles of Amendment designating ESOP Preferred Shares, par value $1 per share--Exhibit 4 to Olin's Form 10-Q for the Quarter ended June 30, 1989.* (b) Articles of Amendment designating Series A Participating Cumulative Preferred Stock, par value $1 per share--Exhibit 2 to Olin's Form 8-A dated February 21, 1996, covering Series A Participating Cumulative Preferred Stock Purchase Rights.* (c) Rights Agreement dated as of February 27, 1996 between Olin and Chemical Mellon Shareholder Services, LLP, Rights Agent--Exhibit 1 to Olin's Form 8-A dated February 21, 1996, covering Series A Participating Cumulative Preferred Stock Purchase Rights.* (d) Form of Senior Debt Indenture between Olin and Chemical Bank-- Exhibit 4(a) to Form 8-K dated June 15, 1992; Supplemental Indenture dated as of March 18, 1994 between Olin and Chemical Bank--Exhibit 4(c) to Registration Statement No. 33-52771; Prospectus Supplement dated June 17, 1992 to Prospectus dated June 16, 1992, with respect to Olin's 8% Senior Notes Due 2002 filed under Registration Statement No. 33-4479; and Prospectus Supplement dated May 26, 1995 to Prospectus dated May 4, 1994 relating to Medium Term Notes, Series A filed under Registration Statement No. 33-52771.* (e) Form of Subordinated Debt Indenture between Olin and Bankers Trust Company-- Exhibit 4(i) to Registration No. 33-4479; and Prospectus Supplement dated June 17, 1987 to Prospectus dated February 3, 1987, with respect to Olin's 9 1/2% Subordinated Notes Due 1997 filed under Registration Statement No. 33-4479.* (f) Credit Agreement, dated as of September 30, 1993, among Olin and the banks named therein--Exhibit 4 to Olin's Form 10-Q for the Quarter ended September 30, 1993.* (g) Letters, dated December 15, 1993, amending the Credit Agreement, dated as of September 30, 1993--Exhibit 4(f) to Olin's Form 10-K for 1993.* (h) Amendment, dated April 11, 1995, to Credit Agreement, dated as of September 30, 1993--Exhibit 4 to Olin's Form 10-Q for the Quarter ended June 30, 1995.*
- -------- * Previously filed as indicated and incorporated herein by reference. Exhibits incorporated by reference are located in SEC File No. 1-1070 unless otherwise indicated. 18 Olin is party to a number of other instruments defining the rights of holders of long-term debt. No such instrument authorizes an amount of securities in excess of 10% of the total assets of Olin and its subsidiaries on a consolidated basis. Olin agrees to furnish a copy of each instrument to the Commission upon request. 10(a) 1980 Stock Option Plan for Key Employees of Olin Corporation and Subsidiaries, as amended--Exhibit 10(a) to Olin's Form 10-K for 1991.* (b) 1988 Stock Option Plan for Key Employees of Olin Corporation and Subsidiaries as amended through February 23, 1995--Exhibit 10(b) to Olin's Form 10-K for 1994.* (c) Olin Corporation Performance Unit Plan, as amended April 24, 1986--Exhibit 10(a) to Olin's Form 10-Q for Quarter ended March 31, 1986.* (d) Olin Corporate Incentive Compensation Plan--Exhibits 1(b) and 2(b) to Registration No. 2-64811.* (e) Olin Deferred Salary Plan, effective January 1, 1983--Exhibit 10(f) to Olin's Form 10-K for 1993.* (f) Form of Directors' deferral plan--Exhibit 10(g) to Olin's Form 10-K for 1993.* (g) Amendments to Olin Corporation Performance Unit Plan, Corporate Incentive Compensation Plan, Deferred Salary Plan and Directors' deferral plan, adopted September 29, 1988--Exhibit 10(j) to Olin's Form 10-K for 1988.* (h) Amendment to Olin Corporation Performance Unit Plan, adopted May 25, 1989--Exhibit 10(b) to Olin's Form 10-Q for Quarter ended June 30, 1989.* (i) Amendment to Olin Corporation Performance Unit Plan, adopted September 26, 1991--Exhibit 10(j) to Olin's Form 10-K for 1991.* (j) Amendment to Olin Corporation Performance Unit Plan, adopted December 16, 1993--Exhibit 10(k) to Olin's Form 10-K for 1993.* (k) Deferral elections with respect to certain acquisitions or "change of control events"--Exhibit 10(h) to Olin's Form 10-K for 1986.* (l) Olin Senior Executive Pension Plan with amendments--Exhibit 10(l) to Olin's Form 10-K for 1994.* (m) Olin Supplementary Contributing Employee Ownership Plan, effective January 1, 1990 with amendments--Exhibit 10(m) to Olin's Form 10-K for 1994.* (n) Form of arrangement to credit 100 shares of Olin Common Stock to certain Directors in each year from 1985 through 1994--Exhibit 10(n) to Olin's Form 10-K for 1994.* (o) Olin Corporation Key Executive Life Insurance Program--Exhibit 10(b) to Olin's Form 10-Q for Quarter ended March 31, 1986.* (p) Form of Olin Corporation Endorsement Split Dollar Agreement (effective January 1, 1993)--Exhibit 10(s) to Olin's Form 10-K for 1992.* (q) Form of executive agreement between Olin and certain executive officers--Exhibit 10(q) to Olin's Form 10-K for 1994.* (r) Form of special severance agreement provided to certain employees to become operative upon a "change in control event"--Exhibit 10(r) to Olin's Form 10-K for 1994.* (s) Retirement Plan for Non-Employee Directors of Olin Corporation, as amended through December 12, 1991--Exhibit 10(u) to Olin's Form 10-K for 1991.* (t) Change in Control elections regarding both the Directors' deferral plan and the arrangement to credit 100 shares of Olin Common Stock to certain Directors--Exhibit 10(z) to Olin's Form 10-K for 1989.* (u) Olin 1991 Long Term Incentive Plan, as amended through February 23, 1995--Exhibit 10(u) to Olin's Form 10-K for 1994.* (v) Description of 1991 Performance Unit Awards granted under the Olin 1991 Long Term Incentive Plan--Exhibit 10(w) to Olin's Form 10-K for 1991.*
- -------- * Previously filed as indicated and incorporated herein by reference. Exhibits incorporated by reference are located in SEC File No. 1-1070 unless otherwise indicated. 19 (w) Description of 1992 Performance Unit Awards granted under the Olin 1991 Long Term Incentive Plan--Exhibit 10(z) to Olin's Form 10-K for 1992.* (x) Description of Performance Share Awards granted under the Olin 1991 Long Term Incentive Plan--Exhibit 10 to Olin's Form 10-Q for the quarter ended June 30, 1993.* (y) Board Resolution adopted April 25, 1991 regarding payment of deferred amounts--Exhibit 10(y) to Olin's Form 10-K for 1991.* (z) Olin Corporation 1994 Stock Plan for Non-employee Directors-- Exhibit 10(a) to Olin's Form 10-Q for Quarter ended March 31, 1994.* (aa) Olin Senior Management Incentive Compensation Plan as amended April 27, 1995--Exhibit 10(b) to Olin's Form 10-Q for Quarter ended March 31, 1995.* (bb) Description of Restricted Stock Unit Awards granted under the Olin 1991 Long Term Incentive Plan. (cc) Form of EVA Incentive Plan. 11. Computation of Per Share Earnings. 12(a) Computation of Ratio of Earnings to Fixed Charges (unaudited). 12(b) Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (unaudited). 13. Excerpts from the 1995 Annual Report to Shareholders. 21. List of Subsidiaries. 23. Consent of KPMG Peat Marwick LLP dated March 8, 1996. 27. Financial Data Schedule.
(b) REPORTS ON FORM 8-K No reports on Form 8-K were filed during the quarter ended December 31, 1995. - -------- * Previously filed as indicated and incorporated herein by reference. Exhibits incorporated by reference are located in SEC File No. 1-1070 unless otherwise indicated. 20 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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. Olin Corporation Date: March 8, 1996 /s/ Donald W. Griffin By................................... DONALD W. GRIFFIN PRESIDENT AND CHIEF EXECUTIVE OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE --------- ----- /s/ John W. Johnstone, Jr. ..................................... JOHN W. JOHNSTONE, JR. Chairman of the Board of Directors /s/ William J. Alley ..................................... WILLIAM J. ALLEY Director /s/ Robert R. Frederick ..................................... ROBERT R. FREDERICK Director /s/ Donald W. Griffin ..................................... DONALD W. GRIFFIN President and Chief Executive Officer and Director (Principal Executive Officer) /s/ William W. Higgins ..................................... WILLIAM W. HIGGINS Director /s/ Suzanne Denbo Jaffe ..................................... SUZANNE DENBO JAFFE Director ..................................... JACK D. KUEHLER Director ..................................... H. WILLIAM LICHTENBERGER Director /s/ G. Jackson Ratcliffe, Jr. ..................................... G. JACKSON RATCLIFFE, JR. Director /s/ William L. Read ..................................... WILLIAM L. READ Director
21
SIGNATURE TITLE --------- ----- /s/ John P. Schaefer ..................................... JOHN P. SCHAEFER Director /s/ Irving Shain ..................................... IRVING SHAIN Director /s/ Robert A. Beyerl ..................................... ROBERT A. BEYERL Vice President and Controller (Principal Accounting Officer) /s/ Anthony W. Ruggiero ..................................... ANTHONY W. RUGGIERO Senior Vice President and Chief Financial Officer (Principal Financial Officer)
Date: March 8, 1996 22 PRINTED ON RECYCLED PAPER [Logo of Recycled Paper appears here] EX-3.A 2 RESTATED ARTICLES OF INC. EXHIBIT 3(a) ================================================================================ RESTATED ARTICLES OF INCORPORATION OF OLIN CORPORATION AS AMENDED THROUGH JANUARY 21, 1986 ================================================================================ ARTICLES OF RESTATEMENT OF ARTICLES OF INCORPORATION OF OLIN CORPORATION 1) The name of the Corporation is Olin Corporation. 2) The text of the restated Articles of Incorporation of the Corporation is as follows: "FIRST: The name of the Corporation shall be Olin Corporation. "SECOND: The principal office of the Corporation in the Commonwealth of Virginia shall be at Abingdon, Virginia 24210. "THIRD: The purposes for which the Corporation is formed are as follows: If, when and to the extent lawful for a corporation organized under the laws of the Commonwealth of Virginia (provided that none of the following powers and purposes shall be construed so as to constitute the Corporation a railroad company, a telegraph company, a telephone company, a canal company, a turnpike company, or other company designated by law as a public service corporation or which shall need to possess the right of eminent domain for the purpose of taking and condemning lands within the Commonwealth of Virginia within the meaning of the statutes thereof): (1) to produce, manufacture, process, refine, treat, extract, store, purchase or otherwise acquire, sell, deal in, transport, distribute, market, handle and otherwise turn to account or dispose of, either in their natural form or any altered, converted or manufactured form, chemicals and chemical compositions of any state, form, nature, mixture or description, including, without limiting the generality of the foregoing, salt, soda ash, caustic soda, chlorine, ammonia, bicarbonate of soda, sulphuric acid, superphosphate, mixed fertilizer, ammonium phosphate, ammonium sulphate, phosphoric acid, sulphur, ethylene glycol, ethylene oxide, polyethylene and other organic chemicals, and all mixtures, derivatives, products or by-products of such chemicals; (2) to produce, manufacture, process, refine, treat, store, purchase or otherwise acquire, sell, deal in, transport, distribute, market, handle and otherwise turn to account or dispose of ammunition, firearms, explosives, munitions and stores of war, and components thereof; (3) to produce, manufacture, process, refine, treat, extract, store, purchase or otherwise acquire, sell, deal in, transport, distribute, market, handle and otherwise turn to account or dispose of, either in their natural form or in any altered, converted or manufactured form, drugs of every kind and description and the constituent parts and elements thereof including, without limiting the generality of the foregoing, all kinds of antibiotic, pharmaceutical, medicinal-chemical, biological, veterinary, dental, hygienic, medicinal-dietetic, household medicinal and toilet substances, products, processes, compounds and compositions, and apparatus and medicinal, hospital and druggists' supplies of every kind and description; (4) to produce, manufacture, process, refine, treat, extract, store, purchase or otherwise acquire, sell, deal in, transport, distribute, market, handle and otherwise turn to account or dispose of, either in their natural form or in any altered, converted or manufactured form, oil, gas and other hydrocarbons, and compositions thereof, of any state, form, nature, mixture or description, including, without limiting the generality of the foregoing, methane, ethane, propane, butane, gasoline and kerosene, and all mixtures, derivatives, products or by-products of such hydrocarbons; (5) to produce, manufacture, process, refine, treat, extract, store, purchase or otherwise acquire, sell, deal in, transport, distribute, market, handle and otherwise turn to account or dispose of iron, steel, copper, brass, nickel, silver, aluminum and other metals and metal products, plastics and plastic products, wood and wooden products, and paper and paper products; (6) to acquire by lease, purchase, contract, concession or otherwise, and to own, explore, exploit, develop, improve, operate, lease, enjoy, control, manage or otherwise turn to account, and to mortgage, grant, sell, exchange, convey or otherwise dispose of, any and all kinds of real estate, lands, options, concessions, grants, land patents, timber lands, oil rights, gas rights, and any other mineral rights, oil royalties, gas royalties, and any other mineral royalties, and any other franchises, claims, rights, privileges, easements, tenements, estates, hereditaments and interests in properties, real or personal, tangible or intangible, of every description and nature whatsoever, useful in the conduct of the business of the Corporation; (7) to construct, build, purchase, lease or otherwise acquire, equip, hold, own, improve, develop, manage, maintain, control, operate, lease, mortgage, create liens upon, sell, convey or otherwise dispose of, or turn to account, any and all factories, plants, refineries, laboratories, oil wells, gas wells, mines, lumberyards, sawmills, installations, equipment, machinery, storage tanks, tank cars, tank wagons, locomotives, railroad cars, tractors, trucks, cars, airplanes, boats, barges, and other vehicles and vessels, pipe lines, pumping stations, filling stations, railways, roadways, canals, water courses, wharves, piers, docks, basins, and other structures, machines and apparatus of every kind and description, and any and all rights and privileges therein, useful in the conduct of the business of the Corporation; (8) to apply for, register, obtain, purchase, lease, take licenses in respect of or otherwise acquire, and to hold, own, use, operate, develop, enjoy, turn to account, grant licenses and immunities in respect of, manufacture under and to introduce, sell, assign, mortgage, pledge or otherwise dispose of, and, in any manner deal with and contract with reference to: (a) inventions, devices, formulae, processes and any improvements and modifications thereof, and (b) letters patent, patent rights, patented processes, copyrights, designs and similar rights, trade-marks, trade symbols and other indications of origin and ownership granted by or recognized under the laws of the United States of America or of any state or subdivision thereof, or of any foreign country or subdivision thereof, and all rights connected therewith or appertaining thereunto; (9) to conduct and carry on any experimental and research work; (10) to manufacture, process, purchase, sell and generally to trade and deal in and with goods, wares and merchandise of every kind, nature and description, and to engage and participate in any mercantile, industrial or trading business of any kind or character whatsoever; (11) to acquire by purchase, exchange, lease or otherwise and to own, hold, use, develop, operate, sell, assign, lease, transfer, convey, exchange, mortgage, pledge or otherwise dispose of or deal in and with, real and personal property of every class or description and rights and privileges therein wheresoever situate; (12) to subscribe to, purchase or otherwise acquire, and to hold, mortgage, pledge, sell, exchange or otherwise dispose of, securities (which term, for the purpose of this Article THIRD, includes, without limitation of the generality thereof, any shares of stock, bonds, debentures, notes, mortgages or other obligations, and any certificates, receipts or other instruments representing rights to receive, purchase or subscribe for the same, or representing any other rights or interests therein or in any property or assets) created or issued by any persons, firms, associations, corporations, or governments or subdivisions thereof; to make payment therefor in any lawful manner, and to exercise as owner or holder of any securities, any and all rights, powers and privileges in respect thereof; (13) to make, enter into, perform and carry out contracts of every kind and description with any person, firm, association, corporation or government or subdivision thereof; (14) to acquire by purchase, exchange or otherwise, all, or any part of, or any interest in, the properties, assets, business and good will of any one or more persons, firms, associations or corporations heretofore or hereafter engaged in any business for which a corporation may now or hereafter be organized under the laws of the Commonwealth of Virginia; to pay for the same in cash, property or its own or other securities; to hold, operate, reorganize, liquidate, sell or in any manner dispose of the whole or any part thereof; and in connection therewith, to assume or guarantee performance of any liabilities, obligations or contracts of such persons, firms, associations or corporations, and to conduct the whole or any part of any business thus acquired; (15) to lend its uninvested funds from time to time to such extent, to such persons, firms, associations, corporations, governments or subdivisions thereof, and on such terms and on such security, if any, as the Board of Directors of the Corporation may determine; (16) to guarantee or become surety in respect to the payment of principal, interest or dividends upon, and the performance of sinking fund or other obligations of, any securities, and to guarantee in any way permitted by law the performance of any of the contracts or other undertakings in which the Corporation may otherwise be or become interested, of any person, firm, association, corporation, government or subdivision thereof, or of any other combination, organization or entity whatsoever; (17) to borrow money for any of the purposes of the Corporation, from time to time, and without limit as to amount; from time to time to issue and sell its own securities in such amounts, on such terms and conditions, for such purposes and for such prices, now or hereafter permitted by the laws of the Commonwealth of Virginia and by these Articles of Incorporation, as the Board of Directors of the Corporation may determine; and to secure such securities by mortgage upon, or the pledge of, or the conveyance or assignment in trust of, the whole or any part of the properties, assets, business and good will of the Corporation, then owned or thereafter acquired; (18) to purchase, hold, cancel, reissue, sell, exchange, transfer or otherwise deal in its own securities from time to time to such extent and in such manner and upon such terms as the Board of Directors of the Corporation shall determine; provided that the Corporation shall not use its funds or property for the purchase of its own shares of capital stock when such use would cause any impairment of its capital, except to the extent permitted by law; and provided further that shares of its own capital stock belonging to the Corporation shall not be voted upon directly or indirectly; (19) to organize or cause to be organized under the laws of the Commonwealth of Virginia, or of any other State of the United States of America, or of the District of Columbia, or of any territory, dependency, colony or possession of the United States of America, or of any foreign country, a corporation or corporations for the purpose of transacting, promoting or carrying on any or all of the objects or purposes for which the Corporation is organized, and to dissolve, wind up, liquidate, merge or consolidate any such corporation or corporations or to cause the same to be dissolved, wound up, liquidated, merged or consolidated; (20) to conduct its business in any and all of its branches and maintain offices both within and without the Commonwealth of Virginia, in any and all States of the United States of America, in the District of Columbia, in any or all territories, dependencies, colonies or possessions of the United States of America, and in foreign countries; (21) to such extent as a corporation organized under the laws of the Commonwealth of Virginia may now or hereafter lawfully do, to do, either as principal or agent and either alone or in connection with, or in partnership with, other persons, firms, associations, corporations and other legal entities, whether organized under the laws of the Commonwealth of Virginia or otherwise, governments or subdivisions thereof, or individuals, all and everything necessary, suitable, convenient or proper for, or in connection with, or incident to, the accomplishment of any of the purposes or the attainment of any one or more of the objects herein enumerated, or designed directly or indirectly to promote the interests of the Corporation or to enhance the value of its properties; and in general to do any and all things and exercise any and all powers, rights and privileges which a corporation may now or hereafter be organized to do or to exercise under the laws of the Commonwealth of Virginia or under any act amendatory thereof, supplemental thereto or substituted therefor. The foregoing clauses shall be construed both as objects and powers, and each as an independent right and power, and it is hereby expressly provided that the enumeration herein of specific objects and powers shall not be held to limit or restrict in any manner the general powers of this Corporation, and all the powers and purposes hereinbefore enumerated shall be exercised, carried out and enjoyed by this Corporation within the Commonwealth of Virginia and outside of the Commonwealth of Virginia to such extent and in such manner as a corporation of this character organized under the laws of the Commonwealth of Virginia may properly and legally exercise, carry out and enjoy, but nothing herein contained shall be deemed to authorize or permit this Corporation to carry on any business or exercise any power or do any act which a corporation of this character, formed under the laws of the Commonwealth of Virginia, may not at the time lawfully carry on or do. "FOURTH: The aggregate number of shares which the Corporation shall have authority to issue shall be 70,000,000 shares, of which 10,000,000 shares shall be Preferred Stock, par value $1 per share (hereinafter called Preferred Stock), and 60,000,000 shares shall be Common Stock, par value $1 per share (hereinafter called Common Stock). The following is a description of each of said different classes of stock, and a statement of the preferences, limitations, voting rights and relative rights in respect of the shares of each such class: 1. The Board of Directors shall have authority, by resolution or resolutions, at any time and from time to time to divide and establish any or all of the unissued shares of Preferred Stock not then allocated to any series of Preferred Stock into one or more series, and, without limiting the generality of the foregoing, to fix and determine the designation of each such series, the number of shares which shall constitute such series and the following relative rights and preferences of the shares of each series so established: (a) The annual dividend rate payable on shares of such series, the time of payment thereof, whether such dividends shall be cumulative or non- cumulative, and the date or dates from which any cumulative dividends shall commence to accrue; (b) the price or prices at which and the terms and conditions, if any, on which shares of such series may be redeemed; (c) the amounts payable upon shares of such series in the event of the voluntary or involuntary dissolution, liquidation or winding-up of the affairs of the Corporation; (d) the sinking fund provisions, if any, for the redemption or purchase of shares of such series; (e) the extent of the voting powers, if any, of the shares of such series; (f) the terms and conditions, if any, on which shares of such series may be converted into shares of stock of the Corporation of any other class or classes or into shares of any other series of the same or any other class or classes; (g) whether, and if so the extent to which, shares of such series may participate with the Common Stock in any dividends in excess of the preferential dividend fixed for shares of such series or in any distribution of the assets of the Corporation, upon a liquidation, dissolution or winding-up thereof, in excess of the preferential amount fixed for shares of such series; and (h) any other preferences and relative, optional or other special rights, and qualifications, limitations or restrictions of such preferences or rights, of shares of such series not fixed and determined by law or in this Article FOURTH. 2. Each series of Preferred Stock shall be so designated as to distinguish the shares thereof from the shares of all other series. Different series of Preferred Stock shall not be considered to constitute different classes of shares for the purpose of voting by classes except as otherwise fixed by the Board of Directors with respect to any series at the time of the creation thereof. 3. So long as any shares of Preferred Stock are outstanding, the Corporation shall not declare and pay or set apart for payment any dividends (other than dividends payable in Common Stock or other stock of the Corporation ranking junior to the Preferred Stock as to dividends) or make any other distribution on such junior stock, if at the time of making such declaration, payment or distribution the Corporation shall be in default with respect to any dividend payable on, or any obligation to retire, shares of Preferred Stock. 4. Shares of any series of Preferred Stock which have been redeemed or otherwise reacquired by the Corporation (whether through the operation of a sinking fund, upon conversion or otherwise) shall, upon cancellation in accordance with law, have the status of authorized and unissued shares of Preferred Stock and may be redesignated and reissued as a part of such series or of any other series of Preferred Stock. Shares of Common Stock which have been reacquired by the Corporation shall, upon cancellation in accordance with law, have the status of authorized and unissued shares of Common Stock and may be reissued. 5. Subject to the provisions of any applicable law or of the By-laws of the Corporation as from time to time amended with respect to the closing of the transfer books or the fixing of a record date for the determination of stockholders entitled to vote, and except as otherwise provided by law or in resolutions of the Board of Directors establishing any series of Preferred Stock pursuant to the provisions of paragraph 1 of this Article FOURTH, the holders of outstanding shares of Common Stock of the Corporation shall exclusively possess voting power for the election of directors and for all other purposes, each holder of record of shares of Common Stock of the Corporation being entitled to one vote for each share of such stock standing in his name on the books of the Corporation. 6. No holder of shares of stock of any class of the Corporation shall, as such holder, have any right to subscribe for or purchase (a) any shares of stock of any class of the Corporation, or any warrants, options or other instruments that shall confer upon the holder thereof the right to subscribe for or purchase or receive from the Corporation any shares of stock of any class, whether or not such shares shall be unissued shares, now or hereafter authorized, or shares acquired by the Corporation after the issue thereof, and whether or not such shares of stock, warrants, options or other instruments are issued for cash or services or property or by way of dividend or otherwise, or (b) any other security of the Corporation which shall be convertible into, or exchangeable for, any shares of stock of the Corporation of any class or classes, or to which shall be attached or appurtenant any warrant, option or other instrument that shall confer upon the holder of such security the right to subscribe for or purchase or receive from the Corporation any shares of its stock of any class or classes, whether or not such shares shall be unissued shares, now or hereafter authorized, or shares acquired by the Corporation after the issue thereof, and whether or not such securities are issued for cash or services or property or by way of dividend or otherwise, other than such right, if any, as the Board of Directors, in its sole discretion, may from time to time determine. If the Board of Directors shall offer to the holders of shares of stock of any class of the Corporation, or any of them, any such shares of stock, options, warrants, instruments or other securities of the Corporation, such offer shall not, in any way, constitute a waiver or release of the right of the Board of Directors subsequently to dispose of other securities of the Corporation without offering the same to said holders. 7. Anything herein to the contrary notwithstanding, dividends upon shares of any class of stock of the Corporation shall be payable only out of assets legally available for the payment of such dividends, and the rights of the holders of shares of stock of the Corporation in respect of dividends shall at all times be subject to the power of the Board of Directors to determine what dividends, if any, shall be declared and paid to the stockholders. 8. Subject to the provisions hereof and except as otherwise provided by law, shares of stock of any class of the Corporation may be issued for such consideration and for such corporate purposes as the Board of Directors may from time to time determine. "FIFTH: The period of the duration of the Corporation is unlimited and perpetual. "SIXTH: 1. The number of directors shall be as specified in the By-laws of the Corporation but such number may be increased or decreased from time to time in such manner as may be prescribed in the By-laws. In no event shall such number exceed 18. In the absence of a By-law specifying the number of directors, the number shall be 15. Commencing with the 1985 annual meeting of stockholders, the Board of Directors shall be divided into three classes, Class I, Class II, and Class III, as nearly equal in number as possible. At the 1985 annual meeting of stockholders, directors of the first class (Class I) shall be elected to hold office for a term expiring at the 1986 annual meeting of stockholders; directors of the second class (Class II) shall be elected to hold office for a term expiring at the 1987 annual meeting of stockholders; and directors of the third class (Class III) shall be elected to hold office for a term expiring at the 1988 annual meeting of stockholders. At each annual meeting of stockholders after 1985, the successors to the class of directors whose term shall then expire shall be identified as being of the same class as the directors they succeed and elected to hold office for a term expiring at the third succeeding annual meeting of stockholders. When the number of directors is changed, any newly-created directorships or any decrease in directorships shall be so apportioned among the classes by the Board of Directors as to make all classes as nearly equal in number as possible. 2. Subject to the rights of the holders of any Preferred Stock then outstanding, directors may be removed only with cause. 3. Subject to the rights of the holders of any Preferred Stock then outstanding, newly-created directorships resulting from any increase in the number of directors and any vacancies in the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall be filled solely by the Board of Directors or at an annual meeting of stockholders by the stockholders entitled to vote on the election of directors. Unless otherwise provided by law, directors so chosen by the stockholders shall hold office for a term expiring at the annual meeting of stockholders at which the term of the class to which they have been elected expires. If the directors remaining in office constitute fewer than a quorum of the Board, they may fill the vacancy by the affirmative vote of a majority of the directors remaining in office. "SEVENTH: The amount of real estate to which the holdings of the Corporation at any one time are to be limited is five million (5,000,000) acres. "EIGHTH: The following provisions are inserted for the regulation of the business and for the conduct of the affairs of the Corporation, and it is expressly provided that the same are to be in furtherance and not in limitation or exclusion of the powers conferred by statute or otherwise: 1. Except where other notice is specifically required by statute, written notice of any meeting of stockholders given as provided by the By-laws of the Corporation shall be sufficient without publication or other form of notice. 2. A meeting of the stockholders, other than the annual meeting of stockholders, may be held at any time but only upon the call of the Board of Directors, the Chairman of the Board, the President or the holders of a majority of the shares of issued and outstanding stock of the Corporation entitled to vote at the meeting. 3. In furtherance and not in limitation of the powers conferred by the laws of the Commonwealth of Virginia, the Board of Directors is expressly authorized and empowered: (a) To make, alter, amend and repeal the By-laws, subject to the power of the stockholders to alter or repeal the By-laws made by the Board of Directors. (b) Subject to the applicable provisions of the By-laws then in effect, to determine, from time to time, whether and to what extent and at what times and places and under what conditions and regulations the accounts and books of the Corporation, or any of them, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account or book or document of the Corporation, except as conferred by the laws of the Commonwealth of Virginia, unless and until authorized so to do by resolution of the Board of Directors or of the stockholders of the Corporation. (c) By resolution passed by a majority of the whole Board of Directors, (i) to designate two or more of their number, to constitute an executive committee, which, to the extent provided in such resolution, shall have and may exercise the power of the Board of Directors in the management of the business and affairs of the Corporation, and may have power to authorize the seal of the Corporation to be affixed to all papers which require it; and (ii) to appoint such other committees, agents and representatives as may be necessary and convenient for the conduct or the management of the business of the Corporation. (d) To determine whether any, and, if any, what part, of the net earnings of the Corporation or of its net assets in excess of its capital shall be declared in dividends and paid to the stockholders, and to direct and determine the use and disposition of any such net earnings or such net assets in excess of capital for any lawful purpose of the Corporation, and, without limiting the generality of the foregoing, from time to time as the Board of Directors may deem necessary or desirable, to set aside reserves for any purpose, to fix from time to time the amount of earnings to be reserved for working capital and to set aside such reserves or make such other provisions for additions, improvements and betterments to plant and equipment, for expansion of the business of the Corporation (including the acquisition of real and personal property for that purpose), for plans for maintaining employment at the plants of the Corporation, and for other plans for the benefit of employees generally. (e) To establish pension, bonus, profit-sharing or other types of incentive or compensation plans for the officers and employees (including officers and employees who are also directors) of the Corporation and its subsidiaries and to fix the amount of earnings to be distributed or shared and to determine the persons to participate in any such plans and the amounts of their respective participations. (f) To issue and sell or grant options fort he purchase of shares of Common Stock to officers and employees (including officers and employees who are also directors) of the Corporation and its subsidiaries for such consideration and on such terms and conditions as the Board of Directors may from time to time determine. In addition to the powers and authorities hereinbefore or by statute expressly conferred upon it, the Board of Directors may exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the laws of the Commonwealth of Virginia, of these Articles of Incorporation and of the By- laws of the Corporation. 4. No contract or other transaction between the Corporation and any other corporation and no other act of the Corporation shall, in the absence of fraud, in any way be affected or invalidated by the fact that any of the directors of the Corporation are pecuniarily or otherwise interested in, or are directors or officers of, such other corporation. Any director of the Corporation individually or any firm or association of which any director may be a member, may be a party to, or may be pecuniarily or otherwise interested in, any contract or transaction of the Corporation, provided that the fact that he individually or such firm or association is so interested shall be disclosed or shall have been known to the Board of Directors or a majority of such members thereof as shall be present at any meeting of the Board of Directors at which action upon any such contract or transaction shall be taken. Any director of the Corporation who is also a director or officer of such other corporation or who is so interested may be counted in determining the existence of a quorum at any meeting of the Board of Directors which shall authorize any such contract or transaction, and may vote thereat to authorize any such contract or transaction, with like force and effect as if he were not such director or officer of such other corporation or not so interested. Any director of the Corporation may vote upon any contract or other transaction between the Corporation and any subsidiary or affiliated corporation without regard to the fact that he is also a director of such subsidiary or affiliated corporation. Any contract, transaction or act of the Corporation or of the directors, which shall be ratified by a majority of a quorum of the stockholders of the Corporation at any annual meeting, or at any special meeting called for such purpose, shall, insofar as permitted by law or by these Articles of Incorporation, be as valid and as binding as though ratified by every stockholder of the Corporation; provided, however, that any failure of the stockholders to approve or ratify any such contract, transaction or act, when and if submitted, shall not be deemed in any way to invalidate the same or deprive the Corporation, its directors, officers or employees, of its or their right to proceed with such contract, transaction or act. Subject to any limitation in the By-laws, the members of the Board of Directors shall be entitled to reasonable fees, salaries or other compensation for their services and to reimbursement for their expenses as such members. Nothing contained herein shall preclude any director from serving the Corporation, or any subsidiary or affiliated corporation, in any other capacity and receiving proper compensation therefor." 3. The Corporation hereby certifies that the foregoing restatement of the Articles of Incorporation does not contain an amendment to the Articles of Incorporation requiring shareholder approval, and that the Board of Directors duly adopted such restatement on June 26, 1986. OLIN CORPORATION By /s/ E. McI. Cover -------------------------- Vice President Dated: July 8, 1986 ARTICLES OF AMENDMENT OF THE ARTICLES OF INCORPORATION OF OLIN CORPORATION under Section 13.1-639 of the Virginia Stock Corporation Act FIRST: The name of the Corporation is Olin Corporation. SECOND: The amendment adopted is to add a new Paragraph 9 to Article Fourth to read as follows: "9: ESOP Preferred Shares. There is hereby established a series of the Corporation's authorized Preferred Stock, to be designated as the "ESOP Preferred Shares, par value $1 per share." The designation and number, and relative rights, preferences and limitations of the ESOP Preferred Shares, insofar as not already fixed by any other provision of these Articles of Incorporation, shall be as follows: Section 1. Designation and Amount; Special Purpose Restricted Transfer ----------------------------------------------------------- Issue. - ------ 1.1 Designation. The shares of such series shall be designated as ----------- "ESOP Preferred Shares, par value $1 per share" (the "ESOP Preferred Shares"), and the number of shares constituting such series shall be 1,750,000. 1.2 Issuance. ESOP Preferred Shares shall be issued only to the -------- trustee (the "Trustee") of the Olin Corporation Contributing Employee Ownership Plan (the "Plan"), as amended from time to time, or any successor to the Plan, including the Plan's employee stock ownership plan component (the "ESOP"). All references to the holder of ESOP Preferred Shares shall mean the Trustee or any company with which or into which the Trustee may merge or any successor trustee for the Plan. 1.3 Transfer Upon Conversion; Redemption. Conversion of ESOP ------------------------------------ Preferred Shares into Common Stock can occur at the election of the holder of ESOP Preferred Shares pursuant to Section 5.1(a) of this Paragraph 9 or automatically in accordance with Section 5.2(a) of this Paragraph 9. Shares of Common Stock issued upon any conversion may be transferred by the holder of those shares as permitted by law. ESOP Preferred Shares shall be redeemable by the Corporation upon the terms and conditions provided by Sections 6, 7 and 8 of this Paragraph 9. Section 2. Dividends and Distributions. --------------------------- 2.1 Entitlement to Dividends. Subject to the provisions for ------------------------ adjustment in this Paragraph 9, the holders of ESOP Preferred Shares shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for dividends, cash dividends ("ESOP Preferred Dividends") in an amount per share equal to 7.75% (seven and seventy-five one hundredths percent) of the Initial Value per share per annum, and no more. 2.2 Payment of Dividends. Dividends shall be payable quarterly in -------------------- arrears, one quarter on the 30th day of March, June, September and December of each year (each a "Dividend Payment Date") commencing on September 30, 1989, to holders of record at the start of business on that Dividend Date. If any Dividend Payment Date falls on any day other than a "Business Day" (as defined in Section 10 of this Paragraph 9), the dividend payment due on that Dividend Payment Date shall be paid on the Business Day immediately preceding that Dividend Payment Date. 2.3 Dividend Accrual. ESOP Preferred Dividends shall begin to accrue ---------------- on outstanding ESOP Preferred Shares from the date of issuance of such ESOP Preferred Shares. ESOP Preferred Dividends shall accrue on a daily basis whether or not the Corporation shall have current or retained earnings at the time, but ESOP Preferred Dividends accrued after issuance of the ESOP Preferred Shares for any period less than a full quarterly period between Dividend Payment Dates (or, in the case of the first dividend payment, from the date of issuance through the first Dividend Payment Date) shall be computed on the basis of a 360-day year of 30-day months. Accrued but unpaid ESOP Preferred Dividends shall cumulate as of the Dividend Payment Date on which they first become payable, but no interest shall accrue on accumulated but unpaid ESOP Preferred Dividends. 