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
OCTOBER 5, 1999
Date of Report (Date of Earliest Event Reported)
ASARCO INCORPORATED
(Exact name of Registrant as specified in its charter)
DELAWARE 1-164 13-492440
(State or Other Jurisdiction (IRS Employer Number) (Identification No.)
Incorporation or Organization)
180 MAIDEN LANE, NEW YORK, NEW YORK 10038
(Address of Principal Executive Office) (Zip Code)
(212) 510-2000
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
ITEM 5. OTHER EVENTS.
On October 5, 1999, ASARCO Incorporated ("ASARCO"), Phelps Dodge
Corporation and AAV Corporation entered into an Agreement and Plan of
Merger, dated as of October 5, 1999 (the "Merger Agreement"), a copy of
which is attached hereto as Exhibit 99.1 and incorporated herein by
reference.
In addition, on October 6, 1999, ASARCO issued a press release
relating to the Merger Agreement, a copy of which is attached hereto as
Exhibit 99.2 and incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(c) Exhibits
99.1 Agreement and Plan of Merger, dated as of October
5, 1999, among ASARCO Incorporated, Phelps Dodge
Corporation and AAV Corporation.
99.2 Press Release of ASARCO Incorporated, dated October
6, 1999.
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 hereunto duly authorized.
ASARCO INCORPORATED
By: /s/ Francis R. McAllister
_______________________________
Name: Francis R. McAllister
Title: Chairman and Chief Executive Officer
Date: October 6, 1999
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NO.
99.1 Agreement and Plan of Merger, dated
as of October 5, 1999, among ASARCO
Incorporated, Phelps Dodge Corporation and
AAV Corporation.
99.2 Press Release of ASARCO
Incorporated, dated October 5, 1999.
AGREEMENT AND PLAN OF MERGER
among
PHELPS DODGE CORPORATION
AAV CORPORATION
and
ASARCO INCORPORATED
Dated as of October 5, 1999
TABLE OF CONTENTS
Page
----
ARTICLE I
THE ASARCO OFFER
Section 1.1 The ASARCO Offer . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 ASARCO Elections . . . . . . . . . . . . . . . . . . . . . 3
Section 1.3 ASARCO Action . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.4 Directors . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II
THE ASARCO MERGER; CLOSING
Section 2.1 The ASARCO Merger . . . . . . . . . . . . . . . . . . . . 7
Section 2.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.4 Effects of the ASARCO Merger . . . . . . . . . . . . . . . 8
Section 2.5 Directors and Officers . . . . . . . . . . . . . . . . . . 8
ARTICLE III
EFFECT OF THE ASARCO MERGER ON THE STOCK OF
ASARCO; EXCHANGE OF CERTIFICATES
Section 3.1 Effect on ASARCO Stock and SubA Stock . . . . . . . . . . 9
Section 3.2 Exchange of Certificates . . . . . . . . . . . . . . . . 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Organization, Qualification, Etc. . . . . . . . . . . . 15
Section 4.2 Capital Stock . . . . . . . . . . . . . . . . . . . . . 17
Section 4.3 Corporate Authority Relative to this Agreement . . . . . 18
Section 4.4 Non-Contravention; Consents and Approvals . . . . . . . 19
Section 4.5 Reports and Financial Statements . . . . . . . . . . . . 20
Section 4.6 Environmental Matters. . . . . . . . . . . . . . . . . . 21
Section 4.7 Employee Benefit Plans; ERISA. . . . . . . . . . . . . . 23
Section 4.8 Information Statement; Registration Statement;
Other Information . . . . . . . . . . . . . . . . . . 27
Section 4.9 ASARCO Rights Plan . . . . . . . . . . . . . . . . . . . 27
Section 4.10 Tax Matters . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.11 Opinion of Financial Advisors . . . . . . . . . . . . . 29
Section 4.12 Required Vote . . . . . . . . . . . . . . . . . . . . . 30
Section 4.13 Absence of Certain Changes . . . . . . . . . . . . . . . 30
Section 4.14 No Undisclosed Material Liabilities . . . . . . . . . . 32
Section 4.15 Labor Relations . . . . . . . . . . . . . . . . . . . . 32
Section 4.16 No Prior Activities . . . . . . . . . . . . . . . . . . 32
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Conduct of Business Pending the Effective Time . . . . . 33
Section 5.2 Investigation . . . . . . . . . . . . . . . . . . . . . 35
Section 5.3 Shareholder Approvals and Other Cooperation . . . . . . 36
Section 5.4 Affiliate Agreements . . . . . . . . . . . . . . . . . . 39
Section 5.5 ASARCO Employee Stock Options, Incentive and
Benefit Plans . . . . . . . . . . . . . . . . . . . . 39
Section 5.6 Filings; Other Action . . . . . . . . . . . . . . . . . 41
Section 5.7 Further Assurances . . . . . . . . . . . . . . . . . . . 43
Section 5.8 Takeover Statute . . . . . . . . . . . . . . . . . . . . 43
Section 5.9 No Solicitation by ASARCO . . . . . . . . . . . . . . . 43
Section 5.10 Public Announcements . . . . . . . . . . . . . . . . . . 45
Section 5.11 Indemnification and Insurance . . . . . . . . . . . . . 45
Section 5.12 Accountants' "Comfort" Letters . . . . . . . . . . . . . 46
Section 5.13 Additional Reports . . . . . . . . . . . . . . . . . . . 46
Section 5.14 Disclosure Schedule Supplements . . . . . . . . . . . . 47
Section 5.15 Certain Litigation. . . . . . . . . . . . . . . . . . . 47
Section 5.16 Shareholder Litigation . . . . . . . . . . . . . . . . . 47
Section 5.17 Section 16(b) . . . . . . . . . . . . . . . . . . . . . 47
Section 5.18 Change of Control Agreements . . . . . . . . . . . . . . 48
ARTICLE VI
CONDITIONS TO THE ASARCO MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect
the ASARCO Merger . . . . . . . . . . . . . . . . . . 48
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
Section 7.1 Termination or Abandonment . . . . . . . . . . . . . . . 49
Section 7.2 Termination by Parent . . . . . . . . . . . . . . . . . 50
Section 7.3 Termination by ASARCO . . . . . . . . . . . . . . . . . 50
Section 7.4 Effect of Termination . . . . . . . . . . . . . . . . . 50
Section 7.5 Termination Fee. . . . . . . . . . . . . . . . . . . . 51
Section 7.6 Amendment or Supplement . . . . . . . . . . . . . . . . 51
Section 7.7 Extension of Time, Waiver, Etc. . . . . . . . . . . . . 52
ARTICLE VIII
MISCELLANEOUS
Section 8.1 No Survival of Representations and Warranties . . . . . 52
Section 8.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 8.3 Counterparts; Effectiveness . . . . . . . . . . . . . . 53
Section 8.4 Governing Law . . . . . . . . . . . . . . . . . . . . . 53
Section 8.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 8.6 Assignment; Binding Effect . . . . . . . . . . . . . . . 54
Section 8.7 Severability . . . . . . . . . . . . . . . . . . . . . . 54
Section 8.8 Enforcement of Agreement . . . . . . . . . . . . . . . . 54
Section 8.9 Entire Agreement; Third-Party Beneficiaries . . . . . . 55
Section 8.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 8.11 Definitions . . . . . . . . . . . . . . . . . . . . . . 55
Section 8.12 Finders or Brokers . . . . . . . . . . . . . . . . . . . 55
LIST OF EXHIBITS
Exhibit A Form of ASARCO Affiliate Letter
INDEX OF DEFINED TERMS
Defined Term Section
------------ -------
affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.11
Aggregate ASARCO Merger Cash Consideration . . . . . . . . . . 3.1(b)(i)
Aggregate ASARCO Merger Stock Consideration . . . . . . . . . 3.1(b)(iii)
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
Antitrust Laws . . . . . . . . . . . . . . . . . . . . . . . . 5.6(b)(i)
ASARCO . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
ASARCO Acquisition Agreement . . . . . . . . . . . . . . . . . . . 5.9(b)
ASARCO Award . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5(b)
ASARCO Board . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3(a)
ASARCO Cash Consideration . . . . . . . . . . . . . . . . . . Introduction
ASARCO Cash Election Shares . . . . . . . . . . . . . . . . . . . . 1.2(a)
ASARCO Cash Proration Factor . . . . . . . . . . . . . . . . . 1.2(b)(i)
ASARCO Certificates . . . . . . . . . . . . . . . . . . . . . . . . 3.1(b)
ASARCO Common Stock . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
ASARCO Designees . . . . . . . . . . . . . . . . . . . . . . . . . 1.4(a)
ASARCO Disclosure Schedule . . . . . . . . . . . . . . . . . . Article IV
ASARCO Employees . . . . . . . . . . . . . . . . . . . . . . . . . 5.5(e)
ASARCO Indemnified Parties . . . . . . . . . . . . . . . . . . . 5.11(a)
ASARCO Incorporated . . . . . . . . . . . . . . . . . . . . . . . . 2.4(b)
ASARCO Maximum Cash Consideration . . . . . . . . . . . . . . . . . 1.2(b)
ASARCO Maximum Stock Consideration . . . . . . . . . . . . . . . . 1.2(c)
ASARCO Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
ASARCO Merger Cash Amount . . . . . . . . . . . . . . . . . . . 3.1(b)(ii)
ASARCO Merger Consideration . . . . . . . . . . . . . . . . . . . . 3.1(b)
ASARCO Merger Exchange Ratio . . . . . . . . . . . . . . . . . . . 3.1(b)
ASARCO Merger Stock Amount . . . . . . . . . . . . . . . . . . 3.1(b)(iv)
ASARCO Non Electing Proration Factor . . . . . . . . . . . . 1.2(d)(iii)
ASARCO Non Electing Shares . . . . . . . . . . . . . . . . . . . . 1.2(a)
ASARCO Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.9(a)
ASARCO Offer . . . . . . . . . . . . . . . . . . . . . . . . Introduction
ASARCO Option Plans . . . . . . . . . . . . . . . . . . . . . . . . 5.5(a)
ASARCO Policy . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11(b)
ASARCO SAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5(a)
ASARCO Shareholder Approval . . . . . . . . . . . . . . . . . . . 4.12(b)
ASARCO Shareholders Meeting . . . . . . . . . . . . . . . . . 5.3(c)(iii)
ASARCO Stock Consideration . . . . . . . . . . . . . . . . . Introduction
ASARCO Stock Election Shares . . . . . . . . . . . . . . . . . . . 1.2(a)
ASARCO Stock Options . . . . . . . . . . . . . . . . . . . . . . . 5.5(a)
ASARCO Stock Proration Factor . . . . . . . . . . . . . . . . . 1.2(c)(i)
ASARCO Surviving Corporation . . . . . . . . . . . . . . . . . . . 2.1(a)
ASARCO Takeover Proposal . . . . . . . . . . . . . . . . . . . . . 5.9(a)
ASARCO Termination Fee . . . . . . . . . . . . . . . . . . . . . . . 7.5
CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6(d)
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(c)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
Combination . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
Common Shares Trust . . . . . . . . . . . . . . . . . . . . . 3.2(e)(iii)
control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.11
Current Representing Party Group . . . . . . . . . . . . . . . . 4.10(a)
DGCL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Employee Benefit Plan . . . . . . . . . . . . . . . . . . . . . 4.7(g)(i)
Encumbrance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c)
Environmental Claim . . . . . . . . . . . . . . . . . . . . . . 4.6(d)(i)
Environmental Law . . . . . . . . . . . . . . . . . . . . . . . 4.6(d)(ii)
Environmental Permits . . . . . . . . . . . . . . . . . . . . . . . 4.6(a)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7(g)(iii)
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . 4.7(g)(iv)
Excess Shares . . . . . . . . . . . . . . . . . . . . . . . . . 3.2(e)(ii)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3(b)
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2(a)
Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2(a)
Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Foreign Plan . . . . . . . . . . . . . . . . . . . . . . . . . 4.7(g)(ii)
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . 4.4(a)
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . 4.6(d)(iii)
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6(b)(i)
interested shareholder . . . . . . . . . . . . . . . . . . . . . . 4.3(b)
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7(b)
Information Statement . . . . . . . . . . . . . . . . . . . . . . . . 4.8
Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4(a)
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . 4.1(a)
Minimum Condition . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Multiemployer Plan . . . . . . . . . . . . . . . . . . . . . . . . 4.7(a)
NJBCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2(e)(ii)
Offer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
Parent Certificates . . . . . . . . . . . . . . . . . . . . . . . . 3.2(a)
Parent Common Stock . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Parent Disclosure Schedule . . . . . . . . . . . . . . . . . . Article IV
Parent Shareholder Approval . . . . . . . . . . . . . . . . . . . 4.12(a)
Parent Shareholders Meeting . . . . . . . . . . . . . . . . . . 5.3(c)(ii)
Past Representing Party Group . . . . . . . . . . . . . . . . . . 4.10(a)
person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.11
Phelps Dodge Proxy Statement . . . . . . . . . . . . . . . . . 5.3(c)(ii)
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7(g)(iii)
Registration Statement . . . . . . . . . . . . . . . . . . . . 5.3(a)(i)
Representing Party . . . . . . . . . . . . . . . . . . . . . . Article IV
Representing Party Affiliated Group . . . . . . . . . . . . . . . 4.10(a)
Representing Party Agreements . . . . . . . . . . . . . . . . . . . 4.4(a)
Representing Party's Disclosure Schedule . . . . . . . . . . . Article IV
Required Statutory Approvals . . . . . . . . . . . . . . . . . . . 4.4(b)
Required Third Party Consents . . . . . . . . . . . . . . . . . . . 4.4(b)
Schedule 14d-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8
Schedule 14d-9 . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3(b)
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5(a)
SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5
Share Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3(a)
Significant Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 8.11
SubA . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.11
Tax Certificates . . . . . . . . . . . . . . . . . . . . . . . 5.3(a)(v)
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10
Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1
THIS AGREEMENT AND PLAN OF MERGER, dated as of October 5, 1999
(the "Agreement"), among PHELPS DODGE CORPORATION, a New York corporation
("Parent"), AAV CORPORATION, a Delaware corporation ("SubA") and ASARCO
INCORPORATED, a New Jersey corporation ("ASARCO");
WHEREAS, Parent and ASARCO desire to combine their respective
businesses upon the terms and subject to the conditions in this Agreement
(the "Combination");
WHEREAS, (i) Parent is a corporation organized and existing under
the laws of the State of New York; and (ii) ASARCO is a corporation
organized and existing under the laws of the State of New Jersey;
WHEREAS, Parent has formed SubA, a wholly owned subsidiary of
Parent, and all the outstanding capital stock of SubA is owned by Parent;
WHEREAS, the Board of Directors of each of Parent and ASARCO
deems it advisable and in the best interests of their shareholders to
effect the Combination by causing ASARCO to become a subsidiary of Parent
pursuant to the ASARCO Merger as provided for in this Agreement;
WHEREAS, in furtherance of the Combination, Parent has caused
SubA to commence an exchange offer, which Parent shall cause SubA to amend
in accordance with the terms of this Agreement (as so amended, the "ASARCO
Offer") to acquire all of the issued and outstanding shares of ASARCO
Common Stock, for either $29.50 per share, net to the seller in cash,
without interest (the "ASARCO Cash Consideration") or 0.50266 of a share of
Parent Common Stock (the "ASARCO Stock Consideration"), subject to the
election and proration provisions of this Agreement and to the terms and
conditions of this Agreement and the ASARCO Offer;
WHEREAS, the parties desire to make certain representations,
warranties, covenants and agreements in connection with the Combination and
also to prescribe various conditions to the Combination;
WHEREAS, for U.S. federal income tax purposes, it is intended
that the ASARCO Merger will qualify as a transaction described in Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, for financial accounting purposes, it is intended that
the transactions contemplated by this Agreement will be accounted for as a
purchase transaction in accordance with United States generally accepted
accounting principles ("GAAP"); and
WHEREAS, the Agreement and Plan of Merger, dated as of July 15,
1999, as amended as of September 27, 1999, among Asarco Cyprus
Incorporated, a Delaware corporation, ACO Acquisition Corp., a New Jersey
corporation, CAM Acquisition Corp., a Delaware corporation, ASARCO and
Cyprus Amax Minerals Company, a Delaware corporation, has been terminated.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, and fully
intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
THE ASARCO OFFER
Section 1.1 The ASARCO Offer. (a) As promptly as practicable
(but in no event later than five business days after the public
announcement of the transactions contemplated by this Agreement), Parent
shall amend the ASARCO Offer to reflect the existence of this Agreement and
amend the conditions to the ASARCO Offer in accordance herewith. The
expiration date of the ASARCO Offer shall be either (i) the initial
expiration date of the ASARCO Offer as set forth in the Schedule 14D-1 or
(ii) the tenth business day from and after the date the ASARCO Offer is
amended to provide for the purchase of all of the outstanding shares of
ASARCO Common Stock in accordance with the terms hereof (the "Expiration
Date"), as soon as it is legally permitted under applicable Law. The
ASARCO Offer shall be made pursuant to a supplement to Parent's Offer to
Purchase dated September 22, 1999 and related letter of transmittal
(together with any supplements or amendments thereto, collectively the
"Offer Documents") containing the terms and conditions set forth in this
Agreement and in form reasonably satisfactory to ASARCO. The obligation of
Parent to accept for payment and pay for the shares of common stock, no par
value, of ASARCO (the "ASARCO Common Stock") tendered pursuant to the
ASARCO Offer shall be subject to the condition (the "Minimum Condition")
that at least the number of shares of ASARCO Common Stock that when added
to the ASARCO Common Stock already owned by Parent shall constitute 80% of
then outstanding ASARCO Common Stock on a fully diluted basis shall have
been validly tendered and not withdrawn prior to the expiration of the
ASARCO Offer and also shall be subject to the satisfaction of the other
conditions set forth in Annex A hereto. Parent expressly reserves the
right to waive any such condition (other than the Minimum Condition, the
Phelps Dodge Stockholder Approval Condition and the condition relating to
the effectiveness of the Registration Statement), to increase the
consideration per share of ASARCO Common Stock payable in the ASARCO Offer,
and to make any other changes in the terms and conditions of the ASARCO
Offer, provided however, that no change may be made which decreases the
consideration per share of ASARCO Common Stock payable in the ASARCO Offer
or which reduces the maximum number of shares of ASARCO Common Stock to be
acquired in the ASARCO Offer or which imposes conditions to the ASARCO
Offer in addition to those set forth in Annex A hereto. Notwithstanding
the foregoing, Parent shall extend the ASARCO Offer at any time up to March
31, 2000 for one or more periods of not more than 10 business days, if at
the Expiration Date of the ASARCO Offer, or any extension thereof, any of
the conditions on Annex A is not satisfied or waived; provided, however, if
all of the conditions to the ASARCO Offer are satisfied or waived but the
number of shares of ASARCO Common Stock tendered is 85% or more, but less
than 90%, of the then outstanding number of shares of ASARCO Common Stock
then Parent may extend the ASARCO Offer for an aggregate period of not more
than three business days beyond the Expiration Date. The ASARCO Cash
Consideration shall, subject to applicable withholding of taxes, be net to
the seller in cash, upon the terms and subject to the conditions of the
ASARCO Offer. Subject to the terms and conditions of the ASARCO Offer,
Parent shall accept for payment and pay the ASARCO Cash Consideration and
issue shares of common stock, par value $6.25 per share, of Parent (the
"Parent Common Stock") in payment of the ASARCO Stock Consideration, as
promptly as practicable after expiration of the ASARCO Offer, for all
shares of ASARCO Common Stock validly tendered and not withdrawn.
