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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): December 11, 1998
GETCHELL GOLD CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-16484 64-0748908
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(State of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
5460 South Quebec Street, Suite 240, Englewood, Colorado 80111
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(Address of principal executive offices) (Zip Code)
(303) 771-9000
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(Registrant's telephone number, including area code)
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(former name or former address, if changed since last report)
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Item 5. Other Events.
On December 11, 1998, Getchell Gold Corporation, a Delaware
corporation (the "Company"), Placer Dome Inc., a corporation amalgamated under
the Canada Business Corporation Act ("Placer"), and Bullion Acquisition Corp.,
a Delaware corporation and a wholly owned subsidiary of Placer ("Merger Sub"),
entered into an Agreement and Plan of Merger (the "Agreement"), pursuant to
which Merger Sub will be merged (the "Merger") with and into the Company, with
the Company surviving the Merger and becoming a wholly owned subsidiary of
Placer. Under the terms of the Agreement, each issued and outstanding share of
the Company common stock, other than shares owned by Placer or the Company, will
be converted into 2.45 shares of Placer common stock. The Agreement is filed as
Exhibit 2.1 hereto and is incorporated herein by reference.
In connection with the Agreement, on December 11, 1998, the
Company amended its Rights Agreement dated as of December 31, 1996 (the "Rights
Agreement"), between the Company and Harris Trust and Savings Bank in order to
render the Rights inapplicable to the Merger and other transactions contemplated
by the Merger Agreement. A copy of the Rights Agreement Amendment is attached
hereto as Exhibit 4.1.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) The following exhibits are filed as part of this Report:
2.1 Agreement and Plan of Merger dated as of December 11,
1998 among Placer Dome Inc., Bullion Acquisition Corp.
and Getchell Gold Corporation.
4.1 Rights Agreement Amendment dated as of December 11, 1998
between Getchell Gold Corporation and Harris Trust and
Savings Bank.
99.1 Joint Press Release of Getchell Gold Corporation and
Placer Dome Inc. dated December 13, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: December 15, 1998
GETCHELL GOLD CORPORATION
By: /s/ Donald S. Robson
---------------------------------------
Name: Donald S. Robson
Title: Vice President, Chief Financial
Officer & Secretary
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EXHIBIT INDEX
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<CAPTION>
Exhibits.
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2.1 Agreement and Plan of Merger dated as of December 11, 1998 among Placer
Dome Inc., Bullion Acquisition Corp. and Getchell Gold Corporation.
4.1 Rights Agreement Amendment dated as of December 11, 1998 between
Getchell Gold Corporation and Harris Trust and Savings Bank.
99.1 Joint Press Release of Getchell Gold Corporation and Placer Dome Inc.
dated December 13, 1998.
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 11, 1998
AMONG
PLACER DOME INC.,
BULLION ACQUISITION CORP.
AND
GETCHELL GOLD CORPORATION,
A DELAWARE CORPORATION
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TABLE OF CONTENTS
<TABLE>
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ARTICLE I. THE MERGER.............................................................................................1
1.1. THE MERGER................................................................................................1
1.2. CLOSING...................................................................................................2
1.3. EFFECTIVE TIME............................................................................................2
1.4. EFFECTS OF THE MERGER.....................................................................................2
1.5. CERTIFICATE OF INCORPORATION..............................................................................2
1.6. BYLAWS....................................................................................................2
1.7. OFFICERS AND DIRECTORS OF SURVIVING CORPORATION...........................................................2
ARTICLE II. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES...2
2.1. EFFECT ON CAPITAL STOCK...................................................................................2
2.2. EXCHANGE OF CERTIFICATES..................................................................................3
ARTICLE III. REPRESENTATIONS AND WARRANTIES.......................................................................7
3.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................................................7
3.2. REPRESENTATIONS AND WARRANTIES OF PARENT.................................................................14
3.3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB RESPECTING MERGER SUB............................21
ARTICLE IV. COVENANTS RELATING TO CONDUCT OF BUSINESS............................................................22
4.1. COVENANTS OF THE COMPANY.................................................................................22
4.2. COVENANTS OF PARENT AND MERGER SUB.......................................................................24
4.3. ADVICE OF CHANGES; GOVERNMENT FILINGS....................................................................26
4.4. CONTROL OF OTHER PARTY'S BUSINESS........................................................................27
ARTICLE V. ADDITIONAL AGREEMENTS.................................................................................27
5.1. PREPARATION OF FORM F-4 AND PROXY STATEMENT; THE COMPANY STOCKHOLDERS MEETING............................27
5.2. ACCESS TO INFORMATION....................................................................................28
5.3. APPROVALS AND CONSENTS; COOPERATION......................................................................29
5.4. ACQUISITION PROPOSALS....................................................................................30
5.5. EMPLOYEE BENEFITS........................................................................................31
5.6. FEES AND EXPENSES........................................................................................32
5.7. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE......................................................32
5.8. PUBLIC ANNOUNCEMENTS.....................................................................................32
5.9. TAX AND ACCOUNTING TREATMENT.............................................................................32
5.10. AFFILIATES...............................................................................................33
5.11. STOCK EXCHANGE LISTING...................................................................................33
5.12. TAKEOVER STATUTES........................................................................................33
5.13. RIGHTS AGREEMENTS........................................................................................33
5.14. EMPLOYEE STOCK OPTIONS AND EQUITY INCENTIVES.............................................................33
5.15. FURTHER ASSURANCES.......................................................................................34
ARTICLE VI. CONDITIONS PRECEDENT.................................................................................35
6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER...............................................35
6.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB............................................36
6.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY......................................................37
ARTICLE VII. TERMINATION AND AMENDMENT...........................................................................37
7.1. TERMINATION..............................................................................................37
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7.2. EFFECT OF TERMINATION....................................................................................39
7.3. AMENDMENT................................................................................................40
7.4. EXTENSION; WAIVER........................................................................................40
ARTICLE VIII. GENERAL PROVISIONS.................................................................................40
8.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS; NO OTHER REPRESENTATIONS AND WARRANTIES......40
8.2. NOTICES..................................................................................................41
8.3. INTERPRETATION...........................................................................................41
8.4. COUNTERPARTS.............................................................................................41
8.5. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES...........................................................41
8.6. GOVERNING LAW............................................................................................42
8.7. SEVERABILITY.............................................................................................42
8.8. ASSIGNMENT...............................................................................................42
8.9. ENFORCEMENT..............................................................................................42
8.10. DEFINITIONS..............................................................................................42
</TABLE>
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GLOSSARY OF DEFINED TERMS
<TABLE>
<CAPTION>
LOCATION OF
DEFINITION DEFINED TERM
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Acquisition Proposal.................................................................................Section 5.4(a)
Agreement..................................................................................................Preamble
Amex............................................................................................Section 3.1(c)(iii)
Average Parent Stock Price ..........................................................................Section 2.1(c)
Board of Directors..................................................................................Section 8.10(a)
Business Day........................................................................................Section 8.10(b)
Canadian GAAP.....................................................................................Section 3.2(d)(i)
Certificate of Merger...................................................................................Section 1.3
Certificates.........................................................................................Section 2.2(b)
Closing.................................................................................................Section 1.2
Closing Date............................................................................................Section 1.2
Code.......................................................................................................Recitals
Common Shares Trust ............................................................................Section 2.2(e)(iii)
Company....................................................................................................Preamble
Company Benefit Plans.............................................................................Section 3.1(l)(i)
Company Common Stock.......................................................................................Recitals
Company Disclosure Schedule.............................................................................Section 3.1
Company Material Contracts...........................................................................Section 3.1(k)
Company Permits......................................................................................Section 3.1(f)
Company Property.....................................................................................Section 3.1(p)
Company Rights Agreement .........................................................................Section 3.1(b)(i)
Company SEC Reports...............................................................................Section 3.1(d)(i)
Company Stock Option Plans..........................................................................Section 8.10(c)
Company Stockholders Meeting.........................................................................Section 5.1(b)
Company Sub..........................................................................................Section 3.1(a)
Company Voting Debt.............................................................................Section 3.1(b)(iii)
Confidentiality Agreement ..............................................................................Section 5.2
Conversion Number....................................................................................Section 2.1(c)
DGCL.......................................................................................................Recitals
Effective Time..........................................................................................Section 1.3
ERISA.............................................................................................Section 3.1(l)(i)
Excess Shares ...................................................................................Section 2.2(e)(ii)
Exchange Act....................................................................................Section 3.1(c)(iii)
Exchange Agent.......................................................................................Section 2.2(a)
Exchange Fund........................................................................................Section 2.2(a)
Expenses................................................................................................Section 5.6
Form F-4..........................................................................................Section 3.1(e)(i)
Governmental Entity.............................................................................Section 3.1(c)(iii)
HSR Act.........................................................................................Section 3.1(c)(iii)
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Indemnified Party.......................................................................................Section 5.7
Liens............................................................................................Section 3.1(b)(ii)
Material Adverse Effect.............................................................................Section 8.10(d)
Merger.....................................................................................................Recitals
Merger Sub.................................................................................................Preamble
Mining Claims .......................................................................................Section 3.1(o)
New Stock Rights....................................................................................Section 5.14(c)
Organizational Documents............................................................................Section 8.10(e)
Outside Date.........................................................................................Section 7.1(b)
Parent.....................................................................................................Preamble
Parent Benefit Plans..............................................................................Section 3.2(k)(i)
Parent Common Stock........................................................................................Recitals
Parent Disclosure Schedule..............................................................................Section 3.2
Parent Material Contracts............................................................................Section 3.2(j)
Parent Permits.......................................................................................Section 3.2(f)
Parent Property......................................................................................Section 3.2(n)
Parent Rights ....................................................................................Section 3.2(b)(i)
Parent Rights Agreement...........................................................................Section 3.2(b)(i)
Parent SEC Reports................................................................................Section 3.2(d)(i)
Parent Voting Debt..............................................................................Section 3.2(b)(iii)
Person..............................................................................................Section 8.10(f)
Proxy Statement...................................................................................Section 3.1(e)(i)
Required Company Votes...............................................................................Section 3.1(j)
Required Parent Votes................................................................................Section 3.2(j)
Required Regulatory Approvals........................................................................Section 6.1(e)
SEC...............................................................................................Section 3.1(d)(i)
Securities Act..................................................................................Section 3.1(c)(iii)
Subsidiary..........................................................................................Section 8.10(g)
Superior Proposal....................................................................................Section 5.4(b)
Surviving Corporation...................................................................................Section 1.1
Takeover statute.......................................................................................Section 5.12
Tax.................................................................................................Section 8.10(h)
Taxable.............................................................................................Section 8.10(h)
Taxes...............................................................................................Section 8.10(h)
Tax Return..........................................................................................Section 8.10(h)
Terminating Company Breach...........................................................................Section 7.1(g)
Terminating Parent Breach............................................................................Section 7.1(h)
The other party.....................................................................................Section 8.10(i)
U.S. GAAP..................................................................................................Recitals
Violation....................................................................................... Section 3.1(c)(ii)
1996 Plan............................................................................................. Section 5.14
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This AGREEMENT AND PLAN OF MERGER, dated as of December 11,
1998 (this "Agreement"), by and among Placer Dome Inc., a corporation
amalgamated under the Canada Business Corporations Act ("Parent"), Bullion
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("Merger Sub"), and Getchell Gold Corporation, a Delaware corporation
(the "Company").
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of Parent, Merger
Sub and the Company have each determined that the Merger (as defined below) is
in the best interests of their respective stockholders and have approved 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 $.0001 per
share, of the Company ("Company Common Stock"), other than shares owned directly
or indirectly by Parent or by the Company, will be converted into the right to
receive the Conversion Number (as defined below) of a fully paid and
nonassessable share of common stock, without par value, of Parent (the "Parent
Common Stock");
WHEREAS, in order to effectuate the foregoing, Merger Sub,
upon the terms and subject to the conditions of this Agreement and in accordance
with the Delaware General Corporation Law (the "DGCL"), will merge with and into
the Company (the "Merger"); and
WHEREAS, Parent, Merger Sub and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe various conditions to the Merger;
WHEREAS, for United States Federal income tax purposes it is
intended that the Merger qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
and
WHEREAS, for financial accounting purposes, it is intended
that the Merger will be accounted for as a pooling of interests transaction
under United States generally accepted accounting principles ("U.S.
GAAP").
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I.
THE MERGER
1.1. THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, Merger Sub shall be
merged with and into the Company at the Effective Time (as defined below).
Following the Merger, the separate corporate existence of Merger Sub shall cease
and the Company shall continue as the surviving corporation (the "Surviving
Corporation") in accordance with the DGCL.
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1.2. CLOSING. The closing of the Merger (the "Closing") will take
place as soon as practicable after satisfaction or waiver (as permitted by this
Agreement and applicable law) of the conditions (excluding conditions that, by
their terms, cannot be satisfied until the Closing Date) set forth in Article VI
(the "Closing Date"), unless another time or date is agreed to in writing by the
parties hereto. The Closing shall be held at the offices of Latham & Watkins,
505 Montgomery Street, Suite 1900, San Francisco, CA 94111, unless another place
is agreed to in writing by the parties hereto.
1.3. EFFECTIVE TIME. Upon the Closing, the parties shall file with
the Secretary of State of the State of Delaware a certificate of merger or other
appropriate documents (in any such case, the "Certificate of Merger") executed
in accordance with the relevant provisions of the DGCL and shall make all other
filings, recordings or publications required under the DGCL in connection with
the Merger. The Merger shall become effective at such time as the Certificate of
Merger is duly filed with the Delaware Secretary of State, or at such other time
as the parties may agree and specify in the Certificate of Merger (the time the
Merger becomes effective being the "Effective Time").
1.4. EFFECTS OF THE MERGER. At and after the Effective Time, the
Merger will have the effects set forth in Section 259 of the DGCL.
1.5. CERTIFICATE OF INCORPORATION. The certificate of incorporation
of Merger Sub as in effect immediately prior to the Effective Time shall be the
certificate of incorporation of the Company until thereafter changed or amended
as provided therein or by applicable law, provided that such certificate of
incorporation shall be amended to reflect "Getchell Gold Corporation" as the
name of the Surviving Corporation.
1.6. BYLAWS. The bylaws of Merger Sub as in effect at the Effective
Time shall be the bylaws of the Company until thereafter changed or amended as
provided therein or by applicable law.
1.7. OFFICERS AND DIRECTORS OF SURVIVING CORPORATION. The officers
and directors of Merger Sub shall be the officers and directors of the Surviving
Corporation, until the earlier of their resignation or removal or otherwise
ceasing to be an officer or director or until their respective successors are
duly elected and qualified, as the case may be.
ARTICLE II.
