================================================================================
AGREEMENT AND PLAN OF MERGER
Among
NEWMONT MINING CORPORATION
("Parent")
BOUNTY MERGER CORP.
a wholly owned subsidiary of Parent
("Sub")
and
BATTLE MOUNTAIN GOLD COMPANY
(the "Company")
June 21, 2000
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
Parties and Recitals...........................................................1
ARTICLE I
The Merger and Canadian Arrangement
SECTION 1.1 The Merger...............................................1
SECTION 1.2 Closing..................................................2
SECTION 1.3 Effective Time of the Merger.............................2
SECTION 1.4 Effects of the Merger....................................2
SECTION 1.5 Articles of Incorporation and By-laws....................2
SECTION 1.6 Directors................................................2
SECTION 1.7 Officers.................................................3
SECTION 1.8 Additional Actions.......................................3
SECTION 1.9 Plan of Arrangement......................................3
ARTICLE II
Effect of the Merger and the Canadian Arrangement on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.1 Effect on Common Stock of the Company and Sub............3
SECTION 2.2 Effect on Capital Stock of Canadian Co. and Canadian Sub.4
SECTION 2.3 Exchange of Certificates.................................4
SECTION 2.4 Assumption of Company Stock Options......................7
SECTION 2.5 Effect on Company Convertible Preferred Stock............8
SECTION 2.6 Effect on Company Special Voting Stock...................9
SECTION 2.7 Convertible Notes........................................9
ARTICLE III
Representations and Warranties
SECTION 3.1 Representations and Warranties of the Company............9
SECTION 3.2 Representations and Warranties of Parent and Sub........28
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.1 Conduct of Business.....................................34
SECTION 4.2 No Solicitation by the Company..........................38
-i-
<PAGE>
ARTICLE V
Additional Agreements
SECTION 5.1 Preparation of Form S-4 and the Proxy Statements;
Stockholders' Meetings..................................40
SECTION 5.2 Access to Information; Confidentiality..................41
SECTION 5.3 Reasonable Efforts; Notification........................41
SECTION 5.4 Benefit Plans...........................................42
SECTION 5.5 Indemnification.........................................43
SECTION 5.6 Fees and Expenses.......................................44
SECTION 5.7 Public Announcements....................................44
SECTION 5.8 Accounting Treatment....................................44
SECTION 5.9 Affiliates..............................................44
SECTION 5.10 Stock Exchange Listing..................................44
ARTICLE VI
Conditions Precedent
SECTION 6.1 Conditions to Each Party's Obligation to Effect the
Merger..................................................45
SECTION 6.2 Conditions to Obligations of Parent and Sub.............46
SECTION 6.3 Conditions to Obligation of the Company.................47
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.1 Termination.............................................48
SECTION 7.2 Termination Fee; Effect of Termination..................49
SECTION 7.3 Amendment...............................................50
SECTION 7.4 Extension; Waiver.......................................51
SECTION 7.5 Procedure for Termination, Amendment, Extension or
Waiver..................................................51
SECTION 7.6 Parent Delaying Transactions............................51
ARTICLE VIII
General Provisions
SECTION 8.1 Non-Survival of Representations and Warranties..........51
SECTION 8.2 Notices.................................................52
SECTION 8.3 Definitions.............................................52
SECTION 8.4 Interpretation..........................................53
SECTION 8.5 Severability............................................53
SECTION 8.6 Counterparts............................................53
SECTION 8.7 Entire Agreement; No Third-Party Beneficiaries..........53
SECTION 8.8 Governing Law...........................................53
SECTION 8.9 Assignment..............................................53
SECTION 8.10 Enforcement.............................................54
Exhibit A - Form of Arrangement Agreement
Exhibit B - Form of Company Affiliate Letter
Exhibit C - Form of FIRPTA Certificate
Exhibit D - Form of Certificate of Designation
-ii-
<PAGE>
INDEX OF DEFINED TERMS
Defined Term Section Page No.
------------ ------- --------
affiliate...................................8.3............................ 53
Agreement...................................Preamble....................... 1
Articles of Merger..........................1.3............................ 2
Canadian Arrangement........................Recitals....................... 1
Canadian Arrangement Agreement..............Recitals....................... 1
Canadian Capital Stock......................3.1(c)......................... 11
Canadian Co.................................1.9............................ 3
Canadian Co. Employee Stock Plans...........3.1(c)......................... 11
Canadian Co. Exchangeable Shares............Recitals....................... 1
Canadian Co. Stock Options..................3.1(c)......................... 11
Canadian Co. Rights.........................3.1(c) ........................ 11
Canadian Co. Rights Agreement...............3.1(c) ........................ 11
Canadian Proxy Statement....................3.1(f)......................... 15
Canadian Securities Documents...............3.1(e)......................... 14
Canadian Shareholder Approval...............3.1(j)......................... 21
Canadian Sub................................1.9............................ 3
Certificates................................2.3(b)......................... 4
Closing.....................................1.2............................ 2
Closing Date................................1.2............................ 2
Code........................................2.4(a)......................... 7
Common Shares Trust.........................2.3(e)......................... 6
Company.....................................Preamble....................... 1
Company Acquisition.........................7.2(c)......................... 50
Company Assets..............................3.1(v)......................... 28
Company Business Personnel..................3.1(r)......................... 27
Company Capital Stock.......................3.1(c)......................... 10
Company Common Stock........................Recitals....................... 1
Company Convertible Preferred Stock.........2.5............................ 8
Company Disclosure Letter...................3.1(b)......................... 10
Company Employee Stock Plans................3.1(c)......................... 10
Company Material Adverse Effect.............3.1(a)......................... 9
Company Rights..............................3.1(c)......................... 10
Company Rights Agreement....................3.1(c)......................... 10
Company SEC Documents.......................3.1(e)......................... 14
Company Series A Preferred Stock............3.1(c)......................... 10
Company Significant Subsidiary..............3.1(a)......................... 9
Company Special Voting Stock................2.6............................ 9
Company Stockholder Approval................3.1(j)......................... 21
Company Stock Options.......................3.1(c)......................... 10
Company Subsidiary..........................3.1(a)......................... 9
-iii-
<PAGE>
Defined Term Section Page No.
------------ ------- --------
Company Takeover Proposal...................4.2(a)......................... 38
Company's Stockholders' Meeting.............5.1(b)......................... 40
Confidentiality Agreement...................5.2............................ 41
Controlled Group Liability..................3.1(i)......................... 17
Conversion Number...........................Recitals....................... 1
Convertible Notes...........................3.1(c)......................... 11
Convertible Notes Agreement.................2.7............................ 9
Contract....................................3.1(d)......................... 13
Covered Employees...........................5.4............................ 42
Delaying Transaction........................7.6(c) ........................ 51
Effective Time of the Merger................1.3............................ 2
Employee Benefit Plan.......................3.1(i)......................... 17
Encumbrance.................................3.1(p)......................... 25
Encumbrances................................3.1(p)......................... 25
Environmental Laws..........................3.1(p)......................... 25
Environmental Liabilities...................3.1(p)......................... 25
ERISA.......................................3.1(i)......................... 17
ERISA Affiliate.............................3.1(i)......................... 17
Excess Shares...............................2.3(e)......................... 6
Exchange Act................................3.1(d)......................... 13
Exchange Agent..............................2.3(a)......................... 4
Exchange Fund...............................2.3(a)......................... 4
Existing Data...............................3.1(p)......................... 25
Filed Company SEC Documents.................3.1(g)......................... 15
Filed Parent SEC Documents..................3.2(g)......................... 32
FIRPTA Certificate..........................6.2(e)......................... 47
Form S-4....................................3.1(f)......................... 15
GAAP........................................Recitals....................... 1
Governmental Entity.........................3.1(d)......................... 13
Governmental Fees...........................3.1(p)......................... 25
Liens.......................................3.1(b)......................... 10
Material Breach.............................7.2(c)......................... 50
Material Employment Agreement...............3.1(i)......................... 17
Maximum Premium.............................5.5(b)......................... 44
Merger......................................Recitals....................... 1
Multiemployer Plan..........................3.1(i)......................... 17
Multiple Employer Plan......................3.1(i)......................... 19
NGCL........................................1.1............................ 1
NYSE........................................2.3(e)......................... 6
Operating Properties........................3.1(p) ........................ 24
Options.....................................3.1(c)......................... 11
Outside Date................................7.1(b)......................... 48
Parent......................................Preamble....................... 1
Parent Capital Stock........................3.2(c)......................... 29
Parent Common Stock.........................Recitals....................... 1
-iv-
<PAGE>
Defined Term Section Page No.
------------ ------- --------
Parent Convertible Preferred Stock..........2.5(b)......................... 8
Parent Disclosure Letter....................3.2(b)......................... 29
Parent Employee Stock Options...............3.2(c)......................... 29
Parent Employee Stock Plans.................3.2(c)......................... 29
Parent Material Adverse Effect..............3.2(a)......................... 29
Parent Preferred Stock......................3.2(c)......................... 29
Parent Rights...............................3.2(c)......................... 29
Parent Rights Agreement.....................3.2(c)......................... 29
Parent SEC Documents........................3.2(e)......................... 31
Parent Series A Preferred Stock.............3.2(c)......................... 29
Parent Subsidiary...........................3.2(a)......................... 29
PBGC........................................3.1(i)......................... 19
Permits.....................................3.1(d)......................... 13
person......................................8.3............................ 53
Preferred Stockholder Approval..............3.1(j)......................... 21
Plan........................................3.1(i)......................... 17
Proxy Statement.............................3.1(d)......................... 13
PwC.........................................6.1(f)......................... 45
Qualified Plans.............................3.1(i)......................... 18
Relief......................................3.1(e) ........................ 14
Safety Acts.................................3.1(s)......................... 27
SEC.........................................2.4(b)......................... 8
Securities Act..............................2.3(d)......................... 6
Sub.........................................Preamble....................... 1
subsidiary..................................8.3............................ 53
Superior Proposal...........................4.2(a)......................... 38
Surviving Corporation.......................1.1............................ 1
Taxes.......................................3.1(m)......................... 23
Tax Returns.................................3.1(m)......................... 23
Voting/Support Agreement....................3.1(+)......................... 27
Withdrawal Liability........................3.1(i)......................... 18
-v-
<PAGE>
This Agreement and Plan of Merger (this "Agreement") dated as
of June 21, 2000, among Newmont Mining Corporation, a Delaware corporation
("Parent"), Bounty Merger Corp., a Nevada corporation and a wholly owned
subsidiary of Parent ("Sub") and Battle Mountain Gold Company, a Nevada
corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and
the Company have approved the merger of Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding share of common stock, par value
$0.10 per share, of the Company ( "Company Common Stock"), not owned directly or
indirectly by Parent or the Company, will be converted into the right to receive
0.105 (as adjusted pursuant to Section 2.1(d), the "Conversion Number") of a
fully paid and nonassessable share of common stock, par value $1.60 per share,
of Parent ("Parent Common Stock");
WHEREAS, upon the terms and subject to the conditions set
forth in this Agreement and the form of Arrangement Agreement, dated the date
hereof, attached as Exhibit A to this Agreement (the "Canadian Arrangement
Agreement"), each issued and outstanding exchangeable share of Battle Mountain
Canada Ltd. ("Canadian Co. Exchangeable Shares"), other than those owned
directly or indirectly by the Company or by holders of Canadian Co. Exchangeable
Shares who validly exercise rights of dissent, will be exchanged for the right
to receive the Conversion Number of a fully paid and nonassessable share of
Parent Common Stock (the "Canadian Arrangement");
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and the Canadian Arrangement and also to prescribe various conditions to
the Merger and the Canadian Arrangement; and
WHEREAS, for accounting purposes, it is intended that the
Merger be accounted for as a pooling of interests under United States generally
accepted accounting principles ("GAAP").
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the parties
agree as follows:
ARTICLE I
The Merger and Canadian Arrangement
SECTION 1.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Nevada
General Corporation Law (including Chapter 92A thereof, the "NGCL"), Sub shall
be merged with and into the Company at the Effective Time of the Merger.
Following the Merger, the separate corporate existence of Sub shall cease and
the Company shall continue as the surviving corporation (the "Surviving
Corporation"), and shall succeed to and assume all the rights, properties,
liabilities and obligations of Sub in accordance with the NGCL. At the election
of Parent, any direct or indirect wholly owned subsidiary of Parent may be
substituted for Sub as a constituent corporation in the Merger or Ca-
<PAGE>
nadian Sub in the Canadian Arrangement; provided that such substitution does not
adversely affect the rights of the holders of Company Common Stock or Canadian
Co. Exchangeable Shares under this Agreement or the Canadian Arrangement
Agreement (or unless the Company shall otherwise consent to such substitution,
such consent not to be unreasonably withheld). In such event, the parties agree
to execute an appropriate amendment to this Agreement in order to reflect such
substitution.
SECTION 1.2. Closing. Upon the terms and subject to the
conditions of this Agreement, the closing of the Merger (the "Closing") shall
take place as soon as reasonably practicable after satisfaction or waiver of the
conditions set forth in Article VI capable of being satisfied prior to the
Closing, but in any event no later than the fifth business day after such time
(the "Closing Date"), at 10:00 a.m. at the offices of Wachtell, Lipton, Rosen &
Katz, 51 West 52nd Street, New York, New York, unless another time, date or
place is agreed to in writing by Parent and the Company.
SECTION 1.3. Effective Time of the Merger. Upon the Closing,
the parties shall file with the Secretary of State of the State of Nevada
articles of merger or other appropriate documents (in any such case, the
"Articles of Merger") executed in accordance with the relevant provisions of the
NGCL, and shall make all other filings, recordings or publications required
under the NGCL in connection with the Merger. The Merger shall become effective
at such time as the Articles of Merger are duly filed with the Nevada Secretary
of State, or at such other time as the parties may agree and specify in the
Articles of Merger (the time the Merger becomes effective, the "Effective Time
of the Merger").
SECTION 1.4. Effects of the Merger. The Merger shall have the
effects set forth in Section 92A.250 of the NGCL.
SECTION 1.5. Articles of Incorporation and By-laws. (a) The
Restated Articles of Incorporation of the Company, as in effect immediately
prior to the Effective Time of the Merger, shall be the Articles of
Incorporation of the Surviving Corporation, until thereafter changed or amended
as provided therein or by applicable law. Notwithstanding the foregoing, at the
option of the Parent, the Articles of Incorporation of Sub, as in effect
immediately prior to the Effective Time of the Merger, shall be the Articles of
Incorporation of the Surviving Corporation, except for Article I thereof, which
shall continue to read "The name of the corporation is `Battle Mountain Gold
Company'," until thereafter changed or amended as provided therein or by
applicable law.
(b) The By-laws of Sub as in effect immediately prior to the
Effective Time of the Merger shall be the By-laws of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
SECTION 1.6. Directors. The individuals who are the directors
of Sub immediately prior to the Effective Time of the Merger shall be the
directors of the Surviving Corporation until thereafter they cease to be
directors in accordance with the NGCL and the Articles of Incorporation and
By-laws of the Surviving Corporation.
-2-
<PAGE>
SECTION 1.7. Officers. The individuals who are the officers of
the Company immediately prior to the Effective Time of the Merger shall be the
officers of the Surviving Corporation until thereafter they cease to be officers
in accordance with the NGCL and the Articles of Incorporation and By-laws of the
Surviving Corporation.
SECTION 1.8. Additional Actions. If, at any time after the
Effective Time of the Merger, the Surviving Corporation shall consider or be
advised that any further deeds, assignments or assurances in law or any other
acts are necessary or desirable to (a) vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of the Company, or (b) otherwise
carry out the provisions of this Agreement, the Company shall be deemed to have
granted to the Surviving Corporation an irrevocable power of attorney to execute
and deliver all such deeds, assignments or assurances in law and to take all
acts necessary, proper or desirable to vest, perfect or confirm title to and
possession of such rights, properties or assets in the Surviving Corporation and
otherwise to carry out the provisions of this Agreement, and the officers and
directors of the Surviving Corporation are authorized in the name of the Company
or otherwise to take any and all such action.
SECTION 1.9. Plan of Arrangement. Contemporaneously with the
execution of this Agreement, Parent, Sub, the Company and Battle Mountain Canada
Ltd., an Ontario corporation and a subsidiary of the Company ("Canadian Co.")
shall execute and enter into the Canadian Arrangement Agreement under which the
Canadian Arrangement shall be effected at the Effective Time of the Merger
pursuant to the Canadian Arrangement Agreement. Pursuant to the terms of the
Canadian Arrangement Agreement, Parent may effect the Canadian Arrangement
through a Nova Scotia unlimited liability company to be formed by Parent as a
wholly owned subsidiary of Parent ("Canadian Sub").
ARTICLE II
Effect of the Merger and the Canadian Arrangement on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.1. Effect on Common Stock of the Company and Sub. As
of the Effective Time of the Merger, by virtue of the Merger and without any
action on the part of the holder of any shares of Company Common Stock or any
shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock.
Each share of Company Common Stock that is owned by the Company and each share
of Company Common Stock that is owned by Parent or Sub shall automatically be
cancelled and retired and shall cease to exist, and no Parent Common Stock or
other consideration shall be delivered in exchange therefor.
-3-
<PAGE>
(c) Conversion of Company Common Stock. Subject to Section
2.3(e), each issued and outstanding share of Company Common Stock (other than
shares to be cancelled in accordance with Section 2.1(b)) shall be converted
into the right to receive the Conversion Number of fully paid and nonassessable
shares of Parent Common Stock. As of the Effective Time of the Merger, all such
shares of Company Common Stock shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such shares of Company Common Stock shall
cease to have any rights with respect thereto, except the right to receive upon
the surrender of such certificates, certificates representing the shares of
Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock and any dividends to the extent provided in Section 2.3(c) to be issued or
paid in consideration therefor upon surrender of such certificate in accordance
with Section 2.3, without interest.
(d) Adjustment of Conversion Number. In the event that, prior
to the Effective Time of the Merger, Parent shall declare or set a record date
prior to the Effective Time of the Merger for a stock dividend or other
distribution payable in Parent Common Stock or securities convertible into
Parent Common Stock, or effect or set a record date prior to the Effective Time
of the Merger for a stock split, reclassification, combination or other change
with respect to Parent Common Stock, the Conversion Number shall be adjusted to
reflect such dividend, distribution, stock split, reclassification, combination
or other change.
SECTION 2.2. Effect on Capital Stock of Canadian Co. and
Canadian Sub. As of the effective time of the Canadian Arrangement (which shall
be simultaneous with the Effective Time of the Merger), the effect on the shares
of capital stock of Canadian Sub and Canadian Co. will be as provided for in
accordance with the Canadian Arrangement Agreement.
SECTION 2.3. Exchange of Certificates. (a) Exchange Agent.