Section 1.2 ASARCO Elections.
(a) Subject to Sections 1.2(b), (c) and (d) below, each holder of
ASARCO Common Stock shall be entitled, with respect to each share of ASARCO
Common Stock held by such holder, to elect to receive either the ASARCO
Cash Consideration or the ASARCO Stock Consideration. Shares of ASARCO
Common Stock that are validly tendered and not withdrawn and (i) covered by
elections to receive the ASARCO Cash Consideration are referred to herein
as "ASARCO Cash Election Shares", (ii) covered by elections to receive the
ASARCO Stock Consideration are referred to herein as "ASARCO Stock Election
Shares", and (iii) not covered by a valid election to receive either the
ASARCO Cash Consideration or the ASARCO Stock Consideration are referred to
herein as "ASARCO Non Electing Shares".
(b) Excess of Cash Elections. If the aggregate ASARCO Cash
Consideration elected in respect of all ASARCO Cash Election Shares exceeds
$14.75 multiplied by the total number of shares of ASARCO Common Stock
outstanding immediately prior to closing of the ASARCO Offer (the "ASARCO
Maximum Cash Consideration"), the following will occur:
(i) Each ASARCO Cash Election Share will be exchanged in the ASARCO
Offer for (A) $29.50 multiplied by a fraction (the "ASARCO Cash
Proration Factor"), the numerator of which is the ASARCO Maximum Cash
Consideration and the denominator of which is the number of ASARCO Cash
Election Shares multiplied by $29.50, and (B) a number of shares of
Parent Common Stock equal to 0.50266 multiplied by l minus the ASARCO
Cash Proration Factor.
(ii) Each ASARCO Stock Election Share and each ASARCO Non Electing Share
will be exchanged for 0.50266 of a share of Parent Common Stock.
(c) Excess of Stock Elections. If the aggregate ASARCO Stock
Consideration elected in respect of all ASARCO Stock Election Shares
exceeds 0.25133120 multiplied by the total number of shares of ASARCO
Common Stock outstanding immediately prior to closing of the ASARCO Offer
(the "ASARCO Maximum Stock Consideration"), the following will occur:
(i) Each ASARCO Stock Election Share will be exchanged in the ASARCO
Offer for (A) a number of shares of Parent Common Stock equal to 0.50266
multiplied by a fraction (the "ASARCO Stock Proration Factor"), the
numerator of which is the ASARCO Maximum Stock Consideration and the
denominator of which is the number of ASARCO Stock Election Shares
multiplied by 0.50266, and (B) cash in an amount equal to $29.50
multiplied by 1 minus the ASARCO Stock Proration Factor.
(ii) Each ASARCO Cash Election Share and each ASARCO Non Electing Share
will be exchanged for $29.50, without interest.
(d) No Excess of Cash or Stock Elections. In the event that
neither Section 1.2(b) or 1.2(c) above is applicable, the following will
occur:
(i) Each ASARCO Cash Election Share will be exchanged for $29.50 in
cash without interest.
(ii) Each ASARCO Stock Election Share will be exchanged for 0.50266 of a
share of Parent Common Stock.
(iii) Each ASARCO Non Electing Share will be exchanged for (A) an
amount in cash without interest equal to $29.50 multiplied by a fraction
(the "ASARCO Non Electing Proration Factor"), the numerator of which is
the difference between the ASARCO Cash Number less the number of ASARCO
Cash Election Shares and the denominator of which is the number of
ASARCO Non Electing Shares; and (B) a number of shares of Parent Common
Stock equal to 0.50266 multiplied by 1 minus the ASARCO Non Electing
Proration Factor. For purposes of this Section 1.2(d), the ASARCO Cash
Number is determined by dividing the ASARCO Maximum Cash Consideration
by $29.50.
Section 1.3 ASARCO Action.
(a) ASARCO hereby approves of and consents to the ASARCO Offer and
represents that (i) the Board of Directors of ASARCO (the "ASARCO Board"),
at a meeting duly called and held on October 5, 1999, has unanimously (A)
determined that this Agreement and the transactions contemplated hereby,
including each of the ASARCO Offer and the ASARCO Merger, are fair to and
in the best interests of the holders of ASARCO Common Stock, (B) approved
and adopted this Agreement and the transactions contemplated hereby and (C)
recommended that the shareholders of ASARCO accept the ASARCO Offer and
approve and adopt this Agreement and the transactions contemplated hereby,
and (ii) Credit Suisse First Boston Corporation has delivered to the Board
an opinion that the consideration to be received by the holders of ASARCO
Common Stock pursuant to each of the ASARCO Offer and the ASARCO Merger is
fair to the holders of ASARCO Common Stock from a financial point of view.
ASARCO hereby consents to the inclusion in the Offer Documents of the
recommendation of the ASARCO Board described in the immediately preceding
sentence, subject to Section 5.9(b). ASARCO has been advised by each of
its directors and executive officers that they intend either to tender all
shares of ASARCO Common Stock beneficially owned by them to Parent pursuant
to the ASARCO Offer or to vote such shares of ASARCO Common Stock in favor
of the approval and adoption by the stockholders of ASARCO of this
Agreement and the transactions contemplated hereby.
(b) As soon as reasonably practicable after the date hereof,
ASARCO shall file with the SEC an amendment to its
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing,
subject to Section 5.9, the recommendation of the ASARCO Board described in
Section 1.3(a) and shall disseminate the Schedule 14D-9 to the extent
required by Rule 14D-9 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act") and any other applicable federal
securities laws. ASARCO and Parent agree to correct promptly any
information provided by either of them for use in the Schedule 14D-9 which
shall have become false or misleading, and ASARCO further agrees to take
all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and disseminated to holders of ASARCO Common Stock, in each
case as and to the extent required by applicable federal securities laws.
Section 1.4 Directors. (a) Promptly upon the purchase of and
payment for shares of ASARCO by Parent or any of its Subsidiaries which
represent at least a majority of the outstanding shares of ASARCO Common
Stock (on a fully diluted basis) pursuant to the ASARCO Offer, Parent shall
be entitled to designate such number of directors, rounded up to the next
whole number, on the ASARCO Board as is equal to the product of the total
number of directors on such Board (giving effect to the directors
designated by Parent pursuant to this sentence) multiplied by the
percentage that the aggregate number of shares of ASARCO Common Stock
beneficially owned by SubA, Parent and any other wholly-owned subsidiary of
Parent bears to the total number of shares of ASARCO Common Stock then
outstanding. ASARCO shall, upon request of SubA, use all reasonable
efforts promptly either to increase the size of its Board of Directors or,
at ASARCO's election, secure the resignations of such number of its
incumbent directors as is necessary to enable Parent's designees to be so
elected to the ASARCO Board, and shall cause Parent's designees to be so
elected. Notwithstanding the foregoing, until the Effective Time, ASARCO
shall retain as members of its Board of Directors at least two directors
who are directors of ASARCO on the date hereof (the "ASARCO Designees");
provided, that subsequent to the purchase of and payment for shares of
ASARCO Common Stock pursuant to the ASARCO Offer, Parent shall always have
its designees represent at least a majority of the entire Board of
Directors. ASARCO's obligations under this Section 1.4(a) shall be subject
to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder.
ASARCO shall promptly take all actions required pursuant to such Section
14(f) and Rule 14f-1 in order to fulfill its obligations under this Section
1.4(a), including mailing to shareholders the information required by such
Section 14(f) and Rule 14f-1 as is necessary to enable Parent's designees
to be elected to the ASARCO Board of Directors. Parent or SubA will supply
ASARCO any information with respect to either of them and their nominees,
officers, directors and affiliates required by such Section 14(f) and Rule
14f-1.
(b) From and after the time, if any, that Parent's designees
constitute a majority of the ASARCO Board, any amendment of this Agreement,
any termination of this Agreement by ASARCO, any extension of time for
performance of any of the obligations of Parent or SubA hereunder, any
waiver of any condition or any of ASARCO's rights hereunder or other action
by ASARCO hereunder may be effected only by the action of a majority of the
directors of ASARCO then in office who were directors of ASARCO on the date
hereof, which action shall be deemed to constitute the action of the full
Board of Directors; provided, that if there shall be no such directors,
such actions may be effected by majority vote of the entire ASARCO Board.
ARTICLE II
THE ASARCO MERGER; CLOSING
Section 2.1 The ASARCO Merger.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the New Jersey Business Corporation Act
(the "NJBCA") and the Delaware General Corporation Law ("DGCL"), SubA shall
merge with ASARCO (the "ASARCO Merger") at the Effective Time. SubA shall
be the surviving corporation in the ASARCO Merger (the "ASARCO Surviving
Corporation"). From and after the Effective Time, the identity and
separate existence of ASARCO shall cease.
(b) In connection with the ASARCO Merger, Parent shall reserve a
sufficient number of shares of Parent Common Stock prior to the ASARCO
Merger, to permit the issuance of shares of Parent Common Stock (i) to the
holders of ASARCO Common Stock, as of the Effective Time in accordance with
the terms of this Agreement, and (ii) upon the exercise of ASARCO Stock
Options being assumed by Parent in accordance with Section 5.5 hereof.
Section 2.2 Closing. The closing of the ASARCO Merger (the
"Closing") will take place at 10:00 a.m. local time on the day following
the later of the Parent Shareholders Meeting and the ASARCO Shareholders
Meeting (the "Closing Date"), but shall in no event be later than the
second business day after satisfaction or waiver of the conditions set
forth in Article VI unless another time or date is agreed to by the parties
hereto. The Closing will be held at the offices of Shearman & Sterling,
599 Lexington Avenue, New York, NY, unless another place is agreed to by
the parties hereto.
Section 2.3 Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, (i) SubA
and ASARCO shall file with the Secretary of State of the State of New
Jersey a certificate of merger duly completed and executed in accordance
with the relevant provisions of the NJBCA and shall make all other filings
or recordings required under the NJBCA in order to effect the ASARCO Merger
and (ii) SubA shall file with the Secretary of State of the State of
Delaware a certificate of merger duly completed and executed in accordance
with the relevant provisions of the DGCL in order to effect the ASARCO
Merger. The ASARCO Merger shall become effective at the actual time of the
filing of both such certificates of merger, or of the later to be filed of
such certificates of merger, or at such other later time as is reasonably
specified in the certificates of merger (the time at which ASARCO Merger
has become fully effective being hereinafter referred to as the "Effective
Time").
Section 2.4 Effects of the ASARCO Merger.
(a) NJBCA and DGCL . The ASARCO Merger shall have the effects set
forth in Section 14A:10-6 of the NJBCA and Section 259 of the DGCL.
(b) Name of Surviving Corporation. The name of the ASARCO
Surviving Corporation from and after the Effective Time shall be "ASARCO
Incorporated" until changed or amended in accordance with applicable Law.
(c) Charter Documents. At the Effective Time the Certificate of
Incorporation and the Bylaws of SubA, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation and Bylaws,
respectively, of the ASARCO Surviving Corporation.
Section 2.5 Directors and Officers. The directors of SubA at the
Effective Time shall be the directors of the ASARCO Surviving Corporation
until the next annual meeting of shareholders of ASARCO (or their earlier
resignation or removal) and until their respective successors are duly
elected and qualified, as the case may be. The officers of SubA at the
Effective Time shall be the officers of the ASARCO Surviving Corporation,
until their respective successors are duly appointed.
ARTICLE III
EFFECT OF THE ASARCO MERGER ON THE STOCK OF
ASARCO; EXCHANGE OF CERTIFICATES
Section 3.1 Effect on ASARCO Stock and SubA Stock. As of the
Effective Time, by virtue of the ASARCO Merger and without any action on
the part of SubA, ASARCO or the holders of any securities of SubA or
ASARCO:
(a) Cancellation of Treasury Stock and Parent Owned Stock. Each
share of ASARCO Common Stock that is owned directly by ASARCO or any of its
Subsidiaries or by Parent or any of its Subsidiaries (but not including any
such shares owned by employees or employee benefit or pension plans) shall
automatically be cancelled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(b) Conversion of ASARCO Common Stock. Each issued and
outstanding share of ASARCO Common Stock (other than shares to be cancelled
in accordance with Section 3.1(a)) shall be converted into the ASARCO Stock
Consideration, the ASARCO Cash Consideration or a combination thereof, in
each case determined pursuant to this Section 3.1(b) (such consideration
being referred to herein as the "ASARCO Merger Consideration"). If Section
1.2(b) is applicable to the ASARCO Offer, each outstanding share of ASARCO
Common Stock will be converted in the ASARCO Merger into the right to
receive the ASARCO Stock Consideration. If Section 1.2(c) is applicable to
the ASARCO Offer, each outstanding share of ASARCO Common Stock will be
converted in the ASARCO Merger into the right to receive the ASARCO Cash
Consideration. If neither Section 1.2(b) nor Section 1.2(c) is applicable,
each outstanding share of ASARCO Common Stock will be converted in the
ASARCO Merger into (A) an amount of cash equal to the ASARCO Merger Cash
Amount, without interest, and (B) a number of shares of Parent Common Stock
equal to the ASARCO Merger Stock Amount. The ASARCO Merger Cash Amount and
the ASARCO Merger Stock Amount will be determined as follows:
(i) The aggregate amount of ASARCO Cash Consideration actually paid in
the ASARCO Offer will be subtracted from the Total ASARCO Available Cash
to determine the amount of cash available to be paid in the ASARCO
Merger (the "Aggregate ASARCO Merger Cash Consideration"). For purposes
of this Section, Total ASARCO Available Cash equals (A) the number of
shares exchanged in the ASARCO Offer plus the number of shares of ASARCO
Common Stock to be converted in the ASARCO Merger, multiplied by (B)
$14.75.