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1. EFFECT ON CAPITAL STOCK. As of the Effective Time, 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 Merger Sub:
(a) Capital Stock of Merger Sub. Each issued and
outstanding share of capital stock of Merger Sub shall be converted into and
become one fully paid
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and nonassessable share of common stock, par value $.001 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 or by a
wholly owned subsidiary of the Company and each share of Company Common Stock
that is owned by Parent, Merger Sub or any other wholly owned subsidiary of
Parent shall automatically be canceled and retired and shall cease to exist, and
no Parent Common Stock or other consideration shall be delivered in exchange
therefor.
(c) Conversion of Company Common Stock. Subject to
Section 2.2(e), each issued and outstanding share of Company Common stock (other
than shares to be canceled 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 together with the associated Parent Right (unless
the context otherwise requires, all references herein to Parent Common Stock
include the associated Parent Right). The "Conversion Number" shall mean 2.45,
as adjusted pursuant to Section 2.1(d). As of the Effective Time, all such
shares of Company Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares of Company Common Stock shall
cease to have any rights with respect thereto, except the right to receive upon
the surrender of such certificates, certificates representing the shares of
Parent Common Stock, and cash in lieu of fractional shares of Parent Common
Stock and any dividends to the extent provided in Section 2.2(c) to be issued or
paid in consideration therefor upon surrender of such certificates in accordance
with Section 2.2, without interest.
(d) Adjustment of Conversion Number. In the event of
any split, combination or reclassification of any Parent Common Stock or any
issuance or the authorization of any issuance of any other securities in
exchange or in substitution for shares of Parent Common Stock at any time during
the period from the date of this Agreement to the Effective Time, the Company
and Parent shall make such adjustment to the Conversion Number as the Company
and Parent shall mutually agree so as to preserve the economic benefits that the
Company and Parent each reasonably expected on the date of this Agreement to
receive as a result of the consummation of the Merger and the other transactions
contemplated by this Agreement.
2.2. EXCHANGE OF CERTIFICATES.
(a) Exchange Agent. Immediately following the
Effective Time, Parent shall deposit with The Bank of New York or such other
bank or trust company as may be designated by Parent and the Company (the
"Exchange Agent"), for the benefit of the holders of shares of Company Common
Stock, for exchange in accordance with this Article II, through the Exchange
Agent, certificates representing the shares of Parent Common Stock issuable
pursuant to Section 2.1 in exchange for outstanding shares of Company Common
Stock together with amounts sufficient in the
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aggregate to provide all funds necessary for the Exchange Agent to make payments
in lieu of fractional shares pursuant to Section 2.2(e) and dividend payments
pursuant to Section 2.2(c) (such shares of Parent Common Stock and funds,
together with any dividends or distributions with respect thereto with a record
date after the Effective Time, being hereinafter referred to as the "Exchange
Fund").
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time of the Merger, the Exchange Agent shall
mail to each holder of record of a certificate or certificates (the
"Certificates") which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock, other than shares to be canceled or
retired in accordance with Section 2.1(b), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing shares of Parent
Common Stock. Upon surrender of a Certificate for 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, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Company Common Stock which is not registered in the
transfer records of the Company, a certificate representing the proper number of
shares of Parent Common Stock may be issued to a Person other than the Person in
whose name the Certificate so surrendered is registered, if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer and the
Person requesting such payment shall pay any transfer or other taxes required by
reason of the issuance of shares of Parent Common Stock to a Person other than
the registered holder of such Certificate or establish to the satisfaction of
Parent that such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the certificate representing the appropriate number of whole shares of
Parent Common Stock, cash in lieu of any fractional shares of Parent Common
Stock and any dividends to the extent provided in Section 2.2(c) as contemplated
by this Section 2.2. No interest will be paid or will accrue on any cash payable
in lieu of any fractional shares of Parent Common Stock.
(c) Distributions with Respect to Unexchanged Shares.
No dividends or other distributions with respect to Parent Common Stock with a
record date after the Effective Time 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 2.2(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
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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 2.2(e)
and the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Common Stock, and (ii) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time but prior to
such surrender and a payment date subsequent to such surrender payable with
respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common
Stock. All shares of Parent Common Stock issued upon the surrender for exchange
of Certificates in accordance with the terms of this Article II (including any
cash paid pursuant to Section 2.2(c) or 2.2(e)) shall be deemed to have been
issued (and paid) in full satisfaction of all rights pertaining to the shares of
Company Common Stock theretofore represented by such Certificates, and there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation or the Exchange
Agent for any reason, they shall be canceled and exchanged as provided in this
Article II, except as otherwise provided by law.
(e) No Fractional Shares.
(i) No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates.
(ii) As promptly as practicable following the
Effective Time, the Exchange Agent shall determine the excess of (x) the number
of shares of Parent Common Stock delivered to the Exchange Agent by Parent
pursuant to Section 2.2(a) over (y) the aggregate number of whole shares of
Parent Common Stock to be distributed to holders of the Certificates pursuant to
Section 2.2(b) (such excess being herein called the "Excess Shares"). As soon as
practicable after the Effective Time, the Exchange Agent, as agent for the
holders of the Certificates, shall sell the Excess Shares at then prevailing
prices on the New York Stock Exchange all in the manner provided in paragraph
(iii) of this Section 2.2(e).
(iii) The sale of the Excess Shares by the
Exchange Agent shall be executed on the New York Stock Exchange through one or
more member firms of the New York Stock Exchange and shall be executed in round
lots to the extent practicable. 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 Surviving Corporation will pay all commission,
transfer taxes and other out-of-pocket transaction costs, including the expenses
and compensation of the Exchange Agent incurred in connection with such sale
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of the Excess Shares. 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
(after taking into account all shares of Company Common Stock held at the
Effective Time by such holder) and the denominator of which is the aggregate
amount of fractional share interest to which all holders of Certificates are
entitled.
(iv) Notwithstanding the provisions of Section
2.2(e)(ii) and (iii), the Surviving Corporation may elect at its option,
exercised prior to the Effective Time, in lieu of the issuance and sale of
Excess Shares and the making of the payments hereinabove contemplated, to pay
each holder of Company Common Stock an amount in cash equal to the product
obtained by multiplying (A) the fractional share interest to which such holder
(after taking into account all shares of Company Common stock held at the
Effective Time by such holder) would otherwise be entitled by (B) the closing
price for a share of Parent Common Stock as reported on the New York Stock
Exchange Composite Transaction Tape (as reported in The Wall Street Journal, or,
if not reported thereby, any other authoritative source) on the last full
trading day prior to the Effective Time, and, in such case, all references
herein to the cash proceeds of the sale of the Excess Shares and similar
references will be deemed to mean and refer to the payments calculated as set
forth in this Section 2.2(e)(iv).
(v) 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 interest, the Exchange Agent shall
make available such amounts, without interest, to such holders of Certificates
who have surrendered their Certificates in accordance with this Article II.
(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 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, Merger 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 delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(h) Investment of Exchange Fund and Common Shares
Trust. The Exchange Agent shall invest any cash included in the Exchange Fund
and Common
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Shares Trust, as directed by Parent, on a daily basis. Any interest and other
income resulting from such investments shall be paid to Parent.
(i) Lost Certificates. In the event that any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if required by Parent, the posting by such Person of a
bond in such reasonable amount as Parent may direct as indemnity against any
claim that may be made against it with respect to such Certificate, the Exchange
Agent will issue in exchange for such lost, stolen or destroyed Certificate the
Parent Common Stock, and any cash in lieu of fractional shares and any unpaid
dividends or distributions with respect to Parent Common Stock, to which they
are entitled pursuant hereto.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set
forth in the Company Disclosure Schedule delivered by the Company to Parent at
or prior to the execution of this Agreement (the "Company Disclosure Schedule")
or the Company SEC Reports (as defined below), the Company represents and
warrants to Parent and Merger Sub as follows:
(a) Organization, Standing and Power. Each of the Company and
FMG Inc., a Nevada corporation ("Company Sub"), has been duly incorporated and
is validly existing and in good standing under the laws of its jurisdiction of
incorporation and has the requisite power and authority to carry on its business
as now being conducted. Each of the Company and Company Sub is duly qualified
and in good standing to do business in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification necessary, except where the failure to so qualify could not
reasonably be expected, either individually or in the aggregate, to have a
Material Adverse Effect on the Company. The copies of the Organizational
Documents of the Company and Company Sub which were previously furnished or made
available to Parent are true, complete and correct copies of such documents as
in effect on the date of this Agreement.
(b) Capital Structure.
(i) The authorized capital stock of the
Company consists of (A) 100,000,000 shares of Company Common Stock, of
which as of the date of this Agreement 30,797,536 shares are
outstanding, and (B) 10,000,000 shares of preferred stock, par value
$.0001 per share, of which no shares are outstanding. All issued and
outstanding shares of the capital stock of the Company are duly
authorized, validly issued, fully paid and nonassessable, and no class
of capital stock is entitled to preemptive rights. As of the date of
this Agreement, there are no outstanding options, warrants or other
rights to acquire capital stock from the Company other than (C) rights
issued pursuant to the Amended and Restated Rights Agreement dated as
of December 31, 1996 between the Company and Harris Trust and Savings
Bank (the "Company Rights Agreement"), (D) options representing in the
aggregate the right to purchase 1,523,227 shares of Company Common
Stock under the Company Stock Option Plans
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<PAGE> 13
and (E) debentures convertible into 10,000 shares of Company Common
Stock. As of the date of this Agreement, the Company also has 72,808
stock appreciation rights outstanding.
(ii) All of the issued and outstanding
shares of capital stock of Company Sub are duly authorized, validly
issued, fully paid and nonassessable and are owned by the Company, free
and clear of any liens, claims, encumbrances, restrictions, preemptive
rights or any other claims of any third party ("Liens"). Except for the
capital stock of Company Sub, the Company does not own, directly or
indirectly, any capital stock or other ownership interest in any
Person.
(iii) No bonds, debentures, notes or other
indebtedness of the Company having the right to vote on any matters on
which stockholders may vote ("Company Voting Debt") are issued or
outstanding.
(iv) Except as otherwise set forth in this
Section 3.1(b) and except in connection with elections made by
participants in the Company's 401(k) plan, there are no securities,
options, warrants, calls, rights, commitments, agreements, arrangements
or undertakings of any kind to which the Company or Company Sub is a
party or by which any of them is bound obligating the Company or
Company Sub to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock or other voting securities
of the Company or Company Sub or obligating the Company or Company Sub
to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or
undertaking. There are no outstanding obligations of the Company or
Company Sub to repurchase, redeem or otherwise acquire any shares of
capital stock of the Company or Company Sub.
(c) Authority; No Conflicts.
(i) The Company has all requisite corporate
power and corporate authority to enter into this Agreement and, subject
to the adoption of this Agreement by the requisite vote of the holders
of Company Common Stock, to consummate the transactions contemplated
hereby. The Board of Directors of the Company has approved this
Agreement and the transactions contemplated by this Agreement and has
resolved (subject to its rights under Sections 5.1 and 5.4) to
recommend to the Company's stockholders that they approve this
Agreement and the transactions contemplated under this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company, subject in the
case of the consummation of the Merger to the adoption of this
Agreement by the stockholders of the Company. This Agreement has been
duly executed and delivered by the Company and constitutes a valid and
binding agreement of the Company, enforceable against it in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws
relating to or
8
<PAGE> 14
affecting creditors generally and by general equity principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(ii) The execution and delivery of this
Agreement does not or will not, as the case may be, and the
consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or constitute a default (with or
without notice or lapse of time, or both) under, or give rise to a
right of consent, termination, amendment, cancellation or acceleration
of any obligation or the loss of any material property, material right
or material benefit under, or the creation of a lien, pledge, security
interest, charge or other encumbrance on any assets (any such conflict,
violation, default, right of consent, termination, amendment,
cancellation or acceleration, loss or creation, a "Violation") pursuant
to: (A) any provision of the Organizational Documents of the Company or
Company Sub or (B) except as could not reasonably be expected to have a
Material Adverse Effect on the Company and, subject to obtaining or
making the consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (iii) below, any loan
or credit agreement, note, mortgage, bond, indenture, lease, benefit
plan or other agreement, obligation, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the Company, Company Sub or their
respective properties or assets.
(iii) No consent, approval, order or
authorization of, or registration, declaration or filing with, any
supranational, national, state, municipal or local government, any
instrumentality, subdivision, court, administrative agency or
commission or other authority thereof, or any quasi-governmental or
private body exercising any regulatory, taxing, or other governmental
or quasi-governmental authority (a "Governmental Entity"), is required
by or with respect to the Company or Company Sub in connection with the
execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby,
except for (x) those required under or in relation to (A) the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (B) state securities or "blue sky" laws, (C) the Securities
Act of 1933, as amended (the "Securities Act"), (D) the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (E) the DGCL
with respect to the filing and recordation of appropriate merger or
other documents, (F) rules and regulations of the American Stock
Exchange (the "Amex"), and (G) antitrust or other competition laws of
other jurisdictions, and (y) such consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of
which to make or obtain could not reasonably be expected to have a
Material Adverse Effect on the Company or materially impair or delay
the ability of the Company to consummate the transactions contemplated
hereby.
(d) Reports and Financial Statements.
(i) The Company has filed all required
reports, schedules, forms, statements and other documents required to
be filed by it with the Securities and
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<PAGE> 15
Exchange Commission (the "SEC") since January 1, 1996 (collectively,
including all exhibits thereto, the "Company SEC Reports"). Company Sub
is not required to file any form, report or other document with the
SEC. None of the Company SEC Reports, as of their respective dates
(and, if amended or superseded by a filing prior to the date of this
Agreement or of the Closing Date, then on the date of such filing),
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. Each of the financial statements (including the
related notes) included in the Company SEC Reports presents fairly, in
all material respects, the consolidated financial position and
consolidated results of operations and cash flows of the Company and
Company Sub as of the respective dates or for the respective periods
set forth therein, all in conformity with U.S. GAAP consistently
applied during the periods involved except as otherwise noted therein,
and subject, in the case of the unaudited interim financial statements,
to normal and recurring year-end adjustments that have not been and are
not expected to be material in amount. All of such Company SEC Reports,
as of their respective dates (and as of the date of any amendment to
the respective Company SEC Report), complied as to form in all material
respects with the applicable requirements of the Securities Act and the
Exchange Act and the rules and regulations promulgated thereunder.
(ii) Except as set forth in the Company SEC
Reports filed prior to the date of this Agreement, and except for
liabilities and obligations incurred in the ordinary course of business
since December 31, 1997, neither the Company nor Company Sub has any
liabilities or obligations of any nature required by U.S. GAAP to be
set forth on a consolidated balance sheet of the Company and Company
Sub which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on the Company.
(e) Information Supplied.
