UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 12, 1996
(December 8, 1996)
HOMESTAKE MINING COMPANY
(Exact name of Registrant as specified in its charter)
Delaware 1-8736 94-2934609
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification Number)
incorporation)
650 California Street, San Francisco, California 94108-2788
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 981-8150
<PAGE>
Item 5. Other Events.
On December 9, 1996 Registrant and Santa Fe Pacific Gold Corporation
("Santa Fe") issued the joint press release appended as Exhibit 99.10,
announcing the proposed business combination of the Registrant and Santa Fe.
Under the terms of the Agreement and Plan of Merger dated December 8, 1996,
unanimously approved by the boards of both companies, Santa Fe shareholders will
receive 1.115 newly-issued Homestake common shares for each Santa Fe common
share. The transaction, which is expected to close by early April 1997, is
subject to approval by both companies' shareholders, antitrust approval,
qualification as pooling of interests, and other customary conditions.
CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.
Statements in this report, including the Exhibits, contain forward
looking statements. The purpose of this cautionary statement is to identify
certain important factors and assumptions on which such forward looking
statements may be based or which could cause actual results to differ materially
from those expressed in the forward looking statements.
Estimates of Cost Savings. Estimates of cost savings for the new
Homestake are based in part on the expectation that the new Homestake will be
able to eliminate certain overlapping expenses of Homestake and Santa Fe, such
as general administrative and operating expenses, that are currently incurred by
both companies and the expectation that Homestake will be able to combine its
exploration program with Santa Fe's exploration program and continue the
combined exploration program at expected levels for less cost.
Certain of the anticipated costs savings are based in part on the
planned closing of Santa Fe's Albuquerque headquarters, the relocating of
certain members of Santa Fe's management team to San Francisco and Nevada, and
the consolidation of the separate functions of the two companies' administration
groups into one. Although the new Homestake intends to close the Santa Fe
headquarters in the near term, there can be no assurances that it will be able
to do so. Unexpected delays may occur and related expenses may exceed estimates
in connection with the actual moving of Santa Fe personnel and administrative
functions to San Francisco and Nevada. In addition, it may take the new
Homestake longer than is anticipated to determine where administrative and
operating functions of the two companies are duplicative so that overlap can be
eliminated. To the extent that the relocation takes longer or costs more than is
anticipated, or to the extent that it takes longer than is anticipated to
determine and eliminate areas of overlap, there can be no assurances that the
new Homestake will be able to achieve all of its estimated costs savings, or
that it will be able to fully realize such cost savings by the end of 1997.
<PAGE>
Certain of the anticipated cost savings are based in part on the new
Homestake's expectation of being able to combine Homestake's and Santa Fe's
exploration programs and to be able to continue the combined exploration program
at expected levels for less cost. Factors which could delay the combination of
the exploration programs, or which could have an impact on the level of costs
include delay in integrating the exploration, administrative and operating
functions of the two companies and the emergence of unanticipated difficulties
or changes at existing exploration projects, which could lead the new Homestake
to decide to postpone any such changes. To the extent that such delays occur,
there can be no assurances that the new Homestake will be able to achieve its
estimated cost savings, or that it will be able to fully realize such cost
savings by the end of 1997.
Risk of Gold Mining. The business of mineral exploration, development
and production by its nature involves significant risks. Among other things, the
business depends on successful location of minable ore reserves and skillful
management. Mineral exploration is highly speculative in nature, involves many
risks and frequently is non-productive. Once mineralization is discovered and
determined to be economically exploitable, it usually takes a number of years
from the initial phases of exploration until production commences, during which
time the economic feasibility of production may change. Substantial expenditures
are required to establish ore reserves through drilling, to determine means of
production and metallurgical processes to extract the metal from ore, and, in
the case of new properties, to construct mining and processing facilities.
Mining is subject to a variety of risks and hazards, including rock
falls and slides, cave-ins, flooding and other weather conditions, and other
acts of God. Homestake and Santa Fe maintain, and the new Homestake intends to
continue to maintain, property and liability insurance consistent with industry
practice, but such insurance contains exclusions and limitations on coverage.
For example, coverage for environmental liability generally is limited and may
be totally unavailable. There can be no assurances that insurance will continue
to be available to the new Homestake at economically acceptable premiums.
Production costs also can be affected by unforeseen changes in ore grades and
recoveries, permitting requirements, environmental factors, work interruptions,
operating circumstances and ore reserves, unstable or unexpected ground
conditions, and technical issues.
Mining operations and exploration are conducted in a number of
countries. Some countries have higher levels of political and economic risk than
others, including potential for such factors as government instability,
uncertainty of laws and legal enforcement and compliance, defects in or
uncertainty as to title to mining property, expropriation of property,
restrictions on production, export controls, currency inconvertibility,
inflation and other general economic and political uncertainties.
Estimates of Production. Production estimates for the new Homestake are
derived from annual mining plans of Homestake and Santa Fe that have been
developed based on, among other things, mining experience, reserve estimates,
assumptions regarding ground conditions and physical characteristics of ores
(such as hardness and presence or absence of
<PAGE>
metallurgical characteristics), and estimated rates and costs of production.
Actual production may vary from estimates for a variety of reasons, including
risks and hazards of the type discussed above, and actual ore mined varying from
estimates of grade and characteristics, mining dilution, strikes and other
actions by labor at unionized locations, and other factors.
Reserves. The reported ore reserves for the new Homestake reflect
estimated quantities and grades of gold in in-situ deposits and in stockpiles of
mined material that Homestake and Santa Fe believe can be mined and sold at
prices sufficient to recover the estimated future cash costs of production,
remaining investment, and anticipated additional capital expenditures. Estimates
of cost of production are based on current and projected costs taking into
account past experience and expectations as to the future. Estimated mining
dilution is factored into reserve calculations.
Ore reserves are reported as general indicators of the life of mineral
deposits. Reserves should not be interpreted as assurances of mine lives or of
the profitability of current or future operations. Reserves are estimated for
each property based upon factors relevant to each deposit. Reserves numbers are
estimates based upon drilling results, past experience with property, experience
of the persons making the reserve estimates and many other factors. Reserve
estimation is an interpretive process based upon available data, and the actual
quality and characteristics of ore bodies cannot be known until mining actually
has taken place.
Changes in reserves over time generally reflect (i) efforts to develop
additional reserves, (ii) depletion of existing reserves through production,
(iii) actual mining experience, (iv) continued testing and development of
additional information, and (v) price forecasts. Grades of ore actually
processed may be different from indicated reserve grades because of geologic
variations in different areas mined, mining dilution, losses in processing and
other factors. Recovery rates vary with the metallurgical characteristics and
grade of ore processed.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit 2.1 Agreement and Plan of Merger dated December 8, 1996 among the
Registrant and Santa Fe Pacific Gold Corporation.
Exhibit 99.10 Press release dated December 9, 1996 announcing the
proposed business combination of Registrant and Santa Fe Pacific
Gold Corporation.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: December 12, 1996
HOMESTAKE MINING COMPANY
(Registrant)
By:/s/ David W. Peat
-----------------
David W. Peat
Vice President and Controller
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
Dated as of December 8, 1996,
Among
HOMESTAKE MINING COMPANY
HMGLD CORP.
and
SANTA FE PACIFIC GOLD CORPORATION
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TABLE OF CONTENTS
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Page
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Parties and Recitals...................................................................................... 1
ARTICLE I
The Merger
SECTION 1.01.
The Merger................................................................................................ 2
SECTION 1.02.
Closing................................................................................................... 2
SECTION 1.03.
Effective Time of the Merger.............................................................................. 2
SECTION 1.04.
Effects of the Merger..................................................................................... 3
SECTION 1.05.
Certificate of Incorporation and
By-laws...................................................................... 3
SECTION 1.06.
Directors................................................................................................. 3
SECTION 1.07.
Officers.................................................................................................. 3
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01.
Effect on Capital Stock................................................................................... 4
SECTION 2.02.
Exchange of Certificates.................................................................................. 5
ARTICLE III
Representations and Warranties
SECTION 3.01.
Representations and Warranties of the
Company...................................................................... 10
SECTION 3.02.
Representations and Warranties of
Parent and Sub............................................................... 26
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2
ARTICLE IV
Covenants Relating to Conduct of Business
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SECTION 4.01.
Conduct of Business....................................................................................... 41
SECTION 4.02.
No Solicitation by the Company............................................................................ 48
SECTION 4.03. No Solicitation by Parent ................................................................ 50
ARTICLE V
Additional Agreements
SECTION 5.01.
Preparation of Form S-4 and the Proxy
Statement; Company's Stockholders'
Meeting and Parent's Stockholders'
Meeting...................................................................... 52
SECTION 5.02.
Letter of the Company's Accountants....................................................................... 55
SECTION 5.03.
Letter of Parent's Accountants............................................................................ 55
SECTION 5.04.
Access to Information;
Confidentiality.............................................................. 55
SECTION 5.05.
Reasonable Efforts; Notification.......................................................................... 55
SECTION 5.06.
Rights Agreement; Consequences if
Rights Triggered ............................................................ 57
SECTION 5.07.
Company Employee Stock Options............................................................................ 58
SECTION 5.08.
Benefit Plans............................................................................................. 60
SECTION 5.09.
Indemnification........................................................................................... 61
SECTION 5.10.
Fees and Expenses......................................................................................... 62
SECTION 5.11.
Public Announcements...................................................................................... 62
SECTION 5.12.
Tax and Accounting Treatment.............................................................................. 62
SECTION 5.13.
Affiliates................................................................................................ 62
SECTION 5.14.
Stock Exchange Listing.................................................................................... 63
SECTION 5.15.
Parent Board of Directors................................................................................. 63
SECTION 5.16.
Parent Officers........................................................................................... 64
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3
ARTICLE VI
Conditions Precedent
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SECTION 6.01.
Conditions to Each Party's Obligation
To Effect the Merger......................................................... 65
SECTION 6.02.
Conditions to Obligations of Parent
and Sub...................................................................... 66
SECTION 6.03.
Conditions to Obligation of the
Company...................................................................... 68
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01.
Termination............................................................................................... 69
SECTION 7.02.
Effect of Termination..................................................................................... 71
SECTION 7.03.
Amendment................................................................................................. 73
SECTION 7.04.
Extension; Waiver......................................................................................... 73
SECTION 7.05.
Procedure for Termination, Amendment,
Extension or Waiver.......................................................... 74
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4
ARTICLE VIII
General Provisions
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SECTION 8.01.
Nonsurvival of Representations and
Warranties................................................................... 74
SECTION 8.02.
Notices................................................................................................... 74
SECTION 8.03.
Definitions............................................................................................... 76
SECTION 8.04.
Interpretation............................................................................................ 76
SECTION 8.05.
Severability.............................................................................................. 76
SECTION 8.06.
Counterparts.............................................................................................. 77
SECTION 8.07.
Entire Agreement; No Third-Party
Beneficiaries................................................................ 77
SECTION 8.08.
Governing Law............................................................................................. 77
SECTION 8.09.
Assignment................................................................................................ 77
SECTION 8.10.
Enforcement............................................................................................... 77
Exhibit A -- Form of Company Affiliate Letter
Exhibit B -- Form of Parent Affiliate Letter
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<PAGE>
Location of Defined Terms in Agreement
Term Location in Agreement
"affiliate" ss.8.03
"Amendment to Parent's
Certificate of Designation" ss.3.02(d)
"Amendment to Parent's Restated
Certificate of Incorporation" ss.3.02(d)
"Certificate of Merger ss.1.03
"Certificates" ss.2.02(b)
"Closing Date" ss.1.02
"Common Shares Trust" ss.2.02(e)
"Company Benefit Plans" ss.3.01(i)
"Company Capital Stock" ss.3.01(c)
"Company Common Stock" Recitals
"Company Disclosure Letter" ss.3.01(b)
"Company Employee Stock
Options" ss.3.01(c)
"Company Employee Stock
Plans ss.3.01(c)
"Company Material Adverse
Effect" ss.3.01(a)
"Company Property" ss.3.01(u)
"Company Rights" ss.3.01(c)
"Company Rights Agreement" ss.3.01(c)
"Company SEC Documents" ss.3.01(e)
"Company Series A Preferred
Stock" ss.3.01(c)
"Company Significant
Subsidiary" ss.3.01(a)
"Company Stock Plans" ss.5.08(a)
"Company Stockholder
Approval" ss.3.01(k)
"Company Subsidiary" ss.4.02(a)
"Company's Stockholders'
Meeting" ss.5.01(b)
"Confidentiality Agreement" ss.5.04
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2
"Conversion Number" Recitals
"Contract" ss.3.01(d)
"DGCL" ss.1.01
"D&O Insurance" ss.5.09
"Effective Time of the
Merger" ss.1.03
"Environmental Law" ss.3.01(r)
"ERISA" ss.3.01(j)
"Excess Shares" ss.2.2(e)
"Exchange Act" ss.3.01(d)
"Exchange Agent" ss.2.02(a)
"Filed Company SEC
Documents" ss.3.01(g)
"Filed Parent SEC
Documents" ss.3.02(g)
"Form S-4" ss.3.01(f)
"Governmental Entity" ss.3.01(d)
"Hazardous Substances" ss.3.01(r)
"HSR Act" ss.3.01(d)
"LSARs" ss.4.01(a)
"Liens" ss.3.01(b)
"Material Breach" ss.7.02(e)
"Maximum Period" ss.5.09
"NYSE" ss.2.02(e)
"Options" ss.3.01(c)
"Parent Benefit Plans" ss.3.02(i)
"Parent Common Stock" Recitals
"Parent Convertible Notes" ss.3.02(c)
"Parent Disclosure Letter" ss.3.02(b)
"Parent Employee Stock
Plans" ss.3.02(c)
"Parent Employee Stock
Options" ss.3.02(c)
"Parent LSARs" ss.5.01(a)
"Parent Material Adverse
Effect" ss.3.02(a)
"Parent Phantom Stock Options" ss.5.07(a)
"Parent Property" ss.3.02(v)
"Parent Rights" ss.3.02(c)
"Parent Rights Agreement" ss.3.02(c)
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3
"Parent SARs" ss.5.01(a)
"Parent SEC Documents" ss.3.02(e)
"Parent Series A Preferred
Stock" ss.3.02(c)
"Parent Significant
Subsidiary ss.3.02(a)
"Parent Stockholder
Approval" ss.3.02(k)
"Parent Subsidiary" ss.3.02(a)
"Parent Takeover Proposal" ss.4.03(a)
"Parent's Stockholders'
Meeting" ss.5.01(c)
"Permits" ss.3.01(d)
"person" ss.8.03
"Phantom Stock Options" ss.5.07(a)
"Primary Company Executives" ss.3.01(p)
"Prime" ss.3.02(c)
"Primary Parent Executives" ss.3.02(p)
"Proxy Statement" ss.3.01(d)
"qualified stock options" ss.5.07(a)
"SARs" ss.4.01(a)
"SEC" ss.3.01(a)
"Securities Act" ss.3.01(e)
"SMCRA" ss.3.01(r)
"subsidiary" ss.8.03
"Surviving Corporation" Recitals
"Tax Returns" ss.3.01(n)
"Taxes" ss.3.01(n)
<PAGE>
AGREEMENT AND PLAN OF MERGER dated as of
December 8, 1996, among HOMESTAKE MINING COMPANY, a
Delaware corporation ("Parent"), HMGLD CORP., a
Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), and SANTA FE PACIFIC GOLD
CORPORATION, a Delaware corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and
the Company have approved the merger of Sub into the Company (the "Merger"),
upon the terms and subject to the conditions set forth in this Agreement,
whereby each issued and outstanding share of common stock, par value $0.01 per
share, of the Company (the "Company Common Stock"), not owned directly or
indirectly by Parent or the Company, will be converted into the right to receive
1.115 (as adjusted pursuant to Sections 2.01(d) and 5.06, the "Conversion
Number") fully paid and nonassessable shares of common stock, par value $1.00
per share, of Parent (the "Parent Common Stock");
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
WHEREAS for Federal income tax purposes it is intended that
the Merger qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS for accounting purposes, it is intended that the
Merger be accounted for as a pooling of interests under United States generally
accepted accounting principles ("GAAP").
<PAGE>
2
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the parties
agree as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Sub shall be merged with and into the
Company at the Effective Time of the Merger (as defined in Section 1.03).
Following the Merger, the separate corporate existence of Sub shall cease and
the Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights, properties,
liabilities and obligations of Sub in accordance with the DGCL. At the election
of Parent, any direct or indirect wholly owned subsidiary of Parent may be
substituted for Sub as a constituent corporation in the Merger; provided,
however, that such substitution has no impact on the satisfaction of the
conditions set forth in Sections 6.02(d) and 6.03(d). In such event, the parties
agree to execute an appropriate amendment to this Agreement in order to reflect
such substitution.
SECTION 1.02. Closing. Upon the terms and subject to the
conditions of this Agreement, the closing of the Merger (the "Closing") shall
take place at 10:00 a.m. on a date to be specified by the parties (the "Closing
Date"), which shall be no later than the second business day after satisfaction
of the conditions set forth in Section 6.01 (other than the condition set forth
in Sections 6.01(d) and 6.01(e)), at the offices of Cravath, Swaine & Moore,
Worldwide Plaza, 825 Eighth Avenue, New York, NY 10019, unless another time,
date or place is agreed to in writing by the parties hereto.
SECTION 1.03. Effective Time of the Merger. Upon
the Closing, the parties shall file with the Secretary of State of the State of
Delaware a certificate of merger or other appropriate documents (in any such
case, the "Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and shall make all other filings, recordings or
publications required under the DGCL in connection with the Merger. The Merger
shall become
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3
effective at such time as the Certificate of Merger is duly filed with the
Delaware Secretary of State, or at such other time as the parties may agree and
specify in the Certificate of Merger (the time the Merger becomes effective
being the "Effective Time of the Merger").
SECTION 1.04. Effects of the Merger.
(a) The Merger shall have the effects set forth in Section
259 of the DGCL.
(b) The Merger shall not result in any acceleration of vesting
of the outstanding non-employee Director share rights of Parent granted under
the Parent Employee Stock Plans (as defined in Section 3.02(c)) that are held by
directors of Parent who continue as members of the Board of Directors of Parent
after the Effective Time of the Merger.
(c) The Merger shall not result in any change in the terms of
the outstanding Parent Employee Stock Options (as defined in Section 3.02(c))
granted under the Parent Employee Stock Plans.
SECTION 1.05. Certificate of Incorporation and By-laws. (a)
The Amended and Restated Certificate of Incorporation of the Company, as in
effect immediately prior to the Effective Time of the Merger, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
(b) The By-laws of the Company as in effect immediately prior
to the Effective Time of the Merger shall be the By-laws of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
SECTION 1.06. Directors. The individuals who are the directors
of Sub immediately prior to the Effective Time of the Merger shall be the
directors of the Surviving Corporation until thereafter they cease to be
directors in accordance with the DGCL and the Certificate of Incorporation and
By-laws of the Surviving Corporation.
SECTION 1.07. Officers. The individuals who are
the officers of the Company immediately prior to the Effective Time of the
Merger shall be the officers of the Surviving Corporation until thereafter they
cease to be
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4
officers in accordance with the DGCL and the Certificate of Incorporation and
By-laws of the Surviving Corporation.
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. As of the Effective
Time of the Merger, by virtue of the Merger and without any action on the part
of the holder of any shares of Company Common Stock or any shares of capital
stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid
and nonassessable share of Common Stock, par value $0.01 per share, of
the Surviving Corporation.
(b) Cancelation of Treasury Stock and Parent- Owned Stock.