(ii) The Aggregate ASARCO Merger Cash Consideration will be divided by
the number of shares of ASARCO Common Stock to be converted in the
ASARCO Merger, to determine the amount of cash consideration to be paid
in respect of each such share of ASARCO Common Stock in the ASARCO
Merger (the "ASARCO Merger Cash Amount").
(iii) The aggregate number of shares of Parent Common Stock actually
issued as ASARCO Stock Consideration in the ASARCO Offer will be
subtracted from the Total ASARCO Available Stock to determine the number
of shares of Parent Common Stock available to be paid in the ASARCO
Merger (the "Aggregate ASARCO Merger Stock Consideration"). For
purposes of this Section, Total ASARCO Available Stock equals (A) the
number of shares of ASARCO Common Stock exchanged in the ASARCO Offer
plus the number of shares of ASARCO Common Stock to be converted in the
ASARCO Merger, multiplied by (B) 0.25133120.
(iv) The Aggregate ASARCO Merger Stock Consideration will be divided by
the number of shares of ASARCO Common Stock to be converted in the
ASARCO Merger, to determine the number of shares of Parent Common Stock
to be issued in respect of each such share of ASARCO Common Stock in the
ASARCO Merger (the "ASARCO Merger Stock Amount").
As of the Effective Time, all such shares of ASARCO Common Stock shall
no longer be outstanding and shall automatically be cancelled and retired
and shall cease to exist, and each holder of a certificate or certificates
which immediately prior to the Effective Time represented outstanding
shares of ASARCO Common Stock (the "ASARCO Certificates") shall cease to
have any rights with respect thereto, except the right to receive (x) the
ASARCO Merger Consideration, (y) certain dividends and other distributions
in accordance with Section 3.2(c), and (z) cash in lieu of fractional
shares of Parent Common Stock in accordance with Section 3.2(e), without
interest.
(c) Conversion of Common Stock of SubA. Each issued and
outstanding share of common stock, par value $.01 per share, of SubA shall
be converted into one fully paid and nonassessable share of common stock of
the ASARCO Surviving Corporation.
Section 3.2 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Parent shall enter
into an agreement with a bank or trust company designated by it and
reasonably satisfactory to ASARCO (the "Exchange Agent"), which shall
provide that Parent shall deposit with the Exchange Agent as of the
Effective Time, for the benefit of the holders of shares of ASARCO Common
Stock for exchange in accordance with this Article III, through the
Exchange Agent, (i) cash in the amount required to be exchanged for ASARCO
Common Stock pursuant to Section 3.1(b) and (ii) certificates ("Parent
Certificates") representing the number of whole shares of Parent Common
Stock issuable pursuant to Section 3.1(b) in exchange for outstanding
shares of ASARCO Common Stock (such cash and shares of Parent Common Stock,
together with any dividends or distributions with respect thereto with a
record date after the Effective Time, any Excess Shares and any cash
(including cash proceeds from the sale of the Excess Shares) payable in
lieu of any fractional shares of Parent Common Stock being hereinafter
referred to as the "Exchange Fund").
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail to each holder of record
of an ASARCO Certificate whose shares were converted into the ASARCO Merger
Consideration pursuant to Section 3.1(b), (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the ASARCO Certificates shall pass, only upon delivery of the
ASARCO Certificates to the Exchange Agent and shall be in such form and
have such other provisions as ASARCO and Parent may reasonably specify),
and (ii) instructions for use in effecting the surrender of the ASARCO
Certificates in exchange for the ASARCO Merger Consideration. Upon
surrender of an ASARCO Certificate for cancellation to the Exchange Agent,
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 ASARCO Certificate shall be entitled to receive in exchange
therefor (i) a check in the amount equal to the cash, if any, which such
holder has the right to receive pursuant to the provisions of this Article
III and (ii) a Parent Certificate representing that number of whole shares
of Parent Common Stock, if any, which such holder has the right to receive
pursuant to the provisions of this Article III, certain dividends or other
distributions in accordance with Section 3.2(c) and cash in lieu of any
fractional share in accordance with Section 3.2(e). The ASARCO Certificate
so surrendered shall forthwith be cancelled. In the event of a transfer of
ownership of ASARCO Common Stock not registered in the transfer records of
ASARCO, the applicable ASARCO Merger Consideration may be issued or paid to
a person other than the person in whose name the ASARCO Certificate so
surrendered is registered if such ASARCO Certificate shall be properly
endorsed or otherwise be in proper form for transfer, and the person
requesting such issuance shall pay all transfer or other non-income Taxes
required by reason of the issuance of ASARCO Merger Consideration to a
person other than the registered holder of such ASARCO 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 3.2,
each ASARCO Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the
applicable ASARCO Merger Consideration into which the shares of ASARCO
Common Stock formerly represented by such ASARCO Certificate have been
converted, certain dividends or other distributions in accordance with
Section 3.2(c) and cash in lieu of any fractional share in accordance with
Section 3.2(e). No interest will be paid or will accrue on any cash
payable to holders of ASARCO Certificates pursuant to the provisions of
this Article III.
(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 shall be paid to the holder of any
unsurrendered ASARCO 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 3.2(e), and all
such dividends, other distributions and cash in lieu of fractional shares
of Parent Common Stock shall be paid by Parent to the Exchange Agent and
shall be included in the Exchange Fund, in each case until the surrender of
such ASARCO Certificate in accordance with this Article III. Subject to
the effect of applicable escheat or similar Laws, following surrender of
any such ASARCO Certificate there shall be paid to the holder of the Parent
Certificate representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Common Stock and 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 3.2(e), and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective
Time but prior to such surrender and with a payment date subsequent to such
surrender payable with respect to such whole shares of Parent Common Stock.
Parent shall make available to the Exchange Agent cash for these purposes.
(d) No Further Ownership Rights in ASARCO Common Stock. All
ASARCO Merger Consideration issued or paid upon the surrender for exchange
of ASARCO Certificates in accordance with the terms of this Article III
shall be deemed to have been issued and paid in full satisfaction of all
rights pertaining to the shares of ASARCO Common Stock theretofore
represented by such ASARCO Certificates, subject, however, to the ASARCO
Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have
been authorized or made by ASARCO on such shares of ASARCO Common Stock
which remain unpaid at the Effective Time, and there shall be no further
registration of transfers on the stock transfer books of the ASARCO
Surviving Corporation of the shares of ASARCO Common Stock which were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, ASARCO Certificates are presented to the ASARCO Surviving
Corporation or the Exchange Agent for any reason, they shall be cancelled
and exchanged as provided in this Article III, except as otherwise provided
by Law.
(e) No Fractional Shares. (i) No Parent Certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon
the surrender for exchange of ASARCO Certificates, no dividend or
distribution of Parent shall relate to such fractional share interests, and
such fractional share interests will not entitle the owner thereof to vote
or to any rights of a shareholder of Parent.
(ii) As promptly as practicable following the Effective Time, the
Exchange Agent will determine the excess of (A) the number of whole
shares of Parent Common Stock delivered to the Exchange Agent by Parent
pursuant to Section 3.2(a) for exchange pursuant to Section 3.1 for
outstanding shares of ASARCO Common Stock over (B) the aggregate number
of whole shares of Parent Common Stock to be distributed to holders of
ASARCO Common Stock pursuant to Section 3.2(b) (such excess being herein
called the "Excess Shares"). Following the Effective Time, the Exchange
Agent will, on behalf of former shareholders of ASARCO, sell the Excess
Shares at then-prevailing prices on the New York Stock Exchange, Inc.
(the "NYSE"), all in the manner provided in Section 3.2(e)(iii).
(iii) The sale of the Excess Shares by the Exchange Agent will be
executed on the NYSE through one or more member firms of the NYSE and
will be executed in round lots to the extent practicable. The Exchange
Agent will use reasonable efforts to complete the sale of the Excess
Shares as promptly following the Effective Time as, in the Exchange
Agent's sole judgment, is practicable consistent with obtaining the best
execution of such sales in light of prevailing market conditions. Until
the net proceeds of such sale or sales have been distributed to the
holders of ASARCO Common Stock, the Exchange Agent will hold such
proceeds in trust for the holders of ASARCO Common Stock (the "Common
Shares Trust"). The Parent will pay all commissions, transfer Taxes and
other out-of-pocket transaction costs, including the expenses and
compensation of the Exchange Agent incurred in connection with such sale
of the Excess Shares. The Exchange Agent will determine the portion of
the Common Shares Trust to which each holder of ASARCO Common Stock is
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 ASARCO Common Stock is entitled (after taking into account all
shares of ASARCO Common Stock held at the Effective Time by such holder)
and the denominator of which is the aggregate amount of fractional share
interests to which all holders of ASARCO Common Stock are entitled.
(iv) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of ASARCO Common Stock with respect
to any fractional share interests, the Exchange Agent will make
available such amounts to such holders of ASARCO Common Stock subject to
and in accordance with the terms of Section 3.2(c).
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of the ASARCO Certificates
six months after the Effective Time shall be delivered to Parent upon
demand, and any holders of the ASARCO Certificates who have not theretofore
complied with this Article III shall thereafter look only to Parent for
payment of their claim for ASARCO Merger Consideration, 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, ASARCO 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 in each case delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Law. If any ASARCO
Certificate shall not have been surrendered prior to seven years after the
Effective Time (or immediately prior to such earlier date on which any
ASARCO Merger Consideration, any cash payable to the holder of such ASARCO
Certificate pursuant to this Article III or any dividends or distributions
payable to the holder of such ASARCO Certificate would otherwise escheat to
or become the property of any governmental body or authority) any such
ASARCO Merger Consideration or cash, dividends or distributions in respect
of such ASARCO Certificate shall, to the extent permitted by applicable
Law, become the property of the ASARCO Surviving Corporation, free and
clear of all claims or interest of any person previously entitled thereto.
(h) Lost Certificates. If any ASARCO Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such ASARCO Certificate to be lost, stolen or destroyed
and, if required by the ASARCO Surviving Corporation, the posting by such
person of a bond in such reasonable amount as the ASARCO Surviving
Corporation may direct as indemnity against any claim that may be made
against it with respect to such ASARCO Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed ASARCO Certificate the
ASARCO Merger Consideration and, if applicable, any cash in lieu of
fractional shares, and unpaid dividends and distributions on shares of
Parent Common Stock as may be deliverable in respect thereof pursuant to
this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Except as set forth in the disclosure schedule delivered by Parent
to ASARCO prior to the execution of this Agreement (the "Parent Disclosure
Schedule"), Parent hereby represents and warrants to ASARCO, and, except as
set forth in the disclosure schedule delivered by ASARCO to Parent prior to
the execution of this Agreement (the "ASARCO Disclosure Schedule"), ASARCO
hereby represents and warrants to Parent, in each case as set forth in this
Article IV, with the party making such representations and warranties being
referred to as the "Representing Party" and such Representing Party's
Disclosure Schedule as the "Representing Party's Disclosure Schedule."
Notwithstanding the foregoing, any representation or warranty which
expressly refers to ASARCO or Parent is being made solely by ASARCO or
Parent, as the case may be.
Section 4.1 Organization, Qualification, Etc.
(a) The Representing Party is a corporation duly organized,
validly existing and in good standing (or other equivalent status) under
the laws of the jurisdiction of its incorporation and has the corporate
power and authority to own, operate and lease all of its properties and
assets and to carry on its business as it is now being conducted or
presently proposed to be conducted and is duly qualified to do business and
is in good standing (or other equivalent status) in each jurisdiction in
which the ownership, operation or leasing of its properties or assets or
the conduct of its business requires such qualification, except for
jurisdictions in which the failure to be so qualified or in good standing
(or other equivalent status) would not, individually or in the aggregate,
have a Material Adverse Effect on the Representing Party and its
Subsidiaries, taken as a whole. As used in this Agreement, any reference
to any state of facts, event, change or effect having a "Material Adverse
Effect" on or with respect to a Representing Party, means such state of
facts, event, change or effect that has had or would reasonably be expected
to have a material adverse effect on the business, results of operations or
financial condition of the Representing Party and its Subsidiaries, taken
as a whole; provided, however, that any adverse effect that copper prices
have had or may have on the business, results of operations or financial
condition of the Representing Party and its Subsidiaries, taken as a whole,
shall not be deemed a Material Adverse Effect for purposes of this
Agreement. The copies of each Representing Party's Certificate of
Incorporation and Bylaws which have been delivered to the other
Representing Party are complete and correct and in full force and effect.
(b) Each of the Representing Party's Significant Subsidiaries is a
corporation duly organized, validly existing and in good standing (or other
equivalent status) under the laws of its jurisdiction of incorporation or
organization, has the power and authority to own, operate and lease its
properties and to carry on its business as it is now being conducted or
presently proposed to be conducted, and is duly qualified to do business
and is in good standing (or equivalent status) in each jurisdiction in
which the ownership, operation or leasing of its properties or assets or
the conduct of its business requires such qualification, except for
jurisdictions in which the failure to be so qualified or in good standing
(or other equivalent status) would not, individually or in the aggregate,
have a Material Adverse Effect on the Representing Party. Each
Representing Party has made available to the other Representing Party
complete and correct copies of the certificate of incorporation, bylaws or
other similar governing documents which are in full force and effect for
each of such Representing Party's Significant Subsidiaries that are not
directly or indirectly wholly owned.
(c) All the outstanding shares of capital stock of, or other
ownership interests in, the Representing Party's Subsidiaries are validly
issued, fully paid and non-assessable and are owned of record and
beneficially by such Representing Party, directly or indirectly, free and
clear of all Encumbrances. As used in this Agreement, the term
"Encumbrance" means any mortgage, pledge, lien, charge, encumbrance,
defect, security interest, claim, option or restriction of any kind. There
are no (i) securities of the Representing Party or any of its Subsidiaries
convertible into or exchangeable or exercisable for shares of capital stock
or other voting securities or ownership interests in any of the
Representing Party's Subsidiaries, (ii) warrants, calls, options or other
rights to acquire from the Representing Party or any of its Subsidiaries,
or any obligations of the Representing Party or any of its Subsidiaries to
issue, any capital stock, voting securities or other ownership interests
in, or any securities convertible into or exchangeable or exercisable for,
any capital stock, voting securities or ownership interests in any of the
Representing Party's Subsidiaries, or (iii) obligations of the Representing
Party or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any outstanding securities of the Representing Party's Subsidiaries or to
issue, deliver or sell, or cause to be issued, delivered or sold, any such
securities.
(d) Except for the Representing Party's Subsidiaries, as set forth
in Section 4.1(d) of the Representing Party's Disclosure Schedule or the
Representing Party's (or any of its Subsidiaries') SEC Reports, and in
respect of minerals exploration or development agreements in the ordinary
course of business, the Representing Party (excluding employee pension or
benefit plans) does not own any securities of, or have any debt or equity
investment in, or loans outstanding to, any corporation, partnership, joint
venture, limited liability company or other entity. The Representing Party
is not subject to any contractual obligation under which it may be required
to advance or contribute capital to any entity, except in respect of
minerals exploration or development agreements in the ordinary course of
business.
Section 4.2 Capital Stock.