(i) 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 F-4 filed with the SEC by
Parent in connection with the issuance of Parent Common Stock in the
Merger (the "Form F-4") will, at the time any amendment or supplement
to the Form F-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, or
(ii) the proxy statement related to the meeting of the Company's
stockholders to be held in connection with the Merger and the
transactions contemplated by this Agreement (the "Proxy Statement")
will, on the date it is first mailed to the Company's stockholders or
at the time of the Company Stockholders Meeting (as defined below),
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. The Proxy Statement
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<PAGE> 16
will comply as to form in all material respects with the requirements
of the Exchange Act and the Securities Act and the rules and
regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing
provisions of this Section 3.1(e), no representation or warranty is
made by the Company with respect to statements made or incorporated by
reference in the Proxy Statement or Form F-4 based on information
supplied by Parent or Merger Sub for inclusion or incorporation by
reference therein.
(f) Compliance with Applicable Laws; Regulatory Matters. The
Company and Company Sub hold all permits, licenses, certificates, franchises,
registrations, variances, exemptions, orders and approvals of all Governmental
Entities which are material to the operation of their businesses, taken as a
whole (the "Company Permits"). The Company and Company Sub are in compliance
with the terms of the Company Permits, except where the failure so to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Company. Except as disclosed in the Company SEC
Reports, the businesses of the Company and Company Sub are not being and have
not been conducted in violation of any law, ordinance, regulation, judgment,
decree, injunction, rule or order of any Governmental Entity, except for
violations which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company and since December 31,
1997, neither the Company nor Company Sub has received any written warning,
notice, notice of violation or probable violation, notice of revocation, or
other written communication from or on behalf of any Governmental Entity,
alleging (A) any violation of any Company Permit or (B) that the Company or the
Company Sub requires any Company Permit required for its business that is not
currently held by it. To the knowledge of the Company, no material investigation
by any Governmental Entity with respect to the Company or Company Sub is pending
or threatened.
(g) Litigation. There is no material litigation, arbitration,
claim, suit, action, investigation or proceeding pending or, to the knowledge of
the Company, threatened, against or affecting the Company or Company Sub, nor is
there any material judgment, award, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or Company Sub
which does not affect all companies similarly situated.
(h) Taxes. (i) The Company and Company Sub have duly and
timely filed (taking into account any extension of time within which to file)
all material Tax Returns required to be filed by any of them and all such filed
Tax Returns are complete and accurate in all material respects; (ii) the Company
and Company Sub have paid all material Taxes that are shown as due on such filed
Tax Returns or that the Company or Company Sub is obligated to withhold from
amounts owing to any employee, creditor or third party, except with respect to
matters contested in good faith; (iii) except as disclosed in the Company's SEC
Reports, to the knowledge of the Company, there are no pending or threatened in
writing audits, examinations, investigations or other proceedings in respect of
Taxes or Tax matters relating to the Company or Company Sub; (iv) except as
disclosed in the Company's SEC Reports, there are no material deficiencies or
claims for any Taxes that have been proposed, asserted or assessed against the
Company or
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<PAGE> 17
Company Sub; (v) there are no material Liens for Taxes upon the assets of the
Company or Company Sub, other than Liens for current Taxes not yet due and
payable and Liens for Taxes that are being contested in good faith by
appropriate proceedings; (vi) neither of the Company nor Company Sub has made an
election under Section 341(f) of the Code; (vii) neither the Company nor Company
Sub have extended, or waived application of, any statute of limitations of any
jurisdiction covering the assessment or collection of any Taxes; (viii) to the
Company's knowledge there are no conditions that would prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code;
and (ix) neither the Company nor Company Sub is a party to any agreement,
contract, arrangement or plan that has resulted or would result, separately or
in the aggregate, in the payment of "excess parachute payments" within the
meaning of Section 280G of the Code.
(i) Absence of Certain Changes or Events. Since September 30,
1998 through the date of this Agreement, (A) each of the Company and Company Sub
has conducted its business in the ordinary course and has not incurred any
material liability, except in the ordinary course of their respective
businesses; (B) there has not been any change in the business, financial
condition or results of operations of the Company or Company Sub that has had,
or could reasonably be expected to have, a Material Adverse Effect on the
Company, (C) there has not been 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; (D) there has not been any split,
combination or reclassification of any Company capital stock or any issuance or
the authorization of any issuance of any other securities in exchange or in
substitution for shares of Company capital stock; (E) there has not been (i) any
granting by the Company or the Company Sub to any executive officer of the
Company or the Company Sub of any increase in compensation, except in the
ordinary course of business consistent with prior practice or as was required
under employment agreements in effect as of the date of the most recent audited
financial statements included in the Company SEC Reports, (ii) any granting by
the Company or the Company Sub to any such executive officer of any increase in
severance or termination pay, except as was required under any employment,
severance or termination agreements in effect as of the date of the most recent
audited financial statements included in the Company SEC Reports, or (iii) any
entry by the Company of the Company Sub into any employment, severance or
termination agreement with any such executive officer; and (F) there has not
been any change in accounting methods, principles or practices by the Company of
the Company Sub materially affecting its assets, liabilities or business, except
insofar as may have been required by a change in U.S. GAAP.
(j) Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock (the "Required
Company Votes") is the only vote of the holders of any class or series of the
Company capital stock necessary to approve this Agreement and the transactions
contemplated hereby.
(k) Certain Agreements. All contracts listed as an exhibit to
the Company's Annual Report on Form 10-K under the rules and regulations of the
SEC relating to the business of the Company and Company Sub (the "Company
Material Contracts") are valid and in full force and effect except to the extent
they have previously expired in accordance with their terms,
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<PAGE> 18
and neither the Company nor Company Sub has violated any provision of, or
committed or failed to perform any act which, with or without notice, lapse of
time, or both, could reasonably be expected to constitute a material default
under the provisions of, any such Company Material Contract. To the knowledge of
the Company, no counterparty to any such Company Material Contract has violated
any provision of, or committed or failed to perform any act which, with or
without notice, lapse of time, or both, could reasonably be expected to
constitute a material default or other material breach under the provisions of,
such Company Material Contract.
(l) Employee Benefit Plans; Labor Matters.
(i) With respect to each employee benefit
plan, program, arrangement and contract (including, without limitation,
any "employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and any
bonus, deferred compensation, stock bonus, stock purchase, restricted
stock, stock option, employment, termination, change in control and
severance plan, program, arrangement and contract), to which the
Company or Company Sub is a party, which is maintained or contributed
to by the Company or Company Sub, or with respect to which the Company
or Company Sub could incur material liability under Section 4069, 4201
or 4212(c) of ERISA (the "Company Benefit Plans"), the Company has made
available to Parent a true and complete copy of such Company Benefit
Plan.
(ii) Each of the Company Benefit Plans that
is an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA and that is intended to be qualified under Section 401(a)
of the Code has received a favorable determination letter from the IRS,
and the Company is not aware of any circumstances likely to result in
the revocation of any such favorable determination letter that could
not reasonably be corrected under Rev. Proc. 98-22.
(iii) With respect to the Company Benefit
Plans, no event has occurred and, to the knowledge of the Company,
there exists no condition or set of circumstances, in connection with
which the Company or Company Sub could be subject to any material
liability under the terms of such Company Benefit Plans, ERISA, the
Code or any other applicable law.
(iv) Neither of the Company nor Company Sub
is a party to any collective bargaining or other labor union contracts
and no collective bargaining agreement is being negotiated by the
Company or Company Sub. There is no pending labor dispute, strike or
work stoppage against the Company or Company Sub which may interfere
with the respective business activities of the Company or Company Sub,
except where such dispute, strike or work stoppage could not reasonably
be expected to have a Material Adverse Effect on the Company. There is
no pending charge or complaint against the Company or Company Sub by
the National Labor Relations Board or any comparable state agency,
except where such unfair labor practice, charge or complaint could not
reasonably be expected to have a Material Adverse Effect on the
Company.
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<PAGE> 19
(m) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of the Company, except Nesbitt Burns Inc. and Salomon Smith Barney
Inc.
(n) Opinion of Financial Advisor. The Company has received the
oral opinion of each of Nesbitt Burns Inc. and Salomon Smith Barney Inc. as of
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 Company Common
Stock.
(o) Real Property and Mining Claims. The Company and Company
Sub have good and marketable fee simple title to each material parcel of real
property (not including unpatented mining claims or millsites) owned by each of
them, free and clear of all material liens, mortgages, adverse claims,
encumbrances and royalty rights or interests, except with respect to taxes and
general and special assessments not in default and payable without penalty or
interest. With respect to all unpatented mining claims and millsites owned by
the Company or Company Sub (the "Mining Claims"), the Company or Company Sub, as
the case may be, (i) is in exclusive possession of the Mining Claims free and
clear of all material liens, mortgages, encumbrances, royalty rights or
interests and, to the knowledge of the Company or Company Sub, as applicable,
adverse claims, subject to the paramount title of the United States, and (ii)
has timely made all filings and recordings in the appropriate governmental
offices as required to maintain the Mining Claims in good standing, except where
the failure to do so would not have a Material Adverse Effect on the Company.
The foregoing representations and warranties with respect to unpatented mining
claims shall not be deemed to constitute a representation or warranty that a
mineral discovery has been made on any such claim.
(p) Dispositions of Company Property. Since December 31, 1997,
neither the Company nor the Company Sub has sold or disposed of or ceased to
hold or own any personal property, real property, any interest or rights with
respect to real property (including exploration or production rights), any
interest in a joint venture or other assets or properties of the Company of the
Company Sub ("Company Property"), other than sales and dispositions of raw
materials, obsolete equipment, mine output and other inventories, and any
interests or rights with respect to real property having an individual fair
market value of less than $1,000,000 in the ordinary course of business,
consistent with past practice. No Company Property 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.
3.2. REPRESENTATIONS AND WARRANTIES OF PARENT. Except as set forth
in the Parent Disclosure Schedule delivered by Parent to the Company at or prior
to the execution of this Agreement (the "Parent Disclosure Schedule") or the
Parent SEC Reports (as defined below), Parent represents and warrants to the
Company as follows:
(a) Organization, Standing and Power. Each of Parent and its
Significant Subsidiaries (as hereinafter defined) has been duly incorporated and
is validly existing and where
14
<PAGE> 20
such concept is recognized in good standing under the laws of its jurisdiction
of incorporation and has the requisite power and authority to carry on its
business as now being conducted. Each of Parent and its Significant Subsidiaries
is duly qualified and in good standing to do business in each jurisdiction in
which the nature of its business or the ownership or leasing of its properties
makes such qualification necessary, except where the failure so to qualify could
not reasonably be expected, either individually or in the aggregate, to have a
Material Adverse Effect on Parent. The copies of the Organizational Documents of
Parent which were previously furnished or made available to the Company are
true, complete and correct copies of such documents as in effect on the date of
this Agreement. The "Significant Subsidiaries" shall mean all Subsidiaries
considered significant subsidiaries under Regulation S-X of the Securities Act
together with the subsidiaries designated as significant subsidiaries of Parent
set forth in Section 3.2(b)(ii) of the Parent Disclosure Schedule. Parent
together with the Significant Subsidiaries account for substantially all of the
consolidated revenues of Parent.
(b) Capital Structure.
(i) The authorized capital stock of Parent
consists of (A) unlimited shares of Parent Common Stock, of which as of
the date of this Agreement 250,050,948 shares are outstanding, and (B)
unlimited shares of preferred stock, of which as of the date of this
Agreement no shares are outstanding. All issued and outstanding shares
of the capital stock of Parent are duly authorized, validly issued,
fully paid and nonassessable, and no class of capital stock is entitled
to preemptive rights. As of the date of this Agreement, there are no
outstanding options, warrants or other rights to acquire capital stock
from Parent other than (C) rights (the "Parent Rights") issued pursuant
to the Rights Agreement amended and restated effective April 14, 1998
between Parent and CIBC Mellon Trust Company (the "Parent Rights
Agreement") and (D) options representing in the aggregate the right to
purchase 7,472,808 shares of Parent Common Stock under Parent's equity
incentive plans.
(ii) Section 3.2(b)(ii) of the Parent
Disclosure Schedule lists all Significant Subsidiaries of Parent as of
the date of this Agreement. All of the issued and outstanding shares of
capital stock of each Significant Subsidiary of Parent are duly
authorized, validly issued, fully paid and nonassessable and are owned,
directly or indirectly, by Parent and are owned free and clear of any
Liens. Except for the capital stock of the Significant Subsidiaries
listed in Section 3.2(b)(ii) of the Parent Disclosure Schedule and
Parent's other Subsidiaries, Parent does not own, directly or
indirectly, any capital stock or other ownership interest in any Person
that is material to Parent.
(iii) No bonds, debentures, notes or other
indebtedness of Parent having the right to vote on any matters on which
stockholders may vote ("Parent Voting Debt") are issued or outstanding.
(iv) Except as otherwise set forth in this
Section 3.2(b) and except pursuant to equity incentive plans of Parent
or any of its Significant Subsidiaries, there are no securities,
options, warrants, calls, rights, commitments, agreements,
15
<PAGE> 21
arrangements or undertakings of any kind to which Parent or any of its
Significant Subsidiaries is a party or by which any of them is bound
obligating Parent or any of its Significant Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of Parent or any of
its Significant Subsidiaries or obligating Parent or any of its
Significant Subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. There are no outstanding obligations of
Parent or any of its Significant Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of Parent.
(c) Authority; No Conflicts.
(i) Parent has all requisite corporate power
and corporate authority to enter into this Agreement and to consummate
the transactions contemplated hereby. The Board of Directors of Parent
has approved this Agreement and the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent.
This Agreement has been duly executed and delivered by Parent and
constitutes a valid and binding agreement of Parent, enforceable
against it in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting creditors generally, or
by general equity principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(ii) The execution and delivery of this
Agreement does not or will not, as the case may be, and the
consummation of the transactions contemplated hereby will not, result
in any Violation of: (A) any provision of the Organizational Documents
of Parent or any of its Significant Subsidiaries or (B) except as could
not reasonably be expected to have a Material Adverse Effect on Parent
and subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in
paragraph (iii) below, any loan or credit agreement, note, mortgage,
bond, indenture, lease, benefit plan or other agreement, obligation,
instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to
Parent, any of its Significant Subsidiaries or their respective
properties or assets.
(iii) No consent, approval, order or
authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to Parent in
connection with the execution and delivery of this Agreement by Parent
or the consummation by Parent of the transactions contemplated hereby,
except for (A) the consents, approvals, orders, authorizations,
registrations, declarations and filings required under or in relation
to clause (x) of Section 3.1(c)(iii) (including approvals of stock
exchanges on which Parent Common Stock is listed for issuance and
exemption orders or rulings as are required to be obtained under
Canadian securities laws) and
16
<PAGE> 22
(B) such consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to make or obtain could
not reasonably be expected to have a Material Adverse Effect on Parent
or materially impair or delay the ability of Parent to consummate the
transactions contemplated hereby.
(d) Reports and Financial Statements.