Each share of Company Common Stock that is owned by the Company or by
any wholly owned subsidiary of the Company and each share of Company
Common Stock that is owned by Parent, Sub or any other wholly owned
subsidiary of Parent shall automatically be canceled and retired and
shall cease to exist, and no Parent Common Stock or other consideration
shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to Section
2.02(e), each issued and outstanding share of Company Common Stock
(other than shares to be canceled in accordance with Section 2.01(b))
shall be converted into the right to receive the Conversion Number of
fully paid and nonassessable shares of Parent Common Stock. As of the
Effective Time of the Merger, all such shares of Company Common Stock
shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock shall cease to
have any rights with respect thereto, except the right to receive upon
the surrender of such certificates, certificates representing the
shares of Parent Common Stock, any cash in lieu of fractional shares of
Parent Common
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5
Stock and any dividends to the extent provided in Section 2.02(c) to be
issued or paid in consideration therefor upon surrender of such
certificate in accordance with Section 2.02, without interest.
(d) Adjustment of Conversion Number. In addition to any
adjustment in the Conversion Number pursuant to Section 5.06(a), in the
event of any split, combination or reclassification of any Parent
Capital Stock or any issuance or the authorization of any issuance of
any other securities in exchange or in substitution for shares of
Parent Capital Stock at any time during the period from the date of
this Agreement to the Effective Time of the Merger, the Company and
Parent shall make such adjustment to the Conversion Number as the
Company and Parent shall mutually agree so as to preserve the economic
benefits that the Company and Parent each reasonably expected on the
date of this Agreement to receive as a result of the consummation of
the Merger and the other transactions contemplated by this Agreement.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent.
Immediately following the Effective Time of the Merger, Parent shall deposit
with The First National Bank of Boston or such other bank or trust company as
may be designated by Parent and the Company (the "Exchange Agent"), for the
benefit of the holders of shares of Company Common Stock, for exchange in
accordance with this Article II, through the Exchange Agent, certificates
representing the shares of Parent Common Stock (such shares of Parent Common
Stock, together with any dividends or distributions with respect thereto with a
record date after the Effective Time of the Merger, being hereinafter referred
to as the "Exchange Fund") issuable pursuant to Section 2.01 in exchange for
outstanding shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time of the Merger, the Exchange Agent shall mail to each
holder of record of a certificate or certificates (the "Certificates") which
immediately prior to the Effective Time of the Merger represented outstanding
shares of Company Common Stock, other than shares to be canceled or retired in
accordance with Section 2.01(b), (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall
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6
be in such form and have such other provisions as Parent may reasonably specify)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock. Upon
surrender of a Certificate for cancelation to the Exchange Agent or to such
other agent or agents as may be appointed by Parent, together with such letter
of transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of whole
shares of Parent Common Stock which such holder has the right to receive
pursuant to the provisions of this Article II, and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of Company Common Stock which is not registered in the transfer records of the
Company, a certificate representing the proper number of shares of Parent Common
Stock may be issued to a person other than the person in whose name the
Certificate so surrendered is registered, if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person requesting
such payment shall pay any transfer or other taxes required by reason of the
issuance of shares of Parent Common Stock to a person other than the registered
holder of such Certificate or establish to the satisfaction of Parent that such
tax has been paid or is not applicable. Until surrendered as contemplated by
this Section 2.02, each Certificate shall be deemed at any time after the
Effective Time of the Merger to represent only the right to receive upon such
surrender the certificate representing the appropriate number of whole shares of
Parent Common Stock, cash in lieu of any fractional shares of Parent Common
Stock and any dividends to the extent provided in Section 2.02(c) as
contemplated by this Section 2.02. No interest will be paid or will accrue on
any cash payable in lieu of any fractional shares of Parent Common Stock.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Parent Common Stock with a
record date after the Effective Time of the Merger shall be paid to the holder
of any unsurrendered Certificate with respect to the shares of Parent Common
Stock represented thereby, and no cash payment in lieu of fractional shares
shall be paid to any such holder pursuant to Section 2.02(e) until the surrender
of such Certificate in accordance with this Article II. Subject to the effect of
applicable laws, following
<PAGE>
7
surrender of any such Certificate, there shall be paid to the holder of the
certificate representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of any
cash payable in lieu of a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 2.02(e) and the amount of dividends or
other distributions with a record date after the Effective Time of the Merger
theretofore paid with respect to such whole shares of Parent Common Stock, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time of the Merger but
prior to such surrender and a payment date subsequent to such surrender payable
with respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms of this Article II (including any cash
paid pursuant to Section 2.02(c) or 2.02(e)) shall be deemed to have been issued
(and paid) in full satisfaction of all rights pertaining to the shares of
Company Common Stock theretofore represented by such Certificates, subject,
however, to the Surviving Corporation's obligation to pay any dividends or make
any other distributions with a record date prior to the Effective Time of the
Merger which may have been declared or made by the Company on such shares of
Company Common Stock in accordance with the terms of this Agreement or prior to
the date of this Agreement and which remain unpaid at the Effective Time of the
Merger, and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Company Common
Stock which were outstanding immediately prior to the Effective Time of the
Merger. If, after the Effective Time of the Merger, Certificates are presented
to the Surviving Corporation or the Exchange Agent for any reason, they shall be
canceled and exchanged as provided in this Article II, except as otherwise
provided by law.
(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests
shall not entitle the owner thereof to vote or to any rights of a stockholder of
Parent.
<PAGE>
8
(ii) As promptly as practicable following the Effective Time
of the Merger, the Exchange Agent shall determine the excess of (x) the number
of shares of Parent Common Stock delivered to the Exchange Agent by Parent
pursuant to Section 2.02(a) over (y) the aggregate number of whole shares of
Parent Common Stock to be distributed to holders of the Certificates pursuant to
Section 2.02(b) (such excess being herein called the "Excess Shares"). As soon
as practicable after the Effective Time of the Merger, the Exchange Agent, as
agent for the holders of the Certificates, shall sell the Excess Shares at then
prevailing prices on the New York Stock Exchange (the "NYSE") all in the manner
provided in paragraph (iii) of this Section 2.02(e).
(iii) The sale of the Excess Shares by the Exchange Agent
shall be executed on the NYSE through one or more member firms of the NYSE and
shall be executed in round lots to the extent practicable. The proceeds from
such sale or sales available for distribution to the holders of Certificates
shall be reduced by the compensation payable to the Exchange Agent and the
expenses incurred by the Exchange Agent, in each case, in connection with such
sale or sales of the Excess Shares, including all related commissions, transfer
taxes and other out-of-pocket transaction costs. Until the net proceeds of such
sale or sales have been distributed to the holders of the Certificates, the
Exchange Agent shall hold such proceeds in trust for the holders of the
Certificates (the "Common Shares Trust"). The Exchange Agent shall determine the
portion of the Common Shares Trust to which each holder of a Certificate shall
be entitled, if any, by multiplying the amount of the aggregate net proceeds
comprising the Common Shares Trust by a fraction, the numerator of which is the
amount of the fractional share interest to which such holder of a Certificate is
entitled and the denominator of which is the aggregate amount of fractional
share interests to which all holders of the Certificates are entitled.
(iv) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Certificates in lieu of any
fractional share interests, the Exchange Agent shall make available such
amounts, without interest, to such holders of Certificates who have surrendered
their Certificates in accordance with this Article II.
<PAGE>
9
(f) Termination of Exchange Fund and Common Shares Trust. Any
portion of the Exchange Fund and Common Shares Trust which remains undistributed
to the holders of Certificates for six months after the Effective Time of the
Merger shall be delivered to Parent, upon demand, and any holders of
Certificates who have not theretofore complied with this Article II shall
thereafter look only to Parent for payment of their claim for Parent Common
Stock, any cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions with respect to Parent Common Stock.
(g) No Liability. None of Parent, Sub, the Company or the
Exchange Agent shall be liable to any person in respect of any shares of Parent
Common Stock (or dividends or distributions with respect thereto) or cash from
the Exchange Fund or the Common Shares Trust delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificates shall not have been surrendered prior to seven years after the
Effective Time of the Merger (or immediately prior to such earlier date on which
any shares of Parent Common Stock, any cash in lieu of fractional shares of
Parent Common Stock or any dividends or distributions with respect to Parent
Common Stock in respect of such Certificate would otherwise escheat to or become
the property of any Governmental Entity (as defined in Section 3.01(d)), any
such shares, cash, dividends or distributions in respect of such Certificate
shall, to the extent permitted by applicable law, become the property of the
Surviving Corporation, free and clear of all claims or interest of any person
previously entitled thereto.
(h) Investment of Exchange Fund and Common Shares Trust. The
Exchange Agent shall invest any cash included in the Exchange Fund and Common
Shares Trust, as directed by Parent, on a daily basis. Any interest and other
income resulting from such investments shall be paid to Parent.
<PAGE>
10
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company.
The Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of the
Company and each Company Significant Subsidiary (as hereinafter
defined) is a corporation, partnership or other legal entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite power and
authority to carry on its business as now being conducted. Each of the
Company and each of its subsidiaries (each a "Company Subsidiary") is
duly qualified or licensed to do business and is in good standing in
each jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed (individually or in the aggregate) would not (i)
have a material adverse effect on the business, properties, financial
condition or results of operations of the Company and the Company
Subsidiaries, taken as a whole (other than effects relating to the gold
mining industry in general), or (ii) prevent the Company from
performing its obligations under this Agreement (a "Company Material
Adverse Effect"). The Company has made available to Parent complete and
correct copies of its Amended and Restated Certificate of Incorporation
and By-laws and the certificates of incorporation and by-laws or
comparable organization documents of the Company Significant
Subsidiaries, in each case as amended to the date of this Agreement.
For purposes of this Agreement, a "Company Significant Subsidiary"
means any Company Subsidiary that constitutes a significant subsidiary
of the Company within the meaning of Rule 1-02 of Regulation S-X of the
Securities and Exchange Commission (the "SEC"). The Company is not in
violation of any provision of its Amended and Restated Certificate of
Incorporation or By-laws, and no Company Subsidiary is in violation of
any provisions of its certificate of incorporation, by-laws or
comparable organizational documents, except to the extent that
<PAGE>
11
such violations would not, individually or in the aggregate, have a
Company Material Adverse Effect.
(b) Company Subsidiaries. Section 3.01(b) of the letter from
the Company, dated the date of this Agreement, addressed to Parent (the
"Company Disclosure Letter") lists each Company Significant Subsidiary
and the ownership or interest therein of the Company. All the
outstanding shares of capital stock of each Company Significant
Subsidiary have been validly issued and are fully paid and
nonassessable and, except as set forth in Section 3.01(b) of the
Company Disclosure Letter, are owned by the Company, by another
subsidiary of the Company or by the Company and another Company
Subsidiary, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"). Except for the capital stock of the Company
Subsidiaries and except for the ownership interests set forth in
Section 3.01(b) of the Company Disclosure Letter, the Company does not
own, directly or indirectly, any capital stock or other ownership
interest, with a fair market value as of the date of this Agreement
greater than $25,000,000, in any person.
(c) Capital Structure. The authorized capital stock of the
Company (the "Company Capital Stock") consists of 500,000,000 shares of
Company Common Stock and 50,000,000 shares of preferred stock, par
value $0.01 per share. Pursuant to a Certificate of Designation,
Preferences and Rights of Series A Junior Participating Preferred
Stock, on January 26, 1995, the Board of Directors of the Company
created a series of 1,500,000 shares of preferred stock designated as
the "Series A Junior Participating Preferred Stock", par value $0.01
per share (the "Company Series A Preferred Stock"), which shares are
issuable in connection with the rights to purchase shares of Company
Series A Preferred Stock (the "Company Rights") that were issued
pursuant to the Rights Agreement dated February 13, 1995 (as amended
from time to time, the "Company Rights Agreement"), between the Company
and Harris Trust and Savings Bank, as Rights Agent. At the close of
business on December 5, 1996: (i) 131,459,422 shares of Company Common
Stock were outstanding, all of which were validly issued, fully paid
and nonassessable, and no shares of Company Series A Preferred Stock,
or of any other series of preferred stock of the Company,
<PAGE>
12
were outstanding; (ii) no shares of Company Common Stock were held by
the Company in its treasury; (iii) 1,521,912 shares of Company Common
Stock were issuable upon the exercise of outstanding employee or
outside director stock options (the "Company Employee Stock Options")
that were granted pursuant to the Company's employee stock plans set
forth in Section 3.01(c) of the Company Disclosure Letter (the "Company
Employee Stock Plans"); and (iv) 1,500,000 shares of Company Series A
Preferred Stock were reserved for issuance in connection with the
Company Rights. Except as set forth above, at the close of business on
December 5, 1996, no shares of capital stock or other voting securities
of the Company were issued, reserved for issuance or outstanding. There
are not any bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which
stockholders of the Company must vote. Except as set forth above and
except as set forth in Section 3.01(c) of the Company Disclosure
Letter, as of the date of this Agreement, there are not any options,
warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind (collectively, "Options") to which the Company
or any Company Subsidiary is a party or by which any of them is bound
relating to the issued or unissued capital stock of the Company or any
Company Subsidiary, or obligating the Company or any Company Subsidiary
to issue, transfer, grant or sell any shares of capital stock or other
equity interests in, or securities convertible or exchangeable for any
capital stock or other equity interests in, the Company or any Company
Subsidiary or obligating the Company or any Company Subsidiary to
issue, grant, extend or enter into any such Options. All shares of
Company Common Stock that are subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instrument
pursuant to which they are issuable, will be duly authorized, validly
issued, fully paid and nonassessable. Except as set forth in Section
3.01(c) of the Company Disclosure Letter, as of the date of this
Agreement, there are not any outstanding contractual obligations of the
Company or any Company Subsidiary to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or any Company
Subsidiary, or make any material investment (in
<PAGE>
13
the form of a loan, capital contribution or otherwise)
in, any Company Subsidiary or any other person.
(d) Authority; Noncontravention. The Company has all requisite
corporate power and authority to enter into this Agreement and, subject
to the Company Stockholder Approval (as defined in Section 3.01(k)), to
consummate the transactions contemplated by this Agreement. The Board
of Directors of the Company has unanimously approved this Agreement and
the transactions contemplated by this Agreement, and has resolved to
recommend to the Company's stockholders that they give the Company
Stockholder Approval. The execution and delivery of this Agreement by
the Company and the consummation by the Company of the transactions
contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of the Company, subject to the
Company Stockholder Approval. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms. Except as set forth in Section 3.01(d) of the Company Disclosure
Letter, the execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, conflict
with, or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of consent,
termination, purchase, cancelation or acceleration of any obligation or
to loss of any property, rights or benefits under, or result in the
imposition of any additional obligation under, or result in the
creation of any Lien upon any of the properties or assets of the
Company or any Company Subsidiary under, (i) the Amended and Restated
Certificate of Incorporation or By-laws of the Company or the
comparable organizational documents of any Company Subsidiary, (ii) any
contract, instrument, permit, concession, franchise, license, loan or
credit agreement, note, bond, mortgage, indenture, lease or other
property agreement, partnership or joint venture agreement or other
legally binding agreement, whether oral or written (a "Contract"),
applicable to the Company or any Company Subsidiary or their respective
properties or assets or (iii) subject to the governmental filings and
other matters referred to in the following sentence, any judgment,
order, decree,
<PAGE>
14
statute, law, ordinance, rule or regulation applicable to the Company
or any Company Subsidiary or their respective properties or assets,
other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights or Liens that individually or in the
aggregate would not have a Company Material Adverse Effect. No consent,
approval, order or authorization of, or registration, declaration or
filing with, any Federal, state or local government or any court,
administrative agency or commission or other governmental authority or
agency, domestic or foreign, including the European Community (a
"Governmental Entity"), is required by or with respect to the Company
or any Company Subsidiary in connection with the execution and delivery
of this Agreement by the Company or the consummation by the Company of
the transactions contemplated by this Agreement, except for (i) the
filing of a premerger notification and report form by the Company under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR
Act"), (ii) the filing with the SEC of (A) a joint proxy statement
relating to the meetings of the Company's stockholders and the Parent's
stockholders to be held in connection with the Merger and the
transactions contemplated by this Agreement (as amended or supplemented
from time to time, the "Proxy Statement"), and (B) such reports under
Section 12 or 13(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (iii)
the filing of the Certificate of Merger with the Delaware Secretary of
State and appropriate documents with the relevant authorities of other
states in which the Company is qualified to do business, (iv) those
that may be required solely by reason of Parent's or Sub's (as opposed
to any other third party's) participation in the Merger and the other
transactions contemplated by this Agreement and (v) such other
consents, approvals, orders, authorizations, registrations,
declarations and filings, including under applicable Environmental Laws
(as defined in Section 3.01(r)), (x) as may be required under the laws
of any foreign country in which the Company or any Company Subsidiary
conducts any business or owns any property or assets, (y) as are set
forth in Section 3.01(d) of the Company Disclosure Letter or (z) that,
if not obtained or made, would not, individually or in the aggregate,
have a Company Material Adverse Effect. Except as set forth
<PAGE>
15
in Section 3.01(d) of the Company Disclosure Letter, the Company and
the Company Subsidiaries possess all certificates, franchises,
licenses, permits, authorizations and approvals issued to or granted by
Governmental Entities (collectively, "Permits"), including pursuant to
any Environmental Law, necessary to conduct their business as such
business is currently conducted or is expected to be conducted, except
for such Permits, the lack of possession of which has not, and is not
reasonably expected to have, a Company Material Adverse Effect. Except
as set forth in Section 3.01(d) of the Company Disclosure Letter, (i)
all such Permits are validly held by the Company or the Company
Subsidiaries, and the Company and the Company Subsidiaries have
complied in all respects with all terms and conditions thereof, except
for such instances where the failure to validly hold such Permits or
the failure to have complied with such Permits has not, and is not
reasonably expected to have, a Company Material Adverse Effect, (ii)
none of such Permits will be subject to suspension, modification,
revocation or nonrenewal as a result of the execution and delivery of
this Agreement or the consummation of the Merger, other than such
Permits the suspension, modification or nonrenewal of which,
individually or in the aggregate, have not had and could not reasonably
be expected to have a Company Material Adverse Effect and (iii) since
December 31, 1995, neither the Company nor any Company Subsidiary has
received any written warning, notice, notice of violation or probable
violation, notice of revocation, or other written communication from or
on behalf of any Governmental Entity, alleging (A) any violation of any
such Permit or (B) that the Company or any Company Subsidiary requires
any Permit required for its business, as such business is currently
conducted, that is not currently held by it.
(e) SEC Documents; Undisclosed Liabilities. The Company has
filed all required reports, schedules, forms, statements and other
documents with the SEC since January 1, 1995 (the "Company SEC
Documents"). As of its date, each Company SEC Document complied in all
material respects with the requirements of the Securities Act of 1933
(the "Securities Act"), or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable
to such Company SEC Documents. None of the
<PAGE>
16
Company SEC Documents contains any untrue statement of a material fact
or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except to the
extent that such statements have been modified or superseded by a later
filed Company SEC Document. The consolidated financial statements of
the Company included in the Company SEC Documents comply as to form in
all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of the Company as of
the dates thereof and the consolidated results of its operations and
cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except as
set forth in the Filed Company SEC Documents (as defined in Section
3.01(g)), neither the Company nor any Company Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by generally accepted accounting
principles to be set forth on a consolidated balance sheet of the
Company and the consolidated Company Subsidiaries or in the notes
thereto and which, individually or in the aggregate, could reasonably
be expected to have a Company Material Adverse Effect, other than any
such liabilities or obligations that were required to be set forth in
the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996. None of the Company Subsidiaries is subject to the
informational reporting requirements of Section 13 of the Exchange Act.
(f) Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed
with the SEC by Parent in connection with the issuance of Parent Common
Stock in the Merger (the "Form S-4") will, at the time the Form S-4 is
filed with the SEC, at any time it is amended or supplemented or at the
time it
<PAGE>
17
becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, or (ii) the Proxy Statement will, at the date
the Proxy Statement is first mailed to the Company's stockholders or
Parent's stockholders or at the time of the Company's Stockholders'
Meeting (as defined in Section 5.01(b)) or the Parent's Stockholders'
Meeting (as defined in Section 5.01(c)), contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
The Proxy Statement will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder, except that no representation or warranty is
made by the Company with respect to statements made or incorporated by
reference therein based on information supplied by Parent or Sub for
inclusion or incorporation by reference in the Proxy Statement.