Immediately following the Effective Time of the Merger, (i) Parent shall deposit
with ChaseMellon Shareholder Services LLC or such other bank or trust company as
may be designated by Parent and reasonably acceptable to the Company (the
"Exchange Agent"), for the benefit of the holders of shares of Company Common
Stock, and (ii) Parent (or at Parent's option, Canadian Sub) shall deposit with
the Exchange Agent for the benefit of holders of Canadian Co. Exchangeable
Shares, for exchange in accordance with this Article II, through the Exchange
Agent, certificates representing the shares of Parent Common Stock (such shares
of Parent Common Stock, together with any dividends or distributions with
respect thereto with a record date after the Effective Time of the Merger, the
"Exchange Fund") issuable pursuant to Section 2.1 and 2.2 in exchange for
outstanding shares of Company Common Stock and Canadian Co. Exchangeable Shares.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time of the Merger, the Exchange Agent shall mail to each
holder of record of a certificate or certificates that immediately prior to the
Effective Time of the Merger represented outstanding shares of Company Common
Stock or outstanding Canadian Co. Exchangeable Shares, other than shares of
Company Common Stock to be cancelled or retired in accordance with Section
2.1(b) and other than Canadian Co. Exchangeable Shares that are not to be
exchanged for shares of Parent Common Stock pursuant to the Canadian Arrangement
(the "Certificates") , (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent and shall be
-4-
<PAGE>
in such form and have such other provisions as Parent may reasonably specify)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock. Upon
surrender of a Certificate for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by Parent, together with such letter
of transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of whole
shares of Parent Common Stock which such holder has the right to receive
pursuant to the provisions of this Article II or the Canadian Arrangement
Agreement, and the Certificate so surrendered shall forthwith be cancelled. In
the event of a transfer of ownership of Company Common Stock or Canadian Co.
Exchangeable Shares that is not registered in the transfer records of the
Company or Canadian Co., a certificate representing the proper number of shares
of Parent Common Stock may be issued to a person other than the person in whose
name the Certificate so surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the person
requesting such payment shall pay any transfer or other taxes required by reason
of the issuance of shares of Parent Common Stock to a person other than the
registered holder of such Certificate or establish to the satisfaction of Parent
that such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.3, each Certificate shall be deemed at any time
after the Effective Time of the Merger to represent only the right to receive
upon such surrender the certificate representing the appropriate number of whole
shares of Parent Common Stock, cash in lieu of any fractional shares of Parent
Common Stock to the extent provided in Section 2.3(e) and any dividends to the
extent provided in Section 2.3(c). No interest will be paid or will accrue on
any cash payable in lieu of any fractional shares of Parent Common Stock. Any
amounts payable or deliverable pursuant to this Agreement shall be subject to
and made net of applicable withholding taxes to the extent such taxes are
imposed under applicable law as determined by Parent in its reasonable
discretion.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Parent Common Stock with a
record date after the Effective Time of the Merger shall be paid to the holder
of any unsurrendered Certificate with respect to the shares of Parent Common
Stock represented thereby, and no cash payment in lieu of fractional shares
shall be paid to any such holder pursuant to Section 2.3(e), until the surrender
of such Certificate in accordance with this Article II. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificate representing whole shares of Parent Common
Stock issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional share of
Parent Common Stock to which such holder is entitled pursuant to Section 2.3(e),
and the amount of dividends or other distributions with a record date after the
Effective Time of the Merger theretofore paid with respect to such whole shares
of Parent Common Stock, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time of
the Merger but prior to such surrender and a payment date subsequent to such
surrender payable with respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common Stock or
Canadian Co. Exchangeable Shares. All shares of Parent Common Stock issued upon
the surrender for exchange of Certificates in accordance with the terms of this
Article II (including any cash paid pursuant to Section 2.3(c) or 2.3(e)) shall
be deemed to have been issued (and paid) in full satis-
-5-
<PAGE>
faction of all rights pertaining to the shares of Company Common Stock or
Canadian Co. Exchangeable Shares theretofore represented by such Certificates,
and there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation or Canadian Co. of the shares of Company
Common Stock or Canadian Co. Exchangeable Shares, respectively, which were
outstanding immediately prior to the Effective Time of the Merger (other than
Canadian Co. Exchangeable Shares held by Parent, Canadian Co., Canadian Sub, the
Company or any wholly owned subsidiary of any of them or any of their
transferees). If, after the Effective Time of the Merger, Certificates are
presented to the Surviving Corporation, Canadian Co. or the Exchange Agent for
any reason, they shall be cancelled and exchanged as provided in this Article
II, except as otherwise provided by law. Certificates surrendered for exchange
by any person constituting an "affiliate" of the Company for purposes of Rule
145(c) under the Securities Act of 1933, as amended (together with the rules and
regulations thereunder, the "Securities Act"), shall not be exchanged until
Parent has received written undertakings from such person in the form attached
as Exhibit B to this Agreement.
(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests
shall not entitle the owner thereof to vote or to any rights of a stockholder of
Parent.
(ii) As promptly as practicable following the Effective Time
of the Merger, the Exchange Agent shall determine the excess of (A) the number
of shares of Parent Common Stock delivered to the Exchange Agent by Parent
pursuant to Section 2.3(a) over (B) the aggregate number of whole shares of
Parent Common Stock to be distributed to holders of the Certificates pursuant to
Section 2.3(b) (such excess, the "Excess Shares"). As soon as practicable after
the Effective Time of the Merger, the Exchange Agent, as agent for the holders
of the Certificates, shall sell the Excess Shares at the then-prevailing prices
on the New York Stock Exchange, Inc. (the "NYSE") all in the manner provided in
Section 2.3(e)(iii).
(iii) The sale of the Excess Shares by the Exchange Agent
shall be executed on the NYSE through one or more member firms of the NYSE and
shall be executed in round lots to the extent practicable. The proceeds from
such sale or sales available for distribution to the holders of Certificates
shall be reduced by the compensation payable to the Exchange Agent and the
expenses incurred by the Exchange Agent, in each case, in connection with such
sale or sales of the Excess Shares, including all related commissions, transfer
taxes and other out-of-pocket transaction costs. Until the net proceeds of such
sale or sales have been distributed to the holders of the Certificates, the
Exchange Agent shall hold such proceeds in trust for the holders of the
Certificates (the "Common Shares Trust"). The Exchange Agent shall determine the
portion of the Common Shares Trust to which each holder of a Certificate shall
be entitled, if any, by multiplying the amount of the aggregate net proceeds
comprising the Common Shares Trust by a fraction, the numerator of which is the
amount of the fractional share interest to which such holder of a Certificate is
entitled and the denominator of which is the aggregate amount of fractional
share interests to which all holders of the Certificates are entitled.
(iv) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Certificates in lieu of any
fractional share interests, the Exchange Agent
-6-
<PAGE>
shall make available such amounts, without interest, to such holders of
Certificates who have surrendered their Certificates in accordance with this
Article II.
(f) Termination of Exchange Fund and Common Shares Trust. Any
portion of the Exchange Fund and Common Shares Trust which remains undistributed
to the holders of Certificates for six months after the Effective Time of the
Merger shall be delivered to Parent, upon demand, and any holders of
Certificates who have not theretofore complied with this Article II shall
thereafter look only to Parent for payment of their claim for Parent Common
Stock, any cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions with respect to Parent Common Stock.
(g) No Liability. None of Parent, Sub, the Company or the
Exchange Agent shall be liable to any person in respect of any shares of Parent
Common Stock (or dividends or distributions with respect thereto) or cash from
the Exchange Fund or the Common Shares Trust delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificates shall not have been surrendered prior to seven years after the
Effective Time of the Merger (or immediately prior to such earlier date on which
any shares of Parent Common Stock, any cash in lieu of fractional shares of
Parent Common Stock or any dividends or distributions with respect to Parent
Common Stock in respect of such Certificate would otherwise escheat to or become
the property of any Governmental Entity), any such shares, cash, dividends or
distributions in respect of such Certificate shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
(h) Investment of Exchange Fund and Common Shares Trust. The
Exchange Agent shall invest any cash included in the Exchange Fund and Common
Shares Trust, as directed by Parent, on a daily basis. Any interest and other
income resulting from such investments shall be paid to Parent; provided that
any losses shall be solely for Parent's account.
SECTION 2.4. Assumption of Company Stock Options. (a) The
Company shall take all actions necessary so that at the Effective Time of the
Merger, all Company Stock Options that are then outstanding and unexercised
shall cease to represent a right to acquire shares of Company Common Stock or
Canadian Co. Exchangeable Shares and shall be converted automatically into
options to purchase shares of Parent Common Stock, and Parent shall assume each
such Company Stock Option subject to the terms of the Company Employee Stock
Plans or Canadian Co. Employee Stock Plans under which each such Company Stock
Option was issued; provided, however, that, from and after the Effective Time of
the Merger, (A) the number of shares of Parent Common Stock purchasable upon
exercise of such Company Stock Option shall be equal to the number of shares of
Company Common Stock or Canadian Co. Exchangeable Shares that were purchasable
under such Company Stock Option immediately prior to the Effective Time of the
Merger multiplied by the Conversion Number, rounding to the nearest whole share,
and (B) the per share exercise price under each such Company Stock Option shall
be adjusted by dividing the per share exercise price of each such Company Stock
Option by the Conversion Number, rounded to the nearest cent. Notwithstanding
the foregoing, the number of shares and the per share exercise price of each
Company Stock Option that is intended to be an "incentive stock option" (as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code")) shall be adjusted in accordance with the requirements of Section 424 of
-7-
<PAGE>
the Code. Similarly, the number of shares and the per share exercise price of
each Canadian Co. Stock Option or in respect of any other stock based award
granted under Canadian Co. Employee Stock Plans shall be adjusted in accordance
with subsection 7(1.4) of the Income Tax Act (Canada). Accordingly, with respect
to any incentive stock options, Canadian Co. Stock Options or stock based awards
granted under the Canadian Co. Employee Stock Plans, fractional shares shall be
rounded down to the nearest whole number of shares and where necessary the per
share exercise price shall be rounded up to the nearest cent.
(b) At or prior to the Effective Time of the Merger, Parent
shall reserve for issuance the number of shares of Parent Common Stock necessary
to satisfy Parent's obligations under this Section 2.4. Not later than 60 days
after the Closing Date, Parent shall file with the United States Securities and
Exchange Commission (the "SEC") a registration statement on Form S-8 (or other
appropriate form) under the Securities Act with respect to the shares of Parent
Common Stock subject to options to acquire Parent Common Stock issued pursuant
to this Section 2.4.
SECTION 2.5. Effect on Company Convertible Preferred Stock. At
the Effective Time of the Merger, by virtue of the Merger and without any action
on the part of any holder of any shares of $3.25 Convertible Preferred Stock of
the Company ("Company Convertible Preferred Stock"):
(a) Each share of Company Convertible Preferred Stock that is
owned by the Company or by Parent shall be cancelled and shall cease to exist,
and no stock of Parent or other consideration shall be delivered in exchange
therefor.
(b) Each share of Company Convertible Preferred Stock issued
and outstanding immediately prior to the Effective Time of the Merger (other
than shares to be cancelled under Section 2.5(a)) shall be converted,
automatically and without the requirement of any exchange of any certificate
representing such share, into one share of preferred stock of Parent to be
designated as the $3.25 Convertible Preferred Stock of Parent ("Parent
Convertible Preferred Stock") with the rights and preferences set forth in the
form of the Certificate of Designation attached as Exhibit D to this Agreement.
The terms of the Parent Convertible Preferred Stock shall be substantively
identical to the terms of the Company Convertible Preferred Stock, except for
changes required by applicable law and except that the number of shares of
Parent Common Stock into which each such share of Parent Convertible Preferred
Stock may be converted, under the terms thereof, shall be calculated based on an
initial Conversion Price (as defined in the Certificate of Designation of the
Company Convertible Preferred Stock) of $10.50 divided by the Conversion Number.
(c) All Company Convertible Preferred Stock converted into
Parent Convertible Preferred Stock pursuant to this Section 2.5 shall no longer
be outstanding and shall automatically be cancelled and shall cease to exist as
of the Effective Time of the Merger, and each certificate previously
representing any such Company Convertible Preferred Stock shall as of the
Effective Time of the Merger be deemed to represent as of the Effective Time of
the Merger the number of shares of Parent Convertible Preferred Stock equal to
the number of shares of Company Convertible Preferred Stock previously
represented by such certificate. At the request of any holder of a certificate
previously representing any such Company Convertible Preferred Stock, and upon
-8-
<PAGE>
surrender of such certificate with such other documents as Parent may reasonably
request, Parent will issue a new certificate representing a number of shares of
Parent Convertible Preferred Stock equal to the number of shares of Company
Convertible Preferred Stock previously represented by such certificate.
SECTION 2.6. Effect on Company Special Voting Stock. As of the
Effective Time of the Merger, by virtue of the Merger and without any action on
the part of the holder of any share or shares of special voting stock, par value
$0.10 per share ("Company Special Voting Stock") of the Company, each share of
Company Special Voting Stock shall automatically be cancelled and retired and
shall cease to exist, and no Parent Common Stock or other consideration shall be
delivered in exchange therefor.
SECTION 2.7. Convertible Notes. In connection with the Merger,
the Company shall take all actions required to be taken by it under the Fiscal
Agency Agreement, dated January 4, 1990, between the Company and Citibank, N.A.
(the "Convertible Notes Agreement"), prior to consummation of the Merger. In
addition, Parent shall, or shall cause the Surviving Corporation to, take all
actions required to be taken under the Convertible Notes Agreement following
consummation of the Merger.
ARTICLE III
Representations and Warranties
SECTION 3.1. Representations and Warranties of the Company.
The Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of the
Company and its subsidiaries (each a "Company Subsidiary") is a corporation,
partnership or other legal entity duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized and has the
requisite power and authority to carry on its business as now being conducted.
Each of the Company and each Company Subsidiary is duly qualified or licensed to
do business and is in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed (individually or in the aggregate) would
not (i) have a material adverse effect on the business, properties, assets,
liabilities, financial condition or results of operations of the Company and the
Company Subsidiaries, taken as a whole (other than as a result of or effects
relating directly to (A) general economic conditions or (B) changes in or
affecting the gold mining industry in general), or (ii) prevent the Company from
performing its obligations on a timely basis under this Agreement (a "Company
Material Adverse Effect"). The Company has made available to Parent complete and
correct copies of the Amended and Restated Articles of Incorporation and By-laws
of the Company and the certificates of incorporation and by-laws or comparable
organization documents of the Company Significant Subsidiaries, in each case, as
amended to the date of this Agreement. For purposes of this Agreement, a
"Company Significant Subsidiary" means any Company Subsidiary that constitutes a
significant subsidiary of the Company within the meaning of Rule 1-02 of
-9-
<PAGE>
Regulation S-X of the SEC. The Company is not in violation of any provision of
the Amended and Restated Articles of Incorporation or By-laws of the Company,
and no Company Subsidiary is in violation of any provisions of its certificate
of incorporation, by-laws or comparable organizational documents, except to the
extent that such violations would not, individually or in the aggregate, have a
Company Material Adverse Effect.
(b) Company Subsidiaries. Section 3.1(b) of the letter from
the Company, dated the date of this Agreement, addressed to Parent (the "Company
Disclosure Letter") lists each Company Subsidiary (other than joint ventures
that are immaterial to the current and contemplated operation of the Company)
and the ownership interest therein of the Company. All the outstanding shares of
capital stock of each Company Subsidiary have been validly issued and are fully
paid and nonassessable and, except as set forth in Section 3.1(b) of the Company
Disclosure Letter, are owned by the Company, by another subsidiary of the
Company or by the Company and another Company Subsidiary, free and clear of all
pledges, claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever (collectively, "Liens"). Except for the capital stock of
the Company Subsidiaries and except for the ownership interests set forth in
Section 3.1(b) of the Company Disclosure Letter, the Company does not own,
directly or indirectly, any capital stock or other ownership interest, with a
fair market value as of the date of this Agreement greater than $1,000,000, in
any person.
(c) Capital Structure.
(i) The authorized capital stock of the Company ("Company
Capital Stock") consists of (A) 500,000,000 shares of Company Common Stock, (B)
50,000,000 shares of preferred stock, par value $1.00 per share and (C) one
share of Company Special Voting Stock. Pursuant to a Resolution Establishing
Designation, Preferences and Rights of Series A Junior Participating Preferred
Stock, the Board of Directors of the Company created a series of 5,000,000
shares of preferred stock designated as "Series A Junior Participating Preferred
Stock," par value $1.00 per share ("Company Series A Preferred Stock"), which
shares are issuable in connection with the rights to purchase shares of Company
Series A Preferred Stock (the "Company Rights") that were issued pursuant to the
Rights Agreement, dated as of November 10, 1988, as amended and restated as of
July 19, 1996, as further amended effective November 10, 1998, between the
Company and The Bank of New York, as Rights Agent (the "Company Rights
Agreement"). At the close of business on June 20, 2000: (A) 131,682,988 shares
of Company Common Stock were outstanding, 2,299,980 shares of Company
Convertible Preferred Stock were outstanding and one share of Company Special
Voting Stock was outstanding, all of which were validly issued, fully paid and
nonassessable, and no shares of Company Series A Preferred Stock, or of any
other series of preferred stock of the Company, were outstanding; (B) no shares
of Company Common Stock were held by the Company in its treasury; (C) 6,122,019
shares of Company Common Stock were issuable upon the exercise of outstanding
employee or outside director stock options (together with the Canadian Co.
Common Stock Options, the "Company Stock Options") and other stock-based awards
that were granted pursuant to the Company's employee and director stock plans
set forth in Section 3.1(c) of the Company Disclosure Letter (the "Company
Employee Stock Plans"); (D) 148,194,939 shares of Company Common Stock were
issuable upon conversion of Canadian Co. Exchangeable Shares; (E) 10,952,505
shares of Company Common Stock were issuable upon conversion of the outstanding
shares of Company Convertible Preferred Stock; and (F) 5,000,000 shares of
-10-
<PAGE>
Company Series A Preferred Stock were reserved for issuance in connection with
the Company Rights. The authorized capital stock of the Canadian Co. (the
"Canadian Capital Stock") consists of (A) an unlimited number of common shares
of Canadian Co., (B) an unlimited number of Canadian Co. Exchangeable Shares,
(C) an unlimited number of subordinate shares and (D) an unlimited number of
preferred shares. At the close of business on June 20, 2000: (A) 100 Canadian
Co. common shares were outstanding, (B) 148,194,939 Canadian Co. Exchangeable
Shares were outstanding, (C) 907,700 Canadian Co. Exchangeable Shares were
issuable upon the exercise of outstanding employee or outside director stock
options (the "Canadian Co. Stock Options") and other stock-based awards that
were granted pursuant to the Canadian Co.'s employees and director stock plans
set forth in Section 3.1(c) of the Company Disclosure Letter (the "Canadian Co.
Employee Stock Plans"), (D) 2,500,000 Canadian Co. Exchangeable Shares were
reserved for issuance in connection with the rights to purchase Canadian Co.
Exchangeable Shares (the "Canadian Co. Rights") that were issued pursuant to the
Rights Agreement, dated as of July 19, 1996, as amended effective November 10,
1998, between Canadian Co. and CIBC Mellon Trust Company (the "Canadian Co.