(i) Parent has filed all required reports,
schedules, forms, statements and other documents required to be filed
by it with the SEC since January 1, 1996 (collectively, including all
exhibits thereto, the "Parent SEC Reports"). No Subsidiary of Parent is
required to file any form, report or other document with the SEC. None
of the Parent SEC Reports, as of their respective dates (and, if
amended or superseded by a filing prior to the date of this Agreement
or of the Closing Date, then on the date of such filing), contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Each of the financial statements (including the related
notes) included in the Parent SEC Reports presents fairly, in all
material respects, the consolidated financial position and consolidated
results of operations and cash flows of Parent and its Subsidiaries as
of the respective dates or for the respective periods set forth
therein, all in conformity with Canadian generally accepted accounting
principles ("Canadian GAAP") consistently applied during the periods
involved except as otherwise noted therein, and subject, in the case of
the unaudited interim financial statements, to normal and recurring
year-end adjustments that have not been and are not expected to be
material in amount. All of such Parent SEC Reports, as of their
respective dates (and as of the date of any amendment to the respective
Parent SEC Report), complied as to form in all material respects with
the applicable requirements of the Securities Act and the Exchange Act
and the rules and regulations promulgated thereunder.
(ii) Except as set forth in the Parent SEC
Reports filed prior to the date of this Agreement, and except for
liabilities and obligations incurred in the ordinary course of business
consistent with past practice since December 31, 1997, neither Parent
nor any of its Subsidiaries has any liabilities or obligations of any
nature required by Canadian GAAP to be set forth on a consolidated
balance sheet of Parent and its Subsidiaries which, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect on Parent.
(e) Information Supplied.
(i) None of the information supplied or to
be supplied by Parent or Merger Sub for inclusion or incorporation by
reference in (i) the Form F-4 will, at the time any amendment or
supplement to the Form F-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 or (ii) the Proxy Statement will, on the date it
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is first mailed to the Company's stockholders or at the time of the
Company 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 were made, not misleading.
(ii) Notwithstanding the foregoing
provisions of this Section 3.2(e), no representation or warranty is
made by Parent or Merger Sub with respect to statements made or
incorporated by reference in the Proxy Statement or Form F-4 based on
information supplied by the Company for inclusion or incorporation by
reference therein.
(f) Compliance with Applicable Laws; Regulatory Matters. The
Parent and its Significant Subsidiaries hold all required permits, licenses,
certificates, franchises, registrations, variances, exemptions, orders and
approvals of all Governmental Entities (the "Parent Permits"), except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on Parent. The Parent and its
Significant Subsidiaries are in compliance with the terms of the Parent Permits,
except where the failure so to comply, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect on Parent. Except
as disclosed in Parent SEC Reports, the businesses of Parent and its Significant
Subsidiaries are not being and have not been conducted in violation of any law,
ordinance, regulation, judgment, decree, injunction, rule or order of any
Governmental Entity, except for violations which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect on
Parent and since December 31, 1997, neither Parent nor any of its Significant
Subsidiaries has received any written warning, notice, notice of violation or
probable violation, notice of revocation, or other written communication from or
on behalf of any Governmental Entity, alleging (A) any violation of any Parent
Permit or (B) that Parent or any of its Significant Subsidiaries requires any
Parent Permit required for its business that is not currently held by it, except
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on Parent. To the knowledge of Parent, no
investigation by any Governmental Entity with respect to Parent or any of its
Significant Subsidiaries is pending or threatened, other than investigations
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on Parent.
(g) Litigation. There is no litigation, arbitration, claim,
suit, action, investigation or proceeding pending or, to the knowledge of
Parent, threatened, against or affecting Parent or any of its Significant
Subsidiaries which, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect on Parent, nor is there
any judgment, award, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against Parent or any of its Significant
Subsidiaries which, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect on Parent.
(h) Taxes. (i) Parent and each of its Significant Subsidiaries
have duly and timely filed (taking into account any extension of time within
which to file) all material Tax Returns required to be filed by any of them and
all such filed Tax Returns are complete and accurate in all material respects;
(ii) Parent and each of its Significant Subsidiaries have paid all
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Taxes that are shown as due on such filed Tax Returns or that Parent or any of
its Significant Subsidiaries is obligated to withhold from amounts owing to any
employee, creditor or third party, except with respect to matters contested in
good faith or for such amounts that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on Parent; (iii) to the
knowledge of Parent, there are no pending or threatened in writing audits,
examinations, investigations or other proceedings in respect of Taxes or Tax
matters relating to Parent or any of its Significant Subsidiaries which, if
determined adversely to Parent or such Significant Subsidiary, could reasonably
be expected to have a Material Adverse Effect on Parent; (iv) there are no
deficiencies or claims for any Taxes that have been proposed, asserted or
assessed against Parent or any of its Significant Subsidiaries which, if such
deficiencies or claims were finally resolved against Parent or any of its
Significant Subsidiaries, could reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on Parent; (v) there are no
material Liens for Taxes upon the assets of Parent or any of its Significant
Subsidiaries, other than Liens for current Taxes not yet due and payable and
Liens for Taxes that are being contested in good faith by appropriate
proceedings; (vi) none of Parent or any of its Significant Subsidiaries has made
an election under Section 341(f) of the Code; and (vii) to Parent's knowledge,
there are no conditions that would prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
(i) Absence of Certain Changes or Events. Since September
30, 1998 through the date of this Agreement, (A) each of Parent and its
Significant Subsidiaries has conducted its business in the ordinary course
consistent with its past practice and has not incurred any material liability,
except in the ordinary course of their respective businesses; (B) there has not
been any change in the business, financial condition or results of operations of
Parent or any of its Significant Subsidiaries that has had, or could reasonably
be expected to have, a Material Adverse Effect on Parent; (C) there has not been
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, except for dividends in the ordinary course of business
consistent with past practice; (D) 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; and (E) there has not been any
change in accounting methods, principles or practices by Parent or any of
Parent's Significant Subsidiaries materially affecting its assets, liabilities
or business, except insofar as may have been required by a change in Canadian
GAAP or in connection with Parent's change to U.S. GAAP.
(j) Certain Agreements. All contracts listed as an exhibit to
Parent's Annual Report on Form 40-F under the rules and regulations of the SEC
relating to the business of the Parent and its Significant Subsidiaries (the
"Parent Material Contracts") are valid and in full force and effect except to
the extent they have previously expired in accordance with their terms, and
neither Parent nor any of its Significant Subsidiaries has violated any
provision of, or committed or failed to perform any act which, with or without
notice, lapse of time, or both, could reasonably be expected to constitute a
default under the provisions of, any such Parent Material Contract, except for
defaults which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on Parent. To the knowledge of the
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Company, no counterparty to any such Parent Material Contract has violated any
provision of, or committed or failed to perform any act which, with or without
notice, lapse of time, or both, could reasonably be expected to constitute a
default or other breach under the provisions of, such Parent Material Contract,
except for defaults or breaches which, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect on Parent.
(k) Employee Benefit Plans; Labor Matters.
(i) With respect to each U.S. employee
benefit plan, program, arrangement and contract (including, without
limitation, any "employee benefit plan," as defined in Section 3(3) of
ERISA and any bonus, deferred compensation, stock bonus, stock
purchase, restricted stock, stock option, employment, termination,
change in control and severance plan, program, arrangement and
contract), to which Parent or any of its Significant Subsidiaries is a
party, which is maintained or contributed to by Parent or any of its
Significant Subsidiaries, or with respect to which Parent or any of its
Significant Subsidiaries could incur material liability under Section
4069, 4201 or 4212(c) of ERISA (the "Parent Benefit Plans"), Parent has
made available to the Company a true and complete copy of such Parent
Benefit Plan.
(ii) Each of the Parent Benefit Plans that
is an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA and that is intended to be qualified under Section 401(a)
of the Code has received a favorable determination letter from the IRS,
and Parent is not aware of any circumstances likely to result in the
revocation of any such favorable determination letter that could not
reasonably be corrected under Rev. Proc. 98-22.
(iii) With respect to the Parent Benefit
Plans or other employee benefit plans, programs, arrangements and
contracts to which Parent or any of its Significant Subsidiaries is a
party, no event has occurred and, to the knowledge of the Parent, there
exists no condition or set of circumstances, in connection with which
the Parent or any of its Significant Subsidiaries could be subject to
any liability under the terms of such Parent Benefit Plans, ERISA, the
Code or any other applicable law which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect on Parent.
(iv) Except as set forth on the Parent
Disclosure Schedule, none of Parent or its Significant Subsidiaries is
a party to any collective bargaining or other labor union contracts and
no collective bargaining agreement is being negotiated by Parent or any
of its Significant Subsidiaries. There is no pending labor dispute,
strike or work stoppage against Parent or any of its Significant
Subsidiaries which may interfere with the respective business
activities of Parent or any of its Significant Subsidiaries, except
where such dispute, strike or work stoppage could not reasonably be
expected to have a Material Adverse Effect on Parent. There is no
pending charge or complaint against Parent or any of its Significant
Subsidiaries by the National Labor Relations
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Board or any comparable state agency, except where such unfair labor
practice, charge or complaint could not reasonably be expected to have
a Material Adverse Effect on Parent.
(l) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent on Merger Sub, except Credit Suisse First Boston
Corporation.
(m) Ownership of Company Capital Stock. As of the date of this
Agreement, neither Parent nor any of its Significant Subsidiaries or, to the
best of its knowledge without investigation, any of its affiliates or associates
(as such terms are defined under the Exchange Act) (i) beneficially owns,
directly or indirectly or (ii) is party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of, in
case of either clause (i) or (ii), shares of capital stock of the Company.
(n) Dispositions of Parent Property. Since December 31,
1997, neither Parent nor any of its Significant Subsidiaries has sold or
disposed of or ceased to hold or own any personal property, real property, any
interest or rights with respect to real property (including exploration or
production rights), any interest in a joint venture or other assets or
properties of Parent or any of its Significant Subsidiaries ("Parent Property"),
other than sales and dispositions of raw materials, obsolete equipment, mine
output and other inventories, and any interests or rights with respect to real
property which, individually or in the aggregate, have had a Material Adverse
Effect on Parent.
3.3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
RESPECTING MERGER SUB. Parent and Merger Sub represent and warrant to the
Company as follows:
(a) Organization and Corporate Power. Merger Sub is a wholly
owned Subsidiary of Parent and a corporation duly incorporated, validly existing
and in good standing under the laws of Delaware. The copies of the
Organizational Documents of Merger Sub which were previously furnished or made
available to the Company are true, complete and correct copies of such documents
as in affect on the date of this Agreement.
(b) Corporate Authorization. Merger Sub has all requisite
corporate power and corporate authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by Merger Sub of this Agreement and the consummation by Merger Sub
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Merger Sub. This Agreement has been
duly executed and delivered by Merger Sub and constitutes a valid and binding
agreement of Merger Sub, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors generally, or by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
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(c) Non-Contravention. The execution, delivery and performance
by Merger Sub of this Agreement and the consummation by Merger Sub of the
transactions contemplated hereby do not and will not contravene or conflict with
the Organizational Documents of Merger Sub.
(d) No Business Activities. Merger Sub is not a party to any
material agreements and has not conducted any activities other than in
connection with the organization of Merger Sub, the negotiation and execution of
this Agreement and the consummation of the transactions contemplated hereby.
Merger Sub has no Subsidiaries.
ARTICLE IV.
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1. COVENANTS OF THE COMPANY. During the period from the date of
this Agreement and continuing until the Effective Time (except as expressly
contemplated or permitted by this Agreement or to the extent that Parent shall
otherwise consent in writing):
(a) Ordinary Course. The Company and Company Sub shall carry
on their respective businesses in the usual, regular and ordinary course in all
material respects, shall not enter into any hedging contracts or arrangements
other than in the ordinary course of business and consistent with past practice,
and shall use all reasonable efforts to preserve intact their present business
organizations and preserve their relationships with customers, suppliers and
others having business dealings with them; provided, however, that no action by
the Company or Company Sub with respect to matters specifically addressed by any
other provision of this Section 4.1 shall be deemed a breach of this Section
4.1(a) unless such action would constitute a breach of one or more of such other
provisions.
(b) Dividends; Changes in Share Capital. The Company shall
not, and shall not permit Company Sub to, and shall not propose to, (i) declare
or pay any dividends on or make other distributions in respect of any of its
capital stock, (ii) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for, shares of its capital stock, or (iii)
repurchase, redeem or otherwise acquire any shares of its capital stock or any
securities convertible into or exercisable for any shares of its capital stock.
(c) Issuance of Securities. The Company shall not and shall
cause Company Sub not to issue, grant, deliver or sell, or authorize or propose
the issuance, grant, delivery or sale of, any shares of its capital stock of any
class, any Company Voting Debt or any securities convertible into or exercisable
for, or any rights, warrants or options to acquire, any such shares or Company
Voting Debt, or enter into any agreement with respect to any of the foregoing,
other than (i) the issuance of Company Common Stock upon the exercise of stock
options or stock appreciation rights issued prior to the date of this Agreement
in the ordinary course of business and consistent with past practice in
accordance with the terms of the Company Stock Option Plans as in effect on the
date of this Agreement or pursuant to elections made by participants in the
Company's 401(k) plan, and (ii) issuances of options, rights or other awards
prior to the date
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of this Agreement in the ordinary course of business and consistent with past
practice pursuant to the Company Stock Option Plans as in effect on the date of
this Agreement.
(d) Organizational Documents. Except to the extent required to
comply with their respective obligations hereunder, required by law or required
by the rules and regulations of the Amex, the Company and Company Sub shall not
amend or propose to amend their respective Organizational Documents.
(e) Indebtedness. The Company shall not, and shall not permit
Company Sub to, (i) incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Company or Company Sub or guarantee any debt
securities of other Persons other than indebtedness of the Company or Company
Sub to the Company or Company Sub and other than in the ordinary course of
business, (ii) make any loans, advances or capital contributions to, or
investments in, any other Person, other than by the Company or Company Sub to or
in the Company or Company Sub, (iii) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise) or (iv) enter into any derivative contracts (other than
hedging contracts in the ordinary course of business and consistent with past
practice), other than in the case of clauses (ii) and (iii), loans or advances
of less than $1,000,000 in the aggregate, investments in marketable securities,
payments, discharges or satisfactions incurred or committed to in the ordinary
course of business consistent with past practice.
(f) Benefit Plans. The Company shall not, and shall not permit
Company Sub to, (i) increase the compensation payable or to become payable to
any of its executive officers or employees or (ii) take any action with respect
to the grant of any severance or termination pay, or stay, bonus or other
incentive arrangement (other than pursuant to benefit plans and policies in
effect on the date of this Agreement), except (A) any such increases made in the
ordinary course of business and in accordance with past practice or (B) as
provided in Section 5.5.
(g) Acquisitions. Subject to Section 5.4, the Company shall
not, and shall not permit Company Sub to, acquire or agree to acquire (i) by
merging or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
limited liability company, joint venture, association or other business
organization or division thereof or (ii) any assets that are material,
individually or in the aggregate, to the Company and the Company Sub, taken as a
whole.