(g) Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Documents filed and publicly available prior to the
date of this Agreement (the "Filed Company SEC Documents"), from
December 31, 1995, to the date of this Agreement, the Company has
conducted its business only in the ordinary course, and:
(i) during the period from September 30, 1996, to the
date of this Agreement, there has not been any event, change,
effect or development which, individually or in the aggregate,
has had or is, so far as reasonably can be foreseen, likely to
have, a Company Material Adverse Effect;
(ii) during the period from December 31, 1995, to the
date of this Agreement, there has not been except for regular
annual dividends not in excess of $0.05 per share of Company
Common Stock, with customary record and payment dates, any
declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect
to any shares of Company Capital Stock;
<PAGE>
18
(iii) during the period from December 31, 1995, to the
date of this Agreement, there has not been any split,
combination or reclassification of any Company Capital Stock
or any issuance or the authorization of any issuance of any
other securities in exchange or in substitution for shares of
Company Capital Stock;
(iv) during the period from December 31, 1995, to the
date of this Agreement, there has not been except as disclosed
in Section 3.01(g) of the Company Disclosure Letter, (A) any
granting by the Company or any Company Subsidiary to any
executive officer of the Company or any Company Subsidiary of
any increase in compensation, except in the ordinary course of
business consistent with prior practice or as was required
under employment agreements in effect as of the date of the
most recent audited financial statements included in the Filed
Company SEC Documents, (B) any granting by the Company or any
Company Subsidiary to any such executive officer of any
increase in severance or termination pay, except as was
required under any employment, severance or termination
agreements in effect as of the date of the most recent audited
financial statements included in the Filed Company SEC
Documents or (C) any entry by the Company or any Company
Subsidiary into any employment, severance or termination
agreement with any such executive officer; and
(v) during the period from December 31, 1995, to the
date of this Agreement, there has not been any change in
accounting methods, principles or practices by the Company or
any Company Significant Subsidiary materially affecting its
assets, liabilities or business, except insofar as may have
been required by a change in generally accepted accounting
principles.
(h) Litigation. Except as disclosed in the Filed Company SEC
Documents or in Section 3.01(h) of the Company Disclosure Letter, there
is no suit, action or proceeding pending or, to the knowledge of the
Company, threatened against the Company or any Company Subsidiary (and
the Company does not have any reasonable basis to expect any such suit,
action or
<PAGE>
19
proceeding to be commenced) that, individually or in the aggregate,
could reasonably be expected to have a Company Material Adverse Effect,
and there is not any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or
any Company Subsidiary having, or which, insofar as reasonably can be
foreseen, in the future would have, any Company Material Adverse
Effect. As of the date of this Agreement, except as disclosed in the
Filed Company SEC Documents or in Section 3.01(h) of the Company
Disclosure Letter, there is no suit, action or proceeding pending, or,
to the knowledge of the Company, threatened, against the Company or any
Company Subsidiary (and the Company does not have any reasonable basis
to expect any such suit, action or proceeding to be commenced) that,
individually or in the aggregate, could reasonably be expected to
prevent or delay in any material respect the consummation of the Merger
or the transactions contemplated by this Agreement.
(i) Absence of Changes in Benefit Plans. Except as disclosed
in the Filed Company SEC Documents or in Section 3.01(i) of the Company
Disclosure Letter, since the date of the most recent audited financial
statements included in the Filed Company SEC Documents and prior to the
date of this Agreement, there has not been any adoption or amendment in
any material respect by the Company or any Company Subsidiary of any
collective bargaining agreement or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan,
arrangement or understanding (whether or not legally binding) providing
benefits to any current or former employee, officer or director of the
Company or any Company Subsidiary (collectively, "Company Benefit
Plans").
(j) ERISA Compliance. Except as described in the Filed Company
SEC Documents or in Section 3.01(j) of the Company Disclosure Letter or
as would not have a Company Material Adverse Effect, (i) all employee
benefit plans or programs maintained for the benefit of the current or
former employees or directors of the Company or any Company Subsidiary
that are sponsored, maintained or contributed to by the Company or any
<PAGE>
20
Company Subsidiary, or with respect to which the Company or any Company
Subsidiary has any liability, including any such plan that is an
"employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA"), are in compliance
with all applicable requirements of law, including ERISA and the Code,
and (ii) neither the Company nor any Company Subsidiary has any
liabilities or obligations with respect to any such employee benefit
plans or programs, whether accrued, contingent or otherwise, nor to the
knowledge of the Company are any such liabilities or obligations
expected to be incurred. Except as set forth in Section 3.01(j) of the
Company Disclosure Letter, the execution of, and performance of the
transactions contemplated by, this Agreement will not (either alone or
upon the occurrence of any additional or subsequent events) constitute
an event under any benefit plan, policy, arrangement or agreement or
any trust or loan that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any employee. The only severance agreements or
severance policies applicable to the Company or the Company
Subsidiaries are the agreements and policies specifically set forth in
Section 3.01(j) of the Company Disclosure Letter.
(k) Voting Requirements. The approval and adoption of this
Agreement by the holders of a majority of the outstanding shares of
Company Common Stock (the "Company Stockholder Approval") is the only
vote of the holders of any class or series of Company Capital Stock
necessary to approve this Agreement and the transactions contemplated
by this Agreement.
(l) Brokers; Schedule of Fees and Expenses. Except as set
forth in Section 3.01(l) of the Company Disclosure Letter, no broker,
investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company.
The Company has made available to Parent true and complete copies of
all agreements that are referred to in Section 3.01(l) of the Company
Disclosure Letter and
<PAGE>
21
all indemnification and other agreements related to the engagement of
the persons so listed.
(m) Opinion of Financial Advisor. The Company has received the
opinion of SBC Warburg Inc., dated the date of this Agreement, to the
effect that, as of such date, the consideration to be received in the
Merger by the Company's stockholders is fair to the Company's
stockholders from a financial point of view, a signed copy of which
opinion has been delivered to Parent.
(n) Taxes. (i) The Company and each Company Subsidiary have
timely filed (or have had timely filed on their behalf) or will file or
cause to be timely filed, all material Tax Returns required by
applicable law to be filed by any of them prior to or as of the
Effective Time of the Merger. All such material Tax Returns are, or
will be at the time of filing, true, complete and correct in all
material respects.
(ii) The Company and each Company Subsidiary have paid (or have
had paid on their behalf) or, where payment is not yet due, have
established (or have had established on their behalf and for their sole
benefit and recourse) or will establish or cause to be established on
or before the Effective Time of the Merger an adequate accrual for the
payment of all Taxes due with respect to any period ending prior to or
as of the Effective Time of the Merger, except where the failure to pay
or establish adequate reserves has not had and would not reasonably be
expected to have a Company Material Adverse Effect.
(iii) Except as set forth in Section 3.01(n) of the Company
Disclosure Letter, no deficiencies for any material Taxes have been
proposed, asserted or assessed against the Company or any Company
Subsidiary, and no requests for waivers of the time to assess any such
material Taxes are pending. The Federal income Tax Returns of the
Company and each Company Subsidiary consolidated in such Tax Returns
have been examined by and settled with the United States Internal
Revenue Service for all years through 1985.
(iv) The Company has no reason to believe that any conditions
exist that could reasonably be expected to prevent the Merger from
qualifying as a
<PAGE>
22
reorganization within the meaning of Section 368(a) of the Code.
(v) For purposes of this Agreement, the following terms shall
have the following meanings:
(A) "Taxes" shall mean all Federal, state, local and
foreign taxes, and other assessments of a similar nature
(whether imposed directly or through withholding), including
any interest, additions to tax, or penalties applicable
thereto.
(B) "Tax Returns" shall mean all Federal, state,
local and foreign tax returns, declarations, statements,
reports, schedules, forms and information returns and any
amended tax return relating to Taxes.
(o) Compliance with Laws. Neither the Company nor any Company
Subsidiary has violated or failed to comply with any statute, law,
ordinance, regulation, rule, judgment, decree or order of any
Governmental Entity applicable to its business or operations, except
for violations and failures to comply that could not, individually or
in the aggregate, reasonably be expected to result in a Company
Material Adverse Effect.
(p) No Excess Parachute Payments. Other than payments that may
be made to the persons listed in Section 3.01(p) of the Company
Disclosure Letter (the "Primary Company Executives"), any amount that
could be received (whether in cash or property or the vesting of
property) as a result of any of the transactions contemplated by this
Agreement by any employee, officer or director of the Company or any of
its affiliates who is a "disqualified individual" (as such term is
defined in proposed Treasury Regulation Section 1.280G-1) under any
employment, severance or termination agreement, other compensation
arrangement or Company Benefit Plan currently in effect would not be
characterized as an "excess parachute payment" (as such term is defined
in Section 280G(b)(1) of the Code). Set forth in Section 3.01(p) of the
Company Disclosure Letter is (i) the estimated maximum amount that
could be paid to each Primary Company Executive as a result of the
transactions contemplated by this Agreement under all employment,
severance and termination agreements, other
<PAGE>
23
compensation arrangements and Company Benefit Plans currently in effect
and (ii) the "base amount" (as such term is defined in Section
280G(b)(3) of the Code) for each Primary Company Executive calculated
as of the date of this Agreement.
(q) Accounting Matters. Neither the Company nor, to its best
knowledge, any of its affiliates, has taken or agreed to take any
action that (without giving effect to any action taken or agreed to be
taken by Parent or any of its affiliates) would prevent Parent from
accounting for the business combination to be effected by the Merger as
a pooling of interests.
(r) Environmental Matters. (i) Except as set forth in Section
3.01(r) of the Company Disclosure Letter and except for items that
could not, in all such cases taken individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse Effect,
neither the Company nor any Company Subsidiary has (x) placed, held,
located, released, transported or disposed of any Hazardous Substances
(as defined below) on, under, from or at any of the Company's or any
Company Subsidiary's current or former properties or any other
properties or (y) any knowledge or reason to know of the presence of
any Hazardous Substances on, under or at any of the Company's or any
Company Subsidiary's current or former properties or any other property
but arising from the Company's or any Company Subsidiary's current or
former properties. For purposes of this Agreement, the term "Hazardous
Substance" shall mean any materials or substances (including asbestos,
buried contaminants, chemicals, flammable explosives, radioactive
materials, petroleum and petroleum products) defined as, or included in
the definition of, "hazardous substances", "hazardous wastes",
"hazardous materials" or "toxic substances" under any Environmental
Law. For purposes of this Agreement, the term "Environmental Law" shall
mean any federal, state, provincial, regional, territorial, municipal,
local or foreign statute, code, ordinance, rule, regulation, policy,
permit, consent, approval, license, judgment, order, writ, decree,
injunction or other authorization, relating to: (A) emissions,
discharges, releases or threatened releases of Hazardous Substances
into the natural or workplace environment, including, without
limitation, ambient air, soil, sediments, land surface, subsurface,
surface
<PAGE>
24
water, groundwater, tailings ponds or settling lagoons; (B) the
generation, treatment, storage, disposal, use, handling, manufacturing,
transportation or shipment of Hazardous Substances; or (C) protection
of health or safety or the environment, handling, treatment or disposal
of solid waste, or operation or reclamation of mines.
(ii) Except for items that individually or in the aggregate could
not reasonably be expected to result in a Company Material Adverse
Effect or as disclosed in Section 3.01(r) of the Company Disclosure
Letter, the Company and the Company Subsidiaries are in compliance with
the Surface Mining Control and Reclamation Act, 30 U.S.C. ss. 1201 et
seq. (the "SMCRA") and any state law comparable to SMCRA under 30
U.S.C. ss. 1253, and neither the Company nor any Company Subsidiary is
subject to any reclamation obligation or other site restoration
obligation under any Environmental Law.
(iii) Except for items that individually or in the aggregate could
not reasonably be expected to result in a Company Material Adverse
Effect or as set forth in Section 3.01(r) of the Company Disclosure
Letter, no Environmental Law imposes any obligation upon the Company or
any Company Subsidiary arising out of or as a condition to any
transaction contemplated by this Agreement, including any requirement
to modify or to transfer any permit or license, any requirement to file
any notice or other submission with any Governmental Entity, the filing
of any notice, acknowledgement or covenant in any land records, or the
modification of or provision of notice under any agreement, consent
order or consent decree.
(s) State Takeover Statutes. The Board of Directors of the
Company has approved the Merger and this Agreement, and such approval
is sufficient to render inapplicable to the Merger, this Agreement and
the transactions contemplated by this Agreement, the provisions of
Section 203 of the DGCL. To the best of the Company's knowledge, no
other state takeover statute or similar statute or regulation applies
or purports to apply to the Merger, this Agreement or any of the
transactions contemplated by this Agreement.
(t) Rights Agreement. The Company has taken all necessary
action to (i) render the Company Rights
<PAGE>
25
inapplicable to the Merger and the other transactions contemplated by
this Agreement and (ii) ensure that (x) neither Parent nor any of its
affiliates is an Acquiring Person (as defined in the Company Rights
Agreement), (y) none of a Distribution Date, Shares Acquisition Date or
Triggering Event (each as defined in the Company Rights Agreement)
shall occur by reason of the approval, execution or delivery of this
Agreement, the announcement or consummation of the Merger or the
consummation of any of the other transactions contemplated by this
Agreement and (z) the Company Rights shall expire immediately prior to
the Effective Time of the Merger.
(u) Dispositions of Company Property. Except as described in
the Filed Company SEC Documents or in Section 3.01(u) of the Company
Disclosure Letter, since December 31, 1995, neither the Company nor any
Company Subsidiary has sold or disposed of or ceased to hold or own any
personal property, real property, any interest or rights with respect
to real property (including exploration or production rights), any
interest in a joint venture or other assets or properties of the
Company or any Company Subsidiary ("Company Property"), other than
sales and dispositions of raw materials, obsolete equipment, mine
output and other inventories, and any interests or rights with respect
to real property having an individual fair market value of less than
$10,000,000 of the Company or any Company Subsidiary, in each case in
the ordinary course of business, consistent with past practice. Except
as set forth in Section 3.01(u) of the Company Disclosure Letter, no
Company Property whose fair market value on the date of this Agreement
is greater than $10,000,000 is subject to any pending sale or
disposition transaction.
(v) Absence of Reduction in Reserves and Mineralized Material.
There has been no material reduction in the aggregate amount of
reserves or in the aggregate amount of mineralized material of the
Company and the Company Subsidiaries, taken as a whole, from the
amounts set forth in the Company's 1995 annual report to shareholders
except for (i) such reductions in reserves that have resulted from
production in the ordinary course of business and (ii) such reductions
in mineralized material that have resulted from reclassifications of
mineralized material as reserves.
<PAGE>
26
(w) Development Projects. The Company has no reason to believe
that (i) the estimated production capacity for each of the time periods
set forth in Section 3.01(w) of the Company Disclosure Letter with
respect to the four development projects described in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995
will not be reached during such time periods, or (ii) the estimated
costs set forth in Section 3.01(w) of the Company Disclosure Letter
with respect to each such development project will be exceeded.
SECTION 3.02. Representations and Warranties of Parent and
Sub. Parent and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of
Parent, Sub and each Parent Significant Subsidiary (as hereinafter
defined) is a corporation, partnership or other legal entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite power and
authority to carry on its business as now being conducted. Each of
Parent, Sub and each of Parent's subsidiaries (each a "Parent
Subsidiary") is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed (individually or in the
aggregate) would not (i) have a material adverse effect on the
business, properties, financial condition or results of operations of
Parent and the Parent Subsidiaries, taken as a whole (other than
effects relating to the gold mining industry in general), or (ii)
prevent Parent from performing its obligations under this Agreement (a
"Parent Material Adverse Effect"). Parent has made available to the
Company complete and correct copies of its Restated Certificate of
Incorporation and By-laws, the Certificate of Incorporation and By-Laws
of Sub and the certificates of incorporation and by-laws or comparable
organizational documents of the Parent Significant Subsidiaries, in
each case as amended to the date of this Agreement. For purposes of
this Agreement, a "Parent Significant Subsidiary" means any Parent
Subsidiary that constitutes a significant subsidiary of
<PAGE>
27
Parent within the meaning of Rule 1-02 of Regulation S-X of the SEC.
Neither Parent nor Sub is in violation of any provision of its
certificate of incorporation or by-laws, and no Parent Subsidiary is in
violation of any provisions of its certificate of incorporation,
by-laws or comparable organizational documents, except to the extent
that such violations would not, individually or in the aggregate, have
a Parent Material Adverse Effect.
(b) Parent Subsidiaries. Section 3.02(b) of the letter from
Parent, dated the date of this Agreement, addressed to the Company (the
"Parent Disclosure Letter") lists each Parent Significant Subsidiary
and the ownership or interest therein of Parent. All the outstanding
shares of capital stock of each Parent Significant Subsidiary have been
validly issued and are fully paid and nonassessable and, except as set
forth in Section 3.02(b) of the Parent Disclosure Letter, are owned by
Parent, by another subsidiary of Parent or by Parent and another Parent
Subsidiary, free and clear of all Liens. Except for the capital stock
of the Parent Subsidiaries and except for the ownership interests set
forth in Section 3.02(b) of the Parent Disclosure Letter, Parent does
not own, directly or indirectly, any capital stock or other ownership
interest, with a fair market value as of the date of this Agreement
greater than $25,000,000, in any person.
(c) Capital Structure. Except as otherwise contemplated by
this Agreement, the authorized capital stock of Parent (the "Parent
Capital Stock") consists of 250,000,000 shares of Parent Common Stock
and 10,000,000 shares of preferred stock, par value $1.00 per share.
Pursuant to a Certificate of Designation of Series A Participating
Cumulative Preferred Stock, on October 16, 1987, the Board of Directors
of Parent created a series of 1,250,000 shares of preferred stock
designated as the "Series A Participating Cumulative Preferred Stock",
par value $1.00 per share, which series was increased to 2,500,000
shares by an amendment to such Certificate of Designation filed with
the Secretary of State of the State of Delaware on June 4, 1993 (the
"Parent Series A Preferred Stock"). The shares of Parent Series A
Preferred Stock are issuable in connection with the rights to purchase
shares of Parent Series A Preferred Stock (the "Parent Rights") that
were issued pursuant to the Rights
<PAGE>
28
Agreement dated October 16, 1987 (as amended from time to time, the
"Parent Rights Agreement"), between Parent and The First National Bank
of Boston. At the close of business on December 4, 1996: (i)
146,672,452 shares of Parent Common Stock were outstanding, all of
which were validly issued, fully paid and nonassessable, and no shares
of Parent Series A Preferred Stock, or of any other series of preferred
stock of Parent, were outstanding; (ii) 12,250 shares of Parent Common
Stock were held by Parent in its treasury; (iii) 8,602,526 shares of
Parent Common Stock were reserved for issuance in connection with the
granting of Directors share rights and upon the exercise of outstanding
employee stock options (the "Parent Employee Stock Options") that were
granted pursuant to the Parent's employee stock plans set forth in
Section 3.02(c) of the Parent Disclosure Letter (the "Parent Employee
Stock Plans"); (iv) 2,500,000 shares of Parent Series A Preferred Stock
were reserved for issuance in connection with the Parent Rights; and
(v) 6,504,000 shares of Parent Common Stock were reserved for issuance
upon the conversion of Parent's 5.5% Convertible Subordinated Notes due
June 23, 2000 (the "Parent Convertible Notes"). Except as set forth
above, at the close of business on December 4, 1996, no shares of
capital stock or other voting securities of Parent were issued,
reserved for issuance or outstanding. Except as set forth above, there
are not any bonds, debentures, notes or other indebtedness of Parent
having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which
stockholders of the Company must vote. Except as set forth above and
except as set forth in Section 3.02(c) of the Parent Disclosure Letter,
as of the date of this Agreement, there are not any Options to which
Parent or any Parent Subsidiary is a party or by which any of them is
bound relating to the issued or unissued capital stock of Parent or any
Parent Subsidiary, or obligating Parent or any Parent Subsidiary to
issue, transfer, grant or sell any shares of capital stock or other
equity interests in, or securities convertible or exchangeable for any
capital stock or other equity interests in, Parent or any Parent
Subsidiary or obligating Parent or any Parent Subsidiary to issue,
grant, extend or enter into any such Options. All shares of Parent
Common Stock that are subject to issuance as aforesaid, upon issuance
on the terms and conditions specified in the
<PAGE>
29
instrument pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. All shares of
Parent Common Stock that are subject to issuance pursuant to the
Merger, upon issuance pursuant to this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable. Except as set
forth in Section 3.02(c) of the Parent Disclosure Letter, as of the
date of this Agreement, there are not any outstanding contractual
obligations of Parent or any Parent Subsidiary to repurchase, redeem or
otherwise acquire any shares of capital stock of Parent or any Parent
Subsidiary, or make any material investment (in the form of a loan,
capital contribution or otherwise) in, any Parent Subsidiary or any
other person. As of the date of this Agreement, the authorized capital
stock of Sub consists of 100 shares of common stock, par value $0.01
per share, all of which have been validly issued, are fully paid and
nonassessable and are owned by Parent free and clear of any Lien.