Rights Agreement"), (E) no subordinate shares were outstanding and (F) no
preferred shares were outstanding. Except as set forth above or in Section
3.1(c) of the Company Disclosure Letter, at the close of business on June 20,
2000, (A) no shares of capital stock or other voting securities of the Company
were issued, reserved for issuance or outstanding and (B) no shares of capital
stock or other voting securities of the Canadian Co. were issued, reserved for
issuance or outstanding. Except as set forth in Section 3.1(c) of the Company
Disclosure Letter, there are not any bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of the Company must vote. Except for the 6% Convertible
Subordinated Debentures due 2005 of the Company (the "Convertible Notes") or as
set forth above and except as set forth in Section 3.1(c) of the Company
Disclosure Letter, as of the date of this Agreement, there are not any options,
warrants, puts, calls, rights, commitments, agreements, arrangements or
undertakings of any kind (collectively, "Options") to which the Company or any
Company Subsidiary is a party or by which any of them is bound relating to the
issued or unissued capital stock of the Company or any Company Subsidiary, or
obligating the Company or any Company Subsidiary to issue, transfer, grant, sell
or pay for or repurchase any shares of capital stock or other equity interests
in, or securities convertible or exchangeable for any capital stock or other
equity interests in, the Company or any Company Subsidiary or obligating the
Company or any Company Subsidiary to issue, grant, extend or enter into any such
Options. All shares of Company Capital Stock that are subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the instrument
pursuant to which they are issuable, will be duly authorized, validly issued,
fully paid and nonassessable. The Company has previously provided Parent with a
schedule setting forth the names of, and the number of shares of each class
(including the number of shares issuable upon exercise of Company Stock Options
and the exercise price and vesting schedule with respect thereto) and the number
of options held by, all holders of Company Stock Options, in each case as of the
date reflected in such schedules. Section 3.1(c) of the Company Disclosure
Letter sets forth the average exercise price for outstanding Company Stock
Options as of the close of business on June 20, 2000. Other than 49,972,225
Canadian Co. Exchangeable Shares owned by the Company and 1000 Canadian Co.
Exchangeable Shares owned by Canadian Co., neither the Company nor any Company
Subsidiary owns any Canadian Co. Exchangeable Shares, as of June 20, 2000, and
any Canadian Co. Exchangeable Shares acquired by the Company or any Company
Subsidiary after such date shall be acquired and held by the Company (except to
-11-
<PAGE>
the extent otherwise required pursuant to Section 6.2(2) or 7.2(2) of the
provisions of the Canadian Co. Exchangeable Shares).
(ii) The issuance and sale of all of the shares of capital
stock described in this Section 3.1(c) have been in compliance in all material
respects with applicable securities laws. Except in respect of the Canadian Co.
Exchangeable Shares or as set forth in Section 3.1(c) of the Company Disclosure
Letter, as of the date of this Agreement, there are not any outstanding
contractual obligations or other requirements of the Company or any Company
Subsidiary to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company or any Company Subsidiary, or provide a guarantee on behalf
of, make any capital expenditure for, make any capital contribution to or make
any investment (in the form of a loan, capital contribution or otherwise) in,
any Company Subsidiary or any other person. Except for registration rights on
Company Common Stock issuable upon the conversion of Company Convertible
Preferred Stock or the Convertible Notes or upon the exchange of Canadian Co.
Exchangeable Shares or as set forth in Section 3.1(c) of the Company Disclosure
Letter, the Company has not agreed to register any securities under the
Securities Act or under any state securities law or granted registration rights
to any person or entity; copies of all such agreements have previously been
provided to Parent.
(d) Authority; Noncontravention. The Company has all requisite
corporate power and authority to enter into this Agreement and, subject to (i)
the Company Stockholder Approval, and (ii) the Preferred Stockholder Approval,
to consummate the transactions contemplated by this Agreement, and Canadian Co.
has all requisite corporate power to enter into the Canadian Arrangement
Agreement and, subject to (i) Canadian Shareholder Approval and (ii) the
approval of the Ontario Superior Court of Justice, to consummate the
transactions contemplated by the Canadian Arrangement Agreement. The Board of
Directors of the Company has unanimously approved this Agreement and the
transactions contemplated by this Agreement, and has resolved to recommend to
the Company's stockholders that they give the Company Stockholder Approval and
to the holders of the Company Convertible Preferred Stock that they give the
Preferred Stockholder Approval. The Board of Directors of the Canadian Co. has
unanimously approved the Canadian Arrangement and the transactions contemplated
by the Canadian Arrangement Agreement, and has resolved to recommend to the
holders of the Canadian Co. Exchangeable Shares that they give the Canadian
Shareholder Approval. The Company is the sole holder of all Common Shares of
Canadian Co. and has consented to and approved the Canadian Arrangement
Agreement and the transactions contemplated by the Canadian Arrangement
Agreement. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action on the part of the
Company, subject to the Company Stockholder Approval and the Preferred
Stockholder Approval. This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms. Except as set
forth in Section 3.1(d) of the Company Disclosure Letter, the execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement or the Canadian Arrangement Agreement and
compliance with the provisions of this Agreement and the Canadian Arrangement
Agreement will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of consent, termination, purchase, cancellation or acceleration of any
obligation or to loss of any property, rights or benefits under, or result in
-12-
<PAGE>
the imposition of any additional obligation under, or result in the creation of
any Lien upon any of the properties or assets of the Company or any Company
Subsidiary under, (i) the Restated Articles of Incorporation or By-laws of the
Company or the comparable organizational documents of any Company Subsidiary,
(ii) any contract, instrument, permit, concession, franchise, license, loan or
credit agreement, note, bond, mortgage, indenture, lease or other property
agreement, partnership or joint venture agreement or other legally binding
agreement, whether oral or written (a "Contract"), applicable to the Company or
any Company Subsidiary or their respective properties or assets or (iii) subject
to the governmental filings and other matters referred to in the following
sentence, any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or any Company Subsidiary or their
respective properties or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not have a Company Material Adverse
Effect. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Federal, state or local government or any court,
administrative agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity"), is required by or with respect to
the Company or any Company Subsidiary in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the transactions contemplated by this Agreement, except for (i) the filing with
the SEC of (A) a proxy statement relating to the meetings of the Company's
stockholders to be held in connection with the Merger and the transactions
contemplated by this Agreement (as amended or supplemented from time to time,
the "Proxy Statement"), and (B) such reports under Section 12 or 13(a) of the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations thereunder the "Exchange Act"), as may be required in connection
with this Agreement and the transactions contemplated by this Agreement, (ii)
the filing of the Articles of Merger with the Nevada Secretary of State and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, (iii) filings with Canadian provincial
regulatory authorities in connection with the Canadian Arrangement similar to
those referred to in clauses (i) and (ii) above, (iv) those that may be required
solely by reason of Parent's or Sub's (as opposed to any other third party's)
participation in the Merger and the other transactions contemplated by this
Agreement, (v) the necessary filings, notices, approvals, confirmations,
consents, declarations and/or decisions under antitrust laws, competition or
other similar rules, regulations and judicial doctrines of any applicable
jurisdictions, and (vi) such other consents, approvals, orders, authorizations,
registrations, declarations and filings, including under applicable
Environmental Laws, (A) as may be required under the laws of any foreign country
in which the Company or any Company Subsidiary conducts any business or owns any
property or assets, (B) as are set forth in Section 3.1(d) of the Company
Disclosure Letter or (C) that, if not obtained or made, would not, individually
or in the aggregate, have a Company Material Adverse Effect. Except as set forth
in Section 3.1(d) of the Company Disclosure Letter, the Company and the Company
Subsidiaries possess all certificates, franchises, licenses, permits,
authorizations and approvals issued to or granted by Governmental Entities
(collectively, "Permits"), including pursuant to any Environmental Law,
necessary to conduct their business as such business is currently conducted.
Except as set forth in Section 3.1(d) of the Company Disclosure Letter, (i) all
such Permits are validly held by the Company or the Company Subsidiaries, and
the Company and the Company Subsidiaries are in compliance in all respects with
all terms and conditions thereof, except for such instances where the failure to
validly hold such Permits or the failure to have complied with such Permits has
not, and is not reasonably expected
-13-
<PAGE>
to have, a Company Material Adverse Effect, (ii) none of such Permits will be
subject to suspension, modification, revocation or nonrenewal as a result of the
execution and delivery of this Agreement or the consummation of the Merger,
other than such Permits the suspension, modification or nonrenewal of which,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect, and (iii) since January 1,
1997, neither the Company nor any Company Subsidiary has received any written
warning, notice, notice of violation or probable violation or notice of
revocation, from or on behalf of any Governmental Entity, alleging (A) any
violation of any Permit significant to the conduct of the business of the
Company or any material portion thereof or (B) that the Company or any Company
Subsidiary requires any Permit required for its business, as such business is
currently conducted, that is not currently held by it; except with respect to
this clause (iii) as previously made available to Parent, provided that copies
of such warnings and notices not of a material nature to the ongoing and
contemplated operations of the Company are provided within one month of the date
hereof.
(e) SEC Documents; Canadian Regulatory Documents; Undisclosed
Liabilities. The Company has filed all required reports, schedules, forms,
statements and other documents with the SEC since January 1, 1997 (the "Company
SEC Documents"). As of its date, each Company SEC Document (as amended prior to
the date hereof) complied in all material respects with the requirements of the
Securities Act, or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Company SEC
Documents. None of the Company SEC Documents, as of their respective dates (as
amended prior to the date hereof) contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except to the extent that such
statements have been modified or superseded by a later-filed Company SEC
Document. Canadian Co. has filed all required reports, schedules, forms,
statements and other documents (collectively, the "Canadian Securities
Documents") with Canadian provincial regulatory authorities since January 1,
1997 in compliance with and subject to the exemptive relief afforded to Canadian
Co. by such Canadian provincial securities regulatory authorities (the
"Relief"). As of its date, subject to the Relief, each Canadian Securities
Document complied in all material respects with the requirements of securities
legislation in each applicable province and the rules and regulations
promulgated thereunder. None of the Canadian Securities Documents, as of their
respective dates, contained any untrue statement of material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances in which they were
made, not misleading, except to the extent that such statements have been
modified or superseded by a later-filed Canadian Securities Document. The
consolidated financial statements of the Company included in the Company SEC
Documents (as amended prior to the date hereof) and Canadian Securities
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC and
(where applicable) the relevant Canadian provincial securities regulatory
authorities with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly presented the consolidated financial
position of the Company as of the dates thereof and the consolidated results of
its operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments). Except (i) as
and to the extent disclosed, reflected or reserved against on the balance sheet
or the notes thereto of the
-14-
<PAGE>
Company as of December 31, 1999 included in the Filed Company SEC Documents,
(ii) as incurred after the date thereof in the ordinary course of business
consistent with prior practice and not prohibited by this Agreement or (iii) as
set forth in Section 3.1(e) of the Company Disclosure Letter, the Company does
not have any liabilities or obligations of any nature, whether known or unknown,
absolute, accrued, contingent or otherwise and whether due or to become due,
that, individually or in the aggregate, have had or would reasonably be expected
to have a Company Material Adverse Effect. Except as set forth in Section 3.1(e)
of the Company Disclosure Letter, none of the Company Subsidiaries is subject to
the informational reporting requirements of the Exchange Act or required to file
any form, report or other document with the SEC, the NYSE, any other stock
exchange or any other comparable Governmental Entities.
(f) Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in (i)
the registration statement on Form S-4 filed with the SEC by Parent in
connection with the issuance of Parent Common Stock in the Merger (the "Form
S-4") will, at the time any amendment or supplement to the Form S-4 is filed
with the SEC, or at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, (ii) the Proxy Statement will, at the date the Proxy Statement
is first mailed to the Company's stockholders or at the time of the Company's
Stockholders' Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading, and (iii) the management information circular of the
Canadian Co. relating to the Canadian Arrangement (the "Canadian Proxy
Statement") will, at the date the Canadian Proxy Statement is first mailed to
the Canadian Co.'s shareholders or at the time of the meeting of such
shareholders at which the Canadian Arrangement is considered, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Proxy Statement
will comply as to form in all material respects with the requirements of the
Exchange Act and the Canadian Proxy Statement will comply as to form in all
material respects with applicable Canadian provincial corporate and securities
legislation and the regulations, rules and published policy statements
promulgated thereunder (subject, as applicable, to the Relief), except that no
representation or warranty is made by the Company or the Canadian Co. with
respect to statements made or incorporated by reference therein based on
information supplied by Parent or Sub for inclusion or incorporation by
reference in the Proxy Statement or the Canadian Proxy Statement.
(g) Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Documents filed and publicly available prior to the date of
this Agreement (the "Filed Company SEC Documents"), since December 31, 1999 the
Company has conducted its business only in the ordinary course, and:
(i) since December 31, 1999, there has not been any event,
change, effect or development that, individually or in the aggregate, has had or
would reasonably be expected to have a Company Material Adverse Effect;
-15-
<PAGE>
(ii) since December 31, 1999 through the date of this
Agreement, there has not been, except for regular quarterly Company Convertible
Preferred Stock dividends not in excess of $.8125 per share, with customary
record and payment dates, any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with respect
to any shares of Company Capital Stock;
(iii) since December 31, 1999 through the date of this
Agreement, there has not been, except as provided for in this Agreement, any
split, combination or reclassification of any Company Capital Stock or, except
for issuances of Company Common Stock (A) in exchange for Canadian Co.
Exchangeable Shares, (B) upon conversion of Company Convertible Preferred Stock
or (C) upon the exercise of Company Stock Options, in each case, pursuant to the
terms thereof, any issuance or the authorization of any issuance of any other
securities in exchange or in substitution for shares of Company Capital Stock;
(iv) since December 31, 1999 through the date of this
Agreement, there has not been, except as disclosed in Section 3.1(g) of the
Company Disclosure Letter, (A) any granting by the Company or any Company
Subsidiary to any officer of the Company or any Company Subsidiary of any
increase in compensation, except in the ordinary course of business consistent
with past practice as was required under employment agreements in effect as of
the date of the most recent audited financial statements included in the Filed
Company SEC Documents, (B) any granting by the Company or any Company Subsidiary
to any such officer of any increase in severance or termination pay, except as
was required under any employment, severance or termination agreements in effect
as of the date of the most recent audited financial statements included in the
Filed Company SEC Documents or (C) any entry by the Company or any Company
Subsidiary into any employment, severance or termination agreement with any such
officer;
(v) since December 31, 1999, there has not been any change in
accounting methods, principles or practices by the Company or any Company
Subsidiary materially affecting its assets, liabilities or business, except
insofar as may have been required by a change in GAAP or as set forth in Section
3.1(g) of the Company Disclosure Letter; and
(vi) since December 31, 1999 through the date of this
Agreement, neither the Company nor any Company Subsidiary has engaged in any
action which, if done after the date of this Agreement, would violate Section
4.1(a), except as set forth in Section 3.1(g) of the Company Disclosure Letter.
(h) Litigation. Except as disclosed in Section 3.1(h) of the
Company Disclosure Letter, there is no suit, action or proceeding pending or, to
the knowledge of the Company, threatened against the Company or any Company
Subsidiary that, individually or in the aggregate, would reasonably be expected
to have a Company Material Adverse Effect, and there is not any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company or any Company Subsidiary having, or that would
be reasonably expected to have, any Company Material Adverse Effect. As of the
date of this Agreement, except as disclosed in Section 3.1(h) of the Company
Disclosure Letter, there is no suit, action or proceeding pending, or, to the
knowledge of the Company, threatened, against the Company or any Company
Subsidiary that, individually or in the aggregate, would reasonably be expected
to
-16-
<PAGE>
prevent or delay in any material respect the consummation of the Merger or the
transactions contemplated by this Agreement.
(i) Employee Benefit Plans. (i) For purposes of this
Agreement, the following terms have the definitions given below:
"Controlled Group Liability" means any and all liabilities (i)
under Title IV of ERISA, (ii) under Section 302 of ERISA, (iii) under
Sections 412 and 4971 of the Code, (iv) as a result of a failure to
comply with the continuation coverage requirements of Section 601 et
seq. of ERISA and Section 4980B of the Code, and (v) under
corresponding or similar provisions of foreign laws or regulations,
other than such liabilities that arise solely out of, or relate solely
to, the Employee Benefit Plans listed in Section 3.1(i) of the Company
Disclosure Letter.
"Employee Benefit Plan" means any employee benefit plan,
program, policy, practices, or other arrangement providing benefits to
any current or former employee, officer or director of the Company or
any of the Company Subsidiaries or any beneficiary or dependent thereof
that is sponsored or maintained by the Company or any of the Company
Subsidiaries or to which the Company or any of the Company Subsidiaries
contributes or is obligated to contribute, including without limitation
any employee welfare benefit plan within the meaning of Section 3(1) of
ERISA, any employee pension benefit plan within the meaning of Section
3(2) of ERISA (whether or not such plan is subject to ERISA) and any
nonqualified retirement, excess benefits, bonus, incentive, deferred
compensation, vacation, stock purchase, stock option, severance,
employment, change of control or fringe benefit plan, program or
agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended and the rules and regulations thereunder.
"ERISA Affiliate" means, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a
group described in Section 414(b), (c), (m) or (o) of the Code or
Section 4001(b)(1) of ERISA that includes the first entity, trade or
business, or that is a member of the same "controlled group" as the
first entity, trade or business pursuant to Section 4001(a)(14) of
ERISA.
"Material Employment Agreement" means a contract, offer letter
or agreement of the Company or any Company Subsidiary with or addressed
to any individual who is rendering or has rendered services thereto as
an employee or consultant pursuant to which the Company or any Company
Subsidiary has any actual or contingent liability or obligation to
provide compensation and/or benefits in consideration for past, present
or future services (including without limitation severance pay or
benefits) in an amount or having a value in excess of $150,000 per year
or $300,000 in the aggregate.
"Multiemployer Plan" means any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA.
"Plan" means any Employee Benefit Plan other than a
Multiemployer Plan.
-17-
<PAGE>
"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer
Plan, as those terms are defined in Part I of Subtitle E of Title IV of
ERISA.
(ii) Section 3.1(i) of the Company Disclosure Letter includes
a complete list of all Employee Benefit Plans and all Material Employment
Agreements.
(iii) With respect to each Plan, the Company has delivered or
made available to Parent a true, correct and complete copy of: (A) each writing
constituting a part of such Plan, including without limitation all plan
documents, material employee communications, benefit schedules, trust
agreements, and insurance contracts and other funding vehicles; (B) the most
recent Annual Report (Form 5500 Series) and accompanying schedule, if any; (C)
the current summary plan description and any material modifications thereto, if
any (in each case, whether or not required to be furnished under ERISA); (D) the
most recent annual financial report, if any; (E) the most recent actuarial
report, if any; and (F) the most recent determination letter from the Internal
Revenue Service, if any. The Company has delivered or made available to Parent a
true, complete and correct copy of each Material Employment Agreement. Except as
specifically provided in the foregoing documents delivered or made available to
Parent, there are no amendments to any Plan or Material Employment Agreement
that have been adopted or approved nor has the Company or any of the Company
Subsidiaries undertaken to make any such amendments or to adopt or approve any
new Plan or Material Employment Agreement.