(h) Sales; Liens and Encumbrances. The Company shall not, and
shall not permit Company Sub to, sell, lease, license, mortgage or other wise
encumber or subject to any Lien or otherwise dispose of any Company Property
other than (i) sales and dispositions of interest or rights with respect to real
property having an aggregate fair market value on the date of this Agreement of
less than $1,000,000, raw materials, obsolete equipment, mine output and other
inventories, in each case only if in the ordinary course of business consistent
with past practice, and (ii) encumbrances and Liens that are incurred in the
ordinary course of business consistent with past practice.
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(i) Material Agreements. The Company shall not, and shall not
permit Company Sub to, terminate or amend on terms materially less favorable to
the Company any agreement filed as an exhibit to any Company SEC Report.
(j) Authorization of Actions. The Company shall not, and shall
not permit Company Sub to, authorize any of, or commit to agree to take any of,
the foregoing actions in this Section 4.1.
(k) Capital Expenditures. The Company shall not, and shall not
permit Company Sub to, make or agree to make any new capital expenditure or
expenditures that, in the aggregate, are in excess of $1,000,000 above the
aggregate amount currently budgeted by the Company, as disclosed in Section
4.1(k) of the Company Disclosure Schedule; provided, however, that Parent's
consent to capital expenditures in excess of such amount shall not be
unreasonably withheld.
(l) Tax Elections. The Company shall not, and shall not permit
Company Sub to, make any material Tax election or settle or compromise any
material Tax liability or refund, except to the extent already provided for in
the Company SEC Documents and except for settlements or compromises with respect
to Tax liabilities or refunds currently in dispute between the Company or
Company Sub and the Internal Revenue Service; provided, however, that Parent's
consent to any Tax election or settlement or compromise of any Tax liability or
refund shall not be unreasonably withheld.
(m) Benefit Plans. Without limiting the generality of clause
(f) above, the Company shall not, and shall not permit Company Sub to, make any
amendment to any Company Stock Option Plan as a result of this Agreement or in
contemplation of the Merger, except as required by law and with respect to the
elimination of any "cash out" provisions.
(n) Other Actions. The Company shall not, and shall not permit
Company Sub to, take any action that could reasonably be expected to result in
(i) any of the representations or warranties of the Company set forth in this
Agreement that are qualified as to materiality becoming untrue (ii) any of such
representations and warranties that are not so qualified becoming untrue in or
(iii) except as otherwise permitted by Section 5.4, any of the conditions to the
Merger set forth in Article VI not being satisfied.
4.2. COVENANTS OF PARENT AND MERGER SUB. During the period from the
date of this Agreement and continuing until the Effective Time (except as
expressly contemplated or permitted by this Agreement or to the extent that the
Company shall otherwise consent in writing):
(a) Ordinary Course. Parent and its Significant Subsidiaries
shall carry on their respective businesses in the usual, regular and ordinary
course in all material respects, in substantially the same manner as heretofore
conducted, and shall use all reasonable efforts to preserve intact their present
lines of business, maintain their rights and franchises and preserve their
relationships with customers, suppliers and others having business dealings with
them to the end that their ongoing businesses shall not be impaired in any
material respect at the Effective
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Time; provided, however, that no action by Parent or any of its Significant
Subsidiaries with respect to matters specifically addressed by any other
provision of this Section 4.2 shall be deemed a breach of this Section 4.2(a)
unless such action would constitute a breach of one or more of such other
provisions.
(b) Dividends; Changes in Share Capital. Parent shall not, and
shall not permit any of its Significant Subsidiaries to, and shall not propose
to, (i) declare or pay any dividends on or make other distributions in respect
of any of its capital stock, except dividends by Parent or Parent's Significant
Subsidiaries in the ordinary course of business consistent with past practice,
(ii) split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock, except for any such transaction
by a wholly owned Subsidiary of Parent which remains a wholly owned Subsidiary
after consummation of such transaction, or (iii) repurchase, redeem or otherwise
acquire any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock; provided, however, that nothing
in this Section 4.2(b) shall prohibit dividends or distributions between
Subsidiaries of Parent or the repurchase, redemption or acquisition of shares of
capital stock of any Subsidiary of Parent.
(c) Issuance of Securities. Parent shall not and shall cause
its Significant Subsidiaries not to issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its capital stock of
any class, any Parent Voting Debt or any securities convertible into or
exercisable for, or any rights, warrants or options to acquire, any such shares
or Parent Voting Debt, or enter into any agreement with respect to any of the
foregoing, other than (i) the issuance of Parent Common Stock upon the exercise
of stock options or stock appreciation rights issued in the ordinary course of
business and consistent with past practice in accordance with the terms of
Parent's or its Significant Subsidiaries' equity incentive or purchase plans as
in effect on the date of this Agreement or pursuant to other equity plans as in
effect on the date of this Agreement, (ii) issuances of options, rights or other
awards in the ordinary course of business and consistent with past practice
pursuant to Parent's equity incentive plans as in effect on the date of this
Agreement, (iii) issuances by a Significant Subsidiary of Parent of shares of
capital stock to another Subsidiary of Parent, and (iv) issuances of shares of
capital stock by a Significant Subsidiary of Parent consistent with Parent's
past practice.
(d) Organizational Documents. Except to the extent required to
comply with their respective obligations hereunder, required by law or required
by the rules and regulations of The Toronto Stock Exchange, Parent and its
Significant Subsidiaries shall not amend or propose to amend their respective
Organizational Documents.
(e) Indebtedness. Parent shall not, and shall not permit any
of its Subsidiaries to, (i) incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or warrants
or rights to acquire any debt securities of Parent or any of its Subsidiaries or
guarantee any debt securities of other Persons other than indebtedness of Parent
or any of its Subsidiaries to Parent or any wholly owned Subsidiary of Parent,
other than in an aggregate amount not exceeding $750,000,000 and other than in
the ordinary course of business, (ii) make any loans, advances or capital
contributions to, or investments in, any other Person,
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other than by Parent or any of its Subsidiaries to or in Parent or any of its
Subsidiaries or (iii) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than in the case of clauses (ii) and (iii), loans, advances,
capital contributions, investments, payments, discharges or satisfactions
incurred or committed to in the ordinary course of business consistent with past
practice.
(f) Acquisitions. Parent shall not, and shall not permit any
of its Significant Subsidiaries to, acquire or agree to acquire for an aggregate
amount in excess of $750,000,000 (i) by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, limited liability company, joint
venture, association or other business organization or division thereof or (ii)
any assets that are material, individually or in the aggregate, to Parent and
its Subsidiaries, taken as a whole.
(g) Material Agreements. Parent shall not, and shall not
permit any of its Subsidiaries to, terminate or amend on terms materially less
favorable to Parent any agreement filed as an exhibit to any Parent SEC Report,
which termination or amendment, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on Parent.
(h) Authorization of Actions. Parent shall not, and shall not
permit any of its Subsidiaries to, authorize any of, or commit to agree to take
any of, the foregoing actions in this Section 4.2.
(i) Other Actions. Parent shall not, and shall not permit any
of its Subsidiaries to, take any action that could reasonably be expected to
result in (i) any of the representations or warranties of the Company set forth
in this Agreement that are qualified as to materiality becoming untrue in any
material respect or (ii) any of the conditions to the Merger set forth in
Article VI not being satisfied.
(j) Board of Directors. Parent shall take such actions as are
necessary to cause the appointment of two designees of the Company to Parent's
Board of Directors, which designees are reasonably acceptable to Parent. Parent
shall take such actions as are necessary to cause the appointment to Parent's
Board of Directors of one of such designees immediately following the Effective
Time and one of such designees as soon as practicable following the Effective
Time.
4.3. ADVICE OF CHANGES; GOVERNMENT FILINGS. Each party shall (a)
confer on a regular and frequent basis with the other, (b) report (to the extent
permitted by law, regulation and any applicable confidentiality agreement) to
the other on operational matters and (c) promptly advise the other orally and in
writing of (i) any representation or warranty made by it 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, (ii) the failure by it
(A) to comply with or satisfy in any respect any covenant, condition or
agreement required to be complied with or satisfied by it under this Agreement
that is qualified as to materiality or (B) to comply with or satisfy in any
material respect any covenant, condition or agreement required to be complied
with or satisfied by it under this Agreement that is not so qualified as to
materiality or (iii) any change, event or
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circumstance that has had or could reasonably be expected to have a Material
Adverse Effect on such party or materially adversely affect its ability to
consummate the Merger in a timely manner; 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. The Company and Parent shall file all reports required to
be filed by each of them with the SEC (and all other Governmental Entities)
between the date of this Agreement and the Effective Time and shall (to the
extent permitted by law or regulation or any applicable confidentiality
agreement) deliver to the other party copies of all such reports promptly after
the same are filed. Subject to applicable laws relating to the exchange of
information, each of the Company and Parent shall have the right to review in
advance, and to the extent practicable each will consult with the other, with
respect to all the information relating to the other party and each of their
respective Subsidiaries, which appears in any filings, announcements or
publications made with, or written materials submitted to, any third party or
any Governmental Entity in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto agrees
to act reasonably and as promptly as practicable. Each party agrees that, to the
extent practicable, it will consult with the other party with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
party apprised of the status of matters relating to completion of the
transactions contemplated hereby.
4.4. CONTROL OF OTHER PARTY'S BUSINESS. Nothing contained in this
Agreement shall give the Company, directly or indirectly, the right to control
or direct Parent's operations prior to the Effective Time. Nothing contained in
this Agreement shall give Parent, directly or indirectly, the right to control
or direct the Company's operations prior to the Effective Time. Prior to the
Effective Time, each of the Company and Parent shall exercise, consistent with
the terms and conditions of this Agreement, complete control and supervision
over its respective operations.
ARTICLE V.
ADDITIONAL AGREEMENTS
5.1. PREPARATION OF FORM F-4 AND PROXY STATEMENT; THE COMPANY
STOCKHOLDERS MEETING.
(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 F-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 F-4 declared effective
under the Securities Act as promptly as practicable after such filing. The
Company shall use reasonable efforts to cause the Proxy Statement to be mailed
to the Company's stockholders as promptly as practicable after the Form F-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 U.S. or Canadian
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
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and the holders of the Company Common Stock and rights to acquire Company Common
Stock pursuant to the Company Stock Option 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
its stockholders (the "Company Stockholders Meeting") for the purpose of
obtaining the Required Company Votes, and, the Company shall, through its Board
of Directors, recommend to its stockholders that they approve the transactions
contemplated by this Agreement; provided, however, that the Board of Directors
of the Company may withdraw, modify or change such recommendation if it receives
a Superior Proposal and determines in good faith, based upon the advice of
outside counsel, that making such recommendation, or the failure to so withdraw,
modify or change its recommendation, or the failure to recommend any other offer
or proposal, could reasonably be deemed to cause the members of the Board of
Directors to breach their fiduciary duties under applicable law. Parent shall
vote or cause to be voted all the shares of Company Common Stock owned of record
by Parent or any of its Subsidiaries in favor of the transactions contemplated
by this Agreement.
(c) The Company shall use reasonable efforts to cause to be
delivered to Parent a letter of KPMG Peat Marwick LLP, the Company's independent
public accountants, dated a date within two Business Days before the date on
which the Form F-4 shall become effective and addressed to Parent, in form and
substance reasonably satisfactory to Parent and customary in scope and substance
for letters delivered by independent public accountants in connection with
registration statements similar to the Form F-4.
(d) Parent shall use reasonable efforts to cause to be
delivered to the Company a letter of Ernst & Young LLP, Parent's independent
public accountants, dated a date within two business days before the date on
which the Form F-4 shall become effective and addressed to the Company, in form
and substance reasonably satisfactory to the Company and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the Form F-4.
5.2. ACCESS TO INFORMATION. Upon reasonable notice, each of the
Company and Parent shall (and shall cause their respective Subsidiaries, to the
extent permitted by the Organizational Documents or other pertinent agreements
of such entity, to) afford to the officers, employees, accountants, counsel,
financial advisors and other representatives of the other party reasonable
access during normal business hours, during the period prior to the Effective
Time, to all its properties, books, contracts, commitments and records and its
officers, employees and representatives and, during such period, each of the
Company and Parent shall (and shall cause its Subsidiaries, to the extent
permitted by the Organizational Documents or other pertinent agreements of such
entity, to) furnish promptly to the other party (a) a copy of each report,
schedule, registration statement and other document filed, published, announced
or received by it during such period pursuant to the requirements of Federal or
state securities laws, as applicable (other than reports or documents which such
party is not permitted to disclose under applicable law) and (b) consistent with
its legal obligations, all other information concerning its business,
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properties and personnel as the other party may reasonably request, including
any information requested with respect to Company stockholder approval at the
Company Stockholders Meeting and the status of efforts to obtain such approval;
provided, however, each of the Company and Parent may restrict the foregoing
access to the extent that (i) a Governmental Entity requires such party or any
of its Subsidiaries to restrict access to any properties or information
reasonably related to any such contract on the basis of applicable laws and
regulations or (ii) any law, treaty, rule or regulation of any Governmental
Entity applicable to such party or any of its Subsidiaries requires such party
or any of its Subsidiaries to restrict access to any properties or information.
Such information shall be held in confidence to the extent required by, and in
accordance with, the provisions of the letter (the "Confidentiality Agreement")
dated November 6, 1998, between the Company and Parent, which Confidentiality
Agreement shall remain in full force and effect.
5.3. APPROVALS AND CONSENTS; COOPERATION. Each of the Company and
Parent shall cooperate with each other and use (and shall cause their respective
Subsidiaries to use) its reasonable efforts to take or cause to be taken all
actions, and do or cause to be done all things, necessary, proper or advisable
on their part under this Agreement and applicable laws to consummate and make
effective the Merger and the other transactions contemplated by this Agreement
as soon as practicable, including (i) preparing and filing as promptly as
practicable all documentation to effect all necessary applications, notices,
petitions, filings, tax ruling requests and other documents and to obtain as
promptly as practicable all consents, waivers, licenses, orders, registrations,
approvals, permits, tax rulings and authorizations necessary or advisable to be
obtained from any third party and/or any Governmental Entity in order to
consummate the Merger or any of the other transactions contemplated by this
Agreement, (ii) taking all reasonable steps as may be necessary to obtain all
such consents, waivers, licenses, registrations, permits, authorizations, tax
rulings, orders and approvals and (iii) subject to fiduciary duties, 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. Without limiting the generality of the foregoing, each of
the Company and Parent agrees to make all necessary filings in connection with
the Required Regulatory Approvals as promptly as practicable after the date of
this Agreement, and to use its reasonable efforts to furnish or cause to be
furnished, as promptly as practicable, all information and documents requested
with respect to such Required Regulatory Approvals and shall otherwise cooperate
with the applicable Governmental Entity in order to obtain any Required
Regulatory Approvals in as expeditious a manner as possible. Each of the Company
and Parent shall use its reasonable efforts to resolve such objections, if any,
as any Governmental Entity may assert with respect to this Agreement and the
transactions contemplated hereby in connection with the Required Regulatory
Approvals. In the event that a suit is instituted by a Person or Governmental
Entity challenging this Agreement and the transactions contemplated hereby as
violative of applicable antitrust or competition laws, each of the Company and
Parent shall use its reasonable efforts to resist or resolve such suit. The
Company and Parent each shall, upon request by the other, furnish the other with
all information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may reasonably be necessary or advisable
in connection with the Form F-4 or Proxy Statement or any other statement,
filing, tax ruling request, notice or application made by or on behalf of the
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Company, Parent or any of their respective Subsidiaries to any third party
and/or any Governmental Entity in connection with the Merger or the other
transactions contemplated by this Agreement.