2.4 Declaration of Dividends on other Stock. --------------------------------------- (a) Parity Stock. So long as any ESOP Preferred Shares shall be ------------ outstanding, no dividend shall be declared or paid or set apart for payment on any other series of stock ranking on a parity with the ESOP Preferred Shares as to dividends, unless there shall also be or have been declared and paid or set apart for payment when due on the ESOP Preferred Shares dividends through the last preceding Dividend Payment Date before the dividend payment date of such parity stock, ratably in proportion to the respective amounts of dividends accumulated and unpaid through such dividend period on the ESOP Preferred Shares and accumulated and unpaid on such parity stock through the dividend payment period on such parity stock next preceding such parity stock dividend payment date. (b) Junior Stock. If at any time, so long as any ESOP Preferred ------------ Shares shall be outstanding, full cumulative dividends on the ESOP Preferred Shares have not been declared and paid or set apart for payment through the last preceding Dividend Payment Date, the Corporation shall not declare or pay or set apart for payment any dividends or make any other distributions, or make any payment on account of the purchase, redemption or other retirement of any shares of Common Stock or any other class of or series of the Corporation's stock ranking as to dividends or as to distributions in the event of the Corporation's liquidation, dissolution or winding-up, junior to the ESOP Preferred Shares until full cumulative dividends on the ESOP Preferred Shares shall have been paid or declared and set apart for payment. (c) Limitations. The provisions of Sections 2.4(a) and 2.4(b) shall ----------- not apply to (i) any dividend payable solely in any shares of any stock ranking as to dividends and as to distributions in the event of the Corporation's liquidation, dissolution or winding-up, junior to the ESOP Preferred Shares or (ii) the acquisition of shares of any stock ranking, as to dividends or as to distributions in the event of a liquidation, dissolution or winding-up of the Corporation, junior to the ESOP Preferred Shares in exchange solely for shares of any other stock ranking, as to dividends and as to distributions in the event of a liquidation, dissolution or winding-up of the Corporation, junior to the ESOP Preferred Shares. Section 3. Voting. ------ 3.1 Voting Rights. The holders of ESOP Preferred Shares shall have the ------------- following voting rights: (a) Voting with Common Stock. The holders of ESOP Preferred Shares ------------------------ shall be entitled to vote on all matters submitted to a vote of the shareholders of the Corporation, voting together with the holders of Common Stock as a single voting group. (b) Number of Votes. The holder of each ESOP Preferred Share shall --------------- be entitled to a number of votes equal to the number of shares of Common Stock into which such ESOP Preferred Share could be converted in accordance with Section 5.2(b) of this Paragraph 9 on the record date for determining the shareholders entitled to vote, rounded to the nearest one one-hundredth of a vote; it being understood that whenever the "Conversion Price" (as defined in Section 5.1(b) of this Paragraph 9) is adjusted as provided in Section 9 of this Paragraph 9 the number of votes of the ESOP Preferred Shares shall also be similarly adjusted. (c) Extent of Voting Rights. Except as otherwise required by law or ----------------------- set forth in this Paragraph 9, holders of ESOP Preferred Shares shall have no special voting rights, and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth in this Paragraph 9) for the taking of any corporate action. Section 4. Liquidation, Dissolution or Winding Up. -------------------------------------- 4.1 Rights of ESOP Preferred Shares Upon Liquidation, Dissolution or ---------------------------------------------------------------- Winding Up. Subject to the rights of the holders of any stock of the - ---------- Corporation ranking senior to or on a parity with the ESOP Preferred Shares in respect of distributions, upon liquidation, dissolution or winding up, upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holder of ESOP Preferred Shares shall be entitled to receive, out of the Corporation's assets that remain after full satisfaction of all creditors' valid claims and that are available for payment to shareholders, before any amount shall be paid or distributed among the holders of Common Stock or any other shares ranking junior to the ESOP Preferred Shares in respect of distributions upon the Corporation's liquidation, dissolution or winding up, liquidating distributions in an amount per share equal to the Initial Value per ESOP Preferred Share (as defined in Section 10 of this Paragraph 9) plus an amount equal to all accrued and unpaid dividends on the ESOP Preferred Shares to the date fixed for distribution, and no more. If, upon any liquidation, dissolution or winding up of the Corporation, the amounts payable with respect to the ESOP Preferred Shares and any other stock ranking as to any such distribution on a parity with the ESOP Preferred Shares are not paid in full, the holders of the ESOP Preferred Shares and such other stock shall share ratably in any distribution of assets in proportion to the full respective preferential amounts to which they are entitled. After payment of the full amount to which the holder of ESOP Preferred Shares is entitled as provided by the foregoing provisions of this Section 4.1, the holder of ESOP Preferred Shares shall not be entitled to any further right or claim to any of the remaining assets of the Corporation. 4.2 Merger or Consolidation not Deemed Liquidation, Dissolution or Winding ---------------------------------------------------------------------- Up. Neither the merger or consolidation of the Corporation with or into any - -- other corporation, nor the merger or consolidation of any other corporation with or into the Corporation, nor the sale, lease, exchange or other transfer of all or any portion of the assets of the Corporation, shall be deemed to be a dissolution, liquidation or winding up of the affairs of the Corporation for purposes of this Paragraph 9. 4.3 Rights Upon Merger or Consolidation. The holder of ESOP Preferred ----------------------------------- Shares shall nevertheless be entitled in the event of any such merger or consolidation to the rights provided by Section 8 of this Paragraph 9. 4.4 Notice. Written notice of any voluntary or involuntary liquidation, ------ dissolution or winding up of the Corporation, stating the payment date or dates when, and the place or places where, the amounts distributable to the holder of ESOP Preferred Shares in such circumstances shall be payable, shall be given by hand delivery, by courier, by standard form of telecommunication, or by first- class mail (postage prepaid), delivered, sent or mailed, as the case may be, not less than twenty (20) days prior to any payment date stated in that notice, to the holder of ESOP Preferred Shares, at the address shown on the books of the Corporation. Section 5. Conversion into Common Stock. ---------------------------- 5.1 When Holder Entitled to Conversion, ---------------------------------- (a) Right to Elect Conversion. The holder of ESOP Preferred Shares ------------------------- shall be entitled, at any time prior to the close of business on the date fixed for redemption of such shares pursuant to Sections 6, 7 and 8 of this Paragraph 9, to cause any or all of such shares to be converted into shares of Common Stock ("Holder Conversion"). (b) Conversion Price in Event of Holder Conversion. Each share of ---------------------------------------------- ESOP Preferred Shares shall have a conversion value, applicable to the conversion price per share of Common Stock, equal to the Initial Value. The initial conversion price per share of Common Stock shall also be equal to the Initial Value but shall be adjusted as provided in Section 9 of this Paragraph 9 (and, as so adjusted, is hereinafter sometimes referred to as the "Conversion Price") (that is, a conversion rate initially equivalent to one (1) share of Common Stock for each ESOP Preferred Share converted, which is subject to adjustment as the Conversion Price is adjusted as provided in Section 9 of this Paragraph 9). 5.2 Automatic Conversion. -------------------- (a) Events Resulting In Automatic Conversion. In the event of any ---------------------------------------- transfer of a certificate for ESOP Preferred Shares for purposes of evidencing ownership of the shares in any person other than the Trustee, the ESOP Preferred Shares so transferred, upon such transfer and without any further action by the Corporation or the holder thereof, shall be automatically converted into shares of Common Stock ("Automatic Conversion"). (b) Automatic Conversion Rate. For purposes of this subsection (b), ------------------------- the number of shares of Common Stock into which each such ESOP Preferred Share shall be converted shall be the greater of (i) the number resulting from dividing the most recent Fair Market Value established for such ESOP Preferred Share by the Fair Market Value of the Common Stock on the effective date of such conversion or (ii) the number of shares of Common Stock into which such ESOP Preferred Share is then convertible in accordance with Section 5.1(b). 5.3 Rights of Transferee other than Trustee. No transferee of ESOP --------------------------------------- Preferred Shares other than a trustee for the Plan shall have any of the voting powers, preferences and relative, participating, optional or special rights ascribed to ESOP Preferred Shares in this Paragraph 9 but, rather, only the powers and rights pertaining to the Common Stock into which such ESOP Preferred Shares shall be so automatically converted. In the event of such a conversion, the transferee of the ESOP Preferred Shares shall be treated for all purposes as the record holder of the shares of Common Stock into which such ESOP Preferred Shares have been automatically converted as of the date of such transfer. Certificates representing ESOP Preferred Shares shall bear a legend to reflect the foregoing provisions of this Section 5.3. 5.4 Holder Conversion; Issuance of New Certificates. The holder of ESOP ----------------------------------------------- Preferred Shares desiring to convert such shares into shares of Common Stock in accordance with Section 5.1(a) of this Paragraph 9 shall surrender the certificate or certificates representing the ESOP Preferred Shares being converted, duly assigned or endorsed for transfer to the Corporation (or accompanied by duly executed stock powers relating thereto), at the principal executive office of the Corporation, accompanied by written notice of conversion. Any notice of conversion shall specify (i) the number of shares of ESOP Preferred Shares to be converted and the name or names in which such holder wishes the certificate or certificates for Common Stock and for any ESOP Preferred Shares not to be so converted to be issued and (ii) the address to which such holder wishes delivery to be made of such new certificates to be issued upon such conversion. 5.5 Effect of Automatic Conversion on ESOP Preferred Certificates; -------------------------------------------------------------- Surrender. Upon any Automatic Conversion, each certificate which prior to the - --------- conversion represented ESOP Preferred Shares shall be deemed for all purposes to evidence ownership of the number of full shares of Common Stock into which the same shall have been converted. Unless and until any such certificate shall be so surrendered in the manner provided for in Section 5.4, dividends and other distributions payable after the expiration of 90 days following the Automatic Conversion to holders of Common Stock shall not be paid to the record holder of such certificate, but there shall be paid to the record holder of such certificate with respect to the shares of Common Stock into which the ESOP Preferred Shares have been converted (i) upon such surrender, the amount of the dividends or other distribution which shall have become payable on such shares after the expiration of 90 days following the Automatic Conversion, but without interest, and (ii) after such surrender, the amount of any dividends or other distributions with a record date prior to surrender and the payment date of which shall be subsequent to surrender, such amount to be paid on such payment date. 5.6 Procedure for Issuance of Common Stock Certificates. Upon surrender --------------------------------------------------- of a certificate representing an ESOP Preferred Share or Shares for conversion, the Corporation shall issue and send by hand delivery, by courier or by first class mail (postage prepaid) to the holder thereof or to such holder's designee, at the address designated by such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled upon conversion. In the event that there shall have been surrendered a certificate or certificates representing ESOP Preferred Shares, only part of which are to be converted, the Corporation shall issue and send to such holder, in the manner set forth in the preceding sentence, a new certificate or certificates representing the number of ESOP Preferred Shares that shall not have been converted. 5.7 Effective Date of Common Stock Issued Upon Holder Conversion. The ------------------------------------------------------------ issuance by the Corporation of shares of Common Stock upon a Holder Conversion shall be effective as of the earlier of (i) the delivery to the holder of the ESOP Preferred Shares or such holder's designee of the certificates representing the shares of Common Stock issued upon conversion thereof or (ii) the commencement of business on the second Business Day after the surrender of the certificate or certificates for the ESOP Preferred Shares to be converted, duly assigned or endorsed for transfer to the Corporation (or accompanied by duly executed stock powers relating thereto) and accompanied by all documentation required to effect the conversion, as provided by this Section 5. On and after the effective date of any conversion, the person or persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock (subject to the provisions of the second sentence of Section 5.5), but no allowance or adjustment shall be made in respect of dividends payable to holders of Common Stock in respect of any period prior to such effective date. The Corporation shall not be obligated to pay any dividends that have been declared and are payable to holders of ESOP Preferred Shares on a Dividend Payment Date if such Dividend Payment Date for such dividend is subsequent to the effective date of conversion of such shares. 5.8 Cash in Lieu of Fractional Shares. The Corporation shall not be --------------------------------- obligated to deliver to the holder of ESOP Preferred Shares, or to any person designated by such holder pursuant to Section 5.4 or to any transferee in a transfer resulting in an Automatic Conversion, any fractional share of Common Stock issuable upon any conversion and surrender of such ESOP Preferred Shares, but in lieu thereof may make a cash payment equal to the proportionate amount of the Fair Market Value of a share of Common Stock on the effective date of conversion. 5.9 Common Stock Reserves. The Corporation shall at all times reserve and --------------------- keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of ESOP Preferred Shares as herein provided, free from any preemptive rights, such number of shares of Common Stock as shall from time to time be issuable upon the conversion of all the ESOP Preferred Shares then outstanding in accordance with Section 5.2. The Corporation shall prepare and shall use its best efforts to obtain and keep in force such governmental or regulatory permits or other authorizations as may be required by law, and shall comply with all requirements as to registration or qualification of the Common Stock, in order to enable the Corporation lawfully to issue and deliver to each holder of record of ESOP Preferred Shares such number of shares of its Common Stock as shall from time to time be sufficient to effect the conversion of all ESOP Preferred Shares then outstanding and convertible into shares of Common Stock in accordance with Section 5.2. Section 6. Redemption. ---------- 6.1 Redemption at the Option of the Corporation. The ESOP Preferred ------------------------------------------- Shares shall be redeemable, in whole or in part, at the option of the Corporation at any time after July 1, 1994 at redemption prices per share equal to the respective percentages of the Initial Value of the ESOP Preferred Shares so to be redeemed set forth below: During the Twelve- Month Period Percentage of Beginning July 1 of Initial Value ------------------- ------------- 1994 103.875 1995 103.100 1996 102.325 1997 101.550 1998 100.775 1999 and 100.000 thereafter plus, in each case, an amount equal to all accrued and unpaid dividends thereon to the date fixed for redemption. 6.2 Mandatory Redemption Upon Certain Plan Events. If the Plan is --------------------------------------------- terminated and must be liquidated immediately according to its terms or if the ESOP within the Plan is terminated or eliminated from the Plan and must be liquidated immediately according to the Plan's terms, and notwithstanding anything to the contrary in Section 6.1, the Corporation shall, as soon thereafter as practicable, call for redemption all then outstanding ESOP Preferred Shares at redemption prices per share equal the respective percentages of the Initial Value of the ESOP Preferred Shares so to be redeemed set forth below: During the Twelve- Month Period Percentage of Beginning July 1 of Initial Value ------------------- ------------- 1989 107.750 1990 106.975 1991 106.200 1992 105.425 1993 104.650 1994 103.875 1995 103.100 1996 102.325 1997 101.550 1998 100.775 1999 and thereafter 100.000 plus in each case an amount equal to all accrued and unpaid dividends thereon to the date fixed for redemption. 6.3 Payment of Redemption Price. The Corporation, at its option, may make --------------------------- payment of the redemption price required upon any redemption of ESOP Preferred Shares in cash, Marketable Obligations, in shares of Common Stock, or in a combination of any two or all three of cash, Marketable Obligations or shares of Common Stock; Marketable Obligations or shares of Common Stock must be valued for such purposes at their Fair Market Value on the redemption date. 6.4 Dividends on Shares Called for Redemption. From and after the date ----------------------------------------- fixed for redemption, dividends on ESOP Preferred Shares called for redemption will cease to accrue, such ESOP Preferred Shares will no longer be deemed to be outstanding, and all rights in respect of such ESOP Preferred Shares shall cease, except the right to receive the redemption price. 6.5 Notice of Redemption. Unless otherwise required by law, notice of -------------------- redemption shall be sent to the holder of ESOP Preferred Shares at the address shown on the books of the Corporation by hand delivery, by courier, by standard form of telecommunication or by first class mail (postage pre-paid) delivered, sent or mailed, as the case may be, not less than twenty (20) days nor more than sixty (60) days prior to the redemption date. Each such notice shall state: (i) the redemption date; (ii) the total number of ESOP Preferred Shares to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of such ESOP Preferred Shares to be redeemed from such holder; (iii) the redemption price; (iv) where the redemption price is to be paid other than wholly in cash, a description of the amount of the redemption price to be paid in Marketable Obligations or shares of Common Stock or a combination thereof and a description of the terms and conditions of the Marketable Obligations, if any, being so used; (v) the place or places where certificates for such ESOP Preferred Shares are to be surrendered for payment of the redemption price; (vi) that dividends on the ESOP Preferred Shares to be redeemed will cease to accrue on such redemption date; and (vii) the conversion rights of the ESOP Preferred Shares to be redeemed, the period within the conversion rights may be exercised, and the Conversion Price and number of shares of Common Stock issuable upon conversion of an ESOP Preferred Share at the time. Upon surrender of the certificate for any ESOP Preferred Shares so called for redemption and not previously converted (properly endorsed or assigned for transfer, if the notice shall so state), such shares shall be redeemed by the Corporation at the date fixed for redemption and at the redemption price set forth in this Section 6. 6.6 Loss of Full Deduction on Change in Statute, Rule or Regulation; ---------------------------------------------------------------- Disqualification. In the event of a change in any statute, rule or regulation - ---------------- of the United States of America or any administrative or judicial interpretation thereof that (i) has the effect of limiting or making unavailable to the Corporation all or any of the tax deductions for contributions to the Plan or for amounts paid (including dividends) on the ESOP Preferred Shares when such amounts are available as provided under Section 404(k)(2) of the Internal Revenue Code of 1986, as amended and in effect on the date ESOP Preferred Shares are initially issued, (ii) affects, directly or indirectly, the treatment accorded the ESOP, the Plan, an ESOP Loan Agreement (as defined in Section 10 of this Paragraph 9) or the Corporation under Section 133 or Section 404(k) of the Internal Revenue Code of 1986, as amended, or that materially affects, directly or indirectly the treatment accorded the ESOP, the Plan, an ESOP Loan Agreement or the Corporation under Section 404(a)(3), (7) or (9) of the Internal Revenue Code of 1986, as amended; or in the event that for any reason the Plan, the ESOP or any trust maintained for the Plan loses its qualified status under either Section 401(a) or Section 501(a) of the Internal Revenue Code of 1986, as amended, and that loss is not caused by a voluntary act of the Corporation, by any trustee of a trust maintained for the Plan, or by any other individual, then the Corporation may for a period of 30 days following the determination that the Plan is no longer qualified, for a period of 30 days following the determination that tax deductions for contributions to the Plan or for amounts paid on the ESOP Preferred Shares are unavailable or limited, or for a period of 30 days following a change that has the effect described in Section 6.6(ii) above, in its sole discretion and notwithstanding anything to the contrary in Section 6.1 elect to redeem any or all of such ESOP Preferred Shares for the greater of (i) a value per share equal to the Plan's remaining payment obligations attributable to the ESOP Preferred Shares remaining unallocated in the Plan (as part of the Plan's suspense account) as of the redemption date, divided by the number of those unallocated shares or (ii) the Fair Market Value of the ESOP Preferred Shares at the date of such redemption of the ESOP Preferred Shares. For purposes of this Section 6.6 materially means more than a 30% diminution of the tax deductions available to the Corporation for any tax year of the Corporation for contributions to the Plan from the deductions that would have been available to the Corporation but for the change in statute, rule or regulation. 6.7 Change in Accounting Treatment. In the event of a change in generally ------------------------------ accepted accounting principles, or the issuance of an opinion or interpretation of generally accepted accounting principles by the Financial Accounting Standards Board (the "FASB") or other group subordinate, successor, or with powers similar to the FASB (including but not limited to the Securities and Exchange Commission), to the effect that the ESOP Preferred Shares should be treated as indebtedness rather than equity for some or all accounting purposes, the Corporation may, in its sole discretion and notwithstanding anything to the contrary in Section 6.1 for a period of 30 days following the Corporation's receipt of advice from its independent accountants that the change must be applied to the Corporation's financial statements, elect to redeem any or all of the ESOP Preferred Shares for the greater of (i) the amount payable in respect of the ESOP Preferred Shares upon liquidation of the Corporation pursuant to Section 4 of this Paragraph 9 or (ii) the Fair Market Value of the ESOP Preferred Shares at the date of such redemption. Section 7. Redemption Rights of Holder. --------------------------- 7.1 Holder's Right to Demand Redemption. ESOP Preferred Shares shall be ----------------------------------- redeemed at the option of the holder at any time and from time to time upon notice to the Corporation given not less than five (5) business days prior to the date fixed by the holder in such notice for such redemption, upon certification by such holder to the Corporation of the following events: (i) when and to the extent necessary for such holder to provide for distributions required to be made to participants under, or to satisfy an investment election provided to participants in accordance with, the ESOP that is part of the Plan; (ii) when and to the extent required to make any payments of principal, interest or premium due and payable (whether as scheduled, upon acceleration or otherwise) under an ESOP Loan Agreement or required to satisfy any indebtedness, expenses or costs incurred by the holder for the benefit of the Plan when due; or (iii) in the event that the ESOP that is part of the Plan is not initially determined by the Internal Revenue Service to be qualified within the meaning of Sections 401(a) and 4975(e)(7) of the Internal Revenue Code of 1986, as amended. ESOP Preferred Shares shall be redeemed by the Corporation for cash or Marketable Obligations or, if the Corporation so elects, in shares of Common Stock, or a combination of any two or three of cash, Marketable Obligations or shares of Common Stock. Marketable Obligations or shares of Common Stock must be valued for such purposes at their Fair Market Value, and the redemption price per share of ESOP Preferred shall be (1) for purposes of (i) of this Section 7.1 the Fair Market Value of an ESOP Preferred Share on the date fixed for redemption (2) for all other purposes of this Section 7.1 the greater of the Fair Market Value of an ESOP Preferred Share on the date fixed for redemption or a value per share equal to the Plan's remaining payment obligations attributable to the ESOP Preferred Shares remaining unallocated in the Plan (as part of the Plan's suspense account) as of the redemption date, divided by the number of those unallocated shares, in all instances plus accrued and unpaid dividends thereon to the date fixed for redemption. Section 8. Consolidation, Merger, etc. -------------------------- 8.1 Effect of Consolidation, Merger, etc. on ESOP Preferred Shares When ------------------------------------------------------------------- Common Stock Converted into Qualifying Employer Securities. In the event that - ---------------------------------------------------------- the Corporation shall consummate any consolidation or merger or similar business combination, pursuant to which the outstanding shares of Common Stock are by operation of law exchanged solely for or changed, reclassified or converted solely into stock that constitutes "qualifying employer securities" (within the meaning of Section 409(l) of the Internal Revenue Code of 1986, as amended, and Section 407(d)(5) of the Employee Retirement Income Security Act of 1974 as amended, or any successor provisions of law) with respect to a holder of ESOP Preferred Shares and, if applicable, for a cash payment in lieu of any fractional shares, the ESOP Preferred Shares of such holder shall, in connection with such consolidation, merger or similar business combination, be assumed by and shall become preferred stock of such successor or resulting corporation, having in respect of such corporation, insofar as possible, the same powers, preferences and relative, participating, optional or other special rights (including the redemption rights provided by Sections 6, 7 and 8 of this Paragraph 9), and the qualifications, limitations or restrictions thereon, that the ESOP Preferred Shares had immediately prior to such transaction, except that after such transaction each ESOP Preferred Share shall be convertible, otherwise on the terms and conditions provided by Section 5 of this Paragraph 9, into the number and kind of qualifying employer securities so receivable by a holder of the number of shares of Common Stock into which such ESOP Preferred Shares could have been converted immediately prior to such transaction. 8.2 Exception. If by virtue of the structure of such transaction, a --------- holder of Common Stock is required to make an election with respect to the nature and kind of consideration to be received in such transaction, which election cannot practicably be made by the holder of the ESOP Preferred Shares, then the ESOP Preferred Shares shall, by virtue of such transaction and on the same terms as apply to the holders of Common Stock, be converted into or exchanged for the aggregate amount of stock, securities, cash or other property (payable in kind) receivable by a holder of the number of shares of Common Stock into which such ESOP Preferred Shares could have been converted immediately prior to such transaction in accordance with Section 5.2 of this Paragraph 9 had such holder of Common Stock failed to exercise any rights of election to receive any kind or amount of stock, securities, cash or other property (provided that, if the kind or amount of qualifying employer securities receivable upon such transaction is not the same for each non-electing share of Common Stock, then the kind and amount so receivable upon such transaction, in respect of each share of Common Stock into which the ESOP Preferred Shares shall have been deemed converted, shall be the kind and amount so receivable per share by the plurality of the non-electing shares of Common Stock). 8.3 Adjustments. Appropriate provision shall be made in the Articles of ----------- Merger providing, for any merger described in Section 8.1 in which the Corporation is not the surviving or resulting corporation, for the rights of the ESOP Preferred Shares as preferred stock of such successor or resulting corporation in a transaction described in Section 8.1 to be subject to successive adjustments after any such transaction as nearly equivalent as practicable to the adjustments provided for by Section 9 of this Paragraph 9 prior to such transaction. 8.4 Conditions to Corporation Consummating Merger, Consolidation or --------------------------------------------------------------- Similar Transaction. The Corporation shall not consummate any merger, - ------------------- consolidation or similar transaction described in Section 8.1 unless all then outstanding ESOP Preferred Shares shall, except to the extent Section 6.5 shall be applicable, be assumed and authorized by the successor or resulting corporation as provided in this Section 8. 8.5 Effect of Merger, Consolidation etc. on ESOP Preferred Shares when ------------------------------------------------------------------ Common Stock Not Converted into Qualifying Employer Securities. - -------------------------------------------------------------- (a) When Conversion into Common Stock Results. In the event that the ----------------------------------------- Corporation shall consummate any consolidation or merger or similar business combination, pursuant to which the outstanding shares of Common Stock are by operation of law exchanged for or changed, reclassified or converted into other stock or securities or cash or any other property, or any combination thereof, other than any such consideration that is constituted solely of qualifying employer securities (as referred to in Section 8.1) and cash payments, if applicable, in lieu of ESOP Preferred Shares could have been converted in accordance with Section 5.2 of this Paragraph 9 immediately prior to such transaction had such holder of Common Stock failed to exercise any rights of election as to the kind or amount of stock, securities, cash or other property receivable upon such transaction (provided that, if the kind or amount of stock, securities, cash or other property receivable upon such transaction is not the same for each non-electing share of Common Stock, then the kind and amount of stock, securities, cash or other property receivable upon such transaction, in respect of each share of Common Stock into which the ESOP Preferred Shares shall have been deemed converted, shall be the kind and amount so receivable per share by a plurality of the non-electing shares of Common Stock). 8.6 Special Election of Redemption. In the event the Corporation shall ------------------------------ enter into any agreement providing for any consolidation or merger or similar business combination described in Section 8.5, then the Corporation shall as soon as practicable thereafter (and in any event at least ten (10) business days before consummation of such transaction) give notice of such agreement and the material terms thereof to the holder of ESOP Preferred Shares and the holder shall have the right to elect, by written notice to the Corporation, to receive, upon consummation of such transaction (if and when such transaction is consummated), from the Corporation or the successor of the Corporation, in redemption and retirement of such ESOP Preferred Shares, a cash payment equal to the following amount per share: During the Twelve- Month Period Percentage of Beginning July 1 of Initial Value ------------------- ------------- 1989 107.750 1990 106.975 1991 106.200 1992 105.425 1993 104.650 1994 103.875 1995 103.100 1996 102.325 1997 101.550 1998 and 100.775 thereafter 100.000 No such notice of redemption shall be effective unless given to the Corporation prior to the close of business on the fifth business day prior to consummation of such transaction, unless the Corporation or the successor of the Corporation shall waive such prior notice, but any notice of redemption so given prior to such time may be withdrawn by notice of withdrawal given to the Corporation prior to the close of business on the fifth business day prior to consummation of such transaction. Section 9. Anti-dilution Adjustments. ------------------------- 9.1 Subdivision of Common Stock; Combination of Common Stock; Payment of -------------------------------------------------------------------- Dividend on or Distribution in Respect of Common Stock in Shares of Common - -------------------------------------------------------------------------- Stock. - ----- (a) Actions Covered. In the event the Corporation shall, at any time --------------- or from time to time while any of the ESOP Preferred Shares are outstanding, (i) pay a dividend or make a distribution in respect of the Common Stock in shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock, or combine the outstanding shares of Common Stock into a smaller number of shares, in each case whether by reclassification of shares, recapitalization of the Corporation (including a recapitalization effected by a merger or consolidation to which Section 8 hereof does not apply) or otherwise the Conversion Price shall be adjusted as provided in Section 9.1(b). (b) Formula For Adjustment. Upon the occurrence of an action ---------------------- described in Section 9.1(a) the Conversion Price in effect immediately prior to such action shall be adjusted by multiplying such Conversion Price by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately before such event, and the denominator of which is the number of shares of Common Stock outstanding immediately after such event. An adjustment made pursuant to this Section 9.1 shall be given effect, upon payment of such a dividend or distribution, as of the record date for the determination of stockholders entitled to receive such dividend or distribution (on a retroactive basis) and in the case of a subdivision or combination shall become effective immediately as of the effective date thereof. 9.2 Issuance of Rights or Warrants to Purchase Common Stock As a Dividend --------------------------------------------------------------------- or Distribution on Common Stock. - -------------------------------- (a) Actions Covered. In the event that the Corporation shall, at any --------------- time or from time to time while any of the ESOP Preferred Shares are outstanding, issue to holders of shares of Common Stock as a dividend or distribution, including by way of a reclassification of shares or a recapitalization of the Corporation, any right or warrant to purchase shares of Common Stock (but not including as such a right or warrant any security convertible into or exchangeable for shares of Common Stock) at a purchase price per share less than the Fair Market Value of a share of Common Stock on the Valuation Day the Conversion Price shall be adjusted as provided in Section 9.2(b). (b) Formula for Adjustment. Upon the occurrence of an action ---------------------- described in Section 9.2(a), the Conversion Price in effect immediately prior to such action shall be adjusted by mutiplying such Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding on the Valuation Day plus the number of shares of Common Stock which could be purchased at the Fair Market Value of a share of Common Stock on the Valuation Day for the maximum aggregate consideration payable upon exercise in full of all such rights or warrants, and the denominator of which shall be the number of shares of Common Stock outstanding on the Valuation Day plus the maximum number of shares of Common Stock that could be acquired upon exercise in full of all such rights and warrants. 9.3 Issuance, Sale or Exchange of Common Stock for less than Fair Market -------------------------------------------------------------------- Value. - ----- (a) Actions Covered. In the event the Corporation shall, at any time --------------- or from time to time while any of the ESOP Preferred Shares are outstanding, issue, sell or exchange shares of Common Stock (other than pursuant to any right or warrant to purchase or acquire shares of Common Stock (including as such a right or warrant any security convertible into or exchangeable for shares of Common Stock) and other than pursuant to any employee or director incentive or benefit plan or arrangement (including any employment, severance or consulting agreement of the Corporation or any subsidiary of the Corporation heretofore or hereafter adopted) for a consideration per share less than the Fair Market Value of a share of Common Stock on the Valuation Day, then the Conversion Price shall be adjusted as provided in Section 9.3(b). (b) Formula for Adjustment. Upon the occurrence of an action ---------------------- described in Section 9.3(a), the Conversion Price in effect immediately prior to such action shall be adjusted by multiplying such Conversion Price by a fraction the numerator of which shall be the sum of (i) the Fair Market Value of all the shares of Common Stock outstanding on the Valuation Day plus (ii) the Fair Market Value of the consideration received by the Corporation in respect of such issuance, sale or exchange of shares of Common Stock, and the denominator of which shall be the product of (a) the Fair Market Value of a share of Common Stock on the Valuation Day multiplied by (b) the sum of the number of shares of Common Stock outstanding on the Valuation Day plus the number of shares of Common Stock so issued, sold or exchanged by the Corporation. 9.4 Issuance, Sale or Exchange of Rights or Warrants to Purchase Common ------------------------------------------------------------------- Stock for Less than Non-Dilutive Amount. - -------------- ------------------------ (a) Actions Covered. In the event the Corporation shall, at any time --------------- or from time to time while any ESOP Preferred Shares are outstanding, issue, sell or exchange any right or warrant to purchase or acquire shares of Common Stock (including as such a right or warrant any security convertible into or exchangeable for shares of Common Stock), other than any such issuance to holders of shares of Common Stock as a dividend or distribution (including by way of a reclassification of shares or a recapitalization of the Corporation) and other than pursuant to any employee or director incentive or benefit plan or arrangement (including any employment, severance or consulting agreement) of the Corporation or any subsidiary of the Corporation heretofore or hereafter adopted, for a consideration having a combined Fair Market Value, on the Valuation Day, less than the Non-Dilutive Amount (as defined in Section 10 of this Paragraph 9), then the Conversion Price shall be adjusted as provided in Section 9.4(b). (b) Formula for Adjustment. Upon the occurrence of an action ---------------------- described in Section 9.4(a), the Conversion Price in effect immediately prior to such action shall be adjusted by multiplying such Conversion Price by a fraction the numerator of which shall be the sum of (I) the Fair Market Value of all the shares of Common Stock outstanding on the Valuation Day plus (II) the Fair Market Value of the consideration received by the Corporation in respect of such issuance, sale or exchange of such right or warrant plus (III) the Fair Market Value at the time of such issuance of the consideration which the Corporation would receive upon exercise in full of all such rights or warrants, and the denominator of which shall be the product of (i) the Fair Market Value of a share of Common Stock on the Valuation Day multiplied by (ii) the sum of the number of shares of Common Stock outstanding on such day plus the maximum number of shares of Common Stock which could be acquired pursuant to such right or warrant at the time of the issuance, sale or exchange of such right or warrant, whether or not exercisable (or convertible or exchangeable) at such time. 9.5 Extraordinary Distribution. -------------------------- (a) Actions Covered. In the event the Corporation shall, at any time --------------- or from time to time while any of the ESOP Preferred Shares are outstanding, make an Extraordinary Distribution in respect of the Common Stock, whether by dividend, distribution, reclassification of shares or recapitalization of the Corporation (including a recapitalization or reclassification effected by a merger or consolidation to which Section 8 of this Paragraph 9 does not apply or a Pro Rata Repurchase) of Common Stock, then the Conversion Price shall be adjusted as provided in Section 9.5(b). (b) Formula for Adjustment. Upon the occurrence of an action ---------------------- described in 9.5(a) the Conversion Price in effect immediately prior to such Extraordinary Distribution shall be adjusted by multiplying such Conversion Price by a fraction, the numerator of which is the difference between (i) the product of (x) the number of shares of Common Stock outstanding immediately before such Extraordinary Distribution minus in the case of a Pro Rata Repurchase, the number of shares of Common Stock repurchased by the Corporation multiplied by (y) the Fair Market Value of a share of Common Stock on the day before the ex-dividend date with respect to an Extraordinary Distribution which is paid in cash and on the distribution date with respect to an Extraordinary Distribution which is paid other than in cash, or on the applicable expiration date (including all extensions thereof) of any tender offer that is a Pro Rata Repurchase, or on the date of purchase with respect to any Pro Rata Repurchase that is not a tender offer, as the case may be, and (ii) the Fair Market Value of the Extraordinary Distribution minus the aggregate amount of regularly scheduled quarterly dividends declared by the Board of Directors of the Corporation and paid by the Corporation in the twelve months immediately preceding such Extraordinary Distribution or the aggregate purchase price of the Pro Rata Repurchase, as the case may be; and the denominator of which shall be the product of (a) the number of shares of Common Stock outstanding immediately before such Extraordinary Distribution minus, in the case of a Pro Rata Repurchase, the number of shares of Common Stock repurchased by the Corporation multiplied by (b) the Fair Market Value of a share of Common Stock on the day before the ex-dividend date with respect to an Extraordinary Distribution which is paid in cash and on the distribution date with respect to an Extraordinary Distribution which is paid other than in cash, or on the applicable expiration date (including all extensions thereof) of any tender offer which is a Pro Rata Repurchase or on the date of purchase with respect to any Pro Rata Repurchase which is not a tender offer, as the case may be. The Corporation shall send the holder of ESOP Preferred Shares (i) notice of its intent to make any such dividend or distribution and (ii) notice of any offer by the Corporation to make a Pro Rata Repurchase, in each case at the same time as, or as soon as practicable after, such offer is first communicated (including by announcement of a record date in accordance with the rules of any stock exchange on which the Common Stock is listed or admitted to trading) to holders of Common Stock. Such notice shall indicate the intended record date and the amount and nature of such dividend or distribution, the terms of any Pro Rata Repurchase, and the number of shares of Common Stock into which an ESOP Preferred Share may be converted at such time. 9.6 Limitation on Obligation to Make Adjustment. Notwithstanding any ------------------------------------------- other provisions of this Section 9, the Corporation shall not be required to make any adjustment to the Conversion Price unless such adjustment would require an increase or decrease of at least one percent (1%) in the Conversion Price. Any lesser adjustment shall be carried forward and shall be made no later than the time of, and together with, the next subsequent adjustment which, together with any adjustment or adjustments so carried forward, shall amount to an increase or decrease of at least one percent (1%) in the Conversion Price. 