(d) Authority; Noncontravention. Parent and Sub have all
requisite corporate power and authority to enter into this Agreement
and, subject to the Parent Stockholder Approval (as defined in Section
3.02(k)) and the filing of an amendment to Parent's Restated
Certificate of Incorporation to increase the authorized Parent Capital
Stock (the "Amendment to Parent's Restated Certificate of
Incorporation") and of an amendment to Parent's Certificate of
Designation of Series A Participating Cumulative Preferred Stock to
increase the number of shares of Parent's preferred stock constituting
Parent Series A Preferred Stock (the "Amendment to Parent's Certificate
of Designation"), to consummate the transactions contemplated by this
Agreement. The Board of Directors of Parent has approved this Agreement
and the transactions contemplated by this Agreement, and has resolved
to recommend to Parent's stockholders that they give the Parent
Stockholder Approval. The execution and delivery of this Agreement and
the consummation of the transactions contemplated by this Agreement, in
each case by Parent or by Parent and Sub, as the case may be, have been
duly authorized by all necessary corporate action on the part of Parent
and Sub, subject to the Parent Stockholder Approval and the filing of
the Amendment to Parent's Restated Certificate of Incorporation and the
Amendment to Parent's Restated
<PAGE>
30
Certificate of Designation. This Agreement has been duly executed and
delivered by Parent and Sub, respectively, and constitutes a valid and
binding obligation of Parent and Sub, respectively, enforceable against
each such party in accordance with its terms. Except as set forth in
Section 3.02(d) of the Parent Disclosure Letter, the execution and
delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of consent, termination, purchase,
cancelation or acceleration of any obligation or to loss of any
property, rights or benefits under, or result in the imposition of any
additional obligation under, or result in the creation of any Lien upon
any of the properties or assets of Parent, Sub or any other Parent
Subsidiary under, (i) the Restated Certificate of Incorporation or
By-laws of Parent, the certificate of incorporation and by-laws of Sub,
or the comparable organizational documents of any Parent Subsidiary,
(ii) any Contract applicable to Parent, Sub or any other Parent
Subsidiary or their respective properties or assets or (iii) subject to
the governmental filings and other matters referred to in the following
sentence, any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Parent, Sub or any other Parent Subsidiary or
their respective properties or assets, other than, in the case of
clauses (ii) and (iii), any such conflicts, violations, defaults,
rights or Liens that individually or in the aggregate would not have a
Parent Material Adverse Effect. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to Parent, Sub or
any other Parent Subsidiary in connection with the execution and
delivery of this Agreement by Parent or Sub, as the case may be, or the
consummation by Parent or Sub, as the case may be, of the transactions
contemplated by this Agreement, except for (i) the filing of a
premerger notification and report form by Parent under the HSR Act,
(ii) the filing with the SEC of (A) the Proxy Statement, and (B) such
reports under Section 13(a) of the Exchange Act, as may be required in
connection with this Agreement and the transactions contemplated by
this Agreement, (iii) the filing of the
<PAGE>
31
Certificate of Merger, the Amendment to Parent's Restated Certificate
of Incorporation and the Amendment to Parent's Restated Certificate of
Designation with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in which Parent
is qualified to do business, (iv) those that may be required solely by
reason of the Company's (as opposed to any other third party's)
participation in the Merger and the other transactions contemplated by
this Agreement and (v) such other consents, approvals, orders,
authorizations, registrations, declarations and filings, including
under applicable Environmental Laws, (x) as may be required under the
laws of any foreign country in which Parent or any Parent Subsidiary
conducts any business or owns any property or assets, (y) as are set
forth in Section 3.02(d) of the Parent Disclosure Letter or (z) that,
if not obtained or made, would not, individually or in the aggregate,
have a Parent Material Adverse Effect. Except as set forth in Section
3.02(d) of the Parent Disclosure Letter, Parent and the Parent
Subsidiaries possess all Permits, including pursuant to any
Environmental Law, necessary to conduct their business as such business
is currently conducted or is expected to be conducted, except for such
Permits, the lack of possession of which has not, and is not reasonably
expected to have, a Parent Material Adverse Effect. Except as set forth
in Section 3.02(d) of the Parent Disclosure Letter, (i) all such
Permits are validly held by Parent or the Parent Subsidiaries, and
Parent and the Parent Subsidiaries have complied in all respects with
all terms and conditions thereof, except for such instances where the
failure to validly hold such Permits or the failure to have complied
with such Permits has not, and is not reasonably expected to have, a
Parent Material Adverse Effect, (ii) none of such Permits will be
subject to suspension, modification, revocation or nonrenewal as a
result of the execution and delivery of this Agreement or the
consummation of the Merger, other than such Permits the suspension,
modification or nonrenewal of which, individually or in the aggregate,
have not had and could not reasonably be expected to have a Parent
Material Adverse Effect and (iii) since December 31, 1995, neither
Parent nor any Parent Subsidiary has received any written warning,
notice, notice of violation or probable violation, notice of
revocation, or other written communication from or on
<PAGE>
32
behalf of any Governmental Entity, alleging (A) any violation of such
Permit or (B) that Parent or any Parent Subsidiary requires any Permit
required for its business, as such business is currently conducted that
is not currently held by it.
(e) SEC Documents; Undisclosed Liabilities. Parent has filed
all required reports, schedules, forms, statements and other documents
with the SEC since January 1, 1995 (the "Parent SEC Documents"). As of
its date, each Parent SEC Document complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Parent SEC Documents. None of the Parent
SEC Documents contains any untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except to the extent that
such statements have been modified or superseded by a later filed
Parent SEC Document. The consolidated financial statements of Parent
included in the Parent SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles
(except, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present
the consolidated financial position of Parent as of the dates thereof
and the consolidated results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in the Filed
Parent SEC Documents (as defined in Section 3.02(g)), neither Parent
nor any Parent Subsidiary has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) required by
generally accepted accounting principles to be set forth on a
consolidated balance sheet of Parent and the consolidated Parent
Subsidiaries or in the notes thereto and which, individually or in the
aggregate, could reasonably be expected to have a Parent Material
Adverse Effect,
<PAGE>
33
other than any such liabilities or obligations that were required to be
set forth in Parents' Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996. None of the Parent Subsidiaries is subject to
the informational reporting requirements of Section 13 of the Exchange
Act.
(f) Information Supplied. None of the information supplied or
to be supplied by Parent or Sub for inclusion or incorporation by
reference in (i) the Form S-4 will, at the time the Form S-4 is filed
with the SEC, at any time it is amended or supplemented or at the time
it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, or (ii) the Proxy Statement will, at the date
the Proxy Statement is first mailed to the Company's stockholders or
Parent's stockholders or at the time of the Company's Stockholders'
Meeting or the Parent's Stockholders' Meeting, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading. The Form S-4 will comply as to form in all
material respects with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder, except that no
representation or warranty is made by Parent or Sub with respect to
statements made or incorporated by reference therein based on
information supplied by the Company for inclusion or incorporation by
reference in the Form S-4.
(g) Absence of Certain Changes or Events. Except as disclosed
in the Parent SEC Documents filed and publicly available prior to the
date of this Agreement (the "Filed Parent SEC Documents"), from
December 31, 1995, to the date of this Agreement, Parent has conducted
its business only in the ordinary course, and:
(i) during the period from September 30, 1996, to the
date of this Agreement, there has not been any event, change,
effect or development which, individually or in the aggregate,
has had or, so far as reasonably can be foreseen, is likely to
have, a Parent Material Adverse Effect;
<PAGE>
34
(ii) during the period from December 31, 1995, to the
date of this Agreement, there has not been except for regular
quarterly dividends not in excess of $0.05 per share of Parent
Common Stock, with customary record and payment dates, any
declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect
to any shares of Parent Capital Stock;
(iii) during the period from December 31, 1995, to the
date of this Agreement, there has not been any split,
combination or reclassification of any Parent Capital Stock or
any issuance or the authorization of any issuance of any other
securities in exchange or in substitution for shares of Parent
Capital Stock;
(iv) during the period from December 31, 1995, to the
date of this Agreement, there has not been except as disclosed
in Section 3.02(g) of the Parent Disclosure Letter, (A) any
granting by Parent or any Parent Subsidiary to any executive
officer of Parent or any Parent Subsidiary of any increase in
compensation, except in the ordinary course of business
consistent with prior practice or as was required under
employment agreements in effect as of the date of the most
recent audited financial statements included in the Filed
Parent SEC Documents, (B) any granting by Parent or any Parent
Subsidiary to any such executive officer of any increase in
severance or termination pay, except as was required under any
employment, severance or termination agreements in effect as
of the date of the most recent audited financial statements
included in the Filed Parent SEC Documents or (C) any entry by
Parent or any Parent Subsidiary into any employment, severance
or termination agreement with any such executive officer; and
(v) during the period from December 31, 1995, to the
date of this Agreement, there has not been any change in
accounting methods, principles or practices by Parent or any
Parent Significant Subsidiary materially affecting its assets,
liabilities or business, except insofar as may
<PAGE>
35
have been required by a change in generally
accepted accounting principles.
(h) Litigation. Except as disclosed in the Filed Parent SEC
Documents or in Section 3.02(h) of the Parent Disclosure Letter, there
is no suit, action or proceeding pending or, to the knowledge of
Parent, threatened against Parent or any Parent Subsidiary (and Parent
does not have any reasonable basis to expect any such suit, action or
proceeding to be commenced) that, individually or in the aggregate,
could reasonably be expected to have a Parent Material Adverse Effect,
and there is not any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against Parent or any
Parent Subsidiary having, or which, insofar as reasonably can be
foreseen, in the future would have, any Parent Material Adverse Effect.
As of the date of this Agreement, except as disclosed in the Filed
Parent SEC Documents or in Section 3.02(h) of the Parent Disclosure
Letter, there is no suit, action or proceeding pending, or, to the
knowledge of Parent, threatened, against Parent or any Parent
Subsidiary (and Parent does not have any reasonable basis to expect any
such suit, action or proceeding to be commenced) that, individually or
in the aggregate, could reasonably be expected to prevent or delay in
any material respect the consummation of the Merger or the transactions
contemplated by this Agreement.
(i) Absence of Changes in Benefit Plans. Except as disclosed
in the Filed Parent SEC Documents or in Section 3.02(i) of the Parent
Disclosure Letter, since the date of the most recent audited financial
statements included in the Filed Parent SEC Documents and prior to the
date of this Agreement, there has not been any adoption or amendment in
any material respect by Parent or any Parent Subsidiary of any
collective bargaining agreement or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan,
arrangement or understanding (whether or not legally binding) providing
benefits to any current or former employee, officer or director of
Parent or any Parent Subsidiary (collectively, "Parent Benefit Plans").
<PAGE>
36
(j) ERISA Compliance. Except as described in the Filed Parent
SEC Documents or in Section 3.02(j) of the Parent Disclosure Letter or
as would not have a Parent Material Adverse Effect, (i) all employee
benefit plans or programs maintained for the benefit of the current or
former employees or directors of Parent or any Parent Subsidiary that
are sponsored, maintained or contributed to by Parent or any Parent
Subsidiary, or with respect to which Parent or any Parent Subsidiary
has any liability, including any such plan that is an "employee benefit
plan" as defined in Section 3(3) of ERISA, are in compliance with all
applicable requirements of law, including ERISA and the Code, and (ii)
neither Parent nor any Parent Subsidiary has any liabilities or
obligations with respect to any such employee benefit plans or
programs, whether accrued, contingent or otherwise, nor to the
knowledge of Parent are any such liabilities or obligations expected to
be incurred. Except as set forth in Section 3.02(j) of the Parent
Disclosure Letter, the execution of, and performance of the
transactions contemplated by, this Agreement will not (either alone or
upon the occurrence of any additional or subsequent events) constitute
an event under any benefit plan, policy, arrangement or agreement or
any trust or loan that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any employee. The only severance agreements or
severance policies applicable to Parent or the Parent Subsidiaries are
the agreements and policies specifically set forth in Section 3.02(j)
of the Parent Disclosure Letter.
(k) Voting Requirements. The (A) approval and adoption by
Parent's stockholders of the issuance of shares of Parent Common Stock
pursuant to the Merger as required by Rule 312 of the New York Stock
Exchange and (B) approval by the holders of a majority of the
outstanding shares of Parent Common Stock of an amendment to the
Restated Certificate of Incorporation of Parent to increase the number
of authorized shares of Parent Common Stock (collectively, the "Parent
Stockholder Approval") are the only votes of the holders of any class
or series of Parent Capital Stock necessary to approve this Agreement
and the transactions contemplated by this Agreement.
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37
(l) Brokers; Schedule of Fees and Expenses. Except as set
forth in Section 3.02(l) of the Parent Disclosure Letter, no broker,
investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent or
Sub. Parent has made available to the Company true and complete copies
of all agreements that are referred to in Section 3.02(l) of the Parent
Disclosure Letter and all indemnification and other agreements related
to the engagement of the persons so listed.
(m) Opinion of Financial Advisor. Parent has received the
opinion of Dillon, Read & Co. Inc., dated the date of this Agreement,
to the effect that, as of such date, the Conversion Number is fair to
Parent's stockholders from a financial point of view, a signed copy of
which opinion has been delivered to the Company.
(n) Taxes. (i) Parent and each Parent Subsidiary have timely
filed (or have had timely filed on their behalf) or will file or cause
to be timely filed, all material Tax Returns required by applicable law
to be filed by any of them prior to or as of the Effective Time of the
Merger. All such material Tax Returns are, or will be at the time of
filing, true, complete and correct in all material respects.
(ii) Parent and each Parent Subsidiary have paid (or have had
paid on their behalf) or, where payment is not yet due, have
established (or have had established on their behalf and for their sole
benefit and recourse) or will establish or cause to be established on
or before the Effective Time of the Merger an adequate accrual for the
payment of all Taxes due with respect to any period ending prior to or
as of the Effective Time of the Merger, except where the failure to pay
or establish adequate reserves has not had and would not reasonably be
expected to have a Parent Material Adverse Effect.
(iii) Except as set forth in Section 3.02(n) of the Parent
Disclosure Letter, no deficiencies for any material Taxes have been
proposed, asserted or assessed against Parent or any Parent Subsidiary,
and no requests for waivers of the time to assess any such
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38
material Taxes are pending. The Federal income Tax Returns of Parent
and each Parent Subsidiary consolidated in such Tax Returns have been
examined by and settled with the United States Internal Revenue Service
for all years through 1991.
(iv) Parent has no reason to believe that any conditions exist
that could reasonably be expected to prevent the Merger from qualifying
as a reorganization within the meaning of Section 368(a) of the Code.
(o) Compliance with Laws. Neither Parent nor any
Parent Subsidiary has violated or failed to comply with any
statute, law, ordinance, regulation, rule, judgment, decree or
order of any Governmental Entity applicable to its business or
operations, except for violations and failures to comply that
could not, individually or in the aggregate, reasonably be
expected to result in a Parent Material Adverse Effect.
(p) No Excess Parachute Payments. Other than payments that may
be made to the persons listed in Section 3.02(p) of the Parent
Disclosure Letter (the "Primary Parent Executives"), any amount that
could be received (whether in cash or property or the vesting of
property) as a result of any of the transactions contemplated by this
Agreement by any employee, officer or director of Parent or any of its
affiliates who is a "disqualified individual" (as such term is defined
in proposed Treasury Regulation Section 1.280G-1) under any employment,
severance or termination agreement, other compensation arrangement or
Parent Benefit Plan currently in effect would not be characterized as
an "excess parachute payment" (as such term is defined in Section
280G(b)(1) of the Code). Set forth in Section 3.02(p) of the Parent
Disclosure Letter is (i) the estimated maximum amount that could be
paid to each Primary Parent Executive as a result of the transactions
contemplated by this Agreement under all employment, severance and
termination agreements, other compensation arrangements and Parent
Benefit Plans currently in effect and (ii) the "base amount" (as such
term is defined in Section 280G(b)(3) of the Code) for each Primary
Parent Executive calculated as of the date of this Agreement.
(q) Accounting Matters. Neither Parent nor, to
its best knowledge, any of its affiliates, has taken or
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39
agreed to take any action that (without giving effect to any action
taken or agreed to be taken by the Company or any of its affiliates)
would prevent Parent from accounting for the business combination to be
effected by the Merger as a pooling of interests.
(r) Environmental Matters. (i) Except as set forth in Section
3.02(r) of the Parent Disclosure Letter and except for items that could
not, in all such cases taken individually or in the aggregate,
reasonably be expected to result in a Parent Material Adverse Effect,
neither Parent nor any Parent Subsidiary has (x) placed, held, located,
released, transported or disposed of any Hazardous Substances on,
under, from or at any of Parent's or any Parent Subsidiary's current or
former properties or any other properties or (y) any knowledge or
reason to know of the presence of any Hazardous Substances on, under or
at any of Parent's or any Parent Subsidiary's current or former
properties or any other property but arising from Parent's or any
Parent Subsidiary's current or former properties.
(ii) Except for items that individually or in the aggregate could
not reasonably be expected to result in a Parent Material Adverse
Effect or as disclosed in Section 3.02(r) of the Parent Disclosure
Letter, Parent and the Parent Subsidiaries are in compliance with the
SMCRA and any state law comparable to SMCRA under 30 U.S.C. ss. 1253,
and neither Parent nor any Parent Subsidiary is subject to any
reclamation obligation or other site restoration obligation under any
Environmental Law.
(iii) Except for items that individually or in the aggregate could
not reasonably be expected to result in a Parent Material Adverse
Effect or as set forth in Section 3.02(r) of the Parent Disclosure
Letter, no Environmental Law imposes any obligation upon Parent or any
Parent Subsidiary arising out of or as a condition to any transaction
contemplated by this Agreement, including any requirement to modify or
to transfer any permit or license, any requirement to file any notice
or other submission with any Governmental Entity, the filing of any
notice, acknowledgement or covenant in any land records, or the
modification of or provision of notice under any agreement, consent
order or consent decree.
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40
(s) State Takeover Statutes. To the best of the Parent's
knowledge, no state takeover statute or similar statute or regulation
applies or purports to apply to the Merger, this Agreement or any of
the transactions contemplated by this Agreement.
(t) Rights Agreement. Parent has taken all necessary action to
(i) render the Parent Rights inapplicable to the Merger and the other
transactions contemplated by this Agreement and (ii) ensure that (x)
neither the Company nor any of its affiliates is an Acquiring Person
(as defined in the Parent Rights Agreement) and (y) none of a
Distribution Date, Share Acquisition Date, Triggering Event or Business
Combination (each as defined in the Parent Rights Agreement) shall
occur by reason of the approval, execution or delivery of this
Agreement, the announcement or consummation of the Merger or the
consummation of any of the other transactions contemplated by this
Agreement.