5.4. ACQUISITION PROPOSALS.
(a) Unless and until this Agreement shall have been terminated
by either party pursuant to Article VII hereof, the Company shall not take or
cause, directly or indirectly, any of the following actions with any party other
than Parent, Merger Sub or their respective designees: (i) solicit, knowingly
encourage, initiate or participate in any negotiations, inquiries or discussions
with respect to any offer, indication or proposal to acquire all or more than
20% of its business, assets or capital shares or voting securities whether by
merger, consolidation, other business combination, purchase of assets, tender or
exchange offer or otherwise (each of the foregoing, an "Acquisition Proposal");
or (ii) disclose, in connection with an Acquisition Proposal, any information or
provide access to its properties, books or records, except as required by law or
pursuant to a governmental request for information. In addition, the Company
shall, and shall cause its officers, directors and representatives to,
immediately cease any activities of the type described in (a)(i) and (a)(ii)
existing as of the date of this Agreement.
(b) Notwithstanding anything to the contrary contained in
Section 5.4(a) or elsewhere in this Agreement, prior to the Effective Time, the
Company may, to the extent the Board of Directors of the Company determines that
it would be in the best interests of the Company or its stockholders to do so,
participate in discussion or negotiations with, and furnish non-public
information, and afford access to the properties, books, records, officers,
employees and representatives of the Company to any Person, entity or group
after such Person, entity or group has delivered to the Company in writing, an
Acquisition Proposal which the Board of Directors of the Company in its good
faith reasonable judgment, after consultation with its financial advisors,
determines if consummated would be more favorable to the Company or its
stockholders than the transactions contemplated by this Agreement (a "Superior
Proposal"). In the event the Company receives a Superior Proposal, nothing
contained in this Agreement (but subject to the terms of this paragraph (b))
will prevent the Board of Directors of the Company from executing or entering
into an agreement relating to such Superior Proposal and recommending such
Superior Proposal to its stockholders, if the Board determines in good faith
that it is appropriate to do so; in such case, the Board of Directors of the
Company may withdraw, modify or refrain from making its recommendation of the
Merger, and, to the extent it does so, the Company may refrain from calling,
providing notice of and holding the Company Stockholders Meeting to adopt this
Agreement and from soliciting proxies or consents to secure the vote or written
consent of its stockholders to adopt this Agreement and may terminate this
Agreement; provided however that the Company shall (i) provide Parent written
notice of the Company's receipt of a Superior Proposal, including a copy of such
Superior Proposal (or a description of the significant terms and conditions
thereof), within 24 hours of such receipt, (ii) provide Parent written notice of
the Company's receipt of an Acquisition Proposal, including a copy of such
Acquisition Proposal (or a description of the significant terms and conditions
thereof), within 48 hours of such receipt and (iii) provide Parent written
notice of the Company's intention to execute or enter into an agreement relating
to a Superior Proposal at least three
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Business Days prior to the Company's
execution of or entry into such an agreement. Notwithstanding anything to the
contrary contained in Section 5.4 or elsewhere in this Agreement, prior to the
Effective Time, the Company may, in connection with a possible Acquisition
Proposal, refer any third party to this Section 5.4 and Section 7.2(b) and make
a copy of this Section 5.4 and Section 7.2(b) available to a third party.
5.5. EMPLOYEE BENEFITS.
(a) Subject to subparagraph 5.5(c) below, for a period of two
years immediately following the Closing Date, Parent shall or shall cause the
Surviving Corporation to maintain in effect employee benefit plans and
arrangements which provide benefits which have a value which is substantially
comparable, in the aggregate, to the benefits provided by the Company Benefit
Plans (not taking into account the value of any benefits under any such plans
which are equity based).
(b) For purposes of determining eligibility to participate,
vesting and accrual or entitlement to benefits where length of service is
relevant under any employee benefit plan or arrangement of Parent, the Surviving
Corporation or any of their respective, employees of the Company and Company Sub
as of the Effective Time shall receive service credit for service with the
Company and Company Sub to the same extent such service credit was granted under
the Company Benefit Plans, subject to offsets for previously accrued benefits
and no duplication of benefits.
(c) Parent shall cause the Surviving Corporation to assume and
honor in accordance with their terms (i) all written employment, severance and
termination plans and agreements (including change in control provisions) of
employees of the Company and Company Sub provided to Parent on or prior to the
date of this Agreement and (ii) the policies identified in Section 5.5(c) of the
Company Disclosure Schedule.
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5.6. FEES AND EXPENSES. Whether or not the Merger is consummated,
all Expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such Expenses, except
(a) if the Merger is consummated, the Surviving Corporation shall pay, or cause
to be paid, any and all property or transfer taxes imposed on the Company or
Company Sub and any real property transfer tax imposed on any holder of shares
of capital stock of the Company resulting from the Merger, (b) the Expenses
incurred in connection with the printing, filing and mailing to stockholders of
the Form F-4 and Proxy Statement and the solicitation of stockholder approvals
shall be shared equally by the Company and Parent, and (c) as provided in
Section 7.2. As used in this Agreement, "Expenses" includes all out-of-pocket
expenses (including, without limitation, all fees and expenses of counsel,
accountants, investment bankers, experts and consultants to a party hereto and
its affiliates) incurred by a party or on its behalf in connection with or
related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby,
including the preparation, printing, filing and mailing of the Form F-4 and
Proxy Statement and the solicitation of stockholder approvals and all other
matters related to the transactions contemplated hereby.
5.7. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. Parent
and the Surviving Corporation shall cause to be
maintained in effect (i) for a period of six years after the Effective Time, the
current provisions regarding indemnification of current or former officers and
directors (each, an "Indemnified Party") contained in the Organizational
Documents of the Company or Company Sub and in any agreements between an
Indemnified Party and the Company or Company Sub and (ii) for a period of six
years, the current policies of directors' and officers' liability insurance and
fiduciary liability insurance maintained by the Company (provided that Parent or
the Surviving Corporation may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are, in the
aggregate, no less advantageous to the insured) with respect to claims arising
from facts or events that occurred on or before the Effective Time. This
covenant is intended to be for the benefit of, and shall be enforceable by, each
of the Indemnified Parties and their respective heirs and legal representatives.
For a period of six years after the Effective Time, Parent and the Surviving
Corporation shall indemnify the Indemnified Parties to the same extent as such
Indemnified Parties are entitled to indemnification pursuant to clause (i) of
the first sentence of this Section 5.7.
5.8. PUBLIC ANNOUNCEMENTS. The Company and Parent shall use all
reasonable efforts to develop a joint communications plan and each party shall
use all reasonable efforts (i) to ensure that all press releases and other
public statements with respect to the transactions contemplated hereby shall be
consistent with such joint communications plan, and (ii) unless otherwise
required by applicable law or by obligations pursuant to any listing agreement
with or rules of any securities exchange, to consult with each other before
issuing any press release or otherwise making any public statement with respect
to this Agreement or the transactions contemplated hereby.
5.9. TAX AND ACCOUNTING TREATMENT. Each of Parent, Merger Sub and
the Company shall not take any action and shall not fail to take any action
which action or failure to act would prevent, or would be likely to prevent, the
Merger from qualifying (A) for pooling of interests
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accounting treatment for U.S. GAAP or (B) as a reorganization within the meaning
of Section 368(a) of the Code.
5.10. AFFILIATES.
(a) Prior to the Closing Date, the Company shall deliver to
Parent a letter identifying all Persons who are, at the time this Agreement 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 or under applicable SEC accounting releases with respect to
pooling of interests accounting treatment. The Company shall use reasonable
efforts to cause each such Person to deliver to Parent on or prior to the
Closing Date a written agreement substantially in the form attached hereto as
Exhibit A.
(b) Prior to the Closing Date, Parent shall deliver to the
Company a letter identifying all Persons who are, at the time this Agreement is
submitted for approval to the stockholders of the Company, "affiliates" of
Parent (including all directors of Parent) under applicable SEC accounting
releases with respect to pooling of interests accounting treatment. Parent shall
use reasonable efforts to cause each such Person to deliver to the Company on or
prior to the Closing Date a written agreement substantially in the form attached
hereto as Exhibit B.
5.11. STOCK EXCHANGE LISTING. Parent shall use reasonable efforts to
cause the shares of Parent Common Stock to be issued in the Merger and pursuant
to the Company Stock Option Plans to be approved for listing on The Toronto
Stock Exchange and the New York Stock Exchange, subject to official notice of
issuance and other customary conditions, prior to the Closing Date.
5.12. TAKEOVER STATUTES. If Section 203 of the DGCL or any other
takeover statute ("Takeover statute") shall become applicable to the
transactions contemplated hereby, the Company and the members of the Board of
Directors of the Company, subject to its fiduciary duties, shall grant such
approvals and take such actions as are necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to eliminate or minimize the effects of
such Takeover Statute on the transactions contemplated hereby.
5.13. RIGHTS AGREEMENTS.Each of Parent and the Company shall take
all necessary action prior to the Effective Time to cause the dilution
provisions of the Company Rights Agreement and the Parent Rights Agreement,
respectively, to be inapplicable to the transactions contemplated by this
Agreement, without any payment to holders of rights issued pursuant to such
rights agreements.
5.14. EMPLOYEE STOCK OPTIONS AND EQUITY INCENTIVES
(a) Simultaneously with the Merger, (i) each outstanding
option to purchase a share of Company Common Stock under the Company Stock
Option Plans (other than the Company's 1996 Long Term Equity Incentive Plan (the
"1996 Plan")) and each outstanding
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option to purchase a share of Company Common Stock under the 1996 Plan that is
not exercised by the holder thereof shall be converted into an option to
purchase the number of shares of Parent Common Stock equal to the Conversion
Number multiplied by the number of shares of Company Common Stock which could
have been obtained prior to the Effective Time upon the exercise of each such
option, at an exercise price per share equal to the exercise price for each such
share of Company Common Stock subject to an option under the Company Stock
Option Plans being so converted divided by the Conversion Number, and all
references in each such option to the Company shall be deemed to refer to
Parent, where appropriate, (ii) each outstanding stock appreciation right that
is not exercised by the holder thereof shall be converted into a stock
appreciation right with respect to the number of shares of Parent Common Stock
equal to the Conversion Number with an exercise price equal to the exercise
price for each such stock appreciation right issued under the Company Stock
Option Plans being so converted divided by the Conversion Number, and all
references in each such stock appreciation right to the Company shall be deemed
to refer to Parent, where appropriate, and (iii) Parent shall assume the
obligations of the Company under such Company Stock Option Plans. The other
terms of each such option and stock appreciation right, and the plans under
which they were issued, shall continue to apply in accordance with their terms,
including any provisions providing for acceleration.
(b) Parent shall (i) reserve for issuance the number of shares
of Parent Common Stock that will become subject to the plans referred to in this
Section 5.14 and (ii) issue or cause to be issued the appropriate number of
shares of Parent Common Stock pursuant to such plans, upon the exercise or
maturation of rights existing thereunder at the Effective Time or thereafter
granted or awarded.
(c) Subject to any applicable limitations under the Securities
Act, Parent shall file a registration statement on Form S-8 (or any successor
form) or another appropriate form (or shall cause options to purchase Company
Common Stock that were converted into options to purchase Parent Common Stock
(the "New Stock Rights") to be deemed to be options issued pursuant to a stock
option or other equity compensation plan of Parent for which shares of Parent
Common Stock have been previously registered pursuant to an appropriate
registration form with the SEC) and shall cause such registration statement to
be effective on or prior to the Effective Time, with respect to the shares of
Parent Common Stock issuable upon the exercise of the New Stock Rights, and
shall use all reasonable efforts to maintain the effectiveness of such
registration statement for so long as such New Stock Rights shall remain
outstanding.
5.15. FURTHER ASSURANCES. In case at any time after the Effective
Time any further action is reasonably necessary to carry out the purposes of
this Agreement, the proper officers of the Company, Parent and Merger Sub shall
take any such reasonably necessary action.
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ARTICLE VI.
CONDITIONS PRECEDENT
6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The obligations of the Company, Parent and Merger Sub to effect the Merger are
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Stockholder Approval. The Company shall have obtained all
approvals of holders of shares of capital stock of the Company necessary to
approve this Agreement and all the transactions contemplated hereby (including
the Merger).
(b) HSR Act; Exon-Florio. The waiting periods (and any
extensions thereof) applicable to the transactions contemplated by this
Agreement under the HSR Act shall have been terminated or shall have expired.
Any consents, approvals and filings under any foreign antitrust law, the absence
of which would prohibit the consummation of the Merger, shall have been obtained
or made. Parent shall have received all consents or approvals necessary under
the Exon-Florio Act.
(c) Effective Registration Statement. The Form F-4 shall have
been declared effective by the SEC under the Securities Act, and no stop order
suspending the effectiveness of the Form F-4 shall have been issued by the SEC
and no proceedings for that purpose shall have been initiated or, to the
knowledge of the Parent or the Company, threatened by the SEC, and all necessary
approvals under blue sky laws and Canadian securities laws (including customary
approvals with respect to the issuance and resale of such Parent Common Stock)
relating to the issuance or trading of the Parent Common Stock to be issued to
the stockholders of the Company in connection with the Merger shall have been
received.
(d) No Injunctions or Restraints, Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
a court or other Governmental Entity of competent jurisdiction shall be in
effect and have the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger; provided, however, that the provisions of this
Section 6.1(d) shall not be available to any party whose failure to fulfill its
obligations pursuant to Section 5.3 shall have been the cause of, or shall have
resulted in, such order or injunction.
(e) Required Regulatory Approvals. All authorizations,
consents, orders and approvals of, and declarations and filings with, and all
expirations of waiting periods imposed by, any Governmental Entity which, if not
obtained in connection with the consummation of the transactions contemplated
hereby, could reasonably be expected to have a Material Adverse Effect on the
Company (collectively, "Required Regulatory Approvals"), shall have been
obtained, have been declared or filed or have occurred, as the case may be, and
all such Required Regulatory Approvals shall be in full force and effect.