(iv) Section 3.1(i) of the Company Disclosure Letter
identifies each Plan that is intended to be a "qualified plan" within the
meaning of Section 401(a) of the Code ("Qualified Plans"). The Internal Revenue
Service has issued a favorable determination letter with respect to each
Qualified Plan and the related trust that has not been revoked, and, to the
Company's knowledge, there are no circumstances and no events have occurred that
would reasonably be expected to adversely affect the qualified status of any
Qualified Plan or the related trust. Section 3.1(i) of the Company Disclosure
Letter identifies each Plan which is intended to meet the requirements of
Section 501(c)(9) of the Code, and each such plan meets such requirements and
provides no disqualified benefits (as such term is defined in Section 4976(b) of
the Code).
(v) Except as set forth in Section 3.1(i)(v) of the Company
Disclosure Letter, all contributions required to be made to any Plan by
applicable law or regulation or by any plan document or other contractual
undertaking, and all premiums due or payable with respect to insurance policies
funding any Plan, for any period through the date hereof have been timely made
or paid in full or, to the extent not required to be made or paid on or before
the date hereof, have been fully reflected on the financial statements included
in the Filed Company SEC Documents and there are no grantor trusts providing for
funding of amounts payable pursuant to any Plans and/or Material Employment
Agreements. Each Employee Benefit Plan that is an employee welfare benefit plan
under Section 3(1) of ERISA is either (A) funded through an insurance company
contract (and is not a "welfare benefit fund" with the meaning of Section 419 of
the Code) or (B) unfunded.
(vi) With respect to each Employee Benefit Plan, the Company
and the Company Subsidiaries have complied, and are now in compliance, in all
material respects, with all provisions of ERISA, the Code and all laws and
regulations applicable to such Employee Benefit
-18-
<PAGE>
Plans and each Employee Benefit Plan has been administered in all material
respects in accordance with its terms. There is not now, nor, to the Company's
knowledge, do any circumstances exist that could give rise to, any requirement
for the posting of security with respect to a Plan or the imposition of any lien
on the assets of the Company or any of the Company Subsidiaries under ERISA or
the Code.
(vii) With respect to each Plan that is subject to Title IV or
Section 302 of ERISA or Section 412 or 4971 of the Code: (A) there does not
exist any accumulated funding deficiency within the meaning of Section 412 of
the Code or Section 302 of ERISA, whether or not waived; (B) no reportable event
within the meaning of Section 4043(c) of ERISA for which the 30-day notice
requirement has not been waived has occurred, and the consummation of the
transactions contemplated by this agreement will not result in the occurrence of
any such reportable event; (C) all premiums to the Pension Benefit Guaranty
Corporation (the "PBGC") have been timely paid in full; (D) no liability (other
than for premiums to the PBGC) under Title IV of ERISA has been or is expected
to be incurred by the Company or any of the Company Subsidiaries; and (E) the
PBGC has not instituted proceedings to terminate any such Plan and, to the
Company's knowledge, no condition exists that presents a risk that such
proceedings will be instituted or which would constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any such Plan.
(viii) Except as set forth in Section 3.1(i)(viii) of the
Company Disclosure Letter: (A) no Employee Benefit Plan is a Multiemployer Plan
or a plan that has two or more contributing sponsors at least two of whom are
not under common control, within the meaning of Section 4063 of ERISA (a
"Multiple Employer Plan"); (B) none of the Company and the Company Subsidiaries
nor any of their respective ERISA Affiliates has, at any time during the last
six years, contributed to or been obligated to contribute to any Multiemployer
Plan or Multiple Employer Plan; and (C) none of the Company and the Company
Subsidiaries nor any ERISA Affiliates has incurred any Withdrawal Liability that
has not been satisfied in full. With respect to each Plan that is a
Multiemployer Plan, except as set forth in Section 3.1(i)(viii) of the Company
Disclosure Letter: (A) if the Company or any of the Company Subsidiaries or any
of their respective ERISA Affiliates were to experience a withdrawal or partial
withdrawal from such plan, no Withdrawal Liability would be incurred; and (B)
none of the Company and the Company Subsidiaries, nor any of their respective
ERISA Affiliates has received any notification, nor has any reason to believe,
that any such Plan is in reorganization, has been terminated, is insolvent, or
may reasonably be expected to be in reorganization, to be insolvent, or to be
terminated.
(ix) There does not now exist, nor, to the Company's
knowledge, do any circumstances exist that would reasonably be expected to
result in, any Controlled Group Liability that would be a material liability of
the Company or any of the Company Subsidiaries following the Closing. Without
limiting the generality of the foregoing, neither Company nor any of the Company
Subsidiaries, nor any of their respective ERISA Affiliates, has engaged in any
transaction described in Section 4069 or Section 4204 or 4212 of ERISA.
(x) Section 3.1(i) of the Company Disclosure Letter sets forth
(A) a complete list of each Employee Benefit Plan or Material Employment
Agreement under which the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby could (either alone or in
conjunction with any other event) result in, cause the accelerated
-19-
<PAGE>
vesting, funding or delivery of, or increase the amount or value of, any payment
or benefit to any employee, officer or director of the Company or any of the
Company Subsidiaries, or could limit the right of the Company or any of the
Company Subsidiaries to amend, merge, terminate or receive a reversion of assets
from any Employee Benefit Plan or related trust or any Material Employment
Agreement or related trust, and (B) the maximum amount of the "excess parachute
payments" within the meaning of Section 280G of the Code that could become
payable by the Company and the Company Subsidiaries in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
(xi) None of the Company and the Company Subsidiaries nor, to
the Company's knowledge, any other person, including any fiduciary, has engaged
in any "prohibited transaction" (as defined in Section 4975 of the Code or
Section 406 of ERISA), which would reasonably be expected to subject any of the
Employee Benefit Plans or their related trusts, the Company, any of the Company
Subsidiaries or any person that the Company or any of the Company Subsidiaries
has an obligation to indemnify, to any material tax or penalty imposed under
Section 4975 of the Code or Section 502 of ERISA.
(xii) Except as set forth in Section 3.1(i)(xii) of the
Company Disclosure Letter, there are no pending or threatened claims (other than
claims for benefits in the ordinary course), lawsuits or arbitrations which have
been asserted or instituted, and to the Company's knowledge, no set of
circumstances exists which would reasonably be expected to give rise to a claim
or lawsuit, against the Plans, any fiduciaries thereof with respect to their
duties to the Plans or the assets of any of the trusts under any of the Plans
which would reasonably be expected to result in any material liability of the
Company or any of the Company Subsidiaries to the PBGC, the Department of
Treasury, the Department of Labor, any Multiemployer Plan, any Plan or any
participant in a Plan.
(xiii) The Company, the Company Subsidiaries and each member
of their respective business enterprises has complied, in all material respects,
with the Worker Adjustment and Retraining Notification Act and all similar
state, local and foreign laws.
(xiv) All Employee Benefit Plans subject to the laws of any
jurisdiction outside of the United States (A) have been maintained in accordance
with all applicable requirements in all material respects, (B) if they are
intended to qualify for special tax treatment, meet all requirements for such
treatment, and (C) if they are intended to be funded and/or book-reserved, are
fully funded and/or book-reserved, as appropriate, based upon reasonable
actuarial assumptions.
(xv) Each individual who renders services to the Company or
any of the Company Subsidiaries who is classified by the Company or such Company
Subsidiary, as applicable, as having the status of an independent contractor or
other non-employee status for any purpose (including for purposes of taxation
and tax reporting and under Employee Benefit Plans) is properly so
characterized.
(xvi) No deferral elections under the Company's 2000 Deferred
Income Plan are in effect.
-20-
<PAGE>
(xvii) Except as set forth in Section 3.1(i) of the Company
Disclosure Letter, no person will have any right, as a result of or in
connection with the consummation of the transactions contemplated by this
Agreement, to receive or elect to receive any cash payment with respect to all
or any portion of any grant, award or other right under any Employee Benefit
Plan or Material Employment Agreement that would, absent the transactions
contemplated hereby, be payable in the form of Company Common Stock or with
respect to any Company Stock Option.
(j) Voting Requirements. The approval and adoption of this
Agreement by the holders of a majority of the votes in respect of the
outstanding shares of Company Common Stock and Company Special Voting Stock,
voting together as a single class (the "Company Stockholder Approval") the
approval and adoption of this Agreement by the holders of the number of votes
required by law in respect of the outstanding shares of Company Convertible
Preferred Stock, voting separately (the "Preferred Stockholder Approval") so
long as the Company Convertible Preferred Stock remains outstanding, and the
approval of the Canadian Arrangement by not less than 66 2/3% of the votes cast
in respect thereof by the holders of Canadian Co. Common Shares and Canadian Co.
Exchangeable Shares (other than shares of Canadian Co. Exchangeable Shares held
by the Company or any Company Subsidiary), voting separately (the "Canadian
Shareholder Approval"), are the only votes of the holders of any class or series
of Company Capital Stock or Canadian Capital Stock necessary to approve this
Agreement and the transactions contemplated by this Agreement. For purposes of
the Company Stockholder Approval, (i) each outstanding share of Company Common
Stock is entitled to one vote and (ii) the outstanding share of Company Special
Voting Stock is entitled to a number of votes equal to the number of outstanding
Canadian Co. Exchangeable Shares. The votes attributable to the Company Special
Voting Stock are required to be cast in accordance with the instructions of the
holders of the Canadian Co. Exchangeable Shares.
(k) Brokers; Schedule of Fees and Expenses. Except as set
forth in Section 3.1(k) of the Company Disclosure Letter, no broker, investment
banker, financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The Company has made available to Parent true and
complete copies of all agreements that are referred to in Section 3.1(k) of the
Company Disclosure Letter and all indemnification and other agreements related
to the engagement of the persons so listed.
(l) Opinion of Financial Advisor. The Company has received the
opinion of CIBC World Markets Corp., dated the date of this Agreement, to the
effect that, as of such date, the Conversion Number is fair, from a financial
point of view, to the holders of the Company Common Stock and Canadian Co.
Exchangeable Shares, a copy of the written opinion of which will be promptly
delivered to Parent.
(m) Taxes. (i) The Company and the Company Subsidiaries have
duly filed or caused to be filed all material federal, state, local and foreign
income, franchise, excise, real and personal property, Nevada net proceeds of
mine and other Tax Returns (including, but not limited to, those filed on a
consolidated, combined or unitary basis) required to have been filed by the
Company or the Company Subsidiaries prior to the date hereof. All of the
foregoing Tax Returns are true and correct (except for such inaccuracies that
are, individually or in the aggre-
-21-
<PAGE>
gate, immaterial), and the Company and the Company Subsidiaries have, within the
time and manner prescribed by applicable law, paid or, prior to the Effective
Time of the Merger, will pay all Taxes, interest and penalties required to be
paid in respect of the periods covered by such Tax Returns or otherwise due to
any federal, state, foreign, local or other taxing authority other than any
Taxes the validity of which is being contested in good faith by appropriate
proceedings and with respect to which adequate reserves in accordance with GAAP
have been provided on the books of the Company. Except as set forth in Section
3.1(m) of the Company Disclosure Letter, neither the Company nor any of the
Company Subsidiaries have any material liability for any Taxes in excess of the
amounts so paid or reserves so established and neither the Company nor any of
the Company Subsidiaries is delinquent in the payment of any material Tax.
Except as set forth in Section 3.1(m) of the Company Disclosure Letter, neither
the Company nor any Company Subsidiary has requested or filed any document
having the effect of causing any extension of time within which to file any Tax
Returns in respect of any fiscal year which have not since been filed. No
deficiencies for any material amount of Tax have been proposed, asserted or
assessed in writing (tentatively or definitely), in each case, by any taxing
authority, against the Company or any of the Company Subsidiaries for which
there are not adequate reserves. Except as set forth in Section 3.1(m) of the
Company Disclosure Letter, neither the Company nor any of the Company
Subsidiaries is the subject of any currently ongoing Tax audit except for those
that are, individually or in the aggregate, immaterial. Except as set forth in
Section 3.1(m) of the Company Disclosure Letter, there are no pending requests
for waivers of the time to assess any material Tax, other than those made in the
ordinary course and for which payment has been made or there are adequate
reserves. Except as set forth in Section 3.1(m) of the Company Disclosure
Letter, neither the Company nor any of the Company Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency. There are no liens with respect
to Taxes upon any of the properties or assets, real or personal, tangible or
intangible of the Company or any of the Company Subsidiaries (other than liens
for Taxes not yet due). To the knowledge of Company, no claim has ever been made
in writing by an authority in a jurisdiction where the Company and the Company
Subsidiaries do not file Tax Returns that the Company or any of the Company
Subsidiaries is or may be subject to taxation by that jurisdiction. Neither the
Company nor any of the Company Subsidiaries has filed an election under Section
341(f) of the Code to be treated as a consenting corporation.
(ii) Except as set forth in Section 3.1(m) of the Company
Disclosure Letter, neither the Company nor any of the Company Subsidiaries is
obligated by any contract, agreement or other arrangement to indemnify any other
person with respect to material Taxes. Except as set forth in Section 3.1(m) of
the Company Disclosure Letter, neither the Company nor any of the Company
Subsidiaries are now or have ever been a party to or bound by any agreement or
arrangement (whether or not written and including, without limitation, any
arrangement required or permitted by law) binding the Company or any of the
Company Subsidiaries that (A) requires the Company or any of the Company
Subsidiaries to make any material Tax payment to or for the account of any other
person, (B) affords any other person the benefit of any net operating loss, net
capital loss, investment Tax credit, foreign Tax credit, charitable deduction or
any other credit or Tax attribute which could reduce Taxes (including, without
limitation, deductions and credits related to alternative minimum Taxes) of the
Company or any of the Company Subsidiaries, or (C) requires or permits the
transfer or assignment of income, revenues, receipts or gains to the Company or
any of the Company Subsidiaries, from any other person.
-22-
<PAGE>
(iii) The Company and the Company Subsidiaries have withheld
and paid or have caused to be withheld and paid all material Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder or other third party.
(iv) Neither the Company nor any of the Company Subsidiaries
is responsible for any material Taxes of any other person under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee, by contract, or otherwise.
(v) The Company is not and has not been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period described in Section 897(c)(1)(A)(ii) of the Code.
(vi) Neither the Company nor any of the Company Subsidiaries
has constituted either a "distributing corporation" or a "controlled
corporation" within the meaning of Section 355(a)(1)(A) of the Code in a
distribution of stock intended to qualify for tax-free treatment under Section
355 of the Code (A) in the two years prior to the date of this Agreement (or
will constitute such a corporation in the two years prior to the date of the
Effective Time of the Merger) or (B) in a distribution which otherwise
constitutes part of a "plan" or "series of related transactions" within the
meaning of Section 355(e) of the Code in conjunction with the Merger.
(vii) "Tax Returns" means returns, reports and forms required
to be filed with any Governmental Entity of the United States or any other
jurisdiction responsible for the imposition or collection of Taxes.
(viii) "Taxes" means (A) all taxes (whether federal, state,
local or foreign) based upon or measured by income and any other tax whatsoever,
including, without limitation, gross receipts, profits, sales, use, occupation,
value added, ad valorem, transfer, franchise, withholding, payroll, employment,
excise and property taxes, and Nevada net proceeds of mine and other similar
taxes, together with any interest or penalties imposed with respect thereto and
(B) any obligations under any agreements or arrangements with respect to any
taxes described in clause (A) above.
(n) Compliance with Laws. Neither the Company nor any Company
Subsidiary has violated or failed to comply with any statute, law, ordinance,
regulation, rule, judgment, decree or order of any Governmental Entity
applicable to its business or operations, except for violations and failures to
comply that would not, individually or in the aggregate, reasonably be expected
to result in a Company Material Adverse Effect.
(o) Accounting Matters. Neither the Company nor, to its best
knowledge, any of its affiliates, has taken or agreed to take any action that
(without giving effect to any action taken or agreed to be taken by Parent or
any of its affiliates) would prevent Parent from accounting for the business
combination to be effected by the Merger as a pooling of interests. The Company
does not have actual knowledge of any other reason that would prevent Parent
from accounting for the business combination to be effected by the Merger as a
pooling of interests.
(p) Title to and Condition of Properties. (i) Each of the
Company and the Company Subsidiaries has good and marketable title (applying
customary standards in the min-
-23-
<PAGE>
ing industry) to its Operating Properties (other than property as to which it is
a lessee, in which case it has a valid leasehold interest and has not received
any notice of default of the terms and provisions of such leases), free and
clear of all Encumbrances created by, through or under the Company or any
Company Subsidiaries, except those matters identified in Section 3.1(p) of the
Company Disclosure Letter. For the purposes of this Agreement, "Operating
Properties" means operating properties, the Phoenix development project and
properties with proven and probable ore reserves.
(ii) All real and tangible personal property of the Company
and each of the Company Subsidiaries is in generally good repair and is
operational and usable in the operation of the Company, subject to normal wear
and tear and technical obsolescence, except for such property whose failure to
be in such condition would not be reasonably likely to have a Company Material
Adverse Effect.
(iii) The Company has delivered to or made available for
inspection by Parent all material Existing Data in its possession or control,
and true and correct copies of all material leases or other material contracts
relating to its Operating Properties.
(iv) Except as to matters otherwise disclosed in writing to
Parent prior to the date of this Agreement:
(A) to the Company's knowledge, the conditions
existing on or with respect to the real properties owned, leased or
used by the Company or the Company Subsidiaries or in which the Company
or the Company Subsidiaries otherwise has an interest, and its
ownership and operation of such properties are not in violation of any
applicable laws (including without limitation any Environmental Laws),
nor causing or permitting any condition which is reasonably likely to
result in the creation of any Environmental Liabilities;
(B) to the Company's knowledge, there have been no
past violations by it or by any of its predecessors or Company
Subsidiaries in title of any Environmental Laws or other applicable
laws affecting or pertaining to any real property owned, leased or used
by the Company or in which the Company or the Company Subsidiaries
otherwise has an interest, nor any past creation of damage or
threatened damage on, about or in the general vicinity of any such
property which is reasonably likely to result in the creation of any
Environmental Liabilities; and
(C) the Company has not received inquiry from or
notice of a pending investigation from any Governmental Entity or of
any administrative or judicial proceeding concerning the violation of
any applicable laws or any Environmental Liabilities.
(v) To the knowledge of the Company, the Company has furnished
or made available to Parent, copies of all material third party and internal
environmental or other like reports prepared by or for the Company or any
Company Subsidiary with respect to any real property owned, leased or used by
the Company or any Company Subsidiary.
(vi) As used in this Agreement, the following terms shall have
the meanings specified:
-24-
<PAGE>
"Encumbrance" or "Encumbrances" means mortgages,
deeds of trust, security interests, pledges, liens, net
profits interests, net smelter returns, royalties or
overriding royalty interests, other payments out of
production, or other burdens of a similar nature.