9.7 When Adjustment Equitably Required. If the Corporation shall make any ---------------------------------- dividend or distribution on the Common Stock or issue any Common Stock, other capital stock or other security of the Corporation or any rights or warrants to purchase or acquire any such security, which transaction does not result in an adjustment to the Conversion Price pursuant to the foregoing provisions of this Section 9, the Board of Directors of the Corporation shall consider whether such action is of such a nature that an adjustment to the Conversion Price should equitably be made in respect of such transaction. If in such case the Board of Directors of the Corporation determines that an adjustment to the Conversion Price should be made, an adjustment shall be made effective as of such date as may be determined by the Board of Directors of the Corporation. The determination of the Board of Directors of the Corporation whether an adjustment to the Conversion Price should be made pursuant to the foregoing provisions of this Section 9.7 and, if so, what adjustment should be made and when, shall be final and binding on the Corporation and all shareholders of the Corporation. The Corporation shall be entitled to make such additional adjustments in the Conversion Price, in addition to those required by the foregoing provisions of this Section 9, as shall be necessary in order that any dividend or distribution in shares of capital stock of the Corporation, subdivision, reclassification or combination of shares of stock of the Corporation or any recapitalization of the Corporation shall not be taxable to the holders of the Common Stock. 9.8 Statements to be Filed. Whenever an adjustment to the Conversion ---------------------- Price and the related voting rights of the ESOP Preferred Shares is required pursuant to this Paragraph 9, the Corporation shall forthwith place on file with the Secretary of the Corporation, a statement signed by two officers of the Corporation stating the adjusted Conversion Price determined as provided herein and the resulting conversion ratio, and the voting rights (as appropriately adjusted), of the ESOP Preferred Shares. Such statement shall set forth in reasonable detail such facts as shall be necessary to show the reason and the manner of computing such adjustment including any determination of Fair Market Value involved in such computation. Promptly after each adjustment to the Conversion Price and the related voting rights of the ESOP Preferred Shares, the Corporation shall mail a notice thereof and of the then prevailing conversion ratio to the holder of ESOP Preferred Shares. Section 10. Definitions. ----------- 10.1 Definitions to Apply. For purposes of this Paragraph 9, the following -------------------- definitions shall apply: "Business Day" shall mean each day that is not a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "Common Stock" shall mean the Corporation's Common Stock, par value $1 per share, as the same exists at the date of the issuance by the State Corporation Commission of Virginia of a certificate of amendment with respect to Articles of Amendment creating the ESOP Preferred Shares or any other class of stock resulting from successive changes or reclassifications of such Common Stock consisting solely of changes in par value, or from par value to no par value, or from no par value to par value. "ESOP Loan Agreement" shall mean any loan agreement (including a purchase- money installment-payment obligation) obligating the trustee for the Plan's ESOP to apply the ESOP's income and assets to satisfy debt incurred for the ESOP incident to an acquisition of ESOP Preferred Shares for the ESOP. "Extraordinary Distribution" shall mean any dividend or other distribution to holders of Common Stock (effected while any of the ESOP Preferred Shares are outstanding) (i) of cash, where the aggregate amount of such cash dividend or distribution together with the amount of all cash dividends and distributions made during the preceding period of 12 months on the Common Stock, when combined with the aggregate amount of all Pro Rata Repurchases (for this purpose, including only that portion of the aggregate purchase price of such Pro Rata Repurchase which is in excess of the Fair Market Value of the Common Stock repurchased as determined on the applicable expiration date (including all extensions thereof) of any tender offer or exchange offer which is a Pro Rata Repurchase, or the date of purchase with respect to any other Pro Rata Repurchase which is not a tender offer or exchange offer made during such period), exceeds twelve and one-half percent (12 1/2%) of the aggregate Fair Market Value of all shares of Common Stock outstanding on the day before the ex- dividend date with respect to such Extraordinary Distribution which is paid in cash and on the distribution date with respect to an Extraordinary Distribution that is paid other than in cash, and/or (ii) of any shares of capital stock of the Corporation (other than shares of Common Stock), other securities of the Corporation (other than securities of the type referred to in Section 9.2 or 9.4 of this Paragraph 9), evidences of indebtedness of the Corporation or any other person or any other property (including shares of any subsidiary of the Corporation) or any combination thereof. The Fair Market Value of an Extraordinary Distribution for purposes of Section 9.5 of this Paragraph 9 shall be equal to the sum of the Fair Market Value of such Extraordinary Distribution plus the amount of any cash dividends that are not Extraordinary Distributions made during such 12-month period and not previously included in the calculation of any adjustment pursuant to Section 9.5 of this Paragraph 9. "Fair Market Value" of publicly traded shares of Common Stock or any other class of capital stock or other security of the Corporation or any other issuer for any day shall mean the last reported sales price, regular way, or, in the event that no sale takes place on such day, the average of the reported closing bid and asked prices, regular way, in either case as reported on the New York Stock Exchange Composite Tape or, if such security is not listed or admitted to trading on the New York Stock Exchange, on the principal national securities exchange on which such security is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, on the NASDAQ National Market System or, if such security is not quoted on such National Market System, the average of the closing bid and asked prices for such day in the over-the counter marked as reported by NASDAQ or, if bid and asked prices for such security on each such day shall not have been reported through NASDAQ, the average of the bid and asked prices for such day as furnished by any New York Stock Exchange member firm regularly making a market in such security selected for such purpose by the Board of Directors of the Corporation or a committee thereof. The "Fair Market Value" of any security that is not publicly traded or of any other property shall mean the fair value thereof as determined by an independent investment banking or appraisal firm experienced in the valuation of such securities or property selected in good faith by the Board of Directors of the Corporation or a committee thereof, or, if no such investment banking or appraisal firm is in the good faith judgment of the Board of Directors or such committee available to make such determination, as determined in good faith by the Board of Directors of the Corporation or such committee except that the Fair Market Value of an ESOP Preferred Share and in effect at any given time shall be the then fair market value established for such ESOP Preferred Share according to the Trust Agreement governing the Trustee who holds the ESOP Preferred Shares. For purposes of this Paragraph 9, the Fair Market Value of any security held by a trustee for the Plan is never less than "adequate consideration" (as defined in Section 3(18) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) and the Fair Market Value of any security to be transferred to a trustee for the plan is never more than "adequate consideration" as defined in Section 3(18) of ERISA. "Initial Value" means the initial per share value established for the ESOP Preferred Shares pursuant to the Stock Purchase Agreement between the Corporation and the Trustee under the Plan pursuant to which the Trustee purchases the ESOP Preferred Shares. "Marketable Obligations" means "marketable obligations" as that term is defined in Section 407(e) of the Employee Retirement Income Security Act of 1974, as amended. "Non-Dilutive Amount" in respect of an issuance, sale or exchange by the Corporation of any right or warrant to purchase or acquire shares of Common Stock (including any security convertible into or exchangeable for shares of Common Stock) shall mean the difference between (i) the product of the Fair Market Value of a share of Common Stock on the Valuation Day multiplied by the maximum number of shares of Common Stock which could be acquired on such date upon the exercise in full of such rights and warrants (including upon the conversion or exchange of all such convertible or exchangeable securities), whether or not exercisable (or convertible or exchangeable) at such date, and (ii) the aggregate amount payable pursuant to such right or warrant to purchase or acquire such maximum number of shares of Common Stock; provided, however, -------- ------- that in no event shall the Non-Dilutive Amount be less than zero. For purposes of the foregoing sentence, in the case of a security convertible into or exchangeable for shares of Common Stock, the amount payable pursuant to a right or warrant to purchase or acquire shares of Common Stock shall be the Fair Market Value of such security on the date of the issuance, sale or exchange of such security by the Corporation. "Pro Rata Repurchase" shall mean any purchase of shares of Common Stock by the Corporation or any subsidiary thereof, whether for cash, shares of capital stock of the Corporation, other securities of the Corporation, evidences of indebtedness of the Corporation or any other person or any other property (including shares of a subsidiary of the Corporation), or any combination thereof, effected while any of the ESOP Preferred Shares are outstanding, pursuant to any tender offer or exchange offer subject to Section 13(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or the regulations thereunder, or any successor provision of law, or pursuant to any other offer available to substantially all holders of Common Stock; provided, -------- however, that no purchase of shares by the Corporation or any subsidiary thereof - ------- made in open market transactions shall be deemed a Pro Rata Repurchase. For purposes of this definition shares shall be deemed to have been purchased by the Corporation or any subsidiary thereof "in open market transactions" if they have been purchased substantially in accordance with the requirements of Rule 10b-18 (as in effect under the Exchange Act on the date ESOP Preferred Shares are initially issued by the Corporation) or on such other terms and conditions as the Board of Directors of the Corporation or a committee thereof in good faith shall have determined are reasonably designed to prevent such purchases from having a material effect on the trading market for the Common Stock. "Valuation Day," with respect to any particular issuance, sale or exchange of Common Stock, or rights or warrants to acquire shares of Common Stock (including as such a right or warrant, any security convertible into or exchangeable for shares of Common Stock) shall mean the business day immediately preceding the earlier of (i) the date of the first public announcement of such issuance, sale or exchange, or (ii) the date of such issuance, sale or exchange. Section 11. Ranking; Retirement of Shares. ----------------------------- 11.1 Ranking. The ESOP Preferred Shares shall rank senior to the Common ------- Stock as to the payment of dividends and the distribution of assets on liquidation, dissolution and winding up of the Corporation, and, unless otherwise provided in the Articles of Incorporation of the Corporation, as the same may be amended, or an Article of Amendment relating to a subsequent series of Preferred Stock, par value $1 per share, of the Corporation, the ESOP Preferred Shares shall rank on a parity with all other series of the Corporation's Preferred Stock, par value $1 per share, as to the payment of dividends and the distribution of assets on liquidation, dissolution or winding up. 11.2 Retirement. Any ESOP Preferred Shares acquired by the Corporation by ---------- reason of the conversion or redemption of such shares as provided by this Paragraph 9, or otherwise so acquired, shall be retired as ESOP Preferred Shares and restored to the status of authorized but unissued shares of Preferred Stock, par value $1 per share, of the Corporation, undesignated as to series, and may thereafter be reissued as part of a new series of such Preferred Shares as permitted by law. Section 12. Miscellaneous. ------------- 12.1 Notices. All notices referred to herein shall be in writing, and all ------- notices hereunder shall be deemed to have been given upon the earlier of delivery thereof if by hand delivery, by courier or by standard form of telecommunication or three (3) business days after the mailing thereof if sent by registered mail (unless first-class mail shall be specifically permitted for such notice under the terms of this Paragraph 9) with postage prepaid, addressed: (i) if to the Corporation, to its office at 120 Long Ridge Road, Stamford, Connecticut 06904-1355 (Attention: Corporate Secretary) or other agent of the Corporation designated as permitted by this Paragraph 9 or (ii) if to the holder of the ESOP Preferred Shares or Common Stock, as the case may be, to such holder at the address of such holder as listed in the stock record books of the Corporation (which may include the records of any transfer agent for the Common Stock), or (iii) to such other address as the Corporation or any such holder, as the case may be, shall have designated by notice similarly given. 12.2 Taxes. The Corporation shall pay any and all stock transfer and ----- documentary stamp taxes that may be payable in respect of any issuance or delivery of ESOP Preferred Shares or shares of Common Stock or other securities issued on account of ESOP Preferred Shares pursuant hereto or certificates representing such shares or securities. The Corporation shall not, however, be required to pay any such tax that may be payable in respect of any transfer involved in the issuance or delivery of ESOP Preferred Shares or Common Stock or other securities in a name other than that in which the ESOP Preferred Shares with respect to which such shares or other securities are issued or delivered were registered, or in respect of any payment to any person with respect to any such shares or securities other than a payment, to the registered holder thereof, and shall not be required to make any such issuance, delivery or payment unless and until the person otherwise entitled to such issuance, delivery or payment has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid or is not payable. 12.3 Designations. In the event that a holder of ESOP Preferred Shares ------------ shall not by written notice designate the name in which the shares of Common Stock to be issued upon conversion of such shares should be registered or to whom payment upon redemption of ESOP Preferred Shares should be made or the address to which the certificate or certificates representing such shares, or such payment, should be sent, the Corporation shall be entitled to register such shares, and make such payment, in the name of such holder of such ESOP Preferred Shares as so shown on the records of the Corporation and to send the certificate or certificates representing such shares, or such payment, to the address of such holder as so shown on the records of the Corporation. 12.4 Payments. Unless otherwise provided in the Articles of Incorporation, -------- as the same may be amended, of the Corporation, all payments in the form of dividends, distributions on voluntary or involuntary dissolution, liquidation or winding-up or otherwise made upon the ESOP Preferred Shares and any other stock ranking on a parity with the ESOP Preferred Shares with respect to such dividend or distribution shall be pro rata, so that amounts paid per ESOP Preferred Share and such other stock shall in all cases bear to each other the same ratio that the required dividends, distributions or payments, as the case may be, then payable per share on the ESOP Preferred Shares and such other stock bear to each other. THIRD: The amendment of the Articles of Incorporation was duly adopted by the Board of Directors of the Corporation on June 20, 1989 without shareholder action, which shareholder action was not required. IN WITNESS WHEREOF, the undersigned has executed these Articles of Amendment as of this 20th day of June, 1989. OLIN CORPORATION By /s/ E. McI. Cover ----------------------- Vice President ARTICLES OF AMENDMENT of ARTICLES OF INCORPORATION of OLIN CORPORATION 1. The name of the Corporation is Olin Corporation. 2. The amendment adopted is to add the following Article NINTH to the Articles of Incorporation of the Corporation, as heretofore amended: "NINTH: Except as expressly otherwise required in these Articles of Incorporation, an amendment or restatement of these Articles requiring shareholder approval shall be approved by a majority of the votes entitled to be cast by each voting group that is entitled to vote on the matter, unless in submitting an amendment or restatement to the shareholders the Board of Directors shall require a greater vote." 3. The amendment was adopted by the Board of Directors on December 14, 1989. 4. The amendment was adopted by the Board of Directors without shareholder action. Shareholder action was not required. Dated: December 15, 1989 OLIN CORPORATION By /s/ E. McI. Cover ----------------------------- E. McI. Cover, Vice President ARTICLES OF AMENDMENT OF THE ARTICLES OF INCORPORATION OF OLIN CORPORATION under Section 13.1-639 of the Virginia Stock Corporation Act FIRST: The name of the Corporation is Olin Corporation. SECOND: The amendment adopted is to add a new Paragraph 10 to Article Fourth to read as follows: "10: Series A Conversion Preferred Stock. There is hereby established a series of the Corporation's authorized Preferred Stock, to be designated as the "Series A Conversion Preferred Stock, par value $1 per share." The designation and number, and relative rights, preferences and limitations of the Series A Conversion Preferred Stock, insofar as not already fixed by any other provision of these Articles of Incorporation, shall be as follows: Section 1. Designation and Amount. ---------------------- 1.1 Designation and Amount. The shares of such series shall be designated ---------------------- as "Series A Conversion Preferred Stock, par value $1 per share" (the "Series A Preferred Stock"), and the number of shares constituting such series shall be 2,760,000. Section 2. Dividends and Distributions. --------------------------- 2.1 Dividends. In respect of the period beginning on the date of --------- issuance of the Series A Preferred Stock and ending on and including March 1, 1995 (the "Preferred Period"), the holders of outstanding shares of the Series A Preferred Stock will be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available therefor, cumulative preferential cash dividends accruing at the per share rate of $3.64 per annum or $.91 per quarterly period for each ending of the quarterly periods ending on February 28 (or, for 1992 only, on February 29), May 31, August 31 and November 30, and no more ("Preferential Dividends"), payable in arrears on each succeeding March 1, June 1, September 1 and December 1, respectively (each such date being hereinafter referred to as a "Preferential Dividend Payment Date"), commencing June 1, 1992. If any Preferential Dividend Payment Date shall not be a Business Day, then the Preferential Dividend Payment Date shall be on the next succeeding Business Day. Each such dividend will be payable to holders of record as they appear on the stock books of the Corporation on such record dates, not less than 10 nor more than 70 days preceding the payment dates thereof, as shall be fixed by the Board of Directors. 2.2 Dividend Accrual. Dividends on the Series A Preferred Stock in ---------------- respect of the Preferred Period shall accrue on a daily basis commencing on the date of issuance of the Series A Preferred Stock, and accrued dividends for each quarterly dividend period shall cumulate, to the extent not paid, from the preferential Dividend Payment Date first following the quarter for which they accrue. Preferential Dividends shall accrue whether or not the Corporation shall have earnings, whether or not there shall be funds legally available for the payment of such dividends and whether or not such dividends are declared. Accumulated dividends shall not bear interest. Dividends (or cash amounts equal to accrued and unpaid dividends) payable on the Series A Preferred Stock for any period longer or shorter than a quarterly dividend period shall be computed on the basis of a 360-day year of twelve 30-day months. 2.3 Declaration of Dividends on and Redemptions of other Stock. ---------------------------------------------------------- (a) Parity Stock. So long as any Series A Preferred Stock are outstanding, ------------ no dividend shall be declared or paid or set apart for payment on any other series of stock ranking on a parity with the Series A Preferred Stock as to dividends, unless there shall also be or have been declared and paid or set apart for payment when due on the Series A Preferred Stock dividends through the last preceding Preferential Dividend Payment Date before the dividend payment date of such parity stock, ratably in proportion to the respective amounts of dividends accumulated and unpaid through such dividend period on the Series A Preferred Stock and accumulated and unpaid on such parity stock through the dividend payment period on such parity stock preceding such parity stock dividend payment date. So long as any shares of the Series A Preferred Stock are outstanding, unless all Preferential Dividends accumulated on all outstanding shares of the Series A Preferred Stock through the most recent Preferential Dividend Payment Date have been paid in full, no stock of the Corporation ranking on a parity with the Series A Preferred Stock as to payment of dividends may be redeemed (pursuant to a sinking fund or otherwise), purchased or otherwise acquired for any consideration by the Corporation except (i) by means of a redemption pursuant to which all outstanding shares of the Series A Preferred Stock and all Preferred Stock of the Corporation ranking on a parity with the Series A Preferred Stock as to payment of dividends and upon liquidation, dissolution or winding up are redeemed or pursuant to which a pro rata redemption is made from all holders of the Series A Preferred Stock and all stock of the Corporation so ranking on a parity, the amount allocable to each series of such stock being determined on the basis of the aggregate liquidation preference of the outstanding shares of each series and the shares of each series being redeemed only on a pro rata basis, (ii) by conversion of such parity Preferred Stock into, or exchange of such parity Preferred Stock for, stock of the Corporation ranking junior to the Series A Preferred Stock as to payment of dividends and upon liquidation, dissolution or winding up or (iii) in accordance with the provisions of clause (i) of the first sentence of Section 7.1 of paragraph 9 of Article FOURTH. (b) Junior Stock. If at any time, so long as any Series A Preferred Stock ------------ shall be outstanding, full cumulative dividends on the Series A Preferred Stock have not been declared and paid or set apart for payment through the last preceding Preferential Dividend Payment Date, the Corporation shall not declare or pay or set apart for payment any dividends or make any other distributions, or make any payment on account of the purchase, redemption or other retirement of any shares of Common Stock or any other class of or series of the Corporation's stock ranking as to dividends or as to distributions in the event of the Corporation's liquidation, dissolution or winding up, junior to the Series A Preferred Stock until full cumulative dividends on the Series A Preferred Stock shall have been paid or declared and set apart for payment. (c) Limitations. The provisions of Section 2.3(a) and 2.3(b) shall ----------- not apply to (i) any dividend payable solely in any shares of any stock ranking as to dividends and as to distributions in the event of the Corporation's liquidation, dissolution or winding up, junior to the Series A Preferred Stock or (ii) the acquisition of shares of any stock ranking, as to dividends or as to distributions in the event of a liquidation, dissolution or winding up of the Corporation, junior to the Series A Preferred Stock in exchange solely for shares of any other stock ranking, as to dividends and as to distributions in the event of a liquidation, dissolution or winding up of the Corporation, junior to the Series A Preferred Stock. Section 3. Voting. ------ 3.1 Voting Rights. The holders of Series A Preferred Stock shall have ------------- the following voting rights: (a) Election of Directors. In the event that the Corporation shall have --------------------- failed to declare and pay or set apart for payment in full the Preferential Dividends accumulated on the outstanding shares of Series A Preferred Stock for any six quarterly dividend payment periods, whether or not consecutive (a "Preferential Dividend Non-Payment"), the number of directors of the Corporation shall be increased by two and the holders of outstanding shares of Series A Preferred Stock, voting together as a single voting group with all other series of Preferred Stock ranking junior to or on a parity with the Series A Preferred Stock with respect to dividends and then entitled to vote on the election of such directors, shall be entitled to elect such additional directors until the full dividends accumulated on all outstanding shares of Series A Preferred Stock have been declared and paid or set apart for payment. Upon the occurrence of a Preferential Dividend Non-Payment, the Board of Directors of the Corporation shall within a reasonable period call a special meeting of the holders of shares of Series A Preferred Stock and all other holders of each series of Preferred Stock ranking junior to or on a parity with the Series A Preferred Stock with respect to the payment of dividends who are then entitled to participate in the election of such additional directors for the purpose of electing the additional directors provided by the foregoing provisions. If and when all accumulated dividends on the Series A Preferred Stock have been declared and paid or set aside for payment in full, the holders of shares of Series A Preferred Stock shall be divested of the special voting rights provided by this paragraph, subject to revesting in the event of each and every subsequent Preferential Dividend Non-Payment. Upon termination of such special voting rights attributable to all holders of Series A Preferred Stock and each other series of Preferred Stock ranking junior to or on a parity with the Series A Preferred Stock with respect to payment of dividends, the term of office of each director elected by the holders of shares of Series A Preferred Stock and such junior or parity Preferred Stock (a "Preferred Stock Director") pursuant to such special voting rights shall forthwith terminate and the number of directors constituting the entire Board of Directors shall be reduced by the number of Preferred Stock Directors. Any Preferred Stock Director may be removed by, and shall not be removed otherwise than by, the vote of the holders of record of a majority of the outstanding shares of Series A Preferred Stock and all other series of Preferred Stock ranking junior to or on a parity with the Series A Preferred Stock with respect to the payment of dividends who were entitled to participate in such Preferred Stock Director's election, voting as a separate class, at a meeting called for such purpose. So long as a Preferential Dividend Non-Payment shall continue, any vacancy in the office of a Preferred Stock Director may be filled by written consent of the Preferred Stock Director remaining in office or, if none remains in office, by vote of the holders of record of a majority of the outstanding shares of Series A Preferred Stock and all other series of Preferred Stock ranking junior to or on a parity with the Series A Preferred Stock with respect to the payment of dividends who are then entitled to participate in the election of such Preferred Stock Directors as provided above. Holders of shares of Series A Preferred Stock shall not, as such stockholders, be entitled to vote on the election or removal of directors other than Preferred Stock Directors, but shall not be divested of any other voting rights provided to such stockholders by law with respect to any other matter to be acted upon by the stockholders of the Corporation. (b) Amendment or Alteration of the Articles of Incorporation. So long as -------------------------------------------------------- any shares of Series A Preferred Stock are outstanding, the Corporation shall not amend any of the provisions of its Articles of Incorporation (1) to authorize or create any shares of stock ranking senior to the Series A Preferred Stock as to dividends or as to distributions in the event of the Corporation's liquidation, dissolution or winding up or (2) to alter or change the rights, preferences or limitations of the Series A Preferred Stock so as to affect such rights, preferences or limitations adversely without, in each case, the affirmative vote of the holders of at least two-thirds of the total number of outstanding shares of the Series A Preferred Stock, voting together as a single voting group with any other series of Preferred Stock that is (i) affected in the same or a substantially similar manner and (ii) entitled by law, by the Articles of Incorporation or by resolution of the Corporation's Board of Directors to vote on such amendment, in person or by proxy, at a meeting called for that purpose as permitted by law and the Articles of Incorporation or the By-Laws. For purposes of this paragraph, any such amendment that would authorize or create any series of Preferred Stock out of the authorized shares of Preferred Stock, or that would authorize or create any shares of stock (whether or not already authorized) ranking junior to or on a parity with the Series A Preferred Stock as to dividends and as to distributions in the event of the Corporation's liquidation, dissolution or winding up, shall not be considered to affect adversely the rights, preferences or limitations of the outstanding shares of Series A Preferred Stock. (c) Extent of Voting Rights. Except as otherwise required by law or ----------------------- set forth in this Paragraph 10, holders of Series A Preferred Stock shall have no voting rights, and their consent shall not be required for the taking of any corporate action. Section 4. Liquidation, Dissolution or Winding Up. -------------------------------------- 4.1 Rights of Series A Preferred Stock Upon Liquidation, Dissolution ---------------------------------------------------------------- or Winding Up. Subject to the rights of the holders of any stock of the - ------------- Corporation ranking senior to or on a parity with the Series A Preferred Stock in respect of distributions upon liquidation, dissolution or winding up, upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of Series A Preferred Stock shall be entitled to receive, out of the Corporation's assets that remain after full satisfaction of all creditors' valid claims and that are available for payment to shareholders, before any amount shall be paid or distributed among the holders of Common Stock or any other shares ranking junior to the Series A Preferred Stock in respect of distributions upon the Corporation's liquidation, dissolution or winding up, liquidating distributions in an amount per share equal to the sum of $41.50 plus an amount equal to all Preferential Dividends accrued and unpaid to the date fixed for distribution, and no more. If, upon any liquidation, dissolution or winding up of the Corporation, the amounts payable with respect to the Series A Preferred Stock and any other stock ranking as to any such distribution on a parity with the Series A Preferred Stock are not paid in full, the holders of the Series A Preferred Stock and such other stock shall share ratably in any distribution of assets in proportion to the full respective preferential amounts to which they are entitled. After payment of the full amount to which the holders of Series A Preferred Stock are entitled as provided by the foregoing provisions of this Section 4.1, the holders of Series A Preferred Stock shall not be entitled to any further right or claim to any of the remaining assets of the Corporation. 4.2 Merger or Consolidation not Deemed Liquidation, Dissolution or -------------------------------------------------------------- Winding Up. Neither the merger or consolidation of the Corporation with or into - ---------- any other corporation, nor the merger or consolidation of any other corporation with or into the Corporation, nor the sale, lease, exchange or other transfer of all or any portion of the assets of the Corporation, shall be deemed to be a dissolution, liquidation or winding up of the affairs of the Corporation for purposes of this Paragraph 10. 4.3 Rights Upon Merger or Consolidation. The holder of Series A ----------------------------------- Preferred Stock shall nevertheless be entitled in the event of any Merger or Consolidation (as defined in Section 5.2) to the rights provided by Section 5.2 of this Paragraph 10. 4.4 Notice. Written notice of any voluntary or involuntary ------ liquidation, dissolution or winding up of the Corporation, stating the payment date or dates when, and the place or places where, the amounts distributable to the holders of shares of Series A Preferred Stock in such circumstances shall be payable, shall be given by hand delivery, by courier, by standard form of telecommunication or by first-class mail (postage prepaid), delivered, sent or mailed as the case may be, not less than twenty (20) days prior to the payment date stated in that notice, to each holder of shares of Series A Preferred Stock, at the address shown for such holder on the books of the Corporation. Section 5. Conversion into Common Stock. ---------------------------- 5.1 Mandatory Conversion. Unless earlier called for redemption in -------------------- accordance with the provisions hereof, on March 1, 1995 (the "Mandatory Conversion Date"), all outstanding shares of Series A Preferred Stock shall be converted automatically into, through the issue thereof by the Corporation in the manner provided hereinafter, fully paid and non-assessable shares of Common Stock. On such date, each holder of shares of Series A Preferred Stock, upon conversion of the Series A Preferred Stock, shall receive (i) the number of shares of Common Stock equal to the product of the Common Equivalent Rate in effect on the Mandatory Conversion Date, multiplied by the number of shares of Series A Preferred Stock owned by such holder and (ii) an amount in cash equal to all accrued and unpaid dividends on such shares of Series A Preferred Stock to and including the Mandatory Conversion Date, whether or not earned or declared, out of funds legally available therefor (and dividends shall cease to accrue as of the Mandatory Conversion Date). 5.2 Upon Certain Mergers or Consolidations or Other Events. Upon ------------------------------------------------------ either (a) immediately prior to the effectiveness of a merger or consolidation of the Corporation that results in the conversion or exchange of the Common Stock into, or results in holders of the Common Stock having the right to receive, other securities or other property (whether of the Corporation or any other entity) (any such merger or consolidation is referred to herein as a "Merger or Consolidation"), or (b) immediately prior to the close of business on the Business Day immediately preceding the Distribution Date (the occurrence of the Distribution Date is referred to herein as the "Distribution Date Event"), then, in either event each outstanding share of Series A Preferred Stock shall be converted automatically into (i) one share of Common Stock multiplied by the Common Equivalent Rate in effect on the effective date of a Merger or Consolidation or on such Business Day immediately preceding the Distribution Date, as the case may be; plus (ii) the right to receive an amount of cash equal to all accrued and unpaid dividends on such share of Series A Preferred Stock to and including the Settlement Date (and dividends shall cease to accrue as of the Settlement Date); plus (iii) the right to receive an amount of cash initially equal to $4.32, declining by $.003861 on each day from and including January 23, 1992 (computed on the basis of a 360-day year of twelve 30-day months) to $.23 on January 1, 1995, and equal to zero thereafter, in each case determined with reference to the Settlement Date, unless sooner redeemed. At the option of the Corporation, it may deliver on the Settlement Date, in lieu of the cash amounts described in clauses (ii) and (iii), a number of shares of Common Stock equal to one times a fraction, the numerator of which is the aggregate of the cash amounts described in such clauses (ii) and (iii) and the denominator of which is the Current Market Price of the Common Stock determined, in the case of a Merger or Consolidation, as of the second Trading Date immediately preceding the Notice Date, and in the case of a Distribution Date Event, as of the second Trading Date immediately preceding the Distribution Date. Such option may be exercised by the Corporation with respect to any or all the outstanding shares of Series A Preferred Stock, but if for less than all, then the shares as to which such option is so exercised shall be selected by lot or pro rata (as nearly as may be) or by any other method determined by the Board of Directors of the Corporation in its sole discretion to be equitable. 5.3 Procedure for Issuance of Common Stock Certificates. Upon --------------------------------------------------- surrender of a certificate representing a share or shares of Series A Preferred Stock for conversion, the Corporation shall issue and send by hand delivery, by courier or by first class mail (postage prepaid) to the holder thereof or to such holder's designee, at the address designated by such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled upon conversion. 5.4 Effective Date of Common Stock Issued Upon Conversion. The ----------------------------------------------------- issuance by the Corporation of shares of Common Stock upon any conversion thereof shall be effective as of the Mandatory Conversion Date, in the case of conversion pursuant to Section 5.1, as of the time immediately before the effective time of a Merger or Consolidation, in the case of conversion pursuant to clause (a) of Section 5.2, or as of the Settlement Date, in the case of conversion pursuant to clause (b) of Section 5.2. On and after the effective date of any conversion, the person or persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock (subject to the provisions of the following sentence), but no allowance or adjustment shall be made in respect of dividends payable to holders of Common Stock in respect of any period prior to such effective date. Unless and until a certificate representing a share or shares of Series A Preferred Stock shall have been surrendered in the manner provided for in Section 5.3, dividends and other distributions payable on the Common Stock after the expiration of 90 days following the conversion of such share or shares to Common Stock shall not be paid to the record holder of such certificate, but there shall be paid to the record holder of such certificate with respect to the share or shares of Common Stock into which such share or shares of Series A Preferred Stock shall have been converted (i) upon such surrender, the amount of the dividends or other distributions which shall have become payable on such share or shares of Common Stock after the expiration of 90 days following such conversion, but without interest, and (ii) after such surrender, the amount of any dividends or other distributions on the Common Stock with a record date prior to surrender and the payment date of which shall be subsequent to surrender, such amount to be paid on such payment date. The Corporation shall not be obligated to pay any dividends that have been declared and are payable to holders of shares of Series A Preferred Stock on a Preferential Dividend Payment Date if such Preferential Dividend Payment Date for such dividend is subsequent to the effective date of conversion of such shares. 5.5 Cash in Lieu of Fractional Shares. The Corporation shall not be --------------------------------- obligated to deliver to any holder of Series A Preferred Stock any fractional share of Common Stock issuable upon any conversion of such Series A Preferred Stock, but in lieu thereof may make a cash payment equal to the proportionate amount of the Current Market Price of a share of Common Stock determined, in any case other than a Distribution Date Event, as of the second Trading Date immediately preceding the relevant Notice Date and, in the case of a Distribution Date Event, as of the second Trading Date immediately preceding the Distribution Date. 5.6 Common Stock Reserves. The Corporation shall at all times reserve and --------------------- keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of Series A Preferred Stock as herein provided, free from any preemptive rights, such number of shares of Common Stock as shall from time to time be issuable upon the conversion of all the Series A Preferred Stock then outstanding in accordance with this Section 5. The Corporation shall prepare and shall use its best efforts to obtain and keep in force such governmental or regulatory permits or other authorizations as may be required by law, and shall comply with all requirements as to registration or qualification of the Common Stock, in order to enable the Corporation lawfully to issue and deliver to each holder of record of Series A Preferred Stock such number of shares of its Common Stock as shall from time to time be sufficient to effect the conversion of all Series A Preferred Stock then outstanding and convertible into shares of Common Stock in accordance with this Section 5. 5.7 Notice of Conversion. Unless otherwise required by law, notice of -------------------- any conversion other than the Mandatory Conversion shall be sent to each holder of Series A Preferred Stock at the address shown for such holder on the books of the Corporation by first-class mail (postage pre-paid) mailed not less than thirty (30) days nor more than sixty (60) days prior to the Settlement Date; provided, however, that if the timing of the effectiveness of a Merger or - -------- ------- Consolidation or the Distribution Date makes it impossible to provide at least 30 days notice, the Corporation shall provide such notice as soon as practicable prior to such effectiveness or the Distribution Date. Such notice shall specify whether the Corporation is exercising any option to deliver shares of Common Stock in lieu of cash and, if so, the Current Market Price (or, if the relevant Current Market Price is not available at the time such notice is sent, the manner in which such Current Market Price will be determined) to be used to calculate the number of such shares. Section 6. Redemption. ---------- 6.1 Right to Call for Redemption. At any time and from time to time ---------------------------- prior to the Mandatory Conversion Date, the Corporation shall have the right to call, in whole or in part, the outstanding shares of Series A Preferred Stock for redemption (subject to the notice provisions set forth in Section 6.5). Upon such call, the Corporation shall deliver to the holders thereof in exchange for each such share, called for redemption, (a) a number of shares of Common Stock equal to one times a fraction, the numerator of which is the Call Price on the redemption date and the denominator of which is the Current Market Price of the Common Stock determined as of the second Trading Date immediately preceding the Notice Date, and (b) an amount in cash equal to all accrued and unpaid dividends on each such share of Series A Preferred Stock to the redemption date. If fewer than all the outstanding shares of Series A Preferred Stock are to be called, the shares of Series A Preferred Stock to be called shall be selected by the Corporation from the outstanding shares of Series A Preferred Stock not previously called by lot or pro rata (as nearly as may be) or by any other method determined by the Board of Directors of the Corporation in its sole discretion to be equitable. 