(a) Section 4.2(a) of the Representing Party's Disclosure Schedule
sets forth as of September 30, 1999:
(i) the number of authorized shares of each class or series of capital
stock of the Representing Party;
(ii) the number of shares of each class or series of capital stock of
the Representing Party which are issued and outstanding;
(iii) the number of shares of each class or series of capital stock
which are held in the treasury of such Representing Party;
(iv) the number of shares of each class or series of capital stock of
the Representing Party which are reserved for issuance, indicating each
specific reservation; and
(v) the number of shares of each class or series of capital stock of
such Representing Party which are subject to employee stock options or
other rights to purchase or receive capital stock granted under such
Representing Party's stock option or other stock based employee or non-
employee director benefit plans, indicating the name of the plan, the
date of grant, the number of shares and the exercise price thereof.
(b) All of the issued and outstanding shares of capital stock of
the Representing Party have been validly issued and are fully paid and
nonassessable. Except as set forth in Section 4.2(a) of the Representing
Party's Disclosure Schedule, there are no authorized, issued, reserved for
issuance or outstanding (i) shares of capital stock or voting securities of
the Representing Party, (ii) securities convertible into or exchangeable
for shares of capital stock or voting securities of the Representing Party,
(iii) warrants, calls, options or other rights to acquire from the
Representing Party or any of its Subsidiaries, or any obligation of the
Representing Party or any of its Subsidiaries to issue, any shares of
capital stock or voting securities or securities convertible into or
exchangeable or exercisable for capital stock or voting securities of the
Representing Party, and (iv) there are no outstanding obligations of the
Representing Party to repurchase, redeem or otherwise acquire any such
securities or to issue, deliver or sell, or cause to be issued, delivered
or sold, any such securities.
Section 4.3 Corporate Authority Relative to this Agreement.
(a) Parent has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of Parent, and, except for the approval of the
issuance of the Parent Common Stock in the ASARCO Merger (the"Share
Issuance") by its shareholders, no other corporate proceedings on the part
of Parent are necessary to authorize the consummation of the transactions
contemplated hereby. The Board of Directors of Parent has determined that
the transactions contemplated by this Agreement are in the best interests
of Parent and its shareholders and to recommend to such shareholders that
they approve the Share Issuance. This Agreement has been duly and validly
executed and delivered by Parent and, assuming this Agreement constitutes a
valid and binding agreement of the other parties hereto, this Agreement
constitutes a valid and binding agreement of Parent, enforceable against
Parent in accordance with its terms (except insofar as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally, or by principles
governing the availability of equitable remedies).
(b) ASARCO has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of ASARCO, and, except for the approval of this
Agreement by its shareholders, no other corporate proceedings on the part
of ASARCO are necessary to authorize the consummation of the transactions
contemplated hereby. The Board of Directors of ASARCO has taken all
appropriate action so that none of Parent or SubA will be (i) an
"interested stockholder" within the meaning of Section 14A:10A-3 of the
NJBCA or (ii) an "interested shareholder" within the meaning of the
Certificate of Incorporation of ASARCO by virtue of Parent and SubA
entering into this Agreement and consummating the transactions contemplated
hereby. The Board of Directors of ASARCO has determined that the
transactions contemplated by this Agreement are in the best interests of
ASARCO and its shareholders and to recommend to such shareholders that they
approve this Agreement. This Agreement has been duly and validly executed
and delivered by ASARCO and, assuming this Agreement constitutes a valid
and binding agreement of the other parties hereto, this Agreement
constitutes a valid and binding agreement of ASARCO, enforceable against
ASARCO in accordance with its terms (except insofar as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally, or by principles
governing the availability of equitable remedies).
Section 4.4 Non-Contravention; Consents and Approvals.
(a) None of the execution, delivery or performance of this
Agreement by the Representing Party or the consummation by such
Representing Party of the transactions contemplated hereby will (i) violate
the certificate of incorporation or the bylaws or other similar governing
documents of the Representing Party or any of its Subsidiaries, (ii) except
for the Required Third Party Consents, result in the violation or breach of
or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, vesting,
payment, exercise, acceleration, suspension or revocation) under any of the
provisions of any note, bond, mortgage, deed of trust, security interest,
indenture, license, contract, agreement, plan or other instrument or
obligation to which the Representing Party or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets may be
bound (the "Representing Party Agreements"), (iii) except for the Required
Statutory Approvals, violate any order, writ, injunction, decree, judgment,
permit, license, statute, law, ordinance, policy, rule or regulation
("Law") of any court, tribunal or administrative, governmental or
regulatory body, agency, commission, division, department, public body or
other authority, whether federal, state, local or foreign (individually, a
"Governmental Entity") applicable to the Representing Party or any of its
Subsidiaries or any of their respective property or assets, or (iv) result
in the creation or imposition of any Encumbrance on any asset of the
Representing Party or any of its Subsidiaries, except in the case of
clauses (ii), (iii) and (iv) for violations, breaches, defaults,
terminations, cancellations, accelerations or creations which would not in
the aggregate have a Material Adverse Effect on the Representing Party and
its Subsidiaries, taken as a whole, or prevent or delay the consummation of
the transactions contemplated hereby.
(b) Section 4.4(b)(i) of the Representing Party's Disclosure
Schedule sets forth a list of all third party consents and approvals
required to be obtained under the Representing Party Agreements prior to
the consummation of the transactions contemplated by this Agreement the
failure of which to obtain would have, individually or in the aggregate, a
Material Adverse Effect on the Representing Party and its Subsidiaries,
taken as a whole (the "Required Third Party Consents"). Section 4.4(b)(ii)
of the Representing Party's Disclosure Schedule sets forth a list of all
notices to, filings and registrations with, and permits, authorizations,
consents and approvals of, Governmental Entities required to be made or
obtained from Governmental Entities prior to the consummation of the
transactions contemplated by this Agreement the failure of which to obtain
would have, individually or in the aggregate, a Material Adverse Effect on
the Representing Party and its Subsidiaries, taken as a whole (the
"Required Statutory Approvals").
Section 4.5 Reports and Financial Statements. The Representing
Party has previously furnished or made available to the other Representing
Party complete and correct copies of:
(a) such Representing Party's (and any of its Subsidiaries')
Annual Reports on Form 10-K filed with the Securities and Exchange
Commission (the "SEC") for each of the years ended December 31, 1996
through 1998;
(b) such Representing Party's (and any of its Subsidiaries')
Quarterly Reports on Form 10-Q filed with the SEC for each of the fiscal
quarters ended following such Representing Party's last fiscal year end;
(c) each definitive proxy statement filed by such Representing
Party or any of its Subsidiaries with the SEC since March 1, 1996;
(d) each final prospectus filed by such Representing Party with
the SEC since December 31, 1995; and
(e) all Current Reports on Form 8-K filed by such Representing
Party with the SEC since January 1, 1998.
As of their respective dates, such reports, proxy statements and
prospectuses (collectively, with any amendments, supplements and exhibits
thereto, the "SEC Reports") (i) complied as to form in all material
respects with the applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), the Exchange Act, and the rules and
regulations promulgated thereunder, and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. Except to
the extent that information contained in any SEC Report of the Representing
Party has been revised or superseded by an SEC Report subsequently filed by
the Representing Party, none of the Representing Party's SEC Reports
contains any untrue statement of a material fact or omits 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 were
made, not misleading. The audited consolidated financial statements and
unaudited consolidated interim financial statements included in the
Representing Party's SEC Reports (including any related notes and
schedules) fairly present the financial position of the Representing Party
and its consolidated Subsidiaries as of the dates thereof and the results
of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end adjustments), in each case
in accordance with past practice and GAAP consistently applied during the
periods involved (except as otherwise disclosed in the notes thereto).
Since January 1, 1998, the Representing Party has timely filed all reports,
registration statements and other filings required to be filed by it with
the SEC under the rules and regulations of the SEC.
Section 4.6 Environmental Matters.
(a) Except for Environmental Claims disclosed in or referred to in
Section 4.6(b) of the Disclosure Schedule, as of the date of this
Agreement, each of the Representing Party and its Subsidiaries has obtained
all licenses, permits, authorizations, approvals and consents from
Governmental Entities which are required under any applicable Environmental
Law in respect of its business, properties, assets and operations
("Environmental Permits"), except (i) for such permits as to which due and
proper application is pending, and (ii) for such failures to have
Environmental Permits which, individually or in the aggregate, are not
reasonably expected to have a Material Adverse Effect on the Representing
Party and its Subsidiaries, taken as a whole. Each of such Environmental
Permits is in full force and effect, and each of the Representing Party and
its Subsidiaries is in compliance with the terms and conditions of all such
Environmental Permits and with all applicable Environmental Laws, except
for such exceptions as would not, individually or in the aggregate, have a
Material Adverse Effect on the Representing Party and its Subsidiaries,
taken as a whole.
(b) Except for Environmental Claims disclosed in or referred to in
Section 4.6(b) of the Disclosure Schedule, as of the date of this
Agreement, there is no Environmental Claim filed, pending, or to the best
knowledge of the Representing Party threatened or in process, against the
Representing Party or any of its Subsidiaries or any person whose liability
for such Environmental Claim the Representing Party or any of its
Subsidiaries has or may have retained or assumed either contractually or by
operation of Law, that would, individually or in the aggregate, have a
Material Adverse Effect on the Representing Party and its Subsidiaries,
taken as a whole.
(c) Except as disclosed or referred to in Section 4.6(c) of the
Disclosure Schedule, no Encumbrances have arisen under or pursuant to any
Environmental Law on any property, site or facility owned, operated or
leased by the Representing Party or any of its Subsidiaries, except for
such Encumbrances which would not, individually or in the aggregate, have a
Material Adverse Effect on the Representing Party and its Subsidiaries,
taken as a whole, and no action of any Governmental Entity has been taken
or, to the best knowledge of the Representing Party, is threatened or in
process which could subject any of such properties to such Encumbrances,
except for such action which would not, individually or in the aggregate,
have a Material Adverse Effect on the Representing Party and its
Subsidiaries, taken as a whole.
(d) As used in this Agreement:
(i) "Environmental Claim" means any claim, action, cause of action,
order, investigation or notice (written or oral) by any person alleging
potential or actual liability (including, without limitation, potential
or actual liability for investigation, evaluation, cleanup, removal
actions, remedial actions, response actions, natural resources damages,
property damages, personal injuries or penalties) arising out of, based
on or resulting from any Environmental Law, including any claim under
CERCLA, and shall include any request for information under CERCLA or
any comparable state or local Law.
(ii) "Environmental Law" means any Law relating to (a) the environment
or pollution, environmental matters, the protection of the environment,
or the protection of human health and safety from environmental
concerns, (b) actual or threatened emissions, discharges, or releases of
pollutants, contaminants, chemicals or solid, industrial, toxic or
hazardous substances, wastes or constituents into the environment, and
(c) the presence, manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials.
(iii) "Hazardous Materials" mean (a) any petroleum or petroleum
products and radioactive materials, (b) any chemicals, constituents,
materials, or substances defined or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous substances," "toxic substances " and related
materials, as such materials are defined in any Environmental Law, and
(c) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any Governmental Entity.
Section 4.7 Employee Benefit Plans; ERISA.
(a) Except as set forth in the Representing Party's SEC Reports or
as would not have a Material Adverse Effect on the Representing Party and
its Subsidiaries, taken as a whole, (i) all Employee Benefit Plans (other
than any Employee Benefit Plan that is a "multiemployer plan" within the
meaning of Section 3(37) of ERISA (a "Multiemployer Plan")) of the
Representing Party are in material compliance with all applicable
requirements of Law, including ERISA and the Code, and (ii) neither the
Representing Party nor any of its Subsidiaries nor any ERISA Affiliate has
any liabilities or obligations with respect to any such Employee Benefit
Plans, whether accrued, contingent or otherwise, that are not otherwise
reflected on the Representing Party's financial statements, nor to the best
knowledge of the Representing Party, are any such liabilities or
obligations expected to be incurred. Except as described in the
Representing Party's (or any of its Subsidiaries') SEC Reports or as set
forth in Section 4.7(a) of the Representing Party's Disclosure Schedule,
the execution and delivery 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 Employee Benefit Plan of the Representing Party that will or may
result in 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 Representing Party or any of its Subsidiaries are the agreements and
policies specifically described in Section 4.7(a) of the Representing
Party's Disclosure Schedule.
(b) With respect to each of its Plans, the Representing Party has
heretofore made available to the other Representing Party complete and
correct copies of each of the following documents, as applicable: (i) a
copy of the Plan and any amendments thereto; (ii) a copy of the most recent
annual report; (iii) a copy of the most recent actuarial report; (iv) a
copy of the most recent Summary Plan Description and all material
modifications; (v) a copy of the trust or other funding agreement and any
amendments thereto; and (vi) the most recent determination letter received
from the Internal Revenue Service (the "IRS") with respect to each Plan
that is intended to be qualified under Section 401 of the Code and all
notices of reportable events received following receipt of such letter.
Each Representing Party will deliver to the other Representing Party a copy
of each Foreign Plan within thirty days following the date hereof.
(c) Section 4.7(c) of the Representing Party's Disclosure Schedule
sets forth a list of each employee of the Representing Party (or any
Subsidiary) who is a party to any agreement (whether written or oral) with
respect to such person's employment by the Representing Party or a
Subsidiary, other than offer letters which do not have guaranteed periods
of employment and statutory employment agreements under foreign Laws, and
which provide for annual compensation in excess of $100,000. The
Representing Party has made available to the other Representing Party a
complete and correct copy of each such written employment agreement and a
complete and correct summary of each such oral agreement.
(d) No liability under Title IV of ERISA has been incurred by the
Representing Party or any ERISA Affiliate within the past six years that
has not been satisfied in full. To the best knowledge of the Representing
Party, no condition exists that presents a material risk to the
Representing Party, any of its Subsidiaries or any ERISA Affiliate of
incurring a liability under such Title that is reasonably likely to have a
Material Adverse Effect on the Representing Party. The Pension Benefit
Guaranty Corporation has not instituted proceedings to terminate any of the
Employee Benefit Plans, and, to the knowledge of the Representing Party, no
condition exists that presents a material risk that such proceedings will
be instituted. Except as would not have a Material Adverse Effect on the
Representing Party, with respect to each of the Employee Benefit Plans that
is subject to Title IV of ERISA, the present value of accrued benefits
under such Employee Benefit Plan, based upon the actuarial assumptions used
for funding purposes in the most recent actuarial report prepared by such
Employee Benefit Plan's actuary with respect to such Employee Benefit Plan,
did not, as of its latest valuation date, exceed the then current value of
the assets of such Employee Benefit Plan allocable to such accrued
benefits, and there have been no changes since such latest valuation date
which would cause the present value of such accrued benefits to exceed the
current value of such assets. None of the Employee Benefit Plans or any
trust established thereunder has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, as of the last day of the most recent fiscal
year of each of the Employee Benefit Plans ended prior to the date of this
Agreement. None of the Employee Benefit Plans is a Multiemployer Plan. To
the knowledge of the Representing Party each of the Employee Benefit Plans
that is intended to be "qualified" within the meaning of Section 401(a) of
the Code is so qualified and the trusts maintained thereunder are exempt
from taxation under Section 501(a) of the Code. Except as set forth in
Section 4.7(d) of the ASARCO Disclosure Schedule, no Employee Benefit Plan
provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees after
retirement or other termination of service (other than coverage mandated by
applicable Law or benefits, the full cost of which is borne by the current
or former employee). There are no material pending or threatened claims by
or on behalf of any Employee Benefit Plan, by any employee or beneficiary
covered under any such Employee Benefit Plan, or otherwise involving any
such Employee Benefit Plan (other than routine claims for benefits). No
prohibited transaction has occurred with respect to any Employee Benefit
Plan that would result, directly or indirectly, in the imposition of an
excise Tax or other liability under the Code or ERISA, except for such a
Tax or other liability that would not have a Material Adverse Effect.
Except as would not have a Material Adverse Effect on the Representing
Party, with respect to each Foreign Plan: (i) all amounts required to be
reserved on account of each Foreign Plan have been so reserved in
accordance with reasonable accounting practices prevailing in the country
where such Foreign Plan is established, and (ii) each Foreign Plan required
to be registered with a Governmental Entity has been registered, has been
maintained in good standing with the appropriate Governmental Entities, and
has been maintained and operated in accordance with its terms and
applicable Law.