"Environmental Laws" means applicable laws aimed at
reclamation or restoration of the real properties owned,
leased or used by the Company or in which the Company
otherwise has an interest; abatement of pollution; protection
of the environment; protection of wildlife, including
endangered species; ensuring public safety from environmental
hazards; protection of cultural or historic resources;
management, storage or control of hazardous materials and
substances; releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous
substances as wastes into the environment, including, without
limitation, ambient air, surface water and groundwater; and
all other applicable laws relating to the manufacturing,
processing, distribution, use, treatment, storage, disposal,
handling or transport of pollutants, contaminants, chemicals
or industrial, toxic or hazardous substances or wastes.
"Environmental Liabilities" means any and all claims,
actions, causes of action, damages, losses, liabilities,
obligations, penalties, judgments, amounts paid in settlement,
assessments, costs, disbursements, or expenses (including,
without limitation, attorneys' fees and costs, experts' fees
and costs, and consultants' fees and costs) of any kind or of
any nature whatsoever that are asserted by any person or
entity (including any Governmental Entity) other than the
Company, alleging liability (including, without limitation,
liability for studies, testing or investigatory costs, cleanup
costs, response costs, removal costs, remediation costs,
containment costs, restoration costs, corrective action costs,
closure costs, reclamation costs, natural resource damages,
property damages, business losses, personal injuries,
penalties or fines) arising out of, based on or resulting from
(A) the presence, release, threatened release, discharge or
emission into the environment of any hazardous materials or
substances existing or arising on, beneath or above the real
properties owned, leased or used by the Company or in which
the Company otherwise has an interest and/or emanating or
migrating and/or threatening to emanate or migrate from such
properties to off-site properties, (B) physical disturbance of
the environment, or (C) the violation or alleged violation or
any Environmental Laws.
"Existing Data" means maps, drill logs and other
drilling data, core tests, pulps, reports, surveys, assays,
analyses, production reports, operations, technical, records,
and other material information developed in operations on the
real properties owned, leased or used by the Company or in
which the Company otherwise has or had an interest prior to
the date of this Agreement.
"Governmental Fees" means all location fees, mining
claim rental fees, mining claim maintenance payments and
similar payments required by applicable laws to locate and
hold unpatented mining claims and mill sites, or any
exploration or mining concessions or like interest granted by
any Governmental Entity.
-25-
<PAGE>
(q) Contracts. Section 3.1(q) of the Company Disclosure Letter
lists all Contracts to which the Company or a Company Subsidiary (other than
Contracts permitted to be entered into under Section 4.1(a)) is a party and
which fall within any of the following categories: (i) Contracts not entered
into in the ordinary course of the Company's business that are material to the
day-to-day operation of the Company's business; (ii) joint venture, partnership
and like agreements (other than any such Contracts that are immaterial to the
current or contemplated operations of the Company); (iii) Contracts which are
equipment leases involving payments by the Company or a Company Subsidiary of
more than $1,000,000 per year; (iv) Contracts containing covenants purporting to
limit the freedom of the Company or a Company Subsidiary (A) in any material
respect to compete in any line of business in any geographic area, (B) in any
material respect to hire any individual or group of individuals or (C) except as
previously disclosed to Parent, to acquire any business or any securities,
assets or properties of any entity; (v) Contracts which after the Effective Time
of the Merger would have the effect of limiting the freedom of Parent or its
subsidiaries (other than the Company and its subsidiaries) (A) in any material
respect to compete in any line of business in any geographic area, (B) in any
material respect to hire any individual or group of individuals or (C) except as
previously disclosed to Parent, to acquire any business or any securities,
assets or properties of any entity; (vi) Contracts which contain minimum
purchase conditions or requirements or other terms that restrict or limit the
purchasing relationships of the Company or a Company Subsidiary in any material
respect; (vii) Contracts relating to any outstanding commitment for capital
expenditures in excess of $1,000,000; (viii) Contracts relating to the existing
hedging activities of the Company or any Company Subsidiary as of June 15, 2000;
(ix) Contracts with any labor organization; (x) indentures, mortgages,
promissory notes, loan agreements, guarantees of amounts in excess of
$1,000,000, letters of credit or other agreements or instruments of the Company
or a Company Subsidiary or commitments for the borrowing or the lending of
amounts in excess of $1,000,000 by the Company or a Company Subsidiary or
providing for the creation of any charge, security interest, encumbrance or Lien
upon any of the assets of the Company or a Company Subsidiary; (xi) Contracts
providing for the payment of any net profits interest, royalties, or overriding
royalty interests or other payments out of production in connection with the
Operating Properties; (xii) Contracts with or for the benefit of any affiliate
of the Company or immediate family member thereof (other than subsidiaries of
the Company); and (xiii) Contracts containing any rights on the part of any
party, including joint venture partners or entities, to acquire mining or other
property rights from the Company or a Company Subsidiary (other than any such
Contracts that are immaterial to the current or contemplated operations of the
Company). All such Contracts and all material Contracts set forth under Item 10
in the exhibit index to the Company's Annual Report on Form 10-K for the year
ended December 31, 1999 are valid and binding obligations of the Company or a
Company Subsidiary and, to the knowledge of the Company, the valid and binding
obligation of each other party thereto except for such Contracts which if not so
valid and binding would not, individually or in the aggregate, have a Company
Material Adverse Effect. Neither the Company nor, to the knowledge of the
Company, any other party thereto is in violation of or in default in respect of,
nor has there occurred an event or condition which with the passage of time or
giving of notice (or both) would constitute a default under or entitle any party
to terminate, accelerate, modify or call a default under, or trigger any
preemptive rights or rights of first refusal under, any such Contract (including
all material Contracts set forth under Item 10 in this exhibit index to the
Company's Annual Report on Form 10-K for the year ended December 31, 1999)
except such violations or defaults under such Contracts that, individually or in
the aggregate, would not have a Company Material Adverse Effect.
-26-
<PAGE>
(r) Labor Relations. Except as set forth in Section 3.1(r) of
the Company Disclosure Letter, neither the Company nor any of the Company
Subsidiaries has any collective bargaining agreements or similar labor contracts
with any persons employed by the Company or any persons otherwise performing
services primarily for the Company or any of its subsidiaries (the "Company
Business Personnel"). Neither the Company nor any of the Company Subsidiaries
has engaged in any unfair labor practice with respect to the Company Business
Personnel since January 1, 1997, and there is no unfair labor practice complaint
pending or, to the knowledge of the Company, threatened, against the Company or
any of its subsidiaries with respect to the Company Business Personnel. Except
as set forth in Section 3.1(r) of the Company Disclosure Letter, there is no
labor strike, dispute, slowdown or stoppage pending or, to the knowledge of the
Company, threatened against the Company or any of its subsidiaries, and neither
the Company nor any of its subsidiaries has experienced any material labor
strike, dispute, slowdown or stoppage or other labor difficulty involving its
employees since January 1, 1997.
(s) MSHA, OSHA Matters. The Company and each of the Company
Subsidiaries is in compliance with the requirements of each of the Federal Mine
Safety and Health Act of 1977, as amended, and the regulations promulgated
thereunder, the Occupational Safety and Health Act of 1970, as amended, and the
regulations promulgated thereunder and any similar laws or regulations of any
foreign, state or local jurisdiction (collectively, the "Safety Acts"), except
for any non-compliance which could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. Since
January 1, 1997, neither the Company nor any Company Subsidiary has received any
citation from the Mine Safety and Health Administration, the Occupational Safety
and Health Administration or any other Governmental Entity or any inspector
setting forth any respect in which the facilities or operations of the Company
and each of the Company Subsidiaries are not in compliance with the Safety Acts,
or the regulations under such acts which noncompliance has not been corrected or
remedied to the satisfaction of such Governmental Entity or inspector, except in
all such cases for any noncompliance that could not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect. The
Company has previously made available to Parent all written citations heretofore
issued to the Company under the Safety Acts and all material correspondence
related thereto since January 1, 1997, and shall within one month of the date
hereof provide Parent with copies of all such written citations and material
correspondence related thereto.
(t) State Takeover Statutes. The Board of Directors of the
Company has approved, and has adopted a bylaw amendment with respect to, the
Merger and this Agreement and the Support/Voting Agreement, dated as of the date
hereof by and between Parent, Noranda Inc. and the Company (the "Voting/Support
Agreement") and such approval and adoption is sufficient to render inapplicable
to the Merger, this Agreement and the transactions contemplated by this
Agreement (including the Voting/Support Agreement), the provisions of Sections
78.378 to 78.3793 and Sections 78.411 to 78.444 of the NGCL. To the best of the
Company's knowledge, no other state takeover statute or similar statute or
regulation, including those applicable in any foreign jurisdictions, applies or
purports to apply to the Merger, this Agreement or any of the transactions
contemplated by this Agreement (including the Voting/Support Agreement).
(u) Rights Agreement. The Company has taken all necessary
action to (i) render the Company Rights and Canadian Co. Rights inapplicable to
the Merger, the Canadian Arrangement and the other transactions contemplated by
this Agreement (including the Vot-
-27-
<PAGE>
ing/Support Agreement) and (ii) ensure that (A) neither Parent nor any of its
affiliates is an Acquiring Person (as defined in either the Company Rights
Agreement or Canadian Co. Rights Agreement) and (B) none of a Distribution Date,
Shares Acquisition Date or Triggering Event (each as defined in either the
Company Rights Agreement or Canadian Co. Rights Agreement) shall occur by reason
of the approval, execution or delivery of this Agreement, the Canadian
Arrangement Agreement, the announcement or consummation of the Merger, the
consummation of the Canadian Arrangement or the consummation of any of the other
transactions contemplated by this Agreement (including the Voting/Support
Agreement).
(v) Dispositions of Company Property. Except as described in
the Filed Company SEC Documents or in Section 3.1(v) of the Company Disclosure
Letter, since December 31, 1999, as of the date hereof, neither the Company nor
any Company Subsidiary has sold or disposed of or ceased to hold or own any
personal property (other than dispositions in the ordinary course of business
consistent with past practice), real property, any interest or rights with
respect to real property (including exploration or production rights), any
participating interest in a joint venture or other assets or properties of the
Company or any Company Subsidiary ("Company Assets"), other than sales and
dispositions having an individual fair market value of less than $1,000,000,
individually, or $5,000,000 in the aggregate. Except as set forth in Section
3.1(v) of the Company Disclosure Letter, no Company Assets whose fair market
value on the date of this Agreement is greater than $1,000,000 is subject to any
pending sale or disposition transaction.
(w) Absence of Reduction in Reserves and Mineralized Material.
There has been no material reduction in the aggregate amount of reserves or in
the aggregate amount of mineralized material of the Company and the Company
Subsidiaries, taken as a whole, from the amounts set forth in the Company's 1999
Annual Report on Form 10-K for the year ended December 31, 1999, as amended
prior to the date hereof, except for (i) such reductions in reserves that have
resulted from production in the ordinary course of business and (ii) such
reductions in mineralized material that have resulted from reclassifications of
mineralized material as reserves.
(x) Development Projects. The Company has no reason to
believe, subject to the receipt of necessary permits and approvals which the
Company reasonably expects as of the date of this Agreement, that (i) the
estimated production capacity for each of the time periods set forth in Section
3.1(x) of the Company Disclosure Letter with respect to the development projects
described therein will not be reached during such time periods, or (ii) the
estimated costs set forth in Section 3.1(x) of the Company Disclosure Letter
with respect to each such development project will be materially exceeded.
SECTION 3.2. Representations and Warranties of Parent and Sub.
Parent and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of
Parent, Sub and Canadian Sub is, or in the case of Canadian Sub, to the extent
not formed, will be, a corporation, partnership or other legal entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite power and authority
to carry on its business as now being conducted. Each of Parent, Sub and
Canadian Sub and each of Parent's subsidiaries (each a "Parent Subsidiary") is,
or in the case of Canadian Sub, to the extent not formed, will be, duly
qualified or li-
-28-
<PAGE>
censed to do business and is in good standing in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed (individually or in the aggregate) would
not (i) have a material adverse effect on the business, properties, assets,
liabilities, financial condition or results of operations of Parent and the
Parent Subsidiaries, taken as a whole (other than as a result of or effects
relating directly to (A) general economic conditions or (B) changes in or
affecting the gold mining industry in general), or (ii) prevent Parent from
performing its obligations on a timely basis under this Agreement (a "Parent
Material Adverse Effect").
(b) Parent Subsidiaries. All the outstanding shares of capital
stock of each Parent Subsidiary have been validly issued and are fully paid and
nonassessable and, except as set forth in Section 3.2(b) of the letter from the
Parent, dated the date of this Agreement, addressed to the Company (the "Parent
Disclosure Letter"), are owned by Parent, by another subsidiary of Parent or by
Parent and another Parent Subsidiary, free and clear of all Liens.
(c) Capital Structure.
(i) Except as otherwise contemplated by this Agreement, the
authorized capital stock of Parent ("Parent Capital Stock") consists of
250,000,000 shares of Parent Common Stock and 5,000,000 shares of preferred
stock, par value $5.00 per share ("Parent Preferred Stock"). Pursuant to a
Certificate of Designations, Preferences and Rights of the First Series of the
Preferred Stock, par value $5.00 per share, filed on September 11, 1990, the
Board of Directors of Parent created a series of 370,000 shares of preferred
stock designated as the "Series A Junior Participating Preferred Stock", par
value $5.00 per share ("Parent Series A Preferred Stock"). The shares of Parent
Series A Preferred Stock are issuable in connection with the rights to purchase
shares of Parent Series A Preferred Stock (the "Parent Rights") that were issued
pursuant to the Rights Agreement dated August 30, 1990 (as amended from time to
time, the "Parent Rights Agreement"), between Parent and The Chase Manhattan
Bank, as successor corporation. At the close of business on June 19, 2000: (A)
168,078,765 shares of Parent Common Stock were outstanding, all of which were
validly issued, fully paid and nonassessable, and no shares of Parent Series A
Preferred Stock, or of any other series of Parent Preferred Stock, were
outstanding; (B) 146,615 shares of Parent Common Stock were held by Parent in
its treasury; (C) 14,591,613 shares of Parent Common Stock were reserved for
issuance upon the exercise of outstanding employee stock options (the "Parent
Employee Stock Options") that were granted in each case pursuant to the Parent's
employee stock plans set forth in Section 3.2(c) of the Parent Disclosure Letter
(the "Parent Employee Stock Plans"); and (D) 370,000 shares of Parent Series A
Preferred Stock were reserved for issuance in connection with the Parent Rights.
Except as set forth above or in Section 3.2(c) of the Parent Disclosure Letter,
at the close of business on June 19, 2000, no shares of capital stock or other
voting securities of Parent were issued, reserved for issuance or outstanding.
Except as set forth in Section 3.2(c) of the Parent Disclosure Letter, there are
not any bonds, debentures, notes or other indebtedness of Parent having the
right to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which stockholders of the Company must vote.
Except as set forth above and except as set forth in Section 3.2(c) of the
Parent Disclosure Letter, as of the date of this Agreement, there are not any
Options to which Parent or any Parent Subsidiary is a party or by which any of
them is bound relating to the issued or unissued capital stock of Parent or any
Parent Subsidiary, or obli-
-29-
<PAGE>
gating Parent or any Parent Subsidiary to issue, transfer, grant, sell or pay
for or repurchase any shares of capital stock or other equity interests in, or
securities convertible or exchangeable for any capital stock or other equity
interests in, Parent or any Parent Subsidiary or obligating Parent or any Parent
Subsidiary to issue, grant, extend or enter into any such Options. All shares of
Parent Common Stock that are subject to issuance as aforesaid, upon issuance on
the terms and conditions specified in the instrument pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and nonassessable.
All shares of Parent Common Stock that are subject to issuance pursuant to the
Merger and the Canadian Arrangement, upon issuance pursuant to this Agreement
and the Canadian Arrangement Agreement, will be duly authorized, validly issued,
fully paid and nonassessable. The authorized capital stock of Sub consists of
1000 shares of common stock, par value $0.01 per share, 100 shares of which have
been validly issued, and fully paid and nonassessable and are owned by Parent
free and clear of any Lien. Except as set forth in Section 3.2(c) of the Parent
Disclosure Letter, as of the date of this Agreement, there are not any
outstanding contractual obligations or other requirements of Parent or any
Parent Subsidiary to repurchase, redeem or otherwise acquire any shares of
capital stock of Parent or any Parent Subsidiary. As of the date of this
Agreement, the authorized capital stock of Canadian Sub consists or will consist
of 1,000 common shares, all of which have been or will be validly issued, fully
paid and nonassessable and are or will be owned by Company free and clear of any
Liens.
(ii) The issuance and sale of all of the shares of capital
stock described in this Section 3.2(c) have been in compliance in all material
respects with United States federal and state securities laws.
(d) Authority; Noncontravention. Parent and Sub have all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, and Canadian Sub has
all requisite corporate power to enter into the Canadian Arrangement Agreement
and, subject to the approval of the Ontario Superior Court of Justice, to
consummate the transactions contemplated by the Canadian Arrangement Agreement.
The Board of Directors of Parent has approved this Agreement and the
transactions contemplated by this Agreement. Parent is or shall be the sole
holder of all Common Shares of Canadian Sub and has or shall consent to and
approve the Canadian Arrangement Agreement and the transactions contemplated by
the Canadian Arrangement Agreement. The execution and delivery of this Agreement
and the consummation of the transactions contemplated by this Agreement, in each
case by Parent or by Parent and Sub, as the case may be, have been duly
authorized by all necessary corporate action on the part of Parent and Sub, and
no vote of the holders of any class or series of Parent Capital Stock is
necessary in connection therewith. This Agreement has been duly executed and
delivered by Parent and Sub, respectively, and constitutes a valid and binding
obligation of Parent and Sub, respectively, enforceable against each such party
in accordance with its terms. Except as set forth in Section 3.2(d) of the
Parent Disclosure Letter, the execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated by this Agreement or the
Canadian Arrangement Agreement and compliance with the provisions of this
Agreement or the Canadian Arrangement Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of consent, termination, purchase,
cancellation or acceleration of any obligation or to loss of any property,
rights or benefits under, or result in the imposition of any additional
obligation under, or result in the creation of any Lien upon any of the
properties or assets of Parent, Sub or
-30-
<PAGE>
any other Parent Subsidiary under, (i) the Restated Certificate of Incorporation
or By-laws of Parent, the Articles of Incorporation and By-laws of Sub, or the
comparable organizational documents of any Parent Subsidiary, (ii) any Contract
applicable to Parent, Sub or any other Parent Subsidiary or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, and as set forth in Section
3.2(d) of the Parent Disclosure Letter, any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Parent, Sub or any other Parent
Subsidiary or their respective properties or assets, other than, in the case of
clauses (ii) and (iii), any such conflicts, violations, defaults, rights or
Liens that, individually or in the aggregate, would not have a Parent Material
Adverse Effect. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Parent, Sub or any other Parent Subsidiary in connection with
the execution and delivery of this Agreement by Parent or Sub, as the case may
be, or the consummation by Parent or Sub, as the case may be, of the
transactions contemplated by this Agreement, except for (i) the filing with the
SEC of (A) the Proxy Statement the Form S-4, and related filings under the
Securities Act and (B) such reports under Section 13(a) of the Exchange Act, as
may be required in connection with this Agreement and the transactions
contemplated by this Agreement, (ii) the filing of the Articles of Merger with
the Nevada Secretary of State and appropriate documents with the relevant
authorities of other states in which Parent is qualified to do business, (iii)
those that may be required solely by reason of the Company's (as opposed to any
other third party's) participation in the Merger and the other transactions
contemplated by this Agreement, (iv) the necessary filings, notices, approvals,
confirmations, consents, declarations and/or decisions under antitrust laws,
competition or other similar rules, regulations and judicial doctrines of
jurisdictions, and (v) such other consents, approvals, orders, authorizations,
registrations, declarations and filings, including under applicable
Environmental Laws, (A) as may be required under the laws of any foreign country
in which Parent or any Parent Subsidiary conducts any business or owns any
property or assets, (B) as are set forth in Section 3.2(d) of the Parent
Disclosure Letter or (C) that, if not obtained or made, would not, individually
or in the aggregate, have a Parent Material Adverse Effect.