6.2 Dividends on Shares Called for Redemption. From and after the date ----------------------------------------- fixed for redemption, dividends on shares of Series A Preferred Stock called for redemption will cease to accrue, such shares of Series A Preferred Stock will no longer be deemed to be outstanding, and all rights in respect of such shares Series A Preferred Stock shall cease, except the right to receive the redemption price. 6.3 Cash in Lieu of Fractional Shares. The Corporation shall not be --------------------------------- obligated to deliver to any holder of Series A Preferred Stock any fractional share of Common Stock issuable upon any redemption of such Series A Preferred Stock, but in lieu thereof may make a cash payment equal to the proportionate amount of the Current Market Price of a share of Common Stock determined as of the second Trading Date immediately preceding the Notice Date. 6.4 Effective Date of Common Stock Issued Upon Redemption. The issuance by ----------------------------------------------------- the Corporation of shares of Common Stock upon redemption in accordance with this Section 6 shall be deemed to be effective as of the date fixed for redemption. On and after the effective date of any redemption the person or persons entitled to receive the Common Stock issuable upon such redemption shall be treated for all purposes as the record holder or holders of such shares of Common Stock (subject to the provisions of the following sentence), but no allowance or adjustment shall be made in respect of dividends payable to holders of Common Stock in respect of any period prior to such effective date. Unless and until a certificate representing a share or shares of Series A Preferred Stock shall have been surrendered in the manner provided for in Section 6.5, dividends and other distributions payable on the Common Stock after the expiration of 90 days following the redemption of such share or shares shall not be paid to the record holder of such certificate, but there shall be paid to the record holder of such certificate with respect to the share or shares of Common Stock to be exchanged for such redeemed share or shares of Series A Preferred Stock (i) upon such surrender, the amount of dividends or other distributions which shall have become payable on such shares of Common Stock after the expiration of 90 days following redemption, but without interest, and (ii) after such surrender, the amount of any dividends or other distributions on the Common Stock with a record date prior to surrender and the payment date of which shall be subsequent to surrender, such amount to be paid on such payment date. 6.5 Notice of Redemption. Unless otherwise required by law, notice of -------------------- redemption shall be sent to each holder of Series A Preferred Stock at the address shown on the books of the Corporation by first class mail (postage pre- paid) mailed not less than thirty (30) days nor more than sixty (60) days prior to the redemption date. Each such notice shall state: (i) the redemption date; (ii) the total number of shares of Series A Preferred Stock to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of such shares of Series A Preferred Stock to be redeemed from such holder; (iii) the Call Price; and (iv) that dividends on the Series A Preferred Stock to be redeemed will cease to accrue on such redemption date. Upon surrender of the certificate for any shares of Series A Preferred Stock so called for redemption and not previously converted (properly endorsed or assigned for transfer, if the notice shall so state), such shares shall be redeemed by the Corporation at the date fixed for redemption and at the redemption price set forth in this Section 6. Section 7. Anti-dilution Adjustments. ------------------------- 7.1 Common Equivalent Rate; Adjustments. The Common Equivalent Rate to be ----------------------------------- used to determine the number of shares of Common Stock to be delivered on the conversion of Series A Preferred Stock into shares of Common Stock pursuant to Section 5 shall be initially one share of Common Stock for one share of Series A Preferred Stock; provided, however, that the Common Equivalent Rate shall be -------- ------- subject to adjustment from time to time as provided in this Section 7.1. All adjustments to the Common Equivalent Rate shall be calculated to the nearest 1/100th of a share of Common Stock (or if there is not a nearest 1/100th of a share, to the next lower 1/100th of a share). (i) If the Corporation shall: (1) pay a dividend or make a distribution with respect to the Common Stock in shares of the Common Stock, (2) subdivide or split its outstanding shares of the Common Stock, (3) combine its outstanding shares of the Common Stock into a smaller number of shares, or (4) issue by reclassification of its shares of the Common Stock any shares of common stock of the Corporation, then, in any such event, the Common Equivalent Rate in effect immediately prior thereto shall be adjusted so that the holder of a share of the Series A Preferred Stock shall be entitled to receive on the conversion of such share of the Series A Preferred Stock, the number of shares of the Common Stock which such holder would have owned or been entitled to receive after the happening of any of the events described above in this clause (i) had such share of the Series A Preferred Stock been surrendered for conversion at the Common Equivalent Rate in effect immediately prior to such time. Such adjustment shall become effective at the opening of business on the Business Day next following the record date for determination of stockholders entitled to receive such dividend or distribution in the case of a dividend or distribution and shall become effective immediately after the effective date in case of a subdivision, split, combination or reclassification. Any shares of the Common Stock issuable in payment of a dividend shall be deemed to have been issued immediately prior to the close of business on the record date for such dividend for purposes of calculating the number of outstanding shares of the Common Stock under clauses (ii) and (iii) below. (ii) If the Corporation shall distribute rights or warrants to all holders of the Common Stock entitling them (for a period not exceeding 45 days from the date of such issuance) to subscribe for or purchase shares of the Common Stock at a price per share less than the Current Market Price per share of the Common Stock on the record date for the determination of stockholders entitled to receive such rights or warrants, then in each case the Common Equivalent Rate shall be adjusted by multiplying the Common Equivalent Rate in effect immediately prior thereto by a fraction, of which the numerator shall be the number of shares of the Common Stock outstanding on the date of distribution of such rights or warrants, immediately prior to such distribution, plus the number of additional shares of the Common Stock offered for subscription or purchase, and of which the denominator shall be the number of shares of the Common Stock outstanding on the date of distribution of such rights or warrants, immediately prior to such distribution, plus the number of shares which the aggregate offering price of the total number of shares so offered for subscription or purchase would purchase at such Current Market Price (determined by multiplying such total number of shares by the exercise price of such rights or warrants and dividing the product so obtained by such Current Market Price). Shares of the Common Stock owned by the Corporation or by another company of which a majority of the shares entitled to vote in the election of directors are held, directly or indirectly, by the Corporation shall not be deemed to be outstanding for purposes of such computation. Such adjustment shall become effective at the opening of business on the Business Day next following the record date for the determination of stockholders entitled to receive such rights or warrants. To the extent that shares of the Common Stock are not delivered after the expiration of such rights or warrants, the Common Equivalent Rate shall be readjusted to the Common Equivalent Rate which would then be in effect had the adjustments made upon the distribution of such rights or warrants been made upon the basis of delivery of only the number of shares of the Common Stock actually delivered. (iii) If the Corporation shall pay a dividend or make a distribution to all holders of the Common Stock of evidence of its indebtedness or other assets (including shares of capital stock of the Corporation but excluding any cash dividends or distributions and dividends referred to in clause (i) above), or shall distribute to all holders of the Common Stock rights or warrants to subscribe for or purchase securities of the Corporation or any of its subsidiaries (other than those referred to clause (ii) above), then in each such case the Common Equivalent Rate shall be adjusted by multiplying the Common Equivalent Rate in effect immediately prior to the date of such distribution by a fraction, of which the numerator shall be the Current Market Price per share of the Common Stock on the record date mentioned below, and of which the denominator shall be such Current Market Price per share of the Common Stock less the fair market value (as determined by the Board of Directors of the Corporation, whose determination shall be conclusive) as of such record date of the portion of the evidence of the indebtedness or other assets so distributed, or of such rights or warrants, applicable to one share of the Common Stock. Such adjustment shall become effective on the opening of business on the Business Day next following the record date for the determination of stockholders entitled to receive such distribution. (iv) Anything in this Section 7.1 notwithstanding, the Corporation shall be entitled to make such upward adjustments in the Common Equivalent Rate, in addition to those required by this Section 7.1, as the Corporation in its discretion shall determine to be advisable, so that any stock dividends, subdivision of shares, distribution of rights to purchase stock or securities, or distribution of securities convertible into or exchangeable for stock (or any transaction which could be treated as any of the foregoing transactions pursuant to Section 305 of the Internal Revenue Code of 1986, as amended) hereafter made by the Corporation to its stockholders will not be taxable. (v) In any case in which this Section 7.1 shall require that an adjustment as a result of any event become effective at the opening of business on the Business Day next following a record date and the date fixed for conversion pursuant to Section 5.1 or Section 5.2 occurs after such record date, but before the occurrence of such event, the Corporation may in its sole discretion elect to defer the following until after the occurrence of such event: (1) issuing to the holder of any shares of the Series A Preferred Stock surrendered for conversion the additional shares of the Common Stock issuable upon such conversion over and above the shares of the Common Stock issuable upon such conversion on the basis of the Common Equivalent Rate prior to adjustment; and (2) paying to such holder any amount in cash in lieu of a fractional share of the Common Stock pursuant to Section 5.5. 7.2 Notice of Adjustments. Whenever the Common Equivalent Rate is --------------------- adjusted as herein provided, the Corporation shall (i) forthwith compute the adjusted Common Equivalent Rate in accordance with Section 7.1 and prepare a certificate signed by the Chief Executive Officer, the Chairman, the President, any Vice President or the Treasurer of the Corporation setting forth the adjusted Common Equivalent Rate, the method of calculation thereof in reasonable detail and the facts requiring such adjustment and upon which such adjustment is based, and file such certificate forthwith with the transfer agent or agents for the Series A Preferred Stock and the Common Stock; and (ii) mail a notice stating that the Common Equivalent Rate has been adjusted, the facts requiring such adjustment and upon which such adjustment is based and setting forth the adjusted Common Equivalent Rate to the holders of the outstanding shares of the Series A Preferred Stock at or prior to the time the Corporation mails an interim statement to its stockholders covering the quarterly period during which the facts requiring such adjustment occurred, but in any event within 45 days of the end of such quarterly period. Section 8. Definitions. ----------- 8.1 Definitions to Apply. For purposes of this Paragraph 10, the -------------------- following definitions shall apply: "Business Day" shall mean each day that is not a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "Call Price" shall mean the per share price for the Series A Preferred Stock, which shall be initially $58.27, declining by $.003861 on each day from and including January 23, 1992 (computed on the basis of a 360-day year of twelve 30-day months) to $54.18 on January 1, 1995 and equal to $53.95 thereafter, if not sooner redeemed. "Closing Price" on any day shall mean the closing sale price regular way on such day or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices regular way, in each case on the New York Stock Exchange, or, if the Common Stock is not listed or admitted to trading on such Exchange, on the principal national securities exchange on which the Common Stock is listed or admitted to trading, or, if not listed or admitted to trading on any national securities exchange, the average of the closing bid and asked prices of the Common Stock on the over-the- counter market on the day in question as reported by the National Quotation Bureau Incorporated, or a similarly generally accepted reporting service, or if not so available in such manner as furnished by any New York Stock Exchange member firm selected from time to time by the Board of Directors of the Corporation for that purpose. "Common Equivalent Rate" shall mean a ratio initially equal to one share of Common Stock for one share of Series A Preferred Stock and subject thereafter to adjustment as provided in Section 7.1. "Common Stock" shall mean the Corporation's Common Stock, par value $1 per share, as the same exists at the date of the issuance by the State Corporation Commission of Virginia of a certificate of amendment with respect to Articles of Amendment creating the Series A Preferred Stock, or any other class of stock resulting from successive changes or reclassifications of such Common Stock consisting solely of changes in par value, or from par value to no par value, or from no par value to par value. "Current Market Price" shall mean on any date of determination the average of the Closing Prices of a share of the Common Stock for the five consecutive Trading Dates ending on and including such date of determination (appropriately adjusted to take into account the occurrence during such five day period of any event that results in an adjustment of the Common Equivalent Rate); provided, however, that if the Closing Price for the Trading Date next following such five-day period (the "next-day closing price") is less than 95% of such average, then the Current Market Price per share of Common Stock on such date of determination will be the next-day closing price; and provided, further, that if any adjustment of the Common Equivalent Rate becomes effective as of any date during the period beginning on the first day of such five-day period and ending on the date on which shares of the Series A Preferred Stock are to be redeemed or converted, then the Current Market Price as determined pursuant to the foregoing will be properly adjusted to reflect such adjustment. "Distribution Date" shall have the meaning set forth in the Rights Agreement dated as of February 27, 1986, between the Corporation and Manufacturers Hanover Trust, as Rights Agent, as the same may be further amended, modified or supplemented (the "Rights Agreement"). "Notice Date" with respect to any notice given by the Corporation in connection with a redemption or conversion of any of the Series A Preferred Stock shall be the date of the commencement of the mailing of such notice to the holders of such Series A Preferred Stock. "Settlement Date" shall mean the following: with respect to a Distribution Date Event, the Business Day immediately preceding the Distribution Date, and with respect to a Merger or Consolidation, the Business Day on which the effective time of the Merger or Consolidation occurs. "Trading Date" shall mean a date on which the New York Stock Exchange (or any successor to such Exchange) is open for the transaction of business. Section 9. Ranking; Retirement of Shares; Increase in Shares. ------------------------------------------------- 9.1 Ranking. The Series A Preferred Stock shall rank senior to the ------- Common Stock as to the payment of dividends and the distribution of assets on liquidation, dissolution and winding up of the Corporation, and, unless otherwise provided in the Articles of Incorporation of the Corporation, as the same may be amended, or in Articles of Amendment relating to a subsequent series of Preferred Stock, par value $1 per share, of the Corporation, the Series A Preferred Stock shall rank on a parity with all other series of the Corporation's Preferred Stock, par value $1 per share, as to the payment of dividends or other distributions and the distribution of assets on liquidation, dissolution or winding up. 9.2 Retirement. Any Series A Preferred Stock acquired by the Corporation ---------- by reason of the conversion or redemption of such shares as provided by this Paragraph 10, or otherwise so acquired, shall be retired as Series A Preferred Stock and restored to the status of authorized but unissued shares of Preferred Stock, par value $1 per share, of the Corporation, undesignated as to series, and may thereafter be reissued as part of a new series of such Preferred Shares as permitted by law. 9.3 Increase in Shares. The number of shares of Series A Preferred Stock ------------------ may, to the extent of the Corporation's authorized and unissued Preferred Stock, be increased by further resolution duly adopted by the Board of Directors and the filing of an amendment to the Articles of Incorporation of the Corporation. Section 10. Miscellaneous. ------------- 10.1 Notices. All notices referred to herein referred to herein shall ------- be in writing, and all notices hereunder shall be deemed to have been given upon the earlier of delivery thereof if by hand delivery, by courier or by standard form of telecommunication or three (3) business days after the mailing thereof if sent by registered mail (unless first-class mail shall be specifically permitted for such notice under the terms of this Paragraph 10) with postage prepaid, addressed: (i) if to the Corporation, to its office at 120 Long Ridge Road, Stamford, Connecticut 06904-1355 (Attention: Corporate Secretary) or other agent of the Corporation designated as permitted by this Paragraph 10 or (ii) if to the holder of the Series A Preferred Stock or Common Stock, as the case may be, to such holder at the address of such holder as listed in the stock record books of the Corporation (which may include the records of any transfer agent for the Series A Preferred Stock or Common Stock), or (iii) to such other address as the Corporation or any such holder, as the case may be, shall have designated by notice similarly given. 10.2 Taxes. The Corporation shall pay any and all stock transfer and ----- documentary stamp taxes that may be payable in respect of any issuance or delivery of Series A Preferred Stock or shares of Common Stock or other securities issued on account of Series A Preferred Stock pursuant hereto or certificates representing such shares or securities. The Corporation shall not, however, be required to pay any such tax that may be payable in respect of any transfer involved in the issuance or delivery of Series A Preferred Stock or Common Stock or other securities in a name other than that in which the Series A Preferred Stock with respect to which such shares or other securities are issued or delivered were registered, or in respect of any payment to any person with respect to any such shares or securities other than a payment, to the registered holder thereof, and shall not be required to make any such issuance, delivery or payment unless and until the person otherwise entitled to such issuance, delivery or payment has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid or is not payable. 10.3 Designations. In the event that a holder of Series A Preferred Stock ------------ shall not by written notice designate the name in which shares of Common Stock to be issued upon conversion of such shares should be registered or to whom payment upon redemption of Series A Preferred Stock should be made or the address to which the certificate or certificates representing such shares, or such payment, should be sent, the Corporation shall be entitled to register such shares, and make such payment, in the name of such holder of such Series A Preferred Stock as shown on the records of the Corporation and to send the certificate or certificates representing such shares, or such payment, to the address of such holder as so shown on the records of the Corporation. 10.4 Payments. Unless otherwise provided in the Articles of -------- Incorporation, as the same may be amended, of the Corporation, all payments in the form of dividends, distributions on voluntary or involuntary dissolution, liquidation or winding up or otherwise made upon the Series A Preferred Stock and any other stock ranking on a parity with the Series A Preferred Stock, with respect to such dividend or distribution shall be pro rata, so that amounts paid per Series A Preferred Stock and such other stock shall in all cases bear to each other the same ratio that the required dividends, distributions or payments, as the case may be, then payable per share on the Series A Preferred Stock and other such stock bear to each other." THIRD: The amendment of the Articles of Incorporation was duly adopted by the Board of Directors of the Corporation on January 13, 1992 without shareholder action, which shareholder action was not required. IN WITNESS WHEREOF, the undersigned has executed these Articles of Amendment as of this 13th day of January, 1992. OLIN CORPORATION By /s/ E. McIntosh Cover --------------------- Vice President CONFORMED COPY ARTICLES OF AMENDMENT OF THE ARTICLES OF INCORPORATION OF OLIN CORPORATION under Section 13.1-639 of the Virginia Stock Corporation Act FIRST: The name of the Corporation is Olin Corporation. SECOND: The amendment adopted is to add a new Paragraph 10 to Article Fourth, to read as follows: "10: Series A Participating Cumulative Preferred Stock. There is hereby established a series of the Corporation's authorized Preferred Stock, to be designated as the "Series A Participating Cumulative Preferred Stock, par value $1 per share." The designation and number, and relative rights, preferences and limitations of the Series A Participating Cumulative Preferred Stock, insofar as not already fixed by any other provision of these Articles of Incorporation, shall be as follows: SECTION 1. Designation and Number of Shares. The shares of such --------------------------------- series shall be designated as "Series A Participating Cumulative Preferred Stock" (the "Series A Preferred Stock"), par value $1 per share. The number of shares initially constituting the Series A Preferred Stock shall be 250,000; provided, however, that, if more than a total of 250,000 shares of Series A - -------- ------- Preferred Stock shall be issuable upon the exercise of Rights (the "Rights") issued pursuant to the Rights Agreement dated as of February 27, 1996, between the Corporation and Chemical Mellon Shareholder Services, L.L.C., as Rights Agent (the "Rights Agreement"), the Board of Directors of the Corporation, pursuant to Section 13.1-639 of the Virginia Stock Corporation Act, shall direct by resolution or resolutions that articles of amendment of the Articles of Incorporation of the Corporation be properly executed and filed with the State Corporation Commission of Virginia providing for the total number of shares of Series A Preferred Stock authorized to be issued to be increased (to the extent that the Articles of Incorporation then permit) to the largest number of whole shares (rounded up to the nearest whole number) issuable upon exercise of such Rights. SECTION 2. Dividends or Distributions. (a) Subject to the prior and --------------------------- superior rights of the holders of shares of any other series of Preferred Stock or other class of capital stock of the Corporation ranking prior and superior to the shares of Series A Preferred Stock with respect to dividends, the holders of shares of the Series A Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of the assets of the Corporation legally available therefor, (i) quarterly dividends payable in cash on the last day of each fiscal quarter in each year, or such other dates as the Board of Directors of the Corporation shall approve (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or a fraction of a share of Series A Preferred Stock, in the amount of $.01 per whole share (rounded to the nearest cent), less the amount of all cash dividends declared on the Series A Preferred Stock pursuant to the following clause (ii) since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock (the total of which shall not, in any event, be less than zero) and (ii) dividends payable in cash on the payment date for each cash dividend declared on the Common Stock in an amount per whole share (rounded to the nearest cent) equal to the Formula Number (as hereinafter defined) then in effect times the cash dividends then to be paid on each share of Common Stock. In addition, if the Corporation shall pay any dividend or make any distribution on the Common Stock payable in assets, securities or other forms of non-cash consideration (other than dividends or distributions solely in shares of Common Stock), then, in each such case, the Corporation shall simultaneously pay or make on each outstanding whole share of Series A Preferred Stock a dividend or distribution in like kind equal to the Formula Number then in effect times such dividend or distribution on each share of the Common Stock. As used herein, the "Formula Number" shall be 1,000; provided, however, that, if at any time after -------- ------- February 27, 1996, the Corporation shall (x) declare or pay any dividend on the Common Stock payable in shares of Common Stock or make any distribution on the Common Stock in shares of Common Stock, (y) subdivide (by a stock split or otherwise) the outstanding shares of Common Stock into a larger number of shares of Common Stock or (z) combine (by a reverse stock split or otherwise) the outstanding shares of Common Stock into a smaller number of shares of Common Stock, then, in each such event, the Formula Number shall be adjusted to a number determined by multiplying the Formula Number in effect immediately prior to such event by a fraction, the numerator of which is the number of shares of Common Stock that are outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that are outstanding immediately prior to such event (and rounding the result to the nearest whole number); and provided further, that, if at any time after -------- ------- February 27, 1996, the Corporation shall issue any shares of its capital stock in a merger, reclassification, or change of the outstanding shares of Common Stock, then, in each such event, the Formula Number shall be appropriately adjusted to reflect such merger, reclassification or change so that each share of Preferred Stock continues to be the economic equivalent of a Formula Number of shares of Common Stock prior to such merger, reclassification or change. (b) The Corporation shall declare a dividend or distribution on the Series A Preferred Stock as provided in Section 2(a) immediately prior to or at the same time it declares a dividend or distribution on the Common Stock (other than a dividend or distribution solely in shares of Common Stock); provided, -------- however, that, in the event no dividend or distribution (other than a dividend - ------- or distribution in shares of Common Stock) shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $.01 per share on the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a dividend or distribution declared thereon, which record date shall be the same as the record date for any corresponding dividend or distribution on the Common Stock. (c) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from and after the Quarterly Dividend Payment Date next preceding the date of original issue of such shares of Series A Preferred Stock; provided, however, that dividends on such shares that are -------- ------- originally issued after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and on or prior to the next succeeding Quarterly Dividend Payment Date shall begin to accrue and be cumulative from and after such Quarterly Dividend Payment Date. Notwithstanding the foregoing, dividends on shares of Series A Preferred Stock that are originally issued prior to the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend on the first Quarterly Dividend Payment Date shall be calculated as if cumulative from and after the last day of the fiscal quarter next preceding the date of original issuance of such shares. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. (d) So long as any shares of the Series A Preferred Stock are outstanding, no dividends or other distributions shall be declared, paid or distributed, or set aside for payment or distribution, on the Common Stock, unless, in each case, the dividend required by this Section 2 to be declared on the Series A Preferred Stock shall have been declared. (e) The holders of the shares of Series A Preferred Stock shall not be entitled to receive any dividends or other distributions, except as provided herein. SECTION 3. Voting Rights. The holders of shares of Series A ------------- Preferred Stock shall have the following voting rights: (a) Each holder of Series A Preferred Stock shall be entitled to a number of votes equal to the Formula Number then in effect, for each share of Series A Preferred Stock held of record on each matter on which holders of the Common Stock or shareholders generally are entitled to vote, multiplied by the maximum number of votes per share which any holder of the Common Stock or shareholders generally then have with respect to such matter (assuming any holding period or other requirement to vote a greater number of shares is satisfied). (b) Except as otherwise provided herein or by applicable law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock shall vote together as one class for the election of directors of the Corporation and on all other matters submitted to a vote of shareholders of the Corporation. (c) If, at the time of any annual meeting of shareholders for the election of directors, the equivalent of six quarterly dividends (whether or not consecutive) payable on any share or shares of Series A Preferred Stock are in default, the number of directors constituting the Board of Directors of the Corporation shall be increased by two. In addition to voting together with the holders of Common Stock for the election of other directors of the Corporation, the holders of record of the Series A Preferred Stock, voting separately as a class to the exclusion of the holders of Common Stock, shall be entitled at said meeting of shareholders (and at each subsequent annual meeting of shareholders), unless all dividends in arrears have been paid or declared and set apart for payment prior thereto, to vote for the election of two directors of the Corporation, the holders of any Series A Preferred Stock being entitled to cast a number of votes per share of Series A Preferred Stock equal to the Formula Number. Until the default in payments of all dividends that permitted the election of said directors shall cease to exist, any director who shall have been so elected pursuant to the next preceding sentence may be removed at any time, either with or without cause, only by the affirmative vote of the holders of the shares of Series A Preferred Stock at the time entitled to cast a majority of the votes entitled to be cast for the election of any such director at a special meeting of such holders called for that purpose, and any vacancy thereby created may be filled by the vote of such holders. If and when such default shall cease to exist, the holders of the Series A Preferred Stock shall be divested of the foregoing special voting rights, subject to revesting in the event of each and every subsequent like default in payments of dividends. Upon the termination of the foregoing special voting rights, the terms of office of all persons who may have been elected directors pursuant to said special voting rights shall forthwith terminate, and the number of directors constituting the Board of Directors shall be reduced by two. The voting rights granted by this Section 3(c) shall be in addition to any other voting rights granted to the holders of the Series A Preferred Stock in this Section 3. (d) Except as provided herein, in Section 11 or by applicable law, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for authorizing or taking any corporate action. SECTION 4. Certain Restrictions. (a) Whenever quarterly dividends --------------------- or other dividends or distributions payable on the Series A Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock; (ii) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock; provided that the Corporation may at any time redeem, purchase or otherwise -------- acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or (iv) purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (b) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (a) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. SECTION 5. Liquidation Rights. Upon the liquidation, dissolution or ------------------- winding up of the Corporation, whether voluntary or involuntary, no distribution shall be made (a) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock, unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received an amount equal to the accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, plus an amount equal to the greater of (i) $.01 per whole share or (ii) an aggregate amount per share equal to the Formula Number then in effect times the aggregate amount to be distributed per share to holders of Common Stock or (b) to the holders of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. SECTION 6. Consolidation, Merger, etc. In case the Corporation shall --------------------------- enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash or any other property, then, in any such case, the then outstanding shares of Series A Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share equal to the Formula Number then in effect times the aggregate amount of stock, securities, cash or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is exchanged or changed. In the event both this Section 6 and Section 2 appear to apply to a transaction, this Section 6 will control. SECTION 7. No Redemption; No Sinking Fund. (a) The shares of Series ------------------------------- A Preferred Stock shall not be subject to redemption by the Corporation or at the option of any holder of Series A Preferred Stock; provided, however, that -------- ------- the Corporation may purchase or otherwise acquire outstanding shares of Series A Preferred Stock in the open market or by offer to any holder or holders of shares of Series A Preferred Stock. (b) The shares of Series A Preferred Stock shall not be subject to or entitled to the operation of a retirement or sinking fund. SECTION 8. Ranking. The Series A Preferred Stock shall rank junior -------- to all other series of Preferred Stock of the Corporation, unless the Board of Directors shall specifically determine otherwise in fixing the powers, preferences and relative, participating, optional and other special rights of the shares of such series and the qualifications, limitations and restrictions thereof. SECTION 9. Fractional Shares. The Series A Preferred Stock shall be ------------------ issuable upon exercise of the Rights issued pursuant to the Rights Agreement in whole shares or in any fraction of a share that is one-thousandth (1/1,000) of a share or any integral multiple of such fraction which shall entitle the holder, in proportion to such holder's fractional shares, to receive dividends, exercise voting rights, participate in distributions and have the benefit of all other rights of holders of Series A Preferred Stock. In lieu of fractional shares, the Corporation, prior to the first issuance of a share or a fraction of a share of Series A Preferred Stock, may elect (a) to make a cash payment as provided in the Rights Agreement for fractions of a share other than one-thousandth (1/1,000) of a share or any integral multiple thereof or (b) to issue depository receipts evidencing such authorized fraction of a share of Series A Preferred Stock pursuant to an appropriate agreement between the Corporation and a depository selected by the Corporation; provided that such agreement shall -------- provide that the holders of such depository receipts shall have all the rights, privileges and preferences to which they are entitled as holders of the Series A Preferred Stock. SECTION 10. Reacquired Shares. Any shares of Series A Preferred ------------------ Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock, par value $1 per share, of the Corporation, undesignated as to series, and may thereafter be reissued as part of a new series of such Preferred Shares as permitted by law. SECTION 11. Amendment. None of the powers, preferences and relative, ---------- participating, optional and other special rights of the Series A Preferred Stock as provided herein or in the Articles of Incorporation shall be amended in any manner that would alter or change the powers, preferences, rights or privileges of the holders of Series A Preferred Stock so as to affect such holders adversely without the affirmative vote of the holders of at least 66-2/3% of the outstanding shares of Series A Preferred Stock, voting as a separate class; provided, however, that no such amendment approved by the holders of at least - -------- ------- 66-2/3% of the outstanding shares of Series A Preferred Stock shall be deemed to apply to the powers, preferences, rights or privileges of any holder of shares of Series A Preferred Stock originally issued upon exercise of a Right after the time of such approval without the approval of such holder. THIRD: This amendment of the Articles of Incorporation was duly adopted by the Board of Directors of the Corporation on January 25, 1996, without shareholder action, which shareholder action was not required. FOURTH: All shares of the Corporation's Series A Conversion Preferred Stock previously outstanding have been converted and are no longer outstanding. IN WITNESS WHEREOF, the undersigned has executed these Articles of Amendment as of this 27th day of February, 1996. OLIN CORPORATION by /s/Johnnie M. Jackson, Jr. -------------------------------- Name: Johnnie M. Jackson, Jr. Title: Vice President, General Counsel and Secretary EX-3.B 3 BYLAWS OF OLIN CORPORATION EXHIBIT 3(B) =============================================================================== BY-LAWS of OLIN CORPORATION As Amended Effective February 29, 1996 ================================================================================ BY-LAWS OF OLIN CORPORATION ARTICLE I. MEETINGS OF SHAREHOLDERS. SECTION 1. PLACE OF MEETINGS. All meetings of the shareholders of Olin Corporation (hereinafter called the "Corporation") shall be held at such place, either within or without the Commonwealth of Virginia, as may from time to time be fixed by the Board of Directors of the Corporation (hereinafter called the "Board"). SECTION 2. ANNUAL MEETINGS. The annual meeting of the shareholders of the Corporation for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held on the last Thursday in April in each year (or, if that day shall be a legal holiday, then on the next succeeding business day), or on such other day and/or in such other month as may be fixed by the board, at such hour as may be specified in the notice thereof. SECTION 3. SPECIAL MEETINGS. A special meeting of the shareholders for any purpose or purposes, unless otherwise provided by law or in the Articles of Incorporation of the Corporation as from time to time amended (hereinafter called the "Articles"), may be held at any time upon the call of the Board, the Chairman of the Board, the President or the holders of a majority of the shares of the issued and outstanding stock of the Corporation entitled to vote at the meeting. SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by law or the Articles, not less than ten nor more than sixty days' notice in writing of the place, day, hour and purpose or purposes of each meeting of the shareholders, whether annual or special, shall be given to each shareholder of record of the Corporation entitled to vote at such meeting, either by the delivery thereof to such shareholder personally or by the mailing thereof to such shareholder in a postage prepaid envelope addressed to such shareholder at his address as it appears on the stock transfer books of the Corporation; provided, however, that in the case of a special meeting of shareholders called by the shareholders, such notice shall be given at least fifty days before the date of the meeting. Notice of any meeting of shareholders shall not be required to be given to any shareholder who shall attend the meeting in person or by proxy, unless attendance is for the express purpose of objecting to the transaction of any business because the meeting was not lawfully called or convened, or who shall waive notice thereof in writing signed by the shareholder before, at or after such meeting. Notice of any adjourned meeting need not be given, except when expressly required by law. 2 SECTION 5. QUORUM. Shares representing a majority of the votes entitled to be cast on a matter by all classes or series which are entitled to vote thereon and be counted together collectively, represented in person or by proxy at any meeting of the shareholders, shall constitute a quorum for the transaction of business thereat with respect to such matter, unless otherwise provided by law or the Articles. In the absence of a quorum at any such meeting or any adjournment or adjournments thereof, shares representing a majority of the votes cast on the matter of adjournment, either in person or by proxy, may adjourn such meeting from time to time until a quorum is obtained. At any such adjourned meeting at which a quorum has been obtained, any business may be transacted which might have been transacted at the meeting as originally called. SECTION 6. VOTING. Unless otherwise provided by law or the Articles, at each meeting of the shareholders each shareholder entitled to vote at such meeting shall be entitled to one vote for each share of stock standing in his name on the books of the Corporation upon any date fixed as hereinafter provided, and may vote either in person or by proxy in writing. Unless demanded by a shareholder present in person or represented by proxy at any meeting of the shareholders and entitled to vote thereon or so directed by the chairman of the meeting, the vote on any matter need not be by ballot. On a vote by ballot, each ballot shall be signed by the shareholder voting or his proxy, and it shall show the number of shares voted. SECTION 7. JUDGES. One or more judges or inspectors of election for any meeting of shareholders may be appointed by the chairman of such meeting, for the purpose of receiving and taking charge of proxies and ballots and deciding all questions as to the qualification of voters, the validity of proxies and ballots and the number of votes properly cast. SECTION 8. CONDUCT OF MEETING. The chairman of the meeting at each meeting of shareholders shall have all the powers and authority vested in presiding officers by law or practice, without restriction, as well as the authority to conduct an orderly meeting and to impose reasonable limits on the amount of time taken up in remarks by any one shareholder. ARTICLE II. BOARD OF DIRECTORS. SECTION 1. NUMBER, CLASSIFICATION, TERM, ELECTION. The property, business and affairs of the Corporation shall be managed under the direction of the board as from time to time constituted. The Board shall consist of twelve directors, but the number of directors may be increased to any number, not more than eighteen directors, or decreased to any number, not less than three directors, by amendment of these By-laws, provided that any increase or decrease by more than thirty percent of the number of directors last elected by the shareholders may only be effected by the shareholders. No director need be a shareholder. The Board shall be divided into three classes, Class I, Class II and 3 Class III, as nearly equal in number as possible, with the members of each class to serve for the respective terms of office provided in the Articles, and until their respective successors shall have been duly elected or until death or resignation or until removal in the manner hereinafter provided. In case the number of directors shall be increased, the additional directors to fill the vacancies caused by such increase shall be elected in accordance with the provisions of Section 4 of Article VI of these By-laws. Any increase or decrease in the number of directors shall be so apportioned among the classes by the Board as to make all classes as nearly equal in number as possible. Subject to the rights of holders of any Preferred Stock outstanding, nominations for the election of directors may be made by the Board or a committee appointed by the Board or by any shareholder entitled to vote in the election of directors generally. However, any shareholder entitled to vote in the election of directors generally may nominate one or more persons for election as directors at a meeting only if it is a meeting of shareholders for the purposes of electing directors and written notice of such shareholder's intent to make such nomination or nominations has been given, either by personal delivery or by United States mail, postage prepaid, to the Secretary of the Corporation not later than (i) with respect to an election to be held at an annual meeting of shareholders, 90 days in advance of such meeting and (ii) with respect to an election to be held at a special meeting of shareholders for the election of directors, the close of business on the seventh day following the date on which notice of such meeting is first given to shareholders. Each such notice shall set forth: (a) the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the shareholder is a holder of record of shares of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder; (d) such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission; and (e) the consent of each nominee to serve as a director of the Corporation if so elected. SECTION 2. COMPENSATION. Each director, in consideration of his serving as such, shall be entitled to receive from the Corporation such amount per annum or such fees for attendance at Board and Committee meetings, or both, in cash or other property, including securities of the Corporation, as the Board shall from time to time determine, together with reimbursements for the reasonable expenses incurred by him in connection with the performance of his duties. Nothing contained herein shall preclude any director from serving the Corporation, or any subsidiary or affiliated corporation, in any other capacity and receiving proper compensation therefor. If the Board adopts a resolution to that effect, any director may elect to defer all or any part of the annual and other fees hereinabove referred to for such period and on such terms and conditions as shall be permitted by such resolution. 