(e) Except as set forth in Section 4.7(a) and (d) of the ASARCO
Disclosure Schedule no director or officer or other employee of such
Representing Party will become entitled to any termination, retirement,
severance or similar payment, benefit or enhanced or accelerated benefit
(including any acceleration of vesting or lapse of restrictions, repurchase
rights or obligations with respect to any employee stock option or other
benefit under any stock option plan or incentive or compensation plan or
arrangement) as a result of the transactions contemplated by this Agreement
(either standing alone or in conjunction with any additional or subsequent
events).
(f) Except as set forth in Section 4.7(f) of the ASARCO Disclosure
Schedule, any amount or other entitlement 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 Representing Party 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 employee benefit plan or other
compensation arrangement currently in effect would not be characterized as
an "excess parachute payment" or a "parachute payment" (as such terms are
defined in Section 280G(b)(1) of the Code).
(g) As used in this Agreement
(i) "Employee Benefit Plan" means any material Plan entered into,
established, maintained, sponsored, contributed to or required to be
contributed to by the Representing Party, any of its Subsidiaries or
ERISA Affiliates for the benefit of the current or former employees or
directors of the Representing Party or any of its Subsidiaries and
existing on the date of this Agreement or at any time subsequent thereto
and on or prior to the Effective Time;
(ii) "Foreign Plan" shall refer to each material plan, program or
contract that is subject to or governed by the Laws of any jurisdiction
other than the United States, and which would have been treated as an
Employee Benefit Plan had it been a United States plan, program or
contract;
(iii) "Plan" means any employment, bonus, incentive compensation,
deferred compensation, pension, profit sharing, retirement, stock
purchase, stock option, stock ownership, stock appreciation rights,
phantom stock, leave of absence, layoff, vacation, day or dependent
care, legal services, cafeteria, life, health, medical, accident,
disability, worker's compensation or other insurance, severance,
separation, termination, change of control or other benefit plan,
agreement, practice policy, program or arrangement of any kind, whether
written or oral, other than a Foreign Plan, including, but not limited
to any "employee benefit plan" within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, and the
rules and regulations thereunder ("ERISA"); and
(iv) "ERISA Affiliate" means, with respect to any Representing Party,
any entity, trade or business that is a member of the same controlled
group as such Representing Party (within the meaning of Sections 414(b),
(c), (m) or (o) of the Code).
Section 4.8 Information Statement; Registration Statement; Other
Information. None of the information with respect to the Representing
Party or its Subsidiaries to be included in the Schedule 14D-9, the Tender
Offer Statement on Schedule 14D-1 (together with all amendments and
supplements thereto, the "Schedule 14D-1"), the Information Statement or
the Registration Statement will, in the case of the Information Statement,
the Schedule 14D-9, Schedule 14D-1, or any amendments or supplements
thereto at the time that such document is mailed, and at the time of the
Parent Shareholders Meeting and the ASARCO Shareholders Meeting, or, in the
case of the Registration Statement, at the time it becomes effective,
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 were
made, not misleading, except that no representation is made by the
Representing Party with respect to information supplied in writing by the
other Representing Party or any of its affiliates specifically for
inclusion in the Information Statement. The Information Statement will
comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations promulgated thereunder. The
letters to shareholders, notices of meeting, information statement and
forms of proxies to be distributed to shareholders in connection with the
ASARCO Merger and any schedules required to be filed with the SEC in
connection therewith are collectively referred to herein as the
"Information Statement."
Section 4.9 ASARCO Rights Plan. ASARCO represents and warrants
that the Board of Directors of ASARCO has taken all necessary action to
render the Rights Agreement dated as of July 26, 1989, as amended, between
ASARCO and First Chicago Trust Company of New York and the Rights Agreement
between ASARCO and The Bank of New York, dated as of January 28, 1998,
inapplicable to the transactions contemplated by this Agreement.
Section 4.10 Tax Matters.
(a) All federal, state, local and foreign Tax Returns required to
be filed by or on behalf of the Representing Party, each of its
Subsidiaries, and each affiliated, combined, consolidated or unitary group
of which the Representing Party or any of its Subsidiaries (i) is a member
(a "Current Representing Party Group") or (ii) was a member during six
years prior to the date hereof but is not currently a member, but only
insofar as any such Tax Return relates to a taxable period ending on a date
within the last six years (a "Past Representing Party Group," together with
Current Representing Party Groups, a "Representing Party Affiliated Group")
have been timely filed, and all such Tax Returns filed are complete and
accurate except to the extent any failure to file or any inaccuracies in
filed Tax Returns would not, individually or in the aggregate, have a
Material Adverse Effect on such Representing Party (it being understood
that the representations made in this Section, to the extent that they
relate to Past Representing Party Groups, are made to the knowledge of the
Representing Party). All Taxes due and owing by the Representing Party,
any Subsidiary of the Representing Party or any Representing Party
Affiliated Group have been paid, or adequately reserved for, except to the
extent any failure to pay or reserve would not, individually or in the
aggregate, have a Material Adverse Effect on the Representing Party. There
is no audit examination, deficiency, refund litigation, proposed adjustment
or matter in controversy with respect to any Taxes due and owing by the
Representing Party, any Subsidiary of the Representing Party or any
Representing Party Affiliated Group which would, individually or in the
aggregate, have a Material Adverse Effect on the Representing Party. All
assessments for Taxes due and owing by the Representing Party, any
Subsidiary of the Representing Party or any Representing Party Affiliated
Group with respect to completed and settled examinations or concluded
litigation have been paid. As soon as practicable after the public
announcement of the execution of the Merger Agreement, the Representing
Party will provide the other party with written schedules of (i) the
taxable years of the Representing Party for which the statutes of
limitations with respect to federal income Taxes have not expired, and (ii)
with respect to federal income Taxes, those years for which examinations
have been completed, those years for which examinations are presently being
conducted, and those years for which examinations have not yet been
initiated. The Representing Party and each of its Subsidiaries have
complied in all material respects with all rules and regulations relating
to the withholding of Taxes, except to the extent any such failure to
comply would not, individually or in the aggregate, have a Material Adverse
Effect on the Representing Party.
(b) Neither the Representing Party nor any of its Subsidiaries has
(i) entered into a closing agreement or similar agreement with a taxing
authority relating to Taxes of the Representing Party or any of its
Subsidiaries with respect to a taxable period for which the statute of
limitations is still open, or (ii) with respect to U.S. federal income
Taxes, granted any waiver of any statute of limitations with respect to, or
any extension of a period for the assessment of, any such income Tax, in
either case, that is still outstanding. There are no Encumbrances relating
to Taxes upon the assets of the Representing Party other than Encumbrances
relating to Taxes not yet due, except as would not have a Material Adverse
Effect on the Representing Party. Neither the Representing Party nor any
of its Subsidiaries is a party to any agreement relating to the allocating
or sharing of Taxes, other than an agreement with each other.
(c) Neither the Representing Party nor any of its Subsidiaries
knows of any fact or has taken any action that could reasonably be expected
to prevent the ASARCO Merger from constituting a transaction described in
Section 368(a) of the Code.
For purposes of this Agreement: (i) "Taxes" means any and all federal,
state, local, foreign or other taxes of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any taxing authority, including, without
limitation, taxes or other charges on or with respect to income, franchise,
windfall or other profits, gross receipts, property, sales, use, severance,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth, and taxes or other charges in the
nature of excise, withholding, ad valorem or value added, and (ii) "Tax
Return" means any return, report or similar statement (including the
attached schedules) required to be filed with respect to any Tax,
including, without limitation, any information return, claim for refund,
amended return or declaration of estimated Tax.
Section 4.11 Opinion of Financial Advisors.
(a) The Board of Directors of ASARCO has received the opinion of
Credit Suisse First Boston Corporation, dated the date of this Agreement,
substantially to the effect that, as of such date, the consideration to be
received by holders of ASARCO Common Stock in the ASARCO Offer and the
ASARCO Merger, is fair to the holders of ASARCO Common Stock from a
financial point of view.
(b) The Board of Directors of Parent has received the opinion of
Morgan Stanley & Co. Incorporated., dated the date of this Agreement,
substantially to the effect that, as of such date, the consideration to be
paid by Parent pursuant to this Agreement is fair to Parent from a
financial point of view.
Section 4.12 Required Vote.
(a) The affirmative vote of the holders of shares of Parent Common
Stock representing a majority of the shares voting at the Parent
Shareholders Meeting, provided that at least 50% of the outstanding Parent
Common Stock that is entitled to vote, votes at the Parent Shareholders
Meeting (the "Parent Shareholder Approval"), is required to approve the
Share Issuance. No other vote of the shareholders of Parent is required by
Law, the Certificate of Incorporation or the Bylaws of Parent or otherwise
in order for Parent to consummate the ASARCO Merger and the transactions
contemplated hereby.
(b) The affirmative vote of the holders of 80% of the outstanding
shares of ASARCO Common Stock entitled to vote at the ASARCO Shareholders
Meeting (the "ASARCO Shareholder Approval") is required to approve this
Agreement. No other vote of the shareholders of ASARCO is required by Law,
the Certificate of Incorporation or the Bylaws of ASARCO or otherwise in
order for ASARCO to consummate the ASARCO Merger and the transactions
contemplated hereby.
Section 4.13 Absence of Certain Changes. Except as set forth in
Section 4.13 of the ASARCO Disclosure Schedule, since December 31, 1998,
and, other than with respect to clause (a) below, prior to the date hereof,
except as set forth in the Representing Party's (or any of its
Subsidiaries') SEC Reports filed prior to the date hereof, the Representing
Party and its Subsidiaries have conducted their respective businesses in
the ordinary course, consistent with past practice and there has not been:
(a) any event, occurrence or development (including the discovery
of new or additional information concerning an existing environmental
condition) which, individually or in the aggregate, would have a Material
Adverse Effect on the Representing Party;
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the
Representing Party (other than regular quarterly cash dividends payable by
the Representing Party in respect of shares of its capital stock consistent
with past practice) or any repurchase, redemption or other acquisition by
the Representing Party or any of its Subsidiaries of any outstanding shares
of its capital stock (except (x) as required by the terms of any employee
or stock option plan or compensation plan or arrangement, (y) in accordance
with any dividend reinvestment plan as in effect as of the date of this
Agreement in the ordinary course of operation of such plan consistent with
past practice, and/or (z) as otherwise permitted by Section 5.1);
(c) any amendment of any material term of any outstanding security
of the Representing Party or any of its Subsidiaries;
(d) any transaction or commitment made, or any contract, agreement
or settlement entered into, by (or judgment, order or decree affecting) the
Representing Party or any of its Subsidiaries relating to its assets or
business (including the acquisition or disposition of any material amount
of assets) or any relinquishment by the Representing Party or any of its
Subsidiaries of any contract or other right, in either case, material to
the Representing Party and its Subsidiaries taken as a whole, other than
transactions, commitments, contracts, agreements or settlements (including
without limitation settlements of litigation and tax proceedings) in the
ordinary course of business consistent with past practice and those
contemplated by this Agreement;
(e) any change prior to the date hereof in any method of
accounting or accounting practice by the Representing Party or any of its
Subsidiaries, except for any such change which is not material or which is
required by reason of a concurrent change in GAAP;
(f) any (i) grant of any severance or termination pay to (or
amendment to any such existing arrangement with) any director, officer or
employee of the Representing Party or any of its Subsidiaries, (ii)
entering into of any employment, deferred compensation, supplemental
retirement or other similar agreement (or any amendment to any such
existing agreement) with any director, officer or employee of the
Representing Party or any of its Subsidiaries, (iii) increase in, or
accelerated vesting and/or payment of, benefits under any existing
severance or termination pay policies or employment agreements or (iv)
increase in or enhancement of any rights or features related to
compensation, bonus or other benefits payable to directors, officers or
employees of the Representing Party or any of its Subsidiaries, in each
case, other than in the ordinary course of business consistent with past
practice or as permitted by this Agreement; or
(g) any material Tax election made or changed, any material audit
settled or any material amended Tax Returns filed.
Section 4.14 No Undisclosed Material Liabilities. There are no
liabilities of the Representing Party or any Subsidiary of the Representing
Party of any kind whatsoever, whether accrued, contingent, absolute,
determined or determinable, other than:
(a) liabilities which, individually or in the aggregate, would
not have a Material Adverse Effect on the Representing Party;
(b) liabilities disclosed in the SEC Reports of the Representing
Party or except as disclosed pursuant to Section 4.6 hereof; and
(c) liabilities under or arising as a result of this Agreement.
Section 4.15 Labor Relations. As of the date of this Agreement:
(i) Section 4.15 of the Representing Party's Disclosure Schedule sets forth
a complete list of each collective bargaining agreement to which the
Representing Party or any of its Subsidiaries is a party, (ii) no labor
organization or group of employees of the Representing Party (or any of its
Subsidiaries) has made a pending demand for recognition or certification,
and there are no representation or certification proceedings or petitions
seeking a representation proceeding presently pending or, to the knowledge
of the Representing Party, threatened to be brought or filed, with the
National Labor Relations Board or any other labor relations tribunal or
authority, and (iii) there are no organizing activities, strikes, work
stoppages, slowdowns, lockouts, material arbitrations or material
grievances, or other material labor disputes pending or, to the knowledge
of the Representing Party, threatened against or involving the Representing
Party or any of its Subsidiaries.
Section 4.16 No Prior Activities. SubA was formed for the purpose
of effecting a business combination with ASARCO, and does not have any
Subsidiaries and has not undertaken any business or other activities other
than in connection with pursuing such business combination and entering
into this Agreement and engaging in the transactions contemplated hereby.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Conduct of Business Pending the Effective Time. From
and after the date hereof and prior to the Effective Time or the date, if
any, on which this Agreement is earlier terminated pursuant to Section 7.1
(the "Termination Date"), and except as may be agreed in writing by the
other parties hereto or as may be provided for or permitted pursuant to
this Agreement:
(a) each of the parties shall, and shall cause each of its
Subsidiaries to, conduct its operations according to their ordinary and
usual course of business in substantially the same manner as heretofore
conducted;
(b) each of the parties shall use its reasonable best efforts, and
cause each of its Subsidiaries to use its reasonable best efforts, to
preserve intact its business organizations and goodwill, keep available the
services of its current officers and other key employees and preserve its
relationships with those persons having business dealings with it
(including its relationships with customers, suppliers, employees and
business partners);
(c) each of the parties shall confer at such times as any of the
other parties may reasonably request with one or more representatives of
such requesting party to report material operational matters and the
general status of ongoing operations (to the extent such requesting party
reasonably requires such information);
(d) each of the parties shall notify the other parties of any
emergency or other change in the normal course of its or its Subsidiaries'
respective businesses or in the operation of its or its Subsidiaries,
respective properties and of any complaints or hearings (or communications
indicating that the same may be contemplated) of any Governmental Entity if
such emergency, change, complaint, investigation or hearing would have a
Material Adverse Effect on such party;
(e) none of the parties shall, and none of the parties shall
permit any of its Subsidiaries to, (i) declare, set aside, authorize or pay
any dividends on or make any distribution with respect to its outstanding
shares of stock, except in the case of Parent for regular quarterly cash
dividends on the outstanding shares of Parent Common Stock and in the case
of ASARCO and its majority owned subsidiary Southern Peru Copper
Corporation for regular quarterly cash dividends on the outstanding shares
of their common stock and except for cash dividends by a wholly owned
Subsidiary to a parent, or (ii) split, combine or reclassify any of its
shares of capital stock;
(f) none of the parties shall, and none of the parties shall
permit any of its Subsidiaries to, except (i) in the ordinary course of
business consistent with past practice, (ii) as otherwise provided in this
Agreement or (iii) as required by applicable Law, adopt or amend any
Employee Benefit Plan;
(g) none of the parties shall, and none of the parties shall
permit any of its Subsidiaries to, authorize, propose or announce an
intention to authorize or propose, or enter into an agreement with respect
to, any merger, consolidation or business combination (other than the
ASARCO Offer and the ASARCO Merger and for Parent's Offer to purchase all
of the outstanding shares of common stock of Cyprus Amax Minerals Company
and the related merger of Cyprus Amax Minerals Company with a Subsidiary of
Parent), any acquisition of a material amount of assets or securities, any
disposition of a material amount of assets or securities or any release or
relinquishment of any material contract rights, in each case not in the
ordinary course of business;
(h) none of the parties shall, and none of the parties shall
permit its Subsidiaries to, propose or adopt any amendments to its
certificate of incorporation or by-laws or other similar governing
documents;
(i) none of the parties shall, and none of the parties shall
permit any of its Subsidiaries to, issue or authorize the issuance of, or
agree to issue or sell any shares of their capital stock of any class
(whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise), except for
the issuance of shares of Parent Common Stock by Parent and ASARCO Common
Stock by ASARCO upon the exercise of stock options or other rights to
acquire such party's capital stock, in each case which securities, options
and rights are outstanding as of the date of this Agreement and such
issuance is made in accordance with the terms of such securities, options
and rights in effect on the date of this Agreement;
(j) none of the parties shall, and none of the parties shall
permit any of its Subsidiaries to, except in the ordinary course of
business in connection with employee incentive and benefit plans, programs
or arrangements in existence on the date hereof, purchase or redeem any
shares of its stock or any rights, warrants or options to acquire any such
shares;
(k) none of the parties shall, and none of the parties shall
permit any of its Subsidiaries to, incur, assume or prepay any indebtedness
or any other material liabilities, other than indebtedness between such
party and a wholly owned Subsidiary or between wholly owned Subsidiaries,
provided, in either such case, such wholly owned Subsidiaries remain wholly
owned Subsidiaries, and other than in the ordinary course of business
consistent with past practice;
(l) none of the parties shall, and none of the parties shall
permit any of its Subsidiaries to, sell, lease, license, mortgage or
otherwise encumber or subject to any Encumbrance or otherwise dispose of
any of its properties or assets (including securitizations), other than in
the ordinary course of business consistent with past practice and other
than the consummation of contracts of sale executed and delivered prior to
the date hereof;
(m) none of the parties shall, and none of the parties shall
permit any of its Subsidiaries to, take any action that would reasonably be
expected to cause the ASARCO Merger not to constitute a transaction
described in Section 368(a) of the Code;
(n) none of the parties shall, and none of the parties shall
permit any of its Subsidiaries to make any material Tax election or settle
or compromise any material Tax liability, other than in the ordinary course
of business consistent with past practice; and
(o) none of the parties shall, and none of the parties shall
permit any of its Subsidiaries to, agree, in writing or otherwise, to take
any of the foregoing actions or take any action which would (i) make any
representation or warranty made by such party in Article IV hereof untrue
or incorrect or (ii) result in any of the conditions to the ASARCO Merger
set forth in Article VI not being satisfied.