(e) SEC Documents; Undisclosed Liabilities. Parent has filed
all required reports, schedules, forms, statements and other documents with the
SEC since January 1, 1997 (the "Parent SEC Documents"). As of its date, each
Parent SEC Document complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Parent SEC
Documents. None of the Parent SEC Documents contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except to the extent that such
statements have been modified or superseded by a later-filed Parent SEC
Document. The consolidated financial statements of Parent included in the Parent
SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP (except, in the case
of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of Parent
as of the dates thereof and the consolidated results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). Except (i) as and to the extent disclosed
or reserved against on the balance sheet of Parent as of De-
-31-
<PAGE>
cember 31, 1999 included in the Filed Parent SEC Documents, (ii) as incurred
after the date thereof in the ordinary course of business consistent with prior
practice and not prohibited by this Agreement or (iii) as set forth in Section
3.2(e) to the Parent Disclosure Letter, Parent does not have any liabilities or
obligations of any nature, whether known or unknown, absolute, accrued,
contingent or otherwise and whether due or to become due, that, individually or
in the aggregate, have had or would reasonably be expected to have a Parent
Material Adverse Effect.
(f) Information Supplied. None of the information supplied or
to be supplied by Parent or Sub for inclusion or incorporation by reference in
(i) the Form S-4 will, at the time the Form S-4 is filed with the SEC, at any
time it is amended or supplemented or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) the Proxy Statement will, at the date
the Proxy Statement is first mailed to the stockholders of the Company or at the
time of the Company's Stockholders' Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, and (iii) the
management information circular of the Canadian Co. relating to the Canadian
Proxy Statement will, at the date the Canadian Proxy Statement is first mailed
to the Canadian Co.'s shareholders or at the time of the meeting of such
shareholders at which the Canadian Arrangement is considered, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Form S-4 will
comply as to form in all material respects with the requirements of the Exchange
Act, except that no representation or warranty is made by Parent or Sub with
respect to statements made or incorporated by reference therein based on
information supplied by the Company for inclusion or incorporation by reference
in the Form S-4.
(g) Absence of Certain Changes or Events. Except as disclosed
in the Parent SEC Documents filed and publicly available prior to the date of
this Agreement (the "Filed Parent SEC Documents"), since December 31, 1999,
Parent has conducted its business only in the ordinary course, and:
(i) since December 31, 1999, there has not been any event,
change, effect or development that, individually or in the aggregate, has had
or, so far as reasonably can be foreseen, is likely to have, a Parent Material
Adverse Effect;
(ii) since December 31, 1999 through the date of this
Agreement, there has not been except for regular quarterly dividends not in
excess of $0.03 per share of Parent Common Stock, with customary record and
payment dates, any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any
shares of Parent Capital Stock;
(iii) since December 31, 1999 through the date of this
Agreement, there has not been any split, combination or reclassification of any
Parent Capital Stock or any issuance or the authorization of any issuance of any
other securities in exchange or in substitution for shares of Parent Capital
Stock except as set forth in Section 3.2(g) of the Parent Disclosure Letter;
-32-
<PAGE>
(iv) since December 31, 1999, there has not been any change in
accounting methods, principles or practices by Parent or any Parent Subsidiary
materially affecting its assets, liabilities or business, except insofar as may
have been required by a change in GAAP; and
(v) since December 31, 1999 through the date of this
Agreement, neither Parent nor any Parent Subsidiary has engaged in any action
which, if done after the date of this Agreement, would violate Section 4.1(c),
except as set forth in Section 3.2(g) of the Parent Disclosure Letter.
(h) Litigation. Except as disclosed in the Filed Parent SEC
Documents or in Section 3.2(h) of the Parent Disclosure Letter, there is no
suit, action or proceeding pending or, to the knowledge of Parent, threatened
against Parent or any Parent Subsidiary that, individually or in the aggregate,
would reasonably be expected to have a Parent Material Adverse Effect, and there
is not any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against Parent or any Parent Subsidiary having,
or that would be reasonably expected to have, any Parent Material Adverse
Effect. As of the date of this Agreement, except as disclosed in the Filed
Parent SEC Documents or in Section 3.2(h) of the Parent Disclosure Letter, there
is no suit, action or proceeding pending, or, to the knowledge of Parent,
threatened, against Parent or any Parent Subsidiary that, individually or in the
aggregate, would reasonably be expected to prevent or delay in any material
respect the consummation of the Merger or the transactions contemplated by this
Agreement.
(i) Brokers. Except for Goldman, Sachs & Co., Inc., no broker,
investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Sub.
(j) Compliance with Laws. Neither Parent nor any Parent
Subsidiary has violated or failed to comply with any statute, law, ordinance,
regulation, rule, judgment, decree or order of any Governmental Entity
applicable to its business or operations, except for violations and failures to
comply that could not, individually or in the aggregate, reasonably be expected
to result in a Parent Material Adverse Effect.
(k) Accounting Matters. Neither Parent nor, to its best
knowledge, any of its affiliates, has taken or agreed to take any action that
(without giving effect to any action taken or agreed to be taken by the Company
or any of its affiliates) would prevent Parent from accounting for the business
combination to be effected by the Merger as a pooling of interests. Parent does
not have actual knowledge of any other reason that would prevent Parent from
accounting for the business combination to be effected by the Merger as a
pooling of interests.
(l) Interim Operations of Sub and Canadian Sub. Sub and
Canadian Sub were formed solely for the purpose of engaging in the transactions
contemplated by this Agreement and have not engaged in any business activities
or conducted any operations other than in connection with the transactions
contemplated by this Agreement.
(m) Absence of Reduction in Reserves and Mineralized Material.
There has been no material reduction in the aggregate amount of
-33-
<PAGE>
reserves or in the aggregate amount of mineralized material of Parent and the
Parent Subsidiaries, taken as a whole, from the amounts set forth in the Annual
Report on Form 10-K of Parent for the year ended December 31, 1999, except for
(i) such reductions in reserves that have resulted from production in the
ordinary course of business and (ii) such reductions in mineralized material
that have resulted from reclassifications of mineralized material as reserves.
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.1. Conduct of Business. (a) Conduct of Business by
the Company. The Company shall conduct its operations in the ordinary course
except as expressly contemplated by this Agreement and the transactions
contemplated hereby and shall use all commercially reasonable efforts to
maintain and preserve its business organization and its material rights and
franchises and to retain the services of its officers and key employees and
maintain relationships with customers, suppliers, lessees, joint venture
partners, licensees and other third parties, and to maintain all of its
operating assets in their current condition (normal wear, tear, depletion and
use excepted), to the end that their goodwill and ongoing business shall not be
impaired in any material respect. The Company shall use all commercially
reasonable efforts to preserve its labor relations and shall on an ongoing basis
consult with and keep Parent advised as to the progress of the negotiations on
all labor matters including any collective bargaining agreement. Without
limiting the generality of the foregoing, during the period from the date of
this Agreement to the Effective Time of the Merger, the Company shall not,
except as otherwise expressly contemplated by this Agreement and the
transactions contemplated hereby, without the prior written consent of Parent:
(i) do or effect any of the following actions with
respect to its securities: (A) adjust, split, combine or reclassify its
capital stock, (B) make, declare or pay any dividend (other than
regular quarterly dividends on the Company Convertible Preferred Stock
of $.8125 per share with record and payment dates consistent with past
practice ) or distribution on, or, directly or indirectly, redeem,
purchase or otherwise acquire (other than acquisitions of Canadian Co.
Exchangeable Shares by the Company (or its subsidiaries to the extent
contemplated by Section 3.1(c)) upon the exchange of such Canadian Co.
Exchangeable Shares pursuant to the terms thereof), any shares of
Company Capital Stock or any securities or obligations convertible into
or exchangeable for any shares of Company Capital Stock, (C) grant any
person any right or option to acquire any shares of Company Capital
Stock, except for grants of options to purchase Company Common Stock or
Canadian Co. Exchangeable Shares for up to an aggregate of 2,000,000
shares of Company Common Stock pursuant to Company Employee Stock Plans
consistent with past practices following consultation with Parent, (D)
issue, deliver or sell or agree to issue, deliver or sell any
additional shares of Company Capital Stock or any securities or
obligations convertible into or exchangeable or exercisable for any
shares of its capital stock or such securities (except pursuant to the
exercise of the Company Stock Options, in connection with cashless
exercises of Company Stock Options and upon the exchange of Canadian
Co. Exchangeable Shares or upon conversion of Company Convertible
Preferred Stock or Convertible Notes), or (E) enter into any agreement,
-34-
<PAGE>
understanding or arrangement with respect to the sale, voting,
registration or repurchase of Company Capital Stock;
(ii) except as set forth in Section 4.1(a)(ii) of the
Company Disclosure Letter, (A) directly or indirectly sell, transfer,
lease, joint venture or otherwise dispose of any of its property or
assets related to Operating Properties or material development projects
or (B) directly or indirectly sell, transfer, lease, joint venture or
dispose of any other properties or assets having a fair market value of
more than $1,000,000, individually, or $5,000,000 in the aggregate);
(iii) except as disclosed in Section 4.1(a) (iii) of
the Company Disclosure Letter, make or propose any changes in its
Restated Articles of Incorporation or its By-laws except as required by
Nevada corporate law or the rules of NYSE;
(iv) merge, consolidate or (except as permitted under
Section 4(a)(ii)) enter into any joint venture with any other person,
provided that upon notice to and prior consultation with Parent, Parent
shall not unreasonably withhold its consent to a request by Company to
enter into a joint venture;
(v) except as disclosed in Section 4.1(a) (v) of the
Company Disclosure Letter, acquire an amount of assets or capital stock
of any other person in excess of $1,000,000 individually or $5,000,000
in the aggregate (other than in connection with delivery of Canadian
Co. Exchangeable Shares to the Company upon exchange for Company Common
Stock);
(vi) amend or modify, or propose to amend or modify,
the Company Rights Agreement or Canadian Co. Rights Agreement, in each
case as amended as of the date hereof;
(vii) except as set forth in Section 4.1(a)(vii) of
the Company Disclosure Letter, incur, create, assume or otherwise
become liable for any indebtedness for borrowed money or assume,
guarantee, endorse or otherwise as an accommodation become responsible
or liable for the obligations of any other individual, corporation or
other entity, other than for amounts not to exceed $20,000,000 in the
aggregate, or otherwise in connection with any refinancing of existing
indebtedness on market terms;
(viii) pledge, mortgage or encumber any of its
property or assets (other than in connection with environmental bonds
(subject to Parent's consent which shall not be unreasonably withheld)
or in connection with any indebtedness permitted under Section
4.1(a)(vii));
(ix) other than pursuant to the terms of existing
Material Employment Agreements listed in Section 3.1(i) of the Company
Disclosure Letter or as otherwise set forth in Section 4.1(ix) of the
Company Disclosure Letter, enter into or modify any employment,
severance, termination or similar agreements or arrangements with, or
grant any bonuses (except as required by the terms of Plans which are
in effect as of the date hereof), salary increases (except in the
ordinary course of business consistent with past practice), severance
or termination pay to, any officer, director, consultant or employee,
-35-
<PAGE>
or otherwise increase or accelerate the funding of any compensation or
benefits provided to any officer, director, consultant or employee
except as may be required by applicable law, contribute any assets to
any grantor trust, or grant, reprice, or accelerate the exercise or
payment of any the Company Stock Options or other equity-based awards;
provided, that the Company may enter into Employment Termination and
Non-Competition Agreements with the individuals listed in
Section 4.1(ix) of the Company Disclosure Letter, providing for
payments not in excess of the amounts listed therein, in substantially
the form attached thereto;
(x) except as permitted by the proviso to clause (ix)
of this Section 4.1, enter into, adopt or amend any Employee Benefit
Plan or Material Employment Agreement, except as may be required by
applicable law;
(xi) take any action that results in an obligation to
pay severance benefits (or would result in such an obligation, if the
affected employee terminated his or her employment) under the Company's
Change in Control Severance Plan;
(xii) change any method or principle of accounting in
a manner that is inconsistent with past practice except to the extent
required by GAAP as advised by the Company's regular independent
accountants;
(xiii) settle any suit, claim, action, proceeding,
hearing, notice of violation, demand letter or investigation, whether
now pending or hereafter made or brought, for an amount which,
individually or in the aggregate, exceeds $1,000,000 without Parent's
consent which shall not be unreasonably withheld;
(xiv) modify, amend or terminate, or waive, release
or assign any material rights or claims with respect to any
confidentiality agreement to which the Company is a party;
(xv) enter into any confidentiality agreements or
arrangements other than in the ordinary course of business consistent
with past practice (other than as permitted, in each case, by Section
4.2(a));
(xvi) write up, write down or write off the book
value of any assets, individually or in the aggregate, in excess of
$2,000,000, except for depreciation and amortization in accordance with
GAAP consistently applied or to the extent otherwise required by GAAP
as advised by the Company's regular independent accountants following
consultation with Parent;
(xvii) incur or commit to any capital expenditures
other than pursuant to (A) the Company capital budget as in effect on
the date of this Agreement (a copy of which has been provided to
Parent) or (B) the Company projected plan as set forth in Section
4.1(a) (xvii) of the Company Disclosure Letter;
(xviii) make any payments in respect of policies of
directors' and officers' liability insurance (premiums or otherwise)
other than: (A) premiums paid in respect of its current policies not in
excess of the amount paid prior to the date of this Agreement, or (B)
-36-
<PAGE>
increases in premiums the incurrence of which is not related to any
increase or improvement in the coverage provided under its current
policies;
(xix) take any action to exempt or make not subject
to the provisions of any state takeover law or state law that purports
to limit or restrict business combinations or the ability to acquire or
vote shares, any person or entity (other than Parent or its
subsidiaries) or any action taken thereby, which person, entity or
action would have otherwise been subject to the restrictive provisions
thereof and not exempt therefrom;
(xx) take any action that would intentionally or
knowingly result in the representations and warranties set forth in
Section 3.1 becoming false or inaccurate in any material respect;
(xxi) enter into or carry out any other transaction
other than in the ordinary and usual course of business;
(xxii) except as otherwise required by law
(including, but not limited to, any provision of the Code and the
regulations thereto, and applicable treaties, orders, directives,
guidelines and policies, having the force of law), make any material
Tax election, settle or compromise any material Tax claim, file any Tax
Return (other than in a manner consistent with past practice) or change
any method of Tax accounting;
(xxiii) except to the extent required under the terms
of the Credit Agreement dated October 1, 1999, between Canadian Co. and
Canadian Imperial Bank of Commerce, engage in any transactions that
would result in the Company or the Company Subsidiaries hedging more
than 100,000 ounces of their gold production;
(xxiv) permit or cause any Company Subsidiary to do
any of the foregoing or agree or commit to do any of the foregoing; or
(xxv) agree in writing or otherwise to take any of
the foregoing actions.
(b) Conduct of Phoenix Project. The Company will use all
commercially reasonable efforts to pursue the development of the Phoenix
Project, including seeking to promptly complete the relevant permitting process.
The Company will employ adequate technical, legal and other personnel, and will
make all appropriate expenditures subject to the terms of this Agreement, and
take all appropriate actions and will expedite, and will, to the extent within
the reasonable control of the Company, cause to be expedited, the completion and
submission of all reports (and revisions of reports) by the Company and its
contractors to effectuate the foregoing as promptly as practicable.
(c) Conduct of Business by Parent. During the period from the
date of this Agreement to the Effective Time of the Merger, Parent shall use all
reasonable efforts to maintain and preserve its business organization and to
retain the services of its officers and key employees and maintain relationships
with customers, suppliers, lessees, joint venture partners, licensees and other
third parties to the end that their goodwill and ongoing business shall not be
impaired in any material respect. During the period from the date of this
Agreement to the Effective Time of the Merger, except as set forth in Section
4.1(c) of the Parent Disclosure Letter,
-37-
<PAGE>
Parent shall not (i) make any amendment to the Parent Certificate of
Incorporation that changes the fundamental attributes of Parent Capital Stock or
adversely affects the holders of the Company Common Stock or Canadian Co.
Exchangeable Shares who will receive such Parent Capital Stock upon consummation
of the Merger in a manner different from the other holders of such Parent
Capital Stock, (ii) make any material changes to the Articles of Incorporation
or Bylaws of Sub, (iii) make, declare or pay any dividend (other than quarterly
dividends on Parent Common Stock not in excess of $0.03 per share with record
and payment dates consistent with past practice), (iv) permit or cause any
Parent Subsidiaries to do any of the foregoing or agree or commit to any of the
foregoing, (v) take any action that would intentionally or knowingly result in
the representations and warranties set forth in Section 3.2 becoming false or
inaccurate in any material respect or (vi) agree in writing or otherwise to take
any of the foregoing actions.