4 SECTION 3. PLACE OF MEETINGS. The Board may hold its meetings at such place or places within or without the Commonwealth of Virginia as it may from time to time by resolution determine or as shall be specified or fixed in the respective notices or waivers of notice thereof. SECTION 4. ORGANIZATION MEETING. After each annual election of directors, as soon as conveniently may be, the newly constituted Board shall meet for the purposes of organization. At such organization meeting, the newly constituted Board shall elect officers of the Corporation and transact such other business as shall come before the meeting. Notice of organization meetings of the Board need not be given. Any organization meeting may be held at any other time or place which shall be specified in a notice given as hereinafter provided for special meetings of the Board, or in a waiver of notice thereof signed by all the directors. SECTION 5. REGULAR MEETINGS. Regular meetings of the Board may be held at such time and place as may from time to time be specified in a resolution adopted by the Board then in effect; and, unless otherwise required by such resolution, or by law, notice of any such regular meeting need not be given. SECTION 6. SPECIAL MEETINGS. Special meetings of the Board shall be held whenever called by the Chief Executive Officer, or by the Secretary at the request of any three directors. Notice of a special meeting shall be mailed to each director, addressed to him at his residence or usual place of business, not later than the second day before the day on which such meeting is to be held, or shall be sent addressed to him at such place by telegraph, cable or wireless, or be delivered personally or by telephone, not later than the day before the day on which such meeting is to be held. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board need be specified in the notice of such meeting, unless required by the Articles. SECTION 7. QUORUM. At each meeting of the Board the presence of a majority of the number of directors fixed by these By-laws shall be necessary to constitute a quorum. The act of a majority of the directors present at a meeting at which a quorum shall be present shall be the act of the Board, except as may be otherwise provided by law or by these By-laws. Any meeting of the Board may be adjourned by a majority vote of the directors present at such meeting. Notice of any adjourned meeting need not be given. SECTION 8. WAIVERS OF NOTICE OF MEETINGS. Anything in these By-laws or in any resolution adopted by the Board to the contrary notwithstanding, notice of any meeting of the Board need not be given to any director if such notice shall be waived in writing signed by such director before, at or after the meeting, or if such director shall be present at the meeting. Any meeting of the Board shall be a legal meeting without any notice having been given or regardless of the giving of any notice or the adoption of any resolution in reference thereto, if every member of the Board shall be present thereat. Except as otherwise provided by law or these By-laws, waivers of notice of any meeting of the Board need not contain any statement of the purpose of the meeting. 5 SECTION 9. TELEPHONE MEETINGS. Members of the Board or any committee may participate in a meeting of the Board or such committee by means of a conference telephone or other means of communications whereby all directors participating may simultaneously hear each other during the meeting, and participation by such means shall constitute presence in person at such meeting. SECTION 10. ACTIONS WITHOUT MEETINGS. Any action that may be taken at a meeting of the Board or of a committee may be taken without a meeting if a consent in writing, setting forth the action, shall be signed, either before or after such action, by all of the directors or all of the members of the committee, as the case may be. Such consent shall have the same force and effect as a unanimous vote. ARTICLE III.* INDEMNIFICATION AND LIMIT ON LIABILITY. (a) Every person who is or was a director, officer or employee of the Corporation, or who, at the request of the Corporation, serves or has served in any such capacity with another corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise shall be indemnified by the Corporation against any and all liability and reasonable expense that may be incurred by him in connection with or resulting from any claim, action or proceeding (whether brought in the right of the Corporation or any such other corporation, entity, plan or otherwise), civil or criminal, in which he may become involved, as a party or otherwise, by reason of his being or having been a director, officer or employee of the Corporation, or such other corporation, entity or plan while serving at the request of the Corporation, whether or not he continues to be such at the time such liability or expense shall have been incurred, unless such person engaged in willful misconduct or a knowing violation of the criminal law. As used in this Article III: (i) the terms "liability" and "expense" shall include, but shall not be limited to, counsel fees and disbursements and amounts of judgments, fines or penalties against, and amounts paid in settlement by, a director, officer or employee; (ii) the terms "director," "officer" and "employee," unless the context otherwise requires, include the estate or personal representative of any such person; (iii) a person is considered to be serving an employee benefit plan as a director, officer or employee of the plan at the Corporation's request if his duties to the Corporation also impose duties on, or otherwise involve services by, him to the plan or, in connection with the plan, to participants in or beneficiaries of the plan; (iv) the term "occurrence" means any act or * [Compiler's Note: This Article III was adopted by the shareholders at the Annual Meeting of Shareholders, April 28, 1994.] 6 failure to act, actual or alleged, giving rise to a claim, action or proceeding; and (v) service as a trustee or as a member of a management or similar committee of a partnership or joint venture shall be considered service as a director, officer or employee of the trust, partnership or joint venture. The termination of any claim, action or proceeding, civil or criminal, by judgment, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that a director, officer or employee did not meet the standards of conduct set forth in this paragraph (a). The burden of proof shall be on the Corporation to establish, by a preponderance of the evidence, that the relevant standards of conduct set forth in this paragraph (a) have not been met. (b) Any indemnification under paragraph (a) of this Article shall be made unless (i) the Board, acting by a majority vote of those directors who were directors at the time of the occurrence giving rise to the claim, action or proceeding involved and who are not at the time parties to such claim, action or proceeding (provided there are at least five such directors), finds that the director, officer or employee has not met the relevant standards of conduct set forth in such paragraph (a), or (ii) if there are not at least five such directors, the Corporation's principal Virginia legal counsel, as last designated by the Board as such prior to the time of the occurrence giving rise to the claim, action or proceeding involved, or in the event for any reason such Virginia counsel is unwilling to so serve, then Virginia legal counsel mutually acceptable to the Corporation and the person seeking indemnification, deliver to the Corporation their written advice that, in their opinion, such standards have not been met. (c) Expenses incurred with respect to any claim, action or proceeding of the character described in paragraph (a) shall, except as otherwise set forth in this paragraph (c), be advanced by the Corporation prior to the final disposition thereof upon receipt of an undertaking by or on behalf of the recipient to repay such amount if it is ultimately determined that he is not entitled to indemnification under this Article III. No security shall be required for such undertaking and such undertaking shall be accepted without reference to the recipient's financial ability to make repayment. Notwithstanding the foregoing, the Corporation may refrain from, or suspend, payment of expenses in advance if at any time before delivery of the final finding described in paragraph (b), the Board or Virginia legal counsel, as the case may be, acting in accordance with the procedures set forth in paragraph (b), find by a preponderance of the evidence then available that the officer, director or employee has not met the relevant standards of conduct set forth in paragraph (a). (d) No amendment or repeal of this Article III shall adversely affect or deny to any director, officer or employee the rights of indemnification provided in this Article III with respect to any liability or expense arising out of a claim, action or proceeding based in whole or substantial part on an occurrence the inception of which takes place before or while this Article III, as adopted by the shareholders of the Corporation at the 1986 Annual Meeting of the Corporation, is in effect. The provisions of this paragraph (d) shall apply to 7 any such claim, action or proceeding whenever commenced, including any such claim, action or proceeding commenced after any amendment or repeal to this Article III. (e) The rights of indemnification provided in this Article III shall be in addition to any rights to which any such director, officer or employee may otherwise be entitled by contraction or as a matter of law. (f) In any proceeding brought by or in the right of the Corporation or brought by or on behalf of shareholders of the Corporation, no director or officer of the Corporation shall be liable to the Corporation or its shareholders for monetary damages with respect to any transaction, occurrence or course of conduct, whether prior or subsequent to the effective date of this Article lll, except for liability resulting from such person's having engaged in willful misconduct or a knowing violation of the criminal law or any federal or state securities law. (g) An amendment to this Article III shall be approved only by a majority of the votes entitled to be cast by each voting group entitled to vote thereon. ARTICLE IV. COMMITTEES. SECTION 1. EXECUTIVE AND FINANCE COMMITTEE. The Board may, by resolution or resolutions adopted by a majority of the number of directors fixed by these By-laws, appoint two or more directors to constitute an Executive and Finance Committee, each member of which shall serve as such during the pleasure of the Board, and may designate for such Committee a Chairman, who shall continue as such during the pleasure of the Board. All completed action by the Executive and Finance Committee shall be reported to the Board at its meeting next succeeding such action or at its meeting held in the month following the taking of such action, and shall be subject to revision or alteration by the Board; provided, that no acts or rights of third parties shall be affected by any such revision or alteration. The Executive and Finance Committee shall fix its own rules of procedure and shall meet where and as provided by such rules or by resolution of the Board. At all meetings of the Executive and Finance Committee, a majority of the full number of members of such Committee shall constitute a quorum, and in every case the affirmative vote of a majority of members present at any meeting of the Executive and Finance Committee at which a quorum is present shall be necessary for the adoption of any resolution. During the intervals between the meetings of the Board, the Executive and Finance Committee shall possess and may exercise all the power and authority of the Board 8 (including, without limitation, all the power and authority of the Board in the management, control and direction of the financial affairs of the Corporation) except with respect to those matters reserved to the Board by Virginia law, in such manner as the Executive and Finance Committee shall deem best for the interests of the Corporation, in all cases in which specific directions shall not have been given by the Board. SECTION 2. OTHER COMMITTEES. To the extent permitted by law, the Board may from time to time by resolution adopted by a majority of the number of directors fixed by these By-laws create such other committees of directors, officers, employees or other persons designated by it as the Board shall deem advisable and with such limited authority, functions and duties as the board shall by resolution prescribe. The Board shall have the power to change the members of any such committee at any time, to fill vacancies, and to discharge any such committee, either with or without cause, at any time. ARTICLE V. OFFICERS. SECTION 1. NUMBER, TERM, ELECTION. The officers of the Corporation shall be a Chief Executive Officer, a Chairman of the Board, a President, one or more Vice Presidents, a Treasurer, a Controller and a Secretary. The Board may appoint such other officers and such assistant officers and agents with such powers and duties as the Board may find necessary or convenient to carry on the business of the Corporation. Such officers and assistant officers shall serve until their successors shall be chosen, or as otherwise provided in these By-laws. Any two or more offices may be held by the same person. SECTION 2. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall, subject to the control of the Board and the Executive and Finance Committee, have full authority and responsibility for directing the conduct of the business, affairs and operations of the Corporation. In addition to acting as Chief Executive Officer of the Corporation, he shall perform such other duties and exercise such other powers as may from time to time be prescribed by the Board and shall see that all orders and resolutions of the Board and the Executive and Finance Committee are carried into effect. In the event of the inability of the Chief Executive Officer to act, the Board will designate an officer of the Corporation to perform the duties of that office. SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside at all meetings of the Board and of the shareholders and, in the absence of the Chairman of the Executive and Finance Committee, at all meetings of the Executive and Finance Committee. He shall perform such other duties and exercise such other powers as may from time to time be prescribed by the Board or, if he shall not be the Chief Executive Officer, by the Chief Executive Officer. 9 SECTION 4. PRESIDENT. The President shall have such powers and perform such duties as may from time to time be prescribed by the Board or, if he shall not be the Chief Executive Officer, by the Chief Executive Officer. SECTION 5. VICE PRESIDENTS. Each Vice President shall have such powers and perform such duties as may from time to time be prescribed by the Board, the Chief Executive Officer or any officer to whom the Chief Executive Officer may have delegated such authority. SECTION 6. TREASURER. The Treasurer shall have the general care and custody of the funds and securities of the Corporation. He shall perform such other duties and exercise such other powers as may from time to time be prescribed by the Board, the Chief Executive Officer or any officer to whom the Chief Executive Officer may have delegated such authority. If the Board shall so determine, he shall give a bond for the faithful performance of his duties, in such sum as the Board may determine to be proper, the expense of which shall be borne by the Corporation. To such extent as the Board shall deem proper, the duties of the Treasurer may be performed by one or more assistants, to be appointed by the Board. SECTION 7. CONTROLLER. The Controller shall be the accounting officer of the Corporation. He shall keep full and accurate accounts of all assets, liabilities, receipts and disbursements and other transactions of the Corporation and cause regular audits of the books and records of the Corporation to be made. He shall also perform such other duties and exercise such other powers as may from time to time be prescribed by the Board, the Chief Executive Officer or any officer to whom the Chief Executive Officer may have delegated such authority. If the Board shall so determine, he shall give a bond for the faithful performance of his duties, in such sum as the Board may determine to be proper, the expense of which shall be borne by the Corporation. To such extent as the Board shall deem proper, the duties of the Controller may be performed by one or more assistants, to be appointed by the Board. SECTION 8. SECRETARY. The Secretary shall keep the minutes of meetings of shareholders, of the Board, and, when requested, of Committees of the Board; and he shall attend to the giving and serving of notices of all meetings thereof. He shall keep or cause to be kept such stock and other books, showing the names of the shareholders of the Corporation, and all other particulars regarding them, as may be required by law. He shall also perform such other duties and exercise such other powers as may from time to time be prescribed by the Board, the Chief Executive Officer or any officer to whom the Chief Executive Officer may have delegated such authority. To such extent as the Board shall deem proper, the duties of the Secretary may be performed by one or more assistants, to be appointed by the Board. 10 ARTICLE VI. REMOVALS, RESIGNATIONS AND VACANCIES. SECTION 1. REMOVAL OF DIRECTORS. Any director may be removed at any time but only with cause, by the affirmative vote of the holders of record of a majority of the shares of the Corporation entitled to vote on the election of directors, given at a special meeting of the shareholders called expressly for the purpose. SECTION 2. REMOVAL OF OFFICERS. Any officer, assistant officer or agent of the Corporation may be removed at any time, either with or without cause, by the Board in its absolute discretion. Any such removal shall be without prejudice to the recovery of damages for breach of the contract rights, if any, of the officer, assistant officer or agent removed. Election or appointment of an officer, assistant officer or agent shall not of itself create contract rights. SECTION 3. RESIGNATION. Any director, officer or assistant officer of the Corporation may resign as such at any time by giving written notice of his resignation to the Board, the Chief Executive Officer or the Secretary of the Corporation. Such resignation shall take effect at the time specified therein or, if no time is specified therein, at the time of delivery thereof, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 4. VACANCIES. Any vacancy in the Board caused by death, resignation, disqualification, removal, an increase in the number of directors, or any other cause, may be filled (a) by the holders of shares of the Corporation entitled to vote on the election of directors, but only at an annual meeting of shareholders, or (b) by the affirmative vote of a majority of the remaining directors though less than a quorum of the Board at any regular or special meeting thereof. Each director so elected by the Board shall hold office until the next annual election of directors, and each director so elected by the shareholders shall hold office for a term expiring at the annual meeting of shareholders at which the term of the class to which he has been elected expires, and, in each case, until his successor shall be elected, or until his death, or until he shall resign, or until he shall have been removed in the manner hereinabove provided. Any vacancy in the office of any officer or assistant officer caused by death, resignation, removal or any other cause, may be filled by the Board for the unexpired portion of the term. ARTICLE VII. CONTRACTS, LOANS, CHECKS, DRAFTS, DEPOSITS, ETC. SECTION 1. EXECUTION OF CONTRACTS. Except as otherwise provided by law or by these By-laws, the Board (i) may authorize any officer, employee or agent of the Corporation to execute and deliver any contract, agreement or other instrument in writing in the name and on behalf of the Corporation, and (ii) may authorize any officer, employee or agent of the Corporation so authorized by the Board to delegate such authority by 11 written instrument to other officers, employees or agents of the Corporation. Any such authorization by the Board may be general or specific and shall be subject to such limitations and restrictions as may be imposed by the Board. Any such delegation of authority by an officer, employee or agent may be general or specific, may authorize re-delegation, and shall be subject to such limitations and restrictions as may be imposed in the written instrument of delegation by the person making such delegation. SECTION 2. LOANS. No loans shall be contracted on behalf of the Corporation and no negotiable paper shall be issued in its name unless authorized by the Board. When authorized by the Board, any officer, employee or agent of the Corporation may effect loans and advances at any time for the Corporation from any bank, trust company or other institution, or from any firm, corporation or individual, and for such loans and advances may make, execute and deliver promissory notes, bonds or other certificates or evidences of indebtedness of the Corporation and when so authorized may pledge, hypothecate or transfer any securities or other property of the Corporation as security for any such loans or advances. Such authority may be general or confined to specific instances. SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts and other orders for the payment of money out of the funds of the Corporation and all notes or other evidences of indebtedness of the Corporation shall be signed on behalf of the Corporation in such manner as shall from time to time be determined by the Board. SECTION 4. DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board may select or as may be selected by the Treasurer or any other officer, employee or agent of the Corporation to whom such power may from time to time be delegated by the Board. SECTION 5. VOTING OF SECURITIES. Unless otherwise provided by the Board, the Chief Executive Officer may from time to time appoint an attorney or attorneys, or agent or agents of the Corporation, in the name and on behalf of the Corporation, to cast the votes which the Corporation may be entitled to cast as the holder of stock or other securities in any other corporation, any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporation, or to consent in writing, in the name of the Corporation as such holder, to any action by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal, or otherwise, all such written proxies or other instruments as such officer may deem necessary or proper in the premises. 12 ARTICLE VIII. CAPITAL STOCK. SECTION 1. CERTIFICATES. Every shareholder shall be entitled to a certificate, or certificates, in such form as shall be approved by the Board, signed by the Chairman of the Board, the President or a Vice President and the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer or any other officer authorized by these By-laws or a resolution of the Board, certifying the number of shares owned by him in the Corporation. Any such certificate may, but need not, bear the seal of the Corporation or a facsimile thereof. If any such certificate is countersigned by a transfer agent or registered by a registrar other than the Corporation or an employee of the Corporation, the signatures of any of the officers above specified upon such certificate may be facsimiles. In case any such officer who shall have signed or whose facsimile signature shall have been placed upon such certificate shall have ceased to be such before such certificate is issued, it may be issued by the Corporation with the same effect as if such officer had not ceased to be such at the date of its issue. SECTION 2. TRANSFERS. Shares of stock of the Corporation shall be transferable on the stock books of the Corporation by the holder in person or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary or the transfer agent, but, except as hereinafter provided in the case of loss, destruction or mutilation of certificates, no transfer of stock shall be entered until the previous certificate, if any, given for the same shall have been surrendered and canceled. Except as otherwise provided by law, no transfer of shares shall be valid as against the Corporation, its shareholders or creditors, for any purpose, until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred. The Board may also make such additional rules and regulations as it may deem expedient concerning the issue and transfer of certificates representing shares of the capital stock of the Corporation. SECTION 3. RECORD DATE. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof unless the Board fixes a new record date, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. 13 SECTION 4. LOST, DESTROYED OR MUTILATED CERTIFICATES. In case of loss, destruction or mutilation of any certificate of stock, another may be issued in its place upon proof of such loss, destruction or mutilation and upon the giving of a bond of indemnity to the Corporation in such form and in such sum as the Board may direct; provided that a new certificate may be issued without requiring any bond when, in the judgment of the Board, it is proper so to do. SECTION 5. CONTROL SHARE ACQUISITIONS. Article 14.1 of Chapter 9 of Title 13.1 of the Code of Virginia shall not apply to acquisitions of shares of the Corporation. ARTICLE IX. INSPECTION OF RECORDS. The Board from time to time shall determine whether, to what extent, at what times and places, and under what conditions and regulations the accounts and books and papers of the Corporation, or any of them, shall be open for the inspection of the shareholders, and no shareholder shall have any right to inspect any account or book or paper of the Corporation except as expressly conferred by statute or by these By-laws or authorized by the Board. ARTICLE X. AUDITOR. The Board shall annually appoint an independent accountant who shall carefully examine the books of the Corporation. One such examination shall be made immediately after the close of the fiscal year and be ready for presentation at the annual meeting of shareholders of the Corporation, and such other examinations shall be made as the Board may direct. ARTICLE XI. SEAL. The seal of the Corporation shall be circular in form and shall bear the name of the Corporation and the year "1892." 14 ARTICLE XII. FISCAL YEAR. The fiscal year of the Corporation shall end on the 31st day of December in each year. ARTICLE XIII. AMENDMENTS. The By-laws of the Corporation may be altered, amended or repealed and new By-laws may be adopted by the Board (except as Section 1 of Article II may otherwise require), or by the holders of the outstanding shares of the Corporation entitled to vote generally at any annual or special meeting of the shareholders when notice thereof shall have been given in the notice of the meeting of shareholders. EMERGENCY BY-LAWS. SECTION 1. DEFINITIONS. As used in these Emergency By-laws, (a) the term "period of emergency" shall mean any period during which a quorum of the Board cannot readily be assembled because of some catastrophic event. (b) the term "incapacitated" shall mean that the individual to whom such term is applied shall not have been determined to be dead but shall be missing or unable to discharge the responsibilities of his office; and (c) the term "senior officer" shall mean the Chairman of the Board, the President, any corporate Vice President, the Treasurer, the Controller and the Secretary, and any other person who may have been so designated by the Board before the emergency. SECTION 2. APPLICABILITY. These Emergency By-laws, as from time to time amended, shall be operative only during any period of emergency. To the extent not inconsistent with these Emergency By-laws, all provisions of the regular by- laws of the Corporation shall remain in effect during any period of emergency. No officer, director or employee shall be liable for actions taken in good faith in accordance with these Emergency By-laws. SECTION 3. BOARD OF DIRECTORS. (a) A meeting of the Board may be called by any director or senior officer of the Corporation. Notice of any meeting of the Board need be given only to such of the directors as it may be feasible to reach at the time and by such 15 means as may be feasible at the time, including publication or radio, and at a time less than twenty-four hours before the meeting if deemed necessary by the person giving notice. (b) At any meeting of the Board, three directors in attendance shall constitute a quorum. Any act of a majority of the directors present at a meeting at which a quorum shall be present shall be the act of the Board. If less than three directors should be present at a meeting of the Board, any senior officer of the Corporation in attendance at such meeting shall serve as a director for such meeting, selected in order of rank and within the same rank in order of seniority. (c) In addition to the Board's powers under the regular By-laws of the Corporation to fill vacancies on the Board, the Board may elect any individual as a director to replace any director who may be incapacitated and to serve until the latter ceases to be incapacitated or until the termination of the period of emergency, whichever first occurs. In considering officers of the Corporation for election to the Board, the rank and seniority of individual officers shall not be pertinent. (d) The Board, during as well as before any such emergency, may change the principal office or designate several alternative offices or authorize the officers to do so. SECTION 4. APPOINTMENT OF OFFICERS. In addition to the Board's powers under the regular By-laws of the Corporation with respect to the election of officers, the Board may elect any individual as an officer to replace any officer who may be incapacitated and to serve until the latter ceases to be incapacitated. SECTION 5. AMENDMENTS. These Emergency By-laws shall be subject to repeal or change by further action of the Board of Directors or by action of the shareholders, except that no such repeal or change shall modify the provisions of the second paragraph of Section 2 with regard to action or inaction prior to the time of such repeal or change. Any such amendment of these Emergency By-laws may make any further or different provision that may be practical and necessary for the circumstances of the emergency. 16 EX-10.B.B 4 DESCRIPTION OF RESTRICTED STOCK UNIT AWARD Exhibit 10(bb) DESCRIPTION OF RESTRICTED STOCK UNIT AWARD 1. Terms The terms and conditions of the Restricted Stock Units (as defined below) are contained in the Award Certificate evidencing the grant of such shares, this Award Description and in the Olin 1991 Long Term Incentive Plan (the "Plan"). 2. Definitions As used herein: "Award Agreement" means this Award Description. "Measurement Time" means with respect to a Vesting Period, the close of business on the last day of such Vesting Period. "Participant" means ____________________, a Salaried Employee. "Restricted Stock Unit" means a unit denominated as one phantom share of Olin Common Stock, granted pursuant to Section 6(c) of the Plan. "Vesting Period" means with respect to a Restricted Stock Unit, a period at the end of which such Restricted Stock Unit is to vest, such period being as set forth in the Restricted Stock Unit certificate representing such unit. Other capitalized terms utilized but not defined herein have the meanings specified in the Plan. 3. Vesting and Payment (a) Except as otherwise provided in the Plan or herein, a Participant's interest in the Restricted Stock Units awarded to him shall vest only at the Measurement Time applicable to the Vesting Period for such Restricted Stock Units. Each Restricted Stock Unit not vested by the Measurement Time relating to such unit shall be forfeited. (b) Each vested Restricted Stock Unit shall be payable to a Participant by delivery of one share of Olin Common Stock (subject to adjustment as provided in the Plan) following the Measurement Time, except as otherwise provided in Section 5 and in the Plan. (c) The total amount of Restricted Stock Units vested in a Participant at each Measurement Time of an applicable Vesting Period shall be paid on or before September 15 following such Measurement Time except as specifically otherwise provided in the Plan or herein. (d) Until further action of the Committee, if Restricted Stock Units are to be paid in cash, the Olin Common Stock will be valued at the average of the high and low sales prices thereof as reported on the consolidated transaction reporting system for New York Stock Exchange issues on the fifth business day before such cash payment is due (or if the Olin Common Stock is not traded on such day, the first preceding day on which such stock is traded). (e) Restricted Stock Units shall carry no voting rights nor be entitled to receive any dividends or other rights enjoyed by shareholders. 4. Termination of Employment (a) A Participant's outstanding Restricted Stock Units not yet vested and payable under the Vesting Period shall be forfeited if his or her employment terminates before the applicable Measurement Time either for cause or without Olin's written consent. If the Participant's employment should terminate before the applicable Measurement Time without cause and with Olin's written consent or by virtue of his or her death or total disability or retirement under an Olin pension plan, the Committee shall determine, in its sole discretion, which outstanding Restricted Stock Units not yet vested (including dividend equivalents thereon and related interest), if any, shall not be forfeited provided that in the case of Participants who are not officers or directors of Olin when their employment terminates and have not been such during the preceding six-month period, the Chief Executive Officer of Olin shall be authorized to make such determination. 5. Change in Control (a) Upon a Change in Control, Restricted Stock Units otherwise not yet vested shall be paid out in accordance with Section 9 of the Plan except that such payout shall be in the form of cash and not Olin Common Stock. 6. Tax Withholding (a) In lieu of requiring the Participant to pay in cash such federal, state or local taxes as may be applicable to the distribution of Restricted Stock Unit payouts ("withholding taxes"), the Participant may elect for withholding taxes to be paid by the Participant in shares of Olin Common Stock or in a combination of cash and shares of Olin Common Stock provided such election is approved by the Committee or in the case of Participants who are not officers or directors of Olin when their employment terminates and have not been such during the preceding six-month period, the Chief Executive Officer of Olin shall be authorized to make such determination. Shares delivered in payment for withholding taxes may be shares withheld by Olin upon distribution of Restricted Stock Units or shares already owned by the Participant as the Committee (or such Chief Executive Officer) approves. 7. Miscellaneous (a) By acceptance of the award of Restricted Stock Units, each employee agrees that such award is special compensation, and that any amount paid will not affect (i) the amount of any pension under any pension or retirement plan in which he or she participates as an employee of Olin, (ii) the amount of coverage under any group life insurance plan in which he or she participates as an employee of Olin, or (iii) the benefits under any other benefit plan of any kind heretofore or hereafter in effect, under which the availability or amount of benefits is related to compensation. EX-10.(CC) 5 FORM OF EVA INCENTIVE PLAN Exhibit 10(cc) FORM OF EVA(R) INCENTIVE PLAN (Management Incentive Compensation Plan) ARTICLE I STATEMENT OF PURPOSE -------------------- 1.1 The purpose of the EVA Incentive Plan (the "Plan") is to provide a system of incentive compensation which will promote the maximization of Economic Value Added ("EVA") over the long term. In order to align management incentives with shareholder interests, incentive compensation will reward the creation of value. This Plan will tie incentive compensation to EVA and, thereby, reward management for creating value and penalize management for destroying value. 1.2 EVA is the performance measure of value creation for Olin Corporation (the "Company"). Managers create value when they employ capital in an endeavor that generates a return that exceeds the cost of the capital employed. Managers destroy value when they employ capital in an endeavor that generates a return that is less than the cost of capital employed. By imputing the cost of capital upon the operating profits generated by a business group, EVA measures the total value created (or destroyed) by management. The Plan will reward increases in EVA and penalize decreases over time. ARTICLE II DEFINITIONS ----------- Unless the context provides a different meaning, the following terms shall have the following meanings: "ACT" means the Securities Exchange Act of 1934, as amended. "ACTUAL EVA" means, with respect to an EVA Center for a fiscal year, the EVA of such center for such year as calculated by the Chief Financial Officer. "BANK BALANCE" means, with respect to a Participant, a bookkeeping record of the net balance of the amounts credited to and debited against such Participant's Bonus Bank following the end of each fiscal year. For a Participant's first year of participation in the Plan, such Participant's Bank Balance shall initially be equal to zero. "BONUS BANK" means, with respect to a Participant, a bookkeeping record of an account to which Declared Bonuses are credited, or debited as the case may be, from EVA(R) is a registered trademark of Stern Stewart & Co. 1 time to time under the Plan and from which bonus payments to such Participant are debited. "BONUS MULTIPLE" means, with respect to a Participant for a fiscal year, the Participant's Performance Multiple plus the Participant's Target Multiple for such year, except in the case of a Participant who has a Combined Performance Multiple for such year, the Bonus Multiple shall be the Combined Performance Multiple for such Participant for such year. "CAPITAL" means, with respect to an EVA Center for a fiscal year, the investment made (both equity and debt) in such center, as determined by the Chief Financial Officer for such year. Each component of Capital will be measured by computing an average balance based on the ending monthly balance for the twelve months of a fiscal year. "CAPITAL CHARGE" means, with respect to an EVA Center for a fiscal year, the deemed opportunity cost of employing Capital in the business of such EVA Center for such year, as determined by the Chief Financial Officer. The Capital Charge is computed as follows: Capital Charge = Capital x Cost of Capital "CAUSE" shall mean (i) dishonesty; (ii) theft or other criminal conduct; (iii) insubordination; (iv) violation of, or deviation from, any Company or facility work rule, or (v) other misconduct deemed by the Company to be of a serious nature warrranting termination. "CHANGE IN CONTROL" means that any of the following events shall have occurred: (i) the Company ceases to be, directly or indirectly, owned by at least 1,000 shareholders; (ii) a person, partnership, joint venture, corporation or other entity, or two or more of any of the foregoing acting as a group (or a "person" within the meaning of Sections 13(d)(3) of the Act), other than the Company, a majority-owned subsidiary of the Company or an employee benefit plan (or related trust) of the Company or such subsidiary, become(s)the "beneficial owner" (as defined in Rule 13(d)(3) under the Act) of 20% or more of the then outstanding voting stock of the Company; (iii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Company's Board of Directors (together with any new Director whose election by the Company's Board of Directors or whose nomination for election by the Company's stockholders, 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 such period or whose election or nomination for 2 election was previously so approved) cease for any reason to constitute a majority of the Directors then in office; or (iv) the Company's Board of Directors determines that a tender offer for the Company's shares indicates a serious intention by the offeror to acquire control of the Company. "CHIEF EXECUTIVE OFFICER" means the Chief Executive Officer of the Company as designated by the Board of Directors of the Company from time to time. "CHIEF FINANCIAL OFFICER" means the Chief Financial Officer of the Company as designated by the Board of Directors of the Company from time to time. "COMBINED PERFORMANCE MULTIPLE" means, with respect to a Participant who is assigned to a Participating Group which has more than one EVA Center, in any fiscal year, the sum of the Performance Multiples for such centers for such year as weighted for such Participating Group. "COMMITTEE" means the Compensation and Nominating Committee of the Board of Directors of the Company or such other committee as such Board may designate from time to time. "COMPANY" means Olin Corporation, a Virginia corporation, and its successors and assigns, including any corporation with which the Company is merged or consolidated. "CORPORATE OFFICER" means a corporate officer of the Company, elected by the Board of Directors of the Company, who is not an assistant officer. "COST OF CAPITAL" means for a fiscal year the weighted average of the cost of debt and the cost of equity for such year, as determined by the Chief Financial Officer. The Cost of Capital will be reviewed at least annually and revised if it has changed significantly. Calculations will be carried to one decimal point. "DECLARED BONUS" means, with respect to a Participant for a fiscal year, the bonus earned by such Participant for such year and is equal to the Participant's Initial Declared Bonus for such year except if the Participant's Participating Group has a Value Driver Factor, such Participant's Declared Bonus shall be equal to the sum of (i) the EVA- weighted portion of the Initial Declared Bonus for such year plus (ii) the product of the non-EVA weighted portion of the Initial Declared Bonus for such year multiplied by the Value Driver Factor for such year; provided that in all cases prior to a Change in Control the Company in its sole discretion may reduce a positive Declared Bonus of any and all Participants to any amount (but no less than zero) prior to the crediting of such Declared Bonus to the Participant's Bonus Bank. 3 "EVA" means, with respect to an EVA Center for a fiscal year, NOPAT of such EVA Center for such year minus Capital Charge of such EVA Center for such year, all as calculated by the Chief Financial Officer. EVA may be positive or negative. "EVA CENTER" means those centers or business groups, including the Company, for which EVA is separately calculated, such centers to be determined annually by the Company for a fiscal year. "EXPECTED IMPROVEMENT IN EVA" means the constant EVA improvement that is added to shift the target up each year as determined by the Company from time to time. This is determined by the expected growth in EVA per year with respect to an EVA Center. With respect to the Corporate EVA Center, the Expected Improvement shall be $___________. "INITIAL DECLARED BONUS" means, with respect to a fiscal year for a Participant, the product of the Participant's Target Incentive for such year multiplied by such Participant's Bonus Multiple for such year. "LEVERAGE FACTOR" with respect to an EVA Center for a fiscal year is the negative (positive) deviation from Target EVA necessary before a zero (two times Target) bonus is earned as determined by the Committee from time to time. The Leverage Factor for the Corporate EVA Center for 1996 shall be $__________. "NOPAT" means, with respect to an EVA Center for a fiscal year, the net operating profit after taxes for such fiscal year, as determined by the Chief Financial Officer. "PARTICIPANT" means for a fiscal year each salaried employee who is designated as a Participant, in the case of Corporate Officers of the Company, by the Committee, and in all other cases, by the Chief Executive Officer or his designee. "PARTICIPATING GROUP" means for a fiscal year a business division or subunit of a business division which are uniquely identified for the purpose of bonus awards under this Plan and are so designated by the Company from time to time as a Participating Group. "PERFORMANCE MULTIPLE" means, with respect to an EVA Center for a fiscal year, the difference between the Actual EVA of such center for such year and the Target EVA of such center for such year divided by the Leverage Factor for such center for such year, plus, in the case of a Participant who is assigned to a Participating Group which has more than one EVA Center, the Participant's Target Multiple for such year. "PLAN" means this EVA Incentive Plan, as amended from time to time. "TARGET EVA" means, with respect to an EVA Center for the initial year, of such center the level of EVA as determined by the Company. With respect to the Corporate EVA Center for 1996, the Target EVA shall be $___________. 