Section 5.2 Investigation.
(a) Each of Parent and ASARCO shall (and shall cause its
respective Subsidiaries to) afford to one another and to one another's
officers, employees, accountants, counsel and other authorized
representatives full and complete access on reasonable prior notice during
normal business hours, throughout the period prior to the earlier of the
Effective Time or the Termination Date, to its and its Subsidiaries'
properties, contracts, commitments, books, and records (including but not
limited to Tax Returns) and any report, schedule or other document filed or
received by it or any of its Subsidiaries pursuant to the requirements of
federal or state securities laws or filed with or sent to the SEC, the
Department of Justice, the Federal Trade Commission or any other
Governmental Entity and shall use their reasonable best efforts to cause
their respective representatives and Subsidiaries to furnish promptly to
one another such additional financial and operating data and other
information as to its and its Subsidiaries' respective businesses and
properties as the other or its duly authorized representatives may from
time to time reasonably request; provided, that nothing herein shall
require either Parent or ASARCO or any of their respective Subsidiaries to
disclose any information to the other that would cause significant
competitive harm to such disclosing party or its affiliates if the
transactions contemplated by this Agreement are not consummated.
Notwithstanding any provision of this Agreement to the contrary, no party
shall be obligated to make any disclosure in violation of applicable Laws.
(b) Parent and ASARCO will not, and will cause their respective
officers, employees, accountants, counsel and representatives not to, use
any information obtained pursuant to this Section 5.2 for any purpose
unrelated to the consummation of the transactions contemplated by this
Agreement. Pending consummation of the transactions herein contemplated,
each of Parent and ASARCO will keep confidential, and will cause their
respective officers, employees, accountants, counsel and representatives to
keep confidential, all information and documents obtained pursuant to this
Section 5.2 unless such information (i) was already known to it, (ii)
becomes available to it from other sources not known by it to be bound by a
confidentiality obligation, (iii) is independently acquired by it as a
result of work carried out by any of its employees or representatives to
whom no disclosure of such information has been made, (iv) is disclosed
with the prior written approval of the other party or (v) is or becomes
readily ascertainable from published information or trade sources. Upon
any termination of this Agreement, each party will, upon request, collect
and deliver to the other party all documents obtained by it or any of its
officers, employees, accountants, counsel and representatives then in their
possession and any copies thereof.
Section 5.3 Shareholder Approvals and Other Cooperation.
(a) If required by applicable Law, as soon as practicable
following consummation of the ASARCO Offer, Parent and ASARCO shall
together, or pursuant to any reasonable allocation of responsibility
between them:
(i) prepare and file confidentially with the SEC as soon as is
reasonably practicable the Information Statement in preliminary form and
promptly prepare and cause Parent to file with the SEC a registration
statement on Form S-4 under the Securities Act with respect to the
Parent Common Stock issuable in the ASARCO Merger (or, to the extent
practicable, to amend as necessary the Registration Statement of Parent
on Form S-4 (Reg. No. 333-86063), which was declared effective by the
SEC on September 2, 1999 with respect to the Parent Common Stock) (the
"Registration Statement"), and shall use their reasonable best efforts
to have the Information Statement cleared by the SEC under the Exchange
Act and the Registration Statement declared effective by the SEC under
the Securities Act;
(ii) as soon as is reasonably practicable cause Parent to take all such
action as may be required under state blue sky or securities laws in
connection with the issuance of shares of Parent Common Stock in the
ASARCO Merger and as contemplated by this Agreement;
(iii) promptly prepare and file with the NYSE and such other stock
exchanges as shall be agreed upon listing applications covering the
shares of Parent Common Stock issuable in the ASARCO Merger, upon
exercise of ASARCO stock options, warrants, conversion rights or other
rights or vesting or payment of other ASARCO equity-based awards and use
its reasonable best efforts to obtain, prior to the Effective Time,
approval for the listing of such Parent Common Stock, subject only to
official notice of issuance;
(iv) cooperate with one another in order to lift any injunctions or
remove any other impediment to the consummation of the transactions
contemplated herein; and
(v) cooperate with one another in obtaining (i) an opinion of Shearman
& Sterling, special counsel to Parent, dated as of the date of the
Effective Time, to the effect that the ASARCO Merger will qualify as a
transaction described in Section 368(a) of the Code, and (ii) an opinion
of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to ASARCO,
dated as of the date of the Effective Time, to the effect that the
ASARCO Merger will qualify as a transaction described in Section 368(a)
of the Code. In connection therewith, each of ASARCO and Parent shall
deliver to Shearman & Sterling and Skadden, Arps, Slate, Meagher & Flom
LLP customary representation letters in form and substance reasonably
satisfactory to such special counsel and Parent and ASARCO shall use
their reasonable best efforts to obtain any representation letters
drafted by their special counsel from their respective appropriate
shareholders and shall deliver any such letters obtained to Shearman &
Sterling and Skadden, Arps, Slate, Meagher & Flom LLP (the
representation letters referred to in this sentence are collectively,
the "Tax Certificates").
(b) Subject to the limitations contained in Section 5.2, Parent
and ASARCO shall each furnish to one another and to one another's counsel
all such information as may be required in order to effect the foregoing
actions and each represents and warrants to the other that no information
furnished by it in connection with such actions or otherwise in connection
with the consummation of the transactions contemplated by this Agreement
will contain any untrue statement of a material fact or omit to state a
material fact required to be stated in order to make any information so
furnished, in light of the circumstances under which it is so furnished,
not misleading.
(c) (i) Parent shall cause an appropriate supplement to the
Phelps Dodge Proxy Statement to be mailed to Parent's shareholders, and
ASARCO shall cause the Information Statement to be mailed to ASARCO's
shareholders, in each case as promptly as practicable after the
Registration Statement is declared effective under the Securities Act.
(ii) Parent shall hold a meeting of its stockholders (the "Parent
Shareholder Meeting") as provided in the Phelps Dodge Proxy Statement
dated September 13, 1999 as supplemented by the Proxy Statement
Supplement dated September 22, 1999 (as the same may be further amended
or supplemented, the "Phelps Dodge Proxy Statement") for the purpose of
obtaining the Parent Shareholder Approval. Parent shall, through its
Board of Directors, recommend to its shareholders the approval of the
Share Issuance and the other transactions contemplated hereby unless the
Board of Directors of Parent determines in good faith, after
consultation with outside counsel, that to do so would be inconsistent
with its fiduciary duties under applicable Law. Notwithstanding
anything herein to the contrary, in the event that Parent, SubA or any
other subsidiary of Parent shall acquire at least 90% of the outstanding
shares of each class of capital stock of ASARCO, pursuant to the ASARCO
Offer or otherwise, the parties hereto agree to take all necessary and
appropriate action to cause the ASARCO Merger to become effective as
soon as practicable after such acquisition, without a meeting of ASARCO
shareholders, in accordance with Section 14A:10-5.1 of the NJBCA and
Section 253 of the DGCL.
(iii) ASARCO shall, as soon as practicable following the date of
this Agreement, duly call, give notice of, convene and hold a meeting of
its shareholders (the "ASARCO Shareholders Meeting") for the purpose of
obtaining the ASARCO Shareholder Approval. ASARCO shall, through its
Board of Directors, subject to the last sentence of Section 5.9(b),
recommend to its shareholders the adoption of this Agreement, the ASARCO
Merger and the other transactions contemplated hereby.
(iv) Each of Parent and ASARCO will use their best efforts to hold the
Parent Shareholders Meeting and the ASARCO Shareholders Meeting as soon
as practicable after the date hereof.
(d) Parent shall vote, or cause to be voted, all of the shares of
ASARCO Common Stock then owned by it or any of its Subsidiaries in favor of
the approval and adoption of this Agreement.
Section 5.4 Affiliate Agreements.
ASARCO shall, as soon as practicable, deliver to Parent a list
(reasonably satisfactory to counsel for Parent) setting forth the names and
addresses of all persons who will be, at the time of the ASARCO
Shareholders Meeting, in ASARCO's reasonable judgment, "affiliates" of
ASARCO for purposes of Rule 145 under the Securities Act. ASARCO shall
furnish such information and documents as Parent may reasonably request for
the purpose of reviewing such list. ASARCO shall use its reasonable best
efforts to cause each person who is identified as an "affiliate" in the
list furnished pursuant to this Section 5.4 to execute a written agreement
on or prior to the mailing of the Joint Proxy Statement, in substantially
the form of Exhibit A hereto.
Section 5.5 ASARCO Employee Stock Options, Incentive and Benefit
Plans.
(a) Simultaneously with the ASARCO Merger, (i) each outstanding
option ("ASARCO Stock Options") and related stock appreciation right
("ASARCO SAR"), if any, to purchase or acquire a share of ASARCO Common
Stock under employee incentive or benefit plans, programs or arrangements
and non-employee director plans presently maintained by ASARCO ("ASARCO
Option Plans") shall be converted into an option (together with a related
stock appreciation right of ASARCO, if applicable) to purchase the number
of shares of Parent Common Stock equal to 0.50266, times the number of
shares of ASARCO Common Stock which could have been obtained prior to the
Effective Time upon the exercise of each such option, at an exercise price
per share equal to the exercise price for each such share of ASARCO Common
Stock subject to an option (and related ASARCO SAR, if any) under the
ASARCO Option Plans divided by 0.50266, and all references in each such
option (and related ASARCO SAR, if any) to ASARCO shall be deemed to refer
to Parent, where appropriate, and (ii) Parent shall assume the obligations
of ASARCO under the ASARCO Option Plans. The other terms of each such
ASARCO Stock Option and ASARCO SAR, and the plans under which they were
issued, shall continue to apply in accordance with their terms, including
any provisions providing for acceleration of vesting or payment.
(b) Simultaneously with the ASARCO Merger, each outstanding award
including restricted stock and phantom stock or common stock equivalents
("ASARCO Award") under any employee incentive or benefit plans, programs or
arrangements and non-employee director plans presently maintained by ASARCO
which provide for grants of equity-based awards shall be amended or
converted into a similar instrument of Parent, in each case with such
adjustments to the terms of such ASARCO Awards as are appropriate to
preserve the value inherent in such ASARCO Awards with no detrimental
effects on the holders thereof. The other terms of each ASARCO Award, and
the plans or agreements under which they were issued, shall continue to
apply in accordance with their terms, including any provisions providing
for acceleration of vesting or payment. With respect to any restricted
stock awards as to which the restrictions shall have lapsed on or prior to
the Effective Time in accordance with the terms of the applicable plans or
award agreements, shares of such previously restricted stock shall be
converted in accordance with the provisions of Section 3.1(b).
(c) Prior to the Effective Time, ASARCO shall amend each of its
employee incentive or benefit plans, programs and arrangements and non-
employee director plans, to the extent necessary and appropriate, to
reflect the transactions contemplated by this Agreement, including, but not
limited to the conversion of shares of ASARCO Common Stock held or to be
awarded or paid pursuant to such benefit plans, programs or arrangements
into shares of Parent Common Stock on a basis consistent with the
transactions contemplated by this Agreement. At or prior to the Effective
Time, 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 ASARCO Stock Options. As soon as practicable after
the Effective Time, Parent shall file a registration statement on Form S-3
or Form S-8, as the case may be (or any successor or other appropriate
forms), with respect to the Parent Common Stock subject to such ASARCO
Stock Options, and shall maintain the effectiveness of such registration
statement and the current status of the prospectus or prospectuses
contained therein, for so long as such ASARCO Stock Options remain
outstanding.
(d) Parent and its Subsidiaries and affiliates agree to honor in
accordance with their terms the ASARCO Employee Benefit Plans, including,
without limitation, any rights or benefits arising thereunder as a result
of the transactions contemplated by this Agreement (either alone or in
combination with any other event). It is the intention of the parties
hereto that, for a period of one year from the Effective Time, Parent and
its Subsidiaries continue to maintain the ASARCO Employee Benefit Plans, in
each case in accordance with their terms as in effect at the Effective
Time, with only such amendments as are required by applicable Law or
permitted by the terms thereof as in effect at the Effective Time, and
which do not adversely affect the rights of participants (or their
beneficiaries) thereunder.
(e) Parent shall take, and shall cause the ASARCO Surviving
Corporation and its Subsidiaries and all other affiliates of Parent to
take, the following actions: (i) waive any limitations regarding pre-
existing conditions and eligibility waiting periods under any welfare or
other employee benefit plan maintained by any of them for the benefit of
employees of ASARCO or any of its Subsidiaries immediately prior to the
Effective Time (the "ASARCO Employees") or in which ASARCO Employees
participate after the Effective Time, (ii) provide each ASARCO Employee
with credit for any co-payments and deductibles paid prior to the Effective
Time for the calendar year in which the Effective Time occurs, in
satisfying any applicable deductible or out-of-pocket requirements under
any welfare plans that such employees are eligible to participate in after
the Effective Time, and (iii) for all purposes under all compensation and
benefit plans and policies applicable to ASARCO Employees, treat all
service by ASARCO Employees with ASARCO or any of its Subsidiaries or
affiliates before the Effective Time as service with Parent and its
Subsidiaries and affiliates.
(f) As of the Effective Time, Parent shall guarantee the
performance of the employment contracts and ASARCO Employee Benefit Plans
in accordance with their respective terms and the terms of this Agreement.
(g) The parties hereto agree that the transactions contemplated by
this Agreement shall constitute a "change of control" for purposes of the
ASARCO Employee Benefit Plans.
Section 5.6 Filings; Other Action.