SECTION 4.2. No Solicitation by the Company. (a) The Company
shall not, nor shall it permit any Company Subsidiary to, nor shall it authorize
or permit any officer, director or employee of or any investment banker,
attorney, accountant or other advisor or representative of, the Company or any
Company Subsidiary to, (i) solicit, initiate or knowingly facilitate or
encourage the submission of any Company Takeover Proposal (as defined below),
(ii) enter into any agreement with respect to any Company Takeover Proposal or
(iii) provide any non-public information regarding the Company to any third
party or engage in any negotiations or discussions in connection with any
Company Takeover Proposal; provided, however, that prior to receipt of the
Company Stockholder Approval, the Company may furnish information to, and engage
in discussions or negotiations with, any party who delivers a written proposal
for a Company Takeover Proposal which was not solicited, initiated, knowingly
facilitated or encouraged after the date of this Agreement in violation of this
Agreement if and so long as the Board of Directors of the Company determines in
good faith by resolution duly adopted that such a proposal (including any
conditions to such proposal that the Board of Directors of the Company
determines are reasonably likely to be satisfied) is, after consulting with the
Company's independent financial advisors, more favorable to the Company
stockholders from a financial point of view than the transactions contemplated
by this Agreement (including any adjustment to the terms and conditions proposed
by Parent in response to such Company Takeover Proposal) and is reasonably
capable of being consummated (a "Superior Proposal"); provided, further, that
prior to furnishing information to, or engaging in discussions with, any party
pursuant to the foregoing proviso, the Company shall have received an executed
agreement from such party having terms which are at least as favorable to the
Company as the terms contained in the Confidentiality Agreement. Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth in the preceding sentence by any officer, director or employee of the
Company or any Company Subsidiary or any investment banker, attorney, accountant
or other advisor or representative of the Company or any Company Subsidiary,
whether or not such person is purporting to act on behalf of the Company or any
Company Subsidiary or otherwise, shall be deemed to be a breach of this Section
4.2(a) by the Company. For purposes of this Agreement, "Company Takeover
Proposal" means any proposal for a merger, consolidation or other business
combination involving the Company or any Company Subsidiary or any proposal or
offer to acquire in any manner, directly or indirectly, more than 20% of any
class of voting securities of the Company or any Company Subsidiary, including
any proposal or offer relating to the acquisition by the Company in any manner,
directly or indirectly, of any securities or assets of another person in
consideration for the issuance of more than 20% of any class of voting
securities of the Company or any Company Subsidiary, or assets representing a
substantial portion of the assets
-38-
<PAGE>
of the Company and the Company Subsidiaries, taken as a whole, other than the
transactions contemplated by this Agreement. The Company shall, and shall cause
each Company Subsidiary to, immediately cease and cause to be terminated any
existing activities, discussions or negotiations by the Company, any Company
Subsidiary or any officer, director or employee of or investment banker,
attorney, accountant or other advisor or representative of, the Company or any
Company Subsidiary, with any parties conducted heretofore with respect to any of
the foregoing.
(b) In the event that prior to the Company Stockholder
Approval, the Board of Directors of the Company receives a Company Takeover
Proposal that is a Superior Proposal that was not solicited, initiated,
knowingly facilitated or encouraged after the date of this Agreement in
violation of this Agreement, the Board of Directors of the Company may (subject
to this and the following sentences) withdraw, modify or change, in a manner
adverse to Parent, the recommendation by the Board of Directors of the Company
that the stockholders of the Company vote to give the Company Stockholder
Approval, provided that it gives Parent five business days' prior written notice
of its intention to do so (provided that the foregoing shall in no way limit or
otherwise affect Parent's right to terminate this Agreement pursuant to Section
7.1(e) at such time as the requirements of such subsection have been met). Any
such withdrawal, modification or change of the recommendation by the Board of
Directors of the Company that the stockholders of the Company vote to give the
Company Stockholder Approval shall not change the approval of the Board of
Directors of the Company for purposes of causing any state takeover statute or
other state law to be inapplicable to the transactions contemplated hereby,
including the Merger, or change the obligation of the Company to present the
Merger for approval at a duly called Company's Stockholders' Meeting on the
earliest practicable date determined in consultation with Parent. From and after
the execution of this Agreement, the Company shall promptly (but in any event
within one calendar day) advise Parent in writing of the receipt, directly or
indirectly, of any inquiries, discussions, negotiations, or proposals relating
to a Company Takeover Proposal (including the specific terms thereof and the
identity of the other party or parties involved) and promptly furnish to Parent
a copy of any such written proposal in addition to any information provided to
or by any third party relating thereto. In addition, the Company shall promptly
(but in any event within one calendar day) advise Parent, in writing, if the
Board of Directors of the Company shall make any determination as to any Company
Takeover Proposal as contemplated by the proviso to the first sentence of
Section 4.2(a). Nothing in this Section 4.2 shall be deemed to limit the ability
of the Company to comply with Rule 14e-2 promulgated under the Exchange Act with
respect to a Company Takeover Proposal, although compliance by the Company with
such obligations shall not relieve the Company of any of its obligations under
Section 4.2 including compliance with the notice requirements set forth herein.
(c) In the event that, prior to the Company Stockholder
Approval, the Board of Directors of the Company receives a Company Takeover
Proposal that is a Superior Proposal that was not solicited, initiated,
knowingly facilitated or encouraged after the date of this Agreement in
violation of this Agreement, the Board of Directors of the Company may (subject
to this and the following sentences) terminate this Agreement pursuant to
Section 7.1(d) and enter into a definitive acquisition agreement with respect to
such Company Takeover Proposal, provided that, prior to any such termination,
(i) the Company has provided Parent written notice that it intends to terminate
this Agreement pursuant to Section 7.1(d), identifying the Company Takeover
Proposal then determined to be more favorable and the parties thereto and all of
the material terms thereof, (ii) the Company has delivered a copy of the
definitive acquisition agreement for
-39-
<PAGE>
such Company Takeover Proposal in the form to be entered into, and (iii) at
least five days after the Company has provided the notice referred to in clause
(i) above and at least 48 hours after the Company has made the delivery required
in clause (ii) above (provided that such Company Takeover Proposal continues to
be a Superior Proposal), the Company delivers to Parent (A) a written notice of
termination of this Agreement pursuant to Section 7.2(d) and (B) the amount of
the termination fee as provided in Section 7.2(a).
ARTICLE V
Additional Agreements
SECTION 5.1. Preparation of Form S-4 and the Proxy Statements;
Stockholders' Meetings. (a) As soon as practicable following the date of this
Agreement, the Company and Parent shall prepare and file with the SEC the Proxy
Statement and Parent shall prepare and file with the SEC the Form S-4, in which
the Proxy Statement shall be included as a prospectus. Each of the Company and
Parent shall use reasonable efforts to have the Form S-4 declared effective
under the Securities Act as promptly as practicable after such filing. Each of
the Company and Parent shall use reasonable efforts to cause the Proxy Statement
to be mailed to the stockholders of the Company as promptly as practicable after
the Form S-4 is declared effective under the Securities Act. Parent shall also
take any action (other than qualifying to do business in any jurisdiction in
which it is not now so qualified) required to be taken under any applicable
state securities or "blue sky" laws in connection with the issuance of Parent
Common Stock pursuant to the Merger, and the Company shall furnish all
information concerning the Company and the holders of the Company Common Stock
and rights to acquire Company Common Stock pursuant to the Company Employee
Stock Plans as may be reasonably requested in connection with any such action.
(b) The Company shall, as soon as practicable following the
date of this Agreement, duly call, give notice of, convene and hold a meeting of
the holders of Company Common Stock, Special Voting Stock and Company
Convertible Preferred Stock (the "Company's Stockholders' Meeting") for the
purpose of obtaining the Company Stockholder Approval and the Preferred
Stockholder Approval. Subject to Section 4.2, the Company shall, through its
Board of Directors, recommend to the stockholders of the Company that they give
the Company Stockholder Approval and the Preferred Stockholder Approval. Parent
shall vote or cause to be voted all the shares of Company Capital Stock owned of
record by Parent or any Parent Subsidiary in favor of the Company Stockholder
Approval and the Preferred Stockholder Approval.
(c) As soon as practicable following the date of this
Agreement, the Company shall cause Canadian Co. to prepare the Canadian Proxy
Statement. The Company shall cause Canadian Co. to use reasonable efforts to
cause the Canadian Proxy Statement to be mailed to the shareholders of Canadian
Co. as promptly as practicable after the Form S-4 referred to in Section 5.1(a)
above is declared effective under the Securities Act, and to file the Canadian
Proxy Statement with the relevant Canadian provincial regulatory authorities
contemporaneously with such mailing.
-40-
<PAGE>
(d) The Company shall cause Canadian Co., as soon as
practicable following the date of this Agreement, to duly call, give notice of,
convene and hold a meeting of its shareholders for the purpose of obtaining the
Canadian Shareholder Approval. Subject to Section 4.2, the Company shall cause
Canadian Co., through the Board of Directors of Canadian Co., to recommend to
the holders of Canadian Co. Exchangeable Shares that they give the Canadian
Shareholder Approval. Parent shall vote or cause to be voted all the shares of
Canadian Capital Stock owned of record by Parent or any Parent Subsidiary in
favor of the Canadian Shareholder Approval.
SECTION 5.2. Access to Information; Confidentiality. Each of
the Company and Parent shall, and shall cause each of its respective
subsidiaries to, afford to the other party and to the officers, directors,
employees, accountants, counsel, financial advisors and other representatives of
such other party, reasonable access during normal business hours during the
period prior to the Effective Time of the Merger to all their respective
properties, books, contracts, commitments, personnel and records and, during
such period, each of the Company and Parent shall, and shall cause each of its
respective subsidiaries to, furnish promptly to the other party (i) a copy of
each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of Federal or state securities
laws and (ii) all other information concerning its business, properties and
personnel as such other party may reasonably request, including any information
requested with respect to stockholder approval at the Company Stockholders'
Meeting and the status of the efforts to obtain such approval. Such information
shall be held in confidence to the extent required by, and in accordance with,
the provisions of the letter, dated September 1, 1999, between the Company and
Parent (the "Confidentiality Agreement").
SECTION 5.3. Reasonable Efforts; Notification. (a) Upon the
terms and subject to the conditions set forth in this Agreement, each of the
parties shall use all reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Merger, the
Canadian Arrangement and the other transactions contemplated by this Agreement,
including (i) the obtaining of all necessary actions or nonactions, waivers,
consents and approvals from Governmental Entities and the making of all
necessary registrations and filings (including filings with Governmental
Entities, if any) and the taking of all reasonable steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated by this Agreement including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed, and (iv) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement;
provided, however, that a party shall not be obligated to take any action
pursuant to the foregoing if the taking of such action or the obtaining of any
waiver, consent, approval or exemption is reasonably likely to result in the
imposition of a condition or restriction of the type referred to in clause (ii),
(iii), (iv) or (v) of Section 6.1(g) unless and to the extent such imposition is
primarily attributable to an acquisition by Parent or any Parent Subsidiary
announced or disclosed after the date of this Agreement. In connection with and
-41-
<PAGE>
without limiting the foregoing, the Company, Parent and their respective Boards
of Directors shall (i) take all action necessary so that no state takeover
statute or similar statute or regulation is or becomes applicable to the Merger,
this Agreement or any other transaction contemplated by this Agreement, and (ii)
if any state takeover statute or similar statute or regulation becomes
applicable to the Merger, the Canadian Arrangement, this Agreement or any other
transaction contemplated by this Agreement, take all commercially reasonable
action necessary so that the Merger and the other transactions contemplated by
this Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
statute or regulation on the Merger and the other transactions contemplated by
this Agreement.
(b) The Company and Parent shall keep the other apprised of
the status of matters relating to the completion of the transactions
contemplated hereby and work cooperatively in connection with obtaining the
requisite approvals and consents or governmental orders, including, without
limitation: (i) promptly notifying the other of, and if in writing furnishing
the other with copies of, any communications from or with any Governmental
Entity with respect to the Merger, the Canadian Arrangement or any of the other
transactions contemplated by this Agreement; (ii) permitting the other party to
review in advance, and considering in good faith the view of one another in
connection with, any proposed communication with any Governmental Entity in
connection with proceedings under or relating to any antitrust law; and (iii)
not agreeing to participate in any meeting or discussion with any governmental
authority in connection with proceedings under or relating to any antitrust law
unless it consults with the other party in advance, and, to the extent permitted
by such governmental authority, gives the other party the opportunity to attend
and participate. The Company shall give prompt notice to Parent, and Parent or
Sub shall give prompt notice to the Company, of (i) any representation or
warranty made by it or contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided, however, that
no such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
SECTION 5.4. Benefit Plans. (a) Effective as of the Effective
Time of the Merger and for a one-year period following the Effective Time of the
Merger, Parent shall provide, or cause the Surviving Corporation and its
subsidiaries and successors to provide, those persons who, at the Effective Time
of the Merger, were employees of the Company and its subsidiaries not
represented by any certified or recognized labor organization ("Covered
Employees"), with benefits and compensation during their continuing employment
that are substantially comparable, in the aggregate, to the compensation and
benefits provided to such employees as of the date of this Agreement; provided
that nothing herein shall restrict Parent or the Surviving Corporation from
terminating the employment of any such employees in accordance with applicable
laws and contractual rights, if any, of such employees.
(b) Parent will, or will cause the Surviving Corporation to:
(i) waive all limitations as to preexisting conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable to
the Covered Employees under any welfare plan that
-42-
<PAGE>
such employees may be eligible to participate in after the Effective Time of the
Merger; (ii) provide each such Covered Employee with credit for any co-payment
and deductibles paid prior to the Effective Time of the Merger 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 of the
Merger; and (iii) provide each Covered Employee with credit for purposes of
vesting and eligibility for all service with the Company and its affiliates
under each employee benefit plan, program, or arrangement of the Parent or its
affiliates in which such employees are eligible to participate to the extent
such service was credited for similar purposes under similar plans of the
Company or its subsidiaries; provided, however, that in no event shall the
Covered Employees be entitled to any credit to the extent that it would result
in a duplication of benefits with respect to the same period of service.
(c) Parent shall (i) cause the Surviving Corporation after the
consummation of the Merger to pay all amounts provided under all of the Employee
Benefit Plans in accordance with their terms, and (ii) honor and cause the
Surviving Corporation to honor all rights, privileges and modifications to or
with respect to any Employee Benefit Plans that become effective as a result of
such change in control in accordance with their terms, subject in each case to
all rights to amend or terminate any Employee Benefit Plan in accordance with
its terms.
(d) In the event the Effective Time of the Merger occurs prior
to December 31, 2000, then at the Effective Time of the Merger, Parent shall pay
or cause to be paid to each Covered Employee, in respect of such person's annual
bonus for calendar year 2000 under the 1997 Incentive Plan, an amount equal to
the product of (i) such employee's bonus for calendar year 2000, computed based
solely upon performance through the Effective Time of the Merger, as reasonably
determined by the Company immediately prior to the Effective Time of the Merger,
and (ii) a fraction, the numerator of which is the number of days elapsed in
calendar year 2000 as of the Effective Time of the Merger and the denominator of
which is 365.
SECTION 5.5. Indemnification. (a) Parent shall, to the fullest
extent permitted by law, cause the Surviving Corporation to honor all the
Company's and the Company Subsidiaries' obligations to indemnify (including any
obligations to advance funds for expenses) the current or former directors or
officers of the Company or any Company Subsidiary for acts or omissions by such
directors and officers occurring prior to the Effective Time of the Merger to
the extent that such obligations of the Company or the applicable Company
Subsidiaries exist on the date of this Agreement, whether pursuant to the
Restated Articles of Incorporation, By-laws of the Company, the organizational
documents of the Company Subsidiaries, individual indemnity agreements or
otherwise, and such obligations shall survive the Merger and shall continue in
full force and effect in accordance with the terms of such Restated Articles of
Incorporation, By-laws, the organizational documents of the Company Subsidiaries
and individual indemnity agreements from the Effective Time of the Merger until
the expiration of the applicable statute of limitations with respect to any
claims against such directors or officers arising out of such acts or omissions.
Parent shall cause (including providing the necessary funding) the payment of
all indemnification obligations of the Surviving Corporation under this Section
5.5(a).
(b) For a period of six years after the Effective Time of the
Merger, Parent shall cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by the Company (provided
that Parent may substitute therefor policies with
-43-
<PAGE>
reputable and financially sound carriers of at least the same coverage and
amounts containing terms and conditions that are no less advantageous) with
respect to claims arising from or related to facts or events that occurred at or
before the Effective Time of the Merger; provided, however, that Parent shall
not be obligated to make annual premium payments for such insurance to the
extent such premiums exceed 200% of the annual premiums paid as of the date
hereof by the Company for such insurance (such 200% amount, the "Maximum
Premium"). If such insurance coverage cannot be obtained at all, or can only be
obtained at an annual premium in excess of the Maximum Premium, Parent shall
maintain the most advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Premium. The Company
represents to Parent that the Maximum Premium is $376,000.
SECTION 5.6. Fees and Expenses. Except as provided in Section
7.2, all fees and expenses, including any fees payable to any broker, investment
banker or financial advisor, incurred in connection with the Merger, the
Canadian Arrangement and the transactions contemplated by this Agreement and the
Canadian Arrangement Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated, except that expenses
incurred in connection with printing and mailing the Proxy Statement, the
Canadian Proxy Statement and the Form S-4 shall be shared equally by Parent and
the Company.
SECTION 5.7. Public Announcements. Parent and Sub, on the one
hand, and the Company and Canadian Co., on the other hand, shall consult with
each other before issuing, and provide each other the opportunity to review and
comment upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement, including the Merger and the
Canadian Arrangement, and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
applicable law, court process or by obligations pursuant to any listing
agreement with any securities exchange.
SECTION 5.8. Accounting Treatment. Each of Parent and the
Company shall not take any action and shall not fail to take any action which
action or failure to act would prevent, or would be likely to prevent, the
Merger from qualifying for pooling of interests accounting treatment and shall
use reasonable efforts to obtain the letters of accountants referred to in
Section 6.1(f).
SECTION 5.9. Affiliates. Prior to the Company Stockholders
Meeting, the Company shall deliver to Parent a letter identifying all persons
who are, at the time this Agreement is submitted for approval to the
stockholders of the Company, "affiliates" of the Company (including all
directors of the Company) for purposes of Rule 145 under the Securities Act. The
Company shall use reasonable efforts to cause each such person to deliver to
Parent at least 30 days prior to the Company Stockholders Meeting, a written
agreement substantially in the form attached as Exhibit B to this Agreement.
SECTION 5.10. Stock Exchange Listing. Parent shall use
reasonable efforts to cause the shares of Parent Common Stock and Parent
Convertible Preferred Stock to be issued in the Merger and the Canadian
Arrangement and pursuant to the Company Employee Stock Plans to be approved for
listing on the NYSE, subject to official notice of issuance, prior to the
Closing Date.
-44-
<PAGE>
ARTICLE VI
Conditions Precedent
SECTION 6.1. Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Stockholder Approvals. The Company shall have obtained the
Company Stockholder Approval, and, so long as shares of Company Convertible
Preferred Stock remain outstanding, the Preferred Stockholder Approval.
(b) NYSE Listing. The shares of Parent Capital Stock issuable
to the stockholders of the Company and the Canadian Co. pursuant to this
Agreement and the Canadian Arrangement Agreement shall have been approved for
listing on the NYSE, subject to official notice of issuance.
(c) Antitrust. The waiting periods (and any extensions
thereof) applicable to the transactions contemplated by this Agreement under the
Hart-Scott-Rodino Improvements Act of 1976, as amended, shall have been
terminated or shall have expired. Any consents, approvals and filings under any
foreign antitrust law shall have been obtained or made without (i) the
imposition of conditions or (ii) the requirement of divestiture, except for such
consents, approvals and authorizations the failure of which to obtain would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect after the Effective Time of the Merger, and except for
conditions imposed or divestitures required that are primarily attributable to
the announcement or disclosure after the date of this Agreement of an
acquisition by Parent or any Parent Subsidiary.