4 After the initial year of an EVA Center, the Target EVA for such center for each succeeding fiscal year is revised according to the following formula: Target EVA = ((Prior Fiscal Year's Actual EVA + Prior Fiscal Year's Target EVA) divided by 2)) + Expected Improvement in EVA; provided such Target EVA shall be adjusted to reflect any change in the Cost of Capial for such succeeding fiscal year as provided in the EVA Business Management System prepared by Stern Stewart & Co. "TARGET INCENTIVE" means, with respect to a Participant for a fiscal year, the Target Incentive for such Participant for such fiscal year as determined by the Committee in the case of Participants who are Corporate Officers of the Company at the time of determination and in all other cases by the Chief Executive Officer or his designee. "TARGET MULTIPLE" means 1.0 for each Participant except in the first four years during which a Participant participates in the Plan, the Target Multiple shall be 1.5. "VALUE DRIVER FACTOR" is based on an assessment of individual and/or group performance as determined annually by the Company. ARTICLE III DETERMINATION AND DISTRIBUTION OF BONUSES ----------------------------------------- 3.1 DETERMINATIONS. For each fiscal year of the Company beginning with -------------- the 1996 fiscal year, the Company shall determine with respect to such fiscal year (1) the persons who will be Participants, (2) the Participating Group for each such Participant, (3) the Target Incentive for each Participant, (4) the minimum and maximum values of the Value Driver Factor, if any, for each Participant, (5) the EVA Center or EVA Centers for each Participating Group, (6) if there is more than one EVA Center for a Participating Group, the weight each EVA Center will carry in determining the Bonus Multiple of such Participating Group and (7) Cost of Capital for each EVA Center. As soon as practicable following the close of such fiscal year, the Company shall determine the following with respect to such fiscal year for each Participant: (1) Actual EVA and Performance Multiple for each EVA Center, (2) the Performance Multiple or Combined Performance Multiple, as the case may be, for each Participating Group, (3) the Bonus Multiple, (4) the Value Driver Factor, (5) the Initial Declared Bonus, (6) the Declared Bonus and (7) the Capital Charge for each EVA Center. The Committee on behalf of the Company shall determine the Initial Declared Bonus, Value Driver Factor (if any) and the Declared Bonus for Participants who are Corporate Officers at the time of determination. Capital, Cost of Capital, Capital Charge, Expected Improvement in EVA, Leverage Factor and Target EVA may be adjusted from time to time for a fiscal year to reflect extraordinary or nonrecurring charges or financial developments. 5 3.2 DISTRIBUTION. As soon as practicable, following the close of each ------------ fiscal year of the Company but no later than March 15 following such close, the Company shall: (1) Add the Declared Bonus for such fiscal year (including any negative bonuses) to the Bonus Bank. (2) Pay out a prescribed portion of any positive Bank Balance in accordance with the distribution ratio shown below and (3) Carry the remaining Bank Balance (positive or negative) forward to the next fiscal year. The prescribed distribution ratios for the Bonus Bank for a Participant are: First year of Plan participation 67% Second year of Plan participation 50% Third year of Plan participation 40% Fourth and subsequent years of Plan participation 33% If the first period of participation for a Participant is less than six months, then the first year distribution ratio (i.e. 67%) applies to this period and the full subsequent year of participation. Thereafter, the distribution ratios are as above. Notwithstanding the foregoing, the Company may, as it determines in its sole discretion, reduce the distribution ratio for any and all Participants at any time prior to payment of the distribution from the Bonus Bank for a fiscal year; provided the Committee shall make such determination in the case of any Corporate Officer. 3.3 NEGATIVE BONUS BANK. If, as a result of negative EVA, a Bonus Bank ------------------- has a deficit, no Participant shall be required, at any time, to reimburse his or her Bonus Bank. 3.4 LUMP SUM. All distributions from the Plan shall be made in a cash -------- lump sum unless payment is deferred in a timely manner by the Participant with the consent of the Company under the Company's bonus deferral policy as in effect from time to time. 3.5 INTEREST. No interest shall be paid on or accrue to any Bank Balance. -------- ARTICLE IV PARTICIPATION, TRANSFERS AND TERMINATIONS ----------------------------------------- 4.1 PARTICIPANT MATTERS. Unless otherwise expressly reserved to the ------------------- Committee or the Chief Financial Officer and except in cases affecting the Chief Executive Officer, the Chief Executive Officer or his designee on behalf of the Company shall determine all Plan matters with respect to all Participants. 4.2 TRANSFERS. A Participant who transfers his or her employment from one --------- Participating Group of the Company to another Participating Group shall retain his or her Bonus Bank and will be eligible to receive future Plan bonuses in accordance with the 6 provisions of the Plan. During the year of transfer, the Initial Declared Bonus and Declared Bonus for such Participant shall be pro rated based on time spent in each Participating Group. 4.3 RETIREMENT, DISABILITY OR DEATH. If during a fiscal year a ------------------------------- Participant terminates employment with the Company by virtue of electing to receive early or normal retirement benefits under one of the Company's pension plans, receiving disability payments under the Company's long-term disability benefits program or death, such Participant shall receive the positive Bank Balance, if any. The Participant will receive his or her balance as soon as practical after qualifying for receipt of benefit payments under the Company's long-term disability benefits program or pension plan or dying, as the case may be. Payments of such balance made under this Section 4.3 shall not be included in any pension calculation. 4.4 INVOLUNTARY TERMINATION WITHOUT CAUSE. A Participant whose employment ------------------------------------- is terminated by the Company or any subsidiary without Cause shall forfeit his or her Bonus Bank and any Bank Balance unless a different determination is made by the Company. Any payments of such balance made under this Section 4.4 shall not be included in any pension calculation. 4.5 VOLUNTARY TERMINATION. In the event that a Participant voluntarily --------------------- terminates employment with the Company or any of its subsidiaries, the right of participant to his or her Bonus Bank and any Bank Balance shall be forfeited unless a different determination is made by the Company. Any payments of such balance made under this Section 4.5 shall not be included in any pension calculation. 4.6 INVOLUNTARY TERMINATION FOR CAUSE. In the event of termination of --------------------------------- employment for Cause, the right of the Participant to the Bonus Bank and any Bank Balance shall be forfeited unless a different determination is made by the Company. Any payments of such balance made under this Section 4.6 shall not be included in any pension calculation. 4.7 BREACH OF AGREEMENT. Notwithstanding any other provision of the Plan ------------------- or any other agreement, in the event that a Participant shall breach any non-competition agreement or provision relating to the Company or breach any agreement with respect to the post-employment conduct of such Participant, including those contained in any benefit or incentive plan or award, the Bonus Bank held by such Participant shall be forfeited. 4.8 CHANGE IN CONTROL. Upon a Change in Control, the Plan shall terminate ----------------- and positive Bank Balances shall be paid to Participants. Any payments of such balance made under this Section 4.8 shall not be included in any pension calculation. 4.9 NO GUARANTEE. Participation in the Plan provides no guarantee that ------------ payments under the Plan will be paid. Selection as a Participant is no guarantee that payments under the Plan will be paid or that selection as a Participant will be made for the subsequent fiscal year. 7 ARTICLE V GENERAL PROVISIONS ------------------ 5.1 WITHHOLDING OF TAXES. The Company shall have the right to withhold -------------------- the amount of taxes, which in the determination of the Company, are required to be withheld under law with respect to any amount due or paid under the Plan. 5.2 EXPENSES. All expenses and costs in connection with the adoption and -------- administration of the Plan shall be borne by the Company out of its general funds. 5.3 CLAIMS FOR BENEFITS. Participants who terminate service for any reason ------------------- will be deemed to have made a claim for benefits and no written claim will be required. Claims for benefits will be decided by the Chief Executive Officer or, in the case of a claim pertaining to the Chief Executive Officer, by the Committee (collectively referred to as the "Adjudicator"). If the Adjudicator believes that a terminated Participant is not entitled to benefits, it shall notify the Participant in writing of the denial of benefits within 90 days of the Participant's termination of service. In the event that a claim is wholly or partially denied, the Participant or his representative will receive a written explanation of the reason for denial. The Participant or his representative may request a review of the denied claim within 60 days of receipt of the denial and, in connection therewith, may review pertinent documents and submit comments in writing. Upon receipt of an appeal, the Adjudicator shall decide the appeal within 60 days of receipt. The decision on appeal shall be in writing, shall include specific reasons for the decision and shall refer to pertinent provisions of the Plan on which the decision is based. In reaching its decision, the Adjudicator shall have complete discretionary authority to determine all questions arising in the interpretation and administration of the Plan and to construe the terms of the Plan, including any doubtful or disputed terms and the eligibility of a Participant for benefits. 5.4 ACTION TAKEN IN GOOD FAITH. The Company may employ attorneys, -------------------------- consultants, accountants or other persons and the Company's directors and officers shall be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made by the Committee or Chief Executive Officer in good faith shall be final and binding upon all employees, the Company and all other interested parties. No member of the Committee, nor any officer, director, employee or representative of the Company, or any of its affiliates acting on behalf of or in conjunction with the Committee, shall be personally liable for any action, determination, or interpretation, whether of commission or omission, taken or made with respect to the Plan.. 5.5 RIGHTS PERSONAL TO EMPLOYEE. Any rights provided to an employee under --------------------------- the Plan shall be personal to such employee, shall not be transferable (except by will or pursuant to the laws of descent or distribution), and shall be exercisable during his lifetime, only by such employee. 8 5.6 DISTRIBUTION. Upon termination of the Plan or suspension for a period ------------ of more than 90 days, the positive Bank Balance of each Participant shall be distributed as soon as practicable but in no event later than 90 days from such event. The Committee, in its sole discretion, may accelerate distribution of the balance of any Bonus Bank, in whole or in part, at any time without penalty. 5.7 NON-ALLOCATION OF AWARD. In the event of a suspension or termination ----------------------- of the Plan during any fiscal year, as provided herein at Section 10.1, the Declared Bonus for such year shall be deemed forfeited and no portion thereof shall be allocated to Participants. In the event of a suspension, any such forfeiture shall not affect the calculation of EVA in any subsequent year. ARTICLE VI LIMITATIONS ----------- 6.1 NO CONTINUED EMPLOYMENT. Nothing contained herein shall provide any ----------------------- employee with any right to continued employment or in any way abridge the rights of the Company and its subsidiaries to determine the terms and conditions of employment and whether to terminate employment of any employee. Neither the establishment of the Plan or the grant of an award or bonus hereunder shall be deemed to constitute an express or implied contract of employment for any period of time or in any way abridge the rights of the Company or any of its subsidiaries to determine the terms and conditions of employment or to terminate the employment of any employee with or without cause at any time. 6.2 NO VESTED RIGHTS. Except as otherwise expressly provided herein, no ---------------- employee or other person shall have any claim of right (legal, equitable, or otherwise) to any award, allocation, or distribution or any right, title, or vested interest in any amounts in his Bonus Bank and no officer or employee of the Company or any subsidiary or any other person shall have any authority to make representations or agreements to the contrary. No interest conferred herein to a Participant shall be assignable or subject to any lien or pledge or any claim by a Participant's creditors. The right of the Participant to receive a distribution thereunder shall be an unsecured claim against the general assets of the Company and the Participant shall have no rights in or against any specific assets of the Company as the result of participation hereunder. 6.3 NOT PART OF OTHER BENEFITS. The benefits provided in this Plan shall -------------------------- not be deemed a part of any other benefit provided by the Company or any of its subsidiaries to its employees. Neither the Company nor any of its subsidiaries assumes any obligation to Participants except as specified herein. 6.4 OTHER PLANS. Nothing contained herein shall limit the Company and its ----------- subsidiaries' power or the Committee's power to grant bonuses to employees of the Company or any of its subsidiaries, whether or not Participants in this Plan. 9 6.5 UNFUNDED PLAN. This Plan is unfunded and is maintained by the Company ------------- in part to provide deferred compensation to a select group of management and highly compensated employees. Nothing herein shall create or be conjured to create a trust or separate fund of any kind, or a fiduciary relationship between the Company (or any of its subsidiaries) and any Participant. ARTICLE VII AUTHORITY --------- 7.1 Full and sole power and authority to interpret and administer this Plan shall be vested in the Committee which shall have the sole authority to make rules and regulations for the administration of the Plan. The Committee may from time to time make such decisions and adopt such rules and regulations for implementing the Plan as it deems appropriate for any Participant under the Plan. Any decision taken by the Committee arising out of or in connection with the construction, administration, interpretation and effect of the Plan shall be final, conclusive and binding upon all Participants and any person claiming under or through them. The Committee may delegate its power and authority with respect to the Plan to the Chief Executive Officer from time to time as it determines. ARTICLE VIII NOTICE ------ 8.1 Any notice to be given pursuant to the provisions of the Plan shall be in writing and directed to the appropriate recipient thereof at his business address or office location. ARTICLE IX EFFECTIVE DATE -------------- 9.1 This Plan shall be effective as of January 1, 1996. ARTICLE X AMENDMENTS ---------- 10.1 This Plan may be amended, suspended or terminated in whole or in part at any time from time to time at the sole discretion of the Committee; provided, however, that no such change in the Plan shall be effective to eliminate or diminish the distribution of any award that has been allocated to the Bonus Bank of a Participant prior to the date of such amendment, suspension or termination. Notice of any such amendment, suspension of termination shall be given promptly to each Participant. 10 ARTICLE XI APPLICABLE LAW -------------- 11.1 This Plan shall be construed in accordance with the provisions of the laws of the State of Connecticut. Adopted as of January 1, 1996 OLIN CORPORATION By: ___________________________________ Peter C. Kosche Senior Vice President, Corporate Affairs 11 EX-11 6 COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11 OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Computation of Per Share Earnings Primary earnings per share are computed by dividing net income less the ESOP preferred stock dividend requirement by the weighted average number of common shares outstanding. In 1994 and 1993, common shares outstanding included an equivalent number (one-for-one) of common shares, assuming the conversion of Series A Conversion Preferred Stock. On March 1, 1995, the Series A Stock was converted on a one-for-one basis into common stock. Fully diluted earnings per share reflect the dilutive effect of stock options and assume the conversion of outstanding ESOP preferred stock into an equivalent number of common shares at the date of issuance. Net income was reduced by an additional ESOP contribution (differential between the common and ESOP preferred dividend rates under an assumed conversion) necessary to satisfy the debt service requirement.
(In thousands) YEARS ENDED DECEMBER 31, ------------------------ 1995 1994 1993 ---- ---- ---- Weighted average number of common shares outstanding and common stock equivalents 24,433 23,303 21,840 Common shares issuable assuming the conversion of outstanding ESOP preferred stock at the date of issuance 1,131 1,440 1,623 Common shares issuable under outstanding stock options and additional remuneration agreements which have a dilutive effect on per share earnings 82 82 24 ------ ------ ------ Adjusted number of common shares outstanding 25,646 24,825 23,487 ====== ====== ====== (In millions) Net income (loss) $ 140 $ 91 $ (92) Less ESOP preferred dividend (6) (7) (7) ------- ------- ------- Net income (loss) adjusted for primary earnings (loss) per share $ 134 $ 84 $ (99) ======= ======= ======= Primary earnings (loss) per share $ 5.50 $ 3.65 $ (4.52) ======= ======= ======= Net income (loss) $ 140 $ 91 $ (92) Less additional ESOP contribution (3) (3) (2) ------- ------- ------- Net income (loss) adjusted for fully diluted earnings (loss) per share $ 137 $ 88 $ (94) ======= ======= ======= Fully diluted earnings (loss) per share (1) $ 5.33 $ 3.54 $ (4.01) ======= ======= =======
Note: (1)Fully diluted loss per share in 1993 was anti-dilutive and therefore, was not reported on the Income Statement. EX-12.(A) 7 COMP. OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12(A) OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Computation of Ratio of Earnings to Fixed Charges (Unaudited)
($ in millions) Years Ended December 31, ====================================================================== 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- Earnings: Income (loss) before taxes $217 $141 $(150) $88 $(25) Add (deduct): Income taxes of 50% owned affiliates 4 4 3 1 3 Equity in (earnings) loss of less than 50% owned affiliates (1) 2 4 5 - Dividends received from less than 50% owned affiliates 1 - - - - Interest capitalized, net of amortization 1 1 (1) (4) (1) Fixed charges as described below 64 56 56 58 63 ---- ---- ---- ---- ---- Total $286 $204 $(88) $148 $40 ==== ==== ==== ==== ==== Fixed charges: Interest expense $45 $38 $41 $45 $50 Estimated interest factor in rent expense 19 18 15 13 13 ---- ---- ---- ---- ---- Total $64 $56 $56 $58 $63 ==== ==== ==== ==== ==== Ratio of earnings to fixed charges(a) 4.5 3.6 - 2.6 0.6 ==== ==== ==== ==== ====
(a) In the twelve months ended December 31, 1993 and December 31, 1991, earnings were inadequate to cover fixed charges by $144 million and $23 million, respectively. In 1993, the Company recorded an after-tax charge of $132 million for personnel reductions, business restructurings involving consolidations and re-alignments within divisions, costs at sites of discontinued businesses, future environmental liabilities, and other charges. In 1991, the Company recorded an after-tax charge of $80 million to cover losses on the disposition and write-down of certain businesses and costs of personnel reductions. EX-12.(B) 8 COMP. OF RATIO OF EARNINGS TO COMBINED FIX. CHARGE EXHIBIT 12(B) OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (Unaudited)
($ in millions) Years Ended December 31, ==================================================================== 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- Earnings: Income (loss) before taxes $217 $141 $(150) $88 $(25) Add (deduct): Income taxes of 50% owned affiliates 4 4 3 1 3 Equity in (earnings) loss of less than 50% owned affiliates (1) 2 4 5 - Dividends received from less than 50% owned affiliates 1 - - - - Interest capitalized, net of amortization 1 1 (1) (4) (1) Fixed charges as described below 64 56 56 58 63 ---- ---- ---- ---- ---- Total $286 $204 $(88) $148 $40 ==== ==== ==== ==== ==== Fixed charges and preferred stock dividends: Interest expense $45 $38 $41 $45 $50 Estimated interest factor in rent expense 19 18 15 13 13 Preferred stock dividend requirement 14 28 28 26 13 ---- ---- ---- ---- ---- Total $78 $84 $84 $84 $76 ==== ==== ==== ==== ==== Ratio of earnings to combined fixed charges and preferred stock dividends (a)(b) 3.7 2.4 - 1.8 0.5 ==== ==== ==== ==== ====
(a) In the twelve months ended December 31, 1993 and December 31, 1991, earnings were inadequate to cover combined fixed charges and preferred stock dividends by $172 million and $36 million, respectively. In 1993, the Company recorded an after-tax charge of $132 million for personnel reductions, business restructurings involving consolidations and re-alignments within divisions, costs at sites of discontinued businesses, future environmental liabilities, and other charges. In 1991, the Company recorded an after-tax charge of $80 million to cover losses on the disposition and write-down of certain businesses and costs of personnel reductions. (b) The ratio of earnings to combined fixed charges and preferred stock dividends has been computed based upon income before taxes and fixed charges included in income (loss) after eliminating the amortization of capitalized interest and the undistributed (earnings) losses of less than 50%-owned affiliates. Fixed charges include interest and that portion of rental expense deemed to represent interest. EX-13 9 EXCERPTS FROM 1995 ANNUAL REPORT EXHIBIT 13 A Fortune 500 Company, Olin Corporation today is one of the world's leading producers and marketers of high-performance chemicals, microelectronic materials, metals, sporting ammunition and defense and aerospace products. Management's Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations Consolidated ($ in millions, except per share data) 1995 1994 1993 - -------------------------------------- ------ ------ ------ Sales $3,150 $2,658 $2,423 Gross Margin 630 505 262 Selling and Administration 346 302 300 Research and Development 39 35 41 Interest Expense 44 37 38 Net Income (Loss) 140 91 (92) Net Income (Loss) per Share: Primary $ 5.50 $ 3.65 $(4.52) Fully Diluted $ 5.33 $ 3.54 $ -- ====== ====== ======
1995 Compared to 1994 Sales and net income reached record levels in 1995, increasing 19% and 54%, respectively. The sales increase was attributed to a 6% improvement in pricing (exclusive of higher metal values) and a 9% increase in sales volume. Past strategic investments were a key factor in meeting the increased demand. In addition to the impact of increased volume and pricing, net income was further enhanced by prior years' initiatives to restructure and reengineer the company and reduce costs. In 1995, record results were achieved by Brass, Chlor-Alkali and the Microelectronic Materials divisions. Gross margin percentage was 20.0%, an increase of 1%. Higher caustic and urethanes prices more than offset increased raw material and manufacturing costs. Selling and administration expenses as a percentage of sales decreased to 11.0% from 11.4%. Selling and administration expenses increased in amount due primarily to additional information processing costs, the inclusion of the operating expenses of acquired businesses, higher legal costs and higher costs related to short-term incentive compensation programs. This increase was offset in part by the impact of cost reduction programs. Research and development expenditures increased as a result of the OCG acquisition. Excluding the impact of OCG, research and development expenses decreased 9% through cost reduction programs and a better focus in the chemicals product lines on the development of new and differentiated products. In other- related research and development activities, 1995 customer-sponsored research of $45 million decreased $34 million due to the reduction in government-funded programs and the advancement of a major ammunition development program into the production stage. Interest expense increased due to higher average interest rates on higher average borrowings. The favorable performance of non-consolidated affiliates, particularly in Japan, increased interest and other income. The effective tax rate was 35.5% in 1995 and 1994. At December 31, 1995 the company had net deferred tax assets of $59 million, primarily comprised of temporary differences between financial statement and tax bases of assets and liabilities. No valuation allowance has been provided because management believes that it is more likely than not that sufficient taxable income will be generated to allow for the realization of these tax benefits. The future taxable income required for such realization currently approximates $174 million. In 1995, the company completed the sales of its Sun(R) brand trademark and its dry sanitizer plant in South Charleston, WV and a related operation in Livonia, MI. These transactions did not have a material impact on the company's results of operations for 1995. In 1995, the company acquired the remaining 50% of OCG Microelectronic Materials, a joint venture formed by Ciba-Geigy and the company in 1990, for approximately $65 million. In addition, the company acquired the remaining 51% of Etoxyl, C.A., a Latin American joint venture. The purchase price is contingent upon the future earnings of this venture. 1994 Compared to 1993 The selective investments made over the past several years, strategic actions taken in 1993 and a stronger economy contributed to the company's improved financial performance. All divisions exceeded 1993 profit levels with record earnings achieved in Metals, Winchester and Microelectronic Materials. Net income increased to $91 million from a net loss of $92 million, which included a charge of $132 million. Sales were a record $2.7 billion, up 10%, attributed primarily to the strong customer demand for most major products. Gross margin percentage was 19%, an increase of 1% from the prior year, excluding the 1993 charge. The increase was driven by increased volumes and cost reduction programs (including an early retirement incentive program), but was offset in part by increased commodity costs (copper and lead) and higher raw materials costs. Selling and administration expenses as a percentage of sales decreased to 11.4% from 12.4%. The impact from cost reduction programs and other personnel reductions were offset by higher administrative expenses and the operating expenses relating to the medium caliber ammunition acquisition. Research and development expenditures decreased as efforts were concentrated on the company's core businesses and on new products and technologies related to such businesses. 17 Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) The decrease in average domestic short-term borrowings more than offset the impact of increasing short-term interest rates and contributed to the decrease in interest expense. The effective tax rate for 1994 was 35.5%, compared to 36.5% in 1993, excluding the effect of the charge. At December 31, 1994 the company had net deferred tax assets of $61 million, principally comprised of alternative minimum tax credits of $30 million and temporary differences between financial statement and tax bases of assets and liabilities. In 1987, a Federal Trade Commission judge ruled that the company must divest the chlorinated isocyanurates business acquired in 1985, which included an isocyanurates manufacturing facility in South Charleston, WV, a packaging facility in Livonia, MI and the Sun(R) brand trademark. Over the years, the company had been unsuccessful in its efforts to appeal. The company unsuccessfully attempted to modify the FTC order by proposing to the FTC that the company sell its trichloroisocyanurate production facility in Lake Charles, LA, to BioLab, Inc. (a sale which it ultimately consummated in 1994) instead of selling its South Charleston facility. The company entered into an agreement in principle, in 1994, to sell the Sun(R) brand of isocyanurates. In February 1995, the company signed a letter of intent for the sale of its South Charleston and Livonia facilities to subsidiaries of Israel Chemicals Ltd. These transactions did not have a material impact on the company's results of operations in 1994. In 1994, the company acquired certain assets of the medium caliber ammunition business of GenCorp's Aerojet Ordnance division for approximately $25 million. Chemicals Results of Operations
($ in millions) 1995 1994 1993 - --------------- ------ ------ ------ Sales $1,501 $1,195 $1,117 Net Income (Loss) 104 42 (94) ====== ====== ======
1995 Compared to 1994 Sales and net income increased 26% and 148%, respectively. This improvement reflects the record performances by the Chlor-Alkali and Microelectronic Materials divisions and the improved operating results of the urethanes business. In Chlor-Alkali, demand remained strong throughout the year. Caustic pricing continued to improve, while chlorine prices remained stable. Plant operating manufacturing rates were close to capacity and lower manufacturing costs were aided by cost reduction initiatives from reengineering programs. Operating results of the urethanes business exceeded last year. Worldwide TDI prices more than offset the effects of a scheduled plant maintenance turnaround. In flexible polyols, the combination of higher prices and volumes and a lower raw material cost contributed to its financial improvement. Specialty urethanes coating product line sales nearly doubled due to stronger worldwide demand, but new product introductions and market-entry costs negatively impacted its operating results. Pool products sales increased 10%, while profits were slightly below last year. Increases in sales volume and pricing were more than offset by higher raw material and other costs. In specialty chemicals, biocides had record volumes on a variety of products, reflecting the continual growth of this business. In Microelectronic Materials, electronic chemicals sales more than doubled and profits increased significantly due to the strong demand from the semiconductor industry for the company's high-purity electronic chemicals and the inclusion of OCG's operating results. Sales of its MQUAD(R) packaging system increased but operating results were adversely affected by costs associated with the introduction of its new Metal Ball Grid Array (MBGA(R)) package. 1994 Compared to 1993 Sales increased 7% while segment net income was $42 million compared to 1993's net income of $12 million, excluding $106 million of the 1993 charge. Improved economic conditions favorably impacted many of the chemicals businesses. Improved pricing and lower manufacturing costs in Chlor-Alkali and higher volumes in pool products and urethanes contributed to the increase in net income. Chlor-Alkali's sales were 11% ahead of last year due to strong demand and increased pricing. These factors along with lower manufacturing costs (raw materials and plant fixed costs) and the implementation of profit improvement programs resulting from reengineered processes, contributed to Chlor-Alkali's improved profit performance. In the urethanes business, strong domestic demand for polyols, contributed to the sales increase. TDI volumes were comparable to 1993's levels. The specialty urethanes coating product line experienced higher sales volumes as this relatively new business continued to expand internationally. Operating results improved as higher volumes more than offset increases in raw material costs and the effect of a production outage at the Lake Charles, LA facility. Pool products sales increased as higher sales volumes more than offset the impact of competitive pricing pressures. Domestic brand and bulk volumes as well as export shipments exceeded last year's levels. 18 Reduction in administrative expenses were offset by additional expenditures for advertising and promotional efforts to support brand products. Operating results of specialty chemicals exceeded last year. Worldwide volumes increased as a result of higher foreign sales and the introduction of new products. The profit impact from these additional volumes was offset in part by higher operating costs relating to toxicology studies on new products and additional administrative personnel at foreign affiliates. Strong demand from the semiconductor industry for the company's high-purity electronic chemicals and its MQUAD(R) microelectronics packaging system accounted for the improvement in sales and profitability of the electronic chemicals business. 1996 Outlook Chemicals sales and profits are expected to increase due to anticipated higher volume in most product lines, offset in part by higher raw material costs. In Chlor-Alkali, demand for chlorine and caustic is expected to moderate slightly. The company's plants are expected to run at or near capacity as no significant new industry capacity is due until 1998. In the urethanes business, higher prices and production volumes are expected to prevail throughout 1996 for both TDI and polyol products. Yield improvements for the specialty urethanes coating product line are expected to enhance its performance. Pool products results are expected to benefit from higher sales volumes and prices. Specialty chemicals business is expected to benefit from higher biocides sales volumes. Continuing semiconductor industry demand for high-purity chemicals and the full year's operating results of OCG are expected to enhance electronic chemicals performance. In January 1996, the company announced that it has signed a letter of intent to sell its Electrostatics business, which makes toners for photocopiers and in 1995 had sales of approximately $13 million. Metals Results of Operations
($ in millions) 1995 1994 1993 - --------------- ----- ----- ----- Sales $ 863 $ 750 $ 660 Net Income 46 39 14 ===== ===== =====
1995 Compared to 1994 Sales and net income improved 15% and 18%, respectively, as this segment reported record financial results for the second consecutive year. Sales improvement was due to higher metal values and improved product mix and selling prices as the demand for brass strip exceeded the historical average for a second consecutive year. Increased sales, lower manufacturing costs and the benefit from cost reduction programs were the main contributors to the net profit increase. New financial records were established by several operations, such as Indianapolis, Oster and Somers Thin Strip. The Indianapolis operation's improvement was due to an improved product mix in its strip, rod, wire and tube businesses. Oster benefited from the automotive and electronics demand. A strong electronics market contributed to Somers financial improvement. 1994 Compared to 1993 Sales improved 14% on higher metal values and increased levels of commercial shipments, as all operations recorded higher volumes than the previous year. Net income increased to $39 million from $26 million in 1993, excluding $12 million of the 1993 charge. This financial performance benefited from higher demand; additional investments in equipment to expand capacity, improve yields and reduce manufacturing costs; the implementation of profit improvement programs including a reduction in the salaried workforce; and the absence of operating losses from a joint venture disposed of in the fourth quarter of 1993. With an improved economy in 1994, the demand for strip products from the automotive, housing and ammunition markets, was exceptionally strong. The industry had not seen demand for strip reach 1994 levels in the last ten years. The 1993 expansion of the East Alton, IL mill provided additional capacity to meet this demand. Shipments of other products such as stainless steel and fineweld tube, also exceeded 1993's levels. 1996 Outlook In 1996, it is expected that the economy will grow at a rate slower than 1995 and that the industry will return to a more normal demand level after two consecutive years of near-record strip consumption. Sales are expected to decrease slightly as increased sales volumes in certain operations are expected to be offset by lower metal values and commercial requirements. Excess domestic capacity and lower operating rates by the company's key competitors are expected to create a competitive pricing environment. It is expected that conversion selling prices will be comparable to 1995's levels and that profit improvement programs will partially offset the competitive pricing impact on profits. Defense and Ammunition Results of Operations
($ in millions) 1995 1994 1993 - --------------- ----- ----- ----- Sales $ 786 $ 713 $ 646 Net Income 16 32 10 ===== ===== =====
19 Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) 1995 Compared to 1994 Sales increased 10% as shipments of medium caliber ammunition, strong demand for Aerospace's solid propellant business and sales under Ordnance's combined effects munitions contract more than offset the reduced shipments of Winchester's domestic commercial ammunition. Net income decreased 50% due to lower volumes in the Winchester domestic commercial ammunition business, higher raw material costs and legal expenses, and additional costs incurred on certain start-up and discontinued programs. Winchester's domestic commercial ammunition sales declined significantly. In 1995, the marketplace for commercial sporting ammunition adjusted for the heavy consumer buying patterns that occurred in 1994 as a result of a concern over restrictive legislation and taxation. Domestic and military export ammunition business achieved record sales performance and partially offset the commercial sales decrease. The profit impact from the lower commercial sales and the effect of higher commodity costs, primarily copper, accounted for the significant decrease in profits. Ordnance's sales improved due to increased shipments of medium caliber ammunition and sales under a combined effects munitions contract. The related profits from these sales were more than offset by cost overruns on the start-up of several programs and the relocation of certain medium caliber production lines. Higher legal fees associated with a government investigation regarding a medium caliber ammunition contract at Marion, IL, also reduced 1995's profits. Tank ammunition sales and profits in 1995 were consistent with 1994 levels. Ball Powder(R) propellant sales were comparable to last year, but operating results were adversely affected by higher raw material costs and an unfavorable product mix. Aerospace sales increased due primarily to strong demand for its solid propellant products and its in-flight entertainment systems. The profit impact of the higher sales was more than offset by costs associated with certain discontinued programs. U.S. Government sales amounted to $513 million in 1995, $379 million in 1994 and $354 million in 1993. Sales under the combined effects munitions contract was the main contributor to the increase in 1995 government sales. Approximately 85% of 1995 sales were to the Department of Defense (DoD) or agencies thereof. Changes in the strategic direction of defense spending, the timing of defense procurements and specific defense program appropriation decisions may adversely affect the performance of the Defense and Ammunition segment and the company in future years, including its income, liquidity, capital resources and financial condition. The precise impact of these decisions will depend upon the timing and size of changes and decisions and the company's ability to mitigate their impact with new business, business consolidations or cost reductions. In view of the continuing uncertainty regarding the size, content and priorities of the annual DoD budget, the historical financial information of the Defense and Ammunition segment, and to a lesser extent, of the company, may not be indicative of future performance. 1994 Compared to 1993 Sales increased 10% due to increased shipments of Winchester commercial ammunition and Ball Powder(R) propellant and the inclusion of sales of the newly-acquired medium caliber business. Net income increased to $32 million from $24 million, excluding $14 million of the 1993 charge. The increased volumes, along with the profit contribution from the medium caliber ammunition acquisition, additional royalty income and the savings from the reduction in the salaried workforce, contributed to the increase in segment net income. Winchester's domestic commercial ammunition sales were exceptionally strong throughout the year. Heavy consumer buying due in part to the fear of restrictive legislation and taxation accounted for Winchester's record sales level and offset decreases in military export ammunition sales. The related profit impact from higher sales more than offset lower fees associated with lower production volumes at Lake City Army Ammunition Plant and accounted for the division's record profits. In Ordnance, the integration of the medium caliber ammunition acquisition was implemented successfully and expanded the company's medium caliber ammunition line of products. Ordnance's sales and profits improved due to the acquisition and increased Ball Powder(R) propellant shipments. Tank ammunition volumes were comparable to the prior year. Aerospace sales were comparable to 1993's amount. Sales of new products were offset by delays/cancellations of certain government funded programs. Increased margins on certain rocket engine programs, new products and additional royalty income contributed to higher divisional profits. 1996 Outlook In 1996, net income for the Defense and Ammunition segment is expected to increase with sales comparable to 1995. Demand for Winchester's commercial ammunition is expected to increase slightly and military ammunition shipments are expected to remain strong. The profit impact from the sales increase and cost reduction efforts are expected to more than offset estimated higher commodity costs. In Ordnance, higher shipments of medium caliber ammunition are expected to offset lower combined effects munitions sales and lower tank ammunition sales. The increased medium caliber ammunition volumes, the 20 absence of cost overruns and a lower level of operating expenses are estimated to be the main contributors to the increased profits. In Aerospace, the absence of costs incurred on certain discontinued programs is expected to more than offset the profit impact from a slight decline in sales. In November 1995, the company announced that it is considering a spin-off to its shareholders of its Ordnance and Aerospace divisions as a free-standing public company. Any final decision would require the approval of the Board of Directors among others. Charge for 1993 Strategic Action Plan In 1993, the company recorded a pretax charge for a series of strategic actions consisting of personnel reductions, business restructurings including consolidations and re-alignments within divisions, provision for costs at sites of discontinued businesses, future environmental liabilities, and other charges. As of December 31, 1995, the planned personnel reductions had been approximately 90% completed. The remaining reductions are anticipated to occur in 1996 at an estimated cost of $13 million. Various actions within the business restructuring phase of the 1993 charge had been completed as of December 31, 1995. The remaining action, the restructuring of the electronic materials businesses, is expected to be finalized within the next year at an estimated cost of $15 million. The savings resulting from the workforce reductions and business restructurings were approximately $28 million in 1995 ($20 million in 1994). The expected additional savings from the remaining actions are estimated to be $6 million on an annualized basis thereafter. Environmental Matters