(a) Subject to the terms and conditions herein provided, Parent
and ASARCO shall (i) promptly make all filings necessary in connection with
their respective Required Statutory Approvals and (ii) use reasonable best
efforts to cooperate with one another in (y) determining whether any
filings are required to be made with, or consents, permits, authorizations
or approvals are required to be obtained from, any third party or other
governmental or regulatory bodies or authorities of federal, state, local
and foreign jurisdictions in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
and thereby and (z) timely making all such filings and timely seeking all
such consents, permits, authorizations or approvals, including such party's
Required Third Party Consents. The parties shall cooperate with one
another in connection with the making of all such filings, including
providing copies of all such documents to the non -filing or non-submitting
party and its advisors prior to filing or otherwise submitting.
(b) (i) Without limiting the generality of the undertakings of
Parent and ASARCO pursuant to Section 5.6(a), Parent agrees to obtain the
expiration or termination of the applicable waiting periods under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
(which approval has already been obtained), and applicable foreign Laws
that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization, restraint of trade or
limitation of competition (collectively, "Antitrust Laws"), which
obligation shall be unconditional and shall be not be qualified by best
efforts (regardless of whether fulfillment of such obligation would have a
Material Adverse Effect on Parent or ASARCO). The existence of the
conditions set forth in Sections 6.1(a) shall not limit or diminish
Parent's obligations pursuant to the foregoing sentence or relieve Parent
of any liability or damages that may result from its breach of its
obligations under this Section 5.6(b)(i) (nor limit the obligations of
ASARCO pursuant to the following sentence or relieve ASARCO of any
liability or damages that may result from its breach of obligations under
this Section 5.6(b)(i)). In connection with the foregoing, ASARCO will
cooperate with and assist Parent, and, with respect to matters that are
within its power or control will use its reasonable best efforts to
promptly (i) take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary, proper or advisable under applicable
Antitrust Laws to consummate the transactions contemplated by this
Agreement as soon as practicable, including, without limitation, preparing
and filing as promptly as practicable all documentation to effect all
necessary filings, notices, petitions, statements, registrations,
submissions of information, applications and other documents and (ii)
obtain and maintain all approvals, consents, registrations, permits,
authorizations and other confirmations required to be obtained from any
third party that are necessary, proper or advisable to consummate the
ASARCO Merger and the other transactions contemplated by this Agreement.
At Parent's request, ASARCO will commit to and implement any divestiture,
hold separate or similar transaction or action with respect to any asset or
business of ASARCO, which commitment and implementation may, at ASARCO's
option, be conditioned upon and effective as of the Effective Time.
Subject to applicable Laws relating to the exchange of information, the
Parent and ASARCO shall have the right to review in advance, and to the
extent practicable each will consult with the other on, all the information
relating to their respective Subsidiaries, that appears in any filing made
with, or written materials submitted to, any third party and/or any
Governmental Entity in connection with the ASARCO Merger and the other
transactions contemplated by this Agreement.
(ii) In furtherance and not in limitation of the foregoing, and to the
extent that any such action has not heretofore been taken or completed,
each of Parent and ASARCO agrees to (i) make an appropriate filing of a
Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby as promptly as practicable and in any
event within ten business days of the date hereof, (ii) supply as promptly
as practicable any additional information and documentary material that may
be requested pursuant to the HSR Act and (iii) complete the review process
under the HSR Act to permit the consummation of the ASARCO Merger
including, but not limited to, causing the expiration of termination of the
applicable waiting periods under the HSR Act as soon as practicable.
Section 5.7 Further Assurances. In case at any time after the
Effective Time any further action is necessary or desirable to carry out
the purposes of this Agreement, the proper officers and directors of each
of the parties to this Agreement shall take all such necessary action.
Section 5.8 Takeover Statute. If any "fair price," "moratorium,"
"control share acquisition" or other form of antitakeover statute or
regulation shall become applicable to the transactions contemplated hereby,
ASARCO and the members of its Board of Directors shall grant such
approvals and take such actions as are reasonably necessary so that the
transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate
or minimize the effects of such statute or regulation on the transactions
contemplated hereby.
Section 5.9 No Solicitation by ASARCO.
(a) ASARCO shall not, nor shall it permit any of its Subsidiaries
to, nor shall it authorize or permit any of its directors, officers or
employees or any investment banker, financial advisor, attorney, accountant
or other representative retained by it or any of its Subsidiaries to,
directly or indirectly through another person, (i) solicit, initiate or
encourage (including by way of furnishing information), or take any other
action designed to facilitate, any inquiries or the making of any proposal
which constitutes any ASARCO Takeover Proposal (or reasonably could be
expected to lead to a ASARCO Takeover Proposal) or (ii) participate in any
discussions or negotiations regarding any ASARCO Takeover Proposal;
provided, however, that if the Board of Directors of ASARCO determines in
good faith, after consultation with outside counsel, that it is necessary
to do so in order to comply with its fiduciary duties to ASARCO's
shareholders under applicable Law, ASARCO may, in response to an ASARCO
Takeover Proposal which was not solicited by it or which did not otherwise
result from a breach of this Section 5.9(a), and subject to providing prior
written notice of its decision to take such action to Parent (the "ASARCO
Notice") (x) furnish information with respect to ASARCO and its
Subsidiaries to any person making an ASARCO Takeover Proposal pursuant to a
customary confidentiality agreement (as determined by ASARCO after
consultation with its outside counsel) and (y) participate in discussions
or negotiations regarding such ASARCO Takeover Proposal. For purposes of
this Agreement, "ASARCO Takeover Proposal" means any inquiry, proposal or
offer (or any improvement, restatement, amendment, renewal or reiteration
thereof) from any person relating to any direct or indirect acquisition or
purchase of a business or shares of any class of equity securities of
ASARCO or any of its Subsidiaries, any tender offer or exchange offer that
if consummated would result in any person beneficially owning any class of
equity securities of ASARCO or any of its Subsidiaries, or any merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving ASARCO or any of its
subsidiaries, other than the transactions contemplated by this Agreement.
(b) Except as expressly permitted by this Section 5.9, neither the
Board of Directors of ASARCO nor any committee thereof shall (i) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse
to Parent, the recommendation by such Board of Directors or such committee
of the ASARCO Merger or this Agreement, (ii) approve or recommend, or
propose publicly to approve or recommend, any ASARCO Takeover Proposal, or
(iii) cause ASARCO to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement (each, a
"ASARCO Acquisition Agreement") related to any ASARCO Takeover Proposal.
Notwithstanding the foregoing, in the event that the Board of Directors of
ASARCO receives an ASARCO Takeover Proposal and the Board of Directors of
ASARCO determines in good faith, after consultation with outside counsel,
that it is necessary to do so in order to comply with its fiduciary duties
to ASARCO's shareholders under applicable Law, the Board of Directors of
ASARCO may (x) take any of the actions described in clauses (i), (ii) or
(iii) above or (y) terminate this Agreement (and concurrently with or after
such termination, if it so chooses, cause ASARCO to enter into any ASARCO
Acquisition Agreement with respect to any ASARCO Takeover Proposal) but
only after the fifth business day following Parent's receipt of written
notice advising Parent that the Board of Directors of ASARCO is prepared to
accept an ASARCO Takeover Proposal, specifying the material terms and
conditions of such ASARCO Takeover Proposal and identifying the person
making such ASARCO Takeover Proposal.
(c) In addition to the obligations of ASARCO set forth in
paragraphs (a) and (b) of this Section 5.9, ASARCO shall immediately advise
Parent orally and in writing of any request for information or of any
ASARCO Takeover Proposal, the material terms and conditions of such request
or ASARCO Takeover Proposal and the identity of the person making such
request or ASARCO Takeover Proposal. ASARCO will keep Parent reasonably
informed of the status and details (including amendments or proposed
amendments) of any such request or ASARCO Takeover Proposal.
(d) Nothing contained in this Section 5.9 shall prohibit ASARCO
from taking and disclosing to its shareholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to ASARCO's shareholders if, in the good faith judgement of the
Board of Directors of ASARCO, after consultation with outside counsel,
failure so to disclose would be inconsistent with its obligations under
applicable Law. At the meeting of the ASARCO Board at which this Agreement
was considered, authorized and approved, held October 5, 1999, the ASARCO
Board unanimously declared it advisable that ASARCO's shareholders adopt
and approve this Agreement. Notwithstanding any subsequent determination
by the ASARCO Board to change such recommendation, this Agreement shall be
submitted to the shareholders of ASARCO at the ASARCO Shareholder Meeting
for the purpose of obtaining the ASARCO Shareholder Approval and nothing
contained herein shall be deemed to relieve ASARCO of such obligation.
Section 5.10 Public Announcements. Parent and ASARCO will consult
with and provide each other the reasonable opportunity to review and
comment upon any press release prior to the issuance of any press release
relating to this Agreement or the transactions contemplated herein and
shall not issue any such press release prior to such consultation except as
may be required by Law or by obligations pursuant to any listing agreement
with any national securities exchange.
Section 5.11 Indemnification and Insurance.
(a) Parent agrees that all rights to exculpation and
indemnification for acts or omissions occurring prior to the Effective Time
now existing in favor of the current or former directors or officers (the
"ASARCO Indemnified Parties") of ASARCO as provided in its charter or by-
laws or in any agreement shall survive the ASARCO Merger and shall continue
in full force and effect in accordance with their terms. For six years
from the Effective Time, Parent shall indemnify the ASARCO Indemnified
Parties to the same extent as such ASARCO Indemnified Parties are entitled
to indemnification pursuant to the preceding sentence.
(b) For three years from the Effective Time, Parent shall maintain
in effect ASARCO's current directors' and officers' liability insurance
policy (the "ASARCO Policy"), covering those persons who are covered by the
ASARCO Policy (a copy of which has been heretofore delivered to Parent);
provided, however, that in no event shall Parent be required to expend in
any one year an amount in excess of 150% of the annual premiums to be paid
by ASARCO for such insurance, and, provided, further, that if the annual
premiums of such insurance coverage exceed such amount, Parent shall be
obligated to obtain a policy with the greatest coverage available for a
cost not exceeding such amount; and provided, further, that Parent may meet
its obligations under this paragraph by covering the above people under
Parent's insurance policy or policies on the terms described above.
Section 5.12 Accountants' "Comfort" Letters. Parent and ASARCO
will each use reasonable best efforts to cause to be delivered to each
other two letters from their respective independent accountants, one dated
a date within two business days before the date of the Registration
Statement and one dated a date within two business days before the
Effective Time, in form and substance reasonably satisfactory to the
recipient and customary in scope for comfort letters delivered by
independent accountants in connection with registration statements similar
to the Registration Statement.
Section 5.13 Additional Reports. Parent and ASARCO shall each
furnish to the other copies of any reports of the type referred to in
Section 4.5 which it files with the SEC on or after the date hereof, and
each of Parent and ASARCO, as the case may be, represents and warrants that
as of the respective dates thereof, such reports will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statement therein,
in light of the circumstances under which they were made, not misleading.
Any unaudited consolidated interim financial statements included in such
reports (including any related notes and schedules) will fairly present the
financial position of Parent and its consolidated Subsidiaries or ASARCO
and its consolidated Subsidiaries, as the case may be, as of the dates
thereof and the results of operations and changes in financial position or
other information included therein for the periods or as of the date then
ended (subject, where appropriate, to normal year-end adjustments), in each
case in accordance with past practice and GAAP consistently applied during
the periods involved (except as otherwise disclosed in the notes thereto).
Section 5.14 Disclosure Schedule Supplements. From time to time
after the date of this Agreement and prior to the Effective Time, Parent
will promptly supplement or amend the Parent Disclosure Schedule with
respect to any matter hereafter arising which, if existing or occurring at
or prior to the date of this Agreement, would have been required to be set
forth or described in the Parent Disclosure Schedule or which is necessary
to correct any information in a schedule or in any representation and
warranty of Parent which has been rendered inaccurate thereby. From time
to time after the date of this Agreement and prior to the Effective Time,
ASARCO will promptly supplement or amend the ASARCO Disclosure Schedule
with respect to any matter hereafter arising which, if existing or
occurring at or prior to the date of this Agreement, would have been
required to be set forth or described in the ASARCO Disclosure Schedule or
which is necessary to correct any information in a schedule or in any
representation and warranty of ASARCO which has been rendered inaccurate
thereby.
Section 5.15 Certain Litigation. Each of the parties shall prior
to or at the Effective Time cease, terminate and dismiss, with prejudice,
any and all actions, proceedings or lawsuits initiated, commenced or filed
by such party in connection with (i) the Combination and (ii) Parent's
exchange offer dated as of September 3, 1999, as amended, for ASARCO and
each of the parties shall use their reasonable best efforts to cause any
and all actions, proceedings or lawsuits initiated, commenced or filed by
third parties in connection with the transactions in the above (i) and (ii)
to cease, terminate or be dismissed, with prejudice.
Section 5.16 Shareholder Litigation. Each of Parent and ASARCO
shall give the other the reasonable opportunity to participate in the
defense of any shareholder litigation against ASARCO or Parent, as
applicable, and its directors relating to the transactions contemplated by
this Agreement.
Section 5.17 Section 16(b). Parent and ASARCO shall take all
steps reasonably necessary to cause the transactions contemplated hereby
and any other dispositions of equity securities of ASARCO (including
derivative securities) or acquisitions of Parent equity securities
(including derivative securities) in connection with this Agreement by each
individual who is a director or officer of ASARCO to be exempt under Rule
16b-3 promulgated under the Exchange Act.
Section 5.18 Change of Control Agreements.
ASARCO has change of control employment agreements with the 12
people listed in Section 5.18(a) of the ASARCO Disclosure Schedule which
provide certain benefits upon a termination of employment other than for
"cause" or for "good reason" following the Effective Time. Parent shall
take all appropriate steps necessary to, and will, give reasonable advance
notice of its intention to offer employment (including the proposed terms
thereof), or not to offer employment, to each of the aforementioned 12
people and will make such offers in the former case, all sufficiently in
advance of the Effective Time to afford such offerees reasonable time prior
to the Effective Time to decide whether or not to accept the employment
offered prior to the Effective Time. ASARCO has previously made written
disclosure to Parent for each of such 12 people and for all such people in
the aggregate of the total estimated amount payable to such people for all
obligations owed to them by ASARCO under all contractual and plan
arrangements with such people, assuming that the employment of each such
person was terminated effective as of December 31, 1999 (except that
specific benefits are calculated as of specified dates set forth in the
written disclosure). The parties hereto agree that the transactions
contemplated by the Agreement shall constitute a "change of control" for
purposes of the change of control employment agreements referred to in this
Section 5.18.
ARTICLE VI
CONDITIONS TO THE ASARCO MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the
ASARCO Merger. The respective obligations of each party to effect the
ASARCO Merger shall be subject to the fulfillment at or prior to the
Effective Time of the following conditions:
(a) The Parent Shareholder Approval and the ASARCO Shareholder
Approval shall have been obtained, all in accordance with applicable Law.
(b) No statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or enforced by
any court or other tribunal or governmental body or authority which
prohibits or makes illegal the consummation of the ASARCO Merger
substantially on the terms contemplated hereby. In the event any order,
decree or injunction shall have been issued, each party shall use its
reasonable efforts to remove any such order, decree or injunction.
(c) SubA shall have accepted for exchange all shares of ASARCO
Common Stock validly tendered and not withdrawn pursuant to the ASARCO
Offer; provided, however, that this condition shall not be applicable to
the obligations of SubA if, in breach of this Agreement, SubA fails to
accept for exchange and exchange any such shares validly tendered and not
withdrawn pursuant to the ASARCO Offer.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
Section 7.1 Termination or Abandonment. This Agreement may be
terminated at any time prior to the Effective Time, whether before or after
any approval of the matters presented in connection with the ASARCO Merger
by the respective shareholders of Parent and ASARCO:
(a) by the mutual consent of the Board of Directors of Parent and
ASARCO;
(b) by either Parent or ASARCO if, without fault of such
terminating party, the purchase of ASARCO Common Stock pursuant to the
ASARCO Offer shall not have occurred on or before March 31, 2000, which
date may be extended by mutual written consent of the parties hereto; or
(c) by either Parent or ASARCO if any court of competent
jurisdiction or other governmental body shall have issued an order (other
than a temporary restraining order), decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting the purchase of
ASARCO Common Stock pursuant to the ASARCO Offer or the ASARCO Merger, and
such order, decree, ruling or other action shall have become final and
nonappealable; provided that the party seeking to terminate this Agreement
shall have used its reasonable best efforts, subject to Section 5.6, to
remove or lift such order, decree or ruling; or any statute, rule,
regulation, order, injunction or decree shall have been enacted, entered,
promulgated or enforced by any court, administrative agency or commission
or other governmental authority or instrumentality which prohibits or makes
illegal the consummation of the ASARCO Offer or the ASARCO Merger and
which, in the case of any such order, injunction or decree, shall have
become final and nonappealable; or there shall have been a failure to
obtain any required consent or approval under foreign laws or regulations
which would prohibit or make the consummation of the ASARCO Offer or the
ASARCO Merger illegal or would have a Material Adverse Effect on Parent or
on ASARCO.