(u) Dispositions of Parent Property. Except as described in
the Filed Parent SEC Documents or in Section 3.02(u) of the Parent
Disclosure Letter, since December 31, 1995, neither Parent nor any
Parent Subsidiary has sold or disposed of or ceased to hold or own any
personal property, real property, any interest in or rights with
respect to real property (including exploration or production rights),
any interest in a joint venture or other assets or properties of Parent
or any Parent Subsidiary ("Parent Property"), other than sales and
dispositions of raw materials, obsolete equipment, mine output and
other inventories, and any interests or rights with respect to real
property having an individual fair market value of less than
$10,000,000 of Parent or any Parent Subsidiary, in each case in the
ordinary course of business, consistent with past practice. Except as
set forth in Section 3.02(u) of the Parent Disclosure Letter, no Parent
Property whose fair market value on the date of this Agreement is
greater than $10,000,000 is subject to any pending sale or disposition
transaction.
(v) Absence of Reduction in Reserves and
Mineralized Material. There has been no material
reduction in the aggregate amount of reserves or in the
aggregate amount of mineralized material of Parent and
the Parent Subsidiaries, taken as a whole, from the
<PAGE>
41
amounts set forth in Parent's 1995 annual report to shareholders except
for (i) such reductions in reserves that have resulted from production
in the ordinary course of business and (ii) such reductions in
mineralized material that have resulted from reclassifications of
mineralized material as reserves.
(w) Development Projects. Parent has no reason to believe that
(i) the estimated production capacity for each of the time periods set
forth in Section 3.02(w) of the Parent Disclosure Letter with respect
to the development project described in Parent's Annual Report on Form
10-K for the fiscal year ended December 31, 1995 will not be reached
during such time periods, or (ii) the estimated costs set forth in
Section 3.02(w) of the Parent Disclosure Letter with respect to each
such development project will be exceeded.
(x) Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement
and has not engaged in any business activities or conducted any
operations other than in connection with the transactions contemplated
by this Agreement.
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of Business by
the Company. During the period from the date of this Agreement to the Effective
Time of the Merger, the Company shall, and shall cause the Company Subsidiaries
to, carry on their respective businesses in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted and in
compliance in all material respects with all applicable laws and regulations
and, to the extent consistent therewith, use reasonable efforts to preserve
intact their current business organizations, keep available the services of
their current officers and employees and preserve their relationships with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with them. Without limiting the generality of the foregoing,
during the period from the date of this Agreement to the Effective Time of the
Merger, except as expressly contemplated by this Agreement or as set
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42
forth in Section 4.01(a) of the Company Disclosure Letter, or otherwise approved
in writing by Parent, the Company shall not, and shall not permit any Company
Subsidiary to:
(i) (x) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other
than dividends and distributions by a direct or indirect wholly owned
Company Subsidiary to its parent and regular annual cash dividends on
the Company Common Stock in an amount not in excess of $0.05 per share
per annum, (y) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock, or (z)
purchase, redeem or otherwise acquire any shares of capital stock of
the Company or any Company Subsidiary or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, grant, pledge or otherwise encumber
any shares of its capital stock, any other voting securities or any
securities convertible into, any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities,
any phantom stock options ("Phantom Stock Options") under the Company's
Phantom Stock Option Plan, or any restricted stock, performance units,
performance shares, stock appreciation rights ("SARs") or limited stock
appreciation rights ("LSARs") under the Company's Long Term Incentive
Stock Plan (other than (x) the issuance of shares of Company Common
Stock (and associated Company Rights) upon the exercise of Company
Employee Stock Options outstanding on the date of this Agreement and in
accordance with their present terms, (y) the issuance of Company
Capital Stock pursuant to the Company Rights Agreement) and (z) the
grant of additional Company Employee Stock Options, Phantom Stock
Options, SARs and LSARs in the ordinary course of business consistent
with past practice to employees of the Company and the Company
Subsidiaries covering not more than an aggregate of 600,000 shares of
Company Common Stock and equivalents and, in the case of Company
Employee Stock Options, the issuance of Company Common Stock (and
associated Company Rights) upon the exercise thereof, but only if and
to the extent that the terms of such Company Employee Stock Options,
Phantom Stock Options, SARs and LSARs provide
<PAGE>
43
that the consummation by the Company of the transactions contemplated
by this Agreement will not result in the acceleration of vesting or the
exercisability of such Company Employee Stock Options, Phantom Stock
Options, SARs and LSARs;
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents, except for such
amendments to its certificate of incorporation, by-laws and other
comparable charter or organizational documents that do not have an
adverse affect on the transactions contemplated by this Agreement;
(iv) acquire or agree to acquire (x) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership, limited
liability company, joint venture, association or other business
organization or division thereof or (y) any assets that are material,
individually or in the aggregate, to the Company and the Company
Subsidiaries taken as a whole;
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any Company Property other
than (A) sales and dispositions of interests or rights with respect to
real property having an aggregate fair market value on the date of this
Agreement of less than $20,000,000, raw materials, obsolete equipment,
mine output and other inventories, in each case only if in the ordinary
course of business consistent with past practice, and (B) encumbrances
and Liens that are incurred in the ordinary course of business
consistent with past practice;
(vi) (y) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities
of the Company or any Company Subsidiary, guarantee any debt securities
of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter
into any arrangement having the economic effect of any of the
foregoing, except for short-term borrowings incurred in the ordinary
course of business consistent with past practice, or (z) make
<PAGE>
44
any loans, advances (other than any advances to employees in the
ordinary course of business consistent with prior practice) or capital
contributions to, or investments in, any other person, other than to
the Company or any direct or indirect wholly owned Company Subsidiary;
(vii) make or agree to make any new capital expenditure or
expenditures that, in the aggregate, are in excess of $25,000,000 above
the aggregate amount currently budgeted by the Company, as disclosed in
Section 4.01(a) of the Company Disclosure Letter;
(viii) make any material Tax election or settle or compromise any
material Tax liability or refund, except to the extent already provided
for in the Filed Company SEC Documents;
(ix) except pursuant to existing employment agreements or as
required by applicable laws, (A) increase the compensation payable or
to become payable to its executive officers or employees, (B) grant any
severance or termination pay to, or enter into any employment or
severance agreement with, any director, executive officer or employee
of the Company or any Company Subsidiary (other than in accordance with
Company Benefit Plans as in effect on the date of this Agreement) or
(C) establish, adopt, enter into or amend in any material respect or
take any action to accelerate any rights or benefits under any
collective bargaining agreement or Company Benefit Plan;
(x) without limiting the generality of clause (ix) above, make
any amendment to any Company Employee Stock Plan as a result of this
Agreement or in contemplation of the Merger;
(xi) terminate or amend on terms less favorable to
the Company any agreement filed as an exhibit to any
Company SEC Document; or
(xii) authorize any of, or commit or agree to take
any of, the foregoing actions.
(b) Conduct of Business by Parent. During the period from the
date of this Agreement to the Effective Time of the Merger, Parent shall, and
shall cause the Parent Subsidiaries to, carry on their respective businesses in
the
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45
usual, regular and ordinary course in substantially the same manner as
heretofore conducted and in compliance in all material respects with all
applicable laws and regulations and, to the extent consistent therewith, use
reasonable efforts to preserve intact their current business organizations, keep
available the services of their current officers and employees and preserve
their relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with them. Without limiting the
generality of the foregoing, during the period from the date of this Agreement
to the Effective Time of the Merger, except as expressly contemplated by this
Agreement or as set forth in Section 4.01(b) of the Parent Disclosure Letter, or
otherwise approved in writing by the Company, Parent shall not, and shall not
permit any Parent Subsidiary to:
(i) (x) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other
than dividends and distributions by a direct or indirect wholly owned
Parent Subsidiary to its parent and regular quarterly cash dividends on
the Parent Common Stock in an amount not in excess of $0.05 per share
per quarter, (y) split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, or
(z) purchase, redeem or otherwise acquire any shares of capital stock
of Parent or any Parent Subsidiary or any other securities thereof or
any rights, warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, grant, pledge or otherwise encumber
any shares of its capital stock, any other voting securities or any
securities convertible into, any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities
or any share appreciation rights or share rights under Parent's 1996
Stock Option and Share Rights Plan (other than (w) the issuance of
shares of Parent Common Stock (and associated Parent Rights) in
connection with Directors share rights and upon the exercise of Parent
Employee Stock Options outstanding on the date of this Agreement and in
accordance with their present terms, (x) the issuance of shares of
Parent Common Stock (and associated Parent Rights) upon conversion of
the Parent Convertible Notes, (y) the issuance of Parent Capital Stock
pursuant to the Parent
<PAGE>
46
Rights Agreement) and (z) the grant of additional Parent Employee Stock
Options in the ordinary course of business consistent with past
practice to employees of Parent and the Parent Subsidiaries covering
not more than 600,000 shares of Parent Common Stock and the issuance of
Parent Common Stock (and associated Parent Rights) upon the exercise
thereof, but only if and to the extent that the terms of such Parent
Employee Stock Options provide that the consummation by Parent of the
transactions contemplated by this Agreement will not result in the
acceleration of vesting or the exercisability of such Parent Employee
Stock Options;
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents, except for such
amendments to its certificate of incorporation, by-laws and other
comparable charter or organizational documents that do not have an
adverse affect on the transactions contemplated by this Agreement;
(iv) acquire or agree to acquire (x) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership, limited
liability company, joint venture, association or other business
organization or division thereof or (y) any assets that are material,
individually or in the aggregate, to the Parent and the Parent
Subsidiaries taken as a whole;
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any Parent Property other
than (A) sales and dispositions of interests or rights with respect to
real property having an aggregate fair market value on the date of this
Agreement of less than $20,000,000, raw materials, obsolete equipment,
mine output and other inventories, in each case only if in the ordinary
course of business consistent with past practice, and (B) encumbrances
and Liens that are incurred in the ordinary course of business
consistent with past practice;
(vi) (y) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities
of Parent or any
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47
Parent Subsidiary, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement
having the economic effect of any of the foregoing, except for
short-term borrowings incurred in the ordinary course of business
consistent with past practice, or (z) make any loans, advances (other
than advances to employees in the ordinary course of business
consistent with prior practice) or capital contributions to, or
investments in, any other person, other than to Parent or any direct or
indirect wholly owned Parent Subsidiary;
(vii) make or agree to make any new capital expenditure or
expenditures that, in the aggregate, are in excess of $25,000,000 above
the aggregate amount currently budgeted by Parent, as disclosed in
Section 4.01(b) of the Parent Disclosure Letter;
(viii) make any material Tax election or settle or compromise any
material Tax liability or refund, except to the extent already provided
for in the Filed Parent SEC Documents;
(ix) except pursuant to existing employment agreements or as
required by applicable laws, (A) increase the compensation payable or
to become payable to its executive officers or employees, (B) grant any
severance or termination pay to, or enter into any employment or
severance agreement with, any director, executive officer or employee
of Parent or any Parent Subsidiary (other than in accordance with
Parent Benefit Plans as in effect on the date of this Agreement) or (C)
establish, adopt, enter into or amend in any material respect or take
any action to accelerate any rights or benefits under any collective
bargaining agreement or Parent Benefit Plan;
(x) without limiting the generality of clause (ix) above, make
any amendment to any Parent Employee Stock Plan as a result of this
Agreement or in contemplation of the Merger;
(xi) terminate or amend on terms less favorable to
Parent any agreement filed as an exhibit to any Parent
SEC Document; or
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(xii) authorize any of, or commit or agree to take
any of, the foregoing actions.
(c) Other Actions. Except as expressly permitted by Sections
4.02, 4.03, 5.01(d) or 5.01(e), the Company and Parent shall not, and shall not
permit any of their respective subsidiaries to, take any action that would, or
that could reasonably be expected to, result in (i) any of the representations
and warranties of such party set forth in this Agreement that are qualified as
to materiality becoming untrue, (ii) any of such representations and warranties
that are not so qualified becoming untrue in any material respect or (iii) any
of the conditions to the Merger set forth in Article VI not being satisfied.
(d) Advice of Changes. The Company and Parent shall promptly
advise the other party orally and in writing of any change or event having, or
which, insofar as can reasonably be foreseen, would have, a Company Material
Adverse Effect or a Parent Material Adverse Effect, as
applicable.
SECTION 4.02. No Solicitation by the Company. (a) The Company
shall not, nor shall it permit any Company Subsidiary to, nor shall it authorize
or permit any officer, director or employee of or any investment banker,
attorney, accountant or other advisor or representative of, the Company or any
Company Subsidiary to, (i) solicit, initiate or encourage the submission of any
Company Takeover Proposal (as defined below), (ii) enter into any agreement with
respect to any Company Takeover Proposal or (iii) provide any non-public
information regarding the Company to any third party or engage in any
negotiations or substantive discussions in connection with any Company Takeover
Proposal; provided, however, that (A) prior to receipt of the Company
Stockholder Approval, the Company may, in response to a Company Takeover
Proposal that was not solicited by the Company and that did not otherwise result
from a breach of this Section 4.02(a), provide any non-public information
regarding itself to any third party or engage in any negotiations or substantive
discussions with such person regarding any Company Takeover Proposal, in each
case only if the Company's Board of Directors determines in good faith, after
consultation with counsel and its financial advisors, that failing to take such
action would create a reasonable possibility of a breach of the fiduciary duties
of the Company's Board of Directors, and (B) nothing contained in this Agreement
shall prevent the Company or its
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49
Board of Directors from complying with Rule 14e-2 promulgated under the Exchange
Act with regard to a Company Takeover Proposal or prevent the Company's Board of
Directors from taking any action permitted by Section 5.01(d). Without limiting
the foregoing, it is understood that any violation of the restrictions set forth
in the preceding sentence by any executive officer of the Company or any Company
Subsidiary or any investment banker, attorney, accountant or other advisor or
representative of the Company or any Company Subsidiary, whether or not such
person is purporting to act on behalf of the Company or any Company Subsidiary
or otherwise, shall be deemed to be a breach of this Section 4.02(a) by the
Company. For purposes of this Agreement, "Company Takeover Proposal" means any
proposal for a merger, consolidation or other business combination involving the
Company or a Company Significant Subsidiary or any proposal or offer to acquire
in any manner, directly or indirectly, more than 30% of any class of voting
securities of the Company or of a Company Significant Subsidiary (other than
where such Company Significant Subsidiary's securities directly or indirectly
represent an economic interest in less than 30% of the assets of the Company and
the Company Subsidiaries, taken as a whole), including any proposal or offer
relating to the acquisition by the Company or a Company Significant Subsidiary
in any manner, directly or indirectly, of any securities or assets of another
person in consideration for the issuance of more than 30% of any class of voting
securities of the Company or of a Company Significant Subsidiary (other than
where such Company Significant Subsidiary's securities directly or indirectly
represent an economic interest in less than 30% of the assets of the Company and
the Company Subsidiaries, taken as a whole), or assets representing a
substantial portion of the assets of the Company and the Company Subsidiaries,
taken as a whole, other than the transactions contemplated by this Agreement.
The Company shall, and shall cause each Company Subsidiary to, immediately cease
and cause to be terminated any existing activities, discussions or negotiations
by the Company, any Company Subsidiary or any officer, director or employee of
or investment banker, attorney, accountant or other advisor or representative
of, the Company or any Company Subsidiary, with any parties conducted heretofore
with respect to any of the foregoing. Any action taken by the Company, any
Company Subsidiary or any officer, director or employee of or any investment
banker, attorney, accountant or other advisor or representative of, the Company
or any Company Subsidiary with or with respect to
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50
any such party on or prior to November 28, 1996, shall be deemed not to
constitute a violation of this Section 4.02(a) and shall not in and of itself
constitute the solicitation of a Company Takeover Proposal even if such actions
result in any such party making a Company Takeover Proposal after the date of
this Agreement.
(b) Subject to Section 5.01(d), neither the Board of Directors
of the Company nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent or Sub, the
adoption and approval by such Board of Directors or any such committee of this
Agreement or the Merger or (ii) approve or recommend, or propose to approve or
recommend, any Company Takeover Proposal.
(c) The Company promptly shall advise Parent orally and in
writing of the receipt of any Company Takeover Proposal and of the receipt of
any inquiry with respect to or which the Company reasonably believes could lead
to any Company Takeover Proposal. The Company promptly shall advise Parent
orally and in writing of the identity of the person making any such Company
Takeover Proposal or inquiry and of the material terms of any such Company
Takeover Proposal and of any changes thereto; provided, however, that the
Company's Board of Directors shall have determined in good faith, after
consultation with counsel, that taking such action would not create a reasonable
possibility of a breach of the fiduciary duties of the Company's Board of
Directors, except that in all events prior to exercising its right of
termination pursuant to Section 7.01(d) the Company shall endeavor to provide
Parent with a reasonable opportunity to respond to any Company Takeover Proposal
which the Company otherwise may wish to accept.
SECTION 4.03. No Solicitation by Parent. (a) Parent shall not,
nor shall it permit any Parent Subsidiary to, nor shall it authorize or permit
any officer, director or employee of or any investment banker, attorney,
accountant or other advisor or representative of, Parent or any Parent
Subsidiary to, (i) solicit, initiate or encourage the submission of any Parent
Takeover Proposal (as defined below), (ii) enter into any agreement with respect
to any Parent Takeover Proposal or (iii) provide any non-public information
regarding Parent to any third party or engage in any negotiations or substantive
discussions in connection with any Parent Takeover Proposal; provided, however,
that (A) prior to receipt of the Parent Stockholder Approval,
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Parent may, in response to a Parent Takeover Proposal that was not solicited by
Parent and that did not otherwise result from a breach of this Section 4.03(a),
provide any non-public information regarding itself to any third party or engage
in any negotiations or substantive discussions with such person regarding any
Parent Takeover Proposal, in each case only if Parent's Board of Directors
determines in good faith, after consultation with counsel and its financial
advisors, that failing to take such action would create a reasonable possibility
of a breach of the fiduciary duties of Parent's Board of Directors, and (B)
nothing contained in this Agreement shall prevent Parent or its Board of
Directors from complying with Rule 14e-2 promulgated under the Exchange Act with
regard to a Parent Takeover Proposal or prevent Parent's Board of Directors from
taking any action permitted by Section 5.01(e). Without limiting the foregoing,
it is understood that any violation of the restrictions set forth in the
preceding sentence by any executive officer of Parent or any Parent Subsidiary
or any investment banker, attorney, accountant or other advisor or
representative of Parent or any Parent Subsidiary, whether or not such person is
purporting to act on behalf of Parent or any Parent Subsidiary or otherwise,
shall be deemed to be a breach of this Section 4.03(a) by Parent. For purposes
of this Agreement, "Parent Takeover Proposal" means any proposal for a merger,
consolidation or other business combination involving Parent or a Parent
Significant Subsidiary or any proposal or offer to acquire in any manner,
directly or indirectly, more than 30% of any class of voting securities of
Parent or of a Parent Significant Subsidiary (other than where such Parent
Significant Subsidiary's securities directly or indirectly represent an economic
interest in less than 30% of the assets of Parent and the Parent Subsidiaries,
taken as a whole), including any proposal or offer relating to the acquisition
by Parent or a Parent Significant Subsidiary in any manner, directly or
indirectly, of any securities or assets of another person in consideration for
the issuance of more than 30% of any class of voting securities of Parent or of
a Parent Significant Subsidiary (other than where such Parent Significant
Subsidiary's securities directly or indirectly represent an economic interest in
less than 30% of the assets of Parent and the Parent Subsidiaries, taken as a
whole), or assets representing a substantial portion of the assets of Parent and
the Parent Subsidiaries, taken as a whole, other than the transactions
contemplated by this Agreement. Notwithstanding the foregoing, any proposal or
offer to acquire in any manner, directly or indirectly, any
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of the voting securities of Prime not owned by Parent or any Parent Subsidiary
shall not constitute a Parent Takeover Proposal. Parent shall, and shall cause
each Parent Subsidiary to, immediately cease and cause to be terminated any
existing activities, discussions or negotiations by Parent, any Parent
Subsidiary, or any officer, director or employee of or investment banker,
attorney, accountant or other advisor or representative of, Parent or any Parent
Subsidiary, with any parties conducted heretofore with respect to any of the
foregoing.