($ in millions) 1995 1994 1993 - --------------- ---- ---- ---- Cash Outlays: Remedial and Investigatory $25 $37 $44 Spending Capital Spending 9 11 11 Plant Operations 36 34 38 ---- ---- ---- Total Cash Outlays $70 $82 $93 ==== ==== ====
The establishment and implementation of federal, state and local standards to regulate air, water and land quality has affected and will continue to affect substantially all of the company's plants. Federal legislation providing for regulation of the manufacture, transportation, use and disposal of hazardous and toxic substances has imposed additional regulatory requirements on industry, particularly the chemicals industry. In addition, implementation of environmental laws, such as the Resource Conservation and Recovery Act and the Clean Air Act, has required and will continue to require new capital expenditures and will increase operating costs. The company employs waste minimization and pollution prevention programs at its manufacturing sites. In order to help finance the cleanup of waste disposal sites, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986 ('Superfund'), imposed a tax on the sale of various chemicals, including chlorine, caustic and certain other chemicals produced by the company, and on the disposal of certain hazardous wastes. The company is party to various governmental and private environmental actions associated with waste disposal sites and manufacturing facilities. Associated costs of investigatory and remedial activities are provided for in accordance with generally accepted accounting principles governing probability and the ability to reasonably estimate future costs. A significant portion of the 1993 provision resulted from expanded volumes of contaminants uncovered while remediating a particular site, combined with the availability of more definitive data from progressing investigatory activities concerning both the nature and extent of contamination and remediation alternatives at other sites. Charges to income for investigatory and remedial efforts were material to operating results in 1995, 1994, and 1993 and may be material to net income in future years. Cash outlays for remedial and investigatory activities associated with former waste sites and past operations were not charged to income but instead were charged to reserves established for such costs identified and expensed to income in prior years; such charges to income were $25 million, $17 million and $85 million in 1995, 1994 and 1993, respectively. Cash outlays for normal plant operations for the disposal of waste and the operation and maintenance of pollution control equipment and facilities to ensure compliance with mandated and voluntarily imposed environmental quality standards were charged to income. Historically, the company has funded its environmental capital expenditures through cash flow from operations and expects to do so in the future. The company's estimated environmental liability at the end of 1995 was attributable to 74 sites, 34 of which were on the National Priority List (NPL). Eleven sites accounted for approximately 80% of such liability and, of the remaining sites, no one site accounted for more than 3% of such liability. Three of these eleven sites were in the investigatory stage of the remediation process. In this stage remedial investigation and feasibility studies are conducted by either the company, the United States Environmental Protection Agency (EPA) or other potentially responsible parties (PRPs) and a Record of Decision (ROD) or its equivalent has not been issued. At another three of the eleven sites, a ROD or its equivalent has been issued by either the EPA or responsible state agency and the company either alone, or as a member of a PRP group, was engaged in performing the remedial measures required by that ROD. At the remaining five of the eleven sites, part of the site is subject to a ROD and another part is still in the investigative stage of remediation. All eleven sites were either former manufacturing facilities or waste sites containing contamination generated by those facilities. 21 Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) The company's consolidated balance sheets included liabilities for future environmental expenditures to investigate and remediate known sites amounting to $111 million at December 31, 1995 and 1994, of which $76 million and $71 million were classified as other noncurrent liabilities, respectively. Those amounts did not take into account any discounting of future expenditures or any consideration of insurance recoveries or advances in technology. Those liabilities are reassessed periodically to determine if environmental circumstances have changed and/or remediation efforts and their costs can be better estimated. As a result of these reassessments, future charges to income may be made for additional liabilities. Total environmental-related cash outlays for 1996 are estimated to be $85 million, of which $34 million is expected to be spent on investigatory and remedial efforts, $17 million on capital projects and $34 million on normal plant operations. Annual environmental-related cash outlays for site investigation and remediation, capital projects and normal plant operations are expected to range between $85-$100 million over the next several years. While the company does not anticipate a material increase in the projected annual level of its environmental-related costs, there is always the possibility that such increases may occur in the future in view of the uncertainties associated with environmental exposures. Environmental exposures are difficult to assess for numerous reasons, including the identification of new sites, developments at sites resulting from investigatory studies, advances in technology, changes in environmental laws and regulations and their application, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and financial capability of other potentially responsible parties and the company's ability to obtain contributions from other parties and the time periods (sometimes lengthy) over which site remediation occurs. It is possible that some of these matters (the outcomes of which are subject to various uncertainties) may be resolved unfavorably against the company. At December 31, 1995, the company had estimated additional contingent environmental liabilities of $28 million. Litigation There is a variety of legal proceedings pending or threatened against the company. It is possible that some of these matters (the outcomes of which are subject to various uncertainties) may be decided unfavorably against the company. Certain of these matters are discussed in Item 3, Legal Proceedings of the Form 10-K Annual Report and in other filings of the company with the Securities and Exchange Commission, which filings are available on request from the company. Liquidity, Investment Activity and Other Financial Data Cash Flow Data
Provided By (Used For) ($ in millions) 1995 1994 1993 - -------------------------------------- ----- ----- ----- Net Operating Activities $ 206 $ 192 $ 147 Capital Expenditures (201) (149) (132) Net Investing Activities (218) (121) (94) Net Financing Activities 13 (67) (54) ===== ===== =====
Cash flow from operations supplemented by credit facilities, proceeds from the divestment of businesses and the issuance of common shares were used to finance the company's major funding needs, namely capital projects, dividends to shareholders and acquisitions. In 1995, the increase in cash flow from operating activities was primarily attributable to higher operating income, partially offset by an increase in working capital. Higher year-end sales of military ammunition and electronic chemicals along with the shipment delays under certain government contracts led to higher receivable levels and more than offset the increase in current liabilities. The 1994 change in cash flow from operating activities was primarily due to increased operating income. The increase in receivables and inventories to support a higher level of business activity was offset in part by higher current liabilities. Cash flow from operations was used for expenses incurred in executing the 1993 strategic action plan. Capital spending in 1995 increased 35% from the prior year mainly to provide additional capacity and product quality for selected product lines. Funds were spent for the following: the manufacturing, distribution and laboratory complex in Mesa, AZ for the electronic materials business, the modernization of the seamless tube and wire facilities at Indianapolis, IN and the relocation of the Corporate headquarters to Norwalk, CT. Capital spending in 1994 increased 13% from the prior year mainly to support the consolidation of some medium caliber ammunition operations, restore the trichloroisocyanurate production facility at South Charleston, WV and provide additional capacity for selected product lines. Capital expenditures in 1996 are estimated to decrease approximately 10-20% from 1995 due to a planned reduction to control capital costs. Also, the completion of the Indianapolis, IN and the Mesa, AZ projects will contribute to this lower level of spending. During 1995, the company sold its Sun(R) brand trademark and its dry sanitizer plant in South Charleston, WV and a related tableting operation in Livonia, MI. These divestments generated proceeds of $49 million. During 1994, the company sold its conductive materials business including the manufacturing facility in Ontario, CA and its trichloroisocyanurate production facility in Lake Charles, LA. These transactions generated proceeds of $41 million. During 1993 the company sold the facility and the assets of its contract integrated circuit assembly operation 22 (completing the divestiture phase of its 1991 streamlining program) and its interest in the German joint venture to its partner. These divestments generated proceeds of $37 million. In 1995 and 1994, investment spending relating to joint ventures was minimal. Investment spending in 1993 was primarily for a new ethylene oxide joint venture in Latin America. The company's investment in this venture totaled $18 million at December 31, 1995. Throughout 1995, this venture continued to experience liquidity difficulties due to high leverage. In Venezuela, general economic conditions have been unstable in light of government actions. The government imposed currency exchange controls in order to control capital flight and manage inflation. The company, along with its venture partners, continued to address these difficulties in order to protect its recorded investment. In February 1996, the company announced that it and The Geon Company will form a joint venture to construct and operate a chlor-alkali plant at the company's existing McIntosh, AL site. Geon will consume all of the chlorine produced by the project and the company will be responsible for marketing the caustic soda. The company intends to fund its share of this project through the sale of other assets. At December 31, 1995, the company maintained committed credit facilities with banks of $309 million of which $253 million was available. The company believes that these credit facilities are adequate to satisfy its liquidity needs for the near future. In June 1995, the company sold $50 million of 7.11% notes due June 2005. The proceeds from this issue were used to reduce short-term debt incurred for working capital purposes. In April 1995, the company amended its unsecured revolving credit agreement with a group of banks. The amended agreement provides a maximum borrowing of $250 million and unless extended, expires in May 2000. The company may select various floating rate borrowing options. On March 1, 1995, 2.76 million shares of the company's $1 par value Series A Conversion Preferred Stock were converted into shares of common stock on a one- for-one basis. The last dividend on these preferred shares was paid in March 1995. In May 1994, the company issued 2.2 million shares of common stock at a price of $46.00. The net proceeds of $98 million were used to reduce short-term floating-rate debt and finance the acquisition of the medium caliber ammunition business. In 1992, the company sold $100 million of 8% notes due 2002. The company then swapped interest payments on $50 million principal amount of the notes to a floating rate (5.6875% at December 31, 1995). In June 1995, the company offset this transaction by swapping interest payments on $50 million principal amount to a fixed rate of 6.485%. The percent of total debt to total capitalization (excluding the reduction in equity for the Contributing Employee Ownership Plan (ESOP) increased to 38.2% at December 31, 1995, from 36.5% at year-end 1994 and was 47.1% at year-end 1993. Contributing to the decrease in 1994 was the issuance of the additional 2.2 million of common shares and the liquidation of all short-term borrowings as of December 31, 1994. In 1989 the company established an ESOP. The ESOP trust borrowed $100 million ($40 million from the company) to purchase 1.3 million shares of the company's convertible preferred stock. The proceeds received by the company from the issuance of its preferred stock were used to acquire shares of its common stock. The ESOP trust has repaid in full its original loan from the company. This loan to the ESOP was financed by the company through a long-term credit facility. Dividends per common share were $2.40 in 1995 and $2.20 in 1994 and 1993. Total dividends paid on common stock amounted to $57 million in 1995, $44 million in 1994 and $42 million in 1993, while total ESOP preferred dividends, paid at an annual dividend rate of $5.97 per share, amounted to $6 million in 1995 and $7 million in 1994 and 1993. Dividends paid on Series A Stock were $3 million in 1995 and $10 million in 1994 and 1993 (equal to $3.64 per share). The company periodically evaluates risk retention and insurance levels for product liability, property damage and other potential areas of risk. Based on the cost and availability of insurance and the likelihood of a loss occurring, management decides the amount of insurance coverage to purchase from unaffiliated companies and the appropriate amount of risk to retain. The current levels of risk retention are believed to be appropriate and are consistent with those of other companies in the various industries in which the company operates. In March 1995, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of." This statement, effective commencing in 1996, establishes accounting standards for the impairment of long-lived assets, certain identifiable intangibles, and goodwill related to those assets to be held and used and for long-lived assets and certain identifiable intangibles to be disposed of. The initial adoption of this standard will not have a material impact on the company's financial position and its operating results. In October 1995, the FASB issued SFAS No.123, "Accounting for Stock-Based Compensation". As allowable by SFAS No.123, the company will not recognize compensation cost for stock-based compensation arrangements, but rather will disclose in the notes to the financial statements the impact on net income and earnings per share as if the fair value based compensation cost had been recognized commencing in 1996. 23 Industry Segments
($ in millions) 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 - --------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Chemicals Sales $1,501 $1,195 $1,117 $ 996 $ 960 $1,269 $1,302 $1,386 $1,232 $1,127 Net Income (Loss) 104 42 (94) 21 (38) 42 106 68 55 37 Assets 1,223 1,037 1,024 1,067 982 945 977 1,034 1,028 920 Capital Expenditures 126 91 75 115 131 144 95 96 83 84 Depreciation 81 82 83 73 70 75 74 77 82 83 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Metals Sales 863 750 660 676 562 566 542 453 304 244 Net Income 46 39 14 29 17 35 19 25 20 15 Assets 456 446 430 445 436 337 326 321 225 204 Capital Expenditures 40 25 31 33 26 19 26 30 13 24 Depreciation 29 27 27 24 22 21 22 19 18 17 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Defense and Ammunition Sales 786 713 646 704 753 757 665 469 394 361 Net Income 16 32 10 29 35 36 31 25 20 19 Assets 564 521 441 465 552 544 535 516 373 365 Capital Expenditures 31 33 26 25 20 24 21 21 19 20 Depreciation 25 25 21 20 21 20 20 15 14 11 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Corporate and Other Sales -- -- -- -- -- -- -- -- -- -- Net Income (Loss) (26) (22) (22) (70) (27) (29) (32) (20) (17) 4 Assets 29 26 35 53 42 40 66 69 59 56 Capital Expenditures 4 -- -- -- -- -- -- -- -- -- Depreciation -- -- -- -- -- -- -- -- -- -- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Consolidated Sales 3,150 2,658 2,423 2,376 2,275 2,592 2,509 2,308 1,930 1,732 Net Income (Loss) 140 91 (92) 9 (13) 84 124 98 78 75 Assets 2,272 2,030 1,930 2,030 2,012 1,866 1,904 1,940 1,685 1,545 Capital Expenditures 201 149 132 173 177 187 142 147 115 128 Depreciation 135 134 131 117 113 116 116 111 114 111 ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Intersegment sales, which are priced generally at prevailing prices and are excluded from above, are not significant. Net income (loss) of each segment includes an allocation of Corporate expenses. 1993 net loss includes a charge for the strategic action plan of $132 ($106 to Chemicals, $12 to Metals and $14 to Defense and Ammunition). 1992 net income includes a charge of $46 (allocated to Corporate and Other) for the cumulative effect of the accounting changes. 1991 net loss includes a charge for the streamlining program of $80 ($73 to Chemicals and $7 to Metals). Corporate and Other principally interest expense. See Notes to Financial Statements for information relative to industry operating income and geographic segment data. 24 Ten-Year Financial Summary
($ and shares in millions, except per share data) 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 - -------------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Operations Sales $ 3,150 $ 2,658 $ 2,423 $ 2,376 $ 2,275 $ 2,592 $ 2,509 $ 2,308 $ 1,930 $ 1,732 Cost of Goods Sold 2,520 2,153 2,161 1,941 1,944 2,063 1,929 1,781 1,455 1,318 Restructuring Charge -- -- 42 -- 22 -- -- -- -- -- Selling and Administration 346 302 300 279 262 316 287 289 264 252 Research and Development 39 35 41 39 41 66 66 58 62 56 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Operating Income (Loss) 245 168 (121) 117 6 147 227 180 149 106 Interest Expense 44 37 38 39 46 53 56 43 32 32 Interest and Other Income 16 10 9 10 15 22 21 14 10 41 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Income (Loss) Before Taxes 217 141 (150) 88 (25) 116 192 151 127 115 Income Tax Provision (Benefit) 77 50 (58) 33 (12) 32 68 53 49 40 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Income (Loss) Before Cumulative Effect of Accounting Changes 140 91 (92) 55 (13) 84 124 98 78 75 Accounting Changes -- -- -- (46) -- -- -- -- -- -- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Net Income (Loss) 140 91 (92) 9 (13) 84 124 98 78 75 ======= ======== ======= ======= ======= ======= ======= ======= ======= ======= Financial Position Working Capital 297 262 136 179 85 212 205 184 276 210 Property, Plant and Equipment, Net 956 879 885 934 899 829 781 801 727 720 Total Assets 2,272 2,030 1,930 2,030 2,012 1,866 1,904 1,940 1,685 1,545 Capitalization: Short-Term Debt 122 29 121 101 178 104 155 211 50 52 Long-Term Debt 411 418 449 477 520 466 501 474 392 375 Shareholders' Equity 841 749 596 741 666 715 665 683 700 654 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Total Capitalization 1,374 1,196 1,166 1,319 1,364 1,285 1,321 1,368 1,142 1,081 ======= ======== ======= ======= ======= ======= ======= ======= ======= ======= Per Share Data Net Income (Loss): Primary: Income (Loss) Before Cumulative Effect of Accounting Changes 5.50 3.65 (4.52) 2.17 (.92) 4.03 6.02 4.63 3.38 3.36 Accounting Changes -- -- -- (2.11) -- -- -- -- -- -- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Net Income (Loss) 5.50 3.65 (4.52) .06 (.92) 4.03 6.02 4.63 3.38 3.36 Net Income-Fully Diluted (1) 5.33 3.54 -- -- -- 3.88 5.85 4.59 3.32 3.13 ======= ======== ======= ======= ======= ======= ======= ======= ======= ======= Dividends: Common 2.40 2.20 2.20 2.20 2.20 2.15 1.95 1.70 1.60 1.525 ESOP Preferred (annual rate) 5.97 5.97 5.97 5.97 5.97 5.97 5.97 -- -- -- Series A Preferred (annual rate) 3.64 3.64 3.64 3.64 -- -- -- -- -- -- Shareholders' Equity (2) 34.05 30.86 27.24 33.92 35.02 37.65 34.99 33.35 31.81 30.56 Market Price of Common Stock: High 77 1/8 60 1/8 50 1/2 54 3/4 54 60 5/8 68 1/4 60 56 1/4 53 1/4 Low 48 3/8 46 39 7/8 37 1/4 33 1/2 28 1/8 49 3/8 40 32 5/8 34 5/8 Year-End 74 1/4 51 1/2 49 3/8 45 3/4 40 3/8 37 3/4 60 51 42 41 ======= ======== ======= ======= ======= ======= ======= ======= ======= ======= Other Capital Expenditures 201 149 132 173 177 187 142 147 115 128 Depreciation 135 134 131 117 113 116 116 111 114 111 Common Dividends Paid 57 44 42 41 41 41 39 36 37 34 Purchases of Common Stock -- -- -- -- 2 6 100 84 100 83 Current Ratio 1.4 1.4 1.2 1.3 1.1 1.4 1.4 1.3 1.7 1.5 Total Debt to Total Capital- ization (3) 38.2% 36.5% 47.1% 42.0% 48.5% 41.5% 46.2% 50.1% 38.7% 39.5% Effective Tax Rate 35.5% 35.5% 38.7% 37.5% 48.0% 27.2% 35.4% 35.1% 38.6% 34.8% Average Common Shares Outstanding 24.4 20.5 19.1 19.1 19.0 19.1 20.0 21.1 23.1 22.4 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Shareholders 12,000 12,100 13,000 13,900 14,600 15,500 16,300 17,600 20,700 20,600 Employees (4) (5) 13,000 12,800 12,400 13,500 14,400 15,200 15,400 16,400 14,100 13,200 ======= ======== ======= ======= ======= ======= ======= ======= ======= =======
(1) Fully diluted income or loss per share is not presented for 1993, 1992 and 1991 as amounts are anti-dilutive. (2) In 1994, 1993 and 1992, calculation is based on common shares and Series A Conversion Preferred Stock outstanding. (3) Excluding reduction to equity for the Employee Stock Ownership Plan from 1989 through 1995. (4) Employee data excludes employees who work at government-owned/contractor- operated facilities. (5) Includes employees of acquired businesses of 450 in 1995 and 270 in 1994. 25 Consolidated Balance Sheets
December 31 ($ in millions, except share data) 1995 1994 --------------------------- ----- ----- Assets Current Assets: Cash $ 8 $ 7 Receivables, Net: Trade 497 373 Other 58 41 Inventories, Net of LIFO Reserve of $193 ($178 in 1994) 410 386 Other Current Assets 79 73 ------ ------ Total Current Assets 1,052 880 Investments and Advances - Affiliated Companies at Equity 80 103 Property, Plant and Equipment, Net 956 879 Goodwill 121 109 Other Assets 63 59 ------ ------ Total Assets $2,272 $2,030 ====== ====== Liabilities and Current Liabilities: Shareholders' Equity Short-Term Borrowings $ 56 $ -- Current Installments of Long-Term Debt 66 29 Accounts Payable 352 332 Income Taxes Payable 6 4 Accrued Liabilities 275 253 ------ ------ Total Current Liabilities 755 618 Long-Term Senior Debt 286 293 Long-Term Subordinated Debt 125 125 Other Liabilities 265 245 ------ ------ Total Liabilities 1,431 1,281 ------ ------ Shareholders' Equity: Preferred Stock, Par Value $1 Per Share: Authorized 10,000,000 Shares Series A Conversion Preferred Stock Issued, 2,760,000 Shares -- 3 ESOP Preferred Stock Issued, 1,003,843 Shares (1,110,418 in 1994) 77 86 ESOP Obligations (22) (27) Common Stock, Par Value $1 Per Share: Authorized 60,000,000 Shares Issued, 24,709,205 Shares (21,516,590 in 1994) 25 21 Additional Paid-In Capital 422 400 Cumulative Translation Adjustment (4) (3) Retained Earnings 343 269 ------ ------ Total Shareholders' Equity 841 749 ------ ------ Total Liabilities and Shareholders' Equity $2,272 $2,030 ====== ======
The accompanying Notes to Financial Statements are an integral part of the financial statements. 26 Consolidated Statements of Income
Years ended December 31 ($ in millions, except per share data) 1995 1994 1993 - --------------------------------------- ---- ---- ---- Sales $ 3,150 $ 2,658 $ 2,423 Operating Expenses: Cost of Goods Sold 2,520 2,153 2,161 Restructuring Charge -- -- 42 Selling and Administration 346 302 300 Research and Development 39 35 41 ------- ------- ------- Operating Income (Loss) 245 168 (121) Interest Expense 44 37 38 Interest and Other Income 16 10 9 ------- ------- ------- Income (Loss) Before Taxes 217 141 (150) Income Tax Provision (Benefit) 77 50 (58) ------- ------- ------- Net Income (Loss) 140 91 (92) Preferred Dividends 6 7 7 ------- ------- ------- Net Income (Loss) Available to Common Shareholders $ 134 $ 84 $ (99) ------- ------- ------- Net Income (Loss) Per Common Share: Primary $5.50 $3.65 $ (4.52) Fully Diluted (1) $5.33 $3.54 $ -- ======= ======= =======
(1) Fully diluted loss per share in 1993 was anti-dilutive. The accompanying Notes to Financial Statements are an integral part of the financial statements. 27 Consolidated Statements of Shareholders' Equity
Common Stock Preferred Stock --------------- Additional Cumulative --------------------- Shares Par Paid-In Translation Retained Series A ESOP ESOP ($ in millions, except share data) Issued Value Capital Adjustment Earnings Par Value Par Value Obligations - ---------------------------------- ------ ----- ---------- ----------- -------- --------- --------- ----------- Balance at January 1, 1993 19,069,775 $19 $296 $(1) $388 $ 3 $96 $(60) Net Loss -- -- -- -- (92) -- -- -- Dividends Paid: Common Stock ($2.20 per share) -- -- -- -- (42) -- -- -- ESOP Preferred Stock ($5.97 per share) -- -- -- -- (7) -- -- -- Series A Conversion Preferred Stock ($3.64 per share) -- -- -- -- (10) -- -- -- Reduction in ESOP Obligations -- -- -- -- -- -- -- 16 Stock Options Exercised 19,418 -- 1 -- -- -- -- -- Translation Adjustment -- -- -- (3) -- -- -- -- Other Transactions 13,077 -- -- (5) 1 -- (4) -- ---------- --- ---- --- ---- --- --- ---- Balance at December 31, 1993 19,102,270 19 297 (9) 238 3 92 (44) Net Income -- -- -- -- 91 -- -- -- Dividends Paid: Common Stock ($2.20 per share) -- -- -- -- (44) -- -- -- ESOP Preferred Stock ($5.97 per share) -- -- -- -- (7) -- -- -- Series A Conversion Preferred Stock ($3.64 per share) -- -- -- -- (10) -- -- -- Issuance of Common Stock 2,213,750 2 96 -- -- -- -- -- Reduction in ESOP Obligations -- -- -- -- -- -- -- 17 Stock Options Exercised 87,102 -- 3 -- -- -- -- -- Translation Adjustment -- -- -- 6 -- -- -- -- Other Transactions 113,468 -- 4 -- 1 -- (6) -- ---------- --- ---- --- ---- --- --- ---- Balance at December 31, 1994 21,516,590 21 400 (3) 269 3 86 (27) Net Income -- -- -- -- 140 -- -- -- Dividends Paid: Common Stock ($2.40 per share) -- -- -- -- (57) -- -- -- ESOP Preferred Stock ($5.97 per share) -- -- -- -- (6) -- -- -- Series A Conversion Preferred Stock ($3.64 per share) -- -- -- -- (3) -- -- -- Conversion of Series A Conversion Preferred Stock 2,760,000 3 -- -- -- (3) -- -- Reduction in ESOP Obligations -- -- -- -- -- -- -- 5 Stock Options Exercised 306,468 1 12 -- -- -- -- -- Translation Adjustment -- -- -- (1) -- -- -- -- Other Transactions 126,147 -- 10 -- -- -- (9) -- ---------- --- ---- --- ---- --- --- ---- Balance at December 31, 1995 24,709,205 $25 $422 $(4) $343 $-- $77 $(22) ========== === ==== === ==== === === ====
The accompanying Notes to Financial Statements are an integral part of the financial statements. 28 Consolidated Statements of Cash Flows
Years ended December 31 ($ in millions) 1995 1994 1993 --------------------------------------- ----- ---- ----- Operating Activities Net Income (Loss) $ 140 $ 91 $ (92) Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities: Losses (Earnings) of Non-consolidated Affiliates (6) (2) 1 Depreciation 135 134 131 Amortization of Intangibles 7 6 8 Deferred Taxes 6 2 (63) Charge for 1993 Strategic Action Plan -- -- 213 Change in Assets and Liabilities Net of Purchases and Sales of Businesses: Receivables (104) (64) 13 Inventories 3 (49) (10) Other Current Assets (5) (2) -- Current Liabilities 18 63 (59) Noncurrent Liabilities 11 2 (6) Other Operating Activities 1 11 11 ----- ---- ----- Net Operating Activities 206 192 147 ----- ---- ----- Investing Activities Capital Expenditures (201) (149) (132) Disposition of Property, Plant and Equipment -- 8 19 Businesses Acquired in Purchase Transactions (65) (25) -- Proceeds from Sales of Businesses 49 41 37 Other Investments 1 (2) (8) Other Investing Activities (2) 6 (10) ----- ---- ----- Net Investing Activities (218) (121) (94) ----- ---- ----- Financing Activities Long-Term Debt: Borrowings 50 -- -- Repayments (25) (29) (30) Short-Term Borrowings (Repayments) 34 (94) 22 Issuance of Common Stock -- 98 -- Repayment from ESOP 5 17 16 Stock Options Exercised 13 3 1 Dividends Paid (66) (61) (59) Other Financing Activities 2 (1) (4) ----- ---- ----- Net Financing Activities 13 (67) (54) ----- ---- ----- Net Increase (Decrease) in Cash 1 4 (1) Cash, Beginning of Year 7 3 4 ----- ---- ----- Cash, End of Year $ 8 $ 7 $ 3 ===== ==== ===== Supplemental Cash Cash Paid for Interest and Income Taxes: Flow Information Interest $ 44 $ 37 $ 39 Income Taxes, Net of Refunds $ 67 $ 39 $ 8 ===== ==== =====
The accompanying Notes to Financial Statements are an integral part of the financial statements. 29 Notes to Financial Statements ($ in millions, except share data) Accounting Policies The preparation of the consolidated financial statements requires estimates and assumptions that affect amounts reported and disclosed in the financial statements and related notes. Actual results could differ from those estimates. Certain reclassifications were made to prior year amounts to conform with the 1995 presentation. Basis of Presentation The consolidated financial statements include the accounts of the company and all majority-owned subsidiaries. Investments in 20-50% owned affiliates are accounted for on the equity method. Accordingly, the company's share of the earnings or losses of these affiliates is included in consolidated net income. Foreign Currency Translation Foreign affiliates' balance sheet amounts are translated at the exchange rates in effect at year-end, and income statement amounts are translated at the average rates of exchange prevailing during the year. Translation adjustments are recorded as a separate component of shareholders' equity. Long-Term Contracts Sales and cost of sales related to government contracts that extend beyond one year are primarily recognized under the percentage-of-completion method of accounting as costs are incurred. Profits expected to be realized on contracts are based on the company's estimates of costs at completion compared to total contract sales value. When the company believes the cost of completing a contract will exceed contract-related revenues, the full amount of the anticipated contract loss is recognized. Inventories Inventories are valued principally by the dollar value last-in, first-out (LIFO) method of inventory accounting; in aggregate, such valuations are not in excess of market. Elements of costs in inventories include raw materials, direct labor and manufacturing overhead. Property, Plant and Equipment Property, plant and equipment are recorded at cost. Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized over the term of the lease or the estimated useful life of the improvement, whichever is less. Start-up costs are expensed as incurred. Goodwill Goodwill, the excess of the purchase price of acquired businesses over fair value of the respective net assets, is amortized principally over 30 years on a straight-line basis. Environmental Liabilities and Expenditures Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, based upon current law and existing technologies. These amounts, which are not discounted and exclusive of claims against third parties, are adjusted periodically as assessment and remediation efforts progress or additional technical or legal information becomes available. Environmental remediation costs are charged to expense. Environmental costs are capitalized if the costs increase the value of the property and/or mitigate or prevent contamination from future operations. Income Taxes Deferred taxes are provided for differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Derivative Financial Instruments The company enters into forward sales and purchase contracts and currency options to manage currency risk resulting from purchase and sale commitments denominated in foreign currencies (principally Australian dollars, Canadian dollars, Italian lira and Japanese yen) and relating to particular anticipated but not yet committed sales expected to be denominated in those currencies. All of the currency derivatives expire within one year and are for United States dollar equivalents. At December 31, 1995, the company had options and contracts to sell foreign currencies with face values of $29 (1994-$4) and $41 (1994-$36), respectively. In addition, the company had options and contracts to buy with face values of $13 (1994-$5) and $11 (1994-$4), respectively. The counterparties to the options and contracts are major financial institutions. The risk of loss to the company in the event of nonperformance by a counterparty is not significant. Net unrealized gains (or losses) were less than $1 at December 31, 1995 and 1994. Foreign currency exchange losses, net of taxes, were $1 in 1995, $2 in 1994, and $4 in 1993. 30 Financial Instruments Fair values were estimated based on quoted market prices, where available, or on current rates offered to the company for debt with similar terms and maturities. At December 31, 1995, the estimated fair value of debt was $495 (1994-$440). The fair value of the company's other financial instruments approximates carrying value. Earnings Per Share Primary earnings per share are computed by dividing net income less the ESOP preferred stock dividend requirement by the weighted average number of common shares outstanding. In 1994 and 1993, common shares outstanding included an equivalent number (one-for-one) of common shares, assuming the conversion of Series A Conversion Preferred Stock. On March 1, 1995, the Series A stock was converted on a one-for-one basis into Common Stock. Fully diluted earnings per share reflect the dilutive effect of stock options and assume the conversion of outstanding ESOP preferred stock into an equivalent number of common shares at the date of issuance. Net income was reduced by an additional ESOP contribution (differential between the common and the ESOP preferred dividend rates under an assumed conversion) necessary to satisfy the debt service requirement. Average Common Shares and Common Equivalents Outstanding
Fully Years ended December 31 (In thousands) Primary Diluted - -------------------------------------- ------- ------- 1995 24,433 25,646 1994 23,303 24,825 1993 21,840 23,487
Trade Receivables At December 31, 1995 and 1994, trade receivables included unbilled receivables of $92, and $71, respectively, related to certain government contracts which are accounted for on the percentage-of-completion method. Allowance for doubtful items was $13 and $12 at December 31, 1995 and 1994, respectively. Provisions charged to operations were $3 in 1995, $2 in 1994 and $3 in 1993. Bad debt write-offs, net of recoveries amounted to $2 in 1995 and 1994 and $1 in 1993. Inventories Inventories valued using the LIFO method comprised 70% and 68% of the total inventories at December 31, 1995 and 1994, respectively. If the first-in, first- out (FIFO) method of inventory accounting had been used, inventories would have been approximately $193 and $178 higher than reported at December 31, 1995 and 1994, respectively. It is not practicable to separate the inventory into its components because LIFO inventory values are determined principally by the use of the dollar value LIFO method. Property, Plant and Equipment
1995 1994 ----- ----- Land and improvements to land $ 127 $ 126 Buildings and building equipment 304 293 Machinery and equipment 1,961 1,910 Leasehold improvements 35 27 Construction in progress 236 147 ------ ------ Property, plant and equipment 2,663 2,503 Less accumulated depreciation 1,707 1,624 ------ ------ Property, plant and equipment, net $ 956 $ 879 ====== ======
Leased assets capitalized and included above are not significant. Maintenance and repairs charged to operations amounted to $168, $153 and $159 in 1995, 1994 and 1993, respectively. Short-Term Borrowings Short-term borrowings at December 31, 1995 consisted of domestic bank loans of $46 at an interest rate of 5.95% and domestic commercial paper of $10 at an interest rate of 5.97%. There were no outstanding short-term borrowings at December 31, 1994. At December 31, 1995, the company maintained committed credit facilities with banks of $309 of which $253 was available, while comparable 1994 amounts were $303 and $278, respectively. 31 Notes to Financial Statements (continued)
Long-Term Debt 1995 1994 ---- ---- Notes payable: 7.077%, due 1996 (7.144% in 1994) $ 40 $ 40 7.11%, due 2005 50 -- 7.75%, due 2005 11 11 7.97%, due 1996-2002 50 56 8%, due 2002 100 100 8.125% -- 12 Industrial development and environmental improvement obligations: Payable at interest rates of 2% to 6% which vary with short-term tax exempt rates, due 2004-2017 35 35 Payable at interest rates of 6% to 7%, due 1996-2008 39 39 Guarantee of ESOP debt varying with LIBOR, due 1996-2009 22 27 Notes floating with LIBOR, due 1999-2009 5 -- Mortgage, capitalized leases and other indebtedness -- 2 ---- ---- Total senior debt 352 322 Amounts due within one year 66 29 ---- ---- Total long-term senior debt 286 293 Subordinated notes 9.5%, due 1997 125 125 ---- ---- Total long-term debt $411 $418 ==== ====
Among the provisions of certain note agreements are restrictions relating to payment of dividends and acquisition of the company's capital stock. At December 31, 1995, retained earnings of approximately $301 were not so restricted under the provisions. The ESOP's purchase of preferred stock in 1989 was financed by $60 of notes (guaranteed by the company) and $40 of borrowings from the company. The loan from the company to the ESOP was financed through a long-term credit facility. During 1995, the company amended its unsecured revolving credit agreement with a group of banks, which provides a maximum borrowing of $250, extending the expiration date to May 2000. The company may select various floating rate borrowing options. In June 1995, the company sold $50 of 7.11% notes with a maturity date of June 2005. The proceeds from this issue were used to reduce short-term debt incurred for working capital purposes. There remains $248 unissued under the medium-term note program registered in May 1994. In June 1992, the company sold $100 of 8% notes due 2002. The proceeds from this issue were used to reduce outstanding short-term debt. The company then swapped interest payments on $50 principal amount of the notes to a floating rate (5.6875% at December 31, 1995). In June 1995, the company offset this transaction by swapping interest payments on $50 principal amount to a fixed rate of 6.485%. Counterparties to interest rate swap contracts are major financial institutions. The risk of loss to the company in the event of nonperformance by a counterparty is not significant. Annual maturities of long-term debt for the next five years are $47 in 1996, $132 in 1997, $7 in 1998, $8 in 1999 and 2000 (excluding the expiring guarantees of ESOP debt). Interest expense incurred on short-term borrowings and long-term debt totaled $45 in 1995, $37 in 1994 and $40 in 1993, of which $1 was capitalized in 1995, less than $1 in 1994, and $2 in 1993. Cost of Sales-Related Transactions Included in cost of sales for 1993 is a pretax charge of $171 associated with the strategic action plan formulated during the fourth quarter. The plan included costs of business restructurings involving the relocation and consolidation of facilities along with lower estimated proceeds from asset disposals and higher costs associated with components of the 1991 streamlining program. Various actions within the business restructuring phase of the 1993 charge had been completed as of December 31, 1995. The remaining actions, primarily the restructuring of the electronic material businesses is expected to be finalized within the next year at an estimated cost of $15. Restructuring Charge The 1993 strategic action plan included a restructuring charge of $42 for workforce reductions which were accomplished largely through an early retirement incentive initiative. As of December 31, 1995, the planned workforce reductions had been approximately 90% completed. The remaining reductions are anticipated to occur in 1996 at an estimated cost of $13. Pension Plans and Retirement Benefits Essentially all of the company's domestic pension plans are non-contributory final-average-pay or flat-benefit plans and all domestic employees are covered. The company's funding policy is consistent with the requirements of federal laws and regulations. In 1993, the company offered to certain qualified employees an option to receive enriched pension benefits under the early retirement incentive program in connection with the restructuring charge. 32
Components of Net Pension Expense 1995 1994 1993 ----- ----- ----- Service cost (benefits earned during the period) $ 23 $ 25 $ 19 Interest cost on the projected benefit obligation 73 68 71 Enriched pension benefit -- -- 7 Actual loss (return) on assets (260) 6 (132) Actual (loss) return deferred for later recognition 174 (89) 53 Net amortization of unrecognized transition asset, prior service cost and deferred gains and losses (2) (1) (2) ----- ----- ----- Net pension expense $ 8 $ 9 $ 16 ===== ===== =====
Principal Assumptions 1995 1994 1993 ---- ---- ---- Weighted average discount rate 7.5% 8.5% 7.5% Weighted average rate of compensation increase 4.5% 4.5% 4.5% Long-term rate of return on assets 9.5% 9.5% 9.5% ==== ==== ====
Funded Status of the Plans 1995 1994 ------- ----- Accumulated benefit obligation including vested benefits of $983 and $845 $ 985 $ 847 ======= ===== Plan assets at fair value, primarily equity and fixed-income securities $ 1,115 $ 916 Projected benefit obligation for service rendered to date (1,047) (898) ------- ----- Assets over projected benefit obligation 68 18 Unrecognized net transition asset (35) (41) Unrecognized (gain) (87) (25) Unrecognized prior service cost 28 29 ------- ----- Net pension liability $ (26) $ (19) ======= =====
The company's common stock represents approximately 4% and 3% of the plan assets at December 31, 1995 and 1994, respectively. The company's foreign subsidiaries maintain pension and other benefit plans which are consistent with statutory practices and are not significant. The Pension Plan of Olin Corporation provides that if, within three years following a change of control of the company, any corporate action is taken or filing made in contemplation of, among other things, a plan termination or merger or other transfer of assets or liabilities of the plan, and such termination, merger or transfer thereafter takes place, plan benefits would automatically be increased for affected participants (and retired participants) to absorb any plan surplus. The company provides certain postretirement health care and life insurance benefits for eligible active and retired domestic employees.