Section 7.2 Termination by Parent. This Agreement may be
terminated and the ASARCO Offer and the ASARCO Merger may be abandoned by
action of the Board of Directors of Parent, at any time prior to the
purchase of ASARCO Common Stock pursuant to the ASARCO Offer, if (a) the
ASARCO Board shall withdraw, modify or change its recommendation or
approval in respect of this Agreement or the ASARCO Offer in a manner
adverse to Parent, (b) the ASARCO Board shall have recommended any proposal
other than by Parent in respect of an ASARCO Takeover Proposal, (c) an
ASARCO Takeover Proposal other than by Parent shall be publicly disclosed
and at the scheduled expiration of the ASARCO Offer the Minimum Tender
Condition shall not have been satisfied; provided, that all other
conditions to the ASARCO Offer are satisfied, or (d) the condition to the
ASARCO Offer described in clause (e) of Annex A hereto shall not have been
satisfied within 30 days of notice that such condition has not been
satisfied.
Section 7.3 Termination by ASARCO. This Agreement may be
terminated and the ASARCO Merger may be abandoned by action of the ASARCO
Board, at any time prior to the acceptance for payment of shares under the
ASARCO Offer, (a) if there shall be a material breach of any of Parent's
representations, warranties or covenants hereunder, which breach shall not
be cured within ten days of notice thereof, or (b) provided ASARCO is not
in breach of any obligation under this Agreement, to allow ASARCO to enter
into an agreement in respect of an ASARCO Takeover Proposal (provided that
such termination pursuant to this clause (b) shall not be effective unless
and until ASARCO shall have paid to Parent the fee described in Section 7.5
hereof and shall have complied with Section 5.9(c) and the notice
provisions of Section 5.9(b)).
Section 7.4 Effect of Termination. In the event of termination of
this Agreement pursuant to Section 7.1, all rights and obligations under
this Agreement shall terminate (except for the provisions of Sections
5.2(b) and 8.2), and there shall be no other liability on the part of
Parent or ASARCO to the other except liability arising out of a willful and
material breach of this Agreement.
Section 7.5 Termination Fee. In the event that (i) after the date
hereof and prior to the ASARCO Shareholder Meeting an ASARCO Takeover
Proposal shall have been made known to ASARCO or any of its Subsidiaries or
shall have been made directly to its shareholders generally or any person
shall have publicly announced an intention (whether or not conditional) to
make an ASARCO Takeover Proposal and thereafter this Agreement is
terminated by either Parent or ASARCO pursuant to Section 7.1(b) or (ii)
this Agreement is terminated by ASARCO pursuant to Section 7.3(b), then
ASARCO shall promptly pay Parent a fee equal to $30 million (the "ASARCO
Termination Fee"), payable by wire transfer of same day funds; provided,
however, that no ASARCO Termination Fee shall be payable to Parent pursuant
to this paragraph unless and until within 18 months of such termination
ASARCO or any of its Subsidiaries enters into any ASARCO Acquisition
Agreement or consummates any ASARCO Takeover Proposal (for the purposes of
the foregoing proviso the terms "ASARCO Acquisition Agreement" and "ASARCO
Takeover Proposal" shall have the meanings assigned to such terms in
Section 5.9 (except that the reference to the "acquisition or purchase of a
business or shares of any class of equity securities of ASARCO or any of
its Subsidiaries" in the definition of "ASARCO Takeover Proposal" in
Section 5.9 shall be deemed to be a reference to the "acquisition or
purchase of a business that constitutes 20% or more of the net revenues,
net income or the assets of ASARCO and its Subsidiaries, taken as a whole,
or 20% of any class of equity securities of ASARCO or any of its
Subsidiaries," in which event the Termination Fee shall be payable upon the
first to occur of such events. ASARCO acknowledges that the agreements
contained in this Section 7.5(a) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent
would not enter into this Agreement; accordingly, if ASARCO fails promptly
to pay the ASARCO Termination Fee, and, in order to obtain such payment,
Parent commences a suit which results in a judgement against ASARCO for the
ASARCO Termination Fee, ASARCO shall pay to Parent its costs and expenses
(including attorneys' fees and expenses) in connection with such suit,
together with interest on the amount of the ASARCO Termination Fee and the
prime rate of Citibank N.A. in effect on the date such payment was required
to be made.
Section 7.6 Amendment or Supplement. At any time before or after
approval of the matters presented in connection with the Combination by the
respective shareholders of Parent and ASARCO and prior to the Effective
Time, this Agreement may be amended or supplemented in writing by Parent
and ASARCO with respect to any of the terms contained in this Agreement;
provided, however, that following approval by the shareholders of ASARCO
there shall be no amendment or change to the provisions hereof with respect
to the ASARCO Merger Consideration as provided herein nor any amendment or
change not permitted under applicable Law, without further approval by the
shareholders of ASARCO.
Section 7.7 Extension of Time, Waiver, Etc. At any time prior to
the Effective Time, any party may:
(a) extend the time for the performance of any of the obligations
or acts of the other party;
(b) waive any inaccuracies in the representations and warranties
of the other party contained herein or in any document delivered pursuant
hereto; or
(c) subject to the proviso of Section 7.3 waive compliance with
any of the agreements or conditions of the other party contained herein.
Notwithstanding the foregoing no failure or delay by any party in
exercising any right hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right hereunder. Any
agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 No Survival 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 ASARCO
Merger.
Section 8.2 Expenses. Whether or not the ASARCO Merger is
consummated, all costs and expenses incurred in connection with the ASARCO
Merger, this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses, except that (a)(i) the filing
fee in connection with any HSR Act filing or any other Required Statutory
Approval, (ii) the commissions and other out-of-pocket transaction costs,
including the expenses and compensation of the Exchange Agent, incurred in
connection with the sale of Excess Shares, (iii) the expenses incurred in
connection with the printing and mailing of the Joint Proxy Statement
(including SEC filing fees), and (iv) all transfer Taxes, shall be shared
equally by Parent and ASARCO.
Section 8.3 Counterparts; Effectiveness. This Agreement may be
executed in two or more consecutive counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument, and shall become effective when one or more
counterparts have been signed by each of the parties and delivered (by
telecopy or otherwise) to the other parties.
Section 8.4 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to the principles of conflicts of laws thereof, except to the extent
the provisions of this Agreement are expressly governed by or derive their
authority from the NJBCA.
Section 8.5 Notices. All notices and other communications
hereunder shall be in writing (including telecopy or similar writing) and
shall be effective (a) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this Section 8.5 and the
appropriate telecopy confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section 8.5:
To Parent or SubA:
Phelps Dodge Corporation
2600 North Central Avenue
Phoenix, Arizona 85004-3014
copies to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: David W. Heleniak
Telecopy: (212) 848-7179
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Michael W. Blair
Telecopy: (212) 909-6836
To ASARCO:
ASARCO Incorporated
180 Maiden Lane
New York, New York 10038
Attention: Augustus B. Kinsolving, Esq.
Telecopy: (212) 510-1910
copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: J. Michael Schell
Margaret L. Wolff
Telecopy: (212) 735-2000
Section 8.6 Assignment; Binding Effect. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned
by any of the parties hereto (whether by operation of Law or otherwise)
without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and
assigns.
Section 8.7 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.
Section 8.8 Enforcement of Agreement. The parties hereto agree
that money damages or other remedy at law would not be sufficient or
adequate remedy for any breach or violation of, or a default under, this
Agreement by them and that in addition to all other remedies available to
them, each of them shall be entitled to the fullest extent permitted by Law
to an injunction restraining such breach, violation or default or
threatened breach, violation or default and to any other equitable relief,
including, without limitation, specific performance, without bond or other
security being required.
Section 8.9 Entire Agreement; Third-Party Beneficiaries. This
Agreement and the Confidentiality Agreement constitute the entire
agreement, and supersede all other prior agreements and understandings,
both written and oral, between the parties, or any of them, with respect to
the subject matter hereof and thereof and, except for the provisions of
Section 5.11 hereof, is not intended to and shall not confer upon any
person other than the parties hereto any rights or remedies hereunder.
Section 8.10 Headings. Headings of the Articles and Sections of
this Agreement are for convenience of the parties only, and shall be given
no substantive or interpretive effect whatsoever.
Section 8.11 Definitions. References in this Agreement to
"Subsidiaries" of any person shall mean any corporation or other form of
legal entity of which more than 50% of the outstanding voting securities
are on the date hereof directly or indirectly owned by such person.
References in this Agreement to "Significant Subsidiaries" shall mean
Subsidiaries which constitute "significant subsidiaries" under Rule 405
promulgated by the SEC under the Securities Act. References in this
Agreement (except as specifically otherwise defined) to "affiliates" shall
mean, as to any person, any other person which, directly or indirectly,
controls, or is controlled by, or is under common control with, such
person. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with")
shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of management or policies of a person, whether
through the ownership of securities or partnership of other ownership
interests, by contract or otherwise. References in the Agreement to
"person" shall mean an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including,
without limitation, a governmental body or authority. Notwithstanding the
foregoing, Parent shall not be deemed to be an "affiliate" or a
"Subsidiary" of ASARCO.
Section 8.12 Finders or Brokers. Except for Morgan Stanley & Co.
Incorporated with respect to Parent, a copy of whose engagement agreement
has been or will be provided to ASARCO, and Credit Suisse First Boston
Corporation with respect to ASARCO, a copy of whose engagement agreement
has been or will be provided to Parent, neither Parent nor ASARCO nor any
of their respective Subsidiaries has employed any investment banker,
broker, finder or intermediary in connection with the transactions
contemplated hereby who might be entitled to any fee or any commission in
connection with or upon consummation of the ASARCO Merger.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the date first above written.
PHELPS DODGE CORPORATION
By: /s/ D. C. Yearley
------------------------------------
Name: Douglas C. Yearley
Title: Chairman & CEO
AAV ACQUISITION CORP.
By: /s/ D. C. Yearley
------------------------------------
Name: Douglas C. Yearley
Title: Chairman
ASARCO INCORPORATED
By: /s/ Francis R. McAllister
-----------------------------------
Name: Francis R. McAllister
Title: Chairman and Chief Executive
Officer
ANNEX A
Conditions to the ASARCO Offer
Notwithstanding any other provision of the ASARCO Offer, Parent
and the Purchaser shall not be required to accept for exchange or exchange
any ASARCO Common Stock, may postpone the acceptance for exchange of or
exchange for tendered ASARCO Common Stock, and, subject to the terms of the
Merger Agreement, may, terminate or amend the Offer as to any ASARCO Common
Stock not then exchanged (a) if at the Expiration Date, any of the Minimum
Condition or the Phelps Dodge Stockholder Approval Condition (as defined in
the Prospectus dated September 22, 1999 relating to the Offer by Phelps
Dodge for shares of ASARCO Common Stock) has not been satisfied or (b) if
on or after October 5, 1999 and at or prior to the Expiration Date, any of
our other conditions are not satisfied. The conditions are as follows:
(a) The shares of our common stock which shall be issued to
ASARCO stockholders in the ASARCO Offer and the ASARCO Merger have been
authorized for listing on the NYSE, subject to official notice of issuance;
(b) Registration Statement No. 333-86063 and any post-effective
amendments thereto shall be effective under the Securities Act, and no stop
order suspending the effectiveness of the Registration Statement shall have
been issued nor shall there have been proceedings for that purpose
initiated or threatened by the SEC and we shall have received all necessary
state securities law or "blue sky" authorizations;
(c) No temporary restraining order, preliminary or permanent
injunction or other order or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Offer or any of the other transactions contemplated
by the Prospectus dated September 22, 1999 (the "Prospectus") shall be in
effect; no statute, rule, regulation, order, injunction or decree shall
have been enacted, entered, promulgated or enforced by any court,
administrative agency or commission or other governmental authority or
instrumentality which prohibits, or makes illegal the consummation of our
Offer; nor shall there have been a failure to obtain any required consent
or approval under foreign laws or regulations which prohibit or would make
the consummation of the ASARCO Offer illegal or would have a Material
Adverse Effect on Parent or on ASARCO;
(d) There shall not have been after the date of this Agreement
any (i) amendment of the Code, (ii) amendment or adoption of final or
temporary Treasury Regulations under the Code, (iii) Internal Revenue
Service revenue ruling, revenue procedures, technical advice memorandum or
notices, or (iv) final decision of a court of competent jurisdiction, in
each case that would be inconsistent with the ASARCO Merger qualifying as a
reorganization under Section 368(a) of the Code; and
(e) The representations and warranties of ASARCO in this
Agreement shall be true and correct (without giving effect to any
qualification as to "materiality" or "Material Adverse Effect" set forth
therein) as of the date of the Agreement and as of the expiration date as
though made on and as of the date of the Agreement and the Expiration Date
except where the failure of such representations and warranties to be so
true and correct would not reasonably be expected to have, individually or
in the aggregate a Material Adverse Effect on ASARCO; and ASARCO shall have
performed or complied in all material respects with all the material
agreements and covenants required by this Agreement.
The foregoing conditions are solely for benefit of Parent and the
Purchaser and Parent and the Purchaser may assert them regardless of the
circumstances giving rise to any such conditions (including any action or
inaction by Parent and the Purchaser). The determination as to whether any
condition has been satisfied shall be deemed a continuing right which may
be asserted at any time and from time to time. Notwithstanding the fact
that Parent and the Purchaser reserve the right to assert the failure of a
condition following acceptance for exchange but prior to exchange in order
to delay exchange or cancel its obligation to exchange properly tendered
ASARCO Common Stock, Parent and the Purchaser will either promptly exchange
such ASARCO Common Stock or promptly return such ASARCO Common Stock.
FOR IMMEDIATE RELEASE
ASARCO BOARD APPROVES MERGER AGREEMENT
WITH PHELPS DODGE
NEW YORK, N.Y., OCTOBER 6, 1999 -- The Board of Directors of ASARCO
Incorporated (NYSE:AR) announced today that it has accepted an improved
offer from Phelps Dodge Corporation (NYSE:PD) which values the Company at
$1.1 billion or $28.21 per share. Pursuant to the merger agreement signed
by the parties, Phelps Dodge will acquire Asarco for $14.75 in cash and
0.2513 Phelps Dodge share for each Asarco common share on a fully prorated
basis.
Francis R. McAllister, chairman and chief executive officer of Asarco,
said, "From the beginning it has been our aim to maximize shareholder
value. We believe this transaction represents good value for Asarco
shareholders. We plan to work closely with Phelps Dodge to ensure a smooth
transition."
Under the agreement, Asarco shareholders can elect to receive cash or
Phelps Dodge shares for each Asarco share, subject to proration to maintain
the overall cash/stock allocation of approximately 50% stock and 50% cash.
The stock portion of the consideration received will be tax-free to Asarco
shareholders.
Based on Phelps Dodge closing share price yesterday, the agreement
currently values Asarco at $28.21 per share, or a total equity value of
approximately $1.1 billion, based on approximately 40 million Asarco shares
outstanding. Based on share prices at the time of Phelps Dodge's original
offer on August 20, 1999, the agreement values Asarco at $29.50 per share
or approximately a 60% premium.
Completion of the exchange offer is subject to 80% of Asarco shares
being tendered and not withdrawn, approval of Phelps Dodge shareholders at
a special meeting on October 13th and customary closing conditions. The
closing should be completed on October 22nd
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