(f) Exchange Listing of Parent Common Stock. The Parent Common
Stock to be issued to the stockholders of the Company in connection with the
Merger and pursuant to the Company Stock Option Plans shall have been approved
for listing on The Toronto Stock
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Exchange and the New York Stock Exchange subject only to official notice of
issuance and other customary conditions.
(g) Pooling. At the Effective Time, each of the Company and
Parent shall have received a letter from its independent public accountants, in
form and substance reasonably satisfactory to it, stating that they concur with
management's conclusion that the Merger will qualify as a transaction to be
accounted for in accordance with the pooling of interests method of accounting
under the requirements of APB No. 16.
6.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to effect the Merger are subject to the
satisfaction of, or waiver by Parent, on or prior to the Closing Date, of the
following additional conditions:
(a) Representations and Warranties. Each of the
representations and warranties of the Company set forth in this Agreement that
is qualified as to materiality shall have been true and correct when made and
shall be true and correct on and as of the Closing Date as if made on and as of
such date (other than representations and warranties which address matters only
as of a certain date which shall be true and correct as of such certain date),
and each of the representations and warranties of the Company that is not so
qualified shall have been true and correct in all material respects when made
and shall be true and correct in all material respects on and as of the Closing
Date as if made on and as of such date (other than representations and
warranties which address matters only as of a certain date which shall be true
and correct in all material respects as of such certain date).
(b) Performance of Obligations of the Company. The Company
shall have performed or complied with all agreements and covenants required to
be performed by it under this Agreement at or prior to the Closing Date that are
qualified as to materiality and shall have performed or complied in all material
respects with all other agreements and covenants required to be performed by it
under this Agreement at or prior to the Closing Date that are not so qualified
as to materiality.
(c) Tax Opinion. Parent shall have received an opinion from
Seyfarth, Shaw, Fairweather & Geraldson, dated on or about the date the Proxy
Statement is mailed to the Company's stockholders, in form and substance
reasonably satisfactory to Parent and based on customary representations of
Parent, Merger Sub and the Company and on the basis of facts and assumptions set
forth in such opinion, which are consistent with the state of facts existing at
the Effective Time, substantially to the effect that (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code and
(ii) no gain or loss will be recognized by Company stockholders for United
States Federal income tax purposes upon the exchange of their Company Common
Stock solely for shares of Parent Common Stock, except with respect to cash, if
any, received in lieu if fractional shares of Company Common Stock. Further, the
opinion Seyfarth, Shaw, Fairweather & Geraldson delivered pursuant to this
section shall not have been withdrawn or modified in any material respect on or
prior to the Effective Time.
(d) Absence of Company Material Adverse Effect. There shall
not have occurred since the date of this Agreement any Material Adverse Effect
on the Company.
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6.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to effect the Merger are subject to the satisfaction
of, or waiver by the Company on or prior to the Closing Date of the following
additional conditions:
(a) Representations and Warranties. Each of the
representations and warranties of Parent and Merger Sub set forth in this
Agreement that is qualified as to materiality shall have been true and correct
when made and shall be true and correct on and as of the Closing Date as if made
on and as of such date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct as of such
certain date), and each of the representations and warranties of each of Parent
and Merger Sub that is not so qualified shall have been true and correct in all
material respects when made and shall be true and correct in all material
respects on and as of the Closing Date as if made on and as of such date (other
than representations and warranties which address matters only as of a certain
date which shall be true and correct in all material respects as of such certain
date).
(b) Performance of Obligations of Parent. Parent shall have
performed or complied with all agreements and covenants required to be performed
by it under this Agreement at or prior to the Closing Date that are qualified as
to materiality and shall have performed or complied in all material respects
with all agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date that are not so qualified as to
materiality.
(c) Tax Opinion. The Company shall have received an opinion
from Latham & Watkins, dated on or about the date the Proxy Statement is mailed
to Company stockholders, in form and substance reasonably satisfactory to the
Company and based on customary representations of Parent, Merger Sub and the
Company and on the basis of facts and assumptions set forth in such opinion,
which are consistent with the state of facts existing at the Effective Time,
substantially to the effect that (i) the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Code and (ii) no gain or loss will
be recognized by Company stockholders for United States Federal income tax
purposes upon the exchange of their Company Common Stock solely for shares of
Parent Common Stock, except with respect to cash, if any, received in lieu if
fractional shares of Company Common Stock. Further, the opinion of Latham &
Watkins delivered pursuant to this section shall not have been withdrawn or
modified in any material respect on or prior to the Effective Time.
ARTICLE VII.
TERMINATION AND AMENDMENT
7.1. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, by action taken or authorized by the Board of
Directors of the terminating party or parties, whether before or after approval
of the matters presented in connection with the Merger by the stockholders of
the Company:
(a) By mutual written consent of Parent and the Company, by
action of their respective Boards of Directors;
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(b) By either the Company or Parent if the Merger shall not
have been consummated by the date which is six months from the date of this
Agreement (the "Outside Date"); provided further that the right to terminate
this Agreement under this Section 7.1(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure of the Merger to occur on or before such date;
(c) By either the Company or Parent if any Governmental Entity
shall have issued an order, decree or ruling or taken any other action (which
order, decree, ruling or other action the parties shall have used their
reasonable efforts to resist, resolve or lift, as applicable, subject to the
provisions of Section 5.3) permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement, and such order,
decree, ruling or other action shall have become final and nonappealable;
(d) By either Parent or the Company if the approval by the
stockholders of the Company required for the consummation of the Merger or the
other transactions contemplated hereby shall not have been obtained at the
Company Stockholders Meeting or at any adjournment thereof by reason of the
failure to obtain the required vote at a duly held meeting of stockholders or at
any adjournment thereof;
(e) By Parent if (i) the Board of Directors of the Company
shall have withdrawn or adversely modified its recommendation of the Merger or
this Agreement; (ii) the Board of Directors of the Company shall have failed to
recommend the Merger or this Agreement or shall have recommended to the
stockholders of the Company that they approve an Acquisition Proposal other than
contemplated by this Agreement; (iii) a tender offer or exchange offer that, if
successful, would result in any Person or "group" becoming a "beneficial owner"
(such terms having the meaning in this Agreement as is ascribed under Regulation
13D under the Exchange Act) of 50% or more of the outstanding shares of Company
Common Stock is commenced (other than by Parent or an affiliate of Parent) and
the Board of Directors of the Company does not oppose such tender offer or
recommends that the stockholders of the Company tender their shares in such
tender or exchange offer; or (iv) for any reason the Company fails to call and
hold the Company Stockholders Meeting by the Outside Date (provided that
Parent's right to terminate this Agreement under such clause (iv) shall not be
available if at such time the Company would be entitled to terminate this
Agreement under Section 7.1(h));
(f) By the Company if the Board of Directors of the Company
determines to accept a Superior Proposal; provided, however, that no termination
pursuant to this Section 7.1(f) shall be effective unless that Company shall
make the payment required by Section 7.2(b) within two Business Days following
the acceptance of such Superior Proposal;
(g) By Parent, upon a material breach of any covenant or
agreement on the part of the Company set forth in this Agreement, or if (i) any
representation or warranty of the Company that is qualified as to materiality
shall have become untrue or (ii) any representation or warranty of the Company
that is not so qualified shall have become untrue in any material respect, in
each case such that the conditions set forth in Section 6.2(a) or Section 6.2(b)
would
38
<PAGE> 44
not be satisfied (a "Terminating Company Breach"); provided, however, that, if
such Terminating Company Breach is capable of being cured by the Company prior
to the Effective Time through the exercise of its best efforts, Parent shall
promptly give notice of such Terminating Company Breach to the Company and if
such Terminating Company Breach is cured within 15 days after giving notice to
the Company of such breach, Parent may not terminate this Agreement under this
Section 7.1(g); or
(h) By the Company, upon a material breach of any covenant or
agreement on the part of Parent or Merger Sub set forth in this Agreement, or if
(i) any representation or warranty of Parent or Merger Sub that is qualified as
to materiality shall have become untrue or (ii) any representation or warranty
of Parent or Merger Sub that is not so qualified shall have become untrue in any
material respect, in each case such that the conditions set forth in Section
6.3(a) or Section 6.3(b) would not be satisfied ("Terminating Parent Breach");
provided, however, that, if such Terminating Parent Breach is capable of being
cured by Parent prior to the Effective Time through the exercise of best
efforts, the Company shall promptly give notice of such Terminating Parent
Breach to Parent and if such Terminating Parent Breach is cured within 15 days
after giving written notice to Parent of such breach, the Company may not
terminate this Agreement under this Section 7.1(h).
7.2. EFFECT OF TERMINATION
(a) 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 there shall be no liability or obligation on the part of Parent
or the Company or their respective officers or directors except (i) with respect
to Section 5.6, this Section 7.2 and Article VIII and (ii) with respect to any
liabilities or damages incurred or suffered by a party as a result of the
willful breach by the other party of any of its covenants or other agreements
set forth in this Agreement.
(b) In the event that this Agreement is terminated pursuant to
Section 7.1(e) or 7.1(f), then the Company shall pay the Parent a cash fee of
$33,500,000, which amount shall be payable by wire transfer of immediately
available funds no later than two Business Days after such termination. The
Company acknowledges that the agreements contained in this Section 7.2(b) are an
integral part of the transactions contemplated in this Agreement, and that,
without these agreements, the Parent and Merger Sub would not enter into this
Agreement.
(c) In the event of termination of this Agreement by Parent
pursuant to Section 7.1(g), then the Company shall reimburse Parent for all its
reasonable out-of-pocket expenses (up to $3,000,000) actually incurred in
connection with this Agreement and the transactions contemplated hereby, which
amount shall be payable by wire transfer of same day funds within three Business
Days of written demand, accompanied by a reasonably detailed statement of such
expenses and appropriate supporting documentation therefor.
(d) In the event of termination of this Agreement by the
Company pursuant to Section 7.1(h), then Parent shall reimburse the Company for
all its reasonable out-of-pocket expenses (up to $3,000,000) actually incurred
in connection with this Agreement and the transactions contemplated hereby,
which amount shall be payable by wire transfer of same day
39
<PAGE> 45
funds within three Business Days of written demand, accompanied by a reasonably
detailed statement of such expenses and appropriate supporting documentation
therefor.
7.3. AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of the Company, but, after any such approval, no
amendment shall be made which by law or in accordance with the rules of the
American Stock Exchange requires further approval by such stockholders without
such further approval. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
7.4. EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. No delay on
the part of any party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party hereto of any right, power or privilege hereunder operate as a waiver
of any other right, power or privilege hereunder, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder. Unless otherwise provided, the rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies which
the parties hereto may otherwise have at law or in equity. 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 those rights.
ARTICLE VIII.
GENERAL PROVISIONS
8.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS; NO
OTHER REPRESENTATIONS AND WARRANTIES. None of the representations, warranties,
covenants and other agreements in this Agreement or in any instrument delivered
pursuant to this Agreement, including any rights arising out of any breach of
such representations, warranties, covenants and other agreements, shall survive
the Effective Time, except for those covenants and agreements contained herein
and therein that by their terms apply or are to be performed in whole or in part
after the Effective Time and this Article VIII. Each party hereto agrees that,
except for the representations and warranties contained in this Agreement, none
of the Company, Parent or Merger Sub makes any other representations or
warranties, and each hereby disclaims any other representations and warranties
made by itself or any of its officers, directors, employees, agents, financial
and legal advisors or other representatives, with respect to the execution and
delivery of this Agreement, the documents and the instruments referred to
herein, or the transactions contemplated hereby or thereby, notwithstanding the
delivery or disclosure to
40
<PAGE> 46
the other party or the other party's representatives of any documentation or
other information with respect to any one or more of the foregoing.
8.2. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed duly given (a) on the date of delivery if
delivered personally, (b) on the first Business Day following the date of
dispatch if delivered by a nationally recognized next-day courier service, (c)
on the tenth Business Day following the date of mailing if delivered by
registered or certified mail, return receipt requested, postage prepaid or (d)
if sent by facsimile transmission, with a copy mailed on the same day in the
manner provided in (a) or (b) above, when transmitted and receipt is confirmed
by telephone. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice:
(a) if to Parent or Merger Sub, to Placer Dome Inc., 1600-1055
Dunsmuir Street, Vancouver, B.C. V7X 1P1, Attention: Ian G. Austin, Executive
Vice President, Facsimile No.: (604) 661-3726, with copies to J. R. Donald Rose,
Vice President, General Counsel and Secretary, and David S. Stone, Seyfarth,
Shaw, Fairweather & Geraldson, 55 East Monroe Street, Suite 4200, Chicago,
Illinois 60603, Facsimile No.: (312) 269-8869;
(b) if to the Company, Getchell Gold Corporation, 5460 South
Quebec Street, Suite 240, Englewood, Colorado 80111, Attention: G.W. Thompson,
President and Chief Executive Officer, Facsimile No.: (303) 771-1075, with a
copy to Christopher L. Kaufman, Latham & Watkins, 135 Commonwealth Drive, Menlo
Park, California 94025, Facsimile No.: (650) 463-2600.
8.3. INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents, glossary of defined terms 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." The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden or proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statue or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the content requires otherwise.
8.4. 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 party, it being understood that both
parties need not sign the same counterpart.
8.5. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
41
<PAGE> 47
(a) This Agreement (including the Schedules and Exhibits)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, other than the Confidentiality Agreement, which shall
survive the execution and delivery of this Agreement.
(b) This Agreement shall be binding upon and inure solely to
the benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement, other
than Sections 5.5 and 5.7 (which is intended to be for the benefit of the
Persons covered thereby and may be enforced by such Persons).
8.6. GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware, without regard to the laws
that might be applicable under conflicts of laws principles.
8.7. SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any law or public policy,
all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible. Any provision of this Agreement
held invalid or unenforceable only in part, degree or certain jurisdictions will
remain in full force and effect to the extent not held invalid or unenforceable.
To the extent permitted by applicable law, each party waives any provision of
law which renders any provision of this Agreement invalid, illegal or
unenforceable in any respect.
8.8. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise), without
the prior written consent of the other parties, and any attempt to make any such
assignment without such consent shall be null and void. 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.
8.9. 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. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.10. DEFINITIONS. As used in this Agreement:
(a) "Board of Directors" means the Board of Directors of any
specified Person and any properly serving and acting committees thereof.
42
<PAGE> 48
(b) "Business Day" means any day on which banks are not
required or authorized to close in the City of New York.
(c) "Company Stock Option Plans" means the Company's 1998
Stock Option Plan for Outside Directors, 1996 Stock Option Plan for Outside
Directors, 1996 Long Term Equity Incentive Plan and Amended and Restated
Long-Term Incentive Plan.