(b) Subject to Section 5.01(e), neither the Board of Directors
of Parent nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to the Company, the adoption and
approval by such Board of Directors or any such committee of this Agreement or
the Merger or (ii) approve or recommend, or propose to approve or recommend, any
Parent Takeover Proposal.
(c) Parent promptly shall advise the Company orally and in
writing of the receipt of any Parent Takeover Proposal and of the receipt of any
inquiry with respect to or which Parent reasonably believes could lead to any
Parent Takeover Proposal. Parent promptly shall advise the Company orally and in
writing of the identity of the person making any such Parent Takeover Proposal
or inquiry and of the material terms of any such Parent Takeover Proposal and of
any changes thereto; provided, however, that Parent's Board of Directors shall
have determined in good faith, after consultation with counsel, that taking such
action would not create a reasonable possibility of a breach of the fiduciary
duties of Parent's Board of Directors, except that in all events prior to
exercising its right of termination pursuant to Section 7.01(e) Parent shall
endeavor to provide the Company with a reasonable opportunity to respond to any
Parent Takeover Proposal which Parent otherwise may wish to accept.
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of Form S-4 and the
Proxy Statement; Company's Stockholders' Meeting and
Parent's Stockholders' Meeting. (a) As soon as practicable
following the date of this Agreement, the Company and Parent
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shall prepare and file with the SEC the Proxy Statement and Parent shall prepare
and file with the SEC the Form S-4, in which the Proxy Statement shall be
included as a prospectus. Each of the Company and Parent shall use reasonable
efforts to have the Form S-4 declared effective under the Securities Act as
promptly as practicable after such filing. Each of the Company and Parent shall
use reasonable efforts to cause the Proxy Statement to be mailed to the
Company's stockholders and Parent's stockholders, respectively, as promptly as
practicable after the Form S-4 is declared effective under the Securities Act.
Parent shall also take any action (other than qualifying to do business in any
jurisdiction in which it is not now so qualified) required to be taken under any
applicable state securities or "blue sky" laws in connection with the issuance
of Parent Common Stock pursuant to the Merger, and the Company shall furnish all
information concerning the Company and the holders of the Company Common Stock
and rights to acquire Company Common Stock pursuant to the Company Employee
Stock Plans as may be reasonably requested in connection with any such action.
(b) Unless the Board of Directors of the Company shall take
any action permitted by Section 5.01(d), the Company shall, as soon as
practicable following the date of this Agreement, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Company's Stockholders'
Meeting") for the purpose of obtaining the Company Stockholder Approval. Subject
to Section 5.01(d), the Company shall, through its Board of Directors, recommend
to its stockholders that they give the Company Stockholder Approval. Parent
shall vote or cause to be voted all the shares of Company Capital Stock owned of
record by Parent or any Parent Subsidiary in favor of the Company Stockholder
Approval.
(c) Unless the Board of Directors of Parent shall take any
action permitted by Section 5.01(e), Parent shall, as soon as practicable
following the date of this Agreement, duly call, give notice of, convene and
hold a meeting of its stockholders (the "Parent's Stockholders' Meeting") for
the purpose of obtaining the Parent Stockholder Approval. Subject to Section
5.01(e), Parent shall, through its Board of Directors, recommend to its
stockholders that they give the Parent Stockholder Approval. The Company shall
vote or cause to be voted all the shares of Parent Capital Stock owned of record
by the Company or any Company Subsidiary in favor of the Parent Stockholder
Approval.
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(d) The Board of Directors of the Company shall be permitted
to (i) not recommend to the Company's stockholders that they give the Company
Stockholder Approval or (ii) withdraw or modify in a manner adverse to Parent
its recommendation to the Company's stockholders that they give the Company
Stockholder Approval, but only if and to the extent that (x) a Company Takeover
Proposal is pending at the time the Company's Board of Directors determines to
take any such action or inaction and such Company Takeover Proposal was not the
result of an intentional breach of Section 4.02(a) by the Company's Board of
Directors and (y) the Company's Board of Directors determines in good faith,
after consultation with counsel and its financial advisors, and after
considering among other things whether such Company Takeover Proposal is more
favorable to the stockholders of the Company than the transactions contemplated
by this Agreement (taking into account all relevant material terms of such
Company Takeover Proposal and this Agreement, including all such conditions, and
any changes to this Agreement proposed by Parent in response to such Company
Takeover Proposal) that failing to take any such action would create a
reasonable possibility of a breach of the fiduciary duties of the Company's
Board of Directors.
(e) The Board of Directors of Parent shall be permitted to (i)
not recommend to Parent's stockholders that they give the Parent Stockholder
Approval or (ii) withdraw or modify in a manner adverse to the Company its
recommendation to Parent's stockholders that they give the Parent Stockholder
Approval, but only if and to the extent that (x) a Parent Takeover Proposal is
pending at the time Parent's Board of Directors determines to take any such
action or inaction and such Parent Takeover Proposal was not the result of an
intentional breach of Section 4.03(a) by Parent's Board of Directors and (y)
Parent's Board of Directors determines in good faith, after consultation with
counsel and its financial advisors, and after considering among other things
whether such Parent Takeover Proposal is more favorable to the stockholders of
Parent than the transactions contemplated by this Agreement (taking into account
all relevant material terms of such Parent Takeover Proposal and this Agreement,
including all such conditions, and any changes to this Agreement proposed by the
Company in response to such Parent Takeover Proposal) that failing to take any
such action would create a reasonable possibility of a breach of the fiduciary
duties of Parent's Board of Directors.
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SECTION 5.02. Letter of the Company's Accountants. The Company
shall use reasonable efforts to cause to be delivered to Parent a letter of
Price Waterhouse LLP, the Company's independent public accountants, dated a date
within two business days before the date on which the Form S-4 shall become
effective and addressed to Parent, in form and substance reasonably satisfactory
to Parent and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4.
SECTION 5.03. Letter of Parent's Accountants. Parent shall use
reasonable efforts to cause to be delivered to the Company a letter of Coopers &
Lybrand LLP, Parent's independent public accountants, dated a date within two
business days before the date on which the Form S-4 shall become effective and
addressed to the Company, in form and substance reasonably satisfactory to the
Company and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4.
SECTION 5.04. Access to Information; Confidentiality. Each of
the Company and Parent shall, and shall cause each of its respective
subsidiaries to, afford to the other party and to the officers, directors,
employees, accountants, counsel, financial advisors and other representatives of
such other party, reasonable access during normal business hours during the
period prior to the Effective Time of the Merger to all their respective
properties, books, contracts, commitments, personnel and records and, during
such period, each of the Company and Parent shall, and shall cause each of its
respective subsidiaries to, furnish promptly to the other party (i) a copy of
each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of Federal or state securities
laws and (ii) all other information concerning its business, properties and
personnel as such other party may reasonably request. Such information shall be
held in confidence to the extent required by, and in accordance with, the
provisions of the letter dated November 17, 1996, between the Company and Parent
(the "Confidentiality Agreement").
SECTION 5.05. Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth
in this Agreement, each of the parties shall use reasonable efforts to take, or
cause to be taken, all actions, and to
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do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement, including (i) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities, if any) and the taking of all
reasonable steps as may be necessary to obtain an approval or waiver from, or to
avoid an action or proceeding by, any Governmental Entity, (ii) the obtaining of
all necessary consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated by this Agreement including seeking to have any stay
or temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement; provided, however, that a party
shall not be obligated to take any action pursuant to the foregoing if the
taking of such action or the obtaining of any waiver, consent, approval or
exemption is reasonably likely to result in the imposition of a condition or
restriction of the type referred to in clause (ii), (iii) or (iv) of Section
6.01(g). In connection with and without limiting the foregoing, Parent, the
Company and their respective Boards of Directors shall (i) take all action
necessary so that no state takeover statute or similar statute or regulation is
or becomes applicable to the Merger, this Agreement or any other transaction
contemplated by this Agreement and (ii) if any state takeover statute or similar
statute or regulation becomes applicable to the Merger, this Agreement or any
other transaction contemplated by this Agreement, take all action necessary so
that the Merger and the other transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Merger and the other transactions contemplated by this Agreement.
(b) The Company shall give prompt notice to Parent, and Parent
or Sub shall give prompt notice to the Company, of (i) any representation or
warranty made by it or contained in this Agreement that is qualified as to
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materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement ; provided, however, that
no such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
SECTION 5.06. Rights Agreements; Consequences if Rights
Triggered. (a) The Board of Directors of the Company shall take all further
action (in addition to that referred to in Section 3.01(t)) requested in writing
by Parent in order to render the Company Rights inapplicable to the Merger and
the other transactions contemplated by this Agreement. Except as provided in
Section 3.01(t) or as requested in writing by Parent, prior to the Company's
Stockholders' Meeting, the Board of Directors of the Company shall not (i) amend
the Company Rights Agreement or (ii) take any action with respect to, or make
any determination under, the Company Rights Agreement. In the event that
notwithstanding Section 3.01(t) and this Section 5.06(a), a Distribution Date,
Shares Acquisition Date or Triggering Event occurs under the Company Rights
Agreement at any time during the period from the date of this Agreement to the
Effective Time of the Merger when the Company Rights are outstanding, the
Company and Parent shall make such adjustment to the Conversion Number as the
Company and Parent shall mutually agree so as to preserve the economic benefits
that the Company and Parent each reasonably expected on the date of this
Agreement to receive as a result of the consummation of the Merger and the other
transactions contemplated by this Agreement.
(b) The Board of Directors of Parent shall take all further
action (in addition to that referred to in Section 3.02(t)) requested in writing
by the Company in order to render the Parent Rights inapplicable to the Merger
and the other transactions contemplated by this Agreement. In the event that,
notwithstanding Section 3.02(t) and this Section 5.06(b), a Distribution Date,
Share Acquisition Date, Triggering Event or Business Combination occurs under
the Parent Rights Agreement at any time during the period from the date of this
Agreement to the Effective Time of the Merger and Rights Certificates (as such
term is defined in the Parent Rights Agreement) are issued to Parent's
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stockholders, Parent's Board of Directors shall take such actions as are
necessary and permitted under the Parent Rights Agreement to provide that Rights
Certificates representing an appropriate number of Rights are issued to the
Company's stockholders and employees who receive Parent Common Stock pursuant to
the Merger. In the event that Parent is not permitted under the Parent's Rights
Agreement to provide Rights Certificates to such Company stockholders and
employees following the occurrence of a Distribution Date, Triggering Event or
Business Combination during such time period, the Company and Parent shall make
such adjustment to the Conversion Number as the Company and Parent shall
mutually agree so as to preserve the economic benefits that the Company and
Parent each reasonably expected on the date of this Agreement to receive as a
result of the consummation of the Merger and the other transactions contemplated
by this Agreement.
SECTION 5.07. Company Employee Stock Options. (a) As soon as
practicable following the date of this Agreement, the Board of Directors of the
Company (or, if appropriate, any committee administering the Company Employee
Stock Plans) shall adopt such resolutions or take such other actions as may be
required to effect the following:
(i) adjust the terms of all outstanding Company Employee Stock
Options granted under the Company Employee Stock Plans and the terms of
the Company Employee Stock Plans, to provide that at the Effective Time
of the Merger, each Company Employee Stock Option outstanding
immediately prior to the Effective Time of the Merger shall be deemed
to constitute an option to acquire, on the same terms and conditions as
were applicable under such Company Employee Stock Option, the same
number of shares of Parent Common Stock as the holder of such Company
Employee Stock Option would have been entitled to receive pursuant to
the Merger had such holder exercised such Company Employee Stock Option
in full immediately prior to the Effective Time of the Merger, at a
price per share equal to (y) the aggregate exercise price for the
shares of Company Common Stock otherwise purchasable pursuant to such
Company Employee Stock option divided by (z) the number of shares of
Parent Common Stock deemed purchasable pursuant to such Company
Employee Stock Option; provided, however, that in the case of any
option to which Section 421 of the Code applies by reason of its
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qualification under either Section 422 or 423 of the Code ("qualified
stock options"), the option price, the number of shares purchasable
pursuant to such option and the terms and conditions of exercise of
such option shall be determined in order to comply with Section 424(a)
of the Code;
(ii) adjust the terms of all outstanding Phantom Stock Options,
SARs and LSARs granted under the Company Stock Plans to provide that,
at the Effective Time of the Merger, (y) each holder of a Phantom Stock
Right, SAR or LSAR shall be entitled to that number of phantom stock
rights, stock appreciation rights or limited stock appreciation rights
with respect to Parent Common Stock ("Parent Phantom Stock Options",
"Parent SARs" or "Parent LSARs") equal to the number of Phantom Stock
Options, SARs or LSARs, as the case may be, held by such holder
immediately prior to the Effective Time of the Merger multiplied by the
Conversion Number, and (z) the share value on the grant date with
respect to each Parent Phantom Stock Option, Parent SAR or Parent LSAR,
as the case may be, shall be equal to the share value on the grant date
in effect with respect to the corresponding Phantom Stock Option, SAR
or LSAR, as the case may be, immediately prior to the Effective Time of
the Merger, divided by the Conversion Number; and
(iii) make such other changes to the Company Employee Stock Plans
as it deems appropriate to give effect to the Merger (subject to the
approval of Parent, which shall not be unreasonably withheld).
(b) As soon as practicable after the Effective Time of the
Merger, Parent shall deliver to the holders of Company Employee Stock Options,
Phantom Stock Options, SARs and LSARs appropriate notices setting forth such
holders' rights pursuant to the respective Company Employee Stock Plans and the
agreements evidencing the grants of such Company Employee Stock Options, Phantom
Stock Options, SARs and LSARs shall continue in effect on the same terms and
conditions (subject to the adjustments required by this Section 5.07 after
giving effect to the Merger). Parent shall comply with the terms of the Company
Employee Stock Plans and ensure, to the extent required by, and subject to the
provisions of, such Company Employee Stock Plans, that the Company Employee
Stock Options which qualified as qualified stock options prior to the Effective
Time of the
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Merger continue to qualify as qualified stock options after the Effective Time
of the Merger.
(c) Parent shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Parent Common Stock for
delivery upon exercise of the Company Employee Stock Options assumed in
accordance with this Section 5.07. As soon as reasonably practicable after the
Effective Time of the Merger, Parent shall file a registration statement on Form
S-8 (or any successor or other appropriate form) with respect to the shares of
Parent Common Stock subject to such Company Employee Stock Options and shall use
reasonable efforts to maintain the effectiveness of such registration statement
or registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such Company Employee Stock
Options remain outstanding. With respect to those individuals who subsequent to
the Merger are subject to the reporting requirements under Section 16(a) of the
Exchange Act, where applicable, Parent shall administer the Company Employee
Stock Plans assumed pursuant to this Section 5.07 in a manner that complies with
Rule 16b-3 promulgated under the Exchange Act to the extent the applicable
Company Stock Plan complied with such rule prior to the Merger.
SECTION 5.08. Benefit Plans. (a) Maintenance of Benefits. For
a period of one year after the Effective Time of the Merger, Parent shall (i)
either (A) maintain or cause the Surviving Corporation (or in the case of a
transfer of all or substantially all the assets and business of the Surviving
Corporation, its successors and assigns) to maintain the Company Benefit Plans
(other than medical plans and plans providing for the issuance of Company
Capital Stock or based on the value of Company Capital Stock) at the benefit
levels in effect on the date of this Agreement or (B) provide or cause the
Surviving Corporation (or, in such case, its successors or assigns) to provide
benefits (other than medical benefits) to employees of the Company and the
Company Subsidiaries that, taken as a whole, are not materially less favorable
in the aggregate to such employees than those provided to similarly situated
employees of Parent and (ii) make available plans providing for the issuance of
Parent Capital Stock or based on the value of Parent Capital Stock, and provide
or cause to be provided medical benefits, to employees of the Company and the
Company Subsidiaries that are substantially equivalent to those provided to
similarly situated employees of Parent.
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From and after the Effective Time of the Merger, Parent shall, and shall cause
the Surviving Corporation to honor in accordance with their respective terms (as
in effect on the date of this Agreement), all of the Company's employment,
severance and termination agreements set forth in the Company Disclosure Letter.
(b) Service. With respect to any "employee benefit plan", as
defined in Section 3(3) of ERISA, maintained by Parent or any Parent Subsidiary
(including any severance plan), for all purposes, including determining
eligibility to participate, level of benefits and vesting, service with the
Company or any Company Subsidiary shall be treated as service with Parent or the
Parent Subsidiaries; provided, however, that such service need not be recognized
to the extent that such recognition would result in any duplication of benefits.
SECTION 5.09. Indemnification. (a) Parent shall, to the
fullest extent permitted by law, cause the Surviving Corporation to honor all
the Company's obligations to indemnify (including any obligations to advance
funds for expenses) the current or former directors or officers of the Company
for acts or omissions by such directors and officers occurring prior to the
Effective Time of the Merger to the extent that such obligations of the Company
exist on the date of this Agreement, whether pursuant to the Company's Amended
and Restated Certificate of Incorporation, By-laws, individual indemnity
agreements or otherwise, and such obligations shall survive the Merger and shall
continue in full force and effect in accordance with the terms of such Amended
and Restated Certificate of Incorporation, By-laws and individual indemnity
agreements from the Effective Time of the Merger until the expiration of the
applicable statute of limitations with respect to any claims against such
directors or officers arising out of such acts or omissions.
(b) For a period of five years after the Effective Time,
Parent shall cause to be maintained in effect the current policies of directors'
and officers' liability insurance maintained by the Company (provided that
Parent may substitute therefor policies with reputable and financially sound
carriers of at least the same coverage and amounts containing terms and
conditions which are no less advantageous) with respect to claims arising from
or related to facts or events which occurred at or before the Effective Time;
provided, however, that Parent shall not be obligated to make annual premium
payments for such insurance to the
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extent such premiums exceed 200% of the annual premiums paid as of the date
hereof by the Company for such insurance (such 200% amount, the "Maximum
Premium"). If such insurance coverage cannot be obtained at all, or can only be
obtained at an annual premium in excess of the Maximum Premium, Parent shall
maintain the most advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Premium. The Company
represents to Parent that the Maximum Premium is $625,000.
SECTION 5.10. Fees and Expenses. Except as provided in Section
7.02, all fees and expenses, including any fees payable to any broker,
investment banker or financial advisor, incurred in connection with the Merger,
this Agreement and the transactions contemplated by this Agreement shall be paid
by the party incurring such fees or expenses, whether or not the Merger is
consummated, except that expenses incurred in connection with printing and
mailing the Proxy Statement and the Form S-4 shall be shared equally by Parent
and the Company.
SECTION 5.11. Public Announcements. Parent and Sub, on the one
hand, and the Company, on the other hand, shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the transactions
contemplated by this Agreement, including the Merger, and shall not issue any
such press release or make any such public statement prior to such consultation,
except as may be required by applicable law, court process or by obligations
pursuant to any listing agreement with any national securities exchange.
SECTION 5.12. Tax and Accounting Treatment. Each of Parent
of Parent and the Company shall not take any action and shall not fail to take
any action which action or failure to act would prevent, or would be likely to
prevent, the Merger from qualifying (A) for pooling of interests accounting
treatment or (B) as a reorganization within the meaning of Section 368(a) of the
Code and shall use reasonable efforts to obtain the opinions of counsel and the
letters of accountants referred to in Sections 6.02(d), 6.03(d) and 6.01(f).