(d) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that subject
to the proviso in Section 5.3(a) each of the parties shall have used reasonable
efforts to prevent the entry of any such injunction or other order and to appeal
as promptly as possible any such injunction or other order that may be entered.
(e) Form S-4. The Form S-4 shall have become effective under
the Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order, and Parent shall have received all state securities or
"blue sky" authorizations necessary to issue the Parent Common Stock pursuant to
this Agreement.
(f) Pooling Letters. Parent shall have received a letter from
Arthur Andersen LLP, dated as of the Closing Date, stating that the Merger will
be treated as a pooling of interests under Accounting Principles Board Opinion
No. 16 and the Company shall have received a letter from Pricewaterhouse Coopers
LLP ("PwC"), dated as of the Closing Date, that based upon the information set
forth in a representation letter furnished to PwC by the Company, PwC concurs
with the conclusions of the Company's management that, as of the Closing Date,
no conditions
-45-
<PAGE>
exist that would preclude the Company from being a party to a business
combination for which the pooling of interests method of accounting would be
available.
(g) No Governmental Entity Litigation. There shall not be
pending any suit, action or proceeding by any Governmental Entity (i)
challenging the acquisition by Parent or Sub of any shares of Company Common
Stock, seeking to restrain or prohibit the consummation of the Merger or any of
the other transactions contemplated by this Agreement or seeking to obtain from
the Company, Parent or Sub any damages that are material in relation to the
Company and its subsidiaries taken as a whole, (ii) seeking to prohibit or limit
the ownership or operation by the Company, any Company Subsidiary, Parent or any
Parent Subsidiary of any material portion of the business or assets of the
Company, any Company Subsidiary, Parent or any Parent Subsidiary or to compel
the Company, any Company Subsidiary, Parent or any Parent Subsidiary to dispose
of or hold separate any material portion of the business or assets of the
Company, any Company Subsidiary, Parent or any Parent Subsidiary, as a result of
the Merger or any of the other transactions contemplated by this Agreement,
(iii) seeking to impose limitations on the ability of Parent, Sub or Canadian
Sub to acquire or hold, or exercise full rights of ownership of, any shares of
capital stock of the Surviving Corporation and Canadian Co., including the right
to vote such capital stock on all matters properly presented to the stockholders
of the Surviving Corporation or Canadian Co., (iv) seeking to prohibit Parent or
any Parent Subsidiary from effectively controlling in any material respect the
business or operations of the Company or the Company Significant Subsidiaries or
(v) which otherwise is reasonably likely to have a Company Material Adverse
Effect or a Parent Material Adverse Effect, except to the extent such suit,
action or proceeding is primarily attributable to the announcement or disclosure
after the date of this Agreement of an acquisition by Parent or any Parent
Subsidiary.
(h) Canadian Arrangement. Canadian Co. shall have obtained the
Canadian Shareholder Approval, and each of the conditions to consummation of the
Canadian Arrangement capable of being satisfied prior to the Closing shall have
been satisfied.
SECTION 6.2. Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction or waiver by Parent on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties. Each of the
representations and warranties of the Company set forth in Section 3.1 (other
than the representations and warranties of the Company set forth in Section
3.1(c)(i) and the penultimate sentence of Section 3.1(e)) shall be true and
correct in all respects (but without regard to any materiality qualifications or
references to Company Material Adverse Effect contained in any specific
representation or warranty) on the date of this Agreement and on and as of the
Closing Date as though made on and as of the Closing Date (except for
representations and warranties made as of a specified date, the accuracy of
which will be determined as of the specified date), unless the failure or
failures of representations and warranties to be true and correct in all
respects, individually and taken together with all other such failures, would
not reasonably be expected to have a Company Material Adverse Effect. The
representations and warranties of the Company set forth in Section 3.1(c)(i) of
this Agreement shall be true and correct in all respects (other than failures to
be true and correct which do not adversely affect Parent unless such effects are
immaterial) on the date of this Agreement and on and as of the Closing Date as
though made on and as of the Closing Date (except for represe-
-46-
<PAGE>
ntations and warranties made as of a specified date, the accuracy of which will
be determined as of the specified date). The representations and warranties of
the Company set forth in the penultimate sentence of Section 3.1(e) of this
Agreement shall be true and correct in all respects on the date of this
Agreement and on and as of the Closing Date as though made on and as of the
Closing Date. Parent shall have received a certificate signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of the
Company to such effect.
(b) Performance of Obligations of the Company. The Company and
Canadian Co. shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the Closing
Date and Parent shall have received a certificate signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of the
Company to such effect.
(c) Letters from Company Affiliates. Parent shall have
received from each person named in the letter referred to in Section 5.9 an
executed copy of an agreement substantially in the form attached as Exhibit B to
this Agreement.
(d) Absence of Company Material Adverse Effect. There shall
not have occurred since the date of this Agreement any event, change, effect or
development that, individually or in the aggregate, has had or is reasonably
likely to have, a Company Material Adverse Effect.
(e) FIRPTA Certificate. Parent shall have received a Foreign
Investment in U.S. Real Property Tax Act of 1980 certification ("FIRPTA
Certificate"), dated as of the Closing Date, in the form attached as Exhibit C
to this Agreement signed on behalf of the Company by a duly authorized officer.
SECTION 6.3. Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject to the
satisfaction or waiver by the Company on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties. Each of the
representations and warranties of each of Parent and Sub set forth in Section
3.2 (other than the representations and warranties of Parent set forth in the
last sentence of Section 3.2(e)) shall be true and correct in all respects (but
without regard to any materiality qualifications or references to Parent
Material Adverse Effect contained in any specific representation or warranty) on
the date of this Agreement and on and as of the Closing Date as though made on
and as of the Closing Date (except for representations and warranties made as of
a specified date, the accuracy of which will be determined as of the specified
date), unless the failure or failures of representations and warranties to be
true and correct in all respects, individually and taken together with all other
such failures, would not reasonably be expected to have a Parent Material
Adverse Effect. The representations and warranties of Parent set forth in the
last sentence of Section 3.2(e) of this Agreement shall be true and correct in
all respects on the date of this Agreement and on and as of the Closing Date as
though made on and as of the Closing Date. The Company shall have received a
certificate signed on behalf of Parent by the Chief Executive Officer and the
Chief Financial Officer of Parent to such effect.
-47-
<PAGE>
(b) Performance of Obligations of Parent and Sub. Parent, Sub
and Canadian Sub shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the Closing
Date, and the Company shall have received a certificate signed on behalf of
Parent by the Chief Executive Officer and the Chief Financial Officer of Parent
to such effect.
(c) Absence of Parent Material Adverse Effect. There shall not
have occurred since the date of this Agreement any event, change, effect or
development that, individually or in the aggregate, has had or is reasonably
likely to have, a Parent Material Adverse Effect.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.1. Termination. This Agreement may be terminated at
any time prior to the Effective Time of the Merger, whether before or after the
Company Stockholder Approval:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if, at a duly held stockholders meeting of the
Company or any adjournment thereof at which the Company Stockholder
Approval is voted upon, the Company Stockholder Approval shall not have
been obtained or if, at a duly held meeting of the Canadian Co.'s
shareholders or any adjournment thereof at which the Canadian
Shareholder Approval is voted upon, the Canadian Shareholder Approval
shall not have been obtained;
(ii) subject to Section 7.6, if the Merger shall not
have been consummated on or before December 31, 2000 (the "Outside
Date"), unless the failure to consummate the Merger is the result of a
willful, Material Breach of this Agreement by the party seeking to
terminate this Agreement;
(iii) if any court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree or ruling or
taken any other action permanently enjoining, restraining or otherwise
prohibiting the Merger and such order, decree, ruling or other action
shall have become final and non-appealable; or
(iv) in the event of a breach by the other party of
any representation, warranty, covenant or other agreement contained in
this Agreement which (A) would give rise to the failure of a condition
set forth in Section 6.2(a) or 6.2(b) or Section 6.3(a) or 6.3(b), as
applicable, and (B) cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party of such
breach (provided that the terminating party is not then in breach of
any representation, warranty, covenant or other agreement that would
give rise to a failure of a condition as described in clause (A)
above);
-48-
<PAGE>
(c) by either Parent or the Company in the event that any
condition to the obligation of such party to effect the Merger set forth in
Section 6.1(f) or 6.2 (in the case of Parent) or Section 6.1(f) or 6.3 (in the
case of the Company) is not capable of being satisfied prior to the Outside Date
(provided that the terminating party is not then in breach of any
representation, warranty, covenant or other agreement that would give rise to a
failure of a condition as described in clause (A) of Section 7.1(b)(iv) above);
(d) by the Company, if the Board of Directors of the Company
shall have approved, and the Company shall concurrently with such termination
enter into, a definitive agreement providing for the implementation of the
transactions contemplated by a Company Takeover Proposal that is a Superior
Proposal; provided, however, that (i) such Company Takeover Proposal was not
solicited by the Company and did not otherwise result from a breach of Section
4.2(a), (ii) the Board of Directors of the Company shall have complied with the
requirements of Sections 4.2(b) and 4.2(c) in connection with such Company
Takeover Proposal and (iii) no termination pursuant to this Section 7.1(d) shall
be effective unless the Company shall simultaneously make the payment required
by Section 7.2(a);
(e) by Parent, if the Board of Directors of the Company shall
have (i) failed to recommend to the stockholders of the Company that they give
the Company Stockholder Approval, (ii) withdrawn or modified in any manner
adverse to Parent its recommendation to the Company's stockholders that they
give the Company Stockholder Approval or (iii) failed to reaffirm its
recommendation to the stockholders of the Company that they give the Company
Stockholder Approval within fourteen days after Parent has made a written
request to the Company to do so (which written request may be made by Parent at
any time after the public disclosure of a Company Takeover Proposal).
SECTION 7.2. Termination Fee; Effect of Termination. (a) In
the event that (i) this Agreement is terminated by the Company pursuant to
Section 7.1(d), (ii) this Agreement is terminated by Parent pursuant to Section
7.1(e) or (iii) this Agreement is terminated pursuant to Section 7.1(b)(i) and
within 12 months of the date of such termination the Company enters into an
agreement providing for, or consummates, a Company Acquisition, then the Company
shall pay to Parent a fee of $16,000,000, which amount shall be payable by wire
transfer of same day funds, on the date of termination of this Agreement (in the
event of a payment pursuant to clause (i) or (ii)), or on the date that a
Company Acquisition is consummated (in the event of a payment pursuant to clause
(iii)). The Company acknowledges that the agreements contained in this Section
7.2(a) are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, Parent would not enter into this Agreement.
Notwithstanding the foregoing, no payment need be made by the Company pursuant
to this Section 7.2(a) if Parent shall be in Material Breach of its
representations, warranties or covenants under this Agreement.
(b) In the event of termination of this Agreement by Parent or
the Company pursuant to Section 7.1(b)(iv), then (unless, with respect to
payment by the Company, Section 7.2(a) is applicable) the breaching party shall
reimburse the terminating party for all its reasonable out-of-pocket expenses
(up to $2,500,000) actually incurred in connection with this Agreement and the
transactions contemplated hereby, which amount shall be payable by wire transfer
of same day funds within three business days of written demand, accompanied by a
reasonably detailed statement of such expenses and appropriate supporting
documentation, therefor. Not-
-49-
<PAGE>
withstanding the foregoing, no payment need be made pursuant to this Section
7.2(b) if the terminating party shall be in Material Breach of its
representations, warranties or covenants under this Agreement.
(c) For purposes of this Agreement, a "Material Breach" shall
mean a breach that is material by reference to (i) the breaching party and its
subsidiaries, taken as a whole, (ii) the ability of the parties to consummate
the Merger and the other transactions contemplated by this Agreement in the
manner contemplated by this Agreement or (iii) the benefits expected to be
received by the non-breaching party and its stockholders as a result of the
consummation of the Merger and the other transactions contemplated by this
Agreement. For purposes of this Agreement, ""Company Acquisition" means (i)
consummation of the Company Takeover Proposal giving rise to the termination
described in Section 7.1(d), (ii) a consolidation, exchange of shares or merger
of the Company with any person, other than Parent or one of its subsidiaries, in
which the Company shall not be the continuing or surviving corporation, unless
the holders of Company Common Stock and Canadian Co. Exchangeable Shares
immediately before such consolidation, share exchange or merger shall after such
transaction represent more than 50% of the voting stock of the surviving
corporation or the surviving corporation's direct or indirect parent outstanding
immediately after such consolidation, merger or share exchange, (iii) a merger
of the Company with a person, other than Parent or one of its Subsidiaries, in
which the Company shall be the continuing or surviving corporation but the then
outstanding Company Common Stock shall be changed into or exchanged for stock or
other securities of the Company or any other person or cash or any other
property or shares of Company Common Stock shall be issued, such that in each
case, the holders of Company Common Stock and Canadian Co. Exchangeable Shares
outstanding immediately before such merger shall after such merger represent
less than 50% of the voting stock of the Company or the Company's direct or
indirect parent outstanding immediately after the merger, (iv) the acquisition
of beneficial ownership (as such term is used under Section 13(d) of the
Exchange Act) of 50% or more of the voting stock of the Company by any person
other than pursuant to a consolidation, share exchange or merger in which the
holders of Company Common Stock and Canadian Co. Exchangeable Shares immediately
before such consolidation, share exchange or merger shall after such transaction
represent more than 50% of the voting stock of the surviving corporation's
direct or indirect parent outstanding immediately after such consolidation,
merger or share exchange, or (v) a sale, lease or other transfer of 50% or more
of the assets of Company to any person, other than Parent or one of its
subsidiaries.
(d) In the event of termination of this Agreement by either
the Company or Parent as provided in Section 7.1, this Agreement shall forthwith
become void and have no effect, without any liability or obligation on the part
of Parent, Sub or the Company, other than the provisions of the last sentence of
Section 5.2, Section 5.6, this Section 7.2 and Article VIII and except that
nothing herein will relieve any party from liability for any willful breach of
this Agreement.
SECTION 7.3. Amendment. This Agreement may be amended by the
parties at any time before or after the Company Stockholder Approval or the
Canadian Shareholder Approval; provided, however, that: (a) after the Company
Stockholder Approval, there shall be made no amendment that by law requires
further approval by such stockholders without the further approval of such
stockholders, (b) after the Preferred Stockholder Approval, there shall be made
no amendment that by law requires further approval by such stockholders without
-50-
<PAGE>
the further approval of such stockholders, and (c) after the Canadian
Shareholder Approval there shall be made no amendment that by law requires
further approval by such shareholders without the further approval of such
shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
SECTION 7.4. Extension; Waiver. At any time prior to the
Effective Time of the Merger, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other parties, (b)
waive any inaccuracies in the representations and warranties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) subject
to the proviso of Section 7.3, waive compliance with any of the covenants or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
SECTION 7.5. Procedure for Termination, Amendment, Extension
or Waiver. A termination of this Agreement pursuant to Section 7.1, an amendment
of this Agreement pursuant to Section 7.3 or an extension or waiver pursuant to
Section 7.4 shall, in order to be effective, require, in the case of Parent, Sub
or the Company, action by its Board of Directors or, in the case of an extension
or waiver pursuant to Section 7.4, the duly authorized designee of its Board of
Directors.
SECTION 7.6. Parent Delaying Transactions.
(a) Following the announcement of a Delaying Transaction,
Parent shall no longer have the right to terminate this Agreement under Section
7.1(b)(ii) to the extent the Merger shall not have been consummated primarily as
a result of such Delaying Transaction.
(b) Following the announcement of a Delaying Transaction, the
Company shall have the right to terminate this Agreement upon five business days
prior notice to Parent if the Merger is unlikely to be consummated prior to
January 31, 2001 primarily as a result of such Delaying Transaction.
(c) For purposes of this Section 7.6(a) the term "Delaying
Transaction" shall mean any business combination, acquisition or intended
acquisition of assets by Parent or the Parent Subsidiaries that would require
the filing of pro forma financial statements by Parent with the SEC to reflect
such transaction.
ARTICLE VIII
General Provisions
SECTION 8.1. Non-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 Effective Time
of the Merger. This Section 8.1 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time of
the Merger.
-51-
<PAGE>
SECTION 8.2. Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing (including by
facsimile) and shall be deemed given upon receipt by the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Parent or Sub, to
Newmont Mining Corporation
1700 Lincoln Street
Denver, CO 80203
Phone: (303) 863-7414
Fax: (303) 837-5810
Attention: Joy E. Hansen
with copies to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Phone: (212) 403-1000
Fax: (212) 403-2000
Attention: David A. Katz, Esq.
(b) if to the Company, to
Battle Mountain Gold Company
333 Clay Street, Suite 4200
Houston, Texas 77002
Phone: (713) 650-6400
Fax: (713) 650-0600
Attention: Greg Etter, Vice-President
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Phone: (212) 373-3000
Fax: (212) 757-3990
Attention: Robert B. Schumer, Esq.
SECTION 8.3. Definitions. For purposes of this Agreement:
-52-
<PAGE>
An "affiliate" of any person means another person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person.
A "person" means an individual, corporation, partnership,
company, limited liability company, joint venture, association, trust,
unincorporated organization or other entity.
A "subsidiary" of any person means another person, an amount
of the voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person.
SECTION 8.4. Interpretation. When a reference is made in this
Agreement to a Section or Exhibit, such reference shall be to a Section of, or
an Exhibit to, this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation".
SECTION 8.5. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule or
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 8.6. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
SECTION 8.7. Entire Agreement; No Third-Party Beneficiaries.
This Agreement (including the documents referred to herein) (a) constitute the
entire agreement, and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of this
Agreement and (b) except for the provisions of Article II and Section 5.5, are
not intended to confer upon any person other than the parties any rights or
remedies.
SECTION 8.8. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 8.9. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of
-53-
<PAGE>
law or otherwise by any of the parties without the prior written consent of the
other parties, except that Parent and Sub may assign all the rights, interests
and obligations of Sub pursuant to Section 1.1. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns. Parent
shall cause Sub and Canadian Sub to perform its obligations hereunder and under
the Canadian Arrangement Agreement. The Company shall cause Canadian Co. to
perform its obligations hereunder and under the Canadian Arrangement Agreement.
SECTION 8.10. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of New York or in New York state court, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties to the Agreement (a) consents to submit
itself to the personal jurisdiction of any Federal court located in the State of
New York or any New York state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
initiate any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a Federal court sitting
in the State of New York or a New York state court.
-54-
<PAGE>
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
NEWMONT MINING CORPORATION
By /s/ Ronald C. Cambre
------------------------
Name: Ronald C. Cambre
Title: Chief Executive Officer
By /s/ Wayne W. Murdy
----------------------
Name: Wayne W. Murdy
Title: President
BOUNTY MERGER CORP.
By /s/ Wayne W. Murdy
----------------------
Name: Wayne W. Murdy
Title: President and Chief Executive
Officer
BATTLE MOUNTAIN GOLD COMPANY
By /s/ John A. Keyes
---------------------
Name: John A. Keyes
Title: President and Chief Operating
Officer
By /s/ Greg V. Etter
---------------------
Name: Greg V. Etter
Title: Vice President and General
Counsel