(d) "Material Adverse Effect" means, with respect to any
entity, any adverse change, circumstance or effect that, individually or in the
aggregate with all other adverse changes, circumstances and effects, is or is
reasonably likely to be materially adverse to the business, operations, assets,
liabilities, financial condition or results of operations of such entity and its
Subsidiaries taken as a whole (other than changes, circumstances or effects
relating to gold prices or gold mining industry in general or the economy) or
would prevent the Company or Parent (as the case may be) from performing its
obligations under this Agreement.
(e) "Organizational Documents" means, with respect to any
entity, the certificate of incorporation, bylaws or other governing documents of
such entity.
(f) "Person" means an individual, corporation, partnership,
limited liability company association, trust, unincorporated organization,
entity or group (as defined in the Exchange Act).
(g) "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the voting and
economic interests in such partnership) or (ii) at least a majority of the
securities or other interests of which having by their terms ordinary voting
power to elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries.
(h) (i) "Tax" (including, with correlative meaning, the terms
"Taxes" and "Taxable") means all federal, state, local and foreign income,
profits, franchise, gross receipts, environmental, customs duty, capital stock,
severance, stamp, payroll, sales, employment, unemployment disability, use,
property, withholding, excise, production, value added, occupancy and other
taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties, fines and additions to tax imposed with respect to such
amounts and any interest in respect of such penalties and additions to tax, and
(ii) "Tax Return" means all returns and reports (including elections, claims,
declarations, disclosures, schedules, estimates, computations and information
returns) required to be supplied to a Tax authority in any jurisdiction relating
to Taxes.
(i) "the other party" means, with respect to the Company,
Parent and means, with respect to Parent, the Company.
43
<PAGE> 49
IN WITNESS WHEREOF, Parent, the Company and Merger Sub have
caused this Agreement to be signed by their respective officers thereunto duly
authorized, all as of December 11, 1998.
PLACER DOME INC.,
a corporation incorporated under the Canada
Business Corporations Act
By: /s/ John M. Willson
------------------------------------------
Name: John M. Willson
Title: President and Chief Executive Officer
By: /s/ Ian G. Austin
------------------------------------------
Name: Ian G. Austin
Title: Executive Vice President
BULLION ACQUISITION CORP.,
a Delaware corporation
By: /s/ Ian G. Austin
------------------------------------------
Name: Ian G. Austin
Title: President
GETCHELL GOLD CORPORATION,
a Delaware corporation
By: /s/ G.W. Thompson
------------------------------------------
Name: G.W. Thompson
Title: President and Chief Executive Officer
44
<PAGE> 1
EXHIBIT 4.1
RIGHTS AGREEMENT AMENDMENT
This Amendment, dated as of December 11, 1998, to the Rights
Agreement, dated as of December 31, 1996 (the "Rights Agreement"), is between
Getchell Gold Corporation, a Delaware corporation (the "Company"), and Harris
Trust and Savings Bank (the "Rights Agent").
The Company and the Rights Agent have heretofore executed and
entered into the Rights Agreement. Pursuant to Section 27 of the Rights
Agreement, the Company and the Rights Agent may from time to time supplement or
amend the Rights Agreement in accordance with the provisions of Section 27
thereof and the Company desires and directs the Rights Agent to so amend the
Rights Agreement. All acts and things necessary to make this Amendment a valid
agreement according to its terms have been done and performed, and the execution
and delivery of this Agreement by the Company and the Rights Agent have been in
all respects authorized by the Company and the Rights Agent.
In consideration of the foregoing premises and mutual
agreements set forth in the Rights Agreement and this Amendment, the parties
hereto agree as follows:
1. Section 1(a) of the Rights Agreement is hereby modified and
amended to read in its entirety as follows:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which shall be the Beneficial Owner (as
such term is hereinafter defined) of 15% or more of the Shares of
Common Stock then outstanding, but shall not include (i) an Exempt
Person (as such term is hereinafter defined) or (ii) Placer Dome Inc.
or any Affiliate thereof ("Parent"); provided, however, that Parent
will become an "Acquiring Person" in the event that Parent becomes the
Beneficial Owner of an aggregate of 15% or more of the Common Stock of
the Company then outstanding other than pursuant to the terms of the
Agreement and Plan of Merger, dated as of December 11, 1998 (the
"Merger Agreement"), between the Company and Parent; provided, however,
that (i) if the Board of Directors of the Company determines in good
faith that a Person who would otherwise be an "Acquiring Person" became
such inadvertently (including, without limitation, because (A) such
Person was unaware that it beneficially owned a percentage of Common
Stock that would otherwise cause such Person to be an "Acquiring
Person" or (B) such Person was aware of the extent of its Beneficial
Ownership of Common Stock but had no actual knowledge of the
consequences of such Beneficial Ownership under this Agreement) and
without any intention of changing or influencing control of the
Company, and if such Person as promptly as practicable divested or
divests itself of Beneficial Ownership of a sufficient number of shares
of Common Stock so that such
<PAGE> 2
Person would no longer be an "Acquiring Person," then such Person shall
not be deemed to be or to have become an "Acquiring Person" for any
purposes of this Agreement; (ii) if, as of the date hereof, any Person
is the Beneficial Owner of 15% or more of the shares of Common Stock
outstanding, such Person shall not be or become an "Acquiring Person"
unless and until such time as such Person shall become the Beneficial
Owner of additional shares of Common Stock (other than pursuant to a
dividend or distribution paid or made by the Company on the outstanding
Common Stock in shares of Common Stock or pursuant to a split or
subdivision of the outstanding Common Stock), unless, upon becoming the
Beneficial Owner of such additional shares of Common Stock, such Person
is not then the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding; and (iii) no Person shall become an "Acquiring
Person" as the result of an acquisition of shares of Common Stock by
the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares of Common Stock
beneficially owned by such Person to 15% or more of the shares of
Common Stock then outstanding, provided, however, that if a Person
shall become the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding by reason of such share acquisitions by
the Company and shall thereafter become the Beneficial Owner of any
additional shares of Common Stock (other than pursuant to a dividend or
distribution paid or made by the Company on the outstanding Common
Stock in shares of Common Stock or pursuant to a split or subdivision
of the outstanding Common Stock), then such person shall be deemed to
be an "Acquiring Person" unless upon becoming the Beneficial Owner of
such additional shares of Common Stock such Person does not
beneficially own 15% or more of the shares of Common Stock then
outstanding. For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the
Beneficial Owner, shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date hereof.
2. Section 1(aa) of the Rights Agreement is hereby amended by
adding as the final sentence thereto the following:
Notwithstanding anything in the Agreement to the contrary, no
Stock Acquisition Date shall be deemed to have occured solely
as a result of (i) the approval, execution or delivery of the
Merger Agreement, or (ii) the consummation of the Merger (as
defined in the Merger Agreement).
3. Section 3(a) of the Rights Agreement is hereby amended by
adding as the final sentence thereto the following:
Notwithstanding anything in this Agreement to the contrary, no
Distribution Date shall be deemed to have occurred solely as a
result of (i) the approval, execution or delivery of the
Merger
2
<PAGE> 3
Agreement, or (ii) the consummation of the Merger (as defined
in the Merger Agreement).
4. Section 7(a) of the Rights Agreement is hereby amended to
add "or (iv) immediately prior to the Effective Time of the Merger (as defined
in the Merger Agreement)."
5. Section 11(a)(ii) of the Rights Agreement is hereby amended
by adding as the final sentence thereto the following:
Notwithstanding anything in this Agreement to the contrary, no
Flip-In Event shall be deemed to have occurred solely as a
result of (i) the approval, execution or delivery of the
Merger Agreement, or (ii) the consummation of the Merger (as
defined in the Merger Agreement).
6. Section 13(a) of the Rights Agreement is hereby amended by
adding as the final sentence thereto the following:
Notwithstanding anything in this Agreement to the contrary,
none of the events described in clauses (i) through (iii) of
the first sentence of Section 13(a) shall be deemed to have
occurred solely as a result of (i) the approval, execution or
delivery of the Merger Agreement, or (ii) the consummation of
the Merger (as defined in the Merger Agreement).
7. Except as expressly amended hereby, the Rights Agreement
remains in full force and effect in accordance with its terms.
8. This Amendment to the Rights Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware.
9. This Amendment to the Rights Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed an original, and all such counterparts shall together constitute but
one and the same instrument.
10. Except as expressly set forth herein, this Amendment to
the Rights Agreement shall not by implication or otherwise alter, modify, amend
or in any way affect any of the terms, conditions, obligations, covenants or
agreements contained in the Rights Agreement, all of which are ratified and
affirmed in all respects and shall continue in full force and effect.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to the Rights Agreement to be duly executed as of the day and year
first above written.
GETCHELL GOLD CORPORATION
By: /s/ Donald S. Robson
----------------------------------------------
Name: Donald S. Robson
Title: Vice President, Chief Financial
Officer and Secretary
HARRIS TRUST AND SAVINGS BANK,
as Rights Agent
By: /s/ Thomas Blatchford
----------------------------------------------
Name: Thomas Blatchford
Title: Account Administrator
4
<PAGE> 1
EXHIBIT 99.1
JOINT NEWS RELEASE BY GETCHELL GOLD CORPORATION AND SUBSIDIARY
AND PLACER DOME INC.
FOR IMMEDIATE RELEASE
- --------------------------------------------------------------------------------
MERGER AGREEMENT REACHED BETWEEN GETCHELL GOLD AND PLACER DOME
ENGLEWOOD, COLORADO (DECEMBER 13, 1998) Placer Dome Inc. and
Getchell Gold Corporation of Denver are pleased to announce an agreement and
plan of merger that will result in Placer Dome owning a 100% interest in
Getchell Gold Corporation which operates the adjoining Getchell and Turquoise
Ridge gold mines in Nevada.
Getchell shareholders will be offered 2.45 Placer Dome shares for each
Getchell share in a reorganization that is tax-free to United States
shareholders and is planned to be treated as a pooling of interests under U.S.
GAAP (Generally Accepted Accounting Principles). Based on the closing price of
Placer Dome's shares on the New York Stock Exchange on December 11, 1998, the
transaction values Getchell at about US$1.085 billion or US$34.45 per share.
Getchell's Board of Directors has unanimously approved the merger and
will recommend to Getchell shareholders acceptance of Placer Dome's offer.
Getchell's Chairman J. Kelley Williams and Chief Executive Officer G. W. (Bill)
Thompson will be invited to join Placer Dome's Board of Directors following the
merger.
Based on the findings of its due diligence study, Placer Dome intends
to implement an aggressive exploration and development program to increase
reserves and resources at Getchell's property to 20 million ozs. of gold by the
end of 1999. By completing development of the new Turquoise Ridge Mine and
expanding the mill to 6,000 tons per day at an incremental capital cost of
about $230 million, Placer Dome expects Getchell to produce more than 800,000
ozs. of gold per year at a cash production cost below $200/oz. starting in
2003. Placer Dome also sees significant potential for more than 20 million
ounces through exploration of Getchell's 50 square mile property that has all
the geological parameters for major discoveries. The observations contained in
this paragraph are those of Placer Dome Inc. based on the findings of its due
diligence and do not constitute any representations, estimates or projections
by Getchell Gold Corporation.
The Getchell property contains two operating underground mines and a
mill facility that includes a pressure oxidation plant. In its second quarter
1998 results, Getchell estimated its total mineral inventory to be 14.8 million
ozs. of gold contained in 37 million tons of material grading 12 grams of gold
per ton. The mines are expected to produce more than 400,000 ozs. per year
from 1999 to 2002 at a cash production cost below $230/oz.
Page 1
<PAGE> 2
Placer Dome now estimates it will produce 3.2 million ozs. of gold in
1999 at an average cash production cost of about $170/oz., with a rising
production profile thereafter to above 3.5 million ozs. by 2003 at an average
cash production cost of about $190/oz., with 60% of this production from North
America.
John Willson, President and CEO of Placer Dome, said: "The Getchell
property provides Placer Dome with an opportunity to use our financial strength
and exploration and project development skills to optimize the potential of an
extraordinary property whose development has been constrained by recent market
conditions. The transaction strengthens our North American base with the
addition of quality ounces, making Placer Dome, with its Cortez operations
nearby, a major Nevada producer. And with our recent joint venture in South
Africa, this puts Placer Dome on track to become a long-term, 3.5
million-ozs.-per-year producer with reserves of 80 million ozs. of gold."
Bill Thompson commented: "I am delighted with this transaction.
Placer Dome has an excellent reputation for mine development, and is
well-positioned from a financial and management perspective to develop this
property into a world-class mining district."
With approximately 31.5 million Getchell shares outstanding on a
fully-diluted basis, Placer Dome will issue about 77 million additional common
shares, which considerably broadens Placer Dome's United States shareholder
base. Upon completion of the merger, Placer Dome will adopt U.S. GAAP as its
primary basis of communicating financial results. This will provide a more
appropriate accounting emphasis for an international gold mining company
reporting in U.S. dollars, and provides better comparison with its peer group.
The transaction is subject to majority approval by Getchell
shareholders and customary regulatory approvals. No approval by Placer Dome
shareholders is required. Placer Dome and Getchell plan to mail their joint
registration statement and proxy statement prospectus to Getchell shareholders
upon receipt of regulatory approvals. The transaction is expected to close by
the end of March 1999.
<TABLE>
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<S> <C>
For further information:
In North America: Investor Relations - Earl Dunlop (604) 661-3779
Media Relations - Hugh Leggatt (604) 661-1554
In South America: Investor and Media Relations - Felipe Ruiz (56-2) 206-6252
In Australia: Investor and Media Relations - Ian Williams (02) 9256-3800
On the Internet: www.placerdome.com
Getchell Gold Corporation: VP & Chief Financial Officer - Donald Robson (303) 771-9000
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PLACER DOME INC. CAUTIONARY NOTE
Some of the statements contained in this news release are forward-looking
statements, such as estimates and statements that describe the Corporation's
future plans, objectives or goals, including words to the effect that the
Corporation or management expects a stated condition or result to occur. Since
forward-looking statements address future events and conditions, by their very
nature, they involve inherent risks and uncertainties. Actual results relating
to among other things, reserves, resources, results of exploration, capital
costs and mine production costs could differ materially from those currently
anticipated in such statements by reason of factors such as the productivity of
the Corporation's mining properties, changes in general economic conditions and
conditions in the financial markets, changes in demand and prices for the
minerals the Corporation produces, litigation, legislative, environmental and
other judicial, regulatory, political and competitive developments in areas in
which the Corporation operates, technological and operational difficulties
encountered in connection with the Corporation's mining activities, and labor
relations matters and costs.
GETCHELL GOLD CORPORATION CAUTIONARY NOTE
The information set forth is this document includes "forward looking
statements" within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended, and is subject to the safe harbor created by that section.
Factors that realistically could cause results to differ materially from those
projected in the forward-looking statements include those set forth in "Risk
Factors" in the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998 as filed with the Securities and Exchange Commission.
Getchell Gold is a gold mining and exploration company with operations
in north central Nevada and a corporate office in Englewood, Colorado.
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