SECTION 5.13. Affiliates. (a) Prior to the Closing Date,
the Company shall deliver to Parent a letter identifying all persons who are, at
the time this Agreement
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is submitted for approval to the stockholders of the Company, "affiliates" of
the Company (including all directors of the Company) for purposes of Rule 145
under the Securities Act. The Company shall use reasonable efforts to cause each
such person to deliver to Parent on or prior to the Closing Date a written
agreement substantially in the form attached hereto as Exhibit A.
(b) Prior to the Closing Date, Parent shall deliver to the
Company a letter identifying all persons who are, at the time of the Parent's
Stockholders' Meeting, "affiliates" of Parent. Parent shall use reasonable
efforts to cause each such person to deliver to Parent on or prior to the
Closing Date a written agreement substantially in the form attached hereto as
Exhibit B.
SECTION 5.14. Stock Exchange Listing. Parent shall use
reasonable efforts to cause the shares of Parent Common Stock to be issued in
the Merger and pursuant to the Company Employee Stock Plans to be approved for
listing on the NYSE, subject to official notice of issuance, prior to the
Closing Date.
SECTION 5.15. Parent Board of Directors. (a) The Board of
Directors of Parent shall take such corporate actions as are necessary to
provide that, effective at the Effective Time of the Merger, (i) the number of
directors of Parent shall be reduced from 13 to 12 and (ii) the Board of
Directors of Parent shall consist of (a) five individuals who are members of the
Board of Directors of Parent immediately prior to the Effective Time of the
Merger (subject to Section 5.15(b), such five individuals to be selected by the
Board of Directors of Parent at least 10 business days' prior to the Effective
Time of the Merger), with Mr. Jack E. Thompson to be the Chairman of the Board
of Directors of Parent, (b) five individuals who are members of the Board of
Directors of the Company immediately prior to the Effective Time of the Merger
(subject to Section 5.15(b), such five individuals to be selected by the Board
of Directors of the Company at least 10 business days' prior to the Effective
Time of the Merger) and (c) two individuals selected by the 10 individuals who
are selected as directors of Parent pursuant to subclauses (a) and (b) above
(such two individuals to be selected by such 10 individuals at such time before
or after the Effective Time of the Merger as such 10 individuals shall agree).
The Board of Directors of Parent shall use its reasonable efforts to provide
that the
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five individuals to be selected by the Board of Directors of Parent and the five
individuals to be selected by the Board of Directors of the Company are
allocated as evenly as possible among the three classes of Parent's directors.
(b) Parent shall promptly notify the Company in writing once
Parent's Board of Directors has selected its five individuals pursuant to
Section 5.15(a), or any replacement individual(s) pursuant to this Section
5.15(b). The Board of Directors of the Company shall be permitted to reject up
to two of such five individuals (other than Jack E. Thompson) by sending Parent
a written notice to such effect within two business days after its receipt of
such notice, in which case the Board of Directors of Parent shall within two
business days thereafter select another individual or individuals, as applicable
(subject to the limitations set forth in Section 5.15(a)) in lieu of such
rejected individual(s). If the Board of Directors of the Company shall have only
rejected one individual in the first instance, it shall be permitted to reject
the replacement individual, in which case the Board of Directors of Parent shall
select another individual (subject to the limitations set forth in Section
5.15(a)) in lieu of such rejected replacement individual. The Company shall
promptly notify Parent in writing once the Company's Board of Directors has
selected its five individuals pursuant to Section 5.15(a), or any replacement
individual pursuant to this Section 5.15(b). The Board of Directors Parent shall
be permitted to reject up to two of such five individuals by sending the Company
a written notice to such effect within two business days after its receipt of
such notice, in which case the Board of Directors of the Company shall within
two business days thereafter select another individual or individuals (subject
to the limitations set forth in Section 5.15(a)) in lieu of such rejected
individual(s). If the Board of Directors of Parent shall have only rejected one
individual in the first instance, it shall be permitted to reject the
replacement individual, in which case the Board of Directors of the Company
shall select another individual (subject to the limitations set forth in Section
5.15(a)) in lieu of such rejected replacement individual.
SECTION 5.16. Parent Officers. The Board of
Directors of Parent shall take such corporate actions as are necessary to
provide that, effective at the Effective Time of the Merger, Jack E. Thompson
shall be appointed the Chief Executive Officer of Parent and Patrick M. James
shall be
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appointed the President and Chief Operating Officer of Parent.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation To Effect
The Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Company Stockholder Approval and Parent Stockholder
Approval. The Company shall have obtained the Company Stockholder Approval and
Parent shall have obtained the Parent Stockholder Approval.
(b) NYSE Listing. The shares of Parent Company Stock issuable
to the Company's stockholders and employees pursuant to this Agreement shall
have been approved for listing on the NYSE, subject to official notice of
issuance.
(c) Antitrust. The waiting periods (and any extensions
thereof) applicable to the transactions contemplated by this Agreement under the
HSR Act shall have been terminated or shall have expired. Any consents,
approvals and filings under any foreign antitrust law, the absence of which
would prohibit the consummation of the Merger, shall have been obtained or made.
(d) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that subject
to the proviso in Section 5.05(a) each of the parties shall have used reasonable
efforts to prevent the entry of any such injunction or other order and to appeal
as promptly as possible any such injunction or other order that may be entered.
(e) Form S-4. The Form S-4 shall have become effective under
the Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order, and Parent shall have received all state securities
<PAGE>
66
or "blue sky" authorizations necessary to issue the Parent Common Stock pursuant
to this Agreement.
(f) Pooling Letters. Parent shall have received a letter from
Coopers & Lybrand LLP dated as of the Closing Date and addressed to Parent, and
the Company shall have received a letter from Price Waterhouse LLP dated as of
the Closing Date and addressed to the Company, in each case stating that the
Merger will qualify as a pooling of interests transaction under Opinion 16 of
the Accounting Principles Board.
(g) No Litigation. There shall not be pending any suit, action
or proceeding by any Governmental Entity (i) challenging the acquisition by
Parent or Sub of any shares of Company Common Stock, seeking to restrain or
prohibit the consummation of the Merger or any of the other transactions
contemplated by this Agreement or seeking to obtain from the Company, Parent or
Sub any damages that are material in relation to the Company and its
subsidiaries taken as a whole, (ii) seeking to prohibit or limit the ownership
or operation by the Company, any Company Significant Subsidiary, Parent or any
Parent Significant Subsidiary of any material portion of the business or assets
of the Company, any Company Significant Subsidiary, Parent or any Parent
Significant Subsidiary or to compel the Company, any Company Significant
Subsidiary, Parent or any Parent Significant Subsidiary to dispose of or hold
separate any material portion of the business or assets of the Company, any
Company Significant Subsidiary, Parent or any Parent Significant Subsidiary, as
a result of the Merger or any of the other transactions contemplated by this
Agreement, (iii) seeking to impose limitations on the ability of Parent or Sub
to acquire or hold, or exercise full rights of ownership of, any shares of
capital stock of the Surviving Corporation, including the right to vote such
capital stock on all matters properly presented to the stockholders of the
Surviving Corporation, (iv) seeking to prohibit Parent or any Parent Subsidiary
from effectively controlling in any material respect the business or operations
of the Company or the Company Significant Subsidiaries or (v) which otherwise is
reasonably likely to have a Company Material Adverse Effect or a Parent Material
Adverse Effect.
SECTION 6.02. Conditions to Obligations of Parent and Sub.
The obligations of Parent and Sub to effect the Merger are further subject to
the satisfaction or waiver by
<PAGE>
67
Parent on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and warranties of
the Company set forth in this Agreement that are not so qualified shall be true
and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date, except to the extent any such representation or warranty expressly relates
to an earlier date (in which case as of such date), and Parent shall have
received a certificate signed on behalf of the Company by the Chief Executive
Officer and the Chief Financial Officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and Parent
shall have received a certificate signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company to such effect.
(c) Letters from Company Affiliates. Parent shall have
received from each person named in the letter referred to in Section 5.13(a) an
executed copy of an agreement substantially in the form attached hereto as
Exhibit A.
(d) Tax Opinion. Parent shall have received an opinion dated
the Closing Date from Cravath, Swaine & Moore, counsel to Parent and Sub, in
form and substance reasonably satisfactory to Parent, substantially to the
effect that, on the basis of facts, representations and assumptions set forth in
such opinion which are consistent with the state of facts existing on the
Closing Date, the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code. In rendering
such opinion, Cravath, Swaine & Moore may require and rely upon (and may
incorporate by reference) representations and covenants, including those
contained in certificates of officers of Parent, the Company, Sub and others.
<PAGE>
68
(e) Absence of Company Material Adverse Effect. There shall
not have occurred since the date of this Agreement any event, change, effect or
development which, individually or in the aggregate, has had or is reasonably
likely to have, a Company Material Adverse Effect.
SECTION 6.03. Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject to the
satisfaction or waiver by the Company on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub set forth in this Agreement that are qualified as
to materiality shall be true and correct, and the representations and warranties
of Parent and Sub set forth in this Agreement that are not so qualified shall be
true and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date, except to the extent any such representation or warranty expressly relates
to an earlier date (in which case as of such date), and the Company shall have
received a certificate signed on behalf of Parent by the Chief Executive Officer
and the Chief Financial Officer of Parent to such effect.
(b) Performance of Obligations of Parent and Sub. Parent and
Sub shall have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing Date, and the
Company shall have received a certificate signed on behalf of Parent by the
Chief Executive Officer and the Chief Financial Officer of Parent to such
effect.
(c) Letters from Parent Affiliates. Parent shall have received
from each person named in the letter referred to in Section 5.13(b) an executed
copy of an agreement substantially in the form attached hereto as Exhibit B.
(d) Tax Opinion. The Company shall have received an opinion
dated the Closing Date from Skadden, Arps, Slate, Meagher & Flom, LLP, counsel
to the Company, in form and substance reasonably satisfactory to the Company,
substantially to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion which are consistent with the state of
facts existing on the Closing Date, the Merger will be treated for Federal
income
<PAGE>
69
tax purposes as a reorganization within the meaning of Section 368(a) of the
Code. In rendering such opinion, Skadden, Arps, Slate, Meagher & Flom, LLP may
require and rely upon (and may incorporate by reference) representations and
covenants, including those contained in certificates of officers of Parent, the
Company, Sub and others.
(e) Absence of Parent Material Adverse Effect. There shall not
have occurred since the date of this Agreement any event, change, effect or
development which, individually or in the aggregate, has had or is reasonably
likely to have, a Parent Material Adverse Effect.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be
terminated at any time prior to the Effective Time of the Merger, whether before
or after the Company Stockholder Approval or the Parent Stockholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if, at a duly held stockholders meeting of the Company or
any adjournment thereof at which the Company Stockholder Approval is
voted upon, the Company Stockholder Approval shall not have been
obtained;
(ii) if, at a duly held stockholders meeting of Parent or any
adjournment thereof at which the Parent Stockholder Approval is voted
upon, the Parent Stockholder Approval shall not have been obtained;
(iii) if the Merger shall not have been consummated on or before
June 30, 1997 (the "Outside Date"), unless the failure to consummate
the Merger is the result of a wilful, Material Breach (as defined in
Section 7.02(e)) of this Agreement by the party seeking to terminate
this Agreement;
(iv) if any court of competent jurisdiction or other Governmental
Entity shall have issued an order,
<PAGE>
70
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Merger and such order, decree,
ruling or other action shall have become final and non-appealable; or
(v) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement contained in this
Agreement which (A) would give rise to the failure of a condition set
forth in Section 6.02(a) or 6.02(b) or Section 6.03(a) or 6.03(b), as
applicable, and (B) cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party of such
breach (provided that the terminating party is not then in breach of
any representation, warranty, covenant or other agreement that would
give rise to a failure of a condition as described in clause (A)
above);
(c) by either Parent or the Company in the event that any
condition to the obligation of such party to effect the Merger set forth in
Section 6.01(f) or 6.02 (in the case of Parent) or Section 6.01(f) or 6.03 (in
the case of the Company) is not capable of being satisfied prior to the Outside
Date;
(d) by the Company, if the Board of Directors of the Company
shall have approved, and the Company shall concurrently with such termination
enter into, a definitive agreement providing for the implementation of the
transactions contemplated by a Company Takeover Proposal; provided, however,
that (i) such Company Takeover Proposal was not solicited by the Company and did
not otherwise result from a breach of Section 4.02(a), (ii) the Board of
Directors of the Company shall have complied with the exception to the proviso
contained in Section 4.02(c) in connection with such Company Takeover Proposal
and (iii) no termination pursuant to this Section 7.01(d) shall be effective
unless the Company shall simultaneously make the payment required by Section
7.02(a);
(e) by Parent, if the Board of Directors of Parent shall have
approved, and Parent shall concurrently with such termination enter into, a
definitive agreement providing for the implementation of the transactions
contemplated by a Parent Takeover Proposal; provided, however, that (i) such
Parent Takeover Proposal was not solicited by Parent and did not otherwise
result from a breach of Section 4.03(a), (ii) the Board of Directors of
<PAGE>
71
Parent shall have complied with the exception to the proviso contained in
Section 4.03(c) in connection with such Parent Takeover Proposal and (iii) no
termination pursuant to this Section 7.01(e) shall be effective unless Parent
shall simultaneously make the payment required by Section 7.02(b);
(f) by the Company, if Parent's Board of Directors shall have
(i) failed to recommend to Parent's stockholders that they give the Parent
Stockholder Approval, (ii) withdrawn or modified in a manner adverse to the
Company its recommendation to Parent's stockholders that they give the Parent
Stockholder Approval, or (iii) failed to reaffirm its recommendation to Parent's
stockholders that they give the Parent Stockholder Approval within fourteen days
after the Company has made a written request to Parent to do so (which written
request may be made by the Company at any time after the public disclosure of a
Parent Takeover Proposal); and
(g) by Parent, if the Company's Board of Directors shall have
(i) failed to recommend to the Company's stockholders that they give the Company
Stockholder Approval, (ii) withdrawn or modified in a manner adverse to Parent
its recommendation to the Company's stockholders that they give the Company
Stockholder Approval, or (iii) failed to reaffirm its recommendation to the
Company's' stockholders that they give the Company Stockholder Approval within
fourteen days after Parent has made a written request to the Company to do so
(which written request may be made by Parent at any time after the public
disclosure of a Company Takeover Proposal).
SECTION 7.02. Effect of Termination. (a) In the
event that (i) any person shall make a Company Takeover Proposal that shall not
have been withdrawn on the date of the Company's Stockholders' Meeting and
thereafter this Agreement is terminated pursuant to Section 7.01(b)(i), (ii)
this Agreement is terminated by the Company pursuant to Section 7.01(d) or (iii)
this Agreement is terminated by Parent pursuant to Section 7.01(g), then the
Company shall pay to Parent a fee of $65,000,000, which amount shall be payable
by wire transfer of same day funds, on the date of termination of this
Agreement. The Company acknowledges that the agreements contained in this
Section 7.02(a) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent would not enter into this
Agreement. Notwithstanding the foregoing, no payment need be made by the Company
pursuant
<PAGE>
72
to this Section 7.02(a) if Parent shall be in Material Breach of its
representations, warranties or covenants under this Agreement.
(b) In the event that (i) any person shall make a Parent
Takeover Proposal that shall not have been withdrawn on the date of the Parent's
Stockholders' Meeting and thereafter this Agreement is terminated pursuant to
Section 7.01(b)(ii), (ii) this Agreement is terminated by Parent pursuant to
Section 7.01(e) or (iii) this Agreement is terminated by the Company pursuant to
Section 7.01(f), then Parent shall pay to the Company a fee of $65,000,000,
which amount shall be payable by wire transfer of same day funds, on the date of
termination of this Agreement. Parent acknowledges that the agreements contained
in this Section 7.02(b) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, the Company would not enter
into this Agreement. Notwithstanding the foregoing, no payment need be made by
Parent pursuant to this Section 7.02(b) if the Company shall be in Material
Breach of its representations, warranties or covenants under this Agreement.
(c) In the event of termination of this Agreement by either
Parent or the Company pursuant to Section 7.01(b)(i) or by Parent pursuant to
Section 7.01(b)(v), then (unless Section 7.02(a) is applicable) the Company
shall reimburse Parent for all its reasonable out-of-pocket expenses (up to
$5,000,000) actually incurred in connection with this Agreement and the
transactions contemplated hereby, which amount shall be payable by wire transfer
of same day funds within three business days of written demand, accompanied by a
reasonably detailed statement of such expenses and appropriate supporting
documentation, therefor. Notwithstanding the foregoing, no payment need be made
by the Company pursuant to this Section 7.02(c) if Parent shall be in Material
Breach of its representations, warranties or covenants under this Agreement.
(d) In the event of termination of this Agreement by either
Parent or the Company pursuant to Section 7.01(b)(ii) or by the Company pursuant
to Section 7.01(b)(v), then (unless Section 7.02(b) is applicable) Parent shall
reimburse the Company for all its reasonable out-of-pocket expenses (up to
$5,000,000) actually incurred in connection with this Agreement and the
transactions contemplated hereby, which amount shall be
<PAGE>
73
payable by wire transfer of same day funds within three business days of written
demand, accompanied by a reasonably detailed statement of such expenses and
appropriate supporting documentation, therefor. Notwithstanding the foregoing,
no payment need be made by Parent pursuant to this Section 7.02(d) if the
Company shall be in Material Breach of its representations, warranties or
covenants under this Agreement.
(e) In the event of termination of this Agreement by either
the Company or Parent as provided in Section 7.01, this Agreement shall
forthwith become void and have no effect, without any liability or obligation on
the part of Parent, Sub or the Company, other than the provisions of Sections
3.01(l) and 3.02(l), the second sentence of Section 5.04, Section 5.10, this
Section 7.02 and Article VIII and except to the extent that such termination
results from a wilful, Material Breach by a party of any of its representations,
warranties, covenants or other agreements set forth in this Agreement which has
not been cured prior to the time of such termination. For purposes of this
Agreement, a "Material Breach" shall mean a breach that is material by reference
to (i) the breaching party and its subsidiaries, taken as a whole, (ii) the
ability of the parties to consummate the Merger and the other transactions
contemplated by this Agreement in the manner contemplated by this Agreement or
(iii) the benefits expected to be received by the non-breaching party and its
stockholders as a result of the consummation of the Merger and the other
transactions contemplated by this Agreement.
SECTION 7.03. Amendment. This Agreement may be amended by the
parties at any time before or after the Company Stockholder Approval or the
Parent Stockholder Approval; provided, however, that after the Company
Stockholder Approval or the Parent Stockholder Approval, there shall be made no
amendment that by law requires further approval by such stockholders without the
further approval of such stockholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties.
SECTION 7.04. Extension; Waiver. At any time prior to the
Effective Time of the Merger, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other parties, (b)
waive any inaccuracies in the representations and warranties contained in this
Agreement or in any document delivered
<PAGE>
74
pursuant to this Agreement or (c) subject to the proviso of Section 7.03, waive
compliance with any of the covenants or conditions contained in this Agreement.
Any agreement on the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such rights.
SECTION 7.05. Procedure for Termination, Amendment, Extension
or Waiver. A termination of this Agreement pursuant to Section 7.01, an
amendment of this Agreement pursuant to Section 7.03 or an extension or waiver
pursuant to Section 7.04 shall, in order to be effective, require, in the case
of Parent, Sub or the Company, action by its Board of Directors or, in the case
of an extension or waiver pursuant to Section 7.04, the duly authorized designee
of its Board of Directors.
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective Time
of the Merger. This Section 8.01 shall not limit any covenant or agreement of
the parties which by its terms contemplates performance after the Effective Time
of the Merger.
SECTION 8.02. Notices. All notices, requests,
claims, demands and other communications under this Agreement shall be in
writing (including by facsimile) and shall be deemed given upon receipt by the
parties at the
<PAGE>
75
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Parent or Sub, to
Homestake Mining Company
650 California Street
San Francisco, CA 94108-2788
Phone: (415) 981-8150
Fax: (415) 397-0952
Attention: Wayne Kirk, Esq.
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Phone: (212) 474-1000
Fax: (212) 474-3700
Attention: Richard Hall, Esq.
(b) if to the Company, to
Santa Fe Pacific Gold Corporation
6200 Uptown Boulevard NE
Suite 400
Albuquerque, NM 87110
Phone: (505) 880-5300
Fax: (505) 880-5435
Attention: Wayne Jarke, Esq.
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Phone: (212) 735-3000
Fax: (212) 735-2000
Attention: Peter Allan Atkins, Esq.
<PAGE>
76
SECTION 8.03. Definitions. For purposes of this
Agreement:
An "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, such first person.
A "person" means an individual, corporation, partnership,
company, limited liability company, joint venture, association, trust,
unincorporated organization or other entity.
A "subsidiary" of any person means another person, an amount
of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its
Board of Directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is
owned directly or indirectly by such first person.
SECTION 8.04. Interpretation. When a reference is made in this
Agreement to a Section or Exhibit, such reference shall be to a Section of, or
an Exhibit to, this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation".
SECTION 8.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule or
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
<PAGE>
77
SECTION 8.06. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
SECTION 8.07. Entire Agreement; No Third-Party Beneficiaries.
This Agreement (including the documents referred to herein) (a) constitute the
entire agreement, and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of this
Agreement and (b) except for the provisions of Article II and Sections 5.07(b),
5.07(c), 5.08 and 5.09, are not intended to confer upon any person other than
the parties any rights or remedies.
SECTION 8.08. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 8.09. Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, except that Sub may assign, in
its sole discretion, any of or all its rights, interests and obligations under
this Agreement to Parent or to any direct or indirect wholly owned Parent
Subsidiary, but no such assignment shall relieve Sub of any of its obligations
under this Agreement. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns. Parent shall cause Sub to perform its
obligations hereunder.
SECTION 8.10. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in Delaware state court, this
being in addition to any other remedy to which they are entitled at law or in
equity. In
<PAGE>
78
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not initiate
any action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a Federal court sitting in the State of
Delaware or a Delaware state court.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
HOMESTAKE MINING COMPANY,
by
--------------------------
Name:
Title:
HMGLD CORP.,
by
--------------------------
Name:
Title:
SANTA FE PACIFIC GOLD
CORPORATION,
by
--------------------------
Name:
Title:
<PAGE>
Exhibit B
[FORM OF PARENT AFFILIATE LETTER]
[ ], 1996
Homestake Mining Company
650 California Street
San Francisco, CA 94108-2788
Ladies and Gentlemen:
This letter agreement (this "Agreement") is being delivered in
accordance with Section 6.03(c) of the Agreement and Plan of Merger, dated as of
December 8, 1996 (the "Merger Agreement"), by and among HOMESTAKE MINING
COMPANY, a Delaware corporation ("Parent"), HMGLD Corp., a Delaware corporation
and a wholly owned subsidiary of Parent ("Sub"), and SANTE FE PACIFIC GOLD
CORPORATION, a Delaware corporation (the "Company"). The Merger Agreement
provides, among other things, for the merger of Sub with and into the Company
(the "Merger"), pursuant to which each share of the Common Stock, par value
$0.01 per share ("Company Common Stock"), of the Company will be converted into
the right to receive 1.115 shares of Common Stock, par value $1.00 per share
("Parent Common Stock"), of Parent on the basis described in the Merger
Agreement.
1. The undersigned ("Stockholder") hereby represents,
warrants, covenants and agrees as follows:
(a) Stockholder understands that as of the date of this letter
Stockholder may be deemed to be an "affiliate" of the Company as such term is
used in and for purposes of Accounting Series Releases 130 and 135, as amended,
of the Commission (an "Affiliate").
(b) Stockholder has carefully read this letter and the Merger
Agreement and has had an opportunity to discuss the requirements of such
documents and any other applicable limitations upon Stockholder's ability to
sell, transfer or otherwise dispose of Parent Common Stock with his counsel or
counsel for the Company.
2. Stockholder understands that the Merger may be
accounted for using the "pooling-of-interests" method and
<PAGE>
2
that such treatment for financial accounting purposes is dependent upon the
accuracy of certain of the representations and warranties, and the compliance by
Stockholder with certain of the covenants and agreements, set forth herein.
Accordingly, Stockholder further hereby represents and covenants that
Stockholder has not, within the 30 days preceding the Effective Time of the
Merger (as such term is defined in the Merger Agreement) sold, transferred or
otherwise disposed of any shares of Parent Common Stock held by Stockholder and
that it will not sell, transfer or otherwise dispose of any Parent Common Stock
received by Stockholder in the Merger until after Parent shall have publicly
released a report (the "Combined Financial Results Report") including the
combined financial results of Parent and the Company for a period of at least 30
days of combined operations of Parent and the Company. Stockholder understands
that stop transfer instructions will be given to the transfer agents of Parent
and the Company in order to prevent any breach of the covenants and agreements
made by Stockholder in this Section 2, although such stop transfer instructions
will be promptly rescinded upon the publication of the Combined Financial
Report.
3. Parent will publish the Combined Financial Results Report
as promptly as practicable following the Merger, and in any event within 30 days
after the end of the first full calendar month following the Merger.
4. Stockholder further understands and agrees that the
representations, warranties, covenants and agreements of Stockholder set forth
herein are for the benefit of Parent, the Company and the Surviving Corporation
(as defined in the Merger Agreement) in the Merger and will be relied up by such
entities and their respective counsel and accountants.
5. This Agreement will be binding upon and enforceable against
administrators, executors, representatives, heirs, legatees and devisees of
Shareholder and any pledgees holding the Shares as collateral. If the Merger
Agreement is terminated in accordance with its terms prior to the Effective
Time, this Agreement will thereupon automatically terminate.
<PAGE>
3
Execution of this letter should not be considered an admission
on the Stockholder's part that it is an "affiliate" of the Company as described
in Section 1(a) of this Agreement.
Very truly yours,
------------------------------
Name:
Address:
Agreed to and accepted:
HOMESTAKE MINING COMPANY
By: ___________________________
Name:
Title:
<PAGE>
Exhibit A
[FORM OF COMPANY AFFILIATE LETTER]
[ ], 1996
Homestake Mining Company
650 California Street
San Francisco, CA 94108-2788
Ladies and Gentlemen:
This letter agreement (this "Agreement") is being delivered in
accordance with Section 6.02(c) of the Agreement and Plan of Merger, dated as of
December 8, 1996 (the "Merger Agreement"), by and among HOMESTAKE MINING
COMPANY, a Delaware corporation ("Parent"), HMGLD Corp., a Delaware corporation
and a wholly owned subsidiary of Parent ("Sub"), and SANTA FE PACIFIC GOLD
CORPORATION, a Delaware corporation (the "Company"). The Merger Agreement
provides, among other things, for the merger of Sub with and into the Company
(the "Merger"), pursuant to which each share of the Common Stock, par value
$0.01 per share ("Company Common Stock"), of the Company will be converted into
the right to receive 1.115 shares of Common Stock, par value $1.00 per share
("Parent Common Stock"), of Parent on the basis described in the Merger
Agreement.
1. The undersigned ("Stockholder") hereby represents,
warrants, covenants and agrees with respect to all Parent Common Stock received
as a result of the Merger as follows:
(a) Stockholder understands that as of the date of this letter
Stockholder may be deemed to be an "affiliate" of the Company as such term is
(i) defined for purposes of paragraphs (c) and (d) of Rule 145 of the general
rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), or (ii) used in and for purposes of Accounting Series
Releases 130 and 135, as amended, of the Commission (an "Affiliate").
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2
(b) Stockholder shall not make any sale, transfer or other
disposition of Parent Common Stock in violation of the Act or the Rules and
Regulations.
(c) Stockholder has carefully read this letter and the Merger
Agreement and has had an opportunity to discuss the requirements of such
documents and any other applicable limitations upon Stockholder's ability to
sell, transfer or otherwise dispose of Parent Common Stock with his counsel or
counsel for the Company.
(d) Stockholder has been advised that the issuance of Parent
Common Stock to Stockholder pursuant to the Merger has been registered with the
Commission under the Act. However, Stockholder has also been advised that, since
at the time the Merger was submitted to a vote of the stockholders of the
Company, Stockholder may be deemed to have been an Affiliate of the Company and
the distribution by Stockholder of Parent Common Stock has not been registered
under the Act. Stockholder may not offer to sell, sell, transfer or otherwise
dispose of Parent Common Stock issued to Stockholder in the Merger unless (i)
such offer, sale, transfer or other disposition has been registered under the
Act or is made in conformity with Rule 145 under the Act, or (ii) in the opinion
of counsel reasonably acceptable to Parent, or pursuant to a "no- action" letter
obtained by Stockholder from the staff of the Commission, such sale, transfer or
other disposition is otherwise exempt from registration under the Act.
(e) Stockholder understands that Parent will give stop
transfer instructions to Parent's transfer agents with respect to Parent Common
Stock, that the Parent Common Stock issued to Stockholder will all be in
certificated form and that the certificates therefor, or any substitutions
thereof, will bear a legend substantially to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN
A TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN ACCORDANCE WITH THE TERMS
OF AN AGREEMENT DATED [ ], 1996, BETWEEN THE REGISTERED HOLDER HEREOF
AND HOLLAND, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF HOMESTAKE MINING COMPANY."
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3
(f) Stockholder also understands that unless the transfer by
Stockholder of Stockholder's Parent Common Stock has been registered under the
Act or is a sale made in conformity with the provisions of Rule 145, Parent
reserves the right to place a legend substantially to the following effect on
the certificates issued to any transferee:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE
ACQUIRED FROM A PERSON WHO RECEIVED SUCH SECURITIES IN A
TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SECURITIES HAVE NOT BEEN ACQUIRED BY THE HOLDER
WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT
OF 1933 AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933."
(g) It is understood and agreed that the legends set forth in
Sections 1(e) and 1(f) above shall be removed by delivery of substitute
certificates without such legend if such legend is not required for purposes of
the Act. It is understood and agreed that such legends and the stop orders
referred to above will be removed if (i) two years shall have elapsed from the
date Stockholder acquired Parent Common Stock received in the Merger and the
provisions of Rule 145(d)(2) are then available to the undersigned, (ii) three
years shall have elapsed from the date Stockholder acquired Parent Common Stock
received in the Merger and the provisions of Rule 145(d)(3) are then available
to the undersigned, or (iii) parent has received either an opinion of counsel,
which opinion and counsel shall be reasonably satisfactory to Parent, or a
"no-action" letter obtained by Stockholder from the staff of the Commission, to
the effect that the restrictions imposed by Rule 145 under the Act no longer
apply to Stockholder.
2. Stockholder understands that the Merger may be accounted
for using the "pooling-of-interests" method and that such treatment for
financial accounting purposes is dependent upon the accuracy of certain of the
representations and warranties, and the compliance by Stockholder with certain
of the covenants and agreements, set forth herein. Accordingly, Stockholder
further hereby
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4
represents and covenants that Stockholder has not, within the 30 days preceding
the Effective Time of the Merger (as such term is defined in the Merger
Agreement) sold, transferred or otherwise disposed of any shares of Parent
Common Stock held by Stockholder and that it will not sell, transfer or
otherwise dispose of any Parent Common Stock received by Stockholder in the
Merger until after Parent shall have publicly released a report (the "Combined
Financial Results Report") including the combined financial results of Parent
and the Company for a period of at least 30 days of combined operations of
Parent and the Company. Stockholder understands that stop transfer instructions
will be given to the transfer agents of Parent and the Company in order to
prevent any breach of the covenants and agreements made by Stockholder in this
Section 2, although such stop transfer instructions will be promptly rescinded
upon the publication of the Combined Financial Report.
3. Parent will publish the Combined Financial Results Report
as promptly as practicable following the Merger, and in any event within 30 days
after the end of the first full calendar month following the Merger.
4. Stockholder further understands and agrees that the
representations, warranties, covenants and agreements of Stockholder set forth
herein are for the benefit of Parent, the Company and the Surviving Corporation
(as defined in the Merger Agreement) in the Merger and will be relied up by such
entities and their respective counsel and accountants.
5. This Agreement will be binding upon and enforceable against
administrators, executors, representatives, heirs, legatees and devisees of
Shareholder and any pledgees holding the Shares as collateral. If the Merger
Agreement is terminated in accordance with its terms prior to the Effective
Time, this Agreement will thereupon automatically terminate.
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5
Execution of this letter should not be considered an admission
on the Stockholder's part that it is an "affiliate" of the Company as described
in Section 1(a) of this Agreement.
Very truly yours,
------------------------------
Name:
Address:
Agreed to and accepted:
HOMESTAKE MINING COMPANY
By: ___________________________
Name:
Title:
<PAGE>
Exhibit 99.10
NEWS RELEASE
Homestake Mining Company
650 California Street
San Francisco, CA 94108
Phone: 415/ 981-8150
Fax: 415/397-5038
Contact:
Michael A. Steeves
Director, Investor Relations
415-983-8169
HOMESTAKE TO ACQUIRE SANTA FE PACIFIC GOLD FOR $2.3 BILLION IN
STOCK, CREATING A NEW LEADING INTERNATIONAL GOLD COMPANY.
SAN FRANCISCO, CA, and ALBUQUERQUE, NM, December 9, 1996 -- Homestake Mining
Company (NYSE: HM) and Santa Fe Pacific Gold Corporation (NYSE: GLD) today
announced a strategic combination that will create a new leading international
gold company. The new Homestake will rank first among North American companies
in worldwide gold reserves and second in gold production, with the largest
Nevada land position of any gold company.
Under the terms of a definitive merger agreement unanimously approved by the
boards of both companies, Santa Fe shareholders will receive 1.115 newly issued
Homestake common shares for each Santa Fe common share, valued at $17.42 per
Santa Fe share, or approximately $2.3 billion in the aggregate, based on
Homestake's closing stock price last Friday. The transaction will be accounted
for as a pooling of interests and is expected to be tax-free.
The acquisition will be accretive to Homestake's expected 1997 cash flow and
earnings before one-time transaction costs. The new Homestake will have 39.4
million ounces of gold reserves and pro forma 1996 production of 2.7 million
ounces of gold, growing to 3.2 million ounces in 1998, with cash costs under
$245 per ounce. It will have 10 domestic and international development projects,
a 1.5 million acre Nevada land position and other high-potential exploration
sites.
"We are creating a new top-tier gold producer with the asset base, portfolio of
growth opportunities, financial strength and operating skills to pursue an
aggressive strategy that should enable the new Homestake to earn a market
valuation reflecting its improved fundamentals," said Jack E. Thompson,
President and Chief Executive Officer of Homestake, who will become Chairman and
Chief Executive Officer of Homestake.
"We have a detailed plan to integrate the best of Homestake and Santa Fe,
creating a new company with a strong management team and a reconstituted board
of directors," said Thompson. "In addition to increased near-term and long-range
growth potential, the new Homestake will also benefit from significant savings
in administrative and operating costs and from a combined and refocused
exploration program, especially in Nevada. We will be well positioned to
capitalize on an extremely strong base of U.S., Canadian and Australian assets
and to compete more aggressively for attractive opportunities worldwide."
Patrick M. James, Chairman, President and Chief Executive Officer of Santa Fe,
who will become Homestake's President and Chief Operating Officer, said, "This
is a compelling strategic combination of two companies with complementary
capabilities and shared goals. Together, we
<PAGE>
have the mining expertise, technical skills and financial strength to
accelerate exploration and development of an unsurpassed land position. We will
be able to tap Homestake's underground mining skills and Santa Fe's patented
technology in refractory ore treatment to help convert our large base of
mineralized material into reserves on a cost-effective basis. Upon closing, we
will be ready to forge a new more competitive gold company capable of achieving
strong growth while maintaining a competitive cost position."
James noted that the new Homestake will benefit from the lowest political risk
profile of any major gold producer because virtually all of its current reserves
and mineralized material are in the U.S., Canada and Australia. "This powerful
platform will give us the capability to take on promising international projects
without substantially increasing overall portfolio risk," he said.
The new Homestake, with headquarters in San Francisco and an operating base in
northern Nevada, will have 17 mines (8 underground, 9 surface) in four
countries. It expects to achieve over $30 million in annual cost savings by
eliminating overlapping expenses and by combining and refocusing its exploration
program, especially in Nevada. These savings are expected to be fully realized
by the end of 1997. Specific near-term initiatives include:
Closing Santa Fe's Albuquerque headquarters, and relocating certain
members of the management team to San Francisco and Nevada.
Combining U.S. Operations management of both companies in a single base in
Reno, taking advantage of Santa Fe's northern Nevada infrastructure to
manage more efficiently both companies' Nevada properties.
Focusing exploration efforts on the strategic land position in Nevada and
on highest-priority international projects in Australasia, Latin America
and Central Asia.
Accelerating exploration/development at existing operations, including
Eskay Creek, Kalgoorlie, Pinson, Twin Creeks, Round Mountain and the Lone
Tree complex.
Optimizing development of 10 domestic and international projects in the
feasibility, permitting or construction stages, including Sage Mill
autoclaves, the Lone Tree and Eskay Creek flotation projects, Ruby Hill and
the La Falda/Jeronimo project.
Leveraging complementary resources and technological expertise, such as
using Santa Fe's inert gas flotation technology at Homestake's Jeronimo
project in Chile and using Homestake's McLaughlin autoclaves and oxygen
plant at Santa Fe's Lone Tree complex.
Upon closing of the combination, the reconstituted Homestake Board will have 12
directors: five designated by Homestake, five designated by Santa Fe and two
additional directors selected by the new Board to complement its capabilities.
The transaction, which is expected to close by early April 1997, is subject to
approval by both companies' shareholders, antitrust approval, qualification as
pooling of interests, and other customary conditions.
<PAGE>
"This is an ideal transaction for the shareholders of both companies," said
Thompson. "Santa Fe's shareholders get a full and fair price, representing a 47%
premium to last Wednesday's unaffected market price for their shares, and the
potential upside of owning half of a dynamic new gold company. Homestake's
shareholders get a substantially increased base of U.S. reserves for an
effective price of about $125 per ounce of reserves. This price is very
attractive for such high-quality, low-risk assets. Homestake will also benefit
from $1 billion in newly built Santa Fe plant and equipment, millions of ounces
of mineralized material we believe can be converted to gold reserves, and the
enormous potential of the Nevada properties. Our shareholders will also own half
of a new, more vigorous and aggressive Homestake that is determined to increase
value for shareholders. We believe our stock can outperform that of our peers,
regardless of the direction of gold prices."
Said James, "Santa Fe has carefully evaluated its strategic alternatives for
well over a year, and the combination with Homestake is clearly the best option
for our shareholders. Before Thanksgiving, Santa Fe's board unanimously
determined not to pursue the Newmont offer made public last Thursday. We have no
intention of allowing this last-minute spoiler tactic to interrupt a
well-conceived and carefully planned combination which will create value for
both companies' shareholders and an exciting new workplace for our employees."
Homestake's financial advisor is Dillon, Read & Co. Inc., and Santa Fe is being
advised by SBC Warburg Inc.
Homestake Mining Company is an international gold mining company with
substantial operations and exploration in the U.S. Canada and Australia.
Homestake also has active exploration programs in the Andes, Venezuela, French
Guiana, Brazil and elsewhere in Latin America, and development and/or evaluation
projects in Chile, Russia and Bulgaria. Homestake has won numerous industry
environmental and safety awards.
Santa Fe Pacific Gold Corporation is one of the largest gold mining companies in
North America, with mines in Nevada and California and exploration offices and
projects throughout the world, including Central Asia, Brazil, Chile, West
Africa and Australia. Santa Fe has one of the industry's best environmental and
safety records.
Statements contained in this press release which are not historical facts are
forward-looking statements as the item is defined in the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risks and uncertainties which could cause actual results to differ materially
form estimated results. Such risks and uncertainties are detailed in the
companies' filings with the Securities and Exchange Commission.