Components of Postretirement Expense 1995 1994 1993 ----- ----- ---- Service cost-benefits earned during year $ 3 $ 3 $ 2 Interest cost on accumulated postretirement benefit obligation 5 5 6 Net amortization of unrecognized prior service cost and deferred gains and losses (1) (1) -- Enriched postretirement benefit -- -- 3 ----- ----- ---- Net postretirement expense $ 7 $ 7 $ 11 ===== ===== ====
Unfunded Liability for Postretirement Benefits 1995 1994 ----- ----- Accumulated postretirement benefit obligation: Retirees $ 42 $ 39 Fully eligible active plan participants 12 13 Other active participants 22 21 ----- ----- Cumulative accumulated postretirement benefit obligation 76 73 Unrecognized loss (8) (6) Unrecognized prior service cost 10 10 ----- ----- Net postretirement benefit liability $ 78 $ 77 ===== =====
The accumulated postretirement benefit obligation was determined using the projected unit credit method and an assumed discount rate of 7.5% in 1995, 8.5% in 1994 and 7.5% in 1993. The assumed health care cost trend rate used for pre- 65 retirees was 12.5% in 1995, 13% in 1994 and 13.5% in 1993, declining one-half percent per annum to 6%. For post-65 retirees, the company provides a fixed dollar benefit which is not subject to escalation. In 1993 the company modified certain attributes of the postemployment medical plan including eligibility requirements, retiree contributions and a limit (effective year 2000) on pre-65 retiree medical coverage. A one percent increase each year in the health care cost trend rate used would have resulted in a $1 increase in the aggregate service and interest components of expense for the year 1995, and a $5 increase in the accumulated postretirement benefit obligation at December 31, 1995. 33 Notes to Financial Statements (continued)
Income Taxes Components of Pretax Income (Loss) 1995 1994 1993 ----- ----- ----- Domestic $ 185 $ 127 $(158) Foreign 32 14 8 ----- ----- ----- Pretax income (loss) $ 217 $ 141 $(150) ===== ===== =====
Components of Income Tax Expense (Benefit) 1995 1994 1993 ----- ----- ----- Currently payable: Federal $ 47 $ 33 $ (1) State 14 8 3 Foreign 10 7 3 ----- ----- ----- 71 48 5 Deferred 6 2 (63) ----- ----- ----- Income tax expense (benefit) $ 77 $ 50 $ (58) ===== ===== =====
The following table accounts for the difference between the actual tax provision and the amounts obtained by applying the statutory U.S. federal income tax of 35% to the income (loss) before taxes.
Effective Tax Rate Reconciliation (Percent) 1995 1994 1993 - --------- ----- ----- ----- Statutory federal tax rate 35.0 35.0 (35.0) Foreign income tax (.8) .2 2.5 State income taxes, net 3.0 3.1 (3.4) Goodwill .8 1.2 1.2 Equity in net income of affiliates (.5) (.7) (.5) Other, net (2.0) (3.3) (3.5) ----- ----- ----- Effective tax rate 35.5 35.5 (38.7) ===== ===== =====
Components of Deferred Tax Assets and Liabilities 1995 1994 ----- ----- Deferred tax assets Postretirement benefits $ 40 $ 37 Non-deductible reserves 104 109 Tax credit carryforwards 5 30 Other miscellaneous items 23 19 ----- ----- Total deferred tax assets $ 172 $ 195 ===== ===== Deferred tax liabilities Property, plant and equipment $ 101 $ 117 Other miscellaneous items 12 17 ----- ----- Total deferred tax liabilities $ 113 $ 134 ===== =====
Included in Other Current Assets at December 31, 1995 and 1994, respectively, are $58 and $54 of net current deferred assets. Taxable income is expected to be sufficient to recover the net benefit within the carryforward period and, therefore, no valuation allowance was established. At December 31, 1995, the company's share of the cumulative undistributed earnings of foreign subsidiaries was approximately $72. No provision has been made for U.S. or additional foreign taxes on the undistributed earnings of foreign subsidiaries since the company intends to continue to reinvest these earnings. Foreign tax credits would be available to substantially reduce or eliminate any amount of additional U.S. tax that might be payable on these foreign earnings in the event of distributions or sale. Contributing Employee Ownership Plan The Contributing Employee Ownership Plan is a defined contribution plan available to essentially all domestic employees which provides a match of employee contributions. The plan purchased from the company approximately 1.3 million shares ($100) of a newly authorized 1.75 million share series of the company's ESOP preferred stock, financed by $60 of notes guaranteed by the company and a $40 loan from the company. This loan has been repaid in total to the company as of December 31, 1992. At December 31, 1995 there were 1.0 million shares of ESOP preferred stock outstanding at a value of $84.88 per share. The annual fixed dividend rate is $5.97 per share. The ESOP preferred stock is convertible by the ESOP Trustee into the company's common stock on a one-for-one basis, subject to anti-dilutive adjustments and may be redeemed at the option of the company, or at the option of the plan under certain circumstances (including upon payment of withdrawing plan participant accounts or if required to meet the plan's debt 34 payments). The company reserves the right to satisfy the redemption in cash, marketable obligations or common stock. Expenses related to the plan are based on ESOP preferred and common stock allocated to participants. These costs amounted to $14 in 1995, $10 in 1994 and 1993. Interest incurred by the plan totaled $1 in 1995 and 1994, and $2 in 1993, which was funded by ESOP preferred dividends. The ESOP preferred stock is included in shareholders' equity because the company intends to redeem the outstanding ESOP preferred stock solely with shares of the company's common stock, and has the ability to do so. Stock Options Under the stock option plans, options may be granted to purchase shares of the company's common stock at not less than fair market value at the date of grant, and are exercisable for a period not exceeding ten years from that date. Stock option transactions are as follows:
Option Price Shares Per Share -------- ------------- Outstanding at January 1, 1993 808,036 $22.14-$65.00 Granted 147,030 43.25 Exercised (19,418) 28.19-44.38 Canceled (14,159) 43.25-53.50 -------- ------------- Outstanding at December 31, 1993 921,489 22.14-65.00 Granted 134,074 52.00 Exercised (87,102) 22.14-53.50 Canceled (12,857) 43.25-53.50 -------- ------------- Outstanding at December 31, 1994 955,604 30.82-65.00 Granted 136,254 55.63-64.81 Exercised (306,468) 30.82-63.60 Canceled (8,256) 30.82-55.63 -------- ------------- Outstanding at December 31, 1995 777,134 $43.25-$65.00 ======== =============
Of the outstanding options at December 31, 1995, options covering 643,151 shares are currently exercisable. At December 31, 1995, common shares reserved for issuance under these plans were 1,413,758 and under additional remuneration agreements were estimated to be 41,000. Shareholder Rights Plan Effective February 1996, the Board of Directors adopted a new Shareholder Rights Plan to replace the prior plan which had been adopted in 1986. Like the former plan, the new plan is designed to prevent an acquiror from gaining control of the company without offering a fair price to all shareholders. Each right entitles a shareholder (other than the acquiror) to buy one-one thousandth share of Series A Participating Cumulative Preferred Stock at an exercise price of two hundred forty dollars. The rights are exercisable only if a person acquires more than 15% of the company's common stock or if the Board of Directors so determines following the commencement of a tender or exchange offer to acquire more than 15% of the company's common stock. If any person acquires more than 15% of the companys common stock and in the event of a subsequent merger or combination, each right will entitle the holder (other than the acquiror) to purchase stock or other property of the acquiror having a value of twice the exercise price. The company can redeem the rights at $.01 for a certain period of time. The rights will expire on February 27, 2006, unless earlier redeemed by the company. Segment Information Information relative to the various industries in which the company operates appears on page 24 and is incorporated herein by reference.
Segment Operating Income (Loss) 1995 1994 1993 ------ ------ ------ Chemicals $ 145 $ 58 $ (165) Metals 74 64 29 Defense and Ammunition 26 46 15 ------ ------ ------ Total operating income (loss) $ 245 $ 168 $ (121) ====== ====== ======
35 Notes to Financial Statements (continued)
Geographic Segment Data 1995 1994 1993 ------ ------ ------ Sales United States $2,842 $2,451 $2,242 Foreign 308 207 181 Transfers between areas United States 125 100 83 Foreign 16 16 16 Eliminations (141) (116) (99) ------ ------ ------ Total sales $3,150 $2,658 $2,423 ====== ====== ====== Operating income (loss) United States $ 208 $ 150 $ (128) Foreign 31 13 6 Eliminations 6 5 1 ------ ------ ------ Operating income (loss) $ 245 $ 168 $ (121) ====== ====== ====== Assets United States $2,073 $1,904 $1,782 Foreign 198 107 137 Investments 43 34 40 Corporate assets and eliminations (42) (15) (29) ------ ------ ------ Total consolidated assets $2,272 $2,030 $1,930 ====== ====== ======
Sales to the U.S. government were $513, $379 and $354 in 1995, 1994 and 1993, respectively. The Defense and Ammunition segment accounted for approximately 85% of the government sales in 1995, 1994 and 1993. Transfers between geographic areas are priced generally at prevailing market prices. Export sales from the United States to unaffiliated customers were $237, $168 and $162 in 1995, 1994 and 1993, respectively. Acquisitions In 1995, the company acquired the remaining 50% of OCG Microelectronic Materials, a joint venture formed by Ciba-Geigy and the company in 1990, for approximately $65. In addition, the company acquired the remaining 51% of Etoxyl, C.A., a Latin American joint venture. The purchase price is contingent upon the future earnings of this entity. In 1994, the company acquired certain assets of the medium caliber ammunition business of GenCorp's Aerojet Ordnance division for approximately $25. These acquisitions were accounted for as purchases and accordingly, their results of operations, which were not material, are included in the consolidated financial statements from the dates of acquisition. Supplemental cash flow information on businesses acquired is as follows:
1995 1994 ----- ----- Working capital $ 39 $ 11 Property, plant and equipment 45 14 Other assets 14 -- Goodwill 17 -- Debt (27) -- Investments and advances- affiliated companies (23) -- ----- ----- Purchase price $ 65 $ 25 ===== =====
Dispositions During 1995, the company sold its dry sanitizer plant in South Charleston, WV, a related tableting operation in Livonia, MI, and Sun(R) brand of isocyanurates completing the final steps to comply with the Federal Trade Commission order to divest chlorinated isocyanurate pool chemical assets that were acquired in 1985. During 1994, the company sold its trichloroisocyanurate production facility and conductive materials business including its manufacturing facility. During 1993, the company sold the facility and the assets of its contract integrated circuit assembly operation and its interest in the German joint venture to its partner. These transactions did not have a material impact on the company's results of operations. Environmental The company is party to various governmental and private environmental actions associated with waste disposal sites and manufacturing facilities. Environmental provisions charged to income amounted to $25 in 1995, $17 in 1994, and $85 in 1993. The significant increase in 1993 resulted from expanded volumes of contaminants uncovered while remediating a particular site combined with the availability of more definitive data from progressing investigatory activities concerning both the nature and extent of contamination and remediation alternatives at other sites. The consolidated balance sheets include reserves for future environmental expenditures to investigate and remediate known sites amounting to $111 at December 31, 1995 and 1994, of which $76 and $71 are classified as other noncurrent liabilities, respectively. 36 Environmental exposures are difficult to assess for numerous reasons, including the identification of new sites, developments at sites resulting from investigatory studies, advances in technology, changes in environmental laws and regulations and their application, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and financial capability of other potentially responsible parties and the company's ability to obtain contributions from other parties and the time periods (sometimes lengthy) over which site remediation occurs. It is possible that some of these matters (the outcomes of which are subject to various uncertainties) may be resolved unfavorably against the company. At December 31, 1995, the company had estimated additional contingent environmental liabilities of $28. Commitments and Contingencies The company leases certain properties, such as manufacturing, warehousing and office space, data processing and office equipment and railroad cars. Leases covering these properties generally contain escalation clauses based on increased costs of the lessor, primarily property taxes, maintenance and insurance and have renewal or purchase options. Total rent expense charged to operations amounted to $56 in 1995, $52 in 1994 and $45 in 1993, (sublease income is not significant). Future minimum rent payments under operating leases having initial or remaining noncancelable lease terms in excess of one year at December 31, 1995 are as follows: $28 in 1996; $26 in 1997; $20 in 1998; $16 in 1999; $14 in 2000; and $56 thereafter. There is a variety of legal proceedings, contractual obligations and environmental issues, arising out of its businesses, pending or threatened against the company. Certain information regarding these matters can be found in the Environmental note to the consolidated financial statements; and Item 3, Legal Proceedings and Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in the 1995 Form 10-K, which is available on request from the company.
Quarterly Data (unaudited) First Second Third Fourth 1995 Quarter Quarter Quarter Quarter Year - ----- ------- ------- ------- ------- ------- Sales $ 766 $ 804 $ 796 $ 784 $ 3,150 Cost of goods sold 613 633 644 630 2,520 Net income 38 44 31 27 140 Net income per share: Primary 1.52 1.74 1.21 1.03 5.50 Fully diluted 1.46 1.66 1.20 1.01 5.33 Common dividends .60 .60 .60 .60 2.40 Market price of common stock* High 54 1/4 57 5/8 72 5/8 77 1/8 77 1/8 Low 48 3/8 50 3/8 51 63 3/8 48 3/8 ======= ======= ======= ======= ======= 1994 - ---- Sales $ 605 $ 708 $ 667 $ 678 $ 2,658 Cost of goods sold 488 567 543 555 2,153 Net income 15 28 22 26 91 Net income per share: Primary .62 1.16 .86 1.01 3.65 Fully diluted .62 1.10 .85 .97 3.54 Common dividends .55 .55 .55 .55 2.20 Market price of common stock* High 51 5/8 54 1/4 59 7/8 60 1/8 60 1/8 Low 47 1/2 46 1/4 53 3/4 50 1/4 46 1/4 ======= ======= ======= ======= =======
*New York Stock Exchange composite transactions. 37 Independent Auditors' Report To the Board of Directors and Shareholders of Olin Corporation: We have audited the accompanying consolidated balance sheets of Olin Corporation and subsidiaries as of December 31, 1995 and 1994 and the related consolidated statements of income, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 1995. These consolidated financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements, referred to above, present fairly, in all material respects, the financial position of Olin Corporation and subsidiaries as of December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1995 in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP Stamford, Connecticut January 25, 1996 Management Report on Financial Statements Management is responsible for the preparation and integrity of the accompanying consolidated financial statements. These financial statements have been prepared in conformity with generally accepted accounting principles and, where necessary, involve amounts based on management's best judgments and estimates. Management also prepared the other information in this annual report and is responsible for its accuracy and consistency with the financial statements. The company's system of internal controls is designed to provide reasonable assurance as to the integrity and reliability of the financial statements, the protection of assets from unauthorized use or disposition, and the prevention and detection of fraudulent financial reporting. This system, which is reviewed regularly, consists of written policies and procedures, an organizational structure providing delegation of authority and segregation of responsibility and is monitored by an internal audit department. The company's independent auditors also review and test the internal control system along with tests of accounting procedures and records to the extent that they consider necessary in order to issue their opinion on the financial statements. Management believes that the system of internal accounting controls meets the objectives noted above. Management also recognizes its responsibility for fostering a strong ethical climate so that the company's affairs are conducted according to the highest standards of personal and corporate conduct. This responsibility is communicated to all employees in the company's code of business conduct, which is publicized throughout the company. The code of conduct addresses, among other things, the necessity of ensuring open communication within the company; potential conflicts of interest; compliance with all domestic and foreign laws, including those relating to financial disclosure; and the confidentiality of proprietary information. The company maintains a systematic program to assess compliance with these policies. The Audit Committee of the Board of Directors, composed solely of outside directors, meets periodically with the independent auditors, management and the company's internal auditors to review the work of each and to evaluate accounting, auditing, internal controls and financial reporting matters. The Audit Committee annually recommends to the Board of Directors the appointment of independent auditors, subject to shareholder approval. The independent auditors and the company's internal audit department have independent and free access to the Audit Committee. /s/ John W. Johnstone, Jr. /s/ Donald W. Griffin John W. Johnstone, Jr. Donald W. Griffin Chairman President and Chief Executive Officer /s/ Anthony W. Ruggiero Anthony W. Ruggiero Senior Vice President and Chief Financial Officer 38 Directors Management Board of Directors Committees of the Board Corporate Management Operations Management William J. Alley Audit Committee John W. Johnstone, Jr. Leon B. Anziano Former Chairman and William W. Higgins, Chairman President, Chlor-Alkali Products, Chief Executive Officer, Chairman and Corporate Vice President American Brands, Inc. Donald W. Griffin William J. Alley President and Douglas J. Cahill Robert R. Frederick Suzanne Denbo Jaffe Chief Executive Officer President, Winchester, and Former President and William L. Read Corporate Vice President Chief Executive Officer, John P. Schaefer Michael E. Campbell RCA Corporation Irving Shain Executive Vice President Angelo A. Catani President, Ordnance, and Donald W. Griffin Compensation and James G. Hascall Corporate Vice President President and Nominating Committee Executive Vice President Chief Executive Officer G. Jackson Ratcliffe, Jr., Patrick J. Davey Chairman Joseph M. Gaffney President, Chemicals, and William W. Higgins Senior Vice President Corporate Vice President Former Senior Vice President, William J. Alley The Chase Manhattan Bank, N.A. Robert R. Frederick Peter C. Kosche Joseph D. Rupp Jack D. Kuehler Senior Vice President, President, Brass, and Suzanne Denbo Jaffe H. William Lichtenberger Corporate Affairs Corporate Vice President Managing Director, Hamilton & Company Executive and Anthony W. Ruggiero William W. Smith Finance Committee Senior Vice President and President, Aerospace, and John W. Johnstone, Jr. Robert R. Frederick, Chief Financial Officer Corporate Vice President Chairman Chairman Robert A. Beyerl Steven T. Warshaw Jack D. Kuehler Donald W. Griffin Vice President and Controller President, Former Vice Chairman, William W. Higgins Microelectronic Materials, and International Business John W. Johnstone, Jr. George B. Erensen Corporate Vice President Machines Corporation Jack D. Kuehler Vice President, G. Jackson Ratcliffe, Jr. Taxes and Risk Management Marc A. Kolpin H. William Lichtenberger President, Physics International Chairman and Corporate Responsibility Johnnie M. Jackson, Jr. Chief Executive Officer, Committee Vice President, Praxair, Inc. John P. Schaefer, General Counsel and Secretary Chairman G. Jackson Ratcliffe, Jr. Janet M. Pierpont Chairman, President and Suzanne Denbo Jaffe Vice President and Treasurer Chief Executive Officer, H. William Lichtenberger ---------------------------- Hubbell Incorporated William L. Read Irving Shain J. Douglas DeMaire William L. Read Vice President, Vice Admiral, U.S. Navy (Ret.) Planning and Development John P. Schaefer Richard E. Koch Chairman, Research Vice President, Investor Relations Corporation Technologies and President, Research Corporation William B. McDaniel Vice President, Public Affairs Irving Shain Former Vice President and Chief Scientist
39 Corporate Data Transfer Agent and Registrar Commercial Paper Dealers Trademarks Form 10K Available Chemical Mellon J.P. Morgan Securities, Inc. Shareholder Services, L.L.C. 60 Wall Street Italicized words identifying A copy of Olin's Form 10-K, 85 Challenger Road New York, NY 10260-0060 products in this report are containing additional Ridgefield Park, NJ 07660 Telephone: (212) 648-0100 trademarks or servicemarks of information of possible Telephone: (800) 306-8594 Olin Corporation or its subsidiaries interest to shareholders Goldman Sachs or affiliates. EVA is a registered and filed with the Stock Exchange Listings Money Markets, L.P. trademark of Stern Stewart & Company. Securities and Exchange Common Stock 85 Broad Street Commission in March New York Stock Exchange New York, NY 10004 Annual Meeting each year, will be sent Pacific Stock Exchange Telephone: (212) 902-8279 The annual meeting of the without charge to any Chicago Stock Exchange shareholders will be held on shareholder who requests Tickler Symbol: OLN Dividend Reinvestment Service Thursday, April 25, 1996, at it. Olin makes a Dividend 10:30 a.m., local time, at the Trustee for Subordinated Notes Reinvestment Service available GTE Norwalk Center Write to: Bankers Trust Company to its shareholders. 32 Weed Avenue Richard E. Koch Four Albany Street For more information, write to: Norwalk, CT Vice President, New York, NY 10015 Chemical Mellon Investor Relations Telephone: (212) 250-6112 Shareholder Services, L.L.C. Free Shareholder Information Olin Corporation P.O. Box 590 Telephone: (800) 656-OLIN 501 Merritt 7 Trustees for 8% Notes Ridgefield Park, NJ 07660 Quarterly earnings releases P.O. Box 4500 and 7.11% Notes and other corporate news releases are Norwalk, CT 06856-4500 Chemical Bank available. Earnings are released Telephone: (203) 750-3254 450 W. 33rd Street during the third week of April, New York, NY 10001 July, October, and the fourth week Telephone: (800) 648-8380 of January. This same information is also available on the Internet at: http://www.shareholder.com/olin/
40 EX-21 10 SUBSIDIARIES OF OLIN CORPORATION EXHIBIT 21 SUBSIDIARIES OF OLIN CORPORATION (as of December 31, 1995)
JURISDICTION PERCENTAGE OF DIRECT/ -------------- -------------------------- WHERE INDIRECT OWNERSHIP BY -------------- -------------------------- SUBSIDIARY ORGANIZED OLIN OF VOTING SECURITIES - ---------- -------------- -------------------------- A.J. Oster Caribe, Inc. Delaware 100% A.J. Oster Company Rhode Island 100% A.J. Oster Foils, Inc. Delaware 100% A.J. Oster West, Inc. Rhode Island 100% Bridgeport Brass Corporation/1/ Indiana 100% Bryan Metals, Inc./2/ Ohio 100% Etoxyl, C.A. Venezuela 100% General Defense Corporation/3/ Pennsylvania 100% Hydrochim, S.A. France 100% N.V. Olin Hunt Specialty Products Belgium 100% N.V. Olin Hunt Trading Belgium 100% OCG Microelectronic Materials, Inc. Delaware 100% OCG Microelectronic Materials Limited United Kingdom 100% Olin Aerospace Company Washington 100% Olin Australia Limited Australia 100% Olin Brasil Ltda. Brazil 100% Olin Canada Inc. Canada 100% Olin Chemicals B.V. Netherlands 100% Olin Corporation N.Z. Limited New Zealand 100% Olin Electronic Chemicals, Inc. Pennsylvania 100% Olin Engineered Systems, Inc. Delaware 100% Olin Export Trading Corporation Virgin Islands 100% Olin Financial Services, Inc. Delaware 100% Olin GmbH Germany 100% Olin Hunt Specialty Products, Inc. Delaware 100% Olin Hunt Sub. I Corp. Delaware 100% Olin Industrial (Hong Kong) Limited Hong Kong 100% Olin Japan, Inc. Japan 100% Olin Microelectronic Materials N.V./4/ Belgium 100% Olin Microelectronic Materials S.A./5/ France 100% Olin Pte. Ltd. Singapore 100% Olin S.A. France 100% Olin S.r.l./6/ Italy 100% Olin (U.K.) Limited United Kingdom 100% Physics International Company California 100% Superior Pool Products, Inc. Delaware 100% U.S. Ordnance Company/7/ Delaware 100%
There are omitted from the foregoing list the names of certain subsidiaries which, if considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary. ________ 1. d/b/a "Olin Brass, Indianapolis" and "Olin Brass, Indianapolis Facility" in States of CA, IL, IN, NJ, NC, OH, PA, RI and TX. 2. d/b/a "Bryan Metals of Ohio" in NJ. 3. d/b/a "Olin Ordnance" in States of FL and PA. 4. Name changed 2/12/96 from OCG Microelectronic Materials N.V. 5. Name changed 2/15/96 from OCG Micro Electronic Materials S.A. 6. Name changed 12/29/95 from OCG Microelectronic Materials S.r.l. 7. d/b/a "Olin Ordnance" in Los Angeles County, CA. EX-23 11 CONSENT OF KPMG PEAT MARWICK LLP Exhibit 23 CONSENT OF INDEPENDENT AUDITORS The Board of Directors Olin Corporation: We consent to incorporation by reference in Registration Statements No. 33-4479 and No. 33-52771 on Form S-3 and Nos. 33-28593, 33-00159, 33-40346, 33-41202, 33-55187 and 33-52681 on Form S-8 of Olin Corporation of our report dated January 25, 1996, relating to the consolidated balance sheets of Olin Corporation and subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of income, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 1995, which report is incorporated by reference in the December 31, 1995 annual report on Form 10-K of Olin Corporation. KPMG PEAT MARWICK LLP Stamford, Connecticut March 8, 1996 EX-27 12 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Financial Statements contained in Item 8 of Form 10-K for the period ended December 31, 1995 and is qualified in its entirety by reference to such financial statements. Figures are rounded to the nearest 1,000,000 (except (EPS). 1,000,000 12-MOS DEC-31-1995 DEC-31-1995 8 0 510 (13) 410 1,052 2,663 (1,707) 2,272 755 411 0 77 25 739 2,272 3,150 3,150 2,520 2,520 0 3 44 217 77 140 0 0 0 140 5.50